HomeMy WebLinkAboutFY16 CAFRTOWN OF FOUNTAIN HILLS, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2016
Issued by:
Administration Department
Finance Division
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
INTRODUCTORY SECTION Page
Letters of Transmittal 1
List of Principal Officials 12
GFOA Certificate of Achievement 13
Organizational Chart 14
FINANCIAL SECTION
INDEPENDENT AUDITOR’S REPORT 17
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) 21
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements:
Statement of Net Position 34
Statement of Activities 35
Fund Financial Statements:
Balance Sheet – Governmental Funds 38
Reconciliation of the Balance Sheet –
Governmental Funds to the Statement of Net Position 41
Statement of Revenues, Expenditures and Changes in Fund Balances –
Governmental Funds 42
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances – Governmental Funds to the
Statement of Activities 44
Notes to Financial Statements 45
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
FINANCIAL SECTION Page
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Revenues Expenditures and Changes in Fund Balances –
Budget and Actual:
General Fund 68
Highway User Revenue Fund 69
Grants Fund 70
Note to Required Supplementary Information 71
COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND
SCHEDULES
Special Revenue Funds:
Combining Balance Sheet 76
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances 78
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual 80
Debt Service Funds:
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual 86
Capital Projects Fund:
Combining Schedule of Revenues, Expenditures and Changes in
Fund Balances – Budget and Actual 90
STATISTICAL SECTION
Financial Trends:
Net Position by Component 94
Changes in Net Position 96
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
STATISTICAL SECTION Page
Financial Trends:
Fund Balances – Governmental Funds 98
Statement of Revenues, Expenditures and Changes in
Fund Balances – Governmental Funds 100
Revenue Capacity:
Governmental Activities – Tax Revenues by Source 102
Assessed Value and Estimated Actual Value of Taxable Property 103
Principal Property Taxpayers 104
Property Tax Levies and Collections 105
Taxable Sales by Category 106
Direct and Overlapping Sales Tax Rates 108
Debt Capacity:
Ratios of Outstanding Debt by Type 109
Ratios of General Bonded Debt Outstanding 110
Direct and Overlapping Governmental Activities Debt 111
Legal Debt Margin Information 112
Calculation of Legal Debt Margin 114
Revenue Bond Coverage 115
Demographic and Economic Information:
Demographic and Economic Statistics 116
Principal Employers 118
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
STATISTICAL SECTION Page
Operating Information:
Authorized Full-Time Equivalent Government Employees by Function 119
Operating Indicators by Function 120
Capital Assets Statistics by Function 122
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INTRODUCTORY SECTION
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October 17, 2016
To the Honorable Mayor, Members of the Town Council, and Citizens of the Town of Fountain
Hills:
State law requires that all general-purpose local governments publish, within six months of the
close of each fiscal year, a complete set of financial statements presented in conformity with
accounting principles generally accepted in the United States of America and audited in
accordance with auditing standards generally accepted in the United States by a certified public
accounting firm licensed in the State of Arizona. Pursuant to that requirement, we hereby issue
the Comprehensive Annual Financial Report (CAFR) of the Town of Fountain Hills (Town) for
the fiscal year ended June 30, 2016.
This report consists of management’s representations concerning the finances of the Town.
Consequently, management assumes full responsibility for the completeness and reliability of all
of the information presented in this report. To provide a reasonable basis for making these
representations, management of the Town has established a comprehensive internal control
framework that is designed both to protect the government’s assets from loss, theft, or misuse
and to compile sufficient reliable information for the preparation of the Town of Fountain Hills’s
financial statements in conformity with accounting principles generally accepted in the United
States of America. Because the cost of internal controls should not outweigh their benefits, the
Town’s comprehensive framework of internal controls has been designed to provide reasonable
rather than absolute assurance that the financial statements will be free of material misstatement.
As management, we assert that, to the best of our knowledge and belief, this financial report is
complete and reliable in all material respects.
The Town’s financial statements have been audited by Heinfeld, Meech & Co., P.C., a certified
public accounting firm. The goal of the independent audit was to provide reasonable assurance
that the financial statements of the Town for the fiscal year ended June 30, 2016, are free of
material misstatement. The independent audit involved examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements; assessing the accounting
principles used and significant estimates made by management; and evaluating the overall
financial statement presentation. The independent auditors concluded, based upon the audit, that
there was a reasonable basis for rendering an unmodified opinion that the Town’s financial
statements for the fiscal year ended June 30, 2016, are fairly presented in conformity with
accounting principles generally accepted in the United States of America. The independent
auditor’s report is presented as the first component of the financial section of this report.
Accounting principles generally accepted in the Unites States of America require that
management provide a narrative introduction, overview, and analysis to accompany the basic
financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter
of transmittal is designed to complement the MD&A and should be read in conjunction with it.
The Town of Fountain Hills’s MD&A can be found immediately following the report of the
independent auditors.
PROFILE OF THE GOVERNMENT
The Town of Fountain Hills is a master planned community established in 1970 by McCulloch
Properties (now MCO Properties, Inc.). Prior to 1970, the area was a cattle ranch and was part of
one of the largest land and cattle holdings in Arizona. The land was purchased by Robert
McCulloch in the late 1960s and the community designed by Charles Wood, Jr. (designer of
Disneyland in southern California). The centerpiece of Fountain Hills is one of the world's tallest
man-made fountains, a focal point that attracts thousands of visitors each year.
Located on 13,006 acres of land, Fountain
Hills is surrounded by the McDowell
Mountains and Scottsdale on the west, the
Fort McDowell Yavapai Nation on the east,
the Salt River Pima-Maricopa Indian
Community on the south, and by the
McDowell Mountain Regional Park on the
north. The elevation is 1,520 feet at the
fountain, 3,000 feet on Golden Eagle
Boulevard, and is approximately 500 feet
above Phoenix.
Over the past twenty plus years, Fountain
Hills has grown from 10,190 residents to a
town of 22,489 in 2010. On June 5, 2006,
the Town of Fountain Hills became twenty
square miles and about ten percent larger by annexing 1,300 acres of State Trust Land. The
process to annex the State Trust Land occurred over a two and one-half year period and
development of the land will occur over the next decade. Annexing this property into the Town
ensures that its future development will be of the highest quality under such Town standards as
the cut-and-fill ordinance and strict zoning regulations.
The Town offers a wide range of living accommodations, from small condominium complexes to
large custom homes. Fountain Hills also offers recreational and cultural programs and services
that contribute to a high quality of life for its residents. The community consists of primarily
residential property and open space; of the total 20.32 square miles of land only 0.7% of the total
is zoned commercial and/or industrial, 23.3% is preserved as open space and 51.1% is
residential.
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The Town’s Mission Statement
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.
To serve, respect, and provide trust and stewardship.
The Town of Fountain Hills is an Arizona Municipal Corporation, acting as a general law town
as prescribed in the Arizona Revised Statutes. The Town was incorporated on December 5, 1989,
with the governmental and administrative affairs of the Town operating under the Council-
Manager form of government. Legislative authority is vested in a seven member Town Council.
The Mayor is a member of the Town Council who is directly elected by voters and chairs the
Town Council meetings. The members of the Council are elected at large and serve four year
overlapping terms. The Town Council is responsible for the adoption of local ordinances, budget
adoption, appointment of residents to citizen advisory committees and hiring the Town Manager.
The Town Manager is responsible for implementation of the policies of the Town Council and
overall management of the Town through department directors and approximately 52 FTE
employees. The Presiding Judge, Town Attorney, and Town Prosecutor are under the direction of
the Town Council.
The Town provides or administers a full range of services
including public safety (law enforcement, fire, animal
control); development services (code enforcement,
planning, building inspection, zoning and public works);
construction and maintenance of streets and infrastructure,
municipal court, recreational activities, community center,
senior services and cultural events. The Town does not
maintain utility or other operations that require the
establishment of enterprise funds.
Fountain Hills Town Hall
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The financial reporting entity (the Town) includes all the funds of the primary government (i.e.,
the Town of Fountain Hills as legally defined) as well as all of its component units. The
component units consist of legally separate entities for which the primary government is
financially accountable. Blended component units, although legally separate entities, are, in
substance, part of the primary government’s operations and are included as part of the primary
government. Accordingly, the Cottonwoods Maintenance District, the Eagle Mountain
Community Facilities District and the Fountain Hills Municipal Property Corporation are
included in the financial report of the Town.
FACTORS AFFECTING FINANCIAL CONDITION
The information presented in the financial statements is perhaps best understood when it is
considered from the broader perspective of the specific environment within which the Town of
Fountain Hills operates.
Internal Controls. As earlier noted, the management of the Town of Fountain Hills, Arizona, is
responsible for establishing and maintaining a system of internal control. Internal accounting
controls are designed to provide reasonable, but not absolute, assurance regarding;
1) Safeguarding of assets against loss from unauthorized use or deposition, and
2) Reliability of financial records for preparing financial statements and maintaining
accountability for assets.
The concept of reasonable assurance recognizes:
1) The cost of a control should not exceed the benefits likely to be derived, and
2) The valuation of costs and benefits requires estimates and judgments by management.
The system of internal control is subject to periodic evaluation by management and is also
considered by the independent auditors in connection with the annual audit of the Town’s
financial statements. All internal control evaluations occur within the above framework. The
Town's internal accounting controls are considered to adequately safeguard assets and provide
reasonable assurance of proper recording of financial transactions.
Budgetary Controls. The budget process is a cyclical process and begins each year with the
preparation of the base budget by each department head. Each budget is based on expenditures to
date and the previous years’ experience. The departments’ base budgets, along with any requests
for new positions, programs or services are reviewed by the Town Manager. The Town Manager
then meets with department heads to review their base budgets and requests for new services
and/or programs. Once management has reviewed the departments’ requests, a tentative budget
is presented to the Town Council by the Town Manager.
The Town Council formally adopts the budget and appropriates funding from the General 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 Town Council meeting in April, 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 June 30, the close of
the Town of Fountain Hills’ fiscal year. The budget is legally enacted through passage of a
resolution and is prepared by fund and department. The resolution sets the limit for expenditures
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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 IX, Section 20.
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 carry-over of
unrestricted cash balance from the prior fiscal year. The limitation is applied to the total of the
combined funds. All appropriations lapse at year-end requiring actual fund balances to be re-
budgeted each fiscal year.
To ensure compliance with the state imposed expenditure limitation, a uniform expenditure
report must be filed with the state each year. This report reconciles total Town expenditures from
the audited financial statements to total expenditures for reporting in accordance with the state’s
uniform expenditure reporting system (ARS Section 41-1279.07). Public hearings on the budget
are held each year in accordance with legal requirements in order to obtain comments from local
taxpayers.
The appropriated budget is prepared by fund, function/program (e.g., public safety), and
department (e.g., police). Department heads may make transfers of appropriations within the
department. Transfers of appropriations between departments, however, require Town Council
approval. Budget-to-actual comparisons are provided in this report for each individual
governmental fund for which an appropriated annual budget has been adopted. Budget-to-actual
comparisons for the General Fund and Major Special Revenue Funds are presented in the
Required Supplementary Information Other Than MD&A and all other funds are presented in
Other Information – Fund Schedules.
Local Economy. The Town of Fountain Hills, Arizona, continues to face many issues during
these slow growth economic times. Its citizens, governing body, and municipal government are
committed to finding solutions for each of the issues. In order to address these issues, the Town
has proposed a baseline budget requiring any new positions to be deemed mission critical. All
vacancies will be evaluated to access the need for replacement, elimination or modification to the
job description. The Town will be closely monitoring its revenue sources and make adjustments
accordingly.
The Great Recession appears to be recovering modestly in Fountain Hills; this recovery is
indicated by the local sales tax receipts in the construction category. Construction activity has
increased 3% over the prior year which we interpret as a leading indicator of a recovering
economy. The Town of Fountain Hills’ local tax revenue base consists of two major tax
categories, the most significant being wholesale/retail sales and transportation/
communication/utilities (construction had been a third significant category in prior years). The
chart below is a look at the past five years’ significant local sales tax activity by sector:
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As can be seen in the chart, sales tax collections continue to show signs of moderate growth.
Retail sales experienced a 5.8% increase over the prior year; restaurant/bar revenues have
exceeded any prior year and an increase of 2.1% from FY14-15. Construction sales tax, a one-
time revenue source, is driven entirely by development activity in the community and increased
3.4% over the prior year; recent building permit activity indicates that construction sales tax is
likely to increase over the next years. Transportation/communication/utilities tax revenues also
posted an increase of 4.0%.
Construction activity provides revenue to the Town through local sales tax, the proceeds of
which are utilized for general operations and capital expenditures. Without the resources to fund
capital projects, the Town must find additional funds to pay for necessary infrastructure projects.
For operating costs, the Town is dependent upon state shared revenues and local sales tax as a
major source of operating revenue, accounting for 84% of total General Fund revenue for fiscal
year 2015-16.
State shared revenues are derived as a proportionate share of state sales, income and vehicle
license taxes which are distributed based on the Town’s population compared to all other
incorporated cities and towns in Arizona (currently 0.45%). State shared income tax revenue
category is based on two years prior personal and corporate earnings; revenue from the State
income tax increased by 3.7% in FY15-16. After decreases in State sales tax from FY08-09
through FY11-12, this revenue declined by 0.5% in FY15-16 compared to the prior year.
Other local activity has remained fairly level during the recessionary period due to the lack of
major retailers (the Town has three grocery stores and one major retailer). Fountain Hills is past
the historic period of rapid growth and the long-term economic outlook for the Town must
recognize this fact. The opportunity to further expand the retail tax base in Fountain Hills is
limited by the lack of available commercial land – over 75% of the currently available
commercial lots are already developed.
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Development Activity over the past year:
Development Services has been involved with the following development activities during fiscal
year 2015-16 (7/1/2015 – 6/30/2016):
Four Concept Plans were approved by the Planning & Zoning Commission during the
period:
Desert Vista storage
Park Place
Copper Ridge
Golf School extension at Sunridge Canyon Golf Course
Four Special Use Permits were granted.
One Temporary Use Permits were issued during the period.
Ten Temporary Visitor Permits were issued.
Forty-two new Single-Family Residential Building Permits were issued.
There were eight new Commercial Building Permits issued.
There were sixteen commercial tenant improvement permits issued during the last fiscal
year.
A summary of the activity, by month, is shown below:
Fiscal year SFR
DUP/MULTI
T.I. &
Comm
Pools,
Fences
&
Other
Add
Ons
(Not
Garages
Garages
&
Carports
MONTH
TOTAL Bldgs. Total
Units
Permits
Issued
JULY 3 0 0 3 1 21 4 0 29
AUGUST 2 0 0 2 3 20 3 2 30
SEPTEMBER 4 1 2 5 2 23 4 0 34
OCTOBER 2 1 2 3 5 17 3 0 28
NOVEMBER 3 0 0 3 1 15 5 0 24
DECEMBER 1 1 2 2 3 19 5 2 31
JANUARY 5 0 0 5 0 24 0 0 29
FEBRUARY 2 0 0 2 1 18 2 0 23
MARCH 5 0 0 5 2 33 2 1 43
APRIL 4 0 0 4 3 29 5 0 41
MAY 3 0 0 3 1 31 3 2 40
JUNE 5 0 0 5 2 42 3 1 53
YEARLY
TOTAL 39 3 6 42 24 292 39 8 405
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Economic Outlook.
Retail Sales – Not having a property tax, the Town of Fountain Hills relies heavily on Town
transaction privilege tax (TPT), sometimes called a sales tax. Overall, Town TPT revenues
provide over 50% of the General Fund revenues. The Town's TPT rate is currently at 2.6%. The
construction TPT is equally divided between the General Fund and the Capital Projects Fund.
State Shared Revenues – The Town of Fountain Hills receives significant revenue allocations
from the State. These "State Shared Revenues" include allocations of the state-collected income
tax, sales tax, fuel tax and motor vehicle-in-lieu taxes. All but the fuel tax is placed in the Town's
General Fund, where it is used to sustain a large portion of the Town's day-to-day activities.
These revenue sources have improved recently with the economy showing signs of recovery.
Highway User Revenue Fund (HURF) – The state shared fuel tax, as it is often called, is
placed in this fund to be used specifically for street maintenance and related activity. In recent
years, the state legislature has reduced the formula distribution of state-shared revenues to cities.
The state shared revenue formulas generally allocate revenues based on official census data.
(Last census: Year 2010).
Long-term Financial Planning. Fountain Hills’ Financial Policies are balanced on sound financial
reserves and conservative revenue growth forecasts for the foreseeable future. Potential for State
legislative impacts to revenue-sharing or local revenues and additional demands for essential
Town services remain. The Town’s financial policies set forth guidelines against which current
budgetary performance can be measured and proposals for future programs can be evaluated.
The Town’s Financial Policies have helped weather the slow economic recovery. This policy
continues to require the Town to internally restrict an amount equal to 20% of the average actual
General Fund revenues for the preceding five fiscal years as part of its General Fund balance.
This amount is estimated to be about 60 days of expenditures coverage and is considered a
“Rainy Day” fund.
Additionally, a reserve of 10% of the average actual General Fund revenues for the preceding
five fiscal years is set aside for “pay-as-you-go” capital replacement expenditures, vehicle or
equipment replacement, capital projects, prepaying or defeasing existing Town debt, or any other
expenditure that is non-recurring in nature.
The Council also adopted Financial Policies that include guidelines for the issuance of debt for
capital expenditures, community facility districts, financing alternatives, expenditure controls
and financial planning. The policy was amended during FY 09-10 to reduce the allocation of the
local construction sales tax to the Capital Projects Fund from 85% to 50%, reflecting the
transition from one-time building activity to ongoing redevelopment activity. The debt policy
was prepared with a preference for “pay-as-you-go” financing for capital spending, however, the
policy did not anticipate the lack of funding for capital projects and bond funding is being
reconsidered.
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In early 2009, the Strategic Planning Advisory Commission began the process of gathering
public input to update the Strategic Plan’s vision, confirm residents’ values, and create a fresh
structure for the Strategic Plan revision. Subsequently, Strategic Plan 2010 was built upon the
foundation of a clearly defined vision statement and eight key values, with specific indicators to
evaluate Council and staff priorities. Based on citizen input, the Strategic Plan is designed to
guide our future decisions grounded on these common values:
1. Civility
2. Civic Responsibility
3. Environmental Stewardship
4. Economic Vitality
5. Education, Learning and Culture
6. Maintain and Improve Community Infrastructure
7. Public Safety, Health and Welfare
8. Recreational Opportunities and Amenities
These values guide the Town’s annual budget process. The Strategic Planning Advisory
Commission is currently in the process of preparing an update to the Plan.
MAJOR INITIATIVES AND SERVICE EFFORTS AND ACCOMPLISHMENTS
The Town of Fountain Hills’ adopted FY15-16 budget reflected the continued recession in the
local economy, which is also somewhat mirrored at the national and state levels. Due to the
challenging current economic conditions, the Town has made significant reductions in staff and
service levels. This reduction was accomplished by a thorough assessment of all existing and
proposed programs and workload; as a result, Town staffing was reduced from 115 to 54 FTE’s
(full time equivalents) over the past years.
The Town Council established priorities for FY15-16 of which the top two are Economic
Development and Pavement Management. In order to implement the Pavement Management
program, the Council approved the use of Vehicle License Tax revenues to be dedicated to
annual pavement maintenance with an effective date of July 1, 2013. Economic Development
initiatives are funded through a new dedicated local sales tax which provides funding for
business attraction, retention and expansion.
During FY14-15, the Town embarked on two major street reconstruction projects. First was the
Shea Boulevard widening project, a Maricopa Association of Governments (MAG) Proposition
400 project which provided 70% of the project funding with a 30% match from the Town. Shea
Boulevard is a road of regional significance and has an average traffic volume of 25,000 vehicles
per day at Saguaro Boulevard. And the second project was the Saguaro Boulevard
Reconstruction. Saguaro Boulevard was one of the first streets constructed in Fountain Hills and
is a major truck route. This reconstruction is the first major work performed on the street. Bonds
totaling $7,565,000 were issued by the Town to fund this project. Both of these projects are now
completed.
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For the Year. The following depicts the continued commitment of the Town of Fountain Hills to
make the community a better place to live. Fiscal year 2015-16 goals attained are summarized
within this list of accomplishments:
Initiation of Ashbrook Wash channelization improvements – Bayfield to Del Cambre
Approval of Fire Station 2 relocation
Completion of Fountain Park Phase 6 improvements
Completion of Shea Boulevard widening
Completion of Saguaro Boulevard reconstruction
Upgrades to traffic signal at Palisades & Saguaro Boulevards
Added several new monthly and special educational programs, workshops and support
groups at the Community Center
New public art installed: Thomas Jefferson, George Washington, Gone But Not
Forgotten, and So Good to See You.
East Loop Sonoran Trail in the Preserve was approved by Council and construction has
begun.
Rotary Harmony Musical Playground was approved by Council for construction at
Fountain Park.
Installation of pathway lighting in Fountain Park
Installation of new tot playground and canopy in conjunction with the Kiwanis Club
APRA (Arizona Parks & Recreation Association) Outstanding Program recognition for
Slide the City
Awarded Playful City USA for 6th time
Successfully executed Presidential campaign rally (Donald Trump)
Bronze award for Best Company Image/Logo from IFEA (International Festival and
Events Association)
Gold Award for Best Advertising Series from IFEA (International Festival and Events
Association)
Secured grant funding from the Arizona Office of Tourism - Proposition 302
Secured grant funding from Salt River Pima Indian Community - Proposition 202
AWARDS AND ACKNOWLEDGEMENTS
Awards. The Government Finance Officers Association (GFOA) awarded a Certificate of
Achievement for Excellence in Financial Reporting to the Town of Fountain Hills for its
comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2015. This was
the twentieth consecutive year that the Town has received this prestigious award. In order to be
awarded a Certificate of Achievement, the Town published an easily readable and efficiently
organized CAFR. This report satisfied both accounting principles generally accepted in the
United States of America (GAAP) and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
CAFR continues to meet the Certificate of Achievement program’s requirements and we are
submitting it to the GFOA to determine its eligibility for the fiscal year ended 2016 Certificate.
For the fourth year, The Town was also given the Award for Outstanding Achievement in
Popular Annual Financial Reporting for the fiscal year ended June 30, 2015.
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In addition, the government received the GFOA’s Distinguished Budget Presentation Award for
its annual budget for the fiscal year beginning July 1, 2014. In order to qualify for the
Distinguished Budget Presentation Award, the government’s budget document was judged to be
proficient in several categories, including as a policy document, a financial plan, an operations
guide, and a communications device. This is the fourteenth consecutive year that the Town has
received the award.
An investment policy was adopted and was awarded the Investment Policy Certification from the
Association of Public Treasurers of United States and Canada.
Acknowledgments. The preparation of this Comprehensive Annual Financial Report could not
have been accomplished without the efficient and dedicated services of the entire team of the
Finance Division. I also wish to extend my appreciation to the Mayor and members of Town
Council for their leadership and support in planning and conducting the financial affairs of the
Town in a responsible and progressive manner. Each employee of the Town has my sincere
appreciation for the contributions made in the preparation of this report.
Respectfully submitted,
Grady E. Miller
Town Manager
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TOWN OF FOUNTAIN HILLS, ARIZONA
LIST OF PRINCIPAL OFFICIALS
JUNE 30, 2016
ELECTED OFFICIALS
Linda M. Kavanagh, Mayor
Cecil A. Yates, Vice-Mayor
Nick DePorter, Councilmember
Cassie Hansen, Councilmember
Henry Leger, Councilmember
Alan Magazine, Councilmember
Dennis Brown, Councilmember
DEPARTMENT DIRECTORS
Grady Miller, Town Manager
Craig Rudolphy, Finance Director
Robert Melton, Presiding Judge
Mark Mayer, Community Services Director
Paul Mood, Development Services Director
Captain Dave Ott, Rural Metro Corporation, Fire Chief
Captain David Letourneau, Maricopa County Sheriff’s Office, District Commander
Mark Iacovino, The Law Office of Mark Iacovino, Town Prosecutor
Andrew McGuire, Gust Rosenfeld, P.L.C., Town Attorney
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FINANCIAL SECTION
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INDEPENDENT AUDITOR’S REPORT
The Honorable Mayor and Members of the Town Council
Town of Fountain Hills, Arizona
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and
the aggregate remaining fund information of Town of Fountain Hills, Arizona (Town), as of and for the year
ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the Town’s
basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation
of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we
express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of significant accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, each major fund, and the aggregate remaining fund
information of the Town of Fountain Hills, Arizona, as of June 30, 2016, and the respective changes in
financial position thereof for the year then ended in accordance with accounting principles generally accepted
in the United States of America.
Change in Accounting Principle
As described in Note 1, the Town implemented the provisions of the Governmental Accounting Standards
Board (GASB) Statement No. 72, Fair Value Measurement and Application, for the year ended June 30, 2016,
which represents a change in accounting principle. Our opinion is not modified with respect to this matter.
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Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s
Discussion and Analysis and budgetary comparison information, as listed in the table of contents, be presented
to supplement the basic financial statements. Such information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential
part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or
historical context. We have applied certain limited procedures to the required supplementary information in
accordance with auditing standards generally accepted in the United States of America, which consisted of
inquiries of management about the methods of preparing the information and comparing the information for
consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge
we obtained during our audit of the basic financial statements. We do not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient evidence to
express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the Town’s basic financial statements. The 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 are the responsibility of management
and were derived from and relate directly to the underlying accounting and other records used to prepare the
basic financial statements. Such information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the information is fairly
stated in all material respects in relation to the basic financial statements as a whole.
The Introductory Section and Statistical Section have not been subjected to the auditing procedures applied in
the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any
assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated October 17, 2016,
on our consideration of Town of Fountain Hills, Arizona’s internal control over financial reporting and on our
tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other
matters. The purpose of that report is to describe the scope of our testing of internal control over financial
reporting and compliance and the results of that testing, and not to provide an opinion on the internal control
over financial reporting or on compliance. That report is an integral part of an audit performed in accordance
with Government Auditing Standards in considering Town of Fountain Hills, Arizona’s internal control over
financial reporting and compliance.
Heinfeld, Meech & Co., P.C.
Phoenix, Arizona
October 17, 2016
Page 18
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
(Required Supplementary Information)
Page 19
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Page 20
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2016
As management of the Town of Fountain Hills, Arizona (Town), we offer readers of the Town’s
financial statements this narrative overview and analysis of the financial activities of the Town
for the fiscal year ended June 30, 2016. This discussion and analysis is intended to be an easily
readable breakdown of the Town of Fountain Hills’ financial activities based on currently
known facts, decisions and conditions. This analysis focuses on current year activities and
operations and should be read in combination with the transmittal letter and the financial
statements that follow. The management’s discussion and analysis is presented as required
supplementary information to supplement the basic financial statements.
FINANCIAL HIGHLIGHTS
The Town’s total net position of governmental activities increased $593.5 thousand to
$117.4 million, representing a .5 percent increase of the total net position.
General revenues from governmental activities accounted for $18.4 million in revenue, or
82.1 percent of all revenues from governmental activities. Program specific revenues in the
form of charges for services and grants and contributions accounted for $4.0 million or 17.9
percent of total governmental activities revenues.
The Town had $21.8 million in expenses related to governmental activities, an increase of
9.8 percent from the prior fiscal year primarily due to the pavement management program,
increased public safety costs and increased expenses for street and park improvements.
Among major governmental funds, the General Fund had $14.7 million in current fiscal year
revenues, which primarily consisted of taxes, charges for services and intergovernmental
revenues. The total expenditures of the General Fund were $12.9 million. The General
Fund’s fund balance increased $1.5 million to $10.2 million at the end of the current fiscal
year.
OVERVIEW OF FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the Town’s basic
financial statements. The Town’s basic financial statements comprise three components: 1)
government-wide financial statements, 2) fund financial statements, and 3) notes to the financial
statements. This report also contains other supplementary information in addition to the basic
financial statements themselves.
Page 21
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2016
OVERVIEW OF FINANCIAL STATEMENTS - continued
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
a private-sector business. The accrual basis of accounting is used for the government-wide
financial statements.
The Statement of Net Position presents information on all of the Town’s assets, liabilities, and
deferred inflows/outflows of resources with the difference reported as net position. Over time,
increases or decreases in net position may serve as a useful indicator of whether the financial
position of the Town is improving or deteriorating.
The Statement of Activities presents information showing how the Town’s net position changed
during the most recent fiscal year. All changes in net position are reported as soon as the
underlying event giving rise to the change occurs, regardless of the timing of related cash flows.
Thus, revenues and expenses are reported in this statement for some items that will only result in
cash flows in future fiscal periods (e.g., earned but unused compensated absences).
The government-wide financial statements distinguish functions of the Town that are principally
supported by taxes and intergovernmental revenues (governmental activities). The governmental
activities of the Town include general government, development services, public safety, streets
and highways, and culture and recreation.
Fund financial statements. A fund is a grouping of related accounts that is used to maintain
control over resources that have been segregated for specific activities or objectives. The Town
uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements. All of the funds of the Town are included in 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 use the modified accrual basis of accounting and focus on near-term inflows of
spendable resources, as well as on balances of spendable resources available at the end of the
fiscal year. Such information may be useful in evaluating the Town’s near-term financing
requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements.
By doing so, readers may better understand the long-term impact of the Town’s near-term
financing decision. Both the governmental fund balance sheet and the governmental fund
statement of revenues, expenditures and changes in fund balances provide a reconciliation to
facilitate this comparison between governmental funds and governmental activities.
Page 22
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2016
OVERVIEW OF FINANCIAL STATEMENTS - continued
Information is presented separately in the governmental fund balance sheet and in the
governmental fund statement of revenues, expenditures and changes in fund balances for the
General, Highway Users Revenue (HURF), Grants, Capital Projects and all Debt Service Funds,
all of which are considered to be major funds. Data from other governmental funds are combined
into a single, aggregated presentation. Individual fund data for each of these non-major
governmental funds is provided in the form of combining statements and schedules.
Notes to the financial statements. The notes provide additional information that is essential to a
full understanding of the data provided in the government-wide and fund financial statements.
The notes to the financial statements can be found immediately following the basic financial
statements.
Other information. In addition to the basic financial statements and accompanying notes, this
report also presents certain required supplementary information concerning the Town’s budget
process. The Town adopts an annual budget for all governmental funds. A schedule of revenues,
expenditures and changes in fund balances - budget and actual has been provided for the General
Fund and major Special Revenue Funds as required supplementary information.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
While this document contains information about the funds used by the Town to provide services
to our citizens, the Statement of Net Position and the Statement of Activities serve to provide an
answer to the question of how the Town, as a whole, did financially throughout the year. These
statements include all assets and liabilities using the accrual basis of accounting similar to the
accounting used by the private sector. The basis for this accounting takes into account all of the
current year’s revenues and expenses regardless of when the cash is received or paid.
These two statements report the Town’s assets and the changes in those assets. The change in
assets is important because it tells the reader whether the financial position of the Town as a
whole has improved or diminished. However, in evaluating the overall position of the Town,
non-financial information such as changes in the Town’s tax base and the condition of the
Town’s capital assets will also need to be evaluated.
Analysis of Net Position.
Net position may serve over time as a useful indicator of a government’s financial position. In
the case of the Town, governmental activities assets exceeded liabilities by $117.4 million at the
current fiscal year end.
Page 23
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2016
GOVERNMENT-WIDE FINANCIAL ANALYSIS - continued
The largest portion of the Town’s governmental activities net position reflects its investment in
capital assets (e.g., land, infrastructure, buildings and improvements, vehicles, machinery and
equipment and construction in progress), less any related outstanding debt used to acquire those
assets. The Town uses these capital assets to provide services to its citizens; consequently, these
assets are not available for future spending. Although the Town’s investment in its capital assets
is reported net of related outstanding debt, it should be noted that the resources needed to repay
this debt must be provided from other sources, since the capital assets themselves cannot be used
to liquidate these liabilities. In addition, a portion of the Town’s net position represents resources
that are subject to external restrictions on how they may be used. The remaining balance is
unrestricted and may be used to meet the Town’s ongoing obligations to its citizens and
creditors.
The following tables present a summary of the Town’s net position for the fiscal years ended
June 30, 2016 and June 30, 2015.
Governmental Activities
As of
June 30, 2016
As of
June 30, 2015
Current and other assets $ 23,190,907 $ 30,103,343
Capital assets, net 106,661,659 105,252,111
Total assets 129,852,566 135,355,454
Current and other liabilities 4,025,377 2,897,349
Long-term liabilities 8,416,454 15,640,889
Total liabilities 12,441,831 18,538,238
Net position
Net investment in capital assets 95,647,990 95,325,824
Restricted 4,530,239 6,310,810
Unrestricted 17,232,506 15,180,582
Total net position $117,410,735 $116,817,216
At the end of the current fiscal year the Town reported positive balances in all three categories of
net position for governmental activities. The Town reported positive balances in all net position
categories in the prior fiscal year.
Page 24
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2016
GOVERNMENT-WIDE FINANCIAL ANALYSIS - continued
The Town’s financial position is the product of several financial transactions including the net
results of activities, the acquisition and payment of debt, the acquisition and disposal of capital
assets, and the depreciation of capital assets. The following are significant current year
transactions that had an impact on the Statement of Net Position.
The addition of $1.4 million of governmental capital assets primarily through
construction projects, infrastructure improvements and purchases of vehicles, machinery,
and equipment.
Changes in net position. The Town’s total revenues for the current fiscal year were $22.4
million. The total cost of all programs and services was $21.8 million. The following table
presents a summary of the changes in net position for the fiscal years ended June 30, 2016, and
June 30, 2015.
Governmental Activities
Fiscal
Year Ended
June 30, 2016
Fiscal
Year Ended
June 30, 2015
Revenues
Program revenues:
Charges for services $ 2,016,451 $ 1,693,830
Operating grants and contributions 1,615,973 1,431,017
Capital grants and contributions 381,011 2,874,796
General revenues
Property taxes 2,569,504 904,660
Sales taxes 9,395,667 8,983,049
Franchise taxes 360,320 352,673
State Shared revenue 4,886,238 4,854,361
Vehicle License taxes 927,440 858,874
Investment earnings 219,058 150,358
Miscellaneous 13,826 188,251
Total revenues 22,385,488 22,291,869
Expenses
General government 2,516,966 2,479,365
Development services 2,253,208 2,074,611
Public safety 7,178,890 6,816,152
Streets and highways 6,476,688 4,963,979
Culture and recreation 3,124,523 2,822,954
Interest on long-term debt 241,694 698,542
Total expenses 21,791,969 19,855,603
Changes in net position 593,519 2,436,266
Net position, beginning 116,817,216 114,380,950
Net position, ending $ 117,410,735 $ 116,817,216
Page 25
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2016
GOVERNMENT-WIDE FINANCIAL ANALYSIS - continued
The charts below compare the governmental expenses from fiscal years 2015-16 and 2014-15.
Page 26
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2016
GOVERNMENT-WIDE FINANCIAL ANALYSIS - continued
The following items are significant current year transactions that have had an impact on the
change of net position.
Fees, Fines and Charges for Services revenue increased 19.0% compared to the prior year
due in large part to the collection of the new environmental fee.
Interest on long-term debt decreased 65.4% due to the refunding of old debt and
reissuance of new bonds.
Public safety costs include contracts for police and fire; those contracts are multi-year
with automatic increases.
Investment income increased in the current year 45.7% over the prior year. This increase
was due to the realized gains on the Town’s investment portfolio.
Overall expenses increased 9.8% due primarily to the pavement management program,
which increased expenses in Highway and streets by 30.5%.
The following table presents the cost of the Town’s major functional activities. The table also
shows each function’s net cost (total cost less charges for services generated by the activities and
intergovernmental aid provided for specific programs). The net cost shows the financial burden
that was placed on the State and Town’s taxpayers by each of these functions.
Year Ended June 30, 2016 Year Ended June 30, 2015
Total
Expenses
Net
(Expense)/
Revenue
Total
Expenses
Net (Expense)/
Revenue
Governmental Activities
General government $ 2,516,966 $ (2,068,504) $ 2,479,365 $ 1,818,274
Development services 2,253,208 (995,716) 2,074,611 (2,074,611)
Public safety 7,178,890 (7,087,802) 6,816,152 (6,758,976)
Streets and highways 6,476,688 (4,816,682) 4,963,979 (3,568,151)
Culture and recreation 3,124,523 (2,568,136) 2,822,954 (2,573,954)
Interest on long-term debt 241,694 (241,694) 698,542 (698,542)
Total expenses $21,791,969 $(17,778,534) $ 19,855,603 $ (13,855,960)
The cost of all governmental activities this year was $21.8 million.
Federal, State, and county governments and charges for services subsidized certain
governmental programs with charges for services of $2.0 million.
Net cost of governmental activities of $17.8 million was financed by general revenues,
which are made up of primarily sales taxes of $9.4 million and State Shared revenues of
$4.9 million.
Page 27
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2016
FINANCIAL ANALYSIS OF THE TOWN’S FUNDS
As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with
finance-related legal requirements.
Governmental funds. The focus of the Town’s governmental funds is to provide information on
near-term inflows, outflows, and balances of spendable resources. Such information is useful in
assessing the Town’s financing requirements. In particular, unassigned fund balance may serve
as a useful measure of the Town’s net resources available for spending at the end of the fiscal
year.
The financial performance of the Town as a whole is reflected in its governmental funds. As the
Town completed the year, its governmental funds reported a combined fund balance of $22.0
million, a decrease of $5.1 million due primarily to the increases in capital outlay expenditures
related to reconstruction of Saguaro Boulevard and Shea Boulevard widening projects and
Ashbrook Wash improvements.
The General Fund comprises 46.4 percent of the total fund balance. Approximately $5.9 million
or 57.3 percent of the General Fund’s fund balance is unassigned.
The General Fund is the principal operating fund of the Town. The fund balance increased by
$1.5 million to $10.2 million as of fiscal year end. General Fund revenues increased $617,710
primarily due to increased sales taxes and permit revenues. General Fund expenditures increased
$329,454. This increase was a result of increased public safety costs.
The Highway User Revenue Fund comprises 7.5 percent of total fund balance. The fund balance
decreased $112,048 from the prior year due to the increase in landscaping costs.
The Capital Projects Fund comprises 24.8 percent of the total fund balance. All of the fund
balance is assigned to capital projects. The fund balance decreased $5.5 million due to ongoing
capital projects during the fiscal year.
BUDGETARY HIGHLIGHTS
Over the course of the year, the Town revised the General Fund annual expenditure budget
primarily due to changes in the contingency amount. The difference between the original budget
and the final amended budget was a $3,595 decrease, or .03 percent.
A schedule showing the budget amounts compared to the Town’s actual financial activity for the
General Fund is provided in this report as required supplementary information. The significant
variances are summarized as follows:
The favorable variance of $721,209 in overall revenues is primarily due to higher
than expected tax revenue, mostly attributable to the improving economy.
The favorable total expenditures variance of $788,946 includes all departments.
Page 28
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2016
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets. As of the end of the current fiscal year, the Town had invested $106.7 million in
governmental capital assets, including buildings, facilities, vehicles, computers, equipment,
infrastructure assets and artwork. These amounts represent net increases prior to depreciation of
$6.5 million from the prior fiscal year for governmental activities. The increases were primarily
due to park and street improvements. Total depreciation expense for the current fiscal year was
$5.1 million for governmental activities.
The following schedule presents a summary of capital asset balances for the fiscal years ended
June 30, 2016 and June 30, 2015.
Governmental Activities
As of
June 30, 2016
As of
June 30, 2015
Capital assets – non-depreciable $ 27,522,240 $ 29,930,540
Capital assets – depreciable, net 79,139,419 75,321,571
Total $106,661,659 $105,252,111
The estimated construction commitments amount is $873,945.
Additional information on the Town’s capital assets can be found in Note 5.
Debt Administration. At year-end, the Town had $10.7 million in governmental long-term debt
outstanding with $2.7 million due within one year. Long-term debt decreased by $4.3 million for
governmental activities.
State statutes currently limit the amount of general obligation debt a Town may issue a
percentage of its total assessed valuation for water, sewer, lights, open space preserves parks,
playgrounds and recreational facilities. The current 20 percent debt limitation for the Town is
$80.4 million. State statutes also currently limit the amount of general obligation debt a Town
may issue to a percentage of its total assessed valuation for all other purposes. The current six
percent debt limitation for the Town is $24.1 million.
Additional information on the Town’s long-term debt can be found in Notes 7 and 8 in the notes
to the financial statements.
CONTACTING THE TOWN’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and investors and
creditors with a general overview of the Town’s finances and to demonstrate the Town’s
accountability for the resources it receives. If you have questions about this report or need
additional information, contact the Finance Division, Town of Fountain Hills, 16705 East
Avenue of the Fountains, Fountain Hills, Arizona 85268 or visit our website at: www.fh.az.gov.
Page 29
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Page 30
BASIC FINANCIAL STATEMENTS
Page 31
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Page 32
GOVERNMENT-WIDE FINANCIAL STATEMENTS
Page 33
ASSETS
Current assets:
Cash and investments
Accounts receivable
Intergovernmental receivable
Taxes receivable
Interest receivable
Inventory, at cost
Prepaid items
Cash and investments - restricted
Total current assets
Noncurrent assets:
Capital assets not being depreciated
Capital assets, net of accumulated depreciation
Total noncurrent assets
Total assets
LIABILITIES
Current liabilities:
Accounts payable
Accrued wages and benefits
Other liabilities
Customer deposits
Compensated absences payable
Revenue bonds payable
General obligation bonds payable
Unearned revenues
Total current liabilities
Noncurrent liabilities:
Non-current portion of long-term liabilities
Total noncurrent liabilities
Total liabilities
NET POSITION
Net investment in capital assets
Restricted for:
Streets and highways
Capital outlay
Debt service
Unrestricted
Total net position
Governmental
Activities
$ 22,089,531
118,415
785,556
75,984
33,975
9,272
9,178
68,996
23,190,907
27,522,240
79,139,419
106,661,659
129,852,566
784,899
63,163
13,829
10,999
244,653
370,000
2,305,000
232,834
4,025,377
8,416,454
8,416,454
12,441,831
95,647,990
1,380,800
2,261,275
888,164
17,232,506
$117,410,735
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF NET POSITION
JUNE 30, 2016
The notes to the basic financial statements are an integral part of this statement.
Page 34
Program Revenues
Net (Expense)
Revenue and
Changes in Net
Position
Functions/Programs
Governmental activities:
General government
Development services
Public safety
Streets and highways
Culture and recreation
Interest on long-term debt
Total governmental activities
Expenses
$ 2,516,966
2,253,208
7,178,890
6,476,688
3,124,523
241,694
$21,791,969
Charges for
Services
$ 298,737
1,257,492
90,345
48,688
321,189
$2,016,451
Operating
Grants and
Contributions
$ 77,101
743
1,451,431
86,698
$1,615,973
Capital Grants
and
Contributions
$ 72,624
159,887
148,500
$381,011
Governmental
Activities
$ (2,068,504)
(995,716)
(7,087,802)
(4,816,682)
(2,568,136)
(241,694)
(17,778,534)
General revenues:
Taxes:
Property taxes
Sales taxes
Franchise taxes
State sales & income tax revenue sharing - unrestricted
Vehicle license tax revenue sharing - unrestricted
Investment earnings
Miscellaneous
Total general revenues
Changes in net position
Net position, beginning of year
Net position, end of year
2,569,504
9,395,667
360,320
4,886,238
927,440
219,058
13,826
18,372,053
593,519
116,817,216
$117,410,735
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2016
The notes to the basic financial statements are an integral part of this statement.
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Page 36
FUND FINANCIAL STATEMENTS
Page 37
ASSETS
Cash and investments
Accounts receivable
Intergovernmental receivable
Taxes receivable
Interest receivable
Inventory, at cost
Prepaid items
Cash and investments - restricted
Total assets
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and benefits
Other liabilities
Customer deposits
Unearned revenues
Total liabilities
Deferred inflows of resources:
Unavailable revenues - property taxes
Unavailable revenues - other
Total deferred inflows of resources
Fund balances:
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total fund balances
Total liabilities, deferred inflows of resources
and fund balances
General
$ 9,779,326
104,888
492,818
17,728
14,379
9,272
4,123
68,996
$10,491,530
$ 158,983
52,877
10,320
10,999
17,908
251,087
19,799
19,799
13,395
2,652,357
1,701,086
5,853,806
10,220,644
$10,491,530
Highway User
Revenue
$ 1,510,388
12,627
176,778
$1,699,793
$ 42,652
6,838
49,490
3,989
3,989
1,376,811
269,503
1,646,314
$1,699,793
Grants
$ 142,302
72,624
$214,926
$
214,926
214,926
$214,926
TOWN OF FOUNTAIN HILLS, ARIZONA
BALANCE SHEET - GOVERNMENTAL FUNDS
JUNE 30, 2016
The notes to the basic financial statements are an integral part of this statement.
Page 38
General
Obligation Debt
Service
$ 445,613
51,079
$496,692
$
23,355
23,355
473,337
473,337
$496,692
Eagle Mountain
Debt Service
$ 72,412
7,177
$79,589
$
2,851
2,851
76,738
76,738
$79,589
Municipal
Property
Corporation
Debt Service
$ 284,573
27,320
$311,893
$10
10
311,883
311,883
$311,893
Capital Projects
$ 5,986,276
1,815
13,238
$6,001,329
$ 533,697
3,349
537,046
5,464,283
5,464,283
$6,001,329
Non-Major
Governmental
Funds
$ 3,868,641
900
14,201
6,358
5,055
$3,895,155
$ 49,557
3,448
160
53,165
5,055
2,261,273
1,366,083
209,579
3,841,990
$3,895,155
Total
Governmental
Funds
$ 22,089,531
118,415
785,556
75,984
33,975
9,272
9,178
68,996
$23,190,907
$ 784,899
63,163
13,829
10,999
232,834
1,105,724
26,206
23,788
49,994
18,450
4,500,042
4,018,440
7,644,451
5,853,806
22,035,189
$23,190,907
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Page 40
Total governmental fund balances 22,035,189$
Amounts reported for governmental activities in the Statement of
Net Position are different because:
Capital assets used in governmental activities are not financial
resources and, therefore, are not reported in the funds.
Governmental capital assets 210,423,922$
Less accumulated depreciation (103,762,263)106,661,659
Some receivables are not available to pay for current period
expenditures and, therefore, are reported as deferred inflows
of resources in the funds.
Property taxes 26,206
Other 23,788 49,994
Long-term liabilities are not due and payable in the current
period and, therefore, are not reported in the funds.
Compensated absences payable (322,438)
Bonds payable (11,013,669)(11,336,107)
Net position of governmental activities 117,410,735$
TOWN OF FOUNTAIN HILLS, ARIZONA
RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
JUNE 30, 2016
The notes to the basic financial statements are an integral part of this statement.
Page 41
Revenues:
Property taxes
Sales taxes
Franchise taxes
Licenses and permits
Leases and rents
Intergovernmental
Charges for services
Other
Fines and forfeitures
Investment earnings
Total revenues
Expenditures:
Current -
General government
Development services
Public safety
Streets and highways
Culture and recreation
Capital outlay
Debt service -
Principal retirement
Interest on long-term debt
Fiscal charges
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses):
Changes in fund balances
Fund balances, beginning of year, as restated
Fund balances, end of year
General
$
7,873,427
360,320
796,330
258,165
4,886,238
169,396
83,461
185,279
95,114
14,707,730
2,269,332
1,492,528
7,034,887
2,045,894
88,644
12,931,285
1,776,445
(281,484)
(281,484)
1,494,961
8,725,683
$10,220,644
Highway User
Revenue
$
2,378,871
27,713
22,670
2,412
2,431,666
2,498,714
2,498,714
(67,048)
(45,000)
(45,000)
(112,048)
1,758,362
$1,646,314
Grants
$
122,624
122,624
50,000
108,947
158,947
(36,323)
36,323
36,323
$
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2016
The notes to the basic financial statements are an integral part of this statement.
Page 42
General
Obligation Debt
Service
$ 2,119,611
2,514
2,122,125
1,770,000
231,850
1,000
2,002,850
119,275
119,275
354,062
$473,337
Eagle Mountain
Debt Service
$ 418,257
472
418,729
365,000
43,516
195
408,711
10,018
10,018
66,720
$76,738
Municipal
Property
Corporation
Debt Service
$
708,777
994
709,771
2,125,000
32,740
810
2,158,550
(1,448,779)
(1,448,779)
1,760,662
$311,883
Capital Projects
$
459,075
118,356
41,531
82,333
701,295
1,935
28,500
6,273,791
6,304,226
(5,602,931)
140,852
(36,323)
104,529
(5,498,402)
10,962,685
$5,464,283
Non-Major
Governmental
Funds
$ 5,430
354,388
575,715
53,347
24,101
35,219
1,048,200
2,759
696,786
194,971
894,516
153,684
384,869
(199,237)
185,632
339,316
3,502,674
$3,841,990
Total
Governmental
Funds
$ 2,543,298
9,395,667
360,320
1,372,045
258,165
7,559,436
197,109
147,662
209,380
219,058
22,262,140
2,324,026
2,217,814
7,034,887
2,498,714
2,240,865
6,471,382
4,260,000
308,106
2,005
27,357,799
(5,095,659)
562,044
(562,044)
(5,095,659)
27,130,848
$22,035,189
Page 43
Changes in fund balances - total governmental funds (5,095,659)$
Amounts reported for governmental activities in the Statement of Activities are
different because:
Governmental funds report the portion of capital outlay for capitalized assets as expenditures.
However, in the Statement of Activities, the costs of those assets are allocated over their
estimated useful lives as depreciation expense.
Expenditures for capitalized assets 6,394,346$
Less current year depreciation (5,131,605) 1,262,741
Donated artwork is not reported in the governmental funds. However, in the Statement
of Activities, the costs of those assets are reported as capital grants and contributions.148,500
Some revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds.
Property taxes 26,206
Other (51,358) (25,152)
Repayments of bond principal are expenditures in the governmental
funds, but the repayment reduces long-term liabilities in the Statement of
Net Position.4,260,000
Some expenses reported in the Statement of Activities do not require the use of
current financial resources and, therefore, are not reported as expenditures in
governmental funds.
Loss on disposal of assets (1,693)
Amortization of deferred bond items 68,417
Compensated absences (23,635) 43,089
Changes in net position in governmental activities 593,519$
TOWN OF FOUNTAIN HILLS, ARIZONA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2016
The notes to the basic financial statements are an integral part of this statement.
Page 44
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Town of Fountain Hills, Arizona (Town) have been prepared
in conformity with accounting principles generally accepted in the United States of America
as applied to government units. The Governmental Accounting Standards Board (GASB) is
the accepted standard-setting body for establishing governmental accounting and financial
reporting principles.
During the year ended June 30, 2016, the Town implemented the provisions of GASB
Statement No. 72, Fair Value Measurement and Application. This Statement addresses
accounting and financial reporting issues related to fair value measurements and establishes a
hierarchy of inputs to valuation techniques used to measure fair value. This Statement also
enhances accountability and transparency through revised note disclosures.
The more significant of the Town’s accounting policies are described below.
A.Reporting Entity
The Town’s major operations include parks and recreation, culture and recreation and
general administrative services.
The Town is a municipal entity governed by an elected Mayor and Council. The financial
reporting entity consists of a primary government and its component units. A component
unit is a legally separate entity that must be included in the reporting entity in conformity
with generally accepted accounting principles. The Town is a primary government that has a
separately elected governing body, is legally separate, and is fiscally independent of other
state or local governments. Furthermore, the component units combined with the Town for
financial statement presentation purposes and the Town are not included in any other
governmental reporting entity. Consequently, the Town’s financial statements include only
the funds of those organizational entities for which its elected governing body is financially
accountable.
Eagle Mountain Community Facilities District and the Cottonwoods Maintenance District.
As special purpose districts and separate political subdivisions under the Arizona
Constitution, the Districts can levy taxes and issue bonds independently of the Town.
Property owners in the designated areas are assessed taxes for the costs of operating the
Districts. The Town Council serves as the Board of Directors; however, the Town has no
liability for the Districts’ debt, the Districts are responsible for the debt; the debt is therefore
not subject to the Town’s debt limit. The District cannot be part of another reporting entity.
The Districts’ governing body is substantially the same as the Town and the Town’s
management oversees operations, resulting in the Town having the ability to exercise control.
As a result, for financial reporting purposes, transactions of the Districts are combined
together and included as if they were part of the Town’s operations.
Page 45
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Town of Fountain Hills, Arizona Municipal Property Corporation. The Town of Fountain
Hills, Arizona Municipal Property Corporation’s (MPC) Board of Directors consists of three
members which are appointed by the Fountain Hills Town Council. The MPC, which is a
nonprofit corporation incorporated under the laws of the State of Arizona, was formed for the
sole purpose of assisting the Town in obtaining financing for various projects of the Town.
The Town has a “moral obligation” for the repayment of the MPC’s bonds. The MPC cannot
be part of another reporting entity. The MPC provides services exclusively to the Town. As a
result, for financial reporting purposes, transactions of the MPC are combined together and
included as if they were part of the Town’s operations.
B.Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the
statement of activities) present financial information about the Town as a whole. The
reported information includes all of the nonfiduciary activities of the Town and its
component units. For the most part, the effect of internal activity has been removed from
these statements. Interfund services provided and used, such as interfund transfers, are not
eliminated in the process of consolidation. These statements are to distinguish between the
governmental and business-type activities of the Town. Governmental activities normally
are supported by taxes and intergovernmental revenues. The Town does not have any
business-type activities.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment is offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include 1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or segment and 2) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or
segment. Taxes, unrestricted state shared revenues, investment income and other items not
included among program revenues are reported instead as general revenues.
Separate financial statements are provided for the governmental funds. Major individual
governmental funds are reported as separate columns in the fund financial statements.
Page 46
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C.Measurement Focus, Basis of Accounting, and Financial Statement Presentation
Government-wide Financial Statements – The government-wide financial statements are
reported using the economic resources measurement focus and the accrual basis of
accounting. Revenues are recorded when earned and expenses are recorded when a liability
is incurred, regardless of the timing of related cash flows. Grants and similar items are
recognized as revenue as soon as all eligibility requirements imposed by the grantor or
provider have been met. As a general rule, the effect of internal activity has been eliminated
from the government-wide financial statements; however, the effects of interfund services
provided and used between functions are reported as expenses and program revenues at
amounts approximating their external exchange value.
Fund Financial Statements – Governmental fund financial statements are reported using the
current financial resources measurement focus and the modified accrual basis of accounting.
Revenues are recognized as soon as they are both measurable and available. Revenues are
considered to be available when they are collectible within the current period or soon enough
thereafter to pay liabilities of the current period. For this purpose, the Town considers
revenues to be available if they are collected within 60 days of the end of the current fiscal
period. Expenditures generally are recorded when a liability is incurred, as under accrual
accounting. However, debt service expenditures, as well as expenditures related to
compensated absences, and claims and judgments, are recorded only when payment is due.
Property taxes, sales taxes, franchise taxes, state shared revenues, licenses and permits,
charges for services, and investment income associated with the current fiscal period are all
considered to be susceptible to accrual and have been recognized as revenues of the current
fiscal period. Grants and similar awards are recognized as revenue as soon as all eligibility
requirements imposed by the grantor or provider have been met. Miscellaneous revenue is
not susceptible to accrual because generally they are not measurable until received in cash.
Unearned revenues arise when resources are received by the Town before it has legal claim
to them, as when grant monies are received prior to meeting all eligibility requirements
imposed by the provider.
Page 47
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The focus of governmental fund financial statements is on major funds rather than reporting
funds by type. Each major fund is presented in a separate column.
The Town reports the following major governmental funds.
General Fund – The General Fund is the Town’s primary operating fund. This fund
accounts for all financial resources of the Town, except those required to be accounted
for in other funds.
Highway User Revenue Fund (HURF) – This fund accounts for the Town’s share of
motor vehicle fuel tax revenues.
Grants Fund – This fund accounts for the activities of various restricted grants and
contributions received by the Town.
General Obligation Debt Service Fund – This fund accounts for the Town’s property tax
revenues received to pay the debt service of the Town’s general obligation bonds.
Municipal Property Corporation Debt Service Fund – This fund accounts for the revenues
received to pay the debt service on MPC revenue bonds.
Eagle Mountain Debt Service Fund – This fund accounts for the property tax revenues
restricted to pay the debt service of the Eagle Mountain Community Facilities District
component unit.
Capital Projects Fund – This fund accounts for the capital improvements to various
projects and equipment purchases of the Town.
D.Cash and Investments
Cash and cash equivalents at year end were cash on hand, cash in bank, restricted cash, and
cash and investments held by the State Treasurer.
Cash and investments are pooled, except for investments that are restricted under provisions
of bond indentures or other restrictions that are required to be reported in the individual
funds.
Page 48
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 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.
Arizona statute requires a pooled collateral program for public deposits and a Statewide
Collateral Pool Administrator (Administrator) in the State Treasurer’s Office. The purpose of
the pooled collateral program is to ensure that governmental entities’ public deposits placed
in participating depositories are secured with collateral of 102 percent of the public deposits,
less any applicable deposit insurance. An eligible depository may not retain or accept any
public deposit unless it has deposited the required collateral with a qualified escrow agent or
the Administrator. The Administrator manages the pooled collateral program, including
reporting on each depository’s compliance with the program.
E. Investment Income
Investment income is composed of interest, dividends, and net changes in the fair value of
applicable investments. Investment income is a component of revenue in the governmental
funds financial statements.
F. Receivables and Payables
Activity between funds that is representative of lending/borrowing arrangements outstanding
at the end of the fiscal year is referred to as either “due to/from other funds” (i.e., the current
portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of
interfund loans). Interfund balances between governmental funds are eliminated on the
Statement of Net Position.
Property taxes are levied by the Town and collected by the Maricopa County Treasurer.
Property taxes are levied no later than the third Monday in August and are payable in two
installments due October 1 of the current year and March 1 of the subsequent year. Taxes
become delinquent after the first business day of November and May, respectively. Interest
attaches on installments after the delinquency date.
All receivables are shown net of an allowance for uncollectibles.
Page 49
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
G.Inventory
All inventories are valued at average cost using the first-in/first-out (FIFO) method.
Inventories consist of expendable supplies held for consumption. Inventories are recorded as
expenses when consumed in the government-wide financial statements, and as expenditures
when consumed in the governmental funds.
H.Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items in both the government-wide and fund financial statements. In the
government-wide and fund financial statements, prepaids are recognized as
expenses/expenditures when goods and/or services are received rather than when purchased.
I.Restricted Cash and Investments
The Town reported restricted assets in the amount of $68,996 for funds held in an escrow
account. The agreement provides that if, prior to July 1, 2017, any future Council fails to
ratify this agreement or fails to provide severance when required as set forth in the agreement
between the Town Council and Town Manager, the Town Manager shall be permitted to
withdraw all funds from the escrow, minus any interest earned, which interest shall be
payable to the Town upon the Town Manager’s withdrawal of the amounts in escrow.
J.Capital Assets
Capital assets, which include land and improvements, artwork, buildings and improvements,
vehicles, machinery, and equipment, construction in progress, and infrastructure assets, are
reported in the government-wide financial statements.
Capital assets are defined be the Town as assets with an initial, individual cost in excess of
$10,000 and an estimated useful life in excess of one year. Such assets are recorded at
historical cost, or estimated historical cost if actual historical cost is not available. Donated
capital assets are recorded at the estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the assets or
materially extend the life of the asset are not capitalized.
Page 50
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Capital assets of the Town are depreciated using the straight-line method over the following
estimated useful lives:
Buildings and building improvements 20 - 50 years
Improvements other than buildings 20 years
Infrastructure 15 - 50 years
Vehicles, machinery and equipment 5 - 20 years
K. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position may report a separate section for
deferred outflows of resources. This separate financial statement element, deferred outflows
of resources, represents a consumption of net position that applies to a future period and so
will not be recognized as an outflow of resources (expense/expenditure) until then. The Town
did not have any items that qualified for reporting in this category.
In addition to liabilities, the statement of financial position may report a separate section for
deferred inflows of resources. This separate financial statement element, deferred inflows of
resources, represents an acquisition of net position that applies to a future period and so will
not be recognized as an inflow of resources (revenue) until that time.
L. Compensated Absences
The Town’s employee vacation and sick leave policies generally provide for granting
vacation and sick leave with pay. Sick leave and vacation benefits accrue as pay periods are
completed at the current rate of pay.
All eligible full-time and part-time employees can accrue vacation leave. Full-time
employees accrue up to a maximum of 416 hours of vacation through carryover of balances,
while part-time employees can accrue up to 208 hours, depending upon their length of
service. In the event of termination, employees will be paid for any accrued, but unused,
vacation hours. Full-time employees accrue sick leave based on their length of service, up to
a maximum of 960 hours. A portion of this balance will be paid upon a satisfactory
separation of service.
The current and long-term liabilities, including related benefits, for accumulated vacation and
sick leave are reported on the government-wide financial statements. A liability for these
amounts is reported in governmental funds only if they have matured, for example, as a result
of employee leave, resignations and retirements. Generally, resources from the General Fund
are used to pay for compensated absences.
Page 51
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
M. Long-term Obligations
In the government-wide financial statements, long-term debt and other long-term obligations
are reported as liabilities on the statement of net position. Bond premiums and discounts are
amortized over the life of the bonds using the straight-line method. Deferred amounts on
refunding result from the difference between the carrying value of refunded debt and its
reacquisition price. This amount is deferred and amortized over the shorter of the life of the
refunded or refunding debt.
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs, during the current period. The face amount of debt
issued is reported as other financing sources. Premiums received on debt issuances are
reported as other financing sources while discounts on debt issuances are reported as other
financing uses. Issuance costs, whether or not withheld from the actual debt proceeds
received, are reported as debt service expenditures.
N. Interfund Activity
Flows of cash from one fund to another without a requirement for repayment are reported as
interfund transfers. Interfund transfers between governmental funds are eliminated in the
Statement of Activities. Interfund transfers in the fund financial statements are reported as
other financing sources/uses in governmental funds.
O. Net Position Flow Assumption
In the government-wide financial statements the Town applies restricted resources first when
outlays are incurred for purposes for which either restricted or unrestricted amounts are
available.
P. Estimates
The preparation of the financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results may differ from those estimates.
Page 52
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 2 – FUND BALANCE CLASSIFICATIONS
Fund balances of the governmental funds are reported separately within classifications based
on a hierarchy of the constraints placed on the use of those resources. The classifications are
based on the relative strength of the constraints that control how the specific amounts can be
spent. The classifications are nonspendable, restricted, committed, assigned, and unassigned
fund balance classifications.
Nonspendable. The nonspendable fund balance classification includes amounts that cannot
be spent because they are not in spendable form, or legally or contractually required to be
maintained intact.
Restricted. Fund balance is reported as restricted when constraints placed on the use of
resources are either externally imposed by creditors (such as through debt covenants),
grantors, contributors, or laws or regulations of other governments or is imposed by law
through constitutional provisions or enabling legislation.
Committed. The committed fund balance classification includes amounts that can be used
only for the specific purposes imposed by formal action of the Town Council, the Town’s
highest level of decision making authority, by resolution or ordinance. Those committed
amounts cannot be used for any other purpose unless the Town Council removes or changes
the specified use by taking the same type of action it employed to previously commit those
amounts.
Assigned. Amounts in the assigned fund balance classification are intended to be used by the
Town for specific purposes but do not meet the criteria to be classified as restricted or
committed. In governmental funds other than the General Fund, assigned fund balance
represents the remaining amount that is not restricted or committed. In the General Fund,
assigned amounts represent intended uses established by the Town Council or a management
official delegated that authority by formal Town Council action. The authority to make
assignments has been delegated by the Town Council to the Finance Director.
Unassigned. Unassigned fund balance is the residual classification for the General Fund and
includes all spendable amounts not contained in the other classifications. In other
governmental funds, the unassigned classification is used only to report a deficit balance
resulting from overspending for specific purposes for which amounts had been restricted,
committed, or assigned.
Page 53
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 2 – FUND BALANCE CLASSIFICATIONS
The Town applies restricted resources first when outlays are incurred for purposes for which
either restricted or unrestricted (committed, assigned, and unassigned) amounts are available.
Similarly, within unrestricted fund balance, committed amounts are reduced first followed by
assigned, and then unassigned amounts when expenditures are incurred for purposes for
which amounts in any of the unrestricted fund balance classifications could be used.
The Town has established a fund balance policy which states that the combined General
Fund operating fund balance should be at least 30 percent of the average actual General Fund
revenues for the preceding five fiscal years.
The Town has established a stabilization fund (Rainy Day fund) in the Town’s fund balance
policy. The Rainy Day fund had a balance of $2,649,684, reported as a committed fund
balance at June 30, 2016. The Rainy Day fund may only be used for the following: 1) to
replace the loss of more than 25 percent of the Town’s local share of State shared revenues,
2) for any event that threatens the health, safety or welfare of the Town’s citizens, 3) for any
event that threatens the fiscal stability of the Town, and lastly 4) to address any matter
declared as an emergency by the governor of the State of Arizona or the Mayor of the Town.
All withdrawals from the Rainy Day fund shall be subject to the following rules: 1) any
appropriation shall require the approval by at least 2/3 vote by the Town Council, and 2) the
maximum amount of Rainy Day withdrawal in any fiscal year shall not exceed one-half of
the total balance in the fund. Replenishment of the Rainy Day fund when spent by the Town
should not exceed a period of more than five years, and should be repaid in equal annual
installments of not less than one percent of the previous fiscal year General Fund balance.
Repayments shall be appropriated as part of the annual budget adoption.
Page 54
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 2 – FUND BALANCE CLASSIFICATIONS
The table below provides detail of the major components of the Town’s fund balance
classifications at year end.
General
Fund
Highway
User
Revenue
Fund
General
Obligation
Debt
Service
Fund
Eagle
Mountain
Debt
Service
Fund
Municipal
Property
Corporation
Debt Service
Fund
Capital
Projects
Fund
Non-Major
Governmental
Funds
Total
Fund Balances:
Nonspendable:
Inventory $ 9,272 $ $ $ $ $ $
$ 9,272
Prepaid items 4,123 5,055 9,178
Restricted:
Capital Projects 14,144 14,144
Debt Service 473,337 76,738 311,883 861,958
Streets and Highways 1,376,811 1,376,811
Development Fees 2,247,129 2,247,129
Committed:
Rainy Day 2,649,684 2,649,684
Public Art 2,673 2,673
Downtown Strategy 939,510 939,510
Economic Development 129,928 129,928
Tourism 141 141
Local Court Enhancement 296,504 296,504
Assigned:
Capital Projects 794,905 5,355,811
6,150,716
Environmental 209,579 209,579
Vehicle Replacement 376,244 269,503 645,747
Facilities Replacement 108,472 108,472
Equipment Replacement 529,937 529,937
Unassigned 5,853,806 5,853,806
Total fund balances $10,220,644 $ 1,646,314 $ 473,337 $ 76,738 $ 311,883 $ 5,464,283 $ 3,841,990 $22,035,189
Page 55
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 3 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
Excess Expenditures Over Budget – At year end, the Town had expenditures in funds that
exceeded the budgets, however, this does not constitute a violation of any legal provisions.
NOTE 4 – CASH AND INVESTMENTS
Arizona Revised Statutes authorize the Town to invest public monies in the State Treasurer’s
local government investment pools, the County Treasurer’s investment pool, obligations of
the U.S. Government and its agencies, obligations of the state and certain local government
subdivisions, interest-bearing savings accounts and certificates of deposit, collateralized
repurchase agreements, certain obligations of U.S. corporations, and certain other securities.
The statutes do not include any requirements for credit risk, custodial credit risk,
concentration of credit risk, interest rate risk, or foreign currency risk for the Town’s
investments.
Custodial Credit Risk – Deposits. Custodial credit risk is the risk that in the event of bank
failure the Town’s deposits may not be returned to the Town. The Town does not have a
deposit policy for custodial credit risk. At year end, the carrying amount of the Town’s
deposits was $518,319 and the bank balance was $660,899. At year end, $166,850 of the
Town’s deposits were covered by collateral held by the pledging financial institution in the
Town’s name. The remaining amount is covered by FDIC.
Fair Value Measurements. The Town categorizes its fair value measurements within the fair
value hierarchy established by generally accepted accounting principles. The hierarchy is
based on the valuation inputs used to measure the fair value of the asset.
Level 1 inputs are quoted prices in active markets for identical assets
Level 2 inputs are significant other observable inputs
Level 3 inputs are significant unobservable inputs
The State Treasurer’s pools are external investment pools, the Local Government Investment
Pool (Pool 5) and Local Government Investment Pool-Government (Pool 7), with no
regulatory oversight. The pools are not required to register (and are not registered) with the
Securities and Exchange Commission. The activity and performance of the pools are
reviewed monthly by the State Board of Investment. The fair value of each participant’s
position in the State Treasurer investment pools approximates the value of the participant’s
shares in the pool and the participants’ shares are not identified with specific investments.
Participants in the pool are not required to categorize the value of shares in accordance with
the fair value hierarchy.
Page 56
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 4 – CASH AND INVESTMENTS
All investments in which the fair value hierarchy is applicable are measured at fair value on a
recurring basis. At year end, cash and investments as of June 30, 2016 are classified in the
accompanying financial statements as follows:
Carrying amount of investments $ 21,570,562
Carrying amount of cash deposits 518,319
Cash on hand 650
Restricted cash and investments 68,996
Total pooled cash and investments $ 22,158,527
At year end, the Town’s investments consisted of the following:
Investment Maturities
(in Years) Credit Rating
Investment Type Category Fair Value Less than 1 1-5 S&P Moody’s
U.S. Treasury Notes Level 2 $ 8,857,427) $ 1,402,876 $7,454,551 N/A N/A
Federal National Mortgage Association Notes Level 2 2,861,938) 2,861,938 AA+ Aaa
Federal Home Loan Mortgage Corporation Notes Level 2 2,410,783) 414,979 1,995,804 AA+ Aaa
Federal Home Loan Bank Notes Level 2 1,077,448) 1,080,448 AA+ Aaa
Tennessee Valley Authority Level 2 258,898) 258,898 AA+ Aaa
Wells Fargo Money Market Funds Level 2 40,587) 40,587 N/A N/A
$ 1,858,442 $13,651,639
State Treasurer’s Investment Pool 7
Not
applicable 6,755,484) 73 days average maturities
(692,003) Withdrawal in transit
Total $21,570,562)
Page 57
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 4 – CASH AND INVESTMENTS
Interest Rate Risk. Interest rate risk is the risk that changes in interest rates may reduce the
market value of Town investments. In accordance with its investment policy, the Town
manages its exposure to declines in fair values by the following:
Structuring the investment portfolio so that securities mature concurrent with the
anticipated cash requirements for ongoing operations, thereby avoiding, as much as
possible, the need to sell securities into an adverse market environment prior to
maturity.
Investing funds primarily in shorter-term securities or similar investment pools and
limiting the average maturity of the portfolio in accordance with the needs of the
Town.
With respect to any firm or individual given responsibility for investments utilizing
external research and advice regarding the current interest rate outlook and global
economic condition to optimize portfolio duration strategy.
Credit Risk. Credit risk is the risk of default of debt by the Town. The Town will limit credit
risk by limiting investments in the Town’s portfolio to the asset classes designated as
acceptable in ARS §35-323. When possible, analysis of the credit worthiness of all individual
debt issuers held in the portfolio should be conducted on an annual basis in an effort to guard
against investing in weak or deteriorating credit situation. Additionally, the Town will pre-
qualify financial institutions, brokers/dealers, and investment advisers with which the Town
will do business.
Custodial Credit Risk – Investments. Custodial credit risk is the risk that in the event of bank
failure, the Town’s deposits may not be returned to the Town. The Town’s investment in the
State Treasurer’s investment pool represents a proportionate interest in the pool’s portfolio;
however the Town’s portion is not identified with specific investments and is not subject to
custodial credit risk.
Page 58
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 4 – CASH AND INVESTMENTS
Concentration of Credit Risk. Concentration of credit risk is the risk of loss from over
concentration of investments. In accordance with its investment policy, the Town diversifies
its investment portfolio to minimize the risk of loss resulting from over concentration of
assets in a specific maturity, specific issuer, or specific class of securities. With the
exception of U.S. Treasury notes and securities and authorized pools, no more than 25
percent of the Town’s total investment portfolio will be invested in a single security type or
with a single financial institution. At year end, the Town had the following diversification of
Town investments:
Investment Type
Fair Value
Percent of Town
Investments
U.S. Treasury Notes $8,857,427 39.79%
Federal National Mortgage Association Notes 2,861,938 12.86
Federal Home Loan Mortgage Corporation Notes 2,410,783 10.83
Federal Home Loan Bank Notes 1,077,448 4.84
Tennessee Valley Authority 258,898 1.16
Wells Fargo Money Market Funds 40,587 0.18
State Treasurer’s Investment Pool 7 6,755,484 30.34
$22,262,565 100.00%
NOTE 5 – RECEIVABLES
Receivable balances, net of allowance for uncollectibles, have been disaggregated by type
and presented separately in the financial statements with the exception of intergovernmental
receivables. Intergovernmental receivables, net of allowance for uncollectibles, as of year
end for the Town’s individual major funds consisted entirely of due from state.
Page 59
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 6 – CAPITAL ASSETS
A summary of capital asset activity at year end is as follows:
Governmental Activities
Beginning
Balance
Increase
Decrease
Ending
Balance
Capital assets, not being depreciated:
Land $ 23,571,668 $ $ $ 23,571,668
Artwork 2,216,500 148,500 2,365,000
Construction in progress 4,142,372 5,959,330 8,516,130 1,585,572
Total capital assets, not being
depreciated 29,930,540 6,107,830 8,516,130 27,522,240
Capital assets, being depreciated:
Infrastructure 137,811,105 8,022,471 145,833,576
Buildings and building improvements 18,996,641 18,996,641
Improvements other than buildings 13,666,226 840,031 14,506,257
Vehicles, machinery and equipment 3,530,259 88,644 53,695 3,565,208
Total capital assets being depreciated 174,004,231 8,951,146 53,695 182,901,682
Less accumulated depreciation for:
Infrastructure (83,268,194) (3,909,289) (87,177,483)
Buildings and building improvements (4,794,867) (397,463) (5,192,330)
Improvements other than buildings (8,354,644) (664,514) (9,019,158)
Vehicles, machinery and equipment (2,264,955) (160,339) (52,002) (2,373,292)
Total accumulated depreciation (98,682,660) (5,131,605) (52,002) (103,762,263)
Total capital assets, being depreciated, net 75,321,571 3,819,541 1,693 79,139,419
Governmental activities capital assets, net $ 105,252,111 $ 9,927,371 $ 8,517,823 $ 106,661,659
Depreciation expense was charged to functions/programs as follows:
Governmental activities:
General government $ 183,610
Development services 4,539
Public safety 143,866
Streets and highways 3,904,796
Culture and recreation 894,794
Total depreciation expense $ 5,131,605
Page 60
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 6 – CAPITAL ASSETS
Construction Commitments – At June 30, 2016, the Town has the following active
construction commitments:
Governmental Activities
Project
Spent-to-Date
Remaining
Commitment
Drainage – Ashbrook Wash Channel $ 1,230,249 $ 198,110
Fire Station #2 Relocation 42,314 290,150
Tennis Court Renovation 108,947 259,558
Adero Canyon TrailHead 43,100 126,127
Total commitments $ 1,424,610 $ 873,945
NOTE 7 – BONDS PAYABLE
Bonds payable at year end consisted of the following general obligation and revenue bonds.
The bonds are both callable and noncallable with interest payable semiannually.
Purpose
Original
Amount
Issued
Interest
Rates
Remaining
Maturities
Outstanding
Principal
June 30, 2016
Due
Within
One Year
Governmental activities:
General Obligation Bonds:
General Obligation Refunding
Bonds, Series 2005 $ 7,225,000 4% 7/1/17-19 $ 1,200,000 $ 435,000
General Obligation Bonds,
Series 2014 7,565,000 4% 7/1/17-20 6,205,000 1,495,000
Eagle Mountain Community
Facilities District, General
Obligation Refunding Bonds,
Series 2015 2,300,000 2.00-3.00% 7/1/17-21 1,935,000 375,000
Revenue Bonds:
Municipal Facilities Revenue
Refunding Bonds, Series 2015 1,880,000 2% 7/1/17-20 1,400,000 370,000
Total $ 10,740,000 $ 2,675,000
Page 61
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 7 – BONDS PAYABLE
Annual debt service requirements to maturity on the bonds payable at year end are
summarized as follows:
Governmental Activities
Year ending June 30, Principal Interest
2017 $ 2,675,000 $ 244,986
2018 2,720,000 185,092
2019 2,635,000 123,872
2020 2,310,000 67,302
2021 400,000 7,040
Total $10,740,000 $ 628,292
Pledged Revenues
The Town has pledged excise tax revenues to repay a total of $1,400,000 in outstanding
Municipal Facilities Revenue Refunding Bonds. For the current fiscal year, the net revenues
available to service the debt were $16.3 million. For the fiscal year ended June 30, 2016, the
debt principal and interest paid on this debt was $512,740 (three percent of pledged
revenues). The total principal and interest remaining to be paid on the bonds is $1,455,080.
NOTE 8 – CHANGES IN LONG-TERM LIABILITIES
Long-term liability activity for the current fiscal year was as follows:
Beginning
Balance Additions Reductions
Ending
Balance
Due Within
One Year
Governmental activities:
Bonds payable:
General obligation bonds $11,475,000 $ $2,135,000 $ 9,340,000 $ 2,305,000
Revenue bonds 3,525,000 2,125,000 1,400,000 370,000
Premium 342,086 68,417 273,669
Total bonds payable 15,342,086 4,328,417 11,013,669 2,675,000
Compensated absences payable 298,803 256,119 232,484 322,438 244,653
Governmental activity long-term
liabilities $15,640,889 $ 256,119 $4,560,901 $11,336,107 $ 2,919,653
Page 62
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 9 – TRANSFERS
At year end, interfund transfers were as follows:
Transfers in
Transfers out
Grants
Fund
Capital
Projects
Fund
Non-Major
Governmental
Funds Total
General Fund $ $ 81,715 $ 199,769 $ 281,484
HURF Fund 45,000 45,000
Capital Projects Fund 36,323 36,323
Non-Major Governmental Funds 59,137 140,100 199,237
Total $ 36,323 $ 140,852 $ 384,869 $ 562,044
The Capital Projects Funds transferred $36,323 to the Grants Fund for the Town’s portion of
grant project G5203 – tennis court replacement. The Non-major Governmental Fund
(Economic Development Fund) transferred $140,100 to the Non-major Governmental Fund
(Tourism Fund) to provide funding for operating costs of the tourism program. The General
Fund transferred $81,715 to the Capital Projects Funds for funding of facilities replacements.
The Non-major Governmental Fund (Downtown Strategy) transferred $59,137 to the Capital
Projects Fund to cover the costs installing lights at intersection with Avenue of the Fountains
which were not part of the original contract for the Saguaro Boulevard Reconstruction
project. The General Fund transferred $199,769 to the Non-major Governmental Fund
(Economic Development Fund - $50,000) for funding economic development efforts and
(Environmental Fund - $194,769) to pay for funding operations of the fund, including the
billing of the environmental fee. The Highway User Revenue Fund transferred $45,000 to the
Non-major Governmental Fund (Environmental Fund) for the costs of street sweeping.
NOTE 10 – CONTINGENT LIABILITIES
Compliance – Amounts received or receivable from grantor agencies are subject to audit and
adjustment by grantor agencies, principally the state government. Any disallowed claims,
including amounts already collected, may constitute a liability of the applicable funds. The
amount, if any, of expenditures/expenses that may be disallowed by the grantor cannot be
determined at this time, although the Town expects such amounts, if any, to be immaterial.
Lawsuits – The Town is a party to a number of various types of lawsuits, many of which
normally occur in governmental operations. The ultimate outcome of the actions is not
determinable, however, Town management believes that the outcome of these proceedings,
either individually or in the aggregate, will not have a materially adverse effect on the
accompanying financial statements.
Page 63
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 11 – RISK MANAGEMENT
The Town is exposed to various risks of loss related to torts; theft of, damage to and
destruction of assets; errors and omissions; and natural disasters. The Town’s insurance
protection is provided by the Arizona Municipal Risk Pool (Pool). The Pool is made up of
various towns and cities within Arizona that operate a common risk management and
insurance program. The Pool is structured such that member premiums are based on an
actuarial review that will provide adequate reserves to allow the Pool to meet its expected
financial obligations. The Pool has the authority to assess its’ members additional premiums
should reserves and annual premiums be insufficient to meet the Pool’s obligations.
The Town joined the Arizona Municipal Workers’ Compensation Pool (Pool) together with
other governments in the state for risks of loss related to workers’ compensation claims. The
Pool is a public entity risk pool currently operating as a common risk management and
insurance program for towns and cities in the State. The Town is responsible for paying a
premium, based on an experience rating formula that allocates pool expenditures and
liabilities among members.
The Town continues to carry commercial insurance for all other risks of loss, including
employee health, dental, and vision insurance.
NOTE 12 – RETIREMENT PLANS
Defined Contribution Pension Plan
All full-time employees of the Town participate in a defined contribution pension plan
administered by the ICMA Retirement Corporation as a 401(a) plan. The payroll for the
Town employees covered by this plan for the year ended June 30, 2016, was $2,569,070. The
Town’s total payroll was $2,941,575.
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 participants’ benefits
that may be allocated to such participant’s account. All full-time Town employees must
participate in the pension plan from the date they are hired. Contributions made by an
employee vest immediately and contributions made by the Town vest after five years of
service on a pro rata basis.
Page 64
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 12 – RETIREMENT PLANS
An employee that leaves the employment of the town is entitled to his or her contributions
and the vested portion of the Town’s contributions, plus interest earned. Each employee must
contribute 11 percent of his or her gross earnings. The Town must match the employee
contribution of 11 percent. During the fiscal year, the Town’s required and actual
contributions amounted to $279,944. The employees’ contributions totaled $279,944.
Employees may also contribute to the ICMA Retirement Corporation 457 plan on a voluntary
basis; there is no employer match for those contributions. During the fiscal year, employees
contributed $92,984 to that plan.
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 2015-16 or as of
the close of the fiscal year.
NOTE 13 – RECLASSIFICATION FROM PRIOR PERIOD
The July 1, 2015 fund balances of the General Fund, Highway User Revenue Fund, and
Capital Projects Fund do not agree to the prior year financial statements due to
reclassifications of sub-fund activity. The net effect of the adjustments is zero.
Governmental Funds
General
Fund
Highway User
Revenue Fund
Capital
Projects Fund
Fund balance, June 30, 2015, as
previously reported
$ 8,894,502 $ 1,692,305 $ 10,859,923
Reclassification of sub-fund activity (168,819) 66,057 102,762
Fund balance, July 1, 2015, as restated $ 8,725,683 $ 1,758,362 $ 10,962,685
Page 65
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Page 66
REQUIRED SUPPLEMENTARY INFORMATION
Page 67
$ 7,317,367 $ 7,317,367 $ 7,873,427 $ 556,060
$ 8,694,683 $ 8,670,778 $ 10,220,644 $ 1,549,866
Variance with
Final Budget
Positive
(Negative)
24,711
1,549,866
20,780
130,100
176,162
150,880
773,946
1,525,155
(2,000)
26,711
169,721
285,052
167,364
808
(7,869)
7,990
(5,929)
17,696
(62,137)
38,268
54,005
721,209
(281,484)
1,494,961
8,725,683
36,010
109,902
7,034,887
12,931,285
1,776,445
(281,484)
3,481,017
3,553,870
88,644
95,114
14,707,730
2,269,332
1,492,528
2,045,894
1,895,939
301,299
72,094
Actual
360,320
796,330
258,165
4,886,238
169,396
83,461
185,279
2,000
(308,195)
(306,195)
(54,905)
8,725,683
1,662,249
2,330,946
7,185,767
13,705,231
281,290
302,107
80,775
80,084
3,501,797
3,683,970
2,445,494
151,700
136,707
147,011
50,000
13,986,521
2,063,303
(31,000)
8,725,683
Final
324,310
686,428
280,831
4,892,167
13,708,826
276,195
2,000
(309,195)
(307,195)
46,775
80,084
3,501,797
3,683,970
2,576,181
1,624,529
2,275,574
7,185,767
135,207
147,011
50,000
13,985,021
2,218,990
277,107
Fund balances, beginning of year, as restated
Fund balances (deficits), end of year
Budgeted Amounts
Original
324,310
686,428
280,831
4,892,167
151,700
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses):
Changes in fund balances
Total general government
Development services
Community services
Culture and recreation
Total public safety
Total expenditures
Administration
Municipal court
Expenditures:
Capital outlay
Mayor and council
Current -
General government
Public safety
Fire and emergency
Law enforcement
Intergovernmental
Charges for services
Other
Fines and forfeitures
Investment earnings
Total revenues
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GENERAL
YEAR ENDED JUNE 30, 2016
Revenues:
Sales taxes
Franchise taxes
Licenses and permits
Leases and rents (22,666)
See accompanying notes to this schedule.
Page 68
Revenues:
Intergovernmental
Charges for services
Other
Investment earnings
Total revenues
Expenditures:
Current -
Streets and highways
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer out
Total other financing sources (uses):
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Budgeted Amounts
Original
$ 2,292,162
12,000
6,000
300
2,310,462
2,798,026
2,798,026
(487,564)
(45,000)
(45,000)
(532,564)
1,758,362
$1,225,798
Final
$ 2,292,162
12,000
6,000
300
2,310,462
2,803,121
2,803,121
(492,659)
(45,000)
(45,000)
(537,659)
1,758,362
$1,220,703
Actual
$ 2,378,871
27,713
22,670
2,412
2,431,666
2,498,714
2,498,714
(67,048)
(45,000)
(45,000)
(112,048)
1,758,362
$1,646,314
Variance with
Final Budget
Positive
(Negative)
$ 86,709
15,713
16,670
2,112
121,204
304,407
304,407
425,611
425,611
$425,611
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
HIGHWAY USER REVENUE
YEAR ENDED JUNE 30, 2016
See accompanying notes to this schedule.
Page 69
Revenues:
Intergovernmental
Total revenues
Expenditures:
Current -
General government
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Total other financing sources (uses):
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Budgeted Amounts
Original
$1,655,000
1,655,000
1,655,000
1,655,000
$
Final
$1,620,141
1,620,141
1,231,636
368,505
1,600,141
20,000
20,000
$20,000
Actual
$122,624
122,624
50,000
108,947
158,947
(36,323)
36,323
36,323
$
Variance with
Final Budget
Positive
(Negative)
$(1,497,517)
(1,497,517)
1,181,636
259,558
1,441,194
(56,323)
36,323
36,323
(20,000)
$(20,000)
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GRANTS
YEAR ENDED JUNE 30, 2016
See accompanying notes to this schedule.
Page 70
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2015
NOTE 1 – BUDGETARY BASIS OF ACCOUNTING
The Town Council follows these procedures in establishing the budgetary data reflected in the
financial statements:
1.In accordance with Arizona Revised Statutes, the Town Manager submits a proposed
budget for the fiscal year commencing the following July 1 to the Town Council. The
operating budget includes proposed expenditures and the means of financing them for the
upcoming year.
2.Public hearings are conducted to obtain taxpayer comment.
3.Prior to the third Monday in August, the expenditure limitation for the Town is legally
enacted through passage of a resolution. To ensure compliance with the expenditure
limitation, a uniform expenditure report must be filed with the State each year. This
report, issued under a separate cover, reconciles total Town expenditures form the audited
basic financial statements to total expenditures for reporting in accordance with the
State’s uniform expenditure reporting system (A.R.S 41-1379.07).
4.Expenditures may not legally exceed the expenditure limitation described below for all
fund types as a whole. For management purposes, the Town adopts a budget by
department for the General Fund and in total by fund for other funds. The Town
Manager, subject to Town Council approval, may at any time transfer any unencumbered
appropriation balance or portion thereof between a department or activity. The adopted
budget cannot be amended in any way without Town Council approval.
5.Formal budgetary integration is employed as a management control device during the
year for the General, Special Revenue, Debt Service, and Capital Projects Funds on
essentially the same modified accrual basis of accounting used to record actual revenues
and expenditures.
The Town is subject to the State of Arizona’s Spending Limitation Law for Towns and Cities.
This law does not permit the Town to spend more than budgeted revenues plus the carryover
unrestricted cash balance from the prior fiscal year. The limitation is applied to the total of the
combined funds. The Town complied with this law during the year.
Page 71
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Page 72
COMBINING AND INDIVIDUAL
INDIVIDUAL FUND STATEMENTS
AND SCHEDULES
Page 73
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Page 74
NON-MAJOR GOVERNMENTAL FUNDS
Special Revenue Funds
Downtown Strategy Fund – accounts for the portion of Town sales tax committed by the Town
Council for the development of downtown.
Economic Development Fund – accounts for the portion of Town sales tax committed by the
Town Council for economic development and tourism.
Tourism Fund – accounts for the portion of Town sales tax committed by the Town Council as
well as any grants received for all tourism activities.
Local Court Enhancement Fund – accounts for a local court surcharge, committed for court
enhancement.
Environmental Fund – accounts for all funds received from collection of the environmental fee.
Cottonwoods Maintenance Fund – accounts for all funds restricted to pay for maintenance of
the Cottonwoods Maintenance District.
Development Fees Fund – accounts for restricted development fees collected from building
permits.
Capital Projects Funds
Facilities Replacement Fund – accounts for all funds assigned for the maintenance and repair
of facilities and equipment.
Page 75
ASSETS
Cash and investments
Accounts receivable
Intergovernmental receivable
Interest receivable
Prepaid items
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and benefits
Other liabilities
Total liabilities
Fund balances:
Nonspendable
Restricted
Committed
Assigned
Total fund balances
Total liabilities and fund balances
Downtown
Strategy
$ 934,072
2,731
2,707
$939,510
$
939,510
939,510
$939,510
Economic
Development
$ 125,993
10,928
5,055
$141,976
$ 4,981
2,012
6,993
5,055
129,928
134,983
$141,976
Tourism
$ 10,729
$10,729
$ 9,375
1,053
160
10,588
141
141
$10,729
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING BALANCE SHEET - NON-MAJOR SPECIAL REVENUE FUNDS
JUNE 30, 2016
Page 76
Local Court
Enhancement
$ 295,962
542
$296,504
$
296,504
296,504
$296,504
Environmental
$ 244,013
900
$244,913
$ 34,951
383
35,334
209,579
209,579
$244,913
Cottonwoods
Maintenance
$ 14,394
$14,394
$250
250
14,144
14,144
$14,394
Development
Fees
$ 2,243,478
3,651
$2,247,129
$
2,247,129
2,247,129
$2,247,129
Totals
$ 3,868,641
900
14,201
6,358
5,055
$3,895,155
$ 49,557
3,448
160
53,165
5,055
2,261,273
1,366,083
209,579
3,841,990
$3,895,155
Page 77
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Fines and forfeitures
Investment earnings
Total revenues
Expenditures:
Current -
General government
Development services
Culture and recreation
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses):
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Downtown
Strategy
$
70,877
11,786
82,663
46,932
46,932
35,731
(59,137)
(59,137)
(23,406)
962,916
$939,510
Economic
Development
$
283,511
217
283,728
174,798
174,798
108,930
50,000
(140,100)
(90,100)
18,830
116,153
$134,983
Tourism
$
53,347
149
53,496
194,435
194,435
(140,939)
140,100
140,100
(839)
980
$141
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2016
Page 78
Local Court
Enhancement
$
24,101
127
24,228
2,759
2,759
21,469
21,469
275,035
$296,504
Environmental
$
486,751
410
487,161
472,351
472,351
14,810
194,769
194,769
209,579
$209,579
Cottonwoods
Maintenance
$ 5,430
30
5,460
2,705
2,705
2,755
2,755
11,389
$14,144
Development
Fees
$
88,964
22,500
111,464
536
536
110,928
110,928
2,136,201
$2,247,129
Totals
$ 5,430
354,388
575,715
53,347
24,101
35,219
1,048,200
2,759
696,786
194,971
894,516
153,684
384,869
(199,237)
185,632
339,316
3,502,674
$3,841,990
Page 79
Total revenues
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Fines and forfeitures
Investment earnings
Expenditures:
Current -
General government
Development services
Culture and recreation
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses):
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Downtown Strategy
Budget
$
66,517
6,000
72,517
80,886
80,886
(8,369)
(477,000)
(477,000)
(485,369)
962,916
$477,547
Actual
$
70,877
11,786
82,663
46,932
46,932
35,731
(59,137)
(59,137)
(23,406)
962,916
$939,510
Variance -
Positive
(Negative)
$
4,360
5,786
10,146
33,954
33,954
44,100
417,863
417,863
461,963
$461,963
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2016
Page 80
Economic Development
Budget
$
266,066
266,066
177,001
177,001
89,065
50,000
(140,100)
(90,100)
(1,035)
116,153
$115,118
Actual
$
283,511
217
283,728
174,798
174,798
108,930
50,000
(140,100)
(90,100)
18,830
116,153
$134,983
Variance -
Positive
(Negative)
$
17,445
217
17,662
2,203
2,203
19,865
19,865
$19,865
Tourism
Budget
$
53,359
53,359
195,280
195,280
(141,921)
140,100
140,100
(1,821)
980
$(841)
Actual
$
53,347
149
53,496
194,435
194,435
(140,939)
140,100
140,100
(839)
980
$141
Variance -
Positive
(Negative)
$
(12)
149
137
845
845
982
982
$982
(Continued)
Page 81
Total revenues
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Fines and forfeitures
Investment earnings
Expenditures:
Current -
General government
Development services
Culture and recreation
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses):
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Local Court Enhancement
Budget
$
16,350
100
16,450
50,615
30,000
80,615
(64,165)
(64,165)
275,035
$210,870
Actual
$
24,101
127
24,228
2,759
2,759
21,469
21,469
275,035
$296,504
Variance -
Positive
(Negative)
$
7,751
27
7,778
47,856
30,000
77,856
85,634
85,634
$85,634
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2016
Page 82
Environmental
Budget
$
540,000
540,000
639,241
639,241
(99,241)
221,480
221,480
122,239
$122,239
Actual
$
486,751
410
487,161
472,351
472,351
14,810
194,769
194,769
209,579
$209,579
Variance -
Positive
(Negative)
$
(53,249)
410
(52,839)
166,890
166,890
114,051
(26,711)
(26,711)
87,340
$87,340
Cottonwoods Maintenance
Budget
$ 5,366
5,366
4,043
4,043
1,323
1,323
11,389
$12,712
Actual
$ 5,430
30
5,460
2,705
2,705
2,755
2,755
11,389
$14,144
Variance -
Positive
(Negative)
$64
30
94
1,338
1,338
1,432
1,432
$1,432
(Continued)
Page 83
Total revenues
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Fines and forfeitures
Investment earnings
Expenditures:
Current -
General government
Development services
Culture and recreation
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses):
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Development Fees
Budget
$
104,640
6,000
110,640
535
535
110,105
(270,686)
(270,686)
(160,581)
2,136,201
$1,975,620
Actual
$
88,964
22,500
111,464
536
536
110,928
110,928
2,136,201
$2,247,129
Variance -
Positive
(Negative)
$
(15,676)
16,500
824
(1)
(1)
823
270,686
270,686
271,509
$271,509
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2016
Page 84
Totals
Budget
$ 5,366
332,583
644,640
53,359
16,350
12,100
1,064,398
50,615
901,171
195,815
30,000
1,177,601
(113,203)
411,580
(887,786)
(476,206)
(589,409)
3,502,674
$2,913,265
Actual
$ 5,430
354,388
575,715
53,347
24,101
35,219
1,048,200
2,759
696,786
194,971
894,516
153,684
384,869
(199,237)
185,632
339,316
3,502,674
$3,841,990
Variance -
Positive
(Negative)
$64
21,805
(68,925)
(12)
7,751
23,119
(16,198)
47,856
204,385
844
30,000
283,085
266,887
(26,711)
688,549
661,838
928,725
$928,725
Page 85
Total revenues
Revenues:
Property taxes
Sales taxes
Investment earnings
Expenditures:
Debt service -
Principal retirement
Interest on long-term debt
Fiscal charges
Total expenditures
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
General Obligation Debt Service
Budget
$ 2,109,477
210
2,109,687
1,770,000
321,622
3,100
2,094,722
14,965
354,062
$369,027
Actual
$ 2,119,611
2,514
2,122,125
1,770,000
231,850
1,000
2,002,850
119,275
354,062
$473,337
Variance -
Positive
(Negative)
$ 10,134
2,304
12,438
89,772
2,100
91,872
104,310
$104,310
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
ALL DEBT SERVICE FUNDS
YEAR ENDED JUNE 30, 2016
Page 86
Eagle Mountain Debt Service
Budget
$ 416,686
9
416,695
365,000
43,516
3,335
411,851
4,844
66,720
$71,564
Actual
$ 418,257
472
418,729
365,000
43,516
195
408,711
10,018
66,720
$76,738
Variance -
Positive
(Negative)
$ 1,571
463
2,034
3,140
3,140
5,174
$5,174
Municipal Property Corporation Debt Service
Budget
$
665,165
100
665,265
480,000
32,740
8,000
520,740
144,525
1,760,662
$1,905,187
Actual
$
708,777
994
709,771
2,125,000
32,740
810
2,158,550
(1,448,779)
1,760,662
$311,883
Variance -
Positive
(Negative)
$
43,612
894
44,506
(1,645,000)
7,190
(1,637,810)
(1,593,304)
$(1,593,304)
(Continued)
Page 87
Total revenues
Revenues:
Property taxes
Sales taxes
Investment earnings
Expenditures:
Debt service -
Principal retirement
Interest on long-term debt
Fiscal charges
Total expenditures
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Totals
Budget
$ 2,526,163
665,165
319
3,191,647
2,615,000
397,878
14,435
3,027,313
164,334
2,181,444
$2,345,778
Actual
$ 2,537,868
708,777
3,980
3,250,625
4,260,000
308,106
2,005
4,570,111
(1,319,486)
2,181,444
$861,958
Variance -
Positive
(Negative)
$ 11,705
43,612
3,661
58,978
(1,645,000)
89,772
12,430
(1,542,798)
(1,483,820)
$(1,483,820)
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
ALL DEBT SERVICE FUNDS
YEAR ENDED JUNE 30, 2016
Page 88
(This page intentionally left blank)
Page 89
Total revenues
Revenues:
Sales taxes
Intergovernmental
Other
Investment earnings
Expenditures:
Current -
General government
Development services
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses):
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Capital Projects
Budget
$ 332,035
1,790,000
154,082
12,000
2,288,117
1,685
14,261,200
14,262,885
(11,974,768)
745,686
745,686
(11,229,082)
10,859,923
$(369,159)
Non-GAAP
Actual
$ 459,075
118,356
41,531
82,140
701,102
1,935
6,226,093
6,228,028
(5,526,926)
59,137
(36,323)
22,814
(5,504,112)
10,859,923
$5,355,811
Variance -
Positive
(Negative)
$ 127,040
(1,671,644)
(112,551)
70,140
(1,587,015)
(250)
8,035,107
8,034,857
6,447,842
(686,549)
(36,323)
(722,872)
5,724,970
$5,724,970
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
ALL CAPITAL PROJECTS FUNDS
YEAR ENDED JUNE 30, 2016
Page 90
Facilities Replacement Fund
Budget
$
130,000
130,000
(130,000)
81,715
81,715
(48,285)
102,762
$54,477
Non-GAAP
Actual
$
193
193
28,500
47,698
76,198
(76,005)
81,715
81,715
5,710
102,762
$108,472
Variance -
Positive
(Negative)
$
193
193
101,500
(47,698)
53,802
53,995
53,995
$53,995
Totals
Budget
$ 332,035
1,790,000
154,082
12,000
2,288,117
1,685
130,000
14,261,200
14,392,885
(12,104,768)
827,401
827,401
(11,277,367)
10,962,685
$(314,682)
Non-GAAP
Actual
$ 459,075
118,356
41,531
82,333
701,295
1,935
28,500
6,273,791
6,304,226
(5,602,931)
140,852
(36,323)
104,529
(5,498,402)
10,962,685
$5,464,283
Variance -
Positive
(Negative)
$ 127,040
(1,671,644)
(112,551)
70,333
(1,586,822)
(250)
101,500
7,987,409
8,088,659
6,501,837
(686,549)
(36,323)
(722,872)
5,778,965
$5,778,965
Page 91
(This page intentionally left blank)
Page 92
STATISTICAL SECTION
The statistical section presents financial statement trends as well as detailed financial and
operational information not available elsewhere in the report. The statistical section is intended
to enhance the reader’s understanding of the information presented in the financial statements,
notes to the financial statements, and other supplementary information presented in this report.
The statistical section is comprised of the five categories of statistical information presented
below.
Financial Trends
These schedules contain information on financial trends to help the reader understand how
the Town’s financial position and financial activities have changed over time.
Revenue Capacity
These schedules contain information to help the reader assess the factors affecting the
Town’s ability to generate revenue.
Debt Capacity
These schedules present information to help the reader evaluate the Town’s current levels
of outstanding debt as well as assess the Town’s ability to make debt payments and/or issue
additional debt in the future.
Demographic and Economic Information
These schedules present various demographic and economic indicators to help the reader
understand the environment in which the Town’s financial activities take place and to help
make comparisons with other cities.
Operating Information
These schedules contain information about the Town’s operations and various resources to
help the reader draw conclusions as to how the Town’s financial information relates to the
services provided by the Town.
Note: For locally assessed property (i.e., excluding mines, utilities, etc.) Proposition 117,
approved by voters in 2012, amended the Arizona Constitution to require that all property taxes
after fiscal year 2014-15 be based upon property values limited to 5 percent in annual growth.
The aggregate assessed value of all taxable properties within a taxing jurisdiction (i.e., after
applying assessment ratios based on the use of a property), including property values with a
growth limit, is currently referred to as net limited assessed value and formerly as primary
assessed value. In accordance with Proposition 117, this value is used for all taxing purposes
beginning fiscal year 2015-16. Aggregate assessed value without a growth limit is currently
referred to as net full cash assessed value and formerly as secondary assessed value. This
remains the value utilized for determining debt capacity limits.
Page 93
2007 2008 2009 2010
Governmental activities:
Net investment in capital assets 92,508,637$ 94,939,805$ 94,611,110$ 95,467,509$
Restricted 12,210,966 12,799,502 11,828,137 11,396,116
Unrestricted 14,276,126 13,230,726 13,765,293 12,321,090
Total governmental activities net position 118,995,729$ 120,970,033$ 120,204,540$ 119,184,715$
Source: The source of this information is the Town's financial records.
Last Ten Fiscal Years
Net Position by Component
Town of Fountain Hills, Arizona
(accrual basis of accounting)
June 30
Page 94
Schedule 1
2011 2012 2013 2014 2015 2016
92,579,483$ 92,006,103$ 89,800,560$ 89,713,260$ 95,325,824$ 95,647,990$
4,385,595 5,951,416 5,721,744 5,480,867 6,310,810 4,530,239
22,598,669 21,064,267 20,612,758 19,186,823 15,180,582 17,232,506
119,563,747$ 119,021,786$ 116,135,062$ 114,380,950$ 116,817,216$ 117,410,735$
June 30
Page 95
2007 2008 2009 2010
Expenses
Governmental activities:
General government 4,292,515$ 3,921,588$ 4,231,529$ 3,720,236$
Development services 2,512,170 2,861,653 2,218,994 1,612,287
Public safety 5,935,742 6,532,292 7,312,415 6,293,323
Streets and highways 5,225,835 5,981,347 5,051,294 5,202,285
Culture and recreation 3,282,160 3,092,661 3,336,616 2,927,848
Interest on long-term debt 1,163,370 1,132,947 1,033,536 950,484
Total governmental activities expenses 22,411,792 23,522,488 23,184,384 20,706,463
Program Revenues
Governmental activities:
Fines, fees and charges for services:
General government 910,978 830,963 499,914 474,434
Development Services 445,028 390,589 455,543 236,377
Public safety 982,659 746,227 55,042 59,806
Streets and highways 28,185 23,700 50,408 266,706
Culture and recreation 153,218 338,332 427,137 338,357
Operating grants and contributions - 56,802 - 1,666,498
Capital grants and contributions 989,100 835,659 1,353,409 632,617
Total governmental activities program revenues 3,509,168 3,222,272 2,841,453 3,674,795
Net (Expenses)/Revenues (18,902,624) (20,300,216) (20,342,931) (17,031,668)
General Revenues and Other Changes in Net Assets
Governmental activities:
Taxes:
Property taxes 1,385,953 1,635,542 1,531,770 1,928,028
Sales taxes 11,407,714 10,489,591 8,932,374 7,644,440
Franchise taxes 324,318 336,290 321,964 285,881
State shared revenues 8,444,731 8,848,199 8,456,552 6,000,923
Investment earnings 1,094,994 780,935 258,478 22,831
Miscellaneous 85,418 183,963 76,300 129,740
Total governmental activities 21,357,175 20,638,978 18,045,668 14,083,815
Changes in Net Position
Governmental activities 2,454,551$ 338,762$ (2,297,263)$ (2,947,853)$
Source: The source of this information is the Town's financial records.
Town of Fountain Hills, Arizona
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year Ended June 30
Page 96
Schedule 2
2011 2012 2013 2014 2015 2016
2,876,848$ 3,119,113$ 2,909,443$ 2,432,965$ 2,479,365$ 2,516,966$
1,572,202 1,442,613 1,633,361 1,237,717 2,074,611 2,253,208
5,963,067 5,820,136 6,100,131 6,958,056 6,816,152 7,178,890
5,567,973 4,718,047 5,712,817 6,630,875 4,963,979 6,476,688
2,840,154 2,754,731 2,779,294 2,760,690 2,822,954 3,124,523
851,957 779,576 567,043 472,999 698,542 241,694
19,672,201 18,634,216 19,702,089 20,493,302 19,855,603 21,791,969
337,279 272,469 380,926 215,943 337,655 298,737
344,821 322,984 377,483 531,193 693,670 1,257,492
65,568 63,926 63,824 74,887 86,641 90,345
77,409 95,201 112,521 250,421 236,706 48,688
339,341 303,508 288,745 340,353 339,158 321,189
1,614,462 1,285,656 1,266,906 1,307,738 1,431,017 1,615,973
2,273,414 1,392,706 150,535 144,570 2,874,796 381,011
5,052,294 3,736,450 2,640,940 2,865,105 5,999,643 4,013,435
(14,619,907) (14,897,766) (17,061,149) (17,628,197) (13,855,960) (17,778,534)
1,349,079 1,453,405 1,385,147 1,449,646 904,660 2,569,504
8,013,480 7,787,489 7,957,163 8,459,267 8,983,049 9,395,667
322,659 332,130 334,668 349,414 352,673 360,320
5,217,140 4,515,511 4,979,183 5,326,332 5,713,235 5,813,678
28,456 88,877 69,998 123,311 150,358 219,058
68,125 178,393 300,899 166,115 188,251 13,826
13,649,860 12,902,400 13,641,911 14,424,439 15,387,566 18,372,053
(970,047)$ (1,995,366)$ (3,419,238)$ (3,203,758)$ 1,531,606$ 593,519$
Fiscal Year Ended June 30
Page 97
Schedule 4
2007 2008 2009 2010
General fund
Reserved 2,934,144$ 3,053,070$ 3,234,860$ 3,235,811$
Unreserved, designated - - 127,916 333,796
Unreserved, undesignated 3,666,005 3,526,738 3,302,373 3,418,799
Total general fund 6,600,149$ 6,579,808$ 6,665,149$ 6,988,406$
All other governmental funds
Unreserved, designated -$ -$ 95,620$ 159,484$
Unreserved, undesignated reported in:
Special revenue funds 5,305,432 3,876,927 4,198,782 4,498,523
Capital projects funds 9,916,670 10,764,857 10,246,395 10,020,336
Debt service funds 1,386,674 1,585,740 1,218,971 1,182,834
Total all other governmental funds 16,608,776$ 16,227,524$ 15,759,768$ 15,861,177$
2011 2012 2013 2014 2015 2016
General fund
Nonspendable:
Inventory 13,183$ 9,332$ 10,201$ 14,358$ 6,975$ 9,272$
Prepaid items 29,234 28,245 32,493 18,348 10,655 4,123
Committed - 1,345,200 1,345,200 1,345,200 2,634,923 2,652,357
Assigned - 2,190,910 2,191,063 1,647,193 1,872,492 1,701,086
Unassigned 8,263,549 3,656,173 4,117,865 4,972,853 4,369,457 5,853,806
Total general fund 8,305,966$ 7,229,860$ 7,696,822$ 7,997,952$ 8,894,502$ 10,220,644$
All other governmental funds
Nonspendable
Cash with escrow agent -$ 2,623,895$ 2,301,609$ 1,973,067$ 1,645,000$ -$
Inventory 5,055
Prepaid items 6,217 5,474 4,706 997 656 -
Restricted 4,379,987 3,300,426 3,354,189 3,505,590 10,066,786 4,500,044
Committed 11,480,869 2,039,560 2,175,094 2,089,361 1,079,780 1,366,081
Assigned - 9,312,168 9,005,276 7,147,586 5,444,124 5,943,365
Total all other governmental funds 15,867,073$ 17,281,523$ 16,840,874$ 14,716,601$ 18,236,346$ 11,814,545$
Source: The source of this information is the Town's financial records.
Note: During fiscal year 2011, the Town implemented GASB Statement No. 54. Therefore, starting
in the fiscal year ended June 30, 2011, governmental fund balances will be presented based on the
GASB Statement No. 54 hierarchy.
Town of Fountain Hills, Arizona
Fund Balances — Governmental Funds
June 30
June 30
Last Ten Fiscal Years
(modified accrual basis of accounting)
Page 98
(This page intentionally left blank)
Page 99
2007 2008 2009 2010
Revenues
Taxes 13,159,087$ 12,457,086$ 10,960,001$ 9,818,985$
Licenses and permits 1,239,318 1,125,957 541,627 399,094
Leases and rents 267,350 296,434 290,083 215,520
Intergovernmental 8,444,731 9,353,260 9,607,961 7,672,037
Charges for services 898,955 620,300 316,676 464,036
Other 85,418 183,963 43,683 129,740
Fines and forfeitures 304,214 287,120 339,658 297,030
Special assessments 4,228 4,337 4,037 -
Investment earnings 1,094,994 780,935 258,478 22,831
Total revenues 25,498,295 25,109,392 22,362,204 19,019,273
Expenditures
Current:
General government 4,024,551 3,548,295 3,514,249 3,186,368
Development services 2,462,643 2,751,740 2,036,295 1,669,449
Public safety 5,689,020 6,321,669 6,624,141 6,200,227
Streets and highways 2,028,397 2,214,557 1,199,850 973,746
Culture and recreation 2,131,374 2,257,007 2,215,065 2,007,737
Capital outlay 2,002,887 5,239,169 3,708,277 1,254,223
Debt service:
Principal 1,968,228 2,153,228 2,240,000 2,460,000
Interest 1,058,665 1,025,321 925,663 825,988
Other debt service - - 3,471 16,869
Total expenditures 21,365,765 25,510,986 22,467,011 18,594,607
Excess (deficiency) of revenues
over (under) expenditures 4,132,530 (401,594) (104,807) 424,666
Other Financing Sources (Uses)
Transfers in 4,383,069 2,756,988 3,759,735 1,127,776
Transfers out (4,383,069) (2,756,988) (3,950,654) (1,127,776)
Issuance of refunding bonds - - - -
Issuance of long-term debt - - - -
Bond Premium - - - -
Payment to refunded bonds escrow agent - - - -
Total other financing sources (uses) - - (190,919) -
Net change in fund balances 4,132,530$ (401,594)$ (295,726)$ 424,666$
Debt service as a percentage of noncapital expenditures 15.4% 15.3% 15.7% 18.9%
Source: The source of this information is the Town's financial records.
Town of Fountain Hills, Arizona
Statement of Revenues, Expenditures and Changes in Fund Balances
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year Ended June 30
Page 100
Schedule 5
2011 2012 2013 2014 2015 2016
9,704,054$ 9,577,321$ 9,713,445$ 10,271,737$ 10,240,382$ 12,299,285$
312,367 194,976 570,904 891,782 1,043,382 1,372,045
227,195 206,018 213,871 252,584 269,753 258,165
7,165,103 6,035,448 6,323,047 6,677,518 9,770,048 7,559,436
388,635 405,663 162,086 161,376 176,541 197,109
72,125 178,393 300,899 134,114 188,251 147,662
236,221 223,673 187,251 170,995 186,456 209,380
-- - - - -
28,456 88,877 69,998 123,311 150,358 219,058
18,134,156 16,910,369 17,541,501 18,683,417 22,025,171 22,262,140
2,575,975 2,887,321 2,699,109 2,194,845 2,275,124 2,324,026
1,564,615 1,421,787 1,643,757 1,774,983 2,073,990 2,217,814
5,772,800 5,869,445 6,022,269 6,890,770 6,675,874 7,034,887
1,123,230 1,054,930 2,058,990 3,085,559 1,275,779 2,498,714
1,871,446 1,794,332 1,791,018 1,921,939 1,962,585 2,240,865
1,043,304 884,323 453,002 1,750,465 8,799,068 6,471,382
2,114,999 1,965,000 2,280,000 2,415,000 1,850,000 4,260,000
729,077 639,135 554,860 460,811 454,957 308,106
15,254 55,752 12,183 12,188 243,585 2,005
16,810,700 16,572,025 17,515,188 20,506,560 25,610,962 27,357,799
1,323,456 338,344 26,313 (1,823,143) (3,585,791) (5,095,659)
431,880 2,470,027 1,279,397 1,838,453 2,519,774 562,044
(431,880) (2,470,027) (1,279,397) (1,838,453) (2,519,774) (562,044)
- - - - 4,180,000 -
- - - - 7,565,000 -
- - - - 342,086 -
- - -- (4,085,000) -
- - -- 8,002,086 -
1,323,456$ 338,344$ 26,313$ (1,823,143)$ 4,416,295$ (5,095,659)$
19.6% 18.7% 16.7% 16.0% 15.2% 21.9%
Fiscal Year Ended June 30
Page 101
Schedule 6
Fiscal Year
Ended June 30 Property Tax Sales Tax Franchise Tax Total
2007 1,427,055$ 11,407,714$ 324,318$ 11,732,032$
2008 1,631,205 10,489,591 336,290 10,825,881
2009 1,705,663 8,932,374 321,964 9,254,338
2010 1,888,664 7,644,441 285,881 7,930,322
2011 1,367,915 8,013,480 322,659 8,336,139
2012 1,457,702 7,779,219 332,130 8,111,349
2013 1,421,614 7,957,163 334,668 8,291,831
2014 1,463,056 8,459,267 349,414 8,808,681
2015 904,660 8,983,050 352,673 9,335,723
2016 2,543,298 9,395,667 360,320 9,755,987
Source: The source of this information is the Town's financial records.
Town of Fountain Hills, Arizona
Governmental Activities - Tax Revenues by Source
Last Ten Fiscal Years
(modified accrual basis of accounting)
Page 102
Schedule 7
Net Assessed
Net Total Estimated Taxable Value as a
Assessed Direct Actual Percentage of
Taxable Tax Taxable Estimated Actual
Fiscal Year Value Rate*Value Taxable Value
2007 397,380,162$ 0.3012$ 3,353,535,254$ 11.85%
2008 610,738,122 0.2124 5,318,424,271 11.48%
2009 684,742,347 0.1972 5,867,175,208 11.67%
2010 651,218,464 0.2273 5,524,103,469 11.79%
2011 576,535,714 0.1639 4,915,512,973 11.73%
2012 451,860,136 0.2258 3,971,538,882 11.38%
2013 377,521,718 0.2657 3,309,940,258 11.41%
2014 366,302,672 0.2773 3,260,087,621 11.24%
2015 402,965,927 0.1151 3,616,672,185 11.14%
2016 402,135,304 0.5246 4,290,989,150 9.37%
* Per $100 of assessed full cash value.
Source: The source of this information is the Arizona Department of Revenue's
Abstract of the Assessment Roll and the Town's financial records.
Town of Fountain Hills, Arizona
Assessed Value and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
Page 103
Schedule 9
Net Limited Percentage of Net Full Cash Percentage of
Assessed Total Net Limited Assessed Total Net Full Cash
Taxpayer Value Rank Assessed Value Value Rank Assessed Value
Chaparral City Water Company 3,207,780$ 1 0.80%3,114,960$ 2 0.78%
Adero Canyon II LLC 2,918,983 2 0.73%
Hunter Retail LLC 2,516,743 3 0.63%
WSL Fountain View Investors V, LLC 1,854,251 4 0.46%2,425,837 5 0.61%
Whitestone Fountain Hills, LLC 1,720,807 5 0.43%
Target Corporation 1,496,191 6 0.37%1,580,692 7 0.40%
Smith's Food & Drug Centers Inc.1,228,266 7 0.31%1,370,079 10 0.34%
EN, LLC 1,224,187 8 0.30%2,509,538 4 0.63%
Qwest Corporation 1,132,473 9 0.28%2,955,801 3 0.74%
29SC Ridgeview LP 1,079,348 10 0.27%
Inland Western Fountain Hills Four Peaks LLC 3,216,251 1 0.81%
Four Peaks AZ Development LLC 1,752,935 6 0.44%
Fountain Hills Hotel Developers LLC 1,516,379 8 0.38%
Sun Tech Development, LLC 1,370,079 9 0.34%
Totals 18,379,029$ 4.58%21,812,551$ 5.47%
Source: The source of this information is the Maricopa County Assessor's Office.
Town of Fountain Hills, Arizona
Principal Property Taxpayers
June 30, 2016 and 2007
2016 2007
Page 104
Schedule 10
Current Percent of Delinquent Ratio of Total
Fiscal Total Tax Current Taxes Tax Total Tax Tax Collections
Year Tax Levy Collections Collected Collections Collections to Total Tax Levy
2007 1,391,521$ 1,353,901$ 97.3% 27,206$ 1,381,107$ 99.3%
2008 1,630,534 1,574,505 96.6% 47,833 1,622,338 99.5%
2009 1,719,105 1,656,021 96.3% 53,379 1,709,400 99.4%
2010 1,895,552 1,834,884 96.8% 52,189 1,887,073 99.6%
2011 1,340,544 1,298,832 96.9% 24,924 1,323,756 98.7%
2012 1,446,076 1,403,367 97.0% 20,255 1,423,622 98.4%
2013 1,429,284 1,393,084 97.5% 18,931 1,412,015 98.8%
2014 1,449,884 1,421,918 98.1% 18,546 1,440,464 99.4%
2015 892,104 878,216 98.4%7,475 885,692 99.3%
2016 2,532,115 2,502,081 98.8%- 2,502,081 98.8%
Source: The source of this information is the Maricopa County Treasurer's Office.
Town of Fountain Hills, Arizona
Property Tax Levies and Collections
Last Ten Fiscal Years
Page 105
2007 2008 2009 2010
Sales category:
Construction 2,695,237$ 2,063,189$ 1,414,308$ 538,562$
Transportation/utilities 1,330,956 1,422,158 1,311,735 1,424,828
Wholesale/retail 4,144,430 3,912,579 3,687,605 3,556,292
Restaurants/bars 537,596 582,226 493,242 509,624
Real estate, rental & leasing 785,490 983,047 665,153 650,400
Services 280,290 327,411 258,139 241,685
Other 1,633,715 1,198,981 1,102,192 723,050
Total 11,407,714$ 10,489,591$ 8,932,374$ 7,644,441$
Note: Other includes all state and local sales tax audit adjustments.
Source: The source of this information is the Town's financial records.
Town of Fountain Hills, Arizona
Taxable Sales by Category
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year Ended June 30
Page 106
Schedule 11
2011 2012 2013 2014 2015 2016
567,135$ 600,403$ 567,589$ 783,064$ 888,311$ 918,150$
1,388,075 1,409,349 1,402,734 1,375,623 1,383,464 1,438,191
3,567,986 3,601,904 3,598,895 3,653,181 3,889,874 4,116,630
559,931 575,704 645,258 655,654 695,041 709,787
731,758 678,326 720,023 782,453 816,890 753,570
276,566 274,521 310,303 342,079 340,002 365,924
922,029 639,012 712,360 867,213 969,468 1,093,415
8,013,480$ 7,779,219$ 7,957,162$ 8,459,267$ 8,983,050$ 9,395,667$
Fiscal Year Ended June 30
Page 107
Schedule 12
Fiscal
Year
Ended Town Maricopa State Total
June 30 Rate County Rate Tax Rate
2007 2.60% 0.70% 5.60% 8.90%
2008 2.60% 0.70% 5.60% 8.90%
2009 2.60% 0.70% 5.60% 8.90%
2010 2.60% 0.70% 6.60% 9.90%
2011 2.60% 0.70% 6.60% 9.90%
2012 2.60% 0.70% 6.60% 9.90%
2013 2.60% 0.70% 5.60% 8.90%
2014 2.60% 0.70% 5.60% 8.90%
2015 2.60% 0.70% 5.60% 8.90%
2016 2.60% 0.70% 5.60% 8.90%
Source: The source of this information is the Arizona Department of Revenue.
Town of Fountain Hills, Arizona
Direct and Overlapping Sales Tax Rates
Last Ten Fiscal Years
Page 108
Schedule 14
Fiscal Community Municipal Highway
Year General Facilities Property User Special Total Debt
Ended Obligation District Corporation Revenue Assessment Outstanding Per
June 30 Bonds Bonds Bonds Bonds Bonds Debt Capita
2007 8,620,000$ 4,255,000$ 11,595,000$ 345,000$ 6,455$ 24,821,455$ 1,082$
2008 7,570,000 4,070,000 10,790,000 235,000 3,228 22,668,228 986
2009 6,530,000 3,860,000 9,905,000 130,000 - 20,425,000 898
2010 5,415,000 3,630,000 8,920,000 - - 17,965,000 799
2011 4,595,000 3,370,000 7,885,000 - - 15,850,000 703
2012 3,755,000 3,090,000 6,800,000 - - 13,645,000 612
2013 2,900,000 2,800,000 5,650,000 - - 11,350,000 507
2014 2,000,000 2,495,000 4,425,000 - - 8,920,000 389
2015 9,175,000 2,300,000 1,880,000 - - 13,355,000 628
2016 7,405,000 1,935,000 1,400,000 - - 10,740,000 449
Source: The source of this information is the Town's financial records and the U.S. Bureau of Economic Analysis.
Note: All amounts presented are net of original issuance discounts and premiums.
Population and personal income data can be found in the Schedule of Demographic and Economic Statistics.
Personal income for fiscal year 2016 was not available.
Town of Fountain Hills, Arizona
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Governmental Activities
Page 109
Schedule 15
Estimated Percentage of Net General Net Municipal
Actual Estimated Obligation Municipal Property
General Taxable Actual Bonded Property Corporation Total
Fiscal Obligation
Value of Taxable Value Debt Corporation Debt per Revenues-
Year Bonds Property of Property per Capita Bonds Capita All Sources
2007 8,620,000$ 3,353,535,254$ 0.26% 376$ 11,595,000 506$ 25,498,295$
2008 7,570,000 5,318,424,271 0.14% 329 10,790,000 469 25,113,211
2009 6,530,000 5,867,175,208 0.11% 287 9,905,000 436 21,331,076
2010 5,415,000 5,524,103,469 0.10% 241 8,920,000 397 18,958,595
2011 4,595,000 4,915,512,973 0.09% 204 7,885,000 350 18,248,326
2012 3,755,000 3,971,538,882 0.09% 165 6,800,000 300 17,184,895
2013 2,900,000 3,309,940,258 0.09% 127 5,650,000 247 17,723,994
2014 2,000,000 3,260,087,621 0.06% 85 4,695,000 199 18,891,967
2015 9,175,000 3,616,672,185 0.25% 384 3,525,000 147 22,161,316
2016 7,405,000 4,290,989,150 0.17% 310 1,400,000 59 22,262,140
Source: The source of this information is the Department of Revenue and the Town's financial records.
Note: All bond amounts are net of original issuance discounts and premiums.
Population data can be found in the Schedule of Demographic and Economic Statistics.
Town of Fountain Hills, Arizona
Ratios of General Bonded Debt Outstanding
Last Ten Fiscal Years
Page 110
Schedule 16
Estimated
Estimated Share of
Percentage Overlapping
Outstanding Debt Applicable Debt
Overlapping:
Maricopa County -$ 1.17%-$
Maricopa County Community College District 534,225,000 1.17% 6,250,433
Maricopa Integrated Health System 73,000,000 1.17% 854,100
East Valley Institute of Technology - 2.64%-
Fountain Hills Unified School District 12,975,000 96.18% 12,479,355
Eagle Mountain Community Facilities District 1,935,000 100.00% 1,935,000
21,518,888
Direct:
Town of Fountain Hills, Arizona
General Obligation Bonds 7,405,000
Revenue Bonds 1,400,000
8,805,000
Total direct and overlapping debt 30,323,888$
Source: The source of this information is the Town's records, the State and County Abstract of the
Assessment Roll, the Arizona Department of Revenue Report of Indebtedness and the applicable
governmental unit.
Note: The estimated percentage of debt outstanding applicable to the Town is calculated
based on the Town's secondary assessed valuation (full cash value) as a percentage of the
secondary assessed valuation of the overlapping jurisdiction.
Overlapping governments are those that coincide, at least in part, with the geographic boundaries
of the Town of Fountain Hills. This schedule further estimates the portion of outstanding debt
of those overlapping governments that is borne by residents and businesses of the Town.
This process recognizes that, when considering a town's ability to issue and repay long-term debt,
the entire debt burden borne by residents should be taken into account. However, this fact does not
imply that every taxpayer is a resident, and, therefore, responsible for repaying the debt of each
overlapping government.
Town of Fountain Hills, Arizona
Direct and Overlapping Governmental Activities Debt
as of June 30, 2016
Governmental Unit
Page 111
2007 2008 2009 2010
6% Debt Limit
Debt limit 23,842,810$ 36,644,287$ 41,084,541$ 39,073,108$
Total applicable to limit 550,000 275,000 - -
Legal debt margin 23,292,810$ 36,369,287$ 41,084,541$ 39,073,108$
Total debt applicable to the limit
as a percentage of debt limit 2% 1% - -
20% Debt Limit
Debt limit 79,476,032$ 122,147,624$ 136,948,469$ 130,243,693$
Total applicable to limit 8,070,000 7,295,000 6,530,000 5,415,000
Legal debt margin 71,406,032$ 114,852,624$ 130,418,469$ 124,828,693$
Total debt applicable to the limit
as a percentage of debt limit 10% 6% 5% 4%
Source: The source of this information is the Town's financial records.
Town of Fountain Hills, Arizona
Legal Debt Margin Information
Last Ten Fiscal Years
Fiscal Year Ended June 30
Page 112
Schedule 17
2011 2012 2013 2014 2015 2016
34,592,143$ 27,111,608$ 22,651,303$ 21,978,160$ 24,177,956$ 24,128,118$
- - - - - -
34,592,143$ 27,111,608$ 22,651,303$ 21,978,160$ 24,177,956$ 24,128,118$
-- - --
115,307,143$ 90,372,027$ 75,504,344$ 73,260,534$ 80,593,185$ 80,427,061$
4,595,000 3,755,000 2,900,000 2,000,000 9,175,000 7,405,000
110,712,143$ 86,617,027$ 72,604,344$ 71,260,534$ 71,418,185$ 73,022,061$
4% 4% 4% 3% 11% 9%
Fiscal Year Ended June 30
Page 113
Schedule 17-2
Net limited assessed valuation $402,135,304
Water, Sewer, Artificial Lighting, Parks, Open Space, Public Safety, Law
Enforcement, Fire and Emergency Facilities, Street and Transportation
Facilities, and Recreational Facility Improvements
Debt limit - 20% of net limited assessed valuation 80,427,061$
Net debt applicable to limit 7,405,000
20% legal debt margin 73,022,061
All Other General Obligation Bonds
Debt limit - 6% of net limited assessed valuation 24,128,118
Net debt applicable to limit -
6% legal debt margin 24,128,118
Total legal debt margin 97,150,179$
Source: The source of this information is the Maricopa County Assessor's Office and the
Town's financial records.
Town of Fountain Hills, Arizona
Calculation of Legal Debt Margin
as of June 30, 2016
Page 114
Schedule 18
Fiscal
Year
Ended Pledged
June 30 Principal Interest Total Revenues Coverage
2007 715,000$ 473,349$ 1,188,349$ 18,408,511$ 15.5
2008 805,000 498,878 1,303,878 18,362,405 14.1
2009 885,000 458,799 1,343,799 15,930,962 11.9
2010 985,000 416,886 1,401,886 14,008,592 10.0
2011 1,035,000 386,630 1,421,630 13,489,416 9.5
2012 1,085,000 327,312 1,412,312 12,995,685 9.2
2013 1,150,000 285,287 1,435,287 13,397,842 9.3
2014 1,225,000 234,176 1,459,176 14,313,158 9.8
2015 2,545,000 184,500 2,729,500 15,583,484 5.7
2016 480,000 32,740 512,740 16,250,673 31.7
Source: The source of this information is the Town's financial records.
Town of Fountain Hills
Revenue Bond Coverage
Last Ten Fiscal Years
Municipal Facilities Corporation Revenue Bonds
Page 115
2006 2007 2008 2009 2010
Population 22,788 22,932 22,984 22,736 22,489
Per capita personal income 32,230$ 32,230$ 38,439$ 38,918$ 40,672$
Median age 46.4 46.4 48.3 48.9 53.9
Public school enrollment 2,425 2,307 2,233 2,203 2,103
Town of Fountain Hills
unemployment rate 1.7% 1.5% 2.6% 4.5% 4.8%
Land use
Total acres 12,996.0 13,005.7 13,005.7 13,005.7 13,005.7
Total square miles 20.31 20.32 20.32 20.32 20.32
Vacant lots N/A 3,355 1,295 1,253 1,226
Number of units
Housing 12,681 12,850 12,832 12,927 12,983
Lodging 4 4 4 4 4
Restaurants 50 53 47 52 53
Shopping centers 14 14 19 19 20
Schools
Public 4 4 4 4 4
Preschool 5 4 4 4 4
Charter 2 1 1 1 1
Sources:
The source of the "Population" is the U.S. Census Bureau.
The source of School Enrollment is the Fountain Hills Unified School District No. 98.
Other information is from the Town's records.
Note: N/A indicates the information is not available.
* Information obtained is based on calendar years; therefore, the latest information obtained was
from 2015
The source of the "Per Capita Personal Income", "Median Age" and "Unemployment Rate"
information is Sites USA.
Town of Fountain Hills, Arizona
Demographic and Economic Statistics
Last Ten Calendar Years
Calendar Year
Page 116
Schedule 19
2011 2012 2013 2014 2015*
22,554 22,695 22,893 23,602 23,899
44,660$ 47,260$ 48,244$ 46,619$ 48,240$
53.9 53.9 53.0 53.7 53.8
1,981 1,886 1,820 1,692 1,619
6.7% 5.6% 6.0% 5.4% 2.4%
13,005.7 13,005.7 13,005.7 13,005.7 13,005.7
20.32 20.32 20.32 20.32 20.32
1,218 1,209 1,196 1,165 1,247
12,990 12,977 12,991 12,981 13,002
4 4 4 4 4
56 56 54 43 46
20 20 20 20 20
4 3 3 3 3
4 6 7 7 7
1 1 1 1 1
Calendar Year
Page 117
Schedule 20
Percentage
Number of of Total Town Number of
Employer Employees Rank Employment Employees Rank
Fountain Hills Unified School District No. 98 171 1 4.2% 270 1
Fountain View Village 140 2 3.4%
Rural Metro Corporation 111 3 2.7%
Target Stores 101 4 2.5% 130 3
Firerock Country Club 100 5 2.4%
Safeway Stores 88 6 2.2%95 5
Fry's Food Stores 80 7 2.0%80 7
Bashas 70 8 1.7%70 8
Eagle Mountain Golf Club 70 9 1.7%70 10
Sunridge Canyon Golf Course 59 10 1.4%70 9
Monks Construction 190 2
MCO Properties, Inc.125 4
Town of Fountain Hills 87 6
Totals 990 24.2% 1,187
Total Town employment 4,082
Source: The source of this information is the Maricopa Association of Governments.
Note: Total Town employment for 2006 was not available.
* Data for 2016 was not available.
Town of Fountain Hills, Arizona
Principal Employers
Prior Fiscal Year and Nine Years Ago
2015 2006
Page 118
Schedule 21
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Municipal court 5.00 5.00 5.00 5.00 5.00 5.00 5.00 4.00 3.63 3.63
Administration 13.00 13.50 13.50 13.25 11.25 11.58 11.68 10.56 11.33 11.63
Development services 41.00 40.50 40.00 35.75 23.25 20.25 18.75 16.25 16.30 16.30
Community services 28.00 29.25 29.75 27.10 21.63 21.53 21.18 20.18 21.06 20.76
Total 87.00 88.25 88.25 81.10 61.13 58.36 56.61 50.99 52.32 52.32
Source: The source of this information is the Town's financial records.
Town of Fountain Hills, Arizona
Authorized Full-time Equivalent Government Employees by Function
Last Ten Fiscal Years
Fiscal Year Ended June 30
Page 119
Function/Program 2007 2008 2009 2010 2011
Municipal Court
Cases filed N/A N/A N/A 3,520 2,584
Hearings/Trials held N/A N/A N/A 1,089 738
Administration
FTEs per 1,000 residents 3.6 3.5 3.3 3.2 2.7
Registered voters - general election none 14,335 none 15,511 none
Voter turnout - general election none 39% none 50% none
Development Services
Building permits issued 759 716 391 409 354
Building inspections conducted 7,975 5,692 3,189 1,936 1,546
Number of code violation cases N/A N/A N/A 1,024 843
Number of zoning cases N/A N/A N/A 7 14
Community Services
Number of Community Center bookings N/A N/A N/A 3,396 3,315
Number of participants in recreational programs N/A N/A N/A 1,960 1,759
Number of Senior Services members N/A N/A N/A 1,105 1,205
Number of home delivered meals N/A N/A N/A 10,169 9,742
Law Enforcement (contracted)
Physical arrests 993 524 825 679 645
Traffic violations 2,315 2,504 4,900 2,959 1,909
Fire & Emergency Medical (contracted)
Total incident responses 3,069 2,694 2,787 2,875 3,179
Average response time (in minutes)3:49 3:37 3:44 4:32 3:46
Source: The source of this information is the Town's financial records.
Note: N/A indicates that the information is not available.
Fiscal Year Ended June 30
Town of Fountain Hills, Arizona
Operating Indicators by Function
Last Ten Fiscal years
Page 120
Schedule 22
2012 2013 2014 2015 2016
2,173 1,740 1,649 1,738 1,593
731 703 1,665 1,585 1,564
2.6 2.5 2.2 2.2 2.2
16,074 none N/A 16,213 none
34% none N/A 38% none
352 419 566 443 381
1,257 1,395 2,131 2,448 2,129
804 746 716 752 713
7 10 41 65 72
3,236 3,196 3,383 3,439 3,124
1,833 1,789 2,291 2,249 2,910
1,208 1,118 1,189 1,273 1,326
8,419 6,941 4,799 4,035 3,497
522 545 743 445 220
1,366 1,296 1,379 1,539 1,215
3,082 3,136 2,956 3,166 3,191
3:50 3:53 3:37 3:57 3:25
Fiscal Year Ended June 30
Page 121
2007 2008 2009 2010 2011 2012
Public safety
Number of fire stations 2 2 2 2 2 2
Other highways and streets
Streets (centerline miles) 178.9 178.9 178.9 178.9 178.9 178.9
Streets (lane miles)390 390 390 390 390 390
Pedestrian lighting 34 34 34 34 34 34
Traffic signals 12 13 13 13 13 13
Parks and recreation
Acreage-developed parks 116 116 116 116 116 116
Playgrounds 6 7 7 7 7 7
Baseball/softball diamonds 6 6 6 6 6 6
Soccer/football fields 1 7 7 7 7 7
Community centers 1 1 1 1 1 1
Preserve acreage N/A N/A N/A N/A N/A 740
Miles of trails N/A N/A N/A N/A N/A 4.3
Source: The source of this information is the Town's facilities records.
Note: N/A indicates the information is not available.
Function/Program
Fiscal Year Ended June 30
Town of Fountain Hills, Arizona
Capital Assets Statistics by Function
Last Ten Fiscal Years
Page 122
Schedule 23
2013 2014 2015 2016
2 2 2 2
178.9 178.9 178.9 178.9
390 390 390 390.5
34 34 85 91
13 13 13 13
116 116 119 119
7 7 7 7
6 6 6 6
7 7 7 7
1 1 1 1
740 740 807.2 807.2
10.43 10.43 15.8 15.8
Fiscal Year Ended June 30
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Town of Fountain Hills
16705 E. Avenue of the Fountains
Fountain Hills, Arizona 85268
480-816-5100
www.fh.az.gov
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