HomeMy WebLinkAboutFY21 ACFRTOWN OF FOUNTAIN HILLS, ARIZONA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
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) 23
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements:
Statement of Net Position 36
Statement of Activities 37
Fund Financial Statements:
Balance Sheet – Governmental Funds 40
Reconciliation of the Balance Sheet –
Governmental Funds to the Statement of Net Position 43
Statement of Revenues, Expenditures and Changes in Fund Balances –
Governmental Funds 44
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances – Governmental Funds to the
Statement of Activities 46
Statement of Net Position – Proprietary Fund 47
Statement of Revenues, Expenses, and Changes in Net Position –
Proprietary Fund 48
Statement of Cash Flows – Proprietary Fund 49
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
FINANCIAL SECTION – continued Page
Notes to Financial Statements 50
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Revenues, Expenditures and Changes in Fund Balances –
Budget and Actual:
General Fund 70
Highway User Revenue Fund 71
Grants Fund 72
Note to Required Supplementary Information 73
COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND
SCHEDULES
Governmental Funds:
Combining Balance Sheet – All Non-Major Governmental Funds –
By Fund Type 76
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances – All Non-Major Governmental Funds – By Fund Type 78
Special Revenue Funds:
Combining Balance Sheet 82
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances 84
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual 86
Debt Service Funds:
Combining Balance Sheet 92
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances 94
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
FINANCIAL SECTION – continued Page
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual 96
Capital Projects Fund:
Combining Balance Sheet 99
Combining Statement of Revenues, Expenditures and Changes in 100
Fund Balances
Combining Schedule of Revenues, Expenditures and Changes in
Fund Balances – Budget and Actual 102
STATISTICAL SECTION
Financial Trends:
Net Position by Component 106
Changes in Net Position 108
Fund Balances – Governmental Funds 110
Statement of Revenues, Expenditures and Changes in
Fund Balances – Governmental Funds 112
Revenue Capacity:
Governmental Activities – Tax Revenues by Source 114
Assessed Value and Estimated Actual Value of Taxable Property 115
Principal Property Taxpayers 116
Property Tax Levies and Collections 117
Taxable Sales by Category 118
Direct and Overlapping Sales Tax Rates 120
TOWN OF FOUNTAIN HILLS, ARIZONA
TABLE OF CONTENTS
STATISTICAL SECTION – continued Page
Debt Capacity:
Ratios of Outstanding Debt by Type 121
Ratios of General Bonded Debt Outstanding 122
Direct and Overlapping Governmental Activities Debt 123
Legal Debt Margin Information 124
Calculation of Legal Debt Margin 126
Revenue Bond Coverage 127
Demographic and Economic Information:
Demographic and Economic Statistics 128
Principal Employers 129
Operating Information:
Authorized Full-Time Equivalent Government Employees by Function 130
Operating Indicators by Function 131
Capital Assets Statistics by Function 132
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INTRODUCTORY SECTION
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www.fh.az.gov
November 4, 2021
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
Annual Comprehensive Financial Report (ACFR) of the Town of Fountain Hills (Town) for the
fiscal year ended June 30, 2021.
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, 2021, 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, 2021, 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
Page 1
Accounting principles generally accepted 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’s 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 thirty years, Fountain Hills has grown from 10,030 residents to a town of 23,820 in
2020. 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 in the
years to come. 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 62 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, Internal 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 1. The budget includes proposed expenditures and the means of financing them. The
Town Council is then required to hold public hearings on the proposed budget and to adopt a final
budget by June 30, the close of the Town of Fountain Hills’ fiscal year. Public hearings on the budget are
held each year in accordance with legal requirements in order to obtain comments from local taxpayers. 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. All inter-departmental and inter-fund transfers are approved by Town Council. 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
non-personnel appropriations within their 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, relies mostly on its Transaction Privilege Tax (Sales Tax) and
Voter-Approved Local Revenue (State Shared Revenue) collections to fund nearly 90% of its General
Fund (Operating) expenditures. During the past fiscal year, the Town’s revenue collections from these
sources met, or exceeded, budgeted expectations. However, the effects of the pandemic on personal
income will not have an effect on collections until Fiscal Year 2023 since it lags by two years. 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, elimination
or modification to the job description. The Town will be closely monitoring its revenue sources and
make adjustments accordingly.
Page 5
Local sales tax collections have continued to grow during the past fiscal year. The following chart is a
look at the past five years’ local sales tax activity by category:
As shown in the chart, sales tax collections continue to show signs of moderate growth and relative
stability across all categories. Retail sales experienced a 27% increase over the prior year, and
restaurant/bar revenues have recovered to pre-pandemic levels with an increase of 19% compared to
FY20. Construction sales tax, a one-time revenue source, is driven entirely by development activity in
the community and increased slightly compared to the prior year. Recent building permit activity
indicates that construction sales tax is likely to be stable over the next few fiscal years. The
Transportation/Communication/Utility and Services categories also increased during the year with an
8.8% and 22.8% increase in revenues, respectively.
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 93% of total General Fund revenue collected for fiscal year 2020-21.
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 0.44%). State-shared income tax revenue category is based on two
years prior personal and corporate earnings. Revenue from the State income tax increased by 11.5% in
fiscal year 2020-21. State sales tax has increased over the past several years, and this year continued
the trend by increasing revenue by 15.8% compared to the prior year.
Other local activity has remained fairly consistent during the period as a result of the lack of major
retailers (the Town has three grocery stores and one major retailer). 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
Page 7
Economic Outlook
Retail Sales – Not having a property tax, the Town of Fountain Hills relies heavily on transaction
privilege taxes (TPT), sometimes called a sales tax. Overall, Town TPT revenues provide over 50% of
the General Fund revenues. On November 1, 2019 the Town’s TPT rate went up 0.3%, The Town's
TPT rate is currently at 2.9%. The construction TPT 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 Voter-Approved Local Revenues (VALR), or state-shared revenues, include
allocations of the state-collected income tax, sales tax, fuel tax and motor vehicle-in-lieu taxes. All but
the fuel tax and the 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. These revenue sources have improved recently with
the economy showing signs of recovery.
Highway User Revenue Fund (Streets) – The Town receives a proportionate share of the fuel tax
collected in Maricopa County. These revenues are placed in the Streets Fund to be used specifically for
street maintenance and related activity. Although the state-shared revenue formula generally allocates
revenues based on official census data, in recent years, the state legislature has reduced the formula
distribution of state-shared revenues to cities.
Long-term Financial Planning
Fountain Hills’ Financial Policies are balanced on sound financial reserves and conservative revenue
growth forecasts for the foreseeable future. However, potential for State legislative impacts to revenue-
sharing, reductions in 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 encountered during the 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 about 60 days of expenditures 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 does allow for bond financing of larger
projects so that the cost can be equitably distributed among the Town’s current and future residents.
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 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. Although the Plan was to be updated in 2021,
the committee was unable to meet due to the pandemic. As a result, the newest version of the Strategic
Plan will be introduced in fiscal year 2021-22.
MAJOR INITIATIVES AND SERVICE EFFORTS AND ACCOMPLISHMENTS
The Town of Fountain Hills’ adopted budget for fiscal year 2020-21 reflected a cautious approach to
the anticipated recovery from the pandemic. Due to the uncertain economic conditions, the Town
reduced its expected revenue projections and kept expenditure levels low as well. At the start of the
fiscal year, the CARES Act provided some resources to local governments through the State of
Arizona. These resources allowed the Town to save nearly $2.9M in the General Fund that would have
otherwise been spent to pay for public safety contracts with Maricopa County Sheriff’s Office and
Rural Metro.
The Town Council established priorities in FY16-17 of which the top two are Economic Development
and Pavement Management. In order to implement the Pavement Management program, the Council
approved the use of Vehicle License Tax revenues to be dedicated to annual pavement maintenance
with an effective date of July 1, 2013. 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 2020-21 goals attained are summarized within this list of
accomplishments:
Implemented policies and programs to address the worldwide pandemic
Provided $300,000 in assistance to local businesses in the form of grants
Completed the roundabout located at La Montana and Avenue of the Fountains
Completed major storm drain improvements on Panorama Drive
Continued park improvements at Four Peaks Park, including a basketball court, new
playground equipment covered by a new shade structure, and completed sidewalk loop
Secured grant funding from the Arizona Office of Tourism - Proposition 302
Secured grant funding from Salt River Pima-Maricopa Indian Community - Proposition 202
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 Annual Comprehensive
Financial Report (ACFR) for the fiscal year ended June 30, 2020. This was the twenty-fifth 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 ACFR. 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 ACFR
continues to meet the Certificate of Achievement program’s requirements, and we will be submitting
it to the GFOA to determine its eligibility for the fiscal year ended 2021 Certificate.
For the ninth year, the Town was also given the Award for Outstanding Achievement in Popular Annual
Financial Reporting for the fiscal year ended June 30, 2020.
In addition, the government received the GFOA’s Distinguished Budget Presentation Award for its
annual budget for the fiscal year beginning July 1, 2020. 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 nineteenth consecutive year that the Town has received the award.
Acknowledgments
The preparation of this Annual Comprehensive Financial Report could not have been accomplished
without the efficient and dedicated services of the entire Finance Division team. 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, 2021
ELECTED OFFICIALS
Ginny Dickey, Mayor
Alan Magazine, Vice-Mayor
Gerry Friedel, Councilmember
Sharron Grzybowski, Councilmember
Peggy McMahon, Councilmember
Mike Scharnow, Councilmember
David Spelich, 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
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
Town of Fountain Hills
Arizona
For its Comprehensive Annual
Financial Report
For the Fiscal Year Ended
June 30, 2020
Executive Director/CEO
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
Community
Relations
Community
Relations
Page 13
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FINANCIAL SECTION
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Independent Auditor’s Report
Honorable Mayor and Members of the Town Council
Town of Fountain Hills, Arizona
Report on Audit of Financial Statements
Opinions
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 (Town), as of
and for the year ended June 30, 2021, and the related notes to the financial statements, which
collectively comprise the Town’s basic financial statements as listed in the table of contents.
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, 2021, and the
respective changes in financial position and, where applicable, cash flows thereof for the year then
ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
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. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements
section of our report. We are required to be independent of Town of Fountain Hills, Arizona, and to meet
our other ethical responsibilities in accordance with the relevant ethical requirements relating to our
audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United States of America, and for 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.
In preparing the financial statements, management is required to evaluate whether there are conditions
or events, considered in the aggregate, that raise substantial doubt about the Town’s ability to continue
as a going concern for one year beyond the financial statement date, including any currently known
information that may raise substantial doubt shortly thereafter.
Page 17
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor's report that
includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance
and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing
standards and Government Auditing Standards will always detect a material misstatement when it
exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control. Misstatements are considered material if there is a substantial
likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable
user based on the financial statements. In performing an audit in accordance with generally accepted
auditing standards and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, and design and perform audit procedures responsive to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Town’s internal control. Accordingly, no such opinion is
expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,
that raise substantial doubt about the Town’s ability to continue as a going concern for a
reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit, significant audit findings, and certain internal control related
matters that we identified during the audit.
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 is the
responsibility of management and, 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.
Page 18
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Town’s basic financial statements. The Combining and Individual Fund
Financial Statements and Schedules are presented for purposes of additional analysis and are not a
required part of the basic financial statements. Such information is the responsibility of management
and was derived from and relates 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.
Other Information
Management is responsible for the other information included in the annual report. The other
information comprises the Introductory Section and Statistical Section but does not include the basic
financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do
not cover the other information and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other
information and consider whether a material inconsistency exists between the other information and
the basic financial statements, or the other information otherwise appears to be materially misstated.
If, based on other work performed, we conclude that an uncorrected material misstatement of the other
information exists, we are required to describe it in our report.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated November 4,
2021, on our consideration of 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 the Town of Fountain Hills, Arizona’s 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 Town of Fountain Hills, Arizona’s
internal control over financial reporting and compliance.
Heinfeld, Meech & Co., P.C.
Scottsdale, Arizona
November 4, 2021
Page 19
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Page 20
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
(Required Supplementary Information)
Page 21
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Page 22
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2021
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, 2021. 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 will focus 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 $3.6 million to $127.8
million, representing a 2.9 percent increase of the total net position.
General revenues from governmental activities accounted for $24.6 million in revenue, or
78.4 percent of all revenues from governmental activities. Program specific revenues in the
form of charges for services and grants and contributions accounted for $6.8 million or 21.6
percent of total governmental activities revenues.
The Town had $27.8 million in expenses related to governmental activities, an increase of 3.8
percent from the prior fiscal year, primarily due to increased capital project expenditures.
Among the major governmental funds, the General Fund had $22.2 million in current fiscal
year revenues, which consisted primarily of taxes and intergovernmental revenues. The total
expenditures of the General Fund were $14.0 million. The General Fund’s fund balance
increased $6.0 million to $15.5 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 23
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2021
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 Town funds are included in the governmental fund classification, except for one
internal service fund that is classified as a proprietary fund.
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 24
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2021
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, and Capital Projects 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.
Proprietary fund. The Town maintains one proprietary fund, which is the Technology
Replacement Fund, an internal service fund. The fund provides goods and services to other
funds and departments on a cost-reimbursement basis. The activity is intended to operate on
an essentially “break-even” basis over time.
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 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.
Page 25
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2021
GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued
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 $127.8 million at the end of the fiscal year.
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, 2021 and June 30, 2020.
Governmental Activities
As of
June 30, 2021
As of
June 30, 2020
Current and other assets $ 25,980,153 $ 23,329,463
Capital assets, net 103,822,185 104,404,331
Total assets 129,802,338 127,733,794
Current and other liabilities 1,861,024 3,338,678
Long-term liabilities 190,600 236,576
Total liabilities 2,051,624 3,575,254
Net position
Net investment in capital assets 103,822,185 104,004,331
Restricted 2,610,178 2,766,041
Unrestricted 21,318,351 17,388,168
Total net position $ 127,750,714 $ 124,158,540
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 26
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2021
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 $31.4 million.
The total cost of all programs and services was $27.8 million. The following table presents a
summary of the changes in net position for the fiscal years ended June 30, 2021 and June 30, 2020.
Governmental Activities
Fiscal
Year Ended
June 30, 2021
Fiscal
Year Ended
June 30, 2020
Revenues
Program revenues:
Charges for services $ 1,899,349 $ 1,783,926
Operating grants and contributions 4,733,757 2,007,841
Capital grants and contributions 135,525 91,245
General revenues
Property taxes 402,481 2,077,368
Sales taxes 15,657,292 13,172,390
Franchise taxes 426,260 434,896
State-shared revenue 6,590,986 5,813,932
Vehicle License taxes 1,196,198 1,060,839
Investment earnings 49,665 545,983
Miscellaneous 262,953 236,452
Total revenues $ 31,354,466 $ 27,224,872
Expenses
General government $ 3,793,915 $ 3,470,936
Development services 968,808 825,884
Public safety 9,214,615 9,003,452
Public works 10,175,540 9,961,306
Culture and recreation 3,601,870 3,490,447
Interest on long-term debt 7,544 881
Total expenses 27,762,292 26,752,906
Changes in net position 3,592,174 471,966
Net position, beginning 124,158,540 123,686,574
Net position, ending $127,750,714 $124,158,540
Page 27
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2021
GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued
The charts below compare the governmental expenses from fiscal years 2020-21 and 2019-20.
Page 28
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2021
GOVERNMENT-WIDE FINANCIAL ANALYSIS – continued
The following items are significant current year transactions that have had an impact on the change
of net position.
Revenue from operating grants increased 135.8 percent compared to the prior year. $2.9
million in AZ CARES funding was received as a result of the federal government’s
response to the coronavirus pandemic.
Investment income decreased 90.9 percent due to the coronavirus pandemic, slowing
economy, and lower interest rates.
Property taxes decreased 80.6 percent due to the retirement of all town-wide bonded debt.
Overall, expenses increased 3.8 percent primarily due to 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, 2021 Year Ended June 30, 2020
Total
Expenses
Net (Expense)/
Revenue
Total
Expenses
Net (Expense)/
Revenue
Governmental Activities
General government $ 3,793,915 $ (3,435,515) $ 3,470,936 $ (2,845,747)
Development services 968,808 (275,647) 825,884 (216,992)
Public safety 9,214,615 (6,155,942) 9,003,452 (8,856,335)
Public works 10,175,540 (8,011,077) 9,961,306 (7,989,399)
Culture and recreation 3,601,870 (3,107,936) 3,490,447 (2,960,540)
Interest on long-term debt 7,544 (7,544) 881 (881)
Total expenses $ 27,762,292 $ (20,993,661) $ 26,752,906 $ (22,869,894)
The cost of all governmental activities this year was $27.8 million.
Federal, State, and county governments and charges for services subsidized certain
governmental programs with revenues of $6.8 million.
Net cost of governmental activities of $21.0 million was financed by general revenues,
which consist of primarily sales taxes of $15.7 million and State-shared revenues of $7.8
million.
Page 29
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2021
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 $3.7 million in the
combined fund balance from $20.5 million to $24.3 million.
The General Fund comprises 63.7 percent of the total fund balance. Approximately $11.0 million,
or 70.9 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 $6.0
million to $15.5 million as of fiscal year end. General Fund revenues increased $2.8 million
primarily due to increased local sales tax collections. General Fund expenditures decreased $2.3
million since approximately $2.9 million in AZ CARES funding was used to pay public safety
costs for the fiscal year.
The Highway User Revenue Fund comprises 4.8 percent of total fund balance. The fund balance
decreased $500 thousand from the prior year because of the continuation of the pavement
management program.
The Capital Projects Fund comprises 18.5 percent of the total fund balance. All of the fund balance
is committed or assigned to capital projects. The fund balance decreased $1.6 million due to
increased capital project expenditures during the fiscal year.
The Grants Fund was utilized during the year to account for the AZ CARES funding. This is
Federal funding to assist with COVID-19 related relief. The fund balance decreased $66,361.
Proprietary fund. Unrestricted net position of the Internal Service Fund at the end of the fiscal
year amounted to $95,787. This was an increase of $95,787 that was due to internal charges to
other governmental funds and transfer in from the General Fund.
Page 30
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2021
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 decrease $2.6 million
as a result of transfers to the Grants fund to pay public safety costs using AZ CARES funding.
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 $2.8 million in overall revenues is primarily due to increased
local sales taxes and an increase in construction activity.
The favorable total expenditures variance of $2.9 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 $103.8 million in
capital assets, including buildings, facilities, vehicles, computers, equipment, infrastructure and
artwork. This amount represents a net increase, prior to depreciation, of $4.3 million from the prior
fiscal year. The increase was primarily due to the reconstruction of a portion of the Panorama
Drive storm water system, purchase and replacement of vehicles and equipment, and continuation
of the sidewalk infill program. 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, 2021 and June 30, 2020.
Governmental Activities
As of
June 30, 2021
As of
June 30, 2020
Capital assets – non-depreciable $ 34,155,329 $ 34,417,953
Capital assets – depreciable, net 69,666,856 69,986,378
Total $103,822,185 $104,404,331
The estimated construction commitments amount is $1,710,344.
Additional information on the Town’s capital assets can be found in Note 6.
Page 31
TOWN OF FOUNTAIN HILLS, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2021
CAPITAL ASSETS AND DEBT ADMINISTRATION – continued
Debt Administration. At year-end, the Town had retired the final $400 thousand in governmental
long-term debt outstanding for the Eagle Mountain Community Facilities District, with the entire
principal balance being paid. As a result, long-term debt decreased by $400 thousand during the
current fiscal year.
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 $119
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 $35.6 million.
Additional information on the Town’s long-term debt can be found in Notes 7 and 8 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 2021-22 budget. Among them:
Revenue projections were developed using conservative growth estimates.
Federal grants related to COVID-19 pandemic relief.
Also considered in the development of the budget is the local economy and inflation of the
surrounding area.
Budgeted expenditures for the Town increased 11.6 percent to $39.1 million in fiscal year
2021-22. Revenues from local sales taxes, state-shared revenue, and federal revenues 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.fountainhillsaz.gov.
Page 32
BASIC FINANCIAL STATEMENTS
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Page 34
GOVERNMENT-WIDE FINANCIAL STATEMENTS
Page 35
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
Retainage payable
Accrued wages and benefits
Other liabilities
Customer deposits
Compensated absences 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 for:
Public works
Capital outlay
Debt service
Unrestricted
Total net position
Governmental
Activities
$ 24,811,172
181,888
861,482
31,875
19,502
7,117
67,117
25,980,153
34,155,329
69,666,856
103,822,185
129,802,338
954,829
106,127
156,566
1,632
40,350
324,163
277,357
1,861,024
190,600
190,600
2,051,624
103,822,185
926,944
1,480,691
202,543
21,318,351
$127,750,714
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF NET POSITION
JUNE 30, 2021
The notes to the basic financial statements are an integral part of this statement.
Page 36
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
$ 3,793,915
968,808
9,214,615
10,175,540
3,601,870
7,544
$27,762,292
Charges for
Services
$ 310,411
693,161
104,726
355,619
435,432
$1,899,349
Operating
Grants and
Contributions
$ 35,761
2,939,947
1,747,200
10,849
$4,733,757
Capital Grants
and
Contributions
$ 12,228
14,000
61,644
47,653
$135,525
Governmental
Activities
$ (3,435,515)
(275,647)
(6,155,942)
(8,011,077)
(3,107,936)
(7,544)
(20,993,661)
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
402,481
15,657,292
426,260
6,590,986
1,196,198
49,665
262,953
24,585,835
3,592,174
124,158,540
$127,750,714
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2021
The notes to the basic financial statements are an integral part of this statement.
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Page 38
FUND FINANCIAL STATEMENTS
Page 39
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
Retainage payable
Accrued wages and benefits
Other liabilities
Customer deposits
Unearned revenues
Total liabilities
Deferred inflows of resources:
Unavailable revenues - property taxes
Unavailable revenues - other
Total deferred inflows of resources
Fund balances:
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total fund balances
Total liabilities, deferred inflows of resources
and fund balances
General
$ 15,268,951
131,755
615,125
10,121
7,117
20,171
$16,053,240
$ 398,016
133,858
1,625
40,350
18,456
592,305
1,905
1,905
27,287
3,387,433
1,085,667
10,958,643
15,459,030
$16,053,240
Highway User
Revenue
$ 1,064,630
50,133
228,386
$1,343,149
$ 110,526
17,457
7
127,990
41,272
41,272
885,672
288,215
1,173,887
$1,343,149
Grants
$ 258,901
$258,901
$
258,901
258,901
$258,901
TOWN OF FOUNTAIN HILLS, ARIZONA
BALANCE SHEET - GOVERNMENTAL FUNDS
JUNE 30, 2021
The notes to the basic financial statements are an integral part of this statement.
Page 40
Capital Projects
$ 4,887,095
8,932
46,571
$4,942,598
$ 339,113
106,127
445,240
3,305,053
1,192,305
4,497,358
$4,942,598
Non-Major
Governmental
Funds
$ 3,235,808
17,971
31,875
449
375
$3,286,478
$ 107,174
5,251
112,425
27,012
27,012
1,656,222
1,125,438
365,381
3,147,041
$3,286,478
Total
Governmental
Funds
$ 24,715,385
181,888
861,482
31,875
19,502
7,117
67,117
$25,884,366
$ 954,829
106,127
156,566
1,632
40,350
277,357
1,536,861
27,012
43,177
70,189
27,287
2,541,894
7,817,924
2,931,568
10,958,643
24,277,316
$25,884,366
Page 41
(This page intentionally left blank)
Page 42
Total governmental fund balances 24,277,316$
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 231,869,678$
Less accumulated depreciation (128,047,493)103,822,185
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 27,012
Other 43,177 70,189
Long-term liabilities (compensated absences payable) are not due and payable
in the current period and, therefore, are not reported in the funds.(514,763)
The Internal Service Fund is used by management to charge the cost of
technology replacement to the individual funds. The assets and liabilities of the
Internal Service Fund are included in the Statement of Net Position.95,787
Net position of governmental activities 127,750,714$
TOWN OF FOUNTAIN HILLS, ARIZONA
RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
JUNE 30, 2021
The notes to the basic financial statements are an integral part of this statement.
Page 43
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
Total other financing sources (uses)
Changes in fund balances
Fund balances (deficits), beginning of year
Fund balances (deficits), end of year
General
$
13,042,381
426,260
854,384
264,621
6,995,548
83,583
272,194
210,882
29,051
22,178,904
3,274,735
954,667
6,013,302
1,087,335
2,519,865
132,559
13,982,463
8,196,441
(2,156,305)
(2,156,305)
6,040,136
9,418,894
$15,459,030
Highway User
Revenue
$
1,079,813
2,584,538
15,507
2,798
734
3,683,390
4,356,971
4,356,971
(673,581)
200,000
(5,078)
194,922
(478,659)
1,652,546
$1,173,887
Grants
$
3,006,715
388
3,007,103
64,693
2,893,126
24,455
2,982,274
24,829
41,532
41,532
66,361
(66,361)
$
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2021
The notes to the basic financial statements are an integral part of this statement.
Page 44
Capital Projects
$
995,192
78,995
14,877
15,469
1,104,533
3,293
431,944
4,516,516
4,951,753
(3,847,220)
2,486,383
(241,532)
2,244,851
(1,602,369)
6,099,727
$4,497,358
Non-Major
Governmental
Funds
$ 427,387
539,906
438,788
47,653
30,422
28,309
4,012
1,516,477
277,572
445,564
206,883
84,537
400,000
7,044
500
1,422,100
94,377
358,713
(733,713)
(375,000)
(280,623)
3,427,664
$3,147,041
Total
Governmental
Funds
$ 427,387
15,657,292
426,260
1,293,172
264,621
12,713,449
99,090
320,291
239,191
49,654
31,490,407
3,620,293
954,667
8,906,428
6,321,814
2,726,748
4,758,067
400,000
7,044
500
27,695,561
3,794,846
3,086,628
(3,136,628)
(50,000)
3,744,846
20,532,470
$24,277,316
Page 45
Changes in fund balances - total governmental funds 3,744,846$
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 4,758,055$
Less current year depreciation (5,340,201) (582,146)
Some revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds.
Property taxes (24,906)
Intergovernmental (58,623)
Other (50,518) (134,047)
Repayments of bond principal are expenditures in the governmental
funds, but the repayment reduces long-term liabilities in the Statement of
Net Position.400,000
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.
Compensated absences 67,734
The Internal Service Fund is used by management to charge the cost of
technology replacement to the individual funds. The changes in net position of the Internal
Service Fund is reported with governmental activities in the Statement of Activities.95,787
Changes in net position in governmental activities 3,592,174$
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, 2021
The notes to the basic financial statements are an integral part of this statement.
Page 46
ASSETS
Current assets:
Cash and investments
Total current assets
Total assets
NET POSITION
Unrestricted
Total net position
Governmental
Activities:
Internal Service
Funds
$95,787
95,787
95,787
95,787
$95,787
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
JUNE 30, 2021
The notes to the basic financial statements are an integral part of this statement.
Page 47
Operating revenues:
Charges for services
Total operating revenues
Operating expenses:
Cost of services
Total operating expenses
Operating income (loss)
Nonoperating revenues (expenses):
Investment earnings
Total nonoperating revenues (expenses)
Income (loss) before transfers
Transfer in
Changes in net position
Total net position, beginning of year
Total net position, end of year
Governmental
Activities:
Internal Service
Funds
$65,000
65,000
19,224
19,224
45,776
11
11
45,787
50,000
95,787
$95,787
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION -
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
The notes to the basic financial statements are an integral part of this statement.
Page 48
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2021
Governmental
Activities:
Internal
Service Funds
Increase/Decrease in Cash and Cash Equivalents
Cash flows from operating activities:
Cash received from charges for services $65,000
Cash payments to suppliers for goods and services (19,224)
Net cash provided by/used for operating activities 45,776
Cash flows from investing activities:
Investment income 11
Net cash provided by/used for investing activities 11
Cash flows from noncapital financing activities:
Transfers in 50,000
Net cash provided by/used for noncapital financing activities 50,000
Net increase/decrease in cash and cash equivalents 95,787
Cash and cash equivalents, beginning of year 0
Cash and cash equivalents, end of year $95,787
Reconciliation of Cash and Cash Equivalents to the Statement of Net Position
Cash and investments $95,787
Less investments not maturing in less than three months 0
Total cash and cash equivalents $95,787
The notes to the basic financial statements are an integral part of this statement.
Page 49
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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 50
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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 51
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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.
Capital Projects Fund – This fund accounts for the capital improvements to various projects
and equipment purchases of the Town.
Page 52
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Additionally, the Town reports the following fund type:
Proprietary Fund – The Proprietary Fund is an Internal Service Fund that accounts for the
operation of technology replacement services to other Town departments on a cost
reimbursement basis.
The Proprietary Fund financial statements are reported using the economic resources
measurement focus and accrual basis of accounting and are presented in a single column.
Proprietary funds distinguish operating revenues and expenses from nonoperating items.
Operating revenues and expenses generally result from providing services and producing and
delivering goods in connection with a proprietary fund’s principal ongoing operations. The
principal operating revenues of the Town’s internal service fund are charges to Town
departments for technology replacement. Operating expenses for the internal service fund
include the cost of goods and services. All revenues and expenses not meeting this definition
are reported as nonoperating revenues and expenses.
D.Cash and Investments
For purposes of the Statement of Cash Flows, the Town considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents. Cash and cash
equivalents at year end was cash in bank
Cash and cash equivalents at year end were cash on hand, cash in bank, restricted cash, cash
and investments held by the State Treasurer, and investments in the State Treasurer’s Local
Government Investment Pool.
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 federal depository insurance.
Page 53
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 and is reported in nonoperating revenue in the proprietary fund
financial statements.
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.
G.Property Tax Calendar
Property taxes are levied by the Town and collected by the Maricopa County Treasurer.
Property taxes are levied no later than the third Monday in August and are payable in two
installments due October 1 of the current year and March 1 of the subsequent year. Taxes
become delinquent after the first business day of November and May, respectively. Interest
attaches on installments after the delinquency date. Pursuant to A.R.S., a lien against assessed
real and personal property attaches on the first day of January preceding assessment and levy;
however according to case law, an enforceable legal claim to the asset does not arise.
All receivables are shown net of an allowance for uncollectibles.
H.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.
I.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.
Page 54
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
J.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.
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
K.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.
L.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.
Page 55
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
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.
M.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.
N.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.
Page 56
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
O.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.
P.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.
Page 57
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 2 – FUND BALANCE CLASSIFICATIONS
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.
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 $3,296,434, reported as a committed fund balance
at June 30, 2021. The Rainy Day fund may only be used for the following: 1) to replace the
loss of more than 20 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 58
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 2 – FUND BALANCE CLASSIFICATIONS
The table below provides detail of the major components of the Town’s fund balance
classifications at year end.
NOTE 3 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
At year end, the Downtown Strategy Fund had expenditures that exceeded the budget,
however, this does not constitute a violation of any legal provisions.
General
Fund
Highway
User
Revenue
Fund
Capital
Projects
Fund
Non-Major
Governmental
Funds Total
Fund Balances:
Nonspendable:
Inventory $ 7,117 $ $ $ $ 7,117
Prepaid items 20,170 20,170
Restricted:
Capital Projects 23,572 23,572
Debt Service 175,531 175,531
Highways and Streets 885,672 885,672
Development Fees 1,457,119 1,457,119
Committed:
Rainy Day 3,296,434 3,296,434
Public Art 90,999 90,999
Downtown Strategy 449,768 449,768
Economic Development 156,419 156,419
Tourism 124,129 124,129
Capital Projects 3,305,053 3,305,053
Local Court Enhancement 395,122 395,122
Assigned:
Capital Projects 1,192,305 1,192,305
Environmental 365,381 365,381
Vehicle Replacement 1,085,667 288,215 1,373,882
Unassigned: 10,958,643 10,958,643
Total fund balances $ 15,459,030 $ 1,173,887 $ 4,497,358 $ 3,147,041 $ 24,277,316
Page 59
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 4 – 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 $571,205 and the bank balance was $887,363. At year end, $387,363 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 60
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 4 – 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, 2021, are classified in the
accompanying financial statements as follows:
Carrying amount of investments $ 24,239,167
Carrying amount of cash deposits 571,205
Cash on hand 800
Total pooled cash and investments $ 24,811,172
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 $ 3,408,792 $ 247,839 $3,160,953
A+, AA+,
AAA Aaa
Federal Agency Notes Level 1 2,934,037 550,840 2,383,197 AA+ Aaa
Corporate and Foreign Bonds Level 2 1,852,883 1,852,883 BBB+ to AA+ A3 - Aaa
Asset Backed Securities Level 2 762,726 762,726 NR to AAA NR to Aaa
Certificates of Deposit Level 2 479,206 201,084 278,122 A-1 to A+ P-1 to Aaa
US Bank Money Market Funds Level 1 13,539 n/a n/a
$ 999,763 $8,437,881
State Treasurer’s Investment Pool 7 Not applicable 14,787,984 62 days average maturities
Total $24,239,167
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 61
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 4 – 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. The State Treasurer’s Local Government
Investment Pool 7 was rated AAA by Moody’s at year end.
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 $ 3,408,792 14.1%
Federal Agency notes 2,934,037 12.1%
Corporate and Foreign Bonds 1,852,883 7.6%
Asset Backed Securities 762,726 3.1%
Certificates of Deposit 479,206 2.0%
US Bank Money Market Funds 13,539 0.1%
State Treasurer’s investment pool 7 14,787,984 61.0%
$ 24,239,167
Page 62
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 5 – 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 6 – 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 2,153,685 4,566,516 4,829,140 1,891,061
Total capital assets, not being depreciated 34,417,953 4,566,516 4,829,140 34,155,329
Capital assets, being depreciated:
Infrastructure 150,166,132 4,397,146 154,563,278
Buildings and building improvements 22,927,414 189,091 23,116,505
Improvements other than buildings 15,282,504 142,018 15,424,522
Vehicles, machinery and equipment 4,749,493 292,424 431,873 4,610,044
Total capital assets being depreciated 193,125,543 5,020,679 431,873 197,714,349
Less accumulated depreciation for:
Infrastructure (103,203,442) (4,001,765) (107,205,207)
Buildings and building improvements (6,484,475) (485,173) (6,969,648)
Improvements other than buildings (11,421,801) (531,332) (11,953,133)
Vehicles, machinery and equipment (2,029,447) (321,931) 431,873 (1,919,505)
Total accumulated depreciation (123,139,165) (5,340,201) 431,873 (128,047,493)
Total capital assets, being depreciated, net 69,986,378 (319,522) 69,666,856
Governmental activities capital assets, net $ 104,404,331 $ 4,246,994 $ 4,829,140 $ 103,822,185
Depreciation expense was charged to functions/programs as follows:
Governmental activities:
General government $ 194,927
Development services 16,721
Public safety 308,187
Streets and highways 3,952,941
Culture and recreation 867,425
Total depreciation expense $ 5,340,201
Page 63
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 6 – CAPITAL ASSETS
Construction Commitments – At June 30, 2021, the Town has the following active
construction commitments:
Governmental Activities
Project Spent-to-Date
Remaining
Commitment
Golden Eagle Drainage Improvements $ 208,791 $ 1,100,000
Video Surveillance Cameras 127,065 50,000
Four Peaks Park Playground Upgrade 830,629 200,000
Four Peaks Park Playground Parking Lot Improvements 263 65,000
Unpaved Alley Paving 253,231 34,000
Shea Boulevard Widening - Palisades to Technology 112,851 226,000
Desert Vista Sidewalk Improvements 73,160 12,741
Traffic Signal at Palisades and Eagle Ridge 26,424 22,603
Total commitments $ 1,632,414 $ 1,710,344
NOTE 7 – BONDS PAYABLE
Private Placements
The Town had bonds during the fiscal year from private placements reported as governmental
activities. The Eagle Mountain Community Facilities District has no outstanding bonds at the
end of the fiscal year from private placements reported as governmental activities. There are
no specific provisions regarding default on the Eagle Mountain Community Facilities District
debt. The Town has no remaining bonds payable at year end.
Page 64
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 8 – 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:
Private placement general
obligation bonds $ 400,000 $ $ 400,000 $ $
Total bonds payable 400,000 400,000
Compensated absences payable 582,497 297,848 365,582 514,763 324,163
Governmental activity long-term
Liabilities $ 982,497 $ 297,848 $ 765,582 $ 514,763 $ 324,163
NOTE 9 – 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 41,532 41,532
Capital Projects Fund 1,906,305 5,078 575,000 2,486,383
Non-Major Governmental Funds 200,000 158,713 358,713
Internal Service Fund 50,000 50,000
Total $ 2,156,305 $ 5,078 $ 241,532 $ 733,713 $ 3,136,628
Page 65
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 9 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
The General Fund transferred $1,906,305 to Capital Projects Fund for future projects, as
required by the Town’s financial policies; $50,000 to Internal Service Fund for technology
replacement costs; and $200,000 to Environmental Fund for continued storm drain and wash
maintenance. The Highway User Revenue Fund transferred $5,078 to Capital Projects Fund
for street-related capital projects. The Capital Projects Fund transferred $200,000 to Highway
User Revenue Fund for pavement maintenance. and $41,532 to the Grants Fund for the Town's
matching portion of a park improvement grant. The Economic Development Fund transferred
$158,713 to the Tourism Fund to provide funding for operating costs of the tourism program.
The Downtown Strategy Fund transferred $575,000 to the Capital Projects Fund for downtown
street improvements. The General Fund transferred $50,000 to the Internal Service Fund for
technology replacements.
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 66
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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, 2021, was $3,596,773 The Town’s total payroll was
$4,345,699.
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. The assets are held in a trust not controlled by the Town and all investment
decisions are made by the employee. The plan does not require reporting under provisions of
GASB Statement No. 84, Fiduciary Activities.
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 $395,645. The employees’
contributions totaled $395,645. 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 $107,073 to that plan. The Town contributed $9,026 for
the contract employee’s 457 account.
Page 67
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 12 – RETIREMENT PLANS
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 2020-21 or as of the close of the
fiscal year.
NOTE 13 – SUBSEQUENT EVENT
The Town applied for American Rescue Plan Act funding from the Governor's Office and was
subsequently awarded $8,416,299 on July 2, 2021. The funding was made available through
the U.S. Department of the Treasury's American Rescue Plan Act, and the funds will be used
to pay public safety contract expenditures.
Page 68
REQUIRED SUPPLEMENTARY INFORMATION
Page 69
13,042,381 $ 2,620,225
$ 3,494,978 $ 7,886,897 $ 15,459,030 $ 7,572,133
Variance with
Final Budget
Positive
(Negative)
(1,906,305)
3,825,339
3,746,794
493,133
561,236
1,288,182
1,054,369
2,913,644
5,731,644
-
(1,906,305)
64,716
441,821
258,623
12,927
31,030
24,113
992,519
154,649
(237,967)
190,839
25,878
2,411
2,818,000
(2,156,305)
6,040,136
9,418,894
214,286
(138,352)
6,013,302
13,982,463
8,196,441
(2,156,305)
2,660,413
3,352,889
132,559
3,274,735
954,667
2,519,865
2,081,037
389,676
50,769
6,995,548
83,583
272,194
210,882
29,051
22,178,904
(250,000)
2,214,797
5,672,100
Actual
426,260
854,384
264,621
2,464,797
(250,000)
163,589
2,961,686
4,562,917
1,019,383
1,745,772
7,067,671
16,896,107
321,550
81,355
185,004
26,640
19,360,904
2,339,660
74,882
(343,997)
3,838,975
Final
211,974
992,736
278,590
6,840,899
19,454,901
(93,997)
(250,000)
(250,000)
111,989
74,882
4,197,328
5,029,469
5,022,085
946,483
3,026,686
9,226,797
185,004
26,640
19,360,904
2,339,660
402,603
2,204,940
Fund balances (deficits), end of year
Budgeted Amounts
Original
211,974
992,736
278,590
6,840,899
321,550
81,355
Other financing sources (uses):
Transfer in
Transfer out
Total other financing sources (uses):
Changes in fund balances
Fund balances, beginning of year
Culture and recreation
Total public safety
Total expenditures
Administration
Municipal court
Excess (deficiency) of revenues over expenditures
Non departmental
Expenditures:
Capital outlay
Mayor and council
Current -
General government
Public safety
Fire and emergency
Law enforcement
Total general government
Development services
Intergovernmental
Charges for services
Other
Fines and forfeitures
Investment earnings
Total revenues
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GENERAL
YEAR ENDED JUNE 30, 2021
Revenues:
Sales taxes
Franchise taxes
Licenses and permits
Leases and rents (13,969)
10,422,156 10,422,156
1,120,861 Public works 1,120,861 1,087,335 33,526
753,253
402,603
3,153,546
3,914,125
See accompanying notes to this schedule.
Page 70
Revenues:
Sales taxes
Intergovernmental
Charges for services
Other
Investment earnings
Total revenues
Expenditures:
Current -
Public works
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 & Final
$ 871,254
2,578,272
200,000
31,000
24,000
3,704,526
5,120,819
5,120,819
(1,416,293)
200,000
200,000
(1,216,293)
1,652,546
$436,253
Actual
$ 1,079,813
2,584,538
15,507
2,798
734
3,683,390
4,356,971
4,356,971
(673,581)
200,000
(5,078)
194,922
(478,659)
1,652,546
$1,173,887
Variance with
Final Budget
Positive
(Negative)
$ 208,559
6,266
(184,493)
(28,202)
(23,266)
(21,136)
763,848
763,848
742,712
(5,078)
(5,078)
737,634
$737,634
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
HIGHWAY USER REVENUE
YEAR ENDED JUNE 30, 2021
See accompanying notes to this schedule.
Page 71
Revenues:
Intergovernmental
Investment earnings
Total revenues
Expenditures:
Current -
General government
Public safety
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 (deficits), beginning of year
Fund balances (deficits), end of year
Budgeted Amounts
Original
$ 1,308,800
1,308,800
1,338,500
1,338,500
(29,700)
29,700
29,700
(66,361)
$(66,361)
Final
$ 1,303,800
1,303,800
801,500
2,893,126
37,000
3,731,626
(2,427,826)
29,700
29,700
(2,398,126)
(66,361)
$(2,464,487)
Actual
$ 3,006,715
388
3,007,103
64,693
2,893,126
24,455
2,982,274
24,829
41,532
41,532
66,361
(66,361)
$
Variance with
Final Budget
Positive
(Negative)
$ 1,702,915
388
1,703,303
736,807
12,545
749,352
2,452,655
11,832
11,832
2,464,487
$2,464,487
TOWN OF FOUNTAIN HILLS, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GRANTS
YEAR ENDED JUNE 30, 2021
See accompanying notes to this schedule.
Page 72
TOWN OF FOUNTAIN HILLS, ARIZONA
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2021
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 73
(This page intentionally left blank)
Page 74
COMBINING AND INDIVIDUAL
FUND FINANCIAL STATEMENTS
AND SCHEDULES
Page 75
ASSETS
Cash and investments
Intergovernmental receivable
Taxes receivable
Interest receivable
Prepaid items
Total assets
LIABILITIES, DEFERRED INFLOWS OF RESOURCES
AND FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and benefits
Total liabilities
Deferred inflows of resources:
Unavailable revenues - property taxes
Fund balances:
Restricted
Committed
Assigned
Total fund balances
Total liabilities, deferred inflows of resources
and fund balances
Special Revenue
$ 1,607,915
17,971
28
449
375
$1,626,738
$ 107,096
5,251
112,347
23,572
1,125,438
365,381
1,514,391
$1,626,738
Debt Service
$ 170,774
31,847
$202,621
$78
78
27,012
175,531
175,531
$202,621
Capital Projects
$ 1,457,119
$1,457,119
$
1,457,119
1,457,119
$1,457,119
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING BALANCE SHEET - ALL NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE
JUNE 30, 2021
Page 76
Total Non-Major
Governmental
Funds
$ 3,235,808
17,971
31,875
449
375
$3,286,478
$ 107,174
5,251
112,425
27,012
1,656,222
1,125,438
365,381
3,147,041
$3,286,478
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
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
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Special Revenue
$ 6,468
539,906
40,330
47,653
30,422
28,309
3,405
696,493
277,572
445,564
166,883
84,527
974,546
(278,053)
358,713
(733,713)
(375,000)
(653,053)
2,167,444
$1,514,391
Debt Service
$ 420,919
98
421,017
10
400,000
7,044
500
407,554
13,463
13,463
162,068
$175,531
Capital Projects
$
398,458
509
398,967
40,000
40,000
358,967
358,967
1,098,152
$1,457,119
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, 2021
Page 78
Total Non-Major
Governmental
Funds
$ 427,387
539,906
438,788
47,653
30,422
28,309
4,012
1,516,477
277,572
445,564
206,883
84,537
400,000
7,044
500
1,422,100
94,377
358,713
(733,713)
(375,000)
(280,623)
3,427,664
$3,147,041
Page 79
(This page intentionally left blank)
Page 80
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.
Debt Service Funds
General Obligation Debt Service Fund – accounts for the Town’s property tax revenues received
to pay the debt service of the Town’s general obligation bonds.
Eagle Mountain Debt Service Fund – accounts for the property tax revenues restricted to pay
the debt service of the Eagle Mountain Community Facilities District.
Municipal Property Corporation Debt Service Fund – accounts for the revenues received to
pay the debt service on MPC revenue bonds.
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 81
ASSETS
Cash and investments
Intergovernmental receivable
Taxes receivable
Interest receivable
Prepaid items
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
$ 446,959
3,483
449
$450,891
$ 1,123
1,123
449,768
449,768
$450,891
Economic
Development
$ 147,714
13,934
$161,648
$ 501
4,728
5,229
156,419
156,419
$161,648
Tourism
$ 126,994
375
$127,369
$ 2,717
523
3,240
124,129
124,129
$127,369
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING BALANCE SHEET - NON-MAJOR SPECIAL REVENUE FUNDS
JUNE 30, 2021
Page 82
Local Court
Enhancement
$ 394,568
554
$395,122
$
395,122
395,122
$395,122
Environmental
$ 467,638
$467,638
$ 102,257
102,257
365,381
365,381
$467,638
Cottonwoods
Maintenance
$ 24,042
28
$24,070
$ 498
498
23,572
23,572
$24,070
Totals
$ 1,607,915
17,971
28
449
375
$1,626,738
$ 107,096
5,251
112,347
23,572
1,125,438
365,381
1,514,391
$1,626,738
Page 83
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
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
Downtown
Strategy
$
107,981
22,000
2,858
132,839
50,091
49,475
99,566
33,273
(575,000)
(575,000)
(541,727)
991,495
$449,768
Economic
Development
$
431,925
7,083
59
439,067
227,481
227,481
211,586
(158,713)
(158,713)
52,873
103,546
$156,419
Tourism
$
47,653
1,339
46
49,038
166,883
166,883
(117,845)
158,713
158,713
40,868
83,261
$124,129
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2021
Page 84
Local Court
Enhancement
$
28,309
169
28,478
35,052
35,052
(6,574)
(6,574)
401,696
$395,122
Environmental
$
40,330
260
40,590
440,666
440,666
(400,076)
200,000
200,000
(200,076)
565,457
$365,381
Cottonwoods
Maintenance
$ 6,468
13
6,481
4,898
4,898
1,583
1,583
21,989
$23,572
Totals
$ 6,468
539,906
40,330
47,653
30,422
28,309
3,405
696,493
277,572
445,564
166,883
84,527
974,546
(278,053)
358,713
(733,713)
(375,000)
(653,053)
2,167,444
$1,514,391
Page 85
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, end of year
Downtown Strategy
Budget
$
87,120
1,260
88,380
53,400
45,000
98,400
(10,020)
(575,000)
(575,000)
(585,020)
991,495
$406,475
Actual
$
107,981
22,000
2,858
132,839
50,091
49,475
99,566
33,273
(575,000)
(575,000)
(541,727)
991,495
$449,768
Variance -
Positive
(Negative)
$
20,861
22,000
1,598
44,459
3,309
(4,475)
(1,166)
43,293
43,293
$43,293
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, 2021
Page 86
Economic Development
Budget
$
348,504
240
348,744
251,270
251,270
97,474
(158,713)
(158,713)
(61,239)
103,456
$42,217
Actual
$
431,925
7,083
59
439,067
227,481
227,481
211,586
(158,713)
(158,713)
52,873
103,546
$156,419
Variance -
Positive
(Negative)
$
83,421
7,083
(181)
90,323
23,789
23,789
114,112
114,112
90
$114,202
Tourism
Budget
$
55,000
180
55,180
208,264
208,264
(153,084)
158,713
158,713
5,629
83,261
$88,890
Actual
$
47,653
1,339
46
49,038
166,883
166,883
(117,845)
158,713
158,713
40,868
83,261
$124,129
Variance -
Positive
(Negative)
$
(7,347)
1,339
(134)
(6,142)
41,381
41,381
35,239
35,239
$35,239
(Continued)
Page 87
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, end of year
Local Court Enhancement
Budget
$
49,000
900
49,900
24,800
35,500
60,300
(10,400)
(10,400)
401,696
$391,296
Actual
$
28,309
169
28,478
35,052
35,052
(6,574)
(6,574)
401,696
$395,122
Variance -
Positive
(Negative)
$
(20,691)
(731)
(21,422)
24,800
448
25,248
3,826
3,826
$3,826
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, 2021
Page 88
Environmental
Budget
$
2,400
2,400
666,904
666,904
(664,504)
200,000
200,000
(464,504)
565,457
$100,953
Actual
$
40,330
260
40,590
440,666
440,666
(400,076)
200,000
200,000
(200,076)
565,457
$365,381
Variance -
Positive
(Negative)
$
40,330
(2,140)
38,190
226,238
226,238
264,428
264,428
$264,428
Cottonwoods Maintenance
Budget
$ 6,642
72
6,714
5,131
5,131
1,583
1,583
21,989
$23,572
Actual
$ 6,468
13
6,481
4,898
4,898
1,583
1,583
21,989
$23,572
Variance -
Positive
(Negative)
$ (174)
(59)
(233)
233
233
$
(Continued)
Page 89
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, end of year
Totals
Budget
$ 6,642
435,624
55,000
49,000
5,052
551,318
329,470
672,035
208,264
80,500
1,290,269
(738,951)
358,713
(733,713)
(375,000)
(1,113,951)
2,167,354
$1,053,403
Actual
$ 6,468
539,906
40,330
47,653
30,422
28,309
3,405
696,493
277,572
445,564
166,883
84,527
974,546
(278,053)
358,713
(733,713)
(375,000)
(653,053)
2,167,444
$1,514,391
Variance -
Positive
(Negative)
$ (174)
104,282
40,330
(7,347)
30,422
(20,691)
(1,647)
145,175
51,898
226,471
41,381
(4,027)
315,723
460,898
460,898
90
$460,988
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, 2021
Page 90
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Page 91
ASSETS
Cash and investments
Taxes receivable
Total assets
LIABILITIES, DEFERRED INFLOWS OF RESOURCES
AND FUND BALANCES
Liabilities:
Accounts payable
Total liabilities
Deferred inflows of resources:
Unavailable revenues - property taxes
Fund balances:
Restricted
Total fund balances
Total liabilities, deferred inflows of resources
and fund balances
General
Obligation Debt
Service
$ 150,292
27,012
$177,304
$
27,012
150,292
150,292
$177,304
Eagle Mountain
Debt Service
$ 9,455
4,835
$14,290
$78
78
14,212
14,212
$14,290
Municipal
Property
Corporation Debt
Service
$ 11,027
$11,027
$
11,027
11,027
$11,027
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING BALANCE SHEET - NON-MAJOR DEBT SERVICE FUNDS
JUNE 30, 2021
Page 92
Totals
$ 170,774
31,847
$202,621
$78
78
27,012
175,531
175,531
$202,621
Page 93
Revenues:
Property taxes
Investment earnings
Total revenues
Expenditures:
Capital outlay
Debt service -
Principal retirement
Interest on long-term debt
Fiscal charges
Total expenditures
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
General
Obligation Debt
Service
$ 26,014
59
26,073
26,073
124,219
$150,292
Eagle Mountain
Debt Service
$ 394,905
39
394,944
400,000
7,044
407,044
(12,100)
26,312
$14,212
Municipal
Property
Corporation Debt
Service
$
10
500
510
(510)
11,537
$11,027
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NON-MAJOR DEBT SERVICE FUNDS
YEAR ENDED JUNE 30, 2021
Page 94
Totals
$ 420,919
98
421,017
10
400,000
7,044
500
407,554
13,463
162,068
$175,531
Page 95
Total revenues
Revenues:
Property taxes
Investment earnings
Expenditures:
Capital outlay
Debt service -
Principal retirement
Interest on long-term debt
Fiscal charges
Total expenditures
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
General Obligation Debt Service
Budget
$
1,200
1,200
350
350
850
124,219
$125,069
Actual
$ 26,014
59
26,073
26,073
124,219
$150,292
Variance -
Positive
(Negative)
$ 26,014
(1,141)
24,873
350
350
25,223
$25,223
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
NON-MAJOR DEBT SERVICE FUNDS
YEAR ENDED JUNE 30, 2021
Page 96
Eagle Mountain Debt Service
Budget
$ 400,000
240
400,240
400,000
7,040
200
407,240
(7,000)
26,312
$19,312
Actual
$ 394,905
39
394,944
400,000
7,044
407,044
(12,100)
26,312
$14,212
Variance -
Positive
(Negative)
$ (5,095)
(201)
(5,296)
(4)
200
196
(5,100)
$(5,100)
Municipal Property Corporation Debt Service
Budget
$
840
840
1,010
1,010
(170)
11,537
$11,367
Actual
$
10
500
510
(510)
11,537
$11,027
Variance -
Positive
(Negative)
$
(840)
(840)
(10)
510
500
(340)
$(340)
(Continued)
Page 97
Total revenues
Revenues:
Property taxes
Investment earnings
Expenditures:
Capital outlay
Debt service -
Principal retirement
Interest on long-term debt
Fiscal charges
Total expenditures
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Totals
Budget
$ 400,000
2,280
402,280
400,000
7,040
1,560
408,600
(6,320)
162,068
$155,748
Actual
$ 420,919
98
421,017
10
400,000
7,044
500
407,554
13,463
162,068
$175,531
Variance -
Positive
(Negative)
$ 20,919
(2,182)
18,737
(10)
(4)
1,060
1,046
19,783
$19,783
TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
NON-MAJOR DEBT SERVICE FUNDS
YEAR ENDED JUNE 30, 2021
Page 98
ASSETS
Cash and investments
Total assets
LIABILITIES AND FUND BALANCES
Fund balances:
Restricted
Total fund balances
Total liabilities and fund balances
Development
Fees
$1,457,119
$1,457,119
$1,457,119
1,457,119
$1,457,119
TOWN OF FOUNTAIN HILLS, ARIZONA
BALANCE SHEET - NON-MAJOR CAPITAL PROJECTS FUND
JUNE 30, 2021
Page 99
Revenues:
Licenses and permits
Investment earnings
Total revenues
Expenditures:
Current -
Culture and recreation
Total expenditures
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Development
Fees
$ 398,458
509
398,967
40,000
40,000
358,967
1,098,152
$1,457,119
TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NON-MAJOR CAPITAL PROJECTS FUND
YEAR ENDED JUNE 30, 2021
Page 100
(This page intentionally left blank)
Page 101
Total revenues
Revenues:
Sales taxes
Licenses and permits
Intergovernmental
Other
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, end of year
Capital Projects
Budget
$ 904,152
17,500
19,200
940,852
2,800
5,514,598
5,517,398
(4,576,546)
575,000
(229,700)
345,300
(4,231,246)
4,488,812
$257,566
Non-GAAP
Actual
$ 995,192
78,995
14,790
1,088,977
3,293
4,514,294
4,517,587
(3,428,610)
2,486,383
(241,532)
2,244,851
(1,183,759)
4,488,812
$3,305,053
Variance -
Positive
(Negative)
$ 91,040
61,495
(4,410)
148,125
(493)
1,000,304
999,811
1,147,936
1,911,383
(11,832)
1,899,551
3,047,487
$3,047,487
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, 2021
Page 102
Facilities Replacement Fund
Budget
$
7,200
7,200
819,144
819,144
(811,944)
(811,944)
1,610,915
$798,971
Non-GAAP
Actual
$
14,877
679
15,556
431,944
2,222
434,166
(418,610)
(418,610)
1,610,915
$1,192,305
Variance -
Positive
(Negative)
$
14,877
(6,521)
8,356
387,200
(2,222)
384,978
393,334
393,334
$393,334
Development Fees
Budget
$
679,311
7,200
686,511
40,000
40,000
646,511
646,511
1,098,152
$1,744,663
Actual
$
398,458
509
398,967
40,000
40,000
358,967
358,967
1,098,152
$1,457,119
Variance -
Positive
(Negative)
$
(280,853)
(6,691)
(287,544)
(287,544)
(287,544)
$(287,544)
(Continued)
Page 103
Total revenues
Revenues:
Sales taxes
Licenses and permits
Intergovernmental
Other
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, end of year
Totals
Budget
$ 904,152
679,311
17,500
33,600
1,634,563
2,800
819,144
40,000
5,514,598
6,376,542
(4,741,979)
575,000
(229,700)
345,300
(4,396,679)
7,197,879
$2,801,200
Non-GAAP
Actual
$ 995,192
398,458
78,995
14,877
15,978
1,503,500
3,293
431,944
40,000
4,516,516
4,991,753
(3,488,253)
2,486,383
(241,532)
2,244,851
(1,243,402)
7,197,879
$5,954,477
Variance -
Positive
(Negative)
$ 91,040
(280,853)
61,495
14,877
(17,622)
(131,063)
(493)
387,200
998,082
1,384,789
1,253,726
1,911,383
(11,832)
1,899,551
3,153,277
$3,153,277
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, 2021
Page 104
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 105
2012 2013 2014 2015
Governmental activities:
Net investment in capital assets 92,006,103$ 89,800,560$ 89,713,260$ 95,325,824$
Restricted 5,951,416 5,721,744 5,480,867 6,310,810
Unrestricted 21,064,267 20,612,758 19,186,823 15,180,582
Total governmental activities net position 119,021,786$ 116,135,062$ 114,380,950$ 116,817,216$
Source: The source of this information is the Town's financial records.
Town of Fountain Hills, Arizona
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year ended June 30
Page 106
2016 2017 2018 2019 2020 2021
95,647,990$ 94,909,703$ 96,777,854$ 104,781,328$ 104,004,331$ 103,822,185$
4,530,239 4,471,661 4,589,526 3,646,449 2,766,041 2,610,178
17,232,506 17,578,068 16,244,169 15,258,797 17,388,168 21,318,351
117,410,735$ 116,959,432$ 117,611,549$ 123,686,574$ 124,158,540$ 127,750,714$
Fiscal Year ended June 30
Page 107
2012 2013 2014 2015
Expenses
Governmental activities:
General government 3,119,113$ 2,909,443$ 2,432,965$ 2,479,365$
Development services 1,442,613 1,633,361 1,237,717 2,074,611
Public safety 5,820,136 6,100,131 6,958,056 6,816,152
Public works 4,718,047 5,712,817 6,630,875 4,963,979
Culture and recreation 2,754,731 2,779,294 2,760,690 2,822,954
Interest on long-term debt 779,576 567,043 472,999 698,542
Total governmental activities expenses 18,634,216 19,702,089 20,493,302 19,855,603
Program Revenues
Governmental activities:
Fines, fees and charges for services:
General government 272,469 380,926 215,943 337,655
Development services 322,984 377,483 531,193 693,670
Public safety 63,926 63,824 74,887 86,641
Public works 95,201 112,521 250,421 236,706
Culture and recreation 303,508 288,745 340,353 339,158
Operating grants and contributions 1,285,656 1,266,906 1,307,738 1,431,017
Capital grants and contributions 1,392,706 150,535 144,570 2,874,796
Total governmental activities program revenues 3,736,450 2,640,940 2,865,105 5,999,643
Net (Expenses)/Revenues (14,897,766) (17,061,149) (17,628,197) (13,855,960)
General Revenues and Other Changes in Net Assets
Governmental activities:
Taxes:
Property taxes 1,453,405 1,385,147 1,449,646 904,660
Sales taxes 7,787,489 7,957,163 8,459,267 8,983,049
Franchise taxes 332,130 334,668 349,414 352,673
State shared revenues 4,515,511 4,979,183 5,326,332 5,713,235
Investment earnings 88,877 69,998 123,311 150,358
Miscellaneous 178,393 300,899 166,115 188,251
Special item - Donation of capital assets - -- -
Total governmental activities 14,355,805 15,027,058 15,874,085 16,292,226
Changes in Net Position
Governmental activities (541,961)$ (2,034,091)$ (1,754,112)$ 2,436,266$
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 108
2016 2017 2018 2019 2020 2021
2,516,966$ 3,142,722$ 3,431,752$ 3,318,477$ 3,470,936$ 3,793,915$
2,253,208 1,364,378 1,460,967 867,725 825,884 968,808
7,178,890 7,563,898 7,567,012 8,142,069 9,003,452 9,214,615
6,476,688 7,904,577 7,380,663 10,263,244 9,961,306 10,175,540
3,124,523 3,375,414 3,311,648 3,767,996 3,490,447 3,601,870
241,694 178,749 118,552 57,054 881 7,544
21,791,969 23,529,738 23,270,594 26,416,565 26,752,906 27,762,292
298,737 837,163 295,716 280,312 533,189 310,411
1,257,492 1,062,094 1,314,915 1,143,871 608,892 693,161
90,345 155,454 155,973 90,774 100,444 104,726
48,688 216,724 52,465 10,214 131,750 355,619
321,189 393,028 497,914 1,151,500 409,651 435,432
1,615,973 1,699,931 1,737,958 1,850,676 2,007,841 4,733,757
381,011 494,328 304,951 181,939 91,245 135,525
4,013,435 4,858,722 4,359,892 4,709,286 3,883,012 6,768,631
(17,778,534) (18,671,016) (18,910,702) (21,707,279) (22,869,894) (20,993,661)
2,569,504 2,296,199 2,263,623 2,476,546 2,077,368 402,481
9,395,667 9,415,151 10,311,577 11,491,123 13,172,390 15,657,292
360,320 367,119 421,682 423,947 434,896 426,260
5,813,678 6,057,278 6,396,667 6,514,470 6,874,771 7,787,184
219,058 55,127 158,860 554,549 545,983 49,665
13,826 28,839 10,410 202,969 236,452 262,953
- -- 6,118,700 - -
18,372,053 18,219,713 19,562,819 27,782,304 23,341,860 24,585,835
593,519$ (451,303)$ 652,117$ 6,075,025$ 471,966$ 3,592,174$
Fiscal Year Ended June 30
Page 109
2012 2013 2014 2015
General fund
Nonspendable
Inventory 9,332$10,201$ 14,358$ 6,975$
Prepaid items 28,245 32,493 18,348 10,655
Committed 1,345,200 1,345,200 1,345,200 2,634,923
Assigned 2,190,910 2,191,063 1,647,193 1,872,492
Unassigned 3,656,173 4,117,865 4,972,853 4,369,457
Total general fund 7,229,860$ 7,696,822$ 7,997,952$ 8,894,502$
All other governmental funds
Nonspendable
Cash with escrow agent 2,623,895$ 2,301,609$ 1,973,067$ 1,645,000$
Prepaid items 5,474 4,706 997 656
Restricted 3,300,426 3,354,189 3,505,590 10,066,786
Committed 2,039,560 2,175,094 2,089,361 1,079,780
Assigned 9,312,168 9,005,276 7,147,586 5,444,124
Unassigned - -- -
Total all other governmental funds 17,281,523$ 16,840,874$ 14,716,601$ 18,236,346$
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 110
2016 2017 2018 2019 2020 2021
9,272$ 5,872$ 13,490$ 5,168$ 8,982$ 7,117$
4,123 16,868 21,945 17,311 2,418 20,170
2,652,357 2,714,135 2,893,850 3,027,804 3,249,354 3,387,433
1,701,086 1,743,768 2,101,574 2,380,653 622,641 1,085,667
5,853,806 2,696,999 2,140,434 1,863,722 5,535,499 10,958,643
10,220,644$ 7,177,642$ 7,171,293$ 7,294,658$ 9,418,894$ 15,459,030$
-$-$ -$-$-$-$
5,055 474 ----
4,500,044 4,432,710 4,571,263 3,579,891 2,708,883 2,541,894
1,366,081 8,576,250 7,248,890 5,868,386 6,068,810 4,430,491
5,943,364 1,784,761 2,340,683 2,592,343 2,402,244 1,845,901
- -- - (66,361) -
11,814,544$ 14,794,195$ 14,160,836$ 12,040,620$ 11,113,576$ 8,818,286$
Fiscal Year ended June 30
Page 111
2012 2013 2014 2015
Revenues
Taxes 9,577,321$ 9,713,445$ 10,271,737$ 10,240,382$
Licenses and permits 194,976 570,904 891,782 1,043,382
Leases and rents 206,018 213,871 252,584 269,753
Intergovernmental 6,035,448 6,323,047 6,677,518 9,770,048
Charges for services 405,663 162,086 161,376 176,541
Other 178,393 300,899 134,114 188,251
Fines and forfeitures 223,673 187,251 170,995 186,456
Investment earnings 88,877 69,998 123,311 150,358
Total revenues 16,910,369 17,541,501 18,683,417 22,025,171
Expenditures
Current:
General government 2,887,321 2,699,109 2,194,845 2,275,124
Development services 1,421,787 1,643,757 1,774,983 2,073,990
Public safety 5,869,445 6,022,269 6,890,770 6,675,874
Public works 1,054,930 2,058,990 3,085,559 1,275,779
Culture and recreation 1,794,332 1,791,018 1,921,939 1,962,585
Capital outlay 884,323 453,002 1,750,465 8,799,068
Debt service:
Principal 1,965,000 2,280,000 2,415,000 1,850,000
Interest 639,135 554,860 460,811 454,957
Other debt service 55,752 12,183 12,188 243,585
Total expenditures 16,572,025 17,515,188 20,506,560 25,610,962
Excess (deficiency) of revenues
over (under) expenditures 338,344 26,313 (1,823,143) (3,585,791)
Other Financing Sources (Uses)
Transfers in 2,470,027 1,279,397 1,838,453 2,519,774
Transfers out (2,470,027) (1,279,397) (1,838,453) (2,519,774)
Proceeds from sale of capital assets - - - -
Issuance of refunding bonds - - - 4,180,000
Issuance of long-term debt - - - 7,565,000
Bond Premium - - - 342,086
Payment to refunded bonds escrow agent - -- (4,085,000)
Total other financing sources (uses) - -- 8,002,086
Net change in fund balances 338,344$ 26,313$ (1,823,143)$ 4,416,295$
Expenditures for capitalized assets 1,333,785$ 467,691$ 2,385,168$ 9,067,254$
Debt service as a percentage of noncapital expenditures 17.5% 16.7% 15.9% 15.4%
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 112
2016 2017 2018 2019 2020 2021
12,299,285$ 12,069,714$ 13,019,341$ 14,342,801$ 15,694,054$ 16,510,939$
1,372,045 1,310,973 2,004,386 2,040,622 835,731 1,293,172
258,165 284,090 282,531 280,801 286,391 264,621
7,559,436 7,917,651 8,266,028 8,401,676 8,920,296 12,713,449
197,109 351,476 254,122 181,105 222,947 99,090
147,662 153,438 207,697 347,141 387,225 320,291
209,380 257,727 182,997 130,483 281,704 239,191
219,058 55,127 158,860 554,549 545,983 49,654
22,262,140 22,400,196 24,375,962 26,279,178 27,174,331 31,490,407
2,324,026 2,713,548 3,195,936 3,147,063 3,280,191 3,620,293
2,217,814 1,275,147 1,397,249 858,957 797,513 954,667
7,034,887 7,420,032 7,402,227 6,295,989 8,566,058 8,906,428
2,498,714 3,954,450 3,420,317 7,880,668 6,046,298 6,321,814
2,240,865 2,484,940 2,375,758 2,845,027 2,609,842 2,726,748
6,471,382 1,693,265 4,317,214 4,487,854 2,716,523 4,758,067
4,260,000 2,675,000 2,720,000 2,635,000 2,310,000 400,000
308,106 244,986 185,164 123,871 67,301 7,044
2,005 2,180 1,805 1,600 1,998 500
27,357,799 22,463,548 25,015,670 28,276,029 26,395,724 27,695,561
(5,095,659) (63,352) (639,708) (1,996,851) 778,607 3,794,846
562,044 5,194,138 4,543,728 3,672,532 1,928,978 3,086,628
(562,044) (5,194,138) (4,543,728) (3,672,532) (1,928,978) (3,136,628)
- - - - 418,585 -
- - - - - -
- - - - - -
- - - - - -
-- -- --
-- - - 418,585 (50,000)
(5,095,659)$ (63,352)$ (639,708)$ (1,996,851)$ 1,197,192$ 3,744,846$
6,394,346$ 1,696,612$ 4,293,214$ 4,465,837$ 2,689,270$ 4,758,055$
21.8% 14.1% 14.0% 11.6% 10.0% 1.8%
Fiscal Year Ended June 30
Page 113
Fiscal Year
Ended June 30 Property Tax Sales Tax Franchise Tax Total
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 2,086,769 13,172,389 434,896 15,694,054
2021 427,387 15,657,292 426,260 16,510,939
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 114
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
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%
2021 520,103,815 -4,909,183,626 10.59%
Source: The source of this information is the Arizona Department of Revenue's
Abstract of the Assessment Roll and the Town's financial records.
** Per $100 of assessed taxable value; No town-wide taxes levied in FY21.
Town of Fountain Hills, Arizona
Assessed Value and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
*Note: On November 6, 2012, voters approved Proposition 117, an amendment to the Arizona
Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary and secondary
taxes are levied against the net limited assessed value. The net full cash value is used for
determining the Town’s bonding capacity and as the ceiling for net limited assessed value.
Page 115
Net LimitedPercentage of Net Full CashPercentage ofAssessedTotal Net Limited AssessedTotal Net Full CashTaxpayerValueRankAssessed ValueValueRankAssessed ValueEPCOR - Chaparral City Water Company4,025,340 10.77%RCS-Park Place 1 LLC3,908,993 20.75%Hunter Retail LLC2,739,776 30.53%WSL Fountain View Investors V, LLC2,366,546 40.46%2,177,727 30.48%Whitestone Fountain Hills, LLC1,962,401 50.38%Target Corporation1,406,296 60.27%1,889,956 50.42%FPACP4 Ridgeview LLC1,377,551 70.26%Fountain Hills Invest Co., LLC1,370,318 8Palisades Resorts LLC1,294,092 90.25%Smith's Food & Drug Centers Inc.1,251,036 10 0.24%Inland Western Fountain Hills Four Peaks LLC3,353,109 10.74%Chapparal City Water Company3,177,001 20.70%J & R Holdings XX LLC1,921,863 40.42%Qwest Corporation1,647,941 60.36%EN LLC1,444,647 70.32%Sun Tech Development LLC1,320,356 80.29%Firerock LLC1,317,707 90.29%Arizona State Land Department1,260,640 100.28%Totals21,702,349$ 3.91%19,510,947$ 4.30%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 theArizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2015-2016), both primary andsecondary taxes are levied against the net assessed limited property valuation. The net assessed full cashproperty valuation is used for determining the Town’s bonding capacity and as the ceiling for net limitedassessed property valuation.Town of Fountain Hills, ArizonaPrincipal Property TaxpayersJune 30, 2021 and 201220212012Page 116
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
2012 1,446,076 1,414,482 97.8% 19,984 1,434,466 99.2%
2013 1,429,285 1,401,654 98.1% 18,563 1,420,217 99.4%
2014 1,449,884 1,426,612 98.4% 18,215 1,444,827 99.7%
2015 892,104 881,170 98.8%6,903 888,073 99.5%
2016 2,532,115 2,502,995 98.8% 18,913 2,521,908 99.6%
2017 2,278,728 2,241,482 98.4% 29,002 2,270,484 99.6%
2018 2,272,027 2,230,328 98.2% 31,197 2,261,525 99.5%
2019 2,404,250 2,369,262 98.5% 20,016 2,389,278 99.4%
2020 2,092,340 2,044,210 97.7% 37,618 2,081,828 99.5%
2021 397,416 392,363 98.7%- 392,363 98.7%
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 117
2012 2013 2014 2015
Sales category:
Construction 600,403$ 567,589$ 783,064$ 935,694$
Transportation/utilities 1,409,349 1,402,734 1,375,623 1,405,768
Wholesale/retail 3,601,904 3,598,895 3,653,181 4,214,119
Restaurants/bars 575,704 645,258 655,654 682,180
Real estate, rental & leasing 678,326 720,023 782,453 617,348
Services 274,521 310,303 342,079 604,618
Other 639,012 712,360 867,213 523,323
Total 7,779,219$ 7,957,162$ 8,459,267$ 8,983,050$
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 118
2016 2017 2018 2019 2020 2021
918,717$ 730,164$ 1,408,332$ 1,932,716$ 1,910,021$ 1,990,383$
1,327,441 1,288,153 1,309,928 1,290,585 1,405,005 1,529,268
4,815,582 4,982,218 5,235,992 5,464,247 7,031,474 8,956,208
742,540 811,985 829,857 893,595 892,210 1,062,172
552,856 636,834 745,171 842,233 965,124 993,228
779,753 852,675 747,834 1,025,548 916,769 1,125,753
254,378 117,523 34,464 42,200 51,786 280
9,391,267$ 9,419,551$ 10,311,578$ 11,491,124$ 13,172,389$ 15,657,292$
Fiscal Year Ended June 30
Page 119
Fiscal
Year
Ended Town Maricopa State Total
June 30 Rate County Rate Tax Rate
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%
2021 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 120
Community Municipal HighwayFiscal Year General Facilities Property User Special Total DebtEnded Obligation District Corporation Revenue Assessment Outstanding PerJune 30Bonds*Bonds**Bonds*BondsBondsDebtCapita20123,755,000 3,090,000 7,040,000 - - 13,885,000 611 20132,900,000 2,800,000 5,905,000 - - 11,605,000 503 20142,000,000 2,495,000 4,695,000 - - 9,190,000 394 20159,517,086 2,300,000 3,525,000 - - 15,342,086 651 20167,678,669 1,935,000 1,400,000 - - 11,013,669 461 20175,680,252 1,560,000 1,030,000 - - 8,270,252 338 20183,631,835 1,180,000 670,000 - - 5,481,835 223 20191,683,417 795,000 300,000 - - 2,778,417 111 2020- 400,000 - - - 400,000 16 2021- - - - --- 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 121
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 2012 6,845,000 94,380 6,750,620 4,096,551,487 0.16% 297 1.49% 4,300,489 189 17,184,895 2013 5,700,000 82,184 5,617,816 3,422,463,416 0.16%244 1.49% 3,561,814 154 17,723,994 2014 4,495,000 87,949 4,407,051 3,359,684,579 0.13%189 1.20% 2,721,933 117 18,891,967 2015 11,817,086 420,782 11,396,304 3,722,794,676 0.31%483 2.83% 1,764,338 75 22,161,316 2016 9,613,669 576,281 9,037,388 3,744,585,506 0.24%378 2.25% 1,088,117 46 22,262,139 2017 7,240,252 343,697 6,896,555 3,965,824,715 0.17%282 1.63% 860,437 35 22,400,196 2018 4,811,835 83,185 4,728,650 4,166,589,970 0.11%192 1.06% 664,484 27 24,375,962 2019 2,478,417 146,100 2,332,317 4,381,287,279 0.05%93 0.50% 287,694 12 26,279,178 2020 400,000 171,807 228,193 4,657,015,387 0.005%9 0.05%- - 27,586,011 2021- 191,594 - 4,909,183,626 - - - 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 122
Estimated
Estimated Share of
Percentage Overlapping
Outstanding Debt Applicable Debt
Overlapping:
Maricopa County -$ 1.14%-$
Maricopa County Community College District 184,715,000 1.14% 2,105,751
Maricopa County Special Healthcare District 640,695,000 1.14% 7,303,923
East Valley Institute of Technology - 2.30%-
Fountain Hills Unified School District 6,735,000 96.38% 6,491,193
Total Overlapping Debt 15,900,867
Direct:
Town of Fountain Hills, Arizona*
General Obligation Bonds -
Revenue Bonds -
Eagle Mountain Community Facilities District**-
Total Direct Debt -
Total direct and overlapping debt 15,900,867$
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, 2021
Governmental Unit
Page 123
2012 2013 2014 2015
6% Debt Limit
Debt limit 27,134,160$ 22,668,984$ 21,957,791$ 24,199,829$
Total net debt applicable to limit - - - -
Legal debt margin 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 90,447,201$ 75,563,278$ 73,192,636$ 80,666,095$
Total net debt applicable to limit 3,755,000 2,900,000 2,000,000 9,175,000
Legal debt margin 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% 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 124
2016 2017 2018 2019 2020 2021
28,325,296$ 30,651,126$ 31,459,192$ 32,400,042$ 33,907,227$ 35,603,580$
- -- -- -
28,325,296$ 30,651,126$ 31,459,192$ 32,400,042$ 33,907,227$ 35,603,580$
-- - - - -
94,417,653$ 102,170,422$ 104,863,974$ 108,000,140$ 113,024,089$ 118,678,601$
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$ 118,678,601$
8% 5% 3% 1% - -
Fiscal Year Ended June 30
Page 125
Net full cash assessed valuation 593,393,005
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 118,678,601$
Net debt applicable to limit -
20% legal debt margin 118,678,601
All Other General Obligation Bonds
Debt limit - 6% of net full cash assessed valuation 35,603,580
Net debt applicable to limit -
6% legal debt margin 35,603,580
Total legal debt margin 154,282,181$
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, 2021
Page 126
Fiscal
Year
Ended Pledged
June 30 Principal Interest Total Revenues Coverage
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
2021 - - - 24,001,082 100.0
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 127
2011201220132014201520162017201820192020*Population22,741 23,070 23,318 23,573 23,899 24,482 24,583 24,987 25,200 23,820 Per capita personal income44,660$ 47,260$ 48,244$ 46,619$ 48,240$ 50,162$ 60,531$ 54,936$ 57,468$ 59,791$ Median age53.9 53.9 53.0 53.7 53.8 53.7 53.5 57.5 58.8 59.4 Public school enrollment1,981 1,886 1,820 1,692 1,619 1,506 1,444 1,380 1,338 1,314 Town of Fountain Hillsunemployment rate6.7% 5.6% 6.0% 5.4% 2.4% 1.9% 1.6% 3.9% 8.7% 4.9%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 lots1,218 1,209 1,196 1,165 1,247 1,209 1,175 1,172 1,052 1,158 Number of unitsHousing12,990 12,977 12,991 12,981 13,002 13,130 13,176 13,558 13,749 13,875 Lodging4 4 4 4 4 4 4 4 4 4 Restaurants56 56 54 43 46 50 52 54 55 55 Shopping centers20 20 20 20 20 20 20 20 20 20 SchoolsPublic4 3 3 3 3 3 3 3 3 3 Preschool4 6 7 7 7 7 7 5 5 5 Charter1 1 1 1 1 1 1 1 1 1 Vocational----- - 1 1 2 2 Note: N/A indicates the information is not available.* Information obtained is based on calendar years; therefore, the latest information obtained wasfrom 2020.Sources: 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.Town of Fountain Hills, ArizonaDemographic and Economic StatisticsLast Ten Calendar YearsCalendar YearPage 128
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 and 2021 was not available.
2019*
Town of Fountain Hills, Arizona
Principal Employers
Prior Fiscal Year and Nine Years Ago
2010
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2012201320142015201620172018201920202021Municipal court5.00 5.00 4.00 3.63 3.63 3.63 3.63 3.63 3.63 3.63 Administration11.58 11.68 10.56 11.33 11.63 12.25 13.45 13.70 15.20 15.00 Public works9.80 9.80 10.80 12.43 12.43 Development services20.25 18.75 16.25 16.30 16.30 7.50 8.50 7.50 9.00 9.00 Community services21.53 21.18 20.18 21.06 20.76 20.76 20.56 20.56 20.56 22.01 Total 58.36 56.61 50.99 52.32 52.32 53.94 55.94 56.19 60.82 62.07 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 130
Function/Program2012201320142015201620172018201920202021Municipal CourtCases filed 2,173 1,740 1,649 1,738 1,593 2,014 1,277 891 2,237 1,324 Hearings/Trials held731 703 1,665 1,585 1,564 1,844 676 801 568 1,430 AdministrationFTEs per 1,000 residents2.6 2.5 2.2 2.2 2.2 2.2 2.3 2.2 2.4 2.6 Registered voters - general election16,074 none N/A 16,213 none 16,387 none 16,775 none 18,415 Voter turnout - general election34% none N/A 38% none 41% none 51% none 91%Development ServicesBuilding permits issued346 457 445 443 410 509 468 576 547 575 Building inspections conducted1,257 1,395 2,131 2,448 2,129 2,704 3,707 4,795 4,069 3,652 Number of code violation cases804 746 716 752 713 669 654 655 690 497 Number of zoning cases7 10 41 65 72 50 41 11 7 21 Community ServicesNumber of Community Center bookings3,236 3,196 3,383 3,439 3,124 3,764 4,395 3,857 3,169 1,675 Number of participants in recreational programs 1,833 1,789 2,291 2,249 2,910 3,773 3,794 3,489 1,830 2,892 Number of Senior Services members1,208 1,118 1,189 1,273 1,326 1,335 1,220 1,313 1,265 1,360 Number of home delivered meals8,419 6,941 4,799 4,035 3,497 3,920 3,093 3,562 5,215 4,402 Law Enforcement (contracted)Physical arrests522 545 743 445 220 220 214 67 86 56 Traffic violations1,366 1,296 1,379 1,539 1,215 1,803 1,053 1,248 2,618 2,745 Fire & Emergency Medical (contracted)Total incident responses3,082 3,136 2,956 3,166 3,191 3,425 3,659 4,073 3,896 4,215 Average response time (in minutes)3:46 3:50 3:53 3:37 3:57 3:25 3:33 3:32 3:51 4:50Source: 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 131
2012201320142015201620172018201920202021Public safetyNumber of fire stations2 2 2 2 2 2 2 2 2 2 Public worksStreets (centerline miles) 178.9 178.9 178.9 178.9 178.9 178.9 180.0 180.0 180.0 180.0 Streets (lane miles)390 390 390 390 390.5 390.5 391.5 391.5 391.5 391.5 Pedestrian lighting34 34 34 85 91 91 91 91 91 91 Traffic signals13 13 13 13 13 13 13 13 13 13 Parks and recreationAcreage-developed parks 116 116 116 119 119 119 119 119 119 119 Playgrounds7 7 7 7 7 7 7 9 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 acreage740 740 740 807.2 807.2 807.2 807.2 889.2 913.2 913.2 Miles of trails4.3 10.43 10.43 15.8 15.8 18.5 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.Fiscal Year Ended June 30Function/ProgramTown of Fountain Hills, ArizonaCapital Assets Statistics by FunctionLast Ten Fiscal YearsPage 132
Town of Fountain Hills
16705 E. Avenue of the Fountains
Fountain Hills, Arizona 85268
480-816-5100
www.fountainhillsaz.gov
- linkedin.com/company/town-of-fountain-hills
-facebook.com/TownofFountainHills
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