HomeMy WebLinkAboutComprehensive Annual Financial Report - FY2014
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
YEAR ENDED
SEPTEMBER 30, 2014
Officials Issuing Report:
Roger C. Roecker
City Manager
Cindy S. Edge
Director of Administrative Services
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
YEAR ENDED SEPTEMBER 30, 2014
C O N T E N T S
Page(s)
INTRODUCTORY SECTION
Letter of Transmittal i-iv
Principal Officials v
GFOA Certificate of Achievement vi
Organizational Chart vii
FINANCIAL SECTION
Independent Auditor's Report 1-3
Management’s Discussion and Analysis (Unaudited) 4-16
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Position 17
Statement of Activities 18
Fund Financial Statements
Governmental Funds
Balance Sheet 19
Reconciliation of the Governmental Funds Balance Sheet to
the Statement of Net Position 20
Statement of Revenues, Expenditures and Changes in Fund Balances 21
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the Statement
of Activities 22
Proprietary Funds
Statement of Net Position 23-24
Statement of Revenues, Expenses and Changes in Fund Net Position 25
Statement of Cash Flows 26-27
Notes to Basic Financial Statements 28-61
Required Supplementary Information
Schedule of Funding Progress for Participation in
Texas Municipal Retirement System 62
Schedule of Funding Progress – Post Employment Benefits Plan Other
Than Pensions 63
Schedule of Revenues, Expenditures, and Changes in Fund Balance
Budget and Actual – General Fund 64-70
Notes to Required Supplementary Information 71-73
Combining and Individual Fund Statements and Schedules
Non-major Governmental Funds 74
Combining Balance Sheet 75
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances 76
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
YEAR ENDED SEPTEMBER 30, 2014
C O N T E N T S – CONTINUED
Page(s)
Combining and Individual Fund Statements and Schedules – Continued
Schedule of Revenues, Expenditures and Changes in Fund Balance –
Budget and Actual
Fire/EMS Donation Fund 77
Debt Service Fund 78
STATISTICAL SECTION (Unaudited) Table Page(s)
Financial Trends
Net Position by Component 1 79
Changes in Net Position 2 80-81
Fund Balances, Governmental Funds 3 82
Changes in Fund Balances, Governmental Funds 4 83
Revenue Capacity
Assessed Value and Taxable Value of Property 5 84
Direct and Overlapping Property Tax Rates 6 85
Principal Property Tax Payers 7 86
Property Tax Levies and Collections 8 87
Debt Capacity
Ratios of Outstanding Debt by Type 9 88
Ratios of Net General Bonded Debt Outstanding 10 89
Direct and Overlapping Governmental Activities Debt 11 90
Legal Debt Margin Information 12 91
Pledged-Revenue Coverage 13 92
Demographic and Economic Information
Demographic and Economic Statistics 14 93
Principal Employers 15 94
Operating Information
Full-Time Equivalent City Government Employees
by Function/Program 16 95
Operating Indicators by Function/Program 17 96
Capital Asset Statistics by Function/Program 18 97
INTRODUCTORY SECTION
ii
iii
iv
v
CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL OFFICIALS AS OF
SEPTEMBER 30, 2014
Elected Officials Position Term Expires
Kevin M. Holland Mayor May-15
Steve Rockey Council Member - Position No. 1 May-15
Billy J. Enochs Council Member - Position No. 2 May-17
Jim Hill Council Member - Position No. 3 May-15
Patrick J. McGinnis, MD Council Member - Position No. 4 May-16
John H. Scott Council Member - Position No. 5 May-17
Carl W. Gustafson Council Member - Position No. 6 May-16
Key Staff Position
Roger C. Roecker City Manager
Morad Kabiri Assistant City Manager
Cindy S. Edge Director of Administrative Services
Terry Byrd Fire Marshal
Patrick Donart Public Works Director
Melinda Welsh City Secretary
James Toney Community Services Director
Robert B. Weiners Police Chief
Ross, Banks, May, Cron & Cavin, P.C. City Attorney
James W. Woltz Judge - Municipal Court
vi
vii
CITY OF FRIENDSWOOD
ORGANIZATIONAL CHART
FINANCIAL SECTION
AN INDEPENDENT MEMBER OF
BAKER TILLY INTERNATIONAL
WEAVER AND TIDWELL, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS
24 GREENWAY PLAZA, SUITE 1800, HOUSTON, TX 77046
P: 713.850.8787 F: 713.850.1673
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor,
City Council and City Manager
City of Friendswood, Texas
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, the discretely presented component unit, each major fund, and the
aggregate remaining fund information of the City of Friendswood, Texas (the City) as of and for
the year ended September 30, 2014, and the related notes to the financial statements, which
collectively comprise the City’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
The City’s management is responsible for the preparation and fair presentation of these
financial statements in accordance with accounting principles generally accepted in the
United States of America; this includes the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
did not audit the financial statements of the West Ranch Management District, a discretely
presented component unit of the City, which represents 100% of the assets, net position and
revenues of the discretely presented component units. Those financial statements were audited
by other auditors whose report thereon has been furnished to us, and our opinion, insofar as it
relates to the amounts included for the West Ranch Management District, is based solely on the
report of the other auditors. We conducted our audit in accordance with auditing standards
generally accepted in the United States of America and the standards applicable to financial
audits contained in Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement. The
financial statements of the West Ranch Management District were not audited in accordance
with Governmental Auditing Standards.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of
To the Honorable Mayor,
City Council and City Manager
City of Friendswood, Texas
2
significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Opinions
In our opinion, based on our audit and the report of the other auditors, the financial statements
referred to above present fairly, in all material respects, the respective financial position of the
governmental activities, the business-type activities, the discretely presented component unit,
each major fund, and the aggregate remaining fund information of the City as of
September 30, 2014, and the respective changes in financial position, and, where applicable,
cash flows thereof for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
Change in Accounting Principle
As discussed in Note 1 to the basic financial statements, the City has adopted the provisions of
Governmental Accounting Standards Board Statement No. 65, Items Previously Reported as
Assets and Liabilities. Beginning net position on the government-wide Statement of Net Position
and the proprietary fund Statement of Net Position has been restated to reflect the effect of
implementation of this statement. Our opinions are not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis, Schedule of Funding Progress for Participation in
Texas Municipal Retirement System, Schedule of Funding Progress – Post Employment
Benefits Other Than Pensions, and Schedule of Revenues, Expenditures, and Changes in Fund
Balance – Budget and Actual – General Fund be presented to supplement the basic financial
statements. Such information, although not a part of the basic financial statements, is required
by the Governmental Accounting Standards Board, who considers it to be an essential part of
financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the
United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management’s
responses to our inquiries, the basic financial statements, and other knowledge we obtained
during our audit of the basic financial statements. We do not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
To the Honorable Mayor,
City Council and City Manager
City of Friendswood, Texas
3
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City’s basic financial statements. The introductory section, combining
and individual nonmajor fund financial statements and schedules, and statistical section are
presented for purposes of additional analysis and are not a required part of the basic financial
statements.
The combining and individual nonmajor fund financial statements and schedules are the
responsibility of management and were derived from and relate directly to the underlying
accounting and other records used to prepare the basic financial statements. Such information
has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic
financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the combining and individual nonmajor fund financial statements and
schedules are fairly stated, in all material respects, in relation to the basic financial statements
as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we do not express an
opinion or provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
March 16, 2015, on our consideration of the City’s internal control over financial reporting and
on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements and other matters. The purpose of that report is to describe the scope of our
testing of internal control over financial reporting and compliance and the results of that testing,
and not to provide an opinion on internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the City’s internal control over financial reporting and compliance.
WEAVER AND TIDWELL, L.L.P.
Houston, Texas
March 16, 2015
4
Management’s Discussion and Analysis
(Unaudited)
As management of the City of Friendswood (the City), we offer readers of the City’s financial
statements this narrative overview and analysis of the financial activities of the City of
Friendswood for the fiscal year ended September 30, 2014. Please read this information in
conjunction with the basic financial statements that follow this section. The discussion and
analysis includes comparative data for 2013.
FINANCIAL HIGHLIGHTS
Some of the City’s financial highlights for the fiscal year ending September 30, 2014 include:
The assets of the City exceeded its liabilities at the close of the most recent fiscal year
by $116,261,509.
The City’s total net position increased during the year by $1,638,637.
Unrestricted net position is $25,617,011.
Program revenues of $15,530,271 reduced the net cost of the City’s functions to be
financed from the City’s general revenues to $19,894,741.
OVERVIEW OF THE FINANCIAL STATEMENTS
Components of the Financial Section
Basic Financial
Statements
Notes to the
Financial
Statements
Fund Financial
Statements
Government‐
Wide Financial
Statements
Independent
Auditors' Report
Managment's
Discussion and
Analysis
Required
Supplementary
Information
Summary Detail
5
This discussion and analysis is intended to serve as an introduction to the City’s basic
financial statements. The basic financial statements are comprised of three components:
1) government-wide financial statements, 2) fund financial statements, and 3) notes to the
financial statements. This report also includes supplementary information intended to furnish
additional detail to support the basic financial statements themselves.
Government-wide Financial Statements
The government-wide financial statements report information for the City as a whole. These
statements included transactions and balances relating to all assets, including infrastructure
capital assets. These statements are designed to provide information about cost of services,
operating results, and financial position of the City as an economic entity. The Statement of Net
Position and the Statement of Activities, which appear first in the City’s financial statements,
report information on the City’s activities that enable the reader to understand the financial
condition of the City. These statements are prepared using the accrual basis of accounting,
which is similar to the accounting used by most private-sector companies. All of the current
year’s revenues and expenses are taken into account even if cash has not yet changed hands.
The Statement of Net Position presents information on all of the City’s assets and liabilities with the
difference reported as net position. Over time, increases or decreases in net position may serve as
a useful indicator of whether the financial position of the City is improving or deteriorating. Other
non-financial factors, such as the City’s property tax base and the condition of the City’s
infrastructure, need to be considered in order to assess the overall health of the City.
The Statement of Activities presents information showing how the City’s net position changed
during the most recent fiscal year. All changes in net position are reported as soon as the
underlying event giving rise to the change occurs, regardless of the timing of related
cash flows – the accrual method rather than modified accrual that is used in the fund level
statements.
Both of the government-wide financial statements distinguish functions of the City that are
principally supported by taxes and intergovernmental revenues (governmental activities) from
functions that are intended to recover all or a significant portion of their costs through user fees
(business-type activities).
Governmental activities – Most of the City’s basic services are reported here including
general government (mayor and council, city secretary, city manager, and administrative
services); public safety (police, volunteer fire department and fire marshal); public works
(streets and drainage); community development (engineering, building inspection and
planning and zoning); community services (parks, facility operations and community
activities) and library. Interest payments on the City’s debt are also reported here.
Property tax, sales tax, franchise taxes, municipal court fines and permit fees finance most
of the activities.
Business-type activities – Services involving a fee for those services, which include the
City’s water and sewer system are reported here.
Component Unit activities include activities of The West Ranch Management District.
6
Fund Financial Statements
A fund is a self-balancing set of accounts that is used to maintain control over resources that
have been segregated for specific activities or objectives. The City uses fund accounting to
ensure and demonstrate compliance with finance-related legal requirements. The City uses two
fund types – governmental and proprietary.
Governmental funds
Governmental funds are used to account for essentially the same functions reported as
governmental activities in the government-wide financial statements with the exclusion of internal
service fund activity. However, unlike the government-wide financial statements, governmental
funds focus on near-term inflows and outflows of spendable resources, as well as on balances of
spendable resources available at the end of the fiscal year. Such information may be useful in
evaluating the City’s near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By
doing so, the reader may better understand the long-term impact of the government’s
near-term financing decisions. Both the governmental fund balance sheet and the governmental
statement of revenues, expenditures, and changes in fund balances provide a reconciliation to
facilitate this comparison between governmental funds and governmental activities.
The City maintains eleven governmental funds. Information is presented separately in the
governmental funds balance sheet and the governmental fund statement of revenues,
expenditures, and changes in fund balances for the General Fund which is considered to be a
major fund. Management has elected to present the debt service fund as a major fund with
singular presentation rather than aggregated with the other non-major funds. The other nine
funds are combined into a single, aggregated presentation. Individual fund data for each of
these non-major governmental funds is provided in the form of combining statements found in
this report.
Proprietary funds
The City maintains two types of proprietary funds: enterprise and internal service funds.
Enterprise funds are used to report the same functions presented as business-type activities in
the government-wide financial statements. The City uses an enterprise fund to account for its
operation in water distribution and wastewater collection/treatment along with its water and
wastewater impact fees, and water construction projects. Management would note that trash
collection services are provided by a third party contract.
Internal service funds are an accounting device used to accumulate and allocate costs internally
among the City’s various functions. The City uses an internal service fund to account for fleet
management services. Because these services predominantly benefit governmental rather than
business-type functions, they have been included within the governmental activities in the
government-wide financial statements.
7
Notes to the Financial Statements
The notes to the financial statements provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements. The
notes are the last section of the basic financial statements.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents
certain Required Supplementary Information (RSI). The RSI includes schedules of funding
progress for the Texas Municipal Retirement System and the City’s other post-employment
healthcare benefits. The City adopts an annual appropriated budget for its general fund. A
budgetary comparison schedule has been provided in RSI to demonstrate compliance with this
budget. RSI can be found after the basic financial statements.
The combining and individual fund statements and schedules that further support the information
in the financial statements are presented immediately following the notes to the required
supplementary information.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Statement of Net Position
As noted earlier, net position may serve over time as a useful indicator of a government’s
financial position. For the City of Friendswood, assets exceeded liabilities by $116.3 million as
of September 30, 2014 in the primary government, which is an increase in the City’s overall
financial position compared to the prior year.
The largest portion of the City’s net position (77.3 percent) reflects its investments in capital
assets (e.g., land, buildings and improvements, machinery and equipment, infrastructure, water
and sewer system, construction in progress and water rights); less any debt outstanding used to
acquire those assets. The City uses these capital assets to provide services to citizens;
consequently these assets are not available for future spending. Although the City’s investment
in its capital assets is reported net of related debt, it should be noted that the resources needed
to repay this debt must be provided from other sources, since the assets themselves cannot be
used to liquidate these liabilities.
The following table reflects the condensed Statement of Net Position.
8
CONDENSED STATEMENT OF NET POSITION
2014 2013 2014 2013 2014 2013
Current and other assets 15,885,919$ 14,263,045$ 16,465,206$ 20,158,255$ 32,351,125$ 34,421,300$
Capital assets 85,049,272 86,127,831 56,244,200 55,861,351 141,293,472 141,989,182
Total assets 100,935,191 100,390,876 72,709,406 76,019,606 173,644,597 176,410,482
Deferred outflows of
resources 470,752 - 292,040 - 762,792 -
Total assets and
deferred outflows
of resources 101,405,943 100,390,876 73,001,446 76,019,606 174,407,389 176,410,482
Long-term liabilities 20,375,437 21,614,799 30,913,294 31,838,747 51,288,731 53,453,546
Other liabilities 4,173,312 3,436,216 2,683,837 4,252,247 6,857,149 7,688,463
Total liabilities 24,548,749 25,051,015 33,597,131 36,090,994 58,145,880 61,142,009
Net Position:
Net investment in
capital assets 65,404,791 65,056,180 24,495,816 22,961,547 89,900,607 88,017,727
Restricted 653,496 718,275 90,395 176,882 743,891 895,157
Unrestricted 10,798,907 9,565,406 14,818,104 16,790,183 25,617,011 26,355,589
Total net position 76,857,194$ 75,339,861$ 39,404,315$ 39,928,612$ 116,261,509$ 115,268,473$
Governmental Activities Business-type Activities Totals
A portion of the primary government’s net position, $743,891 or 0.64 percent, represents
resources that are subject to external restriction on how they may be used. These restrictions
include monies accounted for in special revenue funds for which the use is legally restricted,
monies restricted for debt service, and capital project funds that represent unspent bond
proceeds at the fund level. The remaining balance of unrestricted net position, $25,617,011 or
22.03 percent, may be used to meet the City’s ongoing obligations to citizens and creditors.
Change in Net Position
The following table provides a summary of the City’s changes in net position.
9
CHANGES IN NET POSITION
2014 2013 2014 2013 2014 2013
Revenues:
Program revenues:
Charges for services 2,366,509$ 2,388,737$ 11,117,391$ 11,462,779$ 13,483,900$ 13,851,516$
Operating grants
and contributions 843,995 644,458 - - 843,995 644,458
Capital grants
and contributions 1,202,376 543,763 - - 1,202,376 543,763
General revenues:
Property taxes 14,864,284 14,630,961 - - 14,864,284 14,630,961
Sales taxes 4,693,484 4,293,794 - - 4,693,484 4,293,794
Franchise taxes 1,673,615 1,583,258 - - 1,673,615 1,583,258
Other taxes 32,799 24,974 - - 32,799 24,974
Investment earnings 109,849 88,510 40,713 37,565 150,562 126,075
Miscellaneous 118,634 122,470 - 35,790 118,634 158,260
Total revenues 25,905,545 24,320,925 11,158,104 11,536,134 37,063,649 35,857,059
Expenses:
General government 4,589,795 4,679,339 - - 4,589,795 4,679,339
Public safety 11,236,402 10,800,130 - - 11,236,402 10,800,130
Public Works 3,921,658 4,385,090 - - 3,921,658 4,385,090
Community development 1,097,075 1,207,264 - - 1,097,075 1,207,264
Community services 3,356,587 3,260,931 - - 3,356,587 3,260,931
Library 1,083,043 1,002,801 - - 1,083,043 1,002,801
Water and sewer - - 7,995,106 7,681,366 7,995,106 7,681,366
Interest on long-term
debt 630,542 703,275 1,514,804 1,590,395 2,145,346 2,293,670
Total expenses 25,915,102 26,038,830 9,509,910 9,271,761 35,425,012 35,310,591
Increases/(Decrease) in net position
before transfers (9,557) (1,717,905) 1,648,194 2,264,373 1,638,637 546,468
Transfers 1,799,344 1,773,982 (1,799,344) (1,773,982) - -
Change in net position 1,789,787 56,077 151,150)( 490,391 1,638,637 546,468
Net position - beginning,
as originally reported 75,339,861 75,283,784 39,928,612 39,438,221 115,268,473 114,722,005
Implementation of change
in accounting principle 272,454)( - 373,147)( - 645,601)( -
Net position - beginning,
as restated 75,067,407 75,283,784 39,555,465 39,438,221 114,622,872 114,722,005
Net position, ending 76,857,194$ 75,339,861$ 39,404,315$ 39,928,612$ 116,261,509$ 115,268,473$
Governmental Activities Business-type Activities Totals
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Governmental Activities
Governmental activities increased the City of Friendswood’s net position by $1,789,787. Key
elements of this change are as follows:
Property and sales taxes continue to be the City’s largest revenue sources. Property tax
revenue increased by $233,323 due to new property added to the roll in the current fiscal
year.
Sales tax revenue remained strong during fiscal year 2014, providing a 9.3 percent
increase for the year, from $4.3 million to $4.7 million.
Capital Grants and contributions increased $658,613 from prior year, primarily due to the
commencement of the Friendswood Link/Whispering Pines Street project. This project is
being funded by the Community Development Block Grant.
Total expenses decreased $123,728 from prior year. The largest increase was in Public
Safety ($436,272) offset by decreases in Public Works ($463,432) and Community
Development ($110,189).
Governmental Activities – Revenues
Governmental Activities – Expenses
Charges for
Services
9.14%
Operating
Grants &
Contributions
3.26%
Capital
Grants &
Contributions
4.64%Property
Taxes
57.38%
Sales Taxes
18.12%
Franchise
Taxes
6.46%
Miscellaneous
1.01%
General
Government
18%
Public Safety
43%
Public Works
15%
Community
Development
4%
Community
Services 13%
Library 4%
Interest on
Long‐Term
Debt 3%
11
Business Type Activities
Business type activities decreased the City of Friendswood’s net position by $151,150. Key
elements of this change are as follows:
Operating revenue decreased by $345,388 or 3.3 percent. Water and sewer revenue
decreased approximately 3.85% while impact fees increased slightly, 2.47 percent, due
to new home development. Administrative fees related to disconnect/reconnection and
tampering fees increased approximately 4.70%.
Operating expenses increased $309,299 or 4.0 percent. Expenses related to water
operations decreased 3.62 percent and expenses related to sewer operations increased
12.01 percent.
FINANCIAL ANALYSIS OF THE CITY’S FUNDS
As noted earlier, fund accounting is used to demonstrate and ensure compliance with
finance-related legal requirements.
Governmental Funds
The focus of the City’s governmental funds is to provide information on near-term inflows,
outflows and balances of spendable resources. Such information is useful in assessing the
City’s financing requirements. In particular, unassigned fund balance may serve as a useful
measure of the City’s net resources available for spending at the end of the year.
At the end of the current fiscal year, the City’s governmental funds reported combined ending
fund balances of $12,978,060. Approximately 79.5 percent of this amount ($10,315,105) is
unassigned fund balance; however, $5.3 million is set aside for the 90-day operating reserve, as
set forth in the City’s financial policies.
‐
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
2014 2013
Operating
Revenues
Operating
Expenses
12
The remaining $2,662,955 is nonspendable, restricted or assigned as follows:
Nonspendable (1.3 percent)
Prepaid items $143,201
Permanent fund 31,241
Restricted (8.2 percent)
State and/or federal statutes $327,946
Fire/EMS Donations 83,037
City ordinances 125,187
Debt Service 130,147
Public education and
government channels 400,411
Assigned (11.0 percent)
Encumbrances $1,421,785
The general fund is the chief operating fund of the City of Friendswood. At the end of the
current fiscal year, unassigned fund balance of the general fund was $10.6 million, while the
total fund balance reached $12.5 million. As a measure of the general fund’s liquidity, it may be
useful to compare both unassigned and total fund balance to total fund expenditures.
Unassigned fund balance represents 47.9 percent of total general fund expenditures, while total
fund balance represents 56.8 percent of that same amount. At year end, the City’s operating
reserve was $5.3 million, representing 24 percent of total general fund expenditures.
Key differences between last year’s general fund activity and this year’s include:
$1,066,277 increase in total revenues – new homes added to the property tax roll
increased property taxes, sales tax remained strong and increased from the prior
year 9.0 percent and additional federal grants received increased intergovernmental
revenues.
$359,238 increase in total expenditures – completed capital projects in current year
resulted in increase in capital outlay.
$147,318 decrease in capital lease proceeds – purchase of new public works
equipment in prior year.
Fund balance in the Debt Service Fund decreased $49,681. This decrease was planned during
the budget process as debt service payments would exceed property tax collections.
Proprietary Funds
The City’s proprietary funds financial statements provide the same type of information found in
the government-wide financial statements, but in more detail.
At the end of the year, unrestricted net position was $14,818,104 for the Water and Sewer fund.
The total decrease in the net position of the water and sewer fund was $151,150. Other factors
concerning the finances of this fund have already been addressed in the discussion of the City
of Friendswood’s business-type activities.
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Unrestricted net position of the Internal Service Fund was $315,723. The net position of the
internal service fund decreased by $19,006 primarily as a result of an increase in depreciation
expense.
GENERAL FUND BUDGETARY HIGHLIGHTS
The City made revisions to the original appropriations approved by the City Council. Budgeted
revenues increased by $155,712 or 1 percent and expenditures were increased by $1,610,919
or 7.0 percent.
Total revenues were above budget by $1,048,693. The more significant variances are detailed
below:
$80,057 above budget in property taxes as a result of more new construction and higher
tax values than anticipated.
$572,732 above budget in sales taxes due to improved economic conditions.
$92,769 under budget in fines and forfeitures due to fewer class C misdemeanor
violations.
$140,012 above budget in permits and fees due to greater than anticipated housing
development.
$164,353 above budget in intergovernmental revenues due to more received in federal
funds than anticipated.
Total expenditures of the General Fund were $2,735,689 below the final expenditure budget.
The more significant variances are detailed below:
$539,616 below budget in total general government expenditures primarily a result of
decrease in other services and charges (legal, appraisal services, consulting, etc.) and
personnel vacancies.
$381,012 below budget in total public safety expenditures due to vacancies in personnel
and capital projects that were not complete at the end of the fiscal year
(parking lot repairs at Fire Station #3).
$1,188,641 below budget in public works primarily due to current year capital projects
that were not complete at the end of the fiscal year, a decrease in streets repairs and
maintenance and vacancies in personnel.
$424,376 below budget in community services expenditures due to capital projects that
were not complete at the end of the fiscal year.
CAPITAL ASSETS
The City of Friendswood’s investment in capital assets (net of accumulated depreciation) for its
governmental and business-type activities as of September 30, 2014 is $141,293,472. The
investment in capital assets includes land, buildings and improvements, machinery and
equipment, infrastructure, water and sewer system, water rights and construction in progress.
14
Major capital events during the year included the following:
Completion of the traffic light at Blackhawk and FM 2351. The total cost of the
project was approximately $197,000.
Completion of the Centennial Park lighting project which was approximately
$235,000.
Completion of Water Plant #5 Rehabilitation. Total project cost was $3.3 million.
Completion of Lift Station #6 Replacement. Total cost of the project was
approximately $470,000.
The following water and sewer projects are in construction in progress at the end of
fiscal year 2014: Blackhawk Water Plant Rehabilitation ($2.1 million) Water Plant #2
Replacement ($470,000), Water Plant #7 Rehabilitation ($944,00), and Lift Station
#3 ($80,000).
CITY OF FRIENDSWOOD’S CAPITAL ASSETS AT YEAR-END
2014 2013 2014 2013 2014 2013
Land 24,007,398$ 24,007,398$ 716,818$ 716,818$ 24,724,216$ 24,724,216$
Buildings and
improvements 22,778,832 24,055,022 - - 22,778,832 24,055,022
Equipment 8,080,185 7,995,263 547,711 403,053 8,627,896 8,398,316
Infrastructure 27,560,683 29,043,415 31,628,645 29,389,193 59,189,328 58,432,608
Water rights - - 19,716,695 19,716,695 19,716,695 19,716,695
Construction in
progress 2,622,174 1,026,733 3,634,331 5,635,592 6,256,505 6,662,325
Total capital assets 85,049,272$ 86,127,831$ 56,244,200$ 55,861,351$ 141,293,472$ 141,989,182$
Governmental Activities Business-type Activities Totals
More detailed information on the City’s capital assets is presented in Note 4 to the financial
statements.
DEBT ADMINISTRATION
At the end of the current fiscal year, the City of Friendswood had a total bonded debt and capital
lease obligation of $51,268,407.
CITY OF FRIENDSWOOD’S OUTSTANDING DEBT AT YEAR-END
2014 2013 2014 2013 2014 2013
General obligations 18,815,000$ 20,230,000$ -$ -$ 18,815,000$ 20,230,000$
Revenue bonds payable - - 31,830,000 32,995,000 31,830,000 32,995,000
Certificates of obligation - - - - - -
Capital leases 623,407 876,981 - - 623,407 876,981
19,438,407$ 21,106,981$ 31,830,000$ 32,995,000$ 51,268,407$ 54,101,981$
Governmental Activities Business-type Activities Totals
15
The City’s General Obligation and Revenue Bonds bond ratings are listed below:
Standard
& Poor's
General Obligation Bonds AA+
Revenue Bonds AA-
More detailed information about the City’s outstanding debt can be found in Note 6 to the
financial statements.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
Friendswood continues to experience moderate growth. The City’s current population is
estimated to be 38,911. Friendswood is expected to reach build out with an estimated
population of 57,000. The City is continuing to focus on Economic Development initiatives,
including the revitalization of downtown and a large residential and commercial development
called West Ranch. The West Ranch residential development is currently under way, with
commercial construction scheduled to follow as the area’s residential population grows.
The City’s largest single source of revenue in the General Fund continues to be ad valorem
taxes. The adopted budget for fiscal year 2015 maintains the tax rate of $0.5914 per $100 of
taxable value. This rate consists of a maintenance and operations (M&0) tax rate of $.5303 and
an interest and sinking (debt service) tax rate of $.0611. The rate was set based on a net
assessed value of $2,608,035,340. This is an increase of $105,478,062 from certified taxable
values for tax year 2013 in taxable value. This increase is mainly a result of new construction in
the City. This additional value results in a total levy increase of $720,925. The City’s financial
management policy sets the guideline to maintain the fund balance and retained earnings of the
various operating funds at levels sufficient to protect the City’s creditworthiness as well as its
financial position from unforeseeable emergencies.
The City’s second largest source of revenue in the General Fund is Sales Tax. The City
anticipates an increase in this revenue stream from the prior year and has adjusted the budget
from $4,127,080 to $4,553,543. The franchise fees budget has been increased from
$1,543,900 to $1,552,315 and the budget for municipal court fines has been decreased from
$921,406 to $763,594. If all projections are accurate, the total General Fund unassigned fund
balance net of the 90 day operating requirement ($5.3 million) is estimated to be approximately
$5.2 million at September 30, 2015.
Water revenues are budgeted at $5,907,695 which is an increase of $600,145 in revenues, or
11.31 percent. Sewer revenues are budgeted at $3,866,520. Water and sewer retained
earnings net of the 90 operating requirement ($2.4 million) is expected to be $5.8 million at the
end of fiscal year 2015.
Pursuant to the City’s financial management policy, funds in excess of the 90-day operating
reserve are designated for future capital improvements.
16
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, customers, investors, and creditors with
a general overview of the City’s finances and to show the City’s accountability for the money it
receives. If you have questions about this report or need additional information, contact
Administrative Services, P. O. Box 1288, Friendswood, Texas 77549-1288, or call Cindy S.
Edge at 281-996-3224, or email cedge@friendswood.com.
Separately issued financial statements for the West Ranch Management District can be
obtained by writing to: West Ranch Management District, a Component Unit of the City of
Friendswood, c/o Allen Boone Humphries Robinson LLP, 3200 Southwest Freeway, Suite 2600,
Houston, Texas 77027.
BASIC FINANCIAL STATEMENTS
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET POSITION
SEPTEMBER 30, 2014
The Notes to the Basic Financial Statements
are an integral part of this statement.
17
Primary Government
Governmental Business-type Component
Activities Activities Total Unit
ASSETS
Cash and investments 13,372,650$ 10,057,820$ 23,430,470$ 1,832,256$
Receivables (net of allowances for uncollectibles)
Taxes 1,479,524 - 1,479,524 15,026
Customer accounts 219,030 2,122,431 2,341,461 -
Other 159,403 9,815 169,218 4,813
Internal balances (900,000) 900,000 - -
Due from other governments 1,412,111 - 1,412,111 -
Prepaid items 143,201 40,370 183,571 2,787
Working capital deposit - 303,196 303,196 -
Restricted cash and investments - 3,031,574 3,031,574 -
Capital assets
Land 24,007,398 716,818 24,724,216 5,848,357
Buildings and improvements 38,518,112 - 38,518,112 -
Machinery and equipment 16,992,645 3,244,767 20,237,412 -
Infrastructure 67,671,399 - 67,671,399 483,467
Water and sewer system - 60,361,450 60,361,450 -
Construction in progress 2,622,174 3,634,331 6,256,505 -
Water rights - 19,716,695 19,716,695 -
Accumulated depreciation (64,762,456) (31,429,861) (96,192,317) (41,320)
Total capital assets, net 85,049,272 56,244,200 141,293,472 6,290,504
Total assets 100,935,191 72,709,406 173,644,597 8,145,386
DEFERRED OUTFLOWS OF RESOURCES
Deferred loss on issuance of refunding bonds 470,752 292,040 762,792 -
Total deferred outflows of resources 470,752 292,040 762,792 -
Total assets and deferred outflows
of resources 101,405,943 73,001,446 174,407,389 8,145,386
LIABILITIES
Accounts payable 1,097,445 839,903 1,937,348 27,335
Accrued liabilities 1,069,729 108,225 1,177,954 -
Accrued interest 68,964 123,417 192,381 282,308
Customer deposits - 375,382 375,382 -
Noncurrent liabilities:
Due within one year 1,937,174 1,236,910 3,174,084 330,000
Due in more than one year 20,375,437 30,913,294 51,288,731 16,165,993
Total liabilities 24,548,749 33,597,131 58,145,880 16,805,636
NET POSITION
Net investment in capital assets 65,404,791 24,495,816 89,900,607 -
Restricted for:
Debt service 86,085 - 86,085 772,072
Public safety 410,983 - 410,983 -
Community development
Expendable 125,187 - 125,187 -
Nonexpendable 31,241 - 31,241 -
Capital improvements - 90,395 90,395 6,450
Unrestricted 10,798,907 14,818,104 25,617,011 (9,438,772)
Total net position 76,857,194$ 39,404,315$ 116,261,509$ (8,660,250)$
CITY OF FRIENDSWOOD, TEXAS STATEMENT OF ACTIVITIES YEAR ENDED SEPTEMBER 30, 2014 The Notes to the Basic Financial Statements are an integral part of this statement. 18 Program RevenuesOperating Capital Primary GovernmentCharges for Grants and Grants and Governmental Business - Type ComponentProgram Activities Expenses Services Contributions Contributions Activities Activities Total UnitPrimary governmentGovernmental activitiesGeneral government 4,589,795$ 912,910$ - $ - $ (3,676,885)$ - $ (3,676,885)$ - $ Public safety 11,236,402 31,620 796,398 1,202,376 (9,206,008) - (9,206,008) - Public works 3,921,658 193,064 - - (3,728,594) - (3,728,594) - Community development 1,097,075 877,132 - - (219,943) - (219,943) - Community services 3,356,587 315,702 40,813 - (3,000,072) - (3,000,072) - Library 1,083,043 36,081 6,784 - (1,040,178) - (1,040,178) - Interest on long-term debt 630,542 - - - (630,542) - (630,542) - Total governmental activities 25,915,102 2,366,509 843,995 1,202,376 (21,502,222) - (21,502,222) - Business-type activitiesWater and sewer 9,509,910 11,117,391 - - - 1,607,481 1,607,481 - Total business-type activities 9,509,910 11,117,391 - - - 1,607,481 1,607,481 - Total primary government 35,425,012$ 13,483,900$ 843,995$ 1,202,376$ (21,502,222) 1,607,481 (19,894,741) - Component unitWest Ranch Management District 3,888,850 - - - - - - (3,888,850) 3,888,850$ - $ - $ - $ - - - (3,888,850) GENERAL REVENUESTaxes:Property taxes, levied for general purposes 13,334,122 - 13,334,122 1,322,005 Property taxes, levied for debt service 1,530,162 - 1,530,162 - Sales taxes4,693,484 - 4,693,484 - Franchise taxes 1,673,615 - 1,673,615 - Other taxes32,799 - 32,799 - Penalties and interest - - - 2,735 Interest on investments 109,849 40,713 150,562 3,104 Gain on sale of capital assets 34,359 - 34,359 - Miscellaneous84,275 - 84,275 - TRANSFERS1,799,344 (1,799,344) - - Total general revenues and transfers 23,292,009 (1,758,631) 21,533,378 1,327,844 Change in net position 1,789,787 (151,150) 1,638,637 (2,561,006) NET POSITION, beginning of year - as originally reported75,339,861 39,928,612 115,268,473 (5,168,030) Implementation of change in accounting principle (Note 1)(272,454) (373,147) (645,601) (931,214) NET POSITION, beginning of year - as restated75,067,407 39,555,465 114,622,872 (6,099,244) NET POSITION, end of year76,857,194$ 39,404,315$ 116,261,509$ (8,660,250)$ Changes in Net PositionNet (Expense) Revenue and
CITY OF FRIENDSWOOD, TEXAS
BALANCE SHEET – GOVERNMENTAL FUNDS
SEPTEMBER 30, 2014
The Notes to the Basic Financial Statements
are an integral part of this statement.
19
Other Total
General Debt Governmental Governmental
Fund Service Funds Funds
Cash and investments 11,619,995$ 129,990$ 1,307,157$ 13,057,142$
Receivables, net of allowance
Taxes 1,454,623 24,901 - 1,479,524
Customer accounts 188,032 - 30,998 219,030
Other 154,626 158 4,404 159,188
Due from other funds 939,536 - - 939,536
Receivable from other governments 190,036 - 1,222,075 1,412,111
Prepaids and other assets 143,201 - - 143,201
Total assets 14,690,049$ 155,049$ 2,564,634$ 17,409,732$
Liabilities
Accounts payable 756,992$ -$ 340,453$ 1,097,445$
Accrued liabilities 1,017,329 - 52,400 1,069,729
Due to other funds - - 1,839,536 1,839,536
Total liabilities 1,774,321 - 2,232,389 4,006,710
Deferred Inflows of Resources
Deferred property taxes 191,074 24,902 - 215,976
Court fines 188,585 - 3,912 192,497
Other deferred revenues 16,489 - - 16,489
Total deferred inflows
of resources 396,148 24,902 3,912 424,962
Fund Balances
Nonspendable
Prepaid items 143,201 - - 143,201
Permanent fund - - 31,241 31,241
Restricted for
Public education and
government channels 400,411 - - 400,411
Debt service - 130,147 - 130,147
State and/or federal statute - - 327,946 327,946
Fire/EMS donations - - 83,037 83,037
City ordinances - - 125,187 125,187
Assigned
Encumbrances 1,421,785 - - 1,421,785
Unassigned 10,554,183 - (239,078) 10,315,105
Total fund balances 12,519,580 130,147 328,333 12,978,060
Total liabilities, deferred inflows
of resources, and fund balances 14,690,049$ 155,049$ 2,564,634$ 17,409,732$
ASSETS
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
CITY OF FRIENDSWOOD, TEXAS
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
SEPTEMBER 30, 2014
The Notes to the Basic Financial Statements
are an integral part of this statement.
20
Total fund balances - governmental funds 12,978,060$
84,109,526
(1,399,627)
(68,964)
1,255,469
424,962
Bonds payable (18,815,000)$
Premiums on issuance (676,826)
Capital leases payable (623,407)
Compensated absences (797,751) (20,912,984)
Deferred losses on issuances of refunding bonds are recorded as
deferred outflows of resources in the statement of net position. This
is the difference between the reacquisition price and the net carrying
amount of refunded bonds, net of amortization.470,752
Net position of governmental activities 76,857,194$
funds balance sheet.
resources; therefore, it is not reported as a liability in the governmental
Interest payable on long term debt does not require current financial
These long-term liabilities at year end consists of:
period and therefore are not reported in the fund financial statements.
and compensated absences are not due and payable in the current
Long-term liabilities, including bonds payable, capital leases payable,
An internal service fund is used by management to charge the cost of
Revenues earned but not available within sixty days of the year end are
not recognized as revenue on the fund financial statements.
governmental activities in the statement of net position.
assets and liabilities of the internal service fund are included in the
certain activities, such as fleet management, to individual funds. The
Amounts reported for governmental activities in the statement of net
balance sheet.
resources and therefore are not reported in the governmental funds
Capital assets used in governmental activities are not current financial
therefore not recorded in the governmental fund financial statements.
position are different because:
obligation do not require the use of current financial resources and are
The accruals for net other post employment benefits and net pension
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES – GOVERNMENTAL FUNDS
YEAR ENDED SEPTEMBER 30, 2014
The Notes to the Basic Financial Statements
are an integral part of this statement.
21
Other Total
General Debt Governmental Governmental
Fund Service Funds Funds
Revenues
Property taxes 13,395,956$ 1,539,673$ - $ 14,935,629$
Sales and alcohol taxes 4,726,283 - - 4,726,283
Franchise taxes 1,673,615 - - 1,673,615
Fines and forfeitures 828,637 - 31,620 860,257
Permits and fees 1,327,464 - 58,434 1,385,898
Intergovernmental 548,262 - 1,243,189 1,791,451
Investment earnings 106,134 949 2,034 109,117
Donations 72,940 - 276,226 349,166
Miscellaneous 54,989 - - 54,989
Total revenues 22,734,280 1,540,622 1,611,503 25,886,405
Expenditures
Current
General government 4,194,272 - 111,871 4,306,143
Public safety 10,442,051 - 157,524 10,599,575
Public works 1,689,987 - - 1,689,987
Community development 1,092,982 - - 1,092,982
Community services 2,772,072 - - 2,772,072
Library 1,083,043 - - 1,083,043
Capital outlay 758,533 - 1,741,721 2,500,254
Debt service
Principal - 1,560,379 108,313 1,668,692
Interest and fiscal charges - 646,074 16,644 662,718
Total expenditures 22,032,940 2,206,453 2,136,073 26,375,466
Excess (deficiency) of
revenues over expenditures 701,340 (665,831) (524,570) (489,061)
Other financing sources (uses)
Proceeds from sale of capital assets - - 6,325 6,325
Insurance recoveries 28,886 - - 28,886
Transfers in 1,183,194 616,150 - 1,799,344
Total other financing
sources (uses) 1,212,080 616,150 6,325 1,834,555
Net change in fund balances 1,913,420 (49,681) (518,245) 1,345,494
Fund balances, beginning of year 10,606,160 179,828 846,578 11,632,566
Fund balances, end of year 12,519,580$ 130,147$ 328,333$ 12,978,060$
CITY OF FRIENDSWOOD, TEXAS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
YEAR ENDED SEPTEMBER 30, 2014
The Notes to the Basic Financial Statements
are an integral part of this statement.
22
Net change in fund balances - total governmental funds 1,345,494$
Amounts reported for governmental activities in the statement of activities are
different because:
Governmental funds report capital outlays as expenditures. However, in the
statement of activities the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense. This is the amount of capital
assets recorded in the current period. 2,530,810
Depreciation expense on capital assets is reported in the statement of activities
but does not require the use of current financial resources. Therefore, depreciation
expense is not reported as expenditures in the governmental funds. (3,614,206)
The issuance of long term debt (e.g. bonds, capital leases) provides current
financial resources to governmental funds, while the repayment of the principal of
long term debt consumes the current financial resources of governmental funds.
Neither transaction, however, has any effect on net position. Also, governmental
funds report the effect of premiums, discounts, and similar items when debt
is first issued, whereas the amounts are deferred and amortized in the
statement of activities. The effect of these differences in the treatment of long
term debt and related items was:
Amortization of premium on bonds payable 60,467$
Amortization of deferred loss on refunding bonds (39,229)
Repayment of long term debt 1,668,574 1,689,812
Current year changes in long term liability for compensated absences do not
require the use of current financial resources; therefore, are not reported as
expenditures in governmental funds. (3,471)
Current year changes in accrued interest payable do not require the use of current
financial resources; therefore, it is not reported as an expenditure in the
governmental funds. 10,938
Certain revenues in the government-wide statement of activities that do
not provide current financial resources are not reported as revenue in the
governmental funds. (75,391)
The accruals for net other post employment benefits and net pension obligation do
not require the use of current financial resources and are therefore not recorded in
the governmental fund financial statements. (75,193)
An internal service fund is used by management to charge the cost of fleet
management to individual funds. The change in net position of the internal service
fund is included in the governmental activities in the statement of net position. (19,006)
Change in net position of governmental activities 1,789,787$
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET POSITION – PROPRIETARY FUNDS
SEPTEMBER 30, 2014
The Notes to the Basic Financial Statements
are an integral part of this statement.
23
Business Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
Current assets
Cash and investments 10,057,820$ 315,508$
Accounts receivable, net of allowance
Customer accounts 2,122,431 -
Other 9,815 215
Due from other funds 900,000 -
Prepaids and other assets 40,370 -
Restricted cash and investments 3,031,574 -
Total current assets 16,162,010 315,723
Noncurrent assets
Working capital deposit 303,196 -
Deferred charges - -
Capital assets
Land 716,818 -
Machinery and equipment 3,244,767 2,539,771
Water and sewer system 60,361,450 -
Construction in progress 3,634,331 -
Water rights 19,716,695 -
Accumulated depreciation (31,429,861) (1,600,025)
Net capital assets 56,244,200 939,746
Total noncurrent assets 56,547,396 939,746
Total assets 72,709,406 1,255,469
Deferred loss on issuance of refunding bonds 292,040 -
Total deferred outflows of resources 292,040 -
Total assets and deferred outflows of resources 73,001,446 1,255,469
ASSETS
DEFERRED OUTFLOWS OF RESOURCES
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET POSITION – PROPRIETARY FUNDS
SEPTEMBER 30, 2014
(CONTINUED)
The Notes to the Basic Financial Statements
are an integral part of this statement.
24
Business Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
Current liabilities
Accounts payable 839,903$ - $
Accrued liabilities 108,225 -
Accrued interest 123,417 -
Deposits 375,382 -
Compensated absences 18,134 -
Bonds and other long-term debt payable 1,218,776 -
Total current liabilities 2,683,837 -
Noncurrent liabilities
Compensated absences 91,646 -
Bonds and other long-term debt payable 30,821,648 -
Total noncurrent liabilities 30,913,294 -
Total liabilities 33,597,131 -
Net investment in capital assets 24,495,816 939,746
Restricted for capital improvements 90,395 -
Unrestricted 14,818,104 315,723
Total net position 39,404,315$ 1,255,469$
LIABILITIES
NET POSITION
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30, 2014
The Notes to the Basic Financial Statements
are an integral part of this statement.
25
Business Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
Operating revenues
Charges for services 11,117,391$ 321,725$
Total operating revenues 11,117,391 321,725
Operating expenses
Personnel services 1,603,813 -
Sewer operations 1,970,403 -
Water purchases 1,220,696 -
Repairs and maintenance 563,463 -
Supplies 194,641 610
Other services and charges 823,494 -
Depreciation 1,614,085 368,887
Total operating expenses 7,990,595 369,497
Operating income (loss) 3,126,796 (47,772)
Nonoperating revenues (expenses)
Investment income 40,713 732
Gain (loss) on sale of capital assets - 28,034
Interest expense and fiscal charges (1,514,804) -
Miscellaneous (4,511) -
Total nonoperating revenues (expenses) (1,478,602) 28,766
Income before transfers 1,648,194 (19,006)
Transfers out (1,799,344) -
Change in net position (151,150) (19,006)
Net position, beginning of year - as originally reported 39,928,612 1,274,475
Implementation of change in
accounting principle (Note 1)(373,147) -
Net position, beginning of year - as restated 39,555,465 1,274,475
Net position, end of year 39,404,315$ 1,255,469$
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30, 2014
The Notes to the Basic Financial Statements
are an integral part of this statement.
26
Business Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
OPERATING ACTIVITIES
Cash received from customers 10,996,376$ 321,761$
Cash payments to suppliers for goods
and services (6,453,418) (610)
Cash payments to employees for services (1,600,382) -
Net cash provided by operating activities 2,942,576 321,151
NONCAPITAL FINANCING ACTIVITIES
Transfer out (1,799,344) -
Net cash used in noncapital
financing activities (1,799,344) -
CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from the sale of capital assets - 34,389
Acquisition and construction of capital assets (1,996,934) (380,079)
Repayment of debt (1,165,000) -
Interest paid on debt (1,505,057) -
Net cash used in capital and related
financing activities (4,666,991) (345,690)
INVESTING ACTIVITIES
Investment income 90,953 732
Net cash provided by investing activities 90,953 732
Net change in cash and cash equivalents (3,432,806) (23,807)
CASH AND CASH EQUIVALENTS, beginning of year 16,522,200 339,315
CASH AND CASH EQUIVALENTS, end of year 13,089,394$ 315,508$
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30, 2014
(CONTINUED)
The Notes to the Basic Financial Statements
are an integral part of this statement.
27
Business Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
Reconciliation of operating income (loss)
to net cash provided by operating activities
Operating income (loss) 3,126,796$ (47,772)$
Adjustments to reconcile operating income (loss)
to net cash provided by operating activities
Depreciation and amortization 1,614,085 368,887
Change in assets and liabilities
Accounts receivable (145,660) 36
Prepaids and other assets (7,661) -
Working capital deposits (14,334) -
Accounts payable (1,566,445) -
Accrued liabilities (88,850) -
Deposits 24,645 -
Net cash provided by operating activities 2,942,576$ 321,151$
Reconciliation of cash to statement of net position
Cash and investments 10,057,820$ 315,508$
Restricted cash and investments 3,031,574 -
CASH AND CASH EQUIVALENTS 13,089,394$ 315,508$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
28
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Friendswood, Texas (the City) was incorporated on October 15, 1960. The City
charter provides for a City 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 four 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.
Financial Reporting Entity
The City is an independent political subdivision of the State of Texas governed by an
elected six-member Council and Mayor and is considered a primary government. As
required by generally accepted accounting principles, these financial statements have
been prepared based on considerations regarding the potential for inclusion of other
entities, organizations, or functions as part of the City’s financial reporting entity. Based
on these considerations, the West Ranch Management District has been included in the
City’s reporting entity as a discretely presented component unit. Additionally, as the City
is considered a primary government for financial reporting purposes, its activities are not
considered a part of any other governmental or other type of reporting entity.
Consideration regarding the potential for inclusion of other entities, organizations, or
functions in the City’s financial reporting entity is based on criteria prescribed by
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.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
29
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Financial Reporting Entity – Continued
The West Ranch Management District (the District), a discretely presented component
unit, was created under Section 59, Article XVI of the Texas Constitution added by an
Act of the 79th Legislature of the State of Texas, effective June 17, 2005, in accordance
with the Texas Water Code, Chapter 54. The District operates in accordance with
Chapters 3837, Texas Special District Local Laws Code, Chapters 49 and 54 of the
Texas Water Code and Chapter 375 of the Texas Local Government Code, and is
subject to the continuing supervision of the Texas Commission on Environmental
Quality. The District was created to promote and encourage employment and the public
welfare within the District. The affairs of the District are managed by a Board of
Directors composed of persons appointed by the City Council. The City is financially
accountable for the District because City Council must approve any debt issuances.
Complete financial statements from the component may be obtained at the District’s
administrative office.
Basis of Presentation
The government-wide financial statements (i.e., the statement of net position and the
statement of activities) report information on all activities of the primary government and
its component unit. For the most part, the effect of interfund activity has been removed
from these statements. Governmental activities, which normally are supported by taxes
and intergovernmental revenue, are reported separately from business-type activities,
which rely to a significant extent on fees and charges for support. Likewise, the primary
government is reported separately from certain legally separate component units for
which the primary government is financially accountable.
The statement of activities demonstrates the degree to which the direct expenses of a
given function or segment are offset by program revenue. Direct expenses are those
that are clearly identifiable with a specific function or segment. Program revenue
includes 1) charges to customers or applicants who purchase, use, or directly benefit
from goods, services, or privileges provided by a given function or segment, and
2) grants and contributions that are restricted to meeting the 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.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
30
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Measurement Focus/Basis of Accounting
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, accordingly, 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 Debt Service Fund is used to account for the property taxes levied for payment
of principal and interest on all governmental debt of the City.
Other governmental funds is a summarization of all the non-major governmental funds.
The City reports the following major enterprise fund:
The Water and Sewer Fund is used to account for the activities of the City’s water
and wastewater operations.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
31
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Measurement Focus/Basis of Accounting – Continued
Additionally, the City reports the following fund type:
The Internal Service Fund is used to account for fleet management services
provided to other departments of the City on a cost reimbursement basis.
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 (GASB).
As a general rule, the effect of interfund activity has been eliminated from the
government-wide financial statements. Exceptions to this general rule are charges
between the City’s water and sewer function and various other functions of the
government. Elimination of these charges would distort the direct costs and program
revenue reported for the various functions concerned.
Proprietary funds distinguish operating revenues and expenses from nonoperating
items. Operating revenues and expenses generally result from providing services and
producing and delivering goods in connection with a proprietary fund’s principal ongoing
operations. The principal operating revenues of the Water and Sewer enterprise fund
and of the City’s internal service fund are charges to customers for sales and services.
Operating expenses for the enterprise fund and internal service fund include the cost of
sales and services, administrative expenses, and depreciation on capital assets. All
revenue and expenses not meeting this definition are reported as nonoperating revenue
and expenses.
Cash and Investments
Cash and investments include cash on hand, deposits with financial institutions,
short-term investments in a state-managed public funds investment pool account
(TexPool), and a privately managed public funds investment pool (Texas Class). Other
investments consist mainly of U. S. government treasury bills, treasury notes and other
U. S. government obligations. Restricted cash and investments are assets restricted for
specific use. Restricted cash includes cash on deposit with financial institutions and
investment pools.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
32
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Cash and Investments – 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 are reclassified and
are reflected as interfund accounts payable. Interest income and interest expense are
allocated monthly to each respective individual fund based on their representative fund
balances.
The City’s cash and cash equivalents are considered to be cash on hand, demand
deposits, and short-term investments with original maturities of three months or less
from the date of acquisition.
Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements
outstanding at the end of the fiscal year are referred to as either “due to/from other
funds” (i.e., the current portion of interfund loans) 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.”
All trade and property tax receivables are shown net of an allowance for uncollectible
accounts. Management estimates an allowance for trade accounts receivable based on
past experience, historical losses, and other pertinent factors. The property tax
receivable allowance is equal to 10 percent of outstanding property taxes at
September 30, 2014.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
33
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – 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 Galveston
County. Such taxes are applicable to the fiscal year in which they are levied and
become delinquent with an enforceable lien on property on February 1 of the
subsequent calendar year.
Property taxes are prorated between operations and debt service based on rates
adopted for the year of the levy. For the current year, the City levied property taxes of
$0.5914 per $100 of assessed valuation that were prorated between operations and
debt service in the amounts of $0.5303 and $0.0611, respectively. The resulting tax
levies were approximately $13.3 and $1.5 million for operations and debt service,
respectively, based on a total taxable valuation of approximately $2.5 billion for the 2013
tax year.
West Ranch Management District bond resolutions require that the District levy and
collect an ad valorem debt service tax sufficient to pay interest and principal on bonds
when due. During the year ended July 31, 2014, the District levied an ad valorem debt
service tax at the rate of $0.3800 per $100 of assessed valuation, which resulted in a tax
levy of $769,931 on the taxable valuation of approximately $202.4 million for the 2013
tax year.
During the year ended July 31, 2014, the District levied an ad valorem maintenance tax
at the rate of $0.1500 per $100 of assessed valuation and an ad valorem road tax at the
rate of $0.1200 per $100 of assessed valuation, which resulted in a tax levy of $303,920
and $243,136, respectively, on the taxable valuation of approximately $202.4 million for
the 2013 tax year.
Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and
are recorded as prepaid items in both government-wide and fund financial statements.
The City applies the consumption method in accounting for prepaid items in the
governmental funds.
Restricted Assets
Certain proceeds of the City’s enterprise fund revenue bonds, as well as certain
resources set aside for their repayment, are classified as restricted assets on the
balance sheet because their use is limited by applicable bond covenants.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
34
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Contract with West Ranch Management District
The District approved a contract with the City effective August 15, 2005, as amended.
Under the terms of the contract, the District is to pay for construction of water
distribution, sanitary sewer, drainage, transportation, education and recreation facilities
to serve the District.
The District shall be the owner of the system until the system is completed, approved by
the City and conveyed to it, at which time ownership will vest in the City. The District will
own and operate detention facilities to serve the District. Pursuant to the contract, the
District shall have a security interest therein until all bonds issued by the District are
retired.
Capital Assets
Capital assets, which include property, plant, equipment, infrastructure, and water rights,
are reported in the applicable governmental or business-type activities columns in the
government-wide financial statements. The City defines capital assets as assets with an
initial, individual cost of more than $5,000 and an estimated useful life in excess of one
year. Such assets are recorded at historical cost or estimated historical cost if actual
historical cost is not available. Donated capital assets are recorded at estimated fair
market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend assets’ lives are not capitalized.
The City’s property, plant and equipment is depreciated using the straight-line method
over the following useful lives:
Buildings and improvements 20 - 50 years
Machinery and equipment 5 - 10 years
Infrastructure 40 - 50 years
Water and sewer system 40 - 50 years
The West Ranch Management District’s capital assets are depreciated using the
straight-line method over estimated useful lives of 10 to 45 years.
Compensated Absences
The City’s employees earn vacation and sick leave, which may either be taken or
accumulated, up to certain amounts, until paid upon resignation or retirement. All
vacation and sick leave pay is accrued when incurred in the government-wide and
proprietary fund financial statements. A liability for these amounts is reported in
governmental funds only if they have matured, for example, as a result of employee
resignations and retirements.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
35
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Long-Term Obligations
In the government-wide financial statements and proprietary fund types in the fund
financial statements, long-term debt and other long-term obligations are reported as
liabilities in the applicable governmental activities, business-type activities, or proprietary
fund type statement of net position. Bond premiums and discounts are deferred and
amortized over the life of the bonds using the straight-line method, which approximates
the effective interest method. Bonds payable are reported net of the applicable bond
premium or discount. Bond issuance costs are expensed in the period incurred.
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs during the current period. The face amount of
debt issued is reported as other 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 Balances and Net Position
Government-Wide Financial Statements:
In accordance with GASB Statement No. 63, Financial Reporting of Deferred Outflows of
Resources, Deferred Inflows of Resources, and Net Position, net position on the
Statement of Net Position includes the following categories:
Net investment in capital assets – the component of net position that reports the
difference between capital assets less both the accumulated depreciation and the
outstanding balance of debt, net of premiums and discounts, that is directly
attributable to the acquisition, construction or improvement of these capital assets.
Restricted – Net position is reported as restricted when there are limitations imposed
on its use either through the enabling legislation adopted by the City or through
external restrictions imposed by creditors, grantors, or laws or regulations of other
governments.
Unrestricted – the difference between the assets and liabilities that is not reported in
any of the classifications above.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
36
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Fund Balances and Net Position – Continued
Governmental Fund Financial Statements:
In accordance with GASB Statement No. 54, Fund Balance Reporting and
Governmental Fund Type Definitions, the City classifies governmental fund balances as
follows:
Non-spendable – includes amounts that cannot be spent because they are either not
in spendable form, or, for legal or contractual reasons, must be kept intact. This
classification includes prepaid items and the fund balance of the City’s permanent
fund.
Restricted – includes fund balance amounts that are constrained for specific
purposes which are imposed by providers, such as creditors or amounts restricted
due to constitutional provisions or enabling legislation. This classification includes
retirement of long term debt, construction programs, City ordinances, and other
federal and state grants.
Committed – includes fund balance amounts that are constrained for specific
purposes that are internally imposed by the City through formal action in an open
meeting of the highest level of decision making authority. Committed fund balance is
reported pursuant to resolution passed by the City Council. At September 30, 2014,
the City had no committed fund balance amounts.
Assigned – includes fund balance amounts that are self-imposed by the City to be
used for a particular purpose. Fund balance can be assigned by the City Council or
the City Manager, pursuant to the City’s fund balance policy. At
September 30, 2014, the City’s assigned fund balance included amounts assigned
for encumbrances.
Unassigned – includes residual positive fund balance within the general fund which
has not been classified within the other above mentioned categories. Unassigned
fund balance may also include negative balances for any governmental fund if
expenditures exceed amounts restricted, committed, or assigned for those specific
purposes.
At September 30, 2014, the City’s bond construction fund reported a deficit fund
balance of $239,078.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
37
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Fund Balances and Net Position – Continued
Governmental Fund Financial Statements – Continued:
When both restricted and unrestricted fund balances are available for use, it is the City’s
policy to use restricted fund balance first, then unrestricted fund balance. Furthermore,
committed fund balances are reduced first, followed by assigned amounts and then
unassigned amounts when expenditures are incurred for purposes for which amounts in
any of those unrestricted fund balance classifications are available.
The City has established a minimum fund balance policy whereby the City’s unassigned
general fund balance will be maintained at levels sufficient to protect the City’s
creditworthiness, as well as its financial position, from unforeseeable emergencies. The
City will strive to maintain the unassigned general fund balance at a minimum of 90 days
of prior year audited operating expenditures.
Deferred Inflows and Deferred Outflows of Resources
During the year ending September 30, 2014, the City adopted GASB Statement No. 65,
Items Previously Reported as Assets and Liabilities (GASB 65), which establishes
accounting and financial reporting standards that reclassify, as deferred outflows of
resources and deferred inflows of resources, certain items that were previously reported
as assets and liabilities. The effects of implementation of GASB 65 are reflected in the
accompanying financial statements.
Pursuant to GASB 65, bond issuance costs which previously had been capitalized and
amortized over the term of the bonds in the government-wide financial statements are
now accounted for as expense in the period incurred. Therefore, the beginning net
position on the Statement of Activities has been adjusted to reflect the portion of
deferred charges that were incurred in prior years.
In accordance with GASB 65, deferred inflows of resources represent an acquisition of
resources that applies to a future period and therefore will not be recognized as an
inflow of resources (revenue) until that time. Deferred outflows of resources represent a
consumption of resources that applies to a future period and therefore will not be
recognized as an outflow of resources (expense/expenditure) until that time.
Estimates
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of contingent
liabilities at the date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual amounts could differ materially from
those estimates.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
38
NOTE 2. DEPOSITS AND INVESTMENTS
Under provisions of state and local statutes, the City’s investment policies, and provisions of
the City’s depository contracts with an area financial institution, the City is authorized to
place available deposits and investments in the following:
1. Obligations of the U. S., 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 amounts not to exceed
$100,000;
3. No-load money market mutual funds; and
4. TexPool, Lone Star Investment Pool and Texas Class.
The City Council has adopted a written investment policy regarding the investments of its
funds as defined by the Public Funds Investment Act of 1995 (Chapter 2256, Texas
Government Code). The investments of the City are in compliance with the Council’s
investment policies. The City did not have any derivative investment products during the
current year. All significant legal and contractual provisions for investments were complied
with during the year.
Deposits and investments as of September 30, 2014 are classified in the accompanying
financial statements as follows:
Governmental activities 13,372,650$
Business-type activities 13,089,394
26,462,044$
Deposits and investments as of September 30, 2014 consist of the following:
Deposits with financial institutions 1,870,169$
Investments 24,591,875
26,462,044$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
39
NOTE 2. DEPOSITS AND INVESTMENTS – CONTINUED
As of September 30, 2014, the City had the following investments:
Fair Value
Texas Class 7,274,551$
TexPool 2,837,644
U.S. Agency Securities:
Federal Home Loan Mortgage Corporation 5,493,116 714
Federal Home Loan Bank 4,493,909 739
Federal Farm Credit Bank 3,493,723 777
Federal National Mortgage Association 998,932 492
Total U.S. Agency Securities 14,479,680
Total portfolio 24,591,875$
Investment Type
Weighted Average
Maturity (Days)
The City’s investment pools are 2a7-like pools. A 2a7-like pool is one which is not
registered with the Securities and Exchange Commission (SEC) as an investment company,
but nevertheless has a policy that it will, and does, operate in a manner consistent with the
SEC’s Rule 2a7 of the Investment Company Act of 1940. The City’s investments in these
pools are the same as the value of the pool shares, which are valued based on quoted
market rates.
The City invests in Texas Local Government Investment Pool (TexPool), which was created
under the Interlocal Cooperation Act, Texas Government Code Ann. Chapter 791 and the
Texas Public Funds Investment Act. The Texas Treasury Safekeeping Trust Company
(the Trust) is trustee of TexPool and is a limited purpose trust company authorized pursuant
to Texas Government Code Ann. Section 404.103 for which the Texas State Comptroller is
sole officer, director and shareholder. The advisory board of TexPool is composed of
members appointed pursuant to the requirements of the Texas Public Funds Investment
Act.
The City invests in Texas Class Investment Pool which was established in 1996 pursuant to
the Texas Public Funds Investment Act. The pool is governed by a 7-member board of
trustees, who are elected by pool participants. The Cutwater Investor Services Corp. serves
as the pools program administrator and Wells Fargo Bank Texas, NA, serves as custodian.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
40
NOTE 2. DEPOSITS AND INVESTMENTS – CONTINUED
Interest Rate Risk. In accordance with its investment policy, the City manages its exposure
to declines in fair values by structuring the investment portfolio so that securities mature to
meet cash requirements for ongoing operations and invest operating funds primarily in
short-term securities.
Custodial Credit Risk. In the case of deposits, this is the risk that in the event of a bank
failure, the City’s deposits may not be returned. State statutes require that all deposits in
financial institutions be fully collateralized by U. S. Government obligations or its agencies
and instrumentalities or direct obligations of Texas or its agencies and instrumentalities that
have a fair value of not less than the principal amount of deposits. As of
September 30, 2014, all of the City’s $1,870,169 balance on deposit with financial
institutions was collateralized with securities held by the pledging financial institution in the
City’s name.
Credit Risk. It is the City’s policy to limit its investments to investment types with an
investment quality rating not less than A or its equivalent by a nationally recognized
statistical rating organization. The City’s investments as of September 30, 2014, were rated
as follows:
Rating Rating Agency
Texas Class AAAm Standard & Poor's
TexPool AAAm Standard & Poor's
U.S. Agency Securities:
Federal Home Loan Mortgage Corporation Aaa Moody's Investor Service
Federal Home Loan Bank Aaa Moody's Investor Service
Federal Farm Credit Bank Aaa Moody's Investor Service
Federal National Mortgage Association Aaa Moody's Investor Service
Investment Type
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
41
NOTE 3. ACCOUNTS RECEIVABLE AND DEFERRED INFLOWS OF RESOURCES
Receivables as of September 30, 2014 for the City’s individual major funds, nonmajor funds
in the aggregate and the Internal Service Fund including the applicable allowances for
uncollectible accounts, are as follows:
Debt Water and Internal
General Service Nonmajor Sewer Service Total
Receivables:
Property taxes 212,305$ 27,668$ -$ -$ -$ 239,973$
Sales taxes 866,784 - - - - 866,784
Franchise taxes 396,764 - - - - 396,764
Customer accounts 190,032 - 30,998 2,173,260 - 2,394,290
Accrued interest 12,046 158 471 9,815 215 22,705
Court fines 415,157 - 3,933 - - 419,090
Intergovernmental 190,036 - 1,222,075 - - 1,412,111
Other 10,984 - - - - 10,984
Gross receivables 2,294,108 27,826 1,257,477 2,183,075 215 5,762,701
Less: allowance for
uncollectibles 306,791 2,767 - 50,829 - 360,387
Net total receivables 1,987,317$ 25,059$ 1,257,477$ 2,132,246$ 215$ 5,402,314$
Governmental Funds Proprietary Funds
Governmental funds report deferred inflows of resources in connection with receivables for
revenue that is not considered to be available to liquidate liabilities of the current period. At
the end of the current fiscal year, the various components of deferred revenue reported in
the governmental funds were as follows:
Deferred Inflows
of Resources
General Fund
Delinquent property taxes 191,074$
Court fines 188,585
Miscellaneous 16,489
Total General Fund 396,148
Nonmajor funds
Court fines 3,912
Total nonmajor funds 3,912
Debt Service Fund
Delinquent property taxes 24,902
Total Debt Service Fund 24,902
Total Governmental Funds 424,962$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
42
NOTE 4. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2014 was as follows:
Beginning Reclassifications/ Ending
Balance Increases Decreases Balance
Governmental activities
Capital assets not being depreciated
Land 24,007,398$ -$ -$ 24,007,398$
Construction in progress 1,026,733 2,385,331 (789,890) 2,622,174
Total capital assets not
being depreciated 25,034,131 2,385,331 (789,890) 26,629,572
Capital assets being depreciated
Buildings and improvements 38,447,558 - 70,554 38,518,112
Machinery and equipment 16,247,829 1,244,893 (500,077) 16,992,645
Infrastructure 67,671,399 - - 67,671,399
Total capital assets
being depreciated 122,366,786 1,244,893 (429,523) 123,182,156
Less accumulated depreciation
Buildings and improvements 14,392,536 1,346,744 - 15,739,280
Machinery and equipment 8,252,566 1,153,617 (493,723) 8,912,460
Infrastructure 38,627,984 1,482,732 - 40,110,716
Total accumulated
depreciation 61,273,086 3,983,093 (493,723) 64,762,456
Total capital assets
being depreciated, net 61,093,700 (2,738,200) 64,200 58,419,700
Governmental activities
capital assets, net 86,127,831$ (352,869)$ (725,690)$ 85,049,272$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
43
NOTE 4. CAPITAL ASSETS – CONTINUED
Beginning Reclassifications/ Ending
Balance Increases Decreases Balance
Business-type activities
Capital assets not being depreciated
Land 716,818$ -$ -$ 716,818$
Water rights 19,716,695 - - 19,716,695
Construction in progress 5,635,592 1,803,619 (3,804,880) 3,634,331
Total capital assets not
being depreciated 26,069,105 1,803,619 (3,804,880) 24,067,844
Capital assets being depreciated
Machinery and equipment 3,051,452 193,315 - 3,244,767
Water and sewer system 56,556,570 - 3,804,880 60,361,450
Total capital assets
being depreciated 59,608,022 193,315 3,804,880 63,606,217
Less accumulated depreciation:
Machinery and equipment 2,648,399 48,657 - 2,697,056
Water and sewer system 27,167,377 1,565,428 - 28,732,805
Total accumulated
depreciation 29,815,776 1,614,085 - 31,429,861
Total capital assets
being depreciated, net 29,792,246 (1,420,770) 3,804,880 32,176,356
Business-type activities
capital assets, net 55,861,351$ 382,849$ -$ 56,244,200$
Component unit
Capital assets not being depreciated
Land 5,848,357$ -$ -$ 5,848,357$
Capital assets being depreciated
Water production and
distribution facilities 483,467 - - 483,467
Less accumulated depreciation:
Water production and
distribution facilities 30,575 10,745 - 41,320
Total capital assets
being depreciated, net 452,892 (10,745) - 442,147
Component unit
capital assets, net 6,301,249$ (10,745)$ -$ 6,290,504$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
44
NOTE 4. CAPITAL ASSETS – CONTINUED
Depreciation expense was charged to functions/programs of the primary government as
follows:
Governmental activities
General government 203,800$
Public safety 597,318
Public works 2,231,671
Community services 581,417
Capital assets held by the City's internal service fund are
charged to the various functions based on their usage 368,887
Total depreciation expense - governmental activities 3,983,093$
Business-type activities
Water and sewer 1,614,085$
Total depreciation expense - business-type activities 1,614,085$
Unexpended commitments for construction projects in progress were $8,784,779 at
September 30, 2014.
NOTE 5. INTERFUND BALANCES AND ACTIVITIES
Interfund balances (net) at September 30, 2014 consisted of the following individual fund
balances:
Due to Fund Due from Fund Amount
General Nonmajor 939,536$ Balance of fund expenditures
governmental funded by the general fund,
pending reimbursements
Water and sewer Nonmajor 900,000 Return of excess amount previously
governmental transferred, upon decrease in City's
obligation under grant award
1,839,536$
Purpose
All amounts due are scheduled to be repaid within one year.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
45
NOTE 5. INTERFUND BALANCES AND ACTIVITIES – CONTINUED
During the year ended September 30, 2014, transfers between funds occurred as described
below:
Transfers In Transfers Out Amount
Debt service Water and sewer 616,150$ To fund Series 2010B debt service
payments
General Water and sewer 1,183,194 To fund indirect costs for
administrative expenses
1,799,344$
Purpose
NOTE 6. LONG-TERM DEBT
The City issues a variety of long-term debt instruments in order to acquire and/or construct
major capital facilities and equipment for governmental and business-type activities. These
instruments include general obligation bonds, certificates of obligation, revenue bonds, and
capital leases. These debt obligations are secured by either future tax revenue, water and
sewer system revenue, or liens on property and equipment. Debt obligations that are
intended to be repaid from water and sewer system revenue have been recorded as
business-type activities. All other long-term obligations of the City are considered to be
governmental type activities.
Federal Arbitrage
General obligation bonds, combination tax and revenue bonds, and certificates of
obligation are subject to the provisions of the Internal Revenue Code of 1986 related to
arbitrage and interest income tax regulations under those provisions.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
46
NOTE 6. LONG-TERM DEBT – CONTINUED
Bonds Payable and Certificates of Obligation
The following schedule summarizes the terms of the City’s general obligation bonds,
combination tax and revenue bonds, and certificates of obligation outstanding and their
corresponding allocations to the governmental and business-type activities at
September 30, 2014:
Final Governmental Business-Type
Maturity Interest Rate Activities Activities
General Obligation Bonds
2005 Permanent Improvement
and Refunding $ 9,800,000 2020 2.85% - 4.375% 3,395,000$ -$
2010A Permanent Improvement 3,460,000 2035 1.0% - 4.75% 3,080,000 -
2010B Permanent Improvement
and Refunding 5,460,000 2021 1.0% - 4.0% 3,940,000 -
2012 General Obligation Refunding 8,890,000 2026 2.0% - 3.5% 8,400,000 -
18,815,000 -
Revenue Bonds
2006 Waterworks and Sewer System
Revenue and Refunding 24,285,000 2031 4.0% - 5.0% - 20,975,000
2009 Waterworks and Sewer System 12,120,000 2028 2.0% - 4.8% - 10,855,000
- 31,830,000
Total Bonds and Certificates of Obligation 18,815,000$ 31,830,000$
Series and Original Issue Amount
Annual debt service requirements for the City’s bonds and certificates of obligation are
as follows:
Year Ending
September 30, Principal Interest Principal Interest Total
2015 1,455,000$ 592,152$ 1,205,000$ 1,457,771$ 4,709,923$
2016 1,505,000 552,992 1,240,000 1,409,734 4,707,726
2017 1,550,000 513,382 1,295,000 1,358,571 4,716,953
2018 1,595,000 473,248 1,345,000 1,304,706 4,717,954
2019 - 2023 7,400,000 1,664,430 7,985,000 5,526,591 22,576,021
2024 - 2028 4,145,000 532,577 10,695,000 3,271,296 18,643,873
2029 - 2033 795,000 180,615 7,255,000 829,388 9,060,003
2034 - 2035 370,000 17,806 810,000 20,250 1,218,056
18,815,000$ 4,527,202$ 31,830,000$ 15,178,307$ 70,350,509$
Governmental Activities Business -Type Activities
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, 2014, $17,220,000 of
bonds considered defeased are still outstanding.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
47
NOTE 6. LONG-TERM DEBT – CONTINUED
Obligations Under Capital Leases
The City has entered into capital lease agreements in order to purchase machinery and
equipment for public works, police and fire departments. The assets acquired through
these lease agreements are as follows:
Governmental
Asset: Activities
Machinery and equipment 1,745,048$
Less: accumulated depreciation (481,067)
Total 1,263,981$
The following is a summary of future lease payments due on this machinery and
equipment:
Year Ending Lease
September 30, Obligation
2015 284,322$
2016 191,868
2017 63,056
2018 63,056
2019 63,034
Total 665,336
Less: interest portion (41,929)
Obligations under capital leases 623,407$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
48
NOTE 6. LONG-TERM DEBT – CONTINUED
Changes in Long-term Liabilities
Long-term liability activity of the primary government for the year ended
September 30, 2014, was as follows:
Balance Balance Due
Beginning End of Within One
of Year Increase Decrease Year Year
Governmental activities
General obligation bonds 20,230,000$-$ (1,415,000)$ 18,815,000$ 1,455,000$
Premium on bond issuance 737,293 - (60,467) 676,826 60,468
Capital lease obligations 876,981 - (253,574) 623,407 262,856
Net pension obligation 638,703 1,852,116 (1,847,375) 643,444 -
Net OPEB obligation 685,731 88,587 (18,135) 756,183 -
Compensated absences 794,280 711,608 (708,137) 797,751 158,850
Total governmental
activities 23,962,988 2,652,311 (4,302,688) 22,312,611 1,937,174
Business type activities
Revenue bonds 32,995,000 - (1,165,000) 31,830,000 1,205,000
Discount on bond issuance (52,452) - 2,497 (49,955) (2,498)
Premium on bond issuance 276,653 - (16,274) 260,379 16,274
Compensated absences 106,349 66,807 (63,376) 109,780 18,134
Total business type activities 33,325,550 66,807 (1,242,153) 32,150,204 1,236,910
Total primary government 57,288,538$2,719,118$ (5,544,841)$ 54,462,815$ 3,174,084$
The compensated absences liability attributable to the governmental activities will be
liquidated primarily by the general fund. The general fund has typically been used in
prior years to liquidate the net pension obligation and net OPEB obligation.
West Ranch Management District
The following schedule summarizes the terms of the West Ranch Management District’s
general obligation bonds at July 31, 2014:
Amounts Outstanding Interest Range of Callable
Series July 31, 2014 Rates Maturities Dates *
Series 2010 $6,535,000 3.25% to 5.25% 2014 - 2040 September 1, 2020
Road Series 2010A $1,760,000 3.50% to 5.00% 2014 - 2040 September 1, 2020
Series 2012A $3,110,000 3.50% to 4.10% 2027 - 2040 September 1, 2020
Series 2012B $1,590,000 3.00% to 4.75% 2014 - 2026 September 1, 2016
Road Series 2013 $1,390,000 2.00% to 3.00% 2014 - 2028 September 1, 2021
Series 2013 $1,270,000 3.00% to 5.00% 2015 - 2040 September 1, 2021
*Or any date thereafter; callable at par plus accrued interest to the date of redemption.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
49
NOTE 6. LONG-TERM DEBT – CONTINUED
West Ranch Management District – Continued
Annual debt service requirements for the District’s bonds are as follows:
Year Ending
July 31, Principal Interest Total
2015 330,000$ 672,602$ 1,002,602$
2016 365,000 662,445 1,027,445
2017 375,000 651,738 1,026,738
2018 390,000 640,485 1,030,485
2019 405,000 628,282 1,033,282
2020 - 202 2,275,000 2,904,845 5,179,845
2025 - 2029 2,820,000 2,379,077 5,199,077
2030 - 2034 3,020,000 1,733,228 4,753,228
2035 - 2039 3,850,000 922,476 4,772,476
2040 - 2041 1,825,000 89,512 1,914,512
15,655,000$ 11,284,690$ 26,939,690$
The District’s bonds are payable from the proceeds of an ad valorem tax levied upon all
property within the District subject to taxation, without limitation as to rate or amount.
Long-term liability activity of the West Ranch Management District for the year ended
July 31, 2014, was as follows:
Balance Balance Due
Beginning End of Within One
of Year Increase Decrease Year Year
Component unit
General obligation bonds 14,610,000$ 1,270,000$ (225,000)$ 15,655,000$ 330,000$
Discount on bond issuance (279,352) (38,100) 6,703 (310,749) -
Developer advances 40,000 - - 40,000 -
Due to developer - 1,111,742 - 1,111,742 -
Total component unit 14,370,648$2,343,642$ (218,297)$ 16,495,993$ 330,000$
Developers of the District have constructed underground utilities on behalf of the District.
The District's engineer estimates reimbursable costs for completed projects are
$1,111,742. Additionally, a developer of the District has advanced $40,000 to the
District for operating expenses. The District has agreed to reimburse the developers for
these amounts, plus interest, to the extent approved by the Texas Commission on
Environmental Quality from the proceeds of future bond sales. These amounts have
been recorded in the financial statements as long-term liabilities.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
50
NOTE 7. RESTRICTED ASSETS
The balances of the restricted asset accounts in the enterprise fund are as follows:
Cash and investments:
Customer deposits 375,382$
Construction 90,267
Construction - 2006 bonds 1,242,669
Construction - 2009 bonds 451,791
Debt service reserve 871,465
Total restricted assets 3,031,574$
NOTE 8. EMPLOYEE RETIREMENT SYSTEM
Plan Description
The City provides pension benefits for all of its full-time employees through a
non-traditional, joint contributory, hybrid defined benefit plan in the state-wide Texas
Municipal Retirement System (TMRS), an agent multiple-employer public employee
retirement system. The plan provisions that have been adopted by the City are within
the options available in the governing state statutes of TMRS.
TMRS issues a publicly available comprehensive annual financial report that includes
financial statements and required supplementary information (RSI) for TMRS; the report
also provides detailed explanations of the contributions, benefits and actuarial methods
and assumptions used by the System. This report may be obtained from TMRS’ website
at www.TMRS.com.
Benefits
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 at least 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%) 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.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
51
NOTE 8. EMPLOYEE RETIREMENT SYSTEM – CONTINUED
Benefits – Continued
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 ages 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.
Plan provisions for the City were as follows:
Plan Year Plan Year
2013 2014
Employee deposit rate 7.00% 7.00%
Matching ratio (city to employee) 2 to 1 2 to 1
Years required for vesting 5 5
100% Repeating, 100% Repeating,
Transfers Transfers
50% of 50% of
CPI Repeating CPI Repeating
60/5,0/20
Updated Service Credit
Annuity Increase (to retirees)
Service retirement eligibility
(expressed as age / years of service) 60/5,0/20
Contributions
Under the state law governing TMRS, the contribution rate for each city is determined
annually by the actuary, using the Entry Age Normal (EAN) cost method (EAN was first
used in the December 31, 2013 valuation; previously, the Projected Unit Credit actuarial
cost method had been used). This rate consists of the normal cost contribution rate and
the prior service cost contribution rate, which is calculated to be a level percent of payroll
from year to year. The normal cost contribution rate for an employee is the contribution
rate which, if applied to a member’s compensation throughout their period of anticipated
covered service with the municipality, would be sufficient to meet all benefits payable on
their behalf. The salary-weighted average of the individual rates is the total normal cost
rate. The prior service contribution rate amortizes the unfunded (overfunded) actuarial
liability (asset) over the applicable period for that city. Both the normal cost and prior
service contribution rates include recognition of the projected impact of annually
repeating benefits, such as Updated Service Credits and Annuity Increases.
The City contributes to the TMRS Plan at an actuarially determined 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 serves as the basis for the rate and the calendar year when
the rate goes into effect.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
52
NOTE 8. EMPLOYEE RETIREMENT SYSTEM – CONTINUED
Contributions – Continued
The annual pension cost and net pension obligation are as follows:
Annual required contribution (ARC) 1,847,375$
Interest on net pension obligation 44,709
Adjustment to the ARC (39,968)
Annual pension cost (APC) 1,852,116
Contributions made (1,847,375)
Increase in net pension obligation 4,741
Net pension obligation, beginning of year 638,703
Net pension obligation, end of year 643,444$
City historical data is as follows:
Annual Actual Percentage Net Pension
Fiscal Pension Cost Contribution of APC Obligation
Year (APC) Made Contributed at September 30
2012 1,780,547$ 1,773,895$ 99.6% 633,108$
2013 1,796,817 1,791,222 99.7% 638,703
2014 1,852,116 1,847,375 99.7% 643,444
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
53
NOTE 8. EMPLOYEE RETIREMENT SYSTEM – CONTINUED
Contributions – Continued
The required contribution rates for fiscal year 2014 were determined as part of the
December 31, 2011 and 2012 actuarial valuations. Additional information as of the
latest actuarial valuation, December 31, 2013, also follows:
Valuation date 12/31/2011 12/31/2012 12/31/2013
Actuarial cost method Projected Unit
Credit
Projected Unit
Credit Entry Age Normal
Actuarial assumptions:
Investment rate of return * 7.00% 7.00% 7.00%
* Includes inflation at 3.00% 3.00% 3.00%
Cost-of-living adjustments 1.50% 1.50% 1.50%
Level Percent
of Payroll
27.0 years:
closed period
30 years
10-year
Smoothed Market
Varies by age
and service
Amortization method
GASB 25 Equivalent Single
Amortization Period
Level Percent
of Payroll
Level Percent
of Payroll
Projected salary increases * Varies by age
and service
Varies by age
and service
Asset valuation method 10-year
Smoothed Market
Amortization period for new
gains/losses
27.0 years:
closed period
25.9 years:
closed period
30 years 30 years
10-year
Smoothed Market
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
54
NOTE 8. EMPLOYEE RETIREMENT SYSTEM – CONTINUED
Funded Status and Funding Progress
In October 2013, the TMRS Board approved actuarial changes in (a) the funding method
from Projected Unit Credit to Entry Age Normal, (b) the post-retirement mortality
assumptions used in calculating liabilities and contribution rates and in the development
of the Annuity Purchase Rate factors, and (c) the amortization policy. These actuarial
changes were effective with the December 31, 2013 actuarial valuation. For a complete
description of the new actuarial cost method and assumptions, please see the
December 31, 2013 TMRS Comprehensive Annual Financial Report (CAFR).
The funded status as of December 31, 2013, the most recent actuarial valuation date, is
presented as follows:
Actuarial UAAL as a
Actuarial Actuarial Accrued Unfunded Percentage
Valuation Value of Liability Funded AAL Covered of Covered
Date Assets (AAL) Ratio (UAAL) Payroll Payroll
(1) (2) (3) (4) (5) (6)
(1) / (2) (2) - (1) (4) / (5)
12/31/2013 $47,336,543 $58,341,940 81.1% $11,005,397 $11,615,396 94.7%
Actuarial valuations involve estimates of the value of reported amounts and assumptions
about the probability of events far into the future. Actuarially determined amounts are
subject to continual revision as actual results are compared to past expectations and
new estimates are made about the future.
Actuarial calculations are based on the benefits provided under the terms of the
substantive plan in effect at the time of each valuation, and reflect a long-term
perspective. Consistent with that perspective, actuarial methods and assumptions used
include techniques that are designed to reduce short-term volatility in actuarial accrued
liabilities and the actuarial value of assets.
The schedule of funding progress, presented as Required Supplementary Information
following the notes to the financial statements, presents multi-year trend information
about whether the actuarial value of plan assets is increasing or decreasing over time
relative to the actuarial accrued liability of benefits.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
55
NOTE 9. POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS
Retiree Insurance Coverage
The City Council has established a single-employer medical, dental, and vision
insurance defined benefit plan for retirees. Eligible retirees are provided insurance
benefits at a set premium rate equal to the City’s employees’ rate. Eligible retirees may
also cover their dependents. Retirees are responsible for paying the premium cost
associated with their coverage. A retiree is defined as a person who is receiving lifetime
monthly TMRS pension benefit payments and retired directly from active employment at
the City. The City will stop insurance coverage on the retiree and all dependents on the
last day of the month the retiree fails to submit the required premium payment or upon
death of the employee. The retiree health plan does not issue a publicly available
financial report.
Retirement Benefit Eligibility
The retiring employee must be 60 years of age with 5 years of service or have
20 years of service at any age. Employees terminating before normal retirement
conditions are met are not eligible for retiree health plans. Retirees are not required
to enroll in Medicare Parts A and B once eligible.
Plan Participants
Permanent full-time employees and any dependents covered on the employee’s last
date of employment are eligible for coverage. Dependents are not eligible for
coverage unless the retired employee is covered. Should the retiring employee
reject any of the plans, he/she is never eligible to re-enroll in the rejected plans. At
the time of coverage election, the retiring employee has the option of cancelling
coverage on any dependent with the understanding that that dependent can never
be re-enrolled; new dependents cannot be added to the plan.
Medical Plan
The retiring employee is eligible to retain the medical plan the employee had on the
last day of employment. Any dependents covered at that time may remain on the
retired employee’s plan as long as the retired employee remains active on the plan.
All terms and conditions of the plan are the same as active employees.
Dental Plan
The retiring employee is eligible to retain the dental plan the employee had on the
last day of employment. Any dependents covered at that time may remain on the
retired employee’s plan as long as the retired employee remains active on the plan.
All terms and conditions of the plan are the same as active employees.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
56
NOTE 9. POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS – CONTINUED
Retiree Insurance Coverage – Continued
Vision Plan
The retiring employee is eligible to retain the vision plan the employee had on the
last day of employment. Any dependents covered at that time may remain on the
retired employee’s plan as long as the retired employee remains active on the plan.
All terms and conditions of the plan are the same as active employees.
Premiums Paid
All premiums are 100% paid monthly by the retiree. The City does not contribute to
any of the plans once an employee retires.
Funding Policy and Annual OPEB Cost
The City’s annual other post-employment benefits (OPEB) cost is calculated based
on the annual required contribution of the employer (ARC), an amount actuarially
determined in accordance with the parameters of GASB Statement No. 45. The
ARC represents a level of accrual that, if paid on an ongoing basis, is projected to
cover the normal cost each year and to amortize the unfunded actuarial liabilities
(or funding excesses) over a period not to exceed thirty years. The City’s annual
OPEB cost for the fiscal year ending September 30, 2014 is as follows:
Annual required contribution 86,319$
Interest on OPEB obligation 30,858
Adjustment to ARC (28,590)
Annual O PEB cost (expense) end of year 88,587
Net estimated employer contributions 18,135
Increase in net OPEB obligation 70,452
Net OPEB obligation – as of beginning of the year 685,731
Net OPEB obligation – as of end of year 756,183$
City historical data is as follows:
Annual Actual Percentage Net OPEB
Fiscal OPEB Contribution of OPEB Obligation
Year Cost Made Cost Contributed at September 30
2012 83,150$ 43,719$ 53% 616,197$
2013 85,843 16,309 19% 685,731
2014 88,587 18,135 20% 756,183
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
57
NOTE 9. POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS – CONTINUED
Retiree Insurance Coverage – Continued
Funding Status and Funding Progress
The funded status of the City’s retiree health care plan, under GASB Statement
No. 45 as of December 31, 2012, the most recent valuation date, is as follows:
Actuarial UAAL as a
Actuarial Actuarial Accrued Unfunded Percentage
Valuation Value of Liability Funded AAL Covered of Covered
Date Assets (AAL) Ratio (UAAL) Payroll Payroll
(1) (2) (3) (4) (5) (6)
(1) / (2) (2) - (1) (4) / (5)
12/31/2012 $0 $676,248 0.00% $676,248 $11,513,756 5.87%
Under the reporting parameters, the City’s retiree health care plan is 0% funded with
an estimated actuarial accrued liability exceeding actuarial assets by $676,248 at
December 31, 2012. As of the most recent valuation, the ratio of the unfunded
actuarial accrued liability to annual covered payroll is 5.87%.
The schedule of funding progress, presented as Required Supplementary
Information following the notes to the financial statements, presents multi-year trend
information about whether the actuarial value of plan assets is increasing or
decreasing over time relative to the actuarial accrued liability of benefits.
Actuarial Methods and Assumptions
The Projected Unit Credit actuarial cost method is used to calculate the GASB ARC
for the City’s retiree health care plan. Using the plan benefits, the present health
premiums and a set of actuarial assumptions, the anticipated future payments are
projected. The projected unit credit method then provides for a systematic funding
for these anticipated payments. The yearly ARC is computed to cover the cost of
benefits being earned by covered members as well as to amortize a portion of the
unfunded accrued liability.
Projections of health benefits are based on the plan as understood by the City and
include the types of benefits in force at the valuation date and the pattern of sharing
benefit costs between the City and the City’s employees to that point. Actuarial
calculations reflect a long-term perspective and employ methods and assumptions
that are designed to reduce short-term volatility in actuarial accrued liabilities and the
actuarial value of assets.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
58
NOTE 9. POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS – CONTINUED
Retiree Insurance Coverage – Continued
Actuarial Methods and Assumptions – Continued
Significant methods and assumptions were as follows:
Investment rate of return 4.5%, net of expenses
Inflation rate 3.00%
Healthcare cost trend rates 4.5% to 7.5%
Actuarial cost method Projected Unit Credit Cost Method
Amortization method Level Percent of Payroll over an
open period of 30 years
Payroll Growth Rate 3.00%
Actuarial valuations involve estimates of the value of reported amounts and
assumptions about the probability of events in the future. Amounts determined
regarding the funded status and the annual required contributions of the City’s retiree
health care plan are subject to continual revision as actual results are compared to
past expectations and new estimates are made about the future.
Supplemental Death Benefits Fund
Plan Description
The City also participates in the cost sharing multiple-employer defined benefit
group-term life insurance plan operated by the Texas Municipal Retirement System
(TMRS) known as the Supplemental Death Benefits Fund (SDBF). The City elected,
by ordinance, to provide group-term life insurance coverage to both current and
retired employees. The City may terminate coverage under and discontinue
participation in the SDBF by adopting an ordinance before November 1 of any year
to be effective the following January 1.
The death benefit for active employees provides a lump-sum payment approximately
equal to the employee’s annual salary (calculated based on the employee’s actual
earnings, for the 12-month period preceding the month of death); retired employees
are insured for $7,500; this coverage is an “other postemployment benefit,” or OPEB.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
59
NOTE 9. POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS – CONTINUED
Supplemental Death Benefits Fund – Continued
Contributions
The City contributes to the SDBF at a contractually required rate as determined by
an annual actuarial valuation. The rate is equal to the cost of providing one-year
term life insurance. The funding policy for the SDBF program is to assure that
adequate resources are available to meet all death benefit payments for the
upcoming year; the intent is not to pre-fund retiree term life insurance during
employees’ entire careers.
The City’s contributions to the TMRS SDBF for the years ended
September 30, 2014, 2013 and 2012 were $20,884, $19,708, and $21,455,
respectively, which equaled the required contributions each year.
NOTE 10. 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, 2014, 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
open 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, 2014, the City believed the amounts paid on workers’ compensation would
not change significantly from the amounts recorded.
During the year ended September 30, 2014, employees of the City were covered by a health
and dental insurance plan. The City pays 90% of the monthly premium for employees
choosing individual coverage only. The City pays 70% of the monthly premium for
employees choosing to cover themselves and their dependents.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
60
NOTE 11. COMMITMENTS AND CONTINGENCIES
Southeast Water Purification Plant
The City has entered into a contract with the City of Houston for constructing, operating
and maintaining a water purification plant known as Southeast Water Purification Plant.
The City’s pro rata share of the actual pumping construction costs is 1.33 percent.
The City began receiving water from the plant on October 15, 1990. The City is billed on
a monthly basis for the actual gallons of water received times the City’s pro rata share of
actual costs. At the end of each quarter, the City of Houston computes the total
operation and maintenance expense for the quarter just ended, recalculates the cost per
one thousand gallons, and adjusts previous billings on the next invoice. As of
September 30, 2014, the City has purchased water capacity with an indefinite life of
$19,716,695.
The relationship of the parties is of a fiduciary character. No partnership or joint venture
is created by this contract.
Federal and State Programs
The City recognizes grant monies received as reimbursement for costs incurred in
certain federal and state programs it administers as revenue. Amounts received or
receivable from grantor agencies are subject to audit and adjustment by grantor
agencies. Any disallowed claims, including amounts already collected, may constitute a
liability of the applicable funds. The amount, if any, of expenditures which may be
disallowed by the grantor cannot be determined at this time although the City expects
such amounts, if any, to be immaterial.
Litigation
The City is a defendant in various lawsuits. The outcome and the impact of these
lawsuits is not presently determinable.
NOTE 12. SUBSEQUENT EVENTS
In December 2014, the City sold $8,805,000 in General Obligation Refunding Bonds, Series
2014 (the Series 2014 Bonds). The bonds mature in varying amounts from 2015 through
2028 with coupons ranging from 2% to 4%. Proceeds from the sale of the bonds will be
used to refund $2,995,000 of Permanent Improvement and Refunding Bonds, Series 2005
and $6,085,000 of Waterworks and Sewer System Revenue and Refunding Bonds, Series
2006, and to pay the costs of issuance of the Series 2014 Bonds.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
61
NOTE 12. SUBSEQUENT EVENTS – CONTINUED
In January 2015, the City sold $9,595,000 in General Obligation Bonds, Series 2015
(the Series 2015 Bonds). The bonds mature in varying amounts from 2016 through 2030
with coupons ranging from 2% to 3%. Proceeds from the sale of the bonds will be used for
construction and improvements to City parks and the purchase of land for parks,
construction and improvements to City fire stations and library, construction and
improvements to City streets, and to pay the costs of issuance of the Series 2015 Bonds.
On September 24, 2014, the West Ranch Management District issued its Series 2014
unlimited tax road bonds in the amount of $2,235,000 at a net effective interest rate of
3.610479 percent. The bonds were sold to finance road construction projects within the
District. In November 2014, the West Ranch Management District issued a $660,000 Bond
Anticipation Note (BAN). The BAN will be retired with the issuance of Series 2015 bonds.
REQUIRED SUPPLEMENTARY
INFORMATION
(Unaudited)
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF FUNDING PROGRESS FOR PARTICIPATION
IN TEXAS MUNICIPAL RETIREMENT SYSTEM
SEPTEMBER 30, 2014
62
Actuarial Actuarial UAAL as a
Actuarial Value of Accrued Unfunded AAL Covered Percentage of
Valuation Date Assets Liability (AAL) Funded Ratio (UAAL) Payroll Covered Payroll
(1) (2) (3) (4) (5) (6)
(1) / (2) (2) - (1) (4) / (5)
12/31/2011 39,062,666$ 49,224,949$ 79.4% 10,162,283$ 11,521,562$ 88.2%
12/31/2012 43,044,755 52,372,967 82.2 9,328,212 11,513,756 81.0
12/31/2013 47,336,543 58,341,940 81.1 11,005,397 11,615,396 94.7
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF FUNDING PROGRESS
POST EMPLOYMENT BENEFITS PLAN OTHER THAN PENSIONS
SEPTEMBER 30, 2014
63
Actuarial Actuarial UAAL as a
Actuarial Value of Accrued Unfunded AAL Covered Percentage of
Valuation Date Assets Liability (AAL) Funded Ratio (UAAL) Payroll Covered Payroll
(1) (2) (3) (4) (5) (6)
(1) / (2) (2) - (1) (4) / (5)
12/31/2011 -$ 610,795$ 0.0% 610,795$ 11,160,286$ 5.5%
12/31/2012 - 676,248 0.0 676,248 11,513,756 5.9
12/31/2013 * - 676,248 0.0 676,248 11,513,756 5.9
* In accordance with GASB Statement No. 45, the City has an actuarial valuation performed every 2 years,
which was performed as of 12/31/12. Therefore data for 2013 is the same as 2012.
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2014
64
Variance With
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues
Property taxes 13,315,899$ 13,315,899$ 13,395,956$ 80,057$
Sales and alcohol taxes 4,153,547 4,153,547 4,726,283 572,736
Franchise taxes 1,529,086 1,543,900 1,673,615 129,715
Fines and forfeitures 921,406 921,406 828,637 (92,769)
Permits and fees 1,169,327 1,187,452 1,327,464 140,012
Intergovernmental 340,279 383,909 548,262 164,353
Investment earnings 71,690 71,690 106,134 34,444
Donations 17,000 68,125 72,940 4,815
Miscellaneous 11,641 39,659 54,989 15,330
Total revenues 21,529,875 21,685,587 22,734,280 1,048,693
Expenditures
General government
Mayor and council
Supplies 3,497 3,497 3,229 268
Other services and charges 264,605 264,605 215,572 49,033
Total mayor and council 268,102 268,102 218,801 49,301
City manager
Personnel services 426,407 426,407 412,696 13,711
Supplies 15,244 29,104 28,411 693
Other services and charges 76,786 73,640 46,156 27,484
Total city manager 518,437 529,151 487,263 41,888
City secretary
Personnel services 379,699 379,699 361,387 18,312
Supplies 12,826 12,208 5,806 6,402
Repairs and maintenance 140 140 - 140
Other services and charges 68,773 69,641 53,614 16,027
Total city secretary 461,438 461,688 420,807 40,881
Administrative services
Personnel services 788,816 788,816 712,968 75,848
Supplies 9,822 10,139 5,744 4,395
Other services and charges 207,268 210,869 203,585 7,284
Total administrative services 1,005,906 1,009,824 922,297 87,527
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2014
(CONTINUED)
65
Variance With
Final Budget
Actual Positive
Original Final Amounts (Negative)
General government - continued
Human resources
Personnel services 341,870 341,870 317,722 24,148
Supplies 15,655 14,779 10,942 3,837
Other services and charges 58,346 61,620 58,003 3,617
Total human resources 415,871 418,269 386,667 31,602
Tax
Other services and charges 214,478 218,643 215,989 2,654
Total tax 214,478 218,643 215,989 2,654
Economic development
Personnel services 153,654 153,727 150,110 3,617
Supplies 13,325 13,325 4,382 8,943
Other services and charges 101,259 105,686 72,349 33,337
Total economic development 268,238 272,738 226,841 45,897
Municipal court
Personnel services 536,338 536,338 411,228 125,110
Supplies 16,206 15,307 8,610 6,697
Other services and charges 40,530 41,630 26,910 14,720
Total municipal court 593,074 593,275 446,748 146,527
Computer services
Personnel services 392,211 394,911 390,948 3,963
Supplies 9,230 21,524 16,208 5,316
Repairs and maintenance 68,830 73,002 64,214 8,788
Other services and charges 327,215 322,442 286,424 36,018
Capital outlay 16,000 34,000 11,738 22,262
Total computer services 813,486 845,879 769,532 76,347
Risk management
Personnel services 106,464 106,464 101,169 5,295
Supplies 11,879 9,496 2,346 7,150
Other services and charges 14,100 12,097 7,550 4,547
Total risk management 132,443 128,057 111,065 16,992
Total general government 4,691,473 4,745,626 4,206,010 539,616
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2014
(CONTINUED)
66
Variance With
Final Budget
Actual Positive
Original Final Amounts (Negative)
Public safety
Police services
Personnel services 6,209,324 6,213,849 6,150,138 63,711
Supplies 449,092 431,690 370,553 61,137
Repairs and maintenance 152,407 127,580 107,868 19,712
Other services and charges 388,447 450,569 424,865 25,704
Capital outlay 84,421 72,651 64,422 8,229
Total police services 7,283,691 7,296,339 7,117,846 178,493
Communications
Personnel services 971,556 996,101 991,756 4,345
Supplies 5,722 5,304 4,045 1,259
Repairs and maintenance 27,784 31,373 21,119 10,254
Other services and charges 17,798 21,192 15,444 5,748
Capital outlay 274,900 274,900 274,900 -
Total communications 1,297,760 1,328,870 1,307,264 21,606
Animal control
Personnel services 250,898 263,598 262,760 838
Supplies 28,922 31,471 30,880 591
Repairs and maintenance 2,477 1,887 1,882 5
Other services and charges 79,447 83,127 79,672 3,455
Capital outlay - 8,900 8,838 62
Total animal control 361,744 388,983 384,032 4,951
Fire and EMS
Personnel services 594,222 596,999 561,963 35,036
Supplies 38,482 75,931 72,245 3,686
Repairs and maintenance 6,694 7,244 6,430 814
Other services and charges 1,361,457 1,349,150 1,340,431 8,719
Capital outlay - 278,631 150,924 127,707
Total fire and EMS 2,000,855 2,307,955 2,131,993 175,962
Total public safety 10,944,050 11,322,147 10,941,135 381,012
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2014
(CONTINUED)
67
Variance With
Final Budget
Actual Positive
Original Final Amounts (Negative)
Public works
Administration
Personnel services 289,341 316,875 268,435 48,440
Supplies 1,621 1,621 1,471 150
Other services and charges 1,929 4,614 3,260 1,354
Total administration 292,891 323,110 273,166 49,944
Streets
Personnel services 542,326 583,857 528,074 55,783
Supplies 77,131 84,664 75,889 8,775
Repairs and maintenance 619,300 461,506 72,464 389,042
Other services and charges 413,251 418,838 415,854 2,984
Capital outlay - 860,250 192,156 668,094
Total streets 1,652,008 2,409,115 1,284,437 1,124,678
Drainage
Personnel services 302,144 267,884 262,351 5,533
Supplies 17,493 15,832 10,470 5,362
Repairs and maintenance 37,316 45,481 43,299 2,182
Other services and charges 5,866 9,362 8,420 942
Total drainage 362,819 338,559 324,540 14,019
Total public works 2,307,718 3,070,784 1,882,143 1,188,641
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2014
(CONTINUED)
68
Variance With
Final Budget
Actual Positive
Original Final Amounts (Negative)
Community development
Administration
Personnel services 537,534 422,343 405,546 16,797
Supplies 9,410 8,357 5,237 3,120
Repairs and maintenance 637 637 154 483
Other services and charges 12,218 12,363 8,573 3,790
Total administration 559,799 443,700 419,510 24,190
Planning and zoning
Personnel services 222,244 312,622 279,581 33,041
Supplies 1,585 1,345 714 631
Other services and charges 11,804 12,194 10,083 2,111
Total planning and zoning 235,633 326,161 290,378 35,783
Engineering
Personnel services 11,991 11,091 - 11,091
Supplies 2,222 2,072 1,585 487
Repairs and maintenance 530 530 41 489
Other services and charges 56,921 78,050 33,139 44,911
Capital outlay - 5,695 5,694 1
Total engineering 71,664 97,438 40,459 56,979
Inspection
Personnel services 383,863 339,644 326,976 12,668
Supplies 13,644 15,164 8,486 6,678
Repairs and maintenance 1,930 1,930 336 1,594
Other services and charges 36,523 32,099 12,531 19,568
Total inspection 435,960 388,837 348,329 40,508
Total community development 1,303,056 1,256,136 1,098,676 157,460
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2014
(CONTINUED)
69
Variance With
Final Budget
Actual Positive
Original Final Amounts (Negative)
Community services
Administration
Personnel services 268,265 268,158 267,453 705
Supplies 5,116 2,941 2,740 201
Other services and charges 27,764 25,353 25,241 112
Total administration 301,145 296,452 295,434 1,018
Parks and recreation
Personnel services 874,215 884,829 862,422 22,407
Supplies 124,028 167,419 145,298 22,121
Repairs and maintenance 139,563 163,139 156,458 6,681
Other services and charges 609,210 660,043 637,259 22,784
Capital outlay - 278,726 49,861 228,865
Total parks and recreation 1,747,016 2,154,156 1,851,298 302,858
Swimming pool
Personnel services 54,007 49,339 45,301 4,038
Supplies 13,613 14,163 13,267 896
Repairs and maintenance 7,472 4,915 3,088 1,827
Other services and charges 31,673 34,960 30,476 4,484
Total swimming pool 106,765 103,377 92,132 11,245
Building operations
Supplies 29,585 31,023 26,912 4,111
Repairs and maintenance 139,217 117,495 94,979 22,516
Other services and charges 531,651 513,086 461,178 51,908
Capital outlay - 30,720 - 30,720
Total building operations 700,453 692,324 583,069 109,255
Total community services 2,855,379 3,246,309 2,821,933 424,376
Library
Personnel services 876,341 876,341 856,330 20,011
Supplies 156,213 217,644 196,149 21,495
Repairs and maintenance 1,100 1,140 804 336
Other services and charges 22,380 32,502 29,760 2,742
Total library 1,056,034 1,127,627 1,083,043 44,584
Total expenditures 23,157,710 24,768,629 22,032,940 2,735,689
Excess (deficiency) of
revenues over expenditures (1,627,835) (3,083,042) 701,340 3,784,382
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2014
(CONTINUED)
70
Variance With
Final Budget
Actual Positive
Original Final Amounts (Negative)
Other financing sources
Insurance recoveries 25,342 41,794 28,886 (12,908)
Transfers in 1,335,094 1,335,094 1,183,194 (151,900)
Total other financing sources 1,360,436 1,376,888 1,212,080 (164,808)
Net change in fund balances (267,399) (1,706,154) 1,913,420 3,619,574
Fund balance, beginning of year 10,606,160 10,606,160 10,606,160 -
Fund balance, end of year 10,338,761$ 8,900,006$ 12,519,580$ 3,619,574$
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
71
NOTE 1. BUDGETARY CONTROL
The City’s Code of Ordinances establishes the following framework for the preparation and
format of the City’s annual budget:
Content
The budget shall provide a complete financial plan of all City funds and activities and,
except as required by law or this Charter, shall be in such form as the City Manager
deems desirable or the Council may require. The budget shall begin with a clear general
summary of its contents; shall show in detail all estimated income, the proposed property
tax levy, and all proposed expenditures for the ensuing fiscal year, including debt service
and an itemized estimate of the expense of conducting each Department of the City.
The proposed budget expenditures shall not exceed the total of estimated income. It
shall also include, in separate sections:
(1) Tax levies, rates, and collections for the preceding five years.
(2) The amount required for interest on the City's debts, for sinking fund and for
maturing serial bonds.
(3) The total amount of outstanding City debts, with a schedule of maturities on bond
issues.
(4) Anticipated net surplus or deficit for the ensuing fiscal year of each utility owned
or operated by the City and the proposed method of its disposition, subsidiary
budgets for each such utility giving detailed income and expenditure information
shall be attached as appendices to the budget.
(5) A capital program, which may be revised and extended each year to indicate
capital improvements pending or in process of construction or acquisition, and
shall include the following items which shall be attached as appendices to the
budget:
(a) A summary of proposed programs;
(b) A list of all capital improvements which are proposed to be undertaken during
the five fiscal years next ensuing, with appropriate supporting information as
to the necessity for such improvements;
(c) Cost estimates, method of financing and recommended time schedules for
each such improvement; and
(d) The estimated annual cost of operating and maintaining the facilities to bid
constructed or acquired.
(6) Such other information as may be required by the Council.
Submission
On or before the first day of August of each year, the City Manager shall submit to the
Council a proposed budget and an accompanying message. The Council shall review
the proposed budget and revise as deemed appropriate prior to general circulation for
public hearing.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
72
NOTE 1. BUDGETARY CONTROL – CONTINUED
Public Notice and Hearing
The Council shall post in the City Hall and publish in the official newspaper a general
summary of their [its] proposed budget and a notice stating:
(1) The times and places where copies of the message and budget are available for
inspection by the public; and
(2) The time and place, not less than ten nor more than 30 days after such
publication, for a public hearing on the budget.
Amendment Before Adoption
After the public hearing, the Council may adopt the budget with or without amendment.
In amending the budget, it may add or increase programs or amounts and may delete or
decrease any programs or amounts, except expenditures required by law or for debt
service or for estimated cash deficit, provided that no amendment to the budget shall
increase the authorized expenditures to an amount greater than the total of estimated
income plus funds available from prior years.
Adoption
The Council shall adopt its annual budget inclusive of all governmental and proprietary
funds by ordinance, on one reading, by the 15th day of September or as soon thereafter
as practical. The City legally adopts annual budgets for the general, special revenue
and debt service funds. The budgets are adopted on a basis consistent with generally
accepted accounting principles.
If the Council fails to adopt an annual budget before the start of the fiscal year to which it
applies, appropriations of the last budget adopted shall be considered as adopted for the
current fiscal year on a month to month, pro rata basis, until the annual budget is
adopted. Adoption of the budget shall require an affirmative vote of at least a majority of
all members of the Council. Adoption of the budget shall constitute appropriations of the
amounts specified therein as expenditures from the funds indicated.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
73
NOTE 1. BUDGETARY CONTROL – CONTINUED
Amendments after Adoption
At any time during the fiscal year, the City Manager may transfer part or all of any
unencumbered appropriation balance among programs within a department, division, or
office, and, upon written request by the City Manager, the Council may 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.
COMBINING AND INDIVIDUAL
FUND STATEMENTS AND SCHEDULES
NON MAJOR GOVERNMENTAL FUNDS
74
SPECIAL REVENUE FUNDS
Special revenue funds are used to account for specific revenues that are legally restricted to
expenditures 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 capital outlays and debt repayments.
EDA Grant Fund – This fund is used to account for receipts and expenditures related to
the U.S. Department of Commerce Economic Development Administration grant
awarded to the City in fiscal year 2008-2009.
TDRA Grant Fund – This fund is used to account for receipts and expenditures related
to the Texas Community Development Block Grant awarded to the City in fiscal year
2009-2010.
Sidewalk Installation Fund – This fund is used to account for receipts from developers
to install sidewalks in neighborhood developments.
Park Land Dedication Fund – This fund is used to account for receipts from developers
to build or enhance neighborhood and community parks.
Court Security and Technology Fund – This fund accounts for revenues that are
restricted for court technology and building security. In 1999, the state legislature
authorized a court technology and court security fee for municipal court fines.
CAPITAL PROJECT FUNDS
Capital project funds are used to account for the acquisition and construction of major
capital facilities other than those financed by proprietary funds and trust funds.
Bond Construction Fund – This fund is used to account for the construction of public
safety facilities, and park, streets and drainage improvements that are funded by the
proceeds from Permanent Improvement Bonds.
PERMANENT FUND
The Permanent Fund is used to report resources that are legally restricted to the extent that
only earnings, not principal, may be used for purposes that support the City’s programs.
1776 Park Fund – This fund is used to account for assets held by the City in a trustee
capacity and the earnings benefit this City Park.
CITY OF FRIENDSWOOD, TEXAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2014 75 Capital Projects PermanentCourt Total NonmajorPolice Fire/EMS EDA TDRA Sidewalk Park Land Security and Bond GovernmentalInvestigation Donation Grant Grant Installation Dedication Technology Construction 1776 Park FundsCash and investments 63,363$ 87,915$ 456,873$ - $ 3,241$ 131,825$ 269,822$ 262,904$ 31,214$ 1,307,157$ Receivables, net of allowanceCustomer accounts - 30,998 - - - - - - - 30,998 Other 47 46 - - 4 117 4,163 - 27 4,404 Receivable from other governments - - 501,200 720,875 - - - - - 1,222,075 Total assets 63,410$ 118,959$ 958,073$ 720,875$ 3,245$ 131,942$ 273,985$ 262,904$ 31,241$ 2,564,634$ LIABILITIESAccounts payable 5,226$ 35,922$ 45,174$ - $ - $ 10,000$ - $ 244,131$ - $ 340,453$ Accrued liabilities - - 12,899 36,044 - - 311 3,146 - 52,400 Due to other funds - - 900,000 684,831 - - - 254,705 - 1,839,536 Total liabilities 5,226 35,922 958,073 720,875 - 10,000 311 501,982 - 2,232,389 Deferred Inflows of ResourcesCourt fines - - - - - - 3,912 - - 3,912 Total deferred inflows of resources - - - - - - 3,912 - - 3,912 FUND BALANCESNonspendablePermanent fund - - - - - - - - 31,241 31,241 RestrictedState and/or federal statute 58,184 - - - - - 269,762 - - 327,946 Fire/EMS donations - 83,037 - - - - - - - 83,037 City ordinances - - - - 3,245 121,942 - - - 125,187 Unassigned - - - - - - - (239,078) - (239,078) Total fund balances 58,184 83,037 - - 3,245 121,942 269,762 (239,078) 31,241 328,333 Total liabilities, deferred inflows of resources, and fund balances 63,410$ 118,959$ 958,073$ 720,875$ 3,245$ 131,942$ 273,985$ 262,904$ 31,241$ 2,564,634$ ASSETSLIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCESSpecial Revenue Funds
CITY OF FRIENDSWOOD, TEXAS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED SEPTEMBER 30, 2014 76 Capital Projects PermanentTotalCourt NonmajorPolice Fire/EMS EDA TDRA Sidewalk Park Land Security and Bond GovernmentalInvestigation Donation Grant Grant Installation Dedication Technology Construction 1776 Park FundsRevenuesFines and forfeitures - $ - $ - $ - $ - $ - $ 31,620$ - $ - $ 31,620$ Permits and fees - - - - 3,234 55,200 - - - 58,434 Intergovernmental 40,813 - 292,533 909,843 - - - - - 1,243,189 Investment earnings 182 114 - - 11 470 891 262 104 2,034Donations - 266,226 - - - 10,000 - - - 276,226 Total revenues 40,995 266,340 292,533 909,843 3,245 65,670 32,511 262 104 1,611,503 ExpendituresCurrent:General government - - - 74,610 - - 37,261 - - 111,871 Public safety 23,436 134,088 - - - - - - - 157,524 Capital outlay 28,441 - 292,533 835,233 - 72,028 11,504 501,982 - 1,741,721 Debt service:Principal - 108,313 - - - - - - - 108,313 Interest and fiscal charges - 16,644 - - - - - - - 16,644 Total expenditures 51,877 259,045 292,533 909,843 - 72,028 48,765 501,982 - 2,136,073 Other financing sources (uses)Proceeds from sale of capital assets 6,325 - - - - - - - - 6,325 Total other financing sources (uses) 6,325 - - - - - - - - 6,325 Net change in fund balances (4,557) 7,295 - - 3,245 (6,358) (16,254) (501,720) 104 (518,245) Fund balances, beginning of year 62,741 75,742 - - - 128,300 286,016 262,642 31,137 846,578 Fund balances, end of year 58,184$ 83,037$ - $ - $ 3,245$ 121,942$ 269,762$ (239,078)$ 31,241$ 328,333$ Special Revenue Funds
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE – BUDGET AND ACTUAL
FIRE/EMS DONATION FUND
YEAR ENDED SEPTEMBER 30, 2014
77
Variance With
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues
Interest income - $ - $ 114$ 114$
Donations 254,100 254,100 266,226 12,126
Total revenues 254,100 254,100 266,340 12,240
Expenditures
Current
Public safety 129,142 129,142 134,088 (4,946)
Debt service
Principal 109,570 108,314 108,313 1
Interest and fiscal charges 15,388 16,644 16,644 -
Total expenditures 254,100 254,100 259,045 (4,945)
Excess (deficiency) of revenues
over expenditures - - 7,295 7,295
Net change in fund balance - - 7,295 7,295
Fund balance, beginning of year 75,742 75,742 75,742 -
Fund balance, end of year 75,742$ 75,742$ 83,037$ 7,295$
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE – BUDGET AND ACTUAL
DEBT SERVICE FUND
YEAR ENDED SEPTEMBER 30, 2014
78
Variance With
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues
Property taxes 1,553,879$ 1,553,879$ 1,539,673$ (14,206)$
Interest income 1,294 1,294 949 (345)
Total revenues 1,555,173 1,555,173 1,540,622 (14,551)
Expenditures
Debt service
Principal 1,560,307 1,560,379 1,560,379 -
Interest and fiscal charges 646,642 646,570 646,074 496
Total expenditures 2,206,949 2,206,949 2,206,453 496
Excess (deficiency) of revenues
over expenditures (651,776) (651,776) (665,831) (14,055)
Other financing sources (uses)
Transfers in 616,150 616,150 616,150 -
Total other financing sources 616,150 616,150 616,150 -
Net change in fund balance (35,626) (35,626) (49,681) (14,055)
Fund balance, beginning of year 179,828 179,828 179,828 -
Fund balance, end of year 144,202$ 144,202$ 130,147$ (14,055)$
Budgeted Amounts
STATISTICAL SECTION
(Unaudited)
This part of the City of Friendswood, Texas’ comprehensive annual financial report
presents detailed information as a context for understanding what the information in the
financial statements, note disclosures, and required supplementary information says about
the government’s overall financial health.
FINANCIAL TRENDS INFORMATION - information to help the reader understand how the City's
financial performance and well-being have changed over time.
1 Net position by component
2 Changes in net position
3 Fund balances, governmental funds
4 Changes in fund balances, governmental funds
REVENUE CAPACITY INFORMATION - information to help the reader assess the City's most
significant local revenue source, the property tax.
5 Assessed value and taxable value of property
6 Direct and overlapping property tax rates
7 Principal property tax payers
8 Property tax levies and collections
DEBT CAPACITY INFORMATION - information to help the reader assess the affordability of the
City's current levels of outstanding debt and the City's ability to issue additional debt in the future.
9 Ratios of outstanding debt by type
10 Ratios of net general bonded debt outstanding
11 Direct and overlapping governmental activities debt
12 Legal debt margin information
13 Pledged-revenue coverage
DEMOGRAPHIC AND ECONOMIC INFORMATION - information to help the reader understand the
environment within which the City's financial activities take place, and to help make comparisons over
time and with other governments.
14 Demographic and economic statistics
15 Principal employers
OPERATING INFORMATION - service and infrastructure data to help the reader understand how the
information in the City's financial report relates to the services the City provides and the activities it
performs.
16 Full-time equivalent city government employees by function/program
17 Operating indicators by function/program
18 Capital asset statistics by function/program
Sources: Unless otherwise noted, the information in these schedules is derived from the
comprehensive annual financial reports for the relevant year.
STATISTICAL SECTION
(Unaudited)
79 Table 1City of FriendswoodNet Position by ComponentLast Ten Fiscal Years(accrual basis of accounting)(unaudited)2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Governmental activitiesNet investment in capital assets 32,533,863$ 32,849,446$ 71,777,140$ 70,591,236$ 69,313,348$ 70,480,334$ 66,580,049$ 65,582,783$ 65,056,180$ 65,404,791$ Restricted 1,576,829 2,034,157 2,391,482 2,773,910 2,461,510 1,977,801 922,874 872,869 718,275 653,496 Unrestricted 7,527,573 10,391,123 10,785,998 10,548,129 9,892,077 8,447,179 8,227,254 8,828,132 9,565,406 10,798,907 Total governmental activities net position 41,638,265$ 45,274,726$ 84,954,620$ 83,913,275$ 81,666,935$ 80,905,314$ 75,730,177$ 75,283,784$ 75,339,861$ 76,857,194$ Business-type activitiesNet investment in capital assets 16,823,526$ 16,815,130$ 16,884,376$ 20,375,620$ 21,122,644$ 19,565,756$ 26,251,346$ 25,618,823$ 22,961,547$ 24,495,816$ Restricted 445,086 41,057 162,218 27,246 93,526 593,597 731,410 786,600 176,882 90,395 Unrestricted 5,228,802 6,574,920 7,475,597 4,227,253 6,730,812 8,677,882 11,373,311 13,032,798 16,790,183 14,818,104 Total business-type activities net position22,497,414$ 23,431,107$ 24,522,191$ 24,630,119$ 27,946,982$ 28,837,235$ 38,356,067$ 39,438,221$ 39,928,612$ 39,404,315$ Primary governmentNet investment in capital assets 49,357,389$ 49,664,576$ 88,661,516$ 90,966,856$ 90,435,992$ 90,046,090$ 92,831,395$ 91,201,606$ 88,017,727$ 89,900,607$ Restricted 2,021,915 2,075,214 2,553,700 2,801,156 2,555,036 2,571,398 1,654,284 1,659,469 895,157 743,891 Unrestricted 12,756,375 16,966,043 18,261,595 14,775,382 16,622,889 17,125,061 19,600,565 21,860,930 26,355,589 25,617,011 Total primary government net position 64,135,679$ 68,705,833$ 109,476,811$ 108,543,394$ 109,613,917$ 109,742,549$ 114,086,244$ 114,722,005$ 115,268,473$ 116,261,509$ Fiscal Year
80 Table 2City of FriendswoodChanges in Net PositionLast Ten Fiscal Years(accrual basis of accounting)(unaudited)2005 2006 2007 2008 2009 2010 2011 2012 2013 2014ExpensesGovernmental activities:General government 3,438,849$ 3,330,439$ 4,472,602$ 4,339,620$ 5,164,623$ 5,145,447$ 4,876,064$ 4,737,702$ 4,679,339$ 4,589,795$ Public safety 7,318,886 7,060,800 7,565,797 12,652,812 14,929,941 10,175,028 10,548,568 10,736,805 10,800,130 11,236,402 Community development and public works 2,576,447 2,813,857 5,475,447 4,921,298 5,292,000 - - - - - Public works - - - - - 3,853,685 3,517,707 3,738,111 4,385,090 3,921,658 Community development - - - - - 1,203,204 1,284,188 1,520,401 1,207,264 1,097,075 Community services 3,075,023 3,098,013 3,420,244 3,841,387 4,002,165 3,034,523 3,058,313 3,227,731 3,260,931 3,356,587 Library - - - - - 979,084 979,978 1,004,303 1,002,801 1,083,043 Interest and fiscal charges 478,495 857,602 835,511 803,733 678,705 789,652 871,790 757,011 703,275 630,542 Total governmental activities expenses 16,887,700 17,160,711 21,769,601 26,558,850 30,067,434 25,180,623 25,136,608 25,722,064 26,038,830 25,915,102 Business-type activities:Water and sewer 6,251,251 6,078,881 5,711,063 6,523,501 6,640,062 6,663,308 6,955,505 6,902,279 7,681,366 7,995,106 Interest and fiscal charges 963,355 962,989 1,583,551 1,543,859 1,604,174 2,037,104 1,644,074 1,638,495 1,590,395 1,514,804 Total business-type activities expenses 7,214,606 7,041,870 7,294,614 8,067,360 8,244,236 8,700,412 8,599,579 8,540,774 9,271,761 9,509,910 Total primary government expenses 24,102,306 24,202,581 29,064,215 34,626,210 38,311,670 33,881,035 33,736,187 34,262,838 35,310,591 35,425,012 Program RevenuesGovernmental activities: Charges for services General government 1,176,086 1,238,631 1,353,160 1,178,523 1,327,484 1,072,289 1,158,392 1,167,619 989,190 912,910 Public safety 15,013 54,653 23,267 21,356 46,773 38,438 39,914 39,661 34,944 31,620 Community development and public works 758,487 805,710 998,625 838,060 602,265 - - - - - Public works - - - - - 152,163 158,858 171,890 186,504 193,064 Community development - - - - - 550,286 643,150 730,211 825,366 877,132 Community services 66,281 112,681 219,944 132,244 411,207 258,030 267,837 271,912 316,047 315,702 Library - - - - - 44,313 43,147 38,543 36,686 36,081 Operating grants and contributions 1,271,119 771,477 489,707 4,021,908 5,755,038 2,819,418 3,150,808 648,058 644,458 843,995 Capital grants and contributions 235,300 - - - - - - 527,288 543,763 1,202,376 Total governmental activities program revenues 3,522,286 2,983,152 3,084,703 6,192,091 8,142,767 4,934,937 5,462,106 3,595,182 3,576,958 4,412,880 Business-type activities:Charges for services Water and sewer 8,390,761 8,392,277 8,021,040 8,624,546 12,028,895 9,854,083 12,726,936 11,258,216 11,462,779 11,117,391 Total business-type activities program revenues 8,390,761 8,392,277 8,021,040 8,624,546 12,028,895 9,854,083 12,726,936 11,258,216 11,462,779 11,117,391 Total primary government program revenues 11,913,047 11,375,429 11,105,743 14,816,637 20,171,662 14,789,020 18,189,042 14,853,398 15,039,737 15,530,271 Net (Expense)/RevenuesGovernmental activities (13,365,414) (14,177,559) (18,684,898) (20,366,759) (21,924,667) (20,245,686) (19,674,502) (22,126,882) (22,461,872) (21,502,222) Business-type activities 1,176,155 1,350,407 726,426 557,186 3,784,659 1,153,671 4,127,357 2,717,442 2,191,018 1,607,481 Total primary government net expense (12,189,259)$ (12,827,152)$ (17,958,472)$ (19,809,573)$ (18,140,008)$ (19,092,015)$ (15,547,145)$ (19,409,440)$ (20,270,854)$ (19,894,741)$ (Continued)Fiscal Year
81 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014General Revenues and Other Changes in Net PositionGovernmental activities:Taxes Property 11,352,598$ 11,304,684$ 11,876,246$ 12,512,950$ 13,481,500$ 13,664,765$ 13,944,725$ 14,165,599$ 14,630,961$ 14,864,284$ Sales 3,199,136 3,658,699 3,904,436 3,767,526 3,871,995 3,853,161 4,002,740 3,907,577 4,293,794 4,693,484 Franchise 1,176,460 1,220,581 1,239,167 1,317,166 1,363,221 1,510,794 1,598,407 1,556,556 1,583,258 1,673,615 Other 53,790 11,940 16,186 25,429 28,859 28,859 28,883 23,356 24,974 32,799 Investment earnings 376,435 915,710 1,063,715 648,301 166,492 93,018 110,863 137,202 88,510 109,849 Gain (loss) on sale of capital assets - - 345,976 - 4,320 33,647 23,831 17,601 43,788 34,359 Miscellaneous 51,503 21,556 4,152 73,026 214,484 131,545 126,228 147,457 78,682 84,275 Transfers 763,361 680,850 875,616 981,016 547,456 168,276 (5,336,312) 1,725,141 1,773,982 1,799,344 Total governmental activities 16,973,283 17,814,020 19,325,494 19,325,414 19,678,327 19,484,065 14,499,365 21,680,489 22,517,949 23,292,009 Business-type activities:Investment earnings 114,932 262,761 1,236,092 531,758 128,338 87,056 55,163 82,853 37,565 40,713 Gain (loss) on sale of capital assets - - - - (48,678) (182,198) - 7,000 - - Miscellaneous 13,478 1,375 4,182 - - - - - 35,790 - Extraordinary item - - - - - - - - - - Transfers (763,361) (680,850) (875,616) (981,016) (547,456) (168,276) 5,336,312 (1,725,141) (1,773,982) (1,799,344) Total business-type activities (634,951) (416,714) 364,658 (449,258) (467,796) (263,418) 5,391,475 (1,635,288) (1,700,627) (1,758,631) Total primary government 16,338,332 17,397,306 19,690,152 18,876,156 19,210,531 19,220,647 19,890,840 20,045,201 20,817,322 21,533,378 Change in Net PositionGovernmental activities 3,607,869 3,636,461 640,596 (1,041,345) (2,246,340) (761,621) (5,175,137) (446,393) 56,077 1,789,787 Business-type activities 541,204 933,693 1,091,084 107,928 3,316,863 890,253 9,518,832 1,082,154 490,391 (151,150) Total primary government 4,149,073$ 4,570,154$ 1,731,680$ (933,417)$ 1,070,523$ 128,632$ 4,343,695$ 635,761$ 546,468$ 1,638,637$ (Concluded)Note:Community Development and Publics Works were shown as one department from 2005 to 2009. From 2005 to 2009, the Library was included with Community Services. Fiscal Year
82 Table 3City of FriendswoodFund Balances, Governmental FundsLast Ten Fiscal Years(modified accrual basis of accounting)(unaudited)2005 2006 2007 2008 2009 2010 2011 2012 2013 2014General FundReserved 511,197$ 1,313,829$ 601,646$ 1,037,279$ 686,404$ 1,731,056$ -$ -$ -$ -$ Unreserved 7,032,843 8,973,646 9,926,479 9,177,390 9,185,590 7,399,217 - - - - Nonspendable - - - - - - 220,151 99,874 122,927 143,201 Restricted - - - - - - 97,728 173,015 281,826 400,411 Assigned - - - - - - 1,085,527 434,931 487,201 1,421,785 Unassigned - - - - - - 7,511,998 8,379,399 9,714,206 10,554,183 Total general fund 7,544,040$ 10,287,475$ 10,528,125$ 10,214,669$ 9,871,994$ 9,130,273$ 8,915,404$ 9,087,219$ 10,606,160$ 12,519,580$ All Other Governmental FundsReserved 1,395,767$ 4,220,225$ 3,575,592$ 2,310,481$ 1,385,265$ 667,682$ -$ -$ -$ -$ Unreserved, reported in: - - - - - - - - - - Special revenue funds 175,192 404,749 558,653 643,223 1,075,343 1,328,145 - - - - Capital projects funds 8,584,781 3,943,654 1,957,116 323,597 326,600 - - - - - Permanent fund 26,292 27,477 28,901 30,070 30,507 30,720 - - - - Nonspendable - - - - - - 30,869 31,027 31,137 31,241 Restricted - - - - - - 4,162,423 2,184,855 995,269 666,317 Unassigned - - - - - - - - - (239,078) Total all other governmental funds 10,182,032$ 8,596,105$ 6,120,262$ 3,307,371$ 2,817,715$ 2,026,547$ 4,193,292$ 2,215,882$ 1,026,406$ 458,480$ Note: In fiscal year 2011, the City implemented GASB 54 which changed the fund balance classifications to nonspendable, restricted, committed, assigned and unassigned. Fiscal Year
83 Table 4City of FriendswoodChanges in Fund Balances, Governmental FundsLast Ten Fiscal Years(modified accrual basis of accounting)(unaudited)2005 2006 2007 2008 2009 2010 2011 2012 2013 2014RevenuesTaxes 15,779,126$ 16,190,756$ 16,961,818$ 17,606,273$ 18,763,998$ 19,104,625$ 19,592,092$ 19,630,172$ 20,563,848$ 21,335,527$ Fines and penalties 1,112,916 1,163,984 1,288,794 1,161,903 1,143,102 1,043,126 1,012,592 1,037,880 939,380 860,257 Licenses and permits 717,607 769,352 1,017,502 944,756 966,797 960,479 1,069,845 1,174,013 1,327,918 1,385,898 Intergovernmental 985,339 535,074 248,702 3,801,013 5,794,303 2,652,037 3,109,645 1,077,890 918,641 1,791,451 Investment earnings 375,123 906,552 1,054,698 639,402 161,106 90,337 109,272 135,483 87,330 109,117 Donations 213,381 219,353 229,939 265,535 272,911 280,223 276,209 306,119 363,413 349,166 Other revenues 414,923 277,995 279,788 37,876 34,448 81,366 78,243 41,410 84,673 54,989 Total revenues 19,598,415 20,063,066 21,081,241 24,456,758 27,136,665 24,212,193 25,247,898 23,402,967 24,285,203 25,886,405 ExpendituresGeneral government 3,420,274 3,315,844 4,605,245 4,114,662 4,178,062 4,224,384 4,397,858 4,322,631 4,250,320 4,306,143 Public safety 7,127,975 6,903,806 7,482,603 12,404,745 14,717,404 9,799,372 10,093,964 10,201,010 10,234,811 10,599,575 Community development and public works 2,436,359 2,579,398 3,600,798 3,045,904 3,406,881 - - - - - Public works - - - - - 1,956,479 1,637,237 1,702,119 2,204,176 1,689,987 Community development - - - - - 1,208,899 1,284,188 1,520,401 1,207,264 1,092,982 Community services 2,626,329 2,630,094 2,866,388 3,266,250 3,439,475 2,458,422 2,472,015 2,622,970 2,675,813 2,772,072 Library - - - - - 979,084 979,978 1,004,303 1,002,801 1,083,043 Capital outlay 7,040,173 4,292,854 3,711,569 4,339,546 2,489,845 3,799,303 4,254,582 3,705,622 1,942,746 2,500,254 Debt principal payment 459,422 608,184 658,073 774,584 787,293 787,590 1,065,865 1,562,088 1,721,983 1,668,692 Interest and fiscal agent charges 594,076 757,402 739,487 704,136 691,638 773,744 864,746 768,329 712,822 662,718 Bond issuance costs and fees - - - - - - 200,227 131,380 - - Total expenditures 23,704,608 21,087,582 23,664,163 28,649,827 29,710,598 25,987,277 27,250,660 27,540,853 25,952,736 26,375,466 Excess of revenuesunder expenditures(4,106,193) (1,024,516) (2,582,922) (4,193,069) (2,573,933) (1,775,084) (2,002,762) (4,137,886) (1,667,533) (489,061) Other Financing Sources (Uses)Sale of capital assets - 187,345 785,942 22,600 - 23,340 8,992 9,250 27,566 6,325 Insurance recoveries - - - 63,106 123,707 50,579 45,334 105,502 48,132 28,886 Issuance of debt 8,024,224 - - - - - 3,460,000 8,890,000 - - Capital lease proceeds - - - - 1,133,460 - - 464,270 147,318 - Refunding bonds issued - - - - - - 5,460,000 - - - Payment to refunding bond escrow agent - - - - - - - (9,425,538) - - Premium on issuance of debt - - - - - - 317,452 563,666 - - Transfer in 923,361 904,955 1,226,304 992,586 2,098,405 1,512,987 1,235,892 1,970,819 1,973,106 1,799,344 Transfer out (160,000) (224,105) (350,688) (11,570) (1,613,970) (1,344,711) (6,573,032) (245,678) (199,124) - Total other financing sources (uses) 8,787,585 868,195 1,661,558 1,066,722 1,741,602 242,195 3,954,638 2,332,291 1,996,998 1,834,555 Net change in fund balance4,681,392$ (156,321)$ (921,364)$ (3,126,347)$ (832,331)$ (1,532,889)$ 1,951,876$ (1,805,595)$ 329,465$ 1,345,494$ Debt service as a percentage of noncapital expenditures 6.3% 8.1% 7.0% 6.1% 5.4% 7.0% 8.4% 9.8% 10.1% 9.8%Note:From 2005 to 2009, Public Works and Community Development were combined as one department. Beginning in 2010, they are shown as separate departments.In 2002, the City adopted a Financial Policy. Based on this policy, undesignated fund balance shall be allowed to accumulate to establish a 90-day operating reserve.After the reserve is established, additional undesignated funds are allowed to accumulate for future capital projects.Fiscal Year
84 Table 5City of FriendswoodAssessed Value and Taxable Value of PropertyLast Ten Fiscal Years(Unaudited)Less: TotalCommercial Total Exemptions and Total DirectFiscal Tax Residential and Industrial Other Assessed Tax Exempt Taxable TaxYear Year Property Property Property Value Property Value Rate2005 2004 1,882,823,995$ 211,269,120$ 189,513,770$ 2,283,606,885$ 532,056,903$ 1,751,549,982$ 0.63850$ 2006 2005 1,998,747,285 217,285,258 183,010,440 2,399,042,983 557,521,388 1,841,521,595 0.60400 2007 2006 2,163,006,305 260,809,119 215,897,086 2,639,712,510 622,333,722 2,017,378,788 0.58210 2008 2007 2,305,398,212 266,240,487 223,856,148 2,795,494,847 642,347,609 2,153,147,238 0.57640 2009 2008 2,443,040,835 271,618,942 254,262,180 2,968,921,957 672,410,955 2,296,511,002 0.57970 2010 2009 2,509,894,027 277,693,532 248,910,248 3,036,497,807 695,681,434 2,340,816,373 0.57970 2011 2010 2,547,883,315 276,080,104 235,256,040 3,059,219,459 703,419,784 2,355,799,675 0.58510 2012 2011 2,584,070,993 280,043,373 230,531,859 3,094,646,225 706,059,683 2,388,586,542 0.59020 2013 2012 2,622,105,658 286,288,277 235,960,049 3,144,353,984 710,718,423 2,433,635,561 0.59700 2014 2013 2,695,532,057 294,316,218 238,127,209 3,227,975,484 724,153,848 2,503,821,636 0.59140 Source: Galveston County Tax Assessor/Collector and City of Friendswood records.Note: Property in the City of Friendswood is reassessed once every two years on average. (Source: Galveston Central Appraisal District)Tax rates per $100 of assessed value.Residential property includes both single-family and multi-family properties.
85 Table 6City of FriendswoodDirect and Overlapping Property Tax RatesLast Ten Fiscal Years(unaudited)(rate per $100 of assessed value)FiscalYear Friendswood Clear Creek Galveston CountyEnded Debt Total Independent Independent Drainage Galveston HarrisSeptember 30, General Service Direct School District School District District County County2005 0.5547$ 0.0838$ 0.6385$ 1.6370$ 1.7450$ 0.1483$ 0.6388$ 0.63998$ 2006 0.5243 0.0797 0.6040 1.5070 1.7750 0.1450 0.5874 0.63998 2007 0.5120 0.0701 0.5821 1.5700 1.6300 0.1450 0.5874 0.63998 2008 0.5016 0.0748 0.5764 1.1770 1.3200 0.1425 0.5686 0.62998 2009 0.5097 0.0700 0.5797 1.3670 1.3600 0.1425 0.5586 0.62998 2010 0.4997 0.0800 0.5797 1.3670 1.3600 0.1425 0.6186 0.62998 2011 0.5198 0.0653 0.5851 1.3670 1.3600 0.1425 0.6198 0.62998 2012 0.5218 0.0684 0.5902 1.3670 1.3600 0.1400 0.6129 0.62998 2013 0.5307 0.0663 0.5970 1.3670 1.3600 0.1400 0.5999 0.62998 2014 0.5303 0.0611 0.5914 1.3670 1.4000 0.1400 0.5837 0.62998 Source: Galveston County Tax Assessor/Collector and City of Friendswood records.Note:Overlapping rates are those of local and county governments that apply to property owners within the City of Friendswood. Not all overlapping rates applyto all property owners. Overlapping rates for Friendswood Independent School District, Galveston County Consolidated Drainage District and GalvestonCounty apply only to residents whose property is in Galveston County. Overlapping rates for Clear Creek Independent School District and Harris Countyapply only to residents whose property is in Harris County.City Direct Rates Overlapping Rates
86
Table 7
City of Friendswood
Principal Property Tax Payers
Current Year and Nine Years Ago
(Unaudited)
Percentage Percentage
of Total City of Total City
Taxable Taxable
Taxable Assessed Taxable Assessed
Taxpayer Value Rank Value Value Rank Value
Reserve at Autumn Crk Ltd 18,864,491$ 1 0.75% 13,299,980$ 1 0.76%
Kroger Co. 13,570,271 2 0.54% 7,713,640 4 0.44%
Texas-New Mexico Power Co. 12,084,650 3 0.48% 12,573,930 2 0.72%
Autumn Creek Dev LTD 9,046,190 4 0.36% - -
G&I VI Sky Hawk LP 9,292,240 5 0.37% - -
H.E. Butt Grocery Company 8,149,920 6 0.33% 5,770,930 8 0.33%
HSRE Friendswood LLC 7,535,390 7 0.30% - -
HCP Friendswood LLC 6,995,240 8 0.28% - -
A-S 108 Friendswood Crossing LP 6,310,430 9 0.25% - -
Timber Creek Holdings LP 5,646,290 10 0.23% - -
Southwestern Bell Telephone Co. - - 9,207,860 3 0.53%
Southwest Properties - - 7,500,090 5 0.43%
Texas HCP Holding LP - - 6,457,140 6 0.37%
Friendswood Retirement - - 6,023,505 7 0.34%
D R Horton Texas, Ltd. - - 5,739,170 9 0.33%
Exxon Mobil Pipeline - - 5,003,740 10 0.29%
Total 97,495,112 3.89% 79,289,985 4.52%
All other taxpayers 2,406,326,524 96.11% 1,673,508,835 95.48%
2,503,821,636$ 100.00% 1,752,798,820$ 100.00%
Source: Galveston Central Appraisal District and Harris County Appraisal District
2014 2005
87 Table 8City of FriendswoodProperty Tax Levies and CollectionsLast Ten Fiscal Years(Unaudited)FiscalCollectionsYear Taxes Levied Total Taxes (adjustments)Ended for the Subsequent Levied for the Percentage in Subsequent PercentageSeptember 30, Fiscal Year Adjustments Fiscal Year Amount of Levy Years Amount of Levy2005 11,221,282$ 2,156$ 11,223,438$ 11,078,265$ 98.73% 136,030$ 11,214,295$ 99.92%2006 11,151,572 16,551 11,168,123 11,019,314 98.81% 137,899 11,157,213 99.90%2007 11,740,541 782 11,741,323 11,532,882 98.23% 199,408 11,732,290 99.92%2008 12,351,183 70,571 12,421,754 12,193,715 98.73% 219,575 12,413,290 99.93%2009 13,230,005 87,906 13,317,911 13,113,928 99.12% 191,651 13,305,579 99.91%2010 13,482,173 71,543 13,553,716 13,395,543 99.36% 141,384 13,536,927 99.88%2011 13,680,511 58,467 13,738,978 13,608,076 99.47% 114,382 13,722,458 99.88%2012 13,984,872 83,788 14,068,660 13,916,558 99.51% 130,224 14,046,782 99.84%2013 14,415,212 39,192 14,454,404 14,361,379 99.63% 58,164 14,419,543 99.76%2014 14,700,279 - 14,700,279 14,656,257 99.70% - 14,656,257 99.70%Source: Galveston County Tax Assessor/Collector and City of Friendswood records.Collected within theFiscal Year of the Levy Total Collections to Date
88 Table 9City of FriendswoodRatios of Outstanding Debt by TypeLast Ten Fiscal Years(Unaudited)General Certificates General Certificates Water Total Percentage ofFiscal Obligation of Revenue Capital Obligation of Revenue Primary Personal PerYear Bonds Obligation Bonds Leases Bonds Obligation Bonds Government Income Capita 2005 17,590,000$ -$ -$ 237,597$ 3,310,000$ 470,000$ 14,020,000$ 35,627,597$ 0.39% 1,040$ 2006 17,150,000 - - 168,957 2,855,000 280,000 30,665,000 51,118,957 0.50% 1,490 2007 16,660,000 - - 96,380 2,375,000 50,000 30,515,000 49,696,380 0.46% 1,430 2008 16,065,000 - - 16,351 1,680,000 - 30,355,000 48,116,351 0.41% 1,355 2009 15,445,000 - - 982,518 865,000 - 42,260,000 59,552,518 0.50% 1,582 2010 14,800,000 - - 839,928 - - 42,045,000 57,684,928 0.47% 1,516 2011 22,885,000 - - 710,023 - - 35,205,000 58,800,023 0.46% 1,579 2012 21,605,000 - - 975,726 - - 34,115,000 56,695,726 0.42% 1,498 2013 20,230,000 - - 876,981 - - 32,995,000 54,101,981 0.37% 1,410 2014 18,815,000 - - 623,407 - - 31,830,000 51,268,407 N/A 1,318 Notes:Details regarding the City's outstanding debt can be found in the notes to the financial statements.See Table 14 for personal income and population data. These ratios are calculated using personal income and population for the prior calendar year.Personal income data provided on Table 14 is for the County of Galveston. Data was not available specific to the City of Friendswood and therefore is notincluded on this table.N/A - Information is not available.Governmental Activities Business-Type Activities
89 Table 10City of FriendswoodRatios of Net General Bonded Debt OutstandingLast Ten Fiscal Years(Unaudited)General Less Debt Net Percentage ofFiscal Taxable Obligation Service General Taxable Value PerYear Population Value Bonds Funds Bonded Debt Property Capita 2005 34,272 1,751,549,982$ 17,590,000$ 1,375,345$ 16,214,655$ 0.93% 473$ 2006 34,306 1,841,521,595 17,150,000 1,576,724 15,573,276 0.85% 454 2007 34,759 2,017,378,788 16,660,000 1,803,928 14,856,072 0.74% 427 2008 35,500 2,153,147,238 16,065,000 2,100,617 13,964,383 0.65% 393 2009 37,653 2,296,511,002 15,445,000 952,951 14,492,049 0.63% 385 2010 38,057 2,340,816,373 14,800,000 545,676 14,254,324 0.61% 375 2011 37,247 2,355,799,675 22,885,000 240,869 22,644,131 0.96% 608 2012 37,839 2,388,586,542 21,605,000 193,714 21,411,286 0.90% 566 2013 38,369 2,433,635,561 20,230,000 134,339 20,095,661 0.83% 524 2014 38,911 2,503,821,636 18,815,000 86,085 18,728,915 0.75% 481 Note:Details regarding the City's outstanding debt can be found in the notes to the financial statements.General Bonded Debt Outstanding
90
Table 11
City of Friendswood
Direct and Overlapping Governmental Activities Debt
As of September 30, 2014
(Unaudited)
Estimated
Estimated Share of
Debt Percentage Overlapping
Governmental Unit Outstanding Applicable Debt
Debt repaid with property taxes
Friendswood Independent School District 107,445,000$ 100.00% 107,445,000$
Clear Creek Independent School District 917,031,062 2.050% 18,799,137
Galveston County 248,523,000 7.93% 19,705,000
Harris County 3,205,021,000 0.504% 16,159,716
Subtotal, overlapping debt 162,108,853
City direct debt 19,438,407
Total direct and overlapping debt 181,547,260$
Sources :Information was obtained from either the governmental unit's website or the finance department of the
governmental unit.
Notes: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City.
This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne
by the residents and businesses of the City of Friendswood. The City’s share of the debt of the overlapping
governments is based on the ratio of the assessed value of the City’s own property to that of each of the
other governments. This process recognizes that, when considering the City's ability to issue and repay
long-term debt, the entire debt burden borne by the residents and businesses should be taken into account.
However, this does not imply that every taxpayer is a resident--and therefore responsible for repaying the
debt--of each overlapping government.
91
Table 12
City of Friendswood
Legal Debt Margin Information
(Unaudited)
As a City Council-City Manager form of government, the City of Friendswood is not limited by law in the amount
of debt it may issue. The City's charter states:
"In keeping with the Constitution of the State of Texas and not contrary thereto, the City of Friendswood
shall have the power to borrow money on the credit of the City for any public purpose not now or hereafter
prohibited by the Constitution and laws of the State of Texas, and shall have the right to issue all tax bonds,
revenue bonds, funding and refunding bonds, time warrants and other evidence of indebtedness as now
authorized or as may hereafter be authorized to be issued by cities and towns by the laws of the State of
Texas."
Article 11, Section 5 of the State of Texas Constitution states in part:
"but no tax for any purpose shall ever be lawful for any one year, which shall exceed two and one-half percent
of the taxable property of such city"
The tax rate for fiscal year ended September 30, 2014, is $.5914 per $100 of assessed valuation with assessed
valuation being 100% of market value.
92
Table 13
City of Friendswood
Pledged-Revenue Coverage
Last Ten Fiscal Years
(Unaudited)
Utility Less: Net
Fiscal Service Operating Available Debt Service
Year Charges Expenses Revenue Principal Interest Coverage
2005 8,390,761$ 4,769,885$ 3,620,876$ 140,000$ 766,788$ 3.99$
2006 8,392,277 4,660,868 3,731,409 160,000 445,351 6.16
2007 8,021,040 4,338,819 3,682,221 150,000 1,441,234 2.31
2008 8,624,546 5,143,516 3,481,030 160,000 1,416,465 2.21
2009 12,028,895 5,249,388 6,779,507 215,000 1,986,015 3.08
2010 9,854,083 5,184,330 4,669,753 215,000 1,904,689 2.20
2011 12,726,936 5,410,497 7,316,439 1,440,000 1,640,437 2.38
2012 11,258,216 5,361,567 5,896,649 1,090,000 1,589,565 2.20
2013 11,462,779 6,113,276 5,349,503 1,120,000 1,548,303 2.00
2014 11,117,391 6,376,510 4,740,881 1,165,000 1,504,006 1.78
Notes:Details regarding the City's outstanding debt can be found in the notes to the financial statements.
Operating expenses do not include interest, depreciation or amortization expenses.
Waterworks and Sewer Revenue Bonds
93
Table 14
City of Friendswood
Demographic and Economic Statistics
Last Ten Calendar Years
(Unaudited)
Per
Capita
Calendar Estimated Personal Personal Unemployment
Year Population Income Income Rate
2005 34,272 9,192,246,000$ 33,146$ 3.9%
2006 34,306 10,144,967,000 36,284 3.0%
2007 34,759 10,913,785,000 38,553 3.4%
2008 35,500 11,744,572,000 40,711 4.9%
2009 37,653 11,937,436,000 41,621 6.2%
2010 38,057 12,257,208,000 41,876 7.1%
2011 37,247 12,848,571,000 43,444 6.8%
2012 37,839 13,651,835,000 45,433 5.0%
2013 38,369 14,475,816,000 47,186 4.5%
2014 38,911 - - 3.4%
Sources:Population information was provided from past financial reports. Unemployment rates,
personal income and per capita personal income were obtained from the U.S.
Department of Labor Bureau of Labor Statistics website or the Texas Workforce
Commission website.
Note:Personal Income and Per Capita Personal Income numbers are for Galveston County;
2014 numbers were not available.
94
Table 15
City of Friendswood
Principal Employers
Current Year and Eight Years Ago
(Unaudited)
Percentage Percentage
Estimated of Total City Estimated of Total City
Employer Employees Workforce Employees Workforce
Friendswood ISD 700 28.79% 675 34.83%
HEB 317 13.04% 275 14.19%
Kroger 292 12.01% 234 12.07%
City of Friendswood 232 9.54% 222 11.46%
Clear Creek ISD 155 6.38%2 - 0.00%1
Friendship Haven Nursing Home 140 5.76% 135 6.97%
McDonalds 75 3.09% 33 1.70%
Brookdale 69 2.84% - 0.00%1
Friendswood Healthcare (Autumn Hill 65 2.67% 90 4.64%
U.S. Post Office 62 2.55% 70 3.61%
UTMB 58 2.39% - 0.00%1
Sonic 49 2.02% 49 2.53%
AAA Blastcote 45 1.85% - 0.00%1
Timber Creek Golf Club 45 1.85% 41 2.12%
Perry & Sons Market and Grille 45 1.85% - 0.00%1
Luna's Mexican Restaurant 41 1.69% 40 2.06%
24 Hour Fitness 41 1.69% - 0.00%1
Village on the Park - 0.00%3 34 1.75%
Gary Greene Realtors - 0.00%3 40 2.06%
Total 2,431 100.00% 1,938 100.00%
Source: City Economic Development Division
Note: Principal Employer data was not available for fiscal year 2003 - 2005.
1 Data was not available for fiscal year 2006.
2 Includes Wedgewood Elementary and Brookside Intermediate.
3 Data was not available for fiscal year 2014.
20062014
95
Table 16
City of Friendswood
Full-time Equivalent City Government Employees by Function/Program
Last Ten Fiscal Years
(Unaudited)
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Function/Program
General Government:
City Manager 5.50 5.50 5.50 5.50 5.50 5.50 5.50 4.65 4.15 4.15
City Secretary 4.00 4.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Administrative Services 24.44 25.81 26.19 27.20 27.20 27.20 27.20 28.20 28.20 28.70
Public Safety:
Police 70.07 72.06 81.41 83.90 79.40 79.40 80.40 80.40 81.40 82.40
Fire marshall and fire 12.85 4.50 6.11 6.10 6.10 6.10 6.10 6.10 6.10 6.50
Public Works: - - - - - 19.00 19.00 19.33 20.33 26.33
Community Development: - - - - - 17.70 17.70 16.89 16.89 10.89
Community Development and
Public Works: 34.00 35.00 36.00 36.00 36.70 - - - - -
Community Services: 30.43 31.01 32.18 32.20 32.20 18.95 18.95 19.28 19.20 19.03
Library - - - - - 14.72 14.72 14.72 14.37 14.37
Water: 9.00 9.00 9.00 9.00 10.30 10.30 10.30 10.30 9.30 9.30
Sewer: 7.00 8.00 8.00 8.00 9.00 9.00 9.00 9.00 9.00 9.00
Total City Employees: 197.29 194.88 209.39 212.90 211.40 212.87 213.87 213.87 213.94 215.67
Source: City of Friendswood Budget Documents
Notes: Beginning with fiscal year 2006, the fulltime equivalent for Fire Marshal and Fire include only the Fire Marshal Department.
The City has a contract with the Friendswood Volunteer Fire Department and there are no employees paid directly by the City.
From 2005 - 2009, public works and community development were combined.
In 2010 - 2014, they are shown as two separate departments.
Beginning in fiscal year 2010, the fulltime equivalent for Library is shown separate from Community Services. In previous years, the
fulltime equivalent is included with Community Services.
Full-time Equivalent Employees as of September 30
96 Table 17City of FriendswoodOperating Indicators by Function/ProgramLast Ten Fiscal Years(Unaudited)2005200620072008200920102011201220132014Function/ProgramGeneral Government:Building permits issued 1,129 882 975 872 1,189 984 1,222 1,317 1,469 1,395 Building inspections conducted 12,641 12,264 11,135 11,472 6,673 8,744 9,514 10,486 11,470 10,611 Police:Physical arrests 1,041 1,804 1,923 1,868 1,794 2,002 1,962 1,885 1,601 1,596 Parking violations 22 30 34 46 33 27 82 61 107 58 Traffic violations 12,053 12,623 11,374 7,897 7,821 7,000 7,291 6,518 5,718 5,815 Fire Marshall:Inspections 731 668 1,300 1,312 1,653 1,509 1,444 1,616 1,673 1,427 Fire:Emergency responses 2,453 2,497 2,723 2,794 2,950 2,737 2,818 2,975 2,993 3,261 Fires extinguished 93 75 74 118 102 110 108 86 86 116 Parks and Recreation:Recreation participants NA NA NA 7,547 12,283 13,792 13,894 16,068 18,607 15,178 Facility reservations NA NA 1,115 1,065 1,727 1,451 503 493 686 728 Library:Volumes in collection 90,163 92,633 93,028 96,100 94,512 99,880 97,622 125,251 133,865 141,383 1 Total volumes borrowed 281,060 300,241 308,718 323,323 350,892 356,787 349,223 355,447 367,948 367,452 Water:New connections 208 209 289 202 46 160 173 185 189 193 Water main breaks 76 105 44 73 73 64 516 112 193 149 Average daily consumption 4,094 3,886 3,472 4,217 4,209 3,408 6,406 4,584 5,577 5,171 (thousands of gallons)Peak daily consumption 9,935 7,030 6,358 11,004 7,187 7,606 13,698 10,896 11,505 9,917 Sewer:Average daily sewage treatment 3,081 3,064 3,425 3,120 2,950 3,465 2,787 2,968 2,956 2,867 (thousands of gallons)Maximum daily flow 10,587 10,484 10,484 7,520 9,537 11,393 10,833 10,777 10,401 10,770 (thousands of gallons)Source: Various City departments and prior year CAFRsNA - Information is not available.1Beginning in FY 2012, total volumes count also includes all electronic materials.Fiscal Year
97 Table 18City of FriendswoodCapital Asset Statistics by Function/ProgramLast Ten Fiscal Years(Unaudited)2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Function/ProgramPoliceStations 1111111111Patrol units 16 18 28 27 24 26 26 25 26 27FireStations 3333444444Public WorksStreets - paved (miles) 157 179 150 159 160 161 162 164 165 167Streets - unpaved (miles) 4 102222222Traffic signals 3 333333333Parks and RecreationAcreage 189 189 189 189 189 189 189 189 189 189Parks 8888888888Swimming pool 1 111111111Tennis courts 4 444444444Library 1111111111WaterWater mains (miles) 165 179 180 180 181 183 184 186 187 207Fire hydrants 1,250 1,250 1,275 1,275 1,275 1,305 1,324 1,588 1,608 1,610Connections 11,196 11,405 11,748 11,982 12,057 12,231 12,476 12,711 12,929 13,093Storage capacity 5,993 5,993 5,993 5,993 5,993 5,993 7,500 7,500 7,500 8,000(thousands of gallons)SewerSanitary sewers (miles) 165 153 155 155 156 158 159 162 163 194Connections 10,537 10,682 10,902 11,115 11,256 11,404 11,563 11,828 12,072 12,236Storm sewers (miles) 92 92 95 95 96 98 99 100 100 105Treatment capacity 4,850 4,850 4,850 4,850 4,850 4,850 4,850 4,850 4,850 12,000(thousands of gallons)Source: Various City departments and prior year CAFRsFiscal Year