HomeMy WebLinkAboutFY23 ACFRTown of Fountain Hills, Arizona
Annual Comprehensive
Financial Report
For the Fiscal Year Ended June 30, 2023
TOWN OF FOUNTAIN HILLS, ARIZONA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
Issued by:
Administration Department
Finance Division
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
INTRODUCTORY SECTION Page
Letter of Transmittal 1
List of Elected and Appointed Officials 11
GFOA Certificate of Achievement 12
Organizational Chart 13
FINANCIAL SECTION
INDEPENDENT AUDITOR’S REPORT 17
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) 23
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements:
Statement of Net Position 36
Statement of Activities 37
Fund Financial Statements:
Balance Sheet – Governmental Funds 40
Reconciliation of the Balance Sheet –
Governmental Funds to the Statement of Net Position 43
Statement of Revenues, Expenditures and Changes in Fund Balances –
Governmental Funds 44
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances – Governmental Funds to the
Statement of Activities 46
Statement of Net Position – Proprietary Fund 47
Statement of Revenues, Expenses, and Changes in Net Position –
Proprietary Fund 48
Statement of Cash Flows – Proprietary Fund 49
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
FINANCIAL SECTION – continued Page
Notes to Financial Statements 50
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Revenues, Expenditures and Changes in Fund Balances –
Budget and Actual:
General Fund 72
Highway User Revenue Fund 73
Grants Fund 74
Note to Required Supplementary Information 75
COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND
SCHEDULES
Governmental Funds:
Combining Balance Sheet – All Non-Major Governmental Funds –
By Fund Type 78
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances – All Non-Major Governmental Funds – By Fund Type 80
Special Revenue Funds:
Combining Balance Sheet 84
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances 86
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual 88
Debt Service Funds:
Combining Balance Sheet 94
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances 96
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
FINANCIAL SECTION – continued Page
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual 98
Capital Projects Fund:
Combining Balance Sheet 101
Combining Statement of Revenues, Expenditures and Changes in 102
Fund Balances
Combining Schedule of Revenues, Expenditures and Changes in
Fund Balances – Budget and Actual 104
STATISTICAL SECTION
Financial Trends:
Net Position by Component 108
Changes in Net Position 110
Fund Balances – Governmental Funds 112
Statement of Revenues, Expenditures and Changes in
Fund Balances – Governmental Funds 114
Revenue Capacity:
Governmental Activities – Tax Revenues by Source 116
Assessed Value and Estimated Actual Value of Taxable Property 117
Principal Property Taxpayers 118
Property Tax Levies and Collections 119
Taxable Sales by Category 120
Direct and Overlapping Sales Tax Rates 122
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
STATISTICAL SECTION – continued Page
Debt Capacity:
Ratios of Outstanding Debt by Type 123
Ratios of General Bonded Debt Outstanding 124
Direct and Overlapping Governmental Activities Debt 125
Legal Debt Margin Information 126
Calculation of Legal Debt Margin 128
Revenue Bond Coverage 129
Demographic and Economic Information:
Demographic and Economic Statistics 130
Principal Employers 131
Operating Information:
Authorized Full-Time Equivalent Government Employees by Function 132
Operating Indicators by Function 133
Capital Assets Statistics by Function 134
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INTRODUCTORY SECTION
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www.fountainhillsaz.gov
November 8, 2023
To the Honorable Mayor, Members of the Town Council, and Citizens of the Town of Fountain
Hills:
State law requires that all general-purpose local governments publish, within six months of the
close of each fiscal year, a complete set of financial statements presented in conformity with
accounting principles generally accepted in the United States of America and audited in
accordance with auditing standards generally accepted in the United States by a certified public
accounting firm licensed in the State of Arizona. Pursuant to that requirement, we hereby issue the
Annual Comprehensive Financial Report (ACFR) of the Town of Fountain Hills (Town) for the
fiscal year ended June 30, 2023.
This report consists of management’s representations concerning the finances of the Town.
Consequently, management assumes full responsibility for the completeness and reliability of all
of the information presented in this report. To provide a reasonable basis for making these
representations, management of the Town has established a comprehensive internal control
framework that is designed both to protect the government’s assets from loss, theft, or misuse and
to compile sufficient reliable information for the preparation of the Town of Fountain Hills’s
financial statements in conformity with accounting principles generally accepted in the United
States of America. Because the cost of internal controls should not outweigh their benefits, the
Town’s comprehensive framework of internal controls has been designed to provide reasonable
rather than absolute assurance that the financial statements will be free of material misstatement.
As management, we assert that, to the best of our knowledge and belief, this financial report is
complete and reliable in all material respects.
The Town’s financial statements have been audited by Heinfeld, Meech & Co., P.C., a certified
public accounting firm. The goal of the independent audit was to provide reasonable assurance
that the financial statements of the Town for the fiscal year ended June 30, 2023, are free of
material misstatement. The independent audit involved examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements; assessing the accounting
principles used and significant estimates made by management; and evaluating the overall
financial statement presentation. The independent auditors concluded, based upon the audit, that
there was a reasonable basis for rendering an unmodified opinion that the Town’s financial
statements for the fiscal year ended June 30, 2023, are fairly presented in conformity with
accounting principles generally accepted in the United States of America. The independent
auditor’s report is presented as the first component of the financial section of this report.
TOWN OF FOUNTAIN HILLS
16705 E. Avenue of the Fountains, Fountain Hills, AZ 85268
480.816.5100 | Fax: 480.837.3145
Page 1
Accounting principles generally accepted in the Unites States of America require that management
provide a narrative introduction, overview, and analysis to accompany the basic financial
statements in the form of Management’s Discussion and Analysis (MD&A). This letter of
transmittal is designed to complement the MD&A and should be read in conjunction with it. The
Town of Fountain Hills’s MD&A can be found immediately following the report of the
independent auditors.
PROFILE OF THE GOVERNMENT
The Town of Fountain Hills overlooks the Verde River Valley and the east valley of the metro
Phoenix area. The Town is a master planned community established in 1970 by McCulloch
Properties (now MCO Properties, Inc.). Prior to 1970, the area was a cattle ranch and was part of
one of the largest land and cattle holdings in Arizona. The land was purchased by Robert
McCulloch in the late 1960s and the community designed by Charles Wood, Jr. (designer of
Disneyland in southern California). The centerpiece of Fountain Hills is one of the world's tallest
man-made fountains, a focal point that attracts thousands of visitors each year.
Located on 13,006 acres of land, Fountain Hills is surrounded by the McDowell Mountains and
Scottsdale on the west, the Fort McDowell Yavapai Nation on the east, the Salt River Pima-
Maricopa Indian Community on the south, and by the McDowell Mountain Regional Park on the
north. The elevation is 1,520 feet at the fountain, 2,460 feet at the Adero Canyon Trailhead, and is
approximately 500 feet above Phoenix.
Over the past thirty years, Fountain Hills has grown from 10,030 residents to a town of 23,785
in 2023. On June 5, 2006, the Town of Fountain Hills became twenty square miles and about
ten percent larger by annexing 1,300 acres of State Trust Land. The process to annex the State
Trust Land occurred over a two and one-half year period, and development of the land will occur
in the years to come. Annexing this property into the Town ensures that its future development
will be of the highest quality under Town standards.
The Town offers a wide range
of living accommodations,
from small condominium
complexes to large custom
homes. Fountain Hills also
offers recreational and cultural
programs and services that
contribute to a high quality of
life for its residents. The
community consists of
primarily residential property
and open space; of the total
20.32 square miles of land,
only 2.5% of the total is zoned
commercial and/or industrial, 23.3% is preserved as open space and 51.0% is residential.
Page 2
The Town’s Mission Statement
The Town of Fountain Hills’ purpose is to serve the best interests of the community by:
providing for the safety and well-being of its residents and visitors;
respecting its special, small-town character and quality of life;
providing superior public services;
sustaining the public trust through open and responsive government;
and maintaining the stewardship and preservation of its financial and natural resources.
To serve, respect, and provide trust and stewardship.
The Town of Fountain Hills is an Arizona municipal corporation, acting as a general law town as
prescribed in the Arizona Revised Statutes. The Town was incorporated on December 5, 1989,
with the governmental and administrative affairs of the Town operating under the Council-
Manager form of government. Legislative authority is vested in a seven member Town Council.
The Mayor is a member of the Town Council who is directly elected by voters and chairs the Town
Council meetings. The members of the Council are elected at large and serve four year overlapping
terms. The Town Council is responsible for the adoption of local ordinances, budget adoption,
appointment of residents to citizen advisory committees and hiring the Town Manager. The Town
Manager is responsible for implementation of the policies of the Town Council and overall
management of the Town through department directors and approximately 68 full-time equivalent
(FTE) employees. The Presiding Judge, Town Attorney, and Town Prosecutor are under the
direction of the Town Council.
The Town provides or administers a full
range of services including public safety
(law enforcement, fire and emergency
medical services); development services
(code enforcement, planning and zoning);
public works (including construction and
maintenance of streets and infrastructure);
municipal court; recreational activities;
community center; senior services and
cultural events. The Town does not
maintain utility or other operations that
require the establishment of enterprise
funds.
Fountain Hills Town Hall
Page 3
The financial reporting entity (the Town) includes all the funds of the primary government (i.e., the
Town of Fountain Hills as legally defined) as well as all of its component units. The component units
consist of legally separate entities for which the primary government is financially accountable.
Blended component units, although legally separate entities, are, in substance, part of the primary
government’s operations and are included as part of the primary government. Accordingly, the
Cottonwoods Maintenance District, the Eagle Mountain Community Facilities District and the
Fountain Hills Municipal Property Corporation are included in the financial report of the Town.
FACTORS AFFECTING FINANCIAL CONDITION
The information presented in the financial statements is perhaps best understood when it is considered
from the broader perspective of the specific environment within which the Town of Fountain Hills
operates.
Internal Controls
As earlier noted, the management of the Town of Fountain Hills, Arizona, is responsible for
establishing and maintaining a system of internal control. Internal accounting controls are designed to
provide reasonable, but not absolute, assurance regarding;
1) Safeguarding of assets against loss from unauthorized use or deposition, and
2) Reliability of financial records for preparing financial statements and maintaining
accountability for assets.
The concept of reasonable assurance recognizes:
1) The cost of a control should not exceed the benefits likely to be derived, and
2) The valuation of costs and benefits requires estimates and judgments by management.
The system of internal control is subject to periodic evaluation by management and is also considered
by the independent auditors in connection with the annual audit of the Town’s financial statements. All
internal control evaluations occur within the above framework. The Town's internal accounting
controls are considered to adequately safeguard assets and provide reasonable assurance of proper
recording of financial transactions.
Budgetary Controls
The budget process is a cyclical process and begins each year with the preparation of the base budget
by each department head. Each budget is based on expenditures to date and the previous years’
experience. The departments’ base budgets, along with any requests for new positions, programs or
services are reviewed by the Town Manager. The Town Manager then meets with department heads to
review their base budgets and requests for new services and/or programs. Once management has
reviewed the departments’ requests, a tentative budget is presented to the Town Council by the Town
Manager.
Page 4
The Town Council formally adopts the budget and appropriates funding for the General Fund, Special
Revenue Funds, Debt Service Funds, Internal Service Funds, Capital Projects Funds, and Proprietary
Fund. Therefore, these funds have appropriated budgets, and budget to actual information is presented.
In April/May, the Town Manager submits to the Town Council a proposed budget for the fiscal year
commencing on July 1st. The budget includes proposed expenditures and the means of financing them.
The Town Council is then required to hold public hearings on the proposed budget and to adopt a final
budget by June 30, the close of the Town of Fountain Hills’ fiscal year. Public hearings on the budget
are held each year in accordance with legal requirements in order to obtain comments from local
residents. The budget is legally enacted through passage of a resolution and is prepared by fund and
department. The resolution sets the limit for expenditures during the fiscal year. The Town Manager
may authorize transfers between departments; however, all inter-fund transfers are approved by Town
Council. Additional expenditures may be authorized for expenditures directly necessitated by a natural
or man-made disaster as prescribed in the State Constitution, Article IX, Section 20.
The Town is subject to the State of Arizona’s Expenditure Limitation Law for Towns and Cities. This
law does not permit the Town to spend more than budgeted revenues plus the carry-over of unrestricted
cash balance from the prior fiscal year. The limitation is applied to the total of the combined funds. All
appropriations lapse at year-end.
To ensure compliance with the state imposed expenditure limitation, a uniform expenditure report must
be filed with the state’s Auditor General each year. This report reconciles total Town expenditures from
the audited financial statements to total expenditures for reporting in accordance with the state’s
uniform expenditure reporting system (ARS Section 41-1279.07).
The appropriated budget is prepared by fund and department. Department heads may make transfers of
non-personnel appropriations within their department. Transfers of appropriations between
departments require Town Manager approval, and all inter-fund transfers require Town Council
approval. Budget-to-actual comparisons are provided in this report for each individual governmental
fund for which an appropriated annual budget has been adopted. Budget-to-actual comparisons for the
General Fund, Streets Fund, and Grants Fund are presented in the Required Supplementary Information
and all other funds are presented in Combining and Individual Fund Financial Statements and
Schedules.
Local Economy
The Town of Fountain Hills, Arizona, relies
mostly on its Transaction Privilege Tax
(Sales Tax) and Voter-Approved Local
Revenue (State Shared Revenue) collections
to fund nearly 90% of its General Fund
(Operating) expenditures. During the past
fiscal year, the Town’s revenue collections
from these sources exceeded the budgeted
expectations.
Sales tax revenues continued to grow during the fiscal year, and state shared revenues were mostly in
line with expectations, with a slight slowdown in state-wide fuel taxes. With the possibility of a
recession in the coming fiscal year, the Town will be closely monitoring these revenue sources and
make adjustments accordingly.
Page 5
The following chart is a look at the past five years’ local sales tax activity by category:
As shown in the chart, sales tax collections continue to show signs of moderate growth and relative
stability across all categories. Retail sales, the largest category of sales tax revenue, experienced a 7%
increase over the prior year. Restaurant/Bar and Services revenue exceeded pre-pandemic levels with
an increase of 5% and 14%, respectively, compared to FY22. Construction sales tax, a one-time revenue
source, is driven entirely by development activity in the community and increased substantially
compared to the prior year. This was primarily due to the sale of a commercial development that was
subject to speculative builder taxes. The Transportation/Communication/Utility category also
increased slightly during the year.
Construction activity provides revenue to the Town through sales taxes based on the value of the
project, 50% of these proceeds are utilized for general operations and the other 50% for capital
expenditures. Since this funding source is rarely enough to meet capital project needs, the Town must
find additional funds to pay for necessary infrastructure projects.
State-shared revenues are derived as a proportionate share of state sales, income and vehicle license
taxes which are distributed based on the Town’s population compared to all other incorporated cities
and towns in Arizona (currently 0.40%). State shared income tax revenue is based on personal and
corporate earnings from two years ago. Revenue from this category increased by 42.7% in fiscal year
2022-23 due to delayed tax collections from COVID. State shared sales tax has increased over the past
several years, and this year continued the trend by increasing revenue by 4.3% compared to the prior
year.
Other local activity has remained fairly consistent during the period. The opportunity to further expand
the retail tax base in Fountain Hills is limited by the lack of available commercial land – over 70% of
the currently available commercial lots are already developed.
Page 6
Development Activity
Page 7
Economic Outlook
Retail Sales – Not having a property tax, the Town of Fountain Hills relies heavily on transaction
privilege taxes (TPT), sometimes called a sales tax. Overall, Town TPT revenues provide over 61% of
the General Fund revenues. On November 1, 2019 the Town’s TPT rate went up 0.3% to the current
rate of 2.9%. Hospitality-related collections are the most susceptible to changes in economic
conditions. Construction TPT is also highly tied to the health of the economy and is equally divided
between the General Fund and the Capital Projects Fund.
State Shared Revenues – The Town of Fountain Hills receives significant revenue allocations from
the State. These Voter-Approved Local Revenues (VALR), or State shared revenues, include
allocations of the state-collected income tax, sales tax, fuel tax and motor vehicle-in-lieu taxes. All but
the fuel tax and the vehicle license tax are placed in the Town's General Fund, where it is used to sustain
a large portion of the Town's day-to-day activities. Ultimately, each of these revenue sources will be
negatively affected by inflation, as well as the Federal Reserve’s fight against it.
Streets Fund (HURF) – The Town receives a proportionate share of the fuel tax collected in Maricopa
County. These revenues are placed in the Streets Fund to be used specifically for street maintenance
and related activity. Although the state-shared revenue formula generally allocates revenues based on
official census data, in recent years, the state legislature has reduced the formula distribution of state
shared revenues to cities. The resulting loss must be replaced by the General Fund, which increases the
pressure to maintain operations across the Town.
Long-term Financial Planning
Fountain Hills’ Financial Policies are balanced on sound financial reserves and conservative revenue
growth forecasts for the foreseeable future. However, potential for State legislative impacts to revenue-
sharing, reductions in local revenues, and additional demands for essential Town services remain. The
Town’s Financial Policies set forth guidelines against which current budgetary performance can be
measured and proposals for future programs can be evaluated.
The Town’s Financial Policies have helped weather the uncertainty encountered during the pandemic
and the years that have followed. This policy continues to require the Town to retain an amount equal
to 20% of the average actual General Fund revenues for the preceding five fiscal years as part of its
General Fund balance. This amount is estimated to cover approximately 60 days of General Fund
expenditures and is considered a “Rainy Day” fund.
Additionally, a reserve of 20% of the average actual General Fund revenues for the preceding five
fiscal years will be maintained as Unassigned Fund Balance. This additional fund balance reserve will
provide increased flexibility in the event of unanticipated decreases in revenue collection.
The Council also adopted Financial Policies that include guidelines for the issuance of debt for capital
expenditures, community facility districts, financing alternatives, expenditure controls and financial
planning. The policy was amended during FY 09-10 to reduce the allocation of the local construction
sales tax to the Capital Projects Fund from 85% to 50%, reflecting the transition from one-time building
activity to ongoing redevelopment activity. The debt policy was prepared with a preference for “pay-
as-you-go” financing for capital spending. However, the policy does allow for bond financing of larger
projects so that the cost can be equitably distributed among the Town’s current and future residents.
Page 8
In 2020, the Strategic Planning Advisory Commission (SPAC) began the process of gathering public
input to update the Strategic Plan’s vision, confirm residents’ values, and create a fresh structure for
the Strategic Plan revision. However, the pandemic delayed this effort. Subsequently, Strategic Plan
2022 was built upon the foundation of four Strategic Priorities, eleven Signature Strategies, and twenty-
three Supporting Tasks. Based on citizen input, the Strategic Plan is designed to guide our future
decisions grounded on these common priorities:
1. Targeted Collaborative Economic Development
2. Promote the Long-Term Financial Sustainability of Town Infrastructure, Environmental, and
Social Resources
3. Continue to Improve the Public Health, Well-Being, and Safety of Our Town
4. Maintain Current Infrastructure While Preparing the Town for Emerging Trends that Increase
Public Safety and Quality of Life
MAJOR INITIATIVES, SERVICE EFFORTS AND ACCOMPLISHMENTS
The Town of Fountain Hills’ adopted budget for fiscal year 2022-23 reflected a cautious approach to
the continued recovery from the pandemic and increasing inflation. Due to the uncertain economic
conditions ahead, the Town approached revenue projections cautiously and kept expenditure levels low
as well. At the start of FY22, the American Rescue Plan Act (ARPA) provided resources to local
governments through the State of Arizona. These resources allowed the Town to save $4.2M in the
General Fund that would have otherwise been spent to pay for public safety contracts with Maricopa
County Sheriff’s Office and Rural Metro. The same amount was received in FY23 and was used for
the same purpose. This will result in a total of $8.4M of General Fund savings over the two fiscal years.
As Pavement Management has been a priority for many years, Council decided that the General Fund
savings discussed above should be used toward that purpose. As a result, $4.2M was transferred to the
Streets Fund in FY23 and another $4.2M in FY24. Although these infusions will not resolve all of the
pavement issues in Town, it will provide some relief while other options are researched and
implemented.
For the Year
The following list depicts the continued commitment of the Town of Fountain Hills to make the
community a better place to live. Fiscal year 2022-23 goals attained are summarized within this list of
accomplishments:
Community Services awarded the Gold Medal for Excellence in Park and Recreation
Management by the National Recreation and Park Association
Recognized as a Dementia Friendly community, the 10th in Arizona
Continued park improvements at Desert Vista Park, including renovation and expansion of
the skate park and the addition of a pump track
Over 5,400 meals provided through the Home Delivered Meal program
Completed storm drain improvements throughout the Town
Implemented “See, Click, Fix” portal on Town’s website to simplify resident reporting
Secured grant funding from the Arizona Office of Tourism - Proposition 302
Secured grant funding from Salt River Pima-Maricopa Indian Community - Proposition 202
Page 9
AWARDS AND ACKNOWLEDGEMENTS
Awards
The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for
Excellence in Financial Reporting to the Town of Fountain Hills for its Annual Comprehensive
Financial Report (ACFR) for the fiscal year ended June 30, 2022. This was the twenty-seventh
consecutive year that the Town has received this prestigious award. In order to be awarded a Certificate
of Achievement, the Town published an easily readable and efficiently organized ACFR. This report
satisfied both accounting principles generally accepted in the United States of America (GAAP) and
applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current ACFR
continues to meet the Certificate of Achievement program’s requirements, and we will be submitting
it to the GFOA to determine its eligibility for the fiscal year ended 2023 Certificate.
In addition, the government received the GFOA’s Distinguished Budget Presentation Award for its
annual budget for the fiscal year beginning July 1, 2022. In order to qualify for the Distinguished
Budget Presentation Award, the government’s budget document was judged to be proficient in several
categories, including as a policy document, a financial plan, an operations guide, and a communications
device. This is the twentieth consecutive year that the Town has received the award.
Acknowledgments
The preparation of this Annual Comprehensive Financial Report could not have been accomplished
without the efficient and dedicated services of the entire Finance Division. I also wish to extend my
appreciation to the Mayor and members of Town Council for their leadership and support in planning
and conducting the financial affairs of the Town in a responsible and progressive manner. Each
employee of the Town has my sincere appreciation for the contributions made in the preparation of this
report.
Respectfully submitted,
Rachael Goodwin
Town Manager
Page 10
TOWN OF FOUNTAIN HILLS, ARIZONA
LIST OF PRINCIPAL OFFICIALS
JUNE 30, 2023
ELECTED OFFICIALS
Ginny Dickey, Mayor
Peggy McMahon, Vice-Mayor
Gerry Friedel, Councilmember
Sharron Grzybowski, Councilmember
Brenda Kalivianakis, Councilmember
Allen Skillicorn, Councilmember
Hannah Toth, Councilmember
TOWN MANAGER & DIRECTORS
Rachael Goodwin, Interim Town Manager
David Trimble, Deputy Town Manager/Administrative Services Director
Linda Mendenhall, Town Clerk
Kevin Snipes, Interim Community Services Director
John Wesley, Development Services Director
Amanda Jacobs, Economic Development Director
David Pock, Chief Financial Officer
Justin Weldy, Public Works Director
Aaron Arnson, Pierce Coleman PLLC, Town Attorney
Mark Iacovino, The Law Office of Mark Iacovino, Town Prosecutor
Captain Larry Kratzer, Maricopa County Sheriff’s Office, District Commander
Robert Melton, Presiding Judge
Captain Dave Ott, Rural Metro Corporation, Fire Chief
Page 11
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
Town of Fountain Hills
Arizona
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2022
Executive Director/CEO
Page 12
Citizens of Fountain HillsCitizens of Fountain Hills
Presiding Judge
Town of Fountain Hills Organization
Fire / EMS AdministrationAdministration Law
Enforcement
Town Manager Town AttorneyTown Prosecutor
Appointed
by Council
Contracted
Mayor and Town CouncilMayor and Town Council
Development
Services
Recreation
Community
Services
Community
Center
Code
Enforcement
Building Safety
Senior
Services
Parks
Volunteer
Program
GIS
Planning
Engineering
Streets
Facilities
Public Works
Inspection
Finance Finance
Town ClerkTown Clerk
Administrative
Services
Administrative
Services
Economic
Development /
Tourism
Economic
Development /
Tourism
Community
Relations
Community
Relations
Page 13
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FINANCIAL SECTION
Page 15
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Page 16
Independent Auditor’s Report
Honorable Mayor and Members of the Town Council
Town of Fountain Hills, Arizona
Report on Audit of Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, each major
fund, and the aggregate remaining fund information of Town of Fountain Hills, Arizona (Town), as of
and for the year ended June 30, 2023, and the related notes to the financial statements, which
collectively comprise the Town’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, each major fund, and the aggregate
remaining fund information of the Town of Fountain Hills, Arizona, as of June 30, 2023, and the
respective changes in financial position and, where applicable, cash flows thereof for the year then
ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
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. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements
section of our report. We are required to be independent of Town of Fountain Hills, Arizona, and to meet
our other ethical responsibilities in accordance with the relevant ethical requirements relating to our
audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Change in Accounting Principle
As described in Note 1, the Town implemented the provisions of the GASB Statement No. 96,
Subscription-Based Information Technology Arrangements, for the year ended June 30, 2023, which
represents a change in accounting principle. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United States of America, and for the
design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Page 17
In preparing the financial statements, management is required to evaluate whether there are conditions
or events, considered in the aggregate, that raise substantial doubt about the Town’s ability to continue
as a going concern for one year beyond the financial statement date, including any currently known
information that may raise substantial doubt shortly thereafter.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor's report that
includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance
and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing
standards and Government Auditing Standards will always detect a material misstatement when it
exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control. Misstatements are considered material if there is a substantial
likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable
user based on the financial statements. In performing an audit in accordance with generally accepted
auditing standards and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, and design and perform audit procedures responsive to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements.
Obtain an understanding of internal control relevant to the audit 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 Town’s internal control. Accordingly, no such opinion is
expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,
that raise substantial doubt about the Town’s ability to continue as a going concern for a
reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit, significant audit findings, and certain internal control related
matters that we identified during the audit.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management’s Discussion and Analysis, and budgetary comparison information, as listed in the table
of contents, be presented to supplement the basic financial statements. Such information is the
responsibility of management and, 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
Page 18
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.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Town’s basic financial statements. The Combining and Individual Fund
Financial Statements and Schedules are presented for purposes of additional analysis and are not a
required part of the basic 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 basic financial statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and certain additional procedures, including
comparing and reconciling such information directly to the underlying accounting and other records
used to prepare the basic financial statements or to the basic financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the Combining and Individual Fund Financial Statements and Schedules
information is fairly stated in all material respects in relation to the basic financial statements as a
whole.
Other Information
Management is responsible for the other information included in the annual report. The other
information comprises the Introductory Section and Statistical Section but does not include the basic
financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do
not cover the other information and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other
information and consider whether a material inconsistency exists between the other information and
the basic financial statements, or the other information otherwise appears to be materially misstated.
If, based on other work performed, we conclude that an uncorrected material misstatement of the other
information exists, we are required to describe it in our report.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
November 8, 2023, on our consideration of Town of Fountain Hills, Arizona’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 Town of Fountain Hills, Arizona’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 Town of Fountain Hills,
Arizona’s internal control over financial reporting and compliance.
Heinfeld, Meech & Co., P.C.
Scottsdale, Arizona
November 8, 2023
Page 19
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Page 20
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
(Required Supplementary Information)
Page 21
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Page 22
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2023
As management of the Town of Fountain Hills, Arizona (Town), we offer readers of the Town’s
financial statements this narrative overview and analysis of the financial activities of the Town
for the fiscal year ended June 30, 2023. This discussion and analysis is intended to be an easily
readable breakdown of the Town of Fountain Hills’ financial activities based on currently known
facts, decisions and conditions. This analysis will focus on current year activities and operations
and should be read in combination with the transmittal letter and the financial statements that
follow. The management’s discussion and analysis is presented as required supplementary
information to supplement the basic financial statements.
FINANCIAL HIGHLIGHTS
The Town’s total net position of governmental activities increased $9.3 million to $143.4
million, representing a 6.9 percent increase of the total net position.
General revenues from governmental activities accounted for $31.5 million in revenue, or 77
percent of all revenues from governmental activities. Program specific revenues in the form
of charges for services and grants and contributions accounted for $9.4 million or 23 percent
of total governmental activities revenues.
The Town had $31.6 million in expenses related to governmental activities, an increase of
10.2 percent from the prior fiscal year, primarily due to increased costs associated with public
works and construction services.
Among the major governmental funds, the General Fund had $28.3 million in current fiscal
year revenues, which consisted primarily of transaction privilege (sales) tax and
intergovernmental revenues. The total expenditures of the General Fund were $15.5 million.
The General Fund’s fund balance increased $2.9 million to $17.4 million at the end of the
current fiscal year.
OVERVIEW OF FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the Town’s basic financial
statements. The Town’s basic financial statements comprise three components: 1) government-
wide financial statements, 2) fund financial statements, and 3) notes to the financial statements.
This report also contains other supplementary information in addition to the basic financial
statements themselves.
Page 23
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2023
OVERVIEW OF FINANCIAL STATEMENTS – continued
Government-wide financial statements. The government-wide financial statements provide
readers with a broad overview of the Town’s finances, in a manner similar to a private-sector
business. These statements are prepared using the accrual basis of accounting.
The Statement of Net Position presents information on all of the Town’s assets, liabilities, and
deferred inflows/outflows of resources with the difference reported as net position. Over time,
increases or decreases in net position may serve as a useful indicator of whether the financial
position of the Town is improving or deteriorating.
The Statement of Activities presents information showing how the Town’s net position changed
during the most recent fiscal year. All changes in net position are reported as soon as the underlying
event giving rise to the change occurs, regardless of the timing of related cash flows. Thus,
revenues and expenses are reported in this statement for some items that will only result in cash
flows in future fiscal periods (e.g., earned but unused compensated absences).
The government-wide financial statements distinguish functions of the Town that are principally
supported by taxes and intergovernmental revenues (governmental activities). The governmental
activities of the Town include administration, development services, public safety, public works,
and culture and recreation.
Fund financial statements. A fund is a grouping of related accounts that is used to maintain
control over resources that have been segregated for specific activities or objectives. The Town
uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements. All Town funds are included in the governmental fund classification, except for one
internal service fund that is classified as a proprietary fund.
Governmental funds. Governmental funds are used to account for essentially the same
functions reported as governmental activities in the government-wide financial statements.
However, unlike the government-wide financial statements, governmental fund financial
statements use the modified accrual basis of accounting and focus on near-term inflows of
spendable resources, as well as on balances of spendable resources available at the end of the
fiscal year. Such information may be useful in evaluating the Town’s near-term financing
requirements.
Internal service fund. This type of fund is classified as a proprietary fund, and it is used to
report activity in the Technology Replacement Fund. The fund provides goods and services to
other funds and departments on a cost-reimbursement basis. The activity is intended to operate
on an essentially “break-even” basis over time.
Page 24
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2023
OVERVIEW OF FINANCIAL STATEMENTS – continued
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements.
By doing so, readers may better understand the long-term impact of the Town’s near-term
financing decision. Both the governmental fund balance sheet and the governmental fund
statement of revenues, expenditures and changes in fund balances provide a reconciliation to
facilitate this comparison between governmental funds and governmental activities.
Information is presented separately in the governmental fund balance sheet and in the
governmental fund statement of revenues, expenditures and changes in fund balances for the
General, Highway User Revenue (HURF), Grants, and Capital Projects Funds, all of which are
considered major funds. Data from other governmental funds are combined into a single,
aggregated presentation. Individual fund data for each of these non-major governmental funds is
provided in the form of combining statements and schedules.
Notes to the financial statements. The notes provide additional information that is essential to a
full understanding of the data provided in the government-wide and fund financial statements. The
notes to the financial statements can be found immediately following the basic financial
statements.
Other information. In addition to the basic financial statements and accompanying notes, this
report also presents certain required supplementary information concerning the Town’s budget
process. The Town adopts an annual budget for all funds. A schedule of revenues, expenditures
and changes in fund balances - budget and actual has been provided for the major funds as required
supplementary information.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
While this document contains information about the funds used by the Town to provide services
to its citizens, the Statement of Net Position and the Statement of Activities serve to provide an
answer to the question of how the Town, as a whole, did financially throughout the year. These
statements include all assets and liabilities using the accrual basis of accounting, similar to the
accounting used by the private sector. The basis for this accounting takes into account all of the
current year’s revenues and expenses regardless of when the cash is received or paid.
These two statements report the Town’s assets and the changes in those assets. The change in
assets is important because it tells the reader whether the financial position of the Town as a whole
has improved or diminished. However, in evaluating the overall position of the Town, non-
financial information such as changes in the Town’s tax base and the condition of the Town’s
capital assets will also need to be evaluated.
Page 25
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2023
GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued
Analysis of Net Position. Over time, net position may serve as a useful indicator of a government’s
financial position. In the case of the Town, assets related to governmental activities exceeded
liabilities by $134.4 million at the end of the fiscal year.
The largest portion of the Town’s governmental activities net position reflects its investment in
capital assets (e.g., land, infrastructure, buildings and improvements, vehicles, machinery and
equipment and construction in progress); less any related outstanding debt used to acquire those
assets. The Town uses these capital assets to provide services to its citizens; consequently, these
assets are not available for future spending. Although the Town’s investment in its capital assets
is reported net of related outstanding debt, it should be noted that the resources needed to repay
this debt must be provided from other sources, since the capital assets themselves cannot be used
to liquidate these liabilities. As the Town does not currently have any outstanding debt, the
reported amount represents the total invested in capital assets. In addition, a portion of the Town’s
net position represents resources that are subject to external restrictions on how they may be used.
The remaining balance is unrestricted and may be used to meet the Town’s ongoing obligations to
its citizens and creditors.
The following tables present a summary of the Town’s net position for the fiscal years ended
June 30, 2023 and June 30, 2022.
Governmental Activities
As of As of
June 30, 2023 June 30, 2022
Current and other assets $ 46,708,494 $ 37,056,421
Capital assets, net 101,838,463 102,346,737
Total assets 148,546,957 139,403,158
Current and other liabilities 3,087,313 2,873,943
Long-term liabilities 284,016 297,878
Total liabilities 3,371,329 3,171,821
Deferred outflows 1,734,697 2,124,397
Net position
Net investment in capital assets 102,346,737
Restricted 5,749,726
Unrestricted
101,838,463
9,646,597
31,955,871 26,010,477
Total net position $ 143,440,931 $ 134,106,940
At the end of the current fiscal year the Town reported positive balances in all three categories of
net position for governmental activities. The Town also reported positive balances in all net
position categories in the prior fiscal year.
Page 26
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2023
GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued
The Town’s financial position is the product of several financial transactions including the net
results of activities, the acquisition and payment of debt, the acquisition and disposal of capital
assets, and the depreciation of capital assets.
Changes in net position. The Town’s total revenues for the current fiscal year were $40.9 million.
The total cost of all programs and services was $31.6 million. The following table presents a
summary of the changes in net position for the fiscal years ended June 30, 2023 and June 30, 2022.
Governmental Activities
Fiscal
Year Ended
June 30, 2023
Fiscal
Year Ended
June 30, 2022
Revenues
Program revenues:
Charges for services $ 2,415,721 $ 2,830,516
Operating grants and contributions 6,729,883 6,381,580
Capital grants and contributions 259,266 161,751
General revenues
Property taxes 9,854 9,728
Sales taxes 20,586,294 17,660,758
Franchise taxes 382,948 399,007
State-shared revenue 8,039,448 6,541,023
Vehicle License taxes 1,182,243 1,180,100
Investment earnings 1,099,525 (419,006)
Miscellaneous 226,049 280,140
Total revenues $40,931,231 $ 35,025,597
Expenses
General government $ 4,890,912 $ 4,333,863
Development services 1,206,991 1,068,260
Public safety 9,930,356 9,487,150
Public works 10,792,078 9,780,920
Culture and recreation 4,776,903 3,999,178
Total expenses 31,597,240 28,669,371
Changes in net position 9,333,991 6,356,226
Net position, beginning 134,106,940 127,750,714
Net position, ending $143,440,931 $134,106,940
Page 27
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2023
GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued
The charts below compare the governmental expenses from fiscal years 2022-23 and 2021-22.
Page 28
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2023
GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued
The following items are significant current year transactions that have had an impact on the change
of net position.
Revenues from sales tax collections and state-shared sources increased substantially for the
fiscal year and accounted for approximately $4.7 million more than the prior fiscal year.
The Town received its final American Rescue Plan Act (ARPA) payment during the fiscal
year, which will result in a significant decrease of federal intergovernmental funding in
fiscal year 2024.
Expenditures were up 10.2 percent across all governmental functions, with the highest
percentage increase seen within the Culture and Recreation function. Multiple park
improvements were completed during the fiscal year to increase accessibility and
functionality of the Town’s parks.
Investment income reversed from negative mark-to-market returns reported in the prior
fiscal year to over $1.1 million earned in the current fiscal year. As investments matured,
the Town benefited from higher bond yields with durations from one to three years.
The following table presents the cost of the Town’s major functional activities. The table also
shows each function’s net cost (total cost less charges for services generated by the activities and
intergovernmental aid provided for specific programs). The net cost shows the financial burden
that was placed on the Town by each of these functions.
Year Ended June 30, 2023 Year Ended June 30, 2022
Total
Expenses
Net (Expense)/
Revenue
Total
Expenses
Net (Expense)/
Revenue
Governmental Activities
General government $ 4,890,912 $ (3,751,754) $ 4,333,863 $ (3,617,651)
Development services 1,206,991 (444,062) 1,068,260 (120,829)
Public safety 9,930,356 (5,523,668) 9,487,150 (5,137,429)
Public works 10,792,078 (8,504,075) 9,780,920 (7,243,437)
Culture and recreation 4,776,903 (3,968,811) 3,999,178 (3,176,178)
Total expenses $ 31,597,240 $ (22,192,370) $ 28,669,371 $ (19,295,524)
The cost of all governmental activities this year was $31.6 million.
Federal, State, county, and tribal governments and charges for services subsidized certain
governmental programs with revenues of $9.4 million.
The net cost of the Town’s governmental activities was $22.2 million, which was funded
primarily by general revenues. General revenues consist of $20.6 million in sales taxes and
$9.2 million in State-shared revenues.
Page 29
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2023
FINANCIAL ANALYSIS OF THE TOWN’S FUNDS
As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with
finance-related legal requirements.
Governmental funds. The focus of the Town’s governmental funds is to provide information on
near-term inflows, outflows, and balances of spendable resources. Such information is useful in
assessing the Town’s financing requirements. In particular, unassigned fund balance may serve as
a useful measure of the Town’s net resources available for spending at the end of the fiscal year.
The financial performance of the Town as a whole is reflected in its governmental funds. As the
Town completed the year, its governmental funds reported an increase of $9.6 million in the
combined fund balance from $32.2 million to $41.8 million.
The General Fund comprises 41.6 percent of the total fund balance. Approximately $11.6 million,
or 67.0 percent, of the General Fund’s fund balance is unassigned.
The General Fund is the principal operating fund of the Town. The fund balance increased by $2.9
million to $17.4 million as of fiscal year end. General Fund revenues increased $3.6 million
primarily due to increased local sales tax collections. General Fund expenditures increased slightly
from $13.9 million to $15.5 million.
The Highway User Revenue Fund comprises 17.5 percent of total fund balance. The fund balance
increased $3.4 million from the prior year and will continue to be used to fund the pavement
management program in the next fiscal year.
The Capital Projects Fund comprises 29.8 percent of the total fund balance. All of the fund balance
is committed or assigned to capital projects. The fund balance increased $2.5 million due to a year-
end transfer from the General Fund and unfinished projects that will be carried-over to FY24.
The Grants Fund was utilized during the year primarily to account for the American Rescue Plan
Act (ARPA) funding made available by the Department of the Treasury. This is federal funding
was provided to assist state, county, and local governments after the pandemic. The fund balance
increased $106,156 due to earned but unspent miscellaneous grants.
The Technology Replacement Fund is the Town’s sole proprietary fund. Unrestricted net position
of this fund at the end of the fiscal year amounted to $160,181. This was an increase of $41,453
that was due to internal charges to other governmental funds.
Page 30
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2023
BUDGETARY HIGHLIGHTS
A majority of the budget transfers for the fiscal year moved budget authority between departments
within the General Fund; however, the final budget for the General Fund did decrease $7.0 million
as a result of budget transfers to the Grants Fund to pay public safety costs using ARPA funding
and to the Streets Fund for pavement maintenance.
A schedule showing the budget amounts compared to the Town’s actual financial activity for the
General Fund is provided in this report as required supplementary information. The significant
variances are summarized as follows:
The favorable variance of $3.3 million in overall revenues is primarily due to increased
local sales tax collections.
The favorable total expenditures variance of $2.5 million is due primarily to lowered
expenditures throughout all departments.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets. As of the end of the current fiscal year, the Town had invested $101.8 million in
capital assets, including buildings, facilities, vehicles, computers, equipment, infrastructure and
artwork. This amount represents a net increase, prior to depreciation, of $4.3 million from the prior
fiscal year. The increase was primarily due to completed capital projects for the storm water system
and park infrastructure. Total depreciation expense for the current fiscal year was $5.0 million.
The following schedule presents a summary of capital asset balances for the fiscal years ended
June 30, 2023 and June 30, 2022.
Governmental Activities
As of
June 30, 2023
As of
June 30, 2022
Capital assets – non-depreciable $ 36,231,449 $ 34,894,320
Capital assets – depreciable, net 65,607,014 67,452,417
Total $101,838,463 $102,346,737
The estimated construction commitments amount is $838,200.
Additional information on the Town’s capital assets can be found in Note 6.
Page 31
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2023
CAPITAL ASSETS AND DEBT ADMINISTRATION – continued
Debt Administration. The Town does not currently have any outstanding debt. Therefore, there
were not any town-wide taxes levied in fiscal year 2023.
State statutes currently limit the amount of general obligation debt a Town may issue to a
percentage of its total assessed valuation for water, sewer, artificial lighting, parks, open space,
recreational facility improvements, public safety, law enforcement, fire and emergency facilities
and street and transportation facilities. The current 20 percent debt limitation for the Town is
$134.1 million. State statutes also currently limit the amount of general obligation debt a Town
may issue to a percentage of its total assessed valuation for all other purposes. The current 6 percent
debt limitation for the Town is $40.2 million.
Additional information on the Town’s long-term debt can be found in Note 7 in the notes to the
financial statements.
CONTACTING THE TOWN’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, investors and
creditors with a general overview of the Town’s finances and to demonstrate the Town’s
accountability for the resources it receives. If you have questions about this report or need
additional information, contact the Finance Division, Town of Fountain Hills, 16705 East Avenue
of the Fountains, Fountain Hills, Arizona 85268 or visit our website at www.fountainhillsaz.gov.
Page 32
BASIC FINANCIAL STATEMENTS
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Page 34
GOVERNMENT-WIDE FINANCIAL STATEMENTS
Page 35
ASSETS
Current assets:
Cash and investments
Accounts receivable
Intergovernmental receivable
Taxes receivable
Leases receivable
Interest receivable
Inventory, at cost
Prepaid items
Total current assets
Noncurrent assets:
Capital assets not being depreciated
Capital assets, net of accumulated depreciation
Total noncurrent assets
Total assets
LIABILITIES
Current liabilities:
Accounts payable
Accrued wages and benefits
Other liabilities
Customer deposits
Compensated absences payable
Unearned revenues
Total current liabilities
Noncurrent liabilities:
Non-current portion of long-term liabilities
Total noncurrent liabilities
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Leases
NET POSITION
Net investment in capital assets
Restricted for:
Public works
Capital outlay
Debt service
Unrestricted
Total net position
Governmental
Activities
$ 43,366,214
374,391
1,035,253
26,444
1,762,077
84,324
12,923
46,868
46,708,494
36,231,449
65,607,014
101,838,463
148,546,957
2,082,927
228,927
759
169,241
355,898
249,561
3,087,313
284,016
284,016
3,371,329
1,734,697
101,838,463
7,288,954
2,145,462
212,181
31,955,871
$143,440,931
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF NET POSITION
JUNE 30, 2023
The notes to the basic financial statements are an integral part of this statement.
Page 36
Program Revenues
Net (Expense)
Revenue and
Changes in Net
Position
Functions/Programs
Governmental activities:
General government
Development services
Public safety
Public works
Culture and recreation
Total governmental activities
Expenses
$ 4,890,912
1,206,991
9,930,356
10,792,078
4,776,903
$31,597,240
Charges for
Services
$ 516,373
762,929
136,082
359,972
640,365
$2,415,721
Operating
Grants and
Contributions
$ 622,785
4,270,606
1,779,359
57,133
$6,729,883
Capital Grants
and
Contributions
$
148,672
110,594
$259,266
Governmental
Activities
$ (3,751,754)
(444,062)
(5,523,668)
(8,504,075)
(3,968,811)
(22,192,370)
General revenues:
Taxes:
Property taxes
Sales taxes
Franchise taxes
State sales & income tax revenue sharing - unrestricted
Vehicle license tax revenue sharing - unrestricted
Investment earnings
Miscellaneous
Total general revenues
Changes in net position
Net position, beginning of year
Net position, end of year
9,854
20,586,294
382,948
8,039,448
1,182,243
1,099,525
226,049
31,526,361
9,333,991
134,106,940
$143,440,931
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2023
The notes to the basic financial statements are an integral part of this statement.
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Page 38
FUND FINANCIAL STATEMENTS
Page 39
ASSETS
Cash and investments
Accounts receivable
Intergovernmental receivable
Taxes receivable
Leases receivable
Interest receivable
Inventory, at cost
Prepaid items
Total assets
LIABILITIES, DEFERRED INFLOWS OF RESOURCES
AND FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and benefits
Other liabilities
Customer deposits
Unearned revenues
Total liabilities
Deferred inflows of resources:
Unavailable revenues - property taxes
Unavailable revenues - other
Leases
Total deferred inflows of resources
Fund balances:
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total fund balances
Total liabilities, deferred inflows of resources
and fund balances
General
$ 17,167,897
111,440
718,791
1,762,077
31,122
12,923
44,542
$19,848,792
$ 342,051
198,934
759
169,241
17,373
728,358
193
1,734,697
1,734,890
57,465
4,044,890
1,639,184
11,644,005
17,385,544
$19,848,792
Highway User
Revenue
$ 7,698,249
27,805
262,379
$7,988,433
$ 606,205
21,172
627,377
27,789
27,789
6,922,858
410,409
7,333,267
$7,988,433
Grants
$ 327,341
235,146
26,351
$588,838
$ 18,343
232,188
250,531
223,710
223,710
114,597
114,597
$588,838
TOWN OF FOUNTAIN HILLS, ARIZONA
BALANCE SHEET - GOVERNMENTAL FUNDS
JUNE 30, 2023
The notes to the basic financial statements are an integral part of this statement.
Page 40
Capital Projects
$ 13,466,860
5,472
51,687
$13,524,019
$ 1,047,933
1,047,933
5,692,029
6,784,057
12,476,086
$13,524,019
Non-Major
Governmental
Funds
$ 4,545,686
22,260
26,444
1,515
2,326
$4,598,231
$ 68,395
8,821
77,216
26,334
26,334
2,326
2,331,309
1,766,428
394,618
4,494,681
$4,598,231
Total
Governmental
Funds
$ 43,206,033
374,391
1,035,253
26,444
1,762,077
84,324
12,923
46,868
$46,548,313
$ 2,082,927
228,927
759
169,241
249,561
2,731,415
26,334
251,692
1,734,697
2,012,723
59,791
9,368,764
11,503,347
9,228,268
11,644,005
41,804,175
$46,548,313
Page 41
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Page 42
Total governmental fund balances
Amounts reported for governmental activities in the Statement of
Net Position are different because:41,804,175$
Capital assets used in governmental activities are not financial
resources and, therefore, are not reported in the funds.
Governmental capital assets 239,951,412$
Less accumulated depreciation (138,112,949)101,838,463
Some receivables are not available to pay for current period
expenditures and, therefore, are reported as deferred inflows
of resources in the funds.
Property taxes 26,334
Other 251,692 278,026
Long-term liabilities (compensated absences payable) are not due and payable
in the current period and, therefore, are not reported in the funds.(639,914)
The Internal Service Fund is used by management to charge the cost of
technology replacement to the individual funds. The assets and liabilities of the
Internal Service Fund are included in the Statement of Net Position.160,181
Net position of governmental activities 143,440,931$
TOWN OF FOUNTAIN HILLS, ARIZONA
RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
JUNE 30, 2023
The notes to the basic financial statements are an integral part of this statement.
Page 43
Revenues:
Property taxes
Sales taxes
Franchise taxes
Licenses and permits
Leases and rents
Intergovernmental
Charges for services
Other
Fines and forfeitures
Investment earnings
Total revenues
Expenditures:
Current -
General government
Development services
Public safety
Public works
Culture and recreation
Capital outlay
Debt service -
Fiscal charges
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
General
$
16,732,052
382,948
1,140,759
355,607
8,456,527
212,774
374,877
211,773
387,670
28,254,987
4,024,863
1,210,967
5,404,843
1,311,745
3,292,151
209,920
15,454,489
12,800,498
(9,875,527)
(9,875,527)
2,924,971
14,460,573
$17,385,544
Highway User
Revenue
$
1,419,744
2,606,929
3,664
15,855
197,804
4,243,996
4,988,349
25,676
5,014,025
(770,029)
4,200,000
4,200,000
3,429,971
3,903,296
$7,333,267
Grants
$
4,605,125
95,056
4,700,181
385,875
4,208,150
4,594,025
106,156
106,156
8,441
$114,597
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2023
The notes to the basic financial statements are an integral part of this statement.
Page 44
Capital Projects
$
1,724,626
140,284
4,000
268,398
2,137,308
1,215
841,627
4,263,138
5,105,980
(2,968,672)
5,450,527
5,450,527
2,481,855
9,994,231
$12,476,086
Non-Major
Governmental
Funds
$ 8,778
709,872
383,519
110,594
8,573
29,071
145,230
1,395,637
285,728
401,015
291,320
98
978,161
417,476
597,340
(372,340)
225,000
642,476
3,852,205
$4,494,681
Total
Governmental
Funds
$ 8,778
20,586,294
382,948
1,524,278
355,607
15,919,459
216,438
403,305
240,844
1,094,158
40,732,109
4,697,681
1,210,967
9,612,993
7,542,736
3,583,471
4,498,734
98
31,146,680
9,585,429
10,247,867
(10,247,867)
9,585,429
32,218,746
$41,804,175
Page 45
Changes in fund balances - total governmental funds 9,585,429$
Amounts reported for governmental activities in the Statement of Activities are
different because:
Governmental funds report the portion of capital outlay for capitalized assets as expenditures.
However, in the Statement of Activities, the costs of those assets are allocated over their
estimated useful lives as depreciation expense.
Expenditures for capitalized assets 4,497,424$
Less current year depreciation (4,976,937) (479,513)
Some revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds.
Property taxes 1,076
Other 221,440 222,516
Some expenses reported in the Statement of Activities do not require the use of
current financial resources and, therefore, are not reported as expenditures in
governmental funds.
Loss on disposal of assets (28,761)
Compensated absences (7,133) (35,894)
The Internal Service Fund is used by management to charge the cost of
technology replacement to the individual funds. The changes in net position of the Internal
Service Fund is reported with governmental activities in the Statement of Activities.41,453
Changes in net position in governmental activities 9,333,991$
TOWN OF FOUNTAIN HILLS, ARIZONA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2023
The notes to the basic financial statements are an integral part of this statement.
Page 46
ASSETS
Current assets:
Cash and investments
Total current assets
Total assets
NET POSITION
Unrestricted
Total net position
Governmental
Activities:
Internal Service
Funds
$160,181
160,181
160,181
160,181
$160,181
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
JUNE 30, 2023
The notes to the basic financial statements are an integral part of this statement.
Page 47
Operating revenues:
Other
Charges for services
Total operating revenues
Operating expenses:
Cost of services
Total operating expenses
Operating income (loss)
Nonoperating revenues (expenses):
Investment earnings
Total nonoperating revenues (expenses)
Changes in net position
Total net position, beginning of year
Total net position, end of year
Governmental
Activities:
Internal Service
Funds
$5
65,017
65,022
28,936
28,936
36,086
5,367
5,367
41,453
118,728
$160,181
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION -
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2023
The notes to the basic financial statements are an integral part of this statement.
Page 48
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2023
Governmental
Activities:
Internal
Service Funds
Increase/Decrease in Cash and Cash Equivalents
Cash flows from operating activities:
Cash received from charges for services $65,017
Cash received from other sources 5
Cash payments to suppliers for goods and services (28,936)
Net cash provided by/used for operating activities 36,086
Cash flows from investing activities:
Investment income 5,367
Net cash provided by/used for investing activities 5,367
Net increase/decrease in cash and cash equivalents 41,453
Cash and cash equivalents, beginning of year 118,728
Cash and cash equivalents, end of year $160,181
Reconciliation of Cash and Cash Equivalents to the Statement of Net Position
Cash and investments $160,181
Less investments not maturing in less than three months 0
Total cash and cash equivalents $160,181
The notes to the basic financial statements are an integral part of this statement.
Page 49
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Town of Fountain Hills, Arizona (Town) have been prepared
in conformity with accounting principles generally accepted in the United States of America
as applied to government units. The Governmental Accounting Standards Board (GASB) is
the accepted standard-setting body for establishing governmental accounting and financial
reporting principles.
During the year ended June 30, 2023, the Town implemented the provisions of GASB
Statement No. 96, Subscription-Based Information Technology Arrangements (SBITAs). This
Statement increases the usefulness of the financial statements by requiring the recognition of
certain assets and liabilities for SBITAs. This Statement also requires a government to disclose
essential information about the arrangement. The Town’s analysis of SBITAs in effect at the
beginning of the year resulted in no changes to beginning balances reported in the financial
statements due to the implementation of this standard.
The more significant of the Town’s accounting policies are described below.
A. Reporting Entity
The Town’s major operations include development services, culture and recreation, public
works, public safety and general administrative services.
The Town is a municipal corporation governed by an elected Mayor and Council. The financial
reporting entity consists of a primary government and its component units. A component unit
is a legally separate entity that must be included in the reporting entity in conformity with
generally accepted accounting principles. The Town is a primary government that has a
separately elected governing body, is legally separate, and is fiscally independent of other state
or local governments. Furthermore, the component units combined with the Town for financial
statement presentation purposes and the Town are not included in any other governmental
reporting entity. Consequently, the Town’s financial statements include only the funds of those
organizational entities for which its elected governing body is financially accountable.
Page 50
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Eagle Mountain Community Facilities District and the Cottonwoods Maintenance District. As
special purpose districts and separate political subdivisions under the Arizona Constitution, the
Districts can levy taxes and issue bonds independently of the Town. Property owners in the
designated areas are assessed taxes for the costs of operating the Districts. The Town Council
serves as the Board of Directors; however, the Town has no liability for the Districts’ debt, the
Districts are responsible for the debt; the debt is therefore not subject to the Town’s debt limit.
The Districts cannot be part of another reporting entity. The Districts’ governing bodies are
substantially the same as the Town and the Town’s management oversees operations, resulting
in the Town having the ability to exercise control. As a result, for financial reporting purposes,
transactions of the Districts are combined together and included as if they were part of the
Town’s operations.
Town of Fountain Hills, Arizona Municipal Property Corporation. The Town of Fountain
Hills, Arizona Municipal Property Corporation’s (MPC) Board of Directors consists of three
members which are appointed by the Fountain Hills Town Council. The MPC, which is a
nonprofit corporation incorporated under the laws of the State of Arizona, was formed for the
sole purpose of assisting the Town in obtaining financing for various projects of the Town.
The Town has a “moral obligation” for the repayment of the MPC’s bonds. The MPC cannot
be part of another reporting entity. The MPC provides services exclusively to the Town. As a
result, for financial reporting purposes, transactions of the MPC are combined together and
included as if they were part of the Town’s operations.
B. Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement
of activities) present financial information about the Town as a whole. The reported
information includes all of the Town's component units. For the most part, the effect of internal
activity has been removed from these statements. Interfund services provided and used, such
as interfund transfers, are not eliminated in the process of consolidation. Governmental
activities normally are supported by taxes and intergovernmental revenues. The Town does not
have any fiduciary or business-type activities.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment is offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include 1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or segment and 2) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or segment.
Taxes, unrestricted state shared revenues, investment income and other items not included
among program revenues are reported instead as general revenues.
Page 51
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
Government-wide Financial Statements – The government-wide financial 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 flows. Grants and similar items are recognized as
revenue as soon as all eligibility requirements imposed by the grantor or provider have been
met. As a general rule, the effect of internal activity has been eliminated from the government-
wide financial statements; however, the effects of interfund services provided and used
between functions are reported as expenses and program revenues at amounts approximating
their external exchange value.
Fund Financial Statements – Governmental fund financial statements are reported using the
current financial resources measurement focus and the modified accrual basis of accounting.
Revenues are recognized as soon as they are both measurable 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 Town considers revenues
to be available if they are collected within 60 days of the end of the current fiscal period.
Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
However, debt service expenditures, as well as expenditures related to compensated absences,
and claims and judgments, are recorded only when payment is due.
Property taxes, sales taxes, franchise taxes, state shared revenues, licenses and permits, charges
for services, and investment earnings associated with the current fiscal period are all
considered to be susceptible to accrual and have been recognized as revenues of the current
fiscal period. Grants and similar awards are recognized as revenue as soon as all eligibility
requirements imposed by the grantor or provider have been met. Miscellaneous revenue is not
susceptible to accrual because generally they are not measurable until received in cash.
Unearned revenues arise when resources are received by the Town before it has legal claim to
them, as when grant monies are received prior to meeting all eligibility requirements imposed
by the provider.
The focus of governmental fund financial statements is on major funds rather than reporting
funds by type. Each major fund is presented in a separate column.
The Town reports the following major governmental funds.
General Fund – The General Fund is the Town’s primary operating fund. This fund
accounts for all financial resources of the Town, except those required to be accounted for
in other funds.
Page 52
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Highway User Revenue Fund (HURF) – This fund accounts for the Town’s share of motor
vehicle fuel tax revenues and sales tax.
Grants Fund – This fund accounts for the activities of various restricted grants and
contributions received by the Town.
Capital Projects Fund – This fund accounts for the capital improvements to various projects
and equipment purchases of the Town.
Additionally, the Town reports the following fund type:
Proprietary Fund – The Proprietary Fund is an Internal Service Fund that accounts for the
operation of technology replacement services to other Town departments on a cost
reimbursement basis.
The Proprietary Fund financial statements are reported using the economic resources
measurement focus and accrual basis of accounting and are presented in a single column.
Proprietary funds distinguish operating revenues and expenses from nonoperating items.
Operating revenues and expenses generally result from providing services and producing and
delivering goods in connection with a proprietary fund’s principal ongoing operations. The
principal operating revenues of the Town’s internal service fund are charges to Town
departments for technology replacement. Operating expenses for the internal service fund
include the cost of goods and services. All revenues and expenses not meeting this definition
are reported as nonoperating revenues and expenses.
D. Cash and Investments
For purposes of the Statement of Cash Flows, the Town considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents. Cash and cash
equivalents at year end was cash and investments in the State Treasurer’s Local Government
Investment Pool.
Cash and investments at year end were cash on hand, cash in bank, restricted cash, cash and
investments held by the State Treasurer, and investments in the State Treasurer’s Local
Government Investment Pool.
Cash and investments are pooled, except for investments that are restricted under provisions
of bond indentures or other restrictions that are required to be reported in the individual funds.
Page 53
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Arizona Revised Statutes authorize the Town to invest public monies in the State Treasurer’s
local government investment pools, the County Treasurer’s investment pool, obligations of the
U.S. Government and its agencies, obligations of the state and certain local government
subdivisions, interest-bearing savings accounts and certificates of deposit, collateralized
repurchase agreements, certain obligations of U.S. corporations, and certain other securities.
Investments are stated at fair value.
Statutes do not include any requirements for credit risk, custodial credit risk, concentration of
credit risk, interest rate risk, or foreign currency risk for the Town’s investments.
Arizona statute requires a pooled collateral program for public deposits and a Statewide
Collateral Pool Administrator (Administrator) in the State Treasurer’s Office. The purpose of
the pooled collateral program is to ensure that governmental entities’ public deposits placed in
participating depositories are secured with collateral of 102 percent of the public deposits, less
any applicable federal depository insurance.
An eligible depository may not retain or accept any public deposit unless it has deposited the
required collateral with a qualified escrow agent or the Administrator. The Administrator
manages the pooled collateral program, including reporting on each depository’s compliance
with the program.
E. Investment Earnings
Investment earnings is composed of interest, dividends, and net changes in the fair value of
applicable investments. Investment earnings is a component of revenue in the governmental
funds financial statements and is reported in nonoperating revenue in the proprietary fund
financial statements.
F. Receivables and Payables
Activity between funds that is representative of lending/borrowing arrangements outstanding
at the end of the fiscal year is referred to as either “due to/from other funds” (i.e., the current
portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of
interfund loans). Interfund balances between governmental funds are eliminated on the
statement of net position.
Page 54
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
G. Property Tax Calendar
Property taxes are levied by the Town and collected by the Maricopa County Treasurer.
Property taxes are levied no later than the third Monday in August and are payable in two
installments due October 1 of the current year and March 1 of the subsequent year. Taxes
become delinquent after the first business day of November and May, respectively. Interest
attaches on installments after the delinquency date. Pursuant to A.R.S., a lien against assessed
real and personal property attaches on the first day of January preceding assessment and levy;
however according to case law, an enforceable legal claim to the asset does not arise.
All receivables are shown net of an allowance for uncollectibles.
H. Inventory
All inventories are valued at average cost using the first-in/first-out (FIFO) method.
Inventories consist of expendable supplies held for consumption. The cost of such inventories
is recorded as expenditures/expenses when consumed rather than when purchased.
I. Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items in both the government-wide and fund financial statements. The cost
of prepaid items is recorded as expenditures/expenses when consumed rather than when
purchased.
J. Capital Assets
Capital assets, which include land and improvements, artwork, buildings and improvements,
vehicles, machinery, and equipment, construction in progress, infrastructure assets, and
intangible right-to-use assets are reported in the government-wide financial statements.
Capital assets are defined by the Town as assets with an initial, individual cost in excess of
$10,000 and an estimated useful life in excess of one year. Capital assets are recorded at
historical cost, if purchased or constructed. Donated capital assets are recorded at the
acquisition value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the assets or
materially extend the life of the asset are not capitalized.
Page 55
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Capital assets of the Town are depreciated using the straight-line method over the following
estimated useful lives:
Buildings and building improvements 20 - 50 years
Improvements other than buildings 20 years
Infrastructure 15 - 50 years
Vehicles, machinery and equipment 5 - 20 years
K. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position may report a separate section for
deferred outflows of resources. This separate financial statement element, deferred outflows
of resources, represents a consumption of net assets that applies to a future period and so will
not be recognized as an outflow of resources (expense/expenditure) until then. The Town did
not have any items that qualified for reporting in this category.
In addition to liabilities, the statement of financial position may report a separate section for
deferred inflows of resources. This separate financial statement element, deferred inflows of
resources, represents an acquisition of net assets that applies to a future period and so will not
be recognized as an inflow of resources (revenue) until that time.
L. Compensated Absences
The Town’s employee vacation and sick leave policies generally provide for granting vacation
and sick leave with pay. Sick leave and vacation benefits accrue as pay periods are completed
at the current rate of pay.
All eligible full-time and part-time regularly-scheduled employees can accrue vacation leave.
Employees accrue up to a maximum of two times the yearly maximum accrual of vacation
through carryover of balances. In the event of termination, employees will be paid for any
accrued, but unused, vacation hours. Full-time and part-time regularly-scheduled employees
accrue sick leave, up to a maximum of 1040 hours. Part-time non-regularly-scheduled,
temporary, or seasonal, and other employees accrue paid sick time for hours worked, not to
exceed 40 hours per calendar year.
The current and long-term liabilities, including related benefits, for accumulated vacation and
sick leave are reported on the government-wide financial statements. A liability for these
amounts is reported in governmental funds only if they have matured, for example, as a result
of employee termination, resignations and retirements. Generally, resources from the General
Fund are used to pay for compensated absences.
Page 56
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
M. Long-term Obligations
In the government-wide financial statements, long-term debt and other long-term obligations
are reported as liabilities on the statement of net position. Bond premiums and discounts are
amortized over the life of the bonds using the straight-line method. Deferred amounts on
refunding result from the difference between 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 the fund financial 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 financing sources. Premiums received on debt issuances are
reported as other financing sources while discounts on debt issuances are reported as other
financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received,
are reported as debt service expenditures.
N. Interfund Activity
Flows of cash from one fund to another without a requirement for repayment are reported as
interfund transfers. Interfund transfers between governmental funds are eliminated in the
statement of activities. Interfund transfers in the fund financial statements are reported as other
financing sources/uses in governmental funds.
O. Net Position Flow Assumption
In the government-wide financial statements the Town applies restricted resources first when
outlays are incurred for purposes for which either restricted or unrestricted amounts are
available.
P. Estimates
The preparation of the financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and accompanying
notes. Actual results may differ from those estimates.
Page 57
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Q. Leases
As lessor, the Town recognizes lease receivables with an initial, individual value of $50,000
or more. If there is no stated rate in the lease contract (or if the stated rate is not the rate the
Town charges the lessee) and the implicit rate cannot be determined, the Town uses its own
estimated incremental borrowing rate as the discount rate to measure lease receivables.
The Town’s estimated incremental borrowing rate was determined based on the prevailing
federal funds rate at the beginning of the lease term, since the Town does not have outstanding
debt. This rate reflects the low risk of renting these facilities over a long lease period with
multiple renewals.
NOTE 2 – FUND BALANCE CLASSIFICATIONS
Fund balances of the governmental funds are reported separately within classifications based
on a hierarchy of the constraints placed on the use of those resources. The classifications are
based on the relative strength of the constraints that control how the specific amounts can be
spent. The classifications are nonspendable, restricted, committed, assigned, and unassigned
fund balance classifications.
Nonspendable. The nonspendable fund balance classification includes amounts that cannot
be spent because they are not in spendable form, or legally or contractually required to be
maintained intact.
Restricted. Fund balance is reported as restricted when constraints placed on the use of
resources are either externally imposed by creditors (such as through debt covenants), grantors,
contributors, or laws or regulations of other governments or is imposed by law through
constitutional provisions or enabling legislation.
Committed. The committed fund balance classification includes amounts that can be used only
for the specific purposes imposed by formal action of the Town Council, the Town’s highest
level of decision making authority, by ordinance. Those committed amounts cannot be used
for any other purpose unless the Town Council removes or changes the specified use by taking
the same type of action it employed to previously commit those amounts.
Page 58
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 2 – FUND BALANCE CLASSIFICATIONS
Assigned. Amounts in the assigned fund balance classification are intended to be used by the
Town for specific purposes but do not meet the criteria to be classified as restricted or
committed. In governmental funds other than the General Fund, assigned fund balance
represents the remaining amount that is not restricted or committed. In the General Fund,
assigned amounts represent intended uses established by the Town Council or a management
official delegated that authority by formal Town Council action. The authority to make
assignments has been delegated by the Town Council to the Finance Director.
Unassigned. Unassigned fund balance is the residual classification for the General Fund and
includes all spendable amounts not contained in the other classifications. In other governmental
funds, the unassigned classification is used only to report a deficit balance resulting from
overspending for specific purposes for which amounts had been restricted, committed, or
assigned.
The Town applies restricted resources first when outlays are incurred for purposes for which
either restricted or unrestricted (committed, assigned, and unassigned) amounts are available.
Similarly, within unrestricted fund balance, committed amounts are reduced first followed by
assigned, and then unassigned amounts when expenditures are incurred for purposes for which
amounts in any of the unrestricted fund balance classifications could be used.
The Town has established a fund balance policy which states that the combined General Fund
operating fund balance should be at least 30 percent of the average actual General Fund
revenues for the preceding five fiscal years.
The Town has established a stabilization fund (Rainy Day fund) in the Town’s fund balance
policy. The Rainy Day fund had a balance of $3,980,307, reported as a committed fund balance
at June 30, 2023. The Rainy Day fund may only be used for the following: 1) to replace the
loss of more than 20 percent of the Town’s local share of state shared revenues, 2) for any
event that threatens the health, safety or welfare of the Town’s citizens, 3) for any event that
threatens the fiscal stability of the Town, and lastly 4) to address any matter declared as an
emergency by the governor of the State of Arizona or the Mayor of the Town. All withdrawals
from the Rainy Day fund shall be subject to the following rules: 1) any appropriation shall
require the approval by at least 2/3 vote by the Town Council, and 2) the maximum amount of
Rainy Day withdrawal in any fiscal year shall not exceed one-half of the total balance in the
fund. Replenishment of the Rainy Day fund when spent by the Town should not exceed a
period of more than five years, and should be repaid in annual installments of not less than one
percent of the previous fiscal year General Fund balance. Repayments shall be appropriated as
part of the annual budget adoption.
Page 59
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 2 – FUND BALANCE CLASSIFICATIONS
The table below provides detail of the major components of the Town’s fund balance
classifications at year end.
General
Fund
Highway
User
Revenue
Fund
Grants
Fund
Capital
Projects
Fund
Non-Major
Governmental
Funds Total
Fund Balances:
Nonspendable:
Inventory $ 12,923 $ $ $ $ $ 12,923
Prepaid items 44,542 2,326 46,868
Restricted:
Capital Projects 15,338 15,338
Debt Service 185,847 185,847
Highways and Streets 6,922,858 114,597 7,037,455
Development Fees 2,130,124 2,130,124
Committed:
Rainy Day 3,980,307 3,980,307
Public Art 64,583 64,583
Downtown Strategy 625,922 625,922
Economic Development 591,811 591,811
Tourism 133,017 133,017
Capital Projects 5,692,029 5,692,029
Local Court Enhancement 415,678 415,678
Assigned:
Capital Projects 6,784,057 6,784,057
Environmental 394,618 394,618
Vehicle Replacement 1,639,184 410,409 2,049,593
Unassigned: 11,644,005 11,644,005
Total fund balances $ 17,385,544 $ 7,333,267 $ 114,597 $ 12,476,086 $ 4,494,681 $ 41,804,175
Page 60
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 3 – CASH AND INVESTMENTS
Custodial Credit Risk – Deposits. Custodial credit risk is the risk that in the event of bank
failure the Town’s deposits may not be returned to the Town. The Town does not have a
deposit policy for custodial credit risk. At year end, the carrying amount of the Town’s deposits
was $790,602 and the bank balance was $1,594,390. At year end, $1,094,390 of the Town’s
deposits were covered by collateral held by the pledging financial institution in the Town’s
name. The remaining amount is covered by FDIC.
Fair Value Measurements. The Town categorizes its fair value measurements within 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 significant other observable inputs
Level 3 inputs are significant unobservable inputs
Valuation Techniques. Equity securities classified in Level 1 of the fair value hierarchy are
valued using prices quoted in active markets for those securities. Debt securities classified in
Level 2 of the fair value hierarchy are valued using matrix pricing techniques. Matrix pricing
is used to value securities based on the securities’ relationship to benchmark quoted prices.
The State Treasurer’s pools are external investment pools, the Local Government Investment
Pool (Pool 5) and Local Government Investment Pool-Government (Pool 7), with no
regulatory oversight. The pools, as an investment company, are not registered with the
Securities and Exchange Commission. The activity and performance of the pools are reviewed
monthly by the State Board of Investment. The fair value of each participant’s position in the
State Treasurer investment pools approximates the value of the participant’s shares in the pool
and the participants’ shares are not identified with specific investments. Participants in the pool
are not required to categorize the value of shares in accordance with the fair value hierarchy.
All investments in which the fair value hierarchy is applicable are measured at fair value on a
recurring basis. At year end, cash and investments as of June 30, 2023, are classified in the
accompanying financial statements as follows:
Carrying amount of investments $42,574,912
Carrying amount of cash deposits 790,602
Cash on hand 700
Total pooled cash and investments $43,366,214
Page 61
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 3 – CASH AND INVESTMENTS
At year end, the Town’s investments consisted of the following:
Investment Maturities
(in Years)
Credit Rating
Investment Type Category Fair Value Less than 1 1-5 S&P Moody’s
U.S. Government and Agency Notes Level 1 $ 8,728,324 $ 243,555 $ 8,484,769 AA+ Aaa
Supra-National Notes Level 1 496,329 181,099 315,230 AAA Aaa
Federal Agency Notes Level 1 249,256 249,256 AA+ Aaa
Corporate and Foreign Bonds Level 2 2,820,786 2,820,786 BBB+ to AA A3 - Aa2
Asset Backed Securities Level 2 809,904 4,073 805,831 AAA, NR Aaa, NR
Certificates of Deposit Level 2 126,926 126,926 AA- Aa3
US Bank Money Market Funds Level 1 18,916 n/a n/a
$ 428,727 $12,802,798
State Treasurer’s Investment Pool 7 Not applicable 29,324,471 37 days average maturities
Total $42,574,912
Interest Rate Risk. Interest rate risk is the risk that changes in interest rates may reduce the
market value of Town investments. In accordance with its investment policy, the Town
manages its exposure to declines in fair values by the following:
Structuring the investment portfolio so that securities mature concurrent with the
anticipated cash requirements for ongoing operations, thereby avoiding, as much as
possible, the need to sell securities into an adverse market environment prior to
maturity.
Investing funds primarily in shorter-term securities or similar investment pools and
limiting the average maturity of the portfolio in accordance with the needs of the Town.
With respect to any firm or individual given responsibility for investments utilizing
external research and advice regarding the current interest rate outlook and global
economic condition to optimize portfolio duration strategy.
Page 62
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 3 – CASH AND INVESTMENTS
Credit Risk. Credit risk is the risk of default of debt by an issuer or counterparty to an
investment. The Town will limit credit risk by limiting investments in the Town’s portfolio to
the asset classes designated as acceptable in ARS §35-323. When possible, analysis of the
credit worthiness of all individual debt issuers held in the portfolio should be conducted on an
annual basis in an effort to guard against investing in a weak or deteriorating credit situation.
Additionally, the Town will pre-qualify financial institutions, brokers/dealers, and investment
advisers with which the Town will do business. The State Treasurer’s Local Government
Investment Pool 7 was rated AAA by Moody’s at year end.
Custodial Credit Risk – Investments. Custodial credit risk is the risk that in the event of
depository financial institution failure, the Town’s deposits may not be returned to the Town.
The Town’s investment in the State Treasurer’s investment pool represents a proportionate
interest in the pool’s portfolio; however the Town’s portion is not identified with specific
investments and is not subject to custodial credit risk.
Concentration of Credit Risk. Concentration of credit risk is the risk of loss from over
concentration of investments. In accordance with its investment policy, the Town diversifies
its investment portfolio to minimize the risk of loss resulting from over concentration of assets
in a specific maturity, specific issuer, or specific class of securities. With the exception of U.S.
Treasury notes and securities and authorized pools, the investment policy establishes a
maximum percentage of 30 percent in insured or collateralized certificates of deposit; 20
percent in certificates of deposit registry services; 30 percent in commercial paper; and 30
percent in bonds, debentures, or notes.
Investment Type Fair Value
Percent of Town
Investments
U.S. Government and Agency Notes $ 8,728,324 20.5%
Supra-National Notes 496,329 1.2%
Federal Agency Notes 249,256 0.6%
Corporate and Foreign Bonds 2,820,786 6.6%
Asset Backed Securities 809,904 1.9%
Certificates of Deposit 126,926 0.3%
US Bank Money Market Funds 18,916 0.0%
State Treasurer’s investment pool 7 29,324,471 68.9%
$ 42,574,912
Page 63
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 4 – RECEIVABLES
Receivable balances, net of allowance for uncollectibles, have been disaggregated by type and
presented separately in the financial statements with the exception of intergovernmental
receivables. Intergovernmental receivables, net of allowance for uncollectibles, as of year-end
for the Town’s individual major funds consisted entirely of receivables due from the State.
NOTE 5 – LEASES RECEIVABLE
The Town has cell tower land agreements and a fire station ambulance bay usage agreement
that fall under the provisions of contracts classified as leases. The related receivables under the
lease agreements have been recorded at the present value of their future minimum lease
payments as of the implementation date. Lease revenue of $178,866 and related interest
revenue of $24,051 are recorded as leases and rents in the General Fund.
Future minimum lease payments to be received under the lease agreements at year end are
summarized as follows:
Year ending June 30:
2024 $ 122,997
2025 123,613
2026 125,580
2027 129,538
2028 136,549
2029-33 645,705
2034-38 234,781
2039-43 184,398
2044-45 58,916
Total $ 1,762,077
Page 64
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 6 – CAPITAL ASSETS
A summary of capital asset activity at year end is as follows:
Governmental Activities
Beginning
Balance
Increase
Decrease
Ending
Balance
Capital assets, not being depreciated:
Land $ 29,690,368 $ $ $ 29,690,368
Artwork 2,608,900 2,608,900
Construction in progress 2,595,052 4,325,010 2,987,881 3,932,181
Total capital assets, not being depreciated 34,894,320 4,325,010 2,987,881 36,231,449
Capital assets, being depreciated:
Infrastructure 155,359,694 297,000 155,656,694
Buildings and building improvements 23,421,289 13,193 23,434,482
Improvements other than buildings 16,977,148 2,627,699 19,604,847
Vehicles, machinery and equipment 4,989,483 222,403 187,946 5,023,940
Total capital assets being depreciated 200,747,614 3,160,295 187,946 203,719,963
Less accumulated depreciation for:
Infrastructure (111,275,396)(3,277,816)(114,553,212)
Buildings and building improvements (7,465,337) (499,594) (7,964,931)
Improvements other than buildings (12,361,959)(789,288)(13,151,247)
Vehicles, machinery and equipment (2,192,505) (410,239) (159,185) (2,443,559)
Total accumulated depreciation (133,295,197)(4,976,937)(159,185)(138,112,949)
Total capital assets, being depreciated, net 67,452,417 (1,816,642)28,761 65,607,014
Governmental activities capital assets, net $ 102,346,737 $ 2,508,368 $ 3,016,642 $ 101,838,463
Depreciation expense was charged to functions/programs as follows:
Governmental activities:
General government $ 223,912
Development services 16,721
Public safety 317,363
Streets and highways 3,231,075
Culture and recreation 1,187,866
Total depreciation expense $ 4,976,937
Page 65
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 6 – CAPITAL ASSETS
Construction Commitments – At June 30, 2023, the Town has the following active
construction commitments. The resources for these commitments have been accumulated in
the Capital Projects Fund.
Governmental Activities
Project
Spent-to-Date
Remaining
Commitment
Stormwater Infrastructure Rehabilitation $ 246,391 $ 57,793
Golden Eagle Park Field Lights 690,137 690,137
Shea Boulevard Widening - Palisades to Technology 305,257 40,316
TS – Palisades at Eagle Ridge 104,643 49,954
Total commitments $ 1,346,428 $ 838,200
NOTE 7 – CHANGES IN LONG-TERM LIABILITIES
Long-term liability activity for the current fiscal year was as follows:
Beginning
Balance Additions Reductions
Ending
Balance
Due Within
One Year
Governmental activities:
Compensated absences payable $ 632,781 $ 408,620 $ 401,487 $ 639,914 $ 355,898
Governmental activity long-term
Liabilities $ 632,781 $ 408,620 $ 401,487 $ 639,914 $ 355,898
NOTE 8 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
At year end, interfund balances were as follows:
Interfund transfers:
At year end, interfund transfers were as follows:
Transfers out
Transfers in
General
Fund
Non-Major
Governmental
Funds Total
Highway User Revenue Fund $ 4,200,000 $ $ 4,200,000
Capital Projects Fund 5,450,527 5,450,527
Non-Major Governmental Funds 225,000 372,340 597,340
Total $ 9,875,527 $ 372,340 $10,247,867
Page 66
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 8 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
The General Fund transferred $5,175,527 to the Capital Projects Fund for future projects, as
required by the Town’s financial policies; $4,200,000 to Highway User Revenue Fund for
additional pavement maintenance projects; and $500,000 to Environmental Fund for continued
storm drain and wash maintenance. The Economic Development Fund transferred $97,340 to
the Tourism Fund to provide funding for operating costs of the tourism program. The
Development Fee Fund transferred $275,000 to the Capital Projects Fund for expansion of the
Fountain Park splash pad.
NOTE 9 – CONTINGENT LIABILITIES
Compliance – Amounts received or receivable from grantor agencies are subject to audit and
adjustment by grantor agencies, principally the state government. Any disallowed claims,
including amounts already collected, may constitute a liability of the applicable funds. The
amount, if any, of expenditures/expenses that may be disallowed by the grantor cannot be
determined at this time, although the Town expects such amounts, if any, to be immaterial.
Lawsuits – The Town is a party to a number of various types of lawsuits, many of which
normally occur in governmental operations. The ultimate outcome of the actions is not
determinable; however, Town management believes that the outcome of these proceedings,
either individually or in the aggregate, will not have a materially adverse effect on the
accompanying financial statements.
NOTE 10 – RISK MANAGEMENT
The Town 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 Town’s insurance protection is
provided by the Arizona Municipal Risk Retention Pool (Pool). The Pool is made up of various
towns and cities within Arizona that operate a common risk management and insurance
program. The Pool is structured such that member premiums are based on an actuarial review
that will provide adequate reserves to allow the Pool to meet its expected financial obligations.
The Pool has the authority to assess its’ members additional premiums should reserves and
annual premiums be insufficient to meet the Pool’s obligations.
Page 67
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 10 – RISK MANAGEMENT
The Town joined the Arizona Municipal Workers’ Compensation Pool (Pool) together with
other governments in the state for risks of loss related to workers’ compensation claims. The
Pool is a public entity risk pool currently operating as a common risk management and
insurance program for towns and cities in the State. The Town is responsible for paying a
premium, based on an experience rating formula that allocates pool expenditures and liabilities
among members.
The Town continues to carry commercial insurance for all other risks of loss, including
employee health, dental, and vision insurance. There were no settlements that exceeded
insurance coverage in any of the past three years.
NOTE 11 – RETIREMENT PLANS
Defined Contribution Pension Plan
All full-time employees of the Town participate in a defined contribution pension plan
administered by the ICMA Retirement Corporation as a 401(a) plan. The contribution rates are
11 percent for both the employee and the Town. The payroll for the Town employees covered
by this plan for the year ended June 30, 2023, was $4,764,951 The Town’s total payroll was
$5,541,914.
A defined contribution pension plan provides benefits in return for services rendered, provides
an individual account for each participant, and specifies how contributions to the individual’s
account are to be determined, instead of specifying the amount of benefit the individual is to
receive. Under a defined contribution pension plan, the benefits a participant will receive
depend solely on the amount contributed to the participant’s account and the returns earned on
investment of those contributions. All full-time Town employees must participate in the
pension plan from the date they are hired. Contributions made by an employee vest
immediately and contributions made by the Town vest on a pro rata basis for five years. Town
Council has the authority to establish and amend benefit terms and to establish and amend the
contribution rates. The assets are held in a trust not controlled by the Town and all investment
decisions are made by the employee. The plan does not require reporting under provisions of
GASB Statement No. 84, Fiduciary Activities.
Page 68
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 11 – RETIREMENT PLANS
An employee that leaves the employment of the Town is entitled to his or her contributions
and the vested portion of the Town’s contributions, plus interest earned. During the fiscal year,
the Town’s required and actual contributions amounted to $514,245. The employees’
contributions totaled $514,245. Employees may also contribute to the ICMA Retirement
Corporation 457 plan on a voluntary basis (with the exception of one contract employee that
is limited to 11 percent of earnings); there is no employer match for those contributions. During
the fiscal year, employees contributed $128,170 to that plan. The Town contributed $9,743 for
the contract employee’s 457 account.
No pension provision changes occurred during the year that affected the required contributions
to be made by the Town or its employees. The ICMA Retirement Corporation held no securities
of the Town or other related parties during the fiscal year 2022-23 or as of the close of the
fiscal year.
Page 69
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Page 70
REQUIRED SUPPLEMENTARY INFORMATION
Page 71
16,732,052 $ 2,305,819
$ 14,383,864 $ 21,392,024 $ 17,385,544 $ (4,006,480)
Variance with
Final Budget
Positive
(Negative)
(9,875,527)
(4,006,480)
205,664
40,213
1,437,170
69,650
19,804
6,339
1,341,377
63,199 (130,701) 269,612 6,773
362,430
3,349,482
245,877
2,519,565
5,869,047
(9,875,527)
148,711
452,070
35,682
200,055
2,924,971
14,460,573
57,948
358,667
5,404,843
15,454,489
12,800,498
(9,875,527)
830,650
4,574,193
209,920
4,024,863
1,210,967
3,292,151
2,724,710
426,945
70,280
8,456,527 212,774 374,877 211,773
387,670
28,254,987
25,240
24,905,505
2,794,360
76,619
1,511,800 1,311,745
802,928
446,749
1,036,314
4,614,406
(9,875,527)
6,931,451
14,460,573
Actual
382,948
1,140,759
355,607
6,931,451
245,602
3,744,221
5,462,033
1,359,678
2,144,305
5,650,720
17,974,054
343,475 105,265 205,000
(76,709)
14,460,573
Final
325,000
782,092
299,872
8,393,328
24,982,204
(76,709)
209,300
76,619
4,402,834
5,456,036
8,337,335
1,359,678
3,719,221
9,858,870
205,000
25,240
24,905,495
2,672,360
446,749
5,141,607
1,497,800
Fund balances (deficits), end of year
Budgeted Amounts
Original
325,000
782,092
299,872
8,393,328 343,475 105,265
Other financing sources (uses):
Transfer inTransfer out
Total other financing sources (uses):
Changes in fund balances
Fund balances, beginning of year
Culture and recreation
Total public safety
Total expenditures
Administration
Municipal court
Excess (deficiency) of revenues over expenditures
Non departmental
Expenditures:
Capital outlay
Mayor and council
Current -General government
Public safetyFire and emergency
Law enforcement
Total general government
Development services
Public works
IntergovernmentalCharges for servicesOtherFines and forfeitures
Investment earnings
Total revenues
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GENERAL
YEAR ENDED JUNE 30, 2023
Revenues:Sales taxesFranchise taxes
Licenses and permits
Leases and rents 55,735
14,426,223 14,426,233
See accompanying notes to this schedule.
Page 72
Revenues:
Sales taxes
Intergovernmental
Charges for services
Other
Investment earnings
Total revenues
Expenditures:
Current -
Public works
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Budgeted Amounts
Original
$ 1,197,552
2,679,005
100,000
31,000
10,000
4,017,557
5,908,110
5,908,110
(1,890,553)
(1,890,553)
3,903,296
$2,012,743
Final
$ 1,197,552
2,679,005
100,000
31,000
10,000
4,017,557
9,538,110
70,000
9,608,110
(5,590,553)
(5,590,553)
3,903,296
$(1,687,257)
Actual
$ 1,419,744
2,606,929
3,664
15,855
197,804
4,243,996
4,988,349
25,676
5,014,025
(770,029)
4,200,000
4,200,000
3,429,971
3,903,296
$7,333,267
Variance with
Final Budget
Positive
(Negative)
$ 222,192
(72,076)
(96,336)
(15,145)
187,804
226,439
4,549,761
44,324
4,594,085
4,820,524
4,200,000
4,200,000
9,020,524
$9,020,524
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
HIGHWAY USER REVENUE
YEAR ENDED JUNE 30, 2023
See accompanying notes to this schedule.
Page 73
Revenues:
Intergovernmental
Investment earnings
Total revenues
Expenditures:
Current -
General government
Public safety
Total expenditures
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Budgeted Amounts
Original
$ 11,190,000
11,190,000
981,850
4,208,150
5,190,000
6,000,000
8,441
$6,008,441
Final
$ 11,129,535
11,129,535
5,129,535
4,208,150
9,337,685
1,791,850
8,441
$1,800,291
Actual
$ 4,605,125
95,056
4,700,181
385,875
4,208,150
4,594,025
106,156
8,441
$114,597
Variance with
Final Budget
Positive
(Negative)
$ (6,524,410)
95,056
(6,429,354)
4,743,660
4,743,660
(1,685,694)
$(1,685,694)
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GRANTS
YEAR ENDED JUNE 30, 2023
See accompanying notes to this schedule.
Page 74
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2023
NOTE 1 – BUDGETARY BASIS OF ACCOUNTING
The Town budget is prepared on a basis consistent with accounting principles generally accepted
in the United States of America. The Town Council follows these procedures in establishing the
budgetary data reflected in the financial statements:
1. In accordance with Arizona Revised Statutes, the Town Manager submits a proposed
budget for the fiscal year commencing the following July 1 to the Town Council. The
operating budget includes proposed expenditures and the means of financing them for the
upcoming year.
2. Public hearings are conducted to obtain taxpayer comment.
3. Prior to the third Monday in August, the budget for the Town is legally enacted through
passage of a resolution. To ensure compliance with the expenditure limitation, a uniform
expenditure report must be filed with the State each year. This report, issued under a
separate cover, reconciles total Town expenditures from the audited basic financial
statements to total expenditures for reporting in accordance with the State’s uniform
expenditure reporting system (A.R.S 41-1279.07).
4. Expenditures may not legally exceed the expenditure limitation described below for all
fund types as a whole. For management purposes, the Town adopts a budget by department
for the General Fund and in total by fund for other funds. The Town Manager, subject to
Town Council approval, may at any time transfer any unencumbered appropriation balance
or portion thereof between departments. The adopted budget cannot be amended in any
way without Town Council approval.
5. Formal budgetary integration is employed as a management control device during the year
for the General, Highway User Revenue, Excise Tax, Special Revenue, Debt Service, and
Capital Projects Funds on essentially the same modified accrual basis of accounting used
to record actual revenues and expenditures.
The Town is subject to the State of Arizona’s Spending Limitation Law for Towns and Cities.
This law does not permit the Town to spend more than budgeted revenues plus the carryover
unrestricted cash balance from the prior fiscal year. The limitation is applied to the total of the
combined funds. The Town complied with this law during the year.
Page 75
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Page 76
COMBINING AND INDIVIDUAL
FUND FINANCIAL STATEMENTS
AND SCHEDULES
Page 77
ASSETS
Cash and investments
Intergovernmental receivable
Taxes receivable
Interest receivable
Prepaid items
Total assets
LIABILITIES, DEFERRED INFLOWS OF RESOURCES
AND FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and benefits
Total liabilities
Deferred inflows of resources:
Unavailable revenues - property taxes
Fund balances:
Nonspendable
Restricted
Committed
Assigned
Total fund balances
Total liabilities, deferred inflows of resources
and fund balances
Special Revenue
$ 2,229,588
22,260
149
1,515
2,326
$2,255,838
$ 68,307
8,821
77,128
2,326
15,338
1,766,428
394,618
2,178,710
$2,255,838
Debt Service
$ 185,974
26,295
$212,269
$88
88
26,334
185,847
185,847
$212,269
Capital Projects
$ 2,130,124
$2,130,124
$
2,130,124
2,130,124
$2,130,124
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING BALANCE SHEET - ALL NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE
JUNE 30, 2023
Page 78
Total Non-Major
Governmental
Funds
$ 4,545,686
22,260
26,444
1,515
2,326
$4,598,231
$ 68,395
8,821
77,216
26,334
2,326
2,331,309
1,766,428
394,618
4,494,681
$4,598,231
Page 79
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Total revenues
Expenditures:
Current -
General government
Public works
Culture and recreation
Debt service -
Fiscal charges
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Special Revenue
$ 8,778
709,872
2,556
110,594
8,573
29,071
60,409
929,853
285,728
401,015
291,320
978,063
(48,210)
597,340
(97,340)
500,000
451,790
1,726,920
$2,178,710
Debt Service
$
5,824
5,824
98
98
5,726
5,726
180,121
$185,847
Capital Projects
$
380,963
78,997
459,960
459,960
(275,000)
(275,000)
184,960
1,945,164
$2,130,124
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
ALL NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE
YEAR ENDED JUNE 30, 2023
Page 80
Total Non-Major
Governmental
Funds
$ 8,778
709,872
383,519
110,594
8,573
29,071
145,230
1,395,637
285,728
401,015
291,320
98
978,161
417,476
597,340
(372,340)
225,000
642,476
3,852,205
$4,494,681
Page 81
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Page 82
NON-MAJOR GOVERNMENTAL FUNDS
Special Revenue Funds
Downtown Strategy Fund – accounts for the portion of Town sales tax committed by the Town
Council for the development of the downtown area.
Economic Development Fund – accounts for the portion of Town sales tax committed by the
Town Council for economic development and tourism.
Tourism Fund – accounts for the portion of Town sales tax committed by the Town Council as
well as any grants received for all tourism activities.
Local Court Enhancement Fund – accounts for a local court surcharge, committed for court
enhancement.
Environmental Fund – accounts for all funds received from collection of the environmental fee.
Cottonwoods Maintenance Fund – accounts for all funds restricted to pay for maintenance of
the Cottonwoods Maintenance District.
Debt Service Funds
General Obligation Debt Service Fund – accounts for the Town’s property tax revenues received
to pay the debt service of the Town’s general obligation bonds.
Eagle Mountain Debt Service Fund – accounts for the property tax revenues restricted to pay
the debt service of the Eagle Mountain Community Facilities District.
Municipal Property Corporation Debt Service Fund – accounts for the revenues received to
pay the debt service on MPC revenue bonds.
Capital Projects Funds
Facilities Replacement Fund – accounts for all funds assigned for the maintenance and repair of
facilities and equipment.
Development Fees Fund – accounts for restricted development fees collected from building
permits.
Page 83
ASSETS
Cash and investments
Intergovernmental receivable
Taxes receivable
Interest receivable
Prepaid items
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and benefits
Total liabilities
Fund balances:
Nonspendable
Restricted
Committed
Assigned
Total fund balances
Total liabilities and fund balances
Downtown
Strategy
$ 621,569
4,345
1,515
$627,429
$ 1,507
1,507
625,922
625,922
$627,429
Economic
Development
$ 581,029
17,379
1,131
$599,539
$ 884
5,713
6,597
1,131
591,811
592,942
$599,539
Tourism
$ 149,064
1,195
$150,259
$ 12,939
3,108
16,047
1,195
133,017
134,212
$150,259
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING BALANCE SHEET - NON-MAJOR SPECIAL REVENUE FUNDS
JUNE 30, 2023
Page 84
Local Court
Enhancement
$ 415,142
536
$415,678
$
415,678
415,678
$415,678
Environmental
$ 445,932
$445,932
$ 51,314
51,314
394,618
394,618
$445,932
Cottonwoods
Maintenance
$ 16,852
149
$17,001
$ 1,663
1,663
15,338
15,338
$17,001
Totals
$ 2,229,588
22,260
149
1,515
2,326
$2,255,838
$ 68,307
8,821
77,128
2,326
15,338
1,766,428
394,618
2,178,710
$2,255,838
Page 85
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Total revenues
Expenditures:
Current -
General government
Public works
Culture and recreation
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Downtown
Strategy
$
141,974
4,501
15,480
161,955
54,623
54,623
107,332
107,332
518,590
$625,922
Economic
Development
$
567,898
4,058
16,190
588,146
215,176
215,176
372,970
(97,340)
(97,340)
275,630
317,312
$592,942
Tourism
$
110,594
14
8,637
119,245
291,320
291,320
(172,075)
97,340
97,340
(74,735)
208,947
$134,212
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2023
Page 86
Local Court
Enhancement
$
29,071
161
29,232
15,929
15,929
13,303
13,303
402,375
$415,678
Environmental
$
2,556
19,387
21,943
393,664
393,664
(371,721)
500,000
500,000
128,279
266,339
$394,618
Cottonwoods
Maintenance
$ 8,778
554
9,332
7,351
7,351
1,981
1,981
13,357
$15,338
Totals
$ 8,778
709,872
2,556
110,594
8,573
29,071
60,409
929,853
285,728
401,015
291,320
978,063
(48,210)
597,340
(97,340)
500,000
451,790
1,726,920
$2,178,710
Page 87
Total revenues
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Expenditures:
Current -
General government
Public works
Culture and recreation
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Downtown Strategy
Budget
$
119,755
1,260
121,015
65,200
65,200
55,815
55,815
518,590
$574,405
Actual
$
141,974
4,501
15,480
161,955
54,623
54,623
107,332
107,332
518,590
$625,922
Variance -
Positive
(Negative)
$
22,219
4,501
14,220
40,940
10,577
10,577
51,517
51,517
$51,517
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2023
Page 88
Economic Development
Budget
$
479,021
240
479,261
246,320
246,320
232,941
(97,340)
(97,340)
135,601
317,312
$452,913
Actual
$
567,898
4,058
16,190
588,146
215,176
215,176
372,970
(97,340)
(97,340)
275,630
317,312
$592,942
Variance -
Positive
(Negative)
$
88,877
4,058
15,950
108,885
31,144
31,144
140,029
140,029
$140,029
Tourism
Budget
$
125,465
180
125,645
317,179
317,179
(191,534)
97,340
97,340
(94,194)
208,947
$114,753
Actual
$
110,594
14
8,637
119,245
291,320
291,320
(172,075)
97,340
97,340
(74,735)
208,947
$134,212
Variance -
Positive
(Negative)
$
(14,871)
14
8,457
(6,400)
25,859
25,859
19,459
19,459
$19,459
(Continued)
Page 89
Total revenues
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Expenditures:
Current -
General government
Public works
Culture and recreation
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Local Court Enhancement
Budget
$
49,000
900
49,900
89,850
89,850
(39,950)
(39,950)
402,375
$362,425
Actual
$
29,071
161
29,232
15,929
15,929
13,303
13,303
402,375
$415,678
Variance -
Positive
(Negative)
$
(19,929)
(739)
(20,668)
73,921
73,921
53,253
53,253
$53,253
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2023
Page 90
Environmental
Budget
$
2,400
2,400
627,100
627,100
(624,700)
(624,700)
266,339
$(358,361)
Actual
$
2,556
19,387
21,943
393,664
393,664
(371,721)
500,000
500,000
128,279
266,339
$394,618
Variance -
Positive
(Negative)
$
2,556
16,987
19,543
233,436
233,436
252,979
500,000
500,000
752,979
$752,979
Cottonwoods Maintenance
Budget
$ 8,670
72
8,742
12,388
12,388
(3,646)
(3,646)
13,357
$9,711
Actual
$ 8,778
554
9,332
7,351
7,351
1,981
1,981
13,357
$15,338
Variance -
Positive
(Negative)
$ 108
482
590
5,037
5,037
5,627
5,627
$5,627
(Continued)
Page 91
Total revenues
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Expenditures:
Current -
General government
Public works
Culture and recreation
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Totals
Budget
$ 8,670
598,776
125,465
49,000
5,052
786,963
401,370
639,488
317,179
1,358,037
(571,074)
97,340
(97,340)
(571,074)
1,726,920
$1,155,846
Actual
$ 8,778
709,872
2,556
110,594
8,573
29,071
60,409
929,853
285,728
401,015
291,320
978,063
(48,210)
597,340
(97,340)
500,000
451,790
1,726,920
$2,178,710
Variance -
Positive
(Negative)
$ 108
111,096
2,556
(14,871)
8,573
(19,929)
55,357
142,890
115,642
238,473
25,859
379,974
522,864
500,000
500,000
1,022,864
$1,022,864
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2023
Page 92
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Page 93
ASSETS
Cash and investments
Taxes receivable
Total assets
LIABILITIES, DEFERRED INFLOWS OF RESOURCES
AND FUND BALANCES
Liabilities:
Accounts payable
Total liabilities
Deferred inflows of resources:
Unavailable revenues - property taxes
Fund balances:
Restricted
Total fund balances
Total liabilities, deferred inflows of resources
and fund balances
General
Obligation Debt
Service
$ 155,313
26,295
$181,608
$
26,334
155,274
155,274
$181,608
Eagle Mountain
Debt Service
$ 19,234
$19,234
$88
88
19,146
19,146
$19,234
Municipal
Property
Corporation Debt
Service
$ 11,427
$11,427
$
11,427
11,427
$11,427
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING BALANCE SHEET - NON-MAJOR DEBT SERVICE FUNDS
JUNE 30, 2023
Page 94
Totals
$ 185,974
26,295
$212,269
$88
88
26,334
185,847
185,847
$212,269
Page 95
Revenues:
Investment earnings
Total revenues
Expenditures:
Debt service -
Fiscal charges
Total expenditures
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
General
Obligation Debt
Service
$4,712
4,712
4,712
150,562
$155,274
Eagle Mountain
Debt Service
$710
710
88
88
622
18,524
$19,146
Municipal
Property
Corporation Debt
Service
$402
402
10
10
392
11,035
$11,427
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NON-MAJOR DEBT SERVICE FUNDS
YEAR ENDED JUNE 30, 2023
Page 96
Totals
$5,824
5,824
98
98
5,726
180,121
$185,847
Page 97
Total revenues
Revenues:
Property taxes
Investment earnings
Expenditures:
Debt service -
Fiscal charges
Total expenditures
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
General Obligation Debt Service
Budget
$
1,200
1,200
350
350
850
150,562
$151,412
Actual
$
4,712
4,712
4,712
150,562
$155,274
Variance -
Positive
(Negative)
$
3,512
3,512
350
350
3,862
$3,862
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
NON-MAJOR DEBT SERVICE FUNDS
YEAR ENDED JUNE 30, 2023
Page 98
Eagle Mountain Debt Service
Budget
$ 1,380
100
1,480
14,200
14,200
(12,720)
18,524
$5,804
Actual
$
710
710
88
88
622
18,524
$19,146
Variance -
Positive
(Negative)
$ (1,380)
610
(770)
14,112
14,112
13,342
$13,342
Municipal Property Corporation Debt Service
Budget
$
100
100
1,010
1,010
(910)
11,035
$10,125
Actual
$
402
402
10
10
392
11,035
$11,427
Variance -
Positive
(Negative)
$
302
302
1,000
1,000
1,302
$1,302
(Continued)
Page 99
Total revenues
Revenues:
Property taxes
Investment earnings
Expenditures:
Debt service -
Fiscal charges
Total expenditures
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Totals
Budget
$ 1,380
1,400
2,780
15,560
15,560
(12,780)
180,121
$167,341
Actual
$
5,824
5,824
98
98
5,726
180,121
$185,847
Variance -
Positive
(Negative)
$ (1,380)
4,424
3,044
15,462
15,462
18,506
$18,506
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
NON-MAJOR DEBT SERVICE FUNDS
YEAR ENDED JUNE 30, 2023
Page 100
ASSETS
Cash and investments
Total assets
LIABILITIES AND FUND BALANCES
Fund balances:
Restricted
Total fund balances
Total liabilities and fund balances
Development
Fees
$2,130,124
$2,130,124
$2,130,124
2,130,124
$2,130,124
TOWN OF FOUNTAIN HILLS, ARIZONA
BALANCE SHEET - NON-MAJOR CAPITAL PROJECTS FUND
JUNE 30, 2023
Page 101
Revenues:
Licenses and permits
Investment earnings
Total revenues
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Development
Fees
$ 380,963
78,997
459,960
459,960
(275,000)
(275,000)
184,960
1,945,164
$2,130,124
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NON-MAJOR CAPITAL PROJECTS FUND
YEAR ENDED JUNE 30, 2023
Page 102
(This page intentionally left blank)
Page 103
Total revenues
Revenues:
Sales taxes
Licenses and permits
Intergovernmental
Other
Investment earnings
Expenditures:
Current -
General government
Public works
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Capital Projects
Budget
$ 1,141,951
70,000
10,000
1,221,951
2,800
307,148
6,439,092
6,749,040
(5,527,089)
275,000
275,000
(5,252,089)
4,068,310
$(1,183,779)
Non-GAAP
Actual
$ 1,724,626
140,284
132,283
1,997,193
1,215
59,648
4,263,138
4,324,001
(2,326,808)
3,950,527
3,950,527
1,623,719
4,068,310
$5,692,029
Variance -
Positive
(Negative)
$ 582,675
70,284
122,283
775,242
1,585
247,500
2,175,954
2,425,039
3,200,281
3,675,527
3,675,527
6,875,808
$6,875,808
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
ALL CAPITAL PROJECTS FUNDS
YEAR ENDED JUNE 30, 2023
Page 104
Facilities Replacement Fund
Budget
$
1,000
1,000
1,050,000
1,050,000
(1,049,000)
(1,049,000)
5,925,921
$4,876,921
Non-GAAP
Actual
$
4,000
136,115
140,115
781,979
781,979
(641,864)
1,500,000
1,500,000
858,136
5,925,921
$6,784,057
Variance -
Positive
(Negative)
$
4,000
135,115
139,115
268,021
268,021
407,136
1,500,000
1,500,000
1,907,136
$1,907,136
Development Fees
Budget
$
459,007
3,000
462,007
462,007
(275,000)
(275,000)
187,007
1,945,164
$2,132,171
Actual
$
380,963
78,997
459,960
459,960
(275,000)
(275,000)
184,960
1,945,164
$2,130,124
Variance -
Positive
(Negative)
$
(78,044)
75,997
(2,047)
(2,047)
(2,047)
$(2,047)
(Continued)
Page 105
Total revenues
Revenues:
Sales taxes
Licenses and permits
Intergovernmental
Other
Investment earnings
Expenditures:
Current -
General government
Public works
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Totals
Budget
$ 1,141,951
459,007
70,000
14,000
1,684,958
2,800
1,357,148
6,439,092
7,799,040
(6,114,082)
275,000
(275,000)
(6,114,082)
11,939,395
$5,825,313
Non-GAAP
Actual
$ 1,724,626
380,963
140,284
4,000
347,395
2,597,268
1,215
841,627
4,263,138
5,105,980
(2,508,712)
5,450,527
(275,000)
5,175,527
2,666,815
11,939,395
$14,606,210
Variance -
Positive
(Negative)
$ 582,675
(78,044)
70,284
4,000
333,395
912,310
1,585
515,521
2,175,954
2,693,060
3,605,370
5,175,527
5,175,527
8,780,897
$8,780,897
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
ALL CAPITAL PROJECTS FUNDS
YEAR ENDED JUNE 30, 2023
Page 106
STATISTICAL SECTION
The statistical section presents financial statement trends as well as detailed financial and
operational information not available elsewhere in the report. The statistical section is intended to
enhance the reader’s understanding of the information presented in the financial statements, notes
to the financial statements, and other supplementary information presented in this report. The
statistical section is comprised of the five categories of statistical information presented below.
Financial Trends
These schedules contain information on financial trends to help the reader understand how
the Town’s financial position and financial activities have changed over time.
Revenue Capacity
These schedules contain information to help the reader assess the factors affecting the
Town’s ability to generate revenue.
Debt Capacity
These schedules present information to help the reader evaluate the Town’s current levels of
outstanding debt as well as assess the Town’s ability to make debt payments and/or issue
additional debt in the future.
Demographic and Economic Information
These schedules present various demographic and economic indicators to help the reader
understand the environment in which the Town’s financial activities take place and to help
make comparisons with other cities.
Operating Information
These schedules contain information about the Town’s operations and various resources to
help the reader draw conclusions as to how the Town’s financial information relates to the
services provided by the Town.
Note: For locally assessed property (i.e., excluding mines, utilities, etc.) Proposition 117, approved
by voters in 2012, amended the Arizona Constitution to require that all property taxes after fiscal
year 2014-15 be based upon property values limited to five percent in annual growth. The
aggregate assessed value of all taxable properties within a taxing jurisdiction (i.e., after applying
assessment ratios based on the use of a property), including property values with a growth limit,
is currently referred to as net limited assessed value and formerly as primary assessed value. In
accordance with Proposition 117, this value is used for all taxing purposes beginning with fiscal
year 2015-16. Aggregate assessed value without a growth limit is currently referred to as net full
cash assessed value and formerly as secondary assessed value. This value remains the value
utilized for determining debt capacity limits.
Page 107
2014 2015 2016 2017
Governmental activities:
Net investment in capital assets 89,713,260$ 95,325,824$ 95,647,990$ 94,909,703$
Restricted 5,480,867 6,310,810 4,530,239 4,471,661
Unrestricted 19,186,823 15,180,582 17,232,506 17,578,068
Total governmental activities net position 114,380,950$ 116,817,216$ 117,410,735$ 116,959,432$
Source: The source of this information is the Town's financial records.
Town of Fountain Hills, Arizona
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year ended June 30
Page 108
2018 2019 2020 2021 2022 2023
96,777,854$ 104,781,328$ 104,004,331$ 103,822,185$ 102,346,737$ 101,838,463$
4,589,526 3,646,449 2,766,041 2,610,178 5,749,726 9,646,597
16,244,169 15,258,797 17,388,168 21,318,351 26,010,477 31,955,871
117,611,549$ 123,686,574$ 124,158,540$ 127,750,714$ 134,106,940$ 143,440,931$
Fiscal Year ended June 30
Page 109
2014 2015 2016 2017
Expenses
Governmental activities:
General government 2,432,965$ 2,479,365$ 2,516,966$ 3,142,722$
Development services 1,237,717 2,074,611 2,253,208 1,364,378
Public safety 6,958,056 6,816,152 7,178,890 7,563,898
Public works 6,630,875 4,963,979 6,476,688 7,904,577
Culture and recreation 2,760,690 2,822,954 3,124,523 3,375,414
Interest on long-term debt 472,999 698,542 241,694 178,749
Total governmental activities expenses 20,493,302 19,855,603 21,791,969 23,529,738
Program Revenues
Governmental activities:
Fines, fees and charges for services:
General government 215,943 337,655 298,737 837,163
Development services 531,193 693,670 1,257,492 1,062,094
Public safety 74,887 86,641 90,345 155,454
Public works 250,421 236,706 48,688 216,724
Culture and recreation 340,353 339,158 321,189 393,028
Operating grants and contributions 1,307,738 1,431,017 1,615,973 1,699,931
Capital grants and contributions 144,570 2,874,796 381,011 494,328
Total governmental activities program revenues 2,865,105 5,999,643 4,013,435 4,858,722
Net (Expenses)/Revenues (17,628,197) (13,855,960) (17,778,534) (18,671,016)
General Revenues and Other Changes in Net Assets
Governmental activities:
Taxes:
Property taxes 1,449,646 904,660 2,569,504 2,296,199
Sales taxes 8,459,267 8,983,049 9,395,667 9,415,151
Franchise taxes 349,414 352,673 360,320 367,119
State shared revenues 5,326,332 5,713,235 5,813,678 6,057,278
Investment earnings 123,311 150,358 219,058 55,127
Miscellaneous 166,115 188,251 13,826 28,839
Special item - Donation of capital assets - - - -
Total governmental activities 15,874,085 16,292,226 18,372,053 18,219,713
Changes in Net Position
Governmental activities (1,754,112)$ 2,436,266$ 593,519$ (451,303)$
Source: The source of this information is the Town's financial records.
Town of Fountain Hills, Arizona
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year Ended June 30
Page 110
2018 2019 2020 2021 2022 2023
3,431,752$ 3,318,477$ 3,470,936$ 6,687,041$ 4,333,863$ 4,890,912$
1,460,967 867,725 825,884 968,808 1,068,260 1,206,991
7,567,012 8,142,069 9,003,452 6,321,489 9,487,150 9,930,356
7,380,663 10,263,244 9,961,306 10,175,540 9,780,920 10,792,078
3,311,648 3,767,996 3,490,447 3,601,870 3,999,178 4,776,903
118,552 57,054 881 7,544 - -
23,270,594 26,416,565 26,752,906 27,762,292 28,669,371 31,597,240
295,716 280,312 533,189 310,411 498,242 516,373
1,314,915 1,143,871 608,892 693,161 947,431 762,929
155,973 90,774 100,444 104,726 89,140 136,082
52,465 10,214 131,750 355,619 654,434 359,972
497,914 1,151,500 409,651 435,432 641,269 640,365
1,737,958 1,850,676 2,007,841 4,733,757 6,381,580 6,729,883
304,951 181,939 91,245 135,525 161,751 259,266
4,359,892 4,709,286 3,883,012 6,768,631 9,373,847 9,404,870
(18,910,702) (21,707,279) (22,869,894) (20,993,661) (19,295,524) (22,192,370)
2,263,623 2,476,546 2,077,368 402,481 9,728 9,854
10,311,577 11,491,123 13,172,390 15,657,292 17,660,758 20,586,294
421,682 423,947 434,896 426,260 399,007 382,948
6,396,667 6,514,470 6,874,771 7,787,184 7,721,123 9,221,691
158,860 554,549 545,983 49,665 (419,006) 1,099,525
10,410 202,969 236,452 262,953 280,140 226,049
- 6,118,700 - - - -
19,562,819 27,782,304 23,341,860 24,585,835 25,651,750 31,526,361
652,117$ 6,075,025$ 471,966$ 3,592,174$ 6,356,226$ 9,333,991$
Fiscal Year Ended June 30
Page 111
2014 2015 2016 2017
General fund
Nonspendable
Inventory 14,358$ 6,975$ 9,272$ 5,872$
Prepaid items 18,348 10,655 4,123 16,868
Committed 1,345,200 2,634,923 2,652,357 2,714,135
Assigned 1,647,193 1,872,492 1,701,086 1,743,768
Unassigned 4,972,853 4,369,457 5,853,806 2,696,999
Total general fund 7,997,952$ 8,894,502$ 10,220,644$ 7,177,642$
All other governmental funds
Nonspendable
Cash with escrow agent 1,973,067$ 1,645,000$ -$ -$
Prepaid items 997 656 5,055 474
Restricted 3,505,590 10,066,786 4,500,044 4,432,710
Committed 2,089,361 1,079,780 1,366,081 8,576,250
Assigned 7,147,586 5,444,124 5,943,364 1,784,761
Unassigned - - - -
Total all other governmental funds 14,716,601$ 18,236,346$ 11,814,544$ 14,794,195$
Source: The source of this information is the Town's financial records.
Fiscal Year ended June 30
Town of Fountain Hills, Arizona
Fund Balances — Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Page 112
2018 2019 2020 2021 2022 2023
13,490$ 5,168$ 8,982$ 7,117$ 14,845$ 12,923$
21,945 17,311 2,418 20,170 36,464 44,542
2,893,850 3,027,804 3,249,354 3,387,433 3,664,240 4,044,890
2,101,574 2,380,653 622,641 1,085,667 1,278,191 1,639,184
2,140,434 1,863,722 5,535,499 10,958,643 9,466,833 11,644,005
7,171,293$ 7,294,658$ 9,418,894$ 15,459,030$ 14,460,573$ 17,385,544$
-$ -$ -$ -$ -$ -$
- - - - 4,253 2,326
4,571,263 3,579,891 2,708,883 2,541,894 5,701,067 9,368,764
7,248,890 5,868,386 6,068,810 4,430,491 5,511,281 7,458,457
2,340,683 2,592,343 2,402,244 1,845,901 6,541,572 7,589,084
- - (66,361) - - -
14,160,836$ 12,040,620$ 11,113,576$ 8,818,286$ 17,758,173$ 24,418,631$
Fiscal Year ended June 30
Page 113
Town of Fountain Hills, Arizona
Statement of Revenues, Expenditures and Changes in Fund Balances
Last Ten Fiscal Years
(modified accrual basis of accounting)
2014 2015 2016 2017
Revenues
Taxes 10,271,737$ 10,240,382$ 12,299,285$ 12,069,714$
Licenses and permits 891,782 1,043,382 1,372,045 1,310,973
Leases and rents 252,584 269,753 258,165 284,090
Intergovernmental 6,677,518 9,770,048 7,559,436 7,917,651
Charges for services 161,376 176,541 197,109 351,476
Other 134,114 188,251 147,662 153,438
Fines and forfeitures 170,995 186,456 209,380 257,727
Investment earnings 123,311 150,358 219,058 55,127
Total revenues 18,683,417 22,025,171 22,262,140 22,400,196
Expenditures
Current:
General government 2,194,845 2,275,124 2,324,026 2,713,548
Development services 1,774,983 2,073,990 2,217,814 1,275,147
Public safety 6,890,770 6,675,874 7,034,887 7,420,032
Public works 3,085,559 1,275,779 2,498,714 3,954,450
Culture and recreation 1,921,939 1,962,585 2,240,865 2,484,940
Capital outlay 1,750,465 8,799,068 6,471,382 1,693,265
Debt service:
Principal 2,415,000 1,850,000 4,260,000 2,675,000
Interest 460,811 454,957 308,106 244,986
Other debt service 12,188 243,585 2,005 2,180
Total expenditures 20,506,560 25,610,962 27,357,799 22,463,548
Excess (deficiency) of revenues
over (under) expenditures (1,823,143) (3,585,791) (5,095,659) (63,352)
Other Financing Sources (Uses)
Transfers in 1,838,453 2,519,774 562,044 5,194,138
Transfers out (1,838,453) (2,519,774) (562,044) (5,194,138)
Proceeds from sale of capital assets - - - -
Issuance of refunding bonds - 4,180,000 - -
Issuance of long-term debt - 7,565,000 - -
Bond Premium - 342,086 - -
Payment to refunded bonds escrow agent - (4,085,000) - -
Total other financing sources (uses)- 8,002,086 - -
Net change in fund balances (1,823,143)$ 4,416,295$ (5,095,659)$ (63,352)$
Expenditures for capitalized assets 2,385,168$ 9,067,254$ 6,394,346$ 1,696,612$
Debt service as a percentage of noncapital expenditures 15.9% 15.4% 21.8% 14.1%
Source: The source of this information is the Town's financial records.
Fiscal Year Ended June 30
Page 114
2018 2019 2020 2021 2022 2023
13,019,341$ 14,342,801$ 15,694,054$ 16,510,939$ 18,071,247$ 20,978,020$
2,004,386 2,040,622 835,731 1,293,172 2,039,349 1,524,278
282,531 280,801 286,391 264,621 333,946 355,607
8,266,028 8,401,676 8,920,296 12,713,449 14,124,324 15,919,459
254,122 181,105 222,947 99,090 171,157 216,438
207,697 347,141 387,225 320,291 431,838 403,305
182,997 130,483 281,704 239,191 223,964 240,844
158,860 554,549 545,983 49,654 (419,224) 1,094,158
24,375,962 26,279,178 27,174,331 31,490,407 34,976,601 40,732,109
3,195,936 3,147,063 3,280,191 6,513,419 4,105,257 4,697,681
1,397,249 858,957 797,513 954,667 1,041,531 1,210,967
7,402,227 6,295,989 8,566,058 8,906,428 9,180,108 9,612,993
3,420,317 7,880,668 6,046,298 6,321,814 5,712,452 7,542,736
2,375,758 2,845,027 2,609,842 2,726,748 3,166,526 3,583,471
4,317,214 4,487,854 2,716,523 4,758,067 3,828,699 4,498,734
2,720,000 2,635,000 2,310,000 400,000 - -
185,164 123,871 67,301 7,044 - -
1,805 1,600 1,998 500 598 98
25,015,670 28,276,029 26,395,724 30,588,687 27,035,171 31,146,680
(639,708) (1,996,851) 778,607 901,720 7,941,430 9,585,429
4,543,728 3,672,532 1,928,978 3,086,628 11,962,153 10,247,867
(4,543,728) (3,672,532) (1,928,978) (3,136,628) (11,962,153) (10,247,867)
- - 418,585 - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - 418,585 (50,000) - -
(639,708)$ (1,996,851)$ 1,197,192$ 851,720$ 7,941,430$ 9,585,429$
4,293,214$ 4,465,837$ 2,689,270$ 4,758,055$ 3,890,700$ 4,497,424$
14.0% 11.6% 10.0% 1.8% 0.0% 0.0%
Fiscal Year Ended June 30
Page 115
Fiscal Year
Ended June 30 Property Tax Sales Tax Franchise Tax Total
2014 1,463,056 8,459,267 349,414 10,271,737
2015 904,660 8,983,050 352,673 10,240,383
2016 2,543,298 9,391,267 360,320 12,294,885
2017 2,287,444 9,419,551 367,119 12,074,114
2018 2,286,081 10,311,578 421,682 13,019,341
2019 2,427,730 11,491,124 423,947 14,342,801
2020 2,086,769 13,172,389 434,896 15,694,054
2021 427,387 15,657,292 426,260 16,510,939
2022 11,482 17,660,758 399,007 18,071,247
2023 8,778 20,586,294 382,948 20,978,020
Source: The source of this information is the Town's financial records.
Town of Fountain Hills, Arizona
Governmental Activities - Tax Revenues by Source
Last Ten Fiscal Years
(modified accrual basis of accounting)
Page 116
Net Assessed
Net Total Estimated Taxable Value as a
Assessed Direct Actual Percentage of
Taxable Tax Taxable Estimated Actual
Fiscal Year Value*Rate**Value*Taxable Value
2014 365,963,182 0.2773 3,359,684,579 10.89%
2015 403,330,477 0.1151 3,722,794,676 10.83%
2016 402,223,763 0.5246 3,744,585,506 10.74%
2017 423,688,665 0.4472 3,965,824,715 10.68%
2018 444,639,625 0.4259 4,166,589,970 10.67%
2019 466,895,716 0.4257 4,381,287,279 10.66%
2020 494,576,905 0.3382 4,657,015,387 10.62%
2021 520,103,815 - 4,909,183,626 10.59%
2022 546,532,825 - 5,164,740,322 10.58%
2023 575,824,127 - 5,453,898,649 10.56%
Source: The source of this information is the Arizona Department of Revenue's
Abstract of the Assessment Roll and the Town's financial records.
** Per $100 of assessed taxable value; No town-wide taxes levied since FY20.
Town of Fountain Hills, Arizona
Assessed Value and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
*Note: On November 6, 2012, voters approved Proposition 117, an amendment to the Arizona
Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary and secondary
taxes are levied against the net limited assessed value. The net full cash value is used for
determining the Town’s bonding capacity and as the ceiling for net limited assessed value.
Page 117
Net Limited Percentage of Net Full Cash Percentage of
Assessed Total Net Limited Assessed Total Net Full Cash
Taxpayer Value Rank Assessed Value Value Rank Assessed Value
RCS-Park Place 1 LLC 4,104,443 1 0.75%
EPCOR - Chaparral City Water Company 4,014,150 2 0.73%
Hunter Retail LLC 2,664,494 3 0.49%
FFI Fountain View Owner LLC 2,484,873 4 0.45%
Whitestone Fountain Hills, LLC 1,917,085 5 0.35%1,738,782$ 3 0.48%
Strathmore Company LLC 1,579,590 6 0.29%
Fountain Hills Apartments LLC 1,446,429 7 0.26%
Fountain Hills Invest Co., LLC 1,438,833 8 0.26%
Target Corporation 1,435,594 9 0.26%1,585,664 5 0.43%
Palisades Resorts LLC 1,315,948 10 0.24%
Chapparal City Water Company 3,314,550 1 0.91%
Inland Western Fountain Hills Four Peaks LLC 2,868,437 2 0.78%
WSL Fountain View Investors V, LLC 1,681,860 4 0.46%
Firerock LLC 1,340,312 6 0.37%
Smith's Food & Drug 1,261,980 7 0.34%
Qwest Corporation 1,193,858 8 0.33%
EN LLC 1,491,136 9 0.41%
Fountain Hills Hotel Developers LLC 1,062,651 10 0.29%
Totals 22,401,439$ 4.08%17,539,230$ 4.80%
Source: The source of this information is the Maricopa County Assessor's Office.
Note: On November 6, 2012, voters approved Proposition 117, an amendment to the
Arizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2015-2016), both primary and
secondary taxes are levied against the net assessed limited property valuation. The net assessed full cash
property valuation is used for determining the Town’s bonding capacity and as the ceiling for net limited
assessed property valuation.
Note: 2023 data was unavailable from the Maricopa County Assessor's Office. 2022 data used instead.
Town of Fountain Hills, Arizona
Principal Property Taxpayers
June 30, 2022 and 2014
2022 2014
Page 118
Current Percent of Delinquent Ratio of Total
Fiscal Total Tax Current Taxes Tax Total Tax Tax Collections
Year Tax Levy Collections Collected Collections Collections to Total Tax Levy
2014 1,449,884 1,426,612 98.4% 18,215 1,444,827 99.7%
2015 892,104 881,170 98.8%6,903 888,073 99.5%
2016 2,532,115 2,502,995 98.8% 18,913 2,521,908 99.6%
2017 2,278,728 2,241,482 98.4% 29,003 2,270,485 99.6%
2018 2,272,027 2,230,328 98.2% 30,908 2,261,236 99.5%
2019 2,404,250 2,369,262 98.5% 19,709 2,388,971 99.4%
2020 2,092,340 2,044,210 97.7% 37,403 2,081,613 99.5%
2021 397,416 392,363 98.7%5,064 397,427 100.0%
2022 6,381 6,326 99.1%55 6,381 100.0%
2023 8,669 8,669 100.0%- 8,669 100.0%
Source: The source of this information is the Maricopa County Treasurer's Office.
Town of Fountain Hills, Arizona
Property Tax Levies and Collections
Last Ten Fiscal Years
Page 119
2014 2015 2016 2017
Sales category:
Construction 783,064$ 935,694$ 918,717$ 730,164$
Transportation/utilities 1,375,623 1,405,768 1,327,441 1,288,153
Wholesale/retail 3,653,181 4,214,119 4,815,582 4,982,218
Restaurants/bars 655,654 682,180 742,540 811,985
Real estate, rental & leasing 782,453 617,348 552,856 636,834
Services 342,079 604,618 779,753 852,675
Other 867,213 523,323 254,378 117,523
Total 8,459,267$ 8,983,050$ 9,391,267$ 9,419,552$
Note: Other includes all state and local sales tax audit adjustments.
Source: The source of this information is the Town's financial records.
Fiscal Year Ended June 30
Town of Fountain Hills, Arizona
Taxable Sales by Category
Last Ten Fiscal Years
(modified accrual basis of accounting)
Page 120
2018 2019 2020 2021 2022 2023
1,408,332$ 1,932,716$ 1,910,021$ 1,990,383$ 1,780,123$ 3,449,250$
1,309,928 1,290,585 1,405,005 1,529,268 1,501,600 1,576,570
5,235,992 5,464,247 7,031,474 8,956,208 9,834,924 10,500,903
829,857 893,595 892,210 1,062,172 1,446,971 1,517,063
745,171 842,233 965,124 993,228 1,103,241 1,258,009
747,834 1,025,548 916,769 1,125,753 1,992,955 2,278,723
34,464 42,200 51,786 280 946 5,776
$ 10,311,578 11,491,124$ 13,172,389$ 15,657,292$ 17,660,760$ 20,586,294$
Fiscal Year Ended June 30
Page 121
Fiscal
Year
Ended Town Maricopa State Total
June 30 Rate County Rate Tax Rate
2014 2.60% 0.70% 5.60% 8.90%
2015 2.60% 0.70% 5.60% 8.90%
2016 2.60% 0.70% 5.60% 8.90%
2017 2.60% 0.70% 5.60% 8.90%
2018 2.60% 0.70% 5.60% 8.90%
2019 2.60% 0.70% 5.60% 8.90%
2020* 2.90% 0.70% 5.60% 9.20%
2021 2.90% 0.70% 5.60% 9.20%
2022 2.90% 0.70% 5.60% 9.20%
2023 2.90% 0.70% 5.60% 9.20%
* 0.3% Town rate increase effective 11/1/2019
Source: The source of this information is the Arizona Department of Revenue.
Town of Fountain Hills, Arizona
Direct and Overlapping Sales Tax Rates
Last Ten Fiscal Years
Page 122
Community Municipal Highway
Fiscal Year General Facilities Property User Special Total Debt
Ended Obligation District Corporation Revenue Assessment Outstanding Per
June 30 Bonds*Bonds**Bonds*Bonds Bonds Debt Capita
2014 2,000,000 2,495,000 4,695,000 - - 9,190,000 398
2015 9,517,086 2,300,000 3,525,000 - - 15,342,086 665
2016 7,678,669 1,935,000 1,400,000 - - 11,013,669 477
2017 5,680,252 1,560,000 1,030,000 - - 8,270,252 358
2018 3,631,835 1,180,000 670,000 - - 5,481,835 238
2019 1,683,417 795,000 300,000 - - 2,778,417 120
2020 - 400,000 - - - 400,000 17
2021 - - - - - - -
2022 - - - - - - -
2023 - - - - - - -
Source: The source of this information is the Town's financial records and the U.S. Bureau of Economic Analysis.
* All bond amounts presented include amortization of original issuance discounts and premiums.
** All bond amounts presented include amoritization of original issuance discounts and premiums.
The Town is not obligated for repayment of the Eagle Mountain Community Facilities District general obligation bonds.
Population data can be found in the Schedule of Demographic and Economic Statistics.
Governmental Activities
Town of Fountain Hills, Arizona
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Page 123
Fiscal
Year
General
Obligation
Bonds*
Less: Amounts
Restricted for
Principal
Net General
Obligation
Bonds
Estimated Actual
Taxable Value of
Property
Percentage of
Estimated Actual
Taxable Value of
Property
Net General
Obligation
Bonded Debt
per Capita
Net General
Obligation Bonded
Debt per Net Limited
Assessed Valuation
Municipal
Property
Corporation
Bonds*
Net Municipal
Property
Corporation Debt
per Capita
Total
Revenues-All
Sources
2014 4,495,000 87,949 4,407,051 3,359,684,579 0.13% 189 1.20% 2,721,933 117 18,891,967
2015 11,817,086 420,782 11,396,304 3,722,794,676 0.31%483 2.83% 1,764,338 75 22,161,316
2016 9,613,669 576,281 9,037,388 3,744,585,506 0.24%378 2.25% 1,088,117 46 22,262,139
2017 7,240,252 343,697 6,896,555 3,965,824,715 0.17%282 1.63% 860,437 35 22,400,196
2018 4,811,835 83,185 4,728,650 4,166,589,970 0.11%192 1.06% 664,484 27 24,375,962
2019 2,478,417 146,100 2,332,317 4,381,287,279 0.05%93 0.50% 287,694 12 26,279,178
2020 400,000 171,807 228,193 4,657,015,387 0.01%9 0.05%- - 27,586,011
2021 - 191,594 - 4,909,183,626 -- - - 31,354,466
2022 - 194,344 - 5,436,380,244 - - -- - 35,025,597
2023 - 200,754 - 5,453,898,649 -- -- - 40,931,231
Source: The source of this information is the Department of Revenue and the Town's financial records
* All bond amounts presented are net of original issuance discounts and premiums. The Town is not obligated
for repayment of the Eagle Mountain Community Facilities District general obligation bonds
Population data can be found in the Schedule of Demographic and Economic Statistics.
Note: On November 6, 2012, voters approved Proposition 117, an amendment to the Arizona Constitution. Beginning with Tax Year 2015 (Fiscal
Year 2016), both primary and secondary taxes are levied against the net limited assessed value. The net full cash assessed value is used for
determining the Town’s bonding capacity and as the ceiling for net limited assessed value
Town of Fountain Hills, Arizona
Ratios of General Bonded Debt Outstanding
Last Ten Fiscal Years
Page 124
Estimated
Estimated Share of
Percentage Overlapping
Outstanding Debt Applicable Debt
Overlapping:
Maricopa County Special Healthcare District 600,335,000$ 1.11% 6,663,719$
Maricopa County Community College District 135,585,000 1.11% 1,504,994
East Valley Institute of Technology - 2.25% -
Fountain Hills Unified School District 5,655,000 96.47% 5,455,379
Total Overlapping Debt 13,624,092
Direct:
Town of Fountain Hills, Arizona*
General Obligation Bonds -
Revenue Bonds -
Eagle Mountain Community Facilities District** -
Total Direct Debt -
Total direct and overlapping debt 13,624,092$
Source: The source of this information is the Town's records, the State and County Abstract of the
Assessment Roll, the Arizona Department of Revenue Report of Indebtedness and the applicable
governmental unit.
* All bond amounts include amortization of original issuance discounts and premiums.
** The Town is not obligated for repayment of the Eagle Mountain Community Facilities District general
obligation bonds.
Note: The estimated percentage of debt outstanding applicable to the Town is calculated based on the Town's
net limited assessed valuation as a percentage of the net limited assessed valuation of the overlapping
jurisdiction.
Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the Town
of Fountain Hills. This schedule further estimates the portion of outstanding debt of those overlapping
governments that is borne by residents and businesses of the Town. This process recognizes that, when
considering a town's ability to issue and repay long-term debt, the entire debt burden borne by residents
should be taken into account. However, this fact does not imply that every taxpayer is a resident, and,
therefore, responsible for repaying the debt of each overlapping government.
Town of Fountain Hills, Arizona
Direct and Overlapping Governmental Activities Debt
as of June 30, 2023
Governmental Unit
Page 125
2014 2015 2016 2017
6% Debt Limit
Debt limit 21,957,791$ 24,199,829$ 28,325,296$ 30,651,126$
Total net debt applicable to limit - - - -
Legal debt margin 21,957,791$ 24,199,829$ 28,325,296$ 30,651,126$
Total debt applicable to the limit
as a percentage of debt limit - - - -
20% Debt Limit
Debt limit 73,192,636$ 80,666,095$ 94,417,653$ 102,170,422$
Total net debt applicable to limit 2,000,000 9,175,000 7,405,000 5,475,000
Legal debt margin 71,192,636$ 71,491,095$ 87,012,653$ 96,695,422$
Total debt applicable to the limit
as a percentage of debt limit 3% 11% 8% 5%
Source: The source of this information is the Town's financial records.
Note: All amounts presented are net of original issuance discounts and premiums.
Note: On November 6, 2012, voters approved Proposition 117, an amendment to the
Arizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary and
secondary taxes are levied against the net limited assessed value. The net full cash assessed
value is used for determining the Town’s bonding capacity and as the ceiling for net limited
assessed value.
Fiscal Year Ended June 30
Town of Fountain Hills, Arizona
Legal Debt Margin Information
Last Ten Fiscal Years
Page 126
2018 2019 2020 2021 2022 2023
31,459,192$ 32,400,042$ 33,907,227$ 35,603,580$ 37,800,780$ 40,238,671$
- - - - - -
31,459,192$ 32,400,042$ 33,907,227$ 35,603,580$ 37,800,780$ 40,238,671$
---- - -
104,863,974$ 108,000,140$ 113,024,089$ 118,678,601$ 126,002,599$ 134,128,903$
3,495,000 1,615,000 - - - -
101,368,974$ 106,385,140$ 113,024,089$ 118,678,601$ 126,002,599$ 134,128,903$
3% 1% - - -
Fiscal Year Ended June 30
Page 127
Net full cash assessed valuation 670,644,516
Water, Sewer, Artificial Lighting, Parks, Open Space, Recreational Facility
Improvements, Public Safety, Law Enforcement, Fire and Emergency
Facilities, Street and Transportation Facilities
Debt limit - 20% of net full cash assessed valuation 134,128,903$
Net debt applicable to limit -
20% legal debt margin 134,128,903
All Other General Obligation Bonds
Debt limit - 6% of net full cash assessed valuation 40,238,671
Net debt applicable to limit -
6% legal debt margin 40,238,671
Total legal debt margin 174,367,574$
Source: The source of this information is the Maricopa County Assessor's Office and the
Town's financial records.
Note: On November 6, 2012, voters approved Proposition 117, an amendment to the
Arizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary and
secondary taxes are levied against the net limited assessed value. The net full cash assessed
value is used for determining the Town’s bonding capacity and as the ceiling for net limited
assessed value.
Town of Fountain Hills, Arizona
Calculation of Legal Debt Margin
as of June 30, 2023
Page 128
Fiscal
Year
Ended Pledged
June 30 Principal Interest Total Revenues Coverage
2014 1,225,000 234,176 1,459,176 14,313,158 9.8
2015 2,545,000 184,500 2,729,500 15,583,484 5.7
2016 480,000 32,740 512,740 16,250,673 31.7
2017 370,000 22,680 392,680 16,815,224 42.8
2018 360,000 16,686 376,686 18,194,833 48.3
2019 370,000 10,854 380,854 19,765,936 51.9
2020 300,000 4,860 304,860 20,862,372 68.4
2021 - - - 24,001,082 100.0
2022 - - - 26,453,550 100.0
2023 - - - 30,620,545 100.0
Source: The source of this information is the Town's financial records.
Town of Fountain Hills
Revenue Bond Coverage
Last Ten Fiscal Years
Municipal Facilities Corporation Revenue Bonds
Page 129
Town of Fountain Hills, Arizona
Demographic and Economic Statistics
Last Ten Calendar Years
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*
Population 23,318 23,573 23,899 24,482 24,583 24,987 25,200 23,820 23,906 23,785
Per capita personal income 48,244$ 46,619$ 48,240$ 50,162$ 60,531$ 54,936$ 57,468$ 59,791$ 57,550$ 60,707$
Median age 53 53.7 53.8 53.7 53.5 57.5 58.8 59.4 58.6 62.0
Public school enrollment 1,820 1,692 1,619 1,506 1,444 1,380 1,338 1,314 1,267 1,192
Town of Fountain Hills
unemployment rate 6.0% 5.4% 2.4% 1.9% 1.6% 3.9% 8.7% 4.9% 4.4% 2.8%
Land use
Total acres 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7
Total square miles 20.32 20.32 20.32 20.32 20.32 20.32 20.32 20.32 20.32 20.32
Vacant lots 1,196 1,165 1,247 1,209 1,175 1,172 1,052 1,158 1,158 1,030
Number of units
Housing 12,991 12,981 13,002 13,130 13,176 13,558 13,749 13,875 13,876 14,101
Lodging 4 4 4 4 4 4 4 4 4 4
Restaurants 54 43 46 50 52 54 55 55 57 57
Shopping centers 20 20 20 20 20 20 20 20 20 20
Schools
Public 3 3 3 3 3 3 3 3 3 3
Preschool 7 7 7 7 7 5 5 5 5 5
Charter 1 1 1 1 1 1 1 1 - -
Vocational - - - - 1 1 2 2 1 1
Note: N/A indicates the information is not available
* Information obtained is based on calendar years; therefore, the latest information obtained wa
from 2022.
Sources: The sources of the "Per Capita Personal Income", "Median Age" and "Unemployment Rate" information are
Sites USA (2009-2017), U.S. Census Bureau and Arizona Office of Economic Opportunity (beginning in 2018). The
source of the "Population" is the U.S. Census Bureau July 1, 2022 estimate. The source of School Enrollment is the
Fountain Hills Unified School District No. 98. Other information is from the Town's records.
Calendar Year Calendar Year
Page 130
Percentage
Number of of Total Town Number of
Employer Employees Rank Employment Employees Rank
Fountain Hills Unified School District No. 98 270 1 4.4% 335 1
Safeway Stores 130 2 2.1%87 6
Fountain View Village 120 3 2.0% 136 2
Rural Metro Corporation 110 4 1.8% 111 3
Firerock Country Club 100 5 1.6% 100 5
Fry's Food Stores 80 6 1.3% 105 4
Target Stores 70 7 1.2% 100 5
Eagle Mountain Golf Club 70 7 1.2%70 8
Fountain Hills Family Practice PC 70 7 1.2%
Fountain Hills Medical Center 70 7 1.2%
Town of Fountain Hills 70 7 1.2%60 10
Golf International Inc 60 8 1.0%
Quotemedia Inc 60 8 1.0%
Sunridge Canyon Golf Course 60 8 1.0%59 11
United States Postal Service 60 8 1.0%
Bashas 60 8 1.0%63 9
Holiday Inn 80 7
Totals 1,460 24.2% 1,306
Total Town employment 6,070 5,102
Source: The source of this information is the Maricopa Association of Governments and Town records.
Note: MAG data includes employers with 5+ employees and is rounded to nearest 10.
* Data for 2022 was not available.
2021*
Town of Fountain Hills, Arizona
Principal Employers
Prior Fiscal Year and Nine Years Ago
2012
Page 131
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Municipal court 4.00 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 4.63
Administration 10.56 11.33 11.63 12.25 13.45 13.70 15.20 15.00 16.00 16.24
Public works n/a n/a n/a 9.80 9.80 10.80 12.43 12.43 12.00 13.00
Development services 16.25 16.30 16.30 7.50 8.50 7.50 9.00 9.00 9.00 10.00
Community services 20.18 21.06 20.76 20.76 20.56 20.56 20.56 22.01 24.02 24.52
Total 50.99 52.32 52.32 53.94 55.94 56.19 60.82 62.07 64.65 68.39
Source: The source of this information is the Town's financial records.
Town of Fountain Hills, Arizona
Authorized Full-time Equivalent Government Employees by Function
Last Ten Fiscal Years
Fiscal Year Ended June 30
Page 132
Function/Program 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Municipal Court
Cases filed 1,649 1,738 1,593 2,014 1,277 891 2,237 1,324 1,586 1,823
Hearings/Trials held 1,665 1,585 1,564 1,844 676 801 568 1,430 1,378 1,216
Administration
FTEs per 1,000 residents 2.2 2.2 2.2 2.2 2.3 2.2 2.4 2.6 2.7 2.9
Registered voters - general election N/A 16,213 none 16,387 none 16,775 none 18,415 none 18,423
Voter turnout - general election N/A 40% none 40% none 50% none 90% none 80%
Development Services
Building permits issued 445 443 410 509 468 576 547 575 620 730
Building inspections conducted 2,131 2,448 2,129 2,704 3,707 4,795 4,069 3,652 1,911 5,460
Number of code violation cases 716 752 713 669 654 655 690 497 586 656
Number of zoning cases 41 65 72 50 41 11 7 21 73 95
Community Services
Number of Community Center bookings/permits*3,383 3,439 3,124 3,764 4,395 3,857 3,169 1,675 1033* 316**
Number of participants in recreational programs 2,291 2,249 2,910 3,773 3,794 3,489 1,830 2,892 4,110 5,244
Number of Senior Services members 1,189 1,273 1,326 1,335 1,220 1,313 1,265 1,360 1,175 1,290
Number of home delivered meals 4,799 4,035 3,497 3,920 3,093 3,562 5,215 4,402 4,581 5,449
Law Enforcement (contracted)
Physical arrests 743 445 220 220 214 67 86 56 49 67
Traffic violations 1,379 1,539 1,215 1,803 1,053 1,248 2,618 2,745 2,568 3,349
Fire & Emergency Medical (contracted)
Total incident responses 2,956 3,166 3,191 3,425 3,659 4,073 3,896 4,215 4,268 4,709
Average response time (in minutes)3:53 3:37 3:57 3:25 3:33 3:32 3:51 4:50 4:38 4:44
Source: The source of this information is the Town's financial records.
Note: N/A indicates that the information is not available.
**Beginning in 2023, individual bookings were replaced by single day and recurring permits only.
Fiscal Year Ended June 30
Town of Fountain Hills, Arizona
Operating Indicators by Function
Last Ten Fiscal years
*The Community Center was closed from 7/1/22 until 10/3/22 for renovations.
Page 133
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Public safety
Number of fire stations 2 2 2 2 2 2 2 2 2 2
Public works
Streets (centerline miles) 178.9 178.9 178.9 178.9 180.0 180.0 180.0 180.0 180.0 180.0
Streets (lane miles)390 390 391 390.5 391.5 391.5 391.5 391.5 391.5 391.5
Pedestrian lighting 34 85 91 91 91 91 91 91 95 95
Traffic signals 13 13 13 13 13 13 13 13 13 13
Parks and recreation
Acreage-developed parks 116 119 119 119 119 119 119 119 119 119
Playgrounds 7 7 7 7 7 9 9 9 9 9
Baseball/softball diamonds 6 6 6 6 6 6 6 6 6 6
Soccer/football fields 7 7 7 7 7 7 7 7 7 7
Community centers 1 1 1 1 1 1 1 1 1 1
Preserve acreage 740 807 807.2 807.2 807.2 889.2 913.2 913.2 913.2 913.2
Miles of trails 10.43 15.80 15.8 18.5 18.5 18.5 18.5 18.5 23.0 23.0
Source: The source of this information is the Town's facilities records.
Note: N/A indicates the information is not available.
Town of Fountain Hills, Arizona
Capital Assets Statistics by Function
Last Ten Fiscal Years
Fiscal Year Ended June 30
Function/Program
Page 134
Town of Fountain Hills
16705 E. Avenue of the Fountains
Fountain Hills, Arizona 85268
480-816-5100
www.fountainhillsaz.gov
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