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HomeMy WebLinkAboutComprehensive Annual Financial Report September 30, 2022ol M I U :
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FOR THE FISCAL YEAR ENDED
SEPTEMBEP 30,2022
oie
41
I
City of
pnd6wood
-Texas
CITY OF FRIENDSWOOD, TEXAS
ANNUAL COMPREHENSIVE
FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
Fiscal Year Ended
September 30, 2022
Officials Issuing Report:
Morad Kabiri
City Manager
Katina Hampton
Director of Administrative Services
City of
pnd6wood
-Texas
CITY OF FRIENDSWOOD, TEXAS
TABLE OF CONTENTS
Page
Introductory Section
Letter of Transmittal i
Principal Officials v
GFOA Certificate of Achievement vi
Organizational Chart vii
Financial Section
Independent Auditor's Report
3
Management's Discussion and Analysis
7
Basic Financial Statements:
Government -Wide Financial Statements:
Statement of Net Position
21
Statement of Activities
22
Fund Financial Statements:
Balance Sheet - Governmental Funds
24
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position
25
Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds
26
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of
Governmental Funds to the Statement of Activities
27
Statement of Net Position - Proprietary Funds
28
Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds
31
Statement of Cash Flows - Proprietary Funds
32
Notes to the Financial Statements
35
Required Supplementary Information:
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual -
General Fund
72
Notes to Budgetary Schedule
80
Schedule of Changes in the Net Pension Liability and Related Ratios - Texas Municipal Retirement
System
82
Schedule of City Contributions -Texas Municipal Retirement System
84
Notes to Schedule of Contributions
85
Schedule of Changes in the Total OPEB Liability and Related Ratios - Texas Municipal Retirement
System Supplemental Death Benefits Fund
86
Schedule of Changes in the Total OPEB Liability and Related Ratios - City of Friendswood Retiree
Health Care Plan
87
City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
TABLE OF CONTENTS (continued)
Page
Financial Section (continued)
Other Supplementary Information:
Combining and Individual Fund Financial Statements and Schedules:
Combining Balance Sheet - Nonmajor Governmental Funds
92
Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor
Governmental Funds
95
Schedule of Revenue, Expenditures and Changes in Fund Balances - Budget and Actual:
Police Investigation
98
Fire/EMS Donation
99
Municipal Court
100
CDBG — DR Harris County
101
Hazard Mitigation
102
CDBG — DR Galveston County
103
1776 Park
104
Sidewalk Installation
105
Park Land Dedication
106
Street Improvement
107
Debt Service
108
Bond Construction
109
Page
Table
Statistical Section (Unaudited)
Net Position by Component
114
1
Changes in Net Position
116
2
Fund Balances of Governmental Funds
120
3
Changes in Fund Balances of Governmental Funds
122
4
Assessed Value and Taxable Value of Property
124
5
Direct and Overlapping Property Tax Rates
126
6
Principal Property Taxpayers
127
7
Property Tax Levies and Collections
128
8
Ratios of Outstanding Debt by Type
129
9
Ratio of Net General Bonded Debt Outstanding
130
10
Direct and Overlapping Governmental Activities Debt
131
11
Legal Debt Margin Information
132
12
Pledged Revenue Coverage
133
13
Demographic and Economic Statistics
134
14
Principal Employers
135
15
Full -Time Equivalent City Government Employees by Function/Program
136
16
Operating Indicators by Function/Program
138
17
Capital Asset Statistics by Function/Program
140
18
City of Friendswood, Texas 2022 ACFR
INTRODUCTORY SECTION
City of Friendswood, Texas 2022 ACFR
City of
ripnoodd�w
Texas
City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD
March 22, 2023
The Honorable Mayor, Members of the City Council, and the Citizens of Friendswood:
The Annual Comprehensive Financial Report (ACFR) of the City of Friendswood for the fiscal year ended September 30, 2022,
is hereby submitted. Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation,
including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all
material respects and is reported in a manner designed to present fairly the financial position and results of operations of the
various funds of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial
activities have been included.
This report consists of management's representations concerning the finances of the City. Consequently, management
assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide
a reasonable basis for making these representations, management of the City has established a comprehensive internal
control framework that is designed both to protect the government's assets from loss, theft, or misuse and to compile
sufficient reliable information for the preparation of the City's financial statements in conformity with Generally Accepted
Accounting Principles (GAAP). Because the cost of internal controls should not outweigh their benefits, the City's
comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that
the financial statements will be free from material misstatement. As management, we assert that, to the best of our
knowledge and belief, this financial report is complete and reliable in all material respects.
The City Charter requires an annual audit of the financial statements of all of the various funds of the City by independent
certified public accountants. The accounting firm of Whitley Penn LLP has performed such an audit. The goal of the
independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended
September 30, 2022 are free of material misstatement. The independent audit involved examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant
estimates made by management and evaluating the overall financial statement presentation. The independent auditor
concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City's
financial statements for the fiscal year ended September 30, 2022, are fairly presented in conformity with GAAP. The
independent auditors' report is presented as the first component of the financial section of this report
City of Friendswood, Texas 2022 ACFR
GAAP requires that management provide a narrative introduction, overview and analysis to accompany the basic financial
statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to
complement MD&A and should be read in conjunction with it. The City's MD&A can be found immediately following the
report of the independent auditors.
PROFILE OF THE CITY
Established in 1895 as a Quaker colony, the City of Friendswood is rich in heritage. The City was incorporated in 1960 and
chartered a home -rule city under Texas law in 1971. The City operates under a Council -Manager form of government. Policy -
making and legislative authority are vested in a governing council consisting of the Mayor and six (6) Council Members. The
Mayor and Council are responsible, among other things, for passing ordinances, adopting the budget, appointing board and
committee members and hiring the City Manager, City Attorney, Municipal Judge, and City Secretary. The City Manager is
responsible for carrying out the policies and ordinances of the City Council and overseeing the day-to-day operations of the
City government, and for appointing heads of various departments. The Mayor and Council are elected on an at -large, non-
partisan basis. The Mayor and Council are elected to serve no more than four consecutive three-year terms.
The City provides a full range of municipal services including public safety (police, fire and emergency medical), maintenance
of streets and infrastructure, sanitation services, maintenance of the treated waste distribution system and both sanitary and
storm sewer collection transmission systems, recreational activities and cultural events as well as general administrative
services.
FACTORS AFFECTING FINANCIAL CONDITION
Location
Encompassing 21 square miles, Friendswood is located in southeast Texas near the Texas Gulf Coast, between downtown
Houston and Galveston, spanning across two counties — northern Galveston County and southern Harris County. The current
estimated population is 42,222. Residents and visitors can access Friendswood through FM 2351, FM 518, and FM 528 (NASA
Parkway). Hobby Airport and Ellington Airport are located within a 15 minute drive from Friendswood, and Bush Intercontinental
Airport is just 45 minutes away. Major sectors of the area's economic base include aerospace, specialty chemicals, healthcare,
retail, and tourism.
Community
Friendswood has been nationally recognized as one of the best places to live in the country. With low tax rates, outstanding
public education, and the lowest crime rate in the region, Friendswood is the perfect place to live, work, and play. The city
features beautiful parks and lush landscaping, along with a championship golf course. Children academically excel via two
superior public school systems— Friendswood ISD and Clear Creek ISD. These attributes perfectly match Friendswood's affluent
resident base of well-educated, high -income families. More than 50% of residents work in executive, professional, and
managerial positions and generate an average household income of over $145,000, one of the highest in the Houston area.
Business
Friendswood is the perfect choice for many types of commercial enterprises. Target markets include professional offices, retail,
commercial, and light industrial developments. A key City focus is to encourage redevelopment of the downtown area and
development of the City's panhandle area. City leaders have approved special tools and incentives to revitalize downtown to
promote mixed -use, multi -story developments with pedestrian streetscapes and other amenities. The City offers competitive
business incentives, including a municipal grant program, tax abatement that includes "green" development, freeport tax
exemption, and downtown development fee waivers.
Quality Lifestyle
As with any city, the goal is planning for continued quality growth to create a well-balanced community. Friendswood offers
single-family residential housing in pleasant park -like settings, tucked -away from the busy stream of vehicular traffic.
Friendswood is committed to attracting more local enterprises that will complement and enhance the unique community
environment that has been carefully built over the past 100 years; one that has come to be cherished by residents and business
owners alike.
City of Friendswood, Texas 2022 ACFR
LONG TERM PLANNING
Budgeting Controls
The objective of the City's budgetary controls is to ensure compliance with legal provisions embodied in the annual
appropriated budget approved by Council. The charter requires the City Manager to submit a proposed budget and an
accompanying message to the City Council on or before August 1. The council shall review and revise as deemed appropriate
prior to general circulation for the public hearing. The Public Notice and Hearing must be posted in the city hall and published
in the official newspaper. The budget must be adopted by the 151h of September or as soon thereafter as practical. The City
legally adopts annual budgets for the General, Special Revenue and Debt Service Funds. Annual and project budgets are also
adopted for the Proprietary and Capital Projects Funds, respectively.
The level of budgetary control; that is, the level at which expenditures cannot legally exceed the appropriated amount, is
established by department within a fund. The City also maintains an encumbrance accounting system as one technique of
accomplishing budgetary control. Encumbrances lapse at fiscal year end, but can be re -appropriated through a budget
amendment the following fiscal year. The City Manager is authorized to transfer budgeted amounts within departments in
any fund, but revisions that increase the total expenditures of any fund or transfers between departments must be approved
by Council.
Multi -Year Financial Planning
A Multi -Year financial plan (MYFP) was developed in 2006. Originally, staff was directed to develop a plan to forecast the
City's financial condition through 2020, the projected build -out date. The first version of this plan was drafted and later
reduced in scope to a five year projection.
The MYFP is based on the City's strategic planning efforts, including the Comprehensive Land Use Plan, Vision 2020 and the
Capital Improvements Plan. Departmental operational plans funding requirements to provide programs and services are
included in the MYFP as well. Funding needs and available resources, both current and alternative revenue enhancements,
are identified. Expenditures are projected based on departmental needs assessments and are organized based on "one-time"
and "on -going" expenditures. In collaboration with Council, the plan is updated at least annually and serves as the basis of
budget development.
Relevant Financial Policies
As part of the annual budget process, the City adopts Financial Management Policy Statements that establish a framework
for fiscal decision making and that ensure that financial resources are available to meet the present and future needs of its
citizens. These statements provide guidelines for financial planning and management, addressing every major financial
function and process.
iii City of Friendswood, Texas 2022 ACFR
Most importantly, the Financial Management Policy requires that the City maintain the General Fund unassigned fund balance
at a minimum of 90 days of prior year audited operating expenditures. Any unassigned funds after the fiscal year-end audit
will be allowed to accumulate to build this 90-day reserve. After the General Fund has gathered sufficient resources,
additional unassigned funds will be allowed to accumulate for future General Fund capital improvements.
The Financial Management Policy also requires the minimum working capital in the Water and Sewer Fund be 90 days of prior
year audited operating expenditures. Any unrestricted funds after the fiscal year-end audit will be allowed to accumulate to
build this 90-day reserve. After these funds have gathered sufficient resources, additional unrestricted funds will be allowed
to accumulate in working capital for future utility /operating fund capital improvements.
Awards
The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial
Reporting to the City of Friendswood for its annual comprehensive financial report for the fiscal year ended September 30,
2021. This was the thirty-fourth consecutive year that the City has received this prestigious award. In order to be awarded
a Certificate of Achievement, the City published an easily readable and efficiently organized annual comprehensive financial
report. This report satisfied both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current annual comprehensive financial
report continues to meet the Certificate of Achievement program's requirements and we are submitting it to the GFOA to
determine its eligibility for another certificate.
Acknowledgements
The preparation of the annual comprehensive financial report was made possible by the dedicated service of the entire staff
of the Administrative Services Department. Each member of the department has my sincere appreciation for the
contributions made in the preparation of this report.
In closing, I also express my thanks to the Mayor, members of the City Council and the City Manager for their leadership,
interest and support in conducting the financial operations of the City in a responsible and progressive manner.
Sincerely,
Katina Hampton
Director of Administrative Services
iv City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL OFFICIALS
September 30, 2022
Elected Officials Position
Mike Foreman
Mayor
Steve Rockey
Council Member -
Position No. 1
Sally Branson
Council Member -
Position No. 2
Trish Hanks
Council Member -
Position No. 3
Robert J. Griffon
Council Member -
Position No. 4
John H. Scott
Council Member -
Position No. 5
Brent Erenwert
Council Member -
Position No. 6
Key Staff
Position
Morad Kabiri
City Manager
Steven Rhea
Assistant City Manager
Katina Hampton
Director of Administrative Services
Aubrey Harbin
Director of Community Development
Jildardo Arias
Director of Engineering
Matt Riley
Library Director
Brian Mansfield
Fire Marshal/Emergency Management Coordinator
Haley Brown
Director of Human Resources
James O'Brien
Director of Information Technology
Rene Ibarra
Director of Public Works
James Toney
Director of Parks and Recreation
Leticia Brysch
City Secretary
Robert B. Wieners
Police Chief
Karen Horner
City Attorney
James W. Woltz
Judge - Municipal Court
Term Expires
May 2024
May 2024
May 2023
May 2024
May 2025
May 2023
May 2025
v City of Friendswood, Texas 2022 ACFR
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Friendswood
Texas
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
September 30, 2021
Executive Director/CEO
vi City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
ORGANIZATIONAL CHART
Citizens of Friendswood
City Attorney Mayor and City Council
Prosecutors
Municipal Judge Boards, Committees,
Commissions
City Manager
■ .4dmrnrstration
Administrative Services
. Finance
■ Ufirityf3r7lirtg
■ municipa? Count
City Secretary
AdmanisbaSon
+ Records Management
. Erecfions
Human Resources
Human Resources
. Insurance
. Rrsk Management
Information Technology
. Cybersacurity
. Wrastructur-e Services & Ops
Fire Marshal
. Lldrrrinis�at6orr
. Irr vest5g a So rrsllrrsp a cti a rrs
■ Emergency Managerrrent
■ FVFD Corrfra+cf
Police Department
. A�{mrnisfra?rorr
+ Patrol
+ Criminallnvestrgations
• Animal Carrtrof
o Cammuni4abons
Assistant City Manager
Economic Deveiapmenf
CommunicatrorrvPubiic tnformagon
Community Development
. Adrrrrnislra�avr
Pranning and Zoning
. lnspecdorrs/Code Enforcement
Parks & Recreation
w Adrnrrrrsbm6-,n
r fiecreatron Programs
+ Park Operations
+ Facrtrty Operations
Public Works
Admrnis�a�an
# Streets ! Sidewalks
• Drainage Operations
• W31er Operations
* Sewer Operations
Engineering
e Engineering
+ Pro}ects
Library Services
■ Friendswood Public Library
vii City of Friendswood, Texas 2022 ACFR
City of
3wood
-Texas
viii City of Friendswood, Texas 2022 ACFR
FINANCIAL SECTION
City of Friendswood, Texas 2022 ACFR
City of
City
xas
City of Friendswood, Texas 2022 ACFR
in
whit Ieypenn'
INDEPENDENT AUDITOR'S REPORT
To the Honorable Mayor and
Members of City Council
City of Friendswood, Texas
Report on the Audit of the Financial Statements
Opinions
Houston Office
3737 Buffalo Speedway
Suite 1600
Houston, Texas 77098
713.621.1515 Main
whitleypenn.com
We have audited the accompanying financial statements of the governmental activities, the business -type activities, the
aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of City of
Friendswood, Texas (the "City"), as of and for the year ended September 30, 2022, and the related notes to the financial
statements, which collectively comprise the City's basic financial statements as listed in the table of contents.
In our opinion, based on our report and the report of other auditors, the accompanying financial statements referred to
above present fairly, in all material respects, the respective financial position of the governmental activities, the business -
type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund
information of the City, as of September 30, 2022, and the respective changes in financial position, and, where applicable,
cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States
of America.
We did not audit the financial statements of West Ranch Management District, a discretely presented component unit of the
City, which represents 81%, 100%, and 76%, respectively, of the assets, liabilities, and revenues of the aggregate discretely
presented component units. Those financial statements were audited by other auditors whose report thereon has been
furnished to us, and our opinion, insofar as it related to the amounts included for West Ranch Management District, is based
solely on the report of the other auditors. The financial statements of West Ranch Management District were not audited in
accordance with Government Auditing Standards.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS)
and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States. Our responsibilities underthose standards are further described in the Auditor's Responsibilities
for the Audit of the Financial Statements section of our report. We are required to be independent of the City, and to meet
our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with
accounting principles generally accepted in the United States of America, and for the design, implementation, and
maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events,
considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for twelve
months beyond the financial statement date, including any currently known information that may raise substantial doubt
shortly thereafter.
OHLB
,..u�E',-.,E,.,_,
THEE GLOBAL ADVI=SORY 3 City of Friendswood, Texas 2022 ACFR
AND ACCOUNTING NETWORK
The Honorable Mayor and
Members of the City Council
City of Friendswood, Texas
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable
assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted
in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The
risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are
considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the
judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and
design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's
internal control. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial
doubt about the City's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit, significant audit findings, and certain internal control -related matters that we identified during the
audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that management's discussion and analysis,
general fund budgetary comparison schedule, pension information, and other -post employment benefit information, as listed
in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of
management and, although not a part of the basic financial statements, is required by the Governmental Accounting
Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the United States of America, which
consisted of inquiries of management about the methods of preparing the information and comparing the information for
consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained
during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information
because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
4 City of Friendswood, Texas 2022 ACFR
The Honorable Mayor and
Members of the City Council
City of Friendswood, Texas
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's
basic financial statements. The combining and individual fund financial statements and schedules, are presented for purposes
of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of
management and was derived from and relates directly to the underlying accounting and other records used to prepare the
basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic
financial statements and certain additional procedures, including comparing and reconciling such information directly to the
underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements
themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States
of America. In our opinion, the combining and individual fund financial statements and schedules are fairly stated, in all
material respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the annual report. The other information comprises the
introductory section and statistical section but does not include the basic financial statements and our auditor's report
thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion
or any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider
whether a material inconsistency exists between the other information and the basic financial statements, or the other
information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected
material misstatement of the other information exists, we are required to describe it in our report.
Houston, Texas
March 22, 2023
City of Friendswood, Texas 2022 ACFR
City of
ripnd5wood
Texas
City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
As management of the City of Friendswood, Texas ("the City"), we offer readers of the City's financial statements this
narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2022. Please
read this information in conjunction with the basic financial statements that follow this section.
Financial Highlights
Some of the City's financial highlights for the fiscal year ending September 30, 2022 include:
• The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at
the close of the most recent fiscal year by $138,408,783.
• The City's total net position increased during the year by $10,173,322. The City's net pension and total OPEB liabilities
were $5.2 million and $1.9 million, respectively. The net pension liability and total OPEB liability decreased by $4.6
million and $11.8 thousand, respectively, compared to the prior year.
• As of the close of the current fiscal year, the City reported unrestricted net position of $20,445,699.
• Program revenues of $26,019,424 reduced the net cost of the City's functions to be financed from the City's general
revenues to $24,836,928 .
Overview of the Financial Statements
Coinponeut= of the FinaucialSection
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This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The basic financial
statements are comprised of three components: 1) government -wide financial statements, 2) fund financial statements, and
3) notes to the financial statements. This report also includes supplementary information intended to furnish additional
detail to support the basic financial statements themselves.
City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Government -wide Financial Statements
The government -wide financial statements report information for the City as a whole. These statements include transactions
and balances relating to all assets, including infrastructure capital assets. These statements are designed to provide
information about cost of services, operating results, and financial position of the City as an economic entity. The Statement
of Net Position and the Statement of Activities, which appear first in the City's financial statements, report information on
the City's activities that enable the reader to understand the financial condition of the City. These statements are prepared
using the accrual basis of accounting, which is similar to the accounting used by most private -sector companies. All of the
current year's revenues and expenses are taken into account even if cash has not yet changed hands.
The Statement of Net Position presents information on all of the City's assets and deferred outflows of resources and liabilities
and deferred inflows of resources with the difference reported as net position. Overtime, increases or decreases in the net
position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. Other non-
financial factors, such as the City's property tax base and the condition of the City's infrastructure, need to be considered in
order to assess the overall health of the City.
The Statement of Activities presents information showing how the City's net position changed during the most recent fiscal
year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of
the timing of related cash flows —the accrual method rather than modified accrual that is used in the fund level statements.
Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes
and intergovernmental revenues (governmental activities) from functions that are intended to recover all or significant
portion of their costs through user fees (business -type activities).
Governmental activities— Most of the City's basic services are reported here including general government (mayor and
council, city secretary, city manager, administrative services, human resources, and information technology); public
safety (police and fire marshal); engineering (capital projects administration); public works (streets and drainage);
community development (building inspection and planning and zoning); parks and recreation (parks, facility operations
and community activities) and library. Interest payments on the City's debt and internal lease payments are also
reported here. Property tax, sales tax, franchise taxes, municipal court fines and permit fees finance most of the
activities.
Business -type activities — Services involving a fee for those services, which include the City's water and sewer system
are reported here.
Component Units — Activities of the West Ranch Management District and Friendswood Downtown Economic
Development Corporation.
Fund Financial Statements
A fund is a self -balancing set of accounts that is used to maintain control over resources that have been segregated for specific
activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance -related legal
requirements. The City uses two fund types — governmental and proprietary.
8 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Governmental Funds
Governmental funds are used to account for essentially the same functions reported as governmental activities in the
government -wide financial statements with the exclusion of internal service fund activity. However, unlike the government -
wide financial statements, governmental funds focus on near -term inflows and outflows of spendable resources, as well as
on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the
City's near -term financing requirements.
Because the focus of the 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, the reader may better understand the long-term impact of the
government's near -term financial decisions. Both the governmental fund balance sheet and the governmental statement of
revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between
governmental funds and governmental activities.
The City maintains fourteen governmental funds. Information is presented separately in the governmental funds balance
sheet and the governmental fund statement of revenues, expenditures, and changes in fund balance for the General Fund,
Coronavirus State and Local Fiscal Recovery Fund, Bond Construction Fund, and Debt Service Fund, which are considered to
be major funds. The other ten funds are combined into a single, aggregated presentation. Individual fund data for each of
these non -major governmental funds is provided in the form of combining statements found in this report.
Proprietary Funds
The City maintains two types of proprietary funds: enterprise and internal service funds. Enterprise funds are used to report
the same functions presented as business -type activities in the government -wide financial statements. The City uses an
enterprise fund to account for its operation in water distribution and wastewater collection/treatment along with its water
and wastewater impact fees, and water construction projects. Management would note that trash collection services are
provided by a franchise agreement.
Internal service funds are an accounting device used to accumulate and allocate costs internally among the City's various
functions. The City uses an internal service fund to account for fleet management services. Because these services
predominately benefit governmental rather than business -type functions, they have been included within the governmental
activities in the government -wide financial statements.
Notes to the Financial Statements
The notes to the financial statements provide additional information that is essential to a full understanding of the data
provided in the government -wide fund financial statements. The notes are the last section of the basic financial statements.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents certain Required
Supplementary Information ("RSI"). The City adopts an annual appropriated budget for its General Fund. A budgetary
comparison schedule has been provided as RSI to demonstrate compliance with this budget. RSI can be found after the notes
to the financial statements. The RSI also includes schedules related to the City's progress in funding its obligation to provide
pension and other post -employment benefits to its employees.
The combining and individual fund financial statements and schedules that further support the information in the financial
statements are presented immediately following the required supplementary information.
9 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
GOVERNMENT -WIDE FINANCIAL ANALYSIS
Statement of Net Position
As noted earlier, net position may serve over time as a useful indicator of a government's financial position. For the City,
assets and deferred outflows of resources exceed liabilities and deferred inflows of resources by $138,408,783 as of
September 30, 2022 in the primary government, which is an increase in the City's overall financial position compared to the
prior year.
The largest portion of the City's net position (79.5%) reflects its investments in capital assets (e.g., land, buildings and
improvements, machinery and equipment, infrastructure, water and sewer system, construction in progress and water
rights); less any debt outstanding 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
resources, since the assets themselves cannot be used to liquidate these liabilities.
The following table reflects the condensed Statement of Net Position.
Governmental Activities
Business -Type Activities
Totals
2022
2021
2022
2021
2022
2021
Current and other assets
$ 48,901,051
$ 44,538,331
$ 42,738,547
$ 48,888,658
$ 91,639,598
$ 93,426,989
Capital assets
115,612,347
108,518,265
71,551,212
62,808,555
187,163,559
171,326,820
Total Assets
164,513,398
153,056,596
114,289,759
111,697,213
278,803,157
264,753,809
Deferred Outflows of Resources
3,221,061
2,969,271
1,002,527
1,023,421
4,223,588
3,992,692
Total Assets and Deferred
Outflows of Resources
167,734,459
156,025,867
115,292,286
112,720,634
283,026,745
268,746,501
Long-term liabilities
57,337,086
62,989,424
60,296,656
64,349,995
117,633,742
127,339,419
Other Liabilities
16,380,206
8,080,805
3,611,658
2,429,773
19,991,864
10,510,578
Total Liabilities
73,717,292
71,070,229
63,908,314
66,779,768
137,625,606
137,849,997
Deferred Inflows of Resources
6,282,137
2,336,852
710,219
324,191
6,992,356
2,661,043
Net Position:
Net investment in capital
assets
74,006,329
72,240,727
35,999,342
32,910,959
110,005,671
105,151,686
Restricted
5,059,835
3,491,974
2,897,578
2,721,465
7,957,413
6,213,439
Unrestricted
8,668,866
6,886,085
11,776,833
9,984,251
20,445,699
16,870,336
Total Net Position
$ 87,735,030
$ 82,618,786
$ 50,673,753
$ 45,616,675
$138,408,783
$128,235,461
A portion of the primary government's net position, $7,957,413 or 5.7%, represents resources that are subject to external
restrictions on how they may be used. These restrictions include monies accounted for in special revenue funds for which
the use is legally restricted and capital project funds. The remaining balance of unrestricted net position, $20,445,699 or
14.8%, may be used to meet the City's ongoing obligations to citizens and creditors.
10 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
The following table provides a summary of the City's changes in net position.
Governmental Activities
Business Type Activities
Totals
2022
2021
2022
2021
2022
2021
Revenues
Program Revenues:
Charges for services
$ 2,848,589
$ 2,853,702
$ 19,419,622
$ 17,919,751
$ 22,268,211
$ 20,773,453
Operating grants and
contributions
841,537
3,874,866
289,181
-
1,130,718
3,874,866
Capital grants and
contributions
2,620,495
3,864,589
-
2,620,495
3,864,589
General Revenues:
Property taxes
20,845,938
19,163,858
20,845,938
19,163,858
Sales and alcohol taxes
11,176,190
9,915,046
11,176,190
9,915,046
Franchise taxes
2,170,152
2,090,001
-
2,170,152
2,090,001
Investment earnings
49,151
50,805
130,401
43,099
179,552
93,904
Miscellaneous
638,418
390,533
-
-
638,418
390,533
Total Revenues
41,190,470
42,203,400
19,839,204
17,962,850
61,029,674
60,166,250
Expenses
General government
6,210,336
5,867,654
6,210,336
5,867,654
Public safety
15,655,859
15,645,527
15,655,859
15,645,527
Public works
6,994,042
7,160,229
6,994,042
7,160,229
Engi neeri ng
570,098
506,959
570,098
506,959
Community development
1,017,509
1,035,202
1,017,509
1,035,202
Parks and recreation
4,870,623
4,604,943
4,870,623
4,604,943
Library services
1,283,007
1,221,740
1,283,007
1,221,740
Water and sewer
-
-
11,124,562
11,864,245
11,124,562
11,864,245
Interest on long-term debt
1,268,435
1,244,881
1,861,881
1,808,120
3,130,316
3,053,001
Total Expenses
37,869,909
37,287,135
12,986,443
13,672,365
50,856,352
50,959,500
Increase (decrease) in net position
before transfers
3,320,561
4,916,265
6,852,761
4,290,485
10,173,322
9,206,750
Transfers
1,795,683
1,541,853
(1,795,683)
(1,541,853)
-
-
Changeinnetposition
5,116,244
6,458,118
5,057,078
2,748,632
10,173,322
9,206,750
Net Position - Beginning
82,618,786
76,160,668
45,616,675
42,868,043
128,235,461
119,028,711
Net Position - Ending $
87,735,030
$ 82,618,786
$ 50,673,753
$ 45,616,675
$138,408,783
$128,235,461
11 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Governmental Activities
Governmental activities increased the City's net position by $5,116,244. Key elements of this change are as follows:
• Property taxes continue to be the City's largest revenue source. Property tax revenue increased by $1,682,080
primarily due to new construction within the City to cover operating expenses, deferred facilities maintenance,
deferred equipment purchases and debt service obligations.
• Sales and alcohol tax revenue remained strong during fiscal year 2022, providing a 12.72% increase for the year, from
$9.9 million to $11.2 million. This increase is primarily a result of commercial growth and inflation.
• Operating grants and contributions decreased $3,033,329 from the prior year. This decrease is primarily a result of the
City being awarded $2.5 million in public assistance grant funds related to Hurricane Harvey in the prior year.
• Capital grants and contributions decreased $1,244,094 from the prior year. In the prior year, Flood Mitigation
Assistance funds of $1.9 million were received for the acquisition and demolition of flood -prone properties.
• Overall, total expenses increased $0.6 million from the prior year. The largest increase of $342,682 was in
General Government which was primarily a result of software support service expenses in the current fiscal year. Parks
and Recreation had the next largest increase of $265,680 as a result of facility maintenance items previously deferred.
Governmental Activities - Revenues
Sa I es and alcohol
to xE
27`,
Prop.-, --- --
51%
Fra nchise taxes
Miscellaneous
�r
Operating grants
and
contri butions
2%
al grants and
itri butions
6%
12 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Governmental Activities - Expenses
Library services Intereston long -
Pa rks a nd 3%term debt
� 3%
recreation
13% General
Community government
development °�
� 16
Engi neeri
2%
Publicworks
19%
Business -Type Activities
Publicsafety
41%
Business -type activities increased the City's net position by $5,057,078. Key elements of this change are as follows:
• Revenues increased by $1.9 million or 10.4% resulting from an increase in utility rates and consumption due to drought
like conditions. Expenses decreased $686 thousand which was primarily a result of a decrease in the CIP billings for the
Southeast Water Purification Plant offset by engineering costs for the upgrade of Blackhawk WWTP Aeration project.
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
2022 2021
■ Operating Revenues ■ Operating Expenses
13 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
As noted earlier, fund accounting is used to demonstrate and ensure 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 balances of
spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund
balance may serve as a useful measure of the City's net resources available for spending at the end of the year.
At the end of the current fiscal year, the City's governmental funds reported combined ending fund balance of $29,958,067.
Approximately 39.45% of this amount or $11,817,954 is unassigned fund balance; however, $7.9 million is set aside for the
90-day operating reserve, as set forth in the City's financial policies.
The remaining $18,140,113 is nonspendable, restricted, or assigned as follows:
0.91% - Nonspendable
Prepaid items $ 260,457
Permanent fund 11,093
Total Nonspendable $ 271,550
44.07% - Restricted
Public education and government channels
$ 460,154
Debt servi ce
46,375
Municipal courtoperations
282,910
Public safety operations
674,536
Capital projects
11,737,088
Total Restricted
$ 13,201,063
15.58% - Assigned
Subsequent year's budget appropriation of
fund balance $ 3,396,348
Capital projects 1,271,152
Total Assigned $ 4,667,500
The General Fund is the chief operating fund of the City. At the end of the current fiscal year, total fund balance reached
$17.4 million of which unassigned fund balance of the General Fund was $12.0 million. As a measure of the General Fund's
liquidity, it may be useful to compare both unassigned and total fund balance to total fund expenditures. Unassigned fund
balance represents 35.0% of total General Fund expenditures, while total fund balance represents 50.6% of that
same amount. At year end, the City's operating reserve was $7.9 million, representing 25% of total General Fund
expenditures, excluding capital expenditures.
14 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Key differences between last year's General Fund activity and this year's include:
$0.4 million decrease in total revenues -This decrease is primarily related to a decrease in intergovernmental revenue
as a result of the City receiving $2.5 million in public assistance grants in the prior year. This decrease is offset by an
increase in property taxes of $1.2 million due to new construction to fund operating expenditures. In addition, sales
tax revenue increased $1.0 million as a result of commercial growth and inflation.
$1.0 million increase in total expenditures - This increase can be attributed to $587 thousand in Parks and Recreation
resulting from maintenance cost previously deferred, $532 thousand in Public Safety as a result of increased personnel
costs, $444 thousand in Public Works due to repairs and maintenance in the streets division and $444 thousand in
general government resulting from increased personnel costs and other services and charges. These increases were
offset by a decrease of $1.2 million in capital improvements due to in the purchase of a building in the prior year to
house the Public Works, Engineering and the Operations Division of Parks and Recreation.
The Coronavirus State and Local Fiscal Recovery Fund received an additional $5.0 million in funding in fiscal year 2022. This
amount is unearned revenue and will be expended in fiscal year 2023.
The fund balance of the Bond Construction Fund was $8,152,712, a decrease of $7,059,803 compared to the prior year. This
decrease is related to cost incurred for the renovation of the Public Safety building, the construction of new Fire Station #2
and drainage related projects.
The Debt Service Fund had a total fund balance of $46,375 at the end of the fiscal year, all of which is restricted for the
payment of debt service. The net increase in the Debt Service fund balance during the year was $35,767.
Other non -major governmental funds fund balance increased by $1,647,379. This increase is primarily a result of a sales tax
collections for the Street Improvement fund exceeding improvement cost by $1.9 million.
Proprietary Funds
The City's proprietary funds financial statements provide the same type of information found in the government -wide
financial statements, but in more detail.
At the end of the year, unrestricted net position was $11.8 million for the Water and Sewer Fund. The total increase in the
net position of the Water and Sewer Fund was $5,057,078. Other factors concerning the finances of this fund have already
been addressed in the discussion of the City's business -type activities.
Unrestricted net position of the Internal Service Fund was $910,808. The net position of the Internal Service Fund increased
by $569,274 resulting from lease revenue from the City's participating funds.
General Fund Budgetary Highlights
The City made revisions to the original appropriations approved by the City Council. Budgeted revenues increased by $61,717
or 0.21% and budgeted expenditures were increased by $7,114,700 or 21.48%.
15 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Total revenues were above budget by $1,252,321. The more significant variances are detailed below:
• $818,456 over budget in sales and mixed beverage taxes as a result of commercial growth and inflation.
• $244,324 over budget in franchise taxes as a result of increased gas and electric franchise fees and the receipt of
unbudgeted Public Education and Government (PEG)/In-Kind fees.
• $120,083 below budget in fines and forfeitures due to a decrease in number of tickets written for traffic violations.
• $124,363 over budget in permits due to an increase in commercial and residential growth.
Total expenditures of the General Fund were $6.0 million below the final expenditure budget. The more significant variances
are detailed below:
$761,530 below budget in general government expenditures as a result of an decrease in other services and charges
(legal, contract, consulting, etc.).
$980,287 below budget in public safety expenditures as a result of personnel vacancies in the patrol division. Also, the
implementation of new public safety software included in the budget was not complete at the end of the fiscal year.
$3,875,714 below budget in capital improvements due to projects either not being started or completed in the current
fiscal year. These projects are primarily related to facility and streets improvements.
Capital Assets
The City's investment in capital assets (net of accumulated depreciation) for its governmental and business -type activities as
of September 30, 2022 is $187.2 million. The investment in capital assets include land, buildings and improvements,
machinery and equipment, infrastructure, water and sewer system, water rights and construction in progress.
Major capital events during the year included the following:
• Business -type improvements include the completion of 42" Southeast Transmission Phases 1-III which is a cost share
project with the City of Houston and several other government entities for $3,609,532. The Sanitary Sewer Assessment
Phases V-VI were also completed in FY22 for $203,726.
• To accommodate future flood mitigation projects, the City purchased ten properties for a total cost of $2,660,075.
Grant funds covered a majority of the acquisition costs.
• Heavy equipment purchases included two backhoes, an excavator, and a Freightliner M2106 Truck with loader for a
total cost of $672,548.
• The City accepted completion of four sidewalk infrastructure projects at Leisure Lane, a portion of FM 518 along with
TXDOT, a sidewalk at Cline Elementary, and a portion of sidewalk at Friendswood Parkway. The total cost of the
sidewalk projects was $160,894.
• As part of the Public Safety Building expansion project, computer and server equipment for the Police Department as
well as furniture and fixtures for the Emergency Operations Center upgrade totaled $330,972.
• Several improvements were made to City parks including the completion of a new walking trail at Stevenson Park for
$445,931, a perimeter fence at Renwick Park for $38,000, and playground equipment at Stevenson Park and Old City
Park for $80,435. Bay Area Park had a new security light installed for a cost of $8,886.
• The library received conference room audio and video equipment for a cost of $177,486 purchased with PEG fees.
16 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
• The City purchased 15 new vehicles and the equipment to upfit an additional seven vehicles. Public Safety received 8
of the new vehicles, upfit for one vehicle purchased in FY21, and the upfit equipment for an additional 6 vehicles for a
total cost of $588,290. EMS purchased a new ambulance for a total cost of $163,000. The Fire Marshal's office
purchased a new vehicle with a cost of $52,981. Engineering purchased a new vehicle with a cost of $47,348. Public
Works purchased three new vehicles for a total cost of $177,921. The Parks & Recreation department purchased one
new vehicle with a cost of $42,589.
• The following major projects are in Construction in Progress at the end of fiscal year 2022: Blackhawk Building
Renovation, Fire Station #2, Public Safety Building, Centennial Park Wall, Utility Relocation at Clear Creek Utility Bridge,
Forest Bend Detention Pond, Water System Improvement Study & Engineering, Lift Station Mitigation Program, and
Automated Water Meter installation.
Governmental Activities
Business -type Activities
Totals
2022
2021
2022
2021
2022
2021
Land
$ 32,355,840
$ 29,695,765
$ 319,473
$ 319,473
$ 32,675,313
$ 30,015,238
Buildings and improvements
22,938,656
23,862,519
318,849
338,606
23,257,503
24,201,125
Machinery and equipment
7,845,397
7,014,572
2,596,552
2,658,943
10,441,949
9,673,515
Infrastructure
43,675,282
46,509,824
38,970,139
36,904,531
82,645,423
83,414,355
Water rights
-
-
19,716,695
19,716,695
19,716,695
19,716,695
Construction in progress
8,797,172
1,435,585
9,629,504
2,870,307
18,426,676
4,305,892
$ 115,612,347
$ 108,518,265
$ 71,551,212
$ 62,808,555
$ 187,163,559
$ 171,326,820
More detailed information on the City's capital assets is presented in Note 4 to the financial statements.
Debt Administration
At the end of the current fiscal year, the City had a total bonded debt, premiums and notes payable obligation of $109.3
million.
Governmental Activities
2022 2021
Business -type Activities
2022 2021
Totals
2022 2021
General obligation bonds
$ 43,950,000
$ 46,265,000
$ 18,635,000
$ 20,300,000
$ 62,585,000
$ 66,565,000
Revenue bonds
-
-
35,630,000
37,080,000
35,630,000
37,080,000
Premium on bond issuance
3,193,902
3,544,358
5,264,036
5,666,291
8,457,938
9,210,648
Notes payable
2,613,729
1,681,809
-
2,613,729
1,681,809
$ 49,757,631
$ 51,491,167
$ 59,529,036
$ 63,046,291
$ 109,286,667
$ 114,537,457
The City's General Obligation and Revenue Bonds bond ratings are listed below:
General Obligation Bonds
Revenues Bonds
Standard
& Poor's
AA+
AA -
More detailed information about the City's outstanding debt can be found in Note 5 to the financial statements.
17 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Economic Factors and Next Year's Budgets and Rates
Friendswood continues to experience moderate growth. The City's current population is estimated to be 42,222.
Friendswood is expected to reach build out with an estimated population of 58,012. The City is continuing to focus on
economic development initiatives, including the revitalization of downtown and commercial development. These
commercial development projects include a medical office building and another building that will include 30 hotel rooms,
retail and office space as well as 30 multifamily units. In addition, to commercial growth the City is also experiencing
residential growth with several large master -planned communities in progress or in the planning stages.
The City's largest single source of revenue in the General Fund continues to be ad valorem taxes. The adopted budget for
fiscal year 2023 has a tax rate of $0.487314 per $100 taxable value. This rate consists of a maintenance and operation (M&O)
tax rate of $0.388560 and an interest and sinking (debt service) tax rate of $0.098754. The rate was set based on a net
assessed value of $4,614,143,928. This is an increase of $187,212,608 above certified values including supplemental rolls for
tax year 2021. The City's financial management policy sets the guideline to maintain the fund balance and net position of
the various operating funds at levels sufficient to protect the City's creditworthiness as well as its financial position from
unforeseeable emergencies.
The City second largest source of revenue in the General Fund is sales tax. The City anticipates an increase in this revenue
stream from the prior year and has adjusted the budget from $8,095,816 to $8,621,519. The franchise fees budget increased
from $1,925,828 to $2,044,100 and the budget for licenses and permits has been increased from $823,839 to $873,730. If
all projections are accurate, the total General Fund unassigned fund balance net of the 90 day operating requirement ($7.9
million) is estimated to be approximately $3.6 million at September 30, 2023.
Water revenues are budgeted at $8,548,086 which is an increase of $347,583 in revenues, or 4.23 percent. Sewer
revenues are budgeted at $9,037,580 which is an increase of $160,112 or 1.8 percent. Water and Sewer Fund unrestricted
net position, net of the 90 day operating requirement ($2.3 million) is projected to be $7.4 million at the end of fiscal
year 2023.
Pursuant to the City's financial management policy, funds in excess of the 90 day operating reserve are designated for
future capital improvements.
Requests for Information
The financial report is designed to provide our citizens, customers, investors, and creditors with a general overview of
the City's finance and to show the City's accountability for the money it receives. If you have questions about this report or
need additional information, contact Administrative Services, P.O. Box 1288, Friendswood, Texas 77549-1288, or call
Katina Hampton at 281-996-3221, or email khampton@friendswood.com.
Separately issued financial statements for the West Ranch Management District can be obtained by writing to: West
Ranch Management District, a Component Unity of the City of Friendswood, c/o Allen Boone Humphries LLP, 3200
Southwest Freeway, Suite 2600, Houston, Texas 77027.
18 City of Friendswood, Texas 2022 ACFR
BASIC FINANCIAL STATEMENTS
19 City of Friendswood, Texas 2022 ACFR
rjCity of
rpnd,5wood
-Texas
20 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET POSITION
September 30, 2022
Primary Government
Component Units
West Ranch
Governmental
Business -type
Management
Friendswood
Activities
Activities
Total
District
Downtown EDC
Assets
Cash and cash equivalents
$ 10,434,204
$ 4,313,653
$ 14,747,857
$ 240,532
$ 818,732
Investments
31,130,049
10,374,899
41,504,948
4,250,759
1,969,545
Receivables, net of allowances
Taxes
3,055,805
-
3,055,805
10,674
142,602
Leases
1,021,537
-
1,021,537
-
-
Customer accounts
451,998
3,989,589
4,441,587
Other
734,354
-
734,354
-
-
Accrued interest
17,409
8,258
25,667
32
1,496
Due from other governments
1,795,238
-
1,795,238
-
-
Prepaid items
260,457
63,224
323,681
Working capital deposit
-
571,884
571,884
Restricted investments
-
23,417,040
23,417,040
-
Capital Assets:
Non -depreciable
41,153,012
29,665,672
70,818,684
7,762,414
Depreciable, net
74,459,335
41,885,540
116,344,875
356,185
Total Capital Assets
115,612,347
71,551,212
187,163,559
8,118,599
-
Total Assets
164,513,398
114,289,759
278,803,157
12,620,596
2,932,375
Deferred Outflows of Resources
Deferred loss on issuance of refunding bonds
54,715
587,418
642,133
287,109
-
Deferred outflow of resources for pensions
2,849,672
368,093
3,217,765
-
Deferred outflow of resources for OPEB
316,674
47,016
363,690
-
Total Deferred Outflows of Resources
3,221,061
1,002,527
4,223,588
287,109
-
Total Assets and Deferred Outflows of Resources
167,734,459
115,292,286
283,026,745
12,907,705
2,932,375
Liabilities
Accounts payable
4,850,034
2,694,826
7,544,860
101,485
753
Accrued liabilities
811,325
161,042
972,367
-
-
Retainagepayable
442,341
5,797
448,138
-
Accrued interest
118,802
179,563
298,365
239,053
Unearned revenue
10,003,026
-
10,003,026
-
Customer deposits
8,080
570,430
578,510
Due to other governments
146,598
-
146,598
-
Noncurrent liabilities:
Duewithinoneyear
3,331,788
3,246,882
6,578,670
865,000
Duein morethan oneyear
47,570,186
56,391,564
103,961,750
18,448,638
Netpension liability
4,747,707
410,084
5,157,791
-
TotalOPEBliability
1,687,405
248,126
1,935,531
Total Liabilities
73,717,292
63,908,314
137,625,606
19,654,176
753
Deferred Inflows of Resources
Deferred gain on issuance of refunding bonds
55,814
27,292
83,106
-
-
Deferred Inflows of resources for leases
1,011,689
-
1,011,689
Deferred Inflows of resources for pensions
4,884,186
630,892
5,515,078
Deferred Inflows of resources for OPEB
330,448
52,035
382,483
Total Deferred Inflows of Resources
6,282,137
710,219
6,992,356
Net Position
Net investment in capital assets
74,006,329
35,999,342
110,005,671
5,331,558
Restricted for:
Public education and government channels
460,154
-
460,154
-
Debt service
46,375
2,521,137
2,567,512
1,991,706
Municipal court operations
283,301
-
283,301
-
-
Economic development
-
-
2,931,622
Public safety
674,536
674,536
-
Communitydevelopment- nonexpendable
11,093
-
11,093
Capital projects
3,584,376
376,441
3,960,817
54,638
Unrestricted
8,668,866
11,776,833
20,445,699
(14,124,373)
-
Total Net Position
$ 87,735,030
$ 50,673,753
$ 138,408,783
$ (6,746,471)
$ 2,931,622
See notes to the financial statements. 21 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF ACTIVITIES
For the Year Ended September 30, 2022
Program Revenues
Operating Grants
Capital Grants
Charges for
and
and
Functions/Programs
Expenses
Services
Contributions
Contributions
Primary government
Governmental Activities:
General government
$ 6,210,336
$ 974,029
$ 16,000
$
Public safety
15,655,859
1,197,570
789,849
Public works
6,994,042
234,103
-
2,620,495
Engineering
570,098
-
-
Community development
1,017,509
1,238
-
Parks and recreation
4,870,623
441,649
35,688
Library services
1,283,007
-
-
Interest on long-term debt
1,268,435
-
-
-
Total Governmental Activities
37,869,909
2,848,589
841,537
2,620,495
Business -type Activities:
Water and sewer
12,986,443
19,419,622
289,181
-
Total Business -type Activities
12,986,443
19,419,622
289,181
-
Total Primary Government
50,856,352
22,268,211
1,130,718
2,620,495
Component Units
West Ranch Management District
1,036,725
-
-
-
Friendswood Downtown EDC
36,449
Total Component Units
$ 1,073,174
$
$
$
Page 1 of 2
See notes to the financial statements. 22 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OFACTIVITIES
For the Year Ended September 30, 2022
Functions/Programs
Primary government
Governmental Activities:
General government
Public safety
Public works
Engi neeri ng
Community development
Parks and recreation
Library services
Interest on long-term debt
Total Governmental Activities
Business -type Activities:
Water and sewer
Total Business -type Activities
Total Primary Government
Component Units
West Ranch Management District
Friendswood Downtown EDC
Total Component Units
General revenues:
Taxes:
Property taxes
Franchise and other taxes
Sales taxes
Interest
Miscellaneous
Transfers
Total General Revenues and Transfers
Change in net position
Net Position - Beginning
Net Position - Ending
Net (Expense) Revenue and Changes in Net Position
Primary Government Component Units
Governmental Business -type
Activities Activities Total
$ (5,220,307) $
(13,668,440)
(4,139,444)
(570,098)
(1,016,271)
(4,393,286)
(31,559,288)
$ (5,220,307) $
(13,668,440)
(4,139,444)
(570,098)
(1,016,271)
(4,393,286)
6,722,360 6,722,360
(31,559,288) 6,722,360 (24,836,928)
20,845,938
20,845,938
2,170,152
2,170,152
11,176,190
11,176,190
49,151
130,401 179,552
638,418
- 638,418
Page 2 of 2
West Ranch
Management Friendswood
District Downtown EDC
(1,036,725)
1— AAnX
2,314,093
- 736,129
13,385 (855)
$ 87,735,030 $ 50,673,753 $ 138,408,783 $ (6,746,471) $ 2,931,622
See notes to the financial statements. 23 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
September 30, 2022
Coronavirus State
Total Nonmajor
Total
Fiscal Recovery
Bond
Debt Service
Governmental
Governmental
General Fund
Fund
Construction
Fund
Funds
Funds
Assets
Cash and cash equivalents $
5,650,255
$ 2,935,831
$ 9,982
$ 43,584
$ 1,513,649
$ 10,153,301
Investments
10,075,984
7,062,450
9,572,206
104,845
3,638,822
30,454,307
Receivables, net of allowance:
Taxes
2,573,880
-
-
54,119
427,806
3,055,805
Leases
1,021,537
-
-
-
-
1,021,537
Customer accounts
449,301
-
-
-
2,697
451,998
Other receivables
730,696
-
-
-
3,658
734,354
Accrued interest
10,945
3,079
-
681
2,135
16,840
Duefrom other funds
1,157,730
-
996,000
-
-
2,153,730
Duefrom other governments
44,063
-
-
-
1,751,175
1,795,238
Prepaid items
260,066
391
260,457
Total Assets $
21,974,457
$ 10,001,360
$ 10,578,188
$ 203,229
$ 7,340,333
$ 50,097,567
Liabilities, Deferred Inflows and Fund Balances
Liabilities:
Accounts payable
$ 1,879,444
$ -
$ 2,051,195 $
104,181
$ 768,808 $
4,803,628
Accrued liabilities
811,325
-
-
-
-
811,325
Due to other governments
146,598
-
-
-
-
146,598
Customer deposits
8,080
-
-
8,080
Retainage payable
29,580
-
374,281
-
38,480
442,341
Due to other funds
-
-
-
-
2,153,730
2,153,730
Unearned revenue
10,003,026
10,003,026
Total Liabilities
2,875,027
10,003,026
2,425,476
104,181
2,961,018
18,368,728
Deferred Inflows of Resources:
Unavailable revenue
702,654
-
-
52,673
3,756
759,083
Lea s es
1,011,689
1,011,689
Total Deferred Inflows of resources
1,714,343
52,673
3,756
1,770,772
Fund Balances:
Nonspendable:
Prepaid items
260,066
-
-
-
391
260,457
Perma nent fund
-
-
-
-
11,093
11,093
Restricted:
Public education and government channels
460,154
-
-
-
-
460,154
Municipal court operations
-
-
-
-
282,910
282,910
Debt service
-
-
-
46,375
-
46,375
Publicsafety
-
-
-
-
674,536
674,536
Capital projects
-
-
8,152,712
-
3,584,376
11,737,088
Assigned:
Subsequent year's budget appropriation of
fund balance
3,396,348
-
-
-
-
3,396,348
Capital projects
1,271,152
-
-
-
-
1,271,152
Unassigned
11,997,367
(1,666)
-
(177,747)
11,817,954
Total Fund Balances
17,385,087
(1,666)
8,152,712
46,375
4,375,559
29,958,067
Total Liabilities, Deferred Inflows of Resources,
and Fund Balances
$ 21,974,457
$ 10,001,360
$ 10,578,188 $
203,229
$ 7,340,333 $
50,097,567
See notes to the financial statements. 24 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
September 30, 2022
Total fund balance, governmental funds $ 29,958,067
Amounts reported for governmental activities i n the Statement of Net Position are different because:
Capital assets used in governmental activities are not current financial resources and therefore are not
reported in the fund financial statement, but are reported in the governmental activities of the Statement of
Net Position. 113,247,160
The assets and liabilities of certain internal service funds are not included in the fund financial statement,
but are included in the governmental activities of the Statement of Net Position. 3,275,995
Some liabilities are not due and payable in the current period and are not included in the fund financial
statement, but are included in the governmental activities of the Statement of Net Position.
Bonds and certificates of obligation payable (43,950,000)
Notes payable (2,613,729)
Compensated absences (1,144,343)
Accrued interest payable (118,802)
Unamortized premium on bonds (3,193,902)
Unavailable revenues in the governmental fund statements is recognized as revenue in the government-
widefinancial statements. 759,083
Deferred gain on refunding (55,814)
Deferred loss on refunding 54,715
Certain other long-termassets and liabilities are not available to pay current period expenditures and
therefore are not reported in this fund financial statement, but are reported in the governmental activities
of the Statement of Net Position.
Net pension liability (4,747,707)
Total OPEB liabilty (1,687,405)
Deferred outflows and inflows of resources related to the net pension liability (2,034,514)
Deferred outflows and inflows of resources related to the total OPEB liability (13,774)
Net Position of Governmental Activities in the Statement of Net Position $ 87,735,030
See notes to the financial statements. 25 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended September 30, 2022
Revenues
Property taxes
Sales taxes
Franchise fees and other
Fines and forfeitures
Permits and fees
Intergovernmental
Investment income (loss)
Donations
Miscellaneous
Total Revenues
Expenditures
Current:
General government
Public safety
Public works
Engi neeri ng
Community development
Parks and recreation
Library services
Debt service:
Principal
Interest and other charges
Capital outlay
Total Expenditures
Excess (deficiency) of revenues over
(under) expenditures
Other Financing Sources (Uses)
Notes payable issued
Insurance recoveries
Transfers in
Transfers out
Saleofcapital assets
Total Other Financing Sources (Uses)
Net change in fund balances
Fund Balances - Beginning
Fund Balances - Ending
Coronavirus
Total Nonmajor
Total
State Fiscal
Bond
Debt Service
Governmental
Governmental
General Fund
Recovery Fund
Construction
Fund
Funds
Funds
$ 16,475,894
$
$
$ 4,370,044
$ -
$ 20,845,938
8,967,803
-
2,208,387
11,176,190
2,170,152
-
2,170,152
969,344
83,596
1,052,940
1,789,147
58,838
1,847,985
594,774
2,620,495
3,215,269
(15,254)
(1,666)
68,133
(1,498)
(135)
49,580
61,211
-
194,427
255,638
336,367
8,997
345,364
31,349,438
(1,666)
68,133
4,368,546
5,174,605
40,959,056
5,988,239
-
-
52,593
6,040,832
15,330,928
-
39,333
15,370,261
3,047,460
163,330
2,554,523
5,765,313
571,010
-
-
571,010
1,187,413
-
1,187,413
4,302,309
10,547
-
4,312,856
1,333,456
-
-
2,729
1,336,185
-
2,721,206
119,514
2,840,720
-
1,611,573
13,318
1,624,891
2,563,859
6,954,059
759,216
10,277,134
34,324,674
7,127,936
4,332,779
3,541,226
49,326,615
(2,975,236)
(1,666)
(7,059,803)
35,767
1,633,379
(8,367,559)
1,457,640
1,457,640
74,126
74,126
1,708,331
1,708,331
(124,948)
-
(124,948)
18,029
14,000
32,029
3,133,178
14,000
3,147,178
157,942 (1,666) (7,059,803)
35,767 1,647,379
(5,220,381)
17,227,145 15,212,515
10,608 2,728,180
35,178,448
$ 17,385,087 $ (1,666) $ 8,152,712 $
46,375 $ 4,375,559
$ 29,958,067
See notes to the financial statements. 26 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND
BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
For the Year Ended September 30, 2022
Net Change in Fund Balances - Total Governmental Funds $ (5,220,381)
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Governmental funds report outlays for capital assets as expenditures because such outlays use
current financial resources. In contrast, the Statement of Activities reports only portion of the
outlay as expense. The outlay is allocated over the assets' estimated useful lives as depreciation
expense for the period.
Capital outlay 12,365,688
Depreciation expense (5,637,471)
Governmental funds do not present revenues that are not available to pay current obligations. In
contrast, such revenues are reported in the Statement of Activities when earned.
Unavailable property tax revenue and other revenues 62,599
Governmental funds report proceeds from long-term debt as current financial resources. In contrast,
the Statement of Activities treats such issuance of debt as a liability. Governmental funds report
repayment of long-term debt principal as an expenditure, In contrast, the Statement of Activities treats
such repayments as a reduction in long-term liabilities.
Debt service principal 2,840 720
Proceeds from notes payable (1,457,640)
Contributions aretreated as expenditures in the fund based financial statements, but aretreated as
reductions in the City's net pension/OBEB liability in the statement of net position. This amount is the
difference between contributions and net pension/OPEB expense (revenue) for the currentfiscal year.
Pension 11454,988
OPEB (67,626)
Some expenses reported in the statement of activities do not require the use of current financial
resources and these are not reported as expenditures in governmental funds:
(Increase) decrease in accrued interest
6,003
(Increase) decrease in compensated absences
(148,153)
Amortization of deferred loss on refunding
(6,506)
Amortization of deferred gain on refunding
4,293
Amortization of premium on bonds
350,456
Internal servicefund is used by managementto charge the cost of fleet managementto individual
funds. The change in net position of the internal servicefund is included in the governmental
activities in the statement of activities. 569,274
Change in Net Position of Governmental Activities $ 5,116,244
See notes to the financial statements. 27 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
September 30, 2022
Page 1 of 2
Business -Type Activities
Governmental Activities
Enterprise Fund
Water and Sewer
Internal Service
Assets
Current Assets
Cash and cash equivalents
$ 4,313,653
$ 280,903
Investments
10,374,899
675,742
Accounts receivable, net of allowance:
Customer accounts
3,989,589
-
Accrued interest
8,258
569
Prepaids and other assets
63,224
-
Restricted investments
23,417,040
-
Total Current Assets
42,166,663
957,214
Non -current Assets
Working capital deposit
571,884
-
Capital Assets:
La nd
319,473
Construction in progress
9,629,504
Water rights
19,716,695
Buildings and improvements
683,906
-
Machinery and equipment
7,878,937
5,216,063
Water and sewer systems
78,013,079
-
Accumulated depreciation
(44,690,382)
(2,850,876)
Total Capital Assets
71,551,212
2,365,187
Total Non -current Assets
72,123,096
2,365,187
Total Assets
114,289,759
3,322,401
Deferred Outflows of Resources
Deferred loss on bond refunding
587,418
-
Deferred outflows - pension related
368,093
Deferred outflows - OPEB related
47,016
Total Deferred Outflows of Resources
1,002,527
-
Total Assets and Deferred
Outflows of Resources
115,292,286
3,322,401
See notes to the financial statements. 28 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
September 30, 2022
Liabilities
Current Liabilities
Accounts payable
Accrued liabilities
Accrued interest
Unearned revenue
Customer deposits
Retainage payable
Compensated absences
Bonds and other long-term debt payable
Total Current Liabilities
Non -current Liabilities
Compensated absences
Net Pension liability
Total OPEB liability
Bonds and other long-term debt payable
Total Non -current Liabilities
Total Liabilities
Deferred Inflows of Resources
Deferred gain on issuance of refunding bonds
Deferred inflows - pension related
Deferred inflows of resources for OPEB
Total Deferred Inflows of Resources
Total Liabilities and Deferred Inflows of Resources
Net Position
Net investment in capital assets
Restricted for capital projects
Restricted for debt service
Unrestricted
Total Net Position
Business -Type Activities
Enterprise Fund
Water and Sewer
$ 2,694,826
161,042
179,563
570,430
5,797
21,882
3,225,000
6,858,540
87,528
410,084
248,126
56,304,036
57,049,774
63,908,314
27,292
630,892
52,035
710,219
Page 2 of 2
Governmental Activities
Internal Service
$ 46,406
46,406
46,406
64,618,533 46,406
35,999,342
376,441
2,521,137
11,776,833
$ 50,673,753
2,365,187
910,808
$ 3,275,995
See notes to the financial statements. 29 City of Friendswood, Texas 2022 ACFR
City of
ripnoodd�w
Texas
30 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
For the Year Ended September 30, 2022
Business -Type
Activities Enterprise
Governmental
Fund
Activities
Water and Sewer
Internal Service
Operating Revenues
Charges for services
$ 19,223,542
$ 813,530
Miscellaneous
184,788
-
Total Operating Revenues
19,408,330
813,530
Operating Expenses
Personnel services
2,626,093
-
Sewer operations
2,588,636
-
Water purchases
1,836,874
-
Repairs and maintenance
819,562
3,568
Supplies
217,565
-
Other services and charges
1,041,844
-
Depreciation
1,993,988
515,648
Total Operating Expenses
11,124,562
519,216
Operating income
8,283,768
294,314
Non -Operating Revenues (Expenses)
Intergovernmental
289,181
-
Investment income
130,401
(429)
Gain on disposal of capital assets
-
63,089
Insurance proceeds
11,292
-
Interest expense
(1,861,881)
-
Total Non -Operating Revenues (Expenses)
(1,431,007)
62,660
Income before transfers
6,852,761
356,974
Transfers in
47,648
212,300
Transfers out
(1,843,331)
-
Change in net position
5,057,078
569,274
Net position - Beginning
45,616,675
2,706,721
Total Net Position - Ending
$ 50,673,753
$ 3,275,995
See notes to the financial statements. 31 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended September 30, 2022
Cash flows from operating activities
Cash received from customers
Receipts from interfund charges for fleet management
Cash payments to suppliers for goods and services
Cash payments to employees for services
Net cash provided by operating activities
Cash flows from noncapital financing activities
Transfer in from other funds
Transfers outto other funds
Net cash provided (used) by noncapital
financing activities
Cash flows from capital and related
financing activities
Acquisition and construction of property,
plant and equipment
Disposal of capital assets
Repayment of debt
Interest paid on debt
Net cash provided (used) by capital and
related financing activities
Cash flows from investing activities
Purchase of investments
Investment i ncome
Net cash provided (used) by investing activities
Net increase (decrease) in cash and
cash equivalents
Cash and Cash Equivalents, Beginning
Cash and Cash Equivalents, Ending
Reconciliation of Total Cash and Cash Equivalents
Currentassets -cash and cash equivalents
Restricted assets - cash and cash equivalents
Page 1 of 2
Business -Type
Activities Enterprise
Governmental
Fund
Activities
Water and Sewer
Internal Service
$ 18,888,531
$ -
-
813,530
(4,876,811)
41,100
(2,816,162)
-
11,195,558
854,630
47,648
212,300
(1,843,331)
-
(1,795,683)
212,300
(10,558,139)
(881,513)
-
63,089
(3,456,348)
-
(2,209,143)
-
(16,223,630) (818,424)
(2,190,209) (204,211)
126,588 (744)
(2,063,621) (204,955)
(8,887,376) 43,551
36,618,069 237,352
$ 27,730,693 $ 280,903
$ 4,313,653
23,417,040
$ 27,730,693
$ 280,903
$ 280,903
See notes to the financial statements. 32 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended September 30, 2022
Business -type
Activities - Enterprise
Funds
Water and Sewer
Reconciliation of operating income to net cash
provided (used) by operating activities:
Operating income $ 8,283,768 $
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation 1,993,988
Change in assets, deferred inflows and outflows, and liabilities:
Decrease (increase) in customer receivable
(534,410)
Decrease (increase) in prepaids and other assets
(354)
pensions
(47,141)
Decrease (increase) in deferred outflow for OPEB
4,096
Increase (decrease) in accounts payable
1,561,167
Increase (decrease) in accrued liabilities
66,857
Increase (decrease) in customer deposits
14,611
pensions
381,164
Increase (decrease) in deferred inflows for OPEB
7,896
Increase (decrease) in total OPEB liability
(3,466)
Increase (decrease) in net pension liability
(524,249)
Increase (decrease) in compensated absences
(8,369)
Total Adjustments
2,911,790
Net cash provided by operating activities
Page 2 of 2
Governmental
Activities
Internal Service
294,314
515,648
44,668
560,316
$ 11,195,558 $ 854,630
See notes to the financial statements. 33 City of Friendswood, Texas 2022 ACFR
City of
ripnoodd�w
Texas
34 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
The City of Friendswood, Texas ("the City') was incorporated on October 15, 1960. The City charter provides for a City
Council -City Manager form of government. The Mayor and six Council members are elected from the City at large serving
three-year terms. The City Council is the principal legislative body of the City. The City Manager is appointed by a majority
vote of the City Council and is responsible to the Council for the administration of all the affairs of the City. The City Manager
is responsible for law enforcement, appointment and removal of department directors and employees, supervision and
control of all City departments, and preparation of the annual budget. The Mayor resides at meetings of the City Council and
can vote. The City provides the following services: public safety, streets, parks and recreation, library, water and sewer,
sanitation, planning and zoning, building inspection, code enforcement, and general administrative services.
A. Reporting Entity
The City is an independent political subdivision of the State of Texas governed by an elected six- member Council and Mayor
and is considered a primary government. As required by generally accepted accounting principles, these financial statements
have been prepared based on considerations regarding the potential for inclusion of other entities, organizations, or functions
as part of the City's financial reporting entity. Based on these considerations, the West Ranch Management District and
Friendswood Downtown Economic Development Corporation have been included in the City's reporting entity as discretely
presented component units. Additionally, as the City is considered a primary government for financial reporting purposes,
its activities are not considered a part of any other governmental or other type of reporting entity.
Consideration regarding the potential for inclusion of other entities, organizations, or functions in the City's financial reporting
entity is based on criteria prescribed by general accepted accounting principles. These same criteria are evaluated in
considering whether the City is a part of any other governmental or other type of reporting entity. The overriding elements
associated with prescribed criteria considered in determining that the City's financial reporting entity status is that of a
primary government are that it has a separately elected governing body; it is legally separate; and it is financial independent
of other state and local governments. Additional prescribed criteria under generally accepted accounting principles include
considerations pertaining to organizations for which the primary government is financially accountable; and considerations
pertaining to other organizations for which the nature and significance of the relationship with the primary government are
such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete.
The West Ranch Management District ("the District"), a discretely presented component unit, was created under Section 59,
Article XVI of the Texas Constitution added by an Act of the 791h Legislature of the State of Texas, effective June 17, 2005, in
accordance with the Texas Water Code, Chapter 54. The District operates in accordance with Chapters 3837, Texas Special
District Local Laws Code, Chapters 49 and 54 of the Texas Water Code and Chapter 375 of the Texas Local Government Code,
and is subject to the continuing supervision of the Texas Commission on Environmental Quality. The District was created to
promote and encourage employment and the public welfare within the District. The affairs of the District are managed by a
Board of Directors composed of persons appointed by the City Council. The City is financially accountable for the District
because City Council must approve any debt issuances. Complete financial statements from the component may be obtained
at the District's administrative office.
The Friendswood Downtown Economic Development Corporation ("FDEDC") was incorporated August 1, 2016 as a nonprofit
economic development corporation under the Development Corporation Act. The citizens of Friendswood voted to pass a
one- half cent sales tax dedicated to support and enhance the welfare and prosperity of the citizens of the City and of this
State by promotion of economic development and growth by encouraging the development of new business enterprises and
the retention or expansion of existing business enterprises.
35 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 1. Summary of Significant Accounting Policies (continued)
A. Reporting Entity (continued)
To serve this purpose, the Corporation shall have the authority and power of a Type B corporation to undertake projects as
described in Subchapter C of Chapter 501 of the Local Government Code and Chapter 505 of the Local Government Code,
including undertaking projects as authorized by law, including but not limited to projects to promote new or expanded
business enterprises in the downtown area as defined by the City of Friendswood Downtown District Map, including but not
limited to streets, targeted infrastructure, paved sidewalks, pedestrian amenities including lighting, benches, signage, and
other related public improvements, and the maintenance and operations expenses for any of the above -described projects.
A separate governing board oversees FDEDC, which is appointed by Friendswood City Council, and consists of members of
City Council, City's management, and individuals from the community. The City can remove appointed board members and
approves the FDEDC's budget. The FDEDC is reported as a discretely presented component unit because the governing body
is not identical to the governing body of the City, the FDEDC does not solely serve the City, and the City has the ability to
impose its will on FDEDC. Complete financial statements of the FDEDC may be obtained by contacting FDEDC's administration
office.
B. Government -Wide and Fund Financial Statements
The government -wide financial statements (i.e., the statement of net position and the statement of activities) report
information on all activities of the primary government and its component unit. For the most part, the effect of interfund
activity has been removed from these statements. Governmental activities, which normally are supported by taxes and
intergovernmental revenue, are reported separately from business -type activities, which rely to a significant extent on fees
and charges for support. Likewise, the primary government is reported separately from certain legally separate component
units for which the primary government is financial accountable.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset
by program revenue. Direct expenses are those that are clearly identifiable with a specific function or segment. Program
revenue includes 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the
operations or capital requirements of a particular function or segment. Taxes and other items not properly included among
program revenue are reported instead as general revenue.
Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental
funds and major individual enterprise funds are reported as separate columns in the fund financial statements.
36 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 1. Summary of Significant Accounting Policies (continued)
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government -wide financial statements are reported using the economic resources measurement focus and the modified
accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are
considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of
the current period. For this purpose, the government considered revenue to be available if collected within 60 days of the
end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgements,
are recorded only when payment is due.
Property taxes, franchise taxes, sales taxes, and interest associated with the current fiscal period are all considered to be
susceptible to accrual and, accordingly, have been recognized as revenue of the current fiscal period. All of revenue items
are considered to be measurable and available only when cash is received by the City.
The City reports the following major governmental funds:
The General Fund is the City's primary operating fund. It accounts for all financial resources of the general government,
except those required to be accounted for in another fund.
The Coronavirus State and Local Fiscal Recovery Fund is used to account for federal funds related to the fiscal recovery
of Coronavirus. Funds will be used for water and sewer infrastructure projects.
The Bond Construction Fund is used to account for the construction of public facilities, and park, street and drainage
improvements that are funded by the proceeds from Permanent Improvement Bonds.
The Debt Service Fund is used to account for the accumulation of resources for the payment of general long-term debt
principal, interest, and related costs.
Other governmental funds is a summarization of all the non -major governmental funds.
The City reports the following major enterprise fund:
The Water and Sewer Fund is used to account for the activities of the City's water and wastewater operations.
Additionally, the City reports the following fund type:
The Internal Service Fund is used to account for fleet management services provided to other departments of the City
on a cost reimbursement basis.
As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements.
Exceptions to this general rule are charges between the City's water and sewer function and various other functions of the
government. Elimination of these charges would distort the direct costs and program revenue reported for the various
functions concerned.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses
generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal
ongoing operations. The principal operating revenues of the Water and Sewer enterprise fund and of the City's internal
service fund are charges to customers for sales and services. Operating expenses for the enterprise fund and internal service
fund include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and
expenses not meeting this definition are reported as nonoperating revenue and expenses.
37 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 1. Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance
Cash and Investments
Cash and investments include cash on hand, deposits with financial institutions, short-term investments in a state -managed
public funds investment pool account (TexPool), and a privately managed public funds investment pool (Texas Class). Other
investments consist mainly of U.S. government treasury bills, treasury notes and other U.S. government obligations.
Restricted cash and investments are assets restricted for specific use. Restricted includes cash deposits with financial
institutions and investment pools.
The City maintains a pooled cash and investments account for all funds of the City. Each fund's positive equity in the pooled
cash account is presented as "cash and investments" in the financial statements. Negative equity balances are reclassified
and are reflected as interfund accounts payable. Interest income and interest expense are allocated monthly to each
respective individual fund based on their representative fund balances.
The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with
original maturities of three months or less from the date of acquisition.
Investments for the City are reported at fair value, except for the position in investment pools. The City's investment in pools
are reported at the net asset value per share (which approximates fair value) even though it is calculated using the amortized
cost method.
TexPool and Texas Class have a redemption notice period of one day and may redeem daily. The investment pool's authority
may only impose restrictions on redemptions in the event of a general suspension of trading on major securities markets,
general banking moratorium or national state of emergency that affects the pool's liquidity.
Property Taxes
All trade and property tax receivables are shown net of an allowance for uncollectible accounts. Management estimates an
allowance for trade accounts receivable based on past experience, historical losses, and other pertinent factors.
The City's property taxes are levied annually in October on the basis of the Appraisal District's assessed values as of January
1 of that calendar year. Appraised values are established by the Appraisal District at market value and assessed at 100% of
appraised value less exemptions. The City's property taxes are billed and collected by Galveston County. Such taxes are
applicable to the fiscal year in which they are levied and become delinquent with an enforceable lien on property on February
1 of the subsequent calendar year.
Property taxes are prorated between operations and debt service based on rates adopted for the year of the levy. For the
current year, the City levied property taxes of $0.487314 per $100 of assessed valuation that were prorated between
operations and debt service in the amounts of $0.385147 and $0.102167, respectively. The resulting tax levies were
approximately $16.4 and $4.4 million for operations and debt service, respectively, based on a total taxable valuation of
approximately $4.2 billion for the 2021 tax year.
West Ranch Management District bond resolutions require that the District levy and collect an ad valorem debt service tax
sufficient to pay interest and principal on bonds when due. During the year ended July 31, 2022, the District levied an ad
valorem tax at the rate of $0.1750 per $100 of assessed valuation, which resulted in tax levy of $1.2 million on the taxable
valuation of approximately $697.1 million for the 2021 tax year.
38 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 1. Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance (continued)
Interfund Receivables/Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year
are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans"). All other outstanding
balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the
governmental activities and business -type activities are reported in the government -wide financial statements as "internal
balances."
Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both
government -wide and fund financial statements. The City applies the consumption method in accounting for prepaid items
in the governmental funds.
Restricted Assets
Certain proceeds of the City's enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are
classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants.
Contract with West Ranch Management District
The District approved a contract with the City effective August 15, 2005, as amended. Under the terms of the contract, the
District is to pay for construction of water distribution, sanitary sewer, drainage, transportation, education and recreation
facilities to serve the District.
The District shall be the owner of the system until the system is completed, approved by the City and conveyed to it, at which
time ownership will vest in the City. The District will own and operate these facilities to serve the District. Pursuant to the
contract, the District shall have a security interest therein until all bonds issued by the District are retired.
Capital Assets
Capital assets, which include property, plant, equipment, infrastructure, and water rights, are reported in the applicable
governmental or business -type activities columns in the government- wide financial statements. The City defines capital
assets as assets with an initial, individual cost of more than $5,000 and an estimated historical cost if actual historical cost is
not available. Donated capital assets are recorded at acquisition cost, which is the price that would be paid to acquire an
asset with equivalent service potential at the acquisition date. The City's water rights have an indefinite life.
The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are
not capitalized.
39 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 1. Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance (continued)
Capital Assets
The City's property, plant and equipment are depreciated using the straight-line method over the following useful lives:
Buildings and improvements 20-50 years
Machinery and equipment 5 - 10 years
Infrastructure 40-50 years
Water and sewer system 40-50 years
The West Ranch Management District's capital assets are depreciated using the straight-line method over estimated useful
lives of 10 to 45 years.
Compensated Absences
The City's employees earn vacation leave, which may either be taken or accumulated, up to certain amounts, until paid upon
resignation or retirement. All vacation leave pay is accrued when incurred in the government -wide and proprietary fund
financial statements. A liability for these amounts is reported in the governmental funds only if they have matured, for
example, as a result of employee resignations and retirements.
Long-term Debt
In the government -wide financial statements and proprietary fund types in the fund financial statements, long-term debt and
other long-term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or
proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of
the bonds using the straight-line method, which approximates the effective interest method. Bonds payable are reported
net of the applicable bond premium or discount. Bond issuance cost are expenses in the period incurred.
Leases
The City is a lessor for noncancellable lease agreements. The City recognizes a lease receivable and a deferred inflow of
resources in the government -wide and governmental fund financial statements.
At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected
to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments
received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease
payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized
as revenue over the life of the lease term.
Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease
receipts to present value, (2) lease term, and (3) lease receipts.
• The City uses its estimated incremental borrowing rate as the discount rate for leases.
The lease term includes the noncancellable period of the lease. Lease receipts included in the measurement
of the lease receivable is composed of fixed payments from the lessee.
40 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 1. Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance (continued)
Leases (continued)
The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease
receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of
the lease receivable.
Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position and/or balance sheet will sometimes report a separate section for
deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a
consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources
(expense/expenditure) until then. The City has the following items that qualify for reporting in this category:
• Deferred loss on refunding debt - A deferred loss on refunding results from the difference in the carrying value of
refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the
refunded or refunding debt.
• Deferred outflows of resources for pension - Reported in the government -wide financial statement of net position,
this deferred outflow results from pension plan contributions made after the measurement date of the net pension
liability and the results of 1) differences between projected and actual earnings on pension plan investments; 2)
changes in actuarial assumptions; 3) differences between expected and actual actuarial experiences; and 4) changes
in the City's proportional share of pension liabilities. The deferred outflows of resources related to pensions resulting
from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension
liability in the next fiscal year. The deferred outflows resulting from differences between projected and actual earnings
on pension plan investments will be amortized over a closed five year period. The remaining pension related deferred
outflows will be amortized over the expected remaining service lives of all employees five year period.
• Deferred outflows of resources for other post -employment benefits (OPEB) - Reported in the government wide
financial statement of net position, these deferred outflows result from OPEB plan contributions made after the
measurement date of the total OPEB liability and the results of changes in assumptions and other inputs. The deferred
outflows of resources resulting from City contributions subsequent to the measurement date will be recognized as a
reduction of the total OPEB liability in the next fiscal year. The other OPEB related outflow will be amortized over the
expected remaining service lives of all employees (active and inactive employees) who are provided with OPEB
benefits.
In addition to liabilities, the statement of financial position and/or balance sheet will sometimes report a separate section for
deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents
an acquisition of net assets that applies to a future period(s) and so will not be recognized as an inflow of resources
(revenue) until that time. The City has the following items that qualify for reporting in this category:
• Deferred inflows of resources for unavailable revenues - Reported only in the governmental funds balance sheet,
unavailable revenues arise under the modified accrual basis of accounting. These amounts are deferred and recognized
as an inflow of resources in the period that the amounts become available.
• Deferred inflows of resources for leases - This deferred inflow of resources is initially measured as the initial amount
of the lease receivable, adjusted for lease payments received at or before the lease commencement date.
Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term.
41 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 1. Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance (continued)
Deferred Outflows/Inflows of Resources (continued)
Deferred inflows of resources for pension - Reported in the government wide financial statement of net position, these
deferred inflows result primarily from changes in actuarial assumptions. These pension related deferred inflows will
be amortized over the expected remaining service lives of all employees (active and inactive employees) that are
provided with pensions through the pension plan.
Deferred inflows of resources for gain on issuance of refunding bonds - Reported in the government wide financial
statement of net position, these deferred inflows result primarily from differences from the carrying value of refunded
debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or
refunding debt.
• Deferred inflows of resources for OPEB - Reported in the government wide financial statement of net position, this
deferred inflow results primarily from 1) changes in actuarial assumptions; and 2) differences between expected and
actual actuarial experiences. These OPEB related deferred inflows will be amortized over the expected remaining
service lives of all employees (active and inactive employees) that are provided with OPEB through the OPEB plans.
Pension
For purposes of measuring the net pension liability, pension related deferred outflows and inflows of resources, and pension
expense, City specific information about its Fiduciary Net Position in the Texas Municipal Retirement System (TMRS) and
additions to/deductions from TMRS's Fiduciary Net Position have been determined on the same basis as they are reported
by TMRS. For this purpose, plan contributions are recognized in the period that compensation is reported for the employee,
which is when contributions are legally due. Benefit payments and refunds are recognized when due and payable in
accordance with the benefit terms. Investments are reported at fair value.
Other Post -Employment Benefits (OPEB)
The City provides its retirees the opportunity to maintain health insurance coverage by participating in the City's insurance
plan. The City reports the total liability for this plan on the government -wide and proprietary fund financial statements. The
actual cost recorded in the governmental fund financial statements is the cost of the health benefits incurred on behalf of
the retirees less the premiums collected from the retirees. Information regarding the City's total liability for this plan is
obtained through a report prepared by Gabriel Roeder Smith & Company, the City's third -party actuary, in compliance with
GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions.
Additionally, the City participates in a defined -benefit group -term life insurance plan, both forcurrent and retired employees,
administered by the Texas Municipal Retirement System (TMRS). The City reports the total liability for this plan on the
government -wide and proprietary fund financial statements. Information regarding the City's total OPEB liability is obtained
from TMRS through a report prepared for the City by TMRS' consulting actuary, Gabriel Roeder Smith & Company, in
compliance with GASB Statement No. 75.
42 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 1. Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance (continued)
Fund Balance
The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy that is
based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in
the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are
as follows:
Non -spendable — includes amounts that cannot be spent because they are either not in spendable form, or, for legal
or contractual reasons, must be kept intact. This classification includes prepaid items and the fund balance of the
City's permanent fund.
Restricted— includes fund balance amounts that are constrained for specific purposes which are imposed by providers,
such as creditors or amounts restricted due to constitutional provision or enabling legislation. This classification
includes retirement of long-term debt, construction programs, City ordinances, and other federal and state grants.
Committed— includes fund balance amounts that are constrained for specific purposes that are internally imposed by
the City through formal action in an open meeting of the highest level of decision making authority. Committed fund
balance is reported pursuant to resolution passes by the City Council.
Assigned — includes fund balance amounts that are self-imposed by the City to be used for particular purpose. Fund
balance can be assigned by the City Council or the City Manager, pursuant to the City's fund balance policy. At
September 30, 2022, the City's assigned fund balance included amounts assigned for encumbrances and capital
projects.
Unassigned— includes residual positive fund balance within the general fund which has not been classified within the
other above mentioned categories. Unassigned fund balance may also include negative balances for any governmental
fund if expenditures exceed amounts restricted, committed, or assigned for those specific purposes.
When both restricted and unrestricted fund balances are available for use, it is the City's policy to use restricted fund balance
first, then unrestricted fund balance. Furthermore, committed fund balances are reduced first, followed by assigned amounts
and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of those unrestricted
fund balance classifications are available.
The City has established a minimum fund balance policy whereby the City's unassigned general fund balance will be
maintained at levels sufficient to protect the City's creditworthiness, as well as its financial position, from unforeseeable
emergencies. The City will strive to maintain the unassigned general fund balance at a minimum of 90 days of prior year
audited operating expenditures.
43 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 1. Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance (continued)
Net Position
Government -Wide Financial Statements:
The Statement of Net Position includes the following categories of net position:
Net investment in capital assets —the component unit of net position that reports the difference between capital assets
less both the accumulated depreciation and the outstanding balance of debt, net of premiums and discounts, that is
directly attributable to the acquisition, construction or improvement of these capital assets.
Restricted — Net position is reported as restricted when there are limitations imposed on its use either through the
enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors, or laws or
regulations of other governments.
Unrestricted —the difference between assets, deferred outflows and inflows, and liabilities that are not reported in
any of the classifications above.
Use of Estimates
The preparation of financial statements, in conformity with generally accepted accounting principles, requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent
liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting
period. Actual amounts could differ materially from those estimates.
E. Implementation of New Accounting Standards
The following GASB pronouncements were effective during fiscal year 2022.
GASB Statement No. 87 Leases was issued in June 2017 and was effective for periods beginning after June 15, 2021. This
Statement established a single model for lease accounting based on the foundational principle that leases are financings of
the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible
right -to -use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby
enhancing the relevance and consistency of information about governments' leasing activities. The financial statements have
been updated to reflect this new standard.
44 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 2. Cash and Investments
Under provisions of state and local statutes, the City's investment policies, and provisions of the City's depository contract
with an area financial institution, the City is authorized to place available deposits and investments in the following:
1. Obligations of the U.S., it's agencies and instrumentalities;
2. Certificates of Deposit issued by state and national banks or savings or loan associations domiciled in this state that
are guaranteed or incurred by the Federal Deposit Insurance Corporation or collateralized in accordance with Section
2256.010, the Texas Government Code, in face amounts not to exceed $100,000;
3. No-load money market mutual funds; and
4. TexPool, Lone State Investment Pool and Texas CLASS.
The City Council has adopted a written investment policy regarding the investments of its funds as defined by the Public Funds
Investment Act of 1995 (Chapter 2256, Texas Government Code). The investments of the City are in compliance with the
Council's investment policies. The City did not have any derivative investment products during the current year. All significant
legal and contractual provisions for investments were complied with during the year.
At September 30, 2022, the carrying amount of the City and Friendswood Downtown Economic Development Corporation's
deposits was $15,561,580 and the bank balance of $16,804,877.
As of September 30, 2022, the City and Friendswood Downtown Economic Development Corporation held the following
investments.
Reported
Weighted
Value of
Average
Investments
Maturity (Days)
Investment pools:
TexPool
$ 6,875,033
24
Texas CLASS
51,226,788
34
Total investment pools
58,101,821
Debt Securities:
Federal Farm Credit Bonds
4,377,299
340
Federal Home Loan Bank Bonds
3,449,160
222
Federal Home Loan Mortgage Corporation
494,649
262
Federal National Mortgage Association
468,604
574
Total debt securities
8,789,712
Total investments
$ 66,891,533
The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting
principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are
quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs
are significant unobservable inputs. The valuation techniques used in the fair value measurement are based on quoted market
closing prices for Level 2 inputs.
45 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 2. Cash and Investments (continued)
The City has the following recurring fair value measurements as of September 30, 2022:
Fair Value /
Amortized Cost Level 1 Inputs Level 2 Inputs Level 3 Inputs
Investment Securities:
Federal Farm Credit Bank $ 4,377,299 $ $ 4,377,299 $
Federal Home Loan Bank 3,449,160 3,449,160
Federal Home Loan Mortgage Corp. 494,649 494,649
Federal National Mortgage Assoc. 468,604 468,604
Total Investment Securities $ 8,789,712 $ $ 8,789,712 $
The City invests in Texas Local Government Investment Pool (TexPool), which was created under the Interlocal Cooperation
Act, Texas Government Code Ann. Chapter 791 and the Texas Public Funds Investment Act. The Texas Treasury Safekeeping
Trust Company ("the Trust") is trustee of TexPool and is a limited purpose trust company authorized pursuant to Texas
Government Code Ann. Section 404.103 for which the Texas State Comptroller is sole officer, director and shareholder. The
advisory board of TexPool is composed of members appointed pursuant to the requirements of the Texas Public Funds
Investment Act.
The City invests in Texas CLASS Investment Pool which was established in 1996 pursuant to the Texas Public Funds Investment
Act. The pool is governed by a 7-member board of trustees, who are elected by pool participants. The Cutwater Investor
Services Corp. serves as the pools program administrator and Wells Fargo Bank Texas, NA, serves as custodian.
Interest Rate Risk. In accordance with its investment policy, the City manages its exposure to declines in fair values by
structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations and invest
operating funds primarily in short-term securities.
Custodial Credit Risk. In the case of deposits, this is the risk that in the event of a bank failure, the City's deposits may not be
returned. State statutes require that all deposits in financial institutions be fully collateralized by U.S. Government
obligations or its agencies and instrumentalities or direct obligations of Texas or its agencies and instrumentalities that have
a fair value of not less than the principal amount of deposits. As of September 30, 2022, all of the City's cash deposits with
financial institutions were collateralized with securities held by the pledging financial institution in the City's name.
Credit Risk
Credit Risk. It is the City's policy to limit its investments to investment types with an investment quality rating not less than
A or its equivalent by a nationally recognized statistical rating organization. The City's investments as of September 30, 2022,
were rated as follows:
Credit Quality
Investment Type:
Rating
Rating Agency
Investment Pools:
Texas CLASS
AAAm
Standard & Poor's
TexPool
AAAm
Standard & Poor's
Debt Securities:
Federal Home Loan Mortgage Corp.
Aaa
Moody's Investor Service
Federal Home Loan Bank
Aaa
Moody's Investor Service
Federal Farm Credit Bank
Aaa
Moody's Investor Service
Federal National Mortgage Association
Aaa
Moody's Investor Service
46 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 3. Receivables and Deferred Inflows of Resources
Receivables as of September 30, 2022 for the City's individual major funds and nonmajor funds in the aggregate including the
applicable allowances for uncollectible accounts, are as follows:
receivables
Governmental Funds
Proprietary Fund
Debt Service
Water and
General
Fund
Nonmajor
Sewer
Total
Receivables:
Property taxes
$ 247,529
$ 53,104
$
$
$ 300,633
Penalties and interest
138,675
24,376
163,051
Sales tax
1,731,350
-
427,806
2,159,156
Franchise taxes
572,740
-
572,740
Customer accounts
321,776
2,697
4,268,748
4,593,221
Court fines
873,513
-
-
873,513
Leases
1,021,537
-
1,021,537
Other
730,696
3,658
-
734,354
Gross receivables
5,637,816
77,480
434,161
4,268,748
10,418,205
Less: allowancefor
uncollectibles
(862,402)
(23,361)
-
(279,159)
(1,164,922)
Net total
$ 4 775 414
$ 54 119
$ 434 161
$ 3 989 589
$ 9 253 283
Governmental funds reported deferred inflows of resources in connection with receivables for revenue that is not considered
to be available to liquidate liabilities of the current period. At the end of the current fiscal year, the various components of
deferred inflows of resources for unavailable revenues reported in the governmental funds were as follows:
General Fund:
Delinquent property taxes
Property tax penalties and interest
Court fines
Grants
Miscellaneous
Total General Fund
Debt Service Fund:
Delinquent property taxes
Property tax penalties and interest
Nonmajor funds:
Court fi nes
Total Nonmajor Funds
Total governmental funds
Deferred Inflows
of Resources
$ 173,870
100,990
174,703
244,925
8,166
702,654
37,042
15,631
52,673
3,756
3,756
$ 759,083
47 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 4. Capital Assets
Capital assets activity for the primary government for the fiscal year ended September 30, 2022, is as follows:
Governmental activities
Capital assets, not being depreciated:
Land
Construction in progress
Total capital assets, not being depreciated
Capital assets, being depreciated:
Buildings and improvements
Machinery and equipment
Infrastructure
Total capital assets, being depreciated
Less accumulated depreciation for:
Buildings & improvements
Machinery and equipment
Infrastructure
Total accumulated depreciation
Total capital assets - being depreciated
Governmental capital assets, net
Business -type activities
Capital assets, not being depreciated:
Land
Water rights
Construction in progress
Total capital assets, not being depreciated
Capital assets, being depreciated:
Buildings and improvements
Machinery and equipment
Water and sewer system
Total capital assets, being depreciated
Less accumulated depreciation for:
Buildings and improvements
Machinery and equipment
Water and sewer system
Total accumulated depreciation
Total capital assets - being depreciated
Business -type capital assets, net
Reclassification/
Beginning Balance Increases Decreases Ending Balance
$ 29,695,765 $ 2,660,075 $ $ 32,355,840
1,435,585 7,361,587 8,797,172
31,131,350 10,021,662 41,153,012
45,778,777
573,252
46,352,029
19,043,530
2,497,550
(321,697) 21,219,383
105,053,888
160,894
105,214,782
169,876,195
3,231,696
(321,697) 172,786,194
(21,916,258)
(1,497,115)
-
(23,413,373)
(12,028,958)
(1,660,569)
315,541
(13,373,986)
(58,544,064)
(2,995,436)
-
(61,539,500)
(92,489,280)
(6,153,120)
315,541
(98,326,859)
77,386,915
(2,921,424)
(6,156)
74,459,335
$ 108,518,265 $
7,100,238 $
(6,156) $
115,612,347
Reclassification/
Beginning Balance Increases Decreases Ending Balance
$ 319,473 $ $ $ 319,473
19,716,695 19,716,695
2,870,307 10,572,454 (3,813,257) 9,629,504
22,906,475 10,572,454 (3,813,257) 29,665,672
683,906
- 683,906
7,725,245
164,191 (10,499) 7,878,937
74,199,822
- 3,813,257 78,013,079
82,608,973
164,191 3,802,758 86,575,922
(345,300)
(19,757)
- (365,057)
(5,066,302)
(226,582)
10,499 (5,282,385)
(37,295,291)
(1,747,649)
- (39,042,940)
(42,706,893)
(1,993,988)
10,499 (44,690,382)
39,902,080
(1,829,797)
3,813,257 41,885,540
$ 62,808,555 $
8,742,657 $
- $ 71,551,212
48 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 4. Capital Assets (continued)
Capital assets activity for the discretely presented component units for the fiscal year ended September 30, 2022, is as
follows:
Component Unit
Capital assets, not being depreciated:
La nd
Total capital assets, not being depreciated
Capital assets, being depreciated:
Water production and distribution facilities
Total capital assets, being depreciated
Less accumulated depreciation for:
Water production and distribution facilities
Total accumulated depreciation
Total capital assets - being depreciated
Component Unit capital assets, net
Depreciation
Reclassification/
Beginning Balance Increases Decreases Ending Balance
$ 7,762,414 $ $ $ 7,762,414
7,762,414 7,762,414
483,467 483,467
483,467 483,467
(116,537) (10,745) (127,282)
(116,537) (10,745) (127,282)
366,930 (10,745) 356,185
$ 8,129,344 $ (10,745) $ $ 8,118,599
Depreciation expense was charged to functions/programs of the City as follows:
Depreciation
Expense
Primary Government
Governmental activities:
General government
$ 416,913
Public safety
11197,021
Public works
31338,400
Community development
5,902
Parks and recreation
679,236
Capital assets held bytheCity's internal service
fund are charged tothevarious functions based on
their usage
515,648
Total Governmental activities
61153,120
Business -type activities:
Water and sewer 1,993,988
Total Business -type activities: 1,993,988
Total Primary Government $ 8,147,108
49 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 4. Capital Assets (continued)
Construction commitments
The City has active construction projects as of September 30, 2022. At year end, the City's commitments with contractors
were as follows:
Projects
Governmental funds:
Parks Master Plan
Blackhawk Emergency Shelter
Blackhawk Building Renovation
Fi re Stati on #2
Public Safety Building
Centennial Wall
Utility Relocation at Clear Creek Utility Bridge
Forest Bend Detention Pond
Deepwood Flood Control
IT Network Refresh
Enterprise funds:
Lift Station Mitigation Program
Automated Water Meters
Water Systems Improvements
Lift Station SCADA Server Upgrade
Fire Station #2
Total Commitments
Construction Construction in Remaining
Commitment Progress Commitment
$ 146,200 $
95,400 $
50,800
36,475
27,550
8,925
260,000
213,825
46,175
4,627,683
2,334,587
2,293,096
6,077,700
4,700,280
1,377,420
435,589
291,864
143,725
219,200
202,550
16,650
4,070,225
835,634
3,234,591
236,369
63,924
172,445
239,882
31,558
208,324
16,349,323
8,797,172
7,552,151
$ 507,784
$ 428,256 $
79,528
8,725,441
8,406,911
318,530
937,316
746,221
191,095
3,744
3,744
-
44,372
44,372
-
10,218,657
9,629,504
589,153
$ 26,567,980
$ 18,426,676 $
8,141,304
The remaining commitment amounts were encumbered at year end. The encumbrances and related appropriation lapse at
the end of the fiscal year, but they are re -appropriated and become a part of the subsequent year's budget because
performance under the executory contract is expected in the next year. At year end, the amount of significant encumbrances
expected to be honored upon performance by the vendors in the next year were $3,396,348 for General Fund.
Note 5. Long-term Debt
The City issues a variety of long-term debt instruments in order to acquire and/or construct major capital facilities and
equipment for governmental and business -type activities. These instruments include general obligation bonds, certificates of
obligation, revenue bonds, and notes payable. These debt obligations are secured by either future tax revenue, water and
sewer system revenue, or liens on property and equipment. Debt obligations that are intended to be repaid from water and
sewer system revenue have been recorded as business -type activities. All other long-term obligations of the City are
considered to be governmental type activities.
50 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note S. Long-term Debt (continued)
Federal Arbitrage
The Tax Reform Act of 1986 instituted certain arbitrage restrictions consisting of complex regulations with respect to issuance
of tax-exempt bonds after August 31, 1986. Arbitrage regulations deal with the investment of tax-exempt bond proceeds at
an interest yield greater than the interest yield paid to bondholders. Generally, all interest paid to bondholders can be
retroactively rendered taxable if applicable rebates are not reported and paid to the Internal Revenue Service (IRS) at least
every five years for applicable bond issues. Accordingly, there is the risk that if such calculations are not performed, or are
not performed correctly, a substantial liability to the City could result. The City periodically engages an arbitrage consultant
to perform the calculations in accordance with the rules and regulations of the IRS. There was no liability for arbitrage
recorded as of year-end.
Bonds Payable and Certificates of Obligation
The following schedule summarizes the terms of the City's general obligation bonds, combination tax and revenue bonds,
and certificates of obligation outstanding and their corresponding allocations to the governmental and business -type
activities at September 30, 2022:
Original Issue Final Interest Governmental Business -Type
General Obligation Bonds: Amount Maturity Rates Activities Activities
2014 General Obligation Refunding
2015 General Obligation Refunding
2016 General Obligation Permanent
Improvement and Refunding
2016AGeneral Obligation Refunding
2017 General Obligation Bonds
2020 General Obligation and Refunding
Bonds
2021 General Obligation and Refunding
Bonds
Total general obligation bonds
Revenue Bonds:
2016 Waterworks and Sewer System
2018 Waterworks and Sewer System
2021 Waterworks and Sewer System
Total revenue bonds
Total
$ 8,805,000
9,595,000
19,095,000
9,765,000
5,605,000
10,465,000
16,235,000
5,735,000
20,170,000
13,690,000
2028
2.0%-4.0%
$ 1,910,000 $ 4,910,000
2030
2.0%-3.0%
6,450,000 -
2031
2.0%-5.0%
6,635,000 6,515,000
2034
2.0%-4.0%
- 7,210,000
2031
2.0%-4.0%
4,295,000 -
2050 2.0%-4.0%
2051 2.375% - 4.0%
2036
2038
2041
2.0% - 4.0%
4.0% - 5.0%
3.0% - 4.0%
9,435,000
15,225,000
18,635,000
4,350,000
18,060,000
13,220,000
$ 43,950,000 $ 54,265,000
51
City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note S. Long-term Debt (continued)
Bonds Payable and Certificates of Obligation (continued)
Annual debt service requirements for the City's bonds and revenue bonds are as follows:
Governmental Activities
Business -type Activities
Fiscal Year
Principal
Interest
Principal
Interest
Total
2023
$ 2,400,000
$ 1,508,906
$ 3,225,000
$ 2,096,600
$ 9,230,506
2024
2,485,000
1,424,206
3,345,000
1,973,275
9,227,481
2025
2,575,000
1,333,469
3,485,000
1,837,125
9,230,594
2026
2,670,000
1,239,669
3,685,000
1,687,950
9,282,619
2027
2,815,000
1,136,803
3,760,000
1,528,000
9,239,803
2028-2032
13,510,000
3,886,238
18,260,000
5,072,025
40,728,263
2033-2037
5,505,000
2,083,075
13,485,000
1,994,150
23,067,225
2038-2042
4,835,000
1,248,600
5,020,000
244,450
11,348,050
2043-2047
3,950,000
670,797
-
-
4,620,797
2048-2052
3,205,000
151,878
-
-
3,356,878
$ 43,950,000
$ 14,683,641
$ 54,265,000
$ 16,433,575
$ 129,332,216
Changes in the City's long-term liability activity for the year ended September 30, 2022, are as follows:
Beginning
Additions
Reductions
Ending Balance
Due Within One
Balance
Year
Primary Government
Governmental activities:
General obligation bonds
$ 46,265,000
$
$
(2,315,000)
$ 43,950,000
$
2,400,000
Premium on bond issuance
3,544,358
(350,456)
3,193,902
-
Notes payable
1,681,809
1,457,640
(525,720)
2,613,729
702,919
Compensated absences
996,190
1,180,525
(1,032,372)
1,144,343
228,869
Governmental activity
Long-term liabilities
$ 52,487,357
$
2,638,165
$
(4,223,548)
$ 50,901,974
$
3,331,788
Beginning
Additions
Reductions
Ending Balance
Due Within One
Balance
Year
Business -type activities:
Revenue bonds
37,080,000
$
$
(1,450,000)
$ 35,630,000
$
1,510,000
General obligation bonds
20,300,000
(1,665,000)
18,635,000
1,715,000
Premium on bond issuance
5,666,291
(402,255)
5,264,036
-
Compensated absences
117,779
118,399
(126,768)
109,410
21,882
Business -type activity
Long-term liabilities
$ 63,164,070
$
118,399
$
(3,644,023)
$ 59,638,446
$
3,246,882
Total Primary government
$ 115,651,427
$
2,756,564
$
(7,867,571)
$ 110,540,420
$
6,578,670
52 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note S. Long-term Debt (continued)
Bonds Payable and Certificates of Obligation (continued)
The compensated absences, net pension liability and total OPEB liabilities attributable to the governmental activities will be
liquidated primarily by the General Fund.
West Ranch Management District
The following schedule summarizes the terms of the West Ranch Management District's general obligation bonds at July 31,
2022:
Amounts
Interest
Range of
General Obligation Bonds:
Outstanding
Rates
Maturities
Road Series 2010A
$ 45,000
4.35%
2021-2022
Road Series2014
1,845,000
2.00%-3.75%
2022-2040
Series 2015
3,905,000
2.950% - 4.125%
2022-2030
Series 2016
2,080,000
3.00% - 4.00%
2031-2040
Refunding Series 2016
665,000
2.00%-4.00%
2022-2026
Series 2020
8,975,000
2.00% - 4.00%
2022-2040
Refunding Series 2016
1,535,000
2.00%-4.00%
2022-2040
Total general obligation bonds
$ 19,050,000
* Or any date thereafter, callable at par plus accrued interest to the date of redemption.
Annual debt service requirements for the District's bonds are as follows:
Fiscal Year
2023
2024
2025
2026
2027
2028-2032
2033-2037
2038-2041
Principal
$ 865,000
900,000
930,000
970,000
1,005,000
5,370,000
4,740,000
4,270,000
$ 19,050,000
Interest
$ 559,587
530,329
497,763
461,806
426,238
1,638,010
947,879
255,216
$ 5,316,828
Total
$ 1,424,587
1,430,329
1,427,763
1,431,806
1,431,238
7,008,010
5,687,879
4,525,216
$ 24,366,828
Callable
Date *
September 1, 2020
September 1, 2022
September 1, 2023
September 1, 2024
September 1, 2024
September 1, 2025
September 1, 2025
The District's bonds are payable from the proceeds of an ad valorem tax levied upon all property within the District subject
to taxation, without limitation as to rate or amount.
53 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note S. Long-term Debt (continued)
Bonds Payable and Certificates of Obligation (continued)
West Ranch Management District (continued)
Changes in the discretely presented component units' long-term liabilities for the year end July 31, 2022, are as follows:
Beginning
West Ranch Management District Balance
Component Unit
General obligation bonds
$ 21,750,000
Discount on bonds
(277,729)
Premium on bonds
76,630
Developer advances
40,000
Due to developer
369,600
Due Within One
Increase Decrease Ending Balance Year
$ $ (2,700,000)
64,319
(9,182)
$ 19,050,000 $ 865,000
(213,410) -
67,448
40,000
369,600
Total $ 21,958,501 $ - $ (2,644,863) $ 19,313,638 $ 865,000
At July 31, 2022, the District had $3,775,000 of unlimited tax bonds and recreational facilities' bonds authorized, but unissued,
for the purposes of acquiring, constructing and improving recreational facilities, transportation, education, and the water,
sanitary sewer and drainage systems within the District.
A developer of the District has advanced $40,000 to the District for operating expenses. The District has agreed to pay these
amounts, plus interest, to the extent approved by the Commission from the proceeds of future bond sales. These amounts
have been recorded in the financial statements as long-term liabilities. The District is currently unable to estimate when
bonds will be issued to pay this liability.
The developer of the District has constructed underground utilities on behalf of the District. The District's engineer estimates
reimbursable costs for completed projects are $369,600. The District has agreed to reimburse the developers for these
amounts, plus interest, to the extent approved by the Texas Commission on Environmental Quality from the proceeds of
future bond sales. These amounts have been recorded in the financial statements as long-term liabilities.
Defeasance of Bonds
The City defeased certain bonds by placing the proceeds of new bonds in an irrevocable trust to provide future debt service
payments on the old bonds. Accordingly, the trust account assets and liabilities for the defeased bonds are not included in
the City's financial statements. On September 30, 2022, the City has no bonds considered defeased that were outstanding.
Notes Payable
During the current fiscal year, the City entered into a five-year agreement for the acquisition and use of vehicles and
equipment. An initial liability was recorded in the amount of $1,457,640 during the current fiscal year. The City is required
to make annual principal and interest payments of $318,555. The agreement has an interest rate of 3.03%.
54 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note S. Long-term Debt (continued)
Notes Payable (continued)
The following is a summary of future notes payments due on this machinery and equipment:
Fiscal Year
Principal
Interest
2023
$ 702,919
$ 70,085
2024
721,122
51,882
2025
406,103
33,191
2026
386,312
22,032
2027
397,273
11,172
Total
$ 2,613,729
$ 188,362
Pledged Revenues
On February 1, 2016, the City issued $5,735,000 in Waterworks and Sewer System Revenue Bonds, Series 2016. On December
3, 2018, the City issued $20,170,000 in Waterworks and Sewer System Revenue Bonds, Series 2018. On February 4, 2021, the
City issued $13,690,000 in Water and Sewer System Revenue Bonds, Series 2021. These bonds represent special obligations
of the City and are payable solely from a first lien on and pledge of the net revenues of the City's waterworks and sanitary
sewer system. The proceeds of the bonds were and are to be used to finance sanitary sewer and waterworks system
extensions and improvements. The outstanding revenue bonds have a final maturity of March 1, 2036 for the 2016 bonds,
March 1, 2038 for the 2018 bonds, and March 1, 2041 for the 2021 bonds. The City will commit revenues each year the bonds
are outstanding. At September 30, 2022, the remaining principal on the series 2016, 2018 and 2021 bonds was $4,350,000,
$18,060,000, and $13,220,000, respectively. Principal and interest payments for the fiscal year were $1,450,000 and
$1,434,200, respectively. Net pledged revenue in 2022 produced 385 percent of the current debt service requirement.
55 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 6. Interfund Balances and Transfers
Due to/from Other Funds
The City had interfund receivable and payable balances at September 30, 2022 as follows:
Due To
Due From
Amount
Purpose
Expenditures funded by General Fund
General Fund
HMGPAcquisition and Demolition
$ 205,180
pending grant reimbursement.
Expenditures funded by General Fund
General Fund
2017 CDBG- DR Harvey- Harris County
680,090
pending grant reimbursement.
Expenditures funded by General Fund
General Fund
2017CDBG- DR Harvey- Galveston County
272,460
pending grant reimbursement.
Expenditures funded by bond funds
2021 Bond Fund
2017 CDBG- DR Harvey -Galveston County
996,000
pendinggrantreimbursement
$ 2,153,730
Governmental activities:
General fund $ 1,157,730 $ $ 1,157,730
Bond construction fund -
996,000 996,000
Nonmajor governmental funds -
(2,153,730) (2,153,730)
Interfund Transfers
The composition of interfund transfers for the year ended September 30, 2022, were as follows:
Transfer In Transfers Out Amount Purpose
Budgeted annual transfers for indirect watei
General Fund Water and Sewer Fund $ 1,708,331 and sewer costs by the General Fund
Internal Service Fund General Fund 77,300 To fund newvehiclefor Police Department
Internal Service Fund Water and Sewer Fund 135,000 To fund 2 newvehicles for Public Works
Capital lease proceeds to purchase
Water and Sewer Fund General Fund 47,648 equipment in the sewer division
$ 1,968,279
Note 6. Leases
Lease Receivable
The City leases real property to third parties for the placement of their telecommunication towers. The City recognized
$37,563 in lease revenue and $27,178 in interest revenue during the current fiscal year related to these leases. As of
September 30, 2022, the City's receivable for lease payments was $1,021,537. Also, the City has a deferred inflow of resources
associated with this lease that will be recognized as revenue over the lease term. As of September 30, 2022, the balance of
the deferred inflow of resources was $1,011,689.
56 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 7. Employee Retirement System
Texas Municipal Retirement System
Plan Description and Provisions
The City participates as one of 901 plans in the nontraditional, joint contributory, hybrid defined benefit pension plan administered
bythe Texas Municipal Retirement System (TMRS). TMRS is an agency created bythe State of Texas and administered in accordance
with the TMRS Act, Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agent multiple -employer retirement system
for municipal employees in the State of Texas. The TMRS Act places the general administration and management of the System
with a six -member Board of Trustees. Although the Governor, with the advice and consent of the Senate, appoints the Board, TMRS
is not fiscally dependent on the State of Texas. TMRS's defined benefit pension plan is a tax -qualified plan under Section 401(a) of
the Internal Revenue Code. TMRS a report (ACFR) that can be obtained at www.tmrs.com.
All eligible employees of the City are required to participate in TMRS.
Benefits Provided
TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the governing body of the City, within
the options available in the state statutes governing TMRS.
At retirement, the benefit is calculated as if the sum of the employee's contributions, with interest, and the city -financed monetary
credits with interest were used to purchase an annuity. Members may choose to receive their retirement benefit in one of seven
actuarially equivalent payments options. Members may also choose to receive a portion of their benefit as a Partial Lump Sum
Distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the member's deposits and
interest.
The City has approved an annually repeating (automatic) basis monetary credit referred to as an updated service credit (USC) which
is a theoretical amount which takes into account salary increases or plan improvements. If at any time during their career an
employee earns a USC, this amount remains in their account earning interest at 5% until retirement. At retirement, the benefit is
calculated as if the sum of the employee's accumulated contributions with interest and the employer match plus employer -financed
monetary credits, such as USC, with interest were used to purchase an annuity. Additionally, City provides on an annually repeating
(automatic) basis cost of living adjustments (COLA) for retirees equal to a percentage of the change in the consumer price index
(CPI).
A summary of plan provisions for the City are as follows:
Employee deposit rate:
7%
Matching ratio (City to employee):
2 to 1
Years required for vesting:
5
Service retirement eligibility:
Vested at age 60 or 20 years at
any age
Updated Service Credit:
100% Repeating
Annuity increase to retirees
50% of CPI; Repeating
Supplement death benefit — active
Employees and retirees
Yes
57 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 7. Employee Retirement System (continued)
Texas Municipal Retirement System (continued)
Employees covered by benefit terms
At the December 31, 2021 valuation and measurement date, the following employees were covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 152
Inactive employees entitled to but not yet receiving benefits 131
Active employees 216
Total 499
Contributions
The contribution rates for employees in TMRS are either 5%, 6%, or 7% of employee gross earnings, and the City matching
percentages are either 100%, 150%, or 200%, both as adopted by the governing body of the City. Under the State law governing
TMRS, the contribution rate for each City is determined annually by the consulting actuary, using the Entry Age Normal (EAN)
actuarial cost method. The actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned
by employees during the year, with an additional amount to finance any unfunded accrued liability.
Employees forthe City were required to contribute 7.0%of their annual gross earnings during the fiscal year. The contribution rates
for the City were 16.55% and 16.27% in calendar years 2021 and 2022, respectively. The City's contributions to TMRS for the year
ended September 30, 2022, were $2,844,852 and were equal to the required contributions.
Net Pension Liability
The City's Net Pension Liability (NPL) was measured as of December 31, 2021, and the Total Pension Liability (TPL) used to
calculate the Net Pension Liability was determined by an actuarial valuation as of that date.
Actuarial Assumptions
The Total Pension Liability in the December 31, 2021 actuarial valuation was determined using the following actuarial
assumptions:
Actuarial cost method:
Amortization method:
Remaining amortization period
Asset valuation method:
Inflation:
Salary increases:
Investment rate of return:
Entry age normal
Level percentage of payroll, closed
24 years
10 year smoothed market; 12% soft corridor
2.50%
3.50%to 11.50%including inflation
6.75%
58 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 7. Employee Retirement System (continued)
Texas Municipal Retirement System (continued)
Actuarial Assumptions (continued)
Salary increases are based on a service -related table. Mortality rates for active members are based on the PUB (10) mortality
tables with the Public Safety table used for males and the General Employee table used for females. Mortality rates for healthy
retirees and beneficiaries are based on the Gender distinct 2019 Municipal Retirees of Texas mortality tables. The rates for
actives, healthy retirees and beneficiaries are projected on a fully generational basis by Scale LIMP to account for future mortality
improvements. For disabled annuitants, the same mortality tables for healthy retirees is used with a 4- year set -forward for
males and a 3-year set -forward for females. In addition, a 3.5% and 3.0% minimum mortality rate is applied, for males and
females respectively, to reflect the impairment for younger members who become disabled. The rates are projected on a fully
generational basis by Scale UMP to account for future mortality improvements subject to the floor.
The actuarial assumptions were developed primarily from the actuarial investigation of the experience of TMRS over the four-
year period from December 31, 2014, to December 31, 2018. They were adopted in 2019 and first used in the December 31,
2019, actuarial valuation. The post -retirement mortality assumption for annuity purchase rates is based on the Mortality
Experience Investigation Study covering 2009 through 2011 and dated December 31, 2013. Plan assets are managed on a total
return basis with an emphasis on both capital appreciation as well as the production of income, in order to satisfy the short-term
and long-term funding needs of TMRS.
The long-term expected rate of return on pension plan investments was determined using a building block method in which best
estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation)
are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by
weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. In
determining their best estimate of a recommended investment return assumption under the various alternative asset allocation
portfolios, GRS focused on the area between (1) arithmetic mean (aggressive) without an adjustment for time (conservative)
and (2) the geometric mean (conservative) with an adjustment for time (aggressive). The target allocation and best estimates of
real rates of return for each major asset class in fiscal year 2020 are summarized in the table below:
Global Equity
Core Fixed Income
Non -Core Fixed Income
Other Public and Private Markets
Real Estate
Hedge Funds
Private Equity
Total
Discount Rate
Long -Term
Expected Real
Rate of Return
Target Allocation (Arithmetic)
35.0% 7.55%
6.0%
2.00%
20.0%
5.68%
12.0%
7.22%
12.0%
6.85%
5.0%
5.35%
10.0%
10.00%
100.0%
The discount rate used to measure the Total Pension Liability was 6.75%. The projection of cash flows used to determine the
discount rate assumed that employee and employer contributions will be made at the rates specified in statue. Based on that
assumption, the pension plan's Fiduciary Net Position was projected to be available to make all projected future benefit
payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan
investments was applied to all periods of projected benefit payments to determine the Total Pension Liability.
59 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 7. Employee Retirement System (continued)
Texas Municipal Retirement System (continued)
Changes in the Net Pension Liability
Balance at 12/31/2020
Changes for the year:
Service Cost
Interest (on the Total Pension
Liability)
Difference between expected and
actual experience
Changes of assumptions
Benefit payments, including refunds
of employee contributions
Contributions — employer
Contributions — employee
Net investment income
Administrative Expense
Other
Balance at 12/31/2021
Increase (Decrease)
Total Pension
Plan Fiduciary Net
Net Pension
Liability
Position
Liability
$ 91,096,245
$ 81,355,616
$ 9,740,629
3,032,100
-
3,032,100
6,110,807
-
6,110,807
788,166
-
788,166
(4,163,654)
(4,163,654)
-
-
2,777,049
(2,777,049)
-
1,174,582
(1,174,582)
-
10,611,017
(10,611,017)
-
(49,073)
49,073
-
337
(337)
$ 96,863,664
$ 91,705,874
$ 5,157,790
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability (asset) of the City, calculated using the discount rate of 6.75%, as well as what
the City's net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (5.75%) or
1-percentage-point higher (7.75%) than the current rate:
1%Decrease in Current Single Rate 1%Increase in
Discount Rate (5.75%) Discount Rate (6.75%) Discount Rate (7.75%)
City's net pension liability $ 18,854,597 $ 5,157,790 $ (6,071,734)
Pension Plan Fiduciary Net Position
Detailed information about the pension plan's Fiduciary Net Position is available in a separately issued TMRS financial
report. That report may be obtained on the Internet at www.tmrs.com.
60 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 7. Employee Retirement System (continued)
Texas Municipal Retirement System (continued)
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
For the year ended September 30, 2022, the City recognized a pension expense of $1,199,639.
At September 30, 2022, the City reported deferred outflows and inflows of resources related to pensions from the
following sources:
Deferred
Outflows of
Deferred Inflows
Resources
of Resources
Difference in expected and actual
economic experience
$ 1,016,277
$ (82,001)
Changes in actuarial assumptions
130,195
-
Difference between projected and
actual investment earnings
-
(5,433,077)
Contributions subsequent to the
measurement date
2,071,293
-
Tota I
$ 3,217,765 $ (5,515,078)
The $2,071,293 reported as deferred outflows of resources related to pension resulting from contributions subsequent to
the measurement date will be recognized as a reduction of the net pension liability for the year ending September 30,
2023. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in
pension expenses as follows:
2023
2024
2025
2026
Thereafter
Tota I
Net Deferred Outflows
(Inflows) of Resources
$ (486,639)
(1,949,324)
(991,613)
(941,030)
$ (4,368,606)
61
City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 8. Post Employee Benefits Other Than Pensions
TMRS Supplemental Death Benefits Fund
Benefit Plan Description
The City's single -employer defined benefit group -term life insurance plan is operated by the Texas Municipal Retirement
System (TMRS) via the Supplemental Death Benefits Fund (SDBF). The City elected, by ordinance, to provide group -term
life insurance coverage to both current and retired employees. The City may terminate coverage under and discontinue
participation in the SDBF by adopting an ordinance before November 1 of any year to be effective the following January
1.
The death benefit for active employees provides a lump -sum payment approximately equal to the employee's annual
salary (calculated based on the employee's actual earnings, for the 12-month period preceding the month of death);
retired employees are insured for $7,500; this coverage is another post -employment benefit (OPEB). As the SDBF covers
both active and retiree participants, with no segregation of assets, the SDBF is considered to be an unfunded OPEB plan
(i.e. no assets are accumulated).
Membership in the plan as of the measurement date of December 31, 2021 was as follows:
Inactive employees currently receiving benefits 104
Inactive employees entitled to but not yet receiving benefits 33
Active employees 216
Total 353
Contributions
Contributions are made monthly based on the covered payroll of employee members of the participating member city.
The contractually required contribution rate is determined annually for each city (currently 0.17% of covered payroll). The
rate is based on the mortality and service experience of all employees covered by the SDBF and the demographics specific
to the workforce of the city. There is a one-year delay between the actuarial valuation that serves as the basis for the
employer contribution rate and the calendar year when the rate goes into effect. The funding policy of this plan is to assure
that adequate resources are available to meet all death benefit payments for the upcoming year; the intent is not to
prefund retiree term life insurance during employees' entire careers. As such, contributions are utilized to fund active
member deaths on a pay-as-you-go basis; any excess contributions and investment income over payments then become
net position available for benefits.
Discount Rate
The TMRS SDBF program is treated as unfunded OPEB plan because the SDBF trust covers both active employees and
retirees and the assets are not segregated for these groups. Under GASB Statement No. 75, the discount rate for an
unfunded OPEB plan should be based on 20-year tax-exempt AA or higher Municipal Bonds. Therefore, a discount rate of
1.84% based on the Fidelity Index's "20-Year Municipal GO AA Index" rate as of December 31, 2021.
62 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 8. Post Employee Benefits Other Than Pensions (continued)
TMRS Supplemental Death Benefits Fund (continued)
Actuarial Assumptions
The City's total OPEB liability was measured at December 31, 2021 and was determined by an actuarial valuation as of that
date using the following actuarial assumptions:
Valuation Date: December 31, 2021
Methods and Assumptions:
Inflation: 2.50%
Salary Increases: 3.50%to 11.50%, including inflation
Discount rate *: 1.84%
Retirees' share of benefit related costs: $0
Administrative expenses: All administrative expenses are paid through the Pension Trust and accounted
for under reporting requirements under GASB Statement No. 68.
Mortality rates — service retirees: 2019 Municipal Retirees of Texas Mortality Tables. The rates are projected on
a fully generational basis with scale UMP.
Mortality rates — disabled retirees: 2019 Municipal Retirees of Texas Mortality Tables with a 4 year set -forward
for males and a 3 year set -forward for females. In addition, a 3.5% and 3%
minimum mortality rate will be applied to reflect the impairment for younger
members who become disabled for males and females, respectively. The rates
are projected on a fully generational basis by Scale UMP to account for future
mortality improvements subject to the floor.
*The discount rate was based on the Fidelity Index's "20-Year Municipal GO AA Index" rate as of December 31,2021.
Note: The actuarial assumptions used in the December 31, 2021 valuation were based on the results of an actuarial
experience study for the period December 31, 2014 to December 31, 2018.
Changes in the Total OPEB Liability
Service cost
$ 45,305
Interest
17,025
Changes of benefit terms
-
Difference between expected and actual experience
(9,842)
Changes of assumptions
29,168
Benefit payments
(15,102)
Net change in total OPEB liability
66,554
Total OPEB liability- beginning
836,154
Total OPEB liability- ending
$ 902,708
Ending total OPEB liability is $902,708 as of December 31, 2021. Changes of assumptions reflect a change in the discount
rate from 2.00% as of December 31, 2020 to 1.84% as of December 31,2021.
63 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 8. Post Employee Benefits Other Than Pensions (continued)
TMRS Supplemental Death Benefits Fund (continued)
Sensitivity Analysis
The following presents the total OPEB liability of the employer, calculated using the discount rate of 1.84%, as well as what
the City's total OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower (0.84%)
or 1 percentage point higher (2.84%) than the current rate. Note that the healthcare cost trend rate does not affect the
total OPEB liability, so sensitivity to the healthcare cost trend rate is not shown.
Current Discount
Rate Assumption 1% Increase to
1% Decrease to 0.84% 1.84% 2.84%
$ 1,116,891 $ 902,708 $ 740,283
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB Activity
For the year ended September 30, 2022, the City recognized OPEB expense of $85,258 related to the TMRS Supplemental
Death Benefit Fund and OPEB expense of $63,783 related to the City's retiree healthcare plan for total OPEB expense of
$149,041. As of September 30, 2022, the City reported deferred outflows of resources related to OPEB from the following
sources:
Deferred Outflows of Deferred Inflows of
Resources Resources
Differences between expected
and actual experience $ - $ (75,182)
Changes in assumptions and other inputs 159,032 -
Contributions made subsequent to
the measurement date 3,819 -
Total $ 162,851 $ (75,182)
The $3,819 reported as deferred outflows of resources related to OPEB resulting from contributions subsequent to the
measurement date will be recognized as a reduction of the total OPEB liability for the year ending September 30, 2023.
Other amounts reported as deferred outflows and inflows of resources related to OPEB, excluding contributions
subsequent to the measurement date, will be recognized in OPEB expenses as follows:
Net Deferred
Outflows (Inflows) of
Resources
2023
$ 22,928
2024
17,482
2025
20,637
2026
16,524
2027
5,355
Thereafter
924
Tota 1
$ 83,850
64 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 8. Post Employee Benefits Other Than Pensions (continued)
Retiree Health Care Plan (RHCP)
Plan Description
The City's defined benefit OPEB plan, City of Friendswood Retiree Health Care Plan (RHCP), provides OPEB through an implicit
healthcare premium for retirees for all permanent full-time employees of the City. RHCP is a single -employer defined benefit
OPEB plan administered by the City. At this time, no assets are accumulated in a trust to fund the future requirements of the
RHCP.
Benefits Provided
RHCP provides access to post retirement employees by offering a "blended premium" structure, that is, the overall health
care premiums for active employees and non -Medicare retirees, are stated in terms of a single "blended premium". The
difference between the underlying retiree claims and the blended overall health care premium is referred to as an "implicit"
subsidy. Because the underlying claims costs for a non -Medicare retiree are on average higher than the blended premium,
there is a positive implicit subsidy for the non -Medicare retirees.
Employees covered by benefit terms. At December 31, 2020, the following employees were covered by the benefit terms:
Retirees and beneficiaries 7
Inactive, nonretired members 0
Active members 204
Total 211
Total OPEB Liability
The City's total OPEB liability of $1,032,823 was measured as of December 31, 2021, and was determined by an actuarial
valuation as of December 31, 2020.
65 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 8. Post Employee Benefits Other Than Pensions (continued)
Retiree Health Care Plan (RHCP) (continued)
Actuarial Assumptions and Methods
The actuarial valuation was performed as of December 31, 2020. Update procedures were used to roll forward the total OPEB
liability to December 31, 2021. The total OPEB liability in the December 31, 2020 actuarial valuation was determined using
the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise
specified:
Valuation Date: December 31, 2020
Measurement Date: December 31, 2021
Methods and Assumptions:
Actuarial Cost Method: Individual Entry -Age Normal
Discount Rate: 1.84% as of December 31, 2021
Inflation: 2.50%
Salary Increases: 3.50% to 11.50%, including inflation
Demographic Assumptions: Based on the experience study covering the four year period ending December
31, 2018 as conducted for the Texas Municipal Retirement System (TMRS)
Mortality: For healthy retirees, the gender -distinct 2019 Municipal Retirees of Texas
mortality tables are used. The rate are projected on a fully generational basis
using the ultimate mortality improvement rates in the MP tables published
through 2019 to account for future mortality improvements.
Health Care Trend Rates: Initial rate of 6.80% declining to an ultimate rate of 4.25% after 12 years.
Participation Rates: It was assumed 20% of employees retiring at the age of 50 or over would choose
to receive retiree health care coverage through the City. Employees retiring
before the age of 50 were not assumed to elect coverage.
Other Information:
Notes: The discount rate changed from 2.00% as of December 31, 2020 to 1.84% as of
December 31, 2021. Additionally, the period of service used for the allocation of
service costs was changed to only reflect service with the City.
Discount Rate
For plans that do not have formal assets, the discount rate should equal the tax-exempt municipal bond rate based on an
index of 20-year general obligation bonds with an average AA credit rating as of the measurement date. For the purpose of
this valuation, the municipal bond rate is 1.84% (based on the daily rate closest to but not later than the measurement date
of the Fidelity "20-Year Municipal GO AA Index"). The discount rate was 2.00% as of the prior measurement date.
Plan Assets
There are no plan assets accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75.
66 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 8. Post Employee Benefits Other Than Pensions (continued)
Retiree Health Care Plan (RHCP) (continued)
Changes in the Total OPEB Liability
Service cost
$ 60,759
Interest
22,218
Changes of benefit terms
-
Difference between expected and actual experience
11,967
Changes of assumptions
(111,991)
Benefit payments
(61,339)
Net change in total OPEB liability
(78,386)
Total OPEB liability- beginning
1,111,209
Total OPEB liability- ending
$ 1,032,823
The ending Total OPEB Liability was $1,032,823 as of December 31, 2021.
Sensitivity of the total OPEB liability to changes in the discount rate
The following presents the plan's total OPEB liability, calculated using a discount rate of 1.84%, as well as what the plan's
total OPEB liability would be if it were calculated using a discount rate that is one percent lower or one percent higher:
1% Decrease to
0.84%
$ 1,128,772
Current Discount
Rate Assumption 1% Increase to
1.84% 2.84%
$ 1,032,823 $ 944,844
Sensitivity of the total OPEB liability to changes in the healthcare cost trend rates
The following presents the plan's total OPEB liability, calculated using the assumed trend rates as well as what the plan's total
OPEB liability would be if it were calculated using a trend rate that is one percent lower or one percent higher:
1% Decrease
$ 909,992
Current Healthcare
Cost Trend Rate
Assumption 1% Increase
$ 1,032,823 $ 1,179,741
67 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 8. Post Employee Benefits Other Than Pensions (continued)
Retiree Health Care Plan (RHCP) (continued)
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
For the year ended September 30, 2022, the City recognized OPEB expense of $85,258 related to the TMRS Supplemental
Death Benefit Fund and OPEB expense of $63,783 related to the City's retiree healthcare plan for total OPEB expense of
$149,041. As of September 30, 2022, the City reported deferred outflows of resources related to OPEB from the following
sources:
Differences between expected
and actual experience
Changes assumptions
Contributions subsequent to
the measurement date
Tota I
Deferred Outflows of
Resources
$ 18,959
148,501
Deferred Inflows of
Resources
$ (206,886)
(100,415)
33,379 -
$ 200,839 $ (307,301)
The $33,379 reported as deferred outflows of resources related to OPEB resulting from contributions subsequent to the
measurement date will be recognized as a reduction of the total OPEB liability for the year ending September 30, 2023.
Other amounts reported as deferred outflows and inflows of resources related to OPEB, excluding contributions
subsequent to the measurement date, will be recognized in OPEB expenses as follows:
Net Deferred Outflows
Fiscal Year
(Inflows) of Resources
2023
$ (19,194)
2024
(19,194)
2025
(19,194)
2026
(19,194)
2027
(20,836)
Thereafter
(42,229)
Total
$ (139,841)
68 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 9. Commitments and Contingencies
Southeast Water Purification Plant
The City has entered into a contract with the City of Houston for construction, operating and maintaining a water purification
plant known as Southeast Water Purification Plant. The City's pro rata share of the actual pumping construction costs is 1.33
percent.
The City began receiving water from the plant on October 15, 1990. The City is billed on a monthly basis for the actual gallons
of water received times the City's pro rata share of actual costs. At the end of each quarter, the City of Houston computes
the total operation and maintenance expenses for the quarter just ended, recalculates the cost per one thousand gallons,
and adjusts previous billings on the next invoice.
The relationship of the parties is of a fiduciary character, no partnership or joint venture is created by this contract.
Blackhawk Regional Wastewater Treatment Facility
On December 12, 1974, the City entered into an agreement with Gulf Coast Waste Disposal Authority to construct the
Blackhawk Regional Wastewater Treatment Facility. The Blackhawk Wastewater Treatment Facility was constructed in the
early 1980s and is a regional wastewater treatment plant serving MUD 55, Baybrook MUD 1, City of Houston and the City of
Friendswood. The plant has a capacity of 9.25 million gallons per day (MGD) and is operated and maintained by Gulf Coast
Waste Disposal Authority. Friendswood is the majority owner having 52.465% or 4.853 MGD of its capacity.
As a part of the contract with Gulf Coast Waste Disposal Authority, the City and all participants pay their share of operational
costs and expenses (direct and indirect) incurred monthly at the Blackhawk Wastewater Treatment Facility based upon actual
flows. This includes the maintenance of the plant and the creation and maintenance of reasonable reserves for repairs and
other contingencies. Capital expenditures on the other hand shall be the responsibility of all participants based upon their
purchased capacity in the plant. For Friendswood, that equates to 52.465% for capital projects identified and approved at
the plant.
Federal and State Programs
The City recognizes grant monies received as reimbursement for costs incurred in certain federal and state programs it
administers as revenue. Amounts received or receivable from grantor agencies are subject to audit and adjustment by
grantor agencies. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable
funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time
although the City expects such amounts, if any, to be immaterial.
Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions;
injuries to employees; and natural disasters. The City's risk management program encompasses obtaining property and
liability insurance through Texas Municipal League (TML), an Intergovernmental Risk Pool. The City has not had any significant
reduction in insurance coverage and the amounts of insurance settlements have not exceeded insurance coverage for any of
the last three years. The participation of the City in TML is limited to payment of premiums. During the year ended September
30, 2022, the City paid premiums to TML for provision of various liability, property and casualty insurance. The City has
various deductible amounts ranging from $500 to $5,000 on various policies.
69 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 9. Commitments and Contingencies (continued)
The City also provides workers' compensation insurance on its employees through TML. Workers' compensation is subject
to change when audited by TML. At year-end, September 30, 2022, the City believed the amounts paid on workers'
compensation would not change significantly from the amounts recorded.
During the year ended September 30, 2022, employees of the City were covered by a health and dental insurance plan. The
City pays 90% of the monthly premium of employees choosing individual coverage only. The City pays 70% of the monthly
premium for employees choosing to cover themselves and their dependents.
Note 10— Deficit Fund Balance
As of September 30, 2022, the Coronavirus State and Local Fiscal Recovery fund had a fund balance deficit of $1,666 and the
CDBG-DR Harris County with a deficit of $204,422. The City plans to record revenue in the future to cover the deficits for the
fund.
70 City of Friendswood, Texas 2022 ACFR
REQUIRED SUPPLEMENTARY INFORMATION
71 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 1 of 8
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2022
Variance with
Final budget -
Budgeted Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
Revenues
Property taxes
$ 16,443,981
$ 16,443,981
$ 16,475,894
$ 31,913
Sales and alcohol taxes
8,149,347
8,149,347
8,967,803
818,456
Franchise taxes
1,925,828
1,925,828
2,170,152
244,324
Fines and forfeitures
1,089,427
1,089,427
969,344
(120,083)
Permits and fees
1,658,218
1,664,784
1,789,147
124,363
Intergovernmental
642,396
642,396
S94,774
(47,622)
Investment earnings
34,000
34,000
(1S,254)
(49,254)
Donations
7,750
38,510
61,211
22,701
Miscellaneous
84,453
108,844
336,367
227,523
Total Revenues
30,035,400
30,097,117
31,349,438
1,252,321
Expenditures
General Government:
Mayor and Council - Governing Body:
Supplies and maintenance
11,700
S,364
4,869
49S
Other services and charges
84,850
79,937
7S,077
4,860
Total Governing Body
96,S50
85,301
79,946
5,355
Mayor and Council - City Attorney:
Personnel services
259,523
340,701
338,969
1,732
Supplies
450
32,565
14,341
18,224
Other services and charges
21,270
17,735
12,059
5,676
Total City Attorney
281,243
391,001
365,369
25,632
City Manager - Administration:
Personnel services
747,737
747,737
747,646
91
Supplies
21,780
30,S45
29,725
820
Other services and charges
39,100
35,289
25,566
9,723
Total Administration
808,617
813,571
802,937
10,634
City Manager - Economic Development:
Personnel services
-
-
-
-
Supplies
5,000
5,000
1,000
4,000
Other services and charges
59,820
60,390
31,209
29,181
Total Economic Development
64,820
65,390
32,209
33,181
City Secretary - Municipal Clerk:
Personnel services
389,936
389,936
376,1S4
13,782
Supplies
5,740
25,832
25,779
53
Other services and charges
16,725
19,800
19,901
(101)
Total Municipal Clerk
412,401
435,568
421,834
13,734
72 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2022
Expenditures (continued)
General Government (continued):
City Secretary - Election Services:
Supplies
Other services and charges
Total Election Services
City Secretary - Records Management:
Personnel services
Supplies
Other services and charges
Total Records Management
Administrative Services - Finance:
Personnel services
Supplies
Other services and charges
Total Finance
Administrative Services - Other Admin:
Other services and charges
Total Other Admin
Administrative Services - Municipal Court:
Personnel services
Supplies
Other services and charges
Total Municipal Court
Human Resources - Administration:
Personnel services
Supplies
Other services and charges
Total Administration
Human Resources - Insurance:
Other services and charges
Total Insurance
Budgeted Amounts
Original Final
Page 2 of 8
Variance with
Final budget -
Actual Positive
Amounts (Negative)
$ 1,100 $
200 $
195 $
5
124,980
113,520
54,764
58,756
126,080
113,720
54,959
58,761
159,090
77,912
75,015
2,897
970
-
-
-
21,870
14,970
13,343
1,627
181,930
92,882
88,358
4,524
1,032,087
1,015,087
1,023,020
(7,933)
7,450
15,850
11,220
4,630
110,788
131,410
122,915
8,495
1,150,325
1,162,347
1,157,155
5,192
175,307
176,232
176,118
114
175,307
176,232
176,118
114
400,136
433,056
434,045
(989)
5,780
5,780
5,609
171
28,815
26,815
26,000
815
434,731
465,651
465,654
(3)
378,178
368,680
367,535
1,145
11,700
11,700
5,974
5,726
120,512
120,720
50,788
69,932
510,390
501,100
424,297
76,803
259,297
252,667
250,395
2,272
259,297
252,667
250,395
2,272
73 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 3 of 8
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2022
Variance with
Final budget -
Budgeted Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
Expenditures (continued)
General Government (continued):
Human resources - Risk Management:
Personnel services
$ 148,422
$ 148,422
$ 149,599 $
(1,177)
Supplies
10,960
12,806
7,138
5,668
Other services and charges
61,105
55,037
21,130
33,907
Total Risk Management
220,487
216,265
177,867
38,398
Information Technology - Administration:
Personnel services
755,143
755,143
715,258
39,885
Supplies
82,290
60,056
43,073
16,983
Repairs and maintenance
65,630
65,630
30,049
35,581
Other services and charges
729,495
1,097,245
702,761
394,484
Total Administration
1,632,558
1,978,074
1,491,141
486,933
Total General Government
6,354,736
6,749,769
5,988,239
761,530
Public Safety:
Police Department - Administration:
Personnel services
915,716
915,716
929,797
(14,081)
Supplies
28,750
29,753
21,933
7,820
Repairs and maintenance
42,500
62,104
38,258
23,846
Other services and charges
81,998
541,310
294,109
247,201
Total Administration
1,068,964
1,548,883
1,284,097
264,786
Police Department - Communications
Personnel services
1,196,762
1,196,762
1,186,699
10,063
Supplies
9,700
9,988
6,010
3,978
Repairs and maintenance
36,250
43,250
23,877
19,373
Other services and charges
21,480
21,480
12,270
9,210
Total Communications
1,264,192
1,271,480
1,228,856
42,624
Police Department - Patrol:
Personnel services
6,534,227
6,453,057
6,027,227
425,830
Supplies
305,040
330,355
308,772
21,583
Repairs and maintenance
225,100
252,184
204,305
47,879
Other services and charges
539,294
544,424
507,863
36,561
Total Patrol
7,603,661
7,580,020
7,048,167
531,853
Police Department - Patrol - DOT Program:
Personnel services
102,922
102,922
115,829
(12,907)
Supplies
4,480
4,480
5,784
(1,304)
Repairs and maintenance
1,250
8,750
7,720
1,030
Other services and charges
11,899
11,899
8,654
3,245
Total Patrol - DOT Program
120,551
128,051
137,987
(9,936)
74 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 4 of 8
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2022
Variance with
Final budget -
Budgeted Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
Expenditures (continued)
Public Safety (continued):
Police Department - Criminal Investigation:
Personnel services
$ 1,941,851 $
1,915,351
$ 1,935,860 $
(20,509)
Supplies
52,950
61,387
60,397
990
Repairs and maintenance
52,800
50,421
27,265
23,156
Other services and charges
163,528
216,028
195,197
20,831
Total Criminal Investigation
2,211,129
2,243,187
2,218,719
24,468
Police Department - Animal Control:
Personnel services
346,601
345,218
370,119
(24,901)
Supplies
32,500
42,500
41,980
520
Repairs and maintenance
12,000
12,000
4,433
7,567
Other services and charges
67,914
70,914
57,720
13,194
Total Animal Services
459,015
470,632
474,252
(3,620)
Fire Marshal - Administration:
Personnel services
901,027
911,227
929,053
(17,826)
Supplies
28,075
34,850
33,225
1,625
Repairs and maintenance
5,500
6,219
5,753
466
Other services and charges
105,947
104,447
98,448
5,999
Total Administration
1,040,549
1,056,743
1,066,479
(9,736)
Fire Marshal - Emergency Management:
Personnel services
101,044
101,044
103,516
(2,472)
Supplies
25,350
19,274
12,668
6,606
Repairs and maintenance
3,000
1,700
1,587
113
Other services and charges
48,630
70,301
30,724
39,577
Total Emergency Management
178,024
192,319
148,495
43,824
Fire Marshal - Fire/EMS Administration:
Other services and charges
1,819,900
1,819,900
1,718,833
101,067
Total Fire/EMS Administration
1,819,900
1,819,900
1,718,833
101,067
Fire Marshal - Storm:
Personnel services
-
-
-
-
Supplies
Repairs and maintenance
-
Other services and charges
5,043
(5,043)
Total Storm
5,043
(5,043)
Fire Marshal - Public Safety Health:
Personnel services
-
Supplies
Other services and charges
Total Public Safety Health
-
-
-
-
Total Public Safety
15,765,985
16,311,215
15,330,928
980,287
75 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 5 of 8
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2022
Variance with
Final budget -
Budgeted Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
Expenditures (continued)
Public Works:
Administration:
Personnel services
$ 254,074 $
254,074
$ 253,084 $
990
Supplies
4,050
4,050
3,454
596
Other services and charges
13,275
17,379
5,211
12,168
Total Administration
271,399
275,503
261,749
13,754
Streets:
Personnel services
816,S35
816,535
882,554
(66,019)
Supplies
103,220
111,419
141,378
(29,959)
Repairs and maintenance
143,830
1,023,317
966,247
57,070
Other services and charges
429,898
435,000
447,218
(12,218)
Total Streets
1,493,483
2,386,271
2,437,397
(51,126)
Drainage:
Personnel services
338,413
338,413
271,787
66,626
Supplies
13,090
13,155
13,791
(636)
Repairs and maintenance
56,800
106,336
49,986
56,350
Other services and charges
15,971
15,971
12,750
3,221
Total Drainage
424,274
473,875
348,314
125,561
Total Public Works
2,189,156
3,135,649
3,047,460
88,189
Engineering:
Capital Projects Administration:
Personnel services
482,905
482,905
492,762
(9,857)
Supplies
13,965
17,207
16,661
546
Repairs and maintenance
2,000
2,000
716
1,284
Other services and charges
79,628
73,813
60,871
12,942
Total Capital Projects Administration:
578,498
575,925
571,010
4,915
Total Engineering
578,498
575,925
571,010
4,915
Community Development:
Administration:
Personnel services
367,866
367,866
366,766
1,100
Supplies
9,180
9,180
5,694
3,486
Other services and charges
20,510
20,510
7,081
13,429
Total Administration
397,556
397,556
379,541
18,015
76 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2022
Variance with
Final budget -
Budgeted Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
Expenditures (continued)
Community Development (continued):
Planning and Zoning:
Personnel services
$ 316,297 $
323,097
$ 326,979 $
(3,882)
Supplies
3,900
1,900
1,272
628
Other services and charges
54,075
47,275
22,175
25,100
Total Planning and Zoning
374,272
372,272
350,426
21,846
Inspection and Code Enforcement:
Personnel services
431,959
431,959
411,682
20,277
Supplies
10,380
10,380
10,215
165
Repairs and maintenance
3,650
3,650
1,011
2,639
Other services and charges
56,782
49,882
34,538
15,344
Total Inspection and Code Enforcement
502,771
495,871
457,446
38,425
Total Community Development
1,274,599
1,265,699
1,187,413
78,286
Parks and recreation:
Administration:
Personnel services
291,934
291,934
293,999
(2,065)
Supplies
3,950
3,850
3,754
96
Repairs and maintenance
32,930
33,030
30,536
2,494
Total Administration
328,814
328,814
328,289
525
Recreation Programs
Personnel services
324,187
324,187
345,855
(21,668)
Supplies
19,025
19,716
19,407
309
Other services and charges
127,370
123,500
120,687
2,813
Total Recreation programs
470,582
467,403
485,949
(18,546)
July 4th Program:
Personnel services
31,233
31,233
34,926
(3,693)
Supplies
4,000
5,039
5,038
1
Other services and charges
88,400
103,938
99,744
4,194
Total July 4th Program
123,633
140,210
139,708
502
Summer Day Camp Program:
Personnel services
117,374
117,374
101,031
16,343
Supplies
12,500
13,635
13,631
4
Other services and charges
42,650
44,267
44,370
(103)
Total Summer Day Camp Program
172,524
175,276
159,032
16,244
Page 6 of 8
77 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 7 of 8
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2022
Variance with
Final budget -
Budgeted Amounts
Actual
Positive
Original Final
Amounts
(Negative)
Expenditures (continued)
Parks and recreation (continued):
Keep Friendswood Beautiful committee:
Supplies
$ 14,200 $ 14,634
$ 14,581 $
53
Repairs and maintenance
2,500 4,426
3,925
501
Other services and charges
37,225 37,233
33,415
3,818
Total Keep Friendswood Beautiful committee
53,925 56,293
51,921
4,372
Stevenson Park pool
Personnel services
76,834
76,834
59,674
17,160
Supplies
24,800
23,515
18,582
4,933
Repairs and maintenance
45,518
43,978
38,053
5,925
Other services and charges
25,770
25,810
15,743
10,067
Total Stevenson park pool
172,922
170,137
132,052
38,08S
Senior Activity Center
Personnel services
183,204
183,204
181,675
1,529
Supplies
10,500
9,633
9,315
318
Repairs and maintenance
2,000
5,029
4,997
32
Other services and charges
17,956
18,715
18,851
(136)
Total Senior Activity Center
213,660
216,581
214,838
1,743
Park Operations:
Personnel services
820,904
820,904
843,968
(23,064)
Supplies
77,500
80,675
88,335
(7,660)
Repairs and maintenance
226,258
239,526
235,549
3,977
Other services and charges
514,009
505,181
549,787
(44,606)
Total Park Operations
1,638,671
1,646,286
1,717,639
(71,353)
Facility Operations:
Supplies
29,000
36,373
34,206
2,167
Repairs and maintenance
212,000
538,499
422,100
116,399
Other services and charges
546,000
600,103
616,575
(16,472)
Total Facility Operations
787,000
1,174,975
1,072,881
102,094
Total parks and recreation
3,961,731
4,375,975
4,302,309
73,666
Library:
Administration:
Personnel services
1,164,843
1,164,843
1,144,622
20,221
Supplies
157,185
181,300
159,547
21,753
Repairs and maintenance
440
582
582
-
Other services and charges
18,955
30,098
28,705
1,393
Total Administration
1,341,423
1,376,823
1,333,456
43,367
Total library
1,341,423
1,376,823
1,333,456
43,367
78 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES —
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2022
Expenditures (continued)
Capital improvements:
Repairs and Maintenace
Other services and charges
Capital outlay
Total capital improvements
Total Expenditures
Excess (deficiency) of revenues over
expenditures
Other Financing Sources (Uses)
Insurance recoveries
Sale of capital assets
Notes payable issued
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net change in fund balances
Fund Balances - Beginning
Fund Balances - Ending
Budgeted Amounts
Original Final
Actual
Amounts
Variance with
Final budget -
Positive
(Negative)
Page 8 of 8
$
$ 1,595 $
1,595 $
-
32,298
30,034
2,264
1,649,800
6,405,680
2,532,230
3,873,450
1,649,800
6,439,573
2,563,859
3,875,714
33,115,928
40,230,628
34,324,674
5,905,954
(3,080,528)
(10,133,511)
(2,975,236)
7,158,275
31,308
74,126
42,818
-
18,029
18,029
-
752,663
1,457,640
704,977
1,563,531
1,708,331
1,708,331
-
-
(124,948)
(124,948)
-
1,563,531
2,367,354
3,133,178
765,824
(1,516,997)
(7,766,157)
157,942
7,924,099
17,227,145
17,227,145
17,227,145
-
$ 15,710,148
$ 9,460,988 $
17,385,087 $
7,924,099
79 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 1 of 2
NOTES TO BUDGETARY SCHEDULE
For the Year Ended September 30, 2022
Budgetary Basis of Accounting
Annual budgets are adopted on a basis consistent with generally accepted accounting principles.
Budgetary Information
The City's Code of Ordinances establishes the following frameworkfor the preparation and format of the City's annual budget:
Content
The budget shall provide a complete financial plan of all City funds and activities and, except as required by law or this Charter,
shall be in such form as the City Manager deems desirable or the Council may require. The budget shall begin with a clear
general summary of its contents; shall show in details all estimated income, the proposed property tax levy, and all proposed
expenditures for the ensuing fiscal years, including debt service and an itemized estimate of the expense of conducting each
Department of the City. The proposed budget expenditures shall not exceed the total of estimated income. It shall also
include, in separate sections:
1) Tax levies, rates and collections for the preceding five years.
2) The amount required for interest on the City's debts, for sinking fund and for maturing serial bonds.
3) The total amount of outstanding City debts, with a schedule of maturities on bond issues.
4) Anticipated net surplus of deficit for the ensuing fiscal year of each utility owned or operated by the City and the
proposed method of its disposition, subsidiary budgets for each such utility giving detailed income and expenditure
information shall be attached as appendices to the budget.
5) A capital program, which may be revised and extended each year to indicate capital improvements pending or in
process of construction or acquisition, and shall include the following items which shall be attached as appendices to
the budget:
a) A summary of proposed programs;
b) A list of all capital improvements which are proposed to be undertaken during the five fiscal years next ensuing,
with appropriate supporting information as to the necessity for such improvements;
c) Cost estimates, method of financing and recommended time schedules from each such improvement; and
d) The estimated annual cost of operating and maintaining the facilities to bid constructed or acquired.
6) Such other information as may be required by the Council.
Submission
On or before the first day of August of each year, the City Manager shall submit to the Council a proposed budget and an
accompanying message. The Council shall review the proposed budget and revise as deemed appropriate prior to general
circulation for public hearing.
80 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BUDGETARY SCHEDULE
For the Year Ended September 30, 2022
Public Notice and Hearing
Page 2 of 2
The Council shall post in the City Hall and publish in the official newspaper a general summary of their proposed budget and
a notice stating:
1) The times and places where copies of the message and budget are available for inspection by the public; and
2) The time and place, not less than ten nor more than 30 days after such publication, for a public hearing on the budget.
Amendment Before Adoption
After the public hearing, the Council may adopt the budget with or without amendment. In amending the budget, it may add
or increase programs or amounts and may delete or decrease any programs or amounts, except expenditures required by
law or for debt service or for estimated cash deficit, provided that no amendment to the budget shall increase the authorized
expenditures to an amount greater than the total of estimated income plus funds available from prior years.
If the Council fails to adopt an annual budget before the start of the fiscal year to which it applies, appropriations of the last
budget adopted shall be considered as adopted for the current fiscal year on a month to month, pro rata basis, until the
annual budget is adopted. Adoption of the budget shall require an affirmative vote of at least a majority of all members of
the Council. Adoption of the budget shall constitute appropriations of the amounts specified therein as expenditures from
the funds indicated.
Amendments After Adoption
At any time during the fiscal year, the City Manager may transfer part or all of any unencumbered appropriation balance
among programs within a department, division, or office, and, upon written request by the City Manager, the Council may be
by ordinance transfer part or all of any unencumbered appropriation balance from one department, office, or agency to
another.
No appropriation for debt service may be reduced or transferred and no appropriation may be reduced below any amount
required by law to be appropriated or by more than the amount of the unencumbered balance thereof. The City Council
made supplemental budgetary appropriation changes during the fiscal year. The reported budgetary data has been revised
for these amendments legally authorized during the year.
81 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 1 of 2
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS
TEXAS MUNICIPAL RETIREMENT SYSTEM
Last Eight Measurement Years
2021
2020
2019
2018
A. Total pension liability
1. Service Cost
$ 3,032,100 $
2,979,569 $
2,738,906 $
2,626,099
2. Interest (on the Total Pension Liability)
6,110,807
5,780,980
5,345,140
5,044,613
3. Difference between expected and actual experience
788,166
(146,825)
1,150,459
59,617
4. Changes of assumptions
-
378,973
-
5. Benefit payments, including refunds of employee contributions
6. Net change in total pension liability
7. Total pension liability— beginning
8. Total pension liability — ending
B. Plan fiduciary net position
1. Contributions —employer
2. Contributions —employee
3. Net investment income
4. Benefit payments, including refunds of employee contributions
5. Administrative Expense
6. Other
7. Net change in plan fiduciary net position
8. Plan fiduciary net position — beginning
9. Plan fiduciary net position — ending
(4,163,654)
(3,343,679)
(3,210,157)
(3,458,824)
5,767,419
5,270,045
6,403,321
4,271,505
91,096,245
85,826,200
79,422,879
75,151,374
96,863,664
91,096,245
85,826,200
79,422,879
2,777,049
2,620,564
2,395,398
2,305,344
1,174,582
1,158,078
1,068,692
1,025,248
10,611,017
5,713,369
10,053,454
(2,013,270)
(4,163,654)
(3,343,679)
(3,210,157)
(3,458,824)
(49,073)
(36,958)
(56,778)
(38,892)
337
(1,442)
(1,704)
(2,032)
10,350,258
6,109,932
10,248,905
(2,182,426)
81,355,616
75,245,684
64,996,779
67,179,205
91,705,874
81,355,616
75,245,684
64,996,779
C. Net pension liability (A.9 — B.9)
$ 5,157,790 $
9,740,629 $
10,580,516 $
14,426,100
D. Plan fiduciary net position as a percentage of the
total pension liability
94.68%
89.31%
87.67%
81.84%
E. Covered payroll
$ 16,779,748 $
16,543,970 $
15,267,034 $
14,646,398
F. Net position liability as a percentage of covered
payroll
30.74%
58.88%
69.30%
98.50%
Note: Ten years of data should be presented in this schedule but data was unavailable prior to 2014
82 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 2 of 2
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS
TEXAS MUNICIPAL RETIREMENT SYSTEM
Last Eight Measurement Years
2017
2016
2015
2014
A. Total pension liability
1. Service Cost
$ 2,505,392 $
2,334,817
$ 2,204,299 $
2,018,353
2. Interest (on the Total Pension Liability)
4,755,782
4,435,987
4,317,394
4,084,392
3. Difference between expected and actual experience
(60,180)
366,687
(1,032,789)
(736,093)
4. Changes of assumptions
-
847,469
5. Benefit payments, including refunds of employee contributions
6. Net change in total pension liability
7. Total pension liability — beginning
8. Total pension liability — ending
B. Plan fiduciary net position
1. Contributions —employer
2. Contributions —employee
3. Net investment income
4. Benefit payments, including refunds of employee contributions
5. Administrative Expense
6. Other
7. Net change in plan fiduciary net position
8. Plan fiduciary net position — beginning
9. Plan fiduciary net position — ending
C. Net pension liability (A.9 — B.9)
D. Plan fiduciary net position as a percentage of the
total pension liability
E. Covered payroll
F. Net position liability as a percentage of covered
payroll
(2,505,921)
(2,464,107)
(2,256,734)
(2,005,311)
4,695,073
4,673,384
4,079,639
3,361,341
70,456,304
65,782,920
61,703,281
58,341,940
75,151,377
70,456,304
65,782,920
61,703,281
2,182,093
2,037,849
1,998,038
1,867,782
987,399
923,896
886,669
829,598
8,104,390
3,672,583
79,202
2,868,842
(2,505,921)
(2,464,107)
(2,256,734)
(2,005,311)
(41,987)
(41,467)
(48,239)
(29,949)
(2,127)
(2,234)
(2,383)
(2,462)
8,723,847
4,126,520
656,553
3,528,500
58,455,358
54,328,838
53,672,285
50,143,785
67,179,205
58,455,358
54,328,838
53,672,285
$ 7,972,172 $ 12,000,946 $ 11,454,082 $ 8,030,996
89.39% 82.97% 82.59% 86.98%
$ 14,098,997 $ 13,198,512 $ 12,653,842 $ 11,851,396
56.54% 90.93% 90.52% 67.76%
Note: Ten years of data should be presented in this schedule but data was unavailable prior to 2014.
83 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF CITY CONTRIBUTIONS
TEXAS MUNICIPAL RETIREMENT SYSTEM
Last Nine Fiscal Years
Actuarially required contributions
Contributions in relation to the
actuarially required contributions
Contribution deficiency (excess)
City's covered payroll
Contributions as a percentage of
covered payroll
Actuarially required contributions
Contributions in relation to the
actuarially required contributions
Contribution deficiency (excess)
City's covered payroll
Contributions as a percentage of
covered payroll
2022
2021
2020
2019
2018
$
2,844,852
$
2,721,688
$
2,485,117
$
2,376,185
$
2,255,270
2,844,852
2,721,688
2,485,117
2,376,185
2,255,270
$
17,404,825
$
16,639,755
$
15,724,041
$
15,133,171
$
14,385,208
16.35%
16.36%
15.80%
15.70%
15.68%
2017
2016
2015
2014
$
2,161,617
$
2,100,698
$
1,960,652
$
1,847,375
2,161,617
2,100,698
1,960,652
1,847,375
$
13,986,135
$
13,525,613
$
12,423,310
$
11,781,281
15.46%
15.53%
15.78%
15.68%
Note: Ten years of data should be presented in this schedule but data was unavailable prior to 2014.
84 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO SCHEDULE OF CONTRIBUTIONS
For the Year Ended September 30, 2022
Valuation Date: Actuarially determined contribution rates are calculated as of December 31
and become effective in January 13 months later.
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial Cost Method
Amortization Method
Remaining Amortization
Period
Asset Valuation Method
Inflation
Salary Increases
Investment Rate of Return
Entry Age Normal
Level Percentage of Payroll, Closed
24 years
10 Year smoothed market; 12% soft corridor
2.50%
3.50% to 11.50% including inflation
6.75%
Retirement Age Experience -based table of rates that are specific to the City's plan of
benefits. Last updated for the 2019 valuation pursuant to an experience
study of the period 2014 — 2018
Mortality Post -retirement: 2019 Municipal Retirees of Texas Mortality Tables. The
rates are projected on a fully generational basis with scale LIMP. Pre -
retirement: PUB (10) mortality tables, with the Public Safety table used for
males and the General Employee table used for females. The rates are
projected on a fully generational basis with scale LIMP.
Other Information: There were no benefit changes during the year.
85 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF CHANGES IN THE TOTAL OPEB LIABILITYAND RELATED RATIOS
TEXAS MUNICIPAL RETIREMENT SYSTEM SUPPLEMENTAL DEATH BENEFITS FUND
Last Five Measurement Years
Service cost
Interest
Difference between expected and actual experience
Changes of assumptions
Benefit payments **
Net change in total OPEB liability
Total OPEB liability - beginning
Total OPEB liability - ending
Covered -employee payroll
Total OPEB liability as a percentage of covered -employee payroll
Service cost
Interest
Difference between expected and actual experience
Changes of assumptions
Benefit payments **
Net change in total OPEB liability
Total OPEB liability - beginning
Total OPEB liability - ending
Covered -employee payroll
Total OPEB liability as a percentage of covered -employee payroll
2021
2020
2019
2018
$ 45,305
$ 36,397 $
27,481 $
30,757
17,025
20,150
23,199
20,933
(9,842)
(48,181)
(60,356)
(7,425)
29,168
115,737
118,183
(43,775)
(15,102)
(4,963)
(6,107)
(5,859)
66,554
119,140
102,400
(5,369)
836,154
717,014
614,614
619,983
$ 902,708
$ 836,154 $
717,014 $
614,614
$ 16,779,748
$ 16,543,970 $
15,267,034 $
14,646,398
5.38%
5.05%
4.70%
4.20%
2017
$ 26,788
20,384
49,777
(5,640)
91,309
528,674
$ 619,983
$ 14,098,997
4.40 %
Note: Ten years of data should be presented in this schedule but data was unavailable prior to 2017.
No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB 75 to pay related benefit.
** Due to the SDBF being considered an unfunded OPEB plan under GASB 75, benefit payments
are treated as being equal to the employer's yearly contributions for retirees.
Notes to Required Supplementary Information:
Changes of assumptions:
Changes of assumptions reflect the effects of changes in the discount rate each period. The following are the discount rates
used in each period:
2021
1.84%
2020
2.00%
2019
2.75%
2018
3.71%
2017
3.31%
86 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF CHANGES IN THE TOTAL OPEB LIABILITYAND RELATED RATIOS
CITY OF FRIENDS WOOD RETIREE HEALTH CARE PLAN
Last Five Measurement Years
Service cost
Interest
Difference between expected and actual experience
Changes of assumptions
Benefit payments
Net change in total OPEB liability
Total OPEB liability - beginning
Total OPEB liability - ending
Covered -employee payroll
Total OPEB liability as a percentage of covered -employee payroll
Service cost
Interest
Difference between expected and actual experience
Changes of assumptions
Benefit payments
Net change in total OPEB liability
Total OPEB liability - beginning
Total OPEB liability - ending
Covered -employee payroll
Total OPEB liability as a percentage of covered -employee payroll
2021
2020
2019
2018
$ 60,759
$ 60,972 $
46,995 $
53,919
22,218
30,484
36,314
37,843
11,967
(104,038)
8,768
(214,124)
(111,991)
75,401
86,718
7,071
(61,339)
(59,267)
(52,896)
(38,566)
(78,386)
3,552
125,899
(153,857)
1,111,209
1,107,657
981,758
1,135,615
$ 1,032,823
$ 1,111,209 $
1,107,657 $
981,758
$ 16,779,752
$ 16,543,973 $
15,267,037 $
14,646,402
6.16% 6.72%
2017
$ 44,637
39,497
4,573
51,765
(38,414)
102,058
1,033,557
$ 1,135,615
$ 12,035,859
9.44%
Note: Ten years of data should be presented in this schedule but data was unavailable prior to 2017.
No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB 75 to pay related benefit.
Notes to Required Supplementary Information:
Methods and Assumptions Used to Determine Contribution Rates:
7.26% 6.70%
The demographic assumptions are based on the assumptions that were developed for the defined benefit plan in which the
City participates (TMRS). The assumptions are based on the experience study covering the four year period ending December
31, 2018 as conducted for the Texas Municipal Retirement System (TMRS).
Changes of assumptions:
2021- The period of service used for allocation of service costs was changed to only reflect service with the City.
2019 - The demographic study and salary increase assumptions were updated to reflect the 2019 TMRS Experience Study.
2018 - The health care trend assumption was modified.
Changes of assumptions reflect the effects of changes in the discount rate each period. The following are the discount rates
used in each period:
2021
1.84%
2020
2.00%
2019
2.75%
2018
3.71%
2017
3.31%
87 City of Friendswood, Texas 2022 ACFR
City of
3wood
-Texas
88 City of Friendswood, Texas 2022 ACFR
COMBINING AND INDIVIDUAL FUND
FINANCIAL STATEMENTS AND SCHEDULES
89 City of Friendswood, Texas 2022 ACFR
NONMAJOR
GOVERNMENTAL FUNDS
The Special Revenue Funds are used to account for specific revenue sources (other than major capital projects) that are
legally restricted to expenditures for specified purposes.
Police Investigation Fund — This fund is used to account for revenues that are restricted to police investigation
expenditures.
Fire/EMS Donation Fund — This fund accounts for revenues that are restricted for Fire/EMS capital outlays and debt
repayments.
Municipal Court Fund —This fund accounts for revenues that are restricted for court technology and building security.
In 1999, the state legislature authorized a court technology and court security fee for municipal court fines. In 2019,
the state legislature authorized additional fees for truancy and jury services.
Community Development Block Grant (CDBG) — Disaster Recovery (DR) Harris County — This fund is used to account
for revenues that are restricted to the Community Development Block Grant — Disaster Recovery expenditures. Funds
will be used for the Harris County side of the City.
Hazard Mitigation Grant Program —This fund is used to account for federal grants that are restricted to the acquisition
and demolition of flood -prone residential structures located within the City.
Community Development Block Grant (CDBG) — Disaster Recovery (DR) Galveston County — This fund is used to
account for revenues that are restricted to the Community Development Block Grant— Disaster Recovery expenditures.
Funds will be used for the Galveston County side of the City.
The Permanent Fund is used to report resources that are legally restricted to the extent that only earnings, not principal, may
be used for purposes that support the City's programs.
1776 Park Fund —This fund is used to account for assets held by the City in a trustee capacity and the earnings benefit
this City Park.
90 City of Friendswood, Texas 2022 ACFR
NONMAJOR
GOVERNMENTAL FUNDS (continued)
Capital Projects Funds are used to account for the acquisition and construction of major capital facilities.
Sidewalk Installation Fund — This fund is used to account for receipts from developers to install sidewalks in
neighborhood developments.
Park Land Dedication Fund — This fund is used to account for receipts from developers to build or enhance
neighborhood and community parks.
Street Improvement Fund —This fund is used to record sales tax revenue collected for City's streets maintenance and
improvements.
MAJOR
GOVERNMENTAL FUNDS
The Special Revenue Funds are used to account for specific revenue sources (other than major capital projects) that are
legally restricted to expenditures for specified purposes.
Coronavirus State and Local Fiscal Recovery Fund— This fund is used to account for federal funds related to the fiscal
recovery of Coronavirus. Funds will be used for water and sewer infrastructure projects.
Capital Projects Funds are used to account for the acquisition and construction of major capital facilities.
Bond Construction Fund — is used to account for the construction of public facilities, and park, street and drainage
improvements that are funded by the proceeds from Permanent Improvement Bonds.
Debt Service Funds are used to account for the accumulation of resources that are restricted, committed, or assigned for the
repayment of principal and interest on long-term obligations of the governmental funds.
Debt Service Fund — This fund is used to account for the accumulation of resources for the payment of general long-
term debt principal, interest and related costs.
91 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 1 of 3
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
September 30, 2022
Special Revenue Funds
Police
Fires/EMS
CDBG - DR
Investigation
Donation
Municipal
Court
Harris County
Assets
Cash and cash equivalents
$
55,910
$
141,982
$
84,687
$ 135,596
Investments
132,085
341,552
203,724
326,189
Receivables, net of allowance:
Taxes
-
-
-
-
Customer accounts
-
2,697
-
-
Other receivables
-
-
3,573
-
Accruedinterest
117
332
163
-
Prepaid items
-
-
391
-
Due from other governments
-
-
-
444,527
Total Assets
$
188,112
$
486,563
$
292,538
$ 906,312
Liabilities, Deferred Inflows of
Resources, and Fund Balances
Liabilities:
Accounts payable
$
139
$
-
$
5,208
$ 409,377
Retainage payable
-
-
273
21,267
Due to other funds
-
-
-
680,090
Total Liabilities
139
-
5,481
1,110,734
Deferred Inflows of Resources:
Unavailable revenue
-
-
3,756
-
Total Deferred Inflows
-
-
3,756
-
Fund Balances:
Nonspendable:
Prepaid items
-
-
391
Permanent fund
-
-
Restricted:
Municipal court operations
-
-
282,910
Public safety
187,973
486,563
-
Capital projects
-
-
-
Unassigned
-
-
-
(204,422)
Total Fund Balances
187,973
486,563
283,301
(204,422)
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
$
188,112
$
486,563
$
292,538
$ 906,312
92 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 2 of 3
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
September 30, 2022
Capital Projects
Special Revenue Funds
Permanent
Funds
HMGP
Acquisition &
CDBG - DR
Demolition
Galveston
Sidewalk
Install
Project
County
1776 Park Fund
Fund
Assets
Cash and cash equivalents
$ 2
$
56,842
$
3,255
$
11,174
Investments
-
136,738
7,831
26,881
Receivables, net of allowance:
Taxes
-
-
-
-
Customer accounts
-
-
-
-
Other receivables
-
85
-
-
Accrued interest
-
-
7
24
Prepaid items
-
-
-
-
Due from other governments
205,178
1,101,470
-
-
Total Assets
$ 205,180
$
1,295,135
$
11,093
$
38,079
Liabilities, Deferred Inflows of
Resources, and Fund Balances
Liabilities:
Accounts payable
$ -
$
-
$
-
$
32,220
Retainage payable
-
-
-
-
Due to other funds
205,180
1,268,460
-
-
Total Liabilities
205,180
1,268,460
-
32,220
Deferred Inflows of Resources:
Unavailable revenue
-
-
-
-
Total Deferred Inflows
-
-
-
Fund Balances:
Nonspendable:
Prepaid items
-
-
-
-
Permanent fund
-
-
11,093
Restricted:
Municipal court operations
-
-
-
-
Public safety
-
-
-
-
Capital projects
-
-
-
5,859
Unassigned
-
26,675
-
-
Total Fund Balances
-
26,675
11,093
5,859
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
$ 205,180
$
1,295,135
$
11,093
$
38,079
93 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
September 30, 2022
Capital Projects Funds
Park Land
Street
Total Nonmajor
Dedication
Improvements
Governmental
Funds
Fund
Funds
Assets
Cash and cash equivalents
$
10,167
$
1,014,034
$
1,513,649
Investments
24,458
2,439,364
3,638,822
Receivables, net of allowance:
Taxes
-
427,806
427,806
Customer accounts
-
-
2,697
Other receivables
-
-
3,658
Accrued interest
37
1,455
2,135
Prepaid items
-
-
391
Due from other governments
-
-
1,751,175
Total Assets
$
34,662
$
3,882,659
$
7,340,333
Liabilities, Deferred Inflows of
Resources, and Fund Balances
Liabilities:
Accounts payable
$
-
$
321,864
$
768,808
Retainage payable
-
16,940
38,480
Due to other funds
-
-
2,153,730
Total Liabilities
-
338,804
2,961,018
Deferred Inflows of Resources:
Unavailable revenue
-
-
3,756
Total Deferred Inflows
-
-
3,756
Fund Balances:
Nonspendable:
Prepaid items
-
-
391
Permanent fund
-
-
11,093
Restricted:
Municipal court operations
-
-
282,910
Public safety
-
-
674,536
Capital projects
34,662
3,543,855
3,584,376
Unassigned
-
-
(177,747)
Total Fund Balances
34,662
3,543,855
4,375,559
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
$
34,662
$
3,882,659
$
7,340,333
Page 3 of 3
94 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended September 30, 2022
Special Revenue Funds
Page 1 of 3
Police
Fires/EMS
CDBG - DR
Investigation
Donation
Municipal Court
Harris County
Revenues
Sales taxes
$ -
$
$ -
$ -
Fines and forfeitures
16,648
66,948
-
Permits and fees
-
-
-
Intergovernmental
-
-
443,294
Miscellaneous
-
297
-
-
Donations
-
194,427
-
-
Investment income (loss)
(73)
(692)
(140)
-
Total Revenues
16,575
194,032
66,808
443,294
Expenditures
Current:
General government
- - 52,593 -
Public safety
14,333 25,000 - -
Public works
- - 56,493
Library services
- - -
Debt Service:
Principal
- 119,514 -
Interest and other charges
- 13,318 - -
Capital Outlay
- 163,000 5,452 425,337
Total Expenditures
14,333 320,832 58,045 481,830
Excess (deficiency) of revenues over
(under) expenditures 2,242 (126,800) 8,763 (38,536)
Other Financing Sources (Uses)
Sale of capital assets - 14,000 -
Total Other Financing Sources (Uses) - 14,000 - Net change in fund balances 2,242 (112,800) 8,763 (38,536)
Fund Balances - Beginning 185,731 599,363 274,538 (165,886)
Fund Balances - Ending $ 187,973 $ 486,563 $ 283,301 $ (204,422)
95 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended September 30, 2022
Special Revenue Funds
Permanent
Page 2 of 3
Capital Projects
Funds
HMGP
Acquisition &
CDBG - DR
Demolition
Galveston
Sidewalk Install
Project
County
1776 Park Fund Fund
Revenues
Sales taxes
$ -
$ -
$ - -
Fines and forfeitures
-
-
- -
Permits and fees
-
-
- 1,238
Intergovernmental
-
2,177,201
- -
Miscellaneous
-
8,700
- -
Donations
-
-
- -
Investment income (loss)
-
-
(8) (38)
Total Revenues
-
2,185,901
(8) 1,200
Expenditures
Current:
General government - - - -
Public safety - - - -
Public works - 2,159,226 - -
Library services - - - -
Debt Service:
Principal - - - -
Interest and other charges - - - -
Capital Outlay - - - 39,061
Total Expenditures - 2,159,226 - 39,061
Excess (deficiency) of revenues over
(under) expenditures - 26,675 (8) (37,861)
Other Financing Sources (Uses)
Sale of capital assets - - - -
Total Other Financing Sources (Uses) - - - Net change in fund balances - 26,675 (8) (37,861)
Fund Balances - Beginning - - 11,101 43,720
Fund Balances - Ending $ - $ 26,675 $ 11,093 $ 5,859
96 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 3 of 3
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended September 30, 2022
Capital Projects Funds
Park Land
Street
Total Nonmajor
Dedication
Improvements
Governmental
Funds
Fund
Funds
Revenues
Sales taxes
$ -
$ 2,208,387
$ 2,208,387
Fines and forfeitures
-
-
83,596
Permits and fees
57,600
-
58,838
Intergovernmental
-
-
2,620,495
Miscellaneous
-
-
8,997
Donations
-
-
194,427
Investment income (loss)
(166)
982
(135)
Total Revenues
57,434
2,209,369
5,174,605
Expenditures
Current:
General government
-
-
52,593
Public safety
-
-
39,333
Public works
-
338,804
2,554,523
Library services
2,729
-
21729
Debt Service:
Principal
-
-
119,514
Interest and other charges
-
-
13,318
Capital Outlay
126,366
-
759,216
Total Expenditures
129,095
338,804
3,541,226
Excess (deficiency) of revenues over
(under) expenditures
(71,661)
1,870,565
1,633,379
Other Financing Sources (Uses)
Sale of capital assets - - 14,000
Total Other Financing Sources (Uses) - - 14,000
Net change in fund balances (71,661) 1,870,565 1,647,379
Fund Balances - Beginning 106,323 1,673,290 2,728,180
Fund Balances - Ending $ 34,662 $ 3,543,855 $ 4,375,559
97 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
POLICE INVESTIGATION
For the Year Ended September 30, 2022
Revenues
Fines and forfeitures
Investment earnings
Total Revenues
Expenditures
Current:
Public safety
Total Expenditures
Net change in fund balances
Fund Balances - Beginning
Fund Balances - Ending
Variance with
Final Budget -
Positive
Original Budget Final Budget Actual Amounts (Negative)
$ - $ - $ 16,648 $ 16,648
423 423 (73) (496)
423 423 16,575 16,152
15,294 14,333 961
- 15,294 14,333 961
423 (14,871) 2,242 17,113
185,731 185,731 185,731 -
$ 186,154 $ 170,860 $ 187,973 $ 17,113
98 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FIRE/EMS DONATION
For the Year Ended September 30, 2022
Revenues
Donations
Investment earnings
Miscellaneous
Total Revenues
Expenditures
Current:
Public safety
Debt service:
Principal
Interest and other charges
Capital outlay
Total Expenditures
Excess (deficiency) of revenues over
expenditures
Other Financing Sources (Uses)
Sale of capital assets
Total Other Financing Sources (Uses)
Net change in fund balances
Fund Balances - Beginning
Fund Balances - Ending
Variance with
Final Budget -
Positive
Original Budget Final Budget Actual Amounts (Negative)
$ 215,000 $ 215,000 $ 194,427 $ (20,573)
1,567 1,567 (692) (2,259)
- - 297 297
216,567 216,567 194,032 (22,535)
-
25,000
25,000
-
119,514
119,514
119,514
-
13,318
13,318
13,318
-
220,635
224,135
163,000
61,135
353,467
381,967
320,832
61,135
(136,900)
(165,400)
(126,800)
38,600
-
3,500
14,000
10,500
-
3,500
14,000
10,500
(136,900)
(161,900)
(112,800)
49,100
599,363
599,363
599,363
-
$ 462,463 $
437,463 $
486,563 $
49,100
99 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
MUNICIPAL COURT
For the Year Ended September 30, 2022
Variance with
Final Budget -
Positive
Original Budget
Final Budget
Actual Amounts
(Negative)
Revenues
Fines and forfeitures
$ 49,000
$ 49,000
$ 66,948
$ 17,948
Investment earnings
474
474
(140)
(614)
Total Revenues
49,474
49,474
66,808
17,334
Expenditures
Current:
General government
49,759
54,105
52,593
1,512
Capital outlay
120,000
98,233
5,452
92,781
Total Expenditures
169,759
152,338
58,045
94,293
Net change in fund balances
(120,285)
(102,864)
8,763
111,627
Fund Balances - Beginning
274,538
274,538
274,538
-
Fund Balances - Ending
$ 154,253
$ 171,674
$ 283,301
$ 111,627
100 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
CDBG — DR HARRIS COUNTY
For the Year Ended September 30, 2022
Variance with
Final Budget -
Positive
Original Budget Final Budget
Actual Amounts
(Negative)
Revenues
Intergovernmental
$ - $ -
$ 443,294
$ 443,294
Total Revenues
- -
443,294
443,294
Expenditures
Current:
Public works
- 85,592
56,493
29,099
Capital outlay
- -
425,337
(425,337)
Total Expenditures
- 85,592
481,830
(396,238)
Net change in fund balances
- (85,592)
(38,536)
47,056
Fund Balances - Beginning
(165,886) (165,886)
(165,886)
-
Fund Balances - Ending
$ (165,886) $ (251,478)
$ (204,422)
$ 47,056
101 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
HAZARD MITIGATION GRANT PROGRAM
For the Year Ended September 30, 2022
Variance with
Final Budget -
Positive
Original Budget Final Budget Actual Amounts (Negative)
Revenues
Intergovernmental $ -
Total Revenues - -
Expenditures
Current:
Public works - - -
Capital outlay - - -
Total Expenditures - -
Excess (deficiency) of revenues over
expenditures - - -
Other Financing Sources (Uses)
Transfers in - -
Total Other Financing Sources (Uses) - - -
Net change in fund balances - -
Fund Balances - Beginning - - -
Fund Balances - Ending
102 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
CDBG - DR GALVESTON COUNTY
For the Year Ended September 30, 2022
Revenues
Intergovernmental
Miscellaneous revenue
Total Revenues
Expenditures
Current:
Public works
Total Expenditures
Net change in fund balances
Fund Balances - Beginning
Fund Balances - Ending
Variance with
Final Budget -
Positive
Original Budget Final Budget
Actual Amounts
(Negative)
$ $ 1,075,731
$ 2,177,201
$ 1,101,470
-
8,700
8,700
1,075,731
2,185, 901
1,110,170
1,099,531
2,159,226
(1,059,695)
1,099,531
2,159,226
(1,059,695)
(23,800)
26,675
50,475
$ $ (23,800)
$ 26,675
$ 50,475
103 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
1776 PARK
For the Year Ended September 30, 2022
Variance with
Final Budget -
Positive
Original Budget
Final Budget
Actual Amounts
(Negative)
Revenues
Investment earnings
$ 22
$ 22
$ (8)
$ (30)
Total Revenues
22
22
(8)
(30)
Expenditures
Current
-
-
-
-
Total Expenditures
-
-
-
-
Net change in fund balances
22
22
(8)
(30)
Fund Balances - Beginning
11,101
11,101
11,101
-
Fund Balances - Ending
$ 11,123
$ 11,123
$ 11,093
$ (30)
104 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
SIDEWALK INSTALLATION
For the Year Ended September 30, 2022
Revenues
Permits and fees
Investment earnings
Total Revenues
Expenditures
Capital outlay
Total Expenditures
Net change in fund balances
Fund Balances - Beginning
Fund Balances - Ending
Variance with
Final Budget -
Positive
Original Budget
Final Budget
Actual Amounts
(Negative)
$ -
$ -
$ 1,238
$ 1,238
88
88
(38)
(126)
88
88
11200
1,112
-
45,030
39,061
5,969
-
45,030
39,061
5,969
88
(44,942)
(37,861)
7,081
43,720
43,720
43,720
-
$ 43,808
$ (1,222)
$ 5,859
$ 7,081
105 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
PARK LAND DEDICATION
For the Year Ended September 30, 2022
Variance with
Final Budget -
Positive
Original Budget
Final Budget
Actual Amounts
(Negative)
Revenues
Permit and fees
$ 50,000
$ 50,000
$ 57,600
$ 7,600
Investment earnings
269
269
(166)
(435)
Total Revenues
50,269
50,269
57,434
7,165
Expenditures
Current:
Parks and recreation
-
6,822
2,729
4,093
Capital outlay
149,308
126,366
22,942
Total Expenditures
-
156,130
129,095
27,035
Net change in fund balances
50,269
(105,861)
(71,661)
34,200
Fund Balances - Beginning
106,323
106,323
106,323
-
Fund Balances - Ending
$ 156,592
$ 462
$ 34,662
$ 34,200
106 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
STREET IMPROVEMENT
For the Year Ended September 30, 2022
Revenues
Sales taxes
Investment earnings
Total Revenues
Expenditures
Public works
Capital outlay
Total Expenditures
Variance with
Final Budget -
Positive
Original Budget Final Budget Actual Amounts (Negative)
$ 2,023,954 $ 2,023,954 $ 2,208,387 $ 184,433
2,127 2,127 982 (1,145)
2,026,081 2,026,081 2,209,369 183,288
338,804 338,804 -
184,246 - 184,246
523,050 338,804 184,246
Net change in fund balances 2,026,081 1,503,031 1,870,565 367,534
Fund Balances - Beginning 1,673,290 1,673,290 1,673,290 -
Fund Balances - Ending $ 3,699,371 $ 3,176,321 $ 3,543,855 $ 367,534
107 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
DEBT SERVICE FUND
For the Year Ended September 30, 2022
Revenues
Property taxes
Investment earnings
Total Revenues
Expenditures
Debt service:
Principal
Interest and other charges
Total Expenditures
Net change in fund balances
Fund Balances - Beginning
Fund Balances - Ending
Original Budget Final Budget Actual Amounts
Variance with
Final Budget -
Positive
(Negative)
$ 4,355,517 $ 4,355,517 $ 4,370,044 $ 14,527
1,600 1,600 (1,498) (3,098)
4,357,117 4,357,117 4,368,546 11,429
2,722,150 2,722,150 2,721,206 944
1,613,367 1,613,367 1,611,573 1,794
4,335,517 4,335,517 4,332,779 2,738
21,600 21,600 35,767 14,167
10,608 10,608 10,608 -
$ 32,208 $ 32,208 $ 46,375 $ 14,167
108 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
BOND CONSTRUCTION
For the Year Ended September 30, 2022
Revenues
Investment earnings
Total Revenues
Expenditures
Current:
Public works
Parks and recreation
Capital outlay
Total Expenditures
Net change in fund balances
Fund Balances - Beginning
Fund Balances - Ending
Variance with
Final Budget -
Positive
Original Budget Final Budget Actual Amounts (Negative)
$ 18,258 $ 18,258 $ 68,133 $ 49,875
18,258 18,258 68,133 49,875
245,723
163,330
82,393
-
10,547
(10,547)
14,678,132
6,954,059
7,724,073
- 14,923,855
7,127,936
7,795,919
18,258 (14,905,597)
(7,059,803)
7,845,794
15,212,515 15,212,515
15,212,515
-
$ 15,230,773 $ 306,918 $
8,152,712 $
7,845,794
109 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
CORONAVIRUS STATE FISCAL RECOVERY FUND
For the Year Ended September 30, 2022
Variance with
Final Budget -
Positive
Original Budget
Final Budget
Actual Amounts
(Negative)
Revenues
Intergovernmental
$
$ 14,200
$
$ (14,200)
Investment earnings
-
(1,666)
(1,666)
Total Revenues
$
$ 14,200
$ (1,666)
$ (15,866)
Expenditures
Current:
-
-
Total Expenditures
14,200
14,200
Net change in fund balances
-
(1,666)
(1,666)
Fund Balances - Beginning
Fund Balances - Ending
$
$
$ (1,666)
$ (1,666)
110 City of Friendswood, Texas 2022 ACFR
STATISTICAL SECTION
(Unaudited)
111 City of Friendswood, Texas 2022 ACFR
City of
,i¢nd6wood
TeXas
112 City of Friendswood, Texas 2022 ACFR
STATISTICAL SECTION
(Unaudited)
This part of the City of Friendswood's annual comprehensive financial report presents detailed information as a context for
understanding what the information in the financial statements, note disclosures, and required supplementary information
says about the government's overall financial health.
Contents Pages
Financial Trends 114
These schedules contain trend information to help the reader understand how the
government's financial performance and well-being have changed over time.
Revenue Capacity 124
These schedules contain information to help the reader assess the government's most
significant local revenue source, the property tax.
Debt Capacity 129
These schedules present information to help the reader assess the affordability of the
government's current levels of outstanding debt and the government's ability to issue
additional debt in the future.
Demographic and Economic Information 134
This schedule offers demographic and economic indicators to help the reader understand the
environment within which the government's financial activities take place.
Operating Information 138
These schedules contain service and infrastructure data to help the reader understand how
the information in the government's financial report relates to the services the government
provides and activities it performs.
Sources: Unless otherwise noted, the information in these schedules is derived from the annual comprehensive financial
reports for the relevant year.
113 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
Table 1
Page 1 of 2
2022
2021
2020
2019
2018
Governmental Activities
Net investment in capital assets
$
74,006,329
$
72,240,727
$
68,990,597
$
66,823,023
$
68,320,682
Restricted
5,059,835
3,491,974
4,606,124
4,003,468
4,085,999
Unrestricted
8,668,866
6,886,085
2,563,947
5,402,312
6,248,751
Total Governmental Activities Net Position
$
87,735,030
$
82,618,786
$
76,160,668
$
76,228,803
$
78,655,432
Business -Type Activities
Net investment in capital assets
$
35,999,342
$
32,910,959
$
32,242,803
$
27,038,046
$
27,088,280
Restricted
2,897,578
2,721,465
2,186,731
1,982,666
582,697
Unrestricted
11,776,833
9,984,251
8,438,509
12,077,564
13,620,211
Total Business -Type Activities Net Position
$
50,673,753
$
45,616,675
$
42,868,043
$
41,098,276
$
41,291,188
Primary Government
Net investment in capital assets
$
110,005,671
$
105,151,686
$
101,233,400
$
93,861,069
$
95,408,962
Restricted
7,957,413
6,213,439
6,792,855
5,986,134
4,668,696
Unrestricted
20,445,699
16,870,336
11,002,456
17,479,876
19,868,962
Total Primary Government Net Positions
$
138,408,783
$
128,235,461
$
119,028,711
$
117,327,079
$
119,946,620
114 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Table 1
NET POSITION BY COMPONENT Page 2 of 2
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
2017
2016
2015
2014
2013
Governmental Activities
Net investment in capital assets
$
72,631,192
$
73,588,484
$
73,611,490
$
65,404,791
$
65,056,180
Restricted
2,534,312
1,405,907
1,179,764
653,496
718,275
Unrestricted
5,532,198
5,579,677
5,901,505
10,798,907
9,565,406
Total Governmental Activities Net Position
$
80,697,702
$
80,574,068
$
80,692,759
$
76,857,194
$
75,339,861
Business -Type Activities
Net investment in capital assets
$
29,305,429
$
28,322,718
$
26,628,714
$
24,495,816
$
22,961,547
Restricted
260,703
99,006
27,468
90,395
176,882
Unrestricted
10,584,764
10,238,993
12,040,181
14,818,104
16,790,183
Total Business -Type Activities Net Position
$
40,150,896
$
38,660,717
$
38,696,363
$
39,404,315
$
39,928,612
Primary Government
Net investment in capital assets
$
101,936,621
$
101,911,202
$
100,240,204
$
89,900,607
$
88,017,727
Restricted
2,795,015
1,504,913
1,207,232
743,891
895,157
Unrestricted
16,116,962
15,818,670
17,941,686
25,617,011
26,355,589
Total Primary Government Net Positions
$
120,848,598
$
119,234,785
$
119,389,122
$
116,261,509
$
115,268,473
115 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Table 2
CHANGES IN NET POSITION Page 1 of 4
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
Expenses
Governmental Activities:
General government
Public safety
Public works
Engineering
Community development
Parks and recreation
Library services
Interest and fiscal charges
Total Government Activities Expenses
Business -Type Activities:
Water and wastewater
Interest and other
Total Business -Type Activities
Total Primary Government Expenses
Program Revenues
Governmental activities:
Charges for services:
General government
Public safety
Public works
Community development
Parks and recreation
Library services
Operating grants and contributions
Capital grants and contributions
Total Governmental Activities Program Revenues:
2022
2021
2020
2019
2018
$ 6,210,336
$ 5,867,654
$ 6,119,806
$ 5,912,467
$ 5,734,611
15, 655, 859
15, 645,527
15,501, 734
15,134,465
17, 538,040
6,994,042
7,160,229
8,840,113
7,897,373
6,267,824
570,098
506,959
434,976
-
-
1,017,509
1,035,202
1,122,506
1,359,878
945,701
4,870,623
4,604,943
4,439,511
4,839,076
4,554,114
1,283,007
1,221,740
1,214,130
1,257,970
1,210,207
1,268,435
1,244,881
1,055,889
923,350
953,509
37,869,909
37,287,135
38,728,665
37,324,579
37,204,006
11,178,323
11,864,245
12,071,159
11,507,880
9,019,197
1,808,120
1,808,120
1,733,123
1,579,182
1,029,715
12,986,443
13, 672,365
13,804, 282
13,087,062
10,048,912
$ 50,856,352
$ 50,959,500
$ 52,532,947
$ 50,411,641
$ 47,252,918
$ 974,029
$ 871,362 $
930,686
$ 751,112 $
861,271
1,197,570
1,372,432
871,714
811,768
868,761
234,103
225,419
222,337
236,352
213,042
1,238
-
9,275
6,841
-
441,649
384,489
181,709
341,560
344,064
841,537
3,874,866
3,430,645
1,842,704
4,924,228
2,620,495
3,864,589
708,306
-
-
6,310,621
10,593,157
6,354,672
3,990,337
7,211,366
Business -Type Activities:
Charges for services:
Water and wastewater
19,419,622
17,919,751
16,638,758
13,669,552
12,183,711
Operating grants and contributions
289,181
-
22,602
-
-
Total Business -Type activities Program Revenues
19,708,803
17,919,751
16,661,360
13,669,552
12,183,711
Total Primary Government
Program Revenues
$ 26,019,424
$ 28,512,908
$ 23,016,032
$ 17,659,889
$ 19,395,077
Net(Expense)Revenues
Governmental activities
(31,559,288)
(26,693,978)
(32,373,993)
(33,334,242)
(29,992,640)
Business -type activities
6,722,360
4,247,386
2,857,078
582,490
2,134,799
Total Primary Government Net Expense
$ (24,836,928)
$ (22,446,592)
$ (29,516,915)
$ (32,751,752)
$ (27,857,841)
116 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Table 2
CHANGES IN NET POSITION Page 2 of 4
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
2017
2016
2015
2014
2013
Expenses
Governmental Activities:
General government
$
5,128,399
$
4,736,867
$
5,410,643
$
4,589,795
$
4,679,339
Public safety
15,861,719
13,101,691
11,763,659
11,236,402
10,800,130
Public works
4,429,664
4,429,482
3,933,288
3,921,658
4,385,090
Engineering
-
-
-
-
-
Community development
1,495,001
1,577,813
1,406,288
1,097,075
1,207,264
Parks and recreation
3,459,053
3,080,453
2,869,345
3,356,587
3,260,931
Library services
1,215,683
1,134,859
1,026,967
1,093,043
1,002,801
Interest and fiscal charges
953,146
862,654
730,614
630,542
703,275
Total Government Activities Expenses
32,542,665
28,923,819
27,140,804
25,925,102
26,038,830
Business -Type Activities:
Water and wastewater
8,502,218
7,975,920
7,629,711
7,995,106
7,681,366
Interest and other
1,086,278
1,642,723
1,524,276
1,514,804
1,590,395
Total Business -Type Activities
9,588,496
9,618,643
9,153,987
9,509,910
9,271,761
Total Primary Government Expenses
$
42,131,161
$
38,542,462
$
36,294,791
$
35,435,012
$
35,310,591
Program Revenues
Governmental activities:
Charges for services:
General government
$
1,004,968
$
1,002,022
$
807,245
$
912,910
$
989,190
Public safety
35,007
28,760
30,275
31,620
34,944
Public works
242,184
174,568
190,099
193,064
186,504
Community development
1,036,741
949,011
843,648
877,132
825,366
Parks and recreation
387,915
286,727
280,046
315,702
316,047
Library services
30,600
27,532
33,699
36,081
36,686
Operating grants and contributions
2,591,025
800,151
660,633
843,995
644,458
Capital grants and contributions
219,808
318,657
3,225,672
1,202,376
543,763
Total Governmental Activities Program Revenues:
5,548,248
3,587,428
6,071,317
4,412,880
3,576,958
Business -Type Activities:
Charges for services:
Water and wastewater
12,295,441
11,319,801
11,020,029
11,117,391
11,462,779
Operating grants and contributions
-
-
-
-
-
Total Business -Type activities Program Revenues
12,295,441
11,319,801
11,020,029
11,117,391
11,462,779
Total Primary Government
Program Revenues
$
17,843,689
$
14,907,229
$
17,091,346
$
15,530,271
$
15,039,737
Net(Expense)Revenues
Governmental activities
(26,994,417)
(25,336,391)
(21,069,487)
(21,502,222)
(22,461,872)
Business -type activities
2,706,945
1,701,158
1,866,042
1,607,481
2,191,018
Total Primary Government Net Expense
$
(24,287,472)
$
(23,635,233)
$
(19,203,445)
$
(19,894,741)
$
(20,270,854)
117 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Table 2
CHANGES IN NET POSITION Page 3 of 4
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
General Revenues and Other Changes in Net Position
Governmental activities:
Taxes:
Property taxes
Sales taxes
Franchise and other taxes
Other
Investment earnings
Gain (loss) on disposal of capital assets
Miscellaneous
Transfers
Total Governmental Activities
Business -Type Activities:
Investment earnings
Gain (loss) on disposal of capital assets
Miscellaneous
Transfers
Total Business -Type Activities
Total Primary Government
Change in Net Position
Governmental activities
Business -type activities
Total Primary Government
2022 2021 2020 2019 2018
$ 20,845,938
$ 19,163,858
$ 18,731,549
$ 18,111,247
$ 17,608,094
11,176,190
9,915,046
8,846,359
8,407,249
7,965,662
2,170,152
2,090,001
2,142,660
2,054,395
1,617,121
49,151
50,805
880,606
526,867
321,468
638,418
390,533
269,855
351,165
263,245
1,795, 683
1,541,853
1,434, 829
1,456, 690
1, 554,849
36,675,532
33,152,096
32,305,858
30,907,613
29,330,439
130,401
43,099
347,518
681,288
200,449
(1,795,683)
(1,541,853)
(1,434,829)
(1,456,690)
(1,554,849)
(1,665,282)
(1,498,754)
(1,087,311)
(775,402)
(1,354,400)
35,010,250
31,653,342
31,218,547
30,132,211
27,976,039
5,116,244
6,458,118
(68,135)
(2,426,629)
(662,201)
5,057,078
2,748,632
1,769,767
(192,912)
780,399
$ 10,173,322
$ 9,206,750
$ 1,701,632
$ (2,619,541)
$ 118,198
118 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Table 2
CHANGES IN NET POSITION Page 4 of 4
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
General Revenues and Other Changes in Net Position
Governmental activities:
Taxes:
Property taxes
Sales taxes
Franchise and other taxes
Other
Investment earnings
Gain (loss) on disposal of capital assets
Miscellaneous
Transfers
Total Governmental Activities
Business -Type Activities:
Investment earnings
Gain (loss) on disposal of capital assets
Miscellaneous
Transfers
Total Business -Type Activities
Total Primary Government
Change in Net Position
Governmental activities
Business -type activities
Total Primary Government
2017 2016 2015 2014 2013
$ 17,270,647
$ 16,350,101
$ 15,574,684
$ 14,864,284
$ 14,630,961
6,482,367
5,393,920
5,291,186
4,693,484
4,293,794
1,661, 654
1,779, 234
1,726, 557
1,673, 615
1, 583,258
-
-
-
32,799
24,974
187,001
149,003
79,071
109,849
88,510
25,999
19,564
-
34,359
43,788
131,639
128,813
108,306
84,275
78,682
1,358, 744
1,397,065
1,226,205
1,799, 344
1,773,982
27,118,051
25,217,700
24,006,009
23,292,009
22,517,949
141,978
95,825
49,138
40,713
37,565
-
7,569
-
-
-
-
7,839
35,790
(1,358,744)
(1,397,065)
(1,226,205)
(1,799,344)
(1,773,982)
(1,216,766)
(1,293,671)
(1,169,228)
(1,758,631)
(1,700,627)
25,901,285
23,924,029
22,836,781
21,533,378
20,817,322
123,634
(118,691)
2,936,522
1,789,787
56,077
1,490,179
407,487
696,814
(151,150)
490,391
$ 1,613,813
$ 288,796
$ 3,633,336
$ 1,638,637
$ 546,468
119 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
General fund
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total General Fund
All Other Governmental Funds
Nonspendable
Restricted
Unassigned
Total Other Governmental Funds
Total Fund Balances of
Governmental Funds
2022
2021 2020 2019 2018
Table 3
Page 1 of 2
$ 260,066
$ 355,011
$ 255,796
$ 378,736
$ 371,610
460,154
597,908
650,424
727,704
631,971
4,667,500
4,320,912
2,591,745
2,508,234
4,229,725
11,997,367
11,953,314
13,374,059
10,608,815
9,052,000
17,385,087
17,227,145
16,872,024
14,223,489
14,285,306
11,484
11,101
11,070 24,738 24,307
12,740,909
18,106,088
4,757,183 5,568,395 9,304,724
(179,413)
(165,886)
(1,826,743) - -
12,572,980
17,951,303
2,941,510 5,593,133 9,329,031
$ 29,958,067 $ 35,178,448 $ 19,813,534 $ 19,816,622 $ 23,614,337
120 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
Table 3
Page 2 of 2
2017
2016
2015
2014
2013
General fund
Nonspendable
$ 434,750
$ 646,778
$ 822,226
$ 143,201
$ 122,927
Restricted
667,271
626,229
518,119
400,411
281,826
Committed
-
3,612
685,486
-
-
Assigned
2,893,697
2,706,897
2,773,419
1,421,875
487,201
Unassigned
9,547,039
9,776,031
8,760,424
10,554,183
9,714,206
Total General Fund
13,542,757
13,759,547
13,559,674
12,519,670
10,606,160
All Other Governmental Funds
Nonspendable
31,869 31,721 31,378
31,241 31,137
Restricted
8,464,859 8,165,349 6,539,985
666,317 995,269
Unassigned
- (193,750) -
(239,078) -
Total Other Governmental Funds
8,496,728 8,003,320 6,571,363
458,480 1,026,406
Total Fund Balances of
Governmental Funds $ 22,039,485 $ 21,762,867 $ 20,131,037 $ 12,978,150 $ 11,632,566
121 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
Revenues
Taxes
Fines and forfeitures
Permits and fees
Intergovernmental
Investment earnings
Donations
Miscellaneous
Total Revenues
Expenditures
General government
Public safety
Public works
Engineering
Community development
Parks and recreation
Library services
Capital outlay
Debt principal payment
Interest and other charges
Total expenditures
Excess of revenues over (under) expenditures
Other Financing Sources (Uses)
Sale of capital assets
Insurance recoveries
Issuance of capital related debt
Issuance of notes payable
Issuance of capital lease
Refunding bonds issued
Payment to refunding escrow agent
Premium on issuance of debt
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Debt service as a percentage of noncapital
expenditures
Table 4
Page 1 of 2
2022 2021 2020 2019 2018
$ 34,192,280 $
30,974,155 $
29,712,771 $
28,389,651 $
27,247,421
1,052,940
1,219,096
780,717
866,812
957,671
1,847,985
1,669,033
1,504,555
1,483,554
1,566,656
3,215,269
7,495,971
3,828,898
1,576,838
4,398,836
49,580
48,609
274,405
518,221
313,793
255,638
264,938
274,945
290,069
396,010
345,364
124,627
719,721
18,777
181,017
40,959,056
41,796,429
37,096,012
33,143,922
35,061,404
6,040,832
5,591,248
5,690,428
5,336,269
5,440,888
15, 370,261
14,897,465
14,306,864
13,545,539
16,868, 931
5,765,313
4,612,796
6,021,313
4,127,539
2,157,277
571,010
507,933
434,976
-
-
1,187,413
1,131,498
1,139,566
1,099,154
985,309
4,312,856
3,715,517
3,426,521
3,796,589
3,511,146
1,336,185
1,223,726
1,182, 289
1,204,415
1,200,512
10,277,134
7,037,490
12,865,475
6,219,243
2,615,538
2,840,720
2,556,282
2,221,257
2,168,876
2,137,284
1,624,891
1,567,472
1,285,807
1,112,127
1,145,400
49,326,615
42,841,427
48,574,496
38,609,751
36,062,285
(8,367,559)
(1,044,998)
(11,478,484)
(5,465,829) (1,000,881)
32,029
21,270
72,568
6,614 9,135
74,126
175,351
8,548
235,443 725,304
-
1 457 640
13,185,000
7,795,000
- 485,305
306,329
1,791,015
3,050,000
2,065,000
(3,321,347)
(2,372,262)
1,451,456
753,840 - -
1, 708,331 1,751,915
1,584,985 1,473,591 1,402,989
(124,948) (210,062)
(223,298) (47,534) (47,000)
3,147,178 16,409,912
11,475,396 1,668,114 2,575,733
$ (5,220,381) $ 15,364,914 $ (3,088) $ (3,797,715) $ 1,574,852
12.1% 11.7% 9.9% 10.1% 9.8%
122 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
Revenues
Taxes
Fines and forfeitures
Permits and fees
Intergovernmental
Investment earnings
Donations
Miscellaneous
Total Revenues
Expenditures
General government
Public safety
Public works
Engineering
Community development
Parks and recreation
Library services
Capital outlay
Debt principal payment
Interest and other charges
Total expenditures
Excess of revenues over (under) expenditures
Other Financing Sources (Uses)
Sale of capital assets
Insurance recoveries
Issuance of capital related debt
Issuance of notes payable
Issuance of capital lease
Refunding bonds issued
Payment to refunding escrow agent
Premium on issuance of debt
Transfersin
Transfers out
Total other financing sources (uses)
Net change in fund balances
Debt service as a percentage of noncapital
expenditures
Table 4
Page 2 of 2
2017 2016 2015 2014 2013
$ 25,509,760 $
23,533,294 $
22,513,317 $
21,335,527 $
20,563,848
1,023,556
873,872
907,557
860,257
939,380
1,708,357
1,450,939
1,349,264
1,385,898
1,327,918
1,763,974
664,427
3,536,980
1,791,451
918,641
184,127
147,403
77,947
109,117
87,330
434,164
257,724
349,325
349,166
363,413
165,619
79,435
72,837
54,989
84,673
30,789,557
27,007,094
28,807,227
25,886,405
24,285,203
4,975,926
4,385,321
5,343,160
4,306,143
4,250,320
14,751,381
12,135,956
11,348,346
10,599,575
10,234,811
2,160,152
2,118,572
2,066,349
1,689,987
2,204,176
893,663
954,103
925,947
1,092,982
1,207,264
3,339,864
3,032,979
2,917,857
2,772,072
2,675,813
1,172,245
1,096,614
1,036,843
1,083,043
1,002,801
8,429,200
9,332,400
7,255,229
2,500,254
1,942,746
1,813,130
1,570,176
1,272,823
1,668,692
1,721,983
1,170,958
921,982
776,340
662,718
712,822
38,706,519
35,548,103
32,942,894
26,375,466
25,952,736
(7,916,962) (8,541,009) (4,135,667) (489,061) (1,667,533)
12,757
2,743
99
6,325
27,566
25,999
19,564
39,257
28,886
48,132
5,605,000
7,345,000
9,595,000
-
-
756,006
-
147,318
-
2,840,000
-
-
-
(3,058,663)
435,074
1,484,593
646,746
-
-
1,364,399
1,503,442
1,544,662
1,799,344
1,973,106
(5,655)
(182,503)
(318,457)
-
(199,124)
8,193,580
10,172,839
11,288,644
1,834,555
1,996,998
$ 276,618 $ 1,631,830 $ 7,152,977 $ 1,345,494 $ 329,465
9.9% 9.2% 7.5% 9.8% 10.0%
123 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
ASSESSED VALUE AND TAXABLE VALUE OF PROPERTY
LAST TEN FISCAL YEARS
(Unaudited)
Fiscal
Year
Tax
Year
Residential
Property
Commercial
and Industrial
Property
Other
Property
Total
Assessed
Value
2013
2012
$ 2,622,105,658
$ 286,288,277
$ 235,960,049
$ 3,144,353,984
2014
2013
2,695,532,057
294,316,218
238,127,209
3,227,975,484
2015
2014
2,850,404,776
300,533,643
237,028,723
3,387,967,142
2016
2015
3,156,205,930
335,006,408
206,365,157
3,697,577,495
2017
2016
3,546,622,242
320,646,912
230,805,066
4,098,074,220
2018
2017
3,795,456,220
222,328,923
376,053,145
4,393,838,288
2019
2018
3,749,539,307
227,659,302
352,044,261
4,329,242,870
2020
2019
4,078,991,715
241,927,251
414,739,865
4,735,658,831
2021
2020
4,526,853,385
290,599,941
451,358,776
5,268,812,102
2022
2021
5,112,738,325
337,329,366
528,637,507
5,978,705,198
Source: Galveston Central Appraisal District, Harris County Appraisal District, and City of Friendswood
records.
Table 5
Page 1 of 2
Note: Property in the City of Friendswood is reassessed once every two years on average. (Source: Galveston Central
Appraisal District)
Tax rates per $100 of assessed value.
Residential property includes both single-family and multi -family properties.
124 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
ASSESSED VALUE AND TAXABLE VALUE OF PROPERTY
LAST TEN FISCAL YEARS
(Unaudited)
Fiscal
Year
Tax
Year
Less:
Exemptions and
Tax Exempt
Property
Total
Taxable
Value
Total
Direct
Tax
Rate
2013
2012
$ 710,718,423
$ 2,433,635,561 $
0.59700
2014
2013
724,153,848
2,503,821,636
0.59140
2015
2014
761,444,427
2,626,522,715
0.59140
2016
2015
776,779,458
2,920,798,037
0.56870
2017
2016
977,353,948
3,120,720,272
0.54600
2018
2017
894,716,055
3,499,122,233
0.52735
2019
2018
955,005,811
3,374,237,059
0.53240
2020
2019
1,066,920,381
3,668,738,450
0.52140
2021
2020
1,349,948,370
3,918,863,732
0.48740
2022
2021
1,735,137,851
4,243,567,347
0.48731
Table 5
Page 2 of 2
125 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
DIRECT AND OVERLAPPING PROPERTY TAX RATES
Last Ten Fiscal Years
(Unaudited)
(rate per $100 of assessed value)
Table 6
Fiscal
Year
Ended
September 30,
General
City Direct Rates
Debt
Service
Total
Direct
Friendswood
Independent
School District
Clear Creek
Independent
School District
Overlapping Rates
Galveston County
Consolidate Drainage
District
Galveston
County
Harris
County
2013 $
0.5307
$ 0.0663 $
0.5970
$ 1.3670
$ 1.3600
$ 0.1400
$ 0.5999
$ 0.62998
2014
0.5303
0.0611
0.5914
1.3670
1.4000
0.1400
0.5837
0.62998
2015
0.5303
0.0611
0.5914
1.3670
1.4000
0.1350
0.5788
0.62998
2016
0.4972
0.0715
0.5687
1.3670
1.4000
0.1150
0.5612
0.62998
2017
0.4620
0.0840
0.5460
1.3870
1.4000
0.1120
0.5462
0.62998
2018
0.4323
0.0950
0.5273
1.3670
1.4000
0.1080
0.5461
0.62998
2019
0.4372
0.0952
0.5324
1.3670
1.4000
0.1080
0.5298
0.62998
2020
0.4322
0.0893
0.5214
1.2594
1.3100
0.1122
0.5044
0.61170
2021
0.3922
0.0952
0.4874
1.3440
1.2659
0.1131
0.4651
0.59920
2022
0.3851
0.1022
0.4873
1.2394
1.1797
0.1320
0.4149
0.58135
Source: Galveston County Tax Assessor/Collector and City of Friendswood records
Note: Overlapping rates are those of local and county governments that apply to property owners within the City of Friendswood. Not all overlapping
rates apply to all property owners. Overlapping rates for Friendswood Independent School District, Galveston County Consolidated Drainage District
and Galveston County apply only to residents whose property is in Galveston County. Overlapping rates for Clear Creek Independent School District
and Harris County apply only to residents whose property is in Harris County.
126 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL PROPERTY TAX PAYERS
CURRENT AND NINE YEARS AGO
(Unaudited)
Taxpayer
Reserve at Autumn Creek LTD
Texas -New Mexico Power Co.
Bellevue at Clear Creek LP
Tannos Land Holding III LLC
Kroger Co.
Bay Meadows LLP
The Beldon Friendswood LLC
A-S 108 Friendswood Crossing LP
WCJV Friendswood LLC
Frontier Land V P L L
Autumn Creek Dev LTD
G&I VI Sky Hawk LP
H E Butt Grocery Company
HCP Friendswood LLC
HSRE Friendswood LLC
Buzbee Family LTD Partnership
Total
All other taxpayers
2022
Taxable
Value
Rank
$ 30,972,060
1
22,712,259
2
20,016,530
3
14,000,000
4
13,020,517
5
11,254,573
6
8,500,150
7
8,051,620
8
7,925,690
9
7,385,000
10
143,838,399
4,099,728,948
$4,243,567,347
2013
Percentage
of Total City
Taxable
Assessed
Taxable
Value
Value
Ran
0.73%
$17,486,069
1
0.54%
11,212,150
3
0.47%
-
0.33%
-
0.31%
13,606,816
2
0.27%
-
0.20%
-
0.19%
5,858,350
9
0.19%
-
0.17%
-
-
9,396,550
4
8,856,988
5
8,149,920
6
6,995,240
7
-
5,995,130
8
-
5,367,560
10
3.39%
92,924,773
96.61%
2,340,710,788
100.00%
$2,433,635,561
Source: Galveston Central Appraisal District and Harris County Appraisal District.
Table 7
Percentage
of Total City
Taxable
Assessed
Value
0.72%
0.46%
0.56%
0.24%
0.39%
0.36%
0.33%
0.29%
0.25%
0.22%
3.82%
96.18%
127 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(Unaudited)
Table 8
Collected within the
Collections
Fiscal Year
Taxes Levied
Fiscal Year of the Levy
(adjustments)
Total Collections to Date
Ended
forthe
Percentage
in Subsequent
Percentage
September 30,
Fiscal Year
Amount
of Levy
Years
Amount
of Levy
2013
$ 14,454,404
$ 14,361,379
99.63%
$ 83,459
$ 14,444,838
99.93%
2014
14,747,526
14,656,257
99.38%
81,591
14,737,848
99.93%
2015
15,424,948
15,306,943
99.23%
105,530
15,412,473
99.92%
2016
16,431,153
16,264,080
98.98%
155,239
16,419,319
99.93%
2017
17,014,685
16,922,419
99.46%
80,143
17,002,562
99.93%
2018
17,633,192
17,554,220
99.55%
65,329
17,619,549
99.92%
2019
17,952,134
17,756,864
98.91%
177,496
17,934,360
99.90%
2020
18,682,563
18,605,868
99.59%
49,644
18,655,512
99.86%
2021
18,879,840
18,877,842
99.99%
( 37,764)
18,840,078
99.79%
2022
20,843,713
20,793,321
99.76%
-
20,793,321
99.76%
Source: Galveston County Tax Assessor/Collector and City of Friendswood records.
128 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
RATIOS OF OUTSTANDING DEBY BT TYPE
LAST TEN FISCAL YEARS
(Unaudited)
Governmental Activities
General
Fiscal
Obligation
Notes
Year
Bonds
Payable
2013
$ 20,230,000
$ 876,981
2014
18,815,000
623,407
2015
24,525,285
360,584
2016
31,768,805
180,408
2017
36,067,806
668,284
2018
34,065,657
791,305
2019
32,023,508
436,620
2020
38,058,822
1,861,762
2021
49,809,357
1,681,709
2022
47,143,902
2,613,729
Business -Type Activities
General Water
Obligation Revenue
Bonds Bonds
Total
Primary
Government
Percentage
of Personal
Income
Per
Capita
$
$ 32,995,000
$ 54,101,981
0.37%
$ 1,410
31,830,000
51,268,407
0.35%
1,318
9,875,671
24,663,416
59,424,956
0.40%
1,510
33,238,357
6,109,871
71,297,441
0.46%
1,793
31,160,729
5,871,129
73,767,948
0.47%
1,818
29,028,108
5,627,385
69,512,455
0.42%
1,695
26,845,483
27,039,600
86,345,211
0.49%
2,093
24,587,858
26,037,385
90,545,827
0.49%
2,175
22,310,234
40,736,057
114,537,357
0.57%
2,733
20,447,609
39,081,427
109,286,667
0.51%
2,588
Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements.
See Table 14 for personal income and population data. These ratios are calculated using personal income
and population for the prior calendar year.
Table 9
129 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
RATIOS OF NET GENERAL BONDED DEBY OUTSTANDING
LAST TEN FISCAL YEARS
(Unaudited)
General Bonded Debt Outstanding
Table 10
General
Less Debt
Net
Percentage of
Fiscal
Taxable
Obligation
Service
General
Taxable Value
Per
Year
Population
Value
Bonds *
Funds
Bonded Debt
Property
Capita
2013
38,369
$ 2,433,635,561
$ 20,967,293 $
134,339
$ 20,095,661
0.83%
$ 524
2014
38,911
2,503,821,636
19,491,826
130,147
18,684,853
0.75%
480
2015
39,458
2,626,522,715
34,400,956
147,193
34,253,763
1.30%
868
2016
39,767
2,920,798,037
65,007,162
159,686
64,847,476
2.22%
1,631
2017
40,570
3,120,720,272
67,228,535
115,152
67,113,383
2.15%
1,654
2018
41,003
3,499,122,233
63,093,765
-
63,093,765
1.80%
1,539
2019
41,253
3,374,237,059
58,868,991
18,302
58,850,689
1.74%
1,427
2020
41,637
3,668,738,450
62,646,680
31,909
62,614,771
1.71%
1,504
2021
41,916
3,918,863,732
72,119,591
10,608
72,108,983
1.84%
1,720
2022
42,222
4,243,567,347
67,591,511
46,376
67,545,135
1.59%
1,600
Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.
* Includes both Governmental
Activities and
Business -type Activities
130 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Table 11
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
AS OF September 30, 2022
(Unaudited)
Estimated
Estimated
Share of
Debt
Percentage
Overlapping
Governmental Unit
Outstanding
Applicable
Debt
Debt repaid with property taxes
Friendswood Independent School District
$196,190,000
100.00%
$ 196,190,000
Clear Creek Independent School District
1,094,103,696
2.579%
28,216,934
Galveston County
224,931,000
7.672%
17,256,706
Harris County
2,697,314,000
0.149%
4,018,998
Subtotal, overlapping debt
City Direct Debt
Total Direct and Overlapping Debt
245,682,638
49,757,631
$ 295,440,269
Source: Information was obtained from either the governmental unit's website or the finance department of the
governmental unit.
Notes: 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 Friendswood. The City's share of the debt of the overlapping
governments is based on the ratio of the assessed value of the City's own property to that of each of the
other governments. This process recognizes that, when considering the City'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.
131 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
LEGAL DEBT MARGIN INFORMATION
(UNAUDITED)
Asa City Council -City Manager form of government, the City of Friends wood is not limited by law in the
amount of debt it may issue. The City's charter states:
"In keeping with the Constitution of the State of Texas and not contrary thereto, the City of
Friendswood shall have the power to borrow money on the credit of the City for any public purpose
not now or hereafter prohibited by the Constitution and laws of the State of Texas, and shall havethe
right to issue all tax bonds, revenue bonds, funding and refunding bonds, time warrants and other
evidence of indebtedness as now authorized or as may hereafter be authorized to be issued by cities
and towns by the laws of the State of Texas."
Article 11, Section 5 of the State of Texas Constitution states in part:
"but no tax for any purpose shall ever be lawful for any one year, which shall exceed two and one -hall
percent of the taxable property of such city"
The tax rate for fiscal year ended September 30, 2022 is $0.4873 per $100 of assessed valuation with
assessed valuation being 100% of ma rket va I ue.
Table 12
132 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
PLEDGED REVENUE COVERAGE
LAST TEN FISCAL YEARS
(Unaudited)
Table 13
Waterworks and Sewer Revenue Bonds
Utility
Less:
Net
Fiscal
Service
Operating
Available
Debt Service
Year
Charges
Expenses
Revenue
Principal
Interest
Coverage
2013
$ 11,462,779
$ 6,113,276
$ 5,349,503
$ 1,120,000 $
1,548,303
2.00
2014
11,117,391
6,376,510
4,740,881
1,165,000
1,504,006
1.78
2015
11,020,029
6,220,331
4,799,698
1,205,000
1,153,522
2.04
2016
11,319,801
6,361,229
4,958,572
-
481,140
10.31
2017
12,295,441
6,911,675
5,383,766
220,000
184,100
13.32
2018
12,183,711
7,205,293
4,978,418
225,000
179,250
12.32
2019
13,130,943
9,378,672
3,752,271
230,000
787,319
3.69
2020
16,638,758
10,050,967
6,587,791
905,000
952,470
3.55
2021
17,690,843
9,690,325
8,000,518
935,000
1,113,685
3.91
2022
19,408,330
9,130,574
10,277,756
1,450,000
1,221,488
3.85
Notes: Details regarding theCity's outstanding debt can be found in the notes to the financial statements.
133 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN CALENDAR YEARS
(Unaudited)
Per
Capita
Calendar
Estimated
Personal
Personal
Unemployment
Year
Population
Income
Income
Rate
2013
38,369
$ 14,475,816,000
$ 47,186
4.5%
2014
38,911
14,741,197,000
46,917
3.4%
2015
39,358
14,774,880,000
47,011
3.7%
2016
39,767
15,463,890,000
47,991
4.9%
2017
40,570
15,682,608,000
47,605
4.7%
2018
41,003
16,443,373,000
49,079
4.3%
2019
41,253
17,497,755,000
51,785
3.2%
2020
41,637
18,561,154,000
54,250
5.9%il)
2021
41,916
19,994,969,000
57,941
3.9%
2022
42,222
21,328,914,000
60,071
3.4%
Sources: Population information was provided from pastfinancial reports. Unemploym(
rates, personal income and per capita personal income were obtained from the
U.S. Department of Labor Bureau of Labor Statistics webs ite or the Texas
Workforce Commission website.
(1) Increase in unemployment rate is a resultof the COVID-19 pandemic.
Table 14
134 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
(Unaudited)
Employer
Friendswood ISD
HEB
City of Friendswood
Kroger
Clear Creek ISD
Friendship Haven Nursing Home
McDonalds
U.S. Post Office
Morada (formerly Atria )
UTMB
Friendswood Healthcare (Autumn Hills)
Emeritus
Total
Source: City Manager's Office
Table 15
2022
2013
Percentage
Estimated
of Total
Estimated
Employees
Employment
Rank
Employees
Rank
817
4.10%
1
698
1
500
2.51%
2
370
3
248
1.25%
3
233
4
219
1.10%
4
413
2
190
0.95%
5
168
5
100
0.50%
6
140
6
102
0.51%
7
69
8
75
0.38%
8
58
9
72
0.36%
9
-
60
0.30%
10
-
-
-
-
-
85
7
-
-
-
69
10
2,383
11.97%
2,303
Note: Percentage of total employment is based on total City employment of 19,909 for 2022.
Total City employment for 2013 is not available.
135 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Table 16
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM Page 1 of 2
LAST TEN CALENDAR YEARS
(Unaudited)
Full-time Equivalent Employees as of September 30
2022 2021 2020 2019 2018
Function/Program
General Government
City Attorney
2.15
2.10
2.10
2.10
2.10
City Manager
4.00
6.00
6.00
5.00
5.40
City Secretary
4.00
4.00
4.00
5.00
5.00
Administrative Services
16.60
18.60
18.60
27.60
27.60
Human Resources
5.00
5.00
5.00
-
-
Information Technology
6.00
5.00
5.00
-
-
Public Safety:
Police
90.38
90.38
90.38
90.38
87.72
Fire marshal and fire
7.38
7.20
7.20
7.20
6.60
Public Works
23.00
23.00
23.00
23.00
27.00
Community Development
11.18
10.70
10.70
10.70
10.70
Engi neeri ng
7.45
7.00
7.00
6.00
-
Parks and Recreation
25.30
24.90
24.50
23.10
21.90
Li bra ry
15.62
14.97
14.97
14.97
14.97
Water
11.30
9.30
9.30
9.30
9.30
Sewer
11.00
11.00
11.00
11.00
10.00
Total City Employees:
240.36
239.15
238.75
235.35
228.29
Source: City of Friendswood Budget Documents
Notes:
In-house City Attorney added to staff in fiscal year 2015.
In fiscal year 2019, Engineering became an independent department, separate from Public Works.
In fiscal year 2020, Human Resources and Information Technology became independent departmen
separate from Ad mini strative Services.
136 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Table 16
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM Page 2 of 2
LAST TEN CALENDAR YEARS
(Unaudited)
Full-time Equivalent Employees as of September 30
2017 2016 2015 2014 2013
Function/Program
General Government:
City Attorney
1.00
1.00
1.00
-
-
City Manager
5.40
5.40
4.55
4.15
4.15
City Secretary
5.00
5.00
5.00
5.00
5.00
Administrative Services
27.70
27.70
28.70
28.70
28.20
Human Resources
-
-
-
-
-
Information Technology
-
-
-
-
-
Public Safety:
Police
88.72
86.72
85.72
82.40
81.40
Fire marshal and fire
6.60
6.60
6.60
6.50
6.10
Public Works
26.00
29.00
25.33
26.33
20.33
Community Development
11.70
11.70
10.89
10.89
16.89
Engineering
-
-
-
-
-
Parks and Recreation
20.90
19.63
19.63
19.03
19.20
Library
14.97
14.62
14.62
14.37
14.37
Water
8.30
8.30
8.30
9.30
9.30
Sewer
11.00
8.00
8.00
9.00
9.00
Total City Employees:
227.29
223.67
218.34
215.67
213.94
Source: City of Friendswood Budget Documents
Notes:
In-house City Attorney added to staff in fiscal year 2015.
In fiscal year 2019, Engineering became an independent department, separate from Public Work:
In fiscal year 2020, Human Resources and Information Technology became independent departn
separate from Admini strative Services.
137 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
OPERATING INDICATORS BY FUNCTION/PROGRAM
LAST TEN CALENDAR YEARS
(Unaudited)
Fiscal Year
2022
2021
2020
2019
2018
Function/Program
Community Development:
Building permits issued
1,682
1,658
1,605
1,465
2,788
Building inspections conductec
9,325
9,998
9,124
9,251
14,157
Police:
Physical arrests
1,051
1,368
847
1,190
1,145
Parking violations
11
36
17
26
15
Traffic violations
9,952
11,081
8,807
4,468
6,785
Fire Marshal:
Inspections
1,315
1,730
1,146
1,448
1,139
Fire:
Emergency responses
4,458
4,405
3,650
3,655
3,720
Fires extinguished
129
92
65
80
80
Parks and Recreation:
Recreation participants
36,861
16,907
6,027
19,657
18,299
Facility reservations
5,356
1,033
3,166
3,293
2,123
Library:
Volumes in collection
95,470
101,061
99,930
101,532
102,852
Total volumes borrowed
349,814
340,478
271,078
342,592
348,554
Water:
Newconnections
136
92
185
169
125
Water main breaks
126
49
41
84
116
Average daily consumption
5,714
5,064
5,319
5,129
5,455
(thousands ofgallons)
Peak daily consumption
11,166
14,041
9,927
9,390
9,475
Sewer:
Average dailysewagetreatmer
2,840
3,255
3,113
3,345
3,117
(thousands of gallons)
Maximum daily flow
8,369
11,006
10,520
12,491
10,370
(thousands of gallons)
Source: Various Citydepartmentsand
prioryearACFRs
Table 17
Page 1 of 2
138 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
OPERATING INDICATORS BY FUNCTION/PROGRAM
LAST TEN CALENDAR YEARS
(Unaudited)
Fiscal Year
2017
2016
2015
2014
2013
Function/Program
Community Development:
Building permits issued
2,177
1,865
1,377
1,395
1,469
Building inspections conductec
12,134
11,026
12,145
10,611
11,470
Police:
Physical arrests
903
1,464
1,479
1,596
1,601
Parking violations
61
44
63
58
107
Traffic violations
3,669
5,001
4,540
5,815
5,718
Fire Marshal:
Inspections
1,233
1,354
1,512
1,427
1,673
Fire:
Emergency responses
3,599
3,303
3,258
3,261
2,993
Fires extinguished
75
76
78
116
86
Parks and Recreation:
Recreation participants
20,556
21,369
16,153
15,178
18,607
Facility reservations
1,004
1,444
1,443
728
686
Library:
Volumes in collection
100,678
147,726
133,165
141,383
133,865
Total volumes borrowed
341,048
301,158
350,145
367,452
367,948
Water:
Newconnections
137
183
-
193
189
Water main breaks
44
46
57
149
193
Average daily consumption
5,282
4,963
4,970
5,171
5,577
(thousands ofgallons)
Peak daily consumption
10,110
10,472
12,623
9,917
11,505
Sewer:
Average dailysewagetreatmer
3,286
3,382
3,306
2,867
2,956
(thousands ofgallons)
Maximum daily flow
12,766
12,188
11,237
10,770
10,401
(thousands ofgallons)
Source: Various Citydepartmentsand
prioryearACFRs
Table 17
Page 2 of 2
139 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
LAST TEN CALENDAR YEARS
(Unaudited)
Function/Program
Police
Stations
Patrol units
Fire
Stations
Public Works
Streets - paved (miles)
Streets - unpaved (miles)
Traffic signals
Parks and Recreation
Acreage
Parks
Swimming pool
Tennis courts
Li bra ry
Water
Water mains (miles)
Fi re hydrants
Connections
Stora ge ca pa ci ty
(thousands of gallons)
Sewer
Sanitary sewers (miles)
Connections
Storm sewers (miles)
Treatment ca pa city
(thousands of gallons)
Fiscal Year
Table 18
Page 1 of 2
2022 2021 2020 2019 2018
1
1
1
29
38
31
4
4
4
221
221
185
2
2
2
3
3
3
320
273
266
11
10
10
1
1
1
4
4
4
1
1
1
222
222
216
1,75S
1,747
1,713
14,328
14,192
14,098
7,850
7,850
7,850
182
182
202
13,241
13,132
13,029
117
117
112
9,250
9,250
9,250
Source: Various City departments and prior year ACFRs.
1 1
33 34
4 4
176 176
2 2
3 3
266 266
10 9
1 1
4 4
1 1
216
216
1,707
1,707
13,913
13,744
7,850
7,850
202
202
12,870
12,721
112
112
9,250
9,250
140 City of Friendswood, Texas 2022 ACFR
CITY OF FRIENDSWOOD, TEXAS Table 18
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM Page 2 of 2
LAST TEN CALENDAR YEARS
(Unaudited)
Fiscal Year
2017
2016
2015
2014
2013
Function/Program
Police
Stations
1
1
1
1
1
Patrol units
32
31
29
27
26
Fire
Stations
4
4
4
4
4
Public Works
Streets - paved (miles)
174
172
169
167
165
Streets - unpaved (miles)
2
2
2
2
2
Traffic signals
3
3
3
3
3
Parks and Recreation
Acreage
266
266
232
189
189
Parks
9
9
8
8
8
Swimming pool
1
1
1
1
1
Tennis courts
4
4
4
4
4
Li bra ry
1
1
1
1
1
Water
Water mains (miles)
214
212
209
207
187
Fi re hydra nts
1,690
1,672
1,631
1,610
1,608
Connections
13,619
13,482
13,289
13,093
12,929
Storage ca pacity
7,850
7,850
8,100
8,000
7,500
(thousands of gallons)
Sewer
San i ta ry sewers (miles)
200
198
195
194
163
Connections
12,588
12,378
12,407
12,236
12,072
Storms ewers (miles)
110
109
106
105
100
Treatment ca pa city
9,250
9,250
9,250
12,000
4,850
(thousands of gallons)
Source: Various City departments and prior
year ACFRs.
141
City of Friendswood, Texas 2022 ACFR
City of
,i�nd,swood
Tex a s
142 City of Friendswood, Texas 2022 ACFR