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Item 4W - MemoM E M O R A N D U M March 29, 2022 To: Shana Yelverton, City Manager From: Sharen Jackson, Chief Financial Officer Subject: Approve the 2021 Comprehensive Annual Financial Report Action Requested: Approval of September 30, 2021, Comprehensive Annual Financial Report. Background Information: The purpose of this item is to seek approval of the 2021 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 2021. •City received a “clean” audit on the City’s financial statements for the year ended September 30, 2021. There were not any instances of noncompliance or other reportable findings. •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: 2021 Comprehensive Annual Financial Report Staff Recommendation: Approval of 2021 Comprehensive Annual Financial Report Item 4W CITY OF SOUTHLAKE, TEXAS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2021 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 116 Statement of Activities 217 Fund Financial Statements Governmental Funds Financial Statements Balance Sheet 318 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 4 20 Statement of Revenues, Expenditures, and Changes in Fund Balance521 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 724 Statement of Revenues, Expenses, and Changes in Net Position 8 25 Statement of Cash Flows 926 Fiduciary Fund Financial Statements Statement of Fiduciary Net Position 10 27 Statement of Changes in Fiduciary Net Position 11 28 Notes to the Basic Financial Statements 29 CITY OF SOUTHLAKE, TEXAS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2021 TABLE OF CONTENTS Exhibit Page C. REQUIRED SUPPLEMENTARY INFORMATION Budgetary Comparison Schedule - General Fund A-1 70 Budgetary Comparison Schedule - Southlake Parks Development Cor poration Special Revenue Fund A-2 71 Budgetary Comparison Schedule - Tax Increment Financing Distric t Special Revenue Fund A-3 72 Budgetary Comparison Schedule - Community Enhancement Development Corporation Special Revenue Fund A-4 73 Notes to Budgetary Comparison Schedules 74 Schedule of Changes in Net Pension Liability and Related Ratios - TMRS A-5 75 Schedule of Pension Contributions - TMRS A-6 76 Schedule of Changes in Net OPEB Liability (Asset) and Related Ratios - Southlake Net OPEB (Asset) Liability for Health Insurance A-7 77 Schedule of Contributions - Southlake Net OPEB Liability (Asset) for Health Insurance A-8 78 Schedule of Changes in the Total OPEB Liability and Related Ratios - TMRS - Supplemental Death Benefits A-9 79 Schedule of OPEB Contributions - TMRS - Supplemental Death Benefits A-10 80 Condition Rating of Street System A-11 81 D. COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Major Governmental Funds Budgetary Comparison Schedule - General Obligation Debt Service Fund B-1 83 Nonmajor Governmental Funds Combining Balance Sheet - Nonmajor Governmental Funds C-1 86 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance - Nonmajor Governmental Funds C-2 90 Budgetary Comparison Schedule - Parks and Recreation Special Revenue Fund C-3 94 Budgetary Comparison Schedule - Parks Dedication Special Revenue Fund C-4 95 Budgetary Comparison Schedule - Crime Control District Special Revenue Fund C-5 96 Budgetary Comparison Schedule - Hotel Occupancy Special Revenue Fund C-6 97 Budgetary Comparison Schedule - Storm Water Utility Special Revenue Fund C-7 98 Budgetary Comparison Schedule - Court Security Special Revenue Fund C-8 99 Budgetary Comparison Schedule - Court Technology Special Revenue Fund C-9 100 Budgetary Comparison Schedule - Library Special Revenue Fund C-10 101 Budgetary Comparison Schedule -Red Light Camera Special Revenue Fund C-11 102 Budgetary Comparison Schedule - Commercial Vehicle Enforcement C-12 103 Budgetary Comparison Schedule - Southlake Parks Development Cor poration Debt Service Fund C-13 104 Budgetary Comparison Schedule - Southlake Community Enhancement Development Corporation Special Debt Fund C-14 105 CITY OF SOUTHLAKE, TEXAS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2021 TABLE OF CONTENTS III. STATISTICAL SECTION Table Net Position By Component 1113 Changes in Net Position 2115 Fund Balances, Governmental Funds 3 117 Changes in Fund Balances, Governmental Funds 4 118 Assessed Value and Estimated Actual Value of Taxable Property 5 119 Direct and Overlapping Property Tax Rates 6 120 Principal Property Tax Payers 7121 Ad Valorem Tax Levies and Collections 8 122 Ratio of Outstanding Debt By Type 9123 Ratio of General Bonded Debt Outstanding 10 124 Direct and Overlapping Governmental Activities Debt 11 125 Pledged-Revenue Coverage 12 126 Demographic and Economic Statistics 13 127 Principal Employers 14 128 Full-Time Equivalent City Government Employees By Function/Program 15 129 Operating Indicators By Function/Program 16 130 Capital Asset Statistics By Function/Program 17 131 CITY OF SOUTHLAKE, TEXAS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2021 TABLE OF CONTENTS INTRODUCTORY SECTION 400 Main Street, Suite 440, Southlake, TX 76092 (817) 748-8345 Innovation ◊ Integrity ◊ Accountability ◊ Commitment to Excellence ◊ Teamwork Finance Department March 11, 2022 Honorable Mayor John Huffman and Members of City Council City of Southlake Southlake, Texas Honorable Mayor and Councilmembers: It is with pleasure that we submit to you the Annual Comprehensive Financial Report (ACFR) of the City of Southlake for the fiscal year ended September 30, 2021. 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. ii 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 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, 2021. The financial section is divided into four main subsections: o Management’s Discussion and Analysis o Basic Financial Statements and related notes o Required Supplementary Information o Combining and Individual Fund Financial Statements iii 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. iv PROFILE OF THE GOVERNMENT General Information Although Southlake has been a high-growth community for years, when the first settlers arrived in 1845 they found only a vast area of land and trees where the grand prairie and cross timbers merged. As the site of the first permanent settlement in Tarrant County, a portion of present day Southlake was homesteaded in 1866, which consisted of 360 acres. Keeping with the time, the primary industry was agriculture. Farmers grew peanuts, grains and cotton, and families raised their own livestock. The area that would become Southlake remained a rural farming community for more than 100 years until the U.S. Army Corps of Engineers built Lake Grapevine in 1952. The lake spurred much of the area’s early growth and was the beginning of dramatic change. The town officially incorporated on September 25, 1956 by a public vote of 30 in favor and 24 against. The original town contained 1.62 square miles and had a population of just over 100. The residents chose to call this new town Southlake because it was… south of Lake Grapevine! The Southlake Fire Department was launched in 1965 and the first piece of fire equipment was a 1950 Diamond T-Military unit with a tank capacity of 1,000 gallons and an auxiliary pump. The first chief of police was hired in 1966, and the City purchased its first patrol car in 1967. The opening of the Dallas-Fort Worth International Airport in 1974 served as the next catalyst of growth in the area and Southlake residents adopted a home-rule charter in April 1987, which created the current council-manager form of government with six Council Members and a Mayor who are elected at large on a non-partisan basis for staggered three- year terms. But the single most important event in bringing residential subdivision development to Southlake was the completion of water and sewer lines in the southern portion of the city in the early 1990s. Since that time, much like the area’s first settlers were attracted to the area with its endless possibilities, Southlake has continued to attract the suburban settler desiring a high quality of life and the small town charm that has been preserved from Southlake’s past. Services Provided Services provided by the City under general governmental functions include public events, public safety, planning and development, engineering, street maintenance, parks operation and maintenance, recreation, library services, and general administrative services. The City does not provide educational or welfare services. Water and sewer services and solid waste collection are provided under an Enterprise Fund concept, with user charges set by the City Council to ensure adequate coverage of operating expenses and payments of outstanding debt. v Economic Condition and Outlook 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. There were 74 single family residential permits issued in Fiscal Year 2021 with an average new home construction value, excluding land value, of approximately $1,340,000. As noted on the chart the city experienced a slight reduction in residential home construction. Water customers increased from 11,309 in Fiscal Year 2020 to 11,392 in 2021, while wastewater customers increased from 9,117 to 9,200 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 an increase in sales tax collections during the fiscal year as indicated on the chart. Sales tax collections totaled $37,542,192 in fiscal year 2021, a 19.65% increase from the previous year. 0 50 100 150 200 2017 2018 2019 2020 2021 Single Family Residential Home Permits 10,600 10,700 10,800 10,900 11,000 11,100 11,200 11,300 11,400 11,500 2017 2018 2019 2020 2021 Number of Water Customers - 10,000,000 20,000,000 30,000,000 40,000,000 2017 2018 2019 2020 2021 Sales Tax Revenue General SPDC Crime CEDC vi Future Development During 2021, approximately 10 new construction commercial permits were issued by the city representing over 217,645 square feet of future retail/office.  Southlake’s newest hotel, Westin Southlake, opened in November 2021. The Westin is approximately 216,000 square feet at six stories tall and includes 261 rooms and assorted amenities. 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 2021, the property tax rate was reduced from $0.41 to .405 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. vii Such Annual Comprehensive Financial Report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The City of Southlake received a Certificate of Achievement for the year ended September 30, 2020, 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, 2020. 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 viii ix x LIST OF PRINCIPAL OFFICIALS John Huffman Mayor Chad Patton Mayor Pro Tem Randy Williamson Deputy Mayor Pro Tem Kathy Talley Council Member Randy Robbins Council Member Ronell Smith Council Member Amy Torres-Lepp Council Member Shana K. Yelverton City Manager Alison Ortowski Assistant City Manager Amy Shelley City Secretary Sharen Jackson Chief Financial Officer Daniel Cortez Director of Economic Development/Tourism 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 Weaver and Tidwell, L.L.P. 2300 North Field Street, Suite 1000 | Dallas, Texas 75201 Main: 972.490.1970 CPAs AND ADVISORS | WEAVER.COM 1 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, Texas (the City) as of and for the year ended September 30, 2021, 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. 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, 2021, 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. The Members of the City Council and City Manager City of Southlake, Texas 2 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information, TMRS pension schedules, OPEB schedules and condition rating of street system, as listed in the Table of Contents, 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. 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. The Members of the City Council and City Manager City of Southlake, Texas 3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 11, 2022, 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 solely 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 11, 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 4 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, 2021 by $692,665,685 (net position). Of this amount, $143,009,198 (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 $37,831,508. This increase can be attributed to increases in sales tax revenue and capital grants and contributions. At September 30, 2021, the City’s governmental funds reported combined ending fund balances of $136,589,707. Approximately $69,373 is nonspendable, $40,149,263 is restricted by an outside source, $52,714,881 is committed for future uses, $27,845,344 is assigned by management for specified purposes, and $15,810,846 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 $ 15,810,846 or 36.7% of total General Fund expenditures. At the end of the current fiscal year, the City of Southlake outstanding debt totals $116,303,677 a net decrease of $11,402,683 from the previous year. 5 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 25 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, Tax Increment Financing District Fund, and Community Enhancement Development Corporation Special Revenue 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 vehicle and equipment replacement. 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 trust fund, the Southlake OPEB Liability Trust Fund, which accounts for the funding of post-employment healthcare benefits for retirees of the City and their dependents. The financial statements for the fiduciary funds can be found on pages 27-28 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 29-69 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS Total assets of the City at September 30, 2021 were $821,867,971 while total liabilities were $131,165,100 along with deferred outflows $(5,836,152) and inflows $(3,873,338) of resources resulting in a net position balance of $692,665,685. The largest portion of the City’s net position, $509,786,436 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 $29,410,507. This increase is primarily attributable to increases in sales taxes, and capital grants, capital contributions and a decrease in expenses. Business-type Activities net position increased by $8,421,001. The majority of this change can be attributed to an increase in capital grants, capital contributions and a decrease in expenses. 8 The following analysis highlights the net position as of September 30, 2021: Governmental Business-Type 2021 Activities Activities Total Current and other assets: 156,776,182$ 58,951,991$ 215,728,173$ Capital assets 505,260,116 100,879,682 606,139,798 Total assets 662,036,298 159,831,673 821,867,971 Deferred outflows of resources 5,196,854 639,298 5,836,152 Other liabilities 12,097,048 2,764,375 14,861,423 Long-term debt outstanding 84,047,124 32,256,553 116,303,677 Total liabilities 96,144,172 35,020,928 131,165,100 Deferred inflows of resources 3,289,949 583,389 3,873,338 Net position: Net investment in capital assets 432,717,828 77,068,608 509,786,436 Restricted-debt service 5,315,367 - 5,315,367 Restricted-other 34,554,684 - 34,554,684 Unrestricted 95,211,152 47,798,046 143,009,198 Total net position 567,799,031$ 124,866,654$ 692,665,685$ The following analysis highlights the net position as of September 30, 2020: Governmental Business-Type 2020 Activities Activities Total Current and other assets: 141,336,978$ 53,173,033$ 194,510,011$ Capital assets 495,541,702 101,373,588 596,915,290 Total assets 636,878,680 154,546,621 791,425,301 Deferred outflows of resources 5,745,765 723,678 6,469,443 Other liabilities 8,601,304 2,961,601 11,562,905 Long-term debt outstanding 92,490,934 35,215,426 127,706,360 Total liabilities 101,092,238 38,177,027 139,269,265 Deferred inflows of resources 3,143,683 647,619 3,791,302 Net position: Net investment in capital assets 415,945,257 76,271,158 492,216,415 Restricted-debt service 6,774,153 - 6,774,153 Restricted-other 18,744,691 - 18,744,691 Unrestricted 96,924,423 40,174,495 137,098,918 Total net position 538,388,524$ 116,445,653$ 654,834,177$ 9 The following analysis highlights the changes in net position for the year ended September 30, 2021: Governmental Business-Type 2021 Activities Activities Total Revenues: Program revenues: Charges for services 8,945,731$ 32,071,140$ 41,016,871$ Operating grants and contributions 894,423 - 894,423 Capital grants and contributions 5,882,015 3,332,452 9,214,467 General revenues: Taxes 82,793,407 - 82,793,407 Interest on investments 101,746 32,272 134,018 Miscellaneous 709,736 - 709,736 Total revenues 99,327,058 35,435,864 134,762,922 Expenses: General government 20,990,841 - 20,990,841 Public safety 23,642,969 - 23,642,969 Public works 9,122,951 - 9,122,951 Culture and recreation 15,367,103 - 15,367,103 Interest on long-term debt 2,076,809 - 2,076,809 Water and sewer - 25,730,741 25,730,741 Total expenses 71,200,673 25,730,741 96,931,414 Increase in net position before transfers 28,126,385 9,705,123 37,831,508 Transfers 1,284,122 (1,284,122) - Increase in net position 29,410,507 8,421,001 37,831,508 Net position-beginning of year 538,388,524 116,445,653 654,834,177 Net position-End of Year 567,799,031$ 124,866,654$ 692,665,685$ 10 The following analysis highlights the changes in net position for the year ended September 30, 2020: Governmental Business-Type 2020 Activities Activities Total Revenues: Program revenues: Charges for services 8,986,355$ 32,271,341$ 41,257,696$ Operating grants and contributions 1,807,473 - 1,807,473 Capital grants and contributions 1,422,315 1,315,092 2,737,407 General revenues: Taxes 76,904,467 - 76,904,467 Interest on investments 1,721,876 566,411 2,288,287 Miscellaneous 1,222,231 - 1,222,231 Total revenues 92,064,717 34,152,844 126,217,561 Expenses: General government 21,275,487 - 21,275,487 Public safety 24,054,527 - 24,054,527 Public works 9,839,646 - 9,839,646 Culture and recreation 17,665,953 - 17,665,953 Interest on long-term debt 2,171,359 - 2,171,359 Water and sewer - 27,490,815 27,490,815 Total expenses 75,006,972 27,490,815 102,497,787 Increase in net position before transfers 17,057,745 6,662,029 23,719,774 Transfers 1,234,945 (1,234,945) - Increase in net position 18,292,690 5,427,084 23,719,774 Net position-beginning of year 520,095,834 111,018,569 631,114,403 Net position-End of Year 538,388,524$ 116,445,653$ 654,834,177$ 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, unassigned 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 $136,589,707. Approximately 11.6% or $15,810,846 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 $(5,594,579) recycling $(76,458), police expenditures $(6,549,013) parks $(26,585,410), capital projects $(44,304,341), reinvestment zone expenditures $(5,641,893), municipal court expenditures $(775,437), oil and gas expenditures $(55,451), storm water expenditures ($1,255,873), promotion of culture and tourism $(2,089,422), strategic initiative expenditures $(15,096,120), facility maintenance $(9,351,441), economic investment $(2,870,637) and other $(532,786). 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 $15,810,846. 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 36.7% of total General Fund expenditures, while total fund balance represents 101.4 % of total General Fund expenditures. The fund balance of the General fund increased $6,080,840 during the current fiscal year. The key factor in the increase in fund balance is the increase in sales taxes of $2,938,193 and the reduction in expenditures of $3,171,002. The General Obligation Debt Service Fund has a fund balance of $3,110,539 all of which is restricted for the payment of debt service. The fund balance decreased during the year by $1,525,026 primarily due to increased debt service payments. The fund balance in the General Capital Projects Funds ended the year at $30,161,629, a decrease of $2,438,270 due to the current year spending of bond proceeds issued in prior years for capital projects. The Southlake Parks Development Corporation Special Revenue fund balance increased by $2,782,429 primarily due to an increase in expenditures and transfers out to capital projects funds for projects. The Tax Increment Financing District fund balance increased by $641,998 primarily due to increased property tax revenues. The Community Enhancement Development Corporation Special Revenue Fund balance increased $2,918,864 due to increased sales taxes and charges for services revenues. 12 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: $47,798,046 in the Water and Sewer Fund and $7,945,569 in the Vehicle and Equipment Replacement Fund. Total net position in the Water and Sewer Fund increased by $8,421,001 while the Vehicle and Equipment Replacement Fund net position increased by $1,017,226. Operating revenues exceeding operating expenses is the primary reason for the respective change in the Water and Sewer Fund net position. 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 $1,401,758 or 3% from original budget based on year-to-date experience. Actual revenues exceeded budget by $4,002,400 primarily due to municipal sales and mixed beverage taxes exceeding budget by $2,433,383. Actual expenditures were $1,843,197 less than budgeted due to costs savings realized by all departments. 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, 2021 amount to $606,139,798 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements, machinery and equipment, infrastructure and construction in progress. The City has elected to use the modified approach for its street system in lieu of the depreciation method. An up-to-date inventory of these infrastructure assets was performed and the annual costs to maintain and preserve these assets was established and disclosed through administrative policy. The current condition level of the street system meets the target condition level established by the City. There were no significant changes in the condition levels of infrastructure assets, and the differences between the estimated amounts necessary to maintain and preserve the street system at target condition levels and the actual amount of expense incurred for that purpose for 2021 was not material. Major capital projects completed during the current year included the following:  Bicentennial Park Phase III  Florence Road Drainage Improvement  N. White Chapel Drainage Improvements  12" Water line Fuel Farm Sewer line Lake Drive Neighborhood 13 Governmental Business-Type 2021 Activities Activities Total Land and improvements 114,028,157$ 21,009,675$ 135,037,832$ Buildings and improvements 113,071,566 168,279 113,239,845 Improvements - 78,981,172 78,981,172 Infrastructure 250,632,439 - 250,632,439 Machinery and equipment 9,785,083 141,372 9,926,455 Construction in Progress 17,742,871 579,184 18,322,055 Total 505,260,116$ 100,879,682$ 606,139,798$ Governmental Business-Type 2020 Activities Activities Total Land and improvements 113,048,280$ 19,952,145$ 133,000,425$ Buildings and improvements 114,067,795 198,597 114,266,392 Improvements - 79,568,491 79,568,491 Infrastructure 247,525,907 - 247,525,907 Machinery and equipment 9,203,686 259,592 9,463,278 Construction in Progress 11,696,034 1,394,763 13,090,797 Total 495,541,702$ 101,373,588$ 596,915,290$ Additional information on the City’s capital assets can be found in Note 4 on pages 48-49 of this report. Long-term Debt- At the end of the current fiscal year, the City of Southlake had $73,797,108 total long-term debt outstanding of bonds issued to finance capital improvements for roadway, parks and recreation, public building and infrastructure. $31,133,829 of Utility System bonds, which financed projects to increase capacity of the Utility system, was also outstanding. An additional $1,626,695 was reported for compensated absences at year-end. Governmental Business-Type 2021 Activities Activities Total Bonds payable 73,797,108$ 31,133,829$ 104,930,937$ Unearned revenue - 200,774 200,774 Total OPEB liability for SDBF 978,660 77,178 1,055,838 Net pension liability 7,732,031 757,402 8,489,433 Compensated absences 1,539,325 87,370 1,626,695 Total 84,047,124$ 32,256,553$ 116,303,677$ Governmental Business-Type 2020 Activities Activities Total Bonds payable 81,163,954$ 34,031,551$ 115,195,505$ Unearned revenue - 209,631 209,631 Total OPEB liability for SDBF 798,257 64,312 862,569 Net OPEB liability for Health 326,828 - 326,828 Net pension liability 8,616,920 820,510 9,437,430 Compensated absences 1,584,975 89,422 1,674,397 Total 92,490,934$ 35,215,426$ 127,706,360$ 14 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 3.01% in 2003 to 0.27% in 2021, 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. The City’s bonds are rated “AAA” by Standard and Poor’s and Fitch Ratings. 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 49-53 of this report. 15 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 44.5% of total governmental revenue. Sales tax continues to grow as the second largest governmental resource representing 41.1% of total governmental revenue. The City monitors all of its resources and determines the need for program adjustment or fee increases accordingly. The FY 2022 Adopted Budget reduced the City’s property tax rate from $0.405 to $0.39 per $100 net taxable valuation. The City’s property tax roll remained relatively flat with a decrease of 0.01 percent in net taxable value. As an element of the City’s tax relief initiative the homestead exemption was held at the maximum level of 20%. The estimate of the FY 2022 tax roll is based on the certified roll as provided by the Tarrant Appraisal District (TAD) in July. The assumed collection rate is 100 percent. Requests for Information This financial report is designed to provide a general overview of the City of Southlake’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Chief Financial Officer, 1400 Main Street, 4th Floor Finance Department, Southlake, Texas 76092. BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS CITY OF SOUTHLAKE, TEXAS EXHIBIT 1 STATEMENT OF NET POSITION SEPTEMBER 30, 2021 The Notes to Financial Statements are an integral part of this statement. 16 GOVERNMENTAL BUSINESS-TYPE ACTIVITIES ACTIVITIES TOTAL ASSETS Cash and cash equivalents 145,086,464$ 31,980,485$ 177,066,949$ Receivables (net of allowance for uncollectibles) 8,243,995 5,512,784 13,756,779 Prepaid items 30,370 - 30,370 Inventories 39,003 - 39,003 Restricted assets Cash and cash equivalents 3,103,054 21,173,563 24,276,617 Restricted cash for customer deposits - 285,159 285,159 Receivables 20,995 - 20,995 OPEB asset 252,301 - 252,301 Capital assets: Non-depreciable 331,600,927 21,588,859 353,189,786 Depreciable (net of depreciation) 173,659,189 79,290,823 252,950,012 TOTAL ASSETS 662,036,298 159,831,673 821,867,971 Deferred charge for refunding 1,357,894 376,378 1,734,272 Deferred outflows - TMRS pension 2,977,920 243,692 3,221,612 Deferred outflows - TMRS OPEB 257,382 19,228 276,610 Deferred outflows - OPEB Health 603,658 - 603,658 TOTAL DEFERRED OUTFLOWS OF RESOURCES 5,196,854 639,298 5,836,152 Accounts payable 5,372,757 2,150,081 7,522,838 Accrued liabilities 1,408,287 201,378 1,609,665 Accrued interest payable - 127,757 127,757 Unearned revenue 5,023,282 - 5,023,282 Liabilities payable from restricted assets Accrued interest 292,722 - 292,722 Customer meter deposits - 285,159 285,159 Non-current liabilities: Due within one year 9,961,631 2,440,065 12,401,696 Due in more than one year 74,085,493 29,816,488 103,901,981 TOTAL LIABILITIES 96,144,172 35,020,928 131,165,100 Deferred gain on refunding 103,369 384,605 487,974 Deferred inflows - TMRS pension 2,688,598 192,926 2,881,524 Deferred inflows - TMRS OPEB 78,140 5,858 83,998 Deferred inflows - OPEB Health 419,842 - 419,842 TOTAL DEFERRED INFLOWS OF RESOURCES 3,289,949 583,389 3,873,338 NET POSITION Net investment in capital assets 432,717,828 77,068,608 509,786,436 Restricted for debt service 5,315,367 - 5,315,367 Restricted for municipal court 775,437 - 775,437 Restricted for reinvestment zone 5,641,893 - 5,641,893 Restricted for parks and recreation 24,792,059 - 24,792,059 Restricted for storm water 1,255,873 - 1,255,873 Restricted for promotion of culture and tourism 2,089,422 - 2,089,422 Unrestricted 95,211,152 47,798,046 143,009,198 TOTAL NET POSITION 567,799,031$ 124,866,654$ 692,665,685$ 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, 2021 The Notes to Financial Statements are an integral part of this statement. 17 Charges for Operating Grants Capital Grants Governmental Business - TypeExpenses Services and Contributions and Contributions Activities Activities TOTALPRIMARY GOVERNMENT:Governmental Activities:General government 20,990,841$ 1,733,148$ -$ -$ (19,257,693)$ -$ (19,257,693)$ Public safety 23,642,969 2,166,430 777,341 - (20,699,198) - (20,699,198) Public works 9,122,951 1,658,723 - 5,882,015 (1,582,213) - (1,582,213) Culture and recreation 15,367,103 3,387,430 117,082 - (11,862,591) - (11,862,591) Interest on long-term debt 2,076,809 - - - (2,076,809) - (2,076,809) Total governmental activities71,200,673 8,945,731 894,423 5,882,015 (55,478,504) - (55,478,504) Business-type Activities:Water and sewer 25,730,741 32,071,140 - 3,332,452 - 9,672,851 9,672,851 Total business-type activities25,730,741 32,071,140 - 3,332,452 - 9,672,851 9,672,851 TOTAL PRIMARY GOVERNMENT96,931,414$ 41,016,871$ 894,423$ 9,214,467$ (55,478,504)$ 9,672,851$ (45,805,653)$ General revenues and transfers:Taxes: Property taxes, levied for general purposes 41,660,369$ -$ 41,660,369$ Sales taxes 38,461,312 - 38,461,312 Franchise taxes 2,671,726 - 2,671,726 Interest on investments 101,746 32,272 134,018 Miscellaneous 709,736 - 709,736 Transfers 1,284,122 (1,284,122) - Total general revenues and transfers84,889,011 (1,251,850) 83,637,161 CHANGE IN NET POSITION29,410,507 8,421,001 37,831,508 NET POSITION, beginning of year538,388,524 116,445,653 654,834,177NET POSITION, end of year567,799,031$ 124,866,654$ 692,665,685$ Changes in Net PositionNet (Expense) Revenue andPrimary GovernmentProgram RevenuesFunctions/Program Activities FUND FINANCIAL STATEMENTS GOVERNMENTAL FUNDS FINANCIAL STATEMENTS CITY OF SOUTHLAKE, TEXAS BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2021 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 48,309,221$ 3,103,054$ 31,873,676$ Receivables, net of allowances for uncollectibles: Ad valorem taxes 73,362 16,673 - Franchise taxes 810,888 - - Sales taxes 3,191,101 - - Interest 61,687 4,322 44,379 Other 124,247 - 48,290 Inventories 39,003 - - Prepaid items 30,370 - - TOTAL ASSETS 52,639,879$ 3,124,049$ 31,966,345$ LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES LIABILITIES Accounts payable 2,943,142$ -$ 1,756,426$ Accrued liabilities 1,200,908 - - Unearned revenue 4,647,787 - - TOTAL LIABILITIES 8,791,837 - 1,756,426 DEFERRED INFLOWS OF RESOURCES Unavailable resources 122,479 13,510 48,290 TOTAL DEFERRED INFLOWS OF RESOURCES 122,479 13,510 48,290 FUND BALANCES Nonspendable for: Inventories 39,003 - - Prepaid expenditures 30,370 - - Restricted for: Debt service - 3,110,539 - Municipal court expenditures - - - Reinvestment zone expenditures - - - Parks and recreation - - - Storm water - - - Promotion of culture and tourism - - - Committed for: Police expenditures - - - Parks and recreation - - - Oil and gas expenditures - - - Library - - - Capital projects - - 30,161,629 Assigned for: Teen Court expenditures 20,721 - - Senior Center expenditures 11,074 - - Recycling 76,458 - - Reforestation expenditures 54,847 - - Public art 364,046 - - Facility maintenance 9,351,441 - - Economic investment 2,870,637 - - Strategic initiatives 15,096,120 - - Unassigned 15,810,846 - - TOTAL FUND BALANCES 43,725,563 3,110,539 30,161,629 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES 52,639,879$ 3,124,049$ 31,966,345$ EXHIBIT 3 19 COMMUNITY ENHANCEMENT SOUTHLAKE TAX DEVELOPMENT PARKS INCREMENT CORPORATION NON-MAJOR TOTAL DEVELOPMENT FINANCING SPECIAL GOVERNMENTAL GOVERNMENTAL CORPORATION DISTRICT REVENUE FUNDS FUNDS 10,613,550$ 5,697,426$ 11,882,191$ 28,775,878$ 140,254,996$ - - - - 90,035 - - - - 810,888 1,586,953 - 1,175,521 485,304 6,438,879 14,778 7,933 16,554 40,072 189,725 25,637 183,183 133,784 209,275 724,416 - - - - 39,003 - - - - 30,370 12,240,918$ 5,888,542$ 13,208,050$ 29,510,529$ 148,578,312$ 67,413$ 237,817$ 82,223$ 285,736$ 5,372,757$ 10,057 8,832 121,721 66,769 1,408,287 - - 375,495 - 5,023,282 77,470 246,649 579,439 352,505 11,804,326 - - - - 184,279 - - - - 184,279 - - - - 39,003 - - - - 30,370 - - - 2,484,040 5,594,579 - - - 775,437 775,437 - 5,641,893 - - 5,641,893 12,163,448 - 12,628,611 - 24,792,059 - - 1,255,873 1,255,873 - - - 2,089,422 2,089,422 - - - 6,549,013 6,549,013 - - - 1,793,351 1,793,351 - - - 55,451 55,451 - - - 12,725 12,725 - - - 14,142,712 44,304,341 - - - - 20,721 - - - - 11,074 - - - - 76,458 - - - - 54,847 - - - - 364,046 - - - - 9,351,441 - - - - 2,870,637 - - - - 15,096,120 - - - - 15,810,846 12,163,448 5,641,893 12,628,611 29,158,024 136,589,707 12,240,918$ 5,888,542$ 13,208,050$ 29,510,529$ 148,578,312$ CITY OF SOUTHLAKE, TEXAS EXHIBIT 4 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION AS OF SEPTEMBER 30, 2021 The Notes to Financial Statements are an integral part of this statement. 20 Total fund balances - governmental funds 136,589,707$ 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 $5,849,960 in assets allocated to governmental activities from the internal service fund).499,410,156 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. (292,722) 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. 13,795,529 OPEB asset has not been included in the governmental fund financial statements, as these assets do not represent current financial resources. 252,301 Revenues earned but not available within sixty days of the year end are not recognized as revenue on the fund financial statements. 184,279 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. This amount is the net of deferred losses , $1,357,894 and gains ($103,369) on refundings. 1,254,525 Deferred outflows of resources related to the City's pension and OPEB liabilities result in an increase in net position in the government-wide financial st atements. 3,838,960 Deferred inflows of resources related to the City's pension and OPEB liabilities result in a decrease in net position in the government-wide financial statements. (3,186,580) Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the fund financial statements. (84,047,124) Net position of governmental activities 567,799,031$ CITY OF SOUTHLAKE, TEXAS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2021 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 25,926,682$ 5,930,642$ -$ Franchise taxes 2,671,726 - - Municipal sales and mixed beverage taxes 18,626,383 - - Licenses, permits and fees 1,706,685 - - Charges for services 1,709,545 - - Fines and forfeitures 843,169 - - Grants 231,141 - - Capital recovery fees - - 232,525 Interest earned 27,667 18,753 12,657 Contributions - - 184 Miscellaneous 682,075 - - TOTAL REVENUES 52,425,073 5,949,395 245,366 EXPENDITURES Current General government City secretary/mayor 541,041 - - City manager's office 912,198 - - Human resources 825,450 - - Support services 4,266,695 - - Economic development 968,920 - - Finance 1,502,077 - - Municipal court 735,208 - - Teen court 145,482 - - Information technology 3,482,572 - - Public safety Police services 7,059,221 - - Fire services 10,059,078 - - Public safety support 1,555,409 - - Building inspection 1,118,454 - - Public works Public works administration 1,901,372 - - Streets and drainage 1,054,849 - 2,511,835 Planning 1,084,649 - - Cultural and recreation Community services 1,113,479 - - Parks and recreation 3,430,080 - 8,341 Library services 843,345 - - Promotion of culture and tourism - - - Intergovernmental - - - Capital outlay 506,384 - 8,339,508 Debt service: Principal retirement - 6,766,201 - Interest and fiscal charges - 882,829 51,952 TOTAL EXPENDITURES 43,105,963 7,649,030 10,911,636 Excess (deficiency) of revenues over (under) expenditures 9,319,110 (1,699,635) (10,666,270) OTHER FINANCING SOURCES (USES) Issuance of long-term debt - - 3,753,000 Issuance of refunding bonds - - - Payment to refunding bond escrow agent - - - Proceeds from the sale of capital assets 27,288 - - Transfers from other funds 2,109,442 174,609 4,475,000 Transfers to other funds (5,375,000) - - TOTAL OTHER FINANCING SOURCES (USES)(3,238,270) 174,609 8,228,000 NET CHANGE IN FUND BALANCES 6,080,840 (1,525,026) (2,438,270) FUND BALANCES, BEGINNING OF YEAR 37,644,723 4,635,565 32,599,899 FUND BALANCES, END OF YEAR 43,725,563$ 3,110,539$ 30,161,629$ EXHIBIT 5 22 COMMUNITY ENHANCEMENT SOUTHLAKE TAX DEVELOPMENT PARKS INCREMENT CORPORATION NON-MAJOR TOTAL DEVELOPMENT FINANCING SPECIAL GOVERNMENTAL GOVERNMENTAL CORPORATION DISTRICT REVENUE FUNDS FUNDS -$ 9,818,337$ -$ -$ 41,675,661$ - - - - 2,671,726 9,249,931 - 6,851,800 3,733,198 38,461,312 - - - 334,504 2,041,189 - - 2,495,965 1,578,042 5,783,552 - - - 111,640 954,809 - - - 529,517 760,658 - - - - 232,525 6,908 3,580 8,526 18,092 96,183 - - 1,360 71,021 72,565 153,824 - 1,063 - 836,962 9,410,663 9,821,917 9,358,714 6,376,014 93,587,142 - - - - 541,041 - - - - 912,198 - - - - 825,450 - 800,191 - - 5,066,886 - - - - 968,920 - - - - 1,502,077 - - - 56,172 791,380 - - - - 145,482 - - - - 3,482,572 - 244,086 - 1,680,148 8,983,455 - - - 298,684 10,357,762 - - - - 1,555,409 - - - - 1,118,454 - - - - 1,901,372 - - - 624,500 4,191,184 - - - - 1,084,649 - - - - 1,113,479 1,462,998 - 3,671,870 36,319 8,609,608 - - - 2,922 846,267 - - - 633,255 633,255 - 6,049,200 - - 6,049,200 22,739 2,086,442 - 566,150 11,521,223 - - - 3,575,000 10,341,201 - - - 1,694,804 2,629,585 1,485,737 9,179,919 3,671,870 9,167,954 85,172,109 7,924,926 641,998 5,686,844 (2,791,940) 8,415,033 - - - - 3,753,000 - - - 1,989,000 1,989,000 - - - (1,954,804) (1,954,804) - - - - 27,288 - - - 7,402,030 14,161,081 (5,142,497) - (2,767,980) (1,591,482) (14,876,959) (5,142,497) - (2,767,980) 5,844,744 3,098,606 2,782,429 641,998 2,918,864 3,052,804 11,513,639 9,381,019 4,999,895 9,709,747 26,105,220 125,076,068 12,163,448$ 5,641,893$ 12,628,611$ 29,158,024$ 136,589,707$ 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, 2021 The Notes to Financial Statements are an integral part of this statement. 23 Net change in fund balances - total governmental funds 11,513,639$ 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 additions recorded in the current period (does not include additions of $1,950,025 allocated from internal service fund). 11,521,223 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 $972,353 allocated from internal service fund). (8,419,133) 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 (5,742,000) o Payment to refunded bond escrow 1,954,804 o Repayments 10,341,201 o Amortization of premiums and deferred losses 499,857 7,053,862 The changes in net pension liability and deferred outflows/inflows from TMRS are not reported in the governmental funds. This is the net effect of the decrease in the net pension liability, $884,889, decrease in deferred inflows of resources, $169,132, and decrease in deferred outflows of resources, ($325,046).728,975 The changes in total OPEB liability and deferred outflows/inflows from TMRS are not reported in the governmental funds. This is the net effect of the increase in the total SDBF OPEB liability, ($180,403), increase in deferred inflows of resources, ($17,876), and increase in deferred outflows of resources, $103,472.(94,807) The changes in net OPEB liability and deferred outflows/inflows for healthcare are not reported in the governmental funds. This is the net effect of the decrease in the total healthcare OPEB liability (now a net OPEB asset), $579,129, increase in deferred inflows of resources, ($367,997), and increase in deferred outflows of resources, $56,122.267,254 Current year changes in the long-term liability for compensated absences do not require the use of current financial resources; and therefore, are not reported as expenditures in governmental funds.45,650 Current year changes in accrued interest payable do not require the use of current financial resources; and therefore, are not reported as expenditures in governmental funds.52,919 Internal service funds are used by management to charge the costs of certain activities, such as fleet management, to individual funds. The net income of the internal service fund is allocated entirely to governmental activities. 1,017,226 Governmental funds do not recognize assets contributed by developers. However, in the statement of activities, the fair value of those assets is recognized as revenue, then allocated over their estimated useful lives and reported as depreciation expense.5,649,305 Loss on disposal of capital assets results in a decrease in net position, but the net effect is not reported in governmental funds. (10,653) Certain revenues in the government-wide statement of activities that do not provide current financial resources are not reported as revenue in the governmental funds.85,047 Change in net position of governmental activities 29,410,507$ PROPRIETARY FUNDS FINANCIAL STATEMENTS CITY OF SOUTHLAKE, TEXAS EXHIBIT 7 STATEMENT OF NET POSITION PROPRIETARY FUNDS SEPTEMBER 30, 2021 The Notes to Financial Statements are an integral part of this statement. 24 BUSINESS-TYPE GOVERNMENTAL ACTIVITIES ACTIVITIES WATER AND SEWER VEHICLE AND EQUIPMENT ENTERPRISE REPLACEMENT INTERNAL FUND SERVICE FUND ASSETS CURRENT ASSETS Cash and cash equivalents 31,980,485$ 7,934,522$ Receivables, net of allowance for uncollectibles: Trade accounts 2,723,980 - Unbilled trade accounts 2,714,384 - Interest 74,420 11,047 Restricted assets: Cash restricted for capital 21,173,563 - Restricted cash for customer deposits 285,159 - Total current assets 58,951,991 7,945,569 NON-CURRENT ASSETS Capital assets: Land and improvements 21,009,675 - Buildings and improvements 935,501 - Distribution system 153,042,758 - Equipment 2,553,907 638,431 Vehicles 553,001 11,389,598 Capacity rights 9,190,988 - Construction in progress 579,184 - Total capital assets 187,865,014 12,028,029 Less: accumulated depreciation (86,985,332) (6,178,069) Capital assets, net of accumulated depreciation 100,879,682 5,849,960 Total non-current assets 100,879,682 5,849,960 TOTAL ASSETS 159,831,673$ 13,795,529$ DEFERRED OUTFLOW OF RESOURCES Deferred charge for refunding 376,378$ -$ Deferred outflows - TMRS pension 243,692 - Deferred outflows - TMRS OPEB 19,228 - Total deferred outflows of resources 639,298 - LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION CURRENT LIABILITIES Accounts payable 2,150,081 - Accrued liabilities 201,378 - Accrued interest 127,757 - Current portion of general obligation debt 2,352,695 - Current portion of compensated absences 87,370 - Payable from restricted assets: Customer meter deposits 285,159 - Total current liabilities 5,204,440 - NON-CURRENT LIABILITIES Unearned revenue 200,774 - General obligation debt 28,781,134 - Net pension liability 757,402 - Total OPEB liability 77,178 - Total non-current liabilities 29,816,488 - TOTAL LIABILITIES 35,020,928 - DEFERRED INFLOW OF RESOURCES Deferred gain for refunding 384,605 - Deferred inflows - TMRS pension 192,926 - Deferred inflows - TMRS OPEB 5,858 - Total deferred inflows of resources 583,389 - NET POSITION Net investment in capital assets 77,068,608 5,849,960 Unrestricted 47,798,046 7,945,569 TOTAL NET POSITION 124,866,654$ 13,795,529$ CITY OF SOUTHLAKE, TEXAS EXHIBIT 8 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2021 The Notes to Financial Statements are an integral part of this statement. 25 BUSINESS-TYPE GOVERNMENTAL ACTIVITIES ACTIVITIES WATER AND SEWER VEHICLE AND EQUIPMENT ENTERPRISE REPLACEMENT INTERNAL FUND SERVICE FUND OPERATING REVENUES Charges for sales and services: Water, sewer and garbage 31,936,803$ -$ Service charges 134,337 - Total operating revenues 32,071,140 - OPERATING EXPENSES: Personnel services 2,500,306 - Contractual services 2,254,230 - Lease payments 9,133 15,984 Supplies 415,435 - Utilities 8,560,612 - Administrative 1,288 - Maintenance 6,068,136 - Professional benefits 20,722 - Depreciation and amortization 5,030,179 972,353 Total operating expenses 24,860,041 988,337 OPERATING INCOME (LOSS)7,211,099 (988,337) NON-OPERATING REVENUES (EXPENSES) Interest income 32,272 5,563 Interest expense and bond administration expense (870,700) - Total non-operating revenues (expenses)(838,428) 5,563 INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS 6,372,671 (982,774) CAPITAL CONTRIBUTIONS AND TRANSFERS Capital contributions - property owners 2,948,469 - Contributions - impact fees 383,983 - Transfers from other funds - 2,000,000 Transfers to other funds (1,284,122) - Total capital contributions and transfers 2,048,330 2,000,000 CHANGE IN NET POSITION 8,421,001 1,017,226 NET POSITION, BEGINNING OF YEAR 116,445,653 12,778,303 NET POSITION, END OF YEAR 124,866,654$ 13,795,529$ CITY OF SOUTHLAKE, TEXAS EXHIBIT 9 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2021 The Notes to Financial Statements are an integral part of this statement. 26 BUSINESS-TYPE GOVERNMENTAL ACTIVITIES ACTIVITIES WATER AND SEWER VEHICLE AND EQUIPMENT ENTERPRISE REPLACEMENT INTERNAL FUND SERVICE FUND CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers and users 32,120,906$ -$ Cash payments to suppliers (17,582,513) (15,984) Cash payments to employees (2,530,458) - Net cash provided by (used in) operating activities 12,007,935 (15,984) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Paid for capital purchases (1,565,285) (307,015) Principal payments on bonds (2,673,799) - Bond administration cost (42,835) - Proceeds from issuance of bonds 2,035,000 - Payment to refund bond escrow agent (2,000,013) - Interest paid (1,090,491) - Contributions - impact fees 383,983 - Net cash used in capital and related financing activities (4,953,440) (307,015) CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Transfers from other funds - 2,000,000 Transfers to other funds (1,284,122) - Net cash provided by (used in) non-capital financing activities (1,284,122) 2,000,000 CASH FLOWS FROM INVESTING ACTIVITIES Interest received 43,249 5,725 Net cash provided by investing activities 43,249 5,725 NET CHANGE IN CASH AND CASH EQUIVALENTS 5,813,622 1,682,726 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 47,625,585 6,251,796 CASH AND CASH EQUIVALENTS, END OF YEAR 53,439,207$ 7,934,522$ RECONCILIATION TO STATEMENT OF NET POSITION Cash and cash equivalents 31,980,485$ 7,934,522$ Cash restricted for capital 21,173,563 - Restricted cash for customer deposits 285,159 - Total cash and cash equivalents 53,439,207$ 7,934,522$ RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Operating income (loss)7,211,099$ (988,337)$ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Pension and OPEB expense (50,242) - Depreciation 5,030,179 972,353 Bad debt expense (11,645) - Decrease (increase) in assets and deferred outflows of resources Receivables 35,332 - Deferred outflows of resources - pensions and OPEB 15,801 - Unearned revenue (8,857) Increase (decrease) in liabilities and deferred outflows of res ources Payables and accruals (150,870) - Customer deposits (52,075) - Deferred inflows of resources - pensions and OPEB (10,787) - Net cash provided by (used in) operating activities 12,007,935$ (15,984)$ NON-CASH CAPITAL AND RELATED FINANCING: Contributions of capital assets from developers 2,948,469$ -$ FIDUCIARY FUND FINANCIAL STATEMENTS CITY OF SOUTHLAKE, TEXAS EXHIBIT 10 OPEB LIABILITY TRUST FUND STATEMENT OF FIDUCIARY NET POSITION DECEMBER 31, 2020 The Notes to Financial Statements are an integral part of this statement. 27 Trust Fund* Southlake OPEB Liability ASSETS Investments 2,201,023$ TOTAL ASSETS 2,201,023$ NET POSITION Restricted for post employment benefits other than pensions 2,201,023 TOTAL NET POSITION 2,201,023$ *The Southlake Other Post Employment Benefit (OPEB) Liability Trust fund is reported as of December 31, 2020. CITY OF SOUTHLAKE, TEXAS EXHIBIT 11 OPEB LIABILITY TRUST FUND STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED DECEMBER 31, 2020 The Notes to Financial Statements are an integral part of this statement. 28 Trust Fund Southlake OPEB Liability ADDITIONS Employer contributions 321,362$ Investment earnings, net of unrealized/realized gain/(loss) 201,804 TOTAL ADDITIONS 523,166 DEDUCTIONS Benefit payments 81,362 Administrative expenses 6,098 TOTAL DEDUCTIONS 87,460 CHANGE IN NET POSITION 435,706 NET POSITION - BEGINNNING OF YEAR 1,765,317 NET POSITION - END OF YEAR 2,201,023$ NOTES TO BASIC FINANCIAL STATEMENTS CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 29 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, 2021 30 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 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. Southlake Tax Increment Financing Districts (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 nine member board of directors consisting of the eight members appointed by the City Council, and one member appointed by Carroll Independent School District. Since the Board of the TIF is substantively the same as the City Council; the City has operational responsibility for the TIF and the City receives financial benefit from the TIF, the TIF has been reported as a blended component unit. Southlake Crime Control and Prevention District (the District) – The District was formed under Chapter 363 of the Texas Local Government Code, the Crime Control and Prevention Act. The District is organized exclusively to act on behalf of the City for the financing, development and crime control throughout the City. The District is governed by a seven member board appointed by the City Council. The annual budget and issuance of debt must be approved by the City Council. Since the District provides services entirely to the City, it has been reported as a blended component unit. Basis of Presentation The government-wide financial statements (the statement of net position and the statement of activities) report information on all of the activities of the City, except for fiduciary funds. The effect of interfund activity, within the governmental and business-type activities columns, has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 31 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 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. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 32 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Basis of Presentation – Continued 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 municipal sales taxes. 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 – The Community Enhancement 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 municipal sales taxes and user fees. 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 to the community services department. Parks Dedication Fund- The Parks Dedication Fund was established to account for resources restricted to park improvements. The primary source of revenue for the Parks Dedication Fund is funded through park dedication fees on development. 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 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, 2021 33 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 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. 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. Truancy Prevention The Truancy Prevention Fund is used to account for municipal court fees assessed to provide for juvenile case manager services. Disaster Recovery The Disaster Recovery Fund is used to account for grant awards to provide disaster relief. Debt Service Funds – The City’s 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. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 34 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Basis of Presentation – Continued 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. Community Enhancement and Development Corporation Debt Service Fund- The Community Enhancement and 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 the community entertainment and recreation center. 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: 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 funded primarily through the issuance of general obligation debt. 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. 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 NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 35 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Basis of Presentation – Continued 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 and equipment 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. Fiduciary Funds The City also presents one trust fund, Southlake OPEB Liability Trust Fund. The City’s OPEB Liability Trust Fund accounts for the funding of post-employment healthcare benefits for retirees of the City and their dependents which is presented as of December 31, 2020. 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, proprietary fund, and fiduciary trust fund financial statements are prepared using the economic resources 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 total net 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. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 36 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Measurement Focus and Basis of Accounting – Continued Governmental fund financial statements are reported using the current financial resources measurement focus and are accounted for using the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual; i.e., when they become both measurable and available. “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The City considers all revenues as available if they are collected within 60 days after year end. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on long-term debt which is recognized when due, and certain compensated absences and claims and judgments which are recognized when the obligations are expected to be liquidated with expendable available financial resources. Property taxes, sales taxes, franchise taxes and interest are susceptible to accrual. Other receipts become measurable and available when cash is received by the City and are recognized as revenue at that time. Cash, Cash Equivalents and Investments In accordance with GASB Statement No. 31, the City’s general policy is to report money market investments and short-term participating interest-earning investment contracts at amortized cost and to report nonparticipating interest-earning investment contracts using a cost-based measure. However, if the fair value of an investment is significantly affected by the impairment of the credit standing of the issuer or by other factors, it is reported at fair value. All other investments are reported at fair value unless a legal contract exists which guarantees a higher value. The term “short-term” refers to investments, which have a remaining term of one year or less at the time of purchase. The term “nonparticipating” means that the investment’s value does not vary with market interest rate changes. The City’s cash and cash equivalents are defined as cash on hand, cash and pooled investment demand deposits held with financial institutions, and short-term investments with original maturities of three months or less from the date of acquisition. Cash and cash equivalents also includes long- term investments with maturity of greater than one year. The classification of the City’s cash and cash equivalents is reported in Note 2. The City pools idle cash from all funds for the purpose of increasing income through coordinated investment activities. As of September 30, 2021, the investments held by the City had a remaining maturity of greater than one year from purchase and accordingly are carried at fair value. Interest earnings are allocated to the respective funds based upon each fund’s relative balance in the pool. Cash and cash equivalents reported as restricted are restricted for debt service, 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 Districts at 100% of estimated market value and certified by the Appraisal Review Board. The assessed value upon which the 2021 levy was based on was $10,714,248,031. Taxes are due on October 1 and are delinquent after the following January 31. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 37 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Property Taxes – Continued The City is permitted by Article XI, Section 5 of the State of Texas Constitution to levy taxes up to $2.50 per $100 of assessed valuation for general governmental services, including the payment of principal and interest on general obligation long-term debt. The combined tax rate to finance general governmental services including the payment of principal and interest on long-term debt for the year ended September 30, 2021 was 0.405 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. 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. 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 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 deposits for purchases and are reported on the consumption method. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 38 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements and in the fund financial statements for proprietary funds. All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated assets are valued at acquisition 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. 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 and Equipment Replacement Internal Service Fund to account for City-owned vehicles and equipment. The fund receives transfers from other funds. 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. Sick leave is not paid upon termination. Upon termination or retirement, an employee is reimbursed up to a maximum number of hours of vacation pay based upon the years of service. All vacation 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. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 39 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Long-Term Obligations In the government-wide financial statements and proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund statement of net position. Bond premiums and discounts, as well as any deferred losses and gains 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 and Other Post-Employment Benefits (OPEB) For purposes of measuring the net pension and net OPEB liabilities (assets), pension and OPEB related deferred outflows and inflows of resources and pension and OPEB 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 and Total OPEB Liability is obtained from TMRS through reports 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, and GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Deferred Outflows of Resources on the Statement of Net Position 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/OPEB – these deferred outflows result from pension/OPEB contributions after the measurement date (deferred and recognized as a reduction of the pension/OPEB liability in the following fiscal year); changes in actuarial assumptions and/or differences between expected and actual economic experience (deferred and amortized over the estimated average remaining lives of participants) and/or differences in projected and actual earnings on pension/OPEB assets (deferred and amortized over a closed five year period). CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 40 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Deferred Inflows of Resources on Statement of Net Position In addition to liabilities, the statement of net position and/or balance sheet will sometimes report a separate section for deferred inflows of resources. Deferred Gain on Refunding – these deferred inflows result from the difference in the debt’s reacquisition price and its carrying value that was refunded. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. Pensions/OPEB – Differences in expected and actual experience and differences in assumption changes are deferred and amortized over a closed period equal to the estimated average remaining lives of all employees provided pensions through the plan, while investment experience differences are amortized over a closed 5-year period. Deferred Inflows of Resources Reported on Governmental Fund Balance Sheet In addition to liabilities, the governmental funds balance sheet reports deferred inflows from receivables that were not collected within 60 days of year-end. The deferred inflow from receivables balances and changes are reported as a reconciling amount to the statements of net position and activities. 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 – capital projects and police expenditures). 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 economic investments). 5. Unassigned fund balance – is the residual classification of the general fund and includes all amounts not contained in other classifications. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 41 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Fund Equity – Continued In accordance with GASB 54, the City has also adopted the following policies: Committed Fund Balance - The City Council is the City’s highest level of decision-making authority and approval by resolution is required to establish, modify, or rescind a fund balance commitment. The resolution must either be approved or rescinded, as applicable, prior to the last day of the fiscal year. The amount subject to the constraint may be determined in the subsequent period. Assigned Fund Balance - The City Council has authorized the City’s Chief Financial Officer as the official authorized to assign fund balance to a specific purpose as approved by this fund balance policy. Unassigned Fund Balance - It is the goal of the City to maintain a fund balance in the General Fund, equal to a minimum of 15% of General Fund budgeted operating expenditures, with the optimum goal of 25%. The City considers a balance of less than 15% to be cause for concern, barring unusual or deliberate circumstances. It is the goal of the City to maintain 60 days of working capital in the Enterprise Fund, with the optimum goal of 90 days of working capital. 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 assigning 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 improvement 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. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 42 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Deficit Fund Balance There are no deficit fund balances reported as of September 30, 2021. Subsequent Events The City has evaluated all events or transactions that occurred after September 30, 2021 through March 11, 2022, the date the financial statements were available to be issued. During this period, there were no subsequent events requiring disclosure. NOTE 2. CASH AND INVESTMENTS The funds of the City must be deposited and invested under the terms of a contract, contents of which are set out in the Depository Contract Law. The depository bank places approved pledged securities for safekeeping and trust with the City's agent bank in an amount sufficient to protect City funds on a day-to-day basis during the period of the contract. The pledge of approved securities is waived only to the extent of the depository bank's dollar amount of Federal Deposit Insurance Corporation (FDIC) insurance. At September 30, 2021 the carrying amount of the City's on demand deposits was $18,877,845 and the bank balance was $19,116,845. As of September 30, 2021, none of the City’s deposits were uncollateralized. Legal and contractual provisions governing deposits and investments: The Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions in the areas of investment practices, management reports and establishment of appropriate policies. Among other things, it requires the City to adopt, implement, and publicize an investment policy. That policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6) maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and capabilities, (9) and bid solicitation preferences for certificates of deposit. Statutes and the City’s investment policy authorized the City to invest in the following investments as summarized in the table below: Maximum Maximum Authorized Maximum Percentage Investment Investment Type Maturity of Portfolio In One Issuer U.S. Government Securities 5 years 100% None Commercial Paper 270 days 20% None Eligible Investment Pools 365 days 100% None The Act also requires the City to have independent auditors perform test procedures related to investment practices as provided by the Act. The City is in substantial compliance with the requirements of the Act and with local policies. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 43 NOTE 2. CASH AND INVESTMENTS – CONTINUED Cash and investments as of September 30, 2021 are classified in the accompanying financial statements as follows: Primary Government: Cash and cash equivalents 177,066,949$ Restricted cash and cash equivalents 24,276,617 Restricted cash for customer deposits 285,159 Total primary government 201,628,725 Trust Fund: Investments at fair value 2,201,023 Total fiduciary funds 2,201,023 Total cash and investments 203,829,748$ Cash and investments of the primary government as of September 30, 2021 consist of the following: Cash on hand 5,450$ Deposits with financial institutions 18,877,845 Investments at amortized cost 93,162,951 Investments at fair value 89,582,479 Total cash and investments 201,628,725$ 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, 2021 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, 2021 44 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 securities 43,162,078$ N/A Not rated Municipal bonds 9,393,412 N/A Not rated Commercial paper 28,981,431 N/A Not rated Mutual funds 8,045,558 N/A AAAm TexStar 39,245,709 N/A AAAm TexPool 23,777,001 N/A AAAm Lonestar Investment Pool 24,822,909 N/A AAAm Texas Class 5,317,332 N/A AAAm Total 182,745,430$ 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, 2021, the City investments other than external investment pools that represent 5% or more of the City’s investments include mutual bonds, commercial paper and U.S. Government 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, 2021, none of the City’s cash deposits were uncollateralized. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 45 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 9/30/21 Level 1 Inputs Level 2 Inputs Level 3 Inputs Percent of Total Investments Investments not subject to Fair Value Investment Pools TexPool 23,777,001$ -$ -$ -$ 13% 37 TexStar 39,245,709 - - - 21% 31 Lone Star 24,822,909 - - - 14% 46 Texas CLASS 5,317,332 - - - 3% 56 Investments by Fair Value Level Kaiser Foundation Hospital 4,996,229 - 4,996,229 - 3% 5 Columbia University 4,998,689 4,998,689 3% 20 Cornell University 4,998,542 4,998,542 3% 49 Vanderbilt University 5,993,575 - 5,993,575 - 3% 132 Toyota Motor Credit 4,994,396 - 4,994,396 - 3% 204 Dallas Fort Worth Int'l 3,000,000 - 3,000,000 - 2% 46 U.S. Treasury 33,170,955 - 33,170,955 - 18% 330 Mutual Funds Short-Term Investments Trust 8,045,558 8,045,558 - - 4% 39 Federal Farm Credit Banks 9,991,123 - 9,991,123 - 5% 500 Texas State Public Fin Authority Tax 2,000,600 - 2,000,600 - 1% 124 Texas A&M University 7,392,812 - 7,392,812 - 4% 775 Total 182,745,430$ 8,045,558$ 81,536,921$ -$ 100% 160 Fair Value Measurements Weighted Average Maturity (Days) 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. U.S. Government Securities, commercial paper and municipal bonds 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. . CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 46 NOTE 2. CASH AND INVESTMENTS – CONTINUED Investment in State Investment Pools The City is a voluntary participant in four investment pools: TexPool, TexStar, 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. 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 Public Funds Investment 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. Texas CLASS is measured at fair value (i.e., net asset value). 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 City’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, 2021 47 NOTE 3. RECEIVABLES Receivables at September 30, 2021, 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: General Tax Obligation General SPDC Increment Debt Capital Special Rev. Financing General Service Projects Fund District Receivables: Property taxes 574,089$ 130,475$ -$ -$ -$ Sales taxes 3,191,101 - - 1,586,953 - Franchise taxes 810,888 - - - - Accounts - - 48,290 25,637 - Interest 61,687 4,322 44,379 14,778 7,933 Other 124,247 - - - 183,183 Gross receivables 4,762,012 134,797 92,669 1,627,368 191,116 Less: allowance 500,727 113,802 - - - Net total receivables 4,261,285$ 20,995$ 92,669$ 1,627,368$ 191,116$ CEDC Water Primary Special Non-Major and Internal Government Revenue Governmental Sewer Service Total Receivables: Property taxes -$ -$ -$ -$ 704,564$ Sales taxes 1,175,521 485,304 - - 6,438,879 Franchise taxes - - - - 810,888 Accounts - 209,275 5,622,876 - 5,906,078 Interest 16,554 40,072 74,420 11,047 275,192 Other 133,784 - - - 441,214 Gross receivables 1,325,859 734,651 5,697,296 11,047 14,576,815 Less: allowance - - 184,512 - 799,041 Net total receivables 1,325,859$ 734,651$ 5,512,784$ 11,047$ 13,777,774$ The Water and Sewer Fund and the Storm Water Utility Fund accounts receivable include unbilled charges for services rendered through September 30, 2021 of $2,714,384. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 48 NOTE 4. CAPITAL ASSETS Capital asset activity for the year ended September 30, 2021, was as follows: Beginning Capital Sales or Adjustments/ Ending Balance Acquisitions Disposals Transfers Balance Governmental Activities: Capital assets not being depreciated: Land 94,604,775$ 2,338,436$ -$ -$ 96,943,211$ Street infrastructure 215,617,868 1,418,055 - (121,078) 216,914,845 Construction-in-progress 11,696,034 8,905,657 - (2,858,820) 17,742,871 Total capital assets not being depreciated 321,918,677 12,662,148 - (2,979,898) 331,600,927 Capital assets being depreciated: Land improvements 40,454,194 839,088 - - 41,293,282 Buildings and building improvements 140,226,672 - - 2,020,362 142,247,034 Public art 1,434,202 370,203 - - 1,804,405 Equipment 18,542,990 843,603 (95,559) - 19,291,034 Vehicles 15,610,005 1,901,059 (1,647,242) - 15,863,822 Drainage 59,780,278 2,504,452 - 959,536 63,244,266 Total capital assets being depreciated 276,048,341 6,458,405 (1,742,801) 2,979,898 283,743,843 Accumulated depreciation: Land improvements (22,010,689) (2,197,647) - - (24,208,336) Buildings and building improvements (26,643,737) (3,271,948) - - (29,915,685) Public art (949,342) (114,846) - - (1,064,188) Equipment (14,582,643) (1,023,151) 84,906 - (15,520,888) Vehicles (10,366,666) (1,129,461) 1,647,242 - (9,848,885) Infrastructure (27,872,239) (1,654,433) - - (29,526,672) Total accumulated depreciation (102,425,316) (9,391,486) 1,732,148 - (110,084,654) Total capital assets being depreciated, net 173,623,025 (2,933,081) (10,653) 2,979,898 173,659,189 Governmental activities capital assets, net 495,541,702$ 9,729,067$ (10,653)$ -$ 505,260,116$ Beginning Capital Sales or Adjustments/ Ending Balance Acquisitions Disposals Transfers Balance Business Type Activities: Capital assets not being depreciated: Land 19,952,145$ 1,057,530$ -$ -$ 21,009,675$ Construction-In-Progress 1,394,763 1,587,805 - (2,403,384) 579,184 Total capital assets not being depreciated 21,346,908 2,645,335 - (2,403,384) 21,588,859 Capital assets being depreciated: Buildings and building improvements 935,501 - - - 935,501 Equipment 2,553,907 - - - 2,553,907 Vehicles 553,001 - - - 553,001 Capacity rights 9,190,988 - - - 9,190,988 Distribution system 148,748,436 1,890,938 - 2,403,384 153,042,758 Total capital assets being depreciated 161,981,833 1,890,938 - 2,403,384 166,276,155 Accumulated depreciation: Buildings and building improvements (736,904) (30,318) - - (767,222) Equipment (2,322,427) (101,695) - - (2,424,122) Vehicles (524,889) (16,525) - - (541,414) Capacity rights (4,623,135) (183,820) - - (4,806,955) Distribution system (73,747,798) (4,697,821) - - (78,445,619) Total accumulated depreciation (81,955,153) (5,030,179) - - (86,985,332) Total capital assets being depreciated, net 80,026,680 (3,139,241) - 2,403,384 79,290,823 Business type activities capital assets, net 101,373,588$ (493,906)$ -$ -$ 100,879,682$ CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 49 NOTE 4. CAPITAL ASSETS – CONTINUED Depreciation expense was charged as a direct expense to functions of the primary government as follows: Governmental activities: General government 1,284,451 Public safety 1,914,755 Public works 1,955,866 Culture and recreation 4,236,414 Total depreciation expense- governmental activities 9,391,486$ Business-type activities: Water and Sewer 5,030,179$ 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 Non - General Debt Service Capital Major Fund Fund Projects Governmental Total Deferred inflows of resources: Property taxes 59,444$ 13,510$ -$ -$ 72,954$ Other 63,035 - 48,290 - 111,325 Total deferred inflows of resources 122,479$ 13,510$ 48,290$ -$ 184,279$ Unearned revenue: Franchise taxes 636,628$ -$ -$ -$ 636,628$ Unspent grant awards 4,011,159 - - - 4,011,159 Other - - - 375,495 375,495 Total unearned revenue 4,647,787$ -$ -$ 375,495$ 5,023,282$ 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 prior years, the City has legally defeased certain outstanding general obligation and revenue debt by placing funds into irrevocable trusts pledged to pay all future debt service payments of the refunded debt. Accordingly, a liability for the defeased debt issues is not included in the City’s financial statements. As of September 30, 2021, the City had no additional outstanding bonds that were legally defeased. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 50 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, 2021: Final Interest Business- General Obligation Bonds and Certificates of Obligation Maturity Rates Governmental Type $11,300,000 Series 2012, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2032 3.0 - 4.25% -$ 1,720,000$ $9,965,000 Series 2012, General Obligation Refunding Bonds 2026 3.0 - 4.25% 4,070,000 90,000 $14,250,000 Series 2013, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2033 2.0 - 5.0% - 1,685,000 $22,295,000 Series 2013, General Obligation Refunding Bonds 2026 2.0 - 5.0% 11,745,000 465,000 $21,330,000 Series 2014, General Obligation Refunding Bonds 2026 2.0 - 5.0% 295,000 555,000 $8,780,000 Series 2014, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2034 2.0 - 3.5% - 3,135,000 $3,295,000 Series 2015, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2035 2.75 - 4.0% - 2,545,000 $7,910,000 Series 2017, General Obligation Refunding Bonds 2028 3.0 - 4.0% 2,834,975 3,020,025 $5,400,000 Series 2017, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2037 2.25 - 5.0% - 4,675,000 $4,205,000 Series 2018, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2038 3.0 - 4.0% - 3,765,000 $17,290,000 Series 2019, General Obligation Refunding Bonds 2030 3.0 - 5.0% 4,165,000 5,440,000 $4,240,000 Series 2021, General Obligation Refunding Bonds 2031 1.21% 1,989,000 2,035,000 25,098,975$ 29,130,025$ CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 51 NOTE 6. LONG-TERM DEBT – CONTINUED Final Interest Governmental Revenue Bonds Maturity Rates Governmental $11,300,000 Series 2012, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2032 3.0 - 4.25% 3,650,000$ $16,000,000 Series 2014, Southlake Parks Development Corporation, Sales Tax Revenue Refunding Bonds 2027 3% 7,415,000 $24,450,000 Series 2016, Southlake Community Enhancement and Development Corporation, Sales Tax Revenue Bonds 2036 3.00 - 5.00% 20,755,000 $9,945,000 Series 2017, Southlake Community Enhancement 2036 2.00 - 5.00% 8,420,000 and Development Corporation, Sales Tax Revenue Bonds 40,240,000$ Final Interest Governmental Tax Notes Maturity Rates Governmental $3,753,000 Series 2021, Tax Notes 2026 0.83% 3,753,000$ The following is a summary of long-term transactions for the year ended September 30, 2021: Amount Beginning Ending Due within Balance Additions Reductions Balance One year Governmental activities: General obligation bonds and certificates of obligation 30,271,176$ 1,989,000$ (7,161,201)$ 25,098,975$ 4,210,306$ Sales tax revenue bonds 45,350,000 - (5,110,000) 40,240,000 3,145,000 Tax notes - 3,753,000 - 3,753,000 1,067,000 Bond premiums (discounts) 5,542,778 - (837,645) 4,705,133 - Total bonds payable 81,163,954 5,742,000 (13,108,846) 73,797,108 8,422,306 Net OPEB liability - Health 326,828 - (326,828) - * - Total OPEB liability - SDBF 798,257 180,403 - 978,660 - Net pension liability 8,616,920 - (884,889) 7,732,031 - Compensated absences 1,584,975 1,506,262 (1,551,912) 1,539,325 1,539,325 Total governmental activities 92,490,934$ 7,428,665$ (15,872,475)$ 84,047,124$ 9,961,631$ *Due to current year activity, the $798,257 beginning net OPEB liability became a $252,301 net OPEB asset at year-end. Typically, liquidation of the liabilities for compensated absences, total OPEB, and net pension occurs within the governmental funds where payroll costs are incurred. Typically, liquidation of bonds payable occurs from the General Obligation Debt Service Fund, Southlake Parks Development Corporation Debt Service Fund, and Community Enhancement Development Corporation Debt Service Fund. During 2021, the City issued $3,753,000 of Tax notes, Series 2021. Proceeds from the sale of the notes will be used to fund various capital projects. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 52 NOTE 6. LONG-TERM DEBT – CONTINUED During 2021, the City issued $4,024,000 of General Obligation Refunding Bonds, Series 2021. Proceeds from the sale of the bonds, net of issuance costs, were deposited with an escrow agent to refund $1,975,000 Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation, Series 2011B (all of which were recorded in business-type activities) and $1,930,000 Tax and Water Works and Sewer System (Limited Pledge) Certificates of Obligation, Series 2011C (all of which were recorded in governmental activities). The difference between the debt service of the new debt and old debt is $531,125, which resulted in an economic gain of $508,228. Amount Beginning Ending Due within Balance Additions Reductions Balance One year Business-type activities: Revenue bonds and certificates of obligation 31,743,824$ 2,035,000$ (4,648,799)$ 29,130,025$ 2,352,695$ Bond premiums 2,287,727 - (283,923) 2,003,804 - Total bonds payable 34,031,551 2,035,000 (4,932,722) 31,133,829 2,352,695 Unearned revenue 209,631 - (8,857) 200,774 - Total OPEB liability - SDBF 64,312 12,866 - 77,178 - Net pension liability 820,510 - (63,108) 757,402 - Compensated absences 89,422 85,605 (87,657) 87,370 87,370 Total business-type activities 35,215,426$ 2,133,471$ (5,092,344)$ 32,256,553$ 2,440,065$ 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 2022 4,210,306$ 835,271$ 5,045,577$ 2023 4,371,832 665,310 5,037,142 2024 4,531,358 505,549 5,036,907 2025 4,018,305 350,829 4,369,134 2026 4,170,252 205,401 4,375,653 2027-2031 3,796,922 209,323 4,006,245 Total 25,098,975$ 2,771,683$ 27,870,658$ Governmental Activities CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 53 NOTE 6. LONG-TERM DEBT – CONTINUED Sales Tax Revenue Bonds Fiscal Year Ending September 30, Principal Interest Total 2022 3,145,000$ 1,275,437$ 4,420,437$ 2023 3,250,000 1,155,888 4,405,888 2024 3,380,000 1,027,187 4,407,187 2025 3,335,000 895,662 4,230,662 2026 3,110,000 775,738 3,885,738 2027-2031 12,310,000 2,663,238 14,973,238 2032-2036 11,710,000 882,484 12,592,484 Total 40,240,000$ 8,675,634$ 48,915,634$ Governmental Activities Tax Notes Fiscal Year Ending September 30, Principal Interest Total 2022 1,067,000$ 33,471$ 1,100,471$ 2023 663,000 19,542 682,542 2024 669,000 14,014 683,014 2025 674,000 8,441 682,441 2026 680,000 2,822 682,822 Total 3,753,000$ 78,290$ 3,831,290$ Governmental Activities Revenue Bonds and Certificates of Obligation Fiscal Year Ending September 30, Principal Interest Total 2022 2,352,695$ 976,451$ 3,329,146$ 2023 2,439,167 883,708 3,322,875 2024 2,488,642 788,662 3,277,304 2025 2,477,695 694,050 3,171,745 2026 2,565,747 598,818 3,164,565 2027-2031 10,776,079 1,711,667 12,487,746 2032-2036 5,100,000 502,216 5,602,216 2037-2038 930,000 25,789 955,789 Total 29,130,025$ 6,181,361$ 35,311,386$ Business-Type Activities 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. The contract revenue obligations were paid as of September 30, 2021. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 54 NOTE 7. TRANSFERS All interfund transfers between the various funds are approved supplements to the operations of those funds. Individual fund transfers for fiscal year 2021 were as follows: Transfer In Transfer Out Amount Purpose Southlake Parks Development General fund Corporation operations 327,273$ To fund indirect charges General fund Water and sewer enterprise fund 1,284,122 To fund indirect charges General fund Non major governmental funds 166,873 To fund indirect charges General fund CEDC Special Revenue 331,174 To fund indirect charges General obligation debt service Non major governmental funds 174,609 To pay debt service for bonds issued General capital project funds Non major governmental funds 1,250,000 To fund infrastructure projects General capital project funds General fund 225,000 To fund public art General capital project funds General fund 3,000,000 To fund infrastructure projects Non major governmental funds General fund 150,000 To fund commercial vehicle enforcement Southlake Parks Development Non major governmental funds Corporation operations 2,815,224 To pay debt service for bonds issued Southlake Parks Development Non major governmental funds Corporation operations 2,000,000 To fund capital projects for parks Non major governmental funds CEDC Special Revenue 2,436,806 To pay debt service for bonds issued Vehicle and equipment fund General fund 2,000,000 To replace aging vehicles 16,161,081$ NOTE 8. RETIREMENT PLAN A. Plan Description The City participates as one of 895 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 Annual Comprehensive Financial Report 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, and disability. 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 payment 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. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 55 NOTE 8. RETIREMENT PLAN – CONTINUED B. Benefits Provided – Continued At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount at least equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are a percent (100%, 150%, or 200%) of the employee's accumulated contributions. In addition, the City can grant, as often as annually, another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contributions accumulated with interest if the current employee contribution rate and city matching percent had always been in existence and if the employee's salary had always been the average of his salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer-financed monetary credits with interest were used to purchase an annuity. Members can retire at ages 60 and above with 5 or more years of service or with 20 years of service. A member is vested after 5 years. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. At the December 31, 2020 valuation and measurement date, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 141 Inactive employees entitled to but not yet receiving benefits 256 Active employees 352 749 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 12.84% and 12.70% in calendar years 2020 and 2021, respectively. The City’s contributions to TMRS for the year ended September 30, 2021 were $3,297,682, and were greater than the required contributions by $52,695. D. Net Pension Liability The City’s Net Pension Liability (NPL) was measured as of December 31, 2020 and the Total Pension Liability (TPL) used to calculate the NPL was determined by an actuarial valuation as of that date. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 56 NOTE 8. RETIREMENT PLAN – CONTINUED D. Net Pension Liability – Continued Actuarial Assumptions: The Total Pension Liability in the December 31, 2020 actuarial valuation was determined using the following actuarial assumptions: Inflation 2.5% per year Salary Increases 3.50% to 11.50% including inflation Investment Rate of Return 6.75%, net of pension plan investment expense, including inflation Actuarial Cost Method Entry Age Normal Amortization Method Level percentage of payroll; closed There were no benefit changes during the year. Salary increases were based on a service-related table. Mortality rates for post-retirement were based on the 2020 Municipal Retirees of Texas Mortality Tables. The rates are projected on a fully generational basis with scale UMP. Mortality rates for pre-retirement were based on PUB(10) mortality tables, with the Public Safety table used for males and the General Employee table used for females. The rates are projected on a fully generational basis with scale UMP. Actuarial assumptions used in the December 31, 2020 valuation were developed primarily from the actuarial investigation of the experience of TMRS over the four-year period from December 31, 2014 to December 31, 2019. They were first adopted in 2019 and first used in the December 31, 2019 actuarial valuation. 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). CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 57 NOTE 8. RETIREMENT PLAN – CONTINUED D. Net Pension Liability – Continued 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) Global Equity 30.0% 5.30% Core Fixed Income 10.0% 1.25% Non-Core Fixed Income 20.0% 4.14% Real Return 10.0% 3.85% Real Estate 10.0% 4.00% Absolute Return 10.0% 3.48% Private Equity 10.0% 7.75% Total 100.0% 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. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 58 NOTE 8. RETIREMENT PLAN – CONTINUED D. Net Pension Liability – Continued Changes in the Net Pension Liability Increase Total (Decrease) Net Pension Plan Fiduciary Pension Liability Net Position Liability (a) (b) (a) - (b) Balance at 12/31/2019 111,171,316$ 101,733,886$ 9,437,430$ Changes for the year: Service Cost 4,289,132 - 4,289,132 Interest 7,554,362 - 7,554,362 Change of benefit terms - - - Difference between expected and actual experience 39,572 - 39,572 Changes of assumptions - - - Contributions - employer - 3,322,051 (3,322,051) Contributions - employee - 1,829,612 (1,829,612) Net investment income - 7,731,319 (7,731,319) Benefit payments, including refunds of employee contributions (2,798,825) (2,798,825) - Administrative expense - (49,969) 49,969 Other changes - (1,950) 1,950 Net Changes 9,084,241 10,032,238 (947,997) Balance at 12/31/2020 120,255,557$ 111,766,124$ 8,489,433$ 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 27,591,654$ 8,489,433$ (7,018,497)$ 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. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 59 NOTE 8. RETIREMENT PLAN – CONTINUED E. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended September 30, 2021, the City recognized pension expense of $2,538,907. At September 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual economic experience 498,261$ -$ Changes in actuarial assumptions 197,112 - Difference between projected and actual investment earnings - 2,881,524 Contributions subsequent to the measurement date 2,526,239 - Total 3,221,612$ 2,881,524$ The $2,526,239 reported as deferred outflows of resources related to pensions result from contributions subsequent to the measurement date and will reduce the net pension liability during the fiscal year ended September 30, 2022. The other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Fiscal Year Ended Sept. 30: 2022 (754,185)$ 2023 258,823 2024 (1,535,454) 2025 (155,335) Total (2,186,151)$ CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 60 NOTE 9. OTHER POSTEMPLOYMENT BENEFITS (OPEB) The City of Southlake provides for two other post-employment benefit (OPEB) plans; one provides for postemployment health insurance benefits through a single-employer defined benefit medical plan (Southlake Retiree Health Care Plan), and the other is the Texas Municipal Retirement System Supplemental Death Benefits Fund, a single employer defined benefit OPEB plan. Both plans are described in detail below. Aggregate amounts for the two OPEB plans are as follows: Retiree Healthcare TMRS Plan SDBF Total OPEB liability (asset) (252,301)$ 1,055,838$ 803,537$ Deferred outflows of resources 603,658 276,610 880,268 Deferred inflows of resources 419,842 83,998 503,840 OPEB expense 64,828 112,242 177,070 CITY OF SOUTHLAKE RETIREE HEALTH CARE PLAN Plan Description The City provides other post-employment healthcare benefits in accordance with City policy. Administration of the City of Southlake Retiree Healthcare Plan trust is through Public Agency Retirement Services (PARS) with an IRC Section 115 Irrevocable Exclusive Benefit Trust. Trustee for the plan is US Bank. Ultimate authority for investment decisions and actions necessary to maintain the City’s participation in the program resides with the City Manager, appointed as Plan Administrator through a 2009 resolution of the City Council. Investment strategy is currently through the City’s selection of PARS Moderately Conservative High Mark Plus. 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. A separate financial statement is not issued for the plan. Benefits Provided 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. Recommendations for plan benefits are presented to City Council for their approval during the annual budget process. Employees Covered by Benefit Terms The following table provides a summary of the number of participants in the plan as of December 31, 2020: Inactive employees currently receiving benefits 6 Inactive employees entitled to but not yet receiving benefits 0 Active Employees 343 349 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 61 NOTE 9. OTHER POSTEMPLOYMENT BENEFITS (OPEB) – CONTINUED CITY OF SOUTHLAKE RETIREE HEALTH CARE PLAN – Continued Contributions The City’s contributions during the fiscal year ending September 30, 2021 were $332,082 and were greater than the required contributions by $189,624. The benefit payments were determined in a manner similar to how the benefit payments for the measurement period were developed. The City through its budgeting process determines the annual contributions to the Plan based on the actuarially determined contribution and the availability of funds. Net OPEB Asset The City’s total OPEB liability is based on an actuarial valuation performed as of December 31, 2020. Actuarial Assumptions The total OPEB liability in the December 31, 2020 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Actuarial Cost Method Individual Entry-Age Normal Amortization method Level dollar. Closed bases are established at each valuation for new unfunded liabilities. Amortization period 9 years as of September 30, 2021 Asset valuation Market value Investment rate of return 5.50%, net of investment expenses, inc luding inflation Inflation rate 2.50% per year Salary Increases 3.50% to 11.50% including inflation Demographic Assumptions Based on the experience study covering the four-year period ending December 31, 2018 as conducted for the Texas Municipal Retirement System (TMRS). Mortality For healthy retirees, the gender-distinct 2019 Municipal Retirees of Texas mortality tables are used. The rates are projected on a fully generational basis using the ultimate mortality improvement rates in the MP tables to account for future mortality improvements. Participation Rates 30% of employees who retire at age 55 or older, or retire through disability retirement at any age, were assumed to maintain their health coverage after retirement. Healthcare Cost trend rates Initial rates of 7.00% declining to ultimate rates of 4.25% after 13 years. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 62 NOTE 9. OTHER POSTEMPLOYMENT BENEFITS (OPEB) – CONTINUED CITY OF SOUTHLAKE RETIREE HEALTH CARE PLAN – Continued Actuarial Assumptions—Continued Single Discount Rate. Projected benefit payments are required to be discounted to their actuarial present values using a Single Discount Rate that reflects (1) a long-term expected rate of return on OPEB plan investments (to the extent that the plan’s fiduciary net position is projected to be sufficient to pay benefits), and (2) tax-exempt municipal bond rate based on an index of 20-year general obligation bonds with an average AA credit rating as of the measurement date (to the extent that the contributions for use with the long-term expected rate of return are not met). For the purpose of this valuation, the expected rate of return on OPEB plan investments is 5.50%; the municipal bond rate is 2.0% (based on the daily rate closest to but not later than the measurement date of the Fidelity “20-Year Municipal GO AA Index”); and the resulting Single Discount Rate is 5.0%. The City’s has consistently funded the actuarially determined employer contribution, which is based on a closed amortization policy. As a result, the plan’s fiduciary net position is projected to be sufficient to pay benefits for all future years. Changes in the Net OPEB Liability (Asset) Total Plan Net OPEB Fiduciary OPEB (Asset) Liability Net Position (Asset) Liability (a) (b) (a) - (b) Balance at 12/31/2019 2,092,145$ 1,765,317$ 326,828$ Changes for the year: Service Cost 73,365 - 73,365 Interest 114,848 - 114,848 Difference between expected and actual experience (337,496) - (337,496) Changes of assumptions 87,222 - 87,222 Contributions - employer - 321,362 (321,362) Contributions - employee - - - Net investment income - 201,804 (201,804) Benefit payments, including refunds of employee contributions (81,362) (81,362) - Administrative expense - (6,098) 6,098 Other changes - - - Net Changes (143,423) 435,706 (579,129) Balance at 12/31/2020 1,948,722$ 2,201,023$ (252,301)$ Increase (Decrease) Consistent with the requirements of GASB Statements No. 74, the employer contributions include “amounts for OPEB as the benefits come due that will not be reimbursed to the employer using OPEB plan assets.” The $81,362 in benefit payments was paid by the City using its own assets. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 63 NOTE 9. OTHER POSTEMPLOYMENT BENEFITS (OPEB) – CONTINUED CITY OF SOUTHLAKE RETIREE HEALTH CARE PLAN – Continued Changes in the Net OPEB Liability (Asset)—Continued The plan fiduciary net position is 113% of the total OPEB liability as of the measurement date, resulting in the Net OPEB asset. The benefit payments during the measurement period were determined as follows: City's explicit subsidy 12,475$ City's implicit subsidy (explicit subsidy * 5.522) 68,887 Total benefit payments 81,362$ The 5.522 implicit factor equals the ratio of the expected implicit subsidy to the expected explicit subsidy. Sensitivity of the Net OPEB Asset to Changes in the Discount Rate and Healthcare Cost Trend Rates Regarding the sensitivity of the net OPEB asset to changes in the Single Discount Rate, the following presents the plan’s net OPEB asset, calculated using a discount rate of 5.00%, as well as what the plan’s net OPEB asset would be if it were calculated using a discount rate that is one percent lower or one percent higher: 1% Increase 1% Decrease Discount in Discount Rate (4.00%) Rate (5.00%) Rate (6.00%) Net OPEB asset (63,440)$ (252,301)$ (421,610)$ Regarding the sensitivity of the net OPEB asset to changes in the healthcare cost trend rates, the following presents the plan’s net OPEB asset, calculated using the assumed trend rates as well as what the plan’s net OPEB asset would be if it were calculated using a trend rate that is one percent lower or one percent higher: Current Healthcare Cost Rate 1% Decrease Assumption 1% Increase Net OPEB asset (444,207)$ (252,301)$ (25,374)$ CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 64 NOTE 9. OTHER POSTEMPLOYMENT BENEFITS (OPEB) – CONTINUED CITY OF SOUTHLAKE RETIREE HEALTH CARE PLAN – Continued OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources For the year ended December 31, 2020, the City recognized OPEB expense of $64,828. At September 30, 2021, the reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Difference between Expected and Actual Economic Experiences 11,560$ 304,420$ Changes in Assumptions 292,259 - Investment Experience - 115,422 Contributions subsequent to the measurement date 299,839 - 603,658$ 419,842$ The $299,839 reported as deferred outflows of resources related to OPEB resulting from contributions subsequent to the measurement date will increase the net OPEB asset during the year ending September 30, 2022. Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Fiscal Year Ended Sept. 30: 2022 (25,957)$ 2023 (15,737) 2024 (39,577) 2025 (14,823) 2026 4,832 Thereafter (24,761) Total (116,023)$ Differences between expected and actual experience and changes in assumptions are recognized in OPEB expense using a systematic and rational method over a closed period equal to the average of the expected remaining service lives of all employees that are provided with OPEB through the OPEB plan (active employees and inactive employees) determined as of the beginning of the measurement period. The expected remaining service lives of all active employees in the plan were approximately 3,230 years. Additionally, the total plan membership (active employees and inactive employees) was 349. As a result, the average of the expected remaining service lives for purposes of recognizing the applicable deferred outflows and inflows of resources established in the current measurement period is 9.2554 years. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 65 NOTE 9. OTHER POSTEMPLOYMENT BENEFITS (OPEB) – CONTINUED CITY OF SOUTHLAKE RETIREE HEALTH CARE PLAN – Continued OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources— Continued Additionally, differences between projected and actual earnings on OPEB plan investments should be recognized in OPEB expense using a systematic and rational method over a closed five-year period. For this purpose, the deferred outflows and inflows of resources are recognized in the OPEB expense as a level dollar amount over the closed period identified above. OTHER POST EMPLOYMENT BENEFITS SUPPLEMENTAL DEATH BENEFIT FUND Plan Description Texas Municipal Retirement System (“TMRS”) administers a defined benefit group-term life insurance plan known as the Supplemental Death Benefits Fund (“SDBF”). This is a voluntary program in which participating member cities may elect, by ordinance, to provide group-term life insurance coverage for their active members, including or not including retirees. Employers may terminate coverage under and discontinue participation in the SDBF by adopting an ordinance before November 1 of any year to be effective the following January 1. The City has elected to participate in the SDBF for its active members including retirees. As the SDBF covers both active and retiree participants, with no segregation of assets, the SDBF is considered to be an unfunded single-employer OPEB plan (i.e. no assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75) for City reporting. Benefits Provided The death benefit for active employees provides a lump-sum payment approximately equal to the employee’s annual salary (calculated based on the employee’s actual earnings, for the 12-month period preceding the month of death). The death benefit for retirees is considered an other postemployment benefit (“OPEB”) and is a fixed amount of $7,500. At the December 31, 2020 valuation and measurement date, the following employees were covered by the benefit terms: Inactive employees currently receiving benefits 99 Inactive employees entitled to but not yet receiving benefits 67 Active Employees 352 518 Contributions The member city contributes to the SDBF at a contractually required rate as determined by an annual actuarial valuation. The rate is equal to the cost of providing one-year term life insurance. The funding policy for the SDBF program is to assure that adequate resources are available to meet all death benefit payments for the upcoming year. The intent is not to pre-fund retiree term life insurance during employees’ entire careers. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 66 NOTE 9. OTHER POST EMPLOYMENT BENEFITS (OPEB) – CONTINUED OTHER POST EMPLOYMENT BENEFITS SUPPLEMENTAL DEATH BENEFIT FUND – Continued Contributions—Continued Contributions are made monthly based on the covered payroll of employee members of the participating member city. The contractually required contribution rate is determined annually for each city. The rate is based on the mortality and service experience of all employees covered by the SDBF and the demographics specific to the workforce of the city. There is a one-year delay between the actuarial valuation that serves as the basis for the employer contribution rate and the calendar year when the rate goes into effect. The funding policy of this plan is to assure that adequate resources are available to meet all death benefit payments for the upcoming year. The retiree portion of contribution rates to the SDBF for the City was 0.01% and 0.05% in calendar years 2020 and 2021, respectively. The City’s contributions to the SDBF for the year ended September 30, 2021 were $10,272, and were equal to the required contributions. Total OPEB Liability The City’s Total OPEB Liability (TOL) was measured as of December 31, 2020 and was determined by an actuarial valuation as of that date. Actuarial Assumptions The Total OPEB Liability in the December 31, 2020 actuarial valuation was determined using the following actuarial assumptions: Inflation 2.5% per year Salary increases 3.5% to 11.5% including inflation Discount rate 2.0% Retiree's share of benefit-related costs 0.0% Actuarial cost method Entry Age Normal Amortization Method Level percentage of payroll; closed Salary increases were based on a service-related table. Mortality rates for service retirees were based on the 2019 Municipal Retirees of Texas Mortality Tables. The rates are projected on a fully generational basis with scale UMP. Mortality rates for disabled retirees were based on 2019 Municipal Retirees of Texas Mortality Tables with a 4-year set-forward for males and a 3-year set- forward for females. In addition, a 3.5% and 3% minimum mortality rate will be applied to reflect the impairment for younger members who become disabled for males and females, respectively. The rates are projected on a fully generational basis with scale UMP to account for future mortality improvements subject to the floor. Actuarial assumptions used in the December 31, 2020 valuation were developed primarily from the actuarial investigation of the experience of TMRS over the four-year period from December 31, 2014 to December 31, 2018. They were first adopted in 2019 and first used in the December 31, 2019 actuarial valuation. The discount rate used to measure the Total OPEB Liability was 2.0% and was based on the Fidelity Index’s “20-Year Municipal GO AA Index” rate as of December 31, 2020. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 67 NOTE 9. OTHER POST EMPLOYMENT BENEFITS (OPEB) – CONTINUED OTHER POST EMPLOYMENT BENEFITS SUPPLEMENTAL DEATH BENEFIT FUND – Continued Changes in Total OPEB Liability Total OPEB Liability Balances as of 12/31/2019 862,569$ Changes for the year: Service cost 52,275 Interest 24,403 Difference between expected and actual experience (37,301) Changes of assumptions 156,506 Contributions - employer (2,614) Net Changes 193,269 Balances as of 12/31/2020 1,055,838$ Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following presents the total OPEB liability of the City, calculated using the discount rate of 2.00%, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1 percentage-point lower (1.00%) or 1 percentage-point higher (3.00%) than the current rate: 1% Decrease (1.00%) Discount Rate (2.00%) 1% Increase (3.00%) Total OPEB li ability 1,321,139$ 1,055,838$ 854,086$ OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended September 30, 2021, the City recognized pension expense of $112,242. At September 30, 2021, the City reported deferred outflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Difference between Expected and Actual Economic Experiences -$ 51,724$ Changes in Actuarial Assumptions 266,561 32,274 Contributions subsequent to the measurement date 10,049 - 276,610$ 83,998$ The $10,049 reported as deferred outflows of resources related to OPEB resulting from contributions subsequent to the measurement date will reduce the Total OPEB liability during the year ending September 30, 2022. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2021 68 NOTE 9. OTHER POST EMPLOYMENT BENEFITS (OPEB) – CONTINUED OTHER POST EMPLOYMENT BENEFITS SUPPLEMENTAL DEATH BENEFIT FUND – Continued OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB—Continued The other amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized in OPEB expense as follows: Fiscal Year Ended Sept. 30: 2022 35,564$ 2023 35,564 2024 35,564 2025 26,747 2026 36,671 Thereafter 12,453 Total 182,563$ 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, 2021 69 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, 2021 were $4,993,600. 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. TAX ABATEMENT The City enters into economic development agreements authorized under Chapter 380 of the Texas Local Government Code. These agreements are planning tools designed to stimulate economic activity, redevelopment, community improvement, and provide a return on investment for the community. These programs abate or rebate property and/or sales taxes and may include other incentive payments such as fee reductions or construction cost reimbursements. Economic development agreements are considered on a case by case basis by the City Council and generally contain recapture provisions, which may require repayment or termination if recipients do not meet the required provisions of the economic incentives. Chapter 380 of the Texas Local Government Code allows the City to provide grants for the purpose of promoting local economic development. These grants are based on a percentage of property and/or sales tax received by the City. For the fiscal year ending September 30, 2021, the City rebated $168,140 in property taxes and did not rebate any sales taxes. REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON GENERAL FUND CITY OF SOUTHLAKE, TEXAS EXHIBIT A-1 GENERAL FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2021 See Notes to Budgetary Comparison Schedules 70 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Ad valorem taxes, penalties and interest 25,581,525$ 25,581,525$ 25,926,682$ 345,157$ Franchise taxes 2,891,360 2,736,841 2,671,726 (65,115) Municipal sales and mixed beverage tax 14,334,500 16,193,000 18,626,383 2,433,383 License, permits and fees 1,241,600 1,187,100 1,706,685 519,585 Charges for services 1,437,984 1,344,335 1,709,545 365,210 Fines and forfeitures 910,000 908,000 843,169 (64,831) Grants 72,000 124,400 231,141 106,741 Interest earned 341,000 135,675 27,667 (108,008) Miscellaneous 210,946 211,797 682,075 470,278 TOTAL REVENUES 47,020,915 48,422,673 52,425,073 4,002,400 EXPENDITURES Current: General government City secretary/mayor 546,266 560,266 541,041 19,225 City manager's office 1,070,995 946,914 912,198 34,716 Human resources 863,641 878,141 825,450 52,691 Support services 4,250,107 4,613,953 4,266,695 347,258 Economic development 311,406 1,076,706 968,920 107,786 Finance 1,530,920 1,533,920 1,502,077 31,843 Municipal court 771,980 774,180 735,208 38,972 Teen court 169,409 161,409 145,482 15,927 Information technology 3,597,743 3,590,544 3,482,572 107,972 Public safety Police services 7,442,896 7,159,646 7,059,221 100,425 Fire services 9,748,872 10,038,523 10,059,078 (20,555) Public safety support 1,512,464 1,565,214 1,555,409 9,805 Building inspection 1,211,183 1,205,183 1,118,454 86,729 Public works Public works administration 1,945,633 2,011,533 1,901,372 110,161 Streets and drainage 1,153,848 1,098,848 1,054,849 43,999 Planning 1,118,858 1,125,858 1,084,649 41,209 Culture and recreation Community services 1,494,543 1,244,404 1,113,479 130,925 Parks and recreation 3,917,732 3,718,687 3,430,080 288,607 Library services 841,510 849,510 843,345 6,165 Capital Outlay 775,510 795,721 506,384 289,337 TOTAL EXPENDITURES 44,275,516 44,949,160 43,105,963 1,843,197 Excess of revenues over expenditures 2,745,399 3,473,513 9,319,110 5,845,597 OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets - - 27,288 27,288 Transfers from other funds 1,980,992 2,109,442 2,109,442 - Transfers to other funds (3,750,000) (5,375,000) (5,375,000) - TOTAL OTHER FINANCING SOURCES (USES)(1,769,008) (3,265,558) (3,238,270) 27,288 NET CHANGE IN FUND BALANCE 976,391 207,955 6,080,840 5,872,885 FUND BALANCES, BEGINNING OF YEAR 37,644,723 37,644,723 37,644,723 - FUND BALANCES, END OF YEAR 38,621,114$ 37,852,678$ 43,725,563$ 5,872,885$ BUDGETED AMOUNTS CITY OF SOUTHLAKE, TEXAS EXHIBIT A-2 SOUTHLAKE PARKS DEVELOPMENT CORPORATION SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2021 See Notes to Budgetary Comparison Schedules 71 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Municipal sales tax 7,120,000$ 8,020,000$ 9,249,931$ 1,229,931$ Miscellaneous 153,824 153,824 153,824 - Interest 60,000 8,000 6,908 (1,092) Total revenues 7,333,824 8,181,824 9,410,663 1,228,839 EXPENDITURES: Parks and recreation 1,516,488 1,519,688 1,462,998 56,690 Capital outlay 45,200 45,200 22,739 22,461 Total expenditures 1,561,688 1,564,888 1,485,737 79,151 Excess of revenues over expenditures 5,772,136 6,616,936 7,924,926 1,307,990 OTHER FINANCING USES: Transfers to other funds (5,108,577) (5,142,497) (5,142,497) - Net change in fund balance 663,559 1,474,439 2,782,429 1,307,990 Fund balance, beginning of year 9,381,019 9,381,019 9,381,019 - Fund balance, end of year 10,044,578$ 10,855,458$ 12,163,448$ 1,307,990$ BUDGETED AMOUNTS CITY OF SOUTHLAKE, TEXAS EXHIBIT A-3 TAX INCREMENT FINANCING DISTRICT SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2021 See Notes to Budgetary Comparison Schedules 72 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Ad valorem taxes, penalties and interest 9,955,195$ 9,818,337$ 9,818,337$ -$ Interest 9,000 3,800 3,580 (220) Total revenues 9,964,195 9,822,137 9,821,917 (220) EXPENDITURES: General government: Support services 940,916 940,916 800,191 140,725 Public safety: Police services 283,881 283,881 244,086 39,795 Intergovernmental 6,736,056 6,049,200 6,049,200 - Capital outlay 1,593,265 2,486,530 2,086,442 400,088 Total expenditures 9,554,118 9,760,527 9,179,919 580,608 Excess of revenues over expenditures 410,077 61,610 641,998 580,388 Net change in fund balance 410,077 61,610 641,998 580,388 Fund balance at beginning of year 4,999,895 4,999,895 4,999,895 - Fund balance at end of year 5,409,972$ 5,061,505$ 5,641,893$ 580,388$ BUDGETED AMOUNTS CITY OF SOUTHLAKE, TEXAS EXHIBIT A-4 COMMUNITY ENHANCEMENT DEVELOPMENT CORPORATION SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2021 See Notes to Budgetary Comparison Schedules 73 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Municipal sales tax 5,254,816$ 5,930,500$ 6,851,800$ 921,300$ Charges for services 2,303,706 2,334,944 2,495,965 161,021 Interest 68,500 12,500 8,526 (3,974) Contributions 5,211 1,711 1,360 (351) Miscellaneous - 200 1,063 863 Total revenues 7,632,233 8,279,855 9,358,714 1,078,859 EXPENDITURES: Current: Culture and recreation Parks and recreation 4,188,300 4,120,022 3,671,870 448,152 Total expenditures 4,188,300 4,120,022 3,671,870 448,152 Excess of revenues over expenditures 3,443,933 4,159,833 5,686,844 1,527,011 OTHER FINANCING USES: Transfers to other funds (2,744,137) (2,767,980) (2,767,980) - Total other financing uses (2,744,137) (2,767,980) (2,767,980) - Net change in fund balance 699,796 1,391,853 2,918,864 1,527,011 FUND BALANCES, BEGINNING OF YEAR 9,709,747 9,709,747 9,709,747 - FUND BALANCES, END OF YEAR 10,409,543 11,101,600 12,628,611$ 1,527,011$ BUDGETED AMOUNTS CITY OF SOUTHLAKE, TEXAS NOTES TO BUDGETARY COMPARISON SCHEDULES YEAR ENDED SEPTEMBER 30, 2021 74 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, Community Enhancement Development Corporation, Crime Control District, Parks Dedication, Hotel Occupancy, Storm Water Utility, Red Light Camera, Parks and Recreation, Court Security, Court Technology, Library, Commercial Vehicle Enforcement, 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. 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, Oil and Gas, Truancy Prevention, Disaster Recovery, and all Capital Projects Funds are not presented, as such funds are budgeted over the life of the respective 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. General Fund reported expenditures in excess of appropriations for the year ended September 30, 2021 as follows:  Fire Services ($20,555) CITY OF SOUTHLAKE, TEXAS EXHIBIT A-5 SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS TEXAS MUNICIPAL RETIREMENT SYSTEM LAST SEVEN MEASUREMENT YEARS 75 Measurement Year Measurement Year Measurement Year Measurement Year Measurement Year Measurement Year Measurement Year 2020 2019 2018 2017 2016 2015 2014 Total pension liability: Service cost 4,289,132$ 4,190,311$ 3,919,389$ 3,579,734$ 3,482,384$ 3,222,126$ 2,906,949$ Interest 7,554,362 6,945,183 6,379,342 5,865,601 5,393,997 5,090,308 4,779,462 Changes of benefit terms - - - - - - - Difference between expected and actual experience 39,572 250,630 537,249 213,937 179,076 102,364 (1,602,645) Change in assumptions - 324,280 - - - 760,500 - Benefit payments, including refunds of employee contributions (2,798,825) (2,671,062) (2,506,166) (1,930,078) (2,304,726) (1,921,361) (1,680,030) Net change in total pension liability 9,084,241 9,039,342 8,329,814 7,729,194 6,750,731 7,253,937 4,403,736 Total pension liability - beginning 111,171,316 102,131,974 93,802,160 86,072,966 79,322,235 72,068,298 67,664,562 Total pension liability - ending (a) 120,255,557 111,171,316 102,131,974 93,802,160 86,072,966 79,322,235 72,068,298 Plan fiduciary net position: Contributions - employer 3,322,051 3,212,690 2,992,110 2,682,629 2,595,919 2,425,455 2,283,310 Contributions - employee 1,829,612 1,773,541 1,673,450 1,520,518 1,480,965 1,409,008 1,340,870 Net investment income 7,731,319 13,337,326 (2,598,044) 10,284,603 4,588,256 97,252 3,463,018 Benefit payments, including refunds of employee contributions (2,798,825) (2,671,062) (2,506,166) (1,930,078) (2,304,726) (1,921,361) (1,680,030) Administrative expense (49,969) (75,264) (50,164) (53,258) (51,781) (59,224) (36,150) Other (1,950) (2,262) (2,623) (2,699) (2,790) (2,925) (2,972) Net change in plan fiduciary net position 10,032,238 15,574,969 (491,437) 12,501,715 6,305,843 1,948,205 5,368,046 Plan fiduciary net position - beginning 101,733,886 86,158,917 86,650,354 74,148,639 67,842,796 65,894,591 60,526,545 Plan fiduciary net position - ending (b) 111,766,124 101,733,886 86,158,917 86,650,354 74,148,639 67,842,796 65,894,591 Net pension liability - ending (a) - (b) 8,489,433$ 9,437,430$ 15,973,057$ 7,151,806$ 11,924,327$ 11,479,439$ 6,173,707$ Plan fiduciary net position as a percentage of total pension liability 92.94% 91.51% 84.36% 92.38% 86.15% 85.53% 91.43% Covered payroll 26,137,309$ 25,334,408$ 23,710,761$ 21,721,689$ 21,156,637$ 20,113,150$ 19,154,225$ Net pension liability as a percentage of covered payroll 32.48% 37.25% 67.37% 32.92% 56.36% 57.07% 32.23% Note: Only seven years of data is presented in accordance with GASB #68, paragraph 138. “The information for all periods for the 10-year schedules that are required to be presented as required supplementary information may not 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-6 SCHEDULE OF PENSION CONTRIBUTIONS TEXAS MUNICIPAL RETIREMENT SYSTEM LAST SEVEN FISCAL YEARS 76 Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2021 2020 2019 2018 2017 2016 2015 Actuarially determined contribution 3,244,987$ 3,131,667$ 3,101,504$ 2,829,615$ 2,580,380$ 2,508,791$ 2,439,627$ Contribution in relation of the actuarially determined contribution 3,297,682 3,201,451 3,182,749 2,894,219 2,654,303 2,632,209 2,439,627 Contribution deficiency (excess) (52,695)$ (69,784)$ (81,245)$ (64,604)$ (73,923)$ (123,418)$ -$ Covered payroll 26,156,402$ 25,202,798$ 25,156,408$ 23,132,172$ 21,525,552$ 21,551,426$ 20,034,712$ Contributions as a percentage of covered payroll 12.61% 12.70% 12.65% 12.51% 12.33% 12.21% 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 seven years of data is presented in accordance with GASB #68, paragraph 138. “The information for all periods for the 10-year schedules that are required to be presented as required supplementary information may not 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-7 SCHEDULE OF CHANGES IN NET OPEB LIABILITY (ASSET) AND RELATED RATIOS SOUTHLAKE NET OPEB LIABILITY (ASSET) FOR HEALTH INSURANCE LAST FOUR MEASUREMENT YEARS 77 Measurement Year Measurement Year Measurement Year Measurement Year 2020 2019 2018 2017 Total OPEB liability (asset): Service cost 73,365$ 66,950$ 53,239$ 55,061$ Interest 114,848 108,953 87,706 84,496 Changes of benefit terms - - - - Difference between expected and actual experience (337,496) (1,262) 16,549 (3,965) Change in assumptions 87,222 8,001 297,855 - Benefit payments, including refunds of employee contributions (81,362) (75,967) (75,843) (76,779) Net change in total OPEB liability (asset) (143,423) 106,675 379,506 58,813 Total OPEB liability (asset) - beginning 2,092,145 1,985,470 1,605,964 1,547,151 Total OPEB liability (asset) - ending (a) 1,948,722 2,092,145 1,985,470 1,605,964 Plan fiduciary net position: Contributions - employer 321,362 165,967 172,843 116,779 Net investment income 201,804 207,145 (38,598) 121,500 Benefit payments, including refunds of employee contributions (81,362) (75,967) (75,843) (76,779) Administrative expense (6,098) (5,348) (4,389) (3,483) Net change in plan fiduciary net position 435,706 291,797 54,013 158,017 Plan fiduciary net position - beginning 1,765,317 1,473,520 1,419,507 1,261,490 Plan fiduciary net position - ending (b) 2,201,023 1,765,317 1,473,520 1,419,507 Net OPEB liability (asset)- ending (a) - (b) (252,301)$ 326,828$ 511,950$ 186,457$ Plan fiduciary net position as a percentage of total OPEB liability (asset) 112.95% 84.38% 74.22% 88.39% Covered payroll 26,994,043$ 26,143,074$ 22,468,011$ 20,607,676$ Net OPEB liability (asset)as a percentage of covered payroll -0.93% 1.25% 2.28% 0.90% Note: Only four years of data is presented in accordance with GASB #75. Additional years’ information will be displayed as it becomes available. CITY OF SOUTHLAKE, TEXAS EXHIBIT A-8 SCHEDULE OF CONTRIBUTIONS SOUTHLAKE NET OPEB LIABILITY FOR HEALTH INSURANCE LAST FOUR FISCAL YEARS 78 Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2021 2020 2019 2018 Actuarially determined contribution 142,458$ 140,254$ 89,240$ 89,240$ Contribution in relation of the actuarially determined contribution 332,082 301,318 177,639 168,167 Contribution deficiency (excess) (189,624)$ (161,064)$ (88,399)$ (78,927)$ Covered payroll 25,882,453$ 24,988,882$ 24,537,271$ 23,132,172$ Contributions as a percentage of covered payroll 1.28% 1.21% 0.72% 0.73% Note: Only four years of data is presented in accordance with GASB #75. Additional years’ information will be displayed as it becomes available. CITY OF SOUTHLAKE, TEXAS EXHIBIT A-9 SCHEDULE OF CHANGES IN THE TOTAL OPEB LIABILITY AND RELATED RATIOS TEXAS MUNICIPAL RETIREMENT SYSTEM – SUPPLEMENTAL DEATH BENEFITS LAST FOUR MEASUREMENT YEARS 79 Measurement Year Measurement Year Measurement Year Measurement Year 2020 2019 2018 2017 Total OPEB liability: Service cost 52,275$ 38,002$ 42,679$ 34,755$ Interest 24,403 25,388 23,155 21,919 Changes of benefit terms - - - - Difference between expected and actual experience (37,301) (13,112) (18,599) - Change in assumptions 156,506 149,523 (56,421) 62,407 Contributions - employer (2,614) (5,067) (2,371) (4,344) Net change in total pension liability 193,269 194,734 (11,557) 114,737 Total OPEB liability - beginning 862,569 667,835 679,392 564,655 Total OPEB liability - ending (a) 1,055,838$ 862,569$ 667,835$ 679,392$ Covered employee payroll 26,137,309$ 25,334,408$ 23,710,761$ 21,721,689$ Net pension liability as a percentage of covered employee payroll 4.04% 3.40% 2.82% 3.13% Note: Only four years of data is presented in accordance with GASB #75. Additional years’ information will be displayed as it becomes available. The TMRS Supplementary Death Benefit Fund (SDBF) is considered to be an unfunded OPEB plan; therefore, no plan fiduciary net position and related ratios are reported in the above schedule. CITY OF SOUTHLAKE, TEXAS EXHIBIT A-10 SCHEDULE OF OPEB CONTRIBUTIONS TEXAS MUNICIPAL RETIREMENT SYSTEM – SUPPLEMENTAL DEATH BENEFITS LAST FOUR FISCAL YEARS 80 Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2021 2020 2019 2018 Actuarially determined contribution 10,272$ 3,206$ 3,965$ 2,846$ Contribution in relation of the actuarially determined contribution 10,272 3,206 3,965 2,846 Contribution deficiency (excess) -$ -$ -$ -$ Covered payroll 26,156,403$ 25,202,798$ 25,156,408$ 23,132,172$ Contributions as a percentage of covered payroll 0.04% 0.01% 0.02% 0.01% Note: Only four years of data is presented in accordance with GASB #75. Additional years’ information will be displayed as it becomes available. GASB #75, paragraph 57 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. The TMRS Supplementary Death Benefit Fund (SDBF) is considered to be an unfunded OPEB plan; therefore, no plan fiduciary net position and related ratios are reported in the above schedule. CITY OF SOUTHLAKE, TEXAS EXHIBIT A-11 CONDITION RATING OF STREET SYSTEM SEPTEMBER 30, 2021 81 CONDITION OF ROADWAY SYSTEM Index 2021 IRI 7.3 PCI 8.0 PQI 8.0 COMPARISON OF NEEDED-TO-ACTUAL MAINTENANCE/PRESERVATION Needed Actual Difference 2017 $ 800,000 $ 650,447 $(149,553) 2018 800,000 903,868 103,868 2019 1,000,000 813,411 (186,589) 2020 1,100,000 1,100,285 285 2021 1,200,000 1,336,244 136,244 Total $4,900,000 $4,804,255 $(95,745) 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 Standard for Roads Pavement Condition Index (SRPCI) as developed by the American Society for Testing and Materials (ASTM). The SRPCI 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 roughness survey and a surface distress survey, along with a deflection survey of selected roads. A present status analysis was conducted using data obtained from pavement condition survey to determine the International Roughness Index (IRI) and the Pavement Condition Index (PCI). 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 PQI. 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. Half of the city’s public streets will be assessed annually to ensure all public streets are assessed every two 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 82 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, 2021 83 VARIANCE WITH FINAL BUDGET- POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Ad valorem taxes 5,878,283$ 5,878,283$ 5,930,642$ 52,359$ Interest 76,504 27,504 18,753 (8,751) Total revenues 5,954,787 5,905,787 5,949,395 43,608 EXPENDITURES: Principal retirement 6,810,124 6,766,201 6,766,201 - Interest and fiscal charges 909,416 894,724 882,829 11,895 Total expenditure s 7,719,540 7,660,925 7,649,030 11,895 Excess (deficiency) of revenues over (under) expenditures (1,764,753) (1,755,138) (1,699,635) 55,503 OTHER FINANCING SOURCES (USES): Transfers from other funds 174,609 174,609 174,609 - Total other financing sources (uses)174,609 174,609 174,609 - Net change in fund balance (1,590,144) (1,580,529) (1,525,026) 55,503 FUND BALANCE, BEGINNING OF YEAR 4,635,565 4,635,565 4,635,565 - FUND BALANCE, END OF YEAR 3,045,421$ 3,055,036$ 3,110,539$ 55,503$ BUDGETED AMOUNTS 84 NON-MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS The Special Revenue Funds are used to account for revenue sources that are legally restricted or committed 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 community services department. Parks Dedication Fund – Established to account for resources restricted for use by the community services department. Crime Control District Fund – 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 municipal sales taxes. Hotel Occupancy Fund – Established to account for all revenues and expenditures relating to the hotel occupancy tax received by the City. Storm Water Utility Fund – Established 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 to fund the activities required to comply with TCEQ regulations. Court Security Fund – Established to account for municipal court fees assessed to provide court security. Court Technology Fund – Established to account for municipal court fees assessed to provide court technology. Library Fund – Established to account for resources donated for use by library services. Red Light Camera Fund – Established to account for fees assessed for red light violations captured through the City’s camera monitoring system. Oil and Gas Fund- Established to account for permits fees and the related expenditures for oil and gas drilling. Commercial Vehicle Enforcement Fund – Established to account for the fees assessed for commercial vehicle violations. 85 SPECIAL REVENUE FUNDS - Continued Truancy Prevention - Established to account for municipal court fees assessed to provide for juvenile case manager services. Disaster Recovery - Established to account for grant awards to provide disaster relief. 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. Community Enhancement and Development Corporation Debt Service Fund – Established to accumulate resources to finance the debt service of debt issues for the community entertainment and recreation center. CAPITAL PROJECTS FUNDS The Capital Projects Funds are utilized to account for financial resources to be used for the acquisition or construction of specified capital improvements (other than those financed by proprietary funds). Southlake Parks Development Corporation Capital Projects Fund – Established to fund the acquisition and construction of park recreational facilities as approved by the SPDC board of directors. The fund has been funded primarily through the issuance of general obligation debt. Community Enhancement and Development Corporation Capital Projects Fund - Established 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. Crime Control District Capital Projects Fund – Established 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, 2021 86 Parks Crime and Parks Control Police Recreation Dedication District ASSETS Cash and cash equivalents 34,828$ 204,927$ 1,586,004$ 5,642,674$ Accounts receivable - - - - Sales tax receivable - - - 384,963 Interest receivable 48 286 2,208 7,857 TOTAL ASSETS 34,876$ 205,213$ 1,588,212$ 6,035,494$ LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable 7,984$ 74$ -$ 144,069$ Accrued liabilities - - - 45,403 TOTAL LIABILITIES 7,984 74 - 189,472 FUND BALANCES Restricted for: Municipal court expenditures - - - - Debt service - - - - Storm water - - - - Promotion of culture and tourism - - - - Committed for: Police expenditures 26,892 - - 5,846,022 Parks and recreation - 205,139 1,588,212 - Oil and gas drilling - - - - Library - - - - Capital projects - - - - TOTAL FUND BALANCES 26,892 205,139 1,588,212 5,846,022 TOTAL LIABILITIES AND FUND BALANCES 34,876$ 205,213$ 1,588,212$ 6,035,494$ SPECIAL REVENUE EXHIBIT C-1 CONTINUED 87 Storm Hotel Water Court Court Red Light Occupancy Utility Security Technology Library Camera 2,009,422$ 1,058,955$ 438,385$ 290,365$ 12,707$ 560,235$ - 209,275 - - - - 100,341 - - - - - 2,805 1,474 610 404 18 780 2,112,568$ 1,269,704$ 438,995$ 290,769$ 12,725$ 561,015$ 18,443$ -$ 840$ -$ -$ -$ 4,703 13,831 1,350 - - - 23,146 13,831 2,190 - - - - - 436,805 290,769 - - - - - - - - - 1,255,873 - - - - 2,089,422 - - - - - - - - - - 561,015 - - - - - - - - - - - - - - - - 12,725 - - - - - - - 2,089,422 1,255,873 436,805 290,769 12,725 561,015 2,112,568$ 1,269,704$ 438,995$ 290,769$ 12,725$ 561,015$ SPECIAL REVENUE CITY OF SOUTHLAKE, TEXAS NON-MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET SEPTEMBER 30, 2021 88 Commercial Oil and Vehicle Truancy Disaster Gas Enforcement Prevention Recovery ASSETS Cash and cash equivalents 55,374$ 116,404$ 47,796$ -$ Accounts receivable - - - - Sales tax receivable - - - - Interest receivable 77 162 67 - TOTAL ASSETS 55,451$ 116,566$ 47,863$ -$ LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable -$ -$ -$ -$ Accrued liabilities - 1,482 - - TOTAL LIABILITIES - 1,482 - - FUND BALANCES Restricted for: Municipal court expenditures - - 47,863 - Debt service - - - - Storm water - - - - Promotion of cultural and tourism - - - - Committed for: Police expenditures - 115,084 - Parks and recreation - - - - Oil and gas drilling 55,451 - - - Library - - - - Capital projects - - - - TOTAL FUND BALANCES 55,451 115,084 47,863 - TOTAL LIABILITIES AND FUND BALANCES 55,451$ 116,566$ 47,863$ -$ SPECIAL REVENUE EXHIBIT C-1 CONCLUDED 89 Southlake Community Southlake Community TOTAL Parks Enhancement Parks Enhancement Crime NON-MAJOR Development Development Development Development Control GOVERNMENTAL Corporation Corporation Corporation Corporation District FUNDS 1,926,746$ 553,841$ 12,289,068$ 1,412,806$ 535,341$ 28,775,878$ - - - - - 209,275 - - - - - 485,304 2,682 771 17,111 1,967 745 40,072 1,929,428$ 554,612$ 12,306,179$ 1,414,773$ 536,086$ 29,510,529$ -$ -$ -$ 114,326$ -$ 285,736$ - - - - - 66,769 - - - 114,326 - 352,505 - - - - - 775,437 1,929,428 554,612 - - - 2,484,040 - - - - - 1,255,873 - - - - - 2,089,422 - - - - - 6,549,013 - - - - - 1,793,351 - - - - - 55,451 - - - - - 12,725 - - 12,306,179 1,300,447 536,086 14,142,712 1,929,428 554,612 12,306,179 1,300,447 536,086 29,158,024 1,929,428$ 554,612$ 12,306,179$ 1,414,773$ 536,086$ 29,510,529$ DEBT SERVICE 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, 2021 90 Parks Crime and Parks Control Police Recreation Dedication District REVENUES Municipal sales tax -$ -$ -$ 2,814,078$ Licenses, permits and fees - - 334,504 - Fines and forfeitures - - - - Charges for services - - - - Grants - - - - Interest 35 138 1,087 4,268 Contributions - 66,707 - - TOTAL REVENUES 35 66,845 335,591 2,818,346 EXPENDITURES Current: General government Municipal court - - - - Public safety Police services 6,605 - - 1,347,689 Fire services - - - - Public works Streets and drainage - - - - Cultural and recreation Parks and recreation - 21,163 - - Library services - - - - Promotion of culture and tourism - - - - Capital outlay - - - - Debt service: Principal retirement - - - - Interest and fiscal charges - - - - TOTAL EXPENDITURES 6,605 21,163 - 1,347,689 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (6,570) 45,682 335,591 1,470,657 OTHER FINANCING SOURCES (USES) Proceeds from issuance of refunding bonds - - - - Payment to refund bond escrow agent - - - - Transfers from other funds - - - - Transfers to other funds - - - (71,493) TOTAL OTHER FINANCING SOURCES (USES)- - - (71,493) NET CHANGE IN FUND BALANCES (DEFICITS)(6,570) 45,682 335,591 1,399,164 FUND BALANCES (DEFICITS), BEGINNING OF YEAR 33,462 159,457 1,252,621 4,446,858 FUND BALANCES, END OF YEAR 26,892$ 205,139$ 1,588,212$ 5,846,022$ SPECIAL REVENUE EXHIBIT C-2 CONTINUED 91 Storm Hotel Water Court Court Red Light Occupancy Utility Security Technology Library Camera 919,120$ -$ -$ -$ -$ -$ - - - - - - - - 32,454 27,171 - - - 1,578,042 - - - - - - - - - - 1,928 - 231 147 10 152 - - - - 4,314 - 921,048 1,578,042 32,685 27,318 4,324 152 - - 27,376 28,796 - - - - - - - 145,966 - - - - - - - 624,500 - - - - - - - - - - - - - - 2,922 - 633,255 - - - - - - - - - - - - - - - - - - - - - - - 633,255 624,500 27,376 28,796 2,922 145,966 287,793 953,542 5,309 (1,478) 1,402 (145,814) - - - - - - - - - - - - - - - - - - (32,708) (1,487,281) - - - - (32,708) (1,487,281) - - - - 255,085 (533,739) 5,309 (1,478) 1,402 (145,814) 1,834,337 1,789,612 431,496 292,247 11,323 706,829 2,089,422$ 1,255,873$ 436,805$ 290,769$ 12,725$ 561,015$ SPECIAL REVENUE CITY OF SOUTHLAKE, TEXAS NON-MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED SEPTEMBER 30, 2021 92 Commercial Oil and Vehicle Truancy Disaster Gas Enforcement Prevention Recovery REVENUES Municipal sales tax -$ -$ -$ -$ Licenses, permits and fees - - - - Fines and forfeitures - 20,295 31,720 - Charges for services - - - - Grants - - - 529,517 Interest 27 142 58 - Contributions - - - - TOTAL REVENUES 27 20,437 31,778 529,517 EXPENDITURES Current: General government Municipal court - - - - Public safety Police services - 124,888 - 55,000 Fire services - - - 298,684 Public works Streets and drainage - - - - Cultural and recreation Parks and recreation - - - - Library services - - - - Promotion of culture and tourism - - - - Capital outlay - - - - Debt service: Principal retirement - - - - Interest and fiscal charges - - - - TOTAL EXPENDITURES - 124,888 - 353,684 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 27 (104,451) 31,778 175,833 OTHER FINANCING SOURCES (USES) Proceeds from issuance of refunding bonds - - - - Payment to refund bond escrow agent - - - - Transfers from other funds - 150,000 - - Transfers to other funds - - - - TOTAL OTHER FINANCING SOURCES (USES)- 150,000 - - NET CHANGE IN FUND BALANCES (DEFICITS)27 45,549 31,778 175,833 FUND BALANCES (DEFICITS), BEGINNING OF YEAR 55,424 69,535 16,085 (175,833) FUND BALANCES, END OF YEAR 55,451$ 115,084$ 47,863$ -$ SPECIAL REVENUE EXHIBIT C-2 CONCLUDED 93 Southlake Community Southlake Community TOTAL Parks Enhancement Parks Enhancement Crime NON-MAJOR Development Development Development Development Control GOVERNMENTAL Corporation Corporation Corporation Corporation District FUNDS -$ -$ -$ -$ -$ 3,733,198$ - - - - - 334,504 - - - - - 111,640 - - - - - 1,578,042 - - - - - 529,517 824 214 7,962 602 267 18,092 - - - - - 71,021 824 214 7,962 602 267 6,376,014 - - - - - 56,172 - - - - - 1,680,148 - - - - - 298,684 - - - - - 624,500 - - 13,716 1,440 - 36,319 - - - - - 2,922 - - - - - 633,255 - - 566,150 - - 566,150 2,165,000 1,410,000 - - - 3,575,000 656,148 1,038,656 - - - 1,694,804 2,821,148 2,448,656 579,866 1,440 - 9,167,954 (2,820,324) (2,448,442) (571,904) (838) 267 (2,791,940) 1,989,000 - - - - 1,989,000 (1,954,804) - - - - (1,954,804) 2,815,224 2,436,806 2,000,000 - - 7,402,030 - - - - - (1,591,482) 2,849,420 2,436,806 2,000,000 - - 5,844,744 29,096 (11,636) 1,428,096 (838) 267 3,052,804 1,900,332 566,248 10,878,083 1,301,285 535,819 26,105,220 1,929,428$ 554,612$ 12,306,179$ 1,300,447$ 536,086$ 29,158,024$ DEBT SERVICE CAPITAL PROJECTS CITY OF SOUTHLAKE, TEXAS EXHIBIT C-3 PARKS AND RECREATION SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2021 94 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Interest 1,250$ 500$ 138$ (362)$ Contributions 31,000 12,000 66,707 54,707 Total revenues 32,250 12,500 66,845 54,345 EXPENDITURES Current: Cultural and recreation Parks and recreation 72,500 25,000 21,163 3,837 Total expenditures 72,500 25,000 21,163 3,837 Excess (deficiency) of revenues over (under) expenditures (40,250) (12,500) 45,682 58,182 NET CHANGE IN FUND BALANCES (40,250) (12,500) 45,682 58,182 FUND BALANCES, BEGINNING OF YEAR 159,457 159,457 159,457 - FUND BALANCES, END OF YEAR 119,207$ 146,957$ 205,139$ 58,182$ BUDGETED AMOUNTS CITY OF SOUTHLAKE, TEXAS EXHIBIT C-4 PARKS DEDICATION SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2021 95 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Park fees 90,000$ 277,000$ 334,504$ 57,504$ Interest 5,000 1,900 1,087 (813) Total revenues 95,000 278,900 335,591 56,691 Net change in fund balance 95,000 278,900 335,591 56,691 FUND BALANCES, BEGINNING OF YEAR 1,252,621 1,252,621 1,252,621 - FUND BALANCES, END OF YEAR 1,347,621$ 1,531,521$ 1,588,212$ 56,691$ BUDGETED AMOUNTS CITY OF SOUTHLAKE, TEXAS EXHIBIT C-5 CRIME CONTROL DISTRICT SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2021 96 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Municipal sales tax 1,749,330$ 1,970,000$ 2,814,078$ 844,078$ Interest 38,000 4,500 4,268 (232) Total revenues 1,787,330 1,974,500 2,818,346 843,846 EXPENDITURES: Current: Public safety Police services 1,742,030 1,465,339 1,347,689 117,650 Excess of revenues over expenditures 45,300 509,161 1,470,657 961,496 OTHER FINANCING SOURCES USES: Transfers to other funds (71,493) (71,493) (71,493) - Net change in fund balance (26,193) 437,668 1,399,164 961,496 FUND BALANCES, BEGINNING OF YEAR 4,446,858 4,446,858 4,446,858 - FUND BALANCES, END OF YEAR 4,420,665$ 4,884,526$ 5,846,022$ 961,496$ 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, 2021 97 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Municipal sales tax 390,320$ 813,700$ 919,120$ 105,420$ Interest 12,000 4,000 1,928 (2,072) Total revenues 402,320 817,700 921,048 103,348 EXPENDITURES: Current: Culture and recreation Promotion of culture and tourism 846,912 846,912 633,255 213,657 Excess (deficiency) of revenues over (under) expenditures (444,592) (29,212) 287,793 317,005 OTHER FINANCING USES: Transfers to other funds (16,093) (32,708) (32,708) - Net change in fund balance (460,685) (61,920) 255,085 317,005 FUND BALANCES, BEGINNING OF YEAR 1,834,337 1,834,337 1,834,337 - FUND BALANCES, END OF YEAR 1,373,652$ 1,772,417$ 2,089,422$ 317,005$ 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, 2021 98 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Charges for service 1,564,800$ 1,564,800$ 1,578,042$ 13,242$ Interest 11,000 2,000 - (2,000) Total revenues 1,575,800 1,566,800 1,578,042 11,242 EXPENDITURES: Current: Public works Streets and drainage 629,335 629,335 624,500 4,835 Excess of revenues over expenditures 946,465 937,465 953,542 16,077 OTHER FINANCING USES: Transfers to other funds (1,487,641) (1,487,281) (1,487,281) - Net change in fund balance (541,176) (549,816) (533,739) 16,077 FUND BALANCES, BEGINNING OF YEAR 1,789,612 1,789,612 1,789,612 - FUND BALANCES, END OF YEAR 1,248,436$ 1,239,796$ 1,255,873$ 16,077$ BUDGETED AMOUNTS CITY OF SOUTHLAKE, TEXAS EXHIBIT C-8 COURT SECURITY SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2021 99 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Fines and forfeitures 20,500$ 20,500 32,454$ 11,954$ Interest 3,000 1,000 231 (769) Total revenues 23,500 21,500 32,685 11,185 EXPENDITURES Current: General government Municipal court 59,241 59,241 27,376 31,865 Excess (deficiency) of revenues over (under) expenditures (35,741) (37,741) 5,309 43,050 Net change in fund balance (35,741) (37,741) 5,309 43,050 FUND BALANCES, BEGINNING OF YEAR 431,496 431,496 431,496 - FUND BALANCES, END OF YEAR 395,755$ 393,755$ 436,805$ 43,050$ BUDGETED AMOUNTS CITY OF SOUTHLAKE, TEXAS EXHIBIT C-9 COURT TECHNOLOGY SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2021 100 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Fines and forfeitures 21,500 21,500 27,171 5,671$ Interest 3,000 1,000 147 (853) Total revenues 24,500 22,500 27,318 4,818 EXPENDITURES Current: General government Municipal court 37,830 37,830 28,796 9,034 Excess (deficiency) of revenues over (under) expenditures (13,330) (15,330) (1,478) 13,852 Net change in fund balance (13,330) (15,330) (1,478) 13,852 FUND BALANCES, BEGINNING OF YEAR 292,247 292,247 292,247 - FUND BALANCES, END OF YEAR 278,917$ 276,917$ 290,769$ 13,852$ BUDGETED AMOUNTS CITY OF SOUTHLAKE, TEXAS EXHIBIT C-10 LIBRARY SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2021 101 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Interest 125$ 50$ 10$ (40)$ Contributions 4,000 4,000 4,314 314 Total revenues 4,125 4,050 4,324 274 EXPENDITURES Current: Cultural and recreation Library services 8,000 5,000 2,922 2,078 Excess (deficiency) of revenues over (under) expenditures (3,875) (950) 1,402 2,352 Net change in fund balance (3,875) (950) 1,402 2,352 FUND BALANCES, BEGINNING OF YEAR 11,323 11,323 11,323 - FUND BALANCES, END OF YEAR 7,448$ 10,373$ 12,725$ 2,352$ BUDGETED AMOUNTS CITY OF SOUTHLAKE, TEXAS EXHIBIT C-11 RED LIGHT CAMERA SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2021 102 VARIANCE WITH FINAL BUDGET- POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Interest 5,000$ 1,100$ 152$ (948)$ EXPENDITURES: Current: Public safety Police services 157,705 157,705 145,966 11,739 Excess (deficiency) of revenues (152,705) (156,605) (145,814) 10,791 over (under) expenditures Net change in fund balance (152,705) (156,605) (145,814) 10,791 FUND BALANCES, BEGINNING OF YEAR 706,829 706,829 706,829 - FUND BALANCES, END OF YEAR 554,124$ 550,224$ 561,015$ 10,791$ BUDGETED AMOUNTS CITY OF SOUTHLAKE, TEXAS EXHIBIT C-12 COMMERCIAL VEHICLE ENFORCEMENT BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2021 103 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Fines and forfeitures 25,000$ 15,000$ 20,295$ 5,295$ Interest 700 200 142 (58) Total revenues 25,700 15,200 20,437 5,237 EXPENDITURES Current: General government Police services 153,374 153,374 124,888 28,486 Excess (deficiency) of revenues over (under) expenditures (127,674) (138,174) (104,451) 33,723 OTHER FINANCING SOURCES Transfers from other funds 150,000 150,000 150,000 - Net change in fund balance 22,326 11,826 45,549 33,723 FUND BALANCES, BEGINNING OF YEAR 69,535 69,535 69,535 - FUND BALANCES, END OF YEAR 91,861$ 81,361$ 115,084$ 33,723$ BUDGETED AMOUNTS CITY OF SOUTHLAKE, TEXAS EXHIBIT C-13 SOUTHLAKE PARKS DEVELOPMENT CORPORATION DEBT SERVICE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2021 104 VARIANCE WITH FINAL BUDGET- POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Interest 17,000$ 1,800$ 824$ (976)$ EXPENDITURES: Debt service: Principal retirement 2,165,000 2,165,000 2,165,000 - Interest and fiscal charges 656,224 656,224 656,148 76 Total expenditure s 2,821,224 2,821,224 2,821,148 76 Excess (deficiency) of revenues over (under) expenditures (2,804,224) (2,819,424) (2,820,324) (900) OTHER FINANCING SOURCES (USES): Proceeds from issuance of refunding bonds - 1,989,000 1,989,000 - Payment to refunding bond escrow agent - (1,954,804) (1,954,804) - Transfers from other funds 2,815,224 2,815,224 2,815,224 - Total other financing sources (uses)2,815,224 2,849,420 2,849,420 - Net change in fund balance 11,000 29,996 29,096 (900) FUND BALANCES, BEGINNING OF YEAR 1,900,332 1,900,332 1,900,332 - FUND BALANCES, END OF YEAR 1,911,332$ 1,930,328$ 1,929,428$ (900)$ BUDGETED AMOUNTS CITY OF SOUTHLAKE, TEXAS EXHIBIT C-14 COMMUNITY ENHANCEMENT DEVELOPMENT CORPORATION DEBT SERVICE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2021 105 VARIANCE WITH FINAL BUDGET- POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Interest 5,500$ 1,000$ 214$ (786)$ EXPENDITURES: Debt service: Principal retirement 1,410,000 1,410,000 1,410,000 - Interest and fiscal charges 1,026,806 1,026,806 1,038,656 (11,850) Total expenditures 2,436,806 2,436,806 2,448,656 (11,850) Excess (deficiency) of revenue s over (under) expenditures (2,431,306) (2,435,806) (2,448,442) (12,636) OTHER FINANCING SOURCES: Transfers from other funds 2,436,806 2,436,806 2,436,806 - Net change in fund balance 5,500 1,000 (11,636) (12,636) FUND BALANCES, BEGINNING OF YEAR 566,248 566,248 566,248 - FUND BALANCES, END OF YEAR 571,748$ 567,248$ 554,612$ (12,636)$ BUDGETED AMOUNTS STATISTICAL SECTION 112 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 s ervices the City provides. STATISTICAL SECTION This part of the City of Southlake's annual comprehensive 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 healt h. This information has not been audited by the independent auditor. Source: Unless otherwise noted, the information in these tables is derived from the annual comprehensive financial reports for the relevant year. CITY OF SOUTHLAKE, TEXAS NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) 113 2012 2013 2014 2015 Governmental activities Net investment in capital assets 291,690,099$ 324,928,883$ 338,303,633$ 366,796,228$ Restricted 67,444,322 15,178,798 15,092,604 13,624,164 Unrestricted 16,726,782 50,356,758 58,732,145 59,447,800 Total governmental activities net position 375,861,203$ 390,464,439$ 412,128,382$ 439,868,192$ Business-type activities Net investment in capital assets 67,918,830$ 70,968,919$ 73,126,147$ 78,143,445$ Restricted - - - - Unrestricted 18,908,505 17,673,963 16,085,060 13,660,807 Total business-type activities net position 86,827,335$ 88,642,882$ 89,211,207$ 91,804,252$ Primary government Net investment in capital assets 359,608,929$ 395,897,802$ 411,429,780$ 444,939,673$ Restricted 67,444,322 15,178,798 15,092,604 13,624,164 Unrestricted 35,635,287 68,030,721 74,817,205 73,108,607 Total primary governmental net position 462,688,538$ 479,107,321$ 501,339,589$ 531,672,444$ Source: Annual Comprehensive Financial Report Fiscal Year TABLE 1 114 2016 2017 2018 2019 2020 2021 364,161,725$ 385,506,389$ 392,406,812$ 399,651,828$ 415,945,257$ 432,717,828$ 11,589,350 49,850,439 28,492,591 32,690,100 25,518,844 39,870,051 80,992,079 45,930,426 78,585,681 87,753,906 96,924,423 95,211,152 456,743,154$ 481,287,254$ 499,485,084$ 520,095,834$ 538,388,524$ 567,799,031$ 79,055,138$ 82,251,014$ 83,461,157$ 83,223,713$ 76,271,158$ 77,068,608$ - - - - - - 19,304,913 23,525,952 26,915,321 27,794,856 40,174,495 47,798,046 98,360,051$ 105,776,966$ 110,376,478$ 111,018,569$ 116,445,653$ 124,866,654$ 443,216,863$ 467,757,403$ 475,867,969$ 482,875,541$ 492,216,415$ 509,786,436$ 11,589,350 49,850,439 28,492,591 32,690,100 25,518,844 39,870,051 100,296,992 69,456,378 105,501,002 115,548,762 137,098,918 143,009,198 555,103,205$ 587,064,220$ 609,861,562$ 631,114,403$ 654,834,177$ 692,665,685$ Fiscal Year CITY OF SOUTHLAKE, TEXAS CHANGES IN NET POSITION, LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) 115 2012 2013 2014 2015 Expenses Governmental activities: General government 13,277,006$ 12,892,140$ 13,417,904$ 14,602,425$ Public safety 15,891,911 18,425,878 18,245,617 18,176,698 Public works 6,399,819 8,528,331 8,870,998 9,762,184 Culture and recreation 8,158,291 8,829,394 8,948,841 9,311,006 Interest on long-term debt 5,865,798 6,747,628 5,097,036 2,528,113 Total governmental activities expenses 49,592,825 55,423,371 54,580,396 54,380,426 Business-type activities: Water and sewer 22,530,688 22,119,518 25,030,426 26,692,373 Total business-type activities expenses 22,530,688 22,119,518 25,030,426 26,692,373 Total primary government expenses 72,123,513$ 77,542,889$ 79,610,822$ 81,072,799$ Program Revenues Governmental activities: Charges for Services: General government 2,575,773$ 2,755,038$ 2,657,883$ 2,309,861$ Public safety 3,744,708 3,650,079 3,907,068 4,427,137 Public works 179,094 291,926 360,529 265,432 Culture and recreation 1,400,794 1,422,552 1,379,658 1,399,822 Operating grants and contributions 200,434 639,230 443,157 455,575 Capital grants and contributions 518,617 2,244,965 4,436,346 8,967,466 Total governmental activities program revenues 8,619,420 11,003,790 13,184,641 17,825,293 Business-type activities: Charges for services: Water and sewer 22,451,738 22,806,432 23,591,438 24,792,619 Capital grants and contributions 1,214,395 1,981,354 3,510,936 5,776,438 Total business-type activities program revenues 23,666,133 24,787,786 27,102,374 30,569,057 Total primary government program revenues 32,285,553$ 35,791,576$ 40,287,015$ 48,394,350$ Net (Expenses) Revenue Governmental activities (40,973,405)$ (44,419,581)$ (41,395,755)$ (36,555,133)$ Business-type activities 1,135,445 2,668,268 2,071,948 3,876,684 Total primary government net expenses (39,837,960)$ (41,751,313)$ (39,323,807)$ (32,678,449)$ General Revenues and Other Changes in Net Position Governmental activities: Taxes: Property taxes 31,166,847$ 31,844,930$ 33,099,007$ 33,176,285$ Sales taxes 20,076,478 22,659,917 26,623,661 30,090,614 Franchise taxes 2,598,074 2,646,394 2,841,025 3,327,739 Interest on investments 232,722 30,110 482,607 523,954 Gain (Loss) on sale of capital assets 91,134 89,923 99,109 102,900 Transfers 890,220 915,475 915,116 968,160 Miscellaneous 463,681 836,068 639,571 1,066,818 Total governmental activities 55,519,156 59,022,817 64,700,096 69,256,470 Business-type activities: Interest on investments 46,212 25,227 101,469 112,967 Gain (Loss) on sale of capital assets - - - 23,100 Transfers (890,220) (915,475) (915,116) (968,160) Miscellaneous 10,811 37,527 6,963 4,521 Total business-type activities (833,197) (852,721) (806,684) (827,572) Total primary government 54,685,959$ 58,170,096$ 63,893,412$ 68,428,898$ Change in Net Position Governmental activities 14,545,751$ 14,603,236$ 23,304,341$ 32,701,337$ Business-type activities 302,248 1,815,547 1,265,264 3,049,112 Total primary government 14,847,999$ 16,418,783$ 24,569,605$ 35,750,449$ Source: Annual Comprehensive Financial Report Fiscal Year TABLE 2 116 2016 2017 2018 2019 2020 2021 12,851,787$ 17,430,052$ 18,255,444$ 20,014,583$ 21,275,487$ 20,990,841$ 19,300,590 21,179,963 23,962,971 23,881,485 24,054,527 23,642,969 11,950,671 8,979,020 10,040,453 10,081,721 9,839,646 9,122,951 10,655,763 11,780,022 12,775,020 15,955,201 17,665,953 15,367,103 3,005,359 3,834,897 3,047,221 2,750,037 2,171,359 2,076,809 57,764,170 63,203,954 68,081,109 72,683,027 75,006,972 71,200,673 24,741,428 24,703,007 29,068,434 29,873,788 27,490,815 25,730,741 24,741,428 24,703,007 29,068,434 29,873,788 27,490,815 25,730,741 82,505,598$ 87,906,961$ 97,149,543$ 102,556,815$ 102,497,787$ 96,931,414$ 2,363,499$ 2,262,247$ 2,895,701$ 2,498,549$ 1,631,816$ 1,733,148$ 4,620,030 3,929,564 2,495,288 3,001,895 2,536,553 2,166,430 223,533 143,935 1,635,163 1,724,344 1,824,434 1,658,723 1,537,185 1,814,319 1,301,793 2,145,128 2,993,552 3,387,430 310,636 328,288 459,006 866,518 1,807,473 894,423 2,228,863 7,714,765 1,044,834 1,437,166 1,422,315 5,882,015 11,283,746 16,193,118 9,831,785 11,673,600 12,216,143 15,722,169 25,474,777 27,939,504 32,229,361 29,929,932 32,271,341 32,071,140 1,638,842 3,851,057 2,367,774 896,652 1,315,092 3,332,452 27,113,619 31,790,561 34,597,135 30,826,584 33,586,433 35,403,592 38,397,365$ 47,983,679$ 44,428,920$ 42,500,184$ 45,802,576$ 51,125,761$ (46,480,424)$ (47,010,836)$ (58,249,324)$ (61,009,427)$ (62,790,829)$ (55,478,504)$ 2,372,191 7,087,554 5,528,701 952,796 6,095,618 9,672,851 (44,108,233)$ (39,923,282)$ (52,720,623)$ (60,056,631)$ (56,695,211)$ (45,805,653)$ 34,501,608$ 37,705,796$ 40,380,926$ 41,734,946$ 41,973,780$ 41,660,369$ 29,047,285 29,968,331 30,822,431 31,868,204 32,119,114 38,461,312 2,955,114 2,907,537 2,972,143 3,114,117 2,811,573 2,671,726 379,342 843,082 2,108,804 3,247,401 1,721,876 101,746 102,960 71,284 - - - - (3,767,400) (157,975) 1,211,036 1,178,932 1,234,945 1,284,122 136,477 216,881 - 476,577 1,222,231 709,736 63,355,386 71,554,936 77,495,340 81,620,177 81,083,519 84,889,011 94,837 167,068 320,473 868,227 566,411 32,272 317,276 350 - - - - 3,767,400 157,975 (1,211,036) (1,178,932) (1,234,945) (1,284,122) 4,095 3,968 4,166 - - - 4,183,608 329,361 (886,397) (310,705) (668,534) (1,251,850) 67,538,994$ 71,884,297$ 76,608,943$ 81,309,472$ 80,414,985$ 83,637,161$ 16,874,962$ 24,544,100$ 19,246,016$ 20,610,750$ 18,292,690$ 29,410,507$ 6,555,799 7,416,915 4,642,304 642,091 5,427,084 8,421,001 23,430,761$ 31,961,015$ 23,888,320$ 21,252,841$ 23,719,774$ 37,831,508$ Fiscal Year CITY OF SOUTHLAKE, TEXAS TABLE 3 FUND BALANCES, GOVERNMENTAL FUNDS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) LAST TEN FISCAL YEARS (UNAUDITED) 117 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021General FundNonspendable 37,791$ 292,356$ 46,008$ 27,826$ 86,286$ 57,997$ 86,286$ 63,189$ 40,839$ 69,373$ Committed for:Police expenditures 33,624 22,643 28,647 34,609 - 46,657 - - - - Assigned for:Teen Court expenditures 18,314 18,606 18,832 19,077 19,835 19,684 19,835 20,427 20,693 20,721 Senior Center expenditures 10,397 10,629 10,623 10,624 10,743 10,671 10,743 10,938 11,064 11,074 Recycling 22,642 28,629 34,609 40,612 59,163 52,811 59,163 66,253 70,395 76,458 Reforestation expenditures 113,907 69,128 44,098 101,873 111,728 112,300 111,728 63,030 35,150 54,847 Public art - - - - - - 678,829 835,991 500,819 364,046 Facility maintenance - - - - - - 6,708,556 7,222,995 8,813,795 9,351,441 Economic investment - - - - - - 2,237,211 2,282,718 3,525,280 2,870,637 Strategic initiatives 6,517,692 5,988,904 7,980,605 7,673,680 5,297,998 6,052,063 5,299,595 7,585,671 10,603,712 15,096,120 Unassigned 13,205,240 14,351,627 16,399,991 18,230,317 19,762,633 18,745,735 11,799,021 12,517,340 14,022,976 15,810,846 Total general fund 19,959,607$ 20,782,522$ 24,563,413$ 26,138,618$ 25,348,386$ 25,097,918$ 27,010,967$ 30,668,552$ 37,644,723$ 43,725,563$ All Other Governmental Funds*Nonspendable -$ -$ -$ -$ -$ -$ 50,177$ -$ -$ -$ Restricted for:Debt Service 12,657,819 12,406,902 12,150,184 11,057,196 9,005,985 8,029,607 7,750,782 8,419,008 7,102,145 5,594,579 Municipal court expenditures 770,071 823,737 860,556 878,490 838,458 868,393 851,104 847,247 739,828 775,437 Reinvestment zone expenditures 4,718,865 4,298,510 4,422,565 4,010,195 3,851,783 1,954,971 923,093 2,925,977 4,999,895 5,641,893 Parks and recreation 51,436,227 55,898,283 53,053,840 41,949,791 72,654,652 78,664,646 40,726,831 24,372,567 9,381,019 24,792,059 Storm water - - - - - - - - 1,789,612 1,255,873 Promotion of culture and tourism - - - - - - - - 1,834,337 2,089,422 Committed for:Police expenditures 5,969,294 4,951,542 5,532,996 7,813,849 4,986,804 3,645,226 4,743,948 5,254,694 5,256,684 6,549,013 Parks and recreation 6,381,618 7,692,049 8,020,248 10,720,498 11,125,967 17,968,695 8,904,671 8,815,413 11,121,825 1,793,351 Oil and gas expenditures 53,211 53,220 53,160 53,168 53,227 53,404 53,719 54,754 55,424 55,541 Storm water expenditures 451,127 451,164 450,824 451,371 4,856,336 453,374 456,388 465,180 - - Library expenditures 3,422 15,844 7,967 8,832 7,132 7,432 8,338 9,528 11,323 12,725 Capital projects - - - - - - 34,285,874 44,554,528 45,315,086 44,304,341 Unassigned - - - - - - - - (175,833) - Total all other governmental funds 82,441,654$ 86,591,251$ 84,552,340$ 76,943,390$ 107,380,344$ 111,645,748$ 98,704,748$ 95,718,896$ 87,431,345$ 92,864,234$ Source: Annual Comprehensive Financial ReportNotes: a Includes encumbrances and prepaid items. * The City started splitting parks and recreation with storm water and promotion of culture and tourism in 2020 Fiscal Year CITY OF SOUTHLAKE, TEXAS TABLE 4 CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) LAST TEN FISCAL YEARS (UNAUDITED) 118 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021REVENUESAd valorem taxes, penalties and interest 31,137,199$ 31,844,934$ 33,174,810$ 33,294,062$ 34,445,902$ 37,688,372$ 40,484,511$ 41,744,243$ 41,980,391$ 41,675,661$ Franchise taxes 2,598,074 2,646,394 2,841,025 3,327,739 2,955,114 2,907,537 2,972,143 3,114,117 2,811,573 2,671,726 Municipal sales tax and mixed beverage tax 20,076,478 22,659,917 26,623,661 30,090,614 29,047,285 29,968,331 30,822,431 31,868,204 32,119,114 38,461,312 Licenses, permits and fees 3,431,600 3,517,378 3,925,956 4,385,000 4,590,477 4,103,003 2,184,965 3,161,228 2,868,166 2,041,189 Charges for services 1,805,022 1,876,302 1,778,003 1,849,747 1,797,676 1,909,922 1,984,377 4,970,991 5,013,769 5,783,552 Fines and forfeitures 2,307,407 2,473,444 2,374,221 1,943,406 2,011,137 1,969,180 2,040,036 1,798,033 968,495 954,809 Grants 117,810 205,846 214,152 90,428 128,489 100,899 2,108,228 124,141 1,737,849 760,658 Capital recovery fees 435,406 794,976 474,172 866,782 1,237,552 308,095 376,004 621,715 693,293 232,525 Contributions 26,693 33,316 130,564 112,409 383,732 859,199 97,644 198,449 82,225 72,565 Interest earned 198,601 33,092 457,820 490,551 71,411 118,956 2,044,822 3,123,081 1,634,301 96,183 Miscellaneous 521,598 735,539 552,544 672,333 528,093 544,727 481,919 341,934 1,544,346 836,962 Total revenues 62,655,888 66,821,138 72,546,928 77,123,071 77,196,868 80,478,221 85,597,080 91,066,136 91,453,522 93,587,142 EXPENDITURESGeneral government 7,756,647 8,617,226 8,629,250 8,974,058 9,301,7509,608,516 11,053,010 12,988,724 13,233,455 14,236,006Public safety 14,692,116 17,096,436 16,924,285 16,968,939 17,376,31018,520,588 19,806,464 21,145,351 21,534,858 22,015,080Public works 4,662,449 5,818,028 6,303,749 5,332,402 5,483,131 19,112,170 23,225,431 5,687,428 7,834,577 7,177,205Culture and recreation 6,590,252 6,980,508 7,227,628 7,441,366 8,456,526 8,783,323 8,026,149 21,815,043 13,226,045 11,202,609Intergovernmental 2,972,849 3,572,221 3,834,118 4,478,312 4,623,919 5,348,444 6,045,218 6,123,926 7,214,798 6,049,200Capital outlay 11,072,944 17,097,340 14,623,962 21,349,324 8,658,0674,800,627 12,214,328 8,285,716 15,951,425 11,521,223Debt servicePrincipal retirement 9,901,754 10,660,527 11,930,280 14,489,311 13,394,604 13,258,185 12,220,242 8,385,059 9,896,675 10,341,201Interest and fiscal charges 5,659,876 4,839,491 4,982,567 3,894,5353,796,740 4,084,086 3,695,048 3,175,731 3,108,014 2,629,585Total expenditures 63,308,887 74,681,777 74,455,839 82,928,247 71,091,047 83,515,939 96,285,890 87,606,978 91,999,847 85,172,109 Excess (deficiency) of revenues over (under) expenditures (652,999) (7,860,639) (1,908,911) (5,805,176) 6,105,821 (3,037,718) (10,688,810) 3,459,158 (546,325) 8,415,033 OTHER FINANCING SOURCES (USES)Proceeds from sale of property - 80 1,521 3,271 - - - 6,019 - 27,288 Proceeds from issuance of tax notes payable - - - - - - - - - 3,753,000 Proceeds from issuance of general obligation bonds 8,545,000 11,765,000 4,380,000 - - - - - - - Premium (Discount) on issuance of refunding bonds - - - - - 884,928 - 1,329,086 - - Proceeds from issuance of sales tax revenue bonds - - - - 24,450,000 9,945,000 - - - - Proceeds from issuance of refunding bonds 9,690,000 20,830,000 23,400,000 - - 3,830,000 - 10,860,000 - 1,989,000 Proceeds from capital lease obligation - - - - - - - - - - Premium (Discount) on issuance of general obligation bonds 1,737,875 3,753,175 1,301,376 - 2,168,153 - - - - - Payment to refund bond escrow agent (10,788,860) (24,030,579) (25,547,122) - - (4,309,151) - (12,311,639) - (1,954,804) Transfer from other funds 20,292,866 18,730,003 20,498,983 21,925,067 23,584,605 23,332,602 23,056,973 17,941,263 15,937,424 14,161,081 Transfer to other funds (19,402,646) (18,214,528) (20,383,867) (22,156,907) (28,352,005) (24,940,577) (23,345,937) (20,662,331) (16,702,479) (14,876,959) Total other financing sources (uses) 10,074,235 12,833,151 3,650,891 (228,569) 21,850,753 8,742,802 (288,964) (2,837,602) (765,055) 3,098,606 NET CHANGE IN FUND BALANCES 9,421,236$ 4,972,512$ 1,741,980$ (6,033,745)$ 27,956,574$ 5,705,084$ (10,977,774)$ 621,556$ (1,311,380)$ 11,513,639$ Debt service as a percentage of noncapital expenditures 29.1% 25.9% 27.7% 29.1% 27.0% 25.5% 21.8%16.1% 17.1% 17.6% Source: Annual Comprehensive Financial ReportFiscal Year CITY OF SOUTHLAKE, TEXAS TABLE 5 ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS (UNAUDITED) 119 Fiscal Year Real Property Personal PropertyLess: Tax-Exempt PropertyTotal Taxable Assessed ValueTotal Direct Tax Rate2012 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 2017 7,556,442,291 543,192,799 1,364,174,169 6,735,460,921 0.46200 2018 8,254,704,348 602,971,804 1,683,599,421 7,174,076,731 0.46200 2019 9,002,807,317 614,999,492 1,845,495,105 7,772,311,704 0.44700 2020 9,653,389,547 659,212,511 1,967,287,039 8,345,315,019 0.41000 2021 9,802,447,688 667,695,748 2,040,326,726 8,429,816,710 0.40500 Source: Tarrant Appraisal DistrictEstimated Market Value CITY OF SOUTHLAKE, TEXAS TABLE 6 DIRECT AND OVERLAPPING PROPERTY TAX RATES (PER $100 OF ASSESSED VALUE) LAST TEN FISCAL YEARS (UNAUDITED) 120 Fiscal YearOperating/ General RateGeneral Obligation Debt Service Total DirectCarroll Independent School District Tarrant CountyTarrant County Hospital DistrictTarrant County College District2012 0.33200 0.13000 0.46200 1.41500 0.264000 0.227897 0.14897 2013 0.34200 0.12000 0.46200 1.40000 0.264000 0.227897 0.14897 2014 0.34200 0.12000 0.46200 1.40000 0.264000 0.227897 0.14950 2015 0.34200 0.12000 0.46200 1.40000 0.264000 0.227897 0.14950 2016 0.36200 0.10000 0.46200 1.39500 0.264000 0.227897 0.14950 2017 0.36200 0.10000 0.46200 1.39500 0.254000 0.227897 0.14473 2018 0.36200 0.10000 0.46200 1.38500 0.244000 0.224429 0.14006 2019 0.35700 0.09000 0.44700 1.38000 0.234000 0.224429 0.13607 2020 0.33000 0.08000 0.41000 1.30000 0.234000 0.224429 0.13017 2021 0.33000 0.07500 0.40500 1.28640 0.234000 0.224429 0.13017 Source: Tarrant Appraisal DistrictCity Direct Rates Overlapping Rates CITY OF SOUTHLAKE, TEXAS TABLE 7 PRINCIPAL PROPERTY TAX PAYERS CURRENT YEAR AND FIVE YEARS AGO (UNAUDITED) 121 TaxpayerTaxable Assessed ValuePercentage of Total City Taxable Assessed ValueaTaxpayerTaxable Assessed ValuePercentage of Total City Taxable Assessed ValuebTown Square Ventures LP 249,758,871$ 2.96% Town Square Ventures LP 293,001,243$ 4.77%Cellco Partnership 128,384,164 1.52% Verizon Wireless Texas LLC 171,785,286 2.80%TD Ameritrade Services Company INC 70,000,000 0.83% SLTS Grand Avenue/II LP 85,046,782 1.39%Sabre Headquarters LLC 67,080,633 0.80% GAHC3 Southlake TX Hospital LLC 51,500,000 0.84%Wyndham Properties LTD/ II LTD 57,676,909 0.68% Wyndham Properties LTD 50,276,308 0.82%H & C Southlake Hilton LLC 49,548,567 0.59% Carroll/1709 LTD 47,662,149 0.78%Carroll/1709 LTD 48,828,562 0.58% Sabre Headquarters LLC 45,538,856 0.74%Excel Southlake LP 48,005,178 0.57% H & C Southlake Hilton LLC 31,854,107 0.52%DSL Landlord II LLC 46,406,908 0.55% Forest Park Medical Center 26,108,931 0.43%Red Mountain Estates Three LLC 36,800,000 0.44% Inland Western Southlake Corners Ltd 25,280,713 0.41%Total 802,489,792$ 9.52% Total 828,054,375$ 13.50%Total Assessed Valuation 8,429,816,710$ 100.00% Total Assessed Valuation 6,137,789,731$ 100.00%Source: Tarrant Appraisal DistrictNotes: aTaxpayers are assessed on January 1, 2020 (2020 tax year) for the 2021 fiscal year. bTaxpayers are assessed on January 1, 2015 (2015 tax year) for the 2016 fiscal year.20212016 CITY OF SOUTHLAKE, TEXAS TABLE 8 AD VALOREM TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (UNAUDITED) 122 Fiscal YearTaxes Levied for the Fiscal Year AmountPercentage of LevyCollections in Subsequent Years AmountPercentage of Levy2012 25,915,813$ 25,552,394$ 98.60 222,811$ 25,775,205$ 99.46 2013 26,053,160 25,762,457 98.88 164,797 25,927,254 99.52 2014 27,136,997 26,865,897 99.00 68,968 26,934,865 99.26 2015 27,791,839 27,556,790 99.15 103,879 27,660,669 99.53 2016 28,965,792 28,684,131 99.03 165,219 28,849,350 99.60 2017 31,410,934 31,054,006 98.86 79,963 31,133,969 99.12 2018 33,103,373 32,975,600 99.61 18,534 32,994,134 99.67 2019 34,957,519 34,486,820 98.65 (80,603) 34,406,217 98.42 2020 34,109,141 33,572,469 98.43 - 33,572,469 98.43 2021 34,329,457 33,833,652 98.56 - 33,833,652 98.56 Source: Tarrant County Tax OfficeTotal CollectionsCollected within the Fiscal Year of the Levy CITY OF SOUTHLAKE, TEXAS TABLE 9 RATIO OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS (UNAUDITED) 123 Fiscal YearGeneral Obligation BondsCertificates of Obligation Revenue Bonds Tax NotesGeneral Obligation BondsCertificates of ObligationRevenue BondsContract Revenue ObligationsTotal Primary GovernmentPercentage of Personal IncomeaPer Capitaa2012 55,747,995$ 38,971,935$ 30,360,045$ -$ 24,692,508$ 23,126,850$ 1,790,000$ 1,755,000$ 176,444,333$ 11.44 6,591$ 2013 49,975,889 44,402,760 28,910,000 - 23,163,624 24,660,985 - 1,435,000 172,548,258 9.81 6,372 2014 45,355,674 41,553,855 27,150,000 - 18,923,955 28,009,860 - 1,100,000 162,093,344 10.93 5,910 2015 40,847,363 33,182,855 25,540,000 - 15,422,270 30,035,860 - 750,000 145,778,348 9.03 5,238 2016 40,733,282 29,511,905 48,330,000 - 12,974,232 29,143,202 - 385,000 161,077,621 9.30 5,694 2017 39,022,933 18,706,525 57,207,643 - 13,846,422 28,963,708 - - 157,747,231 8.08 5,358 2018 30,112,187 11,050,000 53,605,000 - 9,187,813 30,550,000 - - 134,505,000 6.14 4,547 2019 40,949,900 - 51,198,945 - 14,816,097 22,463,654 - - 129,428,596 6.01 4,270 2020 33,224,148 - 47,939,806 - 12,678,798 21,352,753 - - 115,195,505 5.29 3,793 2021 27,428,338 - 42,615,770 3,753,000 12,916,025 18,217,805 - - 104,930,938 5.31 3,692 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.Business-Type ActivitiesGovernmental Activities CITY OF SOUTHLAKE, TEXAS TABLE 10 RATIO OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS (UNAUDITED) 124 Fiscal YearGeneral Obligation BondsCertificates of Obligation TotalLess: Available Debt Service FundsNet General Bonded DebtPercentage of Actual Taxable Value of PropertyaPer Capitab2012 80,440,503$ 62,098,785$ 142,539,288$ 12,657,819$ 129,881,469$ 2.36% 4,852$ 2013 73,139,513 69,063,745 142,203,258 12,406,902 129,796,356 2.30% 4,793 2014 64,279,629 69,563,715 133,843,344 12,150,184 121,693,160 2.07% 4,437 2015 56,269,633 63,218,715 119,488,348 11,057,196 108,431,152 1.75% 3,896 2016 53,707,514 58,655,107 112,362,621 9,005,985 103,356,636 1.68% 3,653 2017 52,869,355 47,670,233 100,539,588 8,029,607 92,509,981 1.37% 3,142 2018 39,300,000 41,600,000 80,900,000 7,750,782 73,149,218 1.02% 2,473 2019 55,765,997 22,463,654 78,229,651 8,419,008 69,810,643 0.90% 2,303 2020 45,902,946 21,352,753 67,255,699 7,102,145 60,153,554 0.72% 1,981 2021 40,344,363 18,217,805 58,562,168 5,594,579 52,967,589 0.63% 2,156 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, 2021 (UNAUDITED) 125 Gross Bonded Debt Percentage of Debt Applicable to AreaShare of Overlapping DebtDebt repaid with property taxesCarroll ISD 329,880,000$ 85.30%281,387,640$ Denton County 571,605,000 0.13%743,087 Grapevine-Colleyville ISD 362,388,775 1.50% 5,435,832 Keller ISD 877,564,989 2.43% 21,324,829 Northwest ISD 1,223,981,739 1.38% 16,890,948 Tarrant County 213,675,000 4.03% 8,611,103 Tarrant County College District 255,995,000 4.03% 10,316,599 Tarrant County Hospital District 14,495,000 4.03%584,149 Subtotal, overlapping debt 345,294,187 City of Southlake (direct debt)69,091,975$ 100.00% 69,091,975 Total direct and overlapping debt414,386,162$ Source: Municipal Advisory Council of Texas.Note: Includes only debt of the City's governmental activities.Note: Per the Municipal Advisory Council of Texas, the overlapping percentages are calculated by determining the estimated share assessed valuation of taxable property within the overlapping taxing bodies and the City, and then dividing that share value by the total assessed value oftaxable property within the overlapping tax body.Governmental Unit CITY OF SOUTHLAKE, TEXAS TABLE 12 PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS (UNAUDITED) 126 Fiscal Year Total RevenuesaLess: Operating ExpensesbNet Available RevenueAnnual RequirementcTimes Coverage2012 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 2017 28,110,890 20,039,979 8,070,911 6,090,382 1.33 2018 32,554,350 24,273,419 8,280,931 5,181,837 1.60 2019 31,390,422 25,607,271 5,783,151 4,263,334 1.36 2020 32,837,752 22,792,769 10,044,983 3,798,047 2.64 2021 32,008,486 22,835,444 9,173,042 3,329,146 2.76 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) 127 Fiscal YearEstimated PopulationaPersonal Income Per Capita Personal IncomeSchool EnrollmentcUnemployment Rated2012 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%2017 29,440 1,951,900,038 66,301 8,190 3.0%2018 29,580 2,189,030,472 74,004 8,341 3.2%2019 30,310 2,151,828,140 70,994 8,344 2.7%2020 30,370 2,177,861,595 71,711 8,509 5.2%2021 31,199 2,169,765,423 69,546 8,318 3.6%Note: aCity of Southlake Economic Development bCarroll Independent School DistrictcTexas Workforce Commission CITY OF SOUTHLAKE, TEXAS TABLE 14 PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO (UNAUDITED) 128 EmployeraEmployeesaPercentage of Total City Employment EmployeraEmployeesaPercentage of Total City EmploymentSabre Holdings 2,550 16.43% Sabre Holdings 2,700 20.92%TD Ameritrade 2,230 14.37% CISD - Administration Building 1,072 8.30%Carroll ISD 1,176 7.58% Verizon Wireless 619 4.80%Verizon Wireless 685 4.41% Central Market 350 2.71%Keller Williams 650 4.19% City of Southlake 310 2.40%Gateway Church 600 3.87% IQ Pipeline, LLC 250 1.94%Hilton Dallas/Southlake Town Sq 218 1.69%Century 21 Mike Bowman, Inc. 200 1.55%Tri Dal Ltd. 194 1.50%Variosystems Inc. 170 1.32%Cheesecake Factory 161 1.25%Lowe's Home Improvement 145 1.12%Allied Oil & Gas Services 140 1.08%Total 7,891 50.84% Total 6,529 50.58%Total Southlake Daytime Employeesb15,521 Total Southlake Daytime Employeesb12,909Source: aCity of Southlake Economic Development bTexas Workforce Commission20212012 CITY OF SOUTHLAKE, TEXAS TABLE 15 FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) 129 Function/Program 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021General Government andAdministration 45.75 49.00 55.75 52.00 59.00 57.00 60.00 74.00 75.75 78.14 Public Safety 119.50 138.45 140.45 140.95 140.95 139.95 141.45 141.15 145.15 145.15 Public Works 29.70 29.95 27.25 33.25 28.25 34.50 35.50 35.00 35.00 35.00 Culture and Recreational 62.15 62.15 62.15 65.65 71.40 72.03 114.78 108.93 111.80 113.93 Water and Sewer 29.30 29.30 29.50 29.50 30.25 31.00 31.00 31.00 30.00 30.00 Community Development 21.00 21.00 23.00 23.00 23.00 23.00 23.00 22.00 23.00 22.50 Economic Development 3.50 3.50 4.00 4.00 4.00 1.00 1.00 2.00 3.63 3.63 Total 310.90 333.35 342.10 348.35 356.85 358.48 406.73 414.08 424.33 428.35 Source: City BudgetFiscal Year CITY OF SOUTHLAKE, TEXAS TABLE 16 OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) 130 Function/Program2012 2013 2014 2015 2016 2017 2018 2019 2020 2021Public Safety Police Number of Employees 54 53 68 68 68 67 68 72 72 72 Number of Violations (Citations) 14,062 21,497 32,641 30,451 14,858 13,840 13,492 13,759 9,095 8,230 Number of Arrests 1,420 1,079 1,284 1,095 513 1,148 1,027 7191,025 838 Number of Alarm calls 4,267 3,889 3,087 3,497 3,673 3,284 3,434 3,171 2,465 2,549 Fire Number of Employees 56 68 72 72 73 73 73 73 73 73 Number of Fire runs 990 1,215 1,245 1,220 760 807 811 748 999 1,036 Number of EMS runs 985 1,356 1,492 1,448 1,745 1,808 1,802 1,875 1,517 1,994 Number of Hazardous materials runs 44 80 56 43 95 105 109 90 9492 Number of Alarm calls 392 448 461 501 608 652 651 678 602 748Development Services Streets maintained (miles) 228 245 268 204 209 199 211 213 214 214 Streets crack sealed (blocks) 117 121 94 N/A N/A 75 391 384 5 0 Roadway signage replaced/installed 255 216 188 N/A 568 N/A 21 136 13132 Asphalt repairs (tons) 1,833 2,414 2,802 4,849 4,667 6,671 5,191 6,100 213 7,747 Concrete repairs to roads/sidewalks (cu. yds.) 288 294 240 2,421 308 1,462 1,188 503 41 1,269 Right-of-way maintenance (miles) 456 484 484 N/A N/A 5 417 417 558 55 Building Permits Issueda2,727 2,917 3,051 2,979 2,703 3,163 3,453 3,133 2,834 3,209 Planning & Zoning cases heard 85 121 143 136 190 100 110 76 62 82Cultural and Recreational Parks and Recreation Park maintain & operate per acre 800 800 1,205 1,200 1,1061,106 1,106 1,106 1,106 561 Participants in Leisure Service Programs 12,259 13,170 6,227 6,200 8,687 8,735 9,844 17,555 8,065 7,360 Participants in Special Events 37,546 46,500 47,000 60,000 66,000 72,625 71,400 65,000 900 36,300 Participants in Senior Center Programs 10,401 10,609 4,935 4,900 8,868 13,449 13,552 14,068 4,989 6,390 Library Volumes in Collection 51,790 50,250 46,781 44,971 45,416 44,899 43,947 41,789 43,699 41,895 Patrons 20,902 21,622 16,662 16,838 13,461 13,764 14,327 15,267 13,274 14,467Water and Sewer Number of Water Consumers 9,543 9,765 9,825 10,183 10,581 10,94111,009 11,133 11,236 11,349 Number of Sewer accounts 7,522 7,918 7,770 8,167 8,470 8,889 9,111 11,886 9,053 9,142 Line inspections (feet) 190,000 190,000 217,000 1,086,624 789,266 687,246 574,136 641,941 377,081 214,789 Water meters installed/repaired/replaced 1,047 565 745 1,284 10,566 135 191 279 186 359 Transmitters installed/replaced 115 140 610 N/A 10,566 489 124 113466 1,327 Gallons purchased from Ft. Worth (millions) 3,573,648 3,472,212 3,220,075 3,069,971 2,904,048 3,206,363 3,156,019 2,762,227 3,013,801 3,057,825 Gallons distributed (millions) 3,241,014 3,125,358 2,964,457 3,069,971 2,935,818 2,900,926 3,229,438 2,363,542 2,957,582 2,731,697 Maximum Storage Capacity (million of gallons) 21 21 21 21 21 21 21212121Source: City DepartmentsNotes: N/A Data not availableaIncludes 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) 131 Function/Program2012 2013 2014 2015 2016 2017 2018 2019 2020 2021Public Safety Police Stations 2 2 3 3 3 3 3 3 3 3 Police Patrol Units 24 23 26 25 25 25 25 25 21 23 Fire Stations 2 2 3 3 3 3 3 3 3 3 Police Motorcycle Units 6 5 5 5 5 5 5 5 5 5Cultural and Recreational Parks 18 18 18 18 18 18 18 18 18 35 Playgrounds 3 3 5 7 6 6 6 7 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 21 21 21 21 21 21 21 21 21 21 In-line hockey rink/turf fielda1111111111 Ballfields 21 21 44 32 27 29 29 29 29 22 Soccer Fields 17 17 17 13 12 21 21 21 21 21 Nature Center 1 1 1 1 1 1 1 1 1 1 Water and Sewer Water Mains (miles) 258 206 294 285 290 284 298 301 304 293 Lift Stations 15 15 14 13 13 14 15 15 15 9 Sanitary Sewer Mains (miles) 195 206 209 206 209 212 216 218 220 220 Drainage, ditches/creeks (miles) 89 91 91 36 36 48 52 51 51 42 Fire hydrants 2,902 2,395 2,486 2,594 2,643 2,723 2,774 2,809 2,854 2,919 Water valves 7,614 6,388 6,686 N/A 7,154 7,360 7,553 7,673 7,818 8,023 Source: City DepartmentsNote: N/A - Data not availableaIn-line hockey rink converted to turf field in 2020. Fiscal Year