HomeMy WebLinkAboutFY20 CAFRTOWN OF FOUNTAIN HILLS, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2020
Issued by:
Administration Department
Finance Division
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
INTRODUCTORY SECTION Page
Letter of Transmittal 1
List of Principal Officials 11
GFOA Certificate of Achievement 12
Organizational Chart 13
FINANCIAL SECTION
INDEPENDENT AUDITOR’S REPORT 17
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) 21
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements:
Statement of Net Position 34
Statement of Activities 35
Fund Financial Statements:
Balance Sheet – Governmental Funds 38
Reconciliation of the Balance Sheet –
Governmental Funds to the Statement of Net Position 41
Statement of Revenues, Expenditures and Changes in Fund Balances –
Governmental Funds 42
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances – Governmental Funds to the
Statement of Activities 44
Notes to Financial Statements 45
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
FINANCIAL SECTION – continued Page
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Revenues, Expenditures and Changes in Fund Balances –
Budget and Actual:
General Fund 66
Highway User Revenue Fund 67
Grants Fund 68
Note to Required Supplementary Information 69
COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND
SCHEDULES
Governmental Funds:
Combining Balance Sheet – All Non-Major Governmental Funds –
By Fund Type 72
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances – All Non-Major Governmental Funds – By Fund Type 73
Special Revenue Funds:
Combining Balance Sheet 76
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances 78
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual 80
Debt Service Funds:
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual 86
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
FINANCIAL SECTION – continued Page
Capital Projects Fund:
Combining Balance Sheet 90
Combining Statement of Revenues, Expenditures and Changes in 91
Fund Balances
Combining Schedule of Revenues, Expenditures and Changes in
Fund Balances – Budget and Actual 92
STATISTICAL SECTION
Financial Trends:
Net Position by Component 96
Changes in Net Position 98
Financial Trends:
Fund Balances – Governmental Funds 100
Statement of Revenues, Expenditures and Changes in
Fund Balances – Governmental Funds 102
Revenue Capacity:
Governmental Activities – Tax Revenues by Source 104
Assessed Value and Estimated Actual Value of Taxable Property 105
Principal Property Taxpayers 106
Property Tax Levies and Collections 107
Taxable Sales by Category 108
Direct and Overlapping Sales Tax Rates 110
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
STATISTICAL SECTION – continued Page
Debt Capacity:
Ratios of Outstanding Debt by Type 111
Ratios of General Bonded Debt Outstanding 112
Direct and Overlapping Governmental Activities Debt 113
Legal Debt Margin Information 114
Calculation of Legal Debt Margin 116
Revenue Bond Coverage 117
Demographic and Economic Information:
Demographic and Economic Statistics 118
Principal Employers 119
Operating Information:
Authorized Full-Time Equivalent Government Employees by Function 120
Operating Indicators by Function 121
Capital Assets Statistics by Function 122
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INTRODUCTORY SECTION
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www.fh.az.gov
November 3, 2020
To the Honorable Mayor, Members of the Town Council, and Citizens of the Town of Fountain
Hills:
State law requires that all general-purpose local governments publish, within six months of the
close of each fiscal year, a complete set of financial statements presented in conformity with
accounting principles generally accepted in the United States of America and audited in
accordance with auditing standards generally accepted in the United States by a certified public
accounting firm licensed in the State of Arizona. Pursuant to that requirement, we hereby issue the
Comprehensive Annual Financial Report (CAFR) of the Town of Fountain Hills (Town) for the
fiscal year ended June 30, 2020.
This report consists of management’s representations concerning the finances of the Town.
Consequently, management assumes full responsibility for the completeness and reliability of all
of the information presented in this report. To provide a reasonable basis for making these
representations, management of the Town has established a comprehensive internal control
framework that is designed both to protect the government’s assets from loss, theft, or misuse and
to compile sufficient reliable information for the preparation of the Town of Fountain Hills’s
financial statements in conformity with accounting principles generally accepted in the United
States of America. Because the cost of internal controls should not outweigh their benefits, the
Town’s comprehensive framework of internal controls has been designed to provide reasonable
rather than absolute assurance that the financial statements will be free of material misstatement.
As management, we assert that, to the best of our knowledge and belief, this financial report is
complete and reliable in all material respects.
The Town’s financial statements have been audited by Heinfeld, Meech & Co., P.C., a certified
public accounting firm. The goal of the independent audit was to provide reasonable assurance
that the financial statements of the Town for the fiscal year ended June 30, 2020, are free of
material misstatement. The independent audit involved examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements; assessing the accounting
principles used and significant estimates made by management; and evaluating the overall
financial statement presentation. The independent auditors concluded, based upon the audit, that
there was a reasonable basis for rendering an unmodified opinion that the Town’s financial
statements for the fiscal year ended June 30, 2020, are fairly presented in conformity with
accounting principles generally accepted in the United States of America. The independent
auditor’s report is presented as the first component of the financial section of this report.
TOWN OF FOUNTAIN HILLS
16705 E. Avenue of the Fountains, Fountain Hills, AZ 85268
480.816.5100 | Fax: 480.837.3145
Generally accepted accounting principles in the Unites States of America require that management
provide a narrative introduction, overview, and analysis to accompany the basic financial
statements in the form of Management’s Discussion and Analysis (MD&A). This letter of
transmittal is designed to complement the MD&A and should be read in conjunction with it. The
Town of Fountain Hills’ MD&A can be found immediately following the report of the independent
auditors.
PROFILE OF THE GOVERNMENT
The Town of Fountain Hills overlooks the Verde River Valley and the east valley of the metro
Phoenix area. The Town is a master planned community established in 1970 by McCulloch
Properties (now MCO Properties, Inc.). Prior to 1970, the area was a cattle ranch and was part of
one of the largest land and cattle holdings in Arizona. The land was purchased by Robert
McCulloch in the late 1960s and the community designed by Charles Wood, Jr. (designer of
Disneyland in southern California). The centerpiece of Fountain Hills is one of the world's tallest
man-made fountains, a focal point that attracts thousands of visitors each year.
Located on 13,006 acres of land, Fountain Hills is surrounded by the McDowell Mountains and
Scottsdale on the west, the Fort McDowell Yavapai Nation on the east, the Salt River Pima-
Maricopa Indian Community on the south, and by the McDowell Mountain Regional Park on the
north. The elevation is 1,520 feet at the fountain, 2,460 feet at the Adero Canyon Trailhead, and is
approximately 500 feet above Phoenix.
Over the past twenty-six plus years, Fountain Hills has grown from 10,190 residents to a town of
25,200 in 2019. On June 5, 2006, the Town of Fountain Hills became twenty square miles and
about ten percent larger by annexing 1,300 acres of State Trust Land. The process to annex the
State Trust Land occurred over a two and one-half year period and development of the land will
occur over the next decade. Annexing this property into the Town ensures that its future
development will be of the highest quality under Town standards.
The Town offers a wide range of living
accommodations, from small
condominium complexes to large custom
homes. Fountain Hills also offers
recreational and cultural programs and
services that contribute to a high quality
of life for its residents. The community
consists of primarily residential property
and open space; of the total 20.32 square
miles of land, only 2.5% of the total is
zoned commercial and/or industrial,
23.3% is preserved as open space and
51.0% is residential.
Page 2
The Town’s Mission Statement
The Town of Fountain Hills’ purpose is to serve the best interests of the community by:
providing for its safety and well-being;
respecting its special, small-town character and quality of life;
providing superior public services;
sustaining the public trust through open and responsive government;
and maintaining the stewardship and preservation of its financial and natural resources.
To serve, respect, and provide trust and stewardship.
The Town of Fountain Hills is an Arizona municipal corporation, acting as a general law town as
prescribed in the Arizona Revised Statutes. The Town was incorporated on December 5, 1989,
with the governmental and administrative affairs of the Town operating under the Council-
Manager form of government. Legislative authority is vested in a seven member Town Council.
The Mayor is a member of the Town Council who is directly elected by voters and chairs the Town
Council meetings. The members of the Council are elected at large and serve four year overlapping
terms. The Town Council is responsible for the adoption of local ordinances, budget adoption,
appointment of residents to citizen advisory committees and hiring the Town Manager. The Town
Manager is responsible for implementation of the policies of the Town Council and overall
management of the Town through department directors and approximately 61 FTE employees.
The Presiding Judge, Town Attorney, and Town Prosecutor are under the direction of the Town
Council.
The Town provides or administers a full range of services
including public safety (law enforcement, fire and
emergency medical services); development services (code
enforcement, planning and zoning); public works
(including construction and maintenance of streets and
infrastructure); municipal court; recreational activities;
community center; senior services and cultural events.
The Town does not maintain utility or other operations
that require the establishment of enterprise funds.
Fountain Hills Town Hall
Page 3
The financial reporting entity (the Town) includes all the funds of the primary government (i.e., the
Town of Fountain Hills as legally defined) as well as all of its component units. The component units
consist of legally separate entities for which the primary government is financially accountable.
Blended component units, although legally separate entities, are, in substance, part of the primary
government’s operations and are included as part of the primary government. Accordingly, the
Cottonwoods Maintenance District, the Eagle Mountain Community Facilities District and the
Fountain Hills Municipal Property Corporation are included in the financial report of the Town.
FACTORS AFFECTING FINANCIAL CONDITION
The information presented in the financial statements is perhaps best understood when it is considered
from the broader perspective of the specific environment within which the Town of Fountain Hills
operates.
Internal Controls. As earlier noted, the management of the Town of Fountain Hills, Arizona, is
responsible for establishing and maintaining a system of internal control. Internal accounting controls
are designed to provide reasonable, but not absolute, assurance regarding;
1) Safeguarding of assets against loss from unauthorized use or deposition, and
2) Reliability of financial records for preparing financial statements and maintaining
accountability for assets.
The concept of reasonable assurance recognizes:
1) The cost of a control should not exceed the benefits likely to be derived, and
2) The valuation of costs and benefits requires estimates and judgments by management.
The system of internal control is subject to periodic evaluation by management and is also considered
by the independent auditors in connection with the annual audit of the Town’s financial statements. All
internal control evaluations occur within the above framework. The Town's internal accounting
controls are considered to adequately safeguard assets and provide reasonable assurance of proper
recording of financial transactions.
Budgetary Controls. The budget process is a cyclical process and begins each year with the
preparation of the base budget by each department head. Each budget is based on expenditures to date
and the previous years’ experience. The departments’ base budgets, along with any requests for new
positions, programs or services are reviewed by the Town Manager. The Town Manager then meets
with department heads to review their base budgets and requests for new services and/or programs.
Once management has reviewed the departments’ requests, a tentative budget is presented to the Town
Council by the Town Manager.
Page 4
The Town Council formally adopts the budget and appropriates funding for the General Fund, Special
Revenue Funds, Debt Service Funds, and Capital Projects Funds. Therefore, these funds have
appropriated budgets, and budget to actual information is presented. In April/May, the Town Manager
submits to the Town Council a proposed budget for the fiscal year commencing the following July 1st.
The budget includes proposed expenditures and the means of financing them. The Town Council is
legally required to hold public hearings on the proposed budget in order to obtain comments from local
taxpayers and to adopt a final budget by June 30th, the close of the Town of Fountain Hills’ fiscal year.
The budget is legally enacted through passage of a resolution and is prepared by fund and department.
The resolution sets the limit for expenditures during the fiscal year. The Town Manager may authorize
transfers from and within personnel and from operating capital to services or supplies within a
department. Additional expenditures may be authorized for expenditures directly necessitated by a
natural or man-made disaster as prescribed in the State Constitution, Article IX, Section 20.
The Town is subject to the State of Arizona’s Expenditure Limitation Law for Towns and Cities. This
law does not permit the Town to spend more than budgeted revenues plus the carry-over of unrestricted
cash balance from the prior fiscal year. The limitation is applied to the total of the combined funds. All
appropriations lapse at year-end.
To ensure compliance with the state imposed expenditure limitation, a uniform expenditure report must
be filed with the state each year. This report reconciles total Town expenditures from the audited
financial statements to total expenditures for reporting in accordance with the state’s uniform
expenditure reporting system (ARS Section 41-1279.07).
The appropriated budget is prepared by fund and department. Department heads may make transfers of
appropriations within the department. Transfers of appropriations between departments, however,
require Town Council approval. Budget-to-actual comparisons are provided in this report for each
individual governmental fund for which an appropriated annual budget has been adopted. Budget-to-
actual comparisons for the General Fund and Major Special Revenue Funds are presented in the
Required Supplementary Information and all other funds are presented in Combining and Individual
Fund Financial Statements and Schedules.
Local Economy. The Town of Fountain Hills, Arizona, continues to face many issues during these
uncertain economic times. Its citizens, governing body, and municipal government are committed to
finding solutions for each of these issues. In order to address these issues, the Town has proposed a
baseline budget requiring any new positions to be deemed mission critical. All vacancies will be
evaluated to assess the need for replacement, including possible modification or elimination of the job
description. The Town will be closely monitoring its revenue sources and make adjustments
accordingly.
Overall local sales tax receipts continued to increase during the fiscal year, partly due to a 0.3% rate
increase that became effective on November 1, 2019 for most sales tax categories. The following chart
is a look at the past five years’ local sales tax activity by sector:
Page 5
As shown in the chart, sales tax collections remained relatively steady across most sectors. Retail sales
experienced a significant 28.7% increase over the prior year, and Transportation/Utility revenues
increased 8.9% from FY18-19. Construction sales tax, a one-time revenue source, is driven entirely by
development activity in the community, and it decreased by 1.2% from the prior year. Recent building
permit activity indicates that construction sales tax is likely to increase over the next fiscal year. The
Restaurant/Bar sector was the only other sector to decrease during the year with a 0.2% drop in
revenues.
Construction activity provides revenue to the Town through local sales tax, the proceeds of which are
utilized for general operations and capital expenditures. Without the resources to fund capital projects,
the Town must find additional funds to pay for necessary infrastructure projects. For operating costs,
the Town is dependent upon State-shared revenues and local sales tax as a major source of operating
revenue, accounting for 87% of total General Fund revenue for fiscal year 2019-20.
State-shared revenues are derived as a proportionate share of state sales, income and vehicle license
taxes which are distributed based on the Town’s population compared to all other incorporated cities
and towns in Arizona (currently 0.4%). State-shared income tax revenue category is based on two years
prior personal and corporate earnings, and revenue from this source increased by 8.5% in FY19-20.
State sales tax has increased over the past several years, and this trend continued by increasing revenue
by 4.3% compared to the prior year.
Other local activity has remained fairly static during the period due to the lack of major retailers (the
Town has three grocery stores and one major retailer). Fountain Hills is past the historic period of rapid
growth, and the long-term economic outlook for the Town must recognize this fact. The opportunity to
further expand the retail tax base in Fountain Hills is limited by the lack of available commercial land
– over 70% of the currently available commercial lots are already developed.
Page 6
Development Activity over the past year:
Development Services has been involved with the following development activities during fiscal year
2019-20 (7/1/2019 – 6/30/2020):
o Three Temporary Visitor Permits were issued.
o One Temporary User Permit was issued.
o Three Site Plans were approved during the period.
o Two Special Use Permits were granted.
o Four Administrative Use Permits were issued.
o Eleven Banner and Sign Permits were issued.
o Sixteen commercial development/subdivision cases were granted.
o Five Zoning Verification Letters were issued.
o Four Saguaro Cactus Permits were issued.
o Twenty-nine new Single-Family Residential Building Permits were issued.
o Eighteen Multi-Family Permits were issued.
o There were new two Commercial Building Permits issued.
o There were thirteen Commercial Tenant Improvement Permits issued during the last
fiscal year.
A summary of the activity, by month, is shown below:
Fiscal year
SFR
DUP/MULTI
T.I. &
Comm
Pools,
Fences
&
Other
Add Ons
(Not
Garages
Garages
&
Carports
MONTH
TOTAL
Bldgs. Total
Units
Permits
Issued
JULY 3 4 1 22 3 0 33
AUGUST 5 2 0 41 2 0 50
SEPTEMBER 0 4 1 28 1 0 34
OCTOBER 2 2 0 47 6 1 58
NOVEMBER 0 1 1 18 3 0 23
DECEMBER 3 2 0 32 4 1 42
JANUARY 3 0 2 44 4 0 53
FEBRUARY 2 2 3 41 2 0 50
MARCH 4 1 0 52 5 0 62
APRIL 3 0 2 29 6 1 41
MAY 2 0 3 37 6 0 48
JUNE 2 0 2 42 7 0 53
YEARLY
TOTAL 29 18 15 433 49 3 547
Page 7
Economic Outlook.
Local Sales Tax – Not having a property tax, the Town of Fountain Hills relies heavily on Town
transaction privilege tax (TPT), sometimes called a sales tax. Overall, sales tax revenues provide over
50% of the General Fund revenues. On November 1, 2019 the Town’s TPT rate went up 0.3% resulting
in a total TPT rate of 2.9% for most categories. Sales taxes received from the Construction category is
equally divided between the General Fund and the Capital Projects Fund.
State-Shared Revenues – The Town of Fountain Hills receives significant revenue allocations from
the State. These "State-Shared Revenues" include allocations of the state-collected income tax, sales
tax, fuel tax, and motor vehicle license tax. Revenues received from income tax, sales tax, and a portion
of vehicle license tax are placed in the Town's General Fund, where it is used to sustain a large portion
of the Town's day-to-day activities. Revenues from the fuel tax and the majority of the vehicle license
tax are placed in the Streets Fund (discussed in the next section) and are restricted as to their use.
Overall, State-Shared Revenues have steadily increased from year-to-year.
Streets Fund – The State-Shared fuel tax, referred to as Highway User Revenue Fund (HURF), is
placed in the Streets Fund to be used specifically for street maintenance and related activity. In addition
to the fuel tax, 70% of the revenues received from the vehicle license tax are placed in the Streets Fund
to be used for these same purposes.
Long-term Financial Planning. Fountain Hills’ Financial Policies are balanced on sound financial
reserves and conservative revenue growth forecasts for the foreseeable future. Potential for State
legislative impacts to revenue-sharing or local revenues and additional demands for essential Town
services remain. The Town’s Financial Policies set forth guidelines against which current budgetary
performance can be measured and proposals for future programs can be evaluated.
The Town’s Financial Policies have helped weather the uncertainty caused by the coronavirus
pandemic. This policy continues to require the Town to internally restrict an amount equal to 20% of
the average actual General Fund revenues for the preceding five fiscal years as part of its General Fund
balance. This amount is estimated to be approximately 60 days of expenditure coverage and is
considered a “Rainy Day” fund.
Additionally, a reserve of 20% of the average actual General Fund revenues for the preceding five
fiscal years will be maintained as Unassigned Fund Balance. This additional fund balance reserve will
provide increased flexibility in the event of unanticipated decreases in revenue collection.
The Council also adopted Financial Policies that include guidelines for the issuance of debt for capital
expenditures, community facility districts, financing alternatives, expenditure controls and financial
planning. The policy was amended during FY 09-10 to reduce the allocation of the local construction
sales tax to the Capital Projects Fund from 85% to 50%, reflecting the transition from one-time building
activity to ongoing redevelopment activity. The debt policy was prepared with a preference for “pay-
as-you-go” financing for capital spending; however, the policy did not anticipate the lack of funding
for capital projects, and the use of bond funding should be reconsidered.
Page 8
In early 2009, the Strategic Planning Advisory Commission (SPAC) began the process of gathering
public input to update the Strategic Plan’s vision, confirm residents’ values, and create a fresh structure
for the Strategic Plan revision. Subsequently, Strategic Plan 2010 was built upon the foundation of a
clearly defined vision statement and eight key values, with specific indicators to evaluate Council and
staff priorities. In 2017, SPAC again updated the Strategic Plan. Based on citizen input, the newest
Strategic Plan is designed to guide our future decisions grounded on these common values:
1. Economic Growth
2. Infrastructure Maintenance
3. Demographic Balance
4. Financial Stability and Sustainability
5. Community and Quality of Life
These values guide the Town’s annual budget process.
MAJOR INITIATIVES AND SERVICE EFFORTS AND ACCOMPLISHMENTS
The Town of Fountain Hills’ adopted FY19-20 budget reflected the continued slow recovery in the
local economy, which is also somewhat mirrored at the national and state levels. Due to the challenging
economic conditions of the recession, the Town had made significant reductions in staff and service
levels in past years. This reduction was accomplished by a thorough assessment of all existing and
proposed programs and workload. As a result, Town staffing was reduced from 115 Full-Time
Equivalents (FTEs) to 62.07 FTEs in FY19-20.
The Town Council established priorities in FY16-17, and the two top priorities were determined to be
Economic Development and Pavement Management. In order to implement the Pavement Management
program, the Council approved the use of Vehicle License Tax revenues to annual pavement
maintenance with an effective date of July 1, 2013. Also, effective July 1, 2016, 0.2% of local sales tax
revenues that had been allocated to MPC debt service payments were reallocated to pavement
maintenance. Economic Development initiatives are funded through a dedicated portion of the local
sales tax which provides funding for business attraction, retention and expansion.
For the Year. The following list depicts the continued commitment of the Town of Fountain Hills to
make the community a better place to live. Fiscal year 2019-20 goals attained are summarized within
this list of accomplishments:
Implemented a 0.3% local sales tax increase to ensure adequate funding of Town operations
Secured grant funding from the Arizona Office of Tourism - Proposition 302
Secured grant funding from Salt River Pima-Maricopa Indian Community - Proposition 202
Received Council approval of the Ten-Year Pavement Management Plan
Completed a Development Fee Study resulting in updated funding sources for new parks,
streets, and fire protection infrastructure
Completed a major update to audio-visual equipment in Council Chambers to increase
quality of community broadcasts and presentations
Page 9
AWARDS AND ACKNOWLEDGEMENTS
Awards. The Government Finance Officers Association (GFOA) awarded a Certificate of
Achievement for Excellence in Financial Reporting to the Town of Fountain Hills for its
Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2019. This was the
twenty-fourth consecutive year that the Town has received this prestigious award. In order to be
awarded a Certificate of Achievement, the Town published an easily readable and efficiently organized
CAFR. This report satisfied both accounting principles generally accepted in the United States of
America (GAAP) and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR
continues to meet the Certificate of Achievement program’s requirements, and we are submitting it to
the GFOA to determine its eligibility for the fiscal year ended 2020 Certificate.
For the eighth year, the Town was also given the Award for Outstanding Achievement in Popular
Annual Financial Reporting for the fiscal year ended June 30, 2019.
In addition, the government received the GFOA’s Distinguished Budget Presentation Award for its
annual budget for the fiscal year beginning July 1, 2019. In order to qualify for the Distinguished
Budget Presentation Award, the government’s budget document was judged to be proficient in several
categories, including as a policy document, a financial plan, an operations guide, and a communications
device. This is the eighteenth consecutive year that the Town has received the award.
Acknowledgments. The preparation of this Comprehensive Annual Financial Report could not have
been accomplished without the efficient and dedicated services of the entire team of the Finance
Division. I also wish to extend my appreciation to the Mayor and members of Town Council for their
leadership and support in planning and conducting the financial affairs of the Town in a responsible
and progressive manner. Each employee of the Town has my sincere appreciation for the contributions
made in the preparation of this report.
Respectfully submitted,
Grady E. Miller
Town Manager
Page 10
TOWN OF FOUNTAIN HILLS, ARIZONA
LIST OF PRINCIPAL OFFICIALS
JUNE 30, 2020
ELECTED OFFICIALS
Ginny Dickey, Mayor
Mike Scharnow, Vice-Mayor
Dennis Brown, Councilmember
Sherry Leckrone, Councilmember
Alan Magazine, Councilmember
David Spelich, Councilmember
Art Tolis, Councilmember
DEPARTMENT DIRECTORS
Grady Miller, Town Manager
David Trimble, Deputy Town Manager/Administrative Services Director
Rachael Goodwin, Community Services Director
James Smith, Economic Development Director
John Wesley, Development Services Director
Justin Weldy, Public Works Director
David Pock, Finance Director
Elizabeth Burke, Town Clerk
Captain Dave Ott, Rural Metro Corporation, Fire Chief
Captain Larry Kratzer, Maricopa County Sheriff’s Office, District Commander
Robert Melton, Presiding Judge
Mark Iacovino, The Law Office of Mark Iacovino, Town Prosecutor
Aaron Arnson, Pierce Coleman PLLC, Town Attorney
Page 11
Certificate of
Presented to
Town of Fountain Hills
For its Comprehensive Annual
June 30, 2019
Executive Director/CEO
Financial Report
for the Fiscal Year Ended
Reporting
in Financial
for Excellence
Achievement
Text38:Arizona
Government Finance Officers Association
Page 12
Citizens of Fountain HillsCitizens of Fountain Hills
Presiding Judge
Town of Fountain Hills Organization
Fire / EMS AdministrationAdministration Law
Enforcement
Town Manager Town AttorneyTown Prosecutor
Appointed
by Council
Contracted
Mayor and Town CouncilMayor and Town Council
Development
Services
Recreation
Community
Services
Community
Center
Code
Enforcement
Building Safety
Senior
Services
Parks
Volunteer
Program
GIS
Planning
Engineering
Streets
Facilities
Public Works
Inspection
Finance Finance
Town ClerkTown Clerk
Administrative
Services
Administrative
Services
Economic
Development /
Tourism
Economic
Development /
Tourism
Public
Information
Public
InformationPage 13
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FINANCIAL SECTION
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INDEPENDENT AUDITOR’S REPORT
The Honorable Mayor and Members of the Town Council
Town of Fountain Hills, Arizona
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and
the aggregate remaining fund information of Town of Fountain Hills, Arizona (the Town), as of and for the year
ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the Town’s
basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General
of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of
the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we
express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, each major fund, and the aggregate remaining fund information
of the Town of Fountain Hills, Arizona, as of June 30, 2020, and the respective changes in financial position
thereof for the year then ended in accordance with accounting principles generally accepted in the United States
of America.
Page 17
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s
Discussion and Analysis and budgetary comparison information, as listed in the table of contents, be presented
to supplement the basic financial statements. Such information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential
part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or
historical context. We have applied certain limited procedures to the required supplementary information in
accordance with auditing standards generally accepted in the United States of America, which consisted of
inquiries of management about the methods of preparing the information and comparing the information for
consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge
we obtained during our audit of the basic financial statements. We do not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient evidence to
express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the Town’s basic financial statements. The 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 are the responsibility of management
and were derived from and relate directly to the underlying accounting and other records used to prepare the
basic financial statements. Such information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic financial statements
or to the basic financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the Combining and Individual
Fund Financial Statements and Schedules information is fairly stated in all material respects in relation to the
basic financial statements as a whole.
The Introductory Section and Statistical Section have not been subjected to the auditing procedures applied in
the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any
assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated November 3, 2020,
on our consideration of the Town of Fountain Hills, Arizona’s internal control over financial reporting and on
our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other
matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial
reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of
internal control over financial reporting or on compliance. That report is an integral part of an audit performed
in accordance with Government Auditing Standards in considering the Town of Fountain Hills, Arizona’s
internal control over financial reporting and compliance.
Heinfeld, Meech & Co., P.C.
Phoenix, Arizona
November 3, 2020
Page 18
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
(Required Supplementary Information)
Page 19
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Page 20
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2020
As management of the Town of Fountain Hills, Arizona (Town), we offer readers of the Town’s
financial statements this narrative overview and analysis of the financial activities of the Town
for the fiscal year ended June 30, 2020. This discussion and analysis is intended to be an easily
readable breakdown of the Town of Fountain Hills’ financial activities based on currently known
facts, decisions and conditions. This analysis focuses on current year activities and operations and
should be read in combination with the transmittal letter and the financial statements that follow.
The management’s discussion and analysis is presented as required supplementary information
to supplement the basic financial statements.
FINANCIAL HIGHLIGHTS
The Town’s total net position of governmental activities increased $0.5 million to $124.2
million, representing a 0.4 percent increase of the total net position.
General revenues from governmental activities accounted for $23.3 million in revenue, or
85.7 percent of all revenues from governmental activities. Program specific revenues in the
form of charges for services and grants and contributions accounted for $3.9 million or 14.3
percent of total governmental activities revenues.
The Town had $26.8 million in expenses related to governmental activities, an increase of 1.3
percent from the prior fiscal year, primarily due to increased public safety costs.
Among the major governmental funds, the General Fund had $19.4 million in current fiscal
year revenues, which consisted primarily of taxes and intergovernmental revenues. The total
expenditures of the General Fund were $16.3 million. The General Fund’s fund balance
increased $2.1 million to $9.4 million at the end of the current fiscal year.
OVERVIEW OF FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the Town’s basic financial
statements. The Town’s basic financial statements comprise three components: 1) government-
wide financial statements, 2) fund financial statements, and 3) notes to the financial statements.
This report also contains other supplementary information in addition to the basic financial
statements themselves.
Page 21
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2020
OVERVIEW OF FINANCIAL STATEMENTS – continued
Government-wide financial statements. The government-wide financial statements provide
readers with a broad overview of the Town’s finances, in a manner similar to a private-sector
business. These statements are prepared using the accrual basis of accounting.
The Statement of Net Position presents information on all of the Town’s assets, liabilities, and
deferred inflows/outflows of resources with the difference reported as net position. Over time,
increases or decreases in net position may serve as a useful indicator of whether the financial
position of the Town is improving or deteriorating.
The Statement of Activities presents information showing how the Town’s net position changed
during the most recent fiscal year. All changes in net position are reported as soon as the underlying
event giving rise to the change occurs, regardless of the timing of related cash flows. Thus,
revenues and expenses are reported in this statement for some items that will only result in cash
flows in future fiscal periods (e.g., earned but unused compensated absences).
The government-wide financial statements distinguish functions of the Town that are principally
supported by taxes and intergovernmental revenues (governmental activities). The governmental
activities of the Town include administration, development services, public safety, public works,
and culture and recreation.
Fund financial statements. A fund is a grouping of related accounts that is used to maintain
control over resources that have been segregated for specific activities or objectives. The Town
uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements. All of the funds of the Town are included in governmental funds.
Governmental funds. Governmental funds are used to account for essentially the same
functions reported as governmental activities in the government-wide financial statements.
However, unlike the government-wide financial statements, governmental fund financial
statements use the modified accrual basis of accounting and focus on near-term inflows of
spendable resources, as well as on balances of spendable resources available at the end of the
fiscal year. Such information may be useful in evaluating the Town’s near-term financing
requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements.
By doing so, readers may better understand the long-term impact of the Town’s near-term
financing decision. Both the governmental fund balance sheet and the governmental fund
statement of revenues, expenditures and changes in fund balances provide a reconciliation to
facilitate this comparison between governmental funds and governmental activities.
Page 22
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2020
OVERVIEW OF FINANCIAL STATEMENTS – continued
Information is presented separately in the governmental fund balance sheet and in the
governmental fund statement of revenues, expenditures and changes in fund balances for the
General, Highway User Revenue (HURF), Grants, Capital Projects and all Debt Service Funds, all
of which are considered major funds. Data from other governmental funds are combined into a
single, aggregated presentation. Individual fund data for each of these non-major governmental
funds is provided in the form of combining statements and schedules.
Notes to the financial statements. The notes provide additional information that is essential to a
full understanding of the data provided in the government-wide and fund financial statements. The
notes to the financial statements can be found immediately following the basic financial
statements.
Other information. In addition to the basic financial statements and accompanying notes, this
report also presents certain required supplementary information concerning the Town’s budget
process. The Town adopts an annual budget for all governmental funds. A schedule of revenues,
expenditures and changes in fund balances - budget and actual has been provided for the General
Fund and major Special Revenue Funds as required supplementary information.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
While this document contains information about the funds used by the Town to provide services
to our citizens, the Statement of Net Position and the Statement of Activities serve to provide an
answer to the question of how the Town, as a whole, did financially throughout the year. These
statements include all assets and liabilities using the accrual basis of accounting similar to the
accounting used by the private sector. The basis for this accounting takes into account all of the
current year’s revenues and expenses regardless of when the cash is received or paid.
These two statements report the Town’s assets and the changes in those assets. The change in
assets is important because it tells the reader whether the financial position of the Town as a whole
has improved or diminished. However, in evaluating the overall position of the Town, non-
financial information such as changes in the Town’s tax base and the condition of the Town’s
capital assets will also need to be evaluated.
Analysis of Net Position. Net position may serve over time as a useful indicator of a government’s
financial position. In the case of the Town, assets related to governmental activities exceeded
liabilities by $124.2 million at the end of the fiscal year.
Page 23
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2020
GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued
The largest portion of the Town’s governmental activities net position reflects its investment in
capital assets (e.g., land, infrastructure, buildings and improvements, vehicles, machinery and
equipment and construction in progress); less any related outstanding debt used to acquire those
assets. The Town uses these capital assets to provide services to its citizens; consequently, these
assets are not available for future spending. Although the Town’s investment in its capital assets
is reported net of related outstanding debt, it should be noted that the resources needed to repay
this debt must be provided from other sources, since the capital assets themselves cannot be used
to liquidate these liabilities. In addition, a portion of the Town’s net position represents resources
that are subject to external restrictions on how they may be used. The remaining balance is
unrestricted and may be used to meet the Town’s ongoing obligations to its citizens and creditors.
The following tables present a summary of the Town’s net position for the fiscal years ended
June 30, 2020 and June 30, 2019.
Governmental Activities
As of
June 30, 2020
As of
June 30, 2019
Current and other assets $ 23,329,463 $ 20,419,804
Capital assets, net 104,404,331 107,559,746
Total assets 127,733,794 127,979,550
Current and other liabilities 3,338,678 3,661,199
Long-term liabilities 236,576 631,777
Total liabilities 3,575,254 4,292,976
Net position
Net investment in capital assets 104,004,331 104,781,328
Restricted 2,766,041 3,646,449
Unrestricted 17,388,168 15,258,797
Total net position $ 124,158,540 $ 123,686,574
At the end of the current fiscal year the Town reported positive balances in all three categories of
net position for governmental activities. The Town also reported positive balances in all net
position categories in the prior fiscal year.
Page 24
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2020
GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued
The Town’s financial position is the product of several financial transactions including the net
results of activities, the acquisition and payment of debt, the acquisition and disposal of capital
assets, and the depreciation of capital assets.
Changes in net position. The Town’s total revenues for the current fiscal year were $27.2 million.
The total cost of all programs and services was $26.8 million. The following table presents a
summary of the changes in net position for the fiscal years ended June 30, 2020 and June 30, 2019.
Governmental Activities
Fiscal
Year Ended
June 30, 2020
Fiscal
Year Ended
June 30, 2019
Revenues
Program revenues:
Charges for services $ 1,783,926 $ 2,676,671
Operating grants and contributions 2,007,841 1,850,676
Capital grants and contributions 91,245 181,939
General revenues
Property taxes 2,077,368 2,476,546
Sales taxes 13,172,390 11,491,123
Franchise taxes 434,896 423,947
State-shared revenue 5,813,932 5,453,029
Vehicle License taxes 1,060,839 1,061,441
Investment earnings 545,983 554,549
Miscellaneous 236,452 202,969
Total revenues $ 27,224,872 $ 26,372,890
Expenses
General government $ 3,470,936 3,318,477
Development services 825,884 867,725
Public safety 9,003,452 8,142,069
Public works 9,961,306 10,263,244
Culture and recreation 3,490,447 3,767,996
Interest on long-term debt 881 57,054
Total expenses 26,752,906 26,416,565
Excess before special item 471,966 (43,675)
Special item – Donation of capital assets 0 6,118,700
Changes in net position 471,966 6,075,025
Net position, beginning 123,686,574 117,611,549
Net position, ending $124,158,540 $ 123,686,574
Page 25
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2020
GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued
The charts below compare the governmental expenses from fiscal years 2019-20 and 2018-19.
Page 26
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2020
GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued
The following items are significant current year transactions that have had an impact on the change
of net position.
Fees, Fines and Charges for Services revenue decreased 33.4 percent compared to the prior
year due to the coronavirus pandemic resulting in the shutdown of the U.S. economy.
Investment income decreased in the current year 1.5 percent over the prior year due to the
coronavirus pandemic, slowing economy, and lower interest rates.
Interest on long-term debt decreased 98.5 percent due to the retirement of all town-wide
bonded debt.
Public safety costs, which include fire protection and police services, increased 10.6
percent; the fire contract is multi-year with automatic increases while the police contract is
based on cost reimbursement.
Overall, expenses increased 1.3 percent due primarily to increase public safety costs.
The following table presents the cost of the Town’s major functional activities. The table also
shows each function’s net cost (total cost less charges for services generated by the activities and
intergovernmental aid provided for specific programs). The net cost shows the financial burden
that was placed on the Town’s taxpayers by each of these functions.
Year Ended June 30, 2020 Year Ended June 30, 2019
Total
Expenses
Net (Expense)/
Revenue
Total
Expenses
Net (Expense)/
Revenue
Governmental Activities
General government $ 3,470,936 $ (2,845,747) $ 3,318,477 $ (2,946,699)
Development services 825,884 (216,992) 867,725 276,146
Public safety 9,003,452 (8,856,335) 8,142,069 (7,940,248)
Public works 9,961,306 (7,989,399) 10,263,244 (8,573,437)
Culture and recreation 3,490,447 (2,960,540) 3,767,996 (2,465,987)
Interest on long-term debt 881 (881) 57,054 (57,054)
Total expenses $ 26,752,906 $ (22,869,894) $ 26,416,565 $ (21,707,279)
The cost of all governmental activities this year was $26.8 million.
Federal, State, and county governments and charges for services subsidized certain
governmental programs with revenues of $3.9 million.
Net cost of governmental activities of $22.9 million was financed by general revenues,
which consist of primarily sales taxes of $13.2 million and State-shared revenues of $6.9
million.
Page 27
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2020
FINANCIAL ANALYSIS OF THE TOWN’S FUNDS
As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with
finance-related legal requirements.
Governmental funds. The focus of the Town’s governmental funds is to provide information on
near-term inflows, outflows, and balances of spendable resources. Such information is useful in
assessing the Town’s financing requirements. In particular, unassigned fund balance may serve as
a useful measure of the Town’s net resources available for spending at the end of the fiscal year.
The financial performance of the Town as a whole is reflected in its governmental funds. As the
Town completed the year, its governmental funds reported an increase of $1.2 million in the
combined fund balance from $19.3 million to $20.5 million.
The General Fund comprises 45.9 percent of the total fund balance. Approximately $5.5 million
or 58.8 percent of the General Fund’s fund balance is unassigned.
The General Fund is the principal operating fund of the Town. The fund balance increased by $2.1
million to $9.4 million as of fiscal year end. General Fund revenues increased $1.9 million
primarily due to increased local sales tax collections. General Fund expenditures increased $1.7
million. In addition to the increases of the public safety contracts, the Town also replaced a fire
truck, which was a major investment in capital assets.
The Highway User Revenue Fund comprises 8.0 percent of total fund balance. The fund balance
decreased $1.0 million from the prior year because of the continuation of the pavement
management program.
The Capital Projects Fund comprises 29.7 percent of the total fund balance. All of the fund balance
is committed or assigned to capital projects. The fund balance increased $268 thousand due to
increased construction-related sales tax.
BUDGETARY HIGHLIGHTS
A majority of the budget transfers for the fiscal year moved budget authority between departments
within the General Fund; however, the final budget for the General Fund did increase $234,500
thousand as a result of transfers from non-major funds.
Page 28
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2020
BUDGETARY HIGHLIGHTS – continued
A schedule showing the budget amounts compared to the Town’s actual financial activity for the
General Fund is provided in this report as required supplementary information. The significant
variances are summarized as follows:
The favorable variance of $2.1 million in overall revenues is primarily due to increased
local sales taxes collected from a 0.3% tax rate increase, effective 11/1/2019, and an
increase in construction activity.
The favorable total expenditures variance of $1.7 million is due primarily to lowered
expenditures throughout all departments, in particular contractual services.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets. As of the end of the current fiscal year, the Town had invested $227.5 million in
capital assets, including buildings, facilities, vehicles, computers, equipment, infrastructure and
artwork. This amount represents a net increase, prior to depreciation, of $1.5 million from the prior
fiscal year. The increase was primarily due to the purchase and replacement of vehicles and
equipment and the completion of Phase IV of the unpaved alley project and sidewalk infills. Total
depreciation expense for the current fiscal year was $5.3 million.
The following schedule presents a summary of capital asset balances for the fiscal years ended
June 30, 2020 and June 30, 2019.
Governmental Activities
As of
June 30, 2020
As of
June 30, 2019
Capital assets – non-depreciable $ 34,417,953 $ 33,387,396
Capital assets – depreciable, net 69,986,378 74,172,350
Total $104,404,331 $107,559,746
The estimated construction commitments amount is $910,125.
Additional information on the Town’s capital assets can be found in Note 5.
Debt Administration. At year-end, the Town had $400 thousand in governmental long-term debt
outstanding, with the entire balance due within one year. Long-term debt decreased by $2.4 million
during the current fiscal year.
Page 29
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2020
CAPITAL ASSETS AND DEBT ADMINISTRATION – continued
State statutes currently limit the amount of general obligation debt a Town may issue to a
percentage of its total assessed valuation for water, sewer, artificial lighting, parks, open space,
recreational facility improvements, public safety, law enforcement, fire and emergency facilities
and street and transportation facilities. The current 20 percent debt limitation for the Town is $113
million. State statutes also currently limit the amount of general obligation debt a Town may issue
to a percentage of its total assessed valuation for all other purposes. The current 6 percent debt
limitation for the Town is $33.9 million.
Additional information on the Town’s long-term debt can be found in Notes 6 and 7 in the notes
to the financial statements.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES
Many factors were considered by the Town’s administration during the process of developing the
fiscal year 2020-21 budget. Among them:
Revenue projections were developed using conservative growth estimates and did not
include anticipated revenues that will be received from soon-to-be completed
developments.
The COVID-19 pandemic has increased uncertainty around budgeted revenues. In
response, a large contingency line item has been budgeted in case less revenues are
received.
Also considered in the development of the budget is the local economy and inflation of the
surrounding area.
Budgeted expenditures for the Town increased 3.7 percent to $33.8 million in fiscal year 2020-21.
Revenues from local sales taxes and state-shared revenue are expected to be the primary funding
sources.
CONTACTING THE TOWN’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, investors and
creditors with a general overview of the Town’s finances and to demonstrate the Town’s
accountability for the resources it receives. If you have questions about this report or need
additional information, contact the Finance Division, Town of Fountain Hills, 16705 East Avenue
of the Fountains, Fountain Hills, Arizona 85268 or visit our website at www.fh.az.gov.
Page 30
BASIC FINANCIAL STATEMENTS
Page 31
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Page 32
GOVERNMENT-WIDE FINANCIAL STATEMENTS
Page 33
ASSETS
Current assets:
Cash and investments
Accounts receivable
Intergovernmental receivable
Taxes receivable
Interest receivable
Inventory, at cost
Prepaid items
Total current assets
Noncurrent assets:
Capital assets not being depreciated
Capital assets, net of accumulated depreciation
Total noncurrent assets
Total assets
LIABILITIES
Current liabilities:
Accounts payable
Accrued wages and benefits
Other liabilities
Customer deposits
Compensated absences payable
General obligation bonds payable
Unearned revenues
Total current liabilities
Noncurrent liabilities:
Non-current portion of long-term liabilities
Total noncurrent liabilities
Total liabilities
NET POSITION
Net investment in capital assets
Restricted
Unrestricted
Total net position
Governmental
Activities
$ 22,129,907
147,094
938,992
65,807
36,263
8,982
2,418
23,329,463
34,417,953
69,986,378
104,404,331
127,733,794
2,178,254
83,651
1,504
52,350
345,921
400,000
276,998
3,338,678
236,576
236,576
3,575,254
104,004,331
2,766,041
17,388,168
$124,158,540
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF NET POSITION
JUNE 30, 2020
The notes to the basic financial statements are an integral part of this statement.
Page 34
Program Revenues
Net (Expense)
Revenue and
Changes in Net
Position
Functions/Programs
Governmental activities:
General government
Development services
Public safety
Public works
Culture and recreation
Interest on long-term debt
Total governmental activities
Expenses
$ 3,470,936
825,884
9,003,452
9,961,306
3,490,447
881
$26,752,906
Charges for
Services
$ 533,189
608,892
100,444
131,750
409,651
$1,783,926
Operating
Grants and
Contributions
$ 92,000
46,673
1,840,157
29,011
$2,007,841
Capital Grants
and
Contributions
$
91,245
$91,245
Governmental
Activities
$ (2,845,747)
(216,992)
(8,856,335)
(7,989,399)
(2,960,540)
(881)
(22,869,894)
General revenues:
Taxes:
Property taxes
Sales taxes
Franchise taxes
State sales & income tax revenue sharing - unrestricted
Vehicle license tax revenue sharing - unrestricted
Investment earnings
Miscellaneous
Total general revenues
Changes in net position
Net position, beginning of year
Net position, end of year
2,077,368
13,172,390
434,896
5,813,932
1,060,839
545,983
236,452
23,341,860
471,966
123,686,574
$124,158,540
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2020
The notes to the basic financial statements are an integral part of this statement.
Page 35
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Page 36
FUND FINANCIAL STATEMENTS
Page 37
ASSETS
Cash and investments
Accounts receivable
Intergovernmental receivable
Taxes receivable
Interest receivable
Inventory, at cost
Prepaid items
Total assets
LIABILITIES, DEFERRED INFLOWS OF RESOURCES
AND FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and benefits
Other liabilities
Customer deposits
Unearned revenues
Total liabilities
Deferred inflows of resources:
Unavailable revenues - property taxes
Unavailable revenues - intergovernmental
Unavailable revenues - other
Total deferred inflows of resources
Fund balances (deficits):
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total fund balances
Total liabilities, deferred inflows of resources
and fund balances
General
$ 9,175,656
120,779
604,412
13,607
8,982
2,418
$9,925,854
$ 364,867
67,105
1,498
52,350
18,097
503,917
3,043
3,043
11,400
3,249,354
622,641
5,535,499
9,418,894
$9,925,854
Highway User
Revenue
$ 2,410,401
24,440
193,861
$2,628,702
$ 944,078
7,781
6
951,865
24,291
24,291
1,426,674
225,872
1,652,546
$2,628,702
Grants
$ 195,736
66,361
$262,097
$ 3,196
258,901
262,097
66,361
66,361
(66,361)
(66,361)
$262,097
TOWN OF FOUNTAIN HILLS, ARIZONA
BALANCE SHEET - GOVERNMENTAL FUNDS
JUNE 30, 2020
The notes to the basic financial statements are an integral part of this statement.
Page 38
General
Obligation Debt
Service
$ 113,164
57,307
$170,471
$
46,252
46,252
124,219
124,219
$170,471
Eagle Mountain
Debt Service
$ 23,478
8,500
$31,978
$
5,666
5,666
26,312
26,312
$31,978
Municipal
Property
Corporation Debt
Service
$ 11,537
$11,537
$
11,537
11,537
$11,537
Capital Projects
$ 6,838,934
58,623
20,638
$6,918,195
$ 759,845
759,845
58,623
58,623
4,488,812
1,610,915
6,099,727
$6,918,195
Non-Major
Governmental
Funds
$ 3,361,001
1,875
15,735
2,018
$3,380,629
$ 106,268
8,765
115,033
1,120,141
1,579,998
565,457
3,265,596
$3,380,629
Total
Governmental
Funds
$ 22,129,907
147,094
938,992
65,807
36,263
8,982
2,418
$23,329,463
$ 2,178,254
83,651
1,504
52,350
276,998
2,592,757
51,918
58,623
93,695
204,236
11,400
2,708,883
9,318,164
3,024,885
5,469,138
20,532,470
$23,329,463
Page 39
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Page 40
Total governmental fund balances 20,532,470
Amounts reported for governmental activities in the Statement of
Net Position are different because:
Capital assets used in governmental activities are not financial
resources and, therefore, are not reported in the funds.
Governmental capital assets 227,543,496$
Less accumulated depreciation (123,139,165)104,404,331
Some receivables are not available to pay for current period
expenditures and, therefore, are reported as deferred inflows
of resources in the funds.
Property taxes 51,918
Intergovernmental 58,623
Other 93,695 204,236
Long-term liabilities are not due and payable in the current
period and, therefore, are not reported in the funds.
Compensated absences payable (582,497)
Bonds payable (400,000)(982,497)
Net position of governmental activities 124,158,540$
TOWN OF FOUNTAIN HILLS, ARIZONA
RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
JUNE 30, 2020
The notes to the basic financial statements are an integral part of this statement.
Page 41
Revenues:
Property taxes
Sales taxes
Franchise taxes
Licenses and permits
Leases and rents
Intergovernmental
Charges for services
Other
Fines and forfeitures
Investment earnings
Total revenues
Expenditures:
Current -
General government
Development services
Public safety
Public works
Culture and recreation
Capital outlay
Debt service -
Principal retirement
Interest on long-term debt
Fiscal charges
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Proceeds from sale of capital assets
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
General
$
10,775,505
434,896
715,368
286,391
6,178,807
219,106
320,206
256,153
228,622
19,415,054
2,937,208
797,513
8,564,335
954,970
2,430,480
603,077
16,287,583
3,127,471
(1,003,235)
(1,003,235)
2,124,236
7,294,658
$9,418,894
Highway User
Revenue
$
961,250
2,572,745
3,841
48,326
45,419
3,631,581
4,194,703
337,999
4,532,702
(901,121)
200,000
(346,813)
(146,813)
(1,047,934)
2,700,480
$1,652,546
Grants
$
77,500
77,500
77,500
132,722
210,222
(132,722)
66,361
66,361
(66,361)
$(66,361)
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2020
The notes to the basic financial statements are an integral part of this statement.
Page 42
General
Obligation Debt
Service
$ 1,665,453
7,063
1,672,516
1,615,000
48,450
850
1,664,300
8,216
8,216
116,003
$124,219
Eagle Mountain
Debt Service
$ 414,614
1,736
416,350
395,000
13,991
138
409,129
7,221
7,221
19,091
$26,312
Municipal
Property
Corporation Debt
Service
$
1,866
1,866
300,000
4,860
1,010
305,870
(304,004)
303,235
303,235
(769)
12,306
$11,537
Capital Projects
$
955,010
15,000
10,000
193,926
1,173,936
2,294
404,170
1,642,725
2,049,189
(875,253)
990,775
(266,361)
418,585
1,142,999
267,746
5,831,981
$6,099,727
Non-Major
Governmental
Funds
$ 6,701
480,625
120,363
76,244
8,693
25,551
67,351
785,528
263,189
1,723
492,455
179,362
936,729
(151,201)
368,607
(312,569)
56,038
(95,163)
3,360,759
$3,265,596
Total
Governmental
Funds
$ 2,086,768
13,172,390
434,896
835,731
286,391
8,920,296
222,947
387,225
281,704
545,983
27,174,331
3,280,191
797,513
8,566,058
6,046,298
2,609,842
2,716,523
2,310,000
67,301
1,998
26,395,724
778,607
1,928,978
(1,928,978)
418,585
418,585
1,197,192
19,335,278
$20,532,470
Page 43
Changes in fund balances - total governmental funds 1,197,192$
Amounts reported for governmental activities in the Statement of Activities are
different because:
Governmental funds report the portion of capital outlay for capitalized assets as expenditures.
However, in the Statement of Activities, the costs of those assets are allocated over their
estimated useful lives as depreciation expense.
Expenditures for capitalized assets 2,689,270$
Less current year depreciation (5,318,203) (2,628,933)
Some revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds.
Property taxes (9,400)
Intergovernmental 58,623
Other 87,275 136,498
Repayments of bond principal are expenditures in the governmental
funds, but the repayment reduces long-term liabilities in the Statement of 2,310,000
Net Position.
Some expenses reported in the Statement of Activities do not require the use of
current financial resources and, therefore, are not reported as expenditures in
governmental funds.
Loss on disposal of assets (526,482)
Amortization of deferred bond items 68,418
Compensated absences (84,727) (542,791)
Changes in net position in governmental activities 471,966$
TOWN OF FOUNTAIN HILLS, ARIZONA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2020
The notes to the basic financial statements are an integral part of this statement.
Page 44
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Town of Fountain Hills, Arizona (Town) have been prepared
in conformity with accounting principles generally accepted in the United States of America
as applied to government units. The Governmental Accounting Standards Board (GASB) is
the accepted standard-setting body for establishing governmental accounting and financial
reporting principles.
The more significant of the Town’s accounting policies are described below.
A. Reporting Entity
The Town’s major operations include development services, culture and recreation, public
works, public safety and general administrative services.
The Town is a municipal corporation governed by an elected Mayor and Council. The financial
reporting entity consists of a primary government and its component units. A component unit
is a legally separate entity that must be included in the reporting entity in conformity with
generally accepted accounting principles. The Town is a primary government that has a
separately elected governing body, is legally separate, and is fiscally independent of other state
or local governments. Furthermore, the component units combined with the Town for financial
statement presentation purposes and the Town are not included in any other governmental
reporting entity. Consequently, the Town’s financial statements include only the funds of those
organizational entities for which its elected governing body is financially accountable.
Eagle Mountain Community Facilities District and the Cottonwoods Maintenance District. As
special purpose districts and separate political subdivisions under the Arizona Constitution, the
Districts can levy taxes and issue bonds independently of the Town. Property owners in the
designated areas are assessed taxes for the costs of operating the Districts. The Town Council
serves as the Board of Directors; however, the Town has no liability for the Districts’ debt, the
Districts are responsible for the debt; the debt is therefore not subject to the Town’s debt limit.
The Districts cannot be part of another reporting entity. The Districts’ governing bodies are
substantially the same as the Town and the Town’s management oversees operations, resulting
in the Town having the ability to exercise control. As a result, for financial reporting purposes,
transactions of the Districts are combined together and included as if they were part of the
Town’s operations.
Page 45
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Town of Fountain Hills, Arizona Municipal Property Corporation. The Town of Fountain
Hills, Arizona Municipal Property Corporation’s (MPC) Board of Directors consists of three
members which are appointed by the Fountain Hills Town Council. The MPC, which is a
nonprofit corporation incorporated under the laws of the State of Arizona, was formed for the
sole purpose of assisting the Town in obtaining financing for various projects of the Town.
The Town has a “moral obligation” for the repayment of the MPC’s bonds. The MPC cannot
be part of another reporting entity. The MPC provides services exclusively to the Town. As a
result, for financial reporting purposes, transactions of the MPC are combined together and
included as if they were part of the Town’s operations.
B. Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement
of activities) present financial information about the Town as a whole. The reported
information includes all of the Town's component units. For the most part, the effect of internal
activity has been removed from these statements. Interfund services provided and used, such
as interfund transfers, are not eliminated in the process of consolidation. Governmental
activities normally are supported by taxes and intergovernmental revenues. The Town does not
have any fiduciary or business-type activities.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment is 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, unrestricted state shared revenues, investment income and other items not included
among program revenues are reported instead as general revenues.
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
Government-wide Financial Statements – The government-wide financial statements are
reported using the economic resources measurement focus and the accrual basis of accounting.
Revenues are recorded when earned and expenses are recorded when a liability is incurred,
regardless of the timing of related cash flows. Grants and similar items are recognized as
revenue as soon as all eligibility requirements imposed by the grantor or provider have been
met. As a general rule, the effect of internal activity has been eliminated from the government-
wide financial statements; however, the effects of interfund services provided and used
between functions are reported as expenses and program revenues at amounts approximating
their external exchange value.
Page 46
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fund Financial Statements – Governmental fund financial statements are reported using the
current financial resources measurement focus and the modified accrual basis of accounting.
Revenues are recognized as soon as they are both measurable and available. Revenues are
considered to be available when they are collectible within the current period or soon enough
thereafter to pay liabilities of the current period. For this purpose, the Town considers revenues
to be available if they are collected within 60 days of the end of the current fiscal period.
Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
However, debt service expenditures, as well as expenditures related to compensated absences,
and claims and judgments, are recorded only when payment is due.
Property taxes, sales taxes, franchise taxes, state shared revenues, licenses and permits, charges
for services, and investment earnings associated with the current fiscal period are all
considered to be susceptible to accrual and have been recognized as revenues of the current
fiscal period. Grants and similar awards are recognized as revenue as soon as all eligibility
requirements imposed by the grantor or provider have been met. Miscellaneous revenue is not
susceptible to accrual because generally they are not measurable until received in cash.
Unearned revenues arise when resources are received by the Town before it has legal claim to
them, as when grant monies are received prior to meeting all eligibility requirements imposed
by the provider.
The focus of governmental fund financial statements is on major funds rather than reporting
funds by type. Each major fund is presented in a separate column.
The Town reports the following major governmental funds.
General Fund – The General Fund is the Town’s primary operating fund. This fund
accounts for all financial resources of the Town, except those required to be accounted for
in other funds.
Highway User Revenue Fund (HURF) – This fund accounts for the Town’s share of motor
vehicle fuel tax revenues and sales tax.
Grants Fund – This fund accounts for the activities of various restricted grants and
contributions received by the Town.
General Obligation Debt Service Fund – This fund accounts for the Town’s property tax
revenues received to pay the debt service of the Town’s general obligation bonds.
Municipal Property Corporation Debt Service Fund – This fund accounts for the revenues
received to pay the debt service on MPC revenue bonds.
Page 47
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Eagle Mountain Debt Service Fund – This fund accounts for the property tax revenues
restricted to pay the debt service of the Eagle Mountain Community Facilities District.
Capital Projects Fund – This fund accounts for the capital improvements to various projects
and equipment purchases of the Town.
D. Cash and Investments
Cash and cash equivalents at year end were cash on hand, cash in bank, restricted cash, and
cash and investments held by the State Treasurer.
Cash and investments are pooled, except for investments that are restricted under provisions
of bond indentures or other restrictions that are required to be reported in the individual funds.
Arizona Revised Statutes authorize the Town to invest public monies in the State Treasurer’s
local government investment pools, the County Treasurer’s investment pool, obligations of the
U.S. Government and its agencies, obligations of the state and certain local government
subdivisions, interest-bearing savings accounts and certificates of deposit, collateralized
repurchase agreements, certain obligations of U.S. corporations, and certain other securities.
Investments are stated at fair value.
Arizona statute requires a pooled collateral program for public deposits and a Statewide
Collateral Pool Administrator (Administrator) in the State Treasurer’s Office. The purpose of
the pooled collateral program is to ensure that governmental entities’ public deposits placed in
participating depositories are secured with collateral of 102 percent of the public deposits, less
any applicable deposit insurance. An eligible depository may not retain or accept any public
deposit unless it has deposited the required collateral with a qualified escrow agent or the
Administrator. The Administrator manages the pooled collateral program, including reporting
on each depository’s compliance with the program.
E. Investment Earnings
Investment earnings is composed of interest, dividends, and net changes in the fair value of
applicable investments. Investment earnings is a component of revenue in the governmental
funds financial statements.
Page 48
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
F. Receivables and Payables
Activity between funds that is representative of lending/borrowing arrangements outstanding
at the end of the fiscal year is referred to as either “due to/from other funds” (i.e., the current
portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of
interfund loans). Interfund balances between governmental funds are eliminated on the
statement of net position.
Property taxes are levied by the Town and collected by the Maricopa County Treasurer.
Property taxes are levied no later than the third Monday in August and are payable in two
installments due October 1 of the current year and March 1 of the subsequent year. Taxes
become delinquent after the first business day of November and May, respectively. Interest
attaches on installments after the delinquency date.
All receivables are shown net of an allowance for uncollectibles.
G. Inventory
All inventories are valued at average cost using the first-in/first-out (FIFO) method.
Inventories consist of expendable supplies held for consumption. Inventories are recorded as
expenses when consumed in the government-wide financial statements, and as expenditures
when consumed in the governmental funds.
H. Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items in both the government-wide and fund financial statements. In the
government-wide and fund financial statements, prepaids are recognized as
expenses/expenditures when goods and/or services are received rather than when purchased.
I. Capital Assets
Capital assets, which include land and improvements, artwork, buildings and improvements,
vehicles, machinery, and equipment, construction in progress, and infrastructure assets, are
reported in the government-wide financial statements.
Capital assets are defined by the Town as assets with an initial, individual cost in excess of
$10,000 and an estimated useful life in excess of one year. Capital assets are recorded at
historical cost, if purchased or constructed. Donated capital assets are recorded at the
acquisition value at the date of donation.
Page 49
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The costs of normal maintenance and repairs that do not add to the value of the assets or
materially extend the life of the asset are not capitalized.
Capital assets of the Town are depreciated using the straight-line method over the following
estimated useful lives:
Buildings and building improvements 20 - 50 years
Improvements other than buildings 20 years
Infrastructure 15 - 50 years
Vehicles, machinery and equipment 5 - 20 years
J. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position may report a separate section for
deferred outflows of resources. This separate financial statement element, deferred outflows
of resources, represents a consumption of net position that applies to a future period and so
will not be recognized as an outflow of resources (expense/expenditure) until then. The Town
did not have any items that qualified for reporting in this category.
In addition to liabilities, the statement of financial position may report a separate section for
deferred inflows of resources. This separate financial statement element, deferred inflows of
resources, represents an acquisition of net position that applies to a future period and so will
not be recognized as an inflow of resources (revenue) until that time.
K. Compensated Absences
The Town’s employee vacation and sick leave policies generally provide for granting vacation
and sick leave with pay. Sick leave and vacation benefits accrue as pay periods are completed
at the current rate of pay.
All eligible full-time and part-time regularly-scheduled employees can accrue vacation leave.
Employees accrue up to a maximum of two times the yearly maximum accrual of vacation
through carryover of balances. In the event of termination, employees will be paid for any
accrued, but unused, vacation hours. Full-time and part-time regularly-scheduled employees
accrue sick leave, up to a maximum of 1040 hours. Part-time non-regularly-scheduled,
temporary, or seasonal, and other employees accrue paid sick time for hours worked, not to
exceed 40 hours per calendar year.
Page 50
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The current and long-term liabilities, including related benefits, for accumulated vacation and
sick leave are reported on the government-wide financial statements. A liability for these
amounts is reported in governmental funds only if they have matured, for example, as a result
of employee termination, resignations and retirements. Generally, resources from the General
Fund are used to pay for compensated absences.
L. Long-term Obligations
In the government-wide financial statements, long-term debt and other long-term obligations
are reported as liabilities on the statement of net position. Bond premiums and discounts are
amortized over the life of the bonds using the straight-line method. Deferred amounts on
refunding result from the difference between the carrying value of refunded debt and its
reacquisition price. This amount is deferred and amortized over the shorter of the life of the
refunded or refunding debt.
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs, during the current period. The face amount of debt
issued is reported as other financing sources. Premiums received on debt issuances are
reported as other financing sources while discounts 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.
M. Interfund Activity
Flows of cash from one fund to another without a requirement for repayment are reported as
interfund transfers. Interfund transfers between governmental funds are eliminated in the
statement of activities. Interfund transfers in the fund financial statements are reported as other
financing sources/uses in governmental funds.
N. Net Position Flow Assumption
In the government-wide financial statements the Town applies restricted resources first when
outlays are incurred for purposes for which either restricted or unrestricted amounts are
available.
Page 51
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
O. Estimates
The preparation of the financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and accompanying
notes. Actual results may differ from those estimates.
NOTE 2 – FUND BALANCE CLASSIFICATIONS
Fund balances of the governmental funds are reported separately within classifications based
on a hierarchy of the constraints placed on the use of those resources. The classifications are
based on the relative strength of the constraints that control how the specific amounts can be
spent. The classifications are nonspendable, restricted, committed, assigned, and unassigned
fund balance classifications.
Nonspendable. The nonspendable fund balance classification includes amounts that cannot
be spent because they are not in spendable form, or legally or contractually required to be
maintained intact.
Restricted. Fund balance is reported as restricted when constraints placed on the use of
resources are either externally imposed by creditors (such as through debt covenants), grantors,
contributors, or laws or regulations of other governments or is imposed by law through
constitutional provisions or enabling legislation.
Committed. The committed fund balance classification includes amounts that can be used only
for the specific purposes imposed by formal action of the Town Council, the Town’s highest
level of decision making authority, by ordinance. Those committed amounts cannot be used
for any other purpose unless the Town Council removes or changes the specified use by taking
the same type of action it employed to previously commit those amounts.
Assigned. Amounts in the assigned fund balance classification are intended to be used by the
Town for specific purposes but do not meet the criteria to be classified as restricted or
committed. In governmental funds other than the General Fund, assigned fund balance
represents the remaining amount that is not restricted or committed. In the General Fund,
assigned amounts represent intended uses established by the Town Council or a management
official delegated that authority by formal Town Council action. The authority to make
assignments has been delegated by the Town Council to the Finance Director.
Page 52
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 2 – FUND BALANCE CLASSIFICATIONS
Unassigned. Unassigned fund balance is the residual classification for the General Fund and
includes all spendable amounts not contained in the other classifications. In other governmental
funds, the unassigned classification is used only to report a deficit balance resulting from
overspending for specific purposes for which amounts had been restricted, committed, or
assigned.
The Town applies restricted resources first when outlays are incurred for purposes for which
either restricted or unrestricted (committed, assigned, and unassigned) amounts are available.
Similarly, within unrestricted fund balance, committed amounts are reduced first followed by
assigned, and then unassigned amounts when expenditures are incurred for purposes for which
amounts in any of the unrestricted fund balance classifications could be used.
The Town has established a fund balance policy which states that the combined General Fund
operating fund balance should be at least 30 percent of the average actual General Fund
revenues for the preceding five fiscal years.
The Town has established a stabilization fund (Rainy Day fund) in the Town’s fund balance
policy. The Rainy Day fund had a balance of $3,086,699, reported as a committed fund balance
at June 30, 2020. The Rainy Day fund may only be used for the following: 1) to replace the
loss of more than 25 percent of the Town’s local share of state shared revenues, 2) for any
event that threatens the health, safety or welfare of the Town’s citizens, 3) for any event that
threatens the fiscal stability of the Town, and lastly 4) to address any matter declared as an
emergency by the governor of the State of Arizona or the Mayor of the Town. All withdrawals
from the Rainy Day fund shall be subject to the following rules: 1) any appropriation shall
require the approval by at least 2/3 vote by the Town Council, and 2) the maximum amount of
Rainy Day withdrawal in any fiscal year shall not exceed one-half of the total balance in the
fund. Replenishment of the Rainy Day fund when spent by the Town should not exceed a
period of more than five years, and should be repaid in annual installments of not less than one
percent of the previous fiscal year General Fund balance. Repayments shall be appropriated as
part of the annual budget adoption.
Page 53
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 2 – FUND BALANCE CLASSIFICATIONS
The table below provides detail of the major components of the Town’s fund balance
classifications at year end.
General
Fund
Highway
User
Revenue
Fund
Grants
Fund
General
Obligation
Debt
Service
Fund
Eagle
Mountain
Debt
Service
Fund
Municipal
Property
Corporation
Debt Service
Fund
Capital
Projects
Fund
Non-Major
Governmental
Funds Total
Fund Balances:
Nonspendable:
Inventory $ 8,982 $ $ $ $ $ $ $ $ 8,982
Prepaid items 2,418 2,418
Restricted:
Capital Projects 21,989 21,989
Debt Service 124,219 26,312 11,537 162,068
Highways and Streets 1,426,674 1,426,674
Development Fees 1,098,152 1,098,152
Committed:
Rainy Day 3,086,699 3,086,699
Public Art 162,655 162,655
Downtown Strategy 991,495 991,495
Economic Development 103,546 103,546
Tourism 83,261 83,261
Capital Projects 4,488,812 4,488,812
Local Court
Enhancement 401,696 401,696
Assigned:
Capital Projects 1,610,915 1,610,915
Environmental 565,457 565,457
Vehicle Replacement 622,641 225,872 848,513
Unassigned: 5,535,499 (66,361)5,469,138
Total fund balances $9,418,894 $1,652,546 $(66,361) $ 124,219 $ 26,312 $ 11,537 $ 6,099,727 $ 3,265,596 $20,532,470
Page 54
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 3 – CASH AND INVESTMENTS
Arizona Revised Statutes authorize the Town to invest public monies in the State Treasurer’s
local government investment pools, the County Treasurer’s investment pool, obligations of the
U.S. Government and its agencies, obligations of the state and certain local government
subdivisions, interest-bearing savings accounts and certificates of deposit, collateralized
repurchase agreements, certain obligations of U.S. corporations, and certain other securities.
The statutes do not include any requirements for credit risk, custodial credit risk, concentration
of credit risk, interest rate risk, or foreign currency risk for the Town’s investments.
Custodial Credit Risk – Deposits. Custodial credit risk is the risk that in the event of bank
failure the Town’s deposits may not be returned to the Town. The Town does not have a
deposit policy for custodial credit risk. At year end, the carrying amount of the Town’s deposits
was $925,635 and the bank balance was $1,042,404. At year end, $542,404 of the Town’s
deposits were covered by collateral held by the pledging financial institution in the Town’s
name. The remaining amount is covered by FDIC.
Fair Value Measurements. The Town categorizes its fair value measurements within the fair
value hierarchy established by generally accepted accounting principles. The hierarchy is
based on the valuation inputs used to measure the fair value of the asset.
Level 1 inputs are quoted prices in active markets for identical assets
Level 2 inputs are significant other observable inputs
Level 3 inputs are significant unobservable inputs
Valuation Techniques. Equity securities classified in Level 1 of the fair value hierarchy are
valued using prices quoted in active markets for those securities. Debt securities classified in
Level 2 of the fair value hierarchy are valued using matrix pricing techniques. Matrix pricing
is used to value securities based on the securities’ relationship to benchmark quoted prices.
The State Treasurer’s pools are external investment pools, the Local Government Investment
Pool (Pool 5) and Local Government Investment Pool-Government (Pool 7), with no
regulatory oversight. The pools, as an investment company, are not registered with the
Securities and Exchange Commission. The activity and performance of the pools are reviewed
monthly by the State Board of Investment. The fair value of each participant’s position in the
State Treasurer investment pools approximates the value of the participant’s shares in the pool
and the participants’ shares are not identified with specific investments. Participants in the pool
are not required to categorize the value of shares in accordance with the fair value hierarchy.
Page 55
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 3 – CASH AND INVESTMENTS
All investments in which the fair value hierarchy is applicable are measured at fair value on a
recurring basis. At year end, cash and investments as of June 30, 2020, are classified in the
accompanying financial statements as follows:
Carrying amount of investments $ 21,203,422
Carrying amount of cash deposits 925,635
Cash on hand 850
Total pooled cash and investments $ 22,129,907
At year end, the Town’s investments consisted of the following:
Investment Maturities
(in Years) Credit Rating
Investment Type Category Fair Value Less than 1 1-5 S&P Moody’s
U.S. Government and Agency Notes Level 1 $ 4,695,240 $ $ 4,695,240 AA+, AAA Aaa
Federal Agency Notes Level 1 1,794,679 1,794,679 AA+ Aaa
Corporate and Foreign Bonds Level 2 2,286,429 2,286,429 BBB+, AA+ A3 - Aaa
Asset Backed Securities Level 2 232,470 232,470 NR AAA
Certificates of Deposit Level 2 357,333 151,067 206,266 A-1, AA- P-1, Aa2
Wells Fargo Money Market Funds Level 1 32,402 32,402 n/a n/a
$ 183,469 $ 9,215,084
State Treasurer’s Investment Pool 7 Not applicable 11,804,869 44 days average maturities
Total $ 21,203,422
Interest Rate Risk. Interest rate risk is the risk that changes in interest rates may reduce the
market value of Town investments. In accordance with its investment policy, the Town
manages its exposure to declines in fair values by the following:
Structuring the investment portfolio so that securities mature concurrent with the
anticipated cash requirements for ongoing operations, thereby avoiding, as much as
possible, the need to sell securities into an adverse market environment prior to
maturity.
Investing funds primarily in shorter-term securities or similar investment pools and
limiting the average maturity of the portfolio in accordance with the needs of the Town.
With respect to any firm or individual given responsibility for investments utilizing
external research and advice regarding the current interest rate outlook and global
economic condition to optimize portfolio duration strategy.
Page 56
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 3 – CASH AND INVESTMENTS
Credit Risk. Credit risk is the risk of default of debt by an issuer or counterparty to an
investment. The Town will limit credit risk by limiting investments in the Town’s portfolio to
the asset classes designated as acceptable in ARS §35-323. When possible, analysis of the
credit worthiness of all individual debt issuers held in the portfolio should be conducted on an
annual basis in an effort to guard against investing in a weak or deteriorating credit situation.
Additionally, the Town will pre-qualify financial institutions, brokers/dealers, and investment
advisers with which the Town will do business.
Custodial Credit Risk – Investments. Custodial credit risk is the risk that in the event of
depository financial institution failure, the Town’s deposits may not be returned to the Town.
The Town’s investment in the State Treasurer’s investment pool represents a proportionate
interest in the pool’s portfolio; however the Town’s portion is not identified with specific
investments and is not subject to custodial credit risk.
Concentration of Credit Risk. Concentration of credit risk is the risk of loss from over
concentration of investments. In accordance with its investment policy, the Town diversifies
its investment portfolio to minimize the risk of loss resulting from over concentration of assets
in a specific maturity, specific issuer, or specific class of securities. With the exception of U.S.
Treasury notes and securities and authorized pools, the investment policy establishes a
maximum percentage of 30 percent in insured or collateralized certificates of deposit; 20
percent in certificates of deposit registry services; 30 percent in commercial paper; and 30
percent in bonds, debentures, or notes.
Investment Type
Fair Value
Percent of Town
Investments
U.S. Government and Agency Notes $ 4,695,240 22.1%
Federal Agency notes 1,794,679 8.5%
Corporate and Foreign Bonds 2,286,429 10.8%
Asset Backed Securities 232,470 1.1%
Certificates of Deposit 357,333 1.7%
Wells Fargo Money Market Funds 32,402 0.2%
State Treasurer’s investment pool 7 11,804,869 55.7%
$ 21,203,422
Page 57
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 4 – RECEIVABLES
Receivable balances, net of allowance for uncollectibles, have been disaggregated by type and
presented separately in the financial statements with the exception of intergovernmental
receivables. Intergovernmental receivables, net of allowance for uncollectibles, as of year-end
for the Town’s individual major funds consisted entirely of receivables due from the State.
NOTE 5 – CAPITAL ASSETS
A summary of capital asset activity at year end is as follows:
Governmental Activities
Beginning
Balance Increase Decrease
Ending
Balance
Capital assets, not being depreciated:
Land $ 29,690,368 $ $ $ 29,690,368
Artwork 2,573,900 2,573,900
Construction in progress 1,123,128 1,914,970 884,413 2,153,685
Total capital assets, not being depreciated 33,387,396 1,914,970 884,413 34,417,953
Capital assets, being depreciated:
Infrastructure 149,597,675 568,457 150,166,132
Buildings and building improvements 23,583,418 656,004 22,927,414
Improvements other than buildings 15,149,782 132,722 15,282,504
Vehicles, machinery and equipment 4,301,940 957,534 509,981 4,749,493
Total capital assets being depreciated 192,632,815 1,658,713 1,165,985 193,125,543
Less accumulated depreciation for:
Infrastructure (99,187,268) (4,016,174) (103,203,442)
Buildings and building improvements (6,192,136) (492,604) (200,265) (6,484,475)
Improvements other than buildings (10,892,967) (528,834) (439,238) (10,982,563)
Vehicles, machinery and equipment (2,188,094) (280,591) (2,468,685)
Total accumulated depreciation (118,460,465) (5,318,203) (639,503) (123,139,165)
Total capital assets, being depreciated, net 74,172,350 (3,659,490) 526,482 69,986,378
Governmental activities capital assets, net $ 107,559,746 $ (1,744,520) $ 1,410,895 $ 104,404,331
Depreciation expense was charged to functions/programs as follows:
Governmental activities:
General government $ 172,408
Development services 16,721
Public safety 312,776
Streets and highways 3,953,846
Culture and recreation 862,452
Total depreciation expense $ 5,318,203
Page 58
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 5 – CAPITAL ASSETS
Construction Commitments – At June 30, 2020, the Town has the following active
construction commitments:
Governmental Activities
Project
Spent-to-Date
Remaining
Commitment
Golden Eagle Drainage Improvements $ 140,890 $ 77,673
Panorama Storm Drain Improvements 65,275 33,030
Four Peaks Park Playground Upgrade 475,000 32,144
Fountain Lake Liner Replacement 40,853 98,795
Fountain Lighting Replacement 42,139 47,861
Avenue of the Fountains - La Montana Roundabout 179,828 571,685
Unpaved Alley Paving 20,708 8,949
Fountain Hills Boulevard Shoulder Paving 692,733 7,956
Shea Boulevard Widening 83,747 32,032
Total commitments $ 1,741,173 $ 910,125
NOTE 6 – BONDS PAYABLE
Bonds payable at year end consisted of the following general obligation and revenue bonds.
The bonds are both callable and noncallable with interest payable semiannually.
Purpose
Original
Amount
Issued
Interest
Rates
Remaining
Maturities
Outstanding
Principal
June 30, 2020
Due
Within
One Year
Governmental activities:
Private Placement General Obligation Bonds:
Eagle Mountain Community Facilities
District, General Obligation Refunding
Bonds, Series 2015 2,300,000 1.76% 7/1/20-21 $ 400,000 $ 400,000
Total $ 400,000 $ 400,000
Page 59
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 6 – BONDS PAYABLE
Annual debt service requirements to maturity on the bonds payable at year end are summarized
as follows:
Governmental
Activities
Year ending June 30, Principal Interest
2021 $ 400,000 $ 7,040
Private Placements
The Town had outstanding bonds during the fiscal year from private placements reported as
governmental activities. The Municipal Facilities Revenue Refunding Bonds contain a
provision that the Town must maintain excise taxes coverage of two and one-half times debt
service. In the event the Town does not maintain this coverage, the Town will impose
additional excise taxes. The Town does not have a line of credit associated with the bonds.
The Eagle Mountain Community Facilities District has outstanding bonds from private
placements reported as governmental activities of $400,000. There are no specific provisions
regarding default on the Eagle Mountain Community Facilities District debt.
Pledged Revenues
The Town has pledged excise tax revenues to repay a total of $300,000 in outstanding
Municipal Facilities Revenue Refunding Bonds. For the current fiscal year, the net revenues
available to service the debt were $20,862,372. For the fiscal year ended June 30, 2020, the
debt principal and interest paid on this debt was $304,860 (one percent of pledged revenues).
There is no principal and interest remaining to be paid on the bonds.
Page 60
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 7 – CHANGES IN LONG-TERM LIABILITIES
Long-term liability activity for the current fiscal year was as follows:
Beginning
Balance Additions Reductions
Ending
Balance
Due Within
One Year
Governmental activities:
Bonds payable:
General obligation bonds $ 1,615,000 $ $ 1,615,000 $ $
Private placement general
obligation bonds 795,000 395,000 400,000 400,000
Private placement revenue bonds 300,000 300,000
Premium 68,418 68,418
Total bonds payable 2,778,418 2,378,418 400,000 400,000
Compensated absences payable 497,770 307,154 222,427 582,497 345,921
Governmental activity long-term
Liabilities $ 3,276,188 $ 307,154 $ 2,600,845 $ 982,497 $ 745,921
NOTE 8 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
At year end, interfund balances were as follows:
Interfund transfers:
At year end, interfund transfers were as follows:
Transfers out
Transfers in
General
Fund
Highway
User
Revenue
Fund
Capital
Projects
Fund
Non-Major
Governmental
Funds Total
HURF Fund $ $ $ 200,000 $ $ 200,000
Grants Fund 66,361 66,361
Municipal Property Corporation Debt
Service Fund 303,235 303,235
Capital Projects Fund 500,000 346,813 143,962 990,775
Non-Major Governmental Funds 200,000 168,607 368,607
Total $ 1,003,235 $ 346,813 $ 266,361 $ 312,569 $ 1,928,978
Page 61
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 8 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
The General Fund transferred $500,000 to Capital Projects Fund for funding facilities
replacement; $303,235 to Municipal Property Corporation Debt Service Fund for debt service
costs; and $200,000 to Environmental Fund for funding operations of that fund. The Highway
User Revenue Fund transferred $346,813 to Capital Projects Fund for street-related capital
projects. The Capital Projects Fund transferred $200,000 to Highway User Fund for pavement
maintenance costs; and $66,361 to the Grants Fund for the Town's matching portion of a park
improvement grant. The Economic Development Fund transferred $168,607 to the Tourism
Fund to provide funding for operating costs of the tourism program. The Downtown Strategy
Fund transferred $143,962 to the Capital Projects Fund for downtown street improvements.
NOTE 9– DEFICIT IN FUND BALANCE
The Grants Fund had a deficit fund balance of $66,361. The deficit will be covered by future
revenue reimbursements.
NOTE 10– CONTINGENT LIABILITIES
Compliance – Amounts received or receivable from grantor agencies are subject to audit and
adjustment by grantor agencies, principally the state government. Any disallowed claims,
including amounts already collected, may constitute a liability of the applicable funds. The
amount, if any, of expenditures/expenses that may be disallowed by the grantor cannot be
determined at this time, although the Town expects such amounts, if any, to be immaterial.
Lawsuits – The Town is a party to a number of various types of lawsuits, many of which
normally occur in governmental operations. The ultimate outcome of the actions is not
determinable; however, Town management believes that the outcome of these proceedings,
either individually or in the aggregate, will not have a materially adverse effect on the
accompanying financial statements.
NOTE 11 – RISK MANAGEMENT
The Town is exposed to various risks of loss related to torts; theft of, damage to and destruction
of assets; errors and omissions; and natural disasters. The Town’s insurance protection is
provided by the Arizona Municipal Risk Retention Pool (Pool). The Pool is made up of various
towns and cities within Arizona that operate a common risk management and insurance
program. The Pool is structured such that member premiums are based on an actuarial review
that will provide adequate reserves to allow the Pool to meet its expected financial obligations.
The Pool has the authority to assess its’ members additional premiums should reserves and
annual premiums be insufficient to meet the Pool’s obligations.
Page 62
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 11 – RISK MANAGEMENT
The Town joined the Arizona Municipal Workers’ Compensation Pool (Pool) together with
other governments in the state for risks of loss related to workers’ compensation claims. The
Pool is a public entity risk pool currently operating as a common risk management and
insurance program for towns and cities in the State. The Town is responsible for paying a
premium, based on an experience rating formula that allocates pool expenditures and liabilities
among members.
The Town continues to carry commercial insurance for all other risks of loss, including
employee health, dental, and vision insurance. There were no settlements that exceeded
insurance coverage in any of the past three years.
NOTE 12 – RETIREMENT PLANS
Defined Contribution Pension Plan
All full-time employees of the Town participate in a defined contribution pension plan
administered by the ICMA Retirement Corporation as a 401(a) plan. The contribution rates are
11 percent for both the employee and the Town. The payroll for the Town employees covered
by this plan for the year ended June 30, 2020, was $3,502,664. The Town’s total payroll was
$4,152,592.
A defined contribution pension plan provides benefits in return for services rendered, provides
an individual account for each participant, and specifies how contributions to the individual’s
account are to be determined, instead of specifying the amount of benefit the individual is to
receive. Under a defined contribution pension plan, the benefits a participant will receive
depend solely on the amount contributed to the participant’s account and the returns earned on
investment of those contributions. All full-time Town employees must participate in the
pension plan from the date they are hired. Contributions made by an employee vest
immediately and contributions made by the Town vest on a pro rata basis for five years. Town
Council has the authority to establish and amend benefit terms and to establish and amend the
contribution rates.
Page 63
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 12 – RETIREMENT PLANS
An employee that leaves the employment of the Town is entitled to his or her contributions
and the vested portion of the Town’s contributions, plus interest earned. During the fiscal year,
the Town’s required and actual contributions amounted to $385,293. The employees’
contributions totaled $385,293. Employees may also contribute to the ICMA Retirement
Corporation 457 plan on a voluntary basis (with the exception of one contract employee that
is limited to 11 percent of earnings); there is no employer match for those contributions. During
the fiscal year, employees contributed $121,766 to that plan. The Town contributed $8,591 for
the contract employee’s 457 account.
No pension provision changes occurred during the year that affected the required contributions
to be made by the Town or its employees. The ICMA Retirement Corporation held no securities
of the Town or other related parties during the fiscal year 2019-20 or as of the close of the
fiscal year.
NOTE 13 – SUBSEQUENT EVENT
The Town applied for AZ Cares funding from the Governor's Office and was subsequently
awarded $2,893,126 on July 1st, 2020. The funding was made available through the U.S.
Department of the Treasury's Coronavirus Aid, Relief, and Economic Security (CARES) Act,
and the funds will be used to pay public safety contract expenditures.
Page 64
REQUIRED SUPPLEMENTARY INFORMATION
Page 65
10,775,505 $ 1,649,506
$ 3,838,975 $ 5,672,100 $ 9,418,894 $ 3,746,794
1,100,934 Public works 1,174,934 954,970 219,964
516,221
397,276
4,021,299
4,785,920
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GENERAL
YEAR ENDED JUNE 30, 2020
Revenues:
Sales taxes
Franchise taxes
Licenses and permits
Leases and rents 2,807
9,125,999 9,125,999
Intergovernmental
Charges for services
Other
Fines and forfeitures
Investment earnings
Total revenues
Expenditures:
Capital outlay
Mayor and council
Current -
General government
Public safety
Fire and emergency
Law enforcement
Total general government
Development services
Culture and recreation
Total public safety
Total expenditures
Administration
Municipal court
Excess (deficiency) of revenues over expenditures
Non departmental
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses):
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Budgeted Amounts
Original
187,231
929,417
283,584
6,220,134
297,800
89,765
179,000
26,640
17,339,570
2,050,966
397,276
1,073,362
416,149
98,544
4,021,299
4,785,920
3,620,148
1,100,290
2,735,179
8,807,219
17,779,919
(440,349)
39,100
(1,042,335)
(1,003,235)
(1,443,584)
5,282,559
Final
187,231
929,417
283,584
6,220,134
297,800
89,765
179,000
26,640
17,339,570
2,061,184
98,544
3,186,866
1,100,290
629,862
8,807,219
18,014,419
(674,849)
39,100
(1,042,335)
931,149
2,813,961
(1,003,235)
(1,678,084)
7,350,184
Actual
434,896
715,368
286,391
6,178,807
219,106
320,206
256,153
228,622
19,415,054
2,937,208
797,513
2,430,480
1,979,104
367,131
74,752
3,127,471
39,100
(1,042,335)
3,832,350
4,731,985
603,077
(1,003,235)
2,124,236
7,294,658
247,665
(214,049)
8,564,335
16,287,583
(41,327)
(78,694)
230,441
77,153
201,982
2,075,484
302,777
383,481
82,080
30,145
328,072
23,792
113,641
242,884
1,726,836
3,802,320
-
-
Variance with
Final Budget
Positive
(Negative)
-
3,802,320
(55,526)
188,949
53,935
249,658
See accompanying notes to this schedule.
Page 66
Revenues:
Sales taxes
Intergovernmental
Charges for services
Other
Investment earnings
Total revenues
Expenditures:
Current -
Public works
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Budgeted Amounts
Original
$ 819,678
2,452,224
200,000
43,500
24,000
3,539,402
5,194,059
5,194,059
(1,654,657)
200,000
(521,318)
(321,318)
(1,975,975)
2,422,099
$446,124
Final
$ 819,678
2,452,224
200,000
43,500
24,000
3,539,402
5,173,115
20,944
5,194,059
(1,654,657)
200,000
(521,318)
(321,318)
(1,975,975)
2,422,099
$446,124
Actual
$ 961,250
2,572,745
3,841
48,326
45,419
3,631,581
4,194,703
337,999
4,532,702
(901,121)
200,000
(346,813)
(146,813)
(1,047,934)
2,700,480
$1,652,546
Variance with
Final Budget
Positive
(Negative)
$ 141,572
120,521
(196,159)
4,826
21,419
92,179
978,412
(317,055)
661,357
753,536
174,505
174,505
928,041
278,381
$1,206,422
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
HIGHWAY USER REVENUE
YEAR ENDED JUNE 30, 2020
See accompanying notes to this schedule.
Page 67
Revenues:
Intergovernmental
Total revenues
Expenditures:
Current -
General government
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Budgeted
Amounts
Original & Final
$1,582,525
1,582,525
1,357,525
305,000
1,662,525
(80,000)
80,000
80,000
$
Actual
$77,500
77,500
77,500
132,722
210,222
(132,722)
66,361
66,361
(66,361)
$(66,361)
Variance with
Final Budget
Positive
(Negative)
$(1,505,025)
(1,505,025)
1,280,025
172,278
1,452,303
(52,722)
(13,639)
(13,639)
(66,361)
$(66,361)
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GRANTS
YEAR ENDED JUNE 30, 2020
See accompanying notes to this schedule.
Page 68
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2020
NOTE 1 – BUDGETARY BASIS OF ACCOUNTING
The Town Council follows these procedures in establishing the budgetary data reflected in the
financial statements:
1. In accordance with Arizona Revised Statutes, the Town Manager submits a proposed
budget for the fiscal year commencing the following July 1 to the Town Council. The
operating budget includes proposed expenditures and the means of financing them for the
upcoming year.
2. Public hearings are conducted to obtain taxpayer comment.
3. Prior to the third Monday in August, the budget for the Town is legally enacted through
passage of a resolution. To ensure compliance with the expenditure limitation, a uniform
expenditure report must be filed with the State each year. This report, issued under a
separate cover, reconciles total Town expenditures from the audited basic financial
statements to total expenditures for reporting in accordance with the State’s uniform
expenditure reporting system (A.R.S 41-1279.07).
4. Expenditures may not legally exceed the expenditure limitation described below for all
fund types as a whole. For management purposes, the Town adopts a budget by department
for the General Fund and in total by fund for other funds. The Town Manager, subject to
Town Council approval, may at any time transfer any unencumbered appropriation balance
or portion thereof between a department or activity. The adopted budget cannot be
amended in any way without Town Council approval.
5. Formal budgetary integration is employed as a management control device during the year
for the General, Highway User Revenue, Excise Tax, Special Revenue, Debt Service, and
Capital Projects Funds on essentially the same modified accrual basis of accounting used
to record actual revenues and expenditures.
The Town is subject to the State of Arizona’s Spending Limitation Law for Towns and Cities.
This law does not permit the Town to spend more than budgeted revenues plus the carryover
unrestricted cash balance from the prior fiscal year. The limitation is applied to the total of the
combined funds. The Town complied with this law during the year.
Page 69
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Page 70
COMBINING AND INDIVIDUAL
FUND FINANCIAL STATEMENTS
AND SCHEDULES
Page 71
ASSETS
Cash and investments
Accounts receivable
Intergovernmental receivable
Interest receivable
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and benefits
Total liabilities
Fund balances:
Restricted
Committed
Assigned
Total fund balances
Total liabilities and fund balances
Special Revenue
$ 2,262,849
1,875
15,735
2,018
$2,282,477
$ 106,268
8,765
115,033
21,989
1,579,998
565,457
2,167,444
$2,282,477
Capital Projects
$ 1,098,152
$1,098,152
$
1,098,152
1,098,152
$1,098,152
Total Non-Major
Governmental
Funds
$ 3,361,001
1,875
15,735
2,018
$3,380,629
$ 106,268
8,765
115,033
1,120,141
1,579,998
565,457
3,265,596
$3,380,629
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING BALANCE SHEET - ALL NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE
JUNE 30, 2020
Page 72
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Total revenues
Expenditures:
Current -
General government
Public safety
Public works
Culture and recreation
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Special Revenue
$ 6,701
480,625
17,575
76,244
8,693
25,551
53,507
668,896
263,189
492,455
171,891
927,535
(258,639)
368,607
(312,569)
56,038
(202,601)
2,370,045
$2,167,444
Capital Projects
$
102,788
13,844
116,632
1,723
7,471
9,194
107,438
107,438
990,714
$1,098,152
Total Non-Major
Governmental
Funds
$ 6,701
480,625
120,363
76,244
8,693
25,551
67,351
785,528
263,189
1,723
492,455
179,362
936,729
(151,201)
368,607
(312,569)
56,038
(95,163)
3,360,759
$3,265,596
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
ALL NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE
YEAR ENDED JUNE 30, 2020
Page 73
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Page 74
NON-MAJOR GOVERNMENTAL FUNDS
Special Revenue Funds
Downtown Strategy Fund – accounts for the portion of Town sales tax committed by the Town
Council for the development of the downtown area.
Economic Development Fund – accounts for the portion of Town sales tax committed by the
Town Council for economic development and tourism.
Tourism Fund – accounts for the portion of Town sales tax committed by the Town Council as
well as any grants received for all tourism activities.
Local Court Enhancement Fund – accounts for a local court surcharge, committed for court
enhancement.
Environmental Fund – accounts for all funds received from collection of the environmental fee.
Cottonwoods Maintenance Fund – accounts for all funds restricted to pay for maintenance of
the Cottonwoods Maintenance District.
Capital Projects Funds
Facilities Replacement Fund – accounts for all funds assigned for the maintenance and repair of
facilities and equipment.
Development Fees Fund – accounts for restricted development fees collected from building
permits.
Page 75
ASSETS
Cash and investments
Accounts receivable
Intergovernmental receivable
Interest receivable
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and benefits
Total liabilities
Fund balances:
Restricted
Committed
Assigned
Total fund balances
Total liabilities and fund balances
Downtown
Strategy
$ 990,717
3,115
2,018
$995,850
$ 4,355
4,355
991,495
991,495
$995,850
Economic
Development
$ 95,506
12,460
$107,966
$ 2,174
2,246
4,420
103,546
103,546
$107,966
Tourism
$ 84,322
1,875
$86,197
$ 2,687
249
2,936
83,261
83,261
$86,197
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING BALANCE SHEET - NON-MAJOR SPECIAL REVENUE FUNDS
JUNE 30, 2020
Page 76
Local Court
Enhancement
$ 401,536
160
$401,696
$
401,696
401,696
$401,696
Environmental
$ 668,404
$668,404
$ 96,677
6,270
102,947
565,457
565,457
$668,404
Cottonwoods
Maintenance
$ 22,364
$22,364
$ 375
375
21,989
21,989
$22,364
Totals
$ 2,262,849
1,875
15,735
2,018
$2,282,477
$ 106,268
8,765
115,033
21,989
1,579,998
565,457
2,167,444
$2,282,477
Page 77
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Total revenues
Expenditures:
Current -
General government
Public works
Culture and recreation
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Downtown
Strategy
$
96,125
39,466
135,591
38,474
38,474
97,117
(143,962)
(143,962)
(46,845)
1,038,340
$991,495
Economic
Development
$
384,500
8,674
631
393,805
223,137
223,137
170,668
(168,607)
(168,607)
2,061
101,485
$103,546
Tourism
$
76,244
19
1,090
77,353
171,891
171,891
(94,538)
168,607
168,607
74,069
9,192
$83,261
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2020
Page 78
Local Court
Enhancement
$
25,551
909
26,460
1,578
1,578
24,882
24,882
376,814
$401,696
Environmental
$
17,575
11,137
28,712
487,791
487,791
(459,079)
200,000
200,000
(259,079)
824,536
$565,457
Cottonwoods
Maintenance
$ 6,701
274
6,975
4,664
4,664
2,311
2,311
19,678
$21,989
Totals
$ 6,701
480,625
17,575
76,244
8,693
25,551
53,507
668,896
263,189
492,455
171,891
927,535
(258,639)
368,607
(312,569)
56,038
(202,601)
2,370,045
$2,167,444
Page 79
Total revenues
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Expenditures:
Current -
General government
Public works
Culture and recreation
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Downtown Strategy
Budget
$
81,968
1,260
83,228
46,400
46,400
36,828
(950,000)
(950,000)
(913,172)
1,038,340
$125,168
Actual
$
96,125
39,466
135,591
38,474
38,474
97,117
(143,962)
(143,962)
(46,845)
1,038,340
$991,495
Variance -
Positive
(Negative)
$
14,157
38,206
52,363
7,926
7,926
60,289
806,038
806,038
866,327
$866,327
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2020
Page 80
Economic Development
Budget
$
327,871
240
328,111
285,482
285,482
42,629
(168,607)
(168,607)
(125,978)
101,485
$(24,493)
Actual
$
384,500
8,674
631
393,805
223,137
223,137
170,668
(168,607)
(168,607)
2,061
101,485
$103,546
Variance -
Positive
(Negative)
$
56,629
8,674
391
65,694
62,345
62,345
128,039
128,039
$128,039
Tourism
Budget
$
90,000
180
90,180
259,103
259,103
(168,923)
168,607
168,607
(316)
9,192
$8,876
Actual
$
76,244
19
1,090
77,353
171,891
171,891
(94,538)
168,607
168,607
74,069
9,192
$83,261
Variance -
Positive
(Negative)
$
(13,756)
19
910
(12,827)
87,212
87,212
74,385
74,385
$74,385
(Continued)
Page 81
Total revenues
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Expenditures:
Current -
General government
Public works
Culture and recreation
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Local Court Enhancement
Budget
$
100,000
49,000
840
149,840
24,800
130,000
154,800
(4,960)
(4,960)
376,814
$371,854
Actual
$
25,551
909
26,460
1,578
1,578
24,882
24,882
376,814
$401,696
Variance -
Positive
(Negative)
$
(100,000)
(23,449)
69
(123,380)
23,222
130,000
153,222
29,842
29,842
$29,842
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2020
Page 82
Environmental
Budget
$
491,976
2,400
494,376
735,254
735,254
(240,878)
200,000
200,000
(40,878)
824,536
$783,658
Actual
$
17,575
11,137
28,712
487,791
487,791
(459,079)
200,000
200,000
(259,079)
824,536
$565,457
Variance -
Positive
(Negative)
$
(474,401)
8,737
(465,664)
247,463
247,463
(218,201)
(218,201)
$(218,201)
Cottonwoods Maintenance
Budget
$ 6,642
72
6,714
5,101
5,101
1,613
1,613
19,678
$21,291
Actual
$ 6,701
274
6,975
4,664
4,664
2,311
2,311
19,678
$21,989
Variance -
Positive
(Negative)
$59
202
261
437
437
698
698
$698
(Continued)
Page 83
Total revenues
Revenues:
Property taxes
Sales taxes
Licenses and permits
Intergovernmental
Other
Fines and forfeitures
Investment earnings
Expenditures:
Current -
General government
Public works
Culture and recreation
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Totals
Budget
$ 6,642
409,839
491,976
190,000
49,000
4,992
1,152,449
356,682
740,355
259,103
130,000
1,486,140
(333,691)
368,607
(1,118,607)
(750,000)
(1,083,691)
2,370,045
$1,286,354
Actual
$ 6,701
480,625
17,575
76,244
8,693
25,551
53,507
668,896
263,189
492,455
171,891
927,535
(258,639)
368,607
(312,569)
56,038
(202,601)
2,370,045
$2,167,444
Variance -
Positive
(Negative)
$59
70,786
(474,401)
(113,756)
8,693
(23,449)
48,515
(483,553)
93,493
247,900
87,212
130,000
558,605
75,052
806,038
806,038
881,090
$881,090
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2020
Page 84
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Page 85
Total revenues
Revenues:
Property taxes
Investment earnings
Expenditures:
Debt service -
Principal retirement
Interest on long-term debt
Fiscal charges
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
General Obligation Debt Service
Budget
$ 1,674,485
1,200
1,675,685
1,615,000
48,450
850
1,664,300
11,385
11,385
116,003
$127,388
Actual
$ 1,665,453
7,063
1,672,516
1,615,000
48,450
850
1,664,300
8,216
8,216
116,003
$124,219
Variance -
Positive
(Negative)
$ (9,032)
5,863
(3,169)
(3,169)
(3,169)
$(3,169)
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
ALL DEBT SERVICE FUNDS
YEAR ENDED JUNE 30, 2020
Page 86
Eagle Mountain Debt Service
Budget
$ 413,042
240
413,282
395,000
13,992
200
409,192
4,090
4,090
19,091
$23,181
Actual
$ 414,614
1,736
416,350
395,000
13,991
138
409,129
7,221
7,221
19,091
$26,312
Variance -
Positive
(Negative)
$ 1,572
1,496
3,068
1
62
63
3,131
3,131
$3,131
Municipal Property Corporation Debt Service
Budget
$
840
840
300,000
4,860
1,010
305,870
(305,030)
303,235
303,235
(1,795)
12,306
$10,511
Actual
$
1,866
1,866
300,000
4,860
1,010
305,870
(304,004)
303,235
303,235
(769)
12,306
$11,537
Variance -
Positive
(Negative)
$
1,026
1,026
1,026
1,026
$1,026
(Continued)
Page 87
Total revenues
Revenues:
Property taxes
Investment earnings
Expenditures:
Debt service -
Principal retirement
Interest on long-term debt
Fiscal charges
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Totals
Budget
$ 2,087,527
2,280
2,089,807
2,310,000
67,302
2,060
2,379,362
(289,555)
303,235
303,235
13,680
147,400
$161,080
Actual
$ 2,080,067
10,665
2,090,732
2,310,000
67,301
1,998
2,379,299
(288,567)
303,235
303,235
14,668
147,400
$162,068
Variance -
Positive
(Negative)
$ (7,460)
8,385
925
1
62
63
988
988
$988
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
ALL DEBT SERVICE FUNDS
YEAR ENDED JUNE 30, 2020
Page 88
(This page intentionally left blank)
Page 89
ASSETS
Cash and investments
Total assets
LIABILITIES AND FUND BALANCES
Fund balances:
Restricted
Total fund balances
Total liabilities and fund balances
Development
Fees
$1,098,152
$1,098,152
$1,098,152
1,098,152
$1,098,152
TOWN OF FOUNTAIN HILLS, ARIZONA
BALANCE SHEET - NON-MAJOR CAPITAL PROJECTS FUND
JUNE 30, 2020
Page 90
Revenues:
Licenses and permits
Investment earnings
Total revenues
Expenditures:
Current -
Public safety
Culture and recreation
Total expenditures
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Development
Fees
$ 102,788
13,844
116,632
1,723
7,471
9,194
107,438
990,714
$1,098,152
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NON-MAJOR CAPITAL PROJECTS FUND
YEAR ENDED JUNE 30, 2020
Page 91
Total revenues
Revenues:
Sales taxes
Licenses and permits
Intergovernmental
Other
Investment earnings
Expenditures:
Current -
General government
Public safety
Public works
Culture and recreation
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Proceeds from sale of capital assets
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Capital Projects
Budget
$ 640,293
90,000
7,224
737,517
116,672
190,000
2,653,378
2,960,050
(2,222,533)
1,300,000
(280,000)
1,020,000
(1,202,533)
4,342,555
$3,140,022
Non-GAAP
Actual
$ 955,010
15,000
171,431
1,141,441
2,294
116,281
1,519,608
1,638,183
(496,742)
490,775
(266,361)
418,585
642,999
146,257
4,342,555
$4,488,812
Variance -
Positive
(Negative)
$ 314,717
(75,000)
164,207
403,924
114,378
73,719
1,133,770
1,321,867
1,725,791
(809,225)
13,639
418,585
(377,001)
1,348,790
$1,348,790
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
ALL CAPITAL PROJECTS FUNDS
YEAR ENDED JUNE 30, 2020
Page 92
Facilities Replacement Fund
Budget
$
7,200
7,200
819,144
819,144
(811,944)
500,000
500,000
(311,944)
1,489,426
$1,177,482
Non-GAAP
Actual
$
10,000
22,495
32,495
287,889
123,117
411,006
(378,511)
500,000
500,000
121,489
1,489,426
$1,610,915
Variance -
Positive
(Negative)
$
10,000
15,295
25,295
531,255
(123,117)
408,138
433,433
433,433
$433,433
Development Fees
Budget
$
164,025
7,200
171,225
9,500
40,500
50,000
121,225
121,225
990,714
$1,111,939
Actual
$
102,788
13,844
116,632
1,723
7,471
9,194
107,438
107,438
990,714
$1,098,152
Variance -
Positive
(Negative)
$
(61,237)
6,644
(54,593)
7,777
33,029
40,806
(13,787)
(13,787)
$(13,787)
(Continued)
Page 93
Total revenues
Revenues:
Sales taxes
Licenses and permits
Intergovernmental
Other
Investment earnings
Expenditures:
Current -
General government
Public safety
Public works
Culture and recreation
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfer in
Transfer out
Proceeds from sale of capital assets
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Totals
Budget
$ 640,293
164,025
90,000
21,624
915,942
116,672
9,500
1,009,144
40,500
2,653,378
3,829,194
(2,913,252)
1,800,000
(280,000)
1,520,000
(1,393,252)
6,822,695
$5,429,443
Non-GAAP
Actual
$ 955,010
102,788
15,000
10,000
207,770
1,290,568
2,294
1,723
404,170
7,471
1,642,725
2,058,383
(767,815)
990,775
(266,361)
418,585
1,142,999
375,184
6,822,695
$7,197,879
Variance -
Positive
(Negative)
$ 314,717
(61,237)
(75,000)
10,000
186,146
374,626
114,378
7,777
604,974
33,029
1,010,653
1,770,811
2,145,437
(809,225)
13,639
418,585
(377,001)
1,768,436
$1,768,436
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
ALL CAPITAL PROJECTS FUNDS
YEAR ENDED JUNE 30, 2020
Page 94
STATISTICAL SECTION
The statistical section presents financial statement trends as well as detailed financial and
operational information not available elsewhere in the report. The statistical section is intended to
enhance the reader’s understanding of the information presented in the financial statements, notes
to the financial statements, and other supplementary information presented in this report. The
statistical section is comprised of the five categories of statistical information presented below.
Financial Trends
These schedules contain information on financial trends to help the reader understand how
the Town’s financial position and financial activities have changed over time.
Revenue Capacity
These schedules contain information to help the reader assess the factors affecting the
Town’s ability to generate revenue.
Debt Capacity
These schedules present information to help the reader evaluate the Town’s current levels of
outstanding debt as well as assess the Town’s ability to make debt payments and/or issue
additional debt in the future.
Demographic and Economic Information
These schedules present various demographic and economic indicators to help the reader
understand the environment in which the Town’s financial activities take place and to help
make comparisons with other cities.
Operating Information
These schedules contain information about the Town’s operations and various resources to
help the reader draw conclusions as to how the Town’s financial information relates to the
services provided by the Town.
Note: For locally assessed property (i.e., excluding mines, utilities, etc.) Proposition 117, approved
by voters in 2012, amended the Arizona Constitution to require that all property taxes after fiscal
year 2014-15 be based upon property values limited to five percent in annual growth. The
aggregate assessed value of all taxable properties within a taxing jurisdiction (i.e., after applying
assessment ratios based on the use of a property), including property values with a growth limit,
is currently referred to as net limited assessed value and formerly as primary assessed value. In
accordance with Proposition 117, this value is used for all taxing purposes beginning with fiscal
year 2015-16. Aggregate assessed value without a growth limit is currently referred to as net full
cash assessed value and formerly as secondary assessed value. This value remains the value
utilized for determining debt capacity limits.
Page 95
2011 2012 2013 2014
Governmental activities:
Net investment in capital assets 92,579,483$ 92,006,103$ 89,800,560$ 89,713,260$
Restricted 4,385,595 5,951,416 5,721,744 5,480,867
Unrestricted 22,598,669 21,064,267 20,612,758 19,186,823
Total governmental activities net position 119,563,747$ 119,021,786$ 116,135,062$ 114,380,950$
Source: The source of this information is the Town's financial records.
Fiscal Year ended June 30
Town of Fountain Hills, Arizona
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
Page 96
2015 2016 2017 2018 2019 2020
95,325,824$ 95,647,990$ 94,909,703$ 96,777,854$ 104,781,328$ 104,004,331$
6,310,810 4,530,239 4,471,661 4,589,526 3,646,449 2,766,041
15,180,582 17,232,506 17,578,068 16,244,169 15,258,797 17,388,168
116,817,216$ 117,410,735$ 116,959,432$ 117,611,549$ 123,686,574$ 124,158,540$
Fiscal Year ended June 30
Page 97
2011 2012 2013 2014
Expenses
Governmental activities:
General government 2,876,848$ 3,119,113$ 2,909,443$ 2,432,965$
Development services 1,572,202 1,442,613 1,633,361 1,237,717
Public safety 5,963,067 5,820,136 6,100,131 6,958,056
Public works 5,567,973 4,718,047 5,712,817 6,630,875
Culture and recreation 2,840,154 2,754,731 2,779,294 2,760,690
Interest on long-term debt 851,957 779,576 567,043 472,999
Total governmental activities expenses 19,672,201 18,634,216 19,702,089 20,493,302
Program Revenues
Governmental activities:
Fines, fees and charges for services:
General government 337,279 272,469 380,926 215,943
Development services 344,821 322,984 377,483 531,193
Public safety 65,568 63,926 63,824 74,887
Public works 77,409 95,201 112,521 250,421
Culture and recreation 339,341 303,508 288,745 340,353
Operating grants and contributions 1,614,462 1,285,656 1,266,906 1,307,738
Capital grants and contributions 2,273,414 1,392,706 150,535 144,570
Total governmental activities program revenues 5,052,294 3,736,450 2,640,940 2,865,105
Net (Expenses)/Revenues (14,619,907) (14,897,766) (17,061,149) (17,628,197)
General Revenues and Other Changes in Net Assets
Governmental activities:
Taxes:
Property taxes 1,349,079 1,453,405 1,385,147 1,449,646
Sales taxes 8,013,480 7,787,489 7,957,163 8,459,267
Franchise taxes 322,659 332,130 334,668 349,414
State shared revenues 5,217,140 4,515,511 4,979,183 5,326,332
Investment earnings 28,456 88,877 69,998 123,311
Miscellaneous 68,125 178,393 300,899 166,115
Special item - Donation of capital assets - - - -
Total governmental activities 14,998,939 14,355,805 15,027,058 15,874,085
Changes in Net Position
Governmental activities 379,032$ (541,961)$ (2,034,091)$ (1,754,112)$
Source: The source of this information is the Town's financial records.
Town of Fountain Hills, Arizona
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year Ended June 30
Page 98
2015 2016 2017 2018 2019 2020
2,479,365$ 2,516,966$ 3,142,722$ 3,431,752$ 3,318,477$ 3,470,936$
2,074,611 2,253,208 1,364,378 1,460,967 867,725 825,884
6,816,152 7,178,890 7,563,898 7,567,012 8,142,069 9,003,452
4,963,979 6,476,688 7,904,577 7,380,663 10,263,244 9,961,306
2,822,954 3,124,523 3,375,414 3,311,648 3,767,996 3,490,447
698,542 241,694 178,749 118,552 57,054 881
19,855,603 21,791,969 23,529,738 23,270,594 26,416,565 26,752,906
337,655 298,737 837,163 295,716 280,312 533,189
693,670 1,257,492 1,062,094 1,314,915 1,143,871 608,892
86,641 90,345 155,454 155,973 90,774 100,444
236,706 48,688 216,724 52,465 10,214 131,750
339,158 321,189 393,028 497,914 1,151,500 409,651
1,431,017 1,615,973 1,699,931 1,737,958 1,850,676 2,007,841
2,874,796 381,011 494,328 304,951 181,939 91,245
5,999,643 4,013,435 4,858,722 4,359,892 4,709,286 3,883,012
(13,855,960) (17,778,534) (18,671,016) (18,910,702) (21,707,279) (22,869,894)
904,660 2,569,504 2,296,199 2,263,623 2,476,546 2,077,368
8,983,049 9,395,667 9,415,151 10,311,577 11,491,123 13,172,390
352,673 360,320 367,119 421,682 423,947 434,896
5,713,235 5,813,678 6,057,278 6,396,667 6,514,470 6,874,771
150,358 219,058 55,127 158,860 554,549 545,983
188,251 13,826 28,839 10,410 202,969 236,452
- - - - 6,118,700 -
16,292,226 18,372,053 18,219,713 19,562,819 27,782,304 23,341,860
2,436,266$ 593,519$ (451,303)$ 652,117$ 6,075,025$ 471,966$
Fiscal Year Ended June 30
Page 99
2011 2012 2013 2014
General fund
Nonspendable
Inventory 13,183$ 9,332$ 10,201$ 14,358$
Prepaid items 29,234 28,245 32,493 18,348
Committed - 1,345,200 1,345,200 1,345,200
Assigned - 2,190,910 2,191,063 1,647,193
Unassigned 8,263,549 3,656,173 4,117,865 4,972,853
Total general fund 8,305,966$ 7,229,860$ 7,696,822$ 7,997,952$
All other governmental funds
Nonspendable
Cash with escrow agent -$ 2,623,895$ 2,301,609$ 1,973,067$
Prepaid items 6,217 5,474 4,706 997
Restricted 4,379,987 3,300,426 3,354,189 3,505,590
Committed 11,480,869 2,039,560 2,175,094 2,089,361
Assigned - 9,312,168 9,005,276 7,147,586
Unassigned - - - -
Total all other governmental funds 15,867,073$ 17,281,523$ 16,840,874$ 14,716,601$
Source: The source of this information is the Town's financial records.
Fiscal Year ended June 30
Town of Fountain Hills, Arizona
Fund Balances — Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Page 100
2015 2016 2017 2018 2019 2020
6,975$ 9,272$ 5,872$ 13,490$ 5,168$ 8,982$
10,655 4,123 16,868 21,945 17,311 2,418
2,634,923 2,652,357 2,714,135 2,893,850 3,027,804 3,249,354
1,872,492 1,701,086 1,743,768 2,101,574 2,380,653 622,641
4,369,457 5,853,806 2,696,999 2,140,434 1,863,722 5,535,499
8,894,502$ 10,220,644$ 7,177,642$ 7,171,293$ 7,294,658$ 9,418,894$
1,645,000$ -$ -$ -$ -$ -$
656 5,055 474 - - -
10,066,786 4,500,044 4,432,710 4,571,263 3,579,891 2,708,883
1,079,780 1,366,081 8,576,250 7,248,890 5,868,386 6,068,810
5,444,124 5,943,364 1,784,761 2,340,683 2,592,343 2,402,244
- - - - - (66,361)
18,236,346$ 11,814,544$ 14,794,195$ 14,160,836$ 12,040,620$ 11,113,576$
Fiscal Year ended June 30
Page 101
2011 2012 2013 2014
Revenues
Taxes 9,704,054$ 9,577,321$ 9,713,445$ 10,271,737$
Licenses and permits 312,367 194,976 570,904 891,782
Leases and rents 227,195 206,018 213,871 252,584
Intergovernmental 7,165,103 6,035,448 6,323,047 6,677,518
Charges for services 388,635 405,663 162,086 161,376
Other 72,125 178,393 300,899 134,114
Fines and forfeitures 236,221 223,673 187,251 170,995
Special assessments - - - -
Investment earnings 28,456 88,877 69,998 123,311
Total revenues 18,134,156 16,910,369 17,541,501 18,683,417
Expenditures
Current:
General government 2,575,975 2,887,321 2,699,109 2,194,845
Development services 1,564,615 1,421,787 1,643,757 1,774,983
Public safety 5,772,800 5,869,445 6,022,269 6,890,770
Public works 1,123,230 1,054,930 2,058,990 3,085,559
Culture and recreation 1,871,446 1,794,332 1,791,018 1,921,939
Capital outlay 1,043,304 884,323 453,002 1,750,465
Debt service:
Principal 2,114,999 1,965,000 2,280,000 2,415,000
Interest 729,077 639,135 554,860 460,811
Other debt service 15,254 55,752 12,183 12,188
Total expenditures 16,810,700 16,572,025 17,515,188 20,506,560
Excess (deficiency) of revenues
over (under) expenditures 1,323,456 338,344 26,313 (1,823,143)
Other Financing Sources (Uses)
Transfers in 431,880 2,470,027 1,279,397 1,838,453
Transfers out (431,880) (2,470,027) (1,279,397) (1,838,453)
Proceeds from sale of capital assets
Issuance of refunding bonds - - - -
Issuance of long-term debt - - - -
Bond Premium - - - -
Payment to refunded bonds escrow agent - -- -
Total other financing sources (uses) - -- -
Net change in fund balances 1,323,456$ 338,344$ 26,313$ (1,823,143)$
Expenditures for capitalized assets 389,082$ 1,333,785$ 467,691$ 2,385,168$
Debt service as a percentage of noncapital expenditures 17.4% 17.5% 16.7% 15.9%
Source: The source of this information is the Town's financial records.
Fiscal Year Ended June 30
Town of Fountain Hills, Arizona
Statement of Revenues, Expenditures and Changes in Fund Balances
Last Ten Fiscal Years
(modified accrual basis of accounting)
Page 102
2015 2016 2017 2018 2019 2020
10,240,382$ 12,299,285$ 12,069,714$ 13,019,341$ 14,342,801$ 15,694,054$
1,043,382 1,372,045 1,310,973 2,004,386 2,040,622 835,731
269,753 258,165 284,090 282,531 280,801 286,391
9,770,048 7,559,436 7,917,651 8,266,028 8,401,676 8,920,296
176,541 197,109 351,476 254,122 181,105 222,947
188,251 147,662 153,438 207,697 347,141 387,225
186,456 209,380 257,727 182,997 130,483 281,704
- -- - -
150,358 219,058 55,127 158,860 554,549 545,983
22,025,171 22,262,140 22,400,196 24,375,962 26,279,178 27,174,331
2,275,124 2,324,026 2,713,548 3,195,936 3,147,063 3,280,191
2,073,990 2,217,814 1,275,147 1,397,249 858,957 797,513
6,675,874 7,034,887 7,420,032 7,402,227 6,295,989 8,566,058
1,275,779 2,498,714 3,954,450 3,420,317 7,880,668 6,046,298
1,962,585 2,240,865 2,484,940 2,375,758 2,845,027 2,609,842
8,799,068 6,471,382 1,693,265 4,317,214 4,487,854 2,716,523
1,850,000 4,260,000 2,675,000 2,720,000 2,635,000 2,310,000
454,957 308,106 244,986 185,164 123,871 67,301
243,585 2,005 2,180 1,805 1,600 1,998
25,610,962 27,357,799 22,463,548 25,015,670 28,276,029 26,395,724
(3,585,791) (5,095,659) (63,352) (639,708) (1,996,851) 778,607
2,519,774 562,044 5,194,138 4,543,728 3,672,532 1,928,978
(2,519,774) (562,044) (5,194,138) (4,543,728) (3,672,532) (1,928,978)
418,585
4,180,000 -- - - -
7,565,000 -- - - -
342,086 -- - - -
(4,085,000) - -- --
8,002,086 - -- -418,585
4,416,295$ (5,095,659)$ (63,352)$ (639,708)$ (1,996,851)$ 1,197,192$
9,067,254$ 6,394,346$ 1,696,612$ 4,293,214$ 4,465,837$ 2,689,270$
15.4% 21.8% 14.1% 14.0% 11.6% 10.0%
Fiscal Year Ended June 30
Page 103
Fiscal Year
Ended June 30 Property Tax Sales Tax Franchise Tax Total
2011 1,367,915$ 8,013,480$ 322,659$ 9,704,054$
2012 1,457,702 7,779,219 332,130 9,569,051
2013 1,421,615 7,957,162 334,668 9,713,445
2014 1,463,056 8,459,267 349,414 10,271,737
2015 904,660 8,983,050 352,673 10,240,383
2016 2,543,298 9,391,267 360,320 12,294,885
2017 2,287,444 9,419,551 367,119 12,074,114
2018 2,286,081 10,311,578 421,682 13,019,341
2019 2,427,730 11,491,124 423,947 14,342,801
2020 2,086,768 13,172,390 434,896 15,694,054
Source: The source of this information is the Town's financial records.
Town of Fountain Hills, Arizona
Governmental Activities - Tax Revenues by Source
Last Ten Fiscal Years
(modified accrual basis of accounting)
Page 104
Net Assessed
Net Total Estimated Taxable Value as a
Assessed Direct Actual Percentage of
Taxable Tax Taxable Estimated Actual
Fiscal Year Value*Rate**Value*Taxable Value
2011 576,401,885$ 0.1639$ 5,068,665,363$ 11.37%
2012 452,236,007 0.2258 4,096,551,487 11.04%
2013 377,816,392 0.2657 3,422,463,416 11.04%
2014 365,963,182 0.2773 3,359,684,579 10.89%
2015 403,330,477 0.1151 3,722,794,676 10.83%
2016 402,223,763 0.5246 3,744,585,506 10.74%
2017 423,688,665 0.4472 3,965,824,715 10.68%
2018 444,639,625 0.4259 4,166,589,970 10.67%
2019 466,895,716 0.4257 4,381,287,279 10.66%
2020 494,576,905 0.3382 4,657,015,387 10.62%
Source: The source of this information is the Arizona Department of Revenue's
Abstract of the Assessment Roll and the Town's financial records.
*Note: On November 6, 2012, voters approved Proposition 117, an amendment to the
Arizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary and
secondary taxes are levied against the net limited assessed value. The net full cash assessed
value is used for determining the Town’s bonding capacity and as the ceiling for net limited
assessed value.
** Per $100 of assessed taxable value.
Town of Fountain Hills, Arizona
Assessed Value and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
Page 105
Net LimitedPercentage of Net Full CashPercentage ofAssessedTotal Net Limited AssessedTotal Net Full CashTaxpayerValueRankAssessed ValueValueRankAssessed ValueEPCOR - Chaparral City Water Company3,947,760 10.80%RCS-Park Place 1 LLC3,722,850 20.75%Hunter Retail LLC2,703,022 30.55%WSL Fountain View Investors V, LLC2,253,853 40.46%2,209,139 40.38%Whitestone Fountain Hills, LLC2,064,014 50.42%Target Corporation1,339,330 60.27%2,058,652 70.36%MJFFH7 LLC1,319,079 70.27%FPACP4 Ridgeview LLC1,311,954 8Smith's Food & Drug Centers Inc.1,307,358 90.26%Fountain Hills Invest Co., LLC1,305,063 10 0.26%Inland Western Fountain Hills Four Peaks LLC3,497,492 10.61%Chapparal City Water Company 3,025,000 20.52%EN LLC2,299,280 30.40%Pacific FH Resort LLC2,201,100 50.38%J & R Holdings XX LLC2,089,587 60.36%Qwest Corporation 1,649,928 80.29%Firerock LLC1,608,357 90.28%Fountain Hills AZ Development LLLP 1,504,850 100.26%Totals21,274,283$ 4.04%22,143,385$ 3.84%Source: The source of this information is the Maricopa County Assessor's Office.Note: On November 6, 2012, voters approved Proposition 117, an amendment to the Arizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2015-2016), both primary and secondary taxes are levied against the net assessed limited property valuation. The net assessed full cash property valuation is used for determining the Town’s bonding capacity and as the ceiling for net limited assessed property valuation.Town of Fountain Hills, ArizonaPrincipal Property TaxpayersJune 30, 2020 and 201120202011Page 106
Current Percent of Delinquent Ratio of Total
Fiscal Total Tax Current Taxes Tax Total Tax Tax Collections
Year Tax Levy Collections Collected Collections Collections to Total Tax Levy
2011 1,340,544$ 1,307,092$ 97.5% 24,924$ 1,332,016$ 99.4%
2012 1,446,076 1,414,482 97.8%20,255 1,434,737 99.2%
2013 1,429,285 1,401,654 98.1%18,833 1,420,487 99.4%
2014 1,449,884 1,426,612 98.4%18,448 1,445,060 99.7%
2015 892,104 881,170 98.8%6,995 888,165 99.6%
2016 2,532,115 2,502,995 98.8%19,374 2,522,369 99.6%
2017 2,278,728 2,241,482 98.4%29,635 2,271,117 99.7%
2018 2,272,027 2,230,328 98.2%31,614 2,261,942 99.6%
2019 2,404,250 2,369,262 98.5%21,149 2,390,411 99.4%
2020 2,092,340 2,044,210 97.7%- 2,044,210 97.7%
Source: The source of this information is the Maricopa County Treasurer's Office.
Town of Fountain Hills, Arizona
Property Tax Levies and Collections
Last Ten Fiscal Years
Page 107
2011 2012 2013 2014
Sales category:
Construction 567,135$ 600,403$ 567,589$ 783,064$
Transportation/utilities 1,388,075 1,409,349 1,402,734 1,375,623
Wholesale/retail 3,567,986 3,601,904 3,598,895 3,653,181
Restaurants/bars 559,931 575,704 645,258 655,654
Real estate, rental & leasing 731,758 678,326 720,023 782,453
Services 276,566 274,521 310,303 342,079
Other 922,029 639,012 712,360 867,213
Total 8,013,480$ 7,779,219$ 7,957,162$ 8,459,267$
Note: Other includes all state and local sales tax audit adjustments.
Source: The source of this information is the Town's financial records.
Fiscal Year Ended June 30
Town of Fountain Hills, Arizona
Taxable Sales by Category
Last Ten Fiscal Years
(modified accrual basis of accounting)
Page 108
2015 2016 2017 2018 2019 2020
935,694$ 918,717$ 730,163$ 1,408,332$ 1,932,716$ 1,910,021$
1,405,768 1,327,441 1,288,153 1,309,928 1,290,585 1,405,005
4,214,119 4,815,582 4,982,218 5,235,992 5,464,247 7,031,474
682,180 742,540 811,985 829,857 893,595 892,210
617,348 552,856 636,834 745,171 842,233 965,124
604,618 779,753 852,675 747,834 1,025,548 916,769
523,323 254,378 117,523 34,464 42,200 51,786
8,983,050$ 9,391,267$ 9,419,551$ 10,311,578$ 11,491,124$ 13,172,389$
Fiscal Year Ended June 30
Page 109
Fiscal
Year
Ended Town Maricopa State Total
June 30 Rate County Rate Tax Rate
2011 2.60% 0.70% 6.60% 9.90%
2012 2.60% 0.70% 6.60% 9.90%
2013 2.60% 0.70% 5.60% 8.90%
2014 2.60% 0.70% 5.60% 8.90%
2015 2.60% 0.70% 5.60% 8.90%
2016 2.60% 0.70% 5.60% 8.90%
2017 2.60% 0.70% 5.60% 8.90%
2018 2.60% 0.70% 5.60% 8.90%
2019 2.60% 0.70% 5.60% 8.90%
2020* 2.90% 0.70% 5.60% 9.20%
* 0.3% Town rate increase effective 11/1/2019
Source: The source of this information is the Arizona Department of Revenue.
Town of Fountain Hills, Arizona
Direct and Overlapping Sales Tax Rates
Last Ten Fiscal Years
Page 110
Community Municipal HighwayFiscal Year General Facilities Property User Special Total DebtEnded Obligation District Corporation Revenue Assessment Outstanding PerJune 30Bonds*Bonds**Bonds*BondsBondsDebtCapita2011 4,595,000$ 3,370,000$ 7,885,000$ - - 15,850,000$ 705$ 2012 3,755,000 3,090,000 7,040,000 - - 13,885,000 611 2013 2,900,000 2,800,000 5,905,000 - - 11,605,000 503 2014 2,000,000 2,495,000 4,695,000 - - 9,190,000 394 2015 9,517,086 2,300,000 3,525,000 - - 15,342,086 651 2016 7,678,669 1,935,000 1,400,000 - - 11,013,669 461 2017 5,680,252 1,560,000 1,030,000 - - 8,270,252 338 2018 3,631,835 1,180,000 670,000 - - 5,481,835 223 2019 1,683,417 795,000 300,000 - - 2,778,417 113 2020- 400,000 - - - 400,000 16 Source: The source of this information is the Town's financial records and the U.S. Bureau of Economic Analysis.* All bond amounts presented include amortization of original issuance discounts and premiums.** All bond amounts presented include amoritization of original issuance discounts and premiums.The Town is not obligated for repayment of the Eagle Mountain Community Facilities District general obligation bonds.Population data can be found in the Schedule of Demographic and Economic Statistics.Governmental ActivitiesTown of Fountain Hills, ArizonaRatios of Outstanding Debt by TypeLast Ten Fiscal YearsPage 111
Fiscal YearGeneral Obligation Bonds*Less: Amounts Restricted for PrincipalNet General Obligation BondsEstimated Actual Taxable Value of PropertyPercentage of Estimated Actual Taxable Value of PropertyNet General Obligation Bonded Debt per CapitaNet General Obligation Bonded Debt per Net Limited Assessed ValuationMunicipal Property Corporation Bonds*Net Municipal Property Corporation Debt per Capita Total Revenues-All Sources 2011 7,965,000$ 83,081$ 7,881,919$ 5,068,665,363$ 0.16% 347 1.37% 6,993,694$ 308$ 18,248,326$ 2012 6,845,000 94,380 6,750,620 4,096,551,487 0.16%293 1.49% 4,300,489 186 17,184,895 2013 5,700,000 82,184 5,617,816 3,422,463,416 0.16%241 1.49% 3,561,814 153 17,723,994 2014 4,495,000 87,949 4,407,051 3,359,684,579 0.13%187 1.20% 2,721,933 115 18,891,967 2015 11,817,086 420,782 11,396,304 3,722,794,676 0.31%477 2.83% 1,764,338 74 22,161,316 2016 9,613,669 576,281 9,037,388 3,744,585,506 0.24%369 2.25% 1,088,117 44 22,262,139 2017 7,240,252 343,697 6,896,555 3,965,824,715 0.17%281 1.63% 860,437 35 22,400,196 2018 4,811,835 83,185 4,728,650 4,166,589,970 0.11%189 1.06% 664,484 27 24,375,962 2019 2,478,417 196,412 2,282,005 4,381,287,279 0.05%91 0.49% 287,694 12 26,279,178 2020 400,000 202,449 197,551 4,657,015,387 8 0.04%- - 27,586,011 Source: The source of this information is the Department of Revenue and the Town's financial records.* All bond amounts presented are net of original issuance discounts and premiums. The Town is not obligatedfor repayment of the Eagle Mountain Community Facilities District general obligation bondsPopulation data can be found in the Schedule of Demographic and Economic Statistics.Note: On November 6, 2012, voters approved Proposition 117, an amendment to the Arizona Constitution. Beginning with Tax Year 2015 (FiscalYear 2016), both primary and secondary taxes are levied against the net limited assessed value. The net full cash assessed value is used fordetermining the Town’s bonding capacity and as the ceiling for net limited assessed value.Town of Fountain Hills, ArizonaRatios of General Bonded Debt OutstandingLast Ten Fiscal YearsPage 112
Estimated
Estimated Share of
Percentage Overlapping
Outstanding Debt Applicable Debt
Overlapping:
Maricopa County -$ 1.15% -$
Maricopa County Community College District 250,065,000 1.15% 2,875,748
Maricopa County Special Healthcare District 429,125,000 1.15% 4,934,938
East Valley Institute of Technology - 2.58% -
Fountain Hills Unified School District 7,780,000 96.28% 7,490,584
Total Overlapping Debt 15,301,270
Direct:
Town of Fountain Hills, Arizona*
General Obligation Bonds -
Revenue Bonds -
Eagle Mountain Community Facilities District** 400,000
Total Direct Debt 400,000
Total direct and overlapping debt 15,701,270$
Source: The source of this information is the Town's records, the State and County Abstract of the
Assessment Roll, the Arizona Department of Revenue Report of Indebtedness and the applicable
governmental unit.
* All bond amounts include amortization of original issuance discounts and premiums.
** The Town is not obligated for repayment of the Eagle Mountain Community Facilities District general
obligation bonds.
Note: The estimated percentage of debt outstanding applicable to the Town is calculated based on the Town's
net limited assessed valuation as a percentage of the net limited assessed valuation of the overlapping
jurisdiction.
Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the Town
of Fountain Hills. This schedule further estimates the portion of outstanding debt of those overlapping
governments that is borne by residents and businesses of the Town. This process recognizes that, when
considering a town's ability to issue and repay long-term debt, the entire debt burden borne by residents
should be taken into account. However, this fact does not imply that every taxpayer is a resident, and,
therefore, responsible for repaying the debt of each overlapping government.
Town of Fountain Hills, Arizona
Direct and Overlapping Governmental Activities Debt
as of June 30, 2020
Governmental Unit
Page 113
2011 2012 2013 2014 2015
6% Debt Limit
Debt limit 34,584,113$ 27,134,160$ 22,668,984$ 21,957,791$ 24,199,829$
Total net debt applicable to limit - - - - -
Legal debt margin 34,584,113$ 27,134,160$ 22,668,984$ 21,957,791$ 24,199,829$
Total debt applicable to the limit
as a percentage of debt limit - - - - -
20% Debt Limit
Debt limit 115,280,377$ 90,447,201$ 75,563,278$ 73,192,636$ 80,666,095$
Total net debt applicable to limit 4,595,000 3,755,000 2,900,000 2,000,000 9,175,000
Legal debt margin 110,685,377$ 86,692,201$ 72,663,278$ 71,192,636$ 71,491,095$
Total debt applicable to the limit
as a percentage of debt limit 4% 4% 4% 3% 11%
Source: The source of this information is the Town's financial records.
Note: All amounts presented are net of original issuance discounts and premiums.
Note: On November 6, 2012, voters approved Proposition 117, an amendment to the
Arizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary and
secondary taxes are levied against the net limited assessed value. The net full cash assessed
value is used for determining the Town’s bonding capacity and as the ceiling for net limited
assessed value.
Town of Fountain Hills, Arizona
Legal Debt Margin Information
Last Ten Fiscal Years
Fiscal Year Ended June 30
Page 114
2016 2017 2018 2019 2020
28,325,296$ 30,651,126$ 31,459,192$ 32,400,042$ 33,907,227$
- - - - -
28,325,296$ 30,651,126$ 31,459,192$ 32,400,042$ 33,907,227$
-- - - -
94,417,653$ 102,170,422$ 104,863,974$ 108,000,140$ 113,024,089$
7,405,000 5,475,000 3,495,000 1,615,000 -
87,012,653$ 96,695,422$ 101,368,974$ 106,385,140$ 113,024,089$
8% 5% 3% 1% -
Fiscal Year Ended June 30
Page 115
Net full cash assessed valuation 565,120,444$
Water, Sewer, Artificial Lighting, Parks, Open Space, Recreational Facility
Improvements, Public Safety, Law Enforcement, Fire and Emergency
Facilities, Street and Transportation Facilities
Debt limit - 20% of net full cash assessed valuation 113,024,089$
Net debt applicable to limit -
20% legal debt margin 113,024,089
All Other General Obligation Bonds
Debt limit - 6% of net full cash assessed valuation 33,907,227
Net debt applicable to limit -
6% legal debt margin 33,907,227
Total legal debt margin 146,931,316$
Source: The source of this information is the Maricopa County Assessor's Office and the
Town's financial records.
Note: On November 6, 2012, voters approved Proposition 117, an amendment to the
Arizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary and
secondary taxes are levied against the net limited assessed value. The net full cash assessed
value is used for determining the Town’s bonding capacity and as the ceiling for net limited
assessed value.
Town of Fountain Hills, Arizona
Calculation of Legal Debt Margin
as of June 30, 2020
Page 116
Fiscal
Year
Ended Pledged
June 30 Principal Interest Total Revenues Coverage
2011 1,035,000$ 386,630$ 1,421,630$ 13,489,416$ 9.5
2012 1,085,000 327,312 1,412,312 12,995,685 9.2
2013 1,150,000 285,287 1,435,287 13,397,842 9.3
2014 1,225,000 234,176 1,459,176 14,313,158 9.8
2015 2,545,000 184,500 2,729,500 15,583,484 5.7
2016 480,000 32,740 512,740 16,250,673 31.7
2017 370,000 22,680 392,680 16,815,224 42.8
2018 360,000 16,686 376,686 18,194,833 48.3
2019 370,000 10,854 380,854 19,765,936 51.9
2020 300,000 4,860 304,860 20,862,372 68.4
Source: The source of this information is the Town's financial records.
Town of Fountain Hills
Revenue Bond Coverage
Last Ten Fiscal Years
Municipal Facilities Corporation Revenue Bonds
Page 117
2010201120122013201420152016201720182019*Population22,489 22,741 23,070 23,318 23,573 23,899 24,482 24,583 24,987 25,200 Per capita personal income40,672$ 44,660$ 47,260$ 48,244$ 46,619$ 48,240$ 50,162$ 60,531$ 54,936$ 57,468$ Median age53.9 53.9 53.9 53.0 53.7 53.8 53.7 53.5 57.5 58.8 Public school enrollment2,103 1,981 1,886 1,820 1,692 1,619 1,506 1,444 1,380 1,338 Town of Fountain Hillsunemployment rate4.8% 6.7% 5.6% 6.0% 5.4% 2.4% 1.9% 1.6% 3.9% 8.7%Land useTotal acres13,005.7 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7 Total square miles20.32 20.32 20.32 20.32 20.32 20.32 20.32 20.32 20.32 20.32 Vacant lots1,226 1,218 1,209 1,196 1,165 1,247 1,209 1,175 1,172 1,052 Number of unitsHousing12,983 12,990 12,977 12,991 12,981 13,002 13,130 13,176 13,558 13,749 Lodging4 4 4 4 4 4 4 4 4 4 Restaurants53 56 56 54 43 46 50 52 54 55 Shopping centers20 20 20 20 20 20 20 20 20 20 SchoolsPublic4 4 3 3 3 3 3 3 3 3 Preschool4 4 6 7 7 7 7 7 5 5 Charter1 1 1 1 1 1 1 1 1 1 Vocational- - - - - - - 1 1 2 Note: N/A indicates the information is not available.* Information obtained is based on calendar years; therefore, the latest information obtained was from 2019.Demographic and Economic StatisticsTown of Fountain Hills, ArizonaLast Ten Calendar YearsCalendar YearSources: The sources of the "Per Capita Personal Income", "Median Age" and "Unemployment Rate" information are Sites USA (2009-2017), U.S. Census Bureau and Arizona Office of Economic Opportunity (beginning in 2018). The source of the "Population" is the U.S. Census Bureau July 1, 2019 estimate. The source of School Enrollment is the Fountain Hills Unified School District No. 98. Other information is from the Town's records.Page 118
Percentage
Number of of Total Town Number of
Employer Employees Rank Employment Employees Rank
Fountain Hills Unified School District No. 98 320 1 6.3% 278 1
Rural Metro Corporation 130 2 2.5%
Safeway Stores 130 2 2.5%91 5
Fountain View Village 120 4 2.3%
Firerock Country Club 100 5 2.0%
Fry's Food Stores 90 6 1.8%76 6
Target Stores 90 6 1.8% 125 2
Eagle Mountain Golf Club 70 8 1.4%69 7
Fountain Hills Family Practice PC 70 8 1.4%
Bashas 60 10 1.2%64 8
Golf International Inc 60 10 1.2%
Quotemedia Inc 60 10 1.2%
Sunridge Canyon Golf Course 60 10 1.2%58 10
Town of Fountain Hills 60 10 1.2%61 9
United States Postal Service 60 10 1.2%
Monks Construction 110 3
MCO Properties, Inc.103 4
Totals 1,480 29.2% 1,035
Total Town employment 5,110 5,486
Source: The source of this information is the Maricopa Association of Governments.
Note: MAG data includes employers with 5+ employees and is rounded to nearest 10.
* Data for 2020 was not available.
2019*
Town of Fountain Hills, Arizona
Principal Employers
Prior Fiscal Year and Nine Years Ago
2010
Page 119
2011201220132014201520162017201820192020Municipal court5.00 5.00 5.00 4.00 3.63 3.63 3.63 3.63 3.63 3.63 Administration11.25 11.58 11.68 10.56 11.33 11.63 12.25 13.45 13.70 15.20 Public works9.80 9.80 10.80 12.43 Development services23.25 20.25 18.75 16.25 16.30 16.30 7.50 8.50 7.50 9.00 Community services21.63 21.53 21.18 20.18 21.06 20.76 20.76 20.56 20.56 20.56 Total 61.13 58.36 56.61 50.99 52.32 52.32 53.94 55.94 56.19 60.82 Source: The source of this information is the Town's financial records.Town of Fountain Hills, ArizonaAuthorized Full-time Equivalent Government Employees by FunctionLast Ten Fiscal YearsFiscal Year Ended June 30Page 120
Function/Program2011201220132014201520162017201820192020Municipal CourtCases filed 2,584 2,173 1,740 1,649 1,738 1,593 2,014 1,277 891 2,237 Hearings/Trials held738 731 703 1,665 1,585 1,564 1,844 676 801 568 AdministrationFTEs per 1,000 residents2.7 2.6 2.5 2.2 2.2 2.2 2.2 2.3 2.2 2.4 Registered voters - general electionnone 16,074 none N/A 16,213 none 16,387 none 16,775 noneVoter turnout - general electionnone 34% none N/A 38% none 41% none 51% noneDevelopment ServicesBuilding permits issued350 346 457 445 443 410 509 468 576 547 Building inspections conducted1,546 1,257 1,395 2,131 2,448 2,129 2,704 3,707 4,795 4,069 Number of code violation cases843 804 746 716 752 713 669 654 655 690 Number of zoning cases14 7 10 41 65 72 50 41 11 7 Community ServicesNumber of Community Center bookings3,315 3,236 3,196 3,383 3,439 3,124 3,764 4,395 3,857 3,169 Number of participants in recreational programs 1,759 1,833 1,789 2,291 2,249 2,910 3,773 3,794 3,489 1,830 Number of Senior Services members1,205 1,208 1,118 1,189 1,273 1,326 1,335 1,220 1,313 1,265 Number of home delivered meals9,742 8,419 6,941 4,799 4,035 3,497 3,920 3,093 3,562 5,215 Law Enforcement (contracted)Physical arrests645 522 545 743 445 220 220 214 67 86 Traffic violations1,909 1,366 1,296 1,379 1,539 1,215 1,803 1,053 1,248 2,618 Fire & Emergency Medical (contracted)Total incident responses3,179 3,082 3,136 2,956 3,166 3,191 3,425 3,659 4,073 3,896 Average response time (in minutes)3:46 3:50 3:53 3:37 3:57 3:25 3:33 3:32 3:51 4:21Source: The source of this information is the Town's financial records.Note: N/A indicates that the information is not available.Fiscal Year Ended June 30Town of Fountain Hills, ArizonaOperating Indicators by FunctionLast Ten Fiscal yearsPage 121
2011201220132014201520162017201820192020Public safetyNumber of fire stations2 2 2 2 2 2 2 2 2 2 Public worksStreets (centerline miles) 178.9 178.9 178.9 178.9 178.9 178.9 178.9 180.0 180.0 180.0 Streets (lane miles)390 390 390 390 390 390.5 390.5 391.5 391.5 391.5 Pedestrian lighting34 34 34 34 85 91 91 91 91 91 Traffic signals13 13 13 13 13 13 13 13 13 13 Parks and recreationAcreage-developed parks 116 116 116 116 119 119 119 119 119 119 Playgrounds7 7 7 7 7 7 7 7 9 9 Baseball/softball diamonds 6 6 6 6 6 6 6 6 6 6 Soccer/football fields7 7 7 7 7 7 7 7 7 7 Community centers1 1 1 1 1 1 1 1 1 1 Preserve acreageN/A 740 740 740 807.2 807.2 807.2 807.2 889.2 913.2 Miles of trailsN/A 4.3 10.43 10.43 15.8 15.8 18.5 18.5 18.5 18.5 Source: The source of this information is the Town's facilities records.Note: N/A indicates the information is not available.Town of Fountain Hills, ArizonaCapital Assets Statistics by FunctionLast Ten Fiscal YearsFiscal Year Ended June 30Function/ProgramPage 122