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HomeMy WebLinkAboutComprehensive Annual Financial Report September 30, 2023TY OF FRIENDSWOOD, TEXAS
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CITY OF FRIENDSWOOD, TEXAS
ANNUAL COMPREHENSIVE
FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
Fiscal Year Ended
September 30, 2023
Officials Issuing Report:
Morad Kabiri
City Manager
Katina Hampton
Director of Administrative Services
City of
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-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
74
Notes to Budgetary Schedule
83
Schedule of Changes in the Net Pension Liability and Related Ratios - Texas Municipal Retirement
System
86
Schedule of City Contributions - Texas Municipal Retirement System
88
Notes to Schedule of Contributions
89
Schedule of Changes in the Total OPEB Liability and Related Ratios - Texas Municipal Retirement
System Supplemental Death Benefits Fund
90
Schedule of Changes in the Total OPEB Liability and Related Ratios - City of Friendswood Retiree
Health Care Plan
91
City of Friendswood, Texas 2023 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
97
Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor
Governmental Funds
100
Schedule of Revenue, Expenditures and Changes in Fund Balances - Budget and Actual:
Police Investigation
103
Fire/EMS Donation
104
Municipal Court
105
CDBG — DR Harris County
106
Hazard Mitigation
107
CDBG — DR Galveston County
108
1776 Park
109
Sidewalk Installation
110
Park Land Dedication
111
Street Improvement
112
Debt Service
113
Bond Construction
114
Page
Table
Statistical Section (Unaudited)
Net Position by Component
118
1
Changes in Net Position
120
2
Fund Balances of Governmental Funds
124
3
Changes in Fund Balances of Governmental Funds
126
4
Assessed Value and Taxable Value of Property
128
5
Direct and Overlapping Property Tax Rates
130
6
Principal Property Taxpayers
131
7
Property Tax Levies and Collections
132
8
Ratios of Outstanding Debt by Type
133
9
Ratio of Net General Bonded Debt Outstanding
134
10
Direct and Overlapping Governmental Activities Debt
135
11
Legal Debt Margin Information
136
12
Pledged Revenue Coverage
137
13
Demographic and Economic Statistics
138
14
Principal Employers
139
15
Full -Time Equivalent City Government Employees by Function/Program
140
16
Operating Indicators by Function/Program
142
17
Capital Asset Statistics by Function/Program
144
18
City of Friendswood, Texas 2023 ACFR
INTRODUCTORY SECTION
City of Friendswood, Texas 2023 ACFR
City of
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City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD
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March 22, 2024
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, 2023,
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 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, 2023, 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, 2023, 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 2023 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 42,757. 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, health care,
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 $164,000, 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 along
FM 518, development of the City's "panhandle" area near FM 2351 and most recently the development of 106 acres on FM 528
near Bay Area Blvd. City leaders have approved special tools and incentives to revitalize and develop these areas to promote
mixed -use, multi -story developments with retail spaces, medical and office buildings, hotels and multi -family residential
complexes. The City offers competitive business incentives, including a municipal grant program, tax abatement that includes
"green" development, freeport tax exemption, downtown development fee waivers, and most recently the creation of a Tax
Increment Reinvestment Zone.
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 2023 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 15th 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 2023 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,
2022. This was the thirty-fifth 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 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL OFFICIALS
September 30, 2023
Elected Officials
Position
Term Expires
Mike Foreman
Mayor
May 2024
Steve Rockey
Council Member
- Position No. 1
May 2024
Sally Branson
Council Member
- Position No. 2
May 2026
Trish Hanks
Council Member
- Position No. 3
May 2024
Robert J. Griffon
Council Member
- Position No. 4
May 2025
Joe Matranga
Council Member
- Position No. 5
May 2026
Brent Erenwert
Council Member
- Position No. 6
May 2025
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
Director of Emergency Services
Haley Brown
Director of Human Resources
Terry Prindle
Director of Information Technology
Rene Ibarra
Director of Public Works
James Toney
Director of Parks and Recreation
Leticia Brysch
City Secretary
Christoper Rogers
Chief of Police
Karen Horner
City Attorney
James W. Woltz
Judge - Municipal Court
v City of Friendswood, Texas 2023 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, 2022
G P.
Executive Director/CEO
vi City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
ORGANIZATIONAL CHART
Citizens of Friendswood
City Attorney Mayor and City CoUnciJ
• Prosacutars
Municipal ,Judge
City Manager
■ Administratron
Administrative Services
. Finance
■ Utilityj9-7lirtg
■ Municipai Court
City Secretary
. Administration
• Records l4fanagemerd
. Erections
Human Resources
. Human Resources
. lr�surar�ce
. Risk Managerrrent
Information Technology
. Cybemecurity
. fnfrastructure Services & Cps
Fire Marshal
. Adrrrinis�a�orr
. Irr vestig a SorrsJlrrsp a cti c rrs
■ Emergency Management
■ FVFD Contract
Police Department
. ,4drrrrnistratrart
+ Patrol
+ Criminal investigations
• Animal Control
Comm rnicabons
Boards, Committees,
& Commission
Assistant City Manager
Economic Oeveiopment
GommunicatronslPubfie Intbrmagon
Community Development
. AdrrrrnislraiJavr
Planning and Zonlug
• lnspectronslC-ode Enforcement
Parks & Recreation
. Administration
r f?ecrea6on Progmms
• Park Operations
• Facility Operations
Public Works
Admrnis�atran
+ Streets 1 Skfewaiks
+ Drainage OperaUons
+ Water Operations
+ Sewer Operations
Engineering
• Engineering
+ Pro}ects
Library Services
■ Fnendswood Public Library
vii City of Friendswood, Texas 2023 ACFR
City of
,,pnd6wood0
Texas
viii City of Friendswood, Texas 2023 ACFR
FINANCIAL SECTION
City of Friendswood, Texas 2023 ACFR
City of
,,Pnd6wood0
Texas
City of Friendswood, Texas 2023 ACFR
on
whitleypenri'
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, 2023, 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, 2023, 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 77%, 100%, and 75%, 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 under those standards are further described in the Auditor's Responsibilities
for the Audit of the Financial Statements section of our report. We are required to be independent of 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.
OWE ARE AN INDEPENDENT MEMBER OE
HLBTHE GLOBAL ADVISORY ACCOUNTING NETWORK
City of Friendswood, Texas 2023 ACFR
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, coronavirus state fiscal recovery 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 2023 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.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated March 22, 2024, on our
consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions
of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the
scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to
provide an opinion of the effectiveness of the City's internal control over financial reporting or compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal
control over financial reporting and compliance.
wk-A-F/�Z LI-P
Houston, Texas
March 22, 2024
City of Friendswood, Texas 2023 ACFR
City of
,,Pnd6wood
Texas
City of Friendswood, Texas 2023 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, 2023. 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, 2023 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 $151,015,158.
• The City's total net position increased during the year by $12,606,375. The City's net pension and total OPEB liabilities
were $18.9 million and $1.6 million, respectively. The net pension liability increased by $13.8 million and the total
OPEB liability decreased by $365.1 thousand compared to the prior year.
• As of the close of the current fiscal year, the City reported unrestricted net position of $21,280,699.
• Program revenues of $30,066,518 reduced the net cost of the City's functions to be financed from the City's general
revenues to $27,950,639 .
Overview of the Financial Statements
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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 2023 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. Over time, 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, information technology, and city
attorney); 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 2023 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, and Bond Construction Fund, which are considered to be major funds. The
other eleven 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 2023 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 $151,015,158 as of
September 30, 2023 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 (79.3%) 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
2023 2022
Business -Type Activities
2023 2022
Totals
2023 2022
Current and other assets
$ 73,574,397
$ 48,901,051
$ 39,975,446
$ 42,738,547
$ 113,549,843
$ 91,639,598
Capital assets
123,606,676
115,789,091
77,842,844
71,551,212
201,449,520
187,340,303
Total Assets
197,181,073
164,690,142
117,818,290
114,289,759
314,999,363
278,979,901
Deferred Outflows of Resources
9,104,231
3,221,061
1,687,348
1,002,527
10,791,579
4,223,588
Total Assets and Deferred
Outflows of Resources
206,285,304
167,911,203
119,505,638
115,292,286
325,790,942
283,203,489
Long-term liabilities
96,996,075
57,513,830
58,213,317
60,296,656
155,209,392
117,810,486
Other Liabilities
14,383,827
16,380,206
3,277,179
3,611,658
17,661,006
19,991,864
Total Liabilities
111,379,902
73,894,036
61,490,496
63,908,314
172,870,398
137,802,350
Deferred Inflows of Resources
1,783,691
6,282,137
121,695
710,219
1,905,386
6,992,356
Net Position:
Net investment in capital assets
79,714,165
74,006,329
40,075,768
35,999,342
119,789,933
110,005,671
Restricted
7,105,294
5,059,835
2,839,232
2,897,578
9,944,526
7,957,413
Unrestricted
6,302,252
8,668,866
14,978,447
11,776,833
21,280,699
20,445,699
Total Net Position
$ 93,121,711
$ 87,735,030
$ 57,893,447
$ 50,673,753
$ 151,015,158
$ 138,408,783
A portion of the primary government's net position, $9,944,526 or 6.6%, 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, $21,280,699 or
14.1%, may be used to meet the City's ongoing obligations to citizens and creditors.
10 City of Friendswood, Texas 2023 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
2023
2022
2023
2022
2023
2022
Revenues
Program Revenues:
Charges for services $
2,680,917
$ 2,848,589
$ 21,293,632
$ 19,419,622
$ 23,974,549 $
22,268,211
Operating grants and
contributions
2,229,755
841,537
104,354
289,181
2,334,109
1,130,718
Capital grants and
contributions
3,757,860
2,620,495
-
-
3,757,860
2,620,495
General Revenues:
Property taxes
22,731,678
20,845,938
22,731,678
20,845,938
Sales and alcohol taxes
12,126,784
11,176,190
12,126,784
11,176,190
Franchise taxes
2,235,689
2,170,152
2,235,689
2,170,152
Investment earnings
1,726,549
49,151
1,450,648
130,401
3,177,197
179,552
Miscellaneous
285,666
638,418
-
-
285,666
638,418
Total Revenues
47,774,898
41,190,470
22,848,634
19,839,204
70,623,532
61,029,674
Expenses
General government
7,873,719
6,210,336
-
-
7,873,719
6,210,336
Public safety
18,526,954
15,655,859
18,526,954
15,655,859
Public works
6,990,046
6,994,042
6,990,046
6,994,042
Engineering
640,292
570,098
640,292
570,098
Community development
1,406,566
1,017,509
1,406,566
1,017,509
Parks and recreation
5,608,792
4,870,623
5,608,792
4,870,623
Library services
1,485,716
1,283,007
1,485,716
1,283,007
Water and sewer
-
-
12,075,080
11,124,562
12,075,080
11,124,562
Interest on long-term debt
1,659,932
1,268,435
1,750,060
1,861,881
3,409,992
3,130,316
Total Expenses
44,192,017
37,869,909
13,825,140
12,986,443
58,017,157
50,856,352
Increase (decrease) in net position
before transfers
3,582,881
3,320,561
9,023,494
6,852,761
12,606,375
10,173,322
Transfers
1,803,800
1,795,683
(1,803,800)
(1,795,683)
-
-
Change in net position
5,386,681
5,116,244
7,219,694
5,057,078
12,606,375
10,173,322
Net Position - Beginning
87,735,030
82,618,786
50,673,753
45,616,675
138,408,783
128,235,461
Net Position - Ending $
93,121,711
$ 87,735,030
$ 57,893,447
$ 50,673,753
$ 151,015,158 $
138,408,783
11 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Governmental Activities
Governmental activities increased the City's net position by $5,386,681. Key elements of this change are as follows:
• Property taxes continue to be the City's largest revenue source. Property tax revenue increased by $1,885,740 as a
result of new construction and property tax increases to cover operating expenses, deferred facilities maintenance,
deferred equipment purchases and debt service obligations related to the general obligation bonds authorized by
voters in 2013 and 2019.
• Sales and alcohol tax revenue remained strong during fiscal year 2023, providing a 8.51% increase for the year, from
$11.2 million to $12.1 million. This increase is primarily a result of commercial growth and inflation.
• Operating grants and contributions increased $1,388,218 from the prior year. This increase is primarily a result of the
City's interlocal agreement with Harris County in which funds of $1.2 million were received for the Blackhawk
Boulevard Reconstruction project.
• Capital grants and contributions increased $1,137,365 from the prior year. This increase is due to more activity with
the CDBG-DR grants.
• Overall, total expenses increased $6.3 million from the prior year. The largest increase of $2,871,095 was in Public
Safety which was primarily a result of an increase in personnel cost due to merit, pay plan adjustments, overtime as
well as the cost to fund future retirement benefits. In addition, the Fire/EMS contract with the Friendswood Volunteer
Fire Department increased approximately $322 thousand. General Government had the next largest increase of
$1,663,383 resulting from increased software support services and personnel costs. In addition, an economic incentive
grant in the amount of $350 thousand was awarded for commercial development.
Governmental Activities - Revenues Investment
earnings
Franchise taxes 4%
Sales and alcohol
to xe
25%
Pro p e rty
47
5%
Miscellaneous
1%
Ch a rges for services
5%
Operating grants
and
contri butions
5%
Ca pital grants and
contri butions
8%
12 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Governmental Activities - Expense!
Libra ryservices Interestonlong-
term debt
Parks and 3° �0� 45/c
recreation
13%
Community
developmen
3%
Engi neeri
1%
Pu bl is works
16%
Business -Type Activities
General
government
18%
Pu b l i c s afety
42%
Business -type activities increased the City's net position by $7,219,694. Key elements of this change are as follows:
• Revenues increased by $3.0 million or 15.2% resulting from an increase in utility rates and consumption due to drought
like conditions. Expenses increased $839 thousand primarily a result of increased personnel costs, increased water
purchases due to the drought and the purchase of additional automated meters for new development.
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
2023
2022
■ Operating Revenues ■ Operating Expenses
13 City of Friendswood, Texas 2023 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 $56,818,872.
Approximately 19.55% of this amount or $11,111,696 is unassigned fund balance; however, $8.7 million is set aside for the
90-day operating reserve, as set forth in the City's financial policies.
The remaining $45,707,176 is nonspendable, restricted, or assigned as follows:
0.78% - Nonspendable
Prepaid items
Permanent fund
Total Nonspendable
71.52% - Restricted
Public education and government channels
Debt service
Municipal court operations
Public safety operations
Capital projects
Total Restricted
8.15% - Assigned
$ 430,434
11,501
$ 441,935
$ 566,041
30,793
201,568
500,548
39,335,309
$ 40,634,259
Subsequent year's budget appropriation of fund
balance $ 3,891,673
Capital projects 739,309
Total Assigned $ 4,630,982
The General Fund is the chief operating fund of the City. At the end of the current fiscal year, total fund balance reached
$16.7 million of which unassigned fund balance of the General Fund was $11.1 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 28.6% of total General Fund expenditures, while total fund balance represents 43.1% of that same
amount. At year end, the City's operating reserve was $8.7 million, representing 25% of total General Fund expenditures,
excluding capital expenditures.
14 City of Friendswood, Texas 2023 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:
• $4.4 million increase in total revenues —This increase is primarily related to an increase in property taxes of $1.6 million
due to new home construction as well as the increase in rates to cover operating costs and debt service payments. In
addition, intergovernmental revenue increased $1.4 million as a result of the City receiving $1.2 million from Harris
County for the Blackhawk Boulevard Reconstruction project. Investment income increased $628 thousand due to the
rise in interest rates.
• $4.4 million increase in total expenditures — This increase in expenditures can be attributed to the following: $1.6
million in capital improvements related to the Public Safety Building expansion and the Blackhawk Building renovation,
$1.3 million in Public Safety due to increased personnel costs and an increase in the Fire/EMS contract, $905 thousand
in General Government resulting from increased personnel and software support services costs and the awarding of
an economic development grant, and $612 thousand in Parks and Recreation due to the increased cost of utilities and
contracts to maintain operations.
The Coronavirus State and Local Fiscal Recovery Fund has $10.0 million of unearned revenue that will be expended in fiscal
year 2024.
The fund balance of the Bond Construction Fund was $33,540,466, an increase of $25,387,754 compared to the prior year.
This increase is related to the issuance of the remaining bonds that were approved by voters in 2019. These bonds were
issued for drainage improvement projects.
Other non -major governmental funds fund balance increased by $1,749,849. This increase is primarily a result of a sales tax
collections for the Street Improvement fund exceeding improvement cost by $1.8 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 $15.0 million for the Water and Sewer Fund. The total increase in the
net position of the Water and Sewer Fund was $7,219,694. 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 $1,083,495. The net position of the Internal Service Fund increased
by $393,211 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
$1,323,418 or 4.08% and budgeted expenditures were increased by $9,171,203 or 26.39%.
15 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Total revenues were above budget by $1,983,264. The more significant variances are detailed below:
• $1,037,519 over budget in sales and mixed beverage taxes as a result of commercial growth and inflation.
• $296,193 over budget in miscellaneous revenue as a result of a reimbursement from Lakes of Falcon Ridge HOA for
their portion of the Centennial Wall project.
• $234,567 over budget in investment earnings due to increased interest rates resulting from inflation.
• $191,589 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.
Total expenditures of the General Fund were $5.1 million below the final expenditure budget. The more significant variances
are detailed below:
$656,119 below budget in general government expenditures as a result of a decrease in other services and charges
(legal, contract, consulting, etc.).
$556,747 below budget in parks and recreation expenditures as a result of repairs and maintenance being approved
in FY23 but completed in FY24.
$3,985,864 below budget in capital improvements due to projects either not being started or completed in FY23. 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, 2023 is $201.4 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 the Sanitary Sewer Assessment Phase IV construction, which
was completed for $1,367,517 and the purchase of property at 23 Wilderness Trail for $832,798 to accommodate future
water and sewer projects.
• Using grant funds, the City purchased properties along Deepwood Drive for a total cost of $325,349 for flood mitigation
projects.
• Necessary upgrades were made to improve the City's technological infrastructure for $789,099.
• Heavy equipment purchases included a dump truck, an excavator, and a boom mower for a total cost of $417,859.
• From the Vehicle Replacement Plan, the City purchased 9 new vehicles this year and the equipment to upfit an additional
13 vehicles from the previous year. The total cost was approximately $953,296.
• Self-contained breathing apparatus packs for $411,000 were purchased on behalf of the Friendswood Volunteer Fire
Department using funds from the Fire and EMS Donation Fund.
• Furniture, fixtures, and equipment totaling $935,424 was purchased for the Public Safety Expansion project, Blackhawk
Building renovation project, and the reconstruction of Fire Station #2.
• The following major projects are in Construction in Progress at the end of fiscal year 2023: Parks Master Plan, Blackhawk
Shelter, Blackhawk Building Renovation, Blackhawk Blvd Reconstruction, Fire Station #2, Public Safety Building,
Centennial Park Wall, Utility Relocation at Clear Creek Utility Bridge, Forest Bend Detention Pond, Deepwood Flood
Control, Friendswood Regional Detention Basin, Water System Improvement Study & Engineering, Lift Station
Mitigation Program, 2023 Tank Rehabilitation, Automated Water Meter installation, and the 42" Southeast
Transmission Line.
16 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Governmental Activities
Business -type Activities
Totals
2023
2022
2023
2022
2023
2022
Land
$ 32,720,334
$ 32,355,840
$ 1,152,271
$ 319,473
$ 33,872,605 $
32,675,313
Buildings and improvements
22,057,982
22,938,656
299,092
318,849
22,357,074
23,257,505
Machinery and equipment
9,242,231
7,845,397
2,417,307
2,596,552
11,659,538
10,441,949
Infrastructure
40,696,318
43,675,282
35,250,381
38,970,139
75,946,699
82,645,421
Right -to -use SBITA asset
88,617
176,744
-
-
88,617
176,744
Water rights
-
-
19,716,695
19,716,695
19,716,695
19,716,695
Construction in progress
18,801,194
8,797,172
19,007,098
9,629,504
37,808,292
18,426,676
$ 123,606,676
$ 115,789,091
$ 77,842,844
$ 71,551,212
$ 201,449,520 $
187,340,303
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 $133.3
million.
Governmental Activities
2023 2022
Business -type Activities
2023 2022
Totals
2023 2022
General obligation bonds
$ 71,325,000
$ 43,950,000
$ 16,920,000
$ 18,635,000
$ 88,245,000
$ 62585,000
Revenue bonds
-
-
34,120,000
35,630,000
34,120,000
35,630,000
Premium on bond issuance
3,366,542
3,193,902
4,861,781
5,264,036
8,228,323
8,457,938
Notes payable
2,645,629
2,613,729
-
2,645,629
2,613,729
SBITA liability
92,494
176,744
-
-
92,494
176,744
$ 77,429,665
$ 49,934,375
$ 55,901,781
$ 59,529,036
$ 133,331,446
$ 109,463,411
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 2023 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 42,757.
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 as well as commercial and mixed -use
development outside of the downtown area. These development projects include medical office buildings, hotels, retail and
office spaces as well as multi -family complexes. 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 2024 has a tax rate of $0.500728 per $100 taxable value. This rate consists of a maintenance and operation (M&O)
tax rate of $0.379450 and an interest and sinking (debt service) tax rate of $0.121278. The rate was set based on a net
assessed value of $5,023,334,676. This is an increase of $130,483,289 above certified values including supplemental rolls for
tax year 2022. 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 $8,621,519 to $9,150,001. The franchise fees budget increased
from $2,044,100 to $2,112,803 and the budget for licenses and permits has decreased from $873,730 to $753,524. If all
projections are accurate, the total General Fund unassigned fund balance net of the 90 day operating requirement ($8.7
million) is estimated to be approximately $2.1 million on September 30, 2024.
Water revenues are budgeted at $9,557,321 which is an increase of $1,009,235 in revenues, or 11.81 percent. Sewer revenues
are budgeted at $9,568,474 which is an increase of $530,894 or 5.9 percent. Water and Sewer Fund working capital net of
the 90 day operating requirement ($2.5 million) is projected to be $6.4 million at the end of fiscal year 2024.
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 Robinson, LLP, 3200
Southwest Freeway, Suite 2600, Houston, Texas 77027.
18 City of Friendswood, Texas 2023 ACFR
BASIC FINANCIAL STATEMENTS
19 City of Friendswood, Texas 2023 ACFR
City of
i0
r¢nd3wood
-Texas
20 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET POSITION
September 30, 2023
Primary Government
Component Units
West Ranch
Governmental
Business -type
Management
Friendswood
Activities
Activities
Total
District
Downtown EDC
Assets
Cash and cash equivalents
$ 7,492,092
$ 3,581,022 $
11,073,114
$ 225,017
$ 677,713
Investments
59,489,532
13,151,105
72,640,637
4,860,757
2,489,457
Receivables, net of allowances
Taxes
3,110,710
-
3,110,710
12,310
142,824
Leases
995,808
-
995,808
-
-
Customer accounts
488,383
4,926,480
5,414,863
Other
263,733
-
263,733
-
-
Accrued interest
29,427
14,054
43,481
137
2,576
Due from other governments
1,274,278
-
1,274,278
-
-
Prepaid items
430,434
95,415
525,849
4,398
Working capital deposit
-
571,884
571,884
-
Restricted investments
-
17,635,486
17,635,486
-
-
Capital Assets:
Non -depreciable
51,521,528
39,876,064
91,397,592
7,695,748
505,174
Depreciable, net
72,085,148
37,966,780
110,051,928
345,439
-
Total Capital Assets
123,606,676
77,842,844
201,449,520
8,041,187
505,174
Total Assets
197,181,073
117,818,290
314,999,363
13,143,806
3,817,744
Deferred Outflows of Resources
Deferred loss on issuance of refunding bonds
48,209
523,479
571,688
273,687
-
Deferred outflow of resources for pensions
8,732,353
1,122,271
9,854,624
-
Deferred outflow of resources for OPEB
323,669
41,598
365,267
Total Deferred Outflows of Resources
9,104,231
1,687,348
10,791,579
273,687
-
Total Assets and Deferred Outflows of Resources
206,285,304
119,505,638
325,790,942
13,417,493
3,817,744
Liabilities
Accounts payable
2,047,743
2,277,751
4,325,494
25,783
-
Accrued liabilities
981,017
119,646
1,100,663
-
-
Retainage payable
929,652
167,881
1,097,533
-
9,909
Accrued interest
237,167
169,871
407,038
227,269
-
Unearned revenue
10,023,192
-
10,023,192
-
Customer deposits
66,544
542,030
608,574
Due to other governments
98,512
-
98,512
-
Noncurrent liabilities:
Due within one year
3,720,611
3,370,285
7,090,896
900,000
Due in more than one year
74,959,594
52,657,922
127,617,516
17,141,921
Net pension liability
16,951,983
1,978,562
18,930,545
-
Total OPEB liability
1,363,887
206,548
1,570,435
-
Total Liabilities
111,379,902
61,490,496
172,870,398
18,294,973
9,909
Deferred Inflows of Resources
Deferred gain on issuance of refunding bonds
51,521
24,260
75,781
-
-
Deferred Inflows of resources for leases
974,036
-
974,036
Deferred Inflows of resources for pensions
43,942
5,647
49,589
Deferred Inflows of resources for OPEB
714,192
91,788
805,980
Total Deferred Inflows of Resources
1,783,691
121,695
1,905,386
Net Position
Net investment in capital assets
79,714,165
40,075,768
119,789,933
6,512,015
Restricted for:
Public education and government channels
566,041
-
566,041
-
Debt service
30,793
2,759,284
2,790,077
2,029,067
Municipal court operations
201,568
-
201,568
-
-
Economic development
-
-
3,807,835
Public safety
500,548
500,548
-
Parks and recreation - nonexpendable
11,501
-
11,501
-
Capital projects
5,794,843
79,948
5,874,791
71,156
Unrestricted
6,302,252
14,978,447
21,280,699
(13,489,718)
-
Total Net Position
$ 93,121,711
$ 57,893,447 $
151,015,158
$ (4,877,480)
$ 3,807,835
See notes to the financial statements. 21 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OFACTIVITIES
For the Year Ended September 30, 2023
Program Revenues
Charges for
Operating Grants
Capital Grants
Functions/Programs
Expenses
Services
and Contributions
and Contributions
Primary government
Governmental Activities:
General government
$ 7,873,719
$ 921,752
$ 16,000
$
Public safety
18,526,954
1,023,874
2,145,679
-
Public works
6,990,046
241,445
-
3,757,860
Engineering
640,292
-
-
Community development
1,406,566
-
-
Parks and recreation
5,608,792
493,846
68,076
Library services
1,485,716
-
-
Interest on long-term debt
1,659,932
-
-
-
Total Governmental Activities
44,192,017
2,680,917
2,229,755
3,757,860
Business -type Activities:
Water and sewer
13,825,140
21,293,632
104,354
Total Business -type Activities
13,825,140
21,293,632
104,354
-
Total Primary Government
58,017,157
23,974,549
2,334,109
3,757,860
Component Units
West Ranch Management District
913,045
-
-
-
Friendswood Downtown EDC
30,444
Total Component Units
$ 943,489
$
$
$
Page 1 of 2
See notes to the financial statements. 22 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
Page 2 of 2
STATEMENT OF ACTIVITIES
For the Year Ended September 30, 2023
Net (Expense) Revenue and Changes in Net Position
Primary Government
Component Units
West Ranch
Governmental
Business -type
Management
Friendswood
Functions/Programs
Activities
Activities
Total
District
Downtown EDC
Primary government
Governmental Activities:
General government
$ (6,935,967)
$ $
(6,935,967)
$
$
Public safety
(15,357,401)
(15,357,401)
Public works
(2,990,741)
(2,990,741)
Engineering
(640,292)
(640,292)
Community development
(1,406,566)
(1,406,566)
Parks and recreation
(5,046,870)
(5,046,870)
Library services
(1,485,716)
(1,485,716)
Interest on long-term debt
(1,659,932)
(1,659,932)
Total Governmental Activities
(35,523,485)
(35,523,485)
Business -type Activities:
Water and sewer
7,572,846
7,572,846
Total Business -type Activities
7,572,846
7,572,846
Total Primary Government
(35,523,485)
7,572,846
(27,950,639)
Component Units
West Ranch Management District
(913,045)
Friendswood Downtown EDC
(30,444)
Total Component Units
(913,045)
(30,444)
General revenues:
Taxes:
Property taxes
22,731,678
22,731,678
2,269,540
Franchise and other taxes
2,235,689
2,235,689
-
-
Sales taxes
12,126,784
-
12,126,784
-
803,085
Interest
1,726,549
1,450,648
3,177,197
169,562
103,572
Miscellaneous
285,666
-
285,666
342,934
-
Transfers
1,803,800
(1,803,800)
-
-
-
Total General Revenues and Transfers
40,910,166
(353,152)
40,557,014
2,782,036
906,657
Change in net position
5,386,681
7,219,694
12,606,375
1,868,991
876,213
Net Position - Beginning
87,735,030
50,673,753
138,408,783
(6,746,471)
2,931,622
Net Position - Ending
$ 93,121,711
$ 57,893,447 $
151,015,158
$ (4,877,480)
$ 3,807,835
See notes to the financial statements. 23 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
September 30, 2023
Coronavirus State
Total Nonmajor
Total
Fiscal Recovery
Bond
Governmental
Governmental
General Fund
Fund
Construction
Funds
Funds
Assets
Cash and cash equivalents
$
3,595,467
$ 2,217,263
$
35,374
$ 1,412,325
$
7,260,429
Investments
10,443,545
8,144,712
34,866,060
5,184,240
58,638,557
Receivables, net of allowance:
Taxes
2,625,155
-
-
485,555
3,110,710
Leases
995,808
-
-
-
995,808
Customer accounts
485,644
2,739
488,383
Other receivables
260,160
-
-
3,573
263,733
Accrued interest
14,261
8,821
5,488
28,570
Due from other funds
1,787,687
-
-
1,787,687
Due from other governments
9,462
-
-
1,264,816
1,274,278
Prepaid items
430,134
-
300
430,434
Total Assets
$
20,647,323
$ 10,370,796
$
34,901,434
$ 8,359,036
$
74,278,589
Liabilities, Deferred Inflows and Fund Balances
Liabilities:
Accounts payable
$
1,208,784
$ -
$
710,187
$ 128,772
$
2,047,743
Accrued liabilities
981,017
-
-
981,017
Due to other governments
98,512
98,512
Customer deposits
66,544
-
-
-
66,544
Retainage payable
87,846
650,781
191,025
929,652
Due to other funds
-
-
-
1,787,687
1,787,687
Unearned revenue
-
10,003,026
-
20,166
10,023,192
Total Liabilities
2,442,703
10,003,026
1,360,968
2,127,650
15,934,347
Deferred Inflows of Resources:
Unavailable revenue
491,731
-
-
59,603
551,334
Leases
974,036
-
-
-
974,036
Total Deferred Inflows of resources
1,465,767
-
-
59,603
1,525,370
Fund Balances:
Nonspendable:
Prepaid items
430,134
-
-
300
430,434
Permanent fund
-
-
-
11,501
11,501
Restricted:
Public education and government channels
566,041
-
566,041
Municipal court operations
-
201,568
201,568
Debt service
-
-
-
30,793
30,793
Public safety
-
-
500,548
500,548
Capital projects
-
367,770
33,540,466
5,427,073
39,335,309
Assigned:
Subsequent year's budget appropriation of fund
balance
3,891,673
-
-
-
3,891,673
Capital projects
739,309
-
-
-
739,309
Unassigned
11,111,696
-
-
-
11,111,696
Total Fund Balances
16,738,853
367,770
33,540,466
6,171,783
56,818,872
Total Liabilities, Deferred Inflows of Resources,
and Fund Balances
$
20,647,323
$ 10,370,796
$
34,901,434
$ 8,359,036
$
74,278,589
See notes to the financial statements. 24 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
September 30, 2023
Total Fund Balance, Governmental Funds $ 56,818,872
Amounts reported for governmental activities in 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. 121,020,965
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. 3,669,206
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 (71,325,000)
Notes payable (2,645,629)
SBITA payable (92,494)
Compensated absences (1,250,540)
Accrued interest payable (237,167)
Unamortized premium on bonds (3,366,542)
Unavailable revenues in the governmental fund statements is recognized as revenue in the government -wide
financial statements. 551,334
Deferred gain on refunding (51,521)
Deferred loss on refunding 48,209
Certain other long-term assets 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 (16,951,983)
Total OPEB liability (1,363,887)
Deferred outflows and inflows of resources related to the net pension liability 8,688,411
Deferred outflows and inflows of resources related to the total OPEB liability (390,523)
Net Position of Governmental Activities in the Statement of Net Position $ 93,121,711
See notes to the financial statements. 25 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended September 30, 2023
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
Engineering
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)
Issuance of capital -related debt
Notes payable issued
Premium on bond issuance
Insurance recoveries
Transfers in
Transfers out
Sale of capital assets
Total Other Financing Sources (Uses)
Net change in fund balances
Fund Balances - Beginning
Fund Balances - Ending
Coronavirus
Total Nonmajor
Total
State Fiscal
Bond
Governmental
Governmental
General Fund
Recovery Fund
Construction
Funds
Funds
$ 18,122,796
$
$
$ 4,602,691
$ 22,725,487
9,717,528
2,409,256
12,126,784
2,235,689
-
2,235,689
834,135
61,442
895,577
1,800,725
60,600
1,861,325
1,973,125
3,757,860
5,730,985
612,954
369,436
479,377
230,205
1,691,972
112,474
-
-
183,494
295,968
348,413
-
1,682
350,095
35,757,839
369,436
479,377
11,307,230
47,913,882
6,893,644
16,640,299
2,749,650
641,204
1,293,280
4,914,245
1,401,299
42,734 6,936,378
- - 16,640,299
11,001 811,675 3,572,326
- - 641,204
- 1,293,280
4,093 4,918,338
- 1,401,299
84,250
-
3,293,100
3,377,350
-
311,664
1,597,147
1,908,811
4,175,531
5,080,622
4,230,970
13,487,123
38,793,402
-
5,403,287
9,979,719
54,176,408
(3,035,563)
369,436
(4,923,910)
1,327,511
(6,262,526)
-
-
29,775,000
-
29,775,000
514,000
-
411,000
925,000
-
536,664
4,470
541,134
69,683
-
-
69,683
1,803,800
6,868
1,810,668
(16,335)
-
(16,335)
18,181
-
-
18,181
2,389,329
30,311,664
422,338
33,123,331
(646,234)
369,436
25,387,754
1,749,849
26,860,805
17,385,087
(1,666)
8,152,712
4,421,934
29,958,067
$ 16,738,853 $
367,770
$ 33,540,466 $
6,171,783 $
56,818,872
See notes to the financial statements. 26 City of Friendswood, Texas 2023 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, 2023
Net Change in Fund Balances - Total Governmental Funds $ 26,860,805
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 a portion of the outlay as expense.
The outlay is allocated over the assets' estimated useful lives as depreciation/amortization expense for the
period.
Capital outlay 13,488,086
Depreciation/amortization expense (5,891,025)
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 (207,749)
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 3,293,100
SBITA principal 84,250
Proceeds from issuance of long-term debt (29,775,000)
Proceeds from notes payable (925,000)
Premium from issuance of long-term debt (541,134)
Contributions are treated as expenditures in the fund based financial statements, but are treated as
reductions in the City's net pension/06EB liability in the statement of net position. This amount is the
difference between contributions and net pension/OPEB expense (revenue) for the current fiscal year.
Pension (1,481,350)
OPEB (53,232)
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
(118,365)
(Increase) decrease in compensated absences
(106,197)
Amortization of deferred loss on refunding
(6,506)
Amortization of deferred gain on refunding
4,293
Amortization of premium on bonds
368,494
Internal service fund is used by management to charge the cost of fleet management to individual funds.
The change in net position of the internal service fund is included in the governmental activities in the
statement of activities. 393,211
Change in Net Position of Governmental Activities $ 5,386,681
See notes to the financial statements. 27 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 1 of 2
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
September 30, 2023
Business -Type Activities
Governmental Activities
Enterprise Fund
Water and Sewer
Internal Service
Assets
Current Assets
Cash and cash equivalents
$ 3,581,022
$ 231,663
Investments
13,151,105
850,975
Accounts receivable, net of allowance:
Customer accounts
4,926,480
-
Accrued interest
14,054
857
Prepaids and other assets
95,415
-
Restricted investments
17,635,486
-
Total Current Assets
39,403,562
1,083,495
Non -current Assets
Working capital deposit
571,884
-
Capital Assets:
Land
1,152,271
Construction in progress
19,007,098
Water rights
19,716,695
Buildings and improvements
683,906
-
Machinery and equipment
7,934,769
5,862,037
Water and sewer systems
76,058,499
-
Accumulated depreciation
(46,710,394)
(3,276,326)
Total Capital Assets
77,842,844
2,585,711
Total Non -current Assets
78,414,728
2,585,711
Total Assets
117,818,290
3,669,206
Deferred Outflows of Resources
Deferred loss on bond refunding
523,479
-
Deferred outflows - pension related
1,122,271
Deferred outflows - OPEB related
41,598
Total Deferred Outflows of Resources
1,687,348
Total Assets and Deferred
Outflows of Resources
119,505,638
3,669,206
See notes to the financial statements. 28 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
September 30, 2023
Liabilities
Current Liabilities
Accounts payable
Accrued liabilities
Accrued interest
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
$ 2,277,751
119,646
169,871
542,030
167,881
25,285
3,345,000
6,647,464
101,141
1,978,562
206,548
52,556,781
54,843,032
61,490,496
24,260
5,647
91,788
121,695
61,612,191
Page 2 of 2
Governmental Activities
Internal Service
40,075,768 2,585,711
79,948 -
2,759,284 -
14,978,447 1,083,495
$ 57,893,447 $ 3,669,206
See notes to the financial statements. 29 City of Friendswood, Texas 2023 ACFR
City of
nd6wood
-Texas
30 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
For the Year Ended September 30, 2023
Business -Type
Activities Enterprise
Governmental
Fund
Activities
Water and Sewer
Internal Service
Operating Revenues
Charges for services
$ 21,092,670
$ 998,340
Miscellaneous
200,962
35,224
Total Operating Revenues
21,293,632
1,033,564
Operating Expenses
Personnel services
3,140,920
-
Sewer operations
2,337,235
-
Water purchases
2,144,603
-
Repairs and maintenance
814,793
-
Supplies
184,000
-
Other services and charges
1,433,517
-
Depreciation
2,020,012
630,721
Total Operating Expenses
12,075,080
630,721
Operating income
9,218,552
402,843
Non -Operating Revenues (Expenses)
Intergovernmental
104,354
-
Investment income
1,450,648
34,577
Loss on disposal of capital assets
-
(53,676)
Interest expense
(1,750,060)
-
Total Non -Operating Revenues (Expenses)
(195,058)
(19,099)
Income before transfers
9,023,494
383,744
Transfers in
-
9,467
Transfers out
(1,803,800)
-
Change in net position
7,219,694
393,211
Net position - Beginning
50,673,753
3,275,995
Total Net Position - Ending
$ 57,893,447
$ 3,669,206
See notes to the financial statements. 31 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended September 30, 2023
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 out to other funds
Operating grants
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
Capital grants
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 income
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
Current assets - 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
$
20,328,341
$
-
-
1,033,564
(7,404,810)
(46,406)
(2,931,256)
-
9,992,275
987,158
-
9,467
(1,803,800)
-
79,646
-
(1,724,154)
91467
(8,149,560)
(851,245)
-
(53,676)
24,708
-
(3,225,000)
-
(2,101,100)
-
(13,450,952)
(904,921)
(2,776,206)
(175,233)
1,444,852
34,289
(1,331,354)
(140,944)
(6,514,185)
(49,240)
27,730,693
280,903
$
21,216,508
$
231,663
$
3,581,022
$
231,663
17,635,486
-
$
21,216,508
$
231,663
See notes to the financial statements. 32 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended September 30, 2023
Reconciliation of operating income to net cash
provided (used) by operating activities:
Operating income
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation
Change in assets, deferred inflows and outflows, and liabilities:
Decrease (increase) in customer receivable
Decrease (increase) in prepaids and other assets
Decrease (increase) in deferred outflow for pensions
Decrease (increase) in deferred outflow for OPEB
Increase (decrease) in accounts payable
Increase (decrease) in accrued liabilities
Increase (decrease) in customer deposits
Increase (decrease) in deferred inflows for pensions
Increase (decrease) in deferred inflows for OPEB
Increase (decrease) in total OPEB liability
Increase (decrease) in net pension liability
Increase (decrease) in compensated absences
Total Adjustments
Net cash provided by operating activities
Page 2 of 2
Business -type
Activities - Enterprise Governmental
Funds Activities
Water and Sewer Internal Service
$ 9,218,552 $ 402,843
2,020,012 630,721
(936,891) -
(32,191) -
(754,178) -
5,418
(417,075) (46,406)
(41,396) -
(28,400) -
(625,245) -
39,753 -
(41,578) -
1,568,478 -
17,016 -
773,723 584,315
$ 9,992,275 $ 987,158
See notes to the financial statements. 33 City of Friendswood, Texas 2023 ACFR
City of
nd6wood
-Texas
34 City of Friendswood, Texas 2023 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 79`" 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 2023 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 2023 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, including subscription -based technology arrangements (SBITA) liabilities, 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.
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 2023 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 $0.388560 and $0.098754, respectively. The resulting tax levies were
approximately $18.1 and $4.6 million for operations and debt service, respectively, based on a total taxable valuation of
approximately $4.6 billion for the 2022 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, 2023, the District levied an ad
valorem tax at the rate of $0.1650 per $100 of assessed valuation, which resulted in tax levy of $1.2 million on the taxable
valuation of approximately $753.1 million for the 2022 tax year.
38 City of Friendswood, Texas 2023 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. The City has established a SBITA recognition threshold of $100,000. 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 2023 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, equipment, and right -to -use SBITA assets are depreciated/amortized using the straight-line
method over the following useful lives:
Right -to -use SBITA asset 2 years
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 2023 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.
Subscription -Based Information Technology Arrangements
The City is under a contract for SBITA for governmental software. The agreement/contract is noncancellable and the City
recognizes a SBITA liability and an intangible right -to -use SBITA asset in the government -wide financial statements. The City
recognizes SBITA liabilities with an initial, individual value of $100,000 or more.
At the commencement of the SBITA, the City initially measures the SBITA liability at the present value of payments expected
to be made during the SBITA term. Subsequently, the SBITA liability is reduced by the principal portion of SBITA payments
made. The SBITA asset is initially measured as the initial amount of the SBITA liability, adjusted for payments made at or
before the SBITA commencement date, plus certain initial direct costs. Subsequently, the SBITA asset is amortized on a
straight-line basis over its useful life. Key estimates and judgments related to SBITA include how the City determines (1) the
discount rate it uses to discount the expected SBITA payments to present value, (2) SBITA term, and (3) SBITA payments.
The City uses the interest rate charged by the SBITA vendor as the discount rate. When the interest rate charged by
the SBITA vendor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate
for SBITAs.
• The SBITA term includes the noncancellable period of the SBITA and payments included in the measurement of the
SBITA liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise.
The City monitors changes in circumstances that would require a remeasurement of its SBITA and will remeasure the SBITA
asset and liability if certain changes occur that are expected to significantly affect the amount of the SBITA liability.
SBITA assets are reported with other capital assets and SBITA liabilities are reported with long-term debt on the statement
of net position.
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.
41 City of Friendswood, Texas 2023 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 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.
• 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.
42 City of Friendswood, Texas 2023 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)
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 for current 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.
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 Councilor the City Manager, pursuant to the City's fund balance policy. At September
30, 2023, the City's assigned fund balance included amounts assigned for encumbrances and capital projects.
43 City of Friendswood, Texas 2023 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 (continued)
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.
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.
44 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 1. Summary of Significant Accounting Policies (continued)
E. Implementation of New Accounting Standards
The following GASB pronouncements were effective during fiscal year 2023.
GASB Statement No. 96 Subscription -Based Information Technology Arrangements (SBITA), was issued in May 2020 and was
effective for periods beginning after June 15, 2022. This Statement (1) defines a SBITA; (2) establishes that a SBITA results in
a right -to -use subscription asset —an intangible asset —and a corresponding subscription liability; (3) provides the
capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4)
requires note disclosures regarding a SBITA. To the extent relevant, the standards for SBITAs are based on the standards
established in Statement No. 87, Leases, as amended. The City has evaluated the effects of this standard and has determined
that it does impact the financial statements. As such the City has incorporated such SBITAs into its capital assets and long-
term liabilities on both the face of the financial statements and the note disclosures.
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 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, 2023, the carrying amount of the City and Friendswood Downtown Economic Development Corporation's
deposits was $11,750,827 and the bank balance of $11,727,729.
As of September 30, 2023, the City and Friendswood Downtown Economic Development Corporation held the following
investments.
Reported
Weighted
Value of
Average
Investments
Maturity (Days)
Investment pools:
TexPool
$ 7,193,654
28
Texas CLASS
77,748,191
49
Total investment pools
84,941,845
Debt Securities:
Federal Farm Credit Bonds
1,969,592
184
Federal Home Loan Bank Bonds
3,462,880
204
Federal Home Loan Mortgage Corporation
1,440,100
272
Federal National Mortgage Association
951,163
386
Total debt securities
7,823,735
Total investments
$ 92,765,580
45
City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 2. Cash and Investments (continued)
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.
The City has the following recurring fair value measurements as of September 30, 2023:
Investment Securities:
Federal Farm Credit Bank
Federal Home Loan Bank
Federal Home Loan Mortgage Corp.
Federal National Mortgage Assoc.
Total Investment Securities
Fair Value /
Amortized Cost Level 1 Inputs Level 2 Inputs Level 3 Inputs
$ 1,969,592
3,462,880
1,440,100
$ 1,969,592
3,462,880
1,440,100
951,163 951,163
$ 7,823,735 $ $ 7,823,735 $
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, 2023, 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.
46 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 2. Cash and Investments (continued)
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, 2023,
were rated as follows:
Investment Type:
Credit Quality
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
Note 3. Receivables and Deferred Inflows of Resources
Receivables as of September 30, 2023 for the City's individual major funds and nonmajor funds in the aggregate including the
applicable allowances for uncollectible accounts, are as follows:
Receivables:
Property taxes
Penalties and interest
Sales tax
Franchise taxes
Customer accounts
Court fines
Leases
Other
Gross receivables
Less: allowance for
uncollectibles
Net total receivables
Governmental Funds
fonorml
$ 272,975 $
134,474
1,727,118
613,509
360,968
859,271
995,808
Nnmmninr
Proprietary Fund
Water and
Cowor TnYnl
58,808 $
- $ 331,783
22,936
157,410
428,472
2,155,590
-
613,509
21739
5,205,639 5,569,346
-
- 859,271
-
995,808
47 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 3. Receivables and Deferred Inflows of Resources (continued)
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
Leases
Miscellaneous
Total General Fund
Nonmajor funds:
Delinquent property taxes
Property tax penalties and interest
Court fines
Total Nonmajor Funds
Total governmental funds
Note 4. Capital Assets
Deferred Inflows
of Resources
$ 176,887
100,990
171,854
33,834
974,036
8,166
1,465,767
40,216
15,631
3,756
59,603
$ 1,525,370
Capital assets activity for the primary government for the fiscal year ended September 30, 2023, is as follows:
Governmental activities
Capital assets, not being depreciated/amortized:
Land
Construction in progress
Total capital assets, not being depreciated/amortized
Capital assets, being depreciated/amortized:
Buildings and improvements
Machinery and equipment
Infrastructure
Right -to -use SBITA asset
Total capital assets, being depreciated/amortized
Less accumulated depreciation/amortization for:
Buildings & improvements
Machinery and equipment
Infrastructure
Right -to -use SBITA asset
Total accumulated depreciation/amortization
Total capital assets - being depreciated/amortized
Governmental capital assets, net
Beginning Balance
Reclassification/
as restated
Increases
Decreases
Ending Balance
$ 32,355,840
$ 364,494
$ -
$ 32,720,334
8,797,172
10,243,904
(239,882)
18,801,194
41,153,012
10,608,398
(239,882)
51,521,528
46,352,029
501,160
46,853,189
21,219,383
3,331,824
(67,440)
24,483,767
105,214,782
-
105,214,782
176,744
-
176,744
172,962,938
3,832,984
(67,440)
176,728,482
(23,413,373)
(1,381,834)
-
(24,795,207)
(13,373,986)
(2,072,821)
205,271
(15,241,536)
(61,539,500)
(2,978,964)
-
(64,518,464)
(88,127)
-
(88,127)
(98,326,859)
(6,521,746)
205,271
(104,643,334)
74,636,079
(2,688,762)
137,831
72,085,148
$ 115,789,091 $
7,919,636 $
(102,051) $
123,606,676
48 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 4. Capital Assets (continued)
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
$ 319,473 $ 832,798 $ $ 1,152,271
19,716,695 - 19,716,695
9,629,504 7,13S,579 2,242,015 19,007,098
29,665,672 7,968,377 2,242,015 39,876,064
683,906 -
683,906
7,878,937 55,832
7,934,769
78,013,079 1,654,952 (3,609,532)
76,058,499
86,575,922 1,710,784 (3,609,532)
84,677,174
(365,057) (19,757) (384,814)
(5,282,385) (235,077) (5,517,462)
(39,042,940) (1,765,178) (40,808,118)
(44,690,382) (2,020,012) (46,710,394)
41,885,540 (309,228) (3,609,532) 37,966,780
$ 71,551,212 $ 7,659,149 $ (1,367,517) $ 77,842,844
Capital assets activity for the discretely presented component units for the fiscal year ended September 30, 2023, is as
follows:
Component Unit
Capital assets, not being depreciated:
Land
Construction in progress
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
Reclassification/
Beginning Balance Increases Decreases Ending Balance
$ 7,762,414 $ - $ (66,666) $ 7,695,748
- 505,174 505,174
7,762,414 505,174 (66,666) 8,200,922
483,467 483,467
483,467 483,467
(127,282) (10,746) (138,028)
(127,282) (10,746) (138,028)
356,185 (10,746) 345,439
$ 8,118,599 $ 494,428 $ (66,666) $ 8,546,361
49 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 4. Capital Assets (continued)
Depreciation/Amortization
Depreciation/amortization expense was charged to functions/programs of the City as follows:
Depreciation/
Amortization
Expense
Primary Government
Governmental activities:
General government
$ 615,626
Public safety
1,317,872
Public works
3,365,034
Community development
17,651
Parks and recreation
574,842
Capital assets held by the City's internal service fund are
charged to the various functions based on their usage
630,721
Total Governmental activities
6,521,746
Business -type activities:
Water and sewer 2,020,012
Total Business -type activities: 2,020,012
Total Primary Government $ 8,541,758
50 City of Friendswood, Texas 2023 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, 2023. At year end, the City's commitments with contractors
were as follows:
Construction
Construction in
Projects
Commitment
Progress
Governmental funds:
Parks Master Plan
$ 146,200
$ 101,420 $
Blackhawk Emergency Shelter
871,475
28,400
Blackhawk Building Renovation
3,577,797
1,989,186
Blackhawk Blvd Reconstruction
2,394,576
258,564
Fire Station #2
4,745,568
4,559,306
Public Safety Building
6,387,158
6,115,905
Centennial Wall
452,247
428,175
Utility Relocation at Clear Creek Utility Bridge
240,200
223,550
Forest Bend Detention Pond
3,954,602
3,895,068
Deepwood Flood Control
251,369
214,737
Friendswood Regional Detention Basin
954,233
954,233
Access Control Project
65,300
32,650 _
24,040,725
18,801,194
Enterprise funds:
Southeast Transmission Water Line Settlement
Lift Station Mitigation Program
Automated Water Meters
Water Systems Improvements
2023 Tank Rehabilitation Project
Lift Station SCADA Server Upgrade
Fire Station #2
Blackhawk Building Construction
Blackhawk Boulevard
Blackhawk Shelter
Component unit:
FDEDC FM 518 Illumination
Total Commitments
Remaining
Commitment
44,780
843,075
1,588,611
2,136,012
186,262
271,253
24,072
16,650
59,534
36,632
32,650
5,239,531
$ 20,489,887 $
5,134,296 $
15,355,591
4,784,904
889,053
3,895,851
8,995,300
8,991,024
4,276
2,454,824
1,481,064
973,760
1,556,675
-
1,556,675
91,229
49,369
41,860
191,244
82,589
108,655
2,123,692
2,114,466
9,226
297,734
265,237
32,497
92,000
-
92,000
41,077,489
19,007,098
22,070,391
$ 2,371,974 $ 505,174 $ 1,866,800
2,371,974 505,174 1,866,800
$ 67,490,188 $ 38,313,466 $ 29,176,722
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 $3,891,673 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.
51 City of Friendswood, Texas 2023 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, 2023:
Original Issue
Final
Interest
Governmental
Business -Type
General Obligation Bonds:
Amount
Maturity
Rates
Activities
Activities
2014 General Obligation Refunding
$ 8,805,000
2028
2.0%- 4.0%
$ 1,430,000
$ 4,005,000
2015 General Obligation Refunding
9,595,000
2030
2.0%- 3.0%
5,945,000
-
2016 General Obligation Permanent
Improvement and Refunding
19,095,000
2031
2.0%- 5.0%
6,510,000
6,190,000
2016A General Obligation Refunding
9,765,000
2034
2.0%- 4.0%
-
6,725,000
2017 General Obligation Bonds
5,605,000
2031
2.0%- 4.0%
3,885,000
-
2020 General Obligation and Refunding
Bonds
10,465,000
2050
2.0%-4.0%
9,220,000
2021 General Obligation and Refunding
Bonds
16,235,000
2051
2.375%-4.0%
14,560,000
2023 General Obligation Bonds
27,995,000
2053
4.0%- 5.0%
29,775,000
-
Total general obligation bonds
71,325,000
16,920,000
Revenue Bonds:
2016 Waterworks and Sewer System
5,735,000
2036
2.0%- 4.0%
-
4,105,000
2018 Waterworks and Sewer System
20,170,000
2038
4.0%- 5.0%
17,285,000
2021 Waterworks and Sewer System
13,690,000
2041
3.0%- 4.0%
12,730,000
Total revenue bonds
-
34,120,000
Total
$ 71,325,000
$ 51,040,000
52 City of Friendswood, Texas 2023 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
2024
$ 2,485,000 $
2,846,566
$ 3,345,000
$ 1,973,275
$ 10,649,841
2025
2,840,000
2,663,788
3,485,000
1,837,125
10,825,913
2026
2,965,000
2,555,988
3,685,000
1,687,950
10,893,938
2027
3,085,000
2,438,997
3,760,000
1,528,000
10,811,997
2028
3,210,000
2,312,388
3,930,000
1,362,225
10,814,613
2029-2033
14,575,000
9,504,439
17,340,000
4,316,600
45,736,039
2034-2038
10,770,000
6,929,845
12,830,000
1,510,225
32,040,070
2039-2043
10,165,000
4,945,852
2,665,000
121,575
17,897,427
2044-2048
10,760,000
3,101,674
-
-
13,861,674
2049-2053
10,470,000
989,558
-
11,459,558
$ 71,325,000 $
38,289,095
$ 51,040,000
$ 14,336,975
$ 174,991,070
Changes in the City's long-term liability activity for the year ended September 30, 2023, are as follows:
Beginning
Balance as
Due Within One
restated
Additions
Reductions
Ending Balance
Year
Primary Government
Governmental activities:
General obligation bonds
$
43,950,000
$
29,775,000
$
(2,400,000)
$ 71,325,000
$
2,485,000
Premium on bond issuance
3,193,902
541,134
(368,494)
3,366,542
-
Notes payable
2,613,729
925,000
(893,100)
2,645,629
893,009
SBITA payable
176,744
-
(84,250)
92,494
92,494
Compensated absences
1,144,343
1,369,826
(1,263,629)
1,250,540
250,108
Governmental activity
Long-term liabilities
$
51,078,718
$
32,610,960
$
(5,009,473)
$ 78,680,205
$
3,720,611
Beginning
Additions
Reductions
Ending Balance
Due Within One
Balance
Year
Business -type activities:
Revenue bonds
35,630,000
$
$
(1,510,000)
$ 34,120,000
$
1,575,000
General obligation bonds
18,635,000
(1,715,000)
16,920,000
1,770,000
Premium on bond issuance
5,264,036
(402,255)
4,861,781
-
Compensated absences
109,410
175,841
(158,825)
126,426
25,285
Business -type activity
Long-term liabilities
$
59,638,446
$
175,841
$
(3,786,080)
$ 56,028,207
$
3,370,285
iotai Primary government
$
110,717,164
$
32,786,801
$
(8,795,553)
$ 134,708,412
$
7,090,896
53 City of Friendswood, Texas 2023 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,
2023:
General Obligation Bonds:
Road Series 2014
Series 2015
Series 2016
Refunding Series 2016
Series 2020
Refunding Series 2016
Total general obligation bonds
Amounts
Outstanding
$ 1,780,000
3,530,000
2,080,000
540,000
8,735,000
1,520,000
$ 18,185,000
Interest
Rates
2.00% - 3.75%
2.950% - 4.125%
3.00% - 4.00%
2.00% - 4.00%
2.00% - 4.00%
2.00% - 4.00%
Range of
Maturities
2023-2040
2023-2030
2031-2040
2023-2026
2023-2040
2023-2040
* 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
2024
2025
2026
2027
2028
2029-2033
2034-2038
2039-2041
Principal
$ 900,000
930,000
970,000
1,005,000
1,065,000
5,205,000
4,865,000
3,245,000
$ 18,185,000
Interest
$ 530,329
497,763
461,806
426,238
393,396
1,484,082
818,269
145,358
$ 4,757,241
Callable
Date *
September 1, 2022
September 1, 2023
September 1, 2024
September 1, 2024
September 1, 2025
September 1, 2025
Total
$ 1,430,329
1,427,763
1,431,806
1,431,238
1,458,396
6,689,082
5,683,269
3,390,358
$ 22,942,241
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.
54 City of Friendswood, Texas 2023 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, 2023, are as follows:
Beginning
Due Within One
West Ranch Management District
Balance Increase
Decrease
Ending Balance
Year
Component Unit
General obligation bonds
$ 19,050,000 $
$ (865,000)
$ 18,185,000
$ 900,000
Discount on bonds
(213,410)
12,284
(201,126)
-
Premium on bonds
67,448
(9,401)
58,047
Developer advances
40,000
(40,000)
-
Due to developer
369,600
(369,600)
-
-
Total
$ 19,313,638 $
$ (1,271,717)
$ 18,041,921
$ 900,000
AtJuly 31, 2023, 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 paid in fiscal year 2023.
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 paid in fiscal year 2023.
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, 2023, 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 an ambulance and
related equipment. An initial liability was recorded in the amount of $925,000 during the current fiscal year. The City is
required to make annual principal and interest payments of $204,587. The agreement has an interest rate of 4.45%.
55 City of Friendswood, Texas 2023 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
2024
2025
2026
2027
Principal Interest
$ 893,009 $ 84,582
585,639 58,242
573,838 39,093
593,143 19,888
Total $ 2,645,629 $ 201,805
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, 2023, the remaining principal on the series 2016, 2018 and 2021 bonds was $4,105,000,
$17,285,000, and $12,730,000, respectively. Principal and interest payments for the fiscal year were $1,510,000 and
$1,372,275, respectively. Net pledged revenue in 2023 produced 421 percent of the current debt service requirement.
56 City of Friendswood, Texas 2023 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, 2023 as follows:
Due To
Due From
General Fund HMGP Acquisition and Demolition
General Fund 2017 CDBG- DR Harvey - Harris County
General Fund 2017 CDBG- DR Harvey - Galveston County
Interfund Transfers
Amount Purpose
Expenditures funded by General Fund
$ 205,178 pending grant reimbursement.
Expenditures funded by General Fund
1,248,144 pending grant reimbursement.
Expenditures funded by General Fund
334,365 pending grant reimbursement.
$ 1,787,687
The composition of interfund transfers for the year ended September 30, 2023, were as follows:
Transfer In Transfers Out Amount Purpose
Budgeted annual transfers for indirect water
General Fund Water and Sewer Fund $ 1,803,800 and sewer costs by the General Fund
Internal Service Fund General Fund 9,467 To fund new vehicle for Public Works and Fire
Marshal Office
Nonmajor governmental f General Fund 6,868 To fund expenditures not reimbursable by the
CDBG-DR Grant
$ 1,820,135
Note 6. Leases
Lease Receivable
The City leases real property to third parties for the placement of their telecommunication towers. The City recognized
$37,653 in lease revenue and $29,164 in interest revenue during the current fiscal year related to these leases. As of
September 30, 2023, the City's receivable for lease payments was $995,808. 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, 2023, the balance of
the deferred inflow of resources was $974,036.
Note 7. SBITA Liabilities
During the current fiscal year, the City entered into a two-year SBITA agreement for the acquisition of governmental software.
An initial SBITA liability was recorded in the amount of $176,744 during the current fiscal year. As of September 30, 2023, the
value of the SBITA liability was $92,494. There are no variable payments. The City is required to make annual principal and
interest payments of $84,250 and $95,500 respectively. The SBITA has an interest rate of 3.25%. The value of the right -to -use
asset as of the end of the current fiscal year was $176,744 and had accumulated amortization of $88,127. There are no
commitments under SBITAs before the commencement of the subscription term.
The future principal and interest SBITA payments as of September 30, 2023, were as follows:
Fiscal Year Principal Interest
2024 $ 92,494 $ 3,006
Total
$ 95,500
57 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 8. 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 by the 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
58 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 8. Employee Retirement System (continued)
Texas Municipal Retirement System (continued)
Employees covered by benefit terms
At the December 31, 2022 valuation and measurement date, the following employees were covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 169
Inactive employees entitled to but not yet receiving benefits 132
Active employees 228
Total 529
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 for the City were required to contribute 7.0% of their annual gross earnings during the fiscal year. The contribution rates
for the City were 16.27% and 16.33% in calendar years 2022 and 2023, respectively. The City's contributions to TMRS for the year
ended September 30, 2023, were $3,039,855 and were equal to the required contributions.
Net Pension Liability
The City's Net Pension Liability (NPL) was measured as of December 31, 2022, 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, 2022 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
23 years
10 year smoothed market; 12% soft corridor
2.50%
3.50% to 11.50% including inflation
6.75%
59 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 8. 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 UMP 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%
7.70%
6.0%
4.90%
20.0%
8.70%
12.0%
8.10%
12.0%
5.80%
5.0%
6.90%
10.0%
11.80%
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.
60 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 8. Employee Retirement System (continued)
Texas Municipal Retirement System (continued)
Changes in the Net Pension Liability
Balance at 12/31/2021
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 12/31/2022
Increase (Decrease)
Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability
$ 96,863,664 $ 91,705,874 $ 5,157,790
3,205,331 - 3,205,331
6,508,227
-
6,508,227
1,493,003
-
1,493,003
(4,096,292)
(4,096,292)
-
-
2,879,665
(2,879,665)
-
1,238,946
(1,238,946)
-
(6,696,002)
6,696,002
-
(57,928)
57,928
-
69,125
(69,125)
$ 103,973,933 $
85,043,388
$ 18,930,545
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
Discount Rate (5.75%) Discount Rate (6.75%) Rate (7.75%)
City's net pension liability $ 33,425,805 $ 18,930,545 $ 7,025,492
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.
61 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 8. 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, 2023, the City recognized a pension expense of $4,710,265.
At September 30, 2023, 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 $ 1,725,609 $ (49,589)
Changes in actuarial assumptions 47,269 -
Difference between projected and
actual investment earnings 5,850,262 -
Contributions subsequent to the
measurement date 2,231,484 -
Total $ 9,854,624 $ (49,589)
The $2,231,484 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,
2024. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in
pension expenses as follows:
Net Deferred Outflows
(Inflows) of Resources
2024
$ 974,311
2025
1,932,022
2026
1,982,604
2027
2,684,614
Thereafter
-
Total
$ 7,573,551
62 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 9. 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, 2022 was as follows:
Inactive employees currently receiving benefits 114
Inactive employees entitled to but not yet receiving benefits 31
Active employees 228
Tota 1 373
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 0.30% 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
4.05% based on the Fidelity Index's "20-Year Municipal GO AA Index" rate as of December 31, 2022.
63 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 9. 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, 2022 and was determined by an actuarial valuation as of that
date using the following actuarial assumptions:
Valuation Date: December 31, 2022
Methods and Assumptions:
Inflation: 2.50%
Salary Increases: 3.50%to 11.50%, including inflation
Discount rate *: 4.05%
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 31,2022.
Note: The actuarial assumptions used in the December 31, 2022 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
Interest
Changes of benefit terms
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
$ 51,328
16,968
122
(326,179)
(12,389)
(270,150)
902,708
$ 632,558
Ending total OPEB liability is $632,558 as of December 31, 2022. Changes of assumptions reflect a change in the discount
rate from 1.84% as of December 31, 2021 to 4.05% as of December 31, 2022.
64 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 9. 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 4.05%, 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 (3.05%)
or 1 percentage point higher (5.05%) 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.
1% Decrease to 3.05%
Current Discount Rate
Assumption
4.05 %
1% Increase to
5.05%
$ 757,005 $ 632,558 $ 535,641
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB Activity
For the year ended September 30, 2023, the City recognized OPEB expense of $37,685 related to the TMRS Supplemental
Death Benefit Fund and OPEB expense of $73,598 related to the City's retiree healthcare plan for total OPEB expense of
$111,283. As of September 30, 2023, the City reported deferred outflows of resources related to OPEB from the following
sources:
Differences between expected
and actual experience
Changes in assumptions and other inputs
Contributions made subsequent to
the measurement date
Total
Deferred Outflows of
Resources
$ 101
125,084
12,298
$ 137,483
Deferred Inflows of
Resources
$ (55,072)
(281,709)
$ (336,781)
The $12,298 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, 2024.
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
2024
$ (36,057)
2025
(32,902)
2026
(37,015)
2027
(48,184)
2028
(52,619)
Thereafter
(4,819)
Total
$ (211,596)
65 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 9. 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, 2022, the following employees were covered by the benefit terms:
Retirees and beneficiaries 5
Inactive, nonretired members 0
Active members 219
Total 224
Total OPEB Liability
The City's total OPEB liability of $937,877 was measured as of December 31, 2022, and was determined by an actuarial
valuation as of December 31, 2022.
66 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 9. 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, 2022. The total OPEB liability in the December 31, 2022 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, 2022
Measurement Date: December 31, 2022
Methods and Assumptions:
Actuarial Cost Method:
Individual Entry -Age Normal
Discount Rate:
4.05% as of December 31, 2022
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 7.00% 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 1.84% as of December 31, 2021 to 4.05% as of
December 31, 2022. 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 4.05% (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 1.84% 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.
67 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 9. Post Employee Benefits Other Than Pensions (continued)
Retiree Health Care Plan (RHCP) (continued)
Changes in the Total OPEB Liability
Service cost
$ 89,471
Interest
19,387
Changes of benefit terms
-
Difference between expected and actual experience
74,496
Changes of assumptions
(230,413)
Benefit payments
(47,887)
Net change in total OPEB liability
(94,946)
Total OPEB liability - beginning
1,032,823
Total OPEB liability - ending
$ 937,877
The ending Total OPEB Liability was $937,877 as of December 31, 2022.
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 4.05%, 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 3.05%
$ 1,034,303
Current Discount Rate
Assumption
4.05 %
$ 937,877
1% Increase to
5.05 %
$ 850,988
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:
Current Healthcare
Cost Trend Rate
1% Decrease Assumption 1% Increase
$ 831,715 $ 937,877 $ 1,062,748
68 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 9. 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, 2023, the City recognized OPEB expense of $37,685 related to the TMRS Supplemental
Death Benefit Fund and OPEB expense of $73,598 related to the City's retiree healthcare plan for total OPEB expense of
$111,283. As of September 30, 2023, 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
Total
Deferred Outflows of Deferred Inflows of
Resources Resources
$ 83,151 $ (173,690)
125,550 (295,509)
19,083
$ 227,784 $ (469,199)
The $19,083 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, 2024.
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
$ (35,260)
2024
(35,260)
2025
(35,260)
2026
(36,902)
2027
(31,101)
Thereafter
(86,715)
Total
$ (260,498)
69 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 10.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. Due to the fac that the City is responsible for its pro rata share of maintaining the water purification plant, the City
capitalizes its pro rata share of capital improvements.
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, 2023, 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.
70 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Note 10. 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, 2023, the City believed the amounts paid on workers'
compensation would not change significantly from the amounts recorded.
During the year ended September 30, 2023, 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 11. Subsequent Events
In December 2023, the City Council approved the establishment of the Reinvestment Zone Number One, City of Friendswood,
and the creation of the Friendswood City Center Public Improvement District in January 2024.
71 City of Friendswood, Texas 2023 ACFR
City of
f!,,pnd6wood
Texas
72 City of Friendswood, Texas 2023 ACFR
REQUIRED SUPPLEMENTARY INFORMATION
73 City of Friendswood, Texas 2023 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, 2023
Revenues
Property taxes
Sales and alcohol taxes
Franchise taxes
Fines and forfeitures
Permits and fees
Intergovernmental
Investment earnings
Donations
Miscellaneous
Total Revenues
Expenditures
General Government:
Mayor and Council - Governing Body:
Supplies and maintenance
Other services and charges
Total Governing Body
City Attorney:
Personnel services
Supplies
Other services and charges
Total City Attorney
City Manager - Administration:
Personnel services
Supplies
Other services and charges
Total Administration
City Manager - Economic Development:
Supplies
Other services and charges
Total Economic Development
City Secretary - Municipal Clerk:
Personnel services
Supplies
Other services and charges
Total Municipal Clerk
Budgeted Amounts Actual
Orieinal Final Amounts
Page 1 of 8
Variance with
Final budget -
Positive
(Neeative)
$ 18,006,381
$ 18,006,381 $
18,122,796 $
116,415
8,680,009
8,680,009
9,717,528
1,037,519
2,044,100
2,044,100
2,235,689
191,589
922,160
922,160
834,135
(88,025)
1,740,360
1,760,360
1,800,725
40,365
618,060
1,829,218
1,973,125
143,907
378,387
378,387
612,954
234,567
17,000
101,740
112,474
10,734
44,700
52,220
348,413
296,193
32,451,157
33,774,575
35,757,839
1,983,264
11,700
11,700
9,570
2,130
71,508
69,008
59,733
9,275
83,208
80,708
69,303
11,405
339,111
339,111
356,262
(17,151)
1,160
2,861
2,677
184
51,748
50,047
27,846
22,201
392,019
392,019
386,785
5,234
776,571
776,571
780,379
(3,808)
21,780
20,180
12,368
7,812
38,350
39,950
30,357
9,593
836,701
836,701
823,104
13,597
5,000
5,000
147
4,853
59,820
409,820
375,790
34,030
64,820
414,820
375,937
38,883
497,227
497,227
492,796
4,431
7,370
8,390
7,913
477
97,412
122,241
110,853
11,388
ew nn9
f,77 RSR
F11 S67
16 796
74 City of Friendswood, Texas 2023 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, 2023
Expenditures (continued)
General Government (continued):
Administrative Services - Finance:
Personnel services
Supplies
Other services and charges
Total Finance
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 Actual
Original Final Amounts
Page 2 of 8
Variance with
Final budget -
Positive
(Negative)
$ 1,048,263 $
1,048,263 $
1,041,574 $
6,689
7,930
12,520
11,709
811
311,061
307,822
262,445
45,377
1,367,254
1,368,605
1,315,728
52,877
427,344
427,344
439,278
(11,934)
9,680
9,680
4,928
4,752
29,425
29,425
22,815
6,610
466,449
466,449
467,021
(572)
397,716
397,716
387,737
9,979
11,700
9,200
3,264
5,936
87,131
88,806
56,277
32,529
496,547
495,722
447,278
48,444
321,754
325,054
283,474
41,580
321,754
325,054
283,474
41,580
75 City of Friendswood, Texas 2023 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, 2023
Variance with
Final budget -
Budgeted Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
Expenditures (continued)
General Government (continued):
Human resources - Risk Management:
Personnel services
$ 155,152 $
155,152
$ 155,088
$ 64
Supplies
10,960
27,603
18,522
9,081
Other services and charges
40,740
31,440
11,417
20,023
Total Risk Management
206,852
214,195
185,027
29,168
Information Technology - Administration:
Personnel services
784,569
784,569
773,820
10,749
Supplies
80,290
119,566
72,647
46,919
Repairs and maintenance
65,630
65,630
35,992
29,638
Other services and charges
1,011,304
1,357,867
1,045,966
311,901
Total Administration
1,941,793
2,327,632
1,928,425
399,207
Total General Government
6,779,406
7,549,763
6,893,644
656,119
Public Safety:
Police Department - Administration:
Personnel services
958,111
958,111
967,944
(9,833)
Supplies
30,760
55,807
28,163
27,644
Repairs and maintenance
77,507
18,263
14,899
3,364
Other services and charges
91,227
347,973
265,376
82,597
Total Administration
1,157,605
1,380,154
1,276,382
103,772
Police Department - Communications
Personnel services
1,290,816
1,234,116
1,206,218
27,898
Supplies
10,400
11,191
5,689
5,502
Repairs and maintenance
33,700
70,700
25,025
45,675
Other services and charges
22,190
18,118
12,764
5,354
Total Communications
1,357,106
1,334,125
1,249,696
84,429
Police Department - Patrol:
Personnel services
6,526,512
6,517,598
6,724,474
(206,876)
Supplies
343,175
363,504
330,499
33,005
Repairs and maintenance
231,400
266,022
261,666
4,356
Other services and charges
681,755
685,521
685,559
(38)
Total Patrol
7,782,842
7,832,645
8,002,198
(169,553)
Police Department - Patrol - DOT Program
Personnel services
109,058
109,104
118,175
(9,071)
Supplies
7,060
6,560
5,931
629
Repairs and maintenance
1,250
4,950
4,884
66
Other services and charges
13,260
10,060
8,768
1,292
Total Patrol - DOT Program
130,628
130,674
137,758
(7,084)
76 City of Friendswood, Texas 2023 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, 2023
Variance with
Final budget -
Budgeted Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
Expenditures (continued)
Public Safety (continued):
Police Department - Criminal Investigation:
Personnel services
$ 2,064,588
$ 1,904,744
$ 1,833,970 $
70,774
Supplies
60,500
61,897
54,748
7,149
Repairs and maintenance
53,900
33,805
33,197
608
Other services and charges
196,353
190,698
184,266
6,432
Total Criminal Investigation
2,375,341
2,191,144
2,106,181
84,963
Police Department - Animal Control:
Personnel services
362,576
362,575
382,624
(20,049)
Supplies
33,750
47,312
36,091
11,221
Repairs and maintenance
12,000
9,000
5,925
3,075
Other services and charges
69,492
79,592
67,695
11,897
Total Animal Services
477,818
498,479
492,335
6,144
Fire Marshal - Administration:
Personnel services
978,289
978,289
1,018,564
(40,275)
Supplies
37,430
45,670
44,129
1,541
Repairs and maintenance
11,000
11,478
10,627
851
Other services and charges
79,694
79,444
76,625
2,819
Total Administration
1,106,413
1,114,881
1,149,945
(35,064)
Fire Marshal - Emergency Management:
Personnel services
102,932
102,932
108,508
(5,576)
Supplies
24,300
31,475
29,715
1,760
Repairs and maintenance
5,000
3,000
1,560
1,440
Other services and charges
50,190
59,104
45,616
13,488
Total Emergency Management
182,422
196,511
185,399
11,112
Fire Marshal - Fire/EMS Administration:
Other services and charges
1,963,400
1,963,400
2,040,405
(77,005)
Total Fire/EMS Administration
1,963,400
1,963,400
2,040,405
(77,005)
Total Public Safety
16,533,575
16,642,013
16,640,299
1,714
77 City of Friendswood, Texas 2023 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, 2023
Variance with
Final budget -
Budgeted Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
Expenditures (continued)
Public Works:
Administration:
Personnel services
$ 263,038 $
263,038
$ 263,660
$ (622)
Supplies
4,020
4,720
4,123
597
Other services and charges
13,365
16,313
4,910
11,403
Total Administration
280,423
284,071
272,693
11,378
Streets:
Personnel services
861,972
861,972
998,612
(136,640)
Supplies
164,515
152,615
146,787
5,828
Repairs and maintenance
151,830
498,565
438,126
60,439
Other services and charges
465,794
461,721
525,927
(64,206)
Total Streets
1,644,111
1,974,873
2,109,452
(134,579)
Drainage:
Personnel services
326,286
326,286
308,430
17,856
Supplies
17,600
15,481
13,062
2,419
Repairs and maintenance
66,000
65,052
33,006
32,046
Other services and charges
16,310
14,010
13,007
1,003
Total Drainage
426,196
420,829
367,505
53,324
Total Public Works
2,350,730
2,679,773
2,749,650
(69,877)
Engineering:
Capital Projects Administration:
Personnel services
502,851
502,851
549,405
(46,554)
Supplies
14,985
22,005
21,594
411
Repairs and maintenance
2,000
2,863
2,322
541
Other services and charges
100,718
84,828
67,883
16,945
Total Capital Projects Administration:
620,554
612,547
641,204
(28,657)
Total Engineering
620,554
612,547
641,204
(28,657)
Community Development:
Administration:
Personnel services
382,772
382,772
380,208
2,564
Supplies
6,680
6,560
4,251
2,309
Other services and charges
15,795
10,564
8,295
2,269
Total Administration
405,247
399,896
392,754
7,142
78 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 6 of 8
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2023
Variance with
Final budget -
Budgeted Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
Expenditures (continued)
Community Development (continued):
Planning and Zoning:
Personnel services
$ 417,751 $
417,751
$ 360,848 $
56,903
Supplies
5,250
3,250
2,432
818
Other services and charges
50,305
57,656
37,672
19,984
Total Planning and Zoning
473,306
478,657
400,952
77,705
Inspection and Code Enforcement:
Personnel services
428,532
428,532
437,032
(8,500)
Supplies
11,310
11,310
8,326
2,984
Repairs and maintenance
3,650
3,650
2,995
655
Other services and charges
67,230
71,730
51,221
20,509
Total Inspection and Code Enforcement
510,722
515,222
499,574
15,648
Total Community Development
1,389,275
1,393,775
1,293,280
100,495
Parks and recreation:
Administration:
Personnel services
303,798
303,798
354,495
(50,697)
Supplies
4,450
13,684
13,641
43
Repairs and maintenance
32,950
33,840
29,913
3,927
Total Administration
341,198
351,322
398,049
(46,727)
Recreation Programs:
Personnel services
353,167
353,167
332,296
20,871
Supplies
21,000
25,708
25,510
198
Other services and charges
129,870
145,212
139,061
6,151
Total Recreation programs
504,037
524,087
496,867
27,220
July 4th Program:
Personnel services
32,103
32,103
54,509
(22,406)
Supplies
4,450
5,216
5,215
1
Other services and charges
101,100
105,334
103,212
2,122
Total July 4th Program
137,653
142,653
162,936
(20,283)
Summer Day Camp Program:
Personnel services
120,619
120,619
89,279
31,340
Supplies
18,000
22,791
22,793
(2)
Other services and charges
51,774
46,983
44,905
2,078
Total Summer Day Camp Program
190,393
190,393
156,977
33,416
79 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 7of 8
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2023
Variance with
Final budget -
Budgeted Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
Expenditures (continued)
Parks and recreation (continued):
Keep Friendswood Beautiful committee:
Supplies
$ 13,900 $
13,755
$ 13,803 $
(48)
Repairs and maintenance
2,500
5,253
5,075
178
Other services and charges
37,514
41,294
40,457
837
Total Keep Friendswood Beautiful committee
53,914
60,302
59,335
967
Stevenson Park pool:
Personnel services
78,944
78,944
70,176
8,768
Supplies
31,300
38,590
31,568
7,022
Repairs and maintenance
9,000
15,917
15,908
9
Other services and charges
23,020
21,261
18,547
2,714
Total Stevenson park pool
142,264
154,712
136,199
18,513
Senior Activity Center:
Personnel services
189,230
189,230
189,555
(325)
Supplies
10,960
10,345
6,605
3,740
Repairs and maintenance
4,000
12,985
7,148
5,837
Other services and charges
19,704
26,724
24,625
2,099
Total Senior Activity Center
223,894
239,284
227,933
11,351
Park Operations:
Personnel services
870,890
870,890
897,242
(26,352)
Supplies
111,570
120,977
111,388
9,589
Repairs and maintenance
588,000
246,719
207,951
38,768
Other services and charges
602,245
911,855
901,423
10,432
Total Park Operations
2,172,705
2,150,441
2,118,004
32,437
Facility Operations:
Supplies
45,000
43,144
36,220
6,924
Repairs and maintenance
314,001
710,306
386,910
323,396
Other services and charges
1,044,240
904,348
734,815
169,533
Total Facility Operations
1,403,241
1,657,798
1,157,945
499,853
Total parks and recreation
5,169,299
5,470,992
4,914,245
556,747
Library:
Administration:
Personnel services
1,209,731
1,209,731
1,216,097
(6,366)
Supplies
158,785
172,559
157,349
15,210
Repairs and maintenance
2,482
3,016
1,016
2,000
Other services and charges
22,122
30,598
26,837
3,761
Total Administration
1,393,120
1,415,904
1,401,299
14,605
Total library
1,393,120
1,415,904
1,401,299
14,605
80 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 8 of 8
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2023
Variance with
Final budget -
Budgeted Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
Expenditures (continued)
Capital improvements:
Repairs and Maintenance
$
$ -
$ -
$ -
Other services and charges
27,007
26,817
190
Capital outlay
519,000
8,134,388
4,148,714
3,985,674
Total capital improvements
519,000
8,161,395
4,175,531
3,985,864
Debt service:
Principal on long-term debt
-
-
84,250
(84,250)
Total debt service
-
-
84,250
(84,250)
Total Expenditures
34,754,959
43,926,162
38,793,402
5,132,760
Excess (deficiency) of revenues over
expenditures
(2,303,802)
(10,151,587)
(3,035,563)
7,116,024
Other Financing Sources (Uses)
Insurance recoveries
63,799
69,683
5,884
Sale of capital assets
-
18,181
18,181
Notes payable issued
-
514,000
514,000
-
Transfers in
1,803,800
1,803,800
1,803,800
Transfers out
-
(16,335)
(16,335)
-
Total Other Financing Sources (Uses)
1,803,800
2,365,264
2,389,329
24,065
Net change in fund balances
(500,002)
(7,786,323)
(646,234)
7,140,089
Fund Balances - Beginning
17,385,087
17,385,087
17,385,087
-
Fund Balances - Ending
$ 16,885,085
$ 9,598,764
$ 16,738,853
$ 7,140,089
81 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL (WITH VARIANCES)
CORONA VIRUS STATE FISCAL RECOVERY FUND
For the Year Ended September 30, 2023
Page 1 of 1
Variance with
Final Budget -
Positive
Original Budget
Final Budget
Actual Amounts
(Negative)
Revenues
Investment earnings
$ 86,249
$ 86,249
$ 369,436
$ 283,187
Total Revenues
86,249
86,249
369,436
283,187
Expenditures
Current:
-
-
-
-
Total Expenditures
-
-
-
-
Net change in fund balances
86,249
86,249
369,436
283,187
Fund Balances - Beginning
(1,666)
(1,666)
(1,666)
-
Fund Balances - Ending
$ 84,583
$ 84,583
$ 367,770
$ 283,187
82 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 1 of 3
NOTES TO BUDGETARY SCHEDULE
For the Year Ended September 30, 2023
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 framework for 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.
83 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BUDGETARY SCHEDULE
For the Year Ended September 30, 2023
Public Notice and Hearing
Page 2 of 3
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.
84 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 3 of 3
NOTES TO BUDGETARY SCHEDULE
For the Year Ended September 30, 2023
Excess of Expenditures over Appropriations
For the year ended September 30, 2023, expenditures exceeded appropriations in the following departments (the legal level
of budgetary control):
General Fund
Fire marshal
Public works
Engineering
Debt service
Debt Service Fund
Debt service - principal and interest
Bond Consutction Fund
Debt service - interest and other charges
CDBG - DR Galveston County Fund
Public works
CDBG - DR Harris County Fund
Capital outlay
Fire/EMS Donation Fund
Debt service - principal
$100,957
$69,877
$28,657
$84,250
$112, 933
$311,664
$129,082
$505,048
$18, 905
85 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 1 of
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITYAND RELATED RATIOS
TEXAS MUNICIPAL RETIREMENT SYSTEM
Last Nine Measurement Years
2022
2021
2020
2019
A. Total pension liability
1. Service Cost
$ 3,205,331 $
3,032,100 $
2,979,569 $
2,738,906
2. Interest (on the Total Pension Liability)
6,508,227
6,110,807
5,780,980
5,345,140
3. Difference between expected and actual experience
1,493,003
788,166
(146,825)
1,150,459
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
(4,096,292)
(4,163,654)
(3,343,679)
(3,210,157)
7,110,269
5,767,419
5,270,045
6,403,321
96,863,664
91,096,245
85,826,200
79,422,879
103,973,933
96,863,664
91,096,245
85,826,200
2,879,665
2,777,049
2,620,564
2,395,398
1,238,946
1,174,582
1,158,078
1,068,692
(6,696,002)
10,611,017
5,713,369
10,053,454
(4,096,292)
(4,163,654)
(3,343,679)
(3,210,157)
(57,928)
(49,073)
(36,958)
(56,778)
69,125
337
(1,442)
(1,704)
(6,662,486)
10,350,258
6,109,932
10,248,905
91,705,874
81,355,616
75,245,684
64,996,779
85,043,388
91,705,874
81,355,616
75,245,684
C. Net pension liability (A.9 — 13.9)
$ 18,930,545 $
5,157,790 $
9,740,629 $
10,580,516
D. Plan fiduciary net position as a percentage of the
total pension liability
81.79%
94.68%
89.31%
87.67%
E. Covered payroll
$ 17,699,233 $
16,779,748 $
16,543,970 $
15,267,034
F. Net position liability as a percentage of covered
payroll
106.96%
30.74%
58.88%
69.30%
Note: Ten years of data should be presented in this schedule but data was unavailable prior to 2014
86 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITYAND RELATED RATIOS
TEXAS MUNICIPAL RETIREMENT SYSTEM
Last Nine Measurement Years
A. Total pension liability
1. Service Cost
2. Interest (on the Total Pension Liability)
3. Difference between expected and actual experience
4. Changes of assumptions
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
2018 2017
$ 2,626,099 $ 2,505,392 $
5,044,613 4,755,782
59,617 (60,180)
2016 2015
Page 2 of 2
2014
2,334,817 $ 2,204,299 $ 2,018,353
4,435,987 4,317,394 4,084,392
366,687 (1,032,789) (736,093)
- 847,469
(3,458,824) (2,505,921) (2,464,107) (2,256,734) (2,005,311)
4,271,505 4,695,073 4,673,384 4,079,639 3,361,341
75,151,374 70,456,304 65,782,920 61,703,281 58,341,940
79,422,879 75,151,377 70,456,304 65,782,920 61,703,281
2,305,344
2,182,093
2,037,849
1,998,038
1,867,782
1,025,248
987,399
923,896
886,669
829,598
(2,013,270)
8,104,390
3,672,583
79,202
2,868,842
(3,458,824)
(2,505,921)
(2,464,107)
(2,256,734)
(2,005,311)
(38,892)
(41,987)
(41,467)
(48,239)
(29,949)
(2,032)
(2,127)
(2,234)
(2,383)
(2,462)
(2,182,426)
8,723,847
4,126,520
656,553
3,528,500
67,179,205
58,455,358
54,328,838
53,672,285
50,143,785
64,996,779
67,179,205
58,455,358
54,328,838
53,672,285
$ 14,426,100 $
7,972,172 $
12,000,946 $
11,454,082 $
8,030,996
81.84%
89.39%
82.97%
82.59%
86.98%
$ 14,646,398 $
14,098,997 $
13,198,512 $
12,653,842 $
11,851,396
98.50%
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.
87 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF CITY CONTRIBUTIONS
TEXAS MUNICIPAL RETIREMENT SYSTEM
Last Ten Fiscal Years
2023
2022
2021
2020
2019
Actuarially required contributions
$
3,039,855
$
2,844,852
$
2,721,688
$
2,485,117
$
2,376,185
Contributions in relation to the
actuarially required contributions
3,039,855
2,844,852
2,721,688
2,485,117
2,376,185
Contribution deficiency (excess)
$
_
$
_
$
_
$
_
$
_
City's covered payroll
$
18,633,414
$
17,404,825
$
16,639,755
$
15,724,041
$
15,133,171
Contributions as a percentage of
covered payroll
16.31%
16.35%
16.36%
15.80%
15.70%
2018
2017
2016
2015
2014
Actuarially required contributions
$
2,255,270
$
2,161,617
$
2,100,698
$
1,960,652
$
1,847,375
Contributions in relation to the
actuarially required contributions
2,255,270
2,161,617
2,100,698
1,960,652
1,847,375
Contribution deficiency (excess)
$
_
$
_
$
_
$
_
$
_
City's covered payroll
$
14,385,208
$
13,986,135
$
13,525,613
$
12,423,310
$
11,781,281
Contributions as a percentage of
covered payroll
15.68%
15.46%
15.53%
15.78%
15.68%
88 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NOTES TO SCHEDULE OF CONTRIBUTIONS
For the Year Ended September 30, 2023
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
23 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 UMP. 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 UMP.
Other Information: There were no benefit changes during the year.
89 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF CHANGES IN THE TOTAL OPEB LIABILITY AND RELATED RATIOS
TEXAS MUNICIPAL RETIREMENT SYSTEM SUPPLEMENTAL DEATH BENEFITS FUND
Last Six 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
2022
2021
2020
$ 51,328 $
45,305 $
36,397
16,968
17,025
20,150
122
(9,842)
(48,181)
(326,179)
29,168
115,737
(12,389)
(15,102)
(4,963)
(270,150)
66,554
119,140
902,708
836,154
717,014
$ 632,558 $
902,708 $
836,154
$ 17,699,233 $ 16,779,748 $ 16,543,970
3.57% 5.38% 5.05%
2019
2018
2017
$ 27,481 $
30,757 $
26,788
23,199
20,933
20,384
(60,356)
(7,425)
-
118,183
(43,775)
49,777
(6,107)
(5,859)
(5,640)
102,400
(5,369)
91,309
614,614
619,983
528,674
$ 717,014 $
614,614 $
619,983
$ 15,267,034 $ 14,646,398 $ 14,098,997
4.70% 4.20% 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:
2022
4.05%
2021
1.84%
2020
2.00%
2019
2.75%
2018
3.71%
2017
3.31%
90 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF CHANGES IN THE TOTAL OPEB LIABILITY AND RELATED RATIOS
CITY OF FRIENDSWOOD RETIREE HEALTH CARE PLAN
Last Six 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
2022
2021
2020
$ 89,471 $
60,759 $
60,972
19,387
22,218
30,484
74,496
11,967
(104,038)
(230,413)
(111,991)
75,401
(47,887)
(61,339)
(59,267)
(94,946)
(78,386)
3,552
1,032,823
1,111, 209
1,107, 657
$ 937,877 $
1,032,823 $
1,111,209
$ 17,701,249 $ 16,779,752 $ 16,543,973
5.30% 6.16% 6.72%
2019
2018
2017
$ 46,995 $
53,919 $
44,637
36,314
37,843
39,497
8,768
(214,124)
4,573
86,718
7,071
51,765
(52,896)
(38,566)
(38,414)
125,899
(153,857)
102,058
981,758
1,135,615
1,033,557
$ 1,107,657 $
981,758 $
1,135,615
$ 15,267,037 $ 14,646,402 $ 12,035,859
7.26% 6.70% 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.
91 City of Friendswood, Texas 2023 ACFR
Notes to Required Supplementary Information:
Methods and Assumptions Used to Determine Contribution Rates:
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:
2022 — The spousal coverage and health care trend assumptions were modified.
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:
2022
4.05%
2021
1.84%
2020
2.00%
2019
2.75%
2018
3.71%
2017
3.31%
92 City of Friendswood, Texas 2023 ACFR
COMBINING AND INDIVIDUAL FUND
FINANCIAL STATEMENTS AND SCHEDULES
93 City of Friendswood, Texas 2023 ACFR
City of
,,Pnd6wood
Texas
94 City of Friendswood, Texas 2023 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.
95 City of Friendswood, Texas 2023 ACFR
NONMAJOR
GOVERNMENTAL FUNDS (continued)
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.
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.
96 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
September 30, 2023
Page 1 of 3
Special Revenue Funds
Police
Fires/EMS
CDBG
- DR Harris
Investigation
Donation
Municipal Court
County
Assets
Cash and cash equivalents
$
29,059
$
78,587
$
44,186
$
150,900
Investments
103,066
288,673
162,305
554,302
Receivables, net of allowance:
Taxes
-
-
-
-
Customer accounts
2,739
-
Other receivables
-
-
3,573
Accrued interest
125
385
172
Prepaid items
-
-
300
-
Due from other governments
-
-
-
764,243
Total Assets
$
132,250
$
370,384
$
210,536
$
1,469,445
Liabilities, Deferred Inflows of
Resources, and Fund Balances
Liabilities:
Accounts payable
$
2,086
$
-
$
-
$
54,502
Retainage payable
-
-
4,912
166,799
Due to other funds
-
-
1,248,144
Unearned revenues
-
-
-
-
Total Liabilities
2,086
-
4,912
1,469,445
Deferred Inflows of Resources:
Unavailable revenue
-
-
3,756
-
Total Deferred Inflows
-
3,756
Fund Balances:
Nonspendable:
Prepaid items
-
300
Permanent fund
-
-
Restricted:
Municipal court operations
-
201,568
Debt service
-
-
-
Public safety
130,164
370,384
Capital projects
-
-
Unassigned
-
-
-
Total Fund Balances
130,164
370,384
201,868
-
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
$
132,250
$
370,384
$
210,536
$
1,469,445
97 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 2 of 3
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
September 30, 2023
Special Revenue Funds
Permanent
HMGP
Acquisition &
CDBG - DR
Demolition
Galveston
Debt Service
Project
County
1776 Park Fund
Fund
Assets
Cash and cash equivalents
$
-
$
23,895
$
2,459
$
6,146
Investments
-
87,775
9,032
22,580
Receivables, net of allowance:
Taxes
-
-
-
57,083
Customer accounts
-
-
-
-
Other receivables
-
-
-
-
Accrued interest
-
-
10
831
Prepaid items
-
-
-
-
Due from other governments
205,178
295,395
-
-
Total Assets
$
205,178
$
407,065
$
11,501
$
86,640
Liabilities, Deferred Inflows of
Resources, and Fund Balances
Liabilities:
Accounts payable
$
-
$
21,540
$
$
-
Retainage payable
-
13,020
-
Due to other funds
205,178
334,365
Unearned revenues
-
20,166
Total Liabilities
205,178
389,091
-
Deferred Inflows of Resources:
Unavailable revenue
-
-
-
55,847
Total Deferred Inflows
-
-
-
55,847
Fund Balances:
Nonspendable:
Prepaid items
-
-
-
-
Permanent fund
-
-
11,501
-
Restricted:
Municipal court operations
-
-
-
-
Debt service
-
-
-
30,793
Public safety
-
-
-
-
Capital projects
-
17,974
-
-
Unassigned
-
-
-
-
Total Fund Balances
-
17,974
11,501
30,793
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
$
205,178
$
407,065
$
11,501
$
86,640
98 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS Page 3 of 3
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
September 30, 2023
Capital Projects Funds
Street
Total Nonmajor
Sidewalk
Install
Park Land
Improvements
Governmental
Fund
Dedication
Funds
Fund
Funds
Assets
Cash and cash equivalents
$
1,307
$
15,457
$
1,060,329
$ 1,412,325
Investments
4,803
56,779
3,894,925
5,184,240
Receivables, net of allowance:
Taxes
-
-
428,472
485,555
Customer accounts
-
-
-
2,739
Other receivables
-
-
-
3,573
Accrued interest
5
47
3,913
5,488
Prepaid items
-
-
-
300
Due from other governments
-
-
-
1,264,816
Total Assets
$
6,115
$
72,283
$
5,387,639
$ 8,359,036
Liabilities, Deferred Inflows of
Resources, and Fund Balances
Liabilities:
Accounts payable
$
-
$
-
$
50,644
$ 128,772
Retainage payable
-
-
6,294
191,025
Due to other funds
-
-
-
1,787,687
Unearned revenues
-
-
-
20,166
Total Liabilities
-
-
56,938
2,127,650
Deferred Inflows of Resources:
Unavailable revenue
-
-
-
59,603
Total Deferred Inflows
-
-
59,603
Fund Balances:
Nonspendable:
Prepaid items
-
-
-
300
Permanent fund
-
-
-
11,501
Restricted:
Municipal court operations
-
-
-
201,568
Debt service
-
-
-
30,793
Public safety
-
-
-
500,548
Capital projects
6,115
72,283
5,330,701
5,427,073
Unassigned
-
-
-
-
Total Fund Balances
6,115
72,283
5,330,701
6,171,783
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
$
6,115
$
72,283
$
5,387,639
$ 8,359,036
99 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended September 30, 2023
Special Revenue Funds
Police
Fires/EMS
CDBG - DR Harris
Investigation
Donation
Municipal Court
County
Revenues
Property taxes
$
$
$
$
Sales taxes
Fines and forfeitures
5,060
56,382
Permits and fees
-
-
-
Intergovernmental
3,131,816
Miscellaneous
-
Donations
-
183,494
-
Investment income (loss)
7,339
17,214
7,850
-
Total Revenues
12,399
200,708
64,232
3,131,816
Expenditures
Current:
General government
42,734
Public works
-
Parks and recreation
-
Debt Service:
Principal
206,438
Interest and other charges
- 17,298 - -
Capital Outlay
70,208 504,151 102,931 2,934,262
Total Expenditures
70,208 727,887 145,665 2,934,262
Excess (deficiency) of revenues over
(under) expenditures (57,809) (527,179) (81,433) 197,554
Other Financing Sources (Uses)
Premium on issuance of bonds
-
Transfers in
-
6,868
Notes payable issued
411,000
-
Total Other Financing Sources (Uses)
411,000
6,868
Net change in fund balances
(57,809) (116,179)
(81,433) 204,422
Fund Balances - Beginning
187,973 486,563
283,301 (204,422)
Fund Balances - Ending
$ 130,164 $ 370,384 $
201,868 $
Page 1 of 3
100 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended September 30, 2023
Revenues
Property taxes
Sales taxes
Fines and forfeitures
Permits and fees
Intergovernmental
Miscellaneous
Donations
Investment income (loss)
Total Revenues
Expenditures
Current:
General government
Public works
Parks and recreation
Debt Service:
Principal
Interest and other charges
Capital Outlay
Total Expenditures
Excess (deficiency) of revenues over
(under) expenditures
Other Financing Sources (Uses)
Premium on issuance of bonds
Transfers in
Notes payable issued
Total Other Financing Sources (Uses)
Net change in fund balances
Fund Balances - Beginning
Fund Balances - Ending
Page 2 of 3
Special Revenue Funds
Permanent
HMGP
Acquisition &
CDBG - DR
Demolition
Galveston
Debt Service
Project
County
1776 Park Fund
Fund
$
$
$
$ 4,602,691
626,044
-
-
1,682
-
-
-
408
43,768
-
627,726
408
4,646,459
169,264 -
3,086,662
- 1,579,849
_ 467,163 -
636,427 4,666,511
- (8,701) 408 (20,052)
- 4,470
- 4,470
(8,701) 408 (15,582)
26,675 11,093 46,375
$ $ 17,974 $ 11,501 $ 30,793
101 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended September 30, 2023
Revenues
Page 3 of 3
Capital Projects Funds
Street Total Nonmajor
Sidewalk Install Park Land Improvements Governmental
Fund Dedication Funds Fund Funds
Property taxes
$ $
$
-
$ 4,602,691
Sales taxes
2,409,256
2,409,256
Fines and forfeitures
-
-
-
61,442
Permits and fees
60,600
60,600
Intergovernmental
-
3,757,860
Miscellaneous
1,682
Donations
-
-
183,494
Investment income (loss)
256
1,472
151,898
230,205
Total Revenues
256
62,072
2,561,154
11,307,230
Expenditures
Current:
General government
-
-
-
42,734
Public works
-
642,411
811,675
Parks and recreation
4,093
-
4,093
Debt Service:
Principal
-
3,293,100
Interest and other charges
-
-
1,597,147
Capital Outlay
20,358
131,897
4,230,970
Total Expenditures
-
24,451
774,308
9,979,719
Excess (deficiency) of revenues over
(under) expenditures
256
37,621
1,786,846
1,327,511
Other Financing Sources (Uses)
Premium on issuance of bonds
-
-
-
4,470
Transfers in
6,868
Notes payable issued
411,000
Total Other Financing Sources (Uses)
-
-
-
422,338
Net change in fund balances
256
37,621
1,786,846
1,749,849
Fund Balances - Beginning
5,859
34,662
3,543,855
4,421,934
Fund Balances - Ending
$ 6,115 $
72,283 $
5,330,701
$ 6,171,783
102 City of Friendswood, Texas 2023 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, 2023
Revenues
Fines and forfeitures
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)
$ - $ - $ 5,060 $ 5,060
4,073 4,073 12,399 8,326
- 76,505 70,208 6,297
4,073 (72,432) (57,809) 14,623
187,973 187,973 187,973 -
$ 192,046 $ 115,541 $ 130,164 $ 14,623
103 City of Friendswood, Texas 2023 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, 2023
Variance with
Final Budget -
Positive
Original Budget
Final Budget
Actual Amounts
(Negative)
Revenues
Donations
$ 200,000
$ 200,000
$ 183,494
$ (16,506)
Investment earnings
12,630
12,630
17,214
4,584
Total Revenues
212,630
212,630
200,708
(11,922)
Expenditures
Debt service:
Principal
187,533
187,533
206,438
(18,905)
Interest and other charges
22,272
22,272
17,298
4,974
Capital outlay
114,800
571,329
504,151
67,178
Total Expenditures
324,605
781,134
727,887
53,247
Excess (deficiency) of revenues over
expenditures
(111,975)
(568,504)
(527,179)
41,325
Other Financing Sources (Uses)
Notes payable issued
411,000
411,000
-
Total Other Financing Sources (Uses)
411,000
411,000
-
Net change in fund balances
(111,975)
(157,504)
(116,179)
41,325
Fund Balances - Beginning
486,563
486,563
486,563
-
Fund Balances - Ending
$ 374,588
$ 329,059
$ 370,384
$ 41,325
104 City of Friendswood, Texas 2023 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, 2023
Revenues
Fines and forfeitures
Investment earnings
Total Revenues
Expenditures
Current:
General government
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)
$ 49,000
$ 49,000
$ 56,382
$ 7,382
5,450
5,450
7,850
2,400
54,450
54,450
64,232
9,782
55,914
55,914
42,734
13,180
-
113,081
102,931
10,150
55,914
168,995
145,665
23,330
(1,464)
(114,545)
(81,433)
33,112
283,301
283,301
283,301
-
$ 281,837
$ 168,756
$ 201,868
$ 33,112
105 City of Friendswood, Texas 2023 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, 2023
Variance with
Final Budget -
Positive
Original Budget Final Budget
Actual Amounts
(Negative)
Revenues
Intergovernmental
$ - $ 2,400,115
$ 3,131,816
$ 731,701
Total Revenues
- 2,400,115
3,131,816
731,701
Expenditures
Capital outlay
- 2,429,214
2,934,262
(S05,048)
Total Expenditures
- 2,429,214
2,934,262
(S05,048)
Other Financing Sources (Uses)
Transfers in
- 6,868
6,868
-
Total Other Financing Sources (Uses)
- 6,868
6,868
-
Net change in fund balances
- (22,231)
204,422
226,653
Fund Balances - Beginning
(204,422) (204,422)
(204,422)
-
Fund Balances - Ending
$ (204,422) $ (226,653)
$ -
$ 226,653
106 City of Friendswood, Texas 2023 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, 2023
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
$ $ $ $
107 City of Friendswood, Texas 2023 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, 2023
Variance with
Final Budget -
Positive
Original Budget Final Budget
Actual Amounts
(Negative)
Revenues
Intergovernmental
$ $ 337,349
$ 626,044
$ 288,695
Miscellaneous revenue
1,682
1,682
-
Total Revenues
339,031
627,726
288,695
Expenditures
Current:
Public works
40,182
169,264
(129,082)
Capital outlay
514,444
467,163
47,281
Total Expenditures
554,626
636,427
(81,801)
Net change in fund balances
- (215,595)
(8,701)
206,894
Fund Balances - Beginning
26,675 26,675
26,675
-
Fund Balances - Ending
$ 26,675 $ (188,920)
$ 17,974
$ 206,894
108 City of Friendswood, Texas 2023 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, 2023
Revenues
Investment earnings
Total Revenues
Expenditures
Current
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)
$ 230
$ 230
$ 408
$ 178
230
230
408
178
230
230
408
178
11,093
11,093
11,093
-
$ 11,323
$ 11,323
$ 11,501
$ 178
109 City of Friendswood, Texas 2023 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, 2023
Revenues
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)
$ 871
$ 871
$ 256
$ (615)
871
871
256
(615)
-
5,969
-
5,969
-
5,969
-
5,969
871
(5,098)
256
5,354
5,859
5,859
5,859
-
$ 6,730
$ 761
$ 6,115
$ 5,354
110 City of Friendswood, Texas 2023 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, 2023
Revenues
Permit and fees
Investment earnings
Total Revenues
Expenditures
Current:
Parks and recreation
Capital outlay
Total Expenditures
Net change in fund balances
Fund Balances - Beginning
Fund Balances - Ending
variance wnn
Final Budget -
Positive
Original Budget
Final Budget
Actual Amounts
(Negative)
$ 50,000
$ 50,000
$ 60,600
$ 10,600
1,800
1,800
1,472
(328)
51,800
51,800
62,072
10,272
-
4,093
4,093
-
-
20,358
20,358
-
24,451
24,451
-
51,800
27,349
37,621
10,272
34,662
34,662
34,662
-
$ 86,462
$ 62,011
$ 72,283
$ 10,272
111 City of Friendswood, Texas 2023 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, 2023
Variance with
Final Budget -
Positive
Original Budget
Final Budget
Actual Amounts
(Negative)
Revenues
Sales taxes
$ 2,155,380
$ 2,155,380
$ 2,409,256
$ 253,876
Investment earnings
37,480
37,480
151,898
114,418
Total Revenues
2,192,860
2,192,860
2,561,154
368,294
Expenditures
Public works
-
644,289
642,411
1,878
Capital outlay
-
727,556
131,897
595,659
Total Expenditures
-
1,371,845
774,308
597,537
Net change in fund balances
2,192,860
821,015
1,786,846
965,831
Fund Balances - Beginning
3,543,855
3,543,855
3,543,855
-
Fund Balances - Ending
$ 5,736,715
$ 4,364,870
$ 5,330,701
$ 965,831
112 City of Friendswood, Texas 2023 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, 2023
Revenues
Property taxes
Investment earnings
Total Revenues
Expenditures
Debt service:
Principal
Interest and other charges
Total Expenditures
Other Financing Sources (Uses)
Premium on bond issuance
Total Other Financing Sources
Net change in fund balances
Fund Balances - Beginning
Fund Balances - Ending
Variance with
Final Budget -
Positive
Original Budget Final Budget Actual Amounts (Negative)
$ 4,573,578 $ 4,573,578 $ 4,602,691 $ 29,113
18,186 18,186 43,768 25,582
4,591,764 4,591,764 4,646,459 54,695
2,980,984
2,980,984
3,086,662
(105,678)
1,572,594
1,572,594
1,579,849
(7,255)
4,553,578
4,553,578
4,666,511
(112,933)
4,470 4,470
4,470 4,470
38,186 38,186 (15,582) (53,768)
46,375 46,375 46,375
$ 84,561 $ 84,561 $ 30,793 $ (53,768)
113 City of Friendswood, Texas 2023 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, 2023
Variance with
Final Budget -
Positive
Original Budget
Final Budget
Actual Amounts
(Negative)
Revenues
Investment earnings
$ 323,943
$ 323,943
$ 479,377
$ 155,434
Total Revenues
323,943
323,943
479,377
155,434
Expenditures
Current:
Public works
-
59,001
11,001
48,000
Parks and recreation
-
-
-
Debt service:
Interest and other charges
-
311,664
(311,664)
Capital outlay
7,880,943
5,080,622
2,800,321
Total Expenditures
7,939,944
5,403,287
2,536,657
Other Financing Sources (Uses)
Issuance of capital -related debt
-
29,775,000
29,775,000
Premium on issuance of bonds
536,664
536,664
Total Other Financing Sources (Uses)
-
30,311,664
30,311,664
Net change in fund balances
323,943
(7,616,001)
25,387,754
33,003,755
Fund Balances - Beginning
8,152,712
8,152,712
8,152,712
-
Fund Balances - Ending
$ 8,476,655
$ 536,711
$ 33,540,466
$ 33,003,755
114 City of Friendswood, Texas 2023 ACFR
STATISTICAL SECTION
(Unaudited)
115 City of Friendswood, Texas 2023 ACFR
City of
f!,
Texas
116 City of Friendswood, Texas 2023 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 118
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 128
These schedules contain information to help the reader assess the government's most
significant local revenue source, the property tax.
Debt Capacity 133
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 138
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 142
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.
117 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
Table 1
Page 1 of 2
2023
2022
2021
2020
2019
Governmental Activities
Net investment in capital assets
$ 79,714,165 $
74,006,329 $
72,240,727 $
68,990,597 $
66,823,023
Restricted
7,105,294
5,059,835
3,491,974
4,606,124
4,003,468
Unrestricted
6,302,252
8,668,866
6,886,085
2,563,947
5,402,312
Total Governmental Activities Net Position
$ 93,121,711 $
87,735,030 $
82,618,786 $
76,160,668 $
76,228,803
Business -Type Activities
Net investment in capital assets
$ 40,075,768 $
35,999,342 $
32,910,959 $
32,242,803 $
27,038,046
Restricted
2,839,232
2,897,578
2,721,465
2,186,731
1,982,666
Unrestricted
14,978,447
11,776,833
9,984,251
8,438,509
12,077,564
Total Business -Type Activities Net Position
$ 57,893,447 $
50,673,753 $
45,616,675 $
42,868,043 $
41,098,276
Primary Government
Net investment in capital assets
$ 119,789,933 $
110,005,671
$ 105,151,686
$ 101,233,400
$ 93,861,069
Restricted
9,944,526
7,957,413
6,213,439
6,792,855
5,986,134
Unrestricted
21,280,699
20,445,699
16,870,336
11,002,456
17,479,876
Total Primary Government Net Positions
$ 151,015,158 $
138,408,783
$ 128,235,461
$ 119,028,711
$ 117,327,079
118 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
Table 1
Page 2 of 2
2018
2017
2016
2015
2014
Governmental Activities
Net investment in capital assets
$ 68,320,682 $
72,631,192 $
73,588,484 $
73,611,490 $
65,404,791
Restricted
4,085,999
2,534,312
1,405,907
1,179,764
653,496
Unrestricted
6,248,751
5,532,198
5,579,677
5,901,505
10,798,907
Total Governmental Activities Net Position
$ 78,655,432 $
80,697,702 $
80,574,068 $
80,692,759 $
76,857,194
Business -Type Activities
Net investment in capital assets
$
27,088,280
$
29,305,429
$
28,322,718
$
26,628,714
$
24,495,816
Restricted
582,697
260,703
99,006
27,468
90,395
Unrestricted
13,620,211
10,584,764
10,238,993
12,040,181
14,818,104
Total Business -Type Activities Net Position
$
41,291,188
$
40,150,896
$
38,660,717
$
38,696,363
$
39,404,315
Primary Government
Net investment in capital assets
$
95,408,962
$
101,936,621
$
101,911,202
$
100,240,204
$
89,900,607
Restricted
4,668,696
2,795,015
1,504,913
1,207,232
743,891
Unrestricted
19,868,962
16,116,962
15,818,670
17,941,686
25,617,011
Total Primary Government Net Positions
$
119,946,620
$
120,848,598
$
119,234,785
$
119,389,122
$
116,261,509
119 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS Table 2
CHANGES IN NET POSITION Page 1 of 4
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
2023
2022
2021
2020
2019
Expenses
Governmental Activities:
General government
$
7,873,719
$
6,210,336
$
5,867,654
$
6,119,806
$
5,912,467
Public safety
18,526,954
15,655,859
15,645,527
15,501,734
15,134,465
Public works
6,990,046
6,994,042
7,160,229
8,840,113
7,897,373
Engineering
640,292
570,098
506,959
434,976
-
Community development
1,406,566
1,017,509
1,035,202
1,122,506
1,359,878
Parks and recreation
5,608,792
4,870,623
4,604,943
4,439,511
4,839,076
Library services
1,485,716
1,283,007
1,221,740
1,214,130
1,257,970
Interest and fiscal charges
1,659,932
1,268,435
1,244,881
1,055,889
923,350
Total Government Activities Expenses
44,192,017
37,869,909
37,287,135
38,728,665
37,324,579
Business -Type Activities:
Water and wastewater
12,017,020
11,178,323
11,864,245
12,071,159
11,507,880
Interest and other
1,808,120
1,808,120
1,808,120
1,733,123
1,579,182
Total Business -Type Activities
13,825,140
12,986,443
13,672,365
13,804,282
13,087,062
Total Primary Government Expenses
$
58,017,157
$
50,856,352
$
50,959,500
$
52,532,947
$
50,411,641
Program Revenues
Governmental activities:
Charges for services:
General government
$
921,752
$
974,029
$
871,362
$
930,686
$
751,112
Public safety
1,023,874
1,197,570
1,372,432
871,714
811,768
Public works
241,445
234,103
225,419
222,337
236,352
Community development
-
1,238
-
9,275
6,841
Parks and recreation
493,846
441,649
384,489
181,709
341,560
Library services
-
-
-
-
-
Operating grants and contributions
2,229,755
841,537
3,874,866
3,430,645
1,842,704
Capital grants and contributions
3,757,860
2,620,495
3,864,589
708,306
-
Total Governmental Activities Program Revenues:
8,668,532
6,310,621
10,593,157
6,354,672
3,990,337
Business -Type Activities:
Charges for services:
Water and wastewater
21,293,632
19,419,622
17,919,751
16,638,758
13,669,552
Operating grants and contributions
104,354
289,181
-
22,602
-
Total Business -Type activities Program Revenues
21,397,986
19,708,803
17,919,751
16,661,360
13,669,552
Total Primary Government
Program Revenues
$
30,066,518
$
26,019,424
$
28,512,908
$
23,016,032
$
17,659,889
Net(Expense)Revenues
Governmental activities
(35,523,485)
(31,559,288)
(26,693,978)
(32,373,993)
(33,334,242)
Business -type activities
7,572,846
6,722,360
4,247,386
2,857,078
582,490
Total Primary Government Net Expense
$
(27,950,639)
$
(24,836,928)
$
(22,446,592)
$
(29,516,915)
$
(32,751,752)
120 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
CHANGES IN NET POSITION
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:
Business -Type Activities:
Charges for services:
Water and wastewater
Operating grants and contributions
Total Business -Type activities Program Revenues
Total Primary Government
Program Revenues
Net(Expense)Revenues
Governmental activities
Business -type activities
Total Primary Government Net Expense
Table 2
Page 2 of 4
2018
2017
2016
2015
2014
$ 5,734,611
$ 5,128,399
$ 4,736,867
$ 5,410,643
$ 4,589,795
17,538,040
15,861, 719
13,101,691
11,763,659
11,236,402
6,267,824
4,429,664
4,429,482
3,933,288
3,921,658
945,701
1,495,001
1,577,813
1,406,288
1,097,075
4,554,114
3,459,053
3,080,453
2,869,345
3,356,587
1,210,207
1,215,683
1,134,859
1,026,967
1,093,043
953,509
953,146
862,654
730,614
630,542
37,204,006
32,542,665
28,923,819
27,140,804
25,925,102
9,019,197
8,502,218
7,975,920
7,629,711
7,995,106
1,029,715
1,086, 278
1,642,723
1,524,276
1,514,804
10,048,912
9,588,496
9,618,643
9,153,987
9,509,910
$ 47,252,918
$ 42,131,161
$ 38,542,462
$ 36,294,791
$ 35,435,012
$ 861,271 $
1,004,968 $
1,002,022 $
807,245 $
912,910
868,761
35,007
28,760
30,275
31,620
213,042
242,184
174,568
190,099
193,064
-
1,036,741
949,011
843,648
877,132
344,064
387,915
286,727
280,046
315,702
-
30,600
27,532
33,699
36,081
4,924,228
2,591,025
800,151
660,633
843,995
-
219,808
318,657
3,225,672
1,202,376
12,183, 711 12,295,441 11, 319, 801
12,183, 711 12,295,441 11, 319, 801
11,020,029
11,020,029
11,117,391
$ 19,395,077 $ 17,843,689 $ 14,907,229 $ 17,091,346 $ 15,530,271
(29,992,640) (26,994,417) (25,336,391) (21,069,487) (21,502,222)
5 (27,857,841) 5 (24,287,472) $ (23,635,233) 5 (19,203,445) 5 (19,894,741)
121 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS Table 2
CHANGES IN NET POSITION Page 3 of 4
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
2023
2022
2021
2020
2019
General Revenues and Other Changes in Net Position
Governmental activities:
Taxes:
Property taxes
$ 22,731,678
$ 20,845,938
$ 19,163,858
$ 18,731,549
$ 18,111,247
Sales taxes
12,126,784
11,176,190
9,915,046
8,846,359
8,407,249
Franchise and other taxes
2,235,689
2,170,152
2,090,001
2,142,660
2,054,395
Other
-
-
-
-
-
Investment earnings
1,726,549
49,151
50,805
880,606
526,867
Gain (loss) on disposal of capital assets
-
-
-
-
-
Miscellaneous
285,666
638,418
390,533
269,855
351,165
Transfers
1,803,800
1,795,683
1,541,853
1,434,829
1,456,690
Total Governmental Activities
40,910,166
36,675,532
33,152,096
32,305,858
30,907,613
Business -Type Activities:
Investment earnings
1,450,648
130,401
43,099
347,518
681,288
Gain (loss) on disposal of capital assets
-
-
-
-
-
Miscellaneous
Transfers
(1,803,800)
(1,795,683)
(1,541,853)
(1,434,829)
(1,456,690)
Total Business -Type Activities
(353,152)
(1,665,282)
(1,498,754)
(1,087,311)
(775,402)
Total Primary Government
40,557,014
35,010,250
31,653,342
31,218,547
30,132,211
Change in Net Position
Governmental activities
5,386,681
5,116,244
6,458,118
(68,135)
(2,426,629)
Business -type activities
7,219,694
5,057,078
2,748,632
1,769,767
(192,912)
Total Primary Government
$ 12,606,375
$ 10,173,322
$ 9,206,750
$ 1,701,632
$ (2,619,541)
122 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS Table 2
CHANGES IN NET POSITION Page 4 of 4
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
2018
2017
2016
2015
2014
General Revenues and Other Changes in Net Position
Governmental activities:
Taxes:
Property taxes
$ 17,608,094
$ 17,270,647
$ 16,350,101
$ 15,574,684
$ 14,864,284
Sales taxes
7,965,662
6,482,367
5,393,920
5,291,186
4,693,484
Franchise and other taxes
1,617,121
1,661,654
1,779,234
1,726,557
1,673,615
Other
-
-
-
-
32,799
Investment earnings
321,468
187,001
149,003
79,071
109,849
Gain (loss) on disposal of capital assets
-
25,999
19,564
-
34,359
Miscellaneous
263,245
131,639
128,813
108,306
84,275
Transfers
1,554,849
1,358,744
1,397,065
1,226,205
1,799,344
Total Governmental Activities
29,330,439
27,118,051
25,217,700
24,006,009
23,292,009
Business -Type Activities:
Investment earnings
200,449
141,978
95,825
49,138
40,713
Gain (loss) on disposal of capital assets
-
-
7,569
-
-
Miscellaneous
-
7,839
Transfers
(1,554,849)
(1,358,744)
(1,397,065)
(1,226,205)
(1,799,344)
Total Business -Type Activities
(1,354,400)
(1,216,766)
(1,293,671)
(1,169,228)
(1,758,631)
Total Primary Government
27,976,039
25,901,285
23,924,029
22,836,781
21,533,378
Change in Net Position
Governmental activities
(662,201)
123,634
(118,691)
2,936,522
1,789,787
Business -type activities
780,399
1,490,179
407,487
696,814
(151,150)
Total Primary Government
$ 118,198
$ 1,613,813
$ 288,796
$ 3,633,336
$ 1,638,637
123 City of Friendswood, Texas 2023 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
Table 3
Page 1 of 2
2023
2022
2021
2020
2019
430,134
260,066
355,011
255,796
378,736
566,041
460,154
597,908
650,424
727,704
4,630,982
4,667,500
4,320,912
2,591,745
2,508,234
11,111,696
11,997,367
11,953,314
13,374,059
10,608,815
16,738,853
17,385,087
17,227,145
16,872,024
14,223,489
11,801 11,484
11,101
11,070 24,738
40,068,218 12,740,909
18,106,088
4,757,183 5,568,395
- (179,413)
(165,886)
(1,826,743) -
40,080,019 12,572,980
17,951,303
2,941,510 5,593,133
$ 56,818,872 $ 29,958,067 $ 35,178,448 $ 19,813,534 $ 19,816,622
124 City of Friendswood, Texas 2023 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
Table 3
Page 2 of 2
2018
2017
2016
2015
2014
371,610
434,750
646,778
822,226
143,201
631,971
667,271
626,229
518,119
400,411
-
-
3,612
685,486
-
4,229,725
2,893,697
2,706,897
2,773,419
1,421,875
9,052,000
9,547,039
9,776,031
8,760,424
10,554,183
14,285,306
13,542,757
13, 759, 547
13,559,674
12, 519, 670
24,307 31,869 31,721 31,378
31,241
9,304,724 8,464,859 8,165,349 6,539,985
666,317
- - (193,750) -
(239,078)
9,329,031 8,496,728 8,003,320 6,571,363
458,480
$ 23,614,337 $ 22,039,485 $ 21,762,867 $ 20,131,037 $ 12,978,150
125 City of Friendswood, Texas 2023 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
2023 2022 2021 2020 2019
$ 37,087,960 $
34,192,280 $
30,974,155 $
29,712,771 $
28,389,651
895,577
1,052,940
1,219,096
780,717
866,812
1,861, 325
1,847,985
1,669,033
1,504,555
1,483, 554
5,730,985
3,215,269
7,495,971
3,828,898
1,576,838
1,691,972
49,580
48,609
274,405
518,221
295,968
255,638
264,938
274,945
290,069
350,095
345,364
124,627
719,721
18,777
47,913,882
40,959,056
41,796,429
37,096,012
33,143,922
6,936,378
6,040,832
5,591,248
5,690,428
5,336,269
16, 640, 299
15, 370, 261
14,897,465
14,306,864
13,545, 539
3,572,326
5,765,313
4,612,796
6,021,313
4,127,539
641,204
571,010
507,933
434,976
-
1,293,280
1,187,413
1,131, 498
1,139, 566
1,099,154
4,918,338
4,312,856
3,715,517
3,426,521
3,796,589
1,401, 299
1,336,185
1,223,726
1,182, 289
1,204,415
13,487,123
10,277,134
7,037,490
12,865,475
6,219,243
3,377,350
2,840,720
2,556,282
2,221,257
2,168,876
1,908,811
1,624,891
1,567,472
1,285,807
1,112,127
54,176,408
49,326,615
42,841,427
48,574,496
38,609,751
(6,262,526)
(8,367,559)
(1,044,998)
(11,478,484) (5,465,829)
18,181
32,029
21,270
72,568 6,614
69,683
74,126
175,351
8,548 235,443
29,775,000
-
13,185,000
7,795,000 -
925, 000
1,457, 640
-
-
306,329
1,791,015
3,050,000
2,065,000
-
(3,321,347)
(2,372,262)
541,134
- 1,451,456
753,840 -
1,810,668
1,708,331 1,751,915
1,584,985 1,473,591
(16,335)
(124,948) (210,062)
(223,298) (47,534)
33,123, 331
3,147,178 16, 409, 912
11, 475, 396 1,668,114
$ 26,860,805 $ (5,220,381) $ 15,364,914 $ (3,088) $ (3,797,715)
13.0% 12.1% 11.7% 9.9% 10.1%
126 City of Friendswood, Texas 2023 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 2 of 2
2018 2017 2016 2015 2014
$ 27,247,421 $
25,509,760 $
23,533,294 $
22,513,317 $
21,335,527
957,671
1,023,556
873,872
907,557
860,257
1,566,656
1,708,357
1,450o939
1,349,264
1,385,898
4,398,836
1,763,974
664,427
3,536,980
1,791,451
313,793
184,127
147,403
77,947
109,117
396,010
434,164
257,724
349,325
349,166
181,017
165,619
79,435
72,837
54,989
35,061,404
30,789,557
27,007,094
28,807,227
25,886,405
5,440,888
4,975,926
4,385,321
5,343,160
4,306,143
16,868,931
14,751,381
12,135,956
11,348,346
10,599,575
2,157,277
2,160,152
2,118,572
2,066,349
1,689,987
985,309
893,663
954,103
925,947
1,092,982
3,511,146
3,339,864
3,032,979
2,917,857
2,772,072
1,200,512
1,172,245
1,096,614
1,036,843
1,083,043
2,615,538
8,429,200
9,332,400
7,255,229
2,500,254
2,137, 284
1,813,130
1,570,176
1,272,823
1,668,692
1,145,400
1,170,958
921,982
776,340
662,718
36,062,285
38,706,519
35,548,103
32,942,894
26,375,466
(1,000,881)
(7,916,962)
(8,541,009)
(4,135,667) (489,061)
9,135
12,757
2,743
99 6,325
725,304
25,999
19,564
39,257 28,886
485,305
5,605,000
7,345,000
9,595,000 -
-
2,840,000
(3,058,663)
- 435,074
1,484,593
646,746 -
1,402,989 1,364,399
1,503,442
1,544,662 1,799,344
(47,000) (5,655)
(182,503)
(318,457) -
2,575,733 8,193,580
10,172,839
11,288,644 1,834,555
$ 1,574,852 $ 276,618 $ 1,631,830 $ 7,152,977 $ 1,345,494
9.8% 9.9% 9.2% 7.5% 9.8%
127 City of Friendswood, Texas 2023 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
2014
2013
$ 2,695,532,057
$ 294,316,218
$ 238,127,209 $
2015
2014
2,850,404,776
300,533,643
237,028,723
2016
2015
3,156,205,930
335,006,408
206,365,157
2017
2016
3,546,622,242
320,646,912
230,805,066
2018
2017
3,795,456,220
222,328,923
376,053,145
2019
2018
3,749,539,307
227,659,302
352,044,261
2020
2019
4,078,991,715
241,927,251
414,739,865
2021
2020
4,526,853,385
290,599,941
451,358,776
2022
2021
5,112,738,325
337,329,366
528,637,507
2023
2022
5,591,194,518
379,247,117
591,110,272
Total
Assessed
Value
3,227,975,484
3,387,967,142
3,697,577,495
4,098,074,220
4,393,838,288
4,329,242,870
4,735,658,831
5,268,812,102
5,978,705,198
6,561,551,907
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.
128 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS Table 5
ASSESSED VALUE AND TAXABLE VALUE OF PROPERTY Page 2 of 2
LAST TEN FISCAL YEARS
(Unaudited)
Less:
Total
Exemptions and Total
Direct
Fiscal Tax Tax Exempt Taxable
Tax
Year Year Property Value
Rate
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
2023
2022
1,947,407,979
4,614,143,928
0.48731
129 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
DIRECT AND OVERLAPPING PROPERTY TAX RATES
Last Ten Fiscal Years
(Unaudited)
(rate per $100 of assessed value)
Table 6
City Direct Rates
Overlapping Rates
Fiscal
Year
Friendswood
Clear Creek
Galveston County
Ended
Debt
Total
Independent
Independent
Consolidate Drainage
Galveston
Harris
September 30,
General
Service
Direct
School District
School District
District
County
County
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
2023
0.3886
0.0988
0.4873
1.2094
1.1146
0.1298
0.3676
0.53548
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.
130 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL PROPERTY TAXPAYERS
CURRENT AND NINE YEARS AGO
(Unaudited)
Taxpayer
Reserve at Autumn Creek LTD
Texas -New Mexico Power Co.
Bellevue at Clear Creek LP
Kroger Co.
Tannos Land Holding III LLC
Bay Meadows LLP
The Beldon Friendswood LLC
Frontier Land V P L L
Taylor Morrison of Texas Inc
A-S 108 Friendswood Crossing LP
Autumn Creek Dev LTD
G&I VI Sky Hawk LP
H E Butt Grocery Company
HCP Friendswood LLC
HSRE Friendswood LLC
Timber Creek Holdings LP
Total
All other taxpayers
Table 7
2023
2014
Percentage
Percentage
of Total City
of Total City
Taxable
Taxable
Taxable
Assessed
Taxable
Assessed
Value
Rank
Value
Value
Rank
Value
$ 35,632,199
1
0.77%
$18,864,491
1
0.75%
28,765,360
2
0.62%
12,084,650
3
0.48%
23,669,000
3
0.51%
-
13,708,567
4
0.30%
13,570,271
2
0.54%
13,703,590
5
0.30%
-
11,813,387
6
0.26%
-
11,000,150
7
0.24%
-
11,000,000
8
0.24%
-
9,647,960
9
0.21%
-
8,451,620
10
0.18%
6,310,430
9
0.25%
-
9,046,190
4
0.36%
-
9,292,240
5
0.37%
-
8,149,920
6
0.33%
-
6,995,240
8
0.28%
-
7,535,390
7
0.30%
-
5,646,290
10
0.23%
167,391,833
3.63%
97,495,112
3.89%
41446,752,095
96.37%
2,406,326,524
96.11%
4,614,143,928
100.00%
$2,503,821,636
100.00%
Source: Galveston Central Appraisal District and Harris County Appraisal District.
131 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS Table 8
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(Unaudited)
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
2014
$ 14,747,526
$ 14,656,257
99.38%
$ 81,610
$ 14,737,867
99.93%
2015
15,424,948
15,306,943
99.23%
105,556
15,412,499
99.92%
2016
16,431,153
16,264,080
98.98%
155,283
16,419,363
99.93%
2017
17,014,685
16,922,419
99.46%
80,214
17,002,633
99.93%
2018
17,633,192
17,554,220
99.55%
65,370
17,619,590
99.92%
2019
17,952,134
17,756,864
98.91%
180,445
17,937,309
99.92%
2020
18,682,563
18,605,868
99.59%
58,053
18,663,921
99.90%
2021
18,879,840
18,877,842
99.99%
(23,841)
18,854,001
99.86%
2022
20,843,713
20,793,321
99.76%
9,546
20,802,867
99.80%
2023
22,761,758
22,713,172
99.79%
-
22,713,172
99.79%
Source: Galveston County Tax Assessor/Collector and City of Friendswood records
132 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
RATIOS OF OUTSTANDING DEBY BT TYPE
LAST TEN FISCAL YEARS
(Unaudited)
Table 9
Governmental Activities
Business -Type Activities
General
General
Water
Total
Percentage
Fiscal
Obligation
Notes SBITAs
Obligation
Revenue
Primary
of Personal
Per
Year
Bonds
Payable Payable
Bonds
Bonds
Government
Income
Capita
2014
$ 18,815,000 $
623,407 $
$ - $
31,830,000
$ 51,268,407
0.35%
$ 1,318
2015
24,525,285
360,584
9,875,671
24,663,416
59,424,956
0.40%
1,510
2016
31,768,805
180,408
33,238,357
6,109,871
71,297,441
0.46%
1,793
2017
36,067,806
668,284
31,160,729
5,871,129
73,767,948
0.47%
1,818
2018
34,065,657
791,305
29,028,108
5,627,385
69,512,455
0.42%
1,695
2019
32,023,508
436,620
26,845,483
27,039,600
86,345,211
0.49%
2,093
2020
38,058,822
1,861,762
24,587,858
26,037,385
90,545,827
0.49%
2,175
2021
49,809,357
1,681,709
22,310,234
40,736,057
114,537,357
0.57%
2,733
2022
47,143,902
2,613,729
20,447,609
39,081,427
109,286,667
0.51%
2,588
2023
74,691,542
2,645,629 92,494
18,534,984
37,366,797
133,331,446
0.61%
3,118
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.
133 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
RATIOS OF NET GENERAL BONDED DEBY OUTSTANDING
LAST TEN FISCAL YEARS
(Unaudited)
General Bonded Debt Outstanding
General Less Debt Net Percentage of
Fiscal Taxable Obligation Service General Taxable Value
Population Value Bonds * Funds Bonded Debt Property
2014
38,911 $
2,503,821,636
$ 19,491,826 $
130,147 $
18,684,853
2015
39,458
2,626,522,715
34,400,956
147,193
34,253,763
2016
39,767
2,920,798,037
65,007,162
159,686
64,847,476
2017
40,570
3,120,720,272
67,228,535
115,152
67,113,383
2018
41,003
3,499,122,233
63,093,765
-
63,093,765
2019
41,253
3,374,237,059
58,868,991
18,302
58,850,689
2020
41,637
3,668,738,450
62,646,680
31,909
62,614,771
2021
41,916
3,918,863,732
72,119,591
10,608
72,108,983
2022
42,222
4,243,567,347
67,591,511
46,376
67,545,135
2023
42,757
4,614,143,928
93,226,526
30,793
93,195,733
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
0.75
1.30%
2.22
2.15
1.80%
1.74%
1.71
1.84%
1.59
2.02
Table 10
Per
Capita
$ 480
868
1,631
1,654
1,539
1,427
1,504
1,720
1,600
2,180
134 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS Table 11
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
AS OF September 30, 2023
(Unaudited)
Estimated
Estimated Share of
Debt Percentage Overlapping
Governmental Unit Outstanding Applicable Debt
Debt repaid with property taxes
Friendswood Independent School District
$189,905,000
100.00% $ 189,905,000
Clear Creek Independent School District
1,101,371,754
2.843% 31,311,999
Galveston County
203,115,000
7.220% 14,664,903
Harris County
3,757,467,000
0.148% 5,561,051
Subtotal, overlapping debt 241,442,953
City Direct Debt 77,337,171
Total Direct and Overlapping Debt
$ 318,780,124
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.
135 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
LEGAL DEBT MARGIN INFORMATION
(UNAUDITED)
As a City Council -City Manager form of government, the City of Friendswood 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 Iexas 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 have the 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 S 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-half
percent of the taxable property of such city"
The tax rate for fiscal year ended September 30, 2023 is $0.4873 per $100 of assessed valuation with
assessed valuation being 100% of market value.
Table 12
136 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
PLEDGED REVENUE COVERAGE
LAST TEN FISCAL YEARS
(Unaudited)
Waterworks and Sewer Revenue Bonds
Table 13
Utility
Less:
Net
Fiscal
Service
Operating
Available
Debt Service
Year
Charges
Expenses
Revenue
Principal
Interest
Coverage
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
2023
21,293,632
10,055,068
11,238,564
1,510,000
1,162,374
4.21
Notes: Details regarding the City's outstanding
debt can be found
in the notes to the
financial statements.
Operating expenses
do not include interest, depreciation
or amortization expenses.
137 City of Friendswood, Texas 2023 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
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%"'
2021
41,916
19,994,969,000
57,941
3.9%
2022
42,222
21,328,914,000
60,071
3.4%
2023
42,757
21,872,079,000
61,246
3.2%
Sources:
Population information
was provided from past financial reports. Unemployment
rates, personal income
and per capita personal income
were obtained from
the
U.S. Department of Labor
Bureau of Labor Statistics website or the Texas
Workforce Commission
website.
(1) Increase in unemployment rate is a result of the COVID-19
pandemic.
Table 14
138 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
(Unaudited)
Table 15
2023
2014
Percentage
Estimated
of Total
Estimated
Employer
Employees
Employment
Rank
Employees
Rank
Friendswood ISD
817
3.78%
1
700
1
H E B
505
2.34%
2
317
2
City of Friendswood
258
1.19%
3
232
4
Kroger
226
1.05%
4
292
3
Clear Creek ISD
173
0.80%
5
155
5
Friendship Haven Nursing Home
100
0.46%
6
140
6
McDonalds
102
0.47%
7
75
7
U.S. Post Office
75
0.35%
8
62
10
Morada (formerly Atria)
72
0.33%
9
-
UTMB
60
0.28%
10
-
Brookdale
-
-
69
8
Friendswood Healthcare (Autumn Hills)
-
-
65
9
Total
2,388
11.06%
2,107
Source: City Manager's Office
Note: Percentage of total employment is based on total City employment of 21,601 for 2023.
Total City employment for 2014 is not available.
139 City of Friendswood, Texas 2023 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
2023 2022 2021 2020 2019
Function/Program
General Government:
City Attorney
2.15
2.15
2.10
2.10
2.10
City Manager
4.00
4.00
6.00
6.00
5.00
City Secretary
4.00
4.00
4.00
4.00
5.00
Administrative Services
16.60
16.60
18.60
18.60
27.60
Human Resources
5.00
5.00
5.00
5.00
-
Information Technology
6.00
6.00
5.00
5.00
-
Public Safety:
Police
90.40
90.38
90.38
90.38
90.38
Fire marshal
7.38
7.38
7.20
7.20
7.20
Public Works
24.00
23.00
23.00
23.00
23.00
Community Development
11.70
11.18
10.70
10.70
10.70
Engineering
8.45
7.45
7.00
7.00
6.00
Parks and Recreation
25.30
25.30
24.90
24.50
23.10
Library
15.62
15.62
14.97
14.97
14.97
Water
11.30
11.30
9.30
9.30
9.30
Sewer
11.00
11.00
11.00
11.00
11.00
Total City Employees:
242.90
240.36
239.15
238.75
235.35
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 departments,
separate from Administrative Services.
140 City of Friendswood, Texas 2023 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
2018 2017 2016 2015 2014
Function/Program
General Government:
City Attorney
2.10
1.00
1.00
1.00
-
City Manager
5.40
5.40
5.40
4.55
4.15
City Secretary
5.00
5.00
5.00
5.00
5.00
Administrative Services
27.60
27.70
27.70
28.70
28.70
Human Resources
-
-
-
-
-
Information Technology
-
-
-
-
-
Public Safety:
Police
87.72
88.72
86.72
85.72
82.40
Fire marshal
6.60
6.60
6.60
6.60
6.50
Public Works
27.00
26.00
29.00
25.33
26.33
Community Development
10.70
11.70
11.70
10.89
10.89
Engineering
-
-
-
-
-
Parks and Recreation
21.90
20.90
19.63
19.63
19.03
Library
14.97
14.97
14.62
14.62
14.37
Water
9.30
8.30
8.30
8.30
9.30
Sewer
10.00
11.00
8.00
8.00
9.00
Total City Employees:
228.29
227.29
223.67
218.34
215.67
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 departments,
separate from Administrative Services.
141 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
OPERATING INDICATORS BY FUNCTION/PROGRAM
LAST TEN CALENDAR YEARS
(Unaudited)
Fiscal Year
2023 2022 2021
Function/Program
Community Development
Building permits issued
1,582
Building inspections conducted
9,297
Police:
Physical arrests
100
Parking violations
6
Traffic violations
4,856
Fire Marshal:
Inspections
983
Fire:
Emergency responses
4,199
Fires extinguished
82
Parks and Recreation:
Recreation participants
20,356
Facility reservations
3,060
Library:
Volumes in collection
94,162
Total volumes borrowed
350,419
Water:
New connections
87
Water main breaks
201
Average daily consumption
6,217
(thousands of gallons)
Peak daily consumption
12,801
Sewer:
Average daily sewage treatment
3,072
(thousands of gallons)
Maximum daily flow
11,558
(thousands of gallons)
Source: Various City departments and prior
year ACFRs
2020 2019
1,682
1,658
1,605
1,465
9,325
9,998
9,124
9,251
1,051
1,368
847
1,190
11
36
17
26
9,952
11,081
8,807
4,468
1,315
1,730
1,146
1,448
4,458
4,405
3,650
3,655
129
92
65
80
36,861
16,907
6,027
19,657
5,356
1,033
3,166
3,293
95,470
101,061
99,930
101,532
349,814
340,478
271,078
342,592
136
92
185
169
126
49
41
84
5,714
5,064
5,319
5,129
11,166
14,041
9,927
9,390
2,840
3,255
3,113
3,345
8,369
11,006
10,520
12,491
Table 17
Page 1 of 2
142 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
OPERATING INDICATORS BY FUNCTION/PROGRAM
LAST TEN CALENDAR YEARS
(Unaudited)
Fiscal Year
2018 2017 2016 2015 2014
Function/Program
Community Development:
Building permits issued
2,788
2,177
1,865
1,377
1,395
Building inspections conducted
14,157
12,134
11,026
12,145
10,611
Police:
Physical arrests
1,145
903
1,464
1,479
1,596
Parking violations
15
61
44
63
58
Traffic violations
6,785
3,669
5,001
4,540
5,815
Fire Marshal:
Inspections
1,139
1,233
1,354
1,512
1,427
Fire:
Emergency responses
3,720
3,599
3,303
3,258
3,261
Fires extinguished
80
75
76
78
116
Parks and Recreation:
Recreation participants
18,299
20,556
21,369
16,153
15,178
Facility reservations
2,123
1,004
1,444
1,443
728
Library:
Volumes in collection
102,852
100,678
147,726
133,165
141,383
Total volumes borrowed
348,554
341,048
301,158
350,145
367,452
Water:
New connections
125
137
183
-
193
Water main breaks
116
44
46
57
149
Average daily consumption
5,455
5,282
4,963
4,970
5,171
(thousands of gallons)
Peak daily consumption
9,475
10,110
10,472
12,623
9,917
Sewer:
Average daily sewage treatment
3,117
3,286
3,382
3,306
2,867
(thousands of gallons)
Maximum daily flow
10,370
12,766
12,188
11,237
10,770
(thousands of gallons)
Source: Various City departments and prior year ACFRs
Table 17
Page 2 of 2
143 City of Friendswood, Texas 2023 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
Library
Water
Water mains (miles)
Fire hydrants
Connections
Storage capacity
(thousands of gallons)
Sewer
Sanitary sewers (miles)
Connections
Storm sewers (miles)
Treatment capacity
(thousands of gallons)
Fiscal Year
2023 2022 2021
1
1
1
48
29
38
4
4
4
223
221
221
2
2
2
3
3
3
343
320
273
11
11
10
1
1
1
4
4
4
1
1
1
227
222
222
1,821
1,755
1,747
14,415
14,328
14,192
7,850
7,850
7,850
184
182
182
13,324
13,241
13,132
120
117
117
9,250
9,250
9,250
Source: Various City departments and prior year ACFRs.
Table 18
Page 1 of 2
2020 2019
1 1
31 33
4 4
185 176
2 2
3 3
266 266
10 10
1 1
4 4
1 1
216
216
1,713
1,707
14,098
13,913
7,850
7,850
202
202
13,029
12,870
112
112
9,250
9,250
144 City of Friendswood, Texas 2023 ACFR
CITY OF FRIENDSWOOD, TEXAS
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
LAST TEN CALENDAR YEARS
(Unaudited)
Fiscal Year
2018
2017
2016
2015
2014
Function/Program
Police
Stations
1
1
1
1
1
Patrol units
34
32
31
29
27
Fire
Stations
4
4
4
4
4
Public Works
Streets - paved (miles)
176
174
172
169
167
Streets - unpaved (miles)
2
2
2
2
2
Traffic signals
3
3
3
3
3
Parks and Recreation
Acreage
266
266
266
232
189
Parks
9
9
9
8
8
Swimming pool
1
1
1
1
1
Tennis courts
4
4
4
4
4
Library
1
1
1
1
1
Water
Water mains (miles)
216
214
212
209
207
Fire hydrants
1,707
1,690
1,672
1,631
1,610
Connections
13,744
13,619
13,482
13,289
13,093
Storage capacity
7,850
7,850
7,850
8,100
8,000
(thousands of gallons)
Sewer
Sanitary sewers (miles)
202
200
198
195
194
Connections
12,721
12,588
12,378
12,407
12,236
Storm sewers (miles)
112
110
109
106
105
Treatment capacity
9,250
9,250
9,250
9,250
12,000
(thousands of gallons)
Source: Various City departments and prior year ACFRs.
Table 18
Page 2 of 2
145 City of Friendswood, Texas 2023 ACFR
City of
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146 City of Friendswood, Texas 2023 ACFR