HomeMy WebLinkAboutFY11 CAFRPhone: 480-816-5100
Fax: 480-837-3145
Website: www.fh.az.gov
16705 E. Avenue of the Fountains
Fountain Hills, Arizona 85268
Fiscal Year 2010 -2011 COMPREHENSIVE ANNUAL FINANCIAL REPORT Town of Fountain Hills, Arizona
Issued By:
Administration Department
Finance Division
TOWN OF FOUNTAIN HILLS, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2011
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TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
FISCAL YEAR ENDED JUNE 30, 2011
INTRODUCTORY SECTION
LETTER OF TRANSMITTAL 1
LIST OF PRINCIPAL OFFICIALS 9
ORGANIZATIONAL CHART 10
GFOA CERTIFICATE OF ACHIEVEMENT 11
FINANCIAL SECTION
INDEPENDENT AUDITORS’ REPORT 12
REQUIRED SUPPLEMENTARY INFORMATION
MANAGEMENT’S DISCUSSION AND ANALYSIS 14
BASIC FINANCIAL STATEMENTS
STATEMENT OF NET ASSETS 26
STATEMENT OF ACTIVITIES 27
BALANCE SHEET – GOVERNMENTAL FUNDS 28
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO
THE STATEMENT OF NET ASSETS 30
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCES – GOVERNMENTAL FUNDS 31
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGE IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE
STATEMENT OF ACTIVITIES 33
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – GENERAL FUND 34
NOTES TO BASIC FINANCIAL STATEMENTS 35
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET 54
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGE IN FUND BALANCES 56
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – CAPITAL PROJECTS FUND 58
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – GENERAL OBLIGATION DEBT SERVICE
FUND 59
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS (CONTINUED)
FISCAL YEAR ENDED JUNE 30, 2011
FINANCIAL SECTION (CONTINUED)
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – MUNICIPAL PROPERTY CORPORATION
DEBT SERVICE 60
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – EAGLE MOUNTAIN DEBT SERVICE
FUND 61
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – HURF FUND 62
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – DEVELOPMENT FEES FUND 63
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – LOCAL COURT ENHANCEMENT FUND 64
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – GRANTS FUND 65
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND
BALANCE – BUDGET AND ACTUAL – EXCISE TAX FUND 66
STATISTICAL SECTION (UNAUDITED)
FINANCIAL TRENDS
NET ASSETS BY COMPONENT 67
CHANGES IN NET ASSETS 69
FUND BALANCES OF GOVERNMENTAL FUNDS 73
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND
BALANCES OF GOVERNMENTAL FUNDS 75
REVENUE CAPACITY
GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE 77
TAXABLE SALES BY CATEGORY 78
DIRECT AND OVERLAPPING SALES TAX RATES 80
ASSESSED VALUE AND ESTIMATED TOTAL VALUE OF TAXABLE PROPERTY 81
PRINCIPAL PROPERTY TAXPAYERS 82
PROPERTY TAX LEVIES AND COLLECTIONS 83
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS (CONTINUED)
FISCAL YEAR ENDED JUNE 30, 2011
STATISTICAL SECTION (UNAUDITED) (CONTINUED)
DEBT CAPACITY
RATIOS OF OUTSTANDING DEBT BY TYPE 84
RATIOS OF GENERAL BONDED DEBT OUTSTANDING 85
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT 86
LEGAL DEBT MARGIN INFORMATION 87
CALCULATION OF LEGAL DEBT MARGIN 89
REVENUE BOND COVERAGE 90
DEMOGRAPHIC AND ECONOMIC INFORMATION
DEMOGRAPHIC AND ECONOMIC STATISTICS 91
PRINCIPAL EMPLOYERS 93
OPERATING INFORMATION
FULL-TIME EQUIVALENT GOVERNMENT EMPLOYEES BY FUNCTION 94
OPERATING INDICATORS BY FUNCTION 95
CAPITAL ASSETS STATISTICS BY FUNCTION 97
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INTRODUCTORY SECTION
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(1)
November 29, 2011
To the Honorable Mayor, Members of the Town Council, and Citizens of the Town of Fountain
Hills:
State law requires that all general-purpose local governments publish, within six months of the
close of each fiscal year, a complete set of financial statements presented in conformity with
accounting principles generally accepted in the United States of America (GAAP) and audited in
accordance with auditing standards generally accepted in the United States of America by a firm
of licensed certified public accountants. Pursuant to that requirement, we hereby issue the
Comprehensive Annual Financial Report (CAFR) of the Town of Fountain Hills for the fiscal year
ended June 30, 2011.
This report consists of management’s representations concerning the finances of the Town of
Fountain Hills. Consequently, management assumes full responsibility for the completeness and
reliability of all of the information presented in this report. To provide a reasonable basis for
making these representations, management of the Town of Fountain Hills has established a
comprehensive internal control framework that is designed both to protect the government’s
assets from loss, theft, or misuse and to compile sufficient reliable information for the
preparation of the Town of Fountain Hills’ financial statements in conformity with GAAP.
Because the cost of internal controls should not outweigh their benefits, the Town of Fountain
Hills’ comprehensive framework of internal controls has been designed to provide reasonable
rather than absolute assurance that the financial statements will be free of material
misstatement. As management, we assert that, to the best of our knowledge and belief, this
financial report is complete and reliable in all material respects.
The Town of Fountain Hills’ financial statements have been audited by LarsonAllen 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, 2011, are free of material misstatement. The independent audit involved
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statement; assessing the accounting principles used and significant estimates made by
management; and evaluating the overall financial statement presentation. The independent
auditors concluded, based upon the audit, that there was a reasonable basis for rendering an
unqualified opinion that the Town of Fountain Hills’ financial statements for the fiscal year ended
June 30, 2011, are fairly presented in conformity with GAAP. The independent auditors’ report is
presented as the first component of the financial section of this report.
GAAP require that management provide a narrative introduction, overview, and analysis to
accompany the basic financial statements in the form of Management’s Discussion and Analysis
(MD&A). This letter of transmittal is designed to complement the MD&A and should be read in
conjunction with it. The Town of Fountain Hills’ MD&A can be found immediately following the
report of the independent auditors.
(2)
Town of Fountain Hills Profile
The Town of Fountain Hills is a planned,
family-oriented community established in
1970 by McCulloch Properties (now MCO
Properties, Inc.). Prior to 1970, the area was
a cattle ranch and was part of one of the
largest land and cattle holdings in Arizona.
The land was purchased by Robert
McCulloch in the late 1960s and designed
by Charles Wood, Jr. (designer of
Disneyland in southern California). The
centerpiece of Fountain Hills is one of the
world's tallest man-made fountains, a focal
point that attracts thousands of visitors each
year.
Located on 13,006 acres of land, and
bordering northeast Scottsdale, Fountain Hills is surrounded by the 3,500-foot McDowell
Mountains on the west, the Fort McDowell Indian Reservation on the east, the Salt River Pima-
Maricopa Indian Community on the south and by the McDowell Mountain Regional Park on the
north. Elevation is 1,520 feet at the fountain, 3,000 feet on Golden Eagle Boulevard, and is 500
feet above Phoenix.
Over the past twenty-one years, Fountain Hills has grown from 10,190 residents to a town of
approximately 22,500 based on the 2010 census. On June 5, 2006, the Town of Fountain Hills
became twenty square miles and about ten percent larger by annexing 1,300 acres of state trust
land. The process to annex the state trust land occurred over a two and one-half year period
and development of the land will occur over the next decade. Annexing this property into the
Town ensures that its future development will be of the highest quality under 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 range of living styles, from small community subdivisions to a number of
large custom homes. Fountain Hills also offers recreational, cultural and retirement programs
that address the needs and lifestyles of active families and adults. The community consists of
primarily residential property; of the total 20.32 square miles, only 3.13% of the total is zoned
commercial and/or industrial, 31.6% is reserved as open space and 51.3% is residential.
The Town’s Mission Statement for the Organization
The Town of Fountain Hills’ purpose is to serve the best interests of the community by:
providing for its safety and well-being;
respecting its special, small-town character and quality of life;
providing superior public services;
sustaining the public trust through open and responsive government;
and maintaining the stewardship and preservation of its financial and natural resources.
To serve and respect, and provide trust and stewardship.
(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, the development of citizen advisory committees and hiring the Town Manager. The
Town Manager is responsible for implementation of the policies of the Town Council and administering
the Town’s operations through three department directors and approximately 61 FTE employees. The
Magistrate, Town Attorney and Town Prosecutor are under the direction of the Town Council.
The Town provides or administers a full range of services
including public safety (law enforcement, fire, animal control,
building inspection); community development (code enforcement,
planning, zoning and engineering); the construction and
maintenance of streets and infrastructure, municipal court,
recreational activities, community center, senior center and
cultural events. The Town does not maintain utility or other
operations that require the establishment of enterprise funds.
The financial reporting entity (the Town) includes all the funds of
the primary government (i.e., the Town of Fountain Hills as legally
defined) as well as all of its component units. The component units consist of legally separate entities
for which the primary government is financially accountable. Blended component units, although legally
separate entities, are, in substance, part of the primary government’s operations and are included as
part of the primary government. Accordingly, the Cottonwoods Maintenance District, Eagle Mountain
Community Facilities District and Fountain Hills Municipal Property Corporation are included in the
financial reports of the Town.
The annual budget serves as the foundation for the Town of Fountain Hills’ financial planning and
control. The Town Council formally adopts the budget and legally allocates, or appropriates, available
monies for the General Fund, Special Revenue Funds, Debt Service Funds, and Capital Projects Fund.
Therefore, these funds have appropriated budgets, and budget to actual information is presented. On
or before the second meeting in May, the Town Manager submits to the Town Council a proposed
budget for the fiscal year commencing the following July 1. The budget includes proposed expenditures
and the means of financing them. The Town Council is then required to hold public hearings on the
proposed budget and to adopt a final budget by no later than June 30, the close of the Town of
Fountain Hills’ fiscal year. The budget is legally enacted through passage of an ordinance and is
prepared by fund and department. The ordinance sets the limit for expenditures during the fiscal year.
The Town Manager may authorize transfers from and within personnel and from operating capital to
services or supplies within a department. Additional expenditures may be authorized for expenditures
directly necessitated by a natural or man-made disaster as prescribed in the State Constitution, Article
9, Section 20.
Fountain Hills Town Hall
(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 continues to have an impact on the local businesses in Fountain
Hills, particularly in the construction of residential properties, local business retention and commercial
leasing. Construction activity provides revenue to the Town through local sales tax, the proceeds of
which are utilized for capital expenditures. Without the resources to fund capital projects, the Town
must find additional funds to pay for necessary infrastructure projects. For operating costs, the Town is
dependent upon state shared revenues and local sales tax as a major source of operating revenue,
accounting for 89% of total General Fund revenue for fiscal year 2010-11. State shared revenues are
derived as a proportionate share of state sales, income and vehicle license taxes which are distributed
based on the Town’s population compared to all other incorporated cities and towns in Arizona
(currently 0.045%). State shared income tax revenues decreased 12% during fiscal year 2009-10 and
another 25% in fiscal year 2010-11; this revenue category is based on two years prior personal and
corporate earnings, therefore, it is anticipated that the Town will experience further declines for the next
few years reflecting the economic recession.
The Town of Fountain Hills’ local tax revenue base consists of two major tax categories, the most
significant being retail sales and transportation/communication/utilities (construction was a third
significant category in prior years). The chart below is a look at the past three years’ local sales tax
activity by sector including a projection for the upcoming fiscal year:
As can be seen in the above chart, sales tax collections from construction activity have dropped
significantly (72.5% from FY08) while transportation/utilities continues to show signs of growth.
Construction sales tax is considered a one-time revenue source which is driven entirely by
development activity. As the Town approaches build-out, construction related sales taxes and fees are
likely to dwindle; with a declining revenue base, it will become a challenge for the Town to meet the
increasing demands at current service levels.
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
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opportunity to further expand the retail tax base in Fountain Hills is limited by the lack of available
commercial land – 75% of the developable lots are already developed.
Development Activity over the past year:
Development Services has been involved with the following development activities during FY2010-11:
(7/1/2010 – 6/30/2011)
Two Concept Plans were approved by the Planning & Zoning Commission during the period:
SunDevil Auto La Montana Drive
Senor Taco Fountain Hills Blvd
Five Special Use Permits were granted for Communication arrays:
Light Squared Antenna
(2x) T-Mobile Antennas
(2x) AT&T Antennas
Nine Temporary Use Permits were issued during the period:
(2x) Arts & Crafts Fair (2x) Art & Farmers' Market
Fountain Hills Art League Sofrita’s Restaurant Sidewalk Dancers
Outdoor Sculpture Sales Gem & Mineral Show
Fireworks Sales Tent
Two new Commercial Building Permits were issued:
Industrial 16525 E. Laser Dr.
Commercial 11645 N. Desert Vista Dr.
There were fourteen commercial tenant improvement permits issued during the last fiscal year that
indicate that Fountain Hills is still a desirable place to locate a business.
General Offices 15225 N Fountain Hills Blvd
El Encanto Restaurant 11044 Saguaro Blvd
Little Caesar Pizza 16605 E Palisades Blvd
Verizon Wireless 16605 E Palisades Blvd
Spikes Treats 12645 N Saguaro Blvd Ste 13
Target 16825 E Shea Blvd
Le Edifice Offices 11010 Saguaro Blvd
Fantastic Sams 13771 N Fountain Hills Blvd Ste 112
UPS 13771 N Fountain Hills Blvd Ste 114
Meridian Bank 13404 N La Montana Dr
Senor Taco 13525 N Fountain Hills Blvd Ste 112
Checker Auto 16725 E Shea Blvd
Public Library 12901 La Montana Dr
El Dorado Animal Hospital 16765 E Parkview Dr
No new Multi-Family Residential Building Permits were issued during this period.
Eleven new Single-Family Residential Building Permits were issued.
(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. Specifically, the Town’s Rainy Day Fund policy has
strict requirements that withdrawals can only be for unforeseen or emergency purposes. During the
past fiscal year as the economy continued to falter there was pressure to utilize Rainy Day Funds to
balance the budget, however, the economic downturn could not be classified as “unforeseen or
emergency”. With this policy in place the Town staff had to look for operational efficiencies and cost
savings to balance the budget.
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 FY 2009-10 – a
summary of the policy is below:
1. A contingency fund of no less than 30 days operating expenditures for the upcoming fiscal year
to be in place for unanticipated expenditure or loss of revenue (Rainy Day Fund), separate from
the General Fund
2. An unreserved fund balance of a minimum of ten percent (10%) of the average actual revenues
for the preceding five fiscal years designated for “pay-as-you-go” capital
3. A portion of fund balance of twenty percent (20%) of the average actual revenues for the
preceding five fiscal years which is unavailable for appropriation
(7)
These amounts will not be programmed for expenditure and are only available for use within the
confines of expenditure limitations imposed by the State. A Capital Projects Fund has been created and
is funded with proceeds from excess revenues collected over budget and any unexpended
appropriations not needed to meet fund balance requirements or re-appropriation. For the fiscal year
ending June 30, 2011, the General Fund surplus was $990,000; the policy also allows for the allocation
of surplus funds to pay down debt. The surplus was applied towards the outstanding 2005 bonds from
Town Hall that were defeased in November 2011.
The Council also adopted financial policies that include guidelines for the issuance of debt for capital
expenditures, Community Facility Districts, financing alternatives, expenditure controls and financial
planning. The policy was amended during fiscal year 2009-10 to reduce the allocation of the local
construction sales tax to the Capital Projects Fund from 85% to 50%, reflecting the transition from one-
time building activity to ongoing redevelopment activity. The debt policy was prepared with a preference
for “pay-as-you-go” financing for capital spending; however, the policy did not anticipate the lack of
funding for capital projects and bond funding may be reconsidered. An investment policy was adopted
and was awarded the Investment Policy Certification from the Association of Public Treasurers of
United States and Canada.
Major Initiatives
The Town of Fountain Hills’ adopted fiscal year 2011-12 budget reflects the continued recession in the
local economy as well as an 8% decline in population resulting from the 2010 census, which is also
mirrored at the national and state levels. Due to the challenging current economic conditions, the Town
has made significant reductions in staff and service levels. This 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 61 FTE’s (full time equivalents) over the last two years.
Cash Management. State statutes permit municipalities in Arizona to invest in obligations of the U.S.
Treasury, commercial paper, corporate bonds, repurchase agreements, and the State Treasurer’s
Local Government Investment Pool (LGIP). The Town of Fountain Hills debt policy restricts investments
to securities that are 100% backed by the full faith and credit of the U.S. government. The Town of
Fountain Hills invests all idle cash in the State LGIP-GOV, which consists of government-backed
securities. The year-to-date yield on investments as of June 30, 2011, was less than .5%. Investment
income includes appreciation in the fair value of investments. Increases in fair value during the current
year, however, do not necessarily represent trends that will continue; nor is it always possible to realize
such amounts, especially in the case of temporary changes in the fair value of investments that the
government intends to hold to maturity.
Daily cash deposits are made with the local bank and are maintained for payroll and payables; these
accounts are fully insured for all non-interest bearing accounts.
Risk Management. The Town of Fountain Hills is a member of the Arizona Municipal Risk Retention
Pool. Risk coverage includes general liability, workers compensation, errors and omissions, property
and automobile insurance. The policy insures up to $2,000,000 per incident occurrence plus any
excess liability of up to $13,000,000 per occurrence per year. Coverage is provided on a claims-made
basis.
Pension Plan and Other Postemployment Benefits. The Town of Fountain Hills provides two
deferred compensation plans through the International City/County Management Association (ICMA) in
accordance with Internal Revenue Code Sections 401(a) and 457. The 401(a) is funded by mandatory
employee wage deductions and matching Town contributions. The 457 is voluntary and funded 100%
through employee participation.
For further information on these plans, please refer to Note 4.D. in the financial statements.
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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, 2010. This was the fourteenth consecutive
year that the government has received this prestigious award. In order to be awarded a Certificate of
Achievement, the government published an easily readable and efficiently organized CAFR. This report
satisfied both GAAP and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR
continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to
the GFOA to determine its eligibility for another certificate.
In addition, the government also received the GFOA’s Distinguished Budget Presentation Award for its
annual budget for the fiscal year ending June 30, 2010. 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 ninth consecutive year that the Town has received the award.
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,
Julie A. Ghetti, MPA, CPA, CGFM
Interim Town Manager/Finance Director
TOWN OF FOUNTAIN HILLS, ARIZONA
LIST OF PRINCIPAL OFFICIALS
JUNE 30, 2011
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ELECTED OFFICIALS
Mayor Mr. Jay Schlum
Vice-Mayor Ms. Ginny Dickey
Councilmember Mr. Dennis Brown
Councilmember Mr. Dennis Contino
Councilmember Mr. Tait Elkie
Councilmember Ms. Cassie Hansen
Councilmember Mr. Henry Leger
DEPARTMENT DIRECTORS
Interim Town Manager/
Finance Director
Julie A. Ghetti, MPA, CPA, CGFM
Presiding Judge Mitchell S. Eisenberg
Community Services Director Mark Mayer
Development Services Director Paul Mood
Fire Chief Scott LaGreca
Rural Metro Corporation
District Commander Captain Joe Rodriquez
Maricopa County Sheriff’s Office
Town Prosecutor Iacovino & Kayler
Town Attorney Andrew McGuire,
Gust Rosenfeld, P.L.C.
TOWN OF FOUNTAIN HILLS, ARIZONA ORGANIZATIONAL CHART JUNE 30, 2011 (10)
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FINANCIAL SECTION
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(12)
An independent member of Nexia International
INDEPENDENT AUDITORS’ REPORT
The Honorable Mayor and Members of the Town Council
Town of Fountain Hills, Arizona
Fountain Hills, Arizona
We have audited the accompanying financial statements of the governmental activities, each major
fund, and the aggregate remaining fund information of the Town of Fountain Hills, Arizona (the Town),
as of and for the year ended June 30, 2011, which collectively comprise the Town’s basic financial
statements as listed in the table of contents. These financial statements are the responsibility of the
Town’s management. Our responsibility is to express opinions on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States
of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, each major fund, and the aggregate
remaining fund information of the Town of Fountain Hills, Arizona as of June 30, 2011, and the
respective changes in financial position thereof and the statement of revenues, expenditures and
changes in fund balance – budget to actual for the General Fund for the year then ended in conformity
with accounting principles generally accepted in the United States of America.
As described in Note 1, the Town implemented the provisions of the Governmental Accounting
Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions,
for the year ended June 30, 2011, which represents a change in accounting principle.
The management’s discussion and analysis on pages 14-25 is not a required part of the basic financial
statements but is supplementary information required by the Governmental Accounting Standards
Board. We have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the required supplementary
information. However, we did not audit the information and express no opinion on it.
The Honorable Mayor and Members of the Town Council
Town of Fountain Hills, Arizona
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Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Town’s basic financial statements. The introductory section, combining and
individual fund financial statements and schedules, and statistical section are presented for purposes of
additional analysis and are not required parts of the basic financial statements. The combining and
individual fund financial statements and schedules have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken 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 express no opinion on them.
LarsonAllen LLP
Mesa, Arizona
November 29, 2011
REQUIRED SUPPLEMENTARY INFORMATION
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TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2011
(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, 2011. 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, which can be found in the introductory section of this report, and the financial
statements that follow.
FINANCIAL HIGHLIGHTS
The assets of the Town exceeded its liabilities at the close of fiscal year 2010-11 and fiscal year
2009-10 by $119.6 million and $119.2 million, respectively. Of these amounts, $22.6 million and
$19.8 million, respectively, may be used to meet the government’s continued efforts to reduce
costs, including the reduction of staffing during the year.
Governmental activities program revenues increased by $1.4 million (37%) over the previous
year. This increase was due to an increase in capital grants/contributions in the amount of
$1,640,797 for a major road project. Fees, fines and charges for services decreased by
$211,262 (15%) and operating grants and contributions decreased by $52,036 (3%). The
decline in fees, fines and charges for services is related to the decline in the economy and the
effect on building permits and business licenses.
At June 30, 2011, total fund balance of the governmental funds was $24.2 million, up $1.3
million (6%) from the previous year. Of this, $8.3 million is unassigned in the General Fund,
while the remainder is classified as nonspendable, restricted and commited.
The General Fund reported $13.2 million in revenues, consisting primarily of local taxes,
intergovernmental taxes, charges for services and licenses and permits. Total expenditures of
the General Fund were $11.5 million and the fund balance increased from $7.0 million to $8.3
million, including the Rainy Day, Public Art, and Vehicle Replacement Funds. The nonmajor
governmental funds revenues were $2.1 million with the majority of the revenue from
Intergovernmental Highway User Revenue Funds (HURF). Expenditures for the non-major
funds was $1.5 million with $1.1 million from HURF Funds.
The Town’s total net assets of governmental activities increased $379,032 (0.3%) from the prior
fiscal year; revenues increased 1.9% and a reduction in expenditures was also made (5%).
General revenues in the governmental activities accounted for $15.0 million in revenue, or 75%
of all current fiscal year revenues. Program specific revenues in the form of charges for services
and grants and contributions accounted for $5.1 million or 25% of total current fiscal year
revenues.
The Town had approximately $19.7 million in expenses related to governmental activities, a
decrease of 5% from the prior fiscal year. The decline caused by a protracted economic
recession resulted in significant expenditure reductions in all activities with the exception of
projects related to Highways and Streets that were State funded and Public Safety.
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 fiscal year 2011-12
to defease bonds that were issued in 2005 for the Town Hall. The General Fund’s fund balance
will include the surplus, the Rainy Day, Public Art and Vehicle Replacement Funds in the
amount of $8.3 million.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2011
(15)
OVERVIEW OF FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the Town’s basic financial
statements. The Town’s basic financial statements comprise three components: 1) government-wide
financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report
also contains other supplementary information in addition to the basic financial statements themselves.
Government-Wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of
the Town’s finances, in a manner similar to a private sector business. The accrual basis of accounting
is used for the government-wide financial statements.
The Statement of Net Assets presents information on all of the Town’s assets and liabilities, with the
difference between the two reported as net assets. Over time, increases or decreases in net assets
may serve as a useful indicator of whether the financial position of the Town is improving or
deteriorating.
The Statement of Activities presents information showing how the Town’s net assets changed during
the most recent fiscal year. All changes in net assets are reported as soon as the underlying event
giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and
expenses are reported in this statement for some items that will only result in cash flows in future fiscal
periods (e.g., uncollected taxes and earned but unused compensated absences).
The government-wide financial statements outline functions of the Town that are principally supported
by taxes and intergovernmental revenues. The governmental activities of the Town include general
government, public safety, highways and streets, culture and recreation, community development, and
interest on long-term debt.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The Town uses fund accounting to ensure and
demonstrate compliance with finance-related legal requirements. All of the funds of the Town are
included in the governmental funds.
Governmental Funds – Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental fund financial statements use the modified
accrual basis of accounting and focus on near-term inflows of spendable resources, as well as on
balances of spendable resources available at the end of the fiscal year. Such information may be useful
in evaluating the Town’s near-term financing requirements.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2011
(16)
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By doing
so, readers may better understand the long-term impact of the Town’s near-term financing decision.
Both the governmental fund balance sheet and the governmental fund statement of revenues,
expenditures and change in fund balances provide a reconciliation to facilitate this comparison between
governmental funds and governmental activities.
Information is presented separately in the governmental fund balance sheet and in the governmental
fund statement of revenues, expenditures and change in fund balances for the General Fund, Capital
Projects Fund, General Obligation Debt Service Fund, Municipal Property Corporation Debt Service
Fund, and Eagle Mountain 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 basic financial statements can be
found immediately following the basic financial statements.
Other Information
Governments have the option of including the budgetary comparison statements for the General Fund
and major special revenue funds as either part of the fund financial statements within the basic financial
statements, or as required supplementary information following the notes to the basic financial
statements. The Town has chosen to present these budgetary statements as part of the basic financial
statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
While this document contains information about the funds used by the Town to provide services to our
citizens, the Statement of Net Assets and the Statement of Activities serve to provide an answer to the
question of how the Town, as a whole, did financially throughout the year. These statements include all
assets and liabilities using the accrual basis of accounting similar to the accounting used by the private
sector. The basis for this accounting takes into account all of the current year’s revenues and expenses
regardless of when the cash is received or paid.
These two statements report the Town’s assets and the changes in those assets. The change in assets
is important because it tells the reader whether the financial position of the Town as a whole has
improved or diminished. However, in evaluating the overall position of the Town, non-financial
information such as changes in the Town’s tax base and the condition of the Town’s capital assets will
also need to be evaluated.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2011
(17)
Analysis of Net Assets
Net assets may serve over time as a useful indicator of a government’s financial position. In the case of
the Town, assets exceeded liabilities by $119.6 million at the current fiscal year end. The following table
presents a summary of the Town’s net assets for the fiscal years ended June 30, 2011 and June 30,
2010.
2011 2010
Percent
Change
ASSETS
Current and Other Assets 28,545,371$ 27,897,140$ 2.3%
Capital Assets:
Non-depreciable 28,304,198 26,030,483 8.7%
Depreciable (net) 82,314,694 87,486,356 -5.9%
Total Assets 139,164,263 141,413,979 -1.6%
LIABILITIES
Other Liabilities 3,334,185 3,873,026 -13.9%
Long-Term Liabilities:
Due Within One Year 2,249,113 2,155,612 4.3%
Due in More Than One Year 14,017,218 16,200,626 -13.5%
Total Liabilities 19,600,516 22,229,264 -11.8%
NET ASSETS
Invested in Capital Assets, Net
of Related Debt 92,579,483 95,467,509 -3.0%
Restricted 4,385,595 3,940,741 11.3%
Unrestricted 22,598,669 19,776,465 14.3%
Total Net Assets 119,563,747$ 119,184,715$ 0.3%
Town of Fountain Hills, Arizona
Statement of Net Assets
The largest portion of the Town’s net assets (77%) reflects its investment in capital assets (e.g., land,
infrastructure, buildings, improvements other than buildings, vehicles, machinery and equipment, and
artwork) less any related debt used to acquire those assets that is still outstanding. The Town uses
these capital assets to provide services to its citizens; consequently, these assets are not available for
future spending. Although the Town’s investment in its capital assets is reported net of related debt, it
should be noted that the resources needed to repay this debt must be provided from other sources,
since the capital assets themselves cannot be used to liquidate these liabilities. In addition, a portion of
the Town’s net assets (4%) are for the specified purposes of debt service repayment, capital outlay
investment, public safety and highways and streets.
At the end of the current fiscal year, the Town reported positive balances in all three categories of net
assets. The same situation held true for the prior fiscal year.
The Town’s financial position is the product of several financial transactions including the net results of
activities, the acquisition and payment of debt, the acquisition and disposal of capital assets, and the
depreciation of capital assets.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2011
(18)
Analysis of Changes in Net Assets
The Town’s total net assets increased by $379,032 during the fiscal year 2010-11; the increase was
primarily a result of the General Fund operating budget that included higher than projected revenues
and lower expenditures than the prior fiscal year. This result reflects the conservative fiscal behavior of
the Town during an economic climate that is so unpredictable.
Total governmental revenues increased over the prior year with a net increase of $364,595 (2%). The
most significant increase was an increase of $1.6 million (259%) in capital grants and contributions due
to a transportation grant received from the Arizona Department of Transportation (ADOT). The Town
also saw an increase in sales tax of $369,040 (5%) due to an increase in overall sales tax collections
both at the state and local level.
The Town’s total revenues for the current fiscal year were $20.0 million. The total cost of all programs
and services was $19.7 million. The following table presents a summary of the changes in net assets
for the fiscal years ended June 30, 2011 and June 30, 2010.
2011 2010
Percent
Change
REVENUES
Program Revenues:
Fees, Fines and Charges for Services 1,164,418$ 1,375,680$ -15.4%
Operating Grants and Contributions 1,614,462 1,666,498 -3.1%
Capital Grants and Contributions 2,273,414 632,617 259.4%
General Revenues:
Sales Taxes 8,013,480 7,644,440 4.8%
Property Taxes 1,349,079 1,928,028 -30.0%
Franchise Taxes 322,659 285,881 12.9%
State Shared Revenues 4,417,589 5,179,602 -14.7%
Auto Lieu Taxes 799,551 821,321 -2.7%
Investment Earnings 28,456 22,831 24.6%
Miscellaneous 68,125 129,740 -47.5%
Total Revenues 20,051,233 19,686,638 1.9%
EXPENSES
General Government 2,876,848 3,720,236 -22.7%
Public Safety 5,963,067 6,293,323 -5.2%
Highways and Streets 5,567,973 5,202,285 7.0%
Culture and Recreation 2,840,154 2,927,848 -3.0%
Development Services 1,572,202 1,612,287 -2.5%
Interest on Long-Term Debt 851,957 950,484 -10.4%
Total Expenses 19,672,201 20,706,463 -5.0%
CHANGE IN NET ASSETS 379,032 (1,019,825) 137.2%
Net Assets - Beginning of Year 119,184,715 120,204,540 -0.8%
NET ASSETS - END OF YEAR 119,563,747$ 119,184,715$ 0.3%
Town of Fountain Hills, Arizona
Changes in Net Assets
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2011
(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 (42%), followed by state shared revenues and auto lieu (26%), capital
and operating grants and contributions (19%), property taxes (7%), and fees, fines and charges for
services (6%).
Fees, Fines and
Charges for
Services
6%Operating Grants
and Contributions
8%
Capital Grants
and Contributions
11%
Sales Taxes
40%
Property Taxes
7%
Franchise Taxes
2%
State Shared
Revenues
22%
Auto Lieu Taxes
4%
Investment
Earnings
0%
Miscellaneous
0%
Governmental Activities Revenues
Fiscal Year 2011
The charts below compare the governmental expenses from fiscal year 2010-11 and fiscal year 2009-10.
15%
30%
28%
15%
8%4%
Fiscal Year 2010‐11 Expenses
General Government Public Safety
Highways and Streets Culture and Recreation
Development Services Interest on Long‐Term Debt
18%
30%
25%
14%
8%5%
Fiscal Year 2009‐10 Expenses
General Government Public Safety
Highways and Streets Culture and Recreation
Development Services Interest on Long‐Term Debt
The following are significant current year transactions that had an impact on the Statement of Net
Assets and Statement of Activities:
Overall revenues increased by 2% compared to last year primarily due to proceeds from grants
for major infrastructure projects. While the sales tax revenues increased, income tax revenues
received from the state declined. The Town does not have a primary property tax that is used
for operations; the Town property tax levy is dependent upon the annual debt payment for voter
approved bonds. The decreased property tax is a result of a decreased debt payment.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2011
(20)
Depreciable assets declined 6% ($5.2 million) with the Town’s deferred investment in capital
infrastructure and improvements.
A major road project, Shea Boulevard climbing lane, was funded through the American
Recovery and Reinvestment Act (ARRA) through Arizona Department of Transportation ($1.8
million). This amount was a federal grant that was awarded to the Arizona Department of
Transportation for a project within the Town’s infrastructure.
The change in miscellaneous revenues is due to the lack of proceeds from disposal of
equipment and forfeited retirement funds from the reduction in workforce; the workforce
reductions were not repeated in fiscal year 2010-11.
State shared revenues are determined by the prior two years of income tax returns in Arizona
and is shared with cities and towns based on population; the two year lag affected the current
fiscal year revenues and will continue for at least the next two years as the economy lags.
Additionally, as surrounding communities grow in population, the Town may lose a proportionate
share due to fixed borders and a lack of available developable land.
Sales tax revenues in the Town are derived primarily from retail and telecommunications.
Construction activity saw the steepest declines from $2.1 million in fiscal year 2007-08 to less
than $600,000 in fiscal year 2010-11. Retail activity however, appears to have leveled off with a
very slight increase.
Overall expenses decreased 5% as the Town manages through the great recession by
matching expenses with available resources.
The general government and community development departments reduced expenditures in the
areas of wages and benefits through the reduction of workforce.
Public safety costs include contracts for police and fire; those contracts are multi-year with
automatic increases.
Another significant expense reduction was the deferral of replacement equipment and vehicles
until the economy shows signs of recovery.
FINANCIAL ANALYSIS OF THE TOWN’S FUNDS
As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-
related legal requirements.
Governmental funds. The focus of the Town’s governmental funds is to provide information on near-
term inflows, outflows, and balances of resources that are available for spending. Such information is
useful in assessing the Town’s financing requirements. In particular, unassigned fund balance may
serve as a useful measure of a government’s net resources available for spending at the end of the
fiscal year. Types of major Governmental Funds reported by the Town include the General Fund,
Capital Projects Fund, General Obligation Debt Service Fund, the Municipal Property Corporation Debt
Service Fund, and the Eagle Mountain Debt Service Fund.
The financial performance of the Town as a whole is reflected in its governmental funds. As the Town
completed the year, its governmental funds reported a combined fund balance of $24.2 million, an
increase of $1.3 million due primarily due to a reduction in expenditures of $1.8 million from a reduction
in full time equivalent employees.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2011
(21)
Increase
(Decrease)
Fund Balance From FY 2009-10
General Fund * 8,305,966$ 1,316,039$
Capital Projects Fund 9,633,788 (386,548)
General Obligation Debt Service Fund 51,333 (59,497)
Municipal Property Corporation Debt Service Fund 891,306 (150,048)
Eagle Mountain Debt Service Fund 5,332 (16,337)
Nonmajor Governmental Funds 5,285,314 619,847
24,173,039$ 1,323,456$
The General Fund is the chief operating fund of the Town. At the end of the current fiscal year, the fund
balance of the General Fund was $8.3 million, while total fund balance of the funds reached $24.2
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 72 percent
of total General Fund expenditures, while total fund balance represents 144 percent of total
expenditures. The fund balance of the Town’s General Fund increased by $1.3 million during the
current fiscal year. Expenditures within the General Fund decreased 10% over the prior year – the
savings were substantially realized with a decline in payroll related expenditures due to a reduction in
the full-time employee workforce.
The General Fund comprises 34 percent of the total fund balance. Approximately $8.3 million, or 99
percent of the General Fund’s fund balance constitutes unassigned fund balance. The remaining fund
balance is nonspendable for inventory and prepaid items.
The General Fund is the principal operating fund of the Town; overall the General Fund’s performance
resulted in revenues over expenditures for FY11 in an amount of $1.7 million. The fund balance of $8.3
million in the General Fund as of June 30, 2011, has increased in the current year substantially due to a
decline in Town employees that resulted in a decrease in expenditures.
The fund balance of the Capital Project’s Fund decreased $386,548 during the current fiscal year. The
decrease was primarily due to the planned use of capital project fund balance to fund pay as you go
projects such as deferred street and traffic signal maintenance.
The fund balance of the General Obligation Debt Service Fund decreased $59,497 during the current
fiscal year. The decrease was largely due to the planned use of reserves to reduce the annual levy to
the taxpayers.
The fund balance of the Municipal Property Corporation (MPC) Debt Service Fund decreased $150,048
during the current fiscal year. Revenues for the MPC are derived from local sales tax collections which
were consistent with the prior year. The annual debt payment committed for the MPC is fixed but there
are sufficient reserves to pay annual debt service.
The fund balance of the Eagle Mountain Debt Service Fund decreased by $16,337 during the current
fiscal year. The decrease is significantly due to a decline in property tax revenue collected and an
increase in the principal portion due on the related debt.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2011
(22)
All nonmajor governmental funds of the Town are combined into one column on the governmental fund
statements. The nonmajor governmental funds reported a $619,847 increase in fund balance mainly
due to expenditures that were not completed in both the HURF Fund and the Excise Tax Fund. These
expenditure savings were due to a lack of staff resources to complete the projects.
BUDGETARY HIGHLIGHTS
A schedule showing the original and final budget amounts compared to the Town’s actual financial
activity for the General Fund is provided in this report as part of the basic financial statements. The
significant variances are summarized as follows:
The favorable revenue variance of $558,393 in taxes is due to the recovery in the local economy that
was not anticipated and the conservative estimates when the budget was prepared.
The favorable variance in intergovernmental revenues was a result of the state’s projection of state
sales and vehicle license taxes being less than actual collections which affects the distribution to cities
and towns.
The unfavorable revenue variance of $39,041 in licenses and permits reflects the continued economic
recession, particularly in construction related activities but an increase over the prior year. Building
permit revenues continue to decline as well as business license renewals and applications.
The unfavorable revenue variance of $40,079 in fines and forfeitures reflects decreased court activity
related to decreased traffic enforcement within Town borders.
The favorable expenditure variance of $568,374 includes all departments. The staff has managed
expenditures and looked for efficiencies wherever possible. The general government variance is due
primarily to the appropriation of approximately $300,000 in the event the economy worsened during the
fiscal year; the contingency was not required.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
As of June 30, 2011, the Town had invested $191.4 million in capital assets, including buildings,
vehicles, computers, equipment, infrastructure and artwork. This amount represents a net increase
prior to depreciation of $1.5 million from the prior fiscal year, primarily due to a major road improvement
project on Shea Boulevard that is under construction. Total depreciation expense for the current fiscal
year was $5.0 million.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2011
(23)
The following schedule presents a summary of capital asset balances for the fiscal years ended
June 30, 2011 and June 30, 2010.
2011 2010
Percent
Change
Land 23,571,668$ 23,571,668$ 0.0%
Artwork 1,688,500 1,578,500 7.0%
Construction in Progress 3,044,030 880,315 245.8%
Infrastructure 57,986,232 61,746,350 -6.1%
Buildings 14,911,290 15,314,231 -2.6%
Improvements other than Buildings 9,214,491 9,432,563 -2.3%
Vehicles, Machinery and Equipment 202,681 993,212 -79.6%
Total Capital Assets 110,618,892$ 113,516,839$ -2.6%
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 $15.9 million in bonds outstanding, $2.2 million due within one year; this
amount represents a net decrease of $2.1 million. The chart below is a summary of the Town’s
outstanding debt as of year-end:
2011 2010
General Obligation Bonds 7,965,000$ 9,045,000$
Revenue Bonds 7,885,000 8,920,000
Premium on Bonds 74,409 84,330
Total Outstanding Debt 15,924,409$ 18,049,330$
Town of Fountain Hills, Arizona
Outstanding Long-term Bonds
The Town’s general obligation bonds are subject to two limits; the Constitutional debt limit (total debt
limit) on all general obligation bonds (up to 20% of the total secondary assessed valuation) and the
statutory debt limit on general municipal purpose bonds (up to 6% of the total secondary assessed
valuation). The current total debt limitation for the Town is $112.9 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 Notes 3.C.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2011
(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 credit
rating awarded to Fountain Hills by the major credit rating companies.
The housing market has cooled significantly (both nationally and regionally), indicating that the overall
economy may continue to experience slow growth in the year ahead. The Town’s local housing
economy provides building permit and construction sales tax revenue, which have declined over the
past four fiscal years. With a limited inventory of available lots, the Town will have to adjust to the new
economy, one that is less dependent upon building activity as a source of reliable revenue. There is an
area of almost 1,300 acres that was annexed in 2006 that is planned to be developed but the first
building permit is not scheduled to be pulled until 2015.
The Town’s local sales tax collections, which represent the largest Town revenue source, is made up of
primarily retail, telecommunications and restaurant bar activity. Construction related sales taxes are
projected to continue to decline for the foreseeable future; retail collections, however, are projected to
remain steady due to the fact that the existing retail base is not significantly affected by the recession
(major retail activity consists of three grocery stores and one shopping center with a major retailer).
The Town is heavily dependent upon state shared revenues for general fund operations (39%); state-
shared income tax revenues are anticipated to decline for another year fiscal year 2011-12 due to the
two year lag between actual individual and business revenues and state collections with a total general
fund decline of 25% over the past six years. The Town is aggressively pursuing economic vitality and
redevelopment opportunities, specifically a proposed development in the downtown center. The Town
partnered with the Fountain Hills Chamber of Commerce to commission a vision for the downtown core
including the world renowned Fountain Lake Area. The plan was presented to the public in the late
summer of 2009 and serves as a useful tool for economic development to attract developers.
As of June 30, 2011, the Town had set aside $9.6 million in the capital improvement fund but the
majority of capital projects will be deferred until the economy improves. The Town has been successful
in obtaining stimulus funding for a major road improvement along Shea Boulevard that was completed
subsequent to fiscal year 2011.
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.
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL YEAR ENDED JUNE 30, 2011
(25)
The fiscal year 2011-12 operating budget is $14.1 million; representing a 3% decrease from fiscal year
2010-11. 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
$17.1 million, a 267% increase over fiscal year 2010-11. It includes a question to the voters to approve
$14.9 million for a major road reconstruction as well as projects that qualify for federal stimulus funding
under the American Recovery and Reinvestment Act (ARRA) of 2009. Qualified projects include
widening of Shea Boulevard from two to three lanes. Shea Boulevard is a major thoroughfare that
connects the east valley with Fountain Hills through Scottsdale, Arizona. 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.
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 $70.3 million; with the capital
budget for fiscal year 2011-12 totaling $17.1 million (which includes carryover funds for some large
projects currently underway). In fiscal year 2011-12, the CIP places major emphasis on major road
improvements and maintenance. Due to the economy, there are no recreational or non-essential
projects proposed.
CONTACTING THE TOWN’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, and investors and creditors with a
general overview of the Town’s finances and to demonstrate the Town’s accountability for the
resources it receives. If you have questions about this report or need additional information, contact the
Finance Department, Town of Fountain Hills, 16705 East Avenue of the Fountains, Fountain Hills,
Arizona 85268.
Our website: www.fh.az.gov
BASIC FINANCIAL STATEMENTS
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF NET ASSETS
JUNE 30, 2011
See accompanying Notes to Basic Financial Statements.
(26)
Governmental
Activities
ASSETS
Cash and Investments 23,844,919$
Cash with Paying Agent 2,480,039
Receivables, Net:
Accounts Receivable 162,613
Intergovernmental Receivables 936,240
Property Taxes Receivable 61,195
Inventory, At Cost 13,183
Prepaid Items 35,451
Deferred Charges 1,011,731
Capital Assets:
Non-Depreciable 28,304,198
Depreciable (Net) 82,314,694
Total Assets 139,164,263
LIABILITIES
Accounts Payable 672,831
Accrued Wages and Benefits 156,815
Interest Payable 365,039
Unearned Revenue 24,500
Matured Debt Principal Payable 2,115,000
Noncurrent Liabilities:
Due Within One Year 2,249,113
Due in More Than One Year 14,017,218
Total Liabilities 19,600,516
NET ASSETS
Invested in Capital Assets, Net of Related Debt 92,579,483
Restricted For:
Highways and Streets 705,979
Public Safety 225,000
Capital Outlay 2,493,981
Debt Service 960,635
Unrestricted 22,598,669
Total Net Assets 119,563,747$
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2011
See accompanying Notes to Basic Financial Statements.
(27)
NET (EXPENSE)
REVENUE
Fees, Fines and Operating Capital
Charges for Grants and Grants and Governmental
FUNCTIONS/PROGRAMS EXPENSES Services Contributions Contributions Activities
Governmental Activities:
General Government 2,876,848$ 1,126,926$ -$ 337,501$ (1,412,421)$
Public Safety 5,963,067 21,222 122,008 - (5,819,837)
Highways and Streets 5,567,973 16,270 1,492,454 1,935,913 (2,123,336)
Culture and Recreation 2,840,154 - - - (2,840,154)
Development Services 1,572,202 - - - (1,572,202)
Interest on Long-Term Debt 851,957 - - - (851,957)
Total Governmental Activities $ 19,672,201 $ 1,164,418 $ 1,614,462 $ 2,273,414 (14,619,907)
GENERAL REVENUES
Taxes:
Sales Taxes 8,013,480
Property Taxes 1,349,079
Franchise Taxes 322,659
State Sales Tax Revenue Sharing - Unrestricted 4,417,589
Auto Lieu Tax Revenue Sharing - Unrestricted 799,551
Investment Earnings 28,456
Miscellaneous 68,125
Total General Revenues 14,998,939
Change in Net Assets 379,032
Net Assets - Beginning 119,184,715
Net Assets - Ending 119,563,747$
PROGRAM REVENUES
AND CHANGES
IN NET ASSETS
TOWN OF FOUNTAIN HILLS, ARIZONA
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2011
See accompanying Notes to Basic Financial Statements.
(28)
Municipal
General Property
Capital Obligation Corporation
General Projects Debt Service Debt Service
ASSETS
Cash and Investments 7,841,265$ 9,926,149$ 24,080$ 846,535$
Cash with Paying Agent - - 924,356 1,223,315
Accounts Receivable 133,250 - - -
Intergovernmental Receivable 728,528 33,043 - 44,771
Taxes Receivable - - 50,914 -
Due from Other Funds 2,194 - - -
Inventory, at cost 13,183 - - -
Prepaid Items 29,234 - - -
Total Assets 8,747,654$ 9,959,192$ 999,350$ 2,114,621$
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts Payable 278,042$ 325,404$ -$ -$
Accrued Wages and Benefits 139,146 - - -
Due to Other Funds - - - -
Interest Payable - - 104,356 188,315
Deferred Revenue 24,500 - 23,661 -
Matured Debt Principal Payable - - 820,000 1,035,000
Total Liabilities 441,688 325,404 948,017 1,223,315
Fund Balances:
Nonspendable
Inventory 13,183 - - -
Prepaid Items 29,234 - - -
Restricted - - 51,333 891,306
Committed - 9,633,788 - -
Unassigned 8,263,549 - - -
Total Fund Balance 8,305,966 9,633,788 51,333 891,306
Total Liabilities and Fund Balance 8,747,654$ 9,959,192$ 999,350$ 2,114,621$
(29)
Eagle Nonmajor Total
Mountain Governmental Governmental
Debt Service Funds Funds
-$ 5,206,890$ 23,844,919$
332,368 - 2,480,039
- 29,363 162,613
- 129,898 936,240
10,281 - 61,195
- - 2,194
- - 13,183
- 6,217 35,451
342,649$ 5,372,368$ 27,535,834$
-$ 69,385$ 672,831$
- 17,669 156,815
2,194 - 2,194
72,368 - 365,039
2,755 - 50,916
260,000 - 2,115,000
337,317 87,054 3,362,795
- - 13,183
- 6,217 35,451
5,332 3,432,016 4,379,987
- 1,847,081 11,480,869
- - 8,263,549
5,332 5,285,314 24,173,039
342,649$ 5,372,368$ 27,535,834$
THIS PAGE BLANK
TOWN OF FOUNTAIN HILLS, ARIZONA
RECONCILIATION OF THE BALANCE SHEET
OF GOVERNMENTAL FUNDS TO THE
STATEMENT OF NET ASSETS
JUNE 30, 2011
See accompanying Notes to Basic Financial Statements.
(30)
Total Fund Balances for Governmental Funds 24,173,039$
Governmental Capital Assets 191,449,621
Less Accumulated Depreciation (80,830,729)
Capital Assets Used in Governmental Activities 110,618,892
Property Taxes 26,416
1,011,731
General Obligation Bonds (7,965,000)
Revenue Bonds Payable (7,885,000)
Deferred Amount on Premium (74,409)
Compensated Absences (341,922)
Total Net Assets of Governmental Activities 119,563,747$
Long term liabilities, including bonds payable and compensated absences, are not due
and payable in the current period and therefore are not reported in the governmental
funds.
Capital assets used in governmental activities are not financial resources and therefore
are not reported in the governmental funds.
Amounts reported for governmental activities in the Statement of Net Assets are different
because:
Some revenues are not available to pay for current period expenditures and, therefore,
are deferred in the funds.
Bond issuance costs are reported as expenditures in the governmental funds and shown
net of accumulated amortization in the Statement of Net Assets as deferred charges.
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCES
GOVERNMENTAL FUNDS
FISCAL YEAR ENDED JUNE 30, 2011
See accompanying Notes to Basic Financial Statements.
(31)
Municipal
General Property
Capital Obligation Corporation
General Projects Debt Service Debt Service
REVENUES
Taxes:
Sales Taxes 6,556,254$ 283,567$ -$ 880,244$
Property Taxes - - 970,276 -
Franchise Taxes 322,659 - - -
Intergovernmental 5,165,854 300,507 - -
Fines and Forfeitures 214,999 - - -
Licenses and Permits 312,367 - - -
Charges for Services 318,447 - - -
Contributions and Donations - - - -
Rents and Royalties 227,195 - - -
Investment Earnings 11,608 10,357 79 1,476
Other 62,455 - - -
Total Revenues 13,191,838 594,431 970,355 881,720
EXPENDITURES
Current:
General Government 2,279,569 - - -
Public Safety 5,772,800 - - -
Highways and Streets - - - -
Culture and Recreation 1,821,472 - - -
Development Services 1,564,615 - - -
Debt Service:
Principal Retirement - - 820,000 1,035,000
Interest on Long-Term Debt - - 209,852 383,768
Capital Outlay 64,197 951,612 - -
Total Expenditures 11,502,653 951,612 1,029,852 1,418,768
Excess (Deficiency) of Revenues Over
Expenditures 1,689,185 (357,181) (59,497) (537,048)
OTHER FINANCING SOURCES (USES)
Transfers In 29,367 - - 387,000
Transfers Out (402,513) (29,367) - -
Total Other Financing Sources (Uses) (373,146) (29,367) - 387,000
Net Change in Fund Balance 1,316,039 (386,548) (59,497) (150,048)
FUND BALANCE
Beginning of Year, As Restated 6,989,927 10,020,336 110,830 1,041,354
End of Year 8,305,966$ 9,633,788$ 51,333$ 891,306$
(32)
Eagle Nonmajor Total
Mountain Governmental Governmental
Debt Service Funds Funds
-$ 293,415$ 8,013,480$
394,346 3,293 1,367,915
- - 322,659
- 1,698,742 7,165,103
- 21,222 236,221
- - 312,367
- 70,188 388,635
- 4,000 4,000
- - 227,195
27 4,909 28,456
- 5,670 68,125
394,373 2,101,439 18,134,156
- 296,406 2,575,975
- - 5,772,800
- 1,123,230 1,123,230
- 49,974 1,871,446
- - 1,564,615
260,000 - 2,115,000
150,710 - 744,330
- 27,495 1,043,304
410,710 1,497,105 16,810,700
(16,337) 604,334 1,323,456
- 15,513 431,880
- - (431,880)
- 15,513 -
(16,337) 619,847 1,323,456
21,669 4,665,467 22,849,583
5,332$ 5,285,314$ 24,173,039$
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, 2011
See accompanying Notes to Basic Financial Statements.
(33)
Net Change in Fund Balances of Governmental Funds 1,323,456$
Expenditures for Capital Assets 389,082
Less Current Year Depreciation (4,969,874)
Excess Depreciation Over Capital Expenditures (4,580,792)
(253,068)
Property Taxes (18,836)
Principal Payments on General Obligation Bonds 1,080,000
Principal Payments on Revenue Bonds 1,035,000
Amortization of Deferred Amount on Bond Premium 9,921
Amortization of Deferred Charges (117,548)
Capital Contributions 1,935,913
Net Increase in Compensated Absences (35,014)
Change in Net Assets of Governmental Activities 379,032$
Amounts reported for governmental activities in the Statement of Activities are different
because:
Governmental funds report capital outlays as expenditures. However, in the Statement of
Activities the cost of those assets is allocated over their estimated useful lives and
reported as depreciation expense.
Some expenses reported in the Statement of Activities do not require the use of current
financial resources and therefore are not reported as expenditures in the governmental
Some revenues reported in the Statement of Activities do not provide current financial
resources and therefore are not reported as revenues in governmental funds.
The Statement of Activities reports losses arising from the disposal of existing capital
assets. Conversely, governmental funds do not report any gain or loss on disposals of
capital assets.
The issuance of long term debt (e.g. bonds) provides current financial resources to
governmental funds, while the repayment of the principal of long-term debt consumes the
current financial resources of governmental funds. Neither transaction, however, has any
effect on net assets. The issuance of long-term debt increases long-term liabilities on the
Statement of Net Assets and the repayment of principal on long-term debt reduces long-
term debt on the Statement of Net Assets. Also, governmental funds report the effect of
issuance costs, premiums, and similar items when the debt is first issued, whereas these
items are deferred and amortized over the term of the long term debt in the Statement of
Activities.
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
GENERAL FUND
FISCAL YEAR ENDED JUNE 30, 2011
See accompanying Notes to Basic Financial Statements.
(34)
Variance with
Original Budget Final Budget Actual Final Budget
REVENUES
Taxes:
Sales Taxes 6,020,520$ 6,020,520$ 6,556,254$ 535,734$
Franchise Taxes 300,000 300,000 322,659 22,659
Intergovernmental 5,118,735 5,118,735 5,165,854 47,119
Fines and Forfeitures 255,078 255,078 214,999 (40,079)
Licenses and Permits 351,408 351,408 312,367 (39,041)
Charges for Services 254,447 254,447 318,447 64,000
Rents and Royalties 202,792 202,792 227,195 24,403
Investment Earnings 10,800 10,800 11,608 808
Other 38,487 38,487 62,455 23,968
Total Revenues 12,552,267 12,552,267 13,191,838 639,571
EXPENDITURES
Current:
General Government:
Mayor and Council 72,427 72,427 66,759 5,668
Administration 2,431,974 2,353,324 1,801,906 551,418
Municipal Court 421,291 421,291 410,904 10,387
Total General Government 2,925,692 2,847,042 2,279,569 567,473
Public Safety:
Law Enforcement 2,759,530 2,759,530 2,712,509 47,021
Fire and Emergency Medical 2,928,816 2,948,816 3,060,291 (111,475)
Total Public Safety 5,688,346 5,708,346 5,772,800 (64,454)
Culture and Recreation:
Community Services 1,914,587 1,941,037 1,821,472 119,565
Development Services 1,542,402 1,574,602 1,564,615 9,987
Capital Outlay - - 64,197 (64,197)
Total Expenditures 12,071,027 12,071,027 11,502,653 568,374
Excess (Deficiency) of Revenues Over
Expenditures 481,240 481,240 1,689,185 1,207,945
OTHER FINANCING SOURCES (USES)
Transfers In 90,000 90,000 29,367 (60,633)
Transfers Out (571,240) (571,240) (402,513) 168,727
Total Other Financing Sources (Uses) (481,240) (481,240) (373,146) 108,094
Net Change in Fund Balance - - 1,316,039 1,316,039
FUND BALANCE
Beginning of Year, As Restated - - 6,989,927 6,989,927
End of Year -$ -$ 8,305,966$ 8,305,966$
THIS PAGE BLANK
NOTES TO BASIC FINANCIAL STATEMENTS
THIS PAGE BLANK
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
(35)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Town of Fountain Hills, Arizona (Town) have been prepared
in conformity with accounting principles generally accepted in the United States of America
as applied to government units. The Governmental Accounting Standards Board (GASB) is
the accepted standard-setting body for establishing governmental accounting and financial
reporting principles.
The more significant of the Town’s accounting policies are described below.
For the year ended June 30, 2011, the Town implemented the provisions of GASB
Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions.
GASB Statement No. 54 establishes standards for financial reporting, including note
disclosure requirements, fund balance classifications of the governmental funds and
clarifies existing governmental fund type definitions.
A. Reporting Entity
The Town is a municipal entity governed by an elected Mayor and Council. As required
by accounting principles generally accepted in the United States of America, these
financial statements present the Town and its component units, entities for which the
Town is considered to be financially accountable. Blended component units, although
legally separate entities, are, in substance, part of the Town’s operations and so data
from these units are combined with data of the Town, the primary government.
The financial reporting entity consists of a primary government and its component units.
A component unit is a legally separate entity that must be included in the reporting
entity in conformity with generally accepted accounting principles. The Town is a
primary government that has a separately elected governing body, is legally separate,
and is fiscally independent of other state or local governments. Furthermore,
component units combined with the Town for financial statement presentation purposes
and the Town is not included in any other governmental reporting entity. Consequently,
the Town’s financial statements include only the funds of those organizational entities
for which its elected governing body is financially accountable.
Eagle Mountain Community Facilities District and the Cottonwoods Improvement
District. As special purpose districts and separate political subdivisions under the
Arizona Constitution, the districts can levy taxes and issue bonds independently of the
Town. Property owners in the designated areas are assessed for Town taxes, and thus
for the costs of operating the districts. The Town Council serves as the Board of
Directors; however, the District has no liability for the districts’ debt, the Town is
responsible for the debt; the debt is therefore, not subject to the Town’s debt limit;
therefore, providing a financial benefit to the Town. For financial reporting purposes,
transactions of the Districts are combined together and included as if they were part of
the Town’s operations.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
(36)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. Reporting Entity (Continued)
Town of Fountain Hills, Arizona Municipal Property Corporation. The Town of Fountain
Hills, Arizona Municipal Property Corporation’s (MPC) Board of Directors consists of
three members which are appointed by the Fountain Hills Town Council. The MPC,
which is a nonprofit corporation incorporated under the laws of the State of Arizona,
was formed for the sole purpose of assisting the Town in obtaining financing for various
projects of the Town. The Town has a “moral obligation” for the repayment of the MPC’s
bonds. For financial reporting purposes, transactions of the MPC are combined together
and included as if they were part of the Town’s operations.
B. Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the Statement of Net Assets and the
Statement of Activities) present financial information about the Town as a whole. For
the most part, the effect of internal activity has been removed from these statements.
These statements are to distinguish between the governmental and business-type
activities of the Town. Governmental activities normally are supported by taxes and
intergovernmental revenues. The Town does not have any business-type activities.
The Statement of Activities demonstrates the degree to which the direct expenses of a
given function or segment are offset by program revenues. Direct expenses are those
that are clearly identifiable with a specific function or segment. Program revenues
include 1) charges to customers or applicants who purchase, use, or directly benefit
from goods, services, or privileges provided by a given function or segment and
2) grants and contributions that are restricted to meeting the operational or capital
requirements of a particular function or segment. Taxes, state shared revenues,
investment earnings and other items not included among program revenues are
reported instead as general revenues.
Separate financial statements are provided for governmental funds. Major individual
governmental funds are reported as separate columns in the fund financial statements.
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
Government-Wide Financial Statements
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting. Revenues are recorded when
earned and expenses are recorded when a liability is incurred, regardless of the timing
of related cash flows. Property taxes are recognized as revenues in the year for which
they are levied. Grants and similar items are recognized as revenue as soon as all
eligibility requirements imposed by the grantor or provider have been met. As a general
rule, the effect of internal activity has been eliminated from the government-wide
financial statements; however, the effects of interfund services provided and used
between functions are reported as expenses and program revenues at amounts
approximating their external exchange value.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
(37)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
(Continued)
Fund Financial Statements
Governmental fund financial statements are reported using the current financial
resources measurement focus and the modified accrual basis of accounting. Revenues
are recognized as soon as they are both measurable and available. Revenues are
considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. For this purpose, the Town
considers revenues to be available if they are collected within 60 days of the end of the
current fiscal period.
Expenditures generally are recorded when a liability is incurred, as under accrual
accounting. However, debt service resources are provided during the current year for
payment of long-term debt principal and interest due early in the following year (not to
exceed one month) and therefore the expenditures and related liabilities have been
recognized. Compensated absences are recorded only when payment is due.
Property taxes, sales taxes, franchise taxes, licenses and permits, charges for services,
special assessments and investment earnings associated with the current fiscal period
are all considered to be susceptible to accrual and have been recognized as revenues
of the current fiscal period. Miscellaneous revenue is not susceptible to accrual because
generally they are not measurable until received in cash. Grants and similar awards are
recognized as revenue as soon as all eligibility requirements imposed by the grantor or
provider have been met. Deferred revenues arise when resources are received by the
Town before it has legal claim to them, as when grant monies are received prior to
meeting all eligibility requirements imposed by the provider.
Delinquent property taxes have been recorded as deferred revenue. Receivables that
will not be collected within the available period have also been reported as deferred
revenue on the governmental fund financial statements.
When both restricted and unrestricted resources are available for use, it is the Town’s
policy to use restricted resources first, then unrestricted resources as they are needed.
The focus of governmental fund financial statements is on major funds rather than
reporting funds by type. Each major fund is presented in a separate column. Non-major
funds are aggregated and presented in a single column.
The Town reports the following major governmental funds.
Major Governmental Funds
General Fund
This fund is the Town’s primary operating fund. The Fund accounts for all financial
resources of the Town, except those required to be accounted for in other funds.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
(38)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
(Continued)
Capital Projects Fund
This fund accounts for the capital improvements to various projects and equipment
purchases of the Town.
General Obligation Debt Service Fund
This fund accounts for the Town’s property tax revenues received to pay the debt
service of the Town’s general obligation bonds.
Municipal Property Corporation Debt Service Fund
This fund accounts for the revenues received to pay the debt service on MPC revenue
bonds.
Eagle Mountain Debt Service Fund
This fund accounts for the property tax revenues received to pay the debt service of the
Eagle Mountain Community Facilities District component unit.
D. Assets, Liabilities, and Net Assets or Fund Balance
1. Deposits and Investments
The Town’s cash and cash equivalents are considered to be cash on hand, demand
deposits, cash and investments held by the State Treasurer, and highly liquid
investments with maturities of three months or less from the date of acquisition.
Cash and investments are pooled except for funds required to be held by fiscal
agents or restricted under provisions of bond indentures. Interest earned from
investments purchased with such pooled monies is allocated to each of the funds
based on the average daily cash balances. State statutes authorize the Town to
invest in obligations of the U.S. Treasury and U.S. agencies, certificates of deposit
in eligible depositories, repurchase agreements, obligations of the State of Arizona
or any of its counties or incorporated cities, towns or duly organized school districts,
improvement districts in this state and the State Treasurer’s Local Government
Investment Pool. Investments are stated at fair value.
2. Receivables and Payables
Activity between funds that is representative of lending/borrowing arrangements
outstanding at the end of the fiscal year is referred to as either “due to/from other
funds” (i.e., the current portion of interfund loans) or “advances to/from other funds”
(i.e., the non-current portion of interfund loans). All other outstanding balances
between funds are reported as “due to/from other funds.”
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
(39)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, and Net Assets or Fund Balance (Continued)
2. Receivables and Payables (Continued)
All trade and property tax receivables are shown net of an allowance for
uncollectibles.
Property taxes are levied by the Town and collected by the Maricopa County
Treasurer. Property taxes are levied no later than the third Monday in August and
are payable in two installments due October 1 of the current year and March 1 of
the subsequent year. Taxes become delinquent after the first business day of
November and May, respectively. Interest attaches on installments after the
delinquency date.
Pursuant to Arizona Revised Statutes (A.R.S.) a lien against assessed real and
personal property attaches on the first day of January preceding assessment and
levy; however according to case law, an enforceable legal claim to the asset does
not arise. The State Constitution and State law specify a property tax levy limitation
system. The system consists of two levies, a limited levy known as the primary
property tax levy and an unlimited levy referred to as the secondary levy, which may
only be used to retire bonded indebtedness.
The primary tax levy is limited to an increase of 2 percent over the previous year’s
maximum allowable primary levy, plus an increased dollar amount because of a net
gain in property not taxed the previous year. Also, the primary property tax from all
taxing jurisdictions for homeowners may not exceed 1 percent of the market value
of their homes. If the combined primary property tax (for the Town, County, School
District, etc.) exceeds 1 percent of the market value of the homes, the school
districts will reduce their rate until the homeowners’ aggregate rate is equal to or
less than the allowable 1 percent. The State will then subsidize the school districts
for the reduced revenue. This 1 percent limitation applies to primary property taxes
only and does not affect the secondary property tax levy.
There is also a control on the assessed value of property for primary tax purposes.
The base year for the new tax system is fiscal year 1978-79. From this base year,
two assessed values evolve. The primary assessed values are allowed to increase
by no more than 10 percent a year. The dollar amount of the secondary property tax
levy is “unlimited” and the actual full cash value of property is used in determining
the tax rate.
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.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
(40)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, and Net Assets or Fund Balance (Continued)
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. Capital Assets
Capital assets, which include land, artwork, buildings, improvements other than
buildings, vehicles, machinery, and equipment, construction in progress, and
infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are
reported in the governmental activities column in the government-wide financial
statements. Capital assets are defined by the Town as assets with an initial,
individual cost of $5,000 or more and an estimated useful life of more than one
year. The capital assets include all infrastructure assets acquired by the Town since
incorporation.
Such assets are recorded at historical cost or estimated historical cost if actual
historical cost is not available. Donated capital assets are recorded at estimated fair
market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the
asset or materially extend the life of the asset are not capitalized. Major outlays for
capital assets and improvements are capitalized as projects are constructed.
Capital assets of the Town are depreciated using the straight-line method over the
following estimated useful lives:
Assets Years
Infrastructure 15-50
Buildings 50
Improvements other than buildings 20
Vehicles, machinery and equipment 5-15
6. Compensated Absences
The Town’s employee vacation and sick leave policies generally provide for
granting vacation and sick leave with pay. Sick leave and vacation benefits vest
after 30 days at the employee’s then current rate of pay.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
(41)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, and Net Assets or Fund Balance (Continued)
6. Compensated Absences (Continued)
Effective October 7, 2004, all eligible full-time and part-time employees can accrue
vacation leave. Full-time employees can accrue up to a maximum of 224 hours of
vacation, while part-time employees can accrue up to 112 ours, depending upon
their length of service. In the event of termination, employees will be paid for any
accrued, but unused, vacation hours. Also effective October 7, 2004, full-time
employees started to accrue sick leave, based on their length of service, up to a
maximum of 720 hours. A portion of this balance will be paid upon a satisfactory
separation of service.
The current and long-term liabilities, including related benefits, for accumulated
vacation and sick leave are reported on the government-wide financial statements.
A liability for these amounts is reported in governmental funds only if they have
matured, for example, as a result of employee leave, resignations and retirements.
Generally, resources from the General Fund are used to pay for compensated
absences.
7. Long-term Obligations
In the government-wide financial statements, long-term debt and other long-term
obligations are reported as liabilities on the Statement of Net Assets. Bond
premiums and discounts, as well as issuance costs and the difference between the
reacquisition price and the net carrying amount of the old debt, are deferred and
amortized over the life of the bonds using the straight-line method over the term of
the related debt.
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.
8. Net Assets
In the government-wide financial statements, net assets are reported in three
categories: net assets invested in capital assets, net of related debt; restricted net
assets; and unrestricted net assets. Net assets invested in capital assets, net of
related debt is separately reported because capital assets make up a significant
portion of total net assets. Restricted net assets account for the portion of net
assets restricted by parties outside the Town. Unrestricted net assets are the
remaining net assets not included in the previous two categories.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
(42)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, and Net Assets or Fund Balance (Continued)
9. Fund Balance Classifications
Fund balances of the governmental funds are reported separately within
classifications based on a hierarchy of the constraints placed on the use of those
resources. The classifications are based on the relative strength of the constraints
that control how the specific amounts can be spent. The classifications are
nonspendable, restricted, committed, assigned, and unassigned fund balance
classifications.
The nonspendable fund balance classification includes amounts that cannot be
spent because they are either not in spendable form such as inventories and
prepaid items, or are legally or contractually required to be maintained intact.
Restricted fund balances are those that have externally imposed restrictions on their
usage by creditors (such as through debt covenants), grantors, contributors, or laws
and regulations. Committed fund balances are self-imposed limitations approved by
the Town’s Council, which is the highest level of decision-making authority within
the Town. Only the Town Council can remove or change the constraints placed on
committed fund balances. Assigned fund balances are resources constrained by the
Town’s intent to be used for specific purposes, but are neither restricted nor
committed. The Town Council has not authorized an employee to make
assignments of resources for specific purpose. 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.
10. Interfund Activity
Flows of cash from one fund to another without a requirement for repayment are
reported as interfund transfers. Interfund transfers between governmental funds are
eliminated in the Statement of Activities. Interfund transfers in the fund statements
are reported as other financing sources/uses in governmental funds.
11. 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, 2011
(43)
NOTE 2 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary information
The Town Council follows these procedures in establishing the budgetary data reflected
in the financial statements:
1. In accordance with Arizona Revised Statutes, the Town Manager submits a
proposed budget for the fiscal year commencing the following July 1 to the Town
Council. The operating budget includes proposed expenditures and the means of
financing them for the upcoming year.
2. Public hearings are conducted to obtain taxpayer comment.
3. Prior to the third Monday in August, the expenditure limitation for the Town is
legally enacted through passage of an ordinance. To ensure compliance with the
expenditure limitation, a uniform expenditure report must be filed with the State
each year. This report, issued under a separate cover, reconciles total Town
expenditures from the audited basic financial statements to total expenditures for
reporting in accordance with the State’s uniform expenditure reporting system
(A.R.S. §41-1279.07).
4. Expenditures may not legally exceed the expenditure limitation described below of
all fund types as a whole. For management purposes, the Town adopts a budget
by department for the General Fund and in total by fund for other funds. The Town
Manager, subject to Town Council approval, may at any time transfer any
unencumbered appropriation balance or portion thereof between a department or
activity. The adopted budget cannot be amended in any way without Town Council
approval.
5. Formal budgetary integration is employed as a management control device during
the year for the General, Special Revenue, Debt Service, and Capital Projects
Funds (except for the HURF Debt Service and Cottonwoods Special Assessment
Funds, in which the Town did not adopt a budget) on essentially the same modified
accrual basis of accounting used to record actual revenues and expenditures.
The Town is subject to the State of Arizona’s Spending Limitation Law for Towns and
Cities. This law does not permit the Town to spend more than budgeted revenues plus
the carryover unrestricted cash balance from the prior fiscal year. The limitation is
applied to the total of the combined funds. The Town complied with this law during the
year.
No supplementary budgetary appropriations were necessary during the year.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
(44)
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:
General Fund
Fire and Emergency Medical 111,475$
Capital Outlay 64,197
Municipal Property Corporation Debt Service Fund 138
Cash was available to cover the over expenditures listed above.
NOTE 3 DETAILED NOTES ON ALL FUNDS
A. Assets
1. Deposits and Investments
Deposits and investments at June 30, 2011, consist of the following:
Deposits:
Cash on Hand 1,050$
Cash in Bank 740,626
Cash on Deposit with Paying Agent 2,480,039
Investments
State Treasurer's Investment Pool 23,103,243
Total 26,324,958
Less Cash with Paying Agent (2,480,039)
Total Cash and Investments 23,844,919$
Deposits
The Town’s deposits at June 30, 2011, had a carrying value of $740,626 and a bank
balance of $755,965. The entire bank balance of the Town was deposited in non-
interest bearing accounts or low-interest bearing accounts that were fully insured by
federal depository insurance.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
(45)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
A. Assets (Continued)
1. Deposits and Investments (Continued)
Investments
The State Board of Deposit provides oversight for the State Treasurer’s pools, and
the Local Government Investment Pool Advisory Committee provides consultations
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.
Interest Rate Risk – This is the risk that the market value of securities held in the
portfolio will decline due to increases in market interest rates subsequent to their
purchase. In accordance with its investment policy, the Town manages its exposure
to declines in fair value by:
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.
Credit Risk – This is the risk of loss due to the failure of the financial institution or
security issuer. The Town policy relating to the mitigation of credit risk is to limit
investments in the portfolio to the asset classes designated as acceptable in Arizona
Revised Statutes Section 35-323, provided, however, any investments described in
paragraph 8 or 9 of such statute section shall require written consent from the
Finance Director. 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 situations. The Town pre-
qualifies the financial institutions, broker/dealers, and investment advisers with
which the Town will do business. As of year-end, investments in the State
Treasurer’s Investment Pool did not receive a quality credit rating from a national
credit rating agency.
Custodial Credit Risk – The Town’s investment policy does not address
concentration of credit risk. The Town currently only invests in the State Treasurer’s
Investment Pool.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
(46)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
A. Assets (Continued)
2. Receivables
Governmental funds report deferred revenue in connection with receivables for
revenues that are not considered to be available to liquidate liabilities of the current
period. Governmental funds also defer revenue recognition in connection with
resources that have been received, but not yet earned. At the end of the current
fiscal year, the various components of deferred revenue reported in the
governmental funds were as follows:
Unavailable Unearned
General Fund
Miscellaneous -$ 24,500$
General Obligation Debt Service Fund
Property Taxes 23,661 -
Nonmajor Governmental Funds
Property taxes 2,755 -
Total Deferred Revenue for Governmental Funds 26,416$ 24,500$
(Remainder of Page Intentionally Left Blank)
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
(47)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
A. Assets (Continued)
3. Capital Assets
Capital assets for the year ended June 30, 2011, were as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental Activities:
Capital Assets, Not Being Depreciated:
Land 23,571,668$ -$ -$ 23,571,668$
Artwork 1,578,500 110,000 - 1,688,500
Construction in Progress 880,315 2,163,715 - 3,044,030
Total Capital Assets, Not Being
Depreciated 26,030,483 2,273,715 - 28,304,198
Capital Assets, Being Depreciated:
Infrastructure 126,662,976 - (215,544) 126,447,432
Buildings 18,054,544 - (45,800) 18,008,744
Improvements Other Than Buildings 15,022,357 - - 15,022,357
Vehicles, Machinery and Equipment 4,156,666 51,280 (541,056) 3,666,890
Total Capital Assets, Being
Depreciated 163,896,543 51,280 (802,400) 163,145,423
Accumulated Depreciation for:
Infrastructure (64,916,626) (3,557,196) 12,622 (68,461,200)
Buildings (2,740,313) (360,805) 3,664 (3,097,454)
Improvements Other Than Buildings (5,589,794) (751,118) 533,046 (5,807,866)
Vehicles, Machinery and Equipment (3,163,454) (300,755) - (3,464,209)
Total Accumulated Depreciation (76,410,187) (4,969,874) 549,332 (80,830,729)
Total Capital Assets, Being
Depreciated, Net 87,486,356 (4,918,594) (253,068) 82,314,694
Governmental Activities Capital
Assets, Net 113,516,839$ (2,644,879)$ (253,068)$ 110,618,892$
Depreciation expense was charged to functions/programs as follows:
Governmental Activities:
General Government 267,842$
Public Safety 101,121
Highways and Streets 3,681,428
Culture and Recreation 919,483
Total Depreciation Expense 4,969,874$
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
(48)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
A. Assets (Continued)
4. Construction Commitments
The Town has active construction projects at June 30, 2011. At fiscal year end, the
Town’s commitments with contractors were as follows:
Remaining
Project Spent-to-date Commitment
Shea Boulevard Improvements 3,044,030$ 1,291,725$
Governmental Activities
B. Interfund Receivables/Payables and Transfers
As of June 30, 2011, interfund receivable and payables were as follows:
Eagle Mountain
Debt Service
Due to Fund
General Fund 2,194$
Due From
The above interfund receivable and payable is recorded to eliminate deficit cash at
year-end. The deficit in the Nonmajor Governmental Funds was recovered in the
subsequent fiscal year upon receipt of property taxes.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
(49)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
B. Interfund Receivables/Payables and Transfers (Continued)
Interfund transfers for the year ended June 30, 2011, consisted of the following:
Municipal
Property
Corporation Nonmajor
General Debt Service Governmental
Transfers Out Fund Fund Fund Total
General Fund -$ 387,000$ 15,513$ 402,513$
Capital Projects Fund 29,367 - - 29,367
Total 29,367$ 387,000$ 15,513$ 431,880$
Transfers In
The General Fund transferred $387,000 to pay for debt service costs on the Municipal
Property Corporation’s outstanding bonds. The General Fund transferred $15,513 to the
Nonmajor Governmental Fund to provide the matching portion of a transportation grant
the Town received. The Capital Projects Fund transferred $29,367 to the General Fund
to set aside monies for vehicle replacement.
(The remainder of this page intentionally left blank)
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
(50)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
C. Long-Term Obligations
Bonds payable at year end consisted of the following general obligation, municipal
property corporation and community facilities district bonds. The bonds are both callable
and noncallable with the interest payable semiannually. Property taxes from the
General Obligation Bond Debt Service Fund and Eagle Mountain Debt Service Fund
are used to pay general obligation and community facilities district bonds. State shared
revenues from the HURF Fund are used to pay street and highway user bonds. Tax
revenues from the General Fund and Excise Tax Fund are used to pay municipal
facilities bonds.
Interest Maturity Original Outstanding
Purpose Rates Date Amount Amount
Governmental Activities:
General Obligation Bonds:
General Obligation Refunding
Bonds, Series 2005 3.75-4.00 07/01/11-19
$ 7,225,000 $ 4,595,000
Eagle Mountain Community
Facilities District, General Obligation
Refunding Bonds, Series 2005 3.75-4.125 7/1/2011-21
4,555,000 3,370,000
Total General Obligation Bonds $ 11,780,000 $ 7,965,000
Revenue Bonds:
Municipal Facilities Revenue Bonds,
Series 2000 5.25 7/01/11-12
$ 4,680,000 $ 230,000
Municipal Facilities Revenue Bonds,
Series 2001 4.40-4.50 7/01/11-13
7,750,000 775,000
Municipal Facilities Revenue Bonds,
Series 2004 4.00-4.50 7/01/11-19
3,645,000 2,410,000
Municipal Facilities Revenue
Refunding Bonds, Series 2005 3.75-4.50 7/01/11-20
5,330,000 4,470,000
Total Revenue Bonds $ 21,405,000 $ 7,885,000
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
(51)
NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED)
C. Long-Term Obligations (Continued)
The Town has pledged future excise taxes to repay a total of $7,885,000 in outstanding
municipal facilities revenue and refunding bonds. For fiscal year ended June 30, 2011,
the net revenues available to service this debt were $14.1 million. The debt principal
and interest paid on this debt in fiscal year 2010-11 was $1,035,000 and $373,768,
respectively (10 percent of available pledged revenues).
Changes in long-term obligations for the year ended June 30, 2011, are as follows:
Due Within
July 1, 2010 Increases Decreases June 30, 2011 One Year
Governmental Activities
Bonds
General Obligation Bonds 9,045,000$ -$ (1,080,000)$ 7,965,000$ 1,120,000$
Revenue Bonds 8,920,000 - (1,035,000) 7,885,000 1,085,000
17,965,000 - (2,115,000) 15,850,000 2,205,000
Deferred Amounts:
Premium 84,330 - (9,921) 74,409 9,921
Total Bonds 18,049,330 - (2,124,921) 15,924,409 2,214,921
Other Liabilities:
Compensated Absences 306,908 225,498 (190,484) 341,922 34,192
Governmental Activities
Long-Term Liabilities 18,356,238$ 225,498$ (2,315,405)$ 16,266,331$ 2,249,113$
Debt service requirements on long-term debt at June 30, 2011, are as follows:
Principal Interest
2012 2,205,000$ 654,681$
2013 2,295,000 565,506
2014 2,430,000 470,731
2015 1,990,000 375,106
2016 1,490,000 294,781
2017 - 2021
5,440,000 585,914
15,850,000$ 2,963,219$
Governmental Activities
Year Ending June 30,
In prior years, the Town defeased certain general obligation and other bonds by placing
the proceeds of new bonds in an irrevocable trust to provide for all future debt service
payments on the defeased bonds. Accordingly, the trust account assets and the liability
for the defeased bonds are not included in the Town’s financial statements. At year end,
$7,850,000 of defeased bonds are still outstanding.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
(52)
NOTE 4 OTHER INFORMATION
A. Change in Accounting Principle
As a result of the implementation of GASB Statement No. 54, the Town reclassified the
Public Art fund from a Special Revenue Fund to inclusion in the General Fund for
financial reporting purposes. The following schedule reconciles beginning fund
balances are previously reported to the restated balance.
Fund
General 6,988,406$ 1,521$ 6,989,927$
Capital Projects 10,020,336 - 10,020,336
General Obligation Debt Service 110,830 - 110,830
Municipal Property Corporation Debt Service 1,041,354 - 1,041,354
Eagle Mountain Debt Service 21,669 - 21,669
Nonmajor Governmental Fund 4,666,988 (1,521) 4,665,467
Total 22,849,583$ -$ 22,849,583$
Fund Balance at
July 1, 2010 as
Previously Stated
Funds Reclassified
Due to GASB
Statement No. 54
Fund Balance
July 1, 2010
as Restated
B. 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.
C. 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 $13,000,000
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.
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.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
(53)
NOTE 4 OTHER INFORMATION (CONTINUED)
D. 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, 2011, was
$2,806,371. The Town’s total payroll was $3,147,945.
A defined contribution pension plan provides benefits in return for services rendered,
provides an individual account for each participant, and specifies how contributions to
the individual’s account are to be determined, instead of specifying the amount of
benefit the individual is to receive. Under a defined contribution pension plan, the
benefits a participant will receive depend solely on the amount contributed to the
participant’s account, the returns earned on investment of those contributions, and
forfeitures of other participants’ benefits that may be allocated to such participant’s
account. All non-peace officer full-time Town employees must participate in the pension
plan from the date they are hired. Contributions made by an employee vest immediately
and contributions made by the Town vest after three years of service.
An employee that leaves the employment of the Town is entitled to his or her
contributions and the vested portion of the Town’s contributions, plus interest earned.
Each employee must contribute 11% of his or her gross earnings. The Town must
match the employee contribution of 11%. During fiscal year 2010-11, the Town’s
required and actual contributions amounted to $308,701. The employees’ contributions
totaled $308,701. Employees may also contribute to the lCMA Retirement Corporation
457 plan on a voluntary basis; there is no employer match for those contributions.
During fiscal year 2010-11, employees contributed $151,763 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 2010-11 or as of the close of the fiscal year.
E. Subsequent Events
Subsequent to June 30, 2011, the Town deposited $2,729,109 of cash into an
irrevocable trust, paid issuance costs of $37,500 and placed $3,391 in a contingency
fund to advance refund $2,410,000 in Municipal Property Corporation Bonds, Series
2004. The bonds were refunded to obtain an economic savings over the life of the
bonds.
THIS PAGE BLANK
COMBINING AND INDIVIDUAL FUND
STATEMENTS AND SCHEDULES
THIS PAGE BLANK
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
HURF Fund - accounts for the Town’s share of motor fuel tax revenues and lottery proceeds.
Development Fees Fund - accounts for development fees collected from developers restricted for
projects approved by the Town Council.
Local Court Enhancement Fund - accounts for activities of grants from the Arizona Supreme Court.
Grants Fund - accounts for the activities of various grants and contributions received by the Town.
Excise Tax Fund - accounts for the portion of Town sales tax reserved by the Town Council for special
projects including Town beautification and economic development.
DEBT SERVICE FUNDS
HURF Debt Service Fund - accounts for operating transfers received from the HURF special revenue
fund to pay the debt service of the Street and Highway User Revenue Bonds.
Cottonwoods Special Assessment Fund - accounts for all special assessments received to pay the debt
service of the Cottonwoods Special Assessment District.
TOWN OF FOUNTAIN HILLS, ARIZONA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
JUNE 30, 2011
(54)
HURF
Development
Fees
Local Court
Enhancement Grants Excise Tax
Total Special
Revenue
Funds
ASSETS
Cash and Investments 618,512$ 2,493,981$ 225,000$ 5,402$ 1,851,331$ 5,194,226$
Accounts Receivable 29,363 - - - - 29,363
Intergovernmental Receivable 114,974 - - - 14,924 129,898
Prepaid Items 5,608 - - - 609 6,217
Total Assets 768,457$ 2,493,981$ 225,000$ 5,402$ 1,866,864$ 5,359,704$
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts Payable 47,188$ -$ -$ 4,968$ 17,229$ 69,385$
Accrued Wages and Benefits 15,290 - - 434 1,945 17,669
Total Liabilities 62,478 - - 5,402 19,174 87,054
Fund Balances:
Nonspendable 5,608 - - - 609 6,217
Restricted 700,371 2,493,981 225,000 - - 3,419,352
Committed - - - - 1,847,081 1,847,081
Total Fund Balances 705,979 2,493,981 225,000 - 1,847,690 5,272,650
Total Liabilities and Balance 768,457$ 2,493,981$ 225,000$ 5,402$ 1,866,864$ 5,359,704$
Special Revenue
(55)
HURF Debt
Service
Cottonwoods
Special
Assessment
Total Debt
Service
Funds
Total
Nonmajor
Governmental
Funds
-$ 12,664$ 12,664$ 5,206,890$
- - - 29,363
- - - 129,898
- - - 6,217
-$ 12,664$ 12,664$ 5,372,368$
-$ -$ -$ 69,385$
- - - 17,669
- - - 87,054
- - - 6,217
- 12,664 12,664 3,432,016
- - - 1,847,081
- 12,664 12,664 5,285,314
-$ 12,664$ 12,664$ 5,372,368$
Debt Service
TOWN OF FOUNTAIN HILLS, ARIZONA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGE IN FUND BALANCES
FISCAL YEAR ENDED JUNE 30, 2011
(56)
HURF
Development
Fees
Local Court
Enhancement Grants Excise Tax
Total Special
Revenue
Funds
REVENUES
Taxes:
Sales Taxes -$ -$ -$ -$ 293,415$ 293,415$
Property Taxes - - - - - -
Intergovernmental 1,488,454 - - 210,288 - 1,698,742
Fines and Forfeitures - - 21,222 - - 21,222
Charges for Services 16,270 53,918 - - - 70,188
Contributions and Donations - - - 4,000 - 4,000
Investment Earnings 247 2,635 461 - 1,178 4,521
Other 5,668 - - - - 5,668
Total Revenues 1,510,639 56,553 21,683 214,288 294,593 2,097,756
EXPENDITURES
Current:
General Government - - 12,442 152,332 131,632 296,406
Highways and Streets 1,123,230 - - - - 1,123,230
Culture and Recreation - - - 49,974 - 49,974
Capital Outlay - - - 27,495 - 27,495
Total Expenditures 1,123,230 - 12,442 229,801 131,632 1,497,105
Excess (Deficiency) of
Revenues Over Expenditures 387,409 56,553 9,241 (15,513) 162,961 600,651
OTHER FINANCING SOURCES (USES)
Transfers In - - - 15,513 - 15,513
Net Change in Fund
Balances 387,409 56,553 9,241 - 162,961 616,164
FUND BALANCES
Beginning of Year 318,570 2,437,428 215,759 - 1,684,729 4,656,486
End of Year 705,979$ 2,493,981$ 225,000$ -$ 1,847,690$ 5,272,650$
Special Revenue
(57)
HURF Debt
Service
Cottonwoods
Special
Assessment
Total Debt
Service Funds
Total
Nonmajor
Governmental
Funds
-$ -$ -$ 293,415$
- 3,293 3,293 3,293
- - - 1,698,742
- - - 21,222
- - - 70,188
- - - 4,000
388 - 388 4,909
- 2 2 5,670
388 3,295 3,683 2,101,439
- - - 296,406
- - - 1,123,230
- - - 49,974
- - - 27,495
- - - 1,497,105
388 3,295 3,683 604,334
- - - 15,513
388 3,295 3,683 619,847
(388) 9,369 8,981 4,665,467
-$ 12,664$ 12,664$ 5,285,314$
Debt Service
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, 2011
(58)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Sales Taxes 66,678$ 283,567$ 216,889$
Intergovernmental 1,081,614 300,507 (781,107)
Investment Earnings 300 10,357 10,057
Total Revenues 1,148,592 594,431 (554,161)
EXPENDITURES
Capital Outlay 6,446,116 951,612 5,494,504
Excess (Deficiency) of Revenues Over
Expenditures (5,297,524) (357,181) 4,940,343
OTHER FINANCING SOURCES (USES)
Transfers In 3,365,837 - (3,365,837)
Transfers Out - (29,367) (29,367)
Total Other Financing Sources (Uses) 3,365,837 (29,367) (3,395,204)
Net Change in Fund Balance (1,931,687) (386,548) 1,545,139
FUND BALANCE
Beginning of Year - 10,020,336 10,020,336
End of Year (1,931,687)$ 9,633,788$ 11,565,475$
Original and
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
GENERAL OBLIGATION DEBT SERVICE FUND
FISCAL YEAR ENDED JUNE 30, 2011
(59)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Property Taxes 1,040,484$ 970,276$ (70,208)$
Investment Earnings 300 79 (221)
Total Revenues 1,040,784 970,355 (70,429)
EXPENDITURES
Debt Service:
Principal Retirement 820,000 820,000 -
Interest on Long-Term Debt 208,713 209,852 (1,139)
Fiscal Charges 2,100 - 2,100
Total Expenditures 1,030,813 1,029,852 961
Excess (Deficiency) of Revenues Over
Expenditures 9,971 (59,497) (69,468)
FUND BALANCE
Beginning of Year - 110,830 110,830
End of Year 9,971$ 51,333$ 41,362$
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, 2011
(60)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Sales Taxes 827,500$ 880,244$ 52,744$
Investment Earnings 1,200 1,476 276
Total Revenues 828,700 881,720 53,020
EXPENDITURES
Debt Service:
Principal Retirement 1,035,000 1,035,000 -
Interest on Long-Term Debt 376,630 383,768 (7,138)
Fiscal Charges 7,000 - 7,000
Total Expenditures 1,418,630 1,418,768 (138)
Excess (Deficiency) of Revenues Over
Expenditures (589,930) (537,048) 52,882
OTHER FINANCING SOURCES (USES)
Transfers In 387,000 387,000 -
Net Change in Fund Balance (202,930) (150,048) 52,882
FUND BALANCE
Beginning of Year - 1,041,354 1,041,354
End of Year (202,930)$ 891,306$ 1,094,236$
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, 2011
(61)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Property Taxes 420,000$ 394,346$ (25,654)$
Investment Earnings 84 27 (57)
Total Revenues 420,084 394,373 (25,711)
EXPENDITURES
Debt Service:
Principal Retirement 260,000 260,000 -
Interest on Long-Term Debt 143,360 143,360 -
Fiscal Charges 7,350 7,350 -
Total Expenditures 410,710 410,710 -
Excess (Deficiency) of Revenues Over
Expenditures 9,374 (16,337) (25,711)
FUND BALANCE
Beginning of Year - 21,669 21,669
End of Year 9,374$ 5,332$ (4,042)$
Original and
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
HURF FUND
FISCAL YEAR ENDED JUNE 30, 2011
(62)
Variance with
Final Budget Actual Final Budget
REVENUES
Intergovernmental 1,315,800$ 1,488,454$ 172,654$
Charges for Services 15,068 16,270 1,202
Investment Earnings 120 247 127
Other 7,602 5,668 (1,934)
Total Revenues 1,338,590 1,510,639 172,049
EXPENDITURES
Current:
Highways and Streets 1,207,836 1,123,230 84,606
Excess (Deficiency) of Revenues Over
Expenditures 130,754 387,409 256,655
OTHER FINANCING SOURCES (USES)
Transfers Out (79,875) - 79,875
Net Change in Fund Balance 50,879 387,409 336,530
FUND BALANCE
Beginning of Year - 318,570 318,570
End of Year 50,879$ 705,979$ 655,100$
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, 2011
(63)
Variance with
Final Budget Actual Final Budget
REVENUES
Charges for Services $ 87,610 $ 53,918 $ (33,692)
Investment Earnings 955 2,635 1,680
Total Revenues 88,565 56,553 (32,012)
EXPENDITURES
Current
Highways and Streets - - -
Excess (Deficiency) of Revenues Over
Expenditures 88,565 56,553 (32,012)
OTHER FINANCING SOURCES (USES)
Transfers In 30 - (30)
Net Change in Fund Balance 88,595 56,553 (32,042)
FUND BALANCE
Beginning of Year - 2,437,428 2,437,428
End of Year 88,595$ 2,493,981$ 2,405,386$
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, 2011
(64)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Fines and Forfeitures 19,000$ 21,222$ 2,222$
Investment Earnings 250 461 211
Total Revenues 19,250 21,683 2,433
EXPENDITURES
Current:
General Government 40,350 12,442 27,908
Excess (Deficiency) of Revenues Over
Expenditures (21,100) 9,241 30,341
FUND BALANCE
Beginning of Year - 215,759 215,759
End of Year (21,100)$ 225,000$ 246,100$
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, 2011
(65)
Variance with
Final Budget Actual Final Budget
REVENUES
Intergovernmental $ 7,490,225 $ 210,288 $ (7,279,937)
Contributions and Donations - 4,000 4,000
Total Revenues 7,490,225 214,288 (7,275,937)
EXPENDITURES
Current:
General Government 1,318,423 152,332 1,166,091
Culture and Recreation - 49,974 (49,974)
Capital Outlay - 27,495 (27,495)
Total Expenditures 1,318,423 229,801 1,088,622
Excess (Deficiency) of Revenues Over
Expenditures 6,171,802 (15,513) (6,187,315)
OTHER FINANCING SOURCES (USES)
Transfers In - 15,513 15,513
Transfers Out (6,171,802) - 6,171,802
Total Other Finance Sources (Uses) (6,171,802) 15,513 6,187,315
Net Change in Fund Balance - - -
FUND BALANCE
Beginning of Year - - -
End of Year -$ -$ -$
Original and
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
EXCISE TAX FUND
FISCAL YEAR ENDED JUNE 30, 2011
(66)
Variance with
Final Budget Actual Final Budget
REVENUES
Taxes:
Sales Taxes 270,629$ 293,415$ 22,786$
Investment Earnings - 1,178 1,178
Total Revenues 270,629 294,593 23,964
EXPENDITURES
Current:
General Government 202,877 131,632 71,245
Capital Outlay 11,300 - 11,300
Total Expenditures 214,177 131,632 82,545
Excess (Deficiency) of Revenues Over
Expenditures 56,452 162,961 106,509
OTHER FINANCING SOURCES (USES)
Transfers Out (370,100) - 370,100
Net Change in Fund Balance (313,648) 162,961 476,609
FUND BALANCE
Beginning of Year - 1,684,729 1,684,729
End of Year (313,648)$ 1,847,690$ 2,161,338$
Original and
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.
Due to cost considerations for the accumulation of data, the Town has elected to present less than ten
years of data, or data from less than nine years prior, for certain statistical schedules. This information
will be accumulated and reported each year until the complete ten years of data is presented.
TOWN OF FOUNTAIN HILLS, ARIZONA
NET ASSETS BY COMPONENT
LAST NINE FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
(67)
2003 2004 2005 2006
Governmental Activities:
Invested in Capital Assets, Net of Related Debt 11,843,575$ 11,261,256$ 17,495,539$ 20,806,507$
Restricted 6,681,170 6,471,863 5,144,127 12,446,147
Unrestricted 2,638,149 7,976,113 10,821,304 9,053,611
Total Governmental Activities Net Assets 21,162,894$ 25,709,232$ 33,460,970$ 42,306,265$
Fiscal Year
Source: The source of this information is the Town’s financial records.
Note: The provisions of the Governmental Accounting Standards Board (GASB) Statement No. 34
were adopted in fiscal year 2003. Therefore, ten years of data are not available, but will be
accumulated over time.
(68)
2007 2008 2009 2010 2011
92,508,637$ 94,939,805$ 94,611,110$ 95,467,509$ 92,579,483$
12,210,966 12,799,502 11,828,137 11,396,116 4,385,595
14,276,126 13,230,726 13,765,293 12,321,090 22,598,669
118,995,729$ 120,970,033$ 120,204,540$ 119,184,715$ 119,563,747$
Fiscal Year
TOWN OF FOUNTAIN HILLS, ARIZONA
CHANGES IN NET ASSETS
LAST NINE FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
(69)
2003 2004 2005 2006
EXPENSES
Governmental Activities:
General Government 3,479,333$ 3,686,452$ 3,766,500$ 3,875,014$
Public Safety 5,494,708 4,918,280 5,024,686 5,403,620
Highways and Streets 1,310,683 1,419,509 1,281,061 1,581,068
Culture and Recreation 2,363,897 2,068,613 2,362,661 2,576,406
Development Services 1,235,985 1,144,964 1,460,181 1,812,469
Interest on Long-Term Debt 1,576,842 1,499,575 1,162,796 1,297,119
Total Government Activities Expenses 15,461,448 14,737,393 15,057,885 16,545,696
PROGRAM REVENUES
Governmental activities:
Fees, Fines, and Charges for Services
General Government 2,738,898 3,388,923 4,431,154 4,029,437
Public Safety - - - -
Highways and Streets - - - -
Other Activities 43,487 32,209 59,550 103,826
Operating Grants and Contributions 1,697,900 1,590,787 1,692,712 2,022,675
Capital Grants and Contributions 237,307
Total Governmental Activities Program
Revenues 4,480,285 5,011,919 6,420,723 6,155,938
Net (Expenses)/Revenues (10,981,163)$ (9,725,474)$ (8,637,162)$ (10,389,758)$
Fiscal Year
Source: The source of this information is the Town’s financial records.
Note: The provisions of the Governmental Accounting Standards Board (GASB) Statement No. 34
were adopted in fiscal year 2003. Therefore, ten years of data are not available, but will be
accumulated over time.
(70)
2007 2008 2009 2010 2011
4,292,515$ 3,921,588$ 4,231,529$ 3,720,236$ 2,876,848$
5,935,742 6,532,292 7,312,415 6,293,323 5,963,067
5,225,835 5,981,347 5,051,294 5,202,285 5,567,973
3,282,160 3,092,661 3,336,616 2,927,848 2,840,154
2,512,170 2,861,653 2,218,994 1,612,287 1,572,202
1,163,370 1,132,947 1,033,536 950,484 851,957
22,411,792 23,522,488 23,184,384 20,706,463 19,672,201
910,978 830,963 544,753 1,340,457 1,126,926
982,659 746,227 55,042 32,667 21,222
- - - 2,556 16,270
626,431 752,621 888,249 - -
- 56,802 - 1,666,498 1,614,462
989,100 835,659 1,353,409 632,617 2,273,414
3,509,168 3,222,272 2,841,453 3,674,795 5,052,294
(18,902,624)$ (20,300,216)$ (20,342,931)$ (17,031,668)$ (14,619,907)$
(Continued)
Fiscal Year
TOWN OF FOUNTAIN HILLS, ARIZONA
CHANGES IN NET ASSETS (CONTINUED)
LAST NINE FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
(71)
2003 2004 2005 2006
(Concluded)
GENERAL REVENUES AND OTHER
NET ASSETS
Governmental Activities:
Taxes:
Sales Taxes 5,051,872$ 7,733,643$ 8,879,798$ 11,007,924$
Property Taxes 1,905,770 2,195,856 2,020,800 1,648,947
Franchise Taxes 152,542 126,362 216,031 314,359
State Shared Revenues 4,740,758 4,489,844 4,756,481 5,389,551
Investment Earnings 1,976,809 122,082 395,124 673,351
Miscellaneous 79,706 195,978 120,666 200,921
Total Governmental Activities 13,907,457 14,863,765 16,388,900 19,235,053
CHANGE IN NET ASSETS
Governmental Activities 2,926,294$ 5,138,291$ 7,751,738$ 8,845,295$
Fiscal Year
Source: The source of this information is the Town’s financial records.
Note: The provisions of the Governmental Accounting Standards Board (GASB) Statement No. 34
were adopted in fiscal year 2003. Therefore, ten years of data are not available, but will be
accumulated over time.
(72)
2007 2008 2009 2010 2011
11,407,714$ 10,489,591$ 8,932,374$ 7,644,440$ 8,013,480$
1,385,953 1,635,542 1,531,770 1,928,028 1,349,079
324,318 336,290 321,964 285,881 322,659
8,444,731 8,848,199 8,456,552 6,000,923 5,217,140
1,094,994 780,935 258,478 22,831 28,456
85,418 183,963 76,300 129,740 68,125
22,743,128 22,274,520 19,577,438 16,011,843 14,998,939
3,840,504$ 1,974,304$ (765,493)$ (1,019,825)$ 379,032$
Fiscal Year
TOWN OF FOUNTAIN HILLS, ARIZONA
FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
(73)
2002 2003 2004 2005 2006
General Fund:
Reserved $ - $ - $ 77,485 $ 40,664 $ 14,393
Unreserved, Designated for:
Vehicle Replacement - - - - -
Unreserved, Undesignated 4,812,370 4,037,863 6,293,941 9,041,779 6,515,855
Total General Fund $ 4,812,370 $ 4,037,863 $ 6,371,426 $ 9,082,443 $ 6,530,248
All Other Governmental Funds:
Unreserved, Designated for
Vehicle Replacement $ - $ - $ - $ - $ -
Unreserved, Undesignated Reported in:
Special Revenue Funds - 3,411,738 5,969,830 2,176,086 1,951,434
Capital Projects Funds 414,432 - - 2,429,225 9,496,266
Debt Service Funds 1,051,311 1,705,230 530,372 644,089 159,530
Total All Other Governmental Funds $ 1,465,743 $ 5,116,968 $ 6,500,202 $ 5,249,400 $ 11,607,230
Fiscal Year
2011
General Fund:
Nonspendable
Inventory $ 13,183
Prepaid Items 29,234
Unassigned 8,263,549
Total General Fund $ 8,305,966
All Other Governmental Funds:
Nonspendable
Prepaid Items $ 6,217
Restricted 4,379,987
Committed 11,480,869
Total All Other Governmental Funds $ 15,867,073
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.
(74)
2007 2008 2009 2010
$ 2,934,144 $ 3,053,070 $ 3,234,860 $ 3,235,811
- - 127,916 333,796
3,666,005 3,526,738 3,302,373 3,418,799
$ 6,600,149 $ 6,579,808 $ 6,665,149 $ 6,988,406
$ - $ - $ 95,620 $ 159,484
5,305,432 3,876,927 4,198,782 4,498,523
9,916,670 10,764,857 10,246,395 10,020,336
1,386,674 1,585,740 1,218,971 1,182,834
$ 16,608,776 $ 16,227,524 $ 15,759,768 $ 15,861,177
Fiscal Year
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
(75)
2002 2003 2004 2005 2006
REVENUES
Taxes 7,595,748$ 7,114,486$ 9,997,706$ 11,151,893$ 12,993,876$
Intergovernmental 5,895,676 6,311,458 6,080,631 6,686,500 7,412,226
Fines and Forfeitures 265,605 195,091 361,339 249,564 235,050
Licenses and Permits 1,351,209 1,308,747 1,600,934 2,230,046 1,918,107
Charges for Services 1,067,814 810,412 1,038,170 1,834,205 1,689,046
Rents and Royalties 107,613 188,745 242,704 222,327 255,527
Special Assessments 4,520 4,302 3,612 1,512 21,147
Investment Income (Loss)726,441 1,976,809 122,082 395,124 673,351
Other 1,783,851 275,343 261,561 179,657 233,565
Total Revenues 18,798,477 18,185,393 19,708,739 22,950,828 25,431,895
EXPENDITURES
General Government 3,859,633 3,318,574 3,614,458 9,547,409 4,459,183
Public Safety 5,084,532 5,174,492 4,616,161 4,754,523 5,208,770
Highways and Streets 1,877,790 1,198,080 1,402,502 1,682,563 2,121,986
Culture and Recreation 3,069,695 1,815,416 1,597,150 3,004,216 3,607,750
Development Services 1,064,913 1,215,387 1,144,964 1,460,181 1,812,469
Capital Outlay 14,770,507 79,427 101,951 - -
Debt Service
Principal Retirement 1,229,215 1,393,228 1,423,228 1,308,228 1,968,228
Interest on Long-Term Debt 1,673,901 1,576,842 1,499,575 1,164,561 1,192,414
Other Debt Service - - - 229,990 532,762
Total Expenditures 32,630,186 15,771,446 15,399,989 23,151,671 20,903,562
Excess of Revenues
Over (Under) Expenditures (13,831,709) 2,413,947 4,308,750 (200,843) 4,528,333
OTHER FINANCING
SOURCES (USES)
Transfers In 1,585,674 5,981,544 1,630,907 4,805,635 10,146,663
Transfers Out (1,585,674) (5,981,544) (1,630,907) (4,805,635) (10,146,663)
Issuance of Refunding Debt - - - 12,555,000 4,555,000
Issuance of Long-Term Debt 13,750,000 - - 3,783,896 -
Payment to Refunded Debt
Escrow Agent - - - (14,677,838) (4,338,781)
Total Other Financing
Sources (Uses)13,750,000 - - 1,661,058 216,219
Net Change in Fund Balance (81,709)$ 2,413,947$ 4,308,750$ 1,460,215$ 4,744,552$
Debt Service as a Percentage of
Noncapital Expenditures 19.41% 23.35% 23.62% 13.22% 21.46%
Fiscal Year
Source: The source of this information is the Town’s financial records.
(76)
2007 2008 2009 2010 2011
13,159,087$ 12,457,086$ 10,960,001$ 9,818,985$ 9,704,054$
8,444,731 9,353,260 9,607,961 7,672,037 7,165,103
304,214 287,120 339,658 297,030 236,221
1,239,318 1,125,957 541,627 399,094 312,367
898,955 620,300 316,676 464,036 388,635
267,350 296,434 290,083 215,520 227,195
4,228 4,337 4,037 - -
1,094,994 780,935 258,478 22,831 28,456
85,418 183,963 43,683 129,740 72,125
25,498,295 25,109,392 22,362,204 19,019,273 18,134,156
4,024,551 3,548,295 3,514,249 3,186,368 2,575,975
5,689,020 6,321,669 6,624,141 6,200,227 5,772,800
2,028,397 2,214,557 1,199,850 973,746 1,123,230
2,131,374 2,257,007 2,215,065 2,007,737 1,871,446
2,462,643 2,751,740 2,036,295 1,669,449 1,564,615
2,002,887 5,239,169 3,708,277 1,254,223 1,043,304
1,968,228 2,153,228 2,240,000 2,460,000 2,115,000
1,058,665 1,025,320 929,134 842,857 744,330
- - - - -
21,365,765 25,510,985 22,467,011 18,594,607 16,810,700
4,132,530 (401,593) (104,807) 424,666 1,323,456
4,383,069 2,756,988 3,759,735 1,127,776 431,880
(4,383,069) (2,756,988) (3,950,654) (1,127,776) (431,880)
- - - - -
- - - - -
- - - - -
- - (190,919) - -
4,132,530$ (401,593)$ (295,726)$ 424,666$ 1,323,456$
18.53% 18.60% 20.33% 18.29% 17.41%
Fiscal Year
THIS PAGE BLANK
TOWN OF FOUNTAIN HILLS, ARIZONA
GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE
LAST TEN FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
(77)
Fiscal
Year
Sales
Taxes
Property
Taxes
Franchise
Taxes Total
2002 5,019,735$ 489,358$ 297,149$ 5,806,242$
2003 5,051,872 1,905,770 152,542 7,110,184
2004 7,733,643 2,195,856 126,362 10,055,861
2005 8,879,798 2,020,800 216,031 11,116,629
2006 11,007,924 1,648,947 314,359 12,971,230
2007 11,407,714 1,385,953 324,318 13,117,985
2008 10,489,591 1,635,542 336,290 12,461,423
2009 8,932,374 1,531,770 321,964 10,786,108
2010 7,644,440 1,928,028 285,881 9,858,349
2011 8,013,480 1,349,079 322,659 9,685,218
Source: The source of this information is the Town’s financial records.
TOWN OF FOUNTAIN HILLS, ARIZONA
TAXABLE SALES BY CATEGORY
LAST TEN FISCAL YEARS
(UNAUDITED)
(78)
2002 2003 2004 2005 2006
Sales Category:
Construction 1,325,749$ 1,203,706$ 1,482,981$ 1,837,317$ 3,362,079$
Restaurants and Bars 219,921 276,664 419,107 524,368 547,276
Transportation and Utilities 523,237 590,446 916,498 1,124,677 1,240,120
Services 370,806 455,324 423,433 185,868 263,239
Real estate, Rental and Leasing 192,339 205,849 341,951 604,356 626,364
Wholesale/Retail 1,477,424 1,930,175 3,212,062 3,536,045 3,796,192
Other 157,818 188,654 706,816 933,366 1,030,966
Total 4,267,294$ 4,850,818$ 7,502,848$ 8,745,997$ 10,866,236$
Fiscal Year
Source: The source of this information is the Town’s financial records.
(79)
2007 2008 2009 2010 2011
2,694,700$ 2,062,028$ 1,414,240$ 538,551$ 567,136$
537,596 582,226 493,242 509,624 559,930
1,330,052 1,422,158 1,311,735 1,424,827 1,388,074
280,290 327,411 258,138 241,686 276,566
792,358 982,198 664,999 650,071 731,615
4,144,263 3,912,512 3,687,409 3,555,974 3,567,615
1,296,171 1,182,349 910,561 691,972 733,454
11,075,430$ 10,470,882$ 8,740,324$ 7,612,705$ 7,824,390$
Fiscal Year
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TOWN OF FOUNTAIN HILLS, ARIZONA
DIRECT AND OVERLAPPING SALES TAX RATES
LAST TEN FISCAL YEARS
(UNAUDITED)
(80)
Fiscal
Year
2002 1.60 % 0.70 % 5.60 % 7.90 %
2003 1.60 0.70 5.60 7.90
2004 2.60 0.70 5.60 8.90
2005 2.60 0.70 5.60 8.90
2006 2.60 0.70 5.60 8.90
2007 2.60 0.70 5.60 8.90
2008 2.60 0.70 5.60 8.90
2009 2.60 0.70 5.60 8.90
2010 2.60 0.70 6.60 9.90
2011 2.60 0.70 6.60 9.90
Total Tax
Rate
Town
Rate
Maricopa
County
State
Rate
Source: The source of this information is the Arizona Department of Revenue.
TOWN OF FOUNTAIN HILLS, ARIZONA
ASSESSED VALUE AND ESTIMATED TOTAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
(UNAUDITED)
(81)
Fiscal Year
Net Assessed
Value (in
thousands)
Total Direct Tax
Rate
Total Value
(in thousands)
2002 $ 238,715 $ 0.56 $ 2,154,929 11.08 %
2003 270,603 0.51 2,418,236 11.19
2004 323,384 0.48 2,942,849 10.99
2005 349,399 0.42 3,162,855 11.05
2006 375,183 0.35 3,411,461 11.00
2007 610,738 0.30 5,840,185 10.46
2008 684,742 0.22 6,847,423 10.00
2009 651,218 0.20 6,648,954 9.79
2010 576,535 0.22 6,255,310 9.22
2011 451,860 0.18 4,370,950 10.34
Assessed Value as
a Percentage of
Total Value
Source: The source of this information is the Arizona Department of Revenue’s Abstract of the
Assessment Roll and the Town’s financial records.
TOWN OF FOUNTAIN HILLS, ARIZONA
PRINCIPAL PROPERTY TAXPAYERS
JUNE 30, 2011 AND 2002
(UNAUDITED)
(82)
Taxpayer
Net Secondary
Assessed
Value Rank
Net Secondary
Assessed Value Rank
Inland Western Fountain Hills Four Peaks, LLC 4,423,956$ 1 0.98 % -$ N/A N/A %
EN, LLC 4,145,795 2 0.92 - N/A N/A
WSL Fountain View Investors V, LLC 3,196,512 3 0.71 - N/A N/A
Chaparral City Water Company 3,173,730 4 0.70 3,645,656 1 1.53
Pacific FH Resort, LLC 2,680,400 5 0.59 - N/A N/A
J&R Holdings XX, LLC 2,563,874 6 0.57 - N/A N/A
Target Corporation 2,442,337 7 0.54 - N/A N/A
Adero Canyon, LLC 2,373,520 8 0.53 - N/A N/A
Sun Tech Development, LLC 2,299,593 9 0.51 656,275 11 0.27
Qwest Corporation 1,799,828 10 0.40 - N/A N/A
Firerock, LLC 3,165,390 2 1.33
U.S. West Communications, Inc. 2,133,781 3 0.89
MCO Properties, LP 1,995,388 4 0.84
Four Peaks Limited Partnership 1,381,851 5 0.58
Safeway, Inc.881,935 6 0.37
Ridge View Apartments, LP 856,530 7 0.36
Fountain Hills-Old Vine Limited Partnership 846,083 8 0.35
Summit Estates, LLC 822,160 9 0.34
Sunridge Canyon, LLC 672,536 10 0.28
29,099,545$ 6.45 17,057,585$ 7.14
Percentage of
Total Net
Secondary
Assessed Value
2011 2002
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)
(83)
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
2002 1,752,373$ 1,689,533$ 96.4% 57,258$ 1,746,791$ 99.7%
2003 1,842,009 1,777,619 96.5% 51,558 1,829,177 99.3%
2004 2,125,505 2,053,055 96.6% 57,506 2,110,561 99.3%
2005 2,041,230 1,992,532 97.6% 22,283 2,014,815 98.7%
2006 1,673,519 1,618,877 96.7% 34,011 1,652,888 98.8%
2007 1,391,521 1,359,035 97.7% 27,203 1,386,238 99.6%
2008 1,630,534 1,578,583 96.8% 48,013 1,626,596 99.8%
2009 1,719,105 1,660,820 96.6% 53,548 1,714,368 99.7%
2010 1,895,552 1,838,909 97.0% 52,478 1,891,387 99.8%
2011 1,340,544 1,307,092 97.5% - 1,307,092 97.5%
Source: The source of this information is the Maricopa County Treasurer’s Office.
TOWN OF FOUNTAIN HILLS, ARIZONA
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(UNAUDITED)
(84)
Fiscal Year
General
Obligation
Bonds and
Other Bonds
Less: Amounts
Restricted for
Principal Total Per Capita
2002 25,265,000$ 1,229,215$ 24,035,785$ 23.84 % 1,095$
2003 24,015,000 1,393,228 22,621,772 21.26 1,017
2004 25,335,000 1,423,228 23,911,772 20.68 1,061
2005 24,190,000 1,308,228 22,881,772 18.20 986
2006 22,365,000 1,968,228 20,396,772 15.40 833
2007 26,910,467 1,978,149 24,932,318 17.85 976
2008 24,932,318 2,163,146 22,769,172 N/A 855
2009 22,769,172 2,249,921 20,519,251 N/A 808
2010 17,965,000 2,115,000 15,850,000 N/A 705
2011 15,850,000 2,205,000 13,645,000 N/A 608
Governmental Activities
Percentage of
Personal
Income
Source: The source of this information is the Town’s financial records and the Bureau of Economic
Analysis.
Note: N/A indicates that the information is not availablae.
TOWN OF FOUNTAIN HILLS, ARIZONA
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
(UNAUDITED)
(85)
Fiscal Year
General
Obligation
Bonds
Taxable
Assessed Value
of Property Population
Net General
Obligation
Bonded Debt
Per Capita
2002 12,600,000$ $ 238,715,000 5.28% 21,954 574$
2003 11,865,000 270,603,000 4.38% 22,243 533
2004 11,110,000 323,385,000 3.44% 22,541 493
2005 10,675,000 349,398,000 3.06% 23,217 460
2006 9,600,000 375,183,000 2.56% 24,492 392
2007 8,620,000 576,535,714 1.50% 25,540 338
2008 7,570,000 684,742,347 1.11% 26,633 284
2009 6,530,000 651,218,464 1.00% 25,388 257
2010 9,045,000 576,535,714 1.57% 22,489 402
2011 7,965,000 451,860,136 1.70% 22,444 356
Percentage of
Taxable
Assessed Value
of Property
Source: The source of this information is the Maricopa County Assessor’s Office and the Town’s
financial records.
TOWN OF FOUNTAIN HILLS, ARIZONA
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
AS OF JUNE 30, 2011
(UNAUDITED)
(86)
Governmental Unit Outstanding Debt
Estimated
Percentage
Applicable
Estimated
Share of
Overlapping
Debt
Overlapping:
Maricopa County 145,035,000$ 1.17%1,696,910$
Maricopa County Community College District 601,930,000 1.17%7,042,581
Fountain Hills Unified School District 16,205,000 94.85%15,370,443
Eagle Mountain Community Facilities District 3,370,000 100.00%3,370,000
Subtotal, Overlapping Debt 27,479,933
Direct:
Town of Fountain Hills, Arizona 12,480,000
Total Direct and Overlapping Debt 39,959,933$
Source: The source of this information is the Town’s records and the State and County Abstract of the
Assessment the Arizona Department of Revenue Report of Indebtedness and the applicable
governmental unit.
Note: The estimated percentage of debt outstanding applicable to the Town is calculated based on the
Town’s secondary assessed valuation (full cash value) as a percentage of the secondary assessed
valuation of the overlapping jurisdiction. Overlapping governments are those that coincide, at least in
part, with the geographic boundaries of the Town of Fountain Hills. This schedule further estimates the
portion of outstanding debt of those overlapping governments that is borne by residents and
businesses of the Town. This process recognizes that, when considering a town’s ability to issue and
repay long-term debt, the entire debt burden borne by residents should be taken into account.
However, this fact does not imply that every taxpayer is a resident, and therefore, responsible for
repaying the debt of each overlapping government.
TOWN OF FOUNTAIN HILLS, ARIZONA
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
(UNAUDITED)
(87)
6% Debt Limit
2002 2003 2004 2005 2006
Debt Limit 14,322,872$ 16,236,172$ 19,403,114$ 20,963,900$ 22,510,991$
Total Applicable to Limit 6,005,000 5,625,000 5,190,000 3,595,000 3,410,000
Legal Debt Margin 8,317,872$ 10,611,172$ 14,213,114$ 17,368,900$ 19,100,991$
Total Net Debt Applicable to
the Limit as a Percentage
of the Debt Limit 42% 35% 27% 17% 15%
20% Debt Limit
2002 2003 2004 2005 2006
Debt Limit 47,742,907$ 54,120,573$ 64,677,046$ 69,879,667$ 75,036,636$
Total Applicable to Limit 7,275,000 6,975,000 6,675,000 7,515,000 7,265,000
Legal Debt Margin 40,467,907$ 47,145,573$ 58,002,046$ 62,364,667$ 67,771,636$
Total Net Debt Applicable to
the Limit as a Percentage
of the Debt Limit 15% 13% 10% 11% 10%
Fiscal Year
Fiscal Year
Source: The source of this information is the Maricopa County Assessor’s Office and the Town’s
financial records.
(88)
2007 2008 2009 2010 2011
34,592,143$ 41,084,541$ 39,073,108$ 34,592,143$ 27,111,608$
1,660,000 - 320,000 - -
32,932,143$ 41,084,541$ 38,753,108$ 34,592,143$ 27,111,608$
5% 0% 1% 0% 0%
2007 2008 2009 2010 2011
115,307,143$ 136,948,469$ 130,243,693$ 115,307,143$ 90,372,027$
5,415,000 6,510,000 6,210,000 5,415,000 4,595,000
109,892,143$ 130,438,469$ 124,033,693$ 109,892,143$ 85,777,027$
5% 5% 5% 5% 5%
Fiscal Year
Fiscal Year
TOWN OF FOUNTAIN HILLS, ARIZONA
CALCULATION OF LEGAL DEBT MARGIN
AS OF JUNE 30, 2011
(UNAUDITED)
(89)
Net Secondary Assessed Valuation 451,860,136$
Water, Sewer, Light, Parks, Open Space and Recreational Facility Bonds
Debt Limit - 20% of Net Secondary Assessed Valuation 90,372,027$
Net Debt Applicable to Limit 4,595,000
20% Legal Debt Margin 85,777,027
All other general obligation bonds
Debt Limit - 6% of Net Secondary Assessed Valuation 27,111,608
Net Debt Applicable to Limit -
6% Legal Debt Margin 27,111,608
Total legal debt margin 112,888,635$
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
AS OF JUNE 30, 2011
(UNAUDITED)
(90)
Fiscal Year Principal Interest Total
Pledged
Revenues Coverage
2002 $ 425,000 436,734$ 861,734$ 9,301,654$ 10.8
2003 425,000 566,433 991,433 11,449,010 11.5
2004 425,000 550,983 975,983 14,142,933 14.5
2005 620,000 456,892 1,076,892 16,331,920 15.2
2006 665,000 546,576 1,211,576 18,864,991 15.6
2007 715,000 473,349 1,188,349 21,720,295 18.3
2008 805,000 498,878 1,303,878 21,087,157 16.2
2009 885,000 460,379 1,345,379 18,592,175 13.8
2010 985,000 424,538 1,409,538 14,627,368 10.4
2011 1,035,000 373,768 1,408,768 14,101,867 10.0
Municipal Facilities Revenue Bonds
Source: The source of this information is the Town’s financial records.
TOWN OF FOUNTAIN HILLS, ARIZONA
DEMOGRAPHIC AND ECONOMIC STATISTICS
AS OF JUNE 30, 2011
(UNAUDITED)
(91)
2001 2002 2003 2004
Population 21,383 21,954 22,243 22,541
Personal income 97,138,599$ 100,805,099$ 106,385,325$ 115,604,165$
Per capital personal income 28,717$ 28,900$ 29,607$ 31,133$
Median age N/A N/A N/A N/A
School enrollment N/A 2,447 2,450 2,453
Town of Fountain Hills
unemployment rate 2.0% 2.7% 2.6% 2.1%
Land use
Total acres N/A N/A N/A N/A
Total square miles N/A N/A N/A N/A
Vacant lots N/A N/A N/A N/A
Number of units
Housing N/A N/A N/A N/A
Lodging N/A N/A N/A N/A
Restaurants N/A N/A N/A N/A
Shopping centers N/A N/A N/A N/A
Schools
Public N/A N/A N/A N/A
Preschool N/A N/A N/A N/A
Charter N/A N/A N/A N/A
Calendar Year
Source: The source of the “Personal Income” and “Per Capita” information is the Bureau of Economic
Analysis. The source of the “Population” and “Unemployment Rate” information is State of
Arizona, Department of Administration, Office of Employment and Population Statistics. The
source of School Enrollment is the Fountain Hills Unified School District No. 98. Other
information is from the Town’s records.
Note: N/A indicates that the information is not available.
* Information obtained is based on calendar years; therefore, the latest information obtained was from
2010.
(92)
2005 2006 2007 2008 2009 2010
23,217 24,452 25,540 26,633 25,388 22,489
125,718,070$ 132,423,154$ 139,665,253$ N/A N/A N/A
32,414$ 35,046$ 36,135$ 32,230$ 38,439$ 38,918$
N/A N/A 46.4 46.4 49.7 49.7
2,373 2,425 2,307 2,233 2,203 2,103
2.0% 1.8% 1.6% 2.5% 4.4% 4.5%
N/A 12,296.0 13,005.7 13,005.7 13,005.7 13,005.7
N/A 20.31 20.32 20.32 20.32 20.32
N/A N/A 3,355 1,295 1,253 1,226
N/A 12,681 12,850 12,832 12,927 13,167
N/A 4 4 4 4 4
N/A 50 53 47 52 53
N/A 14 14 19 19 20
N/A 4 4 4 4 4
N/A 5 4 4 4 4
N/A 2 1 1 1 1
Calendar Year
TOWN OF FOUNTAIN HILLS, ARIZONA
PRINCIPAL EMPLOYERS
PRIOR FISCAL YEAR AND NINE YEARS AGO*
(UNAUDITED)
(93)
Employer Employees Rank
Percentage of
Total Town
Employment Employees Rank
Fountain Hills Unified School
District No. 98 278 1 5.1% 250 1
Target 125 2 2.3% -
Monks Construction 110 3 2.0% 150 2
MCO Properties, Inc. 103 4 1.9% 85 5
Safeway Food Stores 91 5 1.7% 95 4
Fry's 76 6 1.4% -
Eagle Mountain Golf Course 69 7 1.3% 40 9
Basha's 64 9 1.2% 70 6
Town of Fountain Hills 61 8 1.1% 115 3
Sun Ridge Canyon Golf Course 58 10 1.1% 70 7
Golf International N/A 11 N/A 50 8
Total 1,035 19.1% 925
Total Town employment 5,486
20012010
Source: The source of this information is the Town’s financial records.
* Data for 2011 and 2002 are not available.
TOWN OF FOUNTAIN HILLS, ARIZONA
FULL-TIME EQUIVALENT GOVERNMENT EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS*
(UNAUDITED)
(94)
Function 2002 2003 2004 2005 2006 2007 2008 2009 2010* 2011
Municipal Court 6.00 6.00 5.00 5.00 5.50 5.00 5.00 5.00 5.00 5.00
Administration 18.00 14.50 10.00 11.00 12.50 13.00 13.50 13.50 13.25 11.25
Public Safety 26.00 20.00 1.00 - - - - - - -
Development Services 42.50 43.00 40.00 39.50 41.00 41.00 40.50 40.00 35.75 23.25
Community Services 22.50 22.50 20.00 21.50 23.50 28.00 29.25 29.75 27.10 21.63
Total 115.00 106.00 76.00 77.00 82.50 87.00 88.25 88.25 81.10 61.13
Fiscal Year
Source: The source of this information is the Town’s financial records.
* During 2010, the Town reorganized its operations into new operating units. Therefore, prior years’
figures are not comparable.
TOWN OF FOUNTAIN HILLS, ARIZONA
OPERATING INDICATORS BY FUNCTION
LAST TEN FISCAL YEARS
(UNAUDITED)
(95)
Function/Program 2002 2003 2004 2005 2006 2007
Building Permits:
Building Permits Issued* 260 168 228 430 468 759
Building Inspections Conducted 8,491 6,389 6,985 8,446 9,377 7,975
Police (Contracted):
Physical Arrests 503 601 601 644 N/A 993
Traffic Violations 3,186 3,186 3,186 2,432 N/A 2,315
Parks and Recreation:
Park Acreage 121 121 121 121 121 121
Community Centers 1 1 1 1 1 1
Fiscal Years
Source: The source of this information is the Town’s financial records.
Note: N/A indicates that the information is not available.
* Includes permits issued for all types of activities requiring permits.
(96)
2008 2009 2010 2011
716 391 409 354
5,692 3,189 1,936 1,546
524 825 679 645
2,504 4,900 2,959 1,909
121 121 121 122
1111
Fiscal Years
TOWN OF FOUNTAIN HILLS, ARIZONA
CAPITAL ASSETS STATISTICS BY FUNCTION
LAST TEN FISCAL YEARS
(UNAUDITED)
(97)
Function/Program 2002 2003 2004 2005 2006 2007
Public Safety:
Number of Fire stations 2 2 2 2 2 2
Other Public Works:
Streets (Miles) 178.5 178.5 178.5 178.5 178.5 178.5
Streetlights N/A N/A N/A N/A 34 34
Traffic Signals 10 10 11 11 12 13
Parks and Recreation:
Acreage 121 121 121 121 121 121
Playgrounds 3 3 3 3 3 3
Baseball/Softball Diamonds 6 6 6 6 6 6
Soccer/Football Fields 4 4 4 4 3 3
Community Centers 1 1 1 1 1 1
Fiscal Year
Source: The source of this information is the Town’s facilities records.
(98)
2008 2009 2010 2011
2222
178.5 178.5 178.5 178.5
34 34 34 34
12 12 12 13
121 121 121 122
3334
6666
3335
1111
Fiscal Year
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