HomeMy WebLinkAboutFY18 CAFRFor the Fiscal Year Ended June 30, 2018
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, 2018
Issued by:
Administration Department
Finance Division
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
INTRODUCTORY SECTION Page
Letter 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 – continued 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
Governmental Funds:
Combining Balance Sheet – All Non-Major Governmental Funds –
By Fund Type 72
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances – All Non-Major Governmental Funds – By Fund Type 73
Special Revenue Funds:
Combining Balance Sheet 76
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances 78
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual 80
Debt Service Funds:
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual 86
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
FINANCIAL SECTION – continued Page
Capital Projects Fund:
Combining Balance Sheet 90
Combining Statement of Revenues, Expenditures and Changes in 91
Fund Balances
Combining Schedule of Revenues, Expenditures and Changes in
Fund Balances – Budget and Actual 92
STATISTICAL SECTION
Financial Trends:
Net Position by Component 96
Changes in Net Position 98
Financial Trends:
Fund Balances – Governmental Funds 100
Statement of Revenues, Expenditures and Changes in
Fund Balances – Governmental Funds 102
Revenue Capacity:
Governmental Activities – Tax Revenues by Source 104
Assessed Value and Estimated Actual Value of Taxable Property 105
Principal Property Taxpayers 106
Property Tax Levies and Collections 107
Taxable Sales by Category 108
Direct and Overlapping Sales Tax Rates 110
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
STATISTICAL SECTION – continued Page
Debt Capacity:
Ratios of Outstanding Debt by Type 111
Ratios of General Bonded Debt Outstanding 112
Direct and Overlapping Governmental Activities Debt 113
Legal Debt Margin Information 114
Calculation of Legal Debt Margin 116
Revenue Bond Coverage 117
Demographic and Economic Information:
Demographic and Economic Statistics 118
Principal Employers 120
Operating Information:
Authorized Full-Time Equivalent Government Employees by Function 121
Operating Indicators by Function 122
Capital Assets Statistics by Function 123
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INTRODUCTORY SECTION
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www.fh.az.gov
October 4, 2018
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, 2018.
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, 2018, 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, 2018, 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-five 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 2.5% of the total
is zoned commercial and/or
industrial, 23.3% is preserved as open
space and 51.0% is residential.
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The Town’s Mission Statement
The Town of Fountain Hills’ purpose is to serve the best interests of the community by:
providing for its safety and well-being;
respecting its special, small-town character and quality of life;
providing superior public services;
sustaining the public trust through open and responsive government;
and maintaining the stewardship and preservation of its financial and natural resources.
To serve, respect, and provide trust and stewardship.
The Town of Fountain Hills is an Arizona municipal corporation, acting as a general law town as
prescribed in the Arizona Revised Statutes. The Town was incorporated on December 5, 1989,
with the governmental and administrative affairs of the Town operating under the Council-
Manager form of government. Legislative authority is vested in a seven member Town Council.
The Mayor is a member of the Town Council who is directly elected by voters and chairs the Town
Council meetings. The members of the Council are elected at large and serve four year overlapping
terms. The Town Council is responsible for the adoption of local ordinances, budget adoption,
appointment of residents to citizen advisory committees and hiring the Town Manager. The Town
Manager is responsible for implementation of the policies of the Town Council and overall
management of the Town through department directors and approximately 56 FTE employees.
The Presiding Judge, Town Attorney, and Town Prosecutor are under the direction of the Town
Council.
The Town provides or administers a full range of
services including public safety (law enforcement, fire
and emergency services); development services (code
enforcement, planning and zoning); public works
(including construction and maintenance of streets and
infrastructure); municipal court; recreational activities;
community center; senior services and cultural events.
The Town does not maintain utility or other operations
that require the establishment of enterprise funds.
Fountain Hills Town Hall
Page 3
The financial reporting entity (the Town) includes all the funds of the primary government (i.e.,
the Town of Fountain Hills as legally defined) as well as all of its component units. The component
units consist of legally separate entities for which the primary government is financially
accountable. Blended component units, although legally separate entities, are, in substance, part
of the primary government’s operations and are included as part of the primary government.
Accordingly, the Cottonwoods Maintenance District, the Eagle Mountain Community Facilities
District and the Fountain Hills Municipal Property Corporation are included in the financial report
of the Town.
FACTORS AFFECTING FINANCIAL CONDITION
The information presented in the financial statements is perhaps best understood when it is
considered from the broader perspective of the specific environment within which the Town of
Fountain Hills operates.
Internal Controls. As earlier noted, the management of the Town of Fountain Hills, Arizona, is
responsible for establishing and maintaining a system of internal control. Internal accounting
controls are designed to provide reasonable, but not absolute, assurance regarding;
1) Safeguarding of assets against loss from unauthorized use or deposition, and
2) Reliability of financial records for preparing financial statements and maintaining
accountability for assets.
The concept of reasonable assurance recognizes:
1) The cost of a control should not exceed the benefits likely to be derived, and
2) The valuation of costs and benefits requires estimates and judgments by management.
The system of internal control is subject to periodic evaluation by management and is also
considered by the independent auditors in connection with the annual audit of the Town’s financial
statements. All internal control evaluations occur within the above framework. The Town's internal
accounting controls are considered to adequately safeguard assets and provide reasonable
assurance of proper recording of financial transactions.
Budgetary Controls. The budget process is a cyclical process and begins each year with the
preparation of the base budget by each department head. Each budget is based on expenditures to
date and the previous years’ experience. The departments’ base budgets, along with any requests
for new positions, programs or services are reviewed by the Town Manager. The Town Manager
then meets with department heads to review their base budgets and requests for new services and/or
programs. Once management has reviewed the departments’ requests, a tentative budget is
presented to the Town Council by the Town Manager.
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. In April/May, the Town
Manager submits to the Town Council a proposed budget for the fiscal year commencing the
following July 1. The budget includes proposed expenditures and the means of financing them.
The Town Council is then required to hold public hearings on the proposed budget and to adopt a
final budget by 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 year. The Town Manager may authorize transfers
from and within personnel and from operating capital to services or supplies within a department.
Page 4
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 assess 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 moderate increase of local sales tax receipts. Construction activity has increased
almost 50% from the prior year, due to several commercial and residential developments currently
in progress. 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 5.1% increase over the prior year; restaurant/bar revenues have exceeded any
prior year and an increase of 2.2% from FY16-17. Construction sales tax, a one-time revenue
source, is driven entirely by development activity in the community and increased 92.9% 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 an increase
of 1.7%.
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 84% of total General Fund revenue for fiscal year
2017-18.
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 3.7% in FY17-18. After decreases in State sales tax from FY08-09
through FY11-12, this revenue increased by 7.3% in FY17-18 compared to the prior year.
Other local activity has remained fairly level during the 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 70% of the currently available commercial lots are already developed.
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Development Activity over the past year:
Development Services has been involved with the following development activities during fiscal
year 2017-18 (7/1/2017 – 6/30/2018):
Two Development Agreements were approved by Council:
Copperwynd
Adero Canyon Phase II/Eagle Nest
Eight Site Plans were approved during the period.
Two Special Use Permits were granted.
Six Administrative Use Permits were issued.
Fifty new Single-Family Residential Building Permits were issued.
Thirty-two Multi-family permits were issued.
There were three new Commercial Building Permits issued.
There were seventeen 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 4 2 2 2 0 27 6 0 39
AUGUST 7 0 0 0 0 23 2 0 32
SEPTEMBER 5 2 2 2 1 18 3 2 31
OCTOBER 4 3 3 3 0 17 6 0 30
NOVEMBER 3 2 2 2 2 17 1 0 25
DECEMBER 4 2 2 2 1 28 4 1 40
JANUARY 7 2 2 2 2 23 6 0 40
FEBRUARY 0 0 0 0 5 32 0 0 37
MARCH 3 0 0 0 2 24 9 0 38
APRIL 5 11 12 11 3 41 5 0 65
MAY 6 4 4 4 1 29 2 1 43
JUNE 2 4 4 4 3 43 8 0 60
YEARLY
TOTAL 50 32 33 32 20 322 52 4 480
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 and the vehicle license
tax are placed in the Town's General Fund, where it is used to sustain a large portion of the Town's
day-to-day activities. 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. Although the State-
shared revenue formula generally allocate revenues based on official census data, in recent years,
the state legislature has reduced the formula distribution of State-shared revenues to cities.
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.
The Mayor and Council on January 30, 2018, approved a resolution to refer a $7.0 million property
tax question to voters on May 15, 2018. The ballot referendum failed which will require the Town
Council to adopt other revenues and possible service level reductions to ensure that future budgets
are balanced.
MAJOR INITIATIVES AND SERVICE EFFORTS AND ACCOMPLISHMENTS
The Town of Fountain Hills’ adopted FY17-18 budget reflected the continued slow recovery in
the local economy, which is also somewhat mirrored at the national and state levels. Due to the
challenging economic conditions, the Town had 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 has been reduced from 115 to 56 FTE’s (full
time equivalents) over the past years.
The Town Council established priorities in 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. Also, effective July 1, 2016, 0.2%
of local sales tax revenues that had been allocated to MPC debt service payments were reallocated
to pavement maintenance. Economic Development initiatives are funded through a dedicated
portion of the 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 2017-18 goals attained are summarized
within this list of accomplishments:
Continuation of Fire Station 2 relocation design and construction
Initiation of design and construction of the Valley Metro Bus Stop
Construction of the Adero Canyon Trailhead
Added several new monthly and special educational programs, workshops and support
groups at the Community Center
New public art installed: Mirth & Melancholy, Orange Sellers, Alignment, and
Southwest Landscape
Awarded Playful City USA for 7th time
Secured grant funding from the Arizona Office of Tourism - Proposition 302
Secured grant funding from Salt River Pima-Maricopa Indian Community - Proposition
202
Awarded the 2017 Governor’s Tourism Award for Outstanding Marketing Campaign
Named World’s 17th International Dark Skies Community, 13th in the United States and
3rd in Arizona
Donation of the 1998 Fire Department’s aerial ladder truck to the Helping Hands
Program in Texas
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, 2017. This
was the twenty-second 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 2018 Certificate.
For the sixth year, the Town was also given the Award for Outstanding Achievement in Popular
Annual Financial Reporting for the fiscal year ended June 30, 2017.
In addition, the government received the GFOA’s Distinguished Budget Presentation Award for
its annual budget for the fiscal year beginning July 1, 2017. 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 sixteenth consecutive year that the Town has received the
award.
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Acknowledgments. The preparation of this Comprehensive Annual Financial Report could not have
been accomplished without the efficient and dedicated services of the entire team of the Finance
Division. I also wish to extend my appreciation to the Mayor and members of Town Council for their
leadership and support in planning and conducting the financial affairs of the Town in a responsible
and progressive manner. Each employee of the Town has my sincere appreciation for the contributions
made in the preparation of this report.
Respectfully submitted,
Grady E. Miller
Town Manager
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TOWN OF FOUNTAIN HILLS, ARIZONA
LIST OF PRINCIPAL OFFICIALS
JUNE 30, 2018
ELECTED OFFICIALS
Linda M. Kavanagh, Mayor
Dennis Brown, Vice-Mayor
Nick DePorter, Councilmember
Henry Leger, Councilmember
Alan Magazine, Councilmember
Art Tolis, Councilmember
Vacant, Councilmember
DEPARTMENT DIRECTORS
Grady Miller, Town Manager
Craig Rudolphy, Finance Director
David Trimble, Administrative Services Director
Rachael Goodwin, Community Services Director
Robert Rogers, Development Services Director
Scott Cooper, Economic Development Director
Justin Weldy, Public Works Director
Elizabeth Burke, Town Clerk
Captain Dave Ott, Rural Metro Corporation, Fire Chief
Captain Hank Brandimarte, Maricopa County Sheriff’s Office, District Commander
Robert Melton, Presiding Judge
Mark Iacovino, The Law Office of Mark Iacovino, Town Prosecutor
Mitesh Patel, Dickinson Wright PLLC, Interim Town Attorney
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Development ServicesCitizens of Fountain HillsCitizens of Fountain HillsPresiding JudgeTown of Fountain Hills OrganizationRecreation / TourismCommunity ServicesFire / EMSAdministrationLaw EnforcementTown ManagerTown AttorneyCommunityCenterCode EnforcementBuilding SafetyFinance / I. T.Town ClerkAdministrative ServicesSenior ServicesParksTown ProsecutorEconomic Development Appointedby CouncilContractedVolunteer ProgramMayor and Town CouncilMayor and Town CouncilGISPlanningEngineeringStreetsFacilitiesPublic WorksInspectionPublic Information Page 14
FINANCIAL SECTION
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INDEPENDENT AUDITOR’S REPORT
The Honorable Mayor and Members of the Town Council
Town of Fountain Hills, Arizona
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and
the aggregate remaining fund information of Town of Fountain Hills, Arizona (Town), as of and for the year
ended June 30, 2018, 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, 2018, 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 4, 2018, 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 4, 2018
Page 18
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
(Required Supplementary Information)
Page 19
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Page 20
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2018
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, 2018. This discussion and analysis is intended to be an easily
readable breakdown of the Town of Fountain Hills’ financial activities based on currently known
facts, decisions and conditions. This analysis focuses on current year activities and operations and
should be read in combination with the transmittal letter and the financial statements that follow.
The management’s discussion and analysis is presented as required supplementary information
to supplement the basic financial statements.
FINANCIAL HIGHLIGHTS
The Town’s total net position of governmental activities increased $652.1 thousand to $ 117.6
million, representing a .6 percent increase of the total net position.
General revenues from governmental activities accounted for $19.6 million in revenue, or
81.8 percent of all revenues from governmental activities. Program specific revenues in the
form of charges for services and grants and contributions accounted for $4.4 million or 18.2
percent of total governmental activities revenues.
The Town had $23.3 million in expenses related to governmental activities, a decrease of 1.1
percent from the prior fiscal year primarily due to decreased public works costs.
Among major governmental funds, the General Fund had $16.0 million in current fiscal year
revenues, which primarily consisted of taxes and intergovernmental revenues. The total
expenditures of the General Fund were $15.0 million. The General Fund’s fund balance
decreased $6.3 thousand to remain at $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, 2018
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 administration, development services, public safety, public works,
and culture and recreation.
Fund financial statements. A fund is a grouping of related accounts that is used to maintain
control over resources that have been segregated for specific activities or objectives. The Town
uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements. All 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, 2018
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 User Revenue (HURF), Grants, Capital Projects and all Debt Service Funds, all
of which are considered to be major funds. Data from other governmental funds are combined into
a single, aggregated presentation. Individual fund data for each of these non-major governmental
funds is provided in the form of combining statements and schedules.
Notes to the financial statements. The notes provide additional information that is essential to a
full understanding of the data provided in the government-wide and fund financial statements. The
notes to the financial statements can be found immediately following the basic financial
statements.
Other information. In addition to the basic financial statements and accompanying notes, this
report also presents certain required supplementary information concerning the Town’s budget
process. The Town adopts an annual budget for all governmental funds. A schedule of revenues,
expenditures and changes in fund balances - budget and actual has been provided for the General
Fund and major Special Revenue Funds as required supplementary information.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
While this document contains information about the funds used by the Town to provide services
to our citizens, the Statement of Net Position and the Statement of Activities serve to provide an
answer to the question of how the Town, as a whole, did financially throughout the year. These
statements include all assets and liabilities using the accrual basis of accounting similar to the
accounting used by the private sector. The basis for this accounting takes into account all of the
current year’s revenues and expenses regardless of when the cash is received or paid.
These two statements report the Town’s assets and the changes in those assets. The change in
assets is important because it tells the reader whether the financial position of the Town as a whole
has improved or diminished. However, in evaluating the overall position of the Town, non-
financial information such as changes in the Town’s tax base and the condition of the Town’s
capital assets will also need to be evaluated.
Analysis of Net Position. Net position may serve over time as a useful indicator of a government’s
financial position. In the case of the Town, governmental activities assets exceeded liabilities by
$117.6 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, 2018
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, 2018 and June 30, 2017.
Governmental Activities
As of
June 30, 2018
As of
June 30, 2017
Current and other assets $ 23,821,565 $ 24,037,642
Capital assets, net 102,259,689 103,179,955
Total assets 126,081,254 127,217,597
Current and other liabilities 5,475,597 4,588,747
Long-term liabilities 2,994,108 5,669,418
Total liabilities 8,469,705 10,258,165
Net position
Net investment in capital assets 96,777,854 94,909,703
Restricted 4,589,526 4,471,661
Unrestricted 16,244,169 17,578,068
Total net position $ 117,611,549 $ 116,959,432
At the end of the current fiscal year the Town reported positive balances in all three categories of
net position for governmental activities. The Town also reported positive balances in all net
position categories in the prior fiscal year.
Page 24
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2018
GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued
The Town’s financial position is the product of several financial transactions including the net
results of activities, the acquisition and payment of debt, the acquisition and disposal of capital
assets, and the depreciation of capital assets.
Changes in net position. The Town’s total revenues for the current fiscal year were $23.9 million.
The total cost of all programs and services was $23.3 million. The following table presents a
summary of the changes in net position for the fiscal years ended June 30, 2018 and June 30, 2017.
Governmental Activities
Fiscal
Year Ended
June 30, 2018
Fiscal
Year Ended
June 30, 2017
Revenues
Program revenues:
Charges for services $ 2,316,983 $ 2,664,463
Operating grants and contributions 1,737,958 1,699,931
Capital grants and contributions 304,951 494,328
General revenues
Property taxes 2,263,623 2,296,199
Sales taxes 10,311,577 9,415,151
Franchise taxes 421,682 367,119
State-shared revenue 5,384,831 5,115,914
Vehicle License taxes 1,011,836 941,364
Investment earnings 158,860 55,127
Miscellaneous 10,410 28,839
Total revenues 23,922,711 23,078,435
Expenses
General government 3,431,752 3,142,722
Development services 1,460,967 1,364,378
Public safety 7,567,012 7,563,898
Public works 7,380,663 7,904,577
Culture and recreation 3,311,648 3,375,414
Interest on long-term debt 118,552 178,749
Total expenses 23,270,594 23,529,738
Changes in net position 652,117 (451,303)
Net position, beginning 116,959,432 117,410,735
Net position, ending $ 117,611,549 $ 116,959,432
Page 25
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2018
GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued
The charts below compare the governmental expenses from fiscal years 2017-18 and 2016-17.
Page 26
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2018
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 decreased 13.0 percent compared to the prior
year due in large part to the absence of in-lieu fees for encroachment permits.
Interest on long-term debt decreased 33.7 percent due to lower rates on the reissued 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 increased in the current year 188.2 percent over the prior year due to
higher overall market returns.
Overall, expenses decreased 1.1 percent due primarily to cautious spending by the
departments and staffing efficiencies.
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, 2018 Year Ended June 30, 2017
Total
Expenses
Net (Expense)/
Revenue
Total
Expenses
Net (Expense)/
Revenue
Governmental Activities
General government $ 3,431,752 $ (2,978,065) $ 3,142,722 $ (2,506,081)
Development services 1,460,967 (146,052) 1,364,378 (298,295)
Public safety 7,567,012 (7,266,692) 7,563,898 (7,186,135)
Public works 7,380,663 (5,725,133) 7,904,577 (6,148,913)
Culture and recreation 3,311,648 (2,676,208) 3,375,414 (2,352,843)
Interest on long-term debt 118,552 (118,552) 178,749 (178,749)
Total expenses $23,270,594 $(18,910,702) $23,529,738 $(18,671,016)
The cost of all governmental activities this year was $23.3 million.
Federal, State, and county governments and charges for services subsidized certain
governmental programs with charges for services of $4.4 million.
Net cost of governmental activities of $18.9 million was financed by general revenues,
which are made up of primarily sales taxes of $10.3 million and State-shared revenues of
$6.4 million.
Page 27
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2018
FINANCIAL ANALYSIS OF THE TOWN’S FUNDS
As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with
finance-related legal requirements.
Governmental funds. The focus of the Town’s governmental funds is to provide information on
near-term inflows, outflows, and balances of spendable resources. Such information is useful in
assessing the Town’s financing requirements. In particular, unassigned fund balance may serve as
a useful measure of the Town’s net resources available for spending at the end of the fiscal year.
The financial performance of the Town as a whole is reflected in its governmental funds. As the
Town completed the year, its governmental funds reported a decrease of $639,708 in the combined
fund balance from $22.0 million to $21.3 million.
The General Fund comprises 33.6 percent of the total fund balance. Approximately $2.1 million
or 29.9 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
$6,349 to remain at $7.2 million as of fiscal year end. General Fund revenues increased $1.0
million primarily due to increased sales tax and State-shared revenues. General Fund expenditures
increased $1.1 million. The majority of the increase was a result of purchase of a new fire truck.
The Highway User Revenue Fund comprises 15.9 percent of total fund balance. The fund balance
increased $1.1 million from the prior year as a result of the postponement of some pavement
maintenance due to results of a pavement management analysis and the re-evaluation of the current
process.
The Capital Projects Fund comprises 33.6 percent of the total fund balance. All of the fund balance
is committed or assigned to capital projects. The fund balance decreased $988,023 million due to
the ongoing capital projects during the fiscal year.
BUDGETARY HIGHLIGHTS
Over the course of the year, the Town revised the General Fund annual expenditure budget
primarily due to changes in the contingency amount. The difference between the original budget
and the final amended budget was an $814,378 decrease, or 4.5 percent.
Page 28
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2018
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 favorable variance of $1.0 million in overall revenues is primarily due to increased
licenses and permit fees, sales taxes resulting from building activity and State-shared
revenues.
The favorable total expenditures variance of $2.3 million is due primarily to cautious
spending and staffing efficiencies by all departments and by not utilizing third party
contracts for inspection services as originally anticipated.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets. As of the end of the current fiscal year, the Town had invested $102.3 million in
governmental capital assets, including buildings, facilities, vehicles, computers, equipment,
infrastructure assets and artwork. This amount represents a net increase prior to depreciation of
$3.9 million from the prior fiscal year for governmental activities. The increase was primarily due
to building and park improvements and purchase of equipment. 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, 2018 and June 30, 2017.
Governmental Activities
As of
June 30, 2018
As of
June 30, 2017
Capital assets – non-depreciable $ 30,157,640 $ 27,134,114
Capital assets – depreciable, net 72,102,049 76,045,841
Total $102,259,689 $103,179,955
The estimated construction commitments amount is $3,543,200.
Additional information on the Town’s capital assets can be found in Note 5.
Debt Administration. At year-end, the Town had $5.5 million in governmental long-term debt
outstanding with $2.8 million due within one year. Long-term debt decreased by $2.6 million for
governmental activities.
Page 29
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2018
CAPITAL ASSETS AND DEBT ADMINISTRATION – continued
State statutes currently limit the amount of general obligation debt a Town may issue to a
percentage of its total assessed valuation for water, sewer, artificial lighting, parks, open space,
recreational facility improvements, public safety, law enforcement, fire and emergency facilities
and street and transportation facilities. The current 20 percent debt limitation for the Town is
$104.9 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 $31.5 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
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Page 32
GOVERNMENT-WIDE FINANCIAL STATEMENTS
Page 33
ASSETS
Current assets:
Cash and investments
Accounts receivable
Intergovernmental receivable
Taxes receivable
Interest receivable
Inventory, at cost
Prepaid items
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
Retainage 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
$ 22,823,317
168,786
691,402
50,230
52,395
13,490
21,945
23,821,565
30,157,640
72,102,049
102,259,689
126,081,254
1,673,496
284,083
114,051
28,231
105,128
373,187
370,000
2,265,000
262,421
5,475,597
2,994,108
2,994,108
8,469,705
96,777,854
3,049,766
1,451,059
88,701
16,244,169
$117,611,549
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF NET POSITION
JUNE 30, 2018
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
$ 3,431,752
1,460,967
7,567,012
7,380,663
3,311,648
118,552
$23,270,594
Charges for
Services
$ 295,716
1,314,915
155,973
52,465
497,914
$2,316,983
Operating
Grants and
Contributions
$ 56,025
45,447
1,593,514
42,972
$1,737,958
Capital Grants
and
Contributions
$ 101,946
98,900
9,551
94,554
$304,951
Governmental
Activities
$ (2,978,065)
(146,052)
(7,266,692)
(5,725,133)
(2,676,208)
(118,552)
(18,910,702)
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
2,263,623
10,311,578
421,682
5,384,831
1,011,836
158,860
10,409
19,562,819
652,117
116,959,432
$117,611,549
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2018
The notes to the basic financial statements are an integral part of this statement.
Page 35
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Page 36
FUND FINANCIAL STATEMENTS
Page 37
ASSETS
Cash and investments
Accounts receivable
Intergovernmental receivable
Taxes receivable
Interest receivable
Due from other funds
Inventory, at cost
Prepaid items
Total assets
LIABILITIES, DEFERRED INFLOWS OF RESOURCES
AND FUND BALANCES
Liabilities:
Accounts payable
Retainage payable
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
General
$ 6,942,070
163,026
460,620
22,254
13,490
21,945
$7,623,405
$ 196,526
103,343
10,888
105,128
31,896
568
448,349
3,763
3,763
35,435
2,893,850
2,101,574
2,140,434
7,171,293
$7,623,405
Highway User
Revenue
$ 3,781,637
5,760
213,872
$4,001,269
$ 605,219
7,027
345
612,591
5,760
5,760
3,044,006
338,912
3,382,918
$4,001,269
Grants
$ 296,474
$296,474
$ 65,949
230,525
296,474
$296,474
TOWN OF FOUNTAIN HILLS, ARIZONA
BALANCE SHEET - GOVERNMENTAL FUNDS
JUNE 30, 2018
The notes to the basic financial statements are an integral part of this statement.
Page 38
General
Obligation Debt
Service
$ 25,400
44,072
$69,472
$
11,190
11,190
58,282
58,282
$69,472
Eagle Mountain
Debt Service
$ 7,634
6,079
$13,713
$
1,313
1,313
12,400
12,400
$13,713
Municipal
Property
Corporation Debt
Service
$ 5,516
$5,516
$
5,516
5,516
$5,516
Capital Projects
$ 8,207,746
22,164
$8,229,910
$ 770,023
284,083
16,998
1,071,104
5,780,363
1,378,443
7,158,806
$8,229,910
Non-Major
Governmental
Funds
$ 3,556,840
16,910
79
7,977
568
$3,582,374
$ 35,779
3,681
39,460
1,451,059
1,468,527
623,328
3,542,914
$3,582,374
Total
Governmental
Funds
$ 22,823,317
168,786
691,402
50,230
52,395
568
13,490
21,945
$23,822,133
$ 1,673,496
284,083
114,051
28,231
105,128
262,421
568
2,467,978
12,503
9,523
22,026
35,435
4,571,263
10,142,740
4,442,257
2,140,434
21,332,129
$23,822,133
Page 39
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Page 40
Total governmental fund balances 21,332,129$
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 215,630,172$
Less accumulated depreciation (113,370,483)102,259,689
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 12,503
Other 9,523 22,026
Long-term liabilities are not due and payable in the current
period and, therefore, are not reported in the funds.
Compensated absences payable (520,460)
Bonds payable (5,481,835)(6,002,295)
Net position of governmental activities 117,611,549$
TOWN OF FOUNTAIN HILLS, ARIZONA
RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
JUNE 30, 2018
The notes to the basic financial statements are an integral part of this statement.
Page 41
Revenues:
Property taxes
Sales taxes
Franchise taxes
Licenses and permits
Leases and rents
Intergovernmental
Charges for services
Other
Fines and forfeitures
Investment earnings
Total revenues
Expenditures:
Current -
General government
Development services
Public safety
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
General
$
8,417,615
421,682
930,768
282,531
5,430,178
233,947
94,772
153,736
40,940
16,006,169
2,892,222
866,594
7,402,227
638,111
2,168,710
1,025,632
14,993,496
1,012,673
1,036,553
(2,055,575)
(1,019,022)
(6,349)
7,177,642
$7,171,293
Highway User
Revenue
$
793,198
2,605,350
20,175
2,148
39,992
3,460,863
2,555,562
24,935
2,580,497
880,366
200,000
200,000
1,080,366
2,302,552
$3,382,918
Grants
$
157,946
157,946
56,000
101,946
157,946
$
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2018
The notes to the basic financial statements are an integral part of this statement.
Page 42
General
Obligation Debt
Service
$ 1,909,924
8,494
1,918,418
1,980,000
140,950
600
2,121,550
(203,132)
(203,132)
261,414
$58,282
Eagle Mountain
Debt Service
$ 370,686
2,115
372,801
380,000
27,528
195
407,723
(34,922)
(34,922)
47,322
$12,400
Municipal
Property
Corporation Debt
Service
$
3,811
3,811
360,000
16,686
1,010
377,696
(373,885)
209,838
209,838
(164,047)
169,563
$5,516
Capital Projects
$
704,166
108,451
39,831
852,448
2,791
221,948
3,164,701
3,389,440
(2,536,992)
2,748,969
(1,200,000)
1,548,969
(988,023)
8,146,829
$7,158,806
Non-Major
Governmental
Funds
$ 5,471
396,599
1,073,618
72,554
2,326
29,261
23,677
1,603,506
244,923
530,655
4,696
207,048
987,322
616,184
348,368
(1,288,153)
(939,785)
(323,601)
3,866,515
$3,542,914
Total
Governmental
Funds
$ 2,286,081
10,311,578
421,682
2,004,386
282,531
8,266,028
254,122
207,697
182,997
158,860
24,375,962
3,195,936
1,397,249
7,402,227
3,420,317
2,375,758
4,317,214
2,720,000
185,164
1,805
25,015,670
(639,708)
4,543,728
(4,543,728)
(639,708)
21,971,837
$21,332,129
Page 43
Changes in fund balances - total governmental funds (639,708)$
Amounts reported for governmental activities in the Statement of Activities are
different because:
Governmental funds report the portion of capital outlay for capitalized assets as expenditures.
However, in the Statement of Activities, the costs of those assets are allocated over their
estimated useful lives as depreciation expense.
Expenditures for capitalized assets 4,293,214$
Less current year depreciation (5,235,480) (942,266)
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.22,000
Some revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds.
Property taxes (22,458)
Other (452,793) (475,251)
Repayments of bond principal are expenditures in the governmental
funds, but the repayment reduces long-term liabilities in the Statement of
Net Position.2,720,000
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.
Amortization of deferred bond items 68,417
Compensated absences (101,075) (32,658)
Changes in net position in governmental activities 652,117$
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, 2018
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, 2018
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 development services, culture and recreation, public
works, public safety and general administrative services.
The Town is a municipal corporation governed by an elected Mayor and Council. The financial
reporting entity consists of a primary government and its component units. A component unit
is a legally separate entity that must be included in the reporting entity in conformity with
generally accepted accounting principles. The Town is a primary government that has a
separately elected governing body, is legally separate, and is fiscally independent of other state
or local governments. Furthermore, the component units combined with the Town for financial
statement presentation purposes and the Town are not included in any other governmental
reporting entity. Consequently, the Town’s financial statements include only the funds of those
organizational entities for which its elected governing body is financially accountable.
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, 2018
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 Town's component units. For the most part, the effect of internal
activity has been removed from these statements. Interfund services provided and used, such
as interfund transfers, are not eliminated in the process of consolidation. Governmental
activities normally are supported by taxes and intergovernmental revenues. The Town does not
have any fiduciary or business-type activities.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment is offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include 1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or segment and 2) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or segment.
Taxes, unrestricted state shared revenues, investment income and other items not included
among program revenues are reported instead as general revenues.
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, 2018
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
Government-wide Financial Statements – The government-wide financial statements are
reported using the economic resources measurement focus and the accrual basis of accounting.
Revenues are recorded when earned and expenses are recorded when a liability is incurred,
regardless of the timing of related cash flows. Grants and similar items are recognized as
revenue as soon as all eligibility requirements imposed by the grantor or provider have been
met. As a general rule, the effect of internal activity has been eliminated from the government-
wide financial statements; however, the effects of interfund services provided and used
between functions are reported as expenses and program revenues at amounts approximating
their external exchange value.
Fund Financial Statements – Governmental fund financial statements are reported using the
current financial resources measurement focus and the modified accrual basis of accounting.
Revenues are recognized as soon as they are both measurable and available. Revenues are
considered to be available when they are collectible within the current period or soon enough
thereafter to pay liabilities of the current period. For this purpose, the Town considers revenues
to be available if they are collected within 60 days of the end of the current fiscal period.
Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
However, debt service expenditures, as well as expenditures related to compensated absences,
and claims and judgments, are recorded only when payment is due.
Property taxes, sales taxes, franchise taxes, state shared revenues, licenses and permits, charges
for services, and investment earnings associated with the current fiscal period are all
considered to be susceptible to accrual and have been recognized as revenues of the current
fiscal period. Grants and similar awards are recognized as revenue as soon as all eligibility
requirements imposed by the grantor or provider have been met. Miscellaneous revenue is not
susceptible to accrual because generally they are not measurable until received in cash.
Unearned revenues arise when resources are received by the Town before it has legal claim to
them, as when grant monies are received prior to meeting all eligibility requirements imposed
by the provider.
The focus of governmental fund financial statements is on major funds rather than reporting
funds by type. Each major fund is presented in a separate column.
The Town reports the following major governmental funds.
General Fund – The General Fund is the Town’s primary operating fund. This fund
accounts for all financial resources of the Town, except those required to be accounted for
in other funds.
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, 2018
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.
Capital Projects Fund – This fund accounts for the capital improvements to various projects
and equipment purchases of the Town.
D. Cash and Investments
Cash and cash equivalents at year end were cash on hand, cash in bank, restricted cash, and
cash and investments held by the State Treasurer.
Cash and investments are pooled, except for investments that are restricted under provisions
of bond indentures or other restrictions that are required to be reported in the individual funds.
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, 2018
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
E. Investment Earnings
Investment earnings is composed of interest, dividends, and net changes in the fair value of
applicable investments. Investment earnings is a component of revenue in the governmental
funds financial statements.
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, 2018
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
I. 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 by the Town as assets with an initial, individual cost in excess of
$10,000 and an estimated useful life in excess of one year. Capital assets are recorded at
historical cost, if purchased or constructed. Donated capital assets are recorded at the
acquisition value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the assets or
materially extend the life of the asset are not capitalized.
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
J. 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, 2018
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
K. Compensated Absences
The Town’s employee vacation and sick leave policies generally provide for granting vacation
and sick leave with pay. Sick leave and vacation benefits accrue as pay periods are completed
at the current rate of pay.
All eligible full-time and part-time regularly-scheduled employees can accrue vacation leave.
Employees accrue up to a maximum of two times the yearly maximum accrual of vacation
through carryover of balances. In the event of termination, employees will be paid for any
accrued, but unused, vacation hours. Full-time and part-time regularly-scheduled employees
accrue sick leave, up to a maximum of 1040 hours. Part-time non-regularly-scheduled,
temporary, or seasonal, and other employees accrue paid sick time for hours worked, not to
exceed 40 hours per calendar year.
The current and long-term liabilities, including related benefits, for accumulated vacation and
sick leave are reported on the government-wide financial statements. A liability for these
amounts is reported in governmental funds only if they have matured, for example, as a result
of employee termination, resignations and retirements. Generally, resources from the General
Fund are used to pay for compensated absences.
L. 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.
M. 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, 2018
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
N. 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.
O. 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, 2018
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 $2,807,648, reported as a committed fund balance
at June 30, 2018. 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, 2018
NOTE 2 – FUND BALANCE CLASSIFICATIONS
The table below provides detail of the major components of the Town’s fund balance
classifications at year end.
General
Fund
Highway
User
Revenue
Fund
General
Obligation
Debt
Service
Fund
Eagle
Mountain
Debt
Service
Fund
Municipal
Property
Corporation
Debt Service
Fund
Capital
Projects
Fund
Non-Major
Governmental
Funds
Total
Fund Balances:
Nonspendable:
Inventory $ 13,490 $ $ $ $ $ $ $ 13,490
Prepaid items 21,945 21,945
Restricted:
Capital Projects 17,045 17,045
Debt Service 58,282 12,400 5,516 76,198
Highways and Streets 3,044,006 3,044,006
Development Fees 1,434,014 1,434,014
Committed:
Rainy Day 2,807,648 2,807,648
Public Art 86,202 86,202
Downtown Strategy 959,920 959,920
Economic Development 137,030 137,030
Tourism 4,092 4,092
Capital Projects 5,780,363 5,780,363
Local Court Enhancement 367,485 367,485
Assigned:
Capital Projects 842,294 1,378,443 2,220,737
Environmental 623,328 623,328
Vehicle Replacement 697,750 338,912 1,036,662
Equipment Replacement 561,530 561,530
Unassigned: 2,140,434 2,140,434
Total fund balances $ 7,171,293 $3,382,918 $ 58,282 $ 12,400 $ 5,516 $ 7,158,806 $ 3,542,914 $ 21,332,129
Page 54
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
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 $835,504 and the bank balance was $1,062,940. At year end, $574,199 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, 2018
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, 2018, are classified in the
accompanying financial statements as follows:
Carrying amount of investments $ 21,986,963
Carrying amount of cash deposits 835,504
Cash on hand 850
Total pooled cash and investments $ 22,823,317
At year end, the Town’s investments consisted of the following:
Investment Maturities
(in Years)
Credit Rating
Investment Type Category Fair Value Less than 1 1-5 S&P Moody’s
U.S. Government and Agency Notes Level 1 $ 6,914,966 $ 1,934,019 $4,980,948 AA+ Aaa
Corporate and Foreign Bonds Level 2 2,691,880 2,691,879 BBB+-AAA A3-Aaa
Commercial Paper Level 2 598,049 598,049 A-1 P-1
Certificates of Deposit Level 2 1,258,376 399,872 858,504 A A-1
Wells Fargo Money Market Funds Level 1 505,331 505,331 N/A N/A
$ 3,437,271 $8,531,331
State Treasurer’s Investment Pool 7 Not applicable 10,018,361 55 days average maturities
Total $ 21,986,963
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, 2018
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. Government and Agency Notes $ 6,914,966 31.5%
Corporate and Foreign Bonds 2,691,880 12.2%
Commercial Paper 598,049 2.7%
Certificates of Deposit 1,258,376 5.7%
Wells Fargo Money Market Funds 505,331 2.3%
State Treasurer’s investment pool 7 10,018,361 45.6%
$ 21,986,963
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, 2018
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 2,503,900 22,000 2,525,900
Construction in progress 1,058,546 3,266,647 265,121 4,060,072
Total capital assets, not being depreciated 27,134,114 3,288,647 265,121 30,157,640
Capital assets, being depreciated:
Infrastructure 147,196,425 147,196,425
Buildings and building improvements 18,533,141 241,121 18,774,262
Improvements other than buildings 15,149,782 15,149,782
Vehicles, machinery and equipment 3,746,023 1,050,567 444,527 4,352,063
Total capital assets being depreciated 184,625,371 1,291,688 444,527 185,472,532
Less accumulated depreciation for:
Infrastructure (91,167,751) (3,994,842) (95,162,593)
Buildings and building improvements (5,339,415) (397,002) (5,736,417)
Improvements other than buildings (9,646,388) (643,853) (10,290,241)
Vehicles, machinery and equipment (2,425,976) (199,783) (444,527) (2,181,232)
Total accumulated depreciation (108,579,530) (5,235,480) (444,527) (113,370,483)
Total capital assets, being depreciated, net 76,045,841 (3,943,792) 72,102,049
Governmental activities capital assets, net $ 103,179,955 $ (655,145) $ 265,121 $ 102,259,689
Depreciation expense was charged to functions/programs as follows:
Governmental activities:
General government $ 173,852
Development services 16,721
Public safety 164,785
Public works 3,960,346
Culture and recreation 919,776
Total depreciation expense $ 5,235,480
Page 58
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 5 – CAPITAL ASSETS
Construction Commitments – At June 30, 2018, the Town has the following active
construction commitments:
Governmental Activities
Project
Spent-to-Date
Remaining
Commitment
Valley Metro Bus Stop – Library $ 67,366 $ 8,711
Fire Station #2 Relocation 2,069,481 2,288,716
Adero Canyon Trailhead 1,266,557 1,180,118
Video Surveillance Cameras 32,509 11,284
Fountain Hills Boulevard Shoulder Paving 46,524 7,956
Wayfinding Sign 49,084 46,416
Total commitments $ 3,531,522 $ 3,543,200
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, 2018
Due
Within
One Year
Governmental activities:
General Obligation Bonds:
General Obligation Refunding
Bonds, Series 2005 $ 7,225,000 4% 7/1/19 $ 310,000 $ 310,000
General Obligation Bonds,
Series 2014 7,565,000 2-3% 7/1/19-20 3,185,000 1,570,000
Notes from Private Placements:
Eagle Mountain Community
Facilities District, General
Obligation Refunding Bonds,
Series 2015 2,300,000 1.76% 7/1/19-21 1,180,000 385,000
Municipal Facilities Revenue
Refunding Bonds, Series 2015 1,880,000 1.62% 7/1/19-20 670,000 370,000
Total $ 5,345,000 $ 2,635,000
Page 59
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
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
2019 $ 2,635,000 $ 123,872
2020 2,310,000 67,302
2021 400,000 7,040
Total $ 5,345,000 $ 198,214
Private Placements
The Town has outstanding bonds from private placements reported as governmental activities
of $670,000. The Municipal Facilities Revenue Refunding Bonds contain a provision that the
Town must maintain excise taxes coverage of two and one-half times debt service. In the event
the Town does not maintain this coverage, the Town will impose additional excise taxes. The
Town does not have a line of credit associated with the bonds.
The Eagle Mountain Community Facilities District has outstanding bonds from private
placements reported as governmental activities of $1,180,000. There are no specific
provisions regarding default on the Eagle Mountain Community Facilities District debt.
Pledged Revenues
The Town has pledged excise tax revenues to repay a total of $670,000 in outstanding
Municipal Facilities Revenue Refunding Bonds. For the current fiscal year, the net revenues
available to service the debt were $18,194,833. For the fiscal year ended June 30, 2018, the
debt principal and interest paid on this debt was $376,686 (two percent of pledged revenues).
The total principal and interest remaining to be paid on the bonds is $685,714.
Page 60
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
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 $ 7,035,000 $ $ 2,360,000 $ 4,675,000 $ 2,265,000
Revenue bonds 1,030,000 360,000 670,000 370,000
Premium 205,252 68,417 136,835
Total bonds payable 8,270,252 2,788,417 5,481,835 2,635,000
Compensated absences payable 419,385 314,692 213,617 520,460 373,187
Governmental activity long-term
Liabilities $ 8,689,637 $ 314,692 $ 3,002,034 $ 6,002,295 $ 3,008,187
NOTE 8 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
At year end, interfund balances were as follows:
Due to/from other funds:
Non-Major
Governmental
Funds
General Fund $ 568
Total Due from Other Funds $ 568
The interfund balance was repaid in July 2018.
Interfund transfers:
At year end, interfund transfers were as follows:
Transfers out
Transfers in
General
Fund
Capital
Projects
Fund
Non-Major
Governmental
Funds Total
General Fund $ $ 1,000,000 $ 36,553 $ 1,036,553
HURF Fund 200,000 200,000
Municipal Property Corporation Debt
Service Fund 209,838 209,838
Capital Projects Fund 1,645,737 1,103,232 2,748,969
Non-Major Governmental Funds 200,000 148,368 348,368
Total $ 2,055,575 $ 1,200,000 $ 1,288,153 $ 4,543,728
Page 61
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 8 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
The General Fund transferred $1,145,737 to Capital Projects Fund for the excess revenues over
expenditures per the Town’s Financial Policy; $209,838 to Municipal Property Corporation
Debt Service Fund for debt service costs; $200,000 to Environmental Fund for funding
operations of that fund; and $500,000 to Facilities Replacement Fund for funding facilities
replacement. The Open Space Development Fee Fund transferred $1,103,232 to Capital
Projects Fund for the Adero Canyon Trailhead project. The Tourism Fund transferred $36,553
to the General Fund to provide funding for special events. The Capital Projects Fund
transferred $200,000 to Highway User Fund for pavement maintenance costs and $1,000,000
to the Vehicle Replacement Fund for the purchase of a new fire truck. The Economic
Development Fund transferred $148,368 to the Tourism Fund to provide funding for operating
costs of the tourism program.
NOTE 9 – CONTINGENT LIABILITIES
Compliance – Amounts received or receivable from grantor agencies are subject to audit and
adjustment by grantor agencies, principally the state government. Any disallowed claims,
including amounts already collected, may constitute a liability of the applicable funds. The
amount, if any, of expenditures/expenses that may be disallowed by the grantor cannot be
determined at this time, although the Town expects such amounts, if any, to be immaterial.
Lawsuits – The Town is a party to a number of various types of lawsuits, many of which
normally occur in governmental operations. The ultimate outcome of the actions is not
determinable; however, Town management believes that the outcome of these proceedings,
either individually or in the aggregate, will not have a materially adverse effect on the
accompanying financial statements.
NOTE 10 – RISK MANAGEMENT
The Town is exposed to various risks of loss related to torts; theft of, damage to and destruction
of assets; errors and omissions; and natural disasters. The Town’s insurance protection is
provided by the Arizona Municipal Risk Retention Pool (Pool). The Pool is made up of various
towns and cities within Arizona that operate a common risk management and insurance
program. The Pool is structured such that member premiums are based on an actuarial review
that will provide adequate reserves to allow the Pool to meet its expected financial obligations.
The Pool has the authority to assess its’ members additional premiums should reserves and
annual premiums be insufficient to meet the Pool’s obligations.
Page 62
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 10 – RISK MANAGEMENT
The Town joined the Arizona Municipal Workers’ Compensation Pool (Pool) together with
other governments in the state for risks of loss related to workers’ compensation claims. The
Pool is a public entity risk pool currently operating as a common risk management and
insurance program for towns and cities in the State. The Town is responsible for paying a
premium, based on an experience rating formula that allocates pool expenditures and liabilities
among members.
The Town continues to carry commercial insurance for all other risks of loss, including
employee health, dental, and vision insurance. There were no settlements that exceeded
insurance coverage in any of the past three years.
NOTE 11 – RETIREMENT PLANS
Defined Contribution Pension Plan
All full-time employees of the Town participate in a defined contribution pension plan
administered by the ICMA Retirement Corporation as a 401(a) plan. The contribution rates are
11 percent for both the employee and the Town. The payroll for the Town employees covered
by this plan for the year ended June 30, 2018, was $2,764,251. The Town’s total payroll was
$3,444,672.
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.
Page 63
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 11 – RETIREMENT PLANS
An employee that leaves the employment of the Town is entitled to his or her contributions
and the vested portion of the Town’s contributions, plus interest earned. During the fiscal year,
the Town’s required and actual contributions amounted to $304,068. The employees’
contributions totaled $304,068. 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 $164,174 to that plan. The Town contributed $8,386 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 2017-18 or as of the close of the
fiscal year.
Page 64
REQUIRED SUPPLEMENTARY INFORMATION
Page 65
$ 8,481,288 $ 8,481,288 $ 8,417,614 $ (63,674)
$ 6,435,526 $ 7,350,184 $ 7,171,293 $ (244,640)
837,495 Public works 836,595 638,111 198,484
204,810
339,913
3,881,833
3,838,581
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GENERAL
YEAR ENDED JUNE 30, 2018
Revenues:
Sales taxes
Franchise taxes
Licenses and permits
Leases and rents 47,108
Intergovernmental
Charges for services
Other
Fines and forfeitures
Investment earnings
Total revenues
Expenditures:
Capital outlay
Mayor and council
Current -
General government
Public safety
Fire and emergency
Law enforcement
Total general government
Development services
Culture and recreation
Total public safety
Total expenditures
Administration
Municipal court
Excess (deficiency) of revenues over expenditures
Non departmental
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
Budgeted Amounts
Original
360,000
2,089,675
235,423
5,321,168
198,724
51,785
200,000
12,980
16,951,043
2,603,146
339,913
1,364,057
862,000
71,849
3,881,833
3,855,626
4,378,965
1,890,482
2,391,496
7,737,459
18,097,897
(1,146,854)
1,062,500
(948,838)
113,662
(1,033,192)
7,468,718
Final
360,000
2,089,675
235,423
5,321,168
198,724
66,785
200,000
12,980
16,966,043
2,603,146
81,849
3,335,787
1,890,482
310,879
7,720,414
17,283,519
(317,476)
1,062,500
(948,838)
1,079,045
2,421,196
113,662
(203,814)
7,553,998
Actual
421,682
930,768
282,531
5,430,178
233,947
94,773
153,736
40,940
16,006,169
2,892,222
866,594
2,168,710
2,288,481
321,152
77,779
1,012,673
1,075,553
(2,094,575)
3,626,953
3,775,274
1,025,632
(1,019,022)
(6,349)
7,177,642
61,682
(1,158,907)
7,402,227
14,993,496
109,010
35,223
27,988
(46,264)
27,960
(959,874)
1,023,888
252,486
314,665
18,761
53,413
4,070
106,069
318,187
2,290,023
1,330,149
13,053
(1,145,737)
Variance with
Final Budget
Positive
(Negative)
(1,132,684)
197,465
(376,356)
254,880
63,307
443,565
See accompanying notes to this schedule.
Page 66
Revenues:
Sales taxes
Intergovernmental
Charges for services
Other
Investment earnings
Total revenues
Expenditures:
Current -
Public works
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Budgeted Amounts
Original
$ 769,512
2,566,773
262,000
25,000
2,340
3,625,625
3,825,625
3,825,625
(200,000)
200,000
200,000
2,302,552
$2,302,552
Final
$ 769,512
2,566,773
262,000
25,000
2,340
3,625,625
3,828,714
3,828,714
(203,089)
200,000
200,000
(3,089)
2,302,552
$2,299,463
Actual
$ 793,198
2,605,350
20,175
2,148
39,992
3,460,863
2,555,562
24,935
2,580,497
880,366
200,000
200,000
1,080,366
2,302,552
$3,382,918
Variance with
Final Budget
Positive
(Negative)
$ 23,686
38,577
(241,825)
(22,852)
37,652
(164,762)
1,273,152
(24,935)
1,248,217
1,083,455
1,083,455
$1,083,455
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
HIGHWAY USER REVENUE
YEAR ENDED JUNE 30, 2018
See accompanying notes to this schedule.
Page 67
Revenues:
Intergovernmental
Total revenues
Expenditures:
Current -
General government
Capital outlay
Total expenditures
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Budgeted Amounts
Original
$1,344,000
1,344,000
1,092,000
252,000
1,344,000
$
Final
$1,329,000
1,329,000
1,077,000
252,000
1,329,000
$
Actual
$157,946
157,946
56,000
101,946
157,946
$
Variance with
Final Budget
Positive
(Negative)
$(1,171,054)
(1,171,054)
1,021,000
150,054
1,171,054
$
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GRANTS
YEAR ENDED JUNE 30, 2018
See accompanying notes to this schedule.
Page 68
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2018
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
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Page 70
COMBINING AND INDIVIDUAL
FUND FINANCIAL STATEMENTS
AND SCHEDULES
Page 71
ASSETS
Cash and investments
Intergovernmental receivable
Taxes receivable
Interest receivable
Due from other funds
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and benefits
Total liabilities
Fund balances:
Restricted
Committed
Assigned
Total fund balances
Total liabilities and fund balances
Special Revenue
$ 2,127,311
16,910
79
3,492
568
$2,148,360
$ 35,779
3,681
39,460
17,045
1,468,527
623,328
2,108,900
$2,148,360
Capital Projects
$ 1,429,529
4,485
$1,434,014
$
1,434,014
1,434,014
$1,434,014
Total Non-Major
Governmental
Funds
$ 3,556,840
16,910
79
7,977
568
$3,582,374
$ 35,779
3,681
39,460
1,451,059
1,468,527
623,328
3,542,914
$3,582,374
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING BALANCE SHEET - ALL NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE
JUNE 30, 2018
Page 72
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
Special Revenue
$ 5,471
396,599
488,474
72,554
2,326
29,261
14,288
1,008,973
244,923
530,655
4,696
206,513
986,787
22,186
348,368
(184,921)
163,447
185,633
1,923,267
$2,108,900
Capital Projects
$
585,144
9,389
594,533
535
535
593,998
(1,103,232)
(1,103,232)
(509,234)
1,943,248
$1,434,014
Total Non-Major
Governmental
Funds
$ 5,471
396,599
1,073,618
72,554
2,326
29,261
23,677
1,603,506
244,923
530,655
4,696
207,048
987,322
616,184
348,368
(1,288,153)
(939,785)
(323,601)
3,866,515
$3,542,914
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
ALL NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE
YEAR ENDED JUNE 30, 2018
Page 73
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Page 74
NON-MAJOR GOVERNMENTAL FUNDS
Special Revenue Funds
Downtown Strategy Fund – accounts for the portion of Town sales tax committed by the Town
Council for the development of 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.
Development Fees Fund – accounts for restricted development fees collected from building
permits.
Page 75
ASSETS
Cash and investments
Intergovernmental receivable
Taxes receivable
Interest receivable
Due from other funds
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and benefits
Total liabilities
Fund balances:
Restricted
Committed
Assigned
Total fund balances
Total liabilities and fund balances
Downtown
Strategy
$ 954,283
3,268
3,492
$961,043
$ 1,123
1,123
959,920
959,920
$961,043
Economic
Development
$ 128,952
13,074
$142,026
$ 2,832
2,164
4,996
137,030
137,030
$142,026
Tourism
$ 13,023
$13,023
$ 7,819
1,112
8,931
4,092
4,092
$13,023
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING BALANCE SHEET - NON-MAJOR SPECIAL REVENUE FUNDS
JUNE 30, 2018
Page 76
Local Court
Enhancement
$ 366,349
568
568
$367,485
$
367,485
367,485
$367,485
Environmental
$ 647,363
$647,363
$ 23,630
405
24,035
623,328
623,328
$647,363
Cottonwoods
Maintenance
$ 17,341
79
$17,420
$ 375
375
17,045
17,045
$17,420
Totals
$ 2,127,311
16,910
79
3,492
568
$2,148,360
$ 35,779
3,681
39,460
17,045
1,468,527
623,328
2,108,900
$2,148,360
Page 77
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
$
79,320
3,756
83,076
56,044
56,044
27,032
27,032
932,888
$959,920
Economic
Development
$
317,279
1,151
318,430
183,332
183,332
135,098
(158,368)
(158,368)
(23,270)
160,300
$137,030
Tourism
$
72,554
2,251
932
75,737
206,513
206,513
(130,776)
148,368
(26,553)
121,815
(8,961)
13,053
$4,092
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2018
Page 78
Local Court
Enhancement
$
29,261
589
29,850
5,547
5,547
24,303
24,303
343,182
$367,485
Environmental
$
488,474
75
7,663
496,212
530,655
530,655
(34,443)
200,000
200,000
165,557
457,771
$623,328
Cottonwoods
Maintenance
$ 5,471
197
5,668
4,696
4,696
972
972
16,073
$17,045
Totals
$ 5,471
396,599
488,474
72,554
2,326
29,261
14,288
1,008,973
244,923
530,655
4,696
206,513
986,787
22,186
348,368
(184,921)
163,447
185,633
1,923,267
$2,108,900
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
Downtown Strategy
Budget
$
76,956
3,060
80,016
58,796
58,796
21,220
(100,000)
(100,000)
(78,780)
932,888
$854,108
Actual
$
79,320
3,756
83,076
56,044
56,044
27,032
27,032
932,888
$959,920
Variance -
Positive
(Negative)
$
2,364
696
3,060
2,752
2,752
5,812
100,000
100,000
105,812
$105,812
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, 2018
Page 80
Economic Development
Budget
$
307,800
48
307,848
252,823
252,823
55,025
(158,368)
(158,368)
(103,343)
160,300
$56,957
Actual
$
317,279
1,151
318,430
183,332
183,332
135,098
(158,368)
(158,368)
(23,270)
160,300
$137,030
Variance -
Positive
(Negative)
$
9,479
1,103
10,582
69,491
69,491
80,073
80,073
$80,073
Tourism
Budget
$
83,000
10,000
180
93,180
221,498
221,498
(128,318)
148,368
(13,500)
134,868
6,550
13,053
$19,603
Actual
$
72,554
2,251
932
75,737
206,513
206,513
(130,776)
148,368
(26,553)
121,815
(8,961)
13,053
$4,092
Variance -
Positive
(Negative)
$
(10,446)
(7,749)
752
(17,443)
14,985
14,985
(2,458)
(13,053)
(13,053)
(15,511)
$(15,511)
(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
Local Court Enhancement
Budget
$
24,600
180
24,780
50,265
30,000
80,265
(55,485)
(55,485)
343,182
$287,697
Actual
$
29,261
589
29,850
5,547
5,547
24,303
24,303
343,182
$367,485
Variance -
Positive
(Negative)
$
4,661
409
5,070
44,718
30,000
74,718
79,788
79,788
$79,788
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, 2018
Page 82
Environmental
Budget
$
492,444
540
492,984
711,806
711,806
(218,822)
200,000
200,000
(18,822)
457,771
$438,949
Actual
$
488,474
75
7,663
496,212
530,655
530,655
(34,443)
200,000
200,000
165,557
457,771
$623,328
Variance -
Positive
(Negative)
$
(3,970)
75
7,123
3,228
181,151
181,151
184,379
184,379
$184,379
Cottonwoods Maintenance
Budget
$ 5,454
36
5,490
5,031
5,031
459
459
16,073
$16,532
Actual
$ 5,471
197
5,668
4,696
4,696
972
972
16,073
$17,045
Variance -
Positive
(Negative)
$17
161
178
335
335
513
513
$513
(Continued)
Page 83
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
$ 5,454
384,756
492,444
83,000
10,000
24,600
4,044
1,004,298
361,884
711,806
5,031
221,498
30,000
1,330,219
(325,921)
348,368
(271,868)
76,500
(249,421)
1,923,267
$1,673,846
Actual
$ 5,471
396,599
488,474
72,554
2,326
29,261
14,288
1,008,973
244,923
530,655
4,696
206,513
986,787
22,186
348,368
(184,921)
163,447
185,633
1,923,267
$2,108,900
Variance -
Positive
(Negative)
$17
11,843
(3,970)
(10,446)
(7,674)
4,661
10,244
4,675
116,961
181,151
335
14,985
30,000
343,432
348,107
86,947
86,947
435,054
$435,054
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, 2018
Page 84
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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
General Obligation Debt Service
Budget
$ 1,893,694
720
1,894,414
1,980,000
140,950
600
2,121,550
(227,136)
(227,136)
261,414
$34,278
Actual
$ 1,909,924
8,494
1,918,418
1,980,000
140,950
600
2,121,550
(203,132)
(203,132)
261,414
$58,282
Variance -
Positive
(Negative)
$ 16,230
7,774
24,004
24,004
24,004
$24,004
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, 2018
Page 86
Eagle Mountain Debt Service
Budget
$ 372,746
120
372,866
380,075
27,456
200
407,731
(34,865)
(34,865)
47,322
$12,457
Actual
$ 370,686
2,115
372,801
380,000
27,528
195
407,723
(34,922)
(34,922)
47,322
$12,400
Variance -
Positive
(Negative)
$ (2,060)
1,995
(65)
75
(72)
5
8
(57)
(57)
$(57)
Municipal Property Corporation Debt Service
Budget
$
840
840
360,000
16,686
1,010
377,696
(376,856)
209,838
209,838
(167,018)
169,563
$2,545
Actual
$
3,811
3,811
360,000
16,686
1,010
377,696
(373,885)
209,838
209,838
(164,047)
169,563
$5,516
Variance -
Positive
(Negative)
$
2,971
2,971
2,971
2,971
$2,971
(Continued)
Page 87
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
$ 2,266,440
1,680
2,268,120
2,720,075
185,092
1,810
2,906,977
(638,857)
209,838
209,838
(429,019)
478,299
$49,280
Actual
$ 2,280,610
14,420
2,295,030
2,720,000
185,164
1,805
2,906,969
(611,939)
209,838
209,838
(402,101)
478,299
$76,198
Variance -
Positive
(Negative)
$ 14,170
12,740
26,910
75
(72)
5
8
26,918
26,918
$26,918
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, 2018
Page 88
(This page intentionally left blank)
Page 89
ASSETS
Cash and investments
Interest receivable
Total assets
LIABILITIES AND FUND BALANCES
Fund balances:
Restricted
Total fund balances
Total liabilities and fund balances
Development
Fees
$ 1,429,529
4,485
$1,434,014
$1,434,014
1,434,014
$1,434,014
TOWN OF FOUNTAIN HILLS, ARIZONA
BALANCE SHEET - NON-MAJOR CAPITAL PROJECTS FUND
JUNE 30, 2018
Page 90
Revenues:
Licenses and permits
Investment earnings
Total revenues
Expenditures:
Current -
Culture and recreation
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Development
Fees
$ 585,144
9,389
594,533
535
535
593,998
(1,103,232)
(1,103,232)
(509,234)
1,943,248
$1,434,014
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NON-MAJOR CAPITAL PROJECTS FUND
YEAR ENDED JUNE 30, 2018
Page 91
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
$ 368,124
255,000
170,000
6,024
799,148
1,940
364,800
7,285,000
7,651,740
(6,852,592)
2,077,024
(1,200,000)
877,024
(5,975,568)
7,127,301
$1,151,733
Non-GAAP
Actual
$ 704,166
103,051
22,557
829,774
2,791
58,189
3,164,701
3,225,681
(2,395,907)
2,248,969
(1,200,000)
1,048,969
(1,346,938)
7,127,301
$5,780,363
Variance -
Positive
(Negative)
$ 336,042
(255,000)
(66,949)
16,533
30,626
(851)
306,611
4,120,299
4,426,059
4,456,685
171,945
171,945
4,628,630
$4,628,630
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, 2018
Page 92
Facilities Replacement Fund
Budget
$
1,440
1,440
906,850
906,850
(905,410)
500,000
500,000
(405,410)
1,019,528
$614,118
Non-GAAP
Actual
$
5,400
17,274
22,674
163,759
163,759
(141,085)
500,000
500,000
358,915
1,019,528
$1,378,443
Variance -
Positive
(Negative)
$
5,400
15,834
21,234
743,091
743,091
764,325
764,325
$764,325
Development Fees
Budget
$
158,160
6,540
164,700
60,535
60,535
104,165
(1,977,024)
(1,977,024)
(1,872,859)
1,943,248
$70,389
Actual
$
585,144
9,389
594,533
535
535
593,998
(1,103,232)
(1,103,232)
(509,234)
1,943,248
$1,434,014
Variance -
Positive
(Negative)
$
426,984
2,849
429,833
60,000
60,000
489,833
873,792
873,792
1,363,625
$1,363,625
(Continued)
Page 93
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
$ 368,124
158,160
255,000
170,000
14,004
965,288
1,940
1,271,650
60,535
7,285,000
8,619,125
(7,653,837)
2,577,024
(3,177,024)
(600,000)
(8,253,837)
10,090,077
$1,836,240
Non-GAAP
Actual
$ 704,166
585,144
108,451
49,220
1,446,981
2,791
221,948
535
3,164,701
3,389,975
(1,942,994)
2,748,969
(2,303,232)
445,737
(1,497,257)
10,090,077
$8,592,820
Variance -
Positive
(Negative)
$ 336,042
426,984
(255,000)
(61,549)
35,216
481,693
(851)
1,049,702
60,000
4,120,299
5,229,150
5,710,843
171,945
873,792
1,045,737
6,756,580
$6,756,580
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, 2018
Page 94
STATISTICAL SECTION
The statistical section presents financial statement trends as well as detailed financial and
operational information not available elsewhere in the report. The statistical section is intended to
enhance the reader’s understanding of the information presented in the financial statements, notes
to the financial statements, and other supplementary information presented in this report. The
statistical section is comprised of the five categories of statistical information presented below.
Financial Trends
These schedules contain information on financial trends to help the reader understand how
the Town’s financial position and financial activities have changed over time.
Revenue Capacity
These schedules contain information to help the reader assess the factors affecting the
Town’s ability to generate revenue.
Debt Capacity
These schedules present information to help the reader evaluate the Town’s current levels of
outstanding debt as well as assess the Town’s ability to make debt payments and/or issue
additional debt in the future.
Demographic and Economic Information
These schedules present various demographic and economic indicators to help the reader
understand the environment in which the Town’s financial activities take place and to help
make comparisons with other cities.
Operating Information
These schedules contain information about the Town’s operations and various resources to
help the reader draw conclusions as to how the Town’s financial information relates to the
services provided by the Town.
Note: For locally assessed property (i.e., excluding mines, utilities, etc.) Proposition 117, approved
by voters in 2012, amended the Arizona Constitution to require that all property taxes after fiscal
year 2014-15 be based upon property values limited to five percent in annual growth. The
aggregate assessed value of all taxable properties within a taxing jurisdiction (i.e., after applying
assessment ratios based on the use of a property), including property values with a growth limit,
is currently referred to as net limited assessed value and formerly as primary assessed value. In
accordance with Proposition 117, this value is used for all taxing purposes beginning with fiscal
year 2015-16. Aggregate assessed value without a growth limit is currently referred to as net full
cash assessed value and formerly as secondary assessed value. This value remains the value
utilized for determining debt capacity limits.
Page 95
2009 2010 2011 2012
Governmental activities:
Net investment in capital assets 94,611,110$ 95,467,509$ 92,579,483$ 92,006,103$
Restricted 11,828,137 11,396,116 4,385,595 5,951,416
Unrestricted 13,765,293 12,321,090 22,598,669 21,064,267
Total governmental activities net position 120,204,540$ 119,184,715$ 119,563,747$ 119,021,786$
Source: The source of this information is the Town's financial records.
Fiscal Year ended June 30
Town of Fountain Hills, Arizona
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
Page 96
2013 2014 2015 2016 2017 2018
89,800,560$ 89,713,260$ 95,325,824$ 95,647,990$ 94,909,703$ 96,777,854$
5,721,744 5,480,867 6,310,810 4,530,239 4,471,661 4,589,526
20,612,758 19,186,823 15,180,582 17,232,506 17,578,068 16,244,169
116,135,062$ 114,380,950$ 116,817,216$ 117,410,735$ 116,959,432$ 117,611,549$
Fiscal Year ended June 30
Page 97
2009 2010 2011 2012 2013
Expenses
Governmental activities:
General government 4,231,529$ 3,720,236$ 2,876,848$ 3,119,113$ 2,909,443$
Development services 2,218,994 1,612,287 1,572,202 1,442,613 1,633,361
Public works 5,051,294 5,202,285 5,567,973 4,718,047 5,712,817
Public safety 7,312,415 6,293,323 5,963,067 5,820,136 6,100,131
Culture and recreation 3,336,616 2,927,848 2,840,154 2,754,731 2,779,294
Interest on long-term debt 1,033,536 950,484 851,957 779,576 567,043
Total governmental activities expenses 23,184,384 20,706,463 19,672,201 18,634,216 19,702,089
Program Revenues
Governmental activities:
Fines, fees and charges for services:
General government 499,914 474,434 337,279 272,469 380,926
Development services 455,543 236,377 344,821 322,984 377,483
Public works 50,408 266,706 77,409 95,201 112,521
Public safety 55,042 59,806 65,568 63,926 63,824
Culture and recreation 427,137 338,357 339,341 303,508 288,745
Operating grants and contributions - 1,666,498 1,614,462 1,285,656 1,266,906
Capital grants and contributions 1,353,409 632,617 2,273,414 1,392,706 150,535
Total governmental activities program revenues 2,841,453 3,674,795 5,052,294 3,736,450 2,640,940
Net (Expenses)/Revenues (20,342,931) (17,031,668) (14,619,907) (14,897,766) (17,061,149)
General Revenues and Other Changes in Net Assets
Governmental activities:
Taxes:
Property taxes 1,531,770 1,928,028 1,349,079 1,453,405 1,385,147
Sales taxes 8,932,374 7,644,440 8,013,480 7,787,489 7,957,163
Franchise taxes 321,964 285,881 322,659 332,130 334,668
State shared revenues 8,456,552 6,000,923 5,217,140 4,515,511 4,979,183
Investment earnings 258,478 22,831 28,456 88,877 69,998
Miscellaneous 76,300 129,740 68,125 178,393 300,899
Total governmental activities 19,577,438 16,011,843 14,998,939 14,355,805 15,027,058
Changes in Net Position
Governmental activities (765,493)$ (1,019,825)$ 379,032$ (541,961)$ (2,034,091)$
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 98
2014 2015 2016 2017 2018
2,432,965$ 2,479,365$ 2,516,966$ 3,142,722$ 3,431,752$
1,237,717 2,074,611 2,253,208 1,364,378 1,460,967
6,630,875 4,963,979 6,476,688 7,904,577 7,567,012
6,958,056 6,816,152 7,178,890 7,563,898 7,380,663
2,760,690 2,822,954 3,124,523 3,375,414 3,311,648
472,999 698,542 241,694 178,749 118,552
20,493,302 19,855,603 21,791,969 23,529,738 23,270,594
215,943 337,655 298,737 837,163 295,716
531,193 693,670 1,257,492 1,062,094 1,314,915
250,421 236,706 48,688 216,724 155,973
74,887 86,641 90,345 155,454 52,465
340,353 339,158 321,189 393,028 497,914
1,307,738 1,431,017 1,615,973 1,699,931 1,737,958
144,570 2,874,796 381,011 494,328 304,951
2,865,105 5,999,643 4,013,435 4,858,722 4,359,892
(17,628,197) (13,855,960) (17,778,534) (18,671,016) (18,910,702)
1,449,646 904,660 2,569,504 2,296,199 2,263,623
8,459,267 8,983,049 9,395,667 9,415,151 10,311,577
349,414 352,673 360,320 367,119 421,682
5,326,332 5,713,235 5,813,678 6,057,278 6,396,667
123,311 150,358 219,058 55,127 158,860
166,115 188,251 13,826 28,839 10,410
15,874,085 16,292,226 18,372,053 18,219,713 19,562,819
(1,754,112)$ 2,436,266$ 593,519$ (451,303)$ 652,117$
Fiscal Year Ended June 30
Page 99
2009 2010
General fund
Reserved 3,234,860$ 3,235,811$
Unreserved, designated 127,916 333,796
Unreserved, undesignated 3,302,373 3,418,799
Total general fund 6,665,149$ 6,988,406$
All other governmental funds
Unreserved, designated 95,620$ 159,484$
Unreserved, undesignated reported in:
Special revenue funds 4,198,782 4,498,523
Capital projects funds 10,246,395 10,020,336
Debt service funds 1,218,971 1,182,834
Total all other governmental funds 15,759,768$ 15,861,177$
2011 2012 2013 2014
General fund
Nonspendable
Inventory 13,183$ 9,332$ 10,201$ 14,358$
Prepaid items 29,234 28,245 32,493 18,348
Committed - 1,345,200 1,345,200 1,345,200
Assigned - 2,190,910 2,191,063 1,647,193
Unassigned 8,263,549 3,656,173 4,117,865 4,972,853
Total general fund 8,305,966$ 7,229,860$ 7,696,822$ 7,997,952$
All other governmental funds
Nonspendable
Cash with escrow agent -$ 2,623,895$ 2,301,609$ 1,973,067$
Prepaid items 6,217 5,474 4,706 997
Restricted 4,379,987 3,300,426 3,354,189 3,505,590
Committed 11,480,869 2,039,560 2,175,094 2,089,361
Assigned - 9,312,168 9,005,276 7,147,586
Total all other governmental funds 15,867,073$ 17,281,523$ 16,840,874$ 14,716,601$
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 100
2015 2016 2017 2018
6,975$ 9,272$ 5,872$ 13,490$
10,655 4,123 16,868 21,945
2,634,923 2,652,357 2,714,135 2,893,850
1,872,492 1,701,086 1,743,768 2,101,574
4,369,457 5,853,806 2,696,999 2,140,434
8,894,502$ 10,220,644$ 7,177,642$ 7,171,293$
1,645,000$ -$ -$ -$
656 5,055 474 -
10,066,786 4,500,044 4,432,710 4,571,263
1,079,780 1,366,081 8,576,250 7,248,890
5,444,124 5,943,364 1,784,761 2,340,683
18,236,346$ 11,814,544$ 14,794,195$ 14,160,836$
Fiscal Year ended June 30
Page 101
2009 2010 2011 2012 2013
Revenues
Taxes 10,960,001$ 9,818,985$ 9,704,054$ 9,577,321$ 9,713,445$
Licenses and permits 541,627 399,094 312,367 194,976 570,904
Leases and rents 290,083 215,520 227,195 206,018 213,871
Intergovernmental 9,607,961 7,672,037 7,165,103 6,035,448 6,323,047
Charges for services 316,676 464,036 388,635 405,663 162,086
Other 43,683 129,740 72,125 178,393 300,899
Fines and forfeitures 339,658 297,030 236,221 223,673 187,251
Special assessments 4,037 - - - -
Investment earnings 258,478 22,831 28,456 88,877 69,998
Total revenues 22,362,204 19,019,273 18,134,156 16,910,369 17,541,501
Expenditures
Current:
General government 3,514,249 3,186,368 2,575,975 2,887,321 2,699,109
Development services 2,036,295 1,669,449 1,564,615 1,421,787 1,643,757
Public works 1,199,850 973,746 1,123,230 1,054,930 2,058,990
Public safety 6,624,141 6,200,227 5,772,800 5,869,445 6,022,269
Culture and recreation 2,215,065 2,007,737 1,871,446 1,794,332 1,791,018
Capital outlay 3,708,277 1,254,223 1,043,304 884,323 453,002
Debt service:
Principal 2,240,000 2,460,000 2,114,999 1,965,000 2,280,000
Interest 925,663.00 825,988 729,077 639,135 554,860
Other debt service 3,471.00 16,869 15,254 55,752 12,183
Total expenditures 22,467,011 18,594,607 16,810,700 16,572,025 17,515,188
Excess (deficiency) of revenues
over (under) expenditures (104,807) 424,666 1,323,456 338,344 26,313
Other Financing Sources (Uses)
Transfers in 3,759,735 1,127,776 431,880 2,470,027 1,279,397
Transfers out (3,950,654) (1,127,776) (431,880) (2,470,027) (1,279,397)
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 (295,726)$ 424,666$ 1,323,456$ 338,344$ 26,313$
Expenditures for capitalized assets 2,528,881$ 532,461$ 389,082$ 1,333,785$ 467,691$
Debt service as a percentage of noncapital expenditures 15.9% 18.3% 17.4% 17.5% 16.7%
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 102
2014 2015 2016 2017 2018
10,271,737$ 10,240,382$ 12,299,285$ 12,069,714$ 13,019,341$
891,782 1,043,382 1,372,045 1,310,973 2,004,386
252,584 269,753 258,165 284,090 282,531
6,677,518 9,770,048 7,559,436 7,917,651 8,266,028
161,376 176,541 197,109 351,476 254,122
134,114 188,251 147,662 153,438 207,697
170,995 186,456 209,380 257,727 182,997
- - - - -
123,311 150,358 219,058 55,127 158,860
18,683,417 22,025,171 22,262,140 22,400,196 24,375,962
2,194,845 2,275,124 2,324,026 2,713,548 3,195,936
1,774,983 2,073,990 2,217,814 1,275,147 1,397,249
3,085,559 1,275,779 2,498,714 3,954,450 7,402,227
6,890,770 6,675,874 7,034,887 7,420,032 3,420,317
1,921,939 1,962,585 2,240,865 2,484,940 2,375,758
1,750,465 8,799,068 6,471,382 1,693,265 4,317,214
2,415,000 1,850,000 4,260,000 2,675,000 2,720,000
460,811 454,957 308,106 244,986 185,164
12,188 243,585 2,005 2,180 1,805
20,506,560 25,610,962 27,357,799 22,463,548 25,015,670
(1,823,143) (3,585,791) (5,095,659) (63,352) (639,708)
1,838,453 2,519,774 562,044 5,194,138 4,543,728
(1,838,453) (2,519,774) (562,044) (5,194,138) (4,543,728)
- 4,180,000 - - -
- 7,565,000 - - -
- 342,086 - - -
- (4,085,000) - - -
- 8,002,086 - - -
(1,823,143)$ 4,416,295$ (5,095,659)$ (63,352)$ (639,708)$
2,385,168$ 9,067,254$ 6,394,346$ 1,696,612$ 4,293,214$
15.9% 15.4% 21.8% 14.1% 14.0%
Fiscal Year Ended June 30
Page 103
Fiscal Year
Ended June 30 Property Tax Sales Tax Franchise Tax Total
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
2018 2,286,081 10,311,578 421,682 13,019,341
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 104
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
2009 683,827,567$ 0.1972$ 6,086,032,196$ 11.24%
2010 651,694,135 0.2273 5,729,894,491 11.37%
2011 576,401,885 0.1639 5,068,665,363 11.37%
2012 452,236,007 0.2258 4,096,551,487 11.04%
2013 377,816,392 0.2657 3,422,463,416 11.04%
2014 365,963,182 0.2773 3,359,684,579 10.89%
2015 403,330,477 0.1151 3,722,794,676 10.83%
2016 402,223,763 0.5246 3,744,585,506 10.74%
2017 423,688,665 0.4472 3,965,824,715 10.68%
2018 444,639,625 0.4259 4,166,589,970 10.67%
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.
** Per $100 of assessed taxable value.
Town of Fountain Hills, Arizona
Assessed Value and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
Page 105
Net LimitedPercentage of Net Full CashPercentage ofAssessedTotal Net Limited AssessedTotal Net Full CashTaxpayerValueRankAssessed ValueValueRankAssessed ValueToll Brothers AZ Construction Company4,406,088$ 10.99%EPCOR - Chaparral City Water Company3,737,160 20.84%3,249,180 40.48%Hunter Retail LLC2,574,292 30.58%WSL Fountain View Investors V, LLC2,044,311 40.46%3,196,512 50.47%Whitestone Fountain Hills, LLC1,897,190 50.43%Smith's Food & Drug Centers Inc.1,300,356 60.29%1,987,058 100.29%MJFFH7 LLC1,265,132 70.28%Palisades Resorts LLC1,225,428 80.28%Fountain Hills Invest Co., LLC1,215,236 90.27%Target Corporation1,214,812 10 0.27%2,558,638 60.37%EN LLC5,768,595 10.84%Inland Western Fountain Hills Four Peaks LLC4,500,754 20.66%Adero Canyon LLC3,542,320 30.52%Pacific FH Resort LLC2,522,720 70.37%Qwest Corporation2,320,477 80.34%Sun Tech Development, LLC 2,301,963 90.34%Totals20,880,005$ 4.69%31,948,217$ 4.68%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 theArizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary andsecondary taxes are levied against the net assessed limited property valuation. The net assessed full cashproperty valuation is used for determining the Town’s bonding capacity and as the ceiling for net limitedassessed property valuation.Town of Fountain Hills, ArizonaPrincipal Property TaxpayersJune 30, 2018 and 200920182009Page 106
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
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% 52,188 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% 18,833 1,420,487 99.4%
2014 1,449,884 1,426,612 98.4% 18,448 1,445,060 99.7%
2015 892,104 881,170 98.8%6,995 888,165 99.6%
2016 2,532,115 2,502,995 98.8% 19,374 2,522,369 99.6%
2017 2,278,728 2,241,482 98.4% 29,637 2,271,119 99.7%
2018 2,272,027 2,230,328 98.2%- 2,230,328 98.2%
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 107
2009 2010 2011 2012 2013
Sales category:
Construction 1,414,308$ 538,562$ 567,135$ 600,403$ 567,589$
Transportation/utilities 1,311,735 1,424,828 1,388,075 1,409,349 1,402,734
Wholesale/retail 3,687,605 3,556,292 3,567,986 3,601,904 3,598,895
Restaurants/bars 493,242 509,624 559,931 575,704 645,258
Real estate, rental & leasing 665,153 650,400 731,758 678,326 720,023
Services 258,139 241,685 276,566 274,521 310,303
Other 1,102,192 723,050 922,029 639,012 712,360
Total 8,932,374$ 7,644,441$ 8,013,480$ 7,779,219$ 7,957,162$
Note: Other includes all state and local sales tax audit adjustments.
Source: The source of this information is the Town's financial records.
Fiscal Year Ended June 30
Last Ten Fiscal Years
Taxable Sales by Category
Town of Fountain Hills, Arizona
(modified accrual basis of accounting)
Page 108
2014 2015 2016 2017 2018
783,064$ 935,694$ 918,717$ 730,164$ 1,408,332$
1,375,623 1,405,768 1,327,441 1,288,153 1,309,928
3,653,181 4,214,119 4,815,582 4,982,218 5,235,992
655,654 682,180 742,540 811,985 829,857
782,453 617,348 552,856 636,834 745,171
342,079 604,618 779,753 852,675 747,834
867,213 523,323 258,779 113,122 34,464
8,459,267$ 8,983,050$ 9,395,667$ 9,415,151$ 10,311,578$
Fiscal Year Ended June 30
Page 109
Fiscal
Year
Ended Town Maricopa State Total
June 30 Rate County Rate Tax Rate
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%
2018 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 110
Community Municipal HighwayFiscal Year General Facilities Property User Special Total DebtEnded Obligation District Corporation Revenue Assessment Outstanding PerJune 30Bonds*Bonds**Bonds*BondsBondsDebtCapita20096,530,000$ 3,860,000$ 9,905,000$ 130,000$ -$ 20,425,000$ 898$ 20105,415,000 3,630,000 8,920,000 - - 17,965,000 799 20114,595,000 3,370,000 7,885,000 - - 15,850,000 697 20123,755,000 3,090,000 7,040,000 - - 13,885,000 602 20132,900,000 2,800,000 5,905,000 - - 11,605,000 498 20142,000,000 2,495,000 4,695,000 - - 9,190,000 390 20159,517,086 2,300,000 3,525,000 - - 15,342,086 642 20167,678,669 1,935,000 1,400,000 - - 11,013,669 450 20175,680,252 1,560,000 1,030,000 - - 8,270,252 336 20183,631,835 1,180,000 670,000 - - 5,481,835 223 Source: The source of this information is the Town's financial records and the U.S. Bureau of Economic Analysis.* All bond amounts presented are net of original issuance discounts and premiums.** All bond amounts presented are net of original issuance discounts and premiums.The Town is not obligated for repayment of the Eagle Mountain Community Facilities District general obligation bonds.Population data can be found in the Schedule of Demographic and Economic Statistics.Governmental ActivitiesTown of Fountain Hills, ArizonaRatios of Outstanding Debt by TypeLast Ten Fiscal YearsPage 111
Fiscal YearGeneral Obligation Bonds*Less: Amounts Restricted for PrincipalNet General Obligation BondsEstimated Actual Taxable Value of PropertyPercentage of Estimated Actual Taxable Value of PropertyNet General Obligation Bonded Debt per CapitaNet General Obligation Bonded Debt per Net Limited Assessed ValuationMunicipal Property Corporation Bonds*Net Municipal Property Corporation Debt per Capita Total Revenues-All Sources 2009 10,390,000$ 9,952$ 10,380,048$ 6,086,032,196$ 0.17% 452$ 1.52% 8,652,918$ 376$ 21,331,076$ 2010 9,045,000 177,751 8,867,249 5,729,894,491 0.15% 390 1.36% 7,878,646 347 18,958,595 2011 7,965,000 83,081 7,881,919 5,068,665,363 0.16% 350 1.37% 6,993,694 311 18,248,326 2012 6,845,000 94,380 6,750,620 4,096,551,487 0.16% 297 1.49% 4,300,489 189 17,184,895 2013 5,700,000 82,184 5,617,816 3,422,463,416 0.16% 244 1.49% 3,561,814 154 17,723,994 2014 4,495,000 87,949 4,407,051 3,359,684,579 0.13% 189 1.20% 2,721,933 117 18,891,967 2015 11,817,086 420,782 11,396,304 3,722,794,676 0.31% 483 2.83% 1,764,338 75 22,161,316 2016 9,613,669 576,281 9,037,388 3,744,585,506 0.24% 378 2.25% 1,088,117 46 22,262,139 2017 7,240,252 343,697 6,896,555 3,965,824,715 0.17% 282 1.63% 860,437 35 22,400,196 2018 4,811,835 83,185 4,728,650 4,166,589,970 0.11% 192 1.06% 664,484 27 24,375,962 Source: The source of this information is the Department of Revenue and the Town's financial records.* All bond amounts presented are net of original issuance discounts and premiums. The Town is not obligatedfor repayment of the Eagle Mountain Community Facilities District general obligation bondsPopulation 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 (FiscalYear 2016), both primary and secondary taxes are levied against the net limited assessed value. The net full cash assessed value is used fordetermining the Town’s bonding capacity and as the ceiling for net limited assessed value.Town of Fountain Hills, ArizonaRatios of General Bonded Debt OutstandingLast Ten Fiscal YearsPage 112
Estimated
Estimated Share of
Percentage Overlapping
Outstanding Debt Applicable Debt
Overlapping:
Maricopa County -$ 1.15% -$
Maricopa County Community College District 380,740,000 1.15% 4,378,510
Maricopa Integrated Health System 75,000,000 1.15% 862,500
East Valley Institute of Technology - 2.59% -
Fountain Hills Unified School District 10,270,000 96.22% 9,881,794
Total Overlapping Debt 15,122,804
Direct:
Town of Fountain Hills, Arizona*
General Obligation Bonds 3,631,835
Revenue Bonds 670,000
Eagle Mountain Community Facilities District** 1,180,000
Total Direct Debt 5,481,835
Total direct and overlapping debt 20,604,639$
Source: The source of this information is the Town's records, the State and County Abstract of the
Assessment Roll, the Arizona Department of Revenue Report of Indebtedness and the applicable
governmental unit.
* All bond amounts are net of original issuance discounts and premiums.
** The Town is not obligated for repayment of the Eagle Mountain Community Facilities District general
obligation bonds.
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, 2018
Governmental Unit
Page 113
2009 2010 2011 2012 2013
6% Debt Limit
Debt limit 41,029,654$ 39,101,648$ 34,584,113$ 27,134,160$ 22,668,984$
Total net debt applicable to limit - - - - -
Legal debt margin 41,029,654$ 39,101,648$ 34,584,113$ 27,134,160$ 22,668,984$
Total debt applicable to the limit
as a percentage of debt limit -----
20% Debt Limit
Debt limit 136,765,513$ 130,338,827$ 115,280,377$ 90,447,201$ 75,563,278$
Total net debt applicable to limit 6,530,000 5,415,000 4,595,000 3,755,000 2,900,000
Legal debt margin 130,235,513$ 124,923,827$ 110,685,377$ 86,692,201$ 72,663,278$
Total debt applicable to the limit
as a percentage of debt limit 5% 4% 4% 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 114
2014 2015 2016 2017 2018
21,957,791$ 24,199,829$ 28,325,296$ 30,651,126$ 31,459,192$
- - - - -
21,957,791$ 24,199,829$ 28,325,296$ 30,651,126$ 31,459,192$
-- - - -
73,192,636$ 80,666,095$ 94,417,653$ 102,170,422$ 104,863,974$
2,000,000 9,175,000 7,405,000 5,475,000 3,495,000
71,192,636$ 71,491,095$ 87,012,653$ 96,695,422$ 101,368,974$
3% 11% 8% 5% 3%
Fiscal Year Ended June 30
Page 115
Net full cash assessed valuation 524,319,870
Water, Sewer, Artificial Lighting, Parks, Open Space, Recreational Facility
Improvements, Public Safety, Law Enforcement, Fire and Emergency
Facilities, and Street and Transportation Facilities
Debt limit - 20% of net full cash assessed valuation 104,863,974$
Net debt applicable to limit 3,495,000
20% legal debt margin 101,368,974
All Other General Obligation Bonds
Debt limit - 6% of net full cash assessed valuation 31,459,192
Net debt applicable to limit -
6% legal debt margin 31,459,192
Total legal debt margin 132,828,166$
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, 2018
Page 116
Fiscal
Year
Ended Pledged
June 30 Principal Interest Total Revenues Coverage
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 16,815,224 42.8
2018 360,000 16,686 376,686 18,194,833 48.3
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 117
2008 2009 2010 2011 2012
Population 22,984 22,736 22,489 22,741 23,070
Per capita personal income 38,439$ 38,918$ 40,672$ 44,660$ 47,260$
Median age 48.3 48.9 53.9 53.9 53.9
Public school enrollment 2,233 2,203 2,103 1,981 1,886
Town of Fountain Hills
unemployment rate 2.6% 4.5% 4.8% 6.7% 5.6%
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 1,295 1,253 1,226 1,218 1,209
Number of units
Housing 12,832 12,927 12,983 12,990 12,977
Lodging 4 4 4 4 4
Restaurants 47 52 53 56 56
Shopping centers 19 19 20 20 20
Schools
Public 4 4 4 4 3
Preschool 4 4 4 4 6
Charter 1 1 1 1 1
Vocational - - - - -
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, 2017
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 2017.
Calendar Year
Town of Fountain Hills, Arizona
Demographic and Economic Statistics
Last Ten Calendar Years
Page 118
2013 2014 2015 2016 2017*
23,318 23,573 23,899 24,482 24,583
48,244$ 46,619$ 48,240$ 50,162$ 60,531$
53.0 53.7 53.8 53.7 53.5
1,820 1,692 1,619 1,506 1,444
6.0% 5.4% 2.4% 1.9% 1.6%
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
1,196 1,165 1,247 1,209 1,175
12,991 12,981 13,002 13,130 13,176
4 4 4 4 4
54 43 46 50 52
20 20 20 20 20
3 3 3 3 3
7 7 7 7 7
1 1 1 1 1
- - - - 1
Calendar Year
Page 119
Percentage
Number of of Total Town Number of
Employer Employees Rank Employment Employees Rank
Fountain Hills Unified School District No. 98 149 1 3.3% 285 1
Fountain View Village 120 2 2.7%
Rural Metro Corporation 111 3 2.5%
Firerock Country Club 100 4 2.2%
Target Stores 98 5 2.2% 130 3
Safeway Stores 95 6 2.1% 110 5
Fry's Food Stores 85 7 1.9%80 7
Bashas 75 8 1.7%70 8
Eagle Mountain Golf Club 70 9 1.6%70 10
Sunrise Senior Living 69 10 1.5%
Monks Construction 190 2
MCO Properties, Inc.125 4
Town of Fountain Hills 87 6
Sunridge Canyon Golf Course 70 9
Totals 972 21.7% 1,217
Total Town employment 4,474
Source: The source of this information is the Maricopa Association of Governments.
Note: Total Town employment for 2008 was not available.
* Data for 2018 was not available.
2017*
Town of Fountain Hills, Arizona
Principal Employers
Prior Fiscal Year and Nine Years Ago
2008
Page 120
2009201020112012201320142015201620172018Municipal court5.00 5.00 5.00 5.00 5.00 4.00 3.63 3.63 3.63 3.63 Administration13.50 13.25 11.25 11.58 11.68 10.56 11.33 11.63 12.25 13.45 Public works9.80 9.80 Development services40.00 35.75 23.25 20.25 18.75 16.25 16.30 16.30 7.50 8.50 Community services29.75 27.10 21.63 21.53 21.18 20.18 21.06 20.76 20.76 20.56 Total 88.25 81.10 61.13 58.36 56.61 50.99 52.32 52.32 53.94 55.94 Source: The source of this information is the Town's financial records.Town of Fountain Hills, ArizonaAuthorized Full-time Equivalent Government Employees by FunctionLast Ten Fiscal YearsFiscal Year Ended June 30Page 121
Function/Program2009201020112012201320142015201620172018Municipal CourtCases filed N/A 3,520 2,584 2,173 1,740 1,649 1,738 1,593 2,014 1,277 Hearings/Trials heldN/A 1,089 738 731 703 1,665 1,585 1,564 1,844 676 AdministrationFTEs per 1,000 residents3.8 3.6 2.7 2.6 2.5 2.2 2.2 2.2 2.2 2.3 Registered voters - general electionnone 15,511 none 16,074 none N/A 16,213 none 16,387 noneVoter turnout - general electionnone 50% none 34% none N/A 38% none 41% noneDevelopment ServicesBuilding permits issued376 411 350 346 457 445 443 410 509 468 Building inspections conducted3,189 1,936 1,546 1,257 1,395 2,131 2,448 2,129 2,704 3,707 Number of code violation casesN/A 1,024 843 804 746 716 752 713 669 654 Number of zoning casesN/A7 14 7 10 41 65 72 50 41 Community ServicesNumber of Community Center bookingsN/A 3,396 3,315 3,236 3,196 3,383 3,439 3,124 3,764 4,395 Number of participants in recreational programs N/A 1,960 1,759 1,833 1,789 2,291 2,249 2,910 3,773 3,794 Number of Senior Services membersN/A 1,105 1,205 1,208 1,118 1,189 1,273 1,326 1,335 1,220 Number of home delivered mealsN/A 10,169 9,742 8,419 6,941 4,799 4,035 3,497 3,920 3,093 Law Enforcement (contracted)Physical arrests825 679 645 522 545 743 445 220 220 214 Traffic violations4,900 2,959 1,909 1,366 1,296 1,379 1,539 1,215 1,803 1,053 Fire & Emergency Medical (contracted)Total incident responses2,787 2,875 3,179 3,082 3,136 2,956 3,166 3,191 3,425 3,659 Average response time (in minutes)3:44 4:32 3:46 3:50 3:53 3:37 3:57 3:25 3:33 3:32Source: 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 30Town of Fountain Hills, ArizonaOperating Indicators by FunctionLast Ten Fiscal yearsPage 122
2009201020112012201320142015201620172018Public safetyNumber of fire stations2 2 2 2 2 2 2 2 2 2 Public worksStreets (centerline miles) 178.9 178.9 178.9 178.9 178.9 178.9 178.9 178.9 178.9 180.0 Streets (lane miles)390 390 390 390 390 390 390 390.5 390.5 391.5 Pedestrian lighting34 34 34 34 34 34 85 91 91 91 Traffic signals13 13 13 13 13 13 13 13 13 13 Parks and recreationAcreage-developed parks 116 116 116 116 116 116 119 119 119 119 Playgrounds7 7 7 7 7 7 7 7 7 7 Baseball/softball diamonds 6 6 6 6 6 6 6 6 6 6 Soccer/football fields7 7 7 7 7 7 7 7 7 7 Community centers1 1 1 1 1 1 1 1 1 1 Preserve acreageN/A N/A N/A 740 740 740 807.2 807.2 807.2 807.2 Miles of trailsN/A N/A N/A 4.3 10.43 10.43 15.8 15.8 18.5 18.5 Source: The source of this information is the Town's facilities records.Note: N/A indicates the information is not available.Function/ProgramTown of Fountain Hills, ArizonaCapital Assets Statistics by FunctionLast Ten Fiscal YearsFiscal Year Ended June 30Page 123
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Page 124
Town of Fountain Hills
16705 E. Avenue of the Fountains
Fountain Hills, Arizona 85268
480-816-5100
www.fh.az.gov
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