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2020-2021 Popular Annual Financial Report Page
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Community
Profile
2020-2021
Financial
Overview
Net
Position
Awards &
Community
Property
Taxes
Page 2 Town of Fountain Hills
The Town of Fountain Hills is pleased to pre-
sent its Popular Annual Financial Report for
the fiscal year ended June 30, 2021. This re-
port is intended to present an accessible over-
view of the Town’s financial position and pol-
icies, and its commitment to providing re-
sponsive services and programs in a fiscally
responsible manner.
We share with you details of how the Town’s
revenue is generated, where the dollars are
spent, and how the local economy impacts
Fountain Hills’ overall financial status. Above
all, our goal is to provide you with an oppor-
tunity to better understand the many financial
aspects that affect your local government.
The financial information provided here is
drawn from detailed information found within
the fiscal year 2020-2021 Annual Compre-
hensive Financial Report (ACFR). The finan-
cial statements were prepared in conformance
with generally accepted accounting principles
in the United States of America (GAAP) and
audited by an independent accounting firm,
receiving an unmodified (or clean) opinion.
The numbers contained within the ACFR
were obtained by employing the basis of ac-
counting as prescribed by the Governmental
Accounting Standards Board (GASB).
While the numbers in this Popular Annual
Financial Report come from an audited
source, they are presented in an abridged,
unaudited non-GAAP format. Citizens who
wish to review audited GAAP-basis financial
statements can refer to the Town’s 2020-2021
ACFR, which is available on the Financial
Reports & Budgets page of the Town’s web-
site at www.fountainhillsaz.gov.
Members of the Finance Division, and staff
across the organization, are proud to serve
this fine community. We hope that the 2020-
2021 Popular Annual Financial Report serves
its purpose and helps assure you that every
effort is made to manage the community’s
resources wisely and for the benefit of all.
David Pock, CPA, CGFM
Finance Director
Welcome
2020-2021 Popular Annual Financial Report Page 3
Community Profile
The Town of Fountain Hills 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 was 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 Moun-
tains 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 approximate-
ly 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 develop-
ment of the land will begin during the years to
come. Annexing this property into the Town
ensures that its future development will be of
the highest quality under Town standards,
such as the cut-and-fill ordinance and strict
zoning regulations.
The Town offers a wide range of living ac-
commodations, from small condominium
complexes to large custom homes. Fountain
Hills also offers recreational and cultural pro-
grams and services that contribute to a high
quality of life for its residents. The communi-
ty 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 pre-
served as open space and 51.0% is residential.
The Town of Fountain Hills is an Arizona
Municipal Corporation, acting as a general
law town as prescribed in the Arizona Re-
vised 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 govern-
ment. The Mayor is a member of the Town
Council who is directly elected by the voters
for a two-year term and chairs the Town
Council meetings. The members of the Coun-
cil are elected at large and serve four-year
overlapping terms. The Town Council is re-
sponsible for the adoption of local ordinances,
budget adoption, appointment of residents to
citizen advisory committees and hiring the
Town Manager. The Town Manager is re-
sponsible for implementation of the policies
of the Town Council and overall management
of the Town through approximately 62 FTE
employees. The Presiding Judge, Town Attor-
ney and Town Prosecutor are under the direc-
tion of the Town Council.
This Popular Annual Financial Report is also
available on the Financial Reports & Budgets
page of www.fountainhillsaz.gov.
Page 4 Town of Fountain Hills
Town Government
The Town provides or administers a full range
of services including public safety (law en-
forcement, fire, animal control); development
services (code enforcement, planning and
zoning); public works (including construction
and maintenance of streets and infrastructure);
municipal court; recreational activities; com-
munity center; senior services and cultural
events. The Town does not maintain or oper-
ate any utilities or other operations that would
require the establishment of enterprise funds.
The financial reporting entity (the Town) in-
cludes all the funds of the primary govern-
ment (i.e., the Town of Fountain Hills as le-
gally defined) as well as all of its component
units. The component units consist of legally
separate entities for which the primary gov-
ernment 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 Dis-
trict, and the Fountain Hills Municipal Prop-
erty Corporation are included in the financial
report of the Town.
The annual budget serves as the foundation
for the Town of Fountain Hills’ financial
planning and control. The Town Council for-
mally adopts the budget and appropriates
funding for the General Fund, Excise Tax
Funds, Special Revenue Funds, Debt Service
Funds, and Capital Projects Funds. Therefore,
these funds have appropriated budgets.
On or before the second Town Council meet-
ing in April, the Town Manager submits to
the Town Council a proposed budget for the
fiscal year commencing the following July
1st. The budget includes proposed expendi-
tures 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’s fiscal year. The budget is legally en-
acted through passage of a resolution and is
prepared by fund and department.
The resolution sets the limit for total expendi-
tures during the fiscal year. The Town Man-
ager may authorize transfers within a depart-
ment, including those within personnel and
from operating capital to services or supplies.
Additional expenditures may be authorized
for expenditures directly necessitated by a
natural or man-made disaster as prescribed in
the State Constitution, Article 9, Section 20.
2020-2021 Popular Annual Financial Report Page 5
MONIES IN
As a governmental entity, the Town
uses fund accounting that is segregated
for specific activities. Governmental
funds are used to account for tax sup-
ported activities, and the Town re-
ceives the funding it needs to provide
services to the community from a vari-
ety of sources. The table to the right
presents a summary of governmental
revenues by primary type for the three
past fiscal years. Online sales tax col-
lections and intergovernmental reve-
nues contributed to an overall increase
in revenues of $816,885, or 5.2%,
compared to 2020.
2020-2021 Financial Overview
REVENUE TYPE DEFINITIONS
Taxes:
Sales - the Town charges a local sales tax of 2.9% on most goods purchased in the
Town. This tax is in addition to the State of Arizona rate of 5.6% and the
Maricopa County rate of 0.7%, for a total sales tax rate of 9.2%.
Property - the Town does not assess a primary property tax. A secondary
property tax may be assessed for debt repayment of voter approved bonds. If
no bonds are outstanding, the secondary property tax is not assessed.
Franchise - revenue received from utility (telecommunications) companies for the
right to operate within the Town.
Licenses and Permits - includes building permit fees, business license fees, fire inspec-
tions, etc..
Leases and Rents - rental fees for use of the Town facilities as well as fees from
leases for wireless communication towers.
Intergovernmental - these are revenues received from other governments or entities,
including state shared sales tax, state shared income tax, fire insurance premium tax,
vehicle license tax, federal grants, and state grants.
Charges for Services - these are revenues received from services and/or programs provided
by the Town such as recreation programs.
Other - these are revenues that do not fit under another classification.
Fines and Forfeitures - these are revenues received from court fines.
Investment Earnings - revenue received from interest on invested monies.
In this section, we present an overview of monies in and monies out for the Town of Fountain
Hills for the fiscal year ended June 30, 2021.
Page 6 Town of Fountain Hills
MONIES OUT
The three-year comparison, shown in the table below, includes the Town ’s operational expendi-
tures by function. Overall, 2021 total Governmental Fund expenditures were more than those of
2020 by $1,299,837, or +4.9%. The Town contracts for law enforcement and fire and emergen-
cy medical services—these contracts include automatic negotiated increases which are reflected
in the Public Safety category and
which makes up 32.5% of total
Government Funds. Debt Service
includes the annual principal and
interest payment for outstanding
bonds. The Town did not have any
outstanding town-wide debt in FY
2020-21. The final outstanding
bonds for Eagle Mountain CFD
were paid during the fiscal year.
The Debit Service expenditures
shown below include that debt re-
tirement. Capital Outlay increased
due, in large part, to completion of
projects carried over from FY 2019
-20 and a new major project in FY
2020-21, the Panorama Storm
Drain Improvement.
2020-2021 Financial Overview - continued
General
Government
12.4%
Development
Services
3.0%
Public Safety
32.5%
Public Works
22.9%
Culture &
Recreation
9.9%
Debt Service
9.0%
Capital Outlay
10.3%
FY 2021
Expenditures
Expenditures 2021 2020 2019
General Government 3,620,293$ 3,280,191$ 3,147,063$
Development Services 954,667 797,513 858,957
Public Safety 8,906,428 8,566,058 7,880,668
Public Works 6,321,814 6,046,298 6,295,989
Culture and Recreation 2,726,748 2,609,842 2,845,027
Debt Service 407,544 2,379,299 2,760,471
Capital Outlay 4,758,067 2,716,523 4,487,854
Total Expenditures 27,695,561$ 26,395,724$ 28,276,029$
Governmental Funds
Three Year Expenditures Summary by Type
2020-2021 Popular Annual Financial Report Page 7
Expenditures from Operating Funds*
Last Five Fiscal Years
(In Millions)
2020-21 Financial Overview - continued
EXPENDITURE TYPE DEFINITIONS
General Government - functions serving Town operations as a whole, including: Town
Council, Town Manager, Town Clerk, Finance, Administrative Services, Information
Technology, Town Attorney, and Town Prosecutor.
Public Safety - contracted services for Law Enforcement and Fire and Emergency Medical
Services departments.
Public Works - represents the Street and Facilities divisions, including Engineering.
Culture and Recreation - encompasses the services, programs and facilities provided by
Parks & Recreation, Community Center and Senior Services.
Development Services - includes Planning, Building Safety, Code Compliance, and
Mapping and Graphics divisions.
Capital Outlay - expenditures on the Town’s Capital Improvement Program projects and
Facilities Replacement.
Debt Service - principal, interest, and other related costs affiliated with the Town’s issuance
of debt to support various capital improvement activities.
* Includes general fund, public art fund, and vehicle replacement fund
Page 8 Town of Fountain Hills
Net Position
The Statement of Net Position presents information on all of the Town’s assets and liabilities,
with the difference between the two reported as net position. Over time, increases and decreases
in net position may serve as a useful indicator of whether the financial position of the Town is
improving or deteriorating. Net position is broken-down into three categories: Net Investment
in Capital Assets, Restricted, and Unrestricted. These categories focus on the accessibility of
the underlying assets.
ASSETS represent what
the Town owns. Current
and other assets include
cash, investments, and
receivables (money due
to the Town). Capital as-
sets are land, buildings,
infrastructure, vehicles,
machinery, and equip-
ment. Capital assets are
either non-depreciable
(land, art, and construc-
tion in progress) or de-
preciable (all other capi-
tal assets). These assets
are shown net of accumu-
lated depreciation.
LIABILITIES represent what the Town owes. Current and other liabilities consist of payables
(money due from the Town) that are due within one year. Long-term liabilities represent debt
that the Town must pay back over multiple years. If any portion of long -
term debt is due within one year, that portion is reported in current liabili-
ties.
NET POSITION is the residual amount remaining after liabilities are
subtracted from assets. The changes reported in net position may be used to
evaluate the Town’s financial condition; however, attention should be paid
to the movement within categories as well. The Town’s largest category
(81%) reflects investment in capital assets (land, buildings, infrastructure,
vehicles, machinery and equipment), less any outstanding related debt used
to acquire those assets. The restricted category (2%) of the Town’s net posi-
tion represents resources that must be used for specific purposes. These le-
gal restrictions are imposed by outside entities such as federal or state gov-
ernments. An example of such a restriction is the State’s requirement that
revenues from the gasoline tax be used only for expenditure on street pro-
jects. Portions of net assets are also restricted to pay debt service and fund
capital projects. The remaining 17% is unrestricted as to use.
2021 2020 2019
ASSETS
Current and Other Assets 25,980,153$ 23,329,463$ 20,419,804$
Capital Assets, net 103,822,185 104,404,331 107,559,746
Total Assets 129,802,338 127,733,794 127,979,550
LIABILITIES
Current and Other Liabilities 1,861,024 3,338,678 3,661,199
Long-Term Liabilities 190,600 236,576 631,777
Total Liabilities 2,051,624 3,575,254 4,292,976
NET POSITION
Net Investment in Capital Assets 103,822,185 104,004,331 104,781,328
Restricted 2,610,178 2,766,041 3,646,449
Unrestricted 21,318,351 17,388,168 15,258,797
Total Net Position 127,750,714$ 124,158,540$ 123,686,574$
Statement of Net Position
2020-2021 Popular Annual Financial Report Page 9
Fund Accounting
Fund Balance
State and local govern-
ments, such as the
Town, employ a system
called fund accounting.
This system groups as-
sets and liabilities ac-
cording to the purpose
for which they are to be
used. Each grouping, or
fund, operates as a sepa-
rate self-balancing set
of accounts. The Gen-
eral Fund is the chief
operating fund of the
Town and accounts for
63.7% of the total fund
balance. Capital project
funds account for the
acquisition or construction of major capital facilities, as well as facilities replacement. Other
purposes can be determined by reviewing the fund balances of the individual funds. The fund
balance is an important component of fiscal planning and factors into the Town’s debt rating.
The Town’s debt rating (Aa2 as rated by Moody’s) has been maintained due to the Town Coun-
cil’s commitment to fund on-going services with on-going revenues.
General Fund
63.7%
HURF
4.8%
Capital Projects
Fund
18.5%
Non-Major
Governmental
Funds
13.0%
Fund Balances
as of June 30, 2021
Page 10 Town of Fountain Hills
One of the biggest bills residents
face each year is tied to the proper-
ty they own. Property tax in Foun-
tain Hills is collected by the Mari-
copa County Treasurer, and is
based on the property’s value (ad
valorem) as determined by the
Maricopa County Assessor. As
the charts indicate, the Town gov-
ernment did not receive any of the
town-wide property taxes paid in
FY 2020-21 since there were no
outstanding town-wide bonds for
the fiscal year. Property taxes col-
lected by the County Treasurer
went to support other separate en-
tities within the Town, including
Fountain Hills Unified School Dis-
trict, Fountain Hills Sanitary Dis-
trict, and various Maricopa County districts. The Town did receive $427,387 or 1.4% of total
revenues from residents of the Eagle Mountain Community Facilities District (EMCFD) for
outstanding bonds payable. These funds were used to retire all of those bonds in FY 2020-21.
Property taxes are calculated by Maricopa County using the assessed value of all property locat-
ed within the Town. For residential property, the tax is calculated using 10% of the assessed
valuation of the real property, dividing by 100 and multiplying by the total tax rate (currently
$7.2105). For example, a residential property with an assessed value of $300,000 would pay
approximately $2,163 in taxes ($300,000 x 10% divided by 100 x $7.2105).
Property Taxes
Education
60%
Maricopa
County
20%
Sanitary
District
13%
Other
7%
Town of
Fountain
Hills
0%
Taxes for a $300,000 Home
Total Property Tax = $2,163
2020-2021 Popular Annual Financial Report Page 11
HOW CAPITAL INVESTMENTS ARE FUNDED
The Town’s capital outlay consists of investments in our roads, equipment, public facilities, and
parks. Every year, the Town prepares and adopts an on-going Five-Year Capital Improvement
Plan that provides for an annual amount of infrastructure improvement projects. Town Council
and staff review and update the plan each year as part of the budget process. The projects are
funded using a combination of grants and existing funds.
DEBT POLICY
The Town’s Debt Policy provides a set of criteria to help determine when it is best to fund capi-
tal projects using existing revenues, issuing bonds and/or seeking loans. The Town had an Aa2
bond rating from Moody’s Investors Service for its last issue of general obligation bonds. This
rating allows the Town to receive very competitive interest rates when issuing debt. The town
had no remaining bonds payable at year end.
REPAYMENT OF OUTSTANDING DEBT
The repayment of debt is funded us-
ing either secondary property taxes
or revenues (see definitions below).
The Town did not charge a second-
ary property tax for FY 2020-2021
because there was no outstanding
town-wide debt.
DEBT MARGIN
The State imposes certain debt limitations of 20% and 6% of the net assessed secondary valua-
tion of the Town. For projects involving water, sewer, artificial lighting, parks, open space, rec-
reation facility improvements, public safety, law enforcement, fire and emergency facilities, and
street and transportation facilities, the Town can issue General Obligation (GO) bonds up to
20% of that valuation. For any other general purpose improvements, the Town may issue bonds
up to the 6% limit.
The Town’s available debt margin is $118.7 million in the 20% capacity and $35.6 million in
the 6% capacity. The Town is currently not using any of its 20% capacity or 6% capacity since
the remaining $400,000 in outstanding EMCFD bond principal was paid before June 30, 2021.
Capital Investments
DEBT TYPE DEFINITIONS
General Obligation Bonds - long-term debt
that is repaid from the Town’s assessment of a
secondary property tax.
Revenue Bonds - long-term debt that is repaid
from a pledged Town revenue stream (i.e.,
Transaction Privilege Tax, Highway User Reve-
nue Fund, etc.).
Page 12 Town of Fountain Hills
Awards & Community
One of the many features that make the
Town of Fountain Hills so unique is the vast
municipally-owned public art collection.
More than 150 pieces of art comprise the col-
lection that is located throughout the Town
for all to enjoy. The collection includes
sculptures, bronzes, murals, paintings, pho-
tography, and more. The Fountain Hills Cul-
tural and Civic Association offers regularly
scheduled art walks to introduce the collec-
tion to residents and visitors.
Fountain Hills has dedicated itself to provid-
ing award-winning community service pro-
grams for residents of all ages. With numer-
ous parks, fields, courts, meeting rooms, and
conference facilities, everyone is sure to find
an activity that is right for them. The Town
also hosts various special events throughout
the year, including celebrations for St. Pat-
rick’s Day, the Fourth of July, Thanksgiving,
and Christmas.
The Town of Fountain Hills encourages in-
volvement in government through volunteer-
ism. Many community members volunteer
their time and efforts to the Town of Foun-
tain Hills and thereby enrich the community
every day. Volunteers work within the Town
to reduce the cost of delivering services to its
residents all while having fun, meeting others
and enjoying new challenges. Annually, Vol-
unteers are recognized at the Volunteer of
the Year Awards Ceremony.
The Government Finance Officers Association
(GFOA) awarded a Certificate of Achieve-
ment 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 25th consecutive year that the government
has received this prestigious award.
In addition, the GFOA recognized the Town
for its June 30, 2020 submission of its Popular
Annual Financial Report (PAFR). The Award
for Outstanding Achievement in Popular An-
nual Financial Reporting is a prestigious na-
tional award recognizing conformance with
the highest standards for preparation of state
and local government popular reports. The
requirements are based on an evaluation of
creativity, presentation, understandability, and
reader appeal. This award is for the Town’s
eighth submission of its PAFR.
Finally, the Town also 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 Distin-
guished Budget Presentation Award, the gov-
ernment’s budget document was judged to be
proficient in several categories, including as a
policy document, a financial plan, an opera-
tions guide, and a communications device.
This is the 19th consecutive year that the
Town has received the award.
2020-2021 Popular Annual Financial Report Page 13
Awards & Community - continued
The Government Finance Officers Association of the United States and Canada has given an Award
for Certificate of Achievement for Excellence in Financial Reporting to the Town of Fountain Hills,
Arizona for its Annual Comprehensive Financial Report for the fiscal year ending June 30, 2020.
Page 14 Town of Fountain Hills
TOWN MANAGER
Grady E. Miller
DEPARTMENT DIRECTORS
Town of Fountain Hills, Arizona
TOWN COUNCIL
Deputy Town Manager David Trimble
Finance Director David Pock
Community Services Director Rachael Goodwin
Development Services Director John Wesley
Economic Development Director James Smith
Public Works Director Justin Weldy
Town Clerk Elizabeth Klein
Fire Chief Captain David Ott,
Rural Metro Corpo-
ration
District Commander Captain Larry
Kratzer,
Maricopa County
Sheriff’s Office Dis-
trict Commander
Presiding Judge Robert Melton
Town Prosecutor Mark Iacovino
The Law Offices of
Mark Iacovino
Town Attorney Aaron Arnson,
Pierce Coleman
PLLC
This Popular Annual Financial Report (PAFR) is
intended to summarize the financial information
appearing in the fiscal year 2020-2021 Annual
Comprehensive Financial Report (ACFR). Both
of these reports, as well as other useful financial
information, can be found by visiting the Town’s
Financial Reports & Budgets page of
www.fountainhillsaz.gov.
TOWN HALL Telephone: 480-816-5100
16705 E. Avenue of the Fountains Fax: 480-837-3145
Fountain Hills, Arizona 85268 Website: www.fountainhillsaz.gov
Arizona Legislature—District 23
U.S. Congress—District 6
Mayor Ginny Dickey
Vice Mayor Alan Magazine
Councilmember Peggy McMahon
Councilmember Sharon Grzybowski
Councilmember Mike Scharnow
Councilmember David Spelich
Councilmember Gerry Friedel
-facebook.com/townoffountainhills
-twitter.com/fhazgov
-linkedin.com/company/town-of-fountain-hills
2020-2021 Popular Annual Financial Report Page 15
Notes