HomeMy WebLinkAboutComprehensive Annual Financial Report September 30, 2020
CITY OF FRIENDSWOOD, TEXAS
ANNUAL COMPREHENSIVE
FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
September 30, 2020
Officials Issuing Report:
Morad Kabiri
City Manager
Katina Hampton
Director of Administrative Services
CITY OF FRIENDSWOOD, TEXAS
TABLE OF CONTENTS
Fiscal Year 2020 Annual Report
Page
Introductory Section
Letter of Transmittal i
Principal Officials v
GFOA Certificate of Achievement vi
Organizational Chart vii
Financial Section
Report of Independent Auditors
3
Management’s Discussion and Analysis
8
Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Position 23
Statement of Activities 24
Fund Financial Statements:
Balance Sheet - Governmental Funds 26
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net
Position 27
Statement of Revenues, Expenditures, and Changes in Fund Balances -
Governmental Funds 28
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund
Balances of Governmental Funds to the Statement of Activities 29
Statement of Net Position - Proprietary Funds 30
Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds 32
Statement of Cash Flows - Proprietary Funds 33
Notes to the Financial Statements 35
CITY OF FRIENDSWOOD, TEXAS
TABLE OF CONTENTS (continued)
Fiscal Year 2020 Annual Report
Page
Financial Section (continued)
Required Supplementary Information
Schedule of Revenues, Expenditures, and Changes in Fund Balances -
Budget and Actual - General Fund 74
Notes to Budgetary Schedule Information 82
Schedule of Changes in the Net Pension Liability and Related Ratios -
Texas Municipal Retirement System - 84
Schedule of City Contributions - Texas Municipal Retirement System - 85
Notes to Schedule of Contributions 86
Schedule of Changes in the Total OPEB Liability and Related Ratios -
Texas Municipal Retirement System Supplemental Death Benefits Fund 87
Schedule of Changes in the Total OPEB Liability and Related Ratios -
City of Friendswood Retiree Health Care Plan 88
Other Supplementary Information:
Combining and Individual Fund Statements and Schedules:
Combining Balance Sheet - Nonmajor Governmental Funds 92
Combining Statement of Revenues, Expenditures and Changes in Fund Balances -
Nonmajor Governmental Funds 94
Schedule of Revenue, Expenditures and Changes in Fund Balances -
Budget and Actual:
Police Investigation 96
Fire/EMS Donation 97
Municipal Court 98
1776 Park 99
Sidewalk Installation 100
Park Land Dedication 101
Street Improvement 102
Debt Service 103
Bond Construction 104
CITY OF FRIENDSWOOD, TEXAS
TABLE OF CONTENTS (continued)
Fiscal Year 2020 Annual Report
Table Page
Unaudited Statistical Section:
Net Position by Component 1 108
Changes in Net Position 2 110
Fund Balances of Governmental Funds 3 114
Changes in Fund Balances of Governmental Funds 4 116
Assessed Value and Taxable Value of Property 5 118
Direct and Overlapping Property Tax Rates 6 120
Principal Property Taxpayers 7 121
Property Tax Levies and Collections 8 122
Ratios of Outstanding Debt by Type 9 123
Ratio of Net General Bonded Debt Outstanding 10 124
Direct and Overlapping Governmental Activities Debt 11 125
Legal Debt Margin Information 12 126
Pledged Revenue Coverage 13 127
Demographic and Economic Statistics 14 128
Principal Employers 15 129
Full-Time Equivalent City Government Employees by Function/ Program 16 130
Operating Indicators by Function/ Program 17 132
Capital Asset Statistics by Function/ Program 18 134
Fiscal Year 2020 Annual Report
Fiscal Year 2020 Annual Report
INTRODUCTORY SECTION
Fiscal Year 2020 Annual Report
i Fiscal Year 2020 Annual Report
March 22, 2021
The Honorable Mayor, Members of the City Council, and the Citizens of Friendswood:
The Annual Comprehensive Financial Report (ACFR) of the City of Friendswood for the fiscal year ended
September 30, 2020, is hereby submitted. Responsibility for both the accuracy of the data, and the
completeness and fairness of the presentation, including all disclosures, rests with the City. To the best
of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a
manner designed to present fairly the financial position and results of operations of the various funds of
the City. All disclosures necessary to enable the reader to gain an understanding of the City’s financial
activities have been included.
This report consists of management’s representations concerning the finances of the City. Consequently,
management assumes full responsibility for the completeness and reliability of all of the information
presented in this report. To provide a reasonable basis for making these representations, management of
the City has established a comprehensive internal control framework that is designed both to protect the
government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the
preparation of the City’s financial statements in conformity with Generally Accepted Accounting
Principles (GAAP). Because the cost of internal controls should not outweigh their benefits, the City’s
comprehensive framework of internal controls has been designed to provide reasonable rather than
absolute assurance that the financial statements will be free from material misstatement. As management,
we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all
material respects.
The City Charter requires an annual audit of the financial statements of all of the various funds of the City
by independent certified public accountants. The accounting firm of Whitley Penn LLP has performed
such an audit. The goal of the independent audit was to provide reasonable assurance that the financial
statements of the City for the fiscal year ended September 30, 2020 are free of material misstatement. The
independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements; assessing the accounting principles used and significant estimates made by
management and evaluating the overall financial statement presentation. The independent auditor
concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion
that the City’s financial statements for the fiscal year ended September 30, 2020, are fairly presented in
conformity with GAAP. The independent auditors’ report is presented as the first component of the
financial section of this report
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GAAP requires that management provide a narrative introduction, overview and analysis to accompany
the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter
of transmittal is designed to complement MD&A and should be read in conjunction with it. The City’s
MD&A can be found immediately following the report of the independent auditors.
PROFILE OF THE CITY
Established in 1895 as a Quaker colony, the City of Friendswood is rich in heritage. The City was
incorporated in 1960 and chartered a home-rule city under Texas law in 1971. The City operates under a
Council-Manager form of government. Policy-making and legislative authority are vested in a governing
council consisting of the Mayor and six (6) Council Members. The Mayor and Council are responsible,
among other things, for passing ordinances, adopting the budget, appointing board and committee
members and hiring the City Manager, City Attorney, Municipal Judge, and City Secretary. The City
Manager is responsible for carrying out the policies and ordinances of the City Council and overseeing
the day-to-day operations of the City government, and for appointing heads of various departments. The
Mayor and Council are elected on an at-large, non-partisan basis. The Mayor and Council are elected to
serve no more than four consecutive three-year terms.
The City provides a full range of municipal services including public safety (police, fire and emergency
medical), maintenance of streets and infrastructure, sanitation services, maintenance of the treated waste
distribution system and both sanitary and storm sewer collection transmission systems, recreational
activities and cultural events as well as general administrative services.
FACTORS AFFECTING FINANCIAL CONDITION
Location
Encompassing 21 square miles, Friendswood is located in southeast Texas near the Texas Gulf Coast,
between downtown Houston and Galveston, spanning across two counties – northern Galveston County and
southern Harris County. The current estimated population is 41,003. Residents and visitors can access
Friendswood through FM 2351, FM 518, and FM 528 (NASA Parkway). Hobby Airport and Ellington
Airport are located within a 15 minute drive from Friendswood, and Bush Intercontinental Airport is just 45
minutes away. Major sectors of the area’s economic base include aerospace, specialty chemicals, health
care, retail, and tourism.
Community
Friendswood has been nationally recognized as one of the best places to live in the country. With low tax
rates, outstanding public education, and the lowest crime rate in the region, Friendswood is the perfect place
to live, work, and play. The city features beautiful parks and lush landscaping, along with a championship
golf course. Children academically excel via two superior public school systems – Friendswood ISD and
Clear Creek ISD. These attributes perfectly match Friendswood’s affluent resident base of well-educated,
high-income families. More than 50% of residents work in executive, professional, and managerial positions
and generate an average household income of over $140,000, one of the highest in the Houston area.
Business
Friendswood is the perfect choice for many types of commercial enterprises. Target markets include
professional offices, retail, commercial, and light industrial developments. A key City focus is to encourage
redevelopment of the downtown area and development of the City’s panhandle area. City leaders have
approved special tools and incentives to revitalize downtown to promote mixed-use, multi-story
developments with pedestrian streetscapes and other amenities. The City offers competitive business
incentives, including a municipal grant program, tax abatement that includes “green” development, freeport
iii Fiscal Year 2020 Annual Report
tax exemption, and downtown development fee waivers.
Quality Lifestyle
As with any city, the goal is planning for continued quality growth to create a well-balanced community.
Friendswood offers single-family residential housing in pleasant park-like settings, tucked-away from the
busy stream of vehicular traffic. Friendswood is committed to attracting more local enterprises that will
complement and enhance the unique community environment that has been carefully built over the past 100
years; one that has come to be cherished by residents and business owners alike.
LONG TERM PLANNING
Budgeting Controls
The objective of the City’s budgetary controls is to ensure compliance with legal provisions embodied in
the annual appropriated budget approved by Council. The charter requires the City Manager to submit a
proposed budget and an accompanying message to the City Council on or before August 1. The council
shall review and revise as deemed appropriate prior to general circulation for the public hearing. The
Public Notice and Hearing must be posted in the city hall and published in the official newspaper. The
budget must be adopted by the 15th of September or as soon thereafter as practical. The City legally adopts
annual budgets for the General, Special Revenue and Debt Service Funds. Annual and project budgets
are also adopted for the Proprietary and Capital Projects Funds, respectively.
The level of budgetary control; that is, the level at which expenditures cannot legally exceed the
appropriated amount, is established by department within a fund. The City also maintains an encumbrance
accounting system as one technique of accomplishing budgetary control. Encumbrances lapse at fiscal
year end, but can be re-appropriated through a budget amendment the following fiscal year. The City
Manager is authorized to transfer budgeted amounts within departments in any fund, but revisions that
increase the total expenditures of any fund or transfers between departments must be approved by Council.
Multi-Year Financial Planning
A Multi-Year financial plan (MYFP) was developed in 2006. Originally, staff was directed to develop a
plan to forecast the City’s financial condition through 2020, the projected build-out date. The first version
of this plan was drafted and later reduced in scope to a five year projection.
The MYFP is based on the City’s strategic planning efforts, including the Comprehensive Land Use Plan,
Vision 2020 and the Capital Improvements Plan. Departmental operational plans funding requirements
to provide programs and services are included in the MYFP as well. Funding needs and available
resources, both current and alternative revenue enhancements, are identified. Expenditures are projected
based on departmental needs assessments and are organized based on “one-time” and “on-going”
expenditures. In collaboration with Council, the plan is updated at least annually and serves as the basis
of budget development.
Relevant Financial Policies
As part of the annual budget process, the City adopts Financial Management Policy Statements that
establish a framework for fiscal decision making and that ensure that financial resources are available to
meet the present and future needs of its citizens. These statements provide guidelines for financial
planning and management, addressing every major financial function and process.
iv Fiscal Year 2020 Annual Report
Most importantly, the Financial Management Policy requires that the City maintain the General Fund
unassigned fund balance at a minimum of 90 days of prior year audited operating expenditures. Any
unassigned funds after the fiscal year-end audit will be allowed to accumulate to build this 90-day reserve.
After the General Fund has gathered sufficient resources, additional unassigned funds will be allowed to
accumulate for future General Fund capital improvements.
The Financial Management Policy also requires the minimum working capital in the Water and Sewer
Fund be 90 days of prior year audited operating expenditures. Any unrestricted funds after the fiscal year-
end audit will be allowed to accumulate to build this 90-day reserve. After these funds have gathered
sufficient resources, additional unrestricted funds will be allowed to accumulate in working capital for
future utility /operating fund capital improvements.
Awards
The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for
Excellence in Financial Reporting to the City of Friendswood for its annual comprehensive financial
report for the fiscal year ended September 30, 2019. This was the thirty-second consecutive year that the
City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City
published an easily readable and efficiently organized annual comprehensive financial report. This report
satisfied both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current annual
comprehensive financial report continues to meet the Certificate of Achievement program’s requirements
and we are submitting it to the GFOA to determine its eligibility for another certificate.
Acknowledgements
The preparation of the annual comprehensive financial report was made possible by the dedicated service
of the entire staff of the Administrative Services Department. Each member of the department has my
sincere appreciation for the contributions made in the preparation of this report.
In closing, I also express my thanks to the Mayor, members of the City Council and the City Manager for
their leadership, interest and support in conducting the financial operations of the City in a responsible
and progressive manner.
Sincerely,
Katina Hampton
Director of Administrative Services
CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL OFFICIALS
September 30, 2020
v Fiscal Year 2020 Annual Report
Elected Officials Position Term Expires
Mike Foreman Mayor May 2021
Steve Rockey Council Member - Position No. 1 May 2021
Sally Branson Council Member - Position No. 2 May 2023
Trish Hanks Council Member - Position No. 3 May 2021
Robert J. Griffon Council Member - Position No. 4 May 2022
John H. Scott Council Member - Position No. 5 May 2023
Brent Erenwert Council Member - Position No. 6 May 2022
Key Staff Position
Morad Kabiri City Manager
Steven Rhea Assistant City Manager
Katina Hampton Director of Administrative Services
Aubrey Harbin Director of Community Development
Jildardo Arias Director of Engineering
Matt Riley Library Director
Brian Mansfield Fire Marshal/Emergency Management Coordinator
William Bender Director of Human Resources
James O’Brien Director of Information Technology
Rene Ibarra Director of Public Works
James Toney Director of Parks and Recreation
Melinda Welsh City Secretary
Robert B. Wieners Police Chief
Mary K. Fischer City Attorney
James W. Woltz Judge - Municipal Court
vi Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
ORGANIZATIONAL CHART
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viii Fiscal Year 2020 Annual Report
1 Fiscal Year 2020 Annual Report
FINANCIAL SECTION
2 Fiscal Year 2020 Annual Report
Houston Office
3737 Buffalo Speedway
Suite 1600
Houston, Texas 77098
713.621.1515 Main
whitleypenn.com
3 Fiscal Year 2020 Annual Report
REPORT OF INDEPENDENT AUDITORS
The Honorable Mayor and
Members of the City Council
City of Friendswood, Texas
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, business-type activities, the
aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of
City of Friendswood, Texas (the “City”), as of and for the year ended September 30, 2020, and the related notes to
the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of
contents.
Management’s Responsibility for the Financial Statements
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.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the
financial statements of West Ranch Management District, which is a 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 related to the amounts included for the West Ranch Management District, is based soled 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.
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. The financial statements of the West Ranch Management District were not audited in accordance with
Government Auditing Standards.
The Honorable Mayor and
Members of the City Council
City of Friendswood, Texas
4 Fiscal Year 2020 Annual Report
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, business-type
activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund
information of the City, as of September 30, 2020, 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.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion
and analysis on pages 8 through 19, budgetary comparison information on pages 74 through 83, pension system
supplementary information and other post-employment benefit supplementary information on pages 84 through 88,
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’s basic financial statements. The introductory section, combining and individual nonmajor fund financial
statements, budgetary 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 budgetary schedules are the responsibility
of management and were derived from and relates directly to the underlying accounting and other records used to
prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in
the audit of the basic financial statements and certain additional procedures, including comparing and reconciling
such information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the combining and individual
nonmajor fund financial statements and budgetary 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.
The Honorable Mayor and
Members of the City Council
City of Friendswood, Texas
5 Fiscal Year 2020 Annual Report
Other Reporting Required By Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated March 22, 2021, on our
consideration of the City's internal control over financial reporting and on our tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is 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’s
internal control over financial reporting and compliance and has been issued under separate cover.
Houston, Texas
March 22, 2021
6 Fiscal Year 2020 Annual Report
7 Fiscal Year 2020 Annual Report
MANAGEMENT’S DISCUSSION AND ANALYSIS
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT’S DISCUSSION AND ANALYSIS
8 Fiscal Year 2020 Annual Report
As management of the City of Friendswood, Texas (“the City”), we offer readers of the City’s financial statements
this narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30,
2020. Please read this information in conjunction with the basic financial statements that follow this section.
Financial Highlights
Some of the City’s financial highlights for the fiscal year ending September 30, 2020 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 $119,028,711.
The City’s total net position increased during the year by $1,701,632. The City’s net pension and total
OPEB liabilities were $10.6 million and $1.8 million, respectively. The net pension liability decreased by
$3.8 million and the total OPEB liability increased by $228 thousand compared to the prior year.
As of the close of the current fiscal year, the City reported unrestricted net position of $11,002,456.
Program revenues of $23,016,032 reduced the net cost of the City’s functions to be financed from the City’s
general revenues to $29,516,915 .
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The
basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund
financial statements, and 3) notes to the financial statements. This report also includes supplementary information
intended to furnish additional detail to support the basic financial statements themselves.
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
9 Fiscal Year 2020 Annual Report
Government-wide Financial Statements
The government-wide financial statements report information for the City as a whole. These statements include
transactions and balances relating to all assets, including infrastructure capital assets. These statements are designed
to provide information about cost of services, operating results, and financial position of the City as an economic
entity. The Statement of Net Position and the Statement of Activities, which appear first in the City’s financial
statements, report information on the City’s activities that enable the reader to understand the financial condition of
the City. These statements are prepared using the accrual basis of accounting, which is similar to the accounting
used by most private-sector companies. All of the current year’s revenues and expenses are taken into account even
if cash has not yet changed hands.
The Statement of Net Position presents information on all of the City’s assets and deferred outflows of resources
and liabilities and deferred inflows of resources with the difference reported as net position. Over time, increases
or decreases in the net position may serve as a useful indicator of whether the financial position of the City is
improving or deteriorating. Other non-financial factors, such as the City’s property tax base and the condition of
the City’s infrastructure, need to be considered in order to assess the overall health of the City.
The Statement of Activities presents information showing how the City’s net position changed during the most
recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change
occurs, regardless of the timing of related cash flows – the accrual method rather than modified accrual that is used
in the fund level statements.
Both of the government-wide financial statements distinguish functions of the City that are principally supported
by taxes and intergovernmental revenues (governmental activities) from functions that are intended to recover all
or significant portion of their costs through user fees (business-type activities).
Governmental activities – Most of the City’s basic services are reported here including general government
(mayor and council, city secretary, city manager, administrative services, human resources, and
information technology); public safety (police and fire marshal); engineering (capital projects
administration); public works (streets and drainage); community development (building inspection and
planning and zoning); parks and recreation (parks, facility operations and community activities) and
library. Interest payments on the City’s debt are also reported here. Property tax, sales tax, franchise
taxes, municipal court fines and permit fees finance most of the activities.
Business-type activities – Services involving a fee for those services, which include the City’s water and
sewer system are reported here.
Component Units – activities include activities of the West Ranch Management District and Friendswood
Downtown Economic Development Corporation.
Fund Financial Statements
A fund is a self-balancing set of accounts that is used to maintain control over resources that have been segregated
for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with
finance-related legal requirements. The City uses two fund types – governmental and proprietary.
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
10 Fiscal Year 2020 Annual Report
Governmental Funds
Governmental funds are used to account for essentially the same functions reported as governmental activities in
the government-wide financial statements with the exclusion of internal service fund activity. However, unlike the
government-wide financial statements, governmental funds focus on near-term inflows and outflows of spendable
resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information
may be useful in evaluating the City’s near-term financing requirements.
Because the focus of the governmental funds is narrower than that of the government-wide financial statements, it
is useful to compare the information presented for governmental funds with similar information presented for
governmental activities in the government-wide financial statements. By doing so, the reader may better understand
the long-term impact of the government’s near-term financial decisions. Both the governmental fund balance sheet
and the governmental statement of revenues, expenditures, and changes in fund balances provide a reconciliation
to facilitate this comparison between governmental funds and governmental activities.
The City maintains thirteen 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, Debt Service Fund, and Bond Construction Fund, which are considered to be major funds. The other
ten funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major
governmental funds is provided in the form of combining statements found in this report.
Proprietary Funds
The City maintains two types of proprietary funds: enterprise and internal service funds. Enterprise funds are used
to report the same functions presented as business-type activities in the government-wide financial statements. The
City uses an enterprise fund to account for its operation in water distribution and wastewater collection/treatment
along with its water and wastewater impact fees, and water construction projects. Management would note that
trash collection services are provided by a third-party 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 benefit governmental rather than business-type functions, they have been included within
the governmental activities in the government-wide financial statements.
Notes to the Financial Statements
The notes to the financial statements provide additional information that is essential to a full understanding of the
data provided in the government-wide fund financial statements. The notes are the last section of the basic financial
statements.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents certain Required
Supplementary Information (“RSI”). The City adopts an annual appropriated budget for its General Fund. A
budgetary comparison schedule has been provided as RSI to demonstrate compliance with this budget. RSI can be
found after the notes to the financial statements. The RSI also includes schedules related to the City’s progress in
funding its obligation to provide pension and other post-employment benefits to its employees.
The combining and individual nonmajor fund financial statements and budgetary schedules that further support the
information in the financial statements are presented immediately following the required supplementary
information.
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
11 Fiscal Year 2020 Annual Report
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Statement of Net Position
As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. For
the City, assets and deferred outflows of resources exceed liabilities and deferred inflows of resources by
$119,028,711 as of September 30, 2020 in the primary government, which is an increase in the City’s overall
financial position compared to the prior year.
The largest portion of the City’s net position (85.1%) reflects its investments in capital assets (e.g., land, buildings
and improvements, machinery and equipment, infrastructure, water and sewer system, construction in progress and
water rights); less any debt outstanding used to acquire those assets. The City uses these capital assets to provide
services to citizens; consequently these assets are not available for future spending. Although the City’s investment
in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt
must be provided from other resources, since the assets themselves cannot be used to liquidate these liabilities.
The following table reflects the condensed Statement of Net Position.
Governmental Activities Business Type Activities Totals
2020 2019 2020 2019 2020 2019
Current and other assets 26,111,095$ 23,878,061$ 33,820,399$ 37,757,920$ 59,931,494$ 61,635,981$
Capital assets 105,843,302 98,039,901 62,204,855 59,766,588 168,048,157 157,806,489
Total assets 131,954,397 121,917,962 96,025,254 97,524,508 227,979,651 219,442,470
Deferred outflows of resources 3,381,110 5,468,313 1,097,676 1,389,888 4,478,786 6,858,201
Total assets and deferred
outflows of resources 135,335,507 127,386,275 97,122,930 98,914,396 232,458,437 226,300,671
Long-term liabilities 51,912,775 47,625,985 52,001,595 55,624,449 103,914,370 103,250,434
Other Liabilities 4,971,167 3,092,062 1,895,345 2,101,516 6,866,512 5,193,578
Total Liabilities 56,883,942 50,718,047 53,896,940 57,725,965 110,780,882 108,444,012
Deferred inflows of resources 2,290,897 439,425 357,947 90,155 2,648,844 529,580
Net position:
Net investment in capital
assets 68,990,597 66,823,023 32,242,803 27,038,046 101,233,400 93,861,069
Restricted 4,606,124 4,003,468 2,186,731 1,982,666 6,792,855 5,986,134
Unrestricted 2,563,947 5,402,312 8,438,509 12,077,564 11,002,456 17,479,876
Total net position 76,160,668$ 76,228,803$ 42,868,043$ 41,098,276$ 119,028,711$ 117,327,079$
A portion of the primary government’s net position, $6,792,855 or 5.7%, represents resources that are subject to
external restrictions on how they may be used. These restrictions include monies accounted for in special revenue
funds for which the use is legally restricted and capital project funds. The remaining balance of unrestricted net
position, $11,002,456 or 9.2%, may be used to meet the City’s ongoing obligations to citizens and creditors.
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
12 Fiscal Year 2020 Annual Report
The following table provides a summary of the City’s changes in net position.
Governmental Activities Business Type Activities Totals
2020 2019 2020 2019 2020 2019
Revenues
Program Revenues:
Charges for services 2,215,721$ 2,147,633$ 16,638,758$ 13,669,552$ 18,854,479$ 15,817,185$
Operating grants and
contributions 3,430,645 1,842,704 22,602 - 3,453,247 1,842,704
Capital grants and
contributions 708,306 - - - 708,306 -
General Revenues:
Property taxes 18,731,549 18,111,247 - - 18,731,549 18,111,247
Sales and alcohol taxes 8,846,359 8,407,249 - - 8,846,359 8,407,249
Franchise taxes 2,142,660 2,054,395 - - 2,142,660 2,054,395
Investment earnings 880,606 526,867 347,518 681,288 1,228,124 1,208,155
Miscellaneous 269,855 351,165 - - 269,855 351,165
Total revenues 37,225,701 33,441,260 17,008,878 14,350,840 54,234,579 47,792,100
Expenses
General government 6,119,806 5,912,467 - - 6,119,806 5,912,467
Public safety 15,501,734 15,134,465 - - 15,501,734 15,134,465
Public works 8,840,113 7,897,373 - - 8,840,113 7,897,373
Engineering 434,976 - - - 434,976 -
Community development 1,122,506 1,359,878 - - 1,122,506 1,359,878
Parks and recreation 4,439,511 4,839,076 - - 4,439,511 4,839,076
Library services 1,214,130 1,257,970 - - 1,214,130 1,257,970
Water and sewer - - 12,071,159 11,507,880 12,071,159 11,507,880
Interest on long-term debt 1,055,889 923,350 1,733,123 1,579,182 2,789,012 2,502,532
Total Expenses 38,728,665 37,324,579 13,804,282 13,087,062 52,532,947 50,411,641
Increase (decrease) in net position
before transfers (1,502,964) (3,883,319) 3,204,596 1,263,778 1,701,632 (2,619,541)
Transfers 1,434,829 1,456,690 (1,434,829) (1,456,690) - -
Change in net position (68,135) (2,426,629) 1,769,767 (192,912) 1,701,632 (2,619,541)
Net position - beginning 76,228,803 78,655,432 41,098,276 41,291,188 117,327,079 119,946,620
Net position - ending 76,160,668$ 76,228,803$ 42,868,043$ 41,098,276$ 119,028,711$ 117,327,079$
Governmental Activities
Governmental activities decreased the City’s net position by $68,135. Key elements of this change are as follows:
Property taxes continue to be the City’s largest revenue source. Property tax revenue increased by $620,302
due to increase in taxable values as well as new construction with the City.
Sales and alcohol tax revenue remained strong during fiscal year 2020, providing a 5.22% increase for the
year, from $8.4 million to $8.8 million. This increase is primarily a result of new businesses opening
during the fiscal year which includes several fast food establishments.
Operating grants and contributions increased $1.6 million from prior year. This increase is primarily a result
of the City being awarded $1.9 million in Coronavirus, Aid, Relief and Economic Security Act (CARES
Act) funds. This increase is offset by a $0.5 million decrease in Hurricane Harvey funds.
Capital grants and contributions increased $708,306 as a result of the City receiving Hazard Mitigation Grant
Program funds in the current year for the acquisition and demolition of flood-prone properties.
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
13 Fiscal Year 2020 Annual Report
Total expenses increased $1.4 million from the prior year. The largest increase was in Public Works
expenses of $0.9 million related to capital asset improvements. Public Safety expenses increased $0.4
million as a result of expenses incurred due to the COVID-19 pandemic. Also, in the current year, an
Engineering department was established to handle the administration of capital projects which accounted
for an increase of approximately $0.4 million in expenses. These increases were offset by a decrease in
Parks and Recreation expenses of $0.4 million due to the cancellation of events and programs due to the
COVID-19 pandemic.
Charges for
services
6%
Operating grants
and
contributions
9%
Capital grants and
contributions
2%
Property taxes
50%
Sales and alcohol
taxes
24%
Franchise taxes
6%
Investment
earnings
2%
Miscellaneous
1%
Governmental Activities ‐Revenues
General
government
16%
Public safety
40%
Public works
23%
Engineering
1%
Community
development
3%
Parks and
recreation
11%
Library services
3%
Interest on long‐
term debt
3%
Governmental Activities ‐Expenses
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
14 Fiscal Year 2020 Annual Report
Business-Type Activities
Business-type activities increased the City’s net position by $1,769,767. Key elements of this change are as follows:
Revenues increased by $2.7 million or 18.5% resulting from an increase in utility rates. Expenses
increased $0.7 million or 5.5% due to the additional amounts paid to the City of Houston for true up costs
related to the capital improvements at the Southeast Water Purification Plant.
FINANCIAL ANALYSIS OF THE CITY’S FUNDS
As noted earlier, fund accounting is used to demonstrate and ensure compliance with finance-related legal
requirements.
Governmental Funds
The focus of the City’s governmental funds is to provide information on near-term inflows, outflows and balances
of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular,
unassigned fund balance may serve as a useful measure of the City’s net resources available for spending at the end
of the year.
At the end of the current fiscal year, the City’s governmental funds reported combined ending fund balance of
$19,813,534. Approximately 58.28% of this amount or $11,547,316 is unassigned fund balance; however, $6.9
million is set aside for the 90-day operating reserve, as set forth in the City’s financial policies.
‐
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
2020 2019
Operating Revenues Operating Expenses
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
15 Fiscal Year 2020 Annual Report
The remaining $8,266,218 is nonspendable, restricted, or assigned as follows:
1.35% - Nonspendable
Prepaid items 172,721$
Notes receivable 83,075
Permanent fund 11,070
Total Nonspendable 266,866$
27.29% - Restricted
Public education and government channels 650,424$
Debt service 31,909
Municipal court operations 235,123
Public safety operations 962,163
Capital projects 3,527,988
Total Restricted 5,407,607$
13.08% - Assigned
Purchases on order 417,134$
Capital projects 2,174,611
Total Assigned 2,591,745$
The General Fund is the chief operating fund of the City. At the end of the current fiscal year, total fund balance
reached $16.9 million of which unassigned fund balance of the General Fund was $13.4 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 44.6% of total General Fund expenditures, while total fund
balance represents 56.2% percent of that same amount. At year end, the City’s operating reserve was $6.9 million,
representing 25% of total General Fund expenditures, excluding capital expenditures.
Key differences between last year’s General Fund activity and this year’s include:
$2.4 million increase in total revenues – This increase is primarily related to $1.9 million in CARES Act
funds received in the current year. In addition, property tax revenue increased $0.8 million due to increased
property tax values and new construction in the City and a $0.4 million increase in sales tax revenue due to
new businesses opening within the City.
$0.5 million increase in total expenditures – Most of the fluctuations between the current year and prior
year can be attributed to the COVID-19 pandemic. Public Safety expenditures increased $0.8 million
primarily due to expenditures incurred in order to respond to the public health emergency. However, Parks
and Recreation expenditures decreased $0.4 million as a result of programs and events being cancelled due
to the virus.
The Debt Service Fund had a total fund balance of $31,909 at the end of the fiscal year, all of which is restricted
for the payment of debt service. The net decrease in fund balance during the year was $25,100.
The fund balance of the Bond Construction Fund was $2,881,036, an increase of $602,374 compared to the prior
year. The increase was a result of the issuance of debt for capital projects, offset by the costs incurred on those
projects during the fiscal year.
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
16 Fiscal Year 2020 Annual Report
Other non-major governmental funds fund balance decreased by $3.2 million. This decrease is primarily a result
of a decrease of $2.2 million in the Street Improvement fund and $1.7 million of expenditures that are pending grant
approval as of September 30, 2020. These decreases are offset by an increase of $0.8 million in the Fire/EMS
Donation Fund. In 2020, the Friendswood Volunteer Fire Department returned to the City $500,000 from previous
years’ donations so that the City could maintain its Capital Asset Replacement Plan going forward.
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 $8.4 million for the Water and Sewer Fund. The total increase
in the net position of the Water and Sewer Fund was $1,769,767. Other factors concerning the finances of this fund
have already been addressed in the discussion of the City’s business-type activities.
Unrestricted net position of the Internal Service Fund was $923,812. The net position of the Internal Service Fund
increased by $451,674 resulting from lease revenue from the City’s participating funds.
General Fund Budgetary Highlights
The City made revisions to the original appropriations approved by the City Council. Budgeted revenues increased
by $59,455 or 0.21% and expenditures were increased by $3,259,639 or 10.82%.
Total revenues were above budget by $1,915,889. The more significant variances are detailed below:
$607,963 below budget in property taxes due to the impact of tax year 2019 protest and freeze ceiling
property value.
$443,352 above budget in sales and alcohol taxes due to the opening of new businesses during the fiscal
year which included several fast food establishments.
$237,119 below budget in permits and fees as a result of a decrease in residential growth.
$2,377,534 above budget in intergovernmental revenue primarily as a result of federal funds received
from the CARES Act and from FEMA for Hurricane Harvey.
Total expenditures of the General Fund were $3,372,650 below the final expenditure budget. The more significant
variances are detailed below:
$538,328 below budget in general government expenditures as a result of a decrease in other services and
charges (legal, contract, consulting, etc.)
$252,124 below budget in public safety as a result of decreased personnel expenditures.
$239,835 below budget in public works due to personnel vacancies and a decrease in streets and drainage
repairs and maintenance.
$668,191 below budget in parks and recreation due to the cancellation of programs and events (i.e. July
4th celebration and summer day camp program) due to the COVID-19 pandemic, and a decrease in
personnel costs in park operations and a decrease in other services and charges in facility operations.
$1,492,341 below budget in capital improvements due to projects either not being started or completed in
the current fiscal year. These projects are primarily related to streets.
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
17 Fiscal Year 2020 Annual Report
Capital Assets
The City’s investment in capital assets (net of accumulated depreciation) for its governmental and business-type
activities as of September 30, 2020 is $168.0 million. The investment in capital assets include land, buildings and
improvements, machinery and equipment, infrastructure, water and sewer system, water rights and construction in
progress.
Major capital events during the year included the following:
Business-type improvements include the Blackhawk Wastewater Treatment Plant 3rd Clarifier, Water
Distribution Line on Beamer Road, Portable Generators, and a Load Bank. The total cost of these projects
was $6.16 million. Of this amount, $6.2 million was costs incurred in prior years and was reclassified in
the current fiscal year to water and sewer improvements.
The City purchased six buyout properties using grant funding. The total cost of these properties was $2.59
million.
Heavy equipment purchases included: Spartan fire truck, sewer vacuum truck, street sweeper, two new EMS
ambulances, and a skid steer track loader. The total cost of these assets was $1.64 million.
San Joaquin Bridge was rehabilitated and the driveway at the Animal Control building was reconstructed.
The total cost for both projects was $301,822.
Technology additions and improvements included conference room upgrades, council chamber upgrades,
weather & flood gauges, toughbooks, a plotter, and other various digital improvements throughout City
facilities. The total cost for these projects was approximately $505,917.
The City purchased 15 new vehicles and 1 new trailer. Public Safety received 14 of the new vehicles for a
total cost of $440,425. Community Development purchased a new vehicle with a cost of $24,786. The
Public Works department purchased the trailer for a total cost of $6,525.
The Public Safety department also gained a new K-9 officer named Rick. The cost for the service animal
was $14,500.
City Parks received improvements of a Boat Ramp at 1776 Park and a new Gate and Fence at Old City Park.
The total for these projects was $50,000.
The following major projects are in Construction in Progress at the end of fiscal year 2020: Blackhawk
Boulevard Phase II, Monument Sign at the Dog Park, Imperial Estates Inline Detention Pond, Friendswood
Lakes Boulevard, a Fiber Optic connection project, the relocation of the Disc Golf Course, Lift Station #23
Replacement, 42” Southeast Transmission Water Line, Lift Station Mitigation Program, and a Sanitary
Sewer Assessment – Phase V & VI.
2020 2019 2020 2019 2020 2019
Land 28,344,769$ 25,759,306$ 319,473$ 319,473$ 28,664,242$ 26,078,779$
Buildings and improvements 21,644,179 23,351,127 358,363 378,120 22,002,542 23,729,247
Machinery and equipment 6,503,500 4,884,383 2,600,356 2,686,808 9,103,856 7,571,191
Infrastructure 38,014,849 40,295,186 34,251,770 29,883,125 72,266,619 70,178,311
Water rights - - 19,716,695 19,716,695 19,716,695 19,716,695
Construction in progress 11,336,005 3,749,899 4,958,198 6,782,367 16,294,203 10,532,266
105,843,302$ 98,039,901$ 62,204,855$ 59,766,588$ 168,048,157$ 157,806,489$
Governmental Activities Business-type Activities Totals
More detailed information on the City’s capital assets is presented in Note 4 to the financial statements.
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
18 Fiscal Year 2020 Annual Report
Debt Administration
At the end of the current fiscal year, the City had a total bonded debt, premiums and capital lease obligation of
$90.6 million.
2020 2019 2020 2019 2020 2019
General obligation bonds 35,390,000$ 29,730,000$ 22,380,000$ 24,440,000$ 57,770,000$ 54,170,000$
Revenue bonds - - 24,325,000 25,230,000 24,325,000 25,230,000
Premium on bond issuance 2,668,822 2,293,508 3,920,243 4,215,083 6,589,065 6,508,591
Capital leases 1,861,762 436,620 - - 1,861,762 436,620
39,920,584$ 32,460,128$ 50,625,243$ 53,885,083$ 90,545,827$ 86,345,211$
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 5 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 41,637.
Friendswood is expected to reach build out with an estimated population of 58,012. The City is continuing to focus
on economic development initiatives, including the revitalization of downtown and 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 grows.
The City’s largest single source of revenue in the General Fund continues to be ad valorem taxes. The City’s 2020-
2021 budget was adopted with revenues and expenditures based on a tax rate of $0.497314 per $100 taxable value.
However, the City Council voted to approve a rate of $0.487314 per $100 taxable value and the budget was
subsequently amended. This rate consists of a maintenance and operation (M&O) tax rate of $0.3921 and an interest
and sinking (debt service) tax rate of $0.0952. The rate was set based on a net assessed value of $3,918,863,732.
This is an increase of $246,671,741 from certified taxable values for tax year 2019. The City’s financial
management policy sets the guideline to maintain the fund balance and net position of the various operating funds
at levels sufficient to protect the City’s creditworthiness as well as its financial position from unforeseeable
emergencies.
The City second largest source of revenue in the General Fund is sales tax. The City anticipates an increase in this
revenue stream from the prior year and has adjusted the budget from $6,597,532 to $7,261,012. The franchise fees
budget decreased from $2,155,318 to $2,101,190 and the budget for license and permits has been increased from
$857,216 to $874,049. If all projections are accurate, the total General Fund unassigned fund balance net of the 90-
day operating requirement ($6.9 million) is estimated to be approximately $6.0 million at September 30, 2021.
Water revenues are budgeted at $8,227,489 which is a decrease of $843,394 in revenues, or 9.30 percent. Sewer
revenues are budgeted at $7,499,460 which is an increase of $962,707 or 14.73 percent. Water and Sewer Fund
working capital, net of the 90-day operating requirement ($2.5 million) is projected to be ($0.8) million at the end
of fiscal year 2021.
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
19 Fiscal Year 2020 Annual Report
Pursuant to the City’s financial management policy, funds in excess of the 90-day operating reserve are designated
for future capital improvements.
Requests for Information
The financial report is designed to provide our citizens, customers, investors, and creditors with a general overview
of the City’s finance and to show the City’s accountability for the money it receives. If you have questions about
this report or need additional information, contact Administrative Services, P.O. Box 1288, Friendswood, Texas
77549-1288, or call Katina Hampton at 281-996-3221, or email khampton@friendswood.com.
Separately issued financial statements for the West Ranch Management District can be obtained by writing to: West
Ranch Management District, a Component Unity of the City of Friendswood, c/o Allen Boone Humphries LLP,
3200 Southwest Freeway, Suite 2600, Houston, Texas 77027.
20 Fiscal Year 2020 Annual Report
21 Fiscal Year 2020 Annual Report
BASIC FINANCIAL STATEMENTS
22 Fiscal Year 2020 Annual Report
See notes to the financial statements. 23 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET POSITION
September 30, 2020
Governmental
Activities
Business-type
Activities Total
West Ranch
Management
District
Friendswood
Downtown EDC
Assets
Cash and cash equivalents 2,697,965$ 1,374,577$ 4,072,542$ 1,642,649$ 214,172$
Investments 18,180,353 8,351,538 26,531,891 3,052,345 1,302,053
Receivables, net of allowances
Taxes 2,445,410 - 2,445,410 17,996 102,244
Customer accounts 394,723 3,561,441 3,956,164 - -
Other 336,935 - 336,935 - -
Accrued interest 35,172 17,591 52,763 19 2,320
Due from other governments 1,847,816 - 1,847,816 - -
Prepaid items 172,721 52,573 225,294 309 -
Working capital deposit - 514,784 514,784 - -
Restricted cash equivalents - 19,947,895 19,947,895 - -
Capital Assets:
Non-depreciable 39,680,775 24,994,366 64,675,141 7,758,982 -
Depreciable, net 66,162,527 37,210,489 103,373,016 377,675 -
Total Capital Assets 105,843,302 62,204,855 168,048,157 8,136,657 -
Total Assets 131,954,397 96,025,254 227,979,651 12,849,975 1,620,789
Deferred Outflows of Resources
Deferred loss on issuance of refunding bonds 261,845 715,296 977,141 314,908 -
Deferred outflow of resources for pensions 2,856,333 350,148 3,206,481 - -
Deferred outflow of resources for OPEB 262,932 32,232 295,164 - -
Total Deferred Outflows of Resources 3,381,110 1,097,676 4,478,786 314,908 -
Total Assets and Deferred
Outflows of Resources 135,335,507 97,122,930 232,458,437 13,164,883 1,620,789
Liabilities
Accounts payable 3,516,915 780,270 4,297,185 33,102 -
Accrued liabilities 911,606 82,017 993,623 - -
Retainage payable 290,164 66,898 357,062 - -
Accrued interest 99,152 158,221 257,373 221,455 -
Unearned revenue - 264,473 264,473 - -
Customer deposits - 543,466 543,466 - -
Due to other governments 153,330 - 153,330 - -
Noncurrent liabilities:
Due within one year 2,726,220 3,037,153 5,763,373 850,000 -
Due in more than one year 38,046,953 47,698,857 85,745,810 21,948,405 -
Net pension liability 9,552,759 1,027,757 10,580,516 - -
Total OPEB liability 1,586,843 237,828 1,824,671 - -
Total Liabilities 56,883,942 53,896,940 110,780,882 23,052,962 -
Deferred Inflows of Resources
Deferred gain on issuance of refunding bonds 64,401 33,356 97,757 - -
Deferred Inflows of resources for pensions 1,998,994 297,136 2,296,130 - -
Deferred Inflows of resources for OPEB 227,502 27,455 254,957 - -
Total Deferred Inflows of Resources 2,290,897 357,947 2,648,844 - -
Net Position
Net investment in capital assets 68,990,597 32,242,803 101,233,400 2,566,694 -
Restricted for:
Public education and government channels 650,424 - 650,424 - -
Debt service - 2,066,530 2,066,530 2,003,813 -
Municipal court operations 235,123 - 235,123 - -
Economic development - - - - 1,620,789
Public safety 962,163 - 962,163 - -
Community development - nonexpendable 11,070 - 11,070 - -
Capital projects 2,747,344 120,201 2,867,545 53,969 -
Unrestricted 2,563,947 8,438,509 11,002,456 (14,512,555) -
Total Net Position 76,160,668$ 42,868,043$ 119,028,711$ (9,888,079)$ 1,620,789$
Primary Government Component Units
See notes to the financial statements. 24 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Page 1 of 2
STATEMENT OF ACTIVITIES
For the Year Ended September 30, 2020
Functions/Programs Expenses
Charges for
Services
Operating
Grants and
Contributions
Capital
Grants and
Contributions
Primary government
Governmental Activities:
General government 6,119,806$ 930,686$ 16,000$ -$
Public safety 15,501,734 871,714 3,398,685 30,487
Public works 8,840,113 222,337 - 677,819
Engineering 434,976 - - -
Community development 1,122,506 9,275 - -
Parks and recreation 4,439,511 181,709 15,960 -
Library services 1,214,130 - - -
Interest on long-term debt 1,055,889 - - -
Total Governmental Activities 38,728,665 2,215,721 3,430,645 708,306
Business-type Activities:
Water and sewer 13,804,282 16,638,758 22,602 -
Total Business-type Activities 13,804,282 16,638,758 22,602 -
Total Primary Government 52,532,947 18,854,479 3,453,247 708,306
Component Units
West Ranch Management District 1,668,164 - - -
Friendswood Downtown EDC 19,780 - - -
Total Component Units 1,687,944$ -$ -$ -$
Program Revenues
See notes to the financial statements. 25 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Page 2 of 2
STATEMENT OF ACTIVITIES
For the Year Ended September 30, 2020
Net (Expense) Revenue and Changes in Net Position
Functions/Programs
Governmental
Activities
Business-
type
Activities Total
West Ranch
Management
District
Friendswood
Downtown
EDC
Primary government
Governmental Activities:
General government (5,173,120)$ -$ (5,173,120)$ -$ -$
Public safety (11,200,848) - (11,200,848) - -
Public works (7,939,957) - (7,939,957) - -
Engineering (434,976) - (434,976) - -
Community development (1,113,231) - (1,113,231) - -
Parks and recreation (4,241,842) - (4,241,842) - -
Library services (1,214,130) - (1,214,130) - -
Interest on long-term debt (1,055,889) - (1,055,889) - -
Total Governmental Activities (32,373,993) - (32,373,993) - -
Business-type Activities:
Water and sewer - 2,857,078 2,857,078 - -
Total Business-type Activities - 2,857,078 2,857,078 - -
Total Primary Government (32,373,993) 2,857,078 (29,516,915) - -
Component Units
West Ranch Management District (1,668,164) -
Friendswood Downtown EDC - (19,780)
Total Component Units (1,668,164) (19,780)
General revenues:
Taxes:
Property taxes 18,731,549 - 18,731,549 2,637,632 -
Franchise and other taxes 2,142,660 - 2,142,660 - -
Sales taxes 8,846,359 - 8,846,359 - 583,075
Interest 880,606 347,518 1,228,124 35,613 -
Gain on disposal of capital assets - - - - 13,679
Miscellaneous 269,855 - 269,855 - -
Transfers 1,434,829 (1,434,829) - - -
Total general revenues and transfers 32,305,858 (1,087,311) 31,218,547 2,673,245 596,754
Change in net position (68,135) 1,769,767 1,701,632 1,005,081 576,974
Net Position - beginning 76,228,803 41,098,276 117,327,079 (10,893,160) 1,043,815
Net Position - ending 76,160,668$ 42,868,043$ 119,028,711$ (9,888,079)$ 1,620,789$
Primary Government Component Units
See notes to the financial statements. 26 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
BALANCE SHEET
September 30, 2020
General Fund
Debt Service
Fund
Bond
Construction
Total
Nonmajor
Governmental
Funds
Total
Governmental
Funds
Assets
Cash and cash equivalents 1,997,862$ 4,046$ 42,377$ 523,381$ 2,567,666$
Investments 10,840,098 24,598 3,344,981 3,178,522 17,388,199
Receivables, net of allowance:
Taxes receivables 2,088,159 50,519 - 306,732 2,445,410
Customer accounts 392,170 - - 2,553 394,723
Other receivables 333,362 - - 3,573 336,935
Accrued interest 26,953 1,012 - 5,848 33,813
Due from other funds 2,629,589 - - - 2,629,589
Due from other governments 1,629,596 - - - 1,629,596
Prepaid items 172,721 - - 218,220 390,941
Total Assets 20,110,510$ 80,175$ 3,387,358$ 4,238,829$ 27,816,872$
Liabilities, Deferred Inflows and Fund Balances
Liabilities:
Accounts payable 1,909,085$ -$ 95,378$ 1,697,702$ 3,702,165$
Accrued liabilities 720,916 - - - 720,916
Due to other governments 153,330 - - - 153,330
Customer deposits 5,440 - - - 5,440
Retainage payable - - 110,944 179,220 290,164
Due to other funds - - 300,000 2,329,589 2,629,589
Total Liabilities 2,788,771 - 506,322 4,206,511 7,501,604
Deferred Inflows of Resources:
Unavailable revenue 449,715 48,266 - 3,753 501,734
Total Deferred Inflows of resources 449,715 48,266 - 3,753 501,734
Fund Balances:
Nonspendable:
Prepaid items 172,721 - - - 172,721
Notes receivable 83,075 - - - 83,075
Permanent fund - - - 11,070 11,070
Restricted:
Public education and government channels 650,424 - - - 650,424
Municipal court operations - - - 235,123 235,123
Debt service - 31,909 - - 31,909
Public safety - - - 962,163 962,163
Capital projects - - 2,881,036 646,952 3,527,988
Assigned:
Purchases on order 417,134 - - - 417,134
Capital projects 2,174,611 - - - 2,174,611
Unassigned 13,374,059 - - (1,826,743) 11,547,316
Total Fund Balances 16,872,024 31,909 2,881,036 28,565 19,813,534
Total Liabilities, Deferred Inflows of
Resources,
and Fund Balances 20,110,510$ 80,175$ 3,387,358$ 4,238,829$ 27,816,872$
See notes to the financial statements.27 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
September 30, 2020
Total fund balance, governmental funds 19,813,534$
Amounts reported for governmental activities in the Statement of Net Position are different because:
Capital assets used in governmental activities are not current financial resources and therefore are
not reported in the fund financial statement, but are reported in the governmental activities of the
Statement of Net Position.104,426,437
The assets and liabilities of certain internal service funds are not included in the fund financial
statement, but are included in the governmental activities of the Statement of Net Position. 2,340,677
Some liabilities are not due and payable in the current period and are not included in the fund
financial statement, but are included in the governmental activities of the Statement of Net Position.
Bonds and certificates of obligation payable (35,390,000)
Capital leases payable (1,861,762)
Compensated absences (852,589)
Accrued interest payable (99,152)
Unamortized premium on bonds (2,668,822)
Unavailable revenues in the governmental fund statements is recognized as revenue in the
government-wide financial statements.501,734
Deferred gain on refunding (64,401)
Deferred loss on refunding 261,845
Certain other long-term assets and liabilities are not available to pay current period expenditures and
therefore are not reported in this fund financial statement, but are reported in the governmental
activities of the Statement of Net Position.
(9,552,759) Net pension liability
Total OPEB liability (1,586,843)
Deferred outflows and inflows of resources related to the net pension liability 857,339
Deferred outflows and inflows of resources related to the total OPEB liability 35,430
Net Position of Governmental Activities in the Statement of Net Position 76,160,668$
See notes to the financial statements. 28 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended September 30, 2020
General Fund
Debt Service
Fund
Bond
Construction
Total
Nonmajor
Governmental
Funds
Total
Governmental
Funds
Revenues
Property taxes 15,518,951$ 3,204,801$ -$ -$ 18,723,752$
Sales taxes 7,097,134 - - 1,749,225 8,846,359
Franchise fees and other 2,142,660 - - - 2,142,660
Fines and forfeitures 690,913 - - 89,804 780,717
Permits and fees 1,426,880 - - 77,675 1,504,555
Intergovernmental 2,983,424 - - 845,474 3,828,898
Investment earnings 197,606 9,293 23,567 43,939 274,405
Donations 59,473 - - 215,472 274,945
Miscellaneous 112,876 - 8,397 598,448 719,721
Total Revenues 30,229,917 3,214,094 31,964 3,620,037 37,096,012
Expenditures
Current:
General government 5,649,705 - - 40,723 5,690,428
Public safet y 14,154,341 - - 152,523 14,306,864
Public works 1,923,729 - 63,135 4,034,449 6,021,313
Engineering 434,976 - - - 434,976
Community development 1,139,566 - - - 1,139,566
Parks and recreation 3,426,521 - - - 3,426,521
Library services 1,182,289 - - - 1,182,289
Debt service:
Principal - 2,221,257 - - 2,221,257
Interest and other charges - 1,146,520 139,287 - 1,285,807
Capital outlay 2,094,024 - 7,313,288 3,458,163 12,865,475
Total Expenditures 30,005,151 3,367,777 7,515,710 7,685,858 48,574,496
Excess (deficiency) of revenues over
(under) expenditures 224,766 (153,683) (7,483,746) (4,065,821) (11,478,484)
Other Financing Sources (Uses)
Issuance of refunding bonds - 2,065,000 - - 2,065,000
Issuance of capital-related debt - - 7,795,000 - 7,795,000
Issuance of capital leases 1,019,000 - - 772,015 1,791,015
Premium on bond issuance - 343,348 410,492 - 753,840
Insurance recoveries 8,548 - - - 8,548
Transfers in 1,461,704 119,372 - 3,909 1,584,985
Transfers out (77,051) (26,875) (119,372) - (223,298)
Sale of capital assets 11,568 - - 61,000 72,568
Payments to refunding bond escrow agent - (2,372,262) - - (2,372,262)
Total Other Financing Sources (Uses)2,423,769 128,583 8,086,120 836,924 11,475,396
Net change in fund balances 2,648,535 (25,100) 602,374 (3,228,897) (3,088)
Fund balances - beginning 14,223,489 57,009 2,278,662 3,257,462 19,816,622
Fund balances - ending 16,872,024$ 31,909$ 2,881,036$ 28,565$ 19,813,534$
See notes to the financial statements. 29 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND
BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
For the Year Ended September 30, 2020
Net change in fund balances - total governmental funds: (3,088)$
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Governmental funds report outlays for capital assets as expenditures because such outlays use
current financial resources. In contrast, the Statement of Activities reports only a portion of
the outlay as expense. The outlay is allocated over the assets' estimated useful lives as
depreciation expense for the period.
Capital outlay 12,991,038
Depreciation expense (5,148,290)
Governmental funds only report the proceeds from the disposal of capital assets and not the
difference between the carrying value and the accumulated depreciation of the asset. This is
the amount by which the carrying value exceeded the accumulated depreciation. (8,904)
Governmental funds do not present revenues that are not available to pay current obligations.
In contrast, such revenues are reported in the Statement of Activities when earned.
Unavailable property tax revenue and other revenues (2,660)
Governmental funds report proceeds from long-term debt as current financial resources. In
contrast, the Statement of Activities treats such issuance of debt as a liability. Governmental
funds report repayment of long-term debt principal as an expenditure, In contrast, the Statement
of Activities treats such repayments as a reduction in long-term liabilities.
Debt service principal 2,221,257
Payments to escrow agent for payment of refunded bonds 2,372,262
Proceeds from issuance of long-term debt (9,860,000)
Proceeds from capital leases (1,791,015)
Premium from issuance of long-term debt (753,840)
Contributions are treated as expenditures in the fund based financial statements, but are treated
as reductions in the City's net pension/OBEB liability in the statement of net position. This
amount is the difference between contributions and net pension/OPEB expense (revenue) for
the current fiscal year.
Pension (539,266)
OPEB (67,360)
Some expenses reported in the statement of activities do not require the use of current financial
resources and these are not reported as expenditures in governmental funds:
(Increase) decrease in accrued interest (14,436)
(Increase) decrease in compensated absences (51,857)
Amortization of deferred loss on refunding (37,832)
Amortization of premium on bonds 282,570
Internal service fund is used by management to charge the cost of fleet management to
individual funds. The change in net position of the internal service fund is included in the
governmental activities in the statement of activities.343,286
Change in net position of governmental activities (68,135)$
See notes to the financial statements. 30 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Page 1 of 2
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
September 30, 2020
Business-Type
Activities Enterprise
Fund
Governmental
Activities
Water and Sewer Internal Service
Assets
Current assets
Cash and cash equivalents 1,374,577$ 130,299$
Investments 8,351,538 792,154
Accounts receivable, net of allowance:
Customer accounts 3,561,441 -
Accrued interest 17,591 1,359
Prepaids and other assets 52,573 -
Restricted cash equivalents 19,947,895 -
Total current assets 33,305,615 923,812
Non-current assets
Working capital deposit 514,784 -
Capital assets:
Land 319,473 -
Construction in progress 4,958,198 -
Water rights 19,716,695 -
Buildings and improvements 683,906 -
Machinery and equipment 7,494,793 3,759,565
Water and sewer systems 69,779,545 -
Accumulated depreciation (40,747,755) (2,342,700)
Total capital assets 62,204,855 1,416,865
Total non-current assets 62,719,639 1,416,865
Total Assets 96,025,254 2,340,677
Deferred Outflows of Resources
Deferred outflows - pension related 350,148 -
Deferred outflows - OPEB related 32,232 -
Deferred loss on bond refunding 715,296 -
Total Deferred Outflows of Resources 1,097,676 -
Total Assets and Deferred
Outflows of Resources 97,122,930 2,340,677
See notes to the financial statements. 31 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Page 2 of 2
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
September 30, 2020
Business-Type
Activities Enterprise
Fund
Governmental
Activities
Water and Sewer Internal Service
Liabilities
Current Liabilities
Accounts payable 780,270$ -$
Accrued liabilities 82,017 -
Accrued interest 158,221 -
Unearned revenue 264,473 -
Customer deposits 543,466 -
Retainage payable 66,898 -
Compensated absences 22,153 -
Bonds and other long-term debt payable 3,015,000 -
Total Current Liabilities 4,932,498 -
Non-current Liabilities
Compensated absences 88,614 -
Net Pension liability 1,027,757 -
Total OPEB liability 237,828 -
Bonds and other long-term debt payable 47,610,243 -
Total Non-current Liabilities 48,964,442 -
Total Liabilities 53,896,940 -
Deferred Inflows of Resources
Deferred gain on issuance of refunding bonds 33,356 -
Deferred inflows - pension related 297,136 -
Deferred inflows of resources for OPEB 27,455 -
Total Deferred Inflows of Resources 357,947 -
Total Liabilities and Deferred Inflows of Resources 54,254,887 -
Net Position
Net investment in capital assets 32,242,803 1,416,865
Restricted for capital projects 120,201 -
Restricted for debt service 2,066,530 -
Unrestricted 8,438,509 923,812
Total Net Position 42,868,043$ 2,340,677$
See notes to the financial statements. 32 Fiscal Year 2020 Annual Report
See notes to the financial statements. 33 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
For the Year Ended September 30, 2020
Business-Type
Activities
Enterprise Fund
Governmental
Activities
Water and Sewer Internal Service
Operating Revenues
Charges for services 16,499,400$ 691,404$
Miscellaneous 139,358 166
Total Operating Revenues 16,638,758 691,570
Operating Expenses
Personnel services 2,567,275 -
Sewer operations 3,230,832 -
Water purchases 2,649,339 -
Repairs and maintenance 551,503 -
Supplies 104,804 -
Other services and charges 947,214 -
Depreciation 2,016,896 348,284
Total Operating Expenses 12,067,863 348,284
Operating income 4,570,895 343,286
Non-Operating Revenues (Expenses)
Intergovernmental 22,602 -
Investment income 347,518 7,753
Gain on disposal of capital assets - 27,493
Interest expense (1,736,419) -
Total Non-Operating Revenues
(Expenses)(1,366,299) 35,246
Income before transfers 3,204,596 378,532
Transfers in 26,875 73,142
Transfers out (1,461,704) -
Change in net position 1,769,767 451,674
Net position - beginning 41,098,276 1,889,003
Total Net Position - ending 42,868,043$ 2,340,677$
See notes to the financial statements. 34 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Page 1 of 2
COMBINING STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended September 30, 2020
Business-Type
Activities
Enterprise Fund
Governmental
Activities
Water and Sewer Internal Service
Cash flows from operating activities
Cash received from customers 16,302,758$ -$
Receipts from interfund charges for fleet management - 691,570
Cash payments to suppliers for goods and services (7,537,284) (28,915)
Cash payments to employees for services (2,928,706) -
Net cash provided (used) by operating activities 5,836,768 662,655
- -
Cash flows from noncapital financing activities
Transfer in from other funds 26,875 73,142
Transfers out to other funds (1,461,704) -
Net cash provided (used) by noncapital
financing activities (1,434,829) 73,142
Cash flows from capital and related
financing activities
Acquisition and construction of property,
plant and equipment (4,636,677) (426,950)
Disposal of capital assets - 28,598
Proceeds from issuance of bonds 605,000 -
Repayment of debt (3,570,000) -
Interest paid on debt (1,743,572) -
Net cash provided (used) by capital and
related financing activities (9,345,249) (398,352)
Cash flows from investing activities
Purchase of investments 1,089,203 (277,161)
Investment income 346,916 7,222
Net cash provided (used) by investing activities 1,436,119 (269,939)
Net increase (decrease) in cash and
cash equivalents (3,507,191) 67,506
Cash and cash equivalents, beginning 24,829,663 62,793
Cash and cash equivalents, ending 21,322,472$ 130,299$
Reconciliation of Total Cash and cash equivalents
Current assets - cash and cash equivalents 1,374,577$ 130,299$
Restricted assets - cash and cash equivalents 19,947,895 -
21,322,472$ 130,299$
See notes to the financial statements. 35 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Page 2 of 2
COMBINING STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended September 30, 2020
Business-type
Activities -
Enterprise Funds
Governmental
Activities
Water and Sewer Internal Service
Reconciliation of operating income to net cash
provided (used) by operating activities:
Operating income (loss)4,570,895$ 343,286$
Adjustments to reconcile operating
income to net cash provided (used)
by operating activities:
Depreciation 2,016,896 348,284
Change in assets, deferred inflows and outflows, and liabilities:
Decrease (increase) in customer receivable (616,316) -
Decrease (increase) in prepaids and other assets 8,081 -
Decrease (increase) in deferred outflow for pensions 216,722 -
Decrease (increase) in deferred outflow for OPEB (20,819)
Increase (decrease) in accounts payable (291,816) (28,915)
Increase (decrease) in accrued liabilities 34,240 -
Increase (decrease) in customer deposits 11,075 -
Increase (decrease) in deferred inflows for pensions 269,241 -
Increase (decrease) in deferred inflows for OPEB 1,583 -
Increase (decrease) in total OPEB liability 28,107 -
Increase (decrease) in net pension liability (419,869) -
Increase (decrease) in compensated absences 28,748 -
Total adjustments 1,265,873 319,369
Net cash provided (used) by operating activities 5,836,768$ 662,655$
See notes to the financial statements. 36 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended September 30, 2020
37 Fiscal Year 2020 Annual Report
Note 1. Summary of Significant Accounting Policies
The City of Friendswood, Texas (“the City”) was incorporated on October 15, 1960. The City charter provides for
a City 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 Mayor resides at meetings of the City Council and can vote. The City provides the following services:
public safety, streets, parks and recreation, library, water and sewer, sanitation, planning and zoning, building
inspection, code enforcement, and general administrative services.
A. Reporting Entity
The City is an independent political subdivision of the State of Texas governed by an elected six- member Council
and Mayor and is considered a primary government. As required by generally accepted accounting principles, these
financial statements have been prepared based on considerations regarding the potential for inclusion of other
entities, organizations, or functions as part of the City’s financial reporting entity. Based on these considerations,
the West Ranch Management District and Friendswood Downtown Economic Development Corporation have been
included in the City’s reporting entity as discretely presented component units. Additionally, as the City is
considered a primary government for financial reporting purposes, its activities are not considered a part of any
other governmental or other type of reporting entity.
Consideration regarding the potential for inclusion of other entities, organizations, or functions in the City’s
financial reporting entity is based on criteria prescribed by general accepted accounting principles. These same
criteria are evaluated in considering whether the City is a part of any other governmental or other type of reporting
entity. The overriding elements associated with prescribed criteria considered in determining that the City’s
financial reporting entity status is that of a primary government are that it has a separately elected governing body;
it is legally separate; and it is financial independent of other state and local governments. Additional prescribed
criteria under generally accepted accounting principles include considerations pertaining to organizations for which
the primary government is financially accountable; and considerations pertaining to other organizations for which
the nature and significance of the relationship with the primary government are such that exclusion would cause the
reporting entity’s financial statements to be misleading or incomplete.
The West Ranch Management District (“the District”), a discretely presented component unit, was created under
Section 59, Article XVI of the Texas Constitution added by an Act of the 79th 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.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
38 Fiscal Year 2020 Annual Report
Note 1. Summary of Significant Accounting Policies (continued)
A. Reporting Entity (continued)
The Friendswood Downtown Economic Development Corporation (“FDEDC”) was incorporated August 1, 2016
as a nonprofit economic development corporation under the Development Corporation Act. The citizens of
Friendswood voted to pass a one- half cent sales tax dedicated to support and enhance the welfare and prosperity of
the citizens of the City and of this State by promotion of economic development and growth by encouraging the
development of new business enterprises and the retention or expansion of existing business enterprises. To serve
this purpose, the Corporation shall have the authority and power of a Type B corporation to undertake projects as
described in Subchapter C of Chapter 501 of the Local Government Code and Chapter 505 of the Local Government
Code, including undertaking projects as authorized by law, including but not limited to projects to promote new or
expanded business enterprises in the downtown area as defined by the City of Friendswood Downtown District
Map, including but not limited to streets, targeted infrastructure, paved sidewalks, pedestrian amenities including
lighting, benches, signage, and other related public improvements, and the maintenance and operations expenses
for any of the above-described projects. A separate governing board oversees FDEDC, which is appointed by
Friendswood City Council, and consists of members of City Council, City’s management, and individuals from the
community. The City can remove appointed board members and approves the FDEDC’s budget. The FDEDC is
reported as a discretely presented component unit because the governing body is not identical to the governing body
of the City, the FDEDC does not solely serve the City, and the City has the ability to impose its will on FDEDC.
Complete financial statements of the FDEDC may be obtained by contacting FDEDC’s administration office.
B. Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement of activities) report
information on all activities of the primary government and its component unit. For the most part, the effect of
interfund activity has been removed from these statements. Governmental activities, which normally are supported
by taxes and intergovernmental revenue, are reported separately from business-type activities, which rely to a
significant extent on fees and charges for support. Likewise, the primary 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 among program revenue are reported instead as general revenue.
Separate financial statements are provided for governmental funds and proprietary funds. Major individual
governmental funds and major individual enterprise funds are reported as separate columns in the fund financial
statements.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
39 Fiscal Year 2020 Annual Report
Note 1. Summary of Significant Accounting Policies (continued)
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources measurement focus and the
modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered to be available when they are collectible within the current period or soon enough
thereafter to pay liabilities of the current period. For this purpose, the government considered revenue to be
available if collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded
when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as
expenditures related to compensated absences and claims and judgements, are recorded only when payment is due.
Property taxes, franchise taxes, sales taxes, and interest associated with the current fiscal period are all considered
to be susceptible to accrual and, accordingly, have been recognized as revenue of the current fiscal period. All of
revenue items are considered to be measurable and available only when cash is received by the City.
The City reports the following major governmental funds:
The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general
government, except those required to be accounted for in another fund.
The Debt Service Fund is used to account for the accumulation of resources for the payment of general
long-term debt principal, interest and related costs.
The Bond Construction Fund is used to account for the construction of public facilities, and park, street
and drainage improvements that are funded by the proceeds from Permanent Improvement Bonds.
Other governmental funds is a summarization of all the non-major governmental funds.
The City reports the following major enterprise fund:
The Water and Sewer Fund is used to account for the activities of the City’s water and wastewater
operations.
Additionally, the City reports the following fund type:
The Internal Service Fund is used to account for fleet management services provided to other departments
of the City on a cost reimbursement basis.
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial
statements. Exceptions to this general rule are charges between the City’s water and sewer function and various
other functions of the government. Elimination of these charges would distort the direct costs and program revenue
reported for the various functions concerned.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and
expenses generally result from providing services and producing and delivering goods in connection with a
proprietary fund’s principal ongoing operations. The principal operating revenues of the Water and Sewer
enterprise fund and of the City’s internal service fund are charges to customers for sales and services. Operating
expenses for the enterprise fund and internal service fund include the cost of sales and services, administrative
expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as
nonoperating revenue and expenses.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
40 Fiscal Year 2020 Annual Report
Note 1. Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance
Cash and Investments
Cash and investments include cash on hand, deposits with financial institutions, short-term investments in a state-
managed public funds investment pool account (TexPool), and a privately managed public funds investment pool
(Texas Class). Other investments consist mainly of U.S. government treasury bills, treasury notes and other U.S.
government obligations. Restricted cash and investments are assets restricted for specific use. Restricted includes
cash deposits with financial institutions and investment pools.
The City maintains a pooled cash and investments account for all funds of the City. Each fund’s positive equity in
the pooled cash account is presented as “cash and investments” in the financial statements. Negative equity balances
are reclassified and are reflected as interfund accounts payable. Interest income and interest expense are allocated
monthly to each respective individual fund based on their representative fund balances.
The City’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term
investments with original maturities of three months or less from the date of acquisition.
Investments for the City are reported at fair value, except for the position in investment pools. The City’s investment
in pools are reported at the net asset value per share (which approximates fair value) even though it is calculated
using the amortized cost method.
TexPool and Texas Class have a redemption notice period of one day and may redeem daily. The investment pool’s
authority may only impose restrictions on redemptions in the event of a general suspension of trading on major
securities markets, general banking moratorium or national state of emergency that affects the pool’s liquidity.
Property Taxes
All trade and property tax receivables are shown net of an allowance for uncollectible accounts. Management
estimates an allowance for trade accounts receivable based on past experience, historical losses, and other pertinent
factors.
The City’s property taxes are levied annually in October on the basis of the Appraisal District’s assessed values as
of January 1 of that calendar year. Appraised values are established by the Appraisal District at market value and
assessed at 100% of appraised value less exemptions. The City’s property taxes are billed and collected by
Galveston County. Such taxes are applicable to the fiscal year in which they are levied and become delinquent with
an enforceable lien on property on February 1 of the subsequent calendar year.
Property taxes are prorated between operations and debt service based on rates adopted for the year of the levy. For
the current year, the City levied property taxes of $0.521439 per $100 of assessed valuation that were prorated
between operations and debt service in the amounts of $0.432160 and $0.089279, respectively. The resulting tax
levies were approximately $15.4 and $3.2 million for operations and debt service, respectively, based on a total
taxable valuation of approximately $3.6 billion for the 2019 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, 2020, the
District levied an ad valorem tax at the rate of $0.4500 per $100 of assessed valuation, which resulted in tax levy
of $2.6 million on the taxable valuation of approximately $580.2 million for the 2019 tax year.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
41 Fiscal Year 2020 Annual Report
Note 1. Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance (continued)
Interfund Receivables/Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the
fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans”). All other
outstanding balances between funds are reported as “due to/from other funds.” Any residual balances outstanding
between the governmental activities and business-type activities are reported in the government-wide financial
statements as “internal balances.”
Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items
in both government-wide and fund financial statements. The City applies the consumption method in accounting
for prepaid items in the governmental funds.
Restricted Assets
Certain proceeds of the City’s enterprise fund revenue bonds, as well as certain resources set aside for their
repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond
covenants.
Contract with West Ranch Management District
The District approved a contract with the City effective August 15, 2005, as amended. Under the terms of the
contract, the District is to pay for construction of water distribution, sanitary sewer, drainage, transportation,
education and recreation facilities to serve the District.
The District shall be the owner of the system until the system is completed, approved by the City and conveyed to
it, at which time ownership will vest in the City. The District will own and operate these facilities to serve the
District. Pursuant to the contract, the District shall have a security interest therein until all bonds issued by the
District are retired.
Capital assets, which include property, plant, equipment, infrastructure, and water rights, are reported in the
applicable governmental or business-type activities columns in the government- wide financial statements. The
City defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated historical
cost if actual historical cost is not available. Donated capital assets are recorded at acquisition cost, which is the
price that would be paid to acquire an asset with equivalent service potential at the acquisition date. The City’s
water rights have an indefinite life.
The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’
lives are not capitalized.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
42 Fiscal Year 2020 Annual Report
Note 1. Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance (continued)
Capital Assets (continued)
The City’s property, plant and equipment are depreciated using the straight-line method over the following useful
lives:
Buildings and improvements 20-50 years
Machinery and equipment 5 - 10 years
Infrastructure 40-50 years
Water and sewer system 40-50 years
The West Ranch Management District’s capital assets are depreciated using the straight-line method over estimated
useful lives of 10 to 45 years.
Compensated Absences
The City’s employees earn vacation 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.
Long-term Debt
In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term
debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-
type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and
amortized over the life of the bonds using the straight-line method, which approximates the effective interest
method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance cost are
expenses in the period incurred.
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 loss on refunding debt - A deferred loss on refunding results from the difference in the carrying value
of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life
of the refunded or refunding debt.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
43 Fiscal Year 2020 Annual Report
Note 1. Summary of Significant Accounting Policies (continued)
Deferred Outflows/Inflows of Resources (continued)
Deferred outflows of resources for pension - Reported in the government-wide financial statement of net
position, this deferred outflow results from pension plan contributions made after the measurement date of the
net pension liability and the results of 1) differences between projected and actual earnings on pension plan
investments; 2) changes in actuarial assumptions; 3) differences between expected and actual actuarial
experiences; and 4) changes in the City’s proportional share of pension liabilities. The deferred outflows of
resources related to pensions resulting from City contributions subsequent to the measurement date will be
recognized as a reduction of the net pension liability in the next fiscal year. The deferred outflows resulting
from differences between projected and actual earnings on pension plan investments will be amortized over a
closed five year period. The remaining pension related deferred outflows will be amortized over the expected
remaining service lives of all employees five year period.
Deferred outflows of resources for other post-employment benefits (OPEB) - Reported in the government wide
financial statement of net position, these deferred outflows result from OPEB plan contributions made after the
measurement date of the total OPEB liability and the results of changes in assumptions and other inputs. The
deferred outflows of resources resulting from City contributions subsequent to the measurement date will be
recognized as a reduction of the total OPEB liability in the next fiscal year. The other OPEB related outflow
will be amortized over the expected remaining service lives of all employees (active and inactive employees)
who are provided with OPEB benefits.
In addition to liabilities, the statement of financial position and/or balance sheet will sometimes report a separate
section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources,
represents an acquisition of net position or balance sheet that applies to a future period(s) and so will not be
recognized as an inflow of resources (revenue) until that time.
Deferred inflows of resources for unavailable revenues - Reported only in the governmental funds balance
sheet, unavailable revenues arise under the modified accrual basis of accounting. These amounts are deferred
and recognized as an inflow of resources in the period that the amounts become available.
Deferred inflows of resources for pension - Reported in the government wide financial statement of net position,
these deferred inflows result primarily from changes in actuarial assumptions. These pension related deferred
inflows will be amortized over the expected remaining service lives of all employees (active and inactive
employees) that are provided with pensions through the pension plan.
Deferred inflows of resources for gain on issuance of refunding bonds - Reported in the government wide
financial statement of net position, these deferred inflows result primarily from differences from the carrying
value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of
the life of the refunded or refunding debt.
Deferred inflows of resources for OPEB - Reported in the government wide financial statement of net position,
this deferred inflow results primarily from 1) changes in actuarial assumptions; and 2) differences between
expected and actual actuarial experiences. These OPEB related deferred inflows will be amortized over the
expected remaining service lives of all employees (active and inactive employees) that are provided with OPEB
through the OPEB plans.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
44 Fiscal Year 2020 Annual Report
Note 1. Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance (continued)
Pension
For purposes of measuring the net pension liability, pension related deferred outflows and inflows of resources, and
pension expense, City specific information about its Fiduciary Net Position in the Texas Municipal Retirement
System (TMRS) and additions to/deductions from TMRS’s Fiduciary Net Position have been determined on the
same basis as they are reported by TMRS. For this purpose, plan contributions are recognized in the period that
compensation is reported for the employee, which is when contributions are legally due. Benefit payments and
refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair
value.
Other Post-Employment Benefits (OPEB)
The City provides its retirees the opportunity to maintain health insurance coverage by participating in the City’s
insurance plan. The City reports the total liability for this plan on the government-wide and proprietary fund
financial statements. The actual cost recorded in the governmental fund financial statements is the cost of the health
benefits incurred on behalf of the retirees less the premiums collected from the retirees. Information regarding the
City’s total liability for this plan is obtained through a report prepared by Gabriel Roeder Smith & Company, the
City’s third-party actuary, in compliance with GASB Statement No. 75, Accounting and Financial Reporting for
Postemployment Benefits Other Than Pensions.
Additionally, the City participates in a defined-benefit group-term life insurance plan, both for current and retired
employees, administered by the Texas Municipal Retirement System (TMRS). The City reports the total liability
for this plan on the government-wide and proprietary fund financial statements. Information regarding the City’s
total OPEB liability is obtained from TMRS through a report prepared for the City by TMRS’ consulting actuary,
Gabriel Roeder Smith & Company, in compliance with GASB Statement No.75.
Fund Balance
The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy
that is based primarily on the extent to which the City is bound to honor constraints on the specific purposes for
which amounts in the respective governmental funds can be spent. The classifications used in the governmental
fund financial statements are as follows:
Non-spendable – includes amounts that cannot be spent because they are either not in spendable form, or, for
legal or contractual reasons, must be kept intact. This classification includes prepaid items, note receivable
and the fund balance of the City’s permanent fund.
Restricted – includes fund balance amounts that are constrained for specific purposes which are imposed by
providers, such as creditors or amounts restricted due to constitutional provision or enabling legislation. This
classification includes retirement of long-term debt, construction programs, City ordinances, and other federal
and state grants.
Committed – includes fund balance amounts that are constrained for specific purposes that are internally
imposed by the City through formal action in an open meeting of the highest level of decision making
authority. Committed fund balance is reported pursuant to resolution passes by the City Council.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
45 Fiscal Year 2020 Annual Report
Note 1. Summary of Significant Accounting Policies (continued)
D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance (continued)
Fund Balance (continue)
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, 2020, 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 then unassigned amounts when expenditures are incurred for purposes for which amounts
in any of those unrestricted fund balance classifications are available.
The City has established a minimum fund balance policy whereby the City’s unassigned general fund balance will
be maintained at levels sufficient to protect the City’s creditworthiness, as well as its financial position, from
unforeseeable emergencies. The City will strive to maintain the unassigned general fund balance at a minimum of
90 days of prior year audited operating expenditures.
Net Position
Government-Wide Financial Statements:
The Statement of Net Position includes the following categories of net position:
Net investment in capital assets – the component unit of net position that reports the difference between
capital assets less both the accumulated depreciation and the outstanding balance of debt, net of premiums
and discounts, that is directly attributable to the acquisition, construction or improvement of these capital
assets.
Restricted – Net position is reported as restricted when there are limitations imposed on its use either through
the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors,
or laws or regulations of other governments.
Unrestricted – the difference between assets, deferred outflows and inflows, and liabilities that are not
reported in any of the classifications above.
Use of Estimates
The preparation of financial statements, in conformity with generally accepted accounting principles, requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual amounts could differ materially from those estimates.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
46 Fiscal Year 2020 Annual Report
Note 1. Summary of Significant Accounting Policies (continued)
E. Current and Future GASB Pronouncements
The following GASB pronouncements have been implemented by the City in the current fiscal year:
GASB Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance. This Statement was
issued in March 2020. The primary objective of this Statement is to provide temporary relief to governments and other
stakeholders in light of the COVID-19 pandemic. That objective is accomplished by postponing the effective dates of
certain provisions in Statements and Implementation Guides that first became effective or are scheduled to become
effective for periods beginning after June 15, 2018, and later. The requirements of this Statement are effective
immediately.
The effective dates of the following pronouncements are postponed by 12 months:
Statement No. 83, Certain Asset Retirement Obligations
Statement No. 84, Fiduciary Activities
Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements
Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period
Statement No. 90, Majority Equity Interests
Statement No. 91, Conduit Debt Obligations
Statement No. 92, Omnibus 2020
Statement No. 93, Replacement of Interbank Offered Rates
Implementation Guide No. 2017-3, Accounting and Financial Reporting for Postemployment Benefits Other
Than Pensions (and Certain Issues Related to OPEB Plan Reporting)
Implementation Guide No. 2018-1, Implementation Guidance Update—2018
Implementation Guide No. 2019-1, Implementation Guidance Update—2019
Implementation Guide No. 2019-2, Fiduciary Activities.
The effective dates of the following pronouncements are postponed by 18 months:
Statement No. 87, Leases
Implementation Guide No. 2019-3, Leases
The following GASB pronouncements have been issued but not yet implemented by the City:
GASB Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal
Revenue Code Section 457 Deferred Compensation Plans—an amendment of GASB Statements No. 14 and No. 84, and
a supersession of GASB Statement No. 32. It was issued in June 2020, but the requirements in (1) paragraph 4 of this
Statement as it applies to defined contribution pension plans, defined contribution OPEB plans, and other employee
benefit plans and (2) paragraph 5 of this Statement are effective immediately. The requirements in paragraphs 6–9 of this
Statement are effective for fiscal years beginning after June 15, 2021. Implementation of this Statement is planned for
fiscal year 2022.
GASB Statement No. 96, Subscription-Based Information Technology Arrangements. This statement was issued in May
2020 and provides guidance on the accounting and financial reporting for subscription-based information technology
arrangements (SBITAs) for government end users (governments). This Statement (1) defines a SBITA; (2) establishes
that a SBITA results in a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability;
(3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a
SBITA; and (4) requires note disclosures regarding a SBITA. To the extent relevant, the standards for SBITAs are based
on the standards established in Statement No. 87, Leases, as amended. This statement is effective for fiscal years
beginning after June 15, 2022, and all reporting periods thereafter. Implementation of this Statement is planned for fiscal
year 2023.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
47 Fiscal Year 2020 Annual Report
Note 2. Cash and Investments
Under provisions of state and local statutes, the City’s investment policies, and provisions of the City’s depository
contract with an area financial institution, the City is authorized to place available deposits and investments in the
following:
1. Obligations of the U.S., it’s agencies and instrumentalities;
2. Certificates of Deposit issued by state and national banks or savings or loan associations domiciled
in this state that are guaranteed or incurred by the Federal Deposit Insurance Corporation or
collateralized in accordance with Section 2256.010, the Texas Government Code, in face amounts
not to exceed $100,000;
3. No-load money market mutual funds; and
4. TexPool, Lone State Investment Pool and Texas CLASS.
The City Council has adopted a written investment policy regarding the investments of its funds as defined by the
Public Funds Investment Act of 1995 (Chapter 2256, Texas Government Code). The investments of the City are in
compliance with the Council’s investment policies. The City did not have any derivative investment products
during the current year. All significant legal and contractual provisions for investments were complied with during
the year.
At September 30, 2020 the carrying amount of the City and Friendswood Downtown Economic Development
Corporation’s deposits was $4,286,714 and the bank balance of $4,672,751.
As of September 30, 2020 the City and Friendswood Downtown Economic Development Corporation held the
following investments.
Reported Weighted
Value of Average
Investments Maturity (Days)
Investment pools:
TexPool 5,174,357$ 38
Texas CLASS 33,000,779 22
Total investment pools 38,175,136
Debt Securities:
Federal Farm Credit Bonds 1,526,419 139
Federal Home Loan Bank Bonds 3,051,608 58
Federal Home Loan Mortgage Corporation 3,009,258 83
Federal National Mortgage Association 2,019,418 89
Total debt securities 9,606,703
Total investments 47,781,839$
The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted
accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset.
Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable
inputs; and Level 3 inputs are significant unobservable inputs. The valuation techniques used in the fair value
measurement are based on quoted market closing prices for Level 2 inputs.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
48 Fiscal Year 2020 Annual Report
Note 2. Cash and Investments (continued)
The City has the following recurring fair value measurements as of September 30, 2020:
Fair Value /
Amortized
Cost
Level 1
Inputs
Level 2
Inputs
Level 3
Inputs
Investment Securities:
Federal Farm Credit Bank 1,526,419$ -$ 1,526,419$ -$
Federal Home Loan Bank 3,051,608 - 3,051,608 -
Federal Home Loan Mortgage Corp. 3,009,258 - 3,009,258 -
Federal National Mortgage Assoc. 2,019,418 - 2,019,418 -
Total Investment Securities 9,606,703$ -$ 9,606,703$ -$
The City invests in Texas Local Government Investment Pool (TexPool), which was created under the Interlocal
Cooperation Act, Texas Government Code Ann. Chapter 791 and the Texas Public Funds Investment Act. The
Texas Treasury Safekeeping Trust Company (“the Trust”) is trustee of TexPool and is a limited purpose trust
company authorized pursuant to Texas Government Code Ann. Section 404.103 for which the Texas State
Comptroller is sole officer, director and shareholder. The advisory board of TexPool is composed of members
appointed pursuant to the requirements of the Texas Public Funds Investment Act.
The City invests in Texas CLASS Investment Pool which was established in 1996 pursuant to the Texas Public
Funds Investment Act. The pool is governed by a 7-member board of trustees, who are elected by pool participants.
The Cutwater Investor Services Corp. serves as the pools program administrator and Wells Fargo Bank Texas, NA,
serves as custodian.
Interest Rate Risk. In accordance with its investment policy, the City manages its exposure to declines in fair values
by structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations
and invest operating funds primarily in short-term securities.
Custodial Credit Risk. In the case of deposits, this is the risk that in the event of a bank failure, the City’s deposits
may not be returned. State statutes require that all deposits in financial institutions be fully collateralized by U.S.
Government obligations or its agencies and instrumentalities or direct obligations of Texas or its agencies and
instrumentalities that have a fair value of not less than the principal amount of deposits. As of September 30, 2020,
all of the City’s cash deposits with financial institutions were collateralized with securities held by the pledging
financial institution in the City’s name.
Credit Risk
Credit Risk. It is the City’s policy to limit its investments to investment types with an investment quality rating not
less than A or its equivalent by a nationally recognized statistical rating organization. The City’s investments as of
September 30, 2020, were rated as follows:
Credit Quality
Investment Type: Rating Rating Agency
Investment Pools:
Texas CLASS AAAm Standard & Poor's
TexPool AAAm Standard & Poor's
Debt Securities:
Federal Home Loan Mortgage Corp. Aaa Moody's Investor Service
Federal Home Loan Bank Aaa Moody's Investor Service
Federal Farm Credit Bank Aaa Moody's Investor Service
Federal National Mortgage Association Aaa Moody's Investor Service
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
49 Fiscal Year 2020 Annual Report
Note 3. Receivables and Deferred Inflows of Resources
Receivables as of September 30, 2020 for the City’s individual major funds and nonmajor funds in the aggregate
including the applicable allowances for uncollectible accounts, are as follows:
Proprietary
General
Debt Service
Fund Nonmajor
Water and
Sewer Total
Receivables:
Property taxes 264,298$ 48,744$ -$ -$ 313,042$
Penalties and interest 147,443 23,579 - - 171,022
Sales tax 1,240,264 - 306,732 - 1,546,996
Franchise taxes 560,272 - - - 560,272
Customer accounts 283,981 - 3,289 3,840,600 4,127,870
Court fines 776,835 - - - 776,835
Other 333,362 - 3,573 - 336,935
Gross receivables 3,606,455 72,323 313,594 3,840,600 7,832,972
Less: allowance for
uncollectibles (792,764) (21,804) (736) (279,159) (1,094,463)
Net total receivables 2,813,691$ 50,519$ 312,858$ 3,561,441$ 6,738,509$
Governmental Funds
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 175,192$
Property tax penalties and interest 100,990
Court fines 155,367
Grants 10,000
Miscellaneous 8,166
Total General Fund 449,715
Debt Service Fund
Delinquent property taxes 32,635
Property tax penalties and interest 15,631
48,266
Nonmajor funds:
Court fines 3,753
Total nonmajor funds 3,753
Total governmental funds 501,734$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
50 Fiscal Year 2020 Annual Report
Note 4. Capital Assets
Capital assets activity for the primary government for the fiscal year ended September 30, 2020, is as follows:
Governmental activities
Beginning
Balance Increases
Reclassification
/Decreases Ending Balance
Capital assets, not being depreciated:
Land 25,759,306$ 2,585,463$ -$ 28,344,769$
Construction in progress 3,749,899 7,610,615 (24,508) 11,336,006
Total capital assets, not being depreciated 29,509,205 10,196,078 (24,508) 39,680,775
Capital assets, being depreciated:
Buildings and improvements 41,783,398 25,212 24,508 41,833,118
Machinery and equipment 14,793,376 2,792,469 (277,289) 17,308,556
Infrastructure 93,495,234 301,822 - 93,797,056
Total capital assets, being depreciated 150,072,008 3,119,503 (252,781) 152,938,730
Less accumulated depreciation for:
Buildings & improvements (18,432,271) (1,756,668) - (20,188,939)
Machinery and equipment (9,908,993) (1,157,747) 261,683 (10,805,057)
Infrastructure (53,200,048) (2,582,159) - (55,782,207)
Total accumulated depreciation (81,541,312) (5,496,574) 261,683 (86,776,203)
Total capital assets - being depreciated 68,530,696 (2,377,071) 8,902 66,162,527
Governmental capital assets, net 98,039,901$ 7,819,007$ (15,606)$ 105,843,302$
Business-type activities
Beginning
Balance Increases
Reclassification
/Decreases Ending Balance
Capital assets, not being depreciated:
Land 319,473$ -$ -$ 319,473$
Water rights 19,716,695 - - 19,716,695
Construction in progress 6,782,367 4,191,355 (6,015,524) 4,958,198
Total capital assets, not being depreciated 26,818,535 4,191,355 (6,015,524) 24,994,366
Capital assets, being depreciated:
Buildings and improvements 683,906 - - 683,906
Machinery and equipment 7,353,510 140,189 1,094 7,494,793
Water and sewer system 63,640,402 123,619 6,015,524 69,779,545
Total capital assets, being depreciated 71,677,818 263,808 6,016,618 77,958,244
Less accumulated depreciation for:
Buildings and improvements (305,786) (19,757) - (325,543)
Machinery and equipment (4,666,702) (226,641) (1,094) (4,894,437)
Water and sewer system (33,757,277) (1,770,498) - (35,527,775)
Total accumulated depreciation (38,729,765) (2,016,896) (1,094) (40,747,755)
Total capital assets - being depreciated 32,948,053 (1,753,088) 6,015,524 37,210,489
Business-type capital assets, net 59,766,588$ 2,438,267$ -$ 62,204,855$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
51 Fiscal Year 2020 Annual Report
Note 4. Capital Assets (continued)
Capital assets activity for the discretely presented component units is as follows:
Component Unit
Beginning
Balance Increases
Reclassification
/Decreases Ending Balance
Capital assets, not being depreciated:
Land 6,839,035$ 855,212$ 64,735$ 7,758,982$
Construction in progress 64,735 - (64,735) -
Total capital assets, not being depreciated 6,903,770 855,212 - 7,758,982
Capital assets, being depreciated:
Water production and distribution facilities 483,467 - - 483,467
Total capital assets, being depreciated 483,467 - - 483,467
Less accumulated depreciation for:
Water production and distribution facilities (95,046) (10,746) - (105,792)
Total accumulated depreciation (95,046) (10,746) - (105,792)
Total capital assets - being depreciated 388,421 (10,746) - 377,675
Component Unit capital assets, net 7,292,191$ 844,466$ -$ 8,136,657$
Depreciation
Depreciation expense was charged to functions/programs of the City as follows:
Depreciation
Expense
Primary government
Governmental activities:
General government 290,747$
Public safety 1,120,221
Public works 2,754,296
Community development 3,613
Parks and recreation 979,413
Capital assets held by the City's internal service
fund are charged to the various functions based on
their usage 348,284
Total Governmental activities 5,496,574
Business-type activities:
Water and sewer 2,016,896
Total Business-type activities:2,016,896
Total primary government 7,513,470$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
52 Fiscal Year 2020 Annual Report
Note 4. Capital Assets (continued)
Construction commitments
The City has active construction projects as of September 30, 2020. At year end, the City’s commitments with
contractors were as follows:
Projects
Construction
Commitment
Construction
in Progress
Remaining
Commitment
Governmental funds:
Blackhawk Boulevard Phase II 5,130,185$ 5,000,377$ 129,808$
Monument Sign at Dog Park 27,075 12,530 14,545
Imperial Estates Inline Detention Pond 5,500,000 5,500,000 -
Friendswood Lakes Boulevard 755,490 755,490 -
Fiber Optic Project 79,999 65,009 14,990
Disc Golf Course 2,600 2,600 -
11,495,349 11,336,006 159,343
Enterprise funds:
Lift Station #23 Replacement 3,874,658 1,671,715 2,202,943
42" SE Transmission Water Line Phase I & II 2241632 2,241,632 -
Blackhawk Boulevard Phase II (Utility Items) 425,973 407,573 18,400
Friendswood Lakes Boulevard 409,427 409,427 -
Lift Station Mitigation Program 677,939 39,188 638,751
Sanitary Sewer Assessment - Phase V & VI 219,499 188,663 30,836
7,849,128 4,958,198 2,890,930
Total Commitments 19,344,477$ 16,294,204$ 3,050,273$
The remaining commitment amounts were encumbered at year end. The encumbrances and related appropriation
lapse at the end of the fiscal year, but they are re-appropriated and become a part of the subsequent year’s budget
because performance under the executory contract is expected in the next year.
Note 5. Long-term Debt
The City issues a variety of long-term debt instruments in order to acquire and/or construct major capital facilities
and equipment for governmental and business-type activities. These instruments include general obligation bonds,
certificates of obligation, revenue bonds, and 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
The Tax Reform Act of 1986 instituted certain arbitrage restrictions consisting of complex regulations with respect
to issuance of tax-exempt bonds after August 3l, 1986. Arbitrage regulations deal with the investment of tax-exempt
bond proceeds at an interest yield greater than the interest yield paid to bondholders. Generally, all interest paid to
bondholders can be retroactively rendered taxable if applicable rebates are not reported and paid to the Internal
Revenue Service (IRS) at least every five years for applicable bond issues. Accordingly, there is the risk that if such
calculations are not performed, or are not performed correctly, a substantial liability to the City could result. The
City periodically engages an arbitrage consultant to perform the calculations in accordance with the rules and
regulations of the IRS. There was no liability for arbitrage recorded as of year-end.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
53 Fiscal Year 2020 Annual Report
Note 5. Long-term Debt (continued)
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, 2020:
Original Issue Final Interest Governmental Business-Type
General Obligation Bonds: Amount Maturity Rates Activities Activities
2012 General Obligation Refunding 8,890,000$ 2026 2.0 - 3.5% 4,170,000$ -$
2014 General Obligation Refunding 8,805,000 2028 2.0% - 4.0% 2,065,000 5,795,000
2015 General Obligation Refunding 9,595,000 2030 2.0% - 3.0% 7,415,000 -
2016 General Obligation Permanent
Improvement and Refunding 19,095,000 2031 2.0% - 5.0% 6,885,000 7,860,000
2016A General Obligation Refunding 9,765,000 2034 2.0% - 4.0% - 8,120,000
2017 General Obligation Bonds 5,605,000 2031 2.0% - 4.0% 4,995,000 -
2020 General Obligation and Refunding
Bonds 10,465,000 2050 2.0% - 4.0% 9,860,000 605,000
Total general obligation bonds 35,390,000 22,380,000
Revenue Bonds:
2016 Waterworks and Sewer System 5,735,000 2036 2.0% - 4.0% - 4,825,000
2018 Waterworks and Sewer System 20,170,000 2038 4.0% - 5.0% - 19,500,000
Total revenue bonds - 24,325,000
Total 35,390,000$ 46,705,000$
Annual debt service requirements for the City’s bonds and certificates of obligation are as follows:
Fiscal Year Principal Interest Principal Interest Total
2021 2,070,000$ 1,232,776$ 3,015,000$ 1,874,330$ 8,192,106$
2022 2,215,000 1,191,881 2,645,000 1,750,425 7,802,306
2023 2,290,000 1,119,669 2,735,000 1,657,800 7,802,469
2024 2,365,000 1,042,406 2,835,000 1,554,475 7,796,881
2025 2,450,000 959,544 2,955,000 1,439,125 7,803,669
2026-2030 13,705,000 3,337,797 17,020,000 5,094,575 39,157,372
2031-2035 5,285,000 1,093,250 10,715,000 1,992,300 19,085,550
2036-2040 2,225,000 588,525 4,785,000 275,900 7,874,425
2041-2045 1,285,000 323,925 - - 1,608,925
2046-2050 1,500,000 115,500 - - 1,615,500
35,390,000$ 11,005,273$ 46,705,000$ 15,638,930$ 108,739,203$
Governmental Activities Business-type Activities
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
54 Fiscal Year 2020 Annual Report
Note 5. Long-term Debt (continued)
Bonds Payable and Certificates of Obligation (continued)
Changes in the City’s long-term liability activity for the year ended September 30, 2020, are as follows:
Beginning
Balance Additions Reductions Ending
Balance
Due Within
One Year
Primary Government
Governmental activities:
General obligation bonds 29,730,000$ 9,860,000$ (4,200,000)$ 35,390,000$ 2,070,000$
Premium on bond issuance 2,293,508 753,840 (378,526) 2,668,822 -
Capital lease 436,620 1,791,399 (366,257) 1,861,762 485,702
Compensated absences 800,732 799,174 (747,317) 852,589 170,518
Governmental activity
Long-term liabilities 33,260,860$ 13,204,413$ (5,692,100)$ 40,773,173$ 2,726,220$
Beginning
Balance Additions Reductions Ending
Balance
Due Within
One Year
Business-type activities:
Revenue bonds 25,230,000$ -$ (905,000)$ 24,325,000$ 935,000$
General obligation bonds 24,440,000 605,000 (2,665,000) 22,380,000 2,080,000
Premium on bond issuance 4,215,083 - (294,840) 3,920,243 -
Compensated absences 82,019 125,839 (97,091) 110,767 22,153
Business-type activity
Long-term liabilities 53,967,102$ 730,839$ (3,961,931)$ 50,736,010$ 3,037,153$
Total Primary government 87,227,962$ 13,935,252$ (9,654,031)$ 91,509,183$ 5,763,373$
The City issued General Obligation Improvement and Refunding Bonds, Series 2020 in June 2020 in the amount
of $10,465,000. The bonds bear interest from 3.0 percent to 5.0 percent and are due in annual installments ranging
from $210,000 to $560,000 through September 2050. Proceeds of the bonds will be used to make certain drainage
improvements, improvements public works facility, refunding certain outstanding obligations and to pay the costs
of issuance of the bonds. City will deposit certain proceeds of the sale of the bonds with the paying agent, such
funds will be held by the paying agent and will be irrevocably pledged to the payment of principal of the refunded
obligations.to provide for future debt service on $2,970,000 of the Permanent Improvement Bonds, Series 2010A
and 2010B. As a result, the refunded bonds are considered to be defeased and the related liability for the bonds has
been removed from the City’s liabilities. The net carrying amount exceeded the reacquisition price of the old debt
by $68,694, which is also known as refunding charge (gain). This amount is being netted against the new debt and
amortized over the life of the new debt, which was equal or shorter than the refunded debt. This resulted in an
economic gain (difference between present values of the old and new debt service payment) of $305,294.
The compensated absences, net pension liability and total OPEB liabilities attributable to the governmental activities
will be liquidated primarily by the General Fund.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
55 Fiscal Year 2020 Annual Report
Note 5. Long-term Debt (continued)
West Ranch Management District
The following schedule summarizes the terms of the West Ranch Management District’s general obligation bonds
at July 31, 2020:
Amounts Interest Range of Callable
General Obligation Bonds: Outstanding Rates Maturities Date *
Series 2010 315,000$ 4.00% - 4.20% 2020-2021 September 1, 2020
Road Series 2010A 130,000 4.10% - 4.35% 2020-2022 September 1, 2020
Road Series 2013 845,000 2.00% - 3.00% 2020-2028 September 1, 2021
Series 2013 1,135,000 3.00% - 5.00% 2020-2040 September 1, 2021
Road Series 2014 1,970,000 2.00% - 3.75% 2020-2040 September 1, 2022
Series 2015 4,625,000 1.30% - 4.125% 2020-2030 September 1, 2023
Series 2016 2,080,000 3.00% - 4.00% 2031-2040 September 1, 2024
Refunding Series 2016 910,000 2.00% - 4.00% 2020-2026 September 1, 2024
Series 2020 9,040,000 2.00% - 4.00% 2021-2040 September 1, 2025
Refunding Series 2016 1,550,000 2.00% - 4.00% 2021-2040 September 1, 2025
Total general obligation bonds 22,600,000$
* Or any date thereafter, callable at par plus accrued interest to the date of redemption.
Annual debt service requirements for the District’s bonds are as follows:
Fiscal Year Principal Interest Total
2021 850,000$ 617,217$ 1,467,217$
2022 965,000 657,354 1,622,354
2023 995,000 625,525 1,620,525
2024 1,025,000 592,441 1,617,441
2025 1,065,000 555,713 1,620,713
2026-2030 5,895,000 2,191,730 8,086,730
2031-2035 5,105,000 1,346,044 6,451,044
2036-2040 5,505,000 609,966 6,114,966
2041 1,195,000 18,509 1,213,509
22,600,000$ 7,214,499$ 29,814,499$
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.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
56 Fiscal Year 2020 Annual Report
Note 5. Long-term Debt (continued)
West Ranch Management District (continued)
Changes in the discretely presented component units’ long-term liabilities for the year end July 31, 2020, are as
follows:
West Ranch Management District
Beginning
Balance Increase Decrease
Ending
Balance
Due Within
One Year
Component Unit
General obligation bonds 22,835,000$ 10,590,000$ (10,825,000)$ 22,600,000$ 850,000$
Discount on bonds (402,592) (99,494) 205,293 (296,793) -
Premium on bonds 94,358 - (8,760) 85,598 -
Developer advances 40,000 - - 40,000 -
Due to developer 369,600 - - 369,600 -
Total 22,936,366$ 10,490,506$ (10,628,467)$ 22,798,405$ 850,000$
On June 9, 2020, the District issued $9,040,000 in unlimited tax refunding bonds, Series 2020 to refund $5,460,000
of outstanding Series 2010 bonds and $3,110,000 of outstanding Series 2012A bonds. The District refunded the
bonds to reduce total debt service payments over future years by $2,042,767 and to obtain an economic gain
(difference between the present values of the debt service payments on the old and new debt) of $1,523,761. On
June 9, 2020, the District also issued $1,550,000 in unlimited tax road refunding bonds, Series 2020 to refund
$1,425,000 of outstanding Road Series 2010A bonds. The District refunded the bonds to reduce total debt service
payments over future years by $324,700 and to obtain an economic gain (difference between the present values of
the debt service payments on the old and new debt) of $238,022.
At July 31, 2020, the District had $3,775,000 of unlimited tax bonds and recreational facilities' bonds authorized,
but unissued, for the purposes of acquiring, constructing and improving recreational facilities, transportation,
education, and the water, sanitary sewer and drainage systems within the District.
A developer of the District has advanced $40,000 to the District for operating expenses. The District has agreed to
pay these amounts, plus interest, to the extent approved by the Commission from the proceeds of future bond sales.
These amounts have been recorded in the financial statements as long-term liabilities. The District is currently
unable to estimate when bonds will be issued to pay this liability.
The developer of the District has constructed underground utilities on behalf of the District. The District’s engineer
estimates reimbursable costs for completed projects are $369,600. The District has agreed to reimburse the
developers for these amounts, plus interest, to the extent approved by the Texas Commission on Environmental
Quality from the proceeds of future bond sales. These amounts have been recorded in the financial statements as
long-term liabilities.
Defeasance of Bonds
The City defeased certain bonds by placing the proceeds of new bonds in an irrevocable trust to provide future debt
service payments on the old bonds. Accordingly, the trust account assets and liabilities for the defeased bonds are
not included in the City’s financial statements. On September 30, 2020, the City has no bonds considered defeased
that were outstanding.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
57 Fiscal Year 2020 Annual Report
Note 5. Long-term Debt (continued)
Capital Leases
During the current fiscal year, the City entered into a five‐year lease agreement as lessee for the acquisition and use
of various vehicles. An initial lease liability was recorded in the amount of $1,019,000 during the current fiscal
year. The City is required to make annual principal and interest payments of $215,355. The lease has an interest
rate of 2.08%.
During the current fiscal year, the City entered into a seven‐year lease agreement as lessee for the acquisition and
use of an ambulance. An initial lease liability was recorded in the amount of $580,000 during the current fiscal year.
The City is required to make annual principal and interest payments of $89,789. The lease has an interest rate of
2.05%.
During the current fiscal year, the City entered into a five‐year lease agreement as lessee for the acquisition and use
of an ambulance. An initial lease liability was recorded in the amount of $192,015 during the current fiscal year.
The City is required to make annual principal and interest payments of $43,043. The lease has an interest rate of
1.98%.
The City has entered into capital lease agreements in order to purchase machinery and equipment for public works,
police and fire departments. The assets acquired through these lease agreements are as follows:
Asset
Governmental
Activities
Machinery and equipment 2,740,590$
Less: accumulated depreciation (471,187)
Total 2,269,403$
The following is a summary of future lease payments due on this machinery and equipment:
Fiscal Year Amount
2021 527,240$
2022 452,368
2023 348,187
2024 348,187
2025 120,739
2026-2027 179,578
Minimum lease payments 1,976,299
Less amount representing interest (114,537)
Total 1,861,762$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
58 Fiscal Year 2020 Annual Report
Note 5. Long-term Debt (continued)
Pledged Revenues
On February 1, 2016, the City issued $5,735,000 in Waterworks and Sewer System Revenue Bonds, Series 2016
and on December 3, 2018 issued $20,170,000 in Waterworks and Sewer System Revenue Bonds, Series 2018.
These bonds represent special obligations of the City and are payable solely from a first lien on and pledge of the
net revenues of the City’s waterworks and sanitary sewer system. The proceeds of the bonds were and are to be
used to finance sanitary sewer and waterworks system extensions and improvements. The outstanding revenue
bonds have a final maturity of March 1, 2036 for the 2016 bonds and March 1, 2038 for the 2018 bonds. The City
will commit revenues each year the bonds are outstanding. At September 30, 2020, the remaining principal on the
series 2016 and 2018 bonds was $4,825,000 and $19,500,000, respectively. Principal and interest payments for the
fiscal year were $905,000 and $1,055,900, respectively. Net pledged revenue in 2020 produced 355 percent of the
current debt service requirement.
Note 6. Interfund Balances and Transfers
Due to/from Other Funds
The City had interfund receivable or payable balances at September 30, 2020 is as follows:
Due from other funds Due to other funds Amount Purpose
General Fund Bond Construction Fund 300,000$
Expenditures funded by General Fund until authorized
bonds are issued.
General Fund Nonmajor governmental funds 2,329,589
Expenditures funded by General Fund pending grant
reimbursement.
Total 2,629,589$
Interfund Transfers
The composition of interfund transfers for the year ended September 30, 2020, is as follows:
Transfer In Transfer Out Amount Purpose
General Fund Water and Sewer 1,461,704$ Budgeted annual transfer for indirect water and sewer
costs by the General Fund
Debt Service Fund Bond Construction Fund 119,372 2020 Bond funds and close out of 2015 Bond
Construction Fund
Nonmajor governmental funds General Fund 3,909 Funds for HMGP Acquisition & Demolition Project
Utility Fund Debt Service Fund 26,875 Debt service f unds
Internal service Fund General Fund 73,142 To fund new vehicle for Police Department
1,685,002$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
59 Fiscal Year 2020 Annual Report
Note 7. Employee Retirement System
Texas Municipal Retirement System
Plan Description and Provisions
The City participates as one of 888 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
agent multiple-employer retirement system for municipal employees in the State of Texas. The TMRS Act places the
general administration and management of the System with a six-member Board of Trustees. Although the Governor,
with the advice and consent of the Senate, appoints the Board, TMRS is not fiscally dependent on the State of Texas.
TMRS’s defined benefit pension plan is a tax-qualified plan under Section 401 (a) of the Internal Revenue Code. TMRS
a report (ACFR) that can be obtained at www.tmrs.com.
All eligible employees of the City are required to participate in TMRS.
Benefits Provided
TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the governing body of the
City, within the options available in the state statutes governing TMRS.
At retirement, the benefit is calculated as if the sum of the employee’s contributions, with interest, and the city-financed
monetary credits with interest were used to purchase an annuity. Members may choose to receive their retirement benefit
in one of seven actuarially equivalent payments options. Members may also choose to receive a portion of their benefit
as a Partial Lump Sum Distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of
the member’s deposits and interest.
The City has approved an annually repeating (automatic) basis monetary credit referred to as an updated service credit
(USC) which is a theoretical amount which takes into account salary increases or plan improvements. If at any time
during their career an employee earns a USC, this amount remains in their account earning interest at 5% until retirement.
At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the
employer match plus employer-financed monetary credits, such as USC, with interest were used to purchase an annuity.
Additionally, City provides on an annually repeating (automatic) basis cost of living adjustments (COLA) for retirees
equal to a percentage of the change in the consumer price index (CPI).
A summary of plan provisions for the City are as follows:
Employee deposit rate: 7%
Matching ratio (City to employee): 2 to 1
Years required for vesting: 5
Service retirement eligibility: Vested at age 60 or 20 years at
any age
Updated Service Credit: 100% Repeating
Annuity increase to retirees 50% of CPI; Repeating
Supplement death benefit – active
Employees and retirees
Yes
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
60 Fiscal Year 2020 Annual Report
Note 7. Employee Retirement System (continued)
Employees covered by benefit terms
At the December 31, 2019 valuation and measurement date, the following employees were covered by the
benefit terms:
Inactive employees or beneficiaries currently receiving benefits 134
Inactive employees entitled to but not yet receiving benefits 117
Active employees 211
Total 462
Contributions
The contribution rates for employees in TMRS are either 5%, 6%, or 7% of employee gross earnings, and the City
matching percentages are either 100%, 150%, or 200%, both as adopted by the governing body of the City. Under the
State law governing TMRS, the contribution rate for each City is determined annually by the consulting actuary, using
the Entry Age Normal (EAN) actuarial cost method. The actuarially determined rate is the estimated amount necessary
to finance the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded
accrued liability.
Employees for the City were required to contribute 7.0% of their annual gross earnings during the fiscal year. The
contribution rates for the City were 15.69% and 15.84% in calendar years 2019 and 2020, respectively. The City’s
contributions to TMRS for the year ended September 30, 2020, were $2,485,117 and were equal to the required
contributions.
Net Pension Liability
The City’s Net Pension Liability (NPL) was measured as of December 31, 2019, 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, 2019 actuarial valuation was determined using the following actuarial
assumptions:
Actuarial cost method: Entry age normal
Amortization method: Level percentage of payroll, closed
Remaining amortization period: 26 years
Asset valuation method: 10 year smoothed market; 12% soft corridor
Inflation: 2.50%
Salary increases: 3.50% to 11.50% including inflation
Investment rate of return: 6.75%
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
61 Fiscal Year 2020 Annual Report
Note 7. Employee Retirement System (continued)
Actuarial Assumptions (continued)
Salary increases are based on a service-related table. Mortality rates for active members are based on the PUB (10)
mortality tables with the Public Safety table used for males and the General Employee table used for females. Mortality
rates for healthy retirees and beneficiaries are based on the Gender distinct 2019 Municipal Retirees of Texas mortality
tables. The rates for actives, healthy retirees and beneficiaries are projected on a fully generational basis by Scale UMP
to account for future mortality improvements. For disabled annuitants, the same mortality tables for healthy retirees is
used with a 4- year set-forward for males and a 3-year set-forward for females. In addition, a 3.5% and 3.0% minimum
mortality rate is applied, for males and females respectively, to reflect the impairment for younger members who
become disabled. The rates are projected on a fully generational basis by Scale UMP to account for future mortality
improvements subject to the floor.
The actuarial assumptions were developed primarily from the actuarial investigation of the experience of TMRS over
the four-year period from December 31, 2014, to December 31, 2018. They were adopted in 2019 and first used in the
December 31, 2019, actuarial valuation. The post-retirement mortality assumption for annuity purchase rates is based
on the Mortality Experience Investigation Study covering 2009 through 2011 and dated December 31, 2013. Plan
assets are managed on a total return basis with an emphasis on both capital appreciation as well as the production of
income, in order to satisfy the short-term and long-term funding needs of TMRS.
The long-term expected rate of return on pension plan investments was determined using a building block method in
which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment
expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term
expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage
and by adding expected inflation. In determining their best estimate of a recommended investment return assumption
under the various alternative asset allocation portfolios, GRS focused on the area between (1) arithmetic mean
(aggressive) without an adjustment for time (conservative) and (2) the geometric mean (conservative) with an
adjustment for time (aggressive). The target allocation and best estimates of real rates of return for each major asset
class in fiscal year 2020 are summarized in the table below:
Target
Allocation
Long-Term
Expected Real
Rate of Return
(Arithmetic)
Domestic Equity 17.5% 4.30%
International Equity 17.5% 6.10%
Core Fixed Income 10.0% 1.00%
Non-Core Fixed Income 20.0% 3.39%
Real Return 10.0% 3.78%
Real Estate 10.0% 4.44%
Absolute Return 10.0% 3.56%
Private Equity 5.0% 7.75%
Total 100.0%
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
62 Fiscal Year 2020 Annual Report
Note 7. Employee Retirement System (continued)
Discount Rate
The discount rate used to measure the Total Pension Liability was 6.75%. The projection of cash flows used to
determine the discount rate assumed that employee and employer contributions will be made at the rates specified in
statue. Based on that assumption, the pension plan’s Fiduciary Net Position was projected to be available to make all
projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of
return on pension plan investments was applied to all periods of projected benefit payments to determine the Total
Pension Liability.
Changes in the Net Pension Liability
Increase (Decrease)
Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability
Balance at 12/31/2018 79,422,879$ 64,996,779$ 14,426,100$
Changes for the year:
Service Cost 2,738,906 - 2,738,906
Interest (on the Total Pension
Liability) 5,345,140 - 5,345,140
Difference between expected and
actual experience 1,150,459 - 1,150,459
Changes of assumptions 378,973 - 378,973
Benefit payments, including
refunds of employee contributions (3,210,157) (3,210,157) -
Contributions – employer - 2,395,398 (2,395,398)
Contributions – employee - 1,068,692 (1,068,692)
Net investment income - 10,053,454 (10,053,454)
Administrative Expense - (56,778) 56,778
Other - (1,704) 1,704
Balance at 12/31/2019 85,826,200$ 75,245,684$ 10,580,516$
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability (asset) of the City, calculated using the discount rate of 6.75%, as
well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-
point lower (5.75%) or 1-percentage-point higher (7.75%) than the current rate:
1% Decrease in
Discount Rate
(5.75%)
Current Single Rate
Discount Rate
(6.75%)
1% Increase in
Discount Rate
(7.75%)
City's net pension liability 22,822,967$ 10,580,516$ 544,151$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
63 Fiscal Year 2020 Annual Report
Note 7. Employee Retirement System (continued)
Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s Fiduciary Net Position is available in a separately issued TMRS
financial report. That report may be obtained on the Internet at www.tmrs.com.
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to
Pensions
For the year ended September 30, 2020, the City recognized a pension expense of $3,090,477.
At September 30, 2020, the City reported deferred outflows and inflows of resources related to pensions from
the following sources:
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Difference in expected and actual
economic experience 1,004,693$ (27,373)$
Changes in actuarial assumptions 299,421 -
Difference between projected and
actual investment earnings - (2,268,757)
Contributions subsequent to the
measurement date 1,902,367 -
Total 3,206,481$ (2,296,130)$
The $1,902,367 reported as deferred outflows of resources related to pension resulting from contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability for the year
ending September 30, 2021. Other amounts reported as deferred outflows and inflows of resources related to
pensions will be recognized in pension expenses as follows:
Net Deferred
Outflows (Inflows) of
Resources
2021 (250,678)$
2022 (319,071)
2023 520,209
2024 (942,476)
Total (992,016)$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
64 Fiscal Year 2020 Annual Report
Note 8. Post Employee Benefits Other Than Pensions
TMRS Supplemental Death Benefits Fund
Benefit Plan Description
The City’s single-employer defined benefit group-term life insurance plan is operated by the Texas Municipal
Retirement System (TMRS) via the Supplemental Death Benefits Fund (SDBF). The City elected, by ordinance,
to provide group-term life insurance coverage to both current and retired employees. The City may terminate
coverage under and discontinue participation in the SDBF by adopting an ordinance before November 1 of any
year to be effective the following January 1.
The death benefit for active employees provides a lump-sum payment approximately equal to the employee’s
annual salary (calculated based on the employee’s actual earnings, for the 12-month period preceding the month
of death); retired employees are insured for $7,500; this coverage is another post-employment benefit (OPEB).
As the SDBF covers both active and retiree participants, with no segregation of assets, the SDBF is considered
to be an unfunded OPEB plan (i.e. no assets are accumulated).
Membership in the plan as of the measurement date of December 31, 2019 was as follows:
Inactive employees currently receiving benefits 93
Inactive employees entitled to but not yet receiving benefits 33
Active employees 211
Total 337
Contributions
Contributions are made monthly based on the covered payroll of employee members of the participating member
city. The contractually required contribution rate is determined annually for each city (currently 0.19% of covered
payroll). The rate is based on the mortality and service experience of all employees covered by the SDBF and the
demographics specific to the workforce of the city. There is a one-year delay between the actuarial valuation that
serves as the basis for the employer contribution rate and the calendar year when the rate goes into effect. The
funding policy of this plan is to assure that adequate resources are available to meet all death benefit payments
for the upcoming year; the intent is not to prefund retiree term life insurance during employees’ entire careers.
As such, contributions are utilized to fund active member deaths on a pay-as-you-go basis; any excess
contributions and investment income over payments then become net position available for benefits.
Discount Rate
The TMRS SDBF program is treated as unfunded OPEB plan because the SDBF trust covers both active
employees and retirees and the assets are not segregated for these groups. Under GASB Statement No. 75, the
discount rate for an unfunded OPEB plan should be based on 20-year tax-exempt AA or higher Municipal Bonds.
Therefore, a discount rate of 2.75% based on the Fidelity Index’s “20-Year Municipal GO AA Index” rate as of
December 31, 2019.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
65 Fiscal Year 2020 Annual Report
Note 8. Post Employee Benefits Other Than Pensions (continued)
TMRS Supplemental Death Benefits Fund (continued)
Actuarial Assumptions
The City’s total OPEB liability was measured at December 31, 2019 and was determined by an actuarial valuation
as of that date using the following actuarial assumptions:
Valuation Date: December 31, 2019
Methods and Assumptions:
Inflation: 2.50%
Salary Increases: 3.50% to 11.50%, including inflation
Discount rate *: 2.75%
Retirees’ share of benefit related costs: $0
Administrative expenses: All administrative expenses are paid through the Pension Trust and
accounted for under reporting requirements under GASB Statement No.
68.
Mortality rates – service retirees: 2019 Municipal Retirees of Texas Mortality Tables. The rates are
projected on a fully generational basis with scale UMP.
Mortality rates – disabled retirees: 2019 Municipal Retirees of Texas Mortality Tables with a 4 year set-
forward for males and a 3 year set-forward for females. In addition, a
3.5% and 3% minimum mortality rate will be applied to reflect the
impairment for younger members who become disabled for males and
females, respectively. The rates are projected on a fully generational
basis by Scale UMP to account for future mortality improvements
subject to the floor.
*The discount rate was based on the Fidelity Index’s “20-Year Municipal GO AA Index” rate as of December
31, 2019.
Note: The actuarial assumptions used in the December 31, 2019 valuation were based on the results of an actuarial
experience study for the period December 31, 2014 to December 31, 2018.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
66 Fiscal Year 2020 Annual Report
Note 8. Post Employee Benefits Other Than Pensions (continued)
TMRS Supplemental Death Benefits Fund (continued)
Changes in the Total OPEB Liability
Service cost 27,481$
Interest 23,199
Changes of benefit terms -
Difference between expected and actual experience (60,356)
Changes of assumptions 118,183
Benefit payments (6,107)
Net change in total OPEB liability 102,400
Total OPEB liability - beginning 614,614
Total OPEB liability - ending 717,014$
Ending total OPEB liability is $717,014 as of December 31, 2019. Changes of assumptions reflect a change in
the discount rate from 3.71% as of December 31, 2018 to 2.75% as of December 31, 2019.
Sensitivity Analysis
The following presents the total OPEB liability of the employer, calculated using the discount rate of 2.75%, as
well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1 percentage
point lower (1.75%) or 1 percentage point higher (3.75%) than the current rate. Note that the healthcare cost trend
rate does not affect the total OPEB liability, so sensitivity to the healthcare cost trend rate is not shown.
1% Decrease to
1.75%
Current Discount
Rate Assumption
2.75%
1% Increase
to 3.75%
877,038$ 717,014$ 594,412$
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
Activity
For the year ended September 30, 2020, the City recognized OPEB expense of $59,663 related to the TMRS
Supplemental Death Benefit Fund and OPEB expense of $77,414 related to the City’s retiree healthcare plan for
total OPEB expense of $137,077. As of September 30, 2020, the City reported deferred outflows of resources
related to OPEB from the following sources:
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Differences between expected
and actual experience -$ (55,816)$
Changes in assumptions and other inputs 125,474 (29,901)
Contributions made subsequent to
the measurement date 3,603 -
Total 129,077$ (85,717)$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
67 Fiscal Year 2020 Annual Report
Note 8. Post Employee Benefits Other Than Pensions (continued)
TMRS Supplemental Death Benefits Fund (continued)
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
Activity (continued)
The $3,603 reported as deferred outflows of resources related to OPEB resulting from contributions subsequent
to the measurement date will be recognized as a reduction of the total OPEB liability for the year ending
September 30, 2021. Other amounts reported as deferred outflows and inflows of resources related to OPEB,
excluding contributions subsequent to the measurement date, will be recognized in OPEB expenses as follows:
Net Deferred
Outflows
(Inflows) of
Resources
2021 8,983$
2022 8,983
2023 8,983
2024 3,537
2025 6,692
Thereafter 2,579
Total 39,757$
Retiree Health Care Plan (RHCP)
Plan Description
The City’s defined benefit OPEB plan, City of Friendswood Retiree Health Care Plan (RHCP), provides OPEB
through an implicit healthcare premium for retirees for all permanent full-time employees of the City. RHCP is a
single-employer defined benefit OPEB plan administered by the City. At this time, no assets are accumulated in a
trust to fund the future requirements of the RHCP.
Benefits provided
RHCP provides access to post retirement employees by offering a “blended premium” structure, that is, the overall
health care premiums for active employees and non-Medicare retirees, are stated in terms of a single “blended
premium”. The difference between the underlying retiree claims and the blended overall health care premium is
referred to as an “implicit” subsidy. Because the underlying claims costs for a non-Medicare retiree are on average
higher than the blended premium, there is a positive implicit subsidy for the non-Medicare retirees.
Employees covered by benefit terms. At December 31, 2018, the following employees were covered by the benefit
terms:
Retirees and beneficiaries 6
Inactive, nonretired members 0
Active members 192
Total 198
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
68 Fiscal Year 2020 Annual Report
Note 8. Post Employee Benefits Other Than Pensions (continued)
Retiree Health Care Plan (RHCP) (continued)
Total OPEB Liability
The City’s total OPEB liability of $1,107,657 was measured as of December 31, 2019, and was determined by an
actuarial valuation as of December 31, 2018.
Actuarial assumptions and methods
The total OPEB liability in the December 31, 2018 actuarial valuation was determined using the following actuarial
assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified:
Valuation Date: December 31, 2018
Methods and Assumptions:
Actuarial Cost Method: Individual Entry-Age Normal
Discount Rate: 2.75% as of December 31, 2019
Inflation: 2.50%
Salary Increases: 3.50% to 11.50%, including inflation
Demographic Assumptions: Based on the experience study covering the four year period ending
December 31, 2018 as conducted for the Texas Municipal Retirement
System (TMRS)
Mortality: For healthy retirees, the gender-distinct 2019 Municipal Retirees of Texas
mortality tables are used. The rate are projected on a fully generational
basis using the ultimate mortality improvement rates in the MP tables to
account for future mortality improvements.
Health Care Trend Rates: Initial rate of 7.20% declining to an ultimate rate of 4.25% after 15 years.
Participation Rates: It was assumed 20% of employees retiring at the age of 50 or over would
choose to receive retiree health care coverage through the City. Employees
retiring before the age of 50 were assumed to decline coverage.
Other Information:
Notes: The discount rate changed from 3.71% as of December 31, 2018 to 2.75%
as of December 31, 2019. Additionally, the demographic and salary
increase assumptions were updated to reflect the 2019 TMRS Experience
Study.
Discount Rate
For plans that do not have formal assets, the discount rate should equal the tax-exempt municipal bond rate based
on an index of 20-year general obligation bonds with an average AA credit rating as of the measurement date. For
the purpose of this valuation, the municipal bond rate is 2.75% (based on the daily rate closest to but not later than
the measurement date of the Fidelity “20-Year Municipal GO AA Index”). The discount rate was 3.71% as of the
prior measurement date.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
69 Fiscal Year 2020 Annual Report
Note 8. Post Employee Benefits Other Than Pensions (continued)
Retiree Health Care Plan (RHCP) (continued)
Plan Assets
There are no plan assets accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75.
Changes in the Total OPEB Liability
Service cost 46,995$
Interest 36,314
Changes of benefit terms -
Difference between expected and actual experience 8,768
Changes of assumptions 86,718
Benefit payments (52,896)
Net change in total OPEB liability 125,899
Total OPEB liability - beginning 981,758
Total OPEB liability - ending 1,107,657$
The ending Total OPEB Liability was $1,107,657 as of December 31, 2019.
Changes of assumptions reflect a change in the discount rate from 3.71% as of December 31, 2018 to 2.75% as of
December 31, 2019, and minor updates to the health care trend assumption.
Sensitivity of the total OPEB liability to changes in the discount rate
The following presents the plan’s total OPEB liability, calculated using a discount rate of 2.75%, as well as what
the plan’s total OPEB liability would be if it were calculated using a discount rate that is one percent lower or one
percent higher:
1% Decrease to
1.75%
Current Discount
Rate Assumption
2.75%
1% Increase
to 2.75%
1,215,878$ 1,107,657$ 1,009,060$
Sensitivity of the total OPEB liability to changes in the healthcare cost trend rates
The following presents the plan’s total OPEB liability, calculated using the assumed trend rates as well as what the
plan’s total OPEB liability would be if it were calculated using a trend rate that is one percent lower or one percent
higher:
1% Decrease
Current
Healthcare Cost
Trend Rate
Assumption 1% Increase
968,821$ 1,107,657$ 1,273,696$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
70 Fiscal Year 2020 Annual Report
Note 8. Post Employee Benefits Other Than Pensions (continued)
Retiree Health Care Plan (RHCP) (continued)
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
For the year ended September 30, 2020, the City recognized OPEB expense of $77,414 related to the City’s retiree
healthcare plan and OPEB expense of $59,663 related to the TMRS Supplemental Death Benefit Fund for a total
OPEB expense of $137,077.
At September 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related
to OPEB from the following sources:
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Differences between expected
and actual experience 11,009$ (169,240)$
Changes assumptions 119,002 -
Contributions subsequent to
the measurement date 36,076 -
Total 166,087$ (169,240)$
The $36,076 reported as deferred outflows of resources related to OPEB resulting from contributions subsequent
to the measurement date will be recognized as a reduction of the total OPEB liability for the year ending
September 30, 2021. Other amounts reported as deferred outflows and inflows of resources related to OPEB,
excluding contributions subsequent to the measurement date, will be recognized in OPEB expenses as follows:
Fiscal Year
Net Deferred
Outflows (Inflows)
of Resources
2021 (5,895)$
2022 (5,895)
2023 (5,895)
2024 (5,895)
2025 (5,895)
Thereafter (9,754)
Total (39,229)$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
71 Fiscal Year 2020 Annual Report
Note 9. Commitments and Contingencies
Southeast Water Purification Plant
The City has entered into a contract with the City of Houston for construction, operating and maintaining a water
purification plant known as Southeast Water Purification Plant. The City’s pro rata share of the actual pumping
construction costs is 1.33 percent.
The City began receiving water from the plant on October 15, 1990. The City is billed on a monthly basis for the
actual gallons of water received times the City’s pro rata share of actual costs. At the end of each quarter, the City
of Houston computes the total operation and maintenance expenses for the quarter just ended, recalculates the cost
per one thousand gallons, and adjusts previous billings on the next invoice.
The relationship of the parties is of a fiduciary character, no partnership or joint venture is created by this contract.
Blackhawk Regional Wastewater Treatment Facility
On December 12, 1974, the City entered into an agreement with Gulf Coast Waste Disposal Authority to construct
the Blackhawk Regional Wastewater Treatment Facility. The Blackhawk Wastewater Treatment Facility was
constructed in the early 1980s and is a regional wastewater treatment plant serving MUD 55, Baybrook MUD 1,
City of Houston and the City of Friendswood. The plant has a capacity of 9.25 million gallons per day (MGD) and
is operated and maintained by Gulf Coast Waste Disposal Authority. Friendswood is the majority owner having
52.465% or 4.853 MGD of its capacity.
As a part of the contract with Gulf Coast Waste Disposal Authority, the City and all participants pay their share of
operational costs and expenses (direct and indirect) incurred monthly at the Blackhawk Wastewater Treatment
Facility based upon actual flows. This includes the maintenance of the plant and the creation and maintenance of
reasonable reserves for repairs and other contingencies. Capital expenditures on the other hand shall be the
responsibility of all participants based upon their purchased capacity in the plant. For Friendswood, that equates to
52.465% for capital projects identified and approved at the plant.
Federal and State Programs
The City recognizes grant monies received as reimbursement for costs incurred in certain federal and state programs
it administers as revenue. Amounts received or receivable from grantor agencies are subject to audit and adjustment
by grantor agencies. Any disallowed claims, including amounts already collected, may constitute a liability of the
applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined
at this time although the City expects such amounts, if any, to be immaterial.
Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and
omissions; injuries to employees; and natural disasters. The City’s risk management program encompasses
obtaining property and liability insurance through Texas Municipal League (TML), an Intergovernmental Risk Pool.
The City has not had any significant reduction in insurance coverage and the amounts of insurance settlements have
not exceeded insurance coverage for any of the last three years. The participation of the City in TML is limited to
payment of premiums. During the year ended September 30, 2020, the City paid premiums to TML for provision
of various liability, property and casualty insurance. The City has various deductible amounts ranging from $500
to $5,000 on various policies.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO THE FINANCIAL STATEMENTS (continued)
72 Fiscal Year 2020 Annual Report
Note 9. Commitments and Contingencies (continued)
The City also provides workers’ compensation insurance on its employees through TML. Workers’ compensation
is subject to change when audited by TML. At year-end, September 30, 2020, the City believed the amounts paid
on workers’ compensation would not change significantly from the amounts recorded.
During the year ended September 30, 2020, employees of the City were covered by a health and dental insurance
plan. The City pays 90% of the monthly premium of employees choosing individual coverage only. The City pays
70% of the monthly premium for employees choosing to cover themselves and their dependents.
Note 10. Subsequent Events
In preparing the financial statements, the City has evaluated events and transactions for potential recognition or
disclosure through March 22, 2021, the date on which the financial statements were available to be issued.
On January 31, 2020, the Secretary of the United States Health and Human Services Department declared a public
health emergency for the United States and on March 13, 2020, the President of the United States declared the
outbreak of COVID-19 in the United States a national emergency. On March 13, 2020, the Governor of Texas (the
“Governor”) declared a state of disaster for all counties in Texas in response to the COVID-19, which disaster
declaration he has subsequently extended. In addition, certain local officials, including the County Judge of
Galveston County, also declared a local state of disaster.
The full extent of the ongoing impact of COVID-19 on the City’s fiscal year 2021 and longer-term operational and
financial performance will depend on future developments, many of which are outside of its control, including the
effectiveness of the mitigation strategies related to COVID-19, the duration and spread of COVID-19, and future
governmental actions, all of which are highly uncertain and cannot be predicted.
On February 4, 2021, the City issued $13,690,000 of waterworks and sewer system revenue bonds to make certain
extensions and improvements to the system, to fund a deposit to the reserve fund, and to pay the costs of issuance
of the bonds. The interest rates on the bonds are 3.0% - 4.0% and the maturity date is March 1, 2041.
73 Fiscal Year 2020 Annual Report
REQUIRED SUPPLEMENTARY INFORMATION
74 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Page 1 of 8
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES –
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2020
Variance with
Final budget -
Actual Positive
Original Final Amounts (Negative)
Revenues
Property taxes 16,126,914$ 16,126,914$ 15,518,951$ (607,963)$
Sales and alcohol taxes 6,653,782 6,653,782 7,097,134 443,352
Franchise taxes 2,155,318 2,155,318 2,142,660 (12,658)
Fines and forfeitures 788,580 788,580 690,913 (97,667)
Permits and fees 1,663,999 1,663,999 1,426,880 (237,119)
Intergovernmental 599,200 605,890 2,983,424 2,377,534
Investment earnings 237,790 237,790 197,606 (40,184)
Donations 17,750 68,018 59,473 (8,545)
Miscellaneous 11,240 13,737 112,876 99,139
Total Revenues 28,254,573 28,314,028 30,229,917 1,915,889
Expenditures
General government:
Mayor and council - governing body:
Supplies and maintenance 8,750 8,250 3,471 4,779
Other services and charges 81,850 86,453 47,097 39,356
Total governing body 90,600 94,703 50,568 44,135
Mayor and council - city attorney:
Personnel services 257,278 257,278 231,376 25,902
Supplies 450 450 176 274
Other services and charges 20,730 20,730 4,236 16,494
Total city attorney 278,458 278,458 235,788 42,670
City manager - administration:
Personnel services 693,801 783,300 782,876 424
Supplies 21,780 27,406 21,102 6,304
Other services and charges 76,100 61,577 21,339 40,238
Total administration 791,681 872,283 825,317 46,966
City manager - economic development:
Personnel services 174,767 269,841 269,769 72
Supplies 7,000 1,960 938 1,022
Other services and charges 73,320 95,340 91,506 3,834
Total economic development 255,087 367,141 362,213 4,928
City secretary - municipal clerk:
Personnel services 336,816 340,556 339,904 652
Supplies 5,740 4,532 3,978 554
Other services and charges 17,970 18,840 14,037 4,803
Total municipal clerk 360,526 363,928 357,919 6,009
Budgeted Amounts
75 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Page 2 of 8
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES –
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2020
Variance with
Final budget -
Actual Positive
Original Final Amounts (Negative)
General government (continued):
City secretary - election services:
Supplies 1,210$ 1,210$ 168$ 1,042$
Other services and charges 34,330 34,330 26,699 7,631
Total election services 35,540 35,540 26,867 8,673
City secretary - records management:
Personnel services 138,448 135,316 125,045 10,271
Supplies 970 1,958 1,668 290
Other services and charges 23,220 22,212 16,851 5,361
Total records management 162,638 159,486 143,564 15,922
Administrative services - finance:
Personnel services 990,393 995,939 993,302 2,637
Supplies 9,050 14,097 5,224 8,873
Other services and charges 124,210 113,874 90,901 22,973
Total finance 1,123,653 1,123,910 1,089,427 34,483
Administrative services - other admin:
Other services and charges 217,900 217,900 157,309 60,591
Total other admin 217,900 217,900 157,309 60,591
Administrative services - municipal court:
Personnel services 380,873 385,279 385,128 151
Supplies 5,780 5,964 5,357 607
Other services and charges 32,530 28,124 18,577 9,547
Total municipal court 419,183 419,367 409,062 10,305
Human resources - administration:
Personnel services 390,869 390,869 392,253 (1,384)
Supplies 11,700 14,831 10,966 3,865
Other services and charges 78,860 72,608 20,535 52,073
Total administration 481,429 478,308 423,754 54,554
Human resources - insurance:
Other services and charges 207,241 207,241 218,137 (10,896)
Total insurance 207,241 207,241 218,137 (10,896)
Budgeted Amounts
76 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Page 3 of 8
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES –
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2020
Variance with
Final budget -
Actual Positive
Original Final Amounts (Negative)
General government (continued):
Human resources - risk management:
Personnel services 140,089$ 140,089$ 140,554$ (465)$
Supplies 10,960 11,002 7,191 3,811
Other services and charges 28,880 28,880 14,156 14,724
Total risk management 179,929 179,971 161,901 18,070
Information technology - administration:
Personnel services 567,473 567,473 583,202 (15,729)
Supplies 92,750 114,927 58,101 56,826
Repairs and maintenance 71,280 64,625 27,832 36,793
Other services and charges 550,690 642,772 518,744 124,028
Total administration 1,282,193 1,389,797 1,187,879 201,918
Total general government 5,886,058 6,188,033 5,649,705 538,328
Public Safety:
Police department - administration:
Personnel services 816,166 816,166 655,762 160,404
Supplies 32,240 33,476 19,997 13,479
Repairs and maintenance 33,500 20,356 1,181 19,175
Other services and charges 94,730 94,730 74,081 20,649
Total administration 976,636 964,728 751,021 213,707
Police department - communications:
Personnel services 1,157,762 1,177,547 1,176,708 839
Supplies 9,700 11,263 6,800 4,463
Repairs and maintenance 36,250 36,250 24,240 12,010
Other services and charges 18,390 20,906 7,416 13,490
Total communications 1,222,102 1,245,966 1,215,164 30,802
Police department - patrol:
Personnel services 6,040,149 5,986,775 5,832,930 153,845
Supplies 307,840 383,755 319,403 64,352
Repairs and maintenance 202,460 203,841 146,813 57,028
Other services and charges 499,460 508,885 474,539 34,346
Total patrol 7,049,909 7,083,256 6,773,685 309,571
Police department - patrol - DOT program:
Personnel services 102,135 102,135 32,020 70,115
Supplies 4,730 4,730 2,831 1,899
Repairs and maintenance 1,000 1,000 - 1,000
Other services and charges 16,940 13,940 9,804 4,136
Total patrol - DOT program 124,805 121,805 44,655 77,150
Budgeted Amounts
77 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Page 4 of 8
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES –
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2020
Variance with
Final budget -
Actual Positive
Original Final Amounts (Negative)
Public Safety (continued):
Police department - criminal investigation:
Personnel services 1,796,464$ 1,796,509$ 1,671,543$ 124,966$
Supplies 61,610 74,623 56,725 17,898
Repairs and maintenance 50,600 50,095 23,318 26,777
Other services and charges 115,330 110,830 93,421 17,409
Total criminal investigation 2,024,004 2,032,057 1,845,007 187,050
Police department - animal control:
Personnel services 315,135 331,279 329,617 1,662
Supplies 31,250 31,850 19,654 12,196
Repairs and maintenance 12,000 12,000 3,745 8,255
Other services and charges 70,460 77,726 52,033 25,693
Total animal services 428,845 452,855 405,049 47,806
Fire marshal - administration:
Personnel services 790,473 790,473 783,701 6,772
Supplies 29,750 34,725 33,092 1,633
Repairs and maintenance 7,050 4,951 4,802 149
Other services and charges 59,430 56,923 51,899 5,024
Total administration 886,703 887,072 873,494 13,578
Fire marshal - emergency management:
Personnel services 73,772 75,979 75,952 27
Supplies 26,550 17,217 11,004 6,213
Repairs and maintenance 3,000 11,278 9,599 1,679
Other services and charges 44,230 35,952 25,581 10,371
Total emergency management 147,552 140,426 122,136 18,290
Fire marshal - fire/ems administration:
Other services and charges 1,478,300 1,478,300 1,709,237 (230,937)
Total fire/ems administration 1,478,300 1,478,300 1,709,237 (230,937)
Fire marshal - storm:
Personnel services - - 19,970 (19,970)
Supplies - - 46,683 (46,683)
Total storm - - 66,653 (66,653)
Fire marshal - public safety health:
Personnel services - - 4,442 (4,442)
Supplies - - 237,116 (237,116)
Other services and charges - - 106,682 (106,682)
Total public safety health - - 348,240 (348,240)
Total public safety 14,338,856 14,406,465 14,154,341 252,124
Budgeted Amounts
78 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Page 5 of 8
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES –
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2020
Variance with
Final budget -
Actual Positive
Original Final Amounts (Negative)
Public Works:
Administration:
Personnel services 236,142$ 238,910$ 237,971$ 939$
Supplies 3,650 7,889 6,968 921
Other services and charges 13,970 11,227 2,087 9,140
Total administration 253,762 258,026 247,026 11,000
Streets:
Personnel services 803,312 803,312 641,146 162,166
Supplies 94,530 99,205 86,828 12,377
Repairs and maintenance 135,000 112,512 69,432 43,080
Other services and charges 425,050 498,532 534,171 (35,639)
Total streets 1,457,892 1,513,561 1,331,577 181,984
Drainage:
Personnel services 300,967 300,967 293,417 7,550
Supplies 11,890 12,640 9,661 2,979
Repairs and maintenance 51,800 55,290 24,135 31,155
Other services and charges 22,470 23,080 17,913 5,167
Total drainage 387,127 391,977 345,126 46,851
Total public works 2,098,781 2,163,564 1,923,729 239,835
Engineering:
Capital projects administration:
Personnel services 339,802 339,802 378,401 (38,599)
Supplies 12,480 27,669 22,629 5,040
Repairs and maintenance 4,500 4,500 622 3,878
Other services and charges 30,270 49,326 33,324 16,002
Total capital projects administration 387,052 421,297 434,976 (13,679)
Total engineering 387,052 421,297 434,976 (13,679)
Community development:
Administration:
Personnel services 329,888 341,083 340,949 134
Supplies 7,980 8,580 7,000 1,580
Other services and charges 21,760 21,760 8,122 13,638
Total administration 359,628 371,423 356,071 15,352
Budgeted Amounts
79 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Page 6 of 8
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES –
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2020
Variance with
Final budget -
Actual Positive
Original Final Amounts (Negative)
Community development (continued):
Planning and zoning:
Personnel services 306,330$ 295,135$ 270,474$ 24,661$
Supplies 2,600 7,600 5,290 2,310
Other services and charges 79,350 73,750 60,929 12,821
Total planning and zoning 388,280 376,485 336,693 39,792
Inspection and code enforcement:
Personnel services 409,202 412,032 410,090 1,942
Supplies 11,060 11,060 7,061 3,999
Repairs and maintenance 3,800 3,000 1,727 1,273
Other services and charges 55,260 53,230 27,924 25,306
Total inspection and code enforcement 479,322 479,322 446,802 32,520
Total community development 1,227,230 1,227,230 1,139,566 87,664
Parks and recreation:
Administration:
Personnel services 258,485 271,992 271,887 105
Supplies 4,350 9,816 9,680 136
Repairs and maintenance 33,130 30,409 22,928 7,481
Total drainage 295,965 312,217 304,495 7,722
Recreation programs:
Personnel services 306,661 306,661 305,625 1,036
Supplies 20,650 21,189 21,053 136
Other services and charges 109,340 119,940 104,076 15,864
Total recreation programs 436,651 447,790 430,754 17,036
July 4th program:
Personnel services 29,543 29,543 512 29,031
Supplies 4,150 5,341 5,180 161
Other services and charges 80,580 76,029 17,365 58,664
Total July 4th program 114,273 110,913 23,057 87,856
Summer day camp program:
Personnel services 111,332 111,332 0 111,332
Supplies 15,450 15,450 3,710 11,740
Other services and charges 43,950 43,950 139 43,811
Total summer day camp program 170,732 170,732 3,849 166,883
Budgeted Amounts
80 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Page 7 of 8
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES –
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2020
Variance with
Final budget -
Actual Positive
Original Final Amounts (Negative)
Parks and recreation (continued):
Keep Friendswood Beautiful committee:
Supplies 14,680$ 19,023$ 18,913$ 110$
Repairs and maintenance 5,000 4,312 2,672 1,640
Other services and charges 23,130 36,462 31,819 4,643
Total Keep Friendswood Beautiful committee 42,810 59,797 53,404 6,393
Stevenson Park pool:
Personnel services 67,021 67,021 33,324 33,697
Supplies 25,450 26,870 26,584 286
Repairs and maintenance 4,500 6,580 6,229 351
Other services and charges 27,840 29,840 26,828 3,012
Total Stevenson park pool 124,811 130,311 92,965 37,346
Senior activity center:
Personnel services 174,925 174,925 173,154 1,771
Supplies 10,890 14,896 12,658 2,238
Repairs and maintenance 2,000 2,000 1,311 689
Other services and charges 17,680 17,030 8,600 8,430
Total senior activity center 205,495 208,851 195,723 13,128
Park operations:
Personnel services 753,406 742,086 631,365 110,721
Supplies 91,780 67,842 62,525 5,317
Repairs and maintenance 169,100 162,417 150,158 12,259
Other services and charges 524,250 553,864 476,915 76,949
Total parks operations 1,538,536 1,526,209 1,320,963 205,246
Facility operations:
Supplies 32,000 44,539 40,631 3,908
Repairs and maintenance 171,000 189,473 187,026 2,447
Other services and charges 847,280 893,880 773,654 120,226
Total facility operations 1,050,280 1,127,892 1,001,311 126,581
Total parks and recreation 3,979,553 4,094,712 3,426,521 668,191
Library:
Administration:
Personnel services 1,074,142 1,074,142 1,022,131 52,011
Supplies 154,470 168,592 132,496 36,096
Repairs and maintenance 440 545 545 -
Other services and charges 23,080 46,856 27,117 19,739
Total administration 1,252,132 1,290,135 1,182,289 107,846
Total library 1,252,132 1,290,135 1,182,289 107,846
Budgeted Amounts
81 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Page 8 of 8
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES –
BUDGET AND ACTUAL (WITH VARIANCES)
GENERAL FUND
For the Year Ended September 30, 2020
Variance with
Final budget -
Actual Positive
Original Final Amounts (Negative)
Capital improvements:
Capital outlay 948,500$ 3,586,365$ 2,094,024$ 1,492,341$
Total capital improvements 948,500 3,586,365 2,094,024 1,492,341
Total Expenditures 30,118,162 33,377,801 30,005,151 3,372,650
Excess (deficiency) of revenues over
expenditures (1,863,589) (5,063,773) 224,766 5,288,539
Other Financing Sources (Uses)
Insurance recoveries - 6,380 8,548 2,168
Sale of capital assets - 7,000 11,568 4,568
Issuance of capital lease - 1,012,873 1,019,000 6,127
Transfers in 1,379,267 1,461,704 1,461,704 -
Transfers out - (74,325) (77,051) (2,726)
Total Other Financing Sources (Uses)1,379,267 2,413,632 2,423,769 10,137
Net change in fund balances (484,322) (2,650,141) 2,648,535 5,298,676
Fund balances - beginning 14,223,489 14,223,489 14,223,489 -
Fund balances - ending 13,739,167$ 11,573,348$ 16,872,024$ 5,298,676$
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS Page 1 of 2
NOTES TO BUDGETARY SCHEDULE
For the Year Ended September 30, 2020
82 Fiscal Year 2020 Annual Report
Budgetary Basis of Accounting
Annual budgets are adopted on a basis consistent with generally accepted accounting principles.
Budgetary Information
The City’s Code of Ordinances establishes the following framework for the preparation and format of the City’s
annual budget:
Content
The budget shall provide a complete financial plan of all City funds and activities and, except as required by law or
this Charter, shall be in such form as the City Manager deems desirable or the Council may require. The
budget shall begin with a clear general summary of its contents; shall show in detail all estimated income, the
proposed property tax levy, and all proposed expenditures for the ensuing fiscal years, including debt service and
an itemized estimate of the expense of conducting each Department of the City. The proposed budget
expenditures shall not exceed the total of estimated income. It shall also include, in separate sections:
1)Tax levies, rates and collections for the preceding five years.
2)The amount required for interest on the City’s debts, for sinking fund and for maturing serial bonds.
3)The total amount of outstanding City debts, with a schedule of maturities on bond issues.
4)Anticipated net surplus of deficit for the ensuing fiscal year of each utility owned or operated by the City
and the proposed method of its disposition, subsidiary budgets for each such utility giving detailed income
and expenditure information shall be attached as appendices to the budget.
5)A capital program, which may be revised and extended each year to indicate capital improvements pending
or in process of construction or acquisition, and shall include the following items which shall be attached
as appendices to the budget:
a)A summary of proposed programs;
b)A list of all capital improvements which are proposed to be undertaken during the five fiscal years
next ensuing, with appropriate supporting information as to the necessity for such improvements;
c)Cost estimates, method of financing and recommended time schedules from each such improvement;
and
d)The estimated annual cost of operating and maintaining the facilities to bid constructed or acquired.
6)Such other information as may be required by the Council.
Submission
On or before the first day of August of each year, the City Manager shall submit to the Council a proposed budget
and an accompanying message. The Council shall review the proposed budget and revise as deemed appropriate
prior to general circulation for public hearing.
CITY OF FRIENDSWOOD, TEXAS Page 2 of 2
NOTES TO BUDGETARY SCHEDULE
For the Year Ended September 30, 2020
83 Fiscal Year 2020 Annual Report
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, provided that no amendment to the
budget shall increase the authorized expenditures to an amount greater than the total of estimated income plus funds
available from prior years.
If the Council fails to adopt an annual budget before the start of the fiscal year to which it applies, appropriations
of the last budget adopted shall be considered as adopted for the current fiscal year on a month to month, pro rata
basis, until the annual budget is adopted. Adoption of the budget shall require an affirmative vote of at least a
majority of all members of the Council. Adoption of the budget shall constitute appropriations of the amounts
specified therein as expenditures from the funds indicated.
Amendments After Adoption
At any time during the fiscal year, the City Manager may transfer part or all of any unencumbered appropriation
balance among programs within a department, division, or office, and, upon written request by the City Manager,
the Council may be by ordinance transfer part or all of any unencumbered appropriation balance from one
department, office, or agency to another.
No appropriation for debt service may be reduced or transferred and no appropriation may be reduced below any
amount required by law to be appropriated or by more than the amount of the unencumbered balance thereof. The
City Council made supplemental budgetary appropriation changes during the fiscal year. The reported budgetary
data has been revised for these amendments legally authorized during the year.
Excess of Expenditures over Appropriations
For the year ended September 30, 2020, expenditures exceeded appropriations in the following departments (the
legal level of budgetary control):
Fire marshal $613,962
Engineering $13,679
84 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
TEXAS MUNICIPAL RETIREMENT SYSTEM
Last Six Measurement Years
2019 2018 2017 2016 2015 2014
A. Total pension liability
1. Service Cost 2,738,906$ 2,626,099$ 2,505,392$ 2,334,817$ 2,204,299$ 2,018,353$
2. Interest (on the Total Pension Liability) 5,345,140 5,044,613 4,755,782 4,435,987 4,317,394 4,084,392
3. Difference between expected and actual experience 1,150,459 59,617 (60,180) 366,687 (1,032,789) (736,093)
4. Changes of assumptions 378,973 - - - 847,469 -
5. Benefit payments, including refunds of employee (3,210,157) (3,458,824) (2,505,921) (2,464,107) (2,256,734) (2,005,311)
6. Net change in total pension liability 6,403,321 4,271,505 4,695,073 4,673,384 4,079,639 3,361,341
7. Total pension liability – beginning 79,422,879 75,151,374 70,456,304 65,782,920 61,703,281 58,341,940
8. Total pension liability – ending 85,826,200 79,422,879 75,151,377 70,456,304 65,782,920 61,703,281
B. Plan fiduciary net position
1. Contributions – employer 2,395,398 2,305,344 2,182,093 2,037,849 1,998,038 1,867,782
2. Contributions – employee 1,068,692 1,025,248 987,399 923,896 886,669 829,598
3. Net investment income 10,053,454 (2,013,270) 8,104,390 3,672,583 79,202 2,868,842
4. Benefit payments, including refunds of employee
contributions (3,210,157) (3,458,824) (2,505,921) (2,464,107) (2,256,734) (2,005,311)
5. Administrative Expense (56,778) (38,892) (41,987) (41,467) (48,239) (29,949)
6. Other (1,704) (2,032) (2,127) (2,234) (2,383) (2,462)
7. Net change in plan fiduciary net position 10,248,905 (2,182,426) 8,723,847 4,126,520 656,553 3,528,500
8. Plan fiduciary net position – beginning 64,996,779 67,179,205 58,455,358 54,328,838 53,672,285 50,143,785
9. Plan fiduciary net position – ending 75,245,684 64,996,779 67,179,205 58,455,358 54,328,838 53,672,285
C. Net pension liability (A.9 – B.9) 10,580,516$ 14,426,100$ 7,972,172$ 12,000,946$ 11,454,082$ 8,030,996$
D. Plan fiduciary net position as a percentage of the
total pension liability 87.67% 81.84% 89.39% 82.97% 82.59% 86.98%
E. Covered payroll 15,267,034$ 14,646,398$ 14,098,997$ 13,198,512$ 12,653,842$ 11,851,396$
F. Net position liability as a percentage of covered
payroll 69.30% 98.50% 56.54% 90.93% 90.52% 67.76%
Note: Ten years of data should be presented in this schedule but data was unavailable prior to 2014.
85 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF CITY CONTRIBUTIONS
TEXAS MUNICIPAL RETIREMENT SYSTEM
Last Seven Fiscal Years
2020 2019 2018 2017 2016
Actuarially required contributions 2,485,117$ 2,376,185$ 2,255,270$ 2,161,617$ 2,100,698$
Contributions in relation to the
actuarially required contributions 2,485,117 2,376,185 2,255,270 2,161,617 2,100,698
Contribution deficiency (excess)-$ -$ -$ -$ -$
City's covered payroll 15,724,041$ 15,133,171$ 14,385,208$ 13,986,135$ 13,525,613$
Contributions as a percentage of
covered payroll 15.80% 15.70% 15.68% 15.46% 15.53%
2015 2014
Actuarially required contributions 1,960,652$ 1,847,375$
Contributions in relation to the
actuarially required contributions 1,960,652 1,847,375
Contribution deficiency (excess)-$ -$
City's covered payroll 12,423,310$ 11,781,281$
Contributions as a percentage of
covered payroll 15.78% 15.68%
Note: Ten years of data should be presented in this schedule but data was unavailable prior to 2014.
86 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
NOTES TO SCHEDULE OF CONTRIBUTIONS
For the Year Ended September 30, 2020
Valuation Date: Actuarially determined contribution rates are calculated as of
December 31 and become effective in January 13 months later.
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial Cost Method Entry Age Normal
Amortization Method Level Percentage of Payroll, Closed
Remaining Amortization
Period
26 years
Asset Valuation Method 10 Year smoothed market; 12% soft corridor
Inflation 2.50%
Salary Increases 3.50% to 11.50% including inflation
Investment Rate of
Return
6.75%
Retirement Age Experience-based table of rates that are specific to the City's plan of
benefits. Last updated for the 2019 valuation pursuant to an
experience study of the period 2014 – 2018
Mortality Post-retirement: 2019 Municipal Retirees of Texas Mortality Tables.
The rates are projected on a fully generational basis with scale UMP.
Pre-retirement: PUB (10) mortality tables, with the Public Safety
table used for males and the General Employee table used for
females. The rates are projected on a fully generational basis with
scale UMP.
Other Information: There were no benefit changes during the year.
87 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF CHANGES IN THE TOTAL OPEB LIABILITY AND RELATED RATIOS
TEXAS MUNICIPAL RETIREMENT SYSTEM SUPPLEMENTAL DEATH BENEFITS FUND
Last Three Measurement Years
2019 2018 2017
Service cost 27,481$ 30,757$ 26,788$
Interest 23,199 20,933 20,384
Difference between expected and actual experience (60,356) (7,425) -
Changes of assumptions 118,183 (43,775) 49,777
Benefit payments ** (6,107) (5,859) (5,640)
Net change in total OPEB liability 102,400 (5,369) 91,309
Total OPEB liability - beginning 614,614 619,983 528,674
Total OPEB liability - ending 717,014$ 614,614$ 619,983$
Covered payroll 15,267,034$ 14,646,398$ 14,098,997$
Total OPEB liability as a percentage of covered payroll 4.70% 4.20% 4.40%
** Due to the SDBF being considered an unfunded OPEB plan under GASB 75, benefit payments
are treated as being equal to the employer's yearly contributions for retirees.
Amounts presented are for each measurement year, which end the preceding
December 31 of the City's fiscal year end.
Total OPEB liability is calculated using a new methodology and will be presented
prospectively in accordance with GASB 75.
Ten years of data should be presented in this schedule but data was unavailable
prior to 2017.
Notes to Required Supplementary Information:
Changes of assumptions:
Changes of assumptions and other inputs reflect the effects of changes in the discount rate each period.
The following are the discount rates used in each period:
2019 2.75%
2018 3.71%
88 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF CHANGES IN THE TOTAL OPEB LIABILITY AND RELATED RATIOS
CITY OF FRIENDSWOOD RETIREE HEALTH CARE PLAN
Last Three Measurement Years
2019 2018 2017
Service cost 46,995$ 53,919$ 44,637$
Interest 36,314 37,843 39,497
Difference between expected and actual experience 8,768 (214,124) 4,573
Changes of assumptions 86,718 7,071 51,765
Benefit payments (52,896) (38,566) (38,414)
Net change in total OPEB liability 125,899 (153,857) 102,058
Total OPEB liability - beginning 981,758 1,135,615 1,033,557
Total OPEB liability - ending 1,107,657$ 981,758$ 1,135,615$
Covered payroll 15,267,037$ 14,646,402$ 12,035,859$
Total OPEB liability as a percentage of covered payroll 7.26% 6.70% 9.44%
Total OPEB liability is calculated using a new methodology and will be presented
prospectively in accordance with GASB 75.
Ten years of data should be presented in this schedule but data was unavailable
prior to 2017.
Notes to Required Supplementary Information:
Methods and Assumptions Used to Determine Contribution Rates:
The demographic assumptions are based on the assumptions that were developed for the defined benefit plan in
which the City participates (TMRS). The assumptions are based on the experience study covering the four year
period ending December 31, 2014 as conducted for the Texas Municipal Retirement System (TMRS).
Assumption changes:
1. The discount rate decreased from 3.71% as of December 31, 2018 to 2.75% as of December 31, 2019. This
change increased the total OPEB liability.
2. The health care trend rates were updated to better reflect the plan’s anticipated experience.
89 Fiscal Year 2020 Annual Report
COMBINING AND INDIVIDUAL FUND
FINANCIAL STATEMENTS AND SCHEDULES
90 Fiscal Year 2020 Annual Report
NONMAJOR
GOVERNMENTAL FUNDS
The Special Revenue Funds are used to account for specific revenue sources (other than major capital projects)
that are legally restricted to expenditures for specified purposes.
Police Investigation Fund – This fund is used to account for revenues that are restricted to police
investigation expenditures.
Fire/EMS Donation Fund – This fund accounts for revenues that are restricted for Fire/EMS capital outlays
and debt repayments.
Municipal Court Fund – This fund accounts for revenues that are restricted for court technology and building
security. In 1999, the state legislature authorized a court technology and court security fee for municipal
court fines. In 2019, the state legislature authorized additional fees for truancy and jury services.
2017 Community Development Block Grant – Disaster Recovery – This fund is used to account for revenues
that are restricted to the Community Block Grant – Disaster Recovery expenditures.
Texas Water Development Board Flood Mitigation Acquisition Grant – This fund is used to account for
revenues that are restricted for the FEMA Flood Mitigation Assistance Grant Program. The funds will be
used for the acquisition and demolition of properties in flood-prone areas.
Hazard Mitigation Grant Program – This fund is used to account for federal grants that are restricted to the
acquisition and demolition of flood-prone residential structures located within the City.
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.
Capital Projects Funds are used to account for the acquisition and construction of major capital facilities.
Sidewalk Installation Fund – This fund is used to account for receipts from developers to install sidewalks
in neighborhood developments.
Park Land Dedication Fund – This fund is used to account for receipts from developers to build or enhance
neighborhood and community parks.
Street Improvement Fund – This fund is used to record sales tax revenue collected for City’s streets
maintenance and improvements.
91 Fiscal Year 2020 Annual Report
MAJOR
GOVERNMENTAL FUNDS
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 the payment of general long-
term debt principal, interest and related costs.
Capital Projects Funds are used to account for the acquisition and construction of major capital facilities.
Bond Construction Fund – is used to account for the construction of public facilities, and park, street and
drainage improvements that are funded by the proceeds from Permanent Improvement Bonds.
92 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
September 30, 2020
Police
Investigation
Fires/EMS
Donation
Municipal
Court
2017 CDBG
Harvey
TWDB
Flood
Mitigation
Acquisition
Grant
Assets
Cash and cash equivalents 31,690$ 113,825$ 32,799$ 28,974$ 93,103$
Investments 186,565 691,993 202,138 176,148 566,017
Receivables, net of allowance:
Taxes receivable - - - - -
Customer accounts - 2,553 - - -
Other receivables - - 3,573 - -
Accrued interest 373 1,372 366 - -
Due from other governments - - - - -
Total Assets 218,628$ 809,743$ 238,876$ 205,122$ 659,120$
Liabilities and Fund Balances
Liabilities:
Accounts payable 17,272$ 48,936$ -$ -$ 581,120$
Retainage payable - - - - -
Due to other funds - - - 208,716 1,775,663
Total Liabilities 17,272 48,936 - 208,716 2,356,783
Deferred Inflows of Resources:
Unavailable revenue - - 3,753 - -
Total Deferred Inflows - - 3,753 - -
Fund Balances:
Nonspendable:
Permanent fund - - - - -
Restricted:
Municipal court operations - - 235,123
Public safety 201,356 760,807 - - -
Capital projects - - -
Unassigned - - - (3,594) (1,697,663)
Total Fund Balances 201,356 760,807 235,123 (3,594) (1,697,663)
Total Liabilities, deferred inflows
of resources, and fund balances 218,628$ 809,743$ 238,876$ 205,122$ 659,120$
Special Revenue Funds
93 Fiscal Year 2020 Annual Report
Permanent Capital Projects Funds
HMGP
Acquisition &
Demolition
Project 1776 Park
Sidewalk
Installation
Park Land
Dedication
Street
Improvement
Total
Nonmajor
Governmental
Funds
25,783$ 1,561$ 6,150$ 18,154$ 171,342$ 523,381$
156,745 9,491 37,385 110,368 1,041,672 3,178,522
- - - - 306,732 306,732
- - - - 2,553
- - - - - 3,573
- 18 70 195 3,454 5,848
218,220 - - - - 218,220
400,748$ 11,070$ 43,605$ 128,717$ 1,523,200$ 4,238,829$
181,024$ -$ -$ 2,600$ 866,750$ 1,697,702$
- - - - 179,220 179,220
345,210 - - - - 2,329,589
526,234 - - 2,600 1,045,970 4,206,511
- - - - - 3,753
- - - - - 3,753
- 11,070 - - - 11,070
- - - - 235,123
- - - - - 962,163
- 43,605 126,117 477,230 646,952
(125,486) - - - - (1,826,743)
(125,486) 11,070 43,605 126,117 477,230 28,565
400,748$ 11,070$ 43,605$ 128,717$ 1,523,200$ 4,238,829$
94 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended September 30, 2020
Police
Investigation
Fires/EMS
Donation
Municipal
Court
2017 CDBG
Harvey
TWDB Flood
Mitigation
Acquisition
Grant
Revenues
Sales taxes -$ -$ -$ -$ -$
Fines and forfeitures 48,134 - 41,670 - -
Permits and fees - - - - -
Intergovernmental - - - - -
Miscellaneous - 598,448 - - -
Donations - 215,472 - - -
Investment earnings 2,653 7,035 2,443 - -
Total Revenues 50,787 820,955 44,113 - -
Expenditures
Current:
General government - - 40,723 - -
Public safety 31,589 120,934 - - -
Public works - - - 3,594 22,050
Debt service:
Principal - - - - -
Interest and other charges - - - - -
Capital outlay - 843,718 - - 1,675,613
Total Expenditures 31,589 964,652 40,723 3,594 1,697,663
Excess (deficiency) of revenues over
(under) expenditures 19,198 (143,697) 3,390 (3,594) (1,697,663)
Other Financing Sources (Uses)
Transfers in - - - - -
Sale of capital assets - 61,000 - - -
Proceeds from capital lease - 772,015 - - -
Total Other Financing Sources (Uses)- 833,015 - - -
Net change in fund balances 19,198 689,318 3,390 (3,594) (1,697,663)
Fund balances - beginning 182,158 71,489 231,733 - -
Fund balances - ending 201,356$ 760,807$ 235,123$ (3,594)$ (1,697,663)$
Special Revenue Funds
95 Fiscal Year 2020 Annual Report
Permanent
HMGP
Acquisition &
Demolition
Project 1776 Park
Sidewalk
Installation
Park Land
Dedication
Street
Improvement
Total Nonmajor
Governmental
Funds
- -$ -$ -$ 1,749,225$ 1,749,225$
- - - - - 89,804
- - 9,275 68,400 - 77,675
845,474 - - - - 845,474
- - - - - 598,448
- - - - - 215,472
- 184 446 959 30,219 43,939
845,474 184 9,721 69,359 1,779,444 3,620,037
- - - - - 40,723
- - - - - 152,523
65,019 - - - 3,943,786 4,034,449
- - - - - -
- - - - - -
909,850 13,852 - 15,130 - 3,458,163
974,869 13,852 - 15,130 3,943,786 7,685,858
(129,395) (13,668) 9,721 54,229 (2,164,342) (4,065,821)
3,909 - - - - 3,909
- - - - - 61,000
- - - - - 772,015
3,909 - - - - 836,924
(125,486) (13,668) 9,721 54,229 (2,164,342) (3,228,897)
- 24,738 33,884 71,888 2,641,572 3,257,462
(125,486)$ 11,070$ 43,605$ 126,117$ 477,230$ 28,565$
Capital Projects Funds
96 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
POLICE INVESTIGATION
For the Year Ended September 30, 2020
Original
Budget Final Budget
Actual
Amounts
Variance with
Final Budget -
Positive
(Negative)
Revenues
Fines and forfeitures -$ -$ 48,134$ 48,134$
Investment earnings 4,720 4,720 2,653 (2,067)
Total Revenues 4,720 4,720 50,787 46,067
Expenditures
Current:
Public safety - 31,589 31,589 -
Total Expenditures - 31,589 31,589 -
Net change in fund balances 4,720 (26,869) 19,198 46,067
Fund balances - beginning 182,158 182,158 182,158 -
Fund balances - ending 186,878$ 155,289$ 201,356$ 46,067$
97 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FIRE/EMS DONATION
For the Year Ended September 30, 2020
Original
Budget Final Budget
Actual
Amounts
Variance with
Final Budget -
Positive
(Negative)
Revenues
Donations 200,000$ 200,000$ 215,472$ 15,472$
Investment earnings 900 900 7,035 6,135
Miscellaneous - 103,000 598,448 495,448
Total Revenues 200,900 303,900 820,955 517,055
Expenditures
Current:
Public safety 72,000 125,000 120,934 4,066
Debt service:
Principal 70,518 70,518 - 70,518
Interest and other charges 14,482 14,482 - 14,482
Capital outlay 43,900 887,618 843,718 43,900
Total Expenditures 200,900 1,097,618 964,652 132,966
Excess (deficiency) of revenues over
expenditures - (793,718) (143,697) 650,021
Other Financing Sources (Uses)
Sale of capital assets - 16,000 61,000 45,000
Proceeds from capital lease - 772,015 772,015 -
Total Other Financing Sources (Uses)- 788,015 833,015 45,000
Net change in fund balances - (5,703) 689,318 695,021
Fund balances - beginning 71,489 71,489 71,489 -
Fund balances - ending 71,489$ 65,786$ 760,807$ 695,021$
98 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
MUNICIPAL COURT
For the Year Ended September 30, 2020
Original
Budget Final Budget
Actual
Amounts
Variance with
Final Budget -
Positive
(Negative)
Revenues
Fines and forfeitures 49,000$ 49,000$ 41,670$ (7,330)$
Investment earnings 3,280 3,280 2,443 (837)
Total Revenues 52,280 52,280 44,113 (8,167)
Expenditures
Current:
General government 53,087 53,087 40,723 12,364
Total Expenditures 53,087 53,087 40,723 12,364
Net change in fund balances (807) (807) 3,390 4,197
Fund balances - beginning 231,733 231,733 231,733 -
Fund balances - ending 230,926$ 230,926$ 235,123$ 4,197$
99 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
1776 PARK
For the Year Ended September 30, 2020
Original
Budget Final Budget
Actual
Amounts
Variance
with Final
Budget -
Positive
(Negative)
Revenues
Investment earnings 370$ 370$ 184$ (186)$
Total Revenues 370 370 184 (186)
Expenditures
Capital outlay - 13,852 13,852 -
Total Expenditures - 13,852 13,852 -
Net change in fund balances 370 (13,482) (13,668) (186)
Fund balances - beginning 24,738 24,738 24,738 -
Fund balances - ending 25,108$ 11,256$ 11,070$ (186)$
100 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
SIDEWALK INSTALLATION
For the Year Ended September 30, 2020
Original
Budget Final Budget
Actual
Amounts
Variance with
Final Budget -
Positive
(Negative)
Revenues
Permits and fees -$ -$ 9,275$ 9,275$
Investment earnings 420 420 446 26
Total Revenues 420 420 9,721 9,301
Expenditures
Current:- - - -
Total Expenditures - - - -
Net change in fund balances 420 420 9,721 9,301
Fund balances - beginning 33,884 33,884 33,884 -
Fund balances - ending 34,304$ 34,304$ 43,605$ 9,301$
101 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
PARK LAND DEDICATION
For the Year Ended September 30, 2020
Original
Budget Final Budget
Actual
Amounts
Variance
with Final
Budget -
Positive
(Negative)
Revenues
Permit and fees 32,000$ 32,000$ 68,400$ 36,400$
Investment earnings 430 430 959 529
Total Revenues 32,430 32,430 69,359 36,929
Expenditures
Current:
Capital outlay - 31,060 15,130 15,930
Total Expenditures - 31,060 15,130 15,930
Net change in fund balances 32,430 1,370 54,229 52,859
Fund balances - beginning 71,888 71,888 71,888 -
Fund balances - ending 104,318$ 73,258$ 126,117$ 52,859$
102 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
STREET IMPROVEMENT
For the Year Ended September 30, 2020
Original
Budget Final Budget
Actual
Amounts
Variance with
Final Budget -
Positive
(Negative)
Revenues
Sales taxes 1,622,100$ 1,622,100$ 1,749,225$ 127,125$
Investment earnings 36,400 36,400 30,219 (6,181)
Total Revenues 1,658,500 1,658,500 1,779,444 120,944
Expenditures
Public works - 262,781 3,943,786 (3,681,005)
Capital outlay - 2,793,634 - 2,793,634
Total Expenditures - 3,056,415 3,943,786 (887,371)
Net change in fund balances 1,658,500 (1,397,915) (2,164,342) (766,427)
Fund balances - beginning 2,641,572 2,641,572 2,641,572 -
Fund balances - ending 4,300,072$ 1,243,657$ 477,230$ (766,427)$
103 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
DEBT SERVICE
For the Year Ended September 30, 2020
Original
Budget Final Budget
Actual
Amounts
Variance with
Final Budget -
Positive
(Negative)
Revenues
Property taxes 3,319,901$ 3,319,901$ 3,204,801$ (115,100)$
Investment earnings 12,630 12,630 9,293 (3,337)
Total Revenues 3,332,531 3,332,531 3,214,094 (118,437)
Expenditures
Debt service:
Principal 2,211,498 2,221,257 2,221,257 -
Interest and other charges 1,083,403 1,149,063 1,146,520 2,543
Total Expenditures 3,294,901 3,370,320 3,367,777 2,543
Excess (deficiency) of revenues over
expenditures 37,630 (37,789) (153,683) (115,894)
Other Financing Sources (Uses)
Issuance of refunding bonds - 2,670,000 2,065,000 (605,000)
Premium on bond issuance - 343,348 343,348 -
Transfers in - 66,205 119,372 53,167
Transfers out - (631,875) (26,875) 605,000
Payments to refunding bond escrow agent - (2,372,259) (2,372,262) (3)
Total Other Financing Sources - 75,419 128,583 53,164
Net change in fund balances 37,630 37,630 (25,100) (62,730)
Fund balances - beginning 57,009 57,009 57,009 -
Fund balances - ending 94,639$ 94,639$ 31,909$ (62,730)$
104 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
BOND CONSTRUCTION
For the Year Ended September 30, 2020
Original
Budget Final Budget
Actual
Amounts
Variance with
Final Budget -
Positive
(Negative)
Revenues
Investment earnings 117,810$ 117,810$ 23,567$ (94,243)$
Miscellaneous - - 8,397 8,397
Total Revenues 117,810 117,810 31,964 (85,846)
Expenditures
Current:
Public works - - 63,135 (63,135)
Debt service:
Bond issuance costs - 139,287 139,287 -
Capital outlay - 9,949,003 7,313,288 2,635,715
Total Expenditures - 10,088,290 7,515,710 2,572,580
Excess (deficiency) of revenues over
expenditures 117,810 (9,970,480) (7,483,746) 2,486,734
Other Financing Sources (Uses)
Issuance of capital-related debt - 7,795,000 7,795,000 -
Premium on issuance of bonds - 410,492 410,492 -
Transfers out - (66,205) (119,372) (53,167)
Total Other Financing Sources (Uses)- 8,139,287 8,086,120 (53,167)
Net change in fund balances 117,810 (1,831,193) 602,374 2,433,567
Fund balances - beginning 2,278,662 2,278,662 2,278,662 -
Fund balances - ending 2,396,472$ 447,469$ 2,881,036$ 2,433,567$
105 Fiscal Year 2020 Annual Report
STATISTICAL SECTION
(Unaudited)
106 Fiscal Year 2020 Annual Report
107 Fiscal Year 2020 Annual Report
STATISTICAL SECTION
(Unaudited)
This part of the City of Friendswood’s annual comprehensive financial report presents detailed information as a
context for understanding what the information in the financial statements, note disclosures, and required
supplementary information says about the government’s overall financial health.
Contents Pages
Financial Trends 108
These schedules contain trend information to help the reader
understand how the government’s financial performance and well-
being have changed over time.
Revenue Capacity 118
These schedules contain information to help the reader assess the
government’s most significant local revenue source, the property
tax.
Debt Capacity 123
These schedules present information to help the reader assess the
affordability of the government’s current levels of outstanding debt
and the government’s ability to issue additional debt in the future.
Demographic and Economic Information 128
This schedule offers demographic and economic indicators to help
the reader understand the environment within which the
government’s financial activities take place.
Operating Information 132
These schedules contain service and infrastructure data to help the
reader understand how the information in the government’s
financial report relates to the services the government provides and
activities it performs.
Sources: Unless otherwise noted, the information in these schedules is derived from the annual comprehensive
financial reports for the relevant year.
108 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
2020 2019 2018 2017
Governmental Activities
Net investment in capital assets 68,990,597$ 66,823,023$ 68,320,682$ 72,631,192$
Restricted 4,606,124 4,003,468 4,085,999 2,534,312
Unrestricted 2,563,947 5,402,312 6,248,751 5,532,198
Total governmental activities net
position 76,160,668$ 76,228,803$ 78,655,432$ 80,697,702$
Business-type activities
Net investment in capital assets 32,242,803$ 27,038,046$ 27,088,280$ 29,305,429$
Restricted 2,186,731 1,982,666 582,697 260,703
Unrestricted 8,438,509 12,077,564 13,620,211 10,584,764
Total business-type activities net
position 42,868,043$ 41,098,276$ 41,291,188$ 40,150,896$
Primary government
Net investment in capital assets 101,233,400$ 93,861,069$ 95,408,962$ 101,936,621$
Restricted 6,792,855 5,986,134 4,668,696 2,795,015
Unrestricted 11,002,456 17,479,876 19,868,962 16,116,962
Total Primary government net
positions 119,028,711$ 117,327,079$ 119,946,620$ 120,848,598$
109 Fiscal Year 2020 Annual Report
Table 1
2016 2015 2014 2013 2012 2011
73,588,484$ 73,611,490$ 65,404,791$ 65,056,180$ 65,582,783$ 66,580,049$
1,405,907 1,179,764 653,496 718,275 872,869 922,874
5,579,677 5,901,505 10,798,907 9,565,406 8,828,132 8,227,254
80,574,068$ 80,692,759$ 76,857,194$ 75,339,861$ 75,283,784$ 75,730,177$
28,322,718$ 26,628,714$ 24,495,816$ 22,961,547$ 25,618,823$ 26,251,346$
99,006 27,468 90,395 176,882 786,600 731,410
10,238,993 12,040,181 14,818,104 16,790,183 13,032,798 11,373,311
38,660,717$ 38,696,363$ 39,404,315$ 39,928,612$ 39,438,221$ 38,356,067$
101,911,202$ 100,240,204$ 89,900,607$ 88,017,727$ 91,201,606$ 92,831,395$
1,504,913 1,207,232 743,891 895,157 1,659,469 1,654,284
15,818,670 17,941,686 25,617,011 26,355,589 21,860,930 19,600,565
119,234,785$ 119,389,122$ 116,261,509$ 115,268,473$ 114,722,005$ 114,086,244$
110 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
2020 2019 2018 2017
Expenses
Governmental activities:
General government 6,119,806$ 5,912,467$ 5,734,611$ 5,128,399$
Public safety 15,501,734 15,134,465 17,538,040 15,861,719
Public works 8,840,113 7,897,373 6,267,824 4,429,664
Engineering 434,976 - - -
Community development 1,122,506 1,359,878 945,701 1,495,001
Parks and recreation 4,439,511 4,839,076 4,554,114 3,459,053
Library services 1,214,130 1,257,970 1,210,207 1,215,683
Interest and fiscal charges 1,055,889 923,350 953,509 953,146
Total government activities expenses 38,728,665 37,324,579 37,204,006 32,542,665
Business-type activities:
Water and wastewater 12,071,159 11,507,880 9,019,197 8,502,218
Interest and other 1,733,123 1,579,182 1,029,715 1,086,278
Total business-type activities 13,804,282 13,087,062 10,048,912 9,588,496
Total primary government expenses 52,532,947$ 50,411,641$ 47,252,918$ 42,131,161$
Program Revenues
Governmental activities:
Charges for services:
General government 930,686$ 751,112$ 861,271$ 1,004,968$
Public safety 871,714 811,768 868,761 35,007
Public works 222,337 236,352 213,042 242,184
Community development 9,275 6,841 - 1,036,741
Parks and recreation 181,709 341,560 344,064 387,915
Library services - - - 30,600
Operating grants and contributions 3,430,645 1,842,704 4,924,228 2,591,025
Capital grants and contributions 708,306 - - 219,808
Total Governmental activities program
revenues:6,354,672 3,990,337 7,211,366 5,548,248
Business-type activities:
Charges for services:
Water and wastewater 16,638,758 13,669,552 12,183,711 12,295,441
Operating grants and contributions 22,602 - - -
Total business-type activities program
revenues 16,661,360 13,669,552 12,183,711 12,295,441
Total primary government
program revenues 23,016,032$ 17,659,889$ 19,395,077$ 17,843,689$
Net (Expense) Revenues
Governmental activities (32,373,993)$ (33,334,242)$ (29,992,640)$ (26,994,417)$
Business-type activities 2,857,078 582,490 2,134,799 2,706,945
Total primary government net expense (29,516,915)$ (32,751,752)$ (27,857,841)$ (24,287,472)$
111 Fiscal Year 2020 Annual Report
Table 2
Page 1 of 2
2016 2015 2014 2013 2012 2011
4,736,867$ 5,410,643$ 4,589,795$ 4,679,339$ 4,737,702$ 4,876,064$
13,101,691 11,763,659 11,236,402 10,800,130 10,736,805 10,548,568
4,429,482 3,933,288 3,921,658 4,385,090 3,738,111 3,517,707
- - - - - -
1,577,813 1,406,288 1,097,075 1,207,264 1,520,401 1,284,188
3,080,453 2,869,345 3,356,587 3,260,931 3,227,731 3,058,313
1,134,859 1,026,967 1,093,043 1,002,801 1,004,303 979,978
862,654 730,614 630,542 703,275 757,011 871,790
28,923,819 27,140,804 25,925,102 26,038,830 25,722,064 25,136,608
7,975,920 7,629,711 7,995,106 7,681,366 6,902,279 6,955,505
1,642,723 1,524,276 1,514,804 1,590,395 1,638,495 1,644,074
9,618,643 9,153,987 9,509,910 9,271,761 8,540,774 8,599,579
38,542,462$ 36,294,791$ 35,435,012$ 35,310,591$ 34,262,838$ 33,736,187$
1,002,022$ 807,245$ 912,910$ 989,190$ 1,167,619$ 1,158,392$
28,760 30,275 31,620 34,944 39,661 39,914
174,568 190,099 193,064 186,504 171,890 158,858
949,011 843,648 877,132 825,366 730,211 643,150
286,727 280,046 315,702 316,047 271,912 267,837
27,532 33,699 36,081 36,686 39,543 43,147
800,151 660,633 843,995 644,458 648,058 3,150,808
318,657 3,225,672 1,202,376 543,763 527,288 -
3,587,428 6,071,317 4,412,880 3,576,958 3,596,182 5,462,106
11,319,801 11,020,029 11,117,391 11,462,779 11,258,216 12,726,936
- - - - - -
11,319,801 11,020,029 11,117,391 11,462,779 11,258,216 12,726,936
14,907,229$ 17,091,346$ 15,530,271$ 15,039,737$ 14,854,398$ 18,189,042$
(25,336,391)$ (21,069,487)$ (21,502,222)$ (22,461,872)$ (22,126,882)$ (19,674,502)$
1,701,158 1,866,042 1,607,481 2,191,018 2,717,442 4,127,357
(23,635,233)$ (19,203,445)$ (19,894,741)$ (20,270,854)$ (19,409,440)$ (15,547,145)$
112 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
2020 2019 2018 2017
General Revenues and Other Changes in Net Position
Governmental activities:
Taxes:
Property taxes 18,731,549$ 18,111,247$ 17,608,094$ 17,270,647$
Sales taxes 8,846,359 8,407,249 7,965,662 6,482,367
Franchise and other taxes 2,142,660 2,054,395 1,617,121 1,661,654
Other - - - -
Investment earnings 880,606 526,867 321,468 187,001
Gain (loss) on disposal of capital assets - - - 25,999
Miscellaneous 269,855 351,165 263,245 131,639
Transfers 1,434,829 1,456,690 1,554,849 1,358,744
Total governmental activities 32,305,858 30,907,613 29,330,439 27,118,051
Business-type activities:
Investment earnings 347,518 681,288 200,449 141,978
Gain (loss) on disposal of capital assets - - - -
Miscellaneous - - - -
Transfers (1,434,829) (1,456,690) (1,554,849) (1,358,744)
Total business-type activities (1,087,311) (775,402) (1,354,400) (1,216,766)
Total primary government 31,218,547 30,132,211 27,976,039 25,901,285
Change in Net Position
Governmental activities (68,135) (2,426,629) (662,201) 123,634
Business-type activities 1,769,767 (192,912) 780,399 1,490,179
Total primary government 1,701,632$ (2,619,541)$ 118,198$ 1,613,813$
113 Fiscal Year 2020 Annual Report
Table 2
Page 2 of 2
2016 2015 2014 2013 2012 2011
16,350,101$ 15,574,684$ 14,864,284$ 14,630,961$ 14,165,599$ 13,944,725$
5,393,920 5,291,186 4,693,484 4,293,794 3,907,577 4,002,740
1,779,234 1,726,557 1,673,615 1,583,258 1,556,556 1,598,407
- - 32,799 24,974 23,356 28,883
149,003 79,071 109,849 88,510 137,202 110,863
19,564 - 34,359 43,788 17,601 23,831
128,813 108,306 84,275 78,682 147,457 126,228
1,397,065 1,226,205 1,799,344 1,773,982 1,725,141 (5,336,312)
25,217,700 24,006,009 23,292,009 22,517,949 21,680,489 14,499,365
95,825 49,138 40,713 37,565 82,853 55,163
7,569 - - - 7,000 -
- 7,839 - 35,790 - -
(1,397,065) (1,226,205) (1,799,344) (1,773,982) (1,725,141) 5,336,312
(1,293,671) (1,169,228) (1,758,631) (1,700,627) (1,635,288) 5,391,475
23,924,029 22,836,781 21,533,378 20,817,322 20,045,201 19,890,840
(118,691) 2,936,522 1,789,787 56,077 (446,393) (5,175,137)
407,487 696,814 (151,150) 490,391 1,082,154 9,518,832
288,796$ 3,633,336$ 1,638,637$ 546,468$ 635,761$ 4,343,695$
114 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
2020 2019 2018 2017
General fund
Reserved -$ -$ -$ -$
Unreserved - - - -
Nonspendable 255,796 378,736 371,610 434,750
Restricted 650,424 727,704 631,971 667,271
Committed - - - -
Assigned 2,591,745 2,508,234 4,229,725 2,893,697
Unassigned 13,374,059 10,608,815 9,052,000 9,547,039
Total General Fund 16,872,024 14,223,489 14,285,306 13,542,757
All Other Governmental Funds
Reserved - - - -
Unreserved, reported in:
Special revenue funds - - - -
Permanent fund - - - -
Nonspendable 11,070 24,738 24,307 31,869
Restricted 4,757,183 5,568,395 9,304,724 8,464,859
Unassigned (1,826,743) - - -
Total Other Governmental Funds 2,941,510 5,593,133 9,329,031 8,496,728
Total Fund Balances of
Governmental Funds 19,813,534$ 19,816,622$ 23,614,337$ 22,039,485$
Note: In 2011, the City implemented GASB 54 which replaced the categories that previously had been
used to classify fund balance. The City did not retroactively apply the provisions of this statement to
previous years fund balance date.
115 Fiscal Year 2020 Annual Report
Table 3
2016 2015 2014 2013 2012 2011
-$ -$ -$ -$ -$ -$
- - - - - -
646,778 822,226 143,201 122,927 99,874 220,151
626,229 518,119 400,411 281,826 173,015 97,728
3,612 685,486 - - - -
2,706,897 2,773,419 1,421,875 487,201 434,931 1,085,527
9,776,031 8,760,424 10,554,183 9,714,206 9,379,399 7,511,998
13,759,547 13,559,674 12,519,670 10,606,160 10,087,219 8,915,404
- - - - - -
- - - - - -
- - - - - -
31,721 31,378 31,241 31,137 31,027 30,869
8,165,349 6,539,985 666,317 995,269 2,184,855 4,162,423
(193,750) - (239,078) - -
8,003,320 6,571,363 458,480 1,026,406 2,215,882 4,193,292
21,762,867$ 20,131,037$ 12,978,150$ 11,632,566$ 12,303,101$ 13,108,696$
116 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
CHANGES INFUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
2020 2019 2018 2017
Revenues
Taxes 29,712,771$ 28,389,651$ 27,247,421$ 25,509,760$
Fines and forfeitures 780,717 866,812 957,671 1,023,556
Permits and fees 1,504,555 1,483,554 1,566,656 1,708,357
Intergovernmental 3,828,898 1,576,838 4,398,836 1,763,974
Investment earnings 274,405 518,221 313,793 184,127
Donations 274,945 290,069 396,010 434,164
Miscellaneous 719,721 18,777 181,017 165,619
Total revenues 37,096,012 33,143,922 35,061,404 30,789,557
Expenditures
General government 5,690,428 5,336,269 5,440,888 4,975,926
Public safety 14,306,864 13,545,539 16,868,931 14,751,381
Public works 6,021,313 4,127,539 2,157,277 2,160,152
Engineering 434,976 - - -
Community development 1,139,566 1,099,154 985,309 893,663
Parks and recreation 3,426,521 3,796,589 3,511,146 3,339,864
Library services 1,182,289 1,204,415 1,200,512 1,172,245
Capital outlay 12,865,475 6,219,243 2,615,538 8,429,200
Debt principal payment 2,221,257 2,168,876 2,137,284 1,813,130
Interest and other charges 1,285,807 1,112,127 1,145,400 1,170,958
Total expenditures 48,574,496 38,609,751 36,062,285 38,706,519
Excess of revenues over (under) expenditures (11,478,484) (5,465,829) (1,000,881) (7,916,962)
Other Financing Sources (Uses)
Sale of capital assets 72,568 6,614 9,135 12,757
Insurance recoveries 8,548 235,443 725,304 25,999
Issuance of capital related debt 7,795,000 - 485,305 5,605,000
Issuance of capital lease 1,791,015 - - 756,006
Refunding bonds issued 2,065,000 - - -
Payment to refunding escrow agent (2,372,262) - - -
Premium on issuance of debt 753,840 - - 435,074
Transfers in 1,584,985 1,473,591 1,402,989 1,364,399
Transfers out (223,298) (47,534) (47,000) (5,655)
Total other financing sources (uses)11,475,396 1,668,114 2,575,733 8,193,580
Net change in fund balances (3,088)$ (3,797,715)$ 1,574,852$ 276,618$
Debt service as a percentage of noncapital
expenditures 9.9% 10.1% 9.8% 9.9%
117 Fiscal Year 2020 Annual Report
Table 4
201620152014201320122011
23,533,294$ 22,513,317$ 21,335,527$ 20,563,848$ 19,630,172$ 19,592,092$
873,872 907,557 860,257 939,380 1,037,880 1,012,592
1,450,939 1,349,264 1,385,898 1,327,918 1,174,013 1,069,845
664,427 3,536,980 1,791,451 918,641 1,077,890 3,109,645
147,403 77,947 109,117 87,330 135,483 109,272
257,724 349,325 349,166 363,413 306,119 276,209
79,435 72,837 54,989 84,673 41,410 78,243
27,007,094 28,807,227 25,886,405 24,285,203 23,402,967 25,247,898
4,385,321 5,343,160 4,306,143 4,250,320 4,322,631 4,397,858
12,135,956 11,348,346 10,599,575 10,234,811 10,201,010 10,093,964
2,118,572 2,066,349 1,689,987 2,204,176 1,702,119 1,637,237
- - - - - -
954,103 925,947 1,092,982 1,207,264 1,520,401 1,284,188
3,032,979 2,917,857 2,772,072 2,675,813 2,622,970 2,472,015
1,096,614 1,036,843 1,083,043 1,002,801 1,004,303 979,978
9,332,400 7,255,229 2,500,254 1,942,746 3,705,622 4,254,582
1,570,176 1,272,823 1,668,692 1,721,983 1,562,088 1,065,865
921,982 776,340 662,718 712,822 899,709 1,064,973
35,548,103 32,942,894 26,375,466 25,952,736 27,540,853 27,250,660
(8,541,009) (4,135,667) (489,061) (1,667,533) (4,137,886) (2,002,762)
2,743 99 6,325 27,566 9,250 8,992
19,564 39,257 28,886 48,132 105,502 45,334
7,345,000 9,595,000 - - 8,890,000 3,460,000
- - - 147,318 464,270 -
- 2,840,000 - - - 5,460,000
- (3,058,663) - - (9,425,538) -
1,484,593 646,746 - - 563,666 317,452
1,503,442 1,544,662 1,799,344 1,973,106 1,970,819 1,235,892
(182,503) (318,457) - (199,124) (245,678) (6,573,032)
10,172,839 11,288,644 1,834,555 1,996,998 2,332,291 3,954,638
1,631,830$ 7,152,977$ 1,345,494$ 329,465$ (1,805,595)$ 1,951,876$
9.2% 7.5% 9.8% 10.0% 9.8% 8.4%
118 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
ASSESSED VALUE AND TAXABLE VALUE OF PROPERTY
LAST TEN FISCAL YEARS
(Unaudited)
Commercial
Fiscal Tax Residential and Industrial Other
Year Year Property Property Property
2011 2010 2,547,883,315$ 276,080,104$ 235,256,040$
2012 2011 2,584,070,993 280,043,373 230,531,859
2013 2012 2,622,105,658 286,288,277 235,960,049
2014 2013 2,695,532,057 294,316,218 238,127,209
2015 2014 2,850,404,776 300,533,643 237,028,723
2016 2015 3,156,205,930 335,006,408 206,365,157
2017 2016 3,546,622,242 320,646,912 230,805,066
2018 2017 3,795,456,220 222,328,923 376,053,145
2019 2018 3,749,539,307 227,659,302 352,044,261
2020 2019 4,078,991,715 241,927,251 414,739,865
Source: Galveston Central Appraisal District, Harris County Appraisal District, 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 $100 of assessed value.
Residential property includes both single-family and multi-family properties.
119 Fiscal Year 2020 Annual Report
Table 5
Less: Total
Total Exemptions and Total Direct
Assessed Tax Exempt Taxable Tax
Value Property Value Rate
3,059,219,459$ 703,419,784$ 2,355,799,675$ 0.58510$
3,094,646,225 706,059,683 2,388,586,542 0.59020
3,144,353,984 710,718,423 2,433,635,561 0.59700
3,227,975,484 724,153,848 2,503,821,636 0.59140
3,387,967,142 761,444,427 2,626,522,715 0.59140
3,697,577,495 776,779,458 2,920,798,037 0.56870
4,098,074,220 977,353,948 3,120,720,272 0.05460
4,393,838,288 894,716,055 3,499,122,233 0.05273
4,329,242,870 955,005,811 3,374,237,059 0.05324
4,735,658,831 1,066,920,381 3,668,738,450 0.05214
120 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Table 6
DIRECT AND OVERLAPPING PROPERTY TAX RATES
Last Ten Fiscal Years
(Unaudited)
(rate per $100 of assessed value)
Fiscal
Year Friendswood Clear Creek Galveston County
Ended Debt Total Independent Independent Drainage Galveston Harris
September 30, General Service Direct School District School District District County County
2011 0.5198$ 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
2016 0.4972 0.0715 0.5687 1.3670 1.4000 0.1150 0.5612 0.62998
2017 0.4620 0.0840 0.5460 1.3870 1.4000 0.1120 0.5462 0.62998
2018 0.4323 0.0950 0.5273 1.3670 1.4000 0.1080 0.5461 0.62998
2019 0.4372 0.0952 0.5324 1.3670 1.4000 0.1080 0.5298 0.62998
2020 0.4322 0.0893 0.5214 1.2594 1.3100 0.1122 0.5044 0.61170
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
121 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Table 7
PRINCIPAL PROPERTY TAX PAYERS
CURRENT AND NINE YEARS AGO
(Unaudited)
Percentage Percentage
of Total City of Total City
Taxable Taxable
Taxable Assessed Taxable Assessed
Taxpayer Value Rank Value Value Rank Value
Reserve at Autumn Creek LTD 27,282,270$ 1 0.74% -$ -
Texas-New Mexico Power Co. 21,620,980 2 0.59% 10,225,400 1 0
Bellevue at Clear Creek LP 19,159,200 3 0.52% - -
Kroger Co. 8,861,055 4 0.24% - -
Bay Meadows LLP 8,486,700 5 0.23% - -
A-S 108 Friendswood Crossing LP 7,031,940 6 0.19% - -
The Beldon Friendswood LLC 6,200,150 7 0.17% - -
H E Butt Grocery Company 6,090,560 8 0.17% 8,489,480 2 0
PS LPT Properties Investors 5,777,596 9 0.16% - -
Baywood Apartments LTD 5,500,000 10 0.15% - -
HCP Friendswood LLC - - 6,995,240 3 0.29%
Autumn Creek Dev LTD - - 5,762,590 4 0.24%
Buzbee Family LTD Partnership - - 5,679,200 5 0.23%
MB Friendswood Parkwood - - 5,383,320 6 0.22%
Friendswood Retirement - - 5,379,393 7 0.22%
Comcast of Houston LLC - - 4,413,130 8 0.18%
Creekwood Associates LLC - - 4,367,180 9 0.18%
HEB Pantry Foods - - 3,544,905 10 0.15%
Total 116,010,451 3.16% 60,239,838 2.49%
All other taxpayers 3,552,727,999 96.84% 2,360,070,075 97.51%
3,668,738,450$ 100.00% 2,420,309,913$ 100.00%
Source: Galveston Central Appraisal District and Harris County Appraisal District.
2020 2011
122 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Table 8
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(Unaudited)
Collections
Fiscal Year Taxes Levied (adjustments)
Ended for the Percentage in Subsequent Percentage
September 30, Fiscal Year Amount of Levy Years Amount of Levy
2011 13,738,978$ 13,608,076$ 99.47% 120,630$ 13,728,706$ 99.93%
2012 14,068,660 13,916,558 99.51% 141,137 14,057,695 99.92%
2013 14,454,404 14,361,379 99.63% 81,802 14,443,181 99.92%
2014 14,747,526 14,656,257 99.38% 76,620 14,732,877 99.90%
2015 15,424,948 15,306,943 99.23% 104,084 15,411,027 99.91%
2016 16,431,153 16,264,080 98.98% 150,637 16,414,717 99.90%
2017 17,014,685 16,922,419 99.46% 71,964 16,994,383 99.88%
2018 17,633,192 17,554,220 99.55% 36,236 17,590,456 99.76%
2019 17,952,134 17,756,864 98.91% 66,524 17,823,388 99.28%
2020 18,682,563 18,605,868 99.59% - 18,605,868 99.59%
Source: Galveston County Tax Assessor/Collector and City of Friendswood records.
Collected within the
Fiscal Year of the Levy Total Collections to Date
123 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Table 9
RATIOS OF OUTSTANDING DEBY BT TYPE
LAST TEN FISCAL YEARS
(Unaudited)
General General Water Total Percentage
Fiscal Obligation Capital Obligation Revenue Primary of Personal Per
Year Bonds Leases Bonds Bonds Government Income Capita
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 59,424,956 0.40% 1,510
2016 31,768,805 180,408 33,238,357 6,109,871 71,297,441 0.46% 1,793
2017 36,067,806 668,284 31,160,729 5,871,129 73,767,948 0.47% 1,818
2018 34,065,657 791,305 29,028,108 5,627,385 69,512,455 0.42% 1,695
2019 32,023,508 436,620 26,845,483 27,039,600 86,345,211 0.49% 2,093
2020 38,058,822 1,861,762 24,587,858 26,037,385 90,545,827 0.49% 2,175
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.
Governmental Activities Business-Type Activities
124 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Table 10
RATIOS OF NET GENERAL BONDED DEBY OUTSTANDING
LAST TEN FISCAL YEARS
(Unaudited)
General Less Debt Net Percentage of
Fiscal Taxable Obligation Service General Taxable Value Per
Year Population Value Bonds * Funds Bonded Debt Property Capita
2011 37,247 2,355,799,675$ 23,293,294$ 240,869$ 22,644,131$ 0.96% 608
2012 37,839 2,388,586,542 22,402,761 193,714 21,411,286 0.90% 566
2013 38,369 2,433,635,561 20,967,293 134,339 20,095,661 0.83% 524
2014 38,911 2,503,821,636 19,491,826 130,147 18,684,853 0.75% 480
2015 39,458 2,626,522,715 34,400,956 147,193 34,253,763 1.30% 868
2016 39,767 2,920,798,037 65,007,162 159,686 64,847,476 2.22% 1,631
2017 40,570 3,120,720,272 67,228,535 115,152 67,113,383 2.15% 1,654
2018 41,003 3,499,122,233 63,093,765 - 63,093,765 1.80% 1,539
2019 41,253 3,374,237,059 58,868,991 18,302 58,850,689 1.74% 1,427
2020 41,637 3,668,738,450 62,646,680 31,909 62,614,771 1.71% 1,504
Note:Details regarding the City's outstanding debt can be found in the notes to the financial statements.
* Includes both Governmental Activities and Business-type Activities
General Bonded Debt Outstanding
125 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Table 11
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
AS OF SEPTEMBER 30, 2020
(Unaudited)
Estimated
Estimated Share of
Debt Percentage Overlapping
Governmental Unit Outstanding Applicable Debt
Debt repaid with property taxes
Friendswood Independent School District 85,170,000$ 100.00% 85,170,000$
Clear Creek Independent School District 1,067,559,573 2.916% 31,130,037
Galveston County 274,009,000 7.953% 21,791,936
Harris County 2,527,057,000 0.144% 3,638,962
Subtotal, overlapping debt 141,730,935
City direct debt 39,920,584
Total direct and overlapping debt 181,651,519$
Source: Information was obtained from either the governmental unit's website or the finance department of the
governmental unit.
Notes: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City.
This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne
by the residents and businesses of the City of Friendswood. The City’s share of the debt of the overlapping
governments is based on the ratio of the assessed value of the City’s own property to that of each of the
other governments. This process recognizes that, when considering the City's ability to issue and repay
long-term debt, the entire debt burden borne by the residents and businesses should be taken into account.
However, this does not imply that every taxpayer is a resident--and therefore responsible for repaying the
debt--of each overlapping government.
126 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Table 12
LEGAL DEBT MARGIN INFORMATION
(UNAUDITED)
As a City Council-City Manager form of government, the City of Friendswood is not limited by law in the
amount of debt it may issue. The City's charter states:
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, 2020 is $0.5214 per $100 of assessed valuation with assessed
valuation being 100% of market value.
"In keeping with the Constitution of the State of Texas and not contrary thereto, the City of Friendswood
shall have the power to borrow money on the credit of the City for any public purpose not now or hereafter
prohibited by the Constitution and laws of the State of Texas, and shall have the right to issue all tax bonds,
revenue bonds, funding and refunding bonds, time warrants and other evidence of indebtedness as now
authorized or as may hereafter be authorized to be issued by cities and towns by the laws of the State of
Texas."
127 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Table 13
PLEDGED REVENUE COVERAGE
LAST TEN FISCAL YEARS
(Unaudited)
Utility Less: Net
Fiscal Service Operating Available Debt Service
Year Charges Expenses Revenue Principal Interest Coverage
2011 12,726,936$ 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 1,153,522 2.04
2016 11,319,801 6,361,229 4,958,572 - 481,140 10.31
2017 12,295,441 6,911,675 5,383,766 220,000 184,100 13.32
2018 12,183,711 7,205,293 4,978,418 225,000 179,250 12.32
2019 13,130,943 9,378,672 3,752,271 230,000 787,319 3.69
2020 16,638,758 10,050,967 6,587,791 905,000 952,470 3.55
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
128 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Table 14
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN CALENDAR YEARS
(Unaudited)
Per
Capita
Calendar Estimated Personal Personal Unemployment
Year Population Income Income Rate
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 14,774,880,000 47,011 3.7%
2016 39,767 15,463,890,000 47,991 4.9%
2017 40,570 15,682,608,000 47,605 4.7%
2018 41,003 16,443,373,000 49,079 4.3%
2019 41,253 17,497,755,000 51,785 3.2%
2020 41,637 18,561,154,000 54,250 5.9%(1)
Sources:Population information was provided from past financial reports. Unemployment
rates, personal income and per capita personal income were obtained from the
U.S. Department of Labor Bureau of Labor Statistics website or the Texas
Workforce Commission website.
(1) Increase in unemployment rate is a result of the COVID-19 pandemic.
129 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS Table 15
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
(Unaudited)
Percentage
Estimated of Total Estimated
Employer Employees Employment Rank Employees Rank
Friendswood ISD 762 3.83% 1 676 1
HEB 374 1.88% 2 350 2
Kroger 287 1.44% 3 305 3
City of Friendswood 239 1.20% 4 233 4
Clear Creek ISD 176 0.88% 5 201 5
UTMB 172 0.86% 6 52 11
Friendship Haven Nursing Home 104 0.52% 7 140 6
McDonalds 87 0.44% 9 89 8
U.S. Post Office 75 0.38% 8 57 10
Atria (formerly Brookdale) 70 0.35% 10 - -
Total 2,346 11.78% 2,103
Source: City Manager's Office
Note: Percentage of total employment is based on total City employment of 19,909 for 2020.
Total City employment for 2011 is not available.
20112020
130 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM
LAST TEN CALENDAR YEARS
(Unaudited)
2011 2012 2013 2014 2015
Function/Program
General Government:
City Attorney - - - - 1.00
City Manager 5.50 4.65 4.15 4.15 4.55
City Secretary 5.00 5.00 5.00 5.00 5.00
Administrative Services 27.20 28.20 28.20 28.70 28.70
Human Resources - - - - -
Information Technology - - - - -
Public Safety:
Police 80.40 80.40 81.40 82.40 85.72
Fire marshal and fire 6.10 6.10 6.10 6.50 6.60
Public Works 19.00 19.33 20.33 26.33 25.33
Parks and Recreation 17.70 16.89 16.89 10.89 10.89
Engineering - - - - -
Community Services 18.95 19.28 19.20 19.03 19.63
Library 14.72 14.72 14.37 14.37 14.62
Water 10.30 10.30 9.30 9.30 8.30
Sewer 9.00 9.00 9.00 9.00 8.00
Total City Employees: 213.87 213.87 213.94 215.67 218.34
Source: City of Friendswood Budget Documents
Notes:
In-house City Attorney added to staff in fiscal year 2015.
In fiscal year 2019, Engineering became an independent department, separate from Public Works.
In fiscal year 2020, Human Resources and Information Technology became independent departments,
separate from Administrative Services.
Full-time Equivalent Employees as of September 30
131 Fiscal Year 2020 Annual Report
Table 16
2016 2017 2018 2019 2020
1.00 1.00 2.10 2.10 2.10
5.40 5.40 5.40 5.00 6.00
5.00 5.00 5.00 5.00 4.00
27.70 27.70 27.60 27.60 18.60
- - - - 5.00
- - - - 5.00
86.72 88.72 87.72 90.38 90.38
6.60 6.60 6.60 7.20 7.20
29.00 26.00 27.00 23.00 23.00
11.70 11.70 10.70 10.70 10.70
- - - 6.00 7.00
19.63 20.90 21.90 23.10 24.50
14.62 14.97 14.97 14.97 14.97
8.30 8.30 9.30 9.30 9.30
8.00 11.00 10.00 11.00 11.00
223.67 227.29 228.29 235.35 238.75
132 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
OPERATING INDICATORS BY FUNCTION/PROGRAM
LAST TEN CALENDAR YEARS
(Unaudited)
2011 2012 2013 2014
Function/Program
Community Development:
Building permits issued 1,222 1,317 1,469 1,395
Building inspections conducted 9,514 10,486 11,470 10,611
Police:
Physical arrests 1,962 1,885 1,601 1,596
Parking violations 82 61 107 58
Traffic violations 7,291 6,518 5,718 5,815
Fire Marshal:
Inspections 1,444 1,616 1,673 1,427
Fire:
Emergency responses 2,818 2,975 2,993 3,261
Fires extinguished 108 86 86 116
Parks and Recreation:
Recreation participants 13,894 16,068 18,607 15,178
Facility reservations 503 493 686 728
Library:
Volumes in collection 97,622 125,251 133,865 141,383
Total volumes borrowed 349,223 355,447 367,948 367,452
Water:
New connections 173 185 189 193
Water main breaks 516 112 193 149
Average daily consumption 6,406 4,584 5,577 5,171
(thousands of gallons)
Peak daily consumption 13,698 10,896 11,505 9,917
Sewer:
Average daily sewage treatment 2,787 2,968 2,956 2,867
(thousands of gallons)
Maximum daily flow 10,833 10,777 10,401 10,770
(thousands of gallons)
Source: Various City departments and prior year ACFRs
Fiscal Year
133 Fiscal Year 2020 Annual Report
Table 17
2015 2016 2017 2018 2019 2020
1,377 1,865 2,177 2,788 1,465 1,605
12,145 11,026 12,134 14,157 9,251 9,124
1,479 1,464 903 1,145 1,190 847
63 44 61 15 26 17
4,540 5,001 3,669 6,785 4,468 8,807
1,512 1,354 1,233 1,139 1,448 1,146
3,258 3,303 3,599 3,720 3,655 3,650
78 76 75 80 80 65
16,153 21,369 20,556 18,299 19,657 6,027
1,443 1,444 1,004 2,123 3,293 3,166
133,165 147,726 100,678 102,852 101,532 99,930
350,145 301,158 341,048 348,554 342,592 271,078
- 183 137 125 169 185
57 46 44 116 84 41
4,970 4,963 5,282 5,455 5,129 5,319
12,623 10,472 10,110 9,475 9,390 9,927
3,306 3,382 3,286 3,117 3,345 3,113
11,237 12,188 12,766 10,370 12,491 10,520
Fiscal Year
134 Fiscal Year 2020 Annual Report
CITY OF FRIENDSWOOD, TEXAS
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
LAST TEN CALENDAR YEARS
(Unaudited)
2011 2012 2013 2014
Function/Program
Police
Stations 1 1 1 1
Patrol units 26 25 26 27
Fire
Stations 4 4 4 4
Public Works
Streets - paved (miles) 162 164 165 167
Streets - unpaved (miles) 2 2 2 2
Traffic signals 3 3 3 3
Parks and Recreation
Acreage 189 189 189 189
Parks 8 8 8 8
Swimming pool 1 1 1 1
Tennis courts 4 4 4 4
Library 1 1 1 1
Water
Water mains (miles) 184 186 187 207
Fire hydrants 1,324 1,588 1,608 1,610
Connections 12,476 12,711 12,929 13,093
Storage capacity 7,500 7,500 7,500 8,000
(thousands of gallons)
Sewer
Sanitary sewers (miles) 159 162 163 194
Connections 11,563 11,828 12,072 12,236
Storm sewers (miles) 99 100 100 105
Treatment capacity 4,850 4,850 4,850 12,000
(thousands of gallons)
Source: Various City departments and prior year ACFRs.
Fiscal Year
135 Fiscal Year 2020 Annual Report
Table 18
2015 2016 2017 2018 2019 2020
1 1 1 1 1 1
29 31 32 34 33 31
4 4 4 4 4 4
169 172 174 176 176 185
2 2 2 2 2 2
3 3 3 3 3 3
232 266 266 266 266 266
8 9 9 9 10 10
1 1 1 1 1 1
4 4 4 4 4 4
1 1 1 1 1 1
209 212 214 216 216 216
1,631 1,672 1,690 1,707 1,707 1,713
13,289 13,482 13,619 13,744 13,913 14,098
8,100 7,850 7,850 7,850 7,850 7,850
195 198 200 202 202 202
12,407 12,378 12,588 12,721 12,870 13,029
106 109 110 112 112 112
9,250 9,250 9,250 9,250 9,250 9,250
Fiscal Year
136 Fiscal Year 2020 Annual Report