HomeMy WebLinkAboutFY03 CAFRI own of
Fountain Hills
FOR THE FISCAL YEAR ENDED
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Combining Balance Sheet - Nonrnajor Governmental Funds
60
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances - Nonmajor Governmental Funds
61
General Obligation Debt Service Fund - Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
62
Eagle Mountain Debt Service Fund - Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
63
Municipal Property Corporation Fund - Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
64
Capital Projects Fund - Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
65
HURF Fund - Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
66
Grants Fund - Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
67
HURF Debt Service Fund - Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
68
Cottonwoods Special Assessment Fund - Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
69
Development Fees Fund -Schedule of Revenues, Expenditures, and
Changes in Fund Balances -Budget and Actual
70
TOWN OF FOUNTAIN HILLS, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2003
TABLE OF CONTENTS
STATISTICAL SECTION
Government -wide information
Government -wide Expenses by Function 72
Government -wide Revenues 73
Fund Information:
General Government Expenditures by Function 74
General Government Revenues by Source 75
General Governmental Tax Revenues by Source 76
Town Transaction Privilege (Sales) Tax Collections by Industry Classification 77
Property Tax Levies and Collections 78
Assessed and Estimated Actual Value of Property 79
Primary and Secondary Taxable Property Assessed Valuation 80
Property Tax Rates for All Direct and Overlapping Governments 81
Primary and Secondary Property Tax Rates - All Overlapping Governments 82
Assessed Valuation of Major Taxpayers 83
Computation of Legal Debt Margin 84
Ratio of Net General Bonded Debt to Assessed Value
and Net Bonded Debt Per Capita 85
Ratio of Annual Debt Service Expenditures to Total General Expenditures 86
Direct and Overlapping General Obligation Bonded Debt 87
Maricopa County Economic Indicators 88
Miscellaneous Statistical Data 89
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ATE Town of F0111,11TAIN HILLS
September 19, 2003
To the Honorable Mayor, Members of the Governing Council, and Citizens of the
Town of Fountain Hills, Arizona:
State law requires that all general-purpose local governments publish within 120 days (240 days
with an extension) of the close of each fiscal year a complete set of financial statements
presented in conformity with generally accepted accounting principles (GAAP) and audited in
accordance with generally accepted auditing standards (GAAS) by a firm of licensed certified
public accountants. The Comprehensive Annual Financial Report (CAFR) of the Town of
Fountain Hills for the fiscal year ended June 30, 2003, is hereby submitted. This document
represents a joint effort by Town staff as well as our auditors, Cronstrom & Trbovich.
This report consists of management's representations concerning the finances of the Town of
Fountain Hills. Responsibility for the accuracy of the data and the completeness and fairness of
the presentation, including all disclosures, rests with management. To provide a reasonable basis
for making these representations, management of the Town of Fountain Hills has established an
internal control framework that is designed to both 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' framework of internal
controls has been designed to provide reasonable rather than absolute assurance that the financial
statements will be free from 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.
All disclosures necessary for the reader to understand the Town's activities have been included.
The Town of Fountain Hills' financial statements have been audited by Cronstrom &Trbovich,
PC, 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, 2003, are free of material misstatement. The independent audit
involved examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements; assessing the accounting principles used and significant estimates made by
management; and evaluating the overall financial statement presentation. The independent
auditor 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, 2003, are fairly presented in conformity with GAAP. The independent auditor's report
is presented as the first component of the financial section of this report.
J
16836 East Palisades Boulevard, Building A - P0. Box 17958 -Fountain Hills, Arizona 85269 - (480) 837-2003 -FAX: (4801837-3145
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 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.
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. It 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 11,340 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 Indian Reservation 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.
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. Policy making and legislative authority are vested in the Town
Council, which consists of a Mayor and six Councilmembers. Councilmembers are elected at
large for staggered four-year terns. The Mayor, who also sits on the Town Council, is directly
elected bi-annually by the voters and the Vice -Mayor is selected by the Council every eight
months on a rotating basis. 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 five department
directors and approximately 77 employees. The Magistrate, Town Attorney and Town
Prosecutor are under the direction of the Town Council.
Over the past thirteen years Fountain Hills has grown from 10,190 residents to a town of almost
22,000 in 2003. The Maricopa Association of Governments (MAG) estimates that the
population of Fountain Hills will continue to grow to near 25,000 by 2010. Although the rate of
growth has slowed due to the national economy the Town continues to attract residents who are
building large custom homes to take advantage of the scenic vistas surrounding our mountain
community.
2
The Town provides or administers a full range of services including public safety (police, 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 and cultural events. The Town does
not maintain utility or other operations that require the establishment of enterprise funds. On
October 31, 2001 the Town Council adopted an ordinance to provide fire protection services to
all Fountain Hills residents, forming a municipal fire department. Fire protection was previously
provided by a separate legal entity, the Fountain Hills Fire District, which has been merged with
the Town of Fountain Hills. The financial reporting entity (the Town) includes all the funds and
account groups 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. During fiscal
year 2002/2003 there were no supplemental budgetary appropriations to the original budget.
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 2002-2003 fiscal year posed several significant challenges for the Town of
Fountain Hills' economic picture. Despite the uncertain economic conditions of the nation and
slower growth of the State's economy, the Town's economy remained stable. The residential
housing market has continued to grow although at a more moderate pace than in previous years.
New commercial development along Shea Boulevard corridor brought a Target Store and major
supermarket shopping center. This increase in retail sales tax base will compensate for the
decrease in construction activity that is anticipated in the next several years as the Town
approaches build -out.
3
The Town recently awarded a contract to a consultant to develop a concept plan for the
downtown area of Fountain Hills. This concept plan will revitalize the downtown area and create
connectivity to new businesses being constructed in the same location. New lighting, pedestrian
walkways, fountains and cultural amenities will provide interest for adults and children.
The Town
also
approved
plans for a Hilton resort that is scheduled to open
in FY 2005. The
resort will
have
178 rooms and 71 townhomes that will expand tourism within
the community.
Long-term financial planning. During the coming year the Town is faced with the challenge
of maintaining the existing level of service to the citizens with reduced resources. A formal five
year financial plan and capital improvement plan that will identify projects to be integrated with
the annual budget and sources of funding to pay for them will be considered by the Council in the
upcoming year. Additional sources of revenue are being proposed that will help to diversify the
resources.
The Town administration recognizes the need to assure reserves for future revenue shortfalls in
case of economic downturns. A large portion of General Fund operating revenue comes from
construction related activity that eventually will be constrained by availability of land or the
economy; the Council adopted a fund balance policy that will ensure that adequate future
reserves are maintained. The policy states:
1. A contingency fund of no less than 30 days operating expenditures for the upcoming
fiscal year to be designated for unanticipated expenditure or loss of revenue
(contingency).
2. A designated 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 reserved fund balance of twenty percent (20%) of the average actual revenues for
the preceding five fiscal years which is unavailable for appropriation.
These amounts will not be programmed for expenditure and are only available for use within the
confines of expenditure limitations imposed by the State. The contingency fund can be used for
unexpected emergencies and projects upon approval by Council.
The Council also adopted additional financial policies that include guidelines for the issuance of
debt for capital expenditures, Community Facilities Districts, financing alternatives, expenditure
controls and financial planning. The debt policy was prepared with a preference for "pay-as-
you-go" financing for capital spending. An investment policy was adopted and was awarded the
Investment Policy Certification from the Association of Public Treasurers of the United States
and Canada.
0
Cash management policies and practices. 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 fall
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, 2003 was 1.32%. 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
collateralized to
$1 million.
Risk management. The Town of Fountain Hills
is a member of the
Arizona Municipal Risk
Retention Pool. Risk
coverage includes general
liability, 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.
During fiscal year 2002-2003 the Town settled two of three lawsuits regarding the Town Council
action to assume fire and emergency medical services to the community. The lawsuits were filed
on behalf of former Fire District firefighters who were not offered positions with the Town as
well as one citizen who filed on behalf of the voters right to decide fire services. The citizen
lawsuit and one firefighter lawsuit were settled for immaterial amounts; the final lawsuit on
behalf of the firefighters represents a claim for $10 million for breach of contract and
interference with contractual relations. The Town expects to prevail in this lawsuit but would be
covered by the insurance provider if the claim is determined to be valid.
The Arizona Municipal
Workers
Compensation
Fund
is the Town°s insurance provider for
Workers' Compensation.
The rate
varies according
to the
functions performed by
personnel.
Pension and other postemployment benefits. The Town of Fountain Hills had two venues
available to employees to provide for them during retirement. The Town Marshal deputies
participated in the Arizona Public Safety Retirement System until June 30, 2003 at which time
the Marshal Department was eliminated. The state agency plan is offered to state and local
governments statewide and funded by employee wage deductions and matching Town
contributions. The rates for these contributions are determined by the retirement system in order
to ensure the proper amount of funding to meet the obligations to retired employees on a timely
basis. As a matter of policy, the Town of Fountain Hills fully funded each year's annual required
contribution to the pension plan as determined by the actuary.
The Town of Fountain Hills also provides two deferred compensation plans through the
International City/County Management Association (ICMA) in accordance with Internal Revenue
Code Sections 401A and 457. The 401A is funded by mandatory employee wage deductions and
matching Town contributions. The 457 is voluntary and funded 100% through employee
participation.
F
For further information on these plans please refer to Note 4 in the financial statements
Awards and Acknowledgements. 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, 2002. This was the seventh consecutive year that the government has received this
prestigious award. hi 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 document dated August 1, 2002. 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.
The preparation of this report would not have been possible without the efficient and dedicated
services of the entire staff of the Finance and Administration Department. I would also like to
extend my appreciation to the Mayor and Council for their leadership and support. Each member
of the department has my sincere appreciation for the contributions made in the preparation of
this report.
f.% c
Timothy G. Pickering,- :EcD, CM
Town Manager / f
3
LIST OF PRINCIPAL OFFIC1 .
Mayor
Vice -Mayor
Councihnember
Councihmember
Councilmember
Councilmember
Councilmember
Town Manager
ELECTED OFFICIALS
Mr. W. J. Nichols
Mr. Rick Melendez
Mr. Mike Archambault
Dr. John Kavanagh
Ms. Kathleen Nicola
Ms. Susan Ralphe
Ms. Leesa Stevens
DEPARTMENT DIRECTORS
Magistrate
Public Works Director
Parks & Recreation Director
Fire Chief
District Commander
Town Prosecutor
Town Attorney
7
Timothy G. Pickering
Ted Armbruster
Tom Ward
Mark Mayer
Mark Zimmerman,
Rural Metro Corporation
Captain Scott Penrose,
Maricopa County Sheriffs Office
Iacovino & Kayler
Andrew McGuire,
Jorden Bischoff McGuire
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or Excellene
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Presented to
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For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30 2002
A Certificate of Achievement for Excellence in Financial
Report ng is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
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IS17
11
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12
affloffiff to ILA 4 V 06 •
CERTIFIED PUBLIC ACCOUNTANTS
The Honorable Mayor and the Town Council of the
Town of 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 (Town), as of and for the year ended June 30, 2003, 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 an opinion 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 opinion.
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,
2003, and the respective changes in financial position, where applicable, thereof and the
respective budgetary comparison for the General and Excise Tax Funds for the year then ended in
conformity with accounting principles generally accepted in the United States of America.
The management's discussion and analysis on pages 15 - 25 and the Public Safety Personnel
Retirement System Schedule of Funding Progress on page 56 are not a required part of the basic
financial statements but are 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.
13
8706
EAST
MANZANITA
DRIVE,
SUITE
100
° SCOTTSDALE, ARIZONA 85258 °
(480) 348-1102
fAX (480)
348-1104
A PROFESSIONAL CORPORATION
Our audit was conducted for the purpose of forming an opinion on the financial statements that
collectively comprise the Town's basic financial statements. The introductory section, combining
and individual fund financial statements and schedules and statistical section are presented for
purposes of additional analysis and are not a required part of the basic financial statements. The
combining and individual fund financial statements and schedules 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.
As described in Note 3, the Town has implemented a new financial reporting model, as required
by the provisions of GASB statement No. 34, Basic Financial Statements - and Management's
Discussion and Analysis -for State and Local Governments, as of June 30, 2003.
Cronstrom & Trbovich, P.C.
September 19, 2003
We (the Town of Fountain Hills) are pleased to provide an overview of our financial activities
for the fiscal year ended June 30, 2003. The intended purpose of the Management Discussion
and Analysis (MD&A) is to provide an introduction to the basic financial statements and notes,
that provides an objective and easy to read analysis of our financial activities based on currently
known facts, decisions, and conditions, by providing an easily readable summary of operating
results and reasons for changes, which will help to determine if our financial position improved
or deteriorated over the past year. This report addresses current operational activities, the
sources, uses, and changes in resources, adherence to budget, service levels, limitations,
significant economic factors, and the status of infrastructure and its impacts on our debt and
operation. As this is our first MD&A we do not have comparative information of many parts of
this analysis. When referring to prior year data in this analysis we will be drawing upon
information from last years audited financial reports.
® The assets of the Town of Fountain Hills exceeded its liabilities at the close of
the most recent fiscal year by $21,162,894 (net assets). Of this amount
$2,638,149 (unrestricted net assets) may be used to meet the government's
ongoing obligations to citizens and creditors.
®
As of the close of the current fiscal year, the Town of Fountain Hills'
governmental funds reported combined ending fund balances of $9,154,831, an
increase of $2,413,947 in comparison with the prior year.
®
At the end of the current fiscal year, unreserved fund balance for the general
fund was $4,037,863 or 35 percent of total general fund expenditures. The
fund balance policy adopted by the Council in May, 2003 requires a minimum
of $4,469,191 in designated, undesignated and reserve funds; the general fund
will contribute $431,328 to the fund balance in the upcoming fiscal year.
®
General fund revenues (on a budgetary basis) exceeded budgeted revenues by
$522,551 for fiscal year 2003. Additionally, budgetary basis expenditures were
only 81% ($2,624,712 (19%) in savings) of the final budget in the General
Fund.
®
General fund revenues exceeded expenditures by $601,251; a positive variance
of $3,147,263 from the original budget.
®
The Town includes two types of separate legal entities in its report - a
Municipal Property Corporation and Community Facilities Districts. Although
legally separate, these "component units" are important because the Town is
financially accountable for them. A description of these three component units
is available in Note 1 on page 37. Separate Financial Statements are not
available for these three entities.
15
Overview of the Financial Statements
This is the first year that the Town has implemented the Governmental Accounting Standards
Board (GASB) Statement 34 - Basic Financial Statements - and Management's Discussion and
Analysis - for State and Local Governments (the new model). The new model contains sweeping
changes to the requirements for governmental reporting. The major changes were as follows:
♦ Government -wide reporting -while governments have traditionally focused
reporting on groupings of funds (i.e. General Fund, Special Revenue Funds,
Capital Project Funds, etc.), the new model also contains financial statements
on a government -wide basis.
♦ Fund financial statements - the new model maintains governmental, proprietary
and fiduciary fund financial statements, but the focus is on major funds within
each fund type.
♦ New focus for governmental activities - in the government -wide financial
statements all activities, including the governmental activities, are reported
using the economic resources measurement focus and accrual basis of
accounting. The traditional current financial resources focus and modified
accrual basis of accounting are maintained for the governmental fund financial
statements in the new model.
♦ Infrastructure reporting - the new model requires governments to report the
value of infrastructure assets of governmental activities (roads, bridges, storm
drainage systems, parks, street lighting, etc.). These assets are reported in the
governmental activities on the government -wide financial statements. The
Town of Fountain Hills has historically capitalized assets for governmental
activities that were reported in the General Fixed Assets Account Group and
were not depreciated under the old reporting model.
♦ Changes in budgetary reporting - the new model requires the display of both
the original adopted budget and the amended budget, if applicable, in the
budgetary comparison schedules. These schedules are only required for the
general fund and major special revenue funds, although they may be presented
for other funds as additional information.
♦ Required narrative analysis - the new model requires that the financial
statements be accompanied by narrative introduction and analytical overview
of the government's financial activities in the form of "management's
discussion and analysis" (MD&A).
The financial section of the Comprehensive Annual Financial Report (CAFR) for the Town of
Fountain Hills, Arizona consists of this discussion and analysis, the basic financial statements
and the required supplementary schedules presented after the basic financial statements. The
basic financial statements include the government -wide financial statements, fund financial
statements, including the budgetary statements for the general fund and major special revenue
funds, and notes to the financial statements.
16
Government -wide financial statements. The government -wide financial statements are
designed to provide readers with a broad overview of the Town of Fountain Hills' finances, in a
manner similar to private -sector business.
The statement of net assets presents information on all of the Town of Fountain Hills° 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 of Fountain Hills is improving or deteriorating.
The statement of activities presents information showing how the govermment'a 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 vacation leave).
Both of the government -wide financial statements distinguish functions of the Town of Fountain
Hills that are principally supported by taxes and intergovernmental revenues (governmental
activities) from other functions that are intended to recover all or a significant portion of their
costs through user fees and charges (business -type activities). The governmental activities of the
Town of Fountain Hills include general government, community development, public safety,
highways and streets, and culture and recreation. The Town does not have any business -type
activities.
The government -wide financial statements can be found on pages 28 - 29 of this report.
Fund financial statements. Also presented are the traditional fund financial statements for
governmental funds. The fund financial statements now focus on major funds of the Town,
rather than fund type used in the old model. 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 of Fountain Hills, like other state and local governments, uses fund accounting to
ensure and demonstrate compliance with finance -related legal requirements. All of the funds of
the Town of Fountain Hills 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 focus on near -term inflows and outflows of spendable resources, as well as balances
of spendable resources available at the end of the fiscal year. Such information may be useful in
evaluating a government's near -term financing requirements. Since the governmental fund
financial statements focus on near -term spendable resources, while the governmental activities
on the government -wide financial statements have a longer term focus, a reconciliation of the
differences between the two is provided with the fund financial statements.
Notes to the financial statements. The notes to the financial statements (pages 37 - 53) provide
additional information that is essential to a full understanding of the data provided in the
government -wide and fund financial statements and should be read with the financial statements.
17
Required supplementary information other than MD&A. Governments have an 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 after the footnotes. The Town has chosen to present these
budgetary statements as part of the basic financial statements. Additionally, governments are
required to disclose certain information about employee pension funds. The Town has disclosed
this information in Note 4.0 to the financial statements.
Government -Wide Financial Analysis
Net assets may serve over time as a use indicator of a government's financial poson. The
following table reflects the condensed Statement of Net Assets of the Town for June 30, 2003
showing that assets exceeded liabilities by $21,162,894,
Town of Fountain Hills
Condensed Statement of Net Assets
As of June 30, 2003
ASSETS
Governmental
Activities
Current and other assets $ 16,801,782
Capital assets
Non -depreciable 23,571,668
Depreciable (net) 17407L272
Total assets $ 57,444,722
LIABILITIES
Other liabilities $ 7,307,826
Non -current liabilities
Due within one year 1,484,604
Due in more than one year 27,4894398
Total liabilities $ 36,281,828
NET ASSETS
Invested in capital assets, net of related debt $ 11,843,575
Restricted 6,681,170
Unrestricted 2,6389149
Total net assets $ 21,162,894
The net assets of the Town are $21,162,894 in fiscal year 2003 in governmental activities. The
Town does not currently have any proprietary or enterprise funds that would otherwise be
classified as business -type activities. All Town funds are considered governmental activities.
m
Net assets consists of three components. The largest portion of the Town of Fountain Hill's net
assets (56%) reflects its investment in capital assets (e.g., land, buildings, machinery and
equipment), less any related debt used to acquire those assets that is still outstanding. The Town
of Fountain Hills uses these capital assets to provide services to citizens; consequently, these
assets are not available for future spending. Although the Town of Fountain Hills' 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. This category of net assets decreased from fiscal year 2001-
2002; the decrease is attributable to the implementation of the depreciation requirements of
GASB 34 in the current reporting period.
An additional portion of the Town of Fountain Hills' net assets (32%) represents resources that
are subject to external restrictions on how they may be used. The remaining balance of
unrestricted net assets ($2,638,149) may be used to meet the government's ongoing obligations to
citizens and creditors.
At the end
of the
current fiscal year, the
Town
of Fountain Hills is able to report positive
balances in
all three
categories of net assets
for the
government as a whole.
Governme®tal Activltees. A comparison of the Town's government -wide revenues and
expenditures is not available as this is the Town's first year to implement government -wide
financial statements, therefore, prior year amounts are not available. However, an analysis of
governmental fund revenues and expenditures has been presented in this discussion and analysis
and comparative analysis of goverment -wide revenues and expenditures will be presented in the
subsequent years' reports when prior year data is available.
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, unreserved 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 Governmental funds reported by the Town include the General Fund, Special
Revenue Funds, Debt Service Funds and Capital Project Funds.
19
As of the end of the current fiscal year the Town's governmental funds reported combined ending
fund balances of $9,154,831, an increase of $2,413,947 in comparison with the prior year.
Approximately 44% of this total amount ($4,037,863) constitutes general fund balance, which is
available for contribution to the designated, undesignated and reserved fund balance. At fiscal
year-end 2002-2003 fund balances were as follows:
Fund
Increase
(Decrease)
Balance From 2001-02
General Fund $ 4,037,863 $ (774,507)
Excise Tax Fund 1,912,404 1,9125404
GO Debt Service Fund 647233 125,385
Eagle Mtn. Debt Service Fund 7902713 (249,784)
Municipal Property Corporation Fund 850,284 8509284
Capital Projects Fund (414,432)
Nonmajor Governmental Funds 1,499,334 9643597
The general fund is the chief operating fund of the Town of Fountain Hills. At the end of the
current fiscal year, the fund balance of the general fund was $4,037,863, while total fund balance
reached $9,154,831. As a measure of the general f rod's liquidity, it may be useful to compare
both general fund balance and total fund balance to total fund expenditures. General fund
balance represents 35 percent of total general fund expenditures, while total fund balance
represents 58 percent of that same amount.
The fund balance of the Town of Fountain Hills' general fund decreased by $(774,507) during the
current fiscal year. Key factors in this change are as follows:
♦ The General Fund transferred $1,535,000 (0.4% of the total local rate) of local
sales tax revenues to the Excise Tax fund to establish a dedicated fund for land
preservation and downtown development. In FY2003 a separate fund was
established (Excise Tax) to directly record the dedicated sales tax.
♦
The Council enacted an increase in the local sales tax rate of 1% on April 1, 2003
(increasing FY03 revenue by $623,275) to primarily fund fire and emergency
medical service operations. The rate increase will be repealed if a new fire district
is formed or the Town is successful in adopting a primary property tax.
♦
Intergovernmental revenues of the general fund increased by $207,244 as a result
of a new revenue source from the Arizona Department of Insurance for fire
insurance premium taxes. This source of revenue became available when the
Town assumed fire operations in FY2001-2002.
♦
The General Fund was reimbursed by bond proceeds for the construction of a new
Community Center. The bond proceeds were previously unavailable due to a
lawsuit between the Town and the trustee but were recovered in August 2002
($1,2569178).
♦
The increases in fund balance were offset by an increase in annual expenditures of
$2A million for fire and emergency medical services that the Town assumed from
the former Fire District.
20
® A Budget Reduction Plan was implemented in February 2003 to reduce
expenditures due to the declining revenues and the addition of a fire department
that results in a savings of approximately $1.5M during FY2003. Total annual
savings is $2.8M.
The Excise Tax Fund is a dedicated portion of the local sales tax that can only be used for debt
retirement of a Municipal Property Corporation bond for open space and development of the
downtown area. The fund balance as of June 30, 2003 is $1,912,404; the annual debt service
payment is $607,4111
The Highway User Revenue Fund is required by state statute to track the state allocation of
gasoline taxes and other state revenues shared with local governments and required to be used for
transportation purposes. Revenue in this fund increased $51,425 (4%) in fiscal year 2003 due to
the increase in state shared revenues. Expenditures decreased $733,478 from the prior year with
the absence of a transfer from the general fund and implementation of a Budget Reduction Plan
in February, 2003.
Other govenunental funds of the Town include the Development Impact Fees Fund which
includes governmental impact (development) fees for streets and highways, parks and recreation,
law enforcement, general government and open space. This is a restricted fund and may only be
appropriated for the particular purpose for which they were imposed. The fund balance as of
June 30, 2003 in this fund is $1,098,851; expenditures for FY 2003 were $30,407 and $80,953 in
FY 2002.
All nonmajor governmental funds of the Town are combined into one column on the
governmental fund statements.
The Town's annual budget is the legally adopted expenditure control document of the Town.
Budgetary comparison statements are required for Lite General Fund and all major special
revenue funds and may be found on pages 34 - 35. These statements compare the original
adopted budget, the budget if amended throughout the fiscal year, and the actual expenditures
prepared on a budgetary basis.
In
fiscal year 2002-2003 significant reductions in expenditures were made in order to offset the
cost for providing municipal fire and emergency medical services without a funding source. The
annualized expenditure reductions in the departments totaled $2,758,000 and were as follows:
$ 1,028,695
General Government
894,950
Public Safety
546,170
Culture and Recreation
122,640
Public Works
165,545
Streets and Highways
21
General Fund revenues of $11,979,151, on a budgetary basis, exceeded budgeted revenues of
$11,456,600 by $522,551 while budgetary basis expenditures of $11,377,900 were only 81% of
budgeted expenditures (savings of $2,624,712). The excess of revenues over budgeted revenues
is primarily due to the increase in the local sales tax rate, the new revenue source of fire
insurance premium tax and vehicle license taxes. The increased taxes were offset by the decrease
in intergovernmental revenues. The Town anticipated a transfer from the County of residual Fire
District assets which were transferred on July 7, 2002 but recorded during FY2001-2002.
Reduced expenditures were a result of the Budget Reduction Plan that was adopted by the
Council in December and implemented in February, 2003,
Capital Asset and Debt Administration
The Town's capital assets for its governmental activities as of June 30, 2003 amount to
$40,642,940 (net of accumulated depreciation), a decrease of 2.7%. For government -wide
financial statement presentation, all depreciable capital assets were depreciated from acquisition
date to the end of the current fiscal year. Fund financial statements record capital asset purchases
as expenditures. See Section 3.13.3 in the Notes to the Financial Statements for further
information regarding capital assets.
The Town recorded its capital assets as part of the general fixed asset account group in past years
and in the appropriate funds as they were acquired or constructed. Capital assets include land,
buildings and improvements, machinery and equipment, roads and improvements, vehicles,
office and computer equipment. With the implementation of GASB 34 the Town reduced the
governmental assets by the appropriate accumulated depreciation amount of $4,129,433. During
fiscal year 2002-2003 the annual depreciation expense was $1,145,159; decreases of $1,031,377
were recorded for assets with a life of less than five years and a valueless than $10,000. There
were only two additions to capital assets during the fiscal year for a total of $31,857:
♦ The Town contributed to a Veterans Memorial in Fountain Park; the first phase
consisted of the installation of three flag poles, and a concrete pad upon which a
piece of military hardware will be placed.
♦ The Community Center and Parks and Recreation Departments were consolidated
during FY03 to facilitate program registration and facility use through the
Community Center. The former break room in the Community Center was
converted into offices through the use of modular furniture and the Parks and
Recreation Department moved into the center.
22
The following table provides a breakdown of the capital assets of the Town at June 30, 2003,
Capital Assets at June 30, 2003
(Net of depreciation)
Governmental Activities
Percent
2003
2002
Change
Land
$ 23,5715668
$ 239571,668
%
Buildings and improvements
955145951
%720,003
(2.1)%
Improvements other than buildings
5,7115469
6,054,208
(5.7)%
Infrastructure
377,221
3855181
(2.1)%
Machinery/Equipment
607,395
694,386
(12.5)%
Office Equipment/Computers
121,105
226,490
(46.5)%
Vehicles
739,131
141045306
(33.1)%
$ 40.642.940
$ 41,756,242
(2.7)%
At the end of the current fiscal year, the Town of Fountain Hills had total long-term obligations
outstanding of $28,974,002 with no debt issued during the year. Of the outstanding debt,
$12,585,000 is general obligation bonds backed by the full faith and credit of the Town. An
additional $4,765,000 are special assessment bonds that are backed by a guaranteed investment
contract with the developer of the district property. All other outstanding debt is secured by
pledges of specific revenue sources of the Town.
The State imposes certain debt limitations on the Town of six percent (6%) and twenty percent
(20%) of the outstanding assessed valuation of the Town. The Town available debt margin at
June 30, 2003 is $16,643,114 in the 6% capacity and $54,852,046 in the 20% capacity.
Additional information on the debt limitations and capacities may be found in the statistical
section of this report (page 84),
23
The following schedule shows the outstanding debt of the Town (both current and long -tern) as
of June 30, 2002 and 2003. Further detail on the Town's outstanding debt may be found in Note
3 on pages 49 - 50,
Outstanding Debt
Governmental Activities
Percent
2003
2002
Change
General Obligation Debt
$ 119865,000
$ 127600,000
(5.8)%
Highway User Revenue Bonds
7205000
810,000
(11.1)%
Special Assessment Debt
199365
22,593
(14.3)%
Community Facilities District Debt
45765,000
4,905,000
(2.9)%
Municipal Property Corporation Debt
11,430,000
119855,000
(3.6)%
Compensated Absences
1744637
2754626
(36.6)%
$ 28,974,002
$ 30,468,219
(4.9)%
The Town currently maintains a rating on its general obligation debt of Aa3 from Moody's
Investor Services. The rating was assigned a negative outlook in April 2003 due to concerns
regarding the Town's financial position and reserve levels that had been published in the
FY 2002-2003 annual budget. However, with the implementation of the Budget Reduction Plan
the actual general fund reserve balance as of June 30, 2003 is $4,037,863. Additionally, in May,
2003 the Town Council adopted a fund balance policy to establish levels of reserves sufficient to
ameliorate effects of future economic fluctuations and legislative actions.
Economic Factors and Next Year's Budgets and Rates
Fountain Hills, as well as ali other Arizona cities, remains dependent on state shared revenues
(257o) and local sales taxes for resources (50°/u). These revenue sources are economically
sensitive taxes and subject to slowdowns in the economy and legislative appropriations.
Fountain Hills' economic activity has remained fairly stable during the national recession and is
expected to grow at a moderate pace over the next year. The low interest rates continue to fuel
the housing market and Fountain Hills still has high -end properties that are being developed for
custom homes.
24
The Town is committed to building cash reserves over the next few years, both for financial
stability and anticipation of the capital and ongoing operational needs of the community. Fiscal
year 2003-2004 budgeted general fund expenditures are $515,000 less than revenue; the surplus
will be added to the prior year fund balance, none of which was appropriated for next fiscal year.
The adopted fiscal year 2003-2004 budget is $18,658,981, up 14% from 2002 actual, which
includes capital projects of $2,089,600. The budget for fiscal year 2003-2004 also includes:
Conservative economic forecast and limited revenue growth
® Estimated expenditures are based on zero based approach for all departments
® Level of service based on implemented budget reduction plan
® Funding of general fund reserves to restore financial stability
® Capital projects are funded with "pay-as-you-go" resources
This financial report is designed to provide a general overview of the Town°s finances for all of
those with an interest in the government's finances and to demonstrate accountability for the use
of public funds. Questions about any of the information provided in this report, or requests for
additional financial information should be addressed to:
Town of Fountain Hills
Accounting Department
P.O. Box 17958
Fountain Hills, AZ 85269
(480) 837-2003
Or visit our website at:
http://www.fh.az.gov
25
THIS PAGE BLANK
26
27
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF NET ASSETS
JUNE 30, 2003
Assets
Governmental Activities
as and equivalents
$ 13,780,485
Cash with paying agent
1,606,741
Receivables, net
Accounts receivable
337,722
Taxes receivable
73,993
Intergovernmental receivable
917,519
Special assessments receivable
7,398
Inventories
63364
Prepaid items
71,560
Capital assets
Non -depreciable
23,571,668
Depreciable (net)
17,071,272
Total assets
57,444,722
Liabilities
Accounts payable
409,108
Accrued wages and benefits
1213734
Interest payable
780,180
Intergovernmental payable
1453029
Deposits payable
26,775
Due to developers
4,4353000
Matured debt principal payable
19390,000
Noncurrent liabilities
Due within one year
134843604
Due in more than one year
27,489398
Total liabilities
36,2814828
Net assets
Invested in capital assets, net of related debt 11,843,575
Restricted for
Highways and streets 3065565
Debt service 351605835
Capital outlay 1,098,851
Other 23114,919
Unrestricted 2,638,149
Total net assets $ 21,162,894
The notes to the fmancial statements are an integral part of this statement.
N
TOWN OF FOUNTAIN HILLS, ARIZONA
BALANCESHEET
GOVERNMENTALFUNDS
JUNE 30, 2003
General
Eagle
Municipal
Nonmajor
Obligation
Mountain
Property
Capital
Governmental
General
Excise Tax
Debt Service
Debt Service
Corporation
Projects
Funds
Totals
Assets
Cash and equivalents
$ 39780,249
$ 1,8062942
$ 503679
$ 5,5233577
$ 1,1162540
$ -
$ 155022498
$ 13,7807485
Cash with paying agent
-
-
11058,874
-
4392956
-
1072911
126062741
Accounts receivable
54,052
-
-
-
-
-
-
54,052
Taxes receivable
137571
-
503663
%759
-
-
-
739993
Intergovernmental receivable
802,979
-
-
-
-
-
114,540
917,519
Special assessments receivable
-
-
-
-
-
-
75398
7,398
Due from other funds
-
1055462
-
-
-
-
223
1055685
Inventories
65364
-
-
-
-
-
-
63364
Prepaid items
70,104
-
-
-
-
-
11456
71,560
Total assets
$ 4,727,319
$ 1,912,404
$ 1,160216
$ 5,533,336
$ 1,556,496
$ -
$ 1,734,026
$ 16,623,797
Liabilities and Fund Balances
Liabilities
Accounts payable
$ 3095104
$ -
$ -
$ -
$ -
$ -
$ 10%004
$ 4092108
Accrued wages and benefits
103,086
-
-
-
-
-
187648
121,734
Interest payable
-
-
323,874
156,675
281,212
-
18,419
7805180
Intergovernmental payable
145,029
-
-
-
-
-
-
145,029
Due to other funds
105,462
-
-
-
-
-
223
105,685
Deferred revenue
-
-
37,109
109948
-
-
7,398
55,455
Deposits payable
26,775
-
-
-
-
-
-
26,775
Due to developers
-
-
-
4,4353000
-
-
-
454355000
Matured debt principal payable
-
-
735,000
140,000
425,000
-
90,000
1,390,000
Total liabilities
6894456
110954983
41742,623
706,212
-
234,692
74468,966
Fund balances
Unreserved
450372863
1,9121404
643233
7903713
8503284
-
-
72655,497
Unreserved, reported in
nonmajor
Special revenue funds
-
-
-
-
-
-
3909333
390,333
Debt service funds
-
-
-
-
-
-
102150
10,150
Capital projects funds
-
-
-
-
-
-
190987851
1,098.951
Total fund balances
4,037,863
1,912,404
64233
7909713
850284
-
11499,334
9,154.831
Total liabilities and fund balances $ 4,727319 $ 1,912,404 $ 1.160216 $ 5.533,336 $ 19556,496 $ - $ 1,734,026 $ 16,623,797
The notes to the financial statements are an intergral part of this statement.
30
TOWN OF FOUNTAIN HILLS, ARIZONA
RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET ASSETS
GOVERNMENTAL FUNDS
JUNE 30, 2003
Fund balances -total governmental funds $ 9,154,831
Amounts reported for governmental activities in the statement of net assets are different because:
Property taxes not collected within 60 days subsequent to fiscal year-end are deferred in the
governmental funds. 55,455
Capital assets used in governmental activities are not financial resources and therefore are not reported in
the governmental funds.
Governmental capital assets 445886,155
Less accumulated depreciation (4,243,215)
Capital assets used in governmental activities 40,642,940
Other long-term assets are not available to pay for current -period expenditures and are not susceptible to
accrual. 2835670
Long-term liabilities, including bonds payable, are not due and payable in the current period and
therefore are not reported in the governmental funds.
General obligation bonds
Revenue bonds
Special assessment debt with government commitment
Community facilities district bonds payable
Compensated absences
Net assets of governmental activities
The notes to the financial statements are an integral part of this statement.
31
(12,585,000)
(113430,000)
(193365)
(4,765,000)
(174,637)
$ 21.162.894
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTALFUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2003
Revenues
Taxes
Sales taxes
Property taxes
Franchise taxes
Intergovernmental
Fines and forfeitures
Licenses and permits
Charges for services
Rents and royalties
Contributions and donations
Special assessments
Investment earnings (loss)
Other
Total Revenues
Expenditures
Current
General government
Public safety
Highways and streets
Culture and recreation
Community development
Debt Service
Principal retirement
Interest on long-term debt
Capital outlay
Total Expenditures
Excess (deficiency) of revenues over
expenditures
Other financing sources (uses)
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning of year
Fund balances, end of year
General
Obligation
General Excise Tax Debt Service
Eagle
Mountain
Debt Service
Municipal
Property
Corporation
Capital
Projects
Nonmajor
Governmental
Funds Totals
683765
-
13383,019
4583288
-
-
-
1,910,072
1523542
-
-
-
-
-
-
152,542
4,740,758
-
-
-
-
-
195709700
653112458
195,091
-
-
-
-
-
-
1953091
15308,747
-
-
-
-
-
-
15308,747
175,112
-
-
-
-
-
635,300
810,412
1885745
-
-
-
-
-
-
188,745
102000
-
-
-
-
-
117,200
1277200
47302
47302
(533214)
7,880
-
(1955647)
-
212165180
1,610
17976,809
140,733
-
-
-
7,410
148,143
119979,151
7,880
19383,019
2624641
-
2,216,180
2,336,522
18,185,393
33225,928
-
-
50,000
-
125239
3%407
333187574
51145,217
-
-
-
-
-
2%275
5,174,492
1,198,080
12198,080
15791,368
-
-
-
-
-
249048
178155416
172155387
-
-
-
-
-
-
1,2155387
-
-
735,000
140,000
4253000
-
93,228
13393,228
-
-
648,347
3225425
5663433
23397
37,240
15576,842
799427
79 427
11,377,900
1 383,347
5129425
9919433
149636
114917705
159771,446
601,251
70
328)
249 784
991 433
27201.544
844.817
2.4131947
1,256,178
2,511,936
125,713
-
1,841,717
-
246,000
5,981,544
(2.631.936)
607 412
-
2 615 976
(126.220)
(5,981.544)
1,375q758
1,904,524
125,713
-
1,841,717(2,615,976
1194780
(774,507)
1,912,404
125,385
(249,784)
8503284
(4145432)
9647597
2,413,947
4,812,370
61152
1,0409497
-
4149432
534,737
6,740,884
$ 4,037,863
$ 1.912.404
$ 64.233 $
790713 $
850,284
$ -
$ 1.499,334
$ 9,154,831
The notes to the financial statements are an intergral part of this statement.
32
TOWN OF FOUNTAIN HILLS, ARIZONA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
GOVERNMENTALFUNDS
FOR THE FISCAL YEAR ENDED NNE 305 2003
Net change in fund balances - total governmental funds $ 25413,947
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.
Expenditures for capital assets 31,857
Less current year depreciation (1,145,159)
Excess capital expenditures over depreciation (1,1134302)
Some revenues reported in the statement of activities do not provide current financial resources and
therefore are not reported as revenues in governmental funds.
Court fines 202,349
The issuance of long-term debt (e.g. bonds, leases) provides current financial resources to govemmemal
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, discounts, and similar items when the debt is first issued, whereas
these items are deferred and amortized over the tent of the long-term debt in the statement of activities.
Principal payments on long-term debt 1,393,228
Some expenses reported in the statement of activities do not require the use of current financial resources
and therefore are not reported as expenditures in the governmental funds.
Net increase in compensated absences 100,989
Bad debt expense (709917)
Change in net assets of governmental activities $ 2.926.294
The notes to the financial statements are an integza] part of this statement.
33
TOWN OF FOUNTAIN HILLS, ARIZONA
GENERALFUND
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND
BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED DUNE 30, 2003
Original and Final
Variance with Final
Budget
Actual
Budget
Revenues
Taxes
$ 4,430,000 $
5,273,179
$ 8435179
Intergovernmental
5,3589000
4,74%758
(617,242)
Fines and forfeitures
2609000
1955091
(64,909)
Licenses and permits
8702000
1,3085747
4385747
Charges for services
205,000
1755112
(2%888)
Rents and royalties
1367600
1885745
525145
Contributions and donations
-
1%000
1%000
Investment earnings (loss)
1503000
(53,214)
(2033214)
Other
47,000
1409733
93,733
Total Revenues
11145600
11,979.151
5224551
Expenditures
Current
General government
Mayor and Town Council
64,660
66,272
(15612)
Magistrate Court
3273470
278,915
485555
General and Administrative
3,3323955
25851,202
481,753
Undesignated Reserves
859,793
-
8595793
Contingency
47.500
29,539
174961
Total general government
4,632,378
39225,928
1,4064450
Public safety
Building Safety
501,700
37%880
121,820
Town Marshal
226583380
2544%402
217,978
Fire Department
24361,270
2.324,935
36 335
Total public safety
54521,350
5,145,217
376,133
Culture and recreation
Parks and Recreation
7275850
62%752
1075098
Desert Vista Park
495800
42,143
71657
Golden Eagle Park
31 %190
278,334
31,856
Fountain Park
359,300
288,854
703446
Four Peaks/Palisades Court
1265330
110,359
15,971
Civic Center
6604704
450,926
209,778
Total culture and recreation
2,2344174
1,791368
442,806
Community development
Community Development
4093510
272,798
136,712
Engineering Department
14205,200
9424589
262.611
Total community development
1,614,710
192154387
399,323
Total Expenditures
14,0029612
119377,900
2,6249712
Excess (deficiency) of revenues over expenditures
(2,54690121
601,251
3.147,263
Other financing sources (uses)
Transfers in
1,137,300
11256,178
118,878
Transfers out
(1,075,000)
(2,631,9361
(19556,9361
Total other financing sources (uses)
62,300
(1.375,7581
(1,438,0581
Net change in fund balances
(2,483,712)
(7743507)
197099205
Fund balances, beginning of year
2,4834712
44812370
2,3289658
Fund balances, end of year
$ - $
4,037,863
$ 4,037.863
The notes to the financial statements are an integral part of this statement
TOWN OF • �ARIZONA
EXCISE TAX FUND
TATEMENT OF REVENUES. EXPENDITURES. r CHANGES IN FUND
BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 302003
Revenues
Investment earnings
Total Revenues
Expenditures
Current
General government
Total Expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses)
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning of year
Fund balances, end of year
Original and Final Variance with Final
Budget Actual Budget
7,880 T880
1,822,700 - 1.822,700
11822,700 - 1,822,700
0,822,700) 7.880 1,830,580
1,075,000
2,511,936
1,436,936
(605,000)
(607Al2)
(2,412)
470,000
1,904,524
144344524
(1,352,700)
1,9125404
33265,104
1.352,700
-
(1,352,700)
$
$ 1,912,404 $
1,912,404
The notes to the financial statements are an integral part of this statement.
35
THIS PAGE BLANK
36
TOWN OF s
MWIM•
ENDEDFISCAL YEAR JUNE 30,2003
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements of the Town of Fountain Hills, Arizona (Town)
have been prepared in conformity with U.S. generally accepted accounting principles
applicable to governmental units adopted by the Governmental Accounting Standards
Board (GASB). A summary of the Town's more significant accounting policies follows.
The Town is a municipal government that is governed by a separately elected governing
body. It is legally separate from and fiscally independent of other state and local
governments. The accompanying 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.
Included within the reporting entity:
The 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 District taxes and thus for
the costs of operating the Districts. The Town Council serves as the Board of Directors;
however, the Town has no liability for the Districts' debt. For financial reporting
purposes, transactions of the Districts are combined together and included as if they were
part of the Town's operations.
Town of Fountain Hills, Arizona Municipal Property Corporation. The Town of
Fountain Hills, Arizona Municipal Property Corporation°s (MPC) board of directors
consists of three members which are appointed by the Fountain Hills Town Council. The
MPC, which is a nonprofit corporation incorporated under the laws of the State of
Arizona, was formed for the sole purpose of assisting the Town in obtaining financing for
various projects of the Town. The Town has a "moral obligation" for the repayment of
the MPC's bonds. For financial reporting purposes, transactions of the MPC are
combined together and included as if they were part of the Town's operations.
The government -wide financial statements (i.e., the statement of net assets and the
statement of changes in net assets) report information on all of the nonfiduciary activities
of the primary government and its component units. The effect of interfund activity has
been removed from these statements. Governmental activities are normally supported by
taxes and intergovernmental revenues.
37
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED TUNE 30, 2003
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 and other items not properly 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
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 provider have been met.
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, except expenditures related to compensated absences and
claims and judgments, which are recorded only when payment is due. However, since
debt service resources are provided during the current year for payment of general long-
term principal and interest due early in the following year, the expenditures and related
liabilities have been recognized in the Debt Service Funds.
Property taxes, intergovernmental grants and aid, and interest associated with the current
fiscal period are all considered to be susceptible to accrual and so have been recognized
as revenues of the current fiscal period. All other revenue items are considered to be
measurable and available only when cash is received by the govermnent.
• O • .
i
iIN Am WI M
P 1 it
The Town reports the following major governmental funds:
The Generad Fund is the TOWn's primary operating fund. It accounts for all
financial resources of the Town, except those required to be accounted for in
another fund.
The 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.
The General Obligation Debt Service Fund accounts for the Town's property tax
revenues received to pay the debt service of the Town's general obligation bonds.
The Eagle Mountain Debt Service accounts for the property tax revenues
received to pay the debt service of the Eagle Mountain Community Facilities
District component unit.
The Municipal Property Corporation Debt Service Fund accounts for the
revenues received to pay the debt service on MPC revenue bonds.
The Capital Projects Fund accounts for the capital improvements to various
projects of the Town.
As a general rule the effect of interfund activity has been eliminated from the
government -wide financial statements.
Amounts reported as program revenues include 1) charges for services, 2) operating
grants and contributions, and 3) capital grants and contributions. Intemally dedicated
resources are reported as general revenues rather than as program revenues. Likewise,
general revenues include all taxes.
When both
restricted and unrestricted
resources are available for use,
for governmental
activities it
is the Town's policy to
use restricted resources first,
then unrestricted
resources as
they are needed.
NOM
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.
39
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2003
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
All trade and property taxes receivables are shown net of an allowance for uncollectibles.
Maricopa County levies real property taxes on or before the third Monday in August that
become due and payable in two equal installments. The first installment is due on the
first day of October and becomes delinquent after the first business day of November.
The second installment is due on the first day of March of the next year and becomes
delinquent after the first business day of May. However, a lien against real and personal
property assessed attaches on the first day of January preceding assessment and levy
thereof.
3. Short-term Interfund Receivables/Payables
During the course of operations, individual funds within the Town's pooled cash accounts
may borrow money from the other funds within the pool on a short-term basis. These
receivables and payables are classified as "due from other funds" or "due to other funds"
on the balance sheet of the fund financial statements and are eliminated in the preparation
of the government -wide financial statements.
4. Inventories and Prepaid Items
Inventories consist of expendable supplies held for consumption. Inventories are valued
at cost using the first-in/first-out (FIFO) method.. Inventories of governmental funds are
recorded as expenditures when consumed rather than when purchased.
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items in both government -wide and fund financial statements.
Cif]
TOWN OF FOUNTAIN HILLS, ARIZONA
ENDEDFISCAL YEAR 0 00
Capital assets, which include property, plant, and equipment, 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 more than
$10,000 and an estimated useful life in excess of one year.
Property, plant and equipment purchased or acquired is carried at historical cost or
estimated historical cost. Contributed assets are recorded at fair market value as of the
date received. Additions, improvements and other capital outlays that significantly
extend the useful life of an asset are capitalized. Other costs incurred for repairs and
maintenance are expensed as incurred.
General infrastructure assets acquired prior to July 1, 2002 are not reported in the basic
financial statements. Those assets will be transitioned in over the next four fiscal years in
accordance with GASB Statement No. 34.
Depreciation
on all assets is provided
on a straight-line basis
over the following estimated
useful lives:
Buildings 50 years
Improvements other than buildings 20 years
Infrastructure 50 years
Furniture, machinery and equipment 5 years
Vehicles 5 years
The liability for compensated absences reported in the government -wide statements
consists of unpaid, accumulated leave balances. The liability has been calculated using
the vesting method, in which leave amounts for both employees who currently are eligible
to receive termination payments and other employees who are expected to become
eligible in the future to receive such payments upon termination are included.
In the government -wide financial statements, long-term debt and other long-term
obligations are reported as liabilities in the applicable governmental activities. Bond
premiums and discounts, as well as issuance costs, are deferred and amortized over the
life of the bonds using the straight line method. Bonds payable are reported net of the
applicable bond premium or discount. Bond issuance costs are reported as deferred
charges and amortized over the term of the related debt.
41
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 307 2003
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs, during the current period. The face amount of
debt issued is reported as other financing sources. Premiums received on debt issuances
are reported as other financing sources while discounts on debt issuances are reported as
other financing uses. Issuance costs, whether or not withheld from the actual debt
proceeds received, are reported as debt service expenditures.
8. Net Assets
In the govenunent-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 the Town reports all Town assets which 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.
9. Fund Equity
In the fund financial statements, governmental funds report reservations of fund balance
for amounts that are not available for appropriation or are legally restricted by outside
parties for use for a specific purpose. Designations of fund balance represent tentative
management plans that are subject to change.
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:
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.
42
u��rr�ry:r��:r i�aRy�y�i+►�tiii . 1%
a 9 1 o+
3. State law requires that, prior to April 15 the Economic Estimates commission
provides the Town with a final expenditure limit for the coming fiscal year. 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 general-purpose financial
statements to total expenditures for reporting in accordance with the State's
uniform expenditure reporting system (A.R.S. §41-1279.07),
4. By Arizona Constitution, 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. Legal budgets are adopted for the General, Special Revenue, Debt Service and
Capital Projects Funds on essentially the same modified accrual basis of
accounting used to record actual revenues and expenditures.
The Town is subject to the State of Arizona's Spending Limitation Law for Towns and
Cities. This law does not permit the Town to spend more than budgeted revenues plus
the carry-over 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.
Expenditures exceeded appropriations in the following funds:
Amount of
Overexpenditure
General Fund:
Mayor and Town Council $ 1,612
Municipal Property Corporation Fund 6,433
VJRF Debt Service Fund 223
43
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2003
C. Deficit Fund Equity
A deficit fund balance in the amount of $223 was reported
in the HURF
Debt Service
Fund. The deficit was due to
unexpended
fiscal charges.
The Town
plans to transfer
additional funds from the HURF
Fund in the
upcoming fiscal
year to cover
the deficit.
NOTE 3 -DETAILED NOTES ONALL FUNDS
A. Change in Accounting Policy
The Town implemented GASB 34 for the fiscal year ended June 30, 2003. The following
adjustments were made in order to properly state beginning net assets using the full
accrual method of accounting.
Fund balances at June 30, 2002, govenunental fund types $ 6,740,884
GASB Statement No. 34 adjustments:
Deferred property tax revenue - prior years
Net capital assets
Accounts receivable - court
General obligation bonds
Revenue bonds
Special assessment debt with government commitment
Community facilities district bonds payable
Compensated absences
Net assets of governmental funds at July 1, 2002
59,756
41,756,242
147,936
(13,4105000)
(11,855,000)
(229592)
(4,905,000)
(275,626)
$ 18,236.600
Deposits and investments at June 30, 2003 consist of the following:
Deposits
Cash on hand $ 1,360
Cash in bank 439,449
Cash on deposit with paying agent 1,606,741
Investments
Money Market Mutual Fund 90,775
U.S. Government Securities 19,365
State Treasurer's Investment Pool 6,589,915
Cash on deposit with trustee 646399621
Total cash and investments 15,3871226
Cash on deposit with paying agent (1.606.741)
Total cash and equivalents $ 13.780,485
Deposlts -The Town's deposits at June 3Q 2003, were entirely covered by federal
depository insurance or by collateral held by the Town's custodial bank in the Towns
name.
Investments -The State Board of Deposit provides oversight for the State Treasurer's
pools, and the Local Government Investment Pool Advisory Committee provides
consultation and advice to the Treasurer. The fair value of a participant's position in the
pool approximates the value of that participant's pool shares. The shares are not
identified with specific investments and are not subject to custodial credit risk. In
addition, the money market mutual fund is not subject to custodial credit risk. All other
investments of the Town are uninsured and unregistered with the securities held by the
counter party's trust department or agent in the Town's name.
45
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 303 2003
2. Receivables
Court fines are recorded net of uncollectible amounts in the government -wide statements
but are not recorded as a receivable in the fund statements because they do not meet the
revenue recognition criteria for the modified accrual basis of accounting. The total
receivable at June 30, 2003 was $354,587, which was reduced by $70,917 for
uncollectible amounts for a net receivable balance at June 30, 2003 of $283,670,
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 and unearned revenue reported in the governmental
funds were as follows:
Unavailable Unearned
Delinquent property taxes receivables
(General Obligation Debt Service Fund) $ 37,109 $
Delinquent property taxes receivables
(Eagle Mountain Debt Service Fund) 10,948
Special assessments receivables
(Nonmajor funds) 7398
Capital asset activity for the year ended June 3Q 2003 was as follows:
Capital assets not being depreciated:
Land
I all wflg I I kil 1Ho•1
Capital assets being depreciated:
Building and improvements
Improvements other than buildings
Infrastructure
Furniture, machinery and equipment
Vehicles
Total capital assets being
depreciated
AA 4
Less accumulate
for:
Building and improvements
Improvements other than buildings
Infrastructure
Furniture, machinery and equipment
Vehicles
Total accumulated depreciation
Beginning Ending
Balance Increases Decreases Balances
$ 23,571,668 $ $ $ 23,571,668
23,571,668 23,571.668
10,080,070 10,080,070
8,491,441 315857 (1,031,377) 75491,921
397,976 397,976
1,518,647 1,518,647
148259873 1,825,873
22,314,007 31,857 {1,031,377) 21,314,487
(360,067)
(205,052)
- (565,119)
(2,437,233)
(374,596)
1,031,377 (1,780,452)
(125795)
(7,960)
(209755)
(597,771)
(192,376)
(790,147)
(721,562)
(36591751
(L086,7421
(4329,433)
{1,145,159)
140319377 (4,243,215)
185184,574
(1.1132302)
- 175071,272
47
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED DUNE 309 2003
Depreciation expense was charged to functions/programs as follows:
Governmental activities
General government $ 118,920
Public safety 365,146
Highways and streets 1169802
Culture and recreation 5449291
Total depreciation expense -governmental activities $ 1,145,159
C. Interfund Receivables, Payables and Transfers
As of June 30, 2003 interfund receivable and payables were as follows:
Due From
General
Fund Nonmajor Total
Excise Tax Fund $ 105,462 $ - $ 105,462
Nonmajor Funds 223 223
$ 105 462 $ 223 $ 105,685
The above interfund receivables and payables are due to monthly sales tax allocations
owed by the General Fund to the Excise Tax Fund and a deficit cash balance at year-end
in a nomnajor fund.
Interfund transfers for the year ended June 30, 2003 consisted of the following:
Transfers From
Capital
Transfers To General Fund Excise Tax Projects Nonmajor Total
General Fund $ - $ $ 1,255,958 $ 220 $ 1,2565178
Excise Tax 25511,936 2,511,936
GO Debt Service 1255713 125,713
MPC 607,412 1,234,305 15841,717
Nonmajor 120,000 1264000 246,000
$ 2.631,936 $ 607.412 $ 2.615,976 $ 126,220 $ 5,981,544
m
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2003
The Capital Projects Fund recovered $2.1M from an investment made by the trustee for
the Municipal Property Corporation (MPC). A portion of the recovery was transferred to
reimburse the General Fund for the cost to complete the capital project that was to be
constructed with bond proceeds. The remainder was transferred to the MPC for future
debt payments. Residual proceeds from a general obligation bond for land preservation
were transferred to debt service to retire the debt. During the 2002-03 fiscal year, local
sales tax receipts were recorded in the General Fund which included a dedication portion
that was transferred to the Excise Tax Fund. In future years the dedicated portion of the
local sales tax will be recorded directly into the Excise Tax Fund. The General Fund
recorded a donation that was restricted for furniture, fixtures and equipment for the new
community center. This was transferred from the General Fund to a special revenue fund
for that purpose. The nonmajor transfer of $126,000 was a transfer from HURF to HURF
Debt Service for the annual payment on HURF revenue bonds.
The Town leases office space under the provisions of a long-term lease agreement
classified as an operating lease. Rental expenditures under the terms of the operating
lease totaled $375,247 for the year ended June 30, 2003. The operating lease term is on a
month -to -month basis.
The Town has long -teen bonds and loans payable issued to provide funds for the
acquisition and construction of major capital facilities. The Town has also issued debt to
refund earlier obligations with higher interest rates. The debt is being repaid by various
debt service funds. Compensated absences are paid by the applicable fund where each
employee is regularly paid, primarily the General Fund.
Special Assessment districts are created only by petition of the Town Council by property
owners within the District areas. The Cottonwoods Improvement District was created so
the Town could fund the improvements. Each of the 54 homeowners within the District
has been assessed taxes by the Town for repayment of the bond. In case of default, the
Town has the responsibility to cover delinquencies of special assessment bonds with
other sources until foreclosure proceeds are received.
m
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED .TUNE 30, 2003
Community facilities districts (CFDs) are created only by petition to the Town Council by
property owners within the District areas. As board of directors for the District, the Town
Council has adopted a formal policy that CID debt will be permitted only when the ratio
of full cash value of the District property (prior to improvements being installed), when
compared to proposed District debt, is a minimum of 3 to 1 prior to issuance of debt and
5 to 1 or higher after construction of improvements. These ratios are verified by an
appraisal paid for by the District and administered by the Town. In addition, cumulative
debt of all CFDs cannot exceed 5 percent of the Town's secondary assessed valuation,
Changes in long-term obligations for the year ended June 30, 2003 are as follows:
Due within
July 1, 2002
Increases
Decreases
June 30, 2003
One Year
Governmental Activities:
General obligation bonds
$ 133410,000
$ -
$ (825,000)
$ 125585,000
$ 8455000
Revenue bonds
11,855,000
(4255000)
11,430,000
425,000
Special assessment debt with
government commitment
22,592
(31227)
19,365
35228
Community facilities district
bonds payable
4,9053000
(140,000)
4,7655000
15%000
Compensated absences
2759626
397 697
(498,686)
174,637
614376
$ 30 ,468 218
$ 397.697
$ (1,8919913)
$ 28.974,002
$ 1,484,604
Debt service requirements on long-term debt at June 30, 2003 are as follows:
Governmental
Activities
Year Ending
June 30
Principal
Interest
2004
$ 1,4239228 $
1,48%640
2005
1,508,228
1,4193829
2006
15583,228
1,344,319
2007
1,673,227
1,265,927
2008
1,7885227
1,182,207
2009-13
85638,227
45596,441
2014-18
7,735,000
2,473,668
2019-23
4,4504000
46L006
$ 28,799,365 $
14,233,037
LY17
i a IV6 WA 1 • '
.
a r t Ir
NOTE 4 -OTHER INFORhdATION
The Town of Fountain Hills, Arizona, 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 Arizona Municipal Risk Retention Pool is structured such that member premiums are
based on an actuarial review that will provide adequate reserves to allow the pool to meet
its expected financial obligations. The pool has the authority to assess its members
additional premiums should reserves and annual premiums be insufficient to meet the
pool's obligations.
The Town is also insured by Arizona Municipal Workers Compensation Fund for
potential worker related accidents.
Accunbulated Sick Leave -Sick leave benefits provide for ordinary sick pay and are
cumulative but do not vest with employees and, therefore, are not accrued. Unvested
accumulated sick leave of Town employees at June 30, 2003, totaled $293,731.
Lawsuits -The Town is a defendant in various lawsuits. In the opinion of the Town's
attorney the outcome of these lawsuits is not presently determinable.
All full-time employees of the Town, except participants in the Arizona Public Safety
Personnel Retirement System, 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 the year ended June 30, 2003 was $2,922,909. The
Town's total payroll was $3,950,930.
51
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2003
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
participant's 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
contribute 11 % of covered earnings. During fiscal year 2002-03, the Town's required and
actual contributions amounted to $321,520. The employees' contributions totaled
$321,520.
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 2002-03 or as of the close of the fiscal year.
Public Safety Personnel Retirement System (PSPRS)
Plan Description -The Town contributes to the Public Safety Personnel Retirement
System (PSPRS), an agent multiple -employer, public employee retirement system that
acts as a common investment and administrative agent to provide retirement and death
and disability benefits for public safety personnel who are regularly assigned hazardous
duty in the employ of the State of Arizona or a political subdivision thereof. All benefit
provisions and other requirements are established by State statute. The Public Safety
Personnel Retirement System issues a publicly available financial report that includes
financial statements and required supplementary information for PSPRS. That report
may be obtained by writing to Public Safety Personnel, 1020 E. Missouri Ave., Phoenix,
AZ 85014 or by calling (602) 255-5575.
Funding Policy -Covered employees are required to contribute 7.65 percent of their
annual salary to the PSPRS. The Town is required to contribute the remaining amounts
necessary to fund the PSPRS, as determined by the actuarial basis specified by statute.
The current rate is 10.71 percent of annual covered payroll.
52
TOWN OF •HILLS,
J
ENDEDFISCAL YEAR 12003
Annual Pension Cost - During Lite year ended June 30, 2002, the Town of Fountain
Hill's annual pension cost of $61,102 for police was equal to the Town of Fountain Hill's
required and actual contributions.
The required contribution was determined as part of the June 30, 2001 actuarial valuation
using an entry age actuarial funding method. Significant actuarial assumptions used in
determining the entry age actuarial accrued liability include (a) a rate of return on the
investment of present and future assets of 9.0% per year compounded annually, (b)
projected salary increases of 6.5% per year compounded annually, and (c) additional
projected salary increases of 0.0% to 3.0% per year attributable to seniority/merit.
The actuarial value of the Town of Fountain Hill°s assets was determined using
techniques that smooth the effects of short-term volatility in the market value of
investments over a four-year period. The Town of Fountain Hill's unfunded actuarial
accrued liability is being amortized as a level percentage of projected payroll on a closed
basis. The remaining amortization period at June 30, 2002, was 20 years.
The preceding methods comply with the financial reporting standards established by the
Governmental Accounting Standards Board.
!IZ�7tl
Fiscal Year Annual Pension
Ended June 30, Cost (Ark,)
2000
$ 287639
2001
57,277
2002
61,102
Percent Net Pension
Contributed Obligation
100.0 % $ -
100.0 -
100.0
Additional historical trend information for the Town's PSPRS is disclosed on page 56.
Historical trend information is presented in order for a reader to assess the progress made
in accumulating sufficient assets to pay pension benefits as they become payable.
53
TffiS PAGE BLANK
54
55
TOWN OF FOUNTAIN HILLS, ARIZONA
REQUIRED SUPPLEMENTARY INFORMATION
PUBLIC SAFETY PERSONNEL
RETIREMENT SYSTEM
SCHEDULE OF FUNDING PROGRESS
Fountain Hills
Police
Over(Under)
Entry Age
funded AAL
Valuation
Actuarial
Actuarial
Over(Under)
Annual
as a Percentage
Date
Value of
Accrued Percent
funded
Covered
of Covered
June 30
Assets
Liability (AAL) Funded
AAL
Payroll
Payroll
1996
$ 17,463
$ 16,084 108.6 %
$ 1,379 $
77,574
L8 %
1997
54,809
48,512 113.0 %
6,297
216,163
2.9 %
1998
1843135
125,791 148.7 %
58,344
3943005
14.8 %
1999
258,664
263,285 98.2 %
(4,621)
4123182
(1.1)%
2000
375,860
401,167 93.7 %
(25,307)
5563445
(4.5)%
2001
562,905
409,913 137.3 %
152,992
63%753
23.9 %
2002
591,957
557,666 106.1 %
34,291
549,166
6.2 %
* Information prior to 1996
is not available.
56
i, • i �. i i :. i
Statements i Schedules
57
YY71�Y7CU�711s1�
G�3
Highway User Revenue Fund (HURF) - accounts for the Town share of motor fuel tax revenues
and lottery proceeds.
Grants Fund -accounts for the activities of various grants and contributions received by the
Town.
II7D) �I1T. E 'i ►CC6 .
HURF Debt Service -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 -accounts for all special assessments received to pay the debt
service of the Cottonwoods Special Assessment District,
Development Fees Fund -accounts for development fees collected from developers restricted for
projects approved by Council.
59
Assets
Cash and equivalents
Cash with paying agent
Receivables, net
Intergovernmental receivable
Special assessments receivable
Due from other funds
Prepaid items
Total assets
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
JUNE 302 2003
Capi al
Revenue Debt Service Projects
Cottonwoods
Nonm jor
HURF Debt
Special
Development
Govemmeatal
HURF
Grants Total
Service
Assessment
Total
Fees
Funds
$ 185,119
$ 2045296 $ 389A15
$ -
$ 105881
$ 10,881
$ 151023202
$ 17502,498
-
- -
1075911
-
1073911
-
1075911
114,540
- 114,540
-
-
-
-
1147540
-
- -
-
7,398
7,398
-
77398
223
- 223
-
-
-
-
223
1.456
- 1.456
-
-
-
-
19456
$ 301,338 $ 204,296 $ 505.634 $ 107,911 $ ]8.279 $ 126.190 $ 1,102,202 $ 1,734,026
Liabilities and Fund Balances
Liabilities
Accounts payable
$ 94,872
$ 12781
$ 96,653
$ - $
-
$ - $
31351
$ 1002004
Accrued wages and benefits
185648
-
18,648
-
-
-
-
189648
Interest payable
-
-
-
17,911
508
187419
-
18,419
Due to other funds
-
-
-
223
-
223
-
223
Deferred revenue
-
-
-
-
79398
7,398
-
7,398
Matured debt principal payable
-
-
-
90.000
-
90,000
-
90,000
Total liabilities
113,520
14781
115,301
108134
7,906
116.040
34351
234,692
Fund balances
Unreserved
1874818
202,515
390,333
(2231
10,373
104150
19098,851
19499.334
Total fund balances
1879818
202515
390333
223
104373
109150
11098,851
1.499,334
Total liabilities and fund balances $ 301,338 $ 204,296 $ 505,634 $ 107 911 $ 18.279 $ 126,190 $ 1,102,202 $ 1,734,026
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND
BALANCES-NONMASORGOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED NNE 305 2003
Revenues
Intergovernmental
Charges for services
Contributions and donations
Special assessments
Investment earnings
Other
Total revenues
Capi al
Special Revenue Debt Service Projects
HI1RF
Gravts
Total
$ 154269688
$ 144,012
$ 1,570,700 $
31,775
-
31,775
-
117,200
117,200
298
298
7 410
74410
1,466,171
26L212
1,727,383
HURF Debt
Service
Cottonwoods
Nomnajor
Special
Development
Governmental
Assessment
Total
Fees
Funds
$ -
$ -
$ -
$ I,570,700
-
-
6035525
635,300
-
-
-
117,200
4,302
47302
-
41302
179
179
1,133
15610
-
7,410
49481
4,481
604,658
2,336,522
Expenditures
Current
General government
-
-
-
-
-
-
302407
302407
Public safety
-
299275
29,275
-
-
-
-
297275
Highways and streets
1,1525353
45,727
1,198,080
-
-
-
-
1,198,080
Culture and recreation
-
24,048
247048
-
-
-
-
24,048
Debt Service
Principal retirement
-
-
-
907000
3,228
93,228
-
93,228
Interest on long-term debt
-
-
-
362223
%017
37,240
-
37,240
Capital outlay
-
79,427
79,427
-
79,427
Total expenditures
1,152,353
17SA77
1,330,830
126,223
4,245
130,468
304407
14491,705
Excess (deficiency) of revenues over
expenditures
313,818
82,735
3969553
(126,223
236
(1254987)
5742251
8444817
Other financing sources (uses)
Transfers in
-
12(1000
1205000
126,000
-
126,000
-
246,000
Transfers out
(126,000 1
(2201
1( 264220
CIL6 220
Total other financing sources (uses)
126,000
1195780
6 220
126.000
-
126.000
119,78
Net change in fund balances
187,818
2022515
390,333
(223)
236
13
5743251
964,597
>. Fund balances, beginning of year
-
-
-
-
104137
109137
524,600
5344737
Fund balances, end of year
$ 187.818
$ 202,515
$ 390.333
$ (223) $
10,373
$ 105150 $
110984851
$ 1,499,334
61
TOWN OF FOUNTAIN HILLS, ARIZONA
GENERAL OBLIGATION DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED TUNE 30, 2003
Revenues
Taxes
Property taxes
Investment earnings
Total Revenues
Expenditures
Current
General government
Debt Service
Principal retirement
Interest on long-term debt
Total Expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses)
Transfers in
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning of year
Fund balances, end of year
Original and Final Variance with
Budget Actual Final Budget
$ 7,25Q,000 $ 1,383,019 $ 133,019
Mn (246501
1,252,650 1,383,019 130,369
101,250
101,250
735,000 735,000 -
655.000 648,347 6,653
11491,250 1383,347 1074903
(23846001 (328) 2389272
125,7] 3 125,7] 3
125,713 125,713
(238,600) 125,385 3635985
238.600 (61,152) (299,752)
$ $ 64,233 $ 64.233
62
TOWN OF FOUNTAIN HILLS, ARIZONA
EAGLE MOUNTAIN DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 305 2003
Original and Final Variance with
Budget Actual Final Budget
Revenues
Taxes
Property taxes $ 490,000 $ 458,288 $ (31,712)
Investment earnings (loss) (195.6471 (19546471
Total Revenues 490,000 262,641 (227,3591
Expenditures
Current
General government
Debt Service
Principal retirement
Interest on long-term debt
Total Expenditures
Excess (deficiency) of revenues over expenditures
Net change in fund balances
Fund balances, beginning of year
Fund balances, end of year
-
50,000
(50,000)
140,000
140,000
-
1168179
3224425
845,754
11308,179
512,425
7954754
(818,179)
(249,7841
568.395
(818,179)
(2495784)
5685395
918179
1,040,497
222,318
$
$ 790.713 $
790,713
TOWN OF FOUNTAIN HILLS, ARIZONA
MUNICIPAL PROPERTY CORPORATION FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED NNE 309 2003
Expenditures
Debt Service
Principal retirement
Interest on long -tens debt
Total Expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses)
Transfers in
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning of year
Fund balances, end of year
Original and Final Variance with
Budget Actual Final Budget
$ 4253000 $ 425,000 $ -
560,000 566,433 (64433)
985,000 991,433 (6,433)
(9854000) (99L433) (64433)
985.000 1,841,717 856,717
9859000 118414717 856,717
- 850,284 8501284
$ $ 850.284 $ 850.284
TOWN OF FOUNTAIN HILLS, ARIZONA
CAPITAL PROJECTS FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2003
Revenues
Investment earnings
Total Revenues
Expenditures
Current
General government
Debt Service
Interest on long-term debt
Capital outlay
Total Expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses)
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning of year
Fund balances, end of year
Original and Final Variance with
Budget Actual Final Budget
$ 24100,000 $ 22162180 $ 1164180
22100,000 2216,180 116,180
-
L2,239
(I2,239)
-
29397
(27397)
720,000
-
7204000
720,000
14.636
705364
1,3809000
2201,544
821,544
(1,380,0001 (2,615.9761 (]235,976)
(1380.0001 122615,976) (1123529761
- (4143432) (414,432)
414,432 414,432
TOWN OF FOUNTAIN HILLS, ARIZONA
HURFFUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED TUNE 305 2003
Revenues
Intergovernmental
Charges for services
Investment earnings
Other
Total Revenues
Expenditures
Current
Highways and streets
Total Expenditures
Excess (deficiency) ofrevenues over expenditures
Other financing sources (uses)
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
and balances, beginning of year
and balances, end of year
Original and Final Variance with
Budget Actual Final Budget
$ 1,420,000 $ 114267688 $ 6,688
203000 31,775 11,775
2,000 298 (1,702)
7,410 7,410
11442,000 1,466,171 24,171
1.565.006
LI52.353
412.653
1,5654006
1152,353
412,653
(123,006)
3134818
4369824
249,000 - (249,000)
(126,000) (126,000)
123,000 (126,000) (249,000)
(6) 187,818 1872824
6 (6)
$ $ 187 818 $ 187,818
TOWN OF FOUNTAIN HILLS, ARIZONA
GRANTSFUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED DUNE 30, 2003
Revenues
Intergovernmental
Contributions and donations
Total Revenues
Expenditures
Current
General government
Public safety
Highways and streets
Culture and recreation
Capital outlay
Total Expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses)
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning of year
Fund balances, end of year
Original and Final Variance with
Budget Actual Final Budget
$ 94%900 S 1445012 $ (7963888)
117,200 117,200
940t900 261,212 (679,6881
750,000
-
750,000
111,900
29,275
82,625
755000
453727
2%273
124,000
243048
9%952
79,427
(79,427)
11060,900
178,477
882.423
(120,000)
82,735
2022735
12Q,000 12Q,000 -
(2201 (2201
120,000 119.780 (2201
- 2027515 2025515
$ $ 2024515 $ 202.515
TOWN OF FOUNTAIN HILLS, ARIZONA
HURF DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED NNE 30, 2003
Expenditures
Debt Service
Principal retirement
Interest on long-term debt
Total Expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses)
Transfers in
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning of year
Fund balances, end of year
Original and Final Variance with
Budget Actual Final Budget
$ 9Q2000-
36,000 36,223 (223)
126,000 126223 (223)
(126,000) (126,223) (223)
126,000 126.000
126 000 1264000
(223) (223)
$ $ (223) $ (223)
TOWN OF FOUNTAIN HILLS, ARIZONA
COTTONWOODS SPECIAL ASSESSMENT FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2003
Revenues
Special assessments
Investment earnings
Total Revenues
Expenditures
Debt Service
Principal retirement
Interest on long-term debt
Total Expenditures
Excess (deficiency) of revenues over expenditures
Net change in fund balances
Fund balances, beginning of year
Fund balances, end of year
Original and Final Variance with
Budget Actual Final Budget
$ 4,500 $ 4,302 $ (198)
179 179
4,500 4.481 (19)
3,228
1,272
4,500
3,228
1,017
4245
236
236
255
255
236
236
10,137
$ 10373
TOWN OF FOUNTAIN HILLS, ARIZONA
DEVELOPMENT FEES FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2003
Revenues
Charges for services
Investment earnings
Total Revenues
Expenditures
Current
General government
Total Expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses)
Transfers out
Total other financing sources (uses)
Net change in fund balances
and balances, beginning of year
Fund balances, end of year
Original and Final Variance with
Budget Actual Final Budget
$ 816,765 $ 603,525 $ (213,240)
59450 1,133 (58,317)
876,215 604,658 (271,557)
1.104,787
30,407
1,074,380
L1044787
30407
1,074,380
(2284572)
574 251
802,823
(383.100) 383.100
(3834100) 383,100
(611,672) 5749251 1,1853923
61 L672 524,600 (87,072)
$ $ 1.098.851 $ 1,098,851
1 F, .
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TOWN
OF FOUNTAIN HILLS,
ARIZONA
GENERAL GOVERNMENTAL TAX REVENUES
BY SOURCE
LAST TEN FISCAL YEARS
(UNAUDITED)
Fiscal
Sales
Property
Franchise
Year
Tax
Tax
Tax
Total
1994
$
$ 393,654
$ 945780 $
488,434
1995
16,622
3579033
94,848
468,503
1996
1,610,116
336,000
78,345
2,0245461
1997
2,664,923
350,024
86,840
3,101,787
1998
2,920,084
302,375
1035748
3,326,207
1999
3,394,152
348,778
118,407
3,861,337
2000
43087,514
657,026
131,926
4,8769466
2001
4,923,174
190385891
125,982
6,088,047
2002
4,355,701
3,109,353
130,694
7,595,748
2003
5,051,872
1,910,072
152,542
7,114,486
76
TOWN OF FOUNTAIN HILLS, ARIZONA
TOWN TRANSACTION PRIVILEGE (SALES) TAX COLLECTIONS
BY INDUSTRY CLASSIFICATION
FISCAL YEAR BASIS
(UNAUDITED)
2003
Excise Tax
Business Activity Category Collections
Construction $ 1,203,706
Transportation/Utilities/Communication 590,446
Wholesale/Retail 1,930J 75
Restaurants/Bars 276,664
Fire, Insurance and Real Estate 205,849
Services 455,324
All Other Services Not Specified 188.654
$ 4.850,818
77
Percent
of
Total
24.8
12.2
%
39.8
%
5.7
%
4.2
%
9.4
%
3.9
%
100.0
%
oF„ o 0 0 0 0 0 0 0 0 0
a
.. o
m "
fa
m
N N
CO o
M
�
q
N
N
a y06
H
O
Q
64
w v ro O O O O O O C h
0 0 O O O O O O 001 �
0
F
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J, C:) vi �p rn b a O1 o4i
a U W m M NC'A 00 7 V
N V \o m M �
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M N m m O N 00 , U
O� F A U 69 O
� b
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TOWN OF FOUNTAIN HILLS, ARIZONA
ASSESSED AND ESTIMATED ACTUAL VALUE OF PROPERTY (1)
LAST TEN FISCAL YEARS
(UNAUDITED)
I �� iir•I,•:i�
Ratio of Total
Assessed Value
Total Total Net to Total
Tax Assessed Exempt Full Cash Estimated Assessed Estimated
Year Value Amount Value Actual Value Value Actual Value
1994
$ 92,301,694
$ 4,918,347
$ 753,145,358
$ 903,774,430
$ 87,383,347
10.21
°/
1995
995271,154
5,0825517
826,917,659
99253015191
94,288,637
10.00
%
1996
105,912,474
5,2625641
884,979,322
1506159753186
10036495833
9.97
%
1997
11858885547
63602,978
15002,546,459
15203,0553751
1125285,569
9.88
%
1998
14130775170
73355,989
%20859%752
1245057625502
13357213181
9.72
%
1999
170,258,614
93255,978
154675193,748
1,76056325498
16150025636
9.67
%
2000
198,224,776
8,5785615
1,713,02%238
2,0555635,086
1895646,161
9.64
%
2001
232,442,986
1252135849
1,997,5253319
25397,030,383
220X9J37
9,70
%
2002
26056355914
1324845185
2,240,7025344
2M8,8422813
247,151,729
9.69
%
2003
29%7435562
16,942,705
2556555229177
3,07856265612
28258005857
9.74
%
SECONDARY
Ratio of Total
Assessed Value
Total
Total
Net
to Total
Tax
Assessed
Exempt
Full Cash
Estimated
Assessed
Estimated
Year
Value
Amount
Value
Actual Value
Value
Actual Value
1994
$ 9450475575
$ 5,2501741
$ 7643582,686
$ 9175499,223
$ 88,796,834
10.25
%
1995
1055660,296
55498,728
8665122,390
15039,346,868
10M61,568
10.17
%
1996
1095463,361
5,5193310
906,4953406
1,087,794,487
1033944,051
10.06
%
1997
123,0973961
6,7645555
1,03428923731
1,2413871,277
11653335406
9,91
%
1998
155,7295430
8,7855700
1,31719463863
1,5815536,236
1465943,730
9,85
%
1999
18555405741
10,5755923
1358350725952
%8995687,542
1745964,818
9.77
%
2000
22159225165
938943702
1588930165352
232663819,622
2125027,463
9,79
%
2001
253,2695562
143555,025
2,1545928,885
255855914,662
238,714,537
9.79
%
2002
28758915481
1752883615
254185235,666
2590%882,799
270,6022866
9.92
%
2003
34450473844
2056629614
258425849,050
35411,418,860
323,385,230
10.09
%
(1) Arizona
uses two types of
property values for
taxing purposes. Primary
values are used
to calculate primary
property
taxes which
are collected
to fund the maintenance and operation
of school districts,
community college districts,
counties,
cites, and state
government. Secondary values are used to pay off secondary property taxes which are
collected
for such things as
debt service (bonds),
budget overrides and special districts. Source: Arizona
Department of
Revenue.
79
TOWN OF FOUNTAIN HILLS, ARIZONA
PRIMARY AND SECONDARY TAXABLE PROPERTY ASSESSED VALUATION
LAST TEN FISCAL YEARS
(UNAUDITED)
Assessed
Assessed
Assessed
Assessed
Valuation
Valuation
Valuation
Valuation
Tax
Town of
Fountain Hills
Maricopa
State of
Year
Fountain Hills
School District
Co un
Arizona
1994
P
$ 87,3839347
$ 87,353,865 $
13,2965003,025 $
219349,754,194
S
88,796,834
899208,873
1395049107,816
215748,0409198
1995
P
94,188,637
88,978,760
13,3029326,609
21,688,438,645
S
100,161,568
90,394,390
13,521,1743915
22,179,317,949
1996
P
100,649,833
95,155,307
13,493,736,826
22510%868,588
S
103,944,051
10I,137,745
14j 19,434,946
23,022,330,962
1997
P
1125285,569
101,5735954
13,975,668,204
22,8115158,500
S
116,3335406
104,881,097
145343,156,861
2393335678,475
1998
P
133,721,181
1135072,537
15,006,270,531
215001,0641273
S
146,9439730
117,144,929
15,723,498,194
22,33398619362
1999
P
190,102,361
134,6501036
17,463,875,533
2L670530013
S
212,415,476
147,884,952
18,676,830,848
22,5339348,150
2000
P
1895646,161
191,579,669
19,3625298,255
22,6455463,514
S
2129027,463
214,037,354
20,8775715,546
231547,348,817
2001
P
220,22%137
1925200,924
19,603,718,629
30,144,285,019
S
238,714,537
214,726,796
21J38,917,389
32,071,738,214
2002
P
2475151,729
223,185,771
2L355,326,477
329518,431,991
S
270,602,866
242,086,985
22,913,134,480
34,4689574,240
2003
P
282,800,857
288596%887
25,4473850,971
34,86895965227
S
323,385,230
331,458,411
2754773987,528
36,825,6609973
P =Primary assessed valuation
S =Secondary assessed valuation
Source: Maricopa County and Arizona Tax Research Foundation.
pp
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TOWN OF FOUNTAIN HILLS, ARIZONA
PRIMARY AND
SECONDARY PROPERTY TAX RATES -
ALL
OVERLAPPING GOVERNMENTS
LAST TEN FISCAL YEARS
(UNAUDITED)
Fiscal
Rate
Rate Rate
Rate
Rate
Year
Town
School District County
State
Total
1994
P
5.03 1.58
0.47
7.08
S
0.43
1.76 0.19
2.38
1995
P
5.50 1.77
0.47
7.74
S
0.39
1.69
2.08
1996
P
4.96 1.69
0.47
7.12
S
0.32
2.67 0.15
3.14
1997
P
4.98 1.64
6.62
S
0.30
2.17 0.16
2.63
1998
P
4.89 1.68
6.57
S
0.23
2.32 0.13
2.68
1999
P
3.89 1.19
5.08
S
0.17
1.96 0.11
2.24
2000
P
3.91 1.16
5.07
S
0.26
2.38 0.12
2.76
2001
P
4.09 1.18
5.27
S
0.56
2.25 0.09
2.90
2002
P
0.97 *
4.33 1.68
6.98
S
0.56
2.00 0.09
2.65
2003
P
3.56 1.21
4.77
S
0.48
2.14 0.07
2.69
P = Primary
assessed valuation
S = Secondary
assessed valuation
Source: Maricopa
County and Arizona Tax Research Foundation.
* The primary
tax
rate represents
the Fountain Hills Fire District and is included
with
the Town
because the Town
took over operations in November 2001.
82
• 8 .
r • • a• �•.
TUNE 302003
(UNAUDITED)
Town's
2002/03
Total Secondary
Assessed
Assessed
_ Taxpayer
Land Description
Valuation
Valuation
Firerock LLC
Vacant Land
$ 4,045,273
1.25
%
Qwest Corporation
TV Systems
3,385,045
1.05
%
MCO Properties
Vacant Land
3,079,071
0,95
%
Chaparral Town Water Company
Water Utility
2,9319751
0.91
%
Fountain Hills Village LLC
Nursing Home
1,9475937
0.60
%
Target Corporation
Shopping Center
1,481,678
0.46
%
Cox Communications
TV Systems
1,404,400
0,43
%
Four Peaks Limited Partnership
Condominiums
1,353,366
0.42
%
Fountain Hills -Old Vine LP
Shopping Center
928,888
0.29
%
Sun Tech Development
Condominiums
895,446
0.28
%
Kimco Barclay Fountain Hills
Shopping Center
85%491
0.27
%
Safeway Inc. #1291
Shopping Center
857,444
0.27
%
Inn at Eagle Mountain LLC
Hotel
853,886
0.26
%
Southwest Gas
Gas & Electric
840 795
0.26
%
$ 24.864,471
7.70
%
Source: Treasurer of Maricopa County.
TOWN OF FOUNTAIN HILLS, ARIZONA
COMPUTATION OF LEGAL DEBT MARGIN
JUNE 3% 2003
(UNAUDITED)
Net secondary assessed valuation $ 323,385,230
Water, Sewer, Light, Parks, Open
Snace and Recreational Facility Boards
Debt limit - 20% of secondary net
assessed valuation $ 64,677,046
Bonds outstanding 9.825,000
Net 20% General Obligation Bonding
Capacity 54,8524046
All Other General Obligation Bonds
Debt limit - 6% of secondary net
assessed valuation 1934035114
Bonds outstanding subject to debt limit
2.760,000
Net 6%General Obligation Bonding
Capacity 16,643,114
Tota120%and 6%Bonding Capacity $ 71,495,160
Source: Maricopa County Assessor's Office.
E�!
TOWN OF FOUNTAIN HILLS, ARIZONA
RATIO OF NET GENERAL BONDED DEBT TO ASSESSED VALUE
AND NET BONDED DEBT PER CAPITA
LAST TEN FISCAL YEARS
(UNAUDITED)
Ne4
Ratio of Net
Secondary
Net
Bonded Debt
Net Bonded
Fiscal
Assessed
Bonded
to Assessed
Debt Per
Year
Population
Valuation
Debt
Value
Capita
1993-94
12,005
$ 88,796,834
$ 45292,389
4.83 %
$ 358
1994-95
13,100
100,161,566
4,144,881
4.14 %
316
1995-96
14,146
103,9449051
4,277,315
4.12 %
302
1996-97
15,220
116,333,406
4,056,473
3.49 %
267
1997-98
165275
146,943,730
3,883,018
2.64 %
239
1998-99
18,015
212,4159476
3,913,952
1.84 %
217
1999-00
18,595
212,0275463
8,677,053
4.09 %
467
2000-01
20,235
* 238,714,537
8,2095873
3.44 %
406
2001-02
20,235
270,6025866
13,410,000
4.96 %
663
2002-03
219740
323,385,230
12,585,000
3.89 %
579
* Year 2000 U.S. Census
TOWN OF FOUNTAIN HILLS, ARIZONA
RATIO OF ANNUAL DEBT SERVICE EXPENDITURES
TO TOTAL GENERAL EXPENDITURES
LAST TEN FISCAL YEARS
(UNAUDITED)
Interest
Bond
Tota]
Ratio of Debt
Fiscal
and Fiscal
Issuance
Debt
Total
Service to Total
Year
Principal
Charges
Cost
Service
Expenditures (*)
Expenditures
1993-94
$ 125,000
$ 340,493
$
$ 465,493
$ 4,113,127
11.32
%
1994-95
1255000
327,463
452,463
4,999,377
9.05
%
1995-96
209,193
208,477
4175670
7075025
5.45
%
1996-97
222,321
247,311
46%632
12,850,703
3.65
%
1997-98
245,210
5545731
799,941
1096315005
7.52
%
1998-99
2239024
517,696
54,368
795,088
11,464,538
6.94
%
1999-00
33%013
585,001
924,014
15,404,414
6.00
%
2000-01
620,408
1,0865208
144,986
L8515602
21,368,050
8.67
%
2001-02
1,229,215
1,372,965
300,936
2,903,116
3256305186
8.90
%
2002-03
1,393,228
1,576,842
2,970,070
1597713446
18.83
%
(*) Includes all Governmental Fund Types.
TOWN OF FOUNTAIN HILLS, ARIZONA
DIRECT AND OVERLAPPING GENERAL OBLIGATION BONDED DEBT
DUNE 30, 2003
(UNAUDITED)
Proportion
Applicable to
Town
of Fountain Hills
Net
2001-02
Outstanding
Net Secondary
General
Assessed
Obligation
Approximate
Net Debt
Overlapping Jurisdiction
Valuation (1)
Bonded Debt
Percent
Amount
State of Arizona
$34,468,574,240
$
0.69
%
$
Maricopa County
22,91351349480
5822055000
0.98
%
570,409
Maricopa County Community College District
223913,134,480
305,7503000
0.98
%
2,9965350
Fountain Hills Unified School District No. 98
24250865985
355305,000
85,94
%
30,341,117
East Valley Institute of Technology District No. 401
115006,145,846
22,8055000
2.17
%
4945869
Fountain Hills Sanitary District
261,8955487
552203000
100.00
%
55220,000
Fountain Hills Fire District
-
-
100,00
%
-
Fountain Hills Road District
-
100.00
%
-
Town of Fountain Hills
270 02,866
13,4103000
100.00
%
13,410,000
Total Direct and Overlapping General Obligation Bonded Debt
$ 53,0322745
(I) 2001-02 is the most recent information available.
Source: Maricopa County Treasurer's Office.
TOWN OF FOUNTAIN HILLS, ARIZONA
MARICOPA COUNTY ECONOMIC INDICATORS
LAST TEN CALENDAR YEARS
(UNAUDITED)
Value
of Building Permits (in
Thousands)
Housing
Year
Starts
Residential
Commercial
Industrial
Other
1993
24,147
$ 2,432,682
$ 547,667
$ 50,139
$ 499,052
1994
33,862
3,203,144
959,539
145,310
584,029
1995
373091
3,1995942
1,0433978
413,835
7829609
1996
395630
3,508,538
1,422,483
788,083
19079,458
1997
433013
3,9439544
1,840,334
233598
L133,069
1998
475801
43778,571
2,230,445
378,141
111015269
1999
47,106
5,142,869
138785629
210,676
15092,337
2000
42,205
4,774,188
2,1449767
253,472
1,493,186
2001
43,732
59088,241
2,256,850
345,985
1,641,521
2002
45,783
5,750,850
156203722
86,044
1,231,003
Source: Arizona Real Estate Center, College of Business, Arizona State University.
m
�.
NX
YUNE 302003
(UNAUDITED)
}
DATE OF INCORPORATION
December 5, 1989
FORM OF GOVERNMENT
Council - Manager
NUMBER OF EMPLOYEES (no police and fire)
Classified - Full time
59
Classified - Part time
18
Exempt
21
AREA
18.27 sq. miles
TOWN OF FOUNTAIN HILLS FACILITIES AND SERVICES
Miles of Street
Surfaced
178.5
Unsurfaced
2
Population (estimated)
20,235
Housing Units
11,601
Building Permits Issued
897
Culture and Recreation
Community Centers
1
Parks
4
Park acreage
121
Tennis courts
6
Senior center
1
FACILITIES AND SERVICES NOT INCLUDED IN PRIMARY
GOVERNMENT
Fire Protection:
Number of stations
2
Number of fire personnel and officers
26
Number of calls answered
25670
Number of inspections conducted
35177
Police Protection:
Contracted
Number of stations
1
Number of police personnel and officers
29
Number of patrol units
9
Number of law violations
Physical arrests
601
Traffic/Parking violations
33186
Sewerage System:
Special District
Miles of sanitary sewers
200
Number of treatment plants
1
Number of service connections
10,916
Daily average treatment in gallons
1.7mgd
Maximum daily capacity of treatment plant in gallons
2.6mgd
Water System:
Private
.Miles of water mains
178
Number of service connections
I L448
Number of hydrants
15217
Daily average consumption in gallons
4.4mgd
Maximum daily capacity of plant in gallons
1155705000
Education:
Number of elementary schools
3
Number of secondary schools
1
Number of students - Primary
1,658
Number of Students - Secondary
833
Source: Town government offices and related districts.
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