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Annual Financial Report
Fiscal Year Ended June 30, 2019
City of Scottsdale Municipal Property Corporation
(A Component Unit of the City of Scottsdale, Arizona)
City of Scottsdale Municipal Property Corporation
(A Component Unit of the City of Scottsdale, Arizona)
Annual Financial Report
Fiscal Year Ended June 30, 2019
Table of Contents
Independent Auditor’s Report ................................................................................................................... 1
Management’s Discussion and Analysis ................................................................................................... 3
BASIC FINANCIAL STATEMENTS
Statement of Net Position and Governmental Funds Balance Sheet ................................................. 8
Statement of Activities and Governmental Funds Statement of Revenues,
Expenditures, and Changes in Fund Balances......................................................................................... 9
Notes to the Basic Financial Statements ................................................................................................ 10
City of Scottsdale Municipal Property Corporation
For the Fiscal Year ended June 30, 2019
Municipal Property Corporation
Board Members
Fredda Bisman
Judith Frost
Kenneth Harder
James Jenkins
Dennis Robbins
William Schrader
City of Scottsdale Municipal Property Corporation
For the Fiscal Year ended June 30, 2019
1
Municipal Property Corporation
INDEPENDENT AUDITOR’S REPORT
Board of Directors
City of Scottsdale Municipal Property Corporation
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and each major
fund of City of Scottsdale Municipal Property Corporation (Corporation), a component unit of the City
of Scottsdale, Arizona, as of and for the year ended June 30, 2019, and the related notes to the financial
statements, which collectively comprise the Corporation’s basic financial statements as listed in the
table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. Accordingly, we express no such opinion.
An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities and each major fund of the City of
Scottsdale Municipal Property Corporation, as of June 30, 2019, and the respective changes in financial
position thereof for the year then ended in accordance with accounting principles generally accepted
in the United States of America.
Table of ContentsTable of Contents
2
Municipal Property Corporation
Change in Accounting Principle
As described in Note 1, the Corporation implemented the provisions of the Governmental Accounting
Standards Board (GASB) Statement No. 88, Certain Disclosures Related to Debt, including Direct
Borrowings and Direct Placements, and Statement No. 89, Accounting
for Interest Cost Before the End of
a Construction Period, for the year ended June 30, 2019, which represent changes in accounting principles.
Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management’s Discussion and Analysis, as listed in the table of contents, be presented to supplement
the basic financial statements. Such information, although not a part of the basic financial statements,
is required by the Governmental Accounting Standards Board, who considers it to be an essential part
of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the United
States of America, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management’s responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic
financial statements. We do not express an opinion or provide any assurance on the information
because the limited procedures do not provide us with sufficient evidence to express an opinion or
provide any assurance.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
October 18, 2019, on our consideration of City of Scottsdale Municipal Property Corporation’s internal
control over financial reporting and on our tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to
describe the scope of our testing of internal control over financial reporting and compliance and the
results of that testing, and not to provide an opinion on the effectiveness of the City of Scottsdale
Municipal Property Corporation’s internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing Standards in
considering City of Scottsdale Municipal Property Corporation’s internal control over financial
reporting and compliance.
Heinfeld, Meech & Co., P.C.
Phoenix, Arizona
October 18, 2019
Table of ContentsTable of Contents
3
Municipal Property Corporation
For the Fiscal Year Ended June 30, 2019
Management’s Discussion and Analysis
As management of the City of Scottsdale Municipal Property Corporation (Corporation) we
offer readers of the City of Scottsdale Municipal Property Corporation’s nancial statements
this narrative overview and analysis of the nancial activities of the Corporation for the scal
year ended June 30, 2019. The Corporation is a component unit of the City of Scottsdale,
Arizona (City).
FINANCIAL HIGHLIGHTS
For the scal year ending 2018/19, the Corporation’s:
• Total assets and deferred outows of resources were greater than total liabilities, resulting in an ending
fund balance of $20,347,257 (net position).
• Total net position decreased by $7,434,872 due to decreased revenues and decreased construction costs
during the year.
• Debt Service Fund and Capital Projects Fund reported ending fund balances of $0 and $20,347,257,
respectively.
• Signicant bond indentures were in compliance.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis introduces the Corporation’s basic nancial statements. Because of its limited
purpose, the Corporation’s basic nancial statements are comprised of two components: (1) Statement of Net
Position and Governmental Funds Balance Sheet and the Statement of Activities and Governmental Funds
Statement of Revenues, Expenditures, and Changes in Fund Balances and (2) Notes to the Basic Financial
Statements. Because the Corporation only has one governmental program, the government-wide and fund
nancial statements are combined.
Government-wide Financial Statements
The Statement of Net Position is designed to provide readers with a broad overview of the Corporation’s nances,
in a manner similar to a private-sector business. The statement of net position presents information on all
of the Corporation’s assets, deferred outows of resources, liabilities, and deferred inows of resources with
the difference reported as net position. Over time, increases or decreases in net position may serve as useful
indicators of whether or not the nancial position of the Corporation is improving or deteriorating.
The Statement of Activities presents information showing how the Corporation’s net position changed during
the most recent scal year. Changes in net position are reported when the underlying event giving rise to the
change occurs, regardless of the timing of related cash ows. Thus, revenues and expenses are reported in this
statement for some items that will only result in cash ows in future scal periods, such as expenses related
to accrued interest.
Table of ContentsTable of Contents
4
Municipal Property Corporation
For the Fiscal Year Ended June 30, 2019
Management’s Discussion and Analysis
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specic activities or objectives. The Corporation, like the City, uses fund accounting to ensure
and demonstrate compliance with nance-related legal requirements.
The Corporation maintains two governmental funds, a debt service fund and a capital projects fund.
Information is presented on the Statement of Net Position and Governmental Funds Balance Sheet and
the Statement of Activities and Governmental Funds Statement of Revenues, Expenditures, and Changes in
Fund Balances.
The Corporation does not adopt an annual appropriated budget for its revenues and expenditures. The debt
service payments are budgeted as part of the City’s annual budget.
Notes to the Basic Financial Statements
The notes to the basic nancial statements provide additional information that is essential to a full understanding
of the data provided in the nancial statements.
Government-wide Financial Analysis
As noted earlier, net position over time, may serve as useful indicators of a Corporation’s nancial position.
The total assets and deferred outows of resources were greater than total liabilities, resulting in an ending
fund balance for the close of the most recent scal year of $20,347,257 (net position).
Table of ContentsTable of Contents
5
Municipal Property Corporation
For the Fiscal Year Ended June 30, 2019
Management’s Discussion and Analysis
Net Position
June 30, 2019 and 2018
2019 2018
ASSETS AND DEFERRED OUTFLOWS OF
RESOURCES
Assets 561,410,674$ 604,494,304$
Deferred Outflows of Resources 13,022,228 14,060,407
Total Assets and Deferred Outflows of Resources 574,432,902 618,554,711
LIABILITIES AND DEFERRED INFLOWS OF
RESOURCES
Long-Term Liabilities Outstanding 511,399,211 545,235,335
Other Liabilities 42,686,434 45,537,247
Total Liabilities 554,085,645 590,772,582
NET POSITION
Restricted for Debt Service - -
Restricted for Capital Projects 20,347,257 27,782,129
Total Net Position 20,347,257$ 27,782,129$
Governmental Activities
Over the scal year, the Corporation’s total net position decreased by $7,434,872. Total revenue decreased by
$1,259,834 as a result of lower lease payments. Total expenses decreased by $26,437,248 primarily due to less
capital project expenses and debt service.
Changes in Net Position
For the Fiscal Years Ended June 30, 2019 and 2018
2019 2018
REVENUES
Lease Payments 19,900,734$ 21,083,623$
Investment Income 545,116 617,592
Other Revenue - 4,469
Total Revenues 20,445,850 21,705,684
EXPENSES
General Government 7,975,090 33,109,521
Interest and Fiscal Charges 19,905,632 21,208,449
Total Expenses 27,880,722 54,317,970
Increase\(Decrease) in Net Position (7,434,872) (32,612,286)
Net Position, Beginning of Year 27,782,129 60,394,415
Net Position, End of Year 20,347,257$ 27,782,129$
Governmental Activities
Table of ContentsTable of Contents
6
Municipal Property Corporation
For the Fiscal Year Ended June 30, 2019
Management’s Discussion and Analysis
Financial Analysis of the Corporation’s Funds
The focus of the Corporation’s governmental funds is to provide information on near-term inows,
outows, and balances of resources that are available for spending. Such information is useful in assessing
the Corporation’s ability to pay the debt service on the bonds it issues to fund construction or acquisition of
public infrastructure.
As of June 30, 2019, the Corporation’s governmental funds reported combined ending fund balances of
$20,347,257. The fund balance for the Debt Service Fund was $0. The fund balance for the Capital Projects
Fund was $20,347,257 which represents unspent bond funds subsequent to a debt issuance in the prior scal
years.
Debt Administration
The total net Excise Revenue Debt at June 30, 2019 was $511,399,211. The Corporation’s total long-term
debt decreased by $33,836,124 during the current scal year due to the payment of principal on outstanding
debt.
For the Fiscal Years Ended June 30, 2019 and 2018
2019 2018
Excise Revenue Bonds 511,399,211$ 545,235,335$
Governmental Activities
Economic Factors
The City’s long-term nancial plan remains one of conservative economic growth. The City continues to
focus on efcient spending and revenues are forecasted to increase by modest amounts again in scal year
2019/20.
Requests for Information
This nancial report is designed to provide a general overview of the Corporation’s nances for all of those
with an interest. If you have questions about this report or need additional nancial information, contact the
Scottsdale City Treasurer’s Ofce at 7447 E. Indian School Road, Suite 210, Scottsdale, AZ 85251.
Table of ContentsTable of Contents
7
Municipal Property Corporation
Basic Financial Statements
Table of ContentsTable of Contents
8
Municipal Property Corporation
Statement of Net Position and Governmental Funds Balance Sheet
June 30, 2019
Debt
Service
Fund
Capital
Projects
Fund
Total
Governmental
Funds
Adjustments
(see Note 2.A.)
Statement
of Net
Position
ASSETS AND DEFERRED OUTFLOWS OF RESOURCES
Assets
Restricted Cash and Short-term Investments 41,447,038$ 21,586,653$ 63,033,691$ -$ 63,033,691$
Amount Due from City of Scottsdale 498,376,983 - 498,376,983 - 498,376,983
Total Assets 539,824,021 21,586,653 561,410,674 - 561,410,674
Deferred Outflows of Resources
Deferred Amounts on Refunding 13,022,228 13,022,228
Total Assets and Deferred Outflows of Resources 13,022,228 574,432,902
LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND
FUND BALANCES/NET POSITION
Liabilities
Accounts Payable - 1,239,396 1,239,396 - 1,239,396
Bond Interest Payable 11,237,038 - 11,237,038 - 11,237,038
Matured Bonds Payable 30,210,000 - 30,210,000 - 30,210,000
Long-term Liabilities
Due Within One Year - - - 32,530,000 32,530,000
Due After One Year - - - 478,869,211 478,869,211
Total Liabilities 41,447,038 1,239,396 42,686,434 511,399,211 554,085,645
Deferred Inflows of Resources
Unavailable Revenue 498,376,983 - 498,376,983 (498,376,983) -
Fund Balances
Restricted - 20,347,257 20,347,257 (20,347,257) -
Total Fund Balances - 20,347,257 20,347,257 (20,347,257) -
Total Liabilities, Deferred Inflows of Resources, and Fund Balances
539,824,021$ 21,586,653$ 561,410,674$
Net Position
Restricted for Debt Service - -
Restricted for Capital Projects 20,347,257 20,347,257
Total Net Position 20,347,257$ 20,347,257$
The accompanying notes to the basic financial statements are an integral part of this statement.
Table of ContentsTable of Contents
9
Municipal Property Corporation
For the Fiscal Year Ended June 30, 2019
Debt Service
Fund
Capital Projects Fund
Total
Governmental
Funds
Adjustments (see
Note 2.B.)
Statement of
Activities
REVENUES
Lease Payments Received from the City of Scottsdale 52,698,679$ -$ 52,698,679$ (32,797,945)$ 19,900,734$
Investment Income 4,345 540,771 545,116 - 545,116
Total Revenues 52,703,024 540,771 53,243,795 (32,797,945) 20,445,850
EXPENDITURES/EXPENSES
Current
General Government - - - 7,975,090 7,975,090
Capital Improvements - 7,975,090 7,975,090 (7,975,090) -
Debt Service .
Principal 30,210,000 - 30,210,000 (30,210,000) -
Interest and Fiscal Charges 22,493,577 - 22,493,577 (2,587,945) 19,905,632
Total Expenditures 52,703,577 7,975,090 60,678,667 (32,797,945) 27,880,722
Excess (Deficiency) of Revenues over Expenditures (553) (7,434,319) (7,434,872) - (7,434,872)
Other Financing Sources (Uses)
Operating Transfers In (Out) 553 (553) - - -
Total Other Financing Sources (Uses) 553 (553) - - -
Net Change in Fund Balances - (7,434,872) (7,434,872) - (7,434,872)
Fund Balances/Net Position, Beginning of Year - 27,782,129 27,782,129 - 27,782,129
Fund Balances/Net Position, End of Year -$ 20,347,257$ 20,347,257$ -$ 20,347,257$
The accompanying notes to the basic financial statements are an integral part of this statement.
Statement of Activities and Governmental Funds Statement of Revenues, Expenditures, and
Changes in Fund Balances
Table of ContentsTable of Contents
10
Municipal Property Corporation
For the Fiscal Year Ended June 30, 2019
Notes to the Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the City of Scottsdale Municipal Property Corporation (Corporation) a component
unit of the City of Scottsdale, Arizona (City) conform to accounting principles generally accepted in the
United States of America applicable to governmental units as promulgated by the Governmental Accounting
Standards Board. A summary of the more signicant accounting policies of the Corporation follows.
During the year ended June 30, 2019, the MPC implemented the provisions of GASB Statement No. 88, Certain
Disclosures Related to Debt, Including Direct Borrowings and Direct Placements. This Statement requires enhanced note
disclosures and claries which liabilities governments should include when disclosing information related to
debt.
During the year ended June 30, 2019, the MPC implemented the provisions of GASB Statement No. 89,
Accounting for Interest Cost Incurred Before the End of a Construction Period. The Statement improves the comparability
information about the capital assets and the cost of borrowing for a reporting period and simplies the
accounting for interest costs incurred before the end of a construction period.
A. Reporting Entity
The City of Scottsdale Municipal Property Corporation, a nonprot corporation, was incorporated in
February 1967 under the laws of the State of Arizona, for the purpose of constructing or otherwise acquiring
or equipping buildings, structures or improvements on land owned by the City of Scottsdale, Arizona for the
benet, common good and general welfare of the City and its inhabitants. Upon dissolution, any remaining
assets are to be distributed to the City. The Corporation is governed by a Board of Directors approved by
the City. For nancial reporting purposes, transactions of the Corporation are included as if the Corporation
were part of the City’s operations.
B. Government-wide and Fund Financial Statements
The government-wide nancial statements (i.e. the Statement of Net Position and the Statement of Activities)
report information on all of the nonduciary activities of the Corporation. For the most part, the effect
of interfund activity has been removed from these statements. Governmental activities, which normally are
supported by taxes and miscellaneous revenues, are reported separately from business-type activities, which
rely to a signicant extent on rates, fees and charges for support. The Corporation had no business-type
activities during the scal year.
Financial statements are provided for major governmental funds, with an adjustment column to arrive at
government-wide nancial statement amounts.
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide nancial statements are reported using the economic resources measurement focus
and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a
liability is incurred, regardless of the timing of related cash ows.
Table of ContentsTable of Contents
11
Municipal Property Corporation
For the Fiscal Year Ended June 30, 2019
Notes to the Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Governmental fund nancial statements are reported using the current nancial resources measurement
focus and the modied accrual basis of accounting. Revenues are recognized when they are both earned and
available. Revenues are considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. For this purpose, the Corporation considers revenues
to be available if they are collected within 31 days of the end of the current scal period. Expenditures
generally are recorded when a liability is incurred, as under accrual accounting, except expenditures related to
claims and judgments, which are recorded only when payment is due. However, since debt service resources
are provided during the current year for payment of governmental long-term principal and interest due early
in the following year, the expenditures and related liabilities have been recognized in the Debt Service Fund.
Lease payments from the City and interest associated with the current scal period are considered to be
susceptible to accrual and have been recognized as revenues of the current scal period. All other revenue
items are considered to be measurable and available only when cash is received by the Corporation.
The Corporation reports the following major governmental funds:
• The Debt Service Fund accounts for the resources accumulated and used for the payment of long-term debt
including principal, interest and related costs.
• The Capital Projects Fund accounts for resources accumulated and used for the acquisition or construction
of major capital facilities.
When both restricted and unrestricted funds are available for use, it is the Corporation’s policy to use restricted
funds rst, and then unrestricted funds. Currently, the Corporation does not have any nonspendable, committed
or assigned fund balance.
D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund
Balance
1. Cash and Investments
Arizona Revised Statutes authorize the Corporation to invest public monies in the State or County
Treasurers’ investment pools, interest bearing savings accounts, certicates of deposit and repurchase
agreements in eligible depositories, bonds or other obligations of the United States government that
are guaranteed as to principal and interest by the United States government, or bonds of the State of
Arizona counties, cities, towns, school districts or special districts as specied by statute. As required by
statute, collateral is required for demand deposits, certicates of deposit, and repurchase agreements
at 100 percent of all deposits not covered by federal depository insurance. This policy is in compliance
with the Corporation’s by-laws and trust agreements.
Cash and investments held by a trustee at June 30, 2019, plus accrued interest, are restricted as to
usage.
The Corporation’s deposits at June 30, 2019 were collateralized with securities held by the pledging
nancial institution’s trust department or agency in the Corporation’s name.
Table of ContentsTable of Contents
12
Municipal Property Corporation
For the Fiscal Year Ended June 30, 2019
Notes to the Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. Capital Assets
Capital assets acquired or constructed by the Corporation are dedicated to the City of Scottsdale,
Arizona to maintain and operate. As a result, the Corporation owns no capital assets.
3. Long-term Obligations
In the government-wide nancial statements, long-term debt and other long-term obligations are
reported as liabilities in the applicable governmental activities. Bond premiums and discounts are
amortized over the life of the bonds using the straight-line method. Bonds payable are reported net
of the applicable bond premium or discount. Bond issuance costs are expensed as incurred.
In the fund nancial statements, governmental fund types recognize bond premiums and discounts, as
well as bond issuance costs, during the current period. The face amount of debt issued is reported as
other nancing sources. Premiums received on debt issuances are reported as other nancing sources
while discounts on debt issuances are reported as other nancing uses. Issuance costs, whether or not
withheld from the actual debt proceeds received, are reported as debt service expenditures.
4. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position reports a separate section for deferred outows of
resources. This represents a consumption of net position that applies to a future period and so will
not be recognized as an outow of resources (expense/expenditure) until then.
The Corporation has only one item that qualies for reporting in this category. It is the deferred
amount on refunding. A deferred amount on refunding results from the difference in the carrying
value of refunded debt and its reacquisition price. This amount is deferred and amortized over the
shorter of, the life of the refunded or refunding debt.
In addition to liabilities, the statement of net position will sometimes report a separate section for
deferred inows of resources. Deferred inows of resources represent an acquisition of net position
that applies to a future period and so will not be recognized as an inow of resources (revenue) until
that time. The Corporation has only one type of this item, which arises only under a modied accrual
basis of accounting that qualies for reporting in this category. Accordingly, the item, unavailable
revenue, is reported only in the governmental funds balance sheet.
Table of ContentsTable of Contents
13
Municipal Property Corporation
For the Fiscal Year Ended June 30, 2019
Notes to the Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
5. Net Position/Fund Balance
In the fund nancial statements, governmental funds report nonspendable portions of fund balance
related to prepaids, inventories, long term receivables, and corpus on any permanent fund. Restricted
funds are constrained from outside parties (statute, grantors, bond agreements, etc.). Committed fund
balances are established and modied by a resolution approved by the Board of Directors. The Board
of Directors has not authorized anyone to assign fund balances and their intended uses. Unassigned
fund balances are considered the remaining amounts. The Corporation has not formally adopted a
spending priority policy and therefore use the spending priority indicated in GASB Statement No.
54, Fund Balance Reporting and Governmental Fund Type Denitions. When an expenditure is incurred for
purposes for which both restricted and unrestricted fund balance is available, GASB 54 indicates to
use restricted rst, then unrestricted fund balance. When an expenditure is incurred for purposes for
which committed, assigned and unassigned amounts are available, GASB 54 indicates to use committed
rst, then assigned, and nally unassigned amounts.
In the government-wide nancial statements, net position is reported in two categories: restricted net
position and unrestricted net position. Restricted net position accounts for the portion of net position
restricted by bond covenants. Unrestricted net position is the remaining net position not included in
the previous category. An unrestricted net position did not occur as of the end of the scal year.
E. Estimates
The preparation of the nancial statements in conformity with accounting principles generally accepted in
the Unites States of America may require management to make estimates and assumptions that affect the
amounts reported in the nancial statements and accompanying notes. Actual results may differ from those
estimates.
Table of ContentsTable of Contents
14
Municipal Property Corporation
For the Fiscal Year Ended June 30, 2019
Notes to the Basic Financial Statements
NOTE 2 – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL
STATEMENTS
A. Amounts Reported in the Statement of Net Position are Different Because:
Amounts due from the City of Scottsdale for retirement of debt
are long-term in nature and are deferred inflows in the
governmental funds.
Prior Year Receivable 531,174,928$
Debt Service Payments Made (30,210,000)
Amortization Amount on Refunding 1,038,179
Amortization of Premium on Existing Bonds (3,626,124) 498,376,983$
Long-term liabilities applicable to the Corporation's
governmental activities are not due and payable in the current
period and accordingly are not reported as fund payables in the
governmental funds.
Bonds Payable (464,530,000)
Deferred Issuance Premium (46,869,211) (511,399,211)
Deferred Amount on Refunding are long-term in nature and are
not reported as deferred outflows of resources in the
governmental funds.
13,022,228 13,022,228
Net adjustment to reduce total fund balance in the
governmental funds to arrive at net position.
-
Total Fund Balances 20,347,257
Total Net Position 20,347,257$
Table of ContentsTable of Contents
15
Municipal Property Corporation
For the Fiscal Year Ended June 30, 2019
Notes to the Basic Financial Statements
NOTE 2 – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL
STATEMENTS (CONTINUED)
B. Amounts Reported in the Statement of Activities are Different Because:
Contractual agreement provides for repayment of debt by the City to the
Corporation; thus, in the statement of activities revenues are recorded at the
inception of the agreement rather than as received. Revenues recognized in
the fund statements are those that provide current financial resources.
Changes in the total debt outstanding will result in adjustments to the revenue
in the statement of activities.
Debt Service Payments Made (30,210,000)$
Amortization Amount on Refunding 1,038,179
Amortization of Premium on Existing Bonds (3,626,124) (32,797,945)$
Interest expense in the statement of activities differs from the amount
reported in governmental funds because additional accrued and accreted
interest was calculated for bonds payable and additional interest expense was
recognized on the amortization of amount on refunding and premiums which
are expended within the funds statements.
Amortization Amount on Refunding (1,038,179)
Amortization of Premium on Existing Bonds 3,626,124 2,587,945
Repayment of bond principal is reported as an expenditure in governmental
funds, and thus, has the effect of reducing fund balance because current
financial resources have been used. For the statement of activities, however,
the principal payments reduce the liabilities in the statement of net position
and do not result in an expense in the statement of activities.
Principal Payments Made 30,210,000 30,210,000
Net Adjustment To Reduce Net Change In Fund Balances To Arrive
At Net Change In Net Position
-
Net Change In Fund Balances (7,434,872)
Net Change In Net Position (7,434,872)$
Table of ContentsTable of Contents
16
Municipal Property Corporation
For the Fiscal Year Ended June 30, 2019
Notes to the Basic Financial Statements
NOTE 3 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. Budgetary Information
The Corporation does not adopt an annual appropriation budget. However, debt service payments are
budgeted as part of the City’s annual budget.
NOTE 4 – DETAILED NOTES ON ALL FUNDS
A. Assets
Deposits and Investments
Deposits – At June 30, 2019, the Corporation’s deposits consisted of the following:
Fair
Value
Accounts With Trustee 63,033,691$
Custodial Credit Risk
Custodial credit risk is the risk that in the event of a bank failure, the Corporation’s deposits may not
be returned to it. As of June 30, 2019, $24,517,925 of the Corporation’s deposits was uninsured and
collateralized by securities held by the pledging bank’s trust department not in the Corporation’s name,
and therefore exposed to custodial credit risk.
B. Liabilities
Obligations Under Long-term Debt
The Corporation issues bonds which are repaid through the City’s excise tax collections and other unrestricted
revenues. The use of property taxes to repay these bonds is specically prohibited by law. The following
bonds, or portions thereof, are paid out of the City’s Water and Sewer Fund:
• a portion of the 2006 MPC Excise Tax Revenue Refunding Bonds,
• the 2010 MPC Excise Tax Revenue Bonds,
• a portion of the 2015 MPC Excise Tax Revenue Refunding Bonds,
• a portion of the 2015A MPC Excise Tax Revenue Bonds,
• the 2017 MPC Excise Tax Revenue Refunding Bonds,
• the 2017A MPC Excise Tax Revenue Bonds.
The 2017B MPC Excise Tax Revenue Bonds are paid out of the City’s Aviation Fund.
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17
Municipal Property Corporation
For the Fiscal Year Ended June 30, 2019
Notes to the Basic Financial Statements
NOTE 4 – DETAILED NOTES ON ALL FUNDS (CONTINUED)
In a prior year, the Corporation renanced other bond issues through the issuance of refunding bonds. The
proceeds from the issuance of the bonds were used to purchase U.S. government securities that were placed
in an irrevocable trust with an escrow agent to provide debt service payments on the bonds being refunded.
As a result, the refunded bonds are considered to be defeased and the liability has been removed from the
governmental activities column of the Corporation’s nancial statements.
The table below reects defeased debt outstanding at June 30, 2019, net of any amounts to be paid or retired
by the trustee on July 1, 2019:
2010 MPC Excise Tax Revenue Bonds 55,510,000$
Refunded in Prior Years
Bonds payable at June 30, 2019 consisted of the outstanding bonds presented below:
Classified in Debt Service Fund - General Government Purposes
Municipal Property Corporation Bonds
Bonds
Outstanding
2006 Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued November 29, 2006) due
in annual installments of $1,200,000 to $4,975,000 through July 1, 2034; interest at 5 percent. Original issue
amount $55,450,000.
$ 50,640,000
2013A Municipal Property Corporation Excise Tax Revenue Bonds (issued February 13, 2013) due in annual
installments of $830,000 to $2,920,000 through July 1, 2028; interest at 3 percent to 5 percent. Original issue
amount $26,295,000.
19,775,000
2013B Municipal Property Corporation Excise Tax Revenue Bonds (issued February 13, 2013) due in annual
installments of $45,000 to $100,000 through July 1, 2033; interest at 3 percent to 5 percent. Original issue
amount $1,440,000.
1,135,000
2013C Municipal Property Corporation Excise Tax Revenue Bonds (issued February 13, 2013) due in annual
installments of $1,210,000 to $2,855,000 through July 1, 2033; interest at 3 percent to 5 percent. Original issue
amount $37,265,000.
29,445,000
2014 Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued May 29, 2014) due in
annual installments of $1,730,000 to $3,040,000 through July 1, 2027; interest at 1.75 percent to 5 percent.
Original issue amount $22,735,000.
16,760,000
2015A Municipal Property Corporation Excise Tax Revenue Bonds (issued January 6, 2015) due in annual
installments of $205,000 to $865,000 through July 1, 2034; interest at 3 percent to 5 percent. Original issue
amount $12,200,000.
10,195,000
2015A Municipal Property Corporation Taxable Revenue Bonds (issued January 6, 2015) due in annual
installments of $275,000 to $1,025,000 through July 1, 2034; interest at 2 percent to 4 percent. Original issue
amount $14,615,000.
11,995,000
2015 Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued March 26, 2015) due in
annual installments of $1,460,000 to $6,877,488 through July 1, 2035; interest at 3 percent to 5 percent.
Original issue amount $46,758,269.
33,816,729
Total Municipal Property Corporation Bonds Outstanding-General Fund $ 173,761,729
Table of ContentsTable of Contents
18
Municipal Property Corporation
For the Fiscal Year Ended June 30, 2019
Notes to the Basic Financial Statements
NOTE 4 – DETAILED NOTES ON ALL FUNDS (CONTINUED)
Classified in Debt Service Fund - Water and Sewer Purposes
Municipal Property Corporation Bonds
Bonds
Outstanding
2006 Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued November 29, 2006) due
in annual installments of $3,600,000 to $10,140,000 through July 1, 2030; interest at 5 percent. Original issue
amount $110,510,000.
$ 79,600,000
2010 Municipal Property Corporation Excise Tax Revenue Bonds (issued April 7, 2010) due in annual
installments of $180,000 to $7,800,000 through July 1, 2036; interest at 3 percent to 5 percent. On March 1,
2017, $55,510,000 due 2023 through 2028 and 2031 through 2036 was refunded. Original issue amount
$75,000,000.
13,940,000
2015A Municipal Property Corporation Excise Tax Revenue Bonds (issued January 6, 2015) due in annual
installments of $310,000 to $1,305,000 through July 1, 2034; interest at 3 percent to 5 percent. Original issue
amount $18,485,000.
15,450,000
2015 Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued March 26, 2015) due in
annual installments of $3,788,459 to $5,822,479 through July 1, 2028; interest at 5 percent. Original issue
amount $46,811,731.
43,023,271
2017 Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued March 1, 2017) due in
annual installments of $2,015,000 to $12,630,000 through July 1, 2036; interest at 3 percent to 5 percent.
Original issue amount $79,970,000.
79,970,000
2017A Municipal Property Corporation Excise Tax Revenue Bonds (issued May 24, 2017) due in annual
installments of $1,080,000 to $2,730,000 through July 1, 2037; interest at 3 percent to 5 percent. Original issue
amount $39,065,000.
36,685,000
Total Municipal Property Corporation Bonds Outstanding-Water and Sewer $ 268,668,271
2017B Municipal Property Corporation Excise Tax Revenue Bonds (issued May 24, 2017) due in annual
installments of $645,000 to $1,655,000 through July 1, 2037; interest at 3 percent to 5 percent. Original issue
amount $23,520,000.
22,100,000
Total Municipal Property Corporation Bonds Outstanding-Aviation $ 22,100,000
Total bonds outstanding $ 464,530,000
The bonds, which mature 8 to 30 years after their respective date of issuance, may be redeemed in whole or in
part on any interest payment date, at redemption prices reecting a premium above par, plus accrued interest
to the date of redemptions.
The City is obligated under contracts to pay the Corporation amounts sufcient to retire the Corporation’s
bonds and related interest in exchange for the assets acquired or constructed in connection with the issuance
of bonds. The City has collateralized the bonds of the Corporation by (1) a rst lien pledge of all excise,
transaction privilege, and franchise taxes collected by the City, except those taxes required by law to be expended
for specic purposes, and (2) a pledge of all net revenue derived by the City from the facilities constructed or
acquired with the bonds proceeds. The Corporation retains legal title to the properties until the amounts due
from the City are paid in full. The City has the sole right to the use of the facilities and is responsible for all
operating and maintenance costs.
Table of ContentsTable of Contents
19
Municipal Property Corporation
For the Fiscal Year Ended June 30, 2019
Notes to the Basic Financial Statements
NOTE 4 – DETAILED NOTES ON ALL FUNDS (CONTINUED)
The contract lease agreements mentioned above are, in substance, long-term sales contracts for an amount
equal to the Corporation’s bonded debt and interest thereon. Accordingly, the accompanying balance sheet
reects a receivable from the City the present value of the amounts due thereunder, which corresponds to the
principal portion plus premium and deferred amount on refunding of the bonded debt payable.
The City has pledged, as security for bonds issued by the Corporation, a portion of the City’s excise tax
revenues. The City has committed to make lease payments to the Corporation each year sufcient to cover the
principal and interest requirements on the Corporation’s bonds. The Corporation has pledged, as sole security
for the bonds, the annual lease payments from the City. Total principal and interest remaining on the debt is
$632,597,888.
The MPC bond issuances, for both governmental and business-type activities, contain the following provisions
that would constitute an event of default by the MPC:
• Non-punctual payment of principal or interest.
• Default in the performance or observance of any covenant, agreement, or condition in the indenture or
in the bonds not cured within 30 days of notice of default. The MPC is also considered to be in default
if the issue is not curable within 30 days and corrective action is not diligently pursued to the satisfaction
of the trustee within 30 days.
• Bankruptcy, insolvency, and/or receivership.
• Default on any bonds which are on a parity basis with the bonds in question.
If any of the events of default transpire, the MPC bond trustee may le a suit or suits in equity or at law and
appoint a receiver to collect and properly disburse pledged MPC revenues for debt service payments. Any
amounts recovered through such proceedings shall be paid rst to the costs and expenses incurred by the
trustee, its agents, attorneys and counsel, and of all proper expenses, liabilities and advances incurred or made
by the trustee or any registered owner(s) of the bonds in question. If a residual amount were to remain, it
would be applied to the then-owed or unpaid amount related to the bonds. If insufcient funds were to exist,
the residual amount would be allocated on a pro-rata basis to) the then-owed or unpaid amount related to the
bonds.
Table of ContentsTable of Contents
20
Municipal Property Corporation
For the Fiscal Year Ended June 30, 2019
Notes to the Basic Financial Statements
NOTE 5 – CHANGES IN LONG TERM DEBT
A. Summary of Changes
The Corporation made principal payments of $30,210,000, amortized deferred issuance premiums of
$3,626,124 and deferred amount on refundings of $1,038,179 during the current scal year.
The following is a summary of changes in long-term debt:
Municipal
Property
Corporation
Bonds Payable
Deferred
Issuance
Premium
Long Term
Liabilities
Beginning Balances 494,740,000$ 50,495,335$ 545,235,335$
Decreases:
Existing Bonds (30,210,000) (3,626,124) (33,836,124)
Ending Balances 464,530,000$ 46,869,211$ 511,399,211$
Amounts Due Within One Year 32,530,000$
Amounts Due in More than One Year 432,000,000$
The following is a summary of annual debt service requirements to maturity as of June 30, 2019:
Fiscal Year Principal Interest Total
2020 32,530,000$ 21,087,375$ 53,617,375$
2021 28,795,000 19,522,875 48,317,875
2022 28,535,000 18,139,425 46,674,425
2023 29,940,000 16,745,575 46,685,575
2024 31,645,000 15,295,675 46,940,675
2025-2029 153,565,000 54,736,394 208,301,394
2030-2034 129,395,000 20,467,831 149,862,831
2035-2037 30,125,000 2,072,738 32,197,738
Total 464,530,000$ 168,067,888$ 632,597,888$
Table of ContentsTable of Contents
21
Municipal Property Corporation
For the Fiscal Year Ended June 30, 2019
Notes to the Basic Financial Statements
NOTE 6 – OTHER INFORMATION
A. Risk Management
The Corporation is exposed to various risks of loss related to torts; theft of, damage to and destruction
of assets; errors and omissions; and natural disasters. The Corporation does not have separate insurance
coverage but is included under the City of Scottsdale, Arizona’s self-insured risk management program. The
City is self-insured for the rst $2,000,000 of public liability; coverage in excess of this amount is provided
through the purchase of commercial insurance. For more information on the City’s self-insurance, please see
the City’s Comprehensive Annual Financial Report, Note V.A.
B. Notice of Event
In September 2019, the City Council approved the issuance of bonds by the Scottsdale Municipal Property
Corporation in an amount not to exceed $43.5 million. Approximately $33.5 million of taxable bonds will be
used to renovate Scottsdale Stadium and $10.0 million of non-taxable bonds were approved for ood control
improvements.
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Completed 16 July 2020

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