Item 4CM E M O R A N D U M
March 13, 2017
To: Shana Yelverton, City Manager
From: Sharen Jackson, Chief Financial Officer
Subject: Approve the 2016 Comprehensive Annual Financial Report
Action
Requested: Approval of September 30, 2016 Comprehensive Annual
Financial Report.
Background
Information: The purpose of this item is to seek approval of the 201 6
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
2016.
City received an unmodified (“clean”) opinion on the
City’s financial statements for the year ended
September 30, 2016.
John DeBurro, 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: 2016 CAFR
Staff Recommendation: Approval of 2016 Comprehensive Annual Financial
Report
Comprehensive Annual Financial Report
For the Fiscal Year Ended
September 30, 2016
CITY OF SOUTHLAKE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016
As Prepared By
Sharen Jackson, CPA
Chief Financial Officer
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, 2016
TABLE OF CONTENTS
Exhibit Page
C.REQUIRED SUPPLEMENTARY INFORMATION
Budgetary Comparison Schedule - General Fund A-1 62
Budgetary Comparison Schedule - Tax Increment Financing District Special
Revenue Fund A-2 63
Notes to Budgetary Comparison Schedules 64
Schedule of Changes in Net Pension Liability and Related Ratios - TMRS A-3 65
Schedule of Contributions - TMRS A-4 66
Notes to Texas Municipal Retirement System Required Supplementary Information 67
Condition Rating of Street System A-5 68
D.COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES
Major Governmental Funds
Budgetary Comparison Schedule - General Obligation Debt Service Fund B-1 70
Nonmajor Governmental Funds
Combining Balance Sheet - Nonmajor Governmental Funds C-1 73
Combining Statement of Revenues, Expenditures, and Changes in Fund Balance -
Nonmajor Governmental Funds C-2 76
Budgetary Comparison Schedule - Parks Dedication Special Revenue Fund C-3 79
Budgetary Comparison Schedule - Southlake Parks Development
Corporation Special Revenue Fund C-4 80
Budgetary Comparison Schedule - Crime Control District Special Revenue Fund C-5 81
Budgetary Comparison Schedule - Hotel Occupancy Special Revenue Fund C-6 82
Budgetary Comparison Schedule - Storm Water Utility Special Revenue Fund C-7 83
Budgetary Comparison Schedule - Red Light Camera Special Revenue Fund C-8 84
Budgetary Comparison Schedule - Southlake Community Enhancement
Development Corporation Special Revenue Fund C-9 85
Budgetary Comparison Schedule - Southlake Parks Development Corporation
Debt Service Fund C-10 86
Agency Funds
Statement of Changes in Assets and Liabilities - Cash Escrow Agency Fund F-1 88
Schedules of Capital Assets Used in the Operation of Governmental Funds
Comparative Schedules of Capital Assets by Source G-1 89
Schedule of Changes in Capital Assets by Function and Activity G-2 90
CITY OF SOUTHLAKE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016
TABLE OF CONTENTS
Exhibit Page
III.STATISTICAL SECTION Table
Net Position By Component 1 91
Changes in Net Position 2 93
Fund Balances, Governmental Funds 3 95
Changes in Fund Balances, Governmental Funds 4 96
Assessed Value and Estimated Actual Value of Taxable Property 5 97
Direct and Overlapping Property Tax Rates 6 98
Principal Property Tax Payers 7 99
Ad Valorem Tax Levies and Collections 8 100
Ratio of Outstanding Debt By Type 9 101
Ratio of General Bonded Debt Outstanding 10 103
Direct and Overlapping Governmental Activities Debt 11 104
Pledged-Revenue Coverage 12 105
Demographic and Economic Statistics 13 106
Principal Employers 14 107
Full-Time Equivalent City Government Employees By Function/Program 15 108
Operating Indicators By Function/Program 16 109
Capital Asset Statistics By Function/Program 17 110
CITY OF SOUTHLAKE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016
TABLE OF CONTENTS
INTRODUCTORY SECTION
1400 Main Street, Suite 440, Southlake, TX 76092 (817) 748-8345
Innovation ◊ Integrity ◊ Accountability ◊ Commitment to Excellence ◊ Teamwork
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Finance Department
March 14, 2017
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, 2016. 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.
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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 now 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.
• The financial section provides a detailed presentation of the financial position and
results of operations for the fiscal year ended September 30, 2016. 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
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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”), Southlake Community Enhancement and
Development Corporation (CEDC) 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 half-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 half-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. In May 2015, Southlake voters
overwhelmingly approved the reallocation of a portion of the District half-cent sales tax
for the purpose of constructing and operating a recreation center through CEDC. The
District’s half-cent sales tax was reduced to a one-eighth cent tax, and the remaining
three-eighths was reallocated to address recreational and economic development needs
for the City, as permitted by State law, through CEDC. 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.
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
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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.
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.
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0
50
100
150
200
250
300
2012 2013 2014 2015 2016
Single Family Residential Home Permits
9,000
9,200
9,400
9,600
9,800
10,000
10,200
10,400
10,600
2012 2013 2014 2015 2016
Number of Water Customers
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
2012 2013 2014 2015 2016
Sales Tax Revenue
General SPDC Crime CEDC
There were 223 single family
residential permits issued in
Fiscal Year 2016 with an
average new home
construction value, excluding
land value, of nearly
$700,000. As noted on the
chart the city experienced a
slight reduction in residential
home construction.
Water customers increased
from 10,189 in Fiscal Year
2015 to 10,426 in 2016,
while wastewater customers
increased from 8,166 to 8,367
during the same year. The
chart shows the five-year trend
of increasing water customers,
the result of the building
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.
The City of Southlake
experienced a reduction in
sales tax collections due to a
large one time sales tax
payment received during the
previous fiscal year. Sales
tax collections totaled
$27,650,799 in fiscal year
2016.
Future Development
During 2016, approximately
30 new construction
commercial permits were
issued by the city representing over 1,763,654 square feet of future retail/office.
• In April 2016, City Council approved a Site Plan for a TD Ameritrade regional
campus consisting of approximately 355,000 square foot three-story office
building and five-level parking garage with 2,014 spaces on approximately 78.617
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acres. The project will be addressed off of Kirkwood Blvd, near SH 114. The TD
Ameritrade project is currently under construction.
• In June 2015, City Council approved a Site Plan for Granite Place, six-story o ffice
building and four-story parking garage structure. The floor area of the office
building is approximately 154,000 square feet, and there will be 485 spaces in the
parking garage. The phase 1 of the project was completed in December 2016.
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 2016, 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.
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.
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The City of Southlake received a Certificate of Achievement for the year ended
September 30, 2015, 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, 2015. 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.
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
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ix
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LIST OF PRINCIPAL OFFICIALS
Laura K. Hill Mayor
Randy Williamson Mayor Pro Tem
Shawn McCaskill Deputy Mayor Pro Tem
Shahid Shafi Council Member
Chad Patton 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
Alison Ortowski 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
FINANCIAL SECTION
AN INDEPENDENT MEMBER OF BAKER TILLY INTERNATIONAL WEAVER AND TIDWELL, L.L.P. CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS 12221 MERIT DRIVE, SUITE 1400, DALLAS, TX 75251 P: 972.490.1970 F: 972.702.8321
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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, 2016, 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.
City of Southlake
Page 2
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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,
2016, 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.
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 62 through 64), TMRS pension schedules (pages 65 through 67) and
condition rating of street system (page 68) 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.
City of Southlake
Page 3
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The combining and individual fund financial statements and schedules are the responsibility of
management and were derived from and relate directly to the underlying accounting and other
records used to prepare the basic financial statements.
Such information has been subjected to the auditing procedures applied in the audit of the
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 14, 2017, on our consideration of the City’s internal control over financial reporting and
on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing
of internal control over financial reporting and compliance and the results of that testing, and not
to provide an opinion on internal control over financial reporting or on compliance. That report is
an integral part of an audit performed in accordance with Government Auditing Standards in
considering the City’s internal control over financial reporting and compliance.
WEAVER AND TIDWELL, L.L.P.
Dallas, Texas
March 14, 2017
MANAGEMENT’S DISCUSSION
AND ANALYSIS
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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, 2016 by $555,103,205 (net position). Of this
amount, $100,296,992 (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 $23,430,761. This increase can be attributed to
increases in sales tax revenue, and charges for services, and a reduction in capital expenditures.
At September 30, 2016, the City’s governmental funds reported combined ending fund balances
of $131,038,582. Approximately 15.1 percent of this amount, $19,762,633, 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
$19,762,633 or 54.9 percent of total General Fund expenditures.
At the end of the current fiscal year, the City of Southlake outstanding debt totals $174,041,115,
a net increase of $12,192,858 from the previous year.
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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.
6
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 financial 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 24 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, Tax Increment Financing District Fund, and Community Enhancement and
Development Corporation Capital Projects 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.
7
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 28-61 of this report.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Total assets of the City at September 30, 2016 were $731,581,276 while total liabilities were
$186,043,073, along with deferred outflows ($10,657,667) and inflows ($1,092,665) of resources
resulting in a net position balance of $555,103,205.
The largest portion of the City’s net position, $443,216,863, 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 $16,874,962. This increase is primarily
attributable to increases in both sales tax and charges for services, and a reduction in capital
expenditures.
Business-type Activities net position increased by $6,555,799. The majority of this change can
be attributed to an increase in transfers from governmental activities.
8
The following analysis highlights the net position as of September 30, 2016:
Governmental Business-Type 2016
Activities Activities Total
Current and other assets:146,337,188$ 35,786,217$ 182,123,405$
Capital assets 442,308,406 107,149,465 549,457,871
Total assets 588,645,594 142,935,682 731,581,276
Deferred outflows of resources 9,410,017 1,247,650 10,657,667
Other liabilities 10,082,724 1,919,234 12,001,958
Long-term debt
outstanding 130,229,051 43,812,064 174,041,115
Total liabilities 140,311,775 45,731,298 186,043,073
Deferred inflows of resources 1,000,682 91,983 1,092,665
Net position:
Net investment in
capital assets 364,161,725 79,055,138 443,216,863
Restricted-debt service 6,899,109 - 6,899,109
Restricted-other 4,690,241 - 4,690,241
Unrestricted 80,992,079 19,304,913 100,296,992
Total net position 456,743,154$ 98,360,051$ 555,103,205$
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 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-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$
9
The following analysis highlights the changes in net position for the year ended September 30,
2016:
Governmental Business-Type 2016
Activities Activities Total
Revenues:
Program revenues:
Charges for services 8,744,247$ 25,474,777$ 34,219,024$
Operating grants and
contributions 310,636 - 310,636
Capital grants and
contributions 2,228,863 1,638,842 3,867,705
General revenues:
Taxes 66,504,007 - 66,504,007
Interest on
investments 379,342 94,837 474,179
Gain on sale of
capital assets 102,960 317,276 420,236
Miscellaneous 136,477 4,095 140,572
Total revenues 78,406,532 27,529,827 105,936,359
Expenses:
General government 12,851,787 - 12,851,787
Public safety 19,300,590 - 19,300,590
Public works 11,950,671 - 11,950,671
Culture and recreation 10,655,763 - 10,655,763
Interest on long-term debt 3,005,359 - 3,005,359
Water and sewer - 24,741,428 24,741,428
Total expenses 57,764,170 24,741,428 82,505,598
Increase in net position
before transfers 20,642,362 2,788,399 23,430,761
Transfers (3,767,400)3,767,400 -
Increase in net position 16,874,962 6,555,799 23,430,761
Net position-beginning
of year 439,868,192 91,804,252 531,672,444
Net position-End of Year 456,743,154$ 98,360,051$ 555,103,205$
10
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 previous 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$
11
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 $131,038,582. Approximately 15.1 percent or $19,762,633 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 ($9,005,985), recycling ($46,657), police expenditures ($5,027,416),
parks ($15,530,430), capital projects ($72,654,652), reinvestment zone expenditures
($3,851,783), municipal court expenditures ($838,458), oil and gas expenditures ($53,227),
storm water expenditures ($451,873), strategic initiative expenditures ($3,704,477) and other
($110,991).
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 $19,762,633. 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 54.9 percent of total
General Fund expenditures, while total fund balance represents 65.7 percent of total General
Fund expenditures. The fund balance of the General fund decreased $2,480,380 during the
current fiscal year. The key factor in the decrease is attributable to the increase in transfers out
to other funds.
The General Obligation Debt Service Fund has a fund balance of $7,247,321, all of which is
restricted for the payment of debt service. The fund balance decreased during the year by
$2,084,320, primarily due to the increased debt service payments. The fund balance in the
General Capital Projects Funds ended the year at $38,217,078, an increase of $2,497,942, due to
the transfers from other funds and the decrease in construction expenditures. The Southlake
Parks Development Corporation Capital Projects fund balance increased $1,476,881, primarily
due to transfers in from other funds. The Community Enhancement and Development
Corporation Capital Projects fund balance increased $25,973,047, primarily the result of the
issuance of sales tax revenue bonds.
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: $19,304,913 in the Water and
Sewer Fund and $4,774,784 in the Vehicle Replacement Fund. Total net position in the Water
and Sewer Fund increased by $6,555,799 while the Vehicle Replacement Fund net position
increased by $484,671. The increase in transfers from other funds is the primary reason for the
respective changes in net position.
12
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 $1,282,355 or 3.1% 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, 2016 amount to $549,457,871 (net of accumulated depreciation).
This investment in capital assets includes land, buildings, improvements, machinery and
equipment, infrastructure and construction in progress.
The City has elected to use the modified approach for its street system in lieu of the depreciation
method. An up-to-date inventory of these infrastructure assets was performed and the annual
costs to maintain and preserve these assets was established and disclosed through administrative
policy. The current condition level of the street system meets the target condition level
established by the City. There were no significant changes in the condition levels of
infrastructure assets, and the differences between the estimated amounts necessary to maintain
and preserve the street system at target condition levels and the actual amount of expense
incurred for that purpose for 2016 was not material. Major capital projects completed during the
current year included the following:
• The Marq Southlake
• Love Henry Court drainage
• Rucker Road at South Carroll intersection improvements
• State Street from Federal to Division
• Pavement Management System – various overlays and rehab
• Various Sidewalks
Governmental Business-Type 2016
Activities Activities Total
Land and improvements 109,984,621$ 18,859,842$ 128,844,463$
Buildings and improvements 80,171,073 319,869 80,490,942
Improvements - 84,231,380 84,231,380
Infrastructure 238,401,530 - 238,401,530
Machinery and equipment 7,952,253 966,489 8,918,742
Construction in Progress 5,798,929 2,771,885 8,570,814
Total 442,308,406$ 107,149,465$ 549,457,871$
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$
13
Additional information on the City’s capital assets can be found in Note 4 on pages 46-47 of this
report.
Long-term Debt- At the end of the current fiscal year, the City of Southlake had $118,575,187
total long-term debt outstanding of bonds issued to finance capital improvements for roadway,
parks and recreation, public building and infrastructure. $42,502,434 of Utility System bonds,
which financed projects to increase capacity of the Utility system, was also outstanding. An
additional $1,248,404 was reported for compensated absences at year-end.
Governmental Business-Type 2016
Activities Activities Total
Bonds payable 118,575,187$ 42,502,434$ 161,077,621$
Unearned revenue - 235,651 235,651
Net pension liability 10,503,321 976,118 11,479,439
Compensated absences 1,150,543 97,861 1,248,404
Total 130,229,051$ 43,812,064$ 174,041,115$
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$
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 0.92% in 2016, 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.
14
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 48-52 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
and sales taxes and fees to fund their government activities.
While property taxes are important to the City, they represent 44.6% of total governmental
revenue. Sales tax continues to grow as the second largest governmental resource representing
37.6% of total governmental revenue. The City monitors all of its resources and determines the
need for program adjustment or fee increases accordingly.
15
The FY 2017 Adopted Budget maintains the City’s property tax rate at $0.462 per $100 net
taxable valuation, which is unchanged from the FY 2016 rate. The City’s property tax roll on net
taxable value increased $583,578,128 or 10.0 percent from the 2015 certified roll to the 2016
certified roll, the largest portion of the increase is attributable to new construction value of
$415,426,992. As an element of the City’s tax relief initiative the homestead exemption was
increased from 12% to 16%. The estimate of the FY 2017 tax roll is based on the certified roll as
provided by the Tarrant Appraisal District (TAD) in July. The assumed collection rate is 100
percent.
Requests for Information
This financial report is designed to provide a general overview of the City of Southlake’s
finances for all those with an interest in the government’s finances. Questions concerning any of
the information provided in this report or requests for additional financial information should be
addressed to the Office of the Chief Financial Officer, 1400 Main Street, 4th Floor Finance
Department, Southlake, Texas 76092.
BASIC FINANCIAL STATEMENTS
GOVERNMENT-WIDE
FINANCIAL STATEMENTS
CITY OF SOUTHLAKE, TEXAS EXHIBIT 1
STATEMENT OF NET POSITION
SEPTEMBER 30, 2016
The Notes to Financial Statements are
an integral part of this statement.
16
GOVERNMENTAL BUSINESS-TYPE
ACTIVITIES ACTIVITIES TOTAL
ASSETS
Cash and cash equivalents 104,728,254$ 6,117,814$ 110,846,068$
Investments 27,470,418 565,891 28,036,309
Receivables (net of allowance for uncollectibles)6,429,766 4,444,385 10,874,151
Prepaid items 5,055 - 5,055
Inventories 26,222 - 26,222
Restricted assets
Cash and cash equivalents 5,489,733 16,244,658 21,734,391
Investments 1,756,325 8,413,469 10,169,794
Receivables 42,326 - 42,326
OPEB asset 389,089 - 389,089
Capital assets:
Non-depreciable 296,281,706 21,631,727 317,913,433
Depreciable (net of depreciation)146,026,700 85,517,738 231,544,438
TOTAL ASSETS 588,645,594 142,935,682 731,581,276
Deferred charge for refunding 3,231,020 670,782 3,901,802
Deferred outflows - TMRS pension 6,178,997 576,868 6,755,865
TOTAL DEFERRED OUTFLOWS OF RESOURCES 9,410,017 1,247,650 10,657,667
Accounts payable 7,464,605 1,153,218 8,617,823
Accrued liabilities 1,446,919 251,455 1,698,374
Accrued interest payable - 189,664 189,664
Unearned revenue 781,981 - 781,981
Liabilities payable from restricted assets
Accrued interest 389,219 - 389,219
Customer meter deposits - 324,897 324,897
Non-current liabilities:
Due within one year 13,386,184 5,569,675 18,955,859
Due in more than one year 116,842,867 38,242,389 155,085,256
TOTAL LIABILITIES 140,311,775 45,731,298 186,043,073
Deferred inflows - TMRS pension 1,000,682 91,983 1,092,665
TOTAL DEFERRED INFLOWS OF RESOURCES 1,000,682 91,983 1,092,665
NET POSITION
Net investment in capital assets 364,161,725 79,055,138 443,216,863
Restricted for debt service 6,899,109 - 6,899,109
Restricted for municipal court 838,458 - 838,458
Restricted for reinvestment zone 3,851,783 - 3,851,783
Unrestricted 80,992,079 19,304,913 100,296,992
TOTAL NET POSITION 456,743,154$ 98,360,051$ 555,103,205$
PRIMARY GOVERNMENT
LIABILITIES
DEFERRED OUTFLOWS OF RESOURCES
DEFERRED INFLOWS OF RESOURCES
CITY OF SOUTHLAKE, TEXAS EXHIBIT 2
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2016
The Notes to Financial Statements are
an integral part of this statement.
17
Charges for Operating Grants Capital Grants Governmental Business - Type
Expenses Services and Contributions and Contributions Activities Activities TOTAL
Functions/Program Activities
PRIMARY GOVERNMENT:
Governmental Activities:
General government 12,851,787$ 2,363,499$ 82,326$ -$ (10,405,962)$ -$ (10,405,962)$
Public safety 19,300,590 4,620,030 33,458 - (14,647,102) - (14,647,102)
Public works 11,950,671 223,533 - 2,228,863 (9,498,275) - (9,498,275)
Culture and recreation 10,655,763 1,537,185 194,852 - (8,923,726) - (8,923,726)
Interest on long-term debt 3,005,359 - - - (3,005,359) - (3,005,359)
Total governmental activities 57,764,170 8,744,247 310,636 2,228,863 (46,480,424) - (46,480,424)
Business-type Activities:
Water and sewer 24,741,428 25,474,777 - 1,638,842 - 2,372,191 2,372,191
Total business-type activities 24,741,428 25,474,777 - 1,638,842 - 2,372,191 2,372,191
TOTAL PRIMARY GOVERNMENT 82,505,598$ 34,219,024$ 310,636$ 3,867,705$ (46,480,424)$ 2,372,191$ (44,108,233)$
General revenues and transfers:
Taxes:
Property taxes, levied for general purposes 34,501,608$ -$ 34,501,608$
Sales taxes 29,047,285 - 29,047,285
Franchise taxes 2,955,114 - 2,955,114
Interest on investments 379,342 94,837 474,179
Gain on sale of capital assets 102,960 317,276 420,236
Miscellaneous 136,477 4,095 140,572
Transfers (3,767,400) 3,767,400 -
Total general revenues and transfers 63,355,386 4,183,608 67,538,994
CHANGE IN NET POSITION 16,874,962 6,555,799 23,430,761
NET POSITION, beginning of year 439,868,192 91,804,252 531,672,444
NET POSITION, end of year 456,743,154$ 98,360,051$ 555,103,205$
Changes in Net Position
Net (Expense) Revenue and
Primary Government
Program Revenues
FUND FINANCIAL STATEMENTS
GOVERNMENTAL FUNDS
FINANCIAL STATEMENTS
CITY OF SOUTHLAKE, TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2016
The Notes to Financial Statements are
an integral part of this statement.
18
GENERAL
OBLIGATION GENERAL
DEBT CAPITAL
GENERAL SERVICE PROJECTS
ASSETS
Cash and cash equivalents 11,498,529$ 5,489,733$ 32,224,243$
Investments 13,000,602 1,756,325 6,487,076
Receivables, net of allowances for
uncollectibles:
Ad valorem taxes 148,445 41,006 -
Franchise taxes 455,979 - -
Sales taxes 2,566,366 - -
Interest 45,433 1,320 14,024
Other 176,376 - 3,000
Due from other funds 3,317 - -
Inventories 26,222 - -
Prepaid items 5,055 - -
TOTAL ASSETS 27,926,324$ 7,288,384$ 38,728,343$
LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND FUND BALANCES
LIABILITIES
Accounts payable 2,038,053$ 56$ 511,265$
Accrued liabilities 1,171,214 - -
Due to other funds - - -
Unearned revenue 658,598 - -
TOTAL LIABILITIES 3,867,865 56 511,265
DEFERRED INFLOWS OF RESOURCES
Unavailable resources 400,221 41,007 -
TOTAL DEFERRED INFLOWS OF RESOURCES 400,221 41,007 -
FUND BALANCES
Nonspendable for:
Inventories 26,222 - -
Prepaid expenditures 5,055 - -
Restricted for:
Debt service - 7,247,321 -
Municipal court expenditures - - -
Reinvestment zone expenditures - - -
Capital projects - - 38,217,078
Committed for:
Police expenditures 40,612 - -
Parks and recreation - - -
Oil and gas expenditures - - -
Storm water expenditures - - -
Library - - -
Assigned for:
Teen Court expenditures 19,479 - -
Senior Center expenditures 10,637 - -
Recycling 46,657 - -
Reforestation expenditures 42,466 - -
Strategic initiatives 3,704,477 - -
Unassigned 19,762,633 - -
TOTAL FUND BALANCES 23,658,238 7,247,321 38,217,078
TOTAL LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES 27,926,324$ 7,288,384$ 38,728,343$
EXHIBIT 3
19
SOUTHLAKE COMMUNITY
PARKS ENHANCEMENT
DEVELOPMENT TAX DEVELOPMENT
CORPORATION INCREMENT CORPORATION NON-MAJOR TOTAL
CAPITAL FINANCING CAPITAL GOVERNMENTAL GOVERNMENTAL
PROJECTS DISTRICT PROJECTS FUNDS FUNDS
1,941,489$ 8,169,131$ 26,028,920$ 21,020,842$ 106,372,887$
1,502,245 306,563 - 5,346,201 28,399,012
- - - - 189,451
- - - - 455,979
- - - 2,564,954 5,131,320
5,740 11 - 11,364 77,892
- - - 336,106 515,482
- - - - 3,317
- - - - 26,222
- - - - 5,055
3,449,474$ 8,475,705$ 26,028,920$ 29,279,467$ 141,176,617$
24,588$ 4,623,922$ 55,873$ 210,833$ 7,464,590$
- - - 275,705 1,446,919
- - - 3,317 3,317
- - - 123,383 781,981
24,588 4,623,922 55,873 613,238 9,696,807
- - - - 441,228
- - - - 441,228
- - - - 26,222
- - - - 5,055
- - - 1,758,664 9,005,985
- - - 838,458 838,458
- 3,851,783 - - 3,851,783
3,424,886 - 25,973,047 5,039,641 72,654,652
- - - 4,986,804 5,027,416
- - - 15,530,430 15,530,430
- - - 53,227 53,227
- - - 451,873 451,873
- - - 7,132 7,132
- - - - 19,479
- - - - 10,637
- - - - 46,657
- - - - 42,466
- - - - 3,704,477
- - - - 19,762,633
3,424,886 3,851,783 25,973,047 28,666,229 131,038,582
3,449,474$ 8,475,705$ 26,028,920$ 29,279,467$ 141,176,617$
CITY OF SOUTHLAKE, TEXAS EXHIBIT 4
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET POSITION
AS OF SEPTEMBER 30, 2016
The Notes to Financial Statements are
an integral part of this statement.
20
Total fund balances - governmental funds 131,038,582$
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 $1,705,444 in assets allocated to governmental activities from the internal
service fund).440,602,962
Interest payable on long-term debt does not require current financial resources;
therefore, interest payable is not reported as a liability in the governmental
funds balance sheet.(389,219)
Internal service funds are used by management to charge the cost of certain
activities, such as fleet management, to individual funds. This
amount represents the assets less the liabilities of the internal service
fund allocated to governmental activities.6,480,228
OPEB asset has not been included in the governmental fund financial statements, as
these assets do not represent current financial resources.389,089
Revenues earned but not available within sixty days of the year end are not
recognized as revenue on the fund financial statements.441,228
For debt refundings, the difference between the acquisition price and net carrying
amount of the debt has been deferred and amortized in the government-wide
financial statements.3,231,020
Net deferred outflows of resources related to the City's net pension liability results in
an increase in net position in the government-wide financial statements.5,178,315
Long-term liabilities, including bonds payable, are not due and payable in the
current period and therefore are not reported in the fund financial statements.(130,229,051)
Net position of governmental activities 456,743,154$
CITY OF SOUTHLAKE, TEXAS
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
The Notes to Financial Statements are
an integral part of this statement.
21
GENERAL
OBLIGATION GENERAL
DEBT CAPITAL
GENERAL SERVICE PROJECTS
REVENUES
Ad valorem taxes, penalties and interest 20,920,809$ 5,880,218$ -$
Franchise taxes 2,955,114 - -
Municipal sales and mixed beverage taxes 13,480,025 - -
Licenses, permits and fees 2,855,311 - -
Charges for services 1,797,676 - -
Fines and forfeitures 1,394,122 - -
Grants 128,489 - -
Capital recovery fees - - 1,237,552
Interest earned 141,303 39,865 95,521
Contributions - - 20,346
Miscellaneous 361,340 - -
TOTAL REVENUES 44,034,189 5,920,083 1,353,419
EXPENDITURES
Current
General government
City secretary/mayor 451,240 - -
City manager's office 884,859 - -
Human resources 648,285 - -
Support services 3,018,522 - -
Economic development 214,653 - -
Finance 1,222,762 - -
Municipal court 650,488 - -
Teen court 110,944 - -
Information technology 2,037,498 - -
Public safety
Police services 5,930,872 - -
Fire services 7,761,424 - -
Public safety support 1,244,840 - -
Building inspection 1,059,896 - -
Public works
Public works administration 2,293,902 - -
Streets and drainage 1,747,893 - 218,299
Planning 943,461 - -
Cultural and recreation
Community services 1,294,144 - -
Parks and recreation 3,842,370 - -
Library services 660,404 - -
Intergovernmental - - -
Capital outlay - - 6,587,178
Debt service:
Principal retirement - 11,479,604 -
Interest and fiscal charges - 2,490,002 - TOTAL EXPENDITURES 36,018,457 13,969,606 6,805,477
Excess (deficiency) of revenues
over (under) expenditures 8,015,732 (8,049,523)(5,452,058)
OTHER FINANCING SOURCES (USES)
Issuance of long-term debt - - -
Premium on issuance of long-term debt - - -
Transfers from other funds 2,243,888 5,965,203 7,950,000
Transfers to other funds (12,740,000) - -
TOTAL OTHER FINANCING SOURCES (USES)(10,496,112)5,965,203 7,950,000
NET CHANGE IN FUND BALANCES (2,480,380)(2,084,320)2,497,942 FUND BALANCES, BEGINNING OF YEAR 26,138,618 9,331,641 35,719,136
FUND BALANCES, END OF YEAR 23,658,238$ 7,247,321$ 38,217,078$
EXHIBIT 5
22
SOUTHLAKE COMMUNITY
PARKS ENHANCEMENT
DEVELOPMENT TAX DEVELOPMENT
CORPORATION INCREMENT CORPORATION NON-MAJOR TOTAL
CAPITAL FINANCING CAPITAL GOVERNMENTAL GOVERNMENTAL
PROJECTS DISTRICT PROJECTS FUNDS FUNDS
-$ 7,644,875$ -$ -$ 34,445,902$
- - - - 2,955,114
- - - 15,567,260 29,047,285
- - - 1,735,166 4,590,477
- - - - 1,797,676
- - - 617,015 2,011,137
- - - - 128,489
- - - - 1,237,552
17,486 1,397 - 88,160 383,732
- - - 51,065 71,411
- - - 166,753 528,093
17,486 7,646,272 - 18,225,419 77,196,868
- - - - 451,240
- - - - 884,859
- - - - 648,285
- - - - 3,018,522
- - - - 214,653
- - - - 1,222,762
- - - - 650,488
- - - - 110,944
- - - 62,499 2,099,997
- - - 1,379,278 7,310,150
- - - - 7,761,424
- - - - 1,244,840
- - - - 1,059,896
- - - - 2,293,902
- - 279,576 - 2,245,768
- - - - 943,461
- - - - 1,294,144
- - - 2,647,029 6,489,399
- - - 12,579 672,983
- 4,623,919 - - 4,623,919
1,540,605 - - 530,284 8,658,067
- - - 1,915,000 13,394,604
- - 365,530 941,208 3,796,740
1,540,605 4,623,919 645,106 7,487,877 71,091,047
(1,523,119)3,022,353 (645,106)10,737,542 6,105,821
- - 24,450,000 - 24,450,000
- - 2,168,153 - 2,168,153
3,000,000 - - 4,425,514 23,584,605
- (3,180,765) - (12,431,240) (28,352,005)
3,000,000 (3,180,765)26,618,153 (8,005,726)21,850,753
1,476,881 (158,412)25,973,047 2,731,816 27,956,574 1,948,005 4,010,195 - 25,934,413 103,082,008
3,424,886$ 3,851,783$ 25,973,047$ 28,666,229$ 131,038,582$
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, 2016
The Notes to Financial Statements are
an integral part of this statement.
23
Net change in fund balances - total governmental funds 27,956,574$
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 $418,901 allocated from internal service fund).7,398,513
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 $598,580 allocated from internal service fund).(6,949,958)
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 Bond proceeds (24,450,000)
o Bond premiums (2,168,153)
o Repayments 13,394,604
o Amortization of premiums 900,953
o Amortization of deferred loss
on refunding (372,311)
(12,694,907)
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 ($3,002,923) and contributions
made after the measurement date $2,301,054.(701,869)
Current year changes in the long-term liability for compensated absences do not require
the use of current financial resources; and therefore, are not reported as expenditures
in governmental funds.(47,504)
Changes in the other post employment benefit assets and liabilities are not reported
at the fund level; however they are reported at the government-wide level.24,365
Current year changes in accrued interest payable do not require the use of current
financial resources; and therefore, are not reported as expenditures
in governmental funds.262,860
Internal service funds are used by management to charge the costs of certain
activities, such as fleet management, to individual funds. The net income
of the internal service fund is allocated entirely to governmental activities.484,671
Governmental funds do not recognize assets contributed by developers. However,
in the statement of activities the fair market value of those assets are
recognized as revenue, then allocated over their estimated useful lives and
reported as depreciation expense.1,045,965
Loss on disposal of capital assets results in a decrease in net position, but the
net effect is not reported in governmental funds. (31,321)
Certain revenues in the government-wide statement of activities that do not
provide current financial resources are not reported as revenue in the
governmental funds.127,573
Change in net position of governmental activities 16,874,962$
PROPRIETARY FUNDS
FINANCIAL STATEMENTS
CITY OF SOUTHLAKE, TEXAS EXHIBIT 7
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
SEPTEMBER 30, 2016
The Notes to Financial Statements are
an integral part of this statement.
24
BUSINESS-TYPE GOVERNMENTAL
ACTIVITIES ACTIVITIES
WATER AND SEWER VEHICLE REPLACEMENT
ENTERPRISE INTERNAL SERVICE
FUND FUND
ASSETS
CURRENT ASSETS
Cash and cash equivalents 6,117,814$ 3,845,100$
Investments 565,891 827,731
Receivables, net of allowance for uncollectibles:
Trade accounts 2,585,782 -
Unbilled trade accounts 1,850,698 -
Interest 7,905 101,968
Restricted assets
Cash restricted for capital 16,244,658 -
Investments restricted for customer meter deposits 324,897 -
Investments restricted for capital 8,088,572 -
Total current assets 35,786,217 4,774,799
NON-CURRENT ASSETS
Capital assets
Land and improvements 18,859,842 -
Buildings and improvements 935,501 -
Distribution system 134,983,585 -
Equipment 2,605,362 -
Vehicles 542,123 5,017,635
Capacity rights 9,190,988 -
Construction in progress 2,771,885 -
Total capital assets 169,889,286 5,017,635
Less: accumulated depreciation (62,739,821) (3,312,191)
Capital assets, net of accumulated depreciation 107,149,465 1,705,444
Total non-current assets 107,149,465 1,705,444
TOTAL ASSETS 142,935,682$ 6,480,243$
DEFERRED OUTFLOW OF RESOURCES
Deferred charge for refunding 670,782$ -$
Deferred inflows - TMRS pension 576,868 -
Total deferred outflows of resources 1,247,650 -
LIABILITIES AND NET POSITION
CURRENT LIABILITIES
Accounts payable 1,153,218 15
Accrued liabilities 251,455 -
Accrued interest 189,664 -
Current portion of general obligation debt 5,081,814 -
Current portion of contract obligation debt 385,000 -
Current portion of compensated absences 97,861 -
Current portion of unearned revenue 5,000 -
Payable from restricted assets:
Customer meter deposits 324,897 -
Total current liabilities 7,488,909 15
NON-CURRENT LIABILITIES
Unearned revenue 230,651 -
General obligation debt 37,035,620 -
Net pension liability 976,118 -
Total non-current liabilities 38,242,389 -
TOTAL LIABILITIES 45,731,298 15
DEFERRED INFLOW OF RESOURCES
Deferred inflows - TMRS pension 91,983 -
Total deferred inflows of resources 91,983 -
NET POSITION
Net investment in capital assets 79,055,138 1,705,444
Unrestricted 19,304,913 4,774,784
TOTAL NET POSITION 98,360,051$ 6,480,228$
CITY OF SOUTHLAKE, TEXAS EXHIBIT 8
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
The Notes to Financial Statements are
an integral part of this statement.
25
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 25,362,725$ -$
Service charges 112,052 -
Miscellaneous 4,095 -
Total operating revenues 25,478,872 -
OPERATING EXPENSES:
Personnel services 2,686,732 -
Contractual services 1,385,236 -
Lease payments 3,342 33,580
Supplies 153,274 -
Utilities 9,118,776 -
Administrative 91,360 -
Maintenance 4,713,993 -
Professional benefits 39,297 -
Depreciation and amortization 5,057,432 598,580
Total operating expenses 23,249,442 632,160
OPERATING INCOME (LOSS)2,229,430 (632,160)
NON-OPERATING REVENUES (EXPENSES)
Gain on sale of capital assets 317,276 102,960
Interest income 94,837 13,871
Interest expense (1,491,986)-
Total non-operating revenues (expenses)(1,079,873)116,831
INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS 1,149,557 (515,329)
CAPITAL CONTRIBUTIONS AND TRANSFERS
Capital contributions - property owners 542,688 -
Contributions - impact fees 1,096,154 -
Transfers from other funds 5,000,000 1,000,000
Transfers to other funds (1,232,600)-
Total capital contributions and transfers 5,406,242 1,000,000
CHANGE IN NET POSITION 6,555,799 484,671
NET POSITION, BEGINNING OF YEAR 91,804,252 5,995,557
NET POSITION, END OF YEAR 98,360,051$ 6,480,228$
CITY OF SOUTHLAKE, TEXAS EXHIBIT 9
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
The Notes to Financial Statements are
an integral part of this statement.
26
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 25,946,782$ -$
Cash payments to suppliers (17,446,827) (33,565)
Cash payments to employees (2,605,622) -
Net cash provided by (used in) operating activities 5,894,333 (33,565)
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Capital expenses (4,085,614) (418,901)
Principal payments on bonds (5,335,434) -
Interest paid (1,514,466) -
Proceeds from sale of capital assets 2,084,317 102,960
Contributions - impact fees 1,096,154 -
Net cash used in capital and related financing activities (7,755,043) (315,941)
CASH FLOWS FROM NON-CAPITAL
FINANCING ACTIVITIES
Transfers from other funds 5,000,000 1,000,000
Transfers to other funds (1,232,600) -
Net cash provided by (used in) non-capital
financing activities 3,767,400 1,000,000
CASH FLOWS FROM INVESTING ACTIVITIES
Net sales of investments 1,012,457 1,505,186
Interest received 103,777 14,736
Net cash provided by investing activities 1,116,234 1,519,922
NET CHANGE IN CASH AND CASH EQUIVALENTS 3,022,924 2,170,416
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 19,339,548 1,674,684
CASH AND CASH EQUIVALENTS, END OF YEAR 22,362,472$ 3,845,100$
RECONCILIATION TO STATEMENT OF NET POSITION
Cash and cash equivalents 6,117,814$ 3,845,100$
Cash restricted for capital 16,244,658 -
Total cash and cash equivalents 22,362,472$ 3,845,100$
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES
Operating income (loss)2,229,430$ (632,160)$
Adjustments to reconcile operating income (loss)
to net cash provided by (used in) operating activities:
Pension expense 456,399 -
Depreciation and amortization 5,057,432 598,580
Decrease (increase) in assets and deferred outflows of resources
Receivables 490,837 -
Deferred outflows of resources - pensions (370,722) -
Increase (decrease) in liabilities and deferred outflows of resources
Payables and accruals (1,930,633) 15
Customer deposits (18,993) -
Deferred inflows of resources - pensions (19,417) -
Net cash provided by (used in) operating activities 5,894,333$ (33,565)$
NON-CASH CAPITAL AND RELATED FINANCING:
Contributions of capital assets from developers 542,688$ -$
FIDUCIARY FUND
FINANCIAL STATEMENTS
CITY OF SOUTHLAKE, TEXAS EXHIBIT 10
CASH ESCROW AGENCY FUND
STATEMENT OF FIDUCIARY NET POSITION
SEPTEMBER 30, 2016
The Notes to Financial Statements are
an integral part of this statement.
27
Agency Fund
Cash
Escrow
ASSETS
Cash and cash equivalents 57,428$
Investments 10,725
Accrued interest receivable 1
TOTAL ASSETS 68,154$
LIABILITIES
Due to builders 68,154$
TOTAL LIABILITIES 68,154$
NOTES TO BASIC FINANCIAL STATEMENTS
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
28
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.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
29
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.
Southlake Community Enhancement and Development Corporation (CEDC) – The CEDC
was formed under the Development Corporation Act of 1979, as amended, Title 12, Subtitle
C1 of the Texas Local Government Code. The CEDC is organized to promote economic
development within the City, including developing, implementing, providing and financing
projects including a community entertainment and recreation center for 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 CEDC 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.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
30
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Basis of Presentation – Continued
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.
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.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
31
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Basis of Presentation – Continued
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.
Community Enhancement and Development Corporation Capital Projects Fund-
The Community Enhancement and Development Corporation (CEDC) Capital Projects Fund is
utilized to fund the acquisition and construction of a community entertainment and recreation
center as approved by the CEDC board of directors. The fund has been financed through the
issuance of sales tax revenue bonds.
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.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
32
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Basis of Presentation – Continued
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.
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.
Community Enhancement and Development Corporation –
The Community Enhance and Development Corporation (“CEDC”) Fund was established to
account for the general operations of the non-profit corporation established to finance, develop
and operate a community entertainment and recreation center. The CEDC is funded primarily
through the receipt of municipal sales taxes.
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.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
33
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Basis of Presentation – Continued
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.
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.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
34
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
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.
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, 2016, 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.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
35
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Cash, Cash Equivalents and Investments – Continued
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 2016 levy was
based on was $6,137,789,731. Taxes are due on October 1 and are delinquent after the
following January 31.
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, 2016 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. Interfund services provided and used are not eliminated in the process of
consolidation.
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.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
36
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
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.
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.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
37
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
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.
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).
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
38
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
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.
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.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
39
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Fund Equity – Continued
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.
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, 2016 up
through March 14, 2017, the date the financial statements were available to be issued. During
this period, there were no subsequent events requiring disclosure.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
40
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, 2016 the carrying amount of the City's deposits was $14,034,526 and the bank
balance was $14,490,590. As of September 30, 2016, none of the City’s deposits were
uncollateralized.
Legal and contractual provisions governing deposits and investments:
The Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions in
the areas of investment practices, management reports and establishment of appropriate policies.
Among other things, it requires the City to adopt, implement, and publicize an investment policy. That
policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio
diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6)
maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted
maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and
capabilities, (9) and bid solicitation preferences for certificates of deposit.
Statutes and the City’s investment policy authorized the City to invest in the following investments as
summarized in the table below:
Maximum Maximum
Authorized Maximum Percentage Investment
Investment Type Maturity of Portfolio In One Issuer
U.S. Government Securities 5 years 100%None
Commercial Paper 270 days 20%None
Eligible Investment Pools 365 days 100%None
The Act also requires the City to have independent auditors perform test procedures related to
investment practices as provided by the Act. The City is in substantial compliance with the
requirements of the Act and with local policies.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
41
NOTE 2. CASH AND INVESTMENTS – CONTINUED
Cash and investments as of September 30, 2016 are classified in the accompanying financial
statements as follows:
Primary Government:
Cash and cash equivalents 110,846,068$
Investments 28,036,309
Restricted cash and cash equivalents 21,734,391
Restricted investments 10,169,794
Total primary government 170,786,562
Fiduciary Funds:
Cash 57,428
Investments 10,725
Total fiduciary funds 68,153
Total cash and investments 170,854,715$
Cash and investments as of September 30, 2016 consist of the following:
Cash on hand 4,925$
Deposits with financial institutions 14,034,526
Investments 156,815,264
Total cash and investments 170,854,715$
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, 2016 the City did not invest in any securities which are highly sensitive to
interest rate fluctuations.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
42
NOTE 2. CASH AND INVESTMENTS – CONTINUED
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
Amount Rating End
Government agency securities 30,021,527$ N/A Not rated
Mutual funds 31,722,308 N/A AAAm
TexStar 32,270,845 N/A AAAm
TexPool 39,937,394 N/A AAAm
Lonestar Investment Pool 10,043,565 N/A AAAm
Certificates of Deposit 8,195,302 N/A AAAm
Texas Class 4,624,323 N/A AAAm
Total 156,815,264$
Investment Type
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, 2016, the City investments other than external investment pools that
represent 5% or more of the City’s investments include mutual funds and U.S. Government Agency
securities as described in the table below.
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, 2016, none of the City’s cash deposits were uncollateralized.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
43
NOTE 2. CASH AND INVESTMENTS – CONTINUED
Custodial Credit Risk – Continued
The City categorizes its fair value measurements within the fair value hierarchy established by
generally accepted accounting principles. GASB Statement No. 72, Fair Value Measurement and
Application, provides a framework for measuring fair value which establishes a three-level fair value
hierarchy that describes the inputs that are used to measure assets and liabilities.
• Level 1 inputs are quoted prices (unadjusted) for identical assets or liabilities in active
markets that a government can access at the measurement date.
• Level 2 inputs are inputs —other than quoted prices included within Level 1—that are
observable for an asset or liability, either directly or indirectly.
• Level 3 inputs are unobservable inputs for an asset or liability.
The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3
inputs. If a price for an identical asset or liability is not observable, a government should measure fair
value using another valuation technique that maximizes the use of relevant observable inputs and
minimizes the use of unobservable inputs. If the fair value of an asset or a liability is measured using
inputs from more than one level of the fair value hierarchy, the measurement is considered to be
based on the lowest priority level input that is significant to the entire measurement.
The City has recurring fair value measurements as presented in the table below. The City’s
investment balances and weighted average maturity of such investments are as follows:
Value at 9/30/16 Level 1 Inputs Level 2 Inputs
Level 3
Inputs
Percent of
Total
Investments
Investments not subject to Fair Value
Investment Pools
TexPool 39,937,394$ -$ -$ -$ 25%44
TexStar 32,270,845 - - - 21%43
Lone Star 10,043,565 - - - 7%31
Texas CLASS 4,624,323 3%56
Comerica Bank-Certificates of Deposit 8,195,302 5%337
Investments by Fair Value Level
Federal Farm Credit Bank 9,017,232 - 9,017,232 - 6%521
Federal Home Loan Bank 5,000,045 - 5,000,045 - 3%941
Federal Home Loan Mortgage Corp.12,996,462 - 12,996,462 - 8%634
Federal National Mortgage Association 3,007,788 - 3,007,788 - 2%122
Mutual Funds - Short-Term Investments Trust 31,722,308 31,722,308 - - 20%44
Total 156,815,264$ 31,722,308$ 30,021,527$ -$ 100%
Fair Value Measurements
Weighted
Average
Maturity
(Days)
U.S. Government Agency Securities classified in Level 2 of the fair value hierarchy are valued using a
matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship
to benchmark quoted prices.
Mutual funds reported as level 1 are valued at the net asset value (NAV) of shares held by the City at
year end. The NAV is a quoted price in an active market.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
44
NOTE 2. CASH AND INVESTMENTS – CONTINUED
Investment in State Investment Pools
The City is a voluntary participant in four investment pools: TexStar, TexPool, Texas Class and Lone
Star.
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.
Texas CLASS is organized under the Sixth Amended and Restated Trust Agreement in accordance
with all the requirements contained in section 2256.016 of the Act. Texas CLASS is administered by
Public Trust Advisors, LLC and all funds are held by the custodial agent, Wells Fargo N.A. Texas
CLASS may invest in obligations of the U.S. or its agencies and instrumentalities; repurchase
agreements; SEC-registered money market funds rated in the highest rating category by at least one
NRSRO; and commercial paper rated A-1, P-1 or equivalent by two nationally recognized rating
agencies.
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.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
45
NOTE 3. RECEIVABLES
Receivables at September 30, 2016, 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 452,724$ 125,061$ -$ -$ -$
Sales taxes 2,566,366 - - - -
Franchise taxes 455,979 - - - -
Accounts - - 3,000 - -
Interest 45,433 1,320 14,024 5,740 11
Other 176,376 - - - -
Gross
receivables 3,696,878 126,381 17,024 5,740 11
Less: allowance 304,279 84,055 - - -
Net total
receivables 3,392,599$ 42,326$ 17,024$ 5,740$ 11$
Non-
Major Water
Govern-and Internal
mental Sewer Service Agency Total
Receivables:
Property taxes -$ -$ -$ -$ 577,785$
Sales taxes 2,564,954 - - - 5,131,320
Franchise taxes - - - - 455,979
Accounts - 4,858,133 - - 4,861,133
Interest 11,364 7,905 101,968 1 187,766
Other 336,106 - - - 512,482
Gross
receivables 2,912,424 4,866,038 101,968 1 11,726,465
Less: allowance - 421,653 - - 809,987
Net total
receivables 2,912,424$ 4,444,385$ 101,968$ 1$ 10,916,478$
The Water and Sewer Fund accounts receivable include unbilled charges for services rendered
through September 30, 2016 of $1,850,698 .
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
46
NOTE 4. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2016, was as follows:
Beginning Capital Sales or Adjustments/Ending
Balance Acquisitions Disposals Transfers Balance
Governmental Activities:
Capital assets not being depreciated:
Land 88,925,825$ 418,770$ -$ -$ 89,344,595$
Street infrastructure 200,408,868 308,990 - 420,324 201,138,182
Construction-in-progress 15,492,114 7,006,989 - (16,700,174) 5,798,929
Total capital assets not
being depreciated 304,826,807 7,734,749 - (16,279,850) 296,281,706
Capital assets being depreciated:
Land improvements 7,978,986 19,895 7,998,881
Buildings and building improvements 82,268,940 89,998 13,763,425 96,122,363
Public art 1,027,852 128,350 1,156,202
Office equipment 2,430,173 561,033 2,991,206
Communications equipment 3,869,251 58,184 3,927,435
Field equipment 1,719,129 195,870 14,003 1,929,002
Heavy equipment 2,111,244 2,111,244
Computer equipment 1,566,705 16,656 (17,290) 1,566,071
Computer software 3,443,802 3,443,802
Vehicles 11,317,265 449,717 (447,785) 17,290 11,336,487
Drainage 42,911,508 318,205 265,862 43,495,575
Bridges, road signs, and fiber
optic lines 5,449,598 - - 156,843 5,606,441
Park improvements 23,811,145 - - 1,243,099 25,054,244
Pathways 10,819,742 - - 127,340 10,947,082
Total capital assets being depreciated 200,725,340 1,128,630 (447,785) 16,279,850 217,686,035
Accumulated depreciation:
Land improvements (1,395,283) (343,998) - - (1,739,281)
Buildings and building improvements (14,600,595) (2,018,714) - - (16,619,309)
Public art (384,328) (103,855) - - (488,183)
Office equipment (836,150) (156,927) - - (993,077)
Communications equipment (3,127,480) (108,974) - - (3,236,454)
Field equipment (1,125,289) (215,161) - - (1,340,450)
Heavy equipment (1,463,942) (145,620) - - (1,609,562)
Computer equipment (1,241,484) (88,133) - - (1,329,617)
Computer software (3,374,038) (33,170) - - (3,407,208)
Vehicles (6,748,510) (1,104,580) 416,464 - (7,436,626)
Drainage (15,542,844) (1,023,830) - - (16,566,674)
Bridges, road signs, and fiber
optic lines (1,060,850) (85,233) - - (1,146,083)
Park improvements (9,060,468) (1,613,350) - - (10,673,818)
Pathways (4,566,000) (506,993) - - (5,072,993)
Total accumulated depreciation (64,527,261) (7,548,538) 416,464 - (71,659,335)
Total capital assets being depreciated, net 136,198,079 (6,419,908) (31,321) 16,279,850 146,026,700
Governmental activities capital assets, net 441,024,886$ 1,314,841$ (31,321)$ -$ 442,308,406$
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
47
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 18,642,568$ 217,274$ -$ -$ 18,859,842$
Construction-In-Progress 2,119,317 692,152 - (39,584)2,771,885
Total capital assets not
being depreciated 20,761,885 909,426 - (39,584) 21,631,727
Capital assets being depreciated:
Buildings and building improvements 935,501 - - - 935,501
Equipment 2,583,458 21,904 - - 2,605,362
Vehicles 572,041 - (29,918) - 542,123
Capacity rights 9,190,988 - - - 9,190,988
Distribution system 137,181,469 3,696,972 (5,934,440) 39,584 134,983,585
Total capital assets being depreciated 150,463,457 3,718,876 (5,964,358) 39,584 148,257,559
Accumulated depreciation:
Buildings and building improvements (585,314) (30,318)- - (615,632)
Equipment (1,546,334) (239,831)- - (1,786,165)
Vehicles (392,733) (32,016)29,918.00 - (394,831)
Capacity rights (3,704,038) (183,820)- - (3,887,858)
Distribution system (55,585,641) (4,340,764)3,871,070 - (56,055,335)
Total accumulated depreciation (61,814,060) (4,826,749) 3,900,988 - (62,739,821)
Total capital assets being depreciated, net 88,649,397 (1,107,873) (2,063,370) 39,584 85,517,738
Business type activities capital assets, net 109,411,282$ (198,447)$ (2,063,370)$ -$ 107,149,465$
Depreciation expense was charged as a direct expense to functions of the primary government as
follows:
Governmental activities:
General government 1,378,875$
Public safety 1,432,360
Public works 2,555,533
Culture and recreation 2,181,770
Total depreciation expense-
governmental activities 7,548,538$
Business-type activities:
Water and Sewer 4,826,749$
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
48
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 148,445$ 41,007$ -$ 189,452$
Other 251,776 - - 251,776
Total deferred inflows of resources 400,221$ 41,007$ -$ 441,228$
Unearned revenue:
Franchise taxes 652,725$ -$ -$ 652,725$
Other 5,873 - 123,383 129,256
Total unearned revenue 658,598$ -$ 123,383$ 781,981$
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 August 2016, the CEDC issued $24,450,000 of Series 2016, Southlake Community Enhancement
and Development Corporation Sales Tax Revenue Bonds. The debt was issued to fund a community
entertainment and recreation center, including the maintenance and operation costs of such project.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
49
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, 2016:
Final Interest Business-
General Obligation Bonds and Certificates of Obligation Maturity Rates Governmental Type
$6,540,000 Series 2007, Combination Tax and Waterworks
and Sewer System Revenue Certificates of Obligation 2018 4.0 - 5.0%1,425,000$ -$
$14,015,000 Series 2008, Combination Tax and Waterworks
and Sewer System Revenue Certificates of Obligation 2028 3.5 - 4.625%4,794,730 5,118,985
$24,835,000 Series 2009, Combination Tax and Waterworks
and Sewer System Revenue Certificates of Obligation 2029 2.0 - 5.0%8,090,000 4,780,000
$26,730,000 Series 2010, General Obligation
Refunding Bonds 2023 3.0 - 4.0%4,575,884 1,848,749
$4,480,000 Series 2011A, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation 2018 2.0 - 5.0%1,405,000 -
$3,365,000 Series 2011B, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation 2031 2.0 - 4.125%- 2,725,000
$15,745,000 Series 2010, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation 2030 3.0 - 4.25%3,405,000 4,135,000
$11,300,000 Series 2012, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation 2032 3.0 - 4.25%580,000 2,335,000
$9,965,000 Series 2012, General Obligation
Refunding Bonds 2026 3.0 - 4.25%7,620,000 225,000
$14,250,000 Series 2013, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation 2033 2.0 - 5.0%3,770,000 2,225,000
$22,295,000 Series 2013, General Obligation
Refunding Bonds 2026 2.0 - 5.0%19,285,000 1,115,000
$21,330,000 Series 2014, General Obligation
Refunding Bonds 2026 2.0 - 5.0%4,625,000 8,705,000
$8,780,000 Series 2014, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation 2034 2.0 - 3.5%2,720,000 4,080,000
$3,295,000 Series 2015, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation 2035 2.75 - 4.0%- 3,195,000
62,295,614$ 40,487,734$
Final Interest Business-
Governmental Revenue Bonds Maturity Rates Governmental Type
$15,745,000 Series 2010, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation 2030 3.00 - 4.25%2,535,000$ -$
$3,285,000 Series 2011C, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation 2031 2.00 - 4.125%2,665,000 -
$11,300,000 Series 2012, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation 2032 3.0 - 4.25%4,950,000 -
$16,000,000 Series 2014, Southlake Parks Development
Corporation, Sales Tax Revenue Refunding Bonds 2027 3%13,730,000 -
$24,450,000 Series 2016, Southlake Community Enhancement 2036 3.00 - 5.00%24,450,000 -
and Development Corporation, Sales Tax Revenue Bonds
48,330,000$ -$
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
50
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, 2016 consist of the
following:
Final Business-
Contract Revenue Obligations Maturity Governmental Type
Series 2001, TRA - Denton Creek Wastewater Pressure
Interceptor - Refunding 2017 -$ 385,000$
The following is a summary of long-term transactions for the year ended September 30, 2016:
Amount
Beginning Ending Due within
Balance Additions Reductions Balance One year
Governmental activities:
General obligation bonds and
certificates of obligation 74,030,218$ -$ (11,734,604)$ 62,295,614$ 11,543,185$
Sales tax revenue bonds 25,540,000 24,450,000 (1,660,000) 48,330,000 1,715,000
Bond premiums (discounts)6,682,373 2,168,153 (900,953) 7,949,573 -
Total bonds payable 106,252,591 26,618,153 (14,295,557) 118,575,187 13,258,185
Net pension liability 5,653,988 4,849,333 - 10,503,321 -
Compensated absences 1,103,039 1,150,543 (1,103,039) 1,150,543 127,999
Total governmental activities 113,009,618$ 32,618,029$ (15,398,596)$ 130,229,051$ 13,386,184$
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 45,458,130$ -$ (4,970,396)$ 40,487,734$ 5,081,814$
Contract revenue obligations 750,000 - (365,000) 385,000 385,000
Bond premiums 1,788,194 - (158,494) 1,629,700 -
Total bonds payable 47,996,324 - (5,493,890) 42,502,434 5,466,814
Unearned revenue 239,585 - (3,934) 235,651 5,000
Net pension liability 519,719 456,399 - 976,118 -
Compensated absences 83,011 97,861 (83,011) 97,861 97,861
Total business-type activities 48,838,639$ 554,260$ (5,580,835)$ 43,812,064$ 5,569,675$
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
51
NOTE 6. LONG-TERM DEBT – CONTINUED
The annual aggregate maturities for each bond type are as follows:
General Obligation Bonds and Certificates of Obligation
Fiscal Year Ending
September 30,Principal Interest Total
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 4,541,140 1,154,699 5,695,839
2022-2026 22,762,939 3,050,154 25,813,093
2027-2031 4,410,501 300,179 4,710,680
Total 62,295,614$ 11,351,906$ 73,647,520$
Governmental Activities
Sales Tax Revenue Bonds
Fiscal Year Ending
September 30,Principal Interest Total
2017 1,715,000$ 1,600,893$ 3,315,893$
2018 2,630,000 1,553,694 4,183,694
2019 2,715,000 1,464,318 4,179,318
2020 2,815,000 1,366,705 4,181,705
2021 2,920,000 1,260,592 4,180,592
2022-2026 15,645,000 4,552,293 20,197,293
2027-2031 11,440,000 2,137,809 13,577,809
2032-2036 8,450,000 625,141 9,075,141
Total 48,330,000$ 14,561,445$ 62,891,445$
Governmental Activities
Revenue Bonds and Certificates of Obligation
Fiscal Year Ending
September 30,Principal Interest Total
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 2,473,860 841,800 3,315,660
2022-2026 10,971,699 2,993,605 13,965,304
2027-2031 8,613,210 1,022,846 9,636,056
2032-2036 2,175,000 111,932 2,286,932
Total 40,487,734$ 9,406,926$ 49,894,660$
Business-Type Activities
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
52
NOTE 6. LONG-TERM DEBT – CONTINUED
Contract Revenue Obligations
Fiscal Year Ending
September 30,Principal Interest Total
2017 385,000 9,625 394,625
Total 385,000$ 9,625$ 394,625$
Business-Type Activities
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 th e
refunded debt. Accordingly, a liability for the defeased debt issues is not included in the City’s
financial statements. As of September 30, 2016, 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 2016 were as follows:
Transfer In Transfer Out Amount Purpose
Non major governmental funds General Fund 40,000$ To fund operations of this new fund
Internal Service Fund General Fund 1,000,000 To replace aging vehicles
Non major governmental funds General Fund 300,000 To assist with funding of large projects
General capital project funds General Fund 6,400,000 To fund future infrastructure
Water and sewer enterprise fund General Fund 5,000,000 To assist with funding of large projects
General Fund Non major governmental funds 40,574 To fund indirect charges
General Fund Non major governmental funds 152,374
General Fund Non major governmental funds 200,059 To assist with funding of large projects
General Fund Non major governmental funds 56,972 To fund indirect charges
General capital project funds Non major governmental funds 1,470,000 To fund drainage projects
General obligation debt service Non major governmental funds 194,538 To pay the principal and interest on debt incurred
General obligation debt service Tax Increment Financing District fund 3,180,765 To fund the debt repayment for bonds issued for TIF District projects
General Fund Non major governmental funds 273,253 To fund indirect charges
Non major governmental funds 3,000,000 To assist with the funding of large park projects
Non major governmental funds Non major governmental funds 2,885,514 To pay the principal and interest on debt incurred
Non major governmental funds Non major governmental funds 1,200,000 To assist with the funding of future projects
General Fund Non major governmental funds 66,720 To fund indirect charges
General obligation debt service Non major governmental funds 2,589,900 To pay the debt service for bonds issued on behalf of the District
General capital project funds Non major governmental funds 80,000 To fund Chesapeake Park drainage project improvements
General Fund Non major governmental funds 221,336 To fund indirect charges
General Fund Water and sewer enterprise fund 999,470 To reclass bond proceeds
General Fund Water and sewer enterprise fund 233,130 To fund indirect charges
29,584,605$
Southlake Parks Development
Corporation capital project funds
To fund future projects and to establish funds for Visitor Information
Center in accordance with the 2030 Economic Development and
Tourism Master Plan
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
53
NOTE 7. TRANSFERS AND INTERFUND RECEIVABLES AND PAYABLES – CONTINUED
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, 2016:
Interfund Receivables:
General
Interfund Payables:Fund
Non-Major Governmental Funds 3,317$
NOTE 8. RETIREMENT PLAN
A. Plan Description
The City participates as one of 866 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.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
54
NOTE 8. RETIREMENT PLAN – CONTINUED
B. Benefits Provided – Continued
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.
At the December 31, 2015 valuation and measurement date, the following employees were
covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 98
Inactive employees entitled to but not yet receiving benefits 149
Active employees 320
567
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 12.17% and 11.62% in calendar years 2015
and 2016, respectively. The City’s contributions to TMRS for the year ended September 30, 2015
were $2,586,531, and were equal to the required contributions.
D. Net Pension Liability
The City’s Net Pension Liability (NPL) was measured as of December 31, 2015 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, 2015 actuarial valuation was determined
using the following actuarial assumptions:
Inflation 2.5% per year
Overall payroll growth 3.0% per year
Investment Rate of Return 6.75%, net of pension plan investment expense, including inflation
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
55
NOTE 8. RETIREMENT PLAN – CONTINUED
D. Net Pension Liability – Continued
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 Combined Healthy Mortality Tables with
Blue Collar Adjustment are used with males rates multiplied by 109% and female rates multiplied
by 103% with a 3-year set-forward for both males and females. In addition, a 3% minimum
mortality rate is applied to reflect the impairment for younger members who become disabled.
The rates are projected on a fully generational basis by scale BB to account for future mortality
improvements subject to the 3% floor.
Actuarial assumptions used in the December 31, 2015, valuation were based on the results of
actuarial experience studies. The experience study in TMRS was for the period December 31,
2010 through December 31, 2014. 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.
After the Asset Allocation Study analysis and experience investigation study, the Board amended
the long-term expected rate of return on pension plan investments from 7% to 6.75%. 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.
The long-term expected rate of return on pension plan investments 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 weighting the expected future real rates of return by the target asset allocation percentage and
by adding expected inflation. In determining their best estimate of a recommended investment
return assumption under the various alternative asset allocation portfolios, GRS focused on the
area between (1) arithmetic mean (aggressive) without an adjustment for time (conservative) and
(2) the geometric mean (conservative) with an adjustment for time (aggressive). At its meeting on
July 30, 2015, the TMRS Board approved a new portfolio target allocation.
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%4.55%
International Equity 17.5%6.10%
Core Fixed Income 10.0%1.00%
Non-Core Fixed Income 20.0%3.65%
Real Return 10.0%4.03%
Real Estate 10.0%5.00%
Absolute Return 10.0%4.00%
Private Equity 5.0%8.00%
Total 100.0%
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
56
NOTE 8. RETIREMENT PLAN – CONTINUED
E. Net Pension Liability – Continued
Discount Rate
The discount rate used to measure the Total Pension Liability was 6.75%. 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
Total Plan Net
Pension Fiduciary Pension
Liability Net Position Liability
(a)(b)(a) - (b)
Balance at 12/31/2014 72,068,298$ 65,894,591$ 6,173,707$
Changes for the year:
Service Cost 3,222,126 - 3,222,126
Interest 5,090,308 - 5,090,308
Change of benefit terms - - -
Difference between expected and
actual experience 102,364 - 102,364
Changes of assumptions 760,500 - 760,500
Contributions - employer - 2,425,455 (2,425,455)
Contributions - employee - 1,409,008 (1,409,008)
Net investment income - 97,252 (97,252)
Benefit payments, including refunds
of employee contributions (1,921,361) (1,921,361) -
Administrative expense - (59,224) 59,224
Other changes - (2,925) 2,925
Net Changes 7,253,937 1,948,205 5,305,732
Balance at 12/31/15 79,322,235$ 67,842,796$ 11,479,439$
Increase (Decrease)
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
57
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 6.75%, 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 (5.75%) or 1 percentage-point higher (7.75%)
than the current rate:
1% Decrease 1% Increase
in Discount Discount in Discount
Rate (5.75%)Rate (6.75%)Rate (7.75%)
Net pension liability 24,580,928$ 11,479,439$ 891,470$
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, 2016, the City recognized pension expense of $3,285,546. At
September 30, 2016, the City reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between expected and actual economic experience 84,085$ 1,092,665$
Changes in actuarial assumptions 624,696 -
Difference between projected and actual investment earnings 4,107,553 -
Contributions subsequent to the measurement date 1,939,531 -
Total 6,755,865$ 1,092,665$
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
58
NOTE 8. RETIREMENT PLAN – CONTINUED
E. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to Pensions – Continued
The $1,939,531 reported as deferred outflows of resources related to pensions result from
contributions subsequent to the measurement date and will reduce the net pension liability during
the fiscal year ended September 30, 2017. The other amounts reported as deferred outflows and
inflows of resources related to pensions will be recognized in pension expense as follows:
Fiscal
Year Ended
Sept. 30:
2017 932,592$
2018 932,592
2019 932,592
2020 851,176
2021 74,717
Thereafter -
Total 3,723,669$
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 2016,
the City contributed $40,000 to the Trust.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
59
NOTE 9. OTHER POSTEMPLOYMENT BENEFITS – CONTINUED
Annual OPEB Cost and Net OPEB Obligation
The City’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on
the annual required contribution of the employer (ARC), an amount actuarially determined in
accordance with the parameters of GASB Statement 45. The ARC represents a level of funding
that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any
unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years on an
open basis. The City’s annual OPEB cost and net OPEB obligation (asset) for the prior three
years is shown below:
2016 2015 2014
Annual required contribution 15,635$ 36,592$ 36,592$
Interest on prior year Net OPEB obligation (21,883) (16,579) (11,274)
Adjustment to annual required contribution 21,883 16,579 11,274
Annual OPEB cost 15,635 36,592 36,592
Contributions made 40,000 125,000 125,000
Increase (decrease) in net OPEB obligation (24,365) (88,408) (88,408)
Net Obligation (asset) - beginning of year (364,724) (276,316) (187,908)
Net Obligation (asset) - end of year (389,089)$ (364,724)$ (276,316)$
Percentage of OPEB costs contributed 256%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.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
60
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.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
61
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, 2016 were $3,578,641.
The City has authorized various contracts obligating future funds of the City as the contracted
services are performed. Significant amounts unexpended under such contracts at year end are
reflected as reserves for authorized contracts in the applicable funds.
The City has certain claims and litigation pending with respect to matters arising in the normal course
of operations. City management is of the opinion that the settlement of these matters will not have a
material adverse impact on the City’s financial statements.
NOTE 13. FUTURE REPORTING REQUIREMENTS
Statement No. 75, “Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions” – This statement changes the focus of accounting of postemployment benefits other than
pensions from whether they are responsibly funding the benefits over time to a point-in time liability
that is reflected on the employer’s financial statements for any actuarially unfunded portion of benefits
earned to date. This statement will become effective for the City in fiscal year 2018. Management is
evaluating the impact of the standard on the City’s financial statements and will take the necessary
steps to implement it.
Statement No. 77, “Tax Abatement Disclosures” – This statement requires governments that enter
into tax abatement agreements to provide certain disclosures regarding these commitments. This
statement will become effective for the City in fiscal year 2017. Management believes this statement
will not have a significant impact on the City’s financial statements.
REQUIRED SUPPLEMENTARY
INFORMATION
BUDGETARY COMPARISON
GENERAL FUND
CITY OF SOUTHLAKE, TEXAS EXHIBIT A-1
GENERAL FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2016
See Notes to Budgetary
Comparison Schedules
62
VARIANCE WITH
FINAL BUDGET -
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES
Ad valorem taxes, penalties and interest 20,283,440$ 20,283,440$ 20,920,809$ 637,369$
Franchise taxes 3,184,914 3,087,969 2,955,114 (132,855)
Municipal sales and mixed beverage tax 12,568,000 12,930,000 13,480,025 550,025
License, permits and fees 1,432,800 2,191,400 2,855,311 663,911
Charges for services 1,805,650 1,798,850 1,797,676 (1,174)
Fines and forfeitures 1,115,000 1,312,000 1,394,122 82,122
Grants - 30,000 128,489 98,489
Interest earned 81,980 112,980 141,303 28,323
Miscellaneous 311,000 318,500 361,340 42,840
TOTAL REVENUES 40,782,784 42,065,139 44,034,189 1,969,050
EXPENDITURES
Current:
General government
City secretary/mayor 481,386 477,528 451,240 26,288
City manager's office 863,668 902,811 884,859 17,952
Human resources 627,211 656,232 648,285 7,947
Support services 3,112,347 3,141,304 3,018,522 122,782
Economic development 230,656 231,775 214,653 17,122
Finance 1,252,430 1,252,430 1,222,762 29,668
Municipal court 694,448 694,444 650,488 43,956
Teen court 155,758 151,123 110,944 40,179
Information technology 2,161,120 2,176,317 2,037,498 138,819
Public safety
Police services 6,029,186 6,000,620 5,930,872 69,748
Fire services 7,785,820 7,792,347 7,761,424 30,923
Public safety support 1,301,711 1,322,556 1,244,840 77,716
Building inspection 1,086,902 1,097,902 1,059,896 38,006
Public works
Public works administration 2,555,618 2,396,915 2,293,902 103,013
Streets and drainage 1,806,889 1,765,203 1,747,893 17,310
Planning 985,820 973,295 943,461 29,834
Culture and recreation
Community services 1,276,132 1,301,768 1,294,144 7,624
Parks and recreation 4,022,720 4,007,861 3,842,370 165,491
Library services 644,159 657,551 660,404 (2,853)
TOTAL EXPENDITURES 37,073,981 36,999,982 36,018,457 981,525
Excess of revenues over expenditures 3,708,803 5,065,157 8,015,732 2,950,575
OTHER FINANCING SOURCES (USES)
Transfers from other funds 8,558,104 2,243,888 2,243,888 -
Transfers to other funds (14,290,000) (12,740,000) (12,740,000) -
TOTAL OTHER FINANCING SOURCES (USES)(5,731,896) (10,496,112) (10,496,112) -
NET CHANGE IN FUND BALANCE (2,023,093) (5,430,955) (2,480,380) 2,950,575
FUND BALANCES, BEGINNING OF YEAR 26,138,618 26,138,618 26,138,618 -
FUND BALANCES, END OF YEAR 24,115,525$ 20,707,663$ 23,658,238$ 2,950,575$
BUDGETED AMOUNTS
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, 2016
See Notes to Budgetary
Comparison Schedules
63
VARIANCE WITH
FINAL BUDGET -
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES
Ad valorem taxes, penalties and interest 7,600,823$ 7,554,767$ 7,644,875$ 90,108$
Interest 1,000 1,000 1,397 397
Total revenues 7,601,823 7,555,767 7,646,272 90,505
EXPENDITURES:
Intergovernmental 4,156,435 4,623,919 4,623,919 -
Total expenditures 4,156,435 4,623,919 4,623,919 -
Excess of revenues
over expenditures 3,445,388 2,931,848 3,022,353 90,505
OTHER FINANCING USES
Transfers to other funds (3,180,765) (3,180,765) (3,180,765) -
Total other financing uses (3,180,765) (3,180,765) (3,180,765) -
Net change in fund balance 264,623 (248,917) (158,412) 90,505
Fund balance at
beginning of year 4,010,195 4,010,195 4,010,195 -
Fund balance at
end of year 4,274,818$ 3,761,278$ 3,851,783$ 90,505$
BUDGETED AMOUNTS
CITY OF SOUTHLAKE, TEXAS
NOTES TO BUDGETARY COMPARISON SCHEDULES
YEAR ENDED SEPTEMBER 30, 2016
64
Budgetary Data
The City Council adheres to the following procedures in establishing the budgets reflected in the
financial statements:
1. Each year the City Manager is required to submit to the City Council, between sixty and
ninety days prior to the beginning of each fiscal year, a proposed budget for the fiscal year
beginning on the following October 1. The operating budget includes proposed expenditures
and the means of financing them.
2. Public hearings are conducted to obtain taxpayers' comments.
3. Prior to October 1, the budget is legally enacted by the City Council through passage of an
ordinance.
4. Annual budgets are legally adopted for the General Fund, the Tax Increment Financing
District, Crime Control, Parks Dedication, Hotel Occupancy, Storm Water Utility, Red Light
Camera, Southlake Community Enhancement and Development Corporation and Southlake
Parks Development Corporation Special Revenue Funds and all Debt Service Funds on a
basis consistent with accounting principles generally accepted in the United States of
America. Formal budgetary integration is not employed for proprietary funds. However, the
City does adopt an annual budget for those funds for managerial control. Control over
expenditures for the capital projects funds are maintained through general obligation bond
indenture agreements, and authorized construction contracts. Accordingly, formal budgetary
integration is not employed for the capital projects funds.
5. During the fiscal year, the City Council may transfer funds allocated to a department to
another department or re-estimate revenues or expenditures. The City Manager may transfer
budgeted funds within a department. Expenditures should not exceed appropriations at the
department level.
6. Budgetary data for the Police, Parks and Recreation, Court Security, Court Technology,
Library, Storm W ater Maintenance, Oil and Gas and Commercial Vehicle Enforcement
Special Revenue Funds, and all Capital Projects Funds are not presented, as such funds are
budgeted over the life of the respective grant or project, and not on an annual basis.
Budgetary information for the Proprietary Funds have not been presented since reporting on
such budgets is not legally required.
7. Expenditures in excess of appropriations for the year ended September 30, 2016 were:
General Fund:
Library Services ($2,853)
CITY OF SOUTHLAKE, TEXAS EXHIBIT A-3
SCHEDULE OF CHANGES IN NET PENSION LIABILITY
AND RELATED RATIOS
TEXAS MUNICIPAL RETIREMENT SYSTEM
LAST TWO MEASUREMENT YEARS
65
Measurement
Year
Measurement
Year
2015 2014
Total pension liability:
Service cost 3,222,126$ 2,906,949$
Interest 5,090,308 4,779,462
Changes of benefit terms -
Difference between expected and actual
experience 102,364 (1,602,645)
Change in assumptions 760,500 -
Benefit payments, including refunds of
employee contributions (1,921,361) (1,680,030)
Net change in total pension liability 7,253,937 4,403,736
Total pension liability - beginning 72,068,298 67,664,562
Total pension liability - ending (a)79,322,235 72,068,298
Plan fiduciary net position:
Contributions - employer 2,425,455 2,283,310
Contributions - employee 1,409,008 1,340,870
Net investment income 97,252 3,463,018
Benefit payments, including refunds of
employee contributions (1,921,361) (1,680,030)
Administrative expense (59,224) (36,150)
Other (2,925) (2,972)
Net change in plan fiduciary net position 1,948,205 5,368,046
Plan fiduciary net position - beginning 65,894,591 60,526,545
Plan fiduciary net position - ending (b)67,842,796 65,894,591
Net pension liability - ending (a) - (b)11,479,439$ 6,173,707$
Plan fiduciary net position as a
percentage of total pension liability 85.53%91.43%
Covered employee payroll 20,113,150 19,154,225$
Net pension liability as a percentage
of covered employee payroll 57.07%32.23%
Note: Only two years of data is presented in accordance with GASB #68, paragraph 138. “The
information for all period for the 10-year schedules that are required to be presented as required
supplementary information may be available initially. In these cases, during the transition period, that
information should be presented for as many periods as are available. The schedules should not include
information that is not measured in accordance with the requirements of this statement. Additional years’
information will be displayed as it becomes available.”
CITY OF SOUTHLAKE, TEXAS EXHIBIT A-4
SCHEDULE OF CONTRIBUTIONS
TEXAS MUNICIPAL RETIREMENT SYSTEM
LAST TWO FISCAL YEARS
66
Fiscal Year Fiscal Year
2016 2015
Actuarially determined contribution 2,586,531$ 2,439,627$
Contribution in relation of the actuarially
determined contribution 2,586,531 2,439,627
Contribution deficiency (excess)-$ -$
Covered employee payroll 21,551,426$ 20,034,712$
Contributions as a percentage of covered
employee payroll 12.00%12.18%
Note: GASB #68, paragraph 81.2.b requires that the data in this schedule be presented as of the City’s
fiscal year as opposed to the time period covered by the measurement date.
Note: Only two years of data is presented in accordance with GASB #68, paragraph 138. “The
information for all period for the 10-year schedules that are required to be presented as required
supplementary information may be available initially. In these cases, during the transition period, that
information should be presented for as many periods as are available. The schedules should not include
information that is not measured in accordance with the requirements of this statement. Additional years’
information will be displayed as it becomes available.”
CITY OF SOUTHLAKE, TEXAS
NOTES TO TEXAS MUNICIPAL RETIREMENT SYSTEM
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED SEPTEMBER 30, 2016
67
Actuarial Cost Method Entry Age Normal
Amortization Method Level Percentage of Payroll, Closed
Remaining Amortization Period 25 years
Asset Valuation Method 10 Year smoothed market; 15% soft corridor
Inflation 2.50%
Salary Increases 3.50% to 10.5% including inflation
Investment Rate of Return 6.75%
Retirement Age Experience-based table of rates that are specific to
the City's plan of benefits. Last updated for the 2015
valuation pursuant to an experience study of the
period 2010 - 2014
Mortality 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.
CITY OF SOUTHLAKE, TEXAS EXHIBIT A-5
CONDITION RATING OF STREET SYSTEM
SEPTEMBER 30, 2016
68
CONDITION OF ROADWAY SYSTEM
Index 2016
RCI 6.0
SDI 8.8
PQI 8.2
COMPARISON OF NEEDED-TO-ACTUAL MAINTENANCE/PRESERVATION
Needed Actual Difference
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
2016 800,000 726,381 (73,619)
Total $4,450,000 $4,615,345 $ 165,345
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.
COMBINING AND INDIVIDUAL FUND
FINANCIAL STATEMENTS AND SCHEDULES
69
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.
CITY OF SOUTHLAKE, TEXAS EXHIBIT B-1
GENERAL OBLIGATION DEBT SERVICE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2016
70
VARIANCE WITH
FINAL BUDGET-
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES:
Ad valorem taxes 5,882,470$ 5,800,470$ 5,880,218$ 79,748$
Interest 20,000 45,000 39,865 (5,135)
Total revenues 5,902,470 5,845,470 5,920,083 74,613
EXPENDITURES:
Principal retirement - 11,479,601 11,479,604 (3)
Interest and fiscal charges - 2,424,180 2,490,002 (65,822)
Total expenditures - 13,903,781 13,969,606 (65,825)
Deficiency of revenues
under expenditures 5,902,470 (8,058,311) (8,049,523) 8,788
OTHER FINANCING SOURCES (USES):
Transfers from other funds 5,965,203 5,965,203 5,965,203 -
Net change in fund balance 11,867,673 (2,093,108) (2,084,320) 8,788
Fund balance, beginning of year 9,331,641 9,331,641 9,331,641 -
Fund balance, end of year 21,199,314$ 7,238,533$ 7,247,321$ 8,788$
BUDGETED AMOUNTS
71
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.
72
Community Enhancement and Development Corporation Special Revenue Fund - Established
to account for the general operations of the non-profit corporation established to finance, develop and
operate a community entertainment and recreation center.
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 acqu isition 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.
CITY OF SOUTHLAKE, TEXAS
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
SEPTEMBER 30, 2016
73
Southlake
Parks Parks Crime
and Parks Development Control
Police Recreation Dedication Corporation District
ASSETS
Cash and cash equivalents 19,944$ 119,243$ 587,329$ 6,310,366$ 4,038,074$
Investments 2,047 6,328 7,232 2,997,024 176,009
Accounts receivable 35 - - 25,638 -
Sales tax receivable - - - 1,258,510 289,247
Interest receivable - 2 8 7,667 45
TOTAL ASSETS 22,026$ 125,573$ 594,569$ 10,599,205$ 4,503,375$
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts payable 7,984$ -$ 2$ -$ 4,486$
Accrued liabilities - - 174,000 6,559 23,876
Due to other funds - - - - -
Unearned revenue - - - 12,819 -
TOTAL LIABILITIES 7,984 - 174,002 19,378 28,362
FUND BALANCES
Restricted for:
Municipal court expenditures - - - - -
Debt service - - - - -
Capital projects - - - - -
Committed for:
Police expenditures 14,042 - - - 4,475,013
Parks and recreation - 125,573 420,567 10,579,827 -
Storm water expenditures - - - - -
Oil and gas drilling - - - - -
Library - - - - -
TOTAL FUND BALANCES 14,042 125,573 420,567 10,579,827 4,475,013
TOTAL LIABILITIES AND FUND BALANCES 22,026$ 125,573$ 594,569$ 10,599,205$ 4,503,375$
SPECIAL REVENUE
EXHIBIT C-1
CONTINUED
74
Community
Storm Enhancement
Hotel Water Court Court Red Light Storm Water Development
Occupancy Utility Security Technology Library Camera Maintenance Corporation
505,054$ 1,061,371$ 368,270$ 351,725$ 5,968$ 436,814$ 404,580$ 2,629,655$
675,053 83,653 71,201 47,742 884 92,665 47,288 999,089
2,261 227,109 - - 280 60,181 6 20,596
84,968 - - - - - - 932,229
1,028 5 6 5 - - - 2,562
1,268,364$ 1,372,138$ 439,477$ 399,472$ 7,132$ 589,660$ 451,874$ 4,584,131$
6,389$ 10,933$ 1$ 1$ -$ 124,277$ 1$ 21,361$
7,960 277 489 - - 1,105 - 50,004
- - - - - - - -
2,261 - - - - - - 108,303
16,610 11,210 490 1 - 125,382 1 179,668
- - 438,987 399,471 - - - -
- - - - - - - -
1,251,754 1,360,928 - - - - - -
- - - - - 464,278 - -
- - - - - - - 4,404,463
- - - - - - 451,873 -
- - - - - - - -
- - - - 7,132 - - -
1,251,754 1,360,928 438,987 399,471 7,132 464,278 451,873 4,404,463
1,268,364$ 1,372,138$ 439,477$ 399,472$ 7,132$ 589,660$ 451,874$ 4,584,131$
SPECIAL REVENUE
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-1
NON-MAJOR GOVERNMENTAL FUNDS CONCLUDED
COMBINING BALANCE SHEET
SEPTEMBER 30, 2016
75
DEBT
SERVICE
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 44,876$ 44,898$ 1,743,449$ -$ 2,349,226$ 21,020,842$
Investments 8,350 22 15,215 4,366 112,033 5,346,201
Accounts receivable - - - - - 336,106
Sales tax receivable - - - - - 2,564,954
Interest receivable 1 1 - - 34 11,364
TOTAL ASSETS 53,227$ 44,921$ 1,758,664$ 4,366$ 2,461,293$ 29,279,467$
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts payable -$ 15$ -$ -$ 35,383$ 210,833$
Accrued liabilities - 11,435 - - - 275,705
Due to other funds - - - 3,317 - 3,317
Unearned revenue - - - - - 123,383
TOTAL LIABILITIES - 11,450 - 3,317 35,383 613,238
FUND BALANCES
Restricted for:
Municipal court expenditures - - - - - 838,458
Debt service - - 1,758,664 - - 1,758,664
Capital projects - - - 1,049 2,425,910 5,039,641
Committed for:
Police expenditures - 33,471 - - - 4,986,804
Parks and recreation - - - - - 15,530,430
Storm water expenditures - - - - - 451,873
Oil and gas drilling 53,227 - - - - 53,227
Library - - - - - 7,132
TOTAL FUND BALANCES 53,227 33,471 1,758,664 1,049 2,425,910 28,666,229
TOTAL LIABILITIES AND
FUND BALANCES 53,227$ 44,921$ 1,758,664$ 4,366$ 2,461,293$ 29,279,467$
SPECIAL REVENUE CAPITAL PROJECTS
CITY OF SOUTHLAKE, TEXAS
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED SEPTEMBER 30, 2016
76
Southlake
Parks Parks Crime
and Parks Development Control
Police Recreation Dedication Corporation District
REVENUES
Municipal sales tax -$ -$ -$ 7,318,490$ 1,803,605$
Licenses, permits and fees - - 131,825 - -
Fines and forfeitures - - - - -
Interest 23 137 693 32,255 25,480
Contributions - 49,815 - - -
Miscellaneous 2,057 - - 153,824 -
Total revenues 2,080 49,952 132,518 7,504,569 1,829,085
EXPENDITURES
Current:
Court technology - - - - -
Public safety
Police services 356 - - - 874,621
Cultural and recreation
Parks and recreation - 62,444 - 980,359 -
Library services - - - - -
Capital outlay - - - - -
Debt service:
Principal retirement - - - - -
Interest and fiscal charges - - - - -
Total expenditures 356 62,444 - 980,359 874,621
Excess (deficiency) of revenues over
expenditures 1,724 (12,492) 132,518 6,524,210 954,464
OTHER FINANCING SOURCES (USES)
Transfers from other funds - - - - -
Transfers to other funds - - (80,000) (6,158,767) (3,856,620)
Total other financing sources (uses)- - (80,000) (6,158,767) (3,856,620)
NET CHANGE IN FUND BALANCES 1,724 (12,492) 52,518 365,443 (2,902,156)
FUND BALANCES,
BEGINNING OF YEAR 12,318 138,065 368,049 10,214,384 7,377,169
FUND BALANCES, END OF YEAR 14,042$ 125,573$ 420,567$ 10,579,827$ 4,475,013$
SPECIAL REVENUE
EXHIBIT C-2
CONTINUED
77
Community
Storm Enhancement
Hotel Water Court Court Red Light Storm Water Development
Occupancy Utility Security Technology Library Camera Maintenance Corporation
1,024,061$ -$ -$ -$ -$ -$ -$ 5,421,104$
- 1,442,714 - - - - - 160,627
- - 35,149 46,802 - 474,845 - -
2,872 1,326 516 433 7 458 502 16,864
- - - - - - - 1,250
- - - - 10,872 - - -
1,026,933 1,444,040 35,665 47,235 10,879 475,303 502 5,599,845
- - - 62,499 - - - -
- - - 2,085 - 382,572 - -
630,180 - - - - - - 974,046
- - - - 12,579 - - -
- 316,183 58,348 - - - - -
- - - - - - - -
- - - - - - - -
630,180 316,183 58,348 64,584 12,579 382,572 - 974,046
396,753 1,127,857 (22,683) (17,349) (1,700) 92,731 502 4,625,799
- - - - - - - -
(393,007) (1,721,510) - - - - - (221,336)
(393,007) (1,721,510) - - - - - (221,336)
3,746 (593,653) (22,683) (17,349) (1,700) 92,731 502 4,404,463
1,248,008 1,954,581 461,670 416,820 8,832 371,547 451,371 -
1,251,754$ 1,360,928$ 438,987$ 399,471$ 7,132$ 464,278$ 451,873$ 4,404,463$
SPECIAL REVENUE
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, 2016
78
DEBT
SERVICE
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 -$ -$ -$ -$ -$ 15,567,260$
Licenses, permits and fees - - - - - 1,735,166
Fines and forfeitures - 60,219 - - - 617,015
Interest 59 81 3,803 1 2,650 88,160
Contributions - - - - - 51,065
Miscellaneous - - - - - 166,753
Total revenues 59 60,300 3,803 1 2,650 18,225,419
EXPENDITURES
Current:
Court technology - - - - - 62,499
Public safety
Police services - 119,644 - - - 1,379,278
Cultural and recreation
Parks and recreation - - - - - 2,647,029
Library services - - - - - 12,579
Capital outlay - - - 1,260 154,493 530,284
Debt service:
Principal retirement - - 1,915,000 - - 1,915,000
Interest and fiscal charges - - 941,208 - - 941,208
Total expenditures - 119,644 2,856,208 1,260 154,493 7,487,877
Excess (deficiency) of revenues over
expenditures 59 (59,344) (2,852,405) (1,259) (151,843) 10,737,542
OTHER FINANCING SOURCES (USES)
Transfers from other funds - 40,000 2,885,514 - 1,500,000 4,425,514
Transfers to other funds - - - - - (12,431,240)
Total other financing sources (uses)- 40,000 2,885,514 - 1,500,000 (8,005,726)
NET CHANGE IN FUND BALANCES 59 (19,344) 33,109 (1,259) 1,348,157 2,731,816
FUND BALANCES,
BEGINNING OF YEAR 53,168 52,815 1,725,555 2,308 1,077,753 25,934,413
FUND BALANCES, END OF YEAR 53,227$ 33,471$ 1,758,664$ 1,049$ 2,425,910$ 28,666,229$
SPECIAL REVENUE CAPITAL PROJECTS
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-3
PARKS DEDICATION SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2016
79
VARIANCE WITH
FINAL BUDGET -
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES:
Park fees 30,000$ 100,000$ 131,825$ 31,825$
Interest 250 250 693 443
Total revenues 30,250 100,250 132,518 32,268
EXPENDITURES:
Parks and recreation 80,000 - - -
Total expenditures 80,000 - - -
Excess of revenues
over expenditures (49,750) 100,250 132,518 32,268
OTHER FINANCING USES:
Transfers to other funds - (80,000) (80,000) -
Total other financing uses - (80,000) (80,000) -
Net change in fund balance (49,750) 20,250 52,518 32,268
Fund balance, beginning of year 368,049 368,049 368,049 -
Fund balance, end of year 318,299$ 388,299$ 420,567$ 32,268$
BUDGETED AMOUNTS
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, 2016
80
VARIANCE WITH
FINAL BUDGET -
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES:
Municipal sales tax 6,670,000$ 7,100,000$ 7,318,490$ 218,490$
Miscellaneous 153,816 153,816 153,824 8
Interest 7,500 7,500 32,255 24,755
Total revenues 6,831,316 7,261,316 7,504,569 243,253
EXPENDITURES:
Parks and recreation 1,134,546 1,130,013 980,359 149,654
Excess of revenues
over expenditures 5,696,770 6,131,303 6,524,210 392,907
OTHER FINANCING USES:
Transfers to other funds (6,158,767) (6,158,767) (6,158,767) -
Net change in fund balance (461,997) (27,464) 365,443 392,907
Fund balance, beginning of year 10,214,384 10,214,384 10,214,384 -
Fund balance, end of year 9,752,387$ 10,186,920$ 10,579,827$ 392,907$
BUDGETED AMOUNTS
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-5
CRIME CONTROL DISTRICT SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAB BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2016
81
VARIANCE WITH
FINAL BUDGET -
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES:
Municipal sales tax 1,667,500$ 1,800,000$ 1,803,605$ 3,605$
Interest 500 500 25,480 24,980
Total revenues 1,668,000 1,800,500 1,829,085 28,585
EXPENDITURES:
Police services 917,060 914,819 874,621 40,198
Excess of revenues
over expenditures 750,940 885,681 954,464 68,783
OTHER FINANCING SOURCES USES:
Transfers to other funds (3,856,620) (3,856,620) (3,856,620) -
Net change in fund balance (3,105,680) (2,970,939) (2,902,156) 68,783
Fund balance, beginning of year 7,377,169 7,377,169 7,377,169 -
Fund balance, end of year 4,271,489$ 4,406,230$ 4,475,013$ 68,783$
BUDGETED AMOUNTS
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-6
HOTEL OCCUPANCY SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2016
82
VARIANCE WITH
FINAL BUDGET -
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES:
Municipal sales tax 1,013,824$ 1,013,824$ 1,024,061$ 10,237$
Interest 500 2,000 2,872 872
Total revenues 1,014,324 1,015,824 1,026,933 11,109
EXPENDITURES:
Parks and recreation 677,821 677,821 630,180 47,641
Excess of revenues
over expenditures 336,503 338,003 396,753 58,750
OTHER FINANCING USES:
Transfers to other funds (392,723) (393,007) (393,007) -
Net change in fund balance (56,220) (55,004) 3,746 58,750
Fund balance, beginning of year 1,248,008 1,248,008 1,248,008 -
Fund balance, end of year 1,191,788$ 1,193,004$ 1,251,754$ 58,750$
BUDGETED AMOUNTS
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-7
STORM WATER UTILITY SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2016
83
VARIANCE WITH
FINAL BUDGET -
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES:
Interest 5,000$ 5,000$ 1,442,714$ 1,437,714$
Licenses, permits and fees 1,419,300 1,419,300 1,326 (1,417,974)
Total revenues 1,424,300 1,424,300 1,444,040 19,740
EXPENDITURES:
Capital outlay 574,025 407,575 316,183 91,392
Excess of revenues
over expenditures 850,275 1,016,725 1,127,857 111,132
OTHER FINANCING USES:
Transfers to other funds (1,721,510) (1,721,510) (1,721,510) -
Net change in fund balance (871,235) (704,785) (593,653) 111,132
Fund balance, beginning of year 1,954,581 1,954,581 1,954,581 -
Fund balance, end of year 1,083,346$ 1,249,796$ 1,360,928$ 111,132$
BUDGETED AMOUNTS
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-8
RED LIGHT CAMERA SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2016
84
VARIANCE WITH
FINAL BUDGET-
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES:
Fines and forfeitures 367,100$ 432,160$ 474,845$ 42,685$
Interest 200 200 458 258
Total revenues 367,300 432,360 475,303 42,943
EXPENDITURES:
Public safety 380,160 380,160 382,572 (2,412)
Excess of revenues (12,860) 52,200 92,731 40,531
over expenditures
Fund balance, beginning of year 371,547 371,547 371,547 -
Fund balance, end of year 358,687$ 423,747$ 464,278$ 40,531$
BUDGETED AMOUNTS
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-9
SOUTHLAKE COMMUNITY ENHANCEMENT DEVELOPMENT
CORPORATION SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2016
85
VARIANCE WITH
FINAL BUDGET -
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES:
Municipal sales tax 5,002,500$ 5,300,000$ 5,421,104$ 121,104$
Licenses, permits and fees 408,980 218,954 160,627 (58,327)
Interest 1,200 1,200 16,864 15,664
Contributions 13,000 12,750 1,250 (11,500)
Total revenues 5,425,680 5,532,904 5,599,845 66,941
EXPENDITURES:
Parks and recreation 1,148,402 1,024,575 974,046 50,529
Total expenditures 1,148,402 1,024,575 974,046 50,529
Excess of revenues
over expenditures 4,277,278 4,508,329 4,625,799 117,470
OTHER FINANCING USES:
Transfers to other funds (218,967) (221,336) (221,336) -
Net change in fund balance 4,058,311 4,286,993 4,404,463 117,470
Fund balance, beginning of year - - - -
Fund balance, end of year 4,058,311$ 4,286,993$ 4,404,463$ 117,470$
BUDGETED AMOUNTS
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-10
SOUTHLAKE PARKS DEVELOPMENT CORPORATION DEBT SERVICE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2016
86
VARIANCE WITH
FINAL BUDGET-
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
REVENUES:
Interest 6,000$ 6,000$ 3,803$ (2,197)$
EXPENDITURES:
Principal retirement 1,915,000 1,915,000 1,915,000 -
Interest and fiscal charges 973,014 973,014 941,208 31,806
Total expenditures 2,888,014 2,888,014 2,856,208 31,806
Deficiency of revenues
under expenditures (2,882,014) (2,882,014) (2,852,405) 29,609
OTHER FINANCING SOURCES:
Transfers from other funds 2,885,514 2,885,514 2,885,514 -
Net change in fund balance 3,500 3,500 33,109 29,609
Fund balance, beginning of year 1,725,555 1,725,555 1,725,555 -
Fund balance, end of year 1,729,055$ 1,729,055$ 1,758,664$ 29,609$
BUDGETED AMOUNTS
87
AGENCY FUNDS
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.
CITY OF SOUTHLAKE, TEXAS EXHIBIT F-1
CASH ESCROW AGENCY FUND
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2016
88
Balance at Balance at
Beginning End
of Year Additions Deletions of Year
ASSETS
Cash and cash equivalents 57,368$ 60$ -$ 57,428$
Investments 10,710 15 - 10,725
Accrued interest receivable - 1 - 1
TOTAL ASSETS 68,078$ 76$ -$ 68,154$
LIABILITIES
Due to builders 68,078$ 76$ -$ 68,154$
TOTAL LIABILITIES 68,078$ 76$ -$ 68,154$
CITY OF SOUTHLAKE, TEXAS EXHIBIT G-1
COMPARATIVE SCHEDULES OF CAPITAL ASSETS BY SOURCE
SEPTEMBER 30, 2016 AND 2015
89
2016 2015
General capital assets
Land and improvements 122,397,720$ 120,715,956$
Buildings and improvements 97,278,565 83,296,792
Equipment 27,305,247 26,457,569
Infrastructure 261,187,280 259,589,716
Construction in progress 5,798,929 15,492,114
Total capital assets 513,967,741$ 505,552,147$
Investment in general capital assets
Capital projects funds 375,949,594 368,942,615
General and other fund revenues 81,937,774 81,575,124
Gifts 56,080,373 55,034,408
Total investment in capital assets 513,967,741$ 505,552,147$
CITY OF SOUTHLAKE, TEXAS EXHIBIT G-2
SCHEDULE OF CHANGES IN CAPITAL ASSETS BY FUNCTION AND ACTIVITY
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016
90
Capital Capital
Assets Assets
October 1,September 30,
Function and Activity 2015 Additions Deductions 2016
General government 187,524,052$ 190,013$ -$ 187,714,065$
Public safety 62,401,015 382,611 (303,146) 62,480,480
Public works 255,627,080 24,990,929 (16,844,813) 263,773,196
Total capital assets 505,552,147$ 25,563,553$ (17,147,959)$ 513,967,741$
General Public Public
Government Safety Works Total
Land and improvements 2,418,799$ 4,303,925$ 115,674,996$ 122,397,720$
Buildings and improvements 25,908,682 48,666,203 22,703,680 97,278,565
Equipment 6,317,944 9,395,938 11,591,365 27,305,247
Infrastructure 153,068,640 114,414 108,004,226 261,187,280
Construction in Progress - - 5,798,929 5,798,929
Total 187,714,065$ 62,480,480$ 263,773,196$ 513,967,741$
STATISTICAL SECTION
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.
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.
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.
CITY OF SOUTHLAKE, TEXAS
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
91
2007 2008 2009 2010
Governmental activities
Net investment in capital assets 209,824,992$ 222,046,528$ 246,238,808$ 277,985,305$
Restricted 6,076,676 6,499,447 7,850,231 8,814,621
Unrestricted 59,208,874 75,986,531 69,949,380 58,438,700
Total governmental activities net position 275,110,542$ 304,532,506$ 324,038,419$ 345,238,626$
Business-type activities
Net investment in capital assets 50,177,976$ 47,834,458$ 60,541,445$ 65,039,374$
Restricted - - - -
Unrestricted 23,777,277 29,794,140 21,171,185 18,831,525
Total business-type activities net position 73,955,253$ 77,628,598$ 81,712,630$ 83,870,899$
Primary government
Net investment in capital assets 260,002,968$ 269,880,986$ 306,780,253$ 343,024,679$
Restricted 6,076,676 6,499,447 7,850,231 8,814,621
Unrestricted 82,986,151 105,780,671 91,120,565 77,270,225
Total primary governmental net position 349,065,795$ 382,161,104$ 405,751,049$ 429,109,525$
Source:Comprehensive Annual Financial Report
Fiscal Year
TABLE 1
92
2011 2012 2013 2014 2015 2016
298,418,769$ 291,690,099$ 324,928,883$ 338,303,633$ 366,796,228$ 364,161,725$
9,739,189 67,444,322 15,178,798 15,092,604 13,624,164 11,589,350
53,157,494 16,726,782 50,356,758 58,732,145 59,447,800 80,992,079$
361,315,452$ 375,861,203$ 390,464,439$ 412,128,382$ 439,868,192$ 456,743,154$
68,911,163$ 67,918,830$ 70,968,919$ 73,126,147$ 78,143,445$ 79,055,138$
- - - - - -
17,613,924 18,908,505 17,673,963 16,085,060 13,660,807 19,304,913
86,525,087$ 86,827,335$ 88,642,882$ 89,211,207$ 91,804,252$ 98,360,051$
367,329,932$ 359,608,929$ 395,897,802$ 411,429,780$ 444,939,673$ 443,216,863$
9,739,189 67,444,322 15,178,798 15,092,604 13,624,164 11,589,350
70,771,418 35,635,287 68,030,721 74,817,205 73,108,607 100,296,992
447,840,539$ 462,688,538$ 479,107,321$ 501,339,589$ 531,672,444$ 555,103,205$
Fiscal Year
CITY OF SOUTHLAKE, TEXAS
CHANGES IN NET POSITION, LAST TEN FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
93
2007 2008 2009 2010
Expenses
Governmental activities:
General government 9,833,572$ 4,406,913$ 11,068,965$ 11,814,836$
Public safety 11,729,107 12,770,012 12,920,263 14,885,499
Public works 4,813,692 8,669,156 5,840,432 5,767,688
Culture and recreation 5,510,247 5,911,730 6,439,100 7,287,434
Interest on long-term debt 5,804,295 5,506,967 5,854,931 6,515,269
Total governmental activities expenses 37,690,913 37,264,778 42,123,691 46,270,726
Business-type activities:
Water and sewer 14,729,469 17,689,865 18,066,346 18,948,438
Total business-type activities expenses 14,729,469 17,689,865 18,066,346 18,948,438
Total primary government expenses 52,420,382$ 54,954,643$ 60,190,037$ 65,219,164$
Program Revenues
Governmental activities:
Charges for Services:
General government 1,778,215$ 1,340,864$ 1,949,993$ 2,476,000$
Public safety 2,979,947 2,843,923 2,633,437 2,706,847
Public works 223,329 199,833 68,369 240,916
Culture and recreation 1,156,965 1,269,571 1,369,725 1,387,558
Operating grants and contributions 304,246 241,144 239,364 688,803
Capital grants and contributions 11,425,990 5,690,613 1,833,160 5,994,206
Total governmental activities program revenues 17,868,692 11,585,948 8,094,048 13,494,330
Business-type activities:
Charges for services:
Water and sewer 15,414,131 18,543,025 19,321,095 18,897,356
Capital grants and contributions 5,589,196 3,748,161 2,212,867 2,578,400
Total business-type activities program revenues 21,003,327 22,291,186 21,533,962 21,475,756
Total primary government program revenues 38,872,019$ 33,877,134$ 29,628,010$ 34,970,086$
Net (Expenses) Revenue
Governmental activities (19,822,221)$ (25,678,830)$ (34,029,643)$ (32,776,396)$
Business-type activities 6,273,858 4,601,321 3,467,616 2,527,318
Total primary government net expenses (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 24,509,730$ 28,950,945$ 30,911,161$ 32,298,360$
Sales taxes 16,931,180 18,781,043 17,256,272 17,610,781
Franchise taxes 2,435,803 2,654,701 2,816,111 2,606,248
Interest on investments 3,598,458 3,128,226 1,703,418 414,852
Gain (Loss) on sale of capital assets - - 167,127 21,465
Transfers 275,595 229,436 341,957 596,093
Miscellaneous 8,688 52,023 339,510 428,804
Total governmental activities 47,759,454 53,796,374 53,535,556 53,976,603
Business-type activities:
Interest on investments 1,183,987 594,891 953,739 155,173
Gain (Loss) on sale of capital assets (3,396) - - -
Transfers (275,595) (229,436) 2,187 (596,093)
Miscellaneous - 10,989 (339,510) 71,871
Total business-type activities 904,996 376,444 616,416 (369,049)
Total primary government 48,664,450$ 54,172,818$ 54,151,972$ 53,607,554$
Change in Net Position
Governmental activities 27,937,233$ 28,117,544$ 19,505,913$ 21,200,207$
Business-type activities 7,178,854 4,977,765 4,084,032 2,158,269
Total primary government 35,116,087$ 33,095,309$ 23,589,945$ 23,358,476$
Source:Comprehensive Annual Financial Report
Fiscal Year
TABLE 2
94
2011 2012 2013 2014 2015 2016
13,754,529$ 13,277,006$ 12,892,140$ 13,417,904$ 14,602,425$ 12,851,787$
15,144,173 15,891,911 18,425,878 18,245,617 18,176,698 19,300,590
6,279,687 6,399,819 8,528,331 8,870,998 9,762,184 11,950,671
7,897,173 8,158,291 8,829,394 8,948,841 9,311,006 10,655,763
5,638,272 5,865,798 6,747,628 5,097,036 2,528,113 3,005,359
48,713,834 49,592,825 55,423,371 54,580,396 54,380,426 57,764,170
20,724,651 22,530,688 22,119,518 25,030,426 26,692,373 24,741,428
20,724,651 22,530,688 22,119,518 25,030,426 26,692,373 24,741,428
69,438,485$ 72,123,513$ 77,542,889$ 79,610,822$ 81,072,799$ 82,505,598$
2,616,321$ 2,575,773$ 2,755,038$ 2,657,883$ 2,309,861$ 2,363,499$
2,818,913 3,744,708 3,650,079 3,907,068 4,427,137 4,620,030
71,129 179,094 291,926 360,529 265,432 223,533
1,384,823 1,400,794 1,422,552 1,379,658 1,399,822 1,537,185
532,100 200,434 639,230 443,157 455,575 310,636
2,309,613 518,617 2,244,965 4,436,346 8,967,466 2,228,863
9,732,899 8,619,420 11,003,790 13,184,641 17,825,293 11,283,746
22,571,056 22,451,738 22,806,432 23,591,438 24,792,619 25,474,777
1,433,278 1,214,395 1,981,354 3,510,936 5,776,438 1,638,842
24,004,334 23,666,133 24,787,786 27,102,374 30,569,057 27,113,619
33,737,233$ 32,285,553$ 35,791,576$ 40,287,015$ 48,394,350$ 38,397,365$
(38,980,935)$ (40,973,405)$ (44,419,581)$ (41,395,755)$ (36,555,133)$ (46,480,424)$
3,279,683 1,135,445 2,668,268 2,071,948 3,876,684 2,372,191
(35,701,252)$ (39,837,960)$ (41,751,313)$ (39,323,807)$ (32,678,449)$ (44,108,233)$
31,568,583$ 31,166,847$ 31,844,930$ 33,099,007$ 33,176,285$ 34,501,608$
18,969,870 20,076,478 22,659,917 26,623,661 30,090,614 29,047,285
2,783,279 2,598,074 2,646,394 2,841,025 3,327,739 2,955,114
258,556 232,722 30,110 482,607 523,954 379,342
26,741 91,134 89,923 99,109 102,900 102,960
791,830 890,220 915,475 915,116 968,160 (3,767,400)
658,902 463,681 836,068 639,571 1,066,818 136,477
55,057,761 55,519,156 59,022,817 64,700,096 69,256,470 63,355,386
123,872 46,212 25,227 101,469 112,967 94,837
- - - - 23,100 317,276
(791,830) (890,220) (915,475) (915,116) (968,160) 3,767,400
42,463 10,811 37,527 6,963 4,521 4,095
(625,495) (833,197) (852,721) (806,684) (827,572) 4,183,608
54,432,266$ 54,685,959$ 58,170,096$ 63,893,412$ 68,428,898$ 67,538,994$
16,076,826$ 14,545,751$ 14,603,236$ 23,304,341$ 32,701,337$ 16,874,962$
2,654,188 302,248 1,815,547 1,265,264 3,049,112 6,555,799
18,731,014$ 14,847,999$ 16,418,783$ 24,569,605$ 35,750,449$ 23,430,761$
Fiscal Year
CITY OF SOUTHLAKE, TEXAS TABLE 3
FUND BALANCES, GOVERNMENTAL FUNDS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
LAST TEN FISCAL YEARS
(UNAUDITED)
95
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
General Fund
Nonspendable -$ -$ -$ -$ 36,519$ 37,791$ 292,356$ 46,008$ 27,826$ 31,277$
Committed for:
Police expenditures - - - - 48,543 33,624 22,643 28,647 34,609 40,612
Assigned for:
Police expenditures - - - - 31,979 - - - -
Teen Court expenditures - - - - 17,954 18,314 18,606 18,832 19,077 19,479
Senior Center expenditures - - - - 10,391 10,397 10,629 10,623 10,624 10,637
Recycling - - - - 33,624 22,642 28,629 34,609 40,612 46,657
Reforestation expenditures - - - - 165,253 113,907 69,128 44,098 101,873 42,466
Strategic initiatives - - - - 4,303,823 6,517,692 5,988,904 7,980,605 7,673,680 3,704,477
Unassigned - - - - 12,400,379 13,205,240 14,351,627 16,399,991 18,230,317 19,762,633
Reserveda 260,969 259,629 221,617 164,205 - - - - - -
Unreserved 19,063,961 16,665,175 15,133,468 17,982,361 - - - - - -
Total general fund 19,324,930$ 16,924,804$ 15,355,085$ 18,146,566$ 17,048,465$ 19,959,607$ 20,782,522$ 24,563,413$ 26,138,618$ 23,658,238$
All Other Governmental Funds
Restricted for:
Debt Service -$ -$ -$ -$ 11,885,706$ 12,657,819$ 12,406,902$ 12,150,184$ 11,057,196$ 9,005,985$
Municipal court expenditures - - - - 738,259 770,071 823,737 860,556 878,490 838,458
Reinvestment zone expenditures - - - - 5,348,592 4,718,865 4,298,510 4,422,565 4,010,195 3,851,783
Capital projects - - - - 43,779,957 51,436,227 55,898,283 53,053,840 41,949,791 72,654,652
Committed for:
Police expenditures - - - - 7,409,770 5,969,294 4,951,542 5,532,996 7,813,849 4,986,804
Parks and recreation - - - - 6,411,344 6,381,618 7,692,049 8,020,248 10,720,498 11,125,967
Oil and gas expenditures - - - - 53,185 53,211 53,220 53,160 53,168 53,227
Storm water expenditures - - - - 300,963 451,127 451,164 450,824 451,371 4,856,336
Library expenditures - - - - 3,784 3,422 15,844 7,967 8,832 7,132
Reserved for:
Debt service 7,218,441 8,394,778 9,997,763 10,768,763 - - - - - -
Police expenditures 6,091,565 3,601,582 1,432,698 4,961,222 - - - - - -
Parks 8,868,823 9,190,609 9,793,631 8,136,946 - - - - - -
Capital projects 28,314,562 42,958,063 51,037,490 45,433,316 - - - - - -
Reinvestment zone expenditures 709,411 2,703,280 3,858,132 5,465,595 - - - - - -
Municipal court expenditures 618,001 683,978 746,735 767,464 - - - - - -
Storm water expenditures - - - 150,000 - - - - - -
Oil and gas expenditures - - - 44,240 - - - - - -
Library expenditures - - - - - - - - - -
Unreserved, reported in:-
Special revenue funds - (547) (106) (11) - - - - - -
Total all other governmental funds 51,820,803$ 67,531,743$ 76,866,343$ 75,727,535$ 75,931,560$ 82,441,654$ 86,591,251$ 84,552,340$ 76,943,390$ 107,380,344$
Source:Comprehensive Annual Financial Report
Notes:aIncludes encumbrances and prepaid items.
The City implemented GASB 54 in 2011
Fiscal Year
CITY OF SOUTHLAKE, TEXAS TABLE 4
CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
LAST TEN FISCAL YEARS
(UNAUDITED)
96
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
REVENUES
Ad valorem taxes, penalties and interest 24,543,401$ 28,908,357$ 30,879,621$ 32,295,959$ 31,564,305$ 31,137,199$ 31,844,934$ 33,174,810$ 33,294,062$ 34,445,902$
Franchise taxes 2,435,803 2,654,701 2,816,111 2,606,248 2,783,279 2,598,074 2,646,394 2,841,025 3,327,739 2,955,114
Municipal sales tax and mixed beverage tax 16,931,180 18,781,043 17,256,272 17,610,781 18,969,870 20,076,478 22,659,917 26,623,661 30,090,614 29,047,285
Licenses, permits and fees 2,148,110 1,717,969 2,547,528 2,854,076 2,620,703 3,431,600 3,517,378 3,925,956 4,385,000 4,590,477
Charges for services 1,434,220 1,616,249 1,498,823 1,535,363 1,660,154 1,805,022 1,876,302 1,778,003 1,849,747 1,797,676
Fines and forfeitures 1,037,697 876,881 1,654,034 2,116,405 2,347,729 2,307,407 2,473,444 2,374,221 1,943,406 2,011,137
Grants 33,167 24,731 43,962 409,498 207,533 117,810 205,846 214,152 90,428 128,489
Capital recovery fees 974,815 317,948 267,036 295,987 645,022 435,406 794,976 474,172 866,782 1,237,552
Contributions 53,227 35,552 73,574 24,479 8,392 26,693 33,316 130,564 112,409 383,732
Interest earned 3,550,768 3,102,683 1,665,060 429,323 280,510 198,601 33,092 457,820 490,551 71,411
Miscellaneous 1,803,015 1,683,758 540,748 676,599 596,885 521,598 735,539 552,544 672,333 528,093
Total revenues 54,945,403 59,719,872 59,242,769 60,854,718 61,684,382 62,655,888 66,821,138 72,546,928 77,123,071 77,196,868
EXPENDITURES
General government 6,594,256 6,962,493 7,433,576 7,773,116 8,175,858 7,756,647 8,617,226 8,629,250 8,974,058 9301750
Public safety 11,355,228 12,004,613 13,426,040 13,985,817 14,209,607 14,692,116 17,096,436 16,924,285 16,968,939 17376310
Public works 5,447,092 5,803,027 6,448,961 4,401,924 4,699,931 4,662,449 5,818,028 6,303,749 5,332,402 5483131
Culture and recreation 4,842,734 5,436,700 5,497,492 6,041,352 6,548,072 6,590,252 6,980,508 7,227,628 7,441,366 8456526
Intergovernmental 2,643,192 3,164,973 3,220,906 3,158,243 3,349,211 2,972,849 3,572,221 3,834,118 4,478,312 4,623,919
Capital outlay 6,122,129 15,589,764 23,837,990 21,636,017 17,852,536 11,072,944 17,097,340 14,623,962 21,349,324 8,658,067
Debt service
Principal retirement 3,988,949 5,258,628 5,717,773 7,560,738 9,104,921 9,901,754 10,660,527 11,930,280 14,489,311 13,394,604
Interest and fiscal charges 5,255,636 5,355,582 5,505,799 5,987,246 5,607,918 5,659,876 4,839,491 4,982,567 3,894,535 3,796,740
Total expenditures 46,249,216 59,575,780 71,088,537 70,544,453 69,548,054 63,308,887 74,681,777 74,455,839 82,928,247 71,091,047
Excess (deficiency) of revenues
over (under) expenditures 8,696,187 144,092 (11,845,768) (9,689,735) (7,863,672) (652,999) (7,860,639) (1,908,911) (5,805,176) 6,105,821
OTHER FINANCING SOURCES (USES)
Sale of vehicles - - - - - - - - - -
Proceeds from sale of property - 3,277 - - 4,849 - 80 1,521 3,271 -
Proceeds from issuance of general obligation bonds - 13,323,260 18,425,000 7,210,000 7,765,000 8,545,000 11,765,000 4,380,000 - -
Premium (Discount) on issuance of refunding bonds - 167,758 846,139 - - - - - - -
Proceeds from issuance of sales tax revenue bonds - - - 3,245,000 - - - - - 24,450,000
Proceeds from issuance of refunding bonds - - - 19,325,790 - 9,690,000 20,830,000 23,400,000 - -
Proceeds from capital lease obligation - - - - - - - - - -
Premium (Discount) on issuance of general obligation bonds - - - 1,321,370 407,917 1,737,875 3,753,175 1,301,376 - 2,168,153
Payment to refund bond escrow agent - - - (20,120,845) - (10,788,860) (24,030,579) (25,547,122) - -
Transfer from other funds 14,064,446 10,668,337 18,853,859 13,510,915 17,004,152 20,292,866 18,730,003 20,498,983 21,925,067 23,584,605
Transfer to other funds (13,788,851) (12,298,901) (18,514,349) (13,149,822) (18,212,322) (19,402,646) (18,214,528) (20,383,867) (22,156,907) (28,352,005)
Total other financing sources (uses)275,595 11,863,731 19,610,649 11,342,408 6,969,596 10,074,235 12,833,151 3,650,891 (228,569) 21,850,753
NET CHANGE IN FUND BALANCES 8,971,782$ 12,007,823$ 7,764,881$ 1,652,673$ (894,076)$ 9,421,236$ 4,972,512$ 1,741,980$ (6,033,745)$ 27,956,574$
Debt service as a percentage
of noncapital expenditures 23.0%24.1%26.2%28.3%28.4%29.1%25.9%27.7%29.1%27.0%
Source: Comprehensive Annual Financial Report
Fiscal Year
CITY OF SOUTHLAKE, TEXAS TABLE 5
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
(UNAUDITED)
97
Fiscal Year Real Property
Personal
Property
Less: Tax-
Exempt Property
Total Taxable
Assessed Value
Total Direct Tax
Rate
2007 4,738,937,144 313,555,615 458,538,254 4,593,954,505 0.46200
2008 5,215,549,424 373,905,985 665,209,399 4,924,246,010 0.46200
2009 5,469,445,428 419,329,000 563,799,909 5,324,974,519 0.46200
2010 5,705,149,612 434,998,249 579,515,687 5,560,632,174 0.46200
2011 5,597,281,840 422,882,032 585,644,425 5,434,519,447 0.46200
2012 5,640,517,144 449,611,387 581,725,777 5,508,402,754 0.46200
2013 5,841,369,884 438,836,614 631,016,684 5,649,189,814 0.46200
2014 5,935,122,961 588,389,191 638,106,472 5,885,405,680 0.46200
2015 6,341,625,915 614,607,452 756,399,951 6,199,833,416 0.46200
2016 6,635,586,201 542,023,423 1,039,819,893 6,137,789,731 0.46200
Source: Tarrant Appraisal District
Estimated Market Value
CITY OF SOUTHLAKE, TEXAS TABLE 6
DIRECT AND OVERLAPPING PROPERTY TAX RATES (PER $100 OF ASSESSED VALUE)
LAST TEN FISCAL YEARS
(UNAUDITED)
98
Fiscal Year
Operating/
General Rate
General
Obligation Debt
Service Total Direct
Carroll
Independent
School District Tarrant County
Tarrant County
Hospital District
Tarrant County
College District
2007 0.31958 0.14242 0.46200 1.79500 0.271500 0.235397 0.13938
2008 0.31958 0.14242 0.46200 1.46500 0.266500 0.230397 0.13938
2009 0.32200 0.14000 0.46200 1.41500 0.264000 0.227897 0.13796
2010 0.33200 0.13000 0.46200 1.41500 0.264000 0.227897 0.13767
2011 0.33200 0.13000 0.46200 1.41500 0.264000 0.227897 0.13764
2012 0.33200 0.13000 0.46200 1.41500 0.264000 0.227897 0.14897
2013 0.34200 0.12000 0.46200 1.40000 0.264000 0.227897 0.14897
2014 0.34200 0.12000 0.46200 1.40000 0.264000 0.227897 0.14950
2015 0.34200 0.12000 0.46200 1.40000 0.264000 0.227897 0.14950
2016 0.36200 0.10000 0.46200 1.39500 0.264000 0.227897 0.14950
Source: Tarrant Appraisal District
City Direct Rates Overlapping Rates
CITY OF SOUTHLAKE, TEXAS TABLE 7
PRINCIPAL PROPERTY TAX PAYERS
CURRENT YEAR AND FIVE YEARS AGO
(UNAUDITED)
99
Taxpayer
Taxable Assessed
Value
Percentage
of Total City
Taxable
Assessed
Valuea Taxpayer
Taxable Assessed
Value
Percentage
of Total City
Taxable
Assessed
Valueb
Verizon Wireless Texas LLC 172,818,555$ 2.79%Verizon Wireless Texas LLC 122,980,368 2.21%
Town Square Ventures LP 141,692,722 2.29%Town Square Ventures LP 116,514,665$ 2.10%
SLTS Grand Avenue/II LP 80,996,312 1.31%SLTS Grand Avenue LP 63,121,921 1.14%
Southlake Land Holdings LP 56,153,054 0.91%Wyndham Properties Ltd 59,025,973 1.06%
Wyndham Properties Ltd.54,803,383 0.88%Carroll/1709 Ltd 34,345,770 0.62%
Carroll/1709 Ltd 50,236,877 0.81%Hobbs & Curry Family LP 29,920,453 0.54%
Sabre Headquarters LLC 45,538,856 0.73%Maguire Partners-Solana LP 27,250,000 0.49%
H & C Southlake Hilton LLC 31,208,142 0.50%Inland Western Southlake Corners Ltd 25,509,576 0.46%
Forest Park Medical Center 29,435,986 0.47%Oncor Electric Delivery Co LLC 17,421,800 0.31%
Inland Western Southlake Corners Ltd 22,492,599 0.36%Southlake Watermark Holding LP 15,941,384 0.29%
Total 685,376,486$ 11.05%Total 512,031,910$ 9.21%
Total Assessed Valuation 6,199,833,416 100.00%Total Assessed Valuation 5,560,632,174 100.00%
Source: Tarrant Appraisal District
Notes: aTaxpayers are assessed on January 1, 2015 (2015 tax year) for the 2016 fiscal year.
bTaxpayers are assessed on January 1, 2010 (2010 tax year) for the 2011 fiscal year.
2016 2011
CITY OF SOUTHLAKE, TEXAS TABLE 8
AD VALOREM TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(UNAUDITED)
100
Fiscal Year
Taxes Levied
for the Fiscal
Year Amount
Percentage of
levy
Delinquent Tax
Collections Amount
Percentage of
levy
2007 20,065,968 19,106,661 95.22 292,211 19,398,872 96.68
2008 22,585,066 22,437,563 99.35 115,837 22,553,400 99.86
2009 24,474,501 24,239,946 99.04 107,676 24,347,622 99.48
2010 25,833,584 25,610,983 99.14 123,772 25,734,755 99.62
2011 25,497,367 25,297,255 99.22 168,912 25,466,166 99.88
2012 25,745,889 25,552,394 99.25 191,156 25,743,550 99.99
2013 25,896,127 25,762,457 99.48 413,995 26,176,451 101.08
2014 26,945,723 26,865,897 99.70 424,745 27,290,642 101.28
2015 27,652,417 27,556,790 99.65 102,506 27,659,296 100.02
2016 28,811,728 28,684,131 99.56 86,553 28,770,684 99.86
Source: Tarrant County Tax Office
Total Collections
Collected within the Fiscal Year of
the Levy
CITY OF SOUTHLAKE, TEXAS TABLE 9
RATIO OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(UNAUDITED)
101
Fiscal
Year
General
Obligation
Bonds
Certificates of
Obligation
Revenue
Bonds Tax Notes
Capital
Leases
2007 26,698,353 55,109,295 23,860,000 - 142,833
2008 26,090,410 64,856,870 22,785,000 - 61,230
2009 25,468,753 79,315,754 21,655,000 - -
2010 61,889,954 42,928,760 23,720,000 - -
2011 57,467,696 44,043,985 25,690,000 - -
2012 55,747,995 38,971,935 30,360,045 - -
2013 49,975,889 44,402,760 28,910,000 - -
2014 45,355,674 41,553,855 27,150,000 - -
2015 40,847,363 33,182,855 25,540,000 - -
2016 40,733,282 29,511,905 48,330,000 - -
Note:Details regarding the City's outstanding debt can be found in the notes to the
financial statements.
aSee Table 13 for personal income and population data.
Governmental Activities
CITY OF SOUTHLAKE, TEXAS TABLE 9 (CONT.)
RATIO OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(UNAUDITED)
102
General
Obligation
Bonds
Certificates of
Obligation
Revenue
Bonds
Contract
Revenue
Obligations
Total Primary
Government
Percentage
of Personal
Incomea Per Capitaa
25,957,462 13,961,204 - 5,194,706 150,923,853 10.76 5,873
25,511,724 19,103,130 - 4,393,444 162,801,808 11.31 6,238
24,644,419 23,516,072 - 3,553,680 178,153,678 12.32 6,685
29,240,686 20,755,540 - 2,665,900 181,200,840 12.40 6,818
26,907,806 23,420,800 - 2,060,000 179,590,287 12.29 6,752
24,692,508 23,126,850 1,790,000 1,755,000 176,444,333 11.44 6,591
23,163,624 24,660,985 - 1,435,000 172,548,258 9.81 6,372
18,923,955 28,009,860 - 1,100,000 162,093,344 10.93 5,910
15,422,270 30,035,860 - 750,000 145,778,348 9.03 5,238
12,974,232 29,143,202 - 385,000 161,077,621 9.30 5,694
Business-Type Activities
CITY OF SOUTHLAKE, TEXAS TABLE 10
RATIO OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
(UNAUDITED)
103
Fiscal
Year
General
Obligation Bonds
Certificates of
Obligation Total
Less: Available
Debt Service
Funds
Net General
Bonded Debt
Percentage
of Actual
Taxable
Value of
Propertya
Per
Capitab
2007 52,655,815 69,070,499 121,726,314 7,218,441 114,507,873 2.65%4,736
2008 51,602,134 83,960,000 135,562,134 8,394,778 127,167,356 2.75%5,194
2009 50,113,172 102,831,826 152,944,998 9,997,763 142,947,235 2.87%5,739
2010 91,130,640 63,684,300 154,814,940 10,768,763 144,046,177 2.78%5,826
2011 84,375,502 67,464,785 151,840,287 11,885,706 139,954,581 2.79%5,708
2012 80,440,503 62,098,785 142,539,288 12,657,819 129,881,469 2.59%5,325
2013 73,139,513 69,063,745 142,203,258 12,406,902 129,796,356 2.52%5,251
2014 64,279,629 69,563,715 133,843,344 9,809,483 124,033,861 2.27%4,880
2015 56,269,633 63,218,715 119,488,348 8,735,479 110,752,869 1.93%4,293
2016 53,707,514 58,655,107 112,362,621 6,899,109 105,463,512 1.83%3,972
Note:Details regarding the city's outstanding debt can be found in the notes to the
financial statements.
aSee Table 5 for property value data.
bSee Table 13 for population data.
General Bonded Debt Outstanding
CITY OF SOUTHLAKE, TEXAS TABLE 11
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
AS OF SEPTEMBER 30, 2016
(UNAUDITED)
104
Governmental Unit
Gross Bonded
Debt
Percentage of
Debt
Applicable to
Area
Share of
Overlapping
Debt
Debt repaid with property taxes
Carroll ISD 203,421,047$ 93.14%189,466,363$
Denton County 608,895,000 0.19%1,156,901$
Grapevine-Colleyville ISD 470,887,687 1.49%7,016,227$
Keller ISD 728,705,387 2.72%19,820,787$
Northwest ISD 733,049,556 0.61%4,471,602$
Tarrant County 344,185,000 4.54%15,625,999$
Tarrant County Hospital District 22,335,000 4.54%1,014,009$
Subtotal, overlapping debt 238,571,887
City of Southlake (direct debt)114,059,529$ 100.00%114,059,529
Total direct and overlapping debt 352,631,416$
Source:Debt outstanding data provided by each school district and county.
Percentage of debt provided by the Municipal Advisory Council of Texas.
CITY OF SOUTHLAKE, TEXAS TABLE 12
PLEDGED-REVENUE COVERAGE
LAST TEN FISCAL YEARS
(UNAUDITED)
105
Fiscal
Year
Total
Revenuesa
Less: Operating
Expensesb
Net Available
Revenue
Annual
Requirementc
Times
Coverage
2007 22,175,755 11,935,143 10,240,612 5,294,702 1.93
2008 22,886,077 11,409,156 11,476,921 5,892,881 1.95
2009 22,545,251 11,637,103 10,908,148 6,403,274 1.70
2010 21,702,800 12,153,476 9,549,324 5,832,842 1.64
2011 24,170,666 14,333,095 9,837,571 5,825,610 1.69
2012 23,723,156 15,869,436 7,853,720 4,394,749 1.79
2013 24,852,430 14,846,831 10,005,599 4,894,720 2.04
2014 24,702,585 17,270,262 7,432,323 5,120,685 1.45
2015 26,112,528 18,238,461 7,874,067 5,335,396 1.48
2016 26,987,100 19,424,610 7,562,490 5,466,814 1.38
Note:aIncludes operating and non-operating revenues.
bIncludes operating expenses minus depreciation plus transfers out.
cIncludes principal and interest.
Water and Sewer System Revenue Bonds
CITY OF SOUTHLAKE, TEXAS TABLE 13
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN CALENDAR YEARS
(UNAUDITED)
106
Year
Estimated
Populationa Personal Income
Per Capita
Personal
Income
School
Enrollmentc
Unemployment
Rated
2007 25,700 1,403,205,300 54,599 7,831 3.6%
2008 26,100 1,439,295,522 55,145 7,900 4.5%
2009 26,650 1,446,339,035 54,272 7,852 6.6%
2010 26,575 1,461,343,140 54,989 7,745 6.7%
2011 26,600 1,461,336,252 54,937 7,710 6.8%
2012 26,770 1,542,009,658 57,602 7,692 5.3%
2013 27,080 1,758,105,132 64,923 7,665 5.6%
2014 27,425 1,483,496,607 54,093 7,864 4.4%
2015 27,833 1,613,950,961 57,987 7,884 3.5%
2016 28,290 1,732,874,762 61,254 8,177 3.5%
Sources:aNorth Central Texas Council of Governments
2003-2009:2000 census adjusted
2010:2010 census
cCarroll Independent School District
dTexas Workforce Commission
CITY OF SOUTHLAKE, TEXAS TABLE 14
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
(UNAUDITED)
107
Employera Employeesa
Percentage of
Total City
Employment Employera Employeesa
Percentage
of Total City
Employment
Sabre Holdings 3,600 26.73%Sabre Holdings 3,000 25.62%
Carroll ISD 1,100 8.17%Carroll ISD 1,037 8.86%
Gateway Church 824 6.12%Tri Dal Ltd.450 3.84%
Verizon Wireless 750 5.57%Verizon Wireless 450 3.84%
Keller Williams 693 5.15%City of Southlake 275 2.35%
Cheesecake Factory 200 1.71%
Costco Wholesale 180 1.54%
Hilton/Southlake Town Square 180 1.54%
Tom Thumb 140 1.20%
Total 6,967 51.73%Total 5,912 50.49%
Total Southlake Daytime Employeesb 13,467 Total Southlake Daytime Employeesb 11,709
Source: aCity of Southlake Economic Development
bTexas Workforce Commission
2016 2007
CITY OF SOUTHLAKE, TEXAS TABLE 15
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
(UNAUDITED)
108
Function/Program 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
General Government
and Administration 44.50 47.75 48.75 48.75 50.75 45.75 49.00 55.75 52.00 59.00
Public Safety 104.50 107.50 113.50 113.50 113.50 119.50 138.45 140.45 140.95 140.95
Public Works 25.50 26.50 25.00 24.50 24.50 29.70 29.95 27.25 33.25 28.25
Culture and Recreational 60.50 61.00 61.50 61.50 61.50 62.15 62.15 62.15 65.65 71.40
Water and Sewer 24.80 28.50 30.50 29.50 29.50 29.30 29.30 29.50 29.50 30.25
Community Development 23.30 24.50 24.00 23.00 21.00 21.00 21.00 23.00 23.00 23.00
Economic Development 3.00 3.00 4.00 3.00 3.00 3.50 3.50 4.00 4.00 4.00
Total 286.10 298.75 307.25 303.75 303.75 310.90 333.35 342.10 348.35 356.85
Source:City Budget
Fiscal Year
CITY OF SOUTHLAKE, TEXAS TABLE 16
OPERATING INDICATORS BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
(UNAUDITED)
109
Function/Program 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Public Safety
Police
Number of Employees 58 58 56 56 54 54 53 68 68 68
Number of Violations (Citations)13,413 12,359 15,091 16,213 17,878 14,062 21,497 32,641 30,451 14,858
Number of Arrests 1,010 1,000 927 1,045 886 1,420 1,079 1,284 1,095 513
Number of Alarm callsa 3,184 3,199 3,666 3,208 3,922 4,267 3,889 3,087 3,497 3,673
Fire
Number of Employees 40 40 51 50 50 56 68 72 72 73
Number of Fire runs 974 937 844 896 1,058 990 1,215 1,245 1,220 760
Number of EMS runs 968 927 913 960 1,246 985 1,356 1,492 1,448 1,745
Number of Hazardous materials runs 80 80 71 84 80 44 80 56 43 95
Number of Alarm calls - - 401 450 460 392 448 461 501 608
Development Services
Streets maintained (miles)N/A N/A 225 226 228 228 245 268 204 209
Streets crack sealed (blocks)N/A 60 64 78 92 117 121 94 N/A N/A
Roadway signage replaced/installed 370 591 312 258 292 255 216 188 N/A 568
Asphalt repairs (tons)3,059 4,767 683 885 1,045 1,833 2,414 2,802 4,849 4,667
Concrete repairs to roads/sidewalks (cu. yds.)563 951 551 366 344 288 294 240 2,421 308
Right-of-way maintenance (miles)12,744 7,335 450 450 456 456 484 484 N/A N/A
Building Permits Issuedb 2,975 2,975 2,546 2,772 2,709 2,727 2,917 3,051 2,979 2,703
Planning & Zoning cases heard 193 157 97 78 65 85 121 143 136 190
Cultural and Recreational
Parks and Recreation
Park maintain & operate per acre 800 800 800 800 800 800 800 1,205 1,200 1,106
Participants in Leisure Service Programs 12,493 13,834 12,471 14,397 13,579 12,259 13,170 6,227 6,200 8,687
Participants in Special Events 26,000 36,950 39,500 40,200 45,150 37,546 46,500 47,000 60,000 66,000
Participants in Senior Center Programs 6,129 8,111 8,201 8,255 8,255 10,401 10,609 4,935 4,900 8,868
Library
Volumes in Collection 52,293 54,450 54,950 55,950 52,350 51,790 50,250 46,781 44,971 45,416
Patrons 16,721 16,174 18,559 19,446 18,889 20,902 21,622 16,662 16,838 13,461
Water and Sewer
Number of Water Consumers 8,966 9,150 9,207 9,379 9,466 9,543 9,765 9,825 10,183 10,581
Number of Sewer accounts 6,735 6,945 7,075 7,296 7,431 7,522 7,918 7,770 8,167 8,470
Line inspections (feet)23,983 14,025 84,000 240,000 190,000 190,000 190,000 217,000 1,086,624 789,266
Water meters installed/repaired/replaced 327 279 1,158 801 1,158 1,047 565 745 1,284 10,566
Transmitters installed/replaced 4,209 1,000 115 235 77 115 140 610 N/A 10,566
Gallons purchased from Ft. Worth (millions)2,831,889 3,711,816 3,738,063 4,191,077 4,456,921 3,573,648 3,472,212 3,220,075 3,069,971 2,904,048
Gallons distributed (millions)3,055,213 4,195,407 3,698,634 3,850,792 4,112,056 3,241,014 3,125,358 2,964,457 3,069,971 2,935,818
Maximum Storage Capacity (million of gallons)20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0
Source:City Departments
Notes:N/A Data not available
aPolice and Fire alarm calls combined 2002 - 2008.
bIncludes residential, commercial, and miscellaneous (e.g. pools, fences) permits.
Fiscal Year
CITY OF SOUTHLAKE, TEXAS TABLE 17
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
(UNAUDITED)
110
Function/Program 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Public Safety
Police Stations 2 2 2 2 2 2 2 3 3 3
Police Patrol Units 17 19 26 24 24 24 23 26 25 25
Fire Stations 2 2 2 2 2 2 2 3 3 3
Police Motorcycle Units 7 7 6 6 6 6 5 5 5 5
Cultural and Recreational
Parks 16 17 18 18 18 18 18 18 18 18
Playgrounds 4 4 4 4 4 3 3 5 7 6
Dog Park 1 1 1 1 1 1 1 1 1 1
Senior Center 1 1 1 1 1 1 1 1 1 1
Tennis Courts 15 15 15 21 21 21 21 21 21 21
In-line hockey rink 1 1 1 1 1 1 1 1 1 1
Ballfields 16 16 13 21 21 21 21 44 32 27
Soccer Fields 17 17 17 17 17 17 17 17 13 12
Nature Center - 1 1 1 1 1 1 1 1 1
Water and Sewer
Water Mains (miles)220 220 236 241 255 258 206 294 285 290
Lift Stations 15 15 15 15 15 15 15 14 13 13
Sanitary Sewer Mains (miles 200 200 184 188 193 195 206 209 206 209
Drainage, ditches/creeks (m 150 150 85 85 85 89 91 91 36 36
Fire hydrants 2,400 2,400 2,171 2,227 2,374 2,902 2,395 2,486 2,594 2,643
Water valves - - 5,509 5,680 6,690 7,614 6,388 6,686 N/A 7,154
Source:City Departments
aBaseball, softball, soccer and multipurpose fields combined through 2014
Fiscal Year