Town of Fountain Hills, Arizona Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2024 Town of Fountain Hills, Arizona Annual Comprehensive Financial Report Fiscal Year Ended June 30, 2024 Issued by: Administration Department Finance Division Town of Fountain Hills, Arizona Table of Contents Introductory Section Letter of Transmittal List of Elected and Appointed Officials GFOA Certificate of Achievement Organizational Chart Financial Section Independent Auditor’s Report Management’s Discussion and Analysis (MD&A) Basic Financial Statements Government-Wide Financial Statements: Statement of Net Position Statement of Activities Fund Financial Statements: Balance Sheet – Governmental Funds Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds to the Statement of Activities Statement of Net Position – Proprietary Funds Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds Statement of Cash Flows – Proprietary Funds Notes to Financial Statements Required Supplementary Information Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: General Fund Highway User Revenue Fund Grants Fund Note to Required Supplementary Information Combining and Individual Fund Financial Statements and Schedules Governmental Funds: Combining Balance Sheet – All Non-Major Governmental Funds – By Fund Type Combining Statement of Revenues, Expenditures and Changes in Fund Balances – All Non-Major Governmental Funds – By Fund Type Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: Downtown Strategy Economic Development Tourism Public Art Page 1 11 12 13 17 23 36 37 40 43 44 46 47 48 49 50 68 69 70 71 78 80 82 83 84 85 Town of Fountain Hills, Arizona Table of Contents Financial Section – continued Combining and Individual Fund Financial Statements and Schedules Governmental Funds: Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: Local Court Enhancement Environmental Cottonwoods Maintenance General Obligation Debt Service Eagle Mountain Debt Service Municipal Property Corporation Debt Service Capital Projects Development Fees Internal Service Funds: Combining Statement of Net Position Combining Statement of Revenues, Expenses and Changes in Fund Net Position Combining Statement of Cash Flows Statistical Section Financial Trends: Net Position by Component Changes in Net Position Fund Balances – Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds Revenue Capacity: Governmental Activities – Tax Revenues by Source Sales Tax Payers by Category Taxable Sales by Category Direct and Overlapping Sales Tax Rates Debt Capacity: Ratios of Outstanding Debt by Type Ratios of General Bonded Debt Outstanding Direct and Overlapping Governmental Activities Debt Legal Debt Margin Information Calculation of Legal Debt Margin Revenue Bond Coverage Demographic and Economic Information: Demographic and Economic Statistics Principal Employers Operating Information: Authorized Full‐Time Equivalent Government Employees by Function Operating Indicators by Function Capital Assets Statistics by Function Page 86 87 88 89 90 91 92 93 96 97 98 100 102 104 106 108 109 110 112 113 114 115 116 118 119 120 121 122 123 124 (This page intentionally left blank) Introductory Section (This page intentionally left blank) TOWN OF FOUNTAIN HILLS 16705 E. Avenue of the Fountains, Fountain Hills, AZ 85268 480.816.5100 | Fax: 480.837.3145 October 31, 2024 To the Honorable Mayor, Members of the Town Council, and Citizens of the Town of Fountain Hills: State law requires that all general‐purpose local governments publish, within six months of the close of each fiscal year, a complete set of financial statements presented in conformity with accounting principles generally accepted in the United States of America and audited in accordance with auditing standards generally accepted in the United States by a certified public accounting firm licensed in the State of Arizona. Pursuant to that requirement, we hereby issue the Annual Comprehensive Financial Report (ACFR) of the Town of Fountain Hills (Town) for the fiscal year ended June 30, 2024. This report consists of management’s representations concerning the finances of the Town. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the Town has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the Town of Fountain Hills’ financial statements in conformity with accounting principles generally accepted in the United States of America. Because the cost of internal controls should not outweigh their benefits, the Town’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free of material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The Town’s financial statements have been audited by Heinfeld, Meech & Co., P.C., a certified public accounting firm. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Town for the fiscal year ended June 30, 2024, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditors concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the Town’s financial statements for the fiscal year ended June 30, 2024, are fairly presented in conformity with accounting principles generally accepted in the United States of America. The independent auditor’s report is presented as the first component of the financial section of this report. www.fountainhillsaz.gov Page 1 Accounting principles generally accepted in the Unites States of America require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The Town of Fountain Hills’ MD&A can be found immediately following the report of the independent auditors. PROFILE OF THE GOVERNMENT The Town of Fountain Hills overlooks the Verde River Valley and the east valley of the metro Phoenix area. The Town is a master planned community established in 1970 by McCulloch Properties (now MCO Properties, Inc.). Prior to 1970, the area was a cattle ranch and was part of one of the largest land and cattle holdings in Arizona. The land was purchased by Robert McCulloch in the late 1960s and the community designed by Charles Wood, Jr. (designer of Disneyland in southern California). The centerpiece of Fountain Hills is one of the world's tallest man-made fountains, a focal point that attracts thousands of visitors each year. Located on 13,006 acres of land, Fountain Hills is surrounded by the McDowell Mountains and Scottsdale on the west, the Fort McDowell Yavapai Nation on the east, the Salt River Pima-Maricopa Indian Community on the south, and by the McDowell Mountain Regional Park on the north. The elevation is 1,520 feet at the fountain, 2,460 feet at the Adero Canyon Trailhead, and is approximately 500 feet above Phoenix. Over the past thirty years, Fountain Hills has grown from 10,030 residents to a town of about 24,000 in 2023. On June 5, 2006, the Town of Fountain Hills became twenty square miles and about ten percent larger by annexing 1,300 acres of State Trust Land. The process to annex the State Trust Land occurred over a two- and a-half-year period, and development of the land may occur in the years to come. Annexing this property into the Town ensures that its possible future development will be of the highest quality under Town standards. The Town offers a wide range of living accommodations, from small condominium complexes to large custom homes. Fountain Hills also offers recreational and cultural programs and services that contribute to a high quality of life for its residents. The community consists of primarily residential property and open space; of the total 20.32 square miles of land, only 2.5% of the total is zoned commercial and/or industrial, 24.7% is preserved as open space and 48.5% is residential. Page 2 The Town’s Mission Statement The Town of Fountain Hills’ purpose is to serve the best interests of the community by: • providing for the safety and well-being of its residents and visitors; • respecting its special, small-town character and quality of life; • providing superior public services; • sustaining the public trust through open and responsive government; • and maintaining the stewardship and preservation of its financial and natural resources. To serve, respect, and provide trust and stewardship. Fountain Hills Town Hall The Town of Fountain Hills is an Arizona municipal corporation, acting as a general law town as prescribed in the Arizona Revised Statutes. The Town was incorporated on December 5, 1989, with the governmental and administrative affairs of the Town operating under the Council-Manager form of government. Legislative authority is vested in a seven member Town Council. The Mayor is a member of the Town Council who is directly elected by voters and chairs the Town Council meetings. The members of the Council are elected at large and serve four year overlapping terms. The Town Council is responsible for the adoption of local ordinances, budget adoption, appointment of residents to citizen advisory committees and hiring the Town Manager. The Town Manager is responsible for implementation of the policies of the Town Council and overall management of the Town through department directors and approximately 105 full-time equivalent (FTE) employees. The Presiding Judge, Town Attorney, and Town Prosecutor are under the direction of the Town Council. The Town provides or administers a full range of services including public safety (law enforcement, fire and emergency medical services); development services (code enforcement, planning and zoning); public works (including construction and maintenance of streets and infrastructure); municipal court; recreational activities; community center; senior services and cultural events. The Town does not maintain utility or other operations that require the establishment of enterprise funds. Page 3 The financial reporting entity (the Town) includes all the funds of the primary government (i.e., the Town of Fountain Hills as legally defined) as well as all of its component units. The component units consist of legally separate entities for which the primary government is financially accountable. Blended component units, although legally separate entities, are, in substance, part of the primary government’s operations and are included as part of the primary government. Accordingly, the Cottonwoods Maintenance District, the Eagle Mountain Community Facilities District and the Fountain Hills Municipal Property Corporation are included in the financial report of the Town. FACTORS AFFECTING FINANCIAL CONDITION The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the Town of Fountain Hills operates. Internal Controls As earlier noted, the management of the Town of Fountain Hills is responsible for establishing and maintaining a system of internal control. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding; 1) Safeguarding of assets against loss from unauthorized use or disposition, and 2) Reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes: 1) The cost of a control should not exceed the benefits likely to be derived, and 2) The valuation of costs and benefits requires estimates and judgments by management. The system of internal control is subject to periodic evaluation by management and is also considered by the independent auditors in connection with the annual audit of the Town’s financial statements. All internal control evaluations occur within the above framework. The Town's internal accounting controls are considered to adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. Budgetary Controls The budget process is a cyclical process and begins each year with the preparation of the base budget by each department head. Each budget is based on expenditures to date and the previous years’ experience. The departments’ base budgets, along with any requests for new positions, programs or services are reviewed by the Town Manager. The Town Manager then meets with department heads to review their base budgets and requests for new services and/or programs. Once management has reviewed the departments’ requests, a tentative budget is presented to the Town Council by the Town Manager. Page 4 The Town Council formally adopts the budget and appropriates funding for the General Fund, Special Revenue Funds, Debt Service Funds, Capital Projects Funds, and Internal Service Funds. Therefore, these funds have appropriated budgets, and budget to actual information is presented. In April/May, the Town Manager submits to the Town Council a proposed budget for the fiscal year commencing on July 1st. The budget includes proposed expenditures and the means of financing them. The Town Council is then required to hold public hearings on the proposed budget and to adopt a final budget by June 30, the close of the Town of Fountain Hills’ fiscal year. Public hearings on the budget are held each year in accordance with legal requirements to obtain comments from local residents. The budget is legally enacted through passage of a resolution and is prepared by fund and department. The resolution sets the limit for expenditures during the fiscal year. The Town Manager may authorize transfers between departments; however, all inter‐fund transfers are approved by Town Council. Additional expenditures may be authorized for expenditures directly necessitated by a natural or man‐made disaster as prescribed in the State Constitution, Article IX, Section 20. The Town is subject to the State of Arizona’s Expenditure Limitation Law for Towns and Cities. This law limits the amount of local revenues (as defined in the State Constitution, Article IX, Section 20) the Town may spend each year. The state adjusts the limitation each year for changes in population and inflation. The limitation is applied to the total expenditures of local revenues of all funds. The law does not limit the Town’s expenditures of revenues excluded from the State Constitution’s definition of local revenue. To ensure compliance with the state‐imposed expenditure limitation, a uniform expenditure report must be filed with the state’s Auditor General each year. This report reconciles total Town expenditures from the audited financial statements to total expenditures for reporting in accordance with the state’s uniform expenditure reporting system (ARS Section 41‐1279.07) and reduces total expenditures by expenditures that are not subject to the expenditure limitation. The appropriated budget is prepared by fund and department. Department heads may make transfers of non‐personnel appropriations within their department and all appropriations lapse at year‐end. Transfers of appropriations between departments require Town Manager approval, and all inter‐fund transfers require Town Council approval. Budget‐to‐actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. Budget‐to‐ actual comparisons for the General Fund, Streets Fund, and Grants Fund are presented in the Required Supplementary Information and all other funds are presented in Combining and Individual Fund Financial Statements and Schedules. Local Economy The Town of Fountain Hills relies mostly on its Transaction Privilege Tax (Sales Tax) and State Shared Revenue collections to fund nearly 90% of its General Fund (Operating) expenditures. During the past fiscal year, the Town’s revenue collections from these sources exceeded the budgeted expectations. Sales tax revenues continued to grow or remained stable during the fiscal year, and state shared revenues were mostly in line with expectations, with some slowdown in certain categories of local sales taxes. With Page 5 the possibility of a recession in the coming fiscal year, the Town will be closely monitoring these revenue sources and make adjustments as needed. The following chart is a look at the past five years’ local sales tax activity by category: MILLIONS Transaction Privilege Tax Revenues by Category $12 $10 $8 $6 $4 $2 $‐ Construction Fiscal Year 2020 Utilities Wholesale & Retail Fiscal Year 2021 Restaurants & Bars Fiscal Year 2022 Real Estate Fiscal Year 2023 Services Misc Fiscal Year 2024 As shown in the chart, sales tax collections are beginning to show signs of slowing growth but have maintained relative stability across most categories. Retail sales, the largest category of sales tax revenue, experienced a 2% increase over the prior year. Restaurant/Bar and Services revenue showed slight decreases of 4% and 3%, respectively, compared to FY23. These trends of decreasing revenues may be a sign of a slowing local economy and will be monitored each year by Finance staff. Construction sales tax, a one‐time revenue source, is driven entirely by development activity in the community and decreased by 7% from the prior year but maintained substantially higher revenues than previous fiscal years 2020 through 2022. These increased sustained revenue levels show that development and construction activity may coincide with the State’s increased level of development activities. The Transportation/Communication/Utility category also increased slightly during the year. Although Real Estate increased by 7% from the prior year, about half of this category will no longer be collected once the State of Arizona’s ban on long‐term residential rental taxes becomes effective during the next fiscal year. Construction activity provides revenue to the Town through sales taxes based on the value of the project, 50% of these proceeds are utilized for general operations and the other 50% for capital expenditures. Since this funding source is rarely enough to meet capital project needs, the Town must find additional funds to pay for necessary infrastructure projects. State‐shared revenues are derived as a proportionate share of state sales, income and vehicle license taxes which are distributed based on the Town’s population compared to all other incorporated cities and towns in Arizona (currently 0.40%). State shared income tax revenue is based on personal and corporate earnings from two years ago. Revenue from this category increased by 39.5% in fiscal year 2023‐24 due to delayed tax collections from COVID. However, Town projections show that these revenues will stabilize and decrease next fiscal year. State shared sales tax has increased over the past several years, and this year continued the trend by increasing revenue by 1.8% compared to the prior year. Page 6 Other local activity has remained fairly consistent during the period. The opportunity to further expand the retail tax base in Fountain Hills is limited by the lack of available commercial land – over 81% of the currently available commercial lots are already developed. Development Activity Town‐Wide Building Permits Issued Page 7 Economic Outlook Retail Sales – Not having a property tax, the Town of Fountain Hills relies heavily on transaction privilege taxes (TPT), sometimes called a sales tax. Overall, Town TPT revenues provided almost 55% of the General Fund revenues in FY2024. On November 1, 2019, the Town’s TPT rate went up 0.3% to the current rate of 2.9%. Hospitality-related collections are the most susceptible to changes in economic conditions. Construction TPT is also highly tied to the health of the economy and is equally divided between the General Fund and the Capital Projects Fund. State Shared Revenues – The Town of Fountain Hills receives significant revenue allocations from the State. These State shared revenues, include allocations of the state-collected income tax, sales tax, fuel tax and vehicle license taxes. All but the fuel tax and 70% of the vehicle license taxes are placed in the Town's General Fund, where it is used to sustain a large portion of the Town's day-to-day activities. Ultimately, each of these revenue sources will be negatively affected by inflation, as well as the Federal Reserve’s fight against it. Streets Fund (HURF) – The Town receives a proportionate share of the fuel tax collected in Maricopa County. These revenues are placed in the Streets Fund to be used specifically for street maintenance and related activity. Although the State shared revenue formula generally allocates revenues based on official census data, in recent years, the Town’s population has slightly decreased which has resulted in relativelyflat shared revenues. Therefore, recent increased budgeted expenditures must be replaced by existing fund balance and transfers from the General Fund, which increases pressure to maintain operations across the Town. Long-term Financial Planning Fountain Hills’ Financial Policies are balanced on sound financial reserves and conservative revenue growth forecasts for the foreseeable future. However, potential for State legislative impacts to revenuesharing, reductions in local revenues, and additional demands for essential Town services remain. The Town’s Financial Policies set forth guidelines against which current budgetary performance can be measured and proposals for future programs can be evaluated. The Town’s Financial Policies have helped weather the uncertainty encountered during the pandemic and the years that have followed. This policy continues to require the Town to retain an amount equal to 20% of the average actual General Fund revenues for the preceding five fiscal years as part of its General Fund balance. This amount is estimated to cover approximately 60 days of General Fund expenditures and is considered a “Rainy Day” fund. Additionally, a reserve of 20% of the average actual General Fund revenues for the preceding five fiscal years will be maintained as Unassigned Fund Balance. This additional fund balance reserve will provide increased flexibility in the event of unanticipated decreases in revenue collection. The Council also adopted Financial Policies that include guidelines for the issuance of debt for capital expenditures, community facility districts, financing alternatives, expenditure controls and financial planning. The policy was amended during FY 09-10 to reduce the allocation of the local construction sales tax to the Capital Projects Fund from 85% to 50%, reflecting the transition from one-time building activity to ongoing redevelopment activity. The debt policy was prepared with a preference for “pay-as-you-go” financing for capital spending. However, the policy does allow for bond financing of larger projects so that the cost can be equitably distributed among the Town’s current and future residents. Page 8 In 2020, the Strategic Planning Advisory Commission (SPAC) began the process of gathering public input to update the Strategic Plan’s vision, confirm residents’ values, and create a fresh structure for the Strategic Plan revision. However, the pandemic delayed this effort. Subsequently, Strategic Plan 2022 was built upon the foundation of four Strategic Priorities, eleven Signature Strategies, and twenty‐three Supporting Tasks. Based on citizen input, the Strategic Plan is designed to guide our future decisions grounded on these common priorities: 1. Targeted Collaborative Economic Development 2. Promote the Long‐Term Financial Sustainability of Town Infrastructure, Environmental, and Social Resources 3. Continue to Improve the Public Health, Well‐Being, and Safety of Our Town 4. Maintain Current Infrastructure While Preparing the Town for Emerging Trends that Increase Public Safety and Quality of Life MAJOR INITIATIVES, SERVICE EFFORTS AND ACCOMPLISHMENTS The Town of Fountain Hills’ adopted budget for fiscal year 2023‐24 reflected a cautious approach to the continued recovery from the pandemic and increasing inflation. Due to the uncertain economic conditions ahead, the Town approached revenue projections cautiously and kept expenditure levels low as well. Throughout FY22 and FY23, the American Rescue Plan Act (ARPA) provided resources to local governments through the State of Arizona. These resources allowed the Town to save $8.4 million in the General Fund that would have otherwise been spent to pay for public safety contracts with Maricopa County Sheriff’s Office and Rural Metro. As Pavement Management has been a priority for many years, Council approved transfers of $8.4 million from the General Fund to the Streets Fund related to General Fund savings. Council also approved another $2.0 million of transfers from the General Fund into the Streets Fund in FY24 through the FY25 budget process that will be processed early next fiscal year. Although these infusions will not resolve all the pavement issues in Town, it will provide available fund balances for future expenditures while other options are researched and implemented. For the Year The following list depicts the continued commitment of the Town of Fountain Hills to make the community a better place to live. Fiscal year 2023‐24 goals attained are summarized within this list of accomplishments:         Page 9 Transitioned a contracted vendor into a fully operational in‐house Fire Department Completed over 8.98 miles of paved roadways within the Town Applied 8,800 linear feet of crack seal, 6,640 square yards of asphalt repair, and 353,130 square yards of preservative treatment to improve streets Installed 1,500 linear feet of new sidewalk Secured grant funding from the Arizona Office of Tourism ‐ Proposition 302 Secured grant funding from Salt River Pima‐Maricopa Indian Community ‐ Proposition 202 Adopted the 2023‐2026 Community Economic Development Strategy Community Services awarded Best Event (Spooky Blast) and Outstanding Facility (Fountain Park Playground) by the Arizona Parks and Recreation Association • • • Added new parks improvements such as outdoor fitness equipment at Desert Vista Park and a 3,000 square foot picnic area at Fountain Park Delivered almost 6,000 meals provided through the Home Delivered Meal program Provided 376 rides to residents through Give a Lift program for medical appointments AWARDS AND ACKNOWLEDGEMENTS Awards The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of Fountain Hills for its Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2023. This was the twenty-eighth consecutive year that the Town has received this prestigious award. In order to be awarded a Certificate of Achievement, the Town published an easily readable and efficiently organized ACFR. This report satisfied both accounting principles generally accepted in the United States of America (GAAP) and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current ACFR continues to meet the Certificate of Achievement program’s requirements, and we will be submitting it to the GFOA to determine its eligibility for the fiscal year ended 2024 Certificate. In addition, the government received the GFOA’s Distinguished Budget Presentation Award for its annual budget for the fiscal year beginning July 1, 2023. In order to qualify for the Distinguished Budget Presentation Award, the government’s budget document was judged to be proficient in several categories, including as a policy document, a financial plan, an operations guide, and a communications device. This is the twenty-second consecutive year that the Town has received the award. Acknowledgments The preparation of this Annual Comprehensive Financial Report could not have been accomplished without the efficient and dedicated services of the entire Finance Division. I also wish to extend my appreciation to the Mayor and members of Town Council for their leadership and support in planning and conducting the financial affairs of the Town in a responsible and progressive manner. Each employee of the Town has my sincere appreciation for the contributions made in the preparation of this report. Respectfully submitted, Rachael Goodwin Town Manager Page 10 Town of Fountain Hills, Arizona List of Principal Officials June 30, 2024 Elected Officials Ginny Dickey, Mayor Brenda Kalivianakis, Vice‐Mayor Gerry Friedel, Councilmember Sharron Grzybowski, Councilmember Peggy McMahon, Councilmember Allen Skillicorn, Councilmember Hannah Toth, Councilmember Town Manager & Directors Rachael Goodwin, Town Manager David Trimble, Deputy Town Manager/Administrative Services Director Linda Mendenhall, Town Clerk Kevin Snipes, Community Services Director John Wesley, Development Services Director Amanda Jacobs, Economic Development Director Dave Ott, Fire Chief Paul Soldinger, Chief Financial Officer Justin Weldy, Public Works Director Aaron Arnson, Pierce Coleman PLLC, Town Attorney Mark Iacovino, The Law Office of Mark Iacovino, Town Prosecutor Captain Larry Kratzer, Maricopa County Sheriff’s Office, District Commander Robert Melton, Presiding Judge Page 11 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to Town of Fountain Hills Arizona For its Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2023 Executive Director/CEO Page 12 Town of Fountain Hills Organization Citizens of Fountain Hills Mayor and Town Council Presiding Judge Fire / EMS Town Prosecutor Community Services Development Services Public Works Administration Parks Building Safety Engineering Finance Recreation Code Enforcement Facilities Administrative Services Community Center GIS Inspection Town Clerk Streets Economic Development / Tourism Senior Services Volunteer Program FY 2024 Page 13 Town Attorney Town Manager Planning Community Relations Law Enforcement Appointed by Council Contracted (This page intentionally left blank) Page 14 Financial Section Page 15 (This page intentionally left blank) Page 16 Independent Auditor’s Report Honorable Mayor and Members of the Town Council Town of Fountain Hills, Arizona Report on Audit of Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Town of Fountain Hills, Arizona (Town), as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the Town’s basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Town of Fountain Hills, Arizona, as of June 30, 2024, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Town of Fountain Hills, Arizona, and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Town’s ability to continue as a going concern for one year beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Page 17 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:      Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Town’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Town’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, and budgetary comparison information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Page 18 Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town’s basic financial statements. The Combining and Individual Fund Financial Statements and Schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Combining and Individual Fund Financial Statements and Schedules information is fairly stated in all material respects in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the Introductory Section and Statistical Section but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on other work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 31, 2024, on our consideration of Town of Fountain Hills, Arizona’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Town of Fountain Hills, Arizona’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Town of Fountain Hills, Arizona’s internal control over financial reporting and compliance. Heinfeld, Meech & Co., P.C. Scottsdale, Arizona October 31, 2024 Page 19 (This page intentionally left blank) Page 20 Management’s Discussion and Analysis (MD&A) (Required Supplementary Information) Page 21 (This page intentionally left blank) Page 22 Town of Fountain Hills, Arizona Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2024 As management of the Town of Fountain Hills, Arizona (Town), we offer readers of the Town’s financial statements this narrative overview and analysis of the financial activities of the Town for the fiscal year ended June 30, 2024. This discussion and analysis is intended to be an easily readable breakdown of the Town of Fountain Hills’ financial activities based on currently known facts, decisions and conditions. This analysis will focus on current year activities and operations and should be read in combination with the transmittal letter and the financial statements that follow. The management’s discussion and analysis is presented as required supplementary information to supplement the basic financial statements. Financial Highlights  The Town’s total net position of governmental activities increased $6.9 million to $150.3 million, representing a 4.8 percent increase of the total net position.  General revenues from governmental activities accounted for $34.6 million in revenue, or 86 percent of all revenues from governmental activities. Program specific revenues in the form of charges for services and grants and contributions accounted for $5.6 million or 14 percent of total governmental activities revenues.  The Town had $33.3 million in expenses related to governmental activities, an increase of 5.0 percent from the prior fiscal year, primarily due to increased payroll and contractual costs.  Among the major governmental funds, the General Fund had $30.8 million in current fiscal year revenues, which consisted primarily of transaction privilege (sales) tax and intergovernmental revenues. The total expenditures of the General Fund were $21.7 million. The General Fund’s fund balance increased $1.9 million to $17.6 million at the end of the current fiscal year. Overview of Financial Statements This discussion and analysis is intended to serve as an introduction to the Town’s basic financial statements. The Town’s basic financial statements comprise three components: 1) government‐wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Page 23 Town of Fountain Hills, Arizona Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2024 Overview of Financial Statements – continued Government‐wide financial statements. The government‐wide financial statements provide readers with a broad overview of the Town’s finances, in a manner similar to a private‐sector business. These statements are prepared using the accrual basis of accounting. The Statement of Net Position presents information on all of the Town’s assets, liabilities, and deferred inflows/outflows of resources with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Town is improving or deteriorating. The Statement of Activities presents information showing how the Town’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., earned but unused compensated absences). The government‐wide financial statements distinguish functions of the Town that are principally supported by taxes and intergovernmental revenues (governmental activities). The governmental activities of the Town include administration, development services, public safety, public works, and culture and recreation. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Town uses fund accounting to ensure and demonstrate compliance with finance‐related legal requirements. All Town funds are included in the governmental fund classification, except for two internal service funds that are classified as proprietary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government‐wide financial statements. However, unlike the government‐wide financial statements, governmental fund financial statements use the modified accrual basis of accounting and focus on near‐term inflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the Town’s near‐term financing requirements. Internal service funds. These types of funds are classified as proprietary funds, and are used to report activity in the Technology Replacement Fund and the Vehicle and Equipment Replacement Fund. These funds provide goods and services to other funds and departments on a cost‐ reimbursement basis. The activity is intended to operate on an essentially “break‐even” basis over time. Page 24 Town of Fountain Hills, Arizona Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2024 Overview of Financial Statements – continued Because the focus of governmental funds is narrower than that of the government‐wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government‐wide financial statements. By doing so, readers may better understand the long‐term impact of the Town’s near‐term financing decision. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General, Highway User Revenue (HURF), Grants, and Capital Projects Funds, all of which are considered major funds. Data from other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non‐major governmental funds is provided in the form of combining statements and schedules. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government‐wide and fund financial statements. The notes to the financial statements can be found immediately following the basic financial statements. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Town’s budget process. The Town adopts an annual budget for all funds. A schedule of revenues, expenditures and changes in fund balances ‐ budget and actual has been provided for the General, Highway User Revenue and Grant funds as required supplementary information. Government‐Wide Financial Analysis While this document contains information about the funds used by the Town to provide services to its citizens, the Statement of Net Position and the Statement of Activities serve to provide an answer to the question of how the Town, as a whole, did financially throughout the year. These statements include all assets and liabilities using the accrual basis of accounting, similar to the accounting used by the private sector. The basis for this accounting takes into account all of the current year’s revenues and expenses regardless of when the cash is received or paid. These two statements report the Town’s assets and the changes in those assets. The change in assets is important because it tells the reader whether the financial position of the Town as a whole has improved or diminished. However, in evaluating the overall position of the Town, non‐financial information such as changes in the Town’s tax base and the condition of the Town’s capital assets will also need to be evaluated. Page 25 Town of Fountain Hills, Arizona Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2024 Government‐Wide Financial Analysis – continued Analysis of Net Position. Over time, net position may serve as a useful indicator of a government’s financial position. In the case of the Town, assets related to governmental activities exceeded liabilities by $150.3 million at the end of the fiscal year. The largest portion of the Town’s governmental activities net position reflects its investment in capital assets (e.g., land, infrastructure, buildings and improvements, vehicles, machinery and equipment and construction in progress); less any related outstanding debt used to acquire those assets. The Town uses these capital assets to provide services to its citizens; consequently, these assets are not available for future spending. Although the Town’s investment in its capital assets is reported net of related outstanding debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. As the Town does not currently have any outstanding debt, the reported amount represents the total invested in capital assets. In addition, a portion of the Town’s net position represents resources that are subject to external restrictions on how they may be used. The remaining balance is unrestricted and may be used to meet the Town’s ongoing obligations to its citizens and creditors. The following table presents a summary of the Town’s net position for the fiscal years ended June 30, 2024 and June 30, 2023. Current and other assets Capital assets, net Total assets Governmental Activities As of As of June 30, 2024 June 30, 2023 $ 53,009,050 $ 46,708,494 101,990,127 101,838,463 154,999,177 148,546,957 Current and other liabilities Long‐term liabilities Total liabilities 2,838,171 553,757 3,391,928 3,087,313 284,016 3,371,329 Deferred inflows 1,274,470 1,734,697 101,990,127 9,474,160 38,868,492 150,332,779 101,838,463 9,646,597 31,955,871 143,440,931 Net position Net investment in capital assets Restricted Unrestricted Total net position $ $ At the end of the current fiscal year the Town reported positive balances in all three categories of net position for governmental activities. The Town also reported positive balances in all net position categories in the prior fiscal year. Page 26 Town of Fountain Hills, Arizona Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2024 Government-Wide Financial Analysis – continued The Town’s financial position is the product of several financial transactions including the net results of activities, the acquisition and payment of debt, the acquisition and disposal of capital assets, and the depreciation of capital assets. Changes in net position. The Town’s total revenues for the current fiscal year were $40.2 million. The total cost of all programs and services was $33.3 million. The following table presents a summary of the changes in net position for the fiscal years ended June 30, 2024 and June 30, 2023. Governmental Activities Fiscal Fiscal Year Ended Year Ended June 30, 2024 June 30, 2023 Revenues Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues Property taxes Sales taxes Franchise taxes State-sales and income tax revenue Vehicle License taxes Investment earnings Miscellaneous Total revenues Expenses General government Development services Public safety Public works Culture and recreation Total expenses Changes in net position Net position, beginning Net position, ending Page 27 $ 2,717,731 2,383,786 520,867 $ 2,415,721 6,729,883 259,266 20,559,928 351,118 9,888,965 1,242,636 2,345,106 191,629 $ 40,201,766 9,854 20,586,294 382,948 8,039,448 1,182,243 1,099,525 226,049 $ 40,931,231 $ 5,106,646 1,324,892 11,746,913 10,455,071 4,676,396 33,309,918 6,891,848 143,440,931 $150,332,779 $ 4,890,912 1,206,991 9,930,356 10,792,078 4,776,903 31,597,240 9,333,991 134,106,940 $143,440,931 Town of Fountain Hills, Arizona Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2024 Government‐Wide Financial Analysis – continued Governmental Activities Revenues Operating grants and contributions, 6% Fiscal Year 2023‐24 Other, 8% Charges for services, 6% Vehicle license taxes, 3% State shared revenue, 25% Sales taxes, 52% The charts below compare the governmental expenses from fiscal years 2023‐24 and 2022‐23. Fiscal Year 2022‐23 Expenses Fiscal Year 2023‐24 Expenses General government, 15% Culture and recreation, 14% Public works, 31% Page 28 Development services, 4% Public safety, 35% General government, 15% Development services, 4% Public safety, 31% Culture and recreation, 15% Public works, 34% Town of Fountain Hills, Arizona Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2024 Government-Wide Financial Analysis – continued The following items are significant current year transactions that have had an impact on the change of net position. • Revenues from state-shared revenues increased substantially for the fiscal year and accounted for approximately $1.8 million more than the prior fiscal year. The Town received its final American Rescue Plan Act (ARPA) payment during the prior fiscal year, which resulted in a significant decrease in operating grants and contributions from the prior year. • Expenses were up five percent across all prior year governmental functions, with the highest percentage increase seen within the Public Safety function. This was a result of the Town's transition from a contracted vendor to an in-house Fire Department. • Investment income increased $1.2 million as a result of increases to short-term investment rates within the State Treasurer's local government investment pool 7. The following table presents the cost of the Town’s major functional activities. The table also shows each function’s net cost (total cost less charges for services generated by the activities and intergovernmental aid provided for specific programs). The net cost shows the financial burden that was placed on the Town by each of these functions. Year Ended June 30, 2024 Total Net (Expense)/ Expenses Revenue Governmental Activities General government Development services Public safety Public works Culture and recreation Total expenses $ $ Year Ended June 30, 2023 Total Net (Expense)/ Expenses Revenue 5,106,646 $ (4,131,998) $ 4,890,912 $ (3,751,754) 1,324,892 (630,242) 1,206,991 (444,062) 11,746,913 (11,546,893) 9,930,356 (5,523,668) 10,455,071 (7,481,840) 10,792,078 (8,504,075) 4,676,396 (3,896,561) 4,776,903 (3,968,811) 33,309,918 $ (27,687,534) $ 31,597,240 $ (22,192,370) • The cost of all governmental activities this year was $33.3 million. • Federal, State, county, and tribal governments and charges for services subsidized certain governmental programs with revenues of $5.6 million. • The net cost of the Town’s governmental activities was $27.7 million, which was funded primarily by general revenues. General revenues consisted primarily of $20.6 million in sales taxes and $11.1 million in State-shared revenues. Page 29 Town of Fountain Hills, Arizona Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2024 Financial Analysis of the Town’s Funds As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. Governmental funds. The focus of the Town’s governmental funds is to provide information on nearterm inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of the Town’s net resources available for spending at the end of the fiscal year. The financial performance of the Town as a whole is reflected in its governmental funds. As the Town completed the year, its governmental funds reported an increase of $6.5 million in the combined fund balance from $39.8 million to $46.3 million. The General Fund comprises 38.0 percent of the total fund balance. Approximately $13.1 million, or 74.4 percent, of the General Fund’s fund balance is unassigned. The General Fund is the principal operating fund of the Town. The fund balance increased by $1.9 million to $17.6 million as of fiscal year end. General Fund revenues increased $2.5 million primarily due the increase in state-shared revenues and investment earnings discussed earlier. General Fund expenditures increased by $6.3 million primarily due to the Town's transition from a contracted vendor to an in-house Fire Department and the impact from moving grant-funded public safety expenditures back to the General Fund in the current fiscal year. The Highway User Revenue Fund comprises 20.7 percent of total fund balance. The fund balance increased $2.6 million from the prior year due to transfers from the General Fund discussed earlier and will continue to be used to fund the pavement management program in the next fiscal year. Fund balance of the Grants Fund increased $6,435 due to collection of opioid settlement revenues in excess of opioid abatement expenditures. The Capital Projects Fund comprises 30.6 percent of the total fund balance. All of the fund balance is assigned to capital projects. The fund balance increased $1.7 million due to transfers from the General Fund and decreased capital outlay expenditures. The Technology Replacement Fund and Vehicle and Equipment Replacement Fund are the Town’s proprietary funds. Unrestricted net position of these funds at the end of the fiscal year amounted to $2.7 million. This was an increase of $514,107 that was due to the Town charging funds in excess of actual vehicle and technology replacement expenditures and significantly higher investment earnings. Page 30 Town of Fountain Hills, Arizona Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2024 Budgetary Highlights A majority of the budget transfers for the fiscal year moved budget authority between departments within the General Fund; however, the final budget for the General Fund did decrease $2.6 million as a result of a large transfer of General Fund contingency to the Capital Projects Fund for a streets widening project. However, the project was delayed to a subsequent year. A schedule showing the budget amounts compared to the Town’s actual financial activity for the General Fund is provided in this report as required supplementary information. The significant variances are summarized as follows: • The favorable variance of $5.2 million in overall revenues is primarily due to strong actual revenues performance compared to conservative internal revenue projections. • The favorable total expenditures variance of $1.3 million is due primarily to lower than expected expenditures throughout all departments. Capital Assets and Debt Administration Capital Assets. As of the end of the current fiscal year, the Town had invested $102.0 million in capital assets, including buildings, facilities, vehicles, computers, equipment, infrastructure and artwork. This amount represents a net increase, prior to depreciation, of $3.4 million from the prior fiscal year. The increase was primarily due to various capital improvement projects, including community center improvements, upgrades to park amenities, and a sidewalk infill project. Total depreciation expense for the current fiscal year was $3.3 million. The following schedule presents a summary of capital asset balances for the fiscal years ended June 30, 2024 and June 30, 2023. Capital assets – non-depreciable Capital assets – depreciable, net Total Governmental Activities As of As of June 30, 2024 June 30, 2023 $ 34,761,936 $ 36,231,449 67,228,191 65,607,014 $ 101,990,127 $ 101,838,463 The estimated construction commitments amount is $136,575. Additional information on the Town’s capital assets can be found in Note 5. Page 31 Town of Fountain Hills, Arizona Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2024 Capital Assets and Debt Administration – continued Debt Administration. The Town does not currently have any outstanding debt. Therefore, there were not any town-wide taxes levied in fiscal year 2024. State statutes currently limit the amount of general obligation debt a Town may issue to a percentage of its total assessed valuation for water, sewer, artificial lighting, parks, open space, recreational facility improvements, public safety, law enforcement, fire and emergency facilities and street and transportation facilities. The current 20 percent debt limitation for the Town is $166.3 million. State statutes also currently limit the amount of general obligation debt a Town may issue to a percentage of its total assessed valuation for all other purposes. The current 6 percent debt limitation for the Town is $49.9 million. Additional information on the Town’s long-term liabilities can be found in Note 6 in the notes to the financial statements. Contacting the Town’s Financial Management This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the Town’s finances and to demonstrate the Town’s accountability for the resources it receives. If you have questions about this report or need additional information, contact the Finance Division, Town of Fountain Hills, 16705 East Avenue of the Fountains, Fountain Hills, Arizona 85268 or visit our website at www.fountainhillsaz.gov. Page 32 Basic Financial Statements Page 33 (This page intentionally left blank) Page 34 Government-Wide Financial Statements Page 35 Town of Fountain Hills, Arizona Statement of Net Position June 30, 2024 Governmental Activities Assets Current assets: Cash and investments Accounts receivable Intergovernmental receivable Leases receivable Interest receivable Inventory, at cost Prepaid items Total current assets Noncurrent assets: Capital assets not being depreciated Capital assets, net of accumulated depreciation Total noncurrent assets Total assets Liabilities Current liabilities: Accounts payable Accrued wages and benefits Other liabilities Customer deposits Compensated absences payable Unearned revenues Total current liabilities Noncurrent liabilities: Non‐current portion of long‐term obligations Total noncurrent liabilities Total liabilities Deferred inflows of resources Leases Total deferred inflows of resources Net position Net investment in capital assets Restricted for: Public works Local court enhancement Opioid abatement Capital outlay Debt service Unrestricted Total net position Page 36 $ 49,708,197 147,676 1,679,102 1,313,858 107,078 5,099 48,040 53,009,050 34,761,936 67,228,191 101,990,127 154,999,177 1,683,533 420,311 2,777 54,892 445,406 231,252 2,838,171 553,757 553,757 3,391,928 1,274,470 1,274,470 101,990,127 $ 6,237,208 439,487 390,988 2,348,186 58,291 38,868,492 150,332,779 The notes to the basic financial statements are an integral part of this statement. Town of Fountain Hills, Arizona Statement of Activities For the Year Ended June 30, 2024 Program Revenue Operating Grants Capital Grants Functions/Programs Governmental activities General government Development services Public safety Public works Culture and recreation Total governmental activities Expenses $ $ Net (Expense) Charges for and and Governmental Services Contributions Contributions Activities 5,106,646 $ 1,324,892 11,746,913 10,455,071 4,676,396 33,309,918 $ 548,921 $ 694,650 108,633 736,967 628,560 2,717,731 $ 409,931 $ 91,387 1,850,986 31,482 2,383,786 $ 15,796 $ 385,278 119,793 520,867 General revenues Taxes: Sales taxes Franchise taxes State sales & income tax revenue sharing ‐ unrestricted Vehicle license tax revenue sharing ‐ unrestricted Investment earnings Miscellaneous Total general revenues 20,559,928 351,118 9,888,965 1,242,636 2,345,106 191,629 34,579,382 Changes in net position 6,891,848 Net position, beginning of year Net position, end of year Page 37 (4,131,998) (630,242) (11,546,893) (7,481,840) (3,896,561) (27,687,534) The notes to the basic financial statements are an integral part of this statement. 143,440,931 $ 150,332,779 (This page intentionally left blank) Page 38 Fund Financial Statements Page 39 Town of Fountain Hills, Arizona Balance Sheet Governmental Funds June 30, 2024 Highway User General Assets Cash and investments Accounts receivable Intergovernmental receivable Leases receivable Interest receivable Inventory, at cost Prepaid items Total assets $ 17,425,328 $ 122,260 954,380 1,313,858 35,229 5,099 33,080 19,889,234 Liabilities Accounts payable Accrued wages and benefits Other liabilities Customer deposits Unearned revenues Total liabilities 548,647 391,451 752 54,892 22,099 1,017,841 Deferred inflows of resources Unavailable revenues ‐ intergovernmental Unavailable revenues ‐ other Leases Total deferred inflows of resources 2,856 1,292,985 1,295,841 9,411,340 $ 25,416 285,500 Grants Capital Projects 290,388 $ 390,988 16,062 9,738,318 131,147 22,754 174 154,075 14,760,917 15,796 54,074 13,500 694,876 14,830,787 318 660,396 15 1,730 209,153 209,486 662,126 364,358 Fund balances Nonspendable Restricted Committed Assigned Unassigned Total fund balances 24,614 15,796 24,614 364,358 6,223,708 13,500 26,630 38,179 15,796 4,466,782 Total liabilities, deferred inflows of resources and fund balances Page 40 Revenue $ 3,335,921 80,902 14,152,865 13,070,591 17,575,552 9,559,629 121,032 14,152,865 19,889,234 $ 9,738,318 $ 694,876 $ 14,830,787 The notes to the basic financial statements are an integral part of this statement. Non‐Major Total Governmental Governmental Funds Funds 5,177,221 $ 47,065,194 147,676 1,679,102 1,313,858 107,078 5,099 48,040 50,366,047 $ 32,438 1,713 1,460 5,212,832 338,556 6,106 344,662 1,679,064 420,311 2,671 54,892 231,252 2,388,190 364,358 43,266 1,292,985 1,700,609 1,460 2,845,964 4,868,170 53,139 9,096,302 4,466,782 19,590,434 13,070,591 46,277,248 5,212,832 $ 50,366,047 2,020,746 $ Page 41 (This page intentionally left blank) Page 42 Town of Fountain Hills, Arizona Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2024 Total fund balances ‐ governmental funds $ 46,277,248 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Governmental capital assets Less accumulated depreciation $ 243,271,396 (141,366,722) 101,904,674 Some receivables are not available to pay for current period expenditures and, therefore, are reported as unavailable in the funds. Leases Intergovernmental Other 18,515 364,358 43,266 426,139 The Internal Service Fund is used by management to charge the cost of technology, vehicle and equipment replacement to the individual funds. The assets and liabilities of the Internal Service Fund are included in the Statement of Net Position. Capital assets Net positions of other remaining balance 85,453 2,638,428 2,723,881 Long‐term liabilities (compensated absences payable) are not due and payable in the current period and, therefore, are not reported in the funds. Net position of governmental activities Page 43 The notes to the basic financial statements are an integral part of this statement. (999,163) $ 150,332,779 Town of Fountain Hills, Arizona Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2024 Highway User Revenue General Revenues Property taxes Sales taxes Franchise taxes Licenses and permits Leases and rents Intergovernmental Charges for services Other Fines and forfeitures Investment earnings Total revenues $ $ 16,834,517 351,118 1,411,600 359,479 10,349,568 242,182 270,109 227,192 728,524 30,774,289 Grants $ Capital Projects $ 1,417,926 1,598,522 2,720,831 120 47,261 267,283 376,783 558,549 4,744,687 15,288 282,571 671,774 2,659,079 265,136 506 115,695 11,000 594,473 25,158 3,070,047 12,000 Expenditures Current: General government Development services Public safety Public works Culture and recreation Capital outlay Debt service: Fiscal charges Total expenditures 21,718,513 6,307,916 276,136 3,690,184 Excess (deficiency) of revenues over expenditures 9,055,776 (1,563,229) 6,435 (1,031,105) Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) 245,884 (7,407,884) (7,162,000) 4,200,000 4,200,000 Changes in fund balances 1,893,776 2,636,771 6,435 1,676,779 Fund balances, beginning of year, previously reported Adjustments to beginning fund balances Fund balances, beginning of year, as restated 17,385,544 (1,703,768) 15,681,776 7,333,267 (410,409) 6,922,858 114,597 12,476,086 114,597 12,476,086 17,575,552 $ 9,559,629 $ 121,032 $ 14,152,865 Fund balances, end of year Page 44 3,942,569 1,275,320 11,330,144 1,554,076 3,426,968 189,436 $ 6,192,221 6,907,884 (4,200,000) 2,707,884 The notes to the basic financial statements are an integral part of this statement. Non‐Major Total Governmental Governmental Funds Funds $ 9,841 $ 708,963 325,441 119,793 5,000 3,642 28,651 244,814 1,446,145 788,366 $ 9,841 20,559,928 351,118 1,737,041 359,479 13,834,258 247,302 333,012 255,843 2,218,949 39,906,771 433,919 31,464 137,399 4,996,577 1,275,320 11,330,144 8,774,689 3,483,590 3,523,577 208 1,391,356 208 33,384,105 54,789 6,522,666 594,253 (340,137) 254,116 11,948,021 (11,948,021) 308,905 6,522,666 4,494,681 64,584 4,559,265 41,804,175 (2,049,593) 39,754,582 4,868,170 $ 46,277,248 Page 45 Town of Fountain Hills, Arizona Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended June 30, 2024 Changes in fund balances ‐ total governmental funds $ 6,522,666 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report the portion of capital outlay for capitalized assets as expenditures. However, in the Statement of Activities, the costs of those assets are allocated over their estimated useful lives and reported as depreciation expense. Expenditures for capitalized assets Less current year depreciation $ 3,523,573 (3,317,963) 205,610 Some revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Leases Intergovernmental Other 18,515 140,648 15,284 174,447 Collections of property tax revenue in the governmental funds exceeded revenues reported in the Statement of Activities. (26,334) Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Loss on disposal of assets Compensated absences (139,399) (359,249) (498,648) The Internal Service Fund is used by management to charge the cost of technology, vehicle and equipment replacement to the individual funds. The changes in net position of the Internal Service Fund is reported with governmental activities in the Statement of Activities. Changes in net position in governmental activities Page 46 The notes to the basic financial statements are an integral part of this statement. 514,107 $ 6,891,848 Town of Fountain Hills, Arizona Statement of Net Position Proprietary Funds June 30, 2024 Governmental Activities Internal Service Funds Assets Current assets: Cash and investments Total current assets $ Noncurrent assets: Capital assets, net of accumulated depreciation Total noncurrent assets Total assets 85,453 85,453 2,728,456 Liabilities Current liabilities: Accounts payable Other liabilities Total current liabilities Net position Net investment in capital assets Unrestricted Total net position Page 47 2,643,003 2,643,003 4,469 106 4,575 $ 85,453 2,638,428 2,723,881 The notes to the basic financial statements are an integral part of this statement. Town of Fountain Hills, Arizona Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For the Year Ended June 30, 2024 Governmental Activities Internal Service Funds Operating revenues Charges for services Total operating revenues $ Operating expenses Costs of services Depreciation Total operating expenses 45,000 7,769 52,769 Operating income (loss) 367,225 Nonoperating revenues (expenses) Investment earnings Gain on sale of capital assets Total nonoperating revenue (expenses) 126,157 20,725 146,882 Changes in net position 514,107 Net position, beginning of year, previously reported Adjustments to beginning net position Net position, beginning of year, as restated Net position, end of year Page 48 419,994 419,994 160,181 2,049,593 2,209,774 $ 2,723,881 The notes to the basic financial statements are an integral part of this statement. Town of Fountain Hills, Arizona Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2024 Governmental Activities Internal Service Funds Increase/Decrease in Cash and Cash Equivalents Cash flows from operating activities Cash received from charges for services Cash payments to suppliers for goods and services Net cash provided by/used for operating activities $ 419,994 (40,425) 379,569 Cash flows from capital activities Purchase of property and equipment Proceeds from sale of capital assets Net cash provided by/used for capital activities (93,222) 31,173 (62,049) Cash flows from investing activities Investment income Net cash provided by/used for investing activities 126,157 126,157 Net increase/decrease in cash and cash equivalents 443,677 Cash and cash equivalents, beginning of year, as restated 2,199,326 Cash and cash equivalents, end of year $ 2,643,003 Reconciliation of Operating Income/Loss to Net Cash Provided by/Used for Operating Activities Operating income/loss Adjustments to reconcile operating income/loss to net cash provided by/used for operating activities: Depreciation Changes in assets and liabilities: Increase/decrease in accounts payable Increase/decrease in other liabilities Total adjustments $ Net cash provided by/used for operating activities $ Page 49 367,225 7,769 4,469 106 12,344 The notes to the basic financial statements are an integral part of this statement. 379,569 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2024 Note 1 – Summary of Significant Accounting Policies The financial statements of the Town of Fountain Hills, Arizona (Town) have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the Town’s accounting policies are described below. A. Reporting Entity The Town’s major operations include development services, culture and recreation, public works, public safety and general administrative services. The Town is a municipal corporation governed by an elected Mayor and Council. The financial reporting entity consists of a primary government and its component units. A component unit is a legally separate entity that must be included in the reporting entity in conformity with generally accepted accounting principles. The Town is a primary government that has a separately elected governing body, is legally separate, and is fiscally independent of other state or local governments. Furthermore, the component units combined with the Town for financial statement presentation purposes and the Town are not included in any other governmental reporting entity. Consequently, the Town’s financial statements include only the funds of those organizational entities for which its elected governing body is financially accountable. Eagle Mountain Community Facilities District and the Cottonwoods Maintenance District. As special purpose districts and separate political subdivisions under the Arizona Constitution, the Districts can levy taxes and issue bonds independently of the Town. Property owners in the designated areas are assessed taxes for the costs of operating the Districts. The Town Council serves as the Board of Directors; however, the Town has no liability for the Districts’ debt, the Districts are responsible for the debt; the debt is therefore not subject to the Town’s debt limit. The Districts cannot be part of another reporting entity. The Districts’ governing bodies are substantially the same as the Town and the Town’s management oversees operations, resulting in the Town having the ability to exercise control. As a result, for financial reporting purposes, transactions of the Districts are combined together and included as if they were part of the Town’s operations. Town of Fountain Hills, Arizona Municipal Property Corporation. The Town of Fountain Hills, Arizona Municipal Property Corporation’s (MPC) Board of Directors consists of three members which are appointed by the Fountain Hills Town Council. The MPC, which is a nonprofit corporation incorporated under the laws of the State of Arizona, was formed for the sole purpose of assisting the Town in obtaining financing for various projects of the Town. The Town has a “moral obligation” for the repayment of the MPC’s bonds. The MPC cannot be part of another reporting entity. The MPC provides services exclusively to the Town. As a result, for financial reporting purposes, transactions of the MPC are combined together and included as if they were part of the Town’s operations. Page 50 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2024 Note 1 – Summary of Significant Accounting Policies B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) present financial information about the Town as a whole. The reported information includes all of the Town's component units. For the most part, the effect of internal activity has been removed from these statements. Interfund services provided and used, such as interfund transfers, are not eliminated in the process of consolidation. Governmental activities normally are supported by taxes and intergovernmental revenues. The Town does not have any fiduciary or business-type activities. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes, unrestricted state shared revenues, investment income and other items not included among program revenues are reported instead as general revenues. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation Government-wide Financial Statements – The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. As a general rule, the effect of internal activity has been eliminated from the government-wide financial statements; however, the effects of interfund services provided and used between functions are reported as expenses and program revenues at amounts approximating their external exchange value. Fund Financial Statements – Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Town considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, and claims and judgments, are recorded only when payment is due. Page 51 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2024 Note 1 – Summary of Significant Accounting Policies Property taxes, sales taxes, franchise taxes, state shared revenues, licenses and permits, charges for services, and investment earnings associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Grants and similar awards are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. Miscellaneous revenue is not susceptible to accrual because generally they are not measurable until received in cash. Unearned revenues arise when resources are received by the Town before it has legal claim to them, as when grant monies are received prior to meeting all eligibility requirements imposed by the provider. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. The Town reports the following major governmental funds. General Fund – The General Fund is the Town’s primary operating fund. This fund accounts for all financial resources of the Town, except those required to be accounted for in other funds. Highway User Revenue Fund (HURF) – This fund accounts for the Town’s share of motor vehicle fuel tax revenues and sales tax. Grants Fund – This fund accounts for the activities of various restricted grants and contributions received by the Town. Capital Projects Fund – This fund accounts for the capital improvements to various projects and equipment purchases of the Town. Additionally, the Town reports the following fund type: Proprietary Fund – The Proprietary Fund is comprised of two Internal Service Funds that account for the operation of technology, vehicle, and equipment replacement services to other Town departments on a cost reimbursement basis. The Proprietary Fund financial statements are reported using the economic resources measurement focus and accrual basis of accounting and are presented in a single column. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Town’s internal service fund are charges to Town departments for technology, vehicle, and equipment replacement. Operating expenses for the internal service fund include the cost of goods and services. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Page 52 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2024 Note 1 – Summary of Significant Accounting Policies D. Cash and Investments For purposes of the Statement of Cash Flows, the Town considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents at year end was cash and investments in the State Treasurer’s Local Government Investment Pool. Cash and investments at year end were cash on hand, cash in bank, restricted cash, cash and investments held by the State Treasurer, and investments in the State Treasurer’s Local Government Investment Pool. Cash and investments are pooled, except for investments that are restricted under provisions of bond indentures or other restrictions that are required to be reported in the individual funds. Arizona Revised Statutes authorize the Town to invest public monies in the State Treasurer’s local government investment pools, the County Treasurer’s investment pool, obligations of the U.S. Government and its agencies, obligations of the state and certain local government subdivisions, interest-bearing savings accounts and certificates of deposit, collateralized repurchase agreements, certain obligations of U.S. corporations, and certain other securities. Investments are stated at fair value. Statutes do not include any requirements for credit risk, custodial credit risk, concentration of credit risk, interest rate risk, or foreign currency risk for the Town’s investments. Arizona statute requires a pooled collateral program for public deposits and a Statewide Collateral Pool Administrator (Administrator) in the State Treasurer’s Office. The purpose of the pooled collateral program is to ensure that governmental entities’ public deposits placed in participating depositories are secured with collateral of 102 percent of the public deposits, less any applicable federal depository insurance. An eligible depository may not retain or accept any public deposit unless it has deposited the required collateral with a qualified escrow agent or the Administrator. The Administrator manages the pooled collateral program, including reporting on each depository’s compliance with the program. E. Investment Earnings Investment earnings is composed of interest, dividends, and net changes in the fair value of applicable investments. Investment earnings is a component of revenue in the governmental funds financial statements and is reported in nonoperating revenue in the proprietary fund financial statements. Page 53 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2024 Note 1 – Summary of Significant Accounting Policies F. Receivables and Payables Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non‐current portion of interfund loans). Interfund balances between governmental funds are eliminated on the statement of net position. G. Inventory All inventories are valued at average cost using the first‐in/first‐out (FIFO) method. Inventories consist of expendable supplies held for consumption. The cost of such inventories is recorded as expenditures/expenses when consumed rather than when purchased. H. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government‐wide and fund financial statements. The cost of prepaid items is recorded as expenditures/expenses when consumed rather than when purchased. I. Capital Assets Capital assets, which include land and improvements, artwork, buildings and improvements, vehicles, machinery, and equipment, construction in progress, infrastructure assets, and intangible right‐to‐use assets are reported in the government‐wide financial statements. Capital assets are defined by the Town as assets with an initial, individual cost in excess of $10,000 and an estimated useful life in excess of one year. Capital assets are recorded at historical cost, if purchased or constructed. Donated capital assets are recorded at the acquisition value. The costs of normal maintenance and repairs that do not add to the value of the assets or materially extend the life of the asset are not capitalized. Page 54 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2024 Note 1 – Summary of Significant Accounting Policies Capital assets of the Town are depreciated using the straight‐line method over the following estimated useful lives: Buildings and building improvements Improvements other than buildings Infrastructure Vehicles, machinery and equipment 20 ‐ 50 years 20 years 15 ‐ 50 years 5 ‐ 20 years J. Compensated Absences The Town’s employee vacation and sick leave policies generally provide for granting vacation and sick leave with pay. Sick leave and vacation benefits accrue as pay periods are completed at the current rate of pay. The current and long‐term liabilities, including related benefits, for accumulated vacation and sick leave are reported on the government‐wide financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee termination, resignations and retirements. Generally, resources from the General Fund are used to pay for compensated absences. K. Interfund Activity Flows of cash from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers between governmental funds are eliminated in the statement of activities. Interfund transfers in the fund financial statements are reported as other financing sources/uses in governmental funds. L. Net Position Flow Assumption In the government‐wide financial statements the Town generally applies restricted resources first when outlays are incurred for purposes for which either restricted or unrestricted amounts are available. However, the Town may apply unrestricted resources before restricted resources when necessary to ensure compliance with the State of Arizona's Expenditure Limitation Law for Towns and Cities. Page 55 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2024 Note 1 – Summary of Significant Accounting Policies M. Leases As lessor, the Town recognizes lease receivables with an initial, individual value of $50,000 or more. If there is no stated rate in the lease contract (or if the stated rate is not the rate the Town charges the lessee) and the implicit rate cannot be determined, the Town uses its own estimated incremental borrowing rate as the discount rate to measure lease receivables. The Town’s estimated incremental borrowing rate was determined based on the prevailing federal funds rate at the beginning of the lease term, since the Town does not have outstanding debt. This rate reflects the low risk of renting these facilities over a long lease period with multiple renewals. Note 2 – Fund Balance Classifications Fund balances of the governmental funds are reported separately within classifications based on a hierarchy of the constraints placed on the use of those resources. The classifications are based on the relative strength of the constraints that control how the specific amounts can be spent. The classifications are nonspendable, restricted, committed, assigned, and unassigned fund balance classifications. Nonspendable. The nonspendable fund balance classification includes amounts that cannot be spent because they are not in spendable form, or legally or contractually required to be maintained intact. Restricted. Fund balance is reported as restricted when constraints placed on the use of resources are either externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or is imposed by law through constitutional provisions or enabling legislation. Committed. The committed fund balance classification includes amounts that can be used only for the specific purposes imposed by formal action of the Town Council, the Town’s highest level of decision making authority, by ordinance. Those committed amounts cannot be used for any other purpose unless the Town Council removes or changes the specified use by taking the same type of action it employed to previously commit those amounts. Assigned. Amounts in the assigned fund balance classification are intended to be used by the Town for specific purposes but do not meet the criteria to be classified as restricted or committed. In governmental funds other than the General Fund, assigned fund balance represents the remaining amount that is not restricted or committed. In the General Fund, assigned amounts represent intended uses established by the Town Council or a management official delegated that authority by formal Town Council action. The authority to make assignments has been delegated by the Town Council to the Chief Financial Officer. Page 56 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2024 Note 2 – Fund Balance Classifications Unassigned. Unassigned fund balance is the residual classification for the General Fund and includes all spendable amounts not contained in the other classifications. In other governmental funds, the unassigned classification is used only to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed, or assigned. The Town generally applies restricted resources first when outlays are incurred for purposes for which either restricted or unrestricted (committed, assigned, and unassigned) amounts are available. Similarly, within unrestricted fund balance, committed amounts are generally reduced first followed by assigned, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used. However, the Town may apply unrestricted resources first before restricted resources when necessary to ensure compliance with the State of Arizona’s Expenditure Limitation Law for Towns and Cities. The Town has established a fund balance policy which states that the combined General Fund operating fund balance should be at least 20 percent of the average actual General Fund revenues for the preceding five fiscal years. The Town has established a stabilization fund (Rainy Day fund) in the Town’s fund balance policy. The Rainy Day fund had a balance of $4,466,782, reported as a committed fund balance at June 30, 2024. The Rainy Day fund may only be used for the following: 1) to replace the loss of more than 20 percent of the Town’s local share of state shared revenues, 2) for any event that threatens the health, safety or welfare of the Town’s citizens, 3) for any event that threatens the fiscal stability of the Town, and lastly 4) to address any matter declared as an emergency by the governor of the State of Arizona or the Mayor of the Town. All withdrawals from the Rainy Day fund shall be subject to the following rules: 1) any appropriation shall require the approval by at least 2/3 vote by the Town Council, and 2) the maximum amount of Rainy Day withdrawal in any fiscal year shall not exceed one-half of the total balance in the fund. Replenishment of the Rainy Day fund when spent by the Town should not exceed a period of more than five years, and should be repaid in annual installments of not less than one percent of the previous fiscal year General Fund balance. Repayments shall be appropriated as part of the annual budget adoption. Page 57 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2024 Note 2 – Fund Balance Classifications The table below provides detail of the major components of the Town’s fund balance classifications at year end. General Fund Fund Balances: Nonspendable: Inventory Prepaid items Restricted: Capital Projects Debt Service Public works Local Court Enhancement Opioid abatement Development Fees Committed: Rainy Day Assigned: Capital Projects Downtown Strategy Economic Development Tourism Public Art Environmental Public works Unassigned: Total fund balances $ Highway User Revenue Fund 5,099 $ 33,080 Capital Projects Fund Grants Fund $ $ Non‐Major Governmental Funds $ 13,500 Total $ 1,460 18,507 58,291 6,223,708 439,487 26,630 2,329,679 4,466,782 5,099 48,040 18,507 58,291 6,223,708 439,487 26,630 2,329,679 4,466,782 14,152,865 14,152,865 691,503 887,648 37,527 41,023 363,045 3,416,823 13,070,591 4,868,170 $ 46,277,248 691,503 887,648 37,527 41,023 363,045 3,335,921 13,070,591 $ 17,575,552 $ 9,559,629 $ 80,902 121,032 $ 14,152,865 $ Note 3 – Cash and Investments Custodial Credit Risk – Deposits. Custodial credit risk is the risk that in the event of bank failure the Town’s deposits may not be returned to the Town. The Town does not have a deposit policy for custodial credit risk. At year end, the carrying amount of the Town’s deposits was $1,785,969 and the bank balance was $3,109,891. Page 58 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2024 Note 3 – Cash and Investments Fair Value Measurements. The Town categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset.    Level 1 inputs are quoted prices in active markets for identical assets Level 2 inputs are significant other observable inputs Level 3 inputs are significant unobservable inputs Valuation Techniques. Equity securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. Debt securities classified in Level 2 of the fair value hierarchy are valued using matrix pricing techniques. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. The State Treasurer’s pools are external investment pools, the Local Government Investment Pool (Pool 5) and Local Government Investment Pool‐Government (Pool 7), with no regulatory oversight. The activity and performance of the pools are reviewed monthly by the State Board of Investment. The fair value of each participant’s position in the State Treasurer investment pools approximates the value of the participant’s shares in the pool and the participants’ shares are not identified with specific investments. Participants in the pool are not required to categorize the value of shares in accordance with the fair value hierarchy. All investments in which the fair value hierarchy is applicable are measured at fair value on a recurring basis. At year end, cash and investments as of June 30, 2024, are classified in the accompanying financial statements as follows: Carrying amount of investments Carrying amount of cash deposits Cash on hand Total cash and investments Page 59 $ 47,921,528 1,785,969 700 $ 49,708,197 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2024 Note 3 – Cash and Investments At year end, the Town’s investments consisted of the following: Investment Maturities (in Years) Investment Type U.S. Government and Agency Notes Supra‐National Notes Federal Agency Notes Corporate and Foreign Bonds Asset Backed Securities Certificates of Deposit US Bank Money Market Funds Category Level 1 Level 1 Level 1 Level 2 Level 2 Level 2 Level 1 Fair Value Less than 1 1‐5 $ 9,227,193 $ 3,890,514 $ 5,336,679 321,506 143,378 178,128 249,506 249,506 2,652,460 936,483 1,715,977 565,489 565,489 472,663 472,663 182,192 182,192 $ 5,402,073 $ 8,268,936 State Treasurer’s Investment Pool 7 Total Not applicable 34,250,519 33 days average maturities $ 47,921,528 Credit Rating S&P n/a AAA AA+ BBB+ to AA N/A, AAA n/a n/a Moody’s N/A, Aaa Aaa Aaa Baa1 to A1 N/A, Aaa n/a n/a Interest Rate Risk. Interest rate risk is the risk that changes in interest rates may reduce the market value of Town investments. In accordance with its investment policy, the Town manages its exposure to declines in fair values by the following:  Structuring the investment portfolio so that securities mature concurrent with the anticipated cash requirements for ongoing operations, thereby avoiding, as much as possible, the need to sell securities into an adverse market environment prior to maturity.  Investing funds primarily in shorter‐term securities or similar investment pools and limiting the average maturity of the portfolio in accordance with the needs of the Town.  With respect to any firm or individual given responsibility for investments utilizing external research and advice regarding the current interest rate outlook and global economic condition to optimize portfolio duration strategy. Credit Risk. Credit risk is the risk of default of debt by an issuer or counterparty to an investment. The Town will limit credit risk by limiting investments in the Town’s portfolio to the asset classes designated as acceptable in ARS §35‐323. When possible, analysis of the credit worthiness of all individual debt issuers held in the portfolio should be conducted on an annual basis in an effort to guard against investing in a weak or deteriorating credit situation. Additionally, the Town will pre‐qualify financial institutions, brokers/dealers, and investment advisers with which the Town will do business. The State Treasurer’s Local Government Investment Pool 7 was rated AAA by Moody’s at year end. Page 60 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2024 Note 3 – Cash and Investments Custodial Credit Risk – Investments. For an investment, custodial credit risk is the risk that, in the event of the counterparty’s failure, the Town will not be able to recover the value of its investments or collateral securities that are in an outside party’s possession. The Town does not have an investment policy for custodial credit risk. The Town’s investment in the State Treasurer’s investment pool represents a proportionate interest in the pool’s portfolio; however, the Town’s portion is not identified with specific investments and is not subject to custodial credit risk. Concentration of Credit Risk. Concentration of credit risk is the risk of loss from over concentration of investments. In accordance with its investment policy, the Town diversifies its investment portfolio to minimize the risk of loss resulting from over concentration of assets in a specific maturity, specific issuer, or specific class of securities. With the exception of U.S. Treasury notes and securities and authorized pools, the investment policy establishes a maximum percentage of 30 percent in insured or collateralized certificates of deposit; 20 percent in certificates of deposit registry services; 30 percent in commercial paper; and 30 percent in bonds, debentures, or notes. Investment Type U.S. Government and Agency Notes Supra-National Notes Federal Agency Notes Corporate and Foreign Bonds Asset Backed Securities Certificates of Deposit US Bank Money Market Funds State Treasurer’s investment pool 7 Fair Value $ 9,227,193 321,506 249,506 2,652,460 565,489 472,663 182,192 34,250,519 $ 47,921,528 Percent of Town Investments 19.3% 0.7% 0.5% 5.5% 1.2% 1.0% 0.4% 71.4% Note 4 – Receivables Intergovernmental receivables consist of sales taxes and shared revenues of $1,271,764 receivable from the State, opioid seƩlement agreement revenues of $390,988 receivable through Maricopa County, and grant receivables of $16,350. Leases receivable of $1,313,858 consist of revenues from four cell tower land use agreements. Payments under these agreements of $140,492 were recognized as leases and rents revenues in the current year. Opioid seƩlement agreement revenues of $364,358 and lease revenues of $1,188,619 are not scheduled to be collected in the subsequent year. Page 61 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2024 Note 5 – Capital Assets A summary of capital asset activity at year end is as follows: Governmental Activities Capital assets, not being depreciated: Land Artwork Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Infrastructure Buildings and building improvements Improvements other than buildings Vehicles, machinery and equipment Total capital assets being depreciated Less accumulated depreciation for: Infrastructure Buildings and building improvements Improvements other than buildings Vehicles, machinery and equipment Total accumulated depreciation Total capital assets, being depreciated, net Governmental activities capital assets, net Beginning Balance $ 29,690,368 2,608,900 3,932,181 36,231,449 Decrease Ending Balance 10,000 4,537,222 4,547,222 $ 29,690,368 2,598,900 2,472,668 34,761,936 64,190 64,190 157,578,806 23,825,602 21,737,425 5,460,849 208,602,682 (64,190) (64,190) (116,234,404) (8,465,244) (13,854,839) (2,820,004) (141,374,491) $ 4,547,222 67,228,191 $ 101,990,127 Increase $ $ 3,077,709 3,077,709 155,656,694 23,434,482 19,604,847 5,023,940 203,719,963 1,922,122 391,120 2,132,578 501,099 4,946,909 (114,553,212) (7,964,931) (13,151,247) (2,443,559) (138,112,949) (1,681,192) (500,313) (703,592) (440,635) (3,325,732) 65,607,014 $ 101,838,463 1,621,177 $ 4,698,886 Depreciation expense was charged to functions/programs as follows: Governmental activities: General government Development services Public safety Streets and highways Culture and recreation Total depreciation expense Page 62 $ 224,616 19,954 337,301 1,645,098 1,098,763 $ 3,325,732 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2024 Note 5 – Capital Assets Construction Commitments – At June 30, 2024, the Town has the following active construction commitments. The resources for these commitments have been accumulated in the Capital Projects Fund. Governmental Activities Remaining Spent‐to‐Date Commitment Project Golden Eagle Impoundment Drainage Shea Blvd Widening ‐ Palisades to Technology Town‐wide Guardrail Replacement Total commitments $ 339,320 330,307 26,105 695,732 $ $ $ 97,975 15,266 23,334 136,575 Note 6 – Changes in Long‐Term Liabilities Long‐term liability activity for the current fiscal year was as follows: Beginning Balance Governmental activities: Compensated absences payable $ Governmental activity long‐term $ Liabilities Additions Ending Balance Reductions Due Within One Year 639,914 $ 794,382 $ 435,133 $ 999,163 $ 445,406 639,914 $ 794,382 $ 435,133 $ 999,163 $ 445,406 Note 7 – Interfund Transfers Interfund transfers for the year ended June 30, 2024 were as follows: Interfund transfers: Transfers in General Fund Highway User Revenue Fund Capital Projects Fund Non‐Major Governmental Funds Total Page 63 General Fund $ $ $ 6,907,884 500,000 7,407,884 $ Transfers out Non‐Major Capital Governmental Projects Funds $ 245,884 $ 4,200,000 4,200,000 $ 94,253 340,137 $ Total 245,884 4,200,000 6,907,884 594,253 11,948,021 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2024 Note 7 – Interfund Transfers The General Fund transferred $6,907,884 to the Capital Projects Fund for future projects and $500,000 to the Environmental Fund for continued storm drain and wash maintenance. The Economic Development Fund transferred $94,253 to the Tourism Fund to provide funding for operating costs of the tourism program. The Development Fee Fund transferred $245,884 to the General Fund for fire department dispatch telecommunications equipment. The Capital Projects Fund transferred $4,200,000 to Highway User Revenue Fund for additional pavement maintenance projects. Note 8 – Contingent Liabilities Compliance – Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the state government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures/expenses that may be disallowed by the grantor cannot be determined at this time, although the Town expects such amounts, if any, to be immaterial. Lawsuits – The Town is a party to a number of various types of lawsuits, many of which normally occur in governmental operations. The ultimate outcome of the actions is not determinable; however, Town management believes that the outcome of these proceedings, either individually or in the aggregate, will not have a materially adverse effect on the accompanying financial statements. Note 9 – Risk Management The Town is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters. The Town’s insurance protection is provided by the Arizona Municipal Risk Retention Pool (Pool). The Pool is made up of various towns and cities within Arizona that operate a common risk management and insurance program. The Pool is structured such that member premiums are based on an actuarial review that will provide adequate reserves to allow the Pool to meet its expected financial obligations. The Pool has the authority to assess its’ members additional premiums should reserves and annual premiums be insufficient to meet the Pool’s obligations. The Town joined the Arizona Municipal Workers’ Compensation Pool (Pool) together with other governments in the state for risks of loss related to workers’ compensation claims. The Pool is a public entity risk pool currently operating as a common risk management and insurance program for towns and cities in the State. The Town is responsible for paying a premium, based on an experience rating formula that allocates pool expenditures and liabilities among members. Page 64 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2024 Note 9 – Risk Management The Town continues to carry commercial insurance for all other risks of loss, including employee health, dental, and vision insurance. There were no settlements that exceeded insurance coverage in any of the past three years. Note 10 – Retirement Plans Defined Contribution Pension Plan All full‐time Town employees participate in a defined contribution pension plan administered by MissionSquare Retirement. The Town Council established and may amend the pension plan’s benefit terms, including contribution requirements. The Town and the employee are each required to contribute 11 percent of the employee’s gross pay. For the year ended June 30, 2024, the Town recognized pension expense of $682,701. Employees are immediately vested in their own contributions and earnings on those contributions and become vested in Town contributions and earnings on Town contributions on a pro rata basis over five years. Nonvested Town contributions are forfeited upon termination of employment. Such forfeitures are used to reduce the Town’s future contributions to the pension plan. For the year ended June 30, 2024, forfeitures reduced the Town’s pension expense by $53,305. Note 11 – Restatements of Beginning Balances Change within the Financial Reporting Entity – In fiscal year 2023‐24, Town management re‐ evaluated the presentation and classifications of funds on the financial statements. They considered current use of funds, future use of funds, and reader understandibility. In doing so, management made the decision to present the Public Art Fund as its own special revenue fund. Its fund activity was previously reported in the General Fund. Furthermore, management made the decision to present the Vehicle and Equipment Replacement Fund as an internal service fund. Its fund activity was previously reported in the General Fund and Highway User Revenue Fund. Page 65 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2024 Note 11 – Restatements of Beginning Balances The effect of the matters noted above resulted in adjustments to and restatements of beginning fund balance and fund net position, as follows: June 30, 2023, As Previously Reported Governmental Funds Major Funds: General Fund Highway User Revenue Fund Nonmajor Fund Public Art Fund Proprietary Funds Internal Service Funds Vehicle and Equipment Replacement Fund Page 66 $ 17,385,544 $ 7,333,267 Change within the Financial Reporting Entity (1,703,768) $ (410,409) June 30, 2023, As Restated 15,681,776 6,922,858 64,584 64,584 2,049,593 2,049,593 Required Supplementary Information Page 67 Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual General For the Year Ended June 30, 2024 Budget Variance with Revenues Sales taxes Franchise taxes Licenses and permits Leases and rents Intergovernmental Charges for services Other revenue Fines and forfeitures Investment earnings Total revenues $ Expenditures Current: General government Mayor and council Administration Non departmental Municipal court Total general government Development services Public safety Fire and emergency Law enforcement Total public safety Public works Culture and recreation Capital outlay Total expenditures Final Budget Original Final Actual 13,154,799 $ 390,000 770,208 277,278 10,387,730 244,215 141,575 200,000 20,000 25,585,805 13,154,799 $ 390,000 770,208 277,278 10,387,730 244,215 141,575 200,000 20,000 25,585,805 16,834,517 $ 351,118 1,411,600 359,479 10,349,568 242,182 270,109 227,192 728,524 30,774,289 3,679,718 (38,882) 641,392 82,201 (38,162) (2,033) 128,534 27,192 708,524 5,188,484 65,494 2,948,360 3,238,088 495,409 6,747,351 1,318,663 75,494 2,948,360 730,588 495,409 4,249,851 1,318,663 68,215 2,741,118 640,311 492,925 3,942,569 1,275,320 7,279 207,242 90,277 2,484 307,282 43,343 5,589,825 6,388,595 11,978,420 1,642,802 3,882,569 16,000 25,585,805 5,402,252 6,388,595 11,790,847 1,692,802 3,882,569 66,000 23,000,732 5,104,358 6,225,786 11,330,144 1,554,076 3,426,968 189,436 21,718,513 297,894 162,809 460,703 138,726 455,601 (123,436) 1,282,219 2,585,073 9,055,776 3,906,265 Excess (deficiency) of revenues over expenditures Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) (1,000,000) (1,000,000) (1,000,000) (1,000,000) 245,884 (7,407,884) (7,162,000) 245,884 (6,407,884) (6,162,000) Changes in fund balances (1,000,000) 1,585,073 1,893,776 (2,255,735) Fund balances, beginning of year, previously reported Adjustments to beginning fund balances Fund balances, beginning of year, as restated 17,385,544 (1,703,768) 15,681,776 17,385,544 (1,703,768) 15,681,776 17,385,544 (1,703,768) 15,681,776 14,681,776 $ 17,266,849 $ 17,575,552 $ Fund balances, end of year Page 68 $ See accompanying notes to this schedule. (2,255,735) Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual Highway User Revenue For the Year Ended June 30, 2024 Budget Variance with Original Revenues Sales taxes Intergovernmental Charges for services Other revenue Investment earnings Total revenues $ Actual 1,064,618 $ 2,703,580 100,000 31,000 10,000 3,909,198 1,064,618 $ 2,703,580 100,000 31,000 10,000 3,909,198 1,417,926 $ 2,720,831 120 47,261 558,549 4,744,687 353,308 17,251 (99,880) 16,261 548,549 835,489 7,048,280 6,192,221 115,695 6,307,916 806,059 (65,695) 740,364 1,575,853 Expenditures Current ‐ Public works Capital outlay Total expenditures 7,048,280 6,998,280 50,000 7,048,280 Excess (deficiency) of revenues over expenditures (3,139,082) (3,139,082) (1,563,229) Other financing sources (uses) Transfers in Total other financing sources (uses) 4,200,000 4,200,000 4,200,000 4,200,000 4,200,000 4,200,000 Changes in fund balances 1,060,918 1,060,918 2,636,771 Fund balances, beginning of year, previously reported Adjustments to beginning fund balances Fund balances, beginning of year, as restated 7,333,267 (410,409) 6,922,858 7,333,267 (410,409) 6,922,858 7,333,267 (410,409) 6,922,858 7,983,776 $ 7,983,776 $ 9,559,629 $ Fund balances, end of year Page 69 $ Final Budget Final See accompanying notes to this schedule. 1,575,853 1,575,853 Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual Grants For the Year Ended June 30, 2024 Budget Variance with Original Revenues Intergovernmental Investment earnings Total revenues $ Final 1,190,000 (922,717) 15,288 (907,429) 650,208 511,000 1,161,208 265,136 11,000 276,136 385,072 500,000 885,072 Excess (deficiency) of revenues over expenditures 28,792 6,435 (22,357) Changes in fund balances 28,792 6,435 (22,357) 114,597 114,597 114,597 114,597 $ 143,389 $ 121,032 $ Page 70 1,190,000 1,190,000 1,190,000 Fund balances, beginning of year Fund balances, end of year 1,190,000 $ Final Budget 267,283 $ 15,288 282,571 Expenditures Current ‐ General government Capital outlay Total expenditures 1,190,000 $ Actual $ See accompanying notes to this schedule. (22,357) Town of Fountain Hills, Arizona Note to Required Supplementary Information June 30, 2024 Note 1 – Budgetary Basis of Accounting The Town budget is prepared on a basis consistent with accounting principles generally accepted in the United States of America. The Town Council follows these procedures in establishing the budgetary data reflected in the financial statements: 1. In accordance with Arizona Revised Statutes, the Town Manager submits a proposed budget for the fiscal year commencing the following July 1 to the Town Council. The operating budget includes proposed expenditures and the means of financing them for the upcoming year. 2. Public hearings are conducted to obtain taxpayer comment. 3. Prior to the third Monday in August, the budget for the Town is legally enacted through passage of a resolution. To ensure compliance with the expenditure limitation, a uniform expenditure report must be filed with the State each year. This report, issued under a separate cover, reconciles total Town expenditures from the audited basic financial statements to total expenditures for reporting in accordance with the State’s uniform expenditure reporting system (A.R.S 41‐1279.07). 4. Expenditures may not legally exceed the expenditure limitation described below for all fund types as a whole. For management purposes, the Town adopts a budget by department for the General Fund and in total by fund for other funds. The Town Manager, subject to Town Council approval, may at any time transfer any unencumbered appropriation balance or portion thereof between departments. The adopted budget cannot be amended in any way without Town Council approval. 5. Formal budgetary integration is employed as a management control device during the year for all governmental funds on essentially the same modified accrual basis of accounting used to record actual revenues and expenditures. The Town is subject to the State of Arizona’s Expenditure Limitation Law for Towns and Cities. This law limits the amount of local revenues (as defined in the State Constitution, Article IX, Section 20) the Town may spend each year. The state adjusts the limitation each year for changes in population and inflation. The limitation is applied to the total expenditures of local revenues of all funds. The law does not limit the Town’s expenditures of revenues excluded from the State Constitution’s definition of local revenue. The Town complied with the law during the year. Page 71 (This page intentionally left blank) Page 72 Combining and Individual Fund Financial Statements and Schedules Page 73 (This page intentionally left blank) Page 74 Governmental Funds Page 75 (This page intentionally left blank) Page 76 Non‐Major Governmental Funds Special Revenue Funds Downtown Strategy Fund – accounts for the portion of Town sales tax for the development of the downtown area. Economic Development Fund – accounts for the portion of Town sales tax for economic development and tourism. Tourism Fund – accounts for the portion of Town sales tax and grants received for tourism activities. Public Art Fund – accounts for developer in‐lieu contributions for maintenance of art and for the installation of art throughout the community. Local Court Enhancement Fund – accounts for a local court surcharge for court enhancement. Environmental Fund – accounts for all monies received from collection of the environmental fee. Cottonwoods Maintenance Fund – accounts for all monies received to pay for maintenance of the Cottonwoods Maintenance District. Debt Service Funds General Obligation Debt Service Fund – accounts for the Town’s property tax revenues received to pay the debt service of the Town’s general obligation bonds. Eagle Mountain Debt Service Fund – accounts for the property tax revenues restricted to pay the debt service of the Eagle Mountain Community Facilities District. Municipal Property Corporation Debt Service Fund – accounts for the revenues received to pay the debt service on MPC revenue bonds. Capital Projects Fund Development Fees Fund – accounts for restricted development fees collected from building permits. Page 77 Town of Fountain Hills, Arizona Combining Balance Sheet Non‐Major Governmental Funds June 30, 2024 Special Revenue Funds Downtown Strategy Assets Cash and investments Intergovernmental receivable Interest receivable Prepaid items Total assets $ Page 78 Public Art Local Court Enhancement 42,969 $ 41,023 $ 438,933 554 675 898,438 785 43,754 41,023 439,487 4,009 6,106 10,115 5,442 5,442 675 785 691,503 691,503 887,648 888,323 37,527 38,312 41,023 41,023 439,487 696,046 $ 898,438 $ 43,754 $ 41,023 $ 439,487 4,543 4,543 Fund balances Nonspendable Restricted Assigned Total fund balances Tourism 872,256 $ 25,507 696,046 Liabilities Accounts payable Accrued wages and benefits Total liabilities Total liabilities, deferred inflows of resources and fund balances 687,956 $ 6,377 1,713 Economic Development 439,487 $ Special Revenue Funds Environmental $ $ Cottonwoods Maintenance General Obligation Debt Service Debt Service Funds Capital Projects Fund Municipal Property Eagle Mountain Corporation Debt Service Debt Service Development Fees Total Non‐Major Governmental Funds 548,588 $ 19,755 $ 163,809 $ 20,208 $ 12,045 $ 2,329,679 $ 548,588 19,755 163,809 20,208 12,045 2,329,679 185,543 1,248 137,573 198 185,543 1,248 137,573 198 18,507 26,236 20,010 12,045 2,329,679 363,045 363,045 18,507 26,236 20,010 12,045 2,329,679 1,460 2,845,964 2,020,746 4,868,170 548,588 $ 19,755 $ 163,809 $ 20,208 $ 12,045 $ 2,329,679 $ 5,212,832 Page 79 5,177,221 32,438 1,713 1,460 5,212,832 338,556 6,106 344,662 Town of Fountain Hills, Arizona Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non‐Major Governmental Funds For the Year Ended June 30, 2024 Special Revenue Funds Downtown Strategy Revenues Property taxes Sales taxes Licenses and permits Intergovernmental Charges for services Other revenue Fines and forfeitures Investment earnings Total revenues $ Economic Development $ 141,793 Tourism $ Public Art $ Local Court Enhancement $ 567,170 119,793 5,000 2,534 1,108 33,698 175,491 38,133 607,837 6,626 127,527 109,910 218,203 317,680 2,903 7,903 28,651 158 28,809 Expenditures Current: General government Public works Culture and recreation Capital outlay Debt service: Fiscal charges Total expenditures 109,910 218,203 317,680 31,464 5,000 Excess (deficiency) of revenues over expenditures 65,581 389,634 (190,153) (23,561) 23,809 (23,561) 23,809 31,464 Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) 94,253 (94,253) (94,253) 94,253 Changes in fund balances 65,581 295,381 (95,900) Fund balances, beginning of year, previously reported Adjustments to beginning fund balances Fund balances, beginning of year, as restated 625,922 592,942 134,212 Fund balances, end of year Page 80 5,000 $ 415,678 625,922 592,942 134,212 64,584 64,584 691,503 $ 888,323 $ 38,312 $ 41,023 $ 415,678 439,487 Special Revenue Funds Cottonwoods Maintenance Environmental $ $ Capital Projects Fund Debt Service Funds General Obligation Debt Eagle Mountain Debt Service Service 9,815 $ 26 $ Municipal Property Corporation $ Development Fees Total Non‐Major Governmental Funds $ $ 1,692 323,749 30,492 32,184 915 10,730 426,358 7,561 8,509 8,535 1,062 1,062 628 628 121,690 445,439 137,573 788,366 433,919 31,464 137,399 137,399 563,757 7,561 137,573 198 198 10 10 (531,573) 3,169 (129,038) 864 618 208 1,391,356 445,439 54,789 (245,884) (245,884) 594,253 (340,137) 254,116 500,000 500,000 $ 9,841 708,963 325,441 119,793 5,000 3,642 28,651 244,814 1,446,145 (31,573) 3,169 (129,038) 864 618 199,555 308,905 394,618 15,338 155,274 19,146 11,427 2,130,124 394,618 15,338 155,274 19,146 11,427 2,130,124 4,494,681 64,584 4,559,265 363,045 $ 18,507 $ 26,236 $ 20,010 $ 12,045 $ 2,329,679 $ 4,868,170 Page 81 Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual Downtown Strategy For the Year Ended June 30, 2024 Budget Variance with Original Revenues Sales taxes Investment earnings Total revenues Actual Final Budget 106,462 $ 600 107,062 106,462 $ 600 107,062 141,793 $ 33,698 175,491 35,331 33,098 68,429 Expenditures Current ‐ General government Total expenditures 85,200 85,200 135,200 135,200 109,910 109,910 25,290 25,290 Excess (deficiency) of revenues over expenditures 21,862 (28,138) 65,581 93,719 Other financing sources (uses) Transfers out Total other financing sources (uses) (35,000) (35,000) (35,000) (35,000) Changes in fund balances (13,138) (63,138) 65,581 Fund balances, beginning of year 625,922 625,922 625,922 612,784 $ 562,784 $ 691,503 $ Fund balances, end of year Page 82 $ Final $ 35,000 35,000 128,719 128,719 Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual Economic Development For the Year Ended June 30, 2024 Budget Variance with Original and Final Revenues Sales taxes Other Investment earnings Total revenues 240 426,087 141,323 2,534 37,893 181,750 Expenditures Current ‐ General government Total expenditures 229,630 229,630 218,203 218,203 11,427 11,427 Excess (deficiency) of revenues over expenditures 196,457 389,634 193,177 Other financing sources (uses) Transfers out Total other financing sources (uses) (94,253) (94,253) (94,253) (94,253) Changes in fund balances 102,204 295,381 Fund balances, beginning of year 592,942 592,942 695,146 $ 888,323 $ Page 83 $ 425,847 $ Final Budget 567,170 $ 2,534 38,133 607,837 Fund balances, end of year $ Actual 193,177 193,177 Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual Tourism For the Year Ended June 30, 2024 Budget Variance with Original Revenues Intergovernmental Other Investment earnings Total revenues $ Final 65,000 $ 65,000 $ 180 65,180 Expenditures Current ‐ General government Total expenditures Excess (deficiency) of revenues over expenditures Actual Final Budget 180 65,180 119,793 $ 1,108 6,626 127,527 54,793 1,108 6,446 62,347 354,029 354,029 382,821 382,821 317,680 317,680 65,141 65,141 (288,849) (317,641) (190,153) 127,488 94,253 94,253 94,253 94,253 94,253 94,253 Changes in fund balances (194,596) (223,388) (95,900) Fund balances, beginning of year 134,212 134,212 134,212 (60,384) $ (89,176) $ 38,312 $ Other financing sources (uses) Transfers in Total other financing sources (uses) Fund balances, end of year Page 84 $ 127,488 127,488 Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual Public Art For the Year Ended June 30, 2024 Budget Variance with Original and Final Revenues Charges for services Investment earnings Total revenues Final Budget 100,000 $ 240 100,240 5,000 $ 2,903 7,903 (95,000) 2,663 (92,337) Expenditures Current ‐ Culture and recreation Total expenditures 41,761 41,761 31,464 31,464 10,297 10,297 Excess (deficiency) of revenues over expenditures 58,479 (23,561) (82,040) Changes in fund balances 58,479 (23,561) (82,040) Fund balances, beginning of year, previously reported Adjustments to beginning fund balances Fund balances, beginning of year, as restated 64,584 64,584 64,584 64,584 123,063 $ 41,023 $ Fund balances, end of year Page 85 $ Actual $ (82,040) Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual Local Court Enhancement For the Year Ended June 30, 2024 Budget Variance with Original and Final Revenues Fines and forfeitures Investment earnings Total revenues Final Budget 33,000 $ 300 33,300 28,651 $ 158 28,809 (4,349) (142) (4,491) Expenditures Current ‐ General government Total expenditures 54,600 54,600 5,000 5,000 49,600 49,600 Excess (deficiency) of revenues over expenditures (21,300) 23,809 45,109 Changes in fund balances (21,300) 23,809 45,109 Fund balances, beginning of year 415,678 415,678 394,378 $ 439,487 $ Fund balances, end of year Page 86 $ Actual $ 45,109 Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual Environmental For the Year Ended June 30, 2024 Budget Variance with Original and Final Revenues Licenses and permits Investment earnings Total revenues $ Actual $ 2,400 2,400 Expenditures Current ‐ Public works Capital outlay Total expenditures 627,024 1,692 $ 30,492 32,184 Final Budget 1,692 28,092 29,784 627,024 426,358 137,399 563,757 200,666 (137,399) 63,267 Excess (deficiency) of revenues over expenditures (624,624) (531,573) 93,051 Other financing sources (uses) Transfers in Total other financing sources (uses) 500,000 500,000 500,000 500,000 Changes in fund balances (124,624) (31,573) Fund balances, beginning of year 394,618 394,618 269,994 $ 363,045 $ Fund balances, end of year Page 87 $ 93,051 93,051 Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual Cottonwoods Maintenance For the Year Ended June 30, 2024 Budget Variance with Original and Final Revenues Property taxes Investment earnings Total revenues Final Budget 9,768 $ 72 9,840 9,815 $ 915 10,730 47 843 890 Expenditures Current ‐ Public works Total expenditures 13,488 13,488 7,561 7,561 5,927 5,927 Excess (deficiency) of revenues over expenditures (3,648) 3,169 6,817 Changes in fund balances (3,648) 3,169 6,817 Fund balances, beginning of year 15,338 15,338 11,690 $ 18,507 $ Fund balances, end of year Page 88 $ Actual $ 6,817 Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual General Obligation Debt Service For the Year Ended June 30, 2024 Budget Variance with Original Revenues Property taxes Investment earnings Total revenues Final $ Actual $ $ 26 $ 8,509 8,535 Final Budget 26 7,909 7,935 600 600 600 600 Expenditures Current ‐ General government Total expenditures 350 350 137,923 137,923 137,573 137,573 350 350 Excess (deficiency) of revenues over expenditures 250 (137,323) (129,038) 8,285 Changes in fund balances 250 (137,323) (129,038) 8,285 155,274 155,274 155,274 155,524 $ 17,951 $ 26,236 $ Fund balances, beginning of year Fund balances, end of year Page 89 $ 8,285 Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual Eagle Mountain Debt Service For the Year Ended June 30, 2024 Budget Variance with Original and Final Revenues Investment earnings Total revenues $ 100 $ 100 Final Budget Actual 1,062 $ 1,062 962 962 Expenditures Debt service ‐ Fiscal charges Total expenditures 18,900 18,900 198 198 18,702 18,702 Excess (deficiency) of revenues over expenditures (18,800) 864 19,664 Changes in fund balances (18,800) 864 19,664 Fund balances, beginning of year 19,146 19,146 Fund balances, end of year Page 90 $ 346 $ 20,010 $ 19,664 Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual Municipal Property Corporation Debt Service For the Year Ended June 30, 2024 Budget Variance with Original and Final Revenues Investment earnings Total revenues Final Budget Actual 300 $ 300 628 $ 628 328 328 Expenditures Debt service ‐ Fiscal charges Total expenditures 510 510 10 10 500 500 Excess (deficiency) of revenues over expenditures (210) 618 828 Changes in fund balances (210) 618 828 11,427 11,427 11,217 $ 12,045 $ $ Fund balances, beginning of year Fund balances, end of year Page 91 $ 828 Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual Capital Projects For the Year Ended June 30, 2024 Budget Variance with Original Revenues Sales taxes Intergovernmental Other Investment earnings Total revenues $ Final Budget Final Actual 685,240 $ 3,768,079 685,240 $ 3,768,079 11,000 4,464,319 11,000 4,464,319 1,598,522 $ 376,783 12,000 671,774 2,659,079 913,282 (3,391,296) 12,000 660,774 (1,805,240) 239,094 (44,473) (25,158) 6,006,384 6,175,847 Expenditures Current ‐ General government Public works Culture and recreation Capital outlay Total expenditures 289,600 550,000 239,600 550,000 6,628,931 7,468,531 9,076,431 9,866,031 506 594,473 25,158 3,070,047 3,690,184 Excess (deficiency) of revenues over expenditures (3,004,212) (5,401,712) (1,031,105) 4,370,607 Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) 535,000 (4,200,000) (3,665,000) 535,000 (4,200,000) (3,665,000) 6,907,884 (4,200,000) 2,707,884 6,372,884 6,372,884 Changes in fund balances (6,669,212) (9,066,712) 1,676,779 10,743,491 Fund balances, beginning of year 12,476,086 12,476,086 12,476,086 5,806,874 $ 3,409,374 $ 14,152,865 $ Fund balances, end of year Page 92 $ 10,743,491 Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual Development Fees For the Year Ended June 30, 2024 Budget Variance with Original and Final Revenues Licenses and permits Investment earnings Total revenues $ Excess (deficiency) of revenues over expenditures Fund balances, beginning of year Fund balances, end of year Page 93 $ Final Budget 379,550 $ 3,000 382,550 323,749 $ 121,690 445,439 (55,801) 118,690 62,889 382,550 445,439 62,889 (245,884) (245,884) (245,884) (245,884) 382,550 199,555 (182,995) 2,130,124 2,130,124 2,512,674 $ 2,329,679 $ Other financing sources (uses) Transfers out Total other financing sources (uses) Changes in fund balances Actual (182,995) (This page intentionally left blank) Page 94 Internal Service Funds Technology Replacement Fund – accounts for the operation of technology replacement services to other Town departments on a cost reimbursement basis. Vehicle and Equipment Replacement Fund – accounts for the operation of vehicle and equipment replacement costs to other Town departments on a cost reimbursement basis. Page 95 Town of Fountain Hills, Arizona Combining Statement of Net Position Internal Service Funds June 30, 2024 Vehicle and Assets Current assets: Cash and investments Total current assets $ Noncurrent assets: Capital assets, net of accumulated depreciation Total noncurrent assets Total assets Liabilities Current liabilities: Accounts payable Other liabilities Total current liabilities Net position Net investment in capital assets Unrestricted Total net position Page 96 Technology Equipment Total Internal Replacement Replacement Service Funds 190,409 $ 190,409 2,452,594 $ 2,452,594 2,643,003 2,643,003 190,409 85,453 85,453 2,538,047 85,453 85,453 2,728,456 4,469 106 4,575 $ 185,834 185,834 $ 4,469 106 4,575 85,453 2,452,594 2,538,047 $ 85,453 2,638,428 2,723,881 Town of Fountain Hills, Arizona Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds For the Year Ended June 30, 2024 Vehicle and Operating revenues Charges for services Total operating revenues $ Technology Equipment Total Internal Replacement Replacement Service Funds 62,000 $ 62,000 357,994 $ 357,994 419,994 419,994 45,000 7,769 52,769 Operating expenses Cost of services Depreciation Total operating expenses 45,000 7,769 7,769 Operating income (loss) 17,000 350,225 367,225 8,653 8,653 117,504 20,725 138,229 126,157 20,725 146,882 Changes in net position 25,653 488,454 514,107 Net position, beginning of year, previously reported Adjustments to beginning net position Net position, beginning of year, as restated 160,181 160,181 2,049,593 2,049,593 160,181 2,049,593 2,209,774 185,834 $ 2,538,047 $ 2,723,881 45,000 Nonoperating revenues (expenses) Investment earnings Gain on sale of capital assets Total nonoperating revenue (expenses) Net position, end of year Page 97 $ Town of Fountain Hills, Arizona Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2024 Vehicle and Technology Equipment Total Internal Replacement Replacement Service Funds Increase/Decrease in Cash and Cash Equivalents Cash flows from operating activities Cash received from charges for services Cash payments to suppliers for goods and services Net cash provided by/used for operating activities $ 62,000 $ (40,425) 21,575 357,994 419,994 (40,425) 379,569 (93,222) 31,173 (62,049) (93,222) 31,173 (62,049) 8,653 117,504 126,157 Net cash provided by/used for investing activities 8,653 117,504 126,157 Net increase/decrease in cash and cash equivalents 30,228 413,449 443,677 Cash and cash equivalents, beginning of year, as restated 160,181 2,039,145 2,199,326 190,409 $ 2,452,594 Cash flows from capital activities Purchase of property and equipment Proceeds from sale of capital assets Net cash provided by/used for capital activities Cash flows from investing activities Investment income Cash and cash equivalents, end of year $ 357,994 $ $ 2,643,003 350,225 $ 367,225 7,769 7,769 4,469 106 4,575 7,769 4,469 106 12,344 21,575 $ 357,994 $ 379,569 Reconciliation of Operating Income/Loss to Net Cash Provided by/Used for Operating Activities Operating income/loss Adjustments to reconcile operating income/loss to net cash provided by/used for operating activities: Depreciation Changes in assets and liabilities: Increase/decrease in accounts payable Increase/decrease in other liabilities Total adjustments $ Net cash provided by/used for operating activities $ Page 98 17,000 $ The notes to the basic financial statements are an integral part of this statement. Statistical Section The statistical section presents financial statement trends as well as detailed financial and operational information not available elsewhere in the report. The statistical section is intended to enhance the reader’s understanding of the information presented in the financial statements, notes to the financial statements, and other supplementary information presented in this report. The statistical section is comprised of the five categories of statistical information presented below. Financial Trends These schedules contain information on financial trends to help the reader understand how the Town’s financial position and financial activities have changed over time. Revenue Capacity These schedules contain information to help the reader assess the factors affecting the Town’s ability to generate revenue. Debt Capacity These schedules present information to help the reader evaluate the Town’s current levels of outstanding debt as well as assess the Town’s ability to make debt payments and/or issue additional debt in the future. Demographic and Economic Information These schedules present various demographic and economic indicators to help the reader understand the environment in which the Town’s financial activities take place and to help make comparisons with other cities. Operating Information These schedules contain information about the Town’s operations and various resources to help the reader draw conclusions as to how the Town’s financial information relates to the services provided by the Town. Page 99 Town of Fountain Hills, Arizona Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year ended June 30 2015 Governmental activities: Net investment in capital assets Restricted Unrestricted Total governmental activities net position 2017 2018 $ 95,325,824 $ 95,647,990 $ 94,909,703 $ 96,777,854 6,310,810 4,530,239 4,471,661 4,589,526 15,180,582 17,232,506 17,578,068 16,244,169 $ 116,817,216 $ 117,410,735 $ 116,959,432 $ 117,611,549 Source: The source of this information is the Town's financial records. Page 100 2016 2019 2020 Fiscal Year ended June 30 2021 2022 2023 $ 104,781,328 $ 104,004,331 $ 103,822,185 $ 102,346,737 $ 101,838,463 $ 3,646,449 2,766,041 2,610,178 5,749,726 9,646,597 15,258,797 17,388,168 21,318,351 26,010,477 31,955,871 $ 123,686,574 $ 124,158,540 $ 127,750,714 $ 134,106,940 $ 143,440,931 $ Page 101 2024 101,990,127 9,474,160 38,868,492 150,332,779 Town of Fountain Hills, Arizona Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year Ended June 30 Expenses Governmental activities: General government Development services Public safety Public works Culture and recreation Interest on long‐term debt $ Total governmental activities expenses Program Revenues Governmental activities: Fines, fees and charges for services: General government Development services Public safety Public works Culture and recreation Operating grants and contributions Capital grants and contributions Total governmental activities program revenues Net (Expenses)/Revenues General Revenues and Other Changes in Net Assets Governmental activities: Taxes: Property taxes Sales taxes Franchise taxes State shared revenues Investment earnings Miscellaneous Special item ‐ Donation of capital assets Total governmental activities Changes in Net Position Governmental activities $ 2015 2016 2017 2018 2,479,365 $ 2,074,611 6,816,152 4,963,979 2,822,954 698,542 2,516,966 $ 2,253,208 7,178,890 6,476,688 3,124,523 241,694 3,142,722 $ 1,364,378 7,563,898 7,904,577 3,375,414 178,749 3,431,752 1,460,967 7,567,012 7,380,663 3,311,648 118,552 19,855,603 21,791,969 23,529,738 23,270,594 337,655 693,670 86,641 236,706 339,158 1,431,017 2,874,796 298,737 1,257,492 90,345 48,688 321,189 1,615,973 381,011 837,163 1,062,094 155,454 216,724 393,028 1,699,931 494,328 295,716 1,314,915 155,973 52,465 497,914 1,737,958 304,951 5,999,643 4,013,435 4,858,722 4,359,892 (13,855,960) (17,778,534) (18,671,016) (18,910,702) 904,660 8,983,049 352,673 5,713,235 150,358 188,251 ‐ 2,569,504 9,395,667 360,320 5,813,678 219,058 13,826 ‐ 2,296,199 9,415,151 367,119 6,057,278 55,127 28,839 ‐ 2,263,623 10,311,577 421,682 6,396,667 158,860 10,410 ‐ 16,292,226 18,372,053 18,219,713 19,562,819 2,436,266 $ Source: The source of this information is the Town's financial records. Page 102 593,519 $ (451,303) $ 652,117 2019 $ $ 2020 Fiscal Year Ended June 30 2021 2022 2023 2024 3,318,477 $ 3,470,936 $ 6,687,041 $ 4,333,863 $ 4,890,912 $ 5,106,646 867,725 825,884 968,808 1,068,260 1,206,991 1,324,892 8,142,069 9,003,452 6,321,489 9,487,150 9,930,356 11,746,913 10,263,244 9,961,306 10,175,540 9,780,920 10,792,078 10,455,071 3,767,996 3,490,447 3,601,870 3,999,178 4,776,903 4,676,396 881 7,544 ‐ ‐ ‐ 57,054 26,416,565 26,752,906 27,762,292 28,669,371 31,597,240 33,309,918 280,312 1,143,871 90,774 10,214 1,151,500 1,850,676 181,939 4,709,286 533,189 608,892 100,444 131,750 409,651 2,007,841 91,245 3,883,012 310,411 693,161 104,726 355,619 435,432 4,733,757 135,525 6,768,631 498,242 947,431 89,140 654,434 641,269 6,381,580 161,751 9,373,847 516,373 762,929 136,082 359,972 640,365 6,729,883 259,266 9,404,870 548,921 694,650 108,633 736,967 628,560 2,383,786 520,867 5,622,384 (21,707,279) (22,869,894) (20,993,661) (19,295,524) (22,192,370) (27,687,534) 2,476,546 11,491,123 423,947 6,514,470 554,549 202,969 6,118,700 27,782,304 2,077,368 13,172,390 434,896 6,874,771 545,983 236,452 ‐ 23,341,860 402,481 15,657,292 426,260 7,787,184 49,665 262,953 ‐ 24,585,835 9,728 17,660,758 399,007 7,721,123 (419,006) 280,140 ‐ 25,651,750 9,854 20,586,294 382,948 9,221,691 1,099,525 226,049 ‐ 31,526,361 ‐ 20,559,928 351,118 11,131,601 2,345,106 191,629 ‐ 34,579,382 3,592,174 $ 6,356,226 $ 9,333,991 $ 6,891,848 6,075,025 $ Page 103 471,966 $ Town of Fountain Hills, Arizona Fund Balances — Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 2015 General fund Nonspendable Inventory Prepaid items Committed Assigned Unassigned Total general fund $ $ Fiscal Year ended June 30 2016 2017 6,975 $ 9,272 $ 10,655 4,123 2,634,923 2,652,357 1,872,492 1,701,086 4,369,457 5,853,806 8,894,502 $ 10,220,644 $ 5,872 $ 16,868 2,714,135 1,743,768 2,696,999 7,177,642 $ 2018 13,490 21,945 2,893,850 2,101,574 2,140,434 7,171,293 All other governmental funds Nonspendable Cash with escrow agent $ 1,645,000 $ ‐ $ ‐ $ ‐ Prepaid items 656 5,055 474 ‐ Restricted 10,066,786 4,500,044 4,432,710 4,571,263 Committed 1,079,780 1,366,081 8,576,250 7,248,890 Assigned 5,444,124 5,943,364 1,784,761 2,340,683 Unassigned ‐ ‐ ‐ ‐ Total all other governmental funds $ 18,236,346 $ 11,814,544 $ 14,794,195 $ 14,160,836 Source: The source of this information is the Town's financial records. Page 104 2019 2020 Fiscal Year ended June 30 2021 2022 2023 2024 $ 5,168 $ 8,982 $ 7,117 $ 14,845 $ 12,923 $ 5,099 17,311 2,418 20,170 36,464 44,542 33,080 3,027,804 3,249,354 3,387,433 3,664,240 4,044,890 4,466,782 2,380,653 622,641 1,085,667 1,278,191 1,639,184 ‐ 1,863,722 5,535,499 10,958,643 9,466,833 11,644,005 13,070,591 $ 7,294,658 $ 9,418,894 $ 15,459,030 $ 14,460,573 $ 17,385,544 $ 17,575,552 $ ‐ $ ‐ $ ‐ ‐ 3,579,891 2,708,883 5,868,386 6,068,810 2,592,343 2,402,244 ‐ (66,361) $ 12,040,620 $ 11,113,576 $ Page 105 ‐ $ ‐ $ ‐ $ ‐ ‐ 4,253 2,326 14,960 2,541,894 5,701,067 9,368,764 9,096,302 4,430,491 5,511,281 7,458,457 ‐ 1,845,901 6,541,572 7,589,084 19,590,434 ‐ ‐ ‐ ‐ 8,818,286 $ 17,758,173 $ 24,418,631 $ 28,701,696 Town of Fountain Hills, Arizona Statement of Revenues, Expenditures and Changes in Fund Balances Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year Ended June 30 2015 2016 2017 2018 10,240,382 $ 1,043,382 269,753 9,770,048 176,541 188,251 186,456 150,358 12,299,285 $ 1,372,045 258,165 7,559,436 197,109 147,662 209,380 219,058 12,069,714 $ 1,310,973 284,090 7,917,651 351,476 153,438 257,727 55,127 13,019,341 2,004,386 282,531 8,266,028 254,122 207,697 182,997 158,860 22,025,171 22,262,140 22,400,196 24,375,962 2,275,124 2,073,990 6,675,874 1,275,779 1,962,585 8,799,068 2,324,026 2,217,814 7,034,887 2,498,714 2,240,865 6,471,382 2,713,548 1,275,147 7,420,032 3,954,450 2,484,940 1,693,265 3,195,936 1,397,249 7,402,227 3,420,317 2,375,758 4,317,214 1,850,000 454,957 243,585 4,260,000 308,106 2,005 2,675,000 244,986 2,180 2,720,000 185,164 1,805 25,610,962 27,357,799 22,463,548 25,015,670 Excess (deficiency) of revenues over (under) expenditures (3,585,791) (5,095,659) (63,352) (639,708) Other Financing Sources (Uses) Transfers in Transfers out Proceeds from sale of capital assets Issuance of refunding bonds Issuance of long‐term debt Bond Premium Payment to refunded bonds escrow agent 2,519,774 (2,519,774) ‐ 4,180,000 7,565,000 342,086 (4,085,000) 562,044 (562,044) ‐ ‐ ‐ ‐ ‐ 5,194,138 (5,194,138) ‐ ‐ ‐ ‐ ‐ 4,543,728 (4,543,728) ‐ ‐ ‐ ‐ ‐ 8,002,086 ‐ ‐ ‐ Revenues Taxes Licenses and permits Leases and rents Intergovernmental Charges for services Other Fines and forfeitures Investment earnings $ Total revenues Expenditures Current: General government Development services Public safety Public works Culture and recreation Capital outlay Debt service: Principal Interest Other debt service Total expenditures Total other financing sources (uses) Net change in fund balances $ 4,416,295 $ (5,095,659) $ (63,352) $ (639,708) Expenditures for capitalized assets $ 9,067,254 $ 6,394,346 $ 1,696,612 $ 4,293,214 15.4% 21.8% 14.1% 14.0% Debt service as a percentage of noncapital expenditures Source: The source of this information is the Town's financial records. Page 106 Fiscal Year Ended June 30 2019 2020 2021 2022 2023 2024 $ 14,342,801 $ 15,694,054 $ 16,510,939 $ 18,071,247 $ 20,978,020 $ 20,920,887 2,040,622 835,731 1,293,172 2,039,349 1,524,278 1,737,041 280,801 286,391 264,621 333,946 355,607 359,479 8,401,676 8,920,296 12,713,449 14,124,324 15,919,459 13,834,258 181,105 222,947 99,090 171,157 216,438 247,302 347,141 387,225 320,291 431,838 403,305 333,012 130,483 281,704 239,191 223,964 240,844 255,843 554,549 545,983 49,654 (419,224) 1,094,158 2,218,949 26,279,178 27,174,331 31,490,407 34,976,601 40,732,109 39,906,771 3,147,063 858,957 6,295,989 7,880,668 2,845,027 4,487,854 3,280,191 797,513 8,566,058 6,046,298 2,609,842 2,716,523 6,513,419 954,667 8,906,428 6,321,814 2,726,748 4,758,067 4,105,257 1,041,531 9,180,108 5,712,452 3,166,526 3,828,699 4,697,681 1,210,967 9,612,993 7,542,736 3,583,471 4,498,734 4,996,577 1,275,320 11,330,144 8,774,689 3,483,590 3,523,577 2,635,000 123,871 1,600 2,310,000 67,301 1,998 400,000 7,044 500 ‐ ‐ 598 ‐ ‐ 98 ‐ ‐ 208 28,276,029 26,395,724 30,588,687 27,035,171 31,146,680 33,384,105 (1,996,851) 778,607 901,720 7,941,430 9,585,429 6,522,666 3,672,532 (3,672,532) ‐ ‐ ‐ ‐ ‐ 1,928,978 (1,928,978) 418,585 ‐ ‐ ‐ ‐ 3,086,628 (3,136,628) ‐ ‐ ‐ ‐ ‐ 11,962,153 (11,962,153) ‐ ‐ ‐ ‐ ‐ 10,247,867 (10,247,867) ‐ ‐ ‐ ‐ ‐ 11,948,021 (11,948,021) ‐ ‐ ‐ ‐ ‐ ‐ 418,585 (50,000) ‐ ‐ ‐ $ (1,996,851) $ 1,197,192 $ 851,720 $ 7,941,430 $ 9,585,429 $ 6,522,666 $ 4,465,837 $ 2,689,270 $ 4,758,055 $ 3,890,700 $ 4,497,424 $ 3,616,795 10.0% 1.8% 0.0% 0.0% 11.6% Page 107 0.0% Town of Fountain Hills, Arizona Governmental Activities ‐ Tax Revenues by Source Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year Ended June 30 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Property Tax 904,660 2,543,298 2,287,444 2,286,081 2,427,730 2,086,769 427,387 11,482 8,778 9,841 Sales Tax 8,983,050 9,391,267 9,419,551 10,311,578 11,491,124 13,172,389 15,657,292 17,660,758 20,586,294 20,559,928 Franchise Tax 352,673 360,320 367,119 421,682 423,947 434,896 426,260 399,007 382,948 351,118 Source: The source of this information is the Town's financial records. Page 108 Total 10,240,383 12,294,885 12,074,114 13,019,341 14,342,801 15,694,054 16,510,939 18,071,247 20,978,020 20,920,887 Town of Fountain Hills, Arizona Sales Tax Payers by Category June 30, 2024 and June 30, 2015 Fiscal Year Ended June 30, 2024 Sales category: Construction Transportation/utilities Wholesale/retail Restaurants/bars Real estate, rental & leasing Services Other Total Number of Percentage Filers of Total Tax Liability Fiscal Year Ended June 30, 2015 Percentage Number of Percentage of Total Filers of Total Percentage Tax Liability of Total 474 151 10,769 108 1,071 681 1,474 3.22% $ 3,197,045 1.03% 1,661,398 73.12% 10,689,793 0.73% 1,452,328 7.27% 1,351,156 4.62% 2,206,542 10.01% 1,666 15.55% 8.08% 52.00% 7.06% 6.57% 10.73% 0.01% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A $ 935,694 1,405,768 4,214,119 682,180 617,348 604,618 523,323 10.42% 15.65% 46.91% 7.59% 6.87% 6.73% 5.83% 14,728 100.00% $ 20,559,928 100.00% N/A N/A $ 8,983,050 100.00% Note: Other includes all state and local sales tax audit adjustments. Source: The source of this information is the Arizona Department of Revenue. Note: Because of confidentiality statutes, the names of the 10 largest revenue payers cannot be disclosed. The categories presented are intended to provide alternative information regarding the sources of the Town's revenue. The Number of Filers was unavailable for the year ended June 30, 2015. Page 109 Town of Fountain Hills, Arizona Taxable Sales by Category Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year Ended June 30 Sales category: Construction Transportation/utilities Wholesale/retail Restaurants/bars Real estate, rental & leasing Services Other Total 2015 2016 2017 2018 $ 935,694 $ 1,405,768 4,214,119 682,180 617,348 604,618 523,323 918,717 $ 1,327,441 4,815,582 742,540 552,856 779,753 254,378 730,164 $ 1,288,153 4,982,218 811,985 636,834 852,675 117,523 1,408,332 1,309,928 5,235,992 829,857 745,171 747,834 34,464 $ 8,983,050 $ 9,391,267 $ 9,419,552 $ 10,311,578 Note: Other includes all state and local sales tax audit adjustments. Source: The source of this information is the Town's financial records. Page 110 Fiscal Year Ended June 30 2019 $ 2020 2021 1,932,716 $ 1,910,021 $ 1,990,383 $ 1,290,585 1,405,005 1,529,268 5,464,247 7,031,474 8,956,208 893,595 892,210 1,062,172 842,233 965,124 993,228 1,025,548 916,769 1,125,753 42,200 51,786 280 2022 2023 2024 1,780,123 $ 3,449,250 $ 3,197,045 1,501,600 1,576,570 1,661,398 9,834,924 10,500,903 10,689,793 1,446,971 1,517,063 1,452,328 1,103,241 1,258,009 1,351,156 1,992,955 2,278,723 2,206,542 946 5,776 1,666 $ 11,491,124 $ 13,172,389 $ 15,657,292 $ 17,660,760 $ 20,586,294 $ 20,559,928 Page 111 Town of Fountain Hills, Arizona Direct and Overlapping Sales Tax Rates Last Ten Fiscal Years Fiscal Year Ended June 30 Town Rate Maricopa County State Rate Total Tax Rate 2015 2016 2017 2018 2019 2020* 2021 2022 2023 2024 2.60% 2.60% 2.60% 2.60% 2.60% 2.90% 2.90% 2.90% 2.90% 2.90% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 8.90% 8.90% 8.90% 8.90% 8.90% 9.20% 9.20% 9.20% 9.20% 9.20% * 0.3% Town rate increase effective 11/1/2019 Source: The source of this information is the Arizona Department of Revenue. Page 112 Town of Fountain Hills, Arizona Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Fiscal Year Ended June 30 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 General Obligation Bonds* 9,517,086 7,678,669 5,680,252 3,631,835 1,683,417 ‐ ‐ ‐ ‐ ‐ Community Facilities District Bonds** Municipal Property Corporation Bonds* 2,300,000 1,935,000 1,560,000 1,180,000 795,000 400,000 ‐ ‐ ‐ ‐ 3,525,000 1,400,000 1,030,000 670,000 300,000 ‐ ‐ ‐ ‐ ‐ Highway User Revenue Bonds Special Assessment Bonds ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Total Outstanding Debt ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Debt Per Capita 15,342,086 11,013,669 8,270,252 5,481,835 2,778,417 400,000 ‐ ‐ ‐ ‐ Source: The source of this information is the Town's financial records and the U.S. Bureau of Economic Analysis. * All bond amounts presented include amortization of original issuance discounts and premiums. ** All bond amounts presented include amoritization of original issuance discounts and premiums. The Town is not obligated for repayment of the Eagle Mountain Community Facilities District general obligation bonds. Population data can be found in the Schedule of Demographic and Economic Statistics. Page 113 651 467 351 233 118 17 ‐ ‐ ‐ ‐ Town of Fountain Hills, Arizona Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Percentage of Net General Net General Municipal General Less: Amounts Net General Estimated Actual Estimated Actual Obligation Obligation Bonded Property Obligation Restricted for Obligation Taxable Value of Taxable Value of Bonded Debt Debt per Net Limited Corporation Year Bonds* Principal 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 11,817,086 9,613,669 7,240,252 4,811,835 2,478,417 400,000 ‐ ‐ ‐ ‐ Fiscal 420,782 576,281 343,697 83,185 146,100 171,807 191,594 194,344 200,754 46,427 Bonds Property Property per Capita Assessed Valuation 11,396,304 9,037,388 6,896,555 4,728,650 2,332,317 228,193 ‐ ‐ ‐ ‐ 3,722,794,676 3,744,585,506 3,965,824,715 4,166,589,970 4,381,287,279 4,657,015,387 4,909,183,626 5,435,983,541 5,721,274,077 6,057,936,533 0.31% 0.24% 0.17% 0.11% 0.05% 0.01% 483 378 282 192 93 9 ‐ ‐ ‐ ‐ 2.83% 2.25% 1.63% 1.06% 0.50% 0.05% ‐ ‐ ‐ ‐ ‐ Bonds* 1,764,338 1,088,117 860,437 664,484 287,694 ‐ ‐ ‐ ‐ ‐ Source: The source of this information is the Department of Revenue and the Town's financial records. * All bond amounts presented are net of original issuance discounts and premiums. The Town is not obligated for repayment of the Eagle Mountain Community Facilities District general obligation bonds. Population data can be found in the Schedule of Demographic and Economic Statistics. Note: On November 6, 2012, voters approved Proposition 117, an amendment to the Arizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary and secondary taxes are levied against the net limited assessed value. The net full cash assessed value is used for determining the Town’s bonding capacity and as the ceiling for net limited assessed value. Page 114 Net Municipal Property Corporation Debt Total Revenues‐ All Sources per Capita 75 46 35 27 12 ‐ ‐ ‐ ‐ ‐ 22,161,316 22,262,139 22,400,196 24,375,962 26,279,178 27,586,011 31,354,466 35,025,597 40,931,231 40,071,615 Town of Fountain Hills, Arizona Direct and Overlapping Governmental Activities Debt as of June 30, 2024 Outstanding Debt Governmental Unit Estimated Share of Overlapping Debt Estimated Percentage Applicable Overlapping: Maricopa County Special Healthcare District Maricopa County Community College District East Valley Institute of Technology Fountain Hills Unified School District $ 574,205,000 135,585,000 ‐ $4,535,000 1.11% $ 1.11% 2.27% 96.49% Total Overlapping Debt 6,373,676 1,504,994 ‐ 4,375,822 12,254,492 Direct: Town of Fountain Hills, Arizona* General Obligation Bonds Revenue Bonds Eagle Mountain Community Facilities District** ‐ ‐ ‐ Total Direct Debt Total direct and overlapping debt ‐ $ 12,254,492 Source: The source of this information is the Town's records, the State and County Abstract of the Assessment Roll, the Arizona Department of Revenue Report of Indebtedness and the applicable governmental unit. The Report of Indebtedness is from the most recent fiscal year which is available, which typically will be one year earlier than the current fiscal year. * All bond amounts include amortization of original issuance discounts and premiums. ** The Town is not obligated for repayment of the Eagle Mountain Community Facilities District general obligation bonds. Note: The estimated percentage of debt outstanding applicable to the Town is calculated based on the Town's net limited assessed valuation as a percentage of the net limited assessed valuation of the overlapping jurisdiction. Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the Tow of Fountain Hills. This schedule further estimates the portion of outstanding debt of those overlapping governments that is borne by residents and businesses of the Town. This process recognizes that, when considering a town's ability to issue and repay long‐term debt, the entire debt burden borne by residents should be taken into account. However, this fact does not imply that every taxpayer is a resident, and, therefore, responsible for repaying the debt of each overlapping government. Page 115 Town of Fountain Hills, Arizona Legal Debt Margin Information Last Ten Fiscal Years Fiscal Year Ended June 30 2015 2016 2017 2018 6% Debt Limit Debt limit Total net debt applicable to limit $ 24,199,829 $ 28,325,296 $ ‐ ‐ 30,651,126 $ ‐ 31,459,192 ‐ Legal debt margin $ 24,199,829 $ 28,325,296 $ 30,651,126 $ 31,459,192 Total debt applicable to the limit as a percentage of debt limit ‐ ‐ ‐ ‐ 20% Debt Limit Debt limit Total net debt applicable to limit $ 80,666,095 $ 94,417,653 $ 102,170,422 $ 104,863,974 7,405,000 5,475,000 3,495,000 9,175,000 Legal debt margin $ 71,491,095 $ 87,012,653 $ Total debt applicable to the limit as a percentage of debt limit 11% 96,695,422 $ 101,368,974 8% 5% Source: The source of this information is the Town's financial records. Note: All amounts presented are net of original issuance discounts and premiums. Note: On November 6, 2012, voters approved Proposition 117, an amendment to the Arizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary and secondary taxes are levied against the net limited assessed value. The net full cash assessed value is used for determining the Town’s bonding capacity and as the ceiling for net limited assessed value. Page 116 3% Fiscal Year Ended June 30 2019 2020 2021 2022 2023 2024 $ 32,400,042 $ 33,907,227 $ 35,603,580 $ 37,800,780 $ 40,238,671 $ 49,892,806 ‐ ‐ ‐ ‐ ‐ ‐ $ 32,400,042 $ 33,907,227 $ 35,603,580 $ 37,800,780 $ 40,238,671 $ 49,892,806 ‐ ‐ ‐ ‐ ‐ ‐ $ 108,000,140 $ 113,024,089 $ 118,678,601 $ 126,002,599 $ 134,128,903 $ 166,309,355 ‐ ‐ ‐ ‐ ‐ 1,615,000 $ 106,385,140 $ 113,024,089 $ 118,678,601 $ 126,002,599 $ 134,128,903 $ 166,309,355 1% Page 117 ‐ ‐ ‐ ‐ Town of Fountain Hills, Arizona Calculation of Legal Debt Margin as of June 30, 2024 Net full cash assessed valuation 831,546,774 Water, Sewer, Artificial Lighting, Parks, Open Space, Recreational Facility Improvements, Public Safety, Law Enforcement, Fire and Emergency Facilities, Street and Transportation Facilities Debt limit ‐ 20% of net full cash assessed valuation Net debt applicable to limit $ 20% legal debt margin 166,309,355 ‐ 166,309,355 All Other General Obligation Bonds Debt limit ‐ 6% of net full cash assessed valuation Net debt applicable to limit 49,892,806 ‐ 6% legal debt margin Total legal debt margin 49,892,806 $ 216,202,161 Source: The source of this information is the Maricopa County Assessor's Office and the Town's financial records. Page 118 Town of Fountain Hills Revenue Bond Coverage Last Ten Fiscal Years Municipal Facilities Corporation Revenue Bonds Fiscal Year Ended June 30 Principal Interest 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2,545,000 480,000 370,000 360,000 370,000 300,000 ‐ ‐ ‐ ‐ 184,500 32,740 22,680 16,686 10,854 4,860 ‐ ‐ ‐ ‐ Total Pledged Revenues Coverage 2,729,500 512,740 392,680 376,686 380,854 304,860 ‐ ‐ ‐ ‐ 15,583,484 16,250,673 16,815,224 18,194,833 19,765,936 20,862,372 24,001,082 26,453,550 30,620,545 33,200,920 5.7 31.7 42.8 48.3 51.9 68.4 100.0 100.0 100.0 100.0 Source: The source of this information is the Town's financial records. Page 119 Town of Fountain Hills, Arizona Demographic and Economic Statistics Last Ten Calendar Years Calendar Year 2014 Population Per capita personal income Median age 2015 23,573 $ 46,619 2016 23,899 $ 48,240 2017 24,482 $ 50,162 2018 24,583 $ 60,531 2019 24,987 $ 54,936 2020 25,200 $ 57,468 2021 23,820 $ 59,791 2022 23,906 $ 57,550 2023* 23,785 $ 60,707 23,820 $ 66,756 53.7 53.8 53.7 53.5 57.5 58.8 59.4 58.6 62.0 60.2 Public school enrollment 1,692 1,619 1,506 1,444 1,380 1,338 1,314 1,267 1,192 1,133 Town of Fountain Hills unemployment rate 5.4% 2.4% 1.9% 1.6% 3.9% 8.7% 4.9% 4.4% 2.8% 2.7% Land use Total acres Total square miles Vacant lots 13,005.7 20.32 1,165 13,005.7 20.32 1,247 13,005.7 20.32 1,209 13,005.7 20.32 1,175 13,005.7 20.32 1,172 13,005.7 20.32 1,052 13,005.7 20.32 1,158 13,005.7 20.32 1,158 13,005.7 20.32 1,030 13,005.7 20.32 966 Number of units Housing Lodging Restaurants Shopping centers 12,981 4 43 20 13,002 4 46 20 13,130 4 50 20 13,176 4 52 20 13,558 4 54 20 13,749 4 55 20 13,875 4 55 20 13,876 4 57 20 14,101 4 57 20 14,330 4 55 20 3 7 1 3 7 1 3 7 1 3 7 1 1 3 5 1 1 3 5 1 2 3 5 1 2 3 5 3 5 4 4 Schools Public Preschool Charter Vocational ‐ ‐ ‐ Sources: The sources of the "Per Capita Personal Income", "Median Age" and "Unemployment Rate" information are Sites USA (2009‐2017), U.S. Census Bureau and Arizona Office of Economic Opportunity (beginning in 2018). The source of the "Population" is the U.S. Census Bureau July 1, 2023 estimate. The source of School Enrollment is the Fountain Hills Unified School District No. 98. Other information is from the Town's records. Note: N/A indicates the information is not available. * Information obtained is based on calendar years; therefore, the latest information obtained was from 2023. Page 120 ‐ ‐ 1 1 ‐ ‐ Town of Fountain Hills, Arizona Principal Employers Prior Fiscal Year and Nine Years Ago 2013 2022* Employer Fountain Hills Unified School District No. 98 Fountain View Village Safeway Stores Rural Metro Corporation Firerock Country Club Fry's Food Stores Target Stores Eagle Mountain Golf Club Fountain Hills Family Practice PC Fountain Hills Medical Center Town of Fountain Hills Golf International Inc Quotemedia Inc Sunridge Canyon Golf Course United States Postal Service Bashas Totals Total Town employment Number of Employees Rank Percentage of Total Town Employment 280 140 130 110 100 80 80 70 70 70 70 60 60 60 60 60 1 2 3 4 5 6 6 7 7 7 7 8 8 8 8 8 4.6% 2.3% 2.1% 1.8% 1.6% 1.3% 1.3% 1.1% 1.1% 1.1% 1.1% 1.0% 1.0% 1.0% 1.0% 1.0% 327 150 88 N/A 68 90 84 70 N/A N/A 41 N/A N/A 59 64 67 24.4% 1,108 1,500 6,120 Number of Employees Rank 1 2 4 N/A 7 3 5 6 N/A N/A 12 N/A N/A 10 9 8 4,655 Source: The source of this information is the Maricopa Association of Governments and Town records. Note: MAG data includes employers with 5+ employees and is rounded to nearest 10. * Data for 2023 was not available. Page 121 Town of Fountain Hills, Arizona Authorized Full‐time Equivalent Government Employees by Function Last Ten Fiscal Years Fiscal Year Ended June 30 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Municipal court 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 4.63 4.63 Administration 11.33 11.63 12.25 13.45 13.70 15.20 15.00 16.00 16.24 17.50 Public works n/a n/a 9.80 9.80 10.80 12.43 12.43 12.00 13.00 13.00 Development services 16.30 16.30 7.50 8.50 7.50 9.00 9.00 9.00 10.00 10.00 Community services 21.06 20.76 20.76 20.56 20.56 20.56 22.01 24.02 24.52 25.38 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 34.00 52.32 52.32 53.94 55.94 56.19 60.82 62.07 64.65 68.39 104.51 Fire Department Total Source: The source of this information is the Town's financial records. Page 122 Town of Fountain Hills, Arizona Operating Indicators by Function Last Ten Fiscal years Fiscal Year Ended June 30 Function/Program 2015 2016 2017 2018 Municipal Court Cases filed Hearings/Trials held 1,738 1,585 1,593 1,564 2,014 1,844 1,277 676 Administration FTEs per 1,000 residents Registered voters ‐ general election Voter turnout ‐ general election 2.2 16,213 40% 2.2 none none 2.2 16,387 40% Development Services Building permits issued Building inspections conducted Number of code violation cases Number of zoning cases 443 2,448 752 65 410 2,129 713 72 Community Services Number of Community Center bookings/permits* Number of participants in recreational programs Number of Senior Services members Number of home delivered meals 3,439 2,249 1,273 4,035 Law Enforcement (contracted) Physical arrests Traffic violations Fire & Emergency Medical (contracted) Total incident responses Average response time (in minutes) 2020 2021 2022 2023 891 801 2,237 568 1,324 1,430 1,586 1,378 1,823 1,216 1,862 1,163 2.3 none none 2.2 16,775 50% 2.4 none none 2.6 18,415 90% 2.7 none none 2.9 18,423 80% 4.4 none none 509 2,704 669 50 468 3,707 654 41 576 4,795 655 11 547 4,069 690 7 575 3,652 497 21 620 1,911 586 73 730 5,460 656 95 742 4,947 299 114 3,124 2,910 1,326 3,497 3,764 3,773 1,335 3,920 4,395 3,794 1,220 3,093 3,857 3,489 1,313 3,562 3,169 1,830 1,265 5,215 1,675 1033* 2,892 4,110 1,360 1,175 4,402 4,581 316** 5,244 1,290 5,449 258 7,093 1,518 5,899 445 1,539 220 1,215 220 1,803 214 1,053 67 1,248 86 2,618 56 2,745 49 2,568 67 3,349 55 2,536 3,166 3:37 3,191 3:57 3,425 3:25 3,659 3:33 4,073 3:32 3,896 3:51 4,215 4:50 4,268 4:38 4,709 4:44 4,140*** 5:00*** Source: The source of this information is the Town's financial records. Note: N/A indicates that the information is not available. *The Community Center was closed from 7/1/22 until 10/3/22 for renovations. **Beginning in 2023, individual bookings were replaced by single day and recurring permits only. ***The Town Fire Department transitioned from a contracted to an in‐house Department in January 2024 and did not have full Fiscal Year 2024 records available. 2024 Fire Department Figures are estimated based on half‐year activity. Page 123 2019 2024 Town of Fountain Hills, Arizona Capital Assets Statistics by Function Last Ten Fiscal Years Fiscal Year Ended June 30 Function/Program 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Public safety Number of fire stations 2 2 2 2 2 2 2 2 2 2 Public works Streets (centerline miles) Streets (lane miles) Pedestrian lighting Traffic signals 178.9 390 85 13 178.9 391 91 13 178.9 390.5 91 13 180.0 391.5 91 13 180.0 391.5 91 13 180.0 391.5 91 13 180.0 391.5 91 13 180.0 391.5 95 13 180.0 391.5 95 13 180.0 391.5 95 13 Parks and recreation Acreage‐developed parks Playgrounds Baseball/softball diamonds Soccer/football fields Community centers Preserve acreage Miles of trails 119 7 6 7 1 807 15.80 119 7 6 7 1 807.2 15.8 119 7 6 7 1 807.2 18.5 119 7 6 7 1 807.2 18.5 119 9 6 7 1 889.2 18.5 119 9 6 7 1 913.2 18.5 119 9 6 7 1 913.2 18.5 119 9 6 7 1 913.2 23.0 119 9 6 7 1 913.2 23.0 119 9 6 7 1 913.2 24.5 Source: The source of this information is the Town's facilities records. Note: N/A indicates the information is not available. Page 124 Town of Fountain Hills 16705 E. Avenue of the Fountains Fountain Hills, Arizona 85268 480-816-5100 www.fountainhillsaz.gov - facebook.com/TownotFountainHills r.J - twitter.com/fbazgov