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Home My WebLink About1-06-05Document in Agenda Packet 1-6-05.obd 1/3/2005 NOTICE OF SPECIAL SESSION OF THE DISTRICT BOARD OF THE EAGLE MOUNTAIN COMMUNITY FACILITIES DISTRICT WHEN: THURSDAY, JANUARY 6, 2005 TIME: IMMEDIATELY PRIOR TO THE TOWN COUNCIL MEETING THAT BEGINS AT 6:30 P.M. WHERE: TOWN HALL COUNCIL CHAMBERS 16836 E. PALISADES BOULEVARD Pursuant to A.R.S. 38-431.02, notice is hereby given to the Directors of the District Board of the Eagle Mountain Community Facilities District and to the general public that the District Board of the Eagle Mountain Community Facilities District will hold a special session open to the public immediately prior to the Council meeting that begins at 6:30 p.m. The agenda for the meeting is as follows: 1.) Meeting CALLED TO ORDER and ROLL CALL. 2.) CALL TO THE PUBLIC. Pursuant to A.R.S. §38-431-01(G), public comment is permitted (not required) on matters not listed on the agenda. Any such comment (i) must be within the jurisdiction of the Directors is subject to reasonable time, place and manner restrictions. The Directors will not discuss or take legal action on matters raised during “Call to the Public” unless the matters are property noticed for discussion and legal action. At the conclusion of the call to the public, individual Directors may (i) respond to criticism, (ii) ask staff to review a matter or (iii) ask that the matter be placed on a future agenda. 3.) Consideration of APPROVING THE MEETING MINUTES of August 5, 2004. 4.) PRESENTATION of the Eagle Mountain Community Facilities District’s COMPREHENSIVE ANNUAL FINANCIAL REPORT for the fiscal year ending June 30, 2004, by the independent auditor firm, Cronstrom and Trbovich. 5.) ADJOURNMENT. DATED this 30th day of December 2004. By: S/Bevelyn J. Bender, District Clerk The Eagle Mountain Community Facilities District in cooperation with the Town of Fountain Hills endeavors to make all public meetings accessible to persons with disabilities. Please call 837-2003 (voice) or 1-800-367-8939 (TDD) 48 hours prior to the meeting to request a reasonable accommodation to participate in this meeting. Supporting documentation and staff reports furnished with this agenda are available for review in the clerk's office. Town of Fountain Hills District Board - Eagle Mtn CFD Agenda Action Form Meeting Type: Special Meeting Meeting Date: January 6, 2005 Submitting Department: Administration Contact Person: Bender Consent: Regular: Requesting Action: Report Only: Type of Document Needing Approval (Check all that apply): Public Hearing Resolution Ordinance Agreement Emergency Clause Special Event Permit Special Consideration Intergovernmental Agreement Acceptance Grant Submission Liquor/Bingo License Application Plat Special Event Permit Special/Temp Use Permit Other: Draft Minutes from August 5, 2004 Council Priority (Check Appropriate Areas): Education Public Fitness Library Services Public Safety Community Activities Economic Development Public Works Human Service Needs Parks & Recreation Town Elections Community Development Regular Agenda Wording: CONSIDERATION of APPROVING THE MEETING MINUTES of August 5, 2004. Staff Recommendation: Approve Fiscal Impact: No $ Purpose of Item and Background Information: To approve the draft minutes for archival purposes. List All Attachments as Follows: Draft minutes Type(s) of Presentation: None Signatures of Submitting Staff: S:/BBender _____________________________________ Department Head Budget Review (if item not budgeted or exceeds budget amount) S:/JAGhett, ATM Town Manager / Designee DRAFT Document in Agenda Packet 1-6-05.obd Page 2 of 10 TOWN OF FOUNTAIN HILLS SPECIAL SESSION OF THE DISTRICT BOARD OF THE EAGLE MOUNTAIN COMMUNITY FACILITIES DISTRICT AUGUST 5, 2004 Chairman Nichols called the Special Session to order at 6:30 p.m. ROLL CALL – Present for roll call were the following members of the District Board of the Cottonwoods Maintenance District: Chairman Nichols and Directors Kehe, McMahan, Nicola, Schlum, Archambault and Kavanagh. Town Attorney Andrew McGuire, the Town’s Bonding Attorney Scott Ruby, Town Manager Tim Pickering, and Accounting Supervisor Julie Ghetti were also present. AGENDA ITEM #2 – CALL TO THE PUBLIC Burt Fischer, 9245 N. Sunset Ridge Mr. Fischer, a member of the Eagle Mountain Community Association, stated that he wished to bring forward the following items for consideration: 1. To further reduce the Community Facilities District (CFD) tax, please immediately begin the process to explore refinancing the CFD bonds. He noted that the bonds were issued at rates between 5.5% and 7.25% and said he believes better rates are now available but the window is closing rapidly. 2. Direct Staff to defer all future CFD cash distributions to the developer until certain apparent accounting errors are resolved. He commented that he discussed this issue with each of the members and they are in the process of being resolved. He noted that the items were brought up during the process of his review and he does not yet know the final outcome. He stated the opinion that until the issues are resolved, it is incumbent upon them not to distribute any more monies until they can determine whose money it is. 3. Engage the Town’s independent auditor to also audit the CFD and issue a separate report. He stated that the current auditor of the Town does not audit the CFD and, in fact, his audit report indicates that he is only expressing an opinion on the overall financial statements. He added that the CFD is included as an un- audited schedule. He stated the opinion that since the developer should be ready to leave shortly and withdraw his $4.4 million dollar deposit, he believes it is incumbent upon them to have an audit of the CFD before he leaves. 4. Determine the current status and closely monitor the significant construction defects dispute involving the CFD, the Sanitary District and the CFD’s developer and lift station/pump station subcontractor. He noted that this is a fairly complicated matter that came to his attention during the process and is separate and apart from the fee issue. He requested that they consider this issue as part of a future agenda. Chairman Nichols thanked Mr. Fischer for his input and stated that the items would be placed on their list of items to research. AGENDA ITEM #3 – CONSIDER APPROVING THE MEETING MINUTES OF JULY 1, 2003. Director Kavanagh MOVED and Vice Chair Archambault SECONDED a motion to approve the meeting minutes of July 1, 2003 as presented. The motion CARRIED UNANIMOUSLY (7 to 0). AGENDA ITEM #4 – PUBLIC HEARING ON THE EAGLE MOUNTAIN COMMUNITY FACILITIES DISTRICT STATEMENTS AND ESTIMATES OF DISTRICT EXPENDITURES ON THE DISTRICT BUDGET FOR FISCAL YEAR 2004-05 AND THE PROPOSED TAX LEVY. DRAFT Document in Agenda Packet 1-6-05.obd Page 3 of 10 Chairman Nichols declared the public hearing open at 6:45 p.m. Town Manager Tim Pickering addressed the members of the Board and said that the action that would take place in accordance with this agenda item occurred on an annual basis. He stated that in the past they had always had a $3.00 tax and this was the first year that they had actually been able to reduce the tax amount because of the amount of homes and evaluations that were occurring in Eagle Mountain. He added that Accounting Supervisor Julie Ghetti would present an overview of this agenda item. He further stated that the Town’s Bond and CFD Attorney, Scott Ruby, would also provide input. Ms. Ghetti stated that the Eagle Mountain Community Facilities District was formed in 1996, bonds were sold to pay for the cost of infrastructure that were to be paid back through a property tax levy of a maximum of $3.00 per hundred. She noted that at the time the infrastructure was done there were no homes at Eagle Mountain and therefore the developer was responsible to make the annual debt payments on the bonds. A developer agreement was reached and required that an amount equal to the principle amount of the bonds be kept with a trustee in the event there were insufficient funds to pay back the bonds. The trustee currently holds $4.4 million, which is the principle amount of the bonds. The development agreement also allows for reimbursement to the Town of Fountain Hills for administering the District. Ms. Ghetti advised that as new homes were added, through the tax rolls less of the developer’s interest earnings were required to pay for the annual debt payment but the interest earnings have continued to accumulate with the trustee. For Fiscal Year 2004-05 there was enough property tax on the rolls to make the annual debt payment and no developer contribution was required. She added that for Fiscal Year 2004-05, the tax levy would be $2.59 per hundred and that was for a budget of $513,000, which included the debt service payment in addition to the administrative fee to the Town. She explained that the administrative fee was based on the Town’s current CFD policy, which permits the Town to levy 30 cents per hundred to recover the cost of the District. She noted that the $51,000 that was included in the budget includes costs for administering the District’s business, hiring a financial advisor to analyze possible refunding and preparation of the refund to the developer if they should request their $4.4 million back. Ms. Ghetti pointed out that the CFD policy also allowed the District Board the flexibility in determining the basis for reimbursing costs. She said that the Board had three options: (1) maintain the current policy of 30 cents per hundred for administrative costs; (2) reduce the administrative costs from 30 cents to another number that was acceptable to the Board; and (3) direct Staff to allocate the direct costs, based on documented billings, and this would be best accomplished by an objective third party administrator who would deal specifically with Eagle Mountain and the billings would specifically pertain to Eagle Mountain. She added that since the Town did not have the resources to do an actual cost basis and track each one of the phone calls and all of the work that was done for the District, it was difficult to determine what the actual true costs were. She stated that Staff felt that if the District Board wanted a true reimbursement cost, then the best thing to do would be to have an objective third party administrator handle that District. Ms. Ghetti noted that included in the General Fund was the administrative fee, so if the administrative fee was reduced from the District, there would have to be a corresponding reduction in the General Fund in the amount of $51,000. Director Kavanagh commented that during the Call to the Public, a representative of the District suggested that some additional actions might be timely, either at this meeting or in the near future. He said that since they were approving the budget this evening and some of the other actions, including an independent audit, or even possibly an administrator, would require additional monies beyond what they were currently talking about in terms of administering the way it was currently conducted, he wondered how they should proceed. He asked if they would be able to amend the budget or they had to pretty much know what the total cost of everything would be this evening. Ms. Ghetti responded to Director Kavanagh’s question and said that if the Board decided to hire an outside administrator, then the Town would not collect on the $51,000. The levy would be there to allow the District to pay the $51,000 or whatever the direct costs would be. She added that if the budget was adopted this evening, there DRAFT Document in Agenda Packet 1-6-05.obd Page 4 of 10 would be sufficient funds to pay for an outside administrator in addition to an independent audit costs and the cost of a financial advisor to look at refunding the bonds. She clarified that if they budgeted the amounts, they were levying the tax at $2.59. Director Kavanagh commented that he was not 100% sure that he knew what the residents wanted in terms of an administrator and said he wanted to do what they wanted but at the same time he did not know what that will cost. Scott Ruby addressed the Board and noted that the levy right now, if adopted, is $2.59 and would produce an administrative fee of $51,000 to the Town and $5,000 to the trustee. He noted that the trustee’s fee is a fixed amount. The $51,000 is currently expected to be paid to the Town and the Town will then reimburse itself for its expenses, time and effort and also for any third-party consultants who are engaged in order to carry out some of the items brought up by Mr. Fischer. He said that all of the potential third parties that might offer services to the District would have to be compensated out of the $51,000 and the Town’s fee would be reduced accordingly. He stated that once a budget was adopted and forwarded to the County, the tax rate was set and the funds would be generated as people paid their taxes. He said they really could not go back, barring some emergency procedures that the Town had, and “bump” the budget and try to sell warrants, which would only serve to complicate this scenario. Director Nicola noted that the CFD policy started out requiring an application for a Community Facilities District and said this was what was approved in March of 2003. She added that it also specifically outlined the manner in which a CFD was formed all the way through Article IV, which got into operations and financing. She said she never considered that they as a Board would assess fees unbeknownst to the homeowners after the fact. She added that she anticipated that the policy was forward looking based upon the manner in which it was written. She said in order to provide for the CFD to be self-supporting for its administrative operations and maintenance expenses, the policy called for the Town and the CFD, unless otherwise agreed, to require the imposition of a 30 cent per $100 dollars of assessed value ad valorem tax upon the CFD’s taxable property. She added that failure to agree to impose any necessary tax for the operation and maintenance of the CFD would relieve the Town and the CFD from undertaking any obligations or operations. Director Nicola said she was having a problem with the entire thing because as she viewed this, the CFD was put into place long before the policy and she did not understand how the policy now “retroactively” could be assessed. She referred to the developer agreement and costs to administer the agreement and read specific language (Page 28, Section 7.20a) into the record that appears to support her concerns, namely: “To provide for the payment of expenses and costs of the District costs arising from the activities, such activities being the financing, etc., including particularly expenses and costs for agents and third parties required to administer bonds, the administration of the bonds, levy and collection of ad valorem taxes for payment of the bonds, preparation of annual audit and budget and any purposes otherwise related to such activities of the District, amounts shall be budgeted by the District Board each year in the District Budget for such purposes and shall be paid first from the tax amount for that purpose and second from an amount available as described in Section 3.4B(b) and deposited in the tax account for such purpose before payment of such amounts to the owner, third from payments from the owner for such purpose upon presentation of such evidence of the applicable expenses and costs and demand by the District for the payment thereof from $40,000 of proceeds from the Series B bonds, etc.” Director Nicola said that in reading through the policy, she was not finding the language that allowed the Board to retroactively come back and assess monies. She added that they did not follow the adopted policy and things were being changed “mid-stream.” She stated that when they adopted the budget on July 1, 2003, it did not include that payment of $51,000 that was then assessed. She requested some clarification and justification for proceeding as proposed. Mr. Ruby said that with respect to Section 7.20a, the thought behind the District was that it would finance infrastructure that was virtually already acquired and completed and thereafter its responsibilities would be limited to duties and functions relative to those bonds and to the levying of a tax, just as Director Nicola read in Section 20. He explained that it was thought then by the District Board that there was not a need for a 30-cent levy because the DRAFT Document in Agenda Packet 1-6-05.obd Page 5 of 10 understanding was that the amount levied for debt service could, pursuant to the definition of debt service contained in the Statutes, incorporate all of the costs and expenses that were detailed in Section 7.20. He said there wasn’t an independent 30-cent levy for operations and maintenance expense and a debt service levy for whatever amount was needed to pay debt service and interest, it was all combined into one because the definition of debt service in the Statutes was broad enough to include all of those costs. Mr. Ruby further stated that with respect to the retroactivity of the 30-cent rule, that rule had been around for quite some time, the 30 cents that was being referenced was being used by the District now as more or less a guide as to what the administrative fee should be for the activities detailed in Section 7.20. He added that it was not meant to be necessarily a 30-cent allocation specifically in the debt service levy, i.e. it takes $2.30 to pay principle and interest on the bonds. He stated there was no “hard and fast rule” that they were immediately going to “bump” the rate to $2.60 because of the 30 cent rule, rather they used it as a guide to determine the range of the fees and levy accordingly. He expressed the opinion that no attempt was made to retroactively apply that as a rule but rather the 30 cents was a guide that they had looked to during the past year and a half as to how much they should charge as an administrative fee. Mr. Ruby commented that it would be the ultimate decision of the Board to determine the amount of the fee and reiterated that the 30 cents was guidance and not retroactively being applied as the rule. He noted that the first flow of funds was from taxes and the Town was obligated according to the development agreement to pay those administrative fees to the extent monies were available from the levy of a tax, not to exceed $3.00 from those fees. He said he believed they were obligated contractually to pay whatever the amount of administrative fees were from the tax. Vice Chair Archambault asked whether there was a reserve they could draw from, similar in nature to one a homeowners’ association (HOA) would build up, should the Board decide to follow through on the recommendations or the requests of members of the CFD to investigate specific allegations. He added that if not, did the CFD have the ability to levy a special assessment, just like a HOA could do. Ms. Ghetti said that the District had been collecting excess revenues from the $4.4 million and those monies had been put aside with the trustee for the District and were on the books right now. She stated that they were trying to determine of that excess, how much was excess earnings from the $4.4 million versus how much was property tax left over from a prior year. She added that they should know the answer to that question by the end of August and said there could be some excess property tax in there that would allow for the expenditure, but that amount was unknown at this time. Mr. Ruby addressed the issue of a reserve and advised that there was an account under the indenture where all the tax proceeds went and there was also a requirement that the excess earnings off of the depository investment be applied in a certain prioritized manner, first and foremost to pay principle and interest on the bonds, second to pay trustee fees and third expenses of the District. He noted that if there were no District expenses and the principle and interest had been paid as well as the trustee fees, then the excess earnings from the depository investment were supposed to be “kicked out” to the owner on July 2nd of every year. He said he didn’t know if the trustee did that or whether the owner requested that but technically it should occur without the owner’s request after the trustee ran through this gauntlet of expenses. He stated that there could be some earnings that technically should have gone back to the developer each year, mingled with some tax proceeds, and added that they needed to determine that. He noted that any tax proceeds levied were levied for debt service purposes and needed to be used for debt service purposes. He said that unless they determined that the excess funds were tax proceeds, they could be used for those administrative purposes or could be used to examine the refunding. He added that if they did not use them for that purpose, they needed to be applied to next year’s tax levy amount so that the Town levied less. Mr. Ruby also addressed the assessment question and stated that there was no way they could levy assessments for this purpose. He noted, however, that the CFD could issue assessment bonds and levy assessments but only for capital projects and only after they engaged in a statutory process that included a number of hearings and notices. Director Kavanagh commented that based upon what had been said, including Mr. Fischer’s comments, the issue had gone far beyond the fairly straight forward question which the Board initially thought they were to address, DRAFT Document in Agenda Packet 1-6-05.obd Page 6 of 10 namely, what should they budget for the routine administrative costs. He said in the interest of avoiding confusion and maintaining order, he would suggest that the Board first deal with the initial issue (what was a reasonable amount for routine administrative costs) and after they decided that, they tackle the second issue, what additional actions should be taken and how much should be budgeted for those actions. Chairman Nichols concurred with Director Kavanagh’s comments. Director Kavanagh noted that the costs started out high, $51,000, and based upon a memo dated June 30th, they decreased considerably to a current $25,000, which he still believed was unreasonably high. He added the opinion that if they removed the rent charges, which he thought were inappropriate and inflated, it would decrease the actual figure down to $6,598.92, which was extremely close to the figure that Mr. Fischer discussed. Chairman Nichols stated that they were currently conducting a public hearing and therefore action could not be taken at this time. Town Attorney Andrew McGuire concurred with the Chairman’s statement. Director Kavanagh clarified that it was his hope that if a sufficient number of members supported that basic philosophy, that the public might understand that and rather than having large numbers of people come up to argue about the $25,000, knowing that there was a consensus for the reasonable amount, they could skip to the next issue and save a lot of time. Chairman Nichols stated that he saw a lot of the members nodding in agreement and suggested that they move on to the next item and said they could come back to this later on. Director Kavanagh advised that the second item was the refinancing, which was pretty straight forward and reasonable, and added that the other issue was the appointment of an administrator. He said this was a new issue and he was not sure what that would cost and whether there was support from the people in the District for that to occur. Ms. Ghetti informed the Board that the purpose for recommending the administrator was that the Town did not have the resources to allocate the cost and keep track of the phone calls and time spent by various Staff members on District affairs. She expressed the opinion that an administrator would be able to present a more accurate representation of time spent since they would bill for their time spent on Eagle Mountain District. Director Kavanagh also discussed audits and asked what that would cost. Ms. Ghetti responded that she believed a single audit was approximately $1500. Chairman Nichols noted that the lift stations were in disrepair and had never been accepted by the Sanitary District and needed to be fixed. He said the question was who was responsible to fix them and said that if there were any expenses for the repairs, that amount would be assessed back to the residents of the District. He stated that the CFD needed legal advice regarding the liability of the lift stations and the associated costs. He added that the cost of that legal work would have to be borne by the CFD and not by the Town. Ms. Ghetti advised that Staff was currently looking into the issues raised by the Chairman and said that no determination had been made regarding who was in control and who was not. She said Staff would continue to research this and come back to the Board at a later date with additional information. Chairman Nichols stated that either way there would have to be some monies built into the budget to pay for the legal expenses. Director Kehe said he believed he heard that that the monies could not be obtained from the CFD and therefore something would have to go someplace along the lines. He added that the June 30th document referred to by Director Kavanagh, the $25,419 was not a hard number since there was nothing to base it on other than estimates. DRAFT Document in Agenda Packet 1-6-05.obd Page 7 of 10 Ms. Ghetti confirmed that the figure was an estimate and said Staff did not have the resources to keep track of each hour spent on each entity. In response to a question from Director Kehe, Ms. Ghetti responded that the tax levy had to be adopted before the third Monday in August and the Board would not meet again. She said that therefore the tax levy had to be established this evening for 2004. She added that Staff could not provide cost estimates this evening upon which to base the budget and said that unless the Board called a special emergency meeting, tonight was the night that the levy had to be adopted. Chairman Nichols stated the opinion that an alternative suggestion existed. He added that they knew there were going to be expenses that had to be borne by the CFD but they did not know the exact hard cost amounts for the refinancing of the bonds, the audit and legal fees at this time. He said that the amount that would flow through this year to Fountain Hills for their administrative work was $6,598.92 and if they said of the $51,000, the only portion that would come through to the Town would be the $6,598.94 (rounded to $6600), the balance of that $51,000 would be used as a pool to pay for the hard costs and at the end of the year, if there was any money left out of that pool, the money would be used to reduce next year’s levy. In response to a question from Director Kavanagh, Mr. Ruby advised that excess unexpended funds would be available to pay the subsequent year’s costs and would not go to the developer. Vice Chair Archambault noted that the Town went through a series on trying to refinance some mountain bonds that they had and said if he remembered correctly, the bonds were not “callable” for ten years and earlier refinancing involved a penalty. He asked whether the bonds for the CFD “callable” now to the point where they could be refinanced at a cheaper rate. Mr. Ruby responded that the bonds were “callable” with a 1% premium beginning July 1, 2006, but added that even that date did not preclude the Board from refinancing at this time and establishing a irrevocable escrow that had in it government securities that matured and came due July 1, 2006, paid the premium amount and paid the bonds. He said they were refundable at any time but whether it made financial sense or there were savings there would have to be determined by a financial advisor. He added that the entire financing scenario would have to be presented to the Board and they would have to decide what was in the best interest of the District. He noted that a lot of the refinancing costs could be “folded into” the bond issue itself and said that was why it was difficult to determine the actual amount since various options were available. Vice Chair Archambault said he was concerned that they might be one year premature at looking at refinancing the bonds and perhaps they should address this matter next year. Mr. Ruby stated that a financial advisor would say that a bird in the hand was better than two in the bush and therefore if there would be a savings in an amount that the Board believed appropriate (industry standard is 3 to 4% of the savings amount equals 3 or 4% of the bonds to be refunded) then maybe they would proceed. He added that the Board might have a different policy with regarding the savings they were looking to achieve. He said that the call date was just another dynamic in the entire formula that had to be gone through in order to determine savings. Chairman Nichols commented that the analysis had to be done now so that they did not miss the window of opportunity. Director Kavanagh said he sensed that consensus exists for a $6600 cap on what the Town would receive for its services and added that his only concern was that $51,000 was the number that came out of nowhere. He stated that he was not sure than an independent administrator, should they decide to go down that road, was going to come about this year. He added that if it did, the Town would not be collecting money. He questioned whether the administrator’s fee should be considered something that was needed this year. He asked whether the Sanitary District issue was too much or an appropriate amount for that type of thing. DRAFT Document in Agenda Packet 1-6-05.obd Page 8 of 10 Ms. Ghetti responded that she did not know the answer to that question and said they did not have a basis at this point upon which to determine an amount. She noted that the alleged damages had not been evaluated and Staff would have to research this and come back at a later date with their findings. Councilwoman Nicola asked whether it was the responsibility of the CFD to stand behind the lift station problem and whether it was within the realm of this Board. Ms. Ghetti reiterated that insufficient information was available at this time and Staff would have to investigate further. Discussion ensued relative to the matters of dispute that existed and the fact that the CFD would be defending its interests or trying to explore the answer to the problems, which would involve lawyers; the fact that they hoped they would come to the conclusion that it was a Sanitary District problem versus the contractor; the fact that the three lift stations would cost approximately $100,000 to $150,000 per lift station and as high as $200,000 each; health issues that could arise if the lift stations gave way; and the fact that whatever amount the Board agreed to this evening would be “locked in” and could not be amended. Mr. Burt Fischer Mr. Fischer again addressed the Board and said that the residents had paid $150,000 so far in fees to the Town for all of the administration. He stated the opinion that the issues could be easily addressed and noted that the lift issue went back to 1996 from the same developer that developed the rest of Eagle Mountain. He noted that there was a $4.4 million deposit and said it went back to the developer’s responsibility as an expense of the CFD back then. He added that the Board needed to understand that the CFD was prosecuting this case right now and had an agreement against the lift subcontractor but he did not know what they had against the prime contractor who was the developer who made the $4.4 million deposit. He said that not only were the prior fees allocable to the developer against the deposit or the interest earned on the deposit, but also any legal fees connected with this information that went back to 1996 (the period of time the developer agreed to fund all expenses and costs) then it seemed to him that there was a fund to get that money from. He added that his concern was that no one knew what the Sanitary District was doing but said he had found out that they had an agreement against the lift subcontractor and they obviously had attorneys working on this issue. He expressed the opinion that this was being “blown” way beyond reasonable proportions. Mr. Fischer expressed the opinion that the enabling documents required that any surplus be considered in setting the tax rate and said that this had never once been considered. He noted that the Town’s own financial statements showed a surplus of some $780,000 reduced from a million something because the developer requested his money and because the original income was not recorded as a liability to the developer, it was recorded as income. He pointed out that there was still $750,000 and at least the interest earned on all the taxes collected until they paid everything out was theirs and belonged to the CFD, not the developer. He added that the problem was segregating it out and determining how much that amount actually was. He said there is at least $50,000 with respect to the other expenditures that were brought up aside from the legal issue that was being pursued by the Sanitary District. Mr. Fischer also discussed the administrative fee and said he recommended $5,000 but would not argue with a $6500 fixed fee. He expressed the opinion that a fiscal administrator was not necessary and said that the HOA’s property manager would take that over and it would not cost much money at all. He encouraged each member of the Board to fulfill his/her fiduciary responsibility for the landowners of the Eagle Mountain Facilities District and to the 578 property owners of Eagle Mountain. He said that there were four reasons why they believed the fees were inappropriate: (1) The fees needed to be reduced to $5,000 (they would accept $6500) and if there was not enough surplus generated, he would recommend to the Board of the Eagle Mountain HOA that they advance the money out of their reserves until they collected it from next year’s tax; (2) the agreement provided for the CFD to provide costs and expenses and there was no provision for the Town to allocate fixed overhead; (3) at the Town level, CFD operations were infrequent in nature, primarily mundane bookkeeping and the trustee did all the formal work for an objective $5,000 fee and (4) Town Staff publicly stated that there were no hard costs. He added that the 578 owners at Eagle Mountain did not cause the Town’s fiscal crisis and expressed the opinion that they should not be asked to pay the proposed fee. He requested that a $5,000 or $6500 fixed fee be approved with a tax rate of DRAFT Document in Agenda Packet 1-6-05.obd Page 9 of 10 $2.50. He said that if there was any deficiency in having the refinancing or other items looked at, the HOA would advance it from their Association and would wait until next year’s assessment to get it back. Chairman Nichols thanked Mr. Fischer for his remarks. In response to a question from Director Kavanagh, Mr. Fischer stated that the governing document (development agreement) stated that in determining the rate, a 5% deficiency factor be considered. He said that the computation provided to the Board did not include the 5% deficiency factor. Ms. Ghetti, responding to a question from Director Nicola, advised that the General Fund budget included the $51,000 and said that last year and the year prior the CFD Board’s budget included payments to the Town. She added that she would be happy to go back and check and provide Director Nicola with copies of prior years’ budgets. Board member Kavanagh commented that Mr. Fischer was recommending that they move forward with the proposed figures except that the $51,000 administrative costs be reduced to $6600 and that if a need existed for additional monies, the Association would pay the costs. He asked what Staff’s opinion was regarding this suggestion. Mr. Ruby said that the District could always accept gifts and said he heard that they would “recommend to the Board” but they did not know whether the Board would approve the request. He added that they would be in a position of asking for money implying that it was needed for a legitimate purpose and they would not know if they were going to get the money. He pointed out that they could not borrow the money because that would be a loan and they had certain procedures that had to be followed. He said they could accept the monies as a gift and deal with it in that respect. He agreed that they could end up not having money to cover legal fees should the Association’s board not agree to the request. Mr. Ruby cautioned that before the Board began to hold somebody’s money back (the $4.4 million referred to by Mr. Fischer), they needed to really look at that issue from a legal standpoint. He added that to tie a construction defect matter and hold back funds from another entity was a dangerous path unless they were absolutely sure they are doing it legitimately. He warned them against offsetting someone else’s money without further exploration were the developer had requested the return of that money as they had a right to do under the contract. There being no additional speakers wishing to present their input, the Chairman closed the public hearing. AGENDA ITEM #5 – CONSIDERATION OF RESOLUTION EMCFD-2004-01, ADOPTING THE FINAL BUDGET FOR THE FISCAL YEAR BEGINNING JULY 1, 2004 AND ENDING JUNE 30, 2005; AND LEVYING UPON THE ASSESSED VALUATION OF THE PROPERTY WITHIN THE DISTRICT, SUBJECT TO AD VALOREM TAXATION, A CERTAIN SUM UPON EACH ONE HUNDRED DOLLARS ($100.00) OF VALUATION SUFFICIENT TO RAISE THE AMOUNTS ESTIMATED TO BE REQUIRED IN THE ANNUAL BUDGET, SPECIFICALLY FOR THE PURPOSE OF PAYING PRINCIPAL AND INTEREST UPON BONDED INDEBTEDNESS; ALL FOR THE FISCAL YEAR ENDING ON JUNE 30, 2005. Director Kavanagh MOVED that the budget reflect revenues and expenditures of $513,000 with the stipulation that of the $51,000 of administrative costs, that the Town would not charge any more than $6600, as agreed upon, and the additional $44,400 would be set aside in case it was needed to explore the other additional needs and possible legal challenge and that the amount not needed would be applied to paying next year’s levy. Vice Chair Archambault SECONDED the motion. Director Kavanagh said he could understand the idea of keeping the amount at $6600 and getting the additional money from the Board rather than doing the extra safety precaution but as a Director and in accordance with legal advice, he believed they needed that money in reserves so that it was available for a legal challenge if needed. He added that the money would go back to the District the following fiscal year if it were not expended. He added that DRAFT Document in Agenda Packet 1-6-05.obd Page 10 of 10 if in fact it was determined that there were additional surplus monies that could be used, those monies could be “tapped” before they went above the $6600. Chairman Nichols asked what the tax rate would be in accordance with Director Kavanagh’s motion and Ms. Ghetti responded that the tax rate would remain the same ($2.59) if they kept the budget at $513,000 but the Town’s administrative costs would not exceed $6600. She advised that this figure did not contain a provision for the 5% delinquency fee and said when determining the amount, she made the assumption that there would be an amount left over from the prior year. She stated that she felt comfortable that the $2.59 was a sufficient amount. Director Nicola commented that the only way she could support this motion was if they found that they did not, in their District board meeting, budget such monies and then those monies should be returned to the CFD. She added that the resolution that she voted on in March of 2003 had a 12-page application process and all kinds of rules and requirements. She stated that she would not have supported that if she knew what was going to happen and she had a problem with people being assessed without notice and without an opportunity to be heard. Chairman Nichols called for the question. The motion CARRIED UNANIMOUSLY (7-0). AGENDA ITEM #6 - ADJOURNMENT Director Kehe MOVED and Director Schlum SECONDED a motion to adjourn the Special Session of the District Board of the Eagle Mountain Community Facilities District. The motion CARRIED UNANIMOUSLY (7 to 0). TOWN OF FOUNTAIN HILLS By __________________________ Wally Nichols, Chairman ATTEST AND PREPARED BY: _______________________________ Bevelyn J. Bender, Board Clerk CERTIFICATION I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Special Session held by the Board of Directors for the Eagle Mountain Facilities District on the 5th day of August, 2004. I further certify that the meeting was duly called and that a quorum was present. DATED this ___ day of __________, 2005. _____________________________ Bevelyn J. Bender, Board Clerk document in agenda packet 1-6-05.obd Town of Fountain Hills District Board - Eagle Mtn CFD Agenda Action Form Meeting Type: Regular Meeting Meeting Date: 1/06/2005 Submitting Department: Admin Contact Person: Julie Ghetti Consent: Regular: Requesting Action: Report Only: Type of Document Needing Approval (Check all that apply): Public Hearing Resolution Ordinance Agreement Emergency Clause Special Event Permit Special Consideration Intergovernmental Agreement Acceptance Grant Submission Liquor/Bingo License Application Plat Special Event Permit Special/Temp Use Permit Other: Council Priority (Check Appropriate Areas): Education Public Fitness Library Services Public Safety Community Activities Economic Development Public Works Human Service Needs Parks & Recreation Town Elections Community Development Finance Regular Agenda Wording: Presentation of the Eagle Mountain Community Facilities District Annual Financial Report for the Fiscal Year Ending June 30, 2004 by the independent audit firm of Cronstrom & Trbovich. Staff Recommendation: Approve Fiscal Impact: No $ Purpose of Item and Background Information: At the request of the District homeowners a single audit and financial report for the District FYE 06/30/2004 has been completed by the independent audit firm of Cronstrom & Trbovich. A partner of the firm, Mr. Dennis Osuch, will present the report to the Council and public. List All Attachments as Follows: District Annual Financial Report - see hard copy. Type(s) of Presentation: Oral Signatures of Submitting Staff: S:/JAGhetti Department Head Budget Review (if item not budgeted or exceeds budget amount) S:/JAGhetti, ATM Town Manager / Designee EAGLE MOUNTAIN COMMUNITY FACILITIES DISTRICT (A COMPONENT UNIT OF THE TOWN OF FOUNTAIN HILLS, ARIZONA) ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2004 EAGLE MOUNTAIN COMMUNITY FACILITIES DISTRICT (A COMPONENT UNIT OF THE TOWN OF FOUNTAIN HILLS, ARIZONA) ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2004 EAGLE MOUNTAIN COMMUNITY FACILITIES DISTRICT TABLE OF CONTENTS FISCAL YEAR ENDED JUNE 30, 2004 Page Independent Auditor’s Report 1 Management’s Discussion and Analysis 2 Basic Financial Statements Statement of Net Assets and Governmental Funds Balance Sheet 8 Statement of Activities and Governmental Funds Revenues, Expenditures, and Changes in Fund Balance 9 Notes to the Basic Financial Statements 10 Individual Fund Financial Statement Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Debt Service Fund 19 1 INDEPENDENT AUDITOR’S REPORT Governing Board Eagle Mountain Community Facilities District We have audited the accompanying basic financial statements of Eagle Mountain Community Facilities District (District), a component unit of the Town of Fountain Hills, Arizona, as of and for the year ended June 30, 2004, as listed in the table of contents. These basic financial statements are the responsibility of the District's management. Our responsibility is to express an opinion on these basic financial statements based on our audit. We conducted our audit in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of Eagle Mountain Community Facilities District as of June 30, 2004, and the results of its operations for the year then ended in conformity with U.S. generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements of Eagle Mountain Community Facilities District taken as a whole. The individual fund financial statement listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Cronstrom & Trbovich, P.C. November 15, 2004 2 MANAGEMENT’S DISCUSSION AND ANALYSIS We (the Eagle Mountain Community Facilities District of Fountain Hills, Arizona (District)) are pleased to provide an overview of our financial activities for the fiscal year ended June 30, 2004. The intended purpose of the Management Discussion and Analysis (MD&A) is to provide an introduction to the basic financial statements and notes, that provides an objective and easy to read analysis of our financial activities based on currently known facts, decisions, and conditions, by providing an easily readable summary of operating results and reasons for changes, which will help to determine if our financial position improved or deteriorated over the past year. As this is our first (and possibly only) MD&A since the Eagle Mountain Community Facilities District is not required to prepare an annual financial report each year we do not have comparative information for many parts of this analysis. When referring to prior year data in this analysis we will be drawing upon information from the Town’s prior years’ audited financial reports in which the Eagle Mountain Community Facilities District is reported as a component unit. The District may elect in the future to continue to be included as a component unit within the Town of Fountain Hills, Arizona annual financial reports. Formed in 1995, the District is a special purpose taxing District and separate political subdivision under Arizona statutes. As such, the District can levy taxes and issue bonds, independent of the Town of Fountain Hills, Arizona (Town). Property owners within the District boundaries pay the debt service due on the District bonds through secondary property tax assessments by law, and by the proceedings of the District, the definition of debt service on the bonds includes all costs and expenses of the District, in addition to principal and interest expenses. Town staff serves as District staff and administers the District and the costs of their services are reimbursed by District funds. The Fountain Hills Town Council also serves as the District Board of Directors. The District is one of the Town of Fountain Hills, Arizona’s component units for the fiscal year ended June 30, 2004. Financial Highlights • District tax collections were sufficient to pay debt service during the fiscal year 2003/04. • District tax levies continue to comply with the assessment limit of $3.00 per $100 valuation. • Property tax collections at the close of fiscal year 2003/04 exceeded collections for fiscal year 2002/03 by approximately 25 percent, as the Eagle Mountain community continues to build and property values increase. • As of June 30, 2004, the District’s governmental funds reported ending fund balance of $261,530. Overview of the Financial Statements This discussion and analysis introduces the District’s basic financial statements. Because of its limited purpose, the District’s basic financial statements are comprised of two components: (1) the Statement of Net Assets and Governmental Funds Balance Sheet and the Statement of Activities and Governmental Fund Revenues, Expenditures and Changes in Fund Balances and (2) notes to the basic financial statements. 3 Because the District has only one governmental program, the government-wide and fund financial statements are combined. Government-wide financial statements The statement of net assets is designed to provide readers with a broad overview of the District’s finances, in a manner similar to private-sector business. The statement of net assets presents information on all of the District’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as useful indicators of whether the financial position of the District is improving or deteriorating. The statement of activities presents information showing how the District’s assets changed during the most recent fiscal year. All changes in net assets are reported when 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., uncollected taxes and expenses related to accrued interest). 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 District, like the Town of Fountain Hills, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District are governmental funds, and, basically, all are restricted as to use. The District maintains one governmental fund, specifically for debt service. Information is presented in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the debt service fund. The District adopts an annual budget for its revenues and expenses. A budgetary comparison statement has been provided to demonstrate compliance with this budget. Notes to the financial statements. The notes to the basic financial statements provide additional information that is essential to a full understanding of the data provided in the financial statements. 4 Government-wide financial analysis As noted, earlier, net assets may serve over time as useful indicators of a government’s financial position. The liabilities of the District exceeded its assets at the close of the most recent fiscal year by ($4,342,522) (net assets). The District’s sole purpose is to finance, through the issuance of its general obligation bonds, the cost of certain infrastructure within the District. As a special purpose district and a separate political subdivision under the Arizona Constitution, the District can levy taxes and issue bonds independently of the Town. Property owners in the designated areas are assessed for District taxes to pay the debt service over the life of the bonds. The Town Council serves as the Board of Directors. However, the Town has no liability for the District’s debt. For financial reporting purposes, transactions of the District are combined together and included as if they were part of the Town’s operations and the assets financed through the District are combined with the infrastructure of the Town. Because the capital assets are recorded in the Town’s financial statements (streets, landscaping, etc.) or in the records of Fountain Hills Sanitary District (all sewer improvements), the Statement of Net Assets for the District reflects a large liability without an offsetting asset. Eagle Mountain Community Facilities District Statement of Net Assets June 30, 2004 Governmental Activities Assets Current and other assets $ 5,642,394 Total Assets 5,642,394 Liabilities Current liabilities 5,529,916 Long-term liabilities outstanding 4,455,000 Total Liabilities 9,984,916 Net Assets Unrestricted $ (4,342,522) 5 Eagle Mountain Community Facilities District Statement of Activities June 30, 2004 Governmental Activities Revenues Taxes $ 585,141 Interest 3,391 Total revenues 588,532 Expenses Current General Government 55,000 Debt Service Interest and fiscal charges 309,814 Total expenses 364,814 Increase in net assets 223,718 Net assets at beginning of year (4,566,240) Net assets at end of year $ (4,342,522) As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with legal requirements related to special purpose Districts and general obligation bonds. Financial analysis of the district’s funds The focus of the District’s governmental funds is to provide information on near-term inflows, outflows, and balances of resources that are available for spending. Such information is useful in assessing the District’s ability to pay the debt service on the general obligation bonds it issues to fund acquisition of public infrastructure. Because of its limited purpose, unreserved fund balance in the District may be used to pay debt service at some point in the life of the District. As of the end of fiscal year 2003/04, the District’s governmental funds reported an ending fund balance of $261,530, a decrease of $529,182 in comparison with the prior year. The decrease represents an adjustment to segregate accumulated interest in the guaranteed investment contract (developer portion) of funds on deposit with the trustee from interest earnings of the District. Without the adjustment revenues exceeded the debt service payment by $62,770. Revenues totaled approximately $577,584 in the fiscal year ended June 30, 2004, of which $574,193 was property tax collected. Property tax revenues increased by approximately 25% from the fiscal year ended June 30, 2003. The District’s property tax collections increased during the fiscal year due to growth in assessed values of homes and other property types in Eagle Mountain are completed and sold. 6 Capital assets and debt administration The District was formed to finance certain elements of public infrastructure that were subsequently dedicated to the Town or Sanitary District for operation. The District does not own or operate infrastructure nor does it have a funding source to pay for operational costs. Since formation, District bonds have been issued, and the proceeds used (or deposited to be used) to finance the cost of public infrastructure improvements. The District was authorized to issue up to $7 million in District general obligation bonds. Eagle Mountain Investors, L.L.C., the developer of the community, contracted to fund any difference between debt service costs and property tax revenues. This contractual promise was collateralized by the developer’s posting with the trustee a guaranteed investment contract for the full amount of the bonded indebtedness ($4.4M). The Town has no liability for the District’s debt. At the time of issue, District general obligation bonds have a 25-year term, typically with the first five years being interest-only payments. In the event that the District Board decides at a future time to dissolve the District, State statute provides that all taxable property in the District will remain subject to the lien for the payment of the bonds until all bonds have been defeased. Eagle Mountain Community Facilities District Outstanding Debt Governmental Activities 2004 2003 General Obligation Bonds $ 4,615,000 $ 4,765,000 Economic factors A fluctuating economy has not affected the property tax generated within the District. The District’s assessed valuation has increased 67% from 2000 ($11,513,916) to 2004 ($19,237,966) due to increased property values and building permits. Total building permits 12/31/2001 458 Total building permits 12/31/2003 480 Due to the increased property valuations, Management has projected that the property tax rate for fiscal year 2005 may be reduced from $3.00 per hundred to $2.59 per hundred of assessed valuation. The anticipated tax revenues, together with funds on hand, are projected to be sufficient to pay all principal and interest on the District bonds and all District administrative costs, owing in the applicable year. Requests for information This financial report is designed to provide a general overview of the District’s finances for all of those with an interest in the government’s finances. If you have questions about this report or need additional financial information, contact the Town of Fountain Hills, Arizona, Finance Division at P.O. Box 17958, Fountain Hills, AZ 85268. 7 Basic Financial Statements EAGLE MOUNTAIN COMMUNITY FACILITIES DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 10 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the Eagle Mountain Community Facilities District (District), a component unit of the Town of Fountain Hills, Arizona (Town), conform to U.S. generally accepted accounting principles applicable to governmental units as promulgated by the Governmental Accounting Standards Board. A summary of the more significant accounting policies of the District follows. A. Reporting entity The Eagle Mountain Community Facilities District was formed by petition to the Town of Fountain Hills, Arizona’s Town Council in 1995. The District's purpose is to acquire and improve public infrastructure in specified land areas. As a special purpose district and separate political subdivision under the Arizona Constitution, the District can levy taxes and issue bonds independently of the Town. Property owners in the designated areas are assessed for District taxes and thus for the costs of operating the District. The Town Council serves as the Board of Directors; however, the Town has no liability for the District debt. For financial reporting purposes, transactions of the Eagle Mountain Community Facilities District are included as if the District 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 assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the District. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and miscellaneous revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The District had no business-type activities during the fiscal year. Separate financial statements are provided for major governmental funds, with an adjustments column to arrive at government-wide statement amounts. C. Measurement focus, basis of accounting, and financial statement presentation 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. Property taxes are recognized as revenues in the year for which they are levied. EAGLE MOUNTAIN COMMUNITY FACILITIES DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 11 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) 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 District 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, except expenditures related to claims and judgments, which are recorded only when payment is due. However, since debt service resources are provided during the current year for payment of governmental long-term principal and interest due early in the following year, the expenditures and related liabilities have been recognized in the Debt Service Fund. Property taxes and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the government. The District reports the following major governmental funds: The Debt Service Fund accounts for resources accumulated and used for the payment of governmental long-term debt principal, interest and related costs. D. Assets, liabilities, and net assets or fund equity 1. Cash and investments Arizona Revised Statutes authorize the District to invest public monies in the State or County Treasurers' investment pools, interest bearing savings accounts, certificates of deposit and repurchase agreements in eligible depositories; bonds or other obligations of the United States government that are guaranteed as to principal and interest by the United States government; or bonds of the State of Arizona counties, cities, towns, school districts or special districts as specified by statute. As required by statute, collateral is required for demand deposits, certificates of deposit and repurchase agreements at 100 percent of all deposits not covered by Federal depository insurance. Cash and investments held at June 30, 2004, by the District’s trustee plus accrued interest are restricted as to usage. The District's deposits at June 30, 2004, were collateralized with securities held by the pledging financial institution's trust department or agency in the District's name. EAGLE MOUNTAIN COMMUNITY FACILITIES DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 12 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Concl'd) 2. Restricted assets Cash and investments held by the District’s trustee are classified as restricted assets on the statement of net assets because their use is limited by applicable bond covenants. 3. Capital assets Capital assets acquired for construction of infrastructure assets by the District are dedicated to the Town of Fountain Hills, Arizona to maintain and operate. As a result, the District owns no capital assets. 4. Long-term obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related 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. EAGLE MOUNTAIN COMMUNITY FACILITIES DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 13 NOTE 2 - RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS A. Amounts reported in the statement of net assets are different because: Long-term assets are not available to pay current-period expenditures and, therefore are deferred in the funds. $ 10,948 Long-term liabilities, including bonds payable are not due and payable in the current period and therefore are not reported in the funds. (4,615,000) Net adjustment to reduce total fund balance to arrive at net assets (4,604,052) Total fund balance 261,530 Total net assets $ (4,342,522) B. Amounts reported in the statement of activities are different because: Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. $ 10,948 Principal payments recorded as expenditures in the fund financial statements are reported as a reduction of the liability in the statement of activities 150,000 Net adjustments to reconcile net changes in fund balances to change in net assets 160,948 Net change in fund balances 62,770 Change in net assets $ 223,718 EAGLE MOUNTAIN COMMUNITY FACILITIES DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 14 NOTE 3 - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Budgetary information The District does not have a general fund or any special revenue funds. However, the District adopts an annual operating budget for expenditures for the Debt Service Fund on essentially the same modified accrual basis of accounting used to record actual expenditures. Budgetary control over expenditures is exercised at the fund level. B. Deficit net assets As described in Note 1, the District was formed to finance and acquire or construct infrastructure assets that are subsequently dedicated to the Town for operation. The District does not own or operate infrastructure. Therefore, the Statement of Net Assets reflects a large liability without an offsetting asset. NOTE 4 - DETAILED NOTES ON ALL FUNDS A. Assets 1. Deposits and investments Deposits – The District had no deposits at June 30, 2004. Investments - At June 30, 2004, the District’s investments were updated at fair value and are as follows: Fair Value Cash and investments held by trustee - restricted $ 5,624,482 All investments were insured or registered in the District’s name, or were held by the District or its agent in the District’s name. 2. Restricted assets Restricted assets at June 30, 2004, were as follows: Restricted for debt service: Debt Service Fund $ 5,624,482 EAGLE MOUNTAIN COMMUNITY FACILITIES DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 15 NOTE 4 - DETAILED NOTES ON ALL FUNDS (Cont’d) 3. Property taxes receivable The Maricopa County Treasurer is responsible for collecting property taxes for all governmental entities within the County. The County levies the property taxes due to the District in August. Two equal installments, payable in October and March, become delinquent after the first business days in November and May. During the year, the County also levies various personal property taxes that are due the second Monday of the month following receipt of the tax notice and become delinquent 30 days later. A lien assessed against real and personal property attaches on the first day of January preceding the assessment levy. Property taxes are recognized as revenues in the fiscal year they are levied in the government-wide financial statements and represent a reconciling item between the government-wide and fund financial statements. In the fund financial statements property taxes are recognized as revenues in the fiscal year they are levied and collected or if they are collected within 60 days subsequent to fiscal year-end. Property taxes not collected within 60 days subsequent to fiscal year-end or collected in advance of the fiscal year for which they are levied are reported as deferred revenues. Property taxes receivable consist of uncollected property taxes as determined from the records of the County Treasurer’s Office, and at June 30, 2004 were as follows: Debt Service Year Fund 2003-04 $ 17,912 At the end of the current fiscal year, deferred revenue reported in the governmental funds was as follows: Unavailable Delinquent property taxes receivable (debt service fund) $ 10,948 EAGLE MOUNTAIN COMMUNITY FACILITIES DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 16 NOTE 4 - DETAILED NOTES ON ALL FUNDS (Cont’d) B. Liabilities 1. Obligations under long-term debt General Obligation Bonds The District issues general obligation bonds to provide funds to acquire and improve public infrastructure in specified lands. General obligation bonds have been issued for governmental activities only. The bonds are generally callable with interest payable semiannually. Bonds payable at June 30, 2004, consisted of the outstanding general obligation bonds presented below: General obligation bonds currently outstanding are as follows: Interest Purpose Rates(%) Amount Capital Improvement Bonds, Series 1996 A 5.50 - 6.50 $ 4,170,000 Capital Improvement Bonds, Series 1996 B 7.25 445,000 Total general obligation bonds payable $ 4,615,000 EAGLE MOUNTAIN COMMUNITY FACILITIES DISTRICT NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 17 NOTE 4 - DETAILED NOTES ON ALL FUNDS (Concl’d) Annual debt service requirements to maturity for general obligation bonds are as follows: Principal Interest 2005 $ 160,000 $ 296,828 2006 170,000 287,403 2007 175,000 277,170 2008 185,000 266,483 2009 205,000 255,025 2010-2014 1,220,000 1,064,480 2015-2019 1,670,000 614,013 2020-2021 830,000 82,875 Total $ 4,615,000 $ 3,144,277 Community facilities districts (CFDs) are created only by petition to the Town Council by property owners within the District areas. As board of directors for the District, the Town Council has adopted a formal policy that CFD debt will be permitted only when the ratio of the full cash value of the District property (prior to improvements being installed), when compared to proposed District debt, is a minimum of 6 to 1 prior to issuance of debt for publicly offered bonds and 4 to 1 for privately placed bonds. These ratios are verified by an MAI appraisal paid for by the District and administered by the Town. Changes in Long-term Liabilities Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities General obligations bonds $ 4,765,000 $-0- $ (150,000) $ 4,615,000 $ 160,000 NOTE 5 - OTHER INFORMATION A. Risk management The District 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 District carries commercial insurance for $1,000,000 per occurrence and aggregate for general liability, public entity, errors and omissions. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. 18 Individual Fund Financial Statement EAGLE MOUNTAIN COMMUNITY FACILITIES DISTRICT STATEMENT OF NET ASSETS AND GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2004 Debt Statement Service Fund Adjustments of Net Assets Assets Cash and investments - restricted $5,624,482 $- $5,624,482 Taxes receivable 17,912 - 17,912 Total Assets $5,642,394 $- $5,642,394 Liabilities Current Interest payable $152,737 $- $152,737 Due to other entity 50,000 - 50,000 Deferred revenue 10,948 (10,948) - Due to developer 5,017,179 - 5,017,179 Matured debt principal payable 150,000 - 150,000 Long-term liabilities: Due within one year - 160,000 160,000 Due after one year - 4,455,000 4,455,000 Total Liabilities 5,380,864 4,604,052 9,984,916 Fund Balances/Net Assets Fund balances Unreserved 261,530 (261,530) - Total Fund Balances 261,530 (261,530) - Total Liabilities and Fund Balances $5,642,394 Net assets Unrestricted (4,342,522) (4,342,522) Total net assets $(4,342,522) $(4,342,522) The accompanying notes to the financial statements are an integral part of this statement. 8 EAGLE MOUNTAIN COMMUNITY FACILITIES DISTRICT STATEMENT OF ACTIVITIES AND GOVERNMENTAL FUNDS REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2004 Debt Statement Service Fund Adjustments of Activities Revenues Taxes $574,193 $10,948 $585,141 Interest 3,391 - 3,391 Total Revenues 577,584 10,948 588,532 Expenditures/Expenses Current General government 55,000 - 55,000 Debt service Principal retirement 150,000 (150,000) - Interest and fiscal charges 309,814 - 309,814 Total Expenditures/Expenses 514,814 (150,000) 364,814 Excess of revenues over expenditures / Changes in net assets 62,770 160,948 223,718 Fund balances/net assets Beginning of the year 198,760 (4,765,000) (4,566,240) End of the year $261,530 $(4,604,052) $(4,342,522) The accompanying notes to the financial statements are an integral part of this statement. 9 EAGLE MOUNTAIN COMMUNITY FACILITIES DISTRICT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - DEBT SERVICE FUND YEAR ENDED JUNE 30, 2004 Original and Final Budget Actual Variance Revenues Taxes $561,500 $574,193 $12,693 Interest - 3,391 3,391 Total Revenues 561,500 577,584 16,084 Expenditures Current General government 54,000 55,000 (1,000) Debt service Principal retirement 150,000 150,000 - Interest and fiscal charges 310,500 309,814 686 Total Expenditures 514,500 514,814 (314) Excess of revenues over (under) expenditures 47,000 62,770 15,770 Fund balance, beginning of year - 198,760 198,760 Fund balance, end of year $47,000 $261,530 $214,530 19 NOTICE OF EXECUTIVE AND REGULAR SESSION OF THE FOUNTAIN HILLS TOWN COUNCIL Mayor Wally Nichols Vice Mayor Mike Archambault Councilman Keith McMahan Councilman John Kavanagh Councilwoman Kathleen Nicola Councilman Ed Kehe Councilman Jay Schlum DATE: THURSDAY, JANUARY 6, 2005 TIME: 5:00 P.M. EXECUTIVE SESSION 6:30 P.M. REGULAR SESSION WHERE: TOWN HALL COUNCIL CHAMBERS, BUILDING B 16836 E. PALISADES BLVD., FOUNTAIN HILLS, AZ (Executive Session will be held in the Building A Teleconference Room) PROCEDURE FOR ADDRESSING THE COUNCIL Anyone wishing to speak before the Council must fill out a speaker’s card and submit it to the Town Clerk prior to Council discussion of that Agenda item. Speaker Cards are located in the Council Chamber Lobby and near the Clerk’s position on the dais. Speakers will be called in the order in which the speaker cards were received either by the Clerk or the Mayor. At that time, speakers should stand and approach the podium. Speakers are asked to state their name prior to commenting and to direct their comments to the Presiding Officer and not to individual Council Members. Speakers’ statements should not be repetitive. If a speaker chooses not to speak when called, the speaker will be deemed to have waived his or her opportunity to speak on the matter. Speakers may not (i) reserve a portion of their time for a later time or (ii) transfer any portion of their time to another speaker. If there is a Public Hearing, please submit the speaker card to speak to that issue during the Public Hearing. Individual speakers will be allowed three contiguous minutes to address the Council. Time limits may be waived by (i) discretion of the Town Manager upon request by the speaker not less than 24 hours prior to a Meeting, (ii) consensus of the Council at Meeting or (iii) the Mayor either prior to or during a Meeting. Please be respectful when making your comments. If you do not comply with these rules, you will be asked to leave. E:\Clerk\AGENDAS\REGULAR\2005\Agenda 1-6-05.doc Page 1 of 3 Last printed 1/5/2005 8:30 AM E:\Clerk\AGENDAS\REGULAR\2005\Agenda 1-6-05.doc Page 2 of 3 Last printed 1/5/2005 8:30 AM • CALL TO ORDER – Mayor Nichols 1.) VOTE TO GO INTO EXECUTIVE SESSION: Pursuant to A.R.S. §38-431-03.A.4, For discussion or consultation with the attorneys of the public body in order to consider its position and instruct its attorneys regarding the public body’s position regarding contracts that are the subject of negotiations, in pending or contemplated litigation or in settlement discussions conducted in order to avoid or resolve litigation. (Specifically, a refund claim by a taxpayer and 562502 Ontario, Inc. v Town of Fountain Hills.) 2.) RETURN TO REGULAR SESSION • CALL TO ORDER AND PLEDGE OF ALLEGIANCE – Mayor Nichols • INVOCATION – Cantor Howard Tabaknek, Temple Beth Hagivot • ROLL CALL – Mayor Nichols CALL TO THE PUBLIC Pursuant to A.R.S. §38-431-01(G), public comment is permitted (not required) on matters not listed on the agenda. Any such comment (i) must be within the jurisdiction of the Council and (ii) is subject to reasonable time, place and manner restrictions. The Council will not discuss or take legal action on matters raised during “Call to the Public” unless the matters are property noticed for discussion and legal action. At the conclusion of the call to the public, individual Council members may (i) respond to criticism, (ii) ask staff to review a matter or (iii) ask that the matter be placed on a future Council agenda. 5 min CONSENT AGENDA *1.) CONSIDERATION of approving the COUNCIL MEETING MINUTES from December 16, 2004. *2.) CONSIDERATION of the SPECIAL EVENT LIQUOR LICENSE APPLICATION submitted by the American Legion Post #58 for Pony Express Day on February 3, 2005 from noon until 6:00 PM. *3.) CONSIDERATION of approving the LIQUOR LICENSE APPLICATION submitted by Matilda Salazar for Terry Nostra Italian Café located at 16740 E. Palisades Blvd. The application is for a new Class 12 license. *4.) CONSIDERATION of RESOLUTION 2005-06 abandoning whatever right, title, or interest the Town has in a portion of the 1’ Vehicular Non-Access Easement located at the easterly property line of Lot 34C, Block 2, Plat 505A. NVAE 04-03. *5.) CONSIDERATION of RESOLUTION 2005-07, which would abandon the Final Replat of Lots 12 and 13, Eagle Mountain Parcel 5 (a lot join), and revert back to the original two lot configuration of Eagle Mountain parcel 5 Final Plat, Lots 12 and 13. Case #S2004-30. *6.) CONSIDERATION of RESOLUTION 2005-08, granting an easement to the Sanitary District for the Civic Center II Project. *7.) CONSIDERATION of retaining Titus, Brueckner, and Berry and Jordan and Rosebrough as litigation counsel. REGULAR AGENDA 10 min 8.) PRESENTATION of the Town of Fountain Hill’s COMPREHENSIVE ANNUAL E:\Clerk\AGENDAS\REGULAR\2005\Agenda 1-6-05.doc Page 3 of 3 Last printed 1/5/2005 8:30 AM FINANCIAL REPORT for the fiscal year ending June 30, 2004, by the independent audit firm, Cronstrom and Trbovich.. 10 min 9.) PRESENTATION by the Downtown Economic Development Coordinator on DOWNTOWN ECONOMIC DEVELOPMENT. 10 min 10.) DISCUSSION AND CONSIDERATION of INITIATING AN AMENDMENT to the Official Zoning Districts Map of Fountain Hills, to rezone the Town owned portions of the McDowell Mountain Preserve from the “R1-43 Single-Family Residential Zoning District to an Open Space Zoning District. Case #Z2004-09. 5 min 11.) COUNCIL ASSESSMENT AND REVIEW of the meeting to identify procedural strengths and weaknesses and discuss possible improvements for future meetings. 12.) COUNCIL DISCUSSION/DIRECTION to the Town Manager. Items listed below are related only to the propriety of (i) placing such items on a future agenda for action or (ii) directing staff to conduct further research and report back to the Council: NONE 13.) SUMMARY OF COUNCIL REQUESTS by Town Manager. 7:20 PM 14.) ADJOURNMENT. DATED this 30th day of December, 2004 ___________________________ Bevelyn J. Bender, Town Clerk The Town of Fountain Hills endeavors to make all public meetings accessible to persons with disabilities. Please call 837-2003 (voice) or 1-800- 367-8939 (TDD) 48 hours prior to the meeting to request a reasonable accommodation to participate in this meeting or to obtain agenda information in large print format. Supporting documentation and staff reports furnished the Council with this agenda are available for review in the Clerk’s office. Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Meeting Date: January 6, 2005 Submitting Department: Administration Contact Person: Bender Consent: Regular: Requesting Action: Report Only: Type of Document Needing Approval (Check all that apply): Public Hearing Resolution Ordinance Agreement Emergency Clause Special Event Permit Special Consideration Intergovernmental Agreement Acceptance Grant Submission Liquor/Bingo License Application Plat Special Event Permit Special/Temp Use Permit Other: Draft Meeting Minutes Council Priority (Check Appropriate Areas): Education Public Fitness Library Services Public Safety Community Activities Economic Development Public Works Human Service Needs Parks & Recreation Town Elections Community Development Regular Agenda Wording: CONSIDERATION of approving the MEETING MINUTES of 12/16/04. Staff Recommendation: Approve Fiscal Impact: No $ Purpose of Item and Background Information: Approve the council meeting minutes for archival purposes. List All Attachments as Follows: Draft minutes from 12/16/04. Type(s) of Presentation: None Signatures of Submitting Staff: S:/BBender Department Head Budget Review (if item not budgeted or exceeds budget amount) S:/JAGhetti, ATM Town Manager / Designee DRAFT Document in Agenda Packet 1-6-05.obd Page 2 of 11 TOWN OF FOUNTAIN HILLS MINUTES OF THE REGULAR SESSION OF THE FOUNTAIN HILLS TOWN COUNCIL DECEMBER 16, 2004 Mayor Nichols called the meeting to order at 6:30 p.m. INVOCATION – The invocation was led by Mayor Wally Nichols. ROLL CALL – Present for roll call were the following members of the Fountain Hills Town Council: Vice Mayor Archambault, Mayor Nichols, Councilman Kehe, Councilman Kavanagh, Councilman Schlum, Councilwoman Nicola, Councilman McMahan. Assistant Town Attorney Carolyn Oberholtzer, Town Manager Tim Pickering, Public Works Director Tom Ward and Town Clerk Bev Bender were also present. Captain Kleinheinz of the Maricopa County Sheriff’s Office introduced newly hired Lieutenant John DiAmico to the members of the Council. Mayor Nichols welcomed Lieutenant DiAmico and said he and the members of the Council were very pleased to welcome him as a new member of the team. CALL TO THE PUBLIC Art Tolis Mr. Tolis addressed the Council and said he was there to present an update on an issue he talked about two weeks ago regarding the Palisades property. He said that he appeared before the Planning and Zoning Commission and stated that the members were friendly and accommodating. He noted that the Commission directed staff to look into finding a way to “make it work,” and stressed the importance of keeping this issue on the front burner. He reported that he continued to make improvements to the property and indicated his intention to keep the property aesthetically pleasing. He said he hoped they could all work together to reach a positive conclusion regarding the issues at hand so that he could move his small mortgage company into the office. Mayor Nichols thanked Mr. Tolis for his comments. CONSENT AGENDA Mayor Nichols read the following consent agenda items: AGENDA ITEM #1 – CONSIDERATION OF APPROVING THE MEETING MINUTES FROM NOVEMBER 18TH AND DECEMBER 2, 2004. AGENDA ITEM #2 – CONSIDERATION OF RESOLUTION 2004-64, ABANDONING WHATEVER RIGHT, TITLE, OR INTEREST THE TOWN HAS IN CERTAIN PUBLIC UTILITY AND DRAINAGE EASEMENTS LOCATED AT THE SOUTHERLY PROPERTY LINE OF LOT 47, BLOCK 1, PLAT 604A (15221 E. RIDGEWAY DRIVE) AS RECORDED IN BOOK 165 OF MAPS, PAGE 16, RECORDS OF MARICOPA COUNTY, ARIZONA. EA04-21 (BREZNAK). AGENDA ITEM #3 – CONSIDERATION OF ACCEPTING AN ART PIECE FROM THE PUBLIC ART COMMITTEE OF THE CULTURAL COUNCIL UNDER THE PREVIOUSLY APPROVED PUBLIC ART MASTER PLAN. AGENDA ITEM #4 – CONSIDERATION OF THE PRELIMINARY AND FINAL PLAT FOR “DEERFIELD CONDOMINIUM II,” A TWO-UNIT CONDOMINIUM PROJECT LOCATED AT 16515 E. LOST ARROW DRIVE, AKA FINAL PLAT NO. 206, BLOCK 3, LOT 10. CASE NUMBER S2004-27. AGENDA ITEM #5 – CONSIDERATION OF APPROVING MCO’S REQUEST TO USE SPECIAL STREET NAME AND TRAFFIC SIGNAGE AT THE ENTRANCES TO THE EAGLES NEST SUBDIVISION. DRAFT Document in Agenda Packet 1-6-05.obd Page 3 of 11 Councilman McMahan MOVED to approve the Consent Agenda as read and Vice Mayor Archambault SECONDED the motion. A roll call vote was taken with the following results: Councilman Kehe Aye Councilman Schlum Aye Councilman Kavanagh Aye Councilwoman Nicola Aye Mayor Nichols Aye Councilman McMahan Aye Vice Mayor Archambault Aye The motion CARRIED UNANIMOUSLY (7 to 0). AGENDA ITEM #6 – CONSIDERATION OF APPROVING ADDITIONAL FUNDING FOR THE INTERIM PLANNING AND ZONING ADMINISTRATOR. Public Works Director Tom Ward addressed the Council regarding this agenda item and noted that Staff had utilized the services of Willdan Associates/John Poole as Interim Planning and Zoning Administrator until a replacement for Molly Bosley could be hired. He noted that seven resumes were received for the position and two strong candidates participated in video conferencing interviews and visited the Town on November 23rd and 24th. He reported that staff decided to offer Richard Turner the position and said he accepted. He noted that Mr. Turner’s only concern was that he was coming from Bloomfield, Colorado, and needed some time to accomplish the move. He indicated that he could begin work on January 3, 2005. Mr. Pickering said that from a customer service standpoint he felt it crucial to maintain coverage and requested that Mr. Poole’s services be extended for an additional eight days, until the new Planning and Zoning Administrator began his employment with the Town. He added that he asked Mr. Poole to remain in the position during the first week of Mr. Turner’s employment to help him acclimate. Mr. Pickering noted that the current purchase order was in the amount of $19,500, (150 hours @ $130 per hour, which included all expenses) and under the spending authority of the Town Manager. He said in order to retain Mr. Poole for the additional eight days, $8,320 must be added to the $19,500 for a total of $27,820 for professional services with Willdan Associates, which would carry them until January 7th. He clarified that Mr. Poole would not work between Christmas and New Years, a slow period for the Town. He advised that staff was very satisfied with Mr. Poole’s performance and recommended approval of the request for additional funding. Councilwoman Nicola MOVED and Vice Mayor Archambault SECONDED a motion to approve additional funding in the amount of $8,320 in order to retain the services of Mr. Poole of Willdan Associates for an additional eight-day period of time. There were no citizens wishing to speak on this agenda item. The motion CARRIED UNANIMOUSLY (7 to 0). AGENDA ITEM #7 – CONSIDERATION OF APPOINTING FOUR CITIZENS TO SERVE TWO-YEAR TERMS ON THE COMMUNITY CENTER ADVISORY COMMISSION. Mayor Nichols announced that there were four openings on the Community Center Advisory Commission for the years 2005-06. He noted that a total of five applications were received and all five applicants were interviewed. He said that four of the applicants were currently members of the Commission who were interested in continuing to serve, Ms. Leona Johnston, Mr. Bob Yordy, Ms. Grace Jakubs and Mr. Jerry Gorrell. He added that the fifth applicant was Mr. Walt Dunne. The Mayor thanked all of the applicants for their interest in serving the Town of Fountain Hills and said it was his recommendation that the four current members, who had done a wonderful job to date on the Commission, be reappointed for the upcoming period. DRAFT Document in Agenda Packet 1-6-05.obd Page 4 of 11 Mayor Nichols MOVED and Councilman Schlum SECONDED a motion to reappoint Ms. Leona Johnston, Mr. Bob Yordy, Ms. Grace Jakubs and Mr. Jerry Gorrell for the additional two-year period of time. There were no citizens wishing to speak on this agenda item. The motion CARRIED UNANIMOUSLY (7 to 0). AGENDA ITEM #8 – CONSIDERATION OF APPROVING THE SECOND AMENDMENT TO THE DESIGN-BUILD AGREEMENT WITH HOLDER CONSTRUCTION GROUP, INCREASING THE AMOUNT OF THE GUARANTEED MAXIMUM PRICE BY $366,515 FOR FURNITURE, FIXTURES, AND EQUIPMENT FOR THE CIVIC CENTER II PROJECT. Town Manager Tim Pickering provided a brief overview of this agenda item and emphasized that from the very beginning, staff’s approach was to provide a cost effective, maximum use approach in a smaller operating package, resulting in cost savings related to less square feet of construction costs. He noted that the design approach allowed for fewer offices and the inclusion of open space modular office cubicles. He said that with smaller more compact offices in the design, existing office furniture systems were too large and inefficient, making it necessary to purchase modular furniture that was compatible with the design of the new building. He added that the existing furniture would be auctioned to return a maximum dollar amount to the general fund, offsetting some of the cost for new design concept furniture. He noted that the Council’s packets included a picture example of the proposed furnishings. Mr. Pickering informed the Council that staff anticipated that they would move into the new Town Hall the summer of 2005, by July 1st and staff had completed the selection process for installation of all office furnishings and related file systems. He noted that staff involvement included an invitation to four vendors to set up mock offices in Building “A” Town Hall. For two weeks, staff reviewed the systems and was asked to fill out an evaluation sheet. He advised that the Herman Miller line was the clear choice. He reported that an earlier value analysis for furnishings and equipment for 39 offices, 6 conference rooms, six files and archiving rooms, Council Chambers and Court, 4 counter/reception areas and 3 waiting areas including all necessary chairs, conference tables, high density file systems, shelving, electric/data and a myriad of support equipment necessary to produce a complete office system brought a guaranteed maximum bid of $380,000. He stated that recognizing that the bids were standard market pricing, staff asked for a re-bid comparing the costs to the State Contract and Mojave pricing and that resulted in a $13,030 savings. He said that three firms responded to the re-bid as follows: Workspaces/Herman Miller $366,515.00 Walsh Bros./Steelcase $370,184.58 Facilitec/Haworth $380,558.00 Mr. Pickering noted that in order to complete the FF&E (furniture, fixtures and equipment) package, a single State contract-pricing bid from Filing Solutions for $35,035.00 was added to the furniture bids described and noted that a breakdown sheet was included as an attachment. He stated that in order to manage a very tight construction budget, staffs needed to look at the lowest bid carefully, while at the same time ensure that the Town received a durable product. He added that after careful analysis, which included a review with the Better Business Bureau and the Registrar of Contractors, staff recommended that the low bidder, Workspaces/Herman Miller, be selected as the vendor at a cost of $366,515.00. Mr. Pickering commented on efforts that were expended to reduce the cost as much as possible and noted that the seniors would not be there and a lot of needs were reduced as a result of a complete analysis of all current furniture and possible reuse where appropriate. He added that for coordination purposes, Holder Construction would purchase the furniture from the vendor. He said they would pay a small amount of money to Holder to perform that coordination and the second amendment to the design-build agreement reflected that charge. Councilwoman Nicola stated that in the past the Department of Public Safety as well as the Maricopa County Sheriff’s Office provided their own furniture and file cabinets. She asked whether they anticipated any kind of reimbursement for the costs. Mr. Pickering said that at this time they did not anticipate any reimbursement DRAFT Document in Agenda Packet 1-6-05.obd Page 5 of 11 because the Town would own the furniture. He emphasized the importance of aesthetic consistency throughout the building and added that eventually the law enforcement segment of the building might construct their own facility and at that time they would already have the furniture to utilize for other departments. He said they had not asked them to reimburse the Town for the furniture. Councilwoman Nicola commented on the importance of ensuring that the chairs would fit the officers’ gun belts and Mr. Pickering agreed and reported that the selected chairs had arms that move out to accommodate the gun belts while still providing comfort. Vice Mayor Archambault asked what the life span of the furniture would be and Mr. Pickering responded that it would depend on the wear. He expressed the opinion that the furniture would last a long time, fifteen to twenty years and possibly beyond. He pointed out that the furniture the Town originally selected had lasted fifteen years and some of it still remained in good condition. Councilman Kavanagh asked whether they originally had a maximum bid of $380,000 and Mr. Pickering explained that when they approved the guaranteed maximum price they had alternates in there. He added that for example the Council would see later on in the spring an alternate for the Avenue of the Fountains project. He said they knew they were going to do that project but did not know what it would cost. He added that the same was true of the furniture. When they first looked at it they thought that the price the contractor gave them was about $380,000. He stated that they did not want to approve it at that time because they needed to do further research on it and attempt to lower the bids. He said they had a bid for $380,000 but they did not feel they needed that much and decided to pare that figure down. He noted that another alternative would be brought before the Council and pointed out that the parking canopies had not been selected and were not included in the price. He added that if everything was going along well and funding was available, that issue might come forward next year. He said they might also see additional adds for items like court millwork but noted that those monies would come from a different fund. He stated that they would see two or three additional amendments as time went on depending upon how the project proceeded. Councilman McMahan said it was his understanding that the modular systems worked very well with computerization and had increased employee efficiency. He asked whether staff intended to hold a moving sale and Mr. Pickering confirmed that existing furniture would be sold through a bid process. He added that some of the items would be reused, such as refrigerators and microwaves. He agreed that efficiency would be increased as a result of the improved design and set up. Vice Mayor Archambault MOVED and Councilwoman Nicola SECONDED a motion to approve the 2nd amendment to the design-build agreement as recommended by staff. The motion CARRIED UNANIMOUSLY (7 to 0). AGENDA ITEM #9 – CONSIDERATION OF APPROVING THE STRATEGIC PLANNING PROCESS. Mr. Pickering addressed the Council regarding this agenda item and noted that staff had been working closely with the Town’s Technical Advisory Committee on this matter. He stated the opinion that the Town was extremely fortunate to have expertise and dedication in the community and reported that approximately five to six different individuals, who had a wealth of expertise in the strategic planning area, offered their services and put together the plan. He noted that these unpaid volunteers put a tremendous amount of work into this project and commented on the extensive meetings that had taken place in an effort to produce a high quality product. He said it was his pleasure to introduce Bob Yordy to the members of the Council and noted that Mr. Yordy was the President of the Civic Association, which had a great history of strategic planning in the Town. He stated that Mr. Yordy would provide an overview of the strategic planning process. Mr. Yordy addressed the Council and highlighted a power point presentation relative to the Strategic Planning Process. He said that he participated as much as a layperson could and added that he was very impressed with the members of the Committee, many who took time from their normal schedules to participate in the process. He noted that they initially held two workshops for the general public, in September and October, and as a result they received a lot of good input. He said that concerns were expressed regarding the importance of proceeding with DRAFT Document in Agenda Packet 1-6-05.obd Page 6 of 11 the process and added that the main concern was “how?” He advised that they formulated a Technical Advisory Committee and began their work. He reported that Councilmembers Nicola and Kehe also provided assistance and said that their Mission Statement was to ensure the success of a planning process based on the following key concepts: inclusiveness (include everyone who is a stakeholder); simplicity (“KISS” – “Keep it simple stupid); financially responsible (approximately $60,000 was allocated in the budget for the project and they believe it could be done at least the rest of this fiscal year for that amount of money); and realistic implementation (well planned and carried out). Mr. Yordy also discussed the challenges they identified, including achieving consensus of future direction; general distrust of government; apathy; lack of public involvement; lack of Council commitment on the part of past Councils; lack of leadership commitment; and lack of a clear message. He discussed the program and began with Phase 1, November, already completed. Define the mission and process the work plan for Town Council acceptance. December, public involvement plan, Council approval and public involvement database. He added that in January they planned to establish a communication theme and conduct an analysis of the existing situation’s projections. He said they needed a “kick off” event to make people aware of what they were doing and encourage their participation. He stated in January they also wanted to analyze what the Town was made up of, its economic plusses, and consider where they were at. In February they would review the existing financial situation of the Town, the existing Capital Improvement Plans, and then come back to Council. He said throughout the entire process the Council was involved. Public interviews would also take place in February and they wanted to involve as many people from the community as possible and summarize common themes and divergent viewpoints. In addition, they would prepare a strategic position report containing accomplishments to date and the first newsletter would be published. In March they planned to conduct a youth visionary institute to find out what they had in mind and would hold the first of two Town Halls. He added that in April they would develop a report and in May publish the second newsletter. In June a planning meeting would be conducted with staff and emphasized the importance of staff involvement in the process. He noted that in July a presentation would be made to Council on the group’s status and another newsletter would be published. He added that focus groups would also be conducted and in August, despite the heat, a second Town Hall would be held. He further stated that in September and October they would conduct a community survey and said by then they should have enough information to tabulate it, put it all together and send it out to every household. In October, they planned to tabulate some of the results and in November they would present a draft of the plan to the Council at a work session attended by anyone who wanted to be there. He said that in December they hoped to receive Town Council’s approval of the proposed Strategic Plan and in January they would celebrate the fact that they accomplished this feat. Mr. Yordy commented that the goals were significant issues to be addressed within a relatively short period of time and said if they spread it out they might lose interest. He emphasized the importance of maintaining momentum and noted that $60,000 had been budgeted by the Council for this fiscal year. He stated the opinion that the proposed plan would remain within that budget figure. He added that the actual costs could be more closely determined after a project facilitator was in place. He reiterated that all of the work to date had been accomplished by volunteers and said they obviously could not keep that up in view of the tremendous amount of important work that needed to be done. Mr. Yordy discussed plans to organize a speaker’s bureau and take their “dog and pony show” on the road. He said they would meet with the community and civic groups and organizations and try to achieve as much participation as possible. He added that newspaper articles would be published and public service announcements would be made as well as Town Council updates in an effort to get the word out as best they could. He stated the opinion that the proposed process was sound. He said it was simple, credible, non-political, involved citizens at every juncture and would accomplish the Council’s goal. He added that if they did nothing and made major decisions without benefit of citizen input, they would be disregarding their tradition of involving volunteers and would lack financial resources at build out. He stated that they lived in a Town of volunteers and most of the things that the citizens dreamed about had come to pass because of the citizens and their energy. He noted the number of Town Halls that had been held over the years as well as community wide surveys that were conducted and added that incorporation was accomplished, a post office was built as well as a library and community center, DRAFT Document in Agenda Packet 1-6-05.obd Page 7 of 11 improved streets, parks, summer activities for youths and adults, etc. were accomplished as a result of citizens and leadership working together. Mayor Nichols thanked Mr. Yordy for his presentation. Vice Mayor Archambault commented on the fact that they were planning to hire a communications company in January and asked when a facilitator should be brought on board. He also noted that the plan was an aggressive one and commended the authors on their hard work. Mr. Pickering said that a facilitator should be hired as soon as possible and added that it would take some time to get individuals on board and stressed the importance of obtaining assistance in the communication area. Councilman Kavanagh thanked Mr. Yordy and the other volunteer members for their efforts and said he was impressed with their hard work. He asked whether the $60,000 was allocated to conduct a strategic plan and Mr. Pickering said there was discussion about using some of the money for education but $60,000 was budgeted for the strategic plan. Councilman Kavanagh said he got the impression from the previous presentation that the $60,000 was just to start the strategic plan but added that he recalled that amount was to complete the entire plan. Mr. Pickering responded that that was not his impression and added that a lot more money was originally budgeted for the project and the new Council was hesitant to move too quickly. He said the price was reduced and discussion took place regarding starting with the education component. Councilman Kavanagh stated that they agreed they did not have the money to spend on a big fancy plan and they were going to trim it down and use volunteers. He said he was concerned now that he was hearing they are going to hire a communications company to design the logo for the plan and the $60,000, which he thought was the total price they agreed on if they were using volunteers, was now just the beginning of the bill. He requested that the actual minutes of the meeting where this issue was discussed be brought to the next meeting to clarify the matter or that they be reviewed before the group began to erroneously begins to think that $60,000 was the first step and there was more money to follow. Mr. Pickering said they knew, for example, from talking with other companies that just the survey alone was going to cost $25,000 and that did not occur until October. He stated that a totally different company that specializes in surveys would probably perform the work. He explained that they could not use monies that were budgeted in this fiscal year for the next fiscal year. Councilman Kavanagh suggested that Mr. Pickering bring this issue back at the next meeting and look at the minutes to see what was decided regarding cost. Councilman Kavanagh commented that it had become an “open ended plan” all of a sudden and Mr. Pickering clarified that the budget had $60,000 to be expended this fiscal year. He added that if the Council did not want to expend any more funds during the next fiscal year that was their choice. Councilman Kavanagh said it would be insane to expend $60,000, get halfway through it and then drop the process. He stated that they should decide right now whether they wanted to proceed with it at all. He suggested that at the next meeting they agendize what the real budget was, the cost to the taxpayers. Mr. Pickering noted that it would take longer than the next meeting to determine the cost because the facilitator’s cost had to be determined. He added that the contract for that service would be before the Council in February. Councilman Kavanagh commented that he was under the impression they were going to use volunteer facilitators and Mr. Pickering said that they were continually using volunteers and, in fact, people had volunteered $30,000 worth of their time to get this going. He pointed out that the cost they were looking at before was over $100,000 for Maximus, an Assistant Town Manager, and a full time Public Information Officer, for a total cost in excess of $250,000. He said they were not going to use all of those. Councilman Kavanagh responded that that did not mean they had a “green light” to put the same monies into this new project open ended. Mr. Pickering agreed that it was not a “green light” because they could only spend DRAFT Document in Agenda Packet 1-6-05.obd Page 8 of 11 $60,000 and said if there was any additional monies, which he believed there would be, the Council would decide the use. Councilman Kavanagh commented that he was assured the survey was part of the process and Mr. Pickering confirmed that it was part of the process. Councilwoman Nicola raised a point of order and said because Fountain Hills was an incorporated Town and not a charter city. The members of the Council had to make the important decisions (what capital projects would be done and how they would be funded). She added that they did not have the opportunity to ask the voters as charter cities did and this was the only opportunity they had to go to the residents and business owners and ask them what they wanted for their community. She commented on the fact that they conducted a work-study on this matter as well as a good portion of their retreat and several public meetings and had a wonderful group of people who had come a long way to help the Town develop a Strategic Plan. She added that during the budget process, a majority of the Council was uncomfortable with the dollar amount for that current budget year but they knew that the project was going to encompass a minimum of two fiscal years to complete and that was just the beginning. She said then they would have to put the plan in place and there would be other monetary decisions. She commented that she for one understood that the $60,000 was just the beginning of an investment and felt comfortable moving forward. She added that she was comfortable with where they were going, what the process was going to achieve, and what the money was going to be spent on. Councilwoman Nicola commented that the Town Manager is going to come before the Council in May or June and report how much it is going to cost to achieve the goals that the Council set. She said she was ready when the time was right to vote to approve moving forward on the plan and allow the Town Manager to select a facilitator to assist him with formulating the plan and hiring a communications company to help get the word out. She expressed the opinion that this was the only way they can have all of the people who lived in the Town participate in how they are going to move forward over the next five years and beyond. Vice Mayor Archambault noted that this was a citizen driven effort and reiterated his previous comments that the citizens would determine how much effort was put into the project and how many dollars were spent. He agreed with Councilwoman Nicola that this was an ongoing effort that must be facilitated into a reality. He too stated that he was under the impression that the $60,000 was just to start the strategic planning process. Councilman Kavanagh reiterated his request to staff to review the minutes and clarify this matter. He asked that this item be placed on the next agenda and that staff report whether the minutes stated that they were going to spend $60,000 for a strategic plan or if in fact it was clearly stated that that was only the beginning of the process and there would be more expenditures to follow. He added that if the words “start” and “beginning” were not there, then he would expect this to be on the agenda of the next meeting so the Council could commit to either the $60,000 that he thought was the limit, or if they were writing an open ended check. He commented that the Council as a whole should make that decision in full view of the public. Mr. Pickering said that staff would be happy to provide that information and stated the opinion that they had the discussion about it being the beginning of the process. He added that he specifically remembered Councilman Kehe talking about starting with education and putting some money into the budget. He stated that they discussed $50,000 versus $60,000. He said he wanted the Council to be assured that they were not writing an open ended check because any contract for a facilitator would come before them early on so if they did not want to proceed with that, they would have the option. He also noted that they would go through the budget process as well and that was another opportunity for the Council to say they did not want to proceed. He stated that staff was obtaining bids and would bring all of the numbers back to the Council. He said that hopefully the amount would be less than anticipated but he could not guarantee that at this time. Councilman McMahan asked what the role of the Civic Association and other community volunteers would be in the implementation of the plan. Mr. Yordy responded that the Civic Association previously held Town Halls and emphasized that the group was non political and ready to help in any way they could, whether it was conducting additional Town Halls, performing survey work, conducting focus groups, etc. He noted that some of the work was going to cost money and added that someone had to head the process up, a key person, to move the whole DRAFT Document in Agenda Packet 1-6-05.obd Page 9 of 11 process forward. He added that it was important to inform the citizens that their input was going to be solicited and they would be involved in the final decision making process. Councilman Kavanagh commented that the Town of Fountain Hills had historically had a lot of volunteers willing to expend their time and effort and said that was why it is difficult to understand why they could not achieve the goals with $60,000 in funding. He recommended that they eliminate the hiring of a communications firm to design a strategic plan logo. He added that as guardians of the residents’ dollars, they should trim the frills. Mr. Pickering noted that individuals who had conducted strategic planning put the work program together. In their professional opinions, they believed these were the things that should be done in order to be successful. He added that consistent communication was something they believed was imperative and they strongly recommended that a consistent theme throughout the entire project be implemented. In response to a request from Councilman Kavanagh, Mr. Pickering listed the names of the members of the Technical Advisory Committee who were involved in this process and provided expert assistance. Councilwoman Nicola MOVED that the Strategic Planning process as presented by staff be approved and Councilman Kehe SECONDED the motion. Councilman Kavanagh MOVED to amend the motion to move this item to the next meeting when staff would provide a report outlining potential expenditures. Councilman McMahan SECONDED the amendment. Councilman Kehe asked to move the question. Mayor Nichols asked whether anyone would like to discuss the amendment. Councilwoman Nicola asked whether Councilman Kavanagh could amend her motion to continue the matter. Assistant Town Attorney Carolyn Oberholtzer said that Councilman Kavanagh could move to continue the item. Councilman Kavanagh noted that the Town Manager stated he would go back and review the minutes and determine what was approved and advise the Council whether the $60,000 was to conduct the entire process or just the beginning of costs associated with achieving the goal. Mr. Pickering commented that a timing issue existed and estimated that he could not give the Council an exact dollar figure until February. He said that the Council’s direction at the workshop was “get us a plan and let’s get going on this.” He added that there was nothing that said they had to start it right now, however, if they wanted to accomplish the goal by December 2005, the added two months would push it over to February 2006. Councilman Kavanagh asked whether there would be any dire results if the plan was accomplished two months later than originally estimated and Mr. Pickering responded that there was a lot of work they were trying to cram into a year and again emphasized the importance of keeping the momentum going. Councilman Kehe agreed that a time factor was involved and said they did not know what the citizen driven results were going to be and when they ultimately reached the final step, the approval of the strategic plan, there might be direction given that had a time factor attached to it. He added that they had been involved in this since August and said he was personally prepared to make a decision this evening on whether to move ahead or not. He noted that when the issue was raised during the budget process, he had the clear understanding that the $60,000 represented just a start, not a road that was going to be completed by June 30th. He stated that he was prepared to move ahead and added that he strongly believed that they should seize the moment. The Vice Mayor said there was a big difference if the plan was completed in December because if it was finalized in January, they would have a plan for the retreat and would be able to give the public what it was they were looking for and start addressing those issues and budgeting them for the 2005-06 budget year. He added that if they did not finish the plan until February or March of next year, they would miss the boat. DRAFT Document in Agenda Packet 1-6-05.obd Page 10 of 11 Mayor Nichols indicated that he was ready to make a decision this evening and said he did not support a continuance. He said the $60,000 figure was just “pulled out of the air” and represented simply an estimate of what they thought they were going to spend. He added that now that the Technical Advisory Committee had worked on this for three months and was asking for approval of the Strategic Planning Process and he believed they had enough information to do so this evening. Councilman Kavanagh noted that the original proposal was over $100,000 and the Council reduced it to $60,000. He agreed that it was going to be an on going process but said they stated after the plan was completed it would have to be revisited every year for amendments. He spoke in favor of delaying this matter as previously discussed but added that the volunteers could continue their efforts without expending money. Councilman Schlum commended the Technical Advisory Committee and all of the volunteers involved in the process. He said they would save the Town significant money and provide a chance for everyone to be heard. He stated that the dollars to be spent this year were not clearly specified and the $60,000 would not be spent this year and he believed the total cost would exceed that amount. He noted that the report reflected a figure of $3,300 in Town staff time spent and that would continue. He expressed faith in staff and the volunteers and emphasized the importance of ensuring that this did not become a political process. He said he was excited about moving forward and would like staff to spell out a little more clearly where they would be through the rest of the year. Mayor Nichols called the question and asked everyone in favor of the continuance to indicate by saying aye. A roll call vote was taken with the following results: Councilwoman Nicola Nay Councilman McMahan Nay Councilman Kavanagh Aye Vice Mayor Archambault Nay Councilman Kehe Nay Councilman Schlum Nay Mayor Nichols Nay The motion FAILED for lack of a majority vote (1 to 6). Mayor Nichols said they would now vote on the main motion. Councilman McMahan expressed concerns regarding the hiring of a communications company to develop a logo but agreed that a facilitator should be hired immediately. He added that some of the other issues could be addressed as they proceeded through the process. Town Clerk Bev Bender advised that Bruce Florence submitted a card indicating his support for proceeding but said he did not wish to speak at this time. The motion CARRIED by majority vote, 6 to 1, with Councilman Kavanagh voting nay. Mayor Nichols thanked all of the volunteers and the members of the Technical Advisory Committee for their hard work. He emphasized that the process was critical to the future of Fountain Hills over the next five to ten years and citizen involvement was also crucial. He urged them to continue their great work and said the Council believed in the process and would continue to be fiscally responsible as they moved forward. AGENDA ITEM #10 - COUNCIL ASSESSMENT AND REVIEW OF THE MEETING TO IDENTIFY PROCEDURAL STRENGTHS AND WEAKNESSES AND DISCUSS POSSIBLE IMPROVEMENTS FOR FUTURE MEETINGS. Councilman Schlum stated that it would be a good idea to have the minutes available from applicable meetings in the future. DRAFT Document in Agenda Packet 1-6-05.obd Page 11 of 11 AGENDA ITEM #11 – COUNCIL DISCUSSION/DIRECTION TO THE TOWN MANAGER. ITEMS LISTED BELOW ARE RELATED ONLY TO THE PROPRIETY OF (i) PLACING SUCH ITEMS ON A FUTURE AGENDA FOR ACTION OR (ii) OR DIRECTING STAFF TO CONDUCT FURTHER RESEARCH AND REPORT BAVK TO THE COUNCIL: NONE. There was no discussion relative to this agenda item. AGENDA ITEM #12 – SUMMARY OF COUNCIL REQUESTS BY TOWN MANAGER Mr. Pickering stated that meeting minutes would be distributed to the Council (minutes from the budget session in June regarding the Strategic Planning Process). Councilwoman Nicola also requested that they be provided copies of the work-study minutes where the issue was discussed. Mayor Nichols said he believed the Council direction was when issues arose in the future that refer to matters that were previously discussed, the minutes of those meetings should be made available to the Council for their review. Mr. Pickering responded that he would be happy to do so if the Council let him know ahead of time, which minutes they would like to review. Mayor Nichols said they would try to do so. Vice Mayor Archambault noted that the Council meeting minutes were available to the public on the Town’s website. Mayor Nichols and the members of the Council wished everyone a happy holiday season, a happy Hanukah and a Happy New Year. Mayor Nichols said that decorations would not be an issue for next year’s holiday season. AGENDA ITEM #13 – ADJOURNMENT Councilwoman Nicola MOVED that the Council adjourn and Councilman Schlum SECONDED the motion, which CARRIED UNANIMOUSLY. The meeting adjourned at 7:46 p.m. TOWN OF FOUNTAIN HILLS By __________________________ Wally Nichols, Mayor ATTEST AND PREPARED BY: Bevelyn J. Bender, Town Clerk CERTIFICATION I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Regular Session held by the Town Council of Fountain Hills on the 16th day of December 2004. I further certify that the meeting was duly called and that a quorum was present. DATED this 6th day of January 2005. _____________________________ Bevelyn J. Bender, Town Clerk Document in Agenda Packet 1-6-05.obd Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Meeting Date: 1/6/05 Submitting Department: Public Works Contact Person: Tom Ward Consent: Regular: Requesting Action: Report Only: Type of Document Needing Approval (Check all that apply): Public Hearing Resolution Ordinance Agreement Emergency Clause Special Event Permit Special Consideration Intergovernmental Agreement Acceptance Grant Submission Liquor/Bingo License Application Plat Special Event Permit Special/Temp Use Permit Other: Council Priority (Check Appropriate Areas): Education Public Fitness Library Services Public Safety Community Activities Economic Development Public Works Human Service Needs Parks & Recreation Town Elections Community Development Regular Agenda Wording: Consideration of the SPECIAL EVENT LIQUOR LICENSE APPLICATION submitted by the American Legion Post #58 for Pony Express Day on February 3, 2005 from noon until 6:00 PM. Staff Recommendation: Approve Fiscal Impact: No $ Purpose of Item and Background Information: To obtain Council approval of a special event liquor license in conjunction with Pony Express Days. The permit covers only the area specified in the application. It received a favorable recommendation from the Sheriff's Office. At the manager's request in an attempt to reduce paper, full applications will not be reproduced for the packets. The front page will be included for representative purposes and the full application is available for review in the clerk's office. List All Attachments as Follows: Staff memo; Sheriff Office memo; application front page Type(s) of Presentation: Consent Agenda Signatures of Submitting Staff: S:/TWard Department Head Budget Review (if item not budgeted or exceeds budget amount) S:/JAGhetti, ATM Town Manager / Designee Document in Agenda Packet 1-6-05.obd TOWN OF FOUNTAIN HILLS PUBLIC WORKS DEPARTMENT MEMO TO: Honorable Mayor and Council DT: December 21, 2004 FR: Tom Ward, Director of Public Works RE: American Legion Post #58 Special Event Liquor License The Fountain Hills American Legion Post #58 is requesting Council approval of a special event liquor license for Pony Express Day scheduled for February 3, 2005. Hours of operation are noon to 6:00 p.m. Although the special event liquor license is issued by the state, local approval by the Council is required. Public Works and the Maricopa County Sheriff’s office have reviewed the application. As of this application, there have not been any known alcohol violations to date, which would prohibit granting of this permit. In addition, the American Legion will have Sheriff’s deputies present during the event and will post one at each entrance to prevent alcohol leaving the permit area. Based on the above information, staff recommends approval. Document in Agenda Packet 1-6-05.obd Document in Agenda Packet 1-6-05.obd Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Meeting Date: 1/6/05 Submitting Department: Public Works Contact Person: Tom Ward Consent: Regular: Requesting Action: Report Only: Type of Document Needing Approval (Check all that apply): Public Hearing Resolution Ordinance Agreement Emergency Clause Special Event Permit Special Consideration Intergovernmental Agreement Acceptance Grant Submission Liquor/Bingo License Application Plat Special Event Permit Special/Temp Use Permit Other: Council Priority (Check Appropriate Areas): Education Public Fitness Library Services Public Safety Community Activities Economic Development Public Works Human Service Needs Parks & Recreation Town Elections Community Development Finance Regular Agenda Wording: Consideration of the liquor license application submitted by Matilde Salazar for Terra Nostra Italian Cafe located at 16740 E. Palisades Blvd. The application is for a new Class 12 (restaurant) license. Staff Recommendation: Approve Fiscal Impact: No $ Purpose of Item and Background Information: To obtain Council approval a new Class 12 (restaurant) liquor license. The application complies with statutory and liquor license regulations and it received a favorable recommendation from the Maricopa County Sheriff's office based on his background investigation. At the manager's request in an attempt to reduce paper, full applications will not be reproduced for the packets. The front page will be included for representative purposes and the full application is available for review in the clerk's office. List All Attachments as Follows: Staff memo, MCSO memo, application front page Type(s) of Presentation: Consent Signatures of Submitting Staff: S:/TWard _____________________________________ Department Head Budget Review (if item not budgeted or exceeds budget amount) S:/JAGhetti, ATM Town Manager/Designee TOWN OF FOUNTAIN HILLS PUBLIC WORKS DEPARTMENT TO: Honorable Mayor and Town Council DT: December 16, 2004 FR: Tom Ward Director of Public Works RE: Terra Nostra Italian Cafe Liquor License Application Matilde Salazar is requesting Council approval of a new Class 12 liquor license for the Terra Nostra Italian Cafe located at 16740 E. Palisades Blvd. A Class 12 license is for restaurant use only. Statute requires that 40% of the business establishment be devoted to serving food and that liquor sales be incidental to the food service. Public Works and the Maricopa County Sheriff’s Office have reviewed the application. It meets the statutory requirements for a Class 12 liquor license. The applicant is an Arizona resident and has no outstanding wants or warrants. The applicant has a Fountain Hills business license on file. Based on statutory compliance and a favorable recommendation from the MCSO, staff recommends approval. bb Document in Agenda Packet 1-6-05.obd Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Meeting Date: 1/6/05 Submitting Department: Public Works Contact Person: Tom Ward Consent: Regular: Requesting Action: Report Only: Type of Document Needing Approval (Check all that apply): Public Hearing Resolution Ordinance Agreement Emergency Clause Special Event Permit Special Consideration Intergovernmental Agreement Acceptance Grant Submission Liquor/Bingo License Application Plat Special Event Permit Special/Temp Use Permit Other: Council Priority (Check Appropriate Areas): Education Public Fitness Library Services Public Safety Community Activities Economic Development Public Works Human Service Needs Parks & Recreation Town Elections Community Development Finance Regular Agenda Wording: Consideration of RESOLUTION 2005-06 abandoning whatever right, title, or interest the Town has in a portion of the 1’ Vehicular Non-Access Easement located at the easterly property line of Lot 34C, Block 2, Plat 505A. NVAE 04-03 Staff Recommendation: Approve Fiscal Impact: No $ Purpose of Item and Background Information: Abandon a portion of the Vehicular Non-Access Easement on the easterly property line in order to relocate the proposed driveway entrance. List All Attachments as Follows: Staff memo, resolution, easement abandonment exhibit, grant of easement and GOE exhibit. Type(s) of Presentation: Signatures of Submitting Staff: S:/TWard _____________________________________ Department Head Budget Review (if item not budgeted or exceeds budget amount) S:/JAGhetti, ATM Town Manager/Designee Document in Agenda Packet 1-6-05.obd TOWN OF FOUNTAIN HILLS PUBLIC WORKS DEPARTMENT INTER OFFICE MEMO TO: Honorable Mayor and Council DT: December13, 2004 FR: Art Candelaria, Engineer Randy Harrel, Town Engineer THRU: Tom Ward, Director of Public Works RE: Abandonment of “Vehicular Non-Access Easement” - 505A-2-34C 15526 N. Boulder Avenue NVAE 04-03 This item on the Town Council’s agenda is a proposal to abandon a portion of the Vehicular Non-Access Easement located at the easterly property line of Plat 505A, Block 2, Lot 34C in order to relocate the proposed driveway entrance to Boulder Drive. (The previous break in the 1’ VNAE is being closed by a separate grant of easement.) This item also abandons the platted Hillside Protection Easement on the above lot. (A replacement HPE is being granted in a separate Grant of Easement.) The Town Engineer has reviewed the site relative to the Town’s traffic and access interests and has determined that there is no need for the town to retain the easement and therefore has no objections to abandoning it. Staff recommends approval of Resolution 2005-06, subject to the following stipulation: • Grant the above-noted replacement 1’ VNAE and HPE, for Town recordation. C: Terry Woodward Adjacent Property Owners Document in Agenda Packet 1-6-05.obd RESOLUTION 2005-06 A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA ABANDONING WHATEVER RIGHT, TITLE, OR INTEREST IT HAS IN A PORTION OF THE CERTAIN VEHICULAR NON-ACCESS EASEMENT, AND THE ENTIRE HILLSIDE PROTECTION EASEMENT LOCATED WITHIN LOT 34C, BLOCK 2, PLAT 505A, FOUNTAIN HILLS, ARIZONA, AS RECORDED IN BOOK 541 OF MAPS, PAGE 43, RECORDS OF MARICOPA COUNTY, ARIZONA. WHEREAS, the Mayor and Council of the Town of Fountain Hills (the “Town Council”), as the governing body of real property located in the Town of Fountain Hills (the “Town”), may require the dedication of public streets, sewer, water, drainage, and other utility easements or rights-of-way within any proposed subdivision; and WHEREAS, the Town Council has the authority to accept or reject offers of dedication of private property by easement, deed, subdivision, plat or other lawful means; and WHEREAS, all present utility companies have received notification of the proposed abandonment. NOW THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, as follows: SECTION 1. That a portion of the certain 1’ Vehicular Non-Access Easement and the Hillside Protection Easement, both located within Lot 34C, Block 2, Plat 505A, Fountain Hills, Arizona; as shown in Exhibit “A”; as recorded in book 541 of maps, page 43 records of Maricopa County, Arizona are hereby declared to be abandoned by the Town of Fountain Hills. SECTION 2. That this Resolution is one of abandonment and disclaimer by the Town solely for the purpose of removing any potential cloud on the title to said property and that the Town in no way attempts to affect the rights of any private party to oppose the abandonment or assert any right resulting therefrom or existing previous to any action by the Town. [SIGNATURES ON FOLLOWING PAGE] Document in Agenda Packet 1-6-05.obd PASSED AND ADOPTED BY the Mayor and Council of the Town of Fountain Hills, January 6, 2005. FOR THE TOWN OF FOUNTAIN HILLS: ATTESTED TO: W. J. Nichols, Mayor Bevelyn J. Bender, Town Clerk REVIEWED BY: APPROVED AS TO FORM: Timothy G. Pickering, Town Manager Andrew J. McGuire, Town Attorney Public Works Town of Fountain Hills P.O. Box 17958 Fountain Hills, AZ 85269 GRANT OF EASEMENT Terry D. Woodward grantor, for good and valuable consideration, hereby grants to the Town of Fountain Hills, Arizona, grantee, a municipal corporation, its successors and assigns, and to public utilities, a perpetual easement for the following purposes, namely: A 1’ Vehicular Non-Access Easement along 30’ of the southeasterly property line of Lot 34C, Block 2, Plat 505A, Fountain Hills, Arizona, Book 541 of Maps, Page 3, MCR. on, over, under and across the ground embraced within the aforementioned plat as depicted in Exhibit "A", situated in the Town of Fountain Hills, State of Arizona. Grantor covenants that grantor is lawfully seized and possessed of this aforementioned tract or parcel of land; that grantor has good and lawful right to sell and convey it; and that grantor will warrant the title and quiet possession thereto against the claim of any person whatsoever. Dated this day of _________________, 2005. By: Terry D. Woodward By: STATE OF ARIZONA ) ) ss. County of Maricopa ) SUBSCRIBED AND SWORN TO before me this day of , 2005, by _______________________________________. Notary Public My Commission Expires: Document in Agenda Packet 1-6-05.obd Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Meeting Date: 1/6/05 Submitting Department: Public Works Contact Person: Dana Burkhardt, AICP, Senior Planner Consent: Regular: Requesting Action: Report Only: Type of Document Needing Approval (Check all that apply): Public Hearing Resolution Ordinance Agreement Emergency Clause Special Event Permit Special Consideration Intergovernmental Agreement Acceptance Grant Submission Liquor/Bingo License Application Plat Special Event Permit Special/Temp Use Permit Other: Council Priority (Check Appropriate Areas): Education Public Fitness Library Services Public Safety Community Activities Economic Development Public Works Human Service Needs Parks & Recreation Town Elections Community Development Regular Agenda Wording: CONSIDERATION of RESOLUTION 2005-07, a request to abandon the "Final Replat of lots 12 and 13, Eagle Mountain Parcel 5", a lot join project, and revert back to the "Final Plat for Eagle Mountain, Parcel 5", Case #S2004-30. Staff Recommendation: Approve Fiscal Impact: No $ Purpose of Item and Background Information: The applicant has requested to abandon the existing lot join replat and revert back to two lots as originally platted. The purpose for this abandonment is to allow the property owner the option to develop or sell the undeveloped portion of this property (Lot 13) in the future. List All Attachments as Follows: Staff Memo; Resolution #2005-07; Application; Petition Letter; Reduction of the Final Replat to be abandoned; Proposed lot configuration after abandonment Type(s) of Presentation: None Signatures of Submitting Staff: ____________________________ _____________________________________ Department Head Budget Review (if item not budgeted or exceeds budget amount) ____________________________ Town Manager / Designee TOWN OF FOUNTAIN HILLS PLANNING & ZONING DIVISION MEMO TO: Honorable Mayor Nichols & Town Council DT: December 27, 2004 FR: Dana Burkhardt, AICP, Senior Planner RE: Adoption of Resolution 2005-07; Abandonment of the “Final Replat for Lots 12 and 13, Eagle Mountain Parcel 5”; Case #S04-30. LOCATION: 9804 & 9814 N. Talon Trail; aka Lots 12 & 13, Eagle Mountain Parcel 5 OWNER: Jack Lundeen APPLICANT: Jack Lundeen EXISTING ZONING: R1-10A EXISTING CONDITION: Lot 13 – Vacant Lot 12 – Developed with a single family home SURROUNDING LAND USES AND ZONING: NORTH: Undeveloped Lots; zoned “R1-10A” SOUTH: Undeveloped Lot; zoned “R1-10A” EAST: Undeveloped Lot; zoned “R1-10A” WEST: Single Family residence and an Undeveloped Lot; zoned “R1-10A” SUMMARY: The applicant, Jack Lundeen, has requested to abandon the existing lot join replat and revert back to the pre-existing two-lot configuration. The purpose for this abandonment is to allow the owner the option to develop or sell the undeveloped portion of his property (Lot 13) in the future. This request is for abandonment of the “Final Replat for Lots 12 and 13, Eagle Mountain Parcel 5” (a lot join), and to revert back to the original two lot configuration of “Final Plat Eagle Mountain, Parcel 5”. Mr. Lundeen has constructed a single family home on Lot 12, and the size and location of the structure meet all the requirements of the “R1-10A” Zoning District. In 1999 the applicant requested that the two lots be joined after the dwelling was constructed on Lot 12. The Town Council granted his request on April 28, 1999 to replat the properties, which consolidated the two lots into one. RECOMMENDATION: The proposed lots and building configuration meet the provisions of the Town’s Zoning and Subdivision Ordinances. Staff recommends approval of Resolution 2005-07. RESOLUTION NO. 2005-07 A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, ABANDONING THE “FINAL REPLAT OF LOTS 12 AND 13, EAGLE MOUNTAIN PARCEL 5” AS RECORDED ON BOOK 506, PAGE 11, OF THE RECORDS OF MARICOPA COUNTY, ARIZONA. WHEREAS, the Town of Fountain Hills (the “Town”) adopted Ordinance No. 96-29 on September 19, 1996, adopting the Subdivision Ordinance for the Town of Fountain Hills (the “Subdivision Ordinance”); and WHEREAS, Section 208 of the Subdivision Ordinance establishes the authority and procedures for abandoning a recorded subdivision; and WHEREAS, a public hearing was held by the Mayor and Council of the Town of Fountain Hills (the “Town Council”) on January 6, 2005; and WHEREAS, the Town Council desires that the “Final Replat of Lots 12 and 13, Eagle Mountain Parcel 5” be abandoned and revert back to the lot configuration shown on “Final Plat for Eagle Mountain Parcel 5”, as recorded in Book 406, Page 12. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, as follows: SECTION 1. That the “Final Replat of Lots 12 and 13, Eagle Mountain Parcel 5” as recorded in Book 506, Page 11 of the Records of Maricopa County, Arizona, is hereby abandoned and reverted back to the “Final Plat for Eagle Mountain Parcel 5” as recorded in Book 406, Page 12. SECTION 2. That the Mayor, the Town Manager, the Town Clerk and the Town Attorney are hereby authorized and directed to take all steps and to execute all documents necessary to carry out the purpose and intent of this Resolution. PASSED AND ADOPTED BY the Mayor and Council of the Town of Fountain Hills, Arizona, January 6, 2005. FOR THE TOWN OF FOUNTAIN HILLS: ATTESTED TO: W. J. Nichols, Mayor Bevelyn J. Bender, Town Clerk REVIEWED BY: APPROVED AS TO FORM: Timothy G. Pickering, Town Manager Andrew J. McGuire, Town Attorney PRE-EXISTING LOT CONFIGURATION (Final Plat for Eagle Mountain Parcel 5) NORTH Document in Agenda Packet 1-6-05.obd Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Meeting Date: January 6, 2005 Submitting Department: Public Works Contact Person: Tom Ward Consent: Regular: Requesting Action: Report Only: Type of Document Needing Approval (Check all that apply): Public Hearing Resolution Ordinance Agreement Emergency Clause Special Event Permit Special Consideration Intergovernmental Agreement Acceptance Grant Submission Liquor/Bingo License Application Plat Special Event Permit Special/Temp Use Permit Other: Grant of Easement Council Priority (Check Appropriate Areas): Education Public Fitness Library Services Public Safety Community Activities Economic Development Public Works Human Service Needs Parks & Recreation Town Elections Community Development Finance Regular Agenda Wording: CONSIDERATION of RESOLUTION 2005-08, granting an easement to the Sanitary District for the Civic Center II Project. Staff Recommendation: Approve Fiscal Impact: No $ Purpose of Item and Background Information: Easements are needed to serve the new Town Hall, for the FHSD recharge well facilities, and to serve existing Community Center/Library. List All Attachments as Follows: Staff Memo, Resolution, Public Utility Easement Agreement, Location Exhibit Map, Grant of Easement Map Type(s) of Presentation: None Signatures of Submitting Staff: S:/TWard _____________________________________ Department Head Budget Review (if item not budgeted or exceeds budget amount) S:/JAGhetti, ATM Town Manager / Designee Document in Agenda Packet 1-6-05.obd TOWN OF FOUNTAIN HILLS PUBLIC WORKS DEPARTMENT INTER OFFICE MEMO TO: Honorable Mayor and Town Council DT: December 30, 2004 FR: Randy L. Harrel, Town Engineer THRU: John Morast, Asst. Public Works Director RE: Grant of Easements at Community Center/ Town Hall property - EAA 04-13 Several public utility easements are needed for the various utilities to serve the new Town Hall building at the southeast corner of La Montana and Avenue of the Fountains. Those Public Utility Easements – typically 20’ wide - are shown on the attached Grant of Easement map. Additionally, the Town Council had approved a Grant of Easement to the Fountain Hills Sanitary District for a recharge well, supporting facilities, and appurtenant utility lines on 9-20-01 (Agenda Item #7). However, the FHSD had never submitted the necessary exhibit map and legal description, and so that easement was never recorded. The FHSD has now indicated the extent of the easement needed; those easements have been included on the attached Grant of Easement map. Also, (with the exception of an easement to SRP) no easements were ever granted to the utility companies for the easements needed for Phase 1 of the Community Center. Known needed easements from Phase 1 of the Community Center have also been included in the attached Grant of Easement map to correct this situation. The public utility easement, granting all the above easements along with the Grant of Easement map, has been included as the recordable documents. We have also attached a Location Exhibit graphically showing where these easements lie with respect to the various buildings and other features on the Civic Center site, for reference. Facility Operations Supervisor Don Thumith (who has been administering the construction of the new Town Hall, as well as the previous Community Center construction) has reviewed and approved this Grant of Easement. Staff will record this Grant of Easement for record purposes. Staff recommends Council approval to grant easements on the Community Center/Town Hall site, as shown in the attached Grant of Easement Map. Attachments: Grant of Easements – Location Exhibit Grant of Easement Map (for signature and recordation) Cc: John Morast Don Thumith Ronald D. Huber/ FHSD Mike Thompson/ CCWC Salt River Project Document in Agenda Packet 1-6-05.obd RESOLUTION NO. 2005-08 A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, GRANTING A PUBLIC UTILITY EASEMENT TO THE FOUNTAIN HILLS SANITARY DISTRICT. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, as follows: SECTION 1. That a public utility easement is hereby granted to Fountain Hills Sanitary District through, over, under and across the real property generally located near the southwest corner of the Avenue of the Fountains and LaMontana Drive, as more particularly described and depicted in Exhibit A, attached hereto and incorporated herein by reference. SECTION 2. That the Mayor, the Town Manager, the Town Clerk and the Town Attorney are hereby authorized and directed to take all steps and to execute all documents necessary to carry out the purpose and intent of this Resolution. PASSED AND ADOPTED BY the Mayor and Council of the Town of Fountain Hills, Arizona, January 6, 2005. FOR THE TOWN OF FOUNTAIN HILLS: ATTESTED TO: W. J. Nichols, Mayor Bevelyn J. Bender, Town Clerk REVIEWED BY: APPROVED AS TO FORM: Timothy G. Pickering, Town Manager Andrew J. McGuire, Town Attorney Document in Agenda Packet 1-6-05.obd When Recorded Mail To: Town Clerk Town of Fountain Hills P.O. Box 17958 Fountain Hills, AZ 85269 PUBLIC UTILITY EASEMENT GRANTOR: Town of Fountain Hills, an Arizona municipal corporation (the “Town”) GRANTEE: Fountain Hills Sanitary District, an Arizona sanitary district THIS PUBLIC UTILITY EASEMENT AGREEMENT (this “Agreement”) is entered into , 2005, by and between the Town and Grantee for the purposes set forth below. RECITALS A. The Town is the record owner of certain real property located in Fountain Hills, Arizona as more particularly described and depicted in Exhibit A, attached hereto and incorporated herein by this reference (the “Easement Area”). B. The Town intends to convey to Grantee a non-exclusive easement over, across and through the Easement Area, on the terms provided herein. AGREEMENT NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the parties agree as follows: 1. Easement. The Town hereby grants to Grantee and its employees, contractors, agents, successors and assigns, a non-exclusive easement, subject to all matters of record, upon, across, over and under the Easement Area, as hereinafter provided. The easement and rights and privileges hereby granted shall be used solely for purposes of installing, operating, inspecting, maintaining, repairing, replacing, or removing underground public utility facilities and specifically including installation and operation of a water well and necessary appurtenances (the “Facilities”) within the Easement Area. The water well and necessary appurtenances permitted herein shall be installed (i) only in the location within the Easement Area designated as a water well on Exhibit A and (ii) in a subterranean vault. Grantee, its employees, contractors and agents, may enter upon the Easement Area at their own risk, after reasonable notice to the Town, in order to exercise the rights granted herein. 2. Conditions. The grant of easement is subject to the following conditions and limitations: a. Grantee and its employees, contractors and agents agree to be bound by all existing terms, provisions and conditions of any easements, restrictions, covenants, conditions, reservations or other encumbrances (excluding monetary liens) now in existence and affecting all or any part of the Easement Area and all laws and regulations governing the activities of Grantee and its Document in Agenda Packet 1-6-05.obd employees, contractors and agents. Grantee shall be responsible for obtaining all governmental permits and approvals which may be necessary in connection with the improvements to be constructed by Grantee. b. To the extent permitted by law, Grantee does hereby covenant and agree to indemnify, defend and hold harmless the Town, its elected officials, officers, employees and agents for, from and against any and all suits, actions, legal or administrative proceedings, claims, demands or damages of any kind or nature relating to this Agreement which are the result of any act or omission of Grantee, its elected officials, officers, employees, agents and anyone acting under its direction or control, whether intentional or negligent, in connection with or incident to the this Agreement. c. Grantee and its employees, contractors and agents, shall in all events cooperate as reasonably requested by Town so as to minimize any disruption or use of the Easement Area caused by the exercise or discharge of Grantee’s rights and obligations herein. 3. Running of Benefits and Burdens. All provisions of this Agreement, including the benefits and burdens, run with the land and are binding upon and inure to the assigns and successors of the parties hereto. This Easement and the rights of the Grantee hereunder shall be subject to all matters presently of record against the property. 4. Termination of Easement. This Agreement and the Easement hereunder may be terminated by the agreement of the parties. Such termination shall take effect upon recordation of a written memorandum of such agreement, signed by all such persons, properly notarized and suitable for recordation (the “Memorandum”). Notwithstanding the foregoing, Grantee’s obligations set forth in Section 2(b) above shall survive such termination. 5. Assignment. This Agreement and the Easement granted hereunder may be assigned by the Grantee to another entity solely for the purposes of construction and operation of the Facilities. Such assignment shall be subject to the prior, written approval of the Town; provided, however, that such prior approval by the Town shall not be unreasonably withheld or delayed. 6. Miscellaneous. a. Entire Agreement. This instrument contains the entire agreement between the parties relating to the rights herein granted and obligations herein assumed. Any oral representations or modifications concerning this instrument shall be of no force and effect excepting subsequent modification in writing, signed by the party to be charged, or as otherwise provided herein. Document in Agenda Packet 1-6-05.obd b. Attorneys’ Fees. Either party may enforce this instrument by appropriate legal action and the prevailing party in such litigation may recover as part of its costs in such action reasonable attorneys' fees and court costs. c. Severability. Every provision of this Agreement is and will be construed to be a separate and independent covenant. If any provision in this Agreement or the application of the same is, to any extent, found to be invalid or unenforceable, then the remainder of this Agreement or the application of that provision to circumstances other than those to which it is invalid or unenforceable, will not be affected by that invalidity or unenforceability. Each provision in this Agreement will be valid and will be enforced to the extent permitted by law and the parties will negotiate in good faith for such amendments of this Agreement as may be necessary to achieve its intent, notwithstanding such invalidity or unenforceability. 7. Cancellation by Town. This Agreement may be cancelled by the Town pursuant to ARIZ. REV. STAT. § 38-511. IN WITNESS WHEREOF, the parties hereto have executed this instrument on the day and year first above written. “Grantee” “Town” FOUNTAIN HILLS SANITARY TOWN OF FOUNTAIN HILLS, an Arizona DISTRICT, an Arizona sanitary district municipal corporation By: By: Ronald D. Huber, General Manager W. J. Nichols, Mayor ATTEST: Bevelyn J. Bender, Town Clerk Document in Agenda Packet 1-6-05.obd STATE OF ARIZONA ) ) ss. COUNTY OF MARICOPA ) This instrument was acknowledged before me on 2005, by Ronald D. Huber, as General Manager of the Fountain Hills Sanitary District, an Arizona sanitary district, on behalf of the District. Notary Public in and for the State of Arizona My Commission Expires: STATE OF ARIZONA ) ) ss. COUNTY OF MARICOPA ) This instrument was acknowledged before me on , 2005, by W. J. Nichols, Mayor of the Town of Fountain Hills, an Arizona municipal corporation, on behalf of the Town. Notary Public in and for the State of Arizona My Commission Expires: Document in Agenda Packet 1-6-05.obd Page 1 of 1 Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Meeting Date: January 6, 2005 Submitting Department: Administration Contact Person: Pickering Consent: Regular: Requesting Action: Report Only: Type of Document Needing Approval (Check all that apply): Public Hearing Resolution Ordinance Agreement Emergency Clause Special Event Permit Special Consideration Intergovernmental Agreement Acceptance Grant Submission Liquor/Bingo License Application Plat Special Event Permit Special/Temp Use Permit Other: Council Priority (Check Appropriate Areas): Education Public Fitness Library Services Public Safety Community Activities Economic Development Public Works Human Service Needs Parks & Recreation Town Elections Community Development Legal Regular Agenda Wording: CONSIDERATION of retaining Titus, Brueckner, and Berry and Jordan and Rosebrough as litigation counsel. Staff Recommendation: Approve Fiscal Impact: $ Purpose of Item and Background Information: List All Attachments as Follows: None Type(s) of Presentation: None Signatures of Submitting Staff: ____________________________ _____________________________________ Department Head Budget Review (if item not budgeted or exceeds budget amount) S:/JAGhetti, ATM Town Manager / Designee document in agenda packet 1-6-05.obd Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Meeting Date: 1/06/2005 Submitting Department: Admin Contact Person: Julie Ghetti Consent: Regular: Requesting Action: Report Only: Type of Document Needing Approval (Check all that apply): Public Hearing Resolution Ordinance Agreement Emergency Clause Special Event Permit Special Consideration Intergovernmental Agreement Acceptance Grant Submission Liquor/Bingo License Application Plat Special Event Permit Special/Temp Use Permit Other: Council Priority (Check Appropriate Areas): Education Public Fitness Library Services Public Safety Community Activities Economic Development Public Works Human Service Needs Parks & Recreation Town Elections Community Development Finance Regular Agenda Wording: Presentation of the Town of Fountain Hills Comprehensive Annual Financial Report for the Fiscal Year Ending June 30, 2004 by the independent audit firm of Cronstrom & Trbovich. Staff Recommendation: Approve Fiscal Impact: No $ Purpose of Item and Background Information: The annual audit and financial report for the Town of Fountain Hills FYE 06/30/2004 has been completed by the independent audit firm of Cronstrom & Trbovich. A partner of the firm, Mr. Dennis Osuch, will present the report to the Council and public. List All Attachments as Follows: Comprehensive Annual Financial Report - see hard copy. Type(s) of Presentation: Oral Signatures of Submitting Staff: ____________________________ _____________________________________ Department Head Budget Review (if item not budgeted or exceeds budget amount) S:/JAGhetti, ATM Town Manager / Designee TOWN OF FOUNTAIN HILLS, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2004 ______________________________________________________________________ Mr. Wallace J. Nichols Mayor Mr. Mike Archambault Vice Mayor Councilmembers Dr. John Kavanagh Mr. Edwin Kehe Mr. Keith McMahan Ms. Kathleen Nicola Mr. Jay Schlum Timothy G. Pickering, CEcD, CM Town Manager Julie A. Ghetti, MPA, CPA Accounting Supervisor Prepared by: Financial Services Department TOWN OF FOUNTAIN HILLS, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2004 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal 1 List of Principal Officials 8 Organizational Chart 9 GFOA Certificate of Achievement 10 FINANCIAL SECTION Independent Auditor's Report 13 Management's Discussion and Analysis 15 Basic Financial Statements Statement of Net Assets 28 Statement of Activities 29 Balance Sheet - Governmental Funds 30 Reconciliation of the Balance Sheet to the Statement of Net Assets - Governmental Funds 31 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 32 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities - Governmental Funds 33 General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 34 Excise Tax Fund Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 35 Notes to the Basic Financial Statements 37 Required Supplementary Information: Public Safety Personnel Retirement System Schedule of Funding Progress 55 TOWN OF FOUNTAIN HILLS, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2004 TABLE OF CONTENTS Combining and Individual Fund Statements and Schedules Combining Balance Sheet - Nonmajor Governmental Funds 59 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds 61 General Obligation Debt Service Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 63 Eagle Mountain Debt Service Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 64 HURF Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 65 Grants Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 66 Municipal Property Corporation Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 67 HURF Debt Service Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 68 Cottonwoods Special Assessment Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 69 Development Fees Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 70 TOWN OF FOUNTAIN HILLS, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2004 TABLE OF CONTENTS STATISTICAL SECTION Government-wide information: Government-wide Expenses by Function 73 Government-wide Revenues 74 Fund Information: General Government Expenditures by Function 75 General Government Revenues by Source 76 General Governmental Tax Revenues by Source 77 Town Transaction Privilege (Sales) Tax Collections by Industry Classification 78 Property Tax Levies and Collections 79 Assessed and Estimated Actual Value of Property 80 Primary and Secondary Taxable Property Assessed Valuation 81 Property Tax Rates for All Direct and Overlapping Governments 82 Primary and Secondary Property Tax Rates - All Direct and Overlapping Governments 83 Assessed Valuation of Major Taxpayers 84 Computation of Legal Debt Margin 85 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita 86 Ratio of Annual Debt Service Expenditures to Total General Expenditures 87 Direct and Overlapping General Obligation Bonded Debt 88 Miscellaneous Statistical Data 89 INTRODUCTORY SECTION THIS PAGE BLANK December 10, 2004 To the Honorable Mayor, Members of the Governing Council, and Citizens of the Town of Fountain Hills, Arizona: State law requires that all general-purpose local governments publish within 120 days of the close of each fiscal year a complete set of financial statements presented in conformity with Generally Accepted Accounting Principles (GAAP) and audited in accordance with Generally Accepted Auditing Standards (GAAS) by a firm of licensed certified public accountants. The Comprehensive Annual Financial Report (CAFR) of the Town of Fountain Hills, Arizona (Town) for the fiscal year ended June 30, 2004, is hereby submitted. This document represents a joint effort by Town staff as well as our auditors, Cronstrom & Trbovich, P.C. This report consists of management's representations concerning the finances of the Town of Fountain Hills. Responsibility for the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with management. To provide a reasonable basis for making these representations, management of the Town of Fountain Hills has established an internal control framework that is designed to both protect the government's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the Town's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the Town's framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from 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. All disclosures necessary for the reader to understand the Town's activities have been included. The Town's financial statements have been audited by Cronstrom & Trbovich, PC, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Town of Fountain Hills, Arizona for the fiscal year ended June 30, 2004, 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 auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the Town's financial statements for the fiscal year ended June 30, 2004, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report. 1 GAAP requires 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' MD&A can be found immediately following the report of the independent auditor. Town of Fountain Hills Profile The Town of Fountain Hills is a planned, family-oriented 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. It was purchased by Robert McCulloch in the late 1960s and 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 11,340 acres of land, and bordering northeast Scottsdale, the Town is surrounded by the 3,500-foot McDowell Mountains on the west, the Fort McDowell Indian Reservation on the east, the Salt River Indian Reservation on the south and by the McDowell Mountain Regional Park on the north. Elevation is 1,520 feet at the fountain, 3,000 feet on Golden Eagle Boulevard, and is 500 feet above Phoenix. Over the past thirteen years the Town has grown from 10,190 residents to a town of over 22,000 in 2004. The Maricopa Association of Governments estimates that the population of Fountain Hills will continue to grow to near 25,000 by 2010. Although the rate of growth has slowed due to the general downturn of the national economy, the Town continues to attract residents who are building large custom homes to take advantage of the scenic vistas surrounding its mountain community. The Town offers a range of living styles, from small community subdivisions to a number of large custom homes. The Town also offers recreational, cultural and retirement programs that address the needs and lifestyles of active families and adults. The community primarily consists of residential property; of the total 11,700 acres of land only 500 acres are zoned commercial (approximately 4%) and 3,600 acres are reserved as open space (31%). The Town's Mission Statement for the Organization The Town of Fountain Hills' purpose is to serve the best interests of the community by: providing for its safety and well-being; 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. In four words, serve, respect, trust, stewardship. 2 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. The Town Council is responsible, among other things, for the adoption of local ordinances, budget adoption, the development of citizen advisory committees and hiring the Town Manager. The Town Manager is responsible for implementation of the policies of the Town Council and administering the Town's operations through five department directors and approximately 77 employees. The Magistrate, 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 (police, fire, animal control, building inspection); community development (code enforcement, planning, zoning and engineering); the construction and maintenance of streets and infrastructure, municipal court, recreational activities, community center and cultural events. The Town does not maintain utility or other operations that require the establishment of enterprise funds. 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 Fountain Hills Municipal Property Corporation are included in the financial reports of the Town. The annual budget serves as the foundation for the Town's financial planning and control. The Town Council formally adopts the budget and legally allocates, or appropriates, available monies for the General Fund, Highway User Revenue Fund, Special Revenue Funds, Debt Service Funds, and Capital Projects Funds. Therefore, these funds have appropriated budgets, and budget to actual information is presented. On or before the second public meeting in May the Town Manager submits to the Town Council a proposed budget for the fiscal year commencing the following July 1. 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 no later than June 30, the close of the Town's fiscal year. The budget is legally enacted through passage of an ordinance and is prepared by fund and department. The ordinance sets the limit for expenditures during the fiscal year. The Town Manager may authorize transfers from and within personnel and from operating capital to services or supplies within a department. Additional expenditures may be authorized for expenditures directly necessitated by a natural or man-made disaster as prescribed in the State Constitution, Article 9, Section 20. During fiscal year 2003/2004 there were no supplemental budgetary appropriations to the original budget. 3 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. Local economy. Despite the uncertain economic conditions of the nation and slower growth of the State's economy, the Town's economy remained stable. Local sales tax receipts increased 10% from FY2003 (excluding the rate increase effective 4/1/2003) and building permit activity increased 33%. Recent development along the commercial corridor includes a Target Store, PetCo, Pier One, Ross Clothing, Famous Footwear and other national retailers. Future retail additions anticipated are Discount Tire, Dollar Tree store and a 35,000 square foot office and retail complex. This increase in retail sales tax base will compensate for the decrease in construction activity that is anticipated in the next several years as the Town approaches build- out. The following chart provides a historical perspective of the local sales tax collections over the last three fiscal years showing the increase in retail activity. The downtown area of the community is located on Avenue of the Fountains, which will be designed to revitalize the downtown area and create connectivity to Phase II of the Civic Center project. Phase I included the construction of a Library/Museum and Community Center during FY2000 and 2001. Phase II will be completed during FY2005 and includes a new 32,000 square foot Town Hall facility that will provide a one stop shop for all municipal services. New lighting, pedestrian walkways, water features and cultural amenities will provide interest for adults and children. 4 The Town has approved plans for a Holiday Inn resort with 108 rooms that is scheduled to open in FY 2005 in the downtown area. Another downtown project is the Fountain Hills Resort Villas with 71 condo units and 250 resort rooms (currently in plan review) that will expand tourism within the community and bring additional retail tax revenue to Fountain Hills. Long-term financial planning. A five-year financial and capital improvement plan process has been initiated that will identify projects to be integrated with the annual budget including sources of funding to pay for them. Additional sources of revenue are being researched to diversify resources. The Town recognizes the need to secure reserves for future revenue shortfalls in case of economic downturns. A large portion of General Fund operating revenue comes from construction related activity that eventually will be constrained by availability of land. The Council has adopted a fund balance policy to provide financial stability and ensure that adequate future reserves are maintained. The policy states: 1. A contingency fund of no less than 30 days operating expenditures for the upcoming fiscal year to be designated for unanticipated expenditure or loss of revenue (contingency). 2. A designated unreserved fund balance of a minimum of ten percent (10%) of the average actual revenues for the preceding five fiscal years designated for "pay-as-you- go" capital. 3. A reserved fund balance of twenty percent (20%) of the average actual revenues for the preceding five fiscal years which is unavailable for appropriation. These amounts will not be programmed for expenditure and are only available for use within the confines of expenditure limitations imposed by the State. The contingency fund can be used for unexpected emergencies and projects upon approval by the Town Council. A historical perspective of past fund reserves is shown below. The general fund reserves recovered significantly after three years of decline that is reflective of the growth of the local and national economies, capital project funding and the establishment of a new municipal fire department. Town Council and management are committed to maintaining and improving the current level of reserves in the future. 5 The Town 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 debt policy was prepared with a preference for "pay-as-you-go" financing for capital spending. An investment policy was adopted and was awarded the Investment Policy Certification from the Association of Public Treasurers of United States and Canada. Cash management policies and practices. State statutes permit municipalities in Arizona to invest in obligations of the U.S. Treasury, commercial paper, corporate bonds, repurchase agreements, and the State Treasurer's Local Government Investment Pool (LGIP). The Town's debt policy restricts investments to securities that are 100% backed by the full faith and credit of the U.S. government. The Town invests all idle cash in the State LGIP-GOV, which consists of government-backed securities. The year-to-date yield on investments as of June 30, 2004 was 1.032%. Investment income includes appreciation in the fair value of investments. Increases in fair value during the current year, however, do not necessarily represent trends that will continue; nor is it always possible to realize such amounts, especially in the case of temporary changes in the fair value of investments that the government intends to hold to maturity. Daily cash deposits are made with the local bank and are maintained for payroll and payables; these accounts are fully collateralized to $1 million. Risk management. The Town of Fountain Hills, Arizona is a member of the Arizona Municipal Risk Retention Pool. Risk coverage includes general liability, errors and omissions, property and automobile insurance. The policy insures up to $2,000,000 per incident occurrence plus any excess liability of up to $13,000,000 per occurrence per year. Coverage is provided on a claims- made basis. The Arizona Municipal Workers Compensation Fund is the Town's insurance provider for Workers' Compensation. The rates vary according to the functions performed by personnel. Retirement plans. The Town of Fountain Hills, Arizona provides two deferred compensation plans through the International City/County Management Association (ICMA) in accordance with Internal Revenue Code Sections 401A and 457. The 401A is funded by mandatory employee wage deductions and matching Town contributions. The 457 is voluntary and funded 100% through employee participation. For further information on these plans please refer to Note 4.D in the financial statements. Awards and acknowledgements. The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of Fountain Hills, Arizona for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2003. This was the eighth consecutive year that the government has received this prestigious award. In order to be awarded a Certificate of Achievement, the government published an easily readable and efficiently organized CAFR. This report satisfied both GAAP and applicable legal requirements. 6 A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. In addition, the government also received the GFOA's Distinguished Budget Presentation Award for its annual budget document dated June 19, 2003. 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. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Finance and Administration Department. I would also like to extend my appreciation to the Mayor and Council for their leadership and support. Each member of the department has my sincere appreciation for the contributions made in the preparation of this report. Respectfully submitted, Timothy G. Pickering, CEcD, CM Town Manager 7 TOWN OF FOUNTAIN HILLS, ARIZONA LIST OF PRINCIPAL OFFICIALS ELECTED OFFICIALS Mayor Mr. Wallace J. Nichols Vice-Mayor Mr. Mike Archambault Councilmember Dr. John Kavanagh Councilmember Mr. Edwin Kehe Councilmember Mr. Keith McMahan Councilmember Ms. Kathleen Nicola Councilmember Mr. Jay Schlum DEPARTMENT DIRECTORS Town Manager Timothy G. Pickering Magistrate Ted Armbruster Public Works Director Tom Ward Parks & Recreation Director Mark Mayer Fire Chief Mark Zimmerman, Rural Metro Corporation District Commander Captain John Kleinheinz, Maricopa County Sheriff's Office Town Prosecutor Iacovino & Kayler Town Attorney Andrew McGuire, Jorden Bischoff McGuire 8 org chart 9 GFOA Certificate 10 FINANCIAL SECTION 11 THIS PAGE BLANK 12 INDEPENDENT AUDITOR'S REPORT The Honorable Mayor and the Town Council of the Town of Fountain Hills, Arizona We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Town of Fountain Hills, Arizona (Town), as of and for the year ended June 30, 2004, which collectively comprise the Town's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Town's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 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, 2004, and the respective changes in financial position, thereof and the respective budgetary comparison for the General and Excise Tax Funds for the year then ended in conformity with accounting principles generally accepted in the United States of America. A prior period adjustment is presented in Note 3.A to correct an error in the previously issued financial statements. The management's discussion and analysis on pages 15 - 25 and the Public Safety Personnel Retirement System Schedule of Funding Progress on page 55 are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. 13 Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Town's basic financial statements. The introductory section, combining and individual fund financial statements and schedules and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. Cronstrom & Trbovich, P.C. December 10, 2004 14 Management's Discussion and Analysis We (the Town of Fountain Hills, Arizona) are pleased to provide an overview of our financial activities for the fiscal year ended June 30, 2004. The intended purpose of the Management's Discussion and Analysis (MD&A) is to provide an introduction to the basic financial statements and notes, that provides an objective and easy to read analysis of our financial activities based on currently known facts, decisions, and conditions, by providing an easily readable summary of operating results and reasons for changes, which will help to determine if our financial position improved or deteriorated over the past year. This report addresses current operational activities, the sources, uses, and changes in resources, adherence to budget, service levels, limitations, significant economic factors, and the status of infrastructure and its impacts on our debt and operations. When referring to prior years' data in this analysis we will be drawing upon information from last years audited financial reports. Financial Highlights ¨The assets of the Town exceeded its liabilities at the close of the most recent fiscal year by $25,709,232 (net assets). Of this amount $7,976,113 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. ¨As of the close of the current fiscal year, the Town's governmental funds reported combined ending fund balances of $12,871,628, an increase of $4,308,750 in comparison with the prior year. ¨At the end of the current fiscal year, unreserved fund balance for the general fund was $6,293,941 or 61 percent of total general fund expenditures. The fund balance policy adopted by the Council in May, 2003 requires a minimum of $4,469,191 in designated, undesignated and reserve funds; the general fund will contribute $2,333,563 to the fund balance in the upcoming fiscal year. ¨General fund revenues (on a budgetary basis) exceeded budgeted revenues by $964,938 for fiscal year 2004. Additionally, budgetary basis expenditures were only 85%($1,763,892 (15%) in savings) of the final budget in the General Fund. ¨General fund revenues exceeded expenditures by $3,243,813; a positive variance of $2,728,830 from the original budget. ¨The Town includes two types of separate legal entities in its report - a Municipal Property Corporation and Community Facilities Districts. Although legally separate, these "component units" are important because the Town is financially accountable for them. A description of these three component units is available in Note 1 on page 37. Separate Financial Statements are not available for these entities. 15 Overview of the Financial Statements The Town implemented the Governmental Accounting Standards Board (GASB) Statement 34 - Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments (the new model) with the financial statements for the year ended June 30, 2003. The new model contained sweeping changes to the requirements for governmental reporting. The major changes were as follows: ¨Government-wide reporting - while governments have traditionally focused reporting on groupings of funds (i.e. General Fund, Special Revenue Funds, Capital Project Funds, etc.), the new model also contains financial statements on a government-wide basis. ¨Fund financial statements - the new model maintains governmental, proprietary and fiduciary fund financial statements, but the focus is on major funds within each fund type. ¨New focus for governmental activities - in the government-wide financial statements all activities, including the governmental activities, are reported using the economic resources measurement focus and accrual basis of accounting. The traditional current financial resources focus and modified accrual basis of accounting are maintained for the governmental fund financial statements in the new model. ¨Infrastructure reporting - the new model requires governments to report the value of infrastructure assets of governmental activities (roads, bridges, storm drainage systems, parks, street lighting, etc.). These assets are reported in the governmental activities on the government-wide financial statements. The Town has historically capitalized assets for governmental activities that were reported in the General Fixed Assets Account Group and were not depreciated under the old reporting model. ¨Changes in budgetary reporting - the new model requires the display of both the original adopted budget and the amended budget, if applicable, in the budgetary comparison schedules. These schedules are only required for the general fund and major special revenue funds, although they may be presented for other funds as additional information. ¨Required narrative analysis - the new model requires that the financial statements be accompanied by narrative introduction and analytical overview of the government's financial activities in the form of "Management's Discussion and Analysis" (MD&A). 16 Required Components of the Annual Financial Report Summary Detail Management’s Discussion and Analysis Basic Financial Statements Required Supplementary Inform ation Government- Wide Financial Statements Fund Financial Statements Notes To the Financial Statements As pictured above, the financial section of the Comprehensive Annual Financial Report (CAFR) for the Town of Fountain Hills, Arizona consists of this discussion and analysis, the basic financial statements and the required supplementary schedules presented after the basic financial statements. The basic financial statements include the government-wide financial statements, fund financial statements, including the budgetary statements for the general fund and major special revenue funds, and notes to the financial statements. Government-wide financial statements The government-wide financial statements are designed to provide readers with a broad overview of the Town's finances, in a manner similar to private-sector business. The statement of net assets presents information on all of the Town's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as useful indicators of whether the financial position of the Town is improving or deteriorating. The statement of activities presents information showing how the government's net assets changed during the most recent fiscal year. All changes in net assets 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., uncollected taxes and earned but unused vacation leave). The government-wide financial statements distinguish functions of the Town that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the Town include general government, community development, public safety, highways and streets, and culture and recreation. The Town does not have any business-type activities. 17 The government-wide financial statements can be found on pages 28 - 29 of this report. Fund financial statements Also presented are the traditional fund financial statements for governmental funds. The fund financial statements now focus on major funds of the Town, rather than fund type used in the old model. 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, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. All of the funds of the Town are included in the governmental funds. Governmental funds 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 focus on near- term inflows and outflows of spendable resources, as well as balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Since the governmental fund financial statements focus on near-term spendable resources, while the governmental activities on the government- wide financial statements have a longer term focus, a reconciliation of the differences between the two is provided following the fund financial statements' balance sheet and statement of revenues, expenditures and changes in fund balances, respectively. Notes to the basic financial statements The notes to the basic financial statements (pages 37 - 53) provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements and should be read with the financial statements. Required supplementary information other than MD&A Governments have an option of including the budgetary comparison statements for the general fund and major special revenue funds as either part of the fund financial statements within the basic financial statements, or as required supplementary information after the footnotes. The Town has chosen to present these budgetary statements as part of the basic financial statements. Additionally, governments are required to disclose certain information about employee pension funds. The Town has disclosed this information in Note 4.D to the basic financial statements. Government-Wide Financial Analysis Net assets may serve over time as useful indicators of a government's financial position. The following table reflects the condensed Statement of Net Assets of the Town for June 30, 2004 compared to the prior year. 18 Town of Fountain Hills, Arizona Condensed Statement of Net Assets As of June 30, 2004 Governmental Activities 2004 2003 Percent Change Assets Current and other assets $21,638,047 $16,801,782 %28.8 Capital assets Non-depreciable 23,571,668 23,571,668 %- Depreciable (net) 16,485,725 17,071,272 %(3.4) Total assets 61,695,440 57,444,722 %7.4 Liabilities Other liabilities 8,338,841 7,307,826 %14.1 Non-current liabilities Due within one year 1,603,159 1,484,604 %8.0 Due in more than one year 26,044,208 27,489,398 %(5.3) Total liabilities 35,986,208 36,281,828 %(0.8) Net assets Invested in capital assets, net of related debt 11,261,256 11,843,575 %(4.9) Restricted 6,471,863 6,681,170 %(3.1) Unrestricted 7,976,113 2,638,149 %202.3 Total net assets $25,709,232 $21,162,894 %21.5 The combined net assets of the Town increased by 21.5% from $21.2 million to $25.7 million in fiscal year 2004, a difference of $4.5 million in governmental activities. The Town does not currently have any proprietary or enterprise funds that would otherwise be classified as business- type activities. All Town funds are considered governmental activities. Net Assets consist of three components. The largest portion of the Town's net assets (44%) reflects its investment in capital assets (e.g., land, buildings, machinery and equipment), less any related debt used to acquire those assets that is still outstanding. The Town uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the Town's investment in its capital assets is reported net of related 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. This category of net assets decreased $582,319 in fiscal year 2004 primarily as a result of depreciation of the capital assets. The second portion of the Town's net assets (25%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($7,976,113) may be used to meet the government's ongoing obligations to citizens and creditors. This category increased $5,337,964 in fiscal year 2004 primarily due to increases to reserves. 19 At the end of the current fiscal year, the Town of Fountain Hills, Arizona is able to report positive balances in all three categories of net assets for the government as a whole. Analysis of changes in net assets The program revenues (charges for services and grants that are clearly identifiable to an operating function) of governmental activities increased $531,634 (12%) from the previous year, primarily due to increased building related activity. Total governmental revenues increased $1.5 million primarily due to increased local sales tax collections derived from an increase in the local tax rate. Program expenses decreased in public safety with the reduction from a dual law enforcement system to a single contract provider. The following table compares the revenue and expenses for the current and previous fiscal year. Town of Fountain Hills, Arizona Changes in Net Assets For the Year Ended June 30, 2004 Governmental Activities 2004 2003 Percent Change Revenues Program revenues Fees, fines and charges for services $3,421,132 $2,782,385 %23.0 Operating grants and contributions 1,590,787 1,697,900 %(6.3) General revenues: Property taxes 2,195,856 1,905,770 %15.2 Local taxes 7,860,005 5,204,414 %51.0 State shared revenues 4,489,844 4,740,758 %(5.3) Investment earnings 122,082 1,976,809 %(93.8) Other 195,978 79,706 %145.9 Total revenues 19,875,684 18,387,742 %8.1 Expenses General government 3,686,452 3,479,333 %6.0 Public safety 4,918,280 5,494,708 %(10.5) Highways and streets 1,419,509 1,310,683 %8.3 Culture and recreation 2,068,613 2,363,897 %(12.5) Community development 1,144,964 1,235,985 %(7.4) Interest on long-term debt 1,499,575 1,576,842 %(4.9) Total expenses 14,737,393 15,461,448 %(4.7) Increase in net assets 5,138,291 2,926,294 %75.6 Net assets, beginning of year (as restated) 20,570,941 18,236,600 %12.8 Net assets, end of year $25,709,232 $21,162,894 %21.5 20 Governmental activities.The following graph illustrates the Town's government-wide revenue resources that were previously discussed in a comparative analysis of government-wide revenues, expenses and changes in net assets. Governmental activities account for 100% of the total revenues and expenditures of the Town. The largest financing source for the Town is the local sales tax (38%) and state shared revenues account for 23% of the government-wide revenue sources. Financial analysis of the Town's funds The focus of the Town's governmental funds is to provide information on near-term inflows, outflows, and balances of resources that are available for spending. Such information is useful in assessing the Town's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. Types of Governmental funds reported by the Town include the General Fund, Special Revenue Funds, Debt Service Funds and Capital Project Funds. As a measure of the general fund's liquidity, it may be useful to compare both general fund balance and total fund balance to total fund expenditures. General fund balance represents 41 percent of total fund expenditures, while total fund balance represents 83 percent of that same amount. 21 The fund balance of the Town's general fund increased by $2,333,563 during the current fiscal year. Key factors in this change are as follows: ¨General Fund revenues exceeded projections by $964,938 (primarily due to building-related activity and state sales tax); expenditures were $1,763,892 less than projected due to expenditures delayed until next fiscal year. ¨A Budget Reduction Plan was implemented in February 2003 as a result of declining revenues and the addition of a fire department; the majority of the plan remains in place. As of the end of the fiscal year 2004 the Town's governmental funds reported combined ending fund balances of $12,871,628, an increase of $4,308,750 over the prior year. Approximately 49% of this total amount $6,371,426 constitutes general fund balance, which is available for contribution to the designated, undesignated and reserved fund balance. At fiscal year-end 2003- 2004 fund balances were as follows: Fund Balance Increase (Decrease) From 2002-03 General Fund $6,371,426 $2,333,563 Excise Tax Fund 2,432,170 519,766 General Obligation Debt Service Fund 268,842 204,609 Eagle Mountain Debt Service Fund 261,530 62,770 Nonmajor Governmental Funds 3,537,660 1,188,042 The Excise Tax Fund is a dedicated portion of the local sales tax (0.4%) that can only be used for debt retirement of Municipal Property Corporation bonds and expenses relating to development of the downtown area. Revenues have exceeded the expenditures each year; the surplus will continue to accumulate in the fund for possible future defeasance of outstanding bonds. All nonmajor governmental funds of the Town are combined into one column on the governmental fund statements. The Highway User Revenue Fund, included with the nonmajor governmental funds of the Town, is required by state statute to track the state allocation of gasoline taxes and other state revenues shared with local governments and required to be used for transportation purposes. Revenue in this fund increased $81,913 (6%) in fiscal year 2004 due to the increase in state shared revenues. Expenditures increased $127,993 from the prior year due to increased expenses for road maintenance. Nonmajor governmental funds of the Town also include the Capital Projects Fund, consisting of governmental impact (development) fees for streets and highways, parks and recreation, law enforcement, general government and open space. This is a restricted fund and may only be appropriated for the particular purpose for which they were imposed. The fund balance as of June 30, 2004 in this fund is $1,740,295; expenditures were made in FY2004 for open space (trailhead design) and recreation (Fountain Park Phase II). 22 Budgetary highlights The Town's annual budget is the legally adopted expenditure control document of the Town. Budgetary comparison statements are required for the General Fund and all major special revenue funds and may be found on pages 34 - 35. These statements compare the original adopted budget, the budget if amended throughout the fiscal year, and the actual expenditures prepared on a budgetary basis. The Town did not amend its budget during the fiscal year. General Fund revenues of $13,643,823, on a budgetary basis, exceeded budgeted revenues of $12,678,885 by $964,938 while budgetary basis expenditures of $10,400,010 were only 85% of budgeted expenditures (savings of $1,763,892). The excess of revenues over budgeted revenues is primarily due to better than expected building permit activity and greater State Sales Tax revenues. The expenditure savings were derived from capital project costs in Fountain Park that were not completed ($652,468), a budgeted General and Administrative expenditure for a sales tax refund that has been referred for a tax hearing ($400,000) as well as organizational vacancy savings ($170,000) and landscape maintenance savings ($55,000). The Town staff is committed to maintaining the level of service without jeopardizing future infrastructure or capital. Capital asset and debt administration The Town's capital assets for its governmental activities as of June 30, 2004 amount to $40,057,393 (net of accumulated depreciation), a decrease from 2003 of 1.4%. For government- wide financial statement presentation, all depreciable capital assets were depreciated from acquisition date to the end of the current fiscal year. Fund financial statements record capital asset purchases as expenditures. See Note 3.B.3 in the Notes to the Basic Financial Statements for further information regarding capital assets. The Town recorded its capital assets as part of the general fixed asset account group in past years as they were acquired or constructed. Capital assets include land, buildings and improvements, machinery and equipment, roads and improvements, vehicles, office and computer equipment. During fiscal year 2003-2004 the annual depreciation expense was $977,496. The following table provides a comparison of current and prior year capital assets. Town of Fountain Hills, Arizona Capital Assets at June 30, 2004 (Net of depreciation) Governmental Activities 2004 2003 Percent Change Land $23,571,668 $23,571,668 %- Buildings and improvements 9,559,273 9,514,951 %0.5 Improvements other than buildings 5,397,938 5,711,469 %(5.5) Infrastructure 451,888 377,221 %19.8 Furniture, machinery and equipment 582,890 728,500 %(20.0) Vehicles 493,736 739,131 %(33.2) $40,057,393 $40,642,940 %(1.4) 23 Long-term debt At the end of the current fiscal year, the Town had total long-term obligations outstanding of $27,647,367 with no debt issued during the year. Of the outstanding debt, $11,740,000 is general obligation bonds backed by the full faith and credit of the Town. An additional $4,615,000 of special assessment bonds are backed by a guaranteed investment contract with the developer of the district property. All other outstanding debt is secured by pledges of specific revenue sources of the Town. The State imposes certain debt limitations on the Town of six percent (6%) and twenty percent (20%) of the outstanding secondary net assessed valuation of the Town. The Town's available debt margin at June 30,2004 is $16,988,114 in the 6% capacity and $55,352,046 in the 20% capacity. Additional information on the debt limitations and capacities may be found in the statistical section of this report (page 85). The following schedule shows the outstanding debt of the Town (both current and long-term) as of June 30,2003 and 2004. Further detail on the Town's outstanding debt may be found in Note 3.E on pages 49 - 50. Town of Fountain Hills, Arizona Outstanding Debt at June 30, 2004 Governmental Activities 2004 2003 Percent Change General Obligation Debt $11,110,000 $11,865,000 %(6.4) Highway User Revenue Bonds 630,000 720,000 %(12.5) Special Assessment Debt 16,137 19,365 %(16.7) Community Facilities District Debt 4,615,000 4,765,000 %(3.1) Municipal Property Corporation Debt 11,005,000 11,430,000 %(3.7) Compensated Absences 271,230 174,637 %55.3 $27,647,367 $28,974,002 %(4.6) The Town currently maintains a rating on its general obligation debt of Aa3 from Moody's Investor Services. Economic factors and next year's budgets and rates The Town of Fountain Hills, Arizona, as well as all other Arizona cities, remains dependent on state shared revenues (33%) and local sales taxes for resources (49%). These revenue sources are sensitive to economic downturns and legislative appropriations. The Town's economic activity has remained fairly stable during the national recession and is expected to continue to grow at a moderate pace over the next year, fueled primarily by the residential construction industry. The Town of Fountain Hills, Arizona has a number of high-end properties that are currently being developed for custom homes. 24 The budget for fiscal year 2004-2005 includes resources targeted towards economic development in the downtown area (Avenue of the Fountains). An economic development coordinator has been hired and capital funds for improvements to the area are included to focus on developing the area to promote economic development. Financial contact This financial report is designed to provide a general overview of the Town's finances for all of those with an interest in government's finances and to demonstrate accountability for the use of public funds. Questions about any of the information provided in this report, or requests for additional financial information should be addressed to: Town of Fountain Hills Accounting Department P.O. Box 17958 Fountain Hills, AZ 85269 Or visit our website at: http://www.fh.az.gov 25 THIS PAGE BLANK 26 Basic Financial Statements 27 TOWN OF FOUNTAIN HILLS, ARIZONA STATEMENT OF NET ASSETS JUNE 30, 2004 Governmental Activities Assets Cash and equivalents $17,477,529 Cash with paying agent 2,342,129 Receivables, net Accounts receivable 444,828 Taxes receivable 83,646 Intergovernmental receivable 1,207,303 Special assessments receivable 5,127 Inventories 10,517 Prepaid items 66,968 Capital assets Non-depreciable 23,571,668 Depreciable (net) 16,485,725 Total assets 61,695,440 Liabilities Accounts payable 903,465 Accrued wages and benefits 118,419 Interest payable 744,778 Intergovernmental payable 50,000 Deposits payable 25,000 Due to developers 5,077,179 Matured debt principal payable 1,420,000 Noncurrent liabilities Due within one year 1,603,159 Due in more than one year 26,044,208 Total liabilities 35,986,208 Net assets Invested in capital assets, net of related debt 11,261,256 Restricted for Public safety 168,885 Highways and streets 331,560 Debt service 1,018,867 Capital outlay 2,382,386 Other 2,570,165 Unrestricted 7,976,113 Total net assets $25,709,232 The notes to the financial statements are an integral part of this statement. 28 TOWN OF FOUNTAIN HILLS, ARIZONA STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Program Revenues Net (Expenses) Revenue and Changes in Net Assets Expenses Fees, Fines and Charges for Services Operating Grants and Contributions Totals Functions/Programs Governmental activities General government $3,686,452 $3,388,923 $-$(297,529) Public safety 4,918,280 -75,000 (4,843,280) Highways and streets 1,419,509 28,597 1,515,787 124,875 Culture and recreation 2,068,613 --(2,068,613) Community development 1,144,964 --(1,144,964) Interest on long-term debt 1,499,575 3,612 -(1,495,963) Totals $14,737,393 $3,421,132 $1,590,787 (9,725,474) General revenues Taxes Sales taxes 7,733,643 Property taxes 2,195,856 Franchise taxes 126,362 State revenue sharing 1,967,973 State sales tax revenue sharing 1,702,374 Auto lieu tax revenue sharing 819,497 Investment earnings 122,082 Other - not program 195,978 Total general revenues 14,863,765 Change in net assets 5,138,291 Net assets, beginning of year (as restated) 20,570,941 Net assets, end of year $25,709,232 The notes to the financial statements are an integral part of this statement. 29 TOWN OF FOUNTAIN HILLS, ARIZONA BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2004 General Excise Tax General Obligation Debt Service Eagle Mountain Debt Service Nonmajor Governmental Funds Totals Assets Cash and equivalents $5,853,264 $2,351,692 $253,559 $5,624,482 $3,394,532 $17,477,529 Cash with paying agent --1,057,064 -1,285,065 2,342,129 Accounts receivable 434,237 ---10,591 444,828 Taxes receivable 12,748 -52,986 17,912 -83,646 Intergovernmental receivable 949,220 137,022 --121,061 1,207,303 Special assessments receivable ----5,127 5,127 Due from other funds 3,514 ----3,514 Inventories 10,517 ----10,517 Prepaid items 66,968 ----66,968 Total assets $7,330,468 $2,488,714 $1,363,609 $5,642,394 $4,816,376 $21,641,561 Liabilities and Fund Balances Liabilities Accounts payable $460,789 $54,922 $594 $-$387,160 $903,465 Accrued wages and benefits 98,859 1,622 --17,938 118,419 Interest payable --302,064 152,737 289,977 744,778 Intergovernmental payable ---50,000 -50,000 Due to other funds ----3,514 3,514 Deferred revenue 374,394 -37,109 10,948 5,127 427,578 Deposits payable 25,000 ----25,000 Due to developers ---5,017,179 60,000 5,077,179 Matured debt principal payable --755,000 150,000 515,000 1,420,000 Total liabilities 959,042 56,544 1,094,767 5,380,864 1,278,716 8,769,933 Fund balances Reserved for inventories 10,517 ----10,517 Reserved for prepaid items 66,968 ----66,968 Unreserved 6,293,941 2,432,170 268,842 261,530 -9,256,483 Unreserved, reported in nonmajor Special revenue funds ----666,779 666,779 Debt service funds ----488,495 488,495 Capital projects funds ----2,382,386 2,382,386 Total fund balances 6,371,426 2,432,170 268,842 261,530 3,537,660 12,871,628 Total liabilities and fund balances $7,330,468 $2,488,714 $1,363,609 $5,642,394 $4,816,376 $21,641,561 The notes to the financial statements are an intergral part of this statement. 30 TOWN OF FOUNTAIN HILLS, ARIZONA RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET ASSETS GOVERNMENTAL FUNDS JUNE 30, 2004 Fund balances - total governmental funds $12,871,628 Amounts reported for governmental activities in the statement of net assets are different because: Property taxes not collected within 60 days subsequent to fiscal year-end are deferred in the governmental funds. 113,610 Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds. Governmental capital assets 45,082,942 Less accumulated depreciation (5,025,549) Capital assets used in governmental activities 40,057,393 Other long-term assets are not available to pay for current-period expenditures and are not susceptible to accrual. 313,968 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the governmental funds. General obligation bonds (11,740,000) Revenue bonds (11,005,000) Special assessment debt with government commitment (16,137) Community facilities district bonds payable (4,615,000) Compensated absences (271,230) Net assets of governmental activities $25,709,232 The notes to the financial statements are an integral part of this statement. 31 TOWN OF FOUNTAIN HILLS, ARIZONA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 General Excise Tax General Obligation Debt Service Eagle Mountain Debt Service Nonmajor Governmental Funds Totals Revenues Taxes Sales taxes $6,543,988 $1,189,655 $-$-$-$7,733,643 Property taxes --1,563,508 574,193 -2,137,701 Franchise taxes 126,362 ----126,362 Intergovernmental 4,489,844 ---1,590,787 6,080,631 Fines and forfeitures 192,150 ---169,189 361,339 Licenses and permits 1,600,934 ----1,600,934 Charges for services 167,749 ---870,421 1,038,170 Rents and royalties 242,704 ----242,704 Special assessments ----3,612 3,612 Investment earnings 68,823 23,473 1,415 3,391 24,980 122,082 Other 211,269 ---50,292 261,561 Total Revenues 13,643,823 1,213,128 1,564,923 577,584 2,709,281 19,708,739 Expenditures Current General government 3,125,413 96,701 -55,000 337,344 3,614,458 Public safety 4,598,934 ---17,227 4,616,161 Highways and streets ----1,402,502 1,402,502 Culture and recreation 1,530,699 ---66,451 1,597,150 Community development 1,144,964 ----1,144,964 Debt Service Principal retirement --755,000 150,000 518,228 1,423,228 Interest on long-term debt --605,314 309,814 584,447 1,499,575 Capital outlay ----101,951 101,951 Total Expenditures 10,400,010 96,701 1,360,314 514,814 3,028,150 15,399,989 Excess (deficiency) of revenues over expenditures 3,243,813 1,116,427 204,609 62,770 (318,869)4,308,750 Other financing sources (uses) Transfers in ----1,630,907 1,630,907 Transfers out (910,250)(596,661)--(123,996)(1,630,907) Total other financing sources (uses) (910,250)(596,661)--1,506,911 - Net change in fund balances 2,333,563 519,766 204,609 62,770 1,188,042 4,308,750 Fund balances, beginning of year (as restated) 4,037,863 1,912,404 64,233 198,760 2,349,618 8,562,878 Fund balances, end of year $6,371,426 $2,432,170 $268,842 $261,530 $3,537,660 $12,871,628 The notes to the financial statements are an intergral part of this statement. 32 TOWN OF FOUNTAIN HILLS, ARIZONA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Net change in fund balances - total governmental funds $4,308,750 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Expenditures for capital assets 391,949 Less current year depreciation (977,496) Excess capital expenditures over depreciation (585,547) Some revenues reported in the statement of activities do not provide current financial resources and therefore are not reported as revenues in governmental funds. Court fines 108,790 Propertytaxes 58,155 The issuance of long-term debt (e.g. bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. The issuance of long-term debt increases long-term liabilities on the statement of net assets and the repayment of principal on long-term debt reduces long-term debt on the statement of net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when the debt is first issued, whereas these items are deferred and amortized over the term of the long-term debt in the statement of activities. Principal payments on long-term debt 1,423,228 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 the governmental funds. Net increase in compensated absences (96,593) Bad debt expense on court fines receivable (78,492) Change in net assets of governmental activities $5,138,291 The notes to the financial statements are an integral part of this statement. 33 TOWN OF FOUNTAIN HILLS, ARIZONA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Original and Final Budget Actual Variance with Final Budget Revenues Taxes $6,609,293 $6,670,350 $61,057 Intergovernmental 4,250,137 4,489,844 239,707 Fines and forfeitures 213,500 192,150 (21,350) Licenses and permits 969,005 1,600,934 631,929 Charges for services 203,950 167,749 (36,201) Rents and royalties 258,000 242,704 (15,296) Investment earnings 85,000 68,823 (16,177) Other 90,000 211,269 121,269 Total Revenues 12,678,885 13,643,823 964,938 Expenditures Current General government Mayor and Town Council 85,360 77,106 8,254 Magistrate Court 299,870 296,272 3,598 General and Administrative 3,507,940 2,741,331 766,609 Contingency 50,000 10,704 39,296 Total general government 3,943,170 3,125,413 817,757 Public safety Building Safety 587,900 548,471 39,429 Law Enforcement 1,743,538 1,708,052 35,486 Fire Department 2,335,830 2,342,411 (6,581) Total public safety 4,667,268 4,598,934 68,334 Culture and recreation Parks and Recreation 1,748,910 1,096,442 652,468 Civic Center 469,994 434,257 35,737 Total culture and recreation 2,218,904 1,530,699 688,205 Community development Community Development 252,000 212,541 39,459 Public Works Dept 1,082,560 932,423 150,137 Total community development 1,334,560 1,144,964 189,596 Total Expenditures 12,163,902 10,400,010 1,763,892 Excess (deficiency) of revenues over expenditures 514,983 3,243,813 2,728,830 Other financing sources (uses) Transfers out -(910,250)(910,250) Total other financing sources (uses) -(910,250)(910,250) Net change in fund balances 514,983 2,333,563 1,818,580 Fund balances, beginning of year 3,380,677 4,037,863 657,186 Fund balances, end of year $3,895,660 $6,371,426 $2,475,766 The notes to the financial statements are an integral part of this statement. 34 TOWN OF FOUNTAIN HILLS, ARIZONA EXCISE TAX FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Original and Final Budget Actual Variance with Final Budget Revenues Taxes $1,174,413 $1,189,655 $15,242 Investment earnings -23,473 23,473 Total Revenues 1,174,413 1,213,128 38,715 Expenditures Current General government 958,065 96,701 861,364 Total Expenditures 958,065 96,701 861,364 Excess (deficiency) of revenues over expenditures 216,348 1,116,427 900,079 Other financing sources (uses) Transfers out -(596,661)(596,661) Total other financing sources (uses) -(596,661)(596,661) Net change in fund balances 216,348 519,766 303,418 Fund balances, beginning of year -1,912,404 1,912,404 Fund balances, end of year $216,348 $2,432,170 $2,215,822 The notes to the financial statements are an integral part of this statement. 35 THIS PAGE BLANK 36 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements of the Town of Fountain Hills, Arizona (Town) have been prepared in conformity with U.S. generally accepted accounting principles applicable to governmental units adopted by the Governmental Accounting Standards Board (GASB). A summary of the Town's more significant accounting policies follows. A. Reporting entity The Town is a municipal government that is governed by a separately elected governing body. It is legally separate from and fiscally independent of other state and local governments. The accompanying financial statements present the Town and its component units, entities for which the Town is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the Town's operations. Included within the reporting entity: The Eagle Mountain Community Facilities District and the Cottonwoods Improvement 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 for District taxes and thus 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. For financial reporting purposes, transactions of the Districts are combined together and included as if they were part of the Town's operations. A separately issued annual financial report was issued for the Eagle Mountain Community Facilities District and is available at Town Hall. 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. 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 assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the primary government and its component units. The effect of interfund activity has been removed from these statements. Governmental activities are normally supported by taxes and intergovernmental revenues. 37 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are 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 and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements. C. Measurement focus, basis of accounting, and financial statement presentation 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. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 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, except expenditures related to compensated absences and claims and judgments, which are recorded only when payment is due. However, since debt service resources are provided during the current year for payment of long-term principal and interest due early in the following year, the expenditures and related liabilities have been recognized in the Debt Service Funds. Property taxes, intergovernmental grants and aid, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the government. 38 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 The Town reports the following major governmental funds: The General Fund is the Town's primary operating fund. It accounts for all financial resources of the Town, except those required to be accounted for in another fund. The Excise Tax Fund accounts for the portion of Town sales tax reserved by the Town Council for special projects including Town beautification and economic development. The 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. The Eagle Mountain Debt Service Fund accounts for the property tax revenues received to pay the debt service of the Eagle Mountain Community Facilities District component unit. As a general rule the effect of interfund activity has been eliminated from the government- wide financial statements. Amounts reported as program revenues include 1) fees, fines and charges for services, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. When both restricted and unrestricted resources are available for use, for governmental activities, it is the Town's policy to use restricted resources first, then unrestricted resources as they are needed. D. Assets, liabilities, and net assets or equity 1. Deposits and investments The Town's cash and cash equivalents are considered to be cash on hand, demand deposits, cash and investments held by the State Treasurer, and highly liquid investments with maturities of three months or less from the date of acquisition. 39 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 Cash and investments are pooled except for funds required to be held by fiscal agents or restricted under provisions of bond indentures. Interest earned from investments purchased with such pooled monies is allocated to each of the funds based on the average daily cash balances. State statutes authorize the Town to invest in obligations of the U.S. Treasury and U.S. agencies, certificates of deposit in eligible depositories, repurchase agreements, obligations of the State of Arizona or any of its counties or incorporated cities, towns or duly organized school districts, improvement districts in this state and the State Treasurer's Local Government Investment Pool. Investments are stated at fair value. 2. Receivables All trade and property taxes receivables are shown net of an allowance for uncollectibles. Maricopa County levies real property taxes on or before the third Monday in August that become due and payable in two equal installments. The first installment is due on the first day of October and becomes delinquent after the first business day of November. The second installment is due on the first day of March of the next year and becomes delinquent after the first business day of May. However, a lien against real and personal property assessed attaches on the first day of January preceding assessment and levy thereof. 3. Short-term interfund receivables/payables During the course of operations, individual funds within the Town's pooled cash accounts may borrow money from the other funds within the pool on a short-term basis. These receivables and payables are classified as "due from other funds" or "due to other funds" on the balance sheet of the fund financial statements and are eliminated in the preparation of the government-wide financial statements. 4. Inventories and prepaid items Inventories consist of expendable supplies held for consumption. Inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 5. Capital assets Capital assets, which include property, plant, and equipment, are reported in the governmental activities column in the government-wide financial statements. Capital assets are defined by the Town as assets with an initial, individual cost of more than $10,000 and an estimated useful life in excess of one year. 40 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 Property, plant and equipment purchased or acquired is carried at historical cost or estimated historical cost. Contributed assets are recorded at fair market value as of the date received. Additions, improvements and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. General infrastructure assets acquired prior to July 1,2002 are not reported in the basic financial statements. Those assets will be transitioned in over the next two fiscal years in accordance with GASB Statement No. 34. Depreciation on all assets is provided on a straight-line basis over the following estimated useful lives: Buildings and improvements 50 years Improvements other than buildings 20 years Infrastructure 50 years Furniture, machinery and equipment 5 years Vehicles 5 years 6. Compensated absences The liability for compensated absences reported in the government-wide statements consists of unpaid, accumulated leave balances. The liability has been calculated using the vesting method, in which leave amounts for both employees who currently are eligible to receive termination payments and other employees who are expected to become eligible in the future to receive such payments upon termination are included. 7. Long-term obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. The Town did not have any premiums, discounts or issuance costs related to any outstanding bonds. 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. 41 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 8. Net assets In the government-wide financial statements, net assets are reported in three categories: net assets invested in capital assets, net of related debt; restricted net assets; and unrestricted net assets. Net assets invested in capital assets, net of related debt is separately reported because the Town reports all Town assets which make up a significant portion of total net assets. Restricted net assets account for the portion of net assets restricted by parties outside the Town. Unrestricted net assets are the remaining net assets not included in the previous two categories. 9. Fund equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. NOTE 2 - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Budgetary information 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. State law requires that, prior to April 1, the Economic Estimates commission provides the Town with a final expenditure limit for the coming fiscal year. 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 basic financial statements to total expenditures for reporting in accordance with the State's uniform expenditure reporting system (A.R.S. §41-1279.07). 42 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 4. By Arizona Constitution, expenditures may not legally exceed the expenditure limitation described below of 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. Legal budgets are adopted for the General, Special Revenue, Debt Service and Capital Projects Funds on essentially the same modified accrual basis of accounting used to record actual revenues and expenditures, with the exception of the Criminal Enhancement Justice Fund and Capital Projects Fund in which a budget was not prepared. 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. No supplementary budgetary appropriations were necessary during the year. B. Excess of expenditures over appropriations Expenditures exceeded appropriations in the following funds: Amount of Overexpenditure General Fund: Fire Department $6,581 Eagle Mountain Debt Service Fund 314 43 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 NOTE 3 - DETAILED NOTES ON ALL FUNDS A. Prior period adjustment The Town made a prior period adjustment in the Eagle Mountain Debt Service Fund in the amount of $591,953 to correct an error in the previously issued financial statements. Interest earned on $4,435,000 of developer contributions the Town holds until the debt service is repaid was recorded as revenue. However, the Town was contractually liable to the developers for any amount of interest earned in excess of the interest revenue used to make the required principal and interest payments. Therefore, the beginning net assets in the government-wide financial statements and the beginning fund balance of the Eagle Mountain Debt Service Fund in the fund financial statements were restated to reflect the interest due to the developers. The following summary is necessary to reconcile beginning net assets and beginning fund balance to the government-wide and fund financial statements, respectively. Statement of Activities Statement of Revenues, Expenditures, and Changes in Fund Balances Net assets / fund balance, July 1, 2003 (as previously stated) $21,162,894 $790,713 Prior period adjustment (591,953)(591,953) Net assets / fund balance July 1, 2003 (as restated) $20,570,941 $198,760 44 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 B. Assets 1. Deposits and investments Deposits and investments at June 30, 2004 consist of the following: Deposits Cash on hand $1,360 Cash in bank 513,944 Cash on deposit with paying agent 2,342,129 Investments Money Market Mutual Fund 338,015 U.S. Government Securities 16,138 State Treasurer's Investment Pool 10,983,590 Cash on deposit with trustee 5,624,482 Total cash and investments 19,819,658 Cash on deposit with paying agent (2,342,129) Total cash and equivalents $17,477,529 Deposits - The Town's deposits at June 30, 2004, were entirely covered by federal depository insurance or by collateral held by the Town's custodial bank in the Town's name. Investments - The State Board of Deposit provides oversight for the State Treasurer's pools, and the Local Government Investment Pool Advisory Committee provides consultation and advice to the Treasurer. The fair value of a participant's position in the pool approximates the value of that participant's pool shares. The shares are not identified with specific investments and are not subject to custodial credit risk. In addition, the money market mutual fund is not subject to custodial credit risk. All other investments of the Town are uninsured and unregistered with the securities held by the counterparty's trust department or agent in the Town's name. 45 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 2. Receivables Court fines are recorded net of uncollectible amounts in the government-wide statements and are recorded as a receivable and a deferred revenue in the fund financial statements because the court fines did not meet the revenue recognition criteria under the modified accrual basis of accounting. The total receivable at June 30, 2004 was $392,460, which was reduced by $78,492 for uncollectible amounts for a net receivable balance at June 30, 2004 of $313,968. Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue reported in the governmental funds were as follows: Unavailable Delinquent property taxes receivables (General Fund) $60,426 Deferred court revenue (General Fund) 313,968 Delinquent property taxes receivables (General Obligation Debt Service Fund) 37,109 Delinquent property taxes receivables (Eagle Mountain Debt Service Fund) 10,948 Special assessments receivables (Nonmajor funds) 5,127 $427,578 46 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 3. Capital assets Capital asset activity for the year ended June 30, 2004 was as follows: Beginning Balances Increases Decreases Ending Balances Governmental Activities: Capital assets not being depreciated: Land $23,571,668 $-$-$23,571,668 Total capital assets, not being depreciated 23,571,668 --23,571,668 Capital assets being depreciated: Buildings and improvements 10,080,070 246,242 -10,326,312 Improvements other than buildings 7,491,921 62,619 -7,554,540 Infrastructure 397,976 83,088 -481,064 Furniture, machinery and equipment 1,518,647 --1,518,647 Vehicles 1,825,873 -(195,162)1,630,711 Total capital assets being depreciated 21,314,487 391,949 (195,162)21,511,274 Less accumulated depreciation for: Buildings and improvements (565,119)(201,920)-(767,039) Improvements other than buildings (1,780,452)(376,150)-(2,156,602) Infrastructure (20,755)(8,421)-(29,176) Furniture, machinery and equipment (790,147)(145,610)-(935,757) Vehicles (1,086,742)(245,395)195,162 (1,136,975) Total accumulated depreciation (4,243,215)(977,496)195,162 (5,025,549) Total capital assets, being depreciated, net 17,071,272 (585,547)-16,485,725 Governmental activities capital assets, net $40,642,940 $(585,547)$-$40,057,393 47 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 Depreciation expense was charged to functions/programs as follows: Governmental activities: General government $96,997 Public safety 295,769 Highways and streets 48,376 Culture and recreation 536,354 Total depreciation expense-governmental activities $977,496 C. Interfund receivables, payables and transfers As of June 30, 2004 interfund receivable and payables were as follows: Due From Due To Nonmajor General Fund $3,514 The above interfund receivables and payables are due to a deficit cash balance in the nonmajor Municipal Property Corporation Debt Service Fund at the end of the fiscal year. Property tax revenues were received subsequent to June 30, 2004 to cover the deficit. Interfund transfers for the year ended June 30, 2004 consisted of the following: Transfers From Transfers To General Fund Excise Tax Nonmajor Total Nonmajor $910,250 $596,661 $123,996 $1,630,907 The General Fund transfer of $910,250 to the Nonmajor Capital Projects Fund was to fund future construction projects. The transfer of $596,661 from the Excise Tax Fund to the Nonmajor funds was for the debt service requirements on the Municipal Property Corporation bonds. The nonmajor transfer of $123,996 was a transfer from Highway User Revenue Fund to the Highway User Debt Service Fund for the annual debt service payments on outstanding revenue bonds. 48 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 D. Obligations under operating leases The Town leases office space under the provisions of a long-term lease agreement classified as an operating lease. Rental expenditures under the terms of the operating lease totaled $385,421 for the year ended June 30, 2004. The lease expires June 30, 2005. Future rental expenditures under the terms of the lease are $401,520 due monthly through June 30, 2005. E. Long-term obligations The Town has long-term bonds and special assessments payable issued to provide funds for the acquisition and construction of major capital facilities. The Town has also issued debt to refund earlier obligations with higher interest rates. The debt is being repaid by various debt service funds. Compensated absences are paid by the applicable fund where each employee is regularly paid, primarily the General Fund. Special Assessment districts are created only by petition of the Town Council by property owners within the District areas. The Cottonwoods Improvement District was created so the Town could fund improvements. Each of the 54 homeowners within the District has been assessed taxes by the Town for repayment of the bond. In case of default, the Town has the responsibility to cover delinquencies of special assessment bonds with other sources until foreclosure proceeds are received. Community facilities districts (CFDs) are created only by petition to the Town Council by property owners within the District areas. As board of directors for the District, the Town Council has adopted a formal policy that CFD debt will be permitted only when the ratio of full cash value of the District property (prior to improvements being installed), when compared to proposed District debt, is a minimum of 3 to 1 prior to issuance of debt and 5 to 1 or higher after construction of improvements. These ratios are verified by an appraisal paid for by the District and administered by the Town. In addition, cumulative debt of all CFDs cannot exceed 5 percent of the Town's secondary assessed valuation. 49 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 Changes in long-term obligations for the year ended June 30, 2004 are as follows: July 1, 2003 Increases Decreases June 30, 2004 Due within One Year Governmental Activities: Bonds and special assessments General obligation bonds $12,585,000 $-$(845,000)$11,740,000 $895,000 Municipal Property Corporation debt 11,430,000 -(425,000)11,005,000 450,000 Special assessment debt with government commitment 19,365 - (3,228) 16,137 3,228 Community facilities district bonds payable 4,765,000 - (150,000) 4,615,000 160,000 Total bonds and special assessment debt 28,799,365 - (1,423,228) 27,376,137 1,508,228 Other liabilities Compensated absences 174,637 280,064 (183,471)271,230 94,931 $28,974,002 $280,064 $(1,606,699)$27,647,367 $1,603,159 Debt service requirements on long-term debt at June 30, 2004 are as follows: Governmental Activities Year Ending June 30 Principal Interest 2005 $1,508,228 $1,419,829 2006 1,583,228 1,344,319 2007 1,673,227 1,265,927 2008 1,788,227 1,182,207 2009 1,798,227 1,095,684 2010-14 8,650,000 4,161,264 2015-19 7,595,000 2,060,488 2020-24 2,780,000 213,594 $27,376,137 $12,743,312 NOTE 4 - OTHER INFORMATION A. Risk management The Town of Fountain Hills, Arizona, 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, of which the Town is a participating member. The limit for basic coverage is for $2,000,000 per occurrence on a claims made basis. Excess coverage is for an additional $13,000,000 per occurrence on a follow form, claims made basis. No significant reduction in insurance coverage occurred during the year and no settlements exceeded insurance coverage during any of the past three fiscal years. 50 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 The Arizona Municipal Risk Retention 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. The Town is also insured by Arizona Municipal Workers Compensation Fund for potential worker related accidents. B. Contingent Liabilities Accumulated sick leave - Sick leave benefits provide for ordinary sick pay and are cumulative but do not vest with employees and; therefore, are not accrued. Unvested accumulated sick leave of Town employees at June 30, 2004, totaled $206,952. Lawsuits - The Town is a defendant in various lawsuits. In the opinion of the Town's attorney the outcome of these lawsuits is not presently determinable. C. Subsequent events Subsequent to June 30, 2004, the Town approved the issuance of $3,685,000 of Municipal Property Corporation Municipal Facilities Revenue Bonds, Series 2004 to pay a portion of the costs in connection with the second phase of construction of the Town's Civic Center, fund a debt services reserve fund or pay a reserve fund surety policy and pay costs in connection with the issuance of the bond. The term of the loan is fifteen years and the rate has not yet been determined. The bond is secured by general revenues of the Town. D. Retirement plans Defined Contribution Pension Plan All full-time employees of the Town, except participants in the Arizona Public Safety Personnel Retirement System, participate in a defined contribution pension plan administered by the ICMA Retirement Corporation as a 401(a) plan. The payroll for the Town employees covered by this plan the year ended June 30,2004 was $2,425,022. The Town's total payroll was $2,843,829. 51 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 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, the returns earned on investment of those contributions, and forfeitures of other participant's benefits that may be allocated to such participant's account. All non-peace officer 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 after three years of service. 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. Each employee must contribute 11% of his or her gross earnings. The Town must contribute 11% of covered earnings. During fiscal year 2003-04, the Town's required and actual contributions amounted to $266,752. The employees' contributions totaled $266,752. 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 2003-04 or as of the close of the fiscal year. Public Safety Personnel Retirement System (PSPRS) Plan description - The Town contributes to the Public Safety Personnel Retirement System (PSPRS), an agent multiple-employer, public employee retirement system that acts as a common investment and administrative agent to provide retirement and death and disability benefits for public safety personnel who are regularly assigned hazardous duty in the employ of the State of Arizona or a political subdivision thereof. All benefit provisions and other requirements are established by State statute. The Public Safety Personnel Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for PSPRS. That report may be obtained by writing to Public Safety Personnel, 1020 E. Missouri Ave., Phoenix, AZ 85014 or by calling (602) 255-5575. Funding policy - Covered employees are required to contribute 7.65 percent of their annual salary to the PSPRS. The Town is required to contribute the remaining amounts necessary to fund the PSPRS, as determined by the actuarial basis specified by statute. The current rate is 10.90 percent of annual covered payroll. 52 TOWN OF FOUNTAIN HILLS, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 Annual pension cost - During the year ended June 30, 2003 (the date of the latest available information), the Town's annual pension cost of $38,522 for police was equal to the Town of Fountain Hill's required and actual contributions. The required contribution was determined as part of the June 30, 2003 actuarial valuation using an entry age actuarial funding method. Significant actuarial assumptions used in determining the entry age actuarial accrued liability include (a) a rate of return on the investment of present and future assets of 9.0% per year compounded annually, (b) projected salary increases of 6.5% per year compounded annually, and (c) additional projected salary increases of 0.0% to 3.0% per year attributable to seniority/merit. The actuarial value of the Town's assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a four-year period. The Town's unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis. The remaining amortization period at June 30, 2003, was 20 years. The preceding methods comply with the financial reporting standards established by the Governmental Accounting Standards Board. Three-Year Trend Information Police Fiscal Year Ended June 30, Annual Pension Cost (APC) Percent Contributed Net Pension Obligation 2001 $57,277 %100.0 $- 2002 61,102 100.0 - 2003 38,522 100.0 - Additional historical trend information for the Town's PSPRS is disclosed on page 55. Historical trend information is presented in order for a reader to assess the progress made in accumulating sufficient assets to pay pension benefits as they become payable. 53 Required Supplementary Information 54 TOWN OF FOUNTAIN HILLS, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM SCHEDULE OF FUNDING PROGRESS Fountain Hills Police Valuation Date June 30, Actuarial Value of Assets Entry Age Actuarial Accrued Liability (AAL) Percent Funded Over(Under) funded AAL Annual Covered Payroll Over(Under) funded AAL as a Percentage of Covered Payroll 1996 $17,463 $16,084 %108.6 $1,379 $77,574 %1.8 1997 54,809 48,512 %113.0 6,297 216,163 %2.9 1998 184,135 125,791 %148.7 58,344 394,005 %14.8 1999 258,664 263,285 %98.2 (4,621) 412,182 %(1.1) 2000 375,860 401,167 %93.7 (25,307) 556,445 %(4.5) 2001 562,905 409,913 %137.3 152,992 639,753 %23.9 2002 591,957 557,666 %106.1 34,291 549,166 %6.2 2003 158,079 225,917 %70.0 (67,838) 172,698 %(39.3) * Information prior to 1996 is not available. 55 Combining and Individual Fund Statements and Schedules 56 THIS PAGE BLANK 57 NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Highway User Revenue Fund (HURF)- accounts for the Town's share of motor fuel tax revenues and lottery proceeds. Grants Fund - accounts for the activities of various grants and contributions received by the Town. Local Court Enhancement Fund - accounts for the activities of grants from the Arizona Supreme Court. DEBT SERVICE FUNDS Municipal Property Corporation Debt Service Fund - accounts for the revenues received to pay the debt service on MPC revenue bonds. HURF Debt Service - accounts for operating transfers received from the HURF special revenue fund to pay the debt service of the Street and Highway User Revenue Bonds. Cottonwoods Special Assessment - accounts for all special assessments received to pay the debt service of the Cottonwoods Special Assessment District. CAPITAL PROJECTS FUND Development Fees Fund - accounts for development fees collected from developers restricted for projects approved by Council. Capital Projects Fund - accounts for the Capital improvements to various projects of the Town. 58 TOWN OF FOUNTAIN HILLS, ARIZONA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2004 Special Revenue Debt Service HURF Grants Local Court Enhancement Totals Municipal Property Corporation HURF Debt Service Cottonwoods Special Assessment Totals Assets Cash and equivalents $400,801 $186,452 $168,885 $756,138 $-$1,662 $10,259 $11,921 Cash with paying agent ----1,178,999 106,066 -1,285,065 Receivables, net Accounts receivable 10,591 --10,591 ---- Intergovernmental receivable 121,061 --121,061 ---- Special assessments receivable ------5,127 5,127 Total assets $532,453 $186,452 $168,885 $887,790 $1,178,999 $107,728 $15,386 $1,302,113 Liabilities and Fund Balances Liabilities Accounts payable $182,955 $20,118 $-$203,073 $-$-$-$- Accrued wages and benefits 17,938 --17,938 ---- Interest payable ----273,487 16,066 424 289,977 Due to other funds ----3,514 --3,514 Deferred revenue ------5,127 5,127 Matured debt principal payable ----425,000 90,000 -515,000 Due to developers -------- Total liabilities 200,893 20,118 -221,011 702,001 106,066 5,551 813,618 Fund balances Unreserved 331,560 166,334 168,885 666,779 476,998 1,662 9,835 488,495 Total fund balances 331,560 166,334 168,885 666,779 476,998 1,662 9,835 488,495 Total liabilities and fund balances $532,453 $186,452 $168,885 $887,790 $1,178,999 $107,728 $15,386 $1,302,113 59 Capital Projects Development Fees Capital Projects Totals Total Nonmajor Governmental Funds $1,832,021 $794,452 $2,626,473 $3,394,532 ---1,285,065 ---10,591 ---121,061 ---5,127 $1,832,021 $794,452 $2,626,473 $4,816,376 $31,726 $152,361 $184,087 $387,160 ---17,938 ---289,977 ---3,514 ---5,127 ---515,000 60,000 -60,000 60,000 91,726 152,361 244,087 1,278,716 1,740,295 642,091 2,382,386 3,537,660 1,740,295 642,091 2,382,386 3,537,660 $1,832,021 $794,452 $2,626,473 $4,816,376 60 TOWN OF FOUNTAIN HILLS, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Special Revenue Debt Service HURF Grants Local Court Enhancement Totals Municipal Property Corporation HURF Debt Service Cottonwoods Special Assessment Totals Revenues Intergovernmental $1,515,787 $75,000 $-$1,590,787 $-$-$-$- Fines and forfeitures --169,189 169,189 ---- Charges for services 28,597 --28,597 ---- Special assessments ------3,612 3,612 Investment earnings 3,700 -846 4,546 6,036 421 10 6,467 Other -28,601 -28,601 ---- Total revenues 1,548,084 103,601 170,035 1,821,720 6,036 421 3,622 10,079 Expenditures Current General government -33,147 1,150 34,297 ---- Public safety -17,227 -17,227 ---- Highways and streets 1,280,346 4,094 -1,284,440 ---- Culture and recreation -66,451 -66,451 ---- Debt Service Principal retirement ----425,000 90,000 3,228 518,228 Interest on long-term debt ----550,983 32,532 932 584,447 Capital outlay -18,863 -18,863 ---- Total expenditures 1,280,346 139,782 1,150 1,421,278 975,983 122,532 4,160 1,102,675 Excess (deficiency) of revenues over expenditures 267,738 (36,181)168,885 400,442 (969,947)(122,111)(538)(1,092,596) Other financing sources (uses) Transfers in ----596,661 123,996 -720,657 Transfers out (123,996)--(123,996)---- Total other financing sources (uses) (123,996)--(123,996)596,661 123,996 -720,657 Net change in fund balances 143,742 (36,181)168,885 276,446 (373,286)1,885 (538)(371,939) Fund balances, beginning of year 187,818 202,515 -390,333 850,284 (223)10,373 860,434 Fund balances, end of year $331,560 $166,334 $168,885 $666,779 $476,998 $1,662 $9,835 $488,495 61 Capital Projects Development Fees Capital Projects Totals Total Nonmajor Governmental Funds $-$-$-$1,590,787 ---169,189 841,824 -841,824 870,421 ---3,612 13,819 148 13,967 24,980 -21,691 21,691 50,292 855,643 21,839 877,482 2,709,281 13,049 289,998 303,047 337,344 ---17,227 118,062 -118,062 1,402,502 ---66,451 ---518,228 ---584,447 83,088 -83,088 101,951 214,199 289,998 504,197 3,028,150 641,444 (268,159)373,285 (318,869) -910,250 910,250 1,630,907 ---(123,996) -910,250 910,250 1,506,911 641,444 642,091 1,283,535 1,188,042 1,098,851 -1,098,851 2,349,618 $1,740,295 $642,091 $2,382,386 $3,537,660 62 TOWN OF FOUNTAIN HILLS, ARIZONA GENERAL OBLIGATION DEBT SERVICEFUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Original and Final Budget Actual Variance with Final Budget Revenues Taxes Property taxes $1,540,000 $1,563,508 $23,508 Investment earnings 1,000 1,415 415 Total Revenues 1,541,000 1,564,923 23,923 Expenditures Debt Service Principal retirement 755,000 755,000 - Interest on long-term debt 615,000 605,314 9,686 Total Expenditures 1,370,000 1,360,314 9,686 Excess (deficiency) of revenues over expenditures 171,000 204,609 33,609 Fund balances, beginning of year -64,233 64,233 Fund balances, end of year $171,000 $268,842 $97,842 63 TOWN OF FOUNTAIN HILLS, ARIZONA EAGLE MOUNTAIN DEBT SERVICE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Original and Final Budget Actual Variance with Final Budget Revenues Taxes Property taxes $561,500 $574,193 $12,693 Investment earnings -3,391 3,391 Total Revenues 561,500 577,584 16,084 Expenditures Current General government 54,000 55,000 (1,000) Debt Service Principal retirement 150,000 150,000 - Interest on long-term debt 310,500 309,814 686 Total Expenditures 514,500 514,814 (314) Excess (deficiency) of revenues over expenditures 47,000 62,770 15,770 Fund balances, beginning of year (as restated) -198,760 198,760 Fund balances, end of year $47,000 $261,530 $214,530 64 TOWN OF FOUNTAIN HILLS, ARIZONA HURF FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Original and Final Budget Actual Variance with Final Budget Revenues Intergovernmental $1,516,400 $1,515,787 $(613) Charges for services 6,000 28,597 22,597 Investment earnings 500 3,700 3,200 Other 1,000 -(1,000) Total Revenues 1,523,900 1,548,084 24,184 Expenditures Current Highways and streets 1,523,900 1,280,346 243,554 Total Expenditures 1,523,900 1,280,346 243,554 Excess (deficiency) of revenues over expenditures -267,738 267,738 Other financing sources (uses) Transfers out -(123,996)(123,996) Total other financing sources (uses) -(123,996)(123,996) Net change in fund balances -143,742 143,742 Fund balances, beginning of year -187,818 187,818 Fund balances, end of year $-$331,560 $331,560 65 TOWN OF FOUNTAIN HILLS, ARIZONA GRANTS FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Original and Final Budget Actual Variance with Final Budget Revenues Intergovernmental $861,600 $75,000 $(786,600) Other -28,601 28,601 Total Revenues 861,600 103,601 (757,999) Expenditures Current General government 680,000 33,147 646,853 Public safety 24,150 17,227 6,923 Highways and streets -4,094 (4,094) Culture and recreation 320,000 66,451 253,549 Capital outlay -18,863 (18,863) Total Expenditures 1,024,150 139,782 884,368 Excess (deficiency) of revenues over expenditures (162,550)(36,181)126,369 Fund balances, beginning of year -202,515 202,515 Fund balances, end of year $(162,550)$166,334 $328,884 66 TOWN OF FOUNTAIN HILLS, ARIZONA MUNICIPAL PROPERTY CORPORATION FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Original and Final Budget Actual Variance with Final Budget Revenues Investment earnings $-$6,036 $6,036 Total Revenues -6,036 6,036 Expenditures Debt Service Principal retirement 425,000 425,000 - Interest on long-term debt 555,500 550,983 4,517 Total Expenditures 980,500 975,983 4,517 Excess (deficiency) of revenues over expenditures (980,500)(969,947)10,553 Other financing sources (uses) Transfers in 980,500 596,661 (383,839) Total other financing sources (uses) 980,500 596,661 (383,839) Net change in fund balances -(373,286)(373,286) Fund balances, beginning of year -850,284 850,284 Fund balances, end of year $-$476,998 $476,998 67 TOWN OF FOUNTAIN HILLS, ARIZONA HURF DEBT SERVICE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Original and Final Budget Actual Variance with Final Budget Revenues Investment earnings $1,000 $421 $(579) Total Revenues 1,000 421 (579) Expenditures Debt Service Principal retirement 90,000 90,000 - Interest on long-term debt 34,000 32,532 1,468 Total Expenditures 124,000 122,532 1,468 Excess (deficiency) of revenues over expenditures (123,000)(122,111)889 Other financing sources (uses) Transfers in 124,000 123,996 (4) Proceeds of long-term debt issuance 1,540,000 -(1,540,000) Total other financing sources (uses) 1,664,000 123,996 (1,540,004) Net change in fund balances 1,541,000 1,885 (1,539,115) Fund balances, beginning of year -(223)(223) Fund balances, end of year $1,541,000 $1,662 $(1,539,338) 68 TOWN OF FOUNTAIN HILLS, ARIZONA COTTONWOODS SPECIAL ASSESSMENT FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Original and Final Budget Actual Variance with Final Budget Revenues Special assessments $4,500 $3,612 $(888) Investment earnings -10 10 Total Revenues 4,500 3,622 (878) Expenditures Debt Service Principal retirement 3,228 3,228 - Interest on long-term debt 1,272 932 340 Total Expenditures 4,500 4,160 340 Excess (deficiency) of revenues over expenditures -(538)(538) Fund balances, beginning of year -10,373 10,373 Fund balances, end of year $-$9,835 $9,835 69 TOWN OF FOUNTAIN HILLS, ARIZONA DEVELOPMENT FEES FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Original and Final Budget Actual Variance with Final Budget Revenues Charges for services $1,021,725 $841,824 $(179,901) Investment earnings -13,819 13,819 Total Revenues 1,021,725 855,643 (166,082) Expenditures Current General government 413,170 13,049 400,121 Highways and streets -118,062 (118,062) Capital outlay -83,088 (83,088) Total Expenditures 413,170 214,199 198,971 Excess (deficiency) of revenues over expenditures 608,555 641,444 32,889 Fund balances, beginning of year -1,098,851 1,098,851 Fund balances, end of year $608,555 $1,740,295 $1,131,740 70 THIS PAGE BLANK 71 STATISTICAL SECTION 72 TOWN OF FOUNTAIN HILLS, ARIZONA GOVERNMENT-WIDE EXPENSES BY FUNCTION LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Year General Government Public Safety Highways and Streets Culture and Recreation Community Development Interest on Long-term Debt Totals 2003 $3,479,333 $5,494,708 $1,310,683 $2,363,897 $1,235,985 $1,576,842 $15,461,448 2004 3,686,452 4,918,280 1,419,509 2,068,613 1,144,964 1,499,575 14,737,393 Note: 2002-03 was the Town's first year to prepare government-wide financial statements. 73 TOWN OF FOUNTAIN HILLS, ARIZONA GOVERNMENT-WIDE REVENUES LAST TEN FISCAL YEARS (UNAUDITED) Program Revenues General Revenues Fiscal Year Fees, Fines and Charges for Services Operating Grants and Contributions Taxes Revenue Sharing Investment Earnings Other Totals 2003 $2,782,385 $1,697,900 $7,100,184 $4,740,758 $1,976,809 $79,706 $18,377,742 2004 3,421,132 1,590,787 10,055,861 4,489,844 122,082 195,978 19,875,684 Note: 2002-03 was the Town's first year to prepare government-wide financial statements. 74 TOWN OF FOUNTAIN HILLS, ARIZONA GENERAL GOVERNMENT EXPENDITURES BY FUNCTION (1) LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Year General Government Public Safety Highways and Streets Culture and Recreation Community Development Capital Outlay Debt Service Total 1995 $1,131,817 $979,482 $610,858 $382,026 $560,325 $843,650 $491,219 $4,999,377 1996 1,617,365 1,241,694 1,687,403 1,196,115 821,796 578,099 524,553 7,667,025 1997 1,757,431 1,499,538 1,627,952 625,928 864,022 5,343,433 1,132,399 12,850,703 1998 1,964,427 2,074,441 2,020,450 1,471,559 947,251 1,352,936 799,941 10,631,005 1999 2,631,245 2,205,600 1,984,879 2,334,901 955,451 557,374 795,088 11,464,538 2000 2,528,953 3,059,020 2,468,498 3,359,509 1,276,951 1,787,469 924,014 15,404,414 2001 3,646,500 3,354,037 2,212,432 3,866,245 1,175,649 5,261,585 1,851,602 21,368,050 2002 3,859,633 5,084,532 1,877,790 3,069,695 1,064,913 14,770,507 2,903,116 32,630,186 2003 3,318,574 5,174,492 1,198,080 1,815,416 1,215,387 79,427 2,970,070 15,771,446 2004 3,614,458 4,616,161 1,402,502 1,597,150 1,144,964 101,951 2,922,803 15,399,989 (1) Includes all governmental fund types. 75 TOWN OF FOUNTAIN HILLS, ARIZONA GENERAL GOVERNMENT REVENUES BY SOURCE (1) LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Year Taxes Inter- Governmenta l Fines and Forfeitures Licenses and Permits Charges for Services Rents and Royalties Contribution s and Donations Special Assessment s Net Investment Income (Loss) Other Total 1995 $468,503 $2,896,271 $171,675 $1,346,134 $358,657 $21,228 $20,000 $-$150,357 $10,263 $5,443,088 1996 2,024,461 2,762,906 211,289 1,653,561 204,541 14,462 --163,457 18,800 7,053,477 1997 3,101,787 3,988,424 209,485 1,770,347 419,976 14,170 1,500 -464,633 19,477 9,989,799 1998 3,326,207 4,364,859 208,930 1,961,687 795,700 13,591 100,000 -582,757 17,487 11,371,218 1999 3,861,337 4,929,062 259,484 2,472,215 624,744 18,140 -14,524 620,639 25,657 12,825,802 2000 4,876,466 4,771,792 293,970 2,569,472 454,366 27,208 10,598 9,241 743,259 21,055 13,777,427 2001 6,088,047 5,281,156 310,359 2,177,614 431,316 35,781 400 7,958 (1,063,339)10,957 13,280,249 2002 7,595,748 5,895,676 265,605 1,351,209 1,067,814 107,613 12,760 4,520 726,441 1,771,091 18,798,477 2003 7,114,486 6,311,458 195,091 1,308,747 810,412 188,745 127,200 4,302 1,976,809 148,143 18,185,393 2004 9,997,706 6,080,631 361,339 1,600,934 1,038,170 242,704 -3,612 122,082 261,561 19,708,739 (1) Includes all governmental fund types. 76 TOWN OF FOUNTAIN HILLS, ARIZONA GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Year Sales Tax Property Tax Franchise Tax Total 1995 $16,622 $357,033 $94,848 $468,503 1996 1,610,116 336,000 78,345 2,024,461 1997 2,664,923 350,024 86,840 3,101,787 1998 2,920,084 302,375 103,748 3,326,207 1999 3,394,152 348,778 118,407 3,861,337 2000 4,087,514 657,026 131,926 4,876,466 2001 4,923,174 1,038,891 125,982 6,088,047 2002 4,355,701 3,109,353 130,694 7,595,748 2003 5,051,872 1,910,072 152,542 7,114,486 2004 7,733,643 2,137,701 126,362 9,997,706 77 TOWN OF FOUNTAIN HILLS, ARIZONA TOWN TRANSACTION PRIVILEGE (SALES) TAX COLLECTIONS BY INDUSTRY CLASSIFICATION FISCAL YEAR BASIS (UNAUDITED) Business Activity Category 2004 Excise Tax Collections Percent of Total Construction $1,482,981 %19.8 Transportation/Utilities/Communication 916,498 %12.2 Wholesale/Retail 3,212,062 %42.8 Restaurants/Bars 419,107 %5.6 Fire, Insurance and Real Estate 341,951 %4.6 Services 423,433 %5.6 Advertising 101,590 %1.3 All Other Services Not Specified 605,226 %8.1 $7,502,848 %100.0 78 TOWN OF FOUNTAIN HILLS, ARIZONA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Year (1) Total Tax Levy Current Tax Collections Percent of Current Taxes Collected Delinquent Tax Collections Total Tax Collections Ratio of Total Tax Collections to Total Tax Levy Outstanding Delinquent Taxes Ratio of Delinquent Taxes to Tax Levy 1995 $339,832 $339,605 %99.9 $9 $339,614 %99.9 $218 %0.06 1996 323,517 323,511 %100.0 6 323,517 %100.0 -%- 1997 312,638 312,489 %100.0 143 312,632 %100.0 6 %- 1998 268,917 261,704 %97.3 7,213 268,917 %100.0 -%- 1999 248,607 235,953 %94.9 12,653 248,606 %100.0 1 %- 2000 444,138 432,965 %97.5 11,171 444,136 %100.0 2 %- 2001 699,006 676,682 %96.8 22,321 699,003 %100.0 3 %- 2002 1,335,787 1,282,844 %96.0 51,532 1,334,376 %99.9 1,411 %0.11 2003 1,378,862 1,329,929 %96.5 46,186 1,376,115 %99.8 2,747 %0.20 2004 1,545,051 1,496,005 %96.8 -1,496,005 %96.8 49,046 %3.17 (1) The amount levied and collected is net of resolutions and does not include component units. Note 1: Amounts collected are on a cash basis rather than modified accrual basis as in the financial statements. Note 2: Unsecured personal property taxes are not included in this schedule. Source: The Maricopa County Treasurer's Office. 79 TOWN OF FOUNTAIN HILLS, ARIZONA ASSESSED AND ESTIMATED ACTUAL VALUE OF PROPERTY (1) LAST TEN FISCAL YEARS (UNAUDITED) PRIMARY Tax Year Total Assessed Value Exempt Amount Total Full Cash Value Estimated Actual Value Net Assessed Value Ratio of Total Assessed Value to Total Estimated Actual Value 1995 $99,271,154 $5,082,517 $826,917,659 $992,301,191 $94,288,637 %10.00 1996 105,912,474 5,262,641 884,979,322 1,061,975,186 100,649,833 %9.97 1997 118,888,547 6,602,978 1,002,546,459 1,203,055,751 112,285,569 %9.88 1998 141,077,170 7,355,989 1,208,968,752 1,450,762,502 133,721,181 %9.72 1999 170,258,614 9,255,978 1,467,193,748 1,760,632,498 161,002,636 %9.67 2000 198,224,776 8,578,615 1,713,029,238 2,055,635,086 189,646,161 %9.64 2001 232,442,986 12,213,849 1,997,525,319 2,397,030,383 220,229,137 %9.70 2002 260,635,914 13,484,185 2,240,702,344 2,688,842,813 247,151,729 %9.69 2003 299,743,562 16,942,705 2,565,522,177 3,078,626,612 282,800,857 %9.74 2004 340,673,759 21,460,295 2,899,977,948 3,479,973,538 319,213,464 %9.79 SECONDARY Tax Year Total Assessed Value Exempt Amount Total Full Cash Value Estimated Actual Value Net Assessed Value Ratio of Total Assessed Value to Total Estimated Actual Value 1995 $105,660,296 $5,498,728 $866,122,390 $1,039,346,868 $100,161,568 %10.17 1996 109,463,361 5,519,310 906,495,406 1,087,794,487 103,944,051 %10.06 1997 123,097,961 6,764,555 1,034,892,731 1,241,871,277 116,333,406 %9.91 1998 155,729,430 8,785,700 1,317,946,863 1,581,536,236 146,943,730 %9.85 1999 185,540,741 10,575,923 1,583,072,952 1,899,687,542 174,964,818 %9.77 2000 221,922,165 9,894,702 1,889,016,352 2,266,819,622 212,027,463 %9.79 2001 253,269,562 14,555,025 2,154,928,885 2,585,914,662 238,714,537 %9.79 2002 287,891,481 17,288,615 2,418,235,666 2,901,882,799 270,602,866 %9.92 2003 344,047,844 20,662,614 2,842,849,050 3,411,418,860 323,385,230 %10.09 2004 377,590,037 28,191,703 3,162,854,959 3,795,425,951 349,398,334 %9.95 (1) Arizona uses two types of property values for taxing purposes. Primary values are used to calculate primary property taxes which are collected to fund the maintenance and operation of school districts, community college districts, counties, cites, and state government. Secondary values are used to pay off secondary property taxes which are collected for such things as debt service (bonds), budget overrides and special districts. Source: Arizona Department of Revenue. 80 TOWN OF FOUNTAIN HILLS, ARIZONA PRIMARY AND SECONDARY TAXABLE PROPERTY ASSESSED VALUATION LAST TEN FISCAL YEARS (UNAUDITED) Tax Year Assessed Valuation Town of Fountain Hills Assessed Valuation Fountain Hills School District Assessed Valuation Maricopa County Assessed Valuation State of Arizona 1995 P $94,188,637 $88,978,760 $13,302,326,609 $21,688,438,645 S 100,161,568 90,394,390 13,521,174,915 22,179,317,949 1996 P 100,649,833 95,155,307 13,493,736,826 22,109,868,588 S 103,944,051 101,137,745 14,119,434,946 23,022,330,962 1997 P 112,285,569 101,573,954 13,975,668,204 22,811,158,500 S 116,333,406 104,881,097 14,343,156,861 23,333,678,475 1998 P 133,721,181 113,072,537 15,006,270,531 21,001,064,273 S 146,943,730 117,144,929 15,723,498,194 22,333,861,362 1999 P 190,102,361 134,650,036 17,463,875,533 21,670,300,013 S 212,415,476 147,884,952 18,676,830,848 22,533,348,150 2000 P 189,646,161 191,579,669 19,362,298,255 22,645,463,514 S 212,027,463 214,037,354 20,877,715,546 23,547,348,817 2001 P 220,229,137 192,200,924 19,603,718,629 30,144,285,019 S 238,714,537 214,726,796 21,138,917,389 32,071,738,214 2002 P 247,151,729 223,185,771 21,355,326,477 32,518,431,991 S 270,602,866 242,086,985 22,913,134,480 34,468,574,240 2003 P 282,800,857 288,969,887 25,447,850,971 34,868,596,227 S 323,385,230 331,458,411 27,477,987,528 36,825,660,973 2004 P 319,213,464 326,230,578 28,070,870,413 41,886,818,760 S 349,398,334 358,634,532 30,066,986,670 44,480,893,202 P = Primary assessed valuation S = Secondary assessed valuation Source: Maricopa County and Arizona Tax Research Foundation. 81 TOWN OF FOUNTAIN HILLS, ARIZONA PROPERTY TAX RATES FOR ALL DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Year Arizona Community College County Fountain Hills School District East Valley Inst. of Tech District Fire District Royalties Sanitary District Road District Flood Control District Library District Volunteer Fire District Central Arizona Project Town of Fountain Hills Total 1995 0.4700 0.8934 1.7726 7.1976 0.0554 0.9781 1.9097 0.5624 0.3632 0.0417 0.0107 0.1400 0.3852 14.7800 1996 0.4700 1.1130 1.8344 7.6367 0.0693 0.9397 1.8590 0.2626 0.3332 0.0099 0.0108 0.1400 0.3192 14.9978 1997 - 1.0476 1.7929 7.1501 0.1616 0.9826 1.8983 0.3186 0.3425 0.0421 0.0109 0.1400 0.3036 14.1908 1998 - 1.1346 1.7929 7.2466 0.1216 1.0407 1.6619 0.1806 0.3425 0.0421 0.0105 0.1400 0.2330 13.9470 1999 - 1.1125 1.8084 7.2134 0.1320 0.9482 1.9394 0.0370 0.3270 0.0421 0.0103 0.1400 0.1699 13.8802 2000 - 1.1285 1.2816 6.2969 0.1217 0.8933 1.8315 -0.2858 0.0421 0.0096 0.1400 0.2578 12.2888 2001 - 1.4557 1.2732 6.3373 0.1120 0.9739 2.0515 -0.2319 0.0421 0.0091 0.1300 0.5605 13.1772 2002 - 1.6016 1.7682 6.3373 0.1117 - 1.2948 -0.2119 0.0421 0.0076 0.1300 1.5344 13.0396 2003 - 1.0785 1.2808 5.7025 0.0976 - 1.1527 -0.2119 0.0521 0.0070 0.1200 0.4762 10.1793 2004 - 1.0372 1.2108 5.5710 0.1032 - 1.1307 -0.2119 0.0521 0.0069 0.1200 0.4250 9.8688 82 TOWN OF FOUNTAIN HILLS, ARIZONA PRIMARY AND SECONDARY PROPERTY TAX RATES - ALL DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Year Rate Town Rate School District Rate County Rate State Rate Total 1995 P - 5.50 1.77 0.47 7.74 S 0.39 1.69 - - 2.08 1996 P - 4.96 1.69 0.47 7.12 S 0.32 2.67 0.15 - 3.14 1997 P - 4.98 1.64 - 6.62 S 0.30 2.17 0.16 - 2.63 1998 P - 4.89 1.68 - 6.57 S 0.23 2.32 0.13 - 2.68 1999 P - 3.89 1.19 - 5.08 S 0.17 1.96 0.11 - 2.24 2000 P - 3.91 1.16 - 5.07 S 0.26 2.38 0.12 - 2.76 2001 P - 4.09 1.18 - 5.27 S 0.56 2.25 0.09 - 2.90 2002 P 0.97 * 4.33 1.68 - 6.98 S 0.56 2.00 0.09 - 2.65 2003 P - 3.56 1.21 - 4.77 S 0.48 2.14 0.07 - 2.69 2004 P - 3.50 1.21 - 4.71 S 0.43 2.07 - - 2.50 P = Primary assessed valuation S = Secondary assessed valuation Source: Maricopa County and Arizona Tax Research Foundation. * The primary tax rate represents the Fountain Hills Fire District and is included with the Town because the Town took over operations in November 2001. 83 TOWN OF FOUNTAIN HILLS, ARIZONA ASSESSED VALUATION OF MAJOR TAXPAYERS JUNE 30, 2002* (UNAUDITED) Taxpayer Land Description 2003/04 Assessed Valuation As % of Town's Total Secondary Assessed Valuation Firerock LLC Vacant Land $4,045,273 %1.25 Qwest Corporation TV Systems 3,385,045 %1.05 MCO Properties Vacant Land 3,079,071 %0.95 Chaparral Town Water Company Water Utility 2,931,751 %0.91 Fountain Hills Village LLC Nursing Home 1,947,937 %0.60 Target Corporation Shopping Center 1,481,678 %0.46 Cox Communications TV Systems 1,404,400 %0.43 Four Peaks Limited Partnership Condominiums 1,353,366 %0.42 Fountain Hills-Old Vine LP Shopping Center 928,888 %0.29 Sun Tech Development Condominiums 895,446 %0.28 Kimco Barclay Fountain Hills Shopping Center 859,491 %0.27 Safeway Inc. #1291 Shopping Center 857,444 %0.27 Inn at Eagle Mountain LLC Hotel 853,886 %0.26 Southwest Gas Gas & Electric 840,795 %0.26 $24,864,471 %7.70 Source: Treasurer of Maricopa County. * Most recent data available. 84 TOWN OF FOUNTAIN HILLS, ARIZONA COMPUTATION OF LEGAL DEBT MARGIN JUNE 30, 2004 (UNAUDITED) Net secondary assessed valuation $323,385,230 Water, Sewer, Light, Parks, Open Space and Recreational Facility Boards Debt limit - 20% of secondary net assessed valuation $64,677,046 Bonds outstanding 9,325,000 Net 20% General Obligation Bonding Capacity 55,352,046 All Other General Obligation Bonds Debt limit - 6% of secondary net assessed valuation 19,403,114 Bonds outstanding subject to debt limit 2,415,000 Net 6% General Obligation Bonding Capacity 16,988,114 Total 20% and 6% Bonding Capacity $72,340,160 Source: Maricopa County Assessor's Office. 85 TOWN OF FOUNTAIN HILLS, ARIZONA RATIO OF NET GENERAL BONDED DEBT TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Year Population Net Secondary Assessed Valuation Net Bonded Debt Ratio of Net Bonded Debt to Assessed Value Net Bonded Debt Per Capita 1994-95 13,100 $88,796,834 $4,144,881 %4.67 $316 1995-96 14,160 100,161,566 4,277,315 %4.27 302 1996-97 15,220 103,944,051 4,056,473 %3.90 267 1997-98 16,275 116,333,406 3,883,018 %3.34 239 1998-99 18,015 146,943,730 3,913,952 %2.66 217 1999-00 18,595 212,415,476 8,677,053 %4.08 467 2000-01 20,235 212,027,463 8,209,873 %3.87 406 2001-02 20,235 238,714,537 13,410,000 %5.62 663 2002-03 21,740 270,602,866 12,585,000 %4.65 579 2003-04 22,105 * 323,385,230 11,740,000 %3.63 531 * League of Arizona Cities and Towns. 86 TOWN OF FOUNTAIN HILLS, ARIZONA RATIO OF ANNUAL DEBT SERVICE EXPENDITURES TO TOTAL GENERAL EXPENDITURES LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Year Principal Interest and Fiscal Charges Bond Issuance Cost Total Debt Service Total Expenditures (*) Ratio of Debt Service to Total Expenditures 1994-95 $125,000 $327,463 $-$452,463 $4,999,377 %9.05 1995-96 209,193 208,477 -417,670 7,667,025 %5.45 1996-97 222,321 247,311 -469,632 12,850,703 %3.65 1997-98 245,210 554,731 -799,941 10,631,005 %7.52 1998-99 223,024 517,696 54,368 795,088 11,464,538 %6.94 1999-00 339,013 585,001 -924,014 15,404,414 %6.00 2000-01 620,408 1,086,208 144,986 1,851,602 21,368,050 %8.67 2001-02 1,229,215 1,372,965 300,936 2,903,116 32,630,186 %8.90 2002-03 1,393,228 1,576,842 -2,970,070 15,771,446 %18.83 2003-04 1,423,228 1,499,575 -2,922,803 15,399,989 %18.98 (*) Includes all Governmental Fund Types. 87 TOWN OF FOUNTAIN HILLS, ARIZONA DIRECT AND OVERLAPPING GENERAL OBLIGATION BONDED DEBT JUNE 30, 2004 (UNAUDITED) Proportion Applicable to Town of Fountain Hills Overlapping Jurisdiction 2003-04 Net Secondary Assessed Valuation Net Outstanding General Obligation Bonded Debt Approximate Percent Net Debt Amount State of Arizona $44,480,893,202 $-%0.79 $- Maricopa County 30,066,986,670 -%1.16 - Maricopa County Community College District 28,070,870,413 234,440,000 %1.24 2,907,056 Eagle Mountain Community Facilities District 22,726,874 4,615,000 %100.00 4,615,000 Fountain Hills Unified School District No. 98 358,634,532 27,990,000 %97.24 27,217,476 East Valley Institute of Technology District 13,339,130,459 6,235,000 %2.62 163,357 Fountain Hills Sanitary District 344,262,269 1,320,000 %100.00 1,320,000 Town of Fountain Hills 323,385,230 11,740,000 %100.00 11,740,000 Total Direct and Overlapping General Obligation Bonded Debt $47,962,889 Source: Maricopa County Treasurer's Office. 88 TOWN OF FOUNTAIN HILLS, ARIZONA MISCELLANEOUS STATISTICAL DATA JUNE 30, 2004 (UNAUDITED) DATE OF INCORPORATION December 5, 1989 FORM OF GOVERNMENT Council - Manager NUMBER OF EMPLOYEES (no police and fire) Classified - Full time 59 Classified - Part time 18 Exempt 21 AREA 18.27 sq. miles TOWN OF FOUNTAIN HILLS FACILITIES AND SERVICES Miles of Street Surfaced 178.5 Unsurfaced 2 Population 1990 census 10,190 1995 census 14,160 2000 census 20,235 Housing Units 11,601 Building Permits Issued 918 Culture and Recreation Community Centers 1 Parks 4 Park acreage 121 Tennis courts 6 Senior center 1 FACILITIES AND SERVICES NOT INCLUDED IN PRIMARY GOVERNMENT Fire Protection: Number of stations 2 The Town of Fountain Hills has no fire employees, but contracts with Rural/Metro Corporation to provide fire services to all residents. The Town does, however, own the fire station and equipment. Police Protection: Number of stations 1 Number of police personnel and officers 29 Number of patrol units 9 Number of law violations Physical arrests 601 Traffic/Parking violations 3,186 Sewerage System: Special District Miles of sanitary sewers 200 Number of treatment plants 1 Maximum daily capacity of treatment plant in gallons 2.6mgd Water System: Private Miles of water mains 178 Number of hydrants 1,217 Maximum daily capacity of plant in gallons 11,570,000 Education: Number of elementary schools 3 Number of secondary schools 1 Source: Town government offices and related districts. 89 document in agenda packet 1-6-05.obd Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Meeting Date: 1-06-05 Submitting Department: Ec. Dev. Contact Person: Gracie Burton, Downtown Development Consent: Regular: Requesting Action: Report Only: Type of Document Needing Approval (Check all that apply): Public Hearing Resolution Ordinance Agreement Emergency Clause Special Event Permit Special Consideration Intergovernmental Agreement Acceptance Grant Submission Liquor/Bingo License Application Plat Special Event Permit Special/Temp Use Permit Other: Council Priority (Check Appropriate Areas): Education Public Fitness Library Services Public Safety Community Activities Economic Development Public Works Human Service Needs Parks & Recreation Town Elections Community Development Finance Regular Agenda Wording: Presentation by the Downtown Economic Development Coordinator on Downtown Economic Development. Staff Recommendation: Fiscal Impact: No $ Purpose of Item and Background Information: Information Only List All Attachments as Follows: Power Point Presentation Type(s) of Presentation: Oral Signatures of Submitting Staff: S:/GBurton _____________________________________ Department Head Budget Review (if item not budgeted or exceeds budget amount) S:/JAGhetti, ATM Town Manager / Designee Downtown Economic DevelopmentGracie Burton, Coordinator ECONOMIC DEVELOPMENTDevelop working relationships with businesses, Chamber of Commerce, Downtown Associations, realtors, etc.Develop business retention and expansion programImplement the Avenue of the Fountains Enhancement PlanDevelop commercial/industrial land availability database Building a “Downtown Coalition”Sidewalk SaleFarmers Market400 Business Letters180 Individual BusinessMeetings RFQ Ended November 8 Responses3 Short ListedCouncil Review January 6, 2005Avenue of the Fountains Enhancement Project Marketing StrategiesScottsdale MagazineDemographic Fact Portfolio Holiday Inn – Groundbreaking January 05’12+ Acre Mixed Use Development Along Avenue of the Fountains – Ground Ownership February 05’Resort Development – Announcement March 05’Q-West Infrastructure Assessment for Technology DevelopmentLarge Printing Corporation relocation to Fountain Hills – Spring 05’Major Developments Town of Fountain Hills Town Council Agenda Action Form Meeting Type: Regular Meeting Meeting Date: 1/6/05 Submitting Department: Public Works Contact Person: Dana Burkhardt, AICP, Senior Planner Consent: Regular: Requesting Action: Report Only: Type of Document Needing Approval (Check all that apply): Public Hearing Resolution Ordinance Agreement Emergency Clause Special Event Permit Special Consideration Intergovernmental Agreement Acceptance Grant Submission Liquor/Bingo License Application Plat Special Event Permit Special/Temp Use Permit Other: Zoning Map Amendment Initiation Council Priority (Check Appropriate Areas): Education Public Fitness Library Services Public Safety Community Activities Economic Development Public Works Human Service Needs Parks & Recreation Town Elections Community Development Regular Agenda Wording: CONSIDERATION to INITIATE an amendment to the Official Zoning Districts Map of Fountain Hills, to rezone the Town owned portions of the McDowell Mountain Preserve from the “R1- 43” Single-Family Residential Zoning District to an Open Space Zoning District. Case #Z2004-09. Staff Recommendation: Approve Fiscal Impact: No $ Purpose of Item and Background Information: The purpose of this agenda item is for discussion and to initiate the rezoning of the Town-owned mountain preserve land. At present, the McDowell Mountain Preserve is zoned “R1-43”, which allows for residential structures and uses. Town Manager Pickering would like the Town Council to consider whether the Town should rezone the Town-owned portions of the McDowell Mountain Preserve to an open space zoning designation. List All Attachments as Follows: Staff Memo; Graphic of Preserve land Type(s) of Presentation: None Signatures of Submitting Staff: S:/DBurkhardt _____________________________________ Department Head Budget Review (if item not budgeted or exceeds budget amount) S:/JAGhetti, ATM Town Manager / Designee TOWN OF FOUNTAIN HILLS PLANNING & ZONING DIVISION MEMO TO: Honorable Mayor Nichols and the Town Council DT: December 28, 2004 FR: Dana Burkhardt, AICP Senior Planner RE: Discussion to initiate an amendment to the Official Zoning Districts Map, to rezone the Town-owned portions of the McDowell Mountain Preserve to open space; Case #Z2004-09. The Town has acquired approximately 740 acres of land intended for natural open space preservation (known as the McDowell Mountain Preserve) in the northwest region of the Town. At present, the McDowell Mountain Preserve is zoned “R1-43”, which allows for residential structures and uses. Town Manager Pickering would like the Town Council to consider whether the Town should rezone the Town-owned portions of the McDowell Mountain Preserve. If the Town Council desires to raise the degree of assurance that the preserve will remain open space, the property should be rezoned to “Open Space Recreation” (OSR). Staff recommends the “OSR” zoning designation rather than the “Open Space Conservation” (OSC) designation, because “OSR” permits the existing infrastructure and uses, and the planned trailhead development. The “OSC” zoning designation prohibits all building structures and restricts land uses to undeveloped natural land and trails. The existing infrastructure, access easements, and the proposed trailhead structures are prohibited in the “OSC” Zoning District. The “OSR” zoning designation is consistent with the General Plan Land Use designation for the preserve property. Staff has considered the option to rezone all portions of the Town-owned preserve not encumbered by utility easements, infrastructure, or planned trailhead improvements to “OSC”. The encumbered portions of the preserve would be rezoned to “OSR” to allow the existing and proposed uses. This option would create cumbersome zoning district boundaries and may be considered “spot zoning”. In addition, the “OSC” zoning designation may not permit the Town or public utility providers to make necessary and unanticipated improvements in the future. Staff recommends the Council initiate an amendment to the Official Zoning Districts Map for Fountain Hills to rezone the Town-owned McDowell Mountain preserve land from the “R1-43” Single-family Residential Zoning District to the “OSR” Open Space Recreational Zoning District.