HomeMy WebLinkAboutFY19 CAFRTOWN OF FOUNTAIN HILLS, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2019
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 11
GFOA Certificate of Achievement 12
Organizational Chart 13
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 8, 2019
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, 2019.
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, 2019, 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, 2019, 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, 2,460 feet at the Adero Canyon 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
24,987 in 2018. 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.
Page 4
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. 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.
Local sales tax receipts have continued to increase during the fiscal year. Construction activity
increased almost 40% 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’ 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 4.4% increase over the prior year; restaurant/bar revenues have exceeded any prior
year with an increase of 7.7% from FY17-18. Construction sales tax, a one-time revenue source, is
driven entirely by development activity in the community and increased 37.2% from the prior year;
recent building permit activity indicates that construction sales tax is likely to increase over the next
fiscal year. The Transportation/Communication/Utility sector was the only one to decrease during the
year with a 1.5% drop in revenues.
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 2018-19.
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 decreased by 1.8% in FY18-
19. State sales tax has increased over the past several years, and this year continued the trend by
increasing revenue by 5.3% 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
2018-19 (7/1/2018 – 6/30/2019):
o Five Temporary Visitor Permits were issued.
o Two Site Plans were approved during the period.
o Four Special Use Permits were granted.
o Six Administrative Use Permits were issued.
o Fifteen Banner and Sign Permits were issued.
o Eleven commercial development/subdivision cases were granted.
o One General Plan Amendment was granted.
o Fifty new Single-Family Residential Building Permits were issued.
o Twenty-nine Multi-Family Permits were issued.
o There were new six Commercial Building Permits issued.
o There were nine Commercial Tenant Improvement Permits issued during the last fiscal
year.
A summary of the activity, by month, is shown below:
Fiscal year
SFR
DUP/MULTI
T.I. &
Comm
Pools,
Fences
&
Other
Add Ons
(Not
Garages
Garages
&
Carports
MONTH
TOTAL
Bldgs. Total
Units
Permits
Issued
JULY 5 0 0 0 1 35 6 1 48
AUGUST 7 8 8 8 2 31 5 0 53
SEPTEMBER 2 2 2 2 2 25 3 0 34
OCTOBER 7 2 2 2 1 37 6 2 55
NOVEMBER 4 2 2 2 2 29 6 0 43
DECEMBER 6 1 2 1 1 33 3 0 44
JANUARY 5 4 6 4 0 29 4 1 43
FEBRUARY 2 4 4 4 2 33 3 1 45
MARCH 3 3 4 3 0 28 2 3 39
APRIL 0 1 2 1 1 40 6 1 49
MAY 5 0 0 0 1 67 5 1 79
JUNE 4 2 2 2 2 32 4 0 44
YEARLY
TOTAL 50 29 34 29 15 419 53 10 576
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Economic Outlook.
Retail Sales – Not having a property tax, the Town of Fountain Hills relies heavily on Town transaction
privilege tax (TPT), sometimes called a sales tax. Overall, Town TPT revenues provide over 50% of
the General Fund revenues. The Town's TPT rate is currently at 2.6%. The construction TPT is equally
divided between the General Fund and the Capital Projects Fund.
State-Shared Revenues – The Town of Fountain Hills receives significant revenue allocations from
the State. These "State-Shared Revenues" include allocations of the state-collected income tax, sales
tax, fuel tax and motor vehicle-in-lieu taxes. All but the fuel tax 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 allocates 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.
MAJOR INITIATIVES AND SERVICE EFFORTS AND ACCOMPLISHMENTS
The Town of Fountain Hills’ adopted FY18-19 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.
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 2018-19 goals attained are summarized within
this list of accomplishments:
Completion of Fire Station 2 relocation design and construction
Completion of design and construction of the Valley Metro Bus Stop
Completion of the Adero Canyon Trailhead
Reconstructed three of the ballfields at Golden Eagle Park damaged by storms
Published the new Fountain Hills First magazine
New public art installed: Athena’s Prayer
Secured grant funding from the Arizona Office of Tourism - Proposition 302
Secured grant funding from Salt River Pima-Maricopa Indian Community - Proposition 202
Page 9
AWARDS AND ACKNOWLEDGEMENTS
Awards. The Government Finance Officers Association (GFOA) awarded a Certificate of
Achievement for Excellence in Financial Reporting to the Town of Fountain Hills for its
Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2018. This was the
twenty-third 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 2019 Certificate.
For the seventh year, the Town was also given the Award for Outstanding Achievement in Popular
Annual Financial Reporting for the fiscal year ended June 30, 2018.
In addition, the government received the GFOA’s Distinguished Budget Presentation Award for its
annual budget for the fiscal year beginning July 1, 2018. 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 seventeenth consecutive year that the Town has received the award.
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, 2019
ELECTED OFFICIALS
Ginny Dickey, Mayor
Art Tolis, Vice-Mayor
Dennis Brown, Councilmember
Sherry Leckrone, Councilmember
Alan Magazine, Councilmember
Mike Scharnow, Councilmember
David Spelich, Councilmember
DEPARTMENT DIRECTORS
Grady Miller, Town Manager
David Pock, Finance Director
David Trimble, Deputy Town Manager/Administrative Services Director
Rachael Goodwin, Community Services Director
John Wesley, Development Services Director
James Smith, Economic Development Director
Justin Weldy, Public Works Director
Elizabeth Burke, Town Clerk
Captain Dave Ott, Rural Metro Corporation, Fire Chief
Captain Larry Kratzer, Maricopa County Sheriff’s Office, District Commander
Robert Melton, Presiding Judge
Mark Iacovino, The Law Office of Mark Iacovino, Town Prosecutor
Aaron Arnson, Pierce Coleman PLLC, 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 Town ClerkAdministrative ServicesSenior ServicesParksTown ProsecutorEconomic Development Appointedby CouncilContractedVolunteer ProgramMayor and Town CouncilMayor and Town CouncilGISPlanningEngineeringStreetsFacilitiesPublic WorksInspectionPublic Information Page 13
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FINANCIAL SECTION
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INDEPENDENT AUDITOR’S REPORT
The Honorable Mayor and Members of the Town Council
Town of Fountain Hills, Arizona
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the
aggregate remaining fund information of Town of Fountain Hills, Arizona (the Town), as of and for the year ended
June 30, 2019, 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, 2019, 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 Combining and Individual
Fund Financial Statements and Schedules information is fairly stated in all material respects in relation to the
basic financial statements as a whole.
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 8, 2019, 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
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 8, 2019
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, 2019
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, 2019. 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 $6.1 million to $123.7
million, representing a 5.2 percent increase of the total net position.
General revenues from governmental activities accounted for $21.7 million in revenue, or
82.1 percent of all revenues from governmental activities. Program specific revenues in the
form of charges for services and grants and contributions accounted for $4.7 million or 17.9
percent of total governmental activities revenues.
The Town had $26.4 million in expenses related to governmental activities, an increase of
13.5 percent from the prior fiscal year, primarily due to the large capital projects in progress.
Among the major governmental funds, the General Fund had $17.5 million in current fiscal
year revenues, which primarily consisted of taxes and intergovernmental revenues. The total
expenditures of the General Fund were $14.6 million. The General Fund’s fund balance
increased $123 thousand to $7.3 million at the end of the current fiscal year.
OVERVIEW OF FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the Town’s basic financial
statements. The Town’s basic financial statements comprise three components: 1) government-
wide financial statements, 2) fund financial statements, and 3) notes to the financial statements.
This report also contains other supplementary information in addition to the basic financial
statements themselves.
Page 21
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2019
OVERVIEW OF FINANCIAL STATEMENTS – continued
Government-wide financial statements. The government-wide financial statements provide
readers with a broad overview of the Town’s finances, in a manner similar to a private-sector
business. These statements are prepared using the accrual basis of accounting.
The Statement of Net Position presents information on all of the Town’s assets, liabilities, and
deferred inflows/outflows of resources with the difference reported as net position. Over time,
increases or decreases in net position may serve as a useful indicator of whether the financial
position of the Town is improving or deteriorating.
The Statement of Activities presents information showing how the Town’s net position changed
during the most recent fiscal year. All changes in net position are reported as soon as the underlying
event giving rise to the change occurs, regardless of the timing of related cash flows. Thus,
revenues and expenses are reported in this statement for some items that will only result in cash
flows in future fiscal periods (e.g., earned but unused compensated absences).
The government-wide financial statements distinguish functions of the Town that are principally
supported by taxes and intergovernmental revenues (governmental activities). The governmental
activities of the Town include administration, development services, public safety, public works,
and culture and recreation.
Fund financial statements. A fund is a grouping of related accounts that is used to maintain
control over resources that have been segregated for specific activities or objectives. The Town
uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements. All 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, 2019
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 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
$123.7 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, 2019
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, 2019 and June 30, 2018.
Governmental Activities
As of
June 30, 2019
As of
June 30, 2018
Current and other assets $ 20,419,804 $ 23,821,565
Capital assets, net 107,559,746 102,259,689
Total assets 127,979,550 126,081,254
Current and other liabilities 3,661,199 5,475,597
Long-term liabilities 631,777 2,994,108
Total liabilities 4,292,976 8,469,705
Net position
Net investment in capital assets 104,781,328 96,777,854
Restricted 3,646,449 4,589,526
Unrestricted 15,258,797 16,244,169
Total net position $ 123,686,574 $ 117,611,549
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, 2019
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 $26.4 million.
The total cost of all programs and services was $26.4 million. The following table presents a
summary of the changes in net position for the fiscal years ended June 30, 2019 and June 30, 2018.
Governmental Activities
Fiscal
Year Ended
June 30, 2019
Fiscal
Year Ended
June 30, 2018
Revenues
Program revenues:
Charges for services $ 2,676,671 $ 2,316,983
Operating grants and contributions 1,850,676 1,737,958
Capital grants and contributions 181,939 304,951
General revenues
Property taxes 2,476,546 2,263,623
Sales taxes 11,491,123 10,311,578
Franchise taxes 423,947 421,682
State-shared revenue 5,453,029 5,384,831
Vehicle License taxes 1,061,441 1,011,836
Investment earnings 554,549 158,860
Miscellaneous 202,969 10,409
Total revenues $ 26,372,890 $ 23,922,711
Expenses
General government $ 3,318,477 3,431,752
Development services 867,725 1,460,967
Public safety 8,142,069 7,567,012
Public works 10,263,244 7,380,663
Culture and recreation 3,767,996 3,311,648
Interest on long-term debt 57,054 118,552
Total expenses 26,416,565 23,270,594
Excess before special item (43,675) 652,117
Special item – Donation of capital assets 6,118,700 0
Changes in net position 6,075,025 652,117
Net position, beginning 117,611,549 116,959,432
Net position, ending $123,686,574 $ 117,611,549
Page 25
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2019
GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued
The charts below compare the governmental expenses from fiscal years 2018-19 and 2017-18.
Page 26
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2019
GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued
The following items are significant current year transactions that have had an impact on the change
of net position.
Fees, Fines and Charges for Services revenue increased 15.5 percent compared to the prior
year due in large part to permitting activity for large developments in Town.
Interest on long-term debt decreased 51.9 percent due to the reduction of principal
outstanding.
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 249.1 percent over the prior year due to
higher overall market returns.
Overall, expenses increased 13.5 percent due to the continuation of the pavement
management program.
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, 2019 Year Ended June 30, 2018
Total
Expenses
Net (Expense)/
Revenue
Total
Expenses
Net (Expense)/
Revenue
Governmental Activities
General government $ 3,318,477 $ (2,946,699) $ 3,431,752 $ (2,978,065)
Development services 867,725 276,146 1,460,967 (146,052)
Public safety 8,142,069 (7,940,248) 7,567,012 (7,266,692)
Public works 10,263,244 (8,573,437) 7,380,663 (5,725,133)
Culture and recreation 3,767,996 (2,465,987) 3,311,648 (2,676,208)
Interest on long-term debt 57,054 (57,054) 118,552 (118,552)
Total expenses $ 26,416,565 $ (21,707,279) $ 23,270,594 $ (18,910,702)
The cost of all governmental activities this year was $26.4 million.
Federal, State, and county governments and charges for services subsidized certain
governmental programs with revenues of $4.7 million.
Net cost of governmental activities of $21.7 million was financed by general revenues,
which consist of primarily sales taxes of $11.5 million and State-shared revenues of $6.5
million.
Page 27
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2019
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 $2.0 million in the
combined fund balance from $21.3 million to $19.3 million.
The General Fund comprises 37.7 percent of the total fund balance. Approximately $1.9 million
or 25.5 percent of the General Fund’s fund balance is unassigned.
The General Fund is the principal operating fund of the Town. The fund balance slightly increased
by $123,365 to $7.3 million as of fiscal year end. General Fund revenues increased $1.5 million
primarily due to increased building activity, which resulted in collections of construction-related
sales tax and permit fees to increase. General Fund expenditures decreased $355.9 thousand.
Although public safety costs increased in the current fiscal year, the Town purchased a fire truck
in the prior fiscal year that was a major investment in capital assets. The net difference between
those items resulted in the net decrease seen in the General Fund.
The Highway User Revenue Fund comprises 14.0 percent of total fund balance. The fund balance
decreased $682.4 thousand from the prior year as a result of the continuation of the pavement
management program.
The Capital Projects Fund comprises 30.2 percent of the total fund balance. All of the fund balance
is committed or assigned to capital projects. The fund balance decreased $1.3 million due to the
completion of the Adero Canyon trailhead and Fire Station #2.
BUDGETARY HIGHLIGHTS
Although the Town reapportioned the budgeted General Fund expenditures between departments,
the total General Fund budget remained the same.
Page 28
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2019
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 $1.2 million in overall revenues is primarily due to increased
building activity resulting in increased permit revenue and local sales taxes collected.
The favorable total expenditures variance of $1.7 million is due primarily to lowered
expenditures throughout all departments, in particular contractual services.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets. As of the end of the current fiscal year, the Town had invested $107.6 million in
capital assets, including buildings, facilities, vehicles, computers, equipment, infrastructure and
artwork. This amount represents a net increase, prior to depreciation, of $10.4 million from the
prior fiscal year. The increase was primarily due to the completion of the Adero Canyon trailhead,
Fire Station #2 and donated land. Total depreciation expense for the current fiscal year was $5.3
million.
The following schedule presents a summary of capital asset balances for the fiscal years ended
June 30, 2019 and June 30, 2018.
Governmental Activities
As of
June 30, 2019
As of
June 30, 2018
Capital assets – non-depreciable $ 33,387,396 $ 30,157,640
Capital assets – depreciable, net 74,172,350 72,102,049
Total $107,559,746 $102,259,689
The estimated construction commitments amount is $179,607.
Additional information on the Town’s capital assets can be found in Note 5.
Debt Administration. At year-end, the Town had $2.8 million in governmental long-term debt
outstanding, with $2.3 million due within one year. Long-term debt decreased by $2.7 million
during the current fiscal year.
Page 29
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2019
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
$108.0 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 $32.4 million.
Additional information on the Town’s long-term debt can be found in Notes 6 and 7 in the notes
to the financial statements.
CONTACTING THE TOWN’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and investors and
creditors with a general overview of the Town’s finances and to demonstrate the Town’s
accountability for the resources it receives. If you have questions about this report or need
additional information, contact the Finance Division, Town of Fountain Hills, 16705 East Avenue
of the Fountains, Fountain Hills, Arizona 85268 or visit our website at www.fh.az.gov.
Page 30
BASIC FINANCIAL STATEMENTS
Page 31
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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
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:
Public works
Capital outlay
Debt service
Unrestricted
Total net position
Governmental
Activities
$ 19,225,688
147,645
893,087
84,988
45,917
5,168
17,311
20,419,804
33,387,396
74,172,350
107,559,746
127,979,550
595,009
87,573
4,620
35,900
334,411
300,000
2,010,000
293,686
3,661,199
631,777
631,777
4,292,976
104,781,328
2,427,339
1,010,392
208,718
15,258,797
$123,686,574
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF NET POSITION
JUNE 30, 2019
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
$ 3,318,477
867,725
8,142,069
10,263,244
3,767,996
57,054
$26,416,565
Charges for
Services
$ 280,312
1,143,871
90,774
10,214
1,151,500
$2,676,671
Operating
Grants and
Contributions
$ 91,466
47,235
1,679,593
32,382
$1,850,676
Capital Grants
and
Contributions
$
63,812
118,127
$181,939
Governmental
Activities
$ (2,946,699)
276,146
(7,940,248)
(8,573,437)
(2,465,987)
(57,054)
(21,707,279)
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
Special item - Donation of capital assets
Total general revenues and special items
Changes in net position
Net position, beginning of year
Net position, end of year
2,476,546
11,491,123
423,947
5,453,029
1,061,441
554,549
202,969
6,118,700
27,782,304
6,075,025
117,611,549
$123,686,574
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2019
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
Inventory, at cost
Prepaid items
Total assets
LIABILITIES, DEFERRED INFLOWS OF RESOURCES
AND FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and benefits
Other liabilities
Customer deposits
Unearned revenues
Total liabilities
Deferred inflows of resources:
Unavailable revenues - property taxes
Unavailable revenues - other
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
$ 6,836,223
133,645
633,470
18,308
5,168
17,311
$7,644,125
$ 201,314
72,032
4,256
35,900
34,785
348,287
1,180
1,180
22,479
3,027,804
2,380,653
1,863,722
7,294,658
$7,644,125
Highway User
Revenue
$ 2,636,675
5,240
236,735
$2,878,650
$ 163,917
9,013
172,930
5,240
5,240
2,422,099
278,381
2,700,480
$2,878,650
Grants
$ 258,901
$258,901
$
258,901
258,901
$258,901
TOWN OF FOUNTAIN HILLS, ARIZONA
BALANCE SHEET - GOVERNMENTAL FUNDS
JUNE 30, 2019
The notes to the basic financial statements are an integral part of this statement.
Page 38
General
Obligation Debt
Service
$ 95,741
71,003
$166,744
$
50,741
50,741
116,003
116,003
$166,744
Eagle Mountain
Debt Service
$ 15,740
13,928
$29,668
$
10,577
10,577
19,091
19,091
$29,668
Municipal
Property
Corporation Debt
Service
$ 12,306
$12,306
$
12,306
12,306
$12,306
Capital Projects
$ 5,987,840
24,921
$6,012,761
$ 180,780
180,780
4,342,555
1,489,426
5,831,981
$6,012,761
Non-Major
Governmental
Funds
$ 3,382,262
8,760
22,882
57
2,688
$3,416,649
$ 48,998
6,528
364
55,890
1,010,392
1,525,831
824,536
3,360,759
$3,416,649
Total
Governmental
Funds
$ 19,225,688
147,645
893,087
84,988
45,917
5,168
17,311
$20,419,804
$ 595,009
87,573
4,620
35,900
293,686
1,016,788
61,318
6,420
67,738
22,479
3,579,891
8,896,190
4,972,996
1,863,722
19,335,278
$20,419,804
Page 39
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Page 40
Total governmental fund balances 19,335,278$
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 226,020,211$
Less accumulated depreciation (118,460,465)107,559,746
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 61,318
Other 6,420 67,738
Long-term liabilities are not due and payable in the current
period and, therefore, are not reported in the funds.
Compensated absences payable (497,770)
Bonds payable (2,778,418)(3,276,188)
Net position of governmental activities 123,686,574$
TOWN OF FOUNTAIN HILLS, ARIZONA
RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
JUNE 30, 2019
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
$
9,198,866
423,947
1,413,507
280,801
5,499,303
181,105
217,656
120,340
166,055
17,501,580
2,825,398
858,957
7,873,036
823,223
2,188,071
68,863
14,637,548
2,864,032
(2,740,667)
(2,740,667)
123,365
7,171,293
$7,294,658
Highway User
Revenue
$
883,932
2,741,035
63,446
91,634
3,780,047
4,495,263
167,222
4,662,485
(882,438)
200,000
200,000
(682,438)
3,382,918
$2,700,480
Grants
$
91,211
91,211
55,000
36,211
91,211
$
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2019
The notes to the basic financial statements are an integral part of this statement.
Page 42
General
Obligation Debt
Service
$ 2,011,868
18,703
2,030,571
1,880,000
92,250
600
1,972,850
57,721
57,721
58,282
$116,003
Eagle Mountain
Debt Service
$ 409,114
3,344
412,458
385,000
20,767
405,767
6,691
6,691
12,400
$19,091
Municipal
Property
Corporation Debt
Service
$
7,090
7,090
370,000
10,854
1,000
381,854
(374,764)
381,554
381,554
6,790
5,516
$12,306
Capital Projects
$
966,359
63,812
196,459
1,226,630
2,720
471,256
388,492
4,215,558
5,078,026
(3,851,396)
2,724,571
(200,000)
2,524,571
(1,326,825)
7,158,806
$5,831,981
Non-Major
Governmental
Funds
$ 6,749
441,966
627,115
70,127
2,227
10,143
71,264
1,229,591
263,945
7,632
506,247
268,464
1,046,288
183,303
366,407
(731,865)
(365,458)
(182,155)
3,542,914
$3,360,759
Total
Governmental
Funds
$ 2,427,731
11,491,123
423,947
2,040,622
280,801
8,401,676
181,105
347,141
130,483
554,549
26,279,178
3,147,063
858,957
7,880,668
6,295,989
2,845,027
4,487,854
2,635,000
123,871
1,600
28,276,029
(1,996,851)
3,672,532
(3,672,532)
(1,996,851)
21,332,129
$19,335,278
Page 43
Changes in fund balances - total governmental funds (1,996,851)$
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 4,465,837$
Less current year depreciation (5,332,480) (866,643)
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 6,166,700
or a special item.
Some revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds.
Property taxes 48,815
Other (3,103) 45,712
Repayments of bond principal are expenditures in the governmental
funds, but the repayment reduces long-term liabilities in the Statement of 2,635,000
Net Position.
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 22,690 91,107
Changes in net position in governmental activities 6,075,025$
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, 2019
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, 2019
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, 2019
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, 2019
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
Government-wide Financial Statements – The government-wide financial statements are
reported using the economic resources measurement focus and the accrual basis of accounting.
Revenues are recorded when earned and expenses are recorded when a liability is incurred,
regardless of the timing of related cash flows. Grants and similar items are recognized as
revenue as soon as all eligibility requirements imposed by the grantor or provider have been
met. As a general rule, the effect of internal activity has been eliminated from the government-
wide financial statements; however, the effects of interfund services provided and used
between functions are reported as expenses and program revenues at amounts approximating
their external exchange value.
Fund Financial Statements – Governmental fund financial statements are reported using the
current financial resources measurement focus and the modified accrual basis of accounting.
Revenues are recognized as soon as they are both measurable and available. Revenues are
considered to be available when they are collectible within the current period or soon enough
thereafter to pay liabilities of the current period. For this purpose, the Town considers revenues
to be available if they are collected within 60 days of the end of the current fiscal period.
Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
However, debt service expenditures, as well as expenditures related to compensated absences,
and claims and judgments, are recorded only when payment is due.
Property taxes, sales taxes, franchise taxes, state shared revenues, licenses and permits, charges
for services, and investment earnings associated with the current fiscal period are all
considered to be susceptible to accrual and have been recognized as revenues of the current
fiscal period. Grants and similar awards are recognized as revenue as soon as all eligibility
requirements imposed by the grantor or provider have been met. Miscellaneous revenue is not
susceptible to accrual because generally they are not measurable until received in cash.
Unearned revenues arise when resources are received by the Town before it has legal claim to
them, as when grant monies are received prior to meeting all eligibility requirements imposed
by the provider.
The focus of governmental fund financial statements is on major funds rather than reporting
funds by type. Each major fund is presented in a separate column.
The Town reports the following major governmental funds.
General Fund – The General Fund is the Town’s primary operating fund. This fund
accounts for all financial resources of the Town, except those required to be accounted for
in other funds.
Page 47
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2019
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Highway User Revenue Fund (HURF) – This fund accounts for the Town’s share of motor
vehicle fuel tax revenues and sales tax.
Grants Fund – This fund accounts for the activities of various restricted grants and
contributions received by the Town.
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, 2019
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, 2019
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, 2019
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, 2019
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, 2019
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 $2,915,640, reported as a committed fund balance
at June 30, 2019. 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, 2019
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 $ 5,168 $ $ $ $ $ $ $ 5,168
Prepaid items 17,311 17,311
Restricted:
Capital Projects 19,678 19,678
Debt Service 116,003 19,091 12,306 147,400
Highways and Streets 2,422,099 2,422,099
Development Fees 990,714 990,714
Committed:
Rainy Day 2,915,640 2,915,640
Public Art 112,164 112,164
Downtown Strategy 1,038,340 1,038,340
Economic Development 101,485 101,485
Tourism 9,192 9,192
Capital Projects 4,342,555 4,342,555
Local Court Enhancement 376,814 376,814
Assigned:
Capital Projects 874,692 1,489,426 2,364,118
Environmental 824,536 824,536
Vehicle Replacement 922,833 278,381 1,201,214
Equipment Replacement 583,128 583,128
Unassigned: 1,863,722 1,863,722
Total fund balances $ 7,294,658 $2,700,480 $ 116,003 $ 19,091 $ 12,306 $ 5,831,981 $ 3,360,759 $ 19,335,278
Page 54
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2019
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 $2,001,320 and the bank balance was $2,323,279. At year end, $1,823,279 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, 2019
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, 2019, are classified in the
accompanying financial statements as follows:
Carrying amount of investments $ 17,222,768
Carrying amount of cash deposits 2,001,320
Cash on hand 1,600
Total pooled cash and investments $ 19,225,688
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 $ 4,903,031 $ 4,679,456 $ 223,575 AA+ Aaa
Corporate and Foreign Bonds Level 2 2,736,822 1,088,159 1,648,663 AA-AA+ Baa1-Aaa
Commercial Paper Level 2 248,785 248,785 A-1+ P-1
Certificates of Deposit Level 2 1,118,964 699,784 419,180 A-1,AA- P-1,Aa2
$ 6,716,184 $ 2,291,418
State Treasurer’s Investment Pool 7 Not applicable 8,215,166 44 days average maturities
Total $ 17,222,768
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, 2019
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 $ 4,903,031 28.5%
Corporate and Foreign Bonds 2,736,822 15.9
Commercial Paper 248,785 1.4
Certificates of Deposit 1,118,964 6.5
State Treasurer’s investment pool 7 8,215,166 47.7
$ 17,222,768
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, 2019
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 $ 6,118,700 $ $ 29,690,368
Artwork 2,525,900 48,000 2,573,900
Construction in progress 4,060,072 3,976,079 6,913,023 1,123,128
Total capital assets, not being depreciated 30,157,640 10,142,779 6,913,023 33,387,396
Capital assets, being depreciated:
Infrastructure 147,196,425 2,401,250 149,597,675
Buildings and building improvements 18,774,262 4,809,156 23,583,418
Improvements other than buildings 15,149,782 15,149,782
Vehicles, machinery and equipment 4,352,063 192,375 242,498 4,301,940
Total capital assets being depreciated 185,472,532 7,402,781 242,498 192,632,815
Less accumulated depreciation for:
Infrastructure (95,162,593) (4,024,675) (99,187,268)
Buildings and building improvements (5,736,417) (455,719) (6,192,136)
Improvements other than buildings (10,290,241) (602,726) (10,892,967)
Vehicles, machinery and equipment (2,181,232) (249,360) 242,498 (2,188,094)
Total accumulated depreciation (113,370,483) (5,332,480) 242,498 (118,460,465)
Total capital assets, being depreciated, net 72,102,049 2,070,301 74,172,350
Governmental activities capital assets, net $ 102,259,689 $12,213,080 $ 6,913,023 $ 107,559,746
Depreciation expense was charged to functions/programs as follows:
Governmental activities:
General government $ 173,822
Development services 16,721
Public safety 261,401
Public works 3,967,255
Culture and recreation 913,281
Total depreciation expense $ 5,332,480
Page 58
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2019
NOTE 5 – CAPITAL ASSETS
Construction Commitments – At June 30, 2019, the Town has the following active
construction commitments:
Governmental Activities
Project
Spent-to-Date
Remaining
Commitment
4 Peaks Playground Upgrades $ 58,455 $ 31,545
Unpaved Alley Paving 14,658 15,000
Fountain Hills Boulevard Widening 49,235 19,765
AOTF/La Montana Improvements 73,216 74,919
Fountain Hills Boulevard Shoulder Paving 154,264 38,378
Total commitments $ 349,828 $ 179,607
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, 2019
Due
Within
One Year
Governmental activities:
General Obligation Bonds:
General Obligation Bonds, Series 2014 $7,565,000 2% 7/1/19-20 $ 1,615,000 $ 1,615,000
Private Placement General Obligation Bonds:
Eagle Mountain Community Facilities
District, General Obligation Refunding
Bonds, Series 2015 2,300,000 1.76% 7/1/19-21 795,000 395,000
Private Placement Revenue Bonds:
Municipal Facilities Revenue Refunding
Bonds, Series 2015 1,880,000 1.62% 7/1/19-20 300,000 300,000
Total $ 2,710,000 $ 2,310,000
Page 59
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2019
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
2020 $ 2,310,000 $ 67,302
2021 400,000 7,040
Total $ 2,710,000 $ 74,342
Private Placements
The Town has outstanding bonds from private placements reported as governmental activities
of $300,000. 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 $795,000. 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 $300,000 in outstanding
Municipal Facilities Revenue Refunding Bonds. For the current fiscal year, the net revenues
available to service the debt were $19,765,936. For the fiscal year ended June 30, 2019, the
debt principal and interest paid on this debt was $380,854 (two percent of pledged revenues).
The total principal and interest remaining to be paid on the bonds is $304,860.
Page 60
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2019
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 $ 3,495,000 $ $ 1,880,000 $ 1,615,000 $ 1,615,000
Private placement general
obligation bonds 1,180,000 385,000 795,000 395,000
Private placement revenue bonds 670,000 370,000 300,000 300,000
Premium 136,835 68,417 68,418
Total bonds payable 5,481,835 2,703,417 2,778,418 2,310,000
Compensated absences payable 520,460 310,352 333,042 497,770 334,411
Governmental activity long-term
Liabilities $ 6,002,295 $ 310,352 $ 3,036,459 $ 3,276,188 $ 2,644,411
NOTE 8 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
At year end, interfund balances were as follows:
Interfund transfers:
At year end, interfund transfers were as follows:
Transfers out
Transfers in
General
Fund
Capital
Projects
Fund
Non-Major
Governmental
Funds Total
HURF Fund $ $ 200,000 $ $ 200,000
Municipal Property Corporation Debt
Service Fund 381,554 381,554
Capital Projects Fund 2,159,113 565,458 2,724,571
Non-Major Governmental Funds 200,000 166,407 366,407
Total $ 2,740,667 $ 200,000 $ 731,865 $ 3,672,532
Page 61
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2019
NOTE 8 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
The General Fund transferred $1,659,113 to Capital Projects Fund for the excess revenues over
expenditures per the Town’s Financial Policy; $381,554 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 $565,458 to Capital Projects
Fund for the Adero Canyon Trailhead project. The Capital Projects Fund transferred $200,000
to Highway User Fund for pavement maintenance costs. The Economic Development Fund
transferred $166,407 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, 2019
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, 2019, was $3,150,216. The Town’s total payroll was
$3,707,584.
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, 2019
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 $346,524. The employees’
contributions totaled $346,524. 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 $201,863 to that plan. The Town contributed $8,351 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 2018-19 or as of the close of the
fiscal year.
Page 64
REQUIRED SUPPLEMENTARY INFORMATION
Page 65
$ 8,693,264 $ 8,693,264 $ 9,198,866 $ 505,602
$ 5,282,559 $ 6,197,217 $ 7,294,658 $ 1,097,441
Variance with
Final Budget
Positive
(Negative)
(1,672,613)
1,276,332
(178,891)
198,890
57,789
654,328
256,679
1,735,000
2,948,945
(13,500)
(1,659,113)
246,441
386,808
284,200
16,477
(21,610)
756
352,895
13,556
(29,619)
122,497
(125,660)
157,415
1,213,945
(2,740,667)
123,365
7,171,293
49,486
477,635
7,873,036
14,637,548
2,864,032
39,100
(2,779,767)
3,719,337
4,153,699
68,863
2,825,398
858,957
2,188,071
2,154,581
325,550
81,836
5,499,303
181,105
217,656
120,340
166,055
17,501,580
(1,068,054)
(1,152,967)
7,350,184
Actual
423,947
1,413,507
280,801
(84,913)
52,600
(1,120,654)
47,253
2,574,879
3,479,726
1,105,398
616,326
8,129,715
16,372,548
210,724
95,159
246,000
8,640
16,287,635
2,438,781
82,592
(1,152,967)
6,435,526
Final
374,461
935,872
237,768
5,485,747
16,372,548
(84,913)
52,600
(1,120,654)
(1,068,054)
47,253
82,592
3,918,227
4,211,488
3,519,726
1,065,398
2,574,879
8,129,715
246,000
8,640
16,287,635
2,438,781
342,027
656,326
Fund balances (deficits), end of year
Budgeted Amounts
Original
374,461
935,872
237,768
5,485,747
210,724
95,159
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses):
Changes in fund balances
Fund balances, beginning of year
Culture and recreation
Total public safety
Total expenditures
Administration
Municipal court
Excess (deficiency) of revenues over expenditures
Non departmental
Expenditures:
Capital outlay
Mayor and council
Current -
General government
Public safety
Fire and emergency
Law enforcement
Total general government
Development services
Intergovernmental
Charges for services
Other
Fines and forfeitures
Investment earnings
Total revenues
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GENERAL
YEAR ENDED JUNE 30, 2019
Revenues:
Sales taxes
Franchise taxes
Licenses and permits
Leases and rents 43,033
1,035,577 Public works 1,035,577 823,223 212,354
263,431
342,027
3,918,227
4,211,488
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
$ 796,063
2,619,995
100,000
25,000
2,400
3,543,458
5,541,496
5,541,496
(1,998,038)
200,000
200,000
(1,798,038)
3,382,918
$1,584,880
Final
$ 796,063
2,619,995
100,000
25,000
2,400
3,543,458
5,035,896
130,600
5,166,496
(1,623,038)
200,000
200,000
(1,423,038)
3,382,918
$1,959,880
Actual
$ 883,932
2,741,035
63,446
91,634
3,780,047
4,495,263
167,222
4,662,485
(882,438)
200,000
200,000
(682,438)
3,382,918
$2,700,480
Variance with
Final Budget
Positive
(Negative)
$ 87,869
121,040
(100,000)
38,446
89,234
236,589
540,633
(36,622)
504,011
740,600
740,600
$740,600
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
HIGHWAY USER REVENUE
YEAR ENDED JUNE 30, 2019
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
$1,188,800
1,188,800
1,123,800
65,000
1,188,800
$
Final
$338,800
338,800
273,800
65,000
338,800
$
Actual
$91,211
91,211
55,000
36,211
91,211
$
Variance with
Final Budget
Positive
(Negative)
$(247,589)
(247,589)
218,800
28,789
247,589
$
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GRANTS
YEAR ENDED JUNE 30, 2019
See accompanying notes to this schedule.
Page 68
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2019
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
Accounts receivable
Intergovernmental receivable
Taxes receivable
Interest receivable
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and benefits
Other liabilities
Total liabilities
Fund balances:
Restricted
Committed
Assigned
Total fund balances
Total liabilities and fund balances
Special Revenue
$ 2,391,548
8,760
22,882
57
2,688
$2,425,935
$ 48,998
6,528
364
55,890
19,678
1,525,831
824,536
2,370,045
$2,425,935
Capital Projects
$ 990,714
$990,714
$
990,714
990,714
$990,714
Total Non-Major
Governmental
Funds
$ 3,382,262
8,760
22,882
57
2,688
$3,416,649
$ 48,998
6,528
364
55,890
1,010,392
1,525,831
824,536
3,360,759
$3,416,649
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING BALANCE SHEET - ALL NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE
JUNE 30, 2019
Page 72
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Total revenues
Expenditures:
Current -
General government
Public safety
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
$ 6,749
441,966
486,924
70,127
2,227
10,143
48,504
1,066,640
263,945
506,247
235,303
1,005,495
61,145
366,407
(166,407)
200,000
261,145
2,108,900
$2,370,045
Capital Projects
$
140,191
22,760
162,951
7,632
33,161
40,793
122,158
(565,458)
(565,458)
(443,300)
1,434,014
$990,714
Total Non-Major
Governmental
Funds
$ 6,749
441,966
627,115
70,127
2,227
10,143
71,264
1,229,591
263,945
7,632
506,247
268,464
1,046,288
183,303
366,407
(731,865)
(365,458)
(182,155)
3,542,914
$3,360,759
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, 2019
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
Accounts receivable
Intergovernmental receivable
Taxes receivable
Interest receivable
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and benefits
Other liabilities
Total liabilities
Fund balances:
Restricted
Committed
Assigned
Total fund balances
Total liabilities and fund balances
Downtown
Strategy
$ 1,032,397
4,379
2,688
$1,039,464
$ 1,124
1,124
1,038,340
1,038,340
$1,039,464
Economic
Development
$ 90,616
17,516
$108,132
$ 1,404
4,937
306
6,647
101,485
101,485
$108,132
Tourism
$ 15,837
$15,837
$ 5,449
1,165
31
6,645
9,192
9,192
$15,837
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING BALANCE SHEET - NON-MAJOR SPECIAL REVENUE FUNDS
JUNE 30, 2019
Page 76
Local Court
Enhancement
$ 376,726
987
$377,713
$ 872
27
899
376,814
376,814
$377,713
Environmental
$ 855,526
8,760
$864,286
$ 39,324
426
39,750
824,536
824,536
$864,286
Cottonwoods
Maintenance
$ 20,446
57
$20,503
$ 825
825
19,678
19,678
$20,503
Totals
$ 2,391,548
8,760
22,882
57
2,688
$2,425,935
$ 48,998
6,528
364
55,890
19,678
1,525,831
824,536
2,370,045
$2,425,935
Page 77
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Total revenues
Expenditures:
Current -
General government
Public works
Culture and recreation
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Downtown
Strategy
$
88,393
28,231
116,624
38,204
38,204
78,420
78,420
959,920
$1,038,340
Economic
Development
$
353,573
1,340
354,913
224,051
224,051
130,862
(166,407)
(166,407)
(35,545)
137,030
$101,485
Tourism
$
70,127
2,223
1,646
73,996
235,303
235,303
(161,307)
166,407
166,407
5,100
4,092
$9,192
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2019
Page 78
Local Court
Enhancement
$
10,143
876
11,019
1,690
1,690
9,329
9,329
367,485
$376,814
Environmental
$
486,924
4
15,997
502,925
501,717
501,717
1,208
200,000
200,000
201,208
623,328
$824,536
Cottonwoods
Maintenance
$ 6,749
414
7,163
4,530
4,530
2,633
2,633
17,045
$19,678
Totals
$ 6,749
441,966
486,924
70,127
2,227
10,143
48,504
1,066,640
263,945
506,247
235,303
1,005,495
61,145
366,407
(166,407)
200,000
261,145
2,108,900
$2,370,045
Page 79
Total revenues
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Expenditures:
Current -
General government
Public works
Culture and recreation
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
$
79,607
1,260
80,867
40,885
40,885
39,982
39,982
959,920
$999,902
Actual
$
88,393
28,231
116,624
38,204
38,204
78,420
78,420
959,920
$1,038,340
Variance -
Positive
(Negative)
$
8,786
26,971
35,757
2,681
2,681
38,438
38,438
$38,438
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, 2019
Page 80
Economic Development
Budget
$
318,425
240
318,665
264,812
264,812
53,853
(166,407)
(166,407)
(112,554)
137,030
$24,476
Actual
$
353,573
1,340
354,913
224,051
224,051
130,862
(166,407)
(166,407)
(35,545)
137,030
$101,485
Variance -
Positive
(Negative)
$
35,148
1,100
36,248
40,761
40,761
77,009
77,009
$77,009
Tourism
Budget
$
83,000
180
83,180
239,258
239,258
(156,078)
166,407
(13,500)
152,907
(3,171)
4,092
$921
Actual
$
70,127
2,223
1,646
73,996
235,303
235,303
(161,307)
166,407
166,407
5,100
4,092
$9,192
Variance -
Positive
(Negative)
$
(12,873)
2,223
1,466
(9,184)
3,955
3,955
(5,229)
13,500
13,500
8,271
$8,271
(Continued)
Page 81
Total revenues
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Expenditures:
Current -
General government
Public works
Culture and recreation
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
$
52,000
240
52,240
50,515
30,000
80,515
(28,275)
(28,275)
367,485
$339,210
Actual
$
10,143
876
11,019
1,690
1,690
9,329
9,329
367,485
$376,814
Variance -
Positive
(Negative)
$
(41,857)
636
(41,221)
48,825
30,000
78,825
37,604
37,604
$37,604
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, 2019
Page 82
Environmental
Budget
$
493,668
1,800
495,468
709,326
709,326
(213,858)
200,000
200,000
(13,858)
623,328
$609,470
Actual
$
486,924
4
15,997
502,925
501,717
501,717
1,208
200,000
200,000
201,208
623,328
$824,536
Variance -
Positive
(Negative)
$
(6,744)
4
14,197
7,457
207,609
207,609
215,066
215,066
$215,066
Cottonwoods Maintenance
Budget
$ 6,642
72
6,714
5,101
5,101
1,613
1,613
17,045
$18,658
Actual
$ 6,749
414
7,163
4,530
4,530
2,633
2,633
17,045
$19,678
Variance -
Positive
(Negative)
$ 107
342
449
571
571
1,020
1,020
$1,020
(Continued)
Page 83
Total revenues
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Expenditures:
Current -
General government
Public works
Culture and recreation
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
$ 6,642
398,032
493,668
83,000
52,000
3,792
1,037,134
356,212
714,427
239,258
30,000
1,339,897
(302,763)
366,407
(179,907)
186,500
(116,263)
2,108,900
$1,992,637
Actual
$ 6,749
441,966
486,924
70,127
2,227
10,143
48,504
1,066,640
263,945
506,247
235,303
1,005,495
61,145
366,407
(166,407)
200,000
261,145
2,108,900
$2,370,045
Variance -
Positive
(Negative)
$ 107
43,934
(6,744)
(12,873)
2,227
(41,857)
44,712
29,506
92,267
208,180
3,955
30,000
334,402
363,908
13,500
13,500
377,408
$377,408
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, 2019
Page 84
(This page intentionally left blank)
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
$ 1,986,373
1,200
1,987,573
1,880,000
92,250
600
1,972,850
14,723
14,723
58,282
$73,005
Actual
$ 2,011,868
18,703
2,030,571
1,880,000
92,250
600
1,972,850
57,721
57,721
58,282
$116,003
Variance -
Positive
(Negative)
$ 25,495
17,503
42,998
42,998
42,998
$42,998
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, 2019
Page 86
Eagle Mountain Debt Service
Budget
$ 409,786
240
410,026
385,000
20,768
200
405,968
4,058
4,058
12,400
$16,458
Actual
$ 409,114
3,344
412,458
385,000
20,767
405,767
6,691
6,691
12,400
$19,091
Variance -
Positive
(Negative)
$ (672)
3,104
2,432
1
200
201
2,633
2,633
$2,633
Municipal Property Corporation Debt Service
Budget
$
840
840
370,000
10,854
1,010
381,864
(381,024)
381,554
381,554
530
5,516
$6,046
Actual
$
7,090
7,090
370,000
10,854
1,000
381,854
(374,764)
381,554
381,554
6,790
5,516
$12,306
Variance -
Positive
(Negative)
$
6,250
6,250
10
10
6,260
6,260
$6,260
(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
$ 2,396,159
2,280
2,398,439
2,635,000
123,872
1,810
2,760,682
(362,243)
381,554
381,554
19,311
76,198
$95,509
Actual
$ 2,420,982
29,137
2,450,119
2,635,000
123,871
1,600
2,760,471
(310,352)
381,554
381,554
71,202
76,198
$147,400
Variance -
Positive
(Negative)
$ 24,823
26,857
51,680
1
210
211
51,891
51,891
$51,891
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, 2019
Page 88
(This page intentionally left blank)
Page 89
ASSETS
Cash and investments
Total assets
LIABILITIES AND FUND BALANCES
Fund balances:
Restricted
Total fund balances
Total liabilities and fund balances
Development
Fees
$990,714
$990,714
$990,714
990,714
$990,714
TOWN OF FOUNTAIN HILLS, ARIZONA
BALANCE SHEET - NON-MAJOR CAPITAL PROJECTS FUND
JUNE 30, 2019
Page 90
Revenues:
Licenses and permits
Investment earnings
Total revenues
Expenditures:
Current -
Public safety
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
$ 140,191
22,760
162,951
7,632
33,161
40,793
122,158
(565,458)
(565,458)
(443,300)
1,434,014
$990,714
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NON-MAJOR CAPITAL PROJECTS FUND
YEAR ENDED JUNE 30, 2019
Page 91
Total revenues
Revenues:
Sales taxes
Licenses and permits
Intergovernmental
Other
Investment earnings
Expenditures:
Current -
General government
Public safety
Public works
Culture and recreation
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Capital Projects
Budget
$ 461,465
990,000
7,224
1,458,689
43,263
83,400
1,917,506
455,000
4,827,349
7,326,518
(5,867,829)
(200,000)
(200,000)
(6,067,829)
5,780,363
$(287,466)
Non-GAAP
Actual
$ 966,359
54,212
158,048
1,178,619
2,720
34,228
388,492
4,215,558
4,640,998
(3,462,379)
2,224,571
(200,000)
2,024,571
(1,437,808)
5,780,363
$4,342,555
Variance -
Positive
(Negative)
$ 504,894
(990,000)
54,212
150,824
(280,070)
40,543
83,400
1,883,278
66,508
611,791
2,685,520
2,405,450
2,224,571
2,224,571
4,630,021
$4,630,021
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, 2019
Page 92
Facilities Replacement Fund
Budget
$
3,600
3,600
975,296
975,296
(971,696)
500,000
500,000
(471,696)
1,378,443
$906,747
Non-GAAP
Actual
$
9,600
38,411
48,011
437,028
437,028
(389,017)
500,000
500,000
110,983
1,378,443
$1,489,426
Variance -
Positive
(Negative)
$
9,600
34,811
44,411
538,268
538,268
582,679
582,679
$582,679
Development Fees
Budget
$
142,581
660
143,241
11,244
49,291
60,535
82,706
82,706
1,434,014
$1,516,720
Actual
$
140,191
22,760
162,951
7,632
33,161
40,793
122,158
(565,458)
(565,458)
(443,300)
1,434,014
$990,714
Variance -
Positive
(Negative)
$
(2,390)
22,100
19,710
3,612
16,130
19,742
39,452
(565,458)
(565,458)
(526,006)
$(526,006)
(Continued)
Page 93
Total revenues
Revenues:
Sales taxes
Licenses and permits
Intergovernmental
Other
Investment earnings
Expenditures:
Current -
General government
Public safety
Public works
Culture and recreation
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Totals
Budget
$ 461,465
142,581
990,000
11,484
1,605,530
43,263
94,644
2,892,802
504,291
4,827,349
8,362,349
(6,756,819)
500,000
(200,000)
300,000
(6,456,819)
8,592,820
$2,136,001
Non-GAAP
Actual
$ 966,359
140,191
63,812
219,219
1,389,581
2,720
7,632
471,256
421,653
4,215,558
5,118,819
(3,729,238)
2,724,571
(765,458)
1,959,113
(1,770,125)
8,592,820
$6,822,695
Variance -
Positive
(Negative)
$ 504,894
(2,390)
(990,000)
63,812
207,735
(215,949)
40,543
87,012
2,421,546
82,638
611,791
3,243,530
3,027,581
2,224,571
(565,458)
1,659,113
4,686,694
$4,686,694
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, 2019
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
2010 2011 2012 2013
Governmental activities:
Net investment in capital assets 95,467,509$ 92,579,483$ 92,006,103$ 89,800,560$
Restricted 11,396,116 4,385,595 5,951,416 5,721,744
Unrestricted 12,321,090 22,598,669 21,064,267 20,612,758
Total governmental activities net position 119,184,715$ 119,563,747$ 119,021,786$ 116,135,062$
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
2014 2015 2016 2017 2018 2019
89,713,260$ 95,325,824$ 95,647,990$ 94,909,703$ 96,777,854$ 104,781,328$
5,480,867 6,310,810 4,530,239 4,471,661 4,589,526 3,646,449
19,186,823 15,180,582 17,232,506 17,578,068 16,244,169 15,258,797
114,380,950$ 116,817,216$ 117,410,735$ 116,959,432$ 117,611,549$ 123,686,574$
Fiscal Year ended June 30
Page 97
2010 2011 2012 2013
Expenses
Governmental activities:
General government 3,720,236$ 2,876,848$ 3,119,113$ 2,909,443$
Development services 1,612,287 1,572,202 1,442,613 1,633,361
Public works 5,202,285 5,567,973 4,718,047 5,712,817
Public safety 6,293,323 5,963,067 5,820,136 6,100,131
Culture and recreation 2,927,848 2,840,154 2,754,731 2,779,294
Interest on long-term debt 950,484 851,957 779,576 567,043
Total governmental activities expenses 20,706,463 19,672,201 18,634,216 19,702,089
Program Revenues
Governmental activities:
Fines, fees and charges for services:
General government 474,434 337,279 272,469 380,926
Development services 236,377 344,821 322,984 377,483
Public safety 59,806 65,568 63,926 63,824
Public works 266,706 77,409 95,201 112,521
Culture and recreation 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 632,617 2,273,414 1,392,706 150,535
Total governmental activities program revenues 3,674,795 5,052,294 3,736,450 2,640,940
Net (Expenses)/Revenues (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 1,928,028 1,349,079 1,453,405 1,385,147
Sales taxes 7,644,440 8,013,480 7,787,489 7,957,163
Franchise taxes 285,881 322,659 332,130 334,668
State shared revenues 6,000,923 5,217,140 4,515,511 4,979,183
Investment earnings 22,831 28,456 88,877 69,998
Miscellaneous 129,740 68,125 178,393 300,899
Special item - Donation of capital assets - - - -
Total governmental activities 16,011,843 14,998,939 14,355,805 15,027,058
Changes in Net Position
Governmental activities (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 2019
2,432,965$ 2,479,365$ 2,516,966$ 3,142,722$ 3,431,752$ 3,318,477$
1,237,717 2,074,611 2,253,208 1,364,378 1,460,967 867,725
6,630,875 4,963,979 6,476,688 7,904,577 7,380,663 10,263,244
6,958,056 6,816,152 7,178,890 7,563,898 7,567,012 8,142,069
2,760,690 2,822,954 3,124,523 3,375,414 3,311,648 3,767,996
472,999 698,542 241,694 178,749 118,552 57,054
20,493,302 19,855,603 21,791,969 23,529,738 23,270,594 26,416,565
215,943 337,655 298,737 837,163 295,716 280,312
531,193 693,670 1,257,492 1,062,094 1,314,915 1,143,871
74,887 86,641 90,345 155,454 155,973 90,774
250,421 236,706 48,688 216,724 52,465 10,214
340,353 339,158 321,189 393,028 497,914 1,151,500
1,307,738 1,431,017 1,615,973 1,699,931 1,737,958 1,850,676
144,570 2,874,796 381,011 494,328 304,951 181,939
2,865,105 5,999,643 4,013,435 4,858,722 4,359,892 4,709,286
(17,628,197) (13,855,960) (17,778,534) (18,671,016) (18,910,702) (21,707,279)
1,449,646 904,660 2,569,504 2,296,199 2,263,623 2,476,546
8,459,267 8,983,049 9,395,667 9,415,151 10,311,577 11,491,123
349,414 352,673 360,320 367,119 421,682 423,947
5,326,332 5,713,235 5,813,678 6,057,278 6,396,667 6,514,470
123,311 150,358 219,058 55,127 158,860 554,549
166,115 188,251 13,826 28,839 10,410 202,969
- - - - - 6,118,700
15,874,085 16,292,226 18,372,053 18,219,713 19,562,819 27,782,304
(1,754,112)$ 2,436,266$ 593,519$ (451,303)$ 652,117$ 6,075,025$
Fiscal Year Ended June 30
Page 99
Fiscal Year
ended June 30
2010
General fund
Reserved 3,235,811$
Unreserved, designated 333,796
Unreserved, undesignated 3,418,799
Total general fund 6,988,406$
All other governmental funds
Unreserved, designated 159,484$
Unreserved, undesignated reported in:
Special revenue funds 4,498,523
Capital projects funds 10,020,336
Debt service funds 1,182,834
Total all other governmental funds 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)
Page 100
2015 2016 2017 2018 2019
6,975$ 9,272$ 5,872$ 13,490$ 5,168$
10,655 4,123 16,868 21,945 17,311
2,634,923 2,652,357 2,714,135 2,893,850 3,027,804
1,872,492 1,701,086 1,743,768 2,101,574 2,380,653
4,369,457 5,853,806 2,696,999 2,140,434 1,863,722
8,894,502$ 10,220,644$ 7,177,642$ 7,171,293$ 7,294,658$
1,645,000$ -$ -$ -$ -$
656 5,055 474 - -
10,066,786 4,500,044 4,432,710 4,571,263 3,579,891
1,079,780 1,366,081 8,576,250 7,248,890 5,868,386
5,444,124 5,943,364 1,784,761 2,340,683 2,592,343
18,236,346$ 11,814,544$ 14,794,195$ 14,160,836$ 12,040,620$
Fiscal Year ended June 30
Page 101
2010 2011 2012 2013
Revenues
Taxes 9,818,985$ 9,704,054$ 9,577,321$ 9,713,445$
Licenses and permits 399,094 312,367 194,976 570,904
Leases and rents 215,520 227,195 206,018 213,871
Intergovernmental 7,672,037 7,165,103 6,035,448 6,323,047
Charges for services 464,036 388,635 405,663 162,086
Other 129,740 72,125 178,393 300,899
Fines and forfeitures 297,030 236,221 223,673 187,251
Special assessments - - - -
Investment earnings 22,831 28,456 88,877 69,998
Total revenues 19,019,273 18,134,156 16,910,369 17,541,501
Expenditures
Current:
General government 3,186,368 2,575,975 2,887,321 2,699,109
Development services 1,669,449 1,564,615 1,421,787 1,643,757
Public works 973,746 1,123,230 1,054,930 2,058,990
Public safety 6,200,227 5,772,800 5,869,445 6,022,269
Culture and recreation 2,007,737 1,871,446 1,794,332 1,791,018
Capital outlay 1,254,223 1,043,304 884,323 453,002
Debt service:
Principal 2,460,000 2,114,999 1,965,000 2,280,000
Interest 825,988 729,077 639,135 554,860
Other debt service 16,869 15,254 55,752 12,183
Total expenditures 18,594,607 16,810,700 16,572,025 17,515,188
Excess (deficiency) of revenues
over (under) expenditures 424,666 1,323,456 338,344 26,313
Other Financing Sources (Uses)
Transfers in 1,127,776 431,880 2,470,027 1,279,397
Transfers out (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) - - - -
Net change in fund balances 424,666$ 1,323,456$ 338,344$ 26,313$
Expenditures for capitalized assets 532,461$ 389,082$ 1,333,785$ 467,691$
Debt service as a percentage of noncapital expenditures 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 2019
10,271,737$ 10,240,382$ 12,299,285$ 12,069,714$ 13,019,341$ 14,342,801$
891,782 1,043,382 1,372,045 1,310,973 2,004,386 2,040,622
252,584 269,753 258,165 284,090 282,531 280,801
6,677,518 9,770,048 7,559,436 7,917,651 8,266,028 8,401,676
161,376 176,541 197,109 351,476 254,122 181,105
134,114 188,251 147,662 153,438 207,697 347,141
170,995 186,456 209,380 257,727 182,997 130,483
- - - - - -
123,311 150,358 219,058 55,127 158,860 554,549
18,683,417 22,025,171 22,262,140 22,400,196 24,375,962 26,279,178
2,194,845 2,275,124 2,324,026 2,713,548 3,195,936 3,147,063
1,774,983 2,073,990 2,217,814 1,275,147 1,397,249 858,957
3,085,559 1,275,779 2,498,714 3,954,450 3,420,317 7,880,668
6,890,770 6,675,874 7,034,887 7,420,032 7,402,227 6,295,989
1,921,939 1,962,585 2,240,865 2,484,940 2,375,758 2,845,027
1,750,465 8,799,068 6,471,382 1,693,265 4,317,214 4,487,854
2,415,000 1,850,000 4,260,000 2,675,000 2,720,000 2,635,000
460,811 454,957 308,106 244,986 185,164 123,871
12,188 243,585 2,005 2,180 1,805 1,600
20,506,560 25,610,962 27,357,799 22,463,548 25,015,670 28,276,029
(1,823,143) (3,585,791) (5,095,659) (63,352) (639,708) (1,996,851)
1,838,453 2,519,774 562,044 5,194,138 4,543,728 3,672,532
(1,838,453) (2,519,774) (562,044) (5,194,138) (4,543,728) (3,672,532)
- 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)$ (1,996,851)$
2,385,168$ 9,067,254$ 6,394,346$ 1,696,612$ 4,293,214$ 4,465,837$
15.9% 15.4% 21.8% 14.1% 14.0% 11.6%
Fiscal Year Ended June 30
Page 103
Fiscal Year
Ended June 30 Property Tax Sales Tax Franchise Tax Total
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
2019 2,427,731 11,491,123 423,947 14,342,801
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
2010 651,694,135$ 0.2300$ 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%
2019 494,576,905 0.3382 4,697,728,014 10.53%
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 $100 of assessed taxable value.
Town of Fountain Hills, Arizona
Assessed Value and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
Page 105
Net LimitedPercentage of Net Full CashPercentage ofAssessedTotal Net Limited AssessedTotal Net Full CashTaxpayerValueRankAssessed ValueValueRankAssessed ValueEPCOR - Chaparral City Water Company3,954,960 10.80%Toll Brothers AZ Construction Company3,468,980 2RCS-Park Place 1 LLC3,130,090 30.63%Hunter Retail LLC2,574,306 40.52%WSL Fountain View Investors V, LLC2,146,527 50.43%3,196,512 30.49%Whitestone Fountain Hills, LLC1,992,049 60.40%MJFFH7 LLC1,303,065 7Fountain Hills Invest Co., LLC1,275,998 80.26%Target Corporation1,275,552 90.26%2,442,337 70.37%Smith's Food & Drug Centers Inc.1,250,532 10 0.25%Inland Western Fountain Hills Four Peaks LLC4,423,956 10.68%EN LLC4,145,795 20.64%Chapparal City Water Company 3,173,730 40.49%Pacific FH Resort LLC2,680,400 50.41%J & R Holdings XX LLC2,563,874 60.39%Adero Canyon LLC2,373,520 80.36%Sun Tech Development, LLC2,299,593 90.35%Qwest Corporation 1,799,828 100.28%Totals22,372,059$ 3.55%29,099,545$ 4.46%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 2015-2016), 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, 2019 and 201020192010Page 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
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% 29,635 2,271,117 99.7%
2018 2,272,027 2,230,328 98.2% 31,692 2,262,020 99.6%
2019 2,404,250 2,369,262 98.5%- 2,369,262 98.5%
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
2010 2011 2012 2013
Sales category:
Construction 538,562$ 567,135$ 600,403$ 567,589$
Transportation/utilities 1,424,828 1,388,075 1,409,349 1,402,734
Wholesale/retail 3,556,292 3,567,986 3,601,904 3,598,895
Restaurants/bars 509,624 559,931 575,704 645,258
Real estate, rental & leasing 650,400 731,758 678,326 720,023
Services 241,685 276,566 274,521 310,303
Other 723,050 922,029 639,012 712,360
Total 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
Town of Fountain Hills, Arizona
Taxable Sales by Category
Last Ten Fiscal Years
(modified accrual basis of accounting)
Page 108
2014 2015 2016 2017 2018 2019
783,064$ 935,694$ 918,717$ 730,164$ 1,408,332$ 1,932,716$
1,375,623 1,405,768 1,327,441 1,288,153 1,309,928 1,290,585
3,653,181 4,214,119 4,815,582 4,982,218 5,235,992 5,464,247
655,654 682,180 742,540 811,985 829,857 893,595
782,453 617,348 552,856 636,834 745,171 842,233
342,079 604,618 779,753 852,675 747,834 1,025,548
867,213 523,323 258,779 113,122 34,464 42,200
8,459,267$ 8,983,050$ 9,395,667$ 9,415,151$ 10,311,578$ 11,491,124$
Fiscal Year Ended June 30
Page 109
Fiscal
Year
Ended Town Maricopa State Total
June 30 Rate County Rate Tax Rate
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%
2019 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*BondsBondsDebtCapita20105,415,000$ 3,630,000$ 8,920,000$ 130,000$ -$ 18,095,000$ 796$ 20114,595,000 3,370,000 7,885,000 - - 15,850,000 705 20123,755,000 3,090,000 7,040,000 - - 13,885,000 611 20132,900,000 2,800,000 5,905,000 - - 11,605,000 503 20142,000,000 2,495,000 4,695,000 - - 9,190,000 394 20159,517,086 2,300,000 3,525,000 - - 15,342,086 651 20167,678,669 1,935,000 1,400,000 - - 11,013,669 461 20175,680,252 1,560,000 1,030,000 - - 8,270,252 338 20183,631,835 1,180,000 670,000 - - 5,481,835 223 20191,683,418 795,000 300,000 - - 2,778,418 113 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 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 2019 2,478,418 196,412 2,282,006 4,697,728,014 0.05%93 0.46% 287,694 12 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 bonds.Population data can be found in the Schedule of Demographic and Economic Statistics.Note: On November 6, 2012, voters approved Proposition 117, an amendment to the Arizona Constitution. Beginning with Tax Year 2015 (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 County Special Healthcare District 497,125,000 1.15% 5,716,938
East Valley Institute of Technology - 2.59% -
Fountain Hills Unified School District 8,800,000 96.22% 8,467,360
Total Overlapping Debt 18,562,808
Direct:
Town of Fountain Hills, Arizona*
General Obligation Bonds 1,684,418
Revenue Bonds 300,000
Eagle Mountain Community Facilities District** 795,000
Total Direct Debt 2,779,418
Total direct and overlapping debt 21,342,226$
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, 2019
Governmental Unit
Page 113
2010 2011 2012 2013 2014
6% Debt Limit
Debt limit 39,101,648$ 34,584,113$ 27,134,160$ 22,668,984$ 21,957,791$
Total net debt applicable to limit - - - - -
Legal debt margin 39,101,648$ 34,584,113$ 27,134,160$ 22,668,984$ 21,957,791$
Total debt applicable to the limit
as a percentage of debt limit - - - - -
20% Debt Limit
Debt limit 130,338,827$ 115,280,377$ 90,447,201$ 75,563,278$ 73,192,636$
Total net debt applicable to limit 5,415,000 4,595,000 3,755,000 2,900,000 2,000,000
Legal debt margin 124,923,827$ 110,685,377$ 86,692,201$ 72,663,278$ 71,192,636$
Total debt applicable to the limit
as a percentage of debt limit 4% 4% 4% 4% 3%
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
2015 2016 2017 2018 2019
24,199,829$ 28,325,296$ 30,651,126$ 31,459,192$ 32,400,042$
- - - - -
24,199,829$ 28,325,296$ 30,651,126$ 31,459,192$ 32,400,042$
--- - -
80,666,095$ 94,417,653$ 102,170,422$ 104,863,974$ 108,000,140$
9,175,000 7,405,000 5,475,000 3,495,000 1,615,000
71,491,095$ 87,012,653$ 96,695,422$ 101,368,974$ 106,385,140$
11% 8% 5% 3% 1%
Fiscal Year Ended June 30
Page 115
Net full cash assessed valuation 540,000,698
Water, Sewer, Artificial Lighting, Parks, Open Space, Recreational Facility
Improvements, Public Safety, Law Enforcement, Fire and Emergency
Facilities, Street and Transportation Facilities
Debt limit - 20% of net full cash assessed valuation 108,000,140$
Net debt applicable to limit 1,615,000
20% legal debt margin 106,385,140
All Other General Obligation Bonds
Debt limit - 6% of net full cash assessed valuation 32,400,042
Net debt applicable to limit -
6% legal debt margin 32,400,042
Total legal debt margin 138,785,182$
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, 2019
Page 116
Fiscal
Year
Ended Pledged
June 30 Principal Interest Total Revenues Coverage
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
2019 370,000 10,854 380,854 19,765,936 51.9
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
2009 2010 2011 2012 2013
Population 22,736 22,489 22,741 23,070 23,318
Per capita personal income 38,918$ 40,672$ 44,660$ 47,260$ 48,244$
Median age 48.9 53.9 53.9 53.9 53.0
Public school enrollment 2,203 2,103 1,981 1,886 1,820
Town of Fountain Hills
unemployment rate 4.5% 4.8% 6.7% 5.6% 6.0%
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 1,253 1,226 1,218 1,209 1,196
Number of units
Housing 12,927 12,983 12,990 12,977 12,991
Lodging 4 4 4 4 4
Restaurants 52 53 56 56 54
Shopping centers 19 20 20 20 20
Schools
Public 4 4 4 3 3
Preschool 4 4 4 6 7
Charter 1 1 1 1 1
Vocational - - - - -
Sources: The sources of the "Per Capita Personal Income", "Median Age" and "Unemployment Rate"
information are Sites USA (2009-2017) and ESRI (beginning in 2018). The source of the "Population"
is the U.S. Census Bureau July 1, 2018 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 2018.
Calendar Year
Town of Fountain Hills, Arizona
Demographic and Economic Statistics
Last Ten Calendar Years
Page 118
2014 2015 2016 2017 2018*
23,573 23,899 24,482 24,583 24,987
46,619$ 48,240$ 50,162$ 60,531$ 55,525$
53.7 53.8 53.7 53.5 58.6
1,692 1,619 1,506 1,444 1,380
5.4% 2.4% 1.9% 1.6% 5.1%
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
1,165 1,247 1,209 1,175 1,172
12,981 13,002 13,130 13,176 13,558
4 4 4 4 4
43 46 50 52 54
20 20 20 20 20
3 3 3 3 3
7 7 7 7 5
1 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. 98 152 1 3.4% 285 1
Fountain View Village 120 2 2.7%
Rural Metro Corporation 110 3 2.5%
Safeway Stores 110 4 2.5% 110 5
Target Stores 100 5 2.2% 130 3
Firerock Country Club 100 6 2.2%
Bashas 70 7 1.6%70 8
Eagle Mountain Golf Club 70 8 1.6%70 10
Palm Valley Golf Club 60 9 1.3%
Golf International Inc 60 10 1.3%
Fry's Food Stores -80 7
Sunrise Senior Living -
Monks Construction 190 2
MCO Properties, Inc.125 4
Town of Fountain Hills 82 6
Sunridge Canyon Golf Course 70 9
Totals 952 21.3% 1,212
Total Town employment 4,474
Source: The source of this information is the Maricopa Association of Governments.
* Data for 2019 was not available.
2018*
Town of Fountain Hills, Arizona
Principal Employers
Prior Fiscal Year and Nine Years Ago
2009
Page 120
2010201120122013201420152016201720182019Municipal court5.00 5.00 5.00 5.00 4.00 3.63 3.63 3.63 3.63 3.63 Administration13.25 11.25 11.58 11.68 10.56 11.33 11.63 12.25 13.45 13.70 Public works9.80 9.80 10.80 Development services35.75 23.25 20.25 18.75 16.25 16.30 16.30 7.50 8.50 7.50 Community services27.10 21.63 21.53 21.18 20.18 21.06 20.76 20.76 20.56 20.56 Total 81.10 61.13 58.36 56.61 50.99 52.32 52.32 53.94 55.94 56.19 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/Program2010201120122013201420152016201720182019Municipal CourtCases filed 3,520 2,584 2,173 1,740 1,649 1,738 1,593 2,014 1,277 891 Hearings/Trials held1,089 738 731 703 1,665 1,585 1,564 1,844 676 801 AdministrationFTEs per 1,000 residents3.6 2.7 2.6 2.5 2.2 2.2 2.2 2.2 2.3 2.2 Registered voters - general election15,511 none 16,074 none N/A 16,213 none 16,387 none 16,775 Voter turnout - general election50% none 34% none N/A 38% none 41% none 51%Development ServicesBuilding permits issued411 350 346 457 445 443 410 509 468 576 Building inspections conducted1,936 1,546 1,257 1,395 2,131 2,448 2,129 2,704 3,707 4,795 Number of code violation cases1,024 843 804 746 716 752 713 669 654 655 Number of zoning cases7 14 7 10 41 65 72 50 41 11 Community ServicesNumber of Community Center bookings3,396 3,315 3,236 3,196 3,383 3,439 3,124 3,764 4,395 3,857 Number of participants in recreational programs 1,960 1,759 1,833 1,789 2,291 2,249 2,910 3,773 3,794 3,489 Number of Senior Services members1,105 1,205 1,208 1,118 1,189 1,273 1,326 1,335 1,220 1,313 Number of home delivered meals10,169 9,742 8,419 6,941 4,799 4,035 3,497 3,920 3,093 3,562 Law Enforcement (contracted)Physical arrests679 645 522 545 743 445 220 220 214 67 Traffic violations2,959 1,909 1,366 1,296 1,379 1,539 1,215 1,803 1,053 1,248 Fire & Emergency Medical (contracted)Total incident responses2,875 3,179 3,082 3,136 2,956 3,166 3,191 3,425 3,659 4,073 Average response time (in minutes)4:32 3:46 3:50 3:53 3:37 3:57 3:25 3:33 3:32 3:51Source: 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
2010201120122013201420152016201720182019Public safetyNumber of fire stations2 2 2 2 2 2 2 2 2 2 Public worksStreets (centerline miles) 178.9 178.9 178.9 178.9 178.9 178.9 178.9 178.9 180.0 180.0 Streets (lane miles)390 390 390 390 390 390 390.5 390.5 391.5 391.5 Pedestrian lighting34 34 34 34 34 85 91 91 91 91 Traffic signals13 13 13 13 13 13 13 13 13 13 Parks and recreationAcreage-developed parks 116 116 116 116 116 119 119 119 119 119 Playgrounds7 7 7 7 7 7 7 7 7 9 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/A740 740 740 807.2 807.2 807.2 807.2 889.2 Miles of trailsN/A N/A 4.3 10.43 10.43 15.8 15.8 18.5 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.Town of Fountain Hills, ArizonaCapital Assets Statistics by FunctionLast Ten Fiscal YearsFiscal Year Ended June 30Function/ProgramPage 123
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Town of Fountain Hills
16705 E. Avenue of the Fountains
Fountain Hills, Arizona 85268
480-816-5100
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