CITY OF FOUNTAIN, COLORADO

Vision Statement:

“The City of Fountain will honor its small town America heritage, promote a high quality of

life for its citizens and provide managed community growth in a safe, secure and stable

manner.”

CITY OF FOUNTAIN, COLORADO

COMPREHENSIVE ANNUAL FINANCIAL REPORT

Year Ended December 31, 2011

PREPARED BY:

Finance Department

Kathy Kuberka, Finance Director

TABLE OF CONTENTS

PAGEINTRODUCTORY SECTION

Letter of Transmittal i - iv

Directory of City Officials v

City Organizational Chart vi

GFOA Certificate of Achievement vii

FINANCIAL SECTION

Independent Auditors’ Report viii - ix

Management’s Discussion and Analysis x - xxi

Basic Financial Statements

Statement of Net Assets 1

Statement of Activities 2

Balance Sheet - Governmental Funds 3

Statement of Revenues, Expenditures and Changes inFund Balances - Governmental Funds 4

Reconciliation of the Statement of Revenues, Expenditures and ChangesIn Fund Balances of Governmental Funds to the Statement of Activities 5

Statement of Net Assets - Proprietary Funds 6

Statement of Revenues, Expenses and Changes inFund Net Assets - Proprietary Funds 7

Statement of Cash Flows - Proprietary Funds 8

Statement of Fiduciary Net Assets - Pension Trust Fund 9

Statement of Changes in Plan Net Assets - Pension Trust Fund 10

Notes to Financial Statements 11 - 33

Required Supplementary Information

Schedule of Funding Progress - Volunteer Firefighters’ Pension Plan 34

Schedule of Funding Progress - Postemployment Benefit Plan 35

TABLE OF CONTENTS(Continued)

PAGEFINANCIAL SECTION (Continued)

Required Supplementary Information (Continued)

Budgetary Comparison Schedule - General Fund 36 - 37

Notes to Required Supplementary Information 38

Combining and Individual Fund Statements and Schedules

Combining Balance Sheet - Nonmajor Governmental Funds 39

Combining Statement of Revenues, Expenditures andChanges in Fund Balances - Nonmajor Governmental Funds 40

Budgetary Comparison Schedule - Conservation Trust Fund 41

Budgetary Comparison Schedule - Heritage Maintenance District Fund 42

Budgetary Comparison Schedule - General Improvement District Fund 43

Budgetary Comparison Schedule - Volunteer Fire Fund 44

Budgetary Comparison Schedule - Public Transportation Fund 45

Budgetary Comparison Schedule - Street Resurfacing Fund 46

Budgetary Comparison Schedule - Street Improvement Fund 47

Combining Statement of Net Assets - Nonmajor Proprietary Funds 48

Combining Statement of Revenues, Expenses and Changes in Fund Net Assets -Nonmajor Proprietary Funds 49

Combining Statement of Cash Flows - Nonmajor Proprietary Funds 50

Budgetary Comparison Schedule - Water Fund 51

Budgetary Comparison Schedule - Electric Fund 52

Budgetary Comparison Schedule - Ambulance Fund 53

Budgetary Comparison Schedule - Drainage Fund 54

Budgetary Comparison Schedule - Insurance Fund 55


PAGEFINANCIAL SECTION (Continued)

Combining and Individual Fund Statements and Schedules (Continued)

Balance Sheet - Component Unit 56

Statement of Revenues, Expenditures and Changesin Fund Balance - Component Unit 57

STATISTICAL SECTION

Table of Contents 58

Financial Trends

Net Assets by Component 59

Changes in Net Assets 60 - 61

Fund Balances, Governmental Funds 62

Changes in Fund Balances - Governmental Funds 63

Revenue Capacity

Assessed Value and Estimated Actual Value of Taxable Property 64

Direct and Overlapping Property Tax Rates 65

Principal Property Tax Payers 66

General Fund Revenues - Taxes by Category 67

Sales Tax by Category 68

Direct and Overlapping Sales Tax Rates 69

Property Tax Levies and Collections 70

Water Revenues 71

Electric Revenues 72

Debt Capacity

Ratios of Outstanding Debt by Type 73

Ratios of Water Fund Debt Outstanding 74

Direct and Overlapping Bonded Debt 75


PAGESTATISTICAL SECTION (Continued)

Demographic and Economic Information

Largest Employers 76

Demographic and Economic Statistics 77

Operating Information

Full-Time Equivalent City Government Employees by Function/Program 78

Operating Indicators by Function/Program 79

Capital Asset Statistics by Function/Program 80

COMPLIANCE SECTION

State Compliance

Local Highway Finance Report 81 - 82

INTRODUCTORY SECTION

v

CITY COUNCIL

Gabriel Ortega, Mayor Pro Tem Ward: #1

Term Expires: 11/2013

Sharon Brown, Council Member Ward: #3


Sam Heckman, Council Member Ward: At Large


Jim Coke, Council Member Ward: At Large


Phil Thomas, Council Member Ward: #2


Patricia St. Louis, Council Member Ward: At Large


CITY STAFF

City Manager

Scott Trainor

City Clerk Silvia Mascarenas HR Manager Robert Smith

Court Administrator Theresa Frank IT Director Paul Lavelle

Deputy City Manager Dave Smedsrud Planning Director Dave Smedsrud

ED Director Lisa Cochrun Police Chief Todd Evans

Finance Director Kathy Kuberka Public Works Director Duane Greenwood

Fire Chief

Darin Anstine Utilities Director Larry Patterson

Jeri C. Howells, Mayor Ward: At Large


City Organizational Chart

vi

Citizens ofFountain

CityCouncil

Office of the

City Manager

CityAttorney

Boards &Commissions

Fire

Planning &Code Enforcement

Police

Public Works

City Clerk’sOffice

Utilities

MunicipalCourt

InformationTechnology

EconomicDevelopment

Finance

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FINANCIAL SECTION

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MANAGEMENT’S DISCUSSION & ANALYSIS This discussion and analysis of the City of Fountain’s financial performance provides an overview of the City’s financial activities for the fiscal year ended December 31, 2011. Please read it in conjunction with the City’s financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Financial Highlights The assets of the City of Fountain exceeded its liabilities at the close of 2011 by

$153.8 million (net assets). Of this amount, $11.55 million (unrestricted net assets) may be used to pay the City’s obligations to citizens and creditors.

At December 31, 2011, the City of Fountain’s governmental funds reported combined ending fund balances of $3.9 million, an increase of $.4 million in comparison with the prior year. $1.6 million of this total amount is available for spending at the government’s discretion (unrestricted, unassigned).

The unrestricted, unassigned fund balance for the General Fund was $1.6 million, or 13.4% of the total General Fund expenditures.

Sales Tax revenue, the City’s largest source of general fund revenue, was $5.240 million for 2011 as compared to $5.167 million for the prior year, an increase of 1.4%.

Recovery from the economic downturn, in the area of new housing construction, began in 2011 with 294 new housing and commercial starts in Fountain, including 240 apartment units, compared to 68 during 2010.

Using this Annual Report This discussion and analysis is intended to serve as an introduction to the City of Fountain’s basic financial statements. The City of Fountain’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. Government-wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the City of Fountain’s finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the City of Fountain’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City of Fountain is improving or deteriorating. The statement of activities presents information showing how the City of Fountain’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses reported in this statement for some

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items will result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City of Fountain that are principally supported by taxes and intergovernmental revenues (Governmental Activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (Business-type Activities). The Governmental Activities of the City of Fountain include general government, public safety (police & fire), streets, code enforcement, planning and economic development, parks, and cemetery. The Business-type Activities of the City of Fountain include Water, Electric, Ambulance, and Drainage. 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 City of Fountain, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the City’s funds can be divided into three categories: Governmental Funds, Proprietary Funds, and Fiduciary Funds. Governmental funds – Most of the City’s basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. The funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental funds statements provide a detailed short-term view of cash, the governmental fund operations and the basic services it provides. 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 government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Proprietary funds – The enterprise fund type of proprietary funds is used to report the same functions presented as business-type activities in the government-wide financial statements, but provide more detail and additional information, such as cash flow. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Assets and the Statement of Activities. Fiduciary funds-Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds.

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Notes to 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 on pages 11-33 of this report. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City of Fountain’s progress in funding its obligation to provide pension benefits to volunteer fire fighters. This supplementary information can be found on page 34 of this report. The Schedule of Funding Progress Postemployment Benefit Plan is located on page 35. The Budgetary Comparison Schedule for the General Fund and the notes to the required supplementary information can be found on pages 36-38. The combining statements, referred to earlier in connection with non-major Governmental Funds and Enterprise Funds, are presented immediately following the required supplementary information on pensions and the General Fund. Combining and individual fund statements and schedules can be found on pages 39-57. Financial Analysis of the City as a Whole As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City of Fountain, assets exceeded liabilities by $154 million at the close of 2011, unchanged from the close of 2010.

Net Assets (in thousands)

Governmental Business-type

Activities Activities Total

2011 2010 2011 2010 2011 2010Current and other assets $ 6,360 $ 6,476 $ 23,949 $ 18,441 $ 30,309 $ 24,917

Capital assets 76,691 77,093 83,888 78,800 160,579 155,893

Total assets 83,051 83,569 107,838 97,241 190,888 180,810

Long-term liabilities

Outstanding 1,198 1,068 25,482 17,927 26,680 18,995

Other liabilities 3,582 3,770 6,845 4,161 10,427 7,931

Total liabilities 4,780 4,838 32,327 22,088 37,107 26,926

Net assets: Invest in capital assets,

Net of related debt 76,127 76,611 63,518 60,772 139,645 137,383

Restricted 2,009 1,168 577 - 2,586 1,168

Unrestricted 135 952 11,416 14,381 11,551 15,333

Total net assets $ 78,271 $ 78,731 $ 75,511 $ 75,153 $153,781 $153,884

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The largest portion of the City of Fountain’s net assets (90.8%) reflects its investment in capital assets (e.g. land, buildings, infrastructure, vehicles, equipment, etc.), less any related debt still outstanding (current and long-term), that was used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Unrestricted net assets may be used to meet the City’s ongoing obligations to citizens and creditors. A small portion of the City of Fountain’s net assets (1.7%) represents resources that are subject to external restriction on how they may be used. The remaining balance of unrestricted net assets ($11.6 million) may be used to meet the City’s ongoing obligations to citizens and creditors. Changes in Net Assets (in thousands) Governmental Business-type Activities Activities Total

2011 2010 2011 2010 2011 2010 Revenues:

Program Revenues:

Charges for services $ 592 $ 508 $27,281 $25,819 $27,873 $26,327

Operating grants and

contributions 1,241 1,323 - - 1,241 1,323

Capital grants and

Contributions 11 66 1,226 1,128 1,237 1,194

General Revenues:

Property taxes 1,808 1,814 - - 1,808 1,814

Sales and use taxes 7,438 7,404 - - 7,438 7,404

Spec. Own. taxes 159 165 - - 159 165

Franchise taxes 1,646 1,567 - - 1,646 1,567

Other revenues 60 263 - - 60 263

Investment earnings 25 32 250 277 275 309

Total revenues 12,980 13,142 28,757 27,224 41,737 40,366

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Governmental Business-type Activities Activities Total

2011 2010 2011 2010 2011 2010Program expenses:

General government 2,949 3,020 - - 2,949 3,020

Public Safety 7,447 7,183 - - 7,447 7,183

Public Works 2,072 4,235 - - 2,072 4,235

Health and welfare 211 166 - - 211 166

Culture and recreation 858 790 - - 858 790

Interest expense 29 28 29 28

Water utility - - 6,702 6,425 6,702 6,425

Electric utility - - 20,739 19,364 20,739 19,364

Ambulance - - 783 689 783 689

Drainage - - 50 62 50 62

Total expenses 13,566 15,422 28,274 26,540 41,840 41,963

Excess/Deficiency Before transfers (586) (2,279) 483 684 (102) (1,595)

Transfers In (Out) 125 187 (125)

(187) - - Increase/(Decrease in net assets

$ (460)

($2,092) $ 358 $ 497 ( $102) ( $1,595)

The City’s net assets decreased $102 thousand during 2011. Governmental Activities Governmental activities decreased the City of Fountain’s net assets by $460 thousand, which can be attributed to depreciation in the amount of $3.3 million offset by the addition of $2.3 million in new street infrastructure accepted from developers during 2011 and the addition of $470 in other capital assets. The following pie chart illustrates the Governmental Activities revenues.

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Sales and Use taxes

57%

Property Taxes14%

Capital Grants and

Contributions0%

Other Revenues

0%Specific

Ownership1%

Investment Earnings

0%

Operating Grants and

Contributions10%

Charges for Services

5%

Franchise Taxes13%

Revenue from general sales tax increased $73 thousand or 1.4% compared to 2010.

Revenue from the voter approved .75% Public Transportation sales tax, which was effective January 1, 2010, generated $437 for public transit; $262 for street resurfacing; and $611 for street improvements.

Revenue from use tax decreased by $58 thousand or 6.1% compared to 2010 collections due to decreased collections from construction materials. Use tax on new construction is now collected at the time of certificate of occupancy.

Revenue from Fines and Court Costs increased $145 thousand or 63%compared to 2010.

Revenue from water franchise fees increased $26 thousand or 9.6% compared to 2010 due to an increase in gross revenues for the City owned water utility. The water utility implemented a 12% rate increase effective May 11, 2011.

Revenue from the electric franchise fees increased $51 thousand or 5.3% compared to 2010 due to the increased cost of energy and increased electric consumption.

Business-type Activities Business-type activities increased the City of Fountain’s net assets by $358 thousand. The following chart illustrates the business-type activities program revenues and expenses.

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Expenses and Program Revenues-Business-type Activities

-

5,000

10,000

15,000

20,000

25,000

Wat

er

Electr

ic

Ambu

lanc

e

Drain

age

Th

ou

san

ds

ProgramRevenues

Expenses

The change/increase in net assets is due to contributed assets in the electric utility

and water tap fees. The water fund did not accept any new infrastructure from developers in 2011.

The results of operations for the proprietary funds, combined, declined $171 thousand from 2010 to 2011. The Electric Fund had the largest decrease for operating results with a decrease of $484 thousand. The Water Fund operating results improved by $316 thousand from 2010 to 2011.

Fiduciary Activities The City of Fountain maintains a fiduciary fund to account for money designated to pay benefits under the City’s Volunteer Fire Pension Plan. Financial Analysis of the City’s Funds The City of Fountain uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balance of spendable resources. Such information is useful in assessing the City’s financing requirements. For the year ended December 31, 2011, the City of Fountain adopted the standards of Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions.

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Fund balance reflects assets minus liabilities and is shown only in governmental fund statements. GASB 54 requires the City to classify fund balance based on the extent to which the City is bound to honor constraints on how the funds can be spent. Fund balances may be categorized as non-spendable, restricted, committed, assigned, or unassigned. Non-spendable Fund Balance cannot be spent because it is either in non-spendable form or is or contractually required to be maintained intact. Examples include items not expected to be converted to cash such as inventories and prepaid assets. Restricted Fund Balance is restricted for specific purposes based on constraints externally imposed by creditors, grantors, contributors, laws, or regulations of other governments, or imposed through constitutional provisions or enabling legislation. Committed Fund Balance is constrained for a specific purpose by resolution or ordinance adopted by the City Council, and can be rescinded only through the same type of formal action used to establish the original commitment. Assigned Fund Balance is constrained for specified purposes by the City Council through informal action. Unassigned Fund Balance is unconstrained and comprised of residual uncategorized fund balance amounts. At the end of 2011, the City’s General Fund reported an ending fund balance of $2.2 million, a decrease of $247 thousand in comparison with the previous year. $1.6 million or 75% of this total represents unrestricted, unassigned fund balance, which is available for spending at the City’s discretion. The remainder of the fund balance is restricted for emergencies ($355 thousand) or committed for park improvements or for school zone improvements ($192 thousand). Proprietary Funds The City’s proprietary funds provide the same type of information found in the government-wide financial statement, but in more detail. Unrestricted net assets of the water and electric utilities were ($3.8) million and $14 million, respectively. General Fund Budgetary Highlights The General Fund accounts for all of the general government services provided by the City of Fountain including: City Council, Municipal Court, Economic Development, Election, Administration, Planning & Engineering, and Information Technology. The following pie chart illustrates the General Fund expenditures by type.

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Debt Service2%

Public Safety62%

Public Works11%

General Government

19%

Culture and Recreation

4%

Health and Welfare

2%

The City does not amend the revenue side of the budget. Line item budget transfers are allowed within a fund with the approval of the City Manager. Increases in the expenditure budget for any fund must be approved by the City Council. The General Fund original budgeted expenditures (including transfers out) were $12.6 million. During the year, the City Council approved numerous budget amendments for $798 thousand for a final budget of $13.4 million.

These budget amendments included $73 thousand in carryovers from the 2010 budget to complete projects that were started in 2010. Additionally, the budget was amended for expenditures relating to the following items:

$168 thousand from various state, local, and federal grants for various public safety equipment and public works projects.

$271 thousand for the purchase of 10 police vehicles and related equipment through capital lease financing.

$90 thousand for a restroom/concession building at Metcalfe Park. $27 thousand for police equipment from money received from a federal forfeiture. $32 thousand for property repairs from insurance proceeds. $52 thousand for an additional cash subsidy to the Ambulance Fund. $85 thousand for miscellaneous items

Total General Fund expenditures (including transfers out) were $12.5 million which is $900 thousand less than the final budget of $13.4 million. In the second quarter of the year it became apparent that the revenue projections for 2011 would not be met. Departments in the General Fund were asked to reduce expenses by delaying projects and equipment replacements and not filling some vacant positions. Variances from the final budget to actual expenditures worth noting include the following:

Public Safety saved $406 through salary and benefit savings.

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General government saved $213 thousand by delaying information technology purchases and putting planning and engineering studies on hold.

Public works expenditures were $205 thousand less than budgeted. This savings was achieved by delaying street maintenance projects and reducing operating costs.

The concession/restroom building at Metcalfe Park was not completed until the spring of 2012; $90 thousand was carried forward to the 2012 parks budget.

Capital Assets and Debt Administration Capital Assets The City of Fountain’s investment in capital assets for its governmental and business- type activities as of December 31, 2011 totaled $160.6 million (net of accumulated depreciation). This investment in capital assets includes land and easements, water and storage rights, buildings and improvements, infrastructure, machinery and equipment, computers and software, and vehicles. The City’s investment in capital assets increased by $4.7 million during 2011; governmental activities decreased $402 thousand while business-type activities increased by $5.1 million. Major capital events for 2011 included the following items:

The water utility expended $970 thousand during 2011 for the Bandley-Security Interconnection project. This pipeline project connects the Security Water District Distribution System to the Fountain Water Distribution System with 4.500 lineal feet of 12” water main and is essential to deliver water from the Venetucci Well field.

The water utility also expended $3.2 million during 2011 related to the financing, engineering, design, permitting, and construction of the Southern Delivery System. The City of Fountain is a partner, along with the City of Colorado Springs, Security Water and Sanitation District, and Pueblo West Metropolitan District in this regional project, which is designed to deliver water through a 53 mile pipeline from Pueblo Reservoir to Upper Williams Creek Reservoir and the Universal Water Treatment plant located east of Colorado Springs. Fountain expects this project to be completed in 2016. The City will capitalize its share of ownership in this project.

The electric utility added $937 thousand to the electric system during 2011 through a variety of additions and upgrades.

The police department replaced ten vehicles at a cost of $271 thousand during 2011.

Note 6 of the financial statements provides a detailed summary of the City’s capital assets.

Long-term Debt The City of Fountain’s total long-term debt increased from $20.7 million to $29.8 million, an increase of $9.1 million during the year ended 2011.

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The City’s long-term debt related to governmental activities increased during 2011 by $204 thousand. Payments of $190 thousand were on made on capital lease obligations during the year while compensated absences increased by $64 thousand. A liability of $56 thousand for post employment benefits was recorded. Beginning on October 1, 2009 the City switched from a fully insured insurance program to a partially self-funded program. At December 31, 2011 the City has recorded a $239 thousand payable for insurance claims. The City’s long-term debt related to business-type activities increased by $8.9 million during 2011. In May 2011, the Utility Enterprise entered into a $9.35 million loan agreement with the Colorado Water Resources and Power Development Authority (CWRPDA) for the Utility’s portion of the construction of the Southern Delivery System and for Phase I of renovations to the future Customer Service facility. In January 2009, the Utility Enterprise obtained a $8.795 million thirty year loan from the CWRPDA for the purpose of acquiring a building for the Customer Service group and acquiring land for a future raw water storage reservoir. The Utility made a $160 thousand principal payment on this loan during 2011. The Utility Enterprise entered into a promissory note with a business during 2008 in the amount of $1.5 million for the acquisition of water rights. Principal payments of $49 thousand were made on this note. A principal payment in the amount $175 thousand was made on the 2005 CWRPDA loan. Principal payments of $112 thousand were made on the promissory notes made in 2003 and 2007 from a private individual. Compensated absences increased by $10 thousand. During 2008, the electric utility issued a promissory note to the Fountain Urban Renewal Authority (FURA) in the amount of $134,750 for start up and administrative costs related to the FURA. An interest only payment was made on this loan during 2011. Note 7 of the financial statements provides a detailed summary on the City’s long-term debt. Economic Factors and Next Year’s Budget and Rates The not seasonally adjusted unemployment rate for December 2011 for the Colorado Springs Metro area was 9.2% which is higher than the national rate of 8.9%. Sales tax revenue is up 5.5% through May 2012 on a cash basis which exceeds the budget forecast by 2.5%. With 74 housing and commercial starts through April 2012, the City is on track to meet or exceed the 125 used for revenue projections in the 2012 budget. Use tax from construction materials through April has doubled from the same period in 2011. Use tax from vehicle sales is also higher than projected with an increase of 35% through March. A water rate study was completed in April 2012 by an independent consultant who recommended a water rate increase. The recommended new rates, which will go before the City Council for consideration on May 22, 2012, include a $6.41 per month increase for the average residential customer (9,000 gallon per month usage). The new rates would go into effect at the end of June.

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Requests for Information This financial report is designed to provide a general overview of the City of Fountain’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or additional financial information should be addressed to the Finance Director: City of Fountain 116 South Main Street Fountain, CO 80817 719-322-2000

BASIC FINANCIAL STATEMENTS


STATEMENT OF NET ASSETSDecember 31, 2011

PRIMARY GOVERNMENT COMPONENT UNITGOVERNMENTAL BUSINESS-TYPE URBAN RENEWAL

ACTIVITIES ACTIVITIES TOTAL AUTHORITYASSETS Cash and Investments $ 3,115,337 $ 3,648,435 $ 6,763,772 $ 107,598 Designated Cash and Investments - 724,280 724,280 - Restricted Cash and Investments - 13,256,447 13,256,447 - Accounts Receivable 1,462,305 3,650,834 5,113,139 - Accrued Interest Receivable 9,595 77,484 87,079 - Taxes Receivable 1,680,346 - 1,680,346 71,865 Inventories - 1,810,407 1,810,407 - Prepaid Expenses - 371,196 371,196 - Internal Balances 92,249 (92,249) - - Due from Component Unit - 134,750 134,750 - Debt Issuance Costs, Net of Accumulated Amortization - 367,759 367,759 - Capital Assets, Not Being Depreciated 1,466,843 44,941,546 46,408,389 - Capital Assets, Net of Accumulated Depreciation 75,224,180 38,946,623 114,170,803 -

TOTAL ASSETS 83,050,855 107,837,512 190,888,367 179,463

LIABILITIES Accounts Payable 559,516 3,114,411 3,673,927 - Accrued Liabilities 25,697 - 25,697 - Deferred Revenues 1,680,346 - 1,680,346 71,865 Deposits 397,197 1,231,735 1,628,932 - Accrued Interest Payable - 309,778 309,778 7,698 Due to Primary Government - - - 134,750 Noncurrent Liabilities Due Within One Year 919,287 2,188,852 3,108,139 - Due in More Than One Year 1,198,024 25,482,176 26,680,200 -

TOTAL LIABILITIES 4,780,067 32,326,952 37,107,019 214,313

NET ASSETS Invested in Capital Assets, Net of Related Debt 76,127,122 63,517,686 139,644,808 - Restricted for Parks 159,446 - 159,446 - Restricted for District Repairs and Maintenance 260,397 260,397 - Restricted for Transportation 160,658 - 160,658 - Restricted for Street Repairs and Maintenance 46,277 - 46,277 - Restricted for Street Improvements 1,026,814 - 1,026,814 - Restricted for Debt Service - 576,900 576,900 - Restricted for Emergencies 355,000 - 355,000 - Unrestricted 135,074 11,415,974 11,551,048 (34,850)

TOTAL NET ASSETS $ 78,270,788 $ 75,510,560 $ 153,781,348 $ (34,850)

The accompanying notes are an integral part of the financial statements.

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STATEMENT OF ACTIVITIESYear Ended December 31, 2011

PROGRAM REVENUESCHARGES OPERATING CAPITAL

FOR GRANTS AND GRANTS ANDFUNCTIONS/PROGRAMS EXPENSES SERVICES CONTRIBUTIONS CONTRIBUTIONSPRIMARY GOVERNMENTGovernmental Activities General Government $ 2,949,011 $ 137,678 $ - $ - Public Safety 7,446,750 394,179 242,391 - Public Works 2,071,681 7,736 770,999 10,760 Health and Welfare 211,294 12,781 38,591 - Culture and Recreation 858,049 39,536 189,504 - Interest Expense 28,812 - - -

Total Governmental Activities 13,565,597 591,910 1,241,485 10,760

Business-Type Activities Water 6,702,091 5,975,973 - 906,382 Electric 20,739,214 20,626,280 - 319,767 Ambulance 782,788 659,662 - - Drainage 49,530 18,875 - -

Total Business-Type Activities 28,273,623 27,280,790 - 1,226,149

TOTAL PRIMARY GOVERNMENT $ 41,839,220 $ 27,872,700 $ 1,241,485 $ 1,236,909

Component Unit Urban Renewal Authority $ 7,442 $ - $ - $ -

GENERAL REVENUES Property Taxes Sales and Use Taxes Specific Ownership Taxes Franchise Taxes Investment Income MiscellaneousTRANSFERS

TOTAL GENERAL REVENUES AND TRANSFERS

CHANGE IN NET ASSETS

NET ASSETS, Beginning

NET ASSETS, Ending


2

NET (EXPENSE) REVENUE AND CHANGE IN NET ASSETS

PRIMARY GOVERNMENT COMPONENT UNITGOVERNMENTAL BUSINESS-TYPE URBAN RENEWAL

ACTIVITIES ACTIVITIES TOTAL AUTHORITY

$ (2,811,333) $ - $ (2,811,333) $ - (6,810,180) - (6,810,180) - (1,282,186) - (1,282,186) -

(159,922) - (159,922) - (629,009) - (629,009) -

(28,812) - (28,812) -

(11,721,442) - (11,721,442) -

- 180,264 180,264 - - 206,833 206,833 - - (123,126) (123,126) - - (30,655) (30,655) -

- 233,316 233,316 -

(11,721,442) 233,316 (11,488,126) -

- - - (7,442)

1,808,353 - 1,808,353 15,9297,437,672 - 7,437,672 19,064

159,210 - 159,210 - 1,645,916 - 1,645,916 -

25,234 249,713 274,947 5359,875 - 59,875 -

125,134 (125,134) - -

11,261,394 124,579 11,385,973 35,046

(460,048) 357,895 (102,153) 27,604

78,730,836 75,152,665 153,883,501 (62,454)

$ 78,270,788 $ 75,510,560 $ 153,781,348 $ (34,850)


BALANCE SHEETGOVERNMENTAL FUNDS

December 31, 2011

NONMAJORGOVERNMENTAL

GENERAL FUNDS TOTALASSETS Cash and Investments $ 1,558,313 $ 1,557,024 $ 3,115,337 Accounts Receivable 1,236,953 216,951 1,453,904 Accrued Interest Receivable 5,446 4,149 9,595 Taxes Receivable 1,612,426 67,920 1,680,346 Due from Other Funds 258,344 - 258,344

TOTAL ASSETS $ 4,671,482 $ 1,846,044 $ 6,517,526

LIABILITIES AND FUND BALANCESLIABILITIES Accounts Payable $ 457,832 $ 81,552 $ 539,384 Accrued Liabilities 25,697 - 25,697 Deferred Revenues 1,612,426 67,920 1,680,346 Deposits 397,197 - 397,197 Advances from Other Funds 23,363 - 23,363

TOTAL LIABILITIES 2,516,515 149,472 2,665,987

FUND BALANCES Restricted for Parks - 159,446 159,446 Restricted for District Repairs and Maintenance - 260,397 260,397 Restricted for Transportation - 160,658 160,658 Restricted for Street Repairs and Maintenance - 46,277 46,277 Restricted for Street Improvements - 1,026,814 1,026,814 Restricted for Emergencies 355,000 - 355,000 Committed to Volunteer Fire Activities - 42,980 42,980 Committed to Park Improvements 161,212 - 161,212 Committed to School Zone 30,996 - 30,996 Unrestricted, Unassigned 1,607,759 - 1,607,759

TOTAL FUND BALANCES 2,154,967 1,696,572 3,851,539

TOTAL LIABILITIES AND FUND BALANCES $ 4,671,482 $ 1,846,044 $ 6,517,526

Amounts Reported for Governmental Activities in the Statement of Net Assets are Different Because:

Total Fund Balances of Governmental Funds $ 3,851,539

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. 76,691,023

Long-term liabilities, including capital leases ($563,901), accrued compensated absences ($1,086,220), and postemployment benefits ($228,113), are not due and payable in the current year and, therefore, are not reported in the funds. (1,878,234)

An internal service fund is used by management to charge the costs of health insurance to individual funds. A portion of the assets and liabilities of the internal service fund is included in governmental activities in the statement of net assets. (393,540)

Total Net Assets of Governmental Activities $ 78,270,788


3


STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDSYear Ended December 31, 2011

NONMAJORGOVERNMENTAL

GENERAL FUNDS TOTALREVENUES Taxes $ 9,659,691 $ 1,391,460 $ 11,051,151 Licenses and Permits 67,875 - 67,875 Intergovernmental 1,026,062 189,504 1,215,566 Charges for Services 142,104 - 142,104 Fines and Forfeitures 376,861 - 376,861 Investment Income 14,717 10,517 25,234 Miscellaneous 64,945 36,679 101,624

TOTAL REVENUES 11,352,255 1,628,160 12,980,415

EXPENDITURES Current General Government 2,266,380 353,421 2,619,801 Public Safety 7,439,202 26,605 7,465,807 Public Works 1,333,584 447,102 1,780,686 Health and Welfare 203,847 - 203,847 Culture and Recreation 534,526 203,541 738,067Debt Service Principal 189,628 - 189,628 Interest 28,812 - 28,812

TOTAL EXPENDITURES 11,995,979 1,030,669 13,026,648

EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (643,724) 597,491 (46,233)

OTHER FINANCING SOURCES (USES) Debt Issued 271,250 - 271,250 Transfers In 591,084 - 591,084 Transfers Out (465,950) - (465,950)

TOTAL OTHER FINANCING SOURCES (USES) 396,384 - 396,384

NET CHANGE IN FUND BALANCES (247,340) 597,491 350,151 FUND BALANCES, Beginning 2,402,307 1,099,081 3,501,388

FUND BALANCES, Ending $ 2,154,967 $ 1,696,572 $ 3,851,539


4


RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF ACTIVITIESYear Ended December 31, 2011

Amounts Reported for Governmental Activities in the Statement of Activities are Different Because:

Net Change in Fund Balances of Governmental Funds $ 350,151

Capital outlays to purchase or construct capital assets are reported in governmental funds as expenditures. However, for governmental activities those costs are capitalized in the statement of net assets and are allocated over their estimated useful lives as annual depreciation expense in the statement of activities. This is the amount by which depreciation expense ($3,254,712) exceeded capital outlay $2,852,833 in the current year. (401,879)

Payments of long-term debt principal are expenditures in the governmental funds, but the payments reduce long-term liabilities in the statement of net assets and do not affect the statement of activities. This amount represents capital lease payments. 189,628

Debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets and does not affect the statement of activities. This amount represents debt issued in the current year. (271,250)

Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. This includes the change in accrued compensated absences ($63,557) and postemployment benefits ($56,083). (119,640)

An internal service fund is used by management to charge the costs of health insurance to individual funds. A portion of the net income of the internal service fund is included in governmental activities in the statement of activities. (207,058)

Change in Net Assets of Governmental Activities $ (460,048)


5


STATEMENT OF NET ASSETSPROPRIETARY FUNDS

December 31, 2011

GOVERNMENTALNONMAJOR ACTIVITIES

PROPRIETARY INTERNALWATER ELECTRIC FUNDS TOTAL SERVICE FUND

ASSETSCurrent Assets Cash and Investments $ - $ 2,127,126 $ 1,521,309 $ 3,648,435 $ - Designated Cash and Investments - 724,280 - 724,280 - Restricted Cash and Investments 7,107,247 6,149,200 - 13,256,447 - Accounts Receivable 549,528 3,034,118 67,188 3,650,834 8,401 Accrued Interest Receivable - 73,319 4,165 77,484 - Inventories 78,527 1,731,880 - 1,810,407 - Prepaid Expenses 371,196 - - 371,196 - Due From Other Funds - 238,471 - 238,471 - Total Current Assets 8,106,498 14,078,394 1,592,662 23,777,554 8,401

Noncurrent Assets Advances to Other Funds - 3,068,455 - 3,068,455 - Notes Receivable - 134,750 - 134,750 - Debt Issuance Costs, Net of Accumulated Amortization 367,759 - - 367,759 - Capital Assets, Not Being Depreciated 44,125,900 815,646 - 44,941,546 - Capital Assets, Net of Accumulated Depreciation 18,077,009 20,865,774 3,840 38,946,623 - Total Noncurrent Assets 62,570,668 24,884,625 3,840 87,459,133 -

TOTAL ASSETS 70,677,166 38,963,019 1,596,502 111,236,687 8,401

LIABILITIESCurrent Liabilities Accounts Payable 1,538,735 1,563,724 11,952 3,114,411 20,132 Accrued Liabilities - - - - - Customer Deposits 137,174 1,094,561 - 1,231,735 - Accrued Interest Payable 309,778 - - 309,778 - Due to Other Funds - - - - 496,815 Insurance Claims Payable, Current Portion - - - - 239,077 Compensated Absences Payable, Current Portion 110,535 249,979 37,523 398,037 - Loans Payable, Current Portion 1,790,815 - - 1,790,815 - Total Current Liabilities 3,887,037 2,908,264 49,475 6,844,776 756,024

Long-Term Liabilities Advances from Other Funds 3,045,092 - - 3,045,092 - Compensated Absences Payable 32,931 340,460 19,728 393,119 - Loans Payable 25,089,057 - - 25,089,057 - Total Long-Term Liabilities 28,167,080 340,460 19,728 28,527,268 -

TOTAL LIABILITIES 32,054,117 3,248,724 69,203 35,372,044 756,024

NET ASSETS Invested in Capital Assets, Net of Related Debt 41,832,426 21,681,420 3,840 63,517,686 - Restricted for Debt Service 576,900 - - 576,900 - Unrestricted (3,786,277) 14,032,875 1,523,459 11,770,057 (747,623)

TOTAL NET ASSETS $ 38,623,049 $ 35,714,295 $ 1,527,299 $ 75,864,643 $ (747,623)

Amounts Reported for Business-Type Activities in the Statement of Net Assets are Different Because:

Total Net Assets of Proprietary Funds $ 75,864,643

An internal service fund is used by management to charge the costs of health insurance to individual funds. A portion of the assets and liabilities of the internal service fund is included in business-type activities in the statement of net assets. (354,083)

Total Net Assets of Business-Type Activities $ 75,510,560


6


STATEMENT OF REVENUES, EXPENSESAND CHANGES IN FUND NET ASSETS

PROPRIETARY FUNDSYear Ended December 31, 2011



OPERATING REVENUES Charges for Services $ 5,680,516 $ 20,166,476 $ 678,537 $ 26,525,529 $ 2,467,120 Miscellaneous 295,457 459,804 - 755,261 -

TOTAL OPERATING REVENUES 5,975,973 20,626,280 678,537 27,280,790 2,467,120

OPERATING EXPENSES Source of Supply 1,712,125 12,780,509 - 14,492,634 - Operations and Maintenance 1,498,383 3,089,555 824,535 5,412,473 - Customer Accounts and Collection 446,093 1,308,883 - 1,754,976 - Administration and General 1,128,766 2,477,056 - 3,605,822 151,158 Insurance Premiums - - - - 386,176 Insurance Claims - - - - 2,329,512 Depreciation 836,787 942,563 2,003 1,781,353 - Amortization 10,955 - - 10,955 -

TOTAL OPERATING EXPENSES 5,633,109 20,598,566 826,538 27,058,213 2,866,846

OPERATING INCOME (LOSS) 342,864 27,714 (148,001) 222,577 (399,726)

NONOPERATING REVENUES (EXPENSES) Investment Income 4,704 232,406 12,603 249,713 - Interest Expense (1,022,742) - - (1,022,742) -

TOTAL NONOPERATING REVENUES (EXPENSES) (1,018,038) 232,406 12,603 (773,029) -

INCOME (LOSS) BEFORE TRANSFERS AND CAPITAL CONTRIBUTIONS (675,174) 260,120 (135,398) (550,452) (399,726)

Transfers In - 406,720 129,420 536,140 - Transfers Out (320,288) (314,736) (26,250) (661,274) - System Development Fees 906,382 120,080 - 1,026,462 - Grants - 199,687 - 199,687 -

CHANGE IN NET ASSETS (89,080) 671,871 (32,228) 550,563 (399,726)

NET ASSETS, Beginning 38,712,129 35,042,424 1,559,527 75,314,080 (347,897)

NET ASSETS, Ending $ 38,623,049 $ 35,714,295 $ 1,527,299 $ 75,864,643 $ (747,623)

Amounts Reported for Business-Type Activities in the Statement of Activities are Different Because:

Change in Net Assets of Proprietary Funds $ 550,563

An internal service fund is used by management to charge the costs of health insurance to individual funds. A portion of the net income of the internal service fund is included in business-type activities in the statement of activities. (192,668)

Change in Net Assets of Business-Type Activities $ 357,895


7


STATEMENT OF CASH FLOWSPROPRIETARY FUNDS

Increase (Decrease) in Cash and Cash EquivalentsYear Ended December 31, 2011



CASH FLOWS FROM OPERATING ACTIVITIES Cash Received from Customers $ 5,939,680 $ 20,741,556 $ 681,371 $ 27,362,607 $ 2,471,478 Cash Payments to Employees (1,906,139) (3,877,611) (654,342) (6,438,092) - Cash Payments to Suppliers (2,996,172) (15,959,025) (160,854) (19,116,051) (2,871,894)

Net Cash Provided (Used) by Operating Activities 1,037,369 904,920 (133,825) 1,808,464 (400,416)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from Other Funds - 406,720 129,420 536,140 - Transfers to Other Funds (320,288) (314,736) (26,250) (661,274) - Payments to Other Funds - (238,471) - (238,471) - Payments from Other Funds - - - - 400,416 Net Cash Provided (Used) by Noncapital Financing Activities (320,288) (146,487) 103,170 (363,605) 400,416

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and Construction of Capital Assets (3,883,293) (1,789,633) - (5,672,926) - Loan Proceeds 9,350,000 - - 9,350,000 - Loan Issuance Costs Paid (189,000) - - (189,000) - System Development Fees Received 906,382 120,080 - 1,026,462 - Grants Received - 42,499 - 42,499 - Payments from Other Funds - 303,003 - 303,003 - Payments to Other Funds (292,150) - - (292,150) - Debt Principal Payments (495,497) - - (495,497) - Debt Interest Payments (886,084) - - (886,084) - Net Cash Provided (Used) by Capital and Related Financing Activities 4,510,358 (1,324,051) - 3,186,307 -

CASH FLOWS FROM INVESTING ACTIVITIES Interest Received 9,396 265,427 17,556 292,379 -

NET CHANGE IN CASH AND CASH EQUIVALENTS 5,236,835 (300,191) (13,099) 4,923,545 -

CASH AND CASH EQUIVALENTS, Beginning 1,870,412 9,300,797 1,534,408 12,705,617 -

CASH AND CASH EQUIVALENTS, Ending $ 7,107,247 $ 9,000,606 $ 1,521,309 $ 17,629,162 $ -

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating Income (Loss) $ 342,864 $ 27,714 $ (148,001) $ 222,577 $ (399,726) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Depreciation and Amortization 847,742 942,563 2,003 1,792,308 - Bad Debt Expense 2,140 8,560 - 10,700 - Loss on Disposal of Capital Assets 608 - 608 - Changes in Assets and Liabilities Accounts Receivable (33,773) 68,966 2,834 38,027 4,358 Inventories (12,279) (303,675) - (315,954) - Prepaid Expenses 10,318 - - 10,318 - Accounts Payable (99,956) 87,327 593 (12,036) 846 Accrued Liabilities 4,945 12,573 1,761 19,279 (8,196) Customer Deposits (4,660) 37,750 - 33,090 - Insurance Claims Payable - - - - 2,302 Compensated Absences Payable (20,580) 23,142 6,985 9,547 -

Net Cash Provided (Used) by Operating Activities $ 1,037,369 $ 904,920 $ (133,825) $ 1,808,464 $ (400,416)


8


STATEMENT OF FIDUCIARY NET ASSETSPENSION TRUST FUND

December 31, 2011

VOLUNTEERFIREFIGHTERS

ASSETS Cash $ 211,529 Investments Local Government Investment Pools 241,770 U.S. Agency Securities 232,536 Accrued Interest Receivable 46,919

TOTAL ASSETS 732,754

LIABILITIES Accounts Payable 50

NET ASSETS Restricted for Pension Benefits $ 732,704


9


STATEMENT OF CHANGES IN PLAN NET ASSETSPENSION TRUST FUND


VOLUNTEERFIREFIGHTERS

ADDITIONS Investment Income $ 19,370

TOTAL ADDITIONS 19,370

DEDUCTIONS Benefit Payments 5,140

TOTAL DEDUCTIONS 5,140

CHANGE IN NET ASSETS 14,230

NET ASSETS, Beginning 718,474

NET ASSETS, Ending $ 732,704


10


NOTES TO FINANCIAL STATEMENTS

December 31, 2011

11

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies of the City of Fountain (the “City”) conform to generally acceptedaccounting principles as applicable to government entities. The Governmental AccountingStandards Board (GASB) is the accepted standard-setting body for establishing governmentalaccounting and financial reporting principles. Following is a summary of the more significantpolicies.

Reporting Entity

The financial reporting entity consists of the City, organizations for which the City is financiallyaccountable, and organizations that raise and hold economic resources for the direct benefit of theCity. All funds, organizations, institutions, agencies, departments and offices that are not legallyseparate are part of the City. Legally separate organizations for which the City is financiallyaccountable are considered part of the reporting entity. Financial accountability exists if the Cityappoints a voting majority of the organization’s governing board and is able to impose its will onthe organization, or if the organization provides benefits to, or imposes financial burdens, on theCity. Based on the application of these criteria, the City includes the following entities in itsreporting entity.

The Heritage Maintenance District was established to maintain landscaping, fencing, drainagefacilities, and other improvements within its boundaries, and the General Improvement DistrictNo. 1 was created to provide for the construction of a fire station, and after funding the fire station,for capital improvements including life safety improvements, park and recreational improvements,regional street improvements, and regional civic and cultural improvements. The City Councilserves as the governing board for these entities. Therefore, their financial activity is blended intothe City’s financial statements.

The Fountain Urban Renewal Authority (the “Authority”) was created to redevelop or rehabilitatecertain blighted areas within the City. The Authority has a separate governing board withmembers appointed by the City Council. Although the Authority is legally separate from the City,the Authority’s primary revenue source, tax increment financing, can only be established by theCity. The Authority does not issue separate financial statements and is discretely presented in theCity’s financial statements.

Government-wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net assets and the statement ofactivities) report information on all nonfiduciary activities of the City and its component units.For the most part, the effect of interfund activity has been removed from these statements.Exceptions to this general rule are charges for interfund services that are reasonably equivalentto the services provided. Governmental Activities, which normally are supported by taxes andintergovernmental revenues, are reported separately from business-type activities, which rely toa significant extent on fees and charges for support. The primary government is reportedseparately from the legally separate component unit for which the City is financially accountable.



December 31, 2011

12

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Government-wide and Fund Financial Statements (Continued)

The statement of activities demonstrates the degree to which the direct expenses of the givenfunction or segment are offset by program revenues. Direct expenses are those that are clearlyidentifiable with a specific function or segment. Program revenues include 1) charges tocustomers or applicants who purchase, use, or directly benefit from goods, services, or privilegesprovided by a given function or segment and 2) grants and contributions that are restricted tomeeting the operational or capital requirements of a particular function or segment. Taxes andother items not properly included among program revenues are reported instead as generalrevenues.

Separate financial statements are provided for governmental funds, proprietary funds, and thefiduciary fund, even though the latter is excluded from the government-wide financial statements.Major individual governmental and proprietary funds are reported as separate columns in the fundfinancial statements.

Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The government-wide financial statements are reported using the economic resourcesmeasurement focus and the accrual basis of accounting, as are the proprietary fund and pensiontrust fund financial statements. Revenues are recorded when earned and expenses are recordedwhen the liability is incurred, regardless of the timing of related cash flows. Property taxes arerecognized as revenues in the year for which they are levied. Grants and similar items arerecognized as revenue as soon as all eligibility requirements imposed by the provider have beenmet.

Governmental fund financial statements are reported using the current financial resourcesmeasurement focus and the modified accrual basis of accounting. Revenues are recognized assoon as they are both measurable and available. Revenues are considered to be available whenthey are collected within the current year or soon enough thereafter to pay liabilities of the currentyear. For this purpose, the City considers revenues to be available if they are collected within 60days of the end of the current year. Taxes, intergovernmental revenues, and interest associatedwith the current year are considered to be susceptible to accrual and so have been recognized asrevenues of the current year. All other revenues are considered to be measurable and availableonly when cash is received by the City. Expenditures generally are recorded when a liability isincurred, as under accrual accounting. However, debt service expenditures, as well asexpenditures related to compensated absences, are recorded only when payment is due.

Proprietary funds distinguish operating revenues and expenses from nonoperating items.Operating revenues and expenses generally result from providing services and producing anddelivering goods in connection with the fund’s principal ongoing operations. Operating expensesinclude the cost of sales and services, administrative expenses, and depreciation on capital assets.All revenues and expenses not meeting this definition are reported as nonoperating revenues andexpenses.



December 31, 2011

13


Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)

When both restricted and unrestricted resources are available for use, it is the City’s practice touse restricted resources first, then unrestricted resources as they are needed.

In the fund financial statements, the City reports the following major governmental fund:

General Fund - The General Fund is the general operating fund of the City. It is used to accountfor all financial resources except those required to be accounted for in another fund.

The City also reports the following major proprietary funds:

Water Utility - This fund accounts for all activities necessary for the provision of water servicesto the City residents.

Electric Utility - This fund accounts for all activities necessary to provide electric power to theCity residents.

Additionally, the City reports the following fund types:

Internal Service Fund - The Insurance Fund accounts for the activities related to employee healthbenefits, which are partially self-insured by the City.

Pension Trust Fund - The Pension Trust Fund is used to account for assets held by the City in atrustee capacity for the City’s volunteer firefighters.

Assets, Liabilities and Net Assets/Fund Balances

Cash and Investments - Cash equivalents include investments with original maturities of threemonths or less. Investments in pooled cash are considered cash equivalents. Investments arereported at fair value.

Accounts Receivable - Receivables are reported at their gross value and, where appropriate, arereduced by the estimated portion that is expected to be uncollectible.

Inventories - Inventories of the proprietary funds are valued using the average cost method.Materials and supplies purchased by the governmental funds are charged to operations whenpurchased.

Prepaid Expenses - Payments to vendors for services that will benefit subsequent years arereported as prepaid expenses.



December 31, 2011

14


Assets, Liabilities and Net Assets/Fund Balances (Continued)

Interfund Receivables and Payables - During the course of operations, certain transactions occurbetween individual funds. The resulting receivables and payables are classified in the fundfinancial statements as due from other funds and due to other funds when they are short-term innature. Noncurrent portions of interfund receivables and payables are reported as advances fromother funds and advances to other funds. Any residual balances outstanding betweengovernmental and business-type activities are reported in the government-wide financialstatements as internal balances.

Deferred Revenues - Deferred revenues include property taxes earned but levied for a subsequentyear.

Capital Assets - Capital assets, which include land, buildings, equipment, and all infrastructureassets owned by the City, are reported in the applicable governmental or business-type activitiescolumns in the government-wide financial statements and the proprietary funds in the fundfinancial statements. Capital assets are defined by the City as assets with an initial, individual costof $5,000 or more and an estimated useful life in excess of one year. Such assets are recorded athistorical cost or estimated historical cost if purchased or constructed. Donated capital assets arerecorded at estimated fair market value at the date of donation. The costs of normal maintenanceand repairs that do not add to the value of the asset or materially extend the asset life are notcapitalized.

Capital assets are depreciated using the straight-line method over the following estimated usefullives.

Buildings and Improvements 20 - 40 yearsInfrastructure 25 - 40 yearsComputers and Software 3 - 7 yearsMachinery and Equipment 5 - 10 yearsVehicles 5 - 7 years

Compensated Absences - Employees of the City are allowed to accumulate unused vacation andsick time. Upon termination of employment from the City, an employee will be compensated forall accrued vacation time up to 320 hours at their current pay rate, and for unused sick time,depending on years of service, up to 720 hours at a percentage of their current rate of pay.Employees hired after March 1, 2006, will be paid for all accrued vacation time up to 240 hoursand for unused sick time, depending on years of service, up to 360 hours at a percentage of theircurrent rate of pay.

These compensated absences are recognized as current salary costs when earned in the proprietaryfunds and when due in the governmental funds. A long-term liability has been reported in thegovernment-wide financial statements for the accrued compensated absences.



December 31, 2011

15


Assets, Liabilities and Net Assets/Fund Balances (Continued)

Postemployment Benefits - A City employee with at least 20 years of service with the City, andwho has reached at least 55 years of age at retirement, is eligible to receive health and lifeinsurance coverage after retirement. This benefit expires when the retiree reaches the age of 65,thereby making the maximum eligibility period 10 years. A long-term liability is reported in thegovernment-wide financial statements when the postemployment benefits are earned.

Long-Term Debt - In the government-wide financial statements and the proprietary funds in thefund financial statements, long-term debt and other long-term obligations are reported as liabilitiesin the applicable governmental activities, business-type activities, or proprietary fund statementof net assets. Debt premiums and discounts, as well as issuance costs, are deferred and amortizedover the life of the debt using the straight-line method.

In the fund financial statements, governmental funds recognize the face amount of debt issued asother financing sources. Premiums received on debt issuances are reported as other financingsources while discounts on debt issuances are reported as other financing uses. Issuance costs,whether or not withheld from the actual debt proceeds received, are reported as currentexpenditures.

Net Assets/Fund Balances - In the government-wide and fund financial statements, net assets andfund balances are restricted when constraints placed on the use of resources are externallyimposed. As reported in the governmental fund financial statements, the City Council establishesa fund balance commitment through passage of an ordinance or a resolution, and is authorized toinformally assign amounts to a specific purpose.

The City Council has established the ideal target reserves at 40% of the current operating budgetof the General Fund. The reserves should not be allowed to fall below 20% of the currentoperating budget, including the emergency reserve required by the Tabor Amendment (See Note12). The City has not established a formal policy for its use of restricted and unrestricted fundbalances. However, if both restricted and unrestricted fund balances are available, the City usesrestricted fund balances first, followed by committed, assigned, and unassigned balances.

Property Taxes

Property taxes attach as an enforceable lien on property on January 1 and are levied the followingDecember for collection in the subsequent year. Taxes are payable in full on April 30 or in twoinstallments on February 28 and June 15. The County Treasurer’s Office collects property taxesand remits to the City on a monthly basis. Since property tax revenues are collected in arrearsduring the succeeding year, a receivable and corresponding deferred revenue are reported atDecember 31.



December 31, 2011

16

NOTE 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

Accountability

At December 31, 2011, the Fountain Urban Renewal Authority had negative net assets of $34,850.Management expects this deficit to be eliminated when future incremental taxes are collected. Inaddition, the Insurance Internal Service Fund had negative net assets of $747,623, which will beeliminated with future charges to other funds.

NOTE 3: CASH AND INVESTMENTS

A summary of cash and investments as of December 31, 2011, follows:

Petty Cash $ 2,717 Deposits (44,727)Investments 21,579,942

Total $ 21,537,932

Cash and investments are reported in the financial statements as follows:

Cash and Investments $ 6,763,772 Designated Cash and Investments 724,280 Restricted Cash and Investments 13,256,447 Pension Trust Fund 685,835 Component Unit 107,598

Total $ 21,537,932

Deposits

The Colorado Public Deposit Protection Act (PDPA) requires all local government entities todeposit cash in eligible public depositories. Eligibility is determined by State regulations.Amounts on deposit in excess of federal insurance levels must be collateralized by eligiblecollateral as determined by the PDPA. The PDPA allows the financial institution to create a singlecollateral pool for all public funds held. The pool is to be maintained by another institution, orheld in trust for all uninsured public deposits as a group. The market value of the collateral mustbe at least equal to 102% of the uninsured deposits.

Investments

The City is required to comply with State statutes which specify investments meeting definedrating, maturity, and concentration risk criteria in which local governments may invest, whichinclude the following. State statutes do not address custodial risk. The City’s investment policydoes not further limit these investment choices.



December 31, 2011

17

NOTE 3: CASH AND INVESTMENTS (Continued)

Investments (Continued)

• Obligations of the United States and certain U.S. Agency securities• General obligation and revenue bonds of U.S. local government entities• Certain corporate or bank securities• Commercial paper• Local government investment pools• Repurchase agreements collateralized by certain authorized securities• Certain money market funds• Guaranteed investment contracts (GICs)

At December 31, 2011, the City had the following investments:

S&P Investment Maturities (in Years) Investment Type Rating Less Than 1 1 - 5 Fair Value

Local Government Investment Pools AAAm $ 11,020,776 $ - $ 11,020,776Money Market Funds AAAm 91,185 - 91,185Money Market Funds Not Rated 317 - 317U.S. Treasury Notes NA - 1,509,805 1,509,805U.S. Agency Securities AA+ 1,015,869 5,848,997 6,864,866Corporate Securities AA+ 1,034,423 547,576 1,581,999Corporate Securities AA - 510,994 510,994

Total $ 13,162,570 $ 8,417,372 $ 21,579,942

Interest Rate Risk - State statutes limit investments in U.S. Treasury and Agency securities to anoriginal maturity of five years, and corporate securities to an original maturity of three years,unless the governing board authorizes the investment for a period in excess of these limits.

Credit Risk - State statutes limit investments in U.S. Agency securities to the highest rating issuedby at least two nationally recognized statistical rating organizations (NRSROs). Corporatesecurities must not be rated below AA- or Aa3 by any NRSRO. State statutes also limitinvestments in money market funds to those that maintain a constant share price, with a maximumremaining maturity in accordance with Rule 2a-7, and either have assets of one billion dollars orthe highest rating issued by a NRSRO.

Concentration of Credit Risk - State statutes do not limit the amount the City may invest in a singleissuer of U.S. Agency securities. Corporate securities are limited to fifty percent of the totalinvestment portfolio and five percent for a single issuer. At December 31, 2011, the City’sinvestments in the Federal Home Loan Bank, Federal Home Loan Mortgage Corporation, andFederal National Mortgage Association represented 7%, 12% and 11%, respectively, of the City’stotal investments.



December 31, 2011

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NOTE 3: CASH AND INVESTMENTS (Continued)

Investments (Continued)

Local Government Investment Pool - At December 31, 2011, the City had $2,012,779 and$9,007,997 invested in the Colorado Surplus Asset Fund Trust (CSAFE) and the Colorado LocalGovernment Liquid Asset Trust (Colotrust), respectively. The pools are investment vehiclesestablished for local government entities in Colorado to pool surplus funds. The ColoradoDivision of Securities administers and enforces the requirements of creating and operating thepools. The pools operate in conformity with the Securities and Exchange Commission’s Rule 2a-7as promulgated under the Investment Company Act of 1940, as amended. Both pools are ratedAAAm by Standard and Poor’s. Investments of the pools are limited to those allowed by Statestatutes. A designated custodial bank provides safekeeping and depository services to the poolsin connection with the direct investment and withdrawal functions. The custodian’s internalrecords identify the investments owned by the participating governments.

Designated Cash and Investments

Beginning January 1, 2006, the City committed to use plant investment fees and water acquisitionfees received by the Water Fund exclusively for growth-related capital improvements andpurchases of water rights. In addition, system development fees collected by the Electric Fund arecommitted for the construction of a new substation. The remaining cash and investments atDecember 31, 2011, of $724,280 were reported as designated cash and investments in the ElectricFund.

Restricted Cash and Investments

Cash and investments of $20,958 and $6,149,200 are restricted as operations and maintenancereserves in the Water and Electric Funds, respectively, as required by the CWRPDA loanagreement. Additionally, cash and investments of $6,509,389 and $576,900 are restricted in theWater Fund for capital projects and debt reserves, respectively.

NOTE 4: INTERFUND BALANCES AND TRANSACTIONS

Interfund Balances

Interfund balances at December 31, 2011, consisted of the following:

Due from Other Funds Due to Other Funds Amount

General Fund Insurance Fund $ 258,344Electric Fund Insurance Fund 238,471

Total $ 496,815

At December 31, 2011, the General and Electric Funds had temporarily subsidized the negativecash balance of the Insurance Fund.



December 31, 2011

19

NOTE 4: INTERFUND BALANCES AND TRANSACTIONS (Continued)

Interfund Balances (Continued)

In August, 2010, the Electric Fund advanced $1,500,000 to the Water Fund to purchase waterrights. The Water Fund is required to repay the advance through annual payments of $189,568,including interest accruing at 4.5% per annum, through 2020. The outstanding balance of theadvance at December 31, 2011, was $1,377,932.

In October, 2009, the Electric Fund advanced $2,000,000 to the Water Fund to purchase waterrights. The Water Fund is required to repay the advance through annual payments of $252,758,including interest accruing at 4.5% per annum, through 2019. The outstanding balance of theadvance at December 31, 2011, was $1,667,160.

During 2002, the Electric Fund advanced $100,000 to the Ambulance Fund for the purchase of anambulance. During 2004, this advance was assigned to the General Fund. The General Fund isrequired to repay the advance through annual payments of $12,564, including interest accruing at5% per annum, through 2013. The outstanding balance of the advance at December 31, 2011, was$23,363.

Interfund Transfers

Interfund transfers for the year ended December 31, 2011, consisted of the following:

Transfers In Transfers Out Amount

General Water $ 273,348General Electric 314,736General Ambulance 3,000Electric General 336,530Electric Water 46,940Electric Ambulance 23,250Ambulance General 129,420

Total $ 1,127,224

During the year ended December 31, 2011, the Water, Electric, and Ambulance Funds reimbursedthe General Fund for information technology services and purchases, and facility maintenancecosts. The General, Water, and Ambulance Funds reimbursed the Electric Fund for fleetmaintenance costs. The General Fund routinely subsidizes the operations of the Ambulance Fund.



December 31, 2011

20

NOTE 5: NOTES RECEIVABLE

In September, 2008, the City, through the Electric Fund, loaned $134,750 to the Fountain UrbanRenewal Authority to assist with operations, administration, and other costs incurred by theAuthority. Annual payments of $32,076 are required under the loan agreement, including interestaccruing at 4.5% per annum, beginning in September, 2012, through 2016.

NOTE 6: CAPITAL ASSETS

Capital assets activity for the year ended December 31, 2011, is summarized below:

Balances Balances 12/31/10 Additions Deletions 12/31/11

Governmental Activities Capital Assets, Not Being Depreciated

Land and Easements $ 1,385,113 $ - $ - $ 1,385,113Construction in Progress - 81,730 - 81,730

Total Capital Assets, Not Being Depreciated 1,385,113 81,730 - 1,466,843

Capital Assets, Being DepreciatedBuildings and Improvements 4,871,450 - - 4,871,450Infrastructure 104,758,983 2,345,705 - 107,104,688Computers and Software 213,525 31,000 - 244,525Machinery and Equipment 3,584,025 104,233 - 3,688,258Vehicles 4,543,895 290,165 148,701 4,685,359

Total Capital Assets, Being Depreciated 117,971,878 2,771,103 148,701 120,594,280

Less Accumulated DepreciationBuildings and Improvements 1,619,867 157,123 - 1,776,990Infrastructure 34,641,284 2,661,924 - 37,303,208Computers and Software 142,180 20,093 - 162,273Machinery and Equipment 2,917,523 151,281 - 3,068,804Vehicles 2,943,235 264,291 148,701 3,058,825

Total Accumulated Depreciation 42,264,089 3,254,712 148,701 45,370,100

Total Capital Assets, Being Depreciated, Net 75,707,789 (483,609) - 75,224,180

Governmental Activities Capital Assets, Net $ 77,092,902 $ (401,879) $ - $ 76,691,023

Business-Type Activities Capital Assets, Not Being Depreciated

Land and Easements $ 6,975,275 $ - $ - $ 6,975,275Water and Storage Rights 22,241,856 28,318 - 22,270,174Construction in Progress 10,692,418 5,003,679 - 15,696,097

Total Capital Assets, Not Being Depreciated 39,909,549 5,031,997 - 44,941,546



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NOTE 6: CAPITAL ASSETS (Continued)

Balances Balances 12/31/10 Additions Deletions 12/31/11

Business-Type Activities (Continued) Capital Assets, Being Depreciated

Buildings and Improvements 4,950,112 323,295 - 5,273,407Infrastructure 49,249,960 1,036,157 - 50,286,117Computers and Software 657,290 72,543 7,295 722,538Machinery and Equipment 2,657,660 344,829 - 3,002,489Vehicles 1,678,078 61,357 - 1,739,435

Total Capital Assets, Being Depreciated 59,193,100 1,838,181 7,295 61,023,986

Less Accumulated Depreciation Buildings and Improvements 1,259,058 135,482 - 1,394,540Infrastructure 15,730,719 1,336,157 - 17,066,876Computers and Software 503,485 50,623 6,687 547,421Machinery and Equipment 1,436,711 157,307 - 1,594,018Vehicles 1,372,724 101,784 - 1,474,508

Total Accumulated Depreciation 20,302,697 1,781,353 6,687 22,077,363

Total Capital Assets, Being Depreciated, Net 38,890,403 56,828 608 38,946,623

Business-Type Activities Capital Assets, Net $ 78,799,952 $ 5,088,825 $ 608 $ 83,888,169

Depreciation expense was charged to programs of the City as follows:

Governmental Activities General Government $ 5,921 Public Safety 355,587 Public Works 2,761,775 Health and Welfare 7,447 Culture and Recreation 123,982

Total $ 3,254,712

Business-Type Activities Water $ 836,787 Electric 942,563 Ambulance 2,003

Total $ 1,781,353



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NOTE 7: LONG-TERM DEBT

Governmental Activities

Following is a summary of long-term debt transactions for the governmental activities for the yearended December 31, 2011.

Balance Balance Due Within

12/31/10 Additions Payments 12/31/11 One Year

Capital Leases $ 482,279 $ 271,250 $ 189,628 $ 563,901 $ 188,961

Compensated Absences 1,022,663 599,264 535,707 1,086,220 491,249

Postemployment Benefits 172,030 61,724 5,641 228,113 -

Insurance Claims Payable 236,775 2,298,698 2,296,396 239,077 239,077

Total $ 1,913,747 $ 3,230,936 $ 3,027,372 $ 2,117,311 $ 919,287

During 2005, the City entered into a lease agreement to purchase various equipment and vehicles,and construct a salt and sand storage building. Monthly payments ranging from $7,618 to $1,077are due through June, 2012. Interest accrues at 3.89% per annum. Assets of $373,795 lessaccumulated depreciation of $244,447 are reported under this lease.

During 2006, the City entered into a lease agreement to purchase police vehicles, an ambulanceand a dump truck. Monthly payments ranging from $7,582 to $4,761 were due through January,2011. Interest accrued on the outstanding balance at 3.897% per annum. The lease was paid infull during the year ended December 31, 2011.

During 2007, the City entered into a lease agreement for $685,000 to purchase police vehicles, astreet sweeper, dispatch consoles, and a pumper truck. Monthly payments ranging from $12,183to $4,764 are due through May, 2014. Interest accrues on the outstanding balance at 3.975% perannum. Assets of $685,000 less accumulated depreciation of $260,957 are reported under thislease.

During 2007, the City paid cash of $500,000 and entered into a lease agreement for $315,000 topurchase a ladder truck. Annual payments of $53,104 are due under the lease agreement throughJuly, 2014. Interest accrues on the outstanding balance at 4.32% per annum. Capital assetstotaling $815,000 less accumulated depreciation of $179,895 are reported in the financialstatements as a result of this transaction.

During 2008, the City entered into a lease agreement for $49,020 to purchase a backhoe. Monthlypayments of $906 are due under the lease agreement through April, 2013. Interest accrues on theoutstanding balance at 4.31% per annum. Capital assets totaling $49,020 less accumulateddepreciation of $18,011 are reported under this lease.

During 2011, the City entered into a lease agreement for $271,250 to purchase police vehicles.Monthly payments of $4,781 are due under the lease agreement through June, 2016. Interestaccrues on the outstanding balance at 2.225% per annum. Capital assets totaling $271,250 lessaccumulated depreciation of $21,518 are reported under this lease.



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NOTE 7: LONG-TERM DEBT (Continued)

Governmental Activities (Continued)

Following is a schedule of the future minimum lease payments required under the capital leaseobligations.

Year Ended December 31,

2012 $ 205,161 2013 171,275 2014 134,301 2015 57,374 2016 28,687 Total Minimum Lease Payments 596,798 Less: Interest Portion (32,897)

Present Value of Future Minimum Lease Payments $ 563,901

Compensated absences and postemployment benefits are expected to be liquidated primarily withGeneral Fund revenues.

Business-Type Activities

Following is a summary of long-term debt transactions for the business-type activities for the yearended December 31, 2011.

Balance Balance Due Within

12/31/10 Additions Payments 12/31/11 One Year

2005 CWRPDA Loan $ 7,390,000 $ - $ 175,000 $ 7,215,000 $ 180,000

Loan Premium 75,134 - 3,077 72,057 -

2003 Water Rights Loan 436,200 - 72,700 363,500 72,700

2007 Water Rights Loan 234,300 - 39,050 195,250 39,050

2008 Water Rights Loan 1,382,812 - 48,747 1,334,065 1,334,065

2009 CWRPDA Loan 8,510,000 - 160,000 8,350,000 165,000

2011 CWRPDA Loan - 9,350,000 - 9,350,000 -

Compensated Absences 781,609 503,733 494,186 791,156 398,037

Total $ 18,810,055 $ 9,853,733 $ 992,760 $ 27,671,028 $ 2,188,852

During 2005, the City entered into a loan agreement with the Colorado Water Resources andPower Development Authority (CWRPDA). Authorized uses of the loan proceeds include landacquisition for future water storage, purchase of water rights and various other water projects.Payments of principal and interest are due semi-annually on May 1 and November 1, throughNovember, 2035. Interest accrues at 4.56% per annum.



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Business-Type Activities (Continued)

During 2003, the City obtained a loan from a private individual for the purchase of water rights.Annual principal payments of $72,700 are due through 2016. Interest accrues at 5% per annumand is paid semi-annually.

During 2007, the City obtained a loan from a private individual to purchase water rights. Annualprincipal payments of $39,050 are due through 2016. Interest accrues at 5% per annum and is paidsemi-annually.

During 2008, the City entered into an agreement with a private individual to purchase water rights.The agreement requires monthly payments of $12,000, with a final balloon payment of $1,321,337due in 2012. Interest accrues at 7% per annum and is paid monthly.

During 2009, the City entered into a loan agreement with the CWRPDA. Loan proceeds were usedfor future water storage sites, and the acquisition of a customer service building. Payments ofinterest are due semi-annually on May 1 and November 1. Principal payments are due annuallyon November 1, through 2038. Interest accrues at rates ranging from 3% to 5.25% per annum.

During 2011, the City entered into a loan agreement with the CWRPDA. Loan proceeds will beused for construction of the Southern Delivery System (See Note 12). Payments of interest are duesemi-annually on February 1 and August 1. Principal payments are due annually beginning onAugust 1, 2013, through 2041. Interest accrues at rates ranging from 2% to 5.4% per annum.

The CWRPDA loans are payable solely from revenues of the City’s utility system, which includesthe Water and Electric Funds, after deduction of operating and maintenance costs. During the yearended December 31, 2011, net revenues of $2,667,113 were available to pay annual debt serviceof $1,226,371. Remaining debt service at December 31, 2011, was $45,868,778.

Future debt service requirements for the outstanding loans at December 31, 2011, were as follows.

Year Ended December 31, Principal Interest Total

2012 $ 1,790,815 $ 1,246,338 $ 3,037,1532013 641,750 1,182,546 1,824,2962014 666,750 1,160,533 1,827,2832015 681,750 1,135,836 1,817,5862016 696,750 1,109,542 1,806,2922017 - 2021 3,315,000 5,165,640 8,480,6402022 - 2026 4,075,000 4,392,962 8,467,9622027 - 2031 5,155,000 3,311,708 8,466,7082032 - 2036 6,090,000 1,866,574 7,956,5742037 - 2041 3,695,000 502,213 4,197,213

Total $ 26,807,815 $ 21,073,892 $ 47,881,707



December 31, 2011

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Component Unit

In September, 2008, the Authority obtained a loan from the City to finance start-up costs. InSeptember, 2011, the loan agreement was modified to require annual payments of $32,076beginning in September, 2012, through 2016. Future debt service requirements are as follows.

Year Ended December 31, Principal Interest Total

2012 $ 19,676 $ 12,400 $ 32,0762013 26,898 5,178 32,0762014 28,108 3,968 32,0762015 29,373 2,703 32,0762016 30,695 1,381 32,076

Total $ 134,750 $ 25,630 $ 160,380

NOTE 8: JOINT VENTURE

The City is a participant in the Fountain Valley Authority which was formed to construct andoperate a water treatment plant. Participants in the Authority are the Cities of Fountain andColorado Springs, Security Water District, Stratmoor Hills Water District and Widefield Waterand Sanitation District. The City is represented on the Authority’s Board of Directors by onemember. The Board of Directors has the responsibility for all operations of the Authority.

The City’s share of available capacity for the year ended December 31, 2011, was 2,000 acre feetof project water, representing an ownership percentage of participation of 9.95%.

The City’s share of the Authority is not included in the financial statements since the Authorityis a component unit of the City of Colorado Springs. Financial information about the FountainValley Authority can be obtained in a separate report available at City Hall.

NOTE 9: RISK MANAGEMENT

The City is exposed to various risks of loss related to torts; theft of, damage to, and destructionof assets; errors and omissions; injuries to employees; natural disasters; and health and dentalclaims of its employees. The City accounts for and finances its risk activities in the General Fundand the Insurance Internal Service Fund.



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NOTE 9: RISK MANAGEMENT (Continued)

Public Entity Risk Pool

For property, liability and workers compensation risks of loss, the City is a member of theColorado Intergovernmental Risk Sharing Agency (CIRSA), a separate and independentgovernmental and legal entity formed by intergovernmental agreement by member municipalitiespursuant to the provision of 24-10-115.5, Colorado Revised Statutes (1982 Replacement Volume)and Colorado Constitution, Article XIV, Section 18(2).

The purposes of CIRSA are to provide members defined liability, property, and workerscompensation coverages and to assist members to prevent and reduce losses and injuries tomunicipal property and to persons or property which might result in claims being made againstmembers of CIRSA, their employees or officers.

It is the intent of the members of CIRSA to create an entity in perpetuity which will administer anduse funds contributed by the members to defend and indemnify, in accordance with the bylaws,any member of CIRSA against stated liability of loss, to the limit of the financial resources ofCIRSA. It is also the intent of the members to have CIRSA provide continuing stability andavailability of needed coverages at reasonable costs. All income and assets of CIRSA shall be atall times dedicated to the exclusive benefit of its members.

CIRSA is a separate legal entity and the City does not approve budgets nor does it have the abilityto significantly affect the operations of CIRSA.

Insurance Fund

Effective October 1, 2009, the City established a partially self-insured program for employeehealth, dental and short-term disability benefits. Transactions of the self-insurance program arereported in the Insurance Fund, an internal service fund. The City has purchased excess insurancepolicies to cover individual claims in excess of $50,000, and aggregate annual claims in excess ofapproximately $2,336,000, depending on enrollment counts. Premiums are paid by the General,Water, Electric, and Ambulance Funds.

Claims liabilities, including estimated incurred but not reported claims (IBNR), are reported in thegovernment-wide financial statements and the internal service fund if information available priorto the issuance of the financial statements indicates that it is probable that a liability has beenincurred at the date of the financial statements and the amount of the loss can be reasonablyestimated. The City believes the estimated claims liability is not fully measurable, and the Citycould incur additional costs related to IBNR claims. Changes in claims payable were as follows:

12/31/11 12/31/10

Claims Payable, Beginning $ 236,775 $ 178,288 Claims and Changes in Provisions 2,329,512 1,845,066 Claims Payments (2,327,210) (1,786,579)

Claims Payable, Ending $ 239,077 $ 236,775



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NOTE 10: RETIREMENT COMMITMENTS

Volunteer Firefighters’ Pension Plan

Plan Description - The City has established a single-employer defined benefit pension plan forvolunteer firefighters as authorized by State of Colorado statute. The Plan is administered by aBoard of Trustees composed of City Council members and firefighters. This Board alsoestablishes and is allowed to amend contribution requirements of the City. Any firefighter whohas both attained the age of fifty and completed twenty years of active service shall be eligible fora monthly pension. A firefighter who is disabled in the line of duty and whose disability is of suchcharacter and magnitude as to deprive the firefighter of earning capacity and extends beyond oneyear, shall be compensated in an amount determined by the Board of Trustees. The Plan does notpublish a separate stand-alone report, but is reported in the financial statements as a Pension TrustFund.

Funding Policy - The Volunteer Firefighters’ Pension Plan may receive contributions from theCity in an amount not to exceed one-half mill of property tax revenue. As established by thelegislature, the State of Colorado contributes ninety percent of the City’s contribution. Thecontributions are not actuarially determined. An actuary is used to determine the adequacy ofcontributions. The actuarial study as of January 1, 2009, indicated that the current level ofcontributions to the fund are adequate to support on an actuarially sound basis the prospectivebenefits for the present Plan.

Annual Pension Cost - For the year ended December 31, 2011, the City and State did not makecontributions to the Plan. The required contribution was determined as part of the January 1,2009, actuarial valuation using the entry age actuarial cost method. Actuarial assumptionsincluded the following:

Actuarial Cost Method - Entry AgeInterest Rate - 5% per annum, compounded annuallyRetirement - Age 50 and 20 years of serviceDisability - Graduated rates for all disabilitiesMortality - 1994 Group Annuity Mortality TableSeparation - Graduated rates for all withdrawalsMarital Status - 90% marriedAge Difference - Males assumed to be 3 years olderAsset Valuation - Market valueInflation Rate - 4%

Based on an amortization period of twenty years using the level dollar method on an open basis,the Plan’s expected contributions exceed the amount recommended to maintain the overfundedactuarial accrued liability.



December 31, 2011

28

NOTE 10: RETIREMENT COMMITMENTS (Continued)

Volunteer Firefighters’ Pension Plan (Continued)

Trend information of the Plan follows:

Percentage

Annual Pension of APC Net Pension

Year Ending Cost (APC) Contributed Obligation

12/31/11 $ - NA $ -

12/31/10 - NA -

12/31/09 - NA -

Funded Status and Funding Progress - At January 1, 2009, the most recent actuarial valuationdate, the Plan’s funded status was as follows. The schedule of funding progress, presented asrequired supplementary information following the notes to the financial statements, presentsmultiyear trend information about the funded status of the Plan.

Actuarial Unfunded

Actuarial Value Accrued (Overfunded)

of Assets Liability (AAL) AAL Funded Ratio

$ 697,470 $ 144,213 $ (553,257) 484%

Police and Firefighter Money Purchase Pension Plan

The City contributes to a single-employer defined contribution money purchase pension plan onbehalf of police officers and paid firefighters. The City is required to contribute 8.5% of eachparticipating employee’s compensation, and each employee must contribute a matching amount.The Plan provisions and contribution requirements are established and may be amended by theCity Council.

Employees are eligible to participate in the Plan on the first day of employment, and become fullyvested after five years of service.

For the year ended December 31, 2011, the City contributed $379,892 to the Plan, equal to therequired contributions. All of the Plan investments at December 31, 2011, are managed by GreatWest Life & Annuity Insurance Company, an outside administrator.

Firefighter Pension Plan

Effective September 1, 2011, paid firefighters had the option to remain in the existing pension planor choose to participate in the Defined Benefit System administered by the Fire and Police PensionAssociation (FPPA) in accordance with Part 3 of Article 31 of Title 31, Colorado Revised Statutes(CRS). Current paid firefighters were allowed to select their future plan participation. Firefightershired after September 1, 2011, will be required to participate in the Statewide Defined Benefit Planon the first day of employment.



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Firefighter Pension Plan (Continued)

Plan Description - The Defined Benefit System consists of the Statewide Defined Benefit Plan,a multiple-employer defined benefit plan, and the Statewide Hybrid Plan, a cost-sharing multiple-employer combination defined benefit and money purchase plan. The plans provide retirementand disability, annual increases, and death benefits for members or their beneficiaries. Title 31,Article 31, Part 1101, of the CRS, as amended, assigns authority to establish benefit provisionsto the State Legislature. FPPA issues a publicly available annual financial report that includesfinancial statements and required supplementary information for the plans. That report may beobtained by contacting FPPA of Colorado, 5290 DTC Parkway, Suite 100, Greenwood Village,Colorado 80111.

Funding Policy - Plan members and the City are required to contribute to the Statewide DefinedBenefit Plan and the Statewide Hybrid Plan at rates established under Title 31, Article 31 of theCRS, as amended. For the year ended December 31, 2011, the contribution rate for members ofthe Statewide Defined Benefit Plan and the City was 8% of base salary. However, firefighters thattransferred from the money purchase pension plan were required to contribute 10.5% of basesalary and the City must contribute 9.5%. This split of contributions was determined by the CityCouncil. Each employee participating in the Statewide Hybrid Plan must contribute 9.5% of basesalary and the City contributes a matching amount. Total contributions in excess of those requiredby the CRS (11.3% from September 1 to December 31, 2011) are deposited into the moneypurchase component of the Statewide Hybrid Plan. These excess contribution amounts areestablished and may be amended by the City Council. City contributions are fully vested after 5years of service. The City’s contributions to the plans for the year ended December 31, 2011, were$40,943, equal to the required contributions.

General Employee Money Purchase Pension Plan

The City contributes to a single-employer defined contribution money purchase pension plan onbehalf of non-police and firefighter employees. The City is required to contribute 3.5% of eachparticipating employee’s compensation, and each employee must contribute a matching amount.The Plan provisions and contribution requirements are established and may be amended by theCity Council.

Employees are eligible to participate in the Plan after six months of employment. Participantsbecome fully vested after five years of service.

For the year ended December 31, 2011, the City contributed $292,065 to the Plan, equal to therequired contributions. All of the Plan investments at December 31, 2011, are managed by theColorado County Officials and Employees Retirement Association (CCOERA), an outsideadministrator.



December 31, 2011

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Deferred Compensation Plan

The City offers its employees a deferred compensation plan created in accordance with InternalRevenue Code Section 457. The plan is available to all City employees and permits them to defera portion of their salary until future years. No City contributions are required. The deferredcompensation is not available to employees until termination, retirement, death, or unforeseeableemergency. All Plan assets are held in trust for the exclusive benefit of the employees.

NOTE 11: POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS

Plan Description - The City has established a single-employer defined benefit postemploymenthealthcare plan. Employees with at least 20 years of service with the City, and who have reachedat least 55 years of age, are eligible to receive health insurance benefits after retirement. Thesebenefits expire when the retiree reaches the age of 65. The authority to establish and amendbenefit provisions rests with the City Council. The City does not issue a stand-alone financialreport for the plan.

Funding Policy - The contribution requirements of plan members and the City are established andmay be amended by the City Council. The required contribution is based on projected pay-as-you-go financing requirements. The City pays the entire monthly insurance premium. Plan membersare not required to contribute to the plan. For the year ended December 31, 2011, the Citycontributed $5,641 to the plan.

Annual OPEB Cost and Net OPEB Obligation - The City’s annual other postemployment benefit(OPEB) cost is calculated based on the annual required contribution of the employer (ARC), anamount actuarially determined in accordance with the parameters of GASB Statement No. 45. TheARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normalcost each year and amortize any unfunded actuarial liabilities over a period of thirty years.

The following table shows the components of the City’s annual OPEB cost for the year, theamount actually contributed to the plan, and changes in the City’s net OPEB obligation to the plan.

Annual required contribution $ 64,247 Interest on net OPEB obligation 7,312 Adjustment to annual required contribution (9,835)Annual OPEB cost 61,724 Contributions made (5,641)Increase in net OPEB obligation 56,083 Net OPEB Obligation, Beginning 172,030

Net OPEB Obligation, Ending $ 228,113



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NOTE 11: POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (Continued)

The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, andthe net OPEB obligation for the year ended December 31, 2011, and the two preceding yearsfollows.

Percentage of

Annual Annual OPEB Net OPEB

Year Ended OPEB Cost Cost Contributed Obligation

12/31/11 $ 61,724 9.1% $ 228,113

12/31/10 58,057 3.7% 172,030

12/31/09 58,057 - 116,114

Funded Status and Funding Progress - At January 1, 2011, the most recent actuarial valuationdate, the actuarial accrued liability (AAL) was $367,674, all of which was unfunded. The coveredpayroll (annual payroll of active employees covered by the plan) was $9.9 million, and the ratioof the unfunded actuarial accrued liability (UAAL) to the covered payroll was 3.72%.

The projection of future benefit payments for an ongoing plan involves estimates of the value ofreported amounts and assumptions about the probability of occurrence of events far into the future.These assumptions include among others, annual rates of payroll increases, healthcare cost trends,and mortality rates. Amounts determined regarding the funded status of the plan and the annualrequired contributions of the City are subject to continual revision as actual results are comparedwith past expectations and new estimates are made about the future. The schedule of fundingprogress, presented as required supplementary information following the notes to the financialstatements, presents trend information about the actuarial accrued liabilities for benefits.

Actuarial Methods and Assumptions - Projections of benefits for financial reporting purposes arebased on the substantive plan as understood by the City and plan members, and are based on thetypes of benefits provided at the time of each valuation and the historical pattern of sharing of thebenefit costs between the City and plan members to that point. The actuarial methods andassumptions used include techniques that are designed to reduce the effects of short-term volatilityin actuarial accrued liabilities and the actuarial value of assets, consistent with the long-termperspective of the calculations.

Significant methods and assumptions included the following:

Actuarial Valuation Date - January 1, 2011Actuarial Cost Method - Entry AgeAmortization Method - Level Percentage of Pay, OpenRemaining Amortization Period - 30 yearsAsset Valuation Method - Fair ValueInvestment Rate of Return - 4.25%, with inflation at 3.5%Healthcare Cost Trend Rate and Premium Increase - 9.4% for 2011, decreasing .6% each year until 6.1% in 2017 and after



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NOTE 12: COMMITMENTS AND CONTINGENCIES

Tabor Amendment

Colorado voters passed an amendment to the State Constitution, Article X, Section 20, which hasseveral limitations, including revenue raising, spending abilities, and other specific requirementsof state and local governments. The Amendment is complex and subject to judicial interpretation.The City believes it is in compliance with the requirements of the Amendment. However, the Cityhas made certain interpretations of the Amendment’s language in order to determine compliance.

The City has established an emergency reserve, representing 3% of qualifying expenditures, asrequired by the Amendment. At December 31, 2011, the emergency reserve of $355,000 wasreported as restricted fund balance in the General Fund.

Litigation

The City is involved in various pending or threatened litigation. The outcome of this litigationcannot be determined at this time.

Claims and Judgements

The City participates in a number of federal, state, and local programs that are fully or partiallyfunded by grants received from other governmental entities. Expenses financed by grants aresubject to audit by the appropriate grantor government. If expenses are disallowed due tononcompliance with grant program regulations, the City may be required to reimburse the grantorgovernment. At December 31, 2011, significant amounts of grant expenses have not been auditedbut management believes that subsequent audits will not have a material effect on the overallfinancial position of the City.

Southern Delivery System

The City, along with the City of Colorado Springs, Security Water and Sanitation District, andPueblo West Metropolitan District, are partners in the Southern Delivery System Project. Thisproject will convey raw water from Pueblo Reservoir through a 66" diameter, 53-mile pipeline toUpper Williams Creek Reservoir and Universal Water Treatment Plant located east of ColoradoSprings. The City’s participation in the conveyance capacity is 2,500 acre-feet per year and 5.625million gallons per day (mgd) in the water treatment plant. The City estimates that the project willbe operational in 2016.

Under the terms of the project agreement, the City’s participation is reported in the financialstatements as an undivided interest, whereby the City reports its assets, liabilities, revenues andexpenses associated with the joint project. At December 31, 2011, the City reported capital assets,with no depreciation, of $8,477,742 for this project.



December 31, 2011

33

NOTE 12: COMMITMENTS AND CONTINGENCIES (Continued)

Conduit Debt Obligations

During 2007, the City issued Development Revenue Bonds (Cheyenne Mountain ZoologicalSociety Project) Series 2007 and Series 2007B, to provide financing for the construction,renovation and equipping of improvements to the Cheyenne Mountain Zoo. The City is notobligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported asa liability in the accompanying financial statements. Outstanding bonds at December 31, 2011,totaled $1,945,343.

Concentration of Risk

A substantial amount of the City’s sales tax revenues are received from two taxpayers. Areduction in these revenue, if it were to occur, may have a significant affect on the City’s programsand activities.

REQUIRED SUPPLEMENTARY INFORMATION


SCHEDULE OF FUNDING PROGRESSVOLUNTEER FIREFIGHTERS' PENSION PLAN

December 31, 2011(Unaudited)

UAAL as aPercentage of

Actuarial Actuarial Actuarial Unfunded AAL CoveredValuation Value of Accrued (UAAL) Funded Ratio Covered Payroll

Date Assets (a) Liability (AAL) (b) (b-a) (a/b) Payroll (c) ((b-a)/c)

1/1/01 $ 584,195 $ 154,016 $ (430,179) 379% NA NA

1/1/06 $ 629,290 $ 250,938 $ (378,352) 251% NA NA

1/1/09 $ 697,470 $ 144,213 $ (553,257) 484% NA NA

See the accompanying Independent Auditors' Report.

34


SCHEDULE OF FUNDING PROGRESSPOSTEMPLOYMENT BENEFIT PLAN

December 31, 2011(Unaudited)

UAAL as aPercentage of

Actuarial Actuarial Actuarial Unfunded AAL CoveredValuation Value of Accrued (UAAL) Funded Ratio Covered Payroll

Date Assets (a) Liability (AAL) (b) (b-a) (a/b) Payroll (c) ((b-a)/c)

1/1/08 $ - $ 322,073 $ 322,073 - $ 9,168,765 3.51%

1/1/11 $ - $ 367,674 $ 367,674 - $ 9,890,941 3.72%


35


BUDGETARY COMPARISON SCHEDULEGENERAL FUND


VARIANCEORIGINAL FINAL PositiveBUDGET BUDGET ACTUAL (Negative)

REVENUESTaxes Property Taxes $ 1,747,830 $ 1,747,830 $ 1,732,669 $ (15,161) Sales Taxes 5,438,000 5,438,000 5,239,962 (198,038) Use Taxes 987,380 987,380 887,719 (99,661) Specific Ownership Taxes 185,000 185,000 153,425 (31,575) Franchise Taxes 1,671,320 1,671,320 1,645,916 (25,404) Total Taxes 10,029,530 10,029,530 9,659,691 (369,839)

Licenses and Permits Business Licenses 33,750 33,750 36,055 2,305 Animal Licenses 100 100 (19) (119) Telecommunications 19,640 19,640 21,140 1,500 Liquor Licenses 4,500 4,500 4,091 (409) Street and Curb Permits 12,000 12,000 6,608 (5,392) Total Licenses and Permits 69,990 69,990 67,875 (2,115)

Intergovernmental Highway Users Tax 660,800 660,800 640,138 (20,662) Road and Bridge Fund 27,090 27,090 27,923 833 Motor Vehicle Registration 71,690 71,690 71,943 253 Cigarette Taxes 30,330 30,330 38,591 8,261 State and Local Grants - - 19,338 19,338 Federal Grants 106,780 106,780 228,129 121,349 Total Intergovernmental 896,690 896,690 1,026,062 129,372 Charges for Services Developer Fees 100,000 100,000 22,580 (77,420) Park Fees 117,370 117,370 34,466 (82,904) School District Juvenile Program 67,510 67,510 43,778 (23,732) Off Duty Police Program 23,770 23,770 5,224 (18,546) Police Fees 20,600 20,600 21,650 1,050 Cemetery 17,400 17,400 12,800 (4,600) Miscellaneous 21,910 21,910 1,606 (20,304) Total Charges for Services 368,560 368,560 142,104 (226,456) Fines and Forfeitures 371,250 371,250 376,861 5,611 Investment Income 38,850 38,850 14,717 (24,133)

Miscellaneous Rents 5,100 5,100 5,070 (30) Other 20,500 20,500 59,875 39,375 Total Miscellaneous 25,600 25,600 64,945 39,345 TOTAL REVENUES 11,800,470 11,800,470 11,352,255 (448,215)

(Continued)


36


BUDGETARY COMPARISON SCHEDULEGENERAL FUND



EXPENDITURESGeneral Government Legislative 32,000 34,500 32,779 1,721 Judicial 259,450 319,450 317,677 1,773 Economic Development 91,810 91,810 56,293 35,517 Election 14,000 14,000 3,482 10,518 Information Technology 711,970 746,796 665,160 81,636 Planning and Engineering 534,780 549,780 486,473 63,307 Administration 695,880 723,890 704,516 19,374 Total General Government 2,339,890 2,480,226 2,266,380 213,846 Public Safety Police 4,310,873 4,733,167 4,620,943 112,224 Communications 860,260 861,760 757,712 104,048 Fire 2,268,970 2,249,970 2,060,547 189,423 Total Public Safety 7,440,103 7,844,897 7,439,202 405,695

Public Works Highway and Streets 1,253,130 1,268,870 1,063,832 205,038 Facilities Maintenance 219,050 269,851 269,752 99 Total Public Works 1,472,180 1,538,721 1,333,584 205,137

Health and Welfare Code Enforcement 209,900 220,660 200,568 20,092 Cemetery 5,000 5,000 3,279 1,721 Total Health and Welfare 214,900 225,660 203,847 21,813 Culture and Recreation Parks 448,075 538,075 457,806 80,269 Community Building 88,300 88,300 76,720 11,580 Total Culture and Recreation 536,375 626,375 534,526 91,849

Debt Service 189,000 222,468 218,440 4,028

TOTAL EXPENDITURES 12,192,448 12,938,347 11,995,979 942,368

EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (391,978) (1,137,877) (643,724) 494,153

OTHER FINANCING SOURCES (USES) Debt Issued - - 271,250 271,250 Transfers In 669,590 669,590 591,084 (78,506) Transfers Out (409,010) (461,510) (465,950) (4,440)

TOTAL OTHER FINANCING SOURCES (USES) 260,580 208,080 396,384 188,304

NET CHANGE IN FUND BALANCE (131,398) (929,797) (247,340) 682,457 FUND BALANCE, Beginning 2,100,460 2,100,460 2,402,307 301,847

FUND BALANCE, Ending $ 1,969,062 $ 1,170,663 $ 2,154,967 $ 984,304


37

38


NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

December 31, 2011

NOTE 1: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

Budgetary Accounting

The City follows these procedures in establishing the budgetary data reflected in the financialstatements:

• In September, management submits to the City Council a proposed operating budget for thefiscal year commencing the following January 1. The operating budget includes proposedexpenditures and the means of financing them.

• Public hearings are conducted to obtain taxpayer comments.

• Prior to December 31, the budget is legally enacted through passage of an ordinance.

• Management is authorized to transfer budgeted amounts between departments within any fund.However, any revisions that alter the total expenditures of any fund must be approved by theCity Council.

• Budgets are legally adopted for all funds of the City. Fiduciary fund budgets are not requiredand have not been presented in the financial statements. Budgets for the governmental fundsare adopted on a basis consistent with generally accepted accounting principles (GAAP).Budgetary comparisons for the proprietary funds are presented on a non-GAAP budgetarybasis. Debt principal is recognized as an expenditure for budgetary purposes. Capital outlayis budgeted as an expenditure and depreciation is not budgeted.

• Budgeted amounts in the financial statements are as originally adopted, or as amended by theCity Council. All appropriations lapse at year end.

• State statutes stipulate that expenditures may not exceed budgeted appropriations at the fundlevel.

Legal Compliance

For the year ended December 31, 2011, the City approved supplemental budget appropriations forthe Public Transportation, Street Resurfacing, and Street Improvement Funds that allowed forexpenditures in excess of the resources available. In addition, the Insurance Fund expendituresexceeded the amounts budgeted by $2,793. These may be violations of State statute.

COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES


COMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDS

December 31, 2011

HERITAGE GENERALCONSERVATION MAINTENANCE IMPROVEMENT VOLUNTEER

TRUST DISTRICT DISTRICT FIREASSETS Cash and Investments $ 175,251 $ 232,303 $ 28,482 $ 44,055 Accounts Receivable - 468 68 - Accrued Interest Receivable 427 638 78 121 Taxes Receivable - 59,898 8,022 -

TOTAL ASSETS $ 175,678 $ 293,307 $ 36,650 $ 44,176

LIABILITIES AND FUND BALANCESLIABILITIES Accounts Payable $ 16,232 $ 1,640 $ - $ 1,196 Deferred Revenues - 59,898 8,022 -

TOTAL LIABILITIES 16,232 61,538 8,022 1,196

FUND BALANCES Restricted for Parks 159,446 - - - Restricted for District Repairs and Maintenance - 231,769 28,628 - Restricted for Transportation - - - - Restricted for Street Repairs and Maintenance - - - - Restricted for Street Improvements - - - - Committed to Volunteer Fire Activities - - - 42,980

TOTAL FUND BALANCES 159,446 231,769 28,628 42,980

TOTAL LIABILITIES AND FUND BALANCES $ 175,678 $ 293,307 $ 36,650 $ 44,176


39

PUBLIC STREET STREETTRANSPORTATION RESURFACING IMPROVEMENT TOTAL

$ 88,324 $ 48,873 $ 939,736 $ 1,557,02472,138 43,283 100,994 216,951

196 162 2,527 4,149- - - 67,920

$ 160,658 $ 92,318 $ 1,043,257 $ 1,846,044

$ - $ 46,041 $ 16,443 $ 81,552- - - 67,920

- 46,041 16,443 149,472

- - - 159,446- - - 260,397

160,658 - - 160,658- 46,277 - 46,277- - 1,026,814 1,026,814- - - 42,980

160,658 46,277 1,026,814 1,696,572

$ 160,658 $ 92,318 $ 1,043,257 $ 1,846,044


COMBINING STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDSYear Ended December 31, 2011

HERITAGE GENERALCONSERVATION MAINTENANCE IMPROVEMENT VOLUNTEER

TRUST DISTRICT DISTRICT FIREREVENUES Property Taxes $ - $ 65,118 $ 10,566 $ - Specific Ownership Taxes - 5,785 - - Intergovernmental 189,504 - - - Investment Income 1,698 1,840 176 273 Miscellaneous - - - 36,679

TOTAL REVENUES 191,202 72,743 10,742 36,952

EXPENDITURESCurrent General Government - - - - Public Safety - - - 26,605 Public Works - 72,446 - - Culture and Recreation 203,541 - - -

TOTAL EXPENDITURES 203,541 72,446 - 26,605

NET CHANGE IN FUND BALANCES (12,339) 297 10,742 10,347

FUND BALANCES, Beginning 171,785 231,472 17,886 32,633

FUND BALANCES, Ending $ 159,446 $ 231,769 $ 28,628 $ 42,980


40

PUBLIC STREET STREETTRANSPORTATION RESURFACING IMPROVEMENT TOTAL

$ 436,664 $ 261,998 $ 611,329 $ 1,385,675- - - 5,785- - - 189,5048 619 5,903 10,517

- - - 36,679

436,672 262,617 617,232 1,628,160

353,421 - - 353,421- - - 26,605- 291,450 83,206 447,102- - - 203,541

353,421 291,450 83,206 1,030,669

83,251 (28,833) 534,026 597,491

77,407 75,110 492,788 1,099,081

$ 160,658 $ 46,277 $ 1,026,814 $ 1,696,572


BUDGETARY COMPARISON SCHEDULECONSERVATION TRUST FUND



REVENUES Lottery Proceeds $ 175,236 $ 175,236 $ 189,504 $ 14,268 Investment Income 1,419 1,419 1,698 279

TOTAL REVENUES 176,655 176,655 191,202 14,547

EXPENDITURES Culture and Recreation 239,570 254,750 203,541 51,209

NET CHANGE IN FUND BALANCE (62,915) (78,095) (12,339) 65,756

FUND BALANCE, Beginning 103,370 103,370 171,785 68,415 FUND BALANCE, Ending $ 40,455 $ 25,275 $ 159,446 $ 134,171


41


BUDGETARY COMPARISON SCHEDULEHERITAGE MAINTENANCE DISTRICT FUND


ORIGINAL VARIANCEAND FINAL Positive

BUDGET ACTUAL (Negative)REVENUES Property Taxes $ 66,020 $ 65,118 $ (902) Specific Ownership Taxes 6,000 5,785 (215) Investment Income 3,500 1,840 (1,660)

TOTAL REVENUES 75,520 72,743 (2,777)

EXPENDITURES Public Works 113,500 72,446 41,054

NET CHANGE IN FUND BALANCE (37,980) 297 38,277

FUND BALANCE, Beginning 225,940 231,472 5,532

FUND BALANCE, Ending $ 187,960 $ 231,769 $ 43,809


42


BUDGETARY COMPARISON SCHEDULEGENERAL IMPROVEMENT DISTRICT FUND



BUDGET ACTUAL (Negative)REVENUES Property Taxes $ 9,480 $ 10,566 $ 1,086 Investment Income 200 176 (24)

TOTAL REVENUES 9,680 10,742 1,062

NET CHANGE IN FUND BALANCE 9,680 10,742 1,062

FUND BALANCE, Beginning 17,623 17,886 263



43


BUDGETARY COMPARISON SCHEDULEVOLUNTEER FIRE FUND



BUDGET ACTUAL (Negative)REVENUES Investment Income $ - $ 273 $ 273 Miscellaneous 30,000 36,679 6,679

TOTAL REVENUES 30,000 36,952 6,952

EXPENDITURES Public Safety 28,700 26,605 2,095

NET CHANGE IN FUND BALANCE 1,300 10,347 9,047

FUND BALANCE, Beginning 24,002 32,633 8,631



44


BUDGETARY COMPARISON SCHEDULEPUBLIC TRANSPORTATION FUND


ORIGINAL FINAL PositiveBUDGET BUDGET ACTUAL (Negative)

REVENUES Sales Taxes $ 450,000 $ 450,000 $ 436,664 $ (13,336) Investment Income - - 8 8

TOTAL REVENUES 450,000 450,000 436,672 (13,328)

EXPENDITURES General Government 450,000 517,995 353,421 164,574

NET CHANGE IN FUND BALANCE - (67,995) 83,251 151,246

FUND BALANCE, Beginning 58,772 58,772 77,407 18,635

FUND BALANCE, Ending $ 58,772 $ (9,223) $ 160,658 $ 169,881


45


BUDGETARY COMPARISON SCHEDULESTREET RESURFACING FUNDYear Ended December 31, 2011


REVENUES Sales Taxes $ 270,000 $ 270,000 $ 261,998 $ (8,002) Investment Income - - 619 619

TOTAL REVENUES 270,000 270,000 262,617 (7,383)

EXPENDITURES Public Works 270,000 338,543 291,450 47,093

NET CHANGE IN FUND BALANCE - (68,543) (28,833) 39,710


FUND BALANCE, Ending $ 32,710 $ (35,833) $ 46,277 $ 82,110


46


BUDGETARY COMPARISON SCHEDULESTREET IMPROVEMENT FUND



REVENUES Sales Taxes $ 631,000 $ 631,000 $ 611,329 $ (19,671) Investment Income - - 5,903 5,903

TOTAL REVENUES 631,000 631,000 617,232 (13,768)

EXPENDITURES Public Works 631,000 1,093,919 83,206 1,010,713

NET CHANGE IN FUND BALANCE - (462,919) 534,026 996,945


FUND BALANCE, Ending $ 457,310 $ (5,609) $ 1,026,814 $ 1,032,423


47


COMBINING STATEMENT OF NET ASSETSNONMAJOR PROPRIETARY FUNDS

December 31, 2011

AMBULANCE DRAINAGE TOTALASSETSCurrent Assets Cash and Investments $ - $ 1,521,309 $ 1,521,309 Accounts Receivable 67,188 - 67,188 Accrued Interest Receivable - 4,165 4,165

Total Current Assets 67,188 1,525,474 1,592,662

Noncurrent Assets Capital Assets, Net of Accumulated Depreciation 3,840 - 3,840

TOTAL ASSETS 71,028 1,525,474 1,596,502

LIABILITIESCurrent Liabilities Accounts Payable 11,952 - 11,952 Compensated Absences Payable, Current Portion 37,523 - 37,523

Total Current Liabilities 49,475 - 49,475

Long-Term Liabilities Compensated Absences Payable 19,728 - 19,728

TOTAL LIABILITIES 69,203 - 69,203

NET ASSETS Invested in Capital Assets 3,840 - 3,840 Unrestricted (2,015) 1,525,474 1,523,459

TOTAL NET ASSETS $ 1,825 $ 1,525,474 $ 1,527,299


48


COMBINING STATEMENT OF REVENUES, EXPENSESAND CHANGES IN FUND NET ASSETS

NONMAJOR PROPRIETARY FUNDSYear Ended December 31, 2011

AMBULANCE DRAINAGE TOTALOPERATING REVENUES Charges for Services $ 659,662 $ 18,875 $ 678,537

TOTAL OPERATING REVENUES 659,662 18,875 678,537

OPERATING EXPENSES Operations and Maintenance 775,005 49,530 824,535 Depreciation 2,003 - 2,003

TOTAL OPERATING EXPENSES 777,008 49,530 826,538

OPERATING INCOME (LOSS) (117,346) (30,655) (148,001)

NONOPERATING REVENUES Investment Income - 12,603 12,603

INCOME (LOSS) BEFORE TRANSFERS (117,346) (18,052) (135,398)

Transfers In 129,420 - 129,420 Transfers Out (26,250) - (26,250)

CHANGE IN NET ASSETS (14,176) (18,052) (32,228)

NET ASSETS, Beginning 16,001 1,543,526 1,559,527

NET ASSETS, Ending $ 1,825 $ 1,525,474 $ 1,527,299


49


COMBINING STATEMENT OF CASH FLOWSNONMAJOR PROPRIETARY FUNDS

Increase (Decrease) in Cash and Cash EquivalentsYear Ended December 31, 2011

AMBULANCE DRAINAGE TOTALCASH FLOWS FROM OPERATING ACTIVITIES Cash Received from Customers $ 662,496 $ 18,875 $ 681,371 Cash Payments to Employees (654,342) - (654,342) Cash Payments to Suppliers (111,324) (49,530) (160,854)

Net Cash Provided (Used) by Operating Activities (103,170) (30,655) (133,825)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from Other Funds 129,420 - 129,420 Transfers to Other Funds (26,250) - (26,250)

Net Cash Provided by Noncapital Financing Activities 103,170 - 103,170

CASH FLOWS FROM INVESTING ACTIVITIES Interest Received - 17,556 17,556

NET CHANGE IN CASH AND CASH EQUIVALENTS - (13,099) (13,099)

CASH AND CASH EQUIVALENTS, Beginning - 1,534,408 1,534,408

CASH AND CASH EQUIVALENTS, Ending $ - $ 1,521,309 $ 1,521,309

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating Income (Loss) $ (117,346) $ (30,655) $ (148,001) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Depreciation 2,003 - 2,003 Changes in Assets and Liabilities Accounts Receivable 2,834 - 2,834 Accounts Payable 593 - 593 Accrued Liabilities 1,761 - 1,761 Compensated Absences Payable 6,985 - 6,985

Net Cash Provided (Used) by Operating Activities $ (103,170) $ (30,655) $ (133,825)


50


BUDGETARY COMPARISON SCHEDULEWATER FUND



REVENUES Charges for Services $ 5,712,000 $ 5,712,000 $ 5,680,516 $ (31,484) Miscellaneous 139,200 139,200 295,457 156,257 Investment Income 22,325 22,325 4,704 (17,621) Plant Investment Fees 1,217,700 1,217,700 771,182 (446,518) Water Acquisition Fees 731,250 731,250 135,200 (596,050) TOTAL REVENUES 7,822,475 7,822,475 6,887,059 (935,416) EXPENDITURES Source of Supply 2,095,220 2,095,220 1,712,125 383,095 Operations and Maintenance 1,758,570 1,868,170 1,498,383 369,787 Customer Accounts and Collection 522,880 491,830 446,093 45,737 Administration and General 1,256,250 1,231,540 1,128,766 102,774 Capital Outlay 8,125,805 10,280,104 5,120,187 5,159,917 Interest Expense 1,236,290 1,236,290 1,022,742 213,548 Transfers Out 328,380 328,380 320,288 (8,092)

TOTAL EXPENDITURES 15,323,395 17,531,534 11,248,584 6,282,950

CHANGE IN NET ASSETS, Budgetary Basis $ (7,500,920) $ (9,709,059) (4,361,525) $ 5,347,534

ADJUSTMENTS TO GAAP BASIS Capital Outlay 5,120,187 Depreciation Expense (836,787) Amortization Expense (10,955)

CHANGE IN NET ASSETS, GAAP Basis (89,080)

NET ASSETS, Beginning 38,712,129

NET ASSETS, Ending $ 38,623,049


51


BUDGETARY COMPARISON SCHEDULEELECTRIC FUND



REVENUES Charges for Services $ 20,205,490 $ 20,205,490 $ 20,166,476 $ (39,014) Miscellaneous 480,000 480,000 459,804 (20,196) Investment Income 319,875 319,875 232,406 (87,469) New Service Installation 1,074,927 1,074,927 120,080 (954,847) System Development Fees 119,125 119,125 - (119,125) Grants - - 199,687 199,687 Transfers In 406,720 406,720 406,720 -

TOTAL REVENUES 22,606,137 22,606,137 21,585,173 (1,020,964)

EXPENDITURES Source of Supply 12,531,520 12,531,520 12,780,509 (248,989) Operations and Maintenance 4,259,880 4,259,880 3,089,555 1,170,325 Customer Accounts and Collection 1,531,200 1,531,199 1,308,883 222,316 Administration and General 2,604,490 2,582,089 2,477,056 105,033 Capital Outlay 3,930,540 4,303,904 1,749,991 2,553,913 Transfers Out 351,570 351,570 314,736 (36,834)

TOTAL EXPENDITURES 25,209,200 25,560,162 21,720,730 3,839,432

CHANGE IN NET ASSETS, Budgetary Basis $ (2,603,063) $ (2,954,025) (135,557) $ 2,818,468

ADJUSTMENTS TO GAAP BASIS Capital Outlay 1,749,991 Depreciation Expense (942,563)

CHANGE IN NET ASSETS, GAAP Basis 671,871




52


BUDGETARY COMPARISON SCHEDULEAMBULANCE FUND



BUDGET ACTUAL (Negative)REVENUES Charges for Services $ 732,000 $ 659,662 $ (72,338) Transfers In 72,480 129,420 56,940 TOTAL REVENUES 804,480 789,082 (15,398)

EXPENDITURES Operations and Maintenance 778,150 775,005 3,145 Transfers Out 26,330 26,250 80

TOTAL EXPENDITURES 804,480 801,255 3,225

CHANGE IN NET ASSETS, Budgetary Basis $ - (12,173) $ (12,173)

ADJUSTMENTS TO GAAP BASIS Depreciation Expense (2,003)

CHANGE IN NET ASSETS, GAAP Basis (14,176)

NET ASSETS, Beginning 16,001

NET ASSETS, Ending $ 1,825


53


BUDGETARY COMPARISON SCHEDULEDRAINAGE FUND



BUDGET ACTUAL (Negative)REVENUES Charges for Services $ 6,600 $ 18,875 $ 18,875 Investment Income 26,250 12,603 12,603 TOTAL REVENUES 32,850 31,478 31,478 EXPENDITURES Operations and Maintenance 200,000 49,530 150,470

TOTAL EXPENDITURES 200,000 49,530 150,470 CHANGE IN NET ASSETS, Budgetary Basis $ (167,150) (18,052) $ 149,098




54


BUDGETARY COMPARISON SCHEDULEINSURANCE FUND



REVENUES Charges for Services $ 2,482,700 $ 2,864,053 $ 2,467,120 $ (396,933) TOTAL REVENUES 2,482,700 2,864,053 2,467,120 (396,933) EXPENDITURES Administration and General 99,750 155,020 151,158 (3,862) Insurance Premiums 421,120 421,120 386,176 (34,944) Insurance Claims 1,876,160 2,287,913 2,329,512 (41,599)

TOTAL EXPENDITURES 2,397,030 2,864,053 2,866,846 (2,793) CHANGE IN NET ASSETS, Budgetary Basis $ 85,670 $ - (399,726) $ (399,726)

NET ASSETS, Beginning (347,897)

NET ASSETS, Ending $ (747,623)


55


BALANCE SHEETCOMPONENT UNITDecember 31, 2011

FOUNTAINURBAN

RENEWALAUTHORITY

ASSETS Cash and Investments $ 107,598 Taxes Receivable 71,865

TOTAL ASSETS $ 179,463

LIABILITIES AND FUND BALANCELIABILITIES Deferred Revenues $ 71,865

TOTAL LIABILITIES 71,865

FUND BALANCE Unrestricted, Unassigned 107,598

TOTAL FUND BALANCE 107,598

TOTAL LIABILITIES AND FUND BALANCE $ 179,463

Amounts Reported for the Component Unit in the Statement of Net Assets are Different Because:

Total Fund Balance of the Component Unit $ 107,598

Long-term liabilities are not due and payable in the current year and, therefore, are not reported in governmental funds. This amount includes a loan ($134,750) and accrued interest payable ($7,698). (142,448)

Total Net Assets of the Component Unit $ (34,850)


56


STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCE

COMPONENT UNITYear Ended December 31, 2011

FOUNTAINURBAN

RENEWALAUTHORITY

REVENUES Property Taxes $ 15,929 Sales Taxes 19,064 Investment Income 53

TOTAL REVENUES 35,046

EXPENDITURES Current General Government 1,105Debt Service Interest 6,337

TOTAL EXPENDITURES 7,442

NET CHANGE IN FUND BALANCE 27,604 FUND BALANCE, Beginning 79,994

FUND BALANCE, Ending $ 107,598


57

STATISTICAL SECTION


Contents Page

Financial Trends 59-63These schedules contain trend information to help the reader understandhow the City's financial performance and well-being have changed overtime.

Revenue Capacity 64-72These schedules contain information to help the reader assess the City'smost significant local revenue sources.

Debt Capacity 73-75These schedules present information to help the reader assess theaffordability of the City's current levels of outstanding debt and theCity's ability to issue additional debt in the future.

Demographic and Economic Information 76-77These schedules offer demographic and economic indicators to help thereader understand the environment within which the City's financialactivities take place.

Operating Information 78-80These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial reportrelates to the services the City provides and the activities it performs.

STATISTICAL SECTION

58

CIT

Y O

F F

OU

NT

AIN

, CO

LO

RA

DO

NE

T A

SS

ET

S B

Y C

OM

PO

NE

NT

T

AB

LE

1L

AS

T N

INE

FIS

CA

L Y

EA

RS

(Un

aud

ited

)

(acc

rual

bas

is o

f ac

coun

ting)

2003

2004

2005

2006

2007

2008

2009

2010

2011

Gov

ernm

enta

l act

iviti

es

I

nves

ted

in c

apita

l ass

ets,

net

of

rela

ted

debt

60

,959

,673

$

61

,937

,636

$

63

,295

,005

$

73

,828

,899

$

76

,850

,378

$

81

,403

,558

$

79

,168

,395

$

76

,610

,623

$

76

,127

,122

$

R

estr

icte

d fo

r P

arks

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1,04

9

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15

9,44

6

R

estr

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r D

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ict R

epai

rs a

nd M

aint

enan

ce26

0,39

7

R

estr

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d fo

r T

rans

port

atio

n77

,407

16

0,65

8

R

estr

icte

d fo

r St

reet

Rep

airs

and

Mai

nten

ance

75,1

10

46,2

77

R

estr

icte

d fo

r St

reet

Im

prov

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ts49

2,78

8

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6,81

4

R

estr

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r em

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s25

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0

253,

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30

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0

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350

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9

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000

34

8,50

0

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000

35

5,00

0

U

nres

tric

ted

3,06

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5

2,

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8,33

0

4,

146,

131

3,75

6,18

5

2,

169,

455

1,05

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Tot

al g

over

nmm

enta

l act

iviti

es n

et a

sset

s64

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65

,120

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67

,109

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78

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80

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83

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78

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Bus

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pe a

ctiv

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I

nves

ted

in c

apita

l ass

ets,

net

of

rela

ted

debt

25

,821

,634

35

,377

,377

38

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,905

38

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,143

47

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57

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58

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63

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R

estr

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9

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24

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17

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16

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11

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Tot

al b

usin

ess-

type

act

iviti

es n

et a

sset

s36

,350

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44

,437

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53

,791

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64

,157

,903

72

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,154

74

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,068

74

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75

,152

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75

,510

,560

Pri

mar

y go

vern

men

t

I

nves

ted

in c

apita

l ass

ets,

net

of

rela

ted

debt

86

,781

,307

97

,315

,013

10

2,13

7,91

0

112,

609,

042

12

4,70

2,79

3

138,

575,

008

13

7,46

1,48

1

137,

382,

129

13

9,64

4,80

8

R

estr

icte

d fo

r pa

rks

251,

049

17

1,78

5

159,

446

R

estr

icte

d fo

r D

istr

ict R

epai

rs a

nd M

aint

enan

ce26

0,39

7

R

estr

icte

d fo

r T

rans

port

atio

n77

,407

16

0,65

8

R

estr

icte

d fo

r St

reet

Rep

airs

and

Mai

nten

ance

75,1

10

46,2

77

R

estr

icte

d fo

r St

reet

Im

prov

emen

ts49

2,78

8

1,02

6,81

4

R

estr

icte

d fo

r D

ebt S

ervi

ce57

6,90

0

R

estr

icte

d fo

r em

erge

ncie

s25

0,00

0

253,

356

30

5,97

0

341,

350

35

6,66

9

352,

000

34

8,50

0

351,

000

35

5,00

0

U

nres

tric

ted

13,5

91,1

11

11,9

89,9

87

18,4

56,6

36

29,5

23,8

91

27,9

63,9

24

19,2

34,0

73

17,4

17,9

03

15,3

33,2

82

11,5

51,0

48

Tot

al p

rim

ary

gove

rnm

ent n

et a

sset

s10

0,62

2,41

8$

109,

558,

356

$

12

0,90

0,51

6$

142,

474,

283

$

15

3,02

3,38

6$

158,

161,

081

$

15

5,47

8,93

3$

153,

883,

501

$

15

3,78

1,34

8$

Sou

rce:

Cit

y of

Fou

nta

in, C

olor

ado,

au

dite

d fi

nan

cial

sta

tem

ents

, 200

3-20

11

Not

e: T

he

Cit

y of

Fou

nta

in a

dopt

ed G

over

nm

enta

l A

ccou

nti

ng

Stan

dard

s B

oard

Sta

tem

ent

No.

34

in 2

003.

Fis

cal

Yea

r

59


CHANGES IN NET ASSETS TABLE 2LAST NINE FISCAL YEARS(Unaudited)

(accrual basis of accounting)

2003 2004 2005 2006 2007 2008 2009 2010 2011

Expenses

Governmental Activities

General Government 1,778,406$ 1,446,121$ 1,769,133$ 1,931,863$ 2,436,516$ 2,801,721$ 2,483,390$ 3,020,265$ 2,949,011$

Public Safety 4,602,107 4,775,186 5,143,434 5,554,234 6,330,794 6,487,537 6,989,181 7,182,513 7,446,750

Public Works 3,112,919 2,920,839 3,575,604 3,988,615 4,062,454 4,370,731 3,881,335 4,235,181 2,071,681

Health and Welfare 185,511 166,369 179,895 192,126 229,291 236,958 193,459 166,141 211,294

Culture and Recreation 338,174 475,830 539,826 710,243 642,930 779,830 966,366 790,333 858,049

Interest Expense 42,189 51,071 39,917 27,846 28,812

Total Governmmental Activities Expenses 10,017,117 9,784,345 11,207,892 12,377,081 13,744,174 14,727,848 14,553,648 15,422,279 13,565,597

Business-type Activities

Water Uiltiy 3,304,700 3,616,800 4,157,429 4,854,507 5,797,432 5,898,155 6,175,434 6,425,441 6,702,091

Electric Utility 12,945,822 13,705,491 15,429,052 17,184,918 17,750,594 18,031,553 18,178,620 19,363,478 20,739,214

Ambulance 546,698 563,138 597,421 623,433 690,328 722,708 680,909 689,230 782,788

Drainage 77,247 2,171 31 - - 18,604 332,103 62,103 49,530

Total Business-type Activities Expenses 16,874,467 17,887,600 20,183,933 22,662,858 24,238,354 24,671,020 25,367,066 26,540,252 28,273,623

Total Primary Government Expenses 26,891,584$ 27,671,945$ 31,391,825$ 35,039,939$ 37,982,528$ 39,398,868$ 39,920,714$ 41,962,531$ 41,839,220$

Program Revenues

Governmental Activities:

Charges for Services:

General Government 84,367$ 99,772$ 103,193$ 205,965$ 267,321$ 160,968$ 154,258$ 117,196$ 137,678$

Public Safety 576,039 55,571 27,000 452,439 499,966 687,339 466,151 297,793 394,179

Public Works 22,581 37,334 32,288 28,169 80,502 25,211 25,258 20,350 7,736

Health and Welfare 17,000 19,623 29,933 26,167 11,994 15,496 16,209 23,122 12,781

Culture and Recreation 118,095 214,219 366,343 400,355 331,007 143,381 125,772 49,667 39,536

Operating Grants and Contributions 978,345 847,855 1,011,542 1,018,610 912,644 956,900 913,581 1,323,439 1,241,485

Capital Grants and Contributions 3,426,619 2,935,402 3,714,296 12,794,795 4,930,875 6,512,188 57,463 66,000 10,760

Total Governmental Activities Program Revenues 5,223,046 4,209,776 5,284,595 14,926,500 7,034,309 8,501,483 1,758,692 1,897,567 1,844,155

Business-type Activities

Charges for Services:

Water Utility 2,570,709 2,594,189 4,620,893 3,744,464 4,208,050 4,544,279 4,574,734 5,420,523 5,975,973

Electric Utility 12,942,223 13,439,211 16,093,112 18,180,158 18,460,945 18,467,209 18,875,288 19,795,797 20,626,280

Ambulance 513,083 537,661 517,770 528,076 668,680 714,921 656,075 585,801 659,662

Drainage 154,238 568,303 234,727 325,212 110,762 93,891 19,268 16,866 18,875

Capital Grants and Contributions 5,546,278 7,414,101 7,327,535 8,696,871 6,969,441 1,832,494 1,598,372 1,128,501 1,226,149

Total Business-type Activities Program Revenues 21,726,531 24,553,465 28,794,037 31,474,781 30,417,878 25,652,794 25,723,737 26,947,488 28,506,939

Total Primary Government Revenues 26,949,577$ 28,763,241$ 34,078,632$ 46,401,281$ 37,452,187$ 34,154,277$ 27,482,429$ 28,845,055$ 30,351,094$

Net (Expense)/Revenue

Governmental Activities (4,794,071)$ (5,574,569)$ (5,923,297)$ 2,549,419$ (6,709,865)$ (6,226,365)$ (12,794,956)$ (13,524,712)$ (11,721,442)$

Business-type Activities 4,852,064 6,665,865 8,610,104 8,811,923 6,179,524 981,774 356,671 407,236 233,316

Total Primary Government Net Expense 57,993$ 1,091,296$ 2,686,807$ 11,361,342$ (530,341)$ (5,244,591)$ (12,438,285)$ (13,117,476)$ (11,488,126)$

Source: City of Fountain, Colorado, audited financial statements, 2003-2011

Note: The City of Fountain adopted Governmental Accounting Standards Board Statement No. 34 in 2003.

Fiscal Year

60

TABLE 2 (continued)

2003 2004 2005 2006 2007 2008 2009 2010 2011

General Revenues and Other Changes in Net Assets

Governmental Activities:

Property Taxes 1,055,209$ 1,126,858$ 1,129,812$ 1,294,876$ 1,424,293$ 1,674,629$ 1,742,023$ 1,814,141$ 1,808,353$

Sales and Use Taxes 4,300,977 4,617,999 5,400,967 5,879,743 6,174,301 5,911,624 5,943,879 7,404,402 7,437,672

Specific Ownership Taxes 154,472 158,538 160,634 168,389 186,485 184,974 171,897 165,271 159,210

Franchise Taxes 754,916 878,787 1,039,493 1,104,699 1,097,936 1,065,600 1,448,683 1,566,986 1,645,916

Investment Income 61,399 153,372 339,168 261,858 333,918 271,405 92,918 31,623 25,234

Other Revenues 16,395 53,909 136,373 367,955 251,668 175,764 49,020 262,831 59,875

Transfers (141,528) (566,002) (294,643) (419,864) (111,884) (95,850) 244,837 186,980 125,134

Total Governmental Activities 6,201,840 6,423,461 7,911,804 8,657,656 9,356,717 9,188,146 9,693,257 11,432,234 11,261,394

Business-type Activities:

Other Revenues 388,060

Investment Earnings 221,727 139,111 448,904 1,134,905 1,610,843 1,098,290 307,717 276,790 249,713

Transfers 141,528 566,002 294,643 419,864 111,884 95,850 (244,837) (186,980) (125,134)

Total Busines-type Activities 751,315 705,113 743,547 1,554,769 1,722,727 1,194,140 62,880 89,810 124,579

Total Primary Government 6,953,155$ 7,128,574$ 8,655,351$ 10,212,425$ 11,079,444$ 10,382,286$ 9,756,137$ 11,522,044$ 11,385,973$

Change in Net Assets

Government Activities 1,407,769$ 848,892$ 1,988,507$ 11,207,075$ 2,646,852$ 2,961,781$ (3,101,699)$ (2,092,478)$ (460,048)$

Business-type Activities 5,603,379 7,370,978 9,353,651 10,366,692 7,902,251 2,175,914 419,551 497,046 357,895

Total Primary Government 7,011,148$ 8,219,870$ 11,342,158$ 21,573,767$ 10,549,103$ 5,137,695$ (2,682,148)$ (1,595,432)$ (102,153)$

Source: City of Fountain, Colorado, audited financial statements, 2003-2011Note: The City of Fountain adopted Governmental Accounting Standards Board Statement No. 34 in 2003.

Fiscal Year

61

CIT

Y O

F F

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NT

AIN

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LO

RA

DO

FU

ND

BA

LA

NC

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, GO

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NT

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(Un

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)

(mod

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0320

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CIT

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2002

2003

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Rev

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6,28

9

6,72

2,34

9

6,86

7,61

0

7,46

5,80

7

Pub

lic

Wor

ks1,

296,

034

1,

662,

883

98

5,85

1

1,

271,

131

1,

760,

698

1,

770,

931

1,

738,

221

1,

192,

431

1,

615,

195

1,

780,

686

Hea

lth

and

Wel

fare

188,

116

179,

032

158,

854

166,

946

191,

098

221,

395

196,

969

185,

429

185,

744

203,

847

Cul

ture

and

Rec

reat

ion

364,

014

420,

902

379,

212

432,

436

841,

343

819,

096

1,10

1,24

0

1,51

4,53

2

743,

197

738,

067

Cap

ital

Out

lay

(1)

126,

129

110,

462

302,

605

611,

543

Deb

t Ser

vice

(2)

(3)

285,

498

300,

015

P

rinc

ipal

304,

023

355,

074

428,

598

288,

355

257,

424

189,

628

I

nter

est

42,1

83

42

,189

51,0

71

39

,917

27,8

46

28

,812

Tot

al E

xpen

ditu

res

9,23

3,40

7

8,75

2,26

5

8,04

7,33

6

9,52

4,69

1

10,6

64,2

08

12

,726

,643

12,9

35,3

82

12

,289

,222

12,5

31,5

07

13

,026

,648

Exc

ess

of R

even

ues

over

(un

der)

Exp

endi

ture

s(1

,381

,079

)

86

,099

691,

134

621,

314

545,

017

(1,1

54,6

08)

(1,3

69,3

41)

(1,0

82,1

10)

611,

314

(46,

233)

Oth

er F

inan

cin

g S

ourc

es (

Use

s)

D

ebt I

ssue

d19

1,06

0

59

,000

110,

417

373,

795

356,

000

1,00

0,00

0

49,0

20

-

-

27

1,25

0

Tra

nsfe

rs I

n24

6,53

6

42

6,44

1

33

3,72

6

66

5,72

3

66

7,41

0

94

4,54

0

73

8,95

1

74

5,57

9

66

1,52

6

59

1,08

4

Tra

nsfe

rs O

ut(6

08,8

04)

(5

67,9

69)

(8

99,7

28)

(9

60,3

66)

(1

,087

,274

)

(1

,056

,424

)

(8

34,8

01)

(5

00,7

42)

(4

74,5

46)

(4

65,9

50)

Tot

al O

ther

Fin

anci

ng S

ourc

es (

Use

s)(1

71,2

08)

(8

2,52

8)

(4

55,5

85)

79

,152

(63,

864)

888,

116

(46,

830)

244,

837

186,

980

396,

384

Net

Cha

nge

in F

und

Bal

ance

s(1

,552

,287

)$

3,

571

$

23

5,54

9$

70

0,46

6$

48

1,15

3$

(2

66,4

92)

$

(1

,416

,171

)$

(8

37,2

73)

$

79

8,29

4$

35

0,15

1$

Deb

t Ser

vice

as

a pe

rcen

tage

of

nonc

apit

al

Exp

endi

ture

s0.

0%0.

0%3.

7%3.

3%3.

4%3.

2%3.

9%2.

7%2.

3%2.

2%

Sou

rce:

Cit

y of

Fou

nta

in, C

olor

ado

aud

ited

fin

anci

al s

tate

men

ts, 2

002-

2011

Not

es:

(1)

Cap

ital O

utla

y w

as r

epor

ted

sepa

rate

ly r

athe

r th

an b

y fu

nctio

n in

the

2004

and

200

5 fin

anci

al s

tate

men

ts.

(2)

Deb

t Ser

vice

was

rep

orte

d w

ith p

rinci

pal a

nd in

tere

st c

ombi

ned

in th

e 20

04 a

nd 2

005

finan

cial

sta

tem

ents

. (3

) D

ebt S

ervi

ce w

as r

epor

ted

with

in e

ach

gove

rnm

enta

l fun

ctio

n in

the

2000

-200

3 fin

anci

al s

tate

men

ts

63

CIT

Y O

F F

OU

NT

AIN

, CO

LO

RA

DO

AS

SE

SS

ED

VA

LU

E A

ND

ES

TIM

AT

ED

AC

TU

AL

T

AB

LE

5V

AL

UE

OF

TA

XA

BL

E P

RO

PE

RT

YL

AS

T T

EN

YE

AR

S(U

nau

dit

ed)

A

sses

sed

Val

ue a

s a

Vac

ant

Res

iden

tial

Com

mer

cial

In

dust

rial

Agr

icul

tura

lN

atur

alS

tate

Tot

al

Dir

ect

Est

imat

edP

erce

ntag

e of

Yea

rL

and

Pro

pert

yP

rope

rty

Pro

pert

yP

rope

rty

Res

ourc

esE

xem

ptA

sses

sed

Ass

esse

d V

alue

Tax

Rat

e A

ctua

l Val

ueA

ctua

l Val

ue

2002

5,34

7,39

0

52,1

16,9

00

29,7

56,8

30

14,0

83,9

00

16

3,30

0

41

3,75

0

9,27

2,03

0

2,

287,

070

11

3,44

1,17

0

10.2

3978

1,16

7,00

0

14.5

2%

2003

6,40

1,63

0

51,3

84,9

80

30,0

98,5

50

12,4

77,0

60

15

3,11

0

37

1,16

0

9,46

5,88

0

1,

988,

970

11

2,34

1,34

0

10.2

3985

6,13

6,25

8

13.1

2%

2004

5,65

8,89

0

55,6

39,1

90

29,4

10,3

50

11,8

44,4

10

15

8,63

0

1,

322,

960

10,1

61,4

90

1,48

7,67

0

115,

683,

590

10

.239

906,

454,

706

12

.76%

2005

9,83

1,85

0

66,6

90,7

60

30,5

27,5

80

10,3

74,3

60

17

9,39

0

1,

305,

110

9,45

1,28

0

2,

020,

150

13

0,38

0,48

0

10.2

391,

065,

563,

472

12.2

4%

2006

9,14

1,10

0

76,8

25,8

90

34,5

47,4

80

10,5

47,8

60

30

2,08

0

1,

215,

770

9,55

9,73

0

2,

032,

590

14

4,17

2,50

0

10.2

391,

205,

452,

074

11.9

6%

2007

12,8

48,0

60

93

,739

,720

38

,075

,420

10

,529

,730

251,

850

889,

310

11

,217

,430

2,

315,

390

16

9,86

6,91

0

10.2

391,

449,

303,

066

11.7

2%

2008

10,6

39,2

00

10

0,13

4,51

0

40

,714

,210

8,

715,

920

23

7,76

0

1,

003,

400

11,5

94,5

10

2,73

3,44

0

175,

772,

950

10

.239

1,52

7,97

1,48

9

11

.50%

2009

11,3

80,1

90

10

3,70

0,67

0

43

,137

,630

8,

427,

690

25

6,12

0

1,

280,

300

12,1

07,1

00

2,88

9,85

0

183,

179,

550

10

.239

1,58

5,64

5,90

8

11

.55%

2010

10,5

32,2

70

10

5,69

5,46

0

43

,245

,410

7,

687,

430

25

7,99

0

76

0,06

0

14,4

10,6

40

2,84

8,39

0

185,

437,

650

10

.239

1,61

1,59

3,37

9

11

.51%

2011

8,29

1,48

0

96,4

90,0

80

42,5

63,1

00

7,25

8,87

0

286,

710

748,

740

14

,298

,740

3,

113,

590

17

3,05

1,31

0

10.2

391,

484,

739,

631

11.6

6%

Sou

rce

- S

tate

of

Col

orad

o A

nn

ual

Rep

ort

and

El P

aso

Cou

nty

Ass

esso

r

Not

e: P

rope

rty

in E

l Pas

o C

ount

y is

rev

alue

d ev

ery

odd

num

bere

d ye

ar.

The

ass

essm

ent r

ate

is 2

9 pe

rcen

t of

actu

al v

alue

for

all

pro

pert

ies

exce

pt r

esid

enti

al a

nd p

rodu

cing

nat

ural

res

ourc

e

prop

erti

es.

The

res

iden

tial

ass

essm

ent r

ate

is e

stab

lish

ed b

y th

e st

ate

legi

slat

ure

ever

y od

d-nu

mbe

red

year

in o

rder

to m

aint

ain

the

tax

burd

en b

alan

ce b

etw

een

resi

dent

ial p

rope

rtie

s an

d ot

her

prop

erti

es.

The

res

iden

tial

ass

essm

ent r

ate

has

decr

ease

d fr

om 1

0.36

per

cent

for

the

1996

ass

essm

ent y

ear

to 7

.96

perc

ent f

or th

e 20

03-2

010

asse

ssm

ent y

ears

. T

ax r

ates

are

per

$1,0

00 o

f as

sess

ed v

alue

.

64


DIRECT AND OVERLAPPING TABLE 6PROPERTY TAX RATES - LAST TEN YEARS(rate per $1,000 of assessed value)(Unaudited)

Assessment Year

Taxing Authority 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Direct

City of Fountain 10.239 10.239 10.239 10.239 10.239 10.239 10.239 10.239 10.239 10.239

(a)

Overlapping Governments

El Paso County 7.880 7.947 8.012 7.673 7.710 7.514 7.583 7.531 7.717 7.597

School Districts

Widefield #3 49.917 53.196 53.196 49.881 49.881 48.923 47.683 47.692 48.96 49.854

Fountain/Fort Carson #8 27.818 27.697 21.568 20.096 19.699 19.715 24.301 24.716 24.690 24.723

Sanitation Districts

Fountain Sanitation 4.999 5.254 3.714 3.759 4.134 4.500 4.501 4.500 4.654 5.334

Water Districts

S.E. Water Conservancy 0.897 0.947 0.947 0.943 0.941 0.915 0.943 0.940 0.940 0.947

Special Districts

Countryside Improv. Maint 4.940 4.940 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

Fountain GID #1 12.000 12.000 12.000 12.000

Heritage Improv. Maint. 4.940 4.940 4.940 4.940 4.940 4.940 4.940 4.940 4.940 4.940

Metropolitan Districts

Countryside South 30.000 30.000 30.000 30.000 30.000

Crescent Canyon 35.000 35.000 35.000 35.000 35.000

Cross Creek 10.000 10.000 10.000 10.727 10.727 10.727 10.727 10.727 10.727

Cumberland Green 40.000 40.000 40.000 40.000 50.000

Mesa Ridge #2 37.000 37.000 37.000 37.000 37.000 37.000 37.000

Remuda Ridge 40.000 40.000 40.000 40.000

Ventana 7.000 7.000 7.000 7.000 0.000 0.000

Miscellaneous Districts

Pikes Peak Library 3.271 3.434 3.495 3.296 3.515 3.325 3.540 3.468 3.556 3.999

Source - El Paso County Assessor's Office, Abstract of Assessment 2002-2011.

Notes:

(a) Overlapping rates are those of county governments and various types of districts that apply to property owners in the City of Fountain

65


PRINCIPAL PROPERTY TAX PAYERS Table 7CURRENT YEAR AND NINE YEARS AGO(Unaudited)

Percentage of Percentage ofAssessed Total Assessed Assessed Total Assessed

Taxpayer Valuation Rank Valuation Valuation Rank Valuation

Dillon Real Estate Co. Inc. 4,598,640$ 1 2.66% 5,254,260$ 1 4.63%

Wal-Mart Real Estate 2,513,990$ 2 1.45% 2,428,980$ 3 2.14%

SCI Plant No. 22 LLC 2,438,440$ 3 1.41% 3,395,680$ 2 2.99%

Lowes HIW Inc. 2,159,820$ 4 1.25%

Raceway 200 LLC 1,885,010$ 5 1.09% 2,124,800$ 5 1.87%

Fountain Fort Carson School 1,325,850$ 6 0.77%

Astar FRR FLI LLC 1,202,340$ 7 0.69%

GHC Merchandise Inc. 1,104,880$ 8 0.64% 2,406,090$ 4 2.12%

Safeway Stores 46 Inc. 969,540$ 9 0.56% 1,192,940$ 6 1.05%

R A G Properties LLC 962,200$ 10 0.56%

Adesa Colorado Inc. 1,158,550$ 7 1.02%

GHC Merchandise Inc.

RMB Products Inc 930,580$ 8 0.82%

R A G Properties LLC 861,230$ 9 0.76%

Pavestone Company

Lafarge West

Baetis Properties 694,700$ 10 0.61%

Beckett K-Mart

SCI Systems Colorado Inc FKA

SCI Technology Inc.

Randolph A Gardiner Trust

Wal-Mart Stoes Inc No 1273

C & W Manhatten Assoc

Fountain North

Res-CO One Appletree Golf Partners

Total Assessed Valuation

City of Fountain 173,051,310$ 113,441,170$

Source: El Paso County Assessor's Office

2011 2002

66

CIT

Y O

F F

OU

NT

AIN

, CO

LO

RA

DO

GE

NE

RA

L F

UN

D R

EV

EN

UE

S-T

AX

ES

BY

CA

TE

GO

RY

T

AB

LE

8L

AS

T T

EN

FIS

CA

L Y

EA

RS

(Un

aud

ited

)(m

odif

ied

accr

ual b

asis

of

acco

unti

ng)

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Sal

es T

ax3,

428,

346

$

3,

293,

901

$

3,

383,

304

$

3,

748,

011

$

4,

381,

368

$

4,

902,

542

$

4,

907,

051

$

5,

051,

851

$

5,

167,

168

$

5,

239,

962

$

G

ener

al P

rope

rty

Tax

832,

189

1,05

5,20

9

1,01

8,40

0

1,07

0,22

5

1,22

6,63

5

1,36

0,19

7

1,

603,

196

1,

664,

587

1,

731,

928

1,

732,

669

U

se T

ax89

7,40

7

1,

007,

076

1,

234,

695

1,

652,

956

1,

498,

375

1,

271,

759

1,

004,

573

89

2,02

8

94

5,69

6

88

7,71

9

S

peci

fic

Ow

ners

hip

Tax

136,

626

154,

472

158,

538

160,

634

168,

389

186,

485

184,

974

171,

897

165,

271

153,

425

Fra

nchi

se T

axes

:

Cab

levi

sion

84,6

92

91

,165

92,9

78

91

,342

99,6

43

91

,986

98,8

19

13

4,22

0

15

0,40

8

15

2,14

5

Ele

ctri

city

(1)

555,

314

555,

121

554,

828

657,

000

654,

981

654,

983

656,

015

916,

377

961,

895

1,01

2,43

0

G

as92

,866

91,8

00

13

7,54

0

17

3,47

6

22

2,15

8

19

0,01

1

15

9,75

2

20

0,47

0

17

3,46

2

17

4,39

4

Tel

epho

ne13

,334

13,3

34

13

,334

13,3

34

13

,334

13,3

34

13

,334

13,3

34

13

,334

13,3

34

Wat

er (

2)3,

500

3,

500

80

,107

103,

641

114,

584

147,

622

137,

680

184,

282

267,

887

293,

613

Tot

al

6,04

4,27

4$

6,26

5,57

8$

6,67

3,72

4$

7,67

0,61

9$

8,37

9,46

7$

8,81

8,91

9$

8,76

5,39

4$

9,22

9,04

6$

9,57

7,04

9$

9,65

9,69

1$

Sou

rce:

Cit

y of

Fou

nta

in, C

olor

ado,

au

dit

ed f

inan

cial

sta

tem

ents

, 200

2-20

11

Not

es:

(1)

Th

e fr

anch

ise

fee

for

the

Cit

y ow

ned

ele

ctri

c u

tili

ty w

as a

fla

t am

oun

t se

t b

y th

e C

ity

Cou

nci

l un

til 2

009

wh

en it

ch

ange

d t

o 5%

of

gros

s re

ven

ues

.

(2

) T

he

fran

chis

e fe

e fo

r th

e C

ity

own

ed w

ater

uti

lity

was

incr

ease

fro

m 3

% t

o 4%

in 2

009

and

incr

ease

d t

o 5%

in 2

010.

67

Fis

cal Y

ear


SALES TAX BY CATEGORY TABLE 9LAST SEVEN FISCAL YEARS(Unaudited)(modified accrual basis of accounting)

2005 2006 2007 2008 2009 2010 2011Auto Repair and Parts Supply 127,077$ 141,109$ 186,259$ 187,066$ 198,555$ 255,356$ 320,889$ Auto Sales 44,487 37,578 122,933 96,775 76,552 93,026 118,774 Communications/Utilities 364,022 348,404 421,066 466,343 475,441 617,272 609,244 Convenience Stores 55,865 56,734 69,823 89,744 91,809 134,520 161,237 Entertainment 100,729 78,427 76,700 76,102 75,362 84,155 51,962 Grocery/Food Stores 102,970 124,757 147,014 145,294 150,983 193,580 205,913 Hotel/Motel/RV Parks 32,239 33,369 38,247 33,151 34,051 42,610 42,374 Liquor Stores 89,522 98,547 99,525 107,285 118,900 131,939 139,820 Lounges/Bars 51,869 21,201 19,621 18,237 18,104 30,991 37,391 Manufacturing/Construction 107,842 76,925 92,363 66,871 48,686 70,096 33,257 Restaurants 494,030 606,353 650,824 705,850 778,998 1,035,896 1,138,697 Retail - Large 1,653,344 2,270,791 2,407,771 2,400,036 2,423,755 2,998,268 2,939,534 Retail - Misc 263,480 251,622 269,349 338,234 333,656 408,977 476,182 Services - Misc 52,026 48,262 48,886 23,820 26,070 59,229 37,765 All Other Outlets 208,509 187,289 252,161 154,243 200,929 302,790 209,119

Total 3,748,011$ 4,381,368$ 4,902,542$ 4,909,051$ 5,051,851$ 6,458,705$ 6,522,158$

City Direct Sales Tax Rate 3.00% 3.00% 3.00% 3.00% 3.00% 3.75% 3.75%

Source: City of Fountain, Colorado audited financial statements, 2005-2011 and Sales Tax SubsidiaryRecords, 2005-2011

Note: Ten years of sales tax information is not available

Fiscal Year

68


DIRECT AND OVERLAPPING SALES TAX RATES TABLE 10DECEMBER 31, 2011(Unaudited)

Fiscal City of El Paso State ofYear Fountain County Colorado

2002 3.00% 1.0% 2.9%

2003 3.00% 1.0% 2.9%

2004 3.00% 1.0% 2.9%

2005 3.00% 1.0% 2.9%

2006 3.00% 1.0% 2.9%

2007 3.00% 1.0% 2.9%

2008 3.00% 1.0% 2.9%

2009 3.00% 1.0% 2.9%

2010 3.75% 1.0% 2.9%

2011 3.75% 1.0% 2.9%

69


PROPERTY TAX LEVIES AND COLLECTIONS TABLE 11LAST TEN YEARS(Unaudited)

Collections in Total Tax

Year Gross Percentage of Subsequent Total Net Taxes Percentage of

Assessed Tax Levy Amount Levy Years (1) Collected Levy

2002 1,066,588 1,043,876 97.87% 11,333 1,055,209 98.93%

2003 1,053,341 983,554 93.37% 34,846 1,018,400 96.68%

2004 1,080,439 1,060,107 98.12% 10,118 1,070,225 99.05%

2005 1,238,194 1,215,241 98.15% 11,394 1,226,635 99.07%

2006 1,374,300 1,346,264 97.96% 13,933 1,360,197 98.97%

2007 1,624,416 1,582,833 97.44% 20,363 1,603,196 98.69%

2008 1,680,824 1,650,144 98.17% 14,443 1,664,587 99.03%

2009 1,751,615 1,714,302 97.87% 17,626 1,731,928 98.88%

2010 1,751,145 1,715,974 97.99% 16,695 1,732,669 98.94%

2011 1,612,426 N/A N/A

Source: El Paso County Treasurer's Office and the City of Fountain, Colorado

audited financial statements, 2002-2011

Note: (1) Property taxes are collected in the fiscal year following the year levied.

Current Collections Total Collections to Date

70

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8

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me

data

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Tab

le 1

8

(Un

aud

ited

)

73

Bu

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Typ

e A

ctiv

itie

s


RATIOS OF WATER FUND DEBT OUTSTANDING TABLE 15LAST SEVEN FISCAL YEARS(Unaudited)

WATER FUND

2005 2006 2007 2008 2009 2010 2011Water Fund Debt Outstanding

2003 Water Rights Loan 727,000$ 727,000$ 654,300$ 581,600$ 508,900$ 436,200$ 363,500$

2005 Loan Payable CWRPDA 8,170,000 8,020,000 7,870,000 7,715,000 7,555,000 7,390,000 7,215,000

2005 Water Rights Agreement 6,000,000 3,000,000

2007 Water Rights Loan 351,450 312,400 273,350 234,300 195,250

2008 Water Rights Loan 1,470,669 1,428,273 1,382,812 1,334,065

2009 Loan Payable CWRPDA 8,665,000 8,510,000 8,350,000

2011 Loan Payable CWRPDA 9,350,000

Total Water Fund Debt Outstanding 14,897,000$ 11,747,000$ 8,875,750$ 10,079,669$ 18,430,523$ 17,953,312$ 26,807,815$

Number of Active Water Service Connections 5,664 5,745 6,709 6,985 7,092 7,219 7,267

Water Fund Debt per Active Water Service Connection 2,630$ 2,045$ 1,323$ 1,443$ 2,599$ 2,487$ 3,689$

Note: Details regarding the City's outstanding debt can be found in the Note 7 in the financial statements.

Source: City of Fountain, Colorado, audited financial statements, 2005-2011 and Utility Billing

Records, 2005-2011.

Notes: Ten years of data is not available

Fiscal Year

74


DIRECT AND OVERLAPPING BONDED DEBT TABLE 16DECEMBER 31, 2011(Unaudited)

Estimated

Estimated Share of

Percentage Overlapping (a)

Government Entity Debt Outstanding Applicable (b) Debt

Fountain/Fort Carson School District #8 9,610,000$ 100.00% 9,610,000$

El Paso County 110,245,000 2.51% 2,763,153$

Widefield School District #3 11,451,800 11.27% 1,290,853$

Cumberland Green Metro District 2,195,000 100.00% 2,195,000$

Total Overlapping Debt 133,501,800 15,859,006

City of Fountain Direct Debt 563,901 100.0% 563,901

Total Direct and Overlapping Debt 134,065,701$ 16,422,907$

Notes:

(a) Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City.

This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by

the residents and businesses of the City of Fountain. This process recognizes that, when considering the City

of Fountain's ability to issue and repay long-term debt, the entire debt burden borne by the residents and

businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and

therefore responsible for repaying the debt of each overlapping government.

(b) For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated using taxable

assessed property values. Applicable percentages were estimated by determining the portion of another

governmental unit's taxable assessed value that is within the City's boundaries and dividing it by each unit's total

taxable assessed value.

75


LARGEST EMPLOYERS TABLE 17DECEMBER 31, 2011(Unaudited)

Employer

Percentage of

Total County

Employees Employment (a)

Fort Carson 30,700 11.25%Widefield School District #3 1,300 0.48%Fountain/Fort Carson School District #8 959 0.35%Wal-Mart 442 0.16%Dillon/GHC 310 0.11%Lowes 148 0.05% Total 33,859 0

Source: Fort Carson website and school districts, Wal-Mart, Dillon, Lowes. Total El Paso County employment information used to calculate the percentage of total county employmentfrom the Colorado Department of labor and Employment.

(a) 2011 El Paso County employment 272,831

Note: Information from nine years ago is not available.

2011

76


DEMOGRAPHIC AND ECONOMIC STATISTICS TABLE 18LAST TEN YEARS(Unaudited)

Personal Personal Income Income Per El Paso County Fountain Capita

Fountain (thousands (thousands Personal UnemploymentYear Population (a) of dollars) (b) of dollars) (c) Income (b) Rate (e)

2002 16,889 16,878,170 523,221 30,980 6.1

2003 17,571 17,225,864 549,199 31,256 6.3

2004 18,350 18,174,330 596,944 32,531 5.8

2005 19,489 19,389,338 666,329 34,190 5.4

2006 20,885 20,676,693 744,905 35,667 4.7

2007 22,078 21,867,969 824,569 37,348 4.4

2008 23,409 22,698,715 892,492 38,126 5.7

2009 23,351 23,133,425 893,549 38,266 8.3

2010 25,846 24,035,091 990,522 38,324 9.7

2011(d) 26,270 24,035,091 1,006,771 38,324 9.2

(a) 2002-2010 per Colorado State Demographer's Office statistics, 2010 is from the Census. 2011 population is from

City of Fountain Planning Department

(b) The data reported for Personal Income and Per Capita Personal Income is for El Paso County and has been updated per

Bureau of Economic Analysis' statistics.

(c) Personal Income for Fountain is calculated by multiplying Fountain population by Per Capita Personal Income.

(d) Personal Income and Per Capita Personal Income data for 2011 is not available as of May 2012; therefore,

2010 data is repeated for 2011.

(e) Unemployment rate is for Colorado Springs Metro Area not seasonally adjusted per the Bureau of Labor Statistics

Source: Department of Local Affairs-Demography Section, U.S. Department of Labor-Bureau of Labor Statistics

and Bureau of Economic Analysis-an agency of the U.S. Department of Commerce.

77


FULL-TIME EQUIVALENT CITY GOVERNMENT TABLE 19EMPLOYEES BY FUNCTION/PROGRAMLAST SEVEN FISCAL YEARS

2005 2006 2007 2008 2009 2010 2011

General Government

City Clerk 3.00 3.00 3.00 3.00 3.00 3.00 3.00

Municipal Court 1.75 1.75 1.75 2.00 2.00 2.00 2.00

City Administration 4.00 4.00 4.40 5.00 5.00 5.00 5.00

Finance 3.00 3.00 3.00 3.00 3.00 3.00 4.00

Human Resource 2.00 2.00 2.00 2.00 2.00 2.00 2.00

Facilities 3.00 3.00 3.00 3.00 3.00 2.00 2.00

Planning & Zoning 2.00 2.70 3.70 3.10 3.30 3.30 3.40

Engineering 1.00 1.00 2.70 2.20 2.50 2.50 2.50

Economic Development 1.00 1.00 1.00 1.00 1.00 1.00 1.00

Information Technology 2.00 2.00 3.00 3.00 4.00 4.00 4.00

Public Safety

Police

Patrol 29.00 28.00 25.00 29.00 25.00 26.00 27.00

K-9 Patrol 0.00 1.00 1.00 1.00 1.00 1.00 1.00

Administration 7.00 6.00 10.00 6.50 3.00 3.00 4.00

Support Services 9.00 9.50 9.50 9.50 18.00 17.00 17.65

Investigations 3.00 3.00 5.00 5.00 5.00 5.00 5.00

School Resource/DARE Program 2.00 2.00 2.00 2.00 2.00 2.00 2.00

Drug Task Force 1.00 1.00 1.00 1.00 1.00 1.00 2.00

Fire

Administration 2.00 2.00 2.00

Emergency Services 16.00 16.00 21.00 21.00 18.00 19.00 19.75

Prevention Services 1.00 1.00 1.00

Ambulance

Emergency Medical Services 8.00 8.00 8.00 8.00 8.00 8.00 8.00

Public Works

Street & Drainage Maintenance 9.30 9.30 9.30 9.30 9.30 9.30 8.00

Health and Welfare

Code Enforcement 2.00 2.00 2.50 2.50 2.00 2.00 2.00

Cultural & Recreation

Parks Maintenance 6.60 6.60 6.60 6.60 6.60 6.60 4.50

Water Utility

Administration 2.50 2.50 2.50 2.50 2.50 2.50 2.50

Water Resource 0.00 1.00 1.00 1.00 1.00 1.00 1.00

Water Conservation 0.00 0.00 0.00 1.00 1.00 0.50 0.00

Water Operations 8.00 8.25 10.25 9.75 10.75 10.75 10.90

Electric Utility

Administration 2.50 2.50 2.50 2.50 3.50 3.50 4.45

Engineering/Planning 3.00 3.50 4.50 8.00 8.00 5.00 5.00

Electric Distribution 18.00 19.25 23.25 20.25 20.25 20.50 19.20

Inventory Control 1.00 1.00 1.00 1.00 1.00 1.00 1.00

Customer Service - Utilities

Administration 2.00 2.25 2.25 4.00 4.00 4.00 4.00

Customer Service 4.00 5.00 5.00 5.50 9.00 10.00 10.00

Customer Billing 3.00 3.00 3.00 3.00 3.00 3.00 3.00

Field Service 2.00 2.00 2.00 0.00 0.00 3.00 3.00

Fleet Services

Fleet Maintenance 5.00 5.00 5.00 5.00 5.00 5.00 5.00

Total 166.65 171.10 190.70 192.20 199.70 200.45 201.85

Source: City of Fountain Finance Department

Support Services for 2011 include Communications Officers, Records Management Techs, and new position of PD Training Coordinator Parks Division in 2011 did not employ any seasonal workers as in previous years

Finance added new Accounting Technician position in 2011

Fiscal Year

Customer Service-Utilities 2008 Field Service moved to Electric Utility Engineering/Planning

Note: Public Safety-Police and Fire were reorganized in 2009 to divisions

Support Services 2005-2008 included only Communications Officers

Support Services 2009 include Communications Officers, Patrol Officers and Records Managmen

78


OPERATING INDICATORS BY FUNCTION/PROGRAM TABLE 20LAST SEVEN FISCAL YEARS(Unaudited)

2005 2006 2007 2008 2009 2010 2011Function/Program Public Safety Fire Department Fire career staff 24 27 30 30 30 30 33 Vounteers 56 46 60 60 49 60 65 Fire Insureance Rating 5 5 5 5 5 5 5 Fire emergency responses 3,013 3,085 3,248 3,440 3,513 3,445 3,556 Police Department Sworn officers 36 38 40 40 40 40 39 Reserve officers 2 2 3 4 5 4 3 Calls for service 18,936 24,221 32,874 33,096 31,239 30,107 38,987 Homocides - 1 0 1 1 1 1 Sexual assaults 75 72 70 70 80 44 82 Robbery 10 12 19 9 5 10 13 Assault 123 133 105 124 71 104 92 Larcency-thefts 631 542 537 477 493 516 551 Traffic citations 2,202 2,957 3,808 5,024 2,781 1,877 3,185 Adult arrests 926 1,107 1,263 1,404 1,334 974 1,388 Juvenile arrests 390 426 525 456 409 243 211 Domstic violence cases 344 358 304 326 369 374 688 Military custodial arrests 9 72 41 57 59 68 67

Public Works Miles of paved street 73.0 85.8 89.0 99.1 99.1 99.1 99.0 Miles of gravel road 1.6 3.2 3.4 3.4 3.4 3.4 3.5 Traffic signals 0 1 1 2 2 2 2 Pedestrian cross walks 73 73 77 79 75 75 75

Cultural & Recreation Developed parks 7 7 7 7 7 7 8 Open space acres (a) 191.5 255.0 288.5 288.5 288.5 288.5 Miles of trails (a) 6 6.0 6.0 6.0 6.0 6.3

Water Utility Number of accounts 5,664 5,745 6,709 6,985 7,092 7,218 7,267 Average daily consumption (gallons) 2,171,430 2,174,436 2,283,895 2,280,775 2,041,428 2,388,278 2,377,927 Annual consumption (gallons) 792,572,620 793,669,381 833,622,008 832,483,193 745,121,559 871,721,559 867,943,362 Distribtion system (miles) (b) 110 114 122 122

Electric Utility Number of accounts 14,187 14,796 15,180 15,407 15,467 15,687 15,812 Peak demand (megawatts) Summer-July 41 43 44 44 42 44 48 Winter-December 39 39 38 39 40 37 38 Average daily consumtion (kwh) 537,286 557,108 566,482 536,268 526,751 547,009 557,379 Annual comsumption 196,109,714 203,344,425 206,766,245 195,738,180 192,264,306 199,658,359 203,443,321 Distribtution system (miles) 528 533 540 546 550 550 550 Number of street lights ( c) 2,196 2,343 2,440 2,508 2,554 2,314 2,946

Source: City of Fountain Fire, Police, Public Works, Water and Electric departments.

Note: (a) information is not available for 2005. (b) information is not available for 2005-2007 (c) actual inventory done in 2010, previous numbers likely inaccurate

Fiscal Year

79


CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM TABLE 21LAST SEVEN FISCAL YEARS(Unaudited)

2005 2006 2007 2008 2009 2010 2011Function/Program Public Safety Fire Department Fire hydrants 679 679 1,175 1,175 1,175 1,175 1,175 Number of fire stations 3 3 3 3 3 3 3 Number of fire trucks/implements 9 9 10 11 11 11 11Police Department Number of police stations 1 1 1 1 1 1 1

Public Works Miles of paved street (miles) 73.00 85.80 89.00 99.10 99.10 99.1 99.0 Cemetery City owned Cemeteries 1 1 1 1 1 1 1

Cultural & Recreation Developed parks 7 7 7 7 7 7 8 Open space acres (a) 191.5 255.0 288.5 288.5 288.5 288.5 Miles of trails (a) 6 6 6 6 6 6 Number of pavillions 5 5 5 5 6 6 6 Number of gazebos 2 2 2 2 2 2 2 Number of splash pads 0 0 0 0 1 1 1 Number of baseball/softball fields 6 6 6 6 6 6 6 Number of dog park areas 0 0 0 1 1 1 1

Water Fund Number of customers 5,664 5,745 6,709 6,985 7,092 7,218 7,267 Number of wells 5 5 5 5 5 5 5 Potable Storage Tank Capacity (in gallons) 8,375,000 8,375,000 8,375,000 8,375,000 8,375,000 8,375,000 8,375,000

Electric Fund Fund Number of customers 14,187 14,796 15,180 15,407 15,467 15,687 15,812 Number of substations 5 5 5 5 5 5 5 Miles of distribution lines 528 533 540 546 550 550 550 Miles of transmission lines 2 2 2 2 2 2 2

Source: City of Fountain Fire, Police, Public Works, Water and Electric departments.

Note: (a) information is not available for 2005.

Fiscal Year

80

COMPLIANCE SECTION

STATE COMPLIANCE

Financial Planning 02/01The public report burden for this information collection is estimated to average 380 hours annually. Form # 350-050-36

City or County:FountainYEAR ENDING :December 2011

This Information From The Records Of (example - City of _ or County of _Prepared By: Shawna DailCity of Fountain Phone: (719) 393-4924

A. Local B. Local C. Receipts from D. Receipts from Motor-Fuel Motor-Vehicle State Highway- Federal Highway

Taxes Taxes User Taxes Administration1. Total receipts available2. Minus amount used for collection expenses3. Minus amount used for nonhighway purposes4. Minus amount used for mass transit5. Remainder used for highway purposes

AMOUNT AMOUNTA. Receipts from local sources: A. Local highway disbursements: 1. Local highway-user taxes 1. Capital outlay (from page 2) 68,637 a. Motor Fuel (from Item I.A.5.) 2. Maintenance: 571,082 b. Motor Vehicle (from Item I.B.5.) 3. Road and street services: c. Total (a.+b.) a. Traffic control operations 24,049 2. General fund appropriations 953,766 b. Snow and ice removal 44,887 3. Other local imposts (from page 2) 181,348 c. Other 4. Miscellaneous local receipts (from page 2) 304,515 d. Total (a. through c.) 68,936 5. Transfers from toll facilities 4. General administration & miscellaneous 310,253 6. Proceeds of sale of bonds and notes: 5. Highway law enforcement and safety 1,132,802 a. Bonds - Original Issues 6. Total (1 through 5) 2,151,710 b. Bonds - Refunding Issues B. Debt service on local obligations: c. Notes 1. Bonds: d. Total (a. + b. + c.) 0 a. Interest 7. Total (1 through 6) 1,439,629 b. RedemptionB. Private Contributions c. Total (a. + b.) 0C. Receipts from State government 2. Notes: (from page 2) 712,081 a. InterestD. Receipts from Federal Government b. Redemption (from page 2) 0 c. Total (a. + b.) 0E. Total receipts (A.7 + B + C + D) 2,151,710 3. Total (1.c + 2.c) 0

C. Payments to State for highwaysD. Payments to toll facilitiesE. Total disbursements (A.6 + B.3 + C + D) 2,151,710

Opening Debt Amount Issued Redemptions Closing DebtA. Bonds (Total) 0 1. Bonds (Refunding Portion)B. Notes (Total) 0

A. Beginning Balance B. Total Receipts C. Total Disbursements D. Ending Balance E. Reconciliation2,151,710 2,151,710 0

Notes and Comments:

FORM FHWA-536 (Rev. 1-05) PREVIOUS EDITIONS OBSOLETE (Next Page)1

81

AND STREET PURPOSES

LOCAL HIGHWAY FINANCE REPORT

I. DISPOSITION OF HIGHWAY-USER REVENUES AVAILABLE FOR LOCAL GOVERNMENT EXPENDITURE

ITEM

III. DISBURSEMENTS FOR ROAD

V. LOCAL ROAD AND STREET FUND BALANCE

ITEM

II. RECEIPTS FOR ROAD AND STREET PURPOSES

IV. LOCAL HIGHWAY DEBT STATUS(Show all entries at par)

ITEM

Highway User Tax Report 2012.xls

STATE:ColoradoYEAR ENDING (mm/yy):December 2011

AMOUNT AMOUNTA.3. Other local imposts: A.4. Miscellaneous local receipts: a. Property Taxes and Assessments a. Interest on investments b. Other local imposts: b. Traffic Fines & Penalities 297,907 1. Sales Taxes c. Parking Garage Fees 2. Infrastructure & Impact Fees d. Parking Meter Fees 3. Liens e. Sale of Surplus Property 4. Licenses f. Charges for Services 5. Specific Ownership &/or Other 181,348 g. Other Misc. Receipts/ Permits 6,608 6. Total (1. through 5.) 181,348 h. Other c. Total (a. + b.) 181,348 i. Total (a. through h.) 304,515

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AMOUNT AMOUNTC. Receipts from State Government D. Receipts from Federal Government 1. Highway-user taxes 640,138 1. FHWA (from Item I.D.5.) 2. State general funds 2. Other Federal agencies: 3. Other State funds: a. Forest Service a. State bond proceeds b. FEMA b. Project Match c. HUD c. Motor Vehicle Registrations 71,943 d. Federal Transit Admin d. Other (Specify) - DOLA Grant e. U.S. Corps of Engineers e. Other (Specify) f. Other Federal f. Total (a. through e.) 71,943 g. Total (a. through f.) 0 4. Total (1. + 2. + 3.f) 712,081 3. Total (1. + 2.g)

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ON NATIONAL OFF NATIONALHIGHWAY HIGHWAY TOTALSYSTEM SYSTEM

(a) (b) (c)A.1. Capital outlay: a. Right-Of-Way Costs 0 b. Engineering Costs 24,565 24,565 c. Construction: (1). New Facilities 0 (2). Capacity Improvements 0 (3). System Preservation 44,072 44,072 (4). System Enhancement & Operation 0 (5). Total Construction (1) + (2) + (3) + (4) 0 44,072 44,072 d. Total Capital Outlay (Lines 1.a. + 1.b. + 1.c.5) 0 68,637 68,637

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Notes and Comments:

FORM FHWA-536 (Rev.1-05) PREVIOUS EDITIONS OBSOLETE2

82

III. DISBURSEMENTS FOR ROAD AND STREET PURPOSES - DETAIL

II. RECEIPTS FOR ROAD AND STREET PURPOSES - DETAIL

LOCAL HIGHWAY FINANCE REPORT

ITEM ITEM

ITEM ITEM

Documents

CITY OF FOUNTAIN, COLORADO