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SUN CITY ORO VALLEY COMMUNITY ASSOCIATION, INC.

AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

YEAR ENDED JUNE 30, 2019

SUN CITY ORO VALLEY COMMUNITY ASSOCIATION, INC. AUDITED FINANCIAL STATEMENTS

AND SUPPLEMENTARY INFORMATION YEAR ENDED JUNE 30, 2019

TABLE OF CONTENTS

Page

Independent auditors' report .............................................................................................................. 1

AUDITED FINANCIAL STATEMENTS:

Balance sheet ................................................................................................................................ 3

Statement of revenues, expenses, and changes in fund balance ................................................ 4

Statement of cash flows ................................................................................................................ 5

Notes to financial statements ........................................................................................................ 6

SUPPLEMENTARY INFORMATION:

Supplementary information on asset replacements (unaudited) ................................................12

Schedule of balance sheets – five year comparison ..................................................................13

Schedule of revenues, expenses, and changes in fund balance – five year comparison .........14

Schedule of cash flows – five year comparison ..........................................................................15

Certified Public Accountants

INDEPENDENT AUDITORS' REPORT

Board of Directors Sun City Oro Valley Community Association, Inc. Oro Valley, Arizona

Report on the financial statements

We have audited the accompanying financial statements of Sun City Oro Valley Community Association, Inc., which comprise the balance sheet as of June 30, 2019, and the related statement of revenues, expenses and changes in fund balance and cash flows for the year then ended, and the related notes to the financial statements.

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.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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 auditors’ 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 auditors consider 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 opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sun City Oro Valley Community Association, Inc. as of June 30, 2019, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

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Board of Directors Sun City Oro Valley Community Association, Inc. Page 2

Future major repairs and replacements

Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. We have not applied procedures to determine whether the funds designated for future major repairs and replacements as discussed in Note 11 are adequate to meet such future costs because that determination is outside the scope of our audit. Our opinion is not modified with respect to that matter.

Report on supplementary information

Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedules of balance sheets, statements of revenues, expenses, and changes in fund balance, and cash flows with five-year comparisons on pages 13 through 15 are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audits of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

Disclaimer of opinion on required supplementary information

Accounting principles generally accepted in the United States of America require that the supplementary information on assets replacements on page 12 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Financial Accounting Standards Board, who considers it to be an essential part of the 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 audits 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.

HBL CPAs, P.C.

October 21, 2019

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SUN CITY ORO VALLEY COMMUNITY ASSOCIATION, INC.BALANCE SHEET

Asset Operating reserve Capital Other

fund fund fund funds Total

Current assets:Cash and cash equivalents $ 4,609,431 $ - $ - $ - $ 4,609,431 Short-term investments 1,200,403 - - - 1,200,403Interest receivable 26,199 - - - 26,199 Accounts receivable 44,488 - - - 44,488 Inventories 84,108 - - - 84,108 Prepaid expenses and other assets 163,028 - - - 163,028

Total current assets 6,127,657 - - - 6,127,657

Non-current assets:

Due from operating (to nonoperating)

funds (6,770,778) 5,435,196 981,191 354,391 -

Long-term investments 5,678,372 - - - 5,678,372Common property 13,373,317 - - - 13,373,317

Total non-current assets 12,280,911 5,435,196 981,191 354,391 19,051,689

$ 18,408,568 $ 5,435,196 $ 981,191 $ 354,391 $ 25,179,346

Current liabilities:Accounts payable $ 96,335 $ - $ - $ - $ 96,335 Accrued payroll and related expenses 292,306 - - - 292,306 Deferred income 4,176,270 - - - 4,176,270 Other accrued expenses 56,954 - - - 56,954

Total liabilities 4,621,865 - - - 4,621,865

Fund balance:Operating 413,386 - - - 413,386 Investment in common property 13,373,317 - - - 13,373,317 Asset reserve fund - 5,435,196 - - 5,435,196 Capital fund - - 981,191 - 981,191Contingency - - - 236,475 236,475 Wash fund - - - 74,830 74,830 Community assitsance committee - - - 10,018 10,018 Friends of the Library fund - - - 33,068 33,068

13,786,703 5,435,196 981,191 354,391 20,557,481

$ 18,408,568 $ 5,435,196 $ 981,191 $ 354,391 $ 25,179,346

JUNE 30, 2019

ASSETS

LIABILITIES AND FUND BALANCE

The accompanying notes are an integral part of these financial statements. 3


fund fund fund funds Total

Revenues and gains:

Membership fees $ 3,502,872 $ 1,085,000 $ - $ 52,248 $ 4,640,120

Capital contribution fee - 45,701 411,166 - 456,867

Golf revenues 1,749,994 - - - 1,749,994

Donations 3,498 2,500 - - 5,998

Restaurant 1,212,983 - - - 1,212,983

Activities 170,926 - - - 170,926

Advertising revenue 158,456 - - - 158,456

Investment income 112,499 109,302 15,523 7,682 245,006

Other income 106,651 - - 32,182 138,833

Lease revenue - - 37,304 - 37,304

Gains (losses) on disposal of

common property (38,668) 9,278 - - (29,390) Total revenues 6,979,211 1,251,781 463,993 92,112 8,787,097

Expenses:

Activities 668,720 - - - 668,720

Maintenance 814,684 - - - 814,684

Golf course 1,262,689 - - - 1,262,689

Pro shop 670,553 - - - 670,553

Restaurant 1,537,110 - - - 1,537,110

Common area maintenance 485,274 - - - 485,274

Depreciation 1,327,122 - - - 1,327,122

Other - - - 74,359 74,359

Administration 1,257,939 - - - 1,257,939

Total expenses 8,024,091 - - 74,359 8,098,450

Excess (deficiency) of revenues

and gains over expenses (1,044,880) 1,251,781 463,993 17,753 688,647

Interfund transfers 433,684 (384,398) (35,286) (14,000) -

Fund balance, beginning of year 14,397,899 4,567,813 552,484 350,638 19,868,834

Fund balance, end of year $ 13,786,703 $ 5,435,196 $ 981,191 $ 354,391 $ 20,557,481

SUN CITY ORO VALLEY COMMUNITY ASSOCIATION, INC.STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCE




fund fund fund funds TotalCash flows from operating activities:

Changes in fund balances $ (1,044,880) $ 1,251,781 $ 463,993 $ 17,753 $ 688,647 Adjustments to reconcile changes in fund balances to net cash from operating activities:

Depreciation expense 1,327,122 - - - 1,327,122 Unrealized (gains) on investments (61,415) - - - (61,415) (Gains) losses on disposal of common

property 38,668 (9,278) - - 29,390 (Increase) decrease in operating assets:

Due from operating funds 1,299,843 (867,383) (428,707) (3,753) - Interest receivable (12,002) - - - (12,002) Accounts receivable (12,824) - - - (12,824) Inventories (33,493) - - - (33,493) Prepaid expenses and other assets 25,737 - - - 25,737

Increase (decrease) in operating liabilities:Accounts payable (47,347) - - - (47,347) Accrued payroll and related expenses 74,794 - - - 74,794 Deferred income 339,731 - - - 339,731 Other accrued expenses 26,732 - - - 26,732

Less capital contribution fees - - (456,867) - (456,867) Net cash provided by operating activities 1,920,666 375,120 (421,581) 14,000 1,888,205

Cash flows from investing activities:Purchases of common property (465,206) - - - (465,206) Proceeds from sale of assets - 9,278 - - 9,278 Purchases of investments (8,265,569) - - - (8,265,569) Sales and maturities of investments 6,240,000 - - - 6,240,000

Net cash (used in) provided by investing activities (2,490,775) 9,278 - - (2,481,497)

Cash flows from financing activities:Capital contribution fees - - 456,867 - 456,867 Interfund transfer 433,684 (384,398) (35,286) (14,000) -

Net cash provided by (used in) financing activities 433,684 (384,398) 421,581 (14,000) 456,867

Change in cash and cash equivalents (136,425) - - - (136,425)

Cash and cash equivalents at beginning of year 4,745,856 - - - 4,745,856

Cash and cash equivalents at end of year $ 4,609,431 $ - $ - $ - $ 4,609,431

SUN CITY ORO VALLEY COMMUNITY ASSOCIATION, INC.STATEMENT OF CASH FLOWS



SUN CITY ORO VALLEY COMMUNITY ASSOCIATION, INC. NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2019

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NOTE 1 – Organization

Sun City Oro Valley Community Association, Inc. (Association) (formerly Sun City Vistoso Community Association, Inc.) is a nonprofit common interest realty association in Oro Valley, Arizona incorporated in January 1987. The Association was organized to provide for the management, maintenance and care of the common property. Membership in the Association is limited to the homeowners of the 2,488 units of Sun City Vistoso who meet certain qualifications.

The Association operates a semi-private golf course and pro-shop, The Views Golf Club of Oro Valley and a bar and restaurant, the Views Restaurant. The Views Golf Club of Oro Valley and the Views Restaurant generated $1,749,994 or 20% of total revenues in the year ended June 30, 2019.

NOTE 2 – Summary of significant accounting policies

Funds

The Association uses fund accounting which requires that funds, such as operating funds and funds designated for future major repair and replacement costs, be classified separately for accounting and reporting purposes. Disbursements from the operating fund are generally at the discretion of the Board of Directors and management and are used for the general operations of the Association. Disbursements from other funds may only be utilized in accordance with the established purposes for accumulation. The following funds have been established by the Association:

Operating fund – This fund is used to account for financial resources available for the general operations of the Association and land, buildings and equipment.

Asset reserve fund – Used to accumulate financial resources designated for future major repairs and replacements.

Capital fund – For the purchase or improvement of real property in Sun City.

Other funds:

Contingency fund – This fund is used to accumulate financial resources to be available to cover unforeseen community expenses, shortfalls in yearly budgets and/or unexpected capital requirements.

Wash fund – This fund was established to accumulate financial resources to pay for repairs and preventative maintenance on washes throughout the community.

Community assistance committee fund – This is an advisory committee of the Board of Directors designed to loan medical and other equipment for use by residents and miscellaneous equipment to residents for use by visiting friends and family at no charge. The committee raises necessary monies to fund the purchases of equipment.

Friends of the library fund – Acting on behalf of the Board of Directors, the Friends of the Library raise funds which are applied to improvements in the library.

SUN CITY ORO VALLEY COMMUNITY ASSOCIATION, INC. NOTES TO FINANCIAL STATEMENTS, CONTINUED

JUNE 30, 2019

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NOTE 2 – Summary of significant accounting policies, continued

Balances owed between funds

All financial assets are maintained by the operating fund. Expenditures for non-operating fund activities are made from the operating funds assets and income allocated to each fund from investments, homeowner fees, capital contribution fees are held on behalf of each non-operating fund. Such activities result in balances owed to and from the operating fund to the other funds. At June 30, 2019, total non-operating fund assets held by the operating fund was $6,770,778.

Cash and cash equivalents

Cash and cash equivalents include all cash balances and highly liquid investments with an original maturity of three months or less. The Association maintains its operating cash in bank deposit accounts which, for short periods of time, may exceed federally insured limits. Uninsured cash at June 30, 2019 was $3,778,054 ($3,559,580 of which was held in treasury government bond funds).

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Accounts receivable

Assessments receivable are stated at unpaid balances due from members. Management believes all assessments receivable are fully collectible, and accordingly has not recorded an allowance for doubtful accounts. Receivables are considered impaired if full principal payments are not received in accordance with the contractual terms. It is the Association’s policy to charge off uncollectible assessments receivable when management determines that the receivable will not be collected.

Inventories

Inventories, which consist primarily of golf merchandise, restaurant food and beverages, are stated at the lower of cost (specific identification method) or market.

Land, buildings and equipment

Purchases of land, buildings and equipment in excess of $1,000 are recorded at cost. Depreciation is recorded over the estimated useful lives of the related assets using the straight-line method. The Association capitalizes all land, building and equipment purchases that have an estimated useful life greater than one year.

Deferred income

The Association collects member dues and certain golf course fees in advance. These fees are reflected in operating revenue ratably over the period to which they apply.


JUNE 30, 2019

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NOTE 2 – Summary of significant accounting policies, continued

Income tax status

The Association is exempt from federal income tax under Section 501(c)(4) of the Internal Revenue Code. However, income from certain activities not directly related to the Organization’s tax-exempt purpose may be subject to taxation as unrelated business income. During the year ended June 30, 2019, the Association’s unrelated business taxable income did not exceed related expense; therefore, the accompanying financial statements contain no provision for income taxes.

Investments

The Association considers investments in marketable debt securities to be current assets if the original maturity dates are twelve months or less from the date of issuance. Long-term investments consist of securities with original terms of greater than twelve months.

Advertising

The Association expenses advertising and promotional costs as incurred. During the year ended June 30, 2019, the Association spent $70,367 on advertising.

NOTE 3 – Investments

The classification of investments is determined at the date of purchase. Investments in certificates of deposit and U.S. Treasury Notes are held to maturity and are valued at fair market value, which approximates cost. These obligations are often purchased at a discount. The discount is then recovered through interest earned during the life of the investment.

The following is a summation of investments maintained in the Association’s operating fund at June 30, 2019:

Amortized Unrealized Faircost gains value

Investments - Held-to-maturity $ 6,834,752 $ 44,023 $ 6,878,775

The following is a summation of contractual maturities for held to maturity debt securities at June 30, 2019:

2020 2021 2022 TotalInvestments -

Held-to-maturity $ 2,163,871 $ 2,992,122 $ 1,722,782 $ 6,878,775

Investment income consisted of the following at June 30, 2019:

Unrealized gains $ 61,415 Interest and dividends 183,591

$ 245,006


JUNE 30, 2019

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NOTE 4 – Fair value of financial instruments

Fair value measurements are determined based on the assumptions—referred to as inputs—that market participants would use in pricing the asset. A fair value hierarchy distinguishes between market participant assumptions and the Association’s own assumptions about market participant assumptions. Observable inputs are assumptions based on market data obtained from independent sources; while unobservable inputs are the Association’s own assumptions about what market participants would assume based on the best information available in the circumstances.

Level 1 inputs. A quoted price in an active market for an identical asset or liability is considered to be the most reliable evidence of fair value. The fair value of the Association’s certificates of deposit are determined by reference to quoted prices in active markets for identical assets and other relevant information generated by market transactions.

Level 2 inputs. These are observable inputs, either directly or indirectly, other than quoted prices included within Level 1. The Association does not utilize Level 2 inputs.

Level 3 inputs. These inputs are unobservable and are used to measure fair value only when observable inputs are not available. The Association does not utilize Level 3 inputs.

Fair value of assets measured on a recurring basis at June 30, 2019 consisted of the following:

Investments: Level 1Certificates of deposit $ 5,316,279 Indexed certificates of deposit 247,375 U.S. Treasury Notes 1,315,121

$ 6,878,775

NOTE 5 – Supplemental cash flow information

There was no cash paid for interest or income taxes during the year ended June 30, 2019.

NOTE 6 – Accounts receivable

Accounts receivable consisted of the following at June 30, 2019:

Membership fees receivable $ 43,012 Other receivables 1,476

$ 44,488

NOTE 7 – Common property

The Association holds title to common real property consisting of a golf course on 180 acres of land, sidewalks and other common areas, four recreation centers, a restaurant, pro-shop and craft center on 12 acres of land. The Association is responsible for preserving and maintaining the properties. In conformity with industry practice, the Association recognizes the following common property as assets:

(a) Common personal property(b) Common real property to which it has title


JUNE 30, 2019

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NOTE 7 – Common property, continued

Accordingly, the Association recognized the acquisition of the above properties and the land on which they are built as assets at their fair values in December 1987, the date on which they were transferred from Del Webb Communities. Other common property which has been transferred from Del Webb Communities subsequent to December 1987, consisting of approximately 3.5 acres of land that is the site of a recreation center and various peripheral land including drainage and buffer areas have not yet been recognized as assets.

Major classifications of land, buildings and equipment are summarized below:

Land and improvements $ 10,524,143 Buildings and improvements 14,258,989 Equipment 5,751,047

30,534,179 Less accumulated depreciation (17,177,063) Construction in progress 16,201

$ 13,373,317

NOTE 8 – Deferred income

Deferred income consisted of the following for the year ended June 30, 2019:

Membership fees $ 3,716,412Golf fees 429,284Other income 30,574

$ 4,176,270

NOTE 9 – Retirement savings plan

The Association implemented a Retirement Savings Plan (the Plan) on August 1, 1990. The Plan is intended to qualify under Section 401(k) of the Internal Revenue Code of 1986, as amended. Employees are qualified to participate in the Plan once they have worked six months for the Association. Under the Plan, an employee may elect a pre-tax deferral of up to 15% of the employee’s pre-tax compensation subject to the ERISA specified annual maximum.

The Association contributed up to a maximum deferral of 5% of the employee’s compensation for each dollar of elective deferrals made and not withdrawn by the employee during the plan year. The total amount contributed by the Association during the year ended June 30, 2019 was $74,977.

The vested portion of an employee’s account may be paid out upon termination of employment, at the employee’s election, as soon as practicable after the end of the plan year in which the employee severs employment or attains the normal retirement age.

NOTE 10 – Asset reserves and capital funds additions

The annual membership fee includes $436 per member for the year ended June 30, 2019, which is designated by the Board of Directors to the asset reserves fund for future fixed asset costs. The fees amounted to $1,085,000 for the year then ended.


JUNE 30, 2019

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NOTE 11 – Future asset replacements

The Association’s governing documents allow funds to be accumulated for future major repairs and asset replacements. Accumulated funds are held in cash and investment accounts and generally are not available for expenditures for normal operations.

Association staff maintain and update the schedule throughout the year to reflect new assets acquired by the Association in that year, and any specific adjustments needed to reflect more accurately the condition and anticipated replacement of existing assets. This internal update considers an annual inflation rate of 3% and interest rate of 1.5%. The table included in the supplementary information on future major repairs and replacements is based on a reserve study issued in 2018 and the updates to the study.

The Board is funding for major repairs and replacements over the remaining useful lives of the components based on the study’s estimates of future replacement costs and considering amounts previously accumulated in the replacement fund. Accordingly, a funding allocation of $1,120,000 has been included in the 2019/20 budget.

Funds are being accumulated based on estimated future costs for repairs and replacements of common property components. Actual expenditures and investment income may vary from the estimated amounts, and the variations may be material. Therefore, amounts accumulated in the replacement fund may not be adequate to meet all future needs for major repairs and replacements. If additional funds are needed, the Association has the right, according to the governing documents, to increase regular assessments, pass special assessments, or delay major repairs and replacements until funds are available.

NOTE 12 – Contingencies

During the year ended June 30, 2016, the Association entered into a 20-year agreement to purchase solar power from a third party. The agreement calls for monthly payments based on the amount of energy produced, and requires that the Association pay the termination value of the contract if the Association defaults on or terminates the agreement prior to expiration. The termination value decreases over the term of the agreement based on the number of monthly payments made as of the termination date, ranging from $1,360,654 after the first payment to $119,356 after the 240th payment. The Association had not terminated the agreement as of June 30, 2019, and has expressed no intention of doing so.

NOTE 13 – Subsequent events

Subsequent events have been evaluated through October 21, 2019, which is the date the financial statements were available to be issued.

SUPPLEMENTARY INFORMATION

Estimated Estimated Componentsremaining future 2020 of asset

useful lives replacement funding reserves atComponents (years) costs allocation 6/30/2019

Common Area Grounds 0 to 13 $ 544,803 $ 15,585 $ 75,630Desert Oasis 0 to 27 2,325,133 66,513 322,777Catalina Vista 0 to 22 1,240,668 35,491 172,230Mountain Vista 0 to 26 5,498,148 157,280 763,257Welcome Center 0 to 16 1,595,826 45,650 221,534Activity Center 0 to 17 1,654,709 47,335 229,708Artisan Center 0 to 27 1,008,530 28,850 140,005Aquatics & Fitness Center 0 to 25 2,837,751 81,177 395,939Restaurant 0 to 27 3,019,678 86,381 419,194Proshop 0 to 28 2,305,807 65,960 320,094Maintenance 0 to 27 1,278,240 36,565 177,446Golf Course 0 to 27 15,644,804 447,534 2,171,822Common Area Maintenance 0 to 11 198,542 5,679 25,560

$ 39,152,639 $ 1,120,000 $ 5,435,196

See Note 11 to the financial statements for information on the reserve study and internal updates.

SUN CITY ORO VALLEY COMMUNITY ASSOCIATION, INC.SUPPLEMENTARY INFORMATION ON ASSET REPLACEMENTS (UNAUDITED)


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2019 2018 2017 2016 2015

Current assets:Cash and cash equivalents $ 4,609,431 $ 4,745,856 $ 3,682,983 $ 3,842,068 $ 2,715,955 Certificates of deposit held at banks - - 252,617 251,988 251,360 Short-term investments 1,200,403 2,636,672 4,617,942 3,360,960 3,817,074 Interest receivable 26,199 14,197 271 159 1,349 Accounts receivable 44,488 31,664 12,399 16,511 8,420 Inventories 84,108 50,615 49,967 42,993 41,870 Prepaid expenses and other assets 163,028 188,765 187,579 110,796 134,705

Total current assets 6,127,657 7,667,769 8,803,758 7,625,475 6,970,733

Non-current assets:Long-term investments 5,678,372 2,155,120 234,375 583,366 577,157 Common property 13,373,317 14,273,900 14,710,396 15,222,508 15,107,322

Total non-current assets 19,051,689 16,429,020 14,944,771 15,805,874 15,684,479

$ 25,179,346 $ 24,096,789 $ 23,748,529 $ 23,431,349 $ 22,655,212

Current liabilities:Accounts payable $ 96,335 $ 143,682 $ 62,150 $ 340,315 $ 125,233 Accrued payroll and related expenses 292,306 217,512 187,115 180,623 171,822 Deferred income 4,176,270 3,836,539 3,905,314 3,624,676 3,278,574 Other accrued expenses 56,954 30,222 26,214 41,663 35,487

Total liabilities 4,621,865 4,227,955 4,180,793 4,187,277 3,611,116

Fund balanceOperations 413,386 123,999 100,318 112,989 170,083 Investment in common property 13,373,317 14,273,900 14,710,396 15,222,508 15,107,322 Asset reserves and capital funds 6,416,387 5,120,297 4,432,336 3,568,538 3,405,851 Contingency fund 236,475 265,264 258,550 308,422 305,286 Wash fund 74,830 48,394 27,194 2,191 3,674 Community assistance committee fund 10,018 6,561 7,258 7,251 11,268 Friends of the library fund 33,068 30,419 31,684 22,173 40,612

20,557,481 19,868,834 19,567,736 19,244,072 19,044,096

$ 25,179,346 $ 24,096,789 $ 23,748,529 $ 23,431,349 $ 22,655,212

JUNE 30, 2019, 2018, 2017, 2016 AND 2015BALANCE SHEET - FIVE YEAR COMPARISON

SUN CITY ORO VALLEY COMMUNITY ASSOCIATION, INC.

LIABILITIES AND FUND BALANCE

ASSETS

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2019 2018 2017 2016 2015

Revenues and gains:Membership fees $ 4,640,120 $ 4,453,520 $ 4,192,280 $ 4,030,560 $ 4,030,560 Capital contribution fee 456,867 504,450 502,410 304,924 296,300 Golf revenues 1,749,994 1,438,079 1,249,707 1,194,765 1,278,522 Donations 5,998 1,299 22,141 34,009 17,963 Restaurant 1,212,983 921,448 920,478 763,119 654,450 Activities 170,926 174,219 158,972 155,229 169,481 Advertising revenue 158,456 145,759 141,650 152,624 130,906 Investment income 245,006 86,633 25,027 16,262 697 Other income 138,833 145,518 149,767 129,421 129,757 Lease revenue 37,304 37,892 36,579 28,138 33,168 (Losses) gains on disposal of common property (29,390) (5,553) (2,083) 795 (15,292)

Total revenues 8,787,097 7,903,264 7,396,928 6,809,846 6,726,512

Expenses:Program:

Activities 668,720 629,885 589,309 573,948 575,375 Maintenance 814,684 806,675 732,142 684,741 743,542 Golf course 1,262,689 1,332,629 1,335,620 1,319,694 1,312,098 Pro shop 670,553 518,792 313,578 286,325 298,710 Restaurant 1,537,110 1,153,403 1,098,884 923,105 747,021 Common area maintenance 485,274 503,568 486,737 470,181 465,761 Depreciation 1,327,122 1,385,957 1,312,083 1,238,874 1,206,879 Other 74,359 42,872 30,414 44,529 51,529

Administration 1,257,939 1,228,385 1,174,497 1,068,473 1,056,011

Total expenses 8,098,450 7,602,166 7,073,264 6,609,870 6,456,926 Excess of revenues over expenses 688,647 301,098 323,664 199,976 269,586

Fund balance, beginning of year 19,868,834 19,567,736 19,244,072 19,044,096 18,774,510

Fund balance, end of year $ 20,557,481 $ 19,868,834 $ 19,567,736 $ 19,244,072 $ 19,044,096

SUN CITY ORO VALLEY COMMUNITY ASSOCIATION, INC.SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCE - FIVE YEAR COMPARISON

YEARS ENDED JUNE 30, 2019, 2018, 2017, 2016 AND 2015

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2019 2018 2017 2016 2015Cash flows from operating activities:

Changes in fund balances $ 688,647 $ 301,098 $ 323,664 $ 199,976 $ 269,586 Adjustments to reconcile changes in fund balances

to net cash from operating activities:Depreciation expense 1,327,122 1,385,957 1,312,083 1,238,874 1,206,879 Unrealized (gains) losses on investments (61,415) 525 12,009 9,905 18,777 (Gains) losses on disposal of common property 29,390 5,553 2,083 (795) 15,292

(Increase) decrease in operating assets:Interest receivable (12,002) (13,926) (113) 1,191 1,860 Accounts receivable (12,824) (19,265) 3,858 (9,016) 11,718 Inventories (33,493) (648) (6,974) (1,123) 9,468 Prepaid expenses and other assets 25,737 (1,186) (76,782) 23,908 (18,945)

Increase (decrease) in operating liabilities:Accounts payable (47,347) 81,532 (278,165) 215,082 2,905 Accrued payroll and related expenses 74,794 30,397 6,492 8,801 17,785 Deferred income 339,731 (68,775) 280,638 346,102 (495,392) Other accrued expenses 26,732 4,008 (15,449) 6,176 (5,776)

Less capital contribution fees (456,867) (504,450) (502,410) (304,924) (296,300)

Net cash provided by operating activities 1,888,205 1,200,820 1,060,934 1,734,157 737,857

Cash flows from investing activities:Purchases of common property (465,206) (957,405) (802,454) (1,354,060) (1,275,261) Proceeds from sale of assets 9,278 2,391 400 795 2,070 Purchases of investments (8,265,569) (6,715,000) (6,440,000) (6,200,000) (6,010,000) Sales and maturities of investments 6,240,000 6,775,000 5,520,000 6,640,000 6,567,000 Proceeds from maturity of certificates of deposit - 252,617 251,988 251,360 250,734

held at banksPurchases of certificates of deposit held at banks - - (252,617) (251,988) (251,360)

Net cash (used in) investing activities (2,481,497) (642,397) (1,722,683) (913,893) (716,817)

Cash flows from financing activities:Capital contribution fees 456,867 504,450 502,410 304,924 296,300 Payments received for special assessment - - 254 925 6,681

Net cash provided by financing activities 456,867 504,450 502,664 305,849 302,981

Change in cash and cash equivalents (136,425) 1,062,873 (159,085) 1,126,113 324,021 Cash and cash equivalents at beginning of year 4,745,856 3,682,983 3,842,068 2,715,955 2,391,934 Cash and cash equivalents at end of year $ 4,609,431 $ 4,745,856 $ 3,682,983 $ 3,842,068 $ 2,715,955

SUN CITY ORO VALLEY COMMUNITY ASSOCIATION, INC.SCHEDULES OF CASH FLOWS - FIVE YEAR COMPARISONYEARS ENDED JUNE 30, 2019, 2018, 2017, 2016 AND 2015

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