HomeMy WebLinkAboutComprehensive Annual Financial Report - FY2004CITY OF
FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
YEAR ENDED SEPTEMBER 30, 2004
CITY OF
FRIENDSWOOD, TEXAS
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
Fiscal Year Ended
September 30, 2004
Officials Issuing Report:
Ronald E. Cox
City Manager
Roger C. Roecker
Director of Administrative Services
CITY OF FRIENDSWOOD, TEXAS
TABLE OF CONTENTS
SEPTEMBER 30, 2004
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, 2004
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 – 53
Combining and Individual Fund Statements and Schedules
General Fund
Comparative Statements of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual................................................. 54 – 61
(continued)
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
(Continued)
SEPTEMBER 30, 2004
Page
Number
FINANCIAL SECTION (Continued)
Combining and Individual Fund Statements and Schedules (Continued)
Nonmajor Governmental Funds
Combining Balance Sheet....................................................................................... 62 – 63
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances................................................................................... 64 – 65
Nonmajor Special Revenue Funds
Schedule of Revenues, Expenditures and Changes in
Fund Balances – Budget and Actual – Fire/EMS
Donation Fund ..................................................................................................... 66
Nonmajor Debt Service Funds
Schedule of Revenues, Expenditures and Changes in
Fund Balances – Budget and Actual.................................................................... 67
COMPLIANCE SECTION
Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of
Financial Statements Performed in Accordance With
Government Auditing Standards................................................................................ 68 – 69
(continued)
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
(Continued)
SEPTEMBER 30, 2004
Page
Table Number
STATISTICAL SECTION (Unaudited)
Government-wide Expenses by Function...................................................... 1 70
Government-wide Revenues.......................................................................... 2 71
General Government Revenue by Source...................................................... 3 72 – 73
General Government Expenditures by Function............................................ 4 74
Property Tax Levies and Collections............................................................. 5 75 – 76
Assessed and Estimated Actual Value of Taxable Property.......................... 6 77
Tax Rate Distribution..................................................................................... 7 78
Property Tax Rates Per $100 Valuation Direct and Overlapping.................. 8 79
Principal Taxpayers ....................................................................................... 9 80
Ratio of Annual Debt Service Expenditures for General
Bonded Debt............................................................................................... 10 81
Revenue Bond Coverage................................................................................ 11 82 – 83
Ratio of Net General Bonded Debt to Assessed Value and
Net Bonded Debt Per Capita....................................................................... 12 84
Computation of Direct and Overlapping Debt............................................... 13 85
Miscellaneous Statistical Data....................................................................... 14 86 – 87
INTRODUCTORY SECTION
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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 serve 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 33,800. 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.
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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 2.86%. 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, 2003. This was the sixteenth 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.
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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
CITY OF FRIENDSWOOD, TEXAS
ORGANIZATION CHART
SEPTEMBER 30, 2004
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CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL OFFICIALS
SEPTEMBER 30, 2004
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 2007
Shannon Kimmel Council Member - Position No. 5 May 2005
Mel P. Measeles Council Member - Position No. 6 May 2007
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
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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, 2004, 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 the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free 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, 2004, and the respective changes in financial position and cash flows, 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.
In accordance with Government Auditing Standards, we have also issued our report dated February
4, 2005, 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 grant agreements
and other matters. The purpose of that report is to describe the scope of our testing of internal control of
financial reporting and compliance and the results of that testing, and not to provide an opinion on the
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be considered in assessing the
results of our audit.
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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.
February 4, 2005
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MANAGEMENT’S
DISCUSSION AND ANALYSIS
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Management’s Discussion and Analysis
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, 2004. 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 $59,986,606 (net assets). Of this amount, $11,463,134
(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 decreased by $17,829,598. This resulted from a prior period
adjustment totaling $21,009,677 to remove governmental infrastructure from the
statement of net assets and a net increase of $3,180,079 from operations.
• As of the close of the current fiscal year, the City of Friendswood’s governmental
funds reported combined ending fund balances of $13,044,680. Approximately 81%
of this amount or $10,586,428 is unreserved and available for use within the City’s
fund designation and policy.
• The City’s bond payable decreased by $1,590,000 or 5%, a result of current year debt
payments.
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.
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 assess the
overall financial condition of the City.
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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 but not used
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 basic services, (general
government, public safety, community development and public works and
community services). Property taxes, sales taxes, and franchise fees primarily finance
these activities.
• Business-type activities include the City’s water and sewer system. Charges for
services covers all or most of the cost for these services.
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 manage money for particular purposes and to ensure finance-related legal requirements.
The City uses two fund types – governmental and proprietary.
• Governmental funds – Similar to the 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 detailed 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.
The City maintains eight governmental funds. Information is presented separately in
the governmental funds balance sheet and the governmental fund statement of
revenues, expenditures, and changes in fund balances for the General Fund and the
2003 Bond Construction Fund, 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.
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• 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, with more detail and include 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 are presented immediately following the notes to the financial
statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
The City’s net assets exceed liabilities by $59.9 million as of September 30, 2004. The largest portion
of the City’s net assets (77.06%) reflects its investments in capital assets (e.g., land, buildings,
equipment, improvements, construction in progress and infrastructure), less any related debt used to
acquire those assets that is still outstanding. The City uses these capital assets to provide services to
citizens; therefore, these assets are not available for future spending. It should be noted that the
resources needed to repay this debt must be provided from other sources, since the capital assets
themselves cannot be used to liquidate these liabilities.
CITY OF FRIENDSWOOD’S NET ASSETS
2004 2003 2004 2003 2004 2003
Current and other assets 15,394,203$ 15,258,770$ 5,747,279$ 7,103,955$ 21,141,482$ 22,362,725$
Capital assets 35,428,920 53,274,291 35,570,302 35,188,349 70,999,222 88,462,640
Total assets 50,823,123 68,533,061 41,317,581 42,292,304 92,140,704 110,825,365
Long-term liabilities 10,437,768 11,497,471 17,842,294 19,369,600 28,280,062 30,867,071
Other liabilities 2,356,959 1,239,565 1,519,077 902,525 3,876,036 2,142,090
Total liabilities 12,794,727 12,737,036 19,361,371 20,272,125 32,156,098 33,009,161
Net assets:
Invested in capital assets,
net of related debt 29,632,831 49,742,075 17,174,525 17,656,296 46,807,356 67,398,371
Restricted 1,271,568 585,080 444,548 305,660 1,716,116 890,740
Unrestricted 7,125,997 5,468,870 4,337,137 4,058,223 11,463,134 9,527,093
Total net assets 38,030,396$ 55,796,025$ 21,956,210$ 22,020,179$ 59,986,606$ 77,816,204$
Governmental Activities Business-type Activities Totals
Governmental and business-type activities decreased the City’s net assets by $17.8 million in 2004. The
following table provides a summary of the City’s operations for the year ended September 30, 2004.
The Governmental activities decreased the City of Friendswood’s net assets by $17.7 million,
accounting for 99.6% of the total reduction in net assets. Business-type activities decreased the City’s
net assets by $63,969, accounting for .3% of the total reduction in net assets.
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CITY OF FRIENDSWOOD’S CHANGES IN NET ASSETS
2004 2003 2004 2003 2004 2003
Revenues:
Program revenues:
Charges for services 1,856,583$ 2,589,339$ 7,203,736$ 7,288,523$ 9,060,319$ 9,877,862$
Operating grants
and contributions 778,261 661,568 - - 778,261 661,568
Capital grants
and contributions 239,200 749,772 - - 239,200 749,772
General revenues:
Property taxes 10,931,393 9,706,202 - - 10,931,393 9,706,202
Sales taxes 2,833,290 2,875,071 - - 2,833,290 2,875,071
Franchise taxes 1,119,328 1,058,726 - - 1,119,328 1,058,726
Other taxes 71,028 79,691 - - 71,028 79,691
Investment earnings 219,085 154,558 59,869 160,629 278,954 315,187
Miscellaneous - 30,826 - - - 30,826
Total revenues 18,048,168 17,905,753 7,263,605 7,449,152 25,311,773 25,354,905
Expenses:
General government 3,375,283 3,019,602 - - 3,375,283 3,019,602
Public safety 6,026,272 5,740,784 - - 6,026,272 5,740,784
Community development
and public works 2,569,356 3,378,579 - - 2,569,356 3,378,579
Community services 3,081,717 2,675,351 - - 3,081,717 2,675,351
Water and sewer - - 6,613,296 6,521,436 6,613,296 6,521,436
Interest on long-term
debt 465,770 128,192 - - 465,770 128,192
Total expenses 15,518,398 14,942,508 6,613,296 6,521,436 22,131,694 21,463,944
Increases in net assets
before transfers 2,529,770 2,963,245 650,309 927,716 3,180,079 3,890,961
Extraordinary items - - - 100,000 - 100,000
Transfers 714,278 664,102 714,278)( 664,102)( - -
Increase (decrease) in net as 3,244,048 3,627,347 63,969)( 363,614 3,180,079 3,990,961
Net assets, beginning 55,796,025 52,168,678 22,020,179 22,246,822 77,816,204 74,415,500
Prior period adjustment 21,009,677)( - - 590,257)( 21,009,677)( 590,257)(
Net assets, ending 38,030,396$ 55,796,025$ 21,956,210$ 22,020,179$ 59,986,606$ 77,816,204$
Governmental Activities Business-type Activities Totals
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 $13,044,680. Approximately 81% of this amount ($10,586,428) is unreserved fund balance.
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 ($384,815), prepaid expense ($250,367), debt
service ($829,701), construction ($8,166), projects ($389,037), and compensated absences ($596,166).
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In the General Fund, fund balance increased by $867,363. The increase is due to increased revenues in
sales tax ($336,943), franchise taxes ($69,328), fines and forfeitures ($277,269) and permits/fees
($179,288). These amounts are included as part of the reservation of fund balance. The Debt Service
Fund balance increased by $575,133 due to the repayment of funds from the General Fund.
Proprietary Fund
Unrestricted net assets of the respective proprietary funds are Enterprise, (water and sewer), $4,337,137
and Internal Service Fund (vehicle replacement fund), $37,487. The net assets of the Water and Sewer
Fund decreased by $63,969. The net assets of the Internal Service Fund increased by $15,053.
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 $2,510,272 or 17%. The
majority of this increase was the re-appropriation of capital for designated projects ($638,731),
encumbrances ($613,263) from the prior year, additional appropriations for street projects ($508,068),
the purchase of additional property at the Public Safety building site ($708,836) and to appropriate
grants awarded during the 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, 2004, is $70,999,222. The investment in
capital assets include land, buildings and improvements, equipment, infrastructure, water rights and
construction in progress.
This year’s major capital events during the current fiscal year included the following:
• Design phase of the Public Safety Building with current year costs of $199,500 and
proposed project costs of $5.9 million.
• Purchase of land for new Fire Station #4 for $387,094 and proposed project costs of
$1.4 million.
• Drainage improvements in Sun Meadow with current costs of $127,554. Project costs
to date are $2 million.
• Continued Phase II improvements at Centennial Park with current year costs of
$1.091 million and total projected costs of $3.5 million.
• Drainage improvements in the subdivisions of Annalea, Kingspark and Whitehall.
Current cost $257,000 with total projected costs of $1.4 million.
• Completion of the Longwood Park Water and Sewer project totaling $1.5 million.
• Completion of the San Joaquin Gravity Sewer Line totaling $801,000.
• Asphalt Street Improvements completed for a total of $459,000.
CITY OF FRIENDSWOOD’S CAPITAL ASSETS AT YEAR-END
2004 2003 2004 2003 2004 2003
Land 24,011,964$ 24,011,964$ 718,493$ 718,493$ 24,730,457$ 24,730,457$
Buildings and
improvements 6,580,179 26,398,880 - - 6,580,179 26,398,880
Equipment 1,529,863 1,955,383 541,840 12,511,571 2,071,703 14,466,954
Infrastructure - - 30,452,500 17,295,193 30,452,500 17,295,193
Water rights - - 3,465,469 3,465,469 3,465,469 3,465,469
Construction in progress 3,306,914 908,064 392,000 1,197,623 3,698,914 2,105,687
Total capital assets 35,428,920$ 53,274,291$ 35,570,302$ 35,188,349$ 70,999,222$ 88,462,640$
Governmental Activities Business-type Activities Totals
Additional information on the City’s capital assets can be found on pages 44 and 45 of this report.
DEBT ADMINISTRATION
At the end of the current fiscal year, the City of Friendswood had a total bonded debt and capital lease
obligation of $28,585,000.
CITY OF FRIENDSWOOD’S OUTSTANDING DEBT AT YEAR-END
2004 2003 2004 2003 2004 2003
General obligations 10,059,865$ 10,375,891$ 1,830,135$ 2,468,558$ 11,890,000$ 12,844,449$
Revenue bonds payable - - 14,160,000 14,185,000 14,160,000 14,185,000
Certificates of obligation - - 2,535,000 2,635,000 2,535,000 2,635,000
Capital leases 362,154 510,858 - - 362,154 510,858
10,422,019$ 10,886,749$ 18,525,135$ 19,288,558$ 28,947,154$ 30,175,307$
Governmental Activities Business-type Activities Totals
The City’s General Obligation, Revenue Bonds, and Certificates of Obligation bond ratings are listed
below:
Moody's Standard
Investors Service & Poor's
General Obligation Bonds A1 A
Revenue Bonds A2 N/A
Additional information on the City’s outstanding debt can be found on pages 45 through 48 of this
report.
16
17
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The entire area surrounding Friendswood continues to experience unprecedented growth. The City’s
current population is estimated to be 33,800. 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 2004-05 budget, the City provided
funding to begin the implementation plan for the Main Street/Town Center.
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 six consecutive years. This rate consists of a
maintenance and operations (M&0) tax rate of $.5547 and an I&S (debt service) tax rate of $.0838. The
rate was set based on a net assessed value of $1,770,000,000. This is an increase of $96,000,000 in
taxable value with $61,557,420 or 65% resulting from new construction in the City. This additional
value results in an M&O levy increase of $532,512, which is 43% less than last year’s increase. The
City’s financial management policies, sets the guideline to maintain the 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 $2,500,000 to $2,700,000, the 2005 estimate is 2.6% less
than the collections of the previous fiscal year. Other significant General Fund revenues are building
permits, $383,506 and municipal court fines, $715,300. If all estimates are realized, the total General
Fund unreserved fund balance is projected to be $3.5 million at September 30, 2005.
Water revenues are budgeted at $4,096,000, which is a 3.9% reduction from the prior year. Sewer
revenues are budgeted at $3,431,000. This represents a $904,000 revenue increase, or 35% which is
needed to cover a deficit in the sewer utility. Water and sewer reserves are expected to be $4.5 million
at the end of fiscal year 2005. Pursuant to the financial management policy, funds in excess of the 90-
day operating reserve are designated for future capital improvements. This capital reserve will allow the
City to reduce the amount of future issuances of revenue bonds.
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, customers, investors, and creditors with a
general overview of the City’s finances and to show the City’s accountability for the money it receives.
If you have questions about this report or need additional information, contact Administrative Services,
P. O. Box 1288, Friendswood, Texas 77549-1288, or call Roger C. Roecker 281-996-3211, or email
rroecker@ci.friendswood.tx.us.
BASIC
FINANCIAL STATEMENTS
Governmental Business-type
Activities Activities Total
ASSETS
Cash and investments 13,342,495$ 3,172,825$ 16,515,320$
Receivables, net of allowances for uncollectibles
Taxes 1,094,361 - 1,094,361
Customer accounts 101,409 1,279,532 1,380,941
Other 298,087 35,103 333,190
Due from other governments 242,494 - 242,494
Prepaids 250,367 2,967 253,334
Deferred charges 64,990 129,358 194,348
Restricted assets:
Cash and investments - 859,130 859,130
Net investment in joint venture - 268,364 268,364
Capital assets:
Land 24,011,964 718,493 24,730,457
Buildings and improvements 12,421,304 - 12,421,304
Machinery and equipment 5,658,331 2,910,523 8,568,854
Water and wastewater system - 44,988,856 44,988,856
Construction in progress 3,306,914 392,000 3,698,914
Water rights - 3,465,469 3,465,469
Accumulated depreciation 9,969,593)( 16,905,039)( 26,874,632)(
Total capital assets, net of accumulated depreciation 35,428,920 35,570,302 70,999,222
Total assets 50,823,123 41,317,581 92,140,704
LIABILITIES
Accounts payable 1,140,065 334,914 1,474,979
Accrued liabilities 597,353 71,565 668,918
Customer deposits - 266,195 266,195
Accrued interest 37,124 81,825 118,949
Noncurrent liabilities:
Due within one year 580,417 764,578 1,344,995
Due in more than one year 10,437,768 17,842,294 28,280,062
Total liabilities 12,792,727 19,361,371 32,154,098
NET ASSETS
Invested in capital assets,
net of related debt 29,632,831 17,174,525 46,807,356
Restricted for:
Debt service 834,752 230,858 1,065,610
Public safety 201,891 - 201,891
Community development 234,925 - 234,925
Capital improvements - 213,690 213,690
Unrestricted 7,125,997 4,337,137 11,463,134
Total net assets 38,030,396$ 21,956,210$ 59,986,606$
The notes to the financial statements are an integral part of this statement.
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2004
Primary Government
18
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions
Primary Government:
Governmental activities:
General government 3,375,283$ 958,665$ -$ -$
Public safety 6,026,272 9,141 697,983 -
Community development and public works 2,569,356 822,927 75,081 239,200
Community services 3,081,717 65,850 5,197 -
Interest on long-term debt 465,770 - - -
Total governmental activities 15,518,398 1,856,583 778,261 239,200
Business-type activities:
Water and sewer 6,613,296 7,203,736 - -
Total business-type activities 6,613,296 7,203,736 - -
Total primary government 22,131,694$ 9,060,319$ 778,261$ 239,200$
General revenues:
Taxes:
Property taxes, levied for general purposes
Property taxes, levied for debt service
Sales
Franchise
Other
Investment earnings
Transfers
Total general revenues and transfers
Change in net assets
Net assets, beginning
Prior period adjustment
Net assets, ending
The notes to the financial statements are an integral part of this statement.
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2004
CITY OF FRIENDSWOOD, TEXAS
Program Revenues
19
Governmental Business-type
Activities Activities Total
2,416,618)$( -$ 2,416,618)$(
5,319,148)( - 5,319,148)(
1,432,148)( - 1,432,148)(
3,010,670)( - 3,010,670)(
465,770)( - 465,770)(
12,644,354)( - 12,644,354)(
- 590,440 590,440
- 590,440 590,440
12,644,354)( 590,440 12,053,914)(
9,490,722 - 9,490,722
1,440,671 - 1,440,671
2,833,290 - 2,833,290
1,119,328 - 1,119,328
71,028 - 71,028
219,085 59,869 278,954
714,278 714,278)( -
15,888,402 654,409)( 15,233,993
3,244,048 63,969)( 3,180,079
55,796,025 22,020,179 77,816,204
21,009,677)( - 21,009,677)(
38,030,396$ 21,956,210$ 59,986,606$
Net (Expense) Revenue and
Changes in Net Assets
Primary Government
20
Other Total
2003 Bond Governmental Governmental
General Construction Funds Funds
ASSETS
Cash and investments 6,303,519$ 5,771,137$ 1,231,103$ 13,305,759$
Receivables, net of allowances for uncollectibles:
Taxes 1,052,186 - 42,175 1,094,361
Customer accounts 74,240 - 27,169 101,409
Other 253,196 35,595 8,545 297,336
Due from other governments 242,494 - - 242,494
Prepaids 250,367 - - 250,367
Total assets 8,176,002$ 5,806,732$ 1,308,992$ 15,291,726$
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable 504,695 635,070 300 1,140,065
Accrued liabilities 597,353 - - 597,353
Deferred revenue 467,453 - 42,175 509,628
Total liabilities 1,569,501 635,070 42,475 2,247,046
Fund balances:
Reserved for:
Encumbrances 384,815 - - 384,815
Prepaids 250,367 - - 250,367
Debt service - - 829,701 829,701
Unreserved, reported in:
General fund
Designated for:
Construction 8,166 - - 8,166
Projects 389,037 - - 389,037
Compensated absences 596,166 - - 596,166
Undesignated 4,977,950 - - 4,977,950
Capital projects - 5,171,662 5,171,662
Special revenue funds - - 411,229 411,229
Permanent fund - - 25,587 25,587
Total fund balances 6,606,501 5,171,662 1,266,517 13,044,680
Total liabilities and fund balances 8,176,002$ 5,806,732$ 1,308,992$
Amounts reported for governmental activities in the statement of net assets are different because:
35,034,392
509,628
432,015
10,990,319)(
Net assets of governmental activities 38,030,396$
The notes to the financial statements are an integral part of this statement.
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
CITY OF FRIENDSWOOD, TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2004
21
Other Total
2003 Bond Governmental Governmental
General Construction Funds Funds
REVENUES
Property taxes 9,452,265$ -$ 1,428,319$ 10,880,584$
Sales taxes 2,843,943 - - 2,843,943
Franchise fees 1,119,328 - - 1,119,328
Fines and forfeitures 879,369 - - 879,369
Permits and fees 746,666 - 60,375 807,041
Intergovernmental 663,130 - 132,195 795,325
Interest on investments 94,304 90,230 33,885 218,419
Donations - - 215,535 215,535
Insurance proceeds - - 6,600 6,600
Other 146,016 - - 146,016
Total revenues 15,945,021 90,230 1,876,909 17,912,160
EXPENDITURES
Current:
General government 3,249,965 - - 3,249,965
Public safety 5,810,503 - - 5,810,503
Community development and public works 2,511,125 - - 2,511,125
Community services 2,655,315 - - 2,655,315
Capital outlay 1,703,823 2,260,872 68,502 4,033,197
Debt service:
Principal - - 469,930 469,930
Interest and fiscal charges - - 476,207 476,207
Total expenditures 15,930,731 2,260,872 1,014,639 19,206,242
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 14,290 2,170,642)( 862,270 1,294,082)(
OTHER FINANCING SOURCES (USES)
Transfers in 853,073 - - 853,073
Transfers out - - 138,795)( 138,795)(
Total other financing sources (uses)853,073 - 138,795)( 714,278
NET CHANGE IN FUND BALANCES 867,363 2,170,642)( 723,475 579,804)(
FUND BALANCES, BEGINNING 5,739,138 7,342,304 543,042 13,624,484
FUND BALANCES, ENDING 6,606,501$ 5,171,662$ 1,266,517$ 13,044,680$
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, 2004
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) 579,804)$(
Governmental funds report capital outlays as expenditures. However,in the statement of
activities the cost of those assets is allocated over their estimated useful lives and reported as
depreciation expense. This is the amount by which capital outlays exceeded depreciation in
the current period.3,178,533
Revenues in the statement of activities that do not provide current financial resources are not
reported as revenues in the funds.135,343
The issuance of long-term debt (e.g., bonds, leases)provides current financial resources to
governmental funds, while the repayment of the principal of long-term debt consumes the
current financial resources of governmental funds. Neither transaction, however, has any
effecton net assets. This amount is the net effect of these differences in the treatment of long-
term debt and related items.464,730
Some expenses reported in the statement of activities do not require the use of current
financial resources and, therefore, are not reported as expenditures in governmental funds. 30,193
Internal Service Funds are used by management to charge the costs of certain capital assets to
individual funds. The net revenue of certain activities of internal service funds is reported
with governmental activities.15,053
Change in net assets of governmental activities (pages 19 - 20)3,244,048$
The notes to the financial statements are an integral part of this statement.
TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2004
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 9,285,678$ 9,285,678$ 9,452,265$ 166,587$
Sales taxes 2,507,000 2,507,000 2,843,943 336,943
Franchise taxes 1,050,000 1,050,000 1,119,328 69,328
Fines and forfeitures 602,100 602,100 879,369 277,269
Permits and fees 564,946 567,378 746,666 179,288
Intergovernmental 525,673 646,931 663,130 16,199
Interest on investments 85,100 85,100 94,304 9,204
Other 73,100 78,216 146,016 67,800
Total revenues 14,693,597 14,822,403 15,945,021 1,122,618
EXPENDITURES
Current:
General government 3,360,218 3,436,535 3,271,317 165,218
Public safety 6,013,372 6,043,476 5,866,100 177,376
Community development and public works 2,951,799 4,077,846 3,496,619 581,227
Community services 2,741,880 4,019,684 3,296,695 722,989
Total expenditures 15,067,269 17,577,541 15,930,731 1,646,810
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 373,672)( 2,755,138)( 14,290 2,769,428
OTHER FINANCING SOURCES
Transfers in 715,783 714,278 853,073 138,795)(
Total other financing sources 715,783 714,278 853,073 138,795)(
NET CHANGE IN FUND BALANCES 342,111 2,040,860)( 867,363 2,908,223
FUND BALANCES, BEGINNING 5,739,138 5,739,138 5,739,138 -
FUND BALANCES, ENDING 6,081,249$ 3,698,278$ 6,606,501$ 2,908,223$
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
FOR THE YEAR ENDED SEPTEMBER 30, 2004
GENERAL FUND
24
Business-type
Activities Governmental
Enterprise Fund Activities
Internal
Service
Water and Sewer Fund
ASSETS
Current assets:
Cash and investments 3,172,825$ 36,736$
Accounts receivable, net of allowance
Customer accounts 1,279,532 -
Other 35,103 751
Prepaids 2,967 -
Restricted cash and investments 859,130 -
Total current assets 5,349,557 37,487
Noncurrent assets
Restricted net investment in joint ventur 268,364 -
Deferred charges 129,358 -
Capital assets:
Land 718,493 -
Machinery and equipmen 2,910,523 738,688
Water and wastewater system 44,988,856 -
Construction in progress 392,000 -
Water rights 3,465,469 -
Accumulated depreciation 16,905,039)( 344,160)(
Total capital assets 35,570,302 394,528
Total noncurrent assets 35,968,024 394,528
Total assets 41,317,581 432,015
LIABILITIES
Current liabilities:
Accounts payable 333,466 -
Accrued liabilities 70,868 -
Compensated absences 16,347 -
Serial bonds and certificates of obligation 748,231 -
Total current liabilities 1,168,912 -
Current liabilities payable from restricted assets
Accounts payable 1,448 -
Accrued liabilities 697 -
Customer deposits 266,195 -
Accrued interest 81,825 -
Total current liabilities payable from restricted assets 350,165 -
Noncurrent liabilities:
Compensated absences 65,390 -
Serial bonds and certificates of obligation 17,776,904 -
Total noncurrent liabilities 17,842,294 -
Total liabilities 19,361,371 -
NET ASSETS
Invested in capital assets, net of related deb 17,174,525 394,528
Restricted for
Debt service 230,858 -
Capital improvements 213,690 -
Unrestricted 4,337,137 37,487
Total net assets 21,956,210$ 432,015$
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, 2004
25
Business-type
Activities Governmental
Enterprise Fund Activities
Internal
Service
Water and Sewer Fund
OPERATING REVENUES
Charges for services 7,203,736$ 283,747$
Total operating revenues 7,203,736 283,747
OPERATING EXPENSES
Personnel services 1,245,436 -
Wastewater operations 1,075,475 -
Water purchases 758,746 -
Repairs and maintenance 404,453 -
Supplies 131,761 45,718
Other services and charges 622,939 -
Depreciation 1,375,267 227,447
Total operating expenses 5,614,077 273,165
OPERATING INCOME 1,589,659 10,582
NONOPERATING REVENUES (EXPENSES)
Investment earnings 59,869 665
Gain on sale of capital assets - 3,806
Interest expense and fiscal charges 999,219)( -
Total nonoperating revenues (expenses)939,350)( 4,471
INCOME BEFORE TRANSFERS 650,309 15,053
TRANSFERS OUT 714,278)( -
CHANGE IN NET ASSETS 63,969)( 15,053
TOTAL NET ASSETS, BEGINNING 22,020,179 416,962
TOTAL NET ASSETS, ENDING 21,956,210$ 432,015$
The notes to the financial statements are an integral part of this statement.
PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30, 2004
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 6,643,612$ 283,747$
Cash paid to suppliers for goods and services 1,255,314)( -
Cash paid to employees for services 2,721,114)( 47,883)(
Net cash provided by operating activities 2,667,184 235,864
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Cash paid to other funds - 120,188)(
Transfers to other funds 714,278)( -
Net cash used for noncapital financing activities 714,278)( 120,188)(
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition of capital assets 1,757,220)( 213,220)(
Proceeds from sale of capital assets - 3,806
Principal paid on bonds 763,423)( -
Interest and fiscal charges paid on debt 1,006,444)( -
Net cash used for capital and related financing activities 3,527,087)( 209,414)(
CASH FLOWS FROM INVESTING ACTIVITIES
Investment earnings 59,869 665
Net cash provided by investing activities 59,869 665
NET DECREASE IN CASH AND CASH EQUIVALENTS 1,514,312)( 93,073)(
CASH AND CASH EQUIVALENTS, BEGINNING 5,546,267 129,809
CASH AND CASH EQUIVALENTS, ENDING 4,031,955$ 36,736$
(Including $592,935 for water and sewer
reported as restricted assets)
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30, 2004
(continued)
27
Business-type
Activities Governmental
Enterprise Fund Activities -
Internal
Service
Water and Sewer Fund
Reconciliation of operating income to net cash
provided by operating activities:
Operating income 1,589,659$ 10,582$
Adjustments to reconcile operating income
to net cash provided by operating activities:
Depreciation 1,375,267 227,447
Changes in assets and liabilities:
Decrease (increase) in assets:
Customer receivable 178,246)( -
Other receivable 24,738 252)(
Prepaid and other assets 7,180 -
Investment in joint venture 23,646)( -
Increase (decrease) in liabilities:
Accounts payable 134,890)( 1,913)(
Accrued liabilities 10,573)( -
Compensated absences payable 695 -
Customer deposits 17,000 -
Net cash provided by operating activities 2,667,184$ 235,864$
The notes to the financial statements are an integral part of this statement.
PROPRIETARY FUNDS
(Continued)
YEAR ENDED SEPTEMBER 30, 2004
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF CASH FLOWS
28
29
CITY OF FRIENDSWOOD, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004
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. 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.
(continued)
31
1. SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the 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.
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 2003 Bond Construction 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 Enterprise Fund:
The Water and Sewer Fund is used to account for the activities of the City’s
water and wastewater operations.
Additionally, the City reports the following fund type:
The Internal Service Fund is used to account for vehicle management services
provided to other departments or agencies of the City, or to other governments, on
a cost reimbursement basis.
(continued)
32
1. SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
Private-sector standards of accounting and financial reporting issued prior to December 1,
1989, generally are followed in both the government-wide and enterprise 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.
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.
D. 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.
(continued)
33
1. SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
D. Assets, Liabilities, and Net Assets or Equity (Continued)
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.
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, 2004.
(continued)
34
1. SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
D. Assets, Liabilities, and Net Assets or Equity (Continued)
Receivables and Payables (Continued)
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.
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
$9.3 and $1.4 million for operations and debt service, respectively, based on a total adjusted
taxable valuation of approximately $1.685 billion for the 2003 tax year.
Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items in both government-wide and fund financial statements.
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.
(continued)
1. SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
D. Assets, Liabilities, and Net Assets or Equity (Continued)
Capital Assets (Continued)
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.
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
The City has elected to delay implementation of the requirements of GASB 34 related to
infrastructure (roads, sidewalks, etc.) assets acquired prior to October 1, 2002. GASB 34
permits an optional four-year transition period for governmental infrastructure reporting.
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.
(continued)
35
36
1. SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
D. Assets, Liabilities, and Net Assets or Equity (Continued)
Long-term Obligations (Continued)
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.
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 $10,990,319 difference are as follows:
General obligation bonds 10,059,865$
Deferred charges for issuance costs (to be amortized
over life of debt)64,990)(
Capitalized lease obligations 362,154
Accrued interest payable 37,124
Compensated absences 596,166
Net adjustment to reduce fund balance - total
governmental funds to arrive at net assets -
governmental activities 10,990,319$
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 $3,178,533 difference are as follows:
Capital outlay 4,033,197$
Depreciation expense 854,664)(
Net adjustment to increase net changes in fund balances -
total governmental funds to arrive at changes in net
assets of governmental activities 3,178,533$
(continued)
37
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
$135,343 difference are as follows:
Property taxes 50,809$
Miscellaneous revenue 84,534
Net adjustment to increase net changes in fund balances -
total governmental funds to arrive at changes in net
assets of governmental activities 135,343$
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 $464,730 difference are
as follows:
Principal repayments:
General obligation debt 285,414$
Capital lease 148,704
Payment of accreted interest on premium compound interest bonds 30,612
Net adjustment to increase net changes in fund balances -
total governmental funds to arrive at changes in net
assets of governmental activities 464,730$
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 $30,193 difference are as follows:
Compensated absences 14,556$
Accrued interest 18,591
Amortization of issuance costs 2,954)(
Net adjustment to increase net changes in fund balances -
total governmental funds to arrive at changes in net
assets of governmental activities 30,193$
38
39
3. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
Budgetary Information
Annual appropriated budgets are adopted for the General, 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)
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.
Excess of Expenditures Over Appropriations
During the 2004 fiscal year, expenditures exceeded appropriations in the following departments
(the legal level of compliance):
General Fund:
General Government - Legal Services 4,797$
General Government - Municipal Court 5,619
General Government - Risk Management 2,439
Public Safety - Communications 15,009
Public Safety - Animal Control 150
Community Services - Administration 7,285
Community Services - Parks and Recreation 73,319
Community Services - Swimming Pool 3,112
4. DETAILED NOTES ON ALL FUNDS
Cash and Investments
At year-end, the City’s carrying amount of deposits was $3,935,771 and the bank balance was
$4,729,865. Of the bank balance, $400,000 was covered by federal depository insurance or
collateral held by the City’s agent in the City’s name. Of the remaining balance, $4,329,865 was
collateralized with securities held by the pledging financial institution’s trust department or agent
in the City’s name.
(continued)
40
4. DETAILED NOTES ON ALL FUNDS (Continued)
Cash and Investments (Continued)
At year-end, the carrying value of cash and cash equivalents (which approximated fair value)
consisted of:
Carrying
Amount
Demand and time deposits 3,935,771$
Petty cash 2,140
U. S. Government Securities 2,087,459
Public Investment Pools:
MBIA - Texas CLASS 9,537,258
TexPool 1,027,685
Lone Star Investment Pool 784,137
Total cash and investments 17,374,450
Less: restricted cash and investments 859,130
Unrestricted cash and investments 16,515,320$
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 year-end, the City’s investment balances were as follows:
(1)(2)(3)
U. S. Government securities 2,087,459$ -$ -$ 2,087,459$
Total 2,087,459$ -$ -$ 2,087,459
Investments not subject
to categorization:
MBIA - Texas Class 9,537,258
TexPool 1,027,685
TexStar Investment Pool 784,137
Total Investments 13,436,539$
Category
Fair Value
Reported Amount/
(continued)
41
42
4. DETAILED NOTES ON ALL FUNDS (Continued)
Cash and Investments (Continued)
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.
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
$100,000;
3. No-load money market mutual funds; and
4. TexPool, Lone Star Investment Pool, MBIA, an the Local Government
Investment Cooperative (LOGIC).
The City Council has adopted a written investment policy regarding the investments of its funds as
defined by the Public Funds Investment Act of 1995 (Chapter 2256, Texas Government Code).
The investments of the City are in compliance with the Council’s investment policies. The City
did not have any derivative investment products during the current year. All significant legal and
contractual provisions for investments were complied with during the year. Investments at year-
end are representative of the types of investments maintained by the City during the year.
(continued)
4. DETAILED NOTES ON ALL FUNDS (Continued)
Receivables
Receivables as of year-end for the City’s individual major funds, and nonmajor and Internal
Service Funds in the aggregate, including the applicable allowances for uncollectible accounts,
are as follows:
2003 Bond Water and Internal
General Construction Nonmajor Sewer Service Total
Receivables:
Property taxes 310,195$ -$ 46,862$ -$ -$ 357,057$
Sales taxes 483,046 - - - - 483,046
Franchise taxes 289,964 - - - - 289,964
Customer accounts 76,240 - 27,169 1,289,532 - 1,392,941
Accrued interest 61,896 35,594 7,994 35,103 751 141,338
Court fines 352,030 - - - - 352,030
Other 15,286 - 550 - - 15,836
Gross receivables 1,588,657 35,594 82,575 1,324,635 751 3,032,212
Less: allowance for
uncollectibles 209,035 - 4,686 10,000 - 223,721
Net total receivables 1,379,622$ 35,594$ 77,889$ 1,314,635$ 751$ 2,808,491$
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 279,176$
Court fines receivable 176,015
Miscellaneous receivable 12,262
Total General Fund 467,453
Debt Service Fund
Delinquent property taxes receivable 42,175
Total Debt Service Fund 42,175
Total Governmental Funds 509,628$
(continued)
43
4. DETAILED NOTES ON ALL FUNDS (Continued)
Capital Assets
Capital asset activity for the year ended September 30, 2004, was as follows:
Primary Government
Beginning Ending
Balance Increases Decreases Adjustments*Balance
Governmental activities:
Capital assets, not being depreciated:
Land 24,011,964$ -$ -$ -$ 24,011,964$
Construction in progress 908,064 3,614,983 1,216,133 - 3,306,914
Total assets not being depreciated 24,920,028 3,614,983 1,216,133 - 27,318,878
Capital assets, being depreciated:
Buildings and improvements 29,361,827 1,216,133 - 18,156,656)( 12,421,304
Machinery and equipment 5,077,297 631,434 50,400 - 5,658,331
Total capital assets being depreciated 34,439,124 1,847,567 50,400 18,156,656)( 18,079,635
Less accumulated depreciation:
Buildings and improvements 2,962,947 498,756 - 2,379,422 5,841,125
Machinery and equipment 3,121,914 583,355 50,400 473,599 4,128,468
Total accumulated depreciation 6,084,861 1,082,111 50,400 2,853,021 9,969,593
Total capital assets being
depreciated, net 28,354,263 765,456 - 21,009,677)( 8,110,042
Governmental activities capital
assets, net 53,274,291$ 4,380,439$ 1,216,133$ 21,009,677)$( 35,428,920$
Business-type activities
Capital assets, not being depreciated:
Land 718,493$ -$ -$ -$ 718,493$
Construction in progress 1,221,706 1,727,955 2,557,661 - 392,000
Water rights 3,465,469 - - - 3,465,469
Total assets not being depreciated 5,405,668 1,727,955 2,557,661 - 4,575,962
Capital assets, being depreciated:
Machinery and equipment 25,638,890 - - 22,728,637)( 2,910,253
Water and wastewater system 19,697,646 2,562,843 - 22,728,637 44,989,126
Total capital assets being depreciated 45,336,536 2,562,843 - - 47,899,379
Less accumulated depreciation:
Machinery and equipment 8,343,697 280,970 - 6,256,254)( 2,368,413
Water and wastewater system 7,186,075 1,094,297 - 6,256,254 14,536,626
Total accumulated depreciation 15,529,772 1,375,267 - - 16,905,039
Total capital assets being
depreciated, net 29,806,764 1,187,576 - - 30,994,340
Business-type activities capital
assets, net 35,212,432$ 2,915,531$ 2,557,661$ -$ 35,570,302$
* Adjustments represent reclassifications and a reduction of governmental infrastructure.
(continued)
44
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 131,341$
Public safety 226,644
Community development and public works 64,254
Community services 432,425
Capital assets held by the City's internal service fund are
charged to the various functions based on their usage 227,447
Total depreciation expense - governmental activities 1,082,111$
Business-type activities:
Water and sewer 1,375,267$
Total depreciation expense - business-type activities 1,375,267$
Commitments for construction projects in progress were $6,617,116 at September 30, 2004.
Interfund Transfers
The following schedule briefly summarizes the City’s transfer activity:
Transfers In Transfers Out Amount Purpose
General Nonmajor Governmental 138,795$ Subsidy for emergency
management expenditures
General Water and Sewer 714,278 Subsidy for administrative
expenditures
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.
(continued)
45
4. DETAILED NOTES ON ALL FUNDS (Continued)
Long-term Debt (Continued)
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, 2004, follows:
Final Interest Governmental Business-type
Maturity Rate Activities Activities
General Obligation Bonds
2002 Refunding Bonds 3,785,000$ 2008 3.950%1,359,865$ 1,830,135$
2003 Permanent
Improvement Bonds 8,700,000 2026 3.65% -5.50%8,700,000 -
10,059,865 1,830,135
Revenue Bonds
1999 Waterworks and Sewer
System Revenue Bonds 4,945,000 2019 4.2% - 5.55%- 4,545,000
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
- 14,160,000
Combination Tax and Revenue
Certificates of Obligation
1995 Series 3,200,000 2010 5.375% - 7.375%- 2,535,000
Total Bonds and Certificates of Obligation 10,059,865$ 18,525,135$
Series and Original
Issue Amount
Annual debt service requirements for bonds and certificates of obligation are as follows:
Year Ending
September 30,Principal Interest Principal Interest
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 10,059,865$ 5,258,570$ 18,525,135$ 8,891,779$
Governmental Activities Business-type Activities
(continued)
46
4. DETAILED NOTES ON ALL FUNDS (Continued)
Long-term Debt (Continued)
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, 2004, $3,210,000 of bonds considered defeased is still
outstanding.
Federal Arbitrage
General obligation bonds, combination tax and revenue bonds and certificates of obligation are
subject to the provisions of the Internal Revenue Code of 1986 related to arbitrage and interest
income tax regulations under those provisions.
Obligations Under Capital Leases
In prior years, the City entered into capital lease agreements in order to purchase machinery and
equipment for public works, police and fire departments. The assets acquired through these lease
agreements are as follows:
Governmental
Activities
Asset:
Machinery and equipment 779,537$
Less: accumulated depreciation 339,774
Total 439,763$
(continued)
47
4. DETAILED NOTES ON ALL FUNDS (Continued)
Long-term Debt (Continued)
The following is a summary of future lease payments due on this machinery and equipment:
Year Ending Lease
September 30,Obligation
2005 140,070$
2006 81,846
2007 80,572
2008 80,574
2009 20,071
Total 403,133
Less interest portion 40,979)(
Obligations under capital leases 362,154$
Changes in Long-term Liabilities
Long-term liability activity for the year ended September 30, 2004, was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental activities
General obligation bonds 10,345,279$ -$ 285,414$ 10,059,865$ 336,769$
Accreted interest on premium
compound interest bonds 30,612 - 30,612 - -
Capital lease obligations 510,858 - 148,704 362,154 124,415
Compensated absences 610,722 346,386 360,942 596,166 119,233
Governmental activities
long-term liabilities 11,497,471$ 346,386$ 825,672$ 11,018,185$ 580,417$
Business-type activities
General obligation bonds 2,441,565$ -$ 611,430$ 1,830,135$ 453,231$
Revenue bonds 14,185,000 - 25,000 14,160,000 140,000
Certificates of obligation 2,635,000 - 100,000 2,535,000 155,000
Accreted interest on premium
compound interest bonds 26,993 - 26,993 - -
Compensated absences 81,042 43,110 42,415 81,737 16,347
Business-type activities
long-term liabilities 19,369,600$ 43,110$ 805,838$ 18,606,872$ 764,578$
The compensated absences liability attributable to the governmental activities will be liquidated
primarily by the General Fund.
(continued)
48
4. DETAILED NOTES ON ALL FUNDS (Continued)
Restricted Assets
The balances of the restricted asset accounts in the Enterprise Fund are as follows:
Customer deposits 266,195$
Bond construction 70,261
Construction 214,681
Debt service 307,993
Net investment in joint venture 268,364
Total restricted assets 1,127,494$
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 794 municipalities having the benefit plan administered by TMRS, an
agent multiple employer public employee retirement system. Each of the 794 municipalities has an
annual individual actuarial valuation performed. All assumptions for the December 31, 2003,
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.
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.
(continued)
49
4. DETAILED NOTES ON ALL FUNDS (Continued)
Employee Retirement System (Continued)
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. 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, 2003, valuation is
effective for rates beginning in January 2005).
Schedule of Actuarial Liabilities and Funding Progress
Actual Valuation Date 12/31/01 12/031/02 12/031/03
Actuarial value of assets 12,505,293$ 13,367,282$ 14,949,967$
Actuarial accrued liability 16,126,623 17,450,995 19,935,673
Percent funded 77.5% 76.6% 75.0%
Unfunded (overfunded) actuarial accrued liability (UAAL)3,621,330 4,083,713 4,985,706
Annual covered payroll 5,849,011 6,274,960 6,866,859
UAAL as a percentage of covered payroll 61.9% 65.1% 72.6%
Net pension obligation (NPO at the beginning of period - - -
Annual Pension Cost:
Annual required contribution (ARC)827,761 881,751 957,310
Interest on NPO - - -
Adjustment to the ARC 827,761 881,751 957,310
Contributions made 827,761 881,751 957,310
Increase in NPO - - -
NPO at the end of the period -$ -$ -$
(continued)
50
4. DETAILED NOTES ON ALL FUNDS (Continued)
Employee Retirement System (Continued)
Contributions (Continued)
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 -7%
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.
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.
(continued)
51
4. DETAILED NOTES ON ALL FUNDS (Continued)
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, 2004, 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).
Separate financial statements for the joint venture were available in the December 31, 2003,
audited financial statements of the Gulf Coast Waste Disposal Authority and are summarized
below:
Blackhawk Blackhawk
Regional Contingency
Facility Reserve
Total assets 662,675$ 202,719$
Total liabilities 662,675 -
Total fund equity -$ 202,719$
Total revenue 1,705,385$ 18,896$
Total expenditures 1,705,385 -
Total other financing use - -
Net change in fund balance - 18,896
Fund balances, beginning - 183,823
Fund balances, ending -$ 202,719$
Joint Venture
Complete financial statements may be obtained at the Gulf Coast Waste Disposal Authority, 910
Bay Area Boulevard, Houston, Texas 77058.
(continued)
52
53
4. DETAILED NOTES ON ALL FUNDS (Continued)
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, 2004, 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,
2004, the City believed the amounts paid on workers’ compensation would not change
significantly from the amounts recorded.
During the year ended September 30, 2004, 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 Adjustment
In the prior year, the City included governmental infrastructure in the statement of net assets. An
adjustment to remove governmental infrastructure from the statement of assets was made during
the current year in the amount of $21,009,677. The Governmental Accounting Standards Board
(GASB) Statement No. 34 permits the City a four-year transition period for governmental
infrastructure reporting.
COMBINING AND INDIVIDUAL FUND
STATEMENTS AND SCHEDULES
GENERAL FUND
The General Fund accounts for the resources used to finance the fundamental operations of the City. It
is the basic fund of the City and covers all activities for which a separate fund has not been established.
Variance with
Final Budget -
Actual Positive
Original Final Amounts (Negative)
REVENUES
Property taxes 9,285,678$ 9,285,678$ 9,452,265$ 166,587$
Sales taxes 2,507,000 2,507,000 2,843,943 336,943
Franchise taxes 1,050,000 1,050,000 1,119,328 69,328
Fines and forfeitures 602,100 602,100 879,369 277,269
Permits and fees 564,946 567,378 746,666 179,288
Intergovernmental 525,673 646,931 663,130 16,199
Interest on investments 85,100 85,100 94,304 9,204
Other 73,100 78,216 146,016 67,800
Total revenues 14,693,597 14,822,403 15,945,021 1,122,618
EXPENDITURES
GENERAL GOVERNMENT
Mayor and council:
Personnel services 248 248 336 88)(
Supplies 2,084 2,084 4,625 2,541)(
Other services and charges 60,728 60,728 40,985 19,743
Total mayor and council 63,060 63,060 45,946 17,114
City manager:
Personnel services 325,050 325,050 323,521 1,529
Supplies 6,652 6,652 5,495 1,157
Other services and charges 81,041 101,041 88,243 12,798
Total city manager 412,743 432,743 417,259 15,484
City secretary:
Personnel services 226,057 226,057 225,939 118
Supplies 6,582 8,716 3,692 5,024
Repairs and maintenance 1,359 1,359 1,837 478)(
Other services and charges 64,504 52,864 36,393 16,471
Total city secretary 298,502 288,996 267,861 21,135
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30, 2004
GENERAL FUND
(continued)
54
Variance with
Final Budget -
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES (Continued)
GENERAL GOVERNMENT (Continued)
Administrative services:
Personnel services 478,761$ 478,761$ 458,279$ 20,482$
Supplies 14,502 14,502 11,177 3,325
Repairs and maintenance 273 273 125 148
Other services and charges 49,037 53,037 49,904 3,133
Total administrative services 542,573 546,573 519,485 27,088
Human resources:
Personnel services 268,293 268,293 265,592 2,701
Supplies 8,395 9,147 12,521 3,374)(
Other services and charges 80,330 77,320 50,625 26,695
Total human resources 357,018 354,760 328,738 26,022
Tax:
Other services and charges 209,313 209,313 184,636 24,677
Total tax 209,313 209,313 184,636 24,677
Economic development:
Personnel services 86,311 86,311 85,588 723
Supplies 301,497 302,068 283,961 18,107
Total economic development 387,808 388,379 369,549 18,830
Legal services:
Other services and charges 108,152 115,748 120,545 4,797)(
Total legal services 108,152 115,748 120,545 4,797)(
Budgeted Amounts
FOR THE YEAR ENDED SEPTEMBER 30, 2004
(continued)
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
(Continued)
GENERAL FUND
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES
55
Variance with
Final Budget -
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES (Continued)
GENERAL GOVERNMENT (Continued)
Municipal court:
Personnel services 252,812$ 252,812$ 254,029$ 1,217)$(
Supplies 13,431 13,431 15,082 1,651)(
Repairs and maintenance 531 531 459 72
Other services and charges 23,127 23,127 25,950 2,823)(
Total municipal court 289,901 289,901 295,520 5,619)(
Computer services:
Personnel services 163,734 163,734 166,122 2,388)(
Supplies 26,976 53,629 75,635 22,006)(
Repairs and maintenance 42,000 42,000 47,109 5,109)(
Other services and charges 225,251 307,974 279,581 28,393
Capital outlay 104,400 50,185 21,352 28,833
Total computer services 562,361 617,522 589,799 27,723
Risk management:
Personnel services 26,395 26,395 28,293 1,898)(
Supplies 7,950 8,703 7,683 1,020
Other services and charges 94,442 94,442 96,003 1,561)(
Total risk management 128,787 129,540 131,979 2,439)(
Total general government 3,360,218 3,436,535 3,271,317 86,808
PUBLIC SAFETY:
Police services:
Personnel services 3,478,125 3,493,011 3,435,202 57,809
Supplies 185,802 177,050 177,112 62)(
Repairs and maintenance 104,925 104,925 83,192 21,733
Other services and charges 272,700 264,941 286,051 21,110)(
Capital outlay 5,000 5,000 - 5,000
Total police services 4,046,552 4,044,927 3,981,557 63,370
Budgeted Amounts
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2004
(Continued)
CITY OF FRIENDSWOOD, TEXAS
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
SCHEDULE OF REVENUES, EXPENDITURES
(continued)
56
Variance with
Final Budget -
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES (Continued)
PUBLIC SAFETY (Continued)
Communications:
Personnel services 631,578$ 631,578$ 647,272$ 15,694)$(
Supplies 8,276 8,276 6,853 1,423
Repairs and maintenance 3,841 3,841 7,930 4,089)(
Other services and charges 10,581 10,581 7,230 3,351
Total communications 654,276 654,276 669,285 15,009)(
Animal control:
Personnel services 126,620 126,620 120,702 5,918
Supplies 8,307 8,307 14,452 6,145)(
Repairs and maintenance 2,247 2,247 2,392 145)(
Other services and charges 11,394 11,394 11,172 222
Total animal control 148,568 148,568 148,718 150)(
Fire and EMS:
Personnel services 528,631 537,731 502,376 35,355
Supplies 151,459 167,862 155,807 12,055
Repairs and maintenance 77,894 77,894 92,035 14,141)(
Other services and charges 147,947 152,265 123,014 29,251
Capital outlay 60,648 55,597 55,597 -
Total fire and EMS 966,579 991,349 928,829 62,520
Emergency management:
Personnel services 33,221 33,221 32,792 429
Supplies 45,245 85,041 83,667 1,374
Repairs and maintenance 7,425 8,425 6,095 2,330
Other services and charges 11,606 17,565 15,157 2,408
Capital outlay 99,900 60,104 - 60,104
Total emergency management 197,397 204,356 137,711 66,645
Total public safety 6,013,372 6,043,476 5,866,100 177,376
(continued)
CITY OF FRIENDSWOOD, TEXAS
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2004
Budgeted Amounts
57
Variance with
Final Budget -
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES (Continued)
COMMUNITY DEVELOPMENT AND PUBLIC WORKS
Administration:
Personnel services 344,550$ 344,550$ 340,216$ 4,334$
Supplies 4,431 4,431 4,127 304
Repairs and maintenance 1,145 1,145 106 1,039
Other services and charges 8,586 8,586 9,993 1,407)(
Total administration 358,712 358,712 354,442 4,270
Planning and zoning:
Personnel services 115,374 115,374 111,896 3,478
Supplies 2,285 2,285 2,541 256)(
Other services and charges 5,435 5,435 6,088 653)(
Total planning and zoning 123,094 123,094 120,525 2,569
Engineering:
Personnel services 52,694 47,724 32,775 14,949
Supplies 2,300 2,300 2,058 242
Repairs and maintenance 500 500 - 500
Other services and charges 6,115 30,453 22,188 8,265
Total engineering 61,609 80,977 57,021 23,956
Inspection:
Personnel services 345,974 345,974 351,809 5,835)(
Supplies 6,911 6,911 7,185 274)(
Repairs and maintenance 1,000 1,000 1,012 12)(
Other services and charges 49,162 49,162 23,412 25,750
Total inspection 403,047 403,047 383,418 19,629
CITY OF FRIENDSWOOD, TEXAS
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2004
Budgeted Amounts
(continued)
58
Variance with
Final Budget -
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES (Continued)
COMMUNITY DEVELOPMENT AND PUBLIC WORKS (Continued)
Streets:
Personnel services 371,291$ 371,291$ 270,927$ 100,364$
Supplies 48,381 48,598 53,646 5,048)(
Repairs and maintenance 713,667 532,022 466,905 65,117
Other services and charges 321,286 321,286 461,521 140,235)(
Capital outlay 200,000 714,218 606,581 107,637
Total streets 1,654,625 1,987,415 1,859,580 127,835
Drainage:
Personnel services 187,658 187,658 253,760 66,102)(
Supplies 1,063 1,063 5,994 4,931)(
Repairs and maintenance 15,981 15,981 14,831 1,150
Other services and charges 142,875 147,193 65,740 81,453
Capital outlay - 769,571 378,913 390,658
Total drainage 347,577 1,121,466 719,238 402,228
Sanitation:
Other services and charges 3,135 3,135 2,395 740
Total sanitation 3,135 3,135 2,395 740
Total community development
and public works 2,951,799 4,077,846 3,496,619 4,270
COMMUNITY SERVICES
Administration:
Personnel services 149,166 149,166 152,115 2,949)(
Supplies 3,103 3,103 5,740 2,637)(
Other services and charges 20,550 20,550 22,249 1,699)(
Total administration 172,819 172,819 180,104 7,285)(
(continued)
CITY OF FRIENDSWOOD, TEXAS
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2004
Budgeted Amounts
59
Variance with
Final Budget -
Actual Positive
Original Final Amounts (Negative)
EXPENDITURES (Continued)
COMMUNITY SERVICES (Continued)
Library:
Personnel services 561,161$ 551,985$ 540,286$ 11,699$
Supplies 136,278 143,204 133,003 10,201
Repairs and maintenance 2,665 2,665 1,457 1,208
Other services and charges 16,882 18,126 16,194 1,932
Total library 716,986 715,980 690,940 25,040
Parks and recreation:
Personnel services 463,396 454,396 499,765 45,369)(
Supplies 71,180 72,463 66,474 5,989
Repairs and maintenance 129,603 136,013 123,701 12,312
Other services and charges 382,286 384,575 438,626 54,051)(
Capital outlay 134,000 160,319 152,519 7,800
Total parks and recreation 1,180,465 1,207,766 1,281,085 73,319)(
Swimming pool:
Personnel services 43,994 43,994 43,890 104
Supplies 14,253 14,417 14,810 393)(
Repairs and maintenance 7,637 7,637 5,431 2,206
Other services and charges 21,150 21,150 26,179 5,029)(
Total swimming pool 87,034 87,198 90,310 3,112)(
Building operations:
Personnel services 34,196 34,196 17,181 17,015
Supplies 16,211 21,211 20,325 886
Repairs and maintenance 141,365 169,965 131,277 38,688
Other services and charges 392,804 396,302 396,612 310)(
Capital outlay - 1,214,247 488,861 725,386
Total building operations 584,576 1,835,921 1,054,256 781,665
Total community services 2,741,880 4,019,684 3,296,695 1,563,330
Total expenditures 15,067,269 17,577,541 15,930,731 1,646,810
Budgeted Amounts
(continued)
CITY OF FRIENDSWOOD, TEXAS
FOR THE YEAR ENDED SEPTEMBER 30, 2004
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
(Continued)
GENERAL FUND
60
Variance with
Final Budget -
Actual Positive
Original Final Amounts (Negative)
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 373,672)$( 2,755,138)$( 14,290$ 2,769,428$
OTHER FINANCING SOURCES
Transfers in 715,783 714,278 853,073 138,795
Total other financing sources 715,783 714,278 853,073 138,795
NET CHANGE IN FUND BALANCES 342,111 2,040,860)( 867,363 2,908,223
FUND BALANCES, BEGINNING 5,739,138 5,739,138 5,739,138 -
FUND BALANCES, ENDING 6,081,249$ 3,698,278$ 6,606,501$ 2,908,223$
Budgeted Amounts
FOR THE YEAR ENDED SEPTEMBER 30, 2004
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
(Continued)
GENERAL FUND
61
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 Land 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 24,816$ 148,296$ 208,337$ -$
Accounts receivable, net of allowance 629 28,150 1,301 -
Total assets 25,445$ 176,446$ 209,638$ -$
LIABILITIES
Accounts payable -$ -$ 300$ -$
Deferred revenue - - - -
Total liabilities - - 300 -
FUND BALANCES
Reserved for debt service - - - -
Unreserved - undesignated 25,445 176,446 209,338 -
Total fund balances 25,445 176,446 209,338 -
Total liabilities and fund balances 25,445$ 176,446$ 209,638$ -$
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2004
Special Revenue
CITY OF FRIENDSWOOD, TEXAS
COMBINING BALANCE SHEET
62
Permanent
Total
Nonmajor
Debt 1776 Governmental
Service Park Funds
824,280$ 25,374$ 1,231,103$
47,596 213 77,889
871,876$ 25,587$ 1,308,992$
-$ -$ 300$
42,175 - 42,175
42,175 - 42,475
829,701 - 829,701
- 25,587 436,816
829,701 25,587 1,266,517
871,876$ 25,587$ 1,308,992$
63
Park Emergency
Police Fire/EMS Land Management
Investigation Donation Dedication Assistance
REVENUES
Property taxes -$ -$ -$ -$
Permits and fees - - 60,375 -
Intergovernmental - - - 132,195
Interest on investments 17,083 1,641 2,427 -
Donations - 215,535 - -
Insurance proceeds - - - 6,600
Total revenues 17,083 217,176 62,802 138,795
EXPENDITURES
Capital outlay - 68,502 - -
Debt service:
Principal - 61,345 - -
Interest and fiscal charges - 19,227 - -
Total expenditures - 149,074 - -
EXCESS OF REVENUES
OVER EXPENDITURES 17,083 68,102 62,802 138,795
OTHER FINANCING SOURCES (USES)
Transfers out - - - 138,795)(
Total other financing sources (uses)- - - 138,795)(
NET CHANGE IN FUND BALANCES 17,083 68,102 62,802 -
FUND BALANCES, BEGINNING 8,362 108,344 146,536 -
FUND BALANCES, ENDING 25,445$ 176,446$ 209,338$ -$
FOR THE YEAR ENDED SEPTEMBER 30, 2004
Special Revenue
CITY OF FRIENDSWOOD, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
64
Permanent
Total
Nonmajor
Debt 1776 Governmental
Service Park Funds
1,428,319$ -$ 1,428,319$
- - 60,375
- - 132,195
12,379 355 33,885
- - 215,535
- - 6,600
1,440,698 355 1,876,909
- - 68,502
408,585 - 469,930
456,980 - 476,207
865,565 - 1,014,639
575,133 355 862,270
- - 138,795)(
- - 138,795)(
575,133 355 723,475
254,568 25,232 543,042
829,701$ 25,587$ 1,266,517$
65
Variance with
Final Budget -
Final Actual Positive
Budget Amounts (Negative)
REVENUES
Interest on investments -$ 1,641$ 1,641$
Donations 210,000 215,535 5,535
Total revenues 210,000 217,176 7,176
EXPENDITURES
Capital outlay 150,000 68,502 81,498
Debt service:
Principal 61,345 61,345 -
Interest and fiscal charges 19,227 19,227 -
Total expenditures 230,572 149,074 81,498
EXCESS OF REVENUES
OVER EXPENDITURES 20,572)( 68,102 88,674
FUND BALANCES, BEGINNING 108,344 108,344 -
FUND BALANCES, ENDING 87,772$ 176,446$ 88,674$
FOR THE YEAR ENDED SEPTEMBER 30, 2004
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FIRE/EMS DONATION FUND
66
Variance with
Final Budget -
Final Actual Positive
Budget Amounts (Negative)
REVENUES
Property taxes 1,402,812$ 1,428,319$ 25,507$
Interest on investments - 12,379 12,379
Total revenues 1,402,812 1,440,698 37,886
EXPENDITURES
Debt service:
Principal 656,937 408,585 248,352
Interest and fiscal charges 848,947 456,980 391,967
Total expenditures 1,505,884 865,565 640,319
NET CHANGE IN FUND BALANCES 103,072)( 575,133 678,205
FUND BALANCES, BEGINNING 254,568 254,568 -
FUND BALANCES, ENDING 151,496$ 829,701$ 678,205$
DEBT SERVICE FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2004
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
67
COMPLIANCE SECTION
REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and
Member of the City of Council
City of Friendswood, Texas
We have audited the financial statements of the governmental activities, 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, 2004, which collectively comprise the City of Friendswood,
Texas’ basic financial statements and have issued our report thereon dated February 4, 2005. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America, and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City of Friendswood, Texas’ internal
control over financial reporting in order to determine our auditing procedures for the purpose of
expressing our opinions on the financial statements and not to provide assurance on the internal control
over financial reporting. Our consideration of the internal control over financial reporting would not
necessarily disclose all matters in the internal control that might be material weaknesses. A material
weakness is a reportable condition in which the design or operation of one or more of the internal
control components does not reduce to a relatively low level the risk that misstatements caused by error
or fraud in amounts that would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal course of performing their
assigned functions. We noted no matters involving the internal control over financial reporting and its
operation that we considered to be material weaknesses. However, we noted other matters involving the
internal control over financial reporting that we have reported to the management of the City of
Friendswood, Texas, in a separate letter dated February 4, 2005.
68
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Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City of Friendswood, Texas’
financial statements are free of material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have
direct and material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do
not express such an opinion. The results of our tests disclosed no instances of noncompliance that are
required to be reported under Government Auditing Standards.
That report is intended solely for the information and use of management, and City Council and
is not intended to be and should not be used by anyone other than these specified parties.
February 4, 2005
69
STATISTICAL SECTION
TABLE 1
Community
Development Interest on
Fiscal General Public and Community Long-term Water
Year Government Safety Public Works Services Debt and Sewer Total
2003 2,923,552$ 5,760,097$ 3,383,229$ 2,747,438$ 128,192$ 6,521,436$ 21,463,944$
2004 3,375,283 6,026,272 2,569,356 3,081,717 465,770 6,613,296 22,131,694
* The City implemented GASB 34 in fiscal year 2003, thus only two years of data are available.
CITY OF FRIENDSWOOD, TEXAS
GOVERNMENT-WIDE EXPENSES BY FUNCTION
LAST TEN FISCAL YEARS*
(UNAUDITED)
70
TABLE 2
Charges Operating Capital
Fiscal for Grants and Grants and Investment
Year Services Contributions Contributions Taxes Earnings Miscellaneous Total
2003 9,877,862$ 661,568$ 749,772$ 13,719,690$ 315,187$ 30,826$ 25,354,905$
2004 9,060,319 778,261 239,200 14,955,039 278,954 - 25,311,773
* The City implemented GASB 34 in fiscal year 2003, thus only two years of data are available.
CITY OF FRIENDSWOOD, TEXAS
GOVERNMENT-WIDE REVENUES
LAST TEN FISCAL YEARS*
(UNAUDITED)
71
Fiscal Year
Ended Property Sales Franchise
September 30, Taxes Taxes Taxes Sanitation
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
2004 10,880,584 2,843,943 1,119,328 -
Includes General, Special Revenue, Debt Service and Permanent Funds (2003 - 2004)
Source: Accounting records of the City
CITY OF FRIENDSWOOD, TEXAS
GENERAL GOVERNMENT REVENUE BY SOURCE
LAST TEN FISCAL YEARS
(UNAUDITED)
72
TABLE 3
Fines Permits Interest
and and on Other
Forfeitures Fees Investments Revenue Total
217,411$ 296,003$ 48,101$ 107,089$ 330,313$ 9,085,175$
266,287 234,518 46,060 193,588 354,627 10,007,263
353,742 401,720 40,055 238,009 224,097 10,264,993
304,017 699,432 346,879 222,586 525,228 11,666,231
332,659 635,905 553,352 292,886 386,084 12,189,593
497,467 970,868 607,963 399,712 484,724 14,205,913
550,854 1,192,899 580,561 424,412 483,063 15,711,774
631,066 922,808 16,294,283 269,109 509,560 32,256,254
639,678 856,721 526,316 140,435 1,029,977 17,902,285
879,369 807,041 795,325 218,419 368,151 18,707,485
Intergovernmental
73
TABLE 4
Community
Fiscal Year Development
Ended General Public and Community Capital Debt
September 30, Government Safety Public Works Services Outlay Service Total
1995 1,478,817$ 2,846,169$ 3,143,687$ 1,426,792$ -$ 1,427,360$ 10,322,825$
1996 1,481,710 3,206,222 3,209,845 1,656,146 - 1,579,490 11,133,413
1997 1,615,770 3,329,960 3,196,258 1,686,909 - 1,202,192 11,031,089
1998 1,937,096 4,043,792 3,348,350 1,904,926 - 909,369 12,143,533
1999 2,051,684 4,166,008 3,103,857 2,193,860 - 698,546 12,213,955
2000 2,305,916 4,265,750 4,204,537 2,355,186 652,206 976,659 14,760,254
2001 2,196,226 5,115,933 2,841,234 2,738,557 98,987 1,127,645 14,118,582
2002 2,897,613 4,961,812 22,601,171 4,250,205 195,385 737,163 35,643,349
2003 3,042,541 5,530,953 4,987,392 2,751,993 139,174 682,728 17,134,781
2004 3,249,965 5,810,503 2,511,125 2,655,315 4,033,197 946,137 19,206,242
Includes General, Special Revenue, Debt Service and Permanent Funds (2003 - 2004)
Source: Accounting records of the City
CITY OF FRIENDSWOOD, TEXAS
GENERAL GOVERNMENT EXPENDITURES BY FUNCTION
LAST TEN FISCAL YEARS
(UNAUDITED)
74
Fiscal Year
Ended Total Current Tax
September 30, Tax Year Tax Rate Tax Levy Collections
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
2004 2003 0.6385 10,785,308 10,630,820
Source: Tax Assessor/Collector's records.
CITY OF FRIENDSWOOD, TEXAS
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(UNAUDITED)
75
TABLE 5
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
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%
98.6% 138,757 10,769,577 99.9% 357,057 3.3%
76
TABLE 6
Ratio of
Fiscal Year Estimated Assessed Value
Ended Assessed Actual to Estimated New
September 30, Tax Year Value Value Actual Value Construction
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 1,506,606,061 1,931,827,716 78% 73,791,386
2004 2003 1,623,502,714 2,099,501,049 77% 22,286,054
Source: Tax Assessor/Collector's records.
CITY OF FRIENDSWOOD, TEXAS
ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
(UNAUDITED)
77
TABLE 7
Fiscal Year Debt
Ended General Service Total
September 30, Tax Year Fund Fund Tax Rate
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
2004 2003 0.55470 0.08380 0.63850
Source: City's tax ordinances.
Tax rates are per $100 valuation.
CITY OF FRIENDSWOOD, TEXAS
TAX RATE DISTRIBUTION
LAST TEN FISCAL YEARS
(UNAUDITED)
78
TABLE 8
Friendswood Clear Creek
Fiscal Year Independent Independent Clear Creek
Ended City of School School Drainage Harris Galveston
September 30, Tax Year Friendswood District District District County (A) County
1995 1994 0.6630$ 1.6090$ 1.4700$ 0.1430$ 0.6220$ 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
2004 2003 0.6385 1.6370 1.7400 0.1500 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 $100 VALUATION DIRECT AND OVERLAPPING
LAST TEN FISCAL YEARS
(UNAUDITED)
79
TABLE 9
Percent
of Total
Assessed Assessed
Type of Property Valuation Valuation
1. Southwestern Bell Telephone Utility Company 12,945,490$ 0.80%
2. Blackhawk Apartments Apartments 12,268,200 0.76%
3. Reserve at Autumn Creek Developer 10,726,040 0.66%
4.Texas New Mexico Power Utility Company 10,580,860 0.65%
5. South West Properties Seahawk Apartments 8,899,990 0.55%
6.Kroger Texas LP Shopping Centers 7,410,080 0.46%
7. H. E. Butt Grocery Co. Grocery Store 7,117,370 0.44%
8.Friendswood Retirement Assisted Living Center 7,030,600 0.43%
9.Autumn Creek Dev., Ltd. Albertson's Shopping Center 6,855,450 0.42%
10.Texas HCP Holding LP Assisted Living Center 6,457,140 0.40%
90,291,220 5.56%
All other taxpayers 1,533,211,494 94.44%
Totals 1,623,502,714$ 100.00%
Source: Tax Assessor/Collector's records.
Taxpayer
CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL TAXPAYERS
SEPTEMBER 30, 2004
(UNAUDITED)
80
TABLE 10
Ratio of
Interest Total Debt Total Debt Service
Fiscal and Fiscal Service General Requirements
Year Principal Charges Requirements Expenditures to Expenditures
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%
2004 469,930 476,207 946,137 15,930,731 5.94%
CITY OF FRIENDSWOOD, TEXAS
RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL BONDED DEBT
LAST TEN FISCAL YEARS
(UNAUDITED)
81
Operating Net Operating
Number Number Expenses Revenue
Fiscal of Water of Sewer Operating Before Available for
Year Customers Customers Revenue Depreciation Debt Service
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
2004 10,988 10,331 7,203,736 4,238,810 2,964,926
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)
82
TABLE 11
Principal Interest Total Coverage
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
25,000 769,936 794,936 3.73
Debt Service Requirements
Revenue Bond (A)
83
TABLE 12
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
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
2004 34,152 1,623,502,714 10,059,865 829,701 9,230,164 0.57% 270
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 $2.5 million.
(UNAUDITED)
CITY OF FRIENDSWOOD, TEXAS
RATIO OF NET GENERAL BONDED DEBT TO ASSESSED
VALUE AND NET BONDED DEBT PER CAPITA
LAST TEN FISCAL YEARS
84
TABLE 13
Estimated
Percentage Debt
Net Debt Applicable Applicable
Outstanding to City to City
Friendswood Independent School District 22,795,000$ 100.00% 22,795,000$
Clear Creek Independent School District 250,150,000 6.81% 17,035,215
Galveston County * 210,661,000 3.64% 7,668,060
Harris County** 2,703,038,000 0.39% 10,541,848
Total Net Overlapping Debt 58,040,124
City of Friendswood - 100.00% -
Total Direct and Overlapping Debt 58,040,124$
**
*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
85
TABLE 14
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 157 miles
Streets - unpaved 4 miles
Fire Protection
Number of stations 3
Number of employees (fulltime equivalent) 13.00
Number of volunteers 110
Fire Prevention
Number of employees (fulltime equivalent) 4.00
Number of volunteers 1
Police Protection
Number of stations 1
Number of sworn officers (fulltime equivalent) 51
Number of patrol units 15
Recreation
Number of parks 8
Size of parks 189 acres
Number of swimming pools 1
Number of tennis courts 4
Miles of storm sewers 92 miles
CITY OF FRIENDSWOOD, TEXAS
MISCELLANEOUS STATISTICAL DATA
SEPTEMBER 30, 2004
(continued)
(UNAUDITED)
86
TABLE 14
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 170
Part-time (fulltime equivalent) 20.90
Election
Number of Votes Cast:
Last City Election - Regular Election 1,428
Water
Source Ground Water Surface Water
Average daily consumption 165,000 gallons 3,792,000 gallons
Maximum daily consumption 2,850,000 gallons 7,868,000 gallons
Water mains 160 miles
Number of connections 10,988
Sewer Blackhawk
Average daily flow 3,258,000 gallons
Maximum daily flow 8,563,000 gallons
Sanitary sewer mains 160 miles
Number of connections 10,331
MISCELLANEOUS STATISTICAL DATA
SEPTEMBER 30, 2004
(Continued)
(UNAUDITED)
CITY OF FRIENDSWOOD, TEXAS
87