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Comprehensive Annual Financial Report
Year Ended September 30, 2005
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CITY OF
FRIENDSWOOD, TEXAS
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
Fiscal Year Ended
September 30, 2005
Officials Issuing Report:
Ronald E. Cox
City Manager
Roger C. Roecker
Director of Administrative Services
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CITY OF FRIENDSWOOD, TEXAS
INTRODUCTORY SECTION TABLE OF CONTENTS SEPTEMBER 30, 2005 Letter of Trans1nittal ........................................................................................ .
Organization Chart. .......................................................................................... .
Certificate of Achievement for Excellence in Financial Reporting ................ ..
Principal Officials ............................................................................................ .
FINANCIAL SECTION
Exhibit
Independent Auditors' Report ...................................................................................... .
Management's Discussion and Analysis ..................................................................... .
Basic Financial Statements
Government-wide Financial Statements
Staten1ent of Net Assets ........................................................................................ ..
Statement of Activities ........................................................................................... .
Fund Financial Statements
Balance Sheet -Governmental Funds ................................................................... .
Statement of Revenues, Expenditures and Changes in
Fund Balances -Governmental Funds ............................................................... .
(continued)
Page
Number
1-4
5
6
7
8-9
10-17
18
19-20
21
22
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
(Continued)
SEPTEMBER 30, 2005
FINANCIAL SECTION (Continued)
Fund Financial Statements (Continued)
Reconciliation of the Statement of Revenues, Expenditures
and Changes in Fund Balances of Governmental Funds to the
Statement of Activities ........................................................................................ .
Statement of Revenues, Expenditures and Changes in
Fund Balances -Budget and Actual -General Fund ......................................... .
Statement of Net Assets -Proprietary Funds ....................................................... ..
Statement of Revenues, Expenses and Changes in
Fund Net Assets -Proprietary Funds ................................................................. .
Statement of Cash Flows -Proprieta1y Funds ....................................................... .
Notes to Financial Staten1ents ................................................................................... .
Combining and Individual Fund Statements and Schedules
General Fund
Comparative Statements of Revenues, Expenditures and
Changes in Fund Balances -Budget and Actual ............................................... ..
(continued)
Page
Number
23
24
25
26
27-28
29-52
53-60
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CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
(Continued)
SEPTEMBER 30, 2005
FINANCIAL SECTION (Continued)
Combining and Individual Fund Statements and Schedules (Continued)
Nonmajor Governmental Funds
Con1bining Balance Sheet. ..................................................................................... .
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances .................................................................................. .
Nonmajor Special Revenue Funds
Schedule of Revenues, Expenditures and Changes in
Fund Balances -Budget and Actual -Fire/EMS
Donation Fund .................................................................................................... .
Nonmajor Debt Service Funds
Schedule of Revenues, Expenditures and Changes in
Fund Balances -Budget and Actual.. ................................................................ ..
STATISTICAL SECTION (Unaudited)
Table
Government-wide Expenses by Function .................................................... ..
Government-wide Revenues ......................................................................... . 2 ( continued)
Page
Number
61-62
63-64
65
66
Page
Number
67
68
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CO NTENTS
(Continued)
SEPTEMBER 30, 2005
STATISTICAL SECTION (Unaudited)
General Government Revenue by Source ..................................................... .
General Government Expenditures by Function .......................................... ..
Property Tax Levies and Collections ............................................................ .
Assessed and Estimated Actual Value of Taxable Property ........................ ..
Tax Rate Distribution .................................................................................... .
Property Tax Rates Per $100 Valuation Direct and Overlapping ................ ..
Principal Taxpayers ...................................................................................... .
Ratio of Annual Debt Service Expenditures for General
Bonded Debt .............................................................................................. .
Revenue Bond Coverage ............................................................................... .
Ratio of Net General Bonded Debt to Assessed Value and
Net Bonded Debt Per Capita ...................................................................... .
Computation of Direct and Overlapping Debt. ............................................ ..
Miscellaneous Statistical Data ...................................................................... .
Table
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7
8
9
10
11
12
13
14
Page
Number
69-70
71
72-73
74
75
76
77
78
79-80
81
82
83-84
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·INTRODUCTORY SECTION
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City of Friendswood
January 19, 2006
The Honorable Mayor, Members of the City Council, and the Citizens of Friendswood:
The Comprehensive Annual Financial Report (CAFR) of the City of Friendswood for the fiscal year
ended September 30, 2005, is hereby submitted. Responsibility for both the accuracy of the data, and
the completeness and fairness of the presentation, including all disclosures, rests with the City. To the
best of our knowledge and belief, the enclosed data are accurate in all material respects and are reported
in a manner designed to present fairly the financial position and results of operations of the various
funds and account groups of the City. All disclosures necessary to enable the reader to gain an
understanding of the City's financial activities have been included.
The comprehensive annual financial report is presented in three sections: introductory, financial, and
statistical. The introductory section includes a list of principal officials, this transmittal letter, and the
City's organizational chart. The financial section includes auditor's repo1t on the financial statement, a
Management Discussion and Analysis (MD&A), the basic financial statements and combining and
individual fund financial statements and schedules. The MD&A, found immediately following the
repmt of the independent auditor, is a narrative introduction; overview and analysis required by
generally accepted accounting principles (GAAP). This letter of transmittal is designed to complement
the MD&A and should be read in conjunction with it. The statistical section includes selected financial
and demographic information, generally presented on a multi-year basis.
Management of the City is responsible for establishing and maintaining an internal control structure
designed to ensure that the assets of the City are protected from loss, theft or misuse and to ensure that
adequate accounting data are compiled to allow for the preparation of financial statements in conformity
with generally accepted accounting principles. The internal control structure is designed to provide
reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable
assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived;
and (2) the valuation of costs and benefits requires estimates and judgments by management.
The City Charter requires an annual audit of the financial statements of all of the various funds of the
City by independent certified public accountants. The accounting firm of Pattillo, Brown & Hill, L.L.P.
has performed such an audit and their opinion has been included in this report. In addition to meeting
the requirements set forth in the City Chalier, the audit was also designed to meet the requirements of
the federal Single Audit Act. The City is required to undergo an annual single audit in conformity with
the provision of the Single Audit Act of 1984, the Single Audit Act Amendments of 1996 and U. S.
Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Nonprofit
Organizations. As part of the City's single audit, tests are made to determine the adequacy of the
internal control structure, including that portion related to federal award programs, as well as to
determine that the City has complied with applicable laws and regulations. The independent auditors'
report related specifically to the single audit is included in separate single audit report. Administrative Services • 910 South Friendswood Drive • Friendswood, Texas 77546-4856 � Fax (281) 482-6491 Computer Services • Finance • Human Resources • Municipal Court • Utility Billing(281)996-3217(281)996-3200(281)996-3225(281)996-3252(281)996-3232
PROFILE OF THE CITY
Established in 1895 as a Quaker colony, the City of Friendswood is rich in heritage. The City was
incorporated in 1960 and chartered a home-rule city under Texas law in 1971. The City operates under
a Council-Manager form of government. Policy-making and legislative authority are vested in a
governing council consisting of the Mayor and six (6) Council Members. The Mayor and Council are
responsible, among other things, for passing ordinances, adopting the budged, appointing board and
committee members and hiring the City Manager, City Attorney, Municipal Judge, and City Secreta1y.
The City Manager is responsible for carrying out the policies and ordinances of the City Council and
overseeing the day-to-day operations of the City government, and for appointing heads of various
departments. The Mayor and Council are elected on an at-large, non-partisan basis. The Mayor and
Council are elected to serve no more than three consecutive three-year terms.
The City provides a full range of municipal services including public safety (police, fire and emergency
medical), maintenance of streets and infrastructure, sanitation services, maintenance of the treated waste
distribution system and both sanitary and storm sewer collection transmission systems, recreational
activities and cultural events as well as general administrative services.
FACTORS AFFECTING FINANCIAL CONDITION
The City of Friendswood, Texas, is located 20 miles southeast of downtown Houston in southern Harris
and northern Galveston Counties. Friendswood's population has more than doubled in every census
count since 1960. The current population is estimated at 34,272. The economy is linked closely to that
of Houston and the Clear Lake area.
The Friendswood/Clear Lake regional economy has become more diverse, featuring aerospace,
petrochemical, tourism, boating, and recreation industries. Biotechnology, biomedical, software services,
electronics and communication equipment sub-sectors are increasing and show solid signs of growth and
sustainability. The NASA/Johnson Space Center, the Bayport petrochemical complex, Ellington Field and
the University of Houston-Clear Lake are key players in the area's economy. According to BAHEP
estimates, "over three-quarters of a million people work within a 45 minute drive time of the Clear Lake
area."
Budgeting Controls
The objective of the City's budgetary controls is to ensure compliance with legal provisions embodied in
the annual appropriated budget approved by Council. The charter requires the City Manager to submit a
proposed budget and an accompanying message to the City Council on or before August 1. The Council
shall review and revise as deemed appropriate prior to general circulation for the public hearing. The
Public Notice and Hearing must be posted in the city hall and published in the official newspaper. The
budget must be adopted by the 15 th of September or as soon thereafter as practical. The City legally
adopts annual budgets for the General, Special Revenue and Debt Service Funds. Annual and project
budgets are also adopted for the Proprietary and Capital Projects Funds, respectively.
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The level of budgetaiy control; that is, the level at which expenditures cannot legally exceed the
appropriated amount, is established by department within a fund. The City also maintains an
encumbrance accounting system as one technique of accomplishing budgetary control. Encumbrances
lapse at fiscal year end, but can be re-appropriated through a budget amendment the following fiscal
year. The City Manager is authorized to transfer budgeted amounts between departments within any
fund, but revisions that increase the total expenditures of any fund must be approved by Council.
Cash Management
The City's investment policy authorizes the City to invest in Obligations of the U. S. Government,
certificates of deposits, money market mutual funds, and local government investment pools. The
primary objectives of the investment policy, in priority order, are safety (preservation of capital),
liquidity (availability of funds) and yield (rate of return commensurate with investment risk and cash
flow needs). The average yield on maturing investments for the year was 2.84%. All deposits are either
insured by federal depository insurance or collateralized with securities held by the pledging financial
institution's trust department.
Risk Management
The City's risk management division continually evaluates risk in terms of severity, frequency of
probability and loss exposure. A proactive safety training and awareness program is provided for all
City employees. The City purchases insurance coverage for property, liability, and worker's
compensation through Texas Municipal League Intergovernmental Risk Pool.
Awards
The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for
Excellence in Financial Reporting to the City of Friendswood for its comprehensive annual financial
rep01i for the fiscal year ended September 30, 2004. This was the 1 ?'h consecutive year that the City has
received this prestigious award. In order to be awarded a Certificate of Achievement, the City published
an easily readable and efficiently organized comprehensive annual financial report. This report satisfied
both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our cmTent
comprehensive annual financial report continues to meet the Certificate of Achievement program's
requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.
Acknowledgements
The preparation of the comprehensive annual financial report was made possible by the dedicated
service of Cindy Edge, Ted Beason and the entire staff of the Administrative Services Department.
Each member of the department has my sincere appreciation for the contributions made in the
preparation of this report. 3
In closing, I also express my thanks to the Mayor, members of the City Council and the City Manager
for their leaders hip, interest and support in conducting the financial operations of the City in a responsible and progressive manner.
Sincerely, v,c.r2�
Roger C. Roecker Director of Administrative Services
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APPOINTED
BOARDS AND AD
HOC
COMMITTEES
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FRIENDSWOOD
VOLUNTEER
FIRE
DEPARTMENT
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ADMINISTRATIVE
SERVICES
CITY OF FRIENDSWOOD, TEXAS
ORGANIZATION CHART
SEPTEMBER 30, 2005
MAYOR
AND
COUNCIL --
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CITY CITY ATTORNE Y
SECRETARY
CITY MANAGER
ECONOMIC
-DEVELOPMENT
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COMMUNITY FIRE MARSHAU DEVELOPMENT POLICE EMERGENCY and MANAGEMENT PUBLIC WORKS
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MUNICIPAL CITY
JUDGE PROSECUTOR
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COMMUNITY
SERVICES
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Friendswood,
Texas
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
September 30, 2004 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive ammal financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. 11__���
President
�/.� Executive Director
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Elected Officials
Kimball W. Brizendine
Laura Ewing
John R. LeCour
Tracy Goza
David Smith
W.Chris Peden
Mel P. Mease I es
APE.ointed Officials
Ronald E. Cox
Deloris McKenzie
Jon Branson
Rebecca Carbone
Mickie! G. Hodge
Olson & Olson
Terry Byrd
Roger C. Roecker
Robert Wieners
James W. Woltz
CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL OFFICIALS
SEPTEMBER 30, 2005
Position
Mayor
Council Member -Position No. 1
Council Member -Position No. 2
Council Member -Position No. 3
Council Member - Position No. 4
Council Member -Position No. 5
Council Member -Position No. 6
City Manager
City Secretaiy
Position
Director of Community Services
Tax Assessor-Collector
Community Development Director
and Public Works Director
City Attorney
Fire Marshal/Emergency Management
Coordinator
Director of Administrative Services
Police Chief
Judge -Municipal Court
7
Term
Expires
May 2006
May 2006
May 2008
May 2006
May 2007
May 2008
May 2007
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PH.sll PATT ILL 0, BROWN & HILL, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS
INDEPENDENT AUDITORS' REPORT
To the Honorable Mayor and
Member of the City of Council
City of Friendswood, Texas
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information of the City of
Friendswood, Texas, as of and for the year ended September 30, 2005, which collectively comprise the
City's basic financial statements as listed in the table of contents. These financial statements are the
responsibility of the City of Friendswood, Texas' management. Our responsibility is to express opinions
on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements refetTed to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information of the City of Friendswood, Texas, as of September
30, 2005, and the respective changes in financial position and cash flows, thereof and the respective
budgeta1y comparison for the General Fund for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated January
19, 2006, on our consideration of the City of Friendswood, Texas' internal control over financial reporting
and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements
and other matters. The purpose of that report is to describe the scope of our testing of internal control of
financial reporting and compliance and the results of that testing, and not to provide an opinion on the
internal control over financial reporting or on compliance. That report is an integral part of an audit
perform ed in accordance with Government Auditing Standards and should be considered in conjunction
with this report in considering the results of our audit.
8
40 I WEST HIGHWAY 6 ■ P. 0. BOX 20725 ■ WACO, TX 76702-0725 ■ (254) 772-490 I ■ FAX: (254) 772-4920 ■ www.pbhcpa.com AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 ■ HILLSBORO, TX (254) 582-2583
TEMPLE, TX (254) 791-3460 ■ ALBUQUERQUE, NM (505) 266-5904
The management's discussion and analysis on pages 10 through 17 is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Friendswood, Texas' basic financial statements. The introductory section, combining and individual fund financial statements and schedules, and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introduct01y section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. j}�l 8� $;)/�a?Janua1y 19, 2006 9
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MANAGEMENT'S
DISCUSSION AND ANALYSIS
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Management's Discussion and Analysis
As Management of the City of Friendswood, we offer readers of the City's financial statements this
narrative overview and analysis of the financial activities of the City for the fiscal year ended September
30, 2005. This information is not intended to be a complete statement of the City's financial condition.
We recommend and encourage readers to consider the information presented here in conjunction with
the accompanying transmittal letter and basic financial statements.
FINANCIAL HIGHLIGHTS
•The assets of the City of Friendswood exceeded its liabilities at the close of the most
recent fiscal year by $64,135,679 (net assets). Of this amount, $7,527,573 is unrestricted
net assets for governmental activities and $5,228,802 for business-type activities.
•The City's net assets increased by $4,149,073. This resulted in an increase in invested in
capital assets net of related debt of $2,550,033, unrestricted net assets increased in the
amount of$1,293,241 and the remaining $305,799 increased resh·icted net assets.
•As of the close of the cunent fiscal year, the City of Friendswood's governmental funds
reported combined ending fund balance of $17,726,072. Of the ending fund balance,
$10,182,032 is restricted under laws external to the City for specific purposes (e.g.,
capital projects, debt service); $1,043,428 is designated by the City for specific
purposes; $511,197 reserved for encumbrances and prepaid items; and $5,989,415 is
unreserved and available to finance the activities of the governmental funds.
•The City's combined ending governmental fund balance increased $4,681,392. This
increase was primarily the result of the issuance of capital related debt coupled with
expending bond proceeds for designated capital projects.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City's basic financial
statements. The City's basic financial statements comprise three components: 1) government-wide
financial statements, 2) fund financial statements, and 3) notes to the financial statements. This repo1t
also contains other supplementary information in addition to the basic financial statements themselves.
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the
City's finances, in a manner similar to a private-sector business.
The Statement of Net Assets presents information on all of the City's assets and liabilities, with the
difference between the two reported as net assets. Over time, increases or decreases in net assets may
serve as a useful indicator of whether the financial position of the City is improving or deteriorating. This
statement combines and consolidates governmental funds cunent financial resources (short-term
spendable resources) with capital assets and long-term obligations. Other non-financial factors should also
be taken into consideration, such as changes in the City's prope1ty tax base and the condition of the City's
infrastructure (i.e. roads, drainage improvements, storm sewer and water lines, etc.), to assess the overall
financial condition of the City.
10
The Statement of Activities presents information showing how the City's net assets changed during the
fiscal year. All of the current year's revenues and expenses are taken into account regardless of when cash
is received or paid. Thus, revenues and expenses are reported in this statement for some items that will only
result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but not used compensated
absences). Both the statement of net assets and the statement of activities are prepared utilizing the accrual
basis of accounting as opposed to the modified accrual basis used in prior reporting models.
Both of the government-wide financial statements distinguish functions of the City that are principally
supported by taxes and intergovernmental revenues (governmental activities) from functions that are
intended to recover all or a significant portion of their costs through user fees (business-type activities).
•Governmental activities include most of the City's basic services, (general government,
public safety, community development and public works and community services).
Property taxes, sales taxes, and franchise fees primarily finance these activities.
•Business-type activities include the City's water and sewer system. Charges for
services covers all or most of the cost for these services.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. Fund accounting is used by state and local governments
to control and manage money for particular purposes and to ensure finance-related legal requirements.
The City uses two fund types -governmental and proprietary.
•Governmental funds - Similar to the governmental activities in the government-wide
financial statements. However, unlike the government-wide financial statements,
governmental funds focus on current sources and uses of spendable resources. The
governmental fund statement provides a detailed short-term view of the City's general
government operations and helps you determine whether resources are available in the
near future to finance City programs. Comparing the information presented for
governmental funds with the information presented for governmental activities in the
government-wide financial statements will help the reader to better understand the
long-term impact of the government's near-term financing decisions. The governmental
funds balance sheet, statement of revenue and expenditures, and changes in fund
balances include a reconciliation to provide such comparison.
The City maintains seven governmental funds. Information is presented separately in the
governmental funds balance sheet and the governmental fund statement of revenues,
expenditures, and changes in fund balances for the General Fund and the Capital Projects
Fund, both are considered to be major funds. The other six funds are combined into a
single, aggregated presentation. Individual fund data for each of these non-major
governmental funds is provided in the f01m of combining statements found in this report.
•Proprietary funds -The City maintains two types of proprietary funds. The City uses
the Enterprise Fund for water and sewer operations. The Enterprise Fund reports the
same functions presented as business-type activities in the government-wide financial
statement. The second proprietary fund is the Internal Service Fund. This fund is used
to account for fleet management services. The Internal Service Fund is included within
the governmental activities in the government-wide financial statements.
11
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Proprietary fund financial statements provide the same type of information as the
government-wide financial statements, with more detail and include the Internal
Service Fund type activity.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in
the government-wide and fund financial statements.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents combining
and individual fund statements and schedules that further support the information in the financial
statements. These statements are presented immediately following the notes to the financial statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
The City's net assets exceed liabilities by $64.1 million as of September 30, 2005. The largest portion
of the City's net assets (76.96%) reflects its investments in capital assets ( e.g., land, buildings,
equipment, improvements, construction in progress and infrastructure), less any related debt used to
acquire those assets that is still outstanding. The City uses these capital assets to provide services to
citizens; therefore, these assets are not available for future spending. It should be noted that the
resources needed to repay this debt must be provided from other sources, since the capital assets
themselves cannot be used to liquidate these liabilities.
Current and other assets $
Capital assets
Total assets
Long-tenn liabilities
Other liabilities
Total liabilities
Net assets:
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total net assets $
CITY OF FRIENDSWOOD'S NET ASSETS
Governmental Activities
2005 2004
20,612,279 $ 15,394,203 $
41,729,856 35,428,920
62,342,135 50,823,123
17,997,649 10,437,768
2,706,221 2,356,959
20,703,870 __ 12_,794,727
32,533,863
1,576,829
7,527,573
41,638,265 $
29,632,831
1,271,568
7,125,997
38,030,396 $
Business-type Activities
2005 2004
6,842,347 $ 5,747,279
34,508,884 35,570,302
41,351,231 41,317,581
17,058,651 17,842,294
1,795,166 1,519,077
18,853,817 ��1�9,361,371
I 6,823,526 17,174,525
445,086 444,548
5,228,802 4,337,137
$
22,497,414 $ 21,956,210 $
Totals
2005
27,454,626
76,238,740
103,693,366
35,056,300
4,501,387
______]_2__,55 7�68 7
49,357,389
2,021,915
12,756,375
$
64,135,679 $
2004
21,141,482
70,999,222
92,140,704
28,280,062
3,876,036
32,li§,098
46,807,356
1,716,116
11,463,134
59,986,606
Governmental and business-type activities increased the City's net assets by $4.14 million in 2005. The
following table provides a summary of the City's operations for the year ended September 30, 2005.
The Governmental activities increased the City of Friendswood's net assets by $3.6 million, accounting
for 86.96% of the total increase in net assets. Business-type activities increased the City's net assets by
$541,204, accounting for 13.04% of the total increase in net assets.
12
CITY OF FRIENDSWOOD'S CHANGES IN NET ASSETS Governmental Activities Business-type Activities Totals 2005 2004 2005 2004 2005 2004 Revenues: Program revenues: Charges for services $ 2,015,867 $ 1,856,583 $ 8,390,761 $7,203,736 $ 10,406,628 $ 9,060,319 Operating grants and contributions 1,271,119 778,261 1,271,119 778,261 Capital grants and contributions 235,300 239,200 235,300 239,200 General revenues: Property taxes 11,352,598 10,931,393 11,352,598 10,931,393 Sales taxes 3,199,136 2,833,290 3,199,136 2,833,290 Franchise taxes I, 176,460 1,119,328 1,176,460 1,119,328 Other taxes 53,790 71,028 53,790 71,028 Investment earnings 376,435 219,085 114,932 59,869 491,367 278,954 Miscellaneous 51,503 13,478 64,981 Total revenues 19,732,208 18,048,168 8,519,171 7,263,605 28,251,379 25,311,773 Expenses: General govennncnt 3,438,849 3,375,283 3,438,849 3,375,283 Public safety 7,318,886 6,026,272 7,318,886 6,026,272 Community development and public works 2,576,447 2,569,356 2,576,447 2,569,356 Community services 3,075,023 3,081,717 3,075,023 3,081,717 Water and sewer 6,251,251 6,613,296 6,251,251 6,613,296 Interest on long-tenn debt 478,495 465,770 963,355 1,441,850 465,770 Total expenses __ l6_,887,700 15,518,398 7,2l 4,6Q(i_ 6,613,296 24,102,306 22,131,694 Increases in net assets before transfers 2,844,508 2,529,770 1,304,565 650,309 4,149,073 3,180,079 Transfers . __ 763,361 714,278 ( 763,361) ( 714,278) Change in net assets 3,607,869 3,244,048 541,204 ( 63,969) 4,149,073 3,180,079 Net assets, beginning 38,030,396 55,796,025 21,956,210 22,020,179 59,986,606 77,816,204 Prior period adjustment ( 21,009,677) ( 21,009,677) Net assets, ending $ 41,638,265 $ 38,030,396 s 22,497,414 $21,956,210 $ 64,135,679 $ 59,986,606 13
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FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS
Governmental Funds
At the end of the current fiscal year, the City's governmental funds reported combined ending fund
balances of $17,72 6,0 72. Approximately 34% of this amount ($5;989,415) is unreserved, undesignated
fund balance, however, $4.1 million is set aside for the 90 -day operating reserve, as set forth in the
City's financial policies. $11,736,657 is reserved, designated or has legal restrictions as follows:
Reserves (3 % )
•Encumbrances
•Prepaid expense
Designations (6%)
•Projects
•Compensated absences
Legally restricted (57%)
•Capital projects
•Special revenue funds
•Permanent Funds
•Debt service
$383,462
127,735
$382,009
661,419
$8,58 4,78 1
175,192
26,292
1,395,767
In the General Fund, fund balance increased by $937,539. The increase is due to increased revenues in
sales tax ($50 1,626), franchise taxes ($100,460), fines and forfeitures ($338 ,401). The Debt Service
Fund balance increased by $566,0 66. The increase is due to unexpected principal and interest payments
for debt that was not issued until the end of the fiscal year.
Proprietary Fund
Unrestricted net assets of the respective proprietary funds are Enterprise, (water and sewer), $5,228,802
and Internal Service Fund (vehicle replacement fund), $221,793. The net assets of the Water and Sewer
Fund increased by $541,204. The net assets of the Internal Service Fund increased by $134,258 .
General Fund Budgetary Highlights
The City made revisions to the original appropriations approved by the City Council. These changes
resulted in an increase in budgeted expenditures from the original budget of $507,209 or 2.8%. The
majority of this increase was the re-appropriation of prior year reserves ($81,337), encumbrances
($38 4,815) from the prior year, and to appropriate insurance proceeds ($32,590).
CAP IT AL 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 , 20 05, is $76,238,740. The investment in
capital assets include land, buildings and improvements, equipment, infrastrncture, water rights and
constrnction in progress.
14
This year's major capital events during the current fiscal year included the following:
Land
•Continued site preparation and pre-constrnction phase of the Public Safety Building
with current year costs of $444,778. Prior year costs were $217,337 and the proposed
project costs are $5.9 million.
•Continued site preparation and pre-constrnction of new Fire Station #4 for $32,492.
The proposed project costs are $1.4 million.
•Continue drainage improvements in Sun Meadow with current costs of $2,003,297.
Project costs to date are $2.2 million.
•Continued Phas e II improvements at Centennial Park with current year costs of $2
million and total projected costs of $3.5 million.
•Completion of drainage improvements in the subdivisions of Annalea, Kingspark and
Whitehall projec t totaling $1.3 million.
•Completion of street and drainage improvements on Woodlawn and Shadowbend
totaling $1.4 million.
•Asphalt street improvements completed for a total of $244,348.
•Design phases of Prairie Wilde Drainage ($9,400), Clover Acres Drainage ($223,692)
and Glenshannon Drainage ($44,685).
CITY OF FRIENDSWOOD'S CAPITAL ASSETS AT YEAR-END
Govemmental Activities Business-type Activities Totals
2005 2004 2005 2004 2005 2004
$ 24,564,265 $ 24,011,964 $ 718,493 $ 718,493 $ 25,282,758 $ 24,730,457
Buildings and
improvements 9,196,060 6,580,179 9,196,060 6,580,179
Equipment 1,625,743 1,529,863 618,525 541,840 2,244,268 2,071,703
Infrastructure 29,373,029 30,452,500 29,373,029 30,452,500
Water rights 3,465,469 3,465,469 3,465,469 3,465,469
Construction in progress 6,343,788 3,306,914 333,368 392,000 6,677,156 3,698,914
Total capital assets $ 41,729,856 $ 35,428,920 s 34,508,884 $ 35,570,302 $ 76,238,740 $ 70,999,222
Additional information on the City's capital assets can be found in the notes on pages 43 and 44 of this
report.
DEBT ADMINISTRATION
At the end of the current fiscal year, the City of Friendswood had a total bonded debt and capital lease
obligation of $35,627,597.
15
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CITY OF FRIENDSWO OD'S OUTSTANDING DEBT AT YEAR-END Governmental Activities Business-ti� Activities Totals 2005 2004 2005 2004 2005 2004 General obligations $ 17,590,000 $ 10,059,865 $ 3,310,000 $ 1,830,135 $ 20,900,000 $ 11,890,000 Revenue bonds payable 14,020,000 14,160,000 14,020,000 14,160,000 Certificates of obligation 470,000 2,535,000 470,000 2,535,000 Capital )eases 237,597 _ 362,154 237,597 362,154 $ 17,827,597 $ 10,422,019 $ 17,800,000 $ �525,135 $ 35,627,591 $ �94 7, 154 The City's General Obligation, Revenue Bonds, and Certificates of Obligation bond ratings are listed
·below:General Obligation Bonds Revenue Bonds Moody's Investors Service Al
A2 Standard &Poor's A+ NIA
Additional information on the City's outstanding debt can be found on pages 44 through 47 of this
report.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
The entire area surrounding Friendswood continues to experience unprecedented growth. The City's
current population is estimated to be 34,272. Friendswood is expected to reach build out sometime
before 2020 with an estimated population of 50,000. The City is continuing to focus on Economic
Development initiatives, including redevelopment of Main Street and two new residential and
commercial developments, West Ranch and Clear Creek Village Center. Clear Creek Village Center, as
planned, will include 1.6 million feet of new development. This is projected to add $230 million in new
taxable value and an estimated $1.5 million in sales tax revenue. The West Ranch residential
development is currently under way. Clear Creek Village Center has not begun construction at this time.
Project completion is estimated at 7 -10 years after construction begins.
The City's largest single source of revenue in the General Fund continues to be ad valorem taxes. Th�
City's tax rate is $.6385 for seven years; the tax rate was reduced by 3.45 cents and is now $.6040. This rate consists of a maintenance and operations (M&O) tax rate of $.5243 and an I&S (debt service) tax
rate of $.0797. The rate was set based on a net assessed value of $1,840,094,487. This is an increase of
$70,000,000 in taxable value with $52,500,000 or 75% resulting from new construction in the City.
This additional value results in an M&O levy increase of $180,569. The City's financial management
policies sets the guideline to maintain the fund balance and net assets of the various operating funds at
levels sufficient to protect the City's creditworthiness as well as its financial position from unforeseeable
emergencies.
16
The City's second largest source of revenue in the General Fund is Sales Tax. While the City projects a
slight increase from the prior year budget of $2,700,000 to $2,800,000, the 2006 estimate is 3.6% less
than the collections of the previous fiscal year. Other significant General Fund revenues are building
permits, $487,050 and municipal court fines, $814,000. If all estimates are realized, the total General
Fund unreserved fund balance is projected to be $5million at September 30, 2006.
Water revenues are budgeted at $4,163,000, which is a 1.7% increase over the prior year. Sewer
revenues are budgeted at $3,524,000. This represents a $93,000 revenue increase, or 2.7%. Water and
sewer reserves are expected to be $5 .9 million at the end of fiscal year 2006. Pursuant to the financial
management policy, funds in excess of the 90-day operating reserve are designated for future capital
improvements. This capital reserve will allow the City to reduce the amount of future issuances of
revenue bonds.
CONTACTING THE CITY'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, customers, investors, and creditors with a
general overview of the City's finances and to show the City's accountability for the money it receives.
If you have questions about this report or need additional information, contact Administrative Services,
P.0. Box 1288, Friendswood, Texas 77549-1288, or call Roger C. Roecker 281-996-3211, or email
rroecker@ci.friendswood.tx.us.
17
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(, CITY OF FRIENDSWOOD, TEXAS
(l STATEMENT OF NET ASSETS
(I SEPTEMBER 30, 2005
(l
( ) Primary Government
() Governmental Business-type
Activities Activities Total
( ) ASSETS
Cash and investments $ 18,280,283 $ 4,051,035 $ 22,331,318
Receivables, net ofallowances•fur uncollectibles
Taxes 1,183,803 1,183,803
( )Customer accounts 113,229 1,489,870 1,603,099
Other 270,575 20,592 291,167 ( '1 Due from other governments 430,607 430,607
( ; Prepaids 127,735 1,864 129,599
Defen·ec\ charges 206,047 133,934 339,981
( l Restricted assets:
( I Cash and investments 873,387 873,387
Net investment in joint venture 271,665 271,665
( ) Capital assets:
Land 24,564,265 718,493 25,282,758 ' )Buildings and improvements 15,614,543 15,614,543
( )Machinery and equipment 6,116,169 3,041,636 9,157,805
Water and wastewater system 45,336,323 45,336,323
( l Construction in progress 6,343,788 333,368 6,677,156
( ) Water rights 3,465,469 3,465,469
Accumulated depreciation ( I 0,908,909) ( 18,386,405) ( 29!295,314)
(1 Total capital assets, net of accumulated depreciation 41,729,856 34,508,884 76,218,740
( Total assets 62,342,135 41,351,231 103,693,366
(
( ' LIABILITIES
Accounts payable 1,394,325 591,659 1,985,984
( ) Accrned liabilities 596,573 25,497 622,070
( )
Customer deposits 262,660 262,660
Accmed interest 62,600 94,914 157,514
( ) NoncutTent liabilities:
Due within one year 652,723 820,436 1,473,159
() Due in more than one year 17,997,649 17,058,651 35,056,300
(1 Total liabilities 20,703,870 18,853,817 39,557,687
( ) NET ASSETS
l)Invested in capital assets, net of related debt 32,533,863 16,823,526 49,357,389
Restricted for:
(J Debt service 1,375,345 295,962 1,671,307
CJ Public safety 77,157 77,157
Community development 124,327 124,327
( J Capital improvements 149,124 149,124
Umestricted 7,527,573 5,228,802 ___!b,756,375 ll l, Total net assets $ 41,638,265 $ 22,497,414 $ 64,135,679
l
I The notes to the fmancial statements are an integral part of this statement.
I \ 18
Functions/Pro�ams
Prinrnry GoYernment:
Governmental activities:
General govemment
Public safety
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF ACTMTIES
FOR THE YEAR ENDED SEPTEMBER 30, 2005
Expenses
$ 3,438,849 $
7,318,886
Charges for
Services
1,176,086
15,013
Pro_gram Revenues
$
Operating
Grants and
Contributions
903,997
Community development and public works
Community services
2,576,447
3,075,023
758,487 360,528
66,281 6,594
Interest on long-le1m debt 478,495
Total governmental activities 16,887,700 2,015,867 __ 1,271,119
Business-type activities:
Water and sewer 7,214,606 8,390,761
Total business-type activities 7,214,606 8,390,761
Total primary government $ 24,102,306 $ 10,406,628 $ 1,271,119
General revenues:
Taxes:
Prope1iy taxes, levied for general purposes
Properly taxes, levied for debt service
Sales
Franchise
Other
hlvestment earnings
Miscellaneous
Transfers
Total general revenues and transfers
Change in net assets
Net assets, beginning
Net assets, ending
The notes to the financial statements are an integral part of this statement.
19
$
Capital
Grants and
Contributions
174,640
60,660
_ � 3 00
$ 235,300
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( ) Net (Expense) Revenue and ( )Changes in Net Assets Primary Government ( )
t ) Governmental Business-type Activities Activities Total ()
( /
( ) $( 2,262,763) $ $( 2,262,763) ( )( 6,225,236) ( 6,225,236) ( ) ( 1,396,772) ( 1,396,772) ( 3,002,148) ( 3,002,148) ( ) ( 478,495) ( 478,495) ( ( 13,365,414) ( 13,365,414) (
( ) 1,176,155 1,176,155 1,176,155 1,176,155 ( )
(' ( 13,365,414) 1,176,155 !12,189,259)( l (
(I 9,856,574 9,856,574 ( )1,496,024 1,496,024 l i 3,199,136 3,199,136 1,176,460 1,176,460 (,1 53,790 53,790 ( ) 376,435 114,932 491,367 51,503 13,478 64,981 () 763,361 ( 763,361) ( ) 16,973,283 ( 634,951) 16,338,332 (_ \ 3,607,869 541,204 4,149,073 38,030,396 21,956,210 59,986,606 tJ $ 41,638_,265 $ ____1,b_497,414 $ ______&±,_ 13 5_, 67 9 ll
(_)
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CITY OF FRIENDSWOOD, TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2005
2003 and Total 2005 Bond Governmental General Construction Other Funds Funds ---ASSETS Cash and investments $ 7,301,726 $ 9,130,391 $ 1,627,009 $ 18,059,126 Receivables, net of allowances for uncollcctibles: Taxes 1,141,625 42,178 1,183,803 Customer accounts 84,961 28,268 113,229 Other 245,725 15,857 8,357 269,939 Due from other governments 430,607 430,607 Prepaids 127,735 127,735 Total assets $ 9,332,379 $ 9,146,248 $ 1,705,812 $ 20,184,439 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 766,475 561,467 66,383 1,394,325 Accrued liabilities 596,573 596,573 Deferred revenue 425,291 42,178 467,469 Total liabilities 1,788,339 561,467 108,561 2,458,367 Fund balances: Reserved for: Encumbrances 383,462 383,462 Prepaids 127,735 127,735 Debt service 1,395,767 1,395,767 Unreserved, reported in: General fond Designated for: Projects 382,009 382,009 Compensated absences 661,419 661,419 Undesignated 5,989,415 5,989,415 Capital projects fonds 8,584,781 8,584,781 Special revenue fonds 175,192 175,192 Pennanent fond 26,292 26,292 Total fond balances 7,544,040 8,584,781 1,597,251 17,726,072 Total liabilities and fund balances $ 9,332,379 $ 9,146,248 $ 1,705,812 Amounts reported for governmental activities in the statement of net assets arc difforcnt because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the fonds. 41,385,376 Other long-tcnn assets arc not available to pay for current-period expenditures and, therefore, are deferred in the fonds. 467,469 An Internal Service Fund is used by management to charge the costs of certain capital assets to individual fimds. The assets and liabilities of the Internal Service Fund arc included in tl1e governmental activities in the statement of net assets. 566,273 Long-tenn liabilities are not due and payable in the current period and therefore are not reported in the fonds. ( 18,506,925) Net assets of governmental activities $ 41,638,265
The notes to the financial statements are an integral part of this statement.
21
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,(
( \ CITY OF FRIENDSWOOD, TEXAS
(\ STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (, GOVERNMENTAL FUNDS (\ FOR THE YEAR ENDED SEPTEMBER 30, 2005 ( )
( ) 2003 and Total ( )2005 Bond Governmental
( I General Construction other Funds Funds
REVENUES (l Prope11y taxes $ 9,896,019 $ $ 1,496,021 $ 11,392,040
i( ) Sales taxes 3,210,626 3,210,626
Franchise fees 1,176,460 1,176,460 ( ) Fines and forfeitures 1,106,423 6,493 1,112,916
() Pennits and fees 675,307 42,300 717,607
Intergovemmental 985,339 985,339
l ·i Interest on investments 248,271 62,986 63,866 375,123
( ) Donations 213,381 213,381
Other 365,920 49 003 414,923 C)Total revenues _____!2i_664,365 62,986 __ 1,871,064 ___12_,5 2_8_, 415
(
( )
EXPENDITURES
Cunent:
( I General govenunent 3,420,274 3,420,274
( )
Public safety 6,801,143 326,832 7,127,975
Community development and public works 2,436,359 2,436,359
( l Community services 2,626,329 2,626,329 ' )
Capital outlay 2,366,082 4,674,091 7,040,173
Debt service:
( )Principal 459,422 459,422
(_, Interest and fiscal charges 594,076 594,076
Total expenditures 17,650,187 4!674,091 1!380,330 23 !704,608 (
l EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 14,178 ( 4,611,105) 490 734 ( 4,106,193)
( J OTHER FINANCING SOURCES (USES)
Issuance of capital related bonds 7,865,000 7,865,000
Premium on issuance of bonds 159,224 159,224
ll Transfers in 923,361 923,361
Transfers out ( 160,000) ( 160,000) l)Total other financing sources (uses)923,361 8,024,224 ( 160,000) 8,787,585
(.)
(.) NET CHANGE IN FUND BALANCES 937,539 3,413,119 330,734 4,681,392
( J FUND BALANCES, BEGINNING 6,606,501 5,171,662 1,266,517 �44,680
l J $ 7,544,040 $ 8,584!781 $ 1,597,251 $ _1_7,726,072 l)FUND BALANCES, ENDING
(_ )
( / The notes to the fmancial statements are an integral part of this statement. l l J 22
I lI l
CITY OF FRIENDSWOOD, TEXAS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2005
Amounts reported for governmental activities in the Statement of Activities (pages 19 -20)
are different because:
Net change in fond balances -total governmental fonds (page 22)
Goverlllllental fonds report capital outlays as expenditures. However, in the statement of
activities the cost of those assets is allocated over their estimated usefol lives and reported as
depreciation expense. This is the amount by which capital outlays exceeded depreciation in
the current period.
Revenues in the statement of activities that do not provide current financial resources are not
reported as revenues in the funds.
The issuance of long-term debt ( e.g., bonds, leases) provides current financial resources to
governmental funds, while the repayment of the principal of long-term debt consumes the
current financial resources of governmental fonds. Neither transaction, however, has any
effect on net assets. This amount is the net effect of these differences in the treatment oflong
term debt and related items.
Some expenses reported in the statement of activities do not require the use of current
financial resources and, therefore, are not reported as expenditures in governmental funds.
Internal Service Funds are used by management to charge the costs of certain capital assets to
individual funds. The net revenue of certain activities of internal service fonds is reported
with governmental activities.
Change in net assets of governmental activities (pages 19 -20)
The notes to the financial statements are an integral part of this statement.
23
$ 4,681,392
6,350,984 ( 42,159)
( 7,420,791)
( 95,815)
134,258
$ 3,607,869
( I CITY OF FRIENDSWOOD, TEXAS
f1 GENERAL FUND
(\ STATEMENT OF REVENUES, EXPENDITURES
( ) AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
(\ FOR THE YEAR ENDED SEPTEMBER 30, 2005
('
( l Variance with ( I Final Budget
( )Budgeted Amounts Actual Positive
( Original Final Amounts (Negative)
( ) REVENUES
( ) Property taxes $ 9,818,190 $ 9,818,190 $ 9,896,019 $ 77,829
Sales taxes 2,709,000 2,709,000 3,210,626 501,626
( ) Franchise taxes 1,076,000 1,076,000 1,176,460 100,460
{l Fines and forfeitures 755,800 768,022 1,106,423 338,401
Permits and fees 531,981 535,511 675,307 139,796 {) Intergovernmental 1,130,086 l, 103,350 985,339 ( 118,011)
( l Interest on investments 65,000 65,000 248,271 183,271
( I Other 117,733 159,748 365,920 206,172
Total revenues 16,203,790 16,234,821 17,664,365 1,429,544
(
(l EXPENDITURES
(1 Current:
General government 3,508,282 3,739,997 3,434,166 305,831
( l Public safety 6,614,101 7,025,082 6,801,143 223,939
()
Community development and public works 4,057,404 3,930,157 3,622,065 308,092
Community services 4,231,517 4,223,277 3,792,813 430,464 (·Total expenditures 18,411,304 18,918,513 17,650)187 _1268,326
( I
(, EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES ( 2,207,514) ( 2,683,692) 14,178 2,697,870
l.) OTHER FINANCING SOURCES
(, Transfers in 923,361 923,361 923,361
(. I Total other financing sources 923,361 923,361 923,361
ll NET CHANGE IN FUND BALANCES ( 1,284,153) ( 1,760,331) 937,539 2,697,870
(.J FUND BALANCES, BEGINNING 6,606,501 6,606,501 ____&_,_606,501 ll
() FUND BALANCES, ENDING $ 5,322,348 $ 4,846,170 $ 7,544,040 $ 2,697,870
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l l 24 l
{ '
ASSETS Current assets: Cash and investments Accounts receivable, net of allowance: Customer accounts Otl1er Prcpaids Restricted cash and investments Total current assets Noncurrent assets: Restricted net investment in joint venture Deferred char11es Capital assets: Laud Machinery and equipment Water and wastewater system Constrnction in pro11ress Water rights Accumulated depreciation Total capital assets Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable Accrned liabilities Accrned interest Customer deposits Compensated absences Bonds payable Total current liabilities Noncurrent liabilities: Compensated absences Bonds payable Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for: Dcbt semce Capital improvements Unrestricted Total net assets CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
SEPTEMBER 30, 2005 Business-type Activities Ente!l!_rise Fund Water and Sewer $ 4,051,035
1,489,870 20,592 1,864
873,387
6,436,748
271,665 133,934
718,493 3,041,636
45,336,323
333,368
3,465,469
18,386,405)
34,508,884
34,914,483
41,351,231
591,659
25,497
94,914
262,660 11,959
808,477
1,795,166
47,836
17,010,815
17,058,651
18,853,817
16,823,526
295,962
149,124
5,228,802
$ 22,497,414
The notes to the financial statements are an integral part of this statement.
25
$
$ Governmental Activities Internal Sen�cc Fund 221,157
636
22!L793
843,005
498,525)
344,480
344,480
566 L273
344,480
221,793
566,273
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STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30, 2005
Business-type Governmental
OPERA TING REVENUES
Charges for services
Total operating revenues
OPERATING EXPENSES
Personnel services
Wastewater operations
Water purchases
Repairs and maintenance
Supplies
Other services and charges
Depreciation
Total operating expenses
OPERATING INCOME
NONOPERATING REVENUES (EXPENSES)
Investment earnings
Gain on sale of capital assets
Interest expense and fiscal charges
Total nonoperating revenues (expenses)
INCOME BEFORE TRANSFERS
TRANSFERS OUT
CHANGE IN NET ASSETS
TOTAL NET ASSETS, BEGINNING
TOTAL NET ASSETS, ENDING
Activities
Entererise Fund
Water and Sewer
$ 8,390,761
8,390,761
1,244,347
1,251,366
804,440
673,097
168,740
627,895
1,481,366
6,251,251
2,139,510
114,932
13,478
( 963,355)
( 834,945)
1,304,565
( 763,361)
541,204
21,956,210
$ 22,497,414
The notes to the financial statements are an integral part of this statement.
26
Activities
Internal
Service
Fund
$ 315,821
315,821
23,940
170,365
194,305
121,516
1,312
11,430
12,742
134,258
134,258
432,015
$ 566,273
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30, 2005
Business-type
Activities
Ente1:Erise Fund
Water and Sewer
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers and users $ 8,191,399
Cash paid to suppliers for goods and services ( 1,312,357)
Cash paid to employees for services { 3,270,991)
Net cash provided by operating activities 3,608,051
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers to other funds { 763,361)
Net cash used for noncapital financing activities { 763,361)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition of capital assets ( 419,948)
Proceeds from sale of capital assets 13,478
Principal paid on bonds ( 689,889)
hlterest and fiscal charges paid on debt { 970,796)
Net cash used for capital and related financing activities { 2,067,155)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment earnings I 14,932
Net cash provided by investing activities 114,932
NET INCREASE IN CASH AND CASH EQUIVALENTS 892,467
CASH AND CASH EQUIVALENTS, BEGINNING 4,031,955
CASH AND CASH EQUIVALENTS, ENDING $ 4,924,422
(hlcluding $873,387 for water and sewer
rep011ed as restricted assets)
( continued)
27
Govenunental
Activities
Intemal
Service
Fund
$ 315,821
{ 23,825)
291,996
( 120,317)
11,430
{ 108,887)
1,312
___ 1,312
184,421
36,736
$ 221,157
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STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
(Continued)
YEAR ENDED SEPTEMBER 30, 2005
Business-type
Activities
Ente1::erise Fund
\Valer and Sewer
Reconciliation of operating income to net cash
provided by operating activities:
Operating income $ 2,139,510
Adjustments to reconcile operating income
to net cash provided by operating activities:
Depreciation 1,481,366
Changes in assets and liabilities:
Decrease (increase) in assets:
Customer receivable ( 210,338)
Other receivable 14,511
Prepaid and other assets 1,103
Investment in joint venture ( 3,301)
Increase (decrease) in liabilities:
Accounts payable 256,745
Accrned liabilities ( 46,068)
Compensated absences payable ( 21,942)
Customer_deposits ( 3,535)
Net cash provided by operating activities $ 3,608,051
l 1 The notes to tlte financial statements a1·e an integral part of this statement.
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$ 121,516
170,365
115
$ 291,996
CITY OF FRIENDSWOOD, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
1.SUMMARY OF SIGNIFICANT ACOUNTING POLICIES
The City of Friendswood, Texas (the City) was incorporated on October 15, 1960. The City
charter provides for a City Council-City Manager form of government. The Mayor and six
Council Members are elected from the City at large serving three-year terms. Currently, the City
charter provides for a Council term limitation of three terms. The City Council is the principal
legislative body of the City. The City Manager is appointed by a majority vote of the City
Council and is responsible to the Council for the administration of all the affairs of the City. The
City Manager is responsible for law enforcement, appointment and removal of department
directors and employees, supervision and control of all City departments, and preparation of the
annual budget. The Mayor presides at meetings of the City Council and can vote. The City
provides the following services: public safety, streets, parks and recreation, libra1y, water and
sewer, sanitation, planning and zoning, building inspection, code enforcement, and general
administrative services.
A.Reporting Entity
The City is an independent political subdivision of the State of Texas governed by an elected
six-member Council and Mayor and is considered a primary government. As required by
generally accepted accounting principles, these financial statements have been prepared
based on considerations regarding the potential for inclusion of other entities, organizations,
or functions as part of the City's financial reporting entity. Based on these considerations, no
other entities have been included in the City's reporting entity. Additionally, as the City is
considered a primary government for financial repo1iing purposes, its activities are not
considered a part of any other governmental or other type of reporting entity.
( continued)
29
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1.SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
A.Reporting Entity (Continued)
Consideration regarding the potential for inclusion of other entities, organizations, or
functions in the City's financial reporting entity is based on criteria prescribed by generally
accepted accounting principles. These same criteria are evaluated in considering whether the
City is a part of any other governmental or other type of reporting entity. The overriding
elements associated with prescribed criteria considered in determining that the City's
financial reporting entity status is that of a primary government are that it has a separately
elected governing body; it is legally separate; and it is financially independent of other state
and local governments. Additional prescribed criteria under generally accepted accounting
principles include considerations pertaining to organizations for which the primary
government is financially accountable; and considerations pertaining to other organizations
for which the nature and significance of their relationship with the primary government are
such that exclusion would cause the reporting entity's financial statements to be misleading
or incomplete.
As indicated in Note 4, the City participates in a joint venture (Blackhawk Regional Waste
Treatment Plant) with three other entities, under the authority of the Gulf Coast Waste
Disposal Authority. This venture is accounted for under the equity method in the City's
Enterprise Fund.
B.Government-wide Fund Financial Statements
The government-wide financial statements (i.e., the statement of net assets and the statement
of activities) rep01i info1mation on all of the nonfiduciary activities of the primary
government. For the most part, the effect of interfund activity has been removed from these
statements. Governmental activities, which normally are supported by taxes and
intergovernmental revenue, are rep01ied separately from business-type activities, which rely
to a significant extent on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenue. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenue includes 1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or segment, and 2) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or
segment. Taxes and other items not properly included among program revenue are reported
instead as general revenue.
Separate financial statements are provided for governmental funds and proprietary funds.
Major individual governmental funds and major individual Enterprise Funds are reported as
separate columns in the fund financial statements.
( continued)
30
1.SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
C.Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund financial
statements. Revenues are recorded when earned and expenses are recorded when a liability
is incmTed, 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 cmTent fiscal period. Expenditures generally are
recorded when a liability is incurred, as under accmal 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 accmal and so have been recognized as revenue
of the current fiscal period. All other revenue items are considered to be measurable and
available only when cash is received by the City.
The City reports the following major governmental funds:
The Ge11eral F1111d is the City's primary operating fund. It accounts for all
financial resources of the general government, except those required to be
accounted for in another fund.
The 2003 a11d 2005 Bo11d Co11structio11 F1111d is used to account for the constrnction
of public safety facilities, and park, streets and drainage improvements that are
funded by the Permanent Improvement Bonds, Series 2003 and 2005.
The City reports the following major Enterprise Fund:
The Water a11d Sewer F1111d is used to account for the activities of the City's
water and wastewater operations.
Additionally, the City reports the following fund type:
The I11ter11al Service F1111d is used to account for vehicle management services
provided to other departments or agencies of the City, or to other governments, on
a cost reimbursement basis.
(continued)
31
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1.SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
C.Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
Private-sector standards of accounting and financial reporting issued prior to December 1,
1989, generally are followed in both the government-wide and enterprise fund financial
statements to the extent that those standards do not conflict with or contradict guidance of the
Governmental Accounting Standards Board. Governments also have the option of following
subsequent private-sector guidance for their business-type activities and Enterprise Funds,
subject to this same limitation. The City has elected not to follow subsequent private-sector
guidance.
As a general rule, the effect of interfund activity has been eliminated from the government
wide financial statements. Exceptions to this general rule are charges between the City's
water and sewer function and various other functions of the government. Elimination of
these charges would distort the direct costs and program revenue reported for the various
functions concerned.
Proprietary funds distinguish operating revenues and expenses from nonoperating items.
Operating revenues and expenses generally result from providing services and producing and
delivering goods in connection with a proprietary fund's principal ongoing operations. The
principal operating revenues of the Water and Sewer Enterprise Fund, and of the City's
Internal Service Funds are charges to customers for sales and services. Operating expenses
for the Enterprise Fund and Internal Service Funds include the cost of sales and services,
administrative expenses, and depreciation on capital assets. All revenue and expenses not
meeting this definition are reported as nonoperating revenue and expenses.
When both restricted and unrestricted resources are available for use, it is the City's policy to
use restricted resources first, then unrestricted resources as they are needed.
D.Assets, Liabilities, and Net Assets or Equity
Cash and Investments
Cash and investments include cash on hand, deposits with financial institutions, short-term
investments in a state-managed public funds investment pool account (TexPool), and two
privately managed public funds investment pools (Lone Star and MBIA). Other investments
consist mainly of U. S. government treasury bills, treasury notes and other U. S. government
obligations. The restricted cash and investments are the assets restricted for specific use.
The restricted cash includes cash on deposit with financial institutions and TexPool.
( continued)
32
1.SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
D.Assets, Liabilities, and Net Assets or Equity (Continued)
In accordance with GASB Statement No. 31, the City's general policy is to report money
market investments and short-term participating interest-earning investment contracts at
amortized cost and to report nonparticipating interest-earning investment contracts using a
cost-based measure. However, if the fair value of an investment is significantly affected by
the impairment of the credit standing of the issuer or by other factors, it is repo1ted 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 "nonpa1ticipating" means
that the investment's value does not vary with market interest rate changes.
The City maintains a pooled cash and investments account for all funds of the City. Each
fund's positive equity in the pooled cash account is presented as "cash and investments" in
the financial statements. Negative equity balances have been reclassified and are reflected as
interfund accounts payable. Interest income and interest expense are allocated to each
respective individual fund monthly based on their representative fund balances.
The City's cash and cash equivalents are considered to be cash on hand, demand deposits,
and short-term investments with original maturities of three months or less from the date of
acquisition.
Receivables and Payables
Activity between funds that are representative of lending/bon-owing arrangements
outstanding at the end of the fiscal year are referred to as either "due to/from other funds"
(i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the
noncurrent portion of interfund loans). All other outstanding balances between funds are
reported as "due to/from other funds." Any residual balances outstanding between the
governmental activities and business-type activities are reported in the government-wide
financial statements as "internal balances."
Advances between funds, as reported in the fund financial statements, are offset by a fund
balance reserve account in applicable governmental funds to indicate that they are not
available for appropriation and are not expendable available financial resources.
All trade and property tax receivables are shown net of an allowance for uncollectibles.
Trade accounts receivable in excess of 180 days comprise the trade accounts receivable
allowance for uncollectibles. The property tax receivable allowance is equal to 10 percent of
outstanding property taxes at September 30, 2005.
(continued)
33
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1.SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
D.Assets, Liabilities, and Net Assets or Equity (Continued)
Receivables and Payables (Continued)
The City's property taxes are levied annually in October on the basis of the Appraisal
District's assessed values as of Januaty 1 of that calendar year. Appraised values are
established by the Appraisal District at market value and assessed at 100% of appraised value
less exemptions. The City's property taxes are billed and collected by the City's Tax
Assessor/Collector. Such taxes are applicable to the fiscal year in which they are levied and
become delinquent with an enforceable lien on property on February 1 of the subsequent
calendar year.
Property taxes are prorated between operations and debt service based on rates adopted for
the year of the levy. For the cunent year, the City levied property taxes of $0.6385 per $100
of assessed valuation that were prorated between operations and debt service in the amounts
of $0.5547 and $0.0838, respectively. The resulting adjusted tax levies were approximately
$9.7 and $1.5 million for operations and debt service, respectively, based on a total adjusted
taxable valuation of approximately $2.127 billion for the 2004 tax year.
Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items in both government-wide and fund financial statements.
Restricted Assets
Certain proceeds of the City's Enterprise Fund revenue bonds, as well as certain resources set
aside for their repayment, are classified as restricted assets on the balance sheet because their
use is limited by applicable bond covenants.
Capital Assets
Capital assets, which include property, plant, equipment, infrastmcture, and water rights are
repo1ted in the applicable governmental or business-type activities columns in the government
wide financial statements. The City defines capital assets as assets with an initial, individual
cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are
recorded at historical cost or estimated historical cost if purchased or constructed. Donated
capital assets are recorded at estimated fair market value at the date of donation.
(continued)
34
1.SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
D.Assets, Liabilities, and Net Assets or Equity (Continued)
Capital Assets (Continued)
The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend assets' lives are not capitalized.
Property, plant and equipment is depreciated using the straight-line method over the
following useful lives:
Buildings
Improvements
Equipment
Assets
Water and sewer system
Years
20-50
5-50
5-10
40-50
The City has elected to delay impleme ntation of the requirements of GASB 34 related to
infrastructure (roads, sidewalks, etc.) assets acquired prior to October 1, 2002. GASB 34
permits an optional four-year transition period for governmental infrastrncture reporting.
Compensated Absences
The City's employees earn vacation and sick leave which may either be taken or
accumulated, up to certain amounts, until paid upon resignation or retirement. All vacation
and sick leave pay are accrued when incurred in the government-wide and proprietary fund
financial statements. A liability for these amounts is reported in governmental funds only if
they have matured, for example, as a result of employee resignations and retirements.
Long-term Obligations
In the government-wide financial statements and proprietary fund types in the fund financial
statements, long-term debt and other long-term obligations are reported as liabilities in the
applicable governmental activities, business-type activities, or proprieta1y fund type
statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred
and amortized over the life of the bonds using the straight-line method which approximates
the effective interest method. Bonds payable are reported net of the applicable bond
premium or discount. Bond issuance costs are repo1ied as deferred charges and amortized
over the term of the related debt.
(continued)
35
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1.SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Continued)
D.Assets, Liabilities, and Net Assets or Equity (Continued)
Long-term Obligations (Continued)
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs during the current period. The face amount of debt
issued is reported as other financing sources. Premiums received on debt issuances are
reported as other financing sources while discou nts on debt issuances are reported as other
financing uses. Issuance costs, whether or not withheld from the actual debt proceeds
received, are reported as debt service expenditures.
Fund Equity
In the fund financial statements, governmental funds report reservations of fund balance for
amounts that are not available for appropriation or are legally restricted by outside parties for
use for a specific purpose. Designations of fund balance represent tentative management
plans that are subject to change.
Net Assets
Net assets represent the difference between assets and liabilities. Net assets invested in
capital assets, net of related debt consists of capital assets, net of accumulated depreciation,
reduced by the outstanding balances of any borrowing used for the acquisition, construction
or improvements of those assets, and adding back unspent proceeds. Net assets are reported
as restricted when there are limitations imposed on their use either through the enabling
legislations adopted by the City or through external restrictions imposed by creditors,
grantors or laws or regulations of other governments.
Estimates
The preparation of financial statements, in conformity with generally accepted accounting
principles, requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the reporting
period. Actual amounts could differ from those estimates.
36
2.RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the
Government-wide Statement of Net Assets
The governmental fund balance sheet includes a reconciliation between fund balance -total
governmental funds and net assets -governmental activities as reported in the government-wide
statement of net assets. One element of that reconciliation explains, "Long-term liabilities,
including bonds payable, are not due and payable in the current period and therefore are not
reported in the funds." The details of this $18,506,925 difference are as follows:
General obligation bonds
DefetTed charges for issuance costs (to be amortized
over life of debt)
Capitalized lease obligations
Accrued interest payable
Compensated absences
Net adjustment to reduce fi111d balance -total
gove/'1/mental fimds to arrive at net assets -
gove/'1/mental activities
$ 17,749,224
$
( 206,047)
237,597
62,600
663�55 l
18,506,925
Explanation of Certain Differences Between the Governmental Fund Statement of Revenue,
Expenditures and Changes in Fund Balances and the Government-wide Statement of
Activities
The governmental fund statement of revenue, expenditures and changes in fund balances
includes a reconciliation between net changes in fund balances -total governmental fund and
changes in net assets of governmental activities as reported in the government-wide statement of
activities. One element of that reconciliation explains, "Governmental funds report capital
outlays as expenditures. However, in the statement of activities, the cost of those assets is
allocated over their estimated useful lives and reported as depreciation expense." The details of
this $6,350,984 difference are as follows:
Capital outlay
Depreciation expense
Net adjustment to increase net changes in fi111d balances -
total gove/'1/mental fi111ds to arrive at changes i11 net
assets of govemmental activities
(continued)
37
$
{
7,214,813
863,829)
$ 6,350,984
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2.RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS(Continued) Explanation of Certain Differences Between the Governmental Fund Statement of Revenue,
Expenditures and Changes in Fund Balances and the Government-wide Statement of
Activities (Continued) Another element of that reconciliation states, "Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds." The details of this $42,159 difference are as follows: Property taxes
Court fines
Miscellaneous revenue
Net adjustment to decrease net changes inflmd balances -
total govem111ental flmds to arrive at changes in net
assets of govel'll111ental activities
$ 39,442
1,688
1,029
$ 42,159 Another element of that reconciliation states, "The issuance of long-term debt ( e.g., bonds, leases) provides cmTent financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities." The details of this $7,420,791 difference are as follows: Debt issued:
Issuance of general obligation
Premium on capital related debt issued
Deferred charges -bond issuance costs
Principal repayments:
General obligation debt
Capital lease
Net adjustment to decrease net changes in flmd balances -
total gove1'11111entalflmds to arrive at changes in net
assets of govel'll111ental activities
$( 7,865,000)
( 159,224)
144,011
334,865 1241557 $( 7,420,791) Another element of that reconciliation states, "Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds." The details of this $95,815 difference are as follows: Compensated absences
Accrued interest
Amortization of issuance costs
Net adjustment to decrease net changes i,1.fund balances -
total gover11111ental.funds to arrive at changes in net
assets of govel'll111ental activities
38
$ 67,385
25,476
21954
$ 95,815
3.STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
Budgetary Information
Annual appropriated budgets are adopted for the General, Fire/EMS Donations Special Revenue,
and Debt Service Funds and are prepared on a basis consistent with generally accepted
accounting principles (GAAP) at the departmental level, the legal level of budgeta1y control. An
annual non-appropriated budget is adopted for the City's Water and Sewer Enterprise Fund on a
non-GAAP basis for managerial control. Project length budgets are adopted for Capital Projects
Funds and amended on an annual basis to reflect the uncompleted portion of the projects.
On or before the first day of August of each year, the City Manager shall submit to the Council a
proposed budget and an accompanying message. The Council shall review the proposed budget
and revise as deemed appropriate prior to general circulation for public hearing. The Council
shall adopt the budget by ordinance on one reading on or before the 15 th day of September or as
soon thereafter as practical. Adoption of the budget shall require an affirmative vote of at least a
majority of all members of the Council. Adoption of the budget shall constitute appropriations
of the amounts specified therein as expenditures from the funds indicated. If, during the fiscal
year, the City Manager certifies that there are funds available for appropriation, revenue in
excess of those estimated in the budget, the Council may make supplemental appropriation for
the year up to the amount of such excess.
At any time during the fiscal year, the City Manager may transfer part or all of any
unencumbered appropriation balance among programs within a department, division, or office,
and, upon written request by the City Manager, the Council may by ordinance transfer part or all
of any unencumbered appropriation balance from one department, office, or agency to another.
No appropriation for debt service may be reduced or transferred and no appropriation may be
reduced below any amount required by law to be appropriated or by more than the amount of the
unencumbered balance thereof. The City Council made supplemental budgeta1y appropriation
changes during the fiscal year. The reported budgeta1y data has been revised for these
amendments legally authorized during the year.
Eve1y appropriation, except an appropriation for a capital expenditure, shall lapse at the close of
the fiscal year to the extent that it has not been expended or encumbered. An appropriation for a
capital expenditure shall continue in force under the purpose for which it was made until it has
been accomplished or abandoned. The purpose of any such appropriation shall be deemed
abandoned if three years pass without disbursement from or encumbrance of the appropriation.
(continued)
39
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3.STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued)
Budgetary Information (Continued)
Encumbrances represent commitments related to unperformed contracts for goods or services.
Encumbrance accounting under which purchase orders, contracts, and other commitments for the
expenditure of resources are recorded to serve that portion of the applicable appropriation is
utilized in the governmental funds. Encumbrances outstanding at year-end are reported as
reservations of fund balances and do not constitute expenditures or liabilities because the
commitments will be honored during the subsequent year. Encumbrances lapse at year-end and
are reappropriated in the ensuing year's budget.
Excess of Expenditures Over Appropriations
During the 2005 fiscal year, expenditures exceeded appropriations in the following departments
(the legal level of compliance):
General Fund:
General Government -City Secreta1y
General Government -Municipal Court
Public Safety -Animal Control
Community Development and Public Works -Engineering
Community Services -Administration
4.DETAILED NOTES ON ALL FUNDS
Deposits and Investments
As of September 30, 2005, the City had the following investments:
Investment Type Fair Value
MBIA Class $ 4,698,308 Lone Star I,032,741
Tex Pool 4,035,739
U.S. Agency Securities:
Freddie Mac 297,599
Federal Home Loan Bank 2,575,169
Fannie Mae 695,015
Total U.S. Agency Securities 3,567_,_783
Total portfolio $ 13,334,571
Portfolio weighted average maturity (days)
(continued)
40
$ 3,033
1,299
5,302
11,469
7,473
Weighted Average
Maturi!X (Days2
39
20
27
207
498
180
133
4.DETAILED NOTES ON ALL FUNDS (Continued)
Deposits and Investments (Continued)
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.
Interest Rate Risk. In accordance with its investment policy, the City manages its exposure to
declines in fair market values by limiting 30% of its portfolio to be invested for a period of more
than two years. As of September 30, 2005, all of the City's investments were invested for a
period less than two years.
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 to it. State statutes require that all deposits in financial
institutions be fully collateralized by U. S. Government obligations or its agencies and
instrnmentalities 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, 2005, $10,059,461 of
the City's $10,359,461 deposit balance was collateralized with securities held by the pledging
financial institution. The remaining balance, $300,000 was covered by FDIC insurance.
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, 2005, were rated as follows:Investment Type Rating Rating Agency MBIA Class AAA Fitch Lone Star AAAf Standard & Poor's TexPool AAAm Standard & Poor's U.S. Agency Securities: Freddie Mac AAA Moody's Investor Service Federal Home Loan Bank AAA Moody's Investor Service Fannie Mae Aaa Moody's Investor Service 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 instrnmentalities;
2.Certificates of Deposit issued by state and national banks or savings or loan
associations domiciled in this state that are guaranteed or insured by the Federal
Deposit Insurance Corporation or collateralized in accordance with Section
2256.010, the Texas Government Code, in face amount not to exceed $100,000;
3.No-load money market mutual funds; and
4.TexPool, Lone Star Investment Pool and MBIA Class.
(continued)
41
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DETAILED NOTES ON ALL FUNDS (Continued)
Deposits and Investments (Continued)
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 cunent year. All significant legal and
conh·actual provisions for investments were complied with during the year. Investments at year
end are representative of the types of investments maintained by the City during the year.
Receivables
Receivables as of year-end 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:
Governmental Funds Proprietary Funds
2003 and
2005 Bond Water and Internal
General Construction Nonmajor Sewer Service Total
Receivables:
Property taxes $ 266,368 $ $ 46,864 $ $ $ 313,232
Sales taxes 603,620 603,620
Franchise taxes 298,274 298,274
Customer accounts 86,961 28,268 1,499,870 1,615,099
Accrued interest 39,835 15,857 7,807 20,144 636 84,279
Court fines 431,019 431,019
Other 36,362 550 448 37,360
Gross receivables 1,762,439 15,857 83,489 1,520,462 636 3,382,883
Less: allowance for
uncollectibles 290,128 4,686 10,000 304,814
Net total receivables $ 1,472,311 $ 15,857 $ 78,803 $ ____!_,i1_Q,_ 4 6 2 $ 636 $ __ 3,078,069
Governmental funds report deferred revenue in connection with receivables for revenue that is
not considered to be available to liquidate liabilities of the cutTent period. Governmental funds
also defer revenue recognition in connection with resources that have been received, but not yet
earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows:
General Fund
Delinquent property taxes receivable
Court fines receivable
Miscellaneous receivable
Total General Fund
Debt Service Fund
Delinquent property taxes receivable
Total Debt Service Fund
Total Governmental Funds
( continued)
42
Unavailable
$ 239,731
174,327
11,233
425,291
42,178
42,178
$ 467�469
4.DETAILED NOTES ON ALL FUNDS (Continued)
Cayital Assets
Capital asset activity for the year ended September 30, 2005, was as follows:
Primary Government
Beginning Ending
Balance Increases Decreases Balance
Governmental activities:
Capilal assels, nol being deprecialed:
Land $ 24,011,964 $ 552,301 $ $ 24,564,265
Conslruclion in progress 3,306,914 4,816,070 1,779,196 6,343,788
Tolal assels nol being depreciated 27,318,878 5,368,371 1,779,196 30,908,053
Capilal assels, being deprecialcd:
Buildings and improvemenls 12,421,304 3,193,239 15,614,543
Machinery and equipment 5,658,331 552,716 94,878 6,116,169
Total capital assets being depreciated 18,079,635 3,745,955 94,878 21,730,712
Less accumulated depreciation:
Buildings and improvemenls 5,841,125 577,358 6,418,483
Machinery and equipment 4,128,468 456,836 94,878 4,490,426
Tolal accumulaled depreciation 9,969,593 1,034,194 94,878 10,908,909
Total capital assets being
depreeialed, nel 8,110,042 2,711,761 10,821,803
Governmental activities capital
assets, net $ 35,428,920 $ 8,080,132 $ 1,779,196 $ __ 4_1,729,856
Business-type activities
Capital assels, nol being dcprecialed:
Land $ 718,493 $ $ $ 718,493
Conslruclion in progress 392,000 310,979 369,611 333,368
Waler rights 3,465,469 3,465,469
Total assels not being depreciated 4,575,962 310,979 369,611 4,517,330
Capital assels, being depreciated:
Machinery and equipment 2,910,253 131,383 3,041,636
Water and waslewater syslem 44,989,126 347,197 45,336,323
Total capital assets being depreciated 47,899,379 478,580 48,377,959
Less accunmlaled depreciation:
Machinery and equipment 2,368,413 54,698 2,423,111
Waler and waslewaler system 14,536,626 1,426,668 15,963,294
Tolal accumulaled depreciation 16,905,039 1,481,366 18,386,405
Tolal capilal assets being
depreciated, nel 30,994,340 ( 1,002,786) 29,991,554
Business-type activities capilal
assels, nel $ 35,570,302 $(691,807) $ 369,611 $ ____]_.!,508,884
(continued)
43
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4.DETAILED NOTES ON ALL FUNDS (Continued)
Capital Assets (Continued)
Depreciation expense was charged to functions/programs of the primaiy government as follows:
Governmental activities:
General government
Public safety
Community development and public works
Community services
Capital assets held by the City's internal service fund are
charged to the various functions based on their usage
Total depreciation expense -governmental activities
Business-type activities:
Water and sewer
Total depreciation expense -business-type activities
$ 134,675
174,065
123,242
431,847
170)65
$ 1,034,194
$ 1,481,366
$ 1,481,366
Commitments for construction projects in progress were $997,215 at September 30, 2005.
Interfund Transfers
The following schedule briefly summarizes the City's transfer activity:
Transfers In Transfers Out Amount � �Purpose
General Nonmajor Governmental $ 160,000 Funding for the Centennial
Park project
General Water and Sewer 763,361 Subsidy for administrative
expenditures
Long-term Debt
The City issues a variety of long-term debt instruments in order to acquire and/or construct major
capital facilities and equipment for governmental and business-type activities. These instruments
include general obligation bonds, certificates of obligation, revenue bonds, and capital leases.
These debt obligations are secured by either future tax revenue, water and sewer system revenue,
or liens on property and equipment. Debt obligations that are intended to be repaid from water
and sewer system revenue have been recorded as business-type activities. All other long-term
obligations of the City are considered to be governmental type activities.
(continued)
44
4.DETAILED NOTES ON ALL FUNDS (Continued)
Long-term Debt (Continued)
Bonds Payable and Certificates of Obligation
A summary of the terms of general obligation bonds, combination tax and revenue bonds, and
certificates of obligation outstanding and their corresponding allocations to the governmental and
business-type activities at September 30, 2005, follows:
Series and Original
Issue Amount
General Obligation Bonds
2002 Refunding
2003 Permanent
Improvement
2005 Pem1ament
Improvement and Refunding
Revenue Bonds
1999 Waterworks and Sewer
System Revenue
2000 Waterworks and Sewer
System Revenue
2001 Waterworks and Sewer
System Revenue
Combination Tax and Revenue
Certificates of Obligation
1995 Series
$ 3,785,000
8,700,000
9,800,000
4,945,000
3,515,000
6,100,000
3,200,000
Final
Maturity
2008
2026
2020
2019
2019
2021
Interest
Rate
3.950%
3.65% -5.50%
2.85%-4.375%
4.2%-5.55%
4.2%-6.5%
4.7%-6.5%
2010 5.375% -7.375%
Governmental
Activities
Business-type
Activities
$ 1,025,000 $ 1,375,000
8,700,000
7,865,000
17,590,000
1,935,000
3,310,000
4,495,000
3,475,000
6,050,000
14,020,000
470,000
470,000
Total Bonds and Certificates of Obligation $ 17,590,000 $ 17,800,000
Annual debt service requirements for bonds and certificates of obligation are as follows: Year Ending Governmental Activities Business-!}'.ee Activities September 30, Principal Interest Principal Interest 2006 $ 440,000 $ 741,782 $ 805,000 $ 904,273 2007 490,000 722,102 860,000 864,119 2008 595,000 698,761 905,000 822,274 2009 620,000 670,243 975,000 778,045 2010 645,000 639,084 1,025,000 730,495 2011-2015 3,650,000 2,736,302 5,855,000 2,746,643 2016-2020 4,430,000 1,909,942 6,695,000 989,010 2021-2025 5,480,000 874,786 680,000 17,340 2026 1,240,000 26,836 Total $ 17,590,000 $ 9,019,838 $ _ll,]_0Q,000 $ 7,852,199 (continued)
45
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DETAILED NOTES ON ALL FUNDS (Continued)
Long-term Debt (Continued)
Advance Refunding
The City issued $1,935,000 of general obligation refunding bonds to provide resources to
purchase U. S. Government State and Local Government Series securities that were placed in an
hTevocable trust for the purpose of generating resources for all future debt service payments of
$1,915,777 of general obligation bonds. As a result, the refunded bonds are considered to be
defeased and the liability has been removed from the Water and Sewer Fund and business-type
activities column of the applicable statement of net assets. The reacquisition price exceeded the
net carrying amount of the old debt by $20,906. This amount is being netted against the new
debt and amortized over the remaining life of the refunded debt, which is shorter than the life of
the new debt issued. This advance refunding was unde1taken to decrease total debt service
payments over the next 5 years by $51,948 and resulted in an economic gain of $74,634.
Prior Year Def easance 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, 2005, $4,345,000 of bonds considered defeased is still
outstanding.
Federal Arbitrage
General obligation bonds, combination tax and revenue bonds and certificates of obligation are
subject to the provisions of the Internal Revenue Code of 1986 related to arbitrage and interest
income tax regulations under those provisions.
Obligations Under Capital Leases
In prior years, the City entered into capital lease agreements in order to purchase machinery and
equipment for public works, police and fire departments. The assets acquired through these lease
agreements are as follows:
Asset:
Machinery and equipment
Less: accumulated depreciation
Total
( continued)
46
Governmental
Activities $ 634,701 327�928 $ 306,773
4.DETAILED NOTES ON ALL FUNDS (Continued)
Long-term Debt (Continued)
The following is a summary of future lease payments due on this machine1y and equipment:Year Ending September 30, 2006 2007 2008 2009 Total Less interest portion Obligations under capital leases Changes in Long-term Liabilities
$
$ Lease Obli_gation 81,846 80,572 80,574 20,071 263,063 ( 25,466) 237,597 Long-term liability activity for the year ended Septemb er 30, 2005, was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental activities
General obligation bonds $ 10,059,865 $ 7,865,000 $ 334,865 $ 17,590,000 $ 440,000 Premium on bond issuance 159,224 159,224 11,373 Capital lease obligations 362,154 124,557 237,597 68,640
Compensated absences 596,166 416,756 349,371 663,551 132,710
Governmental activities
long-term liabilities $ 11,018,185 $ 8,440,980 $ 808,793 $ 18,650,372 $ _____§_g,_723
Business-type activities
General obligation bonds $ 1,830,135 $ 1,935,000 $ 455,135 $ 3,310,000 $ 465,000
Revenue bonds 14,160,000 140,000 14,020,000 150,000 Certificates of obligation 2,535,000 2,065,000 470,000 190,000 Premium on bond issuance 40,198 40,198 8,704
Loss on refunding ( 20,906) ( 20,906) ( 5,227)
Compensated absences 81,737 52,121 74,063 59,795 11,959
Business-type activities
long-term liabilities $ 18,606,872 $ 2,006,413 $ 2,734,198 $ 17,879,087 $ 820,436
The compensated absences liability attributable to the governmental activities will be liquidated
primarily by the General Fund.
(continued)
47
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Restricted Assets
The balances of the restricted asset accounts in the Enterprise Fund are as follows: Customer deposits Bond construction Construction Debt service Net investment in joint venture Total restricted assets Employee Retirement System
Plan Description
$
$ 262,660 74,994 149,901 385,832 271,665 1,145,052 The City provides pension benefits for all of its fulltime employees through a nontraditional, joint
contributory, hybrid defined benefit plan in the statewide Texas Municipal Retirement System
(TMRS). The City is one of 801 municipalities having the benefit plan administered by TMRS, an
agent multiple employer public employee retirement system. Each of the 801 municipalities has an
annual individual actuarial valuation performed. All assumptions for the December 31, 2004,
valuations are contained the 2004 TMRS Comprehensive Annual Financial Report, a copy of
which may be obtained by writing P. 0. Box 149153, Austin, Texas 78714-9153.
Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the
City-financed monetary credits, with interest. At the date the plan began, the City granted
moneta1y credits for service rendered before the plan began of a theoretical amount equal to two
times what would have been contributed by the employee, with interest, prior to establishment of
the plan. Monetary credits for service since the plan began are a percent (100%, 150%, or 200%)
of the employee's accumulated contributions. In addition, the City can grant as often as
annually, another type of monetary credit referred to as an updated service credit which is a
theoretical amount which, when added to the employee's accumulated contributions and the
moneta1y 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 sala1y had always
been the average of his salaiy in the last three years that are one year before the effective date.
At retirement, the benefit is calculated as if the sum of the employee's accumulated
contributions, with interest and the employer-financed monetary credits with interest were used
to purchase an annuity.
Members can retire at age 60 and above with 5 or more years of service or with 20 years of
service regardless of age. A member is vested after 5 years. The plan provisions are adopted by
the governing body of the City, within the options available in the state statutes governing TMRS
and within the actuarial constraints also in the statutes.
(continued)
48
4.DETAILED NOTES ON ALL FUNDS (Continued)
Employee Retirement System (Continued)
Contributions
The contribution rate for the employee is 7%, and the City matching ratio is currently 2 to l, both
as adopted by the governing body of the City. Under the state law governing TMRS, the actuaiy
annually determines the City contribution rate. This rate consists of the normal cost contribution
rate and the prior service contribution rate, both of which are calculated to be a level percent of
payroll from year to year. The normal cost contribution rate finances the currently accrning
moneta1y credits due to the City matching percent, which are the obligation of the City as of an
employee's retirement date, not at the time the employee's contributions are made. The normal
cost contribution rate is the actuarially determined percent of payroll necessaiy to satisfy the
obligation of the City to each employee at the time his/her retirement becomes effective. The
prior service contribution rate amortizes the unfunded ( overfunded) actuarial liability (asset) over
the remainder of the plan's 25-year amortization period. The unit credit actuarial cost method is
used for determining the City contribution rate. Both the employees and the City make
contributions monthly. Since the City needs to know its contribution rate in advance for
budgetaiy purposes, there is a one-year delay between the actuarial valuation that is the basis for
the rate and the calendar year when the rate goes into effect (i.e. December 31, 2004, valuation is
effective for rates beginning in Janumy 2006).
Schedule of Actuarial Liabilities and Funding Progress
Actual Valuation Date 12/031/02 12/031/03 12/031/04
Actuarial value of assets $ 13,367,282 $ 14,949,967 $ 17,143,239
Actuarial accrued liability 17,450,995 19,935,673 21,881,143
Percent funded 76.6% 75.0% 78.3%
Unfunded (overfunded) actuarial accrued liability (UAAL) 4,083,713 4,985,706 4,737,904
Annual covered payroll 6,274,960 6,866,859 7,479,620
UAAL as a percentage of covered payroll 65.1% 72.6% 63.3%
Net pension obligation (NPO at the beginning of period
Annual Pension Cost:
Annual required contribution (ARC) 881,751 957,310 1,084,657
luterest on NPO
Adjustment to the ARC 881,751 957,310 1,084,657
Contributions made 881,751 957,310 1,084,657
Increase in NPO
NPO at the end of the period $ $ $
(continued)
49
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Employee Retirement System (Continued)
Contributions (Continued)
Actuarial Assumptions Actuarial Cost Method Amortization Method Remaining Amortization Period Asset Valuation Method Amortzation Period Investment Rate of Return Projected Salary Increases Includes Inflation at Cost-of-living Adjustments Deferred Compensation Plan Unit Credit Level Percent of Payroll 25 Years -Open Period Amortized Cost (to accurately reflect the requirements of GASB Statement No. 25, paragraphs 36e and 138) Open 7% None None None The City offers its employees a tax-deferred compensation plan meeting the requirements of
Internal Revenue Code Section 457. The plan was established by City ordinance that appointed
ICMA Retirement Corporation as plan administrator. The City's fiduciary responsibility is to
remit employee deferred compensation to the administrator on a regular basis. The deferred
compensation is not available to employees until termination, retirement, death, or emergency.
Southeast Water Purification Plant
The City has entered into a contract with the City of Houston for constructing, operating and
maintaining a water purification plan known as Southeast Water Purification Plant. The City's
pro rata share of the actual pumping construction costs is 1.33 percent.
The City began receiving water from the plant on October 15, 1990. The City is billed on a
monthly basis for the actual gallons of water received times the City's pro rata share of actual
costs. At the end of each quarter, the City of Houston computes the total operation and
maintenance expense for the quatter just ended, recalculates the cost per one thousand gallons,
and adjusts previous billings on the next invoice.
The relationship of the parties is of a fiduciaty character. No patinership or joint venture is
created by this contract.
(continued)
50
4.DETAILED NOTES ON ALL FUNDS (Continued)
Blackhawk Regional Waste Treatment Plant
The City has entered into an arrangement with the Gulf Coast Waste Disposal Authority for the
operation and maintenance of a joint treatment plant known as Blackhawk Regional Waste
Treatment Plant. The City of Friendswood, the City of Houston, Harris County MUD No. 55,
and the Baybrook MUD 1, (the "participants") share in the expense of operation and
maintenance based on their respective usage on a monthly basis. The percentages of equity in
the joint venture based on their respective capacity rights at September 30, 2005, are as follows:
City of Friendswood
City of Houston
Harris County MUD No. 55
Baybrook MUD No. 1
52.47%
16.18%
20.27%
11.08%
100.00%
An annual budget for operations is submitted to the Gulf Coast Waste Disposal Authority each
year. The Gulf Coast Waste Disposal Authority is the governing authority and consists of 9
members (3 appointed by the governor, 3 appointed by Hall'is County, Galveston County, and
Chambers County, and 3 appointed by the pa1ticipants).
Separate financial statements for the joint venture were available in the December 31, 2004,
audited financial statements of the Gulf Coast Waste Disposal Authority and are summarized
below:
Joint Venture
Blackhawk Blackhawk
Regional Contingency
Facili.!J'._ Reserve
Total assets $ 634,320 $ 225,985
Total liabilities 634,320
Total fund equity $ $ _225,985
Total revenue $ 2,032,711 $ 23,266
Total expenditures 2,032,711
Net change in fund balance 23,266
Fund balances, beginning ---202,719
Fund balances, ending $ $ 225,985
Complete financial statements may be obtained at the Gulf Coast Waste Disposal Authority, 910
Bay Area Boulevard, Houston, Texas 77058.
( continued)
51
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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, 2005, the City paid
premiums to TML for provisions of various liability, property and casualty insurance. The City
has various deductible amounts ranging from $500 to $5,000 on various policies. At year-end,
the City did not have any significant claims.
The City also provides workers' compensation insurance on its employees through TML.
Workers' compensation is subject to change when audited by TML. At year-end, September 30,
2005, the City believed the amounts paid on workers' compensation would not change
significantly from the amounts recorded.
During the year ended September 30, 2005, employees of the City were covered by a health and
dental insurance plan. Employees have the option to select either a HMO or a Point of Service
(POS) plan. If an individual employee chooses to cover only themselves, the City pays 90% of
the monthly premium. If an individual employee desires to cover themselves and their
dependents, the City pays 70% of the monthly premium.
52
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COMBINING AND INDIVIDUAL FUND
STATEMENTS AND SCHEDULES
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GENERAL FUND
The General F1111d accounts for the resources used to finance the fundamental operations of the City. It
is the basic fund of the City and covers all activities for which a separate fund has not been established.
CITY OF FRIENDSWOOD, TEXAS
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30, 2005
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative2
REVENUES
Property taxes $ 9,818,190 $ 9,818,190 $ 9,896,019 $ 77,829
Sales taxes 2,709,000 2,709,000 3,210,626 501,626
Franchise taxes 1,076,000 1,076,000 1,176,460 100,460
Fines and forfeihires 755,800 768,022 1,106,423 338,401
Permits and fees 531,98 I 535,511 675,307 139,796
Intergovernmental l, 130,086 1,103,350 985,339 ( 118,011)
Interest on investments 65,000 65,000 248,271 183,271
Other 117,733 159,748 365,920 206,172
Total revenues 16,203,790 16,234,821 17,664,365 1,429,544
EXPENDITURES
GENERAL GOVERNMENT
Mayor and council:
Persmmel services 124 124 149 ( 25)
Supplies 5,124 5,124 2,707 2,417
Other services and charges 58,883 58,883 33,314 25,569
Total mayor and council 64,131 64,131 36,170 27,961
City manager:
Personnel services 344,186 349,186 331,988 17,198
Supplies 11,540 11,540 6,439 5,101
Other services and charges 146,348 187,435 164,919 22,516
Total city manager 502,074 548,161 503,346 44,815
City secretary:
Persotmel services 235,676 246,146 231,671 14,475
Supplies 6,006 6,006 4,522 1,484
Repairs and maintenance 978 978 978
Other services and charges 20,788 31,660 51,630 ( 19,970)
Total city secretary 263,448 284,790 287,823 ( 3,033)
( continued)
53
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CITY OF FRIENDSWOOD, TEXAS
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2005
Budgeted Amounts Actual
Original Final Amounts
EXPENDITURES (Continued)
GENERAL GOVERNMENT (Continued)
Administrative services:
Personnel services $ 502,298 $ 502,298 $ 498,579
Supplies 14,778 14,778 8,026
Repairs and maintenance 278 278 125
Other services and charges 73,970 84,570 64,124
Total administrative services 591,324 601,924 570,854
Human resources:
Personnel services 257,046 257,046 230,105
Supplies 8,554 8,554 10,472
Other services and charges 73,768 73,768 51,621
Total human resources 339,368 339,368 292,198
Tax:
Other services and charges 203,544 203,544 200,817
Total tax 203,544 203,544 200,817
Economic development:
Personnel services 90,388 90,388 92,204
Supplies 153,854 153,854 98,170
Total economic development 244,242 244,242 190,374
Legal services:
Other services and charges 126,503 138,672 131,160
Total legal services 126,503 138,672 13_1160
( continued)
54
Variance with
Final Budget
Positive
(Negative)
$ 3,719
6,752
153
20,446
31,070
26,941
( 1,918)
22,147
47,170
2,727
2,727
( 1,816)
55,684
53,868
7,512
__ 7,512
CITY OF FRIENDSWOOD, TEXAS
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2005
Budgeted Amounts Actual
Original Final Amounts
EXPENDITURES (Continued)
GENERAL GOVERNMENT (Continued)
Municipal court:
Persom1el services $ 296,596 $ 301,887 $ 289,018
Supplies 13,602 13,112 15,007
Repairs and maintenance 542 542 1,576
Other services and charges 13,461 24,438 35,677
Total municipal court 324,201 339,979 341,278
Computer services:
Personnel services 259,305 260,038 214,305
Supplies 32,466 51,145 52,881
Repairs and maintenance 42,798 42,798 49,487
Other services and charges 283,061 435,537 415,539
Capital outlay 100,000 50,572 13,892
Total computer services ___1_!7, 630 840,090 746,104
Risk management:
Personnel services 27,733 27,733 28,320
Supplies 8,336 8,336 7,072
Other services and charges 95,748 99,027 98,650
Total risk management 131,817 135,096 134,042
Total general government 3,508,282 3,739,997 _l_,434,!66
PUBLIC SAFETY:
Police services:
Personnel services 3,760,444 3,771,765 3,704,110
Supplies 185,464 187,174 209,336
Repairs and maintenance 99,900 99,900 93,358
Other services and charges 275,692 311,632 302,958
Total police services 4,321,500 4,370,471 4,309,762
( continued)
55
Variance with
Final Budget
Positive
(Negative�
$ 12,869 ( 1,895) ( 1,034)
( 11,239)
( 1,299)
45,733 ( 1,736)
( 6,689)
19,998
36,680
93,986 ( 587)
1,264
377
1,054
305,831
67,655
( 22,162)
6,542
8,674
60,709
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CITY OF FRIENDSWOOD, TEXAS
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
(Continued)
EXPENDITURES (Continued)
PUBLIC SAFETY (Continued)
Communications:
Personnel services
Supplies
Repairs and maintenance
Other services and charges
Total communications
Animal control:
Personnel services
Supplies
Repairs and maintenance
Other services and charges
Total animal control
Fire and EMS:
Personnel services
Supplies
Repairs and maintenance
Other services and charges
Capital outlay
Total fire and EMS
Total public safety
FOR THE YEAR ENDED SEPTEMBER 30, 2005
$
Budgeted Amounts
Original Final
673,913
9,128
3,914
9,763
696,718
134,430
10,414
2,290
18,828
165,962
604,534
280,919
102,119
237,836
204,513
1,429,921
6,614,101
$
( continued)
56
673,913
9,128
3,914
9,763
696,718
134,430
10,414
2,290
18,828
165,962
605,266
619,079
119,043
244,030
204,513
1,791,931
7,025,082
$
Actual
Amounts
628,862
7,876
185
5,263
642,186
137,938
12,408
2,839
18,079
171,264
465,063
375,530
3,097
834,241
1,677,931
6,801,143
Variance with
Final Budget
Positive
(Negative)
$ 45,051
1,252
3,729
4,500
54,532
( 3,508)
( 1,994)
( 549)
749
( 5,302)
140,203
243,549
115,946
( 590,211)
204,513
114,000
223,939
CITY OF FRIENDSWOOD, TEXAS
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2005
Budgeted Amounts Actual
Original Final Amounts
EXPENDITURES (Continued)
COMMUNITY DEVELOPMENT AND PUBLIC WORKS
Administration:
Persollllel services $366,239 $ 370,239 $ 359,260
Supplies 3,790 3,998 3,339
Repairs and maintenance 621 621
Other services and charges 7,749 7,749 5,217
Total administration 378,399 382,607 367,816
Plalllling and zoning:
Personnel services 120,750 120,750 113,376
Supplies 2,328 2,328 2,374
Other services and charges 5,538 5,538 9,948
Total planning and zoning 128,616 128,616 125,698
Engineering:
Personnel services 50,115 50,115 54,307
Supplies 2,397 2,397 2,059
Repairs and maintenance 510 510 382
Other services and charges 8,574 8,574 16,317
Total engineering 61,596 61,596 73,065
Inspection:
Personnel services 373,573 373,573 361,831
Supplies 7,170 7,350 9,236
Repairs and maintenance 1,019 1,019 l, 173
Other services and charges 63,182 63,250 31,747
Total inspection 444,944 445,192 403,987
( continued)
57
Variance with
Final Budget
Positive
(Negative}
$ 10,979
659
621
2,532
14,791
7,374 ( 46)
( 4,410)
2,918 ( 4,192)
338
128
( 7,743)
( 11,469)
11,742 ( 1,886) ( 154)
31,503
41,205
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CITY OF FRIENDSWOOD, TEXAS
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2005
Budgeted Amounts Actual
Original Final Amounts
EXPENDITURES (Continued)
COMMUNITY DEVELOPMENT AND PUBLIC WORKS (Continued)
Streets:
Personnel services $ 382,711 $ 382,711 $ 277,269
Supplies 51,105 51,105 55,505
Repairs and maintenance 515,089 267,421 282,923
Other services and charges 330,594 330,594 386,894
Capital outlay 286,450 260,015 275,686
Total streets 1,565,949 1,291,846 1,278,277
Drainage:
Personnel services 206,683 206,683 262,207
Supplies 1,083 1,083 2,576
Repairs and maintenance 16,285 16,285 31,215
Other services and charges 100,155 200,155 164,253
Capital outlay 1,150,499 1,192,899 910,020
Total drainage 1,474,705 1,617,105 1,370,271
Sanitation:
Other services and charges 3,195 3,195 2,951
Total sanitation 3,195 3,195 2,951
Total community development
and public works 4,057,404 3,930,157 3,622,065
COMMUNITY SERVICES
Administration:
Persollllel services 158,468 158,468 167,251
Supplies 3,525 3,525 4,597
Other services and charges 20,607 22,907 20,525
Total administration 182,600 184,900 192,373
( continued)
58
Variance with
Final Budget
Positive
(Negative2
$ 105,442
( 4,400)
( 15,502)
( 56,300)
( 15,671)
13,569
( 55,524)
( 1,493)
( 14,930)
35,902
282,879
246,834
244
244
308,092
( 8,783)
( 1,072)
2,382
( 7,473)
CITY OF FRIENDSWOOD, TEXAS
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2005
Budgeted Amounts Actual
Original Final Amounts
EXPENDITURES (Continued)
COMMUNITY SERVICES (Continued)
Library:
Personnel services $ 579,843 $ 579,843 $ 574,289
Supplies 137,877 141,835 126,374
Repairs and maintenance 2,679 2,679 732
Other services and charges 22,169 22,169 15,280
Total library 742,568 746,526 716,675
Parks and recreation:
Personnel services 469,659 469,659 544,197
Supplies 101,352 101,439 61,342
Repairs and maintenance 128,669 128,469 138,694
Other services and charges 435,248 431,387 419,933
Capital outlay 236,900 240,500 8,600
Total parks and recreation 1,371,828 _l,371,454 1,172,766
Swimming pool:
Personnel services 44,322 44,322 39,503
Supplies 13,524 13,524 9,221
Repairs and maintenance 7,032 7,032 3,402
Other services and charges 23,302 23,302 25,036
Total swimming pool 88,180 88,180 77,162
Building operations:
Personnel services 33,235 33,235
Supplies 16,519 16,519 22,903
Repairs and maintenance 95,589 81,065 57,075
Other services and charges 413,222 413,222 395,975
Capital outlay 1,287,776 1,288,176 1,157,884
Total building operations 1,846,341 _1,832,217 --1,633,837
Total community services 4,231,517 4,223,277 3,792,813
Total expenditures 18,411,304 18,918,513 17,650,187
( continued)
59
Variance with
Final Budget
Positive
(Negative2
.�
$ 5,554
15,461
1,947
6,889
29,851 ( 74,538)
40,097
( 10,225)
11,454
231,900
198,688
4,819
4,303
3,630
( 1,734)
11,018
33,235 ( 6,384)
23,990
17,247
130,292
_!2�)80
430,464
1,268,326
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CITY OF FRIENDSWOOD, TEXAS
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2005
EXCESS (DEFICIENCY) OF REVENUES
Budgeted Amounts Actual
Original Final Amounts
OVER EXPENDITURES $( 2,207,514) $( 2,683,692) $ 14,178
OTHER FINANCING SOURCES
Transfers in
Total other financing sources
NET CHANGE IN FUND BALANCES
FUND BALANCES, BEGINNING
FUND BALANCES, ENDING
923,361
923,361
( 1,284,153)
6,606,501
$ 5,322,348
60
923,361 923,361
923,361 923,361
( 1,760,331) 937,539
6,606,501 6,606,501
$ 4,846,170 $ 7,544,010
Variance with
Final Budget
Positive
(Negative)
$ 2,697,870
2,697,870
$ 2,697,870
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NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
Special Revenue Funds are used to account for specific revenues that are legally restricted to
expenditure for pa1ticular purposes.
Police I11vestigatio11 Fmul -This fund is used to account for revenues that are restricted to
police investigation expenditures.
Fire/EMS Donation Fund -This fund accounts for revenues that are restricted for Fire/EMS
expenditures.
Park Laud Dedication Fund -This fund is used to account for receipts from developers to build
or enhance neighborhood parks.
DEBT SERVICE FUND
The Debt Service Fund is used to account for property taxes levied for payment of principal and interest
on all governmental debt of the City.
PERMANENT FUND
( 1 The Permanent Fund is used to report resources that are legally restricted to the extent that only
l)earnings, not principal, may be used for purposes that support the City's programs.
( l 1776 Park Fund -This fund is used to account for assets held by the City in a trustee capacity
() and the earnings benefit the City's parks.
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CITY OF FRIENDSWOOD, TEXAS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2005 Special Revenue Police Fire/EMS Investigation Donation ASSETS Cash and investments $ 39,954 $ 73,875 Accounts receivable, net of allowance 675 28,736 Total assets $ 40,629 $ 102,611
LIABILITIES Accounts payable $ 1,349 $ 64,734 Deferred revenue Total liabilities 1,349 64,734
FUND BALANCES Reserved for debt service Unreserved -undesignated 39,280 37,877 Total fund balances 39,280 37,877 Total liabilities and fund balances $ 40,629 $ 102,611
61 Park Land Dedication $ 97,338
997
$ 98,335
$ 300
300
98,035
98,035
$ 981 335
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Permanent
(.i Total
Nonmajor
( ) Debt 1776 Governmental
(1 Service Park Funds
( ')
( )$ 1,389,670 $ 26,172 $ 1,627,009
( )
48,275 120 78,803
(l $ 1,437,945 $ 26,292 $ 1,705,812
( ·1
( I $ -$$ 66,383
( l 42,178 42,178
(1 42,178 108,561
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( ) 1,395,767 -1,395,767
( )
26,292 201,484
( �1,395,767 26,292 1,597,251
( $ 1,437,945 $ 26,292 $ 1,705,812
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CITY OF FRIENDSWOOD, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2005
Special Revenue
Police Fire/EMS
luvestig_ation Donation
REVENUES
Property taxes $-$-
Fines and forfeitures 6,493
Permits and fees -
Interest on investments 10,696 3,098
Donations -213,381
Other -49,003
Total revenues 17,189 265,482
EXPENDITURES
Current:
Public safety 3,354 323,478
Debt service:
Principal 65,059
Interest and fiscal charges 15,514
Total expenditures 3,354 404,051
EXCESS (DEFICIBNCY) OF REVENUES
OVER (UNDER) EXPENDITURES 13,835 ( 138,569)
OTHER FINANCING SOURCES (USES)
Transfers out
Total other financing sources (uses)
NET CHANGE IN FUND BALANCES 13,835 ( 138,569)
FUND BALANCES, BEGINNING _25A45 176,446
FUND BALANCES, ENDING $ 39,280 $ 37,877
63
Park
Land
Dedication
$
42,300
6,397
� 6 97
48,697
( 160,000)
( 160,000)
( 111,303)
209,338
$ 98,035
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(l Nonmajor
( )Debt 1776 Governmental
Service Park Funds
(l
( ) $ 1,496,021 $ -$ 1,496,021
6,493
( )42,300
( )
42,970 705 63,866
213,381
( ) 49,003
(1 1,538,991 705 1J71,064
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( ' 326,832
( l 394,363 -459,422
(l 578,562 594,076
(1 972,925 __ l,380,330
( )
(l 566,066 705 490,734
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(1 --{ 160,000)
(__ ) 566,066 705 330,734 (>
tJ 829,701 �587 1,266,517
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CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FIRE/EMS DONATION FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2005
Final Actual
Bud� Amounts
REVENUES
Interest on investments $ $ 3,098
Donations 210,000 213,381
Other 45,048 49,003
Total revenues 255,048 265,482
EXPENDITURES
Current:
Public safety 323,478 323,478
Capital outlay 152,500 -
Debt service:
Principal 64,916 65,059
Interest and fiscal charges 15,656 15,514
Total expenditmes 556,550 404�051
NET CHANGE IN FUND BALANCES ( 301,502) ( 138,569)
FUND BALANCES, BEGINNING 176,446 176,446
FUND BALANCES, ENDING $( 125,056)$ 37,877
65
Variance with
Final Budget
Positive
(Negative)
$ 3,098
3,381
3,955
10,434
152,500
( 143)
142
152,499
162,933
$ 162,933
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CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
DEBT SERVICE FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2005
REVENUES
Property taxes
Interest on investments
Total revenues
EXPENDITURES
Debt service:
Principal
Interest and fiscal charges
Total expenditures
NET CHANGE IN FUND BALANCES
FUND BALANCES, BEGINNING
FUND BALANCES, ENDING
66
Final Actual
Bud� Amounts
$ 1,483,260 $ 1,496,021
42,970
1,483,260 1,538,991
556,268 394,363
1,435,921 578,562
1,992,189 972,925
( 508,929) 566,066
829,701 829,701
$ 320,772 $ _!_,_395, 767
Variance with
$
Final Budget
Positive
(Negative)
12,761
42,970
55,731
161,905
857,359
1,019,264
1,074,995
$ 1,074,995
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Fiscal General
Year Govemment 2003 $ 2,923,552 $ 2004 3,375,283 2005 3,438,849 CITY OF FRIENDSWOOD, TEXAS
GOVERNMENT-WIDE EXPENSES BY FUNCTION
LAST TEN FISCAL YEARS*
(UNAUDITED)
Community
Development Interest on
Public and Community Long-term
Safeti'._ Public Works Services Debt 5,760,097 $ 3,383,229 $ 2,747,438 $ 128,192 6,026,272 2,569,356 3,081,717 465,770 7,318,886 2,576,447 3,075,023 478,495 TABLE 1
Water
and Sewer Total $ 6,521,436 $ 21,463,944 6,613,296 22,131,694 7,214,606 24,102,306 ( 1 *The City implemented GASB 34 in fiscal year 2003, thus only three years of data are available.
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67
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Charges
Fiscal for
Year Services
2003 $ 9,877,862
2004 9,060,319
2005 10,406,628
CITY OF FRIENDSWOOD, TEXAS
Operating
Grants and
Contributions
$ 661,568
778,261
1,271,119
GOVERNMENT-WIDE REVENUES
LAST TEN FISCAL YEARS*
(UNAUDITED)
Capital
Grants and
Contributions Taxes
Investment
Earnin_gs
$ 749,772 $ 13,719,690 $ 315,187
239,200 14,955,039 278,954
235,300 15,781,984 491,367 TABLE2 Miscellaneous Total
$ 30,826 $ 25,354,905
25,311,773
64,981 28,251,379
(,l *The City implemented GASB 34 in fiscal year 2003, thus only three years of data are available.
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68
Fiscal Year
Ended
September 30,
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
$
CITY OF FRIENDSWOOD, TEXAS
GENERAL GOVERNMENT REVENUE BY SOURCE
LAST TEN FISCAL YEARS (UNAUDITED)
Property Sales Franchise
Taxes Taxes Taxes
5,865,855 $ l,097,996 $ 863,183
5,660,697 1,477,554 852,091
5,957,486 1,826,462 801,709
6,310,919 1,842,430 821,943
7,226,205 2,121,107 870,839
8,006,906 2,419,071 988,608
8,935,858 2,544,691 1,035,368
9,745,213 2,884,798 1,058,726
10,880,584 2,843,943 1,119,328
11,392,040 3,210,626 1,176,460
Includes General, Special Revenue, Debt Service and Permanent Funds (2004 -2005)
Source: Accounting records of the City
69
Sanitation
$ 1,085,149
1,017,028
982,432
1,013,415
1,027,028
1,065,400
1,113,511
1,020,421
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Fines Permits
and and
Forfeitures Fees
266,287 $ 234,518
353,742 401,720
304,017 699,432
332,659 635,905
497,467 970,868
550,854 1,192,899
631,066 922,808
639,678 856,721
879,369 807,041
1,112,916 717,607
TABLE3
Interest
on Other
Intergovernmental Investments Revenue Total
$ 46,060 $ 193,588 $ 354,627 $ 10,007,263
40,055 238,009 224,097 10,264,993
346,879 222,586 525,228 11,666,231
553,352 292,886 386,084 12,189,593
607,963 399,712 484,724 14,205,913
580,561 424,412 483,063 15,711,774
16,294,283 269,109 509,560 32,256,254
526,316 140,435 1,029,977 17,902,285
795,325 218,419 368,151 18,707,485
985,339 312,137 628,304 19,535,429
70
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l Fiscal Year Ended September 30, 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 General Government $ 1,481,710 1,615,770 1,937,096 2,051,684 2,305,916 2,196,226 2,897,613 3,042,541 3,249,965 3,420,274 CITY OF FRIENDSWOOD, TEXAS
GENERAL GOVERNMENT EXPENDITURES BY FUNC TION
LAST TEN FISCAL YEARS
(UNAUDITED) Community Development Public and Community Capital Safety Public Works Services Outlay $ 3,206,222 $ 3,209,845 $ 1,656,146 $ $ 3,329,960 3,196,258 1,686,909 4,043,792 3,348,350 1,904,926 4,166,008 3,103,857 2,193,860 4,265,750 4,204,537 2,355,186 652,206 5,115,933 2,841,234 2,738,557 98,987 4,961,812 22,601,171 4,250,205 195,385 5,530,953 4,987,392 2,751,993 139,174 5,810,503 2,511,125 2,655,315 4,033,197 7,127,975 2,436,359 2,626,329 2,366,082 Debt Service 1,579,490 1,202,192 909,369 698,546 976,659 1,127,645 737,163 682,728 946,137 1,053,498 Includes General, Special Revenue, Debt Service and Pe1manent Funds (2003 -2005)
Source: Accounting records of the City
71
TABLE4 Total $ 11,133,413 11,031,089 12,143,533 12,213,955 14,760,254 14,118,582 35,643,349 17,134,781 19,206,242 19,030,517
Fiscal Year
Ended
September 30,
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
CITY OF FRIENDSWOOD, TEXAS
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(UNAUDITED)
Total
Tax Year Tax Rate Tax Levy
1995 $ 0.6156 $ 5,610,277
1996 0.6045 5,692,451
1997 0.5961 5,886,162
1998 0.6125 6,292,040
1999 0.6385 7,239,468
2000 0.6385 7,906,786
2001 0.6385 8,863,904
2002 0.6385 9,642,413
2003 0.6385 10,785,308
2004 0.6385 11,221,282 Source: Tax Assessor/Collector's records. 72
CmrentTax
Collections
$ 5,568,094
5,652,357
5,844,583
6,229,896
7,125,877
7,809,643
8,721,196
9,496,887
10,630,820
11,078,265
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Percent
of Levy
Collected
99.2% $
99.3%
99.3%
99.0%
98.4%
98.8%
98.4%
98.5%
98.6%
98.7%
Delinquent Total
Tax Tax
Collections Collections
54,842 $ 5,622,936
53,927 5,706,284
89,625 5,934,208
50,435 6,280,331
129,563 7,255,440
158,585 7,968,228
152,106 8,873,302
137,425 9,634,312
138,757 10,769,577
181,551 11,259,816
TABLES
Outstanding
Total Delinquent
Collections as Outstanding Taxes as
Percent of Delinquent Percent of
Current Levy Taxes Levy
100.2% $ 231,973 4.1%
100.2% 230,990 4.1%
100.8% 237,656 4.0%
99.8% 207,417 3.3%
100.2% 269,184 3.7%
100.8% 308,477 3.9%
100.1 % 208,459 2.4%
99.9% 300,601 3.1%
99.9% 357,057 3.3%
100.3% 313,232 2.8%
73
Fiscal Year
Ended
September 30,
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
CITY OF FRIENDSWOOD, TEXAS
ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
(UNAUDITED)
Ratio of
Estimated Assessed Value
Assessed Actual to Estimated
Tax Year Value Value Actual Value
1995 $ 911,351,022 $ 1,165,107,496 78%
1996 941,679,232 1,207,803,598 78%
1997 987,445,395 1,265,399,421 78%
1998 1,027,271,860 1,322,329,377 78%
1999 1,133,824,245 1,458,851,565 78%
2000 1,238,337,688 1,597,212,470 78%
2001 1,388,238,748 1,597,212,470 87%
2002 1,506,606,061 1,931,827,716 78%
2003 1,623,502,714 2,099,501,049 77%
2004 1,752,798,820 2,126,615,765 82%
Source: Tax Assessor/Collector's records.
74
TABLE6
New
Construction
$ 42,440,747
41,528,406
90,683,060
74,555,875
121,249,420
116,968,791
122,374,064
73,791,386
22,286,054
19,655,016
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TABLE7 ( ', CITY OF FRIENDSWOOD, TEXAS (!
{ I TAX RATE DISTRIBUTION
(', LAST TEN FISCAL YEARS
() (UNAUDITED)
( ·1
( ),' Fiscal Year Debt ( )Ended General Service Total
( )September 30, Tax Year Fund Fund Tax Rate
( )
(, 1996 1995 $ 0.46800 $ 0.14760 $ 0.61560
( ) 1997 1996 0.49610 0.10840 0.60450
(1
( )1998 1997 0.52760 0.06850 0.59610
()
( )
1999 1998 0.56100 0.05150 0.61250
( J 2000 1999 0.55420 0.08430 0.63850
( )
(: 2001 2000 0.55470 0.08380 0.63850
(I 2002 2001 0.55470 0.08380 0.63850 ( )
(, 2003 2002 0.55470 0.08380 0.63850
(_)
( 2004 2003 0.55470 0.08380 0.63850
() 2005 2004 0.55470 0.08380 0.63850 l l
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Fiscal Year Ended September 30, 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Source: (A) CITY OF FRIENDSWOOD, TEXAS
PROPERTY TAX RATES PER $100 VALUATION DIRECT AND OVERLAPPING
LAST TEN FISCAL YEARS
(UNAUDITED) Friendswood Clear Creek Independent Independent Clear Creek City of School School Drainage Harris Tax Year Friendswood Dislrict District District County(A) 1995 $ 0.6156 $ l.5900 $ l.4700 $ 0.1410 $ 0.6195 1996 0.6045 l.5900 l.5150 0.1430 0.64173 1997 0.5961 l.5750 l.5900 0.1425 0.64173 1998 0.6125 l.6720 l.6415 0.1500 0.64173 1999 0.6385 l.5350 l.5986 0.1500 0.64173 2000 0.6385 l.5850 l.7008 0.0155 0.64173 2001 0.6385 l.6170 l.7250 0.0155 0.63998 2002 0.6385 l.6370 1.7400 0.1550 0.63998 2003 0.6385 1.6370 l. 7300 0.1500 0.63998 2004 0.6385 l.6370 l.7450 0.1483 0.63998 Tax Department records of the various taxing authorities.
TABLES Galveston County $ 0.5200 0.5200 0.5200 0.5200 0.5450 0.5400 0.5654 0.6063 0.6063 0.6388 Includes Port of Houston Authority, Hal1'is County Flood Control, and Hat1'is County
Hospital District.
76
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5. 6. 7. 8. 9. 10. Taxpayer
Reserve at Autumn Creek
Texas New Mexico Power
Southwestern Bell Telephone
Kroger Texas, L.P.
South West Properties
Texas HCP Holding, LP
Friendswood Retirement
H. E. Butt Grocery Company
D R Horton Texas, Ltd.
Exxon Mobil Pipeline
All other taxpayers
Totals
PRINCIPAL TAXPAYERS
SEPTEMBER 30, 2005
(UNAUDITED)
Type of Property
Developer
Utility Company
Utility Company
Grocery Store
Seahawk Apartments
Assisted Living Center
Assisted Living Center
Grocery Store
Developer
Pipeline Company
l I Source: Tax Assessor/Collector's records. (l (I
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77 $ $ TABLE9
Percent
of Total
Assessed Assessed
Valuation Valuation 13,299,980 0.76% 12,573,930 0.72% 9,207,860 0.53% 7,713,640 0.44% 7,500,090 0.43% 6,457,140 0.37% 6,023,505 0.34% 5,770,930 0.33% 5,739,170 0.33% 5,003,740 0.29% 79,289,985 4.52% 1,673,508,835 95.48% 1,752,798,820 100.00%
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Fiscal
Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 TABLE 10
CITY OF FRIENDSWOOD, TEXAS
RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL BONDED DEBT
LAST TEN FISCAL YEARS
(UNAUDITED)
Ratio of
Interest Total Debt Total Debt Service
and Fiscal Service General Requirements
Principal Charges R!::9uirements Expenditures to Expenditures
$ 963,272 $ 238,920 $ 1,202,192 $ 10,091,694 11.91% 733,568 202,138 935,706 11,187,677 8.36% 709,094 200,275 909,369 12,143,533 7.49% 512,594 185,952 698,546 12,213,955 5.72% 525,897 450,762 976,659 14,118,582 6.92% 616,470 511,175 1,127,645 14,118,582 7.99% 548,205 188,958 737,163 35,643,349 2.07% 468,987 213,741 682,728 18,437,946 3.70% 469,930 476,207 946,137 15,930,731 5.94% 459,422 594,076 1,653,498 17,650,187 9.37% 78
Number
Fiscal of Water
Year Customers
1996 8,382
1997 8,534
1998 8,893
1999 9,123
2000 9,423
2001 10,088
2002 10,330
2003 10,600
2004 10,988
2005 11,196
CITY OF FRIENDSWOOD, TEXAS
REVENUE BOND COVERAGE
LAST TEN FISCAL YEARS
(UNAUDITED)
Number
of Sewer Operating
Customers Revenue
8,043 $ 4,995,119
8,199 4,744,557
8,377 5,815,425
8,679 5,482,707
8,979 7,211,716
9,415 6,599,787
9,658 7,506,333
10,240 7,275,746
10,331 7,203,736
10,537 8,390,761
Operating
Expenses
Before
DeE_reciation
$ 2,730,719
2,802,914
2,679,707
2,781,480
3,310,375
3,253,593
3,797,453
4,401,694
4,238,810
4,769,885
Net Operating
Revenue
Available for
Debt Service
$ 2,264,400
1,941,643
3,135,718
2,701,227
3,901,341
3,346,194
3,708,880
2,874,052
2,964,926
3,620,826
Note A: The amounts only include Revenue Bonds and do not include amounts paid by the Enterprise
Fund for Combination Tax and Revenue Bonds which are secured by Tax Revenue.
Source: Accounting records of the City.
79
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Revenue Bond (A)
Debt Service R�uirements Principal Interest
45,000 $ 10,244
45,000 7,503
33,000 3,032
33,000 3,032
441,600
325,000 546,621
25,000 850,874
25,000 772,351
25,000 769,936
140,000 766,788
TABLE 11
Total Covera_g_e
$ 55,244 40.99
52,503 36.98
36,032 86.35
36,032 74.97
441,600 8.83
871,621 3.84
875,874 4.23
797,351 3.60
794,936 3.73
906,788 3.99
80
Fiscal
Year Population
1996 28,602 $
1997 28,902
1998 30,787
1999 31,192
2000 31,761
2001 32,720
2002 33,500
2003 33,800
2004 34,152
2005 34,272
CITY OF FRIENDSWOOD, TEXAS
RATIO OF NET GENERAL BONDED DEBT TO ASSESSED
VALUE AND NET BONDED DEBT PER CAPITA
LAST TEN FISCAL YEARS
(UNAUDITED)
Ratio ofNet
Gross Less Debt Bonded Debt
Assessed Bonded Service Net to Assessed
Value Debt Funds Bonded Debt Value
941,679,232 $ 3,935,477 $ 298,053 $ 3,637,424 0.39%
987,445,395 3,606,427 392,220 3,214,207 0.33%
987,445,395 3,206,927 187,908 3,019,019 0.31%
1,027,271,860 2,798,677 73,344 2,725,333 0.27%
l, 133,824,245 2,430,219 68,627 2,361,592 0.21%
1,238,337,688 2,205,725 77,175 2,128,550 0.17%
1,388,238,748 1,915,518 109,799 1,805,719 0.13%
1,506,606,061 10,375,891 254,568 10,121,323 0.67%
1,623,502,714 10,059,865 829,701 9,230,164 0.57%
1,752,798,820 17,590,000 1,395,767 16,194,233 0.92%
Source: Tax Assessor/Collector and accounting records of the City.
TABLE 12
Net Bonded
Debt
Per Capita
127
111
98
87
74
65
54
296
270
473
(1)Reflects recollection of debt to Enterprise Funds in 1994-1995 in the amount of$2.5 million.
81
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CITY OF FRIENDSWOOD, TEXAS
COMPUTATION OF DIRECT AND OVERLAPPING DEBT
(UNAUDITED)
Name of Governmental Unit
Friendswood Independent School District
Clear Creek Independent School District
Galveston County *
Harris County**
Total Net Overlapping Debt
City of Friendswood
Total Direct and Overlapping Debt
$
Net Debt
Outstandin_g___
21,295,000
519,913,625
197,928,000
2,916,534,000
17,590,000
Estimated
Percentage
Applicable
to City
100.00%
6.81%
10.80%
0.33%
100.00%
TABLE 13
Debt
Applicable
to Ci_!y
$ 21,295,000
35,406,118
21,376,224
9,624,562
87,701,904
17,590,000
$ 105,291,904
** Han-is County includes the Hanis County Flood Control District, Port of Houston Authority, Hanis
County Hospital District and the Hanis County Board of Education.
*Galveston County figure is unaudited.
82
CITY OF FRIENDSWOOD, TEXAS
MISCELLANEOUS STATISTICAL DATA
SEPTEMBER 30, 2005
(UNAUDITED)
Date of incorporation
Date of present charter
Form of government
Area
Miles of Streets
Streets -paved
Streets -Wlpaved
Fire Protection
Number of stations
Number of employees (part-time equivalent)
Number of volunteers
Fire Prevention
Number of employees (fulltime equivalent)
Number ofvolW1teers
Police Protection
Number of stations
Number of sworn officers (fulltime equivalent)
Number of pah·ol Wlits
Recreation
Number of parks
Size of parks
Number of swimming pools
Number of tennis cow-ts
Miles of storm sewers
( continued)
83
TABLE 14
October 15, 1960
Adopted Home Rule Charter
October 16, 1971
Council-Manager
22. 70 square miles
157 miles
4 miles
3
31
99
4.00
1
1
51
16
8
189 acres
1
4
92 miles
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Education
CITY OF FRIENDSWOOD, TEXAS
MISCELLANEOUS STATISTICAL DATA
(Continued)
SEPTEMBER 30, 2005
(UNAUDITED)
Friendswood Independent School District: Number of teachers Number of students Clear Creek Independent School District: Number of teachers Number of students City Employees Department heads Employees: Fulltime Part-time (fulltime equivalent) Election
Number of Votes Cast: Last City Election -Regular Election Water Somce Average daily consumption Maximum daily consumption Water mains Number of connections Sewer Average daily flow Maximum daily flow Sanitary sewer mains Number of connections Ground Water 100,000 gallons 1,062,000 gallons Blackhawk 3,081,000 gallons 10,587,000 gallons 84
Surface Water 3,994,000 gallons 8,873,000 gallons TABLE 14 330 5,638 2,265 35,229 8 176 21.29 3,102 165 miles11,196 165 miles10,537
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