Item 4I CITY OF Item
SOUTHLAKE 41
MEMORANDUM
March 30, 2016
To: Shana Yelverton, City Manager
From: Sharen Jackson, Chief Financial Officer
Subject: Approve the 2015 Comprehensive Annual Financial Report
Action
Requested: Approval of September 30, 2015 Comprehensive Annual
Financial Report.
Background
Information: The purpose of this item is to seek approval of the 2015
Comprehensive Annual Financial Report.
• City Charter requires the City at the close of each
fiscal year have an independent audit performed by a
Certified Public Accountant. Weaver L.L.P., Certified
Public Accountants, performed the audit for fiscal year
2015.
• City received an unmodified ("clean") opinion on the
City's financial statements for the year ended
September 30, 2015.
• Shawn Parker, Partner, will present the report to the
audit committee on Tuesday during the committee
meeting scheduled at 5:00 prior to the city council
meeting.
Financial
Considerations: None required
Strategic Link: F4 Establish and maintain effective internal controls
Citizen Input/
Board Review: None required
Legal Review: None required
Alternatives: None required
Supporting
Documents: 2015 CAFR
Staff Recommendation: Approval of 2015 Comprehensive Annual Financial
Report
I
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CITY OF SOUTHLAKE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015
As Prepared By
Sharen Jackson, CPA
Chief Financial Officer
I
CITY OF SOUTHLAKE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015
TABLE OF CONTENTS
Exhibit Page
I. INTRODUCTORY SECTION
Letter of Transmittal i
Certificate of Achievement viii
Organizational Chart ix
List of Principal Officials x
II. FINANCIAL SECTION
Independent Auditor's Report 1
A. MANAGEMENT'S DISCUSSION AND ANALYSIS 4
B. BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statement of Net Position 1 16
Statement of Activities 2 17
Fund Financial Statements
Governmental Funds Financial Statements
Balance Sheet 3 18
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Position 4 20
Statement of Revenues, Expenditures, and Changes in Fund Balance 5 21
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures
and Changes in Fund Balance to the Statement of Activities 6 23
Proprietary Funds Financial Statements
Statement of Net Position 7 24
Statement of Revenues, Expenses, and Changes in Net Position 8 25
Statement of Cash Flows 9 26
Fiduciary Fund Financial Statement
Statement of Fiduciary Net Position 10 27
Notes to the Basic Financial Statements 28
CITY OF SOUTHLAKE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015
TABLE OF CONTENTS
Exhibit Page
C. REQUIRED SUPPLEMENTARY INFORMATION
Budgetary Comparison Schedule-General Fund A-1 60
Budgetary Comparison Schedule -Tax Increment Financing District Special
Revenue Fund A-2 61
Notes to Budgetary Comparison Schedules 62
Schedule of Changes in Net Pension Liability and Related Ratios-TMRS A-3 63
Schedule of Contributions-TMRS A-4 64
Notes to Texas Municipal Retirement System Required Supplementary Information 65
Condition Rating of Street System A-5 66
D. COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES
Major Governmental Funds
Budgetary Comparison Schedule-General Obligation Debt Service Fund B-1 68
Nonmajor Governmental Funds
Combining Balance Sheet-Nonmajor Governmental Funds C-1 71
Combining Statement of Revenues, Expenditures, and Changes in Fund Balance-
Nonmajor Governmental Funds C-2 74
Budgetary Comparison Schedule- Parks Dedication Special Revenue Fund C-3 77
Budgetary Comparison Schedule-Southlake Parks Development
Corporation Special Revenue Fund C-4 78
Budgetary Comparison Schedule-Crime Control District Special Revenue Fund C-5 79
Budgetary Comparison Schedule- Hotel Occupancy Special Revenue Fund C-6 80
Budgetary Comparison Schedule-Storm Water Utility Special Revenue Fund C-7 81
Budgetary Comparison Schedule- Red Light Camera Special Revenue Fund C-8 82
Budgetary Comparison Schedule-Southlake Parks Development Corporation
Debt Service Fund C-9 83
Agency Funds
Statement of Changes in Assets and Liabilities-Cash Escrow Agency Fund F-1 85
Schedules of Capital Assets Used in the Operation of Governmental Funds
Comparative Schedules of Capital Assets by Source G-1 86
Schedule of Changes in Capital Assets by Function and Activity G-2 87
CITY OF SOUTHLAKE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015
TABLE OF CONTENTS
Exhibit Page
III. STATISTICAL SECTION Table
Net Position By Component 1 88
Changes in Net Position 2 90
Fund Balances, Governmental Funds 3 92
Changes in Fund Balances, Governmental Funds 4 93
Assessed Value and Estimated Actual Value of Taxable Property 5 94
Direct and Overlapping Property Tax Rates 6 95
Principal Property Tax Payers 7 96
Ad Valorem Tax Levies and Collections 8 97
Ratio of Outstanding Debt By Type 9 98
Ratio of General Bonded Debt Outstanding 10 100
Direct and Overlapping Governmental Activities Debt 11 101
Pledged-Revenue Coverage 12 102
Demographic and Economic Statistics 13 103
Principal Employers 14 104
Full-Time Equivalent City Government Employees By Function/Program 15 105
Operating Indicators By Function/Program 16 106
Capital Asset Statistics By Function/Program 17 107
I
INTRODUCTORY SECTION
I
e CITY OF
SOU 1 1 iLAKE
Finance Department
March 30, 2016
Honorable Mayor Laura Hill and
Members of City Council
City of Southlake
Southlake, Texas
Honorable Mayor and Councilmembers:
It is with pleasure that we submit to you the Comprehensive Annual Financial Report
(CAFR) of the City of Southlake for the fiscal year ended September 30, 2015. This report
was prepared by the Finance Department in accordance with the Southlake Charter,
Statutes and generally accepted accounting principles for governments. In addition to
meeting legal requirements, this report reflects the City's commitment to full financial
disclosure. We encourage you to thoroughly read this report and take the opportunity to
discuss some of the important items it addresses.
In developing and evaluating the City's accounting system, consideration is given to the
adequacy of internal accounting controls. These controls are designed to provide
reasonable, but not absolute, assurance regarding the safeguarding of assets against loss
from unauthorized use or disposition, and the reliability of financial records for preparing
financial statements and maintaining accountability for assets. The concept of reasonable
assurance recognizes that the cost of a control should not exceed the benefits likely to be
derived, and the evaluation of costs and benefits requires estimates and judgments by
management. We believe that the City's current system of internal controls adequately
safeguards assets and provides reasonable assurance of proper recording of financial
transactions.
The financial statements are presented in accordance with Governmental Accounting
Standards Board Statement 34, Basic Financial Statements-and Management's
Discussion and Analysis For State and Local Governments. The presentation of the
City's financial information includes two financial statements that provide a government-
wide perspective using the accrual basis of accounting. The two government-wide
statements present governmental activities separately from business-type activities. The
inclusion of the government-wide statements in this format enables a more thorough
understanding of the financial operations and condition of the City.
1400 Main Street, Suite 440, Southlake, TX 76092 (817) 748-8345
Innovation 0 Integrity 0 Accountability 0 Commitment to Excellence 0 Teamwork
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The fund financial statements focus on individual major funds. Each major fund is
presented in a separate column in the fund financial statements. Nonmajor funds are
aggregated and presented in a combined column. Budget to actual comparisons are
presented as required supplementary information and are limited to the general fund and
major special revenue funds. The comparisons are more informative, including both the
original adopted budget and the final amended budget.
We believe the reporting model will assist in making economic, social and political
decisions and in assessing accountability to the residents by:
• comparing actual financial results with the legal adopted budget, where
appropriate;
• assessing financial condition and results of operations;
• assisting in determining compliance with fiscally-oriented laws, rules and
regulations; and
• assisting in evaluating the efficiency and effectiveness of City operations.
Responsibility for both the accuracy of the presented 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 data, as presented, is accurate in all material respects and is
reported in a manner designed to present fairly the financial position and results of
operations. All disclosures necessary to enable the reader to gain an understanding of the
City's financial activities have been included.
FINANCIAL STATEMENT FORMAT
This report has been prepared and organized to meet the requirements of the Government
Finance Officers Association (GFOA) Certificate of Achievement for Excellence in
Financial Reporting Program. By following the guidelines of this program, the report's
format facilitates understanding by the residents and provides information needed by the
most sophisticated and interested financial observers. The report is presented in three
sections: introductory, financial and statistical.
• The introductory section, which is unaudited, includes this transmittal letter,
GFOA certificate, the City's organizational chart, and a list of principal officials.
This section is designed to provide an overview and general understanding of the
report.
ii
• The financial section provides a detailed presentation of the financial position and
results of operations for the fiscal year ended September 30, 2015. The financial
section is divided into four main subsections:
o Management's Discussion and Analysis
o Basic Financial Statements and related notes
o Required Supplementary Information
o Combining and Individual Fund Financial Statements and Schedules
Readers are encouraged to pay particular attention to Management's Discussion
and Analysis and to the footnotes to the basic financial statements. These provide
valuable analysis and explanation of the financial statements.
• The statistical section, which is unaudited, includes a number of multi-year tables
and other data designed to present social, economic and financial trends of the
City,providing an overall view of the fiscal capacity of the City.
The financial reporting entity includes all the funds of the primary government, as well as
all of its component units in accordance with GASB Codification of Governmental
Accounting and Financial Reporting Standards, Section 2100, "Defining the Reporting
Entity." Component units are legally separate entities for which the primary government
is financially accountable and for which the nature and significance of their relationship
with the primary government are such that exclusion would cause the City's basic
financial statements to be misleading or incomplete. The primary government is
considered financially accountable if it appoints a voting majority of an organization's
governing body and imposes its will on that organization. The primary government may
also be financially accountable if an organization is fiscally dependent on the primary
government regardless of the authority of the organization's governing board. Blended
component units, although legally separate entities, are, in substance, part of the primary
government's operations and are included as part of the primary government.
Accordingly, the Southlake Parks Development Corporation ("SPDC"), Southlake Crime
Control and Prevention District (the "District") and Tax Increment Reinvestment Zone
("TIF") are included in the governmental funds (special revenue) of the primary
government as blended component units. SPDC was formed in January 1994 pursuant to
a successful election in November 1993 to adopt an additional 1/2 cent sales tax for park
and recreation facility development. SPDC is organized exclusively to act on behalf of
the City for the financing, development and operation of parks and recreation facilities.
Also included in this report is financial information for the District. In November 1997,
voters approved an additional '/2 cent sales tax for Crime Control and Prevention
initiatives. The District is organized exclusively to act on behalf of the City for the
financing, development and crime control throughout the City. Also, included are the
financial statements of the TIF which was created in 1997 to encourage quality
commercial growth. The TIF was formed to finance and make public improvements,
under the authority of the Tax Increment Financing Act.
iii
PROFILE OF THE GOVERNMENT
General Information
Although Southlake has been a high-growth community for years, when the first settlers
arrived in 1845 they found only a vast area of land and trees where the grand prairie and
cross timbers merged. As the site of the first permanent settlement in Tarrant County, a
portion of present day Southlake was homesteaded in 1866, which consisted of 360 acres.
Keeping with the time, the primary industry was agriculture. Farmers grew peanuts,
grains and cotton, and families raised their own livestock.
The area that would become Southlake remained a rural farming community for more
than 100 years until the U.S. Army Corps of Engineers built Lake Grapevine in 1952.
The lake spurred much of the area's early growth and was the beginning of dramatic
change. The town officially incorporated on September 25, 1956 by a public vote of 30
in favor and 24 against. The original town contained 1.62 square miles and had a
population of just over 100. The residents chose to call this new town Southlake because
it was... south of Lake Grapevine! The Southlake Fire Department was launched in 1965
and the first piece of fire equipment was a 1950 Diamond T-Military unit with a tank
capacity of 1,000 gallons and an auxiliary pump. The first chief of police was hired in
1966, and the City purchased its first patrol car in 1967.
The opening of the Dallas-Fort Worth International Airport in 1974 served as the next
catalyst of growth in the area and Southlake residents adopted a home-rule charter in
April 1987, which created the current council-manager form of government with six
Council Members and a Mayor who are elected at large on a non-partisan basis for
staggered three-year terms. But the single most important event in bringing residential
subdivision development to Southlake was the completion of water and sewer lines in the
southern portion of the city in the early 1990s.
Since that time, much like the area's first settlers were attracted to the area with its
endless possibilities, Southlake has continued to attract the suburban settler desiring a
high quality of life and the small town charm that has been preserved from Southlake's
past.
Services Provided
Services provided by the City under general governmental functions include public
events, public safety, planning and development, engineering, street maintenance, parks
operation and maintenance, recreation, library services, and general administrative
services. The City does not provide educational or welfare services.
Water and sewer services and solid waste collection are provided under an Enterprise
Fund concept, with user charges set by the City Council to ensure adequate coverage of
operating expenses and payments of outstanding debt.
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Economic Condition and Outlook
The City of Southlake continues to be one of the major growth areas in Texas. The City is
in a prime location in Northeast Tarrant County, 5 minutes west of Dallas/Fort Worth
International Airport, and 10 minutes east of the Alliance Airport, a commercial aviation
and industrial complex in north Fort Worth. State Highway 114, FM1709, and FM1938,
the regional road arterials, serve the City.
Single Family Residential Home Permits There were 272 single
family residential permits
300 issued in Fiscal Year 2015
250 with an average new home
construction value,
200 excluding land value, of
150 more than $724,000.
Residential home
100
construction has increased
50 — as evidenced by the chart.
0
2011 2012 2013 2014 2015
Water customers increased
Num be r of Water Customers from 9,964 in Fiscal Year
10,400 2014 to 10,189 in 2015,
10,200 while wastewater
10,000 customers increased from
9,800 7,926 to 8,166 during the
9,600 same year. The chart
9,400 shows the five-year trend
9,200 of increasing water
customers, the result of the
9,000 bu
2011 2012 2013 2014 2015 ilding permit activity.
The City has developed
master plans for land use, water, sewer, parks, trails, and thoroughfares, and has
implemented regulatory controls that will maintain the anticipated quality growth into the
future.
Sales Tax Revenue The City of Southlake
experienced an increase in
35,000,000 sales tax collections during
30,000,000 the fiscal year as indicated
25,000,000 on the chart. Sales tax
20,000,000
15,000,000 collections totaled
10,000,000 $29,116,146 in fiscal year
5,000,000 2015, a 13.5% increase
from the previous year.
2011 2012 2013 2014 2015
O General O SPDC O Crime
V
Future Development
During 2015, approximately 27 new construction commercial permits were issued by the
city representing over 988,907 square feet of future retail/office. Residential also
experienced an increase in activity; several subdivisions were approved for development
with an estimated average home value over$950,000.
Financial Management Principles
The City has strong financial management principles that provide the framework for the
City's financial sustainability.
• Tax rate management. The tax rate is allocated properly between
maintenance/operations and debt service.
• Structural balance. The City's ability to weather potential economic downturns or
other financial challenges is critical. The City does not use reserves to balance
the operating budget.
• Reserve management. The City's fund balance policy requires a minimum 15%
and optimum 25% balance. The City uses "excess" reserves as a means to fund
one-time, "pay-as-you-go"projects.
• Multi-year financial plan. The long-term effect of today's decisions on
tomorrow's financial situation is an important consideration during the budget
process.
• Quality service delivery. The City is committed to meeting the needs of our
community through high quality service delivery.
• Risk management. The City supports ongoing initiatives to safeguard the public
trust by internal audits and other initiatives to maintain a strong control
environment.
For fiscal year 2015, the property tax rate was held steady at $0.462 per $100 net taxable
valuation.
OTHER INFORMATION
Independent Audit
The City Charter requires an annual audit of the financial status of the City by independent
Certified Public Accountants selected by the City Council. This requirement has been met
and the auditor's report has been included in this report.
Awards
The Certificate of Achievement is a prestigious national award recognizing conformance
with the highest standards for preparation of state and local government financial reports.
In order to be awarded a Certificate of Achievement, a government unit must publish an
easily readable and efficiently organized comprehensive annual financial report, whose
contents conform to program standards.
Vi
Such CAFR must satisfy both generally accepted accounting principles and applicable legal
requirements. A Certificate of Achievement is valid for a period of one year only. The
City of Southlake received a Certificate of Achievement for the year ended September 30,
2014, and believes our current report conforms to the Certificate of Achievement program
requirements, and we are submitting it to GFOA.
In addition, the City also received the GFOA's Distinguished Budget Presentation award
for its annual budget dated October 1, 2014. In order to qualify for this award, the City's
budget document was judged to be proficient in all categories, including as a policy
document, a financial plan, and operations guide, and a communications device. The City
received the silver member designation for the Texas Comptroller's Leadership Circle for
online financial transparency.
Acknowledgments
The preparation of this report could not be accomplished without the dedication and
efficiency of the entire staff and our independent auditor. I would like to express my
sincere appreciation to all employees who contributed to its preparation. I would also
like to thank the Mayor and members of the City Council for their support in planning
and conducting the financial operations of the City in a responsible and efficient manner.
Respectfully submitted,
Sharen Jackson, CPA
Chief Financial Officer
Vii
a
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Southiake
Texas
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
September 30, 2014
Executive Director/CEO
Viii
CITY OF SOUTHLAKE
ORGANIZATIONAL CHART
ACUIZZgE7S
- - - - - -
CITY CITY MUNICIPAL
ATTORNEY SECRETARY JUDGE
ASSISTANT CITY ASSISTANT CITY
MANAGER MANAGER
COMMUNITY CITY MANAGER'S INFORMATION
SERVICES FIRE SERVICES OFFICE TECHNOLOGY
10
POLICE HUMAN
SERVICES RESOURCES FINANCE
ECONOMIC
DEVELOPMENT &
TOURISM
PLANNING& PUBLIC WORKS
DEVELOPMENT
IX
LIST OF PRINCIPAL OFFICIALS
Laura K. Hill Mayor
Randy Williamson Mayor Protem
Brandon Bledsoe Deputy Mayor Protem
Shahid Shall Council Member
Shawn McCaskill Council Member
John Huffman Council Member
Gary Fawks Council Member
Shana K. Yelverton City Manager
Benjamin Thatcher Assistant City Manager
Alison Ortowski Assistant City Manager
Lori Payne City Secretary
Sharen Jackson Chief Financial Officer
Shannon Hamons Director of Economic Development
Robert Cohen Director of Public Works
Chris Tribble Director of Community Services
Stacey Black Director of Human Resources
Ken Baker Director of Planning/Development
x
FINANCIAL SECTION
I
weaverAssurance- -Advisory JJJ%
INDEPENDENT AUDITOR'S REPORT
To Members of the City Council
and City Manager
City of Southlake, 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 Southlake (the City) as of and for the year ended September 30, 2015, and the related
notes to the financial statements, which collectively comprise the City's basic financial
statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant
to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
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 involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
AN INDEPENDENT MEMBER OF WEAVER AND TIDWELL,L.L.P. 12221 MERIT DRIVE,SUITE 1400,DALLAS,TX 75251
BAKER TILLY INTERNATIONAL CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS P:972.490.1970 F:972.702.8321
1
City of Southlake
Page 2
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business-type activities, each
major fund, and the aggregate remaining fund information of the City, as of September 30,
2015, and the respective changes in financial position, and, where applicable, cash flows
thereof for the year then ended in conformity with accounting principles generally accepted in
the United States of America.
Change in Accounting Principle
As discussed in Note 14 to the financial statements, in 2015 the City adopted new accounting
guidance, GASB Statement No. 68, "Accounting and Financial Reporting for Pensions — an
amendment of GASB Statement No. 27" and GASB Statement No. 71, "Pension Transition for
Contributions Made Subsequent to the Measurement Date". Our opinion is not modified with
respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis (pages 4 through 15), budgetary comparison
information (pages 60 through 62), TMRS pension schedules (pages 63 through 65) and
condition rating of street system (page 66) be presented to supplement the basic financial
statements. Such information, although not a part of the basic financial statements, is required
by the Governmental Accounting Standards Board, who considers it to be an essential part of
financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the
United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management's
responses to our inquiries, the basic financial statements, and other knowledge we obtained
during our audit of the basic financial statements. We do not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City's basic financial statements. The introductory section, combining
and individual fund financial statements and schedules, and statistical section, are presented for
purposes of additional analysis and are not a required part of the financial statements.
2
City of Southlake
Page 3
The combining and individual fund statements and schedules are the responsibility of
management and were derived from and relate directly to the underlying accounting and other
records used to prepare the basic financial statements.
Such information has been subjected to the auditing procedures applied in the audit of the
financial statements and certain additional procedures, including comparing and reconciling
such information directly to the underlying accounting and other records used to prepare the
basic financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the combining and individual fund financial statements and schedules
are fairly stated in all material respects in relation to the basic financial statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we do not express an
opinion or provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
March 30, 2016, on our consideration of the City's internal control over financial reporting and
on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing
of internal control over financial reporting and compliance and the results of that testing, and not
to provide an opinion on internal control over financial reporting or on compliance. That report is
an integral part of an audit performed in accordance with Government Auditing Standards in
considering the City's internal control over financial reporting and compliance.
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WEAVER AND TIDWELL, L.L.P.
Dallas, Texas
March 30, 2016
3
I
MANAGEMENT'S DISCUSSION
AND ANALYSIS
I
MANAGEMENT'S DISCUSSION AND ANALYSIS
The City of Southlake's Management's Discussion and Analysis (MD&A) is designed to provide
an objective and easy to read analysis of the City's financial activities based on currently known
facts, decisions, and conditions. It is intended to provide a broad overview and short-term
analysis of the City's activities based on information presented in the financial statements.
Specifically, this information is designed to assist the reader in focusing on significant financial
issues, provide an overview of the City's financial activity, identify changes in the City's
financial position (its ability to address the next and subsequent years' challenges), identify
material deviations from the approved budget, and identify individual fund issues.
The City presents its financial statements in accordance with the reporting model required by
Governmental Accounting Standards Board Statement 34, Basic Financial Statements-and
Management's Discussion and Analysis- for State and Local Governments. This reporting
model significantly changes not only the presentation of financial data, but also the manner in
which the information is recorded.
The information contained within this MD&A is only a component of the entire financial
statement report. Readers should take time to read and evaluate all sections of the report,
including the footnotes and the other Required Supplementary Information that is provided in
addition to this MD&A.
FINANCIAL HIGHLIGHTS
The assets and deferred outflows of resources of the City of Southlake exceeded its liabilities and
deferred inflows of resources at September 30, 2015 by $531,672,444 (net position). Of this
amount, $73,108,607 (unrestricted net position) may be used to meet the government's ongoing
obligations to citizens and creditors.
The City's total net position increased by $35,750,449, exclusive of the cumulative effect of a
change in accounting principles. This increase can be attributed to increases in sales tax revenue,
contributions, and charges for services.
At September 30, 2015, the City's governmental funds reported combined ending fund balances
of $103,082,008. Approximately 17.7 percent of this amount, $18,230,317, is available for
spending at the government's discretion(unassigned fund balance).
At the end of the current fiscal year, unassigned fund balance for the General Fund was
$18,230,317 or 51.4 percent of total General Fund expenditures.
At the end of the current fiscal year, the City of Southlake outstanding debt totals $161,848,257,
a net decrease of$10,928,246 from the previous year.
4
OVERVIEW OF THE FINANCIAL STATEMENTS
The discussion and analysis is intended to serve as an introduction to the City's basic financial
statements. The reporting focus is on the City as a whole and on individual major funds. It is
intended to present a more comprehensive view of the City's financial activities.
The basic financial statements are comprised of three components: 1) government-wide
financial statements, 2) fund financial statements, and 3) notes to the financial statements. This
report also contains other supplementary information in addition to the basic financial statements
themselves.
GOVERNMENT-WIDE FINANCIAL STATEMENTS
The government-wide financial statements include the Statement of Net Position and the
Statement of Activities. These statements are designed to provide readers with a broad overview
of the City's finances in a manner similar to a private-sector business. Both are prepared using
the economic resources measurement focus and the accrual basis of accounting; meaning that all
the current year's revenues and expenses are included regardless of when cash is received or
paid.
The Statement of Net Position presents information on all of the City's assets and deferred
outflows of resources and liabilities and deferred inflows of resources, including capital assets
and long-term obligations. The difference between the two is reported as net position. Over
time, the increases or decreases in net position may serve as a useful indicator of whether the
financial position of the City is improving or deteriorating. Other indicators of the City's
financial position should be taken into consideration, such as the change in the City's property
tax base and condition of the City's infrastructure (i.e., roads, drainage systems, water and sewer
lines, etc.), in order to more accurately assess the overall financial condition of the City.
The Statement of Activities presents information showing how the City's net position changed
during the most recent fiscal year. It focuses on both the gross and net costs of the government's
various activities and thus summarizes the cost of providing specific government services. This
statement includes all current year revenues and expenses.
The Statement of Net position and the Statement of Activities divide the City's activities into
two types:
Governmental activities- Most of the City's basic services are reported here, including general
administration, debt services, public safety, public works, parks and community services, public
library, public events and facilities, planning and development and finance. Property, sales and
franchise taxes provide the majority of the financing for these activities.
Business-Type activities- Activities for which the City charges a fee to customers to pay most or
all of the costs of a service it provides are reported here. The City's business-type activities
include water distribution and wastewater collection and solid waste collection and disposal.
The government-wide financial statements are found on pages 16-17 of this report.
5
FUND FINANCIAL STATEMENTS
The City of Southlake, like other state and local governments, uses fund accounting to ensure
and demonstrate compliance with finance-related legal requirements. 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. These statements focus on the most significant funds and may
be used to find more detailed information about the City's most significant activities. All of the
funds of the City can be divided into two categories: governmental funds and proprietary funds.
Governmental Funds- These funds are used to account for the majority of the City's activities,
which are essentially the same functions reported as governmental activities in the government-
wide statements. However, unlike the government-wide fmancial statements, governmental fund
financial statements focus on near-term inflows and outflows of spendable resources, as well as
spendable resources available at the end of the fiscal year for future spending. Such information
may be useful in evaluating a government's near-term financing requirements.
The focus of the governmental funds financial statements is narrower than that of the
government-wide financial statements. Therefore, it is useful to compare the information
presented for governmental funds with similar information presented for governmental activities
in the government-wide financial statements. By doing so, readers may better understand the
long-term impact of the government's near-term financing decisions. Both the governmental
funds Balance Sheet and the governmental funds Statement of Revenues, Expenditures and
Changes in Fund Balances provided a reconciliation to facilitate this comparison. The
reconciliation explains the differences between the government's activities as reported in the
government-wide financial statements and the information presented in the governmental funds
financial statements.
The City maintains 22 individual governmental funds. Information is presented separately in the
governmental funds Balance Sheet and in the governmental funds Statement of Revenues,
Expenditures and Changes in Fund Balances for the General Fund, General Obligation Debt
Service Fund, General Capital Projects Fund, Southlake Parks Development Corporation Capital
Projects Fund, and Tax Increment Financing District Fund, all of which are considered to be
major funds. Data for the other governmental funds are combined into a single, aggregated
presentation. Individual fund data for each of the non-major governmental funds is provided in
the form of combining statements elsewhere in this report.
The basic governmental funds financial statements can be found on pages 18-23 of this report.
Proprietary Funds- When the City charges customers for services it provides, the activities are
generally reported in proprietary funds. The City of Southlake maintains two different types of
proprietary funds: enterprise and internal service funds.
Enterprise funds are used to report the same functions presented as business-type activities in the
government-wide financial statements. The City uses enterprise funds to account for its water
and sewer operations and solid waste. These services are primarily provided to outside or non-
governmental customers.
6
Internal service funds are an accounting device used to accumulate and allocate costs internally
among the City's various functions. The City uses internal service funds to account for its
vehicle fleet.
Proprietary funds financial statements provide the same type of information as the government-
wide financial statements, only in more detail. The proprietary funds financial statements
provide separate information for the water and sewer operations, which is considered to be a
major fund of the City, and can be found on pages 24-26 of this report.
Fiduciary funds — the City presents one agency fund, the Cash Escrow Agency Fund, which is
custodial in nature and does not involve measurement of results of operations. The financial
statements for the Cash Escrow Agency Fund, which is prepared on the accrual basis of
accounting, can be found on page 27 of this report.
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. The Notes to the Financial
Statements can be found on pages 28-59 of this report.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Total assets of the City at September 30, 2015 were $700,934,114 while total liabilities were
$174,754,190, and total deferred outflows ($6,815,832) and inflows ($1,323,312) of resources
resulting in a net position balance of$531,672,444.
The largest portion of the City's net position, $444,939,673, reflects its investment in capital
assets (land and improvements, building, infrastructure, machinery and equipment net of
accumulated depreciation); less any related debt used to acquire those assets that is still
outstanding. The City uses these assets to provide services to its citizens; consequently, these
assets are not available for future spending. Although the City reports its capital assets net of
related debt, 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.
Governmental Activities net position increased by $32,701,337, exclusive of the cumulative
effect of the change in accounting principle. This increase is primarily attributable to increases in
both sales tax and charges for services.
Business-type Activities net position increased by $3,049,112, exclusive of the cumulative effect
of the change in accounting principle. The majority of this change can be attributed to an
increase in charges for service which resulted from increased consumption during the summer
months.
7
The following analysis highlights the net position as of September 30, 2015:
Governmental Business-Type 2015
Activities Activities Total
Current and other assets: $ 116,222,419 $ 34,275,527 $ 150,497,946
Capital assets 441,024,886 109,411,282 550,436,168
Total assets 557,247,305 143,686,809 700,934,114
Deferred outflows of resources 5,846,094 969,738 6,815,832
Other liabilities 9,003,677 3,902,256 12,905,933
Long-term debt
outstanding 113,009,618 48,838,639 161,848,257
Total liabilities 122,013,295 52,740,895 174,754,190
Deferred intflows of resources 1,211,912 111,400 1,323,312
Net position:
Net investment in
capital assets 366,796,228 78,143,445 444,939,673
Restricted-debt service 8,735,479 - 8,735,479
Restricted-other 4,888,685 - 4,888,685
Unrestricted 59,447,800 13,660,807 73,108,607
Total net position $ 439,868,192 $ 91,804,252 $ 531,672,444
The following analysis highlights the net position as of September 30, 2014:
Governmental Business-Type 2014
Activities Activities Total
Current and other assets: $ 119,160,773 $ 31,831,555 $ 150,992,328
Capital assets 418,439,098 109,144,692 527,583,790
Total assets 537,599,871 140,976,247 678,576,118
Deferred outflows of resources 3,975,876 861,007 4,836,883
Other liabilities 6,767,682 2,529,227 9,296,909
Long-term debt
outstanding 122,679,683 50,096,820 172,776,503
Total liabilities 129,447,365 52,626,047 182,073,412
Net position:
Net investment in
capital assets 338,303,633 73,126,147 411,429,780
Restricted-debt service 9,809,483 - 9,809,483
Restricted-other 5,283,121 - 5,283,121
Unrestricted 58,732,145 16,085,060 74,817,205
Total net position $ 412,128,382 $ 89,211,207 $ 501,339,589
8
The following analysis highlights the changes in net position for the year ended September 30,
2015:
Governmental Business-Type 2015
Activities Activities Total
Revenues:
Program revenues:
Charges for services $ 8,402,252 $ 24,792,619 $ 33,194,871
Operating grants and
contributions 455,575 - 455,575
Capital grants and
contributions 8,967,466 5,776,438 14,743,904
General revenues:
Taxes 66,594,638 - 66,594,638
Interest on
investments 523,954 112,967 636,921
Gain on sale of
capital assets 102,900 23,100 126,000
Miscellaneous 1,066,818 4,521 1,071,339
Total revenues 86,113,603 30,709,645 116,823,248
Expenses:
General government 14,602,425 - 14,602,425
Public safety 18,176,698 - 18,176,698
Public works 9,762,184 - 9,762,184
Culture and recreation 9,311,006 - 9,311,006
Interest on long-term debt 2,528,113 - 2,528,113
Water and sewer - 26,692,373 26,692,373
Total expenses 54,380,426 26,692,373 81,072,799
Increase in net position
before transfers 31,733,177 4,017,272 35,750,449
Transfers 968,160 (968,160) -
Increase in net position 32,701,337 3,049,112 35,750,449
Net position-beginning
of year,as previously stated 412,128,382 89,211,207 501,339,589
Cumulative effect of
change in accounting principle (4,961,527) (456,067) (5,417,594)
Net position-End of Year $ 439,868,192 $ 91,804,252 $ 531,672,444
9
The following analysis highlights the changes in net position for the year ended September 30,
2014:
Governmental Business-Type 2014
Activities Activities Total
Revenues:
Program revenues:
Charges for services $ 8,305,138 $ 23,591,438 $ 31,896,576
Operating grants and
contributions 443,157 - 443,157
Capital grants and
contributions 4,436,346 3,510,936 7,947,282
General revenues:
Taxes 62,563,693 - 62,563,693
Interest on
investments 482,607 101,469 584,076
Gain on sale of
capital assets 99,109 - 99,109
Miscellaneous 639,571 6,963 646,534
Total revenues 76,969,621 27,210,806 104,180,427
Expenses:
General government 13,417,904 - 13,417,904
Public safety 18,245,617 - 18,245,617
Public works 8,870,998 - 8,870,998
Culture and recreation 8,948,841 - 8,948,841
Interest on long-term debt 5,097,036 - 5,097,036
Water and sewer - 25,030,426 25,030,426
Total expenses 54,580,396 25,030,426 79,610,822
Increase in net position
before transfers 22,389,225 2,180,380 24,569,605
Transfers 915,116 (915,116) -
Increase in net position 23,304,341 1,265,264 24,569,605
Net position-beginning
of year,as previously stated 390,464,439 88,642,882 479,107,321
Cumulative effect of
change in accounting principle (1,640,398) (696,939) (2,337,337)
Net position-End of Year $ 412,128,382 $ 89,211,207 $ 501,339,589
10
FINANCIAL ANALYSIS OF THE GOVERNMENTAL FUNDS
Governmental Funds- The focus of the City of Southlake's governmental funds is to provide
information on near-term inflows, outflows and balances of spendable resources. Such
information is useful in assessing the City's financing requirements. In particular, unreserved
fund balance may serve as a useful measure of a government's net resources available for
spending at the end of the fiscal year.
As of the end of the current fiscal year, the City's governmental funds reported combined fund
balances of $103,082,008. Approximately 17.7 percent or $18,230,317 constitutes unassigned
fund balance, which is available for spending at the government's discretion. Other portions of
the fund balance are either nonspendable,restricted, committed or assigned for specific purposes
to pay for debt service ($11,057,196), recycling ($40,612), police expenditures ($7,848,458),
parks ($10,720,498), capital projects ($41,949,791), reinvestment zone expenditures
($4,010,195), municipal court expenditures ($878,490), oil and gas expenditures ($53,168),
storm water expenditures ($451,371), strategic initiative expenditures ($7,673,680) and other
($168,232).
The General Fund is the chief operating fund of the City. At the end of the current fiscal year,
unassigned fund balance of the general fund was $18,230,317. As a measure of the General
Fund's liquidity, it may be useful to compare both the unassigned fund balance and total fund
balance to total fund expenditures. Unassigned fund balance represents 51.4 percent of total
General Fund expenditures, while total fund balance represents 73.7 percent of total General
Fund expenditures. The fund balance of the General fund increased $1,575,205 during the
current fiscal year. The key factor in the increase is attributable to the revenue increase in
municipal sales and mixed beverage taxes of$1,753,346.
The General Obligation Debt Service Fund has a fund balance of $9,331,641, all of which is
restricted for the payment of debt service. The fund balance decreased during the year by
$1,146,246, primarily due to the increased debt service payments. The fund balance in the
General Capital Projects Funds ended the year at $35,719,136, a decrease of$4,544,899, due to
the construction of roadway and facility projects.
FINANCIAL ANALYSIS OF THE PROPRIETARY FUNDS
The City's proprietary funds provide the same type of information found in the government-wide
financial statements, but in more detail.
Unrestricted net position reported in the Proprietary Funds were: $13,660,807 in the Water and
Sewer Fund and $4,110,434 in the Vehicle Replacement Fund. Total net position in the Water
and Sewer Fund increased by $3,049,112 while the Vehicle Replacement Fund net position
increased by $775,058. The increase in charges for sales and services revenue and capital
contributions and transfers from the other funds are the primary reasons for the respective
changes in net position.
11
GENERAL FUND BUDGETARY HIGHLIGHTS
The City made revisions to the original budget approved by the City Council. Management's
estimate of the General Fund's budgeted revenues increased $3,137,643 or 8.0% from original
budget based on year-to-date experience.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets- The City's investment in capital assets for its governmental and business-type
activities as of September 30, 2015 amount to $550,436,168 (net of accumulated depreciation).
This investment in capital assets includes land, buildings, improvements, machinery and
equipment, infrastructure and construction in progress.
The City has elected to use the modified approach for its street system in lieu of the depreciation
method. An up-to-date inventory of these infrastructure assets was performed and the annual
costs to maintain and preserve these assets was established and disclosed through administrative
policy. The current condition level of the street system meets the target condition level
established by the City. There were no significant changes in the condition levels of
infrastructure assets, and the differences between the estimated amounts necessary to maintain
and preserve the street system at target condition levels and the actual amount of expense
incurred for that purpose for 2015 was not material. Major capital projects completed during the
current year included the following:
• 12"water line along W Bob Jones
• Bicentennial Park Phase II
• Pavement Management System—various overlays and rehab
• Various Sidewalks
Governmental Business-Type 2015
Activities Activities Total
Land and improvements $ 110,260,206 $ 18,642,568 $ 128,902,774
Buildings and improvements 68,311,869 350,187 68,662,056
Improvements - 87,082,778 87,082,778
Infrastructure 238,420,017 - 238,420,017
Machinery and equipment 8,540,680 1,216,432 9,757,112
Construction in Progress 15,492,114 2,119,317 17,611,431
Total $ 441,024,886 $ 109,411,282 $ 550,436,168
Governmental Business-Type 2014
Activities Activities Total
Land and improvements $ 98,522,782 $ 16,789,625 $ 115,312,407
Buildings and improvements 68,008,655 380,505 68,389,160
Improvements - 88,570,613 88,570,613
Infrastructure 221,430,610 - 221,430,610
Machinery and equipment 8,655,433 1,293,725 9,949,158
Construction in Progress 21,821,618 2,110,224 23,931,842
Total $ 418,439,098 $ 109,144,692 $ 527,583,790
12
Additional information on the City's capital assets can be found in Note 4 on pages 44-45 of this
report.
Long-term Debt- At the end of the current fiscal year, the City of Southlake had $106,252,591
total long-term debt outstanding of bonds issued to finance capital improvements for roadway,
parks and recreation, public building and infrastructure. $47,996,324 of Utility System bonds,
which financed projects to increase capacity of the Utility system, was also outstanding. An
additional $1,186,050 was reported for compensated absences at year-end.
Governmental Business-Type 2015
Activities Activities Total
Bonds payable $ 106,252,591 $ 47,996,324 $ 154,248,915
Unearned revenue - 239,585 239,585
Net pension liability 5,653,988 519,719 6,173,707
Compensated absences 1,103,039 83,011 1,186,050
Total $ 113,009,618 $ 48,838,639 $ 161,848,257
Governmental Business-Type 2014
Activities Activities Total
Bonds payable $ 121,633,943 $ 49,775,833 $ 171,409,776
Unearned revenue - 243,490 243,490
Compensated absences 1,045,740 77,497 1,123,237
Total $ 122,679,683 $ 50,096,820 $ 172,776,503
The City takes it debt obligation very seriously. Several years ago, the City Council working
with City staff set goals to reduce the debt as percentage of assessed valuation over the total long
term debt. As you can see in the figure below, the City has reduced the percentage from 3.29%
in 2002 to 1.12% in 2015, during a time of growth for the City. The line that you see on this
chart is a graphic illustration of one of the reasons why two bond rating agencies have rated
Southlake's bonds "AAA".
The City has been able to effectively manage its debt during a period of growth using cash to
partially offset borrowing needs. Additionally, managing debt amortization has been a tool used
to reduce borrowing costs.
13
IANC-TERm DEBT -DEBT As%OF ASSESSED VALUATION
3,50% $120,000,000
3.29
3,00%
3.014u $100,000,000
2.7
za 2,50%
$80,000,000
2.36
0 2,00% a,0l�a d
2• o
$60,000,000
1.50% —
1.47"a 1.99°v
15100 1,54%
1.374v
$40.000.000
$20,000,000
0.50%
0,00% $-
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
The City's bonds are rated "AAA" by Standard and Poor's and FitchRatings. The City is
permitted by Article XI, Section 5, of the State of Texas Constitution to levy taxes up to $2.50
per $100 of assessed valuation for general governmental services including the payment of
principal and interest on general obligation long-term debt.
Additional information on the City's long-term debt can be found in Note 6 on pages 46-50 of
this report.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
The State of Texas, by constitution, does not have a personal income tax and therefore the State
operates primarily using sales and gasoline taxes. Local governments primarily rely on property
taxes and fees to fund their government activities.
While property taxes are important to the City, they represent 43.2% of total governmental
revenue. Sales tax continues to grow as the second largest governmental resource representing
39.0% of total governmental revenue. The City monitors all of its resources and determines the
need for program adjustment or fee increases accordingly.
14
The FY 2016 Adopted Budget maintains the City's property tax rate at $0.462 per $100 net
taxable valuation, which is unchanged from the FY 2015 rate. The City's property tax roll on net
taxable value increased $105,213,477 or 1.8 percent from the 2014 certified roll to the 2015
certified roll. As an element of the City's tax relief initiative the homestead exemption was
increased from 10% to 12% and is projected to collect slightly less in FY 2016 than in FY 2015.
The estimate of the FY 2016 tax roll is based on the certified roll as provided by the Tarrant
Appraisal District(TAD) in July. The assumed collection rate is 100 percent.
Requests for Information
This financial report is designed to provide a general overview of the City of Southlake's
finances for all those with an interest in the government's finances. Questions concerning any of
the information provided in this report or requests for additional financial information should be
addressed to the Office of the Chief Financial Officer, 1400 Main Street, 4`h Floor Finance
Department, Southlake, Texas 76092.
15
BASIC FINANCIAL STATEMENTS
v
GOVERNMENT-WIDE
FINANCIAL STATEMENTS
CITY OF SOUTHLAKE, TEXAS EXHIBIT 1
STATEMENT OF NET POSITION
SEPTEMBER 30, 2015
PRIMARY GOVERNMENT
GOVERNMENTAL BUSINESS-TYPE
ACTIVITIES ACTIVITIES TOTAL
ASSETS
Cash and cash equivalents $ 58,928,330 $ 3,731,108 $ 62,659,438
Investments 41,659,185 1,052,489 42,711,674
Receivables(net of allowance for uncollectibles) 5,854,796 4,944,162 10,798,958
Prepaid items 3,388 - 3,388
Inventories 24,438 - 24,438
Restricted assets
Cash and cash equivalents 2,078,116 15,608,440 17,686,556
Investments 7,266,646 8,939,328 16,205,974
Receivables 42,796 - 42,796
OPEB asset 364,724 - 364,724
Capital assets:
Non-depreciable 304,826,807 20,761,885 325,588,692
Depreciable(net of depreciation) 136,198,079 88,649,397 224,847,476
TOTAL ASSETS 557,247,305 143,686,809 700,934,114
DEFERRED OUTFLOWS OF RESOURCES
Deferred charge for refunding 3,603,448 763,592 4,367,040
Deferred charge for pensions 2,242,646 206,146 2,448,792
TOTAL DEFERRED OUTFLOWS OF RESOURCES 5,846,094 969,738 6,815,832
LIABILITIES
Accounts payable 5,586,308 3,089,417 8,675,725
Accrued liabilities 2,108,853 256,805 2,365,658
Accrued interest payable - 212,144 212,144
Unearned revenue 656,437 - 656,437
Liabilities payable from restricted assets
Accrued interest 652,079 - 652,079
Customer meter deposits - 343,890 343,890
Non-current liabilities:
Due within one year 13,548,551 5,423,407 18,971,958
Due in more than one year 99,461,067 43,415,232 142,876,299
TOTAL LIABILITIES 122,013,295 52,740,895 174,754,190
DEFERRED INFLOWS OF RESOURCES
Unavailable resources-pensions 1,211,912 111,400 1,323,312
TOTAL DEFERRED INFLOWS OF RESOURCES 1,211,912 111,400 1,323,312
NET POSITION
Net investment in capital assets 366,796,228 78,143,445 444,939,673
Restricted for debt service 8,735,479 - 8,735,479
Restricted for municipal court 878,490 878,490
Restricted for reinvestment zone 4,010,195 - 4,010,195
Unrestricted 59,447,800 13,660,807 73,108,607
TOTAL NET POSITION $ 439,868,192 $ 91,804,252 $ 531,672,444
The Notes to Financial Statements are
an integral part of this statement.
16
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I
FUND FINANCIAL STATEMENTS
I
GOVERNMENTAL FUNDS
FINANCIAL STATEMENTS
CITY OF SOUTHLAKE, TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2015
GENERAL
OBLIGATION GENERAL
DEBT CAPITAL
GENERAL SERVICE PROJECTS
ASSETS
Cash and cash equivalents $ 11,836,027 $ 2,078,116 $ 24,734,861
Investments 14,995,372 7,266,646 14,504,863
Receivables,net of allowances for
uncollectibles:
Ad valorem taxes 101,338 32,408 -
Franchise taxes 472,551 -
Sales taxes 2,342,177 - -
Interest 39,614 10,388 33,451
Other 111,999 - 91,591
Due from other funds 32,486 -
Inventories 24,438
Prepaid items 3,388 - -
TOTAL ASSETS $ 29,959,390 $ 9,387,558 $ 39,364,766
LIABILITIES,DEFERRED INFLOWS OF RESOURCES,
AND FUND BALANCES
LIABILITIES
Accounts payable $ 1,060,984 $ $ 3,645,630
Accrued liabilities 1,854,518 -
Due to other funds -
Unearned revenue 647,532 -
TOTAL LIABILITIES 3,563,034 3,645,630
DEFERRED INFLOWS OF RESOURCES
Unavailable resources 257,738 55,917 -
TOTAL DEFERRED INFLOWS OF RESOURCES 257,738 55,917
FUND BALANCES
Nonspendable for:
Inventories 24,438 -
Prepaid expenditures 3,388 -
Restricted for:
Debt service - 9,331,641
Municipal court expenditures -
Reinvestment zone expenditures -
Capital projects - 35,719,136
Committed for:
Police expenditures 34,609 -
Parks and recreation -
Oil and gas expenditures
Storm water expenditures
Library -
Assigned for:
Teen Court expenditures 19,077
Senior Center expenditures 10,624
Recycling 40,612
Reforestation expenditures 101,873
Strategic initiatives 7,673,680
Unassigned 18,230,317 - -
TOTAL FUND BALANCES 26,138,618 9,331,641 35,719,136
TOTAL LIABILITIES,DEFERRED INFLOWS OF
RESOURCES,AND FUND BALANCES $ 29,959,390 $ 9,387,558 $ 39,364,766
The Notes to Financial Statements are
an integral part of this statement.
18
EXHIBIT 3
SOUTHLAKE
PARKS
DEVELOPMENT TAX
CORPORATION INCREMENT NON-MAJOR TOTAL
CAPITAL FINANCING GOVERNMENTAL GOVERNMENTAL
PROJECTS DISTRICT FUNDS FUNDS
$ - $ 3,703,924 $ 16,978,834 $ 59,331,762
2,660,308 306,248 6,859,477 46,592,914
- - - 133,746
- 472,551
- 2,265,642 4,607,819
14,365 23 5,693 103,534
- 273,519 477,109
- 32,486
24,438
- - - 3,388
$ 2,674,673 $ 4,010,195 $ 26,383,165 $ 111,779,747
$ 696,240 $ - $ 183,454 $ 5,586,308
- 254,335 2,108,853
30,428 2,058 32,486
- 8,905 656,437
726,668 448,752 8,384,084
- 313,655
313,655
24,438
- 3,388
1,725,555 11,057,196
- 878,490 878,490
- 4,010,195 - 4,010,195
1,948,005 - 4,282,650 41,949,791
- 7,813,849 7,848,458
10,720,498 10,720,498
53,168 53,168
451,371 451,371
8,832 8,832
- 19,077
10,624
40,612
101,873
7,673,680
- - - 18,230,317
1,948,005 4,010,195 25,934,413 103,082,008
$ 2,674,673 $ 4,010,195 $ 26,383,165 $ 111,779,747
19
CITY OF SOUTHLAKE, TEXAS EXHIBIT 4
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET POSITION
AS OF SEPTEMBER 30, 2015
Total fund balances -governmental funds $ 103,082,008
Amounts reported for governmental activities in the statement of net position
are different because:
Capital assets used in governmental activities are not current financial resources
and, therefore, are not reported in the governmental funds balance sheet
(Less $1,885,123 in assets allocated to governmental activities from the internal
service fund). 439,139,763
Interest payable on long-term debt does not require current financial resources;
therefore, interest payable is not reported as a liability in the governmental
funds balance sheet. (652,079)
Internal service funds are used by management to charge the cost of certain
activities, such as fleet management, to individual funds. This
amount represents the assets less the liabilities of the internal service
fund allocated to governmental activities. 5,995,557
OPEB asset has not been included in the governmental fund financial statements, as
these assets do not represent current financial resources. 364,724
Revenues earned but not available within sixty days of the year end are not
recognized as revenue on the fund financial statements. 313,655
For debt refundings, the difference between the acquisition price and net carrying
amount of the debt has been deferred and amortized in the government-wide
financial statements. 3,603,448
Net deferred outflows of resources related to the City's net pension liability results in
an increase in net position in the government-wide financial statements. 1,030,734
Long-term liabilities, including bonds payable, are not due and payable in the
current period and therefore are not reported in the fund financial statements. (113,009,618)
Net position of governmental activities $ 439,868,192
The Notes to Financial Statements are
an integral part of this statement.
20
v
CITY OF SOUTHLAKE, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
GENERAL
OBLIGATION GENERAL
DEBT CAPITAL
GENERAL SERVICE PROJECTS
REVENUES
Ad valorem taxes,penalties and interest $ 19,149,431 $ 6,819,703 $
Franchise taxes 3,327,739 -
Municipal sales and mixed beverage taxes 14,339,915
Licenses,permits and fees 2,781,823
Charges for services 1,849,747
Fines and forfeitures 1,276,453
Grants 90,428 -
Capital recovery fees - - 866,782
Interest earned 210,250 112,019 106,348
Contributions - - 40,513
Miscellaneous 430,839
TOTAL REVENUES 43,456,625 6,931,722 1,013,643
EXPENDITURES
Current
General government
City secretary/mayor 446,768
City manager's office 819,737
Human resources 579,616
Support services 3,045,584
Economic development 212,264
Finance 1,161,137
Municipal court 610,111
Teen court 132,335
Information technology 1,948,453
Public safety
Police services 5,756,661
Fire services 7,790,701
Public safety support 1,187,229
Building inspection 1,024,493
Public works
Public works administration 2,311,442 -
Streets and drainage 1,650,008 468,186
Planning 902,766 -
Cultural and recreation
Community services 1,131,801
Parks and recreation 4,123,229
Library services 626,848
Intergovernmental - -
Capital outlay - 13,880,356
Debt service:
Principal retirement 12,639,311 -
Interest and fiscal charges - 2,909,672 -
TOTAL EXPENDITURES 35,461,183 15,548,983 14,348,542
Excess(deficiency)of revenues
over(under)expenditures 7,995,442 (8,617,261) (13,334,899)
OTHER FINANCING SOURCES(USES)
Proceeds from the sale of property - - -
Transfers from other funds 1,739,763 7,471,015 8,790,000
Transfers to other funds (8,160,000) - -
TOTAL OTHER FINANCING SOURCES(USES) (6,420,237) 7,471,015 8,790,000
NET CHANGE IN FUND BALANCES 1,575,205 (1,146,246) (4,544,899)
FUND BALANCES,BEGINNING OF YEAR 24,563,413 10,477,887 40,264,035
FUND BALANCES,END OF YEAR $ 26,138,618 $ 9,331,641 $ 35,719,136
The Notes to Financial Statements are
an integral part of this statement.
21
EXHIBIT 5
SOUTHLAKE
PARKS
DEVELOPMENT TAX
CORPORATION INCREMENT NON-MAJOR TOTAL
CAPITAL FINANCING GOVERNMENTAL GOVERNMENTAL
PROJECTS DISTRICT FUNDS FUNDS
$ $ 7,324,928 $ $ 33,294,062
- 3,327,739
15,750,699 30,090,614
1,603,177 4,385,000
- 1,849,747
666,953 1,943,406
- 90,428
- - 866,782
23,177 (318) 39,075 490,551
- - 71,896 112,409
75,662 - 165,832 672,333
98,839 7,324,610 18,297,632 77,123,071
- - - 446,768
819,737
579,616
3,045,584
212,264
1,161,137
610,111
- 132,335
18,053 1,966,506
1,209,855 6,966,516
- 7,790,701
1,187,229
1,024,493
2,311,442
2,118,194
902,766
- 1,131,801
1,548,345 5,671,574
- 11,143 637,991
- 4,478,312 - 4,478,312
6,884,877 - 584,091 21,349,324
- 1,850,000 14,489,311
- - 984,863 3,894,535
6,884,877 4,478,312 6,206,350 82,928,247
(6,786,038) 2,846,298 12,091,282 (5,805,176)
- - 3,271 3,271
1,000,000 2,924,289 21,925,067
- (3,258,668) (10,738,239) (22,156,907)
1,000,000 (3,258,668) (7,810,679) (228,569)
(5,786,038) (412,370) 4,280,603 (6,033,745)
7,734,043 4,422,565 21,653,810 109,115,753
$ 1,948,005 $ 4,010,195 $ 25,934,413 $ 103,082,008
22
CITY OF SOUTHLAKE, TEXAS EXHIBIT 6
RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES OF
GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Net change in fund balances-total governmental funds $ (6,033,745)
Amounts reported for governmental activities in the statement of activities
are different because:
Governmental funds report capital outlays as expenditures. However,
in the statement of activities the cost of those assets is allocated over
their estimated useful lives and reported as depreciation expense. This is
the amount of capital assets recorded in the current period.
(Does not include$559,952 allocated from internal service fund). 19,707,542
Depreciation expense on capital assets is reported in the statement of activities but
does not require the use of current financial resources. Therefore,depreciation
expense is not reported as expenditures in the governmental funds.
(Does not include$539,150 allocated from internal service fund). (6,109,092)
The issuance of long-term debt(e.g.bonds)provides current financial resources
to governmental funds,while the repayment of the principal of long-term debt
consumes the current financial resources of governmental funds. Neither
transaction,however,has any effect on net position.Also,governmental funds
report the effect of premiums,discounts,and similar items when
debt is first issued,whereas the amounts are deferred and amortized in the
statement of activities.This amount is the net effect of the following items:
o Repayments 14,489,311
o Amortization of premiums 892,041
o Amortization of deferred loss
on refunding (372,430)
15,008,922
Implementation of GASB 68 requires certain expenditures to be de-expended and recorded as deferred.
The following is the net effect of the current year pension expense($1,852,918)and contributions
made after the measurement date$2,191,191. 338,273
Current year changes in the long-term liability for compensated absences do not require
the use of current financial resources;and therefore,are not reported as expenditures
in governmental funds. (57,299)
Changes in the other post employment benefit assets and liabilities are not reported
at the fund level;however they are reported at the government-wide level. 88,408
Current year changes in accrued interest payable do not require the use of current
financial resources;and therefore,are not reported as expenditures
in governmental funds. 101,958
Internal service funds are used by management to charge the costs of certain
activities,such as fleet management,to individual funds. The net income
of the internal service fund is allocated entirely to governmental activities. 775,058
Governmental funds do not recognize assets contributed by developers. However,
in the statement of activities the fair market value of those assets are
recognized as revenue,then allocated over their estimated useful lives and
reported as depreciation expense. 8,967,466
Loss on disposal of capital assets results in a decrease in net position,but the
net effect is not reported in governmental funds. (928)
Certain revenues in the government-wide statement of activities that do not
provide current financial resources are not reported as revenue in the
governmental funds. (85,226)
Change in net position of governmental activities $ 32,701,337
The Notes to Financial Statements are
an integral part of this statement.
23
PROPRIETARY FUNDS
FINANCIAL STATEMENTS
I
CITY OF SOUTHLAKE, TEXAS EXHIBIT 7
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
SEPTEMBER 30, 2015
BUSINESS-TYPE GOVERNMENTAL
ACTIVITIES ACTIVITIES
WATER AND SEWER VEHICLE REPLACEMENT
ENTERPRISE INTERNAL SERVICE
FUND FUND
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,731,108 $ 1,674,684
Investments 1,052,489 2,332,917
Receivables,net of allowance for uncollectibles:
Trade accounts 2,751,194 -
Unbilled trade accounts 2,176,123 -
Interest 16,845 102,833
Restricted assets
Cash restricted for capital 15,608,440 -
Investments restricted for customer meter deposits 343,890
Investments restricted for capital 8,595,438
Total current assets 34,275,527 4,110,434
NON-CURRENT ASSETS
Capital assets
Land and improvements 18,642,568 -
Buildings and improvements 935,501
Distribution system 137,181,469
Equipment 2,583,458 -
Vehicles 572,041 4,913,393
Capacity rights 9,190,988 -
Construction in progress 2,119,317
Total capital assets 171,225,342 4,913,393
Less:accumulated depreciation (61,814,060) (3,028,270)
Capital assets,net of accumulated depreciation 109,411,282 1,885,123
Total non-current assets 109,411,282 1,885,123
TOTAL ASSETS $ 143,686,809 $ 5,995,557
DEFERRED OUTFLOW OF RESOURCES
Deferred charge for refunding $ 763,592 $ -
Deferred charge for pensions 206,146
Total deferred outflows of resources 969,738
LIABILITIES AND NET POSITION
CURRENT LIABILITIES
Accounts payable 3,089,417
Accrued liabilities 256,805
Accrued interest 212,144
Current portion of general obligation debt 4,970,396
Current portion of contract obligation debt 365,000
Current portion of compensated absences 83,011
Current portion of unearned revenue 5,000
Payable from restricted assets:
Customer meter deposits 343,890
Total current liabilities 9,325,663
NON-CURRENT LIABILITIES
Unearned revenue 234,585
Contract revenue obligations 385,000
General obligation debt 42,275,928
Net pension liability 519,719
Total noncurrent liabilities 43,415,232
TOTAL LIABILITIES 52,740,895
DEFERRED INFLOW OF RESOURCES
Unavailable resources-pensions 111,400
Total deferred inflows of resources 111,400 -
NET POSITION
Net investment in capital assets 78,143,445 1,885,123
Unrestricted 13,660,807 4,110,434
TOTAL NET POSITION $ 91.804.252 $ 5.995.557
The Notes to Financial Statements are
an integral part of this statement.
24
CITY OF SOUTHLAKE, TEXAS EXHIBIT 8
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
BUSINESS-TYPE GOVERNMENTAL
ACTIVITIES ACTIVITIES
WATER AND SEWER VEHICLE REPLACEMENT
ENTERPRISE INTERNAL SERVICE
FUND FUND
OPERATING REVENUES
Charges for sales and services:
Water,sewer and garbage $ 24,649,099 $ -
Service charges 143,520 -
Miscellaneous 4,521 -
Total operating revenues 24,797,140 -
OPERATING EXPENSES:
Personnel services 2,344,126 -
Contractual services 1,299,889 -
Lease payments 491 19,000
Supplies 121,074 -
Utilities 10,238,540 -
Administrative 175,238 -
Maintenance 3,066,693 2,778
Professional benefits 24,250 -
Depreciation and amortization 5,258,492 539,150
Total operating expenses 22,528,793 560,928
OPERATING INCOME(LOSS) 2,268,347 (560,928)
NON-OPERATING REVENUES(EXPENSES)
Gain on sale of capital assets 23,100 102,900
Interest income 112,967 33,086
Interest expense (4,163,580) -
Total non-operating revenues (expenses) (4,027,513) 135,986
INCOME(LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS (1,759,166) (424,942)
CAPITAL CONTRIBUTIONS AND TRANSFERS
Capital contributions-property owners 4,597,117 -
Contributions-impact fees 1,179,321 -
Transfers from other funds - 1,200,000
Transfers to other funds (968,160) -
Total capital contributions and transfers 4,808,278 1,200,000
CHANGE IN NET POSITION 3,049,112 775,058
NET POSITION, BEGINNING OF YEAR 89,211,207 5,220,499
Cumulative effect of change in accounting
principle (456,067) -
NET POSITION, END OF YEAR $ 91,804,252 $ 5,995,557
The Notes to Financial Statements are
an integral part of this statement.
25
CITY OF SOUTHLAKE, TEXAS EXHIBIT 9
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
BUSINESS-TYPE GOVERNMENTAL
ACTIVITIES ACTIVITIES
WATER AND SEWER VEHICLE REPLACEMENT
ENTERPRISE INTERNAL SERVICE
FUND FUND
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers and users $ 23,882,421 $
Cash payments to suppliers (13,545,369) (21,778)
Cash payments to employees (2,369,706)
Net cash provided by(used in)operating activities 7,967,346 (21,778)
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Capital expenses (979,262) (559,952)
Principal payments on bonds (5,120,685)
Proceeds from issuance of bonds 3,489,888
Interest paid (4,188,144) -
Proceeds from sale of capital assets 23,100 102,900
Contributions-impact fees 1,179,321 -
Net cash used in capital and related financing activities (5,595,782) (457,052)
CASH FLOWS FROM NON-CAPITAL
FINANCING ACTIVITIES
Transfers from other funds 1,200,000
Transfers to other funds (968,160) -
Net cash provided by(used in)non-capital
financing activities (968,160) 1,200,000
CASH FLOWS FROM INVESTING ACTIVITIES
Net(purchases)sales of investments 2,470,005 (14,687)
Interest received 121,491 39,930
Net cash provided by investing activities 2,591,496 25,243
NET CHANGE IN CASH AND CASH EQUIVALENTS 3,994,900 746,413
CASH AND CASH EQUIVALENTS,BEGINNING OF YEAR 15,344,648 928,271
CASH AND CASH EQUIVALENTS,END OF YEAR $ 19,339,548 $ 1,674,684
RECONCILIATION TO STATEMENT OF NET POSITION
Cash and cash equivalents $ 3,731,108 $ 1,674,684
Cash restricted for capital 15,608,440 -
Total cash and cash equivalents $ 19,339,548 $ 1,674,684
RECONCILIATION OF OPERATING INCOME(LOSS)TO NET CASH
PROVIDED BY (USED IN)OPERATING ACTIVITIES
Operating income(loss) $ 2,268,347 $ (560,928)
Adjustments to reconcile operating income(loss)
to net cash provided by(used in)operating activities:
Pension expense 63,652 -
Depreciation and amortization 5,258,492 539,150
Decrease(increase)in assets and deferred outflows of resources
Receivables (927,601) -
Deferred outflows of resources-pensions (206,146)
Increase(decrease)in liabilities and deferred outflows of resources
Payables and accruals 1,382,415
Customer deposits 16,787
Deferred inflows of resources-pensions 111,400
Net cash provided by(used in)operating activities $ 7,967,346 $ (21,778)
NON-CASH CAPITAL AND RELATED FINANCING:
Contributions of capital assets from developers $ 4,597,117 $
The Notes to Financial Statements are
an integral part of this statement.
26
I
FIDUCIARY FUND
FINANCIAL STATEMENTS
I
CITY OF SOUTHLAKE, TEXAS EXHIBIT 10
CASH ESCROW AGENCY FUND
STATEMENT OF FIDUCIARY NET POSITION
SEPTEMBER 30, 2015
Agency Fund
Cash
Escrow
ASSETS
Cash and cash equivalents $ 57,368
Investments 10,710
TOTAL ASSETS $ 68,078
LIABILITIES
Due to builders $ 68,078
TOTAL LIABILITIES $ 68,078
The Notes to Financial Statements are
an integral part of this statement.
27
I
NOTES TO BASIC FINANCIAL STATEMENTS
v
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Statement
The City of Southlake (the City) operates under a Home Rule Council – Manager form of
government. All powers of the City are vested in an elected council, which enables local
legislation, adopts budgets, determines policies and appoints the City Manager. The City
Manager is responsible for executing the laws and administering the government of the City.
The accounting and reporting policies of the City relating to the funds included in the
accompanying basic financial statements conform to accounting principles generally accepted in
the United States of America applicable to state and local governments. Generally accepted
accounting principles for local governments include those principles prescribed by the
Governmental Accounting Standards Board (GASB). The more significant accounting policies of
the City are described below.
Financial Reporting Entity
The City is governed by an elected mayor and a six-member council and has the authority to
make decisions, appoint administrators and managers, and significantly influence operations. It
also has the primary accountability for fiscal matters. Therefore, the City is a financial reporting
entity as defined by the Governmental Accounting Standards Board (GASB) in its Statement No.
14, "The Financial Reporting Entity", as amended by GASB Statement No. 39 "Determining
Whether Certain Organizations Are Component Units" and GASB Statement No. 61, "The
Financial Reporting Entity: Omnibus—an amendment of GASB Statements No. 14 and No. 34."
Under GASB 14 component units are organizations for which the City is financially accountable
and all other organizations for which the nature and significance of their relationship with the City
are such that exclusion would cause the reporting entity's financial statements to be misleading or
incomplete. Financial accountability exists if the City appoints a voting majority of an
organization's governing board and is either able to impose its will on that organization or there is
a potential for the organization to provide specific financial benefits to, or impose specific financial
burdens on, the City. The City may be financially accountable for governmental organizations
with a separately elected governing board, a governing board appointed by another government,
or a jointly appointed board that is fiscally dependent on the City. The financial statements of the
component units may be discretely presented in a separate column from the primary government
or blended with the financial statements of the primary government. GASB 39 added clarification
to GASB 14 by including entities which meet all three of the following requirements:
1. The economic resources received or held by the separate organization are entirely for the
direct benefit of the primary government, its component units, or its constituents.
2. The primary government, or its component units, is entitled to, or has the ability to
otherwise access, a majority of the economic resources received or held by the separate
organization.
3. The economic resources received or held by an individual organization that the specific
primary government, or its component units, is entitled to, or has the ability to otherwise
access, are significant to that primary government.
28
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED
Financial Reporting Entity—Continued
Based on these criteria, the financial information of the following entities has been blended within
the reporting entity. Individual financial statements are not available for these component units.
Southlake Parks Development Corporation (the Corporation) - The Corporation is a nonprofit
industrial development corporation formed in January 1994 under the Development
Corporation Act of 1979. The Corporation is organized exclusively to act on behalf of the City
for the financing, development and operation of parks and recreation facilities. The affairs of
the Corporation are managed by a seven member board of directors, of which four are
members of the City Council. The annual corporate budget and issuance of debt must be
approved by the City Council. Since the Board of the Corporation is substantively the same
as the City Council, the Corporation has been reported as a blended component unit.
Southlake Tax Increment Financing District (the TIF) - The TIF was formed to finance and
make public improvements, under the authority of the Tax Increment Financing Act. The TIF
is governed by a twelve member board of directors consisting of the eight members
appointed by the City Council, and one member each appointed by Carroll Independent
School District, Tarrant County, Tarrant County Junior College District, and the Tarrant
County Hospital District Board of Directors. Since the Board of the TIF is substantively the
same as the City Council, the TIF has been reported as a blended component unit.
Southlake Crime Control and Prevention District (the District)—The District was formed under
Chapter 363 of the Texas Local Government Code, the Crime Control and Prevention Act.
The District is organized exclusively to act on behalf of the City for the financing,
development and crime control throughout the City. The District is governed by a seven
member board appointed by the City Council. The annual budget and issuance of debt must
be approved by the City Council. Since the District provides services entirely to the City, it
has been reported as a blended component unit.
Basis of Presentation
The government-wide financial statements (the statement of net position and the statement of
activities) report information on all of the activities of the City, except for fiduciary funds. The
effect of interfund activity, within the governmental and business-type activities columns, has
been removed from these statements. Governmental activities, which normally are supported by
taxes and intergovernmental revenues, are reported 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
program are offset by program revenues. Direct expenses are those that are clearly identifiable
with a specific program.
Program revenues include 1) charges to customers or applicants who purchase, use, or directly
benefit from goods, services, or privileges provided by a given program and 2) operating or
capital grants and contributions that are restricted to meeting the operational or capital
requirements of a particular program. Taxes and other items not properly included among
program revenues are reported instead as general revenues.
29
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED
Fund Financial Statements:
The City segregates transactions related to certain functions or activities in separate funds in
order to aid financial management and to demonstrate legal compliance. Separate statements
are presented for governmental funds and proprietary funds. These statements present each
major fund as a separate column in the fund financial statements; all non-major funds are
aggregated and presented in a single column.
Governmental funds are those funds through which most governmental functions typically are
financed. The measurement focus of governmental funds is on the sources, uses and balances
of current financial resources.
Governmental Funds
The City reports the following major governmental funds:
General Fund-
The General Fund is the general operating fund of the City. It is used to account for all financial
resources not accounted for in other funds. All general tax revenues and other receipts that are
not restricted by law or contractual agreement to some other fund are accounted for in this fund.
General operating expenditures, fixed charges and capital improvement costs that are not paid
through other funds are paid from the General Fund.
General Obligation Debt Service Fund-
The General Obligation Debt Service Fund is used to account for the accumulation of financial
resources for the payment of principal, interest and related costs on long-term debt paid primarily
from taxes levied by the City. The fund balance of the General Obligation Debt Service Fund is
restricted to signify the amounts that are restricted exclusively for debt service expenditures.
General Capital Projects Fund-
The General Capital Projects Fund is used to account for resources used for the acquisition
and/or construction of capital facilities by the City, except those financed by proprietary funds and
not accounted for by another capital projects fund.
Southlake Parks Development Corporation Capital Projects Fund-
The Southlake Parks Development Corporation (SPDC) Capital Projects Fund is utilized to fund
the acquisition and construction of park recreational facilities as approved by the SPDC board of
directors. The fund has been financed through the issuance of general obligation debt.
Tax Increment Financing District-
The Tax Increment Financing (TIF) District Fund was established to account for the general
operations of the TIF, which was formed to finance and make public improvements. The TIF is
funded primarily through the assessment of ad valorem taxes.
30
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED
Basis of Presentation—Continued
In addition, the City reports the following non-major governmental funds:
Special Revenue Funds — The City's Special Revenue Funds are used to account for revenue
sources that are committed or restricted to expenditures for specified purposes, as follows:
Police Fund-
The Police Fund was established to account for the resources required to be utilized by the police
department.
Parks and Recreation Fund-
The Parks and Recreation Fund was established to account for resources restricted for use by
the parks and recreation department.
Parks Dedication Fund-
The Parks Dedication Fund was established to account for resources restricted for use by the
parks department. The primary source of revenue for the Parks Dedication Fund is user charges
for the use of City parks.
Southlake Parks Development Corporation-
The Southlake Parks Development Corporation ("SPDC") Fund was established to account for
the general operations of the non-profit corporation established to finance, develop and operate
park and recreational facilities. The SPDC is funded primarily through the receipt of municipal
sales taxes.
Crime Control District-
The Crime Control District Special Revenue Fund was established to account for the operations
of the Crime Control District, which was established for the financing and development of crime
control within the City. The Crime Control Fund is funded primarily through the receipt of
municipal sales taxes.
Hotel Occupancy-
The Hotel Occupancy Tax Fund accounts for all revenues and expenditures relating to the hotel
occupancy tax received by the City.
Storm Water Utility-
The Storm Water Utility Fund is used to account for fees collected for the purpose of improving,
upgrading and maintaining the City's drainage system.
Court Security Fund-
The Court Security Fund is used to account for Municipal Court fees assessed to provide for court
security.
31
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED
Basis of Presentation—Continued
Court Technology Fund-
The Court Technology Fund is used to account for Municipal Court fees assessed to provide for
court technology.
Library Fund-
The Library Fund was established to account for resources donated for use by City library
services.
Red Light Camera Fund-
The Red Light Camera Fund is used to account for fees assessed for red light violations captured
through the City's camera monitoring system.
Storm Water Maintenance Fund-
The Storm Water Maintenance Fund is used to account for the maintenance on storm water
infrastructure.
Oil and Gas Fund-
The Oil and Gas Fund is used to account for permit fees and the related expenditures for oil and
gas drilling.
Commercial Vehicle Enforcement Fund-
The Commercial Vehicle Enforcement Fund is used to account for the fees assessed for
commercial vehicle violations.
Southlake Parks Development Corporation Debt Service Fund-
The Southlake Parks Development Corporation Debt Service Fund is utilized to account for the
accumulation of financial resources, primarily transfers from other funds, for the payment of long-
term principal and interest costs associated with the financing of improvements of the Southlake
Parks Development Corporation.
Capital Projects Funds — The City's Capital Projects Funds are utilized to account for financial
resources to be used for the acquisition or construction of specified capital improvements (other
than those financed by proprietary funds). Such resources are derived from proceeds of general
obligation debt, other sources designated for improvements and interest earned on such
proceeds. The City's non-major Capital Projects Funds are as follows:
Tax Increment Financing District Capital Projects Fund-
The Tax Increment Financing District Capital Projects Fund is utilized to fund the acquisition and
construction of public improvements as approved by the TIF board of directors. The fund has
been financed through the issuance of general obligation debt.
32
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED
Basis of Presentation—Continued
Crime Control District Capital Projects Fund-
The Crime Control District Capital Projects Fund is utilized to account for the acquisition and
construction of capital assets as approved by the District's board of directors. The fund has been
funded primarily through the issuance of general obligation debt.
Proprietary Funds-
Proprietary Funds are accounted for using the economic resources measurement focus and the
accrual basis of accounting. The accounting objectives are determinations of net income,
financial position and cash flow. All assets and liabilities are included in the Statement of Net
Position.
The City reports the following major proprietary fund:
Water and Sewer Enterprise Fund-
The Water and Sewer Enterprise Fund is used to account for the acquisition, operation and
maintenance of a municipal water and sewer utility, supported primarily by user charges to the
public.
Additionally, the City reports an Internal Service Fund which is used to account for vehicle
replacement provided to departments of the City.
Proprietary funds distinguish operating revenues and expenses from non-operating 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. Operating
expenses for the proprietary funds include the cost of personnel and contractual services,
supplies and depreciation on capital assets. All revenues and expenses not meeting this
definition are reported as non-operating revenues and expenses.
The City also presents one agency fund, the Cash Escrow Agency Fund. This fund is custodial in
nature and does not involve measurement of results of operations. Financial statements for the
Cash Escrow Agency Fund are prepared on the accrual basis of accounting.
Measurement Focus and Basis of Accounting
Measurement focus refers to what is being measured; basis of accounting refers to when
revenues and expenditures are recognized in the accounts and reported in the financial
statements. Basis of accounting relates to the timing of the measurement made, regardless of
the measurement focus applied.
The government-wide statements and fund financial statements for proprietary and fiduciary
funds are reported using the accrual basis of accounting. The government-wide and proprietary
fund financial statements are prepared using the economic resources measurement focus;
however, the fiduciary funds have no measurement focus. The economic resources
measurement focus means all assets and liabilities (whether current or non-current) are included
in the statement of net position and the operating statements present increases (revenues) and
decreases (expenses) in net total position. Under the accrual basis of accounting, revenues are
recognized when earned, including unbilled water and sewer services which are accrued.
Expenses are recognized at the time the liability is incurred.
33
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED
Measurement Focus and Basis of Accounting—Continued
Governmental fund financial statements are reported using the current financial resources
measurement focus and are accounted for using the modified accrual basis of accounting. Under
the modified accrual basis of accounting, revenues are recognized when susceptible to accrual;
i.e., when they become both measurable and available.
"Measurable" means the amount of the transaction can be determined and "available" means
collectible within the current period or soon enough thereafter to be used to pay liabilities of the
current period. The City considers all revenues as available if they are collected within 60 days
after year end. Expenditures are recorded when the related fund liability is incurred, except for
unmatured interest on long-term debt which is recognized when due, and certain compensated
absences and claims and judgments which are recognized when the obligations are expected to
be liquidated with expendable available financial resources.
Property taxes, sales taxes, franchise taxes and interest are susceptible to accrual. Other
receipts become measurable and available when cash is received by the City and are recognized
as revenue at that time.
Cash, Cash Equivalents and Investments
In accordance with GASB Statement No. 31, the City's general policy is to report money market
investments and short-term participating interest-earning investment contracts at amortized cost
and to report nonparticipating interest-earning investment contracts using a cost-based measure.
However, if the fair value of an investment is significantly affected by the impairment of the credit
standing of the issuer or by other factors, it is reported at fair value. All other investments are
reported at fair value unless a legal contract exists which guarantees a higher value. The term
"short-term" refers to investments, which have a remaining term of one year or less at the time of
purchase. The term "nonparticipating" means that the investment's value does not vary with
market interest rate changes.
The City's cash and cash equivalents are defined as cash on hand, demand deposits, and short-
term investments with original maturities of three months or less from the date of acquisition for
classification in the statement of cash flows for proprietary fund types.
The City pools idle cash from all funds for the purpose of increasing income through coordinated
investment activities. As of September 30, 2015, the investments held by the City had a
remaining maturity of greater than one year from purchase and accordingly are carried at fair
value. Interest earnings are allocated to the respective funds based upon each fund's relative
balance in the pool.
Cash and cash equivalents and investments reported as restricted are restricted for the
acquisition and construction of capital assets, and for utility deposits held by the City.
Property Taxes
The City's property tax is levied each October 1 on the assessed value listed as of the prior
January 1 for all real and certain personal property located within the City. Appraised values are
established by the Central Appraisal District of Tarrant County at 100% of estimated market value
and certified by the Appraisal Review Board. The assessed value upon which the 2015 levy was
based on was $6,199,833,416. Taxes are due on October 1 and are delinquent after the
following January 31.
34
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED
Property Taxes—Continued
The City is permitted by Article XI, Section 5 of the State of Texas Constitution to levy taxes up to
$2.50 per $100 of assessed valuation for general governmental services, including the payment
of principal and interest on general obligation long-term debt. The combined tax rate to finance
general governmental services including the payment of principal and interest on long-term debt
for the year ended September 30, 2015 was $0.462 per$100 of assessed valuation.
In Texas, countywide central appraisal districts are required to assess all property within the
appraisal district on the basis of 100% of its appraised value and are prohibited from applying any
assessment ratios. The value of property within the appraisal district must be reviewed every five
years; however, the City may, at its own expense, require annual reviews of appraised values.
The City may challenge appraised values established by the appraisal district through various
appeals and, if necessary, legal action. Under this legislation, the City continues to set tax rates
on City property. However, if the effective tax rate, excluding tax rates for bonds and other
contractual obligations, adjusted for new improvements, exceeds the rate for the previous year by
more than 8%, qualified voters of the City may petition for an election to determine whether to
limit the tax rate to no more than 8% above the tax rate of the previous year.
Interfund Receivables and Payables
Activities between funds that are representative of lending/borrowing arrangements outstanding
at the end of the fiscal year are referred to 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".
Transactions Between Funds
Interfund services provided and used are accounted for as revenues, expenditures or expenses.
Transactions that constitute reimbursements to a fund for expenditures/expenses initially made
from it that are properly applicable to another fund, are recorded as expenditures/expenses in the
reimbursing fund and as a reduction of expenditures/expenses in the fund reimbursed. All other
interfund transactions, except interfund services provided and used and reimbursements, are
recorded as transfers.
Restricted Resources
When both restricted and unrestricted resources are available for use, it is the City's policy to use
restricted first, then unrestricted resources as required.
Inventories
Inventories are stated at cost (first-in, first-out) and are determined annually by taking a physical
inventory. Inventory in the general fund consists of gasoline and supplies held for consumption
and is reported on the consumption method. Under the consumption method the cost is recorded
as an expenditure at the time individual inventory items are utilized.
Prepaid Items
Certain payments reflect costs applicable to future periods and are recorded as prepaid items in
the government-wide and fund financial statements. These items consist principally of postage
and building deposits and are reported on the consumption method.
35
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED
Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets, are reported
in the applicable governmental or business-type activities columns in the government-wide
financial statements and in the fund financial statements for proprietary funds. All capital assets
are valued at historical cost or estimated historical cost if actual historical cost is not available.
Donated assets are valued at fair market value on the date donated.
The costs of normal repairs and maintenance that do not add to the value of the asset or
materially extend the asset lives are not capitalized. Renewals and betterments are capitalized.
Interest has not been capitalized during the construction period on property, plant and equipment.
Assets capitalized have an original cost of $5,000 or more and over one year of useful life.
Depreciation has been calculated on each class of depreciable property using the straight-line
method. Estimated useful lives are as follows:
Buildings 20 -50 Years
Water and Sewer distribution system 35 -50 Years
Water hydrants 10-15 Years
Water tanks 35 Years
Computer equipment 5 Years
Heavy equipment and vehicles 10 - 20 Years
Light vehicles 2 - 10 Years
Vehicles 5 Years
Improvements 25 Years
Infrastructure 10 Years
The street network is not depreciated. The City has elected to use the modified approach in
accounting for its street infrastructure. The modified approach allows governments to report as
expenses in lieu of depreciation, infrastructure expenditures which maintain the asset but do not
add to or improve the asset. Additions and improvements to the street network are capitalized.
The City uses an asset management system to rate street condition and quantify the results of
maintenance efforts.
The City has established the Vehicle Replacement Internal Service Fund to account for all City-
owned vehicles. Charges for use of the vehicle in the form of lease payments are made by the
City departments to the Vehicle Replacement Internal Service Fund to provide for future
acquisitions and replacement of City-owned vehicles.
Vacation and Sick Leave (Compensated Absences)
City employees earn vacation and sick leave, which may either be taken or accumulated, up to
certain amounts, until paid upon retirement or termination. Upon termination or retirement, an
employee is reimbursed up to a maximum number of hours of vacation pay and sick leave based
upon the years of service. All vacation and sick pay is accrued in the government-wide and
proprietary fund financial statements. A liability for these amounts is reported in the governmental
funds only if they have matured.
36
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED
Long-Term Obligations
In the government-wide financial statements and proprietary fund financial statements, long-term
debt and other long-term obligations are reported as liabilities in the applicable governmental
activities, business-type activities, or proprietary fund statement of net position. Bond premiums
and discounts, as well as any deferred losses on the refunding of bonds, are amortized over the
life of the bonds using the effective interest method. Bonds payable are reported net of the
applicable bond premium or discount. Issuance costs are recorded as expenses when incurred.
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs, during the current period. The face amount of debt
issued is reported as other financing sources. Premiums and discounts received on debt
issuances are reported as other financing sources or uses. Issuance costs, whether or not
withheld from the actual debt proceeds received, are reported as debt service expenditures.
Pensions
For purposes of measuring the net pension liability, pension related deferred outflows and inflows
of resources and pension expense, City specific information about its Fiduciary Net Position in the
Texas Municipal Retirement System (TMRS) and additions to/deductions from the City's
Fiduciary Net Position have been determined on the same basis as they are reported by TMRS.
For this purpose, plan contributions are recognized in the period that compensation is reported for
the employee, which is when contributions are legally due. Benefit payments and refunds are
recognized when due and payable in accordance with the benefit terms. Investments are reported
at fair value.
Information regarding the City's Total Pension Liability is obtained from TMRS through a report
prepared for the City by TMRS consulting actuary, Gabriel Roeder Smith & Company, in
compliance with Governmental Accounting Standards Board (GASB) Statement No. 68,
Accounting and Financial Reporting for Pensions.
Deferred Outflows of Resources
In addition to assets, the statement of financial position and/or balance sheet will sometimes
report a separate section for deferred outflows of resources. This separate financial statement
element, deferred outflows of resources, represents a consumption of net position that applies to
a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure)
until then. The City has the following items that qualify for reporting in this category:
Deferred Loss on Refunding—these deferred outflows result from the difference in the carrying
value of refunded debt and its reacquisition price. This amount is deferred and amortized over the
shorter of the life of the refunded or refunding debt.
Pensions — these deferred outflows result from pension contributions after the measurement
date (deferred and recognized in the following fiscal year) and/or differences in projected and
actual earnings on pension assets (deferred and amortized over a closed five year period).
Deferred Inflows of Resources
In addition to liabilities, the statement of net position and/or balance will sometimes report a
separate section for deferred inflows of resources. While deferred inflow items reported in the
balance sheet are described in detail in Note 5, those that qualify for reporting in the statement of
net position consist of pension items (difference in expected and actual experience and difference
in assumption changes). These differences are deferred and amortized over a closed period
equal to the average of the expected remaining service lives of all employees provided pensions
through the plan.
37
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED
Fund Equity
The City has adopted the provisions of GASB Statement No. 54, Fund Balance Reporting and
Government Fund Type Definitions. The objective of the statement is to enhance the usefulness
of fund balance information by providing clearer fund balance classifications that can be more
consistently applied and by clarifying the existing government fund type definitions. The
statement establishes fund balance classifications that comprise a hierarchy based primarily on
the extent to which a government is bound to observe constraints imposed upon the use of the
resources reported in governmental funds. Fund balance classifications, under GASB 54 are
Nonspendable, Restricted, Committed, Assigned, and Unassigned. These classifications reflect
not only the nature of funds, but also provide clarity to the level of restriction placed upon fund
balance. Fund balance can have different levels of constraint, such as external versus internal
compliance requirements. The General Fund should be the only fund that reports a positive
unassigned balance. In all other funds, unassigned is limited to negative residual fund balance.
In accordance with GASB Statement No. 54, the City classifies governmental fund balances as
follows:
1. Nonspendable fund balance — includes amounts that are not in a spendable form or are
required to be maintained intact (example— inventory or permanent funds).
2. Restricted fund balance — includes amounts that can be spent only for the specific
purposes stipulated by external resource providers either constitutionally or through
enabling legislation (example—court technology and court security funds).
3. Committed fund balance — includes amounts that can only be used for specific purposes
determined by City Council (example— reforestation and park dedication).
4. Assigned fund balance — comprises amounts intended to be used by the City for specific
purposes. Intent can be expressed by the City Council or their designee (Chief Financial
Officer). In governmental funds other than the general fund, assigned fund balance
represents the amount that is not restricted or committed. This indicates that resources in
other governmental funds are, at a minimum, intended to be used for the purpose of that
fund (example— Facility Maintenance and Strategic Initiative Fund).
5. Unassigned fund balance — is the residual classification of the general fund and includes
all amounts not contained in other classifications.
In accordance with GASB 54, the City has also adopted the following policies:
Committed Fund Balance - The City Council is the City's highest level of decision-making
authority and approval by resolution is required to establish, modify, or rescind a fund
balance commitment. The resolution must either be approved or rescinded, as applicable,
prior to the last day of the fiscal year. The amount subject to the constraint may be
determined in the subsequent period.
Assigned Fund Balance - The City Council has authorized the City's Chief Financial Officer
as the official authorized to assign fund balance to a specific purpose as approved by this
fund balance policy.
Unassigned Fund Balance - It is the goal of the City to maintain a fund balance in the General
Fund, equal to a minimum of 15% of General Fund budgeted operating expenditures, with the
optimum goal of 25%. The City considers a balance of less than 15% to be cause for
concern, barring unusual or deliberate circumstances.
It is the goal of the City to maintain 60 days of working capital in the Enterprise Fund, with the
optimum goal of 90 days of working capital.
38
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED
Fund Equity—Continued
The City shall also maintain all Reserve funds for all statutorily required reserve funds to
guarantee debt service.
Order of Expenditure of Funds - When multiple categories of fund balance are available for
expenditures, the City will start with the most restricted category and spend those funds first
before moving to the next category with available funds (restricted, committed, assigned and
unassigned).
During fiscal year 2006, the City began designating funds for strategic initiatives. The source of
these funds is reserves in excess of 25% of general fund expenditures. The funds will be used
for one-time high impact projects involving infrastructure maintenance, community enhancement
and capital acquisition; and are reported as assigned fund balance in the general fund.
Net Position
Net position represents the difference between assets plus deferred outflows of resources and
liabilities plus deferred inflows of resources. Net investment in capital assets 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 position is 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 accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses/expenditures during the reporting period. Actual results could differ from
those estimates.
Subsequent Events
The City has evaluated all events or transactions that occurred after September 30, 2015 up
through March 30, 2016, the date the financial statements were available to be issued. During
this period, there were no subsequent events requiring disclosure.
NOTE 2. CASH AND INVESTMENTS
The funds of the City must be deposited and invested under the terms of a contract, contents of which
are set out in the Depository Contract Law. The depository bank places approved pledged securities
for safekeeping and trust with the City's agent bank in an amount sufficient to protect City funds on a
day-to-day basis during the period of the contract. The pledge of approved securities is waived only
to the extent of the depository bank's dollar amount of Federal Deposit Insurance Corporation (FDIC)
insurance.
At September 30, 2015 the carrying amount of the City's deposits was $14,464,552 and the bank
balance was $16,862,695. As of September 30, 2015, none of the City's deposits were
uncollateralized.
39
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 2. CASH AND INVESTMENTS—CONTINUED
Legal and contractual provisions governing deposits and investments:
The Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions in
the areas of investment practices, management reports and establishment of appropriate policies.
Among other things, it requires the City to adopt, implement, and publicize an investment policy. That
policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio
diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6)
maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted
maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and
capabilities, (9) and bid solicitation preferences for certificates of deposit.
Statutes and the City's investment policy authorized the City to invest in the following investments as
summarized in the table below:
Maximum Maximum
Authorized Maximum Percentage Investment
Investment Type Maturity of Portfolio In One Issuer
U.S. Government Securities 5 years 100% None
Commercial Paper 270 days 20% None
Eligible Investment Pools 365 days 100% None
The Act also requires the City to have independent auditors perform test procedures related to
investment practices as provided by the Act. The City is in substantial compliance with the
requirements of the Act and with local policies.
Cash and investments as of September 30, 2015 are classified in the accompanying financial
statements as follows:
Primary Government:
Cash and cash equivalents $ 62,659,438
Investments 42,711,674
Restricted cash and cash equivalents 17,686,556
Restricted investments 16,205,974
Total primary government 139,263,642
Fiduciary Funds:
Cash 57,368
Investments 10,710
Total fiduciary funds 68,078
Total cash and investments $ 139,331,720
Cash and investments as of September 30, 2015 consist of the following:
Cash on hand $ 3,759
Deposits with financial institutions 14,464,552
Investments 124,863,409
Total cash and investments $ 139,331,720
40
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 2. CASH AND INVESTMENTS—CONTINUED
Disclosures relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of
an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its
fair value to changes in market interest rates. One of the ways that the City manages its exposure to
interest rate risk is by investing mainly in investment pools which purchase a combination of shorter
term investments with an average maturity of less than 60 days, thus reducing the interest rate risk.
The City monitors the interest rate risk inherent in its portfolio by measuring the weighted average
maturity of its portfolio. The City has no specific limitations with respect to this metric.
As of September 30, 2015, the City had the following investments:
Weighted
Average
Investment Type Amount Maturity
Government agency securities $ 41,111,693 600 days
Mutual funds 12,622,085 31 days
TexStar 25,776,998 40 days
TexPool 17,527,482 46 days
Lonestar Investment Pool 10,008,486 33 days
Certificates of Deposit 8,166,665 268 days
Commercial Paper 9,650,000 140 days
Total $ 124,863,409
As of September 30, 2015 the City did not invest in any securities which are highly sensitive to
interest rate fluctuations.
Disclosures relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder
of the investment. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization. Presented below is the minimum rating required by (where applicable)
the Public Funds Investment Act, the City's investment policy, or debt agreements, and the actual
rating as of year-end for each investment type.
Minimum Rating as
Legal of Year
Investment Type Amount Rating End
Government agency securities $ 41,111,693 N/A Not rated
Mutual funds 12,622,085 N/A AAAm
TexStar 25,776,998 N/A AAAm
TexPool 17,527,482 N/A AAAm
Lonestar Investment Pool 10,008,486 N/A AAAm
Certificates of Deposit 8,166,665 N/A AAAm
Commercial Paper 9,650,000 N/A Aa3
Total $ 124,863,409
41
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 2. CASH AND INVESTMENTS—CONTINUED
Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in any
one issuer. As of September 30, 2015, the City had no investments other than external investment
pools that represent 5% or more of the City's investments.
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, a government will not be able to recover its deposits or will not be able to recover collateral
securities that are in the possession of an outside party. The custodial credit risk for investments is
the risk that, in the event of the failure of the counterparty to a transaction, a government will not be
able to recover the value of its investment or collateral securities that are in the possession of another
party. The Public Funds Investment Act and the City's investment policy do not contain legal or policy
requirements that would limit the exposure to custodial credit risk for deposits or investments, other
than the following provision for deposits: The Public Funds Investment Act requires that a financial
institution secure deposits made by state or local governmental units by pledging securities in an
undivided collateral pool held by a depository regulated under state law (unless so waived by the
governmental unit).
The market value of the pledged securities in the collateral pool must equal at least the bank balance
less the FDIC insurance at all times.
As of September 30, 2015, none of the City's cash deposits were uncollateralized.
Investment in State Investment Pools
The City is a voluntary participant in three investment pools: TexStar, TexPool, and Lonestar.
The State Comptroller of Public Accounts exercises responsibility over TexPool. This oversight
includes the ability to significantly influence operations, designation of management, and
accountability for fiscal matters. Additionally, the State Comptroller has established an advisory
board composed of both participants in TexPool and other persons who do not have a business
relationship with TexPool. TexPool operates in a manner consistent with the SEC's Rule 2a7 of the
Investment Company Act of 1940. TexPool uses amortized costs rather than market value to report
net position to compute share prices. Accordingly, the fair value of the position in TexPool is the
same as the value of TexPool shares.
TexStar is administered by First Southwest Asset Management, Inc. and JPMorgan Chase. Together
these organizations bring to the TexStar program the powerful partnership of two leaders in financial
services with a proven and noted track record in local government investment pool management.
TexStar is a local government investment pool created under the Interlocal Cooperation Act
specifically tailored to meet Texas state and local government investment objectives of preservation
of principal, daily liquidity, and competitive yield. TexStar uses amortized costs rather than market
value to report net position to compute share prices. Accordingly, the fair value of the position in
TexStar is the same as the value of TexStar shares.
The Lone Star Investment Pool (the Pool) is organized in conformity with the Interlocal Cooperation
Act, Chapter 791 of the Texas Government Code, and the Public Funds Investment Act, Chapter
2256 of the Texas Government Code. The Pool is governed by an 11 member Board of Trustees,
consisting of individuals representing entities participating in the Pool. The fair value of the District's
position in the Pool is the same as the value of the Pool shares.
42
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 3. RECEIVABLES
Receivables at September 30, 2015, for the government's individual major, non-major, internal
service, and fiduciary funds in the aggregate, including the applicable allowances for uncollectible
accounts, consist of the following:
Southlake
General Parks Tax
Obligation General Development Corp Increment
Debt Capital Capital Financing
General Service Projects Projects District
Receivables:
Property taxes $ 377,458 $ 140,483 $ $ $
Sales taxes 2,342,177 -
Franchise taxes 472,551
Accounts - - 91,591
Interest 39,614 10,388 33,451 14,365 23
Other 111,999 - - -
Gross
receivables 3,343,799 150,871 125,042 14,365 23
Less:allowance 276,120 108,075 - -
Net total
receivables $ 3,067,679 $ 42,796 $ 125,042 $ 14,365 $ 23
Non-
Major Water
Govern- and Internal
mental Sewer Service Agency Total
Receivables:
Property taxes $ - $ $ $ $ 517,941
Sales taxes 2,265,642 4,607,819
Franchise taxes - 472,551
Accounts - 5,348,970 5,440,561
Interest 5,693 16,845 102,833 223,212
Other 273,519 - - 385,518
Gross
receivables 2,544,854 5,365,815 102,833 11,647,602
Less:allowance - 421,653 - 805,848
Net total
receivables $ 2,544,854 $ 4,944,162 $ 102,833 $ $ 10,841,754
The Water and Sewer Fund accounts receivable include unbilled charges for services rendered
through September 30, 2015 of$2,176,123 .
43
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 4. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2015, was as follows:
Beginning Capital Sales or Adjustments/ Ending
Balance Acquisitions Disposals Transfers Balance
Governmental Activities:
Capital assets not being depreciated:
Land $ 85,289,763 $ 3,636,063 $ $ - $ 88,925,825
Street infrastructure 187,112,993 3,376,750 9,919,125 200,408,868
Construction-in-progress 21,821,618 18,463,995 (24,793,499) 15,492,114
Total capital assets not
being depreciated 294,224,374 25,476,808 (14,874,374) 304,826,807
Capital assets being depreciated:
Land improvements 6,806,154 - 1,172,832 7,978,986
Buildings and building improvements 79,945,269 49,690 2,273,981 82,268,940
Public art 1,027,852 - - 1,027,852
Office equipment 2,436,383 (6,210) 2,430,173
Communications equipment 3,869,251 - 3,869,251
Field equipment 1,675,665 43,464 1,719,129
Heavy equipment 2,084,290 74,769 (47,815) 2,111,244
Computer equipment 1,511,173 63,567 (8,035) 1,566,705
Computer software 3,443,802 - 3,443,802
Vehicles 10,142,792 1,518,468 (343,995) 11,317,265
Drainage 40,903,314 2,008,194 - 42,911,508
Bridges,road signs,and fiber
optic lines 3,250,517 - 2,199,081 5,449,598
Park improvements 15,593,483 8,217,662 23,811,145
Pathways 9,808,925 - 1,010,818 10,819,742
Total capital assets being depreciated 182,498,870 3,758,152 (406,055) 14,874,374 200,725,340
Accumulated depreciation:
Land improvements (592,437) (802,846) - (1,395,283)
Buildings and building improvements (12,682,923) (1,917,672) (14,600,595)
Public art (281,543) (102,785) - (384,328)
Office equipment (686,561) (154,868) 5,279 (836,150)
Communications equipment (3,000,077) (127,403) - (3,127,480)
Field equipment (923,911) (201,378) - (1,125,289)
Heavy equipment (1,367,384) (144,373) 47,815 (1,463,942)
Computer equipment (1,111,090) (138,432) 8,038 (1,241,484)
Computer software (3,310,836) (63,202) - (3,374,038)
Vehicles (6,108,064) (984,441) 343,995 (6,748,510)
Drainage (14,487,140) (1,055,704) - (15,542,844)
Bridges,road signs,and fiber
optic lines (1,036,512) (24,338) (1,060,850)
Park improvements (8,574,181) (486,287) (9,060,468)
Pathways (4,121,487) (444,513) - (4,566,000)
Total accumulated depreciation (58,284,146) (6,648,242) 405,127 - (64,527,261)
Total capital assets being depreciated,net 124,214,724 (2,890,090) (928) 14,874,374 136,198,079
Governmental activities capital assets,net $ 418,439,098 $22,586,718 $ (928) $ - $441,024,886
44
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 4. CAPITAL ASSETS—CONTINUED
Beginning Capital Sales or Adjustments/ Ending
Balance Acquisitions Disposals Transfers Balance
Business Type Activities:
Capital assets not being depreciated:
Land $ 16,789,625 $ 1,852,943 $ $ - $ 18,642,568
Construction-In-Progress 2,110,224 339,203 (330,110) 2,119,317
Total capital assets not
being depreciated 18,899,849 2,192,146 (330,110) 20,761,885
Capital assets being depreciated:
Buildings and building improvements 935,501 - 935,501
Equipment 2,415,927 187,531 (20,000) 2,583,458
Vehicles 572,041 - 572,041
Capacity rights 9,190,988 - - 9,190,988
Distribution system 133,654,657 3,196,702 330,110 137,181,469
Total capital assets being depreciated 146,769,114 3,384,233 (20,000) 330,110 150,463,457
Accumulated depreciation:
Buildings and building improvements (554,996) (30,318) - - (585,314)
Equipment (1,333,526) (232,808) 20,000 (1,546,334)
Vehicles (360,717) (32,016) - (392,733)
Capacity rights (3,520,218) (183,820) (3,704,038)
Distribution system (50,754,814) (4,830,827) - (55,585,641)
Total accumulated depreciation (56,524,271) (5,309,789) 20,000 - (61,814,060)
Total capital assets being depreciated,net 90,244,843 (1,925,556) - 330,110 88,649,397
Business type activities capital assets,net $109,144,692 $ 266,590 $ - $ - $ 109,411,282
Depreciation expense was charged as a direct expense to functions of the primary government as
follows:
Governmental activities:
General government $ 1,214,420
Public safety 1,261,526
Public works 2,250,741
Culture and recreation 1,921,555
Total depreciation expense-
governmental activities $ 6,648,242
Business-type activities:
Water and Sewer $ 5,309,789
45
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 5. DEFERRED INFLOWS OF RESOURCES/UNEARNED REVENUE
Governmental funds report deferred inflows of resources in connection with receivables for revenue
that is not considered to be available to liquidate liabilities of the current period. Governmental funds
also defer revenue recognition in connection with resources that have been received, but not yet
earned (unearned revenue). At the end of the current fiscal year, the various components of
unearned revenue and deferred inflows of resources reported in the governmental funds were as
follows:
General Debt Service Non-major
Deferred inflows of resources: Fund Fund Governmental Total
Property taxes $ 77,829 $ 55,917 $ - $ 133,746
Other 179,909 - - 179,909
Total deferred inflows of resources $ 257,738 $ 55,917 $ - $ 313,655
Unearned revenue:
Franchise taxes $ 643,377 $ - $ - $ 643,377
Other 4,155 - 8,905 13,060
Total unearned revenue $ 647,532 $ - $ 8,905 $ 656,437
NOTE 6. LONG-TERM DEBT
The City issues general obligation bonds, combination tax and revenue certificates of obligation and
tax notes to provide for the acquisition and construction of major capital facilities and infrastructure.
Combination tax and revenue certificates of obligation are issued for both governmental and
business-type activities. General obligation bonds, governmental revenue bonds and tax notes
pledge the full faith and credit of the City. Combination tax and revenue certificates of obligation are
payable from the net revenues of the water and sewer system and general debt service tax.
In May 2015, the City issued $3,295,000 of Series 2015, Tax and Waterworks and Sewer System
(limited pledge) certificates of obligation. The debt was issued to pay the costs of construction of
public works improvements and extensions to the City's combined waterworks and sewer system and
improvements to the City's municipal service center. The obligations are payable over the next 20
years.
46
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 6. LONG-TERM DEBT—CONTINUED
General obligation bonds, combination certificates of obligation, tax notes and governmental revenue
bonds are as follows as of September 30, 2015:
Final Interest Business-
General Obligation Bonds and Certificates of Obligation Maturity Rates Governmental Type
$6,540,000 Series 2007,Combination Tax and Waterworks
and Sewer System Revenue Certificates of Obligation 2018 4.0-5.0% $ 2,085,000 $ -
$14,015,000 Series 2008,Combination Tax and Waterworks
and Sewer System Revenue Certificates of Obligation 2028 3.5-4.625% 5,097,855 5,440,860
$24,835,000 Series 2009,Combination Tax and Waterworks
and Sewer System Revenue Certificates of Obligation 2029 2.0-5.0% 8,555,000 5,055,000
$26,730,000 Series 2010,General Obligation
Refunding Bonds 2023 3.0-4.0% 6,627,363 2,557,270
$4,480,000 Series 2011A,Tax and Waterworks and Sewer
System(Limited Pledge)Certificates of Obligation 2018 2.0-5.0% 2,060,000 -
$3,365,000 Series 2011 B,Tax and Waterworks and Sewer
System(Limited Pledge)Certificates of Obligation 2031 2.0-4.125% - 2,865,000
$15,745,000 Series 2010,Tax and Waterworks and Sewer
System(Limited Pledge)Certificates of Obligation 2030 3.0-4.25% 4,120,000 4,360,000
$11,300,000 Series 2012,Tax and Waterworks and Sewer
System(Limited Pledge)Certificates of Obligation 2032 3.0-4.25% 1,145,000 2,445,000
$9,965,000 Series 2012,General Obligation
Refunding Bonds 2026 3.0-4.25% 8,350,000 250,000
$14,250,000 Series 2013,Tax and Waterworks and Sewer
System(Limited Pledge)Certificates of Obligation 2033 2.0-5.0% 6,545,000 2,320,000
$22,295,000 Series 2013,General Obligation
Refunding Bonds 2026 2.0-5.0% 19,820,000 1,230,000
$21,330,000 Series 2014,General Obligation
Refunding Bonds 2026 2.0-5.0% 6,050,000 11,385,000
$8,780,000 Series 2014,Tax and Waterworks and Sewer
System(Limited Pledge)Certificates of Obligation 2034 2.0-3.5% 3,575,000 4,255,000
$3,295,000 Series 2015,Tax and Waterworks and Sewer
System(Limited Pledge)Certificates of Obligation 2035 2.75-4.0% - 3,295,000
$ 74,030,218 $ 45,458,130
Final Interest Business-
Governmental Revenue Bonds Maturity Rates Governmental Type
$15,745,000 Series 2010,Tax and Waterworks and Sewer
System(Limited Pledge)Certificates of Obligation 2030 3.00-4.25% $ 2,670,000 $
$3,285,000 Series 2011 C,Tax and Waterworks and Sewer
System(Limited Pledge)Certificates of Obligation 2031 2.00-4.125% 2,800,000
$11,300,000 Series 2012,Tax and Waterworks and Sewer
System(Limited Pledge)Certificates of Obligation 2032 3.0-4.25% 5,190,000
$16,000,000 Series 2014,Southlake Parks Development
Corporation,Sales Tax Revenue Refunding Bonds 2027 3% 14,880,000
$ 25,540,000 $
47
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 6. LONG-TERM DEBT—CONTINUED
The City has entered into various contractual agreements to unconditionally finance the principal and
interest or a fixed percentage of principal and interest of Trinity River Authority (TRA) Contract Revenue
Bonds. Under the agreements, the TRA utilized the bond proceeds to administer and construct various
sewer and wastewater treatment projects on the City's behalf. Such agreements provide the City title to
the assets upon retirement of the debt or capacity rights in the use of constructed assets. The City has
included in its financial statements its proportionate share of these obligations and its investment in
these assets as capacity rights. Contract revenue obligations at September 30, 2015 consist of the
following:
Final Business-
Contract Revenue Obligations Maturity Governmental Type
Series 2001,TRA-Denton Creek Wastewater Pressure
Interceptor-Refunding 2017 $ - $ 750,000
The following is a summary of long-term transactions for the year ended September 30, 2015:
Amount
Beginning Ending Due within
Balance Additions Reductions Balance One year
Governmental activities:
General obligation bonds and
certificates of obligation $ 86,909,529 $ $(12,879,311) $ 74,030,218 $11,734,601
Sales tax revenue bonds 27,150,000 (1,610,000) 25,540,000 1,660,000
Bond premiums(discounts) 7,574,414 (892,041) 6,682,373 -
Total bonds payable 121,633,943 (15,381,352) 106,252,591 13,394,601
Net pension liability 6,537,120 (883,132) 5,653,988 -
Compensated absences 1,045,740 1,103,038 (1,045,739) 1,103,039 153,950
Total governmental activities $ 129,216,803 $ 1,103,038 $(17,310,223) $113,009,618 $13,548,551
The general fund has been used to liquidate capital lease liabilities with respect to acquisitions of
governmental capital assets and has also typically been used in prior years to liquidate the liability for
compensated absences.
Amount
Beginning Ending Due within
Balance Additions Reductions Balance One year
Business-type activities:
Revenue bonds and certificates
of obligation $ 46,933,815 $ 3,295,000 $ (4,770,685) $ 45,458,130 $ 4,970,396
Contract revenue obligations 1,100,000 - (350,000) 750,000 365,000
Bond premiums 1,742,018 194,888 (148,712) 1,788,194 -
Total bonds payable 49,775,833 3,489,888 (5,269,397) 47,996,324 5,335,396
Unearned revenue 243,490 - (3,905) 239,585 5,000
Net pension liability 600,897 - (81,178) 519,719 -
Compensated absences 77,497 83,011 (77,497) 83,011 83,011
Total business-type activities $ 50,697,717 $ 3,572,899 $ (5,431,977) $ 48,838,639 $ 5,423,407
48
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 6. LONG-TERM DEBT—CONTINUED
The annual aggregate maturities for each bond type are as follows:
General Obligation Bonds and Certificates of Obligation
Governmental Activities
Fiscal Year Ending
September 30, Principal Interest Total
2016 $ 11,734,601 $ 2,594,249 $ 14,328,850
2017 11,543,185 2,184,568 13,727,753
2018 9,271,424 1,798,946 11,070,370
2019 5,314,835 1,521,689 6,836,524
2020 4,451,590 1,341,671 5,793,261
2021-2025 22,838,329 3,930,905 26,769,234
2026-2030 8,876,254 574,127 9,450,381
Total $ 74,030,218 $ 13,946,155 $ 87,976,373
Sales Tax Revenue Bonds
Governmental Activities
Fiscal Year Ending
September 30, Principal Interest Total
2016 $ 1,660,000 $ 782,445 $ 2,442,445
2017 1,715,000 731,144 2,446,144
2018 1,765,000 678,944 2,443,944
2019 1,815,000 624,868 2,439,868
2020 1,875,000 568,755 2,443,755
2021-2025 10,105,000 1,926,367 12,031,367
2026-2030 5,615,000 568,177 6,183,177
2031-2035 990,000 28,416 1,018,416
Total $ 25,540,000 $ 5,909,116 $ 31,449,116
Revenue Bonds and Certificates of Obligation
Business-Type Activities
Fiscal Year Ending
September 30, Principal Interest Total
2016 $ 4,970,396 $ 1,552,683 $ 6,523,079
2017 5,081,814 1,330,297 6,412,111
2018 4,768,576 1,154,167 5,922,743
2019 3,545,165 1,026,662 4,571,827
2020 2,858,410 925,617 3,784,027
2021-2025 11,236,309 3,400,458 14,636,767
2026-2030 9,797,460 1,369,287 11,166,747
2031-2035 3,200,000 200,437 3,400,437
Total $ 45,458,130 $ 10,959,608 $ 56,417,738
49
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 6. LONG-TERM DEBT—CONTINUED
Contract Revenue Obligations
Business-Type Activities
Fiscal Year Ending
September 30, Principal Interest Total
2016 $ 365,000 $ 28,375 $ 393,375
2017 385,000 9,625 394,625
Total $ 750,000 $ 38,000 $ 788,000
In previous years, the City has legally defeased certain outstanding general obligation and revenue
debt by placing funds into irrevocable trusts pledged to pay all future debt service payments of the
refunded debt. Accordingly, a liability for the defeased debt issues is not included in the City's
financial statements. As of September 30, 2015, the City had no outstanding bonds that were legally
defeased.
NOTE 7. TRANSFERS AND INTERFUND RECEIVABLES AND PAYABLES
All interfund transfers between the various funds are approved supplements to the operations of
those funds. Individual fund transfers for fiscal year 2015 were as follows:
Transfer In Transfer Out Amount Purpose
Internal service fund General fund $ 1,200,000 To replace aging vehicles
Non major governmental funds General fund 40,000 To fund operators of new fund
General capital project funds General fund 6,920,000 To fund future infrastructure and wayfinding/event signage
General fund Non major govemmental funds 38,325 To fund indirect charges
General fund Non major govemmental funds 143,713 Pre-development funds for the Visitor Information Center
General capital project funds Non major governmental funds 200,000 Pre-development funds for the Visitor Information Center
General fund Non major governmental funds 55,732 To fund indirect charges
General capital project funds Non major governmental funds 1,235,000 To fund various drainage projects
General obligation debt service fund Non major governmental funds 194,447 To pay the debt service for bonds issued on the Districts'behalf
General obligation debt service fund Tax increment financing district fund 3,258,668 To fund the debt repayment for bonds issued for tax increment
financing district projects
General fund Non major governmental funds 270,133 To fund indirect charges
Southlake parks development Non major governmental funds 1,000,000 To assist with the funding of large park projects
corporation capital projects fund
Non major governmental funds Non major governmental funds 2,884,289 To pay the principal and interest on debt incurred
General fund Non major governmental funds 263,700 To fund indirect charges
General capital project funds Non major governmental funds 235,000 To fund drainage improvements
General obligation debt service fund Non major governmental funds 4,017,900 To pay the debt service for bonds issued on the Districts'behalf
General capital project funds Non major governmental funds 200,000 To fund construction of traffic signal
General fund Water and sewer enterprise fund 968,160 To fund indirect charges
$ 23,125,067
Interfund balances, recorded as "due to/from other funds" represent short-term financing of deficit
cash and consist of the following as of September 30, 2015:
Interfund Receivables:
General
Interfund Payables: Fund
Southlake Parks Development Corporation $ 30,428
Capital Projects Funds
Non-Major Governmental Funds 2,058
$ 32,486
50
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 8. RETIREMENT PLAN
A. Plan Description
The City participates as one of 860 plans in the nontraditional, joint contributory, hybrid defined
benefit pension plan administered by the Texas Municipal Retirement System (TMRS). TMRS is
an agency created by the State of Texas and administered in accordance with the TMRS Act,
Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agent multiple-employer
retirement system for municipal employees in the State of Texas. The TMRS Act places the
general administration and management of the System with a six-member Board of Trustees.
Although the Governor, with the advice and consent of the Senate, appoints the Board, TMRS is
not fiscally dependent on the State of Texas. TMRS' defined benefit pension plan is a tax-
qualified plan under Section 401(a) of the Internal Revenue Code. TMRS issues a publicly
available comprehensive annual financial report (CAFR)that can be obtained at www.tmrs.com.
All eligible employees of the City are required to participate in TMRS.
B. Benefits Provided
TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the
governing body of the City, within the options available in the state statutes governing TMRS.
At retirement, the benefit is calculated as if the sum of the employee's contributions, with interest,
and the city-financed monetary credits with interest were used to purchase an annuity. Members
may choose to receive their retirement benefit in one of seven payments options. Members may
also choose to receive a portion of their benefit as a Partial Lump Sum Distribution in an amount
equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the member's deposits
and interest.
At the date the plan began, the City granted monetary credits for service rendered before the plan
began of a theoretical amount at least equal to two times what would have been contributed by
the employee, with interest, prior to establishment of the plan. Monetary credits for service since
the plan began are a percent (100%, 150%, or 200%) of the employee's accumulated
contributions. In addition, the City can grant, as often as annually, another type of monetary credit
referred to as an updated service credit which is a theoretical amount which, when added to the
employee's accumulated contributions and the monetary credits for service since the plan began,
would be the total monetary credits and employee contributions accumulated with interest if the
current employee contribution rate and city matching percent had always been in existence and if
the employee's salary had always been the average of his salary in the last three years that are
one year before the effective date. At retirement, the benefit is calculated as if the sum of the
employee's accumulated contributions with interest and the employer-financed monetary credits
with interest were used to purchase an annuity.
Members can retire at ages 60 and above with 5 or more years of service or with 20 years of
service. 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.
51
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 8. RETIREMENT PLAN —CONTINUED
B. Benefits Provided—Continued
At the December 31, 2014 valuation and measurement date, the following employees were
covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 89
Inactive employees entitled to but not yet receiving benefits 143
Active employees 315
547
C. Contributions
The contribution rates for employees in TMRS are either 5%, 6%, or 7% of employee gross
earnings, and the city matching percentages are either 100%, 150%, or 200%, both as adopted
by the governing body of the city. Under the state law governing TMRS, the contribution rate for
each city is determined annually by the actuary, using the Entry Age Normal (EAN) actuarial cost
method. The actuarially determined rate is the estimated amount necessary to finance the cost of
benefits earned by employees during the year, with an additional amount to finance any unfunded
accrued liability.
Employees for the City were required to contribute 7% of their annual gross earnings during the
fiscal year. The contribution rates for the City were 12.05% and 12.17% in calendar years 2014
and 2015, respectively. The City's contributions to TMRS for the year ended September 30, 2015
were $2,392,607 , and were equal to the required contributions.
D. Net Pension Liability
The City's Net Pension Liability (NPL) was measured as of December 31, 2014 and the Total
Pension Liability (TPL) used to calculate the NPL was determined by an actuarial valuation as of
that date.
Actuarial Assumptions:
The Total Pension Liability in the December 31, 2014 actuarial valuation was determined
using the following actuarial assumptions:
Inflation 3.0% per year
Overall payroll growth 3.0% per year
Investment Rate of Return 7.0%, net of pension plan investment expense, including inflation
Salary increases were based on a service-related table. Mortality rates for active members,
retirees, and beneficiaries were based on the gender distinct RP2000 Combined Healthy
Mortality Table, which male rates multiplied by 109% and female rates multiplied by 103%.
The rates are projected on a fully generational basis by scale BB to account for future
mortality improvements. For disabled annuitants, the gender-distinct RP2000 Disabled
Retiree Mortality Table is used, with slight adjustments.
52
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 8. RETIREMENT PLAN —CONTINUED
D. Net Pension Liability—Continued
Actuarial Assumptions—Continued:
Actuarial assumptions used in the December 31, 2014 valuation were based on the results of
actuarial experience studies. This experience study was for the period January 1, 2006
through December 31, 2009, first used in the December 31, 2010 valuation. Healthy post-
retirement mortality rates and annuity purchase rates were updated based on a Mortality
Experience Investigation Study covering 2009 through 2011, and dated December 31, 2013.
These assumptions were first used in the December 31, 2013 valuation, along with a change
to the Entry Age Normal (EAN) actuarial cost method. Assumptions are reviewed annually.
No additional changes were made for the 2014 valuation.
The long-term expected rate of return on pension plan investments is 7.0%. The pension
plan's policy in regard to the allocation of invested assets is established and may be
amended by the TMRS Board of Trustees. Plan assets are managed on a total return basis
with an emphasis on both capital appreciation as well as the production of income, in order to
satisfy the short-term and long-term funding needs of TMRS.
This rate was determined using a building-block method in which best estimate ranges of
expected future real rates of return (expected returns, net of pension plan investment
expense and inflation) are developed for each major asset class. These ranges are
combined to produce the long-term expected rate of return by weighing the expected future
real rates of return by the target asset allocation percentage and by adding expected inflation.
The target allocation and best estimates of arithmetic real rates of return for each major asset
class are summarized in the following table:
Long-Term
Expected Real
Target Rate of Return
Asset Class Allocation (Arithmetic)
Domestic Equity 17.5% 4.80%
International Equity 17.5% 6.05%
Core Fixed Income 30.0% 1.50%
Non-Core Fixed Income 10.0% 3.50%
Real Return 5.0% 1.75%
Real Estate 10.0% 5.25%
Absolute Return 5.0% 4.25%
Private Equity 5.0% 8.50%
Total 100.0%
53
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 8. RETIREMENT PLAN —CONTINUED
D. Net Pension Liability—Continued
Discount Rate
The discount rate used to measure the Total Pension Liability was 7.0%. The projection of
cash flows used to determine the discount rate assumed that employee and employer
contributions will be made at the rates specified in statute. Based on that assumption, the
pension plan's Fiduciary Net Position was projected to be available to make all projected
future benefit payments of current active and inactive employees. Therefore, the long-term
expected rate of return on pension plan investments was applied to all periods of projected
benefit payments to determine the Total Pension Liability.
Allocations
The City's net pension liability, pension expense, and deferred outflows of resources related
to TMRS have been allocated between governmental activities and business-type activities
using a contribution-based method.
Changes in the Net Pension Liability
Increase (Decrease)
Total Plan Net
Pension Fiduciary Pension
Liability Net Position Liability
(a) (b) (a)-(b)
Balance at 12/31/2013 $ 67,664,562 $ 60,526,545 $ 7,138,017
Changes for the year:
Service Cost 2,906,949 - 2,906,949
Interest 4,779,462 - 4,779,462
Change of benefit terms - - -
Difference between expected and
actual experience (1,602,645) - (1,602,645)
Changes of assumptions - - -
Contributions-employer - 2,283,310 (2,283,310)
Contributions-employee - 1,340,870 (1,340,870)
Net investment income - 3,463,018 (3,463,018)
Benefit payments, including refunds
of employee contributions (1,680,030) (1,680,030) -
Administrative expense - (36,150) 36,150
Other changes - (2,972) 2,972
Net Changes 4,403,736 5,368,046 (964,310)
Balance at 12/31/14 $ 72,068,298 $ 65,894,591 $ 6,173,707
54
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 8. RETIREMENT PLAN —CONTINUED
D. Net Pension Liability—Continued
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability of the City, calculated using the discount rate
of 7.0%, as well as what the City's net pension liability would be if it were calculated using a
discount rate that is 1 percentage-point lower (6.0%) or 1 percentage-point higher (8.0%)
than the current rate:
1% Decrease 1% Increase
in Discount Discount in Discount
Rate (6.0%) Rate (7.0%) Rate (8.0%)
Net pension liability $ 18,149,145 $ 6,173,707 $ (3,503,159)
Pension Plan Fiduciary Net Position
Detailed information about the pension plan's Fiduciary Net Position is available in a
separately-issued TMRS financial report. That report may be obtained at www.tmrs.com.
E. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to Pensions
For the year ended September 30, 2015, the City recognized pension expense of$2,023,240. At
September 30, 2015, the City reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between expected and actual economic experience $ - $ 1,323,312
Changes in actuarial assumptions - -
Difference between projected and actual investment earnings 619,072 -
Contributions subsequent to the measurement date 1,829,720 -
Total $ 2,448,792 $ 1,323,312
55
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 8. RETIREMENT PLAN —CONTINUED
E. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to Pensions—Continued
The $1,829,720 reported as deferred outflows of resources related to pensions result from
contributions subsequent to the measurement date. Amounts reported as deferred outflows of
resources related to pensions will be recognized in pension expense as follows:
Fiscal
Year Ended
Sept. 30:
2016 $ 1,705,155
2017 (124,565)
2018 (124,565)
2019 (124,565)
2020 (205,980)
Thereafter -
Total $ 1,125,480
NOTE 9. OTHER POSTEMPLOYMENT BENEFITS
Plan Description
The City provides other postemployment benefits (OPEB) in the form of health insurance benefits
through a single-employer defined benefit medical plan. Regular full-time employees retiring from
the City of Southlake have the option to continue medical insurance coverage until the retiree
becomes eligible for Medicare or is eligible to be covered under another medical plan. The City
contributes $125 per month towards the premium for retiree insurance coverage or$225 towards
the premium for retirees and dependents. A third-party administrator is utilized to provide claims
administration and payment of claims. Insurance is purchased to provide specific stop loss and
aggregate stop loss protection.
The Plan does not issue a separate financial report.
Funding Policy
The City passed a resolution in September 2009, electing to participate in the PARS Public
Agencies Post-Retirement Health Care Plan Trust (the Trust) to fund post-employment benefits
for its employees as specified in the City's policies and/or applicable collective bargaining
agreements. The Trust is a multiple employer trust arrangement established to provide
economies of scale and efficiency of administration to public agencies that adopt it to hold the
assets used to fund its OPEB obligation.
The City has made a determination to fund its annual required contribution. For fiscal year 2015,
the City contributed $125,000 to the Trust.
56
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 9. OTHER POSTEMPLOYMENT BENEFITS—CONTINUED
Annual OPEB Cost and Net OPEB Obligation
The City's annual other postemployment benefit (OPEB) cost (expense) is calculated based on
the annual required contribution of the employer (ARC), an amount actuarially determined in
accordance with the parameters of GASB Statement 45. The ARC represents a level of funding
that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any
unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years on an
open basis. The City's annual OPEB cost and net OPEB obligation (asset) for the prior three
years is shown below:
2015 2014 2013
Annual required contribution $ 36,592 $ 36,592 $ 36,592
Interest on prior year Net OPEB obligation (16,579) (11,274) (5,970)
Adjustment to annual required contribution 16,579 11,274 5,970
Annual OPEB cost 36,592 36,592 36,592
Contributions made 125,000 125,000 125,000
Increase (decrease) in net OPEB obligation (88,408) (88,408) (88,408)
Net Obligation (asset)- beginning of year (276,316) (187,908) (99,500)
Net Obligation (asset)-end of year $ (364,724) $ (276,316) $ (187,908)
Percentage of OPEB costs contributed 342% 342% 342%
Funded Status and Funding Progress
The funded status of other postemployment benefits as of December 31, 2014, the date of the
latest actuarial valuation, was as follows:
Actuarial accrued liability $ 913,956
Actuarial value of plan assets (1,042,233)
Overfunded actuarial accrued liability $ (128,277)
Funded ratio 114%
Covered payroll $19,154,225
Overfunded actuarial accrued liability
as a percentage of covered payroll 0.67%
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. The unfunded
actuarial accrued liability is being amortized assuming 10 level annual payments on an open
basis. Examples include assumptions about future employment, mortality, and the healthcare
cost trend. Amounts determined regarding the funded status of the plan and the annual required
contributions of the employer are subject to continual revisions as actual results are compared
with past expectations and new estimates are made about the future.
57
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 9. OTHER POSTEMPLOYMENT BENEFITS—CONTINUED
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan and
include the types of benefits provided at the time of each valuation and the historical pattern of
sharing of benefit costs between the employer and plan members to that point. The actuarial
methods and assumptions used include techniques that are designed to reduce short-term
volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-
term perspective of the calculations.
In the December 31, 2014 actuarial valuation, the individual entry-age actuarial cost method was
used. Key actuarial assumptions include: (a) level dollar contribution amortization method; (b) a
3.0% net real rate of investment return; (c) a sliding scale of medical inflation from 7.25% in 2015
to 4.5% by 2029 and later; and (d) general inflation assumed to be 3.0%.
NOTE 10. DEFERRED COMPENSATION PLAN
The City offers its employees a deferred compensation plan created in accordance with Internal
Revenue Code Section 457. The plan, available to all City employees, permits them to defer a portion
of their salary until future years. The deferred compensation is not available to employees until
termination, retirement, death, or unforeseeable emergency.
The laws governing 457 plans were changed to state that plans would not be considered eligible
plans unless all assets and income of the plans are held in trust for the exclusive benefit of the
participants and their beneficiaries. The City amended the plan documents to comply with these
requirements.
In accordance with GASB 32, the plans as amended are not included in the City's financial
statements.
NOTE 11. RISK FINANCING AND INSURANCE
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. During the fiscal year
1990, the City joined the Texas Municipal League Workers Compensation Joint Insurance Fund ("the
Pool") for risks related to employees. Premiums are paid to the Pool, which retains a limit of loss.
Reinsurance companies insure the risks beyond those limits. The City retains, as a risk, only the
deductible amount of each policy. The City continues to carry commercial insurance with Texas
Municipal League provided by Mutual of Omaha for other risks including general liability, property,
and errors and omissions. There were no significant reductions in coverage in the past year and there
were no settlements exceeding insurance coverage in any of the past three years.
58
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 12. COMMITMENTS AND CONTINGENCIES
The City has entered into various contracts with the Trinity River Authority (TRA) and other cities.
Terms of the agreements provide the City will pay an amount equal to its proportional share of
maintenance and operations and debt service based upon volumes of wastewater transported,
treated, or disposed of. The City's proportional share of future costs under these contracts is
indeterminable and has not been recorded. Payments to the TRA under these contracts for the year
ended September 30, 2015 were $1,135,458.
The City has authorized various contracts obligating future funds of the City as the contracted
services are performed. Significant amounts unexpended under such contracts at year end are
reflected as reserves for authorized contracts in the applicable funds.
The City has certain claims and litigation pending with respect to matters arising in the normal course
of operations. City management is of the opinion that the settlement of these matters will not have a
material adverse impact on the City's financial statements.
NOTE 13. FUTURE REPORTING REQUIREMENTS
Statement No. 75, "Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions" — This statement changes the focus of accounting of postemployment benefits other than
pensions from whether they are responsibly funding the benefits over time to a point-in time liability
that is reflected on the employer's financial statements for any actuarially unfunded portion of benefits
earned to date. This statement will become effective for the City in fiscal year 2018. Management is
evaluating the impact of the standard on the City's financial statements and will take the necessary
steps to implement it.
Statement No. 77, "Tax Abatement Disclosures" — This statement requires governments that enter
into tax abatement agreements to provide certain disclosures regarding these commitments. This
statement will become effective for the City in fiscal year 2017. Management believes this statement
will not have a significant impact on the City's financial statements.
NOTE 14. CUMULATIVE EFFECT OF ADOPTION OF GASB STATEMENTS
As a result of the implementation of GASB Statement No. 68, "Accounting and Financial Reporting for
Pension — an amendment of GASB Statement No. 27", and GASB Statement No. 71, "Pension
Transition for Contributions Made Subsequent to the Measurement Date", an adjustment has been
made to record the City's net pension liability as of October 1, 2014. As a result, beginning net
position of the governmental activities has been decreased by $4,961,527 and the beginning net
position of business-type activities and the water and sewer enterprise fund has been decreased by
$456,067.
59
REQUIRED SUPPLEMENTARY
INFORMATION
IE
BUDGETARY COMPARISON
GENERAL FUND
CITY OF SOUTHLAKE, TEXAS EXHIBIT A-1
GENERALFUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
VARIANCE WITH
BUDGETED AMOUNTS FINAL BUDGET-
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES
Ad valorem taxes,penalties and interest $ 19,561,715 $ 19,456,715 $ 19,149,431 $ (307,284)
Franchise taxes 2,739,404 3,152,147 3,327,739 175,592
Municipal sales and mixed beverage tax 12,022,000 13,768,000 14,339,915 571,915
License,permits and fees 1,457,800 2,412,800 2,781,823 369,023
Charges for services 1,798,650 1,770,650 1,849,747 79,097
Fines and forfeitures 1,115,000 1,115,000 1,276,453 161,453
Grants - 50,000 90,428 40,428
Interest earned 82,180 91,980 210,250 118,270
Miscellaneous 293,000 390,100 430,839 40,739
TOTAL REVENUES 39,069,749 42,207,392 43,456,625 1,249,233
EXPENDITURES
Current:
General government
City secretary/mayor 491,369 483,195 446,768 36,427
City manager's office 825,144 836,274 819,737 16,537
Human resources 616,307 616,307 579,616 36,691
Support services 3,467,109 3,349,113 3,045,584 303,529
Economic development 230,965 230,965 212,264 18,701
Finance 1,231,600 1,217,113 1,161,137 55,976
Municipal court 673,877 673,877 610,111 63,766
Teen court 148,021 148,021 132,335 15,686
Information technology 2,142,154 2,142,154 1,948,453 193,701
Public safety
Police services 5,860,541 5,898,503 5,756,661 141,842
Fire services 7,629,218 7,722,513 7,790,701 (68,188)
Public safety support 1,213,217 1,213,217 1,187,229 25,988
Building inspection 1,052,964 1,056,139 1,024,493 31,646
Public works
Public works administration 2,636,002 2,608,976 2,311,442 297,534
Streets and drainage 1,682,704 1,684,926 1,650,008 34,918
Planning 966,175 954,375 902,766 51,609
Culture and recreation
Community services 1,157,814 1,171,639 1,131,801 39,838
Parks and recreation 4,269,231 4,236,337 4,123,229 113,108
Library services 613,299 637,049 626,848 10,201
TOTAL EXPENDITURES 36,907,711 36,880,693 35,461,183 1,419,510
Excess(deficiency)of revenues over expenditures 2,162,038 5,326,699 7,995,442 2,668,743
OTHER FINANCING SOURCES(USES)
Transfers from other funds 1,724,514 1,739,763 1,739,763 -
Transfers to other funds (7,260,000) (8,160,000) (8,160,000)
TOTAL OTHER FINANCING SOURCES(USES) (5,535,486) (6,420,237) (6,420,237) -
NET CHANGE IN FUND BALANCE (3,373,448) (1,093,538) 1,575,205 2,668,743
FUND BALANCES,BEGINNING OF YEAR 24,563,413 24,563,413 24,563,413 -
FUND BALANCES, END OF YEAR $ 21,189,965 $ 23,469,875 $ 26,138,618 $ 2,668,743
See Notes to Budgetary
Comparison Schedules
60
CITY OF SOUTHLAKE, TEXAS EXHIBIT A-2
TAX INCREMENT FINANCING DISTRICT SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
VARIANCE WITH
BUDGETED AMOUNTS FINAL BUDGET-
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES
Ad valorem taxes, penalties and interest $6,642,975 $7,324,928 $7,324,928 $ -
Interest - 1,000 (318) (1,318)
Total revenues 6,642,975 7,325,928 7,324,610 (1,318)
EXPENDITURES:
Intergovernmental - 4,478,312 4,478,312 -
Total expenditures - 4,478,312 4,478,312 -
Excess of revenues
over expenditures 6,642,975 2,847,616 2,846,298 (1,318)
OTHER FINANCING USES
Transfers to other funds (3,288,465) (3,258,668) (3,258,668) -
Total other financing uses (3,288,465) (3,258,668) (3,258,668) -
Net change in fund balance 3,354,510 (411,052) (412,370) (1,318)
Fund balance at
beginning of year 4,422,565 4,422,565 4,422,565 -
Fund balance at
end of year $7,777,075 $4,011,513 $4,010,195 $ (1,318)
See Notes to Budgetary
Comparison Schedules
61
I
CITY OF SOUTHLAKE, TEXAS EXHIBIT A-3
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
TEXAS MUNICIPAL RETIREMENT SYSTEM
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Measurement
Year
2014
Total pension liability:
Service cost $ 2,906,949
Interest 4,779,462
Changes of benefit terms -
Difference between expected and actual
experience (1,602,645)
Change in assumptions -
Benefit payments, including refunds of
employee contributions (1,680,030)
Net change in total pension liability 4,403,736
Total pension liability- beginning 67,664,562
Total pension liability-ending (a) 72,068,298
Plan fiduciary net position:
Contributions -employer 2,283,310
Contributions -employee 1,340,870
Net investment income 3,463,018
Benefit payments, including refunds of
employee contributions (1,680,030)
Administrative expense (36,150)
Other (2,972)
Net change in plan fiduciary net position 5,368,046
Plan fiduciary net position- beginning 60,526,545
Plan fiduciary net position- ending (b) 65,894,591
Net pension liability- ending (a)- (b) $ 6,173,707
Plan fiduciary net position as a
percentage of total pension liability 91.43%
Covered employee payroll $ 19,154,225
Net pension liability as a percentage
of covered employee payroll 32.23%
63
CITY OF SOUTHLAKE, TEXAS EXHIBIT A-4
SCHEDULE OF CONTRIBUTIONS
TEXAS MUNICIPAL RETIREMENT SYSTEM
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Fiscal Year
2015
Actuarially determined contribution $ 2,439,627
Contribution in relation of the actuarially
determined contribution 2,439,627
Contribution deficiency (excess) $ -
Covered employee payroll $ 20,034,712
Contributions as a percentage of covered
employee payroll 12.18%
64
CITY OF SOUTHLAKE, TEXAS
NOTES TO TEXAS MUNICIPAL RETIREMENT SYSTEM
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Actuarial Cost Method Entry Age Normal
Amortization Method Level Percentage of Payroll, Closed
Remaining Amortization Period 29 years
Asset Valuation Method 10 Year smoothed market; 15% soft corridor
Inflation 3.00%
Salary Increases 3.50% to 12.00% including inflation
Investment Rate of Return 7.00%
Retirement Age Experience-based table of rates that are specific to
the City's plan of benefits. Last updated for the 2010
valuation pursuant to an experience study of the
period 2005-2009
Mortaility RP2000 Combined Mortality Table with Blue Collar
Adjustment with male rates multiplied by 109% and
female rates multiplied by 103% and projected on a
fully generational basis with scale BB
Other Information There were no benefit changes during the year.
65
CITY OF SOUTHLAKE, TEXAS EXHIBIT A-5
CONDITION RATING OF STREET SYSTEM
SEPTEMBER 30, 2015
CONDITION OF ROADWAY SYSTEM
Index 2015
RCI 8.9
SDI 6.1
PQI 8.2
COMPARISON OF NEEDED-TO-ACTUAL MAINTENANCE/PRESERVATION
Needed Actual Difference
2011 1,250,000 1,025,665 (224,335)
2012 1,250,000 1,252,394 2,394
2013 800,000 755,398 (44,602)
2014 800,000 1,050,404 250,404
2015 800,000 830,768 30,768
Total $4,900,000 $4,914,629 14,629
The City hired a consultant to implement a pavement management system (PMS) to cover all public
streets within the City. The condition of street pavement is measured using the Asphalt Pavement Rating
Form as developed by the Asphalt Institute. The Asphalt Pavement Rating Form is based on a weighted
average of thirteen defects found in pavement surfaces. The consultant conducted a pavement condition
survey on all City owned streets. This consisted of a ride condition or roughness survey, a surface
distress survey and a deflection survey. A present status analysis was conducted using data obtained
from the pavement condition survey to determine the Ride Condition Index (RCI) and the Surface
Distress Index (SDI). These indices were then combined into the composite Pavement Quality Index
(PQI). Values of PQI can range from 0 to 10. Typical values for a newly constructed pavement range
from 9.5 to 10.0. The PQI level at which a pavement becomes in need of rehabilitation is typically in the
5.0 to 7.0 range. It was the City's policy to maintain a PQI of 7.3 until 2012 when the City increased the
minimum PQI to 7.8. Needed maintenance is calculated based upon inspections and the pavement
quality index.
In accordance with GASB Statement No. 34, the City is required to report at least one complete condition
assessment at transition using the modified approach. The condition assessment was completed by the
City and documented that the eligible infrastructure assets are being preserved at or above the condition
level established by the City. A third of the City's public streets will be assessed annually to ensure all
public streets are assessed every three years.
The City calculates needed maintenance of its street system annually. However, the scheduling of these
road projects often crosses fiscal years. Therefore, actual maintenance may be less than the calculated
needed maintenance in one fiscal year and greater than the calculated needed maintenance in the
subsequent fiscal year.
66
COMBINING AND INDIVIDUAL FUND
FINANCIAL STATEMENTS AND SCHEDULES
MAJOR GOVERNMENTAL FUNDS
GENERAL OBLIGATION DEBT SERVICE FUND
The General Obligation Debt Service Fund is used to account for the accumulation of resources
for, and the payment of, general obligation bonds and interest from governmental resources.
67
CITY OF SOUTHLAKE, TEXAS EXHIBIT B-1
GENERAL OBLIGATION DEBT SERVICE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
VARIANCE WITH
BUDGETED AMOUNTS FINAL BUDGET-
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES:
Ad valorem taxes $ 6,902,970 $ 6,902,970 $ 6,819,703 $ (83,267)
Interest 20,000 20,000 112,019 92,019
Total revenues 6,922,970 6,922,970 6,931,722 8,752
EXPENDITURES:
Principal retirement 12,639,311 12,639,311 12,639,311 -
Interest and fiscal charges 2,880,050 2,880,050 2,909,672 (29,622)
Total expenditures 15,519,361 15,519,361 15,548,983 (29,622)
Deficiency of revenues
over expenditures (8,596,391) (8,596,391) (8,617,261) (20,870)
OTHER FINANCING SOURCES(USES)
Transfers from other funds 7,471,015 7,471,015 7,471,015 -
Total other financing sources(uses) 7,471,015 7,471,015 7,471,015 -
Net change in fund balance (1,125,376) (1,125,376) (1,146,246) (20,870)
Fund balance, beginning of year 10,477,887 10,477,887 10,477,887 -
Fund balance,end of year $ 9,352,511 $ 9,352,511 $ 9,331,641 $ (20,870)
68
NON-MAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
The Special Revenue Funds are used to account for revenue sources that are legally restricted to
expenditures for specified purposes.
Police Fund-- Established to account for resources required to be utilized by the police department.
Parks and Recreation Fund — Established to account for resources restricted for use by the parks
and recreation department.
Parks Dedication Fund — Established to account for resources restricted for use by the parks
department.
Southlake Parks Development Corporation Special Revenue Fund — Established to account for
the general operations of the non-profit corporation established to finance, develop and operate park
and recreational facilities.
Crime Control District — The Crime Control District Special Revenue Fund was established to
account for the operations of the Crime Control District, which was established for the financing and
development of crime control within the City. The Crime Control Fund is funded primarily through the
receipt of municipal sales taxes.
Hotel Occupancy Fund — The Hotel Occupancy Tax Fund accounts for all revenues and
expenditures relating to the hotel occupancy tax received by the City.
Storm Water Utility Fund — This fund is used to account for fees collected for the purpose of
improving, upgrading and maintaining the City's drainage system. The City is mandated by the Texas
Commission on Environmental Quality (TCEQ) to develop and maintain a Storm Water Management
Plan in order to address capacity and quality issues and protect its residents and their properties from
possible flooding and pollution problems. Drainage fees are collected by residents to fund the
activities required to comply with TCEQ regulations.
Court Security Fund — Established to account for municipal court fees assessed to provide for court
security.
Court Technology Fund — Established to account for municipal court fees assessed to provide for
court technology.
Library Fund— Established to account for resources donated for use by library services.
Red Light Camera Fund —The Red Light Camera Fund is used to account for fees assessed for red
light violations captured through the City's camera monitoring system.
Storm Water Maintenance Fund—The Storm Water Maintenance Fund is used to account for the
maintenance on storm water infrastructure.
Oil and Gas Fund-The Oil and Gas Fund is used to account for permits fees and the related
expenditures for oil and gas drilling.
Commercial Vehicle Enforcement Fund —The Commercial Vehicle Enforcement Fund is used to
account for the fees assessed for commercial vehicle violations.
69
DEBT SERVICE FUNDS
The Debt Service Funds are utilized to account for the accumulation of financial resources for, and the
payment of, long-term debt principal, interest, and related costs arising from the issuance of bonds.
Southlake Parks Development Corporation Debt Service Fund — Established to accumulate
resources to finance the debt service of debt issues of the Southlake Parks Development
Corporation.
CAPITAL PROJECTS FUNDS
The Capital Projects Funds are utilized to account for financial resources to be used for the acquisition or
construction of specified capital improvements (other than those financed by proprietary funds).
Tax Increment Financing District Capital Projects Fund — The Tax Increment Financing District
capital projects fund was established to account for the financing and construction of projects of the
Tax Increment Financing District.
Crime Control District Capital Projects Fund —The Crime Control District Capital Projects Fund is
utilized to account for the acquisition and construction of capital assets as approved by the District's
board of directors. The fund has been funded primarily through the issuance of general obligation
debt.
70
CITY OF SOUTHLAKE, TEXAS
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
SEPTEMBER 30, 2015
SPECIAL REVENUE
Southlake
Parks Parks Crime
and Parks Development Control
Police Recreation Dedication Corporation District
ASSETS
Cash and cash equivalents $18,259 $ 131,763 $ 534,949 $ 6,095,756 $ 5,172,224
Investments 2,042 6,301 7,097 3,004,800 1,174,716
Accounts receivable - - - 12,819 -
Sales tax receivable - - 1,109,811 1,071,510
Interest receivable - 1 3 750 30
TOTAL ASSETS $20,301 $ 138,065 $ 542,049 $ 10,223,936 $ 7,418,480
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts payable $ 7,983 $ $ - $ 2,783 $ 4,861
Accrued liabilities - 174,000 6,769 36,450
Due to other funds - - -
Unearned revenue - - - -
TOTAL LIABILITIES 7,983 174,000 9,552 41,311
FUND BALANCES
Restricted for:
Municipal court expenditures - - - -
Debt service
Capital projects - -
Committed for:
Police expenditures 12,318 - - 7,377,169
Parks and recreation - 138,065 368,049 10,214,384 -
Storm water expenditures - - -
Oil and gas drilling
Library - - - - -
TOTAL FUND BALANCES 12,318 138,065 368,049 10,214,384 7,377,169
TOTAL LIABILITIES AND FUND BALANCES $20,301 $ 138,065 $ 542,049 $ 10,223,936 $ 7,418,480
71
EXHIBIT C-1
CONTINUED
SPECIAL REVENUE
Storm
Hotel Water Court Court Red Light Storm Water
Occupancy Utility Security Technology Library Camera Maintenance
$ 524,244 $1,158,554 $394,929 $ 369,161 $ 7,760 $ 383,236 $ 404,179
678,309 586,566 71,100 47,657 882 92,574 47,189
9,586 216,126 - - 190 34,795 3
84,321 - - - - - -
1,023 3,759 3 2 - - -
$1,297,483 $1,965,005 $466,032 $ 416,820 $ 8,832 $ 510,605 $ 451,371
$ 26,914 $ 2,770 $ 2,044 $ $ $ 136,058 $ -
13,656 7,654 2,318 3,000
8,905 - - -
49,475 10,424 4,362 139,058
- - 461,670 416,820 -
1,248,008 1,954,581 -
- - 371,547
451,371
- - - - 8,832 - -
1,248,008 1,954,581 461,670 416,820 8,832 371,547 451,371
$1,297,483 $1,965,005 $466,032 $ 416,820 $ 8,832 $ 510,605 $ 451,371
72
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-1
NON-MAJOR GOVERNMENTAL FUNDS CONCLUDED
COMBINING BALANCE SHEET
SEPTEMBER 30, 2015
DEBT
SPECIAL REVENUE SERVICE CAPITAL PROJECTS
Southlake Tax TOTAL
Commercial Parks Increment Crime NON-MAJOR
Oil and Vehicle Development Financing Control GOVERNMENTAL
Gas Enforcement Corporation District District FUNDS
ASSETS
Cash and cash equivalents $ 44,830 $ 63,337 $ 709,437 $ - $ 966,216 $ 16,978,834
Investments 8,338 7 1,016,002 4,366 111,531 6,859,477
Accounts receivable - - - - - 273,519
Sales tax receivable - - 2,265,642
Interest receivable - 116 6 5,693
TOTAL ASSETS $ 53,168 $ 63,344 $ 1,725,555 $ 4,366 $ 1,077,753 $ 26,383,165
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts payable $ $ 41 $ $ $ $ 183,454
Accrued liabilities 10,488 254,335
Due to other funds - 2,058 2,058
Unearned revenue - - 8,905
TOTAL LIABILITIES 10,529 2,058 448,752
FUND BALANCES
Restricted for:
Municipal court expenditures 878,490
Debt service 1,725,555 - 1,725,555
Capital projects - - 2,308 1,077,753 4,282,650
Commited for:
Police expenditures 52,815 - - 7,813,849
Parks and recreation - 10,720,498
Storm water expenditures 451,371
Oil and gas drilling 53,168 53,168
Library - 8,832
TOTAL FUND BALANCES 53,168 52,815 1,725,555 2,308 1,077,753 25,934,413
TOTAL LIABILITIES AND
FUND BALANCES $ 53,168 $ 63,344 $ 1,725,555 $ 4,366 $ 1,077,753 $ 26,383,165
73
IE
CITY OF SOUTH LAKE, TEXAS
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED SEPTEMBER 30, 2015
SPECIAL REVENUE
Southlake
Parks Parks Crime
and Parks Development Control
Police Recreation Dedication Corporation District
REVENUES
Municipal sales tax $ $ $ - $ 7,440,726 $ 7,335,505
Licenses, permits and fees 215,818 - -
Fines and forfeitures -
Grants - -
Interest (11) 78 22,198 1,417
Contributions 71,896 - -
Miscellaneous 153,824 -
Total revenues 71,885 215,896 7,616,748 7,336,922
EXPENDITURES
Current:
Court technology - - - -
Public safety
Police services - - 646,323
Cultural and recreation
Parks and recreation 31,282 783,575 -
Library services - -
Capital outlay
Debt service:
Principal retirement
Interest and fiscal charges - - -
Total expenditures 31,282.00 - 783,575 646,323
Excess(deficiency)of revenues over
expenditures - 40,603 215,896 6,833,173 6,690,599
OTHER FINANCING SOURCES(USES)
Proceeds from the sale of property 3,271 - - - -
Transfers from other funds -
Transfers to other funds - (235,000) (4,154,422) (4,281,600)
Total other financing sources(uses) 3,271 - (235,000) (4,154,422) (4,281,600)
NET CHANGE IN FUND BALANCES 3,271 40,603 (19,104) 2,678,751 2,408,999
FUND BALANCES,
BEGINNING OF YEAR 9,047 97,462 387,153 7,535,633 4,968,170
FUND BALANCES, END OF YEAR $ 12,318 $ 138,065 $ 368,049 $ 10,214,384 $ 7,377,169
74
EXHIBIT C-2
CONTINUED
SPECIAL REVENUE
Storm
Hotel Water Court Court Red Light Storm Water
Occupancy Utility Security Technology Library Camera Maintenance
$ 974,468 $ - $ $ $ $ $
- 1,387,359
- 34,768 46,088 512,291
6,395 4,432 65 14 124 547
- - - - 12,008 - -
980,863 1,391,791 34,833 46,102 12,008 512,415 547
- - - 18,053 - - -
- 5,914 445,104
733,488 - - -
- - - 11,143
494,183 39,034 -
733,488 494,183 39,034 23,967 11,143 445,104 -
247,375 897,608 (4,201) 22,135 865 67,311 547
(382,038) (1,485,179) (200,000)
(382,038) (1,485,179) - (200,000) -
(134,663) (587,571) (4,201) 22,135 865 (132,689) 547
1,382,671 2,542,152 465,871 394,685 7,967 504,236 450,824
$ 1,248,008 $ 1,954,581 $ 461,670 $ 416,820 $ 8,832 $ 371,547 $ 451,371
75
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-2
NON-MAJOR GOVERNMENTAL FUNDS CONCLUDED
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED SEPTEMBER 30, 2015
DEBT
SPECIAL REVENUE SERVICE CAPITAL PROJECTS
Southlake Tax TOTAL
Commercial Parks Increment Crime NON-MAJOR
Oil and Vehicle Development Financing Control GOVERNMENTAL
Gas Enforcement Corporation District District FUNDS
REVENUES
Municipal sales tax $ $ $ $ $ $ 15,750,699
Licenses,permits and fees 1,603,177
Fines and forfeitures 73,806 666,953
Grants - -
Interest 8 (20) 3,832 12 (16) 39,075
Contributions - - - 71,896
Miscellaneous - - 165,832
Total revenues 8 73,786 3,832 12 (16) 18,297,632
EXPENDITURES
Current:
Court technology - - - 18,053
Public safety
Police services 112,514 1,209,855
Cultural and recreation
Parks and recreation - 1,548,345
Library services - 11,143
Capital outlay - 1,260 49,614 584,091
Debt service:
Principal retirement 1,850,000 - - 1,850,000
Interest and fiscal charges - 984,863 984,863
Total expenditures 112,514 2,834,863 1,260 49,614 6,206,350
Excess(deficiency)of revenues over
expenditures 8 (38,728) (2,831,031) (1,248) (49,630) 12,091,282
OTHER FINANCING SOURCES(USES)
Proceeds from the sale of property - - 3,271
Transfers from other funds 40,000 2,884,289 2,924,289
Transfers to other funds - - (10,738,239)
Total other financing sources(uses) 40,000 2,884,289 (7,810,679)
NET CHANGE IN FUND BALANCES 8 1,272 53,258 (1,248) (49,630) 4,280,603
FUND BALANCES,
BEGINNING OF YEAR 53,160 51,543 1,672,297 3,556 1,127,383 21,653,810
FUND BALANCES,END OF YEAR $ 53,168 $ 52,815 $ 1,725,555 $ 2,308 $ 1,077,753 $ 25,934,413
76
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-3
PARKS DEDICATION SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
VARIANCE WITH
BUDGETED AMOUNTS FINAL BUDGET-
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES:
Park fees $ 30,000 $215,000 $215,818 $ 818
Interest 250 250 78 (172)
Total revenues 30,250 215,250 215,896 646
EXPENDITURES:
Parks and recreation - - - -
Total expenditures - - - -
Excess of revenues over expenditures 30,250 215,250 215,896 646
OTHER FINANCING SOURCES (USES):
Transfers to other funds (235,000) (235,000) (235,000) -
Total other financing sources (uses) (235,000) (235,000) (235,000) -
Net change in fund balance (204,750) (19,750) (19,104) 646
Fund balance at
beginning of year 387,153 387,153 387,153 -
Fund balance at
end of year $ 182,403 $367,403 $368,049 $ 646
77
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-4
SOUTHLAKE PARKS DEVELOPMENT CORPORATION SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
VARIANCE WITH
BUDGETED AMOUNTS FINAL BUDGET-
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES:
Municipal sales tax $ 5,650,000 $6,400,000 $ 7,440,726 $ 1,040,726
Miscellaneous - 153,816 153,824 8
Interest 14,000 7,500 22,198 14,698
Total revenues 5,664,000 6,561,316 7,616,748 1,055,432
EXPENDITURES
Parks and recreation 732,976 979,258 783,575 195,683
Excess of revenues
over expenditures 4,931,024 5,582,058 6,833,173 1,251,115
OTHER FINANCING USES:
Transfers to other funds (4,154,422) (4,154,422) (4,154,422) -
Net change in fund balance 776,602 1,427,636 2,678,751 1,251,115
Fund balance at
beginning of year 7,535,633 7,535,633 7,535,633 -
Fund balance at
end of year $ 8,312,235 $8,963,269 $10,214,384 $ 1,251,115
78
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-5
CRIME CONTROL DISTRICT SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAB BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
VARIANCE WITH
BUDGETED AMOUNTS FINAL BUDGET-
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES:
Municipal sales tax $5,650,000 $7,300,000 $7,335,505 $ 35,505
Interest 3,500 500 1,417 917
TOTAL REVENUES 5,653,500 7,300,500 7,336,922 36,422
EXPENDITURES
Police services 836,099 676,871 646,323 30,548
Excess of revenues
over expenditures 4,817,401 6,623,629 6,690,599 66,970
OTHER FINANCING USES
Transfers to other funds (4,281,600) (4,281,600) (4,281,600) -
TOTAL OTHER FINANCING USES (4,281,600) (4,281,600) (4,281,600) -
Net change in fund balance 535,801 2,342,029 2,408,999 66,970
Fund balance at
beginning of year 4,968,170 4,968,170 4,968,170 -
Fund balance at
end of year $5,503,971 $7,310,199 $7,377,169 $ 66,970
79
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-6
HOTEL OCCUPANCY SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
VARIANCE WITH
BUDGETED AMOUNTS FINAL BUDGET -
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES:
Municipal sales tax $ 926,065 $ 957,588 $ 974,468 $ 16,880
Interest 500 500 6,395 5,895
Total revenues 926,565 958,088 980,863 22,775
EXPENDITURES:
Parks and recreation 846,844 754,462 733,488 20,974
Excess of revenues
over expenditures 79,721 203,626 247,375 43,749
OTHER FINANCING USES:
Transfers to other funds (376,048) (382,038) (382,038) -
Net change in fund balance (296,327) (178,412) (134,663) 43,749
Fund balance at
beginning of year 1,382,671 1,382,671 1,382,671 -
Fund balance at
end of year $1,086,344 $1,204,259 $1,248,008 $ 43,749
80
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-7
STORM WATER UTILITY SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
VARIANCE WITH
BUDGETED AMOUNTS FINAL BUDGET -
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES:
Interest $ - $ 5,000 $1,387,359 $ 1,382,359
Licenses, permits and fees - 1,388,300 4,432 (1,383,868)
Total revenues - 1,393,300 1,391,791 (1,509)
EXPENDITURES:
Capital outlay 512,426 619,616 494,183 125,433
Excess of revenues
over expenditures (512,426) 773,684 897,608 123,924
OTHER FINANCING USES:
Transfers to other funds (1,483,405) (1,485,179) (1,485,179) -
Net change in fund balance (1,995,831) (711,495) (587,571) 123,924
Fund balance at
beginning of year 2,542,152 2,542,152 2,542,152 -
Fund balance at
end of year $ 546,321 $1,830,657 $1,954,581 $ 123,924
81
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-8
RED LIGHT CAMERA SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
VARIANCE WITH
BUDGETED AMOUNTS FINAL BUDGET-
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES:
Fines and forfeitures $ 1,072,838 $ 831,278 $ 512,291 $ (318,987)
Interest 1,500 200 124 (76)
Total revenues 1,074,338 831,478 512,415 (319,063)
EXPENDITURES:
Public safety 886,054 679,054 445,104 233,950
Excess of revenues
over expenditures 188,284 152,424 67,311 (85,113)
OTHER FINANCING USES
Transfers to other funds (200,000) (200,000) (200,000) -
Total other financing uses (200,000) (200,000) (200,000) -
Net change in fund balance (11,716) (47,576) (132,689) (85,113)
Fund balance, beginning of year 504,236 504,236 504,236 -
Fund balance, end of year $ 492,520 $ 456,660 $ 371,547 $ (85,113)
82
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-9
SOUTHLAKE PARKS DEVELOPMENT CORPORATION DEBT SERVICE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
VARIANCE WITH
BUDGETED AMOUNTS FINAL BUDGET-
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES:
Interest $ 10,000 $ 6,000 $ 3,832 $ (2,168)
Total revenues 10,000 6,000 3,832 (2,168)
EXPENDITURES:
Principal retirement 1,730,000 1,850,000 1,850,000 -
Interest and fiscal charges 1,357,098 1,357,098 984,863 372,235
Total expenditures 3,087,098 3,207,098 2,834,863 372,235
Deficiency of revenues over expenditures (3,077,098) (3,201,098) (2,831,031) 370,067
OTHER FINANCING SOURCES(USES):
Transfers from other funds (2,881,289) 2,884,289 2,884,289 -
Total other financing sources (uses) (2,881,289) 2,884,289 2,884,289 -
Net change in fund balance (5,958,387) (316,809) 53,258 370,067
Fund balance, beginning of year 1,672,297 1,672,297 1,672,297 -
Fund balance,end of year $ (4,286,090) $1,355,488 $ 1,725,555 $ 370,067
83
AGENCYFUNDS
The Agency Funds are used to account for resources held for others in a custodial capacity. The City
maintains the following Agency Fund:
Cash Escrow Agency Fund - accounts for the receipt and subsequent disbursement of deposits paid to
the City by builders/developers.
84
CITY OF SOUTHLAKE, TEXAS EXHIBIT F-1
CASH ESCROW AGENCY FUND
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Balance at Balance at
Beginning End
of Year Additions Deletions of Year
ASSETS
Cash and cash equivalents $ 57,380 $ (12) $ - $ 57,368
Investments 10,687 - (23) 10,710
Accrued interest receivable 3 - 3 -
TOTAL ASSETS $ 68,070 $ (12) $ (20) $ 68,078
LIABILITIES
Due to builders $ 68,070 $ 8 $ - $ 68,078
TOTAL LIABILITIES $ 68,070 $ 8 $ - $ 68,078
85
CITY OF SOUTHLAKE, TEXAS EXHIBIT G-1
COMPARATIVE SCHEDULES OF CAPITAL ASSETS BY SOURCE
SEPTEMBER 30, 2015 AND 2014
2015 2014
General capital assets
Land and improvements $ 120,715,956 $ 107,689,400
Buildings and improvements 83,296,792 80,973,121
Equipment 26,457,569 25,163,356
Infrastructure 259,589,716 241,075,749
Construction in progress 15,492,114 21,821,618
Total capital assets $ 505,552,147 $ 476,723,244
Investment in general capital assets
Capital projects funds $ 368,942,615 $ 350,478,620
General and other fund revenues 81,575,124 80,231,223
Gifts 55,034,408 46,013,401
Total investment in capital assets $ 505,552,147 $ 476,723,244
86
CITY OF SOUTHLAKE, TEXAS EXHIBIT G-2
SCHEDULE OF CHANGES IN CAPITAL ASSETS BY FUNCTION AND ACTIVITY
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015
Capital Capital
Assets Assets
October 1, September 30,
Function and Activity 2014 Additions Deductions 2015
General government $ 187,472,407 $ 97,178 $ (45,533) $ 187,524,052
Public safety 61,654,653 933,807 (187,445) 62,401,015
Public works 227,596,184 52,997,472 (24,966,576) 255,627,080
Total capital assets $ 476,723,244 $ 54,028,457 $ (25,199,554) $ 505,552,147
General Public Public
Government Safety Works Total
Land and improvements $ 2,418,798 $ 4,303,925 $ 113,993,233 $ 120,715,956
Buildings and improvements 25,818,684 48,666,203 8,811,905 83,296,792
Equipment 6,217,930 9,316,473 10,923,166 26,457,569
Infrastructure 153,068,640 114,414 106,406,662 259,589,716
Construction in Progress - - 15,492,114 15,492,114
Total $ 187,524,052 $ 62,401,015 $ 255,627,080 $ 505,552,147
87
IE
STATISTICAL SECTION
STATISTICAL SECTION
This part of the City of Southlake's comprehensive annual financial report presents detailed information as
a context for understanding what the information in the financial statements, notes disclosures, and required
supplementary information says about the City's overall financial health. This information has not been
audited by the independent auditor.
Contents Table #s
Financial Trends 1, 2, 3&4
These tables contain trend information to help the reader understand how the City's
financial performance and well-being have changed over time.
Revenue Capacity 5, 6, 7& 8
These tables contain information to help the reader assess the City's two most significant
local revenue sources, the property and sales taxes.
Debt Capacity 9, 10, 11 & 12
These tables present information to help the reader assess the affordability of the City's
current levels of outstanding debt and the City's ability to issue additional debt in the
future.
Economic and Demographic Information 13 & 14
These tables offer economic and demographic indicators to help the reader understand
the environment within which the City's financial activities take place.
Operating Information 15, 16& 17
These tables contain service and infrastructure data to help the reader understand how
the information in the City's financial report relates to the services the City provides.
Source: Unless otherwise noted, the information in these tables is derived from the comprehensive annual
financial reports for the relevant year. The City implemented GASB Statement 34 in fiscal year 2003: tables
presenting government-wide information include information beginning in that year.
IE
CITY OF SOUTH LAKE, TEXAS
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
Fiscal Year
2006 2007 2008 2009
Governmental activities
Net investment in capital assets $ 190,896,842 $ 209,824,992 $ 222,046,528 $ 246,238,808
Restricted 4,050,884 6,076,676 6,499,447 7,850,231
Unrestricted 52,221,446 59,208,874 75,986,531 69,949,380
Total governmental activities net position $ 247,169,172 $ 275,110,542 $ 304,532,506 $ 324,038,419
Business-type activities
Net investment in capital assets $ 42,821,538 $ 50,177,976 $ 47,834,458 $ 60,541,445
Restricted - - - -
Unrestricted 23,951,465 23,777,277 29,794,140 21,171,185
Total business-type activities net position $ 66,773,003 $ 73,955,253 $ 77,628,598 $ 81,712,630
Primary government
Net investment in capital assets $ 233,718,380 $ 260,002,968 $ 269,880,986 $ 306,780,253
Restricted 4,050,884 6,076,676 6,499,447 7,850,231
Unrestricted 76,172,911 82,986,151 105,780,671 91,120,565
Total primary governmental net position $ 313,942,175 $ 349,065,795 $ 382,161,104 $ 405,751,049
Source: Comprehensive Annual Financial Report
88
TABLE 1
Fiscal Year
2010 2011 2012 2013 2014 2015
$ 277,985,305 $ 298,418,769 $ 291,690,099 $ 324,928,883 $ 338,303,633 $ 366,796,228
8,814,621 9,739,189 67,444,322 15,178,798 15,092,604 13,624,164
58,438,700 53,157,494 16,726,782 50,356,758 58,732,145 59,447,800
$ 345,238,626 $ 361,315,452 $ 375,861,203 $ 390,464,439 $ 412,128,382 $ 439,868,192
$ 65,039,374 $ 68,911,163 $ 67,918,830 $ 70,968,919 $ 73,126,147 $ 78,143,445
18,831,525 17,613,924 18,908,505 17,673,963 16,085,060 13,660,807
$ 83,870,899 $ 86,525,087 $ 86,827,335 $ 88,642,882 $ 89,211,207 $ 91,804,252
$ 343,024,679 $ 367,329,932 $ 359,608,929 $ 395,897,802 $ 411,429,780 $ 444,939,673
8,814,621 9,739,189 67,444,322 15,178,798 15,092,604 13,624,164
77,270,225 70,771,418 35,635,287 68,030,721 74,817,205 73,108,607
$ 429,109,525 $ 447,840,539 $ 462,688,538 $ 479,107,321 $ 501,339,589 $ 531,672,444
89
CITY OF SOUTHLAKE, TEXAS
CHANGES IN NET POSITION, LAST TEN FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
Fiscal Year
2006 2007 2008 2009 2010
Expenses
Governmental activities:
General government $ 8,465,930 $ 9,833,572 $ 4,406,913 $ 11,068,965 $ 11,814,836
Public safety 10,965,357 11,729,107 12,770,012 12,920,263 14,885,499
Public works 3,707,519 4,813,692 8,669,156 5,840,432 5,767,688
Culture and recreation 5,085,976 5,510,247 5,911,730 6,439,100 7,287,434
Interest on long-term debt 5,052,472 5,804,295 5,506,967 5,854,931 6,515,269
Total governmental activities expenses 33,277,254 37,690,913 37,264,778 42,123,691 46,270,726
Business-type activities:
Water and sewer 16,168,430 14,729,469 17,689,865 18,066,346 18,948,438
Total business-type activities expenses 16,168,430 14,729,469 17,689,865 18,066,346 18,948,438
Total primary government expenses $ 49,445,684 $ 52,420,382 $ 54,954,643 $ 60,190,037 $ 65,219,164
Program Revenues
Governmental activities:
Charges for Services:
General government $ 1,956,949 $ 1,778,215 $ 1,340,864 $ 1,949,993 $ 2,476,000
Public safety 1,873,524 2,979,947 2,843,923 2,633,437 2,706,847
Public works 411,381 223,329 199,833 68,369 240,916
Culture and recreation 813,837 1,156,965 1,269,571 1,369,725 1,387,558
Operating grants and contributions 459,688 304,246 241,144 239,364 688,803
Capital grants and contributions 3,575,240 11,425,990 5,690,613 1,833,160 5,994,206
Total governmental activities program revenues 9,090,619 17,868,692 11,585,948 8,094,048 13,494,330
Business-type activities:
Charges for services:
Water and sewer 20,180,636 15,414,131 18,543,025 19,321,095 18,897,356
Capital grants and contributions 3,510,000 5,589,196 3,748,161 2,212,867 2,578,400
Total business-type activities program revenues 23,690,636 21,003,327 22,291,186 21,533,962 21,475,756
Total primary government program revenues $ 32,781,255 $ 38,872,019 $ 33,877,134 $ 29,628,010 $ 34,970,086
Net(Expenses)Revenue
Governmental activities $ (24,186,635) $ (19,822,221) $ (25,678,830) $ (34,029,643) $ (32,776,396)
Business-type activities 7,522,206 6,273,858 4,601,321 3,467,616 2,527,318
Total primary government net expenses $ (16,664,429) $ (13,548,363) $ (21,077,509) $ (30,562,027) $ (30,249,078)
General Revenues
and Other Changes in Net Position
Governmental activities:
Taxes:
Property taxes $ 21,439,614 $ 24,509,730 $ 28,950,945 $ 30,911,161 $ 32,298,360
Sales taxes 16,040,418 16,931,180 18,781,043 17,256,272 17,610,781
Franchise taxes 1,983,381 2,435,803 2,654,701 2,816,111 2,606,248
Interest on investments 2,591,520 3,598,458 3,128,226 1,703,418 414,852
Gain(Loss)on sale of capital assets 35,317 - - 167,127 21,465
Transfers - 275,595 229,436 341,957 596,093
Miscellaneous 166,789 8,688 52,023 339,510 428,804
Total governmental activities 42,257,039 47,759,454 53,796,374 53,535,556 53,976,603
Business-type activities:
Interest on investments 1,024,603 1,183,987 594,891 953,739 155,173
Gain(Loss)on sale of capital assets 930,138 (3,396) - - -
Transfers - (275,595) (229,436) 2,187 (596,093)
Miscellaneous - - 10,989 (339,510) 71,871
Total business-type activities 1,954,741 904,996 376,444 616,416 (369,049)
Total primary government $ 44,211,780 $ 48,664,450 $ 54,172,818 $ 54,151,972 $ 53,607,554
Change in Net Position
Governmental activities $ 18,070,404 $ 27,937,233 $ 28,117,544 $ 19,505,913 $ 21,200,207
Business-type activities 9,476,947 7,178,854 4,977,765 4,084,032 2,158,269
Total primary government $ 27,547,351 $ 35,116,087 $ 33,095,309 $ 23,589,945 $ 23,358,476
Source: Comprehensive Annual Financial Report
90
TABLE 2
Fiscal Year
2011 2012 2013 2014 2015
$ 13,754,529 $ 13,277,006 $ 12,892,140 $ 13,417,904 $ 14,602,425
15,144,173 15,891,911 18,425,878 18,245,617 18,176,698
6,279,687 6,399,819 8,528,331 8,870,998 9,762,184
7,897,173 8,158,291 8,829,394 8,948,841 9,311,006
5,638,272 5,865,798 6,747,628 5,097,036 2,528,113
48,713,834 49,592,825 55,423,371 54,580,396 54,380,426
20,724,651 22,530,688 22,119,518 25,030,426 26,692,373
20,724,651 22,530,688 22,119,518 25,030,426 26,692,373
$ 69,438,485 $ 72,123,513 $ 77,542,889 $ 79,610,822 $ 81,072,799
$ 2,616,321 $ 2,575,773 $ 2,755,038 $ 2,657,883 $ 2,309,861
2,818,913 3,744,708 3,650,079 3,907,068 4,427,137
71,129 179,094 291,926 360,529 265,432
1,384,823 1,400,794 1,422,552 1,379,658 1,399,822
532,100 200,434 639,230 443,157 455,575
2,309,613 518,617 2,244,965 4,436,346 8,967,466
9,732,899 8,619,420 11,003,790 13,184,641 17,825,293
22,571,056 22,451,738 22,806,432 23,591,438 24,792,619
1,433,278 1,214,395 1,981,354 3,510,936 5,776,438
24,004,334 23,666,133 24,787,786 27,102,374 30,569,057
$ 33,737,233 $ 32,285,553 $ 35,791,576 $ 40,287,015 $ 48,394,350
$ (38,980,935) $ (40,973,405) $ (44,419,581) $ (41,395,755) $ (36,555,133)
3,279,683 1,135,445 2,668,268 2,071,948 3,876,684
$ (35,701,252) $ (39,837,960) $ (41,751,313) $ (39,323,807) $ (32,678,449)
$ 31,568,583 $ 31,166,847 $ 31,844,930 $ 33,099,007 $ 33,176,285
18,969,870 20,076,478 22,659,917 26,623,661 30,090,614
2,783,279 2,598,074 2,646,394 2,841,025 3,327,739
258,556 232,722 30,110 482,607 523,954
26,741 91,134 89,923 99,109 102,900
791,830 890,220 915,475 915,116 968,160
658,902 463,681 836,068 639,571 1,066,818
55,057,761 55,519,156 59,022,817 64,700,096 69,256,470
123,872 46,212 25,227 101,469 112,967
- - - - 23,100
(791,830) (890,220) (915,475) (915,116) (968,160)
42,463 10,811 37,527 6,963 4,521
(625,495) (833,197) (852,721) (806,684) (827,572)
$ 54,432,266 $ 54,685,959 $ 58,170,096 $ 63,893,412 $ 68,428,898
$ 16,076,826 $ 14,545,751 $ 14,603,236 $ 23,304,341 $ 32,701,337
2,654,188 302,248 1,815,547 1,265,264 3,049,112
$ 18,731,014 $ 14,847,999 $ 16,418,783 $ 24,569,605 $ 35,750,449
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