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Town of Fountain Hills Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2025 Town of Fountain Hills, Arizona Annual Comprehensive Financial Report Fiscal Year Ended June 30, 2025 Issued by: Administration Department Finance Division Town of Fountain Hills, Arizona Table of Contents Introductory Section Page Letter of Transmittal 1 List of Elected and Appointed Officials 12 GFOA Certificate of Achievement 13 Organizational Chart 14 Financial Section Independent Auditor’s Report 17 Management’s Discussion and Analysis (MD&A) 23 Basic Financial Statements Government‐Wide Financial Statements: Statement of Net Position 36 Statement of Activities 37 Fund Financial Statements: Balance Sheet – Governmental Funds 40 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position 43 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 44 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds to the Statement of Activities 46 Statement of Net Position – Proprietary Funds 47 Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds 48 Statement of Cash Flows – Proprietary Funds 49 Notes to Financial Statements 50 Required Supplementary Information Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: General Fund 68 Highway User Revenue Fund 69 Grants Fund 70 Note to Required Supplementary Information 71 Combining and Individual Fund Financial Statements and Schedules Governmental Funds: Combining Balance Sheet – All Non‐Major Governmental Funds – By Fund Type 78 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – All Non‐Major Governmental Funds – By Fund Type 80 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: Downtown Strategy 82 Economic Development 83 Tourism 84 Public Art 85 Town of Fountain Hills, Arizona Table of Contents Financial Section – continued Page 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 86 Environmental 87 Cottonwoods Maintenance 88 General Obligation Debt Service 89 Eagle Mountain Debt Service 90 Municipal Property Corporation Debt Service 91 Capital Projects 92 Development Fees 93 Internal Service Funds: Combining Statement of Net Position 96 Combining Statement of Revenues, Expenses and Changes in Fund Net Position 97 Combining Statement of Cash Flows 98 Statistical Section Financial Trends: Net Position by Component 100 Changes in Net Position 102 Fund Balances – Governmental Funds 104 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 106 Revenue Capacity: Governmental Activities – Tax Revenues by Source 108 Sales Tax Payers by Category 109 Taxable Sales by Category 110 Direct and Overlapping Sales Tax Rates 112 Debt Capacity: Ratios of Outstanding Debt by Type 113 Ratios of General Bonded Debt Outstanding 114 Direct and Overlapping Governmental Activities Debt 115 Legal Debt Margin Information 116 Calculation of Legal Debt Margin 118 Revenue Bond Coverage 119 Demographic and Economic Information: Demographic and Economic Statistics 120 Principal Employers 121 Operating Information: Authorized Full‐Time Equivalent Government Employees by Function 122 Operating Indicators by Function 123 Capital Assets Statistics by Function 124 (This page intentionally left blank) Introductory Section (This page intentionally left blank) www.fountainhillsaz.gov October 30, 2025 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, 2025. 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, 2025, 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, 2025, are fairly presented in conformity with accounting principles generally accepted in the United States of America. The independent auditor’s report is presented as the first component of the financial section of this report. TOWN OF FOUNTAIN HILLS 16705 E. Avenue of the Fountains, Fountain Hills, AZ 85268 480.816.5100 | Fax: 480.837.3145 Page 1 Accounting principles generally accepted in the United 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. Since incorporation in December 1989, Fountain Hills has grown from about 10,000 residents to a town of about 24,000 in 2025. 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. Adero Canyon 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. 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 the implementation of the policies of the Town Council and overall management of the Town through department directors and approximately 106 full‐time equivalent (FTE) employees. The Presiding Judge, Town Attorney, and Town Prosecutor are also 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. 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 its component units. The component units consist of legally separate entities for which the primary government is financially accountable. Blended component units, although legally Page 3 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. State of the Town - January 2025 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. Page 4 Budgetary Controls The budget process is a cyclical process and begins each year with the preparation of the base budget by each department. Each budget is based on expenditures to date and actual expenditures from previous years. The departments’ base budgets, along with any supplemental requests for new positions, programs or services are reviewed by the Town Manager. The Town Manager then meets with departments to review base budgets and requests for possible inclusion in the Town’s budget for the upcoming year. 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 funding source projected revenues. The Town Council is then required to hold a public hearing on the budget to adopt a final budget by June 30, the closing 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 the 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 (Arizona Revised Statute §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. Departments may make transfers of non‐ personnel appropriations within each department and all budget 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. Page 5 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. For example, the Arizona Legislature eliminated long‐term residential rental sales taxes starting January 1, 2025. Accordingly, the Town’s real estate local sales taxes decreased by about 28% from the prior year with another decrease expected next fiscal year. With the possibility of a recession in the coming fiscal year, the Town will be closely monitoring these revenue sources and adjust as needed. The following chart is a look at the past five years’ local sales tax activity by category: As shown in the chart, Fiscal Year 2025 marked a significant transition for the Town's revenue streams, with total sales tax collections decreasing by 1.8% to $20.2 million. This decline was primarily driven by the state‐mandated elimination of the residential rental tax and a notable slowdown in construction activity. Retail sales, the Town's largest and most critical revenue source, maintained its stability but experienced a slight decrease of 0.8% compared to the prior year. Similarly, Restaurant/Bar revenue saw a modest 2.7% decrease, with both trends signaling a potential cooling in local consumer spending that will be closely monitored. In a positive development, the Services category showed significant strength, growing by a robust 11.8% and highlighting a resilient and expanding area of the local economy. The Transportation/Communication/Utility category also slightly increased by 3.8% during the year. Construction sales tax, a key indicator of development, saw a decrease of 7.0% from the prior year. While this figure remains strong compared to historical averages, the decline contributed significantly to the overall revenue shortfall. As anticipated and noted above, the Real Estate category was directly impacted by new legislation. The State's ban on long‐term residential rental taxes became effective halfway through the fiscal year, causing this category's revenue to decrease by 28.2% compared to FY24. This establishes a new, lower baseline for this revenue source moving forward as the full impact of these legislative changes will be realized in FY26. Page 6 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 in the General Fund and the other 50% for capital expenditures in the Capital Projects Fund. 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 decreased by 20.3% in fiscal year 2024‐25 as municipalities realize the full impacts of the State implementing a flat tax rate. Town projections show that these revenues will continue decreasing next fiscal year before stabilizing and possibly begin increasing in future years based on income tax collections at the State level. State shared sales tax has increased over the past several years, and this year continued the trend by increasing revenue by 1.0% compared to the prior year. 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 as of 2023 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 about 58% of the General Fund revenues in FY2025. On November 1, 2019, the Town’s TPT rate went up 0.3% to the current rate of 2.9%. Hospitality‐related collections in our Services category are the most susceptible to changes in economic conditions, which outperformed projections in FY2025 as discussed earlier. 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, which showed a slight decrease in FY2025. 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 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 may be negatively impacted 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. The Town also receives a proportionate share of vehicle license taxes within the County. Although the State shared revenue formula generally allocates revenues based on official census data, in Page 8 recent years, the Town’s population has slightly decreased which has resulted in relatively‐flat 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 revenue‐ sharing, reductions in local revenues, and additional demands for essential Town services remain. The Town’s Financial Policies set forth guidelines against which current budgetary performance can be measured and proposals for future programs can be evaluated. The Town’s Financial Policies have helped weather the uncertainty encountered during the pandemic 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 about two to three months 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 possible 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 fiscal year 2010 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. 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 Page 9 MAJOR INITIATIVES, SERVICE EFFORTS AND ACCOMPLISHMENTS The Town of Fountain Hills’ adopted budget for fiscal year 2024‐25 reflected a cautious approach to revenue projections and possible inflationary pressures, while also increasing budget for capital improvements within the Town. Due to the uncertain economic conditions ahead, the Town reviewed recent revenue performance and adjusted revenue projections accordingly. Because of recent increased revenue performance in fiscal years 2023 and 2024, as well as federal resources received during the pandemic recovery, the Town has accumulated about $50 million of fund balances, which has allowed it to increase budget authority for capital improvements and streets improvements. As Pavement Management has been a priority for many years, Council approved transfers of over $10 million from General Fund excess reserves to the Streets Fund over the past three to four years. The Town has plans to budget for additional Streets paving projects in future years, using this additional accumulated fund balance realized through these transfers. 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 2024‐25 goals attained are summarized within this list of accomplishments: Completed first full fiscal year with a fully operational in‐house Fire Department Completed over 22.5 lane miles of paved roadways within the Town Maintained and cleaned out almost 50 acres of Town‐owned washes Added 1.8 bicycle lane miles for additional bicycling opportunities for residents Completed 6 capital improvements for residents including a new Panorama pocket park near Fountain Park, with several ongoing multi‐year programs continuing into future years Added 3 new pickleball courts at Four Peaks Park Completed installation of a new restroom facility at Four Peaks Park utilizing grant funding from the State of Arizona Attracted almost 49,000 attendees to 16 special events, requiring collaboration with local organizations Adopted the 2024‐28 Downtown Strategy Delivered almost 6,000 meals provided through the Home Delivered Meal program Provided 296 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, 2024. This was the twenty‐ninth 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. Page 10 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 2025 Certificate. In addition, the government received the GFOA’s Distinguished Budget Presentation Award for its annual budget for the fiscal year beginning July 1, 2024. 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 11 Town of Fountain Hills, Arizona List of Principal Officials June 30, 2025 Elected Officials Gerry Friedel, Mayor Allen Skillicorn, Vice‐Mayor Gayle Earle, Councilmember Peggy McMahon, Councilmember Brenda Kalivianakis, Councilmember Rick Watts, Councilmember Hannah Larrabee, Councilmember Town Manager and Directors Rachael Goodwin, Town Manager David Trimble, Deputy Town Manager/Administrative Services Director Bevelyn Bender, 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 Jennifer Wright, Timothy A. La Sota PLC, Town Attorney Mark Iacovino, The Law Office of Mark Iacovino, Town Prosecutor Captain Kevin Thomas, Maricopa County Sheriff’s Office Robert Melton, Presiding Judge Page 12 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, 2024 Executive Director/CEO Page 13 Citizens of Fountain Hills Citizens of Fountain Hills Presiding Judge Town of Fountain Hills Organization Fire / EMS Administration Administration Law Enforcement Town Manager Town Attorney Town Prosecutor Appointed by Council Contracted Mayor and Town Council Mayor and Town Council Development Services Recreation Community Services Community Center Code Enforcement Building Safety Senior Services Parks Volunteer Program GIS Planning Engineering Streets Facilities Public Works Inspection Finance Finance Town Clerk Town Clerk Administrative Services Administrative Services Economic Development / Tourism Economic Development / Tourism Community Relations Community Relations FY 2024 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, 2025, 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, 2025, 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. Change in Accounting Principle As described in Note 1 to the financial statements, the Town implemented the provisions of GASB Statement No. 101, Compensated Absences, for the year ended June 30, 2025. Our opinion is not modified with respect to this matter. 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. Page 17 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. 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. Page 18 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. 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 30, 2025, 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 30, 2025 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, 2025 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, 2025. 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 $4.0 million to $154.2 million, representing a 2.7 percent increase of the total net position. General revenues from governmental activities accounted for $33.1 million in revenue, or 85 percent of all revenues from governmental activities. Program specific revenues in the form of charges for services and grants and contributions accounted for $5.7 million or 15 percent of total governmental activities revenues. The Town had $34.8 million in expenses related to governmental activities, an increase of 4.5 percent from the prior fiscal year, primarily due to increased streets pavement maintenance costs and an increase in culture and recreation expenses. Among the major governmental funds, the General Fund had $28.5 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 $22.6 million. The General Fund’s fund balance decreased $2.8 million to $14.7 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, 2025 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, 2025 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, 2025 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 $154.2 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, 2025 and June 30, 2024. Governmental Activities As of As of June 30, 2025 June 30, 2024 Current and other assets $ 55,358,008 $ 53,009,050 Capital assets, net 104,695,606 101,990,127 Total assets 160,053,614 154,999,177 Current and other liabilities 3,611,283 2,838,171 Long‐term liabilities 1,139,415 553,757 Total liabilities 4,750,698 3,391,928 Deferred inflows 1,140,535 1,274,470 Net position Investment in capital assets 104,695,606 101,990,127 Restricted 11,497,408 9,474,160 Unrestricted 37,969,367 38,868,492 Total net position $ 154,162,381 $ 150,332,779 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, 2025 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 $38.8 million. The total cost of all programs and services was $34.8 million. The following table presents a summary of the changes in net position for the fiscal years ended June 30, 2025 and June 30, 2024. Governmental Activities Fiscal Year Ended June 30, 2025 Fiscal Year Ended June 30, 2024 Revenues Program revenues: Charges for services $ 2,353,317 $ 2,717,731 Operating grants and contributions 2,636,957 2,383,786 Capital grants and contributions 690,383 520,867 General revenues Property taxes 10,509 Sales taxes 20,191,270 20,559,928 Franchise taxes 334,101 351,118 State‐sales and income tax revenue 8,645,400 9,888,965 Vehicle License taxes 1,300,912 1,242,636 Investment earnings 2,431,871 2,345,106 Miscellaneous 224,218 191,629 Total revenues $ 38,818,938 $ 40,201,766 Expenses General government $ 5,106,169 $ 5,106,646 Development services 1,380,385 1,324,892 Public safety 11,799,373 11,746,913 Public works 11,333,622 10,455,071 Culture and recreation 5,196,648 4,676,396 Total expenses 34,816,197 33,309,918 Changes in net position 4,002,741 6,891,848 Net position, beginning, as restated 150,159,640 143,440,931 Net position, ending $ 154,162,381 $150,332,779 Page 27 Town of Fountain Hills, Arizona Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2025 Public safety, 34% Public works, 33% Culture and recreation, 15% General government, 15% Development services, 4% Fiscal Year 2024‐25 Expenses Government‐Wide Financial Analysis – continued The charts below compare the governmental expenses from fiscal years 2024‐25 and 2023‐24. Public safety, 35% Public works, 31% Culture and recreation, 14% General government, 15% Development services, 4% Fiscal Year 2023‐24 Expenses Property, sales and franchise taxes, 53% State shared revenue, 22% Vehicle license taxes, 3% Charges for services, 6% Operating grants and contributions, 7% Other, 9% Governmental Activities Revenues Fiscal Year 2024‐25 Page 28 Town of Fountain Hills, Arizona Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2025 Government‐Wide Financial Analysis – continued The following items are significant current year transactions that have had an impact on the change of net position. State‐shared revenues for income taxes decreased substantially for the fiscal year due to the full implementation of the State's flat income tax rate. Beginning in January 2025, the State eliminated local sales taxes for long‐term residential rentals. This impacted the Town's local sales tax revenues for the second half of the fiscal year. 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, 2025 Year Ended June 30, 2024 Total Expenses Net (Expense)/ Revenue Total Expenses Net (Expense)/ Revenue Governmental Activities General government $ 5,106,169 $ (4,223,270) $ 5,106,646 $ (4,131,998) Development services 1,380,385 (676,538) 1,324,892 (630,242) Public safety 11,799,373 (11,378,145) 11,746,913 (11,546,893) Public works 11,333,622 (9,093,809) 10,455,071 (7,481,840) Culture and recreation 5,196,648 (3,763,778) 4,676,396 (3,896,561) Total expenses $ 34,816,197 $ (29,135,540) $ 33,309,918 $ (27,687,534) The cost of all governmental activities this year was $34.8 million. Federal, State, county, and tribal governments and charges for services subsidized certain governmental programs with revenues of $5.7 million. The net cost of the Town’s governmental activities was $29.1 million, which was funded primarily by general revenues. General revenues consisted primarily of $20.2 million in sales taxes and $9.9 million in State‐shared revenues. Page 29 Town of Fountain Hills, Arizona Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2025 Financial Analysis of the Town’s Funds As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance‐ related legal requirements. Governmental funds. The focus of the Town’s governmental funds is to provide information on near‐ term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of the Town’s net resources available for spending at the end of the fiscal year. The financial performance of the Town as a whole is reflected in its governmental funds. As the Town completed the year, its governmental funds reported an increase of $786,427 in the combined fund balance from $46.3 million to $47.1 million. The General Fund comprises 31.3 percent of the total fund balance. Approximately $9.7 million, or 65.9 percent, of the General Fund’s fund balance is unassigned. The General Fund is the principal operating fund of the Town. The fund balance decreased by $2.8 million to $14.7 million as of fiscal year end. General Fund revenues decreased $2.3 million primarily due to lower State‐shared income taxes and the loss of long‐term residential rental local sales tax revenues. General Fund expenditures increased by $834,950 primarily due to an increase of culture and recreation expenditures primarily from higher parks repair and maintenance costs, and shifting environmental program expenditures into the General Fund from the Environmental Fund. The Highway User Revenue Fund comprises 24.3 percent of total fund balance. The fund balance increased $1.9 million from the prior year due to transfers in from the General Fund for future road paving. Fund balance of the Grants Fund decreased $54,737 due to expenditures on grant projects exceeding grant funding. The Capital Projects Fund comprises 34.0 percent of the total fund balance. All of the fund balance is assigned to capital projects. The fund balance increased $1.8 million due to transfers in from the General Fund for future capital projects. 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 $3.2 million. This was an increase of $507,215 that was due to no expenditures in the Vehicle Replacement Fund during the fiscal year while additional monies were accumulated for future purchases. Page 30 Town of Fountain Hills, Arizona Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2025 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 $179,400 as a result of budgeted contingency transferred to other funds. A schedule showing the budget amounts compared to the Town’s actual financial activity for the General Fund is provided in this report as required supplementary information. The significant variances are summarized as follows: The favorable variance of $2.7 million in overall revenues is primarily due to actual revenues outperforming conservative projections. The favorable total expenditures variance of $3.1 million is due primarily to lower than expected expenditures across departments. Capital Assets and Debt Administration Capital Assets. As of the end of the current fiscal year, the Town had invested $104.7 million in capital assets, including buildings, facilities, vehicles, computers, equipment, infrastructure and artwork. This amount represents a net increase, prior to depreciation, of $6.1 million from the prior fiscal year. The increase was primarily due to capital projects expenditures, including the major Golden Eagle Park Impoundment project, that was substantially completed during the fiscal year. Total depreciation expense for the current fiscal year was $3.4 million. The following schedule presents a summary of capital asset balances for the fiscal years ended June 30, 2025 and June 30, 2024. Governmental Activities As of June 30, 2025 As of June 30, 2024 Capital assets – non‐depreciable $ 37,433,188 $ 34,761,936 Capital assets – depreciable, net 67,262,418 67,228,191 Total $ 104,695,606 $ 101,990,127 The estimated construction commitments amount is $1.3 million. 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, 2025 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 2025. 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 $206.4 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 six percent debt limitation for the Town is $61.9 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 Governmental Activities Assets Current assets: Cash and investments 52,433,275 $ Accounts receivable 358,436 Intergovernmental receivable 1,204,524 Taxes receivable 687 Leases receivable 1,188,619 Interest receivable 141,739 Inventory, at cost 4,663 Prepaid items 26,065 Total current assets 55,358,008 Noncurrent assets: Capital assets not being depreciated 37,433,188 Capital assets, net of accumulated depreciation 67,262,418 Total noncurrent assets 104,695,606 Total assets 160,053,614 Liabilities Current liabilities: Accounts payable 2,488,934 Retainage payable 146,880 Accrued wages and benefits 459,311 Other liabilities 1,192 Customer deposits 64,397 Compensated absences payable 273,968 Unearned revenues 176,601 Total current liabilities 3,611,283 Noncurrent liabilities: Non‐current portion of long‐term obligations 1,139,415 Total noncurrent liabilities 1,139,415 Total liabilities 4,750,698 Deferred inflows of resources Leases 1,140,535 Total deferred inflows of resources 1,140,535 Net position Investment in capital assets 104,695,606 Restricted for: Public works 8,113,511 Local court enhancement 432,064 Opioid abatement 373,757 Capital outlay 2,536,954 Debt service 41,122 Unrestricted 37,969,367 Total net position 154,162,381 $ Town of Fountain Hills, Arizona Statement of Net Position June 30, 2025 The notes to the basic financial statements are an integral part of this statement. Page 36 Functions/Programs Expenses Charges for Services Operating Grants and Contributions Capital Grants and Contributions Governmental Activities Governmental activities General government 5,106,169 $ 527,790 $ 355,109 $ $ (4,223,270) $ Development services 1,380,385 703,847 (676,538) Public safety 11,799,373 102,524 318,704 (11,378,145) Public works 11,333,622 259,628 1,889,802 90,383 (9,093,809) Culture and recreation 5,196,648 759,528 73,342 600,000 (3,763,778) Total governmental activities 34,816,197 $ 2,353,317 $ 2,636,957 $ 690,383 $ (29,135,540) General revenues Taxes: Property taxes 10,509 Sales taxes 20,191,270 Franchise taxes 334,101 State sales & income tax revenue sharing ‐ unrestricted 8,645,400 Vehicle license tax revenue sharing ‐ unrestricted 1,300,912 Investment earnings 2,431,871 Miscellaneous 224,218 Total general revenues 33,138,281 Changes in net position 4,002,741 Net position, beginning of year, previously reported 150,332,779 Adjustments to beginning net position related to the implementation of GASB 101 (173,139) Net position, beginning of year, as restated 150,159,640 Net position, end of year 154,162,381 $ Program Revenue Net (Expense) Town of Fountain Hills, Arizona For the Year Ended June 30, 2025 Statement of Activities The notes to the basic financial statements are an integral part of this statement. Page 37 (This page intentionally left blank) Page 38 Fund Financial Statements Page 39 General Highway User Revenue Grants Capital Projects Assets Cash and investments 15,209,663 $ 11,334,462 $ 227,547 $ 17,801,817 $ Accounts receivable 204,443 32,852 Intergovernmental receivable 556,042 250,369 373,757 11,743 Taxes receivable Leases receivable 1,188,619 Interest receivable 46,618 21,261 71,592 Inventory, at cost 4,663 Prepaid items 25,390 Total assets 17,235,438 11,638,944 601,304 17,885,152 Liabilities Accounts payable 588,457 138,762 189 1,728,078 Retainage payable 146,880 Accrued wages and benefits 425,431 22,342 Other liabilities 1,185 7 Customer deposits 64,397 Unearned revenues 15,538 161,063 Total liabilities 1,095,008 161,104 161,252 1,874,965 Deferred inflows of resources Unavailable revenues ‐ intergovernmental 373,757 Unavailable revenues ‐ other 225,742 32,852 11,743 Leases 1,167,641 Total deferred inflows of resources 1,393,383 32,852 373,757 11,743 Fund balances Nonspendable 30,053 Restricted 8,113,511 Committed 4,999,717 Assigned 3,331,477 66,295 15,998,444 Unassigned 9,717,277 Total fund balances 14,747,047 11,444,988 66,295 15,998,444 Total liabilities, deferred inflows of resources and fund balances 17,235,438 $ 11,638,944 $ 601,304 $ 17,885,152 $ Town of Fountain Hills, Arizona Balance Sheet Governmental Funds June 30, 2025 The notes to the basic financial statements are an integral part of this statement. Page 40 Non‐Major Governmental Funds Total Governmental Funds 4,706,534 $ 49,280,023 $ 121,141 358,436 12,613 1,204,524 687 687 1,188,619 2,268 141,739 4,663 675 26,065 4,843,918 52,204,756 25,479 2,480,965 146,880 11,538 459,311 1,192 64,397 176,601 37,017 3,329,346 373,757 270,337 1,167,641 1,811,735 675 30,728 3,010,140 11,123,651 4,999,717 1,796,086 21,192,302 9,717,277 4,806,901 47,063,675 4,843,918 $ 52,204,756 $ Page 41 (This page intentionally left blank) Page 42 Total fund balances ‐ governmental funds 47,063,675 $ Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Governmental capital assets 249,342,091 $ Less accumulated depreciation (144,732,298) 104,609,793 Some receivables are not available to pay for current period expenditures and, therefore, are reported as unavailable in the funds. Leases 27,106 Intergovernmental 373,757 Other 270,337 671,200 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 85,813 Net positions of other remaining balance 3,145,283 3,231,096 Long‐term liabilities (compensated absences payable) are not due and payable in the current period and, therefore, are not reported in the funds. (1,413,383) Net position of governmental activities 154,162,381 $ Town of Fountain Hills, Arizona Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2025 Amounts reported for governmental activities in the Statement of Net Position are different because: The notes to the basic financial statements are an integral part of this statement. Page 43 General Highway User Revenue Grants Capital Projects Revenues Property taxes $ $ $ $ Sales taxes 16,616,599 1,392,501 1,485,919 Franchise taxes 334,101 Licenses and permits 952,127 Leases and rents 368,277 Intergovernmental 8,741,292 3,190,714 696,551 20,055 Charges for services 278,369 60 Other 356,642 15,241 8,150 74,381 Fines and forfeitures 214,389 Investment earnings 616,692 595,073 5,181 859,049 Total revenues 28,478,488 5,193,589 709,882 2,439,404 Expenditures Current: General government 4,148,353 209,025 176 Development services 1,345,270 Public safety 11,297,096 Public works 1,681,328 7,241,857 14,670 356,021 Culture and recreation 3,920,418 8,151 Capital outlay 160,998 66,373 532,773 5,240,987 Debt service: Fiscal charges Total expenditures 22,553,463 7,308,230 764,619 5,597,184 Excess (deficiency) of revenues over expenditures 5,925,025 (2,114,641) (54,737) (3,157,780) Other financing sources (uses) Transfers in 4,000,000 5,003,359 Transfers out (8,753,530) Total other financing sources (uses) (8,753,530) 4,000,000 5,003,359 Changes in fund balances (2,828,505) 1,885,359 (54,737) 1,845,579 Fund balances, beginning of year 17,575,552 9,559,629 121,032 14,152,865 Fund balances, end of year 14,747,047 $ 11,444,988 $ 66,295 $ 15,998,444 $ Town of Fountain Hills, Arizona Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2025 The notes to the basic financial statements are an integral part of this statement. Page 44 Non‐Major Governmental Funds Total Governmental Funds 10,509 $ 10,509 $ 696,251 20,191,270 334,101 359,093 1,311,220 368,277 143,379 12,791,991 37,559 315,988 19,612 474,026 30,235 244,624 222,243 2,298,238 1,518,881 38,340,244 857,571 5,215,125 1,345,270 18,809 11,315,905 401,485 9,695,361 52,003 3,980,572 6,001,131 453 453 1,330,321 37,553,817 188,560 786,427 350,000 9,353,359 (599,829) (9,353,359) (249,829) (61,269) 786,427 4,868,170 46,277,248 4,806,901 $ 47,063,675 $ Page 45 Changes in fund balances ‐ total governmental funds 786,427 $ 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 6,001,131 $ Less current year depreciation (3,396,012) 2,605,119 Some revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Leases 8,591 Intergovernmental 9,399 Donated artwork 100,000 Other 227,071 345,061 Compensated absences expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. (241,081) 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. 507,215 Changes in net position in governmental activities 4,002,741 $ Reconciliation of the Statement of Revenues, Expenditures and For the Year Ended June 30, 2025 Town of Fountain Hills, Arizona Changes in Fund Balances of Governmental Funds to the Statement of Activities The notes to the basic financial statements are an integral part of this statement. Page 46 Governmental Activities Internal Service Funds Assets Current assets: Cash and investments 3,153,252 $ Total current assets 3,153,252 Noncurrent assets: Capital assets, net of accumulated depreciation 85,813 Total noncurrent assets 85,813 Total assets 3,239,065 Liabilities Current liabilities: Accounts payable 7,969 Total current liabilities 7,969 Net position Investment in capital assets 85,813 Unrestricted 3,145,283 Total net position 3,231,096 $ Town of Fountain Hills, Arizona Statement of Net Position Proprietary Funds June 30, 2025 The notes to the basic financial statements are an integral part of this statement. Page 47 Governmental Activities Internal Service Funds Operating revenues Charges for services 418,029 $ Total operating revenues 418,029 Operating expenses Costs of services 34,433 Depreciation 10,014 Total operating expenses 44,447 Operating income (loss) 373,582 Nonoperating revenues (expenses) Investment earnings 133,633 Total nonoperating revenue (expenses) 133,633 Changes in net position 507,215 Net position, beginning of year 2,723,881 Net position, end of year 3,231,096 $ Town of Fountain Hills, Arizona Statement of Revenues, Expenses, and Changes in Fund Net Position For the Year Ended June 30, 2025 Proprietary Funds The notes to the basic financial statements are an integral part of this statement. Page 48 Governmental Activities Internal Service Funds Increase/Decrease in Cash and Cash Equivalents Cash flows from operating activities Cash received from charges for services $ 418,029 Cash payments to suppliers for goods and services (31,039) Net cash provided by/used for operating activities 386,990 Cash flows from capital activities Purchase of property and equipment (10,374) Net cash provided by/used for capital activities (10,374) Cash flows from investing activities Investment income 133,633 Net cash provided by/used for investing activities 133,633 Net increase/decrease in cash and cash equivalents 510,249 Cash and cash equivalents, beginning of year 2,643,003 Cash and cash equivalents, end of year $ 3,153,252 Reconciliation of Operating Income/Loss to Net Cash Provided by/Used for Operating Activities Operating income/loss $ 373,582 Adjustments to reconcile operating income/loss to net cash provided by/used for operating activities: Depreciation 10,014 Changes in assets and liabilities: Increase/decrease in accounts payable 3,500 Increase/decrease in other liabilities (106) Total adjustments 13,408 Net cash provided by/used for operating activities $ 386,990 Town of Fountain Hills, Arizona Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2025 The notes to the basic financial statements are an integral part of this statement. Page 49 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2025 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. During the year ended June 30, 2025, the Town implemented the provisions of GASB Statement No. 101, Compensated Absences. That Statement updates the recognition and measurement guidance for compensated absences. The updated guidance affects the current and noncurrent liabilities the Town reports for compensated absences on the statement of net position. Accordingly, beginning net position has been restated as shown on the statement of activities. Also, the beginning balance of compensated absences reported in Note 6 has been restated. The more significant of the Town’s accounting policies are described below. A. Reporting Entity The Town’s major operations include public safety, culture and recreation, public works, development services and general administrative services. The Town is a municipal corporation governed by an elected Mayor and Council. The financial reporting entity consists of a primary government and its component units. A component unit is a legally separate entity that must be included in the reporting entity in conformity with generally accepted accounting principles. The Town is a primary government that has a separately elected governing body, is legally separate, and is fiscally independent of other state or local governments. Furthermore, the component units combined with the Town for financial statement presentation purposes and the Town are not included in any other governmental reporting entity. Consequently, the Town’s financial statements include only the funds of those organizational entities for which its elected governing body is financially accountable. Eagle Mountain Community Facilities District and the Cottonwoods Maintenance District. As special purpose districts and separate political subdivisions under the Arizona Constitution, the Districts can levy taxes and issue bonds independently of the Town. Property owners in the designated areas are assessed taxes for the costs of operating the Districts. The Town Council serves as the Board of Directors; however, the Town has no liability for the Districts’ debt, the Districts are responsible for the debt; the debt is therefore not subject to the Town’s debt limit. The Districts cannot be part of another reporting entity. The Districts’ governing bodies are substantially the same as the Town and the Town’s management oversees operations, resulting in the Town having the ability to exercise control. As a result, for financial reporting purposes, transactions of the Districts are combined together and included as if they were part of the Town’s operations. Page 50 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2025 Note 1 – Summary of Significant Accounting Policies Town of Fountain Hills, Arizona Municipal Property Corporation. The Town of Fountain Hills, Arizona Municipal Property Corporation’s (MPC) Board of Directors consists of three members which are appointed by the Fountain Hills Town Council. The MPC, which is a nonprofit corporation incorporated under the laws of the State of Arizona, was formed for the sole purpose of assisting the Town in obtaining financing for various projects of the Town. The Town has a “moral obligation” for the repayment of the MPC’s bonds. The MPC cannot be part of another reporting entity. The MPC provides services exclusively to the Town. As a result, for financial reporting purposes, transactions of the MPC are combined together and included as if they were part of the Town’s operations. B. Government‐Wide and Fund Financial Statements The government‐wide financial statements (i.e., the statement of net position and the statement of activities) present financial information about the Town as a whole. The reported information includes all of the Town's component units. For the most part, the effect of internal activity has been removed from these statements. Interfund services provided and used, such as interfund transfers, are not eliminated in the process of consolidation. Governmental activities normally are supported by taxes and intergovernmental revenues. The Town does not have any fiduciary or business‐type activities. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes, unrestricted state shared revenues, investment income and other items not included among program revenues are reported instead as general revenues. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation Government‐wide Financial Statements – The government‐wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. As a general rule, the effect of internal activity has been eliminated from the government‐wide financial statements; however, the effects of interfund services provided and used between functions are reported as expenses and program revenues at amounts approximating their external exchange value. Page 51 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2025 Note 1 – Summary of Significant Accounting Policies Fund Financial Statements – Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Town considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, and claims and judgments, are recorded only when payment is due. Property taxes, sales taxes, franchise taxes, state shared revenues, licenses and permits, charges for services, and investment earnings associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Grants and similar awards are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. Miscellaneous revenue is not susceptible to accrual because generally they are not measurable until received in cash. Unearned revenues arise when resources are received by the Town before it has legal claim to them, as when grant monies are received prior to meeting all eligibility requirements imposed by the provider. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. The Town reports the following major governmental funds. General Fund – The General Fund is the Town’s primary operating fund. This fund accounts for all financial resources of the Town, except those required to be accounted for in other funds. Highway User Revenue Fund (HURF) – This fund accounts for the Town’s share of motor vehicle fuel tax revenues and sales tax. Grants Fund – This fund accounts for the activities of various restricted grants and contributions received by the Town. Capital Projects Fund – This fund accounts for the capital improvements to various projects and equipment purchases of the Town. Page 52 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2025 Note 1 – Summary of Significant Accounting Policies 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. 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. Page 53 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2025 Note 1 – Summary of Significant Accounting Policies 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. 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. Page 54 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2025 Note 1 – Summary of Significant Accounting Policies 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. Capital assets of the Town are depreciated using the straight‐line method over the estimated useful lives. Buildings and building improvements 20 ‐ 50 years Improvements other than buildings 20 years Infrastructure 15 ‐ 50 years Vehicles, machinery and equipment 5 ‐ 20 years J. Compensated Absences The Town’s employee leave policies generally provide for granting vacation, sick and other leave with pay. The current and long‐term liabilities, including related benefits, for accumulated leave time 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. 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. Page 55 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2025 Note 1 – Summary of Significant Accounting Policies 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. 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. Page 56 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2025 Note 2 – Fund Balance Classifications Assigned. Amounts in the assigned fund balance classification are intended to be used by the Town for specific purposes but do not meet the criteria to be classified as restricted or committed. In governmental funds other than the General Fund, assigned fund balance represents the remaining amount that is not restricted or committed. In the General Fund, assigned amounts represent intended uses established by the Town Council or a management official delegated that authority by formal Town Council action. The Town Council has delegated authority to make assignments to the Chief Financial Officer. 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 $4,999,717, reported as a committed fund balance at June 30, 2025. 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, 2025 Note 2 – Fund Balance Classifications The table below provides detail of the major components of the Town’s fund balance classifications at year end. General Fund Highway User Revenue Fund Grants Fund Capital Projects Fund Non‐Major Governmental Funds Total Fund Balances: Nonspendable: Inventory $ 4,663 $ $ $ $ $ 4,663 Prepaid items 25,390 675 26,065 Restricted: Capital Projects 21,402 21,402 Debt Service 41,122 41,122 Public works 8,113,511 8,113,511 Local Court Enhancement 432,064 432,064 Development Fees 2,515,552 2,515,552 Committed: Rainy Day 4,999,717 4,999,717 Assigned: Capital Projects 15,998,444 15,998,444 Downtown Strategy 708,382 708,382 Economic Development 867,211 867,211 Tourism 155,911 155,911 Public Art 64,460 64,460 Environmental 122 122 Public works 3,331,477 66,295 3,397,772 Unassigned: 9,717,277 9,717,277 Total fund balances $ 14,747,047 $11,444,988 $ 66,295 $ 15,998,444 $ 4,806,901 $ 47,063,675 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 $1,868,015 and the bank balance was $1,935,484. Page 58 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2025 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, 2025, are classified in the accompanying financial statements as follows: Carrying amount of investments 50,564,560 $ Carrying amount of cash deposits 1,868,015 Cash on hand 700 Total cash and investments 52,433,275 $ Page 59 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2025 Note 3 – Cash and Investments At year end, the Town’s investments consisted of the following: Investment Maturities (in Years) Credit Rating Investment Type Category Fair Value Less than 1 1‐5 S&P Moody’s U.S. Government and Agency Notes Level 1 $ 7,633,823 $ 4,167,150 $ 3,466,673 N/A N/A, AA1 Supra‐National Notes Level 1 179,942 179,942 AAA AAA Federal Agency Notes Level 1 1,177,194 1,177,194 AA+ AA1 Corporate and Foreign Bonds Level 2 4,338,078 1,317,785 3,020,293 N/A, BBB to AA N/A, BAA1 to AA2 Certificates of Deposit Level 2 474,469 372,702 101,767 N/A N/A Money Market Funds Level 1 190,721 190,721 N/A N/A Cash and Cash equivalents Not applicable 25,494 25,494 N/A N/A $ 6,253,794 $ 7,765,927 State Treasurer’s Investment Pool 7 Not applicable 36,544,839 29 days average maturities Total $ 50,564,560 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, 2025 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 Fair Value Percent of Town Investments U.S. Government and Agency Notes $ 7,633,823 15.1% Supra‐National Notes 179,942 0.4% Federal Agency Notes 1,177,194 2.3% Corporate and Foreign Bonds 4,338,078 8.6% Certificates of Deposit 474,469 0.9% Money Market Funds 190,721 0.4% Cash and Cash Equivalents 25,494 0.1% State Treasurer’s investment pool 7 36,544,839 72.3% $ 50,564,560 Note 4 – Receivables Intergovernmental receivables consist of sales taxes and shared revenues of $812,371 receivable from the State, opioid seƩlement agreement revenues of $373,757 receivable through Maricopa County, and grant receivables of $18,396. Leases receivable of $1,188,619 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 $343,435 and lease revenues of $1,061,405 are not scheduled to be collected in the subsequent year. Page 61 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2025 Note 5 – Capital Assets A summary of capital asset activity at year end is as follows: Governmental Activities Beginning Balance Increase Decrease Ending Balance Capital assets, not being depreciated: Land $ 29,690,368 $ $ $ 29,690,368 Artwork 2,598,900 150,000 2,748,900 Construction in progress 2,472,668 5,429,049 2,907,797 4,993,920 Total capital assets, not being depreciated 34,761,936 5,579,049 2,907,797 37,433,188 Capital assets, being depreciated: Infrastructure 157,578,806 1,281,042 158,859,848 Buildings and building improvements 23,825,602 543,773 24,369,375 Improvements other than buildings 21,737,425 897,004 22,634,429 Vehicles, machinery and equipment 5,460,849 718,434 30,436 6,148,847 Total capital assets being depreciated 208,602,682 3,440,253 30,436 212,012,499 Less accumulated depreciation for: Infrastructure (116,234,404) (1,689,371) (117,923,775) Buildings and building improvements (8,465,244) (524,030) (8,989,274) Improvements other than buildings (13,854,839) (731,129) (14,585,968) Vehicles, machinery and equipment (2,820,004) (461,496) (30,436) (3,251,064) Total accumulated depreciation (141,374,491) (3,406,026) (30,436) (144,750,081) Total capital assets, being depreciated, net 67,228,191 34,227 67,262,418 Governmental activities capital assets, net $ 101,990,127 $ 5,613,276 $ 2,907,797 $ 104,695,606 Depreciation expense was charged to functions/programs as follows: Governmental activities: General government $ 232,361 Development services 24,391 Public safety 338,525 Streets and highways 1,656,068 Culture and recreation 1,154,681 Total depreciation expense $ 3,406,026 Page 62 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2025 Note 5 – Capital Assets Construction Commitments – At June 30, 2025, the Town has the following active construction commitments. The resources for these commitments have been accumulated in the Capital Projects Fund. Governmental Activities Project Spent‐to‐Date Remaining Commitment Golden Eagle Impoundment Drainage $ 3,114,872 $ 530,286 Shea Blvd Widening ‐ Palisades to Technology 361,344 68,854 Community Center Improvements ‐ Phase III 108,626 Avenue Linear Park Improvements 125,160 125,160 Pleasantville Park 18,744 11,256 Wayfinding Signs 238,483 32,494 Sidewalk Infill Program ‐ La Montana 118,500 102,094 Town‐wide Guardrail Replacement 26,105 23,334 Chiller Replacement 51,800 248,200 $ 4,055,008 $ 1,250,304 Note 6 – Changes in Long‐Term Liabilities Long‐term liability activity for the current fiscal year was as follows: Beginning Balance (as restated) Net Increase Ending Balance Due Within One Year Governmental activities: Compensated absences payable $ 1,172,302 $ 241,081 $ 1,413,383 $ 273,968 Governmental activity long‐term liabilities $ 1,172,302 $ 241,081 $ 1,413,383 $ 273,968 Page 63 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2025 Note 7 – Interfund Transfers Interfund transfers for the year ended June 30, 2025 were as follows: Interfund transfers: Transfers out Transfers in General Fund Non‐Major Governmental Funds Total Highway User Revenue Fund $ 4,000,000 $ $ 4,000,000 Capital Projects Fund 4,753,530 249,829 5,003,359 Non‐Major Governmental Funds 350,000 350,000 Total $ 8,753,530 $ 599,829 $ 9,353,359 The General Fund transferred $4,753,530 to the Capital Projects Fund for future projects and $4,000,000 to the Highway User Revenue Fund for additional pavement maintenance projects. The Economic Development Fund transferred $350,000 to the Tourism Fund to provide funding for operating costs of the tourism program. The Development Fee Fund transferred $230,329 to the Capital Projects Fund for park improvement projects. The Eagle Mountain Debt Service Fund transferred $19,500 to the Capital Projects Fund for a sidewalk improvement project. 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. Page 64 Town of Fountain Hills, Arizona Notes to Financial Statements June 30, 2025 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. 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 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, 2025, the Town recognized pension expense of $918,589. 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, 2025, forfeitures reduced the Town’s pension expense by $51,935. Page 65 (This page intentionally left blank) Page 66 Required Supplementary Information Page 67 Original Final Actual Variance with Final Budget Revenues Sales taxes 14,858,589 $ 14,858,589 $ 16,616,599 $ 1,758,010 $ Franchise taxes 390,000 390,000 334,101 (55,899) Licenses and permits 784,505 784,505 952,127 167,622 Leases and rents 289,278 289,278 368,277 78,999 Intergovernmental 8,785,604 8,785,604 8,741,292 (44,312) Charges for services 255,265 255,265 278,369 23,104 Other revenue 161,575 161,575 356,642 195,067 Fines and forfeitures 200,000 200,000 214,389 14,389 Investment earnings 100,000 100,000 616,692 516,692 Total revenues 25,824,816 25,824,816 28,478,488 2,653,672 Expenditures Current: General government Mayor and council 73,040 73,040 63,077 9,963 Administration 3,270,412 3,268,912 2,968,896 300,016 Non departmental 2,532,053 2,204,653 582,552 1,622,101 Municipal court 526,374 526,374 533,828 (7,454) Total general government 6,401,879 6,072,979 4,148,353 1,924,626 Development services 1,538,897 1,538,897 1,345,270 193,627 Public safety Fire and emergency 5,694,859 5,694,859 5,109,239 585,620 Law enforcement 6,243,916 6,243,916 6,187,857 56,059 Total public safety 11,938,775 11,938,775 11,297,096 641,679 Public works 1,702,310 1,842,310 1,681,328 160,982 Culture and recreation 4,186,955 4,196,455 3,920,418 276,037 Capital outlay 56,000 56,000 160,998 (104,998) Total expenditures 25,824,816 25,645,416 22,553,463 3,091,953 Excess (deficiency) of revenues over expenditures 179,400 5,925,025 (438,281) Other financing sources (uses) Transfers out (4,000,000) (4,000,000) (8,753,530) (4,753,530) Total other financing sources (uses) (4,000,000) (4,000,000) (8,753,530) (4,753,530) Changes in fund balances (4,000,000) (3,820,600) (2,828,505) (5,191,811) Fund balances, beginning of year 17,575,552 17,575,552 17,575,552 Fund balances, end of year 13,575,552 $ 13,754,952 $ 14,747,047 $ (5,191,811) $ Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual General For the Year Ended June 30, 2025 Budget See accompanying notes to this schedule. Page 68 Original Final Actual Variance with Final Budget Revenues Sales taxes 1,212,573 $ 1,212,573 $ 1,392,501 $ 179,928 $ Intergovernmental 3,038,992 3,038,992 3,190,714 151,722 Charges for services 100,000 100,000 60 (99,940) Other revenue 31,000 31,000 15,241 (15,759) Investment earnings 10,000 10,000 595,073 585,073 Total revenues 4,392,565 4,392,565 5,193,589 801,024 Expenditures Current ‐ Public works 7,087,540 7,616,315 7,241,857 374,458 Capital outlay 66,000 66,373 (373) Total expenditures 7,087,540 7,682,315 7,308,230 374,085 Excess (deficiency) of revenues over expenditures (2,694,975) (3,289,750) (2,114,641) 1,175,109 Other financing sources (uses) Transfers in 2,000,000 2,000,000 4,000,000 2,000,000 Total other financing sources (uses) 2,000,000 2,000,000 4,000,000 2,000,000 Changes in fund balances (694,975) (1,289,750) 1,885,359 3,175,109 Fund balances, beginning of year 9,559,629 9,559,629 9,559,629 Fund balances, end of year 8,864,654 $ 8,269,879 $ 11,444,988 $ 3,175,109 $ 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, 2025 Budget See accompanying notes to this schedule. Page 69 Original Final Actual Variance with Final Budget Revenues Intergovernmental 1,190,000 $ 1,190,000 $ 696,551 $ (493,449) $ Other revenue 8,150 8,150 Investment earnings 5,181 5,181 Total revenues 1,190,000 1,190,000 709,882 (480,118) Expenditures Current ‐ General government 1,190,000 488,951 209,025 279,926 Public works 168,049 14,670 153,379 Culture and recreation 8,151 (8,151) Capital outlay 533,000 532,773 227 Total expenditures 1,190,000 1,190,000 764,619 425,381 Excess (deficiency) of revenues over expenditures (54,737) (54,737) Changes in fund balances (54,737) (54,737) Fund balances, beginning of year 121,032 121,032 121,032 Fund balances, end of year 121,032 $ 121,032 $ 66,295 $ (54,737) $ Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual Grants For the Year Ended June 30, 2025 Budget See accompanying notes to this schedule. Page 70 Town of Fountain Hills, Arizona Note to Required Supplementary Information June 30, 2025 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 Downtown Strategy Economic Development Tourism Public Art Local Court Enhancement Assets Cash and investments 704,922 $ 877,456 $ 159,910 $ 64,460 $ 432,461 $ Accounts receivable Intergovernmental receivable 1,192 4,768 6,653 Taxes receivable Interest receivable 2,268 Prepaid items 275 400 Total assets 708,382 882,499 166,963 64,460 432,461 Liabilities Accounts payable 7,881 6,246 397 Accrued wages and benefits 7,132 4,406 Total liabilities 15,013 10,652 397 Fund balances Nonspendable 275 400 Restricted 432,064 Assigned 708,382 867,211 155,911 64,460 Total fund balances 708,382 867,486 156,311 64,460 432,064 Total liabilities, deferred inflows of resources and fund balances 708,382 $ 882,499 $ 166,963 $ 64,460 $ 432,461 $ Special Revenue Funds Town of Fountain Hills, Arizona Combining Balance Sheet Non‐Major Governmental Funds June 30, 2025 Page 78 Capital Projects Fund Environmental Cottonwoods Maintenance General Obligation Debt Service Eagle Mountain Debt Service Municipal Property Corporation Debt Service Development Fees Total Non‐Major Governmental Funds 9,036 $ 22,313 $ 28,172 $ 700 $ 12,568 $ 2,394,536 $ 4,706,534 $ 125 121,016 121,141 12,613 687 687 2,268 675 9,036 23,000 28,297 700 12,568 2,515,552 4,843,918 8,914 1,598 443 25,479 11,538 8,914 1,598 443 37,017 675 21,402 28,297 257 12,568 2,515,552 3,010,140 122 1,796,086 122 21,402 28,297 257 12,568 2,515,552 4,806,901 9,036 $ 23,000 $ 28,297 $ 700 $ 12,568 $ 2,515,552 $ 4,843,918 $ Debt Service Funds Special Revenue Funds Page 79 Downtown Strategy Economic Development Tourism Public Art Local Court Enhancement Revenues Property taxes $ $ $ $ $ Sales taxes 139,250 557,001 Licenses and permits Intergovernmental 143,379 Charges for services 37,559 Other revenue 1,411 1,076 17,000 Fines and forfeitures 30,235 Investment earnings 33,744 32,748 12,916 2,072 12,429 Total revenues 172,994 591,160 157,371 56,631 42,664 Expenditures Current: General government 156,115 261,997 389,372 50,087 Public safety Public works Culture and recreation 33,194 Debt service: Fiscal charges Total expenditures 156,115 261,997 389,372 33,194 50,087 Excess (deficiency) of revenues over expenditures 16,879 329,163 (232,001) 23,437 (7,423) Other financing sources (uses) Transfers in 350,000 Transfers out (350,000) Total other financing sources (uses) (350,000) 350,000 Changes in fund balances 16,879 (20,837) 117,999 23,437 (7,423) Fund balances, beginning of year 691,503 888,323 38,312 41,023 439,487 Fund balances, end of year 708,382 $ 867,486 $ 156,311 $ 64,460 $ 432,064 $ Special Revenue Funds 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, 2025 Page 80 Capital Projects Fund Environmental Cottonwoods Maintenance General Obligation Debt Service Eagle Mountain Debt Service Municipal Property Corporation Debt Service Development Fees Total Non‐Major Governmental Funds $ 10,509 $ $ $ $ $ 10,509 $ 696,251 1,872 357,221 359,093 143,379 37,559 125 19,612 30,235 9,373 849 1,936 190 533 115,453 222,243 11,245 11,358 2,061 190 533 472,674 1,518,881 857,571 18,809 18,809 374,168 8,463 18,854 401,485 18,809 52,003 443 10 453 374,168 8,463 443 10 56,472 1,330,321 (362,923) 2,895 2,061 (253) 523 416,202 188,560 350,000 (19,500) (230,329) (599,829) (19,500) (230,329) (249,829) (362,923) 2,895 2,061 (19,753) 523 185,873 (61,269) 363,045 18,507 26,236 20,010 12,045 2,329,679 4,868,170 122 $ 21,402 $ 28,297 $ 257 $ 12,568 $ 2,515,552 $ 4,806,901 $ Debt Service Funds Special Revenue Funds Page 81 Original Final Actual Variance with Final Budget Revenues Sales taxes 121,257 $ 121,257 $ 139,250 $ 17,993 $ Investment earnings 600 600 33,744 33,144 Total revenues 121,857 121,857 172,994 51,137 Expenditures Current ‐ General government 90,200 190,200 156,115 34,085 Total expenditures 90,200 190,200 156,115 34,085 Excess (deficiency) of revenues over expenditures 31,657 (68,343) 16,879 85,222 Changes in fund balances 31,657 (68,343) 16,879 85,222 Fund balances, beginning of year 691,503 691,503 691,503 Fund balances, end of year 723,160 $ 623,160 $ 708,382 $ 85,222 $ 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, 2025 Budget Page 82 Original and Final Actual Variance with Final Budget Revenues Sales taxes 485,029 $ 557,001 $ 71,972 $ Other 1,411 1,411 Investment earnings 240 32,748 32,508 Total revenues 485,269 591,160 105,891 Expenditures Current ‐ General government 315,293 261,997 53,296 Total expenditures 315,293 261,997 53,296 Excess (deficiency) of revenues over expenditures 169,976 329,163 159,187 Other financing sources (uses) Transfers out (350,000) (350,000) Total other financing sources (uses) (350,000) (350,000) Changes in fund balances (180,024) (20,837) 159,187 Fund balances, beginning of year 888,323 888,323 Fund balances, end of year 708,299 $ 867,486 $ 159,187 $ 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, 2025 Budget Page 83 Original Final Actual Variance with Final Budget Revenues Intergovernmental 84,000 $ 84,000 $ 143,379 $ 59,379 $ Other 1,076 1,076 Investment earnings 180 180 12,916 12,736 Total revenues 84,180 84,180 157,371 73,191 Expenditures Current ‐ General government 417,378 434,406 389,372 45,034 Total expenditures 417,378 434,406 389,372 45,034 Excess (deficiency) of revenues over expenditures (333,198) (350,226) (232,001) 118,225 Other financing sources (uses) Transfers in 350,000 350,000 350,000 Total other financing sources (uses) 350,000 350,000 350,000 Changes in fund balances 16,802 (226) 117,999 118,225 Fund balances, beginning of year 38,312 38,312 38,312 Fund balances, end of year 55,114 $ 38,086 $ 156,311 $ 118,225 $ Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual Tourism For the Year Ended June 30, 2025 Budget Page 84 Original and Final Actual Variance with Final Budget Revenues Charges for services 100,000 $ 37,559 $ (62,441) $ Other revenue 17,000 17,000 Investment earnings 240 2,072 1,832 Total revenues 100,240 56,631 (43,609) Expenditures Current ‐ Culture and recreation 41,761 33,194 8,567 Total expenditures 41,761 33,194 8,567 Excess (deficiency) of revenues over expenditures 58,479 23,437 (35,042) Changes in fund balances 58,479 23,437 (35,042) Fund balances, beginning of year 41,023 41,023 Fund balances, end of year 99,502 $ 64,460 $ (35,042) $ 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, 2025 Budget Page 85 Original and Final Actual Variance with Final Budget Revenues Fines and forfeitures 33,000 $ 30,235 $ (2,765) $ Investment earnings 300 12,429 12,129 Total revenues 33,300 42,664 9,364 Expenditures Current ‐ General government 52,500 50,087 2,413 Total expenditures 52,500 50,087 2,413 Excess (deficiency) of revenues over expenditures (19,200) (7,423) 11,777 Changes in fund balances (19,200) (7,423) 11,777 Fund balances, beginning of year 439,487 439,487 Fund balances, end of year 420,287 $ 432,064 $ 11,777 $ 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, 2025 Budget Page 86 Original and Final Actual Variance with Final Budget Revenues Licenses and permits $ 1,872 $ 1,872 $ Investment earnings 2,400 9,373 6,973 Total revenues 2,400 11,245 8,845 Expenditures Current ‐ Public works 404,804 374,168 30,636 Total expenditures 404,804 374,168 30,636 Excess (deficiency) of revenues over expenditures (402,404) (362,923) 39,481 Changes in fund balances (402,404) (362,923) 39,481 Fund balances, beginning of year 363,045 363,045 Fund balances, end of year (39,359) $ 122 $ 39,481 $ Town of Fountain Hills, Arizona Schedule of Revenues, Expenditures, and Changes in Fund Balances ‐ Budget and Actual Environmental For the Year Ended June 30, 2025 Budget Page 87 Original and Final Actual Variance with Final Budget Revenues Property taxes 9,768 $ 10,509 $ 741 $ Investment earnings 72 849 777 Total revenues 9,840 11,358 1,518 Expenditures Current ‐ Public works 14,181 8,463 5,718 Total expenditures 14,181 8,463 5,718 Excess (deficiency) of revenues over expenditures (4,341) 2,895 7,236 Changes in fund balances (4,341) 2,895 7,236 Fund balances, beginning of year 18,507 18,507 Fund balances, end of year 14,166 $ 21,402 $ 7,236 $ 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, 2025 Budget Page 88 Original and Final Actual Variance with Final Budget Revenues Other revenue $ 125 $ 125 $ Investment earnings 600 1,936 1,336 Total revenues 600 2,061 1,461 Expenditures Current ‐ General government 350 350 Total expenditures 350 350 Excess (deficiency) of revenues over expenditures 250 2,061 1,811 Changes in fund balances 250 2,061 1,811 Fund balances, beginning of year 26,236 26,236 Fund balances, end of year 26,486 $ 28,297 $ 1,811 $ 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, 2025 Budget Page 89 Original and Final Actual Variance with Final Budget Revenues Investment earnings 100 $ 190 $ 90 $ Total revenues 100 190 90 Expenditures Debt service ‐ Fiscal charges 19,500 443 19,057 Total expenditures 19,500 443 19,057 Excess (deficiency) of revenues over expenditures (19,400) (253) 19,147 Other financing sources (uses) Transfers out (19,500) (19,500) Total other financing sources (uses) (19,500) (19,500) Changes in fund balances (19,400) (19,753) (353) Fund balances, beginning of year 20,010 20,010 Fund balances, end of year 610 $ 257 $ (353) $ 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, 2025 Budget Page 90 Original and Final Actual Variance with Final Budget Revenues Investment earnings 300 $ 533 $ 233 $ Total revenues 300 533 233 Expenditures Debt service ‐ Fiscal charges 510 10 500 Total expenditures 510 10 500 Excess (deficiency) of revenues over expenditures (210) 523 733 Changes in fund balances (210) 523 733 Fund balances, beginning of year 12,045 12,045 Fund balances, end of year 11,835 $ 12,568 $ 733 $ 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, 2025 Budget Page 91 Original Final Actual Variance with Final Budget Revenues Sales taxes 904,856 $ 904,856 $ 1,485,919 $ 581,063 $ Intergovernmental 2,652,500 2,652,200 20,055 (2,632,145) Other 74,381 74,381 Investment earnings 11,000 11,000 859,049 848,049 Total revenues 3,568,356 3,568,056 2,439,404 (1,128,652) Expenditures Current ‐ General government 677,800 2,800 176 2,624 Public works 550,000 550,000 356,021 193,979 Capital outlay 8,415,000 8,501,125 5,240,987 3,260,138 Total expenditures 9,642,800 9,053,925 5,597,184 3,456,741 Excess (deficiency) of revenues over expenditures (6,074,444) (5,485,869) (3,157,780) 2,328,089 Other financing sources (uses) Transfers in 2,950,000 2,950,000 5,003,359 2,053,359 Total other financing sources (uses) 2,950,000 2,950,000 5,003,359 2,053,359 Changes in fund balances (3,124,444) (2,535,869) 1,845,579 4,381,448 Fund balances, beginning of year 14,152,865 14,152,865 14,152,865 Fund balances, end of year 11,028,421 $ 11,616,996 $ 15,998,444 $ 4,381,448 $ 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, 2025 Budget Page 92 Original Final Actual Variance with Final Budget Revenues Licenses and permits 379,550 $ 379,550 $ 357,221 $ (22,329) $ Investment earnings 3,000 3,000 115,453 112,453 Total revenues 382,550 382,550 472,674 90,124 Expenditures Current ‐ Public safety 18,809 18,809 Public works 18,854 18,854 Culture and recreation 18,809 18,809 Total expenditures 56,472 56,472 Excess (deficiency) of revenues over expenditures 382,550 326,078 416,202 90,124 Other financing sources (uses) Transfers out (950,000) (950,000) (230,329) 719,671 Total other financing sources (uses) (950,000) (950,000) (230,329) 719,671 Changes in fund balances (567,450) (623,922) 185,873 809,795 Fund balances, beginning of year 2,329,679 2,329,679 2,329,679 Fund balances, end of year 1,762,229 $ 1,705,757 $ 2,515,552 $ 809,795 $ 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, 2025 Budget Page 93 (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 Technology Replacement Vehicle and Equipment Replacement Total Internal Service Funds Assets Current assets: Cash and investments 220,510 $ 2,932,742 $ 3,153,252 $ Total current assets 220,510 2,932,742 3,153,252 Noncurrent assets: Capital assets, net of accumulated depreciation 9,682 76,131 85,813 Total noncurrent assets 9,682 76,131 85,813 Total assets 230,192 3,008,873 3,239,065 Liabilities Current liabilities: Accounts payable 7,969 7,969 Total current liabilities 7,969 7,969 Net position Investment in capital assets 9,682 76,131 85,813 Unrestricted 212,541 2,932,742 3,145,283 Total net position 222,223 $ 3,008,873 $ 3,231,096 $ Town of Fountain Hills, Arizona Combining Statement of Net Position Internal Service Funds June 30, 2025 Page 96 Technology Replacement Vehicle and Equipment Replacement Total Internal Service Funds Operating revenues Charges for services 62,002 $ 356,027 $ 418,029 $ Total operating revenues 62,002 356,027 418,029 Operating expenses Cost of services 34,433 34,433 Depreciation 692 9,322 10,014 Total operating expenses 35,125 9,322 44,447 Operating income (loss) 26,877 346,705 373,582 Nonoperating revenues (expenses) Investment earnings 9,512 124,121 133,633 Total nonoperating revenue (expenses) 9,512 124,121 133,633 Changes in net position 36,389 470,826 507,215 Net position, beginning of year 185,834 2,538,047 2,723,881 Net position, end of year 222,223 $ 3,008,873 $ 3,231,096 $ 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, 2025 Page 97 Technology Replacement Vehicle and Equipment Replacement Total Internal Service Funds Increase/Decrease in Cash and Cash Equivalents Cash flows from operating activities Cash received from charges for services $ 62,002 $ 356,027 $ 418,029 Cash payments to suppliers for goods and services (31,039) (31,039) Net cash provided by/used for operating activities 30,963 356,027 386,990 Cash flows from capital activities Purchase of property and equipment (10,374) (10,374) Net cash provided by/used for capital activities (10,374) (10,374) Cash flows from investing activities Investment income 9,512 124,121 133,633 Net cash provided by/used for investing activities 9,512 124,121 133,633 Net increase/decrease in cash and cash equivalents 30,101 480,148 510,249 Cash and cash equivalents, beginning of year 190,409 2,452,594 2,643,003 Cash and cash equivalents, end of year $ 220,510 $ 2,932,742 $ 3,153,252 Reconciliation of Operating Income/Loss to Net Cash Provided by/Used for Operating Activities Operating income/loss $ 26,877 $ 346,705 $ 373,582 Adjustments to reconcile operating income/loss to net cash provided by/used for operating activities: Depreciation 692 9,322 10,014 Changes in assets and liabilities: Increase/decrease in accounts payable 3,500 3,500 Increase/decrease in other liabilities (106) (106) Total adjustments 4,086 9,322 13,408 Net cash provided by/used for operating activities $ 30,963 $ 356,027 $ 386,990 Town of Fountain Hills, Arizona Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2025 Page 98 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 2016 2017 2018 2019 Governmental activities: Investment in capital assets 95,647,990 $ 94,909,703 $ 96,777,854 $ 104,781,328 $ Restricted 4,530,239 4,471,661 4,589,526 3,646,449 Unrestricted 17,232,506 17,578,068 16,244,169 15,258,797 Total governmental activities net position 117,410,735 $ 116,959,432 $ 117,611,549 $ 123,686,574 $ Source: The source of this information is the Town's financial records. Town of Fountain Hills, Arizona Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year ended June 30 Page 100 2020 2021 2022 2023 2024 2025 104,004,331 $ 103,822,185 $ 102,346,737 $ 101,838,463 $ 101,990,127 $ 104,695,606 $ 2,766,041 2,610,178 5,749,726 9,381,468 9,474,160 11,497,408 17,388,168 21,318,351 26,010,477 32,221,000 38,868,492 37,969,367 124,158,540 $ 127,750,714 $ 134,106,940 $ 143,440,931 $ 150,332,779 $ 154,162,381 $ Fiscal Year ended June 30 Page 101 2016 2017 2018 2019 Expenses Governmental activities: General government 2,516,966 $ 3,142,722 $ 3,431,752 $ 3,318,477 $ Development services 2,253,208 1,364,378 1,460,967 867,725 Public safety 7,178,890 7,563,898 7,567,012 8,142,069 Public works 6,476,688 7,904,577 7,380,663 10,263,244 Culture and recreation 3,124,523 3,375,414 3,311,648 3,767,996 Interest on long‐term debt 241,694 178,749 118,552 57,054 Total governmental activities expenses 21,791,969 23,529,738 23,270,594 26,416,565 Program Revenues Governmental activities: Fines, fees and charges for services: General government 298,737 837,163 295,716 280,312 Development services 1,257,492 1,062,094 1,314,915 1,143,871 Public safety 90,345 155,454 155,973 90,774 Public works 48,688 216,724 52,465 10,214 Culture and recreation 321,189 393,028 497,914 1,151,500 Operating grants and contributions 1,615,973 1,699,931 1,737,958 1,850,676 Capital grants and contributions 381,011 494,328 304,951 181,939 Total governmental activities program revenues 4,013,435 4,858,722 4,359,892 4,709,286 Net (Expenses)/Revenues (17,778,534) (18,671,016) (18,910,702) (21,707,279) General Revenues and Other Changes in Net Position Governmental activities: Taxes: Property taxes 2,569,504 2,296,199 2,263,623 2,476,546 Sales taxes 9,395,667 9,415,151 10,311,577 11,491,123 Franchise taxes 360,320 367,119 421,682 423,947 State shared revenues 5,813,678 6,057,278 6,396,667 6,514,470 Investment earnings 219,058 55,127 158,860 554,549 Miscellaneous 13,826 28,839 10,410 202,969 Special item ‐ Donation of capital assets ‐ ‐ ‐ 6,118,700 Total governmental activities 18,372,053 18,219,713 19,562,819 27,782,304 Changes in Net Position Governmental activities 593,519 $ (451,303) $ 652,117 $ 6,075,025 $ Source: The source of this information is the Town's financial records. Fiscal Year Ended June 30 Town of Fountain Hills, Arizona Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Page 102 2020 2021 2022 2023 2024 2025 3,470,936 $ 6,687,041 $ 4,333,863 $ 4,890,912 $ 5,106,646 $ 5,106,169 $ 825,884 968,808 1,068,260 1,206,991 1,324,892 1,380,385 9,003,452 6,321,489 9,487,150 9,930,356 11,746,913 11,799,373 9,961,306 10,175,540 9,780,920 10,792,078 10,455,071 11,333,622 3,490,447 3,601,870 3,999,178 4,776,903 4,676,396 5,196,648 881 7,544 ‐ ‐ ‐ ‐ 26,752,906 27,762,292 28,669,371 31,597,240 33,309,918 34,816,197 533,189 310,411 498,242 516,373 548,921 527,790 608,892 693,161 947,431 762,929 694,650 703,847 100,444 104,726 89,140 136,082 108,633 102,524 131,750 355,619 654,434 359,972 736,967 259,628 409,651 435,432 641,269 640,365 628,560 759,528 2,007,841 4,733,757 6,381,580 6,729,883 2,383,786 2,636,957 91,245 135,525 161,751 259,266 520,867 690,383 3,883,012 6,768,631 9,373,847 9,404,870 5,622,384 5,680,657 (22,869,894) (20,993,661) (19,295,524) (22,192,370) (27,687,534) (29,135,540) 2,077,368 402,481 9,728 9,854 ‐ 10,509 13,172,390 15,657,292 17,660,758 20,586,294 20,559,928 20,191,270 434,896 426,260 399,007 382,948 351,118 334,101 6,874,771 7,787,184 7,721,123 9,221,691 11,131,601 9,946,312 545,983 49,665 (419,006) 1,099,525 2,345,106 2,431,871 236,452 262,953 280,140 226,049 191,629 224,218 ‐ ‐ ‐ ‐ ‐ ‐ 23,341,860 24,585,835 25,651,750 31,526,361 34,579,382 33,138,281 471,966 $ 3,592,174 $ 6,356,226 $ 9,333,991 $ 6,891,848 $ 4,002,741 $ Fiscal Year Ended June 30 Page 103 2016 2017 2018 2019 General fund Nonspendable Inventory 9,272 $ 5,872 $ 13,490 $ 5,168 $ Prepaid items 4,123 16,868 21,945 17,311 Committed 2,652,357 2,714,135 2,893,850 3,027,804 Assigned 1,701,086 1,743,768 2,101,574 2,380,653 Unassigned 5,853,806 2,696,999 2,140,434 1,863,722 Total general fund 10,220,644 $ 7,177,642 $ 7,171,293 $ 7,294,658 $ All other governmental funds Nonspendable Prepaid items 5,055 $ 474 $ ‐ $ ‐ $ Restricted 4,500,044 4,432,710 4,571,263 3,579,891 Committed 1,366,081 8,576,250 7,248,890 5,868,386 Assigned 5,943,364 1,784,761 2,340,683 2,592,343 Unassigned ‐ ‐ ‐ ‐ Total all other governmental funds 11,814,544 $ 14,794,195 $ 14,160,836 $ 12,040,620 $ Source: The source of this information is the Town's financial records. Fiscal Year Ended June 30 Town of Fountain Hills, Arizona Fund Balances — Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Page 104 2020 2021 2022 2023 2024 2025 8,982 $ 7,117 $ 14,845 $ 12,923 $ 5,099 $ 4,663 $ 2,418 20,170 36,464 44,542 33,080 25,390 3,249,354 3,387,433 3,664,240 4,044,890 4,466,782 4,999,717 622,641 1,085,667 1,278,191 1,639,184 ‐ ‐ 5,535,499 10,958,643 9,466,833 11,644,005 13,070,591 9,717,277 9,418,894 $ 15,459,030 $ 14,460,573 $ 17,385,544 $ 17,575,552 $ 14,747,047 $ ‐ $ ‐ $ 4,253 $ 2,326 $ 14,960 $ 675 $ 2,708,883 2,541,894 5,701,067 9,368,764 9,096,302 11,123,651 6,068,810 4,430,491 5,511,281 7,458,457 ‐ ‐ 2,402,244 1,845,901 6,541,572 7,589,084 19,590,434 21,192,302 (66,361) ‐ ‐ ‐ ‐ ‐ 11,113,576 $ 8,818,286 $ 17,758,173 $ 24,418,631 $ 28,701,696 $ 32,316,628 $ Fiscal Year Ended June 30 Page 105 2016 2017 2018 2019 Revenues Taxes 12,299,285 $ 12,069,714 $ 13,019,341 $ 14,342,801 $ Licenses and permits 1,372,045 1,310,973 2,004,386 2,040,622 Leases and rents 258,165 284,090 282,531 280,801 Intergovernmental 7,559,436 7,917,651 8,266,028 8,401,676 Charges for services 197,109 351,476 254,122 181,105 Other 147,662 153,438 207,697 347,141 Fines and forfeitures 209,380 257,727 182,997 130,483 Investment earnings 219,058 55,127 158,860 554,549 Total revenues 22,262,140 22,400,196 24,375,962 26,279,178 Expenditures Current: General government 2,324,026 2,713,548 3,195,936 3,147,063 Development services 2,217,814 1,275,147 1,397,249 858,957 Public safety 7,034,887 7,420,032 7,402,227 6,295,989 Public works 2,498,714 3,954,450 3,420,317 7,880,668 Culture and recreation 2,240,865 2,484,940 2,375,758 2,845,027 Capital outlay 6,471,382 1,693,265 4,317,214 4,487,854 Debt service: Principal 4,260,000 2,675,000 2,720,000 2,635,000 Interest 308,106 244,986 185,164 123,871 Other debt service 2,005 2,180 1,805 1,600 Total expenditures 27,357,799 22,463,548 25,015,670 28,276,029 Excess (deficiency) of revenues over (under) expenditures (5,095,659) (63,352) (639,708) (1,996,851) Other Financing Sources (Uses) Transfers in 562,044 5,194,138 4,543,728 3,672,532 Transfers out (562,044) (5,194,138) (4,543,728) (3,672,532) Proceeds from sale of capital assets ‐ ‐ ‐ ‐ Total other financing sources (uses) ‐ ‐ ‐ ‐ Net change in fund balances (5,095,659) $ (63,352) $ (639,708) $ (1,996,851) $ Expenditures for capitalized assets 6,394,346 $ 1,696,612 $ 4,293,214 $ 4,465,837 $ Debt service as a percentage of noncapital expenditures 21.8% 14.1% 14.0% 11.6% Source: The source of this information is the Town's financial records. 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 Page 106 2020 2021 2022 2023 2024 2025 15,694,054 $ 16,510,939 $ 18,071,247 $ 20,978,020 $ 20,920,887 $ 20,535,880 $ 835,731 1,293,172 2,039,349 1,524,278 1,737,041 1,311,220 286,391 264,621 333,946 355,607 359,479 368,277 8,920,296 12,713,449 14,124,324 15,919,459 13,834,258 12,791,991 222,947 99,090 171,157 216,438 247,302 315,988 387,225 320,291 431,838 403,305 333,012 474,026 281,704 239,191 223,964 240,844 255,843 244,624 545,983 49,654 (419,224) 1,094,158 2,218,949 2,298,238 27,174,331 31,490,407 34,976,601 40,732,109 39,906,771 38,340,244 3,280,191 6,513,419 4,105,257 4,697,681 4,996,577 5,215,125 797,513 954,667 1,041,531 1,210,967 1,275,320 1,345,270 8,566,058 8,906,428 9,180,108 9,612,993 11,330,144 11,315,905 6,046,298 6,321,814 5,712,452 7,542,736 8,774,689 9,695,361 2,609,842 2,726,748 3,166,526 3,583,471 3,483,590 3,980,572 2,716,523 4,758,067 3,828,699 4,498,734 3,523,577 6,001,131 2,310,000 400,000 ‐ ‐ ‐ ‐ 67,301 7,044 ‐ ‐ ‐ ‐ 1,998 500 598 98 208 453 26,395,724 30,588,687 27,035,171 31,146,680 33,384,105 37,553,817 778,607 901,720 7,941,430 9,585,429 6,522,666 786,427 1,928,978 3,086,628 11,962,153 10,247,867 11,948,021 9,353,359 (1,928,978) (3,136,628) (11,962,153) (10,247,867) (11,948,021) (9,353,359) 418,585 ‐ ‐ ‐ ‐ ‐ 418,585 (50,000) ‐ ‐ ‐ ‐ 1,197,192 $ 851,720 $ 7,941,430 $ 9,585,429 $ 6,522,666 $ 786,427 $ 2,689,270 $ 4,758,055 $ 3,890,700 $ 4,497,424 $ 3,616,795 $ 6,011,505 $ 10.0% 1.8% 0.0% 0.0% 0.0% 0.0% Fiscal Year Ended June 30 Page 107 Fiscal Year Ended June 30 Property Tax Sales Tax Franchise Tax Total 2016 2,543,298 9,391,267 360,320 12,294,885 2017 2,287,444 9,419,551 367,119 12,074,114 2018 2,286,081 10,311,578 421,682 13,019,341 2019 2,427,730 11,491,124 423,947 14,342,801 2020 2,086,769 13,172,389 434,896 15,694,054 2021 427,387 15,657,292 426,260 16,510,939 2022 11,482 17,660,758 399,007 18,071,247 2023 8,778 20,586,294 382,948 20,978,020 2024 9,841 20,559,928 351,118 20,920,887 2025 10,509 20,191,270 334,101 20,535,880 Source: The source of this information is the Town's financial records. Town of Fountain Hills, Arizona Governmental Activities ‐ Tax Revenues by Source Last Ten Fiscal Years (modified accrual basis of accounting) Page 108 Number of Filers Percentage of Total Tax Liability Percentage of Total Number of Filers Percentage of Total Tax Liability Percentage of Total Sales category: Construction 446 2.86% 2,971,838 $ 14.72% N/A N/A 918,717 $ 9.78% Transportation/utilities 145 0.93% 1,723,779 8.54% N/A N/A 1,327,441 14.13% Wholesale/retail 11,738 75.28% 10,604,440 52.52% N/A N/A 4,815,582 51.28% Restaurants/bars 107 0.69% 1,413,481 7.00% N/A N/A 742,540 7.91% Real estate, rental & leasing 960 6.16% 970,416 4.81% N/A N/A 552,856 5.89% Services 762 4.89% 2,466,878 12.22% N/A N/A 779,753 8.30% Other 1,434 9.20% 40,438 0.20% N/A N/A 254,378 2.71% Total 15,592 100.00% 20,191,270 $ 100.00% N/A N/A 9,391,267 $ 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. Fiscal Year Ended June 30, 2016 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, 2016. Fiscal Year Ended June 30, 2025 Town of Fountain Hills, Arizona Sales Tax Payers by Category June 30, 2025 and June 30, 2016 Page 109 2016 2017 2018 2019 Sales category: Construction 918,717 $ 730,164 $ 1,408,332 $ 1,932,716 $ Transportation/utilities 1,327,441 1,288,153 1,309,928 1,290,585 Wholesale/retail 4,815,582 4,982,218 5,235,992 5,464,247 Restaurants/bars 742,540 811,985 829,857 893,595 Real estate, rental & leasing 552,856 636,834 745,171 842,233 Services 779,753 852,675 747,834 1,025,548 Other 254,378 117,523 34,464 42,200 Total 9,391,267 $ 9,419,552 $ $ 10,311,578 11,491,124 $ Note: Other includes all state and local sales tax audit adjustments. Source: The source of this information is the Town's financial records. Fiscal Year Ended June 30 Town of Fountain Hills, Arizona Taxable Sales by Category Last Ten Fiscal Years (modified accrual basis of accounting) Page 110 2020 2021 2022 2023 2024 2025 1,910,021 $ 1,990,383 $ 1,780,123 $ 3,449,250 $ 3,197,045 $ 2,971,838 $ 1,405,005 1,529,268 1,501,600 1,576,570 1,661,398 1,723,779 7,031,474 8,956,208 9,834,924 10,500,903 10,689,793 10,604,440 892,210 1,062,172 1,446,971 1,517,063 1,452,328 1,413,481 965,124 993,228 1,103,241 1,258,009 1,351,156 970,416 916,769 1,125,753 1,992,955 2,278,723 2,206,542 2,466,878 51,786 280 946 5,776 1,666 40,438 13,172,389 $ 15,657,292 $ 17,660,760 $ 20,586,294 $ 20,559,928 $ 20,191,270 $ Fiscal Year Ended June 30 Page 111 Fiscal Year Ended Town Maricopa State Total June 30 Rate County Rate Tax Rate 2016 2.60% 0.70% 5.60% 8.90% 2017 2.60% 0.70% 5.60% 8.90% 2018 2.60% 0.70% 5.60% 8.90% 2019 2.60% 0.70% 5.60% 8.90% 2020* 2.90% 0.70% 5.60% 9.20% 2021 2.90% 0.70% 5.60% 9.20% 2022 2.90% 0.70% 5.60% 9.20% 2023 2.90% 0.70% 5.60% 9.20% 2024 2.90% 0.70% 5.60% 9.20% 2025 2.90% 0.70% 5.60% 9.20% * 0.3% Town rate increase effective 11/1/2019 Source: The source of this information is the Arizona Department of Revenue. Town of Fountain Hills, Arizona Direct and Overlapping Sales Tax Rates Last Ten Fiscal Years Page 112 Community Municipal Highway Fiscal Year General Facilities Property User Special Total Debt Ended Obligation District Corporation Revenue Assessment Outstanding Per June 30 Bonds* Bonds** Bonds* Bonds Bonds Debt Capita 2016 7,678,669 1,935,000 1,400,000 ‐ ‐ 11,013,669 467 2017 5,680,252 1,560,000 1,030,000 ‐ ‐ 8,270,252 351 2018 3,631,835 1,180,000 670,000 ‐ ‐ 5,481,835 233 2019 1,683,417 795,000 300,000 ‐ ‐ 2,778,417 118 2020 ‐ 400,000 ‐ ‐ ‐ 400,000 17 2021 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2022 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2023 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2024 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2025 ‐ ‐ ‐ ‐ ‐ ‐ ‐ Source: The source of this information is the Town's financial records and the U.S. Bureau of Economic Analysis. * All bond amounts presented include amortization of original issuance discounts and premiums. ** All bond amounts presented include amoritization of original issuance discounts and premiums. The Town is not obligated for repayment of the Eagle Mountain Community Facilities District general obligation bonds. Population data can be found in the Schedule of Demographic and Economic Statistics. Governmental Activities Town of Fountain Hills, Arizona Ratios of Outstanding Debt by Type Last Ten Fiscal Years Page 113 Fiscal Year General Obligation Bonds* Less: Amounts Restricted for Principal Net General Obligation Bonds Estimated Actual Taxable Value of Property Percentage of Estimated Actual Taxable Value of Property Net General Obligation Bonded Debt per Capita Net General Obligation Bonded Debt per Net Limited Assessed Valuation Municipal Property Corporation Bonds* Net Municipal Property Corporation Debt per Capita Total Revenues All Sources 2016 9,613,669 576,281 9,037,388 3,744,585,506 0.24% 378 2.25% 1,088,117 46 22,262,139 2017 7,240,252 343,697 6,896,555 3,965,824,715 0.17% 282 1.63% 860,437 35 22,400,196 2018 4,811,835 83,185 4,728,650 4,166,589,970 0.11% 192 1.06% 664,484 27 24,375,962 2019 2,478,417 146,100 2,332,317 4,381,287,279 0.05% 93 0.50% 287,694 12 26,279,178 2020 400,000 171,807 228,193 4,657,015,387 0.01% 9 0.05% ‐ ‐ 27,586,011 2021 ‐ 191,594 ‐ 4,909,183,626 ‐ ‐ ‐ 31,354,466 2022 ‐ 194,344 ‐ 5,435,983,541 ‐ ‐ ‐ ‐ 35,025,597 2023 ‐ 200,754 ‐ 5,721,274,077 ‐ ‐ ‐ ‐ ‐ 40,931,231 2024 ‐ 46,427 ‐ 6,057,936,533 ‐ ‐ ‐ ‐ ‐ 40,071,615 2025 ‐ 28,554 ‐ 6,181,488,238 ‐ ‐ ‐ ‐ ‐ 38,464,258 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. Town of Fountain Hills, Arizona Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Page 114 Estimated Estimated Share of Percentage Overlapping Outstanding Debt Applicable Debt Overlapping: Maricopa County Special Healthcare District 574,205,000 $ 0.97% 5,569,789 $ Maricopa County Community College District 87,320,000 0.97% 847,004 East Valley Institute of Technology ‐ 2.07% ‐ Fountain Hills Unified School District 3,380,000 96.64% 3,266,432 Total Overlapping Debt 9,683,225 Direct: Town of Fountain Hills, Arizona* General Obligation Bonds ‐ Revenue Bonds ‐ Eagle Mountain Community Facilities District** ‐ Total Direct Debt ‐ Total direct and overlapping debt 9,683,225 $ 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 Town of Fountain Hills. This schedule further estimates the portion of outstanding debt of those overlapping governments that is borne by residents and businesses of the Town. This process recognizes that, when considering a town's ability to issue and repay long‐term debt, the entire debt burden borne by residents should be taken into account. However, this fact does not imply that every taxpayer is a resident, and, therefore, responsible for repaying the debt of each overlapping government. Town of Fountain Hills, Arizona Direct and Overlapping Governmental Activities Debt as of June 30, 2025 Governmental Unit Page 115 2016 2017 2018 2019 6% Debt Limit Debt limit 28,325,296 $ 30,651,126 $ 31,459,192 $ 32,400,042 $ Total net debt applicable to limit ‐ ‐ ‐ ‐ Legal debt margin 28,325,296 $ 30,651,126 $ 31,459,192 $ 32,400,042 $ Total debt applicable to the limit as a percentage of debt limit ‐ ‐ ‐ ‐ 20% Debt Limit Debt limit 94,417,653 $ 102,170,422 $ 104,863,974 $ 108,000,140 $ Total net debt applicable to limit 7,405,000 5,475,000 3,495,000 1,615,000 Legal debt margin 87,012,653 $ 96,695,422 $ 101,368,974 $ 106,385,140 $ Total debt applicable to the limit as a percentage of debt limit 8% 5% 3% 1% Source: The source of this information is the Town's financial records. Note: All amounts presented are net of original issuance discounts and premiums. Fiscal Year Ended June 30 Town of Fountain Hills, Arizona Legal Debt Margin Information Last Ten Fiscal Years Page 116 2020 2021 2022 2023 2024 2025 33,907,227 $ 35,603,580 $ 37,800,780 $ 40,238,671 $ 49,892,806 $ 61,905,341 $ ‐ ‐ ‐ ‐ ‐ ‐ 33,907,227 $ 35,603,580 $ 37,800,780 $ 40,238,671 $ 49,892,806 $ 61,905,341 $ ‐ ‐ ‐ ‐ ‐ 113,024,089 $ 118,678,601 $ 126,002,599 $ 134,128,903 $ 166,309,355 $ 206,351,136 $ ‐ ‐ ‐ ‐ ‐ ‐ 113,024,089 $ 118,678,601 $ 126,002,599 $ 134,128,903 $ 166,309,355 $ 206,351,136 $ ‐ ‐ ‐ ‐ ‐ ‐ Fiscal Year Ended June 30 Page 117 Net full cash assessed valuation 1,031,755,680 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 206,351,136 $ Net debt applicable to limit ‐ 20% legal debt margin 206,351,136 All Other General Obligation Bonds Debt limit ‐ 6% of net full cash assessed valuation 61,905,341 Net debt applicable to limit ‐ 6% legal debt margin 61,905,341 Total legal debt margin 268,256,477 $ Source: The source of this information is the Maricopa County Assessor's Office and the Town's financial records. Town of Fountain Hills, Arizona Calculation of Legal Debt Margin as of June 30, 2025 Page 118 Fiscal Year Ended Pledged June 30 Principal Interest Total Revenues Coverage 2016 480,000 32,740 512,740 16,250,673 31.7 2017 370,000 22,680 392,680 16,815,224 42.8 2018 360,000 16,686 376,686 18,194,833 48.3 2019 370,000 10,854 380,854 19,765,936 51.9 2020 300,000 4,860 304,860 20,862,372 68.4 2021 ‐ ‐ ‐ 24,001,082 100.0 2022 ‐ ‐ ‐ 26,453,550 100.0 2023 ‐ ‐ ‐ 30,620,545 100.0 2024 ‐ ‐ ‐ 33,200,920 100.0 2025 ‐ ‐ ‐ 31,207,254 100.0 Source: The source of this information is the Town's financial records. Town of Fountain Hills Revenue Bond Coverage Last Ten Fiscal Years Municipal Facilities Corporation Revenue Bonds Page 119 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024* Population 23,899 24,482 24,583 24,987 25,200 23,820 23,906 23,785 23,820 24,163 Per capita personal income 48,240 $ 50,162 $ 60,531 $ 54,936 $ 57,468 $ 59,791 $ 57,550 $ 60,707 $ 66,756 $ 66,704 $ Median age 53.8 53.7 53.5 57.5 58.8 59.4 58.6 62.0 60.2 60.8 Public school enrollment 1,619 1,506 1,444 1,380 1,338 1,314 1,267 1,192 1,133 1,152 Town of Fountain Hills unemployment rate 2.4% 1.9% 1.6% 3.9% 8.7% 4.9% 4.4% 2.8% 2.7% 2.8% Land use Total acres 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7 13,005.7 Total square miles 20.32 20.32 20.32 20.32 20.32 20.32 20.32 20.32 20.32 20.32 Vacant lots 1,247 1,209 1,175 1,172 1,052 1,158 1,158 1,030 966 931 Number of units Housing 13,002 13,130 13,176 13,558 13,749 13,875 13,876 14,101 14,330 14,401 Lodging 4 4 4 4 4 4 4 4 4 4 Restaurants 46 50 52 54 55 55 57 57 55 60 Shopping centers 20 20 20 20 20 20 20 20 20 20 Schools Public 3 3 3 3 3 3 3 3 4 4 Preschool 7 7 7 5 5 5 5 5 4 4 Charter 1 1 1 1 1 1 ‐ ‐ ‐ ‐ Vocational ‐ ‐ 1 1 2 2 1 1 ‐ ‐ Note: N/A indicates the information is not available. * Information obtained is based on calendar years; therefore, the latest information obtained was from 2024. Town of Fountain Hills, Arizona Demographic and Economic Statistics Last Ten Calendar Years Calendar Year 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, 2024 estimate. The source of School Enrollment is the Fountain Hills Unified School District No. 98. Other information is from the Town's records. Page 120 Percentage Number of of Total Town Number of Employer Employees Rank Employment Employees Rank Fountain Hills Unified School District No. 98 280 1 4.6% 193 1 Safeway Stores 150 2 2.4% 86 5 Target Stores 110 3 1.8% 85 6 Town of Fountain Hills 100 4 1.6% 41 12 Firerock Country Club 100 4 1.6% 100 4 Toll Brothers 90 5 1.5% N/A N/A Fountain View Village 80 6 1.3% 140 2 Fry's Food Stores 80 6 1.3% 80 7 Eagle Mountain Golf Club 70 8 1.1% 70 9 Fountain Hills Family Practice PC 70 8 1.1% N/A N/A Fountain Hills Medical Center 70 8 1.1% N/A N/A Golf International Inc 60 12 1.0% N/A N/A Quotemedia Inc 60 12 1.0% N/A N/A Sunridge Canyon Golf Course 60 12 1.0% 59 11 Palisades Resorts LLC 60 12 1.0% N/A N/A Bashas 60 12 1.0% 74 8 Totals 1,500 24.4% 928 Total Town employment 6,130 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 2024 was not available. 2023* Town of Fountain Hills, Arizona Principal Employers Prior Fiscal Year and Nine Years Ago 2014 Page 121 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Municipal court 3.63 3.63 3.63 3.63 3.63 3.63 3.63 4.63 4.63 4.63 Administration 11.63 12.25 13.45 13.70 15.20 15.00 16.00 16.24 17.50 17.50 Public works n/a 9.80 9.80 10.80 12.43 12.43 12.00 13.00 13.00 13.00 Development services 16.30 7.50 8.50 7.50 9.00 9.00 9.00 10.00 10.00 11.00 Community services 20.76 20.76 20.56 20.56 20.56 22.01 24.02 24.52 25.38 25.93 Fire Department ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 34.00 34.00 Total 52.32 53.94 55.94 56.19 60.82 62.07 64.65 68.39 104.51 106.06 Source: The source of this information is the Town's financial records. Town of Fountain Hills, Arizona Authorized Full‐time Equivalent Government Employees by Function Last Ten Fiscal Years Fiscal Year Ended June 30 Page 122 Function/Program 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Municipal Court Cases filed 1,593 2,014 1,277 891 2,237 1,324 1,586 1,823 1,862 1,781 Hearings/Trials held 1,564 1,844 676 801 568 1,430 1,378 1,216 1,163 1,238 Administration FTEs per 1,000 residents 2.2 2.2 2.3 2.2 2.4 2.6 2.7 2.9 4.4 4.5 Registered voters ‐ general election none 16,387 none 16,775 none 18,415 none 18,423 none 18,788 Voter turnout ‐ general election none 40% none 50% none 90% none 80% none 91% Development Services Building permits issued 410 509 468 576 547 575 620 730 742 869 Building inspections conducted 2,129 2,704 3,707 4,795 4,069 3,652 1,911 5,460 4,947 4,479 Number of code violation cases 713 669 654 655 690 497 586 656 299 600 Number of zoning cases 72 50 41 11 7 21 73 95 114 48 Community Services Number of Community Center bookings/permits* 3,124 3,764 4,395 3,857 3,169 1,675 1033* 316** 258 363 Number of participants in recreational programs 2,910 3,773 3,794 3,489 1,830 2,892 4,110 5,244 7,093 8,243 Number of Senior Services members 1,326 1,335 1,220 1,313 1,265 1,360 1,175 1,290 1,518 1,622 Number of home delivered meals 3,497 3,920 3,093 3,562 5,215 4,402 4,581 5,449 5,899 5,962 Law Enforcement (contracted) Physical arrests 220 220 214 67 86 56 49 67 55 50 Traffic violations 1,215 1,803 1,053 1,248 2,618 2,745 2,568 3,349 2,536 2,672 Fire & Emergency Medical Total incident responses 3,191 3,425 3,659 4,073 3,896 4,215 4,268 4,709 4,140*** 4,480 Average response time (in minutes) 3:57 3:25 3:33 3:32 3:51 4:50 4:38 4:44 5:00*** 5:40 Source: The source of this information is the Town's financial records. Note: N/A indicates that the information is not available. **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. Fiscal Year Ended June 30 Town of Fountain Hills, Arizona Operating Indicators by Function Last Ten Fiscal Years *The Community Center was closed from 7/1/22 until 10/3/22 for renovations. Page 123 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Public safety Number of fire stations 2 2 2 2 2 2 2 2 2 2 Public works Streets (centerline miles) 178.9 178.9 180.0 180.0 180.0 180.0 180.0 180.0 180.0 180.0 Streets (lane miles) 391 390.5 391.5 391.5 391.5 391.5 391.5 391.5 391.5 391.5 Pedestrian lighting 91 91 91 91 91 91 95 95 95 95 Traffic signals 13 13 13 13 13 13 13 13 13 13 Parks and recreation Acreage‐developed parks 119 119 119 119 119 119 119 119 119 121 Playgrounds 7 7 7 9 9 9 9 9 9 9 Baseball/softball diamonds 6 6 6 6 6 6 6 6 6 6 Soccer/football fields 7 7 7 7 7 7 7 7 7 7 Community centers 1 1 1 1 1 1 1 1 1 1 Preserve acreage 807.2 807.2 807.2 889.2 913.2 913.2 913.2 913.2 913.2 913.2 Miles of trails 15.8 18.5 18.5 18.5 18.5 18.5 23.0 23.0 24.5 24.5 Source: The source of this information is the Town's facilities records. Note: N/A indicates the information is not available. Town of Fountain Hills, Arizona Capital Assets Statistics by Function Last Ten Fiscal Years Fiscal Year Ended June 30 Function/Program Page 124 Town of Fountain Hills 16705 E. Avenue of the Fountains Fountain Hills, Arizona 85268 480-816-5100 www.fountainhillsaz.gov - linkedin.com/company/town-of-fountain-hills - facebook.com/TownofFountainHills - x.com/fhazgov