HomeMy WebLinkAboutComprehensive Annual Financial Report - FY2003CITY OF
FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
YEAR ENDED SEPTEMBER 30, 2003
CITY OF
FRIENDSWOOD, TEXAS
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
Fiscal Year Ended
September 30, 2003
Officials Issuing Report:
Ronald E. Cox
City Manager
Roger C. Roecker
Director of Administrative Services
CITY OF FRIENDSWOOD, TEXAS
TABLE OF CONTENTS
SEPTEMBER 30, 2003
Page
Exhibit Number
INTRODUCTORY SECTION
Letter of Transmittal......................................................................................... 1 – 4
Organization Chart............................................................................................ 5
Certificate of Achievement for Excellence in Financial Reporting.................. 6
Principal Officials............................................................................................. 7
FINANCIAL SECTION
Independent Auditors’ Report....................................................................................... 8 – 9
Management’s Discussion and Analysis ...................................................................... 10 – 17
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Assets.......................................................................................... 18
Statement of Activities............................................................................................ 19 – 20
Fund Financial Statements
Balance Sheet – Governmental Funds.................................................................... 21
Statement of Revenues, Expenditures and Changes in
Fund Balances – Governmental Funds................................................................ 22
(continued)
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
(Continued)
SEPTEMBER 30, 2003
Page
Number
FINANCIAL SECTION (Continued)
Fund Financial Statements (Continued)
Reconciliation of the Statement of Revenues, Expenditures
and Changes in Fund Balances of Governmental Funds to the
Statement of Activities......................................................................................... 23
Statement of Revenues, Expenditures and Changes in
Fund Balances – Budget and Actual – General Fund.......................................... 24
Statement of Net Assets – Proprietary Funds......................................................... 25
Statement of Revenues, Expenses and Changes in
Fund Net Assets – Proprietary Funds.................................................................. 26
Statement of Cash Flows – Proprietary Funds........................................................ 27 – 28
Notes to Financial Statements.................................................................................... 29 – 55
Combining and Individual Fund Statements and Schedules
General Fund
Comparative Statements of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual
(Budgetary Basis)................................................................................................. 56 – 63
(continued)
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
(Continued)
SEPTEMBER 30, 2003
Page
Number
FINANCIAL SECTION (Continued)
Combining and Individual Fund Statements and Schedules (Continued)
Nonmajor Governmental Funds
Combining Balance Sheet....................................................................................... 64 – 65
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances................................................................................... 66 – 67
Nonmajor Special Revenue Funds
Schedule of Revenues, Expenditures and Changes in
Fund Balances – Budget and Actual – Fire/EMS
Donation Fund ..................................................................................................... 68
Nonmajor Debt Service Funds
Schedule of Revenues, Expenditures and Changes in
Fund Balances – Budget and Actual.................................................................... 69
STATISTICAL SECTION (Unaudited)
Page
Table Number
General Government Revenue by Source...................................................... 1 70 – 71
General Government Expenditures by Function............................................ 2 72
(continued)
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
(Continued)
SEPTEMBER 30, 2003
Page
Table Number
STATISTICAL SECTION (Unaudited) (Continued)
Property Tax Levies and Collections............................................................. 3 73 – 74
Assessed and Estimated Actual Value of Taxable Property.......................... 4 75
Tax Rate Distribution..................................................................................... 5 76
Property Tax Rates Per $100 Valuation Direct and Overlapping.................. 6 77
Principal Taxpayers ....................................................................................... 7 78
Ratio of Annual Debt Service Expenditures for General
Bonded Debt............................................................................................... 8 79
Revenue Bond Coverage................................................................................ 9 80 – 81
Ratio of Net General Bonded Debt to Assessed Value and
Net Bonded Debt Per Capita....................................................................... 10 82
Computation of Direct and Overlapping Debt............................................... 11 83
Miscellaneous Statistical Data....................................................................... 12 84 – 85
INTRODUCTORY SECTION
1
January 23, 2004
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, 2003, 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 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 auditors’ report on the financial statement, a
Management Discussion and Analysis (MD&A), the basic financial statements and combining and
individual fund financial statements and schedules. The MD&A, found immediately following the
report of the independent auditor, is a narrative introduction; overview and analysis required by
generally accepted accounting principles (GAAP). This letter of transmittal is designed to complement
the MD&A and should be read in conjunction with it. The statistical section includes selected financial
and demographic information, generally presented on a multi-year basis.
Management of the City is responsible for establishing and maintaining an internal control structure
designed to ensure that the assets of the City are protected from loss, theft or misuse and to ensure that
adequate accounting data are compiled to allow for the preparation of financial statements in conformity
with generally accepted accounting principles. The internal control structure is designed to provide
reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable
assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived;
and (2) the valuation of costs and benefits requires estimates and judgments by management.
The City Charter requires an annual audit of the financial statements of all of the various funds of the
City by independent certified public accountants. The accounting firm of Pattillo, Brown & Hill, L.L.P.
has performed such an audit and their opinion has been included in this report. In addition to meeting
the requirements set forth in the City Charter, the audit was also designed to meet the requirements of
the federal Single Audit Act. The City is required to undergo an annual single audit in conformity with
the provision of the Single Audit Act of 1984, the Single Audit Act Amendments of 1996 and U. S.
Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Nonprofit
Organizations. As part of the City’s single audit, tests are made to determine the adequacy of the
internal control structure, including that portion related to federal award programs, as well as to
determine that the City has complied with applicable laws and regulations. The independent auditors’
reports related specifically to the single audit are included in a separate single audit 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 budged, 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 service no more than three 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
The City of Friendswood, Texas, is located 20 miles southeast of downtown Houston in southern Harris
and northern Galveston Counties. Friendswood’s population has more than doubled in every census
count since 1960. The current population is estimated at 34,152. The economy is linked closely to that
of Houston and the Clear Lake area.
The Friendswood/Clear Lake regional economy has become more diverse, featuring aerospace,
petrochemical, tourism, boating, and recreation industries. Biotechnology, biomedical, software services,
electronics and communication equipment sub-sectors are increasing and show solid signs of growth and
sustainability. The NASA/Johnson Space Center, the Bayport petrochemical complex, Ellington Field and
the University of Houston-Clear Lake are key players in the area’s economy. According to BAHEP
estimates, “over three-quarters of a million people work within a 45-minute drive time of the Clear Lake
area.”
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.
3
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.
Cash Management
The City’s investment policy authorizes the City to invest in Obligations of the U. S. Government,
certificates of deposits, money market mutual funds, and local government investment pools. The
primary objectives of the investment policy, in priority order, are safety (preservation of capital),
liquidity (availability of funds) and yield (rate of return commensurate with investment risk and cash
flow needs). The average yield on maturing investments for the year was 2.06%. All deposits are either
insured by federal depository insurance or collateralized with securities held by the pledging financial
institution’s trust department.
Risk Management
The City’s risk management division continually evaluates risk in terms of severity, frequency of
probability and loss exposure. A proactive safety training and awareness program is provided for all
City employees. The City purchases insurance coverage for property, liability, and workers’
compensation through Texas Municipal League Intergovernmental Risk Pool.
Awards
The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for
Excellence in Financial Reporting to the City of Friendswood for its comprehensive annual financial
report for the fiscal year ended September 30, 2002. This was the fifteenth 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.
4
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,
Roger C. Roecker
Director of Administrative Services
5
CITY OF FRIENDSWOOD, TEXAS
ORGANIZATION CHART
SEPTEMBER 30, 2003
7
CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL OFFICIALS
SEPTEMBER 30, 2003
Term
Elected Officials Position Expires
Kimball W. Brizendine Mayor May 2006
Laura Ewing Council Member - Position No. 1 May 2006
Jerry Ericsson Council Member - Position No. 2 May 2005
Tracy Goza Council Member - Position No. 3 May 2006
David Smith Council Member - Position No. 4 May 2004
Shannon Kimmel Council Member - Position No. 5 May 2005
Mel P. Measeles Council Member - Position No. 6 May 2004
Appointed Officials Position
Ronald E. Cox City Manager
Deloris McKenzie City Secretary
Jon Branson Director of Community Services
Rebecca Carbone Tax Assessor-Collector
Mickiel G. Hodge Community Development Director
and Public Works Director
Olson & Olson City Attorney
Terry Byrd Fire Marshal/Emergency Management
Coordinator
Roger C. Roecker Director of Administrative Services
Robert Wieners Police Chief
James W. Woltz Judge - Municipal Court
FINANCIAL SECTION
INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and
Member of the City of Council
City of Friendswood, Texas
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information of the City of
Friendswood, Texas, as of and for the year ended September 30, 2003, which collectively comprise the
City’s basic financial statements as listed in the table of contents. These financial statements are the
responsibility of the City of Friendswood, Texas’ management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and 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 of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information of the City of Friendswood, Texas, as of September
30, 2003, and the respective changes in financial position and cash flows, where applicable, thereof and
the respective budgetary comparison for the General Fund for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
As described in Note 1, the City has implemented a new financial reporting model, as required
by the provisions of GASB Statement No. 34, Basic Financial Statements—and Management’s
Discussion and Analysis—for State and Local Governments, as of September 30, 2003.
In accordance with Government Auditing Standards, we have also issued our report dated January
23, 2004, on our consideration of the City of Friendswood, Texas’ internal control over financial reporting
and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That
report is an integral part of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of our audit.
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9
The management’s discussion and analysis on pages 10 through 17 is not a required part of the
basic financial statements but is supplementary information required by accounting principles generally
accepted in the United States of America. We have applied certain limited procedures, which consisted
principally of inquiries of management regarding the methods of measurement and presentation of the
supplementary information. However, we did not audit the information and express no opinion on it.
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 fund financial statements and schedules, and statistical tables are
presented for purposes of additional analysis and are not a required part of the basic financial statements.
The combining and individual fund financial statements and schedules have been subjected to the
auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements taken as a whole. The
introductory section and statistical tables have not been subjected to the auditing procedures applied in
the audit of the basic financial statements and, accordingly, we express no opinion on them.
January 23, 2004
MANAGEMENT’S
DISCUSSION AND ANALYSIS
10
CITY OF FRIENDSWOOD, TEXAS
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED SEPTEMBER 30, 2003
As Management of the City of Friendswood, we offer readers of the City’s financial statements this
narrative overview and analysis of the financial activities of the City for the fiscal year ended September
30, 2003. This information is not intended to be a complete statement of the city’s financial condition
we recommend and encourage readers to consider the information presented here in conjunction with the
accompanying transmittal letter and basic financial statements.
FINANCIAL HIGHLIGHTS
• The assets of the City of Friendswood exceeded its liabilities at the close of the most
recent fiscal year by $77,816,204(net assets). Of this amount, $9,527,093 (unrestricted
net assets) may be used to meet the government’s ongoing obligations in accordance with
the City’s fund designation and fiscal policies.
• The City’s net assets increased by $3,990,961.
• As of the close of the current fiscal year, the City of Friendswood’s governmental funds
reported combined ending fund balances of $13,624,484. Approximately 93% of this
amount or $12,686,457 is available for spending at the City’s discretion (unreserved fund
balance).
• As of the close of the current fiscal year, the City of Friendswood’s governmental funds
reported combined ending fund balances of $13,624,484. Approximately 31% of this
amount or $5,055,679 is unreserved and available for use within the City’s designation
and policy.
• The City’s bond payable increased by $7.7 million due to the issuance of permanent
improvement bonds.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City’s basic financial
statements. The City’s basic financial statements comprise three components: 1) government-wide
financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report
also contains other supplementary information in addition to the basic financial statements themselves.
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the
City’s finances, in a manner similar to a private-sector business.
11
The Statement of Net Assets presents information on all of the City’s assets and liabilities, with the
difference between the two reported as net assets. Over time, increases or decreases in net assets may
serve as a useful indicator of whether the financial position of the City is improving or deteriorating.
This statement combines and consolidates governmental funds current financial resources (short-term
spendable resources) with capital assets and long-term obligations. Other non-financial factors should
also be taken into consideration, such as changes in the City’s property tax base and the condition of the
City’s infrastructure (i.e. roads, drainage improvements, storm, sewer and water lines, etc.), to access the
overall financial condition of the City.
The Statement of Activities presents information showing how the City’s net assets changed during the
fiscal year. All of the current year’s revenues and expenses are taken into account regardless of when
cash is received or paid. Thus, revenues and expenses are reported in this statement for some items that
will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned by not unused
compensated absences). Both the statement of net assets and the statement of activities are prepared
utilizing the accrual basis of accounting as opposed to the modified accrual basis used in prior reporting
models.
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 a significant portion of their costs through user fees (business-type activities).
• Governmental activities include most of the City’s basis services, (general government,
public safety, community development & public works and community services).
• Business-type activities include the City’s water and sewer system.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. Fund accounting is used by state and local governments
to control and managed money for particular purposes and to ensure 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. However, unlike the government-wide financial statements, governmental
funds focus on current sources and uses of spendable resources. The governmental fund
statement provides a detail short-term view of the City’s general government operations
and helps you determine whether resources are available in the near future to finance City
programs. Comparing the information presented for governmental funds with the
information presented for governmental activities in the government-wide financial
statements will help the reader to better understand the long-term impact of the
government’s near-term financing decisions. The governmental funds balance sheet,
statement of revenue and expenditures, and changes in fund balances include a
reconciliation to provide such comparison.
12
The City maintains eight governmental funds. Information is presented separately in the
governmental fund balance sheet and the governmental fund statement of revenues,
expenditures, and changes in fund balances for the general fund and the capital projects
funds, both are considered to be major funds. The other six 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.
The City adopts an annual appropriated budget for its General Fund. A budgetary
comparison statement has been provided for the General Fund to demonstrate compliance
with this budget.
• Proprietary funds – The City maintains two types of proprietary funds. The City uses
the Enterprise fund for water and sewer operations. The enterprise fund reports the same
functions presented as business-type activities in the government-wide financial
statement. The second proprietary fund is the Internal Service Fund. This fund is used to
account for fleet management services. The Internal Service Fund is included within the
governmental activities in the government-wide financial statements.
Proprietary fund financial statements provide the same type of information as the
government-wide financial statements, only more detail and including the internal service
fund type activity.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in
the government-wide and fund financial statements.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents
combining and individual fund statements and schedules that further support the information in the
financial statements. These statements and schedules are presented immediately following the notes to
the financial statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
The City’s net assets exceed liabilities by $77.8 million as of September 30, 2003. The largest portion
of the City’s net assets (86.61%) reflects its investments in capital assets (e.g., land, buildings,
equipment, improvements, construction in progress and infrastructure), less any related debt used to
acquire those assets that is still outstanding. The City uses these capital assets to provide services to
citizens; therefore, these assets are not available for future spending. It should be noted that the
resources needed to repay this debt must be provided from other sources, since the capital assets
themselves cannot be used to liquidate these liabilities.
With the first year implementation of GASB Statement 34, the City is not presenting comparable
columns in the various comparisons and analyses for the prior year.
13
CITY OF FRIENDSWOOD’S NET ASSETS
Governmental Business-type
Activities Activities
2003 2003 Total
Current and other assets 15,258,770$ 7,103,955$ 22,362,725$
Capital assets 53,274,291 35,188,349 88,462,640
Total assets 68,533,061 42,292,304 110,825,365
Long-term liabilities 11,497,471 19,369,600 30,867,071
Other liabilities 1,239,565 902,525 2,142,090
Total liabilities 12,737,036 20,272,125 33,009,161
Net assets:
Invested in capital assets,
net of related debt 49,742,075 17,656,296 67,398,371
Restricted 585,080 305,660 890,740
Unrestricted 5,468,870 4,058,223 9,527,093
Total net assets 55,796,025$ 22,020,179$ 77,816,204$
Governmental and business-type activities increased the City’s net assets by $3.9 million in 2003. The
following table provides a summary of the City’s operations for the year ended September 30, 2003.
The City first implemented GASB Statement 34 in 2003; therefore, comparative data is not presented.
The Governmental activities increased the City of Friendswood’s net assets by $3.6 million, accounting
for 91% of the total growth in net assets. Business-type activities increased the City’s net assets by
$363,000, accounting for 9% of the total growth in net assets.
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CITY OF FRIENDSWOOD’S CHANGES IN NET ASSETS
Governmental Business-type
Activities Activities
2003 2003 Total
Revenues:
Program revenues:
Charges for services 2,589,339$ 7,449,152$ 10,038,491$
Operating grants and contributions 661,568 - 661,568
Capital grants and contributions 749,772 - 749,772
General revenues:
Property taxes 9,706,202 - 9,706,202
Sales taxes 2,875,071 - 2,875,071
Franchise taxes 1,058,726 - 1,058,726
Other taxes 79,691 - 79,691
Investment earnings 154,558 - 154,558
Miscellaneous 30,826 - 30,826
Total revenues 17,905,753 7,449,152 25,354,905
Expenses:
General government 2,923,552 - 2,923,552
Public safety 5,760,097 - 5,760,097
Community development and public works 3,383,229 6,521,436 9,904,665
Community services 2,747,438 - 2,747,438
Interest on long-term debt 128,192 - 128,192
Total expenses 14,942,508 6,521,436 21,463,944
Increases in net assets before
extraordinary item and transfers 2,963,245 927,716 3,890,961
Extraordinary item - 100,000 100,000
Transfers 664,102 664,102)( -
Increase in net assets 3,627,347 363,614 3,990,961
Net assets, October 1, 2002 52,168,678 22,246,822 74,415,500
Prior Period Adjustment - 590,257)( 590,257)(
Net assets, September 30, 2003 55,796,025$ 22,020,179$ 77,816,204$
FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS
Governmental Funds
At the end of the current fiscal year, the City’s governmental funds reported combined ending fund
balances of $13,624,484. Approximately 93% of this amount ($12,686,457) constitutes unreserved fund
balance, which is available for spending at the City’s discretion. The remainder of the fund balance is
reserved to indicate that it is not available for new spending because it has already been committed for
encumbrances ($673,210), inventory and prepaid expense ($10,249) and debt service ($254,568).
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During the current year, General Fund balance increased by $1,194,397. This increase is due to
unexpended capital projects in streets, ($238,833), drainage, ($572,409), parks and recreation,
($139,102) and building operations ($188,903). These amounts are included as part of designated fund
balance. The Debt Service Fund balance increased by $7,419,458 due to the issuance of the 2003
Permanent Improvement Bonds. Debt Service Fund balance decreased by $668,877 due to budgeted
expenditures for the Friendswood Sportspark buyout agreement.
Proprietary Fund
Unrestricted net assets of the respective proprietary funds are Enterprise, (water and sewer), $4,058,223,
and Internal Service Fund (vehicle replacement fund), $8,207. The net assets of the Water and Sewer
Fund (after restatement) increased by $363,614. The net assets of the Internal Service Fund increased
by $260,325.
General Fund Budgetary Highlights
The City made revisions to the original appropriations approved by the City Council. These changes
resulted in an increase in budgeted expenditures from the original budget of $2,837,365 or 20%. The
majority of this increase was the re-appropriation of capital for designated projects ($750,000),
encumbrances ($1,180,000) from the prior year, appropriation of state funding for street projects
($440,000), and the receipt of intergovernmental revenue from FEMA ($518,000). There was a
reduction of $84,000 due to the Fire Education Program grant that will not begin until the next fiscal
year.
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, 2003 is $88,462,640. The investment in
capital assets include land, buildings and improvements, equipment, infrastructure, water rights and
construction in progress.
CITY OF FRIENDSWOOD’S CAPITAL ASSETS AT YEAR-END
Governmental Business-type
Activities Activities
2003 2003 Total
Land 24,011,964$ 718,493$ 24,730,457$
Buildings and improvements 26,398,880 - 26,398,880
Machinery and equipment 1,955,383 17,295,193 19,250,576
Water and wastewater system - 12,511,571 12,511,571
Water rights - 3,465,469 3,465,469
Construction in progress 908,064 1,197,623 2,105,687
Total capital assets, net 53,274,291$ 35,188,349$ 88,462,640$
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This year’s major capital events during the current fiscal year included the following:
• Completion of the FEMA Hazard Mitigation Buyout Program $19.2 million; $2.7 million
City contribution
• Purchased land for the new public safety facility $1.1 million
• Sunset Drive reconstruction $479,000
• 500,000 gallon ground storage tank at well number 4 $1 million
• 500,000 gallon ground storage tank at well number 3 $670,000
• Beamer Road pump station $2.4 million
• Beamer Road water line $941,000
• 1.0 MG elevated water storage tank $1.2 million
• Blackhawk Waste Water Treatment Plant improvements $858,000
Additional information on the City’s capital assets can be found in the notes 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
obligations of $30,175,307.
OUTSTANDING DEBT AT YEAR-END
Governmental Business-type
Activities Activities
2003 2003 Total
General obligations 10,375,891$ 2,468,558$ 12,844,449$
Revenue bonds payable - 14,185,000 14,185,000
Certificates of obligation - 2,635,000 2,635,000
Capital leases 510,858 - 510,858
Total 10,886,749$ 19,288,558$ 30,175,307$
During the current fiscal year, the City issued $8.7 million of general obligation bonds. These bonds
will be used to finance the construction of public safety facilities, and park, street and drainage
improvements.
17
The City’s General Obligation, Revenue Bonds, and Certificates of Obligation bond ratings are listed
below:
Moody's Standard
Investors Service and Poor's
General Obligation Bonds A1 A
Revenue Bonds A2 N/A
Additional information on the City’s long-term debt can be found in the notes to the financial statements.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
Despite slower economic conditions, the entire area surrounding Friendswood continues to experience
unprecedented growth. The City’s current population is estimated to be 34,152. Friendswood is
expected to reach build out sometime before 2020 with an estimated population of 50,000. The City is
continuing to focus on Economic Development initiatives and redevelopment of Main Street. In the
2003-04 budget, the City provided funding to develop and support these initiatives. The City
experienced a slow down in residential building during the previous year, but continues to grow with
250 new homes expected in 2003-04.
The City’s largest single source of revenue in the General Fund continues to be ad valorem taxes. The
City’s tax rate is $.6385 and has remained the same for five consecutive years. This rate consists of
maintenance and operations (M&O) tax rate of $.5547 and an Interest and Sinking (debt service) tax rate
of $.0838. The rate was set based on a net assessed value of $1,674,000,000. This is an increase of
$169,000,000 in taxable value with $102,500,000 or 61% resulting from new construction in the City.
This additional value results in an M&O levy increase of $937,000 with $480,000 (52%) directed
towards replenishing the General Fund balance. The City’s financial management policies, sets the
guideline to maintain fund balance and net assets 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. While the City projects a
slight increase from the prior year budget of $2,450,000 to $2,500,000, the 2004 estimate is 5% less than
the collections of the previous fiscal year. Other significant general fund revenues are building permits,
$425,000 and municipal court fines, $545,000. If all estimates are realized, the total general fund
unreserved fund balance is projected to be $2.3 million at September 30, 2004.
Water and sewer revenues are budgeted at $4,259,000 and $2,417,850 respectively. This represents a
slight increase over the previous year. Water and sewer reserves are expected to be $5 million at the end
of fiscal year 2004. Pursuant to the financial management policy, funds in excess of the 90-day
operating reserve are designated for future capital improvements. This capital reserve will allow the
City to reduce the amount of future issuances of revenue bonds.
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, customers, investors, and creditors with a
general overview of the City’s finances and to show the City’s accountability for the money it receives.
If you have questions about this report or need additional information, contact Administrative Services,
P. O. Box 1288, Friendswood, Texas 77549-1288, or call Roger C. Roecker, (281) 996-3211, or email
rroecker@ci.friendswood.tx.us.
BASIC
FINANCIAL STATEMENTS
Governmental Business-type
Activities Activities Total
ASSETS
Cash and investments 13,475,467$ 3,443,368$ 16,918,835$
Receivables, net of allowances for uncollectibles
Taxes 1,079,238 - 1,079,238
Customer accounts 97,839 1,101,286 1,199,125
Other 240,735 59,841 300,576
Due from other governments 287,298 - 287,298
Inventories 2,383 5,575 7,958
Prepaid and other assets 7,866 4,572 12,438
Deferred charges 67,944 141,696 209,640
Restricted assets:
Cash and investments - 2,102,899 2,102,899
Net investment in joint venture - 244,718 244,718
Capital assets:
Land 24,011,964 718,493 24,730,457
Buildings and improvements 29,361,827 - 29,361,827
Machinery and equipment 5,077,297 25,638,890 30,716,187
Water and wastewater system - 19,697,646 19,697,646
Construction in progress 908,064 1,197,623 2,105,687
Water rights - 3,465,469 3,465,469
Accumulated depreciation 6,084,861)( 15,529,772)( 21,614,633)(
Total capital assets, net of accumulated depreciation 53,274,291 35,188,349 88,462,640
Total assets 68,533,061$ 42,292,304$ 110,825,365$
LIABILITIES
Accounts payable 618,022$ 469,804$ 1,087,826$
Accrued liabilities 544,954 82,138 627,092
Customer deposits - 249,195 249,195
Accrued interest 76,589 101,388 177,977
Noncurrent liabilities:
Due within one year 464,724 763,423 1,228,147
Due in more than one year 11,032,747 18,606,177 29,638,924
Total liabilities 12,737,036 20,272,125 33,009,161
NET ASSETS
Invested in capital assets,
net of related debt 49,742,075$ 17,656,296$ 67,398,371$
Restricted for:
Debt service 296,606 305,660 602,266
Other purposes 288,474 - 288,474
Unrestricted 5,468,870 4,058,223 9,527,093
Total net assets 55,796,025$ 22,020,179$ 77,816,204$
The notes to the financial statements are an integral part of this statement.
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2003
Primary Government
18
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions
Primary Government:
Governmental activities:
General government 2,923,552$ 647,958$ -$ -$
Public safety 5,760,097 9,433 618,092 -
Community development and public works 3,383,229 1,865,086 37,425 749,772
Community services 2,747,438 66,862 6,051 -
Interest on long-term debt 128,192 - - -
Total governmental activities 14,942,508 2,589,339 661,568 749,772
Business-type activities:
Water and sewer 6,521,436 7,449,152 - -
Total business-type activities 6,521,436 7,449,152 - -
Total primary government 21,463,944$ 10,038,491$ 661,568$ 749,772$
General revenues:
Taxes:
Property taxes, levied for general purposes
Property taxes, levied for debt service
Sales taxes
Franchise taxes
Other taxes
Investment earnings
Miscellaneous
Extraordinary item
Transfers
Total general revenues, extraordinary item, and transfers
Change in net assets
Net assets, beginning
Prior period adjustment
Net assets, beginning, as restated
Net assets, ending
The notes to the financial statements are an integral part of this statement.
Program Revenues
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2003
CITY OF FRIENDSWOOD, TEXAS
19
Governmental Business-type
Activities Activities Total
2,275,594)$( -$ 2,275,594)$(
5,132,572)( - 5,132,572)(
730,946)( - 730,946)(
2,674,525)( - 2,674,525)(
128,192)( - 128,192)(
10,941,829)( - 10,941,829)(
- 927,716 927,716
- 927,716 927,716
10,941,829)$( 927,716$ 10,014,113)$(
8,431,428$ -$ 8,431,428
1,274,774 - 1,274,774
2,875,071 - 2,875,071
1,058,726 - 1,058,726
79,691 - 79,691
154,558 - 154,558
30,826 - 30,826
- 100,000 100,000
664,102 664,102)( -
14,569,176 564,102)( 14,005,074
3,627,347 363,614 3,990,961
52,168,678 22,246,822 74,415,500
- 590,257)( 590,257)(
52,168,678 21,656,565 73,825,243
55,796,025$ 22,020,179$ 77,816,204$
Changes in Net Assets
Primary Government
Net (Expense) Revenue and
20
Other Total
Capital Governmental Governmental
General Projects Funds Funds
ASSETS
Cash and investments 5,388,837$ 7,411,436$ 545,385$ 13,345,658$
Receivables, net of allowances for uncollectibles:
Taxes 1,037,200 - 42,038 1,079,238
Customer accounts 70,933 - 26,407 97,340
Other 224,229 8,022 8,484 240,735
Due from other governments 287,298 - - 287,298
Due from other funds 120,188 - - 120,188
Inventories 2,383 - - 2,383
Prepaid and other assets 7,866 - - 7,866
Total assets 7,138,934$ 7,419,458$ 622,314$ 15,180,706$
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable 522,594$ 77,154$ 16,361$ 616,109$
Accrued liabilities 544,954 - 20,874 565,828
Deferred revenue 332,248 - 42,037 374,285
Total liabilities 1,399,796 77,154 79,272 1,556,222
Fund balances:
Reserved for:
Encumbrances 673,210 - - 673,210
Inventories and prepaids 10,249 - - 10,249
Debt service - - 254,568 254,568
Unreserved, reported in:
General fund
Designated for:
Construction 679,531 - - 679,531
Projects 227,373 - - 227,373
Compensated absences 610,722 - - 610,722
Undesignated 3,538,053 - - 3,538,053
Capital projects - 7,342,304 7,342,304
Special revenue funds - - 263,242 263,242
Permanent fund - - 25,232 25,232
Total fund balances 5,739,138 7,342,304 543,042 13,624,484
Total liabilities and fund balances 7,138,934$ 7,419,458$ 622,314$
Amounts reported for governmental activities in the statement of net assets are different because:
52,865,536
374,285
416,962
11,485,242)(
Net assets of governmental activities 55,796,025$
The notes to the financial statements are an integral part of this statement.
CITY OF FRIENDSWOOD, TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2003
Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.
Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds.
An Internal Service Fund is used by management to charge the costs of certain capital assets to individual funds.The assets and
liabilities of the Internal Service Fund are included in the governmental activities in the statement of net assets.
Long-term liabilities are not due and payable in the current period and therefore are not reported in the fund
21
Other Total
Capital Governmental Governmental
General Projects Funds Funds
REVENUES
Property taxes 8,465,368$ -$ 1,279,845$ 9,745,213$
Sales taxes 2,884,798 - - 2,884,798
Franchise fees 1,058,726 - - 1,058,726
Sanitation 1,020,421 - - 1,020,421
Fines and forfeitures 639,678 - - 639,678
Permits and fees 786,757 - 69,964 856,721
Intergovernmental 504,473 - 21,843 526,316
Interest on investments 130,484 13,413 9,951 153,848
Donations - - 235,749 235,749
Insurance proceeds - - 664,275 664,275
Other 129,737 - 216 129,953
Total revenues 15,620,442 13,413 2,281,843 17,915,698
EXPENDITURES
Current:
General government 3,042,541 - - 3,042,541
Public safety 5,525,991 - 4,962 5,530,953
Community development and public works 4,987,392 - - 4,987,392
Community services 2,751,993 - - 2,751,993
Capital outlay - 1,303,165 139,174 1,442,339
Debt service:
Principal - - 468,987 468,987
Interest and fiscal charges - - 213,741 213,741
Total expenditures 16,307,917 1,303,165 826,864 18,437,946
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 687,475)( 1,289,752)( 1,454,979 522,248)(
OTHER FINANCING SOURCES (USES)
Capital-related debt issued - 8,632,056 69,439 8,701,495
Transfers in 1,955,635 - - 1,955,635
Transfers out 89,589)( - 1,293,271)( 1,382,860)(
Sale of capital assets 15,826 - - 15,826
Total other financing sources (uses)1,881,872 8,632,056 1,223,832)( 9,290,096
NET CHANGE IN FUND BALANCES 1,194,397 7,342,304 231,147 8,767,848
FUND BALANCES, BEGINNING AS
PREVIOUSLY STATED 3,962,832 - 311,895 4,274,727
PRIOR PERIOD ADJUSTMENT 581,909 - - 581,909
FUND BALANCES, BEGINNING AS RESTATED 4,544,741 - 311,895 4,856,636
FUND BALANCES, ENDING 5,739,138$ 7,342,304$ 543,042$ 13,624,484$
The notes to the financial statements are an integral part of this statement.
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES
FOR THE YEAR ENDED SEPTEMBER 30, 2003
GOVERNMENTAL FUNDS
22
Amounts reported for governmental activities in the Statement of Activities (pages 19 - 20)
are different because:
Net change in fund balances - total governmental funds (page 22) 8,767,848$
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 by which capital outlays exceeded depreciation in
the current period.2,801,427
Revenues in the statement of activities that do not provide current financial resources are not
reported as revenues in the funds.26,481)(
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
effecton net assets. This amount is the net effect of these differences in the treatment of long-
term debt and related items.8,126,628)(
Some expenses reported in the statement of activities do not require the use of current
financial resources and, therefore, are not reported as expenditures in governmental funds. 49,144)(
Internal Service Funds are used by management to charge the costs of certain capital assets to
individual funds. The net revenue of certain activities of internal service funds is reported
with governmental activities.260,325
Change in net assets of governmental activities (pages 19 - 20)3,627,347$
The notes to the financial statements are an integral part of this statement.
TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2003
CITY OF FRIENDSWOOD, TEXAS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS
23
Variance with
Final Budget -
Actual Positive
Original Final Amounts (Negative)
REVENUES
Property taxes 8,409,252$ 8,409,252$ 8,465,368$ 56,116$
Sales taxes 2,456,000 2,456,000 2,884,798 428,798
Franchise taxes 988,000 988,000 1,058,726 70,726
Fines and forfeitures 568,104 568,104 639,678 71,574
Permits and fees 669,842 672,642 786,757 114,115
Intergovernmental 322,813 887,237 504,473 382,764)(
Interest on investments 160,475 160,475 130,484 29,991)(
Other 83,100 201,928 129,737 72,191)(
Total revenues 13,657,586 14,343,638 14,600,021 256,383
EXPENDITURES
Current:
General government 3,107,779 3,327,790 3,042,541 285,249
Public safety 5,437,961 5,643,068 5,525,991 117,077
Community development and public works 3,013,805 4,966,239 3,966,971 999,268
Community services 2,684,835 3,144,648 2,751,993 392,655
Total expenditures 14,244,380 17,081,745 15,287,496 1,794,249
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 586,794)( 2,738,107)( 687,475)( 2,050,632
OTHER FINANCING SOURCES (USES)
Transfers in 620,000 1,955,635 1,955,635 -
Transfers out - 89,589)( 89,589)( -
Sale of capital assets 4,000 4,000 15,826 11,826
Total other financing sources and (uses)624,000 1,870,046 1,881,872 11,826
NET CHANGE IN FUND BALANCES 37,206 868,061)( 1,194,397 2,062,458
FUND BALANCES, BEGINNING AS
PREVIOUSLY STATED 3,962,832 3,962,832 3,962,832 -
PRIOR PERIOD ADJUSTMENT - - 581,909 581,909
FUND BALANCES, BEGINNING AS RESTATED 3,962,832 3,962,832 4,544,741 581,909
FUND BALANCES, ENDING 4,000,038$ 3,094,771$ 5,739,138$ 2,644,367$
The notes to the financial statements are an integral part of this statement.
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGETARY BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2003
GENERAL FUND
24
Business-type
Activities Governmental
Enterprise Fund Activities -
Internal
Service
Water and Sewer Fund
ASSETS
Current assets:
Cash and investments 3,443,368$ 129,809$
Accounts receivable, net of allowance
Customer accounts 1,101,286 -
Other 59,841 499
Inventories 5,575 -
Prepaid and other assets 4,572 -
Restricted cash and investments 2,102,899 -
Total current assets 6,717,541 130,308
Noncurrent assets:
Restricted net investment in joint ventur 244,718 -
Deferred charges 141,696 -
Capital assets:
Land 718,493 -
Machinery and equipmen 25,638,890 525,468
Water and wastewater system 19,697,646 -
Construction in progress 1,197,623 -
Water rights 3,465,469 -
Accumulated depreciation 15,529,772)( 116,713)(
Total capital assets 35,188,349 408,755
Total noncurrent assets 35,574,763 408,755
Total assets 42,292,304 539,063
LIABILITIES
Current liabilities:
Accounts payable 412,514 1,913
Accrued liabilities 59,997 -
Due to other funds - 120,188
Serial bonds and certificates of obligation 736,430 -
Accreted interest on premium compound interest bonds 26,993 -
Total current liabilities 1,235,934 122,101
Current liabilities payable from restricted assets
Accounts payable 57,290 -
Accrued liabilities 22,141 -
Customer deposits 249,195 -
Accrued interest 101,388 -
Total current liabilities payable from restricted assets 430,014 -
Noncurrent liabilities:
Compensated absences 81,042 -
Serial bonds and certificates of obligation 18,525,135 -
Total noncurrent liabilities 18,606,177 -
Total liabilities 20,272,125 122,101
NET ASSETS
Invested in capital assets, net of related deb 17,656,296 408,755
Restricted for debt service 305,660 -
Unrestricted 4,058,223 8,207
Total net assets 22,020,179$ 416,962$
The notes to the financial statements are an integral part of this statement.
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
SEPTEMBER 30, 2003
25
Business-type
Activities Governmental
Enterprise Fund Activities -
Internal
Service
Water and Sewer Fund
OPERATING REVENUES
Water and sewer charges 7,275,746$ -$
Lease revenues - 265,002
Total operating revenues 7,275,746 265,002
OPERATING EXPENSES
Personnel services 1,190,509 -
Wastewater operations 1,111,903 -
Water purchases 765,342 -
Repairs and maintenance 647,256 -
Supplies 154,572 21,528
Other services and charges 532,112 -
Depreciation 1,055,802 103,470
Total operating expenses 5,457,496 124,998
OPERATING INCOME 1,818,250 140,004
NONOPERATING REVENUES (EXPENSES)
Interest and investment revenue 160,629 710
Other 12,777 28,284
Interest expense and fiscal charges 1,063,940)( -
Total nonoperating revenues (expenses)890,534)( 28,994
INCOME BEFORE EXTRAORDINARY ITEM AND TRANSFERS 927,716 168,998
EXTRAORDINARY ITEM 100,000 -
TRANSFERS IN - 91,327
TRANSFERS OUT 664,102)( -
CHANGE IN NET ASSETS 363,614 260,325
TOTAL NET ASSETS, BEGINNING
AS PREVIOUSLY REPORTED 22,246,822 156,637
PRIOR PERIOD ADJUSTMENT 590,257)( -
TOTAL NET ASSETS, BEGINNING AS RESTATED 21,656,565 156,637
TOTAL NET ASSETS, ENDING 22,020,179$ 416,962$
The notes to the financial statements are an integral part of this statement.
PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30, 2003
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS
26
Business-type
Activities Governmental
Enterprise Fund Activities -
Internal
Service
Water and Sewer Fund
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers and users 7,232,221$ 265,002$
Cash paid to suppliers for goods and services 1,187,493)( -
Cash paid to employees for services 3,402,386)( 20,114)(
Net cash provided by operating activities 2,642,342 244,888
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Cash received from miscellaneous 12,777 28,100
Transfers from other funds - 91,327
Transfers to other funds 664,102)( -
Net cash provided by (used for) noncapital
financing activities 651,325)( 119,427
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition of capital assets 2,906,667)( 300,094)(
Proceeds from sale of capital assets - 7,385
Principal paid on bonds 729,801)( -
Principal paid on loan 561,701)( -
Interest and fiscal charges paid on debt 1,049,241)( -
Net cash used for capital and
related financing activities 5,247,410)( 292,709)(
CASH FLOWS FROM INVESTING ACTIVITIES
Interest and investment earnings 160,629 710
Net cash provided by investing activities 160,629 710
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 3,095,764)( 72,316
CASH AND CASH EQUIVALENTS, BEGINNING 8,642,031 57,493
CASH AND CASH EQUIVALENTS, ENDING 5,546,267$ 129,809$
(Including $2,102,899 for water and sewer
reported as restricted assets)
(continued)
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30, 2003
27
Business-type
Activities Governmental
Enterprise Fund Activities -
Internal
Service
Water and Sewer Fund
Reconciliation of operating income to net cash
provided by operating activities:
Operating income 1,818,250$ 140,004$
Adjustments to reconcile operating income
to net cash provided by operating activities:
Depreciation 1,055,802 103,470
Changes in assets and liabilities:
Decrease (increase) in assets:
Customer receivable 63,176)( -
Other receivable 58,860)( 499)(
Prepaid and other assets 8,343 -
Investment in joint venture 10,813 -
Increase (decrease) in liabilities:
Accounts payable 151,497)( 1,913
Accrued liabilities 48,282 -
Compensated absences payable 45,266)( -
Customer deposits 19,651 -
Net cash provided by operating activities 2,642,342$ 244,888$
The notes to the financial statements are an integral part of this statement.
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
(Continued)
YEAR ENDED SEPTEMBER 30, 2003
28
29
CITY OF FRIENDSWOOD, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
1. SUMMARY OF SIGNIFICANT ACOUNTING POLICIES
The City of Friendswood, Texas (the City) was incorporated on October 15, 1960. The City
charter provides for a City Council-City Manager form of government. The Mayor and six
Council Members are elected from the City at large serving three-year terms. Currently, the City
charter provides for a Council term limitation of three 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 presides at meetings of the City Council and can vote. The City
provides the following services: public safety, streets, parks and recreation, library, water and
sewer, sanitation, planning and zoning, building inspection, code enforcement, and general
administrative services.
A. Reporting Entity
The City is an independent political subdivision of the State of Texas governed by an elected
six-member Council and Mayor and is considered a primary government. As required by
generally accepted accounting principles, these financial statements have been prepared
based on considerations regarding the potential for inclusion of other entities, organizations,
or functions as part of the City’s financial reporting entity. Based on these considerations, no
other entities have been included in the City’s reporting entity. 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.
(continued)
30
1. SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
A. Reporting Entity (Continued)
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 generally
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 financially 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 their relationship with the primary government are
such that exclusion would cause the reporting entity’s financial statements to be misleading
or incomplete.
As indicated in Note 4, the City participates in a joint venture (Blackhawk Regional Waste
Treatment Plant) with three other entities, under the authority of the Gulf Coast Waste
Disposal Authority. This venture is accounted for under the equity method in the City’s
Enterprise Fund.
B. Implementation of New Accounting Pronouncement
In June 1999, the Governmental Accounting Standards Board (GASB) unanimously
approved Statement No. 34, Basic Financial Statements—and Management’s Discussion and
Analysis—for State and Local Governments. Certain of the significant changes in the
Statement include the following:
• For the first time, the financial statements include:
¾ A Management Discussion and Analysis (MD&A) section providing an
analysis of the City’s overall financial position and results of operations.
• A change in the fund financial statements to focus on major funds.
These and other changes are reflected in the accompanying financial statements (including
notes to financial statements). The City implemented the general provisions of the Statement
in the current year and plans to retroactively report infrastructure in the fiscal year ending
September 30, 2007.
(continued)
31
1. SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
C. Government-wide Fund Financial Statements
The government-wide financial statements (i.e., the statement of net assets and the statement
of activities) report information on all of the nonfiduciary activities of the primary
government. 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-like activities, which rely
to a significant extent on fees and charges for support.
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 operational 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.
D. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund financial
statements. Revenues are recorded when earned and expenses are recorded when a liability
is incurred, regardless of the timing of related cash flows. Property taxes are recognized as
revenue in the year for which they are levied. Grants and similar items are recognized as
revenue as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial 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 considers 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
judgments, are recorded only when payment is due.
(continued)
32
1. SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
D. Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
Property taxes, franchise taxes, sales taxes, and interest associated with the current fiscal
period are all considered to be susceptible to accrual and so have been recognized as revenue
of the current fiscal period. All other revenue items are considered to be measurable and
available only when cash is received by the City.
The City reports the following major governmental funds:
The General Fund is the City’s primary operating fund. It accounts for all
financial resources of the general government, except those required to be
accounted for in another fund.
The Capital Projects Fund is used to account for the construction of public safety
facilities, and park, streets and drainage improvements that are funded by the
Permanent Improvement Bonds, Series 2003.
The City reports the following major proprietary fund:
The Water and Sewer Fund is used to account for the activities of the City’s
water and wastewater operations.
Additionally, the government reports the following fund type:
The Internal Service Fund is used to account for vehicle management services
provided to other departments or agencies of the City, or to other governments, on
a cost reimbursement basis.
Private-sector standards of accounting and financial reporting issued prior to December 1,
1989, generally are followed in both the government-wide and proprietary fund financial
statements to the extent that those standards do not conflict with or contradict guidance of the
Governmental Accounting Standards Board. Governments also have the option of following
subsequent private-sector guidance for their business-type activities and Enterprise Funds,
subject to this same limitation. The City has elected not to follow subsequent private-sector
guidance.
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.
(continued)
33
1. SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
D. Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
Amounts reported as program revenues include: 1) charges to customers or applicants for
goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital
grants and contributions, including special assessments. Internally dedicated resources are
reported as general revenues rather than as program revenues. Likewise, general revenue
includes all taxes.
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 Funds are charges to customers for sales and services. Operating expenses
for the Enterprise Fund and Internal Service Funds 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.
When both restricted and unrestricted resources are available for use, it is the City’s policy to
use restricted resources first, then unrestricted resources as they are needed.
E. Assets, Liabilities, and Net Assets or Equity
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 two
privately managed public funds investment pools (Lone Star and MBIA). Other investments
consist mainly of U. S. government treasury bills, treasury notes and other U. S. government
obligations. The restricted cash and investments are the assets restricted for specific use.
The restricted cash includes cash on deposit with financial institutions and TexPool.
In accordance with GASB Statement No. 31, the City’s general policy is to report money
market investments and short-term participating interest-earning investment contracts at
amortized cost and to report nonparticipating interest-earning investment contracts using a
cost-based measure. However, if the fair value of an investment is significantly affected by
the impairment of the credit standing of the issuer or by other factors, it is reported at fair
value. All other investments are reported at fair value unless a legal contract exists which
guarantees a higher value. The term “short-term” refers to investments, which have a
remaining term of one year or less at time of purchase. The term “nonparticipating” means
that the investment’s value does not vary with market interest rate changes.
(continued)
34
1. SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
E. Assets, Liabilities, and Net Assets or Equity (Continued)
Cash and Investments (Continued)
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 have been reclassified and are reflected as
interfund accounts payable. Interest income and interest expense are allocated to each
respective individual fund monthly based on their representative fund balances.
The City’s cash and cash equivalents are considered to be cash on hand, demand deposits,
and short-term investments with original maturities of three months or less from the date of
acquisition.
Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements
outstanding at the end of the fiscal year are referred to as either “due to/from other funds”
(i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the
noncurrent 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.”
Advances between funds, as reported in the fund financial statements, are offset by a fund
balance reserve account in applicable governmental funds to indicate that they are not
available for appropriation and are not expendable available financial resources.
All trade and property tax receivables are shown net of an allowance for uncollectibles.
Trade accounts receivable in excess of 180 days comprise the trade accounts receivable
allowance for uncollectibles. The property tax receivable allowance is equal to 10 percent of
outstanding property taxes at September 30, 2003.
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 the City’s Tax
Assessor/Collector. 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.
(continued)
35
1. SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
E. Assets, Liabilities, and Net Assets or Equity (Continued)
Receivables and Payables (Continued)
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 $0.6385 per $100
of assessed valuation that were prorated between operations and debt service in the amounts
of $0.5547 and $0.0838, respectively. The resulting adjusted tax levies were approximately
$8.3 and $1.3 million for operations and debt service, respectively, based on a total adjusted
taxable valuation of approximately $1.507 billion for the 2002 tax year.
Inventories and Prepaid Items
Inventories are recorded in the General and Enterprise Funds and are stated at cost, using the
first-in, first-out method. Inventories consist of expendable supplies held for consumption,
and the cost thereof is recorded as an expense/expenditure at the time the inventory items are
issued (consumption method).
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.
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.
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 useful life in excess of one year.
Such assets are recorded at historical cost or estimated historical cost if purchased or
constructed. Donated capital assets are recorded at estimated fair market value at the date of
donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend assets’ lives are not capitalized.
(continued)
36
1. SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
E. Assets, Liabilities, and Net Assets or Equity (Continued)
Capital Assets (Continued)
Property, plant and equipment is depreciated using the straight-line method over the
following useful lives:
Assets Years
Buildings 20-50
Improvements 5-50
Equipment 5-10
Water and sewer system 40-50
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 are accrued when incurred in the government-wide and proprietary fund
financial statements. A liability for these amounts is reported in 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 assets. Bond premiums and discounts, as well as issuance costs, 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 costs are reported as deferred charges and amortized
over the term of the related debt.
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 financing sources. Premiums received on debt issuances are
reported as other financing 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.
(continued)
37
1. SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
E. Assets, Liabilities, and Net Assets or Equity (Continued)
Fund Equity
In the fund financial statements, governmental funds report reservations of fund balance for
amounts that are not available for appropriation or are legally restricted by outside parties for
use for a specific purpose. Designations of fund balance represent tentative management
plans that are subject to change.
Net Assets
Net assets represent the difference between assets and liabilities. Net assets invested in
capital assets, net of related debt consists of capital assets, net of accumulated depreciation,
reduced by the outstanding balances of any borrowing used for the acquisition, construction
or improvements of those assets, and adding back unspent proceeds. Net assets are reported
as restricted when there are limitations imposed on their use either through the enabling
legislations adopted by the City or through external restrictions imposed by creditors,
grantors or laws or regulations of other governments.
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 from those estimates.
2. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the
Government-wide Statement of Net Assets
The governmental fund balance sheet includes a reconciliation between fund balance – total
governmental funds and net assets – governmental activities as reported in the government-wide
statement of net assets. One element of that reconciliation explains, “long-term liabilities,
including bonds payable, are not due and payable in the current period and therefore are not
reported in the funds.” The details of this $11,485,242 difference are as follows:
(continued)
38
2. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
(Continued)
Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the
Government-wide Statement of Net Assets (Continued)
General obligation bonds 10,345,279$
Accreted interest on premium compound interest bonds 30,612
Deferred charges for issuance costs (to be amortized
over life of debt)67,944)(
Capitalized lease obligations 510,858
Accrued interest payable 55,715
Compensated absences 610,722
Net adjustment to reduce fund balance - total
governmental funds to arrive at net assets -
governmental activities 11,485,242$
Explanation of Certain Differences Between the Governmental Fund Statement of Revenue,
Expenditures and Changes in Fund Balances and the Government-wide Statement of
Activities
The governmental fund statement of revenue, expenditures and changes in fund balances
includes a reconciliation between net changes in fund balances – total governmental fund and
changes in net assets of governmental activities as reported in the government-wide statement of
activities. One element of that reconciliation explains, “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.” The details of
this $2,801,427 difference are as follows:
Capital outlay 3,429,373$
Depreciation expense 627,946)(
Net adjustment to increase net changes in fund balances -
total governmental funds to arrive at changes in net
assets of governmental activities 2,801,427$
(continued)
39
2. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
(Continued)
Explanation of Certain Differences Between the Governmental Fund Statement of Revenue,
Expenditures and Changes in Fund Balances and the Government-wide Statement of
Activities (Continued)
Another element of that reconciliation states, “Revenues in the statement of activities that do not
provide current financial resources are not reported as revenues in the funds.” The details of this
$26,481 difference are as follows:
Property taxes 39,011)$(
Miscellaneous revenue 12,530
Net adjustment to decrease net changes in fund balances -
total governmental funds to arrive at changes in net
assets of governmental activities 26,481)$(
Another element of that reconciliation states, “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 assets. Also, governmental funds report the
effect of issuance costs, and similar items when debt is first issued, whereas these amounts are
deferred and amortized in the statement of activities.” The details of this $8,126,628 difference
are as follows:
Debt issued or incurred:
Issuance of general obligation bonds 8,701,495)$(
Deferred charge on issuance costs 69,439
Accreted interest on premium compound interest bonds 5,141)(
Principal repayments:
General obligation debt 270,239
Capital lease 202,202
Payment of accreted interest on premium compound interest bonds 38,128
Net adjustment to decrease net changes in fund balances -
total governmental funds to arrive at changes in net
assets of governmental activities 8,126,628)$(
Another element of that reconciliation states, “Some expenses reported in the statement of
activities do not require the use of current financial resources and therefore are not reported as
expenditures in governmental funds.” The details of this $49,144 difference are as follows:
Compensated absences 28,813)$(
Accrued interest 20,331)(
Net adjustment to decrease net changes in fund balances -
total governmental funds to arrive at changes in net
assets of governmental activities 49,144)$(
40
3. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
Budgetary Information
An annual appropriated budget is prepared for the General Fund on a non-GAAP basis for
managerial control at the department level, the legal level of budgetary control. Annual
appropriated budgets are also adopted for the Fire/EMS Donations Special Revenue, and Debt
Service Funds and are prepared on a basis consistent with generally accepted accounting
principles (GAAP) at the departmental level, the legal level of budgetary control. An annual
non-appropriated budget is adopted for the City’s Water and Sewer Enterprise Fund on a non-
GAAP basis for managerial control. Project length budgets are adopted for Capital Projects
Funds and amended on an annual basis to reflect the uncompleted portion of the projects.
On or before the first day of August of each year, the City Manager shall submit to the Council a
proposed budget and an accompanying message. The Council shall review the proposed budget
and revise as deemed appropriate prior to general circulation for public hearing. The Council
shall adopt the budget by ordinance on one reading on or before the 15th day of September or as
soon thereafter as practical. 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. If, during the fiscal
year, the City Manager certifies that there are funds available for appropriation, revenue in
excess of those estimated in the budget, the Council may make supplemental appropriation for
the year up to the amount of such excess.
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 by ordinance transfer part or all
of any unencumbered appropriation balance from one department, office, or agency to another.
No appropriation for debt service may be reduced or transferred and no appropriation may be
reduced below any amount required by law to be appropriated or by more than the amount of the
unencumbered balance thereof. The City Council made supplemental budgetary appropriation
changes during the fiscal year. The reported budgetary data has been revised for these
amendments legally authorized during the year.
Every appropriation, except an appropriation for a capital expenditure, shall lapse at the close of
the fiscal year to the extent that it has not been expended or encumbered. An appropriation for a
capital expenditure shall continue in force under the purpose for which it was made until it has
been accomplished or abandoned. The purpose of any such appropriation shall be deemed
abandoned if three years pass without disbursement from or encumbrance of the appropriation.
(continued)
41
3. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued)
Budgetary Information (Continued)
Encumbrances represent commitments related to unperformed contracts for goods or services.
Encumbrance accounting under which purchase orders, contracts, and other commitments for the
expenditure of resources are recorded to serve that portion of the applicable appropriation is
utilized in the governmental funds. Encumbrances outstanding at year-end are reported as
reservations of fund balances and do not constitute expenditures or liabilities because the
commitments will be honored during the subsequent year. Encumbrances lapse at year-end and
are reappropriated in the ensuing year’s budget.
Budget Basis to GAAP Basis Reconciliation. The City uses a different basis of accounting for
budgeting General Fund activities relating to sanitation operations. Because the City has
outsourced sanitation operations to include billing of sanitation fees as well as curbside
collection activities, the City does not budget the corresponding revenue or expenditures. A
reconciliation between General Fund budgetary basis and GAAP basis operations follows:
Unbudgeted
Budgetary Funds/
Basis Activities GAAP Basis
General Fund
Revenue 14,600,021$ 1,020,421$ 15,620,442$
Expenditures 15,287,496 1,020,421 16,307,917
Revenue Over (Under) Expenditures 687,475)( - 687,475)(
Other Financing Sources 1,881,872 - 1,881,872
Net change in fund balance 1,194,397 - 1,194,397
Beginning Fund Balance 3,962,832 - 3,962,832
Prior period adjustment 581,909 - 581,909
Ending Fund Balance 5,739,138$ -$ 5,739,138$
Excess of Expenditures Over Appropriations
During the 2003 fiscal year, expenditures exceeded appropriations at the departmental level (the
legal level of compliance) in the following departments:
General Fund:
General Government - City Secretary 9,564$
Community Development - Inspection 4,532
Commmunity Services - Administration 4,813
Fire/EMS Donation Fund 19,136
42
4. DETAILED NOTES ON ALL FUNDS
Cash and Investments
At year-end, the City’s carrying amount of deposits was $5,288,316 and the bank balance was
$5,442,550. Of the bank balance, $500,000 was covered by federal depository insurance or
collateral held by the City’s agent in the City’s name. Of the remaining balance, $4,942,550
was collateralized with securities held by the pledging financial institution’s trust department or
agent in the City’s name.
At year-end, the carrying value of cash and cash equivalents (which approximated fair value
consisted of:
Carrying
Amount
Demand and time deposits 5,288,316$
Petty cash 2,640
Public Investment Pools:
MBIA - Texas CLASS 11,527,528
TexPool 1,109,487
Lone Star Investment Pool 1,093,763
Total cash and investments 19,021,734
Less: restricted cash and investments 2,102,899
Unrestricted cash and investments 16,918,835$
The carrying amounts and fair values of the City’s investments can be categorized according to
three levels of risk. These credit risk categories are as follows:
Category 1 – Insured or registered, or securities held by the entity or its agent
in the City’s name.
Category 2 – Uninsured and unregistered, with securities held by the counter-
party’s trust department or agent in the City’s name.
Category 3 – Uninsured and unregistered, with securities held by counterparty
or by its trust department or agent, but not in the City’s name.
At September 30, 2003, all of the City’s investments are not categorized by risk. TexPool, Lone
Star, and MBIA balances are not evidenced by securities that exist in physical or book entry
form and, accordingly, are not categorized by risk. However, the nature of these funds requires
that they be used to purchase investments authorized by the Texas Public Funds Investment Act
of 1995. The primary objective of these investment pools is to provide a safe environment for
the placement of public funds in short-term, fully collateralized investments
(continued)
43
4. DETAILED NOTES ON ALL FUNDS (Continued)
Cash and Investments (Continued)
The State Comptroller of Public Accounts exercises oversight responsibility over TexPool, the
Texas Local Government Investment Pool. Oversight includes the ability to significantly
influence operations, designation of management and accountability for fiscal matters.
Additionally, the State Comptroller has established an advisory board composed of both
participants in TexPool and other persons who do not have a business relationship with TexPool.
The Advisory Board members review the investment policy and management fee structure.
Finally, TexPool is rated AAAm by Standard & Poors. As a requirement to maintain the rating
weekly portfolio, information must be submitted to Standard & Poors, as well as the office of the
Comptroller of Public Accounts for review.
TexPool operates in a manner consistent with the SEC’s Rule 2a7 of the Investment Company
Act of 1940. TexPool uses amortized cost rather than fair value to report net assets to compute
share prices. Accordingly, the fair value of the position in TexPool is the same as the value of
TexPool shares.
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., its 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 insured by the
Federal Deposit Insurance Corporation or collateralized in accordance with
Section 2256.010, the Texas Government Code, in face amount not to exceed
$100,000;
3. No-load money market mutual funds; and
4. TexPool, Lone Star Investment Pool, MBIA, an the Local Government
Investment Cooperative (LOGIC).
The City Council has adopted a written investment policy regarding the investments of its funds as
defined by the Public Funds Investment Act of 1995 (Chapter 2256, Texas Government Code).
The investments of the City are in compliance with the Council’s investment policies. The City
did not have any derivative investment products during the current year. All significant legal and
contractual provisions for investments were complied with during the year. Investments at year-
end are representative of the types of investments maintained by the City during the year.
(continued)
44
4. DETAILED NOTES ON ALL FUNDS (Continued)
Receivables
Receivables as of year-end for the government’s individual major funds, nonmajor funds and
Enterprise Fund in the aggregate, including the applicable allowances for uncollectible accounts,
are as follows:
Capital Other Water and Internal
General Projects Funds Sewer Service Total
Receivables:
Property taxes 253,893$ -$ 46,708$ -$ -$ 300,601$
Sales taxes 528,369 - - - - 528,369
Franchise taxes 280,327 - - - - 280,327
Customer accounts 72,933 - 26,407 1,111,286 - 1,210,626
Accrued interest 90,828 8,022 7,934 58,860 499 166,143
Court fines 182,427 - - - - 182,427
Other 42,188 - 550 981 - 43,719
Gross receivables 1,450,965 8,022 81,599 1,171,127 499 2,712,212
Less: allowance for
uncollectibles 118,603 - 4,670 10,000 - 133,273
Net total receivables 1,332,362$ 8,022$ 76,929$ 1,161,127$ 499$ 2,578,939$
Governmental Funds Proprietary Funds
Governmental funds report deferred revenue in connection with receivables for revenue that is
not considered to be available to liquidate liabilities of the current period. Governmental funds
also defer revenue recognition in connection with resources that have been received, but not yet
earned. At the end of the current fiscal year, the various components of deferred revenue and
unearned revenue reported in the governmental funds were as follows:
Unavailable
General Fund
Delinquent property taxes receivable 228,505$
Court fines receivable 91,213
Miscellaneous receivable 12,530
Total General Fund 332,248
Debt Service Fund
Delinquent property taxes receivable 42,037
Total Debt Service Fund 42,037
Total Governmental Funds 374,285$
(continued)
45
4. DETAILED NOTES ON ALL FUNDS (Continued)
Capital Assets
Capital asset activity for the year ended September 30, 2003, was as follows:
Primary Government
Beginning Ending
Balance Increases Decreases Balance
Governmental Activities:
Capital assets, not being depreciated:
Land 22,242,279$ 1,769,685$ -$ 24,011,964$
Construction in progress 323,620 3,000,904 2,416,460 908,064
Total assets not being depreciated 22,565,899 4,770,589 2,416,460 24,920,028
Capital assets, being depreciated:
Buildings and improvements 27,651,894 1,709,933 - 29,361,827
Machinery and equipment 6,970,126 728,563 2,621,392 5,077,297
Total capital assets being depreciated 34,622,020 2,438,496 2,621,392 34,439,124
Less accumulated depreciation:
Buildings and improvements 2,780,550 182,397 - 2,962,947
Machinery and equipment 2,574,894 549,019 1,999 3,121,914
Total accumulated depreciation 5,355,444 731,416 1,999 6,084,861
Total capital assets being
depreciated, net 29,266,576 1,707,080 2,619,393 28,354,263
Governmental activities capital
assets, net 51,832,475$ 6,477,669$ 5,035,853$ 53,274,291$
Business-type Activities:
Capital assets, not being depreciated:
Land 675,565$ 42,928$ -$ 718,493$
Construction in progress 5,144,793 2,860,337 6,807,507 1,197,623
Water rights 3,465,469 - - 3,465,469
Total assets not being depreciated 9,285,827 2,903,265 6,807,507 5,381,585
Capital assets, being depreciated:
Machinery and equipment 19,792,527 5,846,363 - 25,638,890
Water and wastewater system 18,733,102 964,544 - 19,697,646
Total capital assets being depreciated 38,525,629 6,810,907 - 45,336,536
Less accumulated depreciation:
Machinery and equipment 7,839,851 503,846 - 8,343,697
Water and wastewater system 6,633,271 552,804 - 7,186,075
Total accumulated depreciation 14,473,122 1,056,650 - 15,529,772
Total capital assets being depreciated, net 24,052,507 5,754,257 - 29,806,764
Business-type activities capital assets, net 33,338,334$ 8,657,522$ 6,807,507$ 35,188,349$
(continued)
46
4. DETAILED NOTES ON ALL FUNDS (Continued)
Capital Assets (Continued)
Depreciation expense was charged to functions/programs of the primary government as follows:
Governmental Activities:
General government 186,603$
Public safety 408,873
Community development and public works 33,981
Community services 101,959
Total Depreciation Expense - Governmental Activities 731,416$
Business-type Activities:
Water and sewer 1,056,650$
Total Depreciation Expense - Business-type Activities 1,056,650$
Commitments for construction projects in progress were $4,785,295 at September 30, 2003.
Interfund Receivables, Payables and Transfers
The composition of interfund balances as of September 30, 2003, is as follows:
Due to/from other funds:
Receivable Fund Payable Fund Amount
General Internal Service 120,188$
The balance of $120,188 due to the General Fund from the Internal Service Fund resulted from
loans made to establish working capital when the fund was first created.
Interfund transfers:
Transfers are indicative of funding for vehicle replacement or subsidies of various City
operations. The following schedule briefly summarizes the City’s transfer activity:
Transfers In Transfers Out Amount Purpose
General Other Governmental 607,153$ Provide subsidy for the
Friendswood Sportspark
buyout agreement
General Other Governmental 686,118 Subsidy for emergency
management expenditures
General Water and Sewer 642,364 Subsidy for administrative
expenditures
Internal Service General 89,589 Funding for vehicle
replacement
Internal Service Water and Sewer 1,738 Funding for vehicle
replacement (continued)
47
4. DETAILED NOTES ON ALL FUNDS (Continued)
Interfund Receivables, Payables and Transfers (Continued)
Transfers are used to (1) move revenues from the fund that statute or budget requires to collect
them to the fund that statute or budget requires to expend them, (2) move receipts restricted to
debt service from the funds collecting the receipts to the Debt Service Fund as debt service
payments become due, and (3) use unrestricted revenues collected in the General Fund to finance
various programs accounted for in other funds in accordance with budgetary authorizations.
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.
Bonds Payable and Certificates of Obligation
A summary of the terms of 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, 2003, follows:
Final Interest Governmental Business-typ e
Maturity Rate Activities Activities
General Obligation Bonds
1986 Refunding Bonds 10,650,777$ 2004 4.25% - 7.90% 42,626$ 36,823$
1993 Refunding Bonds 6,555,000 2004 2.25% - 4.625% 141,250 423,750
2002 Refunding Bonds 3,785,000 2008 3.950% 1,492,015 2,007,985
2003 Permanent
Improvement Bonds 8,700,000 2026 3.65% -5.50%
8,700,000 -
10,375,891 2,468,558
Revenue Bonds
1999 Waterworks and Sewer
System Revenue Bonds 4,945,000 2019 4.2% - 5.55% - 4,570,000
2000 Waterworks and Sewer
System Revenue Bonds 3,515,000 2019 4.2% - 6.5% - 3,515,000
2001 Waterworks and Sewer
System Revenue Bonds 6,100,000 2021 4.7% - 6.5%
- 6,100,000
- 14,185,000
Combination Tax and Revenue
Certificates of Obligation
1995 Series 3,200,000 2010 5.375% - 7.375%
- 2,635,000
Total Bonds and Certificates of Obligation 10,375,891$ 19,288,558$
Series and Original
Issue Amount
(continued)
48
4. DETAILED NOTES ON ALL FUNDS (Continued)
Long-term Debt (Continued)
Annual debt service requirements for bonds and certificates of obligation are as follows:
Year Ending
September 30, Principal Interest Principal Interest
2004 285,414$ 501,372$ 736,430$ 1,028,228$
2005 336,769 422,796 748,231 962,576
2006 438,901 406,702 796,099 924,067
2007 441,032 387,773 848,968 884,203
2008 493,163 367,385 896,837 841,444
2009-2013 1,605,000 1,579,201 5,320,000 3,360,407
2014-2018 2,045,000 1,223,465 6,945,000 1,739,537
2019-2023 2,690,000 737,209 2,970,000 179,545
2024-2026 2,010,000 134,039 - -
Total 10,345,279$ 5,759,942$ 19,261,565$ 9,920,007$
Governmental Activities Business-type Activities
Accretion on Premium Compound Interest Bonds
A portion of the bonds sold in the Series 1986 refunding bond issue was premium compound
interest bonds. These obligations have par values of $21,844 and maturity values of $85,000.
The interest on these obligations will be paid upon maturity in the fiscal years ending September
30, 2004. The accreted values of these bonds at September 30, 2004, are approximately $57,605
of which $30,612 has been allocated to the governmental activities and $26,993 has been
allocated to business-type activities. Accordingly, accretion on these bonds of approximately
$5,141 and $4,207 has been recorded in the governmental and business-type activities,
respectively.
Prior Year Defeasance of Bonds
In prior years, 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, 2003, $575,000 of bonds considered defeased is still outstanding.
Federal Arbitrage
General obligation bonds, combination tax and revenue bonds and certificates of obligation are
subject to the provisions of the Internal Revenue Code of 1986 related to arbitrage and interest
income tax regulations under those provisions.
(continued)
49
4. DETAILED NOTES ON ALL FUNDS (Continued)
Long-term Debt (Continued)
Obligations Under Capital Leases
In prior years, the City entered into capital lease agreements in order to purchase equipment for
City Hall, public works, and the police and fire departments. Following, is a summary of future
lease payments due on this equipment:
Year Ending Lease
September 30, Obligation
2004 173,011$
2005 140,070
2006 81,846
2007 80,572
2008 80,574
2009 20,071
Total 576,144
Less interest portion 65,286)(
Obligations under capital leases 510,858$
Changes in Long-term Liabilities
Long-term liability activity for the year ended September 30, 2003, was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental activities
General obligation bonds 1,915,518$ 8,700,000$ 270,239$ 10,345,279$ 285,414$
Accreted interest on premium
compound interest bonds 63,599 5,141 38,128 30,612 30,612
Capital lease obligations 713,060 - 202,202 510,858 148,703
Compensated absences 581,909 28,813 - 610,722 -
Governmental activities
long-term liabilities 3,274,086$ 8,733,954$ 510,569$ 11,497,471$ 464,729$
Business-type activities
General obligation bonds 3,021,319$ -$ 579,754$ 2,441,565$ 611,430$
Revenue bonds 14,210,000 - 25,000 14,185,000 25,000
Certificates of obligation 2,735,000 - 100,000 2,635,000 100,000
Accreted interest on premium
compound interest bonds 52,040 4,207 29,254 26,993 26,993
Compensated absences 79,536 1,506 - 81,042 -
Business-type activities
long-term liabilities 20,097,895$ 5,713$ 734,008$ 19,369,600$ 763,423$
The compensated absences liability attributable to the governmental activities will be liquidated
primarily by the General Fund.
(continued)
50
4. DETAILED NOTES ON ALL FUNDS (Continued)
Long-term Debt (Continued)
Changes in Long-term Liabilities (Continued)
During the year, $8.7 million of general obligation bonds were issued to finance construction
projects of public safety facilities, and park, streets and drainage improvements.
Restricted Assets
The balances of the restricted asset accounts in the Enterprise Fund are as follows:
Customer deposits 249,195$
Bond construction 1,554,717
Debt service 298,987
Net investment in joint venture 244,718
Total restricted assets 2,347,617$
Extraordinary Item
In fiscal year 1985, an entity advanced the City $1.2 million to be refunded with impact fees
related to the surface water facilities assessment. During the current year, the entity forgave
$100,000 of this advance.
Employee Retirement System
Plan Description
The City provides pension benefits for all of its fulltime employees through a nontraditional, joint
contributory, hybrid defined benefit plan in the statewide Texas Municipal Retirement System
(TMRS). The City is one of 774 municipalities having the benefit plan administered by TMRS, an
agent multiple employer public employee retirement system. Each of the 774 municipalities has an
annual individual actuarial valuation performed. All assumptions for the December 31, 2002,
valuations are contained the 2002 TMRS Comprehensive Annual Financial Report, a copy of
which may be obtained by writing P. O. Box 149153, Austin, Texas 78714–9153.
(continued)
51
4. DETAILED NOTES ON ALL FUNDS (Continued)
Employee Retirement System (Continued)
Plan Description (Continued)
Benefits depend upon the sum of the employee’s contributions to the plan, with interest, and the
City-financed monetary credits, with interest. At the date the plan began, the City granted
monetary credits for service rendered before the plan began of a theoretical amount equal to two
times what would have been contributed by the employee, with interest, prior to establishment of
the plan. Monetary credits for service since the plan began are a percent (100%, 150%, or 200%)
of the employee’s accumulated contributions. In addition, the City can grant as often as
annually, another type of monetary credit referred to as an updated service credit which is a
theoretical amount which, when added to the employee’s accumulated contributions and the
monetary credits for service since the plan began, would be the total monetary credits and
employee contributions accumulated with interest, if the current employee contribution rate and
the City matching percent had always been in existence; and if the employee’s salary had always
been the average of his salary in the last three years that are one year before the effective date.
At retirement, the benefit is calculated as if the sum of the employee’s accumulated
contributions, with interest and the employer-financed monetary credits with interest were used
to purchase an annuity.
Members can retire at age 60 and above with 5 or more years of service or with 20 years of
service regardless of age. A member is vested after 5 years. The plan provisions are adopted by
the governing body of the City, within the options available in the state statutes governing TMRS
and within the actuarial constraints also in the statutes.
Contributions
The contribution rate for the employee is 7%, and the City matching ratio is currently 2 to 1, both
as adopted by the governing body of the City. Under the state law governing TMRS, the actuary
annually determines the City contribution rate. This rate consists of the normal cost contribution
rate and the prior service contribution rate, both of which are calculated to be a level percent of
payroll from year to year. The normal cost contribution rate finances the currently accruing
monetary credits due to the City matching percent, which are the obligation of the City as of an
employee’s retirement date, not at the time the employee’s contributions are made. The normal
cost contribution rate is the actuarially determined percent of payroll necessary to satisfy the
obligation of the City to each employee at the time his/her retirement becomes effective. The
prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over
the remainder of the plan’s 25-year amortization period. When the City periodically adopts
updated service credits and increases its annuities in effect, the increased unfunded actuarial
liability is to be amortized over a new 25-year period. The unit credit actuarial cost method is
used for determining the City contribution rate. Both the employees and the City make
contributions monthly. Since the City needs to know its contribution rate in advance for
budgetary purposes, there is a one-year delay between the actuarial valuation that is the basis for
the rate and the calendar year when the rate goes into effect (i.e. December 31, 2002, valuation is
effective for rates beginning in January 2004).
(continued)
52
4. DETAILED NOTES ON ALL FUNDS (Continued)
Employee Retirement System (Continued)
Contributions (Continued)
Schedule of Actuarial Liabilities and Funding Progress
Actual Valuation Date 12/31/00 12/31/01 12/031/02
Actuarial value of assets 11,512,297$ 12,505,293$ 13,367,282$
Actuarial accrued liability 14,942,827 16,126,623 17,450,995
Percent funded 77.0% 77.5% 76.6%
Unfunded (overfunded) actuarial accrued liability (UAAL)3,430,530 3,621,330 4,083,713
Annual covered payroll 5,662,296 5,849,011 6,274,960
UAAL as a percentage of covered payroll 60.6% 61.9% 65.1%
Net pension obligation (NPO at the beginning of period - - -
Annual Pension Cost:
Annual required contribution (ARC)754,983 827,761 881,751
Interest on NPO - - -
Adjustment to the ARC 754,983 827,761 881,751
Contributions made 754,983 827,761 881,751
Increase in NPO - - -
NPO at the end of the period -$ -$ -$
Actuarial Assumptions
Actuarial Cost Method - Unit Credit
Amortization Method - Level Percent of Payroll
Remaining Amortization Period - 25 Years - Open Period
Asset Valuation Method - Amortized Cost (to accurately reflect the
requirements of GASB Statement No. 25,
paragraphs 36e and 138)
Amortzation Period - Open
Investment Rate of Return - 8%
Projected Salary Increases - None
Includes Inflation at - None
Cost-of-living Adjustments - None
Deferred Compensation Plan
The City offers its employees a tax-deferred compensation plan meeting the requirements of
Internal Revenue Code Section 457. The plan was established by City ordinance that appointed
ICMA Retirement Corporation as plan administrator. The City’s fiduciary responsibility is to
remit employee deferred compensation to the administrator on a regular basis. The deferred
compensation is not available to employees until termination, retirement, death, or emergency.
Southeast Water Purification Plant
The City has entered into a contract with the City of Houston for constructing, operating and
maintaining a water purification plan known as Southeast Water Purification Plant. The City’s
pro rata share of the actual pumping construction costs is 1.33 percent.
(continued)
53
4. DETAILED NOTES ON ALL FUNDS (Continued)
Southeast Water Purification Plant (Continued)
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 expense 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 Waste Treatment Plant
The City has entered into an arrangement with the Gulf Coast Waste Disposal Authority for the
operation and maintenance of a joint treatment plant known as Blackhawk Regional Waste
Treatment Plant. The City of Friendswood, the City of Houston, Harris County MUD No. 55,
and the Baybrook MUD 1, (the “participants”) share in the expense of operation and
maintenance based on their respective usage on a monthly basis. The percentages of equity in
the joint venture based on their respective capacity rights at September 30, 2003, are as follows:
City of Friendswood 52.47%
City of Houston 16.18%
Harris County MUD No. 55 20.27%
Baybrook MUD No. 1 11.08%
100.00%
An annual budget for operations is submitted to the Gulf Coast Waste Disposal Authority each
year. The Gulf Coast Waste Disposal Authority is the governing authority and consists of 9
members (3 appointed by the governor, 3 appointed by Harris County, Galveston County, and
Chambers County, and 3 appointed by the participants).
(continued)
54
4. DETAILED NOTES ON ALL FUNDS (Continued)
Blackhawk Regional Waste Treatment Plant (Continued)
Separate financial statements for the joint venture were available in the December 31, 2002,
audited financial statements of the Gulf Coast Waste Disposal Authority and are summarized
below:
Blackhawk Blackhawk
Regional Contingency
Facility Reserve
Total assets 604,807$ 183,823$
Total liabilities 604,807 -
Total fund equity -$ 183,823$
Total revenue 1,633,912$ 22,134$
Total expenditures 1,633,912 -
Total other financing use - 175,000)(
Net change in fund balance - 152,866)(
Fund balances, beginning - 336,689
Fund balances, ending -$ 183,823$
Joint Venture
Complete financial statements may be obtained at the Gulf Coast Waste Disposal Authority, 910
Bay Area Boulevard, Houston, Texas 77058.
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, 2003, the City paid
premiums to TML for provisions of various liability, property and casualty insurance. The City
has various deductible amounts ranging from $500 to $5,000 on various policies. At year-end,
the City did not have any significant claims.
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,
2003, the City believed the amounts paid on workers’ compensation would not change
significantly from the amounts recorded.
(continued)
55
4. DETAILED NOTES ON ALL FUNDS (Continued)
Risk Management (Continued)
During the year ended September 30, 2003, employees of the City were covered by a health and
dental insurance plan. Employees have the option to select either a HMO or a Point of Service
(POS) plan. If an individual employee chooses to cover only themselves, the City pays 90% of
the monthly premium. If an individual employee desires to cover themselves and their
dependents, the City pays 70% of the monthly premium.
Prior Period Adjustments
In prior years, the City has recorded an expenditure and a liability in the General Fund for
compensated absences as they were earned. In accordance with generally accepted accounting
principles, expenditure recognition should be strictly limited to the amount due and payable as of
the end of the fiscal period. An adjustment has been made to the beginning fund balance in the
General Fund to reflect this change. The effect of this transaction was an increase of $581,909 to
the beginning fund balance in the General Fund.
During the year ended September 30, 2003, the City determined that capital assets and notes
payable in the Water and Sewer Fund – business-type activities were understated in the prior
year in the amount of $590,257. This restatement decreased net assets from $22,246,822 to
$21,656,565.
COMBINING AND INDIVIDUAL FUND
STATEMENTS AND SCHEDULES
GENERAL FUND
The General Fund accounts for the resources used to finance the fundamental operations of the City. It
is the basic fund of the City and covers all activities for which a separate fund has not been established.
Variance with
Final Budget -
Actual Positive
Original Final Amounts (Negative)
REVENUES
Property taxes 8,409,252$ 8,409,252$ 8,465,368$ 56,116$
Sales taxes 2,456,000 2,456,000 2,884,798 428,798
Franchise taxes 988,000 988,000 1,058,726 70,726
Fines and forfeitures 568,104 568,104 639,678 71,574
Permits and fees 669,842 672,642 786,757 114,115
Intergovernmental 322,813 887,237 504,473 382,764)(
Interest on investments 160,475 160,475 130,484 29,991)(
Other 83,100 201,928 129,737 72,191)(
Total revenues 13,657,586 14,343,638 14,600,021 256,383
EXPENDITURES
GENERAL GOVERNMENT
Mayor and council:
Personnel services 80 80 267 187)(
Supplies 2,084 2,084 2,709 625)(
Other services and charges 60,728 61,618 29,070 32,548
Total mayor and council 62,892 63,782 32,046 31,736
City manager:
Personnel services 325,212 325,212 299,666 25,546
Supplies 6,652 6,805 5,439 1,366
Other services and charges 62,541 67,541 64,451 3,090
Total city manager 394,405 399,558 369,556 30,002
City secretary:
Personnel services 218,420 218,420 225,478 7,058)(
Supplies 6,582 7,082 3,721 3,361
Repairs and maintenance 1,359 1,359 2,381 1,022)(
Other services and charges 33,704 44,635 49,481 4,846)(
Capital outlay - 11,000 10,999 1
Total city secretary 260,065 282,496 292,060 9,564)(
(continued)
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGETARY BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2003
GENERAL FUND
Budgeted Amounts
56
Variance with
Final Budget -
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES (Continued)
GENERAL GOVERNMENT (Continued)
Administrative services:
Personnel services 449,335$ 449,335$ 462,284$ 12,949)$(
Supplies 14,502 15,062 8,281 6,781
Repairs and maintenance 273 273 284 11)(
Other services and charges 44,125 47,574 35,073 12,501
Total administrative services 508,235 512,244 505,922 6,322
Human resources:
Personnel services 199,213 199,213 199,187 26
Supplies 10,609 11,090 6,935 4,155
Repairs and maintenance 134 134 - 134
Other services and charges 55,623 56,839 47,112 9,727
Total human resources 265,579 267,276 253,234 14,042
Tax:
Other services and charges 209,313 209,313 183,255 26,058
Total tax 209,313 209,313 183,255 26,058
Economic development:
Personnel services 79,815 79,815 81,379 1,564)(
Supplies 280,497 280,497 142,871 137,626
Total economic development 360,312 360,312 224,250 136,062
Legal services:
Other services and charges 104,652 115,686 112,745 2,941
Total legal services 104,652 115,686 112,745 2,941
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGETARY BASIS)
(Continued)
GENERAL FUND
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES
(continued)
Budgeted Amounts
FOR THE YEAR ENDED SEPTEMBER 30, 2003
57
Variance with
Final Budget -
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES (Continued)
GENERAL GOVERNMENT (Continued)
Municipal court:
Personnel services 247,954$ 247,954$ 228,596$ 19,358$
Supplies 9,875 9,954 11,890 1,936)(
Repairs and maintenance 1,043 1,043 118 925
Other services and charges 20,888 20,888 17,860 3,028
Total municipal court 279,760 279,839 258,464 21,375
Computer services:
Personnel services 150,302 150,302 154,668 4,366)(
Supplies 26,375 32,666 38,429 5,763)(
Repairs and maintenance 32,000 32,210 40,971 8,761)(
Other services and charges 234,652 296,681 299,804 3,123)(
Capital outlay 100,000 206,187 163,516 42,671
Total computer services 543,329 718,046 697,388 20,658
Risk management:
Personnel services 25,513 25,513 25,576 63)(
Supplies 5,907 5,908 8,148 2,240)(
Other services and charges 87,817 87,817 79,897 7,920
Total risk management 119,237 119,238 113,621 5,617
Total general government 3,107,779 3,327,790 3,042,541 207,017
PUBLIC SAFETY:
Police services:
Personnel services 3,098,148 3,116,607 3,097,091 19,516
Supplies 175,512 210,315 205,126 5,189
Repairs and maintenance 100,401 129,782 125,332 4,450
Other services and charges 261,970 262,739 278,072 15,333)(
Capital outlay 12,500 12,500 7,473 5,027
Total police services 3,648,531 3,731,943 3,713,094 18,849
(continued)
CITY OF FRIENDSWOOD, TEXAS
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGETARY BASIS)
SCHEDULE OF REVENUES, EXPENDITURES
Budgeted Amounts
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2003
(Continued)
58
Variance with
Final Budget -
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES (Continued)
PUBLIC SAFETY (Continued)
Communications:
Personnel services 664,632$ 664,632$ 645,114$ 19,518$
Supplies 8,276 10,188 14,716 4,528)(
Repairs and maintenance 3,841 3,841 534 3,307
Other services and charges 10,581 10,941 11,830 889)(
Total communications 687,330 689,602 672,194 17,408
Animal control:
Personnel services 143,455 124,996 118,153 6,843
Supplies 8,307 9,874 14,345 4,471)(
Repairs and maintenance 2,247 3,292 2,528 764
Other services and charges 15,639 15,984 15,516 468
Capital outlay 5,000 5,000 - 5,000
Total animal control 174,648 159,146 150,542 8,604
Fire and EMS:
Personnel services 487,995 473,919 466,643 7,276
Supplies 151,858 190,758 194,683 3,925)(
Repairs and maintenance 67,394 69,417 80,513 11,096)(
Other services and charges 131,372 153,962 140,703 13,259
Capital outlay - 2,696 - 2,696
Total fire and EMS 838,619 890,752 882,542 8,210
Emergency management:
Personnel services 31,723 31,723 30,677 1,046
Supplies 7,279 62,851 9,844 53,007
Repairs and maintenance 4,625 14,943 11,933 3,010
Other services and charges 7,706 8,291 4,381 3,910
Capital outlay 37,500 53,817 50,784 3,033
Total emergency management 88,833 171,625 107,619 64,006
Total public safety 5,437,961 5,643,068 5,525,991 117,077
FOR THE YEAR ENDED SEPTEMBER 30, 2003
Budgeted Amounts
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGETARY BASIS)
(Continued)
CITY OF FRIENDSWOOD, TEXAS
(continued)
59
Variance with
Final Budget -
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES (Continued)
COMMUNITY DEVELOPMENT AND PUBLIC WORKS
Administration:
Personnel services 329,860$ 301,604$ 302,886$ 1,282)$(
Supplies 3,646 3,931 8,079 4,148)(
Repairs and maintenance 895 895 609 286
Other services and charges 8,470 33,882 32,265 1,617
Capital outlay 37,562 37,562 31,374 6,188
Total administration 380,433 377,874 375,213 2,661
Planning and zoning:
Personnel services 115,636 115,636 72,743 42,893
Supplies 2,285 2,504 2,646 142)(
Repairs and maintenance 247 487 - 487
Other services and charges 3,317 26,452 26,453 1)(
Total planning and zoning 121,485 145,079 101,842 43,237
Engineering:
Personnel services 50,647 50,647 52,065 1,418)(
Supplies 2,115 2,217 2,696 479)(
Repairs and maintenance 1,331 50 22 28
Other services and charges 7,842 39,107 22,581 16,526
Total engineering 61,935 92,021 77,364 14,657
Inspection:
Personnel services 322,905 322,905 328,761 5,856)(
Supplies 6,818 7,167 8,204 1,037)(
Repairs and maintenance 1,335 1,525 1,213 312
Other services and charges 57,167 58,167 56,118 2,049
Total inspection 388,225 389,764 394,296 4,532)(
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2003
Budgeted Amounts
(continued)
CITY OF FRIENDSWOOD, TEXAS
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGETARY BASIS)
60
Variance with
Final Budget -
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES (Continued)
COMMUNITY DEVELOPMENT AND PUBLIC WORKS (Continued)
Streets:
Personnel services 332,715$ 332,715$ 269,718$ 62,997$
Supplies 44,633 48,948 60,030 11,082)(
Repairs and maintenance 122,550 522,885 453,789 69,096
Other services and charges 317,394 320,194 292,066 28,128
Capital outlay 892,985 1,103,234 864,401 238,833
Total streets 1,710,277 2,327,976 1,940,004 387,972
Drainage:
Personnel services 189,522 189,522 214,214 24,692)(
Supplies 1,063 1,063 912 151
Repairs and maintenance 15,981 15,981 24,370 8,389)(
Other services and charges 141,749 142,649 127,494 15,155
Capital outlay - 762,375 189,966 572,409
Total drainage 348,315 1,111,590 556,956 554,634
Sanitation:
Other services and charges 3,135 3,135 2,496 639
Total sanitation 3,135 3,135 2,496 639
Hazard mitigation:
Capital outlay - 518,800 518,800 -
Total hazard mitigation - 518,800 518,800 -
Total community development
and public works 3,013,805 4,966,239 3,966,971 2,661
COMMUNITY SERVICES
Administration:
Personnel services 141,603 141,603 144,147 2,544)(
Supplies 3,103 3,103 5,167 2,064)(
Other services and charges 95,275 96,297 96,502 205)(
Total administration 239,981 241,003 245,816 4,813)(
Budgeted Amounts
(continued)
CITY OF FRIENDSWOOD, TEXAS
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGETARY BASIS)
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2003
61
Variance with
Final Budget -
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES (Continued)
COMMUNITY SERVICES (Continued)
Library:
Personnel services 534,576$ 534,576$ 517,023$ 17,553$
Supplies 128,654 159,181 132,652 26,529
Repairs and maintenance 2,665 2,665 982 1,683
Other services and charges 13,806 13,806 14,446 640)(
Capital outlay - 12,799 9,764 3,035
Total library 679,701 723,027 674,867 48,160
Parks and recreation:
Personnel services 425,274 425,274 439,254 13,980)(
Supplies 84,556 85,216 73,442 11,774
Repairs and maintenance 98,912 126,141 101,357 24,784
Other services and charges 322,729 404,443 453,581 49,138)(
Capital outlay 182,700 221,154 82,052 139,102
Total parks and recreation 1,114,171 1,262,228 1,149,686 112,542
Swimming pool:
Personnel services 44,928 44,928 35,397 9,531
Supplies 14,553 15,255 13,611 1,644
Repairs and maintenance 8,187 8,366 13,671 5,305)(
Other services and charges 21,150 21,150 19,955 1,195
Total swimming pool 88,818 89,699 82,634 7,065
Building operations:
Personnel services 33,274 33,274 33,523 249)(
Supplies 15,795 20,765 19,636 1,129
Repairs and maintenance 115,865 157,977 135,963 22,014
Other services and charges 397,230 408,272 390,368 17,904
Capital outlay - 208,403 19,500 188,903
Total building operations 562,164 828,691 598,990 229,701
Total community services 2,684,835 3,144,648 2,751,993 459,402
Total expenditures 14,244,380 17,081,745 15,287,496 1,794,249
FOR THE YEAR ENDED SEPTEMBER 30, 2003
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGETARY BASIS)
(Continued)
GENERAL FUND
CITY OF FRIENDSWOOD, TEXAS
(continued)
Budgeted Amounts
62
Variance with
Final Budget -
Actual Positive
Original Final Amounts (Negative)
EXCESS OF REVENUES
OVER EXPENDITURES 586,794)$( 2,738,107)$( 687,475)$( 2,050,632$
OTHER FINANCING SOURCES (USES)
Transfers in 620,000 1,955,635 1,955,635 -
Transfers out - 89,589)( 89,589)( -
Proceeds from sale of capital assets 4,000 4,000 15,826 11,826
Total other financing sources and uses 624,000 1,870,046 1,881,872 -
NET CHANGE IN FUND BALANCES 37,206 868,061)( 1,194,397 2,062,458
FUND BALANCES, BEGINNING AS
PREVIOUSLY STATED 3,962,832 3,962,832 3,962,832 -
PRIOR PERIOD ADJUSTMENT - - 581,909 581,909
FUND BALANCES, BEGINNING
AS RESTATED 3,962,832 3,962,832 4,544,741 581,909
FUND BALANCES, ENDING 4,000,038$ 3,094,771$ 5,739,138$ 2,644,367$
FOR THE YEAR ENDED SEPTEMBER 30, 2003
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGETARY BASIS)
(Continued)
GENERAL FUND
Budgeted Amounts
63
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
Special Revenue Funds are used to account for specific revenues that are legally restricted to
expenditure for particular purposes.
Police Investigation Fund – This fund is used to account for revenues that are restricted to
police investigation expenditures.
Fire/EMS Donation Fund – This fund accounts for revenues that are restricted for Fire/EMS
expenditures.
Park Lane Dedication Fund – This fund is used to account for receipts from developers to build
or enhance neighborhood parks.
Emergency Management Assistance Fund – This fund is used to account for grant revenues
used to acquire 200 flood-damaged homes within the City.
DEBT SERVICE FUND
The Debt Service Fund is used to account for property taxes levied for payment of principal and interest
on all governmental debt of the City.
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 the City’s parks.
Park Emergency
Police Fire/EMS Land Management
Investigation Donation Dedication Assistance
ASSETS
Cash and investments 7,704$ 80,494$ 145,504$ -$
Accounts receivable, net of allowance 658 27,850 1,632 -
Total assets 8,362$ 108,344$ 147,136$ -$
LIABILITIES
Accounts payable -$ -$ 600$ -$
Accrued liabilities - - - -
Deferred revenue - - - -
Total liabilities - - 600 -
FUND BALANCES
Reserved for debt service - - - -
Unreserved - undesignated 8,362 108,344 146,536 -
Total fund balances 8,362 108,344 146,536 -
Total liabilities and fund balances 8,362$ 108,344$ 147,136$ -$
Special Revenue
CITY OF FRIENDSWOOD, TEXAS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2003
64
Permanent
Total
Nonmajor
Debt 1776 Governmental
Service Park Funds
286,788$ 24,895$ 545,385$
46,452 337 76,929
333,240$ 25,232$ 622,314$
15,761$ -$ 16,361$
20,874 - 20,874
42,037 - 42,037
78,672 - 79,272
254,568 - 254,568
- 25,232 288,474
254,568 25,232 543,042
333,240$ 25,232$ 622,314$
65
Park Emergency
Police Fire/EMS Land Management
Investigation Donation Dedication Assistance
REVENUES
Property taxes -$ -$ -$ -$
Permits and fees - - 69,964 -
Intergovernmental - - - 21,843
Interest on investments 166 2,137 2,328 -
Donations - 235,749 - -
Insurance proceeds - - - 664,275
Other 216 - - -
Total revenues 382 237,886 72,292 686,118
EXPENDITURES
Current:
Public safety - 4,962 - -
Capital outlay - 139,174 - -
Debt service:
Principal - 58,066 - -
Interest and fiscal charges - 22,506 - -
Total expenditures - 224,708 - -
EXCESS OF REVENUES
OVER EXPENDITURES 382 13,178 72,292 686,118
OTHER FINANCING SOURCES (USES)
Capital-related debt issued - - - -
Transfers out - - - 686,118)(
Total other financing sources (uses)- - - 686,118)(
NET CHANGE IN FUND BALANCES 382 13,178 72,292 -
FUND BALANCES, BEGINNING 7,980 95,166 74,244 -
FUND BALANCES, ENDING 8,362$ 108,344$ 146,536$ -$
CITY OF FRIENDSWOOD, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2003
Special Revenue
66
Permanent
Total
Nonmajor
Debt 1776 Governmental
Service Park Funds
1,279,845$ -$ 1,279,845$
- - 69,964
- - 21,843
4,794 526 9,951
- - 235,749
- - 664,275
- - 216
1,284,639 526 2,281,843
- - 4,962
- - 139,174
410,921 - 468,987
191,235 - 213,741
602,156 - 826,864
682,483 526 1,454,979
69,439 - 69,439
607,153)( - 1,293,271)(
537,714)( - 1,223,832)(
144,769 526 231,147
109,799 24,706 311,895
254,568$ 25,232$ 543,042$
67
Variance with
Final Budget -
Final Actual Positive
Budget Amounts (Negative)
REVENUES
Interest on investments - 2,137 2,137
Donations 215,000 235,749 20,749
Total revenues 215,000 237,886 22,886
EXPENDITURES
Current:
Public safety - 4,962 4,962)(
Capital outlay 125,000 139,174 14,174)(
Debt service:
Principal 58,066 58,066 -
Interest and fiscal charges 22,506 22,506 -
Total expenditures 205,572 224,708 19,136)(
EXCESS OF REVENUES
OVER EXPENDITURES 9,428 13,178 3,750
FUND BALANCES, BEGINNING 95,166 95,166 -
FUND BALANCES, ENDING 104,594$ 108,344$ 3,750$
FOR THE YEAR ENDED SEPTEMBER 30, 2003
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FIRE/EMS DONATION FUND
68
Variance with
Final Budget -
Final Actual Positive
Budget Amounts (Negative)
REVENUES
Property taxes 1,270,408$ 1,279,845$ 9,437$
Interest on investments - 4,794 4,794
Total revenues 1,270,408 1,284,639 14,231
EXPENDITURES
Debt service:
Principal 410,124 410,921 797)(
Interest and fiscal charges 263,187 191,235 71,952
Total expenditures 673,311 602,156 71,155
EXCESS OF REVENUES
OVER EXPENDITURES 597,097 682,483 85,386
OTHER FINANCING SOURCES (USES)
Capital-related debt issued 90,313 69,439 20,874)(
Transfers out - 607,153)( 607,153)(
Total other financing sources (uses)90,313 537,714)( 628,027)(
NET CHANGE IN FUND BALANCES 687,410 144,769 542,641)(
FUND BALANCES, BEGINNING 109,799 109,799 -
FUND BALANCES, ENDING 797,209$ 254,568$ 542,641)$(
DEBT SERVICE FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2003
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
69
STATISTICAL SECTION
Fiscal Year
Ended Property Sales Franchise
September 30, Taxes Taxes Taxes Sanitation
1994 5,249,517$ 1,007,932$ 530,059$ 838,542$
1995 5,553,218 996,943 570,031 966,066
1996 5,865,855 1,097,996 863,183 1,085,149
1997 5,660,697 1,477,554 852,091 1,017,028
1998 5,957,486 1,826,462 801,709 982,432
1999 6,310,919 1,842,430 821,943 1,013,415
2000 7,226,205 2,121,107 870,839 1,027,028
2001 8,006,906 2,419,071 988,608 1,065,400
2002 8,935,858 2,544,691 1,035,368 1,113,511
2003 9,745,213 2,884,798 1,058,726 1,020,421
Includes General, Special Revenue, Debt Service and Permanent Funds (2003)
Source: Accounting records of the City
CITY OF FRIENDSWOOD, TEXAS
GENERAL GOVERNMENT REVENUE BY SOURCE
LAST TEN FISCAL YEARS
(UNAUDITED)
70
TABLE 1
Fines Permits Interest
and and on Other
Forfeitures Fees Investments Revenue
174,487$ 319,384$ 32,273$ 154,195$ 219,615$
217,411 296,003 48,101 107,089 330,313
266,287 234,518 46,060 193,588 354,627
353,742 401,720 40,055 238,009 224,097
304,017 699,432 346,879 222,586 525,228
332,659 635,905 553,352 292,886 386,084
497,467 970,868 607,963 399,712 484,724
550,854 1,192,899 580,561 424,412 483,063
631,066 922,808 16,294,283 269,109 509,560
639,678 856,721 526,316 140,435 1,029,977
Intergovernmental
Revenue
71
TABLE 2
Community
Fiscal Year Development
Ended General Public and Community Capital Debt
September 30, Government Safety Public Works Services Outlay Service
1994 1,149,344$ 2,814,658$ 2,962,058$ 1,319,689$ -$ 1,434,052$
1995 1,478,817 2,846,169 3,143,687 1,426,792 - 1,427,360
1996 1,481,710 3,206,222 3,209,845 1,656,146 - 1,579,490
1997 1,615,770 3,329,960 3,196,258 1,686,909 - 1,202,192
1998 1,937,096 4,043,792 3,348,350 1,904,926 - 909,369
1999 2,051,684 4,166,008 3,103,857 2,193,860 - 698,546
2000 2,305,916 4,265,750 4,204,537 2,355,186 652,206 976,659
2001 2,196,226 5,115,933 2,841,234 2,738,557 98,987 1,127,645
2002 2,897,613 4,961,812 22,601,171 4,250,205 195,385 737,163
2003 3,042,541 5,530,953 4,987,392 2,751,993 139,174 682,728
Includes General, Special Revenue, Debt Service and Permanent Funds (2003)
Source: Accounting records of the City
CITY OF FRIENDSWOOD, TEXAS
GENERAL GOVERNMENT EXPENDITURES BY FUNCTION
LAST TEN FISCAL YEARS
(UNAUDITED)
72
Fiscal Year
Ended Total Current Tax
September 30, Tax Year Tax Rate Tax Levy Collections
1994 1993 0.6630$ 5,450,155$ 5,384,023$
1995 1994 0.6630 5,762,039 5,717,509
1996 1995 0.6156 5,610,277 5,568,094
1997 1996 0.6045 5,692,451 5,652,357
1998 1997 0.5961 5,886,162 5,844,583
1999 1998 0.6125 6,292,040 6,229,896
2000 1999 0.6385 7,239,468 7,125,877
2001 2000 0.6385 7,906,786 7,809,643
2002 2001 0.6385 8,863,904 8,721,196
2003 2002 0.6385 9,642,413 9,496,887
Source: Tax Assessor/Collector's records.
CITY OF FRIENDSWOOD, TEXAS
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(UNAUDITED)
73
TABLE 3
Outstanding
Total Delinquent
Percent Delinquent Total Collections as Outstanding Taxes as
of Levy Tax Tax Percent of Delinquent Percent of
Collected Collections Collections Current Levy Taxes Levy
98.8% 103,113$ 5,487,136$ 100.7% 276,097$ 5.1%
99.2% 89,977 5,807,486 100.8% 230,650 4.0%
99.2% 54,842 5,622,936 100.2% 231,973 4.1%
99.3% 53,927 5,706,284 100.2% 230,990 4.1%
99.3% 89,625 5,934,208 100.8% 237,656 4.0%
99.0% 50,435 6,280,331 99.8% 207,417 3.3%
98.4% 129,563 7,255,440 100.2% 269,184 3.7%
98.8% 158,585 7,968,228 100.8% 308,477 3.9%
98.4% 152,106 8,873,302 100.1% 208,459 2.4%
98.5% 137,425 9,634,312 99.9% 300,601 3.1%
74
TABLE 4
Ratio of
Fiscal Year Estimated Assessed Value
Ended Assessed Actual to Estimated New
September 30, Tax Year Value Value Actual Value Construction
1994 1993 825,111,643$ 976,268,953$ 85% 64,653,799$
1995 1994 869,085,848 1,021,248,848 85% 34,680,410
1996 1995 911,351,022 1,165,107,496 78% 42,440,747
1997 1996 941,679,232 1,207,803,598 78% 41,528,406
1998 1997 987,445,395 1,265,399,421 78% 90,683,060
1999 1998 1,027,271,860 1,322,329,377 78% 74,555,875
2000 1999 1,133,824,245 1,458,851,565 78% 121,249,420
2001 2000 1,238,337,688 1,597,212,470 78% 116,968,791
2002 2001 1,388,238,748 1,597,212,470 87% 122,374,064
2003 2002 1,814,042,031 1,931,827,716 94% 73,791,386
Source: Tax Assessor/Collector's records.
CITY OF FRIENDSWOOD, TEXAS
ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
(UNAUDITED)
75
TABLE 5
Fiscal Year Debt
Ended General Service Total
September 30, Tax Year Fund Fund Tax Rate
1994 1993 0.50250$ 0.16050$ 0.66300$
1995 1994 0.51400 0.14900 0.66300
1996 1995 0.46800 0.14760 0.61560
1997 1996 0.49610 0.10840 0.60450
1998 1997 0.52760 0.06850 0.59610
1999 1998 0.56100 0.05150 0.61250
2000 1999 0.55420 0.08430 0.63850
2001 2000 0.55470 0.08380 0.63850
2002 2001 0.55470 0.08380 0.63850
2003 2002 0.55470 0.08380 0.63850
Source: City's tax ordinances.
Tax rates are per $100 valuation.
CITY OF FRIENDSWOOD, TEXAS
TAX RATE DISTRIBUTION
LAST TEN FISCAL YEARS
(UNAUDITED)
76
TABLE 6
Friendswood Clear Creek
Fiscal Year Independent Independent Clear Creek
Ended City of School School Drainage Harris Galveston
September 30, Tax Year Friendswood District District District County (A) County
1994 1993 0.6630$ 1.6180$ 1.4600$ 0.1450$ 0.5962$ 0.4650$
1995 1994 0.6630 1.6090 1.4700 0.1430 0.62199 0.4850
1996 1995 0.6156 1.5900 1.4700 0.1410 0.61949 0.5200
1997 1996 0.6045 1.5900 1.5150 0.1430 0.64173 0.5200
1998 1997 0.5961 1.5750 1.5900 0.1425 0.64173 0.5200
1999 1998 0.6125 1.6720 1.6415 0.1500 0.64173 0.5200
2000 1999 0.6385 1.5350 1.5986 0.1500 0.64173 0.5450
2001 2000 0.6385 1.5850 1.7008 0.0155 0.64173 0.5400
2002 2001 0.6385 1.6170 1.7250 0.0155 0.63998 0.5654
2003 2002 0.6385 1.6370 1.7400 0.1550 0.63998 0.6063
Source: Tax Department records of the various taxing authorities.
(A) Includes Port of Houston Authority, Harris County Flood Control, and Harris County
Hospital District.
CITY OF FRIENDSWOOD, TEXAS
PROPERTY TAX RATES PER $100 VALUATION DIRECT AND OVERLAPPING
LAST TEN FISCAL YEARS
(UNAUDITED)
77
TABLE 7
Percent
of Total
Assessed Assessed
Type of Property Valuation Valuation
1. Southwestern Bell Telephone Utility Company 13,738,010$ 0.91%
2. Blackhawk Apartments Apartments 11,312,470 0.75%
3. Reserve at Autumn Creed Developer 10,326,050 0.69%
4.Texas New Mexico Power Utility Company 9,086,300 0.60%
5. South West Properties Seahawk Apartments 8,849,980 0.59%
6.Friendswood Retirement Nursing Home 8,169,425 0.54%
7. ACMC-Friendswood, Inc. Nursing Home 6,205,770 0.41%
8.Autumn Creek Dev Ltd Developer 6,166,950 0.41%
9.Albertson's Inc. Albertson's Shopping Center 4,147,230 0.28%
10.Center Point Energy Utility Company 4,020,390 0.27%
82,022,575 5.44%
All other taxpayers 1,424,583,486 94.56%
Totals 1,506,606,061$ 100.00%
Source: Tax Assessor/Collector's records.
Taxpayer
CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL TAXPAYERS
SEPTEMBER 30, 2003
(UNAUDITED)
78
TABLE 8
Ratio of
Interest Total Debt Total Debt Service
Fiscal and Fiscal Service General Requirements
Year Principal Charges Requirements Expenditures to Expenditures
1994 960,000$ 433,270$ 1,393,270$ 9,376,365$ 14.86%
1995 910,000 358,551 1,268,551 10,179,395 12.46%
1996 963,272 238,920 1,202,192 10,091,694 11.91%
1997 733,568 202,138 935,706 11,187,677 8.36%
1998 709,094 200,275 909,369 12,143,533 7.49%
1999 512,594 185,952 698,546 12,213,955 5.72%
2000 525,897 450,762 976,659 14,118,582 6.92%
2001 616,470 511,175 1,127,645 14,118,582 7.99%
2002 548,205 188,958 737,163 35,643,349 2.07%
2003 468,987 213,741 682,728 18,437,946 3.70%
CITY OF FRIENDSWOOD, TEXAS
RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL BONDED DEBT
LAST TEN FISCAL YEARS
(UNAUDITED)
79
Operating Net Operating
Number Number Expenses Revenue
Fiscal of Water of Sewer Operating Before Available for
Year Customers Customers Revenue Depreciation Debt Service
1994 8,031 7,709 3,896,444$ 2,305,953$ 1,590,491$
1995 8,210 7,878 4,394,289 2,135,227 2,259,062
1996 8,382 8,043 4,995,119 2,730,719 2,264,400
1997 8,534 8,199 4,744,557 2,802,914 1,941,643
1998 8,893 8,377 5,815,425 2,679,707 3,135,718
1999 9,123 8,679 5,482,707 2,781,480 2,701,227
2000 9,423 8,979 7,211,716 3,310,375 3,901,341
2001 10,088 9,415 6,599,787 3,253,593 3,346,194
2002 10,330 9,658 7,506,333 3,797,453 3,708,880
2003 10,600 10,240 7,275,746 4,401,694 2,874,052
Note A:
Source: Accounting records of the City.
The amounts only includeRevenue Bonds and do not includeamounts paid by the Enterprise
Fund for Combination Tax and Revenue Bonds which are secured by Tax Revenue.
CITY OF FRIENDSWOOD, TEXAS
REVENUE BOND COVERAGE
LAST TEN FISCAL YEARS
(UNAUDITED)
80
TABLE 9
Principal Interest Total Coverage
135,000$ 25,710$ 160,710$ 9.90
140,000 15,581 155,581 14.52
45,000 10,244 55,244 40.99
45,000 7,503 52,503 36.98
33,000 3,032 36,032 86.35
33,000 3,032 36,032 74.97
- 441,600 441,600 8.83
325,000 546,621 871,621 3.84
25,000 850,874 875,874 4.23
25,000 772,351 797,351 3.60
Debt Service Requirements
Revenue Bond (A)
81
TABLE 10
Ratio of Net
Gross Less Debt Bonded Debt Net Bonded
Fiscal Assessed Bonded Service Net to Assessed Debt
Year Population Value Debt Funds Bonded Debt Value Per Capita
1994 27,356 869,085,848$ 8,160,895$ 47,281$ 8,113,614$ 0.93% 297
1995 27,700 911,351,022 4,776,263 56,968 4,719,295 0.52% (1) 170
1996 28,602 941,679,232 3,935,477 298,053 3,637,424 0.39% 127
1997 28,902 987,445,395 3,606,427 392,220 3,214,207 0.33% 111
1998 30,787 987,445,395 3,206,927 187,908 3,019,019 0.31% 98
1999 31,192 1,027,271,860 2,798,677 73,344 2,725,333 0.27% 87
2000 31,761 1,133,824,245 2,430,219 68,627 2,361,592 0.21% 74
2001 32,720 1,238,337,688 2,205,725 77,175 2,128,550 0.17% 65
2002 33,500 1,388,238,748 1,915,518 109,799 1,805,719 0.13% 54
2003 34,152 1,506,606,061 10,375,891 254,568 10,121,323 0.67% 296
Source: Tax Assessor/Collector and accounting records of the City.
(1) Reflects recollection of debt to Enterprise Funds in 1994-1995 in the amount of $2.5 million.
(UNAUDITED)
CITY OF FRIENDSWOOD, TEXAS
RATIO OF NET GENERAL BONDED DEBT TO ASSESSED
VALUE AND NET BONDED DEBT PER CAPITA
LAST TEN FISCAL YEARS
82
TABLE 11
Estimated
Percentage Debt
Net Debt Applicable Applicable
Outstanding to City to City
Friendswood Independent School District 25,397,702$ 100.00% 25,397,702$
Clear Creek Independent School District 303,199,766 6.81% 20,647,904
Galveston County * 170,187,063 5.68% 9,666,625
Harris County** 2,349,700,956 0.15% 3,524,551
Total Net Overlapping Debt 59,236,783
City of Friendswood 2,128,550 100.00% 2,128,550
Total Direct and Overlapping Debt 61,365,333$
**
*Galveston County figure is unaudited.
CITY OF FRIENDSWOOD, TEXAS
COMPUTATION OF DIRECT AND OVERLAPPING DEBT
(UNAUDITED)
Harris County includesthe Harris County Flood Control District, Port of Houston Authority, Harris
County Hospital District and the Harris County Board of Education.
Name of Governmental Unit
83
TABLE 12
Date of incorporation October 15, 1960
Date of present charter Adopted Home Rule Charter
October 16, 1971
Form of government Council-Manager
Area 22.70 square miles
Miles of Streets
Streets - paved 105 miles
Streets - unpaved 1.09 miles
Fire Protection
Number of stations 3
Number of employees (fulltime equivalent) 12.58
Number of volunteers 100
Fire Prevention
Number of employees (fulltime equivalent) 4.00
Number of volunteers 0
Police Protection
Number of stations 1
Number of sworn officers (fulltime equivalent) 48
Number of patrol units 15
Recreation
Number of parks 8
Size of parks 189.00
Number of swimming pools 1
Number of tennis courts 4
Miles of storm sewers 86 miles
CITY OF FRIENDSWOOD, TEXAS
MISCELLANEOUS STATISTICAL DATA
SEPTEMBER 30, 2003
(continued)
(UNAUDITED)
84
TABLE 12
Education
Friendswood Independent School District:
Number of teachers 338
Number of students 5,395
Clear Creek Independent School District:
Number of teachers 1,618
Number of students 32,733
City Employees
Department heads 6
Employees:
Fulltime 168
Part-time (fulltime equivalent) 20.27
Election
Number of Votes Cast:
Last City Election - Regular Election 3,197
Water
Source Ground Water Surface Water
Average daily consumption 418,000 gallons 3,754,000 gallons
Maximum daily consumption 5,211,000 gallons 6,280,000 gallons
Water mains 160.00
Number of connections 10,600
Sewer Blackhawk
Average daily flow 3,332,000 gallons
Maximum daily flow 10,180,000 gallons
Sanitary sewer mains 160 miles
Number of connections 10,240
MISCELLANEOUS STATISTICAL DATA
SEPTEMBER 30, 2003
(Continued)
(UNAUDITED)
CITY OF FRIENDSWOOD, TEXAS
85