HomeMy WebLinkAboutFY17 CAFRFor the Fiscal Year Ended June 30, 2017
Comprehensive Annual Financial Report
Town of Fountain Hills, Arizona
TOWN OF FOUNTAIN HILLS, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2017
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 66
Highway User Revenue Fund 67
Grants Fund 68
Note to Required Supplementary Information 69
COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND
SCHEDULES
Special Revenue Funds:
Combining Balance Sheet 74
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances 76
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual 78
Debt Service Funds:
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual 84
Capital Projects Fund:
Combining Schedule of Revenues, Expenditures and Changes in
Fund Balances – Budget and Actual 88
STATISTICAL SECTION
Financial Trends:
Net Position by Component 92
Changes in Net Position 94
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
STATISTICAL SECTION Page
Financial Trends:
Fund Balances – Governmental Funds 96
Statement of Revenues, Expenditures and Changes in
Fund Balances – Governmental Funds 98
Revenue Capacity:
Governmental Activities – Tax Revenues by Source 100
Assessed Value and Estimated Actual Value of Taxable Property 101
Principal Property Taxpayers 102
Property Tax Levies and Collections 103
Taxable Sales by Category 104
Direct and Overlapping Sales Tax Rates 106
Debt Capacity:
Ratios of Outstanding Debt by Type 107
Ratios of General Bonded Debt Outstanding 108
Direct and Overlapping Governmental Activities Debt 109
Legal Debt Margin Information 110
Calculation of Legal Debt Margin 112
Revenue Bond Coverage 113
Demographic and Economic Information:
Demographic and Economic Statistics 114
Principal Employers 116
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
STATISTICAL SECTION Page
Operating Information:
Authorized Full-Time Equivalent Government Employees by Function 117
Operating Indicators by Function 118
Capital Assets Statistics by Function 120
(This page intentionally left blank)
INTRODUCTORY SECTION
(This page intentionally left blank)
www.fh.az.gov
October 16, 2017
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, 2017.
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, 2017, 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, 2017, are fairly presented in conformity with
accounting principles generally accepted in the United States of America. The independent
auditor’s report is presented as the first component of the financial section of this report.
TOWN OF FOUNTAIN HILLS
16705 E. Avenue of the Fountains, Fountain Hills, AZ 85268
480.816.5100 | Fax: 480.837.3145
Accounting principles generally accepted in the Unites States of America require that management
provide a narrative introduction, overview, and analysis to accompany the basic financial
statements in the form of Management’s Discussion and Analysis (MD&A). This letter of
transmittal is designed to complement the MD&A and should be read in conjunction with it. The
Town of Fountain Hills’s MD&A can be found immediately following the report of the
independent auditors.
PROFILE OF THE GOVERNMENT
The Town of Fountain Hills overlooks the Verde River Valley and the east valley of the metro
Phoenix area. The Town is a master planned community established in 1970 by McCulloch
Properties (now MCO Properties, Inc.). Prior to 1970, the area was a cattle ranch and was part of
one of the largest land and cattle holdings in Arizona. The land was purchased by Robert
McCulloch in the late 1960s and the community designed by Charles Wood, Jr. (designer of
Disneyland in southern California). The centerpiece of Fountain Hills is one of the world's tallest
man-made fountains, a focal point that attracts thousands of visitors each year.
Located on 13,006 acres of land, Fountain
Hills is surrounded by the McDowell
Mountains and Scottsdale on the west, the
Fort McDowell Yavapai Nation on the east,
the Salt River Pima-Maricopa Indian
Community on the south, and by the
McDowell Mountain Regional Park on the
north. The elevation is 1,520 feet at the
fountain, 2,130 feet at the Golden Eagle
Trailhead, 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 23,899 in 2015. 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 Town standards.
The Town offers a wide range of living accommodations, from small condominium complexes to
large custom homes. Fountain Hills also offers recreational and cultural programs and services that
contribute to a high quality of life for its residents. The community consists of primarily residential
property and open space; of the total 20.32 square miles of land only 0.5% of the total is zoned
commercial and/or industrial, 23.3% is preserved as open space and 51.1% is residential.
Page 2
The Town’s Mission Statement
The Town of Fountain Hills’ purpose is to serve the best interests of the community by:
providing for 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 54 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
Page 3
The financial reporting entity (the Town) includes all the funds of the primary government (i.e.,
the Town of Fountain Hills as legally defined) as well as all of its component units. The component
units consist of legally separate entities for which the primary government is financially
accountable. Blended component units, although legally separate entities, are, in substance, part
of the primary government’s operations and are included as part of the primary government.
Accordingly, the Cottonwoods Maintenance District, the Eagle Mountain Community Facilities
District and the Fountain Hills Municipal Property Corporation are included in the financial report
of the Town.
FACTORS AFFECTING FINANCIAL CONDITION
The information presented in the financial statements is perhaps best understood when it is
considered from the broader perspective of the specific environment within which the Town of
Fountain Hills operates.
Internal Controls. As earlier noted, the management of the Town of Fountain Hills, Arizona, is
responsible for establishing and maintaining a system of internal control. Internal accounting
controls are designed to provide reasonable, but not absolute, assurance regarding;
1) Safeguarding of assets against loss from unauthorized use or deposition, and
2) Reliability of financial records for preparing financial statements and maintaining
accountability for assets.
The concept of reasonable assurance recognizes:
1) The cost of a control should not exceed the benefits likely to be derived, and
2) The valuation of costs and benefits requires estimates and judgments by management.
The system of internal control is subject to periodic evaluation by management and is also
considered by the independent auditors in connection with the annual audit of the Town’s financial
statements. All internal control evaluations occur within the above framework. The Town's internal
accounting controls are considered to adequately safeguard assets and provide reasonable
assurance of proper recording of financial transactions.
Budgetary Controls. The budget process is a cyclical process and begins each year with the
preparation of the base budget by each department head. Each budget is based on expenditures to
date and the previous years’ experience. The departments’ base budgets, along with any requests
for new positions, programs or services are reviewed by the Town Manager. The Town Manager
then meets with department heads to review their base budgets and requests for new services and/or
programs. Once management has reviewed the departments’ requests, a tentative budget is
presented to the Town Council by the Town Manager.
The Town Council formally adopts the budget and appropriates funding for 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 during the fiscal
Page 4
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 Expenditure Limitation Law for Towns and Cities.
This law does not permit the Town to spend more than budgeted revenues plus the carry-over of
unrestricted cash balance from the prior fiscal year. The limitation is applied to the total of the
combined funds. All appropriations lapse at year-end.
To ensure compliance with the state imposed expenditure limitation, a uniform expenditure report
must be filed with the state 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 and department. 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 and all other funds are
presented in Combining and Individual Fund Financial Statements and 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 stable level of local sales tax receipts. Even though construction activity has
decreased almost 21% from the prior year, other categories have increased which we interpret as
an 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
following chart is a look at the past five years’ significant local sales tax activity by sector:
Page 5
As can be seen in the chart, sales tax collections continue to show signs of moderate growth. Retail
sales experienced a 2.7% increase over the prior year; restaurant/bar revenues have exceeded any
prior year and an increase of 8.4% from FY15-16. Construction sales tax, a one-time revenue
source, is driven entirely by development activity in the community and decreased 20.6% from 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 a decrease of
11.7%.
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 86% of total General Fund revenue for fiscal year
2016-17.
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 0.4%). State shared income tax revenue category is based
on two years prior personal and corporate earnings; revenue from the State income tax increased
by 8.0% in FY16-17. After decreases in State sales tax from FY08-09 through FY11-12, this
revenue increased by 2.8% in FY16-17 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.
Page 6
Development Activity over the past year:
Development Services has been involved with the following development activities during fiscal
year 2016-17 (7/1/2016 – 6/30/2017):
Two Development Agreements were approved by Council:
Park Place
Copper Ridge
Three Site Plans were approved by the Planning & Zoning Commission during the period:
Park Place
Fountain View Village
Multi-family condominium
Six Special Use Permits were granted.
Twenty-nine Administrative Use Permits were issued.
Fifty-five new Single-Family Residential Building Permits were issued.
Ten Multi-family permits were issued.
There were six new Commercial Building Permits issued.
There were nine 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 0 2 51 2 0 58
AUGUST 3 1 2 1 1 27 3 0 35
SEPTEMBER 2 0 0 0 0 30 3 2 37
OCTOBER 3 5 10 5 1 33 2 0 44
NOVEMBER 3 0 0 0 0 25 3 1 32
DECEMBER 5 0 0 0 0 25 6 1 37
JANUARY 6 1 8 4 2 27 4 0 43
FEBRUARY 5 0 0 0 1 40 2 4 52
MARCH 3 0 0 0 0 32 2 1 38
APRIL 7 0 0 0 1 27 5 0 40
MAY 7 0 0 0 5 30 4 0 47
JUNE 8 0 0 0 2 29 7 1 46
YEARLY
TOTAL 55 7 20 10 15 376 43 10 509
Page 7
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 formula generally allocate revenues based on official census data
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 needs to be reconsidered.
Page 8
In early 2009, the Strategic Planning Advisory Commission (SPAC) began the process of
gathering public input to update the Strategic Plan’s vision, confirm residents’ values, and create
a fresh structure for the Strategic Plan revision. 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. In 2017, SPAC again updated the Strategic Plan. Based on
citizen input, the newest Strategic Plan is designed to guide our future decisions grounded on these
common values:
1. Economic Growth
2. Infrastructure Maintenance
3. Demographic Balance
4. Financial Stability and Sustainability
5. Community and Quality of Life
These values guide the Town’s annual budget process.
MAJOR INITIATIVES AND SERVICE EFFORTS AND ACCOMPLISHMENTS
The Town of Fountain Hills’ adopted FY16-17 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 FY16-17 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 dedicated local sales tax which provides funding for business attraction,
retention and expansion.
Page 9
For the Year. The following list depicts the continued commitment of the Town of Fountain Hills
to make the community a better place to live. Fiscal year 2016-17 goals attained are summarized
within this list of accomplishments:
Completion of Ashbrook Wash channelization improvements – Bayfield to Del
Cambre
Initiation of Fire Station 2 relocation design and construction
Installation of a new chiller
Completion of the new Lake Aeration System at Fountain Park
Demolition of the Bus Barn at Four Peaks Park
Resurfaced the basketball courts at Golden Eagle Park
Completion of the reconstruction of the tennis courts, mainly financed through the
AZSTA (Arizona Sports and Tourism Authority) grant, at Golden Eagle and Four
Peaks Parks
Added several new monthly and special educational programs, workshops and support
groups at the Community Center
New public art installed: Selfie Gate, Sky Totem, Ascendo, Strength to the People,
Gahn Dancer II and Mounted Carousel Horse
Completion and dedication of the Rotary Harmony Musical Playground
Completion of the East Loop Sonoran Trail in the Preserve
APRA (Arizona Parks & Recreation Association) Outstanding Sports Program
recognition for Archery
Awarded Playful City USA for 6th time
Bronze award for Best Onsite décor for Turkey Trot from IFEA (International Festival
and Events Association)
Silver awards for Best Single Display Ad and Best Ad Series from IFEA (International
Festival and Events Association)
Gold Award for Best Organizational Website 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
Secured grant funding from Fort McDowell Yavapai Nation - Proposition 202
Voted one of the Best Cities for Building Wealth from Lending EDU
Recognized in the Top 50 of the Most Beautiful Places in the Country by Expedia
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, 2016. This was
the twenty-first 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 2017 Certificate.
Page 10
For the fifth year, The Town was also given the Award for Outstanding Achievement in Popular
Annual Financial Reporting for the fiscal year ended June 30, 2016.
In addition, the government received the GFOA’s Distinguished Budget Presentation Award for
its annual budget for the fiscal year beginning July 1, 2016. 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 fifteenth 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
Page 11
TOWN OF FOUNTAIN HILLS, ARIZONA
LIST OF PRINCIPAL OFFICIALS
JUNE 30, 2017
ELECTED OFFICIALS
Linda M. Kavanagh, Mayor
Alan Magazine, Vice-Mayor
Dennis Brown, Councilmember
Nick DePorter, Councilmember
Henry Leger, Councilmember
Art Tolis, Councilmember
Cecil A. Yates, Councilmember
DEPARTMENT DIRECTORS
Grady Miller, Town Manager
Craig Rudolphy, Finance Director
Robert Melton, Presiding Judge
Rachael Goodwin, Interim Community Services Director
Robert Rogers, Development Services Director
Justin Weldy, Interim Public Works Director
Captain Dave Ott, Rural Metro Corporation, Fire Chief
Captain Hank Brandimarte, 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
Page 12
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
Town of Fountain Hills
Arizona
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2016
Executive Director/CEO
Page 13
Development
Services
Citizens of Fountain Hills
Presiding Judge
Town of Fountain Hills Organization
Engineering Streets
Recreation /
Tourism
Community
ServicesFire / EMS Administration Law
Enforcement
Town Manager Town Attorney
Community
Center
Code
Enforcement
Building Safety
Facilities
Finance /
Information
Technology
Town Clerk
Administrative
Services
Senior
Services
Parks
Town Prosecutor
Economic
Development
Appointed
by Council
Contracted
Volunteer
Program
Mayor and Town Council
Public Works
GIS
Planning
InspectionPage 14
FINANCIAL SECTION
Page 15
(This page intentionally left blank)
Page 16
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, 2017, 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, 2017, 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.
Page 17
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 16, 2017, on
our consideration of the Town of Fountain Hills, Arizona’s internal control over financial reporting and on our
tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other
matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial
reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the Town’s internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the Town of Fountain Hills,
Arizona’s internal control over financial reporting and compliance.
Heinfeld, Meech & Co., P.C.
Phoenix, Arizona
October 16, 2017
Page 18
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
(Required Supplementary Information)
Page 19
(This page intentionally left blank)
Page 20
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2017
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, 2017. 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 decreased $451.3 thousand to $ 117.0
million, representing a .4% percent decrease of the total net position.
General revenues from governmental activities accounted for $18.2 million in revenue, or
79.0 percent of all revenues from governmental activities. Program specific revenues in the
form of charges for services and grants and contributions accounted for $4.9 million or 21.0
percent of total governmental activities revenues.
The Town had $23.5 million in expenses related to governmental activities, an increase of 8.0
percent from the prior fiscal year primarily due to increased public works costs.
Among major governmental funds, the General Fund had $15.0 million in current fiscal year
revenues, which primarily consisted of taxes and intergovernmental revenues. The total
expenditures of the General Fund were $13.9 million. The General Fund’s fund balance
decreased $3.0 million to $7.2 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, 2017
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, public
works, and culture and recreation.
Fund financial statements. A fund is a grouping of related accounts that is used to maintain
control over resources that have been segregated for specific activities or objectives. The Town
uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements. All 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, 2017
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, Development Fees 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 $117.0 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, 2017
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, 2017 and June 30, 2016.
Governmental Activities
As of
June 30, 2017
As of
June 30, 2016
Current and other assets $ 24,037,642 $ 23,190,907
Capital assets, net 103,179,955 106,661,659
Total assets 127,217,597 129,852,566
Current and other liabilities 4,588,747 4,025,377
Long-term liabilities 5,669,418 8,416,454
Total liabilities 10,258,165 12,441,831
Net position
Net investment in capital assets 94,909,703 95,647,990
Restricted 4,471,661 4,530,239
Unrestricted 17,578,068 17,232,506
Total net position $ 116,959,432 $ 117,410,735
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, 2017
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 reduction of $3.5 million of governmental capital assets is due primarily to
depreciation expense.
Changes in net position. The Town’s total revenues for the current fiscal year were $23.1 million.
The total cost of all programs and services was $23.5 million. The following table presents a
summary of the changes in net position for the fiscal years ended June 30, 2017 and June 30, 2016.
Governmental Activities
Fiscal
Year Ended
June 30, 2017
Fiscal
Year Ended
June 30, 2016
Revenues
Program revenues:
Charges for services $ 2,664,463 $ 2,016,451
Operating grants and contributions 1,699,931 1,615,973
Capital grants and contributions 494,328 381,011
General revenues
Property taxes 2,296,199 2,569,504
Sales taxes 9,415,151 9,395,667
Franchise taxes 367,119 360,320
State Shared revenue 5,115,914 4,886,238
Vehicle License taxes 941,364 927,440
Investment earnings 55,127 219,058
Miscellaneous 28,839 13,826
Total revenues 23,078,435 22,385,488
Expenses
General government 3,142,722 2,516,966
Development services 1,364,378 2,253,208
Public safety 7,563,898 7,178,890
Public Works 7,904,577 6,476,688
Culture and recreation 3,375,414 3,124,523
Interest on long-term debt 178,749 241,694
Total expenses 23,529,738 21,791,969
Changes in net position (451,303) 593,519
Net position, beginning 117,410,735 116,817,216
Net position, ending $ 116,959,432 $ 117,410,735
Page 25
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2017
GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued
The charts below compare the governmental expenses from fiscal years 2016-17 and 2015-16.
Page 26
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2017
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 32.1 percent compared to the prior
year due in large part to the collection of the new environmental fee.
Interest on long-term debt decreased 26.0 percent due to the prior year refunding of old
debt and reissuance of new bonds.
Public safety costs include contracts for police and fire; one contract is multi-year with
automatic increases while the other is a cost reimbursement contract.
Investment income decreased in the current year 74.8 percent over the prior year due to
low overall market returns.
Overall, expenses increased 8.0 percent due primarily to a general increase in the cost of
obtaining goods and services.
The following table presents the cost of the Town’s major functional activities. The table also
shows each function’s net cost (total cost less charges for services generated by the activities and
intergovernmental aid provided for specific programs). The net cost shows the financial burden
that was placed on the Town’s taxpayers by each of these functions.
Year Ended June 30, 2017 Year Ended June 30, 2016
Total
Expenses
Net
(Expense)/
Revenue
Total
Expenses
Net (Expense)/
Revenue
Governmental Activities
General government $ 3,142,722 $ (2,506,081) $ 2,516,966 $ (2,068,504)
Development services 1,364,378 (298,295) 2,253,208 (995,716)
Public safety 7,563,898 (7,186,135) 7,178,890 (7,087,802)
Public Works 7,904,577 (6,148,913) 6,476,688 (4,816,682)
Culture and recreation 3,375,414 (2,352,843) 3,124,523 (2,568,136)
Interest on long-term debt 178,749 (178,749) 241,694 (241,694)
Total expenses $23,529,738 $(18,671,016) $21,791,969 $(17,778,534)
The cost of all governmental activities this year was $23.5 million.
Federal, State, and county governments and charges for services subsidized certain
governmental programs with charges for services of $4.9 million.
Net cost of governmental activities of $18.7 million was financed by general revenues,
which are made up of primarily sales taxes of $9.4 million and State Shared revenues of
$6.1 million.
Page 27
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2017
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 no change in the combined fund balance
of $22.0 million.
The General Fund comprises 32.7 percent of the total fund balance. Approximately $2.7 million
or 37.6 percent of the General Fund’s fund balance is unassigned.
The General Fund is the principal operating fund of the Town. The fund balance decreased by $3.0
million to $7.2 million as of fiscal year end. General Fund revenues increased $267,181 primarily
due to increased State-shared revenues. General Fund expenditures increased $941,373. This
increase was a result of increased public safety costs and the purchase of eight new vehicles that
were due to be replaced.
The Highway User Revenue Fund comprises 10.5 percent of total fund balance. The fund balance
increased $656,238 from the prior year due to the increase in sales tax revenues.
The Capital Projects Fund comprises 37.1 percent of the total fund balance. All of the fund balance
is committed or assigned to capital projects. The fund balance increased $2.7 million due to the
delays involving ongoing capital projects during the fiscal year.
The Development Fees Fund is 8.8 percent of the total fund balance. The fund balance decreased
primarily because of transfers out to projects utilizing the development fees.
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 $85,280 decrease, or .6 percent.
Page 28
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2017
BUDGETARY HIGHLIGHTS – continued
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 negative variance of $156,233 in overall revenues is primarily due to less than
expected licenses and permits revenue, mostly attributable to the delay in commercial
construction projects assumed to begin in FY 2016-2017.
The favorable total expenditures variance of $1,423,435 includes all departments.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets. As of the end of the current fiscal year, the Town had invested $103.2 million in
governmental capital assets, including buildings, facilities, vehicles, computers, equipment,
infrastructure assets and artwork. These amounts represent net increases prior to depreciation of
$1.3 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
$5.2 million for governmental activities.
The following schedule presents a summary of capital asset balances for the fiscal years ended
June 30, 2017 and June 30, 2016.
Governmental Activities
As of
June 30, 2017
As of
June 30, 2016
Capital assets – non-depreciable $ 27,134,114 $ 27,522,240
Capital assets – depreciable, net 76,045,841 79,139,419
Total $103,179,955 $106,661,659
The estimated construction commitments amount is $286,836.
Additional information on the Town’s capital assets can be found in Note 5.
Debt Administration. At year-end, the Town had $8.3 million in governmental long-term debt
outstanding with $2.7 million due within one year. Long-term debt decreased by $2.7 million for
governmental activities.
Page 29
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2017
CAPITAL ASSETS AND DEBT ADMINISTRATION – continued
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 $84.7 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 $25.4 million.
Additional information on the Town’s long-term debt can be found in Notes 6 and 7 in the notes
to the financial statements.
CONTACTING THE TOWN’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, 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 30
BASIC FINANCIAL STATEMENTS
Page 31
(This page intentionally left blank)
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
$ 22,274,126
656,587
913,745
62,522
38,452
5,872
17,342
68,996
24,037,642
27,134,114
76,045,841
103,179,955
127,217,597
1,035,703
70,322
8,922
151,547
300,219
360,000
2,360,000
302,034
4,588,747
5,669,418
5,669,418
10,258,165
94,909,703
1,999,080
1,959,320
513,261
17,578,068
$116,959,432
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF NET POSITION
JUNE 30, 2017
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
Public works
Culture and recreation
Interest on long-term debt
Total governmental activities
Expenses
$ 3,142,722
1,364,378
7,563,898
7,904,577
3,375,414
178,749
$23,529,738
Charges for
Services
$ 415,883
1,066,083
273,515
216,724
692,258
$2,664,463
Operating
Grants and
Contributions
$ 82,182
50,112
1,538,940
28,697
$1,699,931
Capital Grants
and
Contributions
$ 138,576
54,136
301,616
$494,328
Governmental
Activities
$ (2,506,081)
(298,295)
(7,186,135)
(6,148,913)
(2,352,843)
(178,749)
(18,671,016)
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
2,296,199
9,415,151
367,119
5,115,914
941,364
55,127
28,839
18,219,713
(451,303)
117,410,735
$116,959,432
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2017
The notes to the basic financial statements are an integral part of this statement.
Page 35
(This page intentionally left blank)
Page 36
FUND FINANCIAL STATEMENTS
Page 37
ASSETS
Cash and investments $ 6,972,039 $ 2,227,457 $ 238,076
Accounts receivable
Intergovernmental receivable
Taxes receivable
Interest receivable
Due from other funds
Inventory, at cost
Prepaid items
Cash and investments - restricted
Total assets $ 7,909,036 $ 2,449,775 $ 292,443
Liabilities:
Accounts payable $ 340,944 $ 136,954 $
Accrued wages and benefits
Other liabilities
Customer deposits
Unearned revenues
Due to other funds
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 $ 7,909,036 $ 2,449,775 $ 292,443
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
General
148,773
678,813
17,675
5,872
16,868
68,996
60,501
8,544
151,547
37,488
91,334
690,358
41,036
41,036
22,740
2,714,135
1,743,768
2,696,999
7,177,642
Highway User
Revenue
6,849
215,469
6,280
143,234
3,989
3,989
1,995,090
307,462
2,302,552
Grants
177,892
96,900
274,792
10,246
264,546
274,792
274,792
General
Obligation Debt
Service
$
54,367
$
$
31,029
31,029
261,414
261,414
$
TOWN OF FOUNTAIN HILLS, ARIZONA
BALANCE SHEET - GOVERNMENTAL FUNDS
JUNE 30, 2017
The notes to the basic financial statements are an integral part of this statement.
Page 38
$ 43,147 $ 169,563 $ 8,597,333 $ 1,939,113 $ 1,909,506 $ 22,274,126
$ 51,254 $ 169,563 $ 8,665,124 $ 2,360,539 $ 1,969,310 $ 24,141,836
$ $ $ 505,435 $ $ 42,124 $ 1,035,703
$ 51,254 $ 169,563 $ 8,665,124 $ 2,360,539 $ 1,969,310 $ 24,141,836
Eagle Mountain
Debt Service
8,107
3,932
3,932
47,322
47,322
Municipal
Property
Corporation
Debt Service
169,563
169,563
Capital Projects
54,136
13,655
12,860
518,295
7,127,301
1,019,528
8,146,829
Development
Fees
417,291
4,135
417,291
417,291
1,943,248
1,943,248
Non-Major
Governmental
Funds
29,538
19,463
48
2,987
7,294
474
3,541
378
16,073
1,448,949
457,771
1,923,267
46,043
Total
Governmental
Funds
656,587
913,745
62,522
38,452
104,194
5,872
474
17,342
68,996
70,322
23,214
4,432,710
8,922
151,547
302,034
104,194
1,672,722
11,290,385
3,528,529
2,696,999
21,971,837
34,961
462,316
497,277
Page 39
(This page intentionally left blank)
Page 40
Total governmental fund balances 21,971,837$
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 211,759,485$
Less accumulated depreciation (108,579,530)103,179,955
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 34,961
Other 462,316 497,277
Long-term liabilities are not due and payable in the current
period and, therefore, are not reported in the funds.
Compensated absences payable (419,385)
Bonds payable (8,270,252)(8,689,637)
Net position of governmental activities 116,959,432$
TOWN OF FOUNTAIN HILLS, ARIZONA
RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
JUNE 30, 2017
The notes to the basic financial statements are an integral part of this statement.
Page 41
Revenues:
Property taxes $ $ $ 1,902,919
Sales taxes
Franchise taxes
Licenses and permits
Leases and rents
Intergovernmental
Charges for services
Other
Fines and forfeitures
Investment earnings
Total revenues
Expenditures:
Current -
General government
Development services
Public safety
Public works
Culture and recreation
Capital outlay
Debt service -
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
Fund balances, end of year $ 7,177,642 $ 2,302,552 $ 261,414
General
7,970,576
367,119
698,808
284,090
5,160,526
181,106
94,117
211,190
7,379
14,974,911
2,495,993
780,509
7,420,032
672,806
2,286,053
217,265
13,872,658
1,102,253
39,828
(4,185,083)
(4,145,255)
(3,043,002)
10,220,644
Highway User
Revenue
719,662
2,480,304
170,370
4,492
7,023
3,381,851
2,925,613
2,925,613
456,238
200,000
200,000
656,238
1,646,314
Grants
206,161
206,161
47,068
324,001
371,069
(164,908)
164,908
164,908
General
Obligation Debt
Service
$
4,408
1,907,327
1,930,000
188,250
1,000
2,119,250
(211,923)
(211,923)
473,337
$
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2017
The notes to the basic financial statements are an integral part of this statement.
Page 42
$ 378,872 $ $ $ $ 5,653 $ 2,287,444
$ 47,322 $ 169,563 $ 8,146,829 $ 1,943,248 $ 1,923,267 $ 21,971,837
Eagle Mountain
Debt Service
938
379,810
375,000
34,056
170
409,226
(29,416)
(29,416)
76,738
Municipal
Property
Corporation
Debt Service
2,315
2,315
370,000
22,680
1,010
393,690
(391,375)
249,055
249,055
(142,320)
311,883
Capital Projects
365,082
54,136
23,898
443,116
2,207
352,233
1,151,999
1,506,439
(1,063,323)
4,110,777
(364,908)
3,745,869
2,682,546
5,464,283
Development
Fees
111,434
4,420
115,854
535
535
115,319
(419,200)
(419,200)
(303,881)
2,247,129
Non-Major
Governmental
Funds
359,831
500,731
70,660
693
46,537
4,746
988,851
168,280
494,638
3,798
198,352
865,068
123,783
429,570
(224,947)
204,623
328,406
1,594,861
Total
Governmental
Funds
9,415,151
367,119
1,310,973
284,090
7,917,651
351,476
153,438
257,727
55,127
22,400,196
2,713,548
1,275,147
7,420,032
3,954,450
2,484,940
1,693,265
2,675,000
244,986
2,180
(63,352)
22,035,189
22,463,548
(63,352)
5,194,138
(5,194,138)
Page 43
Changes in fund balances - total governmental funds (63,352)$
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 1,696,612$
Less current year depreciation (5,193,321) (3,496,709)
Donated items are not reported in the governmental funds. However, in the Statement
of Activities, the costs of those assets are reported as capital grants and contributions.230,956
Some revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds.
Property taxes 8,755
Other 438,528 447,283
Repayments of bond principal are expenditures in the governmental
funds, but the repayment reduces long-term liabilities in the Statement of
Net Position.2,675,000
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 (215,951)
Amortization of deferred bond items 68,417
Compensated absences (96,947) (244,481)
Changes in net position in governmental activities (451,303)$
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, 2017
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, 2017
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.
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, public
works, public safety 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 Districts cannot be part of another reporting entity. The Districts’ governing bodies are
substantially the same as the Town and the Town’s management oversees operations, resulting
in the Town having the ability to exercise control. As a result, for financial reporting purposes,
transactions of the Districts are combined together and included as if they were part of the
Town’s operations.
Page 45
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
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, 2017
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.
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 and sales tax.
Page 47
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
Development Fees Fund – This fund accounts for restricted development fees collected
from building permits.
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.
Arizona Revised Statutes authorize the Town to invest public monies in the State Treasurer’s
local government investment pools, the County Treasurer’s investment pool, obligations of the
U.S. Government and its agencies, obligations of the state and certain local government
subdivisions, interest-bearing savings accounts and certificates of deposit, collateralized
repurchase agreements, certain obligations of U.S. corporations, and certain other securities.
Investments are stated at fair value.
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.
Page 48
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
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.
Page 49
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. Capital assets are recorded at
historical cost, if purchased or constructed. Donated capital assets are recorded at the
acquisition value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the assets or
materially extend the life of the asset are not capitalized.
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.
Page 50
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
L. Compensated Absences
The Town’s employee vacation and sick leave policies generally provide for granting vacation
and sick leave with pay. Sick leave and vacation benefits accrue as pay periods are completed
at the current rate of pay.
All eligible full-time and part-time regularly-scheduled employees can accrue vacation leave.
Employees accrue up to a maximum of two times the yearly maximum accrual of vacation
through carryover of balances, depending upon their length of service. In the event of
termination, employees will be paid for any accrued, but unused, vacation hours. Full-time and
part-time regularly-scheduled employees accrue sick leave, up to a maximum of 1040 hours.
A portion of this balance will be paid upon a satisfactory separation of service. Part-time non-
regularly-scheduled, temporary, or seasonal, and other employees accrue paid sick time for
hours worked, not to exceed 40 hours per calendar year.
The current and long-term liabilities, including related benefits, for accumulated vacation and
sick leave are reported on the government-wide financial statements. A liability for these
amounts is reported in governmental funds only if they have matured, for example, as a result
of employee leave, resignations and retirements. Generally, resources from the General Fund
are used to pay for compensated absences.
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.
Page 51
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
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.
Page 52
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
NOTE 2 – FUND BALANCE CLASSIFICATIONS
Assigned. Amounts in the assigned fund balance classification are intended to be used by the
Town for specific purposes but do not meet the criteria to be classified as restricted or
committed. In governmental funds other than the General Fund, assigned fund balance
represents the remaining amount that is not restricted or committed. In the General Fund,
assigned amounts represent intended uses established by the Town Council or a management
official delegated that authority by formal Town Council action. The authority to make
assignments has been delegated by the Town Council to the Finance Director.
Unassigned. Unassigned fund balance is the residual classification for the General Fund and
includes all spendable amounts not contained in the other classifications. In other governmental
funds, the unassigned classification is used only to report a deficit balance resulting from
overspending for specific purposes for which amounts had been restricted, committed, or
assigned.
The Town applies restricted resources first when outlays are incurred for purposes for which
either restricted or unrestricted (committed, assigned, and unassigned) amounts are available.
Similarly, within unrestricted fund balance, committed amounts are reduced first followed by
assigned, and then unassigned amounts when expenditures are incurred for purposes for which
amounts in any of the unrestricted fund balance classifications could be used.
The Town has established a fund balance policy which states that the combined General Fund
operating fund balance should be at least 30 percent of the average actual General Fund
revenues for the preceding five fiscal years.
The Town has established a stabilization fund (Rainy Day fund) in the Town’s fund balance
policy. The Rainy Day fund had a balance of $2,711,008, reported as a committed fund balance
at June 30, 2017. 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 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 53
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
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
Development
Fees Fund
Non-Major
Governmental
Funds Total
Fund Balances:
Nonspendable:
Inventory $ 5,872 $ $ $ $ $ $ $ $ 5,872
Prepaid items 16,868 474 17,342
Restricted:
Capital Projects 16,073 16,073
Debt Service 261,414 47,322 169,563 478,299
Public Works 1,995,090 1,995,090
Development Fees 1,943,248 1,943,248
Committed:
Rainy Day 2,711,008 2,711,008
Public Art 3,127 3,127
Downtown Strategy 932,888 932,888
Economic Development 160,300 160,300
Tourism 13,053 13,053
Capital Projects 7,127,301 7,127,301
Local Court Enhancement 342,708 342,708
Assigned:
Capital Projects 813,302 1,019,528 1,832,830
Environmental 457,771 457,771
Vehicle Replacement 388,264 307,462 695,726
Equipment Replacement 542,202 542,202
Unassigned: 2,696,999 2,696,999
Total fund balances $ 7,177,642 $ 2,302,552 $ 261,414 $ 47,322 $ 169,563 $ 8,146,829 $ 1,943,248 $ 1,923,267 $ 21,971,837
Page 54
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
NOTE 3 – 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 $523,530 and the bank balance was $559,051. At year end, $60,232 of the
Town’s deposits were covered by collateral held by the pledging financial institution in the
Town’s name. The remaining amount is covered by FDIC.
Fair Value Measurements. The Town categorizes its fair value measurements within the fair
value hierarchy established by generally accepted accounting principles. The hierarchy is
based on the valuation inputs used to measure the fair value of the asset.
Level 1 inputs are quoted prices in active markets for identical assets
Level 2 inputs are significant other observable inputs
Level 3 inputs are significant unobservable inputs
Valuation Techniques. Equity securities classified in Level 1 of the fair value hierarchy are
valued using prices quoted in active markets for those securities. Debt securities classified in
Level 2 of the fair value hierarchy are valued using a matrix pricing techniques. Matrix pricing
is used to value securities based on the securities’ relationship to benchmark quoted prices.
Real estate assets classified in Level 3 are valued by external appraisals and are generally
obtained at least annually. The appraisals are performed using generally accepted valuation
approaches by an independent appraiser.
The State Treasurer’s pools are external investment pools, the Local Government Investment
Pool (Pool 5) and Local Government Investment Pool-Government (Pool 7), with no
regulatory oversight. The pools, as an investment company, are not registered with the
Securities and Exchange Commission. The activity and performance of the pools are reviewed
monthly by the State Board of Investment. The fair value of each participant’s position in the
State Treasurer investment pools approximates the value of the participant’s shares in the pool
and the participants’ shares are not identified with specific investments. Participants in the pool
are not required to categorize the value of shares in accordance with the fair value hierarchy.
Page 55
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
NOTE 3 – 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, 2017, are classified in the
accompanying financial statements as follows:
Carrying amount of investments $ 21,749,746
Carrying amount of cash deposits 523,530
Cash on hand 850
Restricted cash and investments 68,996
Total pooled cash and investments $ 22,343,122
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 $ 6,742,894 $ 1,293,736 $ 5,449,158 AA+ Aaa
Federal National Mortgage Association Notes Level 2 3,022,719 3,022,719 AA+ Aaa
Federal Home Loan Mortgage Corporation Notes Level 2 2,708,783 373,594 2,335,189 AA+ Aaa
Federal Home Loan Bank Notes Level 2 3,026,897 741,885 2,285,012 AA+ Aaa
Wells Fargo Money Market Funds Level 2 20,002 20,002 N/A N/A
$ 2,429,217 $ 13,092,078
State Treasurer’s Investment Pool 7
Not
applicable 6,228,451 55 days average maturities
Total $ 21,749,746
Interest Rate Risk. Interest rate risk is the risk that changes in interest rates may reduce the
market value of Town investments. In accordance with its investment policy, the Town
manages its exposure to declines in fair values by the following:
Structuring the investment portfolio so that securities mature concurrent with the
anticipated cash requirements for ongoing operations, thereby avoiding, as much as
possible, the need to sell securities into an adverse market environment prior to
maturity.
Investing funds primarily in shorter-term securities or similar investment pools and
limiting the average maturity of the portfolio in accordance with the needs of the Town.
With respect to any firm or individual given responsibility for investments utilizing
external research and advice regarding the current interest rate outlook and global
economic condition to optimize portfolio duration strategy.
Page 56
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
NOTE 3 – CASH AND INVESTMENTS
Credit Risk. Credit risk is the risk of default of debt by an issuer or counterparty to an
investment. The Town will limit credit risk by limiting investments in the Town’s portfolio to
the asset classes designated as acceptable in ARS §35-323. When possible, analysis of the
credit worthiness of all individual debt issuers held in the portfolio should be conducted on an
annual basis in an effort to guard against investing in a weak or deteriorating credit situation.
Additionally, the Town will pre-qualify financial institutions, brokers/dealers, and investment
advisers with which the Town will do business.
Custodial Credit Risk – Investments. Custodial credit risk is the risk that in the event of
depository financial institution failure, the Town’s deposits may not be returned to the Town.
The Town’s investment in the State Treasurer’s investment pool represents a proportionate
interest in the pool’s portfolio; however the Town’s portion is not identified with specific
investments and is not subject to custodial credit risk.
Concentration of Credit Risk. Concentration of credit risk is the risk of loss from over
concentration of investments. In accordance with its investment policy, the Town diversifies
its investment portfolio to minimize the risk of loss resulting from over concentration of assets
in a specific maturity, specific issuer, or specific class of securities. With the exception of U.S.
Treasury notes and securities and authorized pools, the investment policy establishes a
maximum percentage of 30 percent in insured or collateralized certificates of deposit; 20
percent in certificates of deposit registry services; 30 percent in commercial paper; and 30
percent in bonds, debentures, or notes.
Investment Type
Fair Value
Percent of Town
Investments
U.S. Treasury Notes $ 6,742,894 31.0%
Federal National Mortgage Association Notes 3,022,719 13.9
Federal Home Loan Mortgage Corporation Notes 2,708,783 12.5
Federal Home Loan Bank Notes 3,026,897 13.9
Wells Fargo Money Market Funds 20,002 0.1
State Treasurer’s Investment Pool 7 6,228,451 28.6
$21,749,746 100.0%
NOTE 4 – RECEIVABLES
Receivable balances, net of allowance for uncollectibles, have been disaggregated by type and
presented separately in the financial statements with the exception of intergovernmental
receivables. Intergovernmental receivables, net of allowance for uncollectibles, as of year-end
for the Town’s individual major funds consisted entirely of receivables due from the State.
Page 57
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
NOTE 5 – 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 2,365,000 138,900 2,503,900
Construction in progress 1,585,572 1,423,249 1,950,275 1,058,546
Total capital assets, not being depreciated 27,522,240 1,562,149 1,950,275 27,134,114
Capital assets, being depreciated:
Infrastructure 145,833,576 1,362,849 147,196,425
Buildings and building improvements 18,996,641 463,500 18,533,141
Improvements other than buildings 14,506,257 643,525 15,149,782
Vehicles, machinery and equipment 3,565,208 309,320 128,505 3,746,023
Total capital assets being depreciated 182,901,682 2,315,694 592,005 184,625,371
Less accumulated depreciation for:
Infrastructure (87,177,483) (3,990,268)(91,167,751)
Buildings and building improvements (5,192,330) (395,919) (248,834) (5,339,415)
Improvements other than buildings (9,019,158) (627,230)(9,646,388)
Vehicles, machinery and equipment (2,373,292) (179,904) (127,220) (2,425,976)
Total accumulated depreciation (103,762,263) (5,193,321) (376,054) (108,579,530)
Total capital assets, being depreciated, net 79,139,419 (2,877,627) 215,951 76,045,841
Governmental activities capital assets, net $ 106,661,659 $(1,315,478) $ 2,166,226 $103,179,955
Depreciation expense was charged to functions/programs as follows:
Governmental activities:
General government $ 181,201
Development services 12,011
Public safety 143,866
Public works 3,953,474
Culture and recreation 902,769
Total depreciation expense $ 5,193,321
Page 58
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
NOTE 5 – CAPITAL ASSETS
Construction Commitments – At June 30, 2017, the Town has the following active
construction commitments:
Governmental Activities
Project
Spent-to-Date
Remaining
Commitment
Valley Metro Bus Stop - Library $ 20,517 $ 5,761
Unpaved Alley Parking 14,658 12,342
Fire Station #2 Relocation 233,033 67,164
New Chiller 15,000 16,392
Lighting Upgrades 107,413 44,856
Lake Aeration System 171,504 9,699
Adero Canyon Trailhead 163,358 120,361
Fountain Hills Boulevard Shoulder Paving 114,460 10,261
Total commitments $ 839,943 $ 286,836
NOTE 6 – 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, 2017
Due
Within
One Year
Governmental activities:
General Obligation Bonds:
General Obligation Refunding
Bonds, Series 2005 $ 7,225,000 4% 7/1/18-19 $ 765,000 $ 455,000
General Obligation Bonds,
Series 2014 7,565,000 2-3% 7/1/18-20 4,710,000 1,525,000
Eagle Mountain Community
Facilities District, General
Obligation Refunding Bonds,
Series 2015 2,300,000 1.76% 7/1/18-21 1,560,000 380,000
Revenue Bonds:
Municipal Facilities Revenue
Refunding Bonds, Series 2015 1,880,000 4% 7/1/18-20 1,030,000 360,000
Total $ 8,065,000 $ 2,720,000
Page 59
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
NOTE 6 – 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
2018 $ 2,720,000 $ 185,092
2019 2,635,000 123,872
2020 2,310,000 67,302
2021 400,000 7,040
Total $ 8,065,000 $ 383,306
Pledged Revenues
The Town has pledged excise tax revenues to repay a total of $1,030,000 in outstanding
Municipal Facilities Revenue Refunding Bonds. For the current fiscal year, the net revenues
available to service the debt were $16.6 million. For the fiscal year ended June 30, 2017, the
debt principal and interest paid on this debt was $392,680 (two percent of pledged revenues).
The total principal and interest remaining to be paid on the bonds is $1,062,400.
NOTE 7 – CHANGES IN LONG-TERM LIABILITIES
Long-term liability activity for the current fiscal year was as follows:
Beginning
Balance Additions Reductions
Ending
Balance
Due Within
One Year
Governmental activities:
Bonds payable:
General obligation bonds $ 9,340,000 $ $ 2,305,000 $ 7,035,000 $ 2,360,000
Revenue bonds 1,400,000 370,000 1,030,000 360,000
Premium 273,669 68,417 205,252
Total bonds payable 11,013,669 2,743,417 8,270,252 2,720,000
Compensated absences payable 322,438 347,200 250,253 419,385 300,219
Governmental activity long-term
liabilities $ 11,336,107 $ 347,200 $ 2,933,670 $ 8,689,637 $ 3,020,219
Page 60
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
NOTE 8 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
At year end, interfund balances were as follows:
Due to/from other funds:
Grants
Fund
Non-Major
Governmental
Funds
Total
Due to Other
Funds
General Fund $ 91,334 $ $ 91,334
Capital Projects Fund 5,566 7,294 12,860
Total Due from Other Funds $ 96,900 $ 7,294 $ 104,194
At year end, two funds had negative cash balances in the LGIP account. Negative cash in the
LGIP account was reduced by interfund borrowing with other funds. All interfund balances
are expected to be paid within one year.
Interfund transfers:
At year end, interfund transfers were as follows:
Transfers out
Transfers in
Grants
Fund
Capital
Projects
Fund
Development
Fees
Non-Major
Governmental
Funds Total
General Fund $ $ $ $ 39,828 $ 39,828
HURF Fund 200,000 200,000
Grants Fund 164,908 164,908
Debt Service Funds 249,055 249,055
Capital Projects Fund 3,645,558 419,200 46,019 4,110,777
Non-Major Governmental Funds 290,470 139,100 429,570
Total $4,185,083 $ 364,908 $ 419,200 $ 224,947 $5,194,138
The General Fund transferred $249,055 to the Debt Service Funds to pay for debt service costs;
$3,645,558 to the Capital Projects Fund for funding of facilities replacements and capital
projects as well as transferring excess revenues over expenditures per the Town’s Financial
Policy; and $290,470 to the Non-major Governmental Funds (Economic Development Fund -
$50,000) for funding economic development efforts and (Environmental Fund - $240,000) to
pay for funding operations of the fund, including the billing of the environmental fee and
(Tourism Fund - $470) for art walk brochures. The Capital Projects Funds transferred $200,000
to the HURF Fund for pavement management costs; and $164,908 to the Grants Fund for the
Town’s portion of grant project G5203 – tennis court replacement. The Development Fees
Fund transferred $419,200 to the Capital Projects Fund for the relocation of Fire Station # 2
($255,306) and the Adero Canyon Trailhead ($163,894) projects. The Non-major
Governmental Funds (Economic Development Fund) transferred $39,828 to the General Fund
for Town-wide contracts and $139,100 to the Non-major Governmental Fund (Tourism Fund)
to provide funding for operating costs of the tourism program; (Downtown Strategy)
transferred $46,019 to the Capital Projects Fund to cover the costs installing lights at
intersection with Avenue of the Fountains ($24,000) and Fountain Park access improvements
($22,019).
Page 61
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
NOTE 9 – CONTINGENT LIABILITIES
Compliance – Amounts received or receivable from grantor agencies are subject to audit and
adjustment by grantor agencies, principally the state government. Any disallowed claims,
including amounts already collected, may constitute a liability of the applicable funds. The
amount, if any, of expenditures/expenses that may be disallowed by the grantor cannot be
determined at this time, although the Town expects such amounts, if any, to be immaterial.
Lawsuits – The Town is a party to a number of various types of lawsuits, many of which
normally occur in governmental operations. The ultimate outcome of the actions is not
determinable; however, Town management believes that the outcome of these proceedings,
either individually or in the aggregate, will not have a materially adverse effect on the
accompanying financial statements.
Developer Agreement – As of June 30, 2017, the Town reported a receivable from a developer
in the Development Fees Fund of $417,291, which is due solely from one developer who is
disputing the fees. While a portion of the receivable was collected in the subsequent fiscal year,
the Town continues to work with the developer to successfully resolve the unpaid balance,
which is approximately $300,000. Should the fees be reduced or credited, any outstanding fees
would be paid from the General Fund.
NOTE 10 – RISK MANAGEMENT
The Town is exposed to various risks of loss related to torts; theft of, damage to and destruction
of assets; errors and omissions; and natural disasters. The Town’s insurance protection is
provided by the Arizona Municipal Risk Retention Pool (Pool). The Pool is made up of various
towns and cities within Arizona that operate a common risk management and insurance
program. The Pool is structured such that member premiums are based on an actuarial review
that will provide adequate reserves to allow the Pool to meet its expected financial obligations.
The Pool has the authority to assess its’ members additional premiums should reserves and
annual premiums be insufficient to meet the Pool’s obligations.
The Town joined the Arizona Municipal Workers’ Compensation Pool (Pool) together with
other governments in the state for risks of loss related to workers’ compensation claims. The
Pool is a public entity risk pool currently operating as a common risk management and
insurance program for towns and cities in the State. The Town is responsible for paying a
premium, based on an experience rating formula that allocates pool expenditures and liabilities
among members.
The Town continues to carry commercial insurance for all other risks of loss, including
employee health, dental, and vision insurance. There were no settlements that exceeded
insurance coverage in any of the past three years.
Page 62
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
NOTE 11 – RETIREMENT PLANS
Defined Contribution Pension Plan
All full-time employees of the Town participate in a defined contribution pension plan
administered by the ICMA Retirement Corporation as a 401(a) plan. The contribution rates are
11 percent for both the employee and the Town. The payroll for the Town employees covered
by this plan for the year ended June 30, 2017, was $2,638,552. The Town’s total payroll was
$3,142,946.
A defined contribution pension plan provides benefits in return for services rendered, provides
an individual account for each participant, and specifies how contributions to the individual’s
account are to be determined, instead of specifying the amount of benefit the individual is to
receive. Under a defined contribution pension plan, the benefits a participant will receive
depend solely on the amount contributed to the participant’s account and the returns earned on
investment of those contributions. All full-time Town employees must participate in the
pension plan from the date they are hired. Contributions made by an employee vest
immediately and contributions made by the Town vest on a pro rata basis for five years. Town
Council has the authority to establish and amend benefit terms and to establish and amend the
contribution rates.
An employee that leaves the employment of the town is entitled to his or her contributions and
the vested portion of the Town’s contributions, plus interest earned. During the fiscal year, the
Town’s required and actual contributions amounted to $290,241. The employees’
contributions totaled $290,241. Employees may also contribute to the ICMA Retirement
Corporation 457 plan on a voluntary basis (with the exception of one contract employee that
is limited to 11 percent of earnings); there is no employer match for those contributions. During
the fiscal year, employees contributed $131,668 to that plan. The Town contributed $5,550 for
the contract employee’s 457 account.
No pension provision changes occurred during the year that affected the required contributions
to be made by the Town or its employees. The ICMA Retirement Corporation held no securities
of the Town or other related parties during the fiscal year 2016-17 or as of the close of the
fiscal year.
Page 63
(This page intentionally left blank)
Page 64
REQUIRED SUPPLEMENTARY INFORMATION
Page 65
$ 7,551,057 $ 7,551,057 $ 7,970,576 $ 419,519
$ 7,468,718 $ 7,553,998 $ 7,177,642 $ (376,356)
Variance with
Final Budget
Positive
(Negative)
(1,643,558)
(376,356)
173,278
45,518
645,450
218,796
1,423,435
1,267,202
5,000
(1,648,558)
163,630
228,129
242,469
20,739
10,035
1,332
(52,783)
27,056
(13,030)
15,505
(22,633)
(156,233)
(4,145,255)
(3,043,002)
10,220,644
34,701
(593,967)
7,420,032
13,872,658
1,102,253
83,828
(4,229,083)
3,535,439
3,884,593
217,265
211,190
7,379
14,974,911
2,495,993
780,509
2,286,053
1,921,811
300,515
71,213
Actual
367,119
698,808
284,090
5,160,526
181,106
94,117
78,828
(2,580,525)
(2,501,697)
(2,666,646)
10,220,644
3,141,443
944,139
2,514,182
7,638,828
15,296,093
(164,949)
2,164,280
321,254
227,300
72,545
3,708,717
3,930,111
5,213,309
154,050
107,147
195,685
30,012
15,131,144
(2,501,697)
(2,751,926)
10,220,644
Final
332,418
1,292,775
254,691
7,638,828
15,381,373
(250,229)
78,828
(2,580,525)
Non departmental
227,300
72,545
3,708,717
3,930,111
3,540,065
927,139
2,217,840
107,147
195,685
30,012
15,131,144
2,164,280
321254
Fund balances, beginning of year
Fund balances (deficits), end of year
Budgeted Amounts
Original
332,418
1,292,775
254,691
5,213,309
154,050
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
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, 2017
Revenues:
Sales taxes
Franchise taxes
Licenses and permits
Leases and rents 29,399
583,364 981,986 380,910
830,201 Public works 830,201 672,806 157,395
202,454
See accompanying notes to this schedule.
Page 66
Revenues:
Sales taxes
Intergovernmental
Charges for services
Other
Investment earnings
Total revenues
Expenditures:
Current -
Public works
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
$ 692,778
2,373,986
262,000
25,000
300
3,354,064
3,594,696
3,594,696
(240,632)
202,000
202,000
(38,632)
1,646,314
$1,607,682
Final
$ 692,778
2,373,986
262,000
25,000
300
3,354,064
3,702,675
3,702,675
(348,611)
202,000
202,000
(146,611)
1,646,314
$1,499,703
Actual
$ 719,662
2,480,304
170,370
4,492
7,023
3,381,851
2,925,613
2,925,613
456,238
200,000
200,000
656,238
1,646,314
$2,302,552
Variance with
Final Budget
Positive
(Negative)
$ 26,884
106,318
(91,630)
(20,508)
6,723
27,787
777,062
777,062
804,849
(2,000)
(2,000)
802,849
$802,849
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
HIGHWAY USER REVENUE
YEAR ENDED JUNE 30, 2017
See accompanying notes to this schedule.
Page 67
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
$1,476,000
1,476,000
1,265,000
390,000
1,655,000
(179,000)
179,000
179,000
$
Final
$1,465,430
1,465,430
1,228,152
416,278
1,644,430
(179,000)
179,000
179,000
$
Actual
$206,161
206,161
47,068
324,001
371,069
(164,908)
164,908
164,908
$
Variance with
Final Budget
Positive
(Negative)
$(1,259,269)
(1,259,269)
1,181,084
92,277
1,273,361
14,092
(14,092)
(14,092)
$
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GRANTS
YEAR ENDED JUNE 30, 2017
See accompanying notes to this schedule.
Page 68
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2017
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 budget for the Town is legally enacted through
passage of a resolution. To ensure compliance with the expenditure limitation, a uniform
expenditure report must be filed with the State each year. This report, issued under a
separate cover, reconciles total Town expenditures from the audited basic financial
statements to total expenditures for reporting in accordance with the State’s uniform
expenditure reporting system (A.R.S 41-1279.07).
4. Expenditures may not legally exceed the expenditure limitation described below for all
fund types as a whole. For management purposes, the Town adopts a budget by department
for the General Fund and in total by fund for other funds. The Town Manager, subject to
Town Council approval, may at any time transfer any unencumbered appropriation balance
or portion thereof between 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, Highway User Revenue, Excise Tax, Special Revenue, Debt Service, and
Capital Projects Funds on essentially the same modified accrual basis of accounting used
to record actual revenues and expenditures.
The Town is subject to the State of Arizona’s Spending Limitation Law for Towns and Cities.
This law does not permit the Town to spend more than budgeted revenues plus the carryover
unrestricted cash balance from the prior fiscal year. The limitation is applied to the total of the
combined funds. The Town complied with this law during the year.
Page 69
(This page intentionally left blank)
Page 70
COMBINING AND INDIVIDUAL
FUND STATEMENTS
AND SCHEDULES
Page 71
(This page intentionally left blank)
Page 72
NON-MAJOR GOVERNMENTAL FUNDS
Special Revenue Funds
Downtown Strategy Fund – accounts for the portion of Town sales tax committed by the Town
Council for the development of the downtown area.
Economic Development Fund – accounts for the portion of Town sales tax committed by the
Town Council for economic development and tourism.
Tourism Fund – accounts for the portion of Town sales tax committed by the Town Council as
well as any grants received for all tourism activities.
Local Court Enhancement Fund – accounts for a local court surcharge, committed for court
enhancement.
Environmental Fund – accounts for all funds received from collection of the environmental fee.
Cottonwoods Maintenance Fund – accounts for all funds restricted to pay for maintenance of
the Cottonwoods Maintenance District.
Capital Projects Funds
Facilities Replacement Fund – accounts for all funds assigned for the maintenance and repair of
facilities and equipment.
Page 73
ASSETS
Cash and investments
Accounts receivable
Intergovernmental receivable
Taxes receivable
Interest receivable
Due from other funds
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
$ 926,095
3,806
2,987
$932,888
$
932,888
932,888
$932,888
Economic
Development
$ 155,850
15,227
$171,077
$ 8,657
2,119
1
10,777
160,300
160,300
$171,077
Tourism
$ 31,655
$31,655
$ 17,198
1,027
377
18,602
13,053
13,053
$31,655
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING BALANCE SHEET - NON-MAJOR SPECIAL REVENUE FUNDS
JUNE 30, 2017
Page 74
Local Court
Enhancement
$ 335,458
430
7,294
474
$343,656
$474
474
474
342,708
343,182
$343,656
Environmental
$ 443,523
29,538
$473,061
$ 14,895
395
15,290
457,771
457,771
$473,061
Cottonwoods
Maintenance
$ 16,925
48
$16,973
$900
900
16,073
16,073
$16,973
Totals
$ 1,909,506
29,538
19,463
48
2,987
7,294
474
$1,969,310
$ 42,124
3,541
378
46,043
474
16,073
1,448,949
457,771
1,923,267
$1,969,310
Page 75
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Total revenues
Expenditures:
Current -
General government
Development services
Public works
Culture and recreation
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses):
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Downtown
Strategy
$
71,966
1,487
73,453
34,056
34,056
39,397
(46,019)
(46,019)
(6,622)
939,510
$932,888
Economic
Development
$
287,865
482
288,347
134,102
134,102
154,245
50,000
(178,928)
(128,928)
25,317
134,983
$160,300
Tourism
$
70,660
642
392
71,694
198,352
198,352
(126,658)
139,570
139,570
12,912
141
$13,053
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2017
Page 76
Local Court
Enhancement
$
46,537
263
46,800
122
122
46,678
46,678
296,504
$343,182
Environmental
$
500,731
51
2,048
502,830
494,638
494,638
8,192
240,000
240,000
248,192
209,579
$457,771
Cottonwoods
Maintenance
$ 5,653
74
5,727
3,798
3,798
1,929
1,929
14,144
$16,073
Totals
$ 5,653
359,831
500,731
70,660
693
46,537
4,746
988,851
168,280
494,638
3,798
198,352
865,068
123,783
429,570
(224,947)
204,623
328,406
1,594,861
$1,923,267
Page 77
Total revenues
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Expenditures:
Current -
General government
Development services
Public works
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
$
69,278
3,036
72,314
46,655
46,655
25,659
(975,000)
(975,000)
(949,341)
939,510
$(9,831)
Actual
$
71,966
1,487
73,453
34,056
34,056
39,397
(46,019)
(46,019)
(6,622)
939,510
$932,888
Variance -
Positive
(Negative)
$
2,688
(1,549)
1,139
12,599
12,599
13,738
928,981
928,981
942,719
$942,719
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, 2017
Page 78
Economic Development
Budget
$
277,111
96
277,207
139,483
139,483
137,724
50,000
(178,928)
(128,928)
8,796
134,983
$143,779
Actual
$
287,865
482
288,347
134,102
134,102
154,245
50,000
(178,928)
(128,928)
25,317
134,983
$160,300
Variance -
Positive
(Negative)
$
10,754
386
11,140
5,381
5,381
16,521
16,521
$16,521
Tourism
Budget
$
70,570
10,000
80,570
218,790
218,790
(138,220)
139,570
139,570
1,350
141
$1,491
Actual
$
70,660
642
392
71,694
198,352
198,352
(126,658)
139,570
139,570
12,912
141
$13,053
Variance -
Positive
(Negative)
$
90
(9,358)
392
(8,876)
20,438
20,438
11,562
11,562
$11,562
(Continued)
Page 79
Total revenues
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Expenditures:
Current -
General government
Development services
Public works
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
58,115
30,000
88,115
(71,665)
(71,665)
296,504
$224,839
Actual
$
46,537
263
46,800
122
122
46,678
46,678
296,504
$343,182
Variance -
Positive
(Negative)
$
30,187
163
30,350
57,993
30,000
87,993
118,343
118,343
$118,343
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, 2017
Page 80
Environmental
Budget
$
540,000
540,000
540,586
540,586
(586)
240,000
240,000
239,414
209,579
$448,993
Actual
$
500,731
51
2,048
502,830
494,638
494,638
8,192
240,000
240,000
248,192
209,579
$457,771
Variance -
Positive
(Negative)
$
(39,269)
51
2,048
(37,170)
45,948
45,948
8,778
8,778
$8,778
Cottonwoods Maintenance
Budget
$ 5,588
5,588
4,265
4,265
1,323
1,323
14,144
$15,467
Actual
$ 5,653
74
5,727
3,798
3,798
1,929
1,929
14,144
$16,073
Variance -
Positive
(Negative)
$65
74
139
467
467
606
606
$606
(Continued)
Page 81
Total revenues
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Expenditures:
Current -
General government
Development services
Public works
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
Totals
Budget
$ 5,588
346,389
540,000
70,570
10,000
16,350
3,232
992,129
244,253
540,586
4,265
218,790
30,000
1,037,894
(45,765)
429,570
(1,153,928)
(724,358)
(770,123)
1,594,861
$824,738
Actual
$ 5,653
359,831
500,731
70,660
693
46,537
4,746
988,851
168,280
494,638
3,798
198,352
865,068
123,783
429,570
(224,947)
204,623
328,406
1,594,861
$1,923,267
Variance -
Positive
(Negative)
$65
13,442
(39,269)
90
(9,307)
30,187
1,514
(3,278)
75,973
45,948
467
20,438
30,000
172,826
169,548
928,981
928,981
1,098,529
$1,098,529
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, 2017
Page 82
(This page intentionally left blank)
Page 83
Total revenues
Revenues:
Property taxes
Investment earnings
Expenditures:
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
Total other financing sources (uses):
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
General Obligation Debt Service
Budget
$ 1,894,584
210
1,894,794
1,930,000
188,250
1,100
2,119,350
(224,556)
(224,556)
473,337
$248,781
Actual
$ 1,902,919
4,408
1,907,327
1,930,000
188,250
1,000
2,119,250
(211,923)
(211,923)
473,337
$261,414
Variance -
Positive
(Negative)
$ 8,335
4,198
12,533
100
100
12,633
12,633
$12,633
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, 2017
Page 84
Eagle Mountain Debt Service
Budget
$ 378,392
150
378,542
375,000
34,056
170
409,226
(30,684)
(30,684)
76,738
$46,054
Actual
$ 378,872
938
379,810
375,000
34,056
170
409,226
(29,416)
(29,416)
76,738
$47,322
Variance -
Positive
(Negative)
$480
788
1,268
1,268
1,268
$1,268
Municipal Property Corporation Debt Service
Budget
$
300
300
370,000
22,680
1,010
393,690
(393,390)
249,055
249,055
(144,335)
311,883
$167,548
Actual
$
2,315
2,315
370,000
22,680
1,010
393,690
(391,375)
249,055
249,055
(142,320)
311,883
$169,563
Variance -
Positive
(Negative)
$
2,015
2,015
2,015
2,015
$2,015
(Continued)
Page 85
Total revenues
Revenues:
Property taxes
Investment earnings
Expenditures:
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
Total other financing sources (uses):
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Totals
Budget
$ 2,272,976
660
2,273,636
2,675,000
244,986
2,280
2,922,266
(648,630)
249,055
249,055
(399,575)
861,958
$462,383
Actual
$ 2,281,791
7,661
2,289,452
2,675,000
244,986
2,180
2,922,166
(632,714)
249,055
249,055
(383,659)
861,958
$478,299
Variance -
Positive
(Negative)
$ 8,815
7,001
15,816
100
100
15,916
15,916
$15,916
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, 2017
Page 86
(This page intentionally left blank)
Page 87
Total revenues
Revenues:
Sales taxes
Licenses and permits
Intergovernmental
Other
Investment earnings
Expenditures:
Current -
General government
Public works
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
Capital Projects
Budget
$ 433,023
255,000
150,000
6,000
844,023
1,685
350,000
8,912,200
9,263,885
(8,419,862)
4,046,962
(379,000)
3,667,962
(4,751,900)
5,355,812
$603,912
Non-GAAP
Actual
$ 365,082
54,136
19,756
438,974
2,207
259,148
1,151,999
1,413,354
(974,380)
3,110,777
(364,908)
2,745,869
1,771,489
5,355,812
$7,127,301
Variance -
Positive
(Negative)
$ (67,941)
(255,000)
(95,864)
13,756
(405,049)
(522)
90,852
7,760,201
7,850,531
7,445,482
(936,185)
14,092
(922,093)
6,523,389
$6,523,389
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, 2017
Page 88
Facilities Replacement Fund
Budget
$
431,000
431,000
(431,000)
1,000,000
1,000,000
569,000
108,471
$677,471
Non-GAAP
Actual
$
4,142
4,142
93,085
93,085
(88,943)
1,000,000
1,000,000
911,057
108,471
$1,019,528
Variance -
Positive
(Negative)
$
4,142
4,142
337,915
337,915
342,057
342,057
$342,057
Development Fees
Budget
$
180,571
6,264
186,835
535
535
186,300
(2,071,962)
(2,071,962)
(1,885,662)
2,247,129
$361,467
Actual
$
111,434
4,420
115,854
535
535
115,319
(419,200)
(419,200)
(303,881)
2,247,129
$1,943,248
Variance -
Positive
(Negative)
$
(69,137)
(1,844)
(70,981)
(70,981)
1,652,762
1,652,762
1,581,781
$1,581,781
(Continued)
Page 89
Total revenues
Revenues:
Sales taxes
Licenses and permits
Intergovernmental
Other
Investment earnings
Expenditures:
Current -
General government
Public works
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
Totals
Budget
$ 433,023
180,571
255,000
150,000
12,264
1,030,858
1,685
781,000
535
8,912,200
9,695,420
(8,664,562)
5,046,962
(2,450,962)
2,596,000
(6,068,562)
7,711,412
$1,642,850
Non-GAAP
Actual
$ 365,082
111,434
54,136
28,318
558,970
2,207
352,233
535
1,151,999
1,506,974
(948,004)
4,110,777
(784,108)
3,326,669
2,378,665
7,711,412
$10,090,077
Variance -
Positive
(Negative)
$ (67,941)
(69,137)
(255,000)
(95,864)
16,054
(471,888)
(522)
428,767
7,760,201
8,188,446
7,716,558
(936,185)
1,666,854
730,669
8,447,227
$8,447,227
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, 2017
Page 90
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 with fiscal year 2015-
16. Aggregate assessed value without a growth limit is currently referred to as net full cash
assessed value and formerly as secondary assessed value. This value remains the value utilized for
determining debt capacity limits.
Page 91
2008 2009 2010 2011
Governmental activities:
Net investment in capital assets 94,939,805$ 94,611,110$ 95,467,509$ 92,579,483$
Restricted 12,799,502 11,828,137 11,396,116 4,385,595
Unrestricted 13,230,726 13,765,293 12,321,090 22,598,669
Total governmental activities net position 120,970,033$ 120,204,540$ 119,184,715$ 119,563,747$
Source: The source of this information is the Town's financial records.
Town of Fountain Hills, Arizona
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year ended June 30
Page 92
2012 2013 2014 2015 2016 2017
92,006,103$ 89,800,560$ 89,713,260$ 95,325,824$ 95,647,990$ 94,909,703$
5,951,416 5,721,744 5,480,867 6,310,810 4,530,239 4,471,661
21,064,267 20,612,758 19,186,823 15,180,582 17,232,506 17,578,068
119,021,786$ 116,135,062$ 114,380,950$ 116,817,216$ 117,410,735$ 116,959,432$
Fiscal Year ended June 30
Page 93
2008 2009 2010 2011
Expenses
Governmental activities:
General government 3,921,588$ 4,231,529$ 3,720,236$ 2,876,848$
Development services 2,861,653 2,218,994 1,612,287 1,572,202
Public works 5,981,347 5,051,294 5,202,285 5,567,973
Public safety 6,532,292 7,312,415 6,293,323 5,963,067
Culture and recreation 3,092,661 3,336,616 2,927,848 2,840,154
Interest on long-term debt 1,132,947 1,033,536 950,484 851,957
Total governmental activities expenses 23,522,488 23,184,384 20,706,463 19,672,201
Program Revenues
Governmental activities:
Fines, fees and charges for services:
General government 830,963 499,914 474,434 337,279
Development services 390,589 455,543 236,377 344,821
Public works 23,700 50,408 266,706 77,409
Public safety 746,227 55,042 59,806 65,568
Culture and recreation 338,332 427,137 338,357 339,341
Operating grants and contributions 56,802 - 1,666,498 1,614,462
Capital grants and contributions 835,659 1,353,409 632,617 2,273,414
Total governmental activities program revenues 3,222,272 2,841,453 3,674,795 5,052,294
Net (Expenses)/Revenues (20,300,216) (20,342,931) (17,031,668) (14,619,907)
General Revenues and Other Changes in Net Assets
Governmental activities:
Taxes:
Property taxes 1,635,542 1,531,770 1,928,028 1,349,079
Sales taxes 10,489,591 8,932,374 7,644,440 8,013,480
Franchise taxes 336,290 321,964 285,881 322,659
State shared revenues 8,848,199 8,456,552 6,000,923 5,217,140
Investment earnings 780,935 258,478 22,831 28,456
Miscellaneous 183,963 76,300 129,740 68,125
Total governmental activities 22,274,520 19,577,438 16,011,843 14,998,939
Changes in Net Position
Governmental activities 1,974,304$ (765,493)$ (1,019,825)$ 379,032$
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 94
2012 2013 2014 2015 2016 2017
3,119,113$ 2,909,443$ 2,432,965$ 2,479,365$ 2,516,966$ 3,142,722$
1,442,613 1,633,361 1,237,717 2,074,611 2,253,208 1,364,378
4,718,047 5,712,817 6,630,875 4,963,979 6,476,688 7,904,577
5,820,136 6,100,131 6,958,056 6,816,152 7,178,890 7,563,898
2,754,731 2,779,294 2,760,690 2,822,954 3,124,523 3,375,414
779,576 567,043 472,999 698,542 241,694 178,749
18,634,216 19,702,089 20,493,302 19,855,603 21,791,969 23,529,738
272,469 380,926 215,943 337,655 298,737 837,163
322,984 377,483 531,193 693,670 1,257,492 1,062,094
95,201 112,521 250,421 236,706 48,688 216,724
63,926 63,824 74,887 86,641 90,345 155,454
303,508 288,745 340,353 339,158 321,189 393,028
1,285,656 1,266,906 1,307,738 1,431,017 1,615,973 1,699,931
1,392,706 150,535 144,570 2,874,796 381,011 494,328
3,736,450 2,640,940 2,865,105 5,999,643 4,013,435 4,858,722
(14,897,766) (17,061,149) (17,628,197) (13,855,960) (17,778,534) (18,671,016)
1,453,405 1,385,147 1,449,646 904,660 2,569,504 2,296,199
7,787,489 7,957,163 8,459,267 8,983,049 9,395,667 9,415,151
332,130 334,668 349,414 352,673 360,320 367,119
4,515,511 4,979,183 5,326,332 5,713,235 5,813,678 6,057,278
88,877 69,998 123,311 150,358 219,058 55,127
178,393 300,899 166,115 188,251 13,826 28,839
14,355,805 15,027,058 15,874,085 16,292,226 18,372,053 18,219,713
(541,961)$ (2,034,091)$ (1,754,112)$ 2,436,266$ 593,519$ (451,303)$
Fiscal Year Ended June 30
Page 95
2008 2009 2010
General fund
Reserved 3,053,070$ 3,234,860$ 3,235,811$
Unreserved, designated - 127,916 333,796
Unreserved, undesignated 3,526,738 3,302,373 3,418,799
Total general fund 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 3,876,927 4,198,782 4,498,523
Capital projects funds 10,764,857 10,246,395 10,020,336
Debt service funds 1,585,740 1,218,971 1,182,834
Total all other governmental funds 16,227,524$ 15,759,768$ 15,861,177$
2011 2012 2013 2014 2015 2016 2017
General fund
Nonspendable
Inventory 13,183$ 9,332$ 10,201$ 14,358$ 6,975$ 9,272$ 5,872$
Prepaid items 29,234 28,245 32,493 18,348 10,655 4,123 16,868
Committed - 1,345,200 1,345,200 1,345,200 2,634,923 2,652,357 2,714,135
Assigned - 2,190,910 2,191,063 1,647,193 1,872,492 1,701,086 1,743,768
Unassigned 8,263,549 3,656,173 4,117,865 4,972,853 4,369,457 5,853,806 2,696,999
Total general fund 8,305,966$ 7,229,860$ 7,696,822$ 7,997,952$ 8,894,502$ 10,220,644$ 7,177,642$
All other governmental funds
Nonspendable
Cash with escrow agent -$ 2,623,895$ 2,301,609$ 1,973,067$ 1,645,000$ -$ -$
Prepaid items 6,217 5,474 4,706 997 656 5,055 474
Restricted 4,379,987 3,300,426 3,354,189 3,505,590 10,066,786 4,500,044 4,432,710
Committed 11,480,869 2,039,560 2,175,094 2,089,361 1,079,780 1,366,081 8,576,250
Assigned - 9,312,168 9,005,276 7,147,586 5,444,124 5,943,364 1,784,761
Total all other governmental funds 15,867,073$ 17,281,523$ 16,840,874$ 14,716,601$ 18,236,346$ 11,814,544$ 14,794,195$
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.
Fiscal Year ended June 30
Town of Fountain Hills, Arizona
Fund Balances — Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year ended June 30
Page 96
(This page intentionally left blank)
Page 97
2008 2009 2010 2011 2012
Revenues
Taxes 12,457,086$ 10,960,001$ 9,818,985$ 9,704,054$ 9,577,321$
Licenses and permits 1,125,957 541,627 399,094 312,367 194,976
Leases and rents 296,434 290,083 215,520 227,195 206,018
Intergovernmental 9,353,260 9,607,961 7,672,037 7,165,103 6,035,448
Charges for services 620,300 316,676 464,036 388,635 405,663
Other 183,963 43,683 129,740 72,125 178,393
Fines and forfeitures 287,120 339,658 297,030 236,221 223,673
Special assessments 4,337 4,037 - - -
Investment earnings 780,935 258,478 22,831 28,456 88,877
Total revenues 25,109,392 22,362,204 19,019,273 18,134,156 16,910,369
Expenditures
Current:
General government 3,548,295 3,514,249 3,186,368 2,575,975 2,887,321
Development services 2,751,740 2,036,295 1,669,449 1,564,615 1,421,787
Public works 2,214,557 1,199,850 973,746 1,123,230 1,054,930
Public safety 6,321,669 6,624,141 6,200,227 5,772,800 5,869,445
Culture and recreation 2,257,007 2,215,065 2,007,737 1,871,446 1,794,332
Capital outlay 5,239,169 3,708,277 1,254,223 1,043,304 884,323
Debt service:
Principal 2,153,228 2,240,000 2,460,000 2,114,999 1,965,000
Interest 1,025,321 925,663.00 825,988 729,077 639,135
Other debt service - 3,471.00 16,869 15,254 55,752
Total expenditures 25,510,986 22,467,011 18,594,607 16,810,700 16,572,025
Excess (deficiency) of revenues
over (under) expenditures (401,594) (104,807) 424,666 1,323,456 338,344
Other Financing Sources (Uses)
Transfers in 2,756,988 3,759,735 1,127,776 431,880 2,470,027
Transfers out (2,756,988) (3,950,654) (1,127,776) (431,880) (2,470,027)
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 (401,594)$ (295,726)$ 424,666$ 1,323,456$ 338,344$
Expenditures for capitalized assets 5,171,511$ 2,528,881$ 532,461$ 389,082$ 1,333,785$
Debt service as a percentage of noncapital expenditures 15.6% 15.9% 18.3% 17.4% 17.5%
Source: The source of this information is the Town's financial records.
Fiscal Year Ended June 30
Town of Fountain Hills, Arizona
Statement of Revenues, Expenditures and Changes in Fund Balances
Last Ten Fiscal Years
(modified accrual basis of accounting)
Page 98
2013 2014 2015 2016 2017
9,713,445$ 10,271,737$ 10,240,382$ 12,299,285$ 12,069,714$
570,904 891,782 1,043,382 1,372,045 1,310,973
213,871 252,584 269,753 258,165 284,090
6,323,047 6,677,518 9,770,048 7,559,436 7,917,651
162,086 161,376 176,541 197,109 351,476
300,899 134,114 188,251 147,662 153,438
187,251 170,995 186,456 209,380 257,727
- - - - -
69,998 123,311 150,358 219,058 55,127
17,541,501 18,683,417 22,025,171 22,262,140 22,400,196
2,699,109 2,194,845 2,275,124 2,324,026 2,713,548
1,643,757 1,774,983 2,073,990 2,217,814 1,275,147
2,058,990 3,085,559 1,275,779 2,498,714 3,954,450
6,022,269 6,890,770 6,675,874 7,034,887 7,420,032
1,791,018 1,921,939 1,962,585 2,240,865 2,484,940
453,002 1,750,465 8,799,068 6,471,382 1,693,265
2,280,000 2,415,000 1,850,000 4,260,000 2,675,000
554,860 460,811 454,957 308,106 244,986
12,183 12,188 243,585 2,005 2,180
17,515,188 20,506,560 25,610,962 27,357,799 22,463,548
26,313 (1,823,143) (3,585,791) (5,095,659) (63,352)
1,279,397 1,838,453 2,519,774 562,044 5,194,138
(1,279,397) (1,838,453) (2,519,774) (562,044) (5,194,138)
- - 4,180,000 - -
- - 7,565,000 - -
- - 342,086 - -
- - (4,085,000) - -
- - 8,002,086 - -
26,313$ (1,823,143)$ 4,416,295$ (5,095,659)$ (63,352)$
467,691$ 2,385,168$ 9,067,254$ 6,394,346$ 1,696,612$
16.7% 15.9% 15.4% 21.8% 14.1%
Fiscal Year Ended June 30
Page 99
Fiscal Year
Ended June 30 Property Tax Sales Tax Franchise Tax Total
2008 1,631,205$ 10,489,591$ 336,290$ 12,457,086$
2009 1,705,663 8,932,374 321,964 10,960,001
2010 1,888,664 7,644,441 285,881 9,818,986
2011 1,367,915 8,013,480 322,659 9,704,054
2012 1,457,702 7,779,219 332,130 9,569,051
2013 1,421,615 7,957,162 334,668 9,713,445
2014 1,463,056 8,459,267 349,414 10,271,737
2015 904,660 8,983,050 352,673 10,240,383
2016 2,543,298 9,395,667 360,320 12,299,285
2017 2,287,444 9,415,151 367,119 12,069,714
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 100
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
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 3,638,503,500 11.05%
2017 423,652,443 0.4472 3,869,816,740 10.95%
* Per $100 of assessed full cash value.
Source: The source of this information is the Arizona Department of Revenue's
Abstract of the Assessment Roll and the Town's financial records.
Note: On November 6, 2012, voters approved Proposition 117, an amendment to the
Arizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary and
secondary taxes are levied against the net limited assessed value. The net full cash assessed
value is used for determining the Town’s bonding capacity and as the ceiling for net limited
assessed value.
Town of Fountain Hills, Arizona
Assessed Value and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
Page 101
Net Limited Percentage of Net Full Cash Percentage of
Assessed Total Net Limited Assessed Total Net Full Cash
Taxpayer Value Rank Assessed Value Value Rank Assessed Value
EPCOR - Chaparral City Water Company 3,520,260$ 1 0.83%3,249,900$ 3 0.53%
Adero Canyon II LLC 3,064,932 2 0.72%1,273,920 8 0.21%
Hunter Retail LLC 2,642,580 3 0.62%
WSL Fountain View Investors V, LLC 1,945,963 4 0.46%2,668,420 5 0.44%
Whitestone Fountain Hills, LLC 1,806,848 5 0.43%
EN, LLC 1,272,884 6 0.30%3,267,954 1 0.54%
Smith's Food & Drug Centers Inc.1,270,476 7 0.30%1,332,351 0.22%
Fountain Hills Invest Co., LLC 1,218,492 8 0.29%
Target Corporation 1,156,964 9 0.27%1,716,705 7 0.28%
29SC Ridgeview LP 1,133,315 10 0.27%
FH Resort Developers, LLC 1,771,506 4 0.29%
Qwest Corporation 2,426,767 6 0.40%
Inland Western Fountain Hills Four Peaks LLC 3,419,087 2 0.56%
Fountain Hills AZ Development LLP 1,550,379 10 0.25%
Sun Tech Development, LLC 1,511,270 9 0.25%
Totals 19,032,714$ 4.49%24,188,259$ 3.97%
Source: The source of this information is the Maricopa County Assessor's Office.
Note: On November 6, 2012, voters approved Proposition 117, an amendment to the
Arizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary and
secondary taxes are levied against the net limited assessed value. The net full cash assessed
value is used for determining the Town’s bonding capacity and as the ceiling for net limited
assessed value.
Town of Fountain Hills, Arizona
Principal Property Taxpayers
June 30, 2017 and 2008
2017 2008
Page 102
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
2008 1,630,534$ 1,578,583$ 96.8% 47,835$ 1,626,419$ 99.7%
2009 1,719,105 1,660,820 96.6% 53,379 1,714,199 99.7%
2010 1,895,552 1,838,909 97.0% 52,189 1,891,097 99.8%
2011 1,340,544 1,307,092 97.5% 24,924 1,332,016 99.4%
2012 1,446,076 1,414,482 97.8% 20,255 1,434,737 99.2%
2013 1,429,285 1,401,654 98.1% 18,835 1,420,488 99.4%
2014 1,449,884 1,426,612 98.4% 18,441 1,445,053 99.7%
2015 892,104 881,170 98.8%6,993 888,163 99.6%
2016 2,532,115 2,502,995 98.8% 19,370 2,522,365 99.6%
2017 2,278,728 2,241,482 98.4%- 2,241,482 98.4%
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 103
2008 2009 2010 2011
Sales category:
Construction 2,063,189$ 1,414,308$ 538,562$ 567,135$
Transportation/utilities 1,422,158 1,311,735 1,424,828 1,388,075
Wholesale/retail 3,912,579 3,687,605 3,556,292 3,567,986
Restaurants/bars 582,226 493,242 509,624 559,931
Real estate, rental & leasing 983,047 665,153 650,400 731,758
Services 327,411 258,139 241,685 276,566
Other 1,198,981 1,102,192 723,050 922,029
Total 10,489,591$ 8,932,374$ 7,644,441$ 8,013,480$
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 104
2012 2013 2014 2015 2016 2017
600,403$ 567,589$ 783,064$ 935,694$ 918,717$ 729,462$
1,409,349 1,402,734 1,375,623 1,405,768 1,327,441 1,171,483
3,601,904 3,598,895 3,653,181 4,214,119 4,815,582 4,944,459
575,704 645,258 655,654 682,180 742,540 804,721
678,326 720,023 782,453 617,348 552,856 634,283
274,521 310,303 342,079 604,618 779,753 847,852
639,012 712,360 867,213 523,323 258,778 282,891
7,779,219$ 7,957,162$ 8,459,267$ 8,983,050$ 9,395,667$ 9,415,151$
Fiscal Year Ended June 30
Page 105
Fiscal
Year
Ended Town Maricopa State Total
June 30 Rate County Rate Tax Rate
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%
2017 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 106
Community Municipal Highway
Fiscal Year General Facilities Property User Special Total Debt
Ended Obligation District Corporation Revenue Assessment Outstanding Per
June 30 Bonds*Bonds*Bonds*Bonds Bonds Debt Capita
2008 7,544,841$ 4,069,520$ 9,215,738$ 235,000$ 3,228$ 21,068,327$ 919$
2009 6,506,402 3,859,699 8,652,918 130,000 - 19,149,019 833
2010 5,304,170 3,605,048 7,878,616 - - 16,787,834 738
2011 4,543,667 3,361,913 6,993,694 - - 14,899,274 663
2012 3,671,714 3,078,906 4,300,489 - - 11,051,109 490
2013 2,826,063 2,791,753 3,561,814 - - 9,179,630 404
2014 1,923,166 2,483,885 2,721,933 - - 7,128,984 311
2015 9,163,024 2,233,280 1,764,338 - - 13,160,642 558
2016 7,181,977 1,855,411 1,088,117 - - 10,125,505 424
2017 5,387,809 1,508,746 860,437 - - 7,756,992 317
Source: The source of this information is the Town's financial records and the U.S. Bureau of Economic Analysis.
* All amounts presented are net of original issuance discounts and premiums as well as restricted assets.
Population data can be found in the Schedule of Demographic and Economic Statistics.
Town of Fountain Hills, Arizona
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Governmental Activities
Page 107
Percentage of Net General Municipal Net Municipal
General Estimated Actual Estimated Actual Obligation Property Property Total
Obligation Taxable Value Taxable Value Bonded Debt Corporation Corporation Revenues-
Fiscal Year Bonds*of Property of Property per Capita Bonds*Debt per Capita All Sources
2008 7,544,841$ 5,318,424,271$ 0.14%329$ 9,215,738 402$ 25,113,211$
2009 6,503,402 5,867,175,208 0.11%283 8,652,918 376 21,331,076
2010 5,304,170 5,524,103,469 0.10%233 7,878,646 347 18,958,595
2011 4,543,667 4,915,512,973 0.09%202 6,993,694 311 18,248,326
2012 3,671,714 3,971,538,882 0.09%163 4,300,489 191 17,184,895
2013 2,826,063 3,309,940,258 0.09%125 3,561,814 157 17,723,994
2014 1,923,166 3,260,087,621 0.06%84 2,721,933 119 18,891,967
2015 9,163,024 3,616,672,185 0.25%388 1,764,338 75 22,161,316
2016 7,181,977 3,638,503,500 0.20%301 1,088,117 46 22,262,139
2017 5,387,809 3,869,816,740 0.14%220 860,437 35 22,400,196
Source: The source of this information is the Department of Revenue and the Town's financial records.
* All bond amounts are net of original issuance discounts and premiums as well as restricted assets.
Population data can be found in the Schedule of Demographic and Economic Statistics.
Note: On November 6, 2012, voters approved Proposition 117, an amendment to the
Arizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary and
secondary taxes are levied against the net limited assessed value. The net full cash assessed
value is used for determining the Town’s bonding capacity and as the ceiling for net limited
assessed value.
Town of Fountain Hills, Arizona
Ratios of General Bonded Debt Outstanding
Last Ten Fiscal Years
Page 108
Estimated
Estimated Share of
Percentage Overlapping
Outstanding Debt Applicable Debt
Overlapping:
Maricopa County -$ 1.16% -$
Maricopa County Community College District 445,570,000 1.16% 5,168,612
Maricopa Integrated Health System 37,000,000 1.16% 429,200
East Valley Institute of Technology - 2.62% -
Fountain Hills Unified School District 11,670,000 96.18% 11,224,206
Eagle Mountain Community Facilities District* 1,935,000 100.00% 1,560,000
Total Overlapping Debt 18,382,018
Direct:
Town of Fountain Hills, Arizona
General Obligation Bonds 5,475,000
Revenue Bonds 1,030,000
Premium on Bonds 205,252
Total Direct Debt 6,710,252
Total direct and overlapping debt 25,092,270$
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.
* The Town is not obligated for repayment of the Eagle Mountain Community Facilities District
general obligation bonds.
Note: The estimated percentage of debt outstanding applicable to the Town is calculated based on
the Town's net limited assessed valuation as a percentage of the net limited assessed
valuation of the overlapping jurisdiction.
Overlapping governments are those that coincide, at least in part, with the geographic boundaries
of the Town of Fountain Hills. This schedule further estimates the portion of outstanding debt
of those overlapping governments that is borne by residents and businesses of the Town.
This process recognizes that, when considering a town's ability to issue and repay long-term debt,
the entire debt burden borne by residents should be taken into account. However, this fact does not
imply that every taxpayer is a resident, and, therefore, responsible for repaying the debt of each
overlapping government.
Town of Fountain Hills, Arizona
Direct and Overlapping Governmental Activities Debt
as of June 30, 2017
Governmental Unit
Page 109
2008 2009 2010 2011
6% Debt Limit
Debt limit 36,644,287$ 41,084,541$ 39,073,108$ 34,592,143$
Total net debt applicable to limit 275,000 - - -
Legal debt margin 36,369,287$ 41,084,541$ 39,073,108$ 34,592,143$
Total debt applicable to the limit
as a percentage of debt limit 1% - - -
20% Debt Limit
Debt limit 122,147,624$ 136,948,469$ 130,243,693$ 115,307,143$
Total net debt applicable to limit 7,295,000 6,530,000 5,415,000 4,595,000
Legal debt margin 114,852,624$ 130,418,469$ 124,828,693$ 110,712,143$
Total debt applicable to the limit
as a percentage of debt limit 6% 5% 4% 4%
Source: The source of this information is the Town's financial records.
Note: All amounts presented are net of original issuance discounts and premiums.
Note: On November 6, 2012, voters approved Proposition 117, an amendment to the
Arizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary and
secondary taxes are levied against the net limited assessed value. The net full cash assessed
value is used for determining the Town’s bonding capacity and as the ceiling for net limited
assessed value.
Town of Fountain Hills, Arizona
Legal Debt Margin Information
Last Ten Fiscal Years
Fiscal Year Ended June 30
Page 110
2012 2013 2014 2015 2016 2017
27,111,608$ 22,651,303$ 21,978,160$ 24,177,956$ 24,128,118$ 25,419,147$
- - - - - -
27,111,608$ 22,651,303$ 21,978,160$ 24,177,956$ 24,128,118$ 25,419,147$
-- - -
90,372,027$ 75,504,344$ 73,260,534$ 80,593,185$ 80,427,061$ 84,730,489$
3,755,000 2,900,000 2,000,000 9,175,000 7,405,000 5,475,000
86,617,027$ 72,604,344$ 71,260,534$ 71,418,185$ 73,022,061$ 79,255,489$
4% 4% 3% 11% 9% 6%
Fiscal Year Ended June 30
Page 111
Net full cash assessed valuation 423,652,443
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 full cash assessed valuation 84,730,489$
Net debt applicable to limit 5,475,000
20% legal debt margin 79,255,489
All Other General Obligation Bonds
Debt limit - 6% of net full cash assessed valuation 25,419,147
Net debt applicable to limit -
6% legal debt margin 25,419,147
Total legal debt margin 104,674,636$
Source: The source of this information is the Maricopa County Assessor's Office and the
Town's financial records.
Note: On November 6, 2012, voters approved Proposition 117, an amendment to the
Arizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary and
secondary taxes are levied against the net limited assessed value. The net full cash assessed
value is used for determining the Town’s bonding capacity and as the ceiling for net limited
assessed value.
Town of Fountain Hills, Arizona
Calculation of Legal Debt Margin
as of June 30, 2017
Page 112
Fiscal
Year
Ended Pledged
June 30 Principal Interest Total Revenues Coverage
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
2017 370,000 22,680 392,680 16,645,464 42.4
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 113
2007 2008 2009 2010 2011
Population 22,932 22,984 22,736 22,489 22,554
Per capita personal income 32,230$ 38,439$ 38,918$ 40,672$ 44,660$
Median age 46.4 48.3 48.9 53.9 53.9
Public school enrollment 2,307 2,233 2,203 2,103 1,981
Town of Fountain Hills
unemployment rate 1.5% 2.6% 4.5% 4.8% 6.7%
Land use
Total acres 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7
Total square miles 20.32 20.32 20.32 20.32 20.32
Vacant lots 3,355 1,295 1,253 1,226 1,218
Number of units
Housing 12,850 12,832 12,927 12,983 12,990
Lodging 4 4 4 4 4
Restaurants 53 47 52 53 56
Shopping centers 14 19 19 20 20
Schools
Public 4 4 4 4 4
Preschool 4 4 4 4 4
Charter 1 1 1 1 1
Sources: The source of the "Per Capita Personal Income", "Median Age" and "Unemployment Rate"
information is Sites USA. The source of the "Population" is the U.S. Census Bureau July 1, 2016
estimate. 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 2016
Calendar Year
Town of Fountain Hills, Arizona
Demographic and Economic Statistics
Last Ten Calendar Years
Page 114
2012 2013 2014 2015 2016*
22,695 22,893 23,602 23,899 24,482
47,260$ 48,244$ 46,619$ 48,240$ 50,162$
53.9 53.0 53.7 53.8 53.7
1,886 1,820 1,692 1,619 1,506
5.6% 6.0% 5.4% 2.4% 1.9%
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
1,209 1,196 1,165 1,247 1,209
12,977 12,991 12,981 13,002 13,130
4 4 4 4 4
56 54 43 46 50
20 20 20 20 20
3 3 3 3 3
6 7 7 7 7
1 1 1 1 1
Calendar Year
Page 115
Percentage
Number of of Total Town Number of
Employer Employees Rank Employment Employees Rank
Fountain Hills Unified School District No. 98 168 1 3.7% 250 1
Fountain View Village 115 2 2.5%
Bobcat Contracting, LLC 114 3 2.5%
Rural Metro Corporation 111 4 2.4%
Target Stores 103 5 2.3%
Firerock Country Club 100 6 2.2%
Fry's Food Stores 86 7 1.9%
Eagle Mountain Golf Club 70 8 1.5%40 8
Safeway Stores 70 9 1.5%95 4
Bashas 70 10 1.5%70 6
Monks Construction 150 2
MCO Properties, Inc.85 3
Town of Fountain Hills 68 5
Sunridge Canyon Golf Course 70 7
Golf International 50 9
Totals 1,007 22.2% 878
Total Town employment 4,535
Source: The source of this information is the Maricopa Association of Governments.
Note: Total Town employment for 2007 was not available.
* Data for 2017 was not available.
Town of Fountain Hills, Arizona
Principal Employers
Prior Fiscal Year and Nine Years Ago
2016*2007
Page 116
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Municipal court 5.00 5.00 5.00 5.00 5.00 5.00 4.00 3.63 3.63 3.63
Administration 13.50 13.50 13.25 11.25 11.58 11.68 10.56 11.33 11.63 12.46
Public works 9.80
Development services 40.50 40.00 35.75 23.25 20.25 18.75 16.25 16.30 16.30 7.50
Community services 29.25 29.75 27.10 21.63 21.53 21.18 20.18 21.06 20.76 20.56
Total 88.25 88.25 81.10 61.13 58.36 56.61 50.99 52.32 52.32 53.95
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 117
Function/Program 2008 2009 2010 2011 2012
Municipal Court
Cases filed N/A N/A 3,520 2,584 2,173
Hearings/Trials held N/A N/A 1,089 738 731
Administration
FTEs per 1,000 residents 3.5 3.3 3.2 2.7 2.6
Registered voters - general election 14,335 none 15,511 none 16,074
Voter turnout - general election 39% none 50% none 34%
Development Services
Building permits issued 716 376 411 350 346
Building inspections conducted 5,692 3,189 1,936 1,546 1,257
Number of code violation cases N/A N/A 1,024 843 804
Number of zoning cases N/A N/A 7 14 7
Community Services
Number of Community Center bookings N/A N/A 3,396 3,315 3,236
Number of participants in recreational programs N/A N/A 1,960 1,759 1,833
Number of Senior Services members N/A N/A 1,105 1,205 1,208
Number of home delivered meals N/A N/A 10,169 9,742 8,419
Law Enforcement (contracted)
Physical arrests 524 825 679 645 522
Traffic violations 2,504 4,900 2,959 1,909 1,366
Fire & Emergency Medical (contracted)
Total incident responses 2,694 2,787 2,875 3,179 3,082
Average response time (in minutes)3:37 3:44 4:32 3:46 3:50
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
Last Ten Fiscal years
Operating Indicators by Function
Page 118
2013 2014 2015 2016 2017
1,740 1,649 1,738 1,593 2,014
703 1,665 1,585 1,564 1,844
2.5 2.2 2.2 2.2 2.2
none N/A 16,213 none 16,387
none N/A 38% none 41%
457 445 443 410 509
1,395 2,131 2,448 2,129 2,704
746 716 752 713 669
10 41 65 72 50
3,196 3,383 3,439 3,124 3,764
1,789 2,291 2,249 2,910 3,773
1,118 1,189 1,273 1,326 1,335
6,941 4,799 4,035 3,497 3,920
545 743 445 220 220
1,296 1,379 1,539 1,215 1,803
3,136 2,956 3,166 3,191 3,425
3:53 3:37 3:57 3:25 3:33
Fiscal Year Ended June 30
Page 119
2008 2009 2010 2011 2012 2013
Public safety
Number of fire stations 2 2 2 2 2 2
Public works
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 13 13 13 13 13 13
Parks and recreation
Acreage-developed parks 116 116 116 116 116 116
Playgrounds 7 7 7 7 7 7
Baseball/softball diamonds 6 6 6 6 6 6
Soccer/football fields 7 7 7 7 7 7
Community centers 1 1 1 1 1 1
Preserve acreage N/A N/A N/A N/A 740 740
Miles of trails N/A N/A N/A N/A 4.3 10.43
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 120
2014 2015 2016 2017
2 2 2 2
178.9 178.9 178.9 178.9
390 390 390.5 390.5
34 85 91 91
13 13 13 13
116 119 119 119
7 7 7 7
6 6 6 6
7 7 7 7
1 1 1 1
740 807.2 807.2 807.2
10.43 15.8 15.8 18.5
Fiscal Year Ended June 30
Page 121
(This page intentionally left blank)
Page 122
Town of Fountain Hills
16705 E. Avenue of the Fountains
Fountain Hills, Arizona 85268
480-816-5100
www.fh.az.gov
-facebook.com/TownofFountainHills
-twitter.com/fhazgov