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Item 4D - MemoM E M O R A N D U M March 14, 2023 To: Shana Yelverton, City Manager From: Sharen Jackson, Chief Financial Officer Subject: Approve the 2022 Comprehensive Annual Financial Report Action Requested: Approval of September 30, 2022, Comprehensive Annual Financial Report. Background Information: The purpose of this item is to seek approval of the 2022 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 2022. •City received a “clean” audit on the City’s financial statements for the year ended September 30, 2022. There were not any instances of noncompliance or other reportable findings. •Jennifer Ripka, 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: 2022 Comprehensive Annual Financial Report Staff Recommendation: Approval of 2022 Comprehensive Annual Financial Report Item 4D CITY OF SOUTHLAKE, TEXAS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2022 As Prepared By Sharen Jackson, CPA Chief Financial Officer City of Southlake, Texas Annual Comprehensive Financial Report For the Fiscal Year Ended September 30, 2022 Table of Contents i Exhibit Page I.INTRODUCTORY SECTION Letter of Transmittal vii Certificate of Achievement xiv Organizational Chart xv List of Principal Officials xvi II.FINANCIAL SECTION Independent Auditor’s Report 3 A.MANAGEMENT'S DISCUSSION AND ANALYSIS 9 B.BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Position 1 22 Statement of Activities 2 23 Fund Financial Statements Governmental Funds Financial Statements Balance Sheet 3 28 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 4 30 Statement of Revenues, Expenditures, and Changes in Fund Balance 5 32 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities 6 34 Proprietary Funds Financial Statements Statement of Net Position 7 37 Statement of Revenues, Expenses, and Changes in Net Position 8 38 Statement of Cash Flows 9 39 Fiduciary Fund Financial Statements Statement of Fiduciary Net Position 10 43 Statement of Changes in Fiduciary Net Position 11 44 Notes to the Basic Financial Statements 47 City of Southlake, Texas Annual Comprehensive Financial Report For the Fiscal Year Ended September 30, 2022 Table of Contents – Continued ii Exhibit Page C.REQUIRED SUPPLEMENTARY INFORMATION Budgetary Comparison Schedule - General Fund A-1 90 Budgetary Comparison Schedule - Southlake Parks Development Corporation Special Revenue Fund A-2 91 Budgetary Comparison Schedule - Tax Increment Financing District Special Revenue Fund A-3 92 Budgetary Comparison Schedule - Community Enhancement Development Corporation Special Revenue Fund A-4 93 Notes to Budgetary Comparison Schedules 94 Schedule of Changes in Net Pension Liability and Related Ratios - TMRS A-5 95 Schedule of Pension Contributions - TMRS A-6 96 Schedule of Changes in Net OPEB Liability (Asset) and Related Ratios - Southlake Net OPEB (Asset) Liability for Health Insurance A-7 97 Schedule of Contributions - Southlake Net OPEB Liability (Asset) for Health Insurance A-8 98 Schedule of Changes in the Total OPEB Liability and Related Ratios - TMRS - Supplemental Death Benefits A-9 99 Schedule of OPEB Contributions - TMRS - Supplemental Death Benefits A-10 100 Condition Rating of Street System A-11 101 D.COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Major Governmental Funds Budgetary Comparison Schedule - General Obligation Debt Service Fund B-1 105 Nonmajor Governmental Funds Combining Balance Sheet - Nonmajor Governmental Funds C-1 108 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance - Nonmajor Governmental Funds C-2 112 Budgetary Comparison Schedule - Parks and Recreation Special Revenue Fund C-3 116 Budgetary Comparison Schedule - Parks Dedication Special Revenue Fund C-4 117 Budgetary Comparison Schedule - Crime Control District Special Revenue Fund C-5 118 Budgetary Comparison Schedule - Hotel Occupancy Special Revenue Fund C-6 119 Budgetary Comparison Schedule - Storm Water Utility Special Revenue Fund C-7 120 Budgetary Comparison Schedule - Court Security Special Revenue Fund C-8 121 Budgetary Comparison Schedule - Court Technology Special Revenue Fund C-9 122 Budgetary Comparison Schedule - Library Special Revenue Fund C-10 123 Budgetary Comparison Schedule -Red Light Camera Special Revenue Fund C-11 124 Budgetary Comparison Schedule - Commercial Vehicle Enforcement C-12 125 Budgetary Comparison Schedule - Southlake Parks Development Corporation Debt Service Fund C-13 126 Budgetary Comparison Schedule - Southlake Community Enhancement Development Corporation Special Debt Fund C-14 127 City of Southlake, Texas Annual Comprehensive Financial Report For the Fiscal Year Ended September 30, 2022 Table of Contents – Continued iii Table Page III.STATISTICAL SECTION Net Position By Component 1 132 Changes in Net Position 2 134 Fund Balances, Governmental Funds 3 136 Changes in Fund Balances, Governmental Funds 4 137 Assessed Value and Estimated Actual Value of Taxable Property 5 138 Direct and Overlapping Property Tax Rates 6 139 Principal Property Tax Payers 7 140 Ad Valorem Tax Levies and Collections 8 141 Ratio of Outstanding Debt By Type 9 142 Ratio of General Bonded Debt Outstanding 10 143 Direct and Overlapping Governmental Activities Debt 11 144 Pledged-Revenue Coverage 12 145 Demographic and Economic Statistics 13 146 Principal Employers 14 147 Full-Time Equivalent City Government Employees By Function/Program 15 148 Operating Indicators By Function/Program 16 149 Capital Asset Statistics By Function/Program 17 150 iv v Introductory Section vi 400 Main Street, Suite 440, Southlake, TX 76092 (817) 748-8345 Innovation ◊ Integrity ◊ Accountability ◊ Commitment to Excellence ◊ Teamwork Finance Department March 4, 2023 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, 2022. 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. 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. viii Weaver & Tidwell, LLP, Certified Public Accountants, has issued an unmodified (“clean”) opinion on the City’s financial statements for the fiscal year ended September 30, 2022. The independent auditor’s report is located at the front of the financial section of this report. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. MD&A complements this letter of transmittal and the two should be read in conjunction with each other. 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. By the 2000s, Southlake had become a boom-burb with the population tripling to almost 22,000 and was well known for its picturesque countryside, exemplary school district and luxury neighborhoods. Today, the City’s population stands at just over 31,100 and is estimated to reach 34,000 residents by the year 2050. ix 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. Component Units The financial reporting entity includes all the funds of the primary government, as well as all 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 City’s financial statements include the following blended component units: The Southlake Parks Development Corporation (“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 Southlake Crime Control and Prevention District (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 the Southlake Community Enhancement and Development Corporation (“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. x Also, included are the financial statements of the Tax Increment Reinvestment Zone (“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. Additional information on these legally separate entities can be found in the notes to the financial statements (see Note 1). 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, FM 1709, and FM 1938, the regional road arterials, serve the City. Businesses from many industries including healthcare, hospitality, legal, and financial services have come together to make Southlake a full-service business community for all of north central Texas. Sabre, home of Travelocity.com, is the city’s largest employer with approximately 2,500 employees and Verizon Wireless’ Network Control Center takes advantage of high-tech infrastructure to manage all wireless communications west of the Mississippi River from its Southlake location. Housing Permits There were 99 single family residential permits issued in Fiscal Year 2022 with an average new home construction value, excluding land value, of approximately $1,290,000. As noted on the chart below, the City experienced an increase in residential home construction. 0 20 40 60 80 100 120 140 2018 2019 2020 2021 2022 Single Family Residential Home Permits xi Water Services Water customers increased from 11,392 in Fiscal Year 2021 to 11,461 in 2022, while wastewater customers increased from 9,200 to 9,229 respectively. 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. Sales Tax Revenue The City of Southlake experienced an increase in sales tax collections during the fiscal year as indicated on the chart. Sales tax collections totaled $41,867,949 in fiscal year 2022, a 11.52% increase from the previous year. 10,900 11,000 11,100 11,200 11,300 11,400 11,500 2018 2019 2020 2021 2022 Number of Water Customers - 10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 2018 2019 2020 2021 2022 Sales Tax Revenue General SPDC Crime CEDC xii Future Development The City’s dedication to quality development, sound fiscal policies, and effective strategic management has made it an exemplary community in the Dallas-Fort Worth region. With impeccably built neighborhoods, a successful downtown, and a diverse business community, the City offers an enhanced quality of life for both residents and visitors. During 2022, 19 new construction commercial permits were issued by the City representing over 297,220 square feet of future retail/office space. The City also has the following significant development projects • Southlake Town Square's second Class-A office building is set to open in FY 2023. The new five-story, 151,000 square-foot office building is being built adjacent to the existing Granite Place One building that opened in 2016. • The XO Marriage Center will include a three-story, approx. 32,190 sq. ft. building with office, assembly, and studio uses. • GMI Southlake will include 3 flex light industrial/corporate office buildings totaling approx. 58,780 sq. ft. • Methodist Southlake Hospital Emergency Department expansion will include a one-story, approximately 6,000 sq. ft. addition to the existing hospital building to provide new nuclear medicine facilities. Financial Management Principles The City has strong financial management principles that provide the framework for 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. xiii OTHER INFORMATION Independent Audit The City Charter requires an annual audit of the financial status of the City by independent Certified Public Accountants selected by the City Council. This requirement has been met and the auditor’s report has been included in this report. Awards The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. Such 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, 2021, 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, 2021. 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 xiv xv City of Southlake, Texas List of Principal Officals September 30, 2022 xvi John Huffman Mayor Randy Williamson Mayor Pro Tem Shawn McCaskill 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 Dennis Killough Director of Planning/Development 1 Financial Section 2 Weaver and Tidwell, L.L.P. 2300 North Field Street, Suite 1000 | Dallas, Texas 75201 Main: 972.490.1970 CPAs AND ADVISORS | WEAVER.COM Independent Auditor’s Report To Members of the City Council and City Manager City of Southlake, Texas Report on the Audit of the Financial Statements Opinions We have audited the 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, 2022, and the related notes to the financial statements which collectively comprise the City’s basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements 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, 2022, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Emphasis of Matter As discussed in Note 1 to the basic financial statements, during the year ended September 30, 2022, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 87, Leases. Beginning net position and fund balance have been restated as a result of the implementation of this statement. Our opinions are not modified with respect to this matter. Responsibilities of Management for the Financial Statements The City’s management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. The Members of the City Council and City Manager City of Southlake, Texas 4 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit 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 City’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and the required supplementary information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, 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. The Members of the City Council and City Manager City of Southlake, Texas 5 Supplementary 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 accompanying combining and individual fund statements and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the accompanying 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. Other Information Included in the Annual Comprehensive Financial Report (ACFR) Management is responsible for the other information included in the ACFR. The other information comprises the introductory section and statistical section but does not include the financial statements and our auditor's report thereon. Our opinions on the financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 14, 2023 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 the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. WEAVER AND TIDWELL, L.L.P. Dallas, Texas March 14, 2023 6 7 Management’s Discussion and Analysis 8 9 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 consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages vii‐xiii of this report. 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, 2022 by $739,804,186 (net position). Of this amount, $108,544,841 (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 $47,138,501. This increase can be largely attributed to a rise in sales tax revenue, charges for services, and operating grants and contributions. • At September 30, 2022, the City’s governmental funds reported combined ending fund balances of $169,456,551. Approximately $401,529 is nonspendable, $99,675,596 is restricted by an outside source, $1,224,764 is committed for future uses, $53,473,106 is assigned by management for specified purposes, and $14,681,556 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 $14,681,556 or 39.0% of total General Fund expenditures. • At the end of the current fiscal year, the City of Southlake outstanding debt totals $108,885,382 a net decrease of $7,670,209 from the previous year. 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. 10 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, wastewater collection and solid waste collection and disposal. The government-wide financial statements are found on pages 22-23 of this report. 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. 11 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 26 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 28-34 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. 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. Because these services predominantly benefit the governmental rather than business-type functions, they have been included within the governmental activities in the government-wide financial statements. Proprietary fund financial statements provide the same type of information as the government-wide financial statements, only in more detail. The proprietary funds financial statements can be found on pages 37-39 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 43-44 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 47-85 of this report. 12 Government-Wide Financial Analysis As noted earlier, net position over time may serve as a useful indicator of the City’s financial position. As of September 30, 2022, the City’s assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $739,804,186 (net position), at the close of the most recent fiscal year. The largest portion of the City’s net position, $522,021,593 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 $38,449,409. This can be largely attributed to higher levels of sales tax revenues received by the City which were due to sharp inclines in inflation and increased economic activity within the City. This increased economic activity also spurred higher levels of development in the City which is reflected in the increases in charges for services, primarily license and permit revenue. Additionally, there was a large increase in operating grants and contributions related to the receipt of American Rescue Plan Act (ARPA) funding. Business-type Activities net position increased by $8,689,092. The majority of this change can be attributed to an increase demand for water as the region experienced significantly less rainfall than average for FY 2022. The following analysis highlights the net position as of September 30, 2022: Governmental Business-Type 2022 Activities Activities T otal Current and other assets 190,955,229$ 69,996,562$ 260,951,791$ Capital assets 508,388,715 97,474,702 605,863,417 Total assets 699,343,944 167,471,264 866,815,208 Deferred outflows of resources 4,961,219 580,775 5,541,994 Other liabilities 9,782,068 4,646,604 14,428,672 Long-term debt outstanding 79,872,374 29,013,008 108,885,382 Total liabilities 89,654,442 33,659,612 123,314,054 Deferred inflows of resources 8,402,281 836,681 9,238,962 Net position Net investment in capital assets 444,246,656 77,774,937 522,021,593 Restricted-debt service 5,436,574 - 5,436,574 Restricted-other 93,924,011 9,877,167.00 103,801,178 Unrestricted 62,641,199 45,903,642 108,544,841 Total net position 606,248,440$ 133,555,746$ 739,804,186$ 13 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 changes in net position for the year ended September 30, 2022: Governmental Business-Type 2022 Activities Activities Total Revenues: Program revenues: Charges for services 11,524,968$ 37,241,976$ 48,766,944$ Operating grants and contributions 8,736,294 - 8,736,294 Capital grants and contributions 2,653,556 1,376,002 4,029,558 General revenues: Taxes 88,105,225 - 88,105,225 Investment losses (475,934) (171,020) (646,954) Miscellaneous 804,354 - 804,354 Total revenues 111,348,463 38,446,958 149,795,421 Expenses: General government 20,685,238 - 20,685,238 Public safety 24,915,801 - 24,915,801 Public works 10,111,585 - 10,111,585 Culture and recreation 16,970,272 - 16,970,272 Interest on long-term debt 1,979,546 - 1,979,546 Water and sewer - 28,397,036 28,397,036 Total expenses 74,662,442 28,397,036 103,059,478 Increase in net position before transfers 36,686,021 10,049,922 46,735,943 Transfers 1,360,830 (1,360,830)- Increase in net position 38,046,851 8,689,092 46,735,943 Net position, beginning of year 567,799,031 124,866,654 692,665,685 Cumulative effect of change in accounting principle 402,558 - 402,558 Net position-End of Year 606,248,440$ 133,555,746$ 739,804,186$ 14 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$ O perating 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 Investment income 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$ 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 $169,456,551. Approximately 8.7% or $14,681,556 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 to indicate that it is (1) not in spendable form, $401,529; (2) restricted for particular purposes, $99,675,596; (3) committed for particular purposes, $1,224,764; or (4) assigned for particular purposes, $53,473,106. 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 $14,681,556. 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 39.0% of total General Fund expenditures, while total fund balance represents 130.6 % of total General Fund expenditures. The fund balance of the General fund increased $5,387,860 during the current fiscal year. This net increase was the result of several factors including (1) as previously mentioned, sales tax and license and permits revenues increased significantly due to economic growth and inflation spikes, which produced an increase in revenues of $3,569,892 in the General Fund; (2) police and fire services saw a significant decline in expenditures, $6,280,176, as public safety related costs were allocated to the ARPA grant funding received by the City; and (3) transfers out to other funds increased by $11,913,170 primarily to fund capital projects. 15 The General Obligation Debt Service Fund has a fund balance of $3,287,396, all of which is restricted for the payment of debt service. The fund balance increased during the year by $176,857. This increase was expected as reserves, collections, and future debt service requirements are all considered in the determination of tax rates. The fund balance in the General Capital Projects Funds ended the year at $45,838,424, an increase of $15,676,795. This increase can be attributed to the issuance of $8,595,000 of certificates of obligation and interfund transfers of $15,368,170, which were made available to fund various capital projects for the City. The Southlake Parks Development Corporation Special Revenue fund balance increased by $1,852,991 primarily due to increases in sales tax revenue of $1,361,062. As previously noted, this sales tax revenue increase was due to higher inflation and economic activity. The Tax Increment Financing District fund balance increased by $1,022,077, primarily due to decreased expenditures from capital outlays. The Community Enhancement Development Corporation Special Revenue Fund balance increased $4,039,814, due to increased sales taxes and charges for services revenues related to higher inflation and economic activity. 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: $45,903,642 in the Water and Sewer Fund and $10,173,848 in the Vehicle and Equipment Replacement Fund. Total net position in the Water and Sewer Fund increased by $8,689,092 while the Vehicle and Equipment Replacement Fund net position increased by $1,700,307. Increases in demand for water due to significantly lower than average rainfall 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 $5,152,968 or 10.3% from original budget based on year-to-date experience. Actual revenues exceeded budget by $2,008,782 primarily due to municipal sales and mixed beverage taxes exceeding budget by $1,332,204. Actual expenditures were $3,991,975 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, 2022 amount to $605,863,417 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements, machinery and equipment, infrastructure and construction in progress. The City has elected to use the modified approach for its street system in lieu of the depreciation method. An up-to-date inventory of these infrastructure assets was performed and the annual costs to maintain and preserve these assets was established and disclosed through administrative policy. The current condition level of the street system meets the target condition level established by the City. There were no significant changes in the condition levels of infrastructure assets, and the differences between the estimated amounts necessary to maintain and preserve the street system at target condition levels and the actual amount of expense incurred for that purpose for 2022 was not material. Major capital projects completed during the current year included the following: • N. White Chapel Blvd., Emerald to Highland • FM 1938 Utility Relocations • Lake Carillon Erosion Control project 16 Governmental Business-Type 2022 Activities Activities Total Land and improvements 112,488,586$ 21,033,596$ 133,522,182$ Buildings and improvements 109,721,666 137,961 109,859,627 Improvements - 74,823,256 74,823,256 Infrastructure 265,262,406 - 265,262,406 Machinery and equipment 10,537,317 65,216 10,602,533 Right to use leased assets 333,639 - 333,639 Construction in Progress 10,045,101 1,414,673 11,459,774 Total 508,388,715$ 97,474,702$ 605,863,417$ 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 - 79,981,172 79,981,172 Infrastructure 250,632,439 - 250,632,439 Machinery and equipment 9,785,083 141,372 9,926,455 Right to use leased assets, as restated 452,021 - 452,021 Construction in Progress 17,742,871 579,184 18,322,055 Total 505,712,137$ 101,879,682$ 607,591,819$ Additional information on the City’s capital assets can be found in Note 4 on pages 66-67 of this report. Long-term Debt- At the end of the current fiscal year, the governmental activities had $74,015,056 total bonds outstanding which were issued to finance capital improvements for roadway, parks and recreation, public building and infrastructure. The business-type activities had $28,512,757 of total bonds outstanding which were issued to finance projects to increase capacity of the utility system. Governmental Business-Type 2022 Activities Activities Total Bonds payable 74,015,056$ 28,512,757$ 102,527,813$ Total OPEB liability for SDBF 1,059,723 82,972 1,142,695 Net pension liability 1,332,735 300,064 1,632,799 Financed purchase liabilities 405,368 - 405,368 Other lease liabilities 338,051 - 338,051 Compensated absences 2,721,441 117,215 2,838,656 Total 79,872,374$ 29,013,008$ 108,885,382$ Governmental Business-Type 2021 Activities Activities Total Bonds payable 73,797,108$ 31,133,829$ 104,930,937$ Total OPEB liability for SDBF 978,660 77,178 1,055,838 Net pension liability 7,732,031 757,402 8,489,433 Other lease liabilities, as restated 452,688 - 452,688 Compensated absences 1,539,325 87,370 1,626,695 Total 84,499,812$ 32,055,779$ 116,555,591$ 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 0.22% in 2022, 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”. 17 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 5 on pages 67-72 of this report. Economic Factors and Next Year’s Budgets and Rates The State of Texas, by constitution, does not have a personal income tax and therefore the State operates primarily using sales and gasoline taxes. Local governments primarily rely on property and sales taxes and fees to fund their government activities. While property taxes are important to the City, they represent 37.5% of total governmental revenue. Sales tax has grown to the largest governmental resource representing 39.6% of total governmental revenue. The City monitors all of its resources and determines the need for program adjustment or fee increases accordingly. 18 The FY 2023 adopted budget reduced the City’s property tax rate from $0.39 to $0.36 per $100 net taxable valuation. The City’s net taxable value increased by 10 percent as demand for housing in the DFW market has continued to push values higher and higher over the last few years. As an element of the City’s tax relief initiative the homestead exemption was held at the maximum level of 20%. The estimate of the FY 2023 tax roll is based on the certified roll as provided by the Tarrant Appraisal District (TAD) in July. The assumed collection rate is 100 percent. Requests for Information This financial report is designed to provide a general overview of the City of Southlake’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Chief Financial Officer, 1400 Main Street, 4th Floor Finance Department, Southlake, Texas 76092. 19 Basic Financial Statements 20 21 Government-Wide Financial Statements City of Southlake, Texas Exhibit 1 Statement of Net Position September 30, 2022 The Notes to Financial Statements are an integral part of this statement. 22 GOVERNMENTAL BUSINESS-TYPE ACTIVITIES ACTIVITIES TOTAL ASSETS Cash and investments 177,023,007$ 44,442,878$ 221,465,885$ Receivables (net of allowance for uncollectibles)9,519,899 6,077,370 15,597,269 Prepaid items 380,512 - 380,512 Inventories 21,017 - 21,017 Restricted assets Cash and cash equivalents 3,279,684 19,152,552 22,432,236 Restricted cash for customer deposits - 323,762 323,762 Receivables 13,703 - 13,703 OPEB asset 717,407 - 717,407 Capital assets: Not being depreciated/amortized 339,360,501 22,448,269 361,808,770 Net of depreciation/amortization 169,028,214 75,026,433 244,054,647 Total assets 699,343,944 167,471,264 866,815,208 Deferred loss on refunding 969,501 297,694 1,267,195 Deferred outflows - TMRS pension 3,278,401 265,166 3,543,567 Deferred outflows - TMRS OPEB 239,006 17,915 256,921 Deferred outflows - OPEB Health 474,311 - 474,311 Total deferred outflows of resources 4,961,219 580,775 5,541,994 Accounts payable 5,505,327 3,602,467 9,107,794 Accrued liabilities 1,235,348 311,189 1,546,537 Accrued interest payable - 116,356 116,356 Retainage payable 920,965 100,365 1,021,330 Deposits payable 639,361 - 639,361 Unearned revenue 1,160,065 192,465 1,352,530 Liabilities payable from restricted assets Accrued interest 321,002 - 321,002 Customer meter deposits - 323,762 323,762 Non-current liabilities: Due within one year 11,761,551 2,535,020 14,296,571 Due in more than one year 68,110,823 26,477,988 94,588,811 Total liabilities 89,654,442 33,659,612 123,314,054 Deferred gain on refunding 90,001 331,162 421,163 Deferred inflows - leases 706,608 - 706,608 Deferred inflows - TMRS pension 6,976,554 499,373 7,475,927 Deferred inflows - TMRS OPEB 82,178 6,146 88,324 Deferred inflows - OPEB Health 546,940 - 546,940 Total deferred inflows of resources 8,402,281 836,681 9,238,962 NET POSITION Net investment in capital assets 444,246,656 77,774,937 522,021,593 Restricted for Debt service 5,436,574 - 5,436,574 Capital projects 26,395,656 26,395,656 Municipal court 835,268 - 835,268 Reinvestment zone 6,663,970 - 6,663,970 Police 7,791,993 7,791,993 Parks and recreation 47,632,465 - 47,632,465 Library 14,604 14,604 Storm water 1,936,358 - 1,936,358 Promotion of culture and tourism 2,653,697 - 2,653,697 Impact fees - 9,877,167 9,877,167 Unrestricted 62,641,199 45,903,642 108,544,841 TOTAL NET POSITION 606,248,440$ 133,555,746$ 739,804,186$ 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, 2022 The Notes to Financial Statements are an integral part of this statement. 23 Charges for Operating Grants Capital Grants Governmental Business - Type Expenses Services and Contributions and Contributions Activities Activities TOTAL PRIMARY GOVERNMENT: Governmental Activities: General government 20,685,238$ 1,957,434$ 220$ -$ (18,727,584)$ -$ (18,727,584)$ Public safety 24,915,801 803,365 8,642,530 - (15,469,906) - (15,469,906) Public works 10,111,585 4,287,138 - 2,498,556 (3,325,891) - (3,325,891) Culture and recreation 16,970,272 4,477,031 93,544 155,000 (12,244,697) - (12,244,697) Interest on long-term debt 1,979,546 - - - (1,979,546) - (1,979,546) Total governmental activities 74,662,442 11,524,968 8,736,294 2,653,556 (51,747,624) - (51,747,624) Business-type Activities: Water and sewer 28,397,036 37,241,976 - 1,376,002 - 10,220,942 10,220,942 Total business-type activities 28,397,036 37,241,976 - 1,376,002 - 10,220,942 10,220,942 TOTAL PRIMARY GOVERNMENT 103,059,478$ 48,766,944$ 8,736,294$ 4,029,558$ (51,747,624) 10,220,942 (41,526,682) General revenues and transfers: General revenues Property taxes, levied for general purposes 41,392,861 - 41,392,861 Sales taxes 43,723,490 - 43,723,490 Franchise taxes 2,988,874 - 2,988,874 Investment losses (475,934) (171,020) (646,954) Miscellaneous 804,354 - 804,354 Transfers 1,360,830 (1,360,830) - Total general revenues and transfers 89,794,475 (1,531,850) 88,262,625 Change in net position 38,046,851 8,689,092 46,735,943 Net position, beginning of year 567,799,031 124,866,654 692,665,685 Cumulative effect of change in accounting principle 402,558 - 402,558 Net position, beginning of year-- as restated 568,201,589 124,866,654 693,068,243 NET POSITION, end of year 606,248,440$ 133,555,746$ 739,804,186$ Changes in Net Position Net (Expense) Revenue and Primary Government Program Revenues Functions/Program Activities 24 25 Fund Financial Statements 26 27 Governmental Funds Financial Statements City of Southlake, Texas Balance Sheet Governmental Funds September 30, 2022 The Notes to Financial Statements are an integral part of this statement. 28 GENERAL OBLIGATION GENERAL DEBT CAPITAL GENERAL SERVICE PROJECTS ASSETS Cash and investments 49,415,278$ 3,279,684$ 48,803,791$ Receivables, net of allowances for uncollectibles: Ad valorem taxes 52,261 10,453 - Franchise taxes 741,575 - - Sales taxes 3,392,571 - - Interest 40,567 3,053 45,471 Leases 870,124 - - Other 93,444 197 48,290 Inventories 21,017 - - Prepaid items 380,512 - - TOTAL ASSETS 55,007,349$ 3,293,387$ 48,897,552$ LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES LIABILITIES Accounts payable 3,214,988$ -$ 1,683,393$ Accrued liabilities 1,037,187 - - Retainage payable - - 806,639 Deposits payable 57,005 - 520,806 Unearned revenue 660,546 - - TOTAL LIABILITIES 4,969,726 - 3,010,838 DEFERRED INFLOWS OF RESOURCES Unavailable resources 383,966 5,991 48,290 Deferred inflows- leases 540,234 - - TOTAL DEFERRED INFLOWS OF RESOURCES 924,200 5,991 48,290 FUND BALANCES Nonspendable 401,529 - - Restricted - 3,287,396 26,395,656 Committed - - - Assigned 34,030,338 - 19,442,768 Unassigned 14,681,556 - - TOTAL FUND BALANCES 49,113,423 3,287,396 45,838,424 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES 55,007,349$ 3,293,387$ 48,897,552$ Exhibit 3 29 COMMUNITY ENHANCEMENT SOUTHLAKE TAX DEVELOPMENT PARKS INCREMENT CORPORATION NON-MAJOR TOTAL DEVELOPMENT FINANCING SPECIAL GOVERNMENTAL GOVERNMENTAL CORPORATION DISTRICT REVENUE FUNDS FUNDS 12,446,937$ 6,676,864$ 15,963,057$ 33,552,419$ 170,138,030$ - - - - 62,714 - - - - 741,575 1,681,020 - 1,245,200 651,274 6,970,065 12,043 6,215 14,940 31,236 153,525 188,613 - - - 1,058,737 - 490 174,939 220,437 537,797 - - - - 21,017 - - - - 380,512 14,328,613$ 6,683,569$ 17,398,136$ 34,455,366$ 180,063,972$ 133,889$ 4,668$ 76,558$ 391,831$ 5,505,327$ 11,911 14,931 92,084 79,235 1,235,348 - - - 114,326 920,965 - - 61,550 - 639,361 - - 499,519 - 1,160,065 145,800 19,599 729,711 585,392 9,461,066 - - - 1,500 439,747 166,374 - - - 706,608 166,374 - - 1,500 1,146,355 - - - - 401,529 14,016,439 6,663,970 16,668,425 32,643,710 99,675,596 - - - 1,224,764 1,224,764 - - - - 53,473,106 - - - - 14,681,556 14,016,439 6,663,970 16,668,425 33,868,474 169,456,551 14,328,613$ 6,683,569$ 17,398,136$ 34,455,366$ 180,063,972$ City of Southlake, Texas Exhibit 4 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position For the Fiscal Year Ended September 30, 2022 The Notes to Financial Statements are an integral part of this statement. 30 Total fund balances - governmental funds 169,456,551$ 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 503,066,727 Interest payable on long-term debt does not require current financial resources; therefore, interest (321,002) Internal service funds are used by management to charge the cost of certain activities, such as fleet 15,495,836 OPEB asset has not been included in the governmental fund financial statements, as these assets do not represent current financial resources.717,407 Revenues earned but not available within sixty days of the year end are not recognized as revenue on the fund financial statements.439,747 For debt refundings, the difference between the acquisition price and net carrying amount of the debt 879,500 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 statements.3,991,720 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.(7,605,672) 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.(79,872,374) NET POSITION OF GOVERNMENTAL ACTIVITIES 606,248,440$ reported in the governmental funds balance sheet (Less $5,321,988 in assets allocated to governmental activities from the internal service fund). payable is not reported as a liability in the governmental funds balance sheet. management, to individual funds. This amount represents the assets less the liabilities of the internal service fund allocated to governmental activities. has been deferred and amortized in the government-wide financial statements. This amount is the net of deferred losses, $969,501 and gains ($90,001) on refundings. 31 City of Southlake, Texas Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended September 30, 2022 The Notes to Financial Statements are an integral part of this statement. 32 GENERAL OBLIGATION GENERAL DEBT CAPITAL GENERAL SERVICE PROJECTS REVENUES Ad valorem taxes, penalties and interest 26,713,569$ 5,372,684$ -$ Franchise taxes 2,988,874 - - Municipal sales and mixed beverage taxes 21,047,369 - - Licenses, permits and fees 2,855,591 - - Charges for services 1,997,797 - - Fines and forfeitures 973,523 - - Intergovernmental revenue 574,254 - 1,320,076 Capital recovery fees - - 773,745 Investment income (losses)(162,864) (17,970) (98,724) Contributions 40,986 - 6,070 Miscellaneous 191,266 - - Total revenues 57,220,365 5,354,714 2,001,167 EXPENDITURES Current General government City secretary/mayor 587,120 - - City manager's office 1,085,236 - - Human resources 874,724 - - Support services 4,247,552 - - Economic development 361,298 - - Finance 1,607,797 - - Municipal court 757,460 - - Teen court 161,550 - - Information technology 3,172,551 - - Public safety Police services 4,132,359 - - Fire services 6,705,764 - - Public safety support 1,494,011 - - Public works Public works administration 1,932,212 - - Streets and drainage 1,006,161 - 2,949,647 Planning 1,184,574 - - Building inspection 1,114,921 - - Cultural and recreation Community services 1,329,819 - - Parks and recreation 3,855,677 - - Library services 917,538 - - Promotion of tourism - - - Intergovernmental - - - Capital outlay 945,293 - 7,944,514 Debt service: Principal retirement 114,636 4,675,306 - Interest and fiscal charges 11,638 676,410 131,146 Total expenditures 37,599,891 5,351,716 11,025,307 Excess (deficiency) of revenues over (under) expenditures 19,620,474 2,998 (9,024,140) OTHER FINANCING SOURCES (USES) Issuance of long-term debt - - 8,595,000 Issuance of financed purchases - - - Premium on issuance of long-term debt - - 737,765 Sale of capital assets 52,124 - - Transfers from other funds 2,635,219 173,859 15,368,170 Transfers to other funds (17,288,170) - - Total other financing sources (uses)(14,600,827)173,859 24,700,935 Net change in fund balances 5,019,647 176,857 15,676,795 Fund balances, beginning of year 43,725,563 3,110,539 30,161,629 Cumulative effect of change in accounting principle 368,213 - - Fund balances, beginning of year - as restated 44,093,776 3,110,539 30,161,629 FUND BALANCES, END OF YEAR 49,113,423$ 3,287,396$ 45,838,424$ EXHIBIT 5 33 COMMUNITY ENHANCEMENT SOUTHLAKE TAX DEVELOPMENT PARKS INCREMENT CORPORATION NON-MAJOR TOTAL DEVELOPMENT FINANCING SPECIAL GOVERNMENTAL GOVERNMENTAL CORPORATION DISTRICT REVENUE FUNDS FUNDS -$ 9,343,619$ -$ -$ 41,429,872$ - - - - 2,988,874 10,610,993 - 7,859,995 4,205,133 43,723,490 - - - 215,837 3,071,428 - - 3,512,532 1,594,554 7,104,883 - - - 239,688 1,213,211 - - - 8,080,465 9,974,795 - - - - 773,745 (11,760) (12,950) (31,727) (112,122) (448,117) - - 4,982 190,607 242,645 133,099 - 183 - 324,548 10,732,332 9,330,669 11,345,965 14,414,162 110,399,374 - - - - 587,120 - - - - 1,085,236 - - - - 874,724 - 586,380 - - 4,833,932 - - - - 361,298 - - - - 1,607,797 - - - 51,926 809,386 - - - - 161,550 - - - - 3,172,551 - 372,628 - 1,957,519 6,462,506 - - - 8,057,625 14,763,389 - - - - 1,494,011 - - - - 1,932,212 - - - 673,981 4,629,789 - - - - 1,184,574 - - - - 1,114,921 - - - - 1,329,819 1,657,795 - 4,426,956 159,569 10,099,997 - - - 7,976 925,514 - - - 762,948 762,948 - 5,934,584 - - 5,934,584 62,404 1,415,000 - 1,233,951 11,601,162 - - - 3,855,795 8,645,737 - - - 1,502,644 2,321,838 1,720,199 8,308,592 4,426,956 18,263,934 86,696,595 9,012,133 1,022,077 6,919,009 (3,849,772) 23,702,779 - - - - 8,595,000 - - - 514,162 514,162 - - - - 737,765 - - - - 52,124 - - - 10,397,852 28,575,100 (7,195,113) - (2,879,195) (2,351,792) (29,714,270) (7,195,113) - (2,879,195) 8,560,222 8,759,881 1,817,020 1,022,077 4,039,814 4,710,450 32,462,660 12,163,448 5,641,893 12,628,611 29,158,024 136,589,707 35,971 - - - 404,184 12,199,419 5,641,893 12,628,611 29,158,024 136,993,891 14,016,439$ 6,663,970$ 16,668,425$ 33,868,474$ 169,456,551$ 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, 2022 The Notes to Financial Statements are an integral part of this statement. 34 Net change in fund balances - total governmental funds 32,462,660$ 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, 11,601,162 Depreciation and amortization expense on capital assets are reported in the statement of activities (8,759,213) The issuance of long-term debt (e.g. bonds) provides current financial resources to governmental Issuance of bonds (8,595,000)$ Bond premiums (737,765) Issuance of financed purchases (514,162) Principal payments on debt 8,422,306 Principal payments on financed purchases and other lease liabilities 223,431 Amortization of premiums and deferred gains and losses 317,486 (883,704) The changes in net pension liability and deferred outflows/inflows from TMRS are not reported in the 2,411,821 The changes in total OPEB liability and deferred outflows/inflows from TMRS are not reported in (103,477) The changes in net OPEB liability and deferred outflows/inflows for healthcare are not reported in 208,661 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.(1,182,115) 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.(28,280) Internal service funds are used by management to charge the costs of certain activities, such as 1,700,307 Governmental funds do not recognize assets contributed by developers. However, in the statement 398,665 Loss on disposal of capital assets results in a decrease in net position, but the net effect is not (36,064) Certain revenues in the government-wide statement of activities that do not provide current financial 256,428 Change in net position of governmental activities 38,046,851$ the cost of those assets is allocated over their estimated useful lives and reported as depreciation and amortization expense. This is the amount of capital assets additions recorded in the current period (does not include additions of $564,186 allocated from internal service fund). but does not require the use of current financial resources. Therefore, depreciation and amortization expenses are not reported as expenditures in the governmental funds. (Does not include $1,078,667 allocated from internal service fund). 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: governmental funds. This is the net effect of the decrease in the net pension liability, $6,399,296, increase in deferred inflows of resources, ($4,287,956), and increase in deferred outflows of resources, $300,481. the governmental funds. This is the net effect of the increase in the total SDBF OPEB liability ($81,063), increase in deferred inflows of resources, ($4,038), and decrease in deferred outflows of resources, ($18,376). the governmental funds. This is the net effect of the decrease in the total healthcare OPEB liability (now a net OPEB asset), $465,106, increase in deferred inflows of resources, ($127,098), and decrease in deferred outflows of resources, ($129,347). fleet management, to individual funds. The net income of the internal service fund is allocated entirely to governmental activities. of activities, the fair value of those assets is recognized as revenue, then allocated over their estimated useful lives and reported as depreciation expense. reported in governmental funds (does not include disposals of $37,512 allocated from internal service fund). resources are not reported as revenue in the governmental funds. 35 Proprietary Funds Financial Statements 36 City of Southlake, Texas Exhibit 7 Statement of Net Position Proprietary Funds September 30, 2022 The Notes to Financial Statements are an integral part of this statement. 37 BUSINESS-TYPE GOVERNMENTAL ACTIVITIES ACTIVITIES WATER AND SEWER VEHICLE AND EQUIPMENT ENTERPRISE REPLACEMENT INTERNAL FUND SERVICE FUND ASSETS CURRENT ASSETS Cash and investments 44,442,878$ 10,164,661$ Receivables, net of allowance for uncollectibles: Billed and unbilled trade accounts 6,017,780 - Interest 59,590 9,187 Restricted assets: Cash restricted for capital 19,152,552 - Restricted cash for customer deposits 323,762 - Total current assets 69,996,562 10,173,848 NON-CURRENT ASSETS Capital assets: Land 21,033,596 - Buildings and improvements 935,501 - Distribution system 153,926,558 - Equipment 2,498,009 703,246 Vehicles 511,817 11,143,039 Capacity rights 9,190,988 - Construction in progress 1,414,673 - Total capital assets 189,511,142 11,846,285 Less: accumulated depreciation (92,036,440) (6,524,297) Capital assets, net of accumulated depreciation 97,474,702 5,321,988 Total non-current assets 97,474,702 5,321,988 TOTAL ASSETS 167,471,264$ 15,495,836$ DEFERRED OUTFLOW OF RESOURCES Deferred loss on refunding 297,694$ -$ Deferred outflows - TMRS pension 265,166 - Deferred outflows - TMRS OPEB 17,915 - Total deferred outflows of resources 580,775 - LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION CURRENT LIABILITIES Accounts payable 3,602,467 - Accrued liabilities 311,189 - Retainage payable 100,365 - Accrued interest 116,356 - Unearned revenue 192,465 - Current portion of general obligation debt 2,439,168 - Current portion of compensated absences 95,852 - Payable from restricted assets: Customer meter deposits 323,762 - Total current liabilities 7,181,624 - NON-CURRENT LIABILITIES General obligation debt 26,073,589 - Compensated absences 21,363 - Net pension liability 300,064 - Total OPEB liability 82,972 - Total non-current liabilities 26,477,988 - TOTAL LIABILITIES 33,659,612 - DEFERRED INFLOW OF RESOURCES Deferred gain on refunding 331,162 - Deferred inflows - TMRS pension 499,373 - Deferred inflows - TMRS OPEB 6,146 - Total deferred inflows of resources 836,681 - NET POSITION Net investment in capital assets 77,774,937 5,321,988 Restricted for impact fees 9,877,167 - Unrestricted 45,903,642 10,173,848 TOTAL NET POSITION 133,555,746$ 15,495,836$ City of Southlake, Texas Exhibit 8 Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds For the Year Ended September 30, 2022 The Notes to Financial Statements are an integral part of this statement. 38 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 37,150,182$ -$ Service charges 91,794 - Total operating revenues 37,241,976 - OPERATING EXPENSES: Personnel services 2,585,073 - Contractual services 2,240,922 - Supplies 634,120 15,984 Utilities 11,636,591 - Administrative 12,483 - Maintenance 5,382,610 - Professional benefits 17,668 - Depreciation and amortization 5,158,368 1,078,667 Total operating expenses 27,667,835 1,094,651 OPERATING INCOME (LOSS)9,574,141 (1,094,651) NON-OPERATING REVENUES (EXPENSES) Gain on disposal of capital assets - 322,775 Investment income (losses)(171,020)(27,817) Interest expense and bond administration expense (729,201)- Total non-operating revenues (expenses)(900,221)294,958 INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS 8,673,920 (799,693) CAPITAL CONTRIBUTIONS AND TRANSFERS Capital contributions - property owners 798,472 - Contributions - impact fees 577,530 - Transfers from other funds - 2,500,000 Transfers to other funds (1,360,830) - Total capital contributions and transfers 15,172 2,500,000 Change in net position 8,689,092 1,700,307 Net postition, beginning of year 124,866,654 13,795,529 NET POSITION, END OF YEAR 133,555,746$ 15,495,836$ City of Southlake, Texas Exhibit 9 Statement of Cash Flows Proprietary Funds For the Year Ended September 30, 2022 The Notes to Financial Statements are an integral part of this statement. 39 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 36,692,854$ -$ Cash payments to suppliers (18,308,481) (15,984) Cash payments to employees (2,720,198) - Net cash provided by (used in) operating activities 15,664,175 (15,984) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (908,267) (564,186) Principal payments on bonds (2,352,694) - Interest paid on capital debt (983,739) - Proceeds from disposal of capital assets - 336,266 Contributions - impact fees 577,530 - Net cash used in capital and related financing activities (3,667,170) (227,920) CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Transfers from other funds - 2,500,000 Transfers to other funds (1,360,830) - Net cash provided by (used in) non-capital financing activities (1,360,830) 2,500,000 CASH FLOWS FROM INVESTING ACTIVITIES Net investment losses (171,020) (27,817) Interest received 14,830 1,860 Net cash used in investing activities (156,190) (25,957) Net change in cash and cash equivalents 10,479,985 2,230,139 CASH AND CASH EQUIVALENTS, beginning of year 53,439,207 7,934,522 CASH AND CASH EQUIVALENTS, end of year 63,919,192$ 10,164,661$ RECONCILIATION TO STATEMENT OF NET POSITION Cash and cash equivalents 44,442,878$ 10,164,661$ Cash restricted for capital 19,152,552 - Restricted cash for customer deposits 323,762 - Total cash and cash equivalents 63,919,192$ 10,164,661$ RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Operating income (loss)9,574,141$ (1,094,651)$ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 5,158,368 1,078,667 Decrease (increase) in assets and deferred outflows of resources Receivables (579,416) - Deferred outflows of resources - pensions and OPEB (20,161) - Increase (decrease) in liabilities and deferred outflows of resources Payables and accruals 1,645,758 - Customer deposits 38,603 - Deferred inflows of resources - pensions and OPEB 306,735 - Decrease in pension and OPEB liabilities (451,544) - Unearned revenue (8,309) - Net cash provided by (used in) operating activities 15,664,175$ (15,984)$ NON-CASH CAPITAL AND RELATED FINANCING: Contributions of capital assets from developers 798,472$ -$ 40 41 Fiduciary Fund Financial Statements 42 City of Southlake, Texas Exhibit 10 OPEB Liability Trust Fund Statement of Fiduciary Net Position December 31, 2021 The Notes to Financial Statements are an integral part of this statement. 43 Trust Fund* Southlake OPEB Liability ASSETS Investments 2,550,451$ TOTAL ASSETS 2,550,451$ NET POSITION Restricted for post employment benefits other t han pensions 2,550,451$ TOTAL NET POSITION 2,550,451$ *The Southlake Other Post Employment Benefit (OPEB) Liability Trust fund is reported as of December 31, 2021. City of Southlake, Texas Exhibit 11 OPEB Liability Trust Fund Statement of Changes in Fiduciary Net Position For the Year Ended December 31, 2021 The Notes to Financial Statements are an integral part of this statement. 44 Trust Fund Southlake OPEB Liability ADDITIONS Employer contributions 323,319$ Investment earnings, net of unrealized/realized gain/(loss)117,346 TOTAL ADDITIONS 440,665 DEDUCTIONS Benefit payments 83,319 Administrative expenses 7,918 TOTAL DEDUCTIONS 91,237 Change in net position 349,428 Net postition, beginning of year 2,201,023 NET POSITION - END OF YEAR 2,550,451$ 45 Notes to Basic Financial Statements 46 City of Southlake, Texas Notes to Basic Financial Statements 47 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 six-member council. The accompanying financial statements present the government and its component units, entities for which the government is considered to be financially accountable. The criteria for including legally separate organizations as component units within the City’s reporting entity are set forth in Section 2100 of GASB’s Codification of Governmental Accounting and Financial Reporting Standards (GASB Codification). Blended component units are, in substance, part of the primary government’s operations, even though they are legally separate entities. Thus, blended component units are appropriately presented as funds of the primary government. 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 CEDC 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. City of Southlake, Texas Notes to Basic Financial Statements 48 Southlake Crime Control and Prevention District (the District) – The District was formed under Chapter 363 of the Texas Local Government Code, the Crime Control and Prevention Act. The District is organized exclusively to act on behalf of the City for the financing, development and crime control throughout the City. The District is governed by a seven member board appointed by the City Council. The annual budget and issuance of debt must be approved by the City Council. Since the District provides services entirely to the City, it has been reported as a blended component unit. Basis of Presentation The government-wide financial statements (the statement of net position and the statement of activities) report information on all of the activities of the City, except for fiduciary funds. The effect of interfund activity, within the governmental and business-type activities columns, has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given program are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific program. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given program and 2) operating or capital grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Taxes and other items not properly included among program revenues are reported instead as general revenues. 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. City of Southlake, Texas Notes to Basic Financial Statements 49 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. 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. 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. 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, deferred outflows of resources, liabilities, and deferred inflows of resources 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. City of Southlake, Texas Notes to Basic Financial Statements 50 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, 2021. 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. 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. City of Southlake, Texas Notes to Basic Financial Statements 51 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, 2022, 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 $11,272,064,219. Taxes are due on October 1 and are delinquent after the following January 31. The City is permitted by Article XI, Section 5 of the State of Texas Constitution to levy taxes up to $2.50 per $100 of assessed valuation for general governmental services, including the payment of principal and interest on general obligation long-term debt. The combined tax rate to finance general governmental services including the payment of principal and interest on long-term debt for the year ended September 30, 2022 was 0.390 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”. City of Southlake, Texas Notes to Basic Financial Statements 52 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. 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. Leases Effective October 1, 2021, the City implemented GASB Statement No. 87, Leases, which required the recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. Lessee – The City recognizes a lease liability and an intangible right-to-use lease asset (lease asset) in the government-wide and proprietary funds financial statements. At implementation of GASB Statement No. 87, the City initially measured the lease liabilities at the present value of payments expected to be made during the remaining lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease right-to-use asset was initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease right-to use asset is amortized on a straight-line basis over its useful life. Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term and (3) lease payments. • The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for leases. • The lease term includes the noncancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise. The City monitors changes in circumstances that would require a re-measurement of its lease and will remeasure the lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability. City of Southlake, Texas Notes to Basic Financial Statements 53 Lease assets are reported with other capital assets and lease liabilities are reported with long-term debt on the Statement of Net Position. Lessor—The City recognizes a lease receivable and deferred inflow of resources in the government-wide, and governmental funds financial statements. At implementation of GASB Statement No. 87, the City measured the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term. Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term and (3) lease receipts. • The City uses its estimated incremental borrowing rate as the discount rate for leases. • The lease term includes the non-cancellable period of the lease. Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee. The City monitors changes in circumstances that would require a re-measurement of its lease, and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable. Capital Assets Capital assets, which include property, plant, equipment, right to use leased assets, 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/amortization 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 City of Southlake, Texas Notes to Basic Financial Statements 54 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. Right-to-use assets are amortized over the duration of the lease using the straight-line method. 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 Employees with 10 or 20 year tenures of continuous employment with the City are eligible to receive payment of their unused sick leave, within certain limitations. 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. 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. City of Southlake, Texas Notes to Basic Financial Statements 55 Information regarding the City’s Total OPEB Liability of its Retiree Health Care Plan is obtained from Public Agency Retirement Services (PARS) through reports prepared for the City by PARS consulting actuary, Gabriel Roeder Smith & Company, in compliance with Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Deferred Outflows of Resources In addition to assets, the statement of financial position and/or balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represent a consumption of net assets 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). Deferred Inflows of Resources In addition to liabilities, the statement of net position and/or balance sheet will sometimes report a separate section for deferred inflows of resources, which represents acquisitions of net assets that apply to future periods. 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 from Leases Collections of lease receivables, are deferred in both the governmental fund and government wide financial statements. These amounts are recognized in a systematic manner over the life of the lease. Deferred Inflows from Unavailable Revenues 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. Deferred inflows from leases are also reported on the governmental fund balance sheet. City of Southlake, Texas Notes to Basic Financial Statements 56 Fund Equity 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. 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 ordinance is required to establish, modify, or rescind a fund balance commitment. The ordinance 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 Water and Sewer 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. City of Southlake, Texas Notes to Basic Financial Statements 57 As of September 30, 2022, the City had the governmental fund balances categorized as follows: COMMUNITY ENHANCEMENT GENERAL SOUTHLAKE TAX DEVELOPMENT OBLIGATION GENERAL PARKS INCREMENT CORPORATION NON-MAJOR TOTAL DEBT CAPITAL DEVELOPMENT FINANCING SPECIAL GOVERNMENTAL GOVERNMENTAL GENERAL SERVICE PROJECTS CORPORATION DISTRICT REVENUE F UNDS FUNDS FUND BALANCES Nonspendable for: Inventories 21,017$ -$ -$ -$ -$ -$ -$ 21,017$ Prepaid expenditures 380,512 - - - - - - 380,512 Restricted for: Debt service - 3,287,396 - - - - 2,464,189 5,751,585 Capital projects - - 26,395,656 - - - - 26,395,656 Municipal court expenditures - - - - - - 835,268 835,268 Reinvestment zone expenditures - - - - 6,663,970 - - 6,663,970 Parks and recreation - - - 14,016,439 - 16,668,425 16,947,601 47,632,465 Storm water - - - - - - 1,936,358 1,936,358 Police expenditures - - - - - - 7,791,993 7,791,993 Library - - - - - - 14,604 14,604 Promotion of tourism - - - - - - 2,653,697 2,653,697 Committed for: Police expenditures - - - - - - 1,169,498 1,169,498 Parks and recreation - - - - - - 55,266 55,266 Assigned for: Teen Court expenditures 20,882 - - - - - - 20,882 Senior Center expenditures 11,042 - - - - - - 11,042 Recycling 138,291 - - - - - - 138,291 Reforestation expenditures 96,012 - - - - - - 96,012 Public art 441,984 - - - - - - 441,984 Facility maintenance 10,064,326 - - - - - - 10,064,326 Economic investment 2,950,994 - - - - - - 2,950,994 Strategic initiatives 20,306,807 - - - - - - 20,306,807 Capital projects - - 19,442,768 - - - - 19,442,768 Unassigned 14,681,556 - - - - - - 14,681,556 TOTAL FUND BALANCES 49,113,423$ 3,287,396$ 45,838,424$ 14,016,439$ 6,663,970$ 16,668,425$ 33,868,474$ 169,456,551$ 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. Sometimes the City will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position in the government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City’s policy to consider restricted net position to have been depleted before unrestricted net position is applied. 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. Deficit Fund Balance There are no deficit fund balances reported as of September 30, 2022. City of Southlake, Texas Notes to Basic Financial Statements 58 New Accounting Pronouncements The GASB pronouncements effective in fiscal year 2022 and beyond are listed as follows: GASB Statement No. 87, Leases, increases the usefulness of government financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. The requirements of this Statement were effective for reporting periods beginning after June 15, 2021. The City has implemented this Statement in fiscal year 2022. GASB Statement No. 87, Leases, was implemented by the City effective October 1, 2021, the first day of the 2022 fiscal year, which resulted in a restatement of opening net position totaling $402,558 for its Governmental activities. In the fund financial statements, the implementation of this standard resulted in a restatement of opening fund balances of $368,213 and $35,971 for the General fund and the Southlake Parks Development Corporation fund, respectively. These increases in beginning fund balances are the net effect of establishing the lease receivables of $720,650 and $335,444 against the related deferred inflows from leases of $352,437 and $299,473 for the General and Southlake Parks Development Corporation Funds, respectively. The $402,558 increase in beginning net position reflects the same net effect of the lease receivables and related deferred inflows of resources from leases, as well as the net effect of establishing the governmental type right-to-use leased equipment assets of $452,021 (net of accumulated amortization of $93,048), and the governmental type lease liabilities of $452,688, as well as accrued interest payable on the lease liabilities of $959 as of October 1, 2021. GASB Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, improves financial reporting by addressing these relationships and availability payment arrangements. The requirements of this Statement are effective for fiscal years beginning after June 15, 2022. The City is currently evaluating the impact of this Statement. GASB Statement No. 96, Subscription-Based Information Technology Arrangements (SBITA), provides guidance on the accounting and financial reporting of contractual arrangements. It defines SBITA; establishes that a SBITA results in a right-to-use subscription asset; provides capitalization criteria; and requires note disclosures. The requirements of this Statement are effective for reporting periods beginning after June 15, 2022. The City is currently evaluating the impact of this Statement. GASB Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, increases consistency and comparability related to the reporting of fiduciary component units in circumstances in which a potential component unit does not have a governing board and the primary government performs the duties that governing board typically would perform; mitigates costs associated with the reporting of certain defined contribution pension, OPEB and benefit plans other than pension or OPEB plans; and enhances the relevance, consistency and comparability of the accounting and financial reporting for Internal Revenue Code Section 457 deferred compensation plans that meet the definition of a pension plan and for benefits provided through those plans. The requirements of this Statement related to the accounting and financial reporting for Section 457 plans was effective for fiscal years beginning after June 15, 2021, and have no impact on the City’s financial statements. City of Southlake, Texas Notes to Basic Financial Statements 59 GASB Statement No. 99, Omnibus 2022, enhances comparability in accounting and financial reporting and improves the consistency of authoritative literature by addressing (1) practice issues that have been identified during implementation and application of certain GASB Statements and (2) accounting and financial reporting for financial guarantees. The requirements of this Statement related to extension of use of London Interbank Offered Rate (LIBOR), accounting for Supplemental Nutrition Assistance Program (SNAP) distributions, disclosures of nonmonetary transactions, pledges of future revenues by pledging governments, clarification of certain provisions in Statement No. 34, as amended and terminology updates related to Statements No. 53 and 63 are effective immediately and implemented in the current year. All other requirements of this Statement are effective for fiscal years beginning after June 15, 2022, or June 15, 2023. The City is currently evaluating the impact of this Statement. GASB Statement No. 100, Accounting Changes and Error Corrections – an amendment of GASB Statement No. 62, enhances the accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent and comparable information for making decisions or assessing accountability. The requirements of this Statement are effective for accounting changes and error corrections made in fiscal years beginning after June 15, 2023, and all reporting periods thereafter. The City is currently evaluating the impact of this Statement. GASB Statement No. 101, Compensated Absences, will better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. The objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. The requirements of this Statement are effective for fiscal years beginning after December 15, 2023, and all reporting periods thereafter. The City is currently evaluating the impact of this Statement. Subsequent Events The City has evaluated all events or transactions that occurred after September 30, 2022 through March 14, 2023, 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, 2022, the carrying amount of the City's on demand deposits was $28,656,450 and the bank balance was $28,909,672. As of September 30, 2022, none of the City’s deposits were uncollateralized. The following legal and contractual provisions govern 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. City of Southlake, Texas Notes to Basic Financial Statements 60 Among other things, the Public Funds Investment Act (PFIA) 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, and (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 Authorized Maximum Percentage Investment Type Maturity of Portfolio U.S. Government Securities 5 years 100% Municipal Obligations 5 years 50% Repurchase Agreements 90 days 50% Certificates of Deposit 5 years 100% Bankers Acceptances 270 days 20% Commercial Paper 270 days 20% Money Market Mutual Funds 60 days*50% Eligible Investment Pools N/A 100% Insured Deposit Accounts N/A 20% *dollar weighted average maturity The Act also requires the City to have independent auditors perform test procedures related to investment practices as provided by the Act. The City is in substantial compliance with the requirements of the Act and with local policies. Cash and investments as of September 30, 2022, are classified in the accompanying financial statements as follows: Primary Government: Cash and cash equivalents 221,465,885$ Restricted cash and cash equivalents 22,432,236 Restricted cash for customer deposits 323,762 Total primary government 244,221,883 Trust Fund: Investments at fair value 2,550,451 Total fiduciary funds 2,550,451 Total cash and investments 246,772,334$ City of Southlake, Texas Notes to Basic Financial Statements 61 Cash and investments of the primary government as of September 30, 2022 consist of the following: Cash on hand 5,450$ Deposits with financial institutions 28,656,450 Investments at amortized cost 97,141,013 Investments at fair value 118,418,970 Total cash and investments 244,221,883$ 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, 2022, the City did not invest in any securities which are highly sensitive to interest rate fluctuations. Disclosures Relating to Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the Public Funds Investment Act, the City’s investment policy, or debt agreements, and the actual rating as of year-end for each investment type. Minimum Rating as Legal of Year Amount Rating End U.S. Government securities 63,509,569$ N/A AAA Municipal bonds 6,879,457 A AAA Commercial paper 27,465,485 A-1 / P-1 A-1 - A-1+ Mutual funds 20,564,459 N/A AAAm TexStar 19,370,978 AAA / AAAm AAAm TexPool 47,370,966 AAA / AAAm AAAm Lonestar Investment Pool 25,038,348 AAA / AAAm AAAm Texas Class 5,360,721 AAA / AAAm AAAm Total 215,559,983$ 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, 2022, the City investments other than external investment pools that represent 5% or more of the City’s investments include mutual funds, municipal bonds, commercial paper and U.S. Government securities as described in the table in the following Custodial Credit Risk section. City of Southlake, Texas Notes to Basic Financial Statements 62 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, 2022, none of the City’s cash deposits were uncollateralized. 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. City of Southlake, Texas Notes to Basic Financial Statements 63 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 9/30/22 Level 1 Inputs Level 2 Inputs Level 3 Inputs Percent of Total Investments Investments not subject to Fair Value Investment Pools TexPool 47,370,966$ -$ -$ -$ 22%25 TexStar 19,370,978 - - - 9%16 Lone Star 25,038,348 - - - 12%49 Texas CLASS 5,360,721 - - - 2%31 Investments by Fair Value Level Commercial Paper 27,465,485 27,465,485 13%167 U.S. Treasury Notes & Bonds 44,105,404 44,105,404 20%194 U.S. Government securities 19,404,165 - 19,404,165 - 9%407 Municipal Bonds 6,879,457 - 6,879,457 - 3%459 Mutual Funds Short-Term Investments Trust 20,564,459 20,564,459 - - 10%10 Total 215,559,983$ 20,564,459$ 97,854,511$ -$ 100%136 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. Investment in State Investment Pools The City is a voluntary participant in four investment pools: TexPool, TexStar, Texas CLASS and Lone Star. 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). City of Southlake, Texas Notes to Basic Financial Statements 64 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. Note 3. Receivables Receivables at September 30, 2022, 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 440,817$ 88,164$ -$ -$ -$ Sales taxes 3,392,571 - - 1,681,020 - Franchise taxes 741,575 - - - - Accounts - - 48,290 - - Interest 40,567 3,053 45,471 12,043 6,215 Leases 870,124 - - 188,613 - Other 93,444 197 - - 490 Gross receivables 5,579,098 91,414 93,761 1,881,676 6,705 Less: allowance 388,556 77,711 - - - Net total receivables 5,190,542$ 13,703$ 93,761$ 1,881,676$ 6,705$ CEDC Water Primary Special Non-Major and Internal Government Revenue Governmental Sewer Service Total Receivables: Property taxes -$ -$ -$ -$ 528,981$ Sales taxes 1,245,200 651,274 - - 6,970,065 Franchise taxes - - - - 741,575 Accounts - 220,437 6,092,229 - 6,360,956 Interest 14,940 31,236 59,590 9,187 222,302 Leases - - - - 1,058,737 Other 174,939 - - - 269,070 Gross receivables 1,435,079 902,947 6,151,819 9,187 16,151,686 Less: allowance - - 74,449 - 540,716 Net total receivables 1,435,079$ 902,947$ 6,077,370$ 9,187$ 15,610,970$ City of Southlake, Texas Notes to Basic Financial Statements 65 The Water and Sewer Fund and the Storm Water Utility Fund accounts receivable include unbilled charges for services rendered through September 30, 2022, of $2,923,305. Lease Receivables The City is a lessor for non-cancelable leases of the right-to-use of land, buildings, and infrastructure for which the City recognizes a lease receivable and a deferred inflow of resources in the government-wide and governmental fund financial statements. The interest rates for the leases approximate 2.9% annually, and the terms range from 5 to 25 years. The lease receivables that exist at September 30, 2022, relate to leases whose terms expire between December 2023 and January 2028. At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term. The City has $1,058,737 remaining in lease receivables and $706,608 remaining in deferred inflow as of September 30, 2022. The City recorded lease revenue including interest of $224,170 in the fiscal year. As of September 30, 2022, the expected lease receipts through the expiration of all leases for which the City is a lessor is as follows: Principal Interest Total 301,277$ 27,439$ 328,716$ 199,442 19,651 219,093 171,998 14,670 186,668 183,448 9,553 193,001 155,555 4,097 159,652 47,017 284 47,301 1,058,737$ 75,694$ 1,134,431$ 2027 2028 Total Fiscal Year Ending September 30, 2023 2024 2025 2026 City of Southlake, Texas Notes to Basic Financial Statements 66 Note 4. Capital Assets Capital asset activity for the year ended September 30, 2022, was as follows: Beginning Capital Sales or Adjustments/Ending Balance Acquisitions Disposals Transfers Balance Governmental Activities: Capital assets not being depreciated/amortized: Land 96,943,211$ 13,638$ -$ -$ 96,956,849$ Street infrastructure 216,914,845 18,312 - 15,425,394 232,358,551 Construction-in-progress 17,742,871 8,809,241 - (16,507,011) 10,045,101 Total capital assets not being depreciated/amortized 331,600,927 8,841,191 - (1,081,617) 339,360,501 Capital assets being depreciated/amortized: Land improvements 41,293,282 - - 428,024 41,721,306 Buildings and building improvements 142,247,034 - - - 142,247,034 Public art 1,804,405 - - 10,000 1,814,405 Equipment 19,291,034 2,856,739 (312,876) 85,761 21,920,658 Vehicles 15,863,822 499,370 (1,045,589) - 15,317,603 Drainage 63,244,266 366,714 - 557,832 64,168,812 Right to use leased equipment 545,069 - - - 545,069 Total capital assets being depreciated/amortized 284,288,912 3,722,823 (1,358,465) 1,081,617 287,734,887 Accumulated depreciation/amortization: Land improvements (24,208,336) (1,981,233) - - (26,189,569) Buildings and building improvements (29,915,685) (3,251,335) - - (33,167,020) Public art (1,064,188) (108,565) - - (1,172,753) Equipment (15,520,888) (1,427,047) 312,876 - (16,635,059) Vehicles (9,848,885) (1,213,033) 996,033 - (10,065,885) Infrastructure (29,526,672) (1,738,285) - - (31,264,957) Right to use leased equipment (93,048) (118,382) - - (211,430) Total accumulated depreciation/amortization (110,177,702) (9,837,880) 1,308,909 - (118,706,673) Total capital assets being depreciated/amortized, net 174,111,210 (6,115,057) (49,556) 1,081,617 169,028,214 Governmental activities capital assets, net 505,712,137$ 2,726,134$ (49,556)$ -$ 508,388,715$ Beginning Capital Sales or Adjustments/Ending Balance Acquisitions Disposals Transfers Balance Business Type Activities: Capital assets not being depreciated/amortized: Land 21,009,675$ 23,921$ -$ -$ 21,033,596$ Construction-In-Progress 579,184 944,737 - (109,248) 1,414,673 Total capital assets not being depreciated/amortized 21,588,859 968,658 - (109,248) 22,448,269 Capital assets being depreciated/amortized: Buildings and building improvements 935,501 - - - 935,501 Equipment 2,553,907 10,176 (66,074) - 2,498,009 Vehicles 553,002 - (41,185) - 511,817 Capacity rights 9,190,988 - - - 9,190,988 Distribution system 153,042,758 774,552 - 109,248 153,926,558 Total capital assets being depreciated/amortized 166,276,156 784,728 (107,259) 109,248 167,062,873 Accumulated depreciation/amortization: Buildings and building improvements (767,222) (30,318) - - (797,540) Equipment (2,424,122) (81,454) 66,074 - (2,439,502) Vehicles (541,414) (4,879) 41,185 - (505,108) Capacity rights (4,806,955) (183,820) - - (4,990,775) Distribution system (78,445,619) (4,857,896) - - (83,303,515) Total accumulated depreciation/amortization (86,985,332) (5,158,367) 107,259 - (92,036,440) Total capital assets being depreciated/amortized, net 79,290,824 (4,373,639) - 109,248 75,026,433 Business type activities capital assets, net 100,879,683$ (3,404,981)$ -$ -$ 97,474,702$ City of Southlake, Texas Notes to Basic Financial Statements 67 Depreciation/amortization expenses were charged as a direct expense to functions of the primary government as follows: Governmental activities: General government 1,808,266$ Public safety 1,987,484 Public works 1,991,761 Culture and recreation 4,050,369 Total depreciation/amortization expense - governmental activities 9,837,880$ Business-type activities: Water and Sewer 5,158,367$ Note 5. 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, 2022, the City had no additional outstanding bonds that were legally defeased. City of Southlake, Texas Notes to Basic Financial Statements 68 General obligation bonds, combination certificates of obligation, tax notes, and governmental revenue bonds are as follows as of September 30, 2022: Final Interest Business- General Obligation Bonds and Certificates of Obligation Maturity Rates Governmental Type $11,300,000 Series 2012, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2032 3.0 - 4.25%-$ 1,585,000$ $9,965,000 Series 2012, General Obligation Refunding Bonds 2026 3.0 - 4.25%3,285,000 60,000 $14,250,000 Series 2013, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2033 2.0 - 5.0%- 1,565,000 $22,295,000 Series 2013, General Obligation Refunding Bonds 2026 2.0 - 5.0%9,335,000 315,000 $21,330,000 Series 2014, General Obligation Refunding Bonds 2026 2.0 - 5.0%240,000 450,000 $8,780,000 Series 2014, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2034 2.0 - 3.5%- 2,935,000 $3,295,000 Series 2015, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2035 2.75 - 4.0%- 2,400,000 $7,910,000 Series 2017, General Obligation Refunding Bonds 2028 3.0 - 4.0%2,476,669 2,638,331 $5,400,000 Series 2017, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2037 2.25 - 5.0%- 4,465,000 $4,205,000 Series 2018, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2038 3.0 - 4.0%- 3,600,000 $17,290,000 Series 2019, General Obligation Refunding Bonds 2030 3.0 - 5.0%3,745,000 4,870,000 $4,240,000 Series 2021, General Obligation Refunding Bonds 2031 1.21%1,807,000 1,894,000 $8,595,000 Series 2022, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2037 4.0 - 5.0%8,595,000 - 29,483,669$ 26,777,331$ City of Southlake, Texas Notes to Basic Financial Statements 69 Final Interest Governmental Revenue Bonds Maturity Rates Governmental $11,300,000 Series 2012, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2032 3.0 - 4.25%3,365,000$ $16,000,000 Series 2014, Southlake Parks Development Corporation, Sales Tax Revenue Refunding Bonds 2027 3%6,030,000 $24,450,000 Series 2016, Southlake Community Enhancement and Development Corporation, Sales Tax Revenue Bonds 2036 3.00 - 5.00%19,715,000 $9,945,000 Series 2017, Southlake Community Enhancement and Development Corporation, Sales Tax Revenue Bonds 2036 2.00 - 5.00%7,985,000 37,095,000$ Final Interest Governmental Tax Notes Maturity Rates Governmental $3,753,000 Series 2021, Tax Notes 2026 0.83%2,686,000$ During 2022, the City issued $8,595,000 of Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 2022. The debt was issued for the purpose of paying contractual obligations incurred for constructing, improving, and renovating streets, alleys, culverts, and bridges, including drainage and erosion control. The following is a summary of long-term liability transactions for the year ended September 30, 2022: Amount Beginning Ending Due within Balance Additions Reductions Balance One year Governmental activities: General obligation bonds and certificates of obligation 25,098,975$ 8,595,000$ (4,210,306)$ 29,483,669$ 5,756,832$ Sales tax revenue bonds 40,240,000 - (3,145,000) 37,095,000 3,250,000 Tax notes 3,753,000 - (1,067,000) 2,686,000 663,000 Bond premiums (discounts)4,705,133 737,765 (692,511) 4,750,387 - Total bonds payable 73,797,108 9,332,765 (9,114,817) 74,015,056 9,669,832 Total OPEB liability - SDBF 978,660 81,063 - 1,059,723 - Net pension liability 7,732,031 - (6,399,296) 1,332,735 - Compensated absences 1,539,325 3,464,899 (2,282,783) 2,721,441 1,885,323 Financed purchase liabilities - 514,162 (108,794) 405,368 97,039 Other lease liabilities 452,688 - (114,637) 338,051 109,357 Total governmental activities 84,499,812$ 13,392,889$ (18,020,327)$ 79,872,374$ 11,761,551$ City of Southlake, Texas Notes to Basic Financial Statements 70 Typically, liquidation of the liabilities for compensated absences, total OPEB, and net pension occurs within the General Fund, Community Enhancement Development Corporation Special Revenue Fund, and the Water and Sewer Enterprise Fund where the 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. Amount Beginning Ending Due within Balance Additions Reductions Balance One year Business-type activities: General obligation bonds and certificates of obligation 29,130,025$ -$ (2,352,694)$ 26,777,331$ 2,439,168$ Bond premiums 2,003,804 - (268,378) 1,735,426 - Total bonds payable 31,133,829 - (2,621,072) 28,512,757 2,439,168 Total OPEB liability - SDBF 77,178 5,794 - 82,972 - Net pension liability 757,402 - (457,338) 300,064 - Compensated absences 87,370 218,659 (188,814) 117,215 95,852 Total business-type activities 32,055,779$ 224,453$ (3,267,224)$ 29,013,008$ 2,535,020$ 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 2023 5,756,832$ 1,109,260$ 6,866,092$ 2024 5,751,358 831,199 6,582,557 2025 5,988,305 596,729 6,585,034 2026 6,240,252 350,301 6,590,553 2027 1,302,198 199,738 1,501,936 2028-2032 3,424,724 435,734 3,860,458 2033-2037 1,020,000 114,575 1,134,575 Total 29,483,669$ 3,637,536$ 33,121,205$ Governmental Activities Sales Tax Revenue Bonds Fiscal Year Ending September 30,Principal Interest Total 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 2,970,000 678,237 3,648,237 2028-2032 11,860,000 2,300,448 14,160,448 2033-2037 9,190,000 567,037 9,757,037 Total 37,095,000$ 7,400,197$ 44,495,197$ Governmental Activities City of Southlake, Texas Notes to Basic Financial Statements 71 Tax Notes Fiscal Year Ending September 30,Principal Interest Total 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 2,686,000$ 44,819$ 2,730,819$ Governmental Activities General Obligation Bonds and Certificates of Obligation Fiscal Year Ending September 30,Principal Interest Total 2023 2,439,168$ 883,708$ 3,322,876$ 2024 2,488,642 788,662 3,277,304 2025 2,477,695 694,050 3,171,745 2026 2,565,748 598,818 3,164,566 2027 2,543,802 501,548 3,045,350 2028-2032 9,592,276 1,381,311 10,973,587 2033-2037 4,385,000 351,825 4,736,825 2038-2042 285,000 4,988 289,988 Total 26,777,331$ 5,204,910$ 31,982,241$ 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, 2022. The City has entered into multiple arrangements for the purpose of financing the purchase of various equipment. The City’s arrangements incur interest at 2.9% annually, and have 5 year terms expiring in 2026 and 2027. The annual debt service requirement to amortize the financed purchase liabilities outstanding at September 30, 2022, are as follows: Financed Purchase Liabilities Fiscal Year Ending September 30,Principal Interest Total 2023 97,039$ 11,756$ 108,795$ 2024 99,853 8,942 108,795 2025 102,748 6,046 108,794 2026 105,728 6,033 111,761 Total 405,368$ 32,777$ 438,145$ Governmental Activities City of Southlake, Texas Notes to Basic Financial Statements 72 The City has entered into multiple lease agreements as lessee for the right-to-use equipment over the term of the lease. The City is required to make periodic payments at its incremental borrowing rate or the interest rate stated or implied within the leases. Effective October 1, 2021, the City implemented GASB Statement No. 87, Leases. At implementation of this statement, the City initially measured the lease liability at the present value of payments expected to be made during the remaining lease term. The City’s lessee arrangements incur interest at rates of approximately 2.9% annually; all of which are accounted for within the City's governmental activities. All such arrangements range between 3 and 5 years in length. The annual debt service requirement to amortize the other lease liabilities outstanding at September 30, 2022, are as follows: Lease Liabilities Fiscal Year Ending September 30,Principal Interest Total 2023 109,357$ 8,343$ 117,700$ 2024 89,025 5,406 94,431 2025 87,466 2,894 90,360 2026 52,203 506 52,709 Total 338,051$ 17,149$ 355,200$ Governmental Activities Note 6. Transfers All interfund transfers between the various funds are approved supplements to the operations of those funds. Individual fund transfers for fiscal year 2022 were as follows: General General Vehicle and Obligation Capital Nonmajor Equipment General Debt Service Projects Governmental Replacement Total Fund Fund Fund Funds Fund transfers Transfers out: General Fund -$ -$ 14,638,170$ 150,000$ 2,500,000$ 17,288,170$ Southlake Parks Development Corporation Fund 398,317 - - 6,796,796 - 7,195,113 Community Enhancement and Development Corporation Fund - - - 2,879,195 - 2,879,195 Nonmajor Governmental Funds 876,072 173,859 730,000 571,861 - 2,351,792 Water and Sewer Enterprise Fund 1,360,830 - - - - 1,360,830 Total transfers 2,635,219$ 173,859$ 15,368,170$ 10,397,852$ 2,500,000$ 31,075,100$ Transfers in: During the year, interfund transfers were used for the following recurring items: • Used to allocate indirect changes to other funds including the Southlake Parks Development Corporation, Water and Sewer Enterprise Fu, and other nonmajor governmental funds to the General Fund. • Used to move revenues from the fund with collection authorization to the General Obligation Debt Service Fund and other nonmajor debt service funds as debt service principal and interest payments become due. • Used to move funding for vehicle and equipment replacement from the General Fund to the internal service fund. • Used for funding annual subsidy for commercial vehicle enforcement. City of Southlake, Texas Notes to Basic Financial Statements 73 Further, during the year ended September 30, 2022, the City made the following one-time transfers: • Transfer $14,538,170 from the General Fund to the General Capital Projects Fund for infrastructure projects. • Transfer $100,000 from the General Fund to the General Capital Projects Fund for public art. • Transfer $730,000 from nonmajor governmental funds to the General Capital Projects Fund for infrastructure projects. • Transfers between nonmajor governmental funds of $571,861 to fund parks projects. Note 7. Retirement Plan A. Plan Description The City participates as one of 901 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. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount at least equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are a percent (100%, 150%, or 200%) of the employee's accumulated contributions. In addition, the City can grant, as often as annually, another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contributions accumulated with interest if the current employee contribution rate and City matching percent had always been in existence and if the employee's salary had always been the average of his salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer-financed monetary credits with interest were used to purchase an annuity. City of Southlake, Texas Notes to Basic Financial Statements 74 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, 2021 valuation and measurement date, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 155 I nactive employees entitled to but not yet receiving benefits 270 Active employees 356 781 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 12.39% and 12.33% in calendar years 2021 and 2022, respectively. The City’s contributions to TMRS for the year ended September 30, 2022 were $3,610,307, and were greater than the required contributions by $62,449. D. Net Pension Liability The City’s Net Pension Liability (NPL) was measured as of December 31, 2021 and the Total Pension Liability (TPL) used to calculate the NPL was determined by an actuarial valuation as of that date. Actuarial Assumptions The Total Pension Liability in the December 31, 2021 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. City of Southlake, Texas Notes to Basic Financial Statements 75 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, 2021 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). 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 35.0%7.55% Core Fixed Income 6.0%2.00% Non-Core Fixed Income 20.0%5.68% Other public and private markets 12.0%7.22% Real Estate 12.0%6.85% Hedge funds 5.0%5.35% Private Equity 10.0%10.00% 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 and inflows 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 76 Changes in the Net Pension Liability Increase Total (Decrease) Net Pension Plan Fiduciary Pension Liability Net Position Liability (a)(b)(a) - (b) Balance at 12/31/2020 120,255,557$ 111,766,124$ 8,489,433$ Changes for the year: Service Cost 4,328,436 - 4,328,436 Interest 8,133,486 - 8,133,486 Change of benefit terms - - - Difference between expected and actual experience 426,450 - 426,450 Changes of assumptions - - - Contributions - employer - 3,348,713 (3,348,713) Contributions - employee - 1,871,403 (1,871,403) Net investment income - 14,591,844 (14,591,844) Benefit payments, including refunds of employee contributions (3,847,375) (3,847,375) - Administrative expense - (67,416) 67,416 Other changes - 462 (462) Net Changes 9,040,997 15,897,631 (6,856,634) Balance at 12/31/2021 129,296,554$ 127,663,755$ 1,632,799$ 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 21,959,204$ 1,632,799$ (14,877,454)$ 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 77 E. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended September 30, 2022, the City recognized pension expense of $1,044,738. At September 30, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual economic experience 603,589$ -$ Changes in actuarial assumptions 133,528 - Difference between projected and actual investment earnings - 7,475,927 Contributions subsequent to the measurement date 2,806,450 - Total 3,543,567$ 7,475,927$ The $2,806,450 reported as deferred outflows of resources related to pensions result from contributions subsequent to the measurement date and will reduce the net pension liability during the fiscal year ended September 30, 2023. The other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Fiscal Year Ended Sept. 30 2023 (1,055,514)$ 2024 (2,849,791) 2025 (1,469,672) 2026 (1,363,833) Total (6,738,810)$ Note 8. 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 an agent-multiple 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)(717,407)$ 1,142,695$ 425,288$ Deferred outflows of resources 474,311 256,921 731,232 Deferred inflows of resources 546,940 88,324 635,264 OPEB expense (302,302) 111,995 (190,307) City of Southlake, Texas Notes to Basic Financial Statements 78 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, 2021: Inactive employees currently receiving benefits 6 Inactive employees entitled to but not yet receiving benefits 0 Active Employees 343 349 Contributions The City’s contributions during the fiscal year ending September 30, 2022 were $229,678 and were greater than the required contributions by $84,950. 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 asset is based on an actuarial valuation performed as of December 31, 2021. City of Southlake, Texas Notes to Basic Financial Statements 79 Actuarial Assumptions The total OPEB asset in the December 31, 2021 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 8 years as of September 30, 2022 Asset valuation Market value Investment rate of return 5.50%, net of investment expenses, including inflation Inflation rate 2.50% per year Salary Increases 3.50% to 10.50% including inflation Demographic Assumptions Based on the experience study covering the four- year period ending December 31, 2014 as conducted for the Texas Municipal Retirement System (TMRS). Mortality For healthy retirees, the gender-distinct RP2000 Combined Healthy Mortality Tables with Blue Collar Adjustment are used with male rates multiplied by 109% and female rates multiplied by 103%. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements. 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 7.20% declining to ultimate rates of 4.25% after 15 years. 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 5.0%; the municipal bond rate is 1.84% (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. City of Southlake, Texas Notes to Basic Financial Statements 80 Changes in the Net OPEB Asset Total Plan Net OPEB Fiduciary OPEB (Asset) Liability Net Position (Asset) Liability (a)(b)(a) - (b) Balance at 12/31/2020 1,948,722$ 2,201,023$ (252,301)$ Changes for the year: Service Cost 80,561 - 80,561 Interest 97,367 - 97,367 Difference between expected and actual experience 6,855 - 6,855 Changes of assumptions (217,142) - (217,142) Contributions - employer - 323,319 (323,319) Net investment income - 117,346 (117,346) Benefit payments, including refunds of employee contributions (83,319) (83,319) - Administrative expense - (7,918) 7,918 Net Changes (115,678) 349,428 (465,106) Balance at 12/31/2021 1,833,044$ 2,550,451$ (717,407)$ 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 $83,319 in benefit payments was paid by the City using its own assets. The plan fiduciary net position is 139% of the total OPEB liability as of the measurement date, resulting in the Net OPEB asset. The benefit payments during the measurement period were determined as follows: City's explicit subsidy 12,775$ City's implicit subsidy (explicit subsidy * 5.522)70,544 Total benefit payments 83,319$ 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 (555,348)$ (717,407)$ (863,077)$ City of Southlake, Texas Notes to Basic Financial Statements 81 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 (904,065)$ (717,407)$ (496,127)$ OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources For the year ended December 31, 2021, the City recognized OPEB expense of $21,017. At September 30, 2022, the reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Difference between Expected and Actual Economic Experiences 16,011$ 267,432$ Changes in Assumptions 252,102 193,681 Investment Experience - 85,827 Contributions subsequent to the measurement date 206,198 - 474,311$ 546,940$ The $206,198 reported as deferred outflows of resources related to OPEB resulting from contributions subsequent to the measurement date will increase the net OPEB asset during the year ending September 30, 2023. Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Fiscal Year Ended Sept. 30 2023 (38,756)$ 2024 (62,596) 2025 (37,842) 2026 (18,185) 2027 (17,888) Thereafter (103,560) Total (278,827)$ 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 82 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, 2021 valuation and measurement date, the following employees were covered by the benefit terms: Inactive employees currently receiving benefits 105 Inactive employees entitled to but not yet receiving benefits 75 Active Employees 356 536 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. 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. City of Southlake, Texas Notes to Basic Financial Statements 83 The retiree portion of contribution rates to the SDBF for the City was 0.05% and 0.14% in calendar years 2021 and 2022, respectively. The City’s contributions to the SDBF for the year ended September 30, 2022 were $21,326, and were equal to the required contributions. Total OPEB Liability The City’s Total OPEB Liability (TOL) was measured as of December 31, 2021 and was determined by an actuarial valuation as of that date. Actuarial Assumptions The Total OPEB Liability in the December 31, 2021 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 1.84% Retiree's share of benefit-related costs $0 Actuarial cost method Entry Age Normal Amortization Method Level percentage of payroll; closed Salary increases were based on a service-related table. Mortality rates for service retirees were based on the 2019 Municipal Retirees of Texas Mortality Tables. The rates are projected on a fully generational basis with scale UMP. Mortality rates for disabled retirees were based on 2019 Municipal Retirees of Texas Mortality Tables with a 4-year set-forward for males and a 3-year set-forward for females. In addition, a 3.5% and 3% minimum mortality rate will be applied to reflect the impairment for younger members who become disabled for males and females, respectively. The rates are projected on a fully generational basis with scale UMP to account for future mortality improvements subject to the floor. Actuarial assumptions used in the December 31, 2021 valuation were developed primarily from the actuarial investigation of the experience of TMRS over the four-year period from December 31, 2014 to December 31, 2018. They were first adopted in 2019 and first used in the December 31, 2019 actuarial valuation. The discount rate used to measure the Total OPEB Liability was 1.84% and was based on the Fidelity Index’s “20-Year Municipal GO AA Index” rate as of December 31, 2021. Changes in Total OPEB Liability Total OPEB Liability Balances as of 12/31/2020 1,055,838$ Changes for the year: Service cost 66,103 Interest 21,646 Difference between expected and actual experience (26,578) Changes of assumptions 38,907 Contributions - employer (13,221) Net Changes 86,857 Balances as of 12/31/2021 1,142,695$ City of Southlake, Texas Notes to Basic Financial Statements 84 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 (0.84%) or 1 percentage-point higher (2.84%) than the current rate: 1% Decrease (0.84%) Discount Rate (1.84%) 1% Increase (2.84%) Total OPEB liability 1,426,617$ 1,142,695$ 925,449$ OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended September 30, 2022, the City recognized OPEB expense of $125,216. At September 30, 2022, the City reported deferred outflows and inflows of resources related to the OPEB plan from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Difference between expected and actual economic experiences -$ 64,099$ Changes in actuarial assumptions 245,749 24,225 Contributions subsequent to the measurement date 11,172 - 256,921$ 88,324$ The $11,172 reported as deferred outflows of resources related to the OPEB plan resulting from contributions subsequent to the measurement date will reduce the Total OPEB liability during the year ending September 30, 2023. The other amounts reported as deferred outflows and inflows of resources related to the OPEB plan will be recognized in OPEB expense as follows: Fiscal Year Ended Sept. 30 2023 37,467$ 2024 37,467 2025 28,650 2026 38,574 2027 14,356 Thereafter 911 Total 157,425$ Note 9. 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. City of Southlake, Texas Notes to Basic Financial Statements 85 All amounts of compensation deferred under the plan, all property and rights purchased with such amounts, and all income attributable to such amounts, property, or rights are held in trust or under one or more annuity contracts described in Internal Revenue Code Section 401(f). Except as may otherwise be permitted or required by law, no assets or income of the plan shall be used for, or diverted to, purposes other than for the exclusive purpose of providing benefits for participants and their beneficiaries or defraying reasonable expenses of administration of the plan. In accordance with GASB 97, the plans as amended are not included in the City’s financial statements. Note 10. 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. Note 11. 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, 2022 were $5,227,729. 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 12. 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, 2022, the City rebated $324,319 in sales taxes, $151,766 in property taxes, and $256,305 in hotel occupancy taxes. 86 87 Required Supplementary Information 88 89 Budgetary Comparison General Fund City of Southlake, Texas Exhibit A-1 General Fund Budgetary Comparison Schedule (GAAP Basis) For the Year Ended September 30, 2022 See Notes to Budgetary Comparison Schedules 90 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Ad valorem taxes, penalties and interest 26,662,376$ 26,662,376$ 26,713,569$ 51,193$ Franchise taxes 2,825,446 2,957,795 2,988,874 31,079 Municipal sales and mixed beverage tax 16,405,450 19,715,165 21,047,369 1,332,204 License, permits and fees 1,202,100 2,499,000 2,855,591 356,591 Charges for services 1,648,338 1,816,955 1,997,797 180,842 Fines and forfeitures 908,500 908,000 973,523 65,523 Grants 72,000 397,142 574,254 177,112 Investment income (losses)141,405 37,150 (162,864) (200,014) Contributions 5,000 30,000 40,986 10,986 Miscellaneous 188,000 188,000 191,266 3,266 Total revenues 50,058,615 55,211,583 57,220,365 2,008,782 EXPENDITURES General government City secretary/mayor 579,151 593,383 587,120 6,263 City manager's office 1,039,414 1,081,377 1,085,236 (3,859) Human resources 898,627 912,815 874,724 38,091 Support services 4,677,607 4,486,203 4,247,552 238,651 Economic development 490,495 543,193 361,298 181,895 Finance 1,578,154 1,685,224 1,607,797 77,427 Municipal court 797,220 799,259 757,460 41,799 Teen court 169,326 176,930 161,550 15,380 Information technology 4,113,280 4,041,373 3,172,551 868,822 Public safety Police services 7,621,868 5,199,827 4,132,359 1,067,468 Fire services 9,901,234 7,515,253 6,705,764 809,489 Public safety support 1,529,464 1,602,114 1,494,011 108,103 Public works Public works administration 2,241,100 2,241,572 1,932,212 309,360 Streets and drainage 1,128,593 1,137,844 1,006,161 131,683 Planning 1,175,810 1,223,348 1,184,574 38,774 Building inspection 1,170,606 1,172,042 1,114,921 57,121 Culture and recreation Community services 1,435,531 1,449,832 1,329,819 120,013 Parks and recreation 4,086,236 4,157,343 3,855,677 301,666 Library services 905,449 926,733 917,538 9,195 Capital Outlay 926,712 646,201 945,293 (299,092) Debt Service Principal - - 114,636 (114,636) Interest - - 11,638 (11,638) Total expenditures 46,465,877 41,591,866 37,599,891 3,991,975 Excess of revenues over expenditures 3,592,738 13,619,717 19,620,474 6,000,757 OTHER FINANCING SOURCES (USES) Sale of capital assets - - 52,124 52,124 Transfers from other funds 2,129,660 14,223,389 2,635,219 (11,588,170) Transfers to other funds (6,250,000) (28,876,340) (17,288,170) 11,588,170 Total other financing sources (uses)(4,120,340) (14,652,951) (14,600,827) 52,124 Net change in fund balance (527,602) (1,033,234) 5,019,647 6,052,881 Cumulative effect of change in accounting principle - - 368,213 368,213 Fund balances, beginning of year as restated 44,093,776 44,093,776 44,093,776 - FUND BALANCES, END OF YEAR 43,566,174$ 43,060,542$ 49,113,423$ 6,052,881$ 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, 2022 See Notes to Budgetary Comparison Schedules 91 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Municipal sales tax 8,140,300$ 9,800,000$ 10,610,993$ 810,993$ Miscellaneous - - 133,099 133,099 Investment income (losses)8,400 4,100 (11,760) (15,860) Total revenues 8,148,700 9,804,100 10,732,332 928,232 EXPENDITURES Parks and recreation 1,645,223 1,648,048 1,657,795 (9,747) Capital outlay 190,200 190,000 62,404 127,596 Total expenditures 1,835,423 1,838,048 1,720,199 117,849 Excess of revenues over expenditures 6,313,277 7,966,052 9,012,133 1,046,081 OTHER FINANCING USES Transfers to other funds (7,128,897) (7,195,113) (7,195,113) - Net change in fund balance (815,620) 770,939 1,817,020 1,046,081 Cumulative effect of change in accounting principle - - 35,971 35,971 Fund balances, beginning of year, as restated 12,199,419 12,199,419 12,199,419 - FUND BALANCE, END OF YEAR 11,383,799$ 12,970,358$ 14,016,439$ 1,046,081$ 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, 2022 See Notes to Budgetary Comparison Schedules 92 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Ad valorem taxes, penalties and interest 10,080,279$ 9,228,696$ 9,343,619$ 114,923$ Investment income (losses)3,990 2,500 (12,950) (15,450) Total revenues 10,084,269 9,231,196 9,330,669 99,473 EXPENDITURES General government: Support services 645,076 645,076 586,380 58,696 Public safety: Police services 295,660 370,893 372,628 (1,735) Intergovernmental 6,698,319 5,934,584 5,934,584 - Capital outlay 1,415,000 1,415,000 1,415,000 - Total expenditures 9,054,055 8,365,553 8,308,592 56,961 Excess of revenues over expenditures 1,030,214 865,643 1,022,077 156,434 Net change in fund balance 1,030,214 865,643 1,022,077 156,434 Fund balance, beginning of year 5,641,893 5,641,893 5,641,893 - FUND BALANCE, END OF YEAR 6,672,107$ 6,507,536$ 6,663,970$ 156,434$ 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, 2022 See Notes to Budgetary Comparison Schedules 93 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Municipal sales tax 6,006,256$ 7,350,000$ 7,859,995$ 509,995$ Charges for services 2,878,141 3,343,765 3,512,532 168,767 Investment income (losses)13,100 4,500 (31,727) (36,227) Contributions 7,711 5,711 4,982 (729) Miscellaneous - - 183 183 Total revenues 8,905,208 10,703,976 11,345,965 641,989 EXPENDITURES: Culture and recreation Parks and recreation 4,504,910 4,867,823 4,426,956 440,867 Total expenditures 4,504,910 4,867,823 4,426,956 440,867 Excess of revenues over expenditures 4,400,298 5,836,153 6,919,009 1,082,856 OTHER FINANCING USES: Transfers to other funds (2,807,244) (5,775,995) (2,719,195) 3,056,800 Total other financing uses (2,967,244) (2,879,195) (2,879,195) - Net changes in fund balance 1,433,054 2,956,958 4,039,814 1,082,856 Fund balances, beginning of year 12,628,611 12,628,611 12,628,611 - FUND BALANCES, END OF YEAR 14,061,665$ 15,585,569$ 16,668,425$ 1,082,856$ BUDGETED AMOUNTS City of Southlake, Texas Notes to Budgetary Comparison Schedules For the Fiscal Year Ended September 30, 2022 94 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, Municipal Jury, 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 has 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, 2022 as follows: • City manager’s office - ($3,859) Due to additional employee and changes in employee insurance coverage. • Capital outlay - ($299,092) Due to implementation of GASB 87, not a true cash flow expenditure over budget. • Debt service: Principal - ($114,636) Due to implementation of GASB 87, not a true cash flow expenditure over budget. • Debt service: Interest - ($11,638) Due to implementation of GASB 87, not a true cash flow expenditure over budget. City of Southlake, Texas Exhibit A-5 Schedule of Changes in Net Pension Liability and Related Ratios Texas Municipal Retirement System Last Eight Measurement Years 95 Measurement Year Measurement Year Measurement Year Measurement Year Measurement Year Measurement Year Measurement Year Measurement Year 2021 2020 2019 2018 2017 2016 2015 2014 T otal pension liability: Service cost 4,328,436$ 4,289,132$ 4,190,311$ 3,919,389$ 3,579,734$ 3,482,384$ 3,222,126$ 2,906,949$ Interest 8,133,486 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 426,450 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 (3,847,375) (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 9,040,997 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 120,255,557 111,171,316 102,131,974 93,802,160 86,072,966 79,322,235 72,068,298 67,664,562 Total pension liability - ending (a)129,296,554 120,255,557 111,171,316 102,131,974 93,802,160 86,072,966 79,322,235 72,068,298 Plan fiduciary net position: Contributions - employer 3,348,713 3,322,051 3,212,690 2,992,110 2,682,629 2,595,919 2,425,455 2,283,310 Contributions - employee 1,871,403 1,829,612 1,773,541 1,673,450 1,520,518 1,480,965 1,409,008 1,340,870 Net investment income 14,591,844 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 (3,847,375) (2,798,825) (2,671,062) (2,506,166) (1,930,078) (2,304,726) (1,921,361) (1,680,030) Administrative expense (67,416) (49,969) (75,264) (50,164) (53,258) (51,781) (59,224) (36,150) Other 462 (1,950) (2,262) (2,623) (2,699) (2,790) (2,925) (2,972) Net change in plan fiduciary net position 15,897,631 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 111,766,124 101,733,886 86,158,917 86,650,354 74,148,639 67,842,796 65,894,591 60,526,545 Plan fiduciary net position - ending (b)127,663,755 111,766,124 101,733,886 86,158,917 86,650,354 74,148,639 67,842,796 65,894,591 Net pension liability - ending (a) - (b)1,632,799$ 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 98.74%92.94%91.51%84.36%92.38%86.15%85.53%91.43% Covered payroll 26,441,262$ 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 6.18%32.48%37.25%67.37%32.92%56.36%57.07%32.23% Note: Only eight 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 Eight Fiscal Years 96 Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2022 2021 2020 2019 2018 2017 2016 2015 A ctuarially determined contribution 3,547,858$ 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 3,610,307 3,297,682 3,201,451 3,182,749 2,894,219 2,654,303 2,632,209 2,439,627 Contribution deficiency (excess)(62,449)$ (52,695)$ (69,784)$ (81,245)$ (64,604)$ (73,923)$ (123,418)$ -$ Covered payroll 28,738,669$ 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 12.56% 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 eight 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 Five Measurement Years 97 Measurement Year Measurement Year Measurement Year Measurement Year Measurement Year 2021 2020 2019 2018 2017 T otal OPEB liability (asset): Service cost 80,561$ 73,365$ 66,950$ 53,239$ 55,061$ Interest 97,367 114,848 108,953 87,706 84,496 Changes of benefit terms - - - - - Difference between expected and actual experience 6,855 (337,496) (1,262) 16,549 (3,965) Change in assumptions (217,142) 87,222 8,001 297,855 - Benefit payments, including refunds of employee contributions (83,319) (81,362) (75,967) (75,843) (76,779) Net change in total OPEB liability (asset)(115,678) (143,423) 106,675 379,506 58,813 Total OPEB liability (asset) - beginning 1,948,722 2,092,145 1,985,470 1,605,964 1,547,151 Total OPEB liability (asset) - ending (a)1,833,044 1,948,722 2,092,145 1,985,470 1,605,964 Plan fiduciary net position: Contributions - employer 323,319 321,362 165,967 172,843 116,779 Net investment income 117,346 201,804 207,145 (38,598) 121,500 Benefit payments, including refunds of employee contributions (83,319) (81,362) (75,967) (75,843) (76,779) Administrative expense (7,918) (6,098) (5,348) (4,389) (3,483) Net change in plan fiduciary net position 349,428 435,706 291,797 54,013 158,017 Plan fiduciary net position - beginning 2,201,023 1,765,317 1,473,520 1,419,507 1,261,490 Plan fiduciary net position - ending (b)2,550,451 2,201,023 1,765,317 1,473,520 1,419,507 Net OPEB liability (asset)- ending (a) - (b)(717,407)$ (252,301)$ 326,828$ 511,950$ 186,457$ Plan fiduciary net position as a percentage of total OPEB liability (asset)139.14%112.95%84.38%74.22%88.39% Covered payroll 27,287,214$ 26,994,043$ 26,143,074$ 22,468,011$ 20,607,676$ Net OPEB liability (asset)as a percentage of covered payroll -2.63%-0.93%1.25%2.28%0.90% Note: Only five 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 Five Fiscal Years 98 Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2022 2021 2020 2019 2018 Actuarially determined contribution 144,728$ 142,458$ 140,254$ 89,240$ 89,240$ Contribution in relation of the actuarially determined contribution 229,678 332,082 301,318 177,639 168,167 Contribution deficiency (excess)(84,950)$ (189,624)$ (161,064)$ (88,399)$ (78,927)$ Covered payroll 22,062,303$ 25,882,453$ 24,988,882$ 24,537,271$ 23,132,172$ Contributions as a percentage of covered payroll 1.04%1.28%1.21%0.72%0.73% Note: Only five 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 Five Measurement Years 99 Measurement Year Measurement Year Measurement Year Measurement Year Measurement Year 2021 2020 2019 2018 2017 T otal OPEB liability: Service cost 66,103$ 52,275$ 38,002$ 42,679$ 34,755$ Interest 21,646 24,403 25,388 23,155 21,919 Changes of benefit terms - - - - - Difference between expected and actual experience (26,578) (37,301) (13,112) (18,599) - Change in assumptions 38,907 156,506 149,523 (56,421) 62,407 Contributions - employer (13,221) (2,614) (5,067) (2,371) (4,344) Net change in total pension liability 86,857 193,269 194,734 (11,557) 114,737 Total OPEB liability - beginning 1,055,838 862,569 667,835 679,392 564,655 Total OPEB liability - ending (a)1,142,695$ 1,055,838$ 862,569$ 667,835$ 679,392$ Covered employee payroll 26,441,273$ 26,137,309$ 25,334,408$ 23,710,761$ 21,721,689$ Net pension liability as a percentage of covered employee payroll 4.32%4.04%3.40%2.82%3.13% Note: Only five 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 Five Fiscal Years 100 Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2022 2021 2020 2019 2018 Actuarially determined contribution 21,326$ 10,272$ 3,206$ 3,965$ 2,846$ Contribution in relation of the actuarially determined contribution 21,326 10,272 3,206 3,965 2,846 Contribution deficiency (excess)-$ -$ -$ -$ -$ Covered payroll 28,738,669$ 26,156,403$ 25,202,798$ 25,156,408$ 23,132,172$ Contributions as a percentage of covered payroll 0.07%0.04%0.01%0.02%0.01% Note: Only five 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, 2022 101 CONDITION OF ROADWAY SYSTEM 2022 2021 2020 City Required Minimum International Roughness Index (IRI)73.0 73.0 55.0 Pavement Condition Index (PCI)80.5 80.0 87.0 Pavement Quality Index (PQI)81.1 80.0 82.0 78.0 COMPARISON OF NEEDED-TO-ACTUAL MAINTENANCE/PRESERVATION Needed Actual Difference 2018 900,000 903,868 $ 3,868 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 2022 1,900,000 1,706,384 (193,616) Total $ 6,100,000 $5,860,192 $(239,808) 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 100. Typical values for a newly constructed pavement range from 95.0 to 100.0. The PQI level at which a pavement becomes in need of rehabilitation is typically in the 50.0 to 70.0 range. It was the City’s policy to maintain a PQI of 73.0 until 2012 when the City increased the minimum PQI to 78.0. 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 three complete condition assessments at transition using the modified approach. The condition assessments were completed by the City and concluded 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. 102 103 Combining and Individual Fund Financial Statements and Schedules 104 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, 2022 105 VARIANCE WITH FINAL BUDGET- POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Ad valorem taxes, penalties, and interest 5,395,275$ 5,395,275$ 5,372,684$ (22,591)$ I nvestment income (losses)6,300 6,000 (17,970) (23,970) Total revenues 5,401,575 5,401,275 5,354,714 (46,561) EXPENDITURES Principal retirement 4,675,306 4,675,306 4,675,306 - Interest and fiscal charges 670,826 670,826 676,410 (5,584) Total expenditures 5,346,132 5,346,132 5,351,716 (5,584) Excess (deficiency) of revenues over (under) expenditures 55,443 55,143 2,998 (52,145) OTHER FINANCING SOURCES: Transfers from other funds 173,859 173,859 173,859 - Total other financing sources 173,859 173,859 173,859 - Net change in fund balance 229,302 229,002 176,857 (52,145) Fund balance, beginning of year 3,110,539 3,110,539 3,110,539 - FUND BALANCE, END OF YEAR 3,339,841$ 3,339,541$ 3,287,396$ (52,145)$ BUDGETED AMOUNTS 106 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. Municipal Jury Fund – Established to account for municipal court fees assessed to provide jury services. 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. 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. 107 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, 2022 108 Parks Crime and Parks Control Police Recreation Dedication District ASSETS Cash and cash equivalents 145,556$ 193,059$ 1,168,410$ 5,311,115$ Accounts receivable - 1,500 - 2,218 Sales tax receivable - - - 390,390 Interest receivable 136 180 1,088 4,946 TOTAL ASSETS 145,692$ 194,739$ 1,169,498$ 5,708,669$ LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable 7,984$ -$ -$ 61,418$ Accrued liabilities - - - 55,956 Retainage payable - - - - Total liabilities 7,984 - - 117,374 DEFERRED INFLOWS OF RESOURCES Unavailable resources - 1,500 - - FUND BALANCES Restricted for: Municipal court expenditures - - - - Debt service - - - - Storm water - - - - Police expenditures 137,708 - - 5,591,295 Parks and recreation - 193,239 - - Library - - - - Promotion of culture and tourism - - - - Committed for: Parks and recreation - - 1,169,498 - Oil and gas drilling - - - - Total fund balances 137,708 193,239 1,169,498 5,591,295 TOTAL LIABILITIES AND FUND BALANCES 145,692$ 194,739$ 1,169,498$ 5,708,669$ SPECIAL REVENUE Exhibit C-1 Continued 109 Storm Hotel Water Court Court Municipal Red Light Occupancy Utility Security Technology Jury Library Camera 2,669,665$ 1,744,318$ 438,274$ 311,090$ 1,690$ 14,590$ 331,881$ - 216,719 - - - - - 260,884 - - - - - - 2,485 1,624 408 290 2 14 309 2,933,034$ 1,962,661$ 438,682$ 311,380$ 1,692$ 14,604$ 332,190$ 269,413$ 15,096$ -$ -$ -$ -$ -$ 9,924 11,207 854 - - - - - - - - - - - 279,337 26,303 854 - - - - - - - - - - - - - 437,828 311,380 1,692 - - - - - - - - - - 1,936,358 - - - - - - - - - - - 332,190 - - - - - - - - - - - - 14,604 - 2,653,697 - - - - - - - - - - - - - - - - - - - - 2,653,697 1,936,358 437,828 311,380 1,692 14,604 332,190 2,933,034$ 1,962,661$ 438,682$ 311,380$ 1,692$ 14,604$ 332,190$ SPECIAL REVENUE City of Southlake, Texas Non-Major Governmental Funds Combining Balance Sheet September 30, 2022 110 Commercial Oil and Vehicle Truancy Disaster Gas Enforcement Prevention Recovery ASSETS Cash and cash equivalents 55,215$ 234,778$ 84,290$ -$ Accounts receivable - - - - Sales tax receivable - - - - Interest receivable 51 219 78 - TOTAL ASSETS 55,266$ 234,997$ 84,368$ -$ LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable -$ -$ -$ -$ Accrued liabilities - 1,294 - - Retainage payable - - - - TOTAL LIABILITIES - 1,294 - - DEFERRED INFLOWS OF RESOURCES Unavailable resources - - - - FUND BALANCES Restricted for: Municipal court expenditures - - 84,368 - Debt service - - - - Storm water - - - - Police expenditures - 233,703 - - Parks and recreation - - - - Library - - - - Promotion of cultural and tourism - - - - Committed for: Parks and recreation - - - - Oil and gas expenditures 55,266 - - - TOTAL FUND BALANCES 55,266 233,703 84,368 - TOTAL LIABILITIES AND FUND BALANCES 55,266$ 234,997$ 84,368$ -$ SPECIAL REVENUE Exhibit C-1 Concluded 111 Southlake Community Southlake Community TOTAL Parks Enhancement Parks Enhancement Crime NON-MAJOR Development Development Development Development Control GOVERNMENTAL Corporation Corporation Corporation Corporation District FUNDS 1,911,444$ 550,454$ 15,614,756$ 1,243,287$ 1,528,547$ 33,552,419$ - - - - - 220,437 - - - - - 651,274 1,779 512 14,535 1,157 1,423 31,236 1,913,223$ 550,966$ 15,629,291$ 1,244,444$ 1,529,970$ 34,455,366$ -$ -$ 5,047$ -$ 32,873$ 391,831$ - - - - - 79,235 - - - 114,326 - 114,326 - - 5,047 114,326 32,873 585,392 - - - - - 1,500 - - - - - 835,268 1,913,223 550,966 - - - 2,464,189 - - - - - 1,936,358 - - - - 1,497,097 7,791,993 - - 15,624,244 1,130,118 - 16,947,601 - - - - - 14,604 - - - - - 2,653,697 - - - - - 1,169,498 - - - - - 55,266 1,913,223 550,966 15,624,244 1,130,118 1,497,097 33,868,474 1,913,223$ 550,966$ 15,629,291$ 1,244,444$ 1,529,970$ 34,455,366$ 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, 2022 112 Parks Crime and Parks Control Police Recreation Dedication District REVENUES Municipal sales tax -$ -$ -$ 2,567,974$ Licenses, permits and fees - - 215,837 - Fines and forfeitures 116,061 - - - Charges for services - - - - Grants - - - - Investment income (losses)113 (730) (4,551) (16,410) Contributions - 25,710 - - Total revenues 116,174 24,980 211,286 2,551,564 EXPENDITURES Current: General government Municipal court - - - - Public safety Police services 5,358 - - 1,775,745 Fire services - - - - Public works Streets and drainage - - - - Cultural and recreation Parks and recreation - 36,880 - - Library services - - - - Promotion of culture and tourism - - - - Capital outlay - - - 346,384 Debt service: Principal retirement - - - 106,283 Interest and fiscal charges - - - - Total expenditures 5,358 36,880 - 2,228,412 Excess (deficiency) of revenues over (under) expenditures 110,816 (11,900) 211,286 323,152 OTHER FINANCING SOURCES (USES) Issuance of financed purchases - - - 502,292 Transfers from other funds - - - - Transfers to other funds - - (630,000) (1,080,171) Total other financing sources (uses) - - (630,000) (577,879) Net change in fund balances 110,816 (11,900) (418,714) (254,727) Fund balances, beginning of year 26,892 205,139 1,588,212 5,846,022 FUND BALANCES, END OF YEAR 137,708$ 193,239$ 1,169,498$ 5,591,295$ SPECIAL REVENUE Exhibit C-2 Continued 113 Storm Hotel Water Court Court Municipal Red Light Occupancy Utility Security Technology Jury Library Camera 1,637,159$ -$ -$ -$ -$ -$ -$ - - - - - - - - - 36,524 30,106 1,690 - - - 1,594,554 - - - - - - - - - - - - (5,594) (2,809) (1,472) (956) 2 (42) (1,725) - - - - - 9,897 - 1,631,565 1,591,745 35,052 29,150 1,692 9,855 (1,725) - - 43,387 8,539 - - - - - - - - - 127,100 - - - - - - - - 673,981 - - - - - - - - - - - - - - - - - 7,976 - 762,948 - - - - - - - - - - - - - - - 2,512 - - - - - - - - - - - 762,948 673,981 45,899 8,539 - 7,976 127,100 868,617 917,764 (10,847) 20,611 1,692 1,879 (128,825) - - 11,870 - - - - - - - - - - - (304,342) (237,279) - - - - (100,000) (304,342) (237,279) 11,870 - - - (100,000) 564,275 680,485 1,023 20,611 1,692 1,879 (228,825) 2,089,422 1,255,873 436,805 290,769 - 12,725 561,015 2,653,697$ 1,936,358$ 437,828$ 311,380$ 1,692$ 14,604$ 332,190$ 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, 2022 114 Commercial Oil and Vehicle Truancy Disaster Gas Enforcement Prevention Recovery REVENUES Municipal sales tax -$ -$ -$ -$ Licenses, permits and fees - - - - Fines and forfeitures - 18,655 36,652 - Charges for services - - - - Grants - - - 8,080,465 Investment income (losses)(185) (720) (147) - Contributions - - - - TOTAL REVENUES (185) 17,935 36,505 8,080,465 EXPENDITURES Current: General government Municipal court - - - - Public safety Police services - 49,316 - - Fire services - - - 8,057,625 Public works Streets and drainage - - - - Cultural and recreation Parks and recreation - - - - Library services - - - - Promotion of culture and tourism - - - - Capital outlay - - - 22,840 Debt service: Principal retirement - - - - Interest and fiscal charges - - - - TOTAL EXPENDITURES - 49,316 - 8,080,465 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (185) (31,381) 36,505 - OTHER FINANCING SOURCES (USES) Issuance of financed purchases - - - - Transfers from other funds - 150,000 - - Transfers to other funds - - - - TOTAL OTHER FINANCING SOURCES (USES)- 150,000 - - NET CHANGE IN FUND BALANCES (185) 118,619 36,505 - FUND BALANCES, BEGINNING OF YEAR 55,451 115,084 47,863 - FUND BALANCES, END OF YEAR 55,266$ 233,703$ 84,368$ -$ SPECIAL REVENUE Exhibit C-2 Concluded 115 Southlake Community Southlake Community TOTAL Parks Enhancement Parks Enhancement Crime NON-MAJOR Development Development Development Development Control GOVERNMENTAL Corporation Corporation Corporation Corporation District FUNDS -$ -$ -$ -$ -$ 4,205,133$ - - - - - 215,837 - - - - - 239,688 - - - - - 1,594,554 - - - - - 8,080,465 (11,413) (6,646) (50,063) (5,033) (3,741) (112,122) - - 155,000 - - 190,607 (11,413) (6,646) 104,937 (5,033) (3,741) 14,414,162 - - - - - 51,926 - - - - - 1,957,519 - - - - - 8,057,625 - - - - - 673,981 - - 86,686 36,003 - 159,569 - - - - - 7,976 - - - - - 762,948 - - 700,186 129,293 35,248 1,233,951 2,272,000 1,475,000 - - - 3,855,795 529,588 973,056 - - - 1,502,644 2,801,588 2,448,056 786,872 165,296 35,248 18,263,934 (2,813,001) (2,454,702) (681,935) (170,329) (38,989) (3,849,772) - - - - - 514,162 2,796,796 2,451,056 4,000,000 - 1,000,000 10,397,852 - - - - - (2,351,792) 2,796,796 2,451,056 4,000,000 - 1,000,000 8,560,222 (16,205) (3,646) 3,318,065 (170,329) 961,011 4,710,450 1,929,428 554,612 12,306,179 1,300,447 536,086 29,158,024 1,913,223$ 550,966$ 15,624,244$ 1,130,118$ 1,497,097$ 33,868,474$ 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, 2022 116 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Investment income (losses)600$ 350$ (730)$ (1,080)$ Contributions 46,500 15,500 25,710 10,210 Total revenues 47,100 15,850 24,980 9,130 EXPENDITURES Cultural and recreation Parks and recreation 72,500 72,500 36,880 35,620 Total expenditures 72,500 72,500 36,880 35,620 Excess (deficiency) of revenues over (under) expenditures (25,400) (56,650) (11,900) 44,750 Net change in fund balances (25,400) (56,650) (11,900) 44,750 Fund balances, beginning of year 205,139 205,139 205,139 - FUND BALANCES, END OF YEAR 179,739$ 148,489$ 193,239$ 44,750$ 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, 2022 117 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Licenses, permits, and fees 90,000$ 200,000$ 215,837$ 15,837$ Investment income (losses)2,100 500 (4,551) (5,051) Total revenues 92,100 200,500 211,286 10,786 OTHER FINANCING USES: Transfers to other funds (480,000) (630,000) (630,000) - Total other financing uses (480,000) (630,000) (630,000) - Net change in fund balance (387,900) (429,500) (418,714) 10,786 Fund balances, beginning of year 1,588,212 1,588,212 1,588,212 - FUND BALANCES, END OF YEAR 1,200,312$ 1,158,712$ 1,169,498$ 10,786$ 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, 2022 118 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Municipal sales tax 1,999,550$ 2,400,000$ 2,567,974$ 167,974$ Investment income (losses)4,725 2,225 (16,410) (18,635) Total revenues 2,004,275 2,402,225 2,551,564 149,339 EXPENDITURES: Public safety Police services 2,168,505 1,891,814 1,775,745 116,069 Capital outlay:65,000 65,000 346,384 (281,384) Debt service: Principal retirement - - 106,283 (106,283) Total expenditures 2,233,505 1,956,814 2,228,412 (271,598) Excess (deficiency) of revenues over (under) expenditures (229,230) 445,411 323,152 (122,259) OTHER FINANCING SOURCES (USES): Issuance of financed purchases - - 502,292 502,292 Transfers to other funds (1,080,171) (1,080,171) (1,080,171) - Total other financing (uses)(1,080,171) (1,080,171) (577,879) - Net change in fund balance (1,309,401) (634,760) (254,727) (122,259) Fund balances, beginning of year 5,846,022 5,846,022 5,846,022 - FUND BALANCES, END OF YEAR 4,536,621$ 5,211,262$ 5,591,295$ (122,259)$ 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, 2022 119 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Municipal sales tax 963,855$ 1,600,300$ 1,637,159$ 36,859$ Investment income (losses)4,400 1,500 (5,594) (7,094) Total revenues 968,255 1,601,800 1,631,565 29,765 EXPENDITURES: Culture and recreation Promotion of tourism 312,305 313,133 762,948 (449,815) Excess (deficiency) of revenues over (under) expenditures 655,950 1,288,667 868,617 (420,050) OTHER FINANCING USES: Transfers to other funds (394,760) (304,342) (304,342) - Net change in fund balance 261,190 984,325 564,275 (420,050) Fund balances, beginning of year 2,089,422 2,089,422 2,089,422 - FUND BALANCES, END OF YEAR 2,350,612$ 3,073,747$ 2,653,697$ (420,050)$ 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, 2022 120 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Charges for service 1,570,500$ 1,585,000$ 1,594,554$ 9,554$ Investment income (losses)2,100 500 (2,809) (3,309) Total revenues 1,572,600 1,585,500 1,591,745 6,245 EXPENDITURES: Public works Streets and drainage 681,008 686,026 673,981 12,045 Excess revenues over expenditures 891,592 899,474 917,764 18,290 OTHER FINANCING USES: Transfers to other funds (236,763) (237,279) (237,279) - Net change in fund balance 654,829 662,195 680,485 18,290 Fund balances, beginning of year 1,255,873 1,255,873 1,255,873 - FUND BALANCES, END OF YEAR 1,910,702$ 1,918,068$ 1,936,358$ 18,290$ 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, 2022 121 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Fines and forfeitures 23,000$ 32,500 36,524$ 4,024$ Investment income (losses)1,300 500 (1,472) (1,972) Total revenues 24,300 33,000 35,052 2,052 EXPENDITURES General government Municipal court 72,435 65,715 43,387 22,328 Debt service: Principal retirement - - 2,512 (2,512) Total expenditures 72,435 65,715 45,899 19,816 Excess (deficiency) of revenues over (under) expenditures (48,135) (32,715) (10,847) 21,868 OTHER FINANCING SOURCES Issuance of financed purchases - - 11,870 11,870 Total other financing sources - - 11,870 11,870 Net change in fund balance (48,135) (32,715) 1,023 33,738 Fund balances, beginning of year 436,805 436,805 436,805 - FUND BALANCES, END OF YEAR 388,670$ 404,090$ 437,828$ 33,738$ 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, 2022 122 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Fines and forfeitures 24,225 26,125 30,106 3,981$ Investment income (losses)1,300 500 (956) (1,456) Total revenues 25,525 26,625 29,150 2,525 EXPENDITURES General government Municipal court 8,830 8,830 8,539 291 Excess revenues over expenditures 16,695 17,795 20,611 2,816 Net change in fund balance 16,695 17,795 20,611 2,816 Fund balances, beginning of year 290,769 290,769 290,769 - FUND BALANCES, END OF YEAR 307,464$ 308,564$ 311,380$ 2,816$ BUDGETED AMOUNTS City of Southlake, Texas Exhibit C-10 Library Special Revenue Fund Budgetary Comparison Schedule (GAAP Basis) For the Year Ended September 30, 2022 123 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Investment income (losses)70$ 50$ (42)$ (92)$ Contributions 4,000 9,300 9,897 597 Total revenue 4,070 9,350 9,855 505 EXPENDITURES Current: Cultural and recreation Library services 8,000 8,000 7,976 24 Excess (deficiency) of revenues over (under) expenditures (3,930) 1,350 1,879 529 Net change in fund balance (3,930) 1,350 1,879 529 Fund balances, beginning of year 12,725 12,725 12,725 - FUND BALANCES, END OF YEAR 8,795$ 14,075$ 14,604$ 529$ 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, 2022 124 VARIANCE WITH FINAL BUDGET- POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Investment income (losses)1,200$ 100$ (1,725)$ (1,825)$ EXPENDITURES: Public safety Police services 128,705 128,705 127,100 1,605 Excess (deficiency) of revenues (127,505) (128,605) (128,825) (220) over (under) expenditures OTHER FINANCING USES: Transfers to other funds (100,000) (100,000) (100,000) - Total other financing uses (100,000) (100,000) (100,000) - Net change in fund balance (227,505) (228,605) (228,825) (220) Fund balances, beginning of year 561,015 561,015 561,015 - FUND BALANCES, END OF YEAR 333,510$ 332,410$ 332,190$ (220)$ BUDGETED AMOUNTS City of Southlake, Texas Exhibit C-12 Commercial Vehicle Enforcement Budgetary Comparison Schedule (GAAP Basis) For the Year Ended September 30, 2022 125 VARIANCE WITH FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Fines and forfeitures 25,000$ 20,000$ 18,655$ (1,345)$ Investment income (losses)300 150 (720) (870) Total revenues 25,300 20,150 17,935 (2,215) EXPENDITURES Public safety Police services 157,095 157,095 49,316 107,779 Excess (deficiency) of revenues over (under) expenditures (131,795) (136,945) (31,381) 105,564 OTHER FINANCING SOURCES Transfers from other funds 150,000 150,000 150,000 - Total other financing sources 150,000 150,000 150,000 - Net change in fund balance 18,205 13,055 118,619 105,564 Fund balances, beginning of year 115,084 115,084 115,084 - FUND BALANCES, END OF YEAR 133,289$ 128,139$ 233,703$ 105,564$ 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, 2022 126 VARIANCE WITH FINAL BUDGET- POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Investment income (losses)1,900$ 900$ (11,413)$ (12,313)$ EXPENDITURES: Debt service: Principal retirement 2,272,000 2,272,000 2,272,000 - Interest and fiscal charges 530,796 530,796 529,588 1,208 Total expenditures 2,802,796 2,802,796 2,801,588 1,208 Excess (deficiency) of revenues over (under) expenditures (2,800,896) (2,801,896) (2,813,001) (11,105) OTHER FINANCING SOURCES: Transfers from other funds 2,796,796 2,796,796 2,796,796 - Total other financing sources 2,796,796 2,796,796 2,796,796 - Net change in fund balance (4,100) (5,100) (16,205) (11,105) Fund balances, beginning of year 1,929,428 1,929,428 1,929,428 - FUND BALANCES, END OF YEAR 1,925,328$ 1,924,328$ 1,913,223$ (11,105)$ 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, 2022 127 VARIANCE WITH FINAL BUDGET- POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Investment income (losses)1,050$ 1,000$ (6,646)$ (7,646)$ EXPENDITURES: Debt service: Principal retirement 1,475,000 1,475,000 1,475,000 - Interest and fiscal charges 976,056 976,056 973,056 3,000 TOTAL EXPENDITURES 2,451,056 2,451,056 2,448,056 3,000 Excess (deficiency) of revenues over (under) expenditures (2,450,006) (2,450,056) (2,454,702) (4,646) OTHER FINANCING SOURCES: Transfers from other funds 2,451,056 2,451,056 2,451,056 - Total other financing sources 2,451,056 2,451,056 2,451,056 - Net change in fund balance 1,050 1,000 (3,646) (4,646) Fund balances, beginning of year 554,612 554,612 554,612 - FUND BALANCES, END OF YEAR 555,662$ 555,612$ 550,966$ (4,646)$ BUDGETED AMOUNTS 128 129 Statistical Section 130 131 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 & 12These 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 & 17These tables contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City 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 health. 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) 132 2013 2014 2015 2016 Governmental activities Net investment in capital assets 324,928,883$ 338,303,633$ 366,796,228$ 364,161,725$ Restricted 15,178,798 15,092,604 13,624,164 11,589,350 Unrestricted 50,356,758 58,732,145 59,447,800 80,992,079 Total governmental activities net position 390,464,439$ 412,128,382$ 439,868,192$ 456,743,154$ Business-type activities Net investment in capital assets 70,968,919$ 73,126,147$ 78,143,445$ 79,055,138$ Restricted 2,438,286 2,140,022 3,151,309 6,817,038 Unrestricted 15,235,677 13,945,038 10,509,498 12,487,875 Total business-type activities net position 88,642,882$ 89,211,207$ 91,804,252$ 98,360,051$ Primary government Net investment in capital assets 395,897,802$ 411,429,780$ 444,939,673$ 443,216,863$ Restricted 17,617,084 17,232,626 16,775,473 18,406,388 Unrestricted 65,592,435 72,677,183 69,957,298 93,479,954 Total primary governmental net position 479,107,321$ 501,339,589$ 531,672,444$ 555,103,205$ Source: Annual Comprehensive Financial Report Fiscal Year Table 1 133 2017 2018 2019 2020 2021 2022 385,506,389$ 392,406,812$ 399,651,828$ 415,945,257$ 432,717,828$ 444,246,656$ 49,850,439 28,492,591 32,690,100 25,518,844 39,870,051 99,360,585 45,930,426 78,585,681 87,753,906 96,924,423 95,211,152 62,641,199 481,287,254$ 499,485,084$ 520,095,834$ 538,388,524$ 567,799,031$ 606,248,440$ 82,251,014$ 83,461,157$ 83,223,713$ 76,271,158$ 77,068,608$ 77,774,937$ 7,804,197 8,980,312 6,215,686 10,555,032 10,966,728 9,877,167 15,721,755 17,935,009 21,579,170 29,619,463 36,831,318 45,903,642 105,776,966$ 110,376,478$ 111,018,569$ 116,445,653$ 124,866,654$ 133,555,746$ 467,757,403$ 475,867,969$ 482,875,541$ 492,216,415$ 509,786,436$ 522,021,593$ 57,654,636 37,472,903 38,905,786 36,073,876 50,836,779 109,237,752 61,652,181 96,520,690 109,333,076 126,543,886 132,042,470 108,544,841 587,064,220$ 609,861,562$ 631,114,403$ 654,834,177$ 692,665,685$ 739,804,186$ Fiscal Year City of Southlake, Texas Changes in Net Position, Last Ten Fiscal Years (Accrual Basis of Accounting) (Unaudited) 134 2013 2014 2015 2016 Expenses Governmental activities: General government 12,892,140$ 13,417,904$ 14,602,425$ 12,851,787$ Public safety 18,425,878 18,245,617 18,176,698 19,300,590 Public works 8,528,331 8,870,998 9,762,184 11,950,671 Culture and recreation 8,829,394 8,948,841 9,311,006 10,655,763 Interest on long-term debt 6,747,628 5,097,036 2,528,113 3,005,359 Total governmental activities expenses 55,423,371 54,580,396 54,380,426 57,764,170 Business-type activities: Water and sewer 22,119,518 25,030,426 26,692,373 24,741,428 Total business-type activities expenses 22,119,518 25,030,426 26,692,373 24,741,428 Total primary government expenses 77,542,889$ 79,610,822$ 81,072,799$ 82,505,598$ Program Revenues Governmental activities: Charges for Services: General government 2,755,038$ 2,657,883$ 2,309,861$ 2,363,499$ Public safety 3,650,079 3,907,068 4,427,137 4,620,030 Public works 291,926 360,529 265,432 223,533 Culture and recreation 1,422,552 1,379,658 1,399,822 1,537,185 Operating grants and contributions 639,230 443,157 455,575 310,636 Capital grants and contributions 2,244,965 4,436,346 8,967,466 2,228,863 Total governmental activities program revenues 11,003,790 13,184,641 17,825,293 11,283,746 Business-type activities: Charges for services: Water and sewer 22,806,432 23,591,438 24,792,619 25,474,777 Capital grants and contributions 1,981,354 3,510,936 5,776,438 1,638,842 Total business-type activities program revenues 24,787,786 27,102,374 30,569,057 27,113,619 Total primary government program revenues 35,791,576$ 40,287,015$ 48,394,350$ 38,397,365$ Net (Expenses) Revenue Governmental activities (44,419,581)$ (41,395,755)$ (36,555,133)$ (46,480,424)$ Business-type activities 2,668,268 2,071,948 3,876,684 2,372,191 Total primary government net expenses (41,751,313)$ (39,323,807)$ (32,678,449)$ (44,108,233)$ General Revenues and Other Changes in Net Position Governmental activities: General revenues: Property taxes 31,844,930$ 33,099,007$ 33,176,285$ 34,501,608$ Sales taxes 22,659,917 26,623,661 30,090,614 29,047,285 Franchise taxes 2,646,394 2,841,025 3,327,739 2,955,114 Investment income (losses)30,110 482,607 523,954 379,342 Gain (Loss) on sale of capital assets 89,923 99,109 102,900 102,960 Miscellaneous 836,068 639,571 1,066,818 136,477 Transfers 915,475 915,116 968,160 (3,767,400) Total governmental activities 59,022,817 64,700,096 69,256,470 63,355,386 Business-type activities: Interest on investments 25,227 101,469 112,967 94,837 Gain (Loss) on sale of capital assets - - 23,100 317,276 Transfers (915,475) (915,116) (968,160) 3,767,400 Miscellaneous 37,527 6,963 4,521 4,095 Total business-type activities (852,721) (806,684) (827,572) 4,183,608 Total primary government 58,170,096$ 63,893,412$ 68,428,898$ 67,538,994$ Change in Net Position Governmental activities 14,603,236$ 23,304,341$ 32,701,337$ 16,874,962$ Business-type activities 1,815,547 1,265,264 3,049,112 6,555,799 Total primary government 16,418,783$ 24,569,605$ 35,750,449$ 23,430,761$ Source: Annual Comprehensive Financial Report Fiscal Year Table 2 135 2017 2018 2019 2020 2021 2022 17,430,052$ 18,255,444$ 20,014,583$ 21,275,487$ 20,990,841$ 20,685,238$ 21,179,963 23,962,971 23,881,485 24,054,527 23,642,969 24,915,801 8,979,020 10,040,453 10,081,721 9,839,646 9,122,951 10,111,585 11,780,022 12,775,020 15,955,201 17,665,953 15,367,103 16,970,272 3,834,897 3,047,221 2,750,037 2,171,359 2,076,809 1,979,546 63,203,954 68,081,109 72,683,027 75,006,972 71,200,673 74,662,442 24,703,007 29,068,434 29,873,788 27,490,815 25,730,741 28,397,036 24,703,007 29,068,434 29,873,788 27,490,815 25,730,741 28,397,036 87,906,961$ 97,149,543$ 102,556,815$ 102,497,787$ 96,931,414$ 103,059,478$ 2,262,247$ 2,895,701$ 2,498,549$ 1,631,816$ 1,733,148$ 1,957,434$ 3,929,564 2,495,288 3,001,895 2,536,553 2,166,430 803,365 143,935 1,635,163 1,724,344 1,824,434 1,658,723 4,287,138 1,814,319 1,301,793 2,145,128 2,993,552 3,387,430 4,477,031 328,288 459,006 866,518 1,807,473 894,423 8,736,294 7,714,765 1,044,834 1,437,166 1,422,315 5,882,015 2,653,556 16,193,118 9,831,785 11,673,600 12,216,143 15,722,169 22,914,818 27,939,504 32,229,361 29,929,932 32,271,341 32,071,140 37,241,976 3,851,057 2,367,774 896,652 1,315,092 3,332,452 1,376,002 31,790,561 34,597,135 30,826,584 33,586,433 35,403,592 38,617,978 47,983,679$ 44,428,920$ 42,500,184$ 45,802,576$ 51,125,761$ 61,532,796$ (47,010,836)$ (58,249,324)$ (61,009,427)$ (62,790,829)$ (55,478,504)$ (51,747,624)$ 7,087,554 5,528,701 952,796 6,095,618 9,672,851 10,220,942 (39,923,282)$ (52,720,623)$ (60,056,631)$ (56,695,211)$ (45,805,653)$ (41,526,682)$ 37,705,796$ 40,380,926$ 41,734,946$ 41,973,780$ 41,660,369$ 41,392,861$ 29,968,331 30,822,431 31,868,204 32,119,114 38,461,312 43,723,490 2,907,537 2,972,143 3,114,117 2,811,573 2,671,726 2,988,874 843,082 2,108,804 3,247,401 1,721,876 101,746 (475,934) 71,284 - - - - - 216,881 - 476,577 1,222,231 709,736 804,354 (157,975) 1,211,036 1,178,932 1,234,945 1,284,122 1,360,830 71,554,936 77,495,340 81,620,177 81,083,519 84,889,011 89,794,475 167,068 320,473 868,227 566,411 32,272 (171,020) 350 - - - - - 157,975 (1,211,036) (1,178,932) (1,234,945) (1,284,122) (1,360,830) 3,968 4,166 - - - - 329,361 (886,397) (310,705) (668,534) (1,251,850) (1,531,850) 71,884,297$ 76,608,943$ 81,309,472$ 80,414,985$ 83,637,161$ 88,262,625$ 24,544,100$ 19,246,016$ 20,610,750$ 18,292,690$ 29,410,507$ 38,046,851$ 7,416,915 4,642,304 642,091 5,427,084 8,421,001 8,689,092 31,961,015$ 23,888,320$ 21,252,841$ 23,719,774$ 37,831,508$ 46,735,943$ Fiscal Year City of Southlake, Texas Table 3 Fund Balances, Governmental Funds (Modified Accrual Basis of Accounting) Last Ten Fiscal Years (Unaudited) 136 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 General Fund Nonspendable 292,356$ 46,008$ 27,826$ 86,286$ 57,997$ 86,286$ 63,189$ 40,839$ 69,373$ 401,529$ Committed for: Police expenditures 22,643 28,647 34,609 - 46,657 - - - - - Assigned for: Teen Court expenditures 18,606 18,832 19,077 19,835 19,684 19,835 20,427 20,693 20,721 20,882 Senior Center expenditures 10,629 10,623 10,624 10,743 10,671 10,743 10,938 11,064 11,074 11,042 Recycling 28,629 34,609 40,612 59,163 52,811 59,163 66,253 70,395 76,458 138,291 Reforestation expenditures 69,128 44,098 101,873 111,728 112,300 111,728 63,030 35,150 54,847 96,012 Public art - - - - - 678,829 835,991 500,819 364,046 441,984 Facility maintenance - - - - - 6,708,556 7,222,995 8,813,795 9,351,441 10,064,326 Economic investment - - - - - 2,237,211 2,282,718 3,525,280 2,870,637 2,950,994 Strategic initiatives 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 20,306,807 Unassigned 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 14,681,556 Total general fund 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$ 49,113,423$ All Other Governmental Funds* Nonspendable -$ -$ -$ -$ -$ 50,177$ -$ -$ -$ -$ Restricted for: Debt Service 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 5,751,585 Capital projects - - - - - - - - - 26,395,656 Municipal court expenditures 823,737 860,556 878,490 838,458 868,393 851,104 847,247 739,828 775,437 835,268 Reinvestment zone expenditures 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 6,663,970 Parks and recreation 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 47,632,465 Storm water - - - - - - - 1,789,612 1,255,873 1,936,358 Police expenditures - - - - - - - - - 7,791,993 Library expenditures - - - - - - - - - 14,604 Promotion of culture and tourism - - - - - - - 1,834,337 2,089,422 2,653,697 Committed for: Police expenditures 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 1,169,498 Parks and recreation 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 55,266 Oil and gas expenditures 53,220 53,160 53,168 53,227 53,404 53,719 54,754 55,424 55,541 - Storm water expenditures 451,164 450,824 451,371 4,856,336 453,374 456,388 465,180 - - - Library expenditures 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 - Assigned for: Capital projects - - - - - - - - - 19,442,768 Unassigned - - - - - - - (175,833) - - Total all other governmental funds 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$ 120,343,128$ Source: Annual Comprehensive Financial Report Notes: 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) 137 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 REVENUES Ad valorem taxes, penalties and interest 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$ 41,429,872$ Franchise taxes 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 2,988,874 Municipal sales tax and mixed beverage tax 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 43,723,490 Licenses, permits and fees 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 3,071,428 Charges for services 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 7,104,883 Fines and forfeitures 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 1,213,211 Intergovernmental revenue 205,846 214,152 90,428 128,489 100,899 2,108,228 124,141 1,737,849 760,658 9,974,795 Capital recovery fees 794,976 474,172 866,782 1,237,552 308,095 376,004 621,715 693,293 232,525 773,745 Contributions 33,316 130,564 112,409 383,732 859,199 97,644 198,449 82,225 72,565 242,645 Investment income (losses)33,092 457,820 490,551 71,411 118,956 2,044,822 3,123,081 1,634,301 96,183 (448,117) Miscellaneous 735,539 552,544 672,333 528,093 544,727 481,919 341,934 1,544,346 836,962 324,548 Total revenues 66,821,138 72,546,928 77,123,071 77,196,868 80,478,221 85,597,080 91,066,136 91,453,522 93,587,142 110,399,374 EXPENDITURES General government 8,617,226 8,629,250 8,974,058 9,301,750 9,608,516 11,053,010 12,988,724 13,233,455 14,236,006 13,493,594 Public safety 17,096,436 16,924,285 16,968,939 17,376,310 18,520,588 19,806,464 21,145,351 21,534,858 22,015,080 22,719,906 Public works 5,818,028 6,303,749 5,332,402 5,483,131 19,112,170 23,225,431 5,687,428 7,834,577 7,177,205 8,861,496 Culture and recreation 6,980,508 7,227,628 7,441,366 8,456,526 8,783,323 8,026,149 21,815,043 13,226,045 11,202,609 13,118,278 Intergovernmental 3,572,221 3,834,118 4,478,312 4,623,919 5,348,444 6,045,218 6,123,926 7,214,798 6,049,200 5,934,584 Capital outlay 17,097,340 14,623,962 21,349,324 8,658,067 4,800,627 12,214,328 8,285,716 15,951,425 11,521,223 11,601,162 Debt service Principal retirement 10,660,527 11,930,280 14,489,311 13,394,604 13,258,185 12,220,242 8,385,059 9,896,675 10,341,201 8,645,737 Interest and fiscal charges 4,839,491 4,982,567 3,894,535 3,796,740 4,084,086 3,695,048 3,175,731 3,108,014 2,629,585 2,321,838 Total expenditures 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 86,696,595 Excess (deficiency) of revenues over (under) expenditures (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 23,702,779 OTHER FINANCING SOURCES (USES) Sale of property 80 1,521 3,271 - - - 6,019 - 27,288 52,124 Issuance of tax notes payable - - - - - - - - 3,753,000 - Issuance of general obligation bonds 11,765,000 4,380,000 - - - - - - - - Premium (Discount) on issuance of refunding bonds - - - - 884,928 - 1,329,086 - - 8,595,000 Issuance of sales tax revenue bonds - - - 24,450,000 9,945,000 - - - - - Issuance of refunding bonds 20,830,000 23,400,000 - - 3,830,000 - 10,860,000 - 1,989,000 - Issuance of financed purchase obligation - - - - - - - - - 514,162 Premium (Discount) on issuance of general obligation bonds 3,753,175 1,301,376 - 2,168,153 - - - - - 737,765 Payment to refund bond escrow agent (24,030,579) (25,547,122) - - (4,309,151) - (12,311,639) - (1,954,804) - Transfer from other funds 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 28,575,100 Transfer to other funds (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) (29,714,270) Total other financing sources (uses)12,833,151 3,650,891 (228,569) 21,850,753 8,742,802 (288,964) (2,837,602) (765,055) 3,098,606 8,759,881 NET CHANGE IN FUND BALANCES 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$ 32,462,660$ Debt service as a percentage of noncapital expenditures 25.9%27.7%29.1%27.0%25.5%21.8%16.1%17.1% 17.6% 14.6% Source: Annual Comprehensive Financial Report Fiscal Year City of Southlake, Texas Table 5 Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (Unaudited) 138 Fiscal Year Real Property Personal Property Less: Tax-Exempt Property Total Taxable Assessed Value Total Direct Tax Rate 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 2022 10,643,270,202 653,950,010 2,094,175,854 9,203,044,358 0.39000 Source: Tarrant Appraisal District Estimated Market Value City of Southlake, Texas Table 6 Direct and Overlapping Property Tax Rates (Per $100 of Assessed Value) Last Ten Fiscal Years (Unaudited) 139 Fiscal Year Operating/ General Rate General Obligation Debt Service Total Direct Carroll Independent School District Tarrant County Tarrant County Hospital District Tarrant County College District 2013 0.34200 0.12000 0.46200 1.40000 0.264000 0.227897 0.14897 2014 0.34200 0.12000 0.46200 1.40000 0.264000 0.227897 0.14950 2015 0.34200 0.12000 0.46200 1.40000 0.264000 0.227897 0.14950 2016 0.36200 0.10000 0.46200 1.39500 0.264000 0.227897 0.14950 2017 0.36200 0.10000 0.46200 1.39500 0.254000 0.227897 0.14473 2018 0.36200 0.10000 0.46200 1.38500 0.244000 0.224429 0.14006 2019 0.35700 0.09000 0.44700 1.38000 0.234000 0.224429 0.13607 2020 0.33000 0.08000 0.41000 1.30000 0.234000 0.224429 0.13017 2021 0.33000 0.07500 0.40500 1.28640 0.234000 0.224429 0.13017 2022 0.32500 0.06500 0.39000 1.26860 0.229000 0.224429 0.13017 Source: Tarrant Appraisal District City Direct Rates Overlapping Rates City of Southlake, Texas Table 7 Principal Property Tax Payers Current Year and Five Years Ago (Unaudited) 140 Taxpayer Taxable Assessed Value Percentage of Total City Taxable Assessed Valuea Taxpayer Taxable Assessed Value Percentage of Total City Taxable Assessed Valueb Town Square Ventures LP 241,812,229$ 2.63%Town Square Ventures LP 158,179,461$ 2.34% Cellco Partnership 128,384,164 1.40%Dallas MTA LP 157,999,838 2.34% TD Ameritrade Services Company INC 82,383,719 0.90%SLTS Grand Avenue/II LP 85,552,199 1.26% SC Southlake Owner LLC 71,288,856 0.77%Carroll/1709 LTD 61,040,200 0.90% Wyndham Properties LTD 52,687,728 0.57%Wyndham Properties LTD 57,166,286 0.85% Carroll/1709 LTD 48,437,955 0.53%GAHC3 Southlake TX Hospital LLC 44,000,000 0.65% Excel Southlake LP 46,005,178 0.50%Sabre Headquarters LLC 43,148,431 0.64% DSL Landlord II LLC 38,300,000 0.42%Excel Southlake LP 38,525,000 0.57% Varispace Southlake LLC 33,359,722 0.36%H & C Southlake Hilton LLC 37,250,579 0.55% 3503 RP Southlake Corners Kimball LP 33,260,000 0.36%Inland Western Southlake Corners Ltd 29,500,000 0.44% Total 775,919,551$ 8.44%Total 712,361,994$ 10.54% Total Assessed Valuation 9,203,044,358$ 100.00%Total Assessed Valuation 6,735,460,921$ 100.00% Source: Tarrant Appraisal District Notes: aTaxpayers are assessed on January 1, 2021 (2021 tax year) for the 2022 fiscal year. bTaxpayers are assessed on January 1, 2016 (2016 tax year) for the 2017 fiscal year. 2022 2017 City of Southlake, Texas Table 8 Ad Valorem Tax Levies and Collections Last Ten Fiscal Years (Unaudited) 141 Fiscal Year Taxes Levied for the Fiscal Year Amount Percentage of Levy Collections in Subsequent Years Amount Percentage of Levy 2013 26,053,160$ 25,762,457$ 98.88 165,611$ 25,928,068$ 99.52 2014 27,136,997 26,865,897 99.00 71,124 26,937,021 99.26 2015 27,791,839 27,556,790 99.15 106,945 27,663,735 99.54 2016 28,965,792 28,684,131 99.03 169,955 28,854,086 99.61 2017 31,410,934 31,054,006 98.86 95,328 31,149,334 99.17 2018 33,358,429 32,975,600 98.85 62,843 33,038,443 99.04 2019 34,957,519 34,486,820 98.65 2,758 34,489,578 98.66 2020 34,109,141 33,572,469 98.43 71,742 33,644,211 98.64 2021 34,329,457 33,833,652 98.56 (105,025) 33,728,627 98.25 2022 34,526,168 34,013,771 98.52 - 34,013,771 98.52 Source: Tarrant County Tax Office Total Collections Collected within the Fiscal Year of the Levy City of Southlake, Texas Table 9 Ratio of Outstanding Debt by Type Last Ten Fiscal Years (Unaudited) 142 Fiscal Year General Obligation Bonds Certificates of Obligation Revenue Bonds Tax Notes General Obligation Bonds Certificates of Obligation Revenue Bonds Contract Revenue Obligations Total Primary Government Percentage of Personal Income a Per Capitaa 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 2022 32,055,836 - 39,273,219 2,686,000 11,319,357 17,193,400 - - 102,527,812 4.09 3,248 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) 143 Fiscal Year General Obligation B onds Certificates of Obligation Total Less: Available Debt Service Funds Net General Bonded Debt Percentage of Actual Taxable Value of Propertya Per Capita b 2013 73,139,513$ 69,063,745$ 142,203,258$ 10,056,551$ 132,146,707$ 2.30%4,793$ 2014 64,279,629 69,563,715 133,843,344 9,809,483 124,033,861 2.07%4,437 2015 56,269,633 63,218,715 119,488,348 8,735,479 110,752,869 1.75%3,896 2016 53,707,514 58,655,107 112,362,621 6,899,109 105,463,512 1.68%3,653 2017 52,869,355 47,670,233 100,539,588 7,444,512 93,095,076 1.37%3,142 2018 39,300,000 41,600,000 80,900,000 7,345,622 73,554,378 1.02%2,473 2019 55,765,997 22,463,654 78,229,651 8,009,333 70,220,318 0.90%2,303 2020 45,902,946 21,352,753 67,255,699 6,774,153 60,481,546 0.72%1,981 2021 40,344,363 18,217,805 58,562,168 5,315,367 53,246,801 0.63%1,698 2022 43,375,193 17,193,400 60,568,593 5,436,574 55,132,019 0.66%1,919 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, 2022 (Unaudited) 144 Gross Bonded Debt Percentage of Debt Applicable to Area Share of Overlapping Debt Debt repaid with property taxes Carroll ISD 311,395,000$ 85.02%264,748,029$ Denton County 559,930,000 0.15%839,895 Grapevine-Colleyville ISD 311,711,018 1.62%5,049,718 Keller ISD 836,595,184 2.43%20,329,263 Northwest ISD 1,353,929,040 0.93%12,591,540 Tarrant County 404,360,000 4.09%16,538,324 Tarrant County College District 610,315,000 4.09%24,961,884 Tarrant County Hospital District 12,825,000 4.09%524,543 Subtotal, overlapping debt 345,583,196 City of Southlake (direct debt)74,015,056$ 100.00%74,015,056 Total direct and overlapping debt 419,598,252$ 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 of taxable property within the overlapping tax body. Governmental Unit City of Southlake, Texas Table 12 Pledged-Revenue Coverage Last Ten Fiscal Years (Unaudited) 145 Fiscal Year Total Revenues a Less: Operating Expensesb Net Available Revenue Annual Requirement c Times Coverage 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 2022 37,070,956 23,870,297 13,200,659 3,322,878 3.97 Note: a Includes operating and non-operating revenues. b Includes 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) 146 Fiscal Year Estimated Populationa Personal Income Per Capita Personal Income School Enrollment c Unemployment Rated 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% 2022 31,569 2,506,861,770 79,409 8,382 3.0% Note: a City of Southlake Economic Development b Carroll Independent School District cTexas Workforce Commission City of Southlake, Texas Table 14 Principal Employers Current Year and Nine Years Ago (Unaudited) 147 Employer a Employeesa Percentage of Total City Employment Employer a Employeesa Percentage of Total City Employment Sabre Holdings 2,200 14.05%Sabre Holdings 3,500 26.35% TD Ameritrade 1,867 11.92% Carroll ISD 1,176 7.51% Gateway Church 706 4.51% Verizon Wireless 650 4.15%Verizon Wireless 637 4.80% Keller Williams 650 4.15% City of Southlake 564 3.60% Central Market 390 2.49%Central Market 360 2.71% CISD - Administration Building 1,123 8.46% City of Southlake 357 2.69% Hilton Southlake Hotel 245 1.84% Costco Wholesale 200 1.51% Century 21 Mike Bowman, Inc.200 1.51% Total 8,203 52.37%Total 6,622 49.86% Total Southlake Daytime Employees b 15,663 Total Southlake Daytime Employees b 13,282 Source: aCity of Southlake Economic Development bTexas Workforce Commission 2022 2013 City of Southlake, Texas Table 15 Full-Time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years (Unaudited) 148 Function/Program 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 General Government and Administration 49.00 55.75 52.00 59.00 57.00 60.00 74.00 75.75 78.14 80.64 Public Safety 138.45 140.45 140.95 140.95 139.95 141.45 141.15 145.15 145.15 145.15 Public Works 29.95 27.25 33.25 28.25 34.50 35.50 35.00 35.00 35.00 34.35 Culture and Recreational 62.15 62.15 65.65 71.40 72.03 114.78 108.93 111.80 113.93 113.93 Water and Sewer 29.30 29.50 29.50 30.25 31.00 31.00 31.00 30.00 30.00 31.65 Community Development 21.00 23.00 23.00 23.00 23.00 23.00 22.00 23.00 22.50 22.50 Economic Development 3.50 4.00 4.00 4.00 1.00 1.00 2.00 3.63 3.63 4.00 Total 333.35 342.10 348.35 356.85 358.48 406.73 414.08 424.33 428.35 432.22 Source: City Budget Fiscal Year City of Southlake, Texas Table 16 Operating Indicators by Function/Program Last Ten Fiscal Years (Unaudited) 149 Function/Program 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Public Safety Police Number of Employees 53 68 68 68 67 68 72 72 72 72 Number of Violations (Citations)21,497 32,641 30,451 14,858 13,840 13,492 13,759 9,095 8,230 9,551 Number of Arrests 1,079 1,284 1,095 513 1,148 1,027 719 1,025 838 1,199 Number of Alarm calls 3,889 3,087 3,497 3,673 3,284 3,434 3,171 2,465 2,549 2,509 Fire Number of Employees 68 72 72 73 73 73 73 73 73 73 Number of Fire runs 1,215 1,245 1,220 760 807 811 748 999 1,036 834 Number of EMS runs 1,356 1,492 1,448 1,745 1,808 1,802 1,875 1,517 1,994 2,256 Number of Hazardous materials runs 80 56 43 95 105 109 90 94 92 111 Number of Alarm calls 448 461 501 608 652 651 678 602 748 659 Development Services Streets maintained (miles)245 268 204 209 199 211 213 214 214 214 Streets crack sealed (blocks)121 94 N/A N/A 75 391 384 5 0 68 Roadway signage replaced/installed 216 188 N/A 568 N/A 21 136 13 132 128 Asphalt repairs (tons)2,414 2,802 4,849 4,667 6,671 5,191 6,100 213 7,747 151 Concrete repairs to roads/sidewalks (cu. yds.)294 240 2,421 308 1,462 1,188 503 41 1,269 11 Right-of-way maintenance (miles)484 484 N/A N/A 5 417 417 558 55 7 Building Permits Issueda 2,917 3,051 2,979 2,703 3,163 3,453 3,133 2,834 3,209 3,372 Planning & Zoning cases heard 121 143 136 190 100 110 76 62 82 53 Cultural and Recreational Parks and Recreation Park maintain & operate per acre 800 1,205 1,200 1,106 1,106 1,106 1,106 1,106 561 561 Participants in Leisure Service Programs 13,170 6,227 6,200 8,687 8,735 9,844 17,555 8,065 7,360 13,010 Participants in Special Events 46,500 47,000 60,000 66,000 72,625 71,400 65,000 900 36,300 44,000 Participants in Senior Center Programs 10,609 4,935 4,900 8,868 13,449 13,552 14,068 4,989 6,390 6,691 Library Volumes in Collection 50,250 46,781 44,971 45,416 44,899 43,947 41,789 43,699 41,895 42,607 Patrons 21,622 16,662 16,838 13,461 13,764 14,327 15,267 13,274 14,467 15,446 Water and Sewer Number of Water Consumers 9,765 9,825 10,183 10,581 10,941 11,009 11,133 11,236 11,349 11,461 Number of Sewer accounts 7,918 7,770 8,167 8,470 8,889 9,111 11,886 9,053 9,142 9,229 Line inspections (feet)190,000 217,000 1,086,624 789,266 687,246 574,136 641,941 377,081 214,789 141,503 Water meters installed/repaired/replaced 565 745 1,284 10,566 135 191 279 186 359 - Transmitters installed/replaced 140 610 N/A 10,566 489 124 113 466 1,327 - Gallons purchased from Ft. Worth (millions)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 3,914,878 Gallons distributed (millions)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 3,569,090 Maximum Storage Capacity (million of gallons)21 21 21 21 21 21 21 21 21 21 Source: City Departments Notes: N/A Data not available aIncludes 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) 150 Function/Program 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Public Safety Police Stations 2 3 3 3 3 3 3 3 3 3 Police Patrol Units 23 26 25 25 25 25 25 21 23 20 Fire Stations 2 3 3 3 3 3 3 3 3 3 Police Motorcycle Units 5 5 5 5 5 5 5 5 5 5 Cultural and Recreational Parks 18 18 18 18 18 18 18 18 35 35 Playgrounds 3 5 7 6 6 6 7 7 6 7 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 fielda 1 1 1 1 1 1 1 1 1 1 Ballfields 21 44 32 27 29 29 29 29 22 22 Soccer Fields 17 17 13 12 21 21 21 21 21 21 Nature Center 1 1 1 1 1 1 1 1 1 1 Water and Sewer Water Mains (miles)206 294 285 290 284 298 301 304 293 294 Lift Stations 15 14 13 13 14 15 15 15 9 13 Sanitary Sewer Mains (miles)206 209 206 209 212 216 218 220 220 222 Drainage, ditches/creeks (miles)91 91 36 36 48 52 51 51 42 51 Fire hydrants 2,395 2,486 2,594 2,643 2,723 2,774 2,809 2,854 2,919 2,938 Water valves 6,388 6,686 N/A 7,154 7,360 7,553 7,673 7,818 8,023 8,104 Source: City Departments Note: N/A - Data not available aIn-line hockey rink converted to turf field in 2020. Fiscal Year