HomeMy WebLinkAboutFY12 CAFRPhone: 480-816-5100
Fax: 480-837-3145
Website: www.fh.az.gov
16705 E. Avenue of the Fountains
Fountain Hills, Arizona 85268
Fiscal Year 2011 -2012 COMPREHENSIVE ANNUAL FINANCIAL REPORT Town of Fountain Hills, Arizona
Issued By:
Administration Department
Finance Division
TOWN OF FOUNTAIN HILLS, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2012
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TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
FISCAL YEAR ENDED JUNE 30, 2012
INTRODUCTORY SECTION
LETTER OF TRANSMITTAL 1
LIST OF PRINCIPAL OFFICIALS 9
ORGANIZATIONAL CHART 10
GFOA CERTIFICATE OF ACHIEVEMENT 11
FINANCIAL SECTION
INDEPENDENT AUDITORS’ REPORT 12
REQUIRED SUPPLEMENTARY INFORMATION
MANAGEMENT’S DISCUSSION AND ANALYSIS 14
BASIC FINANCIAL STATEMENTS
STATEMENT OF NET ASSETS 26
STATEMENT OF ACTIVITIES 27
BALANCE SHEET – GOVERNMENTAL FUNDS 28
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO
THE STATEMENT OF NET ASSETS 30
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCES – GOVERNMENTAL FUNDS 31
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGE IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE
STATEMENT OF ACTIVITIES 33
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – GENERAL FUND 34
NOTES TO BASIC FINANCIAL STATEMENTS 35
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET 54
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGE IN FUND BALANCES 56
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – CAPITAL PROJECTS FUND 58
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – GENERAL OBLIGATION DEBT SERVICE
FUND 59
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS (CONTINUED)
FISCAL YEAR ENDED JUNE 30, 2012
FINANCIAL SECTION (CONTINUED)
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
(CONTINUED)
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – MUNICIPAL PROPERTY CORPORATION
DEBT SERVICE 60
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – EAGLE MOUNTAIN DEBT SERVICE
FUND 61
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – HURF FUND 62
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – DEVELOPMENT FEES FUND 63
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – LOCAL COURT ENHANCEMENT FUND 64
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – GRANTS FUND 65
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – EXCISE TAX FUND 66
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – COTTONWOODS SPECIAL
ASSESSMENT FUND 67
STATISTICAL SECTION (UNAUDITED)
FINANCIAL TRENDS
NET ASSETS BY COMPONENT 68
CHANGES IN NET ASSETS 70
FUND BALANCES OF GOVERNMENTAL FUNDS 74
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND
BALANCES OF GOVERNMENTAL FUNDS 76
REVENUE CAPACITY
GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE 78
TAXABLE SALES BY CATEGORY 79
DIRECT AND OVERLAPPING SALES TAX RATES 81
ASSESSED VALUE AND ESTIMATED TOTAL VALUE OF TAXABLE PROPERTY 82
PRINCIPAL PROPERTY TAXPAYERS 83
PROPERTY TAX LEVIES AND COLLECTIONS 84
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS (CONTINUED)
FISCAL YEAR ENDED JUNE 30, 2012
STATISTICAL SECTION (UNAUDITED) (CONTINUED)
DEBT CAPACITY
RATIOS OF OUTSTANDING DEBT BY TYPE 85
RATIOS OF GENERAL BONDED DEBT OUTSTANDING 86
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT 87
LEGAL DEBT MARGIN INFORMATION 88
CALCULATION OF LEGAL DEBT MARGIN 90
REVENUE BOND COVERAGE 91
DEMOGRAPHIC AND ECONOMIC INFORMATION
DEMOGRAPHIC AND ECONOMIC STATISTICS 92
PRINCIPAL EMPLOYERS 94
OPERATING INFORMATION
FULL-TIME EQUIVALENT GOVERNMENT EMPLOYEES BY FUNCTION 95
OPERATING INDICATORS BY FUNCTION 96
CAPITAL ASSETS STATISTICS BY FUNCTION 98
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INTRODUCTORY SECTION
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October 18, 2012
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
generally accepted accounting principles (GAAP) in the United States of America and audited in
accordance with generally accepted auditing standards by a firm of licensed certified public
accountants. Pursuant to that requirement, we hereby issue the comprehensive annual financial
report of the Town of Fountain Hills for the fiscal year ended June 30, 2012.
This report consists of management’s representations concerning the finances of the Town of
Fountain Hills. 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 of Fountain Hills 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’ financial statements in conformity with GAAP.
Because the cost of internal controls should not outweigh their benefits, the Town of Fountain
Hills’ 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 of Fountain Hills’ financial statements have been audited by CliftonLarsonAllen LLP,
a firm of licensed certified public accountants. The goal of the independent audit was to provide
reasonable assurance that the financial statements of the Town of Fountain Hills for the fiscal
year ended June 30, 2012, are free of material misstatement. The independent audit involved
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statement; 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
unqualified opinion that the Town of Fountain Hills’ financial statements for the fiscal year ended
June 30, 2012, are fairly presented in conformity with GAAP. The independent auditors’ report is
presented as the first component of the financial section of this report.
GAAP 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’ MD&A can be found immediately following the
report of the independent auditors.
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Town of Fountain Hills Profile
The Town of Fountain Hills is a planned,
family-oriented community established in
1970 by McCulloch Properties (now MCO
Properties, Inc.). Prior to 1970, the area was
a cattle ranch and was part of one of the
largest land and cattle holdings in Arizona.
The land was purchased by Robert
McCulloch in the late 1960s and designed
by Charles Wood, Jr. (designer of
Disneyland in southern California). The
centerpiece of Fountain Hills is one of the
world's tallest man-made fountains, a focal
point that attracts thousands of visitors each
year.
Located on 13,006 acres of land, and
bordering northeast Scottsdale, Fountain
Hills is surrounded by the 3,500-foot McDowell Mountains on the west, the Fort McDowell Indian
Reservation on the east, the Salt River Pima Maricopa Indian Community on the south and by
the McDowell Mountain Regional Park on the north. Elevation is 1,520 feet at the fountain,
3,000 feet on Golden Eagle Boulevard, and is 500 feet above Phoenix.
Over the past twenty-two years Fountain Hills has grown from 10,190 residents to a town of
approximately 22,500 based on the 2010 census. 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 such as the cut-and-fill ordinance and strict zoning regulations. Fountain Hills will
have an opportunity to demonstrate that it is truly the best place to live in the Valley.
The Town offers a range of living styles, from small community subdivisions to a number of
large custom homes. Fountain Hills also offers recreational, cultural and retirement programs
that address the needs and lifestyles of active families and adults. The community consists of
primarily residential property; of the total 20.32 square miles of land only 2.2% of the total is
zoned commercial and/or industrial, 23.0% is reserved as open space and 51.3% is residential.
The Town’s Mission Statement for the Organization
The Town of Fountain Hills’ purpose is to serve the best interests of the community by:
providing for its safety and well-being;
respecting its special, small-town character and quality of life;
providing superior public services;
sustaining the public trust through open and responsive government;
and maintaining the stewardship and preservation of its financial and natural resources.
To serve and respect, and provide trust and stewardship.
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The Town of Fountain Hills is an Arizona Municipal Corporation, acting as a general law Town as
prescribed in the Arizona Revised Statutes. The Town was incorporated on December 5, 1989, with the
governmental and administrative affairs of the Town operating under the Council-Manager form of
government. The Town Council is responsible, among other things, for the adoption of local ordinances,
budget adoption, the development of citizen advisory committees and hiring the Town Manager. The
Town Manager is responsible for implementation of the policies of the Town Council and administering
the Town’s operations through three department directors and approximately 57 FTE employees. The
Judge, Town Attorney and Town Prosecutor are under the direction of the Town Council.
The Town provides or administers a full range of services
including public safety (law enforcement, fire, animal control,
building inspection); development services (code enforcement,
planning, zoning and public works); the construction and
maintenance of streets and infrastructure, municipal court,
recreational activities, community center, senior center and
cultural events. The Town does not maintain utility or other
operations that require the establishment of enterprise funds.
The financial reporting entity (the Town) includes all the funds of
the primary government (i.e., the Town of Fountain Hills as legally
defined) as well as all of its component units. The component units consist of legally separate entities
for which the primary government is financially accountable. Blended component units, although legally
separate entities, are, in substance, part of the primary government’s operations and are included as
part of the primary government. Accordingly, the Cottonwoods Maintenance District, Eagle Mountain
Community Facilities District and Fountain Hills Municipal Property Corporation are included in the
financial reports of the Town.
The annual budget serves as the foundation for the Town of Fountain Hills’ financial planning and
control. The Town Council formally adopts the budget and legally allocates, or appropriates, available
monies for the General Fund, Special Revenue Funds, Debt Service Funds, and Capital Projects Fund.
Therefore, these funds have appropriated budgets, and budget to actual information is presented. On
or before the second meeting in April, the Town Manager submits to the Town Council a proposed
budget for the fiscal year commencing the following July 1. The budget includes proposed expenditures
and the means of financing them. The Town Council is then required to hold public hearings on the
proposed budget and to adopt a final budget by no later than June 30, the close of the Town of
Fountain Hills’ fiscal year. The budget is legally enacted through passage of an ordinance and is
prepared by fund and department. The ordinance sets the limit for expenditures during the fiscal year.
The Town Manager may authorize transfers from and within personnel and from operating capital to
services or supplies within a department. Additional expenditures may be authorized for expenditures
directly necessitated by a natural or man-made disaster as prescribed in the State Constitution, Article
9, Section 20.
Fountain Hills Town Hall
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Factors Affecting Financial Condition
The information presented in the financial statements is perhaps best understood when it is considered
from the broader perspective of the specific environment within which the Town of Fountain Hills
operates.
Local Economy. The great recession continues to have an impact on the local businesses in Fountain
Hills, particularly in the construction of residential properties, local business retention and commercial
leasing. Construction activity provides revenue to the Town through local sales tax, the proceeds of
which are utilized for 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 91% of total General Fund revenue for fiscal year 2011-12. 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 0.045%). State shared income tax revenues decreased 12% during fiscal year 2009-10 and
another 25% in fiscal year 2010-11; this revenue category is based on two years prior personal and
corporate earnings, therefore, it is anticipated that the Town will experience flat revenues for the next
few years reflecting the economic recession.
The Town of Fountain Hills’ local tax revenue base consists of two major tax categories, the most
significant being retail sales and transportation/communication/utilities (construction was a third
significant category in prior years). The chart below is a look at the past five years’ local sales tax
activity by sector including a projection for the upcoming fiscal year:
As can be seen in the chart on the left sales
tax collections continue to show signs of
moderate growth. Retail sales experienced a
1% increase over the prior year;
restaurant/bar activity increased by just less
than 3%. Construction sales tax, a one-time
revenue source, is driven entirely by
development activity in the community and
increased 6% over the prior year but still
significantly less than fiscal years 2008 and
2009. Transportation/communication tax
revenues increased slightly more than 1%.
Other local activity has remained fairly level during the recessionary period due to the lack of major
retailers (the Town has three grocery stores and one major retailer). Fountain Hills is past the historic
period of rapid growth and the long-term economic outlook for the Town must recognize this fact. The
opportunity to further expand the retail tax base in Fountain Hills is limited by the lack of available
commercial land – 72% of the developable lots are already developed.
Development Activity over the past year:
Development Services has been involved with the following development activities during fiscal year
2011-12 (7/1/2011 – 6/30/2012):
Four Concept Plans were approved by the Planning & Zoning Commission during the period:
Sunridge Canyon Golf School “The Avenue” Theatre project
Dunkin Donuts Avenue of the Fountains Landscape Plan
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Three Special Use Permits were granted:
“The Avenue” Theatre project
Verizon - Eagle Mountain Cellular Antenna
Demaret Drive Golf Net
Nine Temporary Use Permits were issued during the period:
(2x) Arts & Crafts Fair Farmers' Market Tour D’Artistes
Art in the Park (2x) Art on the Avenue Halloween Carnival
Eagles Nest Sales Office
Two new Commercial Building Permits were issued:
13100 Sunridge Canyon Drive - Golf School
13226 La Montana Drive – Sun Devil Auto
There were sixteen commercial tenant improvement permits issued during the last fiscal year that
indicate that Fountain Hills is still a desirable place to locate a business.
13371 Fountain Hills Blvd #114 – UPS
13771 Fountain Hills Blvd #114 – UPS
13404 La Montana Blvd – Meridian Bank
13733 Fountain Hills Blvd – Safeway
13525 Fountain Hills Blvd #106 – Sherwin Williams
16838 Palisades Blvd #111 – Loving Dental
16455 Ave of Fountains - Fountain View Village
13771 Fountain Hills Blvd #103 – Subway
16225 Fountain Hills Blvd #122 – Dunkin Donuts
9800 Summer Hill Blvd - Inn At Eagle Mountain
16730 Palisades Blvd #100 – Goodwill
17210 Amhurst Dr. – North Chapel Church
11010 Saguaro Blvd #204 – Edifice Office
11010 Saguaro Blvd #101 – Edifice Office
16605 Palisades Blvd #140 – Ace Hardware
13100 Sunridge Canyon – Sunridge Canyon patio
One 2-Family Residential Building Permit was issued during this period.
Three new Single-Family Residential Building Permits were issued.
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.
In early 2009, the Strategic Planning Advisory Commission began the process of gathering public input
to update the Strategic Plan’s vision, confirm residents’ values, and create a fresh structure for the
Strategic Plan revision. Subsequently, Strategic Plan 2010 is built upon the foundation of a clearly
defined vision statement and eight key values, with specific indicators to evaluate Council and staff
priorities. Based on citizen input, the Strategic Plan is designed to guide our future decisions grounded
on these common values:
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1. Civility
2. Civic Responsibility
3. Environmental Stewardship
4. Economic Vitality
5. Education, Learning and Culture
6. Maintain and Improve Community Infrastructure
7. Public Safety, Health and Welfare
8. Recreational Opportunities and Amenities
These values guide the Town’s annual budget process.
The Fountain Hills Town Council maintains a fund balance policy that ensures adequate reserves that
will provide financial stability in the event of an unanticipated economic downturn. The policy was
amended in FY08-09 to include the establishment of a Rainy Day Fund beginning in FY09-10. In FY10-
11 the Town adopted Governmental Accounting Standards Board (GASB) Statement No. 54 which
changed how governments report fund balance. The overall principal and goal of GASB No. 54 is to
report governmental fund balances based on a hierarchy that shows, from the highest to the lowest, the
level or form of constraints on fund balance, and accordingly, the extent to which governments are
bound to honor them:
1. Nonspendable – The initial distinction that is made in reporting fund balance information is
identifying amounts that are considered nonspendable, such as fund balance associated with
inventories or prepaid assets. In Fountain Hills this classification would apply to our inventory and
prepaid items.
2. Restricted – The restricted fund balance category includes amounts that can be spent only for
the specific purposes stipulated by constitution, external reporting providers, or through enabling
legislation. In Fountain Hills this classification would apply to Highway User Revenue Fund (HURF),
Development Fees, the Grant/Special Revenue Fund and the Debt Service Fund.
3. Committed – The committed fund balance classification includes amounts that can be used only
for the specific purposes determined by a formal action of the government’s highest level of decision-
making authority. In Fountain Hills this classification would apply to the Rainy Day Fund,
Excise/Downtown Development Fund, and any General Fund surplus.
4. Assigned – Amounts in the assigned fund balance classification are intended to be used by the
government for specific purposes but do not meet the criteria to be classified as restricted or
committed. In Fountain Hills this classification would apply to the current Public Art, Designated,
Unreserved Fund.
5. Unassigned – The unassigned fund balance is the residual classification for the government’s
general fund and includes all spendable amounts not contained in the other classifications. In other
funds, the unassigned classification should be used only to report a deficit balance resulting from
overspending for specific purposes for which amounts had been restricted or committed. In Fountain
Hills this classification would be any residual balance of monies not contained in any of the other
classifications.
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The fund balance amounts will not be programmed for expenditure and are only available for use within
the confines of expenditure limitations imposed by the State. A Capital Projects Fund has been created
and is funded with proceeds from excess revenues collected over budget and any unexpended
appropriations not needed to meet fund balance requirements or re-appropriation. For the fiscal year
ending June 30, 2012 the General Fund balance was reduced by $1.1M as a result of the Town’s
decision to pay off the balance on Municipal Property Corporation bonds issued in 2005 for Town Hall.
The remaining fund balance meets the requirements of the fund balance policy.
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 fiscal year 2009-10 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 may be reconsidered.
Major Initiatives
The Town of Fountain Hills’ adopted FY2011-12 budget reflects the continued recession in the local
economy as well as an 8% decline in population resulting from the 2010 census, which is also mirrored
at the national and state levels. Due to the challenging current economic conditions, the Town has
made significant reductions in staff and service levels. This was accomplished by a thorough
assessment of all existing and proposed programs and workload; as a result Town staffing was
reduced from 81 to 57 FTE’s (full time equivalents) over the last two years.
AWARDS AND ACKNOWLEDGEMENT
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, 2011. This was the fifteenth consecutive year
that the government has received this prestigious award. In order to be awarded a Certificate of
Achievement, the government published an easily readable and efficiently organized CAFR. This report
satisfied both GAAP and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR
continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to
the GFOA to determine its eligibility for another certificate.
In addition, the government also received the GFOA’s Distinguished Budget Presentation Award for its
annual budget for the fiscal year ending June 30, 2011. 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 tenth consecutive year that the Town has received the award. An
investment policy was adopted and was awarded the Investment Policy Certification from the
Association of Public Treasurers of United States and Canada.
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Acknowledgements. The preparation of this report would not have been possible without the efficient
and dedicated services of the entire team of the Finance and Administration Department. I would also
like to extend my appreciation to the Mayor and Council for their leadership and support. Each member
of the department has my sincere appreciation for the contributions made in the preparation of this
report.
Respectfully submitted,
Ken Buchanan
Town Manager
TOWN OF FOUNTAIN HILLS, ARIZONA
LIST OF PRINCIPAL OFFICIALS
JUNE 30, 2012
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ELECTED OFFICIALS
Mayor Ms. Linda Kavanagh
Vice-Mayor Mr. Henry Leger
Councilmember Mr. Dennis Brown
Councilmember Mr. Cecil Yates
Councilmember Mr. Tait Elkie
Councilmember Ms. Cassie Hansen
Councilmember Ms. Ginny Dickey
DEPARTMENT DIRECTORS
Town Manager
Deputy Town Manager/
Finance Director
Ken Buchanan
Julie A. Ghetti, MPA, CPA, CGFM
Presiding Judge Mitchell S. Eisenberg
Community Services Director Mark Mayer
Development Services Director Paul Mood
Fire Chief Scott LaGreca
Rural Metro Corporation
District Commander Captain Joe Rodriquez
Maricopa County Sheriff’s Office
Town Prosecutor Iacovino & Kayler
Town Attorney Andrew McGuire,
Gust Rosenfeld, P.L.C.
TOWN OF FOUNTAIN HILLS, ARIZONA ORGANIZATIONAL CHART JUNE 30, 2012 (10)
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FINANCIAL SECTION
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An independent member of Nexia International
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INDEPENDENT AUDITORS’ REPORT
The Honorable Mayor and Members of the Town Council
Town of Fountain Hills, Arizona
Fountain Hills, Arizona
We have audited the accompanying financial statements of the governmental activities, each major
fund, and the aggregate remaining fund information of the Town of Fountain Hills, Arizona (the Town),
as of and for the year ended June 30, 2012, which collectively comprise the Town’s basic financial
statements as listed in the table of contents. These financial statements are the responsibility of the
Town’s management. Our responsibility is to express 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. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our 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, 2012, and the
respective changes in financial position and the respective budgetary comparison for the General Fund
for the year then ended in conformity with accounting principles generally accepted in the United States
of America.
Accounting principles generally accepted in the United States of America require that the
management’s discussion on pages 14 through 25 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.
The Honorable Mayor and Members of the Town Council
Town of Fountain Hills, Arizona
(13)
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Town of Fountain Hills, Arizona’s financial statements as a whole. The
introductory section, combining and individual nonmajor fund financial statements and schedules, and
the statistical section are presented for purposes of additional analysis and are not a required part of
the basic financial statements. The combining and individual nonmajor 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 financial statements. The 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 financial statements or to the financial
statements themselves, and other additional procedures in accordance with auditing standards
generally accepted in the United States of America. In our opinion, the information is fairly stated in all
material respects in relation to the basic financial statements as a whole. The introductory 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.
CliftonLarsonAllen LLP
Mesa, Arizona
October 18, 2012
REQUIRED SUPPLEMENTARY INFORMATION
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TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2012
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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, 2012. 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. We encourage readers to consider the
information presented here in conjunction with additional information that we have furnished in our letter
of transmittal, which can be found in the introductory section of this report.
FINANCIAL HIGHLIGHTS
The assets of the Town exceeded its liabilities at the close of fiscal year 2011-12 and fiscal year
2010-11 by $119.0 million and $119.6 million, respectively. Of these amounts, $21.1 million and
$22.6 million, respectively, may be used to meet the government’s ongoing obligations to
citizens and creditors.
Governmental activities program revenues decreased overall by $1,315,844 (26%) over the
previous year. The completion of a major street project funded by grants/contributions
contributed to the decline of both operating and capital grants. Charges for services decreased
by 9% as a result of the continued recession and lack of development permits.
At June 30, 2012, total fund balance of the governmental funds was $24.5 million, an increase
of $0.3 million (1.4%) from the previous year which can be attributed to the town’s fiscal policy
to spend within budget limits. Of this, $3.7 million is unassigned in the General Fund, while the
remainder is classified as committed, assigned and nonspendable.
The major governmental funds which includes the General Fund, total $15.2 million in revenues,
consisting primarily of local taxes, intergovernmental taxes, charges for services and licenses
and permits. The total expenditures of the General Fund were $11.7 million and the fund
balance decreased from $8.3 million to $7.2 million including the Rainy Day, Public Art, and
Vehicle Replacement Funds. The nonmajor governmental funds revenues were $1.7 million with
the majority from Intergovernmental - Highway User Revenue Funds (HURF). Expenditures for
the non-major funds were $1.3 million with $1.0 million from the HURF Fund.
The Town’s total net assets of governmental activities decreased $541,961 (0.5%) from the
prior fiscal year; revenues decreased 9.8% with the expiration of grant funding and a reduction
in expenditures was also made (5.3%) in streets related to the major street project.
General revenues accounted for $14.4 million in revenue, or 79% of all current fiscal year
revenues. Program specific revenues in the form of charges for services and grants and
contributions accounted for $3.7 million or 21% of total current fiscal year revenues.
The Town had approximately $18.6 million in expenses related to governmental activities, a
decrease of 5.3% from the prior fiscal year. The decline caused by a protracted economic
recession resulted in significant expenditure reductions in all activities with the exception of
General Government which included payoff of bonds.
Per local policy, residual unassigned General Fund revenues may be transferred to the Rainy
Day fund, supplement pay-as-you-go capital outlay expenditures or prepay existing town debt.
The Council authorized the use of general fund surplus revenues in FY11-12 to transfer funds to
the Municipal Property Corporation Debt Service Fund to provide funds that were placed in an
irrevocable trust to provide for future principal and interest payments on bonds that were issued
in 2005 for the Town Hall. The general fund balance will include the surplus, the Rainy Day and
vehicle replacement funds in the amount of $7.2 million.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2012
(15)
OVERVIEW OF FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the Town’s basic financial
statements. The Town’s basic financial statements comprise three components: 1) government-wide
financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report
also contains other supplementary information in addition to the basic financial statements themselves.
Government-Wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of
the Town’s finances, in a manner similar to a private sector business. The accrual basis of accounting
is used for the government-wide financial statements.
The Statement of Net Assets presents information on all of the Town’s assets and liabilities, with the
difference between the two reported as net assets. Over time, increases or decreases in net assets
may serve as 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 assets changed during
the most recent fiscal year. All changes in net assets are reported as soon as the underlying event
giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and
expenses are reported in this statement for some items that will only result in cash flows in future fiscal
periods (e.g., uncollected taxes and earned but unused compensated absences).
The government-wide financial statements outline functions of the Town that are principally supported
by taxes and intergovernmental revenues. The governmental activities of the Town include general
government, public safety, highways and streets, culture and recreation, development services, and
interest on long-term debt.
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 the 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.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2012
(16)
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.
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 Fund, General
Obligation Debt Service Fund, Municipal Property Corporation Debt Service Fund, Eagle Mountain
Debt Service Fund, and Capital Projects Fund, all of which are considered to be major funds. Data from
the 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 Basic 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 basic financial statements can be
found immediately following the basic financial statements.
Other Information
Governments have the option of including the budgetary comparison statements for the General Fund
and major special revenue funds as either part of the fund financial statements within the basic financial
statements, or as required supplementary information following the notes to the basic financial
statements. The Town has chosen to present these budgetary statements as part of the basic financial
statements.
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 Assets 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.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2012
(17)
Analysis of Net Assets
Net assets may serve over time as a useful indicator of a government’s financial position. In the case of
the Town, assets exceeded liabilities by $119.0 million at the current fiscal year end. The following table
presents a summary of the Town’s net assets for the fiscal years ended June 30, 2012 and June 30,
2011.
2012 2011
Percent
Change
ASSETS
Current and Other Assets 28,669,946$ 28,545,371$ 0.4%
Capital Assets:
Non-depreciable 25,934,778 28,304,198 -8.4%
Depreciable (net) 81,921,325 82,314,694 -0.5%
Total Assets 136,526,049 139,164,263 -1.9%
LIABILITIES
Other Liabilities 3,256,053 3,334,185 -2.3%
Long-Term Liabilities:
Due Within One Year 2,319,551 2,249,113 3.1%
Due in More Than One Year 11,928,659 14,017,218 -14.9%
Total Liabilities 17,504,263 19,600,516 -10.7%
NET ASSETS
Invested in Capital Assets, Net
of Related Debt 92,006,103 92,579,483 -0.6%
Restricted 5,951,416 4,385,595 35.7%
Unrestricted 21,064,267 22,598,669 -6.8%
Total Net Assets 119,021,786$ 119,563,747$ -0.5%
Town of Fountain Hills, Arizona
Statement of Net Assets
The largest portion of the Town’s net assets (77%) reflects its investment in capital assets (e.g., land,
infrastructure, buildings, improvements other than buildings, vehicles, machinery and equipment, and
artwork) less any related debt used to acquire those assets that is still outstanding. 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 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 assets (5%) are for the specified purposes of debt service repayment, capital outlay
investment, and highways and streets.
At the end of the current fiscal year, the Town reported positive balances in all three categories of net
assets. The same situation held true for the prior fiscal year.
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.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2012
(18)
Analysis of Changes in Net Assets
The Town’s total net assets decreased by $541,961 during the FY11-12. Factors contributing to this
decrease are presented on the following pages.
Total governmental revenues decreased over the prior year with a net decrease of $1,958,978 (10%).
The most significant decrease was the exhaustion of operating and capital grants of $1,209,514 (31%)
in capital grants as well as a decrease in revenues for programs. The Town also saw a decrease in
local sales taxes of $225,991 (3%) as well as revenues shared with cities/towns by the State (income
tax, state sales tax and vehicle license taxes – down 7%).
The Town’s total revenues for the current fiscal year were $18.1 million. The total cost of all programs
and services was $18.6 million. The following table presents a summary of the changes in net assets
for the fiscal years ended June 30, 2012 and June 30, 2011.
2012 2011
Percent
Change
REVENUES
Program Revenues:
Fees, Fines and Charges for Services 1,058,088$ 1,164,418$ -9.1%
Operating Grants and Contributions 1,285,656 1,614,462 -20.4%
Capital Grants and Contributions 1,392,706 2,273,414 -38.7%
General Revenues:
Sales Taxes 7,787,489 8,013,480 -2.8%
Property Taxes 1,453,405 1,349,079 7.7%
Franchise Taxes 332,130 322,659 2.9%
State Shared Revenues 3,793,385 4,417,589 -14.1%
Auto Lieu Taxes 722,126 799,551 -9.7%
Investment Earnings 88,877 28,456 212.3%
Miscellaneous 178,393 68,125 161.9%
Total Revenues 18,092,255 20,051,233 -9.8%
EXPENSES
General Government 3,119,113 2,876,848 8.4%
Public Safety 5,820,136 5,963,067 -2.4%
Highways and Streets 4,718,047 5,567,973 -15.3%
Culture and Recreation 2,754,731 2,840,154 -3.0%
Development Services 1,442,613 1,572,202 -8.2%
Interest on Long-Term Debt 779,576 851,957 -8.5%
Total Expenses 18,634,216 19,672,201 -5.3%
CHANGE IN NET ASSETS (541,961) 379,032 243.0%
Net Assets - Beginning of Year 119,563,747 119,184,715 0.3%
NET ASSETS - END OF YEAR 119,021,786$ 119,563,747$ -0.5%
Town of Fountain Hills, Arizona
Changes in Net Assets
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2012
(19)
General revenues such as property, business, and privilege taxes are not shown by program, but are
effectively used to support program activities town-wide. For governmental activities overall, without
regard to program, business taxes which includes Sales and Use Taxes and Franchise Taxes, are the
largest single source of funds (43%), followed by state shared revenues and auto lieu (21%), property
taxes (8%), charges for services (6%) and grants (15%).
The charts below compare the governmental expenses from fiscal year 2011-12 and fiscal year 2010-
11.
16%
31%
25%
15%
8%
5%
Fiscal Year 2011‐12 Expenses
General Government Public Safety
Highways and Streets Culture and Recreation
Development Services Interest on Long‐Term Debt
15%
30%
28%
15%
8%4%
Fiscal Year 2010‐11 Expenses
General Government Public Safety
Highways and Streets Culture and Recreation
Development Services Interest on Long‐Term Debt
General Government Public Safety Highways and Streets
Culture and Recreation Community Development Interest on long-term debt
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2012
(20)
The following are significant current year transactions that had an impact on the Statement of Net
Assets and Statement of Activities:
Overall revenues decreased by 9.8% compared to last year primarily the consequence of
expiring grant funds. Additionally, state shared revenues declined 14.1% which reflected the
decreased share related to declining population. The town does not have a primary property tax
that is used for operations; the town property tax levy is dependent upon the annual debt
payment for voter approved bonds. The increased property tax is a result of an increase in the
annual debt payment.
Depreciable assets declined 0.5% ($393,369) with the Town’s deferred investment in capital
infrastructure and improvements, specifically roads. A major road project, Shea Boulevard
climbing lane, was funded through the American Recovery and Reinvestment Act (ARRA)
through Arizona Department of Transportation ($1.8 million). This project was a federal grant
that was awarded to the Arizona Department of Transportation for a project within the town
infrastructure. The town was not considered a sub recipient of the grant; however, the
improvements were donated from the Arizona Department of Transportation.
The increase in miscellaneous revenues is primarily attributable to refunds from the town liability
insurance carrier ($77,839) a non-profit agency for funding related to background checks
($13,324) and a state agency for prisoner fees ($16,456).
State shared revenues are determined by the prior two years of income tax returns in Arizona
and is shared with cities and towns based on population; the two year lag affected the current
fiscal year revenues and will for at least the next year as the economy lags. Additionally, as
surrounding communities grow in population the town will lose a proportionate share due to
fixed borders and lack of available developable land.
Sales tax revenues in Fountain Hills are derived primarily from retail, telecommunications,
restaurant/bars and construction activity. Construction activity saw the steepest declines from
$2.4 million in FY08 to less than $600 thousand in FY12; retail and telecommunications activity,
however, have leveled off with a very slight increase, less than 1%. Restaurants and bars
increased more than 2%.
Overall expenses decreased 5.3% as the Town manages through the great recession by
matching expenses with available resources.
General Government expenditures increased over the prior year as a result of the costs for the
bi-annual election for Mayor and Town Council as well as expenditures for upgraded equipment
for the Town’s television public access channel.
Development Services includes Public Works, Streets, Building Safety, Planning, Code
Enforcement and Facilities. Deferred maintenance on public infrastructure resulted in a
decrease in Development Services expenses.
Public Safety costs include contracts for police and fire; those contracts are multi-year with
automatic increases.
Other significant expense reductions were deferral of replacement equipment and vehicles until
the economy shows signs of recovery.
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.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2012
(21)
Governmental funds. The focus of the Town’s governmental funds is to provide information on near-
term inflows, outflows, and balances of resources that are available for spending. Such information is
useful in assessing the Town’s financing requirements. In particular, unassigned fund balance may
serve as a useful measure of a government’s net resources available for spending at the end of the
fiscal year. Types of Major Governmental Funds reported by the Town include the General Fund,
Capital Projects Fund, General Obligation Debt Service Fund, Eagle Mountain Debt Service Fund and
the Municipal Property Corporation Debt Service Fund.
The financial performance of the Town as a whole is reflected in its governmental funds. As the Town
completed the year, its governmental funds reported a combined fund balance of $24.5 million, an
increase of $0.3 million due primarily maintain a strong fiscal policy of spending within budget limits and
not exceeding available funding.
Increase
(Decrease)
Fund Balance From FY 2010-11
General Fund 7,229,860$ (1,076,106)$
Capital Projects Fund 9,312,168 (321,620)
General Obligation Debt Service Fund 63,317 11,984
Municipal Property Corporation Debt Service Fund 2,739,511 1,848,205
Eagle Mountain Debt Service Fund 8,944 3,612
Nonmajor Governmental Funds 5,157,583 (127,731)
24,511,383$ 338,344$
The General Fund is the chief operating fund of the Town of Fountain Hills, Arizona. At the end of the
current fiscal year, the fund balance of the General Fund was $7,229,860, while total fund balance of
the funds reached $24.5 million. As a measure of the General Fund’s liquidity, it may be useful to
compare both General Fund balance and total fund balance to total fund expenditures. General Fund
balance represents 62 percent of total General Fund expenditures, while total fund balance represents
148 percent of total expenditures. The fund balance of the Town of Fountain Hills, Arizona’s General
Fund decreased by $1.1M which includes a transfer of $1.9 to the Municipal Property Corporation Debt
Service Fund to place funds in an irrevocable trust with an escrow agent to provide for future principal
and interest payments on a bond issued in 2005. Expenditures within the General Fund increased 1.9%
over the prior year – the primary reason for the increase is the contractual obligations for public safety
contracts.
The General Fund comprises 29 percent of the total fund balance. Approximately $3.7 million, or 51
percent of the General Fund’s fund balance constitutes unassigned fund balance. The remaining fund
balance is committed, assigned and nonspendable for inventory and prepaid items.
The General Fund is the principal operating fund of the Town; overall the General Fund’s performance
resulted in revenues over expenditures for FY12 in an amount of $0.9 million. The fund balance of $7.2
million in the General Fund as of June 30, 2012 decreased in the current year substantially due to a
transfer recorded in the General Fund to the Municipal Property Corporation (MPC) Debt Service Fund
to provide for future principal and interest requirements on an MPC Revenue Bond issued in 2005 to
construct Town Hall.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2012
(22)
The fund balance of the Capital Project’s Fund decreased $321,620 during the current fiscal year. The
decrease was primarily due to the planned use of capital project fund balance to fund pay as you go
projects that were committed through matching funds for grants.
The fund balance of the General Obligation Debt Service Fund increased $11,984 during the current
fiscal year. The increase was largely due to the increase in property tax collections for debt service.
The fund balance of the Municipal Property Corporation (MPC) Debt Service Fund increased
$1,848,205 during the current fiscal year. Revenues for the MPC are derived from local sales tax
collections which were consistent with the prior year. The annual debt payment committed for the MPC
is fixed but there are sufficient reserves to pay annual debt service. The increase in fund balance was
largely due to a transfer from the General Fund to the MPC Debt Service Fund to provide for future
principal and interest requirements on an MPC Revenue Bond issued in 2005 to construct Town Hall.
The fund balance of the Eagle Mountain Debt Service Fund increased by $3,612 during the current
fiscal year due to property tax revenues collected.
All nonmajor governmental funds of the Town are combined into one column on the governmental fund
statements. The nonmajor governmental funds reported a $127,731 decrease in fund balance mainly
due to the transfer of funds from General Government development fees to the defeasance of Town
Hall bonds.
BUDGETARY HIGHLIGHTS
A schedule showing the original and final budget amounts compared to the town’s actual financial
activity for the general fund is provided in this report as part of the basic financial statements. The
significant variances are summarized as follows:
The unfavorable revenue variance of $18,090 (less than 1%) in taxes is due to timing of projected
revenues versus actual receipt.
The favorable variance in intergovernmental revenues was a result of the state’s projection of state
sales and vehicle license taxes being less than actual collections which affects the distribution to cities
and towns.
The unfavorable revenue variance of $19,254 in licenses and permits reflects the continued economic
recession, particularly in construction related activities but an increase over the prior year. Building
permit revenues continue to decline as well as business license renewals and applications.
The unfavorable revenue variance of $56,810 in fines and forfeiture reflects decreased court activity
related to decreased traffic citations within town borders.
The favorable expenditure variance of $866,158 includes all departments. The staff has managed
expenditures and looked for efficiencies wherever possible. The general government variance is due
primarily to the appropriation of approximately $300,000 in the event the economy worsened during the
fiscal year; this contingency was not required.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2012
(23)
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
As of June 30, 2012, the Town had invested $192.8 million in capital assets (not including accumulated
depreciation), including buildings, vehicles, computers, equipment, infrastructure and artwork. This
amount represents a net increase prior to depreciation of $1.3 million from the prior fiscal year, primarily
due to a major road improvement project on Shea Boulevard that has completed construction. Total
depreciation expense for the current fiscal year was $4.9 million.
The following schedule presents a summary of capital asset balances for the fiscal years ended
June 30, 2012 and June 30, 2011.
2012 2011
Percent
Change
Land 23,571,668$ 23,571,668$ 0.0%
Artwork 1,829,500 1,688,500 8.4%
Construction in Progress 533,610 3,044,030 -82.5%
Infrastructure 58,772,006 57,986,232 1.4%
Buildings 14,550,487 14,911,290 -2.4%
Improvements other than Buildings 8,366,079 9,214,491 -9.2%
Vehicles, Machinery and Equipment 232,753 202,681 14.8%
Total Capital Assets 107,856,103$ 110,618,892$ -2.5%
Town of Fountain Hills, Arizona
Capital Assets
(Net of Accumulated Depreciation)
Additional information on the Town’s capital assets can be found in Note 3.A.3.
Long-Term Debt
At year-end, the Town had $13.9 million in bonds outstanding, $2.3 million due within one year; this
represents a net decrease of $2.0 million. The chart below is a summary of the Town’s outstanding
debt as of year-end:
2012 2011
General Obligation Bonds 6,845,000$ 7,965,000$
Revenue Bonds 7,040,000 7,885,000
Premium on Bonds - 74,409
Total Outstanding Debt 13,885,000$ 15,924,409$
Town of Fountain Hills, Arizona
Outstanding Long-term Bonds
The Town’s general obligation bonds are subject to two limits; the Constitutional debt limit (total debt
limit) on all general obligation bonds (up to 20% of the total secondary assessed valuation) and the
statutory debt limit on general municipal purpose bonds (up to 6% of the total secondary assessed
valuation). The current total debt limitation for the Town is $94.4 million, which is more than the Town’s
outstanding general obligation debt.
Additional information on the Town’s long-term debt can be found in Note 3.C.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2012
(24)
ECONOMIC FACTORS
The town continues to maintain strong reserves for unforeseen circumstances, whether of a financial
nature or a natural (or other) disaster. The town’s reserves, in combination with our consistent
adherence to adopted financial policies and management practices, proved big factors in the Aa3 credit
rating awarded to Fountain Hills by the major credit rating companies.
The housing market has cooled significantly (both nationally and regionally), indicating that the overall
economy may continue to experience slow growth in the year ahead. The town’s local housing
economy provides building permit and construction sales tax revenue, which have declined over the
past four fiscal years. With a limited inventory of available lots the town will have to adjust to the new
economy, one that is less dependent upon building activity as a source of reliable revenue. There is an
area of almost 1,300 acres that was annexed in 2006 that is planned to be developed but the first
building permit is not scheduled to be issued until 2015.
The town’s local sales tax collections, which represent the largest town revenue source is made up of
primarily retail, telecommunications and restaurant bar activity. Construction related sales tax are
projected to continue declining for the foreseeable future; retail collections, however, are projected to
remain steady due to the fact that the existing retail base is not significantly affected by the recession
(major retail activity consists of three grocery stores and one shopping center with a major retailer).
The town is heavily dependent upon state shared revenues for general fund operations (36%); state-
shared income tax revenues are anticipated to increase slightly during fiscal year 2012-13 with
increased individual and business revenues and state collections. The town is aggressively pursuing
economic vitality and redevelopment opportunities, specifically a proposed development in the
downtown center. The town partnered with the Fountain Hills Chamber of Commerce to commission a
vision for the downtown core including the world renowned Fountain Lake area. The plan was
presented to the public late summer of 2009 and serves as a useful tool to attract developers.
As of June 30, 2012 the town had set aside $9.3 million in the capital improvement funds but the
majority of capital projects will be deferred until the economy improves. The town has been successful
in obtaining stimulus funding for a major road improvement along Shea Boulevard that was completed
in FY11. The town completed a second construction project for another major road improvement on
Shea Boulevard with further stimulus funding in FY12.
NEXT YEAR’S BUDGETS AND RATES
The protracted economic recession has forced the town to evaluate core services and, in some cases,
to reduce existing service levels. Prudent long-term fiscal planning dictates that we remain
conservative, focus on the highest Council and citizen priorities, and fund only those enhancements we
can sustain financially.
The FY13 general fund operating budget is $14.8 million representing a 6% increase from fiscal year
2011-12. The operating budget is comprised of the costs to continue operations from year to year
without any capital expenditures. It encompasses all the basic services provided to Fountain Hills’
residents: police and fire protection; parks, recreation, streets maintenance; planning and zoning;
building inspection; economic development and administrative services. The capital budget is set at
$11.6 million, a 27% decrease over fiscal year 2011-12. There are some projects in the five-year plan
that are considered affordable within current revenue sources, others will require other sources of
revenue for funding such as bonds, grants, etc. Capital budgets tend to rise and fall each year
depending on the timing of projects – especially if a town, such as Fountain Hills, strives to achieve a
“pay-as-you-go” program.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2012
(25)
The capital improvement program (CIP) is the town’s financial plan for supporting large capital projects.
The five-year CIP addresses the growing needs of the community and enhances the quality of life
through major public investment, and is an essential ingredient in the town’s service delivery plan. The
CIP is closely aligned with the general plan, and integrates a number of specialized facility and
infrastructure master plans. Looking ahead, the five-year CIP totals $60.9 million; with the capital
budget for fiscal year 2012-13 totaling $4.3 million (which includes carryover funds for some large
projects currently underway). In fiscal year 2012-13, the CIP places major emphasis on major road
improvements and maintenance. Due to the economy there are no recreational or non essential
projects proposed.
CONTACTING THE TOWN’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, and investors and creditors with a
general overview of the Town’s finances and to demonstrate the Town’s accountability for the
resources it receives. If you have questions about this report or need additional information, contact the
Finance Division, Town of Fountain Hills, 16705 East Avenue of the Fountains, Fountain Hills, Arizona
85268.
Our website can be found at www.fh.az.gov.
BASIC FINANCIAL STATEMENTS
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF NET ASSETS
JUNE 30, 2012
See accompanying Notes to Basic Financial Statements.
(26)
Governmental
Activities
ASSETS
Cash and Investments 21,613,515$
Cash with Paying Agent 2,234,774
Receivables, Net:
Accounts Receivable 244,868
Intergovernmental Receivables 827,063
Property Taxes Receivable 49,450
Inventory, At Cost 9,332
Prepaid Items 33,719
Deferred Charges 852,633
Restricted Assets 2,804,592
Capital Assets:
Non-Depreciable 25,934,778
Depreciable (Net) 81,921,325
Total Assets 136,526,049
LIABILITIES
Accounts Payable 524,650
Accrued Wages and Benefits 123,542
Interest Payable 374,987
Unearned Revenue 267,874
Matured Debt Principal Payable 1,965,000
Noncurrent Liabilities:
Due Within One Year 2,319,551
Due in More Than One Year 11,928,659
Total Liabilities 17,504,263
NET ASSETS
Invested in Capital Assets, Net of Related Debt 92,006,103
Restricted For:
Highways and Streets 867,219
Public Safety 240,525
Capital Outlay 1,993,771
Debt Service 2,833,891
Cottonwoods Maintenance District 16,010
Unrestricted 21,064,267
Total Net Assets 119,021,786$
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2012
See accompanying Notes to Basic Financial Statements.
(27)
NET (EXPENSE)
REVENUE
Fees, Fines and Operating Capital
Charges for Grants and Grants and Governmental
FUNCTIONS/PROGRAMS EXPENSES Services Contributions Contributions Activities
Governmental Activities:
General Government 3,119,113$ 1,025,940$ -$ 234,281$ (1,858,892)$
Public Safety 5,820,136 20,323 119,141 - (5,680,672)
Highways and Streets 4,718,047 11,825 1,166,515 1,158,425 (2,381,282)
Culture and Recreation 2,754,731 - - - (2,754,731)
Development Services 1,442,613 - - - (1,442,613)
Interest on Long-Term Debt 779,576 - - - (779,576)
Total Governmental Activities $ 18,634,216 $ 1,058,088 $ 1,285,656 $ 1,392,706 (14,897,766)
GENERAL REVENUES
Taxes:
Sales Taxes 7,787,489
Property Taxes 1,453,405
Franchise Taxes 332,130
State Sales Tax Revenue Sharing - Unrestricted 3,793,385
Auto Lieu Tax Revenue Sharing - Unrestricted 722,126
Investment Earnings 88,877
Miscellaneous 178,393
Total General Revenues 14,355,805
Change in Net Assets (541,961)
Net Assets - Beginning 119,563,747
Net Assets - Ending 119,021,786$
PROGRAM REVENUES
AND CHANGES
IN NET ASSETS
TOWN OF FOUNTAIN HILLS, ARIZONA
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2012
See accompanying Notes to Basic Financial Statements.
(28)
Municipal
General Property
Capital Obligation Corporation
General Projects Debt Service Debt Service
ASSETS
Cash and Investments 6,711,553$ 9,596,239$ 42,289$ 83,351$
Cash with Paying Agent - - 928,656 958,625
Accounts Receivable 222,567 12,951 - -
Intergovernmental Receivable 553,065 115,380 - 32,765
Taxes Receivable - - 40,997 -
Inventory, at cost 9,332 - - -
Prepaid Items 28,245 - - -
Restricted Assets 75,484 - - 2,729,108
Total Assets 7,600,246$ 9,724,570$ 1,011,942$ 3,803,849$
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts Payable 231,569$ 212,402$ -$ 500$
Accrued Wages and Benefits 109,171 - - -
Interest Payable - - 88,656 218,838
Deferred Revenue 29,646 200,000 19,969 -
Matured Debt Principal Payable - - 840,000 845,000
Total Liabilities 370,386 412,402 948,625 1,064,338
Fund Balances:
Nonspendable
Cash with Escrow Agent - - - 2,623,895
Inventory 9,332 - - -
Prepaid Items 28,245 - - -
Restricted - - 63,317 115,616
Committed 1,345,200 - - -
Assigned 2,190,910 9,312,168 - -
Unassigned 3,656,173 - - -
Total Fund Balance 7,229,860 9,312,168 63,317 2,739,511
Total Liabilities and Fund Balance 7,600,246$ 9,724,570$ 1,011,942$ 3,803,849$
(29)
Eagle Nonmajor Total
Mountain Governmental Governmental
Debt Service Funds Funds
2,641$ 5,177,442$ 21,613,515$
347,493 - 2,234,774
- 9,350 244,868
- 125,853 827,063
8,453 - 49,450
- - 9,332
- 5,474 33,719
- - 2,804,592
358,587$ 5,318,119$ 27,817,313$
-$ 80,179$ 524,650$
- 14,371 123,542
67,493 - 374,987
2,150 65,986 317,751
280,000 - 1,965,000
349,643 160,536 3,305,930
- - 2,623,895
- - 9,332
- 5,474 33,719
8,944 3,112,549 3,300,426
- 2,039,560 3,384,760
- - 11,503,078
- - 3,656,173
8,944 5,157,583 24,511,383
358,587$ 5,318,119$ 27,817,313$
THIS PAGE BLANK
TOWN OF FOUNTAIN HILLS, ARIZONA
RECONCILIATION OF THE BALANCE SHEET
OF GOVERNMENTAL FUNDS TO THE
STATEMENT OF NET ASSETS
JUNE 30, 2012
See accompanying Notes to Basic Financial Statements.
(30)
Total Fund Balances for Governmental Funds 24,511,383$
Governmental Capital Assets 192,779,992
Less Accumulated Depreciation (84,923,889)
Capital Assets Used in Governmental Activities 107,856,103
Property Taxes 49,877
852,633
General Obligation Bonds (6,845,000)
Revenue Bonds Payable (7,040,000)
Compensated Absences (363,210)
Total Net Assets of Governmental Activities 119,021,786$
Long-term liabilities, including bonds payable and compensated absences, are not due
and payable in the current period and therefore are not reported in the governmental
funds.
Capital assets used in governmental activities are not financial resources and therefore
are not reported in the governmental funds.
Amounts reported for governmental activities in the Statement of Net Assets are different
because:
Some revenues are not available to pay for current period expenditures and, therefore,
are deferred in the funds.
Bond issuance costs are reported as expenditures in the governmental funds and shown
net of accumulated amortization in the Statement of Net Assets as deferred charges.
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCES
GOVERNMENTAL FUNDS
FISCAL YEAR ENDED JUNE 30, 2012
See accompanying Notes to Basic Financial Statements.
(31)
Municipal
General Property
Capital Obligation Corporation
General Projects Debt Service Debt Service
REVENUES
Taxes:
Sales Taxes 6,579,468$ 300,202$ -$ 605,213$
Property Taxes - - 1,029,242 -
Franchise Taxes 332,130 - - -
Intergovernmental 4,496,652 204,262 - -
Fines and Forfeitures 203,350 - - -
Licenses and Permits 194,976 - - -
Charges for Services 353,718 - - -
Rents and Royalties 206,018 - - -
Investment Earnings 38,493 30,713 305 588
Other 173,839 - - -
Total Revenues 12,578,644 535,177 1,029,547 605,801
EXPENDITURES
Current:
General Government 2,631,726 - - -
Public Safety 5,869,445 - - -
Highways and Streets - - - -
Culture and Recreation 1,794,332 - - -
Development Services 1,421,787 - - -
Debt Service:
Principal Retirement - - 840,000 845,000
Interest on Long-Term Debt - - 177,563 327,312
Fiscal Charges - - - 48,402
Capital Outlay - 863,420 - -
Total Expenditures 11,717,290 863,420 1,017,563 1,220,714
Excess (Deficiency) of Revenues Over
Expenditures 861,354 (328,243) 11,984 (614,913)
OTHER FINANCING SOURCES (USES)
Transfers In - 6,623 - 2,463,118
Transfers Out (1,937,460) - - -
Total Other Financing Sources (Uses) (1,937,460) 6,623 - 2,463,118
Net Change in Fund Balance (1,076,106) (321,620) 11,984 1,848,205
FUND BALANCE
Beginning of Year 8,305,966 9,633,788 51,333 891,306
End of Year 7,229,860$ 9,312,168$ 63,317$ 2,739,511$
(32)
Eagle Nonmajor Total
Mountain Governmental Governmental
Debt Service Funds Funds
-$ 302,606$ 7,787,489$
425,125 3,335 1,457,702
- - 332,130
- 1,334,534 6,035,448
- 20,323 223,673
- - 194,976
- 51,945 405,663
- - 206,018
97 18,681 88,877
- 4,554 178,393
425,222 1,735,978 16,910,369
- 255,595 2,887,321
- - 5,869,445
- 1,054,930 1,054,930
- - 1,794,332
- - 1,421,787
280,000 - 1,965,000
134,260 - 639,135
7,350 - 55,752
- 20,903 884,323
421,610 1,331,428 16,572,025
3,612 404,550 338,344
- 286 2,470,027
- (532,567) (2,470,027)
- (532,281) -
3,612 (127,731) 338,344
5,332 5,285,314 24,173,039
8,944$ 5,157,583$ 24,511,383$
TOWN OF FOUNTAIN HILLS, ARIZONA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGE IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2012
See accompanying Notes to Basic Financial Statements.
(33)
Net Change in Fund Balances of Governmental Funds 338,344$
Expenditures for Capital Assets 1,333,785
Less Current Year Depreciation (4,865,600)
Excess Depreciation Over Capital Expenditures (3,531,815)
Loss on Disposal of Capital Assets (389,399)
Capital Contributions 1,158,425
Property Taxes 23,461
Principal Payments on General Obligation Bonds 1,120,000
Principal Payments on Revenue Bonds 845,000
Amortization of Deferred Amount on Bond Premium 74,409
Amortization of Deferred Charges (159,098)
Net Increase in Compensated Absences (21,288)
Change in Net Assets of Governmental Activities (541,961)$
Amounts reported for governmental activities in the Statement of Activities are different
because:
Governmental funds report capital outlays as expenditures. However, in the Statement of
Activities the cost of those assets is allocated over their estimated useful lives and
reported as depreciation expense.
Some expenses reported in the Statement of Activities do not require the use of current
financial resources and therefore are not reported as expenditures in the governmental
Some revenues reported in the Statement of Activities do not provide current financial
resources and therefore are not reported as revenues in governmental funds.
The Statement of Activities reports losses arising from the disposal of existing capital
assets as well as capital contributions received from other governments. Conversely,
governmental funds do not report any gain or loss on disposals of capital assets or capital
contributions.
The issuance of long-term debt (e.g. bonds) provides current financial resources to
governmental funds, while the repayment of the principal of long-term debt consumes the
current financial resources of governmental funds. Neither transaction, however, has any
effect on net assets. The issuance of long-term debt increases long-term liabilities on the
Statement of Net Assets and the repayment of principal on long-term debt reduces long-
term debt on the Statement of Net Assets. Also, governmental funds report the effect of
issuance costs, premiums, and similar items when the debt is first issued, whereas these
items are deferred and amortized over the term of the long term debt in the Statement of
Activities.
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
GENERAL FUND
FISCAL YEAR ENDED JUNE 30, 2012
See accompanying Notes to Basic Financial Statements.
(34)
Variance with
Original Budget Final Budget Actual Final Budget
REVENUES
Taxes:
Sales Taxes 6,626,688$ 6,626,688$ 6,579,468$ (47,220)$
Franchise Taxes 303,000 303,000 332,130 29,130
Intergovernmental 4,482,270 4,482,270 4,496,652 14,382
Fines and Forfeitures 260,160 260,160 203,350 (56,810)
Licenses and Permits 214,230 214,230 194,976 (19,254)
Charges for Services 443,407 443,407 353,718 (89,689)
Rents and Royalties 233,028 233,028 206,018 (27,010)
Investment Earnings 60,000 60,000 38,493 (21,507)
Other 22,696 22,696 173,839 151,143
Total Revenues 12,645,479 12,645,479 12,578,644 (66,835)
EXPENDITURES
Current:
General Government:
Mayor and Council 75,745 75,745 68,445 7,300
Administration 2,309,411 2,395,911 2,177,349 218,562
Municipal Court 432,844 432,844 385,932 46,912
Total General Government 2,818,000 2,904,500 2,631,726 272,774
Public Safety:
Law Enforcement 2,899,522 2,899,522 2,828,127 71,395
Fire and Emergency Medical 3,156,212 3,156,212 3,041,318 114,894
Total Public Safety 6,055,734 6,055,734 5,869,445 186,289
Community Services:
Recreation 475,372 485,372 440,850 44,522
Parks 1,053,893 1,053,594 920,582 133,012
Senior Services 239,322 252,822 222,328 30,494
Community Center 231,685 231,685 210,572 21,113
Total Community Services 2,000,272 2,023,473 1,794,332 229,141
Development Services:
Engineering 501,191 489,051 455,309 33,742
Facilities Maintenance 491,627 498,127 459,874 38,253
Planning 172,029 172,029 183,874 (11,845)
Building Safety 234,687 234,687 127,265 107,422
Code Compliance 125,852 125,852 123,597 2,255
Mapping and Graphics 74,355 79,995 71,868 8,127
Total Development Services 1,599,741 1,599,741 1,421,787 177,954
Total Expenditures 12,473,747 12,583,448 11,717,290 866,158
Excess (Deficiency) of Revenues Over
Expenditures 171,732 62,031 861,354 799,323
OTHER FINANCING SOURCES (USES)
Transfers Out (194,250) (184,550) (1,937,460) (1,752,910)
Net Change in Fund Balance (22,518) (122,519) (1,076,106) (953,587)
FUND BALANCE
Beginning of Year - - 8,305,966 8,305,966
End of Year (22,518)$ (122,519)$ 7,229,860$ 7,352,379$
THIS PAGE BLANK
NOTES TO BASIC FINANCIAL STATEMENTS
THIS PAGE BLANK
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(35)
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 is a municipal entity governed by an elected Mayor and Council. As required
by accounting principles generally accepted in the United States of America, these
financial statements present the Town and its component units, entities for which the
Town is considered to be financially accountable. Blended component units, although
legally separate entities, are, in substance, part of the Town’s operations and so data
from these units are combined with data of the Town, the primary government.
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,
component units combined with the Town for financial statement presentation purposes
and the Town is 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 Improvement
District. As special purpose districts and separate political subdivisions under the
Arizona Constitution, the districts can levy taxes and issue bonds independently of the
Town. Property owners in the designated areas are assessed for Town taxes, and thus
for the costs of operating the districts. The Town Council serves as the Board of
Directors; however, the District has no liability for the districts’ debt, the Town is
responsible for the debt; the debt is therefore, not subject to the Town’s debt limit;
therefore, providing a financial benefit to the Town. For financial reporting purposes,
transactions of the Districts are combined together and included as if they were part of
the Town’s operations.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(36)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. Reporting Entity (Continued)
Town of Fountain Hills, Arizona Municipal Property Corporation. The Town of Fountain
Hills, Arizona Municipal Property Corporation’s (MPC) Board of Directors consists of
three members which are appointed by the Fountain Hills Town Council. The MPC,
which is a nonprofit corporation incorporated under the laws of the State of Arizona,
was formed for the sole purpose of assisting the Town in obtaining financing for various
projects of the Town. The Town has a “moral obligation” for the repayment of the MPC’s
bonds. For financial reporting purposes, transactions of the MPC are combined together
and included as if they were part of the Town’s operations.
B. Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the Statement of Net Assets and the
Statement of Activities) present financial information about the Town as a whole. For
the most part, the effect of internal activity has been removed from these statements.
These statements are to distinguish between the governmental and business-type
activities of the Town. Governmental activities normally are supported by taxes and
intergovernmental revenues. The Town does not have any business-type activities.
The Statement of Activities demonstrates the degree to which the direct expenses of a
given function or segment are offset by program revenues. Direct expenses are those
that are clearly identifiable with a specific function or segment. Program revenues
include 1) charges to customers or applicants who purchase, use, or directly benefit
from goods, services, or privileges provided by a given function or segment and
2) grants and contributions that are restricted to meeting the operational or capital
requirements of a particular function or segment. Taxes, state shared revenues,
investment earnings and other items not included among program revenues are
reported instead as general revenues.
Separate financial statements are provided for governmental funds. Major individual
governmental funds are reported as separate columns in the fund financial statements.
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
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. Property taxes are recognized as revenues in the year for which
they are levied. Grants and similar items are recognized as revenue as soon as all
eligibility requirements imposed by the 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.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(37)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
(Continued)
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 resources are provided during the current year for
payment of long-term debt principal and interest due early in the following year (not to
exceed one month) and therefore the expenditures and related liabilities have been
recognized. Compensated absences are recorded only when payment is due.
Property taxes, sales taxes, franchise taxes, licenses and permits, charges for services,
special assessments 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. Miscellaneous revenue is not susceptible to accrual because
generally they are not measurable until received in cash. Grants and similar awards are
recognized as revenue as soon as all eligibility requirements imposed by the grantor or
provider have been met. Deferred 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.
Delinquent property taxes have been recorded as deferred revenue. Receivables that
will not be collected within the available period have also been reported as deferred
revenue on the governmental fund financial statements.
When both restricted and unrestricted resources are available for use, it is the Town’s
policy to use restricted resources first, then unrestricted resources as they are needed.
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. Non-major
funds are aggregated and presented in a single column.
The Town reports the following major governmental funds.
Major Governmental Funds
General Fund
This fund is the Town’s primary operating fund. The Fund accounts for all financial
resources of the Town, except those required to be accounted for in other funds.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(38)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
(Continued)
Capital Projects Fund
This fund accounts for the capital improvements to various projects and equipment
purchases of 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 received to pay the debt service of the
Eagle Mountain Community Facilities District component unit.
D. Assets, Liabilities, and Net Assets or Fund Balance
1. Deposits and Investments
The Town’s cash and cash equivalents are considered to be cash on hand, demand
deposits, cash and investments held by the State Treasurer, and highly liquid
investments with maturities of three months or less from the date of acquisition.
Cash and investments are pooled except for funds required to be held by fiscal
agents or restricted under provisions of bond indentures. Interest earned from
investments purchased with such pooled monies is allocated to each of the funds
based on the average daily cash balances. State statutes authorize the Town to
invest in obligations of the U.S. Treasury and U.S. agencies, certificates of deposit
in eligible depositories, repurchase agreements, obligations of the State of Arizona
or any of its counties or incorporated cities, towns or duly organized school districts,
improvement districts in this state and the State Treasurer’s Local Government
Investment Pool. Investments are stated at fair value.
2. Receivables 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). All other outstanding balances
between funds are reported as “due to/from other funds.”
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(39)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, and Net Assets or Fund Balance (Continued)
2. Receivables and Payables (Continued)
All trade and property tax receivables are shown net of an allowance for
uncollectibles.
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.
Pursuant to Arizona Revised Statutes (A.R.S.) a lien against assessed real and
personal property attaches on the first day of January preceding assessment and
levy; however according to case law, an enforceable legal claim to the asset does
not arise. The State Constitution and State law specify a property tax levy limitation
system. The system consists of two levies, a limited levy known as the primary
property tax levy and an unlimited levy referred to as the secondary levy, which may
only be used to retire bonded indebtedness.
The primary tax levy is limited to an increase of 2 percent over the previous year’s
maximum allowable primary levy, plus an increased dollar amount because of a net
gain in property not taxed the previous year. Also, the primary property tax from all
taxing jurisdictions for homeowners may not exceed 1 percent of the market value
of their homes. If the combined primary property tax (for the Town, County, School
District, etc.) exceeds 1 percent of the market value of the homes, the school
districts will reduce their rate until the homeowners’ aggregate rate is equal to or
less than the allowable 1 percent. The State will then subsidize the school districts
for the reduced revenue. This 1 percent limitation applies to primary property taxes
only and does not affect the secondary property tax levy.
There is also a control on the assessed value of property for primary tax purposes.
The base year for the new tax system is fiscal year 1978-79. From this base year,
two assessed values evolve. The primary assessed values are allowed to increase
by no more than 10 percent a year. The dollar amount of the secondary property tax
levy is “unlimited” and the actual full cash value of property is used in determining
the tax rate.
Intergovernmental receivables include amounts due from other government
agencies and include Town sales tax ($425,945), Highway User Revenue fuel tax
($109,471), state sales tax ($149,234), auto lieu ($27,033) and grants receivable
($115,380) in the governmental funds and governmental activities column of the
government-wide financial statements.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(40)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, and Net Assets or Fund Balance (Continued)
3. Inventory
Inventories are stated 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 on the fund financial statements.
4. 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.
5. Restricted Assets
The Town reported restricted assets in the amount of $75,484 for funds held in an
escrow account. The agreement provides that if, prior to July 1, 2014, any future
Council fails to ratify this agreement or fails to provide severance when required as
set forth in the agreement between the Town Council and Town Manager, the Town
Manager shall be permitted to withdraw all funds from the escrow, minus any
interest earned, which interest shall be payable to the Town upon the Town
Manager’s withdrawal of the amounts in escrow. The Town also has $2,729,108
deposited in an irrevocable trust with an escrow agent to make future principal and
interest payments on the 2004 Municipal Property Corporation Revenue Bond.
6. Capital Assets
Capital assets, which include land, artwork, buildings, improvements other than
buildings, vehicles, machinery, and equipment, construction in progress, and
infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are
reported in the governmental activities column in the government-wide financial
statements. Capital assets are defined by the Town as assets with an initial,
individual cost of $10,000 or more and an estimated useful life of more than one
year. The capital assets include all infrastructure assets acquired by the Town since
incorporation.
Such assets are recorded at historical cost or estimated historical cost if actual
historical cost is not available. Donated capital assets are recorded at estimated fair
market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the
asset or materially extend the life of the asset are not capitalized. Major outlays for
capital assets and improvements are capitalized as projects are constructed.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(41)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, and Net Assets or Fund Balance (Continued)
6. Capital Assets (Continued)
Capital assets of the Town are depreciated using the straight-line method over the
following estimated useful lives:
Assets Years
Infrastructure 15-50
Buildings 50
Improvements other than buildings 20
Vehicles, machinery and equipment 5-20
7. 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 vest
after 30 days at the employee’s then current rate of pay.
Effective October 7, 2004, all eligible full-time and part-time employees can accrue
vacation leave. Full-time employees can accrue up to a maximum of 224 hours of
vacation, while part-time employees can accrue up to 112 ours, depending upon
their length of service. In the event of termination, employees will be paid for any
accrued, but unused, vacation hours. Also effective October 7, 2004, full-time
employees started to accrue sick leave, based on their length of service, up to a
maximum of 720 hours. A portion of this balance will be paid upon a satisfactory
separation of service.
The current and long-term liabilities, including related benefits, for accumulated
vacation and sick leave are reported on the government-wide financial statements.
A liability for these amounts is reported in governmental funds only if they have
matured, for example, as a result of employee leave, resignations and retirements.
Generally, resources from the General Fund are used to pay for compensated
absences.
8. 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 Assets. Bond
premiums and discounts, as well as issuance costs and the difference between the
reacquisition price and the net carrying amount of the old debt, are deferred and
amortized over the life of the bonds using the straight-line method over the term of
the related debt.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(42)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, and Net Assets or Fund Balance (Continued)
8. Long-term Obligations (Continued)
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 of 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.
9. Net Assets
In the government-wide financial statements, net assets are reported in three
categories: net assets invested in capital assets, net of related debt; restricted net
assets; and unrestricted net assets. Net assets invested in capital assets, net of
related debt is separately reported because capital assets make up a significant
portion of total net assets. Restricted net assets account for the portion of net
assets restricted by parties outside the Town. Unrestricted net assets are the
remaining net assets not included in the previous two categories.
10. 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.
The nonspendable fund balance classification includes amounts that cannot be
spent because they are either not in spendable form such as inventories and
prepaid items, or are legally or contractually required to be maintained intact.
Restricted fund balances are those that have externally imposed restrictions on their
usage by creditors (such as through debt covenants), grantors, contributors, or laws
and regulations. Committed fund balances are self-imposed limitations approved by
the Town’s Council, which is the highest level of decision-making authority within
the Town. Only the Town Council can remove or change the constraints placed on
committed fund balances. Assigned fund balances are resources constrained by the
Town’s intent to be used for specific purposes, but are neither restricted nor
committed. The Town Council has authorized the Deputy Town Manager/Finance
Director to assign fund balances. The unassigned fund balance is the residual
classification for the General Fund and includes all amounts not reported in the
other classifications.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(43)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, and Net Assets or Fund Balance (Continued)
10. Fund Balance Classifications (Continued)
Also, deficits in fund balances of the other governmental funds are reported as
unassigned.
It is the Town’s policy to use restricted fund balance first, then committed, assigned,
and lastly unassigned amounts.
11. 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 statements
are reported as other financing sources/uses in governmental funds.
12. 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 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary information
The Town Council follows these procedures in establishing the budgetary data reflected
in the financial statements:
1. In accordance with Arizona Revised Statutes, the Town Manager submits a
proposed budget for the fiscal year commencing the following July 1 to the Town
Council. The operating budget includes proposed expenditures and the means of
financing them for the upcoming year.
2. Public hearings are conducted to obtain taxpayer comment.
3. Prior to the third Monday in August, the expenditure limitation for the Town is
legally enacted through passage of an ordinance. 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).
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(44)
NOTE 2 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (CONTINUED)
A. Budgetary information (Continued)
4. Expenditures may not legally exceed the expenditure limitation described below for
all fund types as a whole. For management purposes, the Town adopts a budget
by department for the General Fund and in total by fund for other funds. The Town
Manager, subject to Town Council approval, may at any time transfer any
unencumbered appropriation balance or portion thereof between a department or
activity. The adopted budget cannot be amended in any way without Town Council
approval.
5. Formal budgetary integration is employed as a management control device during
the year for the General, Special Revenue, Debt Service, and Capital Projects
Funds (except for the HURF Debt Service and Cottonwoods Special Assessment
Funds, in which the Town did not adopt a budget) 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.
No supplementary budgetary appropriations were necessary during the year.
B. Excess of Expenditures Over Appropriations
Expenditures exceeded appropriations in the following funds:
Amount of
Overexpenditure
Major Funds:
Municipal Property Corporation Debt Service Fund 141,464$
Cash was available to cover the over expenditures listed above.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(45)
NOTE 3 DETAILED NOTES ON ALL FUNDS
A. Assets
1. Deposits and Investments
Deposits and investments at June 30, 2012, consist of the following:
Deposits:
Cash on Hand 1,050$
Cash in Bank 493,672
Cash on Deposit with Paying Agent 2,234,774
Investments
State Treasurer's Investment Pool 6,079,307
Wells Fargo Money Market 59,906
U.S. Agency Securities 8,157,709
U.S. Treasury Notes 6,821,871
Total 23,848,289
Less Cash with Paying Agent (2,234,774)
Total Cash and Investments 21,613,515$
Deposits
The Town’s deposits at June 30, 2012, had a carrying value of $493,672 and a bank
balance of $560,720. The entire bank balance of the Town was deposited in non-
interest bearing accounts or low-interest bearing accounts that were fully insured by
federal depository insurance.
Investments
The Town’s investments at June 30, 2012 were as follows:
Investment Type Amount
Local Government Investment Pool 6,079,307$
Wells Fargo Money Market 59,906
U.S. Agency Securities 8,157,709
U.S. Treasury Notes 6,821,871
21,118,793$
Credit Risk – Credit risk is the risk that an issuer or counterparty to an investment
will not fulfill its obligations. The Town will limit credit risk by limiting investments in
the Town’s portfolio to the asset classes designated as acceptable in A.R.S 835-
323. When possible, analysis of the credit worthiness of all individual debt issuers
held in the portfolio should be conducted on an annual basis in an effort to guard
against investing in weak or deteriorating credit situation. Additionally, the Town will
pre-qualify financial institutions, brokers/dealers, and investment advisors with which
the Town will do business.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(46)
NOTE 4 DETAILED NOTES ON ALL FUNDS (CONTINUED)
A. Assets (Continued)
1. Deposits and Investments (Continued)
At June 30, 2012, credit risk for the Town’s investments was as follows:
Investment Type Rating Agency Amount
Local Government Investment Pool N/A N/A 6,079,307$
Wells Fargo Money Market N/A N/A 59,906
U.S. Agency Securities AA+ S&P 8,157,709
U.S. Treasury Notes N/A N/A 6,821,871
21,118,793$
Custodial credit risk – Concentration credit risk is the risk of loss associated with the
significant of investments in a single issuer. The Town of Fountain Hills will diversify
its investments by security type and institution. With the exception of U.S. Treasury
securities and authorized pools, no more than 25% of the Town’s total investment
portfolio will be invested in a single security type or with a single financial institution.
At June 30, 2012, the Town had the following diversification of Town investments:
Percent of
Town
Investment Type Amount Investments
Local Government Investment Pool 6,079,307$ 28.79%
Wells Fargo Money Market 59,906 0.28%
U.S. Agency Securities 8,157,709 38.63%
U.S. Treasury Notes 6,821,871 32.30%
21,118,793$
Interest rate risk – Interest rate risk is the risk that changes in interest rates will
adversely affect an investment’s fair value. The Town will look to mitigate interest
rate risk by performing 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.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(47)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
A. Assets (Continued)
1. Deposits and Investments (Continued)
The following is a table of the Town’s investment maturities:
Investment 0-6 Months 6-12 Months 12+ Months Total
Local Government Investment Pool 6,079,307$ -$ -$ 6,079,307$
Wells Fargo Advantage Money Market 59,906 - - 59,906
Federal Farm Credit Bank Notes - 655,661 - 655,661
Federal Home Loan Bank Global Notes - - 1,772,022 1,772,022
Federal Home Loan Mortgage Corp. Notes - - 2,723,139 2,723,139
Federal National Mortgage Association Notes - - 3,006,887 3,006,887
U.S. Treasury Notes - - 6,821,871 6,821,871
Total 6,139,213$ 655,661$ 14,323,919$ 21,118,793$
Maturity
2. Receivables
Governmental funds report deferred revenue in connection with receivables for
revenues that are not considered to be available to liquidate liabilities of the current
period. Governmental funds also defer revenue recognition in connection with
resources that have been received, but not yet earned. At the end of the current
fiscal year, the various components of deferred revenue reported in the
governmental funds were as follows:
Unavailable Unearned
General Fund
Miscellaneous 27,758$ 1,888$
Capital Projects Fund
Miscellaneous - 200,000
General Obligation Debt Service Fund
Property Taxes 19,969 -
Eagle Mountain Debt Service Fund -
Property Taxes 2,150 -
Nonmajor Governmental Funds
Grants - 65,986
Total Deferred Revenue for Governmental Funds 49,877$ 267,874$
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(48)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
A. Assets (Continued)
3. Capital Assets
Capital assets for the year ended June 30, 2012, were as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental Activities:
Capital Assets, Not Being Depreciated:
Land 23,571,668$ -$ -$ 23,571,668$
Artwork 1,688,500 141,000 - 1,829,500
Construction in Progress 3,044,030 1,943,110 (4,453,530) 533,610
Total Capital Assets, Not Being
Depreciated 28,304,198 2,084,110 (4,453,530) 25,934,778
Capital Assets, Being Depreciated:
Infrastructure 126,447,432 4,341,081 - 130,788,513
Buildings 18,008,744 - - 18,008,744
Improvements Other Than Buildings 15,022,357 264,128 (647,221) 14,639,264
Vehicles, Machinery and Equipment 3,666,890 256,421 (514,618) 3,408,693
Total Capital Assets, Being
Depreciated 163,145,423 4,861,630 (1,161,839) 166,845,214
Accumulated Depreciation for:
Infrastructure (68,461,200) (3,555,307) - (72,016,507)
Buildings (3,097,454) (360,803) - (3,458,257)
Improvements Other Than Buildings (5,807,866) (731,963) 266,644 (6,273,185)
Vehicles, Machinery and Equipment (3,464,209) (217,527) 505,796 (3,175,940)
Total Accumulated Depreciation (80,830,729) (4,865,600) 772,440 (84,923,889)
Total Capital Assets, Being
Depreciated, Net 82,314,694 (3,970) (389,399) 81,921,325
Governmental Activities Capital
Assets, Net 110,618,892$ 2,080,140$ (4,842,929)$ 107,856,103$
Depreciation expense was charged to functions/programs as follows:
Governmental Activities:
General Government 211,426$
Public Safety 74,873
Highways and Streets 3,676,530
Culture and Recreation 902,771
Total Depreciation Expense 4,865,600$
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(49)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
B. Interfund Transfers
Interfund transfers for the year ended June 30, 2012, consisted of the following:
Municipal
Property
Capital Corporation Nonmajor
Projects Debt Service Governmental
Transfers Out Fund Fund Fund Total
General Fund -$ 1,937,174$ 286$ 1,937,460$
Nonmajor Governmental Funds 6,623 525,944 - 532,567
Total 6,623$ 2,463,118$ 286$ 2,470,027$
Transfers In
The General Fund transferred $1,937,174 to pay for debt service costs on the Municipal
Property Corporation’s outstanding bonds. The General Fund transferred $286 to the
Nonmajor Governmental Fund to provide the matching portion of a transportation grant
the Town received. The Nonmajor Governmental Funds transferred $6,623 to the
Capital Projects Fund to pay for a portion of a capital acquisition. The Nonmajor
Governmental Funds also transferred $525,944 to the Municipal Property Corporation
Debt Service Fund to pay for debt service costs on the outstanding bonds.
C. Long-Term Obligations
Bonds payable at year end consisted of the following general obligation, municipal
property corporation and community facilities district bonds. The bonds are both callable
and noncallable with the interest payable semiannually. Property taxes from the
General Obligation Bond Debt Service Fund and Eagle Mountain Debt Service Fund
are used to pay general obligation and community facilities district bonds. State shared
revenues from the HURF Fund are used to pay street and highway user bonds. Tax
revenues from the General Fund and Excise Tax Fund are used to pay municipal
facilities bonds.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(50)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
C. Long-Term Obligations (Continued)
Bonds outstanding at June 30, 2012 were as follows:
Interest Maturity Original Outstanding
Purpose Rates Date Amount Amount
Governmental Activities:
General Obligation Bonds:
General Obligation Refunding
Bonds, Series 2005 3.75-4.00 07/01/12-19
$ 7,225,000 $ 3,755,000
Eagle Mountain Community
Facilities District, General Obligation
Refunding Bonds, Series 2005 3.75-4.125 7/1/2012-21
4,555,000 3,090,000
Total General Obligation Bonds $ 11,780,000 $ 6,845,000
Revenue Bonds:
Municipal Facilities Revenue Bonds,
Series 2001 4.40-4.50 7/01/12-13
7,750,000 400,000
Municipal Facilities Revenue Bonds,
Series 2004 4.00-4.50 7/01/12-15
3,645,000 2,410,000
Municipal Facilities Revenue
Refunding Bonds, Series 2005 3.75-4.50 7/01/12-20
5,330,000 4,230,000
Total Revenue Bonds $ 21,405,000 $ 7,040,000
The Town has pledged future excise taxes to repay a total of $7,040,000 in outstanding
municipal facilities revenue and refunding bonds. For fiscal year ended June 30, 2012,
the net revenues available to service this debt were $13.1 million. The debt principal
and interest paid on this debt in fiscal year 2011-12 was $845,000 and $332,463,
respectively (11 percent of available pledged revenues).
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(51)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
C. Long-Term Obligations (Continued)
Changes in long-term obligations for the year ended June 30, 2012, are as follows:
Due Within
July 1, 2011 Increases Decreases June 29, 2012 One Year
Governmental Activities
Bonds
General Obligation Bonds 7,965,000$ -$ (1,120,000)$ 6,845,000$ 1,350,000$
Revenue Bonds 7,885,000 - (845,000) 7,040,000 930,000
15,850,000 - (1,965,000) 13,885,000 2,280,000
Deferred Amounts:
Premium 74,409 - (74,409) - -
Total Bonds 15,924,409 - (2,039,409) 13,885,000 2,280,000
Other Liabilities:
Compensated Absences 341,922 284,065 (262,777) 363,210 39,551
Governmental Activities
Long-Term Liabilities 16,266,331$ 284,065$ (2,302,186)$ 14,248,210$ 2,319,551$
Debt service requirements on long-term debt at June 30, 2012, are as follows:
Principal Interest
2013 2,280,000$ 565,506$
2014 2,415,000 470,431
2015 1,970,000 375,106
2016 2,830,000 233,806
2017 1,120,000 186,406
2018 - 2021
3,270,000 302,758
13,885,000$ 2,150,513$
Governmental Activities
Year Ending June 30,
In prior years, the Town defeased certain general obligation and other bonds by placing
the proceeds of new bonds in an irrevocable trust to provide for all future debt service
payments on the defeased bonds. Accordingly, the trust account assets and the liability
for the defeased bonds are not included in the Town’s financial statements. At year end,
$6,385,000 of defeased bonds are still outstanding.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(52)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
D. Fund Balances
Fund Balances at June 30, 2012 were as follows:
Municipal
General Property Eagle Nonmajor
Capital Obligation Corporation Mountain Governmental
General Projects Debt Service Debt Service Debt Service Funds Total
Nonspendable:
Cash with Escrow Agent -$ -$ -$ 2,623,895$ -$ -$ 2,623,895$
Inventory 9,332 - - - - - 9,332
Prepaids 28,245 - - - - 5,474 33,719
Restricted:
Debt Service - - 63,317 115,616 8,944 - 187,877
Highways and Streets - - - - - 862,243 862,243
Local Court Enhancement - - - - - 240,525 240,525
New Development - - - - - 1,993,771 1,993,771
Cottonwoods Maintenance
District - - - - - 16,010 16,010
Committed
Rainy Day Funds 1,345,200 - - - - - 1,345,200
Excise Tax - - - - - 2,039,560 2,039,560
Assigned
Public Art 1,051 - - - - - 1,051
Vehicle Replacement 689,199 - - - - - 689,199
Capital Projects 600,264 9,312,168 - - - - 9,912,432
Equipment Replacement 900,396 - - - - - 900,396
Unassigned 3,656,173 - - - - - 3,656,173
Total Fund Balance 7,229,860$ 9,312,168$ 63,317$ 2,739,511$ 8,944$ 5,157,583$ 24,511,383$
NOTE 4 OTHER INFORMATION
A. Contingent Liabilities
Lawsuits
The Town is a defendant in various lawsuits. Although the outcome of these lawsuits is
not presently determinable, in the opinion of the Town’s legal counsel, the resolution of
these matters will not have a material adverse effect on the financial condition of the
Town.
B. 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, of which
the Town is a participating member. The limit for basic coverage is for $2,000,000 per
occurrence on a claims made basis. Excess coverage is for an additional $8,000,000
per occurrence on a follow form, claims made basis. No significant reduction in
insurance coverage occurred during the year, and no settlements exceeded insurance
coverage during any of the past three fiscal years.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2012
(53)
NOTE 4 OTHER INFORMATION (COTINUED)
B. Risk Management (Continued)
The Town was unable to obtain workers’ compensation insurance at a cost considered
to be economically justifiable. Therefore, the Town joined the Arizona Municipal
Workers’ Compensation Pool (AMWCP). AMWCP is a public entity risk pool currently
operating as a common workers’ compensation insurance program for 67 member cities
and towns. The Town is responsible for paying a premium, based on an experience
rating formula that allocates pool expenditures and liabilities among members.
C. Retirement Plans
Defined Contribution Pension Plan
All full-time employees of the Town participate in a defined contribution pension plan
administered by the ICMA Retirement Corporation as a 401(a) plan. The payroll for the
Town employees covered by this plan for the year ended June 30, 2012, was
$2,549,322. The Town’s total payroll was $2,871,172.
A defined contribution pension plan provides benefits in return for services rendered,
provides an individual account for each participant, and specifies how contributions to
the individual’s account are to be determined, instead of specifying the amount of
benefit the individual is to receive. Under a defined contribution pension plan, the
benefits a participant will receive depend solely on the amount contributed to the
participant’s account, the returns earned on investment of those contributions, and
forfeitures of other participants’ benefits that may be allocated to such participant’s
account. All non-peace officer full-time Town employees must participate in the pension
plan from the date they are hired. Contributions made by an employee vest immediately
and contributions made by the Town vest after three years of service.
An employee that leaves the employment of the Town is entitled to his or her
contributions and the vested portion of the Town’s contributions, plus interest earned.
Each employee must contribute 11% of his or her gross earnings. The Town must
match the employee contribution of 11%. During fiscal year 2011-12, the Town’s
required and actual contributions amounted to $280,425. The employees’ contributions
totaled $280,425. Employees may also contribute to the lCMA Retirement Corporation
457 plan on a voluntary basis; there is no employer match for those contributions.
During fiscal year 2011-12, employees contributed $158,829 to that plan.
No pension provision changes occurred during the year that affected the required
contributions to be made by the Town or its employees.
The ICMA Retirement Corporation held no securities of the Town or other related
parties during the fiscal year 2011-12 or as of the close of the fiscal year.
THIS PAGE BLANK
COMBINING AND INDIVIDUAL FUND
STATEMENTS AND SCHEDULES
THIS PAGE BLANK
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
HURF Fund - accounts for the Town’s share of motor fuel tax revenues and lottery proceeds.
Development Fees Fund - accounts for development fees collected from developers restricted for
projects approved by the Town Council.
Local Court Enhancement Fund - accounts for a local court surcharge.
Grants Fund - accounts for the activities of various grants and contributions received by the Town.
Excise Tax Fund - accounts for the portion of Town sales tax reserved by the Town Council for special
projects including Town beautification and economic development.
Cottonwoods Special Assessment Fund - accounts for all special assessments received to pay for
maintenance of the Cottonwoods Special Assessment District.
TOWN OF FOUNTAIN HILLS, ARIZONA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
JUNE 30, 2012
(54)
HURF
Development
Fees
Local Court
Enhancement Grants Excise Tax
ASSETS
Cash and Investments 831,245$ 1,994,359$ 240,525$ 65,986$ 2,029,317$
Accounts Receivable 1,062 4,144 - - 4,144
Intergovernmental Receivable 109,471 - - - 16,382
Prepaid Items 4,976 - - - 498
Total Assets 946,754$ 1,998,503$ 240,525$ 65,986$ 2,050,341$
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts Payable 66,801$ 4,732$ -$ -$ 8,646$
Accrued Wages and Benefits 12,734 - - - 1,637
Deferred Revenue - - - 65,986 -
Total Liabilities 79,535 4,732 - 65,986 10,283
Fund Balances:
Nonspendable 4,976 - - - 498
Restricted 862,243 1,993,771 240,525 - -
Committed - - - - 2,039,560
Total Fund Balances 867,219 1,993,771 240,525 - 2,040,058
Total Liabilities and Balance 946,754$ 1,998,503$ 240,525$ 65,986$ 2,050,341$
Special Revenue Funds
(55)
Special
Revenue
Funds
Cottonwoods
Special
Assessment
Total
Nonmajor
Governmental
Funds
16,010$ 5,177,442$
- 9,350
- 125,853
- 5,474
16,010$ 5,318,119$
-$ 80,179$
- 14,371
- 65,986
- 160,536
- 5,474
16,010 3,112,549
- 2,039,560
16,010 5,157,583
16,010$ 5,318,119$
TOWN OF FOUNTAIN HILLS, ARIZONA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGE IN FUND BALANCES
FISCAL YEAR ENDED JUNE 30, 2012
(56)
HURF
Development
Fees
Local Court
Enhancement Grants Excise Tax
REVENUES
Taxes:
Sales Taxes -$ -$ -$ -$ 302,606$
Property Taxes - - - - -
Intergovernmental 1,166,515 - - 168,019 -
Fines and Forfeitures - - 20,323 - -
Charges for Services 11,825 40,120 - - -
Investment Earnings 450 9,038 300 - 8,882
Other 4,554 - - - -
Total Revenues 1,183,344 49,158 20,623 168,019 311,488
EXPENDITURES
Current:
General Government - - 5,098 138,000 112,497
Highways and Streets 1,022,104 23,424 - 9,402 -
Capital Outlay - - - 20,903 -
Total Expenditures 1,022,104 23,424 5,098 168,305 112,497
Excess (Deficiency) of
Revenues Over Expenditures 161,240 25,734 15,525 (286) 198,991
OTHER FINANCING SOURCES (USES)
Transfers In - - - 286 -
Transfers Out - (525,944) - - (6,623)
Total Other Financing
Sources (Uses) - (525,944) - 286 (6,623)
Net Change in Fund
Balances 161,240 (500,210) 15,525 - 192,368
FUND BALANCES
Beginning of Year 705,979 2,493,981 225,000 - 1,847,690
End of Year 867,219$ 1,993,771$ 240,525$ -$ 2,040,058$
Special Revenue Funds
(57)
Special
Revenue
Funds
Cottonwoods
Special
Assessment
Total
Nonmajor
Governmental
Funds
-$ 302,606$
3,335 3,335
- 1,334,534
- 20,323
- 51,945
11 18,681
- 4,554
3,346 1,735,978
- 255,595
- 1,054,930
- 20,903
- 1,331,428
3,346 404,550
- 286
- (532,567)
- (532,281)
3,346 (127,731)
12,664 5,285,314
16,010$ 5,157,583$
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
CAPITAL PROJECTS FUND
FISCAL YEAR ENDED JUNE 30, 2012
(58)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Sales Taxes 104,580$ 300,202$ 195,622$
Intergovernmental 4,351,600 204,262 (4,147,338)
Investment Earnings - 30,713 30,713
Total Revenues 4,456,180 535,177 (3,921,003)
EXPENDITURES
Capital Outlay 17,040,039 863,420 16,176,619
Excess (Deficiency) of Revenues Over
Expenditures (12,583,859) (328,243) 12,255,616
OTHER FINANCING SOURCES (USES)
Transfers In 9,615,911 6,623 (9,609,288)
Transfers Out (10,000) - 10,000
Total Other Financing Sources (Uses) 9,605,911 6,623 (9,599,288)
Net Change in Fund Balance (2,977,948) (321,620) 2,656,328
FUND BALANCE
Beginning of Year - 9,633,788 9,633,788
End of Year (2,977,948)$ 9,312,168$ 12,290,116$
Original and
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
GENERAL OBLIGATION DEBT SERVICE FUND
FISCAL YEAR ENDED JUNE 30, 2012
(59)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Property Taxes 1,020,000$ 1,029,242$ 9,242$
Investment Earnings 100 305 205
Total Revenues 1,020,100 1,029,547 9,447
EXPENDITURES
Debt Service:
Principal Retirement 840,000 840,000 -
Interest on Long-Term Debt 177,313 177,563 (250)
Fiscal Charges 2,100 - 2,100
Total Expenditures 1,019,413 1,017,563 1,850
Excess (Deficiency) of Revenues Over
Expenditures 687 11,984 11,297
FUND BALANCE
Beginning of Year - 51,333 51,333
End of Year 687$ 63,317$ 62,630$
Original and
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
MUNICIPAL PROPERTY CORPORATION DEBT SERVICE FUND
FISCAL YEAR ENDED JUNE 30, 2012
(60)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Sales Taxes 631,200$ 605,213$ (25,987)$
Investment Earnings 500 588 88
Total Revenues 631,700 605,801 (25,899)
EXPENDITURES
Debt Service:
Principal Retirement 958,625 845,000 113,625
Interest on Long-Term Debt 113,625 327,312 (213,687)
Fiscal Charges 7,000 48,402 (41,402)
Total Expenditures 1,079,250 1,220,714 (141,464)
Excess (Deficiency) of Revenues Over
Expenditures (447,550) (614,913) (167,363)
OTHER FINANCING SOURCES (USES)
Transfers In 193,500 2,463,118 2,269,618
Payment to Refunded Escrow Agent (2,932,697) - 2,932,697
Total Other Finance Sources (Uses) (2,739,197) 2,463,118 5,202,315
Net Change in Fund Balance (3,186,747) 1,848,205 5,034,952
FUND BALANCE
Beginning of Year - 891,306 891,306
End of Year (3,186,747)$ 2,739,511$ 5,926,258$
Original and
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
EAGLE MOUNTAIN DEBT SERVICE FUND
FISCAL YEAR ENDED JUNE 30, 2012
(61)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Property Taxes 420,000$ 425,125$ 5,125$
Investment Earnings 84 97 13
Total Revenues 420,084 425,222 5,138
EXPENDITURES
Debt Service:
Principal Retirement 280,000 280,000 -
Interest on Long-Term Debt 134,260 134,260 -
Fiscal Charges 7,350 7,350 -
Total Expenditures 421,610 421,610 -
Excess (Deficiency) of Revenues Over
Expenditures (1,526) 3,612 5,138
FUND BALANCE
Beginning of Year - 5,332 5,332
End of Year (1,526)$ 8,944$ 10,470$
Original and
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
HURF FUND
FISCAL YEAR ENDED JUNE 30, 2012
(62)
Variance with
Final Budget Actual Final Budget
REVENUES
Intergovernmental 1,132,332$ 1,166,515$ 34,183$
Charges for Services 25,200 11,825 (13,375)
Investment Earnings 120 450 330
Other 4,800 4,554 (246)
Total Revenues 1,162,452 1,183,344 20,892
EXPENDITURES
Current:
Highways and Streets 1,278,299 1,022,104 256,195
Excess (Deficiency) of Revenues Over
Expenditures (115,847) 161,240 277,087
FUND BALANCE
Beginning of Year - 705,979 705,979
End of Year (115,847)$ 867,219$ 983,066$
Original and
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
DEVELOPMENT FEES FUND
FISCAL YEAR ENDED JUNE 30, 2012
(63)
Variance with
Final Budget Actual Final Budget
REVENUES
Charges for Services $ 92,268 $ 40,120 $ (52,148)
Investment Earnings 420 9,038 8,618
Total Revenues 92,688 49,158 (43,530)
EXPENDITURES
Current
Highways and Streets 70,000 23,424 46,576
Excess (Deficiency) of Revenues Over
Expenditures 22,688 25,734 3,046
OTHER FINANCING SOURCES (USES)
Transfers Out - (525,944) (525,944)
Net Change in Fund Balance 22,688 (500,210) (522,898)
FUND BALANCE
Beginning of Year - 2,493,981 2,493,981
End of Year 22,688$ 1,993,771$ 1,971,083$
Original and
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
LOCAL COURT ENHANCEMENT FUND
FISCAL YEAR ENDED JUNE 30, 2012
(64)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Fines and Forfeitures 14,520$ 20,323$ 5,803$
Investment Earnings 300 300 -
Total Revenues 14,820 20,623 5,803
EXPENDITURES
Current:
General Government 33,250 5,098 28,152
Excess (Deficiency) of Revenues Over
Expenditures (18,430) 15,525 33,955
FUND BALANCE
Beginning of Year - 225,000 225,000
End of Year (18,430)$ 240,525$ 258,955$
Original and
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
GRANTS FUND
FISCAL YEAR ENDED JUNE 30, 2012
(65)
Variance with
Original Final Actual Final Budget
REVENUES
Intergovernmental $ 1,500,000 $ 1,500,000 $ 168,019 $ (1,331,981)
EXPENDITURES
Current:
General Government 1,500,000 1,438,435 138,000 1,300,435
Highways and Streets - - 9,402 (9,402)
Capital Outlay - - 20,903 (20,903)
Total Expenditures 1,500,000 1,438,435 168,305 1,270,130
Excess (Deficiency) of Revenues Over
Expenditures - 61,565 (286) (61,851)
OTHER FINANCING SOURCES (USES)
Transfers In - - 286 286
Net Change in Fund Balance - 61,565 - (61,565)
FUND BALANCE
Beginning of Year - - - -
End of Year -$ 61,565$ -$ (61,565)$
Budget
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
EXCISE TAX FUND
FISCAL YEAR ENDED JUNE 30, 2012
(66)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Sales Taxes 272,136$ 302,606$ 30,470$
Investment Earnings - 8,882 8,882
Total Revenues 272,136 311,488 39,352
EXPENDITURES
Current:
General Government 211,364 112,497 98,867
Excess (Deficiency) of Revenues Over
Expenditures 60,772 198,991 138,219
OTHER FINANCING SOURCES (USES)
Transfers Out - (6,623) (6,623)
Net Change in Fund Balance 60,772 192,368 131,596
FUND BALANCE
Beginning of Year - 1,847,690 1,847,690
End of Year 60,772$ 2,040,058$ 1,979,286$
Original and
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
COTTONWOODS SPECIAL ASSESSMENT FUND
FISCAL YEAR ENDED JUNE 30, 2012
(67)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Property Taxes 3,315$ 3,335$ 20$
Investment Earnings - 11 11
Total Revenue 3,315 3,346 31
EXPENDITURES
Current:
General Government 3,315 - 3,315
Excess (Deficiency) of Revenue Over
Expenditures (3,315) 3,346 6,661
FUND BALANCE
Beginning of Year - 12,664 12,664
End of Year (3,315)$ 16,010$ 19,325$
Original and
THIS PAGE BLANK
STATISTICAL SECTION
(UNAUDITED)
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.
See the table of contents for page numbers of the schedules that encompass the above sections.
TOWN OF FOUNTAIN HILLS, ARIZONA
NET ASSETS BY COMPONENT
LAST TEN FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
(68)
2003 2004 2005 2006
Governmental Activities:
Invested in Capital Assets, Net of Related Debt 11,843,575$ 11,261,256$ 17,495,539$ 20,806,507$
Restricted 6,681,170 6,471,863 5,144,127 12,446,147
Unrestricted 2,638,149 7,976,113 10,821,304 9,053,611
Total Governmental Activities Net Assets 21,162,894$ 25,709,232$ 33,460,970$ 42,306,265$
Fiscal Year
Source: The source of this information is the Town’s financial records.
(69)
2007 2008 2009 2010 2011 2012
92,508,637$ 94,939,805$ 94,611,110$ 95,467,509$ 92,579,483$ 92,006,103$
12,210,966 12,799,502 11,828,137 11,396,116 4,385,595 5,951,416
14,276,126 13,230,726 13,765,293 12,321,090 22,598,669 21,064,267
118,995,729$ 120,970,033$ 120,204,540$ 119,184,715$ 119,563,747$ 119,021,786$
Fiscal Year
TOWN OF FOUNTAIN HILLS, ARIZONA
CHANGES IN NET ASSETS
LAST TEN FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
(70)
2003 2004 2005 2006
EXPENSES
Governmental Activities:
General Government 3,479,333$ 3,686,452$ 3,766,500$ 3,875,014$
Public Safety 5,494,708 4,918,280 5,024,686 5,403,620
Highways and Streets 1,310,683 1,419,509 1,281,061 1,581,068
Culture and Recreation 2,363,897 2,068,613 2,362,661 2,576,406
Development Services 1,235,985 1,144,964 1,460,181 1,812,469
Interest on Long-Term Debt 1,576,842 1,499,575 1,162,796 1,297,119
Total Government Activities Expenses 15,461,448 14,737,393 15,057,885 16,545,696
PROGRAM REVENUES
Governmental activities:
Fees, Fines, and Charges for Services
General Government 2,738,898 3,388,923 4,431,154 4,029,437
Public Safety - - - -
Highways and Streets - - - -
Other Activities 43,487 32,209 59,550 103,826
Operating Grants and Contributions 1,697,900 1,590,787 1,692,712 2,022,675
Capital Grants and Contributions 237,307
Total Governmental Activities Program
Revenues 4,480,285 5,011,919 6,420,723 6,155,938
Net (Expenses)/Revenues (10,981,163)$ (9,725,474)$ (8,637,162)$ (10,389,758)$
Fiscal Year
Source: The source of this information is the Town’s financial records.
(71)
2007 2008 2009 2010 2011 2012
4,292,515$ 3,921,588$ 4,231,529$ 3,720,236$ 2,876,848$ 3,119,113$
5,935,742 6,532,292 7,312,415 6,293,323 5,963,067 5,820,136
5,225,835 5,981,347 5,051,294 5,202,285 5,567,973 4,718,047
3,282,160 3,092,661 3,336,616 2,927,848 2,840,154 2,754,731
2,512,170 2,861,653 2,218,994 1,612,287 1,572,202 1,442,613
1,163,370 1,132,947 1,033,536 950,484 851,957 779,576
22,411,792 23,522,488 23,184,384 20,706,463 19,672,201 18,634,216
910,978 830,963 544,753 1,340,457 1,126,926 1,025,940
982,659 746,227 55,042 32,667 21,222 20,323
- - - 2,556 16,270 11,825
626,431 752,621 888,249 - - -
- 56,802 - 1,666,498 1,614,462 1,285,656
989,100 835,659 1,353,409 632,617 2,273,414 1,392,706
3,509,168 3,222,272 2,841,453 3,674,795 5,052,294 3,736,450
(18,902,624)$ (20,300,216)$ (20,342,931)$ (17,031,668)$ (14,619,907)$ (14,897,766)$
(Continued)
Fiscal Year
TOWN OF FOUNTAIN HILLS, ARIZONA
CHANGES IN NET ASSETS (CONTINUED)
LAST TEN FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
(72)
2003 2004 2005 2006
(Concluded)
GENERAL REVENUES AND OTHER
NET ASSETS
Governmental Activities:
Taxes:
Sales Taxes 5,051,872$ 7,733,643$ 8,879,798$ 11,007,924$
Property Taxes 1,905,770 2,195,856 2,020,800 1,648,947
Franchise Taxes 152,542 126,362 216,031 314,359
State Shared Revenues 4,740,758 4,489,844 4,756,481 5,389,551
Investment Earnings 1,976,809 122,082 395,124 673,351
Miscellaneous 79,706 195,978 120,666 200,921
Total Governmental Activities 13,907,457 14,863,765 16,388,900 19,235,053
CHANGE IN NET ASSETS
Governmental Activities 2,926,294$ 5,138,291$ 7,751,738$ 8,845,295$
Fiscal Year
Source: The source of this information is the Town’s financial records.
(73)
2007 2008 2009 2010 2011 2012
11,407,714$ 10,489,591$ 8,932,374$ 7,644,440$ 8,013,480$ 7,787,489$
1,385,953 1,635,542 1,531,770 1,928,028 1,349,079 1,453,405
324,318 336,290 321,964 285,881 322,659 332,130
8,444,731 8,848,199 8,456,552 6,000,923 5,217,140 4,515,511
1,094,994 780,935 258,478 22,831 28,456 88,877
85,418 183,963 76,300 129,740 68,125 178,393
22,743,128 22,274,520 19,577,438 16,011,843 14,998,939 14,355,805
3,840,504$ 1,974,304$ (765,493)$ (1,019,825)$ 379,032$ (541,961)$
Fiscal Year
TOWN OF FOUNTAIN HILLS, ARIZONA
FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
(74)
2003 2004 2005 2006
General Fund:
Reserved $ - $ 77,485 $ 40,664 $ 14,393
Unreserved, Designated for:
Vehicle Replacement - - - -
Unreserved, Undesignated 4,037,863 6,293,941 9,041,779 6,515,855
Total General Fund $ 4,037,863 $ 6,371,426 $ 9,082,443 $ 6,530,248
All Other Governmental Funds:
Unreserved, Designated for
Vehicle Replacement $ - $ - $ - $ -
Unreserved, Undesignated Reported in:
Special Revenue Funds 3,411,738 5,969,830 2,176,086 1,951,434
Capital Projects Funds - - 2,429,225 9,496,266
Debt Service Funds 1,705,230 530,372 644,089 159,530
Total All Other Governmental Funds $ 5,116,968 $ 6,500,202 $ 5,249,400 $ 11,607,230
2011 2012
General Fund:
Nonspendable
Inventory $ 13,183 $ 9,332
Prepaid Items 29,234 28,245
Restricted - -
Committed - 1,345,200
Assigned - 2,190,910
Unassigned 8,263,549 3,656,173
Total General Fund $ 8,305,966 $ 7,229,860
All Other Governmental Funds:
Nonspendable
Cash with Escrow Agent $ - $ 2,623,895
Prepaid Items 6,217 5,474
Restricted 4,379,987 3,300,426
Committed 11,480,869 2,039,560
Assigned - 9,312,168
Total All Other Governmental Funds $ 15,867,073 $ 17,281,523
Fiscal Year
Fiscal Year
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.
(75)
2007 2008 2009 2010
$ 2,934,144 $ 3,053,070 $ 3,234,860 $ 3,235,811
- - 127,916 333,796
3,666,005 3,526,738 3,302,373 3,418,799
$ 6,600,149 $ 6,579,808 $ 6,665,149 $ 6,988,406
$ - $ - $ 95,620 $ 159,484
5,305,432 3,876,927 4,198,782 4,498,523
9,916,670 10,764,857 10,246,395 10,020,336
1,386,674 1,585,740 1,218,971 1,182,834
$ 16,608,776 $ 16,227,524 $ 15,759,768 $ 15,861,177
Fiscal Year
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
(76)
2003 2004 2005 2006 2007
REVENUES
Taxes 7,114,486$ 9,997,706$ 11,151,893$ 12,993,876$ 13,159,087$
Intergovernmental 6,311,458 6,080,631 6,686,500 7,412,226 8,444,731
Fines and Forfeitures 195,091 361,339 249,564 235,050 304,214
Licenses and Permits 1,308,747 1,600,934 2,230,046 1,918,107 1,239,318
Charges for Services 810,412 1,038,170 1,834,205 1,689,046 898,955
Rents and Royalties 188,745 242,704 222,327 255,527 267,350
Special Assessments 4,302 3,612 1,512 21,147 4,228
Investment Income (Loss)1,976,809 122,082 395,124 673,351 1,094,994
Other 275,343 261,561 179,657 233,565 85,418
Total Revenues 18,185,393 19,708,739 22,950,828 25,431,895 25,498,295
EXPENDITURES
General Government 3,318,574 3,614,458 9,547,409 4,459,183 4,024,551
Public Safety 5,174,492 4,616,161 4,754,523 5,208,770 5,689,020
Highways and Streets 1,198,080 1,402,502 1,682,563 2,121,986 2,028,397
Culture and Recreation 1,815,416 1,597,150 3,004,216 3,607,750 2,131,374
Development Services 1,215,387 1,144,964 1,460,181 1,812,469 2,462,643
Capital Outlay 79,427 101,951 - - 2,002,887
Debt Service
Principal Retirement 1,393,228 1,423,228 1,308,228 1,968,228 1,968,228
Interest on Long-Term Debt 1,576,842 1,499,575 1,164,561 1,192,414 1,058,665
Other Debt Service - - 229,990 532,762 -
Total Expenditures 15,771,446 15,399,989 23,151,671 20,903,562 21,365,765
Excess of Revenues
Over (Under) Expenditures 2,413,947 4,308,750 (200,843) 4,528,333 4,132,530
OTHER FINANCING
SOURCES (USES)
Transfers In 5,981,544 1,630,907 4,805,635 10,146,663 4,383,069
Transfers Out (5,981,544) (1,630,907) (4,805,635) (10,146,663) (4,383,069)
Issuance of Refunding Debt - - 12,555,000 4,555,000 -
Issuance of Long-Term Debt - - 3,783,896 - -
Payment to Refunded Debt
Escrow Agent - - (14,677,838) (4,338,781) -
Total Other Financing
Sources (Uses)- - 1,661,058 216,219 -
Net Change in Fund Balance 2,413,947$ 4,308,750$ 1,460,215$ 4,744,552$ 4,132,530$
Debt Service as a Percentage of
Noncapital Expenditures 23.35% 23.62% 13.22% 21.46% 18.53%
Fiscal Year
Source: The source of this information is the Town’s financial records.
(77)
2008 2009 2010 2011 2012
12,457,086$ 10,960,001$ 9,818,985$ 9,704,054$ 9,577,321$
9,353,260 9,607,961 7,672,037 7,165,103 6,035,448
287,120 339,658 297,030 236,221 223,673
1,125,957 541,627 399,094 312,367 194,976
620,300 316,676 464,036 388,635 405,663
296,434 290,083 215,520 227,195 206,018
4,337 4,037 - - -
780,935 258,478 22,831 28,456 88,877
183,963 43,683 129,740 72,125 178,393
25,109,392 22,362,204 19,019,273 18,134,156 16,910,369
3,548,295 3,514,249 3,186,368 2,575,975 2,887,321
6,321,669 6,624,141 6,200,227 5,772,800 5,869,445
2,214,557 1,199,850 973,746 1,123,230 1,054,930
2,257,007 2,215,065 2,007,737 1,871,446 1,794,332
2,751,740 2,036,295 1,669,449 1,564,615 1,421,787
5,239,169 3,708,277 1,254,223 1,043,304 884,323
2,153,228 2,240,000 2,460,000 2,115,000 1,965,000
1,025,320 929,134 842,857 744,330 639,135
- - - - 55,752
25,510,985 22,467,011 18,594,607 16,810,700 16,572,025
(401,593) (104,807) 424,666 1,323,456 338,344
2,756,988 3,759,735 1,127,776 431,880 2,470,027
(2,756,988) (3,950,654) (1,127,776) (431,880) (2,470,027)
- - - - -
- - - - -
- - - - -
- (190,919) - - -
(401,593)$ (295,726)$ 424,666$ 1,323,456$ 338,344$
18.60% 20.33% 18.29% 17.41% 17.09%
Fiscal Year
THIS PAGE BLANK
TOWN OF FOUNTAIN HILLS, ARIZONA
GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE
LAST TEN FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
(78)
Fiscal
Year
Sales
Taxes
Property
Taxes
Franchise
Taxes Total
2003 5,051,872$ 1,905,770$ 152,542$ 7,110,184$
2004 7,733,643 2,195,856 126,362 10,055,861
2005 8,879,798 2,020,800 216,031 11,116,629
2006 11,007,924 1,648,947 314,359 12,971,230
2007 11,407,714 1,385,953 324,318 13,117,985
2008 10,489,591 1,635,542 336,290 12,461,423
2009 8,932,374 1,531,770 321,964 10,786,108
2010 7,644,440 1,928,028 285,881 9,858,349
2011 8,013,480 1,349,079 322,659 9,685,218
2012 7,787,489 1,453,405 332,130 9,573,024
Source: The source of this information is the Town’s financial records.
TOWN OF FOUNTAIN HILLS, ARIZONA
TAXABLE SALES BY CATEGORY
LAST TEN FISCAL YEARS
(UNAUDITED)
(79)
2003 2004 2005 2006 2007
Sales Category:
Construction 1,203,706$ 1,482,981$ 1,837,317$ 3,362,079$ 2,694,700$
Restaurants and Bars 276,664 419,107 524,368 547,276 537,596
Transportation and Utilities 590,446 916,498 1,124,677 1,240,120 1,330,052
Services 455,324 423,433 185,868 263,239 280,290
Real estate, Rental and Leasing 205,849 341,951 604,356 626,364 792,358
Wholesale/Retail 1,930,175 3,212,062 3,536,045 3,796,192 4,144,263
Other 188,654 706,816 933,366 1,030,966 1,296,171
Total 4,850,818$ 7,502,848$ 8,745,997$ 10,866,236$ 11,075,430$
Fiscal Year
Source: The source of this information is the Town’s financial records.
(80)
2008 2009 2010 2011 2012
2,062,028$ 1,414,240$ 538,551$ 567,136$ 600,402$
582,226 493,242 509,624 559,930 575,705
1,422,158 1,311,735 1,424,827 1,388,074 1,407,331
327,411 258,138 241,686 276,566 274,481
982,198 664,999 650,071 731,615 678,267
3,912,512 3,687,409 3,555,974 3,567,615 3,600,619
1,182,349 910,561 691,972 733,454 730,956
10,470,882$ 8,740,324$ 7,612,705$ 7,824,390$ 7,867,761$
Fiscal Year
THIS PAGE BLANK
TOWN OF FOUNTAIN HILLS, ARIZONA
DIRECT AND OVERLAPPING SALES TAX RATES
LAST TEN FISCAL YEARS
(UNAUDITED)
(81)
Fiscal
Year
2003 1.60 % 0.70 % 5.60 % 7.90 %
2004 2.60 0.70 5.60 8.90
2005 2.60 0.70 5.60 8.90
2006 2.60 0.70 5.60 8.90
2007 2.60 0.70 5.60 8.90
2008 2.60 0.70 5.60 8.90
2009 2.60 0.70 5.60 8.90
2010 2.60 0.70 6.60 9.90
2011 2.60 0.70 6.60 9.90
2012 2.60 0.70 6.60 9.90
Total Tax
Rate
Town
Rate
Maricopa
County
State
Rate
Source: The source of this information is the Arizona Department of Revenue.
TOWN OF FOUNTAIN HILLS, ARIZONA
ASSESSED VALUE AND ESTIMATED TOTAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
(UNAUDITED)
(82)
Fiscal Year
Net Assessed
Value (in
thousands)
Total Direct Tax
Rate
Total Value
(in thousands)
2003 $ 270,603 $ 0.51 $ 2,418,236 11.19 %
2004 323,384 0.48 2,942,849 10.99
2005 349,399 0.42 3,162,855 11.05
2006 375,183 0.35 3,411,461 11.00
2007 610,738 0.30 5,840,185 10.46
2008 684,742 0.22 6,847,423 10.00
2009 651,218 0.20 6,648,954 9.79
2010 576,535 0.22 6,255,310 9.22
2011 451,860 0.18 4,370,950 10.34
2012 377,522 0.22 3,668,374 10.29
Assessed Value as
a Percentage of
Total Value
Source: The source of this information is the Arizona Department of Revenue’s Abstract of the
Assessment Roll and the Town’s financial records.
TOWN OF FOUNTAIN HILLS, ARIZONA
PRINCIPAL PROPERTY TAXPAYERS
JUNE 30, 2012 AND 2003
(UNAUDITED)
(83)
Taxpayer
Net Secondary
Assessed
Value Rank
Net Secondary
Assessed Value Rank
Inland Western Fountain Hills Four Peaks, LLC 3,497,492$ 1 0.93 % -$ N/A N/A %
Chaparral City Water Company 3,025,000 2 0.80 3,645,656 1.35
EN II, LLC 2,299,280 3 0.61 - N/A N/A
WSL Fountain View Investors V, LLC 2,209,139 4 0.59 - N/A N/A
Pacific FH Resort, LLC 13,756,875 5 3.64 - N/A N/A
J & R Holdings XX, LLC 2,089,587 6 0.55 - N/A N/A
Target Corporation 2,058,652 7 0.55 - N/A N/A
Qwest Corporation 1,649,928 8 0.44 - N/A N/A
Firerock, LLC 1,608,357 9 0.43 6,654,687 1 2.46
Fountain Hills AZ Development LLLP 1,504,850 10 0.40 - N/A N/A
MCO Properties, LP 2,132,248 2 0.79
Fountain Hills Village LLC 1,570,000 3
Four Peaks Limited Partnership 1,136,626 4 0.42
MCO Properties, Inc. 1,027,240 5 0.38
Fountain Hills-Old Vine Limited Partnership 890,522 6 0.33
Summit Estates, LLC 862,111 7 0.32
Safeway, Inc. 841,884 8 0.31
562502 Ontario Inc. 838,648 9 0.31
Sun Tech Development, LLC 809,435 10 0.3
33,699,160$ 8.94 20,409,057$ 6.97
Percentage of
Total Net
Secondary
Assessed Value
2012 2003
Percentage of
Total Net
Secondary
Assessed Value
Source: The source of this information is the Maricopa County Assessor’s Office.
TOWN OF FOUNTAIN HILLS, ARIZONA
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(UNAUDITED)
(84)
Ratio of
Current Percent of Delinquent Total Tax
Fiscal Total Tax Current Taxes Tax Total Tax Collections to
Year Tax Levy Collections Collected Collections Collections Total Tax Levy
2003 1,842,009$ 1,777,619$ 96.5% 51,558$ 1,829,177$ 99.3%
2004 2,125,505 2,053,055 96.6% 57,506 2,110,561 99.3%
2005 2,041,230 1,992,532 97.6% 22,283 2,014,815 98.7%
2006 1,673,519 1,618,877 96.7% 34,011 1,652,888 98.8%
2007 1,391,521 1,359,035 97.7% 27,203 1,386,238 99.6%
2008 1,630,534 1,578,583 96.8% 48,013 1,626,596 99.8%
2009 1,719,105 1,660,820 96.6% 53,548 1,714,368 99.7%
2010 1,895,552 1,838,909 97.0% 52,478 1,891,387 99.8%
2011 1,340,544 1,307,092 97.5% 27,530 1,334,622 99.6%
2012 1,446,076 1,414,482 97.8% - 1,414,482 97.8%
Source: The source of this information is the Maricopa County Treasurer’s Office.
TOWN OF FOUNTAIN HILLS, ARIZONA
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(UNAUDITED)
(85)
Fiscal Year
General
Obligation
Bonds and
Other Bonds
Less: Amounts
Restricted for
Principal Total Per Capita
2003 24,015,000$ 1,393,228$ 22,621,772$ 21.26 % 1,017$
2004 25,335,000 1,423,228 23,911,772 20.68 1,061
2005 24,190,000 1,308,228 22,881,772 18.20 986
2006 22,365,000 1,968,228 20,396,772 15.40 833
2007 26,910,467 1,978,149 24,932,318 17.85 976
2008 24,932,318 2,163,146 22,769,172 N/A 855
2009 22,769,172 2,249,921 20,519,251 N/A 808
2010 17,965,000 2,115,000 15,850,000 N/A 705
2011 15,850,000 2,205,000 13,645,000 N/A 608
2012 13,885,000 2,280,000 11,605,000 N/A 515
Governmental Activities
Percentage of
Personal
Income
Source: The source of this information is the Town’s financial records and the Bureau of Economic
Analysis.
Note: N/A indicates that the information is not available.
TOWN OF FOUNTAIN HILLS, ARIZONA
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
(UNAUDITED)
(86)
Fiscal Year
General
Obligation
Bonds
Taxable
Assessed Value
of Property Population
Net General
Obligation
Bonded Debt
Per Capita
2003 11,865,000$ $ 270,603,000 4.38% 22,243 533$
2004 11,110,000 323,385,000 3.44% 22,541 493
2005 10,675,000 349,398,000 3.06% 23,217 460
2006 9,600,000 375,183,000 2.56% 24,492 392
2007 8,620,000 576,535,714 1.50% 25,540 338
2008 7,570,000 684,742,347 1.11% 26,633 284
2009 6,530,000 651,218,464 1.00% 25,388 257
2010 9,045,000 576,535,714 1.57% 22,489 402
2011 7,965,000 451,860,136 1.76% 22,444 355
2011 6,845,000 377,521,718 1.81% 22,554 303
Percentage of
Taxable
Assessed Value
of Property
Source: The source of this information is the Maricopa County Assessor’s Office and the Town’s
financial records.
TOWN OF FOUNTAIN HILLS, ARIZONA
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
AS OF JUNE 30, 2012
(UNAUDITED)
(87)
Governmental Unit Outstanding Debt
Estimated
Percentage
Applicable
Estimated
Share of
Overlapping
Debt
Overlapping:
Maricopa County 133,930,000$ 1.10%1,473,230$
Maricopa County Community College District 683,835,000 1.10%7,522,185
Fountain Hills Unified School District 12,595,000 96.30%12,128,985
Eagle Mountain Community Facilities District 3,090,000 100.00%3,090,000
Subtotal, Overlapping Debt 24,214,400
Direct:
Town of Fountain Hills, Arizona 10,795,000
Total Direct and Overlapping Debt 35,009,400$
Source: The source of this information is the Town’s records and the State and County Abstract of the
Assessment the Arizona Department of Revenue Report of Indebtedness and the applicable
governmental unit.
Note: The estimated percentage of debt outstanding applicable to the Town is calculated based on the
Town’s secondary assessed valuation (full cash value) as a percentage of the secondary assessed
valuation of the overlapping jurisdiction. Overlapping governments are those that coincide, at least in
part, with the geographic boundaries of the Town of Fountain Hills. This schedule further estimates the
portion of outstanding debt of those overlapping governments that is borne by residents and
businesses of the Town. This process recognizes that, when considering a town’s ability to issue and
repay long-term debt, the entire debt burden borne by residents should be taken into account.
However, this fact does not imply that every taxpayer is a resident, and therefore, responsible for
repaying the debt of each overlapping government.
TOWN OF FOUNTAIN HILLS, ARIZONA
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
(UNAUDITED)
(88)
2003 2004 2005 2006
Debt Limit 16,236,172$ 19,403,114$ 20,963,900$ 22,510,991$
Total Applicable to Limit 5,625,000 5,190,000 3,595,000 3,410,000
Legal Debt Margin 10,611,172$ 14,213,114$ 17,368,900$ 19,100,991$
Total Net Debt Applicable to the Limit as a
Percentage of the Debt Limit 35% 27% 17% 15%
20% Debt Limit
2003 2004 2005 2006
Debt Limit 54,120,573$ 64,677,046$ 69,879,667$ 75,036,636$
Total Applicable to Limit 6,975,000 6,675,000 7,515,000 7,265,000
Legal Debt Margin 47,145,573$ 58,002,046$ 62,364,667$ 67,771,636$
Total Net Debt Applicable to the Limit as a
Percentage of the Debt Limit 13% 10% 11% 10%
Fiscal Year
Fiscal Year
Source: The source of this information is the Maricopa County Assessor’s Office and the Town’s
financial records.
(89)
2007 2008 2009 2010 2011 2012
34,592,143$ 41,084,541$ 39,073,108$ 34,592,143$ 27,111,608$ 22,651,303$
1,660,000 - 320,000 - - -
32,932,143$ 41,084,541$ 38,753,108$ 34,592,143$ 27,111,608$ 22,651,303$
5% 0% 1% 0% 0% 0%
2007 2008 2009 2010 2011 2011
115,307,143$ 136,948,469$ 130,243,693$ 115,307,143$ 90,372,027$ 75,504,344$
5,415,000 6,510,000 6,210,000 5,415,000 4,595,000 3,755,000
109,892,143$ 130,438,469$ 124,033,693$ 109,892,143$ 85,777,027$ 71,749,344$
5% 5% 5% 5% 5% 5%
Fiscal Year
Fiscal Year
TOWN OF FOUNTAIN HILLS, ARIZONA
CALCULATION OF LEGAL DEBT MARGIN
AS OF JUNE 30, 2012
(UNAUDITED)
(90)
Net Secondary Assessed Valuation 377,521,718$
Water, Sewer, Light, Parks, Open Space and Recreational Facility Bonds
Debt Limit - 20% of Net Secondary Assessed Valuation 75,504,344$
Net Debt Applicable to Limit 3,755,000
20% Legal Debt Margin 71,749,344
All other general obligation bonds
Debt Limit - 6% of Net Secondary Assessed Valuation 22,651,303
Net Debt Applicable to Limit -
6% Legal Debt Margin 22,651,303
Total legal debt margin 94,400,647$
Source: The source of this information is the Maricopa County Assessor’s Office and the Town’s
financial records.
TOWN OF FOUNTAIN HILLS, ARIZONA
REVENUE BOND COVERAGE
LAST TEN FISCAL YEARS
(UNAUDITED)
(91)
Fiscal Year Principal Interest Total
Pledged
Revenues Coverage
2003 $ 425,000 566,433$ 991,433$ 11,270,153$ 11.4
2004 425,000 550,983 975,983 14,044,597 14.4
2005 620,000 456,892 1,076,892 16,171,235 15.0
2006 665,000 546,576 1,211,576 18,746,928 15.5
2007 715,000 473,349 1,188,349 19,379,717 16.3
2008 805,000 498,878 1,303,878 18,890,944 14.5
2009 885,000 460,379 1,345,379 16,440,872 12.2
2010 985,000 424,538 1,409,538 14,380,648 10.2
2011 1,035,000 373,768 1,408,768 14,001,045 9.9
2012 845,000 332,463 1,177,463 13,075,001 11.1
Municipal Facilities Revenue Bonds
Source: The source of this information is the Town’s financial records.
TOWN OF FOUNTAIN HILLS, ARIZONA
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN CALENDAR YEARS
(UNAUDITED)
(92)
2002 2003 2004 2005
Population 21,954 22,243 22,541 23,217
Personal income 100,805,099$ 106,385,325$ 115,604,165$ 125,718,070$
Per capital personal income 28,900$ 29,607$ 31,133$ 32,414$
Median age N/A N/A N/A N/A
School enrollment 2,447 2,450 2,453 2,373
Town of Fountain Hills
unemployment rate 2.7% 2.6% 2.1% 2.0%
Land use
Total acres N/A N/A N/A N/A
Total square miles N/A N/A N/A N/A
Vacant lots N/A N/A N/A N/A
Number of units
Housing N/A N/A N/A N/A
Lodging N/A N/A N/A N/A
Restaurants N/A N/A N/A N/A
Shopping centers N/A N/A N/A N/A
Schools
Public N/A N/A N/A N/A
Preschool N/A N/A N/A N/A
Charter N/A N/A N/A N/A
Calendar Year
Source: The source of the “Personal Income” and “Per Capita” information is the Bureau of Economic
Analysis. The source of the “Population” and “Unemployment Rate” information is State of
Arizona, Department of Administration, Office of Employment and Population Statistics. 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 that the information is not available.
* Information obtained is based on calendar years; therefore, the latest information obtained was from
2011.
(93)
2006 2007 2008 2009 2010 2011
24,452 25,540 26,633 25,388 22,489 22,554
132,423,154$ 139,665,253$ N/A N/A N/A N/A
35,046$ 36,135$ 32,230$ 38,439$ 38,918$ N/A
N/A 46.4 46.4 49.7 49.7 N/A
2,425 2,307 2,233 2,203 2,103 1,981
1.8% 1.6% 2.5% 4.4% 4.5% 6.8%
12,296.0 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7
20.31 20.32 20.32 20.32 20.32 20.32
N/A 3,355 1,295 1,253 1,226 1,218
12,681 12,850 12,832 12,927 13,167 13,167
4 4 4 4 4 4
50 53 47 52 53 56
14 14 19 19 20 20
4 4 4 4 4 4
5 4 4 4 4 4
2 1 1 1 1 1
Calendar Year
TOWN OF FOUNTAIN HILLS, ARIZONA
PRINCIPAL EMPLOYERS
PRIOR FISCAL YEAR AND NINE YEARS AGO*
(UNAUDITED)
(94)
Employer Employees Rank
Percentage of
Total Town
Employment Employees Rank
Fountain Hills Unified School
District No. 98 336 1 9.1% 250 1
Fountain View Village 136 2 3.7% -
Target 102 3 2.8% -
Firerock County Club 100 4 2.7% -
Fry's 91 5 2.5% -
Safeway Food Stores 90 6 2.4% 95 4
Eagle Mountain Golf Course 70 7 1.9% 40 9
Town of Fountain Hills 66 9 1.8% 115 3
Basha's 62 8 1.7% 70 6
TT Construction, Inc. 60 10 1.6% -
Sunridge Canyon Golf Course 59 11 1.6% 70 7
Desert Canyon Golf Club 58 12 1.6% 50 8
MCO Properties, Inc. - 0.0% 85 5
Monks Construction - 0.0% 150 2
Total 1,230 33.5% 925
Total Town employment 3,675
20022011
Source: The source of this information is the Town’s financial records.
* Data for 2012 and 2003 are not available.
TOWN OF FOUNTAIN HILLS, ARIZONA
FULL-TIME EQUIVALENT GOVERNMENT EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS
(UNAUDITED)
(95)
Function 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Municipal Court 6.00 5.00 5.00 5.50 5.00 5.00 5.00 5.00 5.00 5.00
Administration 14.50 10.00 11.00 12.50 13.00 13.50 13.50 13.25 11.25 11.58
Public Safety 20.00 1.00 - - - - - - - -
Development Services 43.00 40.00 39.50 41.00 41.00 40.50 40.00 35.75 23.25 20.25
Community Services 22.50 20.00 21.50 23.50 28.00 29.25 29.75 27.10 21.63 21.53
Total 106.00 76.00 77.00 82.50 87.00 88.25 88.25 81.10 61.13 58.36
Fiscal Year
Source: The source of this information is the Town’s financial records.
TOWN OF FOUNTAIN HILLS, ARIZONA
OPERATING INDICATORS BY FUNCTION
LAST TEN FISCAL YEARS
(UNAUDITED)
(96)
Function/Program 2003 2004 2005 2006 2007
Municipal Court:
Cases filed N/A N/A N/A N/A N/A
Hearings/Trials held N/A N/A N/A N/A N/A
Administration:
FTEs per 1,000 residents 4.8 3.4 3.4 3.6 3.6
Registered voters - general election 12,594 13,349 none 13,669 none
Voter turnout - general election 43% 23% none 21% none
Development Services:
Building permits issued 168 228 430 468 759
Building inspections conducted 6,389 6,985 8,446 9,377 7,975
Number of code violation cases N/A N/A N/A N/A N/A
Number of zoning cases N/A N/A N/A N/A N/A
Community Services:
Number of Community Center bookings N/A N/A N/A N/A N/A
Number of participants in recreational
programs N/AN/AN/AN/AN/A
Number of Senior Services members N/A N/A N/A N/A N/A
Number of home delivered meals N/A N/A N/A N/A N/A
Law Enforcement (contracted):
Physical arrests 601 601 644 N/A 993
Traffic violations 3,186 3,186 2,432 N/A 2,315
Fire & Emergency Medical (contracted):
Total incident responses N/A N/A N/A 3,056 3,069
Average response time (in minutes) N/A N/A N/A 3:47 3:49
Fiscal Year
Source: The source of this information is the Town’s financial records.
Note: N/A indicates that the information is not available.
* Includes permits issued for all types of activities requiring permits.
(97)
2008 2009 2010 2011 2012
N/A N/A 3,520 2,584 2,173
N/A N/A 1,089 738 731
3.5 3.3 3.2 2.7 2.6
14,335 none 15,511 none 16,074
39% none 50% none 34%
716 391 409 354 352
5,692 3,189 1,936 1,546 1,257
N/A N/A 1,024 843 804
N/A N/A 7 14 7
N/A N/A 3,396 3,315 3,236
N/A N/A 1,960 1,759 1596*
N/A N/A 1,105 1,205 1208*
N/A N/A 10,169 9,742 8000*
524 825 679 645 522
2,504 4,900 2,959 1,909 1,366
2,694 2,787 2,875 3,179 3,082
3:37 3:44 4:32 3:46 3:50
Fiscal Year
TOWN OF FOUNTAIN HILLS, ARIZONA
CAPITAL ASSETS STATISTICS BY FUNCTION
LAST TEN FISCAL YEARS
(UNAUDITED)
(98)
Function/Program 2003 2004 2005 2006 2007
Public Safety:
Number of Fire stations 22222
Other Public Works:
Streets (Miles) 178.5 178.5 178.5 178.5 178.5
Streets (Lane Miles) 395 395 395 395 395
Streetlights N/A N/A N/A 34 34
Traffic Signals 10 11 11 12 13
Parks and Recreation:
Acreage 116 116 116 116 116
Playgrounds 33333
Baseball/Softball Diamonds 66666
Soccer/Football Fields 44433
Community Centers 11111
Preserve Acreage N/A N/A N/A N/A N/A
Miles of Trails N/A N/A N/A N/A N/A
Fiscal Year
Source: The source of this information is the Town’s facilities records.
(99)
2008 2009 2010 2011 2012
22222
178.5 178.5 178.5 178.5 178.5
395 395 395 395 395
34 34 34 34 34
12 12 12 13 13
116 116 116 116 116
33344
66666
33355
11111
N/A N/A N/A N/A 740
N/A N/A N/A N/A 4.3
Fiscal Year
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