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TOWN OF FOUNTAIN HILLS, ARIZONA
COJ\1PREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2005

Mr. Wallace J. Nichols
Mayor

Councilmembers
Mr. Jay Schlum
Vice Mayor
Mr. Mike Archambault
Mr. Edwin Kehe

Dr. John Kavanagh
Mr. Keith McMahan

Timothy G. Pickering, CEcD, ICMA-CM
Town Manager

Julie A. Ghetti, CPA
Finance Director

Prepared by:
Financial Services Department

TOWN OF FOUNTAIN HILLS, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2005

TABLE OF CONTENTS

INTRODUCTORY SECTION
Letter of Transmittal
List of Principal Officials
Organizational Chart
GFOA Certificate of Achievement

1
8
9
10

FINANCIAL SECTION
Independent Auditor's Report
Management's Discussion and Analysis

13
15

Basic Financial Statements
Statement of Net Assets
Statement of Activities
Balance Sheet - Governmental Funds
Reconciliation of the Balance Sheet to the Statement of Net AssetsGovernmental Funds
Statement of Revenues, Expenditures and Changes in Fund BalancesGovernmental Funds
Reconciliation of the Statement of Revenues, Expenditures, and Changes
in Fund Balances to the Statement of Activities- Governmental Funds
General Fund Statement of Revenues, Expenditures, and Changes in
Fund Balances - Budget and Actual
Notes to the Basic Financial Statements

28
29
30
31
32
33
34
35

TOWN OF FOUNTAJN HILLS, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
TABLE OF CONTENTS

Combining and Individual Fund
Statements and Schedules
Combining Balance Sheet- Nonmajor Governmental Funds
Combinillg Statement of Revenues, Expenditnres, and
Changes ill Fund Balances- Nornnajor Govermnental Funds
General Obligation Debt Service Fund- Schedule of Revenues, Expenditures, and
Changes ill Fund Balances - Budget and Actual
Municipal Property Corporation Fund- Schedule of Revenues, Expenditnres, and
Changes in Fund Balances- Budget and Actual
Development Fees Fund- Schedule of Revenues, Expenditnres, and
Changes in Fund Balances - Budget and Actual
Capital Projects Fund- Schedule ofRevennes, Expenditnres, and
Changes ill Fund Balances - Budget and Actual
HURF Fund- Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
Excise Tax Fund- Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
Grants Fund- Schedule of Revenues, Expenditnres, and
Changes in Fund Balances - Budget and Actual
Local Corni Enhancement Frn1d - Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
HURF Debt Service Fund- Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
Eagle Mountaill Debt Service Fund- Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
Cottonwoods Special AssessmentFund- Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual

56
58
60
61

62
63
64
65
66
67
68
69
70

TOWN OF FOUNTAIN HILLS, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
TABLE OF CONTENTS

STATISTICAL SECTION

Govemment-wide infom1ation:
Govemment-wide Expenses by Function
Government-wide Revenues
Fund Information:
General Gove=ent Expenditures by Function
General Govemment Revenues by Source
General Gove=ental Tax Revenues by Source
Town Transaction Privilege (Sales) Tax Collections by Indust1y Classification
Property Tax Levies and Collections
Assessed and Estimated Actual Value of Property
Primary and Secondary Taxable Property Assessed Valuation
Property Tax Rates for All Direct and Overlapping Gove=ents
Primary and Secondary Property Tax Rates - All Direct and
Overlapping Govermnents
Assessed Valuation of Major Taxpayers
Computation of Legal Debt Margin
Ratio of Net General Bonded Debt to Assessed Value
and Net Bonded Debt Per Capita
Ratio of Annual Debt Service Expenditures to Total General Expenditures
Direct and Overlapping General Obligation Bonded Debt
Miscellaneous Statistical Data

72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88

INTRODUCTORY SECTION

THIS PAGE BLANK

Town of FOUNTAIN HILLS

September 26, 2005

To the Honorable Mayor, Members of the Governing Council, and Citizens of the Town of
Fountain Hills, Arizona:
State law requires that all general-purpose local governments publish within 120 days of the
close of each fiscal year a complete set of fmancial statements presented in conformity with
Generally Accepted Accounting Principles (GAAP) and audited in accordance with Generally
Accepted Auditing Standards (GAAS) by a finn of licensed certified public accountants. The
Comprehensive Annual Financial Report (CAFR) of the Town of Fountain Hills, Arizona
(Town) for the fiscal year ended June 30, 2005, is hereby submitted. This document represents a
joint effort by Town staff as well as our auditors, Cronstrom, Trbovich & Osuch, P.C.
This report consists of management's representations conceming the fmances of the Town of
Fountain Hills, Arizona. Responsibility for the accuracy of the data and the completeness and
faimess of the presentation, including all disclosures, rests with management. To provide a
reasonable basis for making these representations, management of the Town of Fountain Hills,
Arizona has established an intemal control framework that is designed to both protect the
government's assets from loss, theft, or misuse and to compile sufficient reliable information for
the preparation of the Town's financial statements in conformity with GAAP. Because the cost
of intemal controls should not outweigh their benefits, the Town's framework of intemal controls
has been designed to provide reasonable rather than absolute assurance that the financial
statements will be free from material misstatement. As management, we assert that, to the best
of our knowledge and belief, this financial report is complete and reliable in all material respects.
All disclosures necessary for the reader to understand the Town's activities have been included
The Town's financial statements have been audited by Cronstrom, Trbovich & Osuch, P.C., a
firm of licensed certified public accountants. The goal of the independent audit was to provide
reasonable assurance that the financial statements of the Town of Fountain Hills, Arizona for the
fiscal year ended June 30, 2005, are free of material misstatement. The independent audit
involved examining, on a test basis, evidence supp01iing the amounts and disclosures in the
fmancial statements; assessing the accoUnting principles used and significant estimates made by
management; and evaluating the overall financial statement presentation. The independent
auditor concluded, based upon the audit, that there was a reasonable basis for rendering an
unqualified opinion that the Town's fmancial statements for the fiscal year ended June 30, 2005,
are fairly presented in confonnity with GAAP. The independent auditor's report is presented as
the first component of the financial section of tllis repmi.
166705 E. Avenue of the Fountains, Fountain Hills, Arizona 85268
1

GAAP requires that management provide a narrative introduction, overview, and analysis to
accompany the basic fmancial statements in the form of Management's Discussion and Analysis
(MD&A). This letter of transmittal is designed to complement MD&A and should be read in
conjunction with it. The Town of Fountain Hills, Arizona's MD&A can be found immediately
following the report of the independent auditors.

Town of Fountain Hills Profile
The Town of Fountain Hills is a planned,
family-oriented community established in
1970 by McCulloch Prope1iies (now MCO
Properties, Inc.). Prior to 1970 the area was a
cattle ranch and was part of one of the largest
land and cattle holdings in Arizona. It was
purchased by Robert McCulloch in the late
1960s and designed by Charles Wood, Jr.
(designer of Disneyland in southern
California). The centerpiece of Fountain Hills
is one of the world's tallest man-made
fountains, a focal point that attracts thousands
of visitors each year. Located on 11,340 acres
of land, and bordering northeast Scottsdale, Fountain Hills is sunounded by the 3,500-foot
McDowell Mountains on the west, the Fort McDowell Indian Reservation on the east, the Salt
River Indian Reservation on the south and by the McDowell Mountain Regional Park on the
north. Elevation is 1,520 feet at the fountain, 3,000 feet on Golden Eagle Boulevard, and is 500
feet above Phoenix.
Over the past fifteen years Fountain Hills has grown from 10,190 residents to a town of over
23,000 in 2005. The Maricopa Association of Governments (MAG) estimates that the
population of Fountain Hills will continue to grow to near 25,000 by 2010. Although the rate of
growth has slowed due to the national economy and lack of production home sites the Town
continues to attract residents who are building large custom homes that take advantage of the
scenic vistas sunounding its mountain community.
The Town offers a range of living styles, from small cmrununity subdivisions to a number of
large custom homes. Fountain Hills also offers recreational, cultural and retirement programs
that address the needs and lifestyles of active families and adults. The conununity consists of
primarily residential property; of the total 11,700 acres of land only 500 acres are zoned
commercial (approximately 4%) and 3,600 acres are reserved as open space (31 %).
The Town's Mission Statement for the Organization
The Town of Fountain Hills' purpose is to serve the best interests of the community by:
providing for its safety and well-being;
respecting its special, small-town character and quality of life;
providing superior public services;
sustaining the public trust through open and responsive goverrunent; and
maintaining the stewardship and preservation of its financial and natural resources.
In four words, serve, respect, trust, stewardship.
2

The Town of Fountain Hills, Arizona is an Arizona Municipal Corporation, acting as a general
law Town as prescribed in the Arizona Revised statutes. The Town was incorporated on
December 5, 1989 with the governmental and administrative affairs of the Town operating under
the Council-Manager form of government. The Town Council is responsible, among other
things, for the adoption of local ordinances, budget adoption, the development of citizen advisory
committees and hiring the Town Manager.
The Town Manager is responsible for
implementation of the policies of the Town Council and administering the Town's operations
through five department directors and approximately 83 employees. The Magistrate, Town
Attomey and Town Prosecutor are under the direction of the Town Council.
The Town provides or administers a full range
of services including public safety (police, fire,
animal
control,
building
inspection);
community development (code enforcement,
planning, zoning and engineering); the
construction and maintenance of streets and
infrastructure, municipal court, recreational
activities, community center and cultural
events. The Town doe~ not maintain utility or
other operations that require the establislunent
of enterprise funds.
The financial reporting entity (the Town) includes all the funds and account groups of the
primary government (i.e., the Town of Fountain Hills, Arizona as legally defined) as well as all
of its component units. The component units consist of legally separate entities for which the
primary government is financially accountable. Blended component units, although legally
separate entities, are, in substance, part of the primary govenunent's operations and are included
as part of the primary government. Accordingly, the Cottonwoods Maintenance District, Eagle
Mountain Community Facilities District and Fountain Hills Municipal Property Corporation are
included in the financial reports of the Town.
The annual budget serves as the foundation for the Town of Fountain Hills, Arizona financial
planning anc;I control. The Town Council fom1ally adopts the budget and legally allocates, or
appropriates, available monies for the General Fund, Special Revenue Funds, Debt Service
Funds, and Capital Projects Fund. Therefore, these funds have appropriated budgets, and budget
to actual information is presented. On or before the second meeting in May the Tovm Manager
submits to the Town Council a proposed budget for the fiscal year commencing the following
July 1. The budget includes proposed expenditures and the means of financing them. The Town
Council is then required to hold public hearings on the proposed budget and to adopt a final
budget by no later than June 30, the close of the Town of Fountain Hills, Arizona fiscal year.
The budget is legally enacted through passage of an ordinance and is prepared by fund and
department. The ordinance sets the limit for expenditures during the fiscal year. The Town
Manager may authmize transfers from and within personnel and from operating capital to
services or supplies within a department. Additional expenditures may be authorized for
expenditures directly necessitated by a natural or man-made disaster as prescribed in the State
Constitution, Article 9, Section 20. Dw'ing fiscal year 2004/2005 the Town Council approved an
additional transfer to the Capital Projects Fund for the Civic Center Phase II project.
3

Factors Affecting Financial Condition

The information presented in the financial statements is perhaps best understood when it is
considered from the broader perspective of the specific environment within which the Town of
Fountafu Hills, Arizona operates.
Local economy. Sinlilar to the State of Arizona, the Town's economy continues to remain stable
fueled by real estate and construction. The largest source of General Fund revenue is the local
sales tax representing almost half of the total, followed by State Shared revenues. Local sales
revenues increased 16% from the prior fiscal year primarily in retail and building permit activity.
The increase in retail activity can be attributed to recent development along the conm1ercial
corridor including a Target Store, PetCo, Pier One, Ross Clothing, Discount Tire, Famous
Footwear and other national retailers. The Tovm Council is focusing on expanding the retail
sales tax base in order to compensate for the anticipated decrease in construction activity over the
next several years as the Town approaches build-out.

The following chart provides a historical perspective of the local sales tax collections over the
last four fiscal years showing the increase in retail activity.
LOCAL SALES TAX COLLECTIONS

Fl'Ol-02 TilROUGHFl'04-05

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1
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The Town of Fountain Hills, Arizona will soon be enhancing development of the downt0\¥11 area
of the community on Avenue of the Fountains. The goal ofthis project is to create the perfect
place to shop and dine while enjoying the enchanting surroundings. Once the project is complete
businesses should expect more foot traffic on the Avenue creating a place where people want to
be and businesses want to locate. A new Town Hall municipal building was constructed as
Phase II of the Civic Center project on Avenue of the Fountains and was designed to revitalize
the downtown area and create connectivity to Phase I of the project. Phase I included the
construction of a Library/Museum and Community Center during FY2000 and 2001. New
lighting, pedestrian walkways, water features and cultural an1erlities that are planned will provide
interest for adults and cllildren.

4

The Tmvn has approved plans for a Holiday
Inn hotel with 104 rooms that is scheduled
to open in FY2006 in the downtown area.
Another downtown project is the Fountain
Hills Conference Resort and Spa with condo ~-­
units and resort rooms (currently in plan
review) that will expand tourism within the
community and bring additional retail tax
revenue to Fountain Hills by the year 2008.
Long-term imancial planning. In June 2005 the Mayor and Town Council reviewed a Twenty
Year Financial Overview and Capital Projects plan that included projected operating and
revenues through the year 2025. The purpose of the overview was to provide a blueprint for
future capital budgeting and assist residents to understand the financial implications as part of the
Town's strategic plan. The strategic planning process was initiated during FY2004 and has
included many hours of public meetings and Town Halls. The final Strategic Plan will be
considered by the Tovvn Council in December 2005. The Twenty Year plan is flexible to allow
the public's input and any additional recommendations for other capital priorities.
The Town recognizes the need to assure reserves for future revenue shortfalls in case of
economic downturns. A large po1iion of General Fund operating revenue comes from
construction related activity that eventually will be constrained by availability of land or the
economy; the Council has adopted a fund balance policy to provide financial stability and ensure
that adequate future reserves are maintained. The policy states:
1.

2.
3.

A contingency fund of no less than 30 days operating expenditures for the upcoming
fiscal year to be designated for unanticipated expenditure or loss of revenue
(contingency).
A designated unreserved fund balance of a mininmm of ten percent ( 10%) of the average
actual revenues for the preceding five fiscal years designated for "pay-as-you-go" capital.
A reserved fund balance of twenty percent (20%) of the average actual revenues for the
preceding five fiscal years which is unavailable for appropriation.

These an1ounts will not be programmed for expenditure and are only available for use within the
confines of expenditure linlltations imposed by the State. The contingency fund can be used for
unexpected emergencies and projects upon approval by Council. A historical perspective of past
fund reserves is shown below. The general fund reserves recovered significantly after three years
of decline that is reflective of the local and national economy, capital project funding and the
establishment of a new municipal fire department. Town Council and management are
committed to maintaining the $6.5M of reserves in the future. In FY2005 the policies were
amended for the establishment of a Capital Improvement Special Revenue Fund with proceeds
from excess revenues collected over budgeted and unexpended appropriations not needed to meet
fund balance requirements or re-appropriation, therefore approximately $2.5M of the general
fund balance will be transferred to the Capital Projects Fund in FY2005-06.

5

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.·.·, The Council also . adopted fmailcialpo1ici~~: that 'include ~uidelines· for .the: issruinc'e o:f debt for ·
. capitalexpendiwres, ,CdminunitY Facility Districts; fffianciug- alternatives," e:xpendifure controls
and firJ.ancial plallning. ' The\1.ebt policy' was prepared'.\vith a.preference ' for ' ~'pay-as~you-go"
. P.tiru~cfug for . capitaj sp~iidil.1g .' : ·. An 'i~vesm~ent. policy wsi; . adopted .ru~d· ,~as,. ~'v~·cted tli~ ··
ljnitecl' ~tat~~ aiid ·
· · .. , Investri:lent Policy- Certification. fi.·6m the,·Associfition of Publ~c TJ.·~asurers
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··'.Cash ~an~gement <p'ollcies:· and' pr~ct1ces. •. Stat~ stq~te;:·pennit muriltiJ?alities ·in: ~~izorla to .
.invest in .ob+igatiqns · of the lJ. S ... Treasilly, comrhercial , paper, cmpor_ate ' bqnci~; repU1~chase
,
, :agreements,- and fueStfite~ Tre~w:~r's L,bcal Govennnen~ Itivesfip.er~t PooJ (LGIP);_T4~ Tm~
Fol.llltaintHills, Arizona's debt policy rest#cts· illvestments .tQ securities that arelOQ%)Jackec,l by .
' ' ' ' the full f~!th ~d credit of the: U.S; g6velfuneP:t. tl.i.eTo\vn bf Fouiltairi. Hills, Arizb}+a ihves't s all ' . '' .
idle:'cash ili:th~ State LQIP:-qov, whk!i:~onsists of goveplinent.,batkyci' s~urities : ·rhe.ye8:r~·tp.: .. .
;•: .. date yield on . inv~stineJJ.ts, as
June 30, ·:2005 . \vas -1.9776%.: . tnvestment ·inconie , inciudes
~ppreCiatlou ·i~ the fa~r yalue, 'o f ilivestrnents._• hitreas.es in ·f ah vaiue dw-ing·t1,1e. 9mt~nt . y~ar,
' 110~ever, do not lle2e,ssarily n!pre~ent trehds.that willcqi1timie; nor is ~t always 'p ossible to·-reiilize . '
such anio~ts~. especially.in the ca~e, of'telilporary.dianges i~ the :fair value, of ip.ve.strri~11ts that · .
tl~egov(:rrimei1t intei~ds to holcl t6, 1miturity.: ·
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tijese accounts qre fully
collaterallzed tO $1Imllion.
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T!le'Town ofFomita.irt Hills, A.rizon~ is amember ofthe Arizona M~licip'al : ' '
Risk Ret~ntion J?o~L Risk ·cov.erag~ ihclUdes generallial:Jility, ~'orker~. coinpe11:satiop.; eno~s ID+d _.
o'n ussiqns, propertY and automobile:insurance.·_ The polity.insure~ up to ·$~',00Q,bOO"per i~dde~f
i ; . occurtence' plus. any excess·li~bility
up to $13~000~000 p~r oct:Urience p~r year.: · Coyera.ge ~s
. proyided ort a cliiiJn~-n~ade ~asis. ·, , .· .. ·
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· . 1W6 deferred; coJ.nper1satim~pla±tsti1ro'ugb th~Intematio·nal CitY(County Man.a gementAss.oci'atioii ....: ·.
·· (IGMA) in ac~ordarice ·with Irit~rnal Rev:enue Code S~~;tions ·40l.A arid 4~1. ;Th~ 40 lA is ·flm.ded ·
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byL lllmld~tbry
and 'matching Town CO~ltriblitibns. ' The ·'4S7 is .'
' ' vo{tfutmyarid.fun.ded 100% th.ro#gb ernplby~e, paliicipatiort ' '.·
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For further infom1ation on these plans please refer to Note 4.D. in the basic financial statements.
Awards and Acknowledgements. The Government Finance Officers Association (GFOA)
awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of
Fountain Hills, Arizona for its comprehensive annual fmancial report (CAFR) for the fiscal year
ended Jnne 30, 2004. This was the eighth consecutive year that the government has received tins
prestigious award. In order to be awarded a Certificate of Achievement, the government
published an easily readable and efficiently organized CAFR. This report satisfied both GAAP
and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
CAFR continues to meet the Ce1tificate of Achievement Program's requirements and we are
submitting it to the GFOA to determine its eligibility for another certificate.
In addition, the govemment also received tl1e GFOA's Distinguished Budget Presentation Award
for its annual budget for the fiscal year ending June 30, 2004. In order to qualify for the
Distinguished Budget Presentation Award, the govenunent's budget document was judged to be
proficient in several categories, including as a policy document, a financial plan, an operations
guide, and a commrnncations device. This is the second consecutive year that the Town has
received the award.

The preparation of tins repmi would not have been possible without the efficient and dedicated
services of the entire staff of the Finance and Admllnstration Department. I would also like to
extend my appreciation to the Mayor and Council for their leadership and suppmi. Each member
of the departrnent has my sincere appreciation for the contributions made in the preparation of
this rep01i.
Respectfully sul:Jmittt<_d_,___

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Picken:~CEc~M
Timotl1y G.
TownManager

v

7

TOWN OF FOUNTAIN HILLS, ARIZONA
LIST OF PRINCIPAL OFFICIALS

ELECTED OFFICIALS

Mayor

Mr. Wallace J. Nichols

Vice-Mayor

Mr. Jay Schlum

Couucilmember

Mr. Mike Archambault

Councilmember

Dr. Jolm Kavanagh

Couucilmember

Mr. Edwin Kehe

Couucilmember

Mr. Keith McMahan

DEPARTMENT DIRECTORS

Town Manager

Timothy G. Pickering

Magistrate

Ted Annbruster

Finance Director

Julie A. Ghetti, CPA

Public Works Director

Tom Ward

Parks & Recreation Director

Mark Mayer

Fire Chief

Scott LaGreca,
Rural Metro Corporation

District Connnander

Captain John Kleinheinz,
Maricopa Couuty Sheriffs Office

Town Prosecutor

Iacovino & Kayler

Town Attorney

Andrew McGuire,
Gust Rosenfeld, P.L.C.

8

Citizens of the
Town of Fountain Hills

Mayor
and

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Community
Center Advisory
Commission

Board of
Adjustment

\D

Town Prosecutor

I
Municipal Court

I
Pa•·ks & Recrea!ionJ
Conununily Center

Town Council
Planning and
Zoning
Commission

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Town Attorney

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Fire Dcpa1·tment

Parl\s and
Recreation
Commission

I

Town Manager

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Law

Enforcement

J

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McDowell
Mountain
Pnservation
Commission

Pub tic Safety
Commission

Town Magistrate

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Ilinanco,
Human Resources,
Info Technology

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Planning,
Building Safety,

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Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to

Town. of Fountain Hills,
Arizona
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2004
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial

reports (CAFRE) achieve tbe highest
standards in government accounting
and fmancial reporting.

President

Executive Director

10

FINANCIAl SECTION

.

11

THIS PAGE BLANK

12

CRONSTROM, TRBOVICH &... OSUCH
CeRTIFieD

PUBLIC

ACCOUNTANTS

INDEPENDENT AUDITOR'S REPORT

The Honorable Mayor and the Town Council of the
Town of Fountain Hills, Arizona
We have audited the accompanying financial statements of the govenunental act!Vltles, each
major fund, and the aggregate remaining fund information of the Town of Fountain Hills,
Arizona (Town), as of and for the year ended June 30, 2005, which collectively comprise the
Town's basic financial statements as listed in the table of contents. These basic financial
statements are the responsibility of the Town's management. Our responsibility is to express an
opinion on these basic financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perfmm the audit to obtain
reasonable assurance about whether the basic financial statements are fi·ee of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the basic financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall
basic financial statement presentation. We believe that our audit provides a reasonable basis for
our op1ruon.
In our opinion, the basic financial statements referred to above present fairly, in all material

respects, the respective fmancial position of the govermnental activities, each major fund, and the
aggregate remaining fund information of the Town of Fountain Hills, Arizona, as of June 30,
2005, and the respective changes in financial position, thereof and the respective budgetary
comparison for the General Fund for the year then ended in confonnity with accounting
principles generally accepted in the United States of America.
The management's discussion and analysis on pages 15 - 25 is not a required pmt of the basic
financial statements but is supplementary information required by the Govermnental Accounting
Standards Board. We have applied ce1tain limited procedures, which consisted principally of
inquiries of management regarding the methods of measurement m1d presentation of the required
supplementary information. However, we did not audit the information and express no opinion
on it.

13

8706 EAST MANZANITA DRIVE. SUITE 100 • SCOTISDALE. ARIZONA 85258 • (480) 348-1102 • FAX (480) 348-1104
A

PROFESSIONAL CORPORATION

Our audit was conducted for the purpose of forming an opinion on the financial statements that
collectively comprise the Town's basic financial statements. The introductory section, combining
and individual fund financial statements and schedules and statistical section are presented for
purposes of additional analysis and are not a required part of the basic financial statements. The
combining and individual fund financial statements and schedules have been subjected to the
auditing procedures applied in the audit of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial statements taken as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures
applied in the audit of the basic fmancial statements and, accordingly, we express no opinion on
them.

Cronstrom, Trbovich & Osuch, P.C.
September 26, 2005

14

Management's Discussion and Analysis
We (the Town of Fountain Hills) (Town) are pleased to provide an overview of our financial
activities for the fiscal year ended June 30, 2005. The intended purpose of the Managemen
Discussion and Analysis (MD&A) is to provide an introduction to the basic financial statement
and notes, that provides an objective and easy to read analysis of our financial activities based on
currently known facts, decisions, and conditions, by providing an easily readable sullllllary o
operating results and reasons for changes, which will help to detennine if our financial positior
improved or deteriorated over the past year. This report addresses current operational activities,
the sources, uses, and changes in resources, adherence to budget, service levels, limitations,
significant economic factors, and the status of infrastructure and its impacts on our debt and
operation. When referring to prior years data in this analysis we will be drawing upon
infonnation from last years' audited financial report.
Financial Highlights

*

The assets of the Town of Fountain Hills, Arizona exceeded its liabilities at the close
of the most recent fiscal year by $33.5 million (net assets). Of this an1ount $10.8
million (unrestricted net assets) may be used to meet the govenunent's ongoing
obligations to citizens and creditors.

*

As of the close of the current fiscal year, the Town's govenunental funds reported
combined ending fund balances of $14.3 million, an increase of $1.5 million in
comparison with the prior year.

*

At the end of the current fiscal year, unreserved fund balance for the general fund was
$9.0 million or 81 percent of total general fund expenditures. The fund balance policy
adopted by the Council in May, 2003 requires a minimum of $4.5 million in
designated, undesignated and reserve funds; the general fund added $2.7 million to
fund balance in FY2005 and will transfer $2.5 million to the Capital improvement
Fund in 2005-06 based on a Town resolution passed in September 2005, leaving an
unappropriated fund balance of $6.6 million.

*

General fund revenues (on a budgetary basis) exceeded budgeted revenues by $1.5
million for fiscal year 2005. Additionally, budgetary basis expenditures were 86%
($1.8 million (14%) in savings) of the fmal budget in the General Fund. Note that the
final payment for Phase II of Fountain Hills Civic Center was not made prior to the
fiscal year end.

*

General fund revenues exceeded expenditures by $4.5 million, a positive variance of
$3.3 million from the original budget.

*

The Town includes two types of separate legal entities in its report- the Fountain Hills
Municipal Property Corporation and Connnunity Facility Districts. Although legally
separate, these "component units" are important because the Town is financially
accountable for them. A description of these three types of component units is
available in Note 1 on page 35. Separate financial statements are not available for
these three entities.
15

Overview of the basic financial statements

This discussion and analysis is intended to serve as an introduction to the Town of Fountain
Hills, Arizona's basic fmancial statements. The Town of Fountain Hills, Arizona's basic
financial statements are comprised of three components (as illustrated below): I) governmentwide fmancial statements, 2) fund financial statements, and 3) notes to the basic financial
statements. This report also contains required supplementary information in the form of tllis
management discussion and analysis letter.
Required Components of the
Annual Financial Report

,----•.L..'~------,~~~ ~~
Management's
Discussion
and
Analysis

······
.

············
······ ....

-··.-

~~-~ ~-~~ ~-~~;==---===~='-----:==::::::.
Basic
Required
Financial
Supplementary
Statements
Information

··············

.... ....

.....'---------_j······

--·-:..,-·

,-

~

-

~--

····· ········

- ·-·--·-.·-·c· -

·················

·············· ·····

~-·-·-·---·~·

:

~

- -_-

·······
._.--.--.

.---'-----'-~----,1

G overnrn ent-

wide
._·

Fund
I

Financial
Statements

Financial
Statements

...
··--

-·--·
.·

. ·.L_.----._ _ _ _ __j • -.
.

Notes
To the
Financial
Statements

L--.,.___--.,.--.,.__ ._-~.

-·

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.

Summary

Detail

Government-wide fmancial statements

The govemment-wide financial statements are designed to provide readers with a broad overview
of the Town's finances, in a manner similar to private-sector business.
The statement of net assets presents information on all of the Town's assets and liabilities, with
the difference between the two reported as net assets. Over time, increases or decreases in net
assets may serve as useful indicators of whether the financial position of the Town is improving
or deteriorating.
The statement of activities presents information showing how the government's net assets
changed during the most recent fiscal year. Changes in net assets are reported as soon as the
underlying event giving rise to the change occurs, regardless of the timing of related cash flows.
Thus, revenues and expenses are reported in this statement for some items that will only result in
cash flows in future fiscal pe1iods (e.g., uncollected taxes and earned but unused vacation leave).

16

The government-wide financial statements distinguish functions of the Town that are principally
supported by taxes and intergovemmental revenues (govemmental activities) from other
functions that are intended to recover all or a significant portion of their costs through user fees
and charges (business-type activities). The governmental activities of the Town include general
govemment, community development, public safety, highways and streets, and culture and
recreation. The Town does not have any business-type activities.
The govemment-wide financial statements can be found on pages 28 - 29 of this report.
Fund financial statements
Also presented are the traditional fund fmancial statements for govemmental funds. A fund is a
grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The Town, like other state and local
governments, uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements. All of the funds of the Town are included in the govemmental funds.
Governmental funds
Governmental funds are used to accom1t for essentially the same functions reported as
govermnental activities in the govermnent-widefinancial statements. However, mllike the
government-wide fmancial statements, governmental fund financial statements focus on neartelm inflows and outflows of spendable resources, as well as balances of spendable resources
available at the end of the fiscal year. Snch infonnation may be useful in evaluating a
government's near-te1m financing requirements.
Since the govermnental fund financial
statements focus on near-tenn spendable resomces, while the governmental activities on the
government-wide fmancial statements have a longer tenn focus, a reconciliation of the
differences between the two is provided following the fund fmancial statements' balance sheet
and statement of revenues, expenditures and changes in fund balances, respectively.
Notes to the basic financial statements
The notes to the basic financial statements (pages 35 - 51) provide additional infonnation that is
essential to a full understanding of the data provided in the government-wide and fund financial
statements and should be read with the financial statements.
Required supplementary information other than MD&A
Govenm1ents have an option of including the budgetary comparison statements for the general
fund and major special revenue funds as either part of the fund financial statements within the
basic fmancial statements, or as required supplementmy information after the footnotes. The
Town has chosen to present these budgetary statements as pmi of the basic financial statements.
Government-wide Financial Analysis
As previously mentioned, net assets may serve over time as useful indicators of a govennnent's
fmancial position. The following table reflects the condensed Statement of Net Assets of the
Town for June 30, 2005 compared to the prior year.
17

Town of Fountain Hills, Arizona
Condensed Statement of Net Assets
As of June 30, 2005 and 2004
Governmental Activities

Assets
Current and other assets
Capital assets
Non-depreciable
Depreciable (net)
Total assets

$

Percent
Change

2005

2004

18,958,084 $

21,638,047

(12.4)%

30,267,560
16,25!j.985
65.482.629

23,571,668
61.695.440

28.4%
(1.4)%
6.1%

16,48~,725

Liabilities
Other liabilities
Non-current liabilities
Due within one year
Due in more than one year
Total liabilities

4,113,074

8,338,841

(50.7)%

1,996,478
25.912 107
32 021 659

1,603,159
26 044 208
35.986.208

24.5%
(0.5)%
0 1.0)%

Net assets
Invested in capital assets,
net of related debt
Restricted
Umestricted
Total net assets

17,495,539
5,144,127
10.821.304
33 460.970 $

11,261,256
6,471,863
7.97!l.ll3
25,702,232

55.4%
(20.5)%
35.7%
30.2%

$

The combined net assets of the Town increased by 30.2% from $25.7 million to $33.5 million in
fiscal year 2005, a difference of $7.8 million in governmental activities. The Town does not
currently have any proprietary or enterprise funds that would otherwise be classified as businesstype activities. All Town funds are considered governmental activities.
Net Assets consist of three components. The largest portion of the Town's net assets (52%)
reflects its investment in capital assets (e.g., land, buildings, machinery and equipment), less any
related debt used to acquire those assets that is still outstanding. The Town uses these capital
assets to provide services to citizens; consequently, these assets are not available for future
spending. Although the Town's investment in its capital assets is reported net of related debt, it
should be noted that the resources needed to repay this debt must be provided from other sources,
since the capital assets themselves cannot be used to liquidate these liabilities. Tins category of
net assets increased $6,234,283 in fiscal year 2005 primarily as a result of several large
construction projects, including the construction of the new Town Hall. The Town Hall
construction was in progress at June 30, 2005 and was completed and occupied in August 2005.
The second portion of the Town's net assets (15%) represents resources that are subject to
external restrictions on how they may be used.
The remaining balance of unrestricted net assets ($10.8 million) may be used to meet the
government's ongoing obligations to citizens and creditors. This category increased $2.8 million
in fiscal year 2005 primarily due to increases in local sales tax revenues, fines and forfeitures
building permit revenues.
18

At the end of the current fiscal year, the Town of Fountain Hills, Arizona is able to report
positive balances in all three categories of net assets for the government as a whole.
Analysis of changes in net assets
Program revenues (charges for services and grants that are clearly identifiable woth an operating
function) of govennnental activities increased $1,408,804 (28%) from the previous year,
primarily due to increased building related activity and increased revenues from fmes and
forfeitnres as a resnlt of increased patrols. Total govennnental revenues increased $2.9 million.
Sales tax collections increased during the fiscal year, accounting for a significant pmiion of the
increase, along with the building pennits and fmes and forfeitnres. Sales tax revenues increased
due to more frequent sales tax audits. Program expenses increased overall 2.2% due to increased
maintenance progran1s in both the Town parks and public rights of way.
The following table compares the revenue and expenses for the current and previous fiscal year.
Town of Fountain Hills, Arizona
Changes in Net Assets
For the Fiscal Year Ended June 30, 2005 and 2004
Govennnental Activities
Percent

2005

2004

Change

Revenues

Program revenues
$

Fees, fines and charges for services

Operating grants and contributions
Capital grants and contributions
General revenues:
Property taxes
Local taxes
State shared revenues
Investment eamings
Other
Total revenues
Expenses
General govemment
Public safety
Highways and streets
Culture and recreation
Community development
Interest on long-tenn debt
Total expenses

Increase in net assets
Net assets, beginning of year (as restated)
Net assets, end of year

$

19

3,421,132
1,590,787

31.3%
6.4%
%

2,020,800
9,095,829
4,756,481
395,124
120.666
22.809.623

2,195,856
7,860,005
4,489,844
122,082
195.978
19.875.684

(8.0)%
15.7 %
5.9%
223.7%
(38.4)%
14.8%

3,766,500
5,024,686
1,281,061
2,362,661
1,460,181
1.162.796
15.057.885

3,686,452
4,918,280
1,419,509
2,068,613
1,144,964
1.499.575
14.737.393

2.2%
2.2%
(9.8)%
14.2%
27.5%
(22.5)%
2.2%

7,751,738

5,138,291

50.9%

25.709.232

20.570.941

25.0%

25.709.232

30.2%

4,490,704
1,692,712
237,307

33.460.970

$

$

Governmental activities. An analysis of governmental fund balances is presented in this
discussion and analysis, in addition to the previous comparative analysis of government-wide
revenues and expenses. Governmental activities account for 100% of the total revenues and
expenses of the Town. The following graph illustrates that the largest financing source for the
Town is the local sales tax (39%). State shared revenues account for 21% of the governmentwide revenue sources.
GOVER.Nl\fENT-,VIDE RE\i""ENUE SOURCES

Fiscal Year 2005

St~te l"e\~nue

sharing

Other- not progl'3m ~
r·
d
Investment Pa!1lings
ee ~. !UPS an
pr•
charges for senice~
0 perating g~·ants
and contributions

..

~~

apltal gnnts nne!
contributions

~~··

Financial analysis of the Town's funds
The focus of the Town's governmental funds is to provide information on near-term inflows,
outflows, and balances of resources that are available for spending. Such infom1ation is useful in
assessing the Town's fmancing requirements. In particular, unreserved fund balance may serve
as a useful measure of a government's net resources available for spending at the end of the fiscal
year. Types of Governmental funds reported by the Town include the General Fund, Special
Revenue Funds, Debt Service Funds and Capital Project Funds.
As a measure of the general fund's liquidity, it may be useful to compare both general fund
balance and total fund balance to total fund expenditures. General fund balance represents 81
percent of total general fund expenditures, while total fund balance represents 62 percent of total
governmental expenditures.
The fund balance of the Town's general fund increased by $2,711,017 during the current fiscal
year. Key factors in this change are as follows:

+

+

General Fund revenues exceeded projections by $1,477,018 (prinlarily due to
building-related activity and state sales tax collections); expenditures were
$1,778,119 less than projected due to unexpected appropriations that are
rebudgeted in fiscal year 2006.
An additional $867,000 was transfened from the General Fund to the Capital
Projects fund for the Tovvn Hall construction project.
20

As of the end of the fiscal year 2005 the Town's govemmental funds reported combined ending
fund balances of $14,331,843, an increase of $1,460,215 over the prior year. Approximately
63% of this total amount $9,082,443 constitutes general fund balance, which is available for
contribution to the designated, undesignated and reserved fund balance with the excess
transferred to the Capital Projects Fund. At fiscal year-end 2004-2005 fund balances were as
follows:

Balance

Fund
General Fund
General Obligation Debt Service Fund
Municipal Property Corporation Debt
Service Fund
Development Fees Fund
Capital Projects Fund
Nonmajor Govemmental Funds

$

Increase
(Decrease)
From 2003-04

9,082,443 $
365,779

2,711,017
96,937

278,310
2,429,225

(198,688)
688,930
(642,091)
(1,195,890)

2,176,086

The General Obligation Debt Service Fund is used to account for property taxes collected for
payment of required principal and interest due on outstanding general obligation bonds. The
increase in net assets was not significant. However, the Town recorded a refunding transaction
during the fiscal year on a general obligation improvement bond to obtain a future economic gain
by obtaining a lower interest rate. See the long-term debt section in this management discussion
and analysis for more information.
The Municipal Property Corporation Debt Service Fund accounts for revenues received to pay
the service on the Municipal Property Corporation debt. The net decrease in fund balance was
largely due the required principal and interest due on the outstanding bonds, as well as issuance
costs related to refunding the excise tax revenue bonds. See the long-tenn debt section in this
management discussion and analysis for further infonnation.
The Development Fees Fund is a restricted fund and may only be appropriated for the pa:tiicular
purpose for which they were imposed. The fund balance as of June 30, 2005 in this fund is
$2,429,225, an increase of $688,930; expenditures were made in FY 2005 for traffic signals,
open space (trailhead design) and recreation (splash park). The current year increase in the
Development Fees Fm1d was the result of increased development within the Town's limits.
All nomnajor funds of the Town are combined into one colunm on the govemmental fund
statements; the nomnajor funds are presented in the fonn of combining statements following the
notes to the basic fina:t1cial statements.
The Highway User Revenue Fund is a nonmajor fund which is required by state statnte to track
the state allocation of gasoline taxes and other state revenues shared with local govennnents and
required to be used for transportation purposes. Revenue in this fund increased $105,153 (7%) in
fiscal year 2005 due to the increase in state shared revenues. Expenditures increased $158,875
from the prior year due to increased expenses for road maintena:t1ce.
21

Budgetary highlights

The Town's annual budget is the legally adopted expenditure control document of the Town.
Budgetary comparison statements are required for the General Fund and all major special
revenue funds and may be found on page 34. This statement compares the original adopted
budget, the budget if amended throughout the fiscal year, and the actual expenditures prepared on
a budgetary basis. The Town did not amend its budget during the fiscal year.
General Fund revenues of $15,686,925, on a budgetary basis, exceeded budgeted revenues of
$14,209,907 by $1,477,018 while budgetary basis expenditures of$11,168,152 were only 86% of
budgeted expenditures (savings of $1,778,119). The excess of revenues over budgeted revenues
is primarily due to better than expected building pern1it activity and greater State Sales Tax
revenues. The expenditure savings were derived from a budgeted general and administrative
expenditure for a sales tax refund that has been referred for a tax hearing ($400,000) as well as a
decision to reduce the amount of space being utilized in Town Hall, thereby providing significant
savings on rent.
Capital asset and debt administration

The Town's capital assets for its governmental activities as of June 30, 2005 amount to
$46,524,545 (net of accumulated depreciation), an increase from 2004 of 16.1 %. For
government-wide fmancial statement presentation, all depreciable capital assets were depreciated
from acquisition date to the end of the current fiscal year. Fund financial statements record
capital asset purchases as expenditures. See Note 3.A.3. in the Notes to the Basic Financial
Statements for fuliher information regarding capital assets.
Capital assets include land, buildings and improvements, machinery and equipment, roads and
improvements, vehicles, office and computer equipment. During fiscal year 2004-2005 the
ammal depreciation expense was $983,733. The following table provides a comparison of
current and prior year capital assets.
The most significant increase in the capital assets was $6.7 million dollars of new construction
recorded as construction in progress at June 30, 2005. Construction of the new Town Hall
accounted for $5.9 million of the total construction in progress. The remaining $800,000 was
composed of various projects including street, park and downtown development projects. The
Town Hall complex was completed and occupied in August 2005.

22

Town of Fountain Hills, Arizona
Capital Assets Net
June 30, 2005 and 2004
Govenunental Activities
2005
$ 23,571,668
Land
6,695,892
Construction in progress
9,128,812
Buildings and improvements
Improvements other than buildings
5,814,099
Infrastructure
483,162
Fumiture, machinery and equipment
460,889
370.023
Vehicles
$ 46.524.545

2004
$ 23,571,668
9,559,273
5,397,938
451,888
582,890
493.736
$ 40.057.393

Percent
Change
%
%
(4.5)%
7.7%
6.9%
(20.9)%
(25.1)%
16.1%

Long-term debt
At the end of the current fiscal year, the Town had total long-tenn obligations outstanding of
$27,908,585. Of the outstanding debt, $11,215,000 is general obligation bonds backed by the
full faith and credit of the Town. An additional $4,455,000 of special assessment bonds are
backed by a guaranteed investment contract with the developer of the district property. All other
outstanding debt is secured by pledges of specific revenue sources of the Town.
During the fiscal year ended June 30, 2005, the Town refunded $7.2 million in general obligation
debt and $5.3 million dollars in Municipal Property Corporation debt to obtain lower interest
rates and an economic gain over the next 14 years of$241,166 and $297,817, respectively. See
Note 3.C. for additional information on the refunding.
The State imposes certain debt limitations on the Town of six percent (6%) and twenty percent
(20%) of the outstanding secondary net assessed valuation of the Town. The Town's available
debt margin at June 30, 2005 is $17,769,092 in the 6% capacity and $69,073,641 in the 20%
capacity. Additional information on the debt limitations and capacities may be found in the
statistical section of this report (page 84 ).
The follov.~ng schedule shows the outstanding debt of the Town (both current and long-tenn) as
of June 30, 2004 and 2005. Further detail on the Town's outstanding debt may be found in Note
3.C. on pages 47-49.

23

Town of Fountain Hills, Arizona
Outstanding Debt at June 30, 2005 and 2004
Governmental Activities
2005

2004

General Obligation Debt
$ 9,607,162 $ 11,110,000
Highway User Revenue Bonds
540,000
630,000
Special Assessment Debt
12,909
16,13 7
C01mnunity Facilities District
4,455,000
4,615,000
Debt
Municipal Property
11,005,000
Corporation Debt
13,108,935
271.230
Compensated Absences
184.579
$ 27,908.585 $ 27 647.367

Percent
Change
(13.5)%
(14.3)%
(20.0)%
(3.5)%
19.1%
(31.9)%
0.9%

The Town cmTently maintains a rating on its general obligation debt of Aa3 from Moody's
Investor Services.
Economic factors and next year's budgets and rates
The Town of Fountain Hills, Arizona, as well as all other Arizona cities, remains dependent on
state shared revenues (21 %) and local sales taxes for resomces (39%). These revenue somces are
sensitive to economic downtmns and legislative appropriations. The Town's economic activity
has remained fairly stable dming the national recession and is expected to continue to grow at a
moderate pace over the next year, fueled primarily by the residential construction industry. The
Town of Fountain Hills, Arizona has a nmnber of high-end properties that are currently being
developed for custom homes.
The budget for fiscal year 2005-2006 includes resomces targeted towards economic development
in the downtown area (Avenue of the Fountains). An economic development coordinator has
been hired and capital funds for improvements to the area are included to focus on developing
the area to promote economic development.

24

Financial contact
This financial report is designed to provide a general overview of the Town's finances for all of
those with an interest in goven1111ent's finances and to demonstrate accountability for the use of
public funds. Questions about any of the information provided in this report, or requests for
additional financial information should be addressed to:
Town of Fountain Hills
Accounting Department
P.O. Box 17958
Fountain Hills, AZ 85269
Or visit our website at:
http://www.fh.az.gov

25

TillS PAGE BLANK

26

Basic Financial Statements

27

TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF NET ASSETS
JUNE 30, 2005

Governmental Activities

Assets
Cash and equivalents
Cash with paying agent
Receivables, net
Accounts receivable
Taxes receivable
Intergovernmental receivable
Special assessments receivable

$

15,562,895
1,461,392
284,888
74,084
1,299,065
4,430
5,041
39,495
226,794

Inventories
Prepaid items
Deferred charges
Capital assets
Non-depreciable
Depreciable (net)

30,267,560
16.256.985

Total assets

65.482.629

Liabilities
Accounts payable
Accrued wages and benefits
Interest payable
Due to developers
Retainage due
Matured debt principal payable
Noncurrent liabilities
Due within one year
Due in more than one year

1,996,478
25.912.107

Total liabilities

32.021.659

1,910,769
57,650
474,832
100,702
264,121
1,305,000

Net assets
Invested in capital assets, net of related debt
Restricted for
Public safety
Highways and streets
Debt service
Capital outlay
Other
Unrestricted

17,495,539
193,110
425,076
916,391
2,429,225
1,180,325
10.821.304

$

Total net assets

33.460.97Q

The notes to the finaocial statements are an integral part of this statement.

28

TOWN OF FOUNTAIN HILLS, ARIZONA
STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED JUNE 30, 2005

Net (Expenses)
Revenue and
Changes in N ct
Assets

Program Revenues
Fees, Fines and
Charges for
Setvices

Expenses

Functions/Programs
Governmental activities
General government
Public safety
Highways and streets
Culture and recreation
Community development
Interest on long-term debt
Totals

$

$

3,766,500
5,024,686
1,281,061
2,362,661
1,460,181
1 162,196

$

057,~85

$

15

4,431,154

Operating
Grants and
Contributions

$

Capital Grants

and
Contriblltions

$

237,307

$

237 307

Totals

$

108,006
1,584,706

58,038

1 512
4 490 704

$

1692712

(8,637 162)

General revenues
Taxes
Sales taxes
Property taxes
Franchise taxes
State revenue sharing- unrestricted
State sales tax revenue sharing- unrestricted
Auto lieu tax revenue sharing - unrestricted
Investment camings
Other
Total general revenues

8,879,798
2,020,800
216,031
2,016,081
1,874,577
865,823
395,124
120,666
16 388 900
7,751,738

Change in net assets

25 709 232

Net assets, beginning of year
Net assets, end of year

The notes to the financial statements are an integral part of this statement

29

901,961
(4,916,680)
361,683
(2,362,661)
(1,460,181)
(1,161284)

$

33 460 970

TOWN OF FOUNTAIN HILLS, ARIZONA
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2005

General

General
Obligation
Debt Service

Municipal
Development
Property
Fees
Co!Eoration

Norunajor

Capital
Projects

Govemmental
Funds

Totals

Assets
$ 8,571,996 $

Cash and equivalents
Cash with paying agent
Accounts receivable
Taxes receivable

283,007
11,929
919,513

Intergovernmental receivable
Special assessments receivable
Due from other funds

6,645
5,041
35.623
$ 9.833.754 $

Inventories
Prepald items
Total assets

375,206 $
532,221

272,770
824,995

$ 2,762,259 $ 1,051,573

$ 2,529,091

$

104,176
1,881
18,907
268,744
4,430

43,248
110,808

3.872
950.675

$ 1.097.765 $ 2.762.259 $ Ll62.381

$ 2.93LI01

$

$

$

15,562,895
1,461,392
284,888
74,084
1,299,065
4,430
6,645
5,041
39 495
18.737 935

LiabHities and Fund Balances
Liabilities
Accmmts payable
Accrued wages and benefits
Interest payable
Due to other funds
Deferred revenue
Due to developers
Retainage due
Matured debt principal payable
Total liabilities
Fund balances
Reserved for inventories
Reserved for prepaid items
Unreserved
Unreserved, reported in nonmajor
Special revenue funds
Debt service funds
Total fund balances
Total liabilities and fund balances

$

477,223 $
40,577

$
112,787

233,511

37,109

751.311

435.000
584.896

$

333,034 $

898,260

199,455

202,252
17,073
162,590
6,645
15,753
100,702

264,121

5,041
35,623
9,041,779

365,779

620.000
819.455

278,310

9.082.443

365 779

278.310

$ 9.833.754 $

950.675

$ 1.097.765

333.034

1.162.381

3,872

5,041
39,495
12,115,093

1,794,639
377.575
2.176.086

1,794,639
377 575
14.331 843

2,429,225

2.429.275

$ 2.762.259 $ LI62.381

The notes to the fmancial statements are an intergral part of this statement

30

250.000
755.015

1,910,769
57,650
474,832
6,645
286,373
100,702
264,121
1.302 QQQ
4.406.092

$ 2.93Ll01

$

18.737 9J5

TOWN OF FOUNTAIN HILLS, ARIZONA
RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET ASSETS
GOVERNMENTAL FUNDS
JUNE 30, 2005

Fund balances -total governmental funds

$

14,331,843

Amounts reported for governmental activities in the statement of net assets are different because:
Property taxes and special assessments not collected within 60 days subsequent to fiscal year-end are
deferred in the governmental funds.

78,346

Capital assets used in governmental activities are not financial resources and therefore are not reported in
the governmental funds.
Governmental capital assets
Less accumulated depreciation
Capital assets used in governmental activities

52,533,827
(6.009.282)
46.524.545

Other long-term assets are not available to pay for current-period expenditures and are not susceptible to
accrual.

208,027

Long-term liabilities, including bonds payable, are not due and payable in the current period and
therefore are not reported in the governmental funds.
·
General obligation bonds
Revenue bonds
Special assessment debt with government conunitrnent
Community facilities district bonds payable
Deferred amount on the refunding
Deferred amount on the bond premium
Deferred issuance costs
Compensated absences
Net assets of governmental activities

(11,215,000)
(12,975,000)
(12,909)
(4,455,000)
1,067,838
(133,935)
226,794
(184.579)

$

The notes to the financial statements are an integral pa:t1 of this statement.

31

33.460.970

TOWN OF FOUNTAIN HILLS, ARlZONA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2005

General
Obligation
General

Debt Service

Municipal
Property
Co!:£oration

Development

Nonmajor
Governmental
Funds

Capital
Projects

Fees

Totals

Revenues
Taxes

$

Sales taxes

Property taxes
Franchise taxes

7,513,675

-

$

-

216,031
4,756,481
222,451
2,230,046
193,065
222,327

Intergovernmental
Fines and forfeitures
Licenses and permits

Charges for services
Rents and royalties

184,871

Total Revenues

-

-

-

-

29,055
29.055

44,514

1.498.846

-

$

-

-

-

-

$

-

-

-

15.686 925

-

-

37,426

147.91~

Other

$

-

-

Special assessments
Investment earnings

-

$
1,461,420

1,692,712
27,113
26,359

-

-

-

-

-

1,512
63,874
31.679
3.804.016

35,384

-

-

1.659.295

$

-

237,307

1,614,781

1,366,123
594,644

272.691

8,879,798
2,056,064
216,031
6,686,500
249,564
2,230,046
1,834,205
222,327
1,512
395,124
179.657
22.950.828

Expenditures

Current
General government

-

1,739,642
1,460,181

Total Expenditures
Excess (deficiency) of revenues over
expenditures

11.168.152

620,000
456,892
80.500
1.157.392

4.518,71l

624 710

(1.128.337)

Other financing sources (uses)
Transfers in
Transfers out
Proceeds oflong-tem1 debt issuance
Proceeds of refunding debt issuance
Payment to refunded debt escrow
agent
Total other financing sources (uses)

(1.807.756)

Net change in fund balances

2,7Jl,OJ7

Fund balances, beginning of year

6.371.426

-

-

2,524,654

-

(1,807,756)

-

$

-

435,000
379,076
60 QQQ
874.076

-

Issuance costs

-

-

-

Interest on long-term debt

-

-

-

Culture and recreation
Community development
Debt Service
Principal retirement

Fund balances, end of year

-

3,223,806
4,744,523

Public safety
Highways and streets

-

-

7,225,000

5,330,000

-

f7. 752 BJ,)
(527 833)

(6.925.005)
929.649

9.082.443

96,937
268

$

(198,688)

~42

365.779 $

-

5,958,166

-

243,342
374,298

809,253

-

-

-

-

-

617.640

1.041.655

-

-

2.429.225

(6.586.468)

1.328.164

2,160,481

120,500
(2,645,154)

4,805,635
(4,805,635)
3,783,896
12,555,000

(2.524.654)

(14.677.838)
1.661.058

(642,091)

(1,195,890)

1,460,215

642.091

3.371.976

12.871.628

-

The notes to the financial statements are an intergral part of this statement.

32

(200.843)

-

-

$

1,308,228
1,164,561
229.990
23.151.671

-

5.944.377

688,930

278.310 $

253,228
326,343
2.475.252

-

(352.725)

1.740.295

2,250
89.490
6.859.159

3,783,896

-

9,547,409
4,754,523
1,682,563
3,004,216
1,460,181

-

-

(352,725)

476.998

365,437
10,000
1,439,221
81,023

-

$

2.176.086

$

14.331.843

TOWN OF FOUNTAJN HILLS, ARIZONA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2005

Net change in fund balances- total governmental funds

$

1,460,215

Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities the
cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.

7,450,885
(983.733)
6.467.152

Expenditures for capital assets
Less current year depreciation
Excess capital expenditures over depreciation

Some revenues reported in the statement of activities do not provide current financial resources and
therefore are not reported as revenues in governmental funds.

(1 05,941)
(35,264)

Court fines
Property taxes
The issuance of long-tem1 debt (e.g. bonds, leases) provides current financial resources to governmental
funds, while the repayment of the principal oflong-tenn debt consumes the current financial resources of
governmental funds. Neither transaction, however, has any effect on net assets. The issuance of longterm debt increases long-term liabilities on the statement of net assets and the repayment of principal on
long-term debt reduces long-tenn debt on the statement of net assets. Also, governmental funds report
the effect of issuance costs, premiums, discounts, and similar items when the debt is first issued, whereas
these items are deferred and amortized over the tem1 of the long-tenn debt in the statement of activities.
Principal payments on long-term debt
Issuance costs
Proceeds of debt issuance
Proceeds of refunding debt issuance
Payment to refunded debt escrow agent
Amortization of issuance costs
Amortization of deferred amount on the premium and the refunding

1,308,228
229,990
(3, 783,896)
(12,555,000)
14,677,838
(3, 196)
4,961

Some expenses reported in the statement of activities do not require the use of current fmancial resources
and therefore are not reported as expenditures in the governmental funds.

86.651

Net decrease in compensated absences
Change in net assets of governmental activities

$==7.._,7._.5_..L..
73;g8

The notes to the financial statements are an integral part of this statement.

33

TOWN OF FOUNTAIN HILLS, ARIZONA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND
BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2005

Original and Final
Budget
Revenues
Taxes
Intergovernmental
Fines and forfeitures
Licenses and permits
Charges for services
Rents and royalties
Investment earnings
Other
Total Revenues

$

Expenditures
Current
General govennnent
Mayor and Tm\TI Council
Magistrate Court
General and Administrative
Information Technology
Contingency
Total general government
Public safety
Building Safety
Law Enforcement
Fire Department
Total public safety
Culture and recreation
Parks and Recreation
Dese11 Vista Park
Golden Eagle Park
Fountain Park
Four Peaks/Palisades Court
Civic Center
Total culture and recreation
Community development
Community Development
Public Works
Total community development
Total Expenditures

$

Other financing sources (uses)
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning of year

$

7,729,706
4,756,481
222,451
2,230,046
193,065
222,327
184,871
147.978
15.686.925

$

55,925
328,489
2,673,035
166,357

329,939
233,781
(11,799)
821,656
(3,735)
(19,973)
84,871
42.278
L477.018

3.223.806

494,930
1,796,670
2A8L7:i!
4.773351

480,561
1,792,782
2.47Ll80
4.744.523

14,369
3,888
10.571
28.828

534,745
53, !50
313,835
320,2!0
79,900
L813337

503,581
39,964
333,295
279,948
82,060
500.794
1.739,642

31,164
13,186
(19,460)
40,262
(2,160)
10.703
73.695

398,480
],]93.235
L59L715
12,946.271

395,874
L064307
L460. 181
I L!68J52

2,606
128.928
13L534
1.778.119

L263.62G

4.518.773

3.255.137

4,085
12,361
1,477,742
(126)
50.000
L544.062

(940,752)
(940.752)

(L807,756)
(L807.756)

322,884

2,711,017

2,388,133

5375322

637L426

996,027

5.698.283

$

9.082,443

The notes to the financial statements are an integral pa>t of this statement

34

Variance with Final
Budget

60,010
340,850
4,150,777
166,231
50.000
4.767.868

5!1A2Z

Excess (deficiency} of revenues over expenditures

Fund balances, end of year

7,399,767
4,522,700
234,250
1,408,390
196,800
242,300
100,000
I 05.700
14.209,907

Actual

(867.004)
(867.004)

$

3384,]60

TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005

NOTE I -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying basic financial statements of the Town of Fountain Hills, Arizona
(Town) have been prepared in conformity with U.S. generally accepted accounting
principles applicable to governmental units adopted by the Governmental Accounting
Standards Board (GASB). A sununary of the Town's more significant accounting
policies follows.
A. Reporting entity
The Town is a municipal govennnent that is governed by a separately elected governing
body. It is legally separate from and fiscally independent of other state and local
govennnents. The accompanying financial statements present the Town and its
component units, entities for which the Town is considered to be financially accountable.
Blended component units, although legally separate entities, are, in substance, part of the
Town's operations.
Included within the reporting entity:
The Eagle Mountain Community Facilities District and the Cottonwoods Improvement
District. As special purpose districts and separate political subdivisions under the
Arizona Constitution, the Districts can levy taxes and issue bonds independently of the
Town. Property owners in tl1e designated areas are assessed for District taxes and thus for
the costs of operating the Districts. The Town Council serves as the Board of Directors;
however, the Town has no liability for the Districts' debt. For financial reporting
purposes, transactions of the Districts are combined togetl1er and included as if they were
part of the Town's operations. A separately issued aruma! financial repoti was issued for
the Eagle Mountain Community Facilities District and is available at Town Hall.

Town of Fountain Hills, Arizona Municipal Property Corporation. The Town of
Fountain Hills, Arizona Municipal Property Corporation's (MPC) board of directors
consists of three members which are appointed by the Fountain Hills Town Council. The
MPC, which is a nonprofit corporation incorporated under the laws of the State of
Arizona, was fonned for the sole purpose of assisting the Town in obtaining fmancing for
various projects of the Town. TI1e Town has a "moral obligation" for the repayment of
fue MPC's bonds. For financial reporting purposes, transactions of the MPC are
combined together and included as if they were pati of the Town's operations.

35

TOWN OF FOUNTAIN IITLLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005

B.

Government-wide and fund financial statements

The government-wide fmancial statements (i.e., the statement of net assets and the
statement of activities) report information on all of the nonfiduciary activities of the
primary government and its component units. The effect of interfund activity has been
removed from these statements. Governmental activities are normally supported by taxes
and intergovernmental revenues.
The statement of activities demonstrates the degree to which the direct expenses of a
given function or segment are offset by program revenues. Direct expenses are those that
are clearly identifiable with a specific function or segment. Program revenues include 1)
charges to customers or applicants who purchase, use, or directly benefit from goods,
services, or privileges provided by a given function or segment and 2) grants and
contributions that are restricted to meeting the operational or capital requirements of a
particular function or segment. Taxes and other items not properly included among
program revenues are reported instead as general revenues.
Separate financial statements are provided for governmental funds. Major individual
governmental funds are reported as separate colunms in the fund basic fmancial
statements.
C. Measurement focus, basis of accounting, and financial statement presentation

The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting. Revenues are recorded when
earned and expenses are recorded when a liability is incurred, regardless of the timing of
related cash flows. Property taxes are recognized as revenues in the year for which they
are levied. Grants and similar items are recognized as revenue as soon as all eligibility
requirements imposed by the provider have been met.
Governmental fund fmancial statements are reported using the current financial
resources measurement focus and the modified accrual basis of accounting. Revenues
are recognized as soon as they are both measurable and available. Revenues are
considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the cunent period. For this purpose, the Town
considers revenues to be available if they are collected within 60 days of the end of the
current fiscal period. Expenditures generally are recorded when a liability is incurred, as
under accrual accounting, except expenditures related to compensated absences and
claims and judgments, which are recorded only when payment is due. However, since
debt service resources are provided during the current year for payment of long-term
principal and interest due early in the following year, the expenditures and related
liabilities have been recognized in the Debt Service Fund.
36

TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005

Property taxes, intergovernmental grants and aid, and interest associated with the current
fiscal period are all considered to be susceptible to accrual and so have been recognized
as revenues of the current fiscal period. All other revenue items are considered to be
measurable and available only when cash is received by the government.
The Town reports the following major governmental funds:
The General Fund is the Town's primary operating fund. It accounts for all
fmancial resources of the Town, except those required to be accounted for in
another fund.
The General Obligation Debt Service Fund accounts for the Town's property tax
revenues received to pay the debt service of the Town's general obligation bonds.
The Municipal Property Corporation Debt (MPC) Service Fund accounts for the
revenues received to pay the debt service on MPC revenue bonds.
The Development Fees Fund accounts for development fees collected from
developers restricted for projects approved by the Town Council.
The Capital Projects Fund accounts for the Capital improvements to various
projects of the Town.

As a general rule the effect of interfund activity has been eliminated from the
government-wide fmancial statements. However, services provided and used are not
eliminated in the process of consolidation.
Amounts reported as progran1 revenues include 1) fees, fines and charges for services,
2) operating grants and contributions, and 3) capital grants and contributions. Internally
dedicated resources are reported as general revenues rather than as program revenues.
Likewise, general revenues include all taxes.
When both restricted and unrestricted resources are available for use, for governmental
activities, it is the Town's policy to use restricted resources first, then unrestricted
resources as they are needed.

37

TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005

D. Assets, liabilities, and net assets or equity
1.

Deposits and investments

The Town's cash and cash equivalents are considered to be cash on hand, demand
deposits, cash and investments held by the State Treasurer, and highly liquid investments
with maturities of three months or less from the date of acquisition.
Cash and investments are pooled except for funds required to be held by fiscal agents or
restricted under provisions of bond indentures. Interest earned from investments
purchased with such pooled monies is allocated to each of the funds based on the average
daily cash balances. State statutes authorize the Town to invest in obligations of the U.S.
Treasury and U.S. agencies, certificates of deposit in eligible depositories, repurchase
agreements, obligations of the State of Arizona or any of its counties or incorporated
cities, towns or duly organized school districts, improvement districts in this state and the
State Treasurer's Local Government Investment Pool. Investments are stated at fair value.

2.

Receivables

All trade and property taxes receivables are shown net of an allowance for uncollectibles.
Maricopa County levies real property taxes on or before the third Monday in August that
become due and payable in two equal installments. The first installment is due on the
first day of October and becomes delinquent after the first business day of November.
The second installment is due on the first day of March of the next year and becomes
delinquent after the first business day of May. However, a lien against real and personal
property assessed attaches on the first day of J anmuy preceding assessment and levy
thereof.

3.

Short-term interfund receivables/payables

During the course of operations, individual funds within the Town's pooled cash accounts
may borrow money from the other funds within the pool on a short-tem1 basis. These
receivables and payables are classified as "due from other funds" or "due to other funds"
on the balance sheet of the fund financial statements and are eliminated in the preparation
of the government-wide fmancial statements.

4.

Inventories and prepaid items

Inventories consist of expendable supplies held for consumption. Inventories are valued
at cost using the first-in/first-out (FIFO) method. Inventories of governmental funds are
recorded as expenditures when consumed rather than when purchased.
38

TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005

Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items in both government-wide and fund financial statements.

5.

Capital assets

Capital assets, which include property, plant, and equipment, are reported in the
governmental activities column in the government-wide financial statements. Capital
assets are defined by the Town as assets with an initial, individual cost of more than
$10,000 and an estimated useful life in excess of one year.
Property, plant and equipment purchased or acquired is carried at historical cost or
estimated historical cost. Contributed assets are recorded at fair market value as of the
date received. Additions, improvements and other capital outlays that significantly
extend the useful life of an asset are capitalized. Other costs incuned for repairs and
maintenance are expensed as incUITed.
General infrastructure assets acquired prior to July I, 2002 are not reported in the basic
financial statements. Those assets will be transitioned in over the next two fiscal years in
accordance with GASB Statement No. 34.
Depreciation on all assets is provided on a straight-line basis over the following estimated
useful lives:
Buildings and improvements
Improvements other than buildings
h1frastructure
Fumiture, machinery and equipment
Vehicles
6.

50 years
20 years
50 years
5 years
5 years

Compensated absences

The liability for compensated absences reported in the government-wide statements
consists of unpaid, accumulated leave balances. The liability has been calculated using
the vesting method, in which leave amounts for both employees who cunently are eligible
to receive tennination payments and other employees who are expected to become
eligible in the future to receive such payments upon telTllination are included.

39

TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005

7.

Long-term obligations

In the government-wide financial statements, long-term debt and other long-tem1
obligations are reported as liabilities in the applicable governmental activities. Bond
premiums and discounts, as well as issuance costs, are deferred and amortized over the
life of the bonds using the straight line method. Bonds payable are reported net of the
applicable bond premiun1 or discount. Bond issuance costs are reported as deferred
charges and amortized over the tenn of the related debt. The Town did not have any
premiun1s, discounts or issuance costs related to any outstanding bonds.
In the fund financial statements, governmental fund types recognize bond premiums and

discounts, as well as bond issuance costs, during the current period. The face amount of
debt issued is reported as other financing sources. Premiums received on debt issuances
are reported as other financing sources while discounts on debt issuances are reported as
other financing uses. Issuance costs, whether or not withheld from the actual debt
proceeds received, are reported as debt service expenditures.
8.

Net assets

In the government-wide fmancial statements, net assets are reported in three categories:

net assets invested in capital assets, net of related debt; restricted net assets; and
unrestricted net assets. Net assets invested in capital assets, net of related debt is
separately reported because the Town reports all Town assets which make up a significant
portion of total net assets. Resuicted net assets account for the portion of net assets
restricted by parties outside the Town. Unrestricted net assets are the remaining net
assets not included in the previous two categories.
9.

Fund equity

In the fund financial statements, governmental funds report reservations of fund balance
for amounts that are not available for appropriation or are legally restricted by outside
parties for use for a specific purpose. Designations of fund balance represent tentative
management plans that are subject to change.

40

TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005

NOTE 2- STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

A. Budgetary information
The Town Council follows these procedures in establishing the budgetary data reflected
in the financial statements:
1.

In accordance with Arizona Revised Statutes, the Town Manager submits a
proposed budget for the fiscal year commencing the following July 1 to the Town

Council. The operating budget includes proposed expenditures and the means of
financing them for the upcoming year.
2.

Public hearings are conducted to obtain taxpayer comment.

3.

State law requires that, p1ior to April 1, the Economic Estimates commission
provides the Town with a final expenditnre limit for the coming fiscal year. To
ensure compliance with the expenditure limitation, a unifmm expenditure report
must be filed with the State each year. Tllis report, issued under a separate cover,
reconciles total Town expenditures from the basic financial statements to total
expenditures for reporting in accordance with the State's uniform expenditure
reporting system (A.R.S. §41-1279.07).

4.

By Arizona Constitution, expenditures may not legally exceed the expenditure
limitation described below of all fund types as a whole. For management
purposes, the Town adopts a budget by depmiment for the General Fund and in
total by fund for other funds. The Town Manager, subject to Town Council
approval, may at any time transfer any unencumbered appropriation balance or
portion thereof between depatiments. The adopted budget cmmot be mnended in
any way without Town Council approval.

5.

Legal budgets m·e adopted for the General, Special Revenue, Debt Service atld
Capital Projects Funds on essentially the smne modified accrual basis of
accounting used to record actual revenues atld expenditures, with the exception of
the Criminal Enhm1cement Justice Fund and Capital Projects Fund for which a
budget was not prepared.

The Town is subject to the State of Arizona's Spending Limitation Law for Towns atld
Cities. This law does not permit the Town to spend more than budgeted revenues plus
the carryover unrestricted cash balance from the prior fiscal year. The limitation is
applied to the total of the combined funds. The Town complied with this law during the
yem·.

41

TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005

No supplementary budgetary appropriations were necessary during the year.

B. Excess of expenditures over appropriations
Expenditures exceeded appropriations in the following funds:
Amount of
Overexpenditure
General Fund:
Infonnation Technology
Golden Eagle Park
Four Peaks/Palisades Court
Capital Projects Fund

$

126
19,460
2,160
347,989

NOTE 3- DETAILED NOTES ON ALL FUNDS
A. Assets

1.

Deposits and investments

Deposits and investments at June 30, 2005 consist of the following:
Deposits
Cashon hand
Cashin bank
Cash on deposit with paying agent
Investments
Money Market Mutual Fund
U.S. Government Securities
State Treasurer's Investment Pool
Cash on deposit with Trustee
Total cash and investments

$

1,400
374,889
1,461,392
748,218
11,979
13,650,821
775.588
17,024,287

Cash on deposit with paying agent
Total cash and equivalents

(1,461.392)
$ 15,562,895

Deposits - The Town's deposits at June 30, 2005, were entirely covered by federal
depository insurance or by collateral held by the Town's custodial bank in the Town's
name. The Town's deposits are not subject to custodial credit risk.

42

TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005

Investments - The State Board of Deposit provides oversight for the State Treasurer's
pools, and the Local Government Investment Pool Advisory Committee provides
consultation and advice to the Treasurer. The fair value of a participant's position in the
pool approximates the value of that participant's pool shares. The shares are not
identified with specific investments and are not subject to custodial credit risk. In
addition, the money market mutual fund is not subject to custodial credit risk. All other
investments of the Town are uninsured and unregistered with the securities held by the
counterparty's trust department or agent in the Town's name.

Interest rate risk. In accordance with its investment policy, the government manages its
exposure to declines in fair value by limiting the average maturity of its investments to
less than one year.
Custodial credit risk. The U.S. Government Securities and the State Treasurer's
Investment Pool are not subject to the custodial credit risk. The money market mutual
funds are invested in Fmmie Mae Securities and have a AAA Standard and Poor's rating.
The mnount deposited with the trustee represents the July 1 principal and interest
payments due on outstm1ding bonds. The investment does not pose any custodial credit
risk as the funds are invested for less thm1 one day to make the required principal and
interest payments.
Concentrations of credit risk. The Town's investment policy does not allow the Town to
invest in securities that are not insured, unregistered or backed by U.S. government
securities.

43

TOWN OF FOUNTAIN IDLLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005

2.

Receivables

Court fines are recorded net of uncollectible amounts in the government-wide statements
and are recorded as a receivable and a deferred revenue in the fund financial statements
because the court fmes did not meet the revenue recognition criteria under the modified
accrual basis of accounting. The total receivable at Jm1e 30, 2005 was $260,034, which
was reduced by $52,007 for uncollectible amounts resulting in a net receivable balance at
June 30, 2005 of $208,027.
Governmental funds report deferred revenue in connection with receivables for revenues
that are not considered to be available to liquidate liabilities of the current period.
Governmental funds also defer revenue recognition in connection with resources that
have been received, but not yet earned. At the end of the current fiscal year, the various
components of deferred revenue reported in the govermnental funds were as follows:
Unavailable
Delinquent property taxes receivable
(General Fund)
Deferred court revenue
(General Fund)
Delinquent property taxes receivable
(General Obligation Debt Service Fund)
Delinquent property taxes receivable
(Nonmajor Governmental Funds)
Special assessments receivable
(Nomnajor Govemmental Funds)

$

208,027
37,109
10,948
4.805
$

44

25,484

286.373

TOWN OF FOUNTAIN HILLS, ARIZONA

NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005

3.

Capital assets

Capital asset activity for the year ended June 30, 2005 was as follows:
Begi1ming
Balances

Increases

Decreases

Adjustment

Ending
Balances

Governmental Activities:
Capital assets not being depreciated:
Land
$23,571,668
Construction in progress
Total capital assets,
not being depreciated
Capital assets being depreciated:
Buildings and improvements
Improvements other than
buildings
Infrastructure
Furniture, machinery and
equipment
Vehicles
Total capital assets being
depreciated
Less accumulated depreciation for:
Buildings and improvements
Improvements other than
buildings
Infrastructure
Fumiture, machine1y and
equipment
Vehicles

23.571,668

$
6.385.425

310.467

$23,571,668
6.695.892

6.385,425

310.467

30.267.560

(227,379)

10,098,933

(83,088)

8,390,993
521,819

$

$

10,326,312
7,554,540
481,064

836,453
123,843

1,518,647
1.630.711

105.164

21.511.274

1.065.460

1,518,647
1.735.875

(31 0.467)

22.266 267

(767,039)

(203,082)

(970,121)

(2, 156,602)
(29,176)

(420,292)
(9,481)

(2,576,894)
(38,657)

(935,757)
(1.136.975)

(122,001)
(228.877)

(1,057,758)
(1.365 852)

Total accumulated depreciation

(5.025.549)

(983. 733)

(6.009.282)

Total capital assets,
being depreciated, net

16.485.725

81.727

Governmental activities
capital assets, net

$40.057,393

$ 6.467.152

(310.467)

$

$

16,256.985

$ 46.524.545

An adjustment was recorded to reclassifY assets as construction in progress that were presented
as buildings and improvements and infrastructure in the prior year.
45

TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005

Depreciation expense was charged to functions/programs as follows:
Governmental activities:
General government
Public safety
Highways and streets
Culture and recreation
Total depreciation expense-governmental activities

$

86,712
274,088
55,233
567.700

$

983.733

B. lnterfund receivables/payables and transfers
As of June 30, 2005 interfund receivable and payables were as follows:
Due From
Norunajor
Governmental
Funds

Due To

$==~6...,64~5

General Fund

The above interfund receivables and payables are due to short-term borrowings between
the General Fund and the Nonruajor Eagle Mountain Debt Service Fund.
Interfund transfers for the year ended June 30, 2005 consisted of the following:
Transfers In

Transfers Out
General Fund
Development Fees Fund
Nonmajor Govermnental Funds

Capital
Projects
Fund

MPCDebt
Service Fund

$

$ 1,807,756
352,725

Nonmajor
Governmental
Funds

$2.524.654

$2,160,481

46

120.500

$1,807,756
352,725
2.645.154

1?0.500

$4.805,635

$

2,524,654
$

Total

TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30,2005

The General Fund transfer of $1,807,756 and the Development Fees transfer of $352,725
to the Capital Projects Fund were recorded to subsidize the construction of the new Town
Hall facility that was included in construction in progress at June 30, 2005. The transfers
of $2,524,654 and $120,500 from the Nonmajor Governmental Funds to the MPC Debt
Service Fund and the Nonmajor Govemmental Funds were recorded to make the debt
service payments during the year on outstanding bonded indebtedness.

C. Long-term obligations
The Town has long-tenn bonds and special assessments payable issued to provide funds
for the acquisition and construction of major capital facilities. TI1e Town has also issued
debt to refund earlier obligations with higher interest rates. The debt is repaid by various
debt service funds. Compensated absences are paid by the applicable fund where each
employee is regularly paid, primarily the General Fund.
Special Assessment districts are created only by petition of the Town Council by property
owners within the Disn·ict areas. The Cottonwoods Improvement District was created so
the Town could fund improvements. Each of the 54 homeowners within the District has
been assessed taxes by the Town for repayment of the bond. In case of default, the Town
has the responsibility to cover delinquencies of special assessment bonds with other
sources until foreclosure proceeds are received.
Community facilities districts (CFDs) are created only by petition to the Town Council by
property owners within the District areas. As board of directors for the Distlict, the Town
Council has adopted a formal policy that CFD debt will be pem1itted only when the ratio
of full cash value of the District property (prior to improvements being installed), when
compared to proposed District debt, is a minimum of 3 to 1 prior to issuance of debt and
5 to 1 or higher after construction of improvements. These ratios are velified by an
appraisal paid for by the District and administered by the Town. In addition, cumulative
debt of all CFDs cam1ot exceed 5 percent of the Town's secondary assessed valuation.

47

TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005

Changes in long-tem1 obligations for the year ended June 30, 2005 are as follows:
Jul~

Increases

I, 2004

Governmental Activities:
Bonds and special assessments
General obligation bonds
$ 11,740,000
Municipal Property
Corporation debt
11,005,000
Special assessment debt with
government commitment
16,137
Cmmnunity Facilities
District bonds payable
4 615.000

$ 7,225,000
8,975,000

27,376,137

16,200,000

Defe1red amount on:
Refunding

Premium
Total bonds and special
assessment debt
Other liabilities
Compensated absences

Decreases

(1,067,838)
138.896

Due within
One Year

June 30, 2005

$ (7,750,000) $ 11,215,000

$

1,160,000

(7,005,000)

12,975,000

665,000

(3,228)

12,909

3,228

(160,000)

4.455.000

170.000

(14,918,228)

28,657,909

1,998,228

(4.961)

(1,067,838)
133.935

(76,274)
9 921

27,376,137

15,271,058

(14,923,189)

27,724,006

1,931,875

271 230

201.881

(288.532)

184.579

64 603

$ 27.647.367

$ 15 472.939

$(15.211.721) $ 27.908.585

Debt service requirements on long-term debt at June 30, 2005 are as follows:
Governmental Activities
Princi£al

Interest

$

1,998,228 $
1,983,227
2,153,227
2,238,227
2,445,000
10,885,000
6,525,000
430 000

1,325,881
1,194,566
1,106,297
1,014,551
916,634
3,124,455
1,020,995
28.288

$

28,657,909

$

9 731 667

Year Ending June 30
2006
2007
2008
2009
2010
2011-15
2016-20
2021

48

$

1.996 478

TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005

During the year ended Jnne 30, 2005, the Town issued $7,225,000 in general obligation
bonds and $5,330,000 in excise tax revenue bonds, with an average interest rate of 3.69
and 3.87 percent, respectively, to advance refund $7,225,000 of outstanding general
obligation bonds and $6,385,000 of MPC bonds with an average interest rate 5.06 and
5.15 percent. The net proceeds of $7,165,000 and $5,249,500 (after payment of $60,000
and $80,500 in underwriting fees, insurance, and other issuance costs) were used to
purchase U.S. govennnent securities. Those securities were deposited in an irrevocable
trust with an escrow agent to provide for all future debt service payments of the refunded
general obligation bonds and MPC bonds. As a result, the refunded general obligation
bonds and the MPC bonds are considered to be defeased, and the liability for those bonds
has been removed from the statement of net assets.
The Town advance refunded the general obligation bonds and MPC bonds to reduce its
total debt service payments over the next 14 years by almost $492,826 and $1,604,155
and obtained an economic gain (i.e., difference between the present values of the debt
service payments on the old and new debt) of$241,166 and $297,817, respectively.

NOTE 4 - OTHER INFORMATION

A. Risk management
The Town of Fountain Hills, Arizona, is exposed to various risks ofloss related to torts;
theft of, damage to and destruction of assets; enors and omissions; and natural disasters.
The Town's insurance protection is provided by the Arizona Municipal Risk Retention
Pool, of which the Town is a participating member. The limit for basic coverage is for
$2,000,000 per occurrence on a claims made basis. Excess coverage is for an additional
$13,000,000 per occurrence on a follow form, claims made basis. No significant
reduction in insurance coverage occurred during the year and no settlements exceeded
insurance coverage during any of the past three fiscal years.
The Arizona Municipal Risk Retention Pool is structured such that member premiums are
based on an actuarial review that will provide adequate reserves to allow the Pool to meet
its expected financial obligations. The Pool has the authority to assess its members
additional premiums should reserves and rumual premiums be insufficient to meet the
Pool's obligations.
The Town is also insured by Arizona Municipal Workers Compensation Fund for
potential worker related accidents.

49

TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005

B.

Contingent liabilities

Accumulated sick leave - Sick leave benefits provide for ordinary sick pay and are
cumulative but do not vest with employees and; therefore, are not accrued. Unvested
accumulated sick leave of Town employees at June 30,2005, totaled $273,194.
Lawsuits - The Town is a defendant in various lawsuits. In the opinion of the Town's
attorney, the outcome of these lawsuits is not presently determinable.
C. Subsequent events

Subsequent to June 30, 2005, the Town issued $4,455,000 of General Obligation
Refunding Bonds to refund $4,455,000 of Eagle Mountain Community Facility District
General Obligation bonds. The Town refunded the bonds to reduce its debt service
requirements over the next sixteen years by $996,894 and obtained an economic gain of
$790,798. Annual principal and semi-annual interest payments are due through the fiscal
year ended June 30,2021 at a 3.25 to 4.125% interest rate.
In addition, in September 2005, the Town Council approved a resolution to fund a Capital

Improvements Fund. The resolution calls for a transfer of General Fund fund balance
each year for any excess revenues collected over budget and unexpended appropriations
necessary to meet fund balance requirements or reappropriation. The accumulation of
funds was approved for purchases of land and buildings, improvements to Town-owned
prope1iies, grant matching requirements associated with capital improvements, public
safety projects and equipment purchases, economic development projects, and such other
capital projects as determined by the Town Council. Expenditures from the Capital
Improvements Fund must be appropriated as part of the Town's annual budget or by
motion and affirmative vote at a time the expenditures are awarded. The resolution does
not affect the fiscal year ended June 30, 2005; however, funds expected to be transfeued
with passage of the resolution in the fiscal year 2005-06 are $2,570,848.
D. Retirement plans
Defined Contribution Pension Plan

All full-time employees of the Town pa1iicipate in a defmed contribution pension plan
administered by the ICMA Retirement Corporation as a 401(a) plan. The payroll for the
Town employees covered by this plan the year ended June 30, 2005 was $2,833,127. The
Town's total payroll was $3,147,673.

50

TOWN OF FOUNTAIN HILLS, ARIZONA
NOTES TO THE BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2005

A defined contribution pension plan provides benefits in return for services rendered,
provides an individual account for each participant, and specifies how contributions to the
individual's account are to be detennined instead of specifYing the amount of benefit the
individual is to receive. Under a defined contribution pension plan, the benefits a
participant will receive depend solely on the amount contributed to the participant's
account, the returns earned on investment of those contributions, and forfeitures of other
participant's benefits that may be allocated to such participant's account. All non-peace
officer full-time Town employees must participate in the pension plan from the date they
are hired. Contributions made by an employee vest immediately and contributions made
by the Town vest after three years of service.
An employee that leaves the employment of the Town is entitled to his or her
contributions and the vested portion of the Town's contributions, plus interest eamed.
Each employee must contribute 11% of his or her gross earnings. The Town must
contribute 11% of covered earnings. During fiscal year 2004-05, the Town's required and
actual contributions amounted to $311,644. The employees' contributions totaled
$311,644.
No pension provisiOn changes occUlTed during the year that affected the required
contributions to be made by the Town or its employees.
The ICMA Retirement Corporation held no securities of the Town or other related parties
during the fiscal year 2004-05 or as of the close of the fiscal year.
Public Safety Personnel Retirement System (PSPRS)
At the end of the fiscal year June 30, 2004, the Marshall's department was disbanded and
during the fiscal year ended June 30, 2005 the retirement funds were transfen·ed to the
Arizona Department of Public Safety. The Town is no longer responsible for
administering the plan or for future post retirement benefits.

51

THIS PAGE BLANK

52

Combining and Individual Fund
Statements and Schedules

53

THIS PAGE BLANK

54

NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS

Highway User Revenue Fund (HURF) - accounts for the Town's share of motor fuel tax revenues
and lottery proceeds.
Excise Tax Fund- accounts for the pmiion of Town sales tax reserved by the Town Council for
special projects including Town beautification and economic development.
Grants Fund - accounts for the activities of various grants and contributions received by the
Town.
Local Court Enhancement Fund- accounts for the activities of grants from the Arizona Supreme
Court.
DEBT SERVICE FUNDS

HURF Debt Service - accounts for operating transfers received from the HURF special revenue
fund to pay tl1e debt service of the Street and Highway User Revenue Bonds.
Eagle Mountain Debt Service Fund - accounts for the property tax revenues received to pay the
debt service of the Eagle Mountain Commwlity Facilities District component unit.
Cottonwoods Special Assessment - accounts for all special assessments received to pay the debt
service of the Cottonwoods Special Assessment District.

55

TOWN OF FOUNTAIN HILLS, ARIZONA
COMBINING BALANCE SHEET
NONMAJORGOVERNMENTALFUNDS
JUNE 30, 2005

S ecial Revenue

HURF

Excise Tax

Grants

Debt Service

Local Court
Enhancement

Total

HURFDebt
Service

Eagle
Cottonwoods
Mountain
Special
Debt Service Assessment

$

$ J775,588

Assets

Cash and equivalents
Cash with paying agent
Receivables, net
Accounts receivable
Taxes receivable
Intergovernmental receivable
Special assessments receivable
Prepaid items
Total assets

$

423,371

$ 1,013,442

$

115,297

$

191,229

$ 1,743,339

1,881

1,881

3,409
104,176

$

17,924
149,230

119,514

268,744

$ ],]32.956

$

115.297

$

3.872
$ 2.017.836

64,729
1,624

$

1,575

$

6,755

983
4,430

$

3.872
576.473

193.110

$

107 585

$

793.512

$

12 168

Liabilities and Fund Balances

Liabilities
Accounts payable
Accrued wages and benefits
Interest payable
Due to other funds
Deferred revenue
Matured debt principal payable
Due to developers
Total liabilities

$

$

$

202,252
17,073

$

219.325

104 176

148,414
6,645
10,948
160,000
100.702
426.709

193.110
193.110

3,872
1.794.639
1 798.5!1

3 409
3 409

366.803
366.803

193.110

$ 2.017.836

90,000

$

151.397

66.353

],575

3,872
421.204
425.076

1.066.603
1.066.603

113.722
113.722

576.473

$ L132.956

$

115291

56

$

$

$
14,176

Fund balances
Reserved for prepaid items
Unreserved
Total fund balances

Total liabilities and fund balances

135,948
15,449

$

107.585

$

793.512

4,805

$

4.805

7.363
7.363
12.168

Debt Service

Total
$

Total
Nonmajor
Governmental
Funds

785,752 $ 2,529,091
104,176
104,176
1,881
18,907
268,744
4,430
4,430
3.872
913.265 $ 2.93LI01
18,907

$

$

$

162,590
6,645
15,753
250,000
100.70£
535.690

202,252
17,073
162,590
6,645
15,753
250,000
100.702
755.015

377.575
377.575

3,872
2.172.214
2.176.086

$

913.265 $ 2.93Ll01

57

TOWN OF FOUNTAlN HILLS, ARIZONA
COMBINJNG STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND
BALANCES -NONNUUORGOVERNMENTALFUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2005

S ecial Revenue

Debt Service

HURFDebt

Local Court

HURF

Excise Tax

Grants

Enhancement

Service

Total

Eagle
Mountain
Debt Service

Cottonwoods

$

$

Special
Assessment

Revenues
Taxes
Sales taxes
Property taxes
Intergovernmental
Fines and forfeitures
Charges for services
Special assessments
Investment earnings

$ 1,366,123

$

$ 1,366,123

$

$

$

594,644
108,006

1,584,706

27,113
26,359
10,493
31.679
1.653.237

Other
Total revenues

2,179

45,579
1,411.702

108.006

29.292

252,615

69,595
10,000

5,067

1,692,712
27,113
26,359
58,251
31.679
3.202.237

5,616

1,512
7

600.260

1.519

Expenditures
Current

General govemment
Public safety
Highways and streets
Culture and recreation
Debt Service
Principal retirement
Interest on long-tem1 debt
Total expenditures

1,439,221
81,023

1.439.221

252.615

160.618

214.016

Ll59.087

(120.500)
(120.500)

(2.5?4,654)
(2.524.654)

93,516

(1,365,567)

(52,612)

331.560

2.432.170

166.334

425.076

$ 1.066.603

327,277
10,000
1,439,221
81,023

38,160

5.067

1.857.521

90,000
28.753
118.753

24.225

1.344.716

(118.753)

160,000
296.827
494.987

3,228
763
3.991

105273

(2.472)

Excess (deficiency) of revenues over
expenditures

(52.612)

Other financing sources (uses)

Transfers in

120,500

Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning of year
Fund balances, end of year

$

$

113.722

58

$

(2.645.154)
(2.645.154)

120.500

24,225

(1,300,438)

1,747

105,273

(2,472)

168.885

3.098.949

1.662

261.530

9.835

193.110

$ 1.798.511

$

3.409

$

366.803

$

7.363

Debt Service

Total

$

$
594,644

1,512

5,623
601.779

$

Total
Nonmajor
Governmental
Funds

1,366,!23
594,644
1,692,712
27,113
26,359
1,512
63,874
31.679
3.804.016

38,160

365,437
10,000
1,439,221
81,023

253,228
326.343
617.731

253,228
326,343
2.475.252

(15.952)

1.328.764

120,500
120.500

120,500
(2,645.154)
(2.524,654)

104,548

(1,195,890)

273.02Z

3.371.976

377.575

$ 2.176.086

59

TOWN OF FOUNTAIN HILLS, ARIZONA
GENERAL OBLIGATION DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2005

Variance with Final

Original and Final
Budoet

Buds;et

Actual

Revenues

Taxes
Property taxes
Investment earnings
Total Revenues

$

I,450,000
LOOO
!.45LOOO

Expenditures
Debt Service
Principal retirement

$

805,000
592,500

Interest onlong~tenn debt
Issuance costs
Total Expenditures
Excess (deficiency) of revenues over expenditures

$

!.397.500

370,000
2I3,424
(6Q QOO)
523.424

53.500

624,7ZQ

571 210

7,225,000
(7.752.833)
(527.833)

Excess (deficiency) of revenues over expenditures
Fund balances, beginning of year

$

7,225,000
(7,752.133)
(527 83,)

53,500

96,937

43,437

I05.4I5

268.842

I63 427

I58.9I5

60

II,420
3g 42g
47 846

435,000
379,076
60.000
874 076

Other financing sources (uses)
Proceeds of refunding debt issuance
Payment to refunded debt escrow agent
Total other financing sources (uses)

Fund balances, end of year

I,46I,420
37.42g
!.498.846

$

365 779

$

206 861

TOWN OF FOUNTAIN HILLS, ARlZONA
MUNJCJPAL PROPERTY CORPORATION FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2005

Original and Final

Budo-et
Revenues
Investment earnings

Actual

$

$

Total Revenues
Expenditures
Debt Service
Principal retirement
Interest on long-term debt
Issuance costs

570,000
750,500

Total Expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses)
Transfers in
Proceeds of refunding debt issuance
Payment to refunded debt escrow agent
Total other financing sources (uses)

29.055
29.055

Variance with Final
Budget

$

1.320 500

620,000
456,892
80.500
],]57.392

(50,000)
293,608
(80.500)
163.108

(1.310.500)

(],]28.337)

192.163

1,320,500

2,524,654
5,330,000
(6.925.005)
929.649

1,204,154
5,330,000
(6.925.005)
(390.851)

(198,688)

(198,688)

1.320.200

Net change in fund balances
Fund balances, beginning of year

476.998

$

Fund balances, end of year

61

29.055
29.055

$

278.310

476.998
$

278.310

TOWN OF FOUNTAlN HILLS, ARIZONA
DEVELOPMENT FEES FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2005

Variance -with Final

Original and Final
Budget
Revenues
Charges for services
Investment earnings
Total Revenues

$

1,176,891
22.750
Ll99.641

Actual
$

1,614,781
44.514
1.659.295

Bud2_et
$

437,890
21.764
459.654

Expenditures
Current
Highways and streets
Culture and recreation
Total Expenditures

365,000
485.100
850.100

243,342
374.298
617.640

121,658
110.802
232 460

Excess (deficiency) of revenues over expenditures

349.541

1.041.655

692.114

Other financing sources (uses)
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning of year

(431.023)
(431.023)

(352.725)
(352.725)

78.298
78.298

(81,482)

688,930

770,412

1.740.295

(136.351)

1.876.646

$

Fund balances, end of year

62

1.795.164

$

2.429.225

$

634.061

TOWN OF FOUNTAIN HILLS, ARJZONA
CAPITAL PROJECTS FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2005

Original and Final

Variance with Final

Buds!:et

Budo-et

Actual

Revenues
Intergovernmental

$

Charges for services
Investment earnings
Total Revenues
Expenditures
Current
General government
Culture and recreation
Debt Service
Interest on long~tem1 debt

474,600
317500

$

Total Expenditures
Excess (deficiency) of revenues over expenditures
Other fmancing sources (uses)
Transfers in
Proceeds of long-tem1 debt issuance
Total other financing sources (uses)
Net change in Fund balances
Fund balances, beginning of year

$

Fund balances, end of year

63

$

792.100

35.384
272.69!

(237,293)
(317,500)
35.384
(519.409)

5,739,200
771,970

5,958,166
809,253

(218,966)
(37,283)

6.511.170

2,250
89.490
6.859.159

(2,250)
(89.490)
(347.989)

(5.719.070)

(6.586.468)

(867.398)

1,662,700
3.500.000
5.!62.700

2,160,481
3.783.896
5.944.377

497,781
283.896
781.677

Issuance costs

237,307

(556,370)

(642,091)

(85,72!)

556.370

642.091

85,721

$

$

TOWN OF FOUNTAJN HlLLS, ARIZONA
HURFFUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2005

Original and Final

Variance with Final

Budo-et

Budcret

Actual

Revenues

Intergovernmental

$

Charges for services
Investment earnings
Other
Total Revenues

I,504,600
I9,000
I,500
I QQQ
1.526 IOO

$

I,584,706
26,359
I0,493
~I 2Z2
1.653.237

$

80,I06
7,359
8,993
30.679
127.137

Expenditures
Current
1.580.96I
1.58Q 26I

Highways and streets
Total Expenditures

Excess (deficiency) of revenues over expenditures
Other financing sources (uses)

Transfers out

1.439.22I

1.422 221

I41.740
I41.740

(54 861)

2I4.0I6

268.877

mo ooo)

Total other financing sources (uses)

(]20 QOO)

(120.500)
(I20 2QQ)

Net change in fund balances

(I74,86I)

93,5I6

268,377

,31.560

331.560

Fund balances, beginning of year

$

Fund balances, end of year

64

(174 861) $

42:~

QZ6

(500)
(500)

$

599.937

TOWN OF FOUJ\'TAlN HILLS, ARIZONA
EXCISE TAX FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2005

Original and Final
Budget
Revenues
Taxes
Sales taxes

$

Investment earnings
Total Revenues

1,338,605
7.500
1.346.105

Actual

$

1,366,123
45.579
1.411.702

Variance with Final
Budget

$

27,518
38.079
65.597

Expenditures
Current
General government
Total Expenditures

558.274

252.615

558.274

252.615

305.659
305.659

Excess (deficiency) of revenues over eh.'penditures

787.831

1.159.087

371.256

Other financing sources (uses)
Transfers out
Total other financing sources (uses)

(945 000)
(945.000)

£2574.654)
(2.524.654)

(1.579.654)
(1.579.654)

Net change in fund balances

(157,169)

(1,365,567)

(I ,208,398)

Fund balances, beginning of year

2.753 liJ

$

Fund balances, end of year

65

?.596.014

$

2.432.170

(321.013)

1.066.603

(1.529.4 I I)

$

TOWN OF FOUNTAJN HILLS, ARJZONA
GRANTS FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2005

Original and Final
Budo-et
Revenues
Intergovernmental
Total Revenues

$

Expenditures
Current
General government
Public safety
Culture and recreation
Total Expenditures
Excess (deficiency) of revenues over expenditures

1.492.500
1.492.500

Actual
$

108 00§
108 006

Variance with Final
Bude:et

$

(1384.494)
(1384.494)

1,375,000
75,000
230.110
L680.77Q

69,595
10,000
81 023
1§0 618

1,305,405
65,000
149.747
1.520.152

(188.2JO)

(52.612)

135.658

Other financing sources (uses)

Transfers in
Net change in fund balances
Fund balances, begilming of year
Fund balances, end of year

(7.500)
(7.500)

7.5QQ
7.500

Total other fmancing sources (uses)

$

66

(180,770)

(52,612)

128,158

180.710

166 334

(14.436)

$

112722

$

113.722

TOWN OF FOUNTAIN HILLS, ARlZONA
LOCAL COURT ENHANCEMENT FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED ruNE 30, 2005

Variance with Final
Budoet

Original and Final

Budget

Actual

Revenues
Fines and forfeitures
Investment earnings
Total Revenues

$

68,500
1.500
70.000

$

27,I 13
2 179
29 292

$

(41,387)
679
(40.708)

Expenditures
Current
General govemment
Total Expenditures

IOO.OQO
100.000

s 06Z
5.067

94.933
94.933

Excess (deficiency) of revenues over expenditures

(30,000)

24,225

54,225

I68.885

168.885

Fund balances, beginning of year
Fund balances, end of year

$

67

(30.QOO)

$

19> I I 0

$

223.110

TOWN OF FOUNTAIN HILLS, ARlZONA
HURF DEBT SERV1CE FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JU!..'E 30, 2005

Variance with Final
Budget

Original and Final

Budo-et

Actual

Expenditures
Debt Service

Principal retirement

$

Interest on long-term debt

Total Expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses)
Transfers in
Total other financing sources (uses)

90,000
34.000
124.QOQ

$

90,000
28 753

$

liS 153

5.247
5.247

(124,000)

(118 753)

5.247

124.QQO
124.000

12Q,500
120 50Q

(3.500)

(3.500)

Net change in fund balances

1,747

1,747

Fund balances, beginning of year

I 662

1.662

Fund balances, end of year

$

68

$

3lQ2

$

3.409

TOWN OF FOUNTAJN HILLS, ARJZONA
EAGLE MOUNTAJN DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2005

Variance with Final

Original and Final

Budget

Budget

Actual

Revenues
Taxes

Property taxes

$

Investment earnings
Total Revenues

513,000

$

513.000

Expenditures
Current
General government
Debt Service

Principal retirement

I 60,000
353.000
513.000

Interest on long-term debt
Total Expenditures
Excess (deficiency) of revenues over expenditures

546.236

Fund balances, beginning of year
Fund balances, end of year

$

69

546.236

$

594,644
5.616
600.260

$

81,644
5.616
87.260

38,160

(38,160)

160,000
296.827
494.987

56.173
18.013

105,273

105,273

261.530

(284.706)

366.803

$

(179.433)

TOWN OF FOUNTAIN HILLS, ARIZONA
COTTONWOODS SPECIAL ASSESSMENT FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2005

Original and Final

Bude:et
Revenues
Special assessments
Investment earnings

$

Total Revenues

4,500

Variance with Final
Budget

Actual

$

4.500

1,512
7
1.519

$

(2,988)

7
(2.981)

Expenditures
Debt Service
Principal retirement

3,228
L272
4.500

Interest on longMterm debt
Total Expenditures

3,228

763

Excess (deficiency) of revenues over expenditures
Fund balances, beginning of year
Fund balances, end of year

$

70

509
509

3.991

$

(2,472)

(2,472)

9.835

9.835

7363

$

7363

STATISTICAL SECTION

71

TOWN OF FOUNTAIN lllLLS, ARIZONA
GOVERNMENT-WIDE EXPENSES BY FUNCTION
LAST TEN FISCAL YEARS
(UNAUDITED)

Fiscal
Year
2003

General
Government

$

3,479,333

Highways
and
Streets

Public
Safety

$

5,494,708

$

1,310,683

Interest on

Culture and
Recreation

$

2,363,897

Community
Development

$

1,235,985

Long-term
Debt

$

Totals

1,576,842

$ 15,461,448

2004

3,686,452

4,918,280

1,419,509

2,068,613

1,144,964

1,499,575

14,737,393

2005

3,766,500

5,024,686

1,281,061

2,362,661

1,460,181

1,162,796

15,057,885

Note: 2002-03 was the Town's first yeaT to prepare govenunent-wide financial statements.

72

TOWN OF FOUNTAIN HILLS, ARIZONA
GOVERNMENT-WIDE REVENUES
LAST TEN FISCAL YEARS
(UNAUDITED)

Program Revenues

Fiscal
Year
2003

$

General Revenues

Fees, Fines
and Charges

Operating
Grants and

Capital
Grants and

for Services

Contributions

ContTibutions

2,782,385

$

1,697,900

2004

3,421,132

1,590,787

2005

4,490,704

1,692,712

$

Investment
Eamings

Revenue
Taxes

Sharing

$ 7,100,184

$ 4,740,758

10,055,861

4,489,844

11,116,629

4,756,481

237,307

Note: 2002-03 was the Town's first year to prepare government-wide financial statements.

73

$

1,976,809

$

Other

Totals

79,706

$ 18,377,742

122,082

195,978

19,875,684

395,124

120,666

22,809,623

TOWN OF FOUNTAIN lllLLS, ARIZONA
GENERAL GOVERNMENT EXPENDITURES BY FUNCTION (1)
LAST TEN FISCAL YEARS
(UNAUDITED)

Public
Safety

Highways
and
Streets

Culture
and
Recreation

Fiscal
Year

General
Govemment

1996

$ 1,617,365

1997

1,757,431

1,499,538

1,627,952

625,928

864,022

1998

1,964,427

2,074,441

2,020,450

1,471,559

1999

2,631,245

2,205,600

1,984,879

2000

2,528,953

3,059,020

2001

3,646,500

2002

$ 1,241,694 $ 1,687,403

$

Community
Development

Debt

-

Total

$ 7,667,025

5,343,433

1,132,399

12,850,703

947,251

1,352,936

799,941

10,631,005

2,334,901

955,451

557,374

795,088

11,464,538

2,468,498

3,359,509

1,276,951

1,787,469

924,014

15,404,414

3,354,037

2,212,432

3,866,245

1,175,649

5,261,585

1,851,602

21,368,050

3,859,633

5,084,532

1,877,790

3,069,695

1,064,913

14,770,507

2,903,116

32,630,186

2003

3,318,574

5,174,492

1,198,080

1,815,416

1,215,387

79,427

2,970,070

15,771,446

2004

3,614,458

4,616,161

1,402,502

1,597,150

1,144,964

101,951

2,922,803

15,399,989

2005

9,547,409

4,754,523

1,682,563

3,004,216

1,460,181

2,702,779

23,151,671

821,796

$

578,099

-

$

Service

524,553

1,196,115

$

Capital
Outlay*

(I) Includes all govemmental fund types.
*h1 the fiscal year 2003 GASB Statement No. 34 was implemented; subsequently, capital outlay was chaJ"ged directly to depruiments rather
tl1ru1 having its own line item.

74

TOWN OF FOUNTAIN HILLS, ARIZONA
GENERAL GOVERNMENT REVENUES BY SOURCE (1)
LAST TEN FISCAL YEARS
(UNAUDITED)

Fiscal
Year

Taxes

Governmental

Fines
and
Forfeitures

1996

$ 2,024,461

$ 2,762,906

$ 211,289

$ 1,653,561

1997

3,101,787

3,988,424

209,485

1,770,347

419,976

14,170

1,500

1998

3,326,207

4,364,859

208,930

1,961,687

795,700

13,591

100,000

1999

3,861,337

4,929,062

259,484

2,472,215

624,744

18,140

2000

4,876,466

4,771,792

293,970

2,569,472

454,366

27,208

2001

6,088,047

5,281,156

310,359

2,177,614

431,316

2002

7,595,748

5,895,676

265,605

1,351,209

2003

7,114,486

6,311,458

195,091

2004

9,997,706

6,080,631

2005

11,151,893

6,686,500

Inter-

Licenses

Charges
for

and
Permits

Services

Income

Assessments

(Loss)

$

$

-

Total

19,477

9,989,799

582,757

17,487

11,371,218

14,524

620,639

25,657

12,825,802

10,598

9,241

743,259

21,055

13,777,427

35,781

400

7,958

10,957

13,280,249

1,067,814

107,613

12,760

4,520

726,441

1,771,091

18,798,477

1,308,747

810,412

188,745

127,200

4,302

1,976,809

148,143

18,185,393

361,339

1,600,934

1,038,170

242,704

3,612

122,082

261,561

19,708,739

249,564

2,230,046

1,834,205

222,327

1,512

395,124

179,657

22,950,828

$

-

163,457

Other

464,633

75

14,462

Special

Donations

$ 7,053,477

( 1) h1cludes all governmental fund types,

$

Net
Investment

Contributions
and

18,800

$

204,541

Rents
and
Royalties

(1,063,339)

$

TOWN OF FOUNTAIN IDLLS, ARIZONA
GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE
LAST TEN FISCAL YEARS
(UNAUDITED)

Fiscal
Year

1996

Sales
Taxes

$

1,610,116

Property
Taxes

$

336,000

Franchise
Taxes

$

78,345

Total

$

2,024,461

1997

2,664,923

350,024

86,840

3,101,787

1998

2,920,084

302,375

103,748

3,326,207

1999

3,394,152

348,778

118,407

3,861,337

2000

4,087,514

657,026

131,926

4,876,466

2001

4,923,174

1,038,891

125,982

6,088,047

2002

4,355,701

3,109,353

130,694

7,595,748

2003

5,051,872

1,910,072

152,542

7,114,486

2004

7,733,643

2,137,701

126,362

9,997,706

2005

8,879,798

2,056,064

216,031

11,151,893

76

TOWN OF FOUNTAlN HILLS, ARIZONA
TOWN TRANSACTION PRIVILEGE (SALES) TAX COLLECTIONS
BY INDUSTRY CLASSIFICATION
FISCAL YEAR BASIS
(UNAUDITED)

2005

Percent
of
Total

Excise Tax

Business Activity Category

Collections

$

1,837,318

21.0%

Transportation/Utilities/Communication

1,124,676

12.9

Wholesale/Retail

3,536,024

40.4

Restaurants/Bars

524,368

6.0

Fire, Insurance and Real Estate

626,813

7.2

Services

185,868

2.1

Advertising

101,590

1.1

All Other Services Not Specified

809.340

____2_J_

Construction

$

77

8.745.997

=

100.0%

TOWN OF FOUNTAIN HILLS, ARIZONA
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(UNAUDITED)

(1)
Total
Fiscal Year
1996

Current
Tax
Collections

TaxLe~

$

323,517

$

Percent of
Current Taxes
Collected

323,511

100.0%

Delinquent
Tax

Total Tax
Collections

Collections

6

$

$

Ratio of Total
Tax Collections
to Total Tax Le~

323,517

100.0%

Outstanding
Delinquent

Ratio of
Delinquent Taxes
to TaxLe~

Taxes

$

-

%

1997

312,638

312,489

100.0

143

312,632

100.0

1998

268,917

261,704

97.3

7,213

268,917

100.0

1999

248,607

235,953

94.9

12,653

248,606

100.0

2000

444,138

432,965

97.5

11,171

444,136

100.0

2

2001

699,006

676,682

96.8

22,321

699,003

100.0

3

2002

1,335,787

1,282,844

96.0

51,532

1,334,376

99.9

1,411

0.11

2003

1,378,862

1,329,929

96.5

46,186

1,376,115

99.8

2,747

0.20

2004

1,545,051

1,496,005

96.8

1,496,005

96.8

49,046

3.17

2005

1,449,287

1,408,289

97.2

1,408,289

97.2

40,998

2.83

-

(I) The amount levied and collected is net of resolutions and does not include component units.
Note 1: Amounts collected are on a cash basis rather than modified accrual basis as in the financial statements.
Note 2: Unsecured personal property taxes are not included in this schedule.
Source: The Maricopa County Treasurer's Office.

78

6

TOWN OF FOUNTAIN HILLS, ARIZONA
ASSESSED AND ESTIMATED ACTUAL VALUE OF PROPERTY (1)
LAST TEN FISCAL YEARS
(UNAUDITED)

PRIMARY

Total
Assessed
Value

Tax
Year
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005

$

105,912,474
118,888,547
141,077,170
170,258,614
198,224,776
232,442,986
260,635,914
299,743,562
340,673,759
373,144,037

Total
Full Cash
Value

Exempt
Amount

$ 5,262,641
6,602,978
7,355,989
9,255,978
8,578,615
12,213,849
13,484,185
16,942,705
21,460,295
22,709,568

$

884,979,322
1,002,546,459
1,208,968, 752
1,467,193,748
1,713,029,238
1,997,525,319
2,240, 702,344
2,565,522,177
2,899,977,948
3,191,431,714

Net
Assessed
Value

Estimated
Actual Value

$ 1,061,975,186
1,203,055,751
1,450,762,502
1,760,632,498
2,055,635,086
2,397,030,383
2,688,842,813
3,078,626,612
3,479,973,538
3,829,718,057

$

94,188,635
100,649,833
112,285,569
133,721,181
190,102,361
220,229,137
247,151,729
282,800,857
319,213,464
350,434,469

Ratio of Total
Assessed Value
to Total
Estimated
Actual Value
9.97%
9.88
9.72
9.67
9.64
9.70
9.69
9.74
9.79
9.74

SECONDARY

Total
Assessed
Value

Tax
Year
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
(1)

$

109,463,361
123,097,961
155,729,430
185,540,741
221,922,165
253,269,562
287,891,481
344,047,844
377,590,037
402,974,523

Total
Full Cash
Value

Exempt
Amount

$ 5,519,310
6,764,555
8,785,700
10,575,923
9,894,702
14,555,025
17,288,615
20,662,614
28,191,703
27,906,320

$

906,495,406
1,034,892,731
1,317,946,863
1,583,072,952
1,889,016,352
2, 154,928,885
2,418,235,666
2,842,849,050
3,162,854,959
3,411,460,877

Net
Assessed
Value

Estimated
Actual Value

$ 1,087,794,487
1,241,871,277
1,581,536,236
1,899,687,542
2,266,819,622
2,585,914,662
2,901 ,882, 799
3,411,418,860
3,795,425,951
4,093,753,052

$

100,161,566
103,944,051
116,333,406
146,943,730
212,415,476
238,714,537
270,602,866
323,385,230
349,398,334
375,068,203

Ratio of Total
Assessed Value
to Total
Estimated
Actual Value
10.06%
9.91
9.85
9.77
9.79
9.79
9.92
10.09
9.95
9.84

Arizona uses two types of property values for taxing purposes. Primary values are used to calculate primary property
taxes which are collected to fund the maintenance and operation of school districts, community college districts,
counties, cites, and state government. Secondary values are used to pay off secondary property taxes which are
collected for such things as debt service (bonds), budget overrides and special districts. Source: Arizona Department
of Revenue.

79

TOWN OF FOUNTAIN HILLS, ARIZONA
PRIMARY AND SECONDARY TAXABLE PROPERTY ASSESSED VALUATION
LAST TEN FISCAL YEARS
(UNAUDITED)

Couuty

Assessed
Valuation
State of
Arizona

95,155,307
101,137,745

$ 13,493,736,826
14,119,434,946

$ 22,109,868,588
23,022,330,962

I 00,649,833
103,944,051

101,573,954
104,881,097

13,975,668,204
14,343,156,861

22,811,158,500
23,333,678,475

112,285,569
116,333,406

113,072,537
117,144,929

15,006,270,531
15,723,498,194

21,001,064,273
22,333,861,362

133,721,181
146,943,730

134,650,036
147,884,952

17,463,875,533
18,676,830,848

21,670,300,013
22,533,348,150

190,102,361
212,415,476

191,579,669
214,037,354

19,362,298,255
20,877,715,546

29,944,135,240
31,837,391,782

220,229,137
23 8, 714,53 7

223,185,771
242,086,985

21,355,326,477
22,913,134,480

32,518,431,391
34,468,574,240

247,151,729
270,602,866

251,514,211
277,768,188

22,955,864,882
24,457,04 7,282

34,868,596,227
36,825,660,973

282,800,857
323,385,230

288,969,887
331,458,411

25,447,850,971
27,477,987,528

34,868,596,227
36,825,660,973

319,213,464
349,398,334

326,230,578
358,634,532

28,070,870,413
30,066,986,670

41,886,818,760
44,480,893,202

350,434,469
375,068,203

360,276,219
386,548,349

31,000,571,899
33,188,609,340

46,046,096,197
48,93 8,261' 134

Assessed
Valuation
Fountain Hills
School District

Assessed
Valuation
Town of
Fountain Hills

Tax
Year

1996

p

1997

p

1998

p

1999

p

2000

p

s
s
s
s
s

2001

p

2002

p

s
s

2003

p

2004

p

2005

p

s
s
s

$

94,188,635
100,161,566

$

Assessed
Valuation
Maricopa

P = Primary assessed valuation
S = Secondary assessed valnation
Sonrce: Maricopa Connty and Arizona Tax Research Foundation.

80

TOWN OF FOUNTAIN HILLS, ARIZONA
PROPERTY TAX RATES FOR ALL
DIRECT AND OVERLAPPING GOVERNMENTS
LAST TEN FISCAL YEARS
(UNAUDITED)

East Valley
In st.
of Tech
District

Fire
District
Royalties

Sanitary
District

Road
District

Flood
Control
District

Library
District

Volunteer
Fire
District

Arizona

Commnnity
College

County

Fountain
Hills
School
District

1996

1.0476

1.7929

7.1501

0.1616

0.9826

1.8983

0.3186

0.3425

0.0421

1997

1.1346

1.7929

7.2466

0.1216

1.0407

1.6619

0.1806

0.3425

1998

1.1125

1.8084

7.2134

0.1320

0.9482

1.9394

0.0370

1.1285

1.8186

5.8569

0.1217

0.8933

1.8315

-

1.1194

1.2793

6.2903

0.1186

1.0239

1.4557

1.1832

6.3373

0.1120

0.9739

2002

1.6016

1.2908

6.1186

2003

1.0785

1.2808

2004

1.0372

2005

1.0315

Fiscal
Year

1999

Arizona

-

2000
2001

-

Project

Town of
Fountain
Hills

Total

0.0109

0.1400

0.3036

14.1908

0.0421

O.QI05

0.1400

0.2330

13.9470

0.3270

0.0421

0.0103

0.1400

0.1699

13.8802

0.2858

0.0421

0.0100

0.1400

0.2578

12.3862

2.8027

0.2534

0.0421

0.0096

0.1300

0.3331

13.4024

2.0515

0.2319

0.0421

0.0091

0.1300

0.5605

13.0872

0.1117

1.2948

0.2119

0.0421

0.0076

0.1300

0.5137

I 1.3228

5.7025

0.0976

1.1527

0.2119

0.0521

0.0070

0.1200

0.4762

I 0.1793

1.2108

5.5710

0.1032

1.1307

0.2119

0.0521

0.0069

0.1200

0.4150

9.8588

1.3177

5.2146

0.0573

1.0547

0.2119

0.0521

0.0069

0.1200

0.3510

9.4177

81

Central

TOWN OF FOUNTAIN HILLS, ARIZONA
PRIMARY AND SECONDARY PROPERTY TAX RATESALL DIRECT AND OVERLAPPING GOVERNMENTS
LAST TEN FISCAL YEARS
(UNAUDITED)

Rate
Town

Fiscal
Year

1996
1997
1998
1999
2000
2001
2002

p

2004

2005

Rate
County

Rate
State

Rate
Total

0.32

4.96
2.67

1.69
0.15

0.30

4.98
2.17

1.64
0.16

6.62
2.63

0.23

4.89
2.32

1.68
0.13

6.57
2.68

0.17

3.89
1.96

1.19
0.11

5.08
2.24

0.26

3.91
2.38

1.16
0.12

5.07
2.76

s

0.56

4.09
2.25

1.18
0.09

5.27
2.90

p

0.97
0.56

4.33
2.00

1.68
0.09

6.98
2.65

0.48

3.56
2.14

1.21
0.07

4.77
2.69

3.50
2.07

1.21

0.43

4.71
2.50

1.20

0.35

3.17
2.05

4.37
2.40

s
p

s
p

s
p

s
p

s
p

s
2003

Rate
School District

p

s
p

s
p

s

*

0.47

7.12
3.14

P =Primary assessed valuation
S = Secondary assessed valuation
Source: Maricopa County and Arizona Tax Research Foundation.

*

The primary tax rate represents the Fountain Hills Fire District and is included with the Town because
the Town took over operations in November 2001.

82

TOWN OF FOUNTAIN HILLS, ARIZONA
ASSESSEDVALUATIONOFMAJOR TAXPAYERS
JUNE 30, 2005
(UNAUDITED)

As% ofTov.m's

Taxpayer

2004/05
Assessed
Valuation

Land Description

Net Secondary
Assessed

Valuation

3,365,809

0.90%

Water Utility

3,066,000

0.82

Fountain Hills Village LLC

Assisted Living Facility

1,822,567

0.49

KIMCO Barclay Fountain Hills

Shopping Center

1,724,863

0.46

MCO Properties

Industrial

1,655,056

0.44

Cox Communications

Communications

1,507,740

0.40

Target Corporation

Shopping Center

1,441,438

0.38

ENLLC

Residential

1,347,042

0.36

Fountain Hills Vista Properties LLC

Commercial

986,365

0.26

Adero Canyon LLC

Residential

834.777

0.22

Qwest Corporations

Telecommunications

Chapparal City Water Company

$

$ 17.751.657

Source: Treasurer of Maricopa County.

83

4.73%

TOWN OF FOUNTAIN HILLS, ARIZONA
COMPUTATION OF LEGAL DEBT MARGIN
JUNE 30, 2005

(UNAUDITED)

Net secondary assessed valuation

$ 375.068203

Water, Sewer, Light, Parks, Open
Space and Recreational Facility Boards
Debt limit- 20% of secondary net
assessed valuation

$

Bonds outstanding

75,013,641
5 940.000

Net 20% General Obligation Bonding
Capacity

69.073.641

All Other General Obligation Bonds
Debt limit - 6% of secondary net
assessed valuation

22,504,092

Bonds outstanding subject to debt limit
4 735 000
Net 6% General Obligation Bonding
Capacity

17.769.092

$

Total20% and 6% Bonding Capacity

Source: Maricopa Cow1ty Assessor's Office.

84

86.842.733

TOWN OF FOUNTAIN HILLS, ARIZONA
RATIO OF NET GENERAL BONDED DEBT TO ASSESSED VALUE
AND NET BONDED DEBT PER CAPITA
LAST TEN FISCAL YEARS
(UNAUDITED)

Fiscal
Year

Population

Net
Secondary
Assessed
Valuation

1995-96

14,160

$100,161,566

1996-97

15,220

1997-98

Net
Bonded
Debt

Ratio ofNet
Bonded Debt
to Assessed
Value

Net Bonded
Debt Per
Capita

4,277,315

4.27%

302

103,944,051

4,056,473

3.90

267

16,275

116,333,406

3,883,018

3.34

239

1998-99

18,015

146,943,730

3,913,952

2.66

217

1999-00

18,595

212,415,476

8,677,053

4.08

467

2000-01

20,235

212,027,463

8,209,873

3.87

406

2001-02

20,235

238,714,537

13,410,000

5.62

663

2002-03

21,740

270,602,866

12,585,000

4.65

579

2003-04

22,105

*
23,700 *

323,385,230

11,740,000

3.63

531

375,068,203

11,215,000

2.99

473

2004-05

* League of Arizona Cities and Towns.

85

$

TOWN OF FOUNTAIN IDLLS, ARIZONA
RATIO OF ANNUAL DEBT SERVICE EXPENDITURES
TO TOTAL GENERAL EXPENDITURES
LAST TEN FISCAL YEARS
(UNAUDITED)

Fiscal
Year

1995-96

Interest
and Fiscal
Charges

Principal

$

209,193

$

208,477

Total
Debt
Service

Bond
Issuance
Cost

$

$

417,670

Total
Expenditnres (*)

$

7,667,025

Ratio of Debt
Service to Total
Expenditnres

5.45%

1996-97

222,321

247,311

469,632

12,850,703

3.65

1997-98

245,210

554,731

799,941

10,631,005

7.52

1998-99

223,024

517,696

795,088

11,464,538

6.94

1999-00

339,013

585,001

924,014

15,404,414

6.00

2000-01

620,408

1,086,208

144,986

1,851,602

21,368,050

8.67

2001-02

1,229,215

1,372,965

300,936

2,903,116

32,630,186

8.90

2002-03

1,393,228

1,576,842

2,970,070

15,771,446

18.83

2003-04

1,423,228

1,499,575

2,922,803

15,399,989

18.98

2004-05

1,308,228

1,164,561

2,702,779

23,151,671

11.67

54,368

229,990

(*) Includes all Govemmental Fund Types.

86

TOWN OF FOUNTAIN HILLS, ARIZONA
DIRECT AND OVERLAPPING GENERAL OBLIGATION BONDED DEBT
JUNE 30, 2005
(UNAUDITED)

Proportion Applicable to
Town of fountain Hills

Overlapping Jurisdiction
State of Arizona

2004-05
Net Secondary
Assessed
Valuation

Net
Outstanding
General
Obligation

Approximate

Bonded Debt

Percent

$48,938,261,134 $

0.77%

Net Debt
Amount
$

Maricopa County

33,188,609,340

Maricopa County Connnunity College District

33,188,609,340

234,440,000

1.13%

2,649,172

Eagle Mountain Connnunity Facilities District

24,195,157

4,455,000

100.00%

4,455,000

Fountain Hills Unified School District No. 98

3 86,548,3 89

27,990,000

97.03%

27,158,697

14,048,333,333

6,235,000

2.67%

166,475

Fountain Hills Sanitary District

373,290,604

1,320,000

100.00%

1,320,000

Town of Fountain Hills

375,068,203

10,675,000

100.00%

10.675.000

East Valley Institute of Technology District

Total Direct and Overlapping General Obligation Bonded Debt

Source: Maricopa County Treasurer's Office.

87

1.13%

$ 46.424.344

TOWN OF FOUNTAJN HILLS, ARIZONA
MISCELLANEOUS STATISTICAL DATA
JUNE 30, 2005
(UNAUDITED)

DATE OF INCORPORATION
FORM OF GOVERNMENT
NUMBER OF EMPLOYEES (no police and fire)
Classified- Full time
Classified - Part time
Exempt
AREA
TOWN OF FOUNTAIN HILLS FACILITIES AND SERVICES
Miles of Street
Surfaced
Unsurfaced
Population
1990 census
I 995 census
2000 census
Housing Units
Building Pennits Issued
Culture and Recreation
Cmmnunity Centers
Parks
Park acreage
Tennis courts
Senior center

FACILITIES AND SERVICES NOT INCLUDED IN PRIMARY
GOVERNMENT
Fire Protection:
Number of stations
The Town of Fountain Hills has no fire employees, but contracts with
Rural/Metro Corporation to provide fire services to all residents. The
Town does, however, own the frre station and equipment.
Police Protection:
Number of stations
Number of police personnel a11d officers
Number of patrol units
Number of Jaw violations
Physical arrests
Traffic/Parking violations

Sewerage System:
Miles of sanitary sewers
Number of treatment plants
Maximum daily capacity of treatment plant in gallons
Water System:
Miles of water mains
Number of hydrants
Maximum daily capacity of plant in gallons

December 5, I 989
Council - Manager
64
20
25
18.27 sq. miles

178.5
2
10,190
14,160
20,235
12,385
950

1
4
121
6
1

2

1
22
9
644
2,432
Special District
210
1
2.6mgd
Private
178
1,217
18,800,000

Education:

Number of elementary schools
Number of secondary schools

3
1

Source: Town govermnent offices and related districts.

88