Loading...
HomeMy WebLinkAboutCity of Show Low - Public Financial Report For Fiscal Year Ending June 30, 2021 City of Show Low “Named by the Turn of a Card” Popular Annual Financial Report  Message From the City Manager……Page 2  Strategic Goals/Mission Statement .. Page 3  Show Low Facts/Demographics ....... Page 5  Revenues by Source .......................... Page 6  Expenditures By Function ................ Page 8  Where does the Money Go ............... Page 9  Governmental Fund Trends ............. Page 10  Business-Type Funds ........................ Page 12  Statement of Net Position ................ Page 13  Financials/Awards ............................ Page 14  Investments ...................................... Page 15  Capital Assets .................................... Page 16  Debt Management ............................ Page 17  Contact Information ......................... Page 18 Table of Contents Message from the City Manager The information contained in this document comes from the City of Show Low’s Annual Com- prehensive Financial Report (ACFR) and Annual Budget Document for Fiscal Year Ending 2021. Detailed information and the complete ACFR regarding the ffnancial position of the City of Show Low can be found on our website at www.showlowaz.gov, or you may contact the Deputy City Manager via e-mail at jjohn- son@showlowaz.gov. Dear Citizens, The City of Show Low is pleased to present this sum- marized version of the Annual Comprehensive Finan- cial Report (ACFR) for the Fiscal Year Ending June 30, 2021. The ACFR is audited in accordance with General- ly Accepted Audited Standards (GAAS) and prepared in conformance with the Generally Accepted Account- ing Principles (GAAP). This report reflects the City of Show Low’s commitment to ffnancial transparency, ac- countability, and communicating the ffnancial position of the City. The intent of this document is to clarify the reporting process in an easy-to-understand language allowing residents and visitors to see where their tax dollars go and how the management of the City’s ffnances follow the Strategic Goals set by City Council. Through a con- servative budget approach and a strong adherence to ffnancial accountability and ffscal responsibility the City of Show Low’s ffnancial position is stable and con- tinuing to improve through economic development and a comprehensive internal control framework de- signed to protect the City’s assets from loss, theft, or misuse. The City looks forward to another successful year and to providing the citizens and visitors of our community a transparent and ffscally responsible local govern- ment. Respectfully, Ed Muder City Manager 2 3 3 Infrastructure: Preserve Existing Assets Quality of Life • Downtown Development • Beautify Downtown • Deuce of Clubs Streetscape and 9th Street Corridor • Overhead power line removal • Merchant façade improvements and way finder signs • Expanded parking • Downtown and Signature Festival Marketplace serve as event venues • Appearance and image • Beautify and maintain city facilities, parks, sports fields and cemetery • Pleasing landscaping features in public areas • Well-maintained city vehicles and equipment • Maintain open space (e.g., Meadow Property) to retain small-town feel • Maintain amenities • Preserve and protect history 4 4 Economic & Community Development Organization Recreation as economic development tool Tournaments and athletic events (Memorial Day softball, Little League district and regional, disc golf, triathlons, Bike the Bluff) Events and Programs City Sponsored: 4th of July Parade/Freedom Fest City Anniversary/BBQ Throwdown Show Low Shines Christmas Light Parade Deuce of Clubs Drop (New Year’s) Co-Sponsored Events: Show Low Days Farmer’s Market Spooktacular Festival Christmas Tree Lighting City Employees Our greatest resource = well-trained employees Our No. 1 goal = provide quality services to Show Low’s Citi- Show Low was named after a marathon poker game played between two early settlers. They decided there was not enough room for both of them in the community and agreed to let a game of cards decide who was to get the 100,000 acre ranch and who was to move on. According to the story, one of them said, “If you can show low, you win.” The other one turned up the deuce of clubs and replied, “show low it is.” Show Low got its name from that card game and Show Low’s main street is named “Deuce of Clubs” in remembrance. Show Low was founded in 1870, incorporated in 1953, and is not only the largest city in the White Mountains of Northeast- ern Arizona it is one of the fastest growing cities in northern Arizona. Show Low is also the business hub and marketing center of the area. DEMOGRAPHICS City of Show Low Navajo County State of Arizona Population/Age Total Population5 11,742 110,924 7,278,717 Male Population3 5,375 54,994 3,620,935 Female Population3 5,755 55,930 3,657,782 Median Age3 39.7 39.4 38.3 65 years and older3 2,618 20,560 1,307,241 Labor Force/Income/Unemployment Average Labor Force4 4,451 38,265 3,326,563 Median Income1 40,616 38,490 45,001 Unemploy- ment Rate2 6.1% 12.7% 5.9% Households by Income1 Less than $10,000 7.4% 13.3% 6.4% $10,000 to $14,999 7.9% 6.8% 4.0% $15,000 to 24,999 13.7% 12.9% 9.2% $25,000 to 34,999 11.4% 11.1% 9.5% $35,000 to $49,999 12.5% 14.4% 13.5% $50,000 to $74,999 17.4% 16.9% 18.6% $75,000 to $99,999 12.2% 10.5% 12.9% $100,000 to $149,999 9.1% 8.9% 14.3% $150,000 to $199,999 5.8% 3.5% 5.8% $200,000 or more 2.4% 1.6% 5.9% Sources: U.S. Census Bureau, https://data.census.gov/cedsci/table?q=show%20low,%20az&t=Populations% 20and%20People&g=0400000US04_0500000US04017&tid=ACSST1Y2019.S0101&hidePreview=false Attractions  Fishing  Camping  Hiking  Horseback Riding  Golf  Big Game Hunting  Apache Sitgreaves National Forrest  The Mogollon Rim  Sunrise Park Ski Resort, located on the White Mountain Apache Indian Reservation 5 6 Revenues By Source 6 Source FY2018-2019 Actuals FY2019-2020 Actuals FY2020-2021 Actuals Percent Change from Local Sales Tax $13,294,795 $13,927,771 $17,157,931 23.2% State Shared Tax $1,118,190 $1,170,395 $3,963,872 15.9% Franchise/License Fees $441,929 $437,487 $436,244 -0.28% Fines/Forfeitures $200,356 $217,451 $281,476 29.44% Planning, Building, & Engineering Fees $306,183 $314,246 $491,022 56,25% Sanitation Use Fees $952,765 $1,025,904 $1,075,747 4.86% Water Use Fees $4,546,600 $4,439,150 $4,723,317 6.40% Wastewater Use $2,887,925 $3,108,424 $3,206,915 3.17% Like many other cities in the state, the City of Show Low experienced a signiffcant increase in economic activity due to COVID. With limited available air travel and other related travel re- strictions many Arizona residents traveled to Show Low for their vacations. This spike in tour- ism had a direct effect on sales tax collections, speciffcally in the retail, restaurant, and accom- modation segments. Additionally, an increased number of residents decided to stay home rather than travel. During their “staycations” numerous residents invested in home improvements. The City also experi- enced an increase in new home construction. These activities created an uptick in construction sales tax as well as an increase in the Planning, Building, & Engineering Fees over the prior ffscal year. Due to these factors and others, the annual sales tax collections increased by over 20% when compared to the prior ffscal year. 7 7 The City of Show Low takes a conservative approach when budgeting revenues each year. Only 95% of expected revenues are budgeted to be spent allowing the City to maintain healthy fund balances for future projects and emergencies. 8 8 Function FY2018-2019 Actuals FY2019-2020 Actuals FY2020-2021 Actuals Percent Change from Prior Year Personnel $15,393,306 $14,424,827 $13,916,367 -3.52% Operational $12,095,479 $11,707,611 $14,181,091 21.13% Capital $6,372,815 $6,880,871 $5,574,389 -18.99% Debt Service $2,282,243 $1,711,834 $2,110,240 23,27% Contingency/CIP Reserves $0.00 $75,000 $79,913 6.55% Expenditures by Function Personnel: The slight decrease in FY2021 from FY2020 is due to a decrease in the amount of retirement budgeted for the Police De- partment as a result of a slight decrease in the amount of payments for the unfunded PSPRS liability ($1,700,000 in FY2020 and $1,300,000 in FY2021) Operational: The increase in FY2021 from FY2020 is due to resuming normal operations after the COVID-19 shutdown in areas such as travel and training, repairs and maintenance, citizen programs, and an increase in medical claims (the City of Show Low is self- insured). Capital: The decrease in capital is due to project completions in FY2020 and a more conservative budget in FY2021 due to the uncer- tainty with COVID-19, the ability to get materials, and the increase in material and labor costs. Contingency/CIP Reserves: The slight increase in FY2021 from FY2020 is due to an increase in contributions from the City of Show Low to the Community Fast Program.. 9 WHERE DOES THE MONEY GO? Personnel The City has 166.5 Full-time equivalents and personnel costs account for 33.16% of the City’s FY2021 Actual Expenditures Operational The City of Show Low has 21 Divi- sions whose operational costs were 34.55% of the City’s FY2021 Actual Expenditures Capital The City of Show Low’s capital expenditures for FY2020/2021 was $5,574,389 which was 13.28% of the City ‘s Actual Expendi- tures. The majority of the capi- tal is in Streets, Wastewater, Water, and the Airport focusing on maintaining and adding new infrastructure. Reserves The City of Show Low has ap- proximately $6.4 million in op- erating reserves, which is 15.37% of the City’s Budget and includes:  3-months operating re- serves for the General Fund, Water, and Wastewater  $1.0 million in voter re- quired reserves Debt Service The City of Show Low’s Debt Service made up 3.64% of the City’s FY2021 Actual Expenditures. Total out- standing debt service principle is $15,069,853 million. Detailed Debt Service Schedules are available on- line at www.showlowaz.gov in the current fiscal year’s budget book. 9 10 Governmental Fund Trends The General Fund is the government’s primary operating fund. It accounts for all ffnancial resources devoted to ffnance services associated with local government. These services include the Library, Public Safety, Legal, Magistrate, Parks/Facilities Mainte- nance, Community Development, and internal support functions. Below is a summary of the General Fund Expenditures by department. Details can be found in the Annual Comprehensive Financial Report and the current Fiscal Year’s Budget, both on- line at www.showlowaz.gov. FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 Expenses by Division Actual Actual Actual Actual Actual Budget City Council 124,868 110,316 86,364 168,451 180,875 409,092 General Operations 4,163,391 3,345,871 2,570,980 3,892,721 3,348,072 8,036,784 Human Resources 262,884 263,101 280,321 282,436 323,944 381,114 Administrative Services 651,419 692,081 677,377 740,025 776,185 959,935 City Magistrate 188,300 173,712 122,771 90,991 91,662 110,899 City Attorney 264,699 248,399 248,879 262,974 253,231 298,893 City Manager 406,740 369,261 388,846 390,510 393,905 583,827 Planning & Zoning 410,714 478,601 530,332 526,158 582,570 816,737 Library 492,163 506,378 488,116 549,817 521,823 586,260 Information Systems 317,083 337,117 339,397 323,483 366,185 476,789 Parks/Facilities Maintenance 824,246 1,449,888 1,238,272 1,242,400 1,428,750 3,284,864 Engineering 590,468 638,397 659,766 677,813 792,793 839,667 Police 5,583,466 5,945,404 8,913,220 8,051,368 7,333,121 11,556,297 Parks & Recreation 339,215 350,230 373,345 313,819 345,263 451,326 City Clerk 279,826 262,071 288,723 211,813 258,650 363,638 Show Low TV 191,568 193,634 235,534 202,815 217,741 235,785 Community Services 165,952 234,347 227,513 225,658 211,123 268,920 Cemetery - - 14,755 18,080 20,356 115,000 Airport - - 3,557,837 1,311,243 1,426,804 3,472,118 Aquatic Center - - 442,734 454,676 461,073 597,437 Total 15,257,003 15,598,808 21,685,082 19,937,251 19,334,135 35,011,499 Notables:  Increase in Police Expenditures between FY2017/2018 Actual and FY2018/2019 Actual a result of the following:  Additional $3.0 million was budgeted towards the City’s unfunded liability for the Public Safety Retirement System  An increase was realized between Fiscal Year 2018/2019 Actual and Fiscal Year 2019/2020 Budget due to an additional $700,000 budgeted towards the City’s unfunded liability for the Public Safety Retirement System  The Cemetery, Airport, and Aquatic Center were moved to the General Fund in Fiscal Year 2018-2019  Prior to Fiscal Year 2018-2019, each of these departments were considered their own fund receiving a subsidy from the General Fund to cover operational costs  By moving these departments into the General Fund there is no subsidy payment out of the General Fund required to help cover operational costs 10 11 Governmental Fund Trends The General Fund is the government’s primary operating fund. It accounts for all ffnancial resources devoted to ffnance services associated with local government. These services include the Library, Public Safety, Legal, Magistrate, Parks/Facilities Mainte- nance, Community Development, and internal support functions. Below is a summary of the General Fund Revenues by Cate- gory. Details can be found in the Annual Comprehensive Financial Report and the current Fiscal Year’s Budget, both on-line at www.showlowaz.gov. FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 Revenues by Category Actual Actual Actual Actual Actual Budget Local Sales Tax $10,963,170 $12,248,424 $13,294,795 $13,927,771 $17,157,931 $12,000,000 Franchise Tax $405,434 $371,228 $441,929 $437,487 $436,244 $370,000 State Shared Revenues $995,864 $1,065,866 $1,118,190 $1,170,396 $1,357,400 $1,276,293 Urban Revenue $1,332,380 $1,259,816 $1,343,966 $1,463,969 $1,635,222 $1,418,261 Vehicle License Tax $648,842 $703,405 $750,997 $775,074 $971,250 $822,312 HURF Shared Revenue $1,505,726 $1,541,263 $1,672,198 $1,863,518 $1,887,443 $1,643,238 Licenses and Permits $257,322 $369,875 $306,183 $314,246 $491,022 $276,300 Charges for Service $1,640,082 $1,934,920 $1,919,444 $2,006,235 $2,507,659 $2,428,757 Total $17,738,464 $17,957,031 $20,847,672 $21,958,696 $26,444,171 $20,235,161 Revenues by Category above represent the major revenue categories. The City of Show Low budgets revenue at 95% of expected revenues remaining conservative in our budget approach. Total revenue detail can be found on Page 20 of the FY2020/2021 Annual Comprehensive Financial Report. Notables:  Increase in Licenses and Permits between Fiscal Year 2016/2017 and Fiscal Year 2017/2018 are a direct result of the hospital expansion project by Summit Regional Medical Center. The increase between FY2019/2020 and FY2020/2021 is due to an increase in Sincle Fami- ly Residential permits.  The State Shared Revenues, Urban Revenue, Vehicle License Tax, and HURF Shared Revenues are all programed at 95% of the States estimates.  FY2021 Actual increased over FY2020 Actual as a result of additional COVID-19 Relief funds and a signiffcant increase in Local Sales Tax due to a “Shop Local” campaign. State Estimate Fiscal Year 21/22 City Budget Fiscal Year 21/22 95% Difference Sales Tax $1,343,466 $1,276,293 $67,173 Income Tax (Urban Revenue) $1,492,906 $1,418,261 $74,645 Vehicle License Tax $865,592 $822,312 $43,280 HURF Shared Revenue $1,729,724 $1,643,238 $86,486 Total $5,431,688 $5,160,104 $271,584 11 12 Business Type Fund Trends Proprietary Funds or Business Type Funds include Sanitation, Wastewater and Water. The City charges a fee to customers that is intended to cover all of the costs of services within these funds. Types of services include curbside trash and recycling weekly pick ups, Annual Project Clean Sweep program, Christmas Tree Recycling Program, Electronic and Hazardous Waste Program, Water and Wastewater infrastructure maintenance, repairs, replacements, and additions. Details can be found in the Annual Comprehensive Financial Report and the current Fiscal Year’s Budget, both on-line at www.showlowaz.gov. FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 Expenditures By Fund Actual Actual Actual Actual Actual Budget Sanitation $879,210 $894,039 $936,051 $987,441 $1,076,216 $1,112,000 Wastewater $3,480,075 $5,006,575 $3,240,518 $3,186,754 $3,206,849 $8,807,393 Water $3,784,322 $4,580,771 $3,344,559 $3,628,114 $3,828,900 $8,882,085 Total $8,143,607 $10,481,385 $7,521,128 $7,802,309 $8,111,965 $18,801,478 Notables:  Signiffcant increases in expenditures in the Wastewater Fund for Fiscal Year 2016/2017 and Fiscal Year 2017/2018 are due to the completion of the Wastewater Treatment Plant.  In Fiscal Year 2018/2019 Wastewater expenditures decreased as some capital expenditures were not completed and were carried forward to FY2019/2020.  In Fiscal Year 2019/2020 the Wastewater expenditures have decrease signiffcantly to allow the fund to recover costs associated with the construction of the new Wastewater Treatment Plant and capital expenditures.  In Fiscal Year 2020/2021 Water Expenditures increased due to larger capital projects budgeted for ffscal year.  Budgeted Expenditures in Wastewater increased due to an increase in wastewater capital projects as a result of new debt service to assist wastewater in catching up with capital infrastructure projects after the completion of the Wastewater Treatment Plan.  Budgeted Expenditures in Water increased due to an increase in water capital projects as a result of a healthy fund balance allowing for additional infrastructure projects to completed. FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 Revenues By Fund Actual Actual Actual Actual Actual Budget Sanitation $866,419 $893,848 $952,765 $1,025,905 $1,075,747 $1,100,000 Wastewater $2,542,267 $3,014,638 $2,888,156 $3,108,424 $3,155,246 $3,114,578 Water $4,061,822 $4,333,068 $4,506,540 $4,589,776 $4,741,657 $4,632,084 Total $7,470,508 $8,241,554 $8,347,461 $8,724,105 $8,972,650 $8,846,662 12 13 Statement of Net Position The statement of net position is a condensed overview of the City’s assets and liabilities as of June 30, 2020 and June 30, 2021. The difference represents the amount the City owns compared to the amount owed. A portion of the City’s net position reflects its investment of 107,629,652, or 77.3% in capital assets. An additional portion of $722,872, or 0.52%, represents restricted net position. The remaining balance is unrestricted net position of $30,803,310, or 22.14%. At the end of the current ffscal year, the City is able to report positive balances in all three categories of net position for the government and business-type activities. The City can also report the majority of the City’s net position is in the investment in capital assets, which is reflective of the City Councils Strategic Goals. Governmental Activities Business-Type Activities Current Year Previous Year Current Year Previous Year Total Current Year Total Previous Year Current and Other Assets $33,552,465 $25,071,300 $13,235,504 $11,297,596 $46,787,969 $36,368,896 Net capital assets $69,445,955 $70,208,377 $51,707,270 $52,291,131 $121,153,226 $122,499,507 Total Assets $102,998,420 $95,279,677 $64,949,615 $63,588,727 $167,941,195 $158,868,403 Deferred outflows of resources $5,666,202 $5,656,692 $326,753 $187,820 $5,992,956 $5,844,512 Total assets and deferred outflows $108,664,622 $100,936,368 $65,276,638 $63,776,547 $173,934,150 $164,712,915 Long-term debt outstanding $8,591,307 $9,733,564 $4,959,256 $5,535,143 $13,550,563 $15,268,707 Other Liabilities $18,476,386 $16,246,312 $2,453,701 $2,553,273 $20,930,087 $18,799,585 Total Liabilities $27,067,694 $25,979,876 $7,412,957 $8,088,416 $34,480,651 $34,068,292 Deferred inflows of resources $259,902 $521,196 $44,604 $105,981 $304,506 $627,177 Total liabilities and deferred in- flows $27,327,596 $26,501,072 $7,457,561 $8,194,397 $34,785,157 $34,695,469 Net Position: Net Investment in capital assets $60,881,637 $60,691,476 $46,748,015 $46,755,988 $107,629,652 $107,447,464 Restricted $722,872 $1,210,426 $0.00 $0.00 $722,872 $1,120,426 Unrestricted $19,732,517 $12,533,395 $11,070,793 $8,826,162 $30,803,310 $21,359,557 Total net position $81,337,026 $74,435,296 $57,818,807 $55,582,150 $139,155,834 $130,017,447  Assets: Current and other assets are economic resources held with the expectation of sale, conversion to cash or use within the near future, usually twelve months  Capital Assets: Are investments in land, buildings, equipment, improvements and infrastructure that are long-term in nature and there- fore not available for future spending  Long-Term Liabilities: Are outstanding are mainly debt obligations incurred by the City to ffnance major projects or large purchases  Other Liabilities: Are the City’s payment obligations due within one year and include principal and interest on long-term debt due with- in the next year, accounts payable, and accrued items, such as payroll and interest  Deferred Outflows/Inflows of Resources: Deferred outflows/inflows of resources are expenses/revenues that have been incurred/ received but are not yet being recognized until a future period  Net Position: Net investment in capital assets represents the City’s investment in capital assets less any related outstanding debt used to acquire those assets  Restricted Net Position: Are resources subject to restrictions on how they may be used. The City sets aside resources for debt service, capital projects, street improvements, grantor and contributor purposes.  Unrestricted Net Position: Are the accessible resources available to provide residents services if no additional revenues or resources are obtainable 13 14 Financials The ffnancial information is drawn from the City of Show Low’s Annual Comprehensive Financial Report (ACFR) for the ffscal year ended June 30, 2021. The ACFR will be pre- sented to the Government Finance Oificers Association of the United States and Canada (GFOA) to seek the award for Achievement for Excellence in Financial Reporting. The Certiffcate of Achievement is the highest form of recognition for excellence in state and local government reporting and its valid for one year. The ACFR must satisfy both Gener- ally Accepted Accounting Principles (GAAP) and applicable legal requirements. The City of Show Low has received this award for the past 18 years. Statement of Activities The graphs below show the expenses and revenues for governmental and busi- ness-type activities as it relates to the program category in which the funds were expended or collected. Governmental activities include the General Oper- ating Fund, Debt Service, Capital Projects, and Special Revenue Funds. Busi- ness-type activities include Sanitation, Water, and Wastewater Funds. 14 15 Investments The City’s investment policy applies to activities of the City of Show Low with regard to investing the ffnancial assets of the General Fund and all other Funds established by the City. The investment portfolio shall be managed in a manner to attain a market rate of return throughout budgetary and economic cycles while preserving and protecting capital in the overall portfo- lio. Investments shall be based on statutory constraints and the primary investment criteria in priority sequence are 1) Safety, 2) Liquidity, and 3) Avoidance of Speculation. Fair Value Credit Rating (1) Weighted Average Maturity (2) Cash on Deposit $13,030,344 N/A N/A Cash on Hand $0.00 N/A N/A Local Governments Investment Pool 5* $12,695,593 AAA f/S1+ 36.5 days Local Governments Investment Pool 500* $6,540,069 AA-3 2.06 years Local Governments Investment Pool 700* $6,774,507 AAA 2.42 years $39,040,514 * The fair value of the City’s position in each pool is the same as the value of the pool shares. (1) Ratings are provided where applicable to indicate associated Credit Risk. N/A indicates not applicable (2) Interest Rate Risk is estimated using the weighted average days to maturity The Arizona State Treasurer’s Oifice operates the Local Government Investment Pool (LGIP) with no regulatory oversight. The LGIP is available for investment of funds administered by any Arizona Public Treasurer. The LGIP is not registered with the SEC as an investment company. Deposits in the LGIP are not insured or otherwise guaranteed by the State of Arizona, and par- ticipants share proportionally in any realized gain or losses on investments. The provisions of State law (A.R.S. 35-323) govern the investment of funds in excess of $100,000. A.R.S. 35-323 allows for invest- ment in certiffcates of deposit, interest bearing savings accounts, repurchase agreements with a maximum maturity of 180 days, pooled investment funds established by the State Treasurer, obligations, guaranteed by the United States, bonds of the State of Arizona or other local municipalities, commercial paper of prime quality that is rate “P1” by Moody’s investors or “A1” by Stand- ard and Poor’s rate service, and bonds, debentures or notes that are issued by corporations organized and doing business in the United States subject to certain restrictions. For investments of less than $100,000 procedures as speciffed by local ordinance or resolution must be followed. As of June 30, 2021, the City had the following deposits and investments:  Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulffll its obligations. The City’s policy for reducing its exposure to credit risk is to comply with State law (A.R.S. 35-323). A.R.S. 35-323 limits investment in commercial paper and corporate bonds to the top ratings issued by nationally recognized statistical rating organizations such as Standard & Poor’s and Moody’s Investor Services.  Interest Rate Risk Interest rate risk is the risk that changes in the interest rates will adversely affect the fair value of an investment. The City’s policy for managing its exposure to fair value loss arising from increasing interest rates is to comply with the provisions of State law (A.R.S. 35-323). A.R.S. 35-323 requires that the City’s investment portfolio maturities do no exceed ffre years from the time of purchase.  Fair Value Measurements As noted above, the City holds investments that are measured at ffar value on a recurring basis. The City categorizes its fair value measurements with in the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets. Level 2 inputs are signiffcant other observable in puts. Level 3 inputs are signiffcant unobservable inputs. The sate treasurer’s investment pool, mutual funds, and certiffcates of deposit, as listed above are valued using inputs other an quoted prices, that are observable (Level 2 inputs). 15 16 Capital Assets Capital assets, which include 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 ffnancial state- ments. Capital assets are deffned by the City as assets with an initial, individual cost of more than $10,000 and an estimated useful life in excess of three years. Such assets are recorded if purchased or constructed. Donated capital assets are recorded at estimated acquisition value at the date of donation. Depreciation of capital assets is computed using the straight-line method over their estimated useful lives. Land and construction in progress are not depreciated. Property, plant, and equipment of the primary government, as well as the component units (if any), are depreciated using the straight-line method over the following estimated useful lives: Buildings and Improvements 40 years Machinery and Equipment 5 to 15 years Vehicles 5 to 15 years Streets, Sidewalks & Other Infrastructure 40 years Governmental Activities Business-Type Activities Current Year Previous Year Current Year Previous Year Total Current Year Total Previous Year Land and Water Rights $6778,048 $6,646,326 $1,256,833 $1,256,833 $8,034,881 $7,903,159 Buildings $12,961,711 $12,803,434 $255,602 $266,484 $13,217,313 $13,069,918 Improvements $7,060,979 $7,344,856 $0.00 $0.00 $7,060,979 $7,344,856 Infrastructure $38,192,869 $38,613,848 $47,309,327 $46,953,630 $85,502,196 $85,567,478 Machinery and Equipment $1,806,328 $1,937,595 $1,698,159 $1,757,805 $3,504,487 $3,695,400 Vehicles $1,974,301 $1,893,069 $266,131 $227,819 $2,240,432 $2,120,888 Work in Progress $732,755 $969,249 $921,219 $1,828,560 $1,653,974 $2,797,809 Totals $69,506,992 $70,208,377 $51,707,270 $52,291,131 $121,214,262 $122,499,508 City of Show Low’s Capital Assets (net of depreciation) As of June 30, 2021 16 17 Debt Management The City utilizes long-term debt to ffnance capital projects with long useful lives. Financing capital projects with debt provides for an “intergenerational equity”, as the actual users of the capital asset pay for its costs over time, rather than one group of us- ers paying in advance for the cost of the asset. The City’s debt policy is to provide for the preservation and eventual enhance- ment of the City’s bond ratings, the maintenance of adequate debt service reserves, compliance with debt instrument cove- nants and provisions, and required disclosures to investors, underwriters, and rating agencies. The policy guidelines will also be used when evaluating the purpose, necessity, and condition under which debt will be issued. City of Show Low’s Outstanding Debt As of June 30, 2021 Governmental Activities Principal Balance Term of Debt Community Facilities District $1,155,000 July 2031 Excise Tax Rev. Ref. Bonds—Series 2015 $6,270,000 July 2026 Energy Conservation Equipment Lease $674,318 August 2034 Accrued Compensated Absences $915,540 Capital Leases $465,000 July 2027 Landffll Monitoring Costs $26,988 Net Pension Liability $12,665,738 Total Governmental $12,665,738 Business-Type Activities WIFA Loan—Water PV/FH $1,310,863 July 2032 WIFA Loan—Water Pineview $2,353,392 July 2031 Sewer System Rev. Ob.—2014 $1,295,000 July 2024 Accrued Compensated Absences $74,417 Net Pension Liability $1,672,831 Total Business-Type $6,706,504 Total Outstanding Debt $29,999,166  Community Facilities District: Show Low Bluff Community Facilities District Bonds at an interest rate ranging from 5.2% to 5.6% due in annual principal installments and semiannual interest installments. As a Community Facilities District, the liability is not the responsibility of the City of Show Low.  Excise Tax Rev. Ref. Bonds—Series 2015: At an average coupon rate of 2.42% the 2015 loans were issued and transferred to an Escrow Trust to repay in advance of maturity the $4,722,410 of the GADA Bonds Series 2006B principal and interest and $4,000,000 of the proceeds were issued to ffnance the costs of the new Public Safety Building. There was $142,590 transferred to an Escrow Trust to pay fees and expenses for the refunding  Energy Conservation Equipment Lease: The lease is for the guaranteed energy conservation measures agreement which included invento- rying and studying potential energy savings upgrades to provide the City with a turnkey energy conservation and modernization solution that can be paid for through energy and operational cost savings.  Capital Leases: The City has entered into a lease agreement which is considered a capital lease in accordance with Generally Accepted Ac- counting Principles. The Lease is for the Qualiffed Energy Conservation Bond (QECB)  WIFA Loan—Water PV/FH: Bearing an interest rate of 2.8%, this loan was for the purchase of the Park Valley/Fool Hollow Water System  WIFA Loan—Water Pineview: Bearing an interest rate of 3.096%, this loan was for the purchase of the Pineview Water System  Sewer System Rev. Ob.—2014: Bearing an interest rate of .23%, this loan was for the ffnance costs of the Waste Water Treatment Plant Ex- pansion project 17 18 Contact Information City of Show Low 180 N 9th Street Show Low, AZ 85901 928.532.4000 ph 928.532.4044 fax www.showlowaz.gov. City Staff City Manager Ed Muder emuder@showlowaz.gov Deputy City Justin Johnson jjohnson@showlowaz.gov Morgan Brown Attorney mbrown@showlowaz.gov Rachael Hall City Clerk rahall@showlowaz.gov Brad Provost Police Chief bprovost@showlowaz.gov Shirley Patterson City Magistrate spatterson@showlowaz.gov William Kopp Public Works Director bkopp@showlowaz.gov Jay Brimhall Community Service Director jbrimhall@showlowaz.gov Justen Tregaskes Planning & Zoning Director jtregaskes@showlowaz.gov MAYOR John Leech Jr. VICE-MAYOR Connie Kakavas COUNCIL MEMBERS Brandt Clark Mike Allsop Jon Adams Dawn Wilson Brent Hatch 18 “Named by the Turn of a Card” Show Low was named after a marathon poker game played between two early settlers. They decided there wasn't’ enough room for both of them in the community and agreed to let a game of cards decide who was to get the 100,000 acre ranch and who was to move on. According to the story, one of them said, “If you can show low, you win.: The other one turned up the deuce of clubs and replied, “show low it is.” Show Low got its name from that card game and Show Low’s main street is named “Deuce of Clubs” in remembrance.