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TOWN OF FOUNTAIN HILLS, ARIZONA
COJ\1PREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
Mr. Wallace J. Nichols
Mayor
Councilmembers
Mr. Jay Schlum
Vice Mayor
Mr. Mike Archambault Dr. John Kavanagh
Mr. Edwin Kehe Mr. Keith McMahan
Timothy G. Pickering, CEcD, ICMA-CM
Town Manager
Julie A. Ghetti, CPA
Finance Director
Prepared by:
Financial Services Department
TOWN OF FOUNTAIN HILLS, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
Letter of Transmittal
List of Principal Officials
Organizational Chart
TABLE OF CONTENTS
INTRODUCTORY SECTION
GFOA Certificate of Achievement
FINANCIAL SECTION
Independent Auditor's Report
Management's Discussion and Analysis
Statement of Net Assets
Statement of Activities
Basic Financial Statements
Balance Sheet -Governmental Funds
Reconciliation of the Balance Sheet to the Statement of Net Assets-
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances-
Governmental Funds
Reconciliation of the Statement of Revenues, Expenditures, and Changes
in Fund Balances to the Statement of Activities-Governmental Funds
General Fund Statement of Revenues, Expenditures, and Changes in
Fund Balances -Budget and Actual
Notes to the Basic Financial Statements
1
8
9
10
13
15
28
29
30
31
32
33
34
35
TOWN OF FOUNTAJN HILLS, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
TABLE OF CONTENTS
Combining and Individual Fund
Statements and Schedules
Combining Balance Sheet-Nonmajor Governmental Funds 56
Combinillg Statement of Revenues, Expenditnres, and
Changes ill Fund Balances-Nornnajor Govermnental Funds 58
General Obligation Debt Service Fund-Schedule of Revenues, Expenditures, and
Changes ill Fund Balances -Budget and Actual 60
Municipal Property Corporation Fund-Schedule of Revenues, Expenditnres, and
Changes in Fund Balances-Budget and Actual 61
Development Fees Fund-Schedule of Revenues, Expenditnres, and
Changes in Fund Balances -Budget and Actual 62
Capital Projects Fund-Schedule ofRevennes, Expenditnres, and
Changes ill Fund Balances -Budget and Actual 63
HURF Fund-Schedule of Revenues, Expenditures, and
Changes in Fund Balances -Budget and Actual 64
Excise Tax Fund-Schedule of Revenues, Expenditures, and
Changes in Fund Balances -Budget and Actual 65
Grants Fund-Schedule of Revenues, Expenditnres, and
Changes in Fund Balances -Budget and Actual 66
Local Corni Enhancement Frn1d -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
Eagle Mountaill Debt Service Fund-Schedule of Revenues, Expenditures, and
Changes in Fund Balances -Budget and Actual 69
Cottonwoods Special AssessmentFund-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, 2005
TABLE OF CONTENTS
STATISTICAL SECTION
Govemment-wide infom1ation:
Govemment-wide Expenses by Function 72
Government-wide Revenues 73
Fund Information:
General Gove=ent Expenditures by Function 7 4
General Govemment Revenues by Source 75
General Gove=ental Tax Revenues by Source 76
Town Transaction Privilege (Sales) Tax Collections by Indust1y 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 Gove=ents 81
Primary and Secondary Property Tax Rates -All Direct and
Overlapping Govermnents 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
Miscellaneous Statistical Data 88
INTRODUCTORY SECTION
THIS PAGE BLANK
Town of FOUNTAIN HILLS
September 26, 2005
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 of the
close of each fiscal year a complete set of fmancial statements presented in conformity with
Generally Accepted Accounting Principles (GAAP) and audited in accordance with Generally
Accepted Auditing Standards (GAAS) by a finn of licensed certified public accountants. The
Comprehensive Annual Financial Report (CAFR) of the Town of Fountain Hills, Arizona
(Town) for the fiscal year ended June 30, 2005 , is hereby submitted. This document represents a
joint effort by Town staff as well as our auditors , Cronstrom, Trbovich & Osuch, P .C .
This report consists of management's representations conceming the fmances of the Town of
Fountain Hills, Arizona. Responsibility for the accuracy of the data and the completeness and
faimess 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,
Arizona has establi shed an intemal control framework that is designed to both protect the
government's assets f rom loss, theft, or misuse and to compile sufficient reliable info rmation for
the preparation of the Town's financial statements in conformity with GAAP. Because the cost
of intemal controls should not outweigh their benefits, the Town's framework of intemal 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 r espects.
All disclosures necessary for the reader to understand the Town's activities have been included
The Town's financial statements have been audited by Cronstrom, Trbovich & Osuch, P .C., 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, Arizona for the
fiscal year ended June 30 , 2005, are free of material misstatement. The independent audit
involved examining, on a test basis , evidence supp01iing the amounts and disclosures in the
fmancial 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's fmancial statements for the fiscal year ended June 30, 2005 ,
are fairly presented in confonnity with GAAP. The independent auditor's report is presented as
the first component of the financial section of tllis repmi.
166705 E . Avenue of the Fountains, Fountain Hills, Arizona 85268
1
GAAP requires that management provide a narrative introduction, overview, and analysis to
accompany the basic fmancial 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, Arizona's 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 Prope1iies (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 sunounded 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.
Over the past fifteen years Fountain Hills has grown from 10,190 residents to a town of over
23,000 in 2005. 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 and lack of production home sites the Town
continues to attract residents who are building large custom homes that take advantage of the
scenic vistas sunounding its mountain community.
The Town offers a range of living styles, from small cmrununity subdivisions to a number of
large custom homes. Fountain Hills also offers recreational, cultural and retirement programs
that address the needs and lifestyles of active families and adults. The conununity consists of
primarily residential property; of the total 11,700 acres of land only 500 acres are zoned
commercial (approximately 4%) and 3,600 acres are reserved as open space (31 %).
The Town's Mission Statement for the Organization
The Town of Fountain Hills' purpose is to serve the best interests of the community by:
providing for its safety and well-being;
respecting its special, small-town character and quality of life;
providing superior public services;
sustaining the public trust through open and responsive goverrunent; and
maintaining the stewardship and preservation of its financial and natural resources.
In four words, serve, respect, trust, stewardship.
2
The Town of Fountain Hills, Arizona is an Arizona Municipal Corporation, acting as a general
law Town as prescribed in the Arizona Revised statutes. The Town was incorporated on
December 5, 1989 with the governmental and administrative affairs of the Town operating under
the Council-Manager form of government. The Town Council is responsible, among other
things, for the adoption of local ordinances, budget adoption, the development of citizen advisory
committees and hiring the Town Manager. The Town Manager is responsible for
implementation of the policies of the Town Council and administering the Town's operations
through five department directors and approximately 83 employees. The Magistrate, Town
Attomey and Town Prosecutor are under the direction of the Town Council.
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 doe~ not maintain utility or
other operations that require the establislunent
of enterprise funds .
The financial reporting entity (the Town) includes all the funds and account groups of the
primary government (i.e., the Town of Fountain Hills, Arizona 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 govenunent'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, Arizona financial
planning anc;I control. The Town Council fom1ally 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 Tovm 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, Arizona 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 authmize 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 . Dw'ing fiscal year 2004/2005 the Town Council approved an
additional transfer to the Capital Projects Fund for the Civic Center Phase II project.
3
Factors Affecting Financial Condition
The information presented in the financial statements is perhaps best understood when it is
considered from the broader perspective of the specific environment within which the Town of
Fountafu Hills, Arizona operates.
Local economy. Sinlilar to the State of Arizona, the Town's economy continues to remain stable
fueled by real estate and construction. The largest source of General Fund revenue is the local
sales tax representing almost half of the total, followed by State Shared revenues. Local sales
revenues increased 16% from the prior fiscal year primarily in retail and building permit activity.
The increase in retail activity can be attributed to recent development along the conm1ercial
corridor including a Target Store, PetCo, Pier One, Ross Clothing, Discount Tire , Famous
Footwear and other national retailers. The Tovm Council is focusing on expanding the retai l
sales tax base in order to compensate for the anticipated decrease in construction activity over the
next several years as the Town approaches build-out.
The following chart provides a historical perspective of the local sales tax collections over the
last four fiscal years showing the increase in retail activity.
LOCAL SALES TAX COLLECTIONS
Fl'Ol-02 TilROUGHFl'04-05
T~~:~~~::::~~::~~;::r:::·~·~·r·~·:·~r:·:·:·:·:·j··:·~~·J··~ __ _j Constrw:tion 1 . . ,· · . ..
$.0 $~S $1.0 $l.S $2.0 $Z.S $3.0 $].; $4.0
( :millioru)
I':IFYD4-05 IIFYD3c04 •FYD2-03 DFYOl -02
The Town of Fountain Hills, Arizona will soon be enhancing development of the downt0\¥11 area
of the community on Avenue of the Fountains. The goal ofthis project is to create th e perfect
place to shop and dine while enjoying the enchanting surroundings. Once the project is complete
businesses should expect more foot traffic on the A venue creating a place where people want to
be and businesses want to locate . A new Town Hall municipal building was constructed as
Phase II of the Civic Center project on Avenue of the Fountains and was designed to revitalize
the downtown area and create connectivity to Phase I of the project. Phase I included the
construction of a Library/Museum and Community Center during FY2000 and 2001. New
lighting, pedestrian walkways, water features and cultural an1erlities that are planned will provide
interest for adults and cllildren.
4
The Tmvn has approved plans for a Holiday
Inn hotel with 104 rooms that is scheduled
to open in FY2006 in the downtown area.
Another downtown project is the Fountain
Hills Conference Resort and Spa with condo ~-
units and resort rooms (currently in plan
review) that will expand tourism within the
community and bring additional retail tax
revenue to Fountain Hills by the year 2008.
Long-term imancial planning. In June 2005 the Mayor and Town Council reviewed a Twenty
Year Financial Overview and Cap ital Projects plan that included projected operating and
revenues through the year 2025. The purpose of the overview was to provide a blueprint for
future capital budgeting and assist residents to understand the financial implications as part of the
To wn's strategic plan. The strategic planning process was initiated during FY2004 and has
included many hours of public meetings and Town Halls. The final Strategic Plan will be
considered by the Tovvn Council in December 2005. The Twenty Year plan is flexible to allow
the public's input and any additional recommendations for other capital priorities.
The Town recognizes the need to assure reserves for future revenue shortfalls in case of
economic downturns. A large po1iion of General Fund operating revenue comes from
construction related activity that eventually will be constrained by availability of land or the
economy; the Council has adopted a fund balance policy to provide financial stability and 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 mininmm 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 an1ounts will not be programmed for expenditure and are only available for use within the
confines of expenditure linlltations imposed by the State. The contingency fund can be used for
unexpected emergencies and projects upon approval by Council. A historical perspect ive of past
fund reserves is shown below. The general fund reserves recovered significantly after three years
of decline that is reflective of the local and national economy, capital project funding and the
establishment of a new municipal fire department. Town Council and management are
committed to maintaining the $6.5M of reserves in the future. In FY2005 the policies were
amended for the establishment of a Capital Improvement Special Revenue Fund with proceeds
from excess revenues collected over budgeted and unexpended appropriations not needed to meet
fund balance requirements or re-appropriation, therefore approximately $2.5M of the general
fund balance will be transferred to the Capital Projects Fund in FY2005-0 6.
5
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. ·.·,The Council also . adopted fmailcialpo1ici~~: that 'include ~uidelines· for . the: issruinc'e o:f debt for ·
. capitalexpendiwres, ,CdminunitY Facility Districts; fffianciug-alternatives," e :xpendifure controls
and firJ.ancial plallning. ' The\1.ebt policy' was prepared'.\vith a. preference ' for ' ~'pay-as~you-go" •, ,,: I
. P.tiru~cfug for . capitaj sp~iidil.1g .. ' : ·. An 'i~vesm~ent . policy wsi; . adopted .ru~d· ,~as ,. ~'v~·cted tli~ · ·
· · .. , Investri:lent Policy-Certification. fi.·6m the,·Associfition of Publ~c TJ.·~asurers of. ljnitecl' ~tat~~ aiid ·
·. Canada.' · · · · · · ;·, ,., ··. .... .,. · ..... ··,
;•,_·
··'.Cash ~an~gement <p 'ollcies:· and 'pr~ct1ces. •. Stat~ stq~te;:·pennit muriltiJ?alities ·in: ~~izorla to .
. invest in . ob+igatiqns · of the lJ. S ... Treasilly, comrhercial , paper, cmpor_ate ' bqnci~; repU1~chase ,
, :agreements,-and fueStfite ~ Tre~w:~r's L,bcal Govennnen~ Itivesfip.er~t PooJ (LGIP);_ T4~ Tm~ of: .
Fol.llltaintHills, Arizona's debt policy rest#cts· illvestments .tQ securities that arelOQ%)Jackec,l by .
' '' ' the full f~!th ~d credit of the: U.S; g6velfuneP:t. tl.i.eTo\vn bf Fouiltairi. Hills, Arizb}+a ihves'ts all ' . '' .
idle: 'cash ili:th~ State LQIP:-qov, whk!i : ~onsists of goveplinent.,batkyci' s~urities : · rhe. ye8:r~·tp.: ...
;•: .. date yield on . inv~stineJJ.ts, as of' June 30, ·:2005 . \vas -1.9776%.: . tnvestment ·inconie , inciudes
~ppreCiatlou ·i~ the fa~r yalue, 'of ilivestrnents._• hitreas.es in ·fah vaiue dw-ing· t1,1e . 9mt~nt . y~ar, · j
' 110~ever, do not lle2e,ssarily n!pre~ent trehds. that willcqi1timie; nor is ~t always 'possible to ·-reiilize . '
such anio~ts~. especially. in the ca~e , of'telilporary . dianges i~ the :fair value, of ip.ve.strri~11ts that · .
tl~egov(:rrimei1t intei~ds to holcl t6, 1miturity.: · · · . , . · · · ', ·. : ~
· · · D~ly casl~'depb,sits ~-ellia~~·withtlie'Io'c~lballk ~d ~e niaintainedforpaytol1 :~d 'pa~abl~s; ... ,
tijese accounts qre fully collaterallzed tO $1Imllion. . . . . , . , , ·. 1
". • •
-' ' -. -. . '. ~. . ' " ' ' '
Risk management T!le'Town ofFomita.irt Hills, A.rizon~ is amember ofthe Arizona M~licip'al : ' '
Risk Ret~ntion J?o~L Risk ·cov.erag~ ihclUdes generallial:Jility, ~'orker~. coinpe11:satiop.; eno~s ID+d _ .
o'nussiqns, propertY and automobile: insurance.·_ The polity. insure~ up to ·$~',00Q,bOO"per i~dde~f
i ; . occurtence'plus. any excess· li~bility of up to $13~000~000 p~r oct:Urience p~r year.: ··Coyera.ge ~s ·: .
. proyided ort a cliiiJn~-n~ade ~asis.·,, .· .. · ., •. · '· · '
,, 1 1 • • 1 1 ' , ' • •. 'I' . ! ' :; i, _:1
·. PeriSion ~nd .ot11,~r . post~m,ployment .ben~fits: .: Tht<.To~l ~f.Fooot~in Htlls ,' Arizbn~ pmvid~s .· .
· . 1W6 deferred;coJ.nper1satim~pla±tsti1ro'ugb th~Intematio·nal CitY(County Man.agementAss.oci'atioii .... : ·.
... :
·:
· · (IGMA) in ac~ordarice ·with Irit~rnal Rev:enue Code S~~;tions ·40l.A arid 4~1. ; Th~ 40 lA is ·flm.ded · ·'i · ·
' . by L lllmld~tbry 1 e{iiployet?.'Wage:.d~ducti9rls and 'matching Town CO~ltriblitibns.' The ·'4S7 is .'
' 'vo{tfutmyarid .fun.ded 100% th.ro#gb ernplby~e,paliicipatiort ' '.· . . . •' .. •.. '., ., '•. ···'6 ... :: · .. ··. ',. -•·;
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For further infom1ation on these plans please refer to Note 4.D. in the basic 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, Arizona for its comprehensive annual fmancial report (CAFR) for the fiscal year
ended Jnne 30, 2004. This was the eighth consecutive year that the government has received tins
prestigious award. In order to be awarded a Certificate of Achievement, the government
published an easily readable and efficiently organized CAFR. This report satisfied both GAAP
and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
CAFR continues to meet the Ce1tificate of Achievement Program's requirements and we are
submitting it to the GFOA to determine its eligibility for another certificate.
In addition, the govemment also received tl1e GFOA's Distinguished Budget Presentation Award
for its annual budget for the fiscal year ending June 30, 2004. In order to qualify for the
Distinguished Budget Presentation Award, the govenunent's budget document was judged to be
proficient in several categories, including as a policy document, a financial plan, an operations
guide, and a commrnncations device. This is the second consecutive year that the Town has
received the award.
The preparation of tins repmi would not have been possible without the efficient and dedicated
services of the entire staff of the Finance and Admllnstration Department. I would also like to
extend my appreciation to the Mayor and Council for their leadership and suppmi. Each member
of the departrnent has my sincere appreciation for the contributions made in the preparation of
this rep01i.
Respectfully sul:Jmittt<_d_,___
~;:~~ ~~ /ZtUfZ:£'~~
Timotl1y G. Picken:~CEc~M
TownManager v
7
TOWN OF FOUNTAIN HILLS, ARIZONA
LIST OF PRINCIPAL OFFICIALS
ELECTED OFFICIALS
Mayor Mr. Wallace J. Nichols
Vice-Mayor Mr. Jay Schlum
Couucilmember Mr. Mike Archambault
Councilmember Dr. Jolm Kavanagh
Couucilmember Mr. Edwin Kehe
Couucilmember Mr. Keith McMahan
DEPARTMENT DIRECTORS
Town Manager
Magistrate
Finance Director
Public Works Director
Parks & Recreation Director
Fire Chief
District Connnander
Town Prosecutor
Town Attorney
8
Timothy G. Pickering
Ted Annbruster
Julie A. Ghetti, CPA
Tom Ward
Mark Mayer
Scott LaGreca,
Rural Metro Corporation
Captain John Kleinheinz,
Maricopa Couuty Sheriffs Office
Iacovino & Kayler
Andrew McGuire,
Gust Rosenfeld, P.L.C.
Community
Center Advisory
Commission
\D
I
Municipal Court
Citizens of the
Town of Fountain Hills
Mayor
I and I I Town Council
Planning and Parl\s and McDowell
Board of Mountain Pub tic Safety
Adjustment Zoning Recreation Pnservation Commission Commission Commission Commission
Town Prosecutor I Town Attorney I Town Manager J Town Magistrate J
I I I I I
Ilinanco, J Public Works,
Pa•·ks & Recrea!ionJ Law Planning,
Conununily Center Fire Dcpa1·tment Enforcement Human Resources, Building Safety, Info Technology Streets
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Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
Town. of Fountain Hills,
Arizona
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2004
A Certificate of Achievement for Excellence in Financial
Reporting 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 (CAFRE) achieve tbe highest
standards in government accounting
and fmancial reporting.
President
Executive Director
10
FINANCIAl SECTION
.
11
THIS PAGE BLANK
12
CRONSTROM, TRBOVICH &... OSUCH
CeRTIFieD PUBLIC ACCOUNTANTS
INDEPENDENT AUDITOR'S REPORT
The Honorable Mayor and the Town Council of the
Town of Fountain Hills, Arizona
We have audited the accompanying financial statements of the govenunental act!Vltles, 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, 2005, which collectively comprise the
Town's basic financial statements as listed in the table of contents. These basic financial
statements are the responsibility of the Town's management. Our responsibility is to express an
opinion on these basic 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 perfmm the audit to obtain
reasonable assurance about whether the basic financial statements are fi·ee of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the basic financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall
basic financial statement presentation. We believe that our audit provides a reasonable basis for
our op1ruon.
In our opinion, the basic financial statements referred to above present fairly, in all material
respects, the respective fmancial position of the govermnental activities, each major fund, and the
aggregate remaining fund information of the Town of Fountain Hills, Arizona, as of June 30,
2005, and the respective changes in financial position, thereof and the respective budgetary
comparison for the General Fund for the year then ended in confonnity with accounting
principles generally accepted in the United States of America.
The management's discussion and analysis on pages 15 -25 is not a required pmt of the basic
financial statements but is supplementary information required by the Govermnental Accounting
Standards Board. We have applied ce1tain limited procedures, which consisted principally of
inquiries of management regarding the methods of measurement m1d 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 • SCOTISDALE. 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 fmancial statements and, accordingly, we express no opinion on
them.
Cronstrom, Trbovich & Osuch, P.C.
September 26, 2005
14
Management's Discussion and Analysis
We (the Town of Fountain Hills) (Town) are pleased to provide an overview of our financial
activities for the fiscal year ended June 30, 2005. The intended purpose of the Managemen
Discussion and Analysis (MD&A) is to provide an introduction to the basic financial statement
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 sullllllary o
operating results and reasons for changes, which will help to detennine if our financial positior
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. When referring to prior years data in this analysis we will be drawing upon
infonnation from last years' audited financial report.
Financial Highlights
* The assets of the Town of Fountain Hills, Arizona exceeded its liabilities at the close
of the most recent fiscal year by $33.5 million (net assets). Of this an1ount $10.8
million (unrestricted net assets) may be used to meet the govenunent's ongoing
obligations to citizens and creditors.
* As of the close of the current fiscal year, the Town's govenunental funds reported
combined ending fund balances of $14.3 million, an increase of $1.5 million in
comparison with the prior year.
* At the end of the current fiscal year, unreserved fund balance for the general fund was
$9.0 million or 81 percent of total general fund expenditures. The fund balance policy
adopted by the Council in May, 2003 requires a minimum of $4.5 million in
designated, undesignated and reserve funds; the general fund added $2.7 million to
fund balance in FY2005 and will transfer $2.5 million to the Capital improvement
Fund in 2005-06 based on a Town resolution passed in September 2005, leaving an
unappropriated fund balance of $6.6 million.
* General fund revenues (on a budgetary basis) exceeded budgeted revenues by $1.5
million for fiscal year 2005. Additionally, budgetary basis expenditures were 86%
($1.8 million (14%) in savings) of the fmal budget in the General Fund. Note that the
final payment for Phase II of Fountain Hills Civic Center was not made prior to the
fiscal year end.
* General fund revenues exceeded expenditures by $4.5 million, a positive variance of
$3.3 million from the original budget.
* The Town includes two types of separate legal entities in its report-the Fountain Hills
Municipal Property Corporation and Connnunity Facility Districts. Although legally
separate, these "component units" are important because the Town is financially
accountable for them. A description of these three types of component units is
available in Note 1 on page 35. Separate financial statements are not available for
these three entities.
15
Overview of the basic financial statements
This discussion and analysis is intended to serve as an introduction to the Town of Fountain
Hills, Arizona's basic fmancial statements. The Town of Fountain Hills, Arizona's basic
financial statements are comprised of three components (as illustrated below): I) government-
wide fmancial statements, 2) fund financial statements, and 3) notes to the basic financial
statements. This report also contains required supplementary information in the form of tllis
management discussion and analysis letter.
._·
Required Components of the
Annual Financial Report
,----•.L..' ~------,~ ~~ ~~ ~~-~ ~-~~ ~-~~;==---===~='-----:==::::::.
Basic
Financial
Statements
Management's
Discussion
and
Analysis
..... '---------_j······ .... ·····
Required
Supplementary
Information
.... ········ ·············· ················· ············ ·············· .... ····· ······ ······· ······
. -··.-,-
.---'-----'-~----,1
G overnrn ent-
wide I
Financial
Statements
··--.
Summary
...
--·-:..,-· ~ -~---·-·--·-.·-·c· -~-·-·-·---·~· : ~ ---_-._.--.--.
Fund
Financial
Statements
. ·.L_.----.. _____ _j •• -.
-·--· .·
.
Notes
To the
Financial
Statements -·
L--.,.-___--.,.--.,.-__ ._-~. ..
Detail
Government-wide fmancial statements
The govemment-wide financial statements are designed to provide readers with a broad overview
of the Town's finances, in a manner similar to private-sector business.
The statement of net assets presents information on all of the Town's assets and liabilities, with
the difference between the two reported as net assets. Over time, increases or decreases in net
assets may serve as useful indicators of whether the financial position of the Town is improving
or deteriorating.
The statement of activities presents information showing how the government's net assets
changed during the most recent fiscal year. 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 pe1iods (e.g., uncollected taxes and earned but unused vacation leave).
16
The government-wide financial statements distinguish functions of the Town that are principally
supported by taxes and intergovemmental revenues (govemmental 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 include general
govemment, community development, public safety, highways and streets, and culture and
recreation. The Town does not have any business-type activities.
The govemment-wide financial statements can be found on pages 28 -29 of this report.
Fund financial statements
Also presented are the traditional fund fmancial statements for govemmental funds. 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, 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 are included in the govemmental funds.
Governmental funds
Governmental funds are used to accom1t for essentially the same functions reported as
govermnental activities in the govermnent-widefinancial statements. However, mllike the
government-wide fmancial statements, governmental fund financial statements focus on near-
telm inflows and outflows of spendable resources, as well as balances of spendable resources
available at the end of the fiscal year. Snch infonnation may be useful in evaluating a
government's near-te1m financing requirements. Since the govermnental fund financial
statements focus on near-tenn spendable resomces, while the governmental activities on the
government-wide fmancial statements have a longer tenn focus, a reconciliation of the
differences between the two is provided following the fund fmancial statements' balance sheet
and statement of revenues, expenditures and changes in fund balances, respectively.
Notes to the basic financial statements
The notes to the basic financial statements (pages 35 -51) provide additional infonnation 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.
Required supplementary information other than MD&A
Govenm1ents 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 fmancial statements, or as required supplementmy information after the footnotes. The
Town has chosen to present these budgetary statements as pmi of the basic financial statements.
Government-wide Financial Analysis
As previously mentioned, net assets may serve over time as useful indicators of a govennnent's
fmancial position. The following table reflects the condensed Statement of Net Assets of the
Town for June 30, 2005 compared to the prior year.
17
Town of Fountain Hills, Arizona
Condensed Statement of Net Assets
As of June 30, 2005 and 2004
Governmental Activities
Percent
2005 2004 Change
Assets
Current and other assets $ 18,958,084 $ 21,638,047 (12.4)%
Capital assets
Non-depreciable 30,267,560 23,571,668 28.4%
Depreciable (net) 16,25!j.985 16,48~,725 (1.4)%
Total assets 65.482.629 61.695.440 6.1%
Liabilities
Other liabilities 4,113,074 8,338,841 (50.7)%
Non-current liabilities
Due within one year 1,996,478 1,603,159 24.5%
Due in more than one year 25.912 107 26 044 208 (0.5)%
Total liabilities 32 021 659 35.986.208 0 1.0)%
Net assets
Invested in capital assets,
net of related debt 17,495,539 11,261,256 55.4%
Restricted 5,144,127 6,471,863 (20.5)%
Umestricted 10.821.304 7.97!l.ll3 35.7%
Total net assets $ 33 460.970 $ 25,702,232 30.2%
The combined net assets of the Town increased by 30.2% from $25.7 million to $33.5 million in
fiscal year 2005, a difference of $7.8 million 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.
Net Assets consist of three components. The largest portion of the Town's net assets (52%)
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 uses these capital
assets to provide services to citizens; consequently, these assets are not available for future
spending. Although the Town's investment in its capital assets is reported net of related debt, it
should be noted that the resources needed to repay this debt must be provided from other sources,
since the capital assets themselves cannot be used to liquidate these liabilities. Tins category of
net assets increased $6,234,283 in fiscal year 2005 primarily as a result of several large
construction projects, including the construction of the new Town Hall. The Town Hall
construction was in progress at June 30, 2005 and was completed and occupied in August 2005.
The second portion of the Town's net assets (15%) represents resources that are subject to
external restrictions on how they may be used.
The remaining balance of unrestricted net assets ($10.8 million) may be used to meet the
government's ongoing obligations to citizens and creditors. This category increased $2.8 million
in fiscal year 2005 primarily due to increases in local sales tax revenues, fines and forfeitures
building permit revenues.
18
At the end of the current fiscal year, the Town of Fountain Hills, Arizona is able to report
positive balances in all three categories of net assets for the government as a whole.
Analysis of changes in net assets
Program revenues (charges for services and grants that are clearly identifiable woth an operating
function) of govennnental activities increased $1,408,804 (28%) from the previous year,
primarily due to increased building related activity and increased revenues from fmes and
forfeitnres as a resnlt of increased patrols. Total govennnental revenues increased $2.9 million.
Sales tax collections increased during the fiscal year, accounting for a significant pmiion of the
increase, along with the building pennits and fmes and forfeitnres. Sales tax revenues increased
due to more frequent sales tax audits. Program expenses increased overall 2.2% due to increased
maintenance progran1s in both the Town parks and public rights of way.
The following table compares the revenue and expenses for the current and previous fiscal year.
Town of Fountain Hills, Arizona
Changes in Net Assets
For the Fiscal Year Ended June 30, 2005 and 2004
Govennnental Activities
Percent
2005 2004 Change
Revenues
Program revenues
Fees, fines and charges for services $ 4,490,704 $ 3,421,132 31.3%
Operating grants and contributions 1,692,712 1,590,787 6.4%
Capital grants and contributions 237,307 %
General revenues:
Property taxes 2,020,800 2,195,856 (8.0)%
Local taxes 9,095,829 7,860,005 15.7 %
State shared revenues 4,756,481 4,489,844 5.9%
Investment eamings 395,124 122,082 223.7%
Other 120.666 195.978 (38.4)%
Total revenues 22.809.623 19.875.684 14.8%
Expenses
General govemment 3,766,500 3,686,452 2.2%
Public safety 5,024,686 4,918,280 2.2%
Highways and streets 1,281,061 1,419,509 (9.8)%
Culture and recreation 2,362,661 2,068,613 14.2%
Community development 1,460,181 1,144,964 27.5%
Interest on long-tenn debt 1.162.796 1.499.575 (22.5)%
Total expenses 15.057.885 14.737.393 2.2%
Increase in net assets 7,751,738 5,138,291 50.9%
Net assets, beginning of year (as restated) 25.709.232 20.570.941 25.0%
Net assets, end of year $ 33.460.970 $ 25.709.232 30.2%
19
Governmental activities. An analysis of governmental fund balances is presented in this
discussion and analysis, in addition to the previous comparative analysis of government-wide
revenues and expenses. Governmental activities account for 1 00% of the total revenues and
expenses of the Town. The following graph illustrates that the large st financing source for the
Town is the local sales tax (39%). State shared revenues account for 21% of the government-
wide revenue sources.
GOVER.Nl\fENT-,VIDE RE\i""ENUE SOURCES
Fiscal Year 2005
Other-not progl'3m ~ r· d
St~te l"e\~nue
Investment Pa!1lings ee ~. !UPS an
pr• charges for senice~
sharing
Financial analysis of the Town's funds
0 perating g~·ants
and contributions
~~ ...
ap ltal gnnts nne!
contributions
~~··
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 infom1ation is useful in
assessing the Town's fmancing requirements. In particular, unreserved fund balance may serve
as a u seful measure of a government's net resources available for spending at the end of the fiscal
year. Types of Gov ernmental funds reported by the Town include the General Fund, Special
Revenue Funds, Debt Service Funds and Capital Project Funds .
As a m eas ure of the general fund's liquidity, it may be useful to compare both general fund
balance and total fund balance to total fund expenditures. General fund balance represents 81
percent of total general fund expenditures, while total fund balance represents 62 percent of total
governmental expenditures.
The fund balance of the Town's general fund increased by $2,711,017 during the current fiscal
year. Key factors in this change are as follows:
+ General Fund revenues exceeded projections by $1,477,018 (prinlarily due to
building-related activity and state sales tax collections); expenditures were
$1,778,119 les s than projected due to unexpected appropriations that are
rebudgeted in fiscal year 2006.
+ An additional $867,000 was transfened from the General Fund to the Capital
Projects fund for the Tovvn Hall construction project.
20
As of the end of the fiscal year 2005 the Town's govemmental funds reported combined ending
fund balances of $14,331,843, an increase of $1,460,215 over the prior year. Approximately
63% of this total amount $9,082,443 constitutes general fund balance, which is available for
contribution to the designated, undesignated and reserved fund balance with the excess
transferred to the Capital Projects Fund. At fiscal year-end 2004-2005 fund balances were as
follows:
Fund
General Fund
General Obligation Debt Service Fund
Municipal Property Corporation Debt
Service Fund
Development Fees Fund
Capital Projects Fund
Nonmajor Govemmental Funds
Balance
$ 9,082,443
365,779
278,310
2,429,225
2,176,086
Increase
(Decrease)
From 2003-04
$ 2,711,017
96,937
(198,688)
688,930
(642,091)
(1,195,890)
The General Obligation Debt Service Fund is used to account for property taxes collected for
payment of required principal and interest due on outstanding general obligation bonds. The
increase in net assets was not significant. However, the Town recorded a refunding transaction
during the fiscal year on a general obligation improvement bond to obtain a future economic gain
by obtaining a lower interest rate. See the long-term debt section in this management discussion
and analysis for more information.
The Municipal Property Corporation Debt Service Fund accounts for revenues received to pay
the service on the Municipal Property Corporation debt. The net decrease in fund balance was
largely due the required principal and interest due on the outstanding bonds, as well as issuance
costs related to refunding the excise tax revenue bonds. See the long-tenn debt section in this
management discussion and analysis for further infonnation.
The Development Fees Fund is a restricted fund and may only be appropriated for the pa:tiicular
purpose for which they were imposed. The fund balance as of June 30, 2005 in this fund is
$2,429,225, an increase of $688,930; expenditures were made in FY 2005 for traffic signals,
open space (trailhead design) and recreation (splash park). The current year increase in the
Development Fees Fm1d was the result of increased development within the Town's limits.
All nomnajor funds of the Town are combined into one colunm on the govemmental fund
statements; the nomnajor funds are presented in the fonn of combining statements following the
notes to the basic fina:t1cial statements.
The Highway User Revenue Fund is a nonmajor fund which is required by state statnte to track
the state allocation of gasoline taxes and other state revenues shared with local govennnents and
required to be used for transportation purposes. Revenue in this fund increased $105,153 (7%) in
fiscal year 2005 due to the increase in state shared revenues. Expenditures increased $158,875
from the prior year due to increased expenses for road maintena:t1ce.
21
Budgetary highlights
The Town's annual budget is the legally adopted expenditure control document of the Town.
Budgetary comparison statements are required for the General Fund and all major special
revenue funds and may be found on page 34. This statement compares the original adopted
budget, the budget if amended throughout the fiscal year, and the actual expenditures prepared on
a budgetary basis. The Town did not amend its budget during the fiscal year.
General Fund revenues of $15,686,925, on a budgetary basis, exceeded budgeted revenues of
$14,209,907 by $1,477,018 while budgetary basis expenditures of$11,168,152 were only 86% of
budgeted expenditures (savings of $1,778,119). The excess of revenues over budgeted revenues
is primarily due to better than expected building pern1it activity and greater State Sales Tax
revenues. The expenditure savings were derived from a budgeted general and administrative
expenditure for a sales tax refund that has been referred for a tax hearing ($400,000) as well as a
decision to reduce the amount of space being utilized in Town Hall, thereby providing significant
savings on rent.
Capital asset and debt administration
The Town's capital assets for its governmental activities as of June 30, 2005 amount to
$46,524,545 (net of accumulated depreciation), an increase from 2004 of 16.1 %. For
government-wide fmancial 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 Note 3.A.3. in the Notes to the Basic Financial
Statements for fuliher information regarding capital assets.
Capital assets include land, buildings and improvements, machinery and equipment, roads and
improvements, vehicles, office and computer equipment. During fiscal year 2004-2005 the
ammal depreciation expense was $983,733. The following table provides a comparison of
current and prior year capital assets.
The most significant increase in the capital assets was $6.7 million dollars of new construction
recorded as construction in progress at June 30, 2005. Construction of the new Town Hall
accounted for $5.9 million of the total construction in progress. The remaining $800,000 was
composed of various projects including street, park and downtown development projects. The
Town Hall complex was completed and occupied in August 2005.
22
Land
Construction in progress
Buildings and improvements
Town of Fountain Hills, Arizona
Capital Assets Net
June 30, 2005 and 2004
Govenunental Activities
2005 2004
$ 23,571,668 $ 23,571,668
6,695,892
9,128,812 9,559,273
Improvements other than buildings 5,814,099 5,397,938
Infrastructure 483,162 451,888
Fumiture, machinery and equipment 460,889 582,890
Vehicles 370.023 493.736
$ 46.524.545 $ 40.057.393
Long-term debt
Percent
Change
%
%
(4.5)%
7.7%
6.9%
(20.9)%
(25.1)%
16.1%
At the end of the current fiscal year, the Town had total long-tenn obligations outstanding of
$27,908,585. Of the outstanding debt, $11,215,000 is general obligation bonds backed by the
full faith and credit of the Town. An additional $4,455,000 of special assessment bonds 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.
During the fiscal year ended June 30, 2005, the Town refunded $7.2 million in general obligation
debt and $5.3 million dollars in Municipal Property Corporation debt to obtain lower interest
rates and an economic gain over the next 14 years of$241,166 and $297,817, respectively. See
Note 3.C. for additional information on the refunding.
The State imposes certain debt limitations on the Town of six percent (6%) and twenty percent
(20%) of the outstanding secondary net assessed valuation of the Town. The Town's available
debt margin at June 30, 2005 is $17,769,092 in the 6% capacity and $69,073,641 in the 20%
capacity. Additional information on the debt limitations and capacities may be found in the
statistical section of this report (page 84 ).
The follov.~ng schedule shows the outstanding debt of the Town (both current and long-tenn) as
of June 30, 2004 and 2005. Further detail on the Town's outstanding debt may be found in Note
3.C. on pages 47-49.
23
Town of Fountain Hills, Arizona
Outstanding Debt at June 30, 2005 and 2004
General Obligation Debt
Highway User Revenue Bonds
Special Assessment Debt
C01mnunity Facilities District
Debt
Municipal Property
Corporation Debt
Compensated Absences
Governmental Activities
2005
$ 9,607,162
540,000
12,909
4,455,000
13,108,935
184.579
$ 27,908.585
2004
$ 11,110,000
630,000
16,13 7
4,615,000
11,005,000
271.230
$ 27 647.367
Percent
Change
(13.5)%
(14.3)%
(20.0)%
(3.5)%
19.1%
(31.9)%
0.9%
The Town cmTently maintains a rating on its general obligation debt of Aa3 from Moody's
Investor Services.
Economic factors and next year's budgets and rates
The Town of Fountain Hills, Arizona, as well as all other Arizona cities, remains dependent on
state shared revenues (21 %) and local sales taxes for resomces (39%). These revenue somces are
sensitive to economic downtmns and legislative appropriations. The Town's economic activity
has remained fairly stable dming the national recession and is expected to continue to grow at a
moderate pace over the next year, fueled primarily by the residential construction industry. The
Town of Fountain Hills, Arizona has a nmnber of high-end properties that are currently being
developed for custom homes.
The budget for fiscal year 2005-2006 includes resomces targeted towards economic development
in the downtown area (Avenue of the Fountains). An economic development coordinator has
been hired and capital funds for improvements to the area are included to focus on developing
the area to promote economic development.
24
Financial contact
This financial report is designed to provide a general overview of the Town's finances for all of
those with an interest in goven1111ent'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
Or visit our website at:
http://www.fh.az.gov
25
TillS PAGE BLANK
26
Basic Financial Statements
27
Assets
Cash and equivalents
Cash with paying agent
Receivables, net
Accounts receivable
Taxes receivable
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF NET ASSETS
JUNE 30, 2005
Intergovernmental receivable
Special assessments receivable
Inventories
Prepaid items
Deferred charges
Capital assets
Non-depreciable
Depreciable (net)
Total assets
Liabilities
Accounts payable
Accrued wages and benefits
Interest payable
Due to developers
Retainage due
Matured debt principal payable
Noncurrent liabilities
Due within one year
Due in more than one year
Total liabilities
Net assets
Invested in capital assets, net of related debt
Restricted for
Public safety
Highways and streets
Debt service
Capital outlay
Other
Unrestricted
Total net assets
Governmental Activities
$ 15,562,895
1,461,392
284,888
74,084
1,299,065
4,430
5,041
39,495
226,794
30,267,560
16.256.985
65.482.629
1,910,769
57,650
474,832
100,702
264,121
1,305,000
1,996,478
25.912.107
32.021.659
17,495,539
193,110
425,076
916,391
2,429,225
1,180,325
10.821.304
$ 33.460.97Q
The notes to the finaocial statements are an integral part of this statement.
28
Functions/Programs
Governmental activities
General government
Public safety
Highways and streets
Culture and recreation
Community development
Interest on long-term debt
Totals
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
Fees, Fines and
Expenses
$ 3,766,500 $
5,024,686
1,281,061
2,362,661
1,460,181
1 162,196
$ 15 057,~85 $
General revenues
Taxes
Sales taxes
Property taxes
Franchise taxes
Charges for
Setvices
4,431,154
58,038
1 512
4 490 704
Program Revenues
Operating
Grants and
Contributions
$
108,006
1,584,706
$ 1692712
State revenue sharing-unrestricted
State sales tax revenue sharing-unrestricted
Auto lieu tax revenue sharing -unrestricted
Investment camings
Other
Total general revenues
Change in net assets
Net assets, beginning of year
Net assets, end of year
Capital Grants
and
Contriblltions
$ 237,307
$ 237 307
The notes to the financial statements are an integral part of this statement
29
Net (Expenses)
Revenue and
Changes in N ct
Assets
Totals
$ 901,961
(4,916,680)
361,683
(2,362,661)
(1,460,181)
(1,161284)
(8,637 162)
8,879,798
2,020,800
216,031
2,016,081
1,874,577
865,823
395,124
120,666
16 388 900
7,751,738
25 709 232
$ 33 460 970
Assets
Cash and equivalents
Cash with paying agent
Accounts receivable
Taxes receivable
Intergovernmental receivable
Special assessments receivable
Due from other funds
Inventories
Prepald items
Total assets
LiabHities and Fund Balances
Liabilities
Accmmts payable
Accrued wages and benefits
Interest payable
Due to other funds
Deferred revenue
Due to developers
Retainage due
Matured debt principal payable
Total liabilities
Fund balances
Reserved for inventories
Reserved for prepaid items
Unreserved
Unreserved, reported in nonmajor
Special revenue funds
Debt service funds
Total fund balances
Total liabilities and fund balances
TOWN OF FOUNTAIN HILLS, ARIZONA
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2005
General Municipal
Obligation Property Development Capital
General Debt Service Co!Eoration Fees Projects
$ 8,571,996 $ 375,206 $ 272,770 $ 2,762,259 $ 1,051,573
532,221 824,995
283,007
11,929 43,248
919,513 110,808
6,645
5,041
35.623
$ 9.833.754 $ 950.675 $ 1.097.765 $ 2.762.259 $ Ll62.381
$ 477,223 $ $ $ 333,034 $ 898,260
40,577
112,787 199,455
233,511 37,109
264,121
435.000 620.000
751.311 584.896 819.455 333.034 1.162.381
5,041
35,623
9,041,779 365,779 278,310 2,429,225
9.082.443 365 779 278.310 2.429.275
$ 9.833.754 $ 950.675 $ 1.097.765 $ 2.762.259 $ LI62.381
The notes to the fmancial statements are an intergral part of this statement
30
Norunajor
Govemmental
Funds Totals
$ 2,529,091 $ 15,562,895
104,176 1,461,392
1,881 284,888
18,907 74,084
268,744 1,299,065
4,430 4,430
6,645
5,041
3.872 39 495
$ 2.93LI01 $ 18.737 935
$ 202,252 $ 1,910,769
17,073 57,650
162,590 474,832
6,645 6,645
15,753 286,373
100,702 100,702
264,121
250.000 1.302 QQQ
755.015 4.406.092
5,041
3,872 39,495
12,115,093
1,794,639 1,794,639
377.575 377 575
2.176.086 14.331 843
$ 2.93Ll01 $ 18.737 9J5
TOWN OF FOUNTAIN HILLS, ARIZONA
RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET ASSETS
GOVERNMENTAL FUNDS
JUNE 30, 2005
Fund balances -total governmental funds
Amounts reported for governmental activities in the statement of net assets are different because:
Property taxes and special assessments not collected within 60 days subsequent to fiscal year-end are
deferred in the governmental funds.
Capital assets used in governmental activities are not financial resources and therefore are not reported in
the governmental funds.
Governmental capital assets
Less accumulated depreciation
Capital assets used in governmental activities
Other long-term assets are not available to pay for current-period expenditures and are not susceptible to
accrual.
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 conunitrnent
Community facilities district bonds payable
Deferred amount on the refunding
Deferred amount on the bond premium
Deferred issuance costs
Compensated absences
Net assets of governmental activities
The notes to the financial statements are an integral pa:t1 of this statement.
31
$
$
14,331,843
78,346
52,533,827
(6.009.282)
46.524.545
208,027
(11,215,000)
(12,975,000)
(12,909)
( 4,455,000)
1,067,838
(133,935)
226,794
(184.579)
33.460.970
TOWN OF FOUNTAIN HILLS, ARlZONA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
General Municipal Nonmajor
Obligation Property Development Capital Governmental
General Debt Service Co!:£oration Fees Projects Funds Totals
Revenues
Taxes
Sales taxes $ 7,513,675 $ -$ -$ -$ -$ 1,366,123 $ 8,879,798
Property taxes -1,461,420 - -
-594,644 2,056,064
Franchise taxes 216,031 -----216,031
Intergovernmental 4,756,481 ---237,307 1,692,712 6,686,500
Fines and forfeitures 222,451 -- -
-27,113 249,564
Licenses and permits 2,230,046 -----2,230,046
Charges for services 193,065 --1,614,781 -26,359 1,834,205
Rents and royalties 222,327 -- -
--222,327
Special assessments - -- -
-1,512 1,512
Investment earnings 184,871 37,426 29,055 44,514 35,384 63,874 395,124
Other 147.91~ --- -
31.679 179.657
Total Revenues 15.686 925 1.498.846 29.055 1.659.295 272.691 3.804.016 22.950.828
Expenditures
Current
General government 3,223,806 ---5,958,166 365,437 9,547,409
Public safety 4,744,523 --- -
10,000 4,754,523
Highways and streets - --243,342 -1,439,221 1,682,563
Culture and recreation 1,739,642 --374,298 809,253 81,023 3,004,216
Community development 1,460,181 --- -
-1,460,181
Debt Service
Principal retirement -435,000 620,000 --253,228 1,308,228
Interest on long-term debt -379,076 456,892 -2,250 326,343 1,164,561
Issuance costs -60 QQQ 80.500 -89.490 -229.990
Total Expenditures 11.168.152 874.076 1.157.392 617.640 6.859.159 2.475.252 23.151.671
Excess (deficiency) of revenues over
expenditures 4.518,71l 624 710 (1.128.337) 1.041.655 (6.586.468) 1.328.164 (200.843)
Other financing sources (uses)
Transfers in --2,524,654 -2,160,481 120,500 4,805,635
Transfers out (1,807,756) --(352,725) -(2,645,154) (4,805,635)
Proceeds oflong-tem1 debt issuance - ---3,783,896 -3,783,896
Proceeds of refunding debt issuance -7,225,000 5,330,000 ---12,555,000
Payment to refunded debt escrow
agent -f7. 752 BJ,) (6.925.005) ---(14.677.838)
Total other financing sources (uses) (1.807.756) (527 833) 929.649 (352.725) 5.944.377 (2.524.654) 1.661.058
Net change in fund balances 2,7Jl,OJ7 96,937 (198,688) 688,930 (642,091) (1,195,890) 1,460,215
Fund balances, beginning of year 6.371.426 268 ~42 476.998 1.740.295 642.091 3.371.976 12.871.628
Fund balances, end of year $ 9.082.443 $ 365.779 $ 278.310 $ 2.429.225 $ -$ 2.176.086 $ 14.331.843
The notes to the financial statements are an intergral part of this statement.
32
TOWN OF FOUNTAJN HILLS, ARIZONA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
Net change in fund balances-total governmental funds
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
Less current year depreciation
Excess capital expenditures over depreciation
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
Property taxes
The issuance of long-tem1 debt (e.g. bonds, leases) provides current financial resources to governmental
funds, while the repayment of the principal oflong-tenn 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-tenn 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 tem1 of the long-tenn debt in the statement of activities.
Principal payments on long-term debt
Issuance costs
Proceeds of debt issuance
Proceeds of refunding debt issuance
Payment to refunded debt escrow agent
Amortization of issuance costs
Amortization of deferred amount on the premium and the refunding
Some expenses reported in the statement of activities do not require the use of current fmancial resources
and therefore are not reported as expenditures in the governmental funds.
Net decrease in compensated absences
Change in net assets of governmental activities
The notes to the financial statements are an integral part of this statement.
33
$ 1,460,215
7,450,885
(983.733)
6.467.152
(1 05,941)
(35,264)
1,308,228
229,990
(3, 783,896)
(12,555,000)
14,677,838
(3, 196)
4,961
86.651
$==7.._, 7._.5_..L .. 73;g8
TOWN OF FOUNTAIN HILLS, ARIZONA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND
BALANCES -BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
Original and Final Variance with Final
Budget Actual Budget
Revenues
Taxes $ 7,399,767 $ 7,729,706 $ 329,939
Intergovernmental 4,522,700 4,756,481 233,781
Fines and forfeitures 234,250 222,451 (11,799)
Licenses and permits 1,408,390 2,230,046 821,656
Charges for services 196,800 193,065 (3,735)
Rents and royalties 242,300 222,327 (19,973)
Investment earnings 100,000 184,871 84,871
Other I 05.700 147.978 42.278
Total Revenues 14.209,907 15.686.925 L477.018
Expenditures
Current
General govennnent
Mayor and Tm\TI Council 60,010 55,925 4,085
Magistrate Court 340,850 328,489 12,361
General and Administrative 4,150,777 2,673,035 1,477,742
Information Technology 166,231 166,357 (126)
Contingency 50.000 50.000
Total general government 4.767.868 3.223.806 L544.062
Public safety
Building Safety 494,930 480,561 14,369
Law Enforcement 1,796,670 1,792,782 3,888
Fire Department 2A8L7:i! 2.47Ll80 10.571
Total public safety 4.773351 4.744.523 28.828
Culture and recreation
Parks and Recreation 534,745 503,581 31,164
Dese11 Vista Park 53, !50 39,964 13,186
Golden Eagle Park 313,835 333,295 (19,460)
Fountain Park 320,2!0 279,948 40,262
Four Peaks/Palisades Court 79,900 82,060 (2,160)
Civic Center 5!1A2Z 500.794 10.703
Total culture and recreation L813337 1.739,642 73.695
Community development
Community Development 398,480 395,874 2,606
Public Works ],]93.235 L064307 128.928
Total community development L59L715 L460. 181 13L534
Total Expenditures 12,946.271 I L!68J52 1.778.119
Excess (deficiency} of revenues over expenditures L263.62G 4.518.773 3.255.137
Other financing sources (uses)
Transfers out (940,752) (L807,756) (867.004)
Total other financing sources (uses) (940.752) (L807.756) (867.004)
Net change in fund balances 322,884 2,711,017 2,388,133
Fund balances, beginning of year 5375322 637L426 996,027
Fund balances, end of year $ 5.698.283 $ 9.082,443 $ 3384,]60
The notes to the financial statements are an integral pa>t of this statement
34
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005
NOTE I -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying basic 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 sununary of the Town's more significant accounting
policies follows.
A. Reporting entity
The Town is a municipal govennnent that is governed by a separately elected governing
body. It is legally separate from and fiscally independent of other state and local
govennnents. 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 tl1e 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 togetl1er and included as if they were
part of the Town's operations. A separately issued aruma! financial repoti was issued for
the Eagle Mountain Community Facilities District and is available at Town Hall.
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 fonned for the sole purpose of assisting the Town in obtaining fmancing for
various projects of the Town. TI1e Town has a "moral obligation" for the repayment of
fue MPC's bonds. For financial reporting purposes, transactions of the MPC are
combined together and included as if they were pati of the Town's operations.
35
TOWN OF FOUNTAIN IITLLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005
B. Government-wide and fund financial statements
The government-wide fmancial statements (i.e., the statement of net assets and the
statement of activities) 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.
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 colunms in the fund basic fmancial
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 fmancial 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 cunent 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 long-term
principal and interest due early in the following year, the expenditures and related
liabilities have been recognized in the Debt Service Fund.
36
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005
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 government.
The Town reports the following major governmental funds:
The General Fund is the Town's primary operating fund. It accounts for all
fmancial resources of the Town, except those required to be accounted for in
another fund.
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 Municipal Property Corporation Debt (MPC) Service Fund accounts for the
revenues received to pay the debt service on MPC revenue bonds.
The Development Fees Fund accounts for development fees collected from
developers restricted for projects approved by the Town Council.
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 fmancial statements. However, services provided and used are not
eliminated in the process of consolidation.
Amounts reported as progran1 revenues include 1) fees, fines and charges for services,
2) operating grants and contributions, and 3) capital grants and contributions. Internally
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.
37
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005
D. Assets, liabilities, and net assets or equity
1. Deposits and investments
The Town's cash and cash equivalents are considered to be cash on hand, demand
deposits, cash and investments held by the State Treasurer, and highly liquid investments
with maturities of three months or less from the date of acquisition.
Cash and investments are pooled except for funds required to be held by fiscal agents or
restricted under provisions of bond indentures. Interest earned from investments
purchased with such pooled monies is allocated to each of the funds based on the average
daily cash balances. State statutes authorize the Town to invest in obligations of the U.S.
Treasury and U.S. agencies, certificates of deposit in eligible depositories, repurchase
agreements, obligations of the State of Arizona or any of its counties or incorporated
cities, towns or duly organized school districts, improvement districts in this state and the
State Treasurer's Local Government Investment Pool. Investments are stated at fair value.
2. Receivables
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 J anmuy 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-tem1 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 fmancial 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.
38
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005
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.
5. Capital assets
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 incuned for repairs and
maintenance are expensed as incUITed.
General infrastructure assets acquired prior to July I, 2002 are not reported in the basic
financial statements. Those assets will be transitioned in over the next two 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 and improvements
Improvements other than buildings
h1frastructure
Fumiture, machinery and equipment
Vehicles
6. Compensated absences
50 years
20 years
50 years
5 years
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 cunently are eligible
to receive tennination payments and other employees who are expected to become
eligible in the future to receive such payments upon telTllination are included.
39
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005
7. Long-term obligations
In the government-wide financial statements, long-term debt and other long-tem1
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 premiun1 or discount. Bond issuance costs are reported as deferred
charges and amortized over the tenn of the related debt. The Town did not have any
premiun1s, discounts or issuance costs related to any outstanding bonds.
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 government-wide fmancial 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. Resuicted 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.
40
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005
NOTE 2-STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. Budgetary information
The Town Council follows these procedures in establishing the budgetary data reflected
in the financial statements:
1. In accordance with Arizona Revised Statutes, the Town Manager submits a
proposed budget for the fiscal year commencing the following July 1 to the Town
Council. The operating budget includes proposed expenditures and the means of
financing them for the upcoming year.
2. Public hearings are conducted to obtain taxpayer comment.
3. State law requires that, p1ior to April 1, the Economic Estimates commission
provides the Town with a final expenditnre limit for the coming fiscal year. To
ensure compliance with the expenditure limitation, a unifmm expenditure report
must be filed with the State each year. Tllis report, issued under a separate cover,
reconciles total Town expenditures from the basic financial statements to total
expenditures for reporting in accordance with the State's uniform expenditure
reporting system (A.R.S. §41-1279.07).
4. 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 depmiment 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 depatiments. The adopted budget cmmot be mnended in
any way without Town Council approval.
5. Legal budgets m·e adopted for the General, Special Revenue, Debt Service atld
Capital Projects Funds on essentially the smne modified accrual basis of
accounting used to record actual revenues atld expenditures, with the exception of
the Criminal Enhm1cement Justice Fund and Capital Projects Fund for which a
budget was not prepared.
The Town is subject to the State of Arizona's Spending Limitation Law for Towns atld
Cities. This law does not permit the Town to spend more than budgeted revenues plus
the carryover unrestricted cash balance from the prior fiscal year. The limitation is
applied to the total of the combined funds. The Town complied with this law during the
yem·.
41
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005
No supplementary budgetary appropriations were necessary during the year.
B. Excess of expenditures over appropriations
Expenditures exceeded appropriations in the following funds:
General Fund:
Infonnation Technology
Golden Eagle Park
Four Peaks/Palisades Court
Capital Projects Fund
NOTE 3-DETAILED NOTES ON ALL FUNDS
A. Assets
1. Deposits and investments
Amount of
Overexpenditure
$ 126
19,460
2,160
347,989
Deposits and investments at June 30, 2005 consist of the following:
Deposits
Cashon hand $ 1,400
Cashin bank 374,889
Cash on deposit with paying agent 1,461,392
Investments
Money Market Mutual Fund 748,218
U.S. Government Securities 11,979
State Treasurer's Investment Pool 13,650,821
Cash on deposit with Trustee 775.588
Total cash and investments 17,024,287
Cash on deposit with paying agent (1,461.392)
Total cash and equivalents $ 15,562,895
Deposits -The Town's deposits at June 30, 2005, were entirely covered by federal
depository insurance or by collateral held by the Town's custodial bank in the Town's
name. The Town's deposits are not subject to custodial credit risk.
42
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005
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
counterparty's trust department or agent in the Town's name.
Interest rate risk. In accordance with its investment policy, the government manages its
exposure to declines in fair value by limiting the average maturity of its investments to
less than one year.
Custodial credit risk. The U.S. Government Securities and the State Treasurer's
Investment Pool are not subject to the custodial credit risk. The money market mutual
funds are invested in Fmmie Mae Securities and have a AAA Standard and Poor's rating.
The mnount deposited with the trustee represents the July 1 principal and interest
payments due on outstm1ding bonds. The investment does not pose any custodial credit
risk as the funds are invested for less thm1 one day to make the required principal and
interest payments.
Concentrations of credit risk. The Town's investment policy does not allow the Town to
invest in securities that are not insured, unregistered or backed by U.S. government
securities.
43
TOWN OF FOUNTAIN IDLLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005
2. Receivables
Court fines are recorded net of uncollectible amounts in the government-wide statements
and are recorded as a receivable and a deferred revenue in the fund financial statements
because the court fmes did not meet the revenue recognition criteria under the modified
accrual basis of accounting. The total receivable at Jm1e 30, 2005 was $260,034, which
was reduced by $52,007 for uncollectible amounts resulting in a net receivable balance at
June 30, 2005 of $208,027.
Governmental funds report deferred revenue in connection with receivables for revenues
that are not considered to be available to liquidate liabilities of the current period.
Governmental funds also defer revenue recognition in connection with resources that
have been received, but not yet earned. At the end of the current fiscal year, the various
components of deferred revenue reported in the govermnental funds were as follows:
Delinquent property taxes receivable
(General Fund)
Deferred court revenue
(General Fund)
Delinquent property taxes receivable
(General Obligation Debt Service Fund)
Delinquent property taxes receivable
(Nonmajor Governmental Funds)
Special assessments receivable
(Nomnajor Govemmental Funds)
44
Unavailable
$ 25,484
208,027
37,109
10,948
4.805
$ 286.373
3.
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005
Capital assets
Capital asset activity for the year ended June 30, 2005 was as follows:
Begi1ming
Balances Increases Decreases Adjustment
Governmental Activities:
Capital assets not being depreciated:
Land $23,571,668 $ $ $
Construction in progress 6.385.425 310.467
Total capital assets,
not being depreciated 23.571,668 6.385,425 310.467
Capital assets being depreciated:
Buildings and improvements 10,326,312 (227,379)
Improvements other than
buildings 7,554,540 836,453
Infrastructure 481,064 123,843 (83,088)
Furniture, machinery and
equipment 1,518,647
Vehicles 1.630.711 105.164
Total capital assets being
depreciated 21.511.274 1.065.460 (31 0.467)
Less accumulated depreciation for:
Buildings and improvements (767,039) (203,082)
Improvements other than
buildings (2, 156,602) (420,292)
Infrastructure (29,176) (9,481)
Fumiture, machine1y and
equipment (935,757) (122,001)
Vehicles (1.136.975) (228.877)
Total accumulated depreciation (5.025.549) (983. 733)
Total capital assets,
being depreciated, net 16.485.725 81.727 (310.467)
Governmental activities
capital assets, net $40.057,393 $ 6.467.152 $ $
Ending
Balances
$23,571,668
6.695.892
30.267.560
10,098,933
8,390,993
521,819
1,518,647
1.735.875
22.266 267
(970,121)
(2,576,894)
(38,657)
(1,057,758)
(1.365 852)
(6.009.282)
16,256.985
$ 46.524.545
An adjustment was recorded to reclassifY assets as construction in progress that were presented
as buildings and improvements and infrastructure in the prior year.
45
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005
Depreciation expense was charged to functions/programs as follows:
Governmental activities:
General government $
Public safety
Highways and streets
Culture and recreation
Total depreciation expense-governmental activities $
B. lnterfund receivables/payables and transfers
86,712
274,088
55,233
567.700
983.733
As of June 30, 2005 interfund receivable and payables were as follows:
Due To
General Fund
Due From
Norunajor
Governmental
Funds
$==~6 . ..,64~5
The above interfund receivables and payables are due to short-term borrowings between
the General Fund and the Nonruajor Eagle Mountain Debt Service Fund.
Interfund transfers for the year ended June 30, 2005 consisted of the following:
Transfers In
Capital Nonmajor
MPCDebt Projects Governmental
Transfers Out Service Fund Fund Funds Total
General Fund $ $ 1,807,756 $ $1,807,756
Development Fees Fund 352,725 352,725
Nonmajor Govermnental Funds 2,524,654 120.500 2.645.154
$2.524.654 $2,160,481 $ 1?0.500 $4.805,635
46
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30,2005
The General Fund transfer of $1,807,756 and the Development Fees transfer of $352,725
to the Capital Projects Fund were recorded to subsidize the construction of the new Town
Hall facility that was included in construction in progress at June 30, 2005. The transfers
of $2,524,654 and $120,500 from the Nonmajor Governmental Funds to the MPC Debt
Service Fund and the Nonmajor Govemmental Funds were recorded to make the debt
service payments during the year on outstanding bonded indebtedness.
C. Long-term obligations
The Town has long-tenn bonds and special assessments payable issued to provide funds
for the acquisition and construction of major capital facilities. TI1e Town has also issued
debt to refund earlier obligations with higher interest rates. The debt is 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 Disn·ict areas. The Cottonwoods Improvement District was created so
the Town could fund 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.
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 Distlict, the Town
Council has adopted a formal policy that CFD debt will be pem1itted 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 velified by an
appraisal paid for by the District and administered by the Town. In addition, cumulative
debt of all CFDs cam1ot exceed 5 percent of the Town's secondary assessed valuation.
47
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005
Changes in long-tem1 obligations for the year ended June 30, 2005 are as follows:
Jul~ I, 2004 Increases Decreases June 30, 2005
Governmental Activities:
Bonds and special assessments
General obligation bonds $ 11,740,000 $ 7,225,000 $ (7,750,000) $ 11,215,000 $
Municipal Property
Corporation debt 11,005,000 8,975,000 (7,005,000) 12,975,000
Special assessment debt with
government commitment 16,137 (3,228) 12,909
Cmmnunity Facilities
District bonds payable 4 615.000 (160,000) 4.455.000
27,376,137 16,200,000 (14,918,228) 28,657,909
Defe1red amount on:
Refunding (1,067,838) (1,067,838)
Premium 138.896 (4.961) 133.935
Total bonds and special
assessment debt 27,376,137 15,271,058 (14,923,189) 27,724,006
Other liabilities
Compensated absences 271 230 201.881 (288.532) 184.579
$ 27.647.367 $ 15 472.939 $(15.211.721) $ 27.908.585 $
Debt service requirements on long-term debt at June 30, 2005 are as follows:
Governmental Activities
Princi£al Interest
Year Ending June 30
2006 $ 1,998,228 $ 1,325,881
2007 1,983,227 1,194,566
2008 2,153,227 1,106,297
2009 2,238,227 1,014,551
2010 2,445,000 916,634
2011-15 10,885,000 3,124,455
2016-20 6,525,000 1,020,995
2021 430 000 28.288
$ 28,657,909 $ 9 731 667
48
Due within
One Year
1,160,000
665,000
3,228
170.000
1,998,228
(76,274)
9 921
1,931,875
64 603
1.996 478
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005
During the year ended Jnne 30, 2005, the Town issued $7,225,000 in general obligation
bonds and $5,330,000 in excise tax revenue bonds, with an average interest rate of 3.69
and 3.87 percent, respectively, to advance refund $7,225,000 of outstanding general
obligation bonds and $6,385,000 of MPC bonds with an average interest rate 5.06 and
5.15 percent. The net proceeds of $7,165,000 and $5,249,500 (after payment of $60,000
and $80,500 in underwriting fees, insurance, and other issuance costs) were used to
purchase U.S. govennnent securities. Those securities were deposited in an irrevocable
trust with an escrow agent to provide for all future debt service payments of the refunded
general obligation bonds and MPC bonds. As a result, the refunded general obligation
bonds and the MPC bonds are considered to be defeased, and the liability for those bonds
has been removed from the statement of net assets.
The Town advance refunded the general obligation bonds and MPC bonds to reduce its
total debt service payments over the next 14 years by almost $492,826 and $1,604,155
and obtained an economic gain (i.e., difference between the present values of the debt
service payments on the old and new debt) of$241,166 and $297,817, respectively.
NOTE 4 -OTHER INFORMATION
A. Risk management
The Town of Fountain Hills, Arizona, is exposed to various risks ofloss related to torts;
theft of, damage to and destruction of assets; enors 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 rumual 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.
49
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005
B. Contingent liabilities
Accumulated 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 30,2005, totaled $273,194.
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.
C. Subsequent events
Subsequent to June 30, 2005, the Town issued $4,455,000 of General Obligation
Refunding Bonds to refund $4,455,000 of Eagle Mountain Community Facility District
General Obligation bonds. The Town refunded the bonds to reduce its debt service
requirements over the next sixteen years by $996,894 and obtained an economic gain of
$790,798. Annual principal and semi-annual interest payments are due through the fiscal
year ended June 30,2021 at a 3.25 to 4.125% interest rate.
In addition, in September 2005, the Town Council approved a resolution to fund a Capital
Improvements Fund. The resolution calls for a transfer of General Fund fund balance
each year for any excess revenues collected over budget and unexpended appropriations
necessary to meet fund balance requirements or reappropriation. The accumulation of
funds was approved for purchases of land and buildings, improvements to Town-owned
prope1iies, grant matching requirements associated with capital improvements, public
safety projects and equipment purchases, economic development projects, and such other
capital projects as determined by the Town Council. Expenditures from the Capital
Improvements Fund must be appropriated as part of the Town's annual budget or by
motion and affirmative vote at a time the expenditures are awarded. The resolution does
not affect the fiscal year ended June 30, 2005; however, funds expected to be transfeued
with passage of the resolution in the fiscal year 2005-06 are $2,570,848.
D. Retirement plans
Defined Contribution Pension Plan
All full-time employees of the Town pa1iicipate in a defmed 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, 2005 was $2,833,127. The
Town's total payroll was $3,147,673.
50
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005
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 detennined 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 eamed.
Each employee must contribute 11% of his or her gross earnings. The Town must
contribute 11% of covered earnings. During fiscal year 2004-05, the Town's required and
actual contributions amounted to $311,644. The employees' contributions totaled
$311,644.
No pension provisiOn changes occUlTed 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 2004-05 or as of the close of the fiscal year.
Public Safety Personnel Retirement System (PSPRS)
At the end of the fiscal year June 30, 2004, the Marshall's department was disbanded and
during the fiscal year ended June 30, 2005 the retirement funds were transfen·ed to the
Arizona Department of Public Safety. The Town is no longer responsible for
administering the plan or for future post retirement benefits.
51
THIS PAGE BLANK
52
Combining and Individual Fund
Statements and Schedules
53
THIS PAGE BLANK
54
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
Highway User Revenue Fund (HURF) -accounts for the Town's share of motor fuel tax revenues
and lottery proceeds.
Excise Tax Fund-accounts for the pmiion of Town sales tax reserved by the Town Council for
special projects including Town beautification and economic development.
Grants Fund -accounts for the activities of various grants and contributions received by the
Town.
Local Court Enhancement Fund-accounts for the activities of grants from the Arizona Supreme
Court.
DEBT SERVICE FUNDS
HURF Debt Service -accounts for operating transfers received from the HURF special revenue
fund to pay tl1e debt service of the Street and Highway User Revenue Bonds.
Eagle Mountain Debt Service Fund -accounts for the property tax revenues received to pay the
debt service of the Eagle Mountain Commwlity Facilities District component unit.
Cottonwoods Special Assessment -accounts for all special assessments received to pay the debt
service of the Cottonwoods Special Assessment District.
55
HURF
Assets
Cash and equivalents $ 423,371
Cash with paying agent
Receivables, net
Accounts receivable
Taxes receivable
Intergovernmental receivable 149,230
Special assessments receivable
Prepaid items 3.872
Total assets $ 576.473
Liabilities and Fund Balances
Liabilities
Accounts payable $ 135,948
Accrued wages and benefits 15,449
Interest payable
Due to other funds
Deferred revenue
Matured debt principal payable
Due to developers
Total liabilities 151.397
Fund balances
Reserved for prepaid items 3,872
Unreserved 421.204
Total fund balances 425.076
Total liabilities and fund balances $ 576.473
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING BALANCE SHEET
NONMAJORGOVERNMENTALFUNDS
JUNE 30, 2005
S ecial Revenue
Local Court
Excise Tax Grants Enhancement
$ 1,013,442 $ 115,297 $ 191,229 $
1,881
119,514
Total
1,743,339
1,881
268,744
3.872
$ ],]32.956 $ 115.297 $ 193.110 $ 2.017.836
$ 64,729 $ 1,575 $ $ 202,252
1,624 17,073
66.353 ],575 219.325
3,872
1.066.603 113.722 193.110 1.794.639
1.066.603 113.722 193.110 1 798.5!1
$ L132.956 $ 115291 $ 193.110 $ 2.017.836
56
Debt Service
Eagle Cottonwoods
HURFDebt Mountain Special
Service Debt Service Assessment
$ 3,409 $ J775,588 $ 6,755
104,176
17,924 983
4,430
$ 107 585 $ 793.512 $ 12 168
$ $ $
14,176 148,414
6,645
10,948 4,805
90,000 160,000
100.702
104 176 426.709 4.805
3 409 366.803 7.363
3 409 366.803 7.363
$ 107.585 $ 793.512 $ 12.168
Debt Service
Total
Nonmajor
Governmental
Total Funds
$ 785,752 $ 2,529,091
104,176 104,176
1,881
18,907 18,907
268,744
4,430 4,430
3.872
$ 913.265 $ 2.93LI01
$ $ 202,252
17,073
162,590 162,590
6,645 6,645
15,753 15,753
250,000 250,000
100.70£ 100.702
535.690 755.015
3,872
377.575 2.172.214
377.575 2.176.086
$ 913.265 $ 2.93Ll01
57
TOWN OF FOUNT AlN HILLS, ARIZONA
COMBINJNG STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND
BALANCES -NONNUUORGOVERNMENTALFUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
S ecial Revenue Debt Service
Eagle Cottonwoods
Local Court HURFDebt Mountain Special
HURF Excise Tax Grants Enhancement Total Service Debt Service Assessment
Revenues
Taxes
Sales taxes $ $ 1,366,123 $ $ $ 1,366,123 $ $ $
Property taxes 594,644
Intergovernmental 1,584,706 108,006 1,692,712
Fines and forfeitures 27,113 27,113
Charges for services 26,359 26,359
Special assessments 1,512
Investment earnings 10,493 45,579 2,179 58,251 5,616 7
Other 31.679 31.679
Total revenues 1.653.237 1,411.702 108.006 29.292 3.202.237 600.260 1.519
Expenditures
Current
General govemment 252,615 69,595 5,067 327,277 38,160
Public safety 10,000 10,000
Highways and streets 1,439,221 1,439,221
Culture and recreation 81,023 81,023
Debt Service
Principal retirement 90,000 160,000 3,228
Interest on long-tem1 debt 28.753 296.827 763
Total expenditures 1.439.221 252.615 160.618 5.067 1.857.521 118.753 494.987 3.991
Excess (deficiency) of revenues over
expenditures 214.016 Ll59.087 (52.612) 24.225 1.344.716 (118.753) 105273 (2.472)
Other financing sources (uses)
Transfers in 120,500
Transfers out (120.500) (2.5?4,654) (2.645.154)
Total other financing sources (uses) (120.500) (2.524.654) (2.645.154) 120.500
Net change in fund balances 93,516 (1,365,567) (52,612) 24,225 (1,300,438) 1,747 105,273 (2,472)
Fund balances, beginning of year 331.560 2.432.170 166.334 168.885 3.098.949 1.662 261.530 9.835
Fund balances, end of year $ 425.076 $ 1.066.603 $ 113.722 $ 193.110 $ 1.798.511 $ 3.409 $ 366.803 $ 7.363
58
Debt Service
Total
Nonmajor
Governmental
Total Funds
$ $ 1,366,!23
594,644 594,644
1,692,712
27,113
26,359
1,512 1,512
5,623 63,874
31.679
601.779 3.804.016
38,160 365,437
10,000
1,439,221
81,023
253,228 253,228
326.343 326,343
617.731 2.475.252
(15.952) 1.328.764
120,500 120,500
(2,645.154)
120.500 (2.524,654)
104,548 (1,195,890)
273.02Z 3.371.976
$ 377.575 $ 2.176.086
59
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 JUNE 30, 2005
Original and Final Variance with Final
Budoet Actual Buds;et
Revenues
Taxes
Property taxes $ I,450,000 $ I,46I,420 $ II,420
Investment earnings LOOO 37.42g 3g 42g
Total Revenues !.45LOOO !.498.846 47 846
Expenditures
Debt Service
Principal retirement 805,000 435,000 370,000
Interest onlong~tenn debt 592,500 379,076 2I3,424
Issuance costs 60.000 (6Q QOO)
Total Expenditures !.397.500 874 076 523.424
Excess (deficiency) of revenues over expenditures 53.500 624,7ZQ 571 210
Other financing sources (uses)
Proceeds of refunding debt issuance 7,225,000 7,225,000
Payment to refunded debt escrow agent (7.752.833) (7,752.133)
Total other financing sources (uses) (527.833) (527 83,)
Excess (deficiency) of revenues over expenditures 53,500 96,937 43,437
Fund balances, beginning of year I05.4I5 268.842 I63 427
Fund balances, end of year $ I58.9I5 $ 365 779 $ 206 861
60
TOWN OF FOUNTAIN HILLS, ARlZONA
MUNJCJPAL PROPERTY CORPORATION FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
Original and Final Variance with Final
Budo-et Actual Budget
Revenues
Investment earnings $ $ 29.055 $ 29.055
Total Revenues 29.055 29.055
Expenditures
Debt Service
Principal retirement 570,000 620,000 (50,000)
Interest on long-term debt 750,500 456,892 293,608
Issuance costs 80.500 (80.500)
Total Expenditures 1.320 500 ],]57.392 163.108
Excess (deficiency) of revenues over expenditures (1.310.500) (],]28.337) 192.163
Other financing sources (uses)
Transfers in 1,320,500 2,524,654 1,204,154
Proceeds of refunding debt issuance 5,330,000 5,330,000
Payment to refunded debt escrow agent (6.925.005) (6.925.005)
Total other financing sources (uses) 1.320.200 929.649 (390.851)
Net change in fund balances (198,688) (198,688)
Fund balances, beginning of year 476.998 476.998
Fund balances, end of year $ $ 278.310 $ 278.310
61
TOWN OF FOUNT AlN HILLS, ARIZONA
DEVELOPMENT FEES FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
Original and Final Variance -with Final
Budget Actual Bud2_et
Revenues
Charges for services $ 1,176,891 $ 1,614,781 $ 437,890
Investment earnings 22.750 44.514 21.764
Total Revenues Ll99.641 1.659.295 459.654
Expenditures
Current
Highways and streets 365,000 243,342 121,658
Culture and recreation 485.100 374.298 110.802
Total Expenditures 850.100 617.640 232 460
Excess (deficiency) of revenues over expenditures 349.541 1.041.655 692.114
Other financing sources (uses)
Transfers out (431.023) (352.725) 78.298
Total other financing sources (uses) (431.023) (352.725) 78.298
Net change in fund balances (81,482) 688,930 770,412
Fund balances, beginning of year 1.876.646 1.740.295 (136.351)
Fund balances, end of year $ 1.795.164 $ 2.429.225 $ 634.061
62
TOWN OF FOUNTAIN HILLS, ARJZONA
CAPITAL PROJECTS FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
Original and Final Variance with Final
Buds!:et Actual Budo-et
Revenues
Intergovernmental $ 474,600 $ 237,307 $ (237,293)
Charges for services 317500 (317,500)
Investment earnings 35.384 35.384
Total Revenues 792.100 272.69! (519.409)
Expenditures
Current
General government 5,739,200 5,958,166 (218,966)
Culture and recreation 771,970 809,253 (37,283)
Debt Service
Interest on long~tem1 debt 2,250 (2,250)
Issuance costs 89.490 (89.490)
Total Expenditures 6.511.170 6.859.159 (347.989)
Excess (deficiency) of revenues over expenditures (5.719.070) (6.586.468) (867.398)
Other fmancing sources (uses)
Transfers in 1,662,700 2,160,481 497,781
Proceeds of long-tem1 debt issuance 3.500.000 3.783.896 283.896
Total other financing sources (uses) 5.!62.700 5.944.377 781.677
Net change in Fund balances (556,370) (642,091) (85,72!)
Fund balances, beginning of year 556.370 642.091 85,721
Fund balances, end of year $ $ $
63
TOWN OF FOUNTAJN HlLLS, ARIZONA
HURFFUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
Original and Final Variance with Final
Budo-et Actual Budcret
Revenues
Intergovernmental $ I,504,600 $ I,584,706 $ 80,I06
Charges for services I9,000 26,359 7,359
Investment earnings I,500 I0,493 8,993
Other I QQQ ~I 2Z2 30.679
Total Revenues 1.526 IOO 1.653.237 127.137
Expenditures
Current
Highways and streets 1.580.96I 1.439.22I I41.740
Total Expenditures 1.58Q 26I 1.422 221 I41.740
Excess (deficiency) of revenues over expenditures (54 861) 2I4.0I6 268.877
Other financing sources (uses)
Transfers out mo ooo) (120.500) (500)
Total other financing sources (uses) (]20 QOO) (I20 2QQ) (500)
Net change in fund balances (I74,86I) 93,5I6 268,377
Fund balances, beginning of year ,31.560 331.560
Fund balances, end of year $ (174 861) $ 42:~ QZ6 $ 599.937
64
TOWN OF FOUJ\'T AlN HILLS, ARIZONA
EXCISE TAX FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
Original and Final Variance with Final
Budget Actual Budget
Revenues
Taxes
Sales taxes $ 1,338,605 $ 1,366,123 $ 27,518
Investment earnings 7.500 45.579 38.079
Total Revenues 1.346.105 1.411.702 65.597
Expenditures
Current
General government 558.274 252.615 305.659
Total Expenditures 558.274 252.615 305.659
Excess (deficiency) of revenues over eh.'penditures 787.831 1.159.087 371.256
Other financing sources (uses)
Transfers out (945 000) £2574.654) (1.579.654)
Total other financing sources (uses) (945.000) (2.524.654) (1.579.654)
Net change in fund balances (157,169) (1,365,567) (I ,208,398)
Fund balances, beginning of year 2.753 liJ 2.432.170 (321.013)
Fund balances, end of year $ ?.596.014 $ 1.066.603 $ (1.529.4 I I)
65
TOWN OF FOUNTAJN HILLS, ARJZONA
GRANTS FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
Original and Final Variance with Final
Budo-et Actual Bude:et
Revenues
Intergovernmental $ 1.492.500 $ 108 00§ $ (1384.494)
Total Revenues 1.492.500 108 006 (1384.494)
Expenditures
Current
General government 1,375,000 69,595 1,305,405
Public safety 75,000 10,000 65,000
Culture and recreation 230.110 81 023 149.747
Total Expenditures L680.77Q 1§0 618 1.520.152
Excess (deficiency) of revenues over expenditures (188.2JO) (52.612) 135.658
Other financing sources (uses)
Transfers in 7.5QQ (7.500)
Total other fmancing sources (uses) 7.500 (7.500)
Net change in fund balances (180,770) (52,612) 128,158
Fund balances, begilming of year 180.710 166 334 (14.436)
Fund balances, end of year $ $ 112722 $ 113.722
66
TOWN OF FOUNTAIN HILLS, ARlZONA
LOCAL COURT ENHANCEMENT FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED ruNE 30, 2005
Revenues
Fines and forfeitures
Investment earnings
Total Revenues
Expenditures
Current
General govemment
Total Expenditures
Excess (deficiency) of revenues over expenditures
Fund balances, beginning of year
Fund balances, end of year
Original and Final
Budget
$
$
67
68,500 $
1.500
70.000
IOO.OQO
100.000
(30,000)
(30.QOO) $
Actual
Variance with Final
Budoet
27,I 13 $
2 179
29 292
s 06Z
5.067
24,225
I68.885
19> I I 0 $
(41,387)
679
(40.708)
94.933
94.933
54,225
168.885
223.110
TOWN OF FOUNTAIN HILLS, ARlZONA
HURF DEBT SER V1CE FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JU!..'E 30, 2005
Original and Final Variance with Final
Budo-et Actual Budget
Expenditures
Debt Service
Principal retirement $ 90,000 $ 90,000 $
Interest on long-term debt 34.000 28 753 5.247
Total Expenditures 124.QOQ liS 153 5.247
Excess (deficiency) of revenues over expenditures (124,000) (118 753) 5.247
Other financing sources (uses)
Transfers in 124.QQO 12Q,500 (3.500)
Total other financing sources (uses) 124.000 120 50Q (3.500)
Net change in fund balances 1,747 1,747
Fund balances, beginning of year I 662 1.662
Fund balances, end of year $ $ 3lQ2 $ 3.409
68
TOWN OF FOUNTAJN HILLS, ARJZONA
EAGLE MOUNTAJN DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
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
Fund balances, beginning of year
Fund balances, end of year
Original and Final
Budget
$ 513,000 $
513.000
I 60,000
353.000
513.000
546.236
$ 546.236 $
69
Variance with Final
Actual Budget
594,644 $ 81,644
5.616 5.616
600.260 87.260
38,160 (38,160)
160,000
296.827 56.173
494.987 18.013
105,273 105,273
261.530 (284.706)
366.803 $ (179.433)
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, 2005
Revenues
Special assessments
Investment earnings
Total Revenues
Expenditures
Debt Service
Principal retirement
Interest on longMterm debt
Total Expenditures
Excess (deficiency) of revenues over expenditures
Fund balances, beginning of year
Fund balances, end of year
Original and Final
Bude:et
$ 4,500 $
4.500
3,228
L272
4.500
$ $
70
Actual
Variance with Final
Budget
1,512 $
7
1.519
3,228
763
3.991
(2,988)
7
(2.981)
509
509
(2,472) (2,472)
9.835 9.835
7363 $ 7363
STATISTICAL SECTION
71
Fiscal General
Year Government
2003 $ 3,479,333
2004 3,686,452
2005 3,766,500
Public
Safety
TOWN OF FOUNTAIN lllLLS, ARIZONA
GOVERNMENT-WIDE EXPENSES BY FUNCTION
LAST TEN FISCAL YEARS
(UNAUDITED)
Highways
and Culture and Community
Streets Recreation Development
$ 5,494,708 $ 1,310,683 $ 2,363,897 $ 1,235,985
4,918,280 1,419,509 2,068,613 1,144,964
5,024,686 1,281,061 2,362,661 1,460,181
Note: 2002-03 was the Town's first yeaT to prepare govenunent-wide financial statements.
72
Interest on
Long-term
Debt Totals
$ 1,576,842 $ 15,461,448
1,499,575 14,737,393
1,162,796 15,057,885
Fees, Fines
Fiscal and Charges
Year for Services
2003 $ 2,782,385
2004 3,421,132
2005 4,490,704
TOWN OF FOUNTAIN HILLS, ARIZONA
GOVERNMENT-WIDE REVENUES
LAST TEN FISCAL YEARS
(UNAUDITED)
Program Revenues General Revenues
Operating Capital
Grants and Grants and Revenue Investment
Contributions ContTibutions Taxes Sharing Eamings
$ 1,697,900 $ $ 7,100,184 $ 4,740,758 $ 1,976,809
1,590,787 -10,055,861 4,489,844 122,082
1,692,712 237,307 11,116,629 4,756,481 395,124
Note: 2002-03 was the Town's first year to prepare government-wide financial statements.
73
Other Totals -
$ 79,706 $ 18,377,742
195,978 19,875,684
120,666 22,809,623
TOWN OF FOUNTAIN lllLLS, ARIZONA
GENERAL GOVERNMENT EXPENDITURES BY FUNCTION (1)
LAST TEN FISCAL YEARS
(UNAUDITED)
Highways Culture
Fiscal General Public and and Community Capital Debt
Year Govemment Safety Streets Recreation Development Outlay* Service Total -
1996 $ 1,617,365 $ 1,241,694 $ 1,687,403 $ 1,196,115 $ 821,796 $ 578,099 $ 524,553 $ 7,667,025
1997 1,757,431 1,499,538 1,627,952 625,928 864,022 5,343,433 1,132,399 12,850,703
1998 1,964,427 2,074,441 2,020,450 1,471,559 947,251 1,352,936 799,941 10,631,005
1999 2,631,245 2,205,600 1,984,879 2,334,901 955,451 557,374 795,088 11,464,538
2000 2,528,953 3,059,020 2,468,498 3,359,509 1,276,951 1,787,469 924,014 15,404,414
2001 3,646,500 3,354,037 2,212,432 3,866,245 1,175,649 5,261,585 1,851,602 21,368,050
2002 3,859,633 5,084,532 1,877,790 3,069,695 1,064,913 14,770,507 2,903,116 32,630,186
2003 3,318,574 5,174,492 1,198,080 1,815,416 1,215,387 79,427 2,970,070 15,771,446
2004 3,614,458 4,616,161 1,402,502 1,597,150 1,144,964 101,951 2,922,803 15,399,989
2005 9,547,409 4,754,523 1,682,563 3,004,216 1,460,181 -2,702,779 23,151,671
(I) Includes all govemmental fund types.
*h1 the fiscal year 2003 GASB Statement No. 34 was implemented; subsequently, capital outlay was chaJ"ged directly to depruiments rather
tl1ru1 having its own line item.
74
TOWN OF FOUNTAIN HILLS, ARIZONA
GENERAL GOVERNMENT REVENUES BY SOURCE (1)
LAST TEN FISCAL YEARS
(UNAUDITED)
Net
Fines Licenses Charges Rents Contributions Investment
Fiscal Inter-and and for and and Special Income
Year Taxes Governmental Forfeitures Permits Services Royalties Donations Assessments (Loss) Other Total -
1996 $ 2,024,461 $ 2,762,906 $ 211,289 $ 1,653,561 $ 204,541 $ 14,462 $ $ $ 163,457 $ 18,800 $ 7,053,477
1997 3,101,787 3,988,424 209,485 1,770,347 419,976 14,170 1,500 464,633 19,477 9,989,799
1998 3,326,207 4,364,859 208,930 1,961,687 795,700 13,591 100,000 582,757 17,487 11,371,218
1999 3,861,337 4,929,062 259,484 2,472,215 624,744 18,140 14,524 620,639 25,657 12,825,802
2000 4,876,466 4,771,792 293,970 2,569,472 454,366 27,208 10,598 9,241 743,259 21,055 13,777,427
2001 6,088,047 5,281,156 310,359 2,177,614 431,316 35,781 400 7,958 (1,063,339) 10,957 13,280,249
2002 7,595,748 5,895,676 265,605 1,351,209 1,067,814 107,613 12,760 4,520 726,441 1,771,091 18,798,477
2003 7,114,486 6,311,458 195,091 1,308,747 810,412 188,745 127,200 4,302 1,976,809 148,143 18,185,393
2004 9,997,706 6,080,631 361,339 1,600,934 1,038,170 242,704 3,612 122,082 261,561 19,708,739
2005 11,151,893 6,686,500 249,564 2,230,046 1,834,205 222,327 -1,512 395,124 179,657 22,950,828
( 1) h1cludes all governmental fund types,
75
Fiscal
Year
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
TOWN OF FOUNTAIN IDLLS, ARIZONA
GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE
LAST TEN FISCAL YEARS
(UNAUDITED)
Sales Property Franchise
Taxes Taxes Taxes
$ 1,610,116 $ 336,000 $ 78,345 $
2,664,923 350,024 86,840
2,920,084 302,375 103,748
3,394,152 348,778 118,407
4,087,514 657,026 131,926
4,923,174 1,038,891 125,982
4,355,701 3,109,353 130,694
5,051,872 1,910,072 152,542
7,733,643 2,137,701 126,362
8,879,798 2,056,064 216,031
76
Total
2,024,461
3,101,787
3,326,207
3,861,337
4,876,466
6,088,047
7,595,748
7,114,486
9,997,706
11,151,893
TOWN OF FOUNTAlN HILLS, ARIZONA
TOWN TRANSACTION PRIVILEGE (SALES) TAX COLLECTIONS
BY INDUSTRY CLASSIFICATION
FISCAL YEAR BASIS
(UNAUDITED)
2005 Percent
Excise Tax of
Business Activity Category Collections Total
Construction $ 1,837,318 21.0%
Transportation/Utilities/Communication 1,124,676 12.9
Wholesale/Retail 3,536,024 40.4
Restaurants/Bars 524,368 6.0
Fire, Insurance and Real Estate 626,813 7.2
Services 185,868 2.1
Advertising 101,590 1.1
All Other Services Not Specified 809.340 ____2_J_
$ 8.745.997 100.0% =
77
(1) Current
Total Tax
Fiscal Year TaxLe~ Collections
1996 $ 323,517 $ 323,511
1997 312,638 312,489
1998 268,917 261,704
1999 248,607 235,953
2000 444,138 432,965
2001 699,006 676,682
2002 1,335,787 1,282,844
2003 1,378,862 1,329,929
2004 1,545,051 1,496,005
2005 1,449,287 1,408,289
TOWN OF FOUNTAIN HILLS, ARIZONA
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(UNAUDITED)
Percent of Delinquent Ratio of Total
Current Taxes Tax Total Tax Tax Collections
Collected Collections Collections to Total Tax Le~
100.0% $ 6 $ 323,517 100.0%
100.0 143 312,632 100.0
97.3 7,213 268,917 100.0
94.9 12,653 248,606 100.0
97.5 11,171 444,136 100.0
96.8 22,321 699,003 100.0
96.0 51,532 1,334,376 99.9
96.5 46,186 1,376,115 99.8
96.8 -1,496,005 96.8
97.2 1,408,289 97.2
(I) The amount levied and collected is net of resolutions and does not include component units.
Note 1: Amounts collected are on a cash basis rather than modified accrual basis as in the financial statements.
Note 2: Unsecured personal property taxes are not included in this schedule.
Source: The Maricopa County Treasurer's Office.
78
Outstanding Ratio of
Delinquent Delinquent Taxes
Taxes to TaxLe~
$ -%
6
2
3
1,411 0.11
2,747 0.20
49,046 3.17
40,998 2.83
TOWN OF FOUNTAIN HILLS, ARIZONA
ASSESSED AND ESTIMATED ACTUAL VALUE OF PROPERTY (1)
LAST TEN FISCAL YEARS
(UNAUDITED)
PRIMARY
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
1996 $ 105,912,474 $ 5,262,641 $ 884,979,322 $ 1,061,975,186 $ 94,188,635 9.97%
1997 118,888,547 6,602,978 1,002,546,459 1,203,055,751 100,649,833 9.88
1998 141,077,170 7,355,989 1 ,208,968, 752 1,450,762,502 112,285,569 9.72
1999 170,258,614 9,255,978 1,467,193,748 1,760,632,498 133,721,181 9.67
2000 198,224,776 8,578,615 1,713,029,238 2,055,635,086 190,102,361 9.64
2001 232,442,986 12,213,849 1,997,525,319 2,397,030,383 220,229,137 9.70
2002 260,635,914 13,484,185 2,240, 702,344 2,688,842,813 247,151,729 9.69
2003 299,743,562 16,942,705 2,565,522,177 3,078,626,612 282,800,857 9.74
2004 340,673,759 21,460,295 2,899,977,948 3,479,973,538 319,213,464 9.79
2005 373,144,037 22,709,568 3,191,431,714 3,829,718,057 350,434,469 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
1996 $ 109,463,361 $ 5,519,310 $ 906,495,406 $ 1,087,794,487 $ 100,161,566 10.06%
1997 123,097,961 6,764,555 1,034,892,731 1,241,871,277 103,944,051 9.91
1998 155,729,430 8,785,700 1,317,946,863 1,581,536,236 116,333,406 9.85
1999 185,540,741 10,575,923 1,583,072,952 1,899,687,542 146,943,730 9.77
2000 221,922,165 9,894,702 1,889,016,352 2,266,819,622 212,415,476 9.79
2001 253,269,562 14,555,025 2, 154,928,885 2,585,914,662 238,714,537 9.79
2002 287,891,481 17,288,615 2,418,235,666 2,901 ,882, 799 270,602,866 9.92
2003 344,047,844 20,662,614 2,842,849,050 3,411,418,860 323,385,230 10.09
2004 377,590,037 28,191,703 3,162,854,959 3,795,425,951 349,398,334 9.95
2005 402,974,523 27,906,320 3,411,460,877 4,093,753,052 375,068,203 9.84
(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 Couuty Arizona
1996 p $ 94,188,635 $ 95,155,307 $ 13,493,736,826 $ 22,109,868,588
s 100,161,566 101,137,745 14,119,434,946 23,022,330,962
1997 p I 00,649,833 101,573,954 13,975,668,204 22,811,158,500
s 103,944,051 104,881,097 14,343,156,861 23,333,678,475
1998 p 112,285,569 113,072,537 15,006,270,531 21,001,064,273
s 116,333,406 117,144,929 15,723,498,194 22,333,861,362
1999 p 133,721,181 134,650,036 17,463,875,533 21,670,300,013
s 146,943,730 147,884,952 18,676,830,848 22,533,348,150
2000 p 190,102,361 191,579,669 19,362,298,255 29,944,135,240
s 212,415,476 214,037,354 20,877,715,546 31,837,391,782
2001 p 220,229,137 223,185,771 21,355,326,477 32,518,431,391
s 23 8, 714,53 7 242,086,985 22,913,134,480 34,468,574,240
2002 p 247,151,729 251,514,211 22,955,864,882 34,868,596,227
s 270,602,866 277,768,188 24,457,04 7,282 36,825,660,973
2003 p 282,800,857 288,969,887 25,447,850,971 34,868,596,227
s 323,385,230 331,458,411 27,477,987,528 36,825,660,973
2004 p 319,213,464 326,230,578 28,070,870,413 41,886,818,760
s 349,398,334 358,634,532 30,066,986,670 44,480,893,202
2005 p 350,434,469 360,276,219 31,000,571,899 46,046,096,197
s 375,068,203 386,548,349 33,188,609,340 48,93 8,261' 134
P = Primary assessed valuation
S = Secondary assessed valnation
Sonrce: Maricopa Connty and Arizona Tax Research Foundation.
80
Fountain
Hills
Fiscal Commnnity School
Year Arizona College County District
1996 1.0476 1.7929 7.1501
1997 1.1346 1.7929 7.2466
1998 1.1125 1.8084 7.2134
1999 -1.1285 1.8186 5.8569
2000 1.1194 1.2793 6.2903
2001 -1.4557 1.1832 6.3373
2002 1.6016 1.2908 6.1186
2003 1.0785 1.2808 5.7025
2004 1.0372 1.2108 5.5710
2005 1.0315 1.3177 5.2146
TOWN OF FOUNTAIN HILLS, ARIZONA
PROPERTY TAX RATES FOR ALL
DIRECT AND OVERLAPPING GOVERNMENTS
LAST TEN FISCAL YEARS
(UNAUDITED)
East Valley
In st. Fire Flood
of Tech District Sanitary Road Control
District Royalties District District District
0.1616 0.9826 1.8983 0.3186 0.3425
0.1216 1.0407 1.6619 0.1806 0.3425
0.1320 0.9482 1.9394 0.0370 0.3270
0.1217 0.8933 1.8315 -0.2858
0.1186 1.0239 2.8027 0.2534
0.1120 0.9739 2.0515 0.2319
0.1117 1.2948 0.2119
0.0976 1.1527 0.2119
0.1032 1.1307 0.2119
0.0573 1.0547 0.2119
81
Volunteer Central Town of
Library Fire Arizona Fountain
District District Project Hills Total
0.0421 0.0109 0.1400 0.3036 14.1908
0.0421 O.QI05 0.1400 0.2330 13.9470
0.0421 0.0103 0.1400 0.1699 13.8802
0.0421 0.0100 0.1400 0.2578 12.3862
0.0421 0.0096 0.1300 0.3331 13.4024
0.0421 0.0091 0.1300 0.5605 13.0872
0.0421 0.0076 0.1300 0.5137 I 1.3228
0.0521 0.0070 0.1200 0.4762 I 0.1793
0.0521 0.0069 0.1200 0.4150 9.8588
0.0521 0.0069 0.1200 0.3510 9.4177
Fiscal
Year
1996 p
s
1997 p
s
1998 p
s
1999 p
s
2000 p
s
2001 p
s
2002 p
s
2003 p
s
2004 p
s
2005 p
s
TOWN OF FOUNTAIN HILLS, ARIZONA
PRIMARY AND SECONDARY PROPERTY TAX RATES-
ALL DIRECT AND OVERLAPPING GOVERNMENTS
LAST TEN FISCAL YEARS
(UNAUDITED)
Rate Rate Rate Rate
Town School District County State
4.96 1.69 0.47
0.32 2.67 0.15
4.98 1.64
0.30 2.17 0.16
4.89 1.68
0.23 2.32 0.13
3.89 1.19
0.17 1.96 0.11
3.91 1.16
0.26 2.38 0.12
4.09 1.18
0.56 2.25 0.09
0.97 * 4.33 1.68
0.56 2.00 0.09
3.56 1.21
0.48 2.14 0.07
3.50 1.21
0.43 2.07
3.17 1.20
0.35 2.05
P =Primary assessed valuation
S = Secondary assessed valuation
Source: Maricopa County and Arizona Tax Research Foundation.
Rate
Total
7.12
3.14
6.62
2.63
6.57
2.68
5.08
2.24
5.07
2.76
5.27
2.90
6.98
2.65
4.77
2.69
4.71
2.50
4.37
2.40
* 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
TOWN OF FOUNTAIN HILLS, ARIZONA
ASSESSEDVALUATIONOFMAJOR TAXPAYERS
JUNE 30, 2005
(UNAUDITED)
2004/05
Assessed
Taxpayer Land Description Valuation
Qwest Corporations Telecommunications $ 3,365,809
Chapparal City Water Company Water Utility 3,066,000
Fountain Hills Village LLC Assisted Living Facility 1,822,567
KIMCO Barclay Fountain Hills Shopping Center 1,724,863
MCO Properties Industrial 1,655,056
Cox Communications Communications 1,507,740
Target Corporation Shopping Center 1,441,438
ENLLC Residential 1,347,042
Fountain Hills Vista Properties LLC Commercial 986,365
Adero Canyon LLC Residential 834.777
$ 17.751.657
Source: Treasurer of Maricopa County.
83
As% ofTov.m's
Net Secondary
Assessed
Valuation
0.90%
0.82
0.49
0.46
0.44
0.40
0.38
0.36
0.26
0.22
4.73%
TOWN OF FOUNTAIN HILLS, ARIZONA
COMPUTATION OF LEGAL DEBT MARGIN
JUNE 30, 2005
(UNAUDITED)
Net secondary assessed valuation
Water, Sewer, Light, Parks, Open
Space and Recreational Facility Boards
Debt limit-20% of secondary net
assessed valuation
Bonds outstanding
Net 20% General Obligation Bonding
Capacity
All Other General Obligation Bonds
Debt limit -6% of secondary net
assessed valuation
Bonds outstanding subject to debt limit
Net 6% General Obligation Bonding
Capacity
Total20% and 6% Bonding Capacity
Source: Maricopa Cow1ty Assessor's Office.
84
$ 375.068203
$ 75,013,641
5 940.000
69.073.641
22,504,092
4 735 000
17.769.092
$ 86.842.733
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)
Net Ratio ofNet
Secondary Net Bonded Debt Net Bonded
Fiscal Assessed Bonded to Assessed Debt Per
Year Population Valuation Debt Value Capita
1995-96 14,160 $100,161,566 $ 4,277,315 4.27% 302
1996-97 15,220 103,944,051 4,056,473 3.90 267
1997-98 16,275 116,333,406 3,883,018 3.34 239
1998-99 18,015 146,943,730 3,913,952 2.66 217
1999-00 18,595 212,415,476 8,677,053 4.08 467
2000-01 20,235 212,027,463 8,209,873 3.87 406
2001-02 20,235 238,714,537 13,410,000 5.62 663
2002-03 21,740 270,602,866 12,585,000 4.65 579
2003-04 22,105 * 323,385,230 11,740,000 3.63 531
2004-05 23,700 * 375,068,203 11,215,000 2.99 473
* League of Arizona Cities and Towns.
85
Fiscal
Year
1995-96 $
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
TOWN OF FOUNTAIN IDLLS, ARIZONA
RATIO OF ANNUAL DEBT SERVICE EXPENDITURES
TO TOTAL GENERAL EXPENDITURES
Principal
209,193 $
222,321
245,210
223,024
339,013
620,408
1,229,215
1,393,228
1,423,228
1,308,228
LAST TEN FISCAL YEARS
(UNAUDITED)
Interest Bond Total
and Fiscal Issuance Debt
Charges Cost Service
208,477 $ $ 417,670
247,311 469,632
554,731 799,941
517,696 54,368 795,088
585,001 924,014
1,086,208 144,986 1,851,602
1,372,965 300,936 2,903,116
1,576,842 2,970,070
1,499,575 2,922,803
1,164,561 229,990 2,702,779
Total
Expenditnres (*)
$ 7,667,025
12,850,703
10,631,005
11,464,538
15,404,414
21,368,050
32,630,186
15,771,446
15,399,989
23,151,671
(*) Includes all Govemmental Fund Types.
86
Ratio of Debt
Service to Total
Expenditnres
5.45%
3.65
7.52
6.94
6.00
8.67
8.90
18.83
18.98
11.67
TOWN OF FOUNTAIN HILLS, ARIZONA
DIRECT AND OVERLAPPING GENERAL OBLIGATION BONDED DEBT
JUNE 30, 2005
Overlapping Jurisdiction
State of Arizona
Maricopa County
Maricopa County Connnunity College District
Eagle Mountain Connnunity Facilities District
Fountain Hills Unified School District No. 98
East Valley Institute of Technology District
Fountain Hills Sanitary District
Town of Fountain Hills
(UNAUDITED)
2004-05
Net Secondary
Assessed
Valuation
$48,938,261,134
33,188,609,340
33,188,609,340
24,195,157
3 86,548,3 89
14,048,333,333
373,290,604
375,068,203
Total Direct and Overlapping General Obligation Bonded Debt
Source: Maricopa County Treasurer's Office.
87
$
Net
Outstanding
General
Obligation
Bonded Debt
234,440,000
4,455,000
27,990,000
6,235,000
1,320,000
10,675,000
Proportion Applicable to
Town of fountain Hills
Approximate
Percent
0.77%
1.13%
1.13%
100.00%
97.03%
2.67%
100.00%
100.00%
$
Net Debt
Amount
2,649,172
4,455,000
27,158,697
166,475
1,320,000
10.675.000
$ 46.424.344
TOWN OF FOUNTAJN HILLS, ARIZONA
MISCELLANEOUS STATISTICAL DATA
JUNE 30, 2005
(UNAUDITED)
DATE OF INCORPORATION
FORM OF GOVERNMENT
NUMBER OF EMPLOYEES (no police and fire)
Classified-Full time
Classified -Part time
Exempt
AREA
TOWN OF FOUNTAIN HILLS FACILITIES AND SERVICES
Miles of Street
Surfaced
Unsurfaced
Population
1990 census
I 995 census
2000 census
Housing Units
Building Pennits Issued
Culture and Recreation
Cmmnunity Centers
Parks
Park acreage
Tennis courts
Senior center
FACILITIES AND SERVICES NOT INCLUDED IN PRIMARY
GOVERNMENT
Fire Protection:
Number of stations
The Town of Fountain Hills has no fire employees, but contracts with
Rural/Metro Corporation to provide fire services to all residents. The
Town does, however, own the frre station and equipment.
Police Protection:
Number of stations
Number of police personnel a11d officers
Number of patrol units
Number of Jaw violations
Physical arrests
Traffic/Parking violations
Sewerage System:
Miles of sanitary sewers
Number of treatment plants
Maximum daily capacity of treatment plant in gallons
Water System:
Miles of water mains
Number of hydrants
Maximum daily capacity of plant in gallons
Education:
Number of elementary schools
Number of secondary schools
Source: Town govermnent offices and related districts.
88
December 5, I 989
Council -Manager
64
20
25
18.27 sq. miles
178.5
2
10,190
14,160
20,235
12,385
950
1
4
121
6
1
2
1
22
9
644
2,432
Special District
210
1
2.6mgd
Private
178
1,217
18,800,000
3
1