HomeMy WebLinkAboutComprehensive Annual Financial Report September 30, 2015CITY OF FRIENDSWOOD TEXAS
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
Year Ended September 30, 2015
Officials Issuing Report:
Roger C. Roecker
City Manager
Cindy S. Edge
Director of Administrative Services
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
SEPTEMBER 30, 2015
Page
Number
INTRODUCTORY SECTION
Letter of Transmittal ..................................................................................................... i – iv
Principal Officials ......................................................................................................... v
GFOA Certificate of Achievement ............................................................................... vi
Organizational Chart ..................................................................................................... vii
FINANCIAL SECTION
Independent Auditors’ Report....................................................................................... 1 – 4
Management’s Discussion and Analysis ...................................................................... 5 – 18
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Position ....................................................................................... 19
Statement of Activities ............................................................................................ 20 – 21
Fund Financial Statements
Balance Sheet – Governmental Funds .................................................................... 22
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Position .......................................................................... 23
Statement of Revenues, Expenditures and Changes in
Fund Balances – Governmental Funds ................................................................ 24
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
SEPTEMBER 30, 2015
Page
Number
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities ......................................................................................... 25
Statement of Net Position – Proprietary Funds....................................................... 26
Statement of Revenues, Expenses and Changes in
Net Position – Proprietary Funds ....................................................................... 27 – 28
Statement of Cash Flows – Proprietary Funds ........................................................ 29 – 30
Notes to Financial Statements .................................................................................... 31 – 64
Required Supplementary Information
Schedule of Changes in Net Pension Liability
and Related Ratios .............................................................................................. 65
Schedule of Pension Contributions ............................................................................ 66
Schedule of Funding Progress –
Post Employment Benefits Plan Other Than Pensions ........................................ 67
Schedule of Revenues, Expenditures, and Changes in
Fund Balance – Budget and Actual – General Fund............................................ 68 – 75
Schedule of Revenues, Expenditures and Changes in
Fund Balance – Budget and Actual – TDRA Grant ............................................ 76
Notes to Required Supplementary Budget Information ............................................. 77 – 79
Combining And Individual Fund Statement and Schedules
Nonmajor Governmental Funds:
Combining Balance Sheet .......................................................................................... 80 – 81
Combining Statement of Revenues, Expenditures, and Changes
in Fund Balances .................................................................................................. 82 – 83
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
SEPTEMBER 30, 2015
Page
Number
Schedule of Revenues, Expenditures and Changes in Fund Balance –
Budget and Actual
Bond Construction .................................................................................................. 84
Police Investigation ................................................................................................. 85
Fire/EMS Donation Fund ........................................................................................ 86
Debt Service Fund................................................................................................... 87
Park Land Dedication ............................................................................................. 88
Court Security Technology ..................................................................................... 89
1776 Park ................................................................................................................ 90
STATISTICAL SECTION (Unaudited)
Page
Table Number
Net Position by Component ........................................................................... 1 91 – 92
Changes in Net Position ................................................................................. 2 93 – 96
Fund Balances – Governmental Funds .......................................................... 3 97 – 98
Changes in Fund Balances – Governmental Funds ....................................... 4 99 – 100
Assessed Value and Actual Value of Taxable Property ................................ 5 101
Direct and Overlapping Property Tax Rates .................................................. 6 102
Principal Property Taxpayers ......................................................................... 7 103
Property Tax Levies and Collections ............................................................. 8 104
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
SEPTEMBER 30, 2015
Page
Table Number
Ratios of Outstanding Debt by Type ............................................................. 9 105
Ratio of Net General Bonded Debt Outstanding ........................................... 10 106
Direct and Overlapping Governmental
Activities Debt ............................................................................................ 11 107
Legal Debt Margin Information ..................................................................... 12 108
Pledged-Revenue Coverage ............................................................................ 13 109
Demographic and Economic Statistics .......................................................... 14 110
Principal Employers ....................................................................................... 15 111
Full-Time Equivalent City Government Employees
by Function/Program .................................................................................. 16 112
Operating Indicators by Function/Program ................................................... 17 113
Capital Assets Statistics by Function/Program .............................................. 18 114
INTRODUCTORY SECTION
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April 15, 2016
The Honorable Mayor, Members of the City Council, and the Citizens of Friendswood:
The Comprehensive Annual Financial Report (CAFR) of the City of Friendswood for the fiscal year
ended September 30, 2015, 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 are accurate in all material respects and are repor ted
in a manner designed to present fairly the financial position and results of operations of the various
funds and account groups of the City. All disclosures necessary to enable the reader to gain an
understanding of the City’s financial activities have been included.
The comprehensive annual financial report is presented in three sections: introductory, financial, and
statistical. The introductory section includes a list of principal officials, this transmittal letter, and the
City’s organizational chart. The financial section includes the auditor’s report on the financial
statements, a Management Discussion and Analysis (MD&A), the basic financial statements, required
supplementary information and combining and individual fund financial statements and schedules. The
MD&A, found immediately following the report of the independent auditor, is a narrative introduction;
overview and analysis required by generally accepted accounting principles (GAAP). This letter of
transmittal is designed to complement the MD&A and should be read in conjunction with it. The
statistical section includes selected financial and demographic information, generally presented on a
multi-year basis.
Management of the City is responsible for establishing and maintaining an internal control structure
designed to ensure that the assets of the City are protected from loss, theft or misuse and to ensure that
adequate accounting data are compiled to allow for the preparation of financial statements in conformity
with generally accepted accounting principles. The internal control structure is designed to provide
reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable
assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived;
and (2) the valuation of costs and benefits requires estimates and judgments by management.
The 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 Pattillo, Brown & Hill, L.L.P.
has performed such an audit and their opinion has been included in this report.
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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 S ecretary.
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 39,458. 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. The average household income is $126,851 and the median household income
is $100,751.
Business
Friendswood is the perfect choice for many types of commercial enterprises. Target markets include
professional offices, retail, commercial, and light industrial developments. A key City focus is to
encourage redevelopment of the downtown area and development of the City’s panhandle area. City
leaders have approved special tools and incentives to revitalize downtown to promote mixed-use, multi-
story developments with pedestrian streetscapes and other amenities. The City offers competitive business
incentives, including a municipal grant program, tax abatement that includes “green” development,
freeport tax exemption, and downtown development fee waivers.
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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.
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 publi c 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 between departments within any
fund, but revisions that increase the total expenditures of any fund 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 project out five years.
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 o n “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.
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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.
Major Initiatives
In 2013, the voters of the City approved $24 million in general obligation bonds. In 2014, The City’s
general obligation bond rating was raised from AA- to AA+. The issuance of these bonds and
waterworks and sewer system revenue bonds has enabled the City to make significant progress on
projects identified in the City’s Capital Improvement Program. Major projects include expansion and
renovation of the library, fire station expansion, a new fire station, park improvements and street
improvements. The water and sewer infrastructure is being updated with water plant and lift station
replacements.
Awards
The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for
Excellence in Financial Reporting to the City of Friendswood for its comprehensive annual financial
report for the fiscal year ended September 30, 2014. This was the twenty-seventh consecutive year that
the City has received this prestigious award. In order to be awarded a Certificate of Achie vement, the
City published an easily readable and efficiently organized comprehensive annual 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
comprehensive annual 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 certificat e.
Acknowledgements
The preparation of the comprehensive annual 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,
Cindy S. Edge
Director of Administrative Services
CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL OFFICIALS AS OF
SEPTEMBER 30, 2015
Elected Officials Position Term Expires
Kevin M. Holland Mayor May 2018
Steve Rockey Council Member – Position No. 1 May 2018
Billy J. Enochs Council Member – Position No. 2 May 2017
Jim Hill Council Member – Position No. 3 May 2018
Patrick J. McGinnis, MD Council Member – Position No. 4 May 2016
John H. Scott Council Member – Position No. 5 May 2017
Carl W. Gustafson Council Member – Position No. 6 May 2016
Key Staff Position
Roger C. Roecker City Manager
Morad Kabiri Assistant City Manager
Cindy Edge Director of Administrative Services
Terry Byrd Fire Marshal/Emergency Management Coordinator
Patrick Donart Director of Public Works
Melinda Welsh City Secretary
James Toney Director of Parks and Recreation
Robert B. W ieners Police Chief
Arnold Polanco City Attorney
James W. Woltz Judge – Municipal Court
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Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Friendswood
Texas
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
September 30, 2014
CITY OF FRIENDSWOOD
Organization Chart
Parks and Recreation
• Administration
• Recreation Programs
• Park Operations
• Facility Operations
Citizens of
Friendswood
City Attorney
Municipal Judge
Mayor and
City Council
City Secretary
• Administration
• Records Management
• Elections
City Manager
• Administration
• Economic Development
• Public Information
Boards, Committees,
& Commissions
Administrative Services
• Finance
• Utility Billing
• Municipal Court
• HR/Risk Management
• Information Technology
Community Development
• Administration
• Planning
• Inspections/Code Enforcement
Fire Marshal
• Administration
• Emergency Management
• Investigations/Inspections
Police Department
• Administration
• Communications
• Patrol
• Criminal Investigations
• Animal Control
Public Works
• Administration
• Streets/Sidewalks
• Drainage Operations
• Water Operations & Utilities
• Sewer Operations & Utilities
• Engineering & Capital Projects
Library Services
• Friendswood Public Library
Assistant City
Manager
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FINANCIAL SECTION
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INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor,
City Council and City Manager
City of Friendswood, Texas
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, the discretely presented component unit, each major fund, and the aggregate
remaining fund information of the City of Friendswood, Texas, as of and for the year ended September
30, 2015, and the related notes to the financial statements, which collectively comprise the City of
Friendswood, Texas’ basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
The City of Friendswood, Texas’ management is responsible for the preparation and fair
presentation of these financial statements in accordance with accounting principles generally accepted in
the United States of America; this includes 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.
Auditors’ Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We did
not audit the financial statements of the West Ranch Management District, a discretely presented
component unit of the City, which represents 100% percent of the discretely presented component unit.
Those financial statements were audited by other auditors whose report thereon has been furnished to us,
and our opinion, insofar as it relates to the amounts included for the West Ranch Management District,
is based solely on the report of the other auditors. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America and the standards applicable to financial
audits contained in Government Auditing Standards, issued by the Comptroller General of the United
States. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement. The financial statements of West
Ranch Management District were not audited in accordance with Government Auditing Standards.
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An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Opinions
In our opinion, based on our audit and the report of the other auditors, the financial statements
referred to above present fairly, in all material respects, the respective financial position of the
governmental activities, the business-type activities, the discretely presented component unit, each major
fund, and the aggregate remaining fund information of the City of Friendswood, Texas, as of September
30, 2015, 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.
Change in Accounting Principle
As discussed in Note I to the financial statements, in 2015 the City adopted new accounting
guidance, Governmental Accounting Standards (GASB) Statement No. 68, Accounting and Financial
Reporting for Pensions—an amendment of GASB Statement No. 27 and Governmental Accounting
Standards (GASB) Statement No. 71, Pension Transition for Contributions Made Subsequent to the
Measurement Date—an amendment of GASB Statement No. 68. Our opinion is not modified with respect
to this matter.
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Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis, budgetary comparison information, and pension and other post-
employment benefit information be presented to supplement the basic financial statements. Such
information, 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.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Friendswood, Texas’ basic financial statements. The introductory
section, combining and individual nonmajor fund financial statements and schedules, and statistical
section are presented for purposes of additional analysis and are not a required part of the basic financial
statements.
The combining and individual nonmajor fund financial statements and schedules are the
responsibility of management and were derived from and relate directly to the underlying accounting
and other records used to prepare the basic financial statements. Such information has been subjected
to the auditing procedures applied in the audit of the basic financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying accounting
and other records used to prepare the basic financial statements or to the basic financial statements
themselves, and other additional procedures in accordance with auditing standards generally accepted in
the United States of America by us and the other auditors. In our opinion, the combining and individual
nonmajor fund financial statements and schedules are fairly stated in all material respects in relation to
the basic financial statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures
applied in the audit of the basic financial statements, and, accordingly, we do not express an opinion or
provide any assurance on them.
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Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated April
15, 2016 on our consideration of the City of Friendswood, Texas’ 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 to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that testing, and not to provide
an opinion on internal control over financial reporting or on compliance. That report is an integral part
of an audit performed in accordance with Government Auditing Standards in considering the City of
Friendswood, Texas’ internal control over financial reporting and compliance.
Waco, Texas
April 15, 2016
MANAGEMENT’S
DISCUSSION AND ANALYSIS
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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 of Friendswood for
the fiscal year ended September 30, 2015. Please read this information in conjunction with the basic
financial statements that follow this section. The discussion and analysis includes comparative data for
2014.
FINANCIAL HIGHLIGHTS
Some of the City’s financial highlights for the fiscal year ending September 30, 2015 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 $119,389,122.
The City’s total net position increased during the year by $4,893,184 from operations.
Unrestricted net position is $17,941,686.
Program revenues of $17,091,346 reduced the net cost of the City’s functions to be financed
from the City’s general revenues to $19,203,445.
OVERVIEW OF THE FINANCIAL STATEMENTS
Summary Detail
Components of the Financial Section
Management's
Discussion and
Analysis
Basic Financial
Statements
Required
Supplementary
Information
Independent
Auditors' Report
Government-wide
Financial
Statements
Fund Financial
Statements
Notes to the
Financial
Statements
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This discussion and analysis is intended to service 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.
Government-wide Financial Statements
The government-wide financial statements report information for the City as a whole. These statements
included transactions and balances relating to all assets, including infrastructure capital assets. These
statements are assigned 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 und erlying 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, and administrative services);
public safety (police, volunteer fire department and fire marshal); public works (streets and
drainage); community development (engineering, building inspection and planning and zoning);
community services (parks, facility operations and community activities) and library. Interest
payments on the City’s debt 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 Unit – activities include activities of The West Ranch Management District.
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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.
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 balances sheet and the governmental statement of revenues,
expenditures, and change sin fund balances provide a reconciliation to facilitate this comparison
between governmental funds and governmental activities.
The City maintains eleven 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, Texas Department of Rural Affairs (TDRA) Grant Fund, and Bond
Construction Fund which are considered to be major funds. The other eight 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 combing statements founds 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 fits 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 third part
contract.
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 benefits governmental rather than business-type
functions, they have been included within the governmental activities in the government -wide financial
statements.
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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 tin 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 RSI includes a schedule of funding progress for the
City’s other post-employment healthcare benefits and two schedules related to the City’s pension with
the Texas Municipal Retirement System (“TMRS”). These schedules, the Schedule of Changes in Net
Pension Liability and the Schedule of Contributions, were added to RSI with the implementation of
GASB Statement No. 68. The City adopts an annual appropriated budget for its General Fund and the
TDRA Grant Fund. Budgetary comparison schedules have been provided in RSI to demonstrate
compliance with this budget. RSI can be found after the basic financial statements.
The combining and individual fund statements and schedule that further support the information in the
financial statements are presented immediately following the notes to the required supplementary
information.
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 of Friendswood, assets and deferred outflows of resources exceed liabilities and
deferred inflows of resources by $119,389,122 as of September 30, 2015 in the primary government,
which is an increase in the City’s overall financial position compared to the prior year.
The largest portion of the City’s net position (91.22%) reflects its investments in capital assets (e.g.,
land, buildings and improvements, machinery and equipment, infrastructure, water and sewer system,
construction in progress and water rights); less any debt outstanding used to acquire those assets. The
City uses these capital assets to provide services to citizens; consequently these assets are not available
for future spending. Although the City’s investment in its capital assets is reported net of related debt, it
should be noted that the resources needed to repay this debt must be provided from other resources,
since the assets themselves cannot be used to liquidate these liability.
9
The following table reflects the condensed Statement of Net Position.
CONDENSED STATEMENT OF NET POSITION
2015 2014 2015 2014 2015 2014
Current and other assets 24,121,182$ 15,885,919$ 14,036,525$ 16,465,206$ 38,157,707$ 32,351,125$
Capital assets 91,797,299 85,049,272 60,947,210 56,244,200 152,744,509 141,293,472
Total assets 115,918,481 100,935,191 74,983,735 72,709,406 190,902,216 173,644,597
Deferred outflows
of resources 2,434,725 470,752 822,111 292,040 3,256,836 762,792
Total assets and
deferred outflows
of resources 118,353,206 101,405,943 75,805,846 73,001,446 194,159,052 174,407,389
Long-term liabilities 31,805,424 20,375,437 33,769,292 30,913,294 65,574,716 51,288,731
Other liabilities 5,316,575 4,173,312 3,280,363 2,683,837 8,596,938 6,857,149
Total liabilities 37,121,999 24,548,749 37,049,655 33,597,131 74,171,654 58,145,880
Deferred inflows
of resources 538,448 - 59,828 - 598,276 -
Net Position:
Net investment in
capital assets 73,611,490 65,404,791 26,628,714 24,495,816 100,240,204 89,900,607
Restricted 1,179,764 653,496 27,468 90,395 1,207,232 743,891
Unrestricted 5,901,505 10,798,907 12,040,181 14,818,104 17,941,686 25,617,011
Total net position 80,692,759$ 76,857,194$ 38,696,363$ 39,404,315$ 119,389,122$ 116,261,509$
Governmental Activities Business-Type Activities Totals
A portion of the primary government’s net position, $1,207,232 or 1.01%, represents resources that are
subject to external restrictions on how they may be used. These restrictions include monies accounted
for in special revenue finds for which the use is legally restricted, monies restricted for debt service, and
capital project funds that represent unspent bond proceeds at the fund level. The remaining balance of
unrestricted net position, $17,941,686 or 15.03%, may be used to meet the City’s ongoing obligations to
citizens and creditors.
10
Change in Net Position
The following table provides a summary of the City’s changes in net position.
2015 2014 2015 2014 2015 2014
Revenues:
Program revenues:
Charges for services 2,185,012$ 2,366,509$ 11,020,029$ 11,117,391$ 13,205,041$ 13,483,900$
Operating grants
and contributions 660,633 843,995 - - 660,633 843,995
Capital grants
and contributions 3,225,672 1,202,376 - - 3,225,672 1,202,376
General revenues:
Property taxes 15,574,684 14,864,284 - - 15,574,684 14,864,284
Sales and alcohol taxes 5,291,186 4,726,283 - - 5,291,186 4,726,283
Franchise taxes 1,726,557 1,673,615 - - 1,726,557 1,673,615
Investment earnings 79,071 109,849 49,138 40,713 128,209 150,562
Miscellaneous 108,306 118,634 7,839 - 116,145 118,634
Total revenues 28,851,121 25,905,545 11,077,006 11,158,104 39,928,127 37,063,649
Expenses:
General government 5,410,643 4,589,795 - - 5,410,643 4,589,795
Public safety 11,763,659 11,236,402 - - 11,763,659 11,236,402
Public works 3,933,288 3,921,658 - - 3,933,288 3,921,658
Community development 1,406,288 1,097,075 - - 1,406,288 1,097,075
Community services 2,869,345 3,356,587 - - 2,869,345 3,356,587
Library 1,026,967 1,083,043 - - 1,026,967 1,083,043
Water and sewer - - 7,629,711 7,995,106 7,629,711 7,995,106
Interest on long-term
debt 567,142 630,542 1,413,962 1,514,804 677,456 2,145,346
Bond issuance costs 163,472 - 110,314 - 273,786 -
Total expenses 27,140,804 25,284,560 9,153,987 9,509,910 34,313,687 33,279,666
Increases/(Decrease) in
net position before transfers
and extraordinary item 1,710,317 9,557)( 1,923,019 1,648,194 3,633,336 1,638,637
Transfers 1,226,205 1,799,344 1,226,205)( 1,799,344)( - -
Extraordinary item - - 1,259,848 - 1,259,848 -
Change in net position 2,936,522 1,789,787 1,956,662 151,150)( 4,893,184 1,638,637
Net position - beginning
as originally reported 76,857,194 75,339,861 39,404,315 39,928,612 116,261,509 115,268,473
Prior period adjustment 899,043 272,454)( 2,664,614)( 373,147)( 1,765,571)( 645,601)(
Net position - beginning,
as restated 77,756,237 75,067,407 36,739,701 39,555,465 114,495,938 114,622,872
Net position, ending 80,692,759$ 76,857,194$ 38,696,363$ 39,404,315$ 119,389,122$ 116,261,509$
Governmental Activities Business-Type Activities Totals
11
Governmental Activities
Governmental activities increased the City of Friendswood’s net position by $2,936,522 from
operations. Key elements of this change are as follows:
Property and sales taxes continue to be the City’s largest revenue sources. Property tax revenue
increased by $710,400 due to increased appraisals on property within the City.
Sales tax revenue remained strong during fiscal year 2015, providing a 11.95% increase for the
year, from $4.7 million to $5.3 million.
Capital grants and contributions increased $2,023,296 from prior year, primarily due to
commencement of the Friendswood Link/Whispering Pines Street project. This project is being
funded by the Community Development Block Grant.
Total expenses increased $1,856,244 from the prior year. The largest increases were in General
Government ($820,848), and Public Safety ($527,257). Some function in the Community
Development and Public works were combined resulting in an increase in Community
Development ($309,213) and decreases in Public Works ($487,242). The increase in General
Government were largely impacted by a $500,000 settlement paid out by the City in fiscal year
2015. Public Safety expenses increased primarily due filling vacant positions, salary adjustments
and increases in Volunteer Fire Department operating costs.
There were also a prior period adjustments resulting from the implementation of GASB 68, capital asset
adjustments, and the reallocation of long-term debt to the business-type activities that increased
beginning net position by $899,043.
Governmental Activities – Revenues
Charges for
services
8%
Operating
grants and
contribution
s
2%
Capital grants
and
contributions
11%
Property taxes
54%
Sales and
alcohol taxes
18%
Franchise
taxes
6%
Interest and
other
1%
12
Governmental Activities – Expenses
General
government
20%
Public safety
43%
Public works
14%
Community
development
5%
Community
services
11%
Library
4%Interest and
other
3%
Business-Type Activities
Business-type activities increased the City of Friendswood’s net position by $1,956,662. Key elements
of this change are as follows:
Revenues decreased b y $81,098 or 0.73%. An increase to the allowance for uncollectible
accounts for the current year decreased revenues by $240,181. This was offset by an increase in
charges for services collected in the year.
Expenses decreased $355,923 or 3.74%. The largest portion of this decrease was a result of
decreased expenses for water purchases and sewer operations.
The City received a reimbursement of excess contributions plus interest in the amount of
$1,259,848 from the City of Houston related to expansion projects at the Southeast Water
Purification Plant.
There were also a prior period adjustments resulting from the implementation of GASB 68, adjustments
to capital assets, and the allocation of long-term debt from the governmental activities that decreased
beginning net position by $2,664,614.
13
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
2015 2014
Operating revenues Operating expenses
FINANCIAL ANALYSIS OF THE CITY’S FUNDS
As noted earlier, fund accounting 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 $20,131,037. Approximately 43.52% of this amount ($8,760,424) is unassigned fund balance;
however, $5.76 million is set aside for the 90-day operating reserve, as set forth in the City’s financial
policies.
14
The remaining $11,370,613 is nonspendable, restricted, committed, or assigned as follows:
4.2%-Nonspendable
Prepaid items 338,862$
Notes receivable 483,364
Permanent fund 31,378
853,604$
35.1%-Restricted
Public education and government
channels 518,119$
Debt service 177,670
State and/or federal statutes 185,367
Economic development 641
Public safety operations 141,350
Capital projects 5,879,241
City ordinances 155,716
7,058,104$
3.4%-Committed
Capital projects under contract 685,486$
13.8%-Assigned
Purchases on order 443,024$
Capital projects 1,330,395
Mud Gully detention project 1,000,000
2,773,419$
The General Fund is the chief operating fund of the City of Friendswood. At the end of the current fiscal
year, unassigned fund balance of the General Fund was $8.8 million, which the total fund balance
reached $13.6 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
36.81% of total General Fund expenditures, while total fund balance represents 56.98% percent of that
same amount. At year end, the City’s operating reserve was $5.76 million, representing 24% of total
General Fund expenditures.
Key differences between last year’s General Fund activity and this year’s include:
$837,053 increases in total revenues – new homes added to the property tax roll increased
property taxes, sales tax remained strong and increased from the prior year by 3.68%.
$1,763,860 increase in total expenditures – increase primarily resulted from a one-time $500,000
settlement payment and budgeted payroll increases.
Fund balance in the TDRA Grant Fund increased $296. During the fiscal year the City reported revenues
of $3,017,212 and expenditures of $3,016,916 related to grant programs used by the City.
Fund balance in the Capital Projects Fund increased $6,118,319. This increase was primarily caused by
the issuance of $9,595,000 in bonds during the fiscal year which was offset by capital expenditures of
$3,544,886.
15
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 $12,040,181 for the Water and Sewer Fund. The
total increase in the net position of the Water and Sewer Fund was $1,956,662 from operations. This
increase was offset with a prior period adjustment of ($2,664,614) resulting from the implementation of
GASB 68, adjustments to capital assets, and the allocation of long-term liabilities from the governmental
activities. Other factors concerning the finances of this fund have already been addressed in the
discussion of the City of Friendswood’s business-type activities.
Unrestricted net position of the Internal Service Fund was $269,482. The net position of the internal
service fund decreased by $67,121 primarily as a result of expenditures, especially depreciation expense,
exceeding the allocations to 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 $126,714 or 0.57% and expenditures were increased by $3,741,750 or 15.86%.
Total revenues were above budget by $1,059,100. The more significant variances are detailed below:
$81,521 above budget in property taxes as a result of more new construction and higher tax
values than anticipated.
$706,022 above budget in sales taxes and alcohol tax due to improved economic conditions.
$163,410 above budget in franchise taxes due to growth and new fees.
Total expenditures of the General Fund were $3,538,881 below the final expenditure budget. The more
significant variances are detailed below:
$756,812 below budget in total general government expenditures primarily a result of personnel
vacancies, fuel costs, and other services.
$365,600 below budget in total public safety expenditures due to vacancies in personnel and
decrease in fuel costs.
$1,981,629 below budget in capital improvements. Budgeted projects that were either not started
or incomplete will be reappropriated in the subsequent year.
16
CAPITAL ASSETS
The City of Friendswood’s investment in capital assets (net of accumulated depreciation) for its
governmental and business-type activities as of September 30, 2015 is $150,977,611. 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:
Completion of the traffic light at Blackhawk and FM 2351. The total cost of the project was
approximately $197,000.
Completion of the Centennial Park lighting project which was approximately $235,000.
Completion of Water Plant #5 Rehabilitation. Total project cost was $3.3 million.
Completion of Lift Station #6 Replacement. Total cost of the project was approximately
$469,000.
The following water and sewer projects are in construction in progress at the end of fiscal year
2015: Blackhawk Water Plant Rehabilitation ($3.1 million) Water Plant #2 Replacement ($1.1
million), Water Plant #7 Rehabilitation ($1.4 million), and Lift Station #3 ($105,000).
CITY OF FRIENDSWOOD’S CAPITAL ASSETS AT YEAR-END
2015 2014 2015 2014 2015 2014
Land 25,805,161$ 24,007,398$ 319,473$ 716,818$ 26,124,634$ 24,724,216$
Buildings and
improvements 26,269,837 22,778,832 371,385 - 26,641,222 22,778,832
Equipment 5,060,951 8,080,185 331,943 547,711 5,392,894 8,627,896
Infrastructure 27,019,663 27,560,683 32,403,002 31,628,645 59,422,665 59,189,328
Water rights - - 19,716,695 19,716,695 19,716,695 19,716,695
Construction in
progress 7,641,687 2,622,174 6,037,814 3,634,331 13,679,501 6,256,505
Total capital assets 91,797,299$ 85,049,272$ 59,180,312$ 56,244,200$ 150,977,611$ 141,293,472$
Governmental Activities Business-Type Activities Totals
More detailed information on the City’s capital assets is presented in Note V to the financial statements.
DEBT ADMINISTRATION
At the end of the current fiscal year, the City of Friendswood had a total bonded debt and capital lease
obligation of $57,280,494.
17
CITY OF FRIENDSWOOD’S OUTSTANDING DEBT AT YEAR-END
2015 2014 2015 2014 2015 2014
General obligations 23,305,000$ 18,815,000$ 9,255,000$ -$ 32,560,000$ 18,815,000$
Revenue bonds payable - - 24,540,000 31,830,000 24,540,000 31,830,000
Capital leases 180,494 623,407 - - 180,494 623,407
23,485,494$ 19,438,407$ 33,795,000$ 31,830,000$ 57,280,494$ 51,268,407$
Governmental Activities Business-Type Activities Totals
The City’s General Obligation and Revenue Bonds bond ratings are listed below:
Standard
& Poor's
General Obligation Bonds AA+
Revenues Bonds AA-
More detailed information about the City’s outstanding debt can be found in Note V II to the financial
statements.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
Friendswood continues to experience moderate growth. The City’s current population is estimated to be
39,458. Friendswood is expected to reach build out with an estimated population of 57,000. The City is
continuing to focus on Economic Development initiatives, including the revitalization of downtown and
a large residential and commercial development called West Ranch. The West Ranch residential
development is currently under way, with commercial construction scheduled to follow as the area’s
residential population growth.
The City’s largest single source of revenue in the General Fund continues to be ad valorem taxes. The
adopted budget for fiscal year 2016 has a tax rate of $.5687 per $100 of taxable value. This rate consists
of a maintenance and operations (M&O) tax rate of $.4972 and an interest and sinking (debt service) tax
rate of $.0715. The rate was set based on a net assessed value of $2,974,520,186. This is an increase of
$341,033,490 from certified taxable values for tax year 2014 in taxable value. This increase is mainly a
result of new construction in the City. This additional value results in a total levy increase of
$1,354,957. This City’s financial management policy sets the guideline to maintain the fund balance and
retained earnings 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’s 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 $4,553,543 to
$4,956,193. The franchise fees budget has been increased from $1,552,315 to $1,644,011 and the budget
for municipal court fines has been increased from $723,258 to $802,762. If all projections are accurate,
the total General Fund unassigned fun balance net of the 90 day operating requirement ($5.3 million) is
estimated to be approximately $4.9 million at September 30, 2016.
18
Water revenues are budgeted at $6,437,187 which is an increase of $529,492in revenues, or 8 percent.
Sewer revenues are budgeted at $4,972,430 which is an increase of $1,105,910 in revenues, or 28
percent. Water and Sewer Fund net position, net of the 90 day operating requirement ($1.5 million), is
expected to be $7.2 million at the end of fiscal year 2016.
Pursuant to the City’s financial management policy, funds in excess of the 90 -day operating reserve are
designated for future capital improvements.
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
The financial report is designed to provide our citizens, customers, investors, and creditors with a
general overview of the City’s finance and to show the City’s accountability for the money it receives. If
you have questions about this report or need additional information, contact Administrative Services,
P.O. Box 1288, Friendswood, Texas 77549-1288, or call Cindy S. Edge at 281-996-3224, or email
cedge@friendswood.com.
Separately issued financial statements for the West Ranch Management District can be obtained by
writing to: West Ranch Management District, a Component Unity of the City of Friendswood, c/o Allen
Boone Humphries LLP, 3200 Southwest Freeway, Suite 2600, Houston, Texas 77027.
BASIC
FINANCIAL STATEMENTS
THIS PAGE LEFT BLANK INTENTIONALLY
Governmental Business-type Component
Activities Activities Total Unit
ASSETS
Cash and investments 21,231,497$ 10,822,289$ 32,053,786$ 4,186,959$
Receivables (net of allowance)
Taxes 1,628,292 - 1,628,292 11,622
Customer accounts 301,721 2,000,594 2,302,315 -
Other 12,827 - 12,827 5
Internal balances 1,172,858)( 1,172,858 - -
Due from other governments 1,297,402 - 1,297,402 -
Prepaid items 338,937 40,784 379,721 56,299
Notes receivable 483,364 - 483,364 -
Working capital deposit - 383,491 383,491 -
Restricted cash and investments - 1,383,407 1,383,407 -
Capital assets
Nondepreciable 33,446,848 26,073,982 59,520,830 6,006,988
Depreciable, net 58,350,451 33,106,330 91,456,781 431,401
Total capital assets, net 91,797,299 59,180,312 150,977,611 6,438,389
Total assets 115,918,481 74,983,735 190,902,216 10,693,274
DEFERRED OUTFLOWS OF RESOURCES
Deferred loss on issuance of refunding bonds 472,470 604,082 1,076,552 -
Deferred outflow of resources for pensions 1,962,255 218,029 2,180,284 -
Total deferred outflows of resources 2,434,725 822,111 3,256,836 -
Total assets and deferred outflows of resources 118,353,206 75,805,846 194,159,052 10,693,274
LIABILITIES
Accounts payable 2,162,366 794,324 2,956,690 21,222
Accrued liabilities 1,281,212 155,275 1,436,487 -
Accrued interest 64,580 115,899 180,479 314,037
Customer deposits 100 430,557 430,657 -
Due to other governments 119,780 - 119,780 -
Noncurrent liabilities:
Due within on year 1,688,537 1,784,308 3,472,845 410,000
Due in more than one year 31,805,424 33,769,292 65,574,716 18,190,589
Total liabilities 37,121,999 37,049,655 74,171,654 18,935,848
DEFERRED INFLOWS OF RESOURCES
Deferred inflow of resources for pensions 538,448 59,828 598,276 -
Total deferred inflows of resources 538,448 59,828 598,276 -
Total liabilities and deferred inflows of resources 37,660,447 37,109,483 74,769,930 18,935,848
NET POSITION
Net investment in capital assets 73,611,490 26,628,714 100,240,204 -
Restricted for:
Public education and government channels 518,119 518,119
Debt service 147,193 - 147,193 966,112
State and/or federal statutes 185,367 - 185,367 -
Economic development 641 - 641 -
Public safety operations 141,350 - 141,350 -
Community development
Expendable 155,716 - 155,716 -
Nonexpendable 31,378 - 31,378 -
Capital projects - 27,468 27,468 7,611
Unrestricted 5,901,505 12,040,181 17,941,686 9,216,297)(
Total net position 80,692,759$ 38,696,363$ 119,389,122$ 8,242,574)$(
The accompanying notes are an integral part of these financial statements.
Primary Government
SEPTEMBER 30, 2015
STATEMENT OF NET POSITION
CITY OF FRIENDSWOOD, TEXAS
19
Functions/Programs Expenses
Charges for
Services
Operating
Grants and
Contributions
Capital Grants
and
Contributions
Primary government
Governmental activities:
General government 5,410,643$ 807,245$ -$ -$
Public safety 11,763,659 30,275 602,912 3,225,672
Public works 3,933,288 190,099 - -
Community development 1,406,288 843,648 - -
Community service 2,869,345 280,046 43,099 -
Library 1,026,967 33,699 14,622 -
Interest on long-term debt 567,142 - - -
Bond issuance costs 163,472 - - -
Total governmental activities 27,140,804 2,185,012 660,633 3,225,672
Business-type activities:
Water and sewer 9,153,987 11,020,029 - -
Total business-type activities 9,153,987 11,020,029 - -
Total primary government 36,294,791 13,205,041 660,633 3,225,672
Component Unit
West Ranch Management District 1,247,887 - - -
Total component unit 1,247,887$ -$ -$ -$
General revenues:
Taxes:
Property
Sales and alcohol
Franchise
Interest
Other
Transfers
Total general revenues and transfers
Extraordinary item
Change in net position
Net position - beginning
Prior period adjustment
Net position - beginning, as restated
Net position - ending
The accompanying notes are an integral part of these financial statements.
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Program Revenue
20
Governmental
Activities
Business-type
Activities Total
Component
Unit
4,603,398)$( -$ 4,603,398)$( -$
7,904,800)( - 7,904,800)( -
3,743,189)( - 3,743,189)( -
562,640)( - 562,640)( -
2,546,200)( - 2,546,200)( -
978,646)( - 978,646)( -
567,142)( - 567,142)( -
163,472)( - 163,472)( -
21,069,487)( - 21,069,487)( -
- 1,866,042 1,866,042 -
- 1,866,042 1,866,042 -
21,069,487)( 1,866,042 19,203,445)( -
1,247,887)(
1,247,887)(
15,574,684 - 15,574,684 1,660,796
5,291,186 - 5,291,186 -
1,726,557 - 1,726,557 -
79,071 49,138 128,209 4,767
108,306 7,839 116,145 -
1,226,205 1,226,205)( - -
24,006,009 1,169,228)( 22,836,781 1,665,563
- 1,259,848 1,259,848 -
2,936,522 1,956,662 4,893,184 417,676
76,857,194 39,404,315 116,261,509 8,660,250)(
899,043 2,664,614)( 1,765,571)( -
77,756,237 36,739,701 114,495,938 8,660,250)(
80,692,759$ 38,696,363$ 119,389,122$ 8,242,574)$(
Primary Government
Net (Expense) Revenue and Changes in Net Position
21
Other Total
TDRA Bond Governmental Governmental
General Grant Construction Funds Funds
ASSETS
Cash and investments 12,392,296 $ 586,673$ 6,872,577$ 1,109,769$ 20,961,315$
Receivables, net of allowance
Taxes receivable 1,594,190 - - 34,102 1,628,292
Customer accounts 277,765 - - 23,956 301,721
Other receivables 9,254 - - 3,573 12,827
Due from other funds 684,831 - - - 684,831
Due from other governments 31,948 766,838 - 498,616 1,297,402
Notes receivable 483,364 - - - 483,364
Prepaids and other assets 338,862 - - 75 338,937
Total assets 15,812,510 1,353,511 6,872,577 1,670,091 25,708,689
LIABILITIES
Accounts payable 732,830 395,526 993,336 39,974 2,161,666
Accrued liabilities 1,005,518 - - 636 1,006,154
Due to other governments 119,780 - - - 119,780
Customer deposits 100 - - - 100
Due to other funds - 957,689 - 900,000 1,857,689
Total liabilities 1,858,228 1,353,215 993,336 940,610 5,145,389
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues 394,608 - - 37,655 432,263
Total deferred inflows of resources 394,608 - - 37,655 432,263
FUND BALANCES
Nonspendable:
Prepaid items 338,862 - - - 338,862
Notes receivable 483,364 - - - 483,364
Permanent fund - - - 31,378 31,378
Restricted for:
Public education and government
channels 518,119 - - - 518,119
Debt service - - - 177,670 177,670
State and/or federal statutes - - - 185,367 185,367
Economic development - 296 - 345 641
Public safety operations - - - 141,350 141,350
Capital projects - - 5,879,241 - 5,879,241
City ordinances - - - 155,716 155,716
Committed for:
Capital projects under contract 685,486 - - - 685,486
Assigned for:
Purchases on order 443,024 - - - 443,024
Capital projects 1,330,395 1,330,395
Mud Gully detention project 1,000,000 - - - 1,000,000
Unassigned 8,760,424 - - - 8,760,424
Total fund balances 13,559,674 296 5,879,241 691,826 20,131,037
Total liabilities, deferred inflows of
resources and fund balances 15,812,510$ 1,353,511$ 6,872,577$ 1,670,091$ 25,708,689$
The accompanying notes are an integral part of these financial statements.
CITY OF FRIENDSWOOD, TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2015
22
Total fund balances - governmental funds 20,131,037$
Capital assets used in governmental activities are not current financial resources and
therefore are not reported in the governmental funds balance sheet.90,603,375
Interest payable on long term debt does not require current financial resources;
therefore, it is not reported as a liability in the governmental funds balance sheet.64,580)(
An internal service fund is used by management to charge the cost of certain
activities,such as fleet management to individual funds.The assets and liabilities of
the internal service fund are included in the governmental activities in the statement
of net position.1,188,348
Revenues earned but not available within sixty days of the year-end are not
recognized as revenue on the fund financial statements.432,263
Long-term liabilities are not due and payable in the current period and therefore are
not reported in the fund financial statements.These long-term liabilities at year end
consists of:
Bonds payable 23,305,000)(
Premiums on issuance 1,220,285)(
Capital leases payable 360,584)(
Net pension liability 7,227,897)(
Net OPEB obligation 706,369)(
Compensated absences 673,826)(
Deferred inflows and outflows of resources related to pensions are reported in
conjunction with the net pension liability and are not reported in the City's fund
financial statements.1,423,807
Deferred losses on issuances of refunding bonds are recorded s deferred outflows of
resources in the statement of net position.This is the difference between the
reacquisition price and the net carrying amount of refunded bonds,net of
amortization.472,470
Net position of governmental activities 80,692,759$
The accompanying notes are an integral part of these financial statements.
SEPTEMBER 30, 2015
Amounts reported for governmental activities in the statement of net position are
different because:
CITY OF FRIENDSWOOD, TEXAS
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
23
Other Total
TDRA Capital Governmental Governmental
General Grant Projects Funds Funds
REVENUES
Property taxes 13,894,078$ -$ -$ 1,601,496$ 15,495,574$
Sales and alcohol taxes 5,291,186 - - - 5,291,186
Franchise taxes 1,726,557 - - - 1,726,557
Fines and forfeitures 877,282 - - 30,275 907,557
Permits and fees 1,289,432 - - 59,832 1,349,264
Intergovernmental 268,209 3,016,916 - 251,855 3,536,980
Investment earnings 64,770 296 8,205 4,676 77,947
Donations 86,982 - - 262,343 349,325
Miscellaneous 72,837 - - - 72,837
Total revenues 23,571,333 3,017,212 8,205 2,210,477 28,807,227
EXPENDITURES
Current:
General government 5,227,515 - - 115,645 5,343,160
Public safety 11,167,516 - - 180,830 11,348,346
Public works 2,066,349 - - - 2,066,349
Community development 925,947 - - - 925,947
Parks and recreation 2,917,857 - - - 2,917,857
Library 1,036,843 - - - 1,036,843
Debt service:
Principal - - - 1,272,823 1,272,823
Interest and other - - - 612,868 612,868
Bond issuance costs - - - 163,472 163,472
Capital outlay 454,773 3,016,916 3,544,886 238,654 7,255,229
Total expenditures 23,796,800 3,016,916 3,544,886 2,584,292 32,942,894
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 225,467)( 296 3,536,681)( 373,815)( 4,135,667)(
OTHER FINANCING SOURCES (USES)
Issuance of capital-related debt - - 9,595,000 - 9,595,000
Issuance of refunding debt - - - 2,840,000 2,840,000
Premium on bond issuance - - 378,457 268,289 646,746
Payment to bond refunding escrow agent - - - 3,058,663)( 3,058,663)(
Insurance recoveries 39,257 - - - 39,257
Transfers in 1,226,205 - - 318,457 1,544,662
Transfers out - - 318,457)( - 318,457)(
Proceeds from sale of capital assets 99 - - - 99
Total other financing sources and uses 1,265,561 - 9,655,000 368,083 11,288,644
NET CHANGE IN FUND BALANCES 1,040,094 296 6,118,319 5,732)( 7,152,977
FUND BALANCES, BEGINNING 12,519,580 - 239,078)( 697,558 12,978,060
FUND BALANCES, ENDING 13,559,674$ 296$ 5,879,241$ 691,826$ 20,131,037$
The accompanying notes are an integral part of these financial statements.
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
24
Net change in fund balances - total governmental funds 7,152,977$
Governmental funds report capital outlays as expenditures.However,in the statement of activities,
the cost of those assets is allocated over their estimated useful lives and reported as depreciation
expense. This is the amount of capital outlays reported in the current period.7,644,794
Depreciation is not recognized as an expenditure in governmental funds since it does not require the
use of current financial resources.The effect of recording current year depreciation is to decrease
net assets.3,057,901)(
The 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 net position.67,121)(
The issuance of long-term debt (e.g.,bonds,leases)provides current financial resources to
governmental funds,while the repayment of the principal of long-term debt consumes the current
financial resources of governmental funds.Neither transaction,however,has any effect on net
position.Also,governmental funds report the premiums and similar items when debt is first issued,
whereas these amounts are deferred and amortized in the statement of activities.This amount is the
net effect of these differences in the treatment of long-term debt and related items.
Issuance of bonds 13,081,746)(
Repayment of principal on long-term debt 1,272,823
Bond refunding 3,058,663
Amortization of:
Premium on bond issuance 103,287
Loss on refunding 61,945)(
Current year changes in certain long-term liabilities do not require the use of current financial
resources and, therefore, are not reported as expenditures in governmental funds.
Compensated absences liability 123,925
Retainage payable 275,058)(
Net pension liability 175,863
Net OPEB obligation 63,724)(
Interest payable on long-term debt is accrued in the government-wide financial statements,whereas
in the fund financial statements, interest expenditures are reported when due. 4,384
Revenues from property taxes and fines that do not provide current financial resources are not
reported as revenues in the funds.7,301
Change in net position of governmental activities 2,936,522$
The accompanying notes are an integral part of these financial statements.
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Amounts reported for governmental activities in the Statement of Activities are different because:
CITY OF FRIENDSWOOD, TEXAS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
TO THE STATEMENT OF ACTIVITIES
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
25
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Business Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
ASSETS
Current assets
Cash and investments 10,822,289 $ 270,182 $
Accounts receivable, net of allowance
Customer accounts 2,000,594 -
Due from other funds 1,172,858 -
Prepaids and other assets 40,784 -
Restricted cash and investments 1,383,407 -
Total current assets 15,419,932 270,182
Noncurrent assets
Working capital deposit 383,491 -
Capital assets
Land 319,473 -
Construction in progress 6,037,814 -
Water rights 19,716,695 -
Machinery and equipment 1,195,559 2,867,477
Buildings and improvements 589,624 -
Water and sewer system 63,267,248 -
Accumulated depreciation 31,946,101)( 1,948,611)(
Net capital assets 59,180,312 918,866
Total noncurrent assets 59,563,803 918,866
Total assets 74,983,735 1,189,048
DEFERRED OUTFLOWS OF RESOURECES
Deferred loss on issuance of refunding bonds 604,082 -
Deferred outflow of resources for pensions 218,029 -
Total deferred outflows of resources 822,111 -
Total assets and deferred outflows of resources 75,805,846 1,189,048
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET POSITION - PROPRIETARY FUNDS
SEPTEMBER 30, 2015
26
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Business-Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
LIABILITIES
Current liabilities
Accounts payable 794,324 $ 700 $
Accrued liabilities 155,275 -
Accrued interest 115,899 -
Deposits 430,557 -
Compensated absences 14,308 -
Bonds and other long-term debt payable 1,770,000 -
Total current liabilities 3,280,363 700
Noncurrent liabilities
Compensated absences 72,309 -
Net pension liability 803,100 -
Net OPEB obligation 124,796 -
Bonds and other long-term debt payable 32,769,087 -
Total noncurrent liabilities 33,769,292 -
Total liabilities 37,049,655 700
DEFERRED INFLOWS OF RESOURECES
Deferred inflow of resources for pensions 59,828 -
Total deferred inflows of resources 59,828 -
Total liabilities and deferred inflows of resources 37,109,483 700
NET POSITION
Net investment in capital assets 26,628,714 918,866
Restricted for capital projects 27,468 -
Unrestricted 12,040,181 269,482
Total net position 38,696,363 $ 1,188,348 $
The notes to the basic financial statements are an integral part of this statement.
SEPTEMBER 30, 2015
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET POSITION - PROPRIETARY FUNDS
27
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Business-Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
OPERATING REVENUES
Charges for services 11,020,029$ 359,125$
Total operating revenues 11,020,029 359,125
OPERATING EXPENSES
Personnel services 1,675,139 -
Sewer operations 1,755,070 -
Water purchases 1,070,000 -
Repairs and maintenance 560,443 -
Supplies 138,988 7,751
Other services and charges 810,410 -
Depreciation 1,619,661 415,732
Total operating expenses 7,629,711 423,483
Operating income (loss)3,390,318 64,358)(
NONOPERATING REVENUES (EXPENSES)
Investment income 49,138 1,124
Gain (loss) on disposal of capital assets 7,839 3,887)(
Bond issuance costs 110,314)( -
Interest expense 1,413,962)( -
Total nonoperating revenues (expenses)1,467,299)( 2,763)(
Income (loss) before transfers and extraordinary item 1,923,019 67,121)(
Transfers out 1,226,205)( -
Extraordinary item 1,259,848 -
Change in net position 1,956,662 67,121)(
Net position, beginning 39,404,315 1,255,469
Prior period adjustment 2,664,614)( -
Net position, beginning - as restated 36,739,701 1,255,469
Net position, ending 38,696,363$ 1,188,348$
The notes to the basic financial statements are an integral part of this statement.
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
28
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Business-Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
OPERATING ACTIVITIES
Cash received from customers 11,206,856$ -$
Receipts from interfund charges for fleet management - 359,340
Cash payments to suppliers for goods
and services 1,659,535)( 7,051)(
Cash payments to employees for services 3,201,351)( -
Net cash provided by operating activities 6,345,970 352,289
NONCAPITAL FINANCING ACTIVITIES
Cash paid to other funds 272,858)( -
Transfers to other funds 1,226,205)( -
Net cash used by noncapital
financing activities 1,499,063)( -
CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from the sale of capital assets 7,839 9,346
Acquisition and construction of capital assets 2,502,409)( 408,085)(
Repayment of debt 1,855,000)( -
Interest paid on debt 1,430,173)( -
Net cash used in capital and related
financing activities 5,779,743)( 398,739)(
INVESTING ACTIVITIES
Investment income 49,138 1,124
Net cash provided by investing activities 49,138 1,124
Net change in cash and cash equivalents 883,698)( 45,326)(
CASH AND CASH EQUIVALENTS, BEGINNING 13,089,394 315,508
CASH AND CASH EQUIVALENTS, ENDING 12,205,696$ 270,182$
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
29
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Business-Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
Reconciliation of operating income (loss)
to net cash provided by operating activities
Operating income (loss)3,390,318$ 64,358)$(
Adjustments to reconcile operating income (loss)
to net cash provided by operating activities
Depreciation 1,619,661 415,732
Extraordinary item 1,259,848 -
Change in assets, deferred inflows and outflows, and liabilities
Decrease (increase) in customer receivable 131,652 215
Decrease (increase) in prepaids and other assets 414)( -
Decrease (increase) in working capital deposit 80,295)( -
Decrease (increase) in deferred outflow for pensions 62,653)( -
Increase (decrease) in accounts payable 45,579)( 700
Increase (decrease) in other liabilities 47,050 -
Increase (decrease) in customer deposits 55,175 -
Increase (decrease) deferred inflows for pensions 59,828 -
Increase (decrease) in net OPEB obligation 11,258 -
Increase (decrease) in net pension liability 16,716)( -
Increase (decrease) in compensated absences 23,163)( -
Net cash provided by operating activities 6,345,970$ 352,289$
SCHEDULE OF NON-CASH CAPITAL AND
RELATED FINANCING ACTIVITIES
Refunding debt issued 5,965,000$ -$
The notes to the basic financial statements are an integral part of this statement.
FOR THE YEAR ENDED SEPTEMBER 30, 2015
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
30
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31
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
I. 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 County-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 Major 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.
Financial 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 has been included in the City’s reporting entity as a discretely presented
component unit. 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.
32
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 f the 79 th
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.
Basis of Presentation
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 governmental 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 amount 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.
Measurement Focus/Basis of Accounting
The government-wide financial statements are reported using the economic resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as
soon as they are both measurable and available. Revenues are considered to be available when
they are collectible within the current period or soon enough thereafter to pay liabilities of the
current period. For this purpose, the government considered revenue to be available if collected
within 60 days of the end of the current fiscal period. Expenditures generally are recorded when
a liability is incurred, as under accrual accounting. However, debt service expenditures, as well
as expenditures related to compensated absences and claims and judgements, are recorded only
when payment is due.
33
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 measureable 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 TDRA Grant Fund is used to account for receipts and expenditures related to the Texas
Community Development Block Grant awarded to the City in fiscal year 2009-2010.
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 Permeant
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 carious functions concerned.
Proprietary funds distinguish operating revenues and expenses from nonoperating items.
Operating revenues and expenses generally result from providing services and providing the
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.
34
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 on deposits with
financial institutions and investment pools.
In accordance with GASB Statement No. 31, the City’s general policy is to report money market
investments and short-term participating interest-earning investment contracts at amortized cost
and to report nonparticipating interest-earning investment contracts using a cost-based measure.
However, if the fair value of an investment is significantly report at fair value. All other
investments are reported at fair value unless a legal contract exists which guarantees a higher
value. The term “short-term” refers to investments which have a remaining term of one year or
less at time of purchase. The term “nonparticipating” means that the investment’s value does not
vary with market interest rate changes.
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.
Receivables and 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.”
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.
35
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 $0.5914 per $100 of
assessed valuation that were prorated between operations and debt service in the amounts of
$0.5303 and $0.0611, respectively. The resulting tax levies were approximately $12.9 and $1.6
million for operations and debt service, respectively, based on a total taxable valuation of
approximately $2.6 billion for the 2014 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, 2015, the District levied an ad valorem debt service tax at the rate of $0.3800
per $100 of assessed valuation, which resulted in tax levy of $769,931 on the taxable valuation
of approximately $202.4 million for the 2014 tax year.
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 revenues 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 detention facilities to serve the District. Pursuant to the contract, the District shall have a
security interest therein until all bonds issued by the District are retired.
Capital Assets
Capital assets, which include property, plant, equipment, infrastructure, and water rights, are
reported in the applicable governmental or business-type activities columns in the government-
wide financial statements. The City defines capital assets as assets with an initial, individual cost
of more than $5,000 and an estimated historical cost if actual historical cost is not available.
Donated capital assets are recorded at estimated fair market value at the date of donation.
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.
36
The City’s property, plant and equipment is depreciated using the straight -line method over the
following useful lives:
Buildings and improvements 20-50 years
Machinery and equipment 5 - 10 years
Infrastructure 40-50 years
Water and sewer system 40-50 years
The West Ranch Management District’s capital assets are depreciated using the straight-line
method over estimated useful lives of 10 to 45 years.
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 position 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 charges on refunding debt – A deferred charge 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.
Pension contributions after measurement date – These contributions are deferred and
recognized in the following fiscal year.
Difference in projected and actual earnings on pension assets – This difference is deferred
and amortized over a closed five year period.
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 position 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 only one type of item that qualifies for reporting in this category under the full
accrual basis of accounting. This item, the difference in expected and actual pension experience, is
deferred and recognized over the estimated average remaining lives of all members determined as
of the measurement date. The City also has one item that qualifies for reporting in this category
under the modified accrual basis of accounting. This item, unavailable revenues, represents
revenues that are not considered available because they are not collected by the City within the 60-
day accrual period.
Compensated Absences
The City’s employees earn vacation and sick leave, which may either be taken or accumulated,
up to certain amounts, until paid upon resignation or retirement. All vacation and sick 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.
37
Long-Term Obligations
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 costa re expenses in
the period incurred.
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs during the current period. The face amount of debt
issued is reported as other financial sources. Premiums received in debt issuances are reported as
other financial sources while discounts on debt issuances are reported as other financing uses.
Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as
debt services expenditures.
Pensions
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 the City’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.
Fund Balances and Net Position
Government-Wide Financial Statements:
In accordance with GASB Statement No. 63, Financial Reporting of Deferred Outflows of
Resources, Deferred Inflows of Resources, and Net Position on the Statement of Net Position
includes the following categories:
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 acquisiti on,
construction or improvement of these capital assets.
Restricted – Net position is reported a 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.
38
Unrestricted – the difference between the assets and liabilities that is not reported in any of
the classifications above.
Governmental Fund Financial Statements:
In accordance with GASB Statement No. 54, Fund Balance Reporting and Governmental Fund
Type Definitions, the City classifies governmental fund balances 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 th e highest
level of decision making authority. Committed fund balance is reported pursuant to
resolution passes by the City Council.
Assigned – includes fund balance amounts that are self-imposed by the City to be used for
particular purpose. Fund balance can be assigned by the City Council or the City Manager,
pursuant to the City’s fund balance policy. At September 30, 2015, the City’s assigned fund
balance included amounts assigned for encumbrances.
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 ten 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 operation
expenditures.
39
Estimates
The preparation of financial statements, in conformity with generally accepted accounting
principles, requires management to make estimates and assumptions that affect the rep orted
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.
II. DEPOSITS AND INVESTMENTS
Under provisions of state and local statutes, the City’s investment policies, and provisions of the
City’s depository contracts with an area financial institution, the City is authorized to place
available deposits and investments in the following:
1. Obligations of the U.S., it’s agencies and instrumentalities;
2. Certificates of Deposit issued by state and national banks or savings or loan associations
domiciled in this state that are guaranteed or incurred by the Federal Deposit Insurance
Corporation or collateralized in accordance with Section 2256.010, the Texas Government
Code, in face amounts not to exceed $100.000;
3. No-load money market mutual funds; and
4. TexPool, Lone State Investment Pool and Texas Class.
The City Council has adopted a written investment policy regarding the investments of its funds
as defined by the Public Funds Investment Act of 1995 (Chapter 2256, Texas Government
Code). The investments of the City are in compliance with the Council’s investment policies.
The City did not have any derivative investment products during the current year. All significant
legal and contractual provisions for investments were complied with during the year.
Deposits and investments as of September 30, 2015 are classified in the accompanying financial
statements as follows:
Governmental activities 21,231,497$
Business-type activities 12,205,696
33,437,193$
40
Deposits and investments as of September 30, 2015 consist of the following:
Deposits with financial institutions 8,908,938$
Investments 24,528,255
33,437,193$
As of September 30, 2015, the City had the following investments:
Weighted Average
Investment Type Fair Value Maturity (Days)
Texas Class 11,177,546$ 61
TexPool 2,338,983 40
U.S. Agency Securities:
Federal Home Loan Mortgage Corporation 4,505,518 844
Federal Home Loan Bank 4,505,336 712
Federal Farm Credit Bank 2,000,872 877
Total U.S. Agency Securities 11,011,726
Total portfolio 24,528,255$
The City’s investment pools are 2a7-like pools. A 2a7-like pool is one which is not registered
with the Securities and Exchange Commission (SEC) as an investment company, but
nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC’s
Rule 2a7 of the Investment Company Act of 1940. The City’s investments in these pools are the
same as the value of the pool shares, which are valued based on quoted market rates.
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 operation funds primarily in short-term
securities.
41
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, 2015, all of the
City’s cash deposits with financial institutions were collateralized with securities held by the
pledging financial institution in the City’s name.
Credit Risk. 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, 2015, were rated as follows:
Investment Type Rating Rating Agency
Texas Class AAAm Standard & Poor's
TexPool AAAm Standard & Poor's
U.S. Agency Securities:
Federal Home Loan Mortgage Corporation 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
III. ACCOUNTS RECIEVABLE AND DEFERRED INFLOWS OF RESOURCES
Receivables as of September 30, 2015 for the City’s individual major funds, nonmajor funds in
the aggregate and the Internal Service Fund including the applicable allowances for uncollectible
accounts, are as follows:
TDRA Water and
General Grant Nonmajor Sewer Total
Receivables:
Property taxes 242,803$ -$ 44,310$ -$ 287,113$
Penalties and interest 96,307 - - - 96,307
Sales taxes 955,061 - - - 955,061
Franchise taxes 378,145 - - - 378,145
Customer accounts 199,574 - 31,404 2,250,775 2,481,753
Court fines 602,561 - 3,573 - 606,134
Intergovernmental 31,948 766,838 498,616 - 1,297,402
Other 9,254 - - - 9,254
Gross receivables 2,515,653 766,838 577,903 2,250,775 6,111,169
Less: allowance for
uncollectibles 602,496)( - 17,656)( 250,181)( 870,333)(
Net receivables 1,913,157$ 766,838$ 560,247$ 2,000,594$ 5,240,836$
Governmental Funds Proprietary
42
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:
Deferred Inflows
of Resources
General Fund
Delinquent property taxes 186,864$
Property tax penalties and interest 74,119
Court fines 120,512
Miscellaneous 13,113
Total General Fund 394,608
Nonmajor Funds
Delinquent property taxes 23,585
Property tax penalties and interest 10,518
Court fines 3,552
Total Nonmajor Funds 37,655
Total Governmental Funds 432,263$
IV. NOTES RECEIVABLE
On June 1, 2015, The City Council approved the purchase of a fire truck for the Friendswood
Volunteer Fire Department for $483,364. This purchase is supported with a repayment
agreement whereby the Friendswood Volunteer Fire Department where the City would be repaid
$72,000 per year for the first six years, with a final payment of $65,000. The City set an initial
interest rate of 1% with an option to increase should interest rates rise significantly.
43
V. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2015 was as follows:
Beginning Reclassifications/Ending
Governmental Activities Balance Increases Decreases Adjustments Balance
Capital assets not being depreciated
Land 24,007,398$ 1,219,283$ -$ 578,480$ 25,805,161$
Construction in progress 2,622,174 6,194,213 1,174,700)( - 7,641,687
Total capital assets not
being depreciated 26,629,572 7,413,496 1,174,700)( 578,480 33,446,848
Capital assets being depreciated
Buildings and improvements 38,518,112 6,500 30,640 2,695,283 41,250,535
Machinery and equipment 16,992,645 632,625 16,028)( 2,745,014)( 14,864,228
Infrastructure 67,671,399 - 1,079,967 78 68,751,444
Total capital assets
being depreciated 123,182,156 639,125 1,094,579 49,653)( 124,866,207
Less accumulated depreciation
Buildings and improvements 15,739,280)( 720,158)( - 1,478,740 14,980,698)(
Machinery and equipment 8,912,460)( 1,204,075)( 67,146 246,112 9,803,277)(
Infrastructure 40,110,716)( 1,549,400)( - 71,665)( 41,731,781)(
Total accumulated
depreciation 64,762,456)( 3,473,633)( 67,146 1,653,187 66,515,756)(
Total capital assets
being depreciation, net 58,419,700 2,834,508)( 1,161,725 1,603,534 58,350,451
Government activities
capital assets, net 85,049,272$ 4,578,988$ 12,975)$( 2,182,014$ 91,797,299$
44
Beginning Reclassifications/Ending
Business-type Activities Balance Increases Decreases Adjustments Balance
Capital assets not being depreciated
Land 716,818$ -$ -$ 397,345)$( 319,473$
Water rights 19,716,695 - - - 19,716,695
Construction in progress 3,634,331 2,403,483 - - 6,037,814
Total capital assets not
being depreciated 24,067,844 2,403,483 - 397,345)( 26,073,982
Capital assets being depreciated
Buildings and improvements - - - 589,624 589,624
Machinery and equipment 3,244,767 98,925 - 2,148,133)( 1,195,559
Water and sewer system 60,361,450 - - 2,905,798 63,267,248
Total capital assets
being depreciated 63,606,217 98,925 - 1,347,289 65,052,431
Less accumulated depreciation:
Buildings and improvements - 17,852)( - 200,387)( 218,239)(
Machinery equipment 2,697,056)( 44,686)( - 1,878,126 863,616)(
Water and sewer system 28,732,805)( 1,557,123)( - 574,318)( 30,864,246)(
Total accumulation
deprecation 31,429,861)( 1,619,661)( - 1,103,421 31,946,101)(
Total capital assets
being depreciated, net 32,176,356 1,520,736)( - 2,450,710 33,106,330
Business-type activities
capital assets, net 56,244,200$ 882,747$ -$ 2,053,365$ 59,180,312$
Beginning Reclassifications/Ending
Component Unit Balance Increases Decreases Balance
Capital assets not being depreciated
Land 5,848,357$ 158,631$ -$ 6,006,988$
Capital assets being depreciated
Water production and
distribution facilities 483,467 - - 483,467
Less accumulated deprecation:
Water production and
distribution facilities 41,320)( 10,746)( - 52,066)(
Total capital assets
being depreciated, net 442,147 10,746)( - 431,401
Component units
capital assets, net 6,290,504$ 147,885$ -$ 6,438,389$
45
Depreciation expense was charged to functions/programs of the primary government as follows:
Governmental activities
General government 171,900$
Public safety 503,823
Public works 1,891,766
Community services 490,412
Capital assets held by the City's internal service fund are
charged to the various functions based on their usage 415,732
Total deprecation expense - governmental activities 3,473,633$
Business-type activities
Water and sewer 1,619,661 $
Total deprecation expense - business-type activities 1,619,661$
VI. INTERFUND BALANCES AND ACTIVITIES
Interfund balances at September 30, 2015 consisted of the following individual fund balances
that are scheduled to be repaid within one year:
Due to Fund Due from Fund Amount Purpose
General TDRA Grant 684,831$ Balance of fund expenditures
funded by the General Fund,
pending reimbursements
Water and Sewer TDRA Grant 272,858 Water and Sewer Fund providing
cash to fund purchase of SCADA
equipment.
Water and Sewer Nonmajor 900,000 Return of excess amount previously
governmental transferred, upon decrease in City's
obligation under grant award
1,857,689$
During the year ended September 30, 2015, transfers between funds occurred as described
below:
Transfer In Transfers Out Amount Purpose
Debt Service (nonmajor)Capital Projects 318,457$ Bond proceeds
General Water and Sewer 1,226,205 Budgeted annual transfer for indirect water and
sewer costs by the General Fund
1,544,662$
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VII. 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 capital leases.
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.
Federal Arbitrage
General obligation bonds, combination tax and revenue bonds, and certificates of obligation are
subject to the provisions of the Internal Revenue Code of 1986 related to arbitrage and interest
income tax regulations under those provisions.
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,
2015:
Final Governmental Business-Type
Maturity Interest Rate Activities Activities
General Obligation Bonds
2010A Permanent Improvement 9,800,000 $ 2035 1.0% - 4.75%2,970,000$ -$
2010B Permanent Improvement 3,460,000 2021
and Refunding 1.0% - 4.75%- 3,435,000
2012 General Obligation Refunding 5,460,000 2026 2.0% - 3.5%7,960,000 -
2014 General Obligation Refunding 8,805,000 2028 2.0% - 4.0%2,780,000 5,820,000
2015 General Obligation Refunding 9,595,000 2030 2.0% - 3.0% 9,595,000 -
23,305,000 9,255,000
Revenue Bonds
2006 Waterworks and Sewer System
Revenue and Refunding 24,285,000 2031 4.0% - 5.0%- 14,030,000
2009 Waterworks and Sewer System 12,120,000 2028 2.0% - 4.8%- 10,510,000
- 24,540,000
23,305,000$ 33,795,000$
Series and Original Issue Amount
47
Annual debt service requirements for the City’s bonds and certificates of obligation are as
follows:
Year Ending
September 30,Principal Interest Principal Interest Total
2016 1,390,000$ 671,019$ 1,770,000$ 1,424,684$ 5,255,703$
2017 1,430,000 641,688 1,840,000 1,360,071 5,271,759
2018 1,465,000 609,894 1,910,000 1,289,606 5,274,500
2019 1,495,000 576,806 1,980,000 1,215,759 5,267,565
2020 1,530,000 542,281 2,065,000 1,131,185 5,268,466
2021 - 2025 8,410,000 1,953,681 9,645,000 4,397,789 24,406,470
2026 - 2030 6,715,000 669,622 11,565,000 2,134,516 21,084,138
2031 - 2035 870,000 106,275 3,020,000 311,250 4,307,525
23,305,000$ 5,771,266$ 33,795,000$ 13,264,860$ 76,136,126$
Governmental Activities Business-Type Activities
Advance Refunding
On November 3, 2014, the City issued $8.805 million in Series 2014 General Obligation
Refunding Bonds with an average interest rate of 2.474 percent to refund $2.995 million of
outstanding Series 2005 Permanent Improvement and Refunding Bonds and refund $6.085
million of outstanding Series 2006 Waterworks and Sewer System Revenue and Refunding
Bonds (the Refunded Bonds) with an average interest rate of 4.795 percent. The net proceeds of
$9.588 million (after payment of $152,690 in underwriting fees and other issuance costs) w ere
used to purchase U.S. government securities. Those securities were deposited in an irrevocable
trust with an escrow agent to provide for all future debt service payments on the Refunded
Bonds. As a result, the Refunded Bonds are considered to be defeas ed and the liability for those
bonds has been removed from the government-wide statement of position.
The refunding resulted in a difference between the reacquisition price and the net carrying
amount of the old debt of $483,309. This difference, reported in the accompanying financial
statements as a deferred outflow of resources, is being charged to operations through the year
2028. The City completed the advance refunding to reduce its total debt service payments over
the next 14 years by $1,509,749 and to obtain an economic gain (difference between the present
values of the old and new debt service payments) of $1,254,977.
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, 2015, $6,085,000 of bonds considered defeased are still outstanding.
48
Obligations Under Capital Leases
The City has entered into capital lease agreements in order to purchase machinery and equipment
for public works, police and fire departments. The assets acquired through these lease
agreements are as follows:
Governmental
Asset:Activities
Machinery and equipment 1,745,042$
Less: accumulated deprecation 597,779)(
Total 1,147,263$
The following is a summary of future lease payments due on this machinery and equipment:
Year Ending Lease
September 30, Obligation
2016 191,868$
2017 63,056
2018 63,056
2019 63,056
Total 381,036
Less: interest portion 20,452)(
Obligations under capital leases 360,584$
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Changes in Long-Term Liabilities
Long-term liability activities of the primary government for the year ended September 30, 2015,
was as follows:
Balance Balance Due
Beginning End of Within One
of Year Increase Decrease Adjustments Year Year
Governmental activities
General obligation bonds 18,815,000$ 12,435,000$ 4,005,000)$( 3,940,000)$( 23,305,000$ 1,390,000$
Premium on bond issuance 676,826 646,746 103,287)( - 1,220,285 -
Capital lease obligation 623,407 - 262,823)( - 360,584 180,090
Net pension obligation 643,444 - 643,444)( - - -
Net pension liability 7,378,339 3,025,208 3,175,650)( - 7,227,897 -
Net OPEB obligation 756,183 72,100 8,376)( 113,538)( 706,369 -
Compensated absences 797,751 709,998 833,923)( - 673,826 118,447
Total governmental
activities 29,690,950 16,889,052 9,032,503)( 4,053,538)( 33,493,961 1,688,537
Business-type activities
Revenue bonds 31,830,000 - 7,290,000)( - 24,540,000 1,240,000
General obligation bonds - 5,965,000 650,000)( 3,940,000 9,255,000 530,000
Discount on bond issuance 49,955)( - 2,498 - 47,457)( -
Premium on bond issuance 260,379 668,414 137,249)( - 791,544 -
Net pension liability 819,816 336,134 352,850)( - 803,100 -
Net OPEB obligation - 12,738 1,480)( 113,538 124,796 -
Compensated absences 109,780 68,062 91,225)( - 86,617 14,308
Total business-type activities 32,970,020 7,050,348 8,520,306)( 4,053,538 35,553,600 1,784,308
Total primary government 62,660,970$ 23,939,400$ 17,552,809)$( -$ 69,047,561$ 3,472,845$
The compensated absences, net pension liability, and net OPEB obligation 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, 2015:
Amounts Outstanding Interest Range of Callable
Series July 31, 2015 Rates Maturities Dates *
Series 2010 6,425,000$ 3.25% to 5.25%2015 - 2040 September 1, 2020
Road Series 2010A 1,730,000 3.50% to 5.00%2015 - 2040 September 1, 2020
Series 2012A 3,110,000 3.50% to 4.10%2027 - 2040 September 1, 2020
Series 2012B 1,490,000 3.00% to 4.75%2015 - 2026 September 1, 2016
Road Series 2013 1,300,000 2.00% to 3.00%2015 - 2028 September 1, 2021
Series 2013 1,270,000 3.00% to 5.00% 2015 - 2040 September 1, 2021
Road Series 2014 2,235,000 2.00% to 3.75% 2015 - 2040 September 1, 2022
17,560,000$
* Or any date thereafter, callable at par plus accrued interest to the date of redemption.
50
Annual debt service requirements for the District’s bonds are as follows:
Year Ending
July 31,Principal Interest Total
2016 410,000$ 732,501$ 1,142,501$
2017 425,000 720,844 1,145,844
2018 445,000 708,541 1,153,541
2019 460,000 695,238 1,155,238
2020 480,000 680,278 1,160,278
2021 - 2025 2,700,000 3,121,105 5,821,105
2026 - 2030 3,255,000 2,511,905 5,766,905
2031 - 2035 3,670,000 1,770,139 5,440,139
2036 - 2040 4,640,000 816,923 5,456,923
2041 1,075,000 25,273 1,100,273
17,560,000$ 11,782,747$ 29,342,747$
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.
Long-term liability activity of the West Ranch Management District for the year ended July 31,
2015, was as follows:
Balance Balance
Beginning End of Due Within
of Year Increase Decrease Year One Year
Component Unit
General obligation bonds 15,655,000$ 2,235,000$ 330,000)$( 17,560,000$ 410,000$
Discount on bond issuance 310,749)( 66,474)( 7,951 369,272)( -
Bond anticipation note - 660,000 - 660,000 -
Developer advances 40,000 - - 40,000 -
Due to developer 1,111,742 189,678 591,559)( 709,861 -
Total component unit 16,495,993$ 3,018,204$ 913,608)$( 18,600,589$ 410,000$
Developers of the District have constructed underground utilities on behalf of the District. The
District’s engineer estimates reimbursable costs for completed projects are $709,861.
Additionally, a developer of the District has advanced $40,000 to the District for operating
expenses. The District has agreed to reimburse the developers for these amounts, plus interest, to
the extent approved by the Texas Commission on Environmental Quality from the proceeds of
future bond sales. These amounts have been recorded in the financial statement as long-term
liabilities.
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VIII. PLEDGED REVENUES
On August 21, 2006, the City issued $24,285,000 in Waterworks and Sewer System Revenue
and Refunding Bonds, Series 2006. Additionally, on July 6, 2009, the City issued $12,120,000 in
Waterworks and Sewer System Revenue Bonds, Series 2009. 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, and to
refund certain outstanding obligations of the Cit y. At September 30, 2015, the remaining
principal and interest on the series 2006 bonds was $14,030,000 and $5,295,372 respectively. At
September 30, 2015, the remaining principal and interest on the series 2009 bonds was
$10,510,000 and $5,517,788 respectively. Principal and interest payments for the fiscal year
were $860,000 and $659,244 for the series 2006 bonds and $ 345,000 and 494,278 for the series
2009 bonds. Water and Sewer revenues for the current year were $11,020,029. The outstanding
revenue bonds have a final maturity of March 1, 2030 for the series 2006 bonds and March 1,
2034 for the series 2009 bonds.
IX. CONSTRUCTION COMMITMENTS AND ENCUMBRANCES
Construction Commitments
The City has active construction projects as of September 30, 2015. At year end the City’s
commitments with contractors are as follows:
Remaining
Project Commitment
Governmental Funds
Library expansion 2,317,846$
Friendswood Link/Whispering Pines 1,018,799
Basketball pavilion 12,104
Firestation 4 remodel and new firestation 113,761
Streets - round 1 engineering 30,201
3,492,711
Enterprise fund
Blackhawk WWTP rehab 33,886
Friendswood Link/Whispering Pines - 582,251
Lift station #3 replacement 14,622
Lift station #18 81,750
Water Plant #2 Replacement 674,013
Water Plant #7 Rehab 314,380
1,700,902
Total 5,193,613$
The remaining commitment amounts of $5,193,613 were encumbered at year end. The
encumbrances and related appropriation lapse at the end of the fiscal year, but they are re -
appropriated and become a part of the subsequent year’s budget because performance under the
executory contract is expected in the next year.
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Encumbrances
At year end, the amount of encumbrances expected to be honored upon performance by a vendor
in the next fiscal year were as follows:
General Fund 1,773,419$
TDRA Grant Fund 252,858
Bond Construction Fund 3,966,554
Nonmajor governmental funds 32,495
Total 6,025,326$
X. RESTRICTED ASSETS
The balances of the restricted asset accounts in the enterprise fund are as follows:
Cash and investments:
Construction - 2006 bonds 1,024,778$
Construction - 2009 bonds 358,629
Total restricted assets 1,383,407$
XI. DEFINED BENEFIT PENSION POLICIES
Plan Descriptions
The City participates as one of 860 plans in the nontraditional, joint contributory, hybrid defined
benefit pension plan administered by the 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 agency 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 Sections 401(a) of the Internal Revenue Code. TMRS issues a publicly
available comprehensive annual financial report (CAFR) that can be obtained at www.tmrs.org.
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.
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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 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.
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 20 years to any age,
5 years at age 60 and above
Updated Service Credit 100%; Repeating
Annuity Increase to retirees 50% of CPI;
Repeating
Employees covered by benefit terms
At the December 31, 2014 valuation and measurement date, the following employees were covered
by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 95
Inactive employees entitled to but not yet receiving benefits 97
Active employees 194
386
Contributions
The contribution rates for employees in TMRS are either 5%, 6%, or 7% of employee gross
earnings, and the City matching percentages are with 100%, 150%, or 200%, both as adopted by
the governing body of the City. Under the state law governing TMRS, the contributions rate for
each city is determined annually by the 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% of their annual gross earnings during the
fiscal year. The contribution rates for the City were 15.76% and 15.79% in calendar years 2014
and 2015, respectively. The City’s contributions to TMRS for the year ended September 30, 2015,
were $1,960,652, and were equal to the required contributions.
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Net Pension Liability
The City’s Net Pension Liability (NPL) was measured as of December 31, 2014, 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, 2014 actuarial valuation was determined using the
following actuarial assumptions:
Inflation 3.0% per year
Overall payroll growth 3.50% to 12.00% including inflation
Investment rate of return 7.0%, net of pension plan investment
expense, including inflation
Salary increases were based on a service-related table. Mortality rates for active members, retirees,
and beneficiaries were based on the gender-distinct RP2000 Combined Healthy Mortality Table,
with male rates multiplied by 109% and female rates multiplied by 103%. The rates are projected
on a fully generational basis by scale BB to account for future mortality improvements. For
disabled annuitants, the gender-distinct RP2000 Disabled Retiree Mortality Table is used, with
slight adjustments.
Actuarial assumptions used in the December 31, 2014 valuation were based on the results of
actuarial experience studies. The experience study in TMRS was for the period January 1, 2006
through December 31, 2009, first used in the December 31, 2010 valuation. Healthy post-
retirement mortality rates and annuit y purchase rates were updated based on a Mortality
Experience Investigation Study covering the 2009 through 2011, and the dated December 31,
2013. These assumptions were first used in the December 31, 2013 valuation, along with a change
to the Entry Age Normal (EAN) actuarial cost method. Assumptions are reviewed annually. No
additional changes were made for the 2014 valuation.
The long-term expected rate of return on pension plan investments is 7.0%. The pension plan’s
policy in regard to the allocation of invested assets is established and may be amended by the
TMRS Board of Trustees. 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.
55
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 expenses 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. The target allocation and best estimates of arithmetic real rates return
for each major assets class are summarized in the following table:
Long-Tem Expected
Target Rate of Return
Asset Class Allocation (Arithmetic)
Domestic Equity 17.5%4.80%
International Equity 17.5%6.05%
Core Fixed Income 30.0%1.50%
Non-Core Fixed Income 10.0%3.50%
Real Return 5.0%1.75%
Real Estate 10.0%5.25%
Absolute Return 5.0%4.25%
Private Equity 5.0%8.50%
Total 100.0%
Discount Rate
The discount rate used to measure the Total Pension Liability was 7.0%. 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 period of projected benefit payments to determine the Total Pension
Liability.
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Changes in the Net Pension Liability
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
(a)(b)(a) - (b)
Balance at 12/31/2013 58,341,940$ 50,143,785$ 8,198,155$
Changes for the year:
Service cost 2,018,353 - 2,018,353
Interest 4,084,392 - 4,084,392
Difference between expected and
actual experience 736,093)( - 736,093)(
Contributions - employer - 1,867,782 1,867,782)(
Contributions - employee - 829,598 829,598)(
Net investment income - 2,868,842 2,868,842)(
Benefit payments, including refunds
of employee contributions 2,005,311)( 2,005,311)( -
Administrative expense - 29,949)( 29,949
Other changes - 2,462)( 2,462
Net changes 3,361,341 3,528,500 167,159)(
Balance at 12/31/2014 65,064,622$ 57,200,785$ 7,863,837$
Increase (Decrease)
The following presents the net pension liability of the City, calculated using the discount rate of
7.0%, 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 (6.0%) of 1-percentage-higher (8.0%) than the
current rate:
1% Decrease in 1% Increase in
Discount Rate (6.0%)Discount Rate (7.0%)Discount Rate (8.0%)
City's net pension liability 16,868,920$ 8,030,996$ 782,755$
Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s Fiduciary Net Position is available in a separately-
issued TMRS financial report. The report may be obtained on the Internet at www.tmrs.org.
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to Pensions
For the year ended September 30, 2015, the City recognized pension expense of $1,785,921.
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At September 30, 2015, the City reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Deferred Deferred
Outflows of Resources Inflows of Resources
Differences between expected and
actual economic experience -$ 598,276$
Difference between projected and
actual investment earnings 512,978 -
Contributions subsequent to the
measurement date 1,667,306 -
Total 2,180,284$ 598,276$
$1,667,306 reported as deferred outflows of resources related to pension resulting from
contributions subsequent to the measurement date will be recognized as a reduction of the net
pension liability for the year ending September 30, 2016. Other amounts reported as deferred
outflows and inflows of resources related to pensions will be recognized in pension expenses as
follows:
For the Year
Ended September 30,
2016 9,572)$(
2017 9,572)(
2018 9,572)(
2019 9,574)(
2020 47,008)(
Total 85,298)$(
Subsequent Event
Pursuant to TMRS policy of conducting experience studies every four years, the TMRS Board at
their July 31, 2015 meeting determined that they would be changing certain actuarial assumptions
including reducing the long term expected rate of return from the current 7% to 6.75% and
changing the inflation assumption from 3% to 2.5%. Reduction of expected investment return and
related discount rate will increase projected pension liabilities. Reducing the inflation assumption
reduces liabilities as future annuity levels and future cost of living adjustments are not projected to
be a large as originally projected. While the actual impact on the City’s valuation for December
31, 2015 is not known the City does expect some downward pressure on its funded status and
upward pressure on its 2017 actuarially determined contribution (ADC) due to this change.
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XII. POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS
Retiree Insurance Coverage
The City Council has established a single-employer medical, dental, and vision insurance defined
benefit plan for retirees. Eligible retirees are provide insurance benefits at a set premium rate
equal to the City’s employees’ rate. Eligible retirees may also cover their dependents. Retirees
are responsible for paying the premium cost associated with their coverage. A retiree is defined
as a person who is received lifetime monthly TMRS pension benefits payments and retired
directly from active employment at the City. The City will stop insurance coverage on the retiree
and all dependents on the last day of the month the retiree fails to submit the required premium
payment or upon death of the employee. The retiree health plan does not issue a publically
available financial report.
Retirement Benefit Eligibility
The retiring employee must be 60 years of age with 5 years of service or have 20 years of service
at any age. Employees terminating before normal retirement conditions are net are not eligible
for retiree health plans. Retirees are not required to enroll in Medicare Parts A and B once
eligible.
Plan Participants
Permanent full-time employees and any dependents covered on the employee’s lost date of
employment are eligible for coverage. Dependents are no eligible for coverage unless the retired
employee is covered. Should the retiring employee reject any of the plans, he/she is never
eligible to re-enroll in the rejected plans. At the time of coverage election, the retiring employee
has the option of cancelling coverage on any dependent with the understanding that that
dependent can never be re-enrolled; new dependents cannot be added to the plan.
Medical Plan
The retiring employee is eligible to retain the medical plan the employee had on the last day of
employment. Any dependents covered at that time may remain on the retired employee’s plan as
long as the retired employee remains active on the plan. All terms and conditions of the plan are
the same as active employees.
Dental Plan
The retiring employee is eligible to retain the dental plan the employee had on the last day of
employment. Any dependents covered at the time may remain on the retired employee’s plan as
long as the retired employee remains active on the plan. All terms and conditions of the plan are
the same as active employees.
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Vision Plan
The retiring employee is eligible to retain the vision plan the employee had on the last day of
employment. Any dependents covered at that time may remain on the retired employee’s plan as
long as the retired employee remains active on the plan. All terms and conditions of the plan are
the same as active employees.
Premiums Paid
All premiums are 100% paid monthly by the retiree. The City does not contribute to any of the
plans once an employee retires.
Funding Policy and Annual OPEB Cost
The City’s annual other post-employment benefits (OPEB) cost is calculated based on the annual
required contribution of the employer (ARC), an amount actuarially determined in accordance
with the parameters of GASB Statement No. 45. The ARC represents a level of accrual that, if
paid on an ongoing basis, is projected to cover the normal cost each year and to amortize the
unfunded actuarial liability (or funding excesses) over a period not to exceed thirty years. The
City’s annual OPEB cost he fiscal year ending September 30, 2015 is as follows:
Annual required contribution 82,337$
Interest on OPEB obligation 34,028
Adjustment to ARC 31,527)(
Annual OPEB cost (expense) end of year 84,838
Net estimated employer contributions 9,856)(
Increase in net OPEB obligation 74,982
Net OPEB obligation - beginning of year 756,183
Net OPEB obligation - end of year 831,165$
City historical data is as follows:
Annual Actual Percentage Net OPEB
Fiscal OPEB Contribution of OPEB Obligation
Year Cost Made Cost Contributed at September 30
2013 85,843 $ 16,309 $ 19.0%685,731 $
2014 88,587 18,135 20.0%756,183
2015 84,838 9,856 11.6%831,165
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Funding Status and Funding Progress
The funded status of the City’s retiree health care plan, under GASB Statement No. 45 as of
December 31, 2014, the most recent valuation date, is as follows:
(1)(2)(3)(4)(5)(6)
Actuarial UAAL as a
Actuarial Actuarial Accrued Funded Unfunded AAL % of Covered
Valuation Value of Liability Ratio (UAAL)Covered Payroll
Date Assets (AAL)((1) / (2))((2) - (1))Payroll ((4) / (5))
12/31/2014 -$ 641,352 $ 0.00%641,352 $ 12,423,310 $ 5.16%
Under the reporting parameters, the City’s retiree health care plan is 0% funded with as
estimated actuarial liability exceeding actuarial assets by $641,352 at December 31, 2014. As of
the most recent valuation, the ratio of the unfunded actuarial accrued liability to annual covered
payroll is 5.16%.
The schedule of funding progress, presented as Required Supplementary Information following
the notes to the financial statements, presents multi-year trend information about whether the
actuarial value of plan assets is increasing or decreasing over time relative to the actuarial
accrued liability of benefits.
Actuarial Methods and Assumptions
The Projected Unit Credit actuarial cost method is used to calculate the GASB ARC for the
City’s retiree health care plan. Using the plan benefits, the present health premiums and a set of
actuarial assumptions, the anticipated future payments are projected. The projected unit credit
method then provides for a systematic funding for these anticipated payments. The yearly ARC
is computed to cover the cost of benefits being earned by covered members as well as to
amortize a portion of the unfunded accrued liability.
Projections of health benefits are based on the plan as understood by the City and include the
types of benefits in force at the valuation date and the pattern of sharing benefits costs between
the City and the City’s employees to that point. Actuarial calculations reflect a long-term
perspective and employ methods and assumptions that are designed to reduce short-term
volatility in actuarial accrued liabilities and the actuarial value of assets.
Significant methods and assumptions were as follows:
Investment rate of return 4.5%, net of expenses
Inflation rate 3.00%
Healthcare cost trend rates 4.5% to 7.5%
Actuarial cost method Projected Unit Credit Cost Method
Amortization method Level Percent of Payroll over an
open period of 30 years
Payroll growth rate 3.00%
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Actuarial valuations involve estimates of the value of reported amounts and assumptions about
the probability of events in the future. Amounts determined regarding the funded status and the
annual required contributions of the City’s retiree health care plan are subject to continual
revision as actual results are compared to past expectations and new estimates are made about
the future.
Supplemental Death Benefits Fund
Plan Descriptions
The City also participates in the cost sharing multiple-employer defined benefit group-term life
insurance plan operated by the Texas Municipal Retirement System (TMRS) known as 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 provide 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
an “other post-employment benefit,” or OPEB.
Contributions
The City contributes to the SDBF at a contractually required rate as determined by the annual
actuarial valuation. The rate is equal to the cost of providing one-year term life insurance. The
funding policy for the SDBF program is to assure that adequate resources are available to meet
all death benefit payments for the upcoming year; the intent is not to pre-fund retiree term life
insurance during employee’s entire careers.
The City’s contributions to the TMRS SDBF for the years ended September 30, 2015, 2014, and
2013 were $24,187, $20,884, and $19,708, respectively, which equaled the required
contributions each year.
XIII. 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, 2015, the City pai d 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. At year-end, the City did
not have any significant open claims.
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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,
2015, the City believed the amounts paid on workers’ compensation would not change
significantly from the amounts recorded.
During the year ended September 30, 2015, 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.
XIV. COMMITMENTS AND CONTINGENCIES
Southeast Water Purification Plant
The city has entered into a contract with the City of Houston for construction, operating and
maintaining a water purification plant known as Southeast Water Purification Plant. The City’s
pro rata share of the actual pumping construction costs is 1.33 percent.
The City began receiving water from the plant on October 15, 1990. The City is billed on a
monthly basis for the actual gallons of water received times the City’s pro rata share of actual
costs. At the end of each quarter, the City of Houston computes the total operation and
maintenance expenses for the quarter just ended, recalculates the cost per one thousand gallons,
and adjusts previous billings on the next invoice. As of September 30, 2015, the City has
purchased water capacity with an indefinite life of $19,716,695.
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.
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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.
Litigation
The City is a defendant in various lawsuits. The outcome and the impact of these lawsuits is not
presently determinable.
XV. PRIOR PERIOD ADJUSTMENTS
At September 30, 2015, the City reported prior period adjustments for the following items:
Fund Level
Statement of Revenues,
Expenses and Changes in
Net Position -
Proprietary Funds
Governmental Business-type Water and
Activities Activities Sewer
Net position at September 30, 2014,
as previously reported 76,857,194$ 39,404,315$ 39,404,315$
Capital assets adjustments 2,182,014 2,053,364 2,053,364
Allocation of net OPEB obligation to
enterprise fund 113,538 113,538)( 113,538)(
Allocation of bonds to fund repaying debt 3,940,000 3,940,000)( 3,940,000)(
Recording of net pension liability - GASB
Statement No. 68 implementation 5,979,953)( 664,440)( 664,440)(
Elimination of net pension obligation
as of September 30, 2014 643,444 - -
Net position at September 30, 2014,
as restated 77,756,237$ 36,739,701$ 36,739,701$
Statement of Activities
Government-wide
64
XVI. EXTRAORDINARY ITEM
On April 2, 2015, the City of Houston reimbursed the City of Friendswood $1,259,848. This
reimbursement is related to the City of Friendswood’s contribution to the Southeast Water
Purification Plan Expansion. Excess contributions made by the City of Friendswood were
$528,000 and interest earned on those contributions between July 1, 2006 and February 28, 2015
totaled $731,848. This reimbursement is both unusual in nature and infrequent in occurrence,
therefore, it has been classified as an extraordinary item.
XVII. SUBSEQUENT EVENTS
On February 1, 2016, the City issued $19,095,000 of General Obligation Permanent
Improvement and Refunding Bonds, Series 2016. These bonds were issued to refund
$13,145,000 of the outstanding Waterworks and Sewer System Revenue and Refunding Bonds,
Series 2006 and for construction and improvements to City parks and the purchase of land for
parks and for construction and improvements to City fire stations. These bonds have interest
rates ranging from 2.0 – 5.0% and will have a final maturity of March 1, 2031.
On February 1, 2016, the City issued $5,735,000 in Waterworks and Sewer System Revenue
Bonds, Series 2016. The proceeds of these bonds will be used to make extensions and
improvements to the City’s water and sewer systems and to fund a deposit to a reserve fund.
These bonds have interest rates ranging from 2.0 – 4.0% and will have a final maturity of March
1, 2036.
On August 1, 2015, West Ranch Management District, a component unit of the City, issued
Series 2015 Unlimited Tax Bonds in the amount of $5,655,000 at a net effective interest rate of
3.896%. The bonds were sold to finance water, sewer and drainage construction projects within
the District.
REQUIRED
SUPPLEMENTARY INFORMATION
THIS PAGE LEFT BLANK INTENTIONALLY
Plan Year 2014
A. Total pension liability
Service Cost 2,018,353$
Interest (on the Total Pension Liability)4,084,392
Difference between expected and actual experience 736,093)(
Benefit payments, including refunds of employee contributions 2,005,311)(
Net change in total pension liability 3,361,341
Total pension liability - beginning 58,341,940
Total pension liability - ending (a)61,703,281
B. Plan fiduciary net position
Contributions - employer 1,867,782
Contributions - employee 829,598
Net investment income 2,868,842
Benefit payments, including refunds of employee contributions 2,005,311)(
Administrative expenses 29,949)(
Other 2,462)(
Net change in plan fiduciary net position 3,528,500
Plan fiduciary net position - beginning 50,143,785
Plan fiduciary net position - ending (b)53,672,285
C. Net pension liability - ending (a) - (b)8,030,996$
D. Plan fiduciary net position as a percentage of total pension liability 86.98%
E. Covered employee payroll 11,851,396$
F. Net position liability as a percentage of covered employee payroll 67.76%
SEPTEMBER 30, 2015
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF CHANGES IN NET PENSION LIABILITY
AND RELATED RATIOS
65
Fiscal Year 2014 2015
Actuarial determined contribution 1,847,375$ 1,960,652$
Contributions in relation to the actuarially determined contribution 1,847,375 1,960,652
Contribution deficiency (excess)- -
Covered employee payroll 11,781,281 12,423,310
Contributions as a percentage of covered employee payroll 15.68%15.78%
Valuation Date
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial Cost Method Entry Age Normal
Amortization Method Level Percentage of Payroll, Closed
Remaining Amortization 26 years
Period
Asset Valuation Method 10 Year smoothed market; 15% soft corridor
Inflation 3.00%
Salary Increases 3.50% to 12.00% including inflation
Investment Rate of Return 7.00%
Retirement Age
Mortality
Other Information There were no benefit changes during the year.
RP2000 Combined Mortality Table with Blue Collar Adjustment with male rates
multiplied by 109%and female rates multiplied by 103%and projected on a fully
generational basis of with BB.
NOTES TO SCHEDULE OF CONTRIBUTIONS
Actuarially determined contribution rates are calculated as of December 31 and become
effective in January, 13 months later.
Experience-based table of rates that are specific to the City's plan of benefits.Last
updated for the 2010 valuation pursuant to an experience study of the period 2005-2009.
CITY OF FRIENDSWOOD, TEXAS
SEPTEMBER 30, 2015
SCHEDULE OF PENSION CONTRIBUTIONS
66
(1)(2)(3)(4)(5)(6)
((1) / (2))((2) - (1))((4) / (5))
Actuarial Actuarial Unfunded UAAL as a
Actuarial Value of Accrued Funded AAL Covered Percentage of
Valuation Date Assets Liability (AAL)Ratio (UAAL)Payroll Covered Payroll
12/31/2010 -$ 610,795 $ 0.0%610,795 $ 11,160,286 $ 5.5%
12/31/2012 - 676,248 0.0%676,248 11,513,756 5.9%
12/31/2014 - 641,352 0.0%641,352 12,423,310 5.2%
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF FUNDING PROGRESS
POST EMPLOYMENT BENEFITS PLAN OTHER THAN PENSIONS
SEPTEMBER 30, 2015
67
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Property taxes 13,811,671$ 13,812,557$ 13,894,078$ 81,521$
Sales and alcohol taxes 4,585,164 4,585,164 5,291,186 706,022
Franchise taxes 1,552,315 1,563,147 1,726,557 163,410
Fines and forfeitures 763,594 763,594 877,282 113,688
Permits and fees 1,314,505 1,317,655 1,289,432 28,223)(
Intergovernmental 240,504 282,896 268,209 14,687)(
Investment earnings 29,137 29,137 64,770 35,633
Donations 17,000 69,365 86,982 17,617
Miscellaneous 71,629 88,718 72,837 15,881)(
Total revenues 22,385,519 22,512,233 23,571,333 1,059,100
EXPENDITURES
General government
Mayor and council - governing body
Supplies and maintenance 4,036 4,898 3,233 1,665
Other services and charges 263,203 696,233 648,939 47,294
Total governing body 267,239 701,131 652,172 48,959
Mayor and council - city attorney
Personnel services - 36,710 31,818 4,892
Supplies - 8,300 6,831 1,469
Other services and charges - 21,960 7,413 14,547
Total city attorney - 66,970 46,062 20,908
City manager - administration
Personnel services 509,231 497,231 471,668 25,563
Supplies 14,420 16,674 5,745 10,929
Other services and charges 57,321 71,218 34,380 36,838
Total administration 580,972 585,123 511,793 73,330
City manager - economic development
Personnel services 156,839 156,839 157,449 610)(
Supplies 6,000 5,800 4,800 1,000
Other services and charges 91,609 91,809 70,015 21,794
Total economic development 254,448 254,448 232,264 22,184
City secretary - municipal clerk
Personnel services 271,533 271,533 269,391 2,142
Supplies 5,428 4,819 2,829 1,990
Other services and charges 16,865 16,865 11,321 5,544
Total municipal clerk 293,826 293,217 283,541 9,676
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2015
68
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
City secretary - election services
Personnel services 7,575$ 7,575$ 4,350$ 3,225$
Supplies 6,477 7,528 6,465 1,063
Repairs and maintenance 525 525 410 115
Other services and charges 4,209 3,158 1,046 2,112
Total election services 18,786 18,786 12,271 6,515
City secretary - records management
Personnel services 112,161 112,161 108,275 3,886
Supplies 944 393 371 22
Other services and charges 21,086 22,246 15,179 7,067
Total records management 134,191 134,800 123,825 10,975
Administrative services - finance
Personnel services 855,188 852,460 774,133 78,327
Supplies 7,770 8,382 7,264 1,118
Other services and charges 66,684 71,756 67,986 3,770
Capital Outlay - 1,135 1,135 -
Total finance 929,642 933,733 850,518 83,215
Administrative services - other admin
Other services and charges 156,750 157,636 154,487 3,149
Total other admin 156,750 157,636 154,487 3,149
Administrative services - municipal court
Personnel services 534,897 537,946 414,082 123,864
Supplies 14,750 14,750 11,900 2,850
Other services and charges 36,919 29,549 20,502 9,047
Total municipal court 586,566 582,245 446,484 135,761
Administrative services - human resources
Personnel services 351,189 358,666 323,732 34,934
Supplies 13,265 15,853 11,131 4,722
Other services and charges 70,784 67,723 49,496 18,227
Total human resources 435,238 442,242 384,359 57,883
Administrative services - Insurance
Other services and charges 160,350 160,350 151,140 9,210
Total insurance 160,350 160,350 151,140 9,210
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Budgeted Amounts
(Continued)
69
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Administrative services - risk management
Personnel services 108,771$ 108,771$ 108,549$ 222$
Supplies 21,900 26,279 19,009 7,270
Other services and charges 20,350 20,350 12,060 8,290
Total risk management 151,021 155,400 139,618 15,782
Administrative services - information technology
Personnel services 403,507 403,507 403,415 92
Supplies 12,990 23,269 10,133 13,136
Repairs and maintenance 74,630 76,875 44,733 32,142
Other services and charges 321,844 926,164 712,722 213,442
Capital outlay 19,000 68,431 67,978 453
Total information technology 831,971 1,498,246 1,238,981 259,265
Total general government 4,801,000 5,984,327 5,227,515 756,812
Public safety
Police department - administration
Personnel services 698,921 700,550 664,612 35,938
Supplies 40,677 39,620 25,319 14,301
Repairs and maintenance 5,700 7,549 3,478 4,071
Other services and charges 438,415 502,084 483,189 18,895
Total administration 1,183,713 1,249,803 1,176,598 73,205
Police department - communications
Personnel services 1,002,458 1,019,888 1,026,773 6,885)(
Supplies 5,750 25,871 20,277 5,594
Repairs and maintenance 30,275 32,888 21,798 11,090
Other services and charges 16,057 18,557 11,870 6,687
Total communications 1,054,540 1,097,204 1,080,718 16,486
Police department - patrol
Personnel services 4,376,988 4,365,651 4,269,628 96,023
Supplies 320,121 353,833 261,138 92,695
Repairs and maintenance 119,300 128,996 115,446 13,550
Capital outlay - 16,800 10,000 6,800
Total patrol 4,816,409 4,865,280 4,656,212 209,068
Police department - patrol - DOT program
Personnel services 86,744 86,744 46,475 40,269
Supplies 8,479 9,479 3,514 5,965
Repairs and maintenance 1,000 - - -
Total patrol - DOT program 96,223 96,223 49,989 46,234
Budgeted Amounts
(Continued)
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2015
70
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Police department - criminal investigation
Personnel services 1,323,339$ 1,498,375$ 1,535,855$ 37,480)$(
Supplies 58,361 62,303 46,499 15,804
Repairs and maintenance 22,150 22,150 11,695 10,455
Total criminal investigation 1,403,850 1,582,828 1,594,049 11,221)(
Police department - animal control
Personnel services 275,076 275,076 274,499 577
Supplies 31,649 28,679 19,695 8,984
Repairs and maintenance 2,500 3,500 2,487 1,013
Other services and charges 82,414 84,884 68,411 16,473
Total animal services 391,639 392,139 365,092 27,047
Police department - fire administration
Other services and charges 1,439,552 1,439,552 1,442,162 2,610)(
Total fire administration 1,439,552 1,439,552 1,442,162 2,610)(
Fire marshal - administration
Personnel services 537,487 564,310 569,161 4,851)(
Supplies 21,371 27,251 25,099 2,152
Repairs and maintenance 5,005 8,030 6,335 1,695
Other services and charges 38,082 31,307 28,849 2,458
Total administration 601,945 630,898 629,444 1,454
Fire marshal - emergency management
Personnel services 79,554 79,554 79,518 36
Supplies 21,745 57,966 53,033 4,933
Repairs and maintenance 1,725 1,510 1,510 -
Other services and charges 37,770 27,274 26,306 968
Capital outlay - 12,885 12,885 -
Total emergency management 140,794 179,189 173,252 5,937
Total public safety 11,128,665 11,533,116 11,167,516 365,600
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Budgeted Amounts
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
CITY OF FRIENDSWOOD, TEXAS
(Continued)
71
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Public works
Administration
Personnel services 353,587$ 353,587$ 352,027$ 1,560$
Supplies 1,473 1,473 920 553
Other services and charges 6,501 7,554 4,778 2,776
Total administration 361,561 362,614 357,725 4,889
Streets
Personnel services 562,949 574,215 555,291 18,924
Supplies 83,144 83,144 63,218 19,926
Repairs and maintenance 119,205 86,455 61,894 24,561
Other services and charges 411,461 442,836 441,254 1,582
Capital outlay 24,146 24,146 21,606 2,540
Total streets 1,200,905 1,210,796 1,143,263 67,533
Drainage
Personnel services 295,836 302,095 297,651 4,444
Supplies 12,455 11,568 6,637 4,931
Repairs and maintenance 37,316 37,535 27,918 9,617
Other services and charges 12,383 13,200 13,150 50
Total drainage 357,990 364,398 345,356 19,042
Engineering
Personnel services 72,254 135,478 113,978 21,500
Supplies 3,405 6,194 4,261 1,933
Repairs and maintenance 300 507 462 45
Other services and charges 9,228 41,192 17,924 23,268
Total engineering 85,187 183,371 136,625 46,746
Capital projects administration
Personnel services 170,773 77,549 79,239 1,690)(
Supplies 2,562 566 566 -
Repairs and maintenance 325 1,268 1,268 -
Other services and charges 5,234 2,307 2,307 -
Total capital projects administration 178,894 81,690 83,380 1,690)(
Total public works 2,184,537 2,202,869 2,066,349 136,520
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2015
72
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Community development
Administration
Personnel services 204,484$ 204,856$ 206,558$ 1,702)$(
Supplies 4,555 5,083 4,446 637
Other services and charges 4,200 15,434 14,476 958
Total administration 213,239 225,373 225,480 107)(
Planning and zoning
Personnel services 307,481 308,771 311,474 2,703)(
Supplies 690 690 539 151
Repairs and maintenance 14,700 15,466 15,108 358
Total planning and zoning 322,871 324,927 327,121 2,194)(
Inspection and code enforcement
Personnel services 345,332 348,245 351,536 3,291)(
Supplies 9,278 9,278 4,708 4,570
Repairs and maintenance 1,665 1,997 1,338 659
Other services and charges 33,796 20,564 15,764 4,800
Total inspection and code enforcement 390,071 380,084 373,346 6,738
Total community development 926,181 930,384 925,947 4,437
Parks and recreation
Administration
Personnel services 273,468 279,654 282,486 2,832)(
Supplies 4,445 6,584 5,557 1,027
Repairs and maintenance 26,218 26,829 25,342 1,487
Total administration 304,131 313,067 313,385 318)(
Recreation programs
Personnel services 189,872 192,597 186,452 6,145
Supplies 23,927 22,515 21,437 1,078
Other services and charges 55,130 55,499 51,162 4,337
Capital outlay - 5,688 5,688 -
Total recreation programs 268,929 276,299 264,739 11,560
July 4th program
Personnel services 27,911 27,911 25,748 2,163
Supplies 2,540 4,377 3,007 1,370
Other services and charges 54,909 59,059 58,081 978
Total July 4th program 85,360 91,347 86,836 4,511
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES
73
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Summer day camp program
Personnel services 70,958$ 74,146$ 74,146$ -$
Supplies 9,750 13,600 12,017 1,583
Other services and charges 26,646 26,996 24,563 2,433
Total summer day camp program 107,354 114,742 110,726 4,016
Keep Friendswood beautiful committee
Supplies 8,360 12,718 11,885 833
Repairs and maintenance 11,500 11,120 11,117 3
Other services and charges 15,775 45,745 35,962 9,783
Capital outlay 15,000 15,000 6,500 8,500
Total keep Friendswood beautiful committee 50,635 84,583 65,464 19,119
Stevenson park pool
Personnel services 54,068 48,680 46,532 2,148
Supplies 12,747 12,715 10,916 1,799
Repairs and maintenance 7,843 6,422 3,276 3,146
Other services and charges 35,535 34,988 31,215 3,773
Capital outlay - 24,500 24,500 -
Total Stevenson park pool 110,193 127,305 116,439 10,866
Senior activity center
Personnel services 152,838 153,807 152,706 1,101
Supplies 15,354 18,881 14,594 4,287
Repairs and maintenance 1,200 2,608 2,607 1
Other services and charges 22,105 19,152 13,472 5,680
Total senior activity center 191,497 194,448 183,379 11,069
Parks operations
Personnel services 466,492 469,407 434,242 35,165
Supplies 103,257 109,474 84,018 25,456
Repairs and maintenance 137,484 148,600 132,247 16,353
Other services and charges 478,462 491,701 475,768 15,933
Capital outlay - 16,608 3,565 13,043
Total parks operations 1,185,695 1,235,790 1,129,840 105,950
Facility operations
Supplies 24,809 26,809 20,930 5,879
Repairs and maintenance 122,080 123,354 100,350 23,004
Other services and charges 522,546 525,006 510,877 14,129
Capital outlay - 30,720 14,892 15,828
Total facility operations 669,435 705,889 647,049 58,840
Total parks and recreation 2,973,229 3,143,470 2,917,857 225,613
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
74
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Library
Administration
Personnel services 902,760$ 903,353$ 870,053$ 33,300$
Supplies 130,252 135,885 126,791 9,094
Repairs and maintenance 300 392 391 1
Other services and charges 8,780 9,491 8,356 1,135
Total administration 1,042,092 1,049,121 1,005,591 43,530
Board
Supplies 25,067 41,552 17,841 23,711
Repairs and maintenance 200 440 420 20
Other services and charges 12,960 14,000 12,991 1,009
Total board 38,227 55,992 31,252 24,740
Total library 1,080,319 1,105,113 1,036,843 68,270
Capital improvements
Repairs and maintenance 500,000 523,894 7,475 516,419
Capital outlay - 1,912,508 447,298 1,465,210
Total capital improvements 500,000 2,436,402 454,773 1,981,629
Total expenditures 23,593,931 27,335,681 23,796,800 3,538,881
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 1,208,412)( 4,823,448)( 225,467)( 4,597,981
OTHER FINANCING SOURCES (USES)
Insurance recoveries - 31,077 39,257 8,180)(
Sale of capital assets - - 99 99)(
Transfers in 1,226,205 1,226,205 1,226,205 -
Total other financing sources (uses)1,226,205 1,257,282 1,265,561 8,279)(
NET CHANGE IN FUND BALANCE 17,793 3,566,166)( 1,040,094 4,589,702
FUND BALANCE, BEGINNING 12,519,580 12,519,580 12,519,580 -
FUND BALANCE, ENDING 12,537,373$ 8,953,414$ 13,559,674$ 4,589,702$
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
75
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Intergovernmental 2,850,830 $ 2,850,830 $ 3,016,916 $ 166,086 $
Interest income - - 296 296
Total revenues 2,850,830 2,850,830 3,017,212 166,382
EXPENDITURES
Current
Capital outlay 2,850,830 3,374,261 3,016,916 357,345
Total expenditures 2,850,830 3,374,261 3,016,916 357,345
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES - 523,431)( 296 523,727
OTHER FINANCING SOURCES (USES)
Transfers in - 272,858 - 272,858)(
Total other financing sources (uses)- 272,858 - 272,858)(
NET CHANGE IN FUND BALANCE - 250,573)( 296 250,869
FUND BALANCE, BEGINNING - - - -
FUND BALANCE, ENDING -$ 250,573)$( 296 $ 250,869 $
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
TDRA GRANT
FOR THE YEAR ENDED SEPTEMBER 30, 2015
76
77
CITY OF FRIENDSWOOD, TEXAS
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
SEPTEMBER 30, 2015
I. BUDGETARY CONTROL
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.
78
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 support
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 t he 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.
Public Notice and Hearing
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, provide 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.
79
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 ordinance transfer part of 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.
THIS PAGE LEFT BLANK INTENTIONALLY
COMBINING AND INDIVIDUAL
STATEMENTS AND SCHEDULES
THIS PAGE LEFT BLANK INTENTIONALLY
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
Special revenue funds are used to account for revenues that are restricted in nature for a special purpose
limited by state law and management intentions for expenditures.
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.
EDA Grant Fund – This fund is used to account for receipts and expenditures related to the U.S.
Department of Commerce Economic Development Administration grant awarded to the City in
fiscal year 2008-2009.
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.
Court Security and Technology 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.
DEBT SERVICE FUND
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 – is used to account for the accumulation of resources for, and the payment
of, general long-term debt principal, interest and related costs.
PERMANENT FUND
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.
Police Fires/EMS EDA Sidewalk
Investigation Donation Grant Installation
ASSETS
Cash and investments 61,172$ 95,263$ 401,729$ 20,523$
Receivables, net of allowance
Taxes receivable - - - -
Customer accounts - 23,956 - -
Other receivables - - - -
Due from other governments - - 498,616 -
Prepaids and other assets - - - -
Total assets 61,172 119,219 900,345 20,523
LIABILITIES
Accounts payable 3,446 35,595 - -
Accrued liabilities - - - -
Due to other funds - - 900,000 -
Total liabilities 3,446 35,595 900,000 -
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - - - -
Total deferred inflows of resources - - - -
FUND BALANCES
Nonspendable:
Permanent fund - - - -
Restricted for:
Debt service - - - -
State and/or federal statute - - - -
Economic development - - 345 -
Public safety 57,726 83,624 - -
City ordinances - - - 20,523
Total fund balances 57,726 83,624 345 20,523
Total liabilities, deferred inflows of
resources, and fund balance 61,172$ 119,219$ 900,345$ 20,523$
CITY OF FRIENDSWOOD, TEXAS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2015
Special Revenue Funds
80
Permanent Total
Court Nonmajor
Park Land Security and Debt Governmental
Dedication Technology Service 1776 Park Funds
135,193$ 186,840$ 177,671$ 31,378$ 1,109,769$
- - 34,102 - 34,102
- - - - 23,956
- 3,573 - - 3,573
- - - - 498,616
- 75 - - 75
135,193 190,488 211,773 31,378 1,670,091
- 933 - 39,974
- 636 - - 636
- - - - 900,000
- 1,569 - - 940,610
- 3,552 34,103 - 37,655
- 3,552 34,103 - 37,655
- - - 31,378 31,378
- - 177,670 - 177,670
- 185,367 - - 185,367
- - - - 345
- - - - 141,350
135,193 - - - 155,716
135,193 185,367 177,670 31,378 691,826
135,193$ 190,488$ 211,773$ 31,378$ 1,670,091$
Special Revenue Funds
81
Police Fires/EMS EDA Sidewalk
Investigation Donation Grant Installation
REVENUES
Taxes -$ -$ -$ -$
Licenses, permits and fees - - - 17,232
Intergovernmental 43,099 - 208,756 -
Fines and forfeitures - - - -
Contributions - 262,343 - -
Interest 273 201 345 46
Total revenues 43,372 262,544 209,101 17,278
EXPENDITURES
Current:
General government - - - -
Public safety 43,830 137,000 - -
Debt Service
Principal - 112,292 - -
Interest and other - 12,665 - -
Bond issuance costs - - - -
Capital outlay - - 208,756 -
Total expenditures 43,830 261,957 208,756 -
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 458)( 587 345 17,278
OTHER FINANCING SOURCES (USES)
Transfers in - - - -
Premium on bond issuance - - - -
Payment to refunding escrow agent - - - -
Issuance of refunding bonds - - - -
Total other financing sources (uses)- - - -
NET CHANGE IN FUND BALANCES 458)( 587 345 17,278
FUND BALANCES, BEGINNING 58,184 83,037 - 3,245
FUND BALANCES, ENDING 57,726$ 83,624$ 345$ 20,523$
Special Revenue
CITY OF FRIENDSWOOD, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
82
Permanent Total
Court Nonmajor
Park Land Security and Debt Governmental
Dedication Technology Service 1776 Park Funds
-$ -$ 1,601,496$ -$ 1,601,496$
42,600 - - - 59,832
- - - 251,855
- 30,275 - - 30,275
- - - - 262,343
549 975 2,150 137 4,676
43,149 31,250 1,603,646 137 2,210,477
- 115,645 - - 115,645
- - - - 180,830
- - 1,160,531 - 1,272,823
- - 600,203 - 612,868
- - 163,472 - 163,472
29,898 - - - 238,654
29,898 115,645 1,924,206 - 2,584,292
13,251 84,395)( 320,560)( 137 373,815)(
- - 318,457 - 318,457
- - 268,289 - 268,289
- - 3,058,663)( - 3,058,663)(
- - 2,840,000 - 2,840,000
- - 368,083 - 368,083
13,251 84,395)( 47,523 137 5,732)(
121,942 269,762 130,147 31,241 697,558
135,193$ 185,367$ 177,670$ 31,378$ 691,826$
Special Revenue
CITY OF FRIENDSWOOD, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
83
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Interest income -$ -$ 8,205$ 8,205$
Total revenues - - 8,205 8,205
EXPENDITURES
Capital outlay - 9,153,019 3,544,886 5,608,133
Total expenditures - 9,153,019 3,544,886 5,608,133
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES - 9,153,019)( 3,536,681)( 5,616,338
OTHER FINANCING SOURCES (USES)
Issuance of capital-related debt 9,431,302 9,595,000 9,595,000 -
Premium on bond issuance - 378,457 378,457 -
Transfers out - 318,457)( 318,457)( -
Total other financing sources (uses)9,431,302 9,655,000 9,655,000 -
NET CHANGE IN FUND BALANCES 9,431,302 501,981 6,118,319 5,616,338
FUND BALANCES, BEGINNING 239,078)( 239,078)( 239,078)( -
FUND BALANCES, ENDING 9,192,224$ 262,903$ 5,879,241$ 5,616,338$
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
BOND CONSTRUCTION
FOR THE YEAR ENDED SEPTEMBER 30, 2015
84
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Intergovernmental 1,737$ 37,335$ 43,099$ 5,764$
Interest income 113 113 273 160
Total revenues 1,850 37,448 43,372 5,924
EXPENDITURES
Current
Public safety 1,737 56,421 43,830 12,591
Total expenditures 1,737 56,421 43,830 12,591
NET CHANGE IN FUND BALANCE 113 18,973)( 458)( 18,515
FUND BALANCE, BEGINNING 58,184 58,184 58,184 -
FUND BALANCE, ENDING 58,297$ 39,211$ 57,726$ 18,515$
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
POLICE INVESTIGATION
FOR THE YEAR ENDED SEPTEMBER 30, 2015
85
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Donations 267,220$ 267,220$ 262,343$ 4,877)$(
Interest income - - 201 201
Total revenues 267,220 267,220 262,544 4,676)(
EXPENDITURES
Current:
Public safety 142,262 142,262 137,000 5,262
Debt service:
Principal 112,224 112,292 112,292 -
Interest and other charges 12,734 12,666 12,665 1
Total expenditures 267,220 267,220 261,957 5,263
NET CHANGE IN FUND BALANCE - - 587 587
FUND BALANCE, BEGINNING 83,037 83,037 83,037 -
FUND BALANCE, ENDING 83,037$ 83,037$ 83,624$ 587$
CITY OF FRIENDSWOOD, TEXAS
Budgeted Amounts
FOR THE YEAR ENDED SEPTEMBER 30, 2015
FIRE/EMS DONATION FUND
IN FUND BALANCE - BUDGET AND ACTUAL
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
86
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Property taxes 1,602,648$ 1,602,648$ 1,601,496$ 1,152)$(
Interest 1,000 1,000 2,150 1,150
Total revenues 1,603,648 1,603,648 1,603,646 2)(
EXPENDITURES
Debt service
Principal 1,605,634 1,810,635 1,160,531 650,104
Interest and other 603,634 875,517 600,203 275,314
Bond issuance costs - 299,730 163,472 136,258
Total expenditures 2,209,268 2,985,882 1,924,206 1,061,676
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 605,620)( 1,382,234)( 320,560)( 1,061,674
OTHER FINANCING SOURCES (USES)
Transfers in 620,900 1,243,608 318,457 925,151)(
Transfers out - 6,085,000)( - 6,085,000
Premium on bond issuance - - 268,289 268,289
Payment to refunding escrow agent - 3,502,800)( 3,058,663)( 444,137
Refunding bonds issued - 9,741,703 2,840,000 6,901,703)(
Total other financing sources 620,900 1,397,511 368,083 1,029,428)(
NET CHANGE IN FUND BALANCE 15,280 15,277 47,523 32,246
FUND BALANCE, BEGINNING 130,147 130,147 130,147 -
FUND BALANCE, ENDING 145,427$ 145,424$ 177,670$ 32,246$
CITY OF FRIENDSWOOD, TEXAS
Budgeted Amounts
FOR THE YEAR ENDED SEPTEMBER 30, 2015
DEBT SERVICE FUND
IN FUND BALANCE - BUDGET AND ACTUAL
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
87
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Licenses, permits and fees 53,000$ 53,000$ 42,600$ 10,400)$(
Interest income 325 325 549 224
Total revenues 53,325 53,325 43,149 10,176)(
EXPENDITURES
Capital outlay 159,414 182,919 29,898 153,021
Total expenditures 159,414 182,919 29,898 153,021
NET CHANGE IN FUND BALANCE 106,089)( 129,594)( 13,251 142,845
FUND BALANCE, BEGINNING 121,942 121,942 121,942 -
FUND BALANCE, ENDING 15,853$ 7,652)$( 135,193$ 142,845$
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
PARK LAND DEDICATION
FOR THE YEAR ENDED SEPTEMBER 30, 2015
88
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Fines and forfeitures 30,500$ 30,500$ 30,275$ 225)$(
Interest income 600 600 975 375
Total revenues 31,100 31,100 31,250 150
EXPENDITURES
Current
General government 35,087 144,615 115,645 28,970
Total expenditures 35,087 144,615 115,645 28,970
NET CHANGE IN FUND BALANCE 3,987)( 113,515)( 84,395)( 29,120
FUND BALANCE, BEGINNING 269,762 269,762 269,762 -
FUND BALANCE, ENDING 265,775$ 156,247$ 185,367$ 29,120$
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
COURT SECURITY TECHNOLOGY
FOR THE YEAR ENDED SEPTEMBER 30, 2015
89
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Interest income 70$ 70$ 137$ 67$
Total revenues 70 70 137 67
EXPENDITURES
Current - - - -
Total expenditures - - - -
NET CHANGE IN FUND BALANCE 70 70 137 67
FUND BALANCE, BEGINNING 31,241 31,241 31,241 -
FUND BALANCE, ENDING 31,311$ 31,311$ 31,378$ 67$
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
1776 PARK
FOR THE YEAR ENDED SEPTEMBER 30, 2015
90
STATISTICAL SECTION
(Unaudited)
This part of City of Friendswood, Texas’ comprehensive annual 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 Page
Financial Trends
These schedules contain trend information to help the reader
understand how the City’s financial performance has changed over
time. 91 – 100
Revenue Capacity
These schedules contain trend information to help the reader assess
the factors affecting the City’s ability to generate its electric utility,
sales tax and property tax revenues. 101 – 104
Debt Capacity
These schedules present information to help the reader assess the
affordability of the City’s current levels of outstanding debt and its
ability to issue additional debt in the future. 105 – 109
Economic and Demographic Indicators
These schedules contain economic and demographic information
to help the reader understand the environment within which the
City’s financial activities take place. 110 – 112
Operating Information
These schedules contain information about the City’s operations and
resources to help the reader understand how the City’s financial
information relates to the services the City provides and the
activities it performs. 113 – 114
2006 2007 2008 2009
Governmental activities
Net investment
in capital assets 32,849,446$ 71,777,140$ 70,591,236$ 69,313,348$
Restricted 2,034,157 2,391,482 2,773,910 2,461,510
Unrestricted 10,391,123 10,785,998 10,548,129 9,892,077
Total governmental activities
net position 45,274,726 84,954,620 83,913,275 81,666,935
Business-type activities
Net investment in
capital assets 16,815,130 16,884,376 20,375,620 21,122,644
Restricted 41,057 162,218 27,246 93,526
Unrestricted 6,574,920 7,475,597 4,227,253 6,730,812
Total business-type activities
net position 23,431,107 24,522,191 24,630,119 27,946,982
Primary government
Net investment
in capital assets 49,664,576 88,661,516 90,966,856 90,436,992
Restricted 2,075,214 2,553,700 2,801,156 2,555,036
Unrestricted 16,966,043 18,261,595 14,775,382 16,622,889
Total primary government
net position 68,705,833$ 109,476,811$ 108,543,394$ 109,614,917$
CITY OF FRIENDSWOOD, TEXAS
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
(Unaudited)
Fiscal Year
91
TABLE 1
2010 2011 2012 2013 2014 2015
70,480,334$ 66,580,049$ 65,582,783$ 65,056,180$ 65,404,791$ 73,611,490$
1,977,801 922,874 872,869 718,275 653,496 1,179,764
8,447,179 8,227,254 8,828,132 9,565,406 10,798,907 5,901,505
80,905,314 75,730,177 75,283,784 75,339,861 76,857,194 80,692,759
19,565,756 26,251,346 25,618,823 22,961,547 24,495,816 26,628,714
593,597 731,410 786,600 176,882 90,395 27,468
8,677,882 11,373,311 13,032,798 16,790,183 14,818,104 12,040,181
28,837,235 38,356,067 39,438,221 39,928,612 39,404,315 38,696,363
90,046,090 92,831,395 91,201,606 88,017,727 89,900,607 100,240,204
2,571,398 1,654,284 1,659,469 895,157 743,891 1,207,232
17,125,061 19,600,565 21,860,930 26,355,589 24,617,011 17,941,686
109,742,549$ 114,086,244$ 114,722,005$ 115,268,473$ 115,261,509$ 119,389,122$
Fiscal Year
92
2006 2007 2008 2009
Expenses
Governmental activities:
General government 3,330,439$ 4,472,602$ 4,339,620$ 5,164,623$
Public safety 7,060,800 7,565,797 12,652,812 14,929,941
Community development
and public works 2,831,857 5,475,447 4,921,298 5,292,000
Public works - - - -
Community development - - - -
Community services 3,098,013 3,420,244 3,841,387 4,002,165
Library - - - -
Interest and fiscal charges 857,602 835,511 803,733 678,705
Bond issuance costs - - - -
Total governmental activities expenses 17,178,711 21,769,601 26,558,850 30,067,434
Business-type activities:
Water and sewer 6,078,881 5,711,063 6,523,501 6,640,062
Interest and fiscal charges 962,989 1,583,551 1,543,859 1,604,174
Bond issuance costs - - - -
Total business-type activities expenses 7,041,870 7,294,614 8,067,360 8,244,236
Total primary government expenses 24,220,581 29,064,215 34,626,210 38,311,670
Program Revenues
Governmental activities:
Charges for services
General government 1,238,631 1,353,160 1,178,523 1,327,484
Public safety 54,653 23,267 21,356 46,773
Community development
and public works 805,710 998,625 838,060 602,265
Public works - - - -
Community development - - - -
Community services 112,681 219,944 132,244 411,207
Library - - - -
Operating grants and contributions 771,477 489,707 4,021,908 5,755,038
Capital grants and contributions - - - -
Total governmental activities
program revenues 2,983,152 3,084,703 6,192,091 8,142,767
Business-type activities:
Charges for services
Water and sewer 8,392,277 8,021,040 8,624,546 12,028,895
Total business-type activities
program revenues 8,392,277 8,021,040 8,624,546 12,028,895
Total primary government
program revenues 11,375,429 11,105,743 14,816,637 20,171,662
Net (Expense) Revenues
Governmental activities 14,177,559)( 18,684,898)( 20,366,759)( 21,924,667)(
Business-type activities 1,350,407 726,426 557,186 3,784,659
Total primary government net expense 12,827,152)$( 17,958,472)$( 19,809,573)$( 18,140,008)$(
CITY OF FRIENDSWOOD, TEXAS
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(Accrual basis of accounting)
(Unaudited)
Fiscal Year
93
TABLE 2
2010 2011 2012 2013 2014 2015
5,145,447$ 4,876,064$ 4,737,702$ 4,679,339$ 4,589,795$ 5,410,643$
10,175,028 10,548,568 10,736,805 10,800,130 11,236,402 11,763,659
- - - - - -
3,853,685 3,517,707 3,738,111 4,385,090 3,921,658 3,933,288
1,203,204 1,284,188 1,520,401 1,207,264 1,097,075 1,406,288
3,034,523 3,058,313 3,227,731 3,260,931 3,356,587 2,869,345
979,084 979,978 1,004,303 1,002,801 1,083,043 1,026,967
789,652 871,790 757,011 703,275 630,542 567,142
- - - - - 163,472
25,180,623 25,136,608 25,722,064 26,038,830 25,915,102 27,140,804 27,140,804
6,663,308 6,955,505 6,902,279 7,681,366 7,995,106 7,629,711
2,037,104 1,644,074 1,638,495 1,590,395 1,514,804 1,413,962
- - - - - 110,314
8,700,412 8,599,579 8,540,774 9,271,761 9,509,910 9,153,987
33,881,035 33,736,187 34,262,838 35,310,591 35,425,012 36,294,791
1,072,289 1,158,392 1,167,619 989,190 912,910 807,245
38,438 39,914 39,661 34,944 31,620 30,275
- - - - - -
152,163 158,858 171,890 186,504 193,064 190,099
550,286 643,150 730,211 825,366 877,132 843,648
258,030 267,837 271,912 316,047 315,702 280,046
44,313 43,147 39,543 36,686 36,081 33,699
2,819,418 3,150,808 648,058 644,458 843,995 660,633
- - 527,288 543,763 1,202,376 3,225,672
4,934,937 5,462,106 3,596,182 3,576,958 4,412,880 6,071,317
9,854,083 12,726,936 11,258,216 11,462,779 11,117,391 11,020,029
9,854,083 12,726,936 11,258,216 11,462,779 11,117,391 11,020,029
14,789,020 18,189,042 14,854,398 15,039,737 15,530,271 17,091,346
20,245,686)( 19,674,502)( 22,126,882)( 22,461,872)( 21,502,222)( 21,069,487)(
1,153,671 4,127,357 2,717,442 2,191,018 1,607,481 1,866,042
19,092,015)$( 15,547,145)$( 19,409,440)$( 20,270,854)$( 19,894,741)$( 19,203,445)$(
Fiscal Year
94
2006 2007 2008 2009
General Revenues and Other Changes
in Net Position
Governmental activities:
Taxes
Property 11,304,684$ 11,876,246$ 12,512,950$ 13,481,500$
Sales and alcohol 3,658,699 3,904,436 3,767,526 3,871,995
Franchise 1,220,581 1,239,167 1,317,166 1,363,221
Other 11,940 16,186 25,429 28,859
Investment earnings 915,710 1,063,715 648,301 166,492
Gain (loss) on sale of capital assets - 345,976 - 4,320
Miscellaneous 21,556 4,152 73,026 214,484
Transfers 680,850 875,616 981,016 547,456
Total governmental activities 17,814,020 19,325,494 19,325,414 19,678,327
Business-type activities:
Investment earnings 262,761 1,236,092 531,758 128,338
Gain (loss) on sale of capital assets - - - 48,678)(
Miscellaneous 1,375 4,182 - -
Transfers 680,850)( 875,616)( 981,016)( 547,456)(
Total business-type activities 416,714)( 364,658 449,258)( 467,796)(
Total primary government 17,397,306 19,690,152 18,876,156 19,210,531
Change in Net Position
Governmental activities 3,636,461 640,596 1,041,345)( 2,246,340)(
Business-type activities 933,693 1,091,084 107,928 3,316,863
Total primary government 4,570,154$ 1,731,680$ 933,417)$( 1,070,523$
CITY OF FRIENDSWOOD, TEXAS
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(Accrual basis of accounting)
(Unaudited)
Fiscal Year
95
TABLE 2
(continued)
2010 2011 2012 2013 2014 2015
13,664,765$ 13,944,725$ 14,165,599$ 14,630,961$ 14,864,284$ 15,574,684$
3,853,161 4,002,740 3,907,577 4,293,794 4,693,484 5,291,186
1,510,794 1,598,407 1,556,556 1,583,258 1,673,615 1,726,557
28,859 28,883 23,356 24,974 32,799 -
93,018 110,863 137,202 88,510 109,849 79,071
33,647 23,831 17,601 43,788 34,359 -
131,545 126,228 147,457 78,682 84,275 108,306
168,276 5,336,312)( 1,725,141 1,773,982 1,799,344 1,226,205
19,484,065 14,499,365 21,680,489 22,517,949 23,292,009 24,006,009
87,056 55,163 82,853 37,565 40,713 49,138
182,198)( - 7,000 - - -
- - - 35,790 - 7,839
168,276)( 5,336,312 1,725,141)( 1,773,982)( 1,799,344)( 1,226,205)(
263,418)( 5,391,475 1,635,288)( 1,700,627)( 1,758,631)( 1,169,228)(
19,220,647 19,890,840 20,045,201 20,817,322 21,533,378 22,836,781
761,621)( 5,175,137)( 446,393)( 56,077 1,789,787 2,936,522
890,253 9,518,832 1,082,154 490,391 151,150)( 1,956,662
128,632$ 4,343,695$ 635,761$ 546,468$ 1,638,637$ 4,893,184$
Fiscal Year
96
2006 2007 2008 2009
General fund
Reserved 1,313,829$ 601,646$ 1,037,279$ 686,404$
Unreserved 8,973,646 9,926,479 9,177,390 9,185,590
Nonspendable - - - -
Restricted - - - -
Committed - - - -
Assigned - - - -
Unassigned - - - -
Total general fund 10,287,475 10,528,125 10,214,669 9,871,994
All other governmental funds
Reserved 4,220,225 3,575,592 2,310,481 1,385,265
Unreserved, reported in:
Special revenue funds 404,749 558,653 643,223 1,075,343
Capital projects fund 3,943,654 1,957,116 323,597 326,600
Permanent fund 27,477 28,901 30,070 30,507
Nonspendable - - - -
Restricted - - - -
Unassigned - - - -
Total all other governmental funds 8,596,105$ 6,120,262$ 3,307,371$ 2,817,715$
CITY OF FRIENDSWOOD, TEXAS
FUND BALANCES - GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified accrual basis of accounting)
(Unaudited)
Fiscal Year
97
TABLE 3
2010 2011 2012 2013 2014 2015
1,731,056$ -$ -$ -$ -$ -$
7,399,217 - - - - -
- 220,151 99,874 122,927 143,201 822,226
- 97,728 173,015 281,826 400,411 518,119
- - - - - 685,486
- 1,085,527 434,931 487,201 1,421,785 2,773,419
- 7,511,998 9,379,399 9,714,206 10,554,183 8,760,424
9,130,273 8,915,404 10,087,219 10,606,160 12,519,580 13,559,674
667,682 - - - - -
1,328,145 - - - - -
- - - - - -
30,720 - - - - -
- 30,869 31,027 31,137 31,241 31,378
- 4,162,423 2,184,855 995,269 666,317 6,539,985
- - - - 239,078)( -
2,026,547$ 4,193,292$ 2,215,882$ 1,026,406$ 458,480$ 6,571,363$
Fiscal Year
98
2006 2007 2008 2009
Revenues
Taxes 16,190,756$ 16,961,818$ 17,606,273$ 18,763,998$
Fines and penalties 1,163,984 1,288,794 1,161,903 1,143,102
Licenses and permits 769,352 1,017,502 944,756 966,797
Intergovernmental 535,074 248,702 3,801,013 5,794,303
Investment earnings 906,552 1,054,698 639,402 161,106
Donations 219,353 229,939 265,535 272,911
Other revenues 277,995 279,788 37,876 34,448
Total revenues 20,063,066 21,081,241 24,456,758 27,136,665
Expenditures
General governmental 3,315,844 4,605,245 4,114,662 4,178,062
Public safety 6,903,806 7,482,603 12,404,745 14,717,404
Community development
and public works 2,579,398 3,600,798 3,045,904 3,406,881
Public works - - - -
Community development - - - -
Community services 2,630,094 2,866,388 3,266,250 3,439,475
Library - - - -
Capital outlay 4,292,854 3,711,569 4,339,546 2,489,845
Debt principal payment 608,184 658,073 774,584 787,293
Interest and fiscal agent charges 757,402 739,487 704,136 691,638
Bond issuance costs and fees - - - -
Total expenditures 21,087,582 23,664,163 28,649,827 29,710,598
Excess of revenues
over (under) expenditures 1,024,516)( 2,582,922)( 4,193,069)( 2,573,933)(
Other financing sources (uses)
Sale of capital assets 187,345 785,942 22,600 -
Insurance recoveries - - 63,106 123,707
Issuance of capital related debt - - - -
Issuance of capital lease - - - 1,133,460
Refunding bonds issued - - - -
Payment to refunding escrow agent - - - -
Premium on issuance of debt - - - -
Transfer in 904,955 1,226,304 992,586 2,098,405
Transfer out 224,105)( 350,688)( 11,570)( 1,613,970)(
Total other financing sources (uses)868,195 1,661,558 1,066,722 1,741,602
Net change in fund balance 156,321)$( 921,364)$( 3,126,347)$( 832,331)$(
Debt service as a percentage of
noncapital expenditures 8.1%7.0%6.1%5.4%
Fiscal Year
CITY OF FRIENDSWOOD, TEXAS
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified accrual basis of accounting)
(Unaudited)
99
TABLE 4
2010 2011 2012 2013 2014 2015
19,104,625$ 19,592,092$ 19,630,172$ 20,563,848$ 21,335,527$ 22,513,317$
1,043,126 1,012,592 1,037,880 939,380 860,257 907,557
960,479 1,069,845 1,174,013 1,327,918 1,385,898 1,349,264
2,652,037 3,109,645 1,077,890 918,641 1,791,451 3,536,980
90,337 109,272 135,483 87,330 109,117 77,947
280,223 276,209 306,119 363,413 349,166 349,325
81,366 78,243 41,410 84,673 54,989 72,837
24,212,193 25,247,898 23,402,967 24,285,203 25,886,405 28,807,227
4,224,384 4,397,858 4,322,631 4,250,320 4,306,143 5,343,160
9,799,372 10,093,964 10,201,010 10,234,811 10,599,575 11,348,346
- - - - - -
1,956,479 1,637,237 1,702,119 2,204,176 1,689,987 2,066,349
1,208,899 1,284,188 1,520,401 1,207,264 1,092,982 925,947
2,458,422 2,472,015 2,622,970 2,675,813 2,772,072 2,917,857
979,084 979,978 1,004,303 1,002,801 1,083,043 1,036,843
3,799,303 4,254,582 3,705,622 1,942,746 2,500,254 7,255,229
787,590 1,065,865 1,562,088 1,721,983 1,668,692 1,272,823
773,744 864,746 768,329 712,822 662,718 612,868
- 200,227 131,380 - - 163,472
25,987,277 27,250,660 27,540,853 25,952,736 26,375,466 32,942,894
1,775,084)( 2,002,762)( 4,137,886)( 1,667,533)( 489,061)( 4,135,667)(
23,340 8,992 9,250 27,566 6,325 99
50,579 45,334 105,502 48,132 28,886 39,257
- 3,460,000 8,890,000 - - 9,595,000
- - 464,270 147,318 - -
- 5,460,000 - - - 2,840,000
- - 9,425,538)( - - 3,058,663)(
- 317,452 563,666 - - 646,746
1,512,987 1,235,892 1,970,819 1,973,106 1,799,344 1,544,662
1,344,711)( 6,573,032)( 245,678)( 199,124)( - 318,457)(
242,195 3,954,638 2,332,291 1,996,998 1,834,555 11,288,644
1,532,889)$( 1,951,876$ 1,805,595)$( 329,465$ 1,345,494$ 7,152,977$
7.0%8.4%9.8%10.1%9.8%7.5%
Fiscal Year
CITY OF FRIENDSWOOD, TEXAS
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified accrual basis of accounting)
(Unaudited)
100
Table 5
Less: Total
Commercial Total Exemptions and Total Direct
Fiscal Tax Residential and Industrial Other Assessed Tax Exempt Taxable Tax
Year Year Property Property Property Value Property Value Rate
2005 2004 1,882,823,995$ 211,269,120$ 189,513,770$ 2,283,606,885$ 532,056,903$ 1,751,549,982$ 0.63850
2006 2005 1,998,747,285 217,285,258 183,010,440 2,399,042,983 557,521,388 1,841,521,595 0.60400
2007 2006 2,163,006,305 260,809,119 215,897,086 2,639,712,510 622,333,722 2,017,378,788 0.58210
2008 2007 2,305,398,212 266,240,487 223,856,148 2,795,494,847 642,347,609 2,153,147,238 0.57640
2009 2008 2,443,040,835 271,618,942 254,262,180 2,968,921,957 672,410,955 2,296,511,002 0.57970
2010 2009 2,509,894,027 277,693,532 248,910,248 3,036,497,807 695,681,434 2,340,816,373 0.57970
2011 2010 2,547,883,315 276,080,104 235,256,040 3,059,219,459 703,419,784 2,355,799,675 0.58510
2012 2011 2,584,070,993 280,043,373 230,531,859 3,094,646,225 706,059,683 2,388,586,542 0.59020
2013 2012 2,622,105,658 286,288,277 235,960,049 3,144,353,984 710,718,423 2,433,635,561 0.59700
2014 2013 2,695,532,057 294,316,218 238,127,209 3,227,975,484 724,153,848 2,503,821,636 0.59140
2015 2014 2,850,404,776 300,533,643 237,028,723 3,387,967,142 761,444,427 2,626,522,715 0.56870
Source: Galveston County Tax Assessor/Collector and City of Friendswood records.
Note: Property in the City of Friendswood is reassessed once every two years on average. (Source: Galveston Central Appraisal District)
Tax rates per $100 of assessed value.
Residential property includes both single-family and multi-family properties.
CITY OF FRIENDSWOOD, TEXAS
ASSESSED VALUE AND TAXABLE VALUE OF PROPERTY
LAST TEN FISCAL YEARS
(Unaudited)
101
Table 6
Fiscal
Year Friendswood Clear Creek Galveston County
Ended Debt Total Independent Independent Drainage Galveston Harris
September 30,General Service Direct School District School District District County County
2005 0.5547$ 0.0838$ 0.6385$ 1.6370$ 1.7450$ 0.1483$ 0.6388$ 0.63998$
2006 0.5243 0.0797 0.6040 1.5070 1.7750 0.1450 0.5874 0.63998
2007 0.5120 0.0701 0.5821 1.5700 1.6300 0.1450 0.5874 0.63998
2008 0.5016 0.0748 0.5764 1.1770 1.3200 0.1425 0.5686 0.62998
2009 0.5097 0.0700 0.5797 1.3670 1.3600 0.1425 0.5586 0.62998
2010 0.4997 0.0800 0.5797 1.3670 1.3600 0.1425 0.6186 0.62998
2011 0.5198 0.0653 0.5851 1.3670 1.3600 0.1425 0.6198 0.62998
2012 0.5218 0.0684 0.5902 1.3670 1.3600 0.1400 0.6129 0.62998
2013 0.5307 0.0663 0.5970 1.3670 1.3600 0.1400 0.5999 0.62998
2014 0.5303 0.0611 0.5914 1.3670 1.4000 0.1400 0.5837 0.62998
2015 0.5303 0.0611 0.5914 1.3670 1.4000 0.1350 0.5788 0.62998
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.
City Direct Rates Overlapping Rates
CITY OF FRIENDSWOOD, TEXAS
DIRECT AND OVERLAPPING PROPERTY TAX RATES
LAST TEN FISCAL YEAR
(Unaudited)
(rate per $100 of assessed value)
102
Table 7
Percentage Percentage
of Total City of Total City
Taxable Taxable
Taxable Assessed Taxable Assessed
Taxpayer Value Rank Value Value Rank Value
Reserve at Autumn Crk LTD 21,110,108$ 1 0.80% -$ -
Texas-New Mexico Power Co. 14,801,749 2 0.56% 12,092,450 1 0.53%
Kroger Co.13,641,468 3 0.52% - -
G&I VI Sky Hawk, LP 9,683,100 4 0.37% - -
H E Butt Grocery Company 8,039,600 5 0.31% 7,578,980 3 -
HSRE Friendswood, LLC 7,535,390 6 0.29% - -
Autumn Creek Dev LTD 7,189,780 7 0.27% -
HCP Friendswood LLC 6,995,240 8 0.27% - -
A-S 108 Friendswood Crossing LP 6,796,870 9 0.26% - -
Denbury Onshore LLC 6,397,460 10 0.24% - -
Southwestern Bell Telephone Co.- - 8,163,500 2 0.36%
Texas HCP Holding, LP - - 6,457,140 4 0.28%
Friendswood Retirement - - 5,873,500 5 0.26%
Exxon Mobil Pipeline Co.- - 4,852,400 6 0.21%
D R Horton - Texas LTD - - 3,612,810 7 0.16%
Maxi-Ban LTD - - 3,529,980 8 0.16%
Friendswood Huntington Woods - - 3,518,610 9 0.15%
Texas & Kansas City Cable Partners - - 3,467,420 10 0.15%
Total 102,190,765 3.89% 59,146,790 2.27%
All other taxpayers 2,524,331,950 96.11% 2,215,425,848 97.40%
2,626,522,715$ 100.00% 2,274,572,638$ 99.67%
Source: Galveston Central Appraisal District and Harris County Appraisal District
CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL PROPERTY TAX PAYERS
CURRENT YEAR AND NINE YEARS AGO
(Unaudited)
2015 2006
103
Table 8
Collections
Fiscal Year Taxes Levied (adjustments)
Ended for the Percentage in Subsequent Percentage
September 30,Fiscal Year Amount of Levy Years Amount of Levy
2006 11,168,123$ 11,019,314$ 98.81%137,930$ 11,157,244$ 99.90%
2007 11,741,323 11,532,882 98.23%199,751 11,732,633 99.93%
2008 12,421,754 12,193,715 98.73%220,210 12,413,925 99.94%
2009 13,317,911 13,113,928 99.12%192,440 13,306,368 99.91%
2010 13,553,716 13,395,543 99.36%142,688 13,538,231 99.89%
2011 13,738,978 13,608,076 99.47%113,137 13,721,213 99.87%
2012 14,068,660 13,916,558 99.51%131,248 14,047,806 99.85%
2013 14,454,404 14,361,379 99.63%69,157 14,430,536 99.83%
2014 14,700,279 14,656,257 99.70%8,251 14,664,508 99.76%
2015 15,424,948 15,306,943 99.23%- 15,315,248 99.29%
Source: Galveston County Tax Assessor/Collector and City of Friendswood records.
Note:Percentage of levy collected to date exceeds taxes levied for some fiscal years due to adjustments made to the tax levy in subsequent years.Taxes
levied per this schedule represent the original taxes levied, while collections include amounts related to adjustments.
Collected within the
Fiscal Year of the Levy Total Collections to Date
CITY OF FRIENDSWOOD, TEXAS
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(Unaudited)
104
Table 9
General General Certificates Water Total Percentage
Fiscal Obligation Capital Obligation of Revenue Primary of Personal Per
Year Bonds Leases Bonds Obligation Bonds Government Income Capita
2005 17,590,000$ 237,597$ 3,310,000$ 470,000$ 14,020,000$ 35,627,597$ 0.39%1,040$
2006 17,150,000 168,957 2,855,000 280,000 30,665,000 51,118,957 0.50%1,490
2007 16,660,000 96,380 2,375,000 50,000 30,515,000 49,696,380 0.46%1,430
2008 16,065,000 16,351 1,680,000 - 30,355,000 48,116,351 0.41%1,355
2009 15,445,000 982,518 865,000 - 42,260,000 59,552,518 0.50%1,582
2010 14,800,000 839,928 - - 42,045,000 57,684,928 0.47%1,516
2011 22,885,000 710,023 - - 35,205,000 58,800,023 0.46%1,579
2012 21,605,000 975,726 - - 34,115,000 56,695,726 0.42%1,498
2013 20,230,000 876,981 - - 32,995,000 54,101,981 0.37%1,410
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 49,549,285 N/A 1,259
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.
Personal income data provided on Table 14 is for the County of Galveston. Data was not available specific to the
City of Friendswood and therefore is not included on this table.
Governmental Activities Business-Type Activities
CITY OF FRIENDSWOOD, TEXAS
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(Unaudited)
105
Table 10
General Less Debt Net Percentage of
Fiscal Taxable Obligation Service General Taxable Value Per
Year Population Value Bonds Funds Bonded Debt Property Capita
2005 34,272 1,751,549,982$ 17,590,000$ 1,375,345$ 16,214,655$ 0.93%473$
2006 34,306 1,841,521,595 17,150,000 1,576,724 15,573,276 0.85%454
2007 34,759 2,017,378,788 16,660,000 1,803,928 14,856,072 0.74%427
2008 35,500 2,153,147,238 16,065,000 2,100,617 13,964,383 0.65%393
2009 37,653 2,296,511,002 15,445,000 952,951 14,492,049 0.63%385
2010 38,057 2,340,816,373 14,800,000 545,676 14,254,324 0.61%375
2011 37,247 2,355,799,675 22,885,000 240,869 22,644,131 0.96%608
2012 37,839 2,388,586,542 21,605,000 193,714 21,411,286 0.90%566
2013 38,369 2,433,635,561 20,230,000 134,339 20,095,661 0.83%524
2014 38,911 2,503,821,636 18,815,000 130,147 18,684,853 0.75%480
2015 39,458 2,626,522,715 34,400,956 147,193 34,253,763 1.30%868
Note:Details regarding the City's outstanding debt can be found in the notes to the financial statements.
General Bonded Debt Outstanding
CITY OF FRIENDSWOOD, TEXAS
RATIOS OF NET GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
(Unaudited)
106
Table 11
Estimated
Estimated Share of
Debt Percentage Overlapping
Governmental Unit Outstanding Applicable Debt
Debt repaid with property taxes
Friendswood Independent School District 105,515,000$ 100.00%105,515,000$
Clear Creek Independent School District 964,908,004 3.370%32,517,400
Galveston County 232,129,000 8.361%19,409,000
Harris County 3,270,712,000 0.461%15,084,524
Subtotal, overlapping debt 172,525,923
City direct debt 34,761,540
Total direct and overlapping debt 207,287,463$
Sources: 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.
CITY OF FRIENDSWOOD, TEXAS
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
AS OF SEPTEMBER 30, 2015
(Unaudited)
107
Table 12
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:
Article 11, Section 5 of the State of Texas Constitution states in part:
"but no tax for any purpose shall ever be lawful for any one year, which shall exceed two and one-half percent
of the taxable property of such city"
The tax rate for fiscal year ended September 30, 2015 is $.5914 per $100 of assessed valuation with assessed
valuation being 100% of market value.
CITY OF FRIENDSWOOD, TEXAS
LEGAL DEBT MARGIN INFORMATION
(Unaudited)
"In keeping with the Constitution of the State of Texas and not contrary thereto,the City of Friendswood shall
have the power to borrow money on the credit of the City for any public purpose not now or hereafter prohibited
by the Constitution and laws of the State of Texas,and shall have the right to issue all tax bonds,revenue bonds,
funding and refunding bonds,time warrants and other evidence of indebtedness as now authorized or as may
hereafter be authorized to be issued by cities and towns by the laws of the State of Texas."
108
Table 13
Utility Less:Net
Fiscal Service Operating Available Debt Service
Year Charges Expenses Revenue Principal Interest Coverage
2005 8,390,761$ 4,769,885$ 3,620,876$ 140,000$ 766,788$ 3.99
2006 8,392,277 4,660,868 3,731,409 160,000 445,351 6.16
2007 8,021,040 4,338,819 3,682,221 150,000 1,441,234 2.31
2008 8,624,546 5,143,516 3,481,030 160,000 1,416,465 2.21
2009 12,028,895 5,249,388 6,779,507 215,000 1,986,015 3.08
2010 9,854,083 5,184,330 4,669,753 215,000 1,904,689 2.20
2011 12,726,936 5,410,497 7,316,439 1,440,000 1,640,437 2.38
2012 11,258,216 5,361,567 5,896,649 1,090,000 1,589,565 2.20
2013 11,462,779 6,113,276 5,349,503 1,120,000 1,548,303 2.00
2014 11,117,391 6,376,510 4,740,881 1,165,000 1,504,006 1.78
2015 11,020,029 6,220,331 4,799,698 1,205,000 1,457,772 1.80
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.
Waterworks and Sewer Revenue Bonds
CITY OF FRIENDSWOOD, TEXAS
PLEDGED-REVENUE COVERAGE
LAST TEN FISCAL YEARS
(Unaudited)
109
Table 14
Per
Capita
Calendar Estimated Personal Personal Unemployment
Year Population Income Income Rate
2005 34,272 9,192,246,000$ 33,146$ 3.9%
2006 34,306 10,144,967,000 36,284 3.0%
2007 34,759 10,913,785,000 38,553 3.4%
2008 35,500 11,744,572,000 40,711 4.9%
2009 37,653 11,937,436,000 41,621 6.2%
2010 38,057 12,257,208,000 41,876 7.1%
2011 37,247 12,848,571,000 43,444 6.8%
2012 37,839 13,651,835,000 45,433 5.0%
2013 38,369 14,475,816,000 47,186 4.5%
2014 38,911 14,741,197,000 46,917 3.4%
2015 39,358 - - 3.7%
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.
Note:Personal Income and Per Capita Personal Income numbers are for Galveston County;
2015 numbers were not available.
CITY OF FRIENDSWOOD, TEXAS
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN CALENDAR YEARS
(Unaudited)
110
Table 15
Percentage Percentage
Estimated of Total City Estimated of Total City
Employer Employees Workforce Employees Workforce
Friendswood ISD 700 28.40% 675 34.83%
HEB 317 12.86% 275 14.19%
Kroger 292 11.85% 234 12.07%
City of Friendswood 232 9.41% 222 11.46%
Clear Creek ISD 155 6.29% 2 - - 1
Friendship Haven Nursing Home 140 5.68% 135 6.97%
McDonalds 75 3.04% 33 1.70%
Brookdale 69 2.80% - - 1
Friendswood Healthcare (Autumn Hills) 65 2.64% 90 4.64%
U.S. Post Office 62 2.52% 70 3.61%
UTMB 58 2.35% - - 1
Sonic 49 1.99% 49 2.53%
AAA Blastcote 45 1.83% -
Timber Creek Golf Club 45 1.83% 41 2.12%
Perry & Sons Market and Grille 45 1.83% - - 1
Luna's Mexican Restaurant 41 1.66% 40 2.06%
24 Hour Fitness 40 1.62% - - 1
Village on the Park 35 1.42% 34 1.75%
Gary Greene Realtors - - 3 40 2.06%
Total 2,465 100.00% 1,938 100.00%
Source: City Economic Development Division
Note: Principal Employer data was not available for fiscal year 2003 - 2005.
1 Data was not available for fiscal year 2006.
2 Includes Wedgewood Elementary and Brookside Intermediate.
3 Data was not available for fiscal year 2015.
20062015
CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
(Unaudited)
111
Table 16
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Function/Program
General Government:
City Attorney - - - - - - - - - 1.00
City Manager 5.50 5.50 5.50 5.50 5.50 5.50 4.65 4.15 4.15 4.55
City Secretary 4.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Administrative Services 25.81 26.19 27.20 27.20 27.20 27.20 28.20 28.20 28.70 28.70
Public Safety:
Police 72.06 81.41 83.90 79.40 79.40 80.40 80.40 81.40 82.40 85.72
Fire marshal and fire 4.50 6.11 6.10 6.10 6.10 6.10 6.10 6.10 6.50 6.60
Public Works:- - - - 19.00 19.00 19.33 20.33 26.33 25.33
Community Development:- - - - 17.70 17.70 16.89 16.89 10.89 10.89
Community Development and
Public Works:35.00 36.00 36.00 36.70 - - - - - -
Community Services:31.01 32.18 32.20 32.20 18.95 18.95 19.28 19.20 19.03 19.63
Library - - - - 14.72 14.72 14.72 14.37 14.37 14.62
Water:9.00 9.00 9.00 10.30 10.30 10.30 10.30 9.30 9.30 8.30
Sewer:8.00 8.00 8.00 9.00 9.00 9.00 9.00 9.00 9.00 8.00
Total City Employees:194.88 209.39 212.90 211.40 212.87 213.87 213.87 213.94 215.67 218.34
Source: City of Friendswood Budget Documents
Notes: Beginning with fiscal year 2006, the fulltime equivalent for Fire Marshal and Fire include only the Fire Marshal Department. The City
has a contract with the Friendswood Volunteer Fire Department and there are no employees paid directly by the City.
From 2005 - 2009, public works and community development were combined.
In 2010 - 2014, they are shown as two separate departments.
Beginning in fiscal year 2010, the fulltime equivalent for Library is shown separate from Community Services. In previous years, the fulltime
equivalent is included with Community Services.
In-house City Attorney added to staff in fiscal year 2015.
Full-time Equivalent Employees as of September 30
CITY OF FRIENDSWOOD, TEXAS
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
(Unaudited)
112
Table 17
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Function/Program
General Government:
Building permits issued 882 975 872 1,189 984 1,222 1,317 1,469 1,395 1,377
Building inspections conducted 12,264 11,135 11,472 6,673 8,744 9,514 10,486 11,470 10,611 12,145
Police:
Physical arrests 1,804 1,923 1,868 1,794 2,002 1,962 1,885 1,601 1,596 1,479
Parking violations 30 34 46 33 27 82 61 107 58 63
Traffic violations 12,623 11,374 7,897 7,821 7,000 7,291 6,518 5,718 5,815 4,540
Fire Marshal:
Inspections 668 1,300 1,312 1,653 1,509 1,444 1,616 1,673 1,427 1,512
Fire:
Emergency responses 2,497 2,723 2,794 2,950 2,737 2,818 2,975 2,993 3,261 3,258
Fires extinguished 75 74 118 102 110 108 86 86 116 78
Parks and Recreation:
Recreation participants NA NA 7,547 12,283 13,792 13,894 16,068 18,607 15,178 16,153
Facility reservations NA 1,115 1,065 1,727 1,451 503 493 686 728 1,443
Library:
Volumes in collection 92,633 93,028 96,100 94,512 99,880 97,622 125,251 133,865 141,383 133,165
Total volumes borrowed 300,241 308,718 323,323 350,892 356,787 349,223 355,447 367,948 367,452 350,145
Water:
New connections 209 289 202 46 160 173 185 189 193
Water main breaks 105 44 73 73 64 516 112 193 149 57
Average daily consumption 3,886 3,472 4,217 4,209 3,408 6,406 4,584 5,577 5,171 4,970
(thousands of gallons)
Peak daily consumption 7,030 6,358 11,004 7,187 7,606 13,698 10,896 11,505 9,917 12,623
Sewer:
Average daily sewage treatment 3,064 3,425 3,120 2,950 3,465 2,787 2,968 2,956 2,867 3,306
(thousands of gallons)
Maximum daily flow 10,484 10,484 7,520 9,537 11,393 10,833 10,777 10,401 10,770 11,237
(thousands of gallons)
Source:
1
Fiscal Year Fiscal Year
CITY OF FRIENDSWOOD, TEXAS
LAST TEN FISCAL YEARS
OPERATING INDICATORS BY FUNCTION/PROGRAM
(Unaudited)
113
Table 18
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Function/Program
Police
Stations 1 1 1 1 1 1 1 1 1 1
Patrol units 18 28 27 24 26 26 25 26 27 29
Fire
Stations 3 3 3 4 4 4 4 4 4 4
Public Works
Streets - paved (miles)179 150 159 160 161 162 164 165 167 169
Streets - unpaved (miles)1 0 2 2 2 2 2 2 2 2
Traffic signals 3 3 3 3 3 3 3 3 3 3
Parks and Recreation
Acreage 189 189 189 189 189 189 189 189 189 232
Public Safety:Parks 8 8 8 8 8 8 8 8 8 8
Swimming pool 1 1 1 1 1 1 1 1 1 1
Tennis courts 4 4 4 4 4 4 4 4 4 4
Library 1 1 1 1 1 1 1 1 1 1
Water
Water mains (miles)179 180 180 181 183 184 186 187 207 209
Fire hydrants 1,250 1,275 1,275 1,275 1,305 1,324 1,588 1,608 1,610 1,631
Connections 11,405 11,748 11,982 12,057 12,231 12,476 12,711 12,929 13,093 13,289
Storage capacity 5,993 5,993 5,993 5,993 5,993 7,500 7,500 7,500 8,000 8,100
(thousands of gallons)
Sewer
Sanitary sewers (miles)153 155 155 156 158 159 162 163 194 195
Connections 10,682 10,902 11,115 11,256 11,404 11,563 11,828 12,072 12,236 12,407
Storm sewers (miles)92 95 95 96 98 99 100 100 105 106
Treatment capacity 4,850 4,850 4,850 4,850 4,850 4,850 4,850 4,850 12,000 9,250
(thousands of gallons)
Source: Various City departments and prior year CAFRs
Fiscal Year
CITY OF FRIENDSWOOD, TEXAS
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
(Unaudited)
114
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