HomeMy WebLinkAboutFY14 CAFRFor the Fiscal Year Ended June 30, 2014
Comprehensive Annual Financial Report
Town of Fountain Hills, Arizona
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Issued By:
Administration Department
Finance Division
TOWN OF FOUNTAIN HILLS, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2014
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TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
FISCAL YEAR ENDED JUNE 30, 2014
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 POSITION 26
STATEMENT OF ACTIVITIES 27
BALANCE SHEET – GOVERNMENTAL FUNDS 28
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO
THE STATEMENT OF NET POSITION 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
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – HURF FUND 35
NOTES TO THE BASIC FINANCIAL STATEMENTS 36
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET 57
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGE IN FUND BALANCES 59
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – CAPITAL PROJECTS FUND 61
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – GENERAL OBLIGATION DEBT SERVICE
FUND 62
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS (CONTINUED)
FISCAL YEAR ENDED JUNE 30, 2014
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 FUND 63
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – DEVELOPMENT FEES FUND 64
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – LOCAL COURT ENHANCEMENT FUND 65
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – GRANTS FUND 66
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – DOWNTOWN STRATEGY FUND 67
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – ECONOMIC DEVELOPMENT FUND 68
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – COTTONWOODS MAINTENANCE FUND 69
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – EAGLE MOUNTAIN DEBT SERVICE
FUND 70
STATISTICAL SECTION (UNAUDITED)
FINANCIAL TRENDS
NET POSITION BY COMPONENT 71
CHANGES IN NET POSITION 73
FUND BALANCES OF GOVERNMENTAL FUNDS 77
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND
BALANCES OF GOVERNMENTAL FUNDS 79
REVENUE CAPACITY
GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE 81
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE
PROPERTY 82
PRINCIPAL PROPERTY TAXPAYERS 83
PROPERTY TAX LEVIES AND COLLECTIONS 84
TAXABLE SALES BY CATEGORY 85
DIRECT AND OVERLAPPING SALES TAX RATES 87
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS (CONTINUED)
FISCAL YEAR ENDED JUNE 30, 2014
STATISTICAL SECTION (CONTINUED)
DEBT CAPACITY
RATIOS OF OUTSTANDING DEBT BY TYPE 88
RATIOS OF GENERAL BONDED DEBT OUTSTANDING 89
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT 90
LEGAL DEBT MARGIN INFORMATION 91
CALCULATION OF LEGAL DEBT MARGIN 93
REVENUE BOND COVERAGE 94
DEMOGRAPHIC AND ECONOMIC INFORMATION
DEMOGRAPHIC AND ECONOMIC STATISTICS 95
PRINCIPAL EMPLOYERS 97
OPERATING INFORMATION
AUTHORIZED FULL-TIME EQUIVALENT GOVERNMENT EMPLOYEES BY
FUNCTION 98
OPERATING INDICATORS BY FUNCTION 99
CAPITAL ASSETS STATISTICS BY FUNCTION 101
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INTRODUCTORY SECTION
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Town of FOUNTAIN HILLS
(1)
16705 E. Avenue of the Fountains – Fountain Hills, Arizona 85268 – (480) 816-5100 - Fax (480) 837-3145
October 17, 2014
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 accordance with
accounting principles generally accepted in the United States of America and audited in
accordance with auditing standards generally accepted in the United States by a 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, 2014.
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 accordance with accounting
principles generally accepted in the United States of America. 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, 2014, 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
unmodified opinion that the Town of Fountain Hills’ financial statements for the fiscal year ended
June 30, 2014, are fairly presented in accordance with accounting principles generally accepted
in the United States of America. The independent auditors’ report is presented as the first
component of the financial section of this report.
Accounting principles generally accepted in the United States of America require that
management provide a narrative introduction, overview, and analysis to accompany the basic
financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter
of transmittal is designed to complement the MD&A and should be read in conjunction with it.
The Town of Fountain Hills’ MD&A can be found immediately following the report of the
independent auditors.
(2)
Town of Fountain Hills Profile
The Town of Fountain Hills is a master
planned community established in 1970 by
McCulloch Properties (now MCO
Properties, Inc.). Prior to 1970, the area was
a cattle ranch and was part of one of the
largest land and cattle holdings in Arizona.
The land was purchased by Robert
McCulloch in the late 1960s and the
community designed by Charles Wood, Jr.
(designer of Disneyland in southern
California). The centerpiece of Fountain
Hills is one of the world's tallest man-made
fountains, a focal point that attracts
thousands of visitors each year.
Located on 13,006 acres of land, and
bordering northeast Scottsdale, Fountain
Hills is surrounded by the 3,500-foot McDowell Mountains and Scottsdale on the west, the Fort
McDowell Yavapai Nation on the east, the Salt River Pima-Maricopa Indian Community on the
south and by the McDowell Mountain Regional Park on the north. The elevation is 1,520 feet at
the fountain, 3,000 feet on Golden Eagle Boulevard, and is 500 feet above Phoenix.
Over the past twenty years, Fountain Hills has grown from 10,190 residents to a town of 22,489
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 such Town standards 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 wide range of living accommodations, from small condominiums to large
custom homes. Fountain Hills also offers recreational, cultural and retirement programs that
address the needs and lifestyles of active families as well as older adults. The community
consists of primarily residential property; of the total 20.32 square miles of land only 2.6% of the
total is zoned commercial and/or industrial, 23.0% is preserved as open space and 51.3% is
residential.
The Town’s Mission Statement
The Town of Fountain Hills’ purpose is to serve the best interests of the community by:
providing for its safety and well-being;
respecting its special, small-town character and quality of life;
providing superior public services;
sustaining the public trust through open and responsive government;
and maintaining the stewardship and preservation of its financial and natural
resources.
To serve, respect, and provide trust and stewardship.
(3)
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, 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 51 FTE employees. The
Presiding Judge, Town Attorney and Town Prosecutor are under the direction of the Town Council.
The Town provides or administers a full range of services
including public safety (law enforcement, fire, animal control);
development services (code enforcement, planning, building
inspection, zoning and public works); construction and
maintenance of streets and infrastructure, municipal court,
recreational activities, community center, senior services and
cultural events. The Town does not maintain utility or other
operations that require the establishment of enterprise funds.
The financial reporting entity (the Town) includes all the funds of
the primary government (i.e., the Town of Fountain Hills as legally
defined) as well as all of its component units. The component units consist of legally separate entities
for which the primary government is financially accountable. Blended component units, although legally
separate entities, are, in substance, part of the primary government’s operations and are included as
part of the primary government. Accordingly, the Cottonwoods Maintenance District, the Eagle
Mountain Community Facilities District and the Fountain Hills Municipal Property Corporation are
included in the financial 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 a resolution and is
prepared by fund and department. The resolution sets the limit for expenditures during the fiscal year.
The Town Manager may authorize transfers from and within personnel and from operating capital to
services or supplies within a department. Additional expenditures may be authorized for expenditures
directly necessitated by a natural or man-made disaster as prescribed in the State Constitution,
Article 9, Section 20.
Fountain Hills Town Hall
(4)
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 appears to be recovering modestly in Fountain Hills; this
recovery is indicated by the local sales tax receipts in the construction category. The construction
activity has jumped 39% over the prior year which we interpret as a leading indicator of a rebounding
economy. 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 had been a
third significant category in prior years). The chart below is a look at the past six years’ significant local
sales tax activity by sector:
As can be seen in the chart on the left,
sales tax collections continue to show
signs of moderate growth. Retail sales
experienced less than 2% increase over
the prior year; restaurant/bar revenues
have exceeded any prior year and an
increase of 1.6% from FY12-13.
Construction sales tax, a one-time
revenue source, is driven entirely by
development activity in the community and
increased 39% over the prior year; recent
building permit activity indicates that
construction sales tax is likely to increase
over the next years. Transportation
/communication tax revenues posted a
slight decrease of 2%.
Construction activity provides revenue to the Town through local sales tax, the proceeds of which are
utilized for general operations and capital expenditures. Without the resources to fund capital projects,
the Town must find additional funds to pay for necessary infrastructure projects. For operating costs,
the Town is dependent upon state shared revenues and local sales tax as a major source of operating
revenue, accounting for 89% of total General Fund revenue for fiscal year 2013-14.
State shared revenues are derived as a proportionate share of state sales, income and vehicle license
taxes which are distributed based on the Town’s population compared to all other incorporated cities
and towns in Arizona (currently 0.45%). State shared income tax revenue category is based on two
years prior personal and corporate earnings; from FY09-10 through FY11-12 the Town lost 53% of this
revenue source ($1.7M or 13% of the General Fund operating budget). However, the revenue from the
State income tax increased by 9% in FY13-14 and is anticipated to increase another 8.5% for FY14-15.
After a 16% decrease in State sales tax from FY08-09 through FY11-12, this revenue has recovered
with a 6% increase in FY13-14 and anticipated to increase another 4.6% in FY14-15.
Other local activity has remained fairly level during the recessionary period due to the lack of major
retailers (the Town has three grocery stores and one major retailer). Fountain Hills is past the historic
period of rapid growth and the long-term economic outlook for the Town must recognize this fact. The
opportunity to further expand the retail tax base in Fountain Hills is limited by the lack of available
commercial land – over 70% of the currently available commercial lots are already developed.
(5)
Development Activity over the past year:
Development Services has been involved with the following development activities during fiscal year
2013-14 (7/1/2013 – 6/30/2014):
Three Concept Plans were approved by the Planning & Zoning Commission during the period:
Prevco Subsea Housings
Tractor Supply Company
Mods for Rods, Inc.
Three Special Use Permits were granted:
Tractor Supply Company – outdoor storage & display
Verizon Cell Tower – Eagle Mountain
Propane Tank Installation – 17251 E Shea Blvd.
Two Temporary Use Permits were issued during the period:
Eagles Nest Ranch House
Group Home – Jacklin Drive
Thirty-two new Single-Family Residential Building Permits were issued.
There were no new Commercial Building Permits issued.
There were nineteen commercial tenant improvement permits issued during the last fiscal year.
Fiscal year
SFR
DUP MULTI
Dwelling
Units
T.I. &
Comm
Pools
&
Fences
Add
Ons
(Not
Garages
Garages
&
Carports
Other
MONTH
TOTAL
Bldgs. Total
Units Bldgs. Total
Units
JULY 5 0 0 0 0 0 0 2 5 0 21 33
AUGUST 3 0 0 0 0 0 1 6 5 0 31 46
SEPTEMBER 1 0 0 0 0 0 2 7 1 0 13 24
OCTOBER 3 0 0 0 3 0 3 11 4 1 15 40
NOVEMBER 1 0 0 0 0 0 1 3 3 0 18 26
DECEMBER 2 0 0 0 3 0 0 5 3 0 16 29
JANUARY 0 0 0 0 0 0 2 9 1 1 27 40
FEBRUARY 3 0 0 0 0 0 3 6 1 1 20 34
MARCH 3 0 0 0 0 8 0 9 2 2 27 51
APRIL 2 0 0 0 0 0 3 8 2 1 21 37
MAY 8 0 0 0 0 0 2 7 4 0 23 44
JUNE 1 1 2 0 0 0 2 11 6 0 22 45
YEARLY
TOTAL 32 1 2 0 6 8 19 84 37 6 254 449
(6)
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:
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
FY11-12 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
was 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 capital assets. In Fountain Hills this classification would apply to our fuel inventory,
capital assets, 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, Downtown
Strategy Fund, and Economic Development Fund.
(7)
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 Fund as well as a
portion of the General 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, committed, or assigned. In
Fountain Hills, this classification would be any residual balance of monies not contained in any of the
other classifications.
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 a portion of the construction sales tax, proceeds from excess revenues collected
over budget, and any unexpended appropriations not needed to meet fund balance requirements or re-
appropriation.
The Council also adopted financial policies that include guidelines for the issuance of debt for capital
expenditures, community facility districts, financing alternatives, expenditure controls and financial
planning. The policy was amended during FY 09-10 to reduce the allocation of the local construction
sales tax to the Capital Projects Fund from 85% to 50%, reflecting the transition from one-time building
activity to ongoing redevelopment activity. The debt policy was prepared with a preference for “pay-as-
you-go” financing for capital spending, however, the policy did not anticipate the lack of funding for
capital projects and bond funding is being reconsidered.
Major Initiatives
The Town of Fountain Hills’ adopted FY13-14 budget reflected the continued recession in the local
economy, which is also somewhat mirrored at the national and state levels. Due to the challenging
current economic conditions, the Town has made significant reductions in staff and service levels. This
reduction was accomplished by a thorough assessment of all existing and proposed programs and
workload; as a result, Town staffing was reduced from 81 to 51 FTE’s (full time equivalents) over the
last five years.
The Town Council established priorities for FY13-14 of which the top two are Economic Development
and Pavement Management. In order to implement the Pavement Management program, the Council
approved the use of Vehicle License Tax revenues to be dedicated to annual pavement maintenance
with an effective date of July 1, 2013. Economic Development initiatives are funded through a new
dedicated local sales tax which provides funding for business attraction, retention and expansion.
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, 2013. This was the eighteenth 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 Generally Accepted Accounting Principles (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.
(8)
For the second year, The Town was also given the Award for Outstanding Achievement in Popular
Annual Financial Reporting for the fiscal year ended June 30, 2013.
In addition, the government received the GFOA’s Distinguished Budget Presentation Award for its
annual budget for the fiscal year beginning July 1, 2013. 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 twelfth 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.
Acknowledgements. The preparation of this report would not have been possible without the efficient
and dedicated services of the entire team of the Finance Division 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, 2014
(9)
ELECTED OFFICIALS
Mayor Ms. Linda M. Kavanagh
Vice-Mayor Mr. Cecil A. Yates
Councilmember Mr. Dennis Brown
Councilmember Ms. Ginny Dickey
Councilmember Mr. Tait D. Elkie
Councilmember Ms. Cassie Hansen
Councilmember Mr. Henry Leger
DEPARTMENT DIRECTORS
Town Manager
Finance Director
Ken Buchanan
Craig Rudolphy
Presiding Judge Robert Melton
Community Services Director Mark Mayer
Development Services Director Paul Mood
Fire Chief Randy Roberts
Rural Metro Corporation
District Commander Captain David Letourneau
Maricopa County Sheriff’s Office
Town Prosecutor Mark Iacovino
The Law Office of Mark Iacovino
Town Attorney Andrew McGuire
Gust Rosenfeld, P.L.C.
TOWN OF FOUNTAIN HILLS, ARIZONA ORGANIZATIONAL CHART JUNE 30, 2014 (10)
(11)
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FINANCIAL SECTION
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An independent member of Nexia International
(12)
INDEPENDENT AUDITORS’ REPORT
The Honorable Mayor and Members of the Town Council
Town of Fountain Hills
Fountain Hills, Arizona
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major
fund, and the aggregate remaining fund information of the Town of Fountain Hills, Arizona (Town), as of
and for the year ended June 30, 2014, and the related notes to the financial statements, which
collectively comprise the Town’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditors’ Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditors’ judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the Town’s
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Town’s internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
The Honorable Mayor and Members of the Town Council
Town of Fountain Hills, Arizona
(13)
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, 2014, and the
respective changes in financial position and the budgetary comparison schedules of the General Fund
and HURF Fund for the year then ended in accordance with accounting principles generally accepted in
the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that management’s
discussion and analysis on pages 14 - 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.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Town’s basic financial statements. The combining and individual nonmajor
fund financial statements and schedules and the introductory and statistical sections 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 basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying accounting
and other records used to prepare the basic financial statements or to the basic financial statements
themselves, and other additional procedures in accordance with auditing standards generally accepted
in the United States of America. In our opinion, the combining and individual nonmajor fund financial
statements and schedules are fairly stated, in all material respects, in relation to the basic financial
statements as a whole.
The introductory and statistical sections 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.
Phoenix, Arizona
October 17, 2014
REQUIRED SUPPLEMENTARY INFORMATION
THIS PAGE BLANK
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2014
(14)
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, 2014. 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 2013-14 and fiscal year
2012-13 by $114.4 million and $116.1 million, respectively. Of these amounts, $19.2 million and
$20.6 million, respectively, may be used to meet the government’s ongoing obligations to
citizens and creditors.
Governmental activities program revenues increased overall by $224,165 (8.5%) over the
previous year. The majority of the increase was attributable to an increase in Fees, Fines and
Charges for Services. Fees, Fines and Charges for Services increased by 15.5% indicating an
improving economy, particularly in building permits and development fees.
At June 30, 2014, total fund balance of the governmental funds was $22.7 million. The decrease
of $1.8 million from the prior year was mainly the result of an increase in capital outlay. Of the
total fund balance, $5.0 million is unassigned in the General Fund, while the remainder is
classified as nonspendable, restricted, committed, and assigned.
The major governmental funds, which include the General Fund, total $17.5 million in revenues,
consisting primarily of local taxes, intergovernmental revenues, charges for services and
licenses and permits. The total expenditures of the General Fund were $12.5 million and the
fund balance increased from $7.7 million to $8.0 million including the Rainy Day, Public Art, and
Vehicle Replacement Funds. The Highway User Revenue Fund (HURF) revenues were $2.1
million with expenditures of $3.1 million. The non-major governmental funds revenues were $1.2
million with the majority from local sales taxes (Downtown Strategy and Economic Development
Funds) and property taxes (Eagle Mountain Community Facilities District). Expenditures for the
non-major funds were $0.7 million primarily for debt service for Eagle Mountain Community
Facilities District.
The Town’s total net position of governmental activities decreased $1.8 million (1.5%) from the
prior fiscal year. Revenues increased 6.1% with higher fee revenue; expenditures for long term
debt were reduced but increased in Highways and Streets due to continuation of the program
for pavement maintenance.
General revenues accounted for $15.9 million in revenue, or 85% of all current fiscal year
revenues. Program specific revenues in the form of charges for services and grants and
contributions accounted for $2.9 million or 15% of total current fiscal year revenues.
The Town had approximately $20.5 million in expenses related to governmental activities, an
increase of 4.0% over the prior fiscal year, attributed to the pavement management program.
Per local policy, residual unassigned General Fund revenues may be transferred to the Rainy
Day fund, to 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 fund and Vehicle Replacement funds in the amount of $3.0 million.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2014
(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 Position presents information on all of the Town’s assets and liabilities, with the
difference between the two reported as net position. Over time, increases or decreases in net position
may serve as a useful indicator of whether the financial position of the Town is improving or
deteriorating.
The Statement of Activities presents information showing how the Town’s net position changed during
the most recent fiscal year. All changes in net position are reported as soon as the underlying event
giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and
expenses are reported in this statement for some items that will only result in cash flows in future fiscal
periods (e.g., earned but unused compensated absences).
The government-wide financial statements 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.
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.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2014
(16)
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,
Highway Users Revenue Fund (HURF), Capital Projects Fund, General Obligation Debt Service Fund,
and Municipal Property Corporation Debt Service 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 the 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 Position and the Statement of Activities serve to provide an answer to the
question of how the Town, as a whole, did financially throughout the year. These statements include all
assets and liabilities using the accrual basis of accounting similar to the accounting used by the private
sector. The basis for this accounting takes into account all of the current year’s revenues and expenses
regardless of when the cash is received or paid.
These two statements report the Town’s assets and the changes in those assets. The change in assets
is important because it tells the reader whether the financial position of the Town as a whole has
improved or diminished. However, in evaluating the overall position of the Town, non-financial
information such as changes in the Town’s tax base and the condition of the Town’s capital assets will
also need to be evaluated.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2014
(17)
Analysis of Net Position
Net position may serve, over time, as a useful indicator of a government’s financial position. In the case
of the Town, assets exceeded liabilities by $114.4 million at the current fiscal year end. The following
table presents a summary of the Town’s net position for the fiscal years ended June 30, 2014 and
June 30, 2013.
2014 2013
Percent
Change
ASSETS
Current and Other Assets 26,489,337$ 28,460,597$ (6.9)%
Capital Assets:
Non-depreciable 27,334,347 26,223,288 4.2 %
Depreciable (net) 73,728,913 77,222,272 (4.5)%
Total Assets 127,552,597 131,906,157 (3.3)%
LIABILITIES
Other Liabilities 3,717,336 3,820,104 (2.7)%
Long-Term Liabilities:
Due W ithin One Year 2,164,879 2,449,599 (11.6)%
Due in More Than One Year 7,289,432 9,501,392 (23.3)%
Total Liabilities 13,171,647 15,771,095 (16.5)%
NET POSITION
Net Investment in Capital Assets 89,713,260 89,800,560 (0.1)%
Restricted 5,480,867 5,721,744 (4.2)%
Unrestricted 19,186,823 20,612,758 (6.9)%
Total Net Position 114,380,950$ 116,135,062$ (1.5)%
Town of Fountain Hills, Arizona
Statement of Net Position
The largest portion of the Town’s net position (78%) reflects its investment in capital assets (e.g., land,
infrastructure, buildings, improvements, 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
position (5%) is 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
position. 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, 2014
(18)
Analysis of Changes in Net Position
The Town’s total net position decreased by $1.8 million during the fiscal year. The decrease was
primarily a result of the pavement management program.
Total governmental revenues increased over the prior year with a net increase of $1.1 million (6%);
primarily due to building permits and related construction and intergovernmental revenues. The Town
also saw an increase in local sales taxes of $0.5 million (6%) as well as revenues shared with
cities/towns by the State (income tax, state sales tax and vehicle license taxes – increase of 7%)
reflecting improvements in the economy.
The Town’s total revenues for the current fiscal year were $18.7 million. The total cost of all programs
and services was $20.5 million. The following table presents a summary of the changes in net position
for the fiscal years ended June 30, 2014 and June 30, 2013.
2014 2013
Percent
Change
REVENUES
Program Revenues:
Fees, Fines and Charges for Services 1,412,797$ 1,223,499$ 15.5 %
Operating Grants and Contributions 1,307,738 1,266,906 3.2 %
Capital Grants and Contributions 144,570 150,535 (4.0)%
General Revenues:
Sales Taxes 8,459,267 7,957,163 6.3 %
Property Taxes 1,449,646 1,385,147 4.7 %
Franchise Taxes 349,414 334,668 4.4 %
State Shared Revenues 4,525,857 4,226,234 7.1 %
Vehicle License Taxes 800,475 752,949 6.3 %
Investment Earnings 123,311 69,998 76.2 %
Miscellaneous 166,115 300,899 (44.8)%
Total Revenues 18,739,190 17,667,998 6.1 %
EXPENSES
General Government 2,432,965 2,909,443 (16.4)%
Public Safety 6,958,056 6,100,131 14.1 %
Highways and Streets 6,630,875 5,712,817 16.1 %
Culture and Recreation 2,760,690 2,779,294 (0.7)%
Development Services 1,237,717 1,633,361 (24.2)%
Interest on Long-Term Debt 472,999 567,043 (16.6)%
Total Expenses 20,493,302 19,702,089 4.0 %
CHANGE IN NET POSITION (1,754,112) (2,034,091) (13.8)%
Net Position - Beginning of Year 116,135,062 118,169,153 (1.7)%
NET POSITION - END OF YEAR 114,380,950$ 116,135,062$ (1.5)%
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2014
(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 (47%), followed by state shared revenues (24%), property taxes (8%),
grants (8%), fees, fines and charges for services (7%), and vehicle license tax (4%).
The charts below compare the governmental expenses from fiscal years 2013-14 and 2012-13.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2014
(20)
The following items are significant current year transactions that had an impact on the Statement of Net
Position and Statement of Activities:
Depreciable assets declined 4.5% ($3,493,359) with the Town’s depreciation of capital assets.
Overall revenues increased by 6% compared to the prior year, largely due to an increase in
sales tax. Additionally, state shared revenues increased 7% which reflected the improving
economy. 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.
Fees, Fines and Charges for Services revenue increased 15.5% compared to the prior year due
in large part to an increase in building permits.
Sales tax revenues in Fountain Hills are derived primarily from retail and
transportation/communications/utilities activity. An increase in these revenues reflects an
improving economy.
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; last fiscal year revenues, both State
income tax and State sales tax, were higher than anticipated with an increase of $299,623.
Investment income increased in the current year 76.2% over the prior year. This increase was
due to realized gains on the Town’s investment portfolio.
The decrease in miscellaneous revenues is primarily attributable to a decline in forfeitures in the
retirement plan. In the prior year, there was also a recovery from the State Treasurer’s
investment pool which did not occur in the current year.
Overall expenses increased 4.0% due to primarily to increases in public safety contracts and
expenditures for the pavement management program.
General Government expenses were less than prior year due to decreases in attorney fees and
contracted services.
Public Safety costs include contracts for police and fire; those contracts are multi-year with
automatic increases.
Increase in Highways and Streets expenses was due to the pavement management program.
FINANCIAL ANALYSIS OF THE TOWN’S FUNDS
As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-
related legal requirements.
Governmental Funds
The focus of the Town’s governmental funds is to provide information on near-term inflows, outflows,
and balances of 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, Highway Users Revenue Fund,
Capital Projects Fund, General Obligation Debt Service Fund, and the Municipal Property Corporation
Debt Service Fund.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2014
(21)
The financial performance of the Town as a whole is reflected in its governmental funds. As the Town
completed the year, its governmental funds reported a combined fund balance of $22.7 million, a
decrease of $1.8 million.
Increase
(Decrease)
Fund Balance From FY 2012-13
General Fund 7,997,952$ 301,130$
HURF Fund 701,391 (156,790)
Capital Projects Fund 7,147,586 (1,857,690)
General Obligation Debt Service Fund 76,834 15,606
Municipal Property Corporation Debt Service Fund 1,973,067 (370,119)
Nonmajor Governmental Funds 4,817,723 244,720
22,714,553$ (1,823,143)$
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 $8.0 million, while total fund balance of all
funds reached $22.7 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 64 percent of total General Fund expenditures, while total fund balance represents
111 percent of total expenditures. The fund balance of the Town of Fountain Hills’ General Fund, which
includes the Vehicle Replacement Fund, balance increased by $0.3 million. Any residual balance will
be transferred to the Capital Projects Fund per the Town Council policy. Expenditures within the
General Fund increased 4% over the prior year – the primary reason for the increase is the purchase of
a new fire truck.
The General Fund comprises 35 percent of the total fund balance. Approximately $5.0 million or
62 percent of the General Fund’s fund balance constitutes unassigned fund balance. The remaining
fund balance is committed, assigned and non-spendable for inventory and prepaid items.
The General Fund is the principal operating fund of the Town; overall the General Fund’s performance
resulted in a net change in fund balance of $0.3 million.
The fund balance of the HURF Fund decreased $0.2 million. The decrease was due primarily to
expenditures for the pavement management program.
The fund balance of the Capital Project’s Fund decreased $1.9 million during the current fiscal year.
The decrease was primarily due to the new street yard building, Fire Station #1 renovations and the
Avenue of the Fountains median improvements.
The fund balance of the General Obligation Debt Service Fund increased $15,606 during the current
fiscal year. The increase was largely due to lower debt service payments.
The fund balance of the Municipal Property Corporation (MPC) Debt Service Fund decreased $0.4
million 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 were insufficient reserves to pay annual debt service. Reserves from this fund contributed to the
early retirement of Town Hall bonds in a prior year.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2014
(22)
All non-major governmental funds of the Town are combined into one column on the governmental fund
statements. The non-major governmental funds reported a $0.2 million increase in fund balance mainly
due to the allocation of local sales tax for economic development and revenues from development fees.
BUDGETARY HIGHLIGHTS
A statement 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 favorable revenue variance of $83,503 in sales taxes is due to higher than expected tax revenue,
mostly attributable to the improved economy.
The favorable revenue variance of $46,414 in franchise taxes is due to higher than expected franchise
payments from services operating in the Town, mostly attributable to the improved economy.
The unfavorable variance in intergovernmental revenues of $52,285 was a result of the state’s actual
collections of fire insurance premium taxes being less than projected, which affects the distribution to
cities and towns.
The unfavorable revenue variance of $92,396 in fines and forfeiture reflects decreased court activity
related to decreased traffic citations within Town borders.
The unfavorable revenue variance of $48,090 in licenses and permits reflects the lower activity than
anticipated in the current year largely attributable to less construction activity toward the end of the
year.
The favorable expenditure variance of $1,428,037 includes all departments. Development Services
noticed lower than anticipated repairs and maintenance and utilities for Town-owned facilities. The
Municipal Court also reduced staffing with a part-time judge. The general government Administration
variance is due primarily to the appropriation of approximately $168,400 in the event the economy
worsened during the fiscal year; this contingency was not required. The remainder of the general
government Administration variance was due to an employee going from full-time to part-time and less
than anticipated information technology improvements.
The change of $114,019 between the original and final budget was not significant during the fiscal year.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
As of June 30, 2014, the Town had invested $101.1 million in capital assets, including buildings,
vehicles, computers, equipment, infrastructure and artwork net of accumulated depreciation. This
amount represents a net decrease from the prior fiscal year of $2.4 million. Total depreciation expense
for the current fiscal year was $4.8 million, which accounted for most of the decrease.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2014
(23)
Major capital asset events during the current fiscal year included the following:
Avenue of the Fountains median improvements
Fire Station #1 remodel
Street maintenance building
ERV star pumper fire truck
The schedule below presents a summary of capital asset balances for the fiscal years ended June 30,
2014 and June 30, 2013.
2014 2013
Percent
Change
Land 23,571,668$ 23,571,668$ 0.0%
Artwork 1,967,500 1,886,500 4.3%
Construction in Progress 1,795,179 765,120 134.6%
Infrastructure 51,559,773 55,215,185 -6.6%
Buildings 14,027,400 14,189,682 -1.1%
Improvements 6,907,205 7,148,597 -3.4%
Vehicles, Machinery and Equipment 1,234,535 668,808 84.6%
Total Capital Assets 101,063,260$ 103,445,560$ -2.3%
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 $9.2 million in bonds outstanding, $2.0 million due within one year; this
amount represents a net decrease of $2.4 million. The chart below is a summary of the Town’s
outstanding debt as of year-end:
2014 2013
General Obligation Bonds 4,495,000$ 5,700,000$
Revenue Bonds 4,695,000 5,905,000
Total Outstanding Debt 9,190,000$ 11,605,000$
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 purpose municipal bonds (up to 6% of the total secondary assessed
valuation). The current total debt limitation for the Town is $93.2 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, 2014
(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 a major credit rating agency.
The housing market has shown signs of recovery (both nationally and regionally), indicating that the
overall economy may continue to experience moderate 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 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 beyond 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 stop 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 a 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 (37%); State-
shared income tax revenues are anticipated to increase slightly during fiscal year 2014-15 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 plan was presented to the public late summer of 2009 and serves as a useful
tool for economic development to attract developers.
As of June 30, 2014, the Town had set aside $7.1 million in the capital improvement fund. The Town
had been successful in obtaining a contract with ADOT to fund a major road improvement along Shea
Boulevard that was completed in fiscal year 2011-2012. The Town completed a second construction
project for another major road improvement on Shea Boulevard with further funding from ADOT in fiscal
year 2012-2013. The widening of Shea Boulevard, funded primarily by a grant, will begin in fiscal year
2014-2015 as well as the reconstruction of Saguaro Boulevard, which will be bond financed.
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 fiscal year 2014-2015 General Fund operating budget is $13.7 million representing a 4% increase
from fiscal year 2013-14 budget. 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 $ 22.2 million, a 22% increase over fiscal year 2013-14 in anticipation of the reconstruction of
Saguaro Boulevard that will be funded by voter-approved bonds. 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, 2014
(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 $22.8 million; with the capital
budget for fiscal year 2014-15 totaling $ 22.2 million (which includes carryover funds for some large
projects currently underway). In fiscal year 2014-15, 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 or visit our website at: www.fh.az.gov.
BASIC FINANCIAL STATEMENTS
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF NET POSITION
JUNE 30, 2014
See accompanying Notes to Basic Financial Statements.
(26)
Governmental
Activities
ASSETS
Cash and Investments 20,972,629$
Cash with Paying Agent 2,348,018
Receivables, Net:
Accounts Receivable 172,590
Intergovernmental Receivables 850,699
Property Taxes Receivable 20,620
Inventory, At Cost 14,358
Prepaid Items 19,345
Restricted Assets 2,091,078
Capital Assets:
Non-Depreciable 27,334,347
Depreciable (Net) 73,728,913
Total Assets 127,552,597
LIABILITIES
Accounts Payable 790,531
Accrued Wages and Benefits 130,595
Interest Payable 230,406
Retainage Payable 48,660
Unearned Revenue 357,144
Matured Debt Principal Payable 2,160,000
Noncurrent Liabilities:
Due Within One Year 2,164,879
Due in More Than One Year 7,289,432
Total Liabilities 13,171,647
NET POSITION
Net Investment in Capital Assets 89,713,260
Restricted For:
Highways and Streets 702,604
Public Safety 256,850
Capital Outlay 2,450,605
Debt Service 2,061,016
Cottonwoods Maintenance District 9,792
Unrestricted 19,186,823
Total Net Position 114,380,950$
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2014
See accompanying Notes to Basic Financial Statements.
(27)
NET (EXPENSE)
REVENUE
AND CHANGES
IN NET POSITION
Fees, Fines and Operating Capital
Charges for Grants and Grants and Governmental
FUNCTIONS/PROGRAMS EXPENSES Services Contributions Contributions Activities
Governmental Activities:
General Government 2,432,965$ 1,373,670$ -$ 43,448$ (1,015,847)$
Public Safety 6,958,056 16,971 39,174 - (6,901,911)
Highways and Streets 6,630,875 22,156 1,268,564 20,122 (5,320,033)
Culture and Recreation 2,760,690 - - 81,000 (2,679,690)
Development Services 1,237,717 - - - (1,237,717)
Interest on Long-Term Debt 472,999 - - - (472,999)
Total Governmental Activities $20,493,302 $ 1,412,797 $ 1,307,738 $ 144,570 (17,628,197)
GENERAL REVENUES
Taxes:
Sales 8,459,267
Property 1,449,646
Franchise 349,414
State Sales and Income Tax Revenue Sharing - Unrestricted 4,525,857
Vehicle License Tax Revenue Sharing - Unrestricted 800,475
Investment Earnings 123,311
Miscellaneous 166,115
Total General Revenues 15,874,085
Change in Net Position (1,754,112)
Net Position - Beginning 116,135,062
Net Position - Ending 114,380,950$
PROGRAM REVENUES
TOWN OF FOUNTAIN HILLS, ARIZONA
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2014
See accompanying Notes to Basic Financial Statements.
(28)
General
Obligation
General HURF Capital Projects Debt Service
ASSETS
Cash and Investments 7,463,697$ 601,158$ 7,852,549$ 65,074$
Cash with Paying Agent - - - 956,875
Accounts Receivable 119,384 21,205 32,001 -
Intergovernmental Receivable 635,612 153,826 - -
Taxes Receivable 5,946 - - 11,760
Due from Other Funds 40,808 - - -
Inventory, At cost 14,358 - - -
Prepaid Items 18,348 997 - -
Restricted Assets 75,623 - - -
Total Assets 8,373,776$ 777,186$ 7,884,550$ 1,033,709$
LIABILITIES, DEFERRED INFLOWS OF RESOURCES
AND FUND BALANCES
Liabilities:
Accounts Payable 237,146$ 61,825$ 456,303$ -$
Accrued Wages and Benefits 114,444 12,757 - -
Retainage Payable - - 48,660 -
Unearned Revenue - - 200,000 -
Due to Other Funds - - - -
Interest Payable - - - 56,875
Matured Debt Principal Payable - - - 900,000
Total Liabilities 351,590 74,582 704,963 956,875
Deferred Inflows of Resources
Unavailable Revenues 24,234 1,213 32,001 -
Fund Balances
Nonspendable
Cash with Escrow Agent - - - -
Inventory 14,358 - - -
Prepaid Items 18,348 997 - -
Restricted - 700,394 - 76,834
Committed 1,345,200 - - -
Assigned 1,647,193 - 7,147,586 -
Unassigned 4,972,853 - - -
Total Fund Balances 7,997,952 701,391 7,147,586 76,834
Total Liabilities, Deferred Inflows of
Resources and Fund Balances 8,373,776$ 777,186$ 7,884,550$ 1,033,709$
(29)
Municipal
Property Nonmajor Total
Corporation Governmental Governmental
Debt Service Funds Funds
-$ 4,990,151$ 20,972,629$
1,029,700 361,443 2,348,018
- - 172,590
40,818 20,443 850,699
- 2,914 20,620
- - 40,808
- - 14,358
- - 19,345
2,015,455 - 2,091,078
3,085,973$ 5,374,951$ 26,530,145$
10$ 35,247$ 790,531$
- 3,394 130,595
- - 48,660
- 157,144 357,144
40,808 - 40,808
117,088 56,443 230,406
955,000 305,000 2,160,000
1,112,906 557,228 3,758,144
- - 57,448
1,973,067 - 1,973,067
- - 14,358
- - 19,345
- 2,728,362 3,505,590
- 2,089,361 3,434,561
- - 8,794,779
- - 4,972,853
1,973,067 4,817,723 22,714,553
3,085,973$ 5,374,951$ 26,530,145$
THIS PAGE BLANK
TOWN OF FOUNTAIN HILLS, ARIZONA
RECONCILIATION OF THE BALANCE SHEET
OF GOVERNMENTAL FUNDS TO THE
STATEMENT OF NET POSITION
JUNE 30, 2014
See accompanying Notes to Basic Financial Statements.
(30)
Total Fund Balances for Governmental Funds 22,714,553$
Governmental Capital Assets 194,991,356
Less Accumulated Depreciation (93,928,096)
Capital Assets Used in Governmental Activities 101,063,260
Miscellaneous Permits 25,447
Miscellaneous Revenue 32,001
General Obligation Bonds (4,495,000)
Revenue Bonds Payable (4,695,000)
Compensated Absences (264,311)
Total Net Position of Governmental Activities 114,380,950$
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 Position are different
because:
Some revenues are not available to pay for current period expenditures and, therefore,
are reported as deferred inflows of resources in the funds.
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCES
GOVERNMENTAL FUNDS
FISCAL YEAR ENDED JUNE 30, 2014
See accompanying Notes to Basic Financial Statements.
(31)
General
Obligation
General HURF Capital Projects Debt Service
REVENUES
Taxes:
Sales 7,100,383$ -$ 390,871$ -$
Property - - - 1,029,428
Franchise 349,414 - - -
Intergovernmental 4,503,364 2,069,039 43,448 -
Fines and Forfeitures 154,024 - - -
Licenses and Permits 554,690 - - -
Charges for Services 139,220 22,156 - -
Leases and Rents 252,584 - - -
Investment Earnings 56,576 375 30,815 178
Other 123,932 10,182 - -
Total Revenues 13,234,187 2,101,752 465,134 1,029,606
EXPENDITURES
Current:
General Government 2,125,922 - - -
Public Safety 6,886,158 - - -
Highways and Streets - 3,073,746 - -
Culture and Recreation 1,900,648 - - -
Development Services 1,597,517 - - -
Debt Service:
Principal Retirement - - - 900,000
Interest on Long-Term Debt - - - 113,750
Fiscal Charges - - - 250
Capital Outlay - - 1,750,465 -
Total Expenditures 12,510,245 3,073,746 1,750,465 1,014,000
Excess (Deficiency) of Revenues Over
Expenditures 723,942 (971,994) (1,285,331) 15,606
OTHER FINANCING SOURCES (USES)
Transfers In - 994,000 421,641 -
Transfers Out (422,812) (178,796) (994,000) -
Total Other Financing Sources (Uses) (422,812) 815,204 (572,359) -
Net Change in Fund Balance 301,130 (156,790) (1,857,690) 15,606
FUND BALANCE
Beginning of Year 7,696,822 858,181 9,005,276 61,228
End of Year 7,997,952$ 701,391$ 7,147,586$ 76,834$
(32)
Municipal
Property Nonmajor Total
Corporation Governmental Governmental
Debt Service Funds Funds
645,342$ 322,671$ 8,459,267$
- 433,628 1,463,056
- - 349,414
- 61,667 6,677,518
- 16,971 170,995
- 337,092 891,782
- - 161,376
- - 252,584
11,341 24,026 123,311
- - 134,114
656,683 1,196,055 18,683,417
- 68,923 2,194,845
- 4,612 6,890,770
- 11,813 3,085,559
- 21,291 1,921,939
- 177,466 1,774,983
1,210,000 305,000 2,415,000
234,176 112,885 460,811
4,510 7,428 12,188
- - 1,750,465
1,448,686 709,418 20,506,560
(792,003) 486,637 (1,823,143)
421,884 928 1,838,453
- (242,845) (1,838,453)
421,884 (241,917) -
(370,119) 244,720 (1,823,143)
2,343,186 4,573,003 24,537,696
1,973,067$ 4,817,723$ 22,714,553$
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, 2014
See accompanying Notes to Basic Financial Statements.
(33)
Net Change in Fund Balances of Governmental Funds (1,823,143)$
Expenditures for Capital Assets 2,385,168
Less Current Year Depreciation (4,823,757)
Excess Depreciation Over Capital Expenditures (2,438,589)
Loss on Disposal of Capital Assets (44,833)
Capital Contributions 101,122
Property Taxes (13,410)
Miscellaneous Permits (63,940)
Miscellaneous Revenue 32,001
Principal Payments on General Obligation Bonds 1,205,000
Principal Payments on Revenue Bonds 1,210,000
Net Decrease in Compensated Absences 81,680
Change in Net Position of Governmental Activities (1,754,112)$
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
funds.
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 position. The issuance of long-term debt increases long-term liabilities on
the Statement of Net Position and the repayment of principal on long-term debt reduces
long-term debt on the Statement of Net Position. Also, governmental funds report the
effect of issuance costs, premiums, and similar items when the debt is first issued,
whereas these items are amortized over the term of the long term debt in the Statement
of Activities except for issuance costs which are expensed in the year when incurred.
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
GENERAL FUND
FISCAL YEAR ENDED JUNE 30, 2014
See accompanying Notes to Basic Financial Statements.
(34)
Variance with
Original Budget Final Budget Actual Final Budget
REVENUES
Taxes:
Sales Taxes 7,016,880$ 7,016,880$ 7,100,383$ 83,503$
Franchise Taxes 303,000 303,000 349,414 46,414
Intergovernmental 4,555,649 4,555,649 4,503,364 (52,285)
Fines and Forfeitures 246,420 246,420 154,024 (92,396)
Licenses and Permits 602,780 602,780 554,690 (48,090)
Charges for Services 142,048 142,048 139,220 (2,828)
Leases and Rents 224,544 224,544 252,584 28,040
Investment Earnings 61,200 61,200 56,576 (4,624)
Other 229,648 229,648 123,932 (105,716)
Total Revenues 13,382,169 13,382,169 13,234,187 (147,982)
EXPENDITURES
Current:
General Government:
Mayor and Council 77,652 79,702 76,800 2,902
Administration 2,184,483 2,080,191 1,756,630 323,561
Municipal Court 360,006 362,401 292,492 69,909
Total General Government 2,622,141 2,522,294 2,125,922 396,372
Public Safety:
Law Enforcement 3,121,325 3,121,325 3,064,708 56,617
Fire and Emergency Medical 3,975,005 4,060,663 3,821,450 239,213
Total Public Safety 7,096,330 7,181,988 6,886,158 295,830
Culture and Recreation:
Community Services 2,239,465 2,267,884 1,900,648 367,236
Development Services 1,866,327 1,966,116 1,597,517 368,599
Total Expenditures 13,824,263 13,938,282 12,510,245 1,428,037
Excess (Deficiency) of Revenues Over
Expenditures (442,094) (556,113) 723,942 1,280,055
OTHER FINANCING SOURCES (USES)
Transfers Out (221,500) (221,500) (422,812) (201,312)
Net Change in Fund Balance (663,594) (777,613) 301,130 1,078,743
FUND BALANCE
Beginning of Year - - 7,696,822 7,696,822
End of Year (663,594)$ (777,613)$ 7,997,952$ 8,775,565$
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
HIGHWAY USER REVENUE FUND
FISCAL YEAR ENDED JUNE 30, 2014
See accompanying Notes to Basic Financial Statements.
(35)
Variance with
Original Budget Final Budget Actual Final Budget
REVENUES
Intergovernmental 2,018,340$ 2,018,340$ 2,069,039$ 50,699$
Charges for Services 25,240 25,240 22,156 (3,084)
Investment Earnings 1,200 1,200 375 (825)
Other 6,060 6,060 10,182 4,122
Total Revenues 2,050,840 2,050,840 2,101,752 50,912
EXPENDITURES
Current:
Highways and Streets 2,094,000 3,091,318 3,073,746 17,572
Excess (Deficiency) of Revenues Over
Expenditures (43,160)(1,040,478) (971,994) 68,484
OTHER FINANCING SOURCES (USES)
Transfers In - - 994,000 994,000
Transfers Out (225,000) (225,000) (178,796) 46,204
Total Other Finance Sources (Uses) (225,000) (225,000) 815,204 1,040,204
Net Change in Fund Balance (268,160)(1,265,478) (156,790) 1,108,688
FUND BALANCE
Beginning of Year - - 858,181 858,181
End of Year (43,160)$ (1,265,478)$ 701,391$ 1,966,869$
NOTES TO BASIC FINANCIAL STATEMENTS
THIS PAGE BLANK
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(36)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying 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 applicable to governmental units adopted by the Governmental
Accounting Standards Board (GASB). A summary of the Town’s more significant
accounting policies follows.
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 Town reports the following component units:
Eagle Mountain Community Facilities District and the Cottonwoods Maintenance
District. As special purpose districts and separate political subdivisions under the
Arizona Constitution, the Districts can levy taxes and issue bonds independently of the
Town. Property owners in the designated areas are assessed taxes, and thus for the
costs of operating the Districts. The Town Council serves as the Board of Directors;
however, the Town has no liability for the Districts’ debt, the Districts are responsible for
the debt; the debt is therefore not subject to the Town’s debt limit. The District cannot
be part of another reporting entity. The District’s governing body is substantially the
same as the Town. As a result, for financial reporting purposes, transactions of the
Districts are combined together and included as if they were part of the Town’s
operations.
Town of Fountain Hills, Arizona Municipal Property Corporation. The Town of Fountain
Hills, Arizona Municipal Property Corporation’s (MPC) Board of Directors consists of
three members which are appointed by the Fountain Hills Town Council. The MPC,
which is a nonprofit corporation incorporated under the laws of the State of Arizona,
was formed for the sole purpose of assisting the Town in obtaining financing for various
projects of the Town. The Town has a “moral obligation” for the repayment of the MPC’s
bonds. The MPC cannot be part of another reporting entity. The MPC provides services
almost exclusively to the Town. As a result, for financial reporting purposes,
transactions of the MPC are combined together and included as if they were part of the
Town’s operations.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(37)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B. Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the Statement of Net Position and the
Statement of Activities) present financial information about the Town as a whole. 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, 2014
(38)
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. Unearned revenues arise when resources are received by the
Town before it has legal claim to them, as when grant monies are received prior to
meeting all eligibility requirements imposed by the provider.
Delinquent property taxes not received within 60 days of the fiscal year end are
reported as deferred inflows of resources. Other receivables that will not be collected
within the available period have also been reported as deferred inflows 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.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(39)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
(Continued)
The Town reports the following 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.
Highway Users Revenue Fund (HURF)
This special revenue fund accounts for the Town’s share of motor fuel tax revenues.
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.
D. Assets, Liabilities, Deferred Inflows of Resources, and Net Position 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.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(40)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Inflows of Resources and Net Position or Fund
Balance (Continued)
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.”
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. The Town does not asses a primary tax.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(41)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Inflows of Resources and Net Position or Fund
Balance (Continued)
2. Receivables and Payables (Continued)
Intergovernmental receivables include amounts due from other government
agencies and include Town sales tax ($530,669), Highway User Revenue fuel tax
($119,479), State sales and income tax ($166,205), and vehicle license tax
($34,346) in the governmental funds and governmental activities column of the
government-wide financial statements.
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 $75,623 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 $2,015,455
deposited in an irrevocable trust with an escrow agent to make future principal and
interest payments on the 2004 Municipal Property Corporation Revenue Bonds.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(42)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Inflows of Resources and Net Position or Fund
Balance (Continued)
6. Capital Assets
Capital assets, which include land, artwork, buildings, improvements, 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 completed.
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 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 accrue
as pay periods are completed at the current rate of pay.
Effective October 7, 2004, all eligible full-time and part-time employees can accrue
vacation leave. Full-time employees accrue up to a maximum of 224 hours of
vacation through carryover of balances, while part-time employees can accrue up to
112 hours, 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 960 hours. A portion of this balance will be
paid upon a satisfactory separation of service.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(43)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Inflows of Resources and Net Position or Fund
Balance (Continued)
7. Compensated Absences (Continued)
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 Position. Bond
premiums and discounts and the difference between the reacquisition price and the
net carrying amount of the old debt, are amortized over the life of the bonds using
the straight-line method over the term of the related debt. The difference between
the reacquisition price and the net carrying value of the old debt is reported as
either a deferred inflow or a deferred outflow of resources and the premium and/or
discount are recorded against the outstanding debt. Issuance costs are expended
when incurred.
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 Position
In the government-wide financial statements, net position is reported in three
categories: net investment in capital assets; restricted net position; and unrestricted
net position. The net investment in capital assets, is separately reported because
capital assets make up a significant portion of total net position. Restricted net
position account for the portion of net position restricted by parties outside the
Town. Unrestricted net position is the remaining net position not included in the
previous two categories.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(44)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Inflows of Resources and Net Position or Fund
Balance (Continued)
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. Fund balances must be committed prior to fiscal year end
through formal council action by passage of a resolution at a public meeting.
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 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.
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.
The Town has established a fund balance policy whereas the combined General
Fund operating fund balance of at least 30% of revenues is recommended.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(45)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Inflows of Resources and Net Position or Fund
Balance (Continued)
10. Fund Balance Classifications (Continued)
The Town has established a stabilization fund (Rainy Day fund) in the Town’s fund
balance policy. The Rainy Day fund had a balance of $1,345,200, reported as a
committed fund balance at June 30, 2014. The Rainy Day fund may only be used
for the following: 1) to replace the loss of more than 25% of the Town’s local share
of State shared revenues, 2) for any event that threatens the health, safety or
welfare of the Town’s citizens, 3) for any event that threatens the fiscal stability of
the Town, and lastly 4) to address any matter declared as an emergency by the
Governor of the State of Arizona or the Mayor of the Town. All withdrawals from the
Rainy Day fund shall be subject to the following rules: 1) any appropriation shall
require the approval by at least 2/3 vote by the Town Council, and 2) the maximum
amount of Rainy Day withdrawal in any fiscal year shall not exceed one-half of the
total balance in the fund. Replenishment of the Rainy Day fund when spent by the
Town should not exceed a period of more than five years, and should be repaid in
equal annual installments of not less than 1% of the previous fiscal year General
Fund fund balance. Repayments shall be appropriated as part of the annual budget
adoption.
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 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.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(46)
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 a resolution. To ensure compliance with the
expenditure limitation, a uniform expenditure report must be filed with the State
each year. This report, issued under a separate cover, reconciles total Town
expenditures from the audited basic financial statements to total expenditures for
reporting in accordance with the State’s uniform expenditure reporting system
(A.R.S. §41-1279.07).
4. Expenditures may not legally exceed the expenditure limitation described below for
all fund types as a whole. For management purposes, the Town adopts a budget
by department for the General Fund and in total by fund for other funds. The Town
Manager, subject to Town Council approval, may at any time transfer any
unencumbered appropriation balance or portion thereof between a department or
activity. The adopted budget cannot be amended in any way without Town Council
approval.
5. Formal budgetary integration is employed as a management control device during
the year for the General, Special Revenue, Debt Service, and Capital Projects
Funds on essentially the same modified accrual basis of accounting used to record
actual revenues and expenditures.
The Town is subject to the State of Arizona’s Spending Limitation Law for Towns and
Cities. This law does not permit the Town to spend more than budgeted revenues plus
the carryover unrestricted cash balance from the prior fiscal year. The limitation is
applied to the total of the combined funds. The Town complied with this law during the
year.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(47)
NOTE 2 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (CONTINUED)
B. Excess of Expenditures Over Appropriations
Expenditures exceeded appropriations in the following funds:
Amount of
Overexpenditure
Major Funds:
Municipal Property Corporation Debt Service Fund 337,286$
The overexpenditure of $337,286 was due to the principal and interest payments made
on the Series 2004 MPC revenue bonds that are not budgeted for by the Town as the
cash has been fully paid to the trustee for future distribution.
(Remainder of This Page Intentionally Left Blank)
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(48)
NOTE 3 DETAILED NOTES ON ALL FUNDS
A. Assets
1. Deposits and Investments
Deposits and investments at June 30, 2014, consist of the following:
Deposits:
Cash on Hand 650$
Cash in Bank 795,509
Cash on Deposit with Paying Agent 2,348,018
Investments
Local Government Investment Pool 4,952,605
Wells Fargo Money Market 73,640
U.S. Agency Securities 3,080,552
U.S. Treasury Securities 2,091,078
U.S. Treasury Notes 12,069,673
Total 25,411,725
Less Cash with Paying Agent (2,348,018)
Less Restricted Assets (2,091,078)
Total Cash and Investments 20,972,629$
Deposits
The Town’s deposits at June 30, 2014, had a carrying value of $795,509 and a bank
balance of $809,618. Of the bank balance, $500,000 was insured by federal
depository insurance and $309,618 was collateralized by securities held by the
pledging financial institutions in the Town’s name.
Investments
The Town’s investments at June 30, 2014 were as follows:
Investment Type Amount
Local Government Investment Pool 4,952,605$
Wells Fargo Money Market 73,640
U.S. Agency Securities 3,080,552
U.S. Treasury Securities 2,091,078
U.S. Treasury Notes 12,069,673
22,267,548$
The State Board of Deposit provides oversight for the LGIP, and the Local
Government Investment Pool Advisory Committee provides consultation and advice
to the Treasurer. The fair value of a participant’s position in the pool approximates
the value of that participant’s pool shares. The shares are not identified with specific
investments and are not subject to custodial credit risk.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(49)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
A. Assets (Continued)
1. Deposits and Investments (Continued)
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.
At June 30, 2014, credit risk for the Town’s investments was as follows:
Investment Type Rating Agency Amount
Local Government Investment Pool AAA S&P 4,952,605$
Wells Fargo Money Market N/A N/A 73,640
U.S. Agency Securities AA+ S&P 3,080,552
U.S. Treasury Securities N/A N/A 2,091,078
U.S. Treasury Notes AA+ S&P 12,069,673
22,267,548$
Custodial credit risk – Concentration credit risk is the risk of loss associated with the
majority 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
notes and 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, 2014, the Town had the following diversification of Town investments:
Percent of
Town
Investment Type Amount Investments
Local Government Investment Pool 4,952,605$ 22.24%
Wells Fargo Money Market 73,640 0.33%
U.S. Agency Securities 3,080,552 13.83%
U.S. Treasury Securities 2,091,078 9.40%
U.S. Treasury Notes 12,069,673 54.20%
22,267,548$ 100.00%
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:
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(50)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
A. Assets (Continued)
1. Deposits and Investments (Continued)
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.
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 4,952,605$ -$ -$ 4,952,605$
Wells Fargo Advantage Money Market 73,640 - - 73,640
Federal Farm Credit Bank Notes - - 500,435 500,435
Federal Home Loan Bank Global Notes - - 431,475 431,475
Federal Home Loan Mortgage Corp. Notes - - 452,300 452,300
Federal National Mortgage Association Notes - - 1,696,342 1,696,342
U.S. Treasury Securities 414,291 1,676,787 - 2,091,078
U.S. Treasury Notes - 2,284,421 9,785,252 12,069,673
Total 5,440,536$3,961,208$ 12,865,804$ 22,267,548$
Maturity
2. Receivables
Governmental funds report deferred inflows of resources in connection with
receivables for revenues that are not considered to be available to liquidate liabilities
of the current period. Governmental funds also record unearned revenue 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 inflows of resources
and unearned revenue reported in the governmental funds were as follows:
Unavailable Unearned
Miscellaneous
General Fund 24,234$ -$
Highway User Revenue Fund 1,213 -
Capital Projects Fund 32,001 200,000
Grants
Nonmajor Governmental Funds - 157,144
57,448$ 357,144$
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(51)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
A. Assets (Continued)
3. Capital Assets
Capital assets for the year ended June 30, 2014, were as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental Activities:
Capital Assets, Not Being Depreciated:
Land 23,571,668$ -$ -$ 23,571,668$
Artwork 1,886,500 81,000 - 1,967,500
Construction in Progress 765,120 1,693,924 (663,865) 1,795,179
Total Capital Assets, Not Being
Depreciated 26,223,288 1,774,924 (663,865) 27,334,347
Capital Assets, Being Depreciated:
Infrastructure 130,788,513 - (11,626) 130,776,887
Buildings 18,008,744 198,523 (33,872) 18,173,395
Improvements 14,766,654 476,968 - 15,243,622
Vehicles, Machinery and Equipment 3,482,484 699,740 (719,119) 3,463,105
Total Capital Assets, Being
Depreciated 167,046,395 1,375,231 (764,617) 167,657,009
Accumulated Depreciation for:
Infrastructure (75,573,328) (3,643,786) - (79,217,114)
Buildings (3,819,062) (360,805) 33,872 (4,145,995)
Improvements (7,618,057) (718,360) - (8,336,417)
Vehicles, Machinery and Equipment (2,813,676) (100,806) 685,912 (2,228,570)
Total Accumulated Depreciation (89,824,123) (4,823,757) 719,784 (93,928,096)
Total Capital Assets, Being
Depreciated, Net 77,222,272 (3,448,526) (44,833) 73,728,913
Governmental Activities Capital
Assets, Net 103,445,560$ (1,673,602)$ (708,698)$ 101,063,260$
Depreciation expense was charged to functions/programs as follows:
Governmental Activities:
General Government 196,870$
Public Safety 67,286
Highways and Streets 3,679,407
Culture and Recreation 880,194
Total Depreciation Expense 4,823,757$
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(52)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
A. Assets (Continued)
4. Construction Commitments
At June 30, 2014, the Town has the following active construction commitments:
Remaining
Project Spent-to-date Commitment
Avenue of the Fountains Median and
Right of Way Improvements 645,290$ 1,094,898$
Fountain Park VI 71,238 26,500
Saguaro Boulevard Reconstruction 265,229 142,012
Fountain Hills Boulevard Shoulder Paving 103,372 10,440
Palisades and Saguaro Traffic Signal Upgrades 13,979 5,991
Total Commitments 1,099,108$ 1,279,841$
Governmental Activities
B. Interfund Transfers
Interfund transfers for the year ended June 30, 2014, consisted of the following:
Municipal
Property
Capital Corporation Nonmajor
HURF Projects Debt Service Governmental
Transfers Out Fund Fund Fund Funds Total
General Fund -$ -$ 421,884$ 928$ 422,812$
HURF Fund - 178,796 178,796
Capital Projects Fund 994,000 - - - 994,000
Nonmajor Governmental Funds - 242,845 - - 242,845
Total 994,000$ 421,641$ 421,884$ 928$ 1,838,453$
Transfers In
The General Fund transferred $421,884 to pay for debt service costs on the Municipal
Property Corporation’s outstanding bonds. The General Fund transferred $928 to the
Development Fees Nonmajor Governmental Fund to reimburse for a refund incorrectly
returned. The Capital Projects Fund transferred $994,000, to the HURF Fund to fund
additional street pavement projects. The HURF Fund transferred 178,796 to the Capital
Projects Fund for construction of a new streets building. The Nonmajor Governmental
Funds transferred $242,845 to the Capital Projects Fund to fund a median improvement
project.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(53)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
C. Long-Term Obligations
Bonds payable at year end consisted of 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. Tax revenues from the
General Fund and Excise Tax Fund are used to pay municipal facilities bonds.
Bonds outstanding at June 30, 2014, were as follows:
Interest Maturity Original Outstanding
Purpose Rates Date Amount Amount
Governmental Activities:
General Obligation Bonds:
General Obligation Refunding
Bonds, Series 2005 4.00 07/01/15-19
$ 7,225,000 $ 2,000,000
Eagle Mountain Community
Facilities District, General Obligation
Refunding Bonds, Series 2005 4.00-4.125 7/1/2015-21
4,555,000 2,495,000
Total General Obligation Bonds $ 11,780,000 $ 4,495,000
Revenue Bonds:
Municipal Facilities Revenue Bonds,
Series 2004 4.25-4.50 7/1/14-15
$ 3,645,000 $ 1,915,000
Municipal Facilities Revenue
Refunding Bonds, Series 2005 3.25-4.00 7/01/15-20
5,330,000 2,780,000
Total Revenue Bonds $ 8,975,000 $ 4,695,000
The Town has pledged future excise taxes to repay a total of $4,695,000 in outstanding
municipal facilities revenue and refunding bonds. For fiscal year ended June 30, 2014,
the net revenues available to service this debt were $14.8 million. The debt principal
and interest paid on this debt for the fiscal year was $1,210,000 and $234,176,
respectively (10 percent of available pledged revenues).
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(54)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
C. Long-Term Obligations (Continued)
Changes in long-term obligations for the year ended June 30, 2014, are as follows:
Due Within
July 1, 2013 Increases Decreases June 30, 2014 One Year
Governmental Activities
Bonds
General Obligation Bonds 5,700,000$ -$ (1,205,000)$ 4,495,000$ 705,000$
Revenue Bonds 5,905,000 - (1,210,000) 4,695,000 1,265,000
Total Bonds 11,605,000 - (2,415,000) 9,190,000 1,970,000
Other Liabilities:
Compensated Absences 345,991 159,256 (240,936) 264,311 194,879
Governmental Activities
Long-Term Liabilities 11,950,991$ 159,256$ (2,655,936)$ 9,454,311$ 2,164,879$
Debt service requirements on long-term debt at June 30, 2014, are as follows:
Principal Interest
2015 $ 1,970,000 $ 386,581
2016 2,830,000 307,136
2017 1,120,000 186,406
2018 1,150,000 141,606
2019 1,040,000 100,567
2020 - 2022
1,080,000 60,585
9,190,000$ 1,182,881$
Governmental Activities
Year Ending June 30,
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2014
(55)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
D. Fund Balances
Fund Balances at June 30, 2014 were as follows:
Municipal
General Property Nonmajor
Capital Obligation Corporation Governmental
General HURF Projects Debt Service Debt Service Funds Total
Nonspendable:
Cash with Escrow Agent -$ -$ -$ -$ 1,973,067$ -$ 1,973,067$
Inventory 14,358 - - - - - 14,358
Prepaids 18,348 997 - - - - 19,345
Restricted:
Debt Service - - - 76,834 - 11,115 87,949
Highways and Streets - 700,394 - - - - 700,394
Local Court Enhancement - - - - - 256,850 256,850
New Development - - - - - 2,450,605 2,450,605
Cottonwoods Maintenance
District - - - - - 9,792 9,792
Committed
Rainy Day Funds 1,345,200 - - - - - 1,345,200
Town Beautification and
Economic Development - - - - - 2,089,361 2,089,361
Assigned
Public Art 1,078 - - - - - 1,078
Vehicle Replacement 301,259 - - - - - 301,259
Capital Projects 537,942 - 7,147,586 - - - 7,685,528
Equipment Replacement 806,914 - - - - - 806,914
Unassigned 4,972,853 - - - - - 4,972,853
Total Fund Balance 7,997,952$ 701,391$ 7,147,586$ 76,834$ 1,973,067$ 4,817,723$ 22,714,553$
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, 2014
(56)
NOTE 4 OTHER INFORMATION (CONTINUED)
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, 2014, was
$2,380,050. The Town’s total payroll was $2,811,315.
A defined contribution pension plan provides benefits in return for services rendered,
provides an individual account for each participant, and specifies how contributions to
the individual’s account are to be determined, instead of specifying the amount of
benefit the individual is to receive. Under a defined contribution pension plan, the
benefits a participant will receive depend solely on the amount contributed to the
participant’s account, the returns earned on investment of those contributions, and
forfeitures of other participants’ benefits that may be allocated to such participant’s
account. All full-time Town employees must participate in the pension plan from the date
they are hired. Contributions made by an employee vest immediately and contributions
made by the Town vest after five years of service on a pro rata basis.
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 the fiscal year, the Town’s required
and actual contributions amounted to $261,806. The employees’ contributions totaled
$261,806. Employees may also contribute to the lCMA Retirement Corporation 457 plan
on a voluntary basis; there is no employer match for those contributions. During the
fiscal year, employees contributed $129,453 to that plan.
No pension provision changes occurred during the year that affected the required
contributions to be made by the Town or its employees. The ICMA Retirement
Corporation held no securities of the Town or other related parties during the fiscal year
2013-14 or as of the close of the fiscal year.
THIS PAGE BLANK
COMBINING AND INDIVIDUAL FUND
STATEMENTS AND SCHEDULES
THIS PAGE BLANK
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
Development Fees Fund - accounts for restricted development fees collected from developers for
projects approved by the Town Council.
Local Court Enhancement Fund - accounts for a local court surcharge, restricted for court
enhancement.
Grants Fund - accounts for the activities of various restricted grants and contributions received by the
Town.
Downtown Strategy Fund - accounts for the portion of Town sales tax committed by the Town Council
for the development of downtown.
Economic Development Fund – accounts for the portion of Town sales tax committed by the Town
Council for economic development.
Cottonwoods Maintenance Fund - accounts for all special assessments restricted to pay for
maintenance of the Cottonwoods Special Assessment District.
DEBT SERVICE FUNDS
Eagle Mountain Debt Service Fund – accounts for the property tax revenues restricted to pay the debt
service of the Eagle Mountain Community Facilities District component unit.
TOWN OF FOUNTAIN HILLS, ARIZONA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
JUNE 30, 2014
(57)
Development
Fees
Local Court
Enhancement Grants
Downtown
Strategy
ASSETS
Cash and Investments 2,451,501$ 256,850$ 188,804$ 2,035,147$
Cash with Paying Agent - - - -
Intergovernmental Receivable - - - 8,164
Taxes Receivable - - - -
Total Assets 2,451,501$ 256,850$ 188,804$ 2,043,311$
LIABILITIES AND FUND BALANCES
Liabilities
Accounts Payable 896$ -$ 31,660$ -$
Accrued Wages and Benefits - - - -
Unearned Revenue - - 157,144 -
Interest Payable - - - -
Matured Debt Principal Payable - - - -
Total Liabilities 896 - 188,804 -
Fund Balances
Restricted 2,450,605 256,850 - -
Committed - - - 2,043,311
Total Fund Balances 2,450,605 256,850 - 2,043,311
Total Liabilities and Fund Balances 2,451,501$ 256,850$ 188,804$ 2,043,311$
Special Revenue Funds
(58)
Debt Service
Fund
Economic
Development
Cottonwoods
Maintenance
Total Special
Revenue
Funds
Eagle
Mountain
Debt Service
Total
Nonmajor
Governmental
Funds
39,640$ 10,008$ 4,981,950$ 8,201$ 4,990,151$
- - - 361,443 361,443
12,245 34 20,443 - 20,443
- - - 2,914 2,914
51,885$ 10,042$ 5,002,393$ 372,558$ 5,374,951$
2,441$ 250$ 35,247$ -$ 35,247$
3,394 - 3,394 - 3,394
- - 157,144 - 157,144
- - - 56,443 56,443
- - - 305,000 305,000
5,835 250 195,785 361,443 557,228
- 9,792 2,717,247 11,115 2,728,362
46,050 - 2,089,361 - 2,089,361
46,050 9,792 4,806,608 11,115 4,817,723
51,885$ 10,042$ 5,002,393$ 372,558$ 5,374,951$
Special Revenue Funds
TOWN OF FOUNTAIN HILLS, ARIZONA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGE IN FUND BALANCES
FISCAL YEAR ENDED JUNE 30, 2014
(59)
Development
Fees
Local Court
Enhancement Grants
Downtown
Strategy
REVENUES
Taxes:
Sales -$ -$ -$ 129,068$
Property - - - -
Intergovernmental - - 61,667 -
Fines and Forfeitures - 16,971 - -
Licenses and Permits 337,092 - - -
Investment Earnings 11,915 122 - 11,879
Total Revenues 349,007 17,093 61,667 140,947
EXPENDITURES
Current:
General Government - 3,893 61,667 -
Public Safety 4,612 - - -
Highways and Streets 11,813 - - -
Culture and Recreation 21,291 - - -
Development Services - - - 29,885
Debt Service
Principal Retirement - - - -
Interest on Long-Term Debt - - - -
Fiscal Charges - - - -
Total Expenditures 37,716 3,893 61,667 29,885
Excess (Deficiency) of
Revenues Over Expenditures 311,291 13,200 - 111,062
OTHER FINANCING SOURCES (USES)
Transfers In 928 - - -
Transfers Out - - - (242,845)
Total Other Financing
Sources (Uses) 928 - - (242,845)
Net Change in Fund
Balances 312,219 13,200 - (131,783)
FUND BALANCES
Beginning of Year 2,138,386 243,650 - 2,175,094
End of Year 2,450,605$ 256,850$ -$ 2,043,311$
Special Revenue Funds
(60)
Debt Service
Fund
Economic
Development
Cottonwoods
Maintenance
Total Special
Revenue
Funds
Eagle
Mountain Debt
Service
Total
Nonmajor
Governmental
Funds
193,603$ -$ 322,671$ -$ 322,671$
- 4,823 4,823 428,805 433,628
- - 61,667 - 61,667
- - 16,971 - 16,971
- - 337,092 - 337,092
28 5 23,949 77 24,026
193,631 4,828 767,173 428,882 1,196,055
- 3,363 68,923 - 68,923
- - 4,612 - 4,612
- - 11,813 - 11,813
- - 21,291 - 21,291
147,581 - 177,466 - 177,466
- - - 305,000 305,000
- - - 112,885 112,885
- - - 7,428 7,428
147,581 3,363 284,105 425,313 709,418
46,050 1,465 483,068 3,569 486,637
- - 928 - 928
- - (242,845) - (242,845)
- - (241,917) - (241,917)
46,050 1,465 241,151 3,569 244,720
- 8,327 4,565,457 7,546 4,573,003
46,050$ 9,792$ 4,806,608$ 11,115$ 4,817,723$
Special Revenue Funds
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, 2014
(61)
Variance with
Original Budget Final Budget Actual Final Budget
REVENUES
Taxes:
Sales 120,000$ 120,000$ 390,871$ 270,871$
Intergovernmental 3,878,000 3,878,000 43,448 (3,834,552)
Licenses and Permits 200,000 200,000 - (200,000)
Investment Earnings - - 30,815 30,815
Total Revenues 4,198,000 4,198,000 465,134 (3,732,866)
EXPENDITURES
Capital Outlay 19,198,080 18,204,080 1,750,465 16,453,615
Excess (Deficiency) of Revenues Over
Expenditures (15,000,080)(14,006,080) (1,285,331) 12,720,749
OTHER FINANCING SOURCES (USES)
Transfers In 2,093,000 2,093,000 421,641 (1,671,359)
Transfers Out - - (994,000) (994,000)
Issuance of Long-Term Debt 8,200,000 8,200,000 - (8,200,000)
Total Other Financing Sources (Uses) 10,293,000 10,293,000 (572,359) (10,865,359)
Net Change in Fund Balance (4,707,080)(3,713,080) (1,857,690) 1,855,390
FUND BALANCE
Beginning of Year - - 9,005,276 9,005,276
End of Year (4,707,080)$ (3,713,080)$ 7,147,586$ 10,860,666$
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, 2014
(62)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Property 1,013,040$ 1,029,428$ 16,388$
Investment Earnings 210 178 (32)
Total Revenues 1,013,250 1,029,606 16,356
EXPENDITURES
Debt Service:
Principal Retirement 900,000 900,000 -
Interest on Long-Term Debt 113,750 113,750 -
Fiscal Charges 2,100 250 1,850
Total Expenditures 1,015,850 1,014,000 1,850
Excess (Deficiency) of Revenues Over
Expenditures (2,600) 15,606 18,206
FUND BALANCE
Beginning of Year - 61,228 61,228
End of Year (2,600)$ 76,834$ 79,434$
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, 2014
(63)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Sales 594,000$ 645,342$ 51,342$
Investment Earnings 500 11,341 10,841
Total Revenues 594,500 656,683 62,183
EXPENDITURES
Debt Service:
Principal Retirement 955,000 1,210,000 (255,000)
Interest on Long-Term Debt 149,400 234,176 (84,776)
Fiscal Charges 7,000 4,510 2,490
Total Expenditures 1,111,400 1,448,686 (337,286)
Excess (Deficiency) of Revenues Over
Expenditures (516,900) (792,003) (275,103)
OTHER FINANCING SOURCES (USES)
Transfers In 193,500 421,884 228,384
Net Change in Fund Balance (323,400) (370,119) (46,719)
FUND BALANCE
Beginning of Year - 2,343,186 2,343,186
End of Year (323,400)$ 1,973,067$ 2,296,467$
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, 2014
(64)
Variance with
Final Budget Actual Final Budget
REVENUES
Licenses and Permits $ 130,632 $ 337,092 $ 206,460
Investment Earnings 100 11,915 11,815
Total Revenues 130,732 349,007 218,275
EXPENDITURES
Current
Public Safety 10,000 4,612 5,388
Highways and Streets 20,000 11,813 8,187
Culture and Recreation 20,000 21,291 (1,291)
Total Expenditures 50,000 37,716 12,284
Excess (Deficiency) of Revenues Over
Expenditures 80,732 311,291 230,559
OTHER FINANCING SOURCES (USES)
Transfers In - 928 928
Net Change in Fund Balance 80,732 312,219 231,487
FUND BALANCE
Beginning of Year - 2,138,386 2,138,386
End of Year 80,732$ 2,450,605$ 2,369,873$
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, 2014
(65)
Variance with
Final Budget Actual Final Budget
REVENUES
Fines and Forfeitures 14,250$ 16,971$ 2,721$
Investment Earnings 300 122 (178)
Total Revenues 14,550 17,093 2,543
EXPENDITURES
Current:
General Government 48,875 3,893 44,982
Excess (Deficiency) of Revenues Over
Expenditures (34,325) 13,200 47,525
FUND BALANCE
Beginning of Year - 243,650 243,650
End of Year (34,325)$ 256,850$ 291,175$
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, 2014
(66)
Variance with
Original Final Actual Final Budget
REVENUES
Intergovernmental $ 1,498,655 $ 1,498,655 $ 61,667 $ (1,436,988)
EXPENDITURES
Current:
General Government 1,498,655 1,297,964 61,667 1,236,297
Excess (Deficiency) of Revenues Over
Net Change in Fund Balance - 200,691 - (200,691)
FUND BALANCE
Beginning of Year - - - -
End of Year -$ 200,691$ -$ (200,691)$
Budget
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
DOWNTOWN STRATEGY FUND
FISCAL YEAR ENDED JUNE 30, 2014
(67)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Sales 114,084$ 129,068$ 14,984$
Investment Earnings - 11,879 11,879
Total Revenues 114,084 140,947 26,863
EXPENDITURES
Current:
Development Services 114,079 29,885 84,194
Excess (Deficiency) of Revenues Over
Expenditures 5 111,062 111,057
OTHER FINANCING SOURCES (USES)
Transfers Out (1,840,000) (242,845) 1,597,155
Net Change in Fund Balance (1,839,995) (131,783) 1,708,212
FUND BALANCE
Beginning of Year - 2,175,094 2,175,094
End of Year (1,839,995)$ 2,043,311$ 3,883,306$
Original and
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
ECONOMIC DEVELOPMENT FUND
FISCAL YEAR ENDED JUNE 30, 2014
(68)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Sales 171,119$ 193,603$ 22,484$
Investment Earnings - 28 28
Total Revenues 171,119 193,631 22,512
EXPENDITURES
Current:
Development Services 171,119 147,581 23,538
Excess (Deficiency) of Revenues Over
Expenditures - 46,050 46,050
FUND BALANCE
Beginning of Year - - -
End of Year -$ 46,050$ 46,050$
Original and
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
COTTONWOODS MAINTENANCE FUND
FISCAL YEAR ENDED JUNE 30, 2014
(69)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Property 4,823$ 4,823$ -$
Investment Earnings - 5 5
Total Revenue 4,823 4,828 5
EXPENDITURES
Current:
General Government 3,500 3,363 137
Excess (Deficiency) of Revenue Over
Expenditures 1,323 1,465 142
FUND BALANCE
Beginning of Year - 8,327 8,327
End of Year 1,323$ 9,792$ 8,469$
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, 2014
(70)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Property 430,248$ 428,805$ (1,443)$
Investment Earnings 600 77 (523)
Total Revenues 430,848 428,882 (1,966)
EXPENDITURES
Debt Service:
Principal Retirement 305,000 305,000 -
Interest on Long-Term Debt 112,885 112,885 -
Fiscal Charges 7,350 7,428 (78)
Total Expenditures 425,235 425,313 (78)
Excess (Deficiency) of Revenues Over
Expenditures 5,613 3,569 (2,044)
FUND BALANCE
Beginning of Year - 7,546 7,546
End of Year 5,613$ 11,115$ 5,502$
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 POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
(71)
2005 2006 2007 2008
Governmental Activities:
Net Investment in Capital Assets 17,495,539$ 20,806,507$ 92,508,637$ 94,939,805$
Restricted 5,144,127 12,446,147 12,210,966 12,799,502
Unrestricted 10,821,304 9,053,611 14,276,126 13,230,726
Total Governmental Activities Net Position 33,460,970$ 42,306,265$ 118,995,729$ 120,970,033$
Fiscal Year
Source: The source of this information is the Town’s financial records.
(72)
2009 2010 2011 2012 2013 2014
94,611,110$ 95,467,509$ 92,579,483$ 92,006,103$ 89,800,560$ 89,713,260$
11,828,137 11,396,116 4,385,595 5,951,416 5,721,744 5,480,867
13,765,293 12,321,090 22,598,669 21,064,267 20,612,758 19,186,823
120,204,540$ 119,184,715$ 119,563,747$ 119,021,786$ 116,135,062$ 114,380,950$
Fiscal Year
TOWN OF FOUNTAIN HILLS, ARIZONA
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
(73)
2005 2006 2007 2008
EXPENSES
Governmental Activities:
General Government 3,766,500$ 3,875,014$ 4,292,515$ 3,921,588$
Public Safety 5,024,686 5,403,620 5,935,742 6,532,292
Highways and Streets 1,281,061 1,581,068 5,225,835 5,981,347
Culture and Recreation 2,362,661 2,576,406 3,282,160 3,092,661
Development Services 1,460,181 1,812,469 2,512,170 2,861,653
Interest on Long-Term Debt 1,162,796 1,297,119 1,163,370 1,132,947
Total Government Activities Expenses 15,057,885 16,545,696 22,411,792 23,522,488
PROGRAM REVENUES
Governmental activities:
Fees, Fines, and Charges for Services
General Government 4,431,154 4,029,437 910,978 830,963
Public Safety - - 982,659 746,227
Highways and Streets - - - -
Operating Grants and Contributions 1,692,712 2,022,675 - 56,802
Capital Grants and Contributions 237,307 989,100 835,659
Total Governmental Activities Program
Revenues 6,420,723 6,155,938 3,509,168 3,222,272
Net (Expenses)/Revenues (8,637,162)$ (10,389,758)$ (18,902,624)$ (20,300,216)$
Fiscal Year
Source: The source of this information is the Town’s financial records.
(74)
2009 2010 2011 2012 2013 2014
4,231,529$ 3,720,236$ 2,876,848$ 3,119,113$ 2,909,443$ 2,432,965$
7,312,415 6,293,323 5,963,067 5,820,136 6,100,131 6,958,056
5,051,294 5,202,285 5,567,973 4,718,047 5,712,817 6,630,875
3,336,616 2,927,848 2,840,154 2,754,731 2,779,294 2,760,690
2,218,994 1,612,287 1,572,202 1,442,613 1,633,361 1,237,717
1,033,536 950,484 851,957 779,576 567,043 472,999
23,184,384 20,706,463 19,672,201 18,634,216 19,702,089 20,493,302
544,753 1,340,457 1,126,926 1,025,940 1,204,356 1,373,670
55,042 32,667 21,222 20,323 14,227 16,971
- 2,556 16,270 11,825 4,916 22,156
- 1,666,498 1,614,462 1,285,656 1,266,906 1,307,738
1,353,409 632,617 2,273,414 1,392,706 150,535 144,570
2,841,453 3,674,795 5,052,294 3,736,450 2,640,940 2,865,105
(20,342,931)$ (17,031,668)$ (14,619,907)$ (14,897,766)$ (17,061,149)$ (17,628,197)$
(Continued)
Fiscal Year
TOWN OF FOUNTAIN HILLS, ARIZONA
CHANGES IN NET POSITION (CONTINUED)
LAST TEN FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
(75)
2005 2006 2007 2008
(Concluded)
GENERAL REVENUES AND OTHER
Governmental Activities:
Taxes:
Sales Taxes 8,879,798$ 11,007,924$ 11,407,714$ 10,489,591$
Property Taxes 2,020,800 1,648,947 1,385,953 1,635,542
Franchise Taxes 216,031 314,359 324,318 336,290
State Shared Revenues 4,756,481 5,389,551 8,444,731 8,848,199
Investment Earnings 395,124 673,351 1,094,994 780,935
Miscellaneous 120,666 200,921 85,418 183,963
Total Governmental Activities 16,388,900 19,235,053 22,743,128 22,274,520
CHANGE IN NET POSITION
Governmental Activities 7,751,738$ 8,845,295$ 3,840,504$ 1,974,304$
Fiscal Year
Source: The source of this information is the Town’s financial records.
(76)
2009 2010 2011 2012 2013 2014
8,932,374$ 7,644,440$ 8,013,480$ 7,787,489$ 7,957,163$ 8,459,267$
1,531,770 1,928,028 1,349,079 1,453,405 1,385,147 1,449,646
321,964 285,881 322,659 332,130 334,668 349,414
8,456,552 6,000,923 5,217,140 4,515,511 4,979,183 5,326,332
258,478 22,831 28,456 88,877 69,998 123,311
76,300 129,740 68,125 178,393 300,899 166,115
19,577,438 16,011,843 14,998,939 14,355,805 15,027,058 15,874,085
(765,493)$ (1,019,825)$ 379,032$ (541,961)$ (2,034,091)$ (1,754,112)$
Fiscal Year
TOWN OF FOUNTAIN HILLS, ARIZONA
FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
(77)
2005 2006 2007 2008
General Fund:
Reserved $ 40,664 $ 14,393 $ 2,934,144 $ 3,053,070
Unreserved, Designated for:
Vehicle Replacement - - - -
Unreserved, Undesignated 9,041,779 6,515,855 3,666,005 3,526,738
Total General Fund $ 9,082,443 $ 6,530,248 $ 6,600,149 $ 6,579,808
All Other Governmental Funds:
Unreserved, Designated for
Vehicle Replacement $ - $ - $ - $ -
Unreserved, Undesignated Reported in:
Special Revenue Funds 2,176,086 1,951,434 5,305,432 3,876,927
Capital Projects Funds 2,429,225 9,496,266 9,916,670 10,764,857
Debt Service Funds 644,089 159,530 1,386,674 1,585,740
Total All Other Governmental Funds $ 5,249,400 $ 11,607,230 $ 16,608,776 $ 16,227,524
2011 2012 2013 2014
General Fund:
Nonspendable
Inventory $ 13,183 $ 9,332 $ 10,201 $ 14,358
Prepaid Items 29,234 28,245 32,493 18,348
Committed - 1,345,200 1,345,200 1,345,200
Assigned - 2,190,910 2,191,063 1,647,193
Unassigned 8,263,549 3,656,173 4,117,865 4,972,853
Total General Fund $ 8,305,966 $ 7,229,860 $ 7,696,822 $ 7,997,952
All Other Governmental Funds:
Nonspendable
Cash with Escrow Agent $ - $ 2,623,895 $ 2,301,609 $ 1,973,067
Prepaid Items 6,217 5,474 4,706 997
Restricted 4,379,987 3,300,426 3,354,189 3,505,590
Committed 11,480,869 2,039,560 2,175,094 2,089,361
Assigned - 9,312,168 9,005,276 7,147,586
Total All Other Governmental Funds $ 15,867,073 $ 17,281,523 $ 16,840,874 $ 14,716,601
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.
(78)
2009 2010
$ 3,234,860 $ 3,235,811
127,916 333,796
3,302,373 3,418,799
$ 6,665,149 $ 6,988,406
$ 95,620 $ 159,484
4,198,782 4,498,523
10,246,395 10,020,336
1,218,971 1,182,834
$ 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)
(79)
2005 2006 2007 2008 2009
REVENUES
Taxes 11,151,893$ 12,993,876$ 13,159,087$ 12,457,086$ 10,960,001$
Intergovernmental 6,686,500 7,412,226 8,444,731 9,353,260 9,607,961
Fines and Forfeitures 249,564 235,050 304,214 287,120 339,658
Licenses and Permits 2,230,046 1,918,107 1,239,318 1,125,957 541,627
Charges for Services 1,834,205 1,689,046 898,955 620,300 316,676
Leases and Rents 222,327 255,527 267,350 296,434 290,083
Special Assessments 1,512 21,147 4,228 4,337 4,037
Investment Income (Loss)395,124 673,351 1,094,994 780,935 258,478
Other 179,657 233,565 85,418 183,963 43,683
Total Revenues 22,950,828 25,431,895 25,498,295 25,109,392 22,362,204
EXPENDITURES
General Government 9,547,409 4,459,183 4,024,551 3,548,295 3,514,249
Public Safety 4,754,523 5,208,770 5,689,020 6,321,669 6,624,141
Highways and Streets 1,682,563 2,121,986 2,028,397 2,214,557 1,199,850
Culture and Recreation 3,004,216 3,607,750 2,131,374 2,257,007 2,215,065
Development Services 1,460,181 1,812,469 2,462,643 2,751,740 2,036,295
Capital Outlay - - 2,002,887 5,239,169 3,708,277
Debt Service
Principal Retirement 1,308,228 1,968,228 1,968,228 2,153,228 2,240,000
Interest on Long-Term Debt 1,164,561 1,192,414 1,058,665 1,025,320 929,134
Other Debt Service 229,990 532,762 - - -
Total Expenditures 23,151,671 20,903,562 21,365,765 25,510,985 22,467,011
Excess of Revenues
Over (Under) Expenditures (200,843) 4,528,333 4,132,530 (401,593) (104,807)
OTHER FINANCING
SOURCES (USES)
Transfers In 4,805,635 10,146,663 4,383,069 2,756,988 3,759,735
Transfers Out (4,805,635) (10,146,663) (4,383,069) (2,756,988) (3,950,654)
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 - - (190,919)
Net Change in Fund Balance 1,460,215$ 4,744,552$ 4,132,530$ (401,593)$ (295,726)$
Debt Service as a Percentage of
Noncapital Expenditures 13.22% 21.46% 18.53% 18.60% 20.33%
Fiscal Year
Source: The source of this information is the Town’s financial records.
(80)
2010 2011 2012 2013 2014
9,818,985$ 9,704,054$ 9,577,321$ 9,713,445$ 10,271,737$
7,672,037 7,165,103 6,035,448 6,323,047 6,677,518
297,030 236,221 223,673 187,251 170,995
399,094 312,367 194,976 570,904 891,782
464,036 388,635 405,663 162,086 161,376
215,520 227,195 206,018 213,871 252,584
- - - - -
22,831 28,456 88,877 69,998 123,311
129,740 72,125 178,393 300,899 134,114
19,019,273 18,134,156 16,910,369 17,541,501 18,683,417
3,186,368 2,575,975 2,887,321 2,699,109 2,194,845
6,200,227 5,772,800 5,869,445 6,022,269 6,890,770
973,746 1,123,230 1,054,930 2,058,990 3,085,559
2,007,737 1,871,446 1,794,332 1,791,018 1,921,939
1,669,449 1,564,615 1,421,787 1,643,757 1,774,983
1,254,223 1,043,304 884,323 453,002 1,750,465
2,460,000 2,115,000 1,965,000 2,280,000 2,415,000
842,857 744,330 639,135 554,860 460,811
- - 55,752 12,183 12,188
18,594,607 16,810,700 16,572,025 17,515,188 20,506,560
424,666 1,323,456 338,344 26,313 (1,823,143)
1,127,776 431,880 2,470,027 1,279,397 1,838,453
(1,127,776) (431,880) (2,470,027) (1,279,397) (1,838,453)
- - - - -
- - - - -
- - - - -
- - - - -
424,666$ 1,323,456$ 338,344$ 26,313$ (1,823,143)$
18.29% 17.41% 17.09% 16.63% 18.20%
Fiscal Year
TOWN OF FOUNTAIN HILLS, ARIZONA
GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE
LAST TEN FISCAL YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
(81)
Fiscal
Year
Sales
Taxes
Property
Taxes
Franchise
Taxes Total
2005 8,879,798$ 2,056,064$ 216,031$ 11,151,893$
2006 11,007,924 1,671,593 314,359 12,993,876
2007 11,407,714 1,427,055 324,318 13,159,087
2008 10,489,591 1,631,205 336,290 12,457,086
2009 8,932,374 1,705,663 321,964 10,960,001
2010 7,644,440 1,888,664 285,881 9,818,985
2011 8,013,480 1,367,915 322,659 9,704,054
2012 7,787,489 1,457,702 332,130 9,577,321
2013 7,957,163 1,421,614 334,668 9,713,445
2014 8,459,267 1,463,056 349,414 10,271,737
Source: The source of this information is the Town’s financial records.
TOWN OF FOUNTAIN HILLS, ARIZONA
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
(UNAUDITED)
(82)
Fiscal Year
Net Assessed
Taxable Value
Total Direct Tax
Rate*
Estimated Actual
Taxable Value
2005 349,398,334$ $ 0.4150 3,162,854,959$11.05 %
2006 375,183,181 0.3510 3,411,460,877 11.00
2007 397,380,162 0.3012 3,615,453,567 10.99
2008 610,738,122 0.2124 5,840,184,927 10.46
2009 684,742,347 0.1972 6,648,954,354 10.30
2010 651,218,464 0.2273 6,255,310,705 10.41
2011 576,535,714 0.1639 5,461,763,819 10.56
2012 451,860,136 0.2258 4,370,950,282 10.34
2013 377,521,718 0.2657 3,668,373,751 10.29
2014 366,302,672 0.2773 3,579,924,332 10.23
Net Assessed
Taxable Value
as a Percentage
of Estimated Actual
Taxable 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.
* Per $100 of secondary assessed value.
TOWN OF FOUNTAIN HILLS, ARIZONA
PRINCIPAL PROPERTY TAXPAYERS
JUNE 30, 2014 AND 2005
(UNAUDITED)
(83)
Taxpayer
Net
Secondary
Assessed
Value Rank
Net
Secondary
Assessed
Value Rank
Chaparral City Water Company 3,314,550$ 1 0.90 % 3,137,501$ 2 0.90 %
Inland Western Fountain Hills Four Peaks, LLC 2,868,432 2 0.78 - N/A
Whitestone Fountain Hills, LLC 1,738,782 3 0.47 - N/A
WSL Fountain View Investors V, LLC 1,681,860 4 0.46 - N/A
Target Corporation 1,432,483 5 0.39 2,327,837 3 0.67
Firerock, LLC 1,289,141 6 0.35 1,045,133 11 0.30
Smith's Food & Drug Centers Inc. 1,261,980 7 0.34 1,049,895 10 0.30
Qwest Corporation 1,193,858 8 0.33 3,261,132 1 0.93
Arizona State Land Department 1,122,752 9 0.31 - N/A
EN, LLC 1,092,294 10 0.30 2,096,229 4 0.60
Fountain Hills Village LLC - - 2,004,824 5 0.57
Kimco Barclay Fountain Hills LP - - 1,681,694 6 0.48
Four Peaks Limited Partnership - - 1,468,985 7 0.42
Sun Tech Development, LLC - - 1,169,471 8 0.33
MCO Properties, Inc. - - 1,144,428 90.33
16,996,132$ 4.63 % 20,387,129$ 5.83 %
Percentage of
Total Net
Secondary
Assessed Value
2014 2005
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
2005 2,041,230$ 1,992,532$ 97.6 % 22,287$ 2,014,819$ 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 47,833 1,626,416 99.7
2009 1,719,105 1,660,820 96.6 53,378 1,714,198 99.7
2010 1,895,552 1,838,909 97.0 52,188 1,891,097 99.8
2011 1,340,544 1,307,092 97.5 24,924 1,332,016 99.4
2012 1,446,076 1,414,482 97.8 20,359 1,434,841 99.2
2013 1,429,284 1,401,654 98.1 15,795 1,417,449 99.2
2014 1,449,884 1,426,612 98.4 - 1,426,612 98.4 Source: The source of this information is the Maricopa County Treasurer’s Office.
TOWN OF FOUNTAIN HILLS, ARIZONA
TAXABLE SALES BY CATEGORY
LAST TEN FISCAL YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
(85)
2005 2006 2007 2008 2009
Sales Category:
Construction 1,837,317$ 3,106,859$ 2,694,700$ 2,062,028$ 1,414,240$
Transportation and Utilities 1,124,677 1,240,123 1,330,052 1,422,158 1,311,735
Wholesale/Retail 3,536,045 3,796,192 4,144,263 3,912,512 3,687,409
Restaurants and Bars 524,368 547,276 537,596 582,226 493,242
Real estate, Rental and Leasing 604,356 881,584 792,358 982,198 664,999
Services 185,868 263,239 280,290 327,411 258,138
Other 1,067,167 1,172,651 1,632,142 1,201,058 929,163
Total 8,879,798$ 11,007,924$ 11,411,401$ 10,489,591$ 8,758,926$
Fiscal Year
Source: The source of this information is the Town’s financial records.
Note: Other includes all state and local sales tax audit adjustments.
(86)
2010 2011 2012 2013 2014
538,551$ 567,136$ 600,402$ 563,540$ 781,742$
1,424,827 1,388,074 1,407,331 1,402,193 1,375,620
3,555,974 3,567,615 3,600,619 3,601,212 3,653,447
509,624 559,930 575,705 645,258 655,656
650,071 731,615 678,267 719,884 782,453
241,686 276,566 274,481 309,827 342,924
723,707 922,545 642,414 715,248 867,425
7,644,440$ 8,013,481$ 7,779,219$ 7,957,162$ 8,459,267$
Fiscal Year
TOWN OF FOUNTAIN HILLS, ARIZONA
DIRECT AND OVERLAPPING SALES TAX RATES
LAST TEN FISCAL YEARS
(UNAUDITED)
(87)
Fiscal
Year
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
2013 2.60 0.70 5.60 8.90
2014 2.60 0.70 5.60 8.90
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
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(UNAUDITED)
(88)
Community Municipal Highway
General Facilities Property User Special Total Debt
Obligation District Corporation Revenue Assessment Outstanding Per
Fiscal Year Bonds Bonds Bonds Bonds Bonds Debt Capita
2005 10,675,000$ 4,455,000$ 12,975,000$ 540,000$ 12,910$ 28,657,910$ 1,271$
2006 9,600,000 4,415,000 12,310,000 455,000 9,683 26,789,683 1,176
2007 8,620,000 4,255,000 11,595,000 345,000 6,455 24,821,455 1,082
2008 7,570,000 4,070,000 10,790,000 235,000 3,228 22,668,228 986
2009 6,530,000 3,860,000 9,905,000 130,000 - 20,425,000 898
2010 5,415,000 3,630,000 8,920,000 - - 17,965,000 799
2011 4,595,000 3,370,000 7,885,000 - - 15,850,000 703
2012 3,755,000 3,090,000 6,800,000 - - 13,645,000 601
2013 2,900,000 2,800,000 5,650,000 - - 11,350,000 496
2014 2,000,000 2,495,000 4,695,000 - - 9,190,000 390
Governmental Activities
Source: The source of this information is the Town’s financial records and the U.S. Bureau of
Economic Analysis.
Note: All amounts presented are net of original issue discounts and premiums.
Population data can be found in the Schedule of Demographic and Economic Statistics.
TOWN OF FOUNTAIN HILLS, ARIZONA
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
(UNAUDITED)
(89)
Fiscal Year
General
Obligation
Bonds
Estimated Actual
Taxable Value of
Property
Percentage of
Estimated
Actual
Taxable Value
of Property
Net General
Obligation
Bonded Debt
per Capita
Municipal
Property
Corporation
Bonds
Net Municipal
Property
Corporation
Debt per
Capita
Total
Revenues - All
Sources
2005 10,675,000$ 3,162,854,959$ 0.34 %468$ 12,975,000$ 569$ 22,950,831$
2006 9,600,000 3,411,460,877 0.28 419 12,310,000 537 25,327,909
2007 8,620,000 3,615,453,567 0.24 375 11,595,000 504 25,498,519
2008 7,570,000 5,840,184,927 0.13 333 10,790,000 475 25,113,210
2009 6,530,000 6,648,954,354 0.10 290 9,905,000 440 21,393,767
2010 5,415,000 6,255,310,705 0.09 240 8,920,000 395 18,958,595
2011 4,595,000 5,461,763,819 0.08 202 7,885,000 347 18,307,726
2012 3,755,000 4,370,950,282 0.09 164 6,800,000 297 17,194,297
2013 2,900,000 3,668,373,751 0.08 127 5,650,000 247 17,751,673
2014 2,000,000 3,579,924,332 0.06 87 4,695,000 193 18,891,710
Source: The source of this information is the Maricopa County Assessor’s Office and the Town’s
financial records.
Note: All amounts presented are net of original issue discounts and premiums.
Population data can be found in the Schedule of Demographic and Economic Statistics.
TOWN OF FOUNTAIN HILLS, ARIZONA
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
AS OF JUNE 30, 2014
(UNAUDITED)
(90)
Governmental Unit Outstanding Debt
Estimated
Percentage
Applicable
Estimated
Share of
Overlapping
Debt
Overlapping:
Maricopa County 108,975,000$ 1.15%1,253,213$
Maricopa County Community College District 713,145,000 1.15%8,201,168
East Valley Institute of Technology - 2.63%-
Fountain Hills Unified School District 8,505,000 96.11%8,174,156
Eagle Mountain Community Facilities District 2,495,000 100.00%2,495,000
20,123,536
Direct:
Town of Fountain Hills, Arizona 9,190,000
Total Direct and Overlapping Debt 29,313,536$
Source: The source of this information is the Town’s records and the State and County Abstract of the
Assessment Roll, the Arizona Department of Revenue Report of Indebtedness and the
applicable governmental unit.
Note: The estimated percentage of debt outstanding applicable to the Town is calculated based on the
Town’s secondary assessed valuation (full cash value) as a percentage of the secondary assessed
valuation of the overlapping jurisdiction.
Overlapping governments are those that coincide, at least in part, with the geographic boundaries of
the Town of Fountain Hills. This schedule further estimates the portion of outstanding debt of those
overlapping governments that is borne by residents and businesses of the Town. This process
recognizes that, when considering a town’s ability to issue and repay long-term debt, the entire debt
burden borne by residents should be taken into account. However, this fact does not imply that every
taxpayer is a resident, and therefore, responsible for repaying the debt of each overlapping
government.
TOWN OF FOUNTAIN HILLS, ARIZONA
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
(UNAUDITED)
(91)
6% Debt Limit
2005 2006 2007 2008
Debt Limit 10,485,644$ 22,510,991$ 23,842,810$ 36,644,287$
Total Applicable to Limit 1,325,000 800,000 550,000 275,000
Legal Debt Margin 9,160,644$ 21,710,991$ 23,292,810$ 36,369,287$
Total Debt Applicable to the Limit as a
Percentage of the Debt Limit 13% 4% 2% 1%
20% Debt Limit
2005 2006 2007 2008
Debt Limit 34,952,148$ 75,036,636$ 79,476,032$ 122,147,624$
Total Applicable to Limit 9,350,000 8,800,000 8,070,000 7,295,000
Legal Debt Margin 25,602,148$ 66,236,636$ 71,406,032$ 114,852,624$
Total Debt Applicable to the Limit as a
Percentage of the Debt Limit 27% 12% 10% 6%
Fiscal Year
Fiscal Year
Source: The source of this information is the Town’s financial records.
(92)
2009 2010 2011 2012 2013 2014
41,084,541$ 39,073,108$ 34,592,143$ 27,111,608$ 22,651,303$ 21,978,160$
- - - - - -
41,084,541$ 39,073,108$ 34,592,143$ 27,111,608$ 22,651,303$ 21,978,160$
0% 0% 0% 0% 0% 0%
2009 2010 2011 2012 2013 2014
136,948,469$ 130,243,693$ 115,307,143$ 90,372,027$ 75,504,344$ 73,260,534$
6,530,000 5,415,000 4,595,000 3,755,000 2,900,000 2,000,000
130,418,469$ 124,828,693$ 110,712,143$ 86,617,027$ 72,604,344$ 71,260,534$
5% 4% 4% 4% 4% 3%
Fiscal Year
Fiscal Year
TOWN OF FOUNTAIN HILLS, ARIZONA
CALCULATION OF LEGAL DEBT MARGIN
AS OF JUNE 30, 2014
(UNAUDITED)
(93)
Net Secondary Assessed Valuation 366,302,672$
Water, Sewer, Artificial Lighting, Parks, Open Space, Public Safety, Law Enforcement, Fire
and Emergency Facilities, Street and Transportation Facilities, and Recreational Facility
Improvements
Debt Limit - 20% of Net Secondary Assessed Valuation 73,260,534$
Net Debt Applicable to Limit 2,000,000
20% Legal Debt Margin 71,260,534
All other general obligation bonds
Debt Limit - 6% of Net Secondary Assessed Valuation 21,978,160
Net Debt Applicable to Limit -
6% Legal Debt Margin 21,978,160
Total legal debt margin 93,238,694$
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)
(94)
Fiscal Year Principal Interest Total
Pledged
Revenues Coverage
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 985,000 417,028 1,402,028 14,380,648 10.3
2011 1,035,000 327,312 1,362,312 14,001,045 10.3
2012 1,085,000 285,288 1,370,288 13,079,953 9.5
2013 1,150,000 234,175 1,384,175 13,772,209 9.9
2014 1,210,000 234,176 1,444,176 14,774,914 10.2
Municipal Facilities Corporation 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)
(95)
2004 2005 2006 2007
Population 22,048 22,547 22,788 22,932
Per capital personal income 31,133$ 32,414$ 32,320$ 32,230$
Median age N/A N/A 46.4 46.4
School enrollment 2,453 2,373 2,425 2,307
Town of Fountain Hills
unemployment rate 2.1% 2.0% 1.7% 1.5%
Land use
Total acres N/A N/A 12,996.0 13,005.7
Total square miles N/A N/A 20.31 20.32
Vacant lots N/A N/A N/A 3,355
Number of units
Housing N/A N/A 12,681 12,850
Lodging N/A N/A 4 4
Restaurants N/A N/A 50 53
Shopping centers N/A N/A 14 14
Schools
Public N/A N/A 4 4
Preschool N/A N/A 5 4
Charter N/A N/A 2 1
Calendar Year
Source: The source of the “Personal Income” and “Per Capita” information is the U.S. 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
2013.
(96)
2008 2009 2010 2011 2012 2013*
22,984 22,736 22,489 22,554 22,695 22,893
38,439$ 38,918$ 40,672$ 44,660$ 47,260$ 48,244$
48.3 48.9 53.9 53.9 53.9 53.0
2,233 2,203 2,103 1,981 1,886 1,820
2.6% 4.5% 4.8% 6.7% 5.6% 6.0%
13,005.7 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7
20.32 20.32 20.32 20.32 20.32 20.32
1,295 1,253 1,226 1,218 1,209 1,196
12,832 12,927 12,983 12,990 12,977 12,991
4 4 4 4 4 4
47 52 53 56 56 54
19 19 20 20 20 20
4 4 4 4 3 3
4 4 4 4 6 7
1 1 1 1 1 1
Calendar Year
TOWN OF FOUNTAIN HILLS, ARIZONA
PRINCIPAL EMPLOYERS
JUNE 30, 2013, AND 2002*
(UNAUDITED)
(97)
Employer Employees Rank
Percentage of
Total Town
Employment Employees Rank
Fountain Hills Unified School
District No. 98 327 1 7.0% 250 1
Fountain View Village 150 2 3.2% -
Fry's 90 3 1.9% -
Safeway Stores 88 4 1.9% 95 4
Target Stores 84 5 1.8% -
Eagle Mountain Golf Club 70 6 1.5% 40 9
Firerock Country Club 68 7 1.5% -
Bashas 67 8 1.4% 70 6
United Stated Postal Service 64 9 1.4% -
Sunridge Canyon Golf Course 59 10 1.3% 70 7
Desert Canyon Golf Club 58 11 1.2% 50 8
Town of Fountain Hills 41 0.9% 115 3
MCO Properties, Inc. 12 0.3% 85 5
Monks Construction - 150 2
Total 1,178 25.3% 925
Total Town employment 4,655
2002*2013
Source: The source of this information is the Maricopa Association of Governments.
* Data for 2014 and 2003 were not available.
TOWN OF FOUNTAIN HILLS, ARIZONA
AUTHORIZED FULL-TIME EQUIVALENT GOVERNMENT EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS
(UNAUDITED)
(98)
Function 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Municipal Court 5.00 5.50 5.00 5.00 5.00 5.00 5.00 5.00 5.00 4.00
Administration 11.00 12.50 13.00 13.50 13.50 13.25 11.25 11.58 11.68 10.56
Development Services 39.50 41.00 41.00 40.50 40.00 35.75 23.25 20.25 18.75 16.25
Community Services 21.50 23.50 28.00 29.25 29.75 27.10 21.63 21.53 21.18 20.18
Total 77.00 82.50 87.00 88.25 88.25 81.10 61.13 58.36 56.61 50.99
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)
(99)
Function/Program 2005 2006 2007 2008 2009 2010
Municipal Court:
Cases filed N/A N/A N/A N/A N/A 3,520
Hearings/Trials held N/A N/A N/A N/A N/A 1,089
Administration:
FTEs per 1,000 residents 3.4 3.6 3.6 3.5 3.3 3.2
Registered voters - general election none 13,669 none 14,335 none 15,511
Voter turnout - general election none 21% none 39% none 50%
Development Services:
Building permits issued 430 468 759 716 391 409
Building inspections conducted 8,446 9,377 7,975 5,692 3,189 1,936
Number of code violation cases N/A N/A N/A N/A N/A 1,024
Number of zoning cases N/A N/A N/A N/A N/A 7
Community Services:
Number of Community Center bookings N/A N/A N/A N/A N/A 3,396
Number of participants in recreational
programs N/A N/A N/A N/A N/A 1,960
Number of Senior Services members N/A N/A N/A N/A N/A 1,105
Number of home delivered meals N/A N/A N/A N/A N/A 10,169
Law Enforcement (contracted):
Physical arrests 644 N/A 993 524 825 679
Traffic violations 2,432 N/A 2,315 2,504 4,900 2,959
Fire & Emergency Medical (contracted):
Total incident responses N/A 3,056 3,069 2,694 2,787 2,875
Average response time (in minutes) N/A 3:47 3:49 3:37 3:44 4:32
Fiscal Year
Source: The source of this information is the Town’s financial records.
Note: N/A indicates that the information is not available.
(100)
2011 2012 2013 2014
2,584 2,173 1,740 1,649
738 731 703 1,665
2.7 2.6 2.5 2.2
none 16,074 none N/A
none 34% none N/A
354 352 419 566
1,546 1,257 1,395 2,131
843 804 746 716
14 7 10 41
3,315 3,236 3,196 3,383
1,759 1,833 1,789 2,291
1,205 1,208 1,118 1,189
9,742 8,419 6,941 4,799
645 522 545 743
1,909 1,366 1,296 1,379
3,179 3,082 3,136 2,956
3:46 3:50 3:53 3:37
Fiscal Year
TOWN OF FOUNTAIN HILLS, ARIZONA
CAPITAL ASSETS STATISTICS BY FUNCTION
LAST TEN FISCAL YEARS
(UNAUDITED)
(101)
Function/Program 2005 2006 2007 2008 2009 2010
Public Safety:
Number of Fire stations 222222
Highways and Streets
Streets (Centerline Miles) 178.5 178.5 178.5 178.5 178.5 178.5
Streets (Lane Miles) 395 395 395 395 395 395
Pedestrian Lighting N/A 34 34 34 34 34
Traffic Signals 11 12 12 13 13 13
.
Parks and Recreation:
Acreage 116 116 116 116 116 116
Playgrounds 333444
Baseball/Softball Diamonds 666666
Soccer/Football Fields 111444
Community Centers 111111
Preserve Acreage N/A N/A N/A N/A N/A N/A
Miles of Trails N/A N/A N/A N/A N/A N/A
Fiscal Year
Source: The source of this information is the Town’s facilities records.
Note: N/A indicates the information is not available.
(102)
2011 2012 2013 2014
2222
178.5 178.5 178.5 178.5
395 395 395 395
34 34 34 34
13 13 13 13
116 116 116 116
4444
6666
4444
1111
N/A 740 740 740
N/A 4.3 10.43 10.43
Fiscal Year
16705 E. Avenue of the Fountains
Fountain Hills, Arizona 85268
Phone: 480-816-5100
Fax: 480-837-3145
Website: www.fh.az.gov