HomeMy WebLinkAboutComprehensive Annual Financial Report September 30, 2017
CITY OF FRIENDSWOOD TEXAS
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
September 30, 2017
Officials Issuing Report:
Roger C. Roecker
City Manager
Katina Hampton
Director of Administrative Services
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CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
SEPTEMBER 30, 2017
Page
Number
INTRODUCTORY SECTION
Letter of Transmittal ..................................................................................................... i – iv
Principal Officials ......................................................................................................... v
GFOA Certificate of Achievement ............................................................................... vi
Organizational Chart ..................................................................................................... vii
FINANCIAL SECTION
Independent Auditors’ Report....................................................................................... 1 – 3
Management’s Discussion and Analysis ...................................................................... 4 – 17
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Position ....................................................................................... 18
Statement of Activities ............................................................................................ 19 – 20
Fund Financial Statements
Balance Sheet – Governmental Funds .................................................................... 21
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Position .......................................................................... 22
Statement of Revenues, Expenditures and Changes in
Fund Balances – Governmental Funds ................................................................ 23
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
SEPTEMBER 30, 2017
Page
Number
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities ......................................................................................... 24
Statement of Net Position – Proprietary Funds....................................................... 25 – 26
Statement of Revenues, Expenses and Changes in
Net Position – Proprietary Funds ....................................................................... 27
Statement of Cash Flows – Proprietary Funds ........................................................ 28 – 29
Notes to Financial Statements .................................................................................... 30 – 63
Required Supplementary Information
Schedule of Changes in Net Pension Liability
and Related Ratios .............................................................................................. 64
Schedule of Pension Contributions ............................................................................ 65
Schedule of Funding Progress –
Post Employment Benefits Plan Other Than Pensions ........................................ 66
Schedule of Revenues, Expenditures, and Changes in
Fund Balance – Budget and Actual – General Fund............................................ 67 – 74
Notes to Required Supplementary Budget Information ............................................. 75 – 77
Combining Statement And Individual Fund Schedules
Nonmajor Governmental Funds:
Combining Balance Sheet .......................................................................................... 78 – 79
Combining Statement of Revenues, Expenditures, and Changes
in Fund Balances .................................................................................................. 80 – 81
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
SEPTEMBER 30, 2017
Page
Number
Schedule of Revenues, Expenditures and Changes in Fund Balance –
Budget and Actual
Bond Construction .................................................................................................. 82
Police Investigation ................................................................................................. 83
Fire/EMS Donation Fund ........................................................................................ 84
Debt Service Fund................................................................................................... 85
Court Security Technology ..................................................................................... 86
1776 Park ................................................................................................................ 87
Park Land Dedication ............................................................................................. 88
STATISTICAL SECTION (Unaudited)
Page
Table Number
Net Position by Component ........................................................................... 1 89 – 90
Changes in Net Position ................................................................................. 2 91 – 94
Fund Balances – Governmental Funds .......................................................... 3 95 – 96
Changes in Fund Balances – Governmental Funds ....................................... 4 97 – 98
Assessed Value and Actual Value of Taxable Property ................................ 5 99
Direct and Overlapping Property Tax Rates .................................................. 6 100
Principal Property Taxpayers ......................................................................... 7 101
Property Tax Levies and Collections ............................................................. 8 102
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
SEPTEMBER 30, 2017
Page
Table Number
Ratios of Outstanding Debt by Type ............................................................. 9 103
Ratio of Net General Bonded Debt Outstanding ........................................... 10 104
Direct and Overlapping Governmental
Activities Debt ............................................................................................ 11 105
Legal Debt Margin Information ..................................................................... 12 106
Pledged-Revenue Coverage ............................................................................ 13 107
Demographic and Economic Statistics .......................................................... 14 108
Principal Employers ....................................................................................... 15 109
Full-Time Equivalent City Government Employees
by Function/Program .................................................................................. 16 110
Operating Indicators by Function/Program ................................................... 17 111
Capital Assets Statistics by Function/Program .............................................. 18 112
INTRODUCTORY SECTION
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March 26, 2018
The Honorable Mayor, Members of the City Council, and the Citizens of Friendswood:
The Comprehensive Annual Financial Report (CAFR) of the City of Friendswood for the fiscal year ended
September 30, 2017, is hereby submitted. Responsibility for both the accuracy of the data, and the
completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of
our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a
manner designed to present fairly the financial position and results of operations of the various funds and
account groups of the City. All disclosures necessary to enable the reader to gain an understanding of the
City’s financial activities have been included.
The comprehensive annual financial report is presented in three sections: introductory, financial, and
statistical. The introductory section includes a list of principal officials, this transmittal letter, and the
City’s organizational chart. The financial section includes the auditor’s report on the financial statements,
a Management Discussion and Analysis (MD&A), the basic financial statements, required supplementary
information and the combining statement and individual fund schedules. The MD&A, found immediately
following the report of the independent auditor, is a narrative introduction; overview and analysis required
by generally accepted accounting principles (GAAP). This letter of transmittal is designed to complement
the MD&A and should be read in conjunction with it. The statistical section includes selected financial
and demographic information, generally presented on a multi-year basis.
Management of the City is responsible for establishing and maintaining an internal control structure
designed to ensure that the assets of the City are protected from loss, theft or misuse and to ensure that
adequate accounting data are compiled to allow for the preparation of financial statements in conformity
with generally accepted accounting principles. The internal control structure is designed to provide
reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance
recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the
valuation of costs and benefits requires estimates and judgments by management.
The City Charter requires an annual audit of the financial statements of all of the various funds of the City
by independent certified public accountants. The accounting firm of Pattillo, Brown & Hill, L.L.P. has
performed such an audit and their opinion has been included in this report.
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PROFILE OF THE CITY
Established in 1895 as a Quaker colony, the City of Friendswood is rich in heritage. The City was
incorporated in 1960 and chartered a home-rule city under Texas law in 1971. The City operates under a
Council-Manager form of government. Policy-making and legislative authority are vested in a governing
council consisting of the Mayor and six (6) Council Members. The Mayor and Council are responsible,
among other things, for passing ordinances, adopting the budget, appointing board and committee
members and hiring the City Manager, City Attorney, Municipal Judge, and City 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 40,570. Residents and visitors can access
Friendswood through FM 2351, FM 518, and FM 528 (NASA Parkway). Hobby Airport and Ellington
Airport are located within a 15 minute drive from Friendswood, and Bush Intercontinental Airport is just 45
minutes away. Major sectors of the area’s economic base include aerospace, specialty chemicals, health
care, retail, and tourism.
Community
Friendswood has been nationally recognized as one of the best places to live in the country. With low tax
rates, outstanding public education, and the lowest crime rate in the region, Friendswood is the perfect place
to live, work, and play. The City features beautiful parks and lush landscaping, along with a championship
golf course. Children academically excel via two superior public school systems – Friendswood ISD and
Clear Creek ISD. These attributes perfectly match Friendswood’s affluent resident base of well-educated,
high-income families. More than 50% of residents work in executive, professional, and managerial
positions. The average household income is $137,732 and the median household income is $105,993.
Business
Friendswood is the perfect choice for many types of commercial enterprises. Target markets include
professional offices, retail, commercial, and light industrial developments. A key City focus is to encourage
redevelopment of the downtown area and development of the City’s panhandle area. City leaders have
approved special tools and incentives to revitalize downtown to promote mixed-use, multi-story
developments with pedestrian streetscapes and other amenities. The City offers competitive business
incentives, including a municipal grant program, tax abatement that includes “green” development, freeport
tax exemption, and downtown development fee waivers. Additionally, the City received a $2 million EDA
grant that provided utilities to serve a large commercial area located at the northeast corner of the City along
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FM 2351 near Beamer Road and Interstate 45. This commercial area will provide opportunities for new
construction, employment and sales tax revenue in the City.
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 between departments within any fund, but revisions
that increase the total expenditures of any fund must be approved by Council.
Multi-Year Financial Planning
A Multi-Year Financial Plan (MYFP) was developed in 2006. Originally, staff was directed to develop a
plan to forecast the City’s financial condition through 2020, the projected build-out date. The first version
of this plan was drafted and later reduced in scope to 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.
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Most importantly, the Financial Management Policy requires that the City maintain the General Fund
unassigned fund balance at a minimum of 90 days of prior year audited operating expenditures . Any
unassigned funds after the fiscal year-end audit will be allowed to accumulate to build this 90-day reserve.
After the General Fund has gathered sufficient resources, additional unassigned funds will be allowed to
accumulate for future General Fund capital improvements.
The Financial Management Policy also requires the minimum working capital in the Water and Sewer
Fund be 90 days of prior year audited operating expenses. 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 com prehensive annual financial
report for the fiscal year ended September 30, 2016. This was the twenty-ninth 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 Comprehensive Annual Financial Report. This
report satisfied both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
Comprehensive Annual Financial Report continues to meet the Certificate of Achievement program’s
requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.
Acknowledgements
The preparation of the Comprehensive Annual Financial Report was made possible by the dedicated
service of the entire staff of the Administrative Services Department. Each member of the department has
my sincere appreciation for the contributions made in the preparation of this report.
In closing, I also express my thanks to the Mayor, members of the City Council and the City Manager for
their leadership, interest and support in conducting the financial operations of the City in a responsible
and progressive manner.
Sincerely,
Katina Hampton
Director of Administrative Services
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CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL OFFICIALS AS OF
SEPTEMBER 30, 2017
Elected Officials Position Term Expires
Kevin M. Holland Mayor May 2018
Steve Rockey Council Member – Position No. 1 May 2018
Sally Branson Council Member – Position No. 2 May 2020
Jim Hill Council Member – Position No. 3 May 2018
Mike Foreman Council Member – Position No. 4 May 2019
John H. Scott Council Member – Position No. 5 May 2020
Carl W. Gustafson Council Member – Position No. 6 May 2019
Key Staff Position
Roger C. Roecker City Manager
Morad Kabiri Assistant City Manager
Katina Hampton Director of Administrative Services
Terry Byrd Fire Marshal/Emergency Management Coordinator
Patrick Donart Director of Public Works
Melinda Welsh City Secretary
James Toney Director of Parks and Recreation
Robert B. Wieners Police Chief
Mary K. Fischer City Attorney
James W. Woltz Judge – Municipal Court
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Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Friendswood
Texas
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
September 30, 2016
CITY OF FRIENDSWOOD
Organization Chart
Parks and Recreation
• Administration
• Recreation Programs
• Park Operations
• Facility Operations
Citizens of
Friendswood
City Attorney
Municipal Judge
Mayor and
City Council
City Secretary
• Administration
• Records Management
• Elections
City Manager
• Administration
• Economic Development
• Public Information
Boards, Committees,
& Commissions
Administrative Services
• Finance
• Utility Billing
• Municipal Court
• HR/Risk Management
• Information Technology
Community Development
• Administration
• Planning
• Inspections/Code Enforcement Fire Marshal
• Administration
• Emergency Management
• Investigations/Inspections
Police Department
• Administration
• Communications
• Patrol
• Criminal Investigations
• Animal Control
Public Works
• Administration
• Streets/Sidewalks
• Drainage Operations
• Water Operations & Utilities
• Sewer Operations & Utilities
• Engineering & Capital Projects
Library Services
• Friendswood Public Library
Assistant City
Manager
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FINANCIAL SECTION
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INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor
and City Council of
City of Friendswood, Texas
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, the discretely presented component units, each major fund, and the aggregate
remaining fund information of the City of Friendswood, Texas, as of and for the year ended September
30, 2017, and the related notes to the financial statements, which collectively comprise the City of
Friendswood, Texas’ basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
the City of Friendswood, Texas’ management is responsible for the preparation and fair
presentation of these financial statements in accordance with accounting principles generally accepted in
the United States of America; this includes the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
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 relates to the amounts included for the West Ranch
Management District, is based solely on the report of the other auditors. We conducted our audit in
accordance with auditing standards generally accepted in the United States of America and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material misstatement. The
financial statements of the West Ranch Management District were not audited in accordance with
Government Auditing Standards.
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An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entity’s preparation and fair presentation of the financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of significan t
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Opinions
In our opinion, based on our audit and the report of the other auditors, the financial statements
referred to above present fairly, in all material respects, the respective financial position of the
governmental activities, the business-type activities, the discretely presented component units, each
major fund, and the aggregate remaining fund information of the City of Friendswood, Texas, as of
September 30, 2017, 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, budgetary comparison information, and pension and other post -
employment benefit information on pages 4 through 17 and 64 through 75, respectively, to 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.
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Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Friendswood, Texas’ basic financial statements. The introductory
section, combining and individual nonmajor fund financial statements and schedules, and statistical
section are presented for purposes of additional analysis and are not a required part of the basic financial
statements.
The combining statement and individual nonmajor fund financial schedules are the responsibility
of management and was derived from and relates directly to the underlying accounting and other records
used to prepare the basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and other
records used to prepare the basic financial statements or to the basic financial statements themselves,
and other additional procedures in accordance with auditing standards generally accepted in the United
States of America by us and the other auditors. In our opinion, the combining statement and individual
nonmajor fund financial 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 it.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated March
26, 2018 on our consideration of the City of Friendswood, Texas’ internal control over financial
reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and
grant agreements, and other matters. The purpose of that report is solely to describe the scope of our
testing of internal control over financial reporting and compliance and the results of that testing, and not
to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government
Auditing Standards in considering the City of Friendswood, Texas’ internal control over financial
reporting and compliance.
Waco, Texas
March 26, 2018
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MANAGEMENT’S
DISCUSSION AND ANALYSIS
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CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT’S DISCUSSION AND ANALYSIS
As management of the City of Friendswood, Texas (“the City”), we offer readers of the City’s financial
statements this narrative overview and analysis of the financial activities of the City of Friendswood for
the fiscal year ended September 30, 2017. 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, 2017 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 $120,848,598.
• The City’s total net position increased during the year by $1,613,813 from operations.
• Unrestricted net position is $16,116,962.
• Program revenues of $17,843,689 reduced the net cost of the City’s functions to be financed
from the City’s general revenues to $24,287,472.
OVERVIEW OF THE FINANCIAL STATEMENTS
Summary Detail
Components of the Financial Section
Management's
Discussion and
Analysis
Basic Financial
Statements
Required
Supplementary
Information
Independent
Auditors' Report
Government-wide
Financial Statements
Fund Financial
Statements
Notes to the
Financial
Statements
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This discussion and analysis is intended to service as an introduction to the City’s basic financial
statements. The basic financial statements are comprised of three components: 1) government-wide
financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report
also includes supplementary information intended to furnish additional detail to support the basic
financial statements themselves.
Government-wide Financial Statements
The government-wide financial statements report information for the City as a whole. These statements
include transactions and balances relating to all assets, including infrastructure capital assets. These
statements are assigned to provide information about cost of services, operating results, and financial
position of the City as an economic entity. The Statement of Net Position and the Statement of
Activities, which appear first in the City’s financial statements, report information on the City’s
activities that enable the reader to understand the financial condition of the City. These statements are
prepared using the accrual basis of accounting, which is similar to the accounting used by most private-
sector companies. All of the current year’s revenues and expenses are taken into account even if cash
has not yet changed hands.
The Statement of Net Position presents information on all of the City’s assets and deferred outflows of
resources and liabilities and deferred inflows of resources with the difference reported as net position.
Over time, increases or decreases in the net position may serve as a useful indicator of whether the
financial position of the City is improving or deteriorating. Other non-financial factors, such as the
City’s property tax base and the condition of the City’s infrastructure, need to be considered in order to
assess the overall health of the City.
The Statement of Activities presents information showing how the City’s net position changed during
the most recent fiscal year. All changes in net position are reported as soon as the 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, and administrative services);
public safety (police, volunteer fire department and fire marshal); public works (streets and
drainage); community development (engineering, building inspection and planning and zoning);
community services (parks, facility operations and community activities) and library. Interest
payments on the City’s debt are also reported here. Property tax, sales tax, franchise taxes,
municipal court fines and permit fees finance most of the activities.
• Business-type activities – Services involving a fee for those services, which include the City’s
water and sewer system are reported here.
• Component Units – activities include activities of The West Ranch Management District and
Friendswood Downtown Economic Development Corporation.
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Fund Financial Statements
A fund is a self-balancing set of accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate
compliance with finance-related legal requirements. The City uses two fund types – governmental and
proprietary.
Governmental Funds
Governmental funds are used to account for essentially the same functions reported as governmental
activities in the government-wide financial statements with the exclusion of internal service fund
activity. However, unlike the government-wide financial statements, governmental funds focus on near-
term inflows and outflows of spendable resources, as well as on balances of spendable resources
available at the end of the fiscal year. Such information may be useful in evaluating the City’s near -term
financing requirements.
Because the focus of the governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By
doing so, the reader may better understand the long-term impact of the government’s near-term financial
decisions. Both the governmental fund 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 eleven governmental funds. Information is presented separately in the governmental
funds balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund
balance for the General Fund and Bond Construction Fund which are considered to be major funds. The
other nine 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.
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Notes to the Financial Statements
The notes to the financial statements provide additional information that is essential to a full
understanding of the data provided 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 RSI includes a schedule of funding progress for the
City’s other post-employment healthcare benefits and two schedules related to the City’s pension with
the Texas Municipal Retirement System (“TMRS”). The City adopts an annual appropriated budget for
its General Fund. Budgetary comparison schedules have been provided in RSI to demonstrate
compliance with this budget. RSI can be found after the basic financial statements.
The combining statement and individual fund schedules that further support the information in the
financial statements are presented immediately following the notes to the required supplementary
information.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Statement of Net Position
As noted earlier, net position may serve over time as a useful indicator of a government’s financial
position. For the City of Friendswood, assets and deferred outflows of resources exceed liabilities and
deferred inflows of resources by $120,848,598 as of September 30, 2017 in the primary government,
which is an increase in the City’s overall financial position compared to the prior year.
The largest portion of the City’s net position (84.35%) reflects its investments in capital assets (e.g.,
land, buildings and improvements, machinery and equipment, infrastructure, water and sewer system,
construction in progress and water rights); less any debt outstanding used to acquire those assets. The
City uses these capital assets to provide services to citizens; consequently these assets are not availa ble
for future spending. Although the City’s investment in its capital assets is reported net of related debt, it
should be noted that the resources needed to repay this debt must be provided from other resources,
since the assets themselves cannot be used to liquidate these liabilities.
8
The following table reflects the condensed Statement of Net Position.
CONDENSED STATEMENT OF NET POSITION
2017 2016 2017 2016 2017 2016
Current and other assets 26,832,792$ 26,449,063$ 17,861,201$ 19,395,572$ 44,693,993$ 45,844,635$
Capital assets 102,145,795 97,575,331 61,387,988 60,640,086 163,533,783 158,215,417
Total assets 128,978,587 124,024,394 79,249,189 80,035,658 208,227,776 204,060,052
Deferred outflows
of resources 4,824,499 5,424,885 1,464,777 1,606,929 6,289,276 7,031,814
Total assets and
deferred outflows
of resources 133,803,086 129,449,279 80,713,966 81,642,587 214,517,052 211,091,866
Long-term liabilities 46,766,883 41,910,551 36,263,720 38,574,221 83,030,603 80,484,772
Other liabilities 5,488,936 5,805,898 4,162,502 4,233,414 9,651,438 10,039,312
Total liabilities 52,255,819 47,716,449 40,426,222 42,807,635 92,682,041 90,524,084
Deferred inflows
of resources 849,565 1,158,762 136,848 174,235 986,413 1,332,997
Net position:
Net investment in
capital assets 72,631,192 73,588,484 29,305,429 28,322,718 101,936,621 101,911,202
Restricted 2,534,312 1,405,907 260,703 99,006 2,795,015 1,504,913
Unrestricted 5,532,198 5,579,677 10,584,764 10,238,993 16,116,962 15,818,670
Total net position 80,697,702$ 80,574,068$ 40,150,896$ 38,660,717$ 120,848,598$ 119,234,785$
Governmental Activities Business-Type Activities Totals
A portion of the primary government’s net position, $2,795,015 or 2.31%, 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, $16,116,962 or 13.34%, may be used to meet the City’s
ongoing obligations to citizens and creditors.
9
Change in Net Position
The following table provides a summary of the City’s changes in net position.
2017 2016 2017 2016 2017 2016
Revenues:
Program revenues:
Charges for services 2,737,415$ 2,468,620$ 12,295,441$ 11,319,801$ 15,032,856$ 13,788,421$
Operating grants
and contributions 2,591,025 800,151 - - 2,591,025 800,151
Capital grants
and contributions 219,808 318,657 - - 219,808 318,657
General revenues:
Property taxes 17,270,647 16,350,101 - - 17,270,647 16,350,101
Sales and alcohol taxes 6,482,367 5,393,920 - - 6,482,367 5,393,920
Franchise taxes 1,661,654 1,779,234 - - 1,661,654 1,779,234
Investment earnings 187,001 149,003 141,978 95,825 328,979 244,828
Miscellaneous 157,638 148,377 - 7,569 157,638 155,946
Total revenues 31,307,555 27,408,063 12,437,419 11,423,195 43,744,974 38,831,258
Expenses:
General government 5,128,399 4,736,867 - - 5,128,399 4,736,867
Public safety 15,861,719 13,101,691 - - 15,861,719 13,101,691
Public works 4,429,664 4,429,482 - - 4,429,664 4,429,482
Community development 1,495,001 1,577,813 - - 1,495,001 1,577,813
Parks and recreation 3,459,053 3,080,453 - - 3,459,053 3,080,453
Library 1,215,683 1,134,859 - - 1,215,683 1,134,859
Water and sewer - - 8,502,218 7,975,920 8,502,218 7,975,920
Interest on long-term debt 953,146 862,654 1,086,278 1,642,723 2,039,424 2,505,377
Total expenses 32,542,665 28,923,819 9,588,496 9,618,643 42,131,161 38,542,462
Increase/(decrease) in net
position before transfers 1,235,110)( 1,515,756)( 2,848,923 1,804,552 1,613,813 288,796
Transfers 1,358,744 1,397,065 1,358,744)( 1,397,065)( - -
Change in net position 123,634 118,691)( 1,490,179 407,487 1,613,813 288,796
Net position - beginning
as originally reported 80,574,068 80,692,759 38,660,717 38,696,363 119,234,785 119,389,122
Prior period adjustment - - - 443,133)( - 443,133)(
Net position - beginning,
as restated 80,574,068 80,692,759 38,660,717 38,253,230 119,234,785 118,945,989
Net position, ending 80,697,702$ 80,574,068$ 40,150,896$ 38,660,717$ 120,848,598$ 119,234,785$
Governmental Activities Business-Type Activities Totals
10
Governmental Activities
Governmental activities increased the City of Friendswood’s net position by $123,634 from operations.
Key elements of this change are as follows:
• Property taxes continue to be the City’s largest revenue source. Property tax revenue increased
by $920,546 due to an increase in property values and new construction within the City.
• Sales and alcohol tax revenue remained strong during fiscal year 2017, providing a 20.18%
increase for the year, from $5.4 million to $6.5 million.
• Operating grants and contributions increased $1,790,874 from prior year, primarily due to
FEMA assistance due to flooding during the current fiscal year.
• Total expenses increased $3,618,846 from the prior year. The largest increase was in Public
Safety ($2,760,028). This increase is related to debris removal, additional salaries and benefits
and other storm related costs incurred as a result of the flooding caused by Hurricane Harvey.
Governmental Activities – Revenues
Charges for
services
9%
Operating grants
and contributions
8%
Capital grants and
contributions
1%
Property taxes
55%
Sales and alcohol
taxes
21%
Franchise taxes
5%
Interest and other
1%
11
Governmental Activities – Expenses
General
government
16%
Public safety
49%
Public works
13%
Community
development
4%
Parks and
recreation
11%
Library
4%Interest and other
3%
Business-Type Activities
Business-type activities increased the City of Friendswood’s net position by $1,490,179. Key elements
of this change are as follows:
• Revenues increased by $1,014,224 or 8.88%; resulting from greater utility fees revenue and
increased water and sewer impact fees, which can be attributed to new development within the
City. Expenses increased $526,289 or 6.59% due to salary and associated benefits and additional
water and sewer operational costs.
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
2017 2016
Operating revenues Operating expenses
12
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 $22,039,485. Approximately 43.32% of this amount ($9,547,039) is unassigned fund balance;
however, $6.66 million is set aside for the 90-day operating reserve, as set forth in the City’s financial
policies.
The remaining $12,492,446 is nonspendable, restricted, committed, or assigned as follows:
2.12%-Nonspendable
Prepaid items 149,386$
Notes receivable 285,364
Permanent fund 31,869
466,619$
41.43%-Restricted
Public education and government
channels 667,271$
Debt service 91,938
Municipal court operations 212,053
Public safety operations 177,091
Capital projects 7,983,777
9,132,130$
13.13%-Assigned
Purchases on order 1,518,849$
Capital projects 374,848
Mud Gully detention project 1,000,000
2,893,697$
The General Fund is the chief operating fund of the City of Friendswood. At the end of the current fiscal
year, total fund balance reached $13.5 million of which unassigned fund balance of the General Fund
was $9.5 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
33.28% of total General Fund expenditures, while total fund balance represents 47.21% percent of that
same amount. At year end, the City’s operating reserve was $6.66 million, representing 23% of total
General Fund expenditures.
13
Key differences between last year’s General Fund activity and this year’s include:
• $2,044,459 increases in total revenues – new homes added to the property tax roll increased the
property levy, federal grant received as a result of Hurricane Harvey and permit fees increased
due to new development.
• $3,255,382 increase in total expenditures – salary merit increases and associated benefits,
additional personnel, higher health insurance premiums and several one-time expenditures
incurred as a result of the flooding in the current year.
Fund balance in the Bond Construction Fund decreased $793,666. This decrease was a result of capital
expenditures of $6,725,391 offset by the issuance of $5,605,000 in bonds during the fiscal year. This
bond issuance was the final of those authorized in November 2013.
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 $10,584,764 for the Water and Sewer Fund. The
total increase in the net position of the Water and Sewer Fund was $1,490,179 from operations. Other
factors concerning the finances of this fund have already been addressed in the discussion of the City of
Friendswood’s business-type activities.
Unrestricted net position of the Internal Service Fund was $410,701. The net position of the internal
service fund decreased by $134,791 primarily as a result of expenditures, especially depreciation
expense, exceeding the allocations to the City’s participating funds.
GENERAL FUND BUDGETARY HIGHLIGHTS
The City made revisions to the original appropriations approved by the City Council. Budgeted revenues
increased by $1,085,228 or 4.39% and expenditures were increased by $5,061,899 or 19.42%.
Total revenues were above budget by $540,005. The more significant variances are detailed below:
• $478,640 below budget in property taxes due to fewer of the property values under protest at the
time of budget development becoming taxable than projected.
• $183,783 above budget in permit fees due to larger than anticipated growth resulting in more
permits being issued.
• $68,202 above budget in sales taxes and alcohol tax due to improved economic conditions.
• $247,355 above budget in fines and forfeitures due to a significant increase in tickets paid during
the current fiscal year and increase in warrants applied to court fines.
14
Total expenditures of the General Fund were $2,438,865 below the final expenditure budget. The more
significant variances are detailed below:
• $927,513 below budget in total general government expenditures primarily a result of personnel
vacancies, fuel costs, retainage of payment for software support related to the City’s new
enterprise software implementation and the computer refresh project not being complete at the
fiscal year end.
• $236,709 over budget in public safety expenditures as a result of the flooding in the current fiscal
year offset by personnel vacancies in the police department.
CAPITAL ASSETS
The City of Friendswood’s investment in capital assets (net of accumulated depreciation) for its
governmental and business-type activities as of September 30, 2017 is $163,533,783. The investment in
capital assets include land, buildings and improvements, machinery and equipment, infrastructure, water
and sewer system, water rights and construction in progress.
Major capital events during the year included the following:
• Completion of the new Kenneth Camp Fire Station and renovation of Fire Station #4 on
Woodlawn Drive. The combined cost of both projects was approximately $6.6 million.
• Completion of the Library expansion and renovation which was approximately $2.9 million.
• Completion of Lake Friendswood Park. The total cost of the project was approximately $1.0
million.
• Completion of several additional Parks and Recreation projects including the Basketball Pavilion
at Centennial Park and improvements at both the Corporal Steven Schulz Sports Park and
Stevenson Park. The combined cost of these projects was approximately $3.7 million.
• The following major water and sewer projects are in construction in progress at the end of fiscal
year 2017: Blackhawk Wastewater Treatment Plant – 3rd Clarifier addition and Lift Station #23
(Crazy Horse).
15
CITY OF FRIENDSWOOD’S CAPITAL ASSETS AT YEAR-END
2017 2016 2017 2016 2017 2016
Land 25,805,161$ 25,805,161$ 319,473$ 319,473$ 26,124,634$ 26,124,634$
Buildings and
improvements 37,698,577 24,866,740 335,681 353,533 38,034,258 25,220,273
Equipment 4,132,484 4,824,343 256,788 292,008 4,389,272 5,116,351
Infrastructure 24,075,329 25,543,237 29,326,598 30,851,335 53,401,927 56,394,572
Water rights - - 19,716,695 19,716,695 19,716,695 19,716,695
Construction in
progress 10,434,244 16,535,850 11,432,753 9,107,042 21,866,997 25,642,892
Total capital assets 102,145,795$ 97,575,331$ 61,387,988$ 60,640,086$ 163,533,783$ 158,215,417$
Governmental Activities Business-Type Activities Totals
More detailed information on the City’s capital assets is presented in Note V to the financial statements.
DEBT ADMINISTRATION
At the end of the current fiscal year, the City of Friendswood had a total bonded debt and capital lease
obligation of $67,863,284.
CITY OF FRIENDSWOOD’S OUTSTANDING DEBT AT YEAR-END
2017 2016 2017 2016 2017 2016
General obligations 33,320,000$ 29,260,000$ 28,360,000$ 30,240,000$ 61,680,000$ 59,500,000$
Revenue bonds payable - - 5,515,000 5,735,000 5,515,000 5,735,000
Capital leases 668,284 180,408 - - 668,284 180,408
33,988,284$ 29,440,408$ 33,875,000$ 35,975,000$ 67,863,284$ 65,415,408$
Governmental Activities Business-Type Activities Totals
The City’s General Obligation and Revenue Bonds bond ratings are listed below:
Standard
& Poor's
General Obligation Bonds AA+
Revenues Bonds AA-
More detailed information about the City’s outstanding debt can be found in Note V II to the financial
statements.
16
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
Friendswood continues to experience moderate growth. The City’s current population is estimated to be
40,570. Friendswood is expected to reach build out with an estimated population of 57,000. The City is
continuing to focus on economic development initiatives, including the revitalization of downtown and a
large residential and commercial development called West Ranch. The West Ranch residential
development is currently under way, with commercial construction scheduled to follow as the area’s
residential population growth.
The City’s largest single source of revenue in the General Fund continues to be ad valorem taxes. The
adopted budget for fiscal year 2018 has a tax rate of $0.5274 per $100 of taxable value. This rate
consists of a maintenance and operations (M&O) tax rate of $0.4324 and an interest and sinking (debt
service) tax rate of $0.0950. The rate was set based on a net assessed value of $3,420,831,171. This is an
increase of $247,457,365 from certified taxable values for tax year 2016. This increase is mainly a result
of new construction in the City. This additional value results in a total levy increase of $896,969. 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’s second largest source of revenue in the General Fund is sales tax. The City anticipates an
increase in this revenue stream from the prior year and has adjusted the budget from $5,372,934 to
$5,717,840. The franchise fees budget is increased from $1,657,673 to $1,709,283 and the budget for
license and permits has been increased from $780,327 to $841,816. If all projections are accurate, the
total General Fund unassigned fund balance net of the 90 day operating requirement ($6.5 million) is
estimated to be approximately $5.3 million at September 30, 2018.
Water revenues are budgeted at $6,900,951 which is an increase of $476,360 in revenues, or 7.4%
percent. Sewer revenues are budgeted at $4,897,926 which is a decrease of $299,605 in revenues, or 6.5
percent. Water and Sewer Fund net position, net of the 90 day operating requirement ($1.8 million), is
projected to be $11.1 million at the end of fiscal year 2018.
Pursuant to the City’s financial management policy, funds in excess of the 90-day operating reserve are
designated for future capital improvements.
17
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
The financial report is designed to provide our citizens, customers, investors, and creditors with a
general overview of the City’s finance and to show the City’s accountability for the money it receives. If
you have questions about this report or need additional information, contact Administrative Services,
P.O. Box 1288, Friendswood, Texas 77549-1288, or call Katina Hampton at 281-996-3221, or email
khampton@ci.friendswood.tx.us.
Separately issued financial statements for the West Ranch Management District can be obtained by
writing to: West Ranch Management District, a Component Unity of the City of Friendswood, c/o Allen
Boone Humphries LLP, 3200 Southwest Freeway, Suite 2600, Houston, Texas 77027.
BASIC
FINANCIAL STATEMENTS
THIS PAGE LEFT BLANK INTENTIONALLY
West Ranch Friendswood
Governmental Business-type Management Downtown
Activities Activities Total District EDC
ASSETS
Cash and cash equivalents 14,233,510$ 4,224,953$ 18,458,463$ 5,659,639$ 103,239$
Investments 8,365,428 5,429,581 13,795,009 - 128,805
Receivables (net of allowance):
Taxes 2,009,248 - 2,009,248 20,153 81,746
Customer accounts 534,388 2,370,119 2,904,507 - -
Other 14,909 - 14,909 24 -
Accrued interest 21,555 16,111 37,666 - 227
Due from other governments 1,219,004 - 1,219,004 8,250 -
Prepaid items 149,386 42,595 191,981 316 -
Notes receivable 285,364 - 285,364 - -
Working capital deposit - 389,080 389,080 - -
Restricted cash and cash equivalents - 5,388,762 5,388,762 - -
Capital assets:
Nondepreciable 36,239,405 31,468,921 67,708,326 6,821,433 -
Depreciable, net 65,906,390 29,919,067 95,825,457 409,911 -
Total capital assets, net 102,145,795 61,387,988 163,533,783 7,231,344 -
Total assets 128,978,587 79,249,189 208,227,776 12,919,726 314,017
DEFERRED OUTFLOWS OF RESOURCES
Deferred loss on issuance of refunding bonds 388,180 971,853 1,360,033 14,110 -
Deferred outflow of resources for pensions 4,436,319 492,924 4,929,243 - -
Total deferred outflows of resources 4,824,499 1,464,777 6,289,276 14,110 -
Total assets and deferred outflows of resources 133,803,086 80,713,966 214,517,052 12,933,836 314,017
LIABILITIES
Accounts payable 1,879,092 1,232,320 3,111,412 256,037 -
Accrued liabilities 607,306 111,998 719,304 - -
Retainage payable 475,286 38,812 514,098 21,650 -
Accrued interest 95,296 99,867 195,163 392,955 -
Customer deposits 131 506,391 506,522 - -
Due to other governments 135,296 - 135,296 - -
Noncurrent liabilities:
Due within on year 2,296,529 2,173,114 4,469,643 795,000 -
Due in more than one year 46,766,883 36,263,720 83,030,603 23,725,407 -
Total liabilities 52,255,819 40,426,222 92,682,041 25,191,049 -
DEFERRED INFLOWS OF RESOURCES
Deferred gain on issuance of refunding bonds - 42,452 42,452 - -
Deferred inflow of resources for pensions 849,565 94,396 943,961 - -
Total deferred inflows of resources 849,565 136,848 986,413 - -
Total liabilities and deferred inflows of resources 53,105,384 40,563,070 93,668,454 25,191,049 -
NET POSITION
Net investment in capital assets 72,631,192 29,305,429 101,936,621 568,443)( -
Restricted for:
Public education and government channels 667,271 667,271
Debt service 115,150 - 115,150 1,866,944 -
Municipal court operations 212,053 - 212,053 - -
Economic development - - - - 314,017
Public safety operations 177,091 - 177,091 - -
Community development - nonexpendable 31,869 - 31,869 - -
Capital projects 1,330,878 260,703 1,591,581 15,394 -
Unrestricted 5,532,198 10,584,764 16,116,962 13,571,108)( -
Total net position 80,697,702$ 40,150,896$ 120,848,598$ 12,257,213)$( 314,017$
Primary Government Component Units
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET POSITION
SEPTEMBER 30, 2017
The accompanying notes are an integral
part of these financial statements.18
Functions/Programs Expenses
Charges for
Services
Operating
Grants and
Contributions
Capital Grants
and
Contributions
Primary government:
Governmental activities:
General government 5,128,399$ 1,004,968$ 13,125$ -$
Public safety 15,861,719 35,007 2,502,535 219,808
Public works 4,429,664 242,184 - -
Community development 1,495,001 1,036,741 - -
Parks and recreation 3,459,053 387,915 72,588 -
Library 1,215,683 30,600 2,777 -
Interest on long-term debt 953,146 - - -
Total governmental activities 32,542,665 2,737,415 2,591,025 219,808
Business-type activities:
Water and sewer 9,588,496 12,295,441 - -
Total business-type activities 9,588,496 12,295,441 - -
Total primary government 42,131,161 15,032,856 2,591,025 219,808
Component units:
West Ranch Management District 1,415,669 - - -
Friendswood Downtown EDC 19,959 - - -
Total component units 1,435,628$ -$ -$ -$
General revenues:
Taxes:
Property
Sales and alcohol
Franchise
Interest
Gain on disposal of capital assets
Miscellaneous
Transfers
Total general revenues and transfers
Change in net position
Net position - beginning
Net position - ending
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2017
Program Revenue
The accompanying notes are an integral
part of these financial statements.19
Governmental
Activities
Business-type
Activities Total
West Ranch
Management
District
Friendswood
Downtown
EDC
4,110,306)$( -$ 4,110,306)$( -$ -$
13,104,369)( - 13,104,369)( - -
4,187,480)( - 4,187,480)( - -
458,260)( - 458,260)( - -
2,998,550)( - 2,998,550)( - -
1,182,306)( - 1,182,306)( - -
953,146)( - 953,146)( - -
26,994,417)( - 26,994,417)( - -
- 2,706,945 2,706,945 - -
- 2,706,945 2,706,945 - -
26,994,417)( 2,706,945 24,287,472)( - -
1,415,669)( -
- 19,959)(
1,415,669)( 19,959)(
17,270,647 - 17,270,647 2,178,577 -
6,482,367 - 6,482,367 - 333,277
1,661,654 - 1,661,654 - -
187,001 141,978 328,979 8,934 699
25,999 - 25,999 - -
131,639 - 131,639 - -
1,358,744 1,358,744)( - - -
27,118,051 1,216,766)( 25,901,285 2,187,511 333,976
123,634 1,490,179 1,613,813 771,842 314,017
80,574,068 38,660,717 119,234,785 13,029,055)( -
80,697,702$ 40,150,896$ 120,848,598$ 12,257,213)$( 314,017$
Component Units
Net (Expense) Revenue and Changes in Net Position
Primary Government
20
Other Total
Bond Governmental Governmental
General Construction Funds Funds
ASSETS
Cash and cash equivalents 6,050,049 $ 7,247,125$ 753,828$ 14,051,002$
Investments 7,198,472 - 939,250 8,137,722
Receivables, net of allowance
Taxes receivable 1,715,312 - 293,936 2,009,248
Customer accounts 531,903 - 2,485 534,388
Other receivables 11,336 - 3,573 14,909
Accrued interest 18,762 - 2,306 21,068
Due from other funds 285,543 - - 285,543
Due from other governments 1,004,717 - 214,287 1,219,004
Notes receivable 285,364 - - 285,364
Prepaids and other assets 149,386 - - 149,386
Total assets 17,250,844 7,247,125 2,209,665 26,707,634
LIABILITIES
Accounts payable 1,632,119 193,444 53,529 1,879,092
Accrued liabilities 607,306 - - 607,306
Due to other governments 135,296 - - 135,296
Customer deposits 131 - - 131
Retainage payable 74,504 400,782 - 475,286
Due to other funds - - 285,543 285,543
Total liabilities 2,449,356 594,226 339,072 3,382,654
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues 1,258,731 - 26,764 1,285,495
Total deferred inflows of resources 1,258,731 - 26,764 1,285,495
FUND BALANCES
Nonspendable:
Prepaid items 149,386 - - 149,386
Notes receivable 285,364 - - 285,364
Permanent fund - - 31,869 31,869
Restricted for:
Public education and government
channels 667,271 - - 667,271
Debt service - - 91,938 91,938
Municipal court operations - - 212,053 212,053
Public safety operations - - 177,091 177,091
Capital projects - 6,652,899 1,330,878 7,983,777
Assigned for:
Purchases on order 1,518,849 - - 1,518,849
Capital projects 374,848 - - 374,848
Mud Gully detention project 1,000,000 - - 1,000,000
Unassigned 9,547,039 - - 9,547,039
Total fund balances 13,542,757 6,652,899 1,843,829 22,039,485
Total liabilities, deferred inflows of
resources and fund balances 17,250,844$ 7,247,125$ 2,209,665$ 26,707,634$
CITY OF FRIENDSWOOD, TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2017
The accompanying notes are an integral
part of these financial statements.21
Total fund balances - governmental funds 22,039,485$
Capital assets used in governmental activities are not current financial resources and
therefore are not reported in the governmental funds balance sheet.101,352,285
Interest payable on long term debt does not require current financial resources;
therefore, it is not reported as a liability in the governmental funds balance sheet.95,296)(
An internal service fund is used by management to charge the cost of certain
activities,such as fleet management to individual funds.The assets and liabilities of
the internal service fund are included in the governmental activities in the statement
of net position.1,204,211
Revenues earned but not available within sixty days of the year-end are not
recognized as revenue on the fund financial statements.1,285,495
Long-term liabilities are not due and payable in the current period and therefore are
not reported in the fund financial statements.These long-term liabilities at year end
consists of:
Bonds payable 33,320,000)(
Premiums on issuance 2,747,806)(
Capital leases payable 668,284)(
Net pension liability 10,800,848)(
Net OPEB obligation 807,232)(
Compensated absences 719,242)(
Deferred inflows and outflows of resources related to pensions are reported in
conjunction with the net pension liability and are not reported in the City's fund
financial statements.3,586,754
Deferred losses on issuances of refunding bonds are recorded s deferred outflows of
resources in the statement of net position.This is the difference between the
reacquisition price and the net carrying amount of refunded bonds,net of
amortization.388,180
Net position of governmental activities 80,697,702$
SEPTEMBER 30, 2017
Amounts reported for governmental activities in the statement of net position are
different because:
CITY OF FRIENDSWOOD, TEXAS
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
The accompanying notes are an integral
part of these financial statements.22
Other Total
Bond Governmental Governmental
General Construction Funds Funds
REVENUES
Property taxes 14,672,877$ -$ 3,692,693$ 18,365,570$
Sales and alcohol taxes 5,482,536 - - 5,482,536
Franchise taxes 1,661,654 - - 1,661,654
Fines and forfeitures 994,051 - 29,505 1,023,556
Permits and fees 1,581,700 - 126,657 1,708,357
Intergovernmental 1,471,578 - 292,396 1,763,974
Investment earnings 99,174 74,070 10,883 184,127
Donations 203,384 - 230,780 434,164
Miscellaneous 165,619 - - 165,619
Total revenues 26,332,573 74,070 4,382,914 30,789,557
EXPENDITURES
Current:
General government 4,954,518 - 21,408 4,975,926
Public safety 14,489,105 - 262,276 14,751,381
Public works 2,160,152 - - 2,160,152
Community development 893,663 - - 893,663
Parks and recreation 3,339,864 - - 3,339,864
Library 1,172,245 - - 1,172,245
Debt service:
Principal - - 1,813,130 1,813,130
Interest and other - 95,404 1,075,554 1,170,958
Capital outlay 1,677,667 6,725,391 26,142 8,429,200
Total expenditures 28,687,214 6,820,795 3,198,510 38,706,519
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 2,354,641)( 6,746,725)( 1,184,404 7,916,962)(
OTHER FINANCING SOURCES (USES)
Issuance of capital-related debt - 5,605,000 - 5,605,000
Premium on bond issuance - 342,404 92,670 435,074
Insurance recoveries 25,999 - - 25,999
Transfers in 1,358,744 5,655 - 1,364,399
Transfers out 5,655)( - - 5,655)(
Sale of capital assets 2,757 - 10,000 12,757
Issuance of capital lease 756,006 - - 756,006
Total other financing sources and uses 2,137,851 5,953,059 102,670 8,193,580
NET CHANGE IN FUND BALANCES 216,790)( 793,666)( 1,287,074 276,618
FUND BALANCES, BEGINNING 13,759,547 7,446,565 556,755 21,762,867
FUND BALANCES, ENDING 13,542,757$ 6,652,899$ 1,843,829$ 22,039,485$
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2017
The accompanying notes are an integral
part of these financial statements.23
Net change in fund balances - total governmental funds 276,618$
Governmental funds report capital outlays as expenditures.However,in the statement of activities,
the cost of those assets is allocated over their estimated useful lives and reported as depreciation
expense. This is the amount of capital outlays reported in the current period.8,655,169
Depreciation is not recognized as an expenditure in governmental funds since it does not require the
use of current financial resources.The effect of recording current year depreciation is to decrease
net position.3,542,705)(
The internal service fund is used by management to charge the cost of fleet management to
individual funds.The change in net position of the internal service fund is included in the
governmental activities in the statement of net position.134,791)(
The issuance of long-term debt (e.g.,bonds,leases)provides current financial resources to
governmental funds,while the repayment of the principal of long-term debt consumes the current
financial resources of governmental funds.Neither transaction,however,has any effect on net
position.Also,governmental funds report the premiums and similar items when debt is first issued,
whereas these amounts are deferred and amortized in the statement of activities.This amount is the
net effect of these differences in the treatment of long-term debt and related items.
Issuance of bonds 5,605,000)(
Premium on issuance of bonds 435,074)(
Issuance of capital lease 756,006)(
Repayment of principal on long-term debt 1,813,130
Amortization of:
Premium on bond issuance 196,073
Loss on refunding 42,145)(
Current year changes in certain long-term liabilities do not require the use of current financial
resources and, therefore, are not reported as expenditures in governmental funds.
Compensated absences 105,930)(
Net pension liability 741,219)(
Net OPEB obligation 41,475)(
Interest payable on long-term debt is accrued in the government-wide financial statements,whereas
in the fund financial statements, interest expenditures are reported when due. 63,884
Revenues from property taxes and fines that do not provide current financial resources are not
reported as revenues in the funds.523,105
Change in net position of governmental activities 123,634$
FOR THE YEAR ENDED SEPTEMBER 30, 2017
Amounts reported for governmental activities in the Statement of Activities are different because:
CITY OF FRIENDSWOOD, TEXAS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
TO THE STATEMENT OF ACTIVITIES
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
The accompanying notes are an integral
part of these financial statements.24
Business-Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
ASSETS
Current assets
Cash and cash equivalents 4,224,953 $ 182,508 $
Investments 5,429,581 227,706
Accounts receivable, net of allowance
Customer accounts 2,370,119 -
Accrued interest 16,111 487
Prepaids and other assets 42,595 -
Restricted cash and cash equivalents 5,388,762 -
Total current assets 17,472,121 410,701
Noncurrent assets
Working capital deposit 389,080 -
Capital assets
Land 319,473 -
Construction in progress 11,432,753 -
Water rights 19,716,695 -
Buildings and improvements 589,624 -
Machinery and equipment 1,213,530 2,971,978
Water and sewer system 63,267,248 -
Accumulated depreciation 35,151,335)( 2,178,468)(
Net capital assets 61,387,988 793,510
Total noncurrent assets 61,777,068 793,510
Total assets 79,249,189 1,204,211
DEFERRED OUTFLOWS OF RESOURCES
Deferred loss on issuance of refunding bonds 971,853 -
Deferred outflow of resources for pensions 492,924 -
Total deferred outflows of resources 1,464,777 -
Total assets and deferred outflows of resources 80,713,966 1,204,211
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET POSITION - PROPRIETARY FUNDS
SEPTEMBER 30, 2017
25
Business-Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
LIABILITIES
Current liabilities
Accounts payable 1,232,320 $ -$
Accrued liabilities 111,998 -
Accrued interest 99,867 -
Customer deposits 506,391 -
Retainage payable 38,812 -
Compensated absences 13,114 -
Bonds and other long-term debt payable 2,160,000 -
Total current liabilities 4,162,502 -
Noncurrent liabilities
Compensated absences 52,457 -
Net pension liability 1,200,095 -
Net OPEB obligation 139,306 -
Bonds and other long-term debt payable 34,871,862 -
Total noncurrent liabilities 36,263,720 -
Total liabilities 40,426,222 -
DEFERRED INFLOWS OF RESOURCES
Deferred gain on issuance of refunding bonds 42,452 -
Deferred inflow of resources for pensions 94,396 -
Total deferred inflows of resources 136,848 -
Total liabilities and deferred inflows of resources 40,563,070 -
NET POSITION
Net investment in capital assets 29,305,429 793,510
Restricted for capital projects 260,703 -
Unrestricted 10,584,764 410,701
Total net position 40,150,896$ 1,204,211$
SEPTEMBER 30, 2017
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET POSITION - PROPRIETARY FUNDS
The accompanying notes are an integral
part of these financial statements.26
Business-Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
OPERATING REVENUES
Charges for services 12,295,441$ 375,718$
Total operating revenues 12,295,441 375,718
OPERATING EXPENSES
Personnel services 2,117,344 -
Sewer operations 1,594,805 -
Water purchases 1,539,452 -
Repairs and maintenance 676,143 -
Supplies 133,402 -
Other services and charges 850,529 -
Depreciation 1,590,543 466,646
Total operating expenses 8,502,218 466,646
Operating income (loss)3,793,223 90,928)(
NONOPERATING REVENUES (EXPENSES)
Investment income 141,978 2,874
Gain (loss) on disposal of capital assets - 46,737)(
Interest expense 1,086,278)( -
Total nonoperating revenues (expenses)944,300)( 43,863)(
Income (loss) before transfers 2,848,923 134,791)(
Transfers out 1,358,744)( -
Change in net position 1,490,179 134,791)(
Net position, beginning 38,660,717 1,339,002
Net position, ending 40,150,896$ 1,204,211$
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2017
The accompanying notes are an integral
part of these financial statements.27
Business-Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
OPERATING ACTIVITIES
Cash received from customers 11,893,187$ -$
Receipts from interfund charges for fleet management - 375,718
Cash payments to suppliers for goods and services 1,976,915)( 1,052)(
Cash payments to employees for services 4,802,483)( -
Net cash provided by operating activities 5,113,789 374,666
NONCAPITAL FINANCING ACTIVITIES
Transfers to other funds 1,358,744)( -
Net cash used by noncapital
financing activities 1,358,744)( -
CAPITAL AND RELATED FINANCING ACTIVITIES
Acquisition and construction of capital assets 2,533,729)( 260,542)(
Repayment of debt 2,100,000)( -
Interest paid on debt 1,232,025)( -
Net cash used in capital and related
financing activities 5,865,754)( 260,542)(
INVESTING ACTIVITIES
Purchase of investments 2,080,591)( 255,738)(
Proceeds from sale of investments 781,174 32,849
Investment income 125,867 2,387
Net cash used by investing activities 1,173,550)( 220,502)(
Net change in cash and cash equivalents 3,284,259)( 106,378)(
CASH AND CASH EQUIVALENTS, BEGINNING 12,897,974 288,886
CASH AND CASH EQUIVALENTS, ENDING 9,613,715$ 182,508$
RECONCILIATION OF TOTAL CASH AND CASH EQUIVALENTS
Current assets - cash and cash equivalents 4,224,953$ 182,508$
Restricted assets - cash and cash equivalents 5,388,762 -
Total cash and cash equivalents 9,613,715$ 182,508$
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2017
28
Business-Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
Reconciliation of operating income (loss)
to net cash provided by operating activities
Operating income (loss)3,793,223$ 90,928)$(
Adjustments to reconcile operating income (loss)
to net cash provided by operating activities
Depreciation 1,590,543 466,646
Change in assets, deferred inflows and outflows, and liabilities
Decrease (increase) in customer receivable 446,764)( -
Decrease (increase) in prepaids and other assets 12,404 -
Decrease (increase) in deferred outflow for pensions 62,028 -
Increase (decrease) in accounts payable 20,556)( 1,052)(
Increase (decrease) in other liabilities 45,582 -
Increase (decrease) in customer deposits 44,510 -
Increase (decrease) deferred inflows for pensions 34,355)( -
Increase (decrease) in net OPEB obligation 5,953 -
Increase (decrease) in net pension liability 54,686 -
Increase (decrease) in compensated absences 6,535 -
Net cash provided by operating activities 5,113,789$ 374,666$
FOR THE YEAR ENDED SEPTEMBER 30, 2017
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
The accompanying notes are an integral
part of these financial statements.29
30
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Friendswood, Texas (“the City”) was incorporated on October 15, 1960. The City
charter provides for a City County-City manager form of government. The Mayor and six
Council members are elected from the City at large serving three-year terms. The City Council is
the principal legislative body of the City. The City Manager is appointed by a majority vote of
the City Council and is responsible to the Council for the administration of all the affairs of the
City. The City Manager is responsible for law enforcement, appointment and removal of
department directors and employees, supervision and control of all City departments, and
preparation of the annual budget. The 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.
Financial Reporting Entity
The City is an independent political subdivision of the State of Texas governed by an elected six-
member Council and Mayor and is considered a primary government. As required by generally
accepted accounting principles, these financial statements have been prepared based on
considerations regarding the potential for inclusion of other entities, organizations, or functions
as part of the City’s financial reporting entity. Based on these considerations, the West Ranch
Management District 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.
31
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.
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 th e 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.
Basis of Presentation
The government-wide financial statements (i.e., the statement of net position and the statement
of activities) report information on all activities of the primary government and its component
unit. For the most part, the effect of interfund activity has been removed from these statements.
Governmental activities, which normally are supported by taxes and intergovernmental revenue,
are reported separately from business-type activities, which rely to a significant extent on fees
and charges for support. Likewise, the primary governmental is reported separately from certain
legally separate component units for which the primary government is financial accountable.
32
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.
Measurement Focus/Basis of Accounting
The government-wide financial statements are reported using the economic resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as
soon as they are both measurable and available. Revenues are considered to be available when
they are collectible within the current period or soon enough thereafter to pay liabilities of the
current period. For this purpose, the government considered revenue to be available if collected
within 60 days of the end of the current fiscal period. Expenditures generally are recorded when
a liability is incurred, as under accrual accounting. However, debt service expenditures, as well
as expenditures related to compensated absences and claims and judgements, are recorded only
when payment is due.
Property taxes, franchise taxes, sales taxes, and interest associated with the current fiscal period
are all considered to be susceptible to accrual and, accordingly, have been recognized as revenue
of the current fiscal period. All of revenue items are considered to be measureable and available
only when cash is received by the City.
The City reports the following major governmental funds:
The General Fund is the City’s primary operating fund. It accounts for all financial
resources of the general government, except those required to be accounted for in another
fund.
The 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 Pe rmanent
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.
33
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.
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 deposit s 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.
34
Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at
the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current
portion of interfund loans”). All other outstanding balances between funds are reported as “due
to/from other funds.” Any residual balances outstanding between the governmental activities and
business-type activities are reported in the government-wide financial statements as “internal
balances.”
All trade and property tax receivables are shown net of an allowance for uncollectible accounts.
Management estimates an allowance for trade accounts receivable based on past experience,
historical losses, and other pertinent factors.
The City’s property taxes are levied annually in October on the basis of the Appraisal District’s
assessed values as of January 1 of that calendar year. Appraised values are established by the
Appraisal District at market value and assessed at 100% of appraised value less exemptions. The
City’s property taxes are billed and collected by Galveston County. Such taxes are applicable to
the fiscal year in which they are levied and become delinquent with an enforceable lien on
property on February 1 of the subsequent calendar year.
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 $0.5460 per $100 of
assessed valuation that were prorated between operations and debt service in the amounts of
$0.4620 and $0.0840, respectively. The resulting tax levies were approximately $14.3 and $2.7
million for operations and debt service, respectively, based on a total taxable valuation of
approximately $3.1 billion for the 2016 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, 2016, the District levied an ad valorem debt service tax at the rate of $0.1000
per $100 of assessed valuation, which resulted in tax levy of $394,477 on the taxable valuation
of approximately $330.4 million for the 2016 tax year.
Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items in both government-wide and fund financial statements. The City
applies the consumption method in accounting for prepaid items in the governmental funds.
Restricted Assets
Certain proceeds of the City’s enterprise fund 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.
35
Contract with West Ranch Management District
The District approved a contract with the City effective August 15, 2005, as amended. Under the
terms of the contract, the District is to pay for construction of water distribution, sanitary sewer,
drainage, transportation, education and recreation facilities to serve the District.
The District shall be the owner of the system until the system is completed, approved by the City
and conveyed to it, at which time ownership will vest in the City. The District will own and
operate these facilities to serve the District. Pursuant to the contract, the District shall have a
security interest therein until all bonds issued by the District are retired.
Capital Assets
Capital assets, which include property, plant, equipment, infrastructure, and water rights, are
reported in the applicable governmental or business-type activities columns in the government-
wide financial statements. The City defines capital assets as assets with an initial, individual cost
of more than $5,000 and an estimated historical cost if actual historical cost is not available.
Donated capital assets are recorded at acquisition cost, which is the price that would be paid to
acquire an asset with equivalent service potential at the acquisition date. The City’s water rights
have an indefinite life.
The cost of normal maintenance and repairs that do not add to the value of the asset or materially
extend assets’ lives are not capitalized.
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.
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.
36
• Pension contributions after measurement date – These contributions are deferred and
recognized in the following fiscal year.
• Difference in projected and actual earnings on pension assets – This difference is deferred
and amortized over a closed five year period.
• Changes in actuarial assumptions related to pensions – These changes are deferred and
recognized over the estimated average remaining lives of all members determined as of the
measurement date
In addition to liabilities, the statement of financial position and/or balance sheet will sometimes
report a separate section for deferred inflows of resources. This separate financial statement
element, deferred inflows of resources, represents an acquisition of net position that applies to a
future period(s) and so will not be recognized as an inflow of resources (revenue) until that time.
The City has two types of items that qualify for reporting in this category under the full accrual
basis of accounting. The first, the difference in expected and actual pension experience, is deferred
and recognized over the estimated average remaining lives of all members determined as of the
measurement date. The second, deferred gains on refunding debt, 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.
The City also has one item that qualifies for reporting in this category under the modified accrual
basis of accounting. This item, unavailable revenues, represents revenues that are not considered
available because they are not collected by the City within the 60-day accrual period.
Compensated Absences
The City’s employees earn vacation and sick leave, which may either be taken or accumulated,
up to certain amounts, until paid upon resignation or retirement. All vacation and sick leave pay
is accrued when incurred in the government-wide and proprietary fund financial statements. A
liability for these amounts is reported in the governmental funds only if they have matured, for
example, as a result of employee resignations and retirements.
Long-Term Obligations
In the government-wide financial statements and proprietary fund types in the fund financial
statements, long-term debt and other long-term obligations are reported as liabilities in the
applicable governmental activities, business-type activities, or proprietary fund type statement of
net position. Bond premiums and discounts are deferred and amortized over the life of the bonds
using the straight-line method, which approximates the effective interest method. Bonds payable
are reported net of the applicable bond premium or discount. Bond issuance cost are expenses in
the period incurred.
37
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs during the current period. The face amount of debt
issued is reported as other financial sources. Premiums received in debt issuances are reported as
other financial sources while discounts on debt issuances are reported as other financing uses.
Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as
debt service expenditures.
Pensions
For purposes of measuring the net pension liability, pension related deferred outflows and inflows
of resources, and pension expense, City specific information about its Fiduciary Net Position in the
Texas Municipal Retirement System (TMRS) and additions to/deductions from 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.
Fund Balances and 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.
Governmental Fund Financial Statements:
The City classifies governmental fund balances as follows:
Non-spendable – includes amounts that cannot be spent because they are either not in
spendable form, or, for legal or contractual reasons, must be kept intact. This classification
includes prepaid items and the fund balance of the City’s permanent fund.
Restricted – includes fund balance amounts that are constrained for specific purposes which
are imposed by providers, such as creditors or amounts restricted due to constitutional
provision or enabling legislation. This classification includes retirement of long-term debt,
construction programs, City ordinances, and other federal and state grants.
38
Committed – includes fund balance amounts that are constrained for specific purposes that
are internally imposed by the City through formal action in an open meeting of the highest
level of decision making authority. Committed fund balance is reported pursuant to
resolution passes by the City Council.
Assigned – includes fund balance amounts that are self-imposed by the City to be used for
particular purpose. Fund balance can be assigned by the City Council or the City Manager,
pursuant to the City’s fund balance policy. At September 30, 2017, 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 operatin g
expenditures.
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.
II. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
For the year ended September 30, 2017, expenditures exceeded appropriations in the
Friendswood Volunteer Fire Department – fire administration and the Fire Marshall – storm
departments (the legal level of budgetary control) within the public safety functio n of the general
fund by $30 and $1,236,783, respectively. These overages were funded with existing fund
balance. Expenditures exceeded appropriations in capital outlay and debt service of the bond
construction fund, public safety of the police investigation fund and public safety in the fire/ems
donations fund by $425,283, $95,404, $5,325 and $164,222, respectively. These overages were
funded by existing fund balance.
39
III. DEPOSITS AND INVESTMENTS
Under provisions of state and local statutes, the City’s investment policies, and provisions of the
City’s depository contracts with an area financial institution, the City is authorized to place
available deposits and investments in the following:
1. Obligations of the U.S., it’s agencies and instrumentalities;
2. Certificates of Deposit issued by state and national banks or savings or loan associations
domiciled in this state that are guaranteed or incurred by the Federal Deposit Insurance
Corporation or collateralized in accordance with Section 2256.010, the Texas Government
Code, in face amounts not to exceed $100.000;
3. No-load money market mutual funds; and
4. TexPool, Lone State Investment Pool and Texas CLASS.
The City Council has adopted a written investment policy regarding the investments of its funds
as defined by the Public Funds Investment Act of 1995 (Chapter 2256, Texas Government
Code). The investments of the City are in compliance with the Council’s investment policies.
The City did not have any derivative investment products during the current year. All significant
legal and contractual provisions for investments were complied with during the year.
As of September 30, 2017, the City held the following investments.
Weighted
Reported Average
Value of Maturity
Investments (Days)
Investment pools:
TexPool 2,469,699$ 37
Texas CLASS 16,801,819 53
Total investment pools 19,271,518
Debt securities:
Federal Farm Credit Bonds 2,989,259 449
Federal Home Loan Bank Bonds 996,417 327
Federal Home Loan Mortgage Corporation 5,471,602 405
Federal National Mortgage Association 4,466,536 600
Total debt securities 13,923,814
Total investments 33,195,332$
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 i dentical
assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant
unobservable inputs.
40
The City has the following recurring fair value measurements as of September 30, 2017:
• Debt securities of $5,964,803 were valued using an option-adjusted discounted cash flow
model (Level 2 inputs).
• Debt securities of $6,962,594 were valued using a documented trade history in exact
security pricing model (Level 2 inputs).
• Debt securities of $996,417 were valued using a documented trade history in exact security
pricing model (Level 1 inputs).
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, 2017, 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.
41
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, 2017, were rated as follows:
Investment Type Rating Rating Agency
Texas CLASS AAAm Standard & Poor's
TexPool AAAm Standard & Poor's
Debt Securities:
Federal Home Loan Mortgage Corporation Aaa Moody's Investor Service
Federal Home Loan Bank Aaa Moody's Investor Service
Federal Farm Credit Bank Aaa Moody's Investor Service
Federal National Mortgage Association Aaa Moody's Investor Service
IV. ACCOUNTS RECEIVABLE AND DEFERRED INFLOWS OF RESOURCES
Receivables as of September 30, 2017 for the City’s individual major funds and nonmajor funds
in the aggregate and the Internal Service Fund including the applicable allowances for
uncollectible accounts, are as follows:
Water and
General Nonmajor Sewer Total
Receivables:
Property taxes 268,942$ 40,231$ -$ 309,173$
Penalties and interest 148,002 20,922 - 168,924
Sales taxes 980,951 245,238 - 1,226,189
Franchise taxes 402,340 - - 402,340
Customer accounts 241,403 2,485 2,649,278 2,893,166
Court fines 1,415,770 - - 1,415,770
Other 11,336 3,573 - 14,909
Gross receivables 3,468,744 312,449 2,649,278 6,430,471
Less: allowance for
uncollectibles 1,210,193)( 12,455)( 279,159)( 1,501,807)(
Net receivables 2,258,551$ 299,994$ 2,370,119$ 4,928,664$
Governmental Funds Proprietary
42
Governmental funds reported deferred inflows of resources in connection with receivables for
revenue that is not considered to be available to liquidate liabilities of the current period. At the
end of the current fiscal year, the various components of def erred inflows of resources for
unavailable revenues reported in the governmental funds were as follows:
Deferred Inflows
of Resources
General Fund
Delinquent property taxes 48,886$
Property tax penalties and interest 117,857
Court fines 269,523
Grants 809,352
Miscellaneous 13,113
Total General Fund 1,258,731
Nonmajor funds
Delinquent property taxes 6,551
Property tax penalties and interest 16,661
Court fines 3,552
Total nonmajor funds 26,764
Total governmental funds 1,285,495$
V. NOTES RECEIVABLE
On June 1, 2015, The City Council approved the purchase of a fire truck for the Friendswood
Volunteer Fire Department for $483,364. This purchase is supported with a repayment
agreement whereby the Friendswood Volunteer Fire Department where the City would be repaid
$72,000 per year for the first six years, with a final payment of $65,000. The City set an initial
interest rate of 1% with an option to increase should interest rates rise significantly. The balance
of the note receivable at September 30, 2017 is $285,364.
43
VI. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2017 was as follows:
Beginning Reclassifications/Ending
Governmental Activities Balance Increases Decreases Balance
Capital assets not being depreciated
Land 25,805,161$ -$ -$ 25,805,161$
Construction in progress 16,535,851 8,119,485 14,221,092)( 10,434,244
Total capital assets not
being depreciated 42,341,012 8,119,485 14,221,092)( 36,239,405
Capital assets being depreciated
Buildings and improvements 41,250,535 14,221,092 - 55,471,627
Machinery and equipment 15,573,146 534,529 520,250)( 15,587,425
Infrastructure 68,751,444 - - 68,751,444
Total capital assets
being depreciated 125,575,125 14,755,621 520,250)( 139,810,496
Less accumulated depreciation
Buildings and improvements 16,383,795)( 1,389,255)( - 17,773,050)(
Machinery and equipment 10,748,802)( 1,152,189)( 446,050 11,454,941)(
Infrastructure 43,208,209)( 1,467,906)( - 44,676,115)(
Total accumulated
depreciation 70,340,806)( 4,009,350)( 446,050 73,904,106)(
Total capital assets
being depreciation, net 55,234,319 10,746,271 74,200)( 65,906,390
Government activities
capital assets, net 97,575,331$ 18,865,756$ 14,295,292)$( 102,145,795$
44
Beginning Reclassifications/Ending
Business-type Activities Balance Increases Decreases Balance
Capital assets not being depreciated
Land 319,473$ -$ -$ 319,473$
Water rights 19,716,695 - - 19,716,695
Construction in progress 9,107,042 2,325,711 - 11,432,753
Total capital assets not
being depreciated 29,143,210 2,325,711 - 31,468,921
Capital assets being depreciated
Buildings and improvements 589,624 - - 589,624
Machinery and equipment 1,200,796 12,734 - 1,213,530
Water and sewer system 63,267,248 - - 63,267,248
Total capital assets
being depreciated 65,057,668 12,734 - 65,070,402
Less accumulated depreciation:
Buildings and improvements 236,091)( 17,852)( - 253,943)(
Machinery equipment 908,788)( 47,954)( - 956,742)(
Water and sewer system 32,415,913)( 1,524,737)( - 33,940,650)(
Total accumulation
deprecation 33,560,792)( 1,590,543)( - 35,151,335)(
Total capital assets
being depreciated, net 31,496,876 1,577,809)( - 29,919,067
Business-type activities
capital assets, net 60,640,086$ 747,902$ -$ 61,387,988$
Beginning Reclassifications/Ending
Component Unit Balance Increases Decreases Balance
Capital assets not being depreciated
Land 6,006,988$ 814,445$ -$ 6,821,433$
Capital assets being depreciated
Water production and
distribution facilities 483,467 - - 483,467
Less accumulated deprecation:
Water production and
distribution facilities 62,811)( 10,745)( - 73,556)(
Total capital assets
being depreciated, net 420,656 10,745)( - 409,911
Component unit
capital assets, net 6,427,644$ 803,700$ -$ 7,231,344$
45
Depreciation expense was charged to functions/programs of the primary government as follows:
Governmental activities
General government 199,153$
Public safety 583,700
Public works 2,191,690
Community services 568,161
Capital assets held by the City's internal service fund are
charged to the various functions based on their usage 466,646
Total deprecation expense - governmental activities 4,009,350$
Business-type activities
Water and sewer 1,590,543$
Total deprecation expense - business-type activities 1,590,543$
VII. INTERFUND BALANCES AND ACTIVITIES
Interfund balances at September 30, 2017 consisted of the following individual fund balances
that are scheduled to be repaid within one year:
Due from other funds Due to other funds Amount Purpose
General Fund Nonmajor governmental 285,543$ Balance of fund expenditures
funded by the General Fund,
pending reimbursements.
During the year ended September 30, 2017, transfers between funds occurred as described
below:
Transfer In Transfers Out Amount Purpose
General Fund Water and Sewer 1,358,744$ Budgeted annual transfer for
indirect water and sewer costs
by the General Fund.
Bond Construction Fund General Fund 5,655 To fund Bond Construction
Fund expenditures.
1,364,399$
46
VIII. LONG-TERM DEBT
The City issues a variety of long-term debt instruments in order to acquire and/or construct major
capital facilities and equipment for governmental and business-type activities. These instruments
include general obligation bonds, certificates of obligation, revenue bonds, and capital leases.
These debt obligations are secured by either future tax revenue, water and sewer system revenue,
or liens on property and equipment. Debt obligations that are intended to be repaid from water
and sewer system revenue have been recorded as business-type activities. All other long-term
obligations of the City are considered to be governmental type activities.
Federal Arbitrage
General obligation bonds, combination tax and revenue bonds, and certificates of obligation are
subject to the provisions of the Internal Revenue Code of 1986 related to arbitrage and interest
income tax regulations under those provisions.
Bonds Payable and Certificates of Obligation
The following schedule summarizes the terms of the City’s general obligation bonds,
combination tax and revenue bonds, and certificates of obligation outstanding and their
corresponding allocations to the governmental and business-type activities at September 30,
2017:
Final Governmental Business-Type
Maturity Interest Rate Activities Activities
General Obligation Bonds
2010A Permanent Improvement 3,460,000 $ 2035 1.0% - 4.75%2,735,000$ -$
2010B Permanent Improvement
and Refunding 5,460,000 2021 1.0% - 4.0%- 2,370,000
2012 General Obligation Refunding 8,890,000 2026 2.0% - 3.5%6,690,000 -
2014 General Obligation Refunding 8,805,000 2028 2.0% - 4.0%2,300,000 5,810,000
2015 General Obligation Refunding 9,595,000 2030 2.0% - 3.0% 8,760,000 -
2016 General Obligation Permanent
Improvement and Refunding 19,095,000 2031 2.0% - 5.0% 7,230,000 10,815,000
2016A General Obligation Refunding 9,765,000 2034 2.0% - 4.0%- 9,365,000
2017 General Obligation Bonds 5,605,000 2031 2.0% - 4.0%5,605,000 -
33,320,000 28,360,000
Revenue Bonds
2016 Waterworks and Sewer System 5,735,000 2036 2.0% - 4.0%- 5,515,000
- 5,515,000
Total 33,320,000$ 33,875,000$
Series and Original Issue Amount
47
Annual debt service requirements for the City’s bonds and certificates of obligation are as
follows:
Year Ending
September 30,Principal Interest Principal Interest Total
2018 1,775,000$ 1,124,344$ 2,160,000$ 1,171,425$ 6,230,769$
2019 1,815,000 1,083,831 2,215,000 1,112,250 6,226,081
2020 1,855,000 1,042,281 2,275,000 1,053,500 6,225,781
2021 1,995,000 991,231 2,335,000 992,850 6,314,081
2022 2,150,000 927,606 1,905,000 935,225 5,917,831
2023-2027 11,840,000 3,534,803 10,555,000 3,668,550 29,598,353
2028-2032 11,345,000 1,150,769 9,525,000 1,397,075 23,417,844
2033-2037 545,000 39,544 2,905,000 173,900 3,663,444
33,320,000$ 9,894,409$ 33,875,000$ 10,504,775$ 87,594,184$
Governmental Activities Business-Type Activities
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, 2017, $9,785,000 of bonds considered defeased are still outstanding.
Obligations Under Capital Leases
The City has entered into capital lease agreements in order to purchase machinery and equipment
for public works, police and fire departments. The assets acquired through these lease
agreements are as follows:
Governmental
Asset:Activities
Machinery and equipment 467,270$
Less: accumulated deprecation 114,133)(
Total 353,137$
The following is a summary of future lease payments due on this machinery and equipment:
Year Ending Lease
September 30, Obligation
2018 272,909$
2019 273,000
2020 74,872
2021 74,872
Total 695,653
Less: interest portion 27,369)(
Obligations under capital leases 668,284$
48
Changes in Long-Term Liabilities
Long-term liability activities of the primary government for the year ended September 30, 2017,
was as follows:
Balance Balance Due
Beginning End of Within One
of Year Increase Decrease Year Year
Governmental activities
General obligation bonds 29,260,000$ 5,605,000$ 1,545,000)$( 33,320,000$ 1,775,000$
Premium on bond issuance 2,508,805 435,074 196,073)( 2,747,806 -
Capital lease obligation 180,408 756,006 268,130)( 668,284 258,006
Net pension liability 10,308,673 4,206,043 3,713,868)( 10,800,848 -
Net OPEB obligation 765,757 71,104 29,629)( 807,232 -
Compensated absences 613,312 703,486 597,556)( 719,242 263,523
Total governmental
activities 43,636,955 11,776,713 6,350,256)( 49,063,412 2,296,529
Business-type activities
Revenue bonds 5,735,000 - 220,000)( 5,515,000 225,000
General obligation bonds 30,240,000 - 1,880,000)( 28,360,000 1,935,000
Premium on bond issuance 3,373,228 - 216,366)( 3,156,862 -
Net pension liability 1,145,409 467,338 412,652)( 1,200,095 -
Net OPEB obligation 133,353 10,205 4,252)( 139,306 -
Compensated absences 59,038 75,914 69,381)( 65,571 13,114
Total business-type activities 40,686,028 553,457 2,802,651)( 38,436,834 2,173,114
Total primary government 84,322,983$ 12,330,170$ 9,152,907)$( 87,500,246$ 4,469,643$
The compensated absences, net pension liability, and net OPEB obligation attributable to the
governmental activities will be liquidated primarily by the General Fund.
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West Ranch Management District
The following schedule summarizes the terms of the West Ranch Management District’s general
obligation bonds at July 31, 2017:
Amounts
Outstanding Interest Range of Callable
Series July 31, 2017 Rates Maturities Dates *
Series 2010 6,185,000$ 3.25% to 5.25%2017 - 2040 September 1, 2020
Road Series 2010A 1,665,000 3.50% to 5.00%2017 - 2040 September 1, 2020
Series 2012A 3,110,000 3.50% to 4.10%2027 - 2040 September 1, 2020
Road Series 2013 1,120,000 2.00% to 3.00%2017 - 2028 September 1, 2021
Series 2013 1,220,000 3.00% to 5.00% 2017 - 2040 September 1, 2021
Road Series 2014 2,140,000 2.00% to 3.75% 2017 - 2040 September 1, 2022
Series 2015 5,655,000 1.30% to 4.125%2017 - 2030 September 1, 2023
Series 2016 2,080,000 3.00% to 4.00%2031 - 2040 September 1, 2024
Refunding Series 2016 1,255,000 2.00% to 4.00%2017 - 2040 September 1, 2024
24,430,000$
* 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:
Year Ending
July 31,Principal Interest Total
2018 795,000$ 945,687$ 1,740,687$
2019 800,000 928,016 1,728,016
2020 830,000 907,460 1,737,460
2021 850,000 883,383 1,733,383
2022 885,000 856,611 1,741,611
2022 - 2027 4,900,000 3,794,099 8,694,099
2028 - 2032 5,450,000 2,726,449 8,176,449
2033 - 2037 5,040,000 1,634,492 6,674,492
2038 - 2041 4,880,000 442,843 5,322,843
24,430,000$ 13,119,040$ 37,549,040$
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.
50
Long-term liability activity of the West Ranch Management District for the year ended July 31,
2017, was as follows:
Balance Balance
Beginning End of Due Within
of Year Increase Decrease Year One Year
Component Unit
General obligation bonds 22,805,000$ 3,335,000$ 1,710,000)$( 24,430,000$ 795,000$
Discount on bonds 416,752)( 39,216)( 25,504 430,464)( -
Premium on bonds - 115,700 4,429)( 111,271 -
Developer advances 40,000 - - 40,000 -
Due to developer 2,667,297 66,666 2,364,363)( 369,600 -
Total component unit 25,095,545$ 3,478,150$ 4,053,288)$( 24,520,407$ 795,000$
During the current year, the District issued $3,335,000 in unlimited tax and refunding bonds,
Series 2016, to reimburse the developer for park and recreation facilities constructed within the
District and to refund $1,285,000 of outstanding Series 2012B bonds. The District refunded the
bonds to reduce total debt service payments over future years by $124,873 and to obtain an
economic gain (difference between the present value of the debt service payments on the old and
new debt) of $103,456. As of year-end the District did not have defeased bonds outstanding.
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.
IX. PLEDGED REVENUES
On February 1, 2016, the City issued $5,735,000 in Waterworks and Sewer System Revenue
Bonds, Series 2016. 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. At September 30, 2017, the remaining
principal on the series 2016 bonds was $5,515,000. Interest and principal payments for the fiscal
year were $184,100 and $220,000, respectively. Water and Sewer revenues for the current year
were $12,295,441. The outstanding revenue bonds have a final maturity of March 1, 2036.
51
X. CONSTRUCTION COMMITMENTS AND ENCUMBRANCES
Construction Commitments
The City has active construction projects as of September 30, 2017. At year end the City’s
commitments with contractors are as follows:
Remaining
Project Commitment
Governmental funds
Street Bond Projects 2,027,564$
Total 2,027,564$
Enterprise funds
Lift Station #23 replacement 99,380$
Blackhawk WWTP 3rd Clarifier 875,320
Total 974,700$
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.
Encumbrances
At year end, the amount of encumbrances expected to be honored upon performance by a vendor
in the next fiscal year were as follows:
General Fund 1,518,849$
Total 1,518,849$
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XI. RESTRICTED ASSETS
The balances of the restricted asset accounts in the enterprise fund are as follows:
Cash and investments:
Customer deposits 506,391$
Construction - 2006 bonds 41,880
Construction - 2009 bonds 332,161
Construction - 2016 bonds 4,247,988
Construction - impact fees 260,342
Total restricted assets 5,388,762$
XII. DEFINED BENEFIT PENSION PLAN
Plan Descriptions
The City participates as one of 872 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 administ ered in accordance with the TMRS Act,
Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agency multiple -employer
retirement system for municipal employees in the State of Texas. The TMRS Act places the
general administration and management of the System with a six-member Board of Trustees.
Although the Governor, with the advice and consent of the Senate, appoints the Board, TMRS is
not fiscally dependent on the State of Texas. TMRS’s defined benefit pension plan is a tax -
qualified plan under Sections 401(a) of the Internal Revenue Code. TMRS issues a publicly
available comprehensive annual financial report (CAFR) that can be obtained at www.tmrs.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 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 grants monetary credits for service rendered of a theoretical amount equa l to two times
what would have been contributed by the employee, with interest. Monetary credits, also known as
the matching ratio, are 200% of the employee’s accumulated contributions and are only payable in
the form of an annuity.
53
Beginning in 1999, the City granted an annually repeating (automatic) basis monetary credit
referred to as an updated service credit (USC) which is a theoretical amount that 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, initiated in 2012, the City provided 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
Employees covered by benefit terms
At the December 31, 2016 valuation and measurement date, the following employees were covered
by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 110
Inactive employees entitled to but not yet receiving benefits 103
Active employees 204
417
Contributions
The contribution rates for employees in TMRS are either 5%, 6%, or 7% of employee gross
earnings, and the City matching percentages are with 100%, 150%, or 200%, both as adopted by
the governing body of the City. Under the state law governing TMRS, the contributions rate for
each city is determined annually by the actuary, using the Entry Age Normal (EAN) actuarial cost
method. The actuarially determined rate is the estimated amount necessary to finance the cost of
benefits earned by employees during the year, with an additional amount to finance any unfunded
accrued liability.
Employees for the City were required to contribute 7% of their annual gross earnings during the
fiscal year. The contribution rates for the City were 15.44% and 15.47% in calendar years 2016
and 2017, respectively. The City’s contributions to TMRS for the year ended September 30, 2017,
were $2,161,617 and were equal to the required contributions.
54
Net Pension Liability
The City’s Net Pension Liability (NPL) was measured as of December 31, 2016, 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, 2016 actuarial valuation was determined using the
following actuarial assumptions:
Inflation 2.50%
Overall payroll growth 3.0% per year
Investment rate of return 6.75%, net of pension plan investment
expense, including inflation
Salary increases were based on a service-related table. Mortality rates for active members, retirees,
and beneficiaries were based on the gender-distinct RP2000 Combined Healthy Mortality Tables
with Blue Collar Adjustment, with male rates multiplied by 109% and female rates multiplied by
103%. The rates are projected on a fully generational basis by scale BB to account for future
mortality improvements. For disabled annuitants, the gender-distinct RP2000 Combined Healthy
Mortality Tables with Blue Collar Adjustment are used with males rates multiplied by 109% and
female rates multiplied by 103% with a 3-year set-forward for both males and females. In addition,
a 3% minimum mortality rate is applied to reflect the impairment for younger members who
become disabled. The rates are projected on a fully generational basis by scale BB to account for
future mortality improvements subject to the 3% floor.
Actuarial assumptions used in the December 31, 2016, valuation were based on the results of
actuarial experience studies. The experience study in TMRS was for the period December 31, 2010
through December 31, 2014. Healthy post-retirement mortality rates and annuity purchase rates
were updated based on a Mortality Experience Investigation Study covering 2009 through 2011,
and dated December 31, 2013. These assumptions were first used in the December 31, 2013
valuation, along with a change to the Entry Age Normal (EAN) actuarial cost method.
Assumptions are reviewed annually. Plan assets are managed on a total return basis with an
emphasis on both capital appreciation as well as the production of income, in order to satisfy the
short-term and long-term funding needs of TMRS.
55
The long-term expected rate of return on pension plan investments was determined using a
building-block method in which best estimate ranges of expected future real rates of return
(expected returns, net of pension plan investment 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 2017 are summarized
in the following table:
Long-Tem Expected
Target Rate of Return
Asset Class Allocation (Arithmetic)
Domestic Equity 17.5%4.55%
International Equity 17.5%6.35%
Core Fixed Income 10.0%1.00%
Non-Core Fixed Income 20.0%4.15%
Real Return 10.0%4.15%
Real Estate 10.0%4.75%
Absolute Return 10.0%4.00%
Private Equity 5.0%7.75%
Total 100.0%
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.
56
Changes in the Net Pension Liability
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
(a)(b)(a) - (b)
Balance at 12/31/2015 65,782,920$ 54,328,838$ 11,454,082$
Changes for the year:
Service cost 2,334,817 - 2,334,817
Interest 4,435,984 - 4,435,984
Difference between expected
and actual experience 366,687 - 366,687 -
Contributions - employer - 2,037,849 2,037,849)(
Contributions - employee - 923,896 923,896)(
Net investment income - 3,672,583 3,672,583)(
Benefit payments, including
refunds of employee 2,464,107)( 2,464,107)( -
Administrative expense - 41,467)( 41,467
Other changes - 2,234)( 2,234
Net changes 4,673,381 4,126,520 546,861
Balance at 12/31/2016 70,456,301$ 58,455,358$ 12,000,943$
Increase (Decrease)
Sensitivity of the net pension liability to changes in the discount rate
The following presents the net pension liability 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%) of 1-percentage-point higher (7.75%) than
the current rate:
1% Decrease in Current Single Rate 1% Increase in
Discount Rate (5.75%)Discount Rate (6.75%)Discount Rate (7.75%)
City's net pension liability 20,033,028$ 12,000,943$ 3,779,463$
Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s Fiduciary Net Position is available in a separately-
issued TMRS financial report. The report may be obtained on the Internet at www.tmrs.com.
57
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to Pensions
For the year ended September 30, 2017, the City recognized pension expense $2,985,196. At
September 30, 2017, the City reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between expected and actual economic experience 292,906$ 943,961$
Changes in actuarial assumptions 509,832 -
Difference between projected and actual investment earnings 2,458,895 -
Contributions subsequent to the measurement date 1,667,610 -
Total 4,929,243$ 943,961$
$1,667,610 reported as deferred outflows of resources related to pension resulting from
contributions subsequent to the measurement date will be recognized as a reduction of the net
pension liability for the year ending September 30, 2018. Other amounts reported as deferred
outflows and inflows of resources related to pensions will be recognized in pension expenses as
follows:
For the Year
Ended September 30:
2018 761,786$
2019 761,786
2020 724,349
2021 69,751
Total 2,317,672$
XIII. POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS
Retiree Insurance Coverage
The City Council has established a single-employer medical, dental, and vision insurance defined
benefit plan for retirees. Eligible retirees are provided insurance benefits at a set premium rate
equal to the City’s employees’ rate. Eligible retirees may also cover their dependents. Retirees
are responsible for paying the premium cost associated with their coverage. A retiree is defined
as a person who has received lifetime monthly TMRS pension benefits payments and retired
directly from active employment at the Cit y. The City will stop insurance coverage on the retiree
and all dependents on the last day of the month the retiree fails to submit the required premium
payment or upon death of the employee. The retiree health plan does not issue a publically
available financial report.
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Retirement Benefit Eligibility
The retiring employee must be 60 years of age with 5 years of service or have 20 years of service
at any age. Employees terminating before normal retirement conditions are not eligible for retiree
health plans. Retirees are not required to enroll in Medicare Parts A and B once eligible.
Plan Participants
Permanent full-time employees and any dependents covered on the employee’s last date of
employment are eligible for coverage. Dependents are not eligible for coverage unless the retired
employee is covered. Should the retiring employee reject any of the plans, he/she is never
eligible to re-enroll in the rejected plans. At the time of coverage election, the retiring em ployee
has the option of cancelling coverage on any dependent with the understanding that the
dependent can never be re-enrolled; new dependents cannot be added to the plan.
Medical Plan
The retiring employee is eligible to retain the medical plan the employee had on the last day of
employment. Any dependents covered at that time may remain on the retired employee’s plan as
long as the retired employee remains active on the plan. All terms and conditions of the plan are
the same as active employees.
Dental Plan
The retiring employee is eligible to retain the dental plan the employee had on the last day of
employment. Any dependents covered at the time may remain on the retired employee’s plan as
long as the retired employee remains active on the plan. All terms and conditions of the plan are
the same as active employees.
Vision Plan
The retiring employee is eligible to retain the vision plan the employee had on the last day of
employment. Any dependents covered at that time may remain on the retired emp loyee’s plan as
long as the retired employee remains active on the plan. All terms and conditions of the plan are
the same as active employees.
Premiums Paid
All premiums are 100% paid monthly by the retiree. The City does not contribute to any of the
plans once an employee retires.
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Funding Policy and Annual OPEB Cost
The City’s annual other post-employment benefits (OPEB) cost is calculated based on the annual
required contribution of the employer (ARC), an amount actuarially determined in accordance
with the parameters of GASB Statement No. 45. The ARC represents a level of accrual that, if
paid on an ongoing basis, is projected to cover the normal cost each year and to amortize the
unfunded actuarial liability (or funding excesses) over a period not to exceed thirty years. The
City’s annual OPEB cost for the fiscal year ending September 30, 2017 is as follows:
Annual required contribution 80,380$
Interest on OPEB obligation 35,964
Adjustment to ARC 35,035)(
Annual OPEB cost (expense) end of year 81,309
Net estimated employer contributions 33,881)(
Increase in net OPEB obligation 47,428
Net OPEB obligation - beginning of year 899,110
Net OPEB obligation - end of year 946,538$
City historical data is as follows:
Annual Actual Percentage Net OPEB
Fiscal OPEB Contribution of OPEB Obligation
Year Cost Made Cost Contributed at September 30
2015 84,838$ 9,856$ 11.6%831,165$
2016 87,556 19,611 22.4%899,110
2017 81,309 33,881 41.7%946,538
Funding Status and Funding Progress
The funded status of the City’s retiree health care plan, under GASB Statement No. 45 as of
December 31, 2016, the most recent valuation date, is as follows:
(1)(2)(3)(4)(5)(6)
Actuarial UAAL as a
Actuarial Actuarial Accrued Funded Unfunded AAL % of Covered
Valuation Value of Liability Ratio (UAAL)Covered Payroll
Date Assets (AAL)((1) / (2))((2) - (1))Payroll ((4) / (5))
12/31/2016 -$ 1,010,239 $ 0.00%1,010,239 $ 13,198,512 $ 7.65%
Under the reporting parameters, the City’s retiree health care plan is 0% funded with as
estimated actuarial liability exceeding actuarial assets by $1,010,239 at December 31, 2016. As
of the most recent valuation, the ratio of the unfunded actuarial accrued liability to annual
covered payroll is 7.65%.
60
The schedule of funding progress, presented as Required Supplementary Information following
the notes to the financial statements, presents multi-year trend information about whether the
actuarial value of plan assets is increasing or decreasing over time relative to the actuarial
accrued liability of benefits.
Actuarial Methods and Assumptions
The Projected Unit Credit actuarial cost method is used to calculate the GASB ARC for the
City’s retiree health care plan. Using the plan benefits, the present health premiums and a set of
actuarial assumptions, the anticipated future payments are projected. The projected unit credit
method then provides for a systematic funding for these anticipated payments. The yearly ARC
is computed to cover the cost of benefits being earned by covered members as well as to
amortize a portion of the unfunded accrued liability.
Projections of health benefits are based on the plan as understood by the City and include the
types of benefits in force at the valuation date and the pattern of sharing benefits costs between
the City and the City’s employees to that point. Actuarial calculations reflect a long-term
perspective and employ methods and assumptions that are designed to reduce short-term
volatility in actuarial accrued liabilities and the actuarial value of assets.
Significant methods and assumptions were as follows:
Investment rate of return 4.0%, net of expenses
Inflation rate 2.50%
Healthcare cost trend rates 4.25% to 7.5%
Actuarial cost method Individual Entry Age
Amortization method Level Percent of Payroll over an
open period of 30 years
Payroll growth rate 3.00%
Actuarial valuations involve estimates of the value of reported amounts and assumptions about
the probability of events in the future. Amounts determined regarding the funded status and the
annual required contributions of the City’s retiree health care plan are subject to continual
revision as actual results are compared to past expectations and new estimates are made about
the future.
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Supplemental Death Benefits Fund
Plan Descriptions
The City also participates in the cost sharing multiple-employer defined benefit group-term life
insurance plan operated by the Texas Municipal Retirement System (TMRS) known as the
Supplemental Death Benefits Fund (SDBF). The City elected, by ordinance, to provide group -
term life insurance coverage to both current and retired employees. The City may terminate
coverage under and discontinue participation in the SDBF by adopting an ordinance before
November 1 of any year to be effective the following January 1.
The death benefit for active employees 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
an “other post-employment benefit,” or OPEB.
Contributions
The City contributes to the SDBF at a contractually required rate as determined by the annual
actuarial valuation. The rate is equal to the cost of providing one-year term life insurance. The
funding policy for the SDBF program is to assure that adequate resources are available to meet
all death benefit payments for the upcoming year; the intent is not to pre-fund retiree term life
insurance during employee’s entire careers.
The City’s contributions to the TMRS SDBF for the years ended September 30, 2017, 2016 and
2015 were $29,371, $28,051, and $24,187, respectively, which equaled the required
contributions each year.
XIV. 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, 2017, 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. During the year, the City
incurred flood damage due to Hurricane Harvey. The amount of claims outstanding as of
September 30, 2017, are unknown.
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,
2017, the City believed the amounts paid on workers’ compensation would not change
significantly from the amounts recorded.
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During the year ended September 30, 2017, 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 choosin g to
cover themselves and their dependents.
XV. 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.
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Federal and State Programs
The City recognizes grant monies received as reimbursement for costs incurred in certain federal
and state programs it administers as revenue. Amounts received or receivable from grantor
agencies are subject to audit and adjustment by grantor agencies. Any disallowed claims,
including amounts already collected, may constitute a liability of the applicable funds. The
amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at
this time although the City expects such amounts, if any, to be immaterial.
Litigation
The City is a defendant in various lawsuits. The outcome and the impact of these lawsuits is not
presently determinable.
XVI. NEW ACCOUNTING PRINCIPLES
Significant new accounting standards not yet implemented by the City include the following:
Statement No, 75, Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions – This statement changes the focus of accounting of postemployment benefits other
than pensions from whether an entity is responsible for funding the benefits over time to a point-
in-time liability that is reflected on the employer’s financial statements for any actuarially
unfunded portion of benefits earned to date. This statement will become effective for the City in
fiscal year 2018.
Statement No. 87, Leases – This statement changes the recognition requirements for certain lease
assets and liabilities for leases that are currently classified as operating leases. This statement
will become effective for the City in fiscal year 2021.
REQUIRED
SUPPLEMENTARY INFORMATION
THIS PAGE LEFT BLANK INTENTIONALLY
Plan Year 2014 2015 2016
A. Total pension liability
Service Cost 2,018,353$ 2,204,299$ 2,334,817$
Interest (on the Total Pension Liability)4,084,392 4,317,394 4,435,984
Difference between expected and actual experience 736,093)( 1,032,789)( 366,687
Changes of assumptions - 847,469 -
Benefit payments, including refunds of employee contributions 2,005,311)( 2,256,734)( 2,464,107)(
Net change in total pension liability 3,361,341 4,079,639 4,673,381
Total pension liability - beginning 58,341,940 61,703,281 65,782,920
Total pension liability - ending (a)61,703,281 65,782,920 70,456,301
B. Plan fiduciary net position
Contributions - employer 1,867,782 1,998,038 2,037,849
Contributions - employee 829,598 886,669 923,896
Net investment income 2,868,842 79,202 3,672,583
Benefit payments, including refunds of employee contributions 2,005,311)( 2,256,734)( 2,464,107)(
Administrative expenses 29,949)( 48,239)( 41,467)(
Other 2,462)( 2,383)( 2,234)(
Net change in plan fiduciary net position 3,528,500 656,553 4,126,520
Plan fiduciary net position - beginning 50,143,785 53,672,285 54,328,838
Plan fiduciary net position - ending (b)53,672,285 54,328,838 58,455,358
C. Net pension liability - ending (a) - (b)8,030,996$ 11,454,082$ 12,000,943$
D. Plan fiduciary net position as a percentage of total pension
liability 86.98%82.59%82.97%
E. Covered employee payroll 11,851,396$ 12,653,842$ 13,198,512$
F. Net position liability as a percentage of covered employee
payroll 67.76%90.52%90.93%
Note -GASB 68 requires 10 years of data to be included in the schedule of pension contributions.Additional years will be added in
subsequent periods as data becomes available.
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF CHANGES IN NET PENSION LIABILITY
AND RELATED RATIOS
SEPTEMBER 30, 2017
64
Fiscal Year 2014 2015 2016 2017
Actuarial determined contribution 1,847,375$ 1,960,652$ 2,100,698$ 2,161,617$
Contributions in relation to the actuarially
determined contribution 1,847,375 1,960,652 2,100,698 2,161,617
Contribution deficiency (excess)- - - -
Covered employee payroll 11,781,281 12,423,310 13,525,613 13,986,135
Contributions as a percentage of covered
employee payroll 15.68%15.78%15.53%15.46%
Valuation Date
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial Cost Method
Amortization Method Level Percentage of Payroll, Closed
Remaining Amortization 29 years
Period
Asset Valuation Method 10 Year smoothed market; 15% soft corridor
Inflation 2.50%
Salary Increases 3.50% to 10.5% including inflation
Investment Rate of Return 6.75%
Retirement Age
Mortality
Other Information
Entry Age Normal
Experience-based table of rates that are specific to the City's plan of benefits.Last updated
for the 2015 valuation pursuant to an experience study of the period 2010-2014
RP2000 Combined Mortality Table with Blue Collar Adjustment with male rates multiplied
by 109%and female rates multiplied by 103%and projected on a fully generational basis of
with scale BB.
There were no benefit changes during the year.
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF PENSION CONTRIBUTIONS
SEPTEMBER 30, 2017
Note -GASB 68 requires 10 years of data to be included in the schedule of pension contributions.Additional years will be added in
subsequent periods as data becomes available.
NOTES TO SCHEDULE OF CONTRIBUTIONS
Actuarially determined contribution rates are calculated as of December 31 and become
effective in January, 13 months later.
65
(1)(2)(3)(4)(5)(6)
((1) / (2))((2) - (1))((4) / (5))
Actuarial Actuarial Unfunded UAAL as a
Actuarial Value of Accrued Funded AAL Covered Percentage of
Valuation Date Assets Liability (AAL)Ratio (UAAL)Payroll Covered Payroll
12/31/2012 -$ 676,248 $ 0.0%676,248 $ 11,513,756 $ 5.9%
12/31/2014 - 641,352 0.0%641,352 12,423,310 5.2%
12/31/2016 - 1,010,239 0.0%1,010,239 13,198,512 7.7%
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF FUNDING PROGRESS
POST EMPLOYMENT BENEFITS PLAN OTHER THAN PENSIONS
SEPTEMBER 30, 2017
66
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Property taxes 15,151,517$ 15,151,517$ 14,672,877$ 478,640)$(
Sales and alcohol taxes 5,414,334 5,414,334 5,482,536 68,202
Franchise taxes 1,657,673 1,669,118 1,661,654 7,464)(
Fines and forfeitures 746,696 746,696 994,051 247,355
Permits and fees 1,394,890 1,397,917 1,581,700 183,783
Intergovernmental 239,401 1,277,531 1,471,578 194,047
Investment earnings 74,190 74,190 99,174 24,984
Donations 17,000 49,626 203,384 153,758
Miscellaneous 11,639 11,639 165,619 153,980
Total revenues 24,707,340 25,792,568 26,332,573 540,005
EXPENDITURES
General government
Mayor and council - governing body
Supplies and maintenance 4,211 4,211 2,205 2,006
Other services and charges 52,465 134,414 106,486 27,928
Total governing body 56,676 138,625 108,691 29,934
Mayor and council - city attorney
Personnel services 200,969 200,969 187,280 13,689
Supplies 300 380 360 20
Other services and charges 18,600 16,571 3,210 13,361
Total city attorney 219,869 217,920 190,850 27,070
City manager - administration
Personnel services 689,544 689,544 669,495 20,049
Supplies 15,220 26,053 16,295 9,758
Other services and charges 64,521 57,582 38,912 18,670
Total administration 769,285 773,179 724,702 48,477
City manager - economic development
Personnel services 168,397 168,397 165,936 2,461
Supplies 6,000 5,500 1,873 3,627
Other services and charges 90,650 124,323 84,191 40,132
Total economic development 265,047 298,220 252,000 46,220
City secretary - municipal clerk
Personnel services 298,628 299,642 299,642 -
Supplies 5,558 2,338 2,098 240
Other services and charges 17,722 20,461 12,504 7,957
Total municipal clerk 321,908 322,441 314,244 8,197
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2017
67
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
City secretary - election services
Personnel services 7,603$ 7,603$ 2,828$ 4,775$
Supplies 6,477 6,477 2,536 3,941
Repairs and maintenance 525 525 - 525
Other services and charges 12,554 12,554 9,826 2,728
Total election services 27,159 27,159 15,190 11,969
City secretary - records management
Personnel services 124,795 123,780 101,940 21,840
Supplies 944 604 525 79
Other services and charges 30,044 30,865 10,905 19,960
Total records management 155,783 155,249 113,370 41,879
Administrative services - finance
Personnel services 822,615 822,615 816,440 6,175
Supplies 7,920 7,607 5,844 1,763
Other services and charges 79,313 79,626 45,864 33,762
Total finance 909,848 909,848 868,148 41,700
Administrative services - other admin
Other services and charges 241,685 241,685 175,178 66,507
Total other admin 241,685 241,685 175,178 66,507
Administrative services - municipal court
Personnel services 445,434 445,434 367,299 78,135
Supplies 7,650 7,650 3,636 4,014
Other services and charges 26,236 26,236 20,146 6,090
Total municipal court 479,320 479,320 391,081 88,239
Administrative services - human resources
Personnel services 353,584 342,418 320,802 21,616
Supplies 12,365 18,517 13,842 4,675
Other services and charges 78,710 78,186 63,948 14,238
Total human resources 444,659 439,121 398,592 40,529
Administrative services - insurance
Other services and charges 163,013 177,290 177,290 -
Total insurance 163,013 177,290 177,290 -
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2017
Budgeted Amounts
(Continued)
68
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Administrative services - risk management
Personnel services 118,543$ 118,543$ 118,425$ 118$
Supplies 10,220 10,220 3,729 6,491
Other services and charges 27,661 27,701 12,991 14,710
Total risk management 156,424 156,464 135,145 21,319
Administrative services - information technology
Personnel services 476,002 476,002 449,170 26,832
Supplies 24,500 425,686 184,587 241,099
Repairs and maintenance 70,100 72,775 52,143 20,632
Other services and charges 338,710 552,047 388,455 163,592
Capital outlay 19,000 19,000 15,682 3,318
Total information technology 928,312 1,545,510 1,090,037 455,473
Total general government 5,138,988 5,882,031 4,954,518 927,513
Public safety
Police department - administration
Personnel services 759,138 759,138 750,692 8,446
Supplies 38,746 34,268 16,505 17,763
Repairs and maintenance 23,580 26,580 4,252 22,328
Other services and charges 96,378 89,821 83,789 6,032
Total administration 917,842 909,807 855,238 54,569
Police department - communications
Personnel services 1,077,967 1,080,906 1,080,906 -
Supplies 7,600 7,600 3,401 4,199
Repairs and maintenance 32,269 32,493 29,655 2,838
Other services and charges 19,302 20,426 16,906 3,520
Capital outlay 24,181 24,181 - 24,181
Total communications 1,161,319 1,165,606 1,130,868 34,738
Police department - patrol
Personnel services 4,986,259 4,955,725 4,694,334 261,391
Supplies 358,021 374,257 236,134 138,123
Repairs and maintenance 138,860 138,169 122,420 15,749
Other services and charges 332,391 341,061 324,375 16,686
Capital outlay 18,400 33,400 29,442 3,958
Total patrol 5,833,931 5,842,612 5,406,705 435,907
Police department - patrol - DOT program
Personnel services 93,534 105,963 105,371 592
Supplies 9,129 9,629 4,826 4,803
Repairs and maintenance 1,000 1,000 741 259
Other services and charges 13,997 13,497 8,779 4,718
Total patrol - DOT program 117,660 130,089 119,717 10,372
Budgeted Amounts
(Continued)
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2017
69
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Police department - criminal investigation
Personnel services 1,728,697$ 1,728,697$ 1,460,426$ 268,271$
Supplies 68,391 75,675 43,128 32,547
Repairs and maintenance 32,860 32,860 16,711 16,149
Other services and charges 75,426 71,589 64,972 6,617
Total criminal investigation 1,905,374 1,908,821 1,585,237 323,584
Police department - animal control
Personnel services 285,031 301,781 301,780 1
Supplies 33,249 34,249 30,695 3,554
Repairs and maintenance 3,730 3,730 2,558 1,172
Other services and charges 89,709 98,561 36,677 61,884
Total animal services 411,719 438,321 371,710 66,611
Friendswood Volunteer Fire Department -
fire administration
Supplies and Maintenance - 361,006 361,006 -
Other services and charges 1,598,698 1,601,698 1,601,728 30)(
Total fire administration 1,598,698 1,962,704 1,962,734 30)(
Fire marshal - administration
Personnel services 620,816 620,816 607,012 13,804
Supplies 28,080 24,813 19,950 4,863
Repairs and maintenance 6,555 9,055 8,292 763
Other services and charges 39,487 36,987 25,896 11,091
Total administration 694,938 691,671 661,150 30,521
Fire marshal - emergency management
Personnel services 86,089 90,990 89,985 1,005
Supplies 23,816 39,835 16,376 23,459
Repairs and maintenance 4,725 6,149 2,849 3,300
Other services and charges 46,200 39,904 23,866 16,038
Total emergency management 160,830 176,878 133,076 43,802
Fire marshal - storm
Personnel services - - 726,757 726,757)(
Supplies - - 94,641 94,641)(
Repairs and maintenance - - 12,448 12,448)(
Other services and charges - 1,025,887 1,428,824 402,937)(
Total storm - 1,025,887 2,262,670 1,236,783)(
Total public safety 12,802,311 14,252,396 14,489,105 236,709)(
SCHEDULE OF REVENUES, EXPENDITURES
CITY OF FRIENDSWOOD, TEXAS
(Continued)
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2017
Budgeted Amounts
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
70
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Public works
Administration
Personnel services 293,146$ 293,826$ 293,826$ -$
Supplies 2,850 2,042 1,973 69
Other services and charges 12,460 6,773 5,578 1,195
Capital outlay 8,750 8,765 8,418 347
Total administration 317,206 311,406 309,795 1,611
Streets
Personnel services 712,335 666,849 597,293 69,556
Supplies 90,410 91,340 80,492 10,848
Repairs and maintenance 118,000 111,223 133,236 22,013)(
Other services and charges 414,630 420,424 420,126 298
Total streets 1,335,375 1,289,836 1,231,147 58,689
Drainage
Personnel services 277,063 322,549 322,443 106
Supplies 12,830 12,830 7,540 5,290
Repairs and maintenance 46,500 45,840 32,585 13,255
Other services and charges 13,425 17,779 16,491 1,288
Total drainage 349,818 398,998 379,059 19,939
Capital projects administration
Personnel services 220,743 221,074 221,073 1
Supplies 6,282 5,451 1,714 3,737
Repairs and maintenance 4,500 5,000 1,338 3,662
Other services and charges 19,935 25,735 16,026 9,709
Total capital projects administration 251,460 257,260 240,151 17,109
Total public works 2,253,859 2,257,500 2,160,152 97,348
Community development
Administration
Personnel services 225,029 225,029 215,823 9,206
Supplies 4,410 4,656 3,090 1,566
Other services and charges 6,580 6,880 5,189 1,691
Total administration 236,019 236,565 224,102 12,463
(Continued)
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2017
71
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Community development
Planning and zoning
Personnel services 269,629$ 269,629$ 231,383$ 38,246$
Supplies 840 840 731 109
Other services and charges 300 300 17 283
Repairs and maintenance 34,160 38,160 28,595 9,565
Total planning and zoning 304,929 308,929 260,726 48,203
Inspection and code enforcement
Personnel services 376,080 378,580 375,884 2,696
Supplies 13,063 13,063 9,809 3,254
Repairs and maintenance 3,575 3,575 2,823 752
Other services and charges 37,763 30,763 20,319 10,444
Total inspection and code enforcement 430,481 425,981 408,835 17,146
Total community development 971,429 971,475 893,663 77,812
Parks and recreation
Administration
Personnel services 231,979 235,731 235,030 701
Supplies 4,500 6,190 6,016 174
Repairs and maintenance 28,400 27,787 26,865 922
Total administration 264,879 269,708 267,911 1,797
Recreation programs
Personnel services 236,483 236,483 234,793 1,690
Supplies 24,250 17,417 16,583 834
Other services and charges 71,720 71,149 70,754 395
Total recreation programs 332,453 325,049 322,130 2,919
July 4th program
Personnel services 27,842 27,842 22,341 5,501
Supplies 4,275 6,239 5,649 590
Other services and charges 61,550 73,226 73,058 168
Total July 4th program 93,667 107,307 101,048 6,259
Summer day camp program
Personnel services 71,850 81,320 81,319 1
Supplies 12,450 9,650 10,560 910)(
Other services and charges 31,350 32,756 31,843 913
Total summer day camp program 115,650 123,726 123,722 4
SCHEDULE OF REVENUES, EXPENDITURES
CITY OF FRIENDSWOOD, TEXAS
(Continued)
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2017
Budgeted Amounts
72
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Keep Friendswood Beautiful committee
Supplies 12,900$ 22,174$ 21,561$ 613$
Repairs and maintenance 10,000 6,000 6,000 -
Other services and charges 40,150 49,672 49,669 3
Total keep Friendswood beautiful committee 63,050 77,846 77,230 616
Stevenson Park Pool
Personnel services 58,289 50,713 46,549 4,164
Supplies 14,750 19,800 18,286 1,514
Repairs and maintenance 7,843 5,693 3,691 2,002
Other services and charges 32,683 29,783 27,017 2,766
Total Stevenson park pool 113,565 105,989 95,543 10,446
Senior Activity Center
Personnel services 166,879 172,894 172,849 45
Supplies 14,190 13,908 11,555 2,353
Repairs and maintenance 2,000 2,000 1,311 689
Other services and charges 20,106 16,960 13,296 3,664
Total senior activity center 203,175 205,762 199,011 6,751
Parks operations
Personnel services 570,419 566,667 529,981 36,686
Supplies 103,024 100,897 88,368 12,529
Repairs and maintenance 133,984 178,056 163,096 14,960
Other services and charges 543,900 508,773 478,295 30,478
Capital outlay 10,000 13,320 13,319 1
Total parks operations 1,361,327 1,367,713 1,273,059 94,654
Facility operations
Supplies 30,130 30,736 24,926 5,810
Repairs and maintenance 173,580 365,066 326,283 38,783
Other services and charges 525,446 525,993 529,001 3,008)(
Total facility operations 729,156 921,795 880,210 41,585
Total parks and recreation 3,276,922 3,504,895 3,339,864 165,031
Library
Administration
Personnel services 979,237 983,316 983,316 -
Supplies 129,402 129,343 119,693 9,650
Repairs and maintenance 400 400 - 400
Other services and charges 9,965 9,965 10,112 147)(
Total administration 1,119,004 1,123,024 1,113,121 9,903
(Continued)
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2017
Budgeted Amounts
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
SCHEDULE OF REVENUES, EXPENDITURES
CITY OF FRIENDSWOOD, TEXAS
73
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Board
Supplies 25,067$ 39,123$ 33,880$ 5,243$
Repairs and maintenance 440 440 394 46
Other services and charges 13,660 13,814 11,685 2,129
Capital outlay - 26,330 13,165 13,165
Total board 39,167 79,707 59,124 20,583
Total library 1,158,171 1,202,731 1,172,245 30,486
Capital improvements
Other services and charges 37,500 126,568 51,987 74,581
Capital outlay 425,000 2,928,483 1,625,680 1,302,803
Total capital improvements 462,500 3,055,051 1,677,667 1,377,384
Total expenditures 26,064,180 31,126,079 28,687,214 2,438,865
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 1,356,840)( 5,333,511)( 2,354,641)( 2,978,870
OTHER FINANCING SOURCES (USES)
Insurance recoveries - 22,996 25,999 3,003
Sale of capital assets - - 2,757 2,757
Issuance of capital lease - 756,006 756,006 -
Transfers out - 930,960)( 5,655)( 925,305
Transfers in 1,358,744 1,764,036 1,358,744 405,292)(
Total other financing sources (uses)1,358,744 1,612,078 2,137,851 525,773
NET CHANGE IN FUND BALANCE 1,904 3,721,433)( 216,790)( 3,504,643
FUND BALANCE, BEGINNING 13,759,547 13,759,547 13,759,547 -
FUND BALANCE, ENDING 13,761,451$ 10,038,114$ 13,542,757$ 3,504,643$
(Continued)
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2017
Budgeted Amounts
74
75
CITY OF FRIENDSWOOD, TEXAS
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
SEPTEMBER 30, 2017
I. BUDGETARY CONTROL
The City’s Code of Ordinances establishes the following framework for the preparation and format
of the City’s annual budget:
Content
The budget shall provide a complete financial plan of all City funds and activities and, except as
required by law or this Charter, shall be in such form as the City Manager deems desirable or the
Council may require. The budget shall begin with a clear general summary of its contents; shall
show in details all estimated income, the proposed property tax levy, and all proposed expenditures
for the ensuing fiscal years, including debt service and an itemized estimate of the expense of
conducting each Department of the City. The proposed budget expenditures shall not exceed the
total of estimated income. It shall also include, in separate sections:
1) Tax levies, rates and collections for the preceding five years.
2) The amount required for interest on the City’s debts, for sinking fund and for maturing
serial bonds.
3) The total amount of outstanding City debts, with a schedule of maturities on bond issues.
4) Anticipated net surplus of deficit for the ensuing fiscal year of each utility owned or
operated by the City and the proposed method of its disposition, subsidiary budgets for
each such utility giving detailed income and expenditure information shall be attached as
appendices to the budget.
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
76
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 th e Council a
proposed budget and an accompanying message. The Council shall review the proposed budget
and revise as deemed appropriate prior to general circulation for public hearing.
Public Notice and Hearing
The Council shall post in the City Hall and publish in the official newspaper a general summary of
their proposed budget and a notice stating:
1) The times and places where copies of the message and budget are available for inspection
by the public; and
2) The time and place, not less than ten nor more than 30 days after such publication, for a
public hearing on the budget.
Amendment Before Adoption
After the public hearing, the Council may adopt the budget with or without amendment. In
amending the budget, it may add or increase programs or amounts and may delete or decrease any
programs or amounts, except expenditures required by law or for debt service or for estimated cash
deficit, 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 ordinance transfer part of all of any
unencumbered appropriation balance from one department, office, or agency to another.
77
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.
COMBINING AND INDIVIDUAL
STATEMENTS AND SCHEDULES
THIS PAGE LEFT BLANK INTENTIONALLY
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
Special revenue funds are used to account for revenues that are restricted in nature for a special purpose
limited by state law and management intentions for expenditures.
Police Investigation Fund – This fund is used to account for revenues that are restricted to
police investigation expenditures.
Fire/EMS Donation Fund – This fund accounts for revenues that are restricted for Fire/EMS
capital outlays and debt repayments.
Court Security and Technology Fund – This fund accounts for revenues that are restricted for
court technology and building security. In 1999, the state legislature authorized a court
technology and court security fee for municipal court fines.
DEBT SERVICE FUND
Debt service funds are used to account for the accumulation of resources that are restricted, committed,
or assigned for the repayment of principal and interest on long-term obligations of the governmental
funds.
Debt Service Fund – is used to account for the accumulation of resources for the payment of
general long-term debt principal, interest and related costs.
PERMANENT FUND
The Permanent Fund is used to report resources that are legally restricted to the extent that only
earnings, not principal, may be used for purposes that support the City’s programs.
1776 Park Fund – This fund is used to account for assets held by the City in a trustee capacity
and the earnings benefit this City Park.
CAPITAL PROJECTS FUNDS
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.
TDRA Grant Fund – This fund is used to account for receipts and expenditures related to the
Texas Community Development Block Grant.
Court
Police Fires/EMS Security and Debt
Investigation Donation Technology Service
ASSETS
Cash and cash equivalents 47,488$ 54,364$ 94,206$ 61,123$
Investments 57,997 67,826 117,535 76,259
Receivables, net of allowance:
Taxes receivable - - - 48,698
Customer accounts - 2,485 - -
Other receivables - - 3,573 -
Accrued interest 74 386 291 326
Due from other governments - - - -
Total assets 105,559 125,061 215,605 186,406
LIABILITIES
Accounts payable 139 53,390 -
Due to other funds - - - 71,256
Total liabilities 139 53,390 - 71,256
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - - 3,552 23,212
Total deferred inflows of resources - - 3,552 23,212
FUND BALANCES
Nonspendable:
Permanent fund - - - -
Restricted for:
Municipal court operations - - 212,053 -
Debt service - - - 91,938
Public safety 105,420 71,671 - -
Capital projects - - - -
Total fund balances 105,420 71,671 212,053 91,938
Total liabilities, deferred inflows of
resources, and fund balance 105,559$ 125,061$ 215,605$ 186,406$
SEPTEMBER 30, 2017
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
CITY OF FRIENDSWOOD, TEXAS
Special Revenue
78
Permanent Total
Nonmajor
Sidewalk Park Land Street TDRA Governmental
1776 Park Installation Dedication Improvement Grant Funds
14,160$ 11,665$ 134,395$ 336,427$ -$ 753,828$
17,665 14,553 167,676 419,739 - 939,250
- - - 245,238 - 293,936
- - - - - 2,485
- - - - - 3,573
44 35 403 747 - 2,306
- - - - 214,287 214,287
31,869 26,253 302,474 1,002,151 214,287 2,209,665
- - - - - 53,529
- - - - 214,287 285,543
- - - - 214,287 339,072
- - - - - 26,764
- - - - - 26,764
31,869 - - - - 31,869
- - - - - 212,053
- - - - - 91,938
- - - - - 177,091
- 26,253 302,474 1,002,151 - 1,330,878
31,869 26,253 302,474 1,002,151 - 1,843,829
31,869$ 26,253$ 302,474$ 1,002,151$ 214,287$ 2,209,665$
Capital Projects
79
Court
Police Fires/EMS Security and Debt
Investigation Donation Technology Service
REVENUES
Taxes -$ -$ -$ 2,692,862$
Licenses, permits and fees - - - -
Intergovernmental 72,588 - -
Fines and forfeitures - - 29,505 -
Contributions - 230,780 - -
Interest 458 2,072 2,016 1,679
Total revenues 73,046 232,852 31,521 2,694,541
EXPENDITURES
Current:
General government - - 21,408 -
Public safety 10,886 251,390 - -
Debt Service:
Principal - 58,657 - 1,754,473
Interest and other - 4,398 - 1,071,156
Capital outlay - - - -
Total expenditures 10,886 314,445 21,408 2,825,629
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 62,160 81,593)( 10,113 131,088)(
OTHER FINANCING SOURCES (USES)
Sale of capital assets - 10,000 - -
Premium on bond issuance - - - 92,670
Total other financing sources (uses)- 10,000 - 92,670
NET CHANGE IN FUND BALANCES 62,160 71,593)( 10,113 38,418)(
FUND BALANCES, BEGINNING 43,260 143,264 201,940 130,356
FUND BALANCES, ENDING 105,420$ 71,671$ 212,053$ 91,938$
Special Revenue
CITY OF FRIENDSWOOD, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2017
80
Permanent Total
Nonmajor
Sidewalk Park Land Street TDRA Governmental
1776 Park Installation Dedication Improvement Grant Funds
-$ -$ -$ 999,831$ -$ 3,692,693$
- 5,457 121,200 - - 126,657
- - - - 219,808 292,396
- - - - - 29,505
- - - - - 230,780
305 209 1,740 2,320 84 10,883
305 5,666 122,940 1,002,151 219,892 4,382,914
- - - - - 21,408
- - - - - 262,276
- - - - - 1,813,130
- - - - - 1,075,554
- - - - 26,142 26,142
- - - - 26,142 3,198,510
305 5,666 122,940 1,002,151 193,750 1,184,404
- - - - - 10,000
- - - - - 92,670
- - - - - 102,670
305 5,666 122,940 1,002,151 193,750 1,287,074
31,564 20,587 179,534 - 193,750)( 556,755
31,869$ 26,253$ 302,474$ 1,002,151$ -$ 1,843,829$
Capital Projects
81
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Interest income -$ -$ 74,070$ 74,070$
Total revenues - - 74,070 74,070
EXPENDITURES
Capital outlay 6,683,978 6,300,108 6,725,391 425,283)(
Debt service:
Bond issuance costs - - 95,404 95,404)(
Total expenditures 6,683,978 6,300,108 6,820,795 520,687)(
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 6,683,978)( 6,300,108)( 6,746,725)( 446,617)(
OTHER FINANCING SOURCES (USES)
Issuance of capital-related debt 5,853,000 400,000 5,605,000 5,205,000
Premium on bond issuance - - 342,404 342,404
Transfers in - 930,960 5,655 925,305)(
Transfers out - 400,000)( - 400,000
Total other financing sources (uses)5,853,000 930,960 5,953,059 5,022,099
NET CHANGE IN FUND BALANCES 830,978)( 5,369,148)( 793,666)( 4,575,482
FUND BALANCES, BEGINNING 7,446,565 7,446,565 7,446,565 -
FUND BALANCES, ENDING 6,615,587$ 2,077,417$ 6,652,899$ 4,575,482$
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
BOND CONSTRUCTION
FOR THE YEAR ENDED SEPTEMBER 30, 2017
82
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Intergovernmental 2,276$ 3,326$ 72,588$ 69,262$
Interest income 320 320 458 138
Total revenues 2,596 3,646 73,046 69,400
EXPENDITURES
Current
Public safety 2,276 5,561 10,886 5,325)(
Total expenditures 2,276 5,561 10,886 5,325)(
Excess (deficiency) of revenues
over expenditures 320 1,915)( 62,160 64,075
OTHER FINANCING SOURCES (USES)
Transfers out - 5,292)( - 5,292
Total other financing sources (uses)- 5,292)( - 5,292
NET CHANGE IN FUND BALANCE 320 7,207)( 62,160 69,367
FUND BALANCE, BEGINNING 43,260 43,260 43,260 -
FUND BALANCE, ENDING 43,580$ 36,053$ 105,420$ 69,367$
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
POLICE INVESTIGATION
FOR THE YEAR ENDED SEPTEMBER 30, 2017
83
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Donations 222,000$ 222,000$ 230,780$ 8,780$
Interest income 225 225 2,072 1,847
Total revenues 222,225 222,225 232,852 10,627
EXPENDITURES
Current:
Public safety 87,168 87,168 251,390 (164,222)
Debt service:
Principal 126,629 126,629 58,657 67,972
Interest and other charges 8,428 8,428 4,398 4,030
Total expenditures 222,225 222,225 314,445 92,220)(
Excess (deficiency) of revenues
over expenditures - - 81,593)( 81,593)(
OTHER FINANCING SOURCES (USES)
Sale of capital assets - - 10,000 10,000
Total other financing sources (uses)- - 10,000 10,000
NET CHANGE IN FUND BALANCE - - 71,593)( 71,593)(
FUND BALANCE, BEGINNING 143,264 143,264 143,264 -
FUND BALANCE, ENDING 143,264$ 143,264$ 71,671$ 71,593)$(
CITY OF FRIENDSWOOD, TEXAS
Budgeted Amounts
FOR THE YEAR ENDED SEPTEMBER 30, 2017
FIRE/EMS DONATION FUND
IN FUND BALANCE - BUDGET AND ACTUAL
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
84
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Property taxes 2,743,112$ 2,743,112$ 2,692,862$ 50,250)$(
Interest 3,100 3,100 1,679 1,421)(
Total revenues 2,746,212 2,746,212 2,694,541 51,671)(
EXPENDITURES
Debt service
Principal 3,233,720 3,636,903 1,754,473 1,882,430
Interest and other 2,140,423 2,107,240 1,071,156 1,036,084
Total expenditures 5,374,143 5,744,143 2,825,629 2,918,514
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 2,627,931)( 2,997,931)( 131,088)( 2,866,843
OTHER FINANCING SOURCES (USES)
Transfers in 2,628,575 2,998,575 - 2,998,575)(
Premium on bond issuance - - 92,670 92,670
Total other financing sources 2,628,575 2,998,575 92,670 2,905,905)(
NET CHANGE IN FUND BALANCE 644 644 38,418)( 39,062)(
FUND BALANCE, BEGINNING 130,356 130,356 130,356 -
FUND BALANCE, ENDING 131,000$ 131,000$ 91,938$ 39,062)$(
CITY OF FRIENDSWOOD, TEXAS
Budgeted Amounts
FOR THE YEAR ENDED SEPTEMBER 30, 2017
DEBT SERVICE FUND
IN FUND BALANCE - BUDGET AND ACTUAL
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
85
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Fines and forfeitures 32,000$ 32,000$ 29,505$ 2,495)$(
Interest income 1,500 1,500 2,016 516
Total revenues 33,500 33,500 31,521 1,979)(
EXPENDITURES
Current
General government 28,570 42,146 21,408 20,738
Total expenditures 28,570 42,146 21,408 20,738
NET CHANGE IN FUND BALANCE 4,930 8,646)( 10,113 18,759
FUND BALANCE, BEGINNING 201,940 201,940 201,940 -
FUND BALANCE, ENDING 206,870$ 193,294$ 212,053$ 18,759$
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
COURT SECURITY TECHNOLOGY
FOR THE YEAR ENDED SEPTEMBER 30, 2017
86
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Interest income 200$ 200$ 305$ 105$
Total revenues 200 200 305 105
EXPENDITURES
Current - - - -
Total expenditures - - - -
NET CHANGE IN FUND BALANCE 200 200 305 105
FUND BALANCE, BEGINNING 31,564 31,564 31,564 -
FUND BALANCE, ENDING 31,764$ 31,764$ 31,869$ 105$
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
1776 PARK
FOR THE YEAR ENDED SEPTEMBER 30, 2017
87
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Licenses, permits and fees 42,000$ 42,000$ 121,200$ 79,200$
Interest income 620 620 1,740 1,120
Total revenues 42,620 42,620 122,940 80,320
EXPENDITURES
Capital outlay 42,620 212,623 - 212,623
Total expenditures 42,620 212,623 - 212,623
NET CHANGE IN FUND BALANCE - 170,003)( 122,940 292,943
FUND BALANCE, BEGINNING 179,534 179,534 179,534 -
FUND BALANCE, ENDING 179,534$ 9,531$ 302,474$ 292,943$
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
PARK LAND DEDICATION
FOR THE YEAR ENDED SEPTEMBER 30, 2017
88
STATISTICAL SECTION
THIS PAGE LEFT BLANK INTENTIONALLY
STATISTICAL SECTION
(Unaudited)
This part of City of Friendswood, Texas’ comprehensive annual financial report presents detailed
information as a context for understanding what the information in the financial statements, note
disclosures, and required supplementary information says about the government’s overall financial
health.
Contents Page
Financial Trends
These schedules contain trend information to help the reader
understand how the City’s financial performance has changed over
time. 89 – 98
Revenue Capacity
These schedules contain trend information to help the reader assess
the factors affecting the City’s ability to generate its electric utility,
sales tax and property tax revenues. 99 – 102
Debt Capacity
These schedules present information to help the reader assess the
affordability of the City’s current levels of outstanding debt and its
ability to issue additional debt in the future. 103 – 107
Economic and Demographic Indicators
These schedules contain economic and demographic information
to help the reader understand the environment within which the
City’s financial activities take place. 108 – 110
Operating Information
These schedules contain information about the City’s operations and
resources to help the reader understand how the City’s financial
information relates to the services the City provides and the
activities it performs. 111 – 112
2008 2009 2010 2011
Governmental activities
Net investment
in capital assets 70,591,236$ 69,313,348$ 70,480,334$ 66,580,049$
Restricted 2,773,910 2,461,510 1,977,801 922,874
Unrestricted 10,548,129 9,892,077 8,447,179 8,227,254
Total governmental activities
net position 83,913,275 81,666,935 80,905,314 75,730,177
Business-type activities
Net investment in
capital assets 20,375,620 21,122,644 19,565,756 26,251,346
Restricted 27,246 93,526 593,597 731,410
Unrestricted 4,227,253 6,730,812 8,677,882 11,373,311
Total business-type activities
net position 24,630,119 27,946,982 28,837,235 38,356,067
Primary government
Net investment
in capital assets 90,966,856 90,436,992 90,046,090 92,831,395
Restricted 2,801,156 2,555,036 2,571,398 1,654,284
Unrestricted 14,775,382 16,622,889 17,125,061 19,600,565
Total primary government
net position 108,543,394$ 109,614,917$ 109,742,549$ 114,086,244$
CITY OF FRIENDSWOOD, TEXAS
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(Accrual Basis of Accounting)
(Unaudited)
Fiscal Year
89
TABLE 1
2012 2013 2014 2015 2016 2017
65,582,783$ 65,056,180$ 65,404,791$ 73,611,490$ 73,588,484$ 72,631,192$
872,869 718,275 653,496 1,179,764 1,405,907 2,534,312
8,828,132 9,565,406 10,798,907 5,901,505 5,579,677 5,532,198
75,283,784 75,339,861 76,857,194 80,692,759 80,574,068 80,697,702
25,618,823 22,961,547 24,495,816 26,628,714 28,322,718 29,305,429
786,600 176,882 90,395 27,468 99,006 260,703
13,032,798 16,790,183 14,818,104 12,040,181 10,238,993 10,584,764
39,438,221 39,928,612 39,404,315 38,696,363 38,660,717 40,150,896
91,201,606 88,017,727 89,900,607 100,240,204 101,911,202 101,936,621
1,659,469 895,157 743,891 1,207,232 1,504,913 2,795,015
21,860,930 26,355,589 24,617,011 17,941,686 15,818,670 16,116,962
114,722,005$ 115,268,473$ 115,261,509$ 119,389,122$ 119,234,785$ 120,848,598$
Fiscal Year
90
2008 2009 2010 2011
Expenses
Governmental activities:
General government 4,339,620$ 5,164,623$ 5,145,447$ 4,876,064$
Public safety 12,652,812 14,929,941 10,175,028 10,548,568
Community development
and public works 4,921,298 5,292,000 - -
Public works - - 3,853,685 3,517,707
Community development - - 1,203,204 1,284,188
Parks and recreation 3,841,387 4,002,165 3,034,523 3,058,313
Library - - 979,084 979,978
Interest and fiscal charges 803,733 678,705 789,652 871,790
Total governmental activities expenses 26,558,850 30,067,434 25,180,623 25,136,608
Business-type activities:
Water and sewer 6,523,501 6,640,062 6,663,308 6,955,505
Interest and other 1,543,859 1,604,174 2,037,104 1,644,074
8,067,360 8,244,236 8,700,412 8,599,579
Total primary government expenses 34,626,210 38,311,670 33,881,035 33,736,187
Program Revenues
Governmental activities:
Charges for services
General government 1,178,523 1,327,484 1,072,289 1,158,392
Public safety 21,356 46,773 38,438 39,914
Community development
and public works 838,060 602,265 - -
Public works - - 152,163 158,858
Community development - - 550,286 643,150
Parks and recreation 132,244 411,207 258,030 267,837
Library - - 44,313 43,147
Operating grants and contributions 4,021,908 5,755,038 2,819,418 3,150,808
Capital grants and contributions - - - -
Total governmental activities
program revenues 6,192,091 8,142,767 4,934,937 5,462,106
Business-type activities:
Charges for services
Water and sewer 8,624,546 12,028,895 9,854,083 12,726,936
Total business-type activities
program revenues 8,624,546 12,028,895 9,854,083 12,726,936
Total primary government
program revenues 14,816,637 20,171,662 14,789,020 18,189,042
Net (Expense) Revenues
Governmental activities 20,366,759)( 21,924,667)( 20,245,686)( 19,674,502)(
Business-type activities 557,186 3,784,659 1,153,671 4,127,357
Total primary government net expense 19,809,573)$( 18,140,008)$( 19,092,015)$( 15,547,145)$(
CITY OF FRIENDSWOOD, TEXAS
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(Accrual basis of accounting)
(Unaudited)
Fiscal Year
91
TABLE 2
2012 2013 2014 2015 2016 2017
4,737,702$ 4,679,339$ 4,589,795$ 5,410,643$ 4,736,867$ 5,128,399$
10,736,805 10,800,130 11,236,402 11,763,659 13,101,691 15,861,719
- - - - - -
3,738,111 4,385,090 3,921,658 3,933,288 4,429,482 4,429,664
1,520,401 1,207,264 1,097,075 1,406,288 1,577,813 1,495,001
3,227,731 3,260,931 3,356,587 2,869,345 3,080,453 3,459,053
1,004,303 1,002,801 1,083,043 1,026,967 1,134,859 1,215,683
757,011 703,275 630,542 730,614 862,654 953,146
25,722,064 26,038,830 25,915,102 27,140,804 28,923,819 32,542,665 #DIV/0!#DIV/0!32,542,665
6,902,279 7,681,366 7,995,106 7,629,711 7,975,920 8,502,218
1,638,495 1,590,395 1,514,804 1,524,276 1,642,723 1,086,278
8,540,774 9,271,761 9,509,910 9,153,987 9,618,643 9,588,496
34,262,838 35,310,591 35,425,012 36,294,791 38,542,462 42,131,161
1,167,619 989,190 912,910 807,245 1,002,022 1,004,968
39,661 34,944 31,620 30,275 28,760 35,007
- - - - - -
171,890 186,504 193,064 190,099 174,568 242,184
730,211 825,366 877,132 843,648 949,011 1,036,741
271,912 316,047 315,702 280,046 286,727 387,915
39,543 36,686 36,081 33,699 27,532 30,600
648,058 644,458 843,995 660,633 800,151 2,591,025
527,288 543,763 1,202,376 3,225,672 318,657 219,808
3,596,182 3,576,958 4,412,880 6,071,317 3,587,428 5,548,248
11,258,216 11,462,779 11,117,391 11,020,029 11,319,801 12,295,441
11,258,216 11,462,779 11,117,391 11,020,029 11,319,801 12,295,441
14,854,398 15,039,737 15,530,271 17,091,346 14,907,229 17,843,689
22,126,882)( 22,461,872)( 21,502,222)( 21,069,487)( 25,336,391)( 26,994,417)(
2,717,442 2,191,018 1,607,481 1,866,042 1,701,158 2,706,945
19,409,440)$( 20,270,854)$( 19,894,741)$( 19,203,445)$( 23,635,233)$( 24,287,472)$(
Fiscal Year
92
2008 2009 2010 2011
General Revenues and Other Changes
in Net Position
Governmental activities:
Taxes
Property 12,512,950$ 13,481,500$ 13,664,765$ 13,944,725$
Sales and alcohol 3,767,526 3,871,995 3,853,161 4,002,740
Franchise 1,317,166 1,363,221 1,510,794 1,598,407
Other 25,429 28,859 28,859 28,883
Investment earnings 648,301 166,492 93,018 110,863
Gain (loss) on disposal of capital assets - 4,320 33,647 23,831
Miscellaneous 73,026 214,484 131,545 126,228
Transfers 981,016 547,456 168,276 5,336,312)(
Total governmental activities 19,325,414 19,678,327 19,484,065 14,499,365
Business-type activities:
Investment earnings 531,758 128,338 87,056 55,163
Gain (loss) on disposal of capital assets - 48,678)( 182,198)( -
Miscellaneous - - - -
Transfers 981,016)( 547,456)( 168,276)( 5,336,312
Total business-type activities 449,258)( 467,796)( 263,418)( 5,391,475
Total primary government 18,876,156 19,210,531 19,220,647 19,890,840
Change in Net Position
Governmental activities 1,041,345)( 2,246,340)( 761,621)( 5,175,137)(
Business-type activities 107,928 3,316,863 890,253 9,518,832
Total primary government 933,417)$( 1,070,523$ 128,632$ 4,343,695$
CITY OF FRIENDSWOOD, TEXAS
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(Accrual basis of accounting)
(Unaudited)
Fiscal Year
93
TABLE 2
(continued)
2012 2013 2014 2015 2016 2017
14,165,599$ 14,630,961$ 14,864,284$ 15,574,684$ 16,350,101$ 17,270,647$
3,907,577 4,293,794 4,693,484 5,291,186 5,393,920 6,482,367
1,556,556 1,583,258 1,673,615 1,726,557 1,779,234 1,661,654
23,356 24,974 32,799 - - -
137,202 88,510 109,849 79,071 149,003 187,001
17,601 43,788 34,359 - 19,564 25,999
147,457 78,682 84,275 108,306 128,813 131,639
1,725,141 1,773,982 1,799,344 1,226,205 1,397,065 1,358,744
21,680,489 22,517,949 23,292,009 24,006,009 25,217,700 27,118,051
82,853 37,565 40,713 49,138 95,825 141,978
7,000 - - - 7,569 -
- 35,790 - 7,839 - -
1,725,141)( 1,773,982)( 1,799,344)( 1,226,205)( 1,397,065)( 1,358,744)(
1,635,288)( 1,700,627)( 1,758,631)( 1,169,228)( 1,293,671)( 1,216,766)(
20,045,201 20,817,322 21,533,378 22,836,781 23,924,029 25,901,285
446,393)( 56,077 1,789,787 2,936,522 118,691)( 123,634
1,082,154 490,391 151,150)( 1,956,662 407,487 1,490,179
635,761$ 546,468$ 1,638,637$ 4,893,184$ 288,796$ 1,613,813$
Fiscal Year
94
2008 2009 2010 2011
General Fund
Reserved 1,037,279$ 686,404$ 1,731,056$ -$
Unreserved 9,177,390 9,185,590 7,399,217 -
Nonspendable - - - 220,151
Restricted - - - 97,728
Committed - - - -
Assigned - - - 1,085,527
Unassigned - - - 7,511,998
Total General Fund 10,214,669 9,871,994 9,130,273 8,915,404
All other governmental funds
Reserved 2,310,481 1,385,265 667,682 -
Unreserved, reported in:
Special revenue funds 643,223 1,075,343 1,328,145 -
Capital projects fund 323,597 326,600 - -
Permanent fund 30,070 30,507 30,720 -
Nonspendable - - - 30,869
Restricted - - - 4,162,423
Unassigned - - - -
Total all other governmental funds 3,307,371$ 2,817,715$ 2,026,547$ 4,193,292$
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 data.
CITY OF FRIENDSWOOD, TEXAS
FUND BALANCES - GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified accrual basis of accounting)
(Unaudited)
Fiscal Year
95
TABLE 3
2012 2013 2014 2015 2016 2017
-$ -$ -$ -$ -$ -$
- - - - - -
99,874 122,927 143,201 822,226 646,778 434,750
173,015 281,826 400,411 518,119 626,229 667,271
- - - 685,486 3,612 -
434,931 487,201 1,421,785 2,773,419 2,706,897 2,893,697
9,379,399 9,714,206 10,554,183 8,760,424 9,776,031 9,547,039
10,087,219 10,606,160 12,519,580 13,559,674 13,759,547 13,542,757
- - - - - -
- - - - - -
- - - - - -
- - - - - -
31,027 31,137 31,241 31,378 31,721 31,869
2,184,855 995,269 666,317 6,539,985 8,165,349 8,464,859
- - 239,078)( - 193,750)( -
2,215,882$ 1,026,406$ 458,480$ 6,571,363$ 8,003,320$ 8,496,728$
Fiscal Year
96
2008 2009 2010 2011
Revenues
Taxes 17,606,273$ 18,763,998$ 19,104,625$ 19,592,092$
Fines and forfeitures 1,161,903 1,143,102 1,043,126 1,012,592
Permits and fees 944,756 966,797 960,479 1,069,845
Intergovernmental 3,801,013 5,794,303 2,652,037 3,109,645
Investment earnings 639,402 161,106 90,337 109,272
Donations 265,535 272,911 280,223 276,209
Miscellaneous 37,876 34,448 81,366 78,243
Total revenues 24,456,758 27,136,665 24,212,193 25,247,898
Expenditures
General governmental 4,114,662 4,178,062 4,224,384 4,397,858
Public safety 12,404,745 14,717,404 9,799,372 10,093,964
Community development
and public works 3,045,904 3,406,881 - -
Public works - - 1,956,479 1,637,237
Community development - - 1,208,899 1,284,188
Parks and recreation 3,266,250 3,439,475 2,458,422 2,472,015
Library - - 979,084 979,978
Capital outlay 4,339,546 2,489,845 3,799,303 4,254,582
Debt principal payment 774,584 787,293 787,590 1,065,865
Interest and other 704,136 691,638 773,744 1,064,973
Total expenditures 28,649,827 29,710,598 25,987,277 27,250,660
Excess of revenues
over (under) expenditures 4,193,069)( 2,573,933)( 1,775,084)( 2,002,762)(
Other financing sources (uses)
Sale of capital assets 22,600 - 23,340 8,992
Insurance recoveries 63,106 123,707 50,579 45,334
Issuance of capital related debt - - - 3,460,000
Issuance of capital lease - 1,133,460 - -
Refunding bonds issued - - - 5,460,000
Payment to refunding escrow agent - - - -
Premium on issuance of debt - - - 317,452
Transfer in 992,586 2,098,405 1,512,987 1,235,892
Transfer out 11,570)( 1,613,970)( 1,344,711)( 6,573,032)(
Total other financing sources (uses)1,066,722 1,741,602 242,195 3,954,638
Net change in fund balance 3,126,347)$( 832,331)$( 1,532,889)$( 1,951,876$
Debt service as a percentage of
noncapital expenditures 6.1%5.4%7.0%8.4%
Fiscal Year
CITY OF FRIENDSWOOD, TEXAS
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified accrual basis of accounting)
(Unaudited)
97
TABLE 4
2012 2013 2014 2015 2016 2017
19,630,172$ 20,563,848$ 21,335,527$ 22,513,317$ 23,533,294$ 25,509,760$
1,037,880 939,380 860,257 907,557 873,872 1,023,556
1,174,013 1,327,918 1,385,898 1,349,264 1,450,939 1,708,357
1,077,890 918,641 1,791,451 3,536,980 664,427 1,763,974
135,483 87,330 109,117 77,947 147,403 184,127
306,119 363,413 349,166 349,325 257,724 434,164
41,410 84,673 54,989 72,837 79,435 165,619
23,402,967 24,285,203 25,886,405 28,807,227 27,007,094 30,789,557
4,322,631 4,250,320 4,306,143 5,343,160 4,385,321 4,975,926
10,201,010 10,234,811 10,599,575 11,348,346 12,135,956 14,751,381
- - - - - -
1,702,119 2,204,176 1,689,987 2,066,349 2,118,572 2,160,152
1,520,401 1,207,264 1,092,982 925,947 954,103 893,663
2,622,970 2,675,813 2,772,072 2,917,857 3,032,979 3,339,864
1,004,303 1,002,801 1,083,043 1,036,843 1,096,614 1,172,245
3,705,622 1,942,746 2,500,254 7,255,229 9,332,400 8,429,200
1,562,088 1,721,983 1,668,692 1,272,823 1,570,176 1,813,130
899,709 712,822 662,718 776,340 921,982 1,170,958
27,540,853 25,952,736 26,375,466 32,942,894 35,548,103 38,706,519
4,137,886)( 1,667,533)( 489,061)( 4,135,667)( 8,541,009)( 7,916,962)(
9,250 27,566 6,325 99 2,743 12,757
105,502 48,132 28,886 39,257 19,564 25,999
8,890,000 - - 9,595,000 7,345,000 5,605,000
464,270 147,318 - - - 756,006
- - - 2,840,000 - -
9,425,538)( - - 3,058,663)( - -
563,666 - - 646,746 1,484,593 435,074
1,970,819 1,973,106 1,799,344 1,544,662 1,503,442 1,364,399
245,678)( 199,124)( - 318,457)( 182,503)( 5,655)(
2,332,291 1,996,998 1,834,555 11,288,644 10,172,839 8,193,580
1,805,595)$( 329,465$ 1,345,494$ 7,152,977$ 1,631,830$ 276,618$
9.8%10.1%9.8%7.5%9.2%9.6%
Fiscal Year
98
Table 5
Less: Total
Commercial Total Exemptions and Total Direct
Fiscal Tax Residential and Industrial Other Assessed Tax Exempt Taxable Tax
Year Year Property Property Property Value Property Value Rate
2008 2007 2,305,398,212$ 266,240,487$ 223,856,148$ 2,795,494,847$ 642,347,609$ 2,153,147,238$ 0.57640
2009 2008 2,443,040,835 271,618,942 254,262,180 2,968,921,957 672,410,955 2,296,511,002 0.57970
2010 2009 2,509,894,027 277,693,532 248,910,248 3,036,497,807 695,681,434 2,340,816,373 0.57970
2011 2010 2,547,883,315 276,080,104 235,256,040 3,059,219,459 703,419,784 2,355,799,675 0.58510
2012 2011 2,584,070,993 280,043,373 230,531,859 3,094,646,225 706,059,683 2,388,586,542 0.59020
2013 2012 2,622,105,658 286,288,277 235,960,049 3,144,353,984 710,718,423 2,433,635,561 0.59700
2014 2013 2,695,532,057 294,316,218 238,127,209 3,227,975,484 724,153,848 2,503,821,636 0.59140
2015 2014 2,850,404,776 300,533,643 237,028,723 3,387,967,142 761,444,427 2,626,522,715 0.59140
2016 2015 3,156,205,930 335,006,408 206,365,157 3,697,577,495 776,779,458 2,920,798,037 0.56870
2017 2016 3,546,622,242 320,646,912 230,805,066 4,098,074,220 977,353,948 3,120,720,272 0.05460
Source: Galveston County Tax Assessor/Collector and City of Friendswood records.
Note: Property in the City of Friendswood is reassessed once every two years on average. (Source: Galveston Central Appraisal District)
Tax rates per $100 of assessed value.
Residential property includes both single-family and multi-family properties.
2,596,618,153 559,587,777 3,156,205,930
279,648,930 55,357,478 335,006,408
259,368,437 46,996,720 306,365,157
CITY OF FRIENDSWOOD, TEXAS
ASSESSED VALUE AND TAXABLE VALUE OF PROPERTY
LAST TEN FISCAL YEARS
(Unaudited)
99
Table 6
Fiscal
Year Friendswood Clear Creek Galveston County
Ended Debt Total Independent Independent Drainage Galveston Harris
September 30,General Service Direct School District School District District County County
2008 0.5016$ 0.0748$ 0.5764$ 1.1770$ 1.3200$ 0.1425$ 0.5686$ 0.62998$
2009 0.5097 0.0700 0.5797 1.3670 1.3600 0.1425 0.5586 0.62998
2010 0.4997 0.0800 0.5797 1.3670 1.3600 0.1425 0.6186 0.62998
2011 0.5198 0.0653 0.5851 1.3670 1.3600 0.1425 0.6198 0.62998
2012 0.5218 0.0684 0.5902 1.3670 1.3600 0.1400 0.6129 0.62998
2013 0.5307 0.0663 0.5970 1.3670 1.3600 0.1400 0.5999 0.62998
2014 0.5303 0.0611 0.5914 1.3670 1.4000 0.1400 0.5837 0.62998
2015 0.5303 0.0611 0.5914 1.3670 1.4000 0.1350 0.5788 0.62998
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
Source: Galveston County Tax Assessor/Collector and City of Friendswood records.
Note:
CITY OF FRIENDSWOOD, TEXAS
DIRECT AND OVERLAPPING PROPERTY TAX RATES
LAST TEN FISCAL YEAR
(Unaudited)
(rate per $100 of assessed value)
Overlapping rates are those of local and county governments that apply to property owners within the City of Friendswood.Not all overlapping rates
apply to all property owners.Overlapping rates for Friendswood Independent School District,Galveston County Consolidated Drainage District and
Galveston County apply only to residents whose property is in Galveston County.Overlapping rates for Clear Creek Independent School District and
Harris County apply only to residents whose property is in Harris County.
City Direct Rates Overlapping Rates
100
Table 7
Percentage Percentage
of Total City of Total City
Taxable Taxable
Taxable Assessed Taxable Assessed
Taxpayer Value Rank Value Value Rank Value
Reserve at Autumn Crk LTD 27,625,898$ 1 0.89% 12,600,000$ 3 0.45%
Texas-New Mexico Power Co. 18,019,376 2 0.58% 13,627,600 2 0.49%
LSREF3 Bravo Houston LLC 14,606,974 3 0.47% - -
Kroger Co.13,101,428 4 0.42% 9,176,030 5 0.33%
Autumn Creek Dev LTD 7,879,910 5 0.25% 6,627,210 9 0.24%
A-S 108 Friendswood Crossing LP 6,859,560 6 0.22% - -
H E Butt Grocery Company 6,086,480 7 0.20% 8,631,640 6 0.31%
PS LPT Properties Investors 5,826,000 8 0.19% - -
FM 528 Bay Area Blvd LP 5,533,556 9 0.18% - -
HCP Friendswood LLC 5,425,000 10 0.17% - -
Friendswood Estates, LTD - - 14,901,010 1 0.53%
Southwestern Bell Telephone Co.- - 9,246,010 4 0.33%
Southwest Properties, L.P.- - 7,350,000 7 0.26%
Texas HCP Holding, LP - - 6,995,240 8 0.25%
MB Friendswood Parkwood - - 5,833,550 10 0.21%
Total 110,964,182 3.56% 94,988,290 3.40%
All other taxpayers 3,009,756,090 96.44% 2,700,506,557 96.60%
3,120,720,272$ 100.00% 2,795,494,847$ 100.00%
Source: Galveston Central Appraisal District and Harris County Appraisal District
CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL PROPERTY TAX PAYERS
CURRENT YEAR AND NINE YEARS AGO
(Unaudited)
2017 2008
101
Table 8
Collections
Fiscal Year Taxes Levied (adjustments)
Ended for the Percentage in Subsequent Percentage
September 30,Fiscal Year Amount of Levy Years Amount of Levy
2008 12,421,754$ 12,193,715$ 98.73%220,729$ 12,414,444$ 99.94%
2009 13,317,911 13,113,928 99.12%193,098 13,307,026 99.92%
2010 13,553,716 13,395,543 99.36%143,775 13,539,318 99.89%
2011 13,738,978 13,608,076 99.47%118,199 13,726,275 99.91%
2012 14,068,660 13,916,558 99.51%138,260 14,054,818 99.90%
2013 14,454,404 14,361,379 99.63%69,957 14,431,336 99.84%
2014 14,747,526 14,656,257 99.38%64,369 14,720,626 99.82%
2015 15,424,948 15,306,943 99.23%83,599 15,390,542 99.78%
2016 16,431,153 16,264,080 98.98%128,174 16,392,254 99.76%
2017 16,994,387 16,922,419 99.58%- 16,922,419 99.58%
Source: Galveston County Tax Assessor/Collector and City of Friendswood records.
Note:Percentage of levy collected to date exceeds taxes levied for some fiscal years due to adjustments made to the tax levy in subsequent years.Taxes
levied per this schedule represent the original taxes levied, while collections include amounts related to adjustments.
Collected within the
Fiscal Year of the Levy Total Collections to Date
CITY OF FRIENDSWOOD, TEXAS
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(Unaudited)
102
Table 9
General General Certificates Water Total Percentage
Fiscal Obligation Capital Obligation of Revenue Primary of Personal Per
Year Bonds Leases Bonds Obligation Bonds Government Income Capita
2008 16,065,000$ 16,351$ 1,680,000$ -$ 30,355,000$ 48,116,351$ 0.41%1,355$
2009 15,445,000 982,518 865,000 - 42,260,000 59,552,518 0.50%1,582
2010 14,800,000 839,928 - - 42,045,000 57,684,928 0.47%1,516
2011 22,885,000 710,023 - - 35,205,000 58,800,023 0.46%1,579
2012 21,605,000 975,726 - - 34,115,000 56,695,726 0.42%1,498
2013 20,230,000 876,981 - - 32,995,000 54,101,981 0.37%1,410
2014 18,815,000 623,407 - - 31,830,000 51,268,407 0.35%1,318
2015 24,525,285 360,584 9,875,671 - 24,663,416 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 - 5,871,133 73,767,952 0.47%1,855
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
CITY OF FRIENDSWOOD, TEXAS
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(Unaudited)
103
Table 10
General Less Debt Net Percentage of
Fiscal Taxable Obligation Service General Taxable Value Per
Year Population Value Bonds Funds Bonded Debt Property Capita
2008 35,500 2,153,147,238$ 16,065,000$ 2,100,617$ 13,964,383$ 0.65%393$
2009 37,653 2,296,511,002 15,445,000 952,951 14,492,049 0.63%385
2010 38,057 2,340,816,373 14,800,000 545,676 14,254,324 0.61%375
2011 37,247 2,355,799,675 22,885,000 240,869 22,644,131 0.96%608
2012 37,839 2,388,586,542 21,605,000 193,714 21,411,286 0.90%566
2013 38,369 2,433,635,561 20,230,000 134,339 20,095,661 0.83%524
2014 38,911 2,503,821,636 18,815,000 130,147 18,684,853 0.75%480
2015 39,458 2,626,522,715 34,400,956 147,193 34,253,763 1.30%868
2016 39,767 2,920,798,037 29,260,000 159,686 29,100,314 1.00%732
2017 40,570 3,120,720,272 33,320,000 115,152 33,204,848 1.06%818
Note:Details regarding the City's outstanding debt can be found in the notes to the financial statements.
General Bonded Debt Outstanding
CITY OF FRIENDSWOOD, TEXAS
RATIOS OF NET GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
(Unaudited)
104
Table 11
Estimated
Estimated Share of
Debt Percentage Overlapping
Governmental Unit Outstanding Applicable Debt
Debt repaid with property taxes
Friendswood Independent School District 94,265,000$ 100.00%94,265,000$
Clear Creek Independent School District 888,875,935 6.939%61,679,990
Galveston County 251,793,000 9.113%22,947,000
Harris County 3,031,001,000 1.212%36,735,732
Subtotal, overlapping debt 215,627,722
City direct debt 36,736,090
Total direct and overlapping debt 252,363,812$
Sources: Information was obtained from either the governmental unit's website or the finance department of the
governmental unit.
Notes: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City.
This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne
by the residents and businesses of the City of Friendswood. The City’s share of the debt of the overlapping
governments is based on the ratio of the assessed value of the City’s own property to that of each of the
other governments. This process recognizes that, when considering the City's ability to issue and repay
long-term debt, the entire debt burden borne by the residents and businesses should be taken into account.
However, this does not imply that every taxpayer is a resident--and therefore responsible for repaying the
debt--of each overlapping government.
CITY OF FRIENDSWOOD, TEXAS
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
AS OF SEPTEMBER 30, 2017
(Unaudited)
105
Table 12
As a City Council-City Manager form of government, the City of Friendswood is not limited by law in the amount
of debt it may issue. The City's charter states:
Article 11, Section 5 of the State of Texas Constitution states in part:
"but no tax for any purpose shall ever be lawful for any one year, which shall exceed two and one-half percent
of the taxable property of such city"
The tax rate for fiscal year ended September 30, 2017 is $0.5460 per $100 of assessed valuation with assessed
valuation being 100% of market value.
CITY OF FRIENDSWOOD, TEXAS
LEGAL DEBT MARGIN INFORMATION
(Unaudited)
"In keeping with the Constitution of the State of Texas and not contrary thereto,the City of Friendswood shall
have the power to borrow money on the credit of the City for any public purpose not now or hereafter prohibited
by the Constitution and laws of the State of Texas,and shall have the right to issue all tax bonds,revenue bonds,
funding and refunding bonds,time warrants and other evidence of indebtedness as now authorized or as may
hereafter be authorized to be issued by cities and towns by the laws of the State of Texas."
106
Table 13
Utility Less:Net
Fiscal Service Operating Available Debt Service
Year Charges Expenses Revenue Principal Interest Coverage
2008 8,624,546$ 5,143,516$ 3,481,030$ 160,000$ 1,416,465$ 2.21
2009 12,028,895 5,249,388 6,779,507 215,000 1,986,015 3.08
2010 9,854,083 5,184,330 4,669,753 215,000 1,904,689 2.20
2011 12,726,936 5,410,497 7,316,439 1,440,000 1,640,437 2.38
2012 11,258,216 5,361,567 5,896,649 1,090,000 1,589,565 2.20
2013 11,462,779 6,113,276 5,349,503 1,120,000 1,548,303 2.00
2014 11,117,391 6,376,510 4,740,881 1,165,000 1,504,006 1.78
2015 11,020,029 6,220,331 4,799,698 1,205,000 1,457,772 1.80
2016 11,319,801 6,361,229 4,958,572 1,770,000 1,121,362 1.71
2017 12,295,441 6,911,675 5,383,766 2,100,000 1,229,025 1.62
Notes:Details regarding the City's outstanding debt can be found in the notes to the financial statements.
Operating expenses do not include interest, depreciation or amortization expenses.
Waterworks and Sewer Revenue Bonds
CITY OF FRIENDSWOOD, TEXAS
PLEDGED-REVENUE COVERAGE
LAST TEN FISCAL YEARS
(Unaudited)
107
Table 14
Per
Capita
Calendar Estimated Personal Personal Unemployment
Year Population Income Income Rate
2008 35,500 11,744,572,000$ 40,711$ 4.9%
2009 37,653 11,937,436,000 41,621 6.2%
2010 38,057 12,257,208,000 41,876 7.1%
2011 37,247 12,848,571,000 43,444 6.8%
2012 37,839 13,651,835,000 45,433 5.0%
2013 38,369 14,475,816,000 47,186 4.5%
2014 38,911 14,741,197,000 46,917 3.4%
2015 39,358 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%
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.
CITY OF FRIENDSWOOD, TEXAS
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN CALENDAR YEARS
(Unaudited)
108
Table 15
Percentage Percentage
Estimated of Total City Estimated of Total City
Employer Employees Workforce Employees Workforce
Friendswood ISD 694 26.47% 711 31.54%
Kroger 308 11.75% 225 9.98%
HEB 305 11.63% 280 12.42%
City of Friendswood 238 9.08% 228 10.12%
Clear Creek ISD 234 8.92% 2 - - 1
Friendship Haven Nursing Home 146 5.57% 150 6.65%
Friendswood Healthcare (Autumn Hills) 96 3.66% 70 3.11%
McDonalds 76 2.90% 80 3.55%
Brookdale 70 2.67% - - 1
U.S. Post Office 69 2.63% 70 3.11%
UTMB 63 2.40% 97 4.30%
Sonic 52 1.98% 64 2.84%
Timber Creek Golf Club 45 1.72% 65 2.88%
Perry & Sons Market and Grille 45 1.72% - -
24 Hour Fitness 42 1.60% - -
Luna's Mexican Restaurant 41 1.56% 40 1.77%
AAA Blastcote 34 1.30% - -
Village on the Park 34 1.30% 40 1.77%
Memorial Hermann Medical Group 30 1.14% - -
Summerville (Park Place)- - 3 86 3.82%
Gary Greene Realtors - - 3 48 2.13%
Total 2,622 100.00% 2,254 100.00%
Source: City Economic Development Division
1 Data was not available for fiscal year 2008.
2 Includes Wedgewood Elementary and Brookside Intermediate.
3 Data was not available for fiscal year 2017.
20082017
CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
(Unaudited)
109
Table 16
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Function/Program
General Government:
City Attorney - - - - - - - 1.00 1.00 1.00
City Manager 5.50 5.50 5.50 5.50 4.65 4.15 4.15 4.55 5.40 5.40
City Secretary 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Administrative Services 27.20 27.20 27.20 27.20 28.20 28.20 28.70 28.70 27.70 27.70
Public Safety:
Police 83.90 79.40 79.40 80.40 80.40 81.40 82.40 85.72 86.72 88.72
Fire marshal and fire 6.10 6.10 6.10 6.10 6.10 6.10 6.50 6.60 6.60 6.60
Public Works:- - 19.00 19.00 19.33 20.33 26.33 25.33 29.00 26.00
Community Development:- - 17.70 17.70 16.89 16.89 10.89 10.89 11.70 11.70
Community Development and
Public Works:36.00 36.70 - - - - - - - -
Community Services:32.20 32.20 18.95 18.95 19.28 19.20 19.03 19.63 19.63 20.90
Library - - 14.72 14.72 14.72 14.37 14.37 14.62 14.62 14.97
Water:9.00 10.30 10.30 10.30 10.30 9.30 9.30 8.30 8.30 8.30
Sewer:8.00 9.00 9.00 9.00 9.00 9.00 9.00 8.00 8.00 11.00
Total City Employees:212.90 211.40 212.87 213.87 213.87 213.94 215.67 218.34 223.67 227.29
Source: City of Friendswood Budget Documents
Notes: Beginning with fiscal year 2006, the fulltime equivalent for Fire Marshal and Fire include only the Fire Marshal Department. The City
has a contract with the Friendswood Volunteer Fire Department and there are no employees paid directly by the City.
From 2008 - 2009, public works and community development were combined.
In 2010 - 2017, they are shown as two separate departments.
Beginning in fiscal year 2010, the fulltime equivalent for Library is shown separate from Community Services. In previous years, the fulltime
equivalent is included with Community Services.
In-house City Attorney added to staff in fiscal year 2015.
Full-time Equivalent Employees as of September 30
CITY OF FRIENDSWOOD, TEXAS
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
(Unaudited)
110
Table 17
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Function/Program
General Government:
Building permits issued 872 1,189 984 1,222 1,317 1,469 1,395 1,377 1,865 2,177
Building inspections conducted 11,472 6,673 8,744 9,514 10,486 11,470 10,611 12,145 11,026 12,134
Police:
Physical arrests 1,868 1,794 2,002 1,962 1,885 1,601 1,596 1,479 1,464 903
Parking violations 46 33 27 82 61 107 58 63 44 61
Traffic violations 7,897 7,821 7,000 7,291 6,518 5,718 5,815 4,540 5,001 3,669
Fire Marshal:
Inspections 1,312 1,653 1,509 1,444 1,616 1,673 1,427 1,512 1,354 1,233
Fire:
Emergency responses 2,794 2,950 2,737 2,818 2,975 2,993 3,261 3,258 3,303 3,599
Fires extinguished 118 102 110 108 86 86 116 78 76 75
Parks and Recreation:
Recreation participants 7,547 12,283 13,792 13,894 16,068 18,607 15,178 16,153 21,369 20,556
Facility reservations 1,065 1,727 1,451 503 493 686 728 1,443 1,444 1,004
Library:
Volumes in collection 96,100 94,512 99,880 97,622 125,251 133,865 141,383 133,165 147,726 100,678
Total volumes borrowed 323,323 350,892 356,787 349,223 355,447 367,948 367,452 350,145 301,158 341,048
Water:
New connections 202 46 160 173 185 189 193 - 183 137
Water main breaks 73 73 64 516 112 193 149 57 46 44
Average daily consumption 4,217 4,209 3,408 6,406 4,584 5,577 5,171 4,970 4,963 5,282
(thousands of gallons)
Peak daily consumption 11,004 7,187 7,606 13,698 10,896 11,505 9,917 12,623 10,472 10,110
Sewer:
Average daily sewage treatment 3,120 2,950 3,465 2,787 2,968 2,956 2,867 3,306 3,382 3,286
(thousands of gallons)
Maximum daily flow 7,520 9,537 11,393 10,833 10,777 10,401 10,770 11,237 12,188 12,766
(thousands of gallons)
Source: Various City departments and prior year CAFRs
CITY OF FRIENDSWOOD, TEXAS
LAST TEN FISCAL YEARS
OPERATING INDICATORS BY FUNCTION/PROGRAM
(Unaudited)
Fiscal Year
111
Table 18
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Function/Program
Police
Stations 1 1 1 1 1 1 1 1 1 1
Patrol units 27 24 26 26 25 26 27 29 31 32
Fire
Stations 3 4 4 4 4 4 4 4 4 4
Public Works
Streets - paved (miles)159 160 161 162 164 165 167 169 172 174
Streets - unpaved (miles)2 2 2 2 2 2 2 2 2 2
Traffic signals 3 3 3 3 3 3 3 3 3 3
Parks and Recreation
Acreage 189 189 189 189 189 189 189 232 266 266
Public Safety:Parks 8 8 8 8 8 8 8 8 9 9
Swimming pool 1 1 1 1 1 1 1 1 1 1
Tennis courts 4 4 4 4 4 4 4 4 4 4
Library 1 1 1 1 1 1 1 1 1 1
Water
Water mains (miles)180 181 183 184 186 187 207 209 212 214
Fire hydrants 1,275 1,275 1,305 1,324 1,588 1,608 1,610 1,631 1,672 1,690
Connections 11,982 12,057 12,231 12,476 12,711 12,929 13,093 13,289 13,482 13,619
Storage capacity 5,993 5,993 5,993 7,500 7,500 7,500 8,000 8,100 7,850 7,850
(thousands of gallons)
Sewer
Sanitary sewers (miles)155 156 158 159 162 163 194 195 198 200
Connections 11,115 11,256 11,404 11,563 11,828 12,072 12,236 12,407 12,378 12,588
Storm sewers (miles)95 96 98 99 100 100 105 106 109 110
Treatment capacity 4,850 4,850 4,850 4,850 4,850 4,850 12,000 9,250 9,250 9,250
(thousands of gallons)
Source: Various City departments and prior year CAFRs
Fiscal Year
CITY OF FRIENDSWOOD, TEXAS
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
(Unaudited)
112
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