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Item 4D - MemoCITY OF SOUTHLAKE MEMORANDUM March 4, 2025 To: Alison Ortowski, City Manager From: Sharen Jackson, Chief Financial Officer Item 4D Subject: Approve the 2024 Annual Comprehensive Financial Report Action Requested: Approval of the September 30, 2024, Annual Comprehensive Financial Report Background Information: The purpose of this item is to seek City Council approval of the 2024 Annual Comprehensive Financial Report. • The 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 2024. • The City received an unmodified ("clean") opinion on the City's financial statements for the year ended September 30, 2024. • Jennifer Ripka, Partner, will present the Annual Comprehensive Financial Report along with the Single Audit Report, which includes reporting on internal controls, to the Audit Committee on Tuesday during the committee meeting scheduled at 5:00 p.m. prior to the City Council meeting. Financial Considerations: None required Strategic Link: F1 — Safeguarding the public trust through a commitment to thoughtful planning and responsible, conservative financial management. Citizen Input/ Board Review: None required. Legal Review: None required. Alternatives: None required. Supporting Documents: 2024 Annual Comprehensive Financial Report (electronic copy attached). Hard available upon request. Staff Recommendation: Approval of the 2024 Annual Comprehensive Financial Report CITY OF SOUTHLAKE, TEXAS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2024 City of Southlake, Texas Annual Comprehensive Financial Report For the Fiscal Year Ended September 30, 2024 CITY OF SOUTHLA14CE As Prepared by: The Finance Department Sharen Jackson, CPA, Chief Financial Officer Nicole Bradshaw, CPA, Deputy Director of Finance City of Southlake Annual Comprehensive Financial Report For the Fiscal Year Ended September 30, 2024 Table of Contents Exhibit Page INTRODUCTORY SECTION Letter of Transmittal v Certificate of Achievement xviii Organizational Chart xix List of Principal Officials xx FINANCIAL SECTION Independent Auditor's Report Management's Discussion and Analysis Basic Financial Statements Government -Wide Financial Statements Statement of Net Position 1 25 Statement of Activities 2 26 Fund Financial Statements Governmental Funds Financial Statements Balance Sheet 3 30 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 4 32 Statement of Revenues, Expenditures, and Changes in Fund Balance 5 34 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities 6 36 Proprietary Funds Financial Statements Statement of Net Position 7 38 Statement of Revenues, Expenses, and Changes in Net Position 8 40 Statement of Cash Flows 9 41 Fiduciary Fund Financial Statements Statement of Fiduciary Net Position 10 45 Statement of Changes in Fiduciary Net Position 11 46 Notes to the Basic Financial Statements 49 Required Supplementary Information Budgetary Comparison Schedule - General Fund A-1 92 Budgetary Comparison Schedule - Southlake Parks Development Corporation Operating Fund A-2 93 Budgetary Comparison Schedule - Community Enhancement Development Corporation Special Revenue Fund A-3 94 Notes to Budgetary Comparison Schedules 95 Schedule of Changes in Net Pension Liability and Related Ratios - TMRS A-4 98 Schedule of Pension Contributions - TMRS A-5 100 Schedule of Changes in Net OPEB Liability (Asset) and Related Ratios - Southlake Net OPEB Liability (Asset) for Health Insurance A-6 102 Schedule of Contributions - Southlake Net OPEB Liability (Asset) for Health Insurance A-7 104 Schedule of Changes in the Total OPEB Liability and Related Ratios - TMRS - Supplemental Death Benefits A-8 106 Schedule of OPEB Contributions - TMRS - Supplemental Death Benefits A-9 108 Condition Rating of Street System A-10 110 City of Southlake Annual Comprehensive Financial Report For the Fiscal Year Ended September 30, 2024 Table of Contents - Continued Exhibit Page Combining and Individual Fund Financial Statements and Schedules Major Governmental Funds Budgetary Comparison Schedule - General Obligation Debt Service Fund B-1 113 Nonmajor Governmental Funds Combining Balance Sheet - Nonmajor Governmental Funds C-1 116 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance - Nonmajor Governmental Funds C-2 120 Budgetary Comparison Schedule - Police Special Revenue Fund C-3 124 Budgetary Comparison Schedule - Parks and Recreation Special Revenue Fund C-4 125 Budgetary Comparison Schedule - Parks Dedication Special Revenue Fund C-5 126 Budgetary Comparison Schedule - Crime Control District Special Revenue Fund C-6 127 Budgetary Comparison Schedule - Hotel Occupancy Special Revenue Fund C-7 128 Budgetary Comparison Schedule - Storm Water Utility Special Revenue Fund C-8 129 Budgetary Comparison Schedule - Court Security Special Revenue Fund C-9 130 Budgetary Comparison Schedule - Court Technology Special Revenue Fund C-10 131 Budgetary Comparison Schedule - Library Special Revenue Fund C-11 132 Budgetary Comparison Schedule - Red Light Camera Special Revenue Fund C-12 133 Budgetary Comparison Schedule - Commercial Vehicle Enforcement C-13 134 Budgetary Comparison Schedule - Tax Increment Financing District Special Revenue Fund C-14 135 Budgetary Comparison Schedule - Southlake Parks Development Corporation Debt Service Fund C-15 136 Budgetary Comparison Schedule - Community Enhancement Development Corporation Debt Service Fund C-16 137 Table Page Statistical Section Net Position By Component 1 142 Changes in Net Position 2 144 Fund Balances, Governmental Funds 3 146 Changes in Fund Balances, Governmental Funds 4 148 Assessed Value and Estimated Actual Value of Taxable Property 5 150 Direct and Overlapping Property Tax Rates 6 151 Principal Property Tax Payers 7 152 Ad Valorem Tax Levies and Collections 8 153 Ratios of Outstanding Debt By Type 9 154 Ratios of General Bonded Debt Outstanding 10 155 Direct and Overlapping Governmental Activities Debt 11 156 Pledged -Revenue Coverage - Southlake Parks Development Corporation 12 157 Pledged -Revenue Coverage - Southlake Community Enhancement and Development Corporation 13 158 Demographic and Economic Statistics 14 159 Principal Employers 15 160 Full -Time Equivalent City Government Employees By Function/Program 16 161 Operating Indicators By Function/Program 17 162 Capital Asset Statistics By Function/Program 18 163 Introductory Section IVA CITY OF SOUTHLAKE ig Finance Department February 21, 2025 To the Honorable Mayor, Councilmembers and Citizens of the City of Southlake, Texas: 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, 2024. 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. 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, 2024. 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. The MD&A complements this letter of transmittal, and the two should be read in conjunction with each other. 1400 Main Street, Suite 420, Southlake, TX 76092 (817) 748-8345 Innovation 0 Integrity 0 Accountability 0 Commitment to Excellence 0 Teamwork v PROFILE OF SOUTHLAKE 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 city was officially incorporated on September 25, 1956, by a public vote of 30 in favor and 24 against. The original city 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 police chief 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. Southlake residents adopted a home -rule charter in April 1987, which created the current council-manager form of government. Six Council Members and a Mayor are elected at large on a nonpartisan basis for staggered three-year terms. However, the most crucial event in bringing residential subdivision development to Southlake was the completion of water and sewer lines in the city's southern portion 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 is just over 33,000 and is estimated to reach just over 34,000 residents by the year 2050. Since then, much like the area's first settlers were attracted to the area with its endless possibilities, Southlake has continued attracting the suburban settlers desiring a high quality of life and the small-town charm preserved from Southlake's past. Services Provided The City provides a full range of municipal services established by statute or charter, including providing police, fire, and ambulance services, planning, zoning and development services, engineering, streets and storm drainage infrastructure construction and maintenance, parks operations and maintenance, recreation programming and facilities, library services, and other general administrative 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. vi INTEGRITY INNOVATION TEAMWORK EXCELLENCE ACCOUNTABILITY �Fwr__ --I . Serve Our C77 we, 0/e--p Pt C I Delivering outstanding customer experiences through innovation. passion, and a strong culture. Enhancing the sense of community by proactively creating opportunities for community partnerships. volunteer involvement, and citizen engagement. C = Customer Objectives Component Units City of Southlake Strategy Map The mission of the City of Southlake is to provide municipal services that support the highest quality of life for our residents, a supportive environment for local businesses, and unique and special experiences for visitors. we #wAvet, on Our Focus Areas V r�,4 Ps000 if safti Inhantru it "i PmItnemiftsill1i Pakif n we DovolopnUM Yolaebod= Name ii we- 0/--pk 1-1 Safeguarding the public trust through a commitment to thoughtful planning and responsible. conservative financial management. 172 Investing to provide & maintain high quality public assets. F = Financial objectives Ws' We, Manage Prc n r t Tha _ 47 B 1 Achieving strong outcomes through continual evaluation and pursuit of better practices that improve core business operations. 62 Collaborating with select partners to implement service solutions 63 Maintaining an environment of future readiness by understanding and acting upon the forces. trends, and corning challenges affecting services. B - Business objectives Me- 0- ' " 6 i Defining and! managing a professional workplace culture that supports City values and promotes a positive employee experience. Fostering positive employee engagement Attracting, developing & retaining a talented and motivated workforce for lasting world -class performance. L = learning & Growth objectives 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. vii In May 2015, Southlake voters overwhelmingly approved the reallocation of a portion of the District's 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. This report also includes financial information for the Tax Increment Financing District (the "TIF"), which was created in 1997 to encourage quality commercial growth. The TIF was formed to finance and make public improvements under the authority of the Tax Increment Financing Act. 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. The City of Southlake is currently 92% developed and made up of over 2,600 businesses, including 52 new businesses for FY 2024. Businesses from many industries, including professional, scientific, and technical services, healthcare and social services, hospitality, retail, and banking and financial services, have come together to make Southlake a full -service business community. Sabre, home of Travelocity.com, is the City's largest employer, with approximately 2,400 employees. Carroll I.S.D. and Charles Schwab are the next most significant employers, each with approximately 1,100 employees. Housing Permits There were 48 single-family residential permits issued in FY 2024 with an average new home construction value, excluding land value, of approximately $2,160,000. As noted in the chart below, the City experienced decreased residential home construction. Single Family Residential Home Permits 120 100 80 60 4-0 20 0 2020 2021 2022 2023 2024 Property Taxes Total certified taxable value for commercial and residential property was $11.36 billion, an increase of $954 million and a 9.2 percent increase from the prior year. New construction added $172 million to the tax roll. Tax rate management and tax relief have been guiding financial management principles that Southlake has strategically implemented over time, beginning in 2009 with adopting a homestead exemption. Since that time, Southlake has annually implemented tax relief, first in the form of the homestead exemption and then beginning in 2019 with tax rate reductions. New development and strong sales tax revenues combined with expenditure management have made it possible to implement thirteen relief initiatives since 2009. In FY 2024, the City incorporated a total tax rate of $0.319 per $100 valuation, reducing the rate by $0.041 from FY 2023. The tax rate of $0.319 is split between General Fund operations and debt service. The allocation for FY 2024 is $0.264 for general operations and $0.055 for debt service. Sales Taxes In Southlake, the total sales tax rate is 8.25%. The City receives $0.02 of sales tax for every dollar spent in our city limits (the remainder goes to the State). One of those pennies goes to the General Fund and can be spent on general operating costs, like supplies, salaries, and general maintenance. The other penny is split between our Crime Control and Prevention District ("CCPD"), the Southlake Parks Development Corporation ("SPDC"), and the Community Enhancement and Development Corporation ("CEDC"). Southlake Sales Tax Districts 1/8% CCPD l% CEDC 1% General Fund Sales taxes are an essential source of revenue for the City, making up approximately 29% of total revenues. It is estimated that non-residents who shop and dine in Southlake generate up to 70% of the sales tax revenue. These monies are used to support the City's general operations, fund parks development, crime prevention and safety initiatives, construction and operations of The Marq, and economic development, and pay off the debt for these funds. Utilizing special sales tax districts has allowed the City of Southlake to maintain excellent financial conditions and reduce the property tax burden. ix The City of Southlake experienced a decrease in sales tax collections during the fiscal year, as indicated on the chart. Sales tax collections exceeded $42 million in FY 2024, a 7.23% decrease from the previous year. This decrease was expected, however, as the City received significant one-time audit adjustments at the end of FY 2023. These adjustments caused that year to appear particularly unusual. Sales Tax 550,000,000 S45,000,000 S40,000,000 S 35,000,000 _ S 30,000,000 S 25,000,000 S 20,000,000 S 15,000,000 S 10,000,000 S5,000,000 S- 2020 2021 2022 2023 2024 ■ General ■ SPDC ■ Crime CE CC Future Economic Outlook Generating economic development is a significant consideration in the City of Southlake's future economic outlook. To that end, the City has developed the following policy statement related to public investment in economic development. General Purpose and Objectives of Incentives The City of Southlake is committed to improving the quality of life for its citizens through the attraction and retention of high -quality development that drives a dynamic and sustainable economic environment. On a case -by -case basis, Southlake will consider providing inducement packages as a stimulus for economic development activity, including business attraction, relocation, and retention. Public Funds Investment Guiding Principles In carrying out its economic development objectives, the City of Southlake will adhere to the following guiding investment principles to best determine the strategic investment of its resources in eligible projects: • Project supports comprehensive plan implementation • Project will retain, expand, or attract targeted industries • Project will contribute to a top -tier workforce by retaining or expanding the daytime population and preferred job types • Project includes preferred quality of life benefits such as open space preservation and project enhancements x • Public investment is performance -based and considers reasonable return on investment via direct financial return and other indirect benefits • Investments will be made into projects sponsored by a financially viable company in good legal standing with the City and State • Project will make a unique or unequaled contribution to development or redevelopment efforts in the City of Southlake due to its magnitude, significance to the community, or aesthetic quality Criteria Investment recommendations will be based on the evaluation of criteria, including the following: • What is the estimated total value of capital investment for buildings, other real property improvements, furniture, fixtures, and equipment? • What is the value of the Real and Business Personal Property that will Fiscal be added to the tax rolls? Impact • How much direct sales tax will be generated? • Will infrastructure construction be required? • Will the project generate overnight stays in the community? If so, how many annually? • What is the estimated return on public investment? • How many jobs will be brought to Southlake? • How many jobs will be retained? Employment What types of jobs will be created? Impact What will the total annual payroll be? • What is the average annual salary of jobs created and/or retained? • How compatible is the project with the City's comprehensive plan Community Impact goals? How does the project support goals related to the preferred quality of life benefit, such as preservation of open space and project enhancements? • Does the project meet the following minimum preferred thresholds? o Capital investment: $5,000,000 o Jobs created or retained: 100 o Average annual total compensation of jobs created or Project retained: $50,000 Eligibility o Average education level: 4-year degree o Target industry alignment • If the project does not meet the preferred thresholds, will it make a unique or unequaled contribution to the development or redevelopment efforts in the City? How? xi Target Industries The Southlake 2035 Economic Development Master Plan specifies these target industries: • Full -service and limited -service restaurants (unique, independent, farm -to -table, chef -driven, etc.) • Specialty grocery (organic/local, specialty foods, dine -in or takeaway house -made prepared foods, artisanal cafe, wine and cheese from around the globe) Niche Retail • House & home retail (furnishings and appliances, home design showrooms, smart home technology) • Health, beauty and wellness (salons, spas, fitness training/gyms, yoga studios) • Culinary Hub (farm -to -table, farmers market, specialty food retailers, commercial grade kitchens, culinary business incubator) • Corporate headquarters and regional offices (large-scale, build - to -suit campus office) Office • Multi -tenant garden -style (professional services: accountants, engineers/planners/architects, information technology, lawyers, advertising and media, management consulting, actuary) • Health, beauty, and wellness (specialized facilities for cosmetic procedures, healthy living, etc.) Medical and ' Specialized pediatric and senior clinic/outpatient facilities Healthcare ' Specialized medical facilities for surgical procedures (implanted medical devices, bariatric, etc.) • Medical/wellness hub along SH 114 • Research & Development Center Finance, Insurance and • Corporate headquarters and regional offices Wealth • Professional services Management Information • Corporate headquarters and regional offices Technology and • Professional services Media • Telecommunications Biotechnology and 0 Corporate headquarters and regional offices Pharmaceuticals Research and development Eligible Activities Investment funds may be used for one or more of the following eligible activities to assist a targeted industry in locating in the City or to facilitate a redevelopment project: • Capital investments related to real property construction and acquisition • Improvements to an existing building • On -site and/or off -site infrastructure • Site enhancements that the City may support to encourage upgraded aesthetics or amenities. • Other purposes which bring value to the community as determined by the Southlake City Council xii Exclusionary Factors Even though a project might meet all the minimum project qualifications, it will not be considered for public investment if any of the following factors apply: • If the project would, for any reason, result in a net reduction of the ad valorem tax valuation of all facilities in the City owned by the company or its parent, subsidiary, or affiliated companies, assistance will not be provided. • Investment will not be provided to companies not in good legal standing with the state or that have not met their obligations as businesses in the City of Southlake. • No prior commitment to investment shall be binding if the company originally receiving the assistance assigns it to another company unless the City has consented to such assignment in writing, as specified in an approved investment agreement. • The financial condition of the company receiving the assistance must not make its ability to meet its obligations uncertain. Available Investment Tools This is a tool whereby all or a portion of the increase in the value of real and/or business personal property can be exempted from taxation. The Tax Abatement legal authority for tax abatements comes from Chapter 312 of the Texas Property Tax Code; therefore, cities must meet the provisions of the Code when using abatements. Chapter 380 This incentive option is authorized under Chapter 380 of the Texas Local Economic Government Code. It is an agreement between the taxpayer and taxing Development entity to offer a variety of fee -based or tax -based incentives, grants (which Grants may or may not be repaid), or rebates. This is a flexible option, but there are certain state law requirements that must be met in all cases. Infrastructure The City of Southlake has a track record of facilitating development through Participation enhancement of water, sewer, and roadway infrastructure relevant to sites selected for significant projects as needed. Tax Increment Tax Increment Financing is a tool to finance public improvements within a Reinvestment defined area. The improvements should enhance the environment and Zone attract new investment. The statutes governing tax increment financing are in Chapter 311 of the Texas Tax Code. Public A PID is a defined geographical area established to provide specific types Improvement of improvements or maintenance within the area which are financed by Districts (PID) assessments against the property owners within the area. Chapter 372 of the Texas Local Government Code authorizes the creation of PIDs by cities. Fee Waivers or The City of Southlake will consider a waiver or reimbursement of Reimbursement development fees on eligible projects. The City entered into no new incentive agreements for FY 2024. All projects undergo this rigorous vetting process before the City enters into any agreements. Agreements also undergo periodic monitoring after inception to ensure that performance targets are being met. Major Development Projects In 2024, the following projects have been approved for development in the City: • Brumlow East will include a 32.8-acre mixed -use development encompassing a single- family residential component with 56 residential homes and approximately 71,000 square feet of office and office/warehouse buildings. • Well Binion will include a new approximately 5,960 sq. ft. multi -tenant commercial building on an existing pad site. • The Overlook and Willowtree Gardens will include a single-family residential component and an office building component. • Lambert Homes will include an approximate 10,570 sq. ft. two-story building (serving as Lambert Homes' primary office, retail, and storage space), and an approximate 2,800 sq. ft. one-story building intended for future retail use. • Southlake Municipal Service Center will support the City of Southlake Public Works Operations. The site will also include a Training Tower for the Department of Public Safety's use. • Tom Thumb Gas Station —The project will convert the former Texaco establishment into a Tom Thumb Gasoline Service Station and Convenience Store at the northwest corner of the W. Southlake Blvd. and N. White Chapel Blvd. intersection. • Tommy's Car Wash - Northeast Corner of W. Southlake Boulevard and N. Pearson Ln. will include a self-service car wash with a conceptual future retail component. The City has the following development projects under construction: • Southlake Marketplace will include lighting improvements, landscape improvements, and the construction of an approximately 2,600 sq. ft. drive-thru restaurant. • The Wheelhouse will include 2 single -story buildings totaling approximately 19,461 sq. ft. for office showroom with retail sales and automobile and motorcycle sales and/or service uses. Additionally, The Wheelhouse will include 3 single -story buildings totaling approximately 47,629 sq. ft. with garage and storage uses, maintenance of personal vehicles, and hobby shop for personal use. • Mustang Business Park will include 3 distribution warehouse buildings totaling approximately 340,180 sq. ft. on approximately 26.27 acres. • The Garden District Residences will include 58 residential units in 2 four-story buildings on approximately 2.24 acres. • Next Century Health Care Plaza will include 6 single -story medical office buildings totaling approximately 50,000 sq. ft. • Carillon Parc Residential will include 79 residential lots and 3 commercial lots. • Constellation will include 4 large warehouse buildings totaling approximately 546,330 sq. ft. • Kirkwood East will include 8 buildings totaling approximately 50,000 sq. ft. at build out - 2 under construction. xiv During FY 2024, the following significant projects were completed, which will have an impact on the local economy in the future: • Capital Grille - E. State Highway 114 - Capital Grille includes a 9,447 sq. ft. restaurant. • Granite Place Phase Two includes a five -story, approximately 151,000 sq. ft. office building adjacent to the existing Granite Place One building. The project will also include a five - level parking structure. • GMI Southlake includes 3 flex light industrial/corporate office buildings totaling approximately 58,780 sq. ft. • Methodist Southlake Hospital Emergency Department Expansion includes a one-story, approximately 6,000 sq. ft. addition to the existing hospital building to provide new nuclear medicine facilities. • Primrose Office II includes 3 two-story office buildings totaling 25,660 sq. ft. on approximately 1.84 acres. - 2 buildings complete/1 building remaining for construction. • Mustang Business Park will include 3 distribution warehouse buildings totaling approx. 340,180 sq. ft. on approximately 26.27 acres. 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 residents, businesses, and visitors an enhanced quality of life. 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 of 15% and an optimum of 25%. The City uses "excess" reserves 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 important 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 public trust through internal audits and other initiatives to maintain a strong control environment. Multi -year Sustainability Executive leaders evaluate the operational impact of all identified projects and include those costs in future budget projections. The Executive Leadership Team has also begun a more formalized 5-year financial roadmap that reflects known and planned expenditures to create further predictability for future budgets. xv Staff monitors trends that depict the City's long-term financial health and uses these trends to make decisions to reach financial and service goals. Thoroughly understanding economic conditions is critical for proper planning. Economic Information Used for City Financial Projections CITY OF SOUTHLAKE rEconomic FrLab 1&, FHoluing and rConsumler Growth C �� *W L� �� L� �� Interest Rates Wages Building Permits Retail Sales GDB Growth Unemployment Home Values Projections Fuel Costs Healthcare Costs Top Taxpayer Meetings The City has taken an additional formal step to understand and plan for the organization's financial future by adopting the Southlake Sustainability Plan as an element of the Southlake Comprehensive Plan. It contains formal recommendations to ensure positive financial outcomes for the City. Management is working with the City Council to update this plan, with formal adoption scheduled for FY 2025. 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. Additionally, the City has an Audit Committee as a subcommittee of the City Council, which hears and reviews all recommendations made by the independent auditors. Awards The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Southlake for its Annual Comprehensive Financial Report for the fiscal year ended September 30, 2023. This was the 24th consecutive year that the City has received this prestigious national award. To earn the Certificate of Achievement, the City published an easy -to -read and efficiently organized Annual Comprehensive Financial Report with contents that conformed to program standards. This report must satisfy both GAAP and applicable legal requirements. xvi A Certificate of Achievement is valid for one year. The City believes that the current Annual Comprehensive Financial Report continues to meet the Certificate of Achievement Program's requirements and thus is submitting it to GFOA to determine its eligibility for another certificate. GFOA named the City of Southlake a 2023 Triple Crown winner. GFOA's Triple Crown designation recognizes governments who have received GFOA's Certificate of Achievement for Excellence in Financial Reporting, Popular Annual Financial Reporting Award, and the Distinguished Budget Presentation Award for a fiscal year. The City has received this designation 5 years in a row. Acknowledgments This report could not have been prepared without the dedication and efficiency of the entire staff and our independent auditor. I want to express appreciation to City employees throughout the organization, especially those staff members in the Finance Department, who were instrumental in the successful completion of this report. I would also like to thank the Mayor and members of the City Council for their support in planning and conducting the City's financial operations in a responsible and efficient manner. Respectfully submitted, Sharen Jackson Chief Financial Officer xvii Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Southlake Texas For its Annual Comprehensive Financial Report For the Fiscal Year Ended September 30, 2023 Executive Director/CEO City of Southlake Organizational Structure 0 0 COMMUNITY SERVICES ECONOMIC DEVELOPMENT& TOURISM V) z O FIRE V1 Q POLICE ¢ z w Q Z PLANNING & DEVELOPMENT z > LU j SERVICES J OU W V)LU C[ J Q OU H 0 PUBLIC WORKS J J z O Z z W J W w Z O < iZ w ° a 0 W Ur z U Z.. LL E LU 0 ¢ w Q ¢ H.. U } H °C U U, LL Lo z z > = OU w C C O J j wQ U O Z O w y Q O = U � ? J U J z O ¢ Z l7 O N U 0 Uj U W [C a w CC O v~'i U W ¢ Z w N U VI Z O ¢ OU u' 2 Z Uj 2i W r O Z LU W Z U ¢ O �=- a aCORPORATETEAM a CITY DEPARTMENTS 0 CORPORATE FUNCTIONAL AREAS Ax City of Southlake, Texas List of Principal Officials September 30, 2024 Shawn McCaskill Mayor Randy Williamson Mayor Pro Tern Kathy Talley Deputy Mayor Pro Tem Randy Robbins Council Member Frances Scharli Council Member Ronell Smith Council Member Vacant* Council Member Alison Ortowski City Manager Stacey Black Assistant City Manager/Senior Director of Human Resources James Brandon Assistant City Manager Amy Shelley City Secretary Sharen Jackson Chief Financial Officer Daniel Cortez Economic Development & Tourism Director Lauren LaNeave Interim Public Works Director David Miller Community Services Director Dennis Killough Planning & Development Services Director Pilar Schank Communications Director Blair Halbert Information Technology Director Ashleigh Casey Police Chief Jeremy Wilson Interim Fire Chief * As of January 21, 2025 xx Financial Section weaver Independent Auditor's Report To the Honorable Mayor and Members of City Council and Management of the City of Southlake, Texas Report on the Audit of the Financial Statements Opinions 2300 North Field Street, Suite 1000 Dallas, Texas 75201 972-490-1970 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 (City), as of and for the year ended September 30, 2024, 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, 2024, 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 (Government Auditing Standards). 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 13 to the basic financial statements, during the year ended September 30, 2024, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 100, Accounting Changes and Error Corrections. Beginning fund balance has 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 the financial statements in accordance with accounting principles generally accepted in the United States of America, and for 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. Weaver and Tidwell, L.L.P. 3 CPAs AND ADVISORS I WEAVER.COM The Honorable Mayor and Members of City Council and Management of the City of Southlake, Texas 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 and Government Auditing Standards 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 and Government Auditing Standards, 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 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 GAAS, 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. 4 The Honorable Mayor and Members of City Council and Management of the City of Southlake, Texas 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 Combining and Individual Nonmajor Fund Financial 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 Nonmajor Fund Financial Statements and Schedules are the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The 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 GAAS. In our opinion, the other supplementary information is 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 and statistical sections but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic 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 basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic 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 February 21, 2025 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 February 21, 2025 5 Management's Discussion and Analysis 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 v-xvii 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 on September 30, 2024, by $829,662,667 (net position). Of this amount, $158,939,609 (unrestricted net position) may be used to meet the government's ongoing obligations to citizens and creditors. • The net position of the City's governmental activities increased by $33,994,334 while the net position of business -type activities increased by $10,690,031. • As of September 30, 2024, the City's governmental funds reported combined ending fund balances of $206,393,821. Of this amount, $44,905 is reported as nonspendable, $111,358,465 is restricted by outside sources, $2,092,186 is committed for future uses, $75,878,532 is assigned by management for specified purposes, and $17,019,733 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 $17,019,733, or 30.9% of total General Fund expenditures. • At the end of the current fiscal year, the City of Southlake's outstanding debt totaled $122,696,656, a net decrease of $6,384,463 from the previous year. OVERVIEW OF THE FINANCIAL STATEMENTS This 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 includes supplementary information intended to furnish additional detail to support the basic financial statements themselves. 0 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 the condition of the City's infrastructure (i.e., roads, drainage systems, water and sewer lines, etc.), to assess the overall financial condition of the City more accurately. 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 most of the financing for these activities. Business -type activities - These are activities for which the City charges customers a fee to pay most or all of the costs of a service it provides. 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 25-26 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 the City's funds can be divided into two categories: governmental funds and proprietary funds. Governmental Funds - These funds 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 and spendable resources available at the end of the fiscal year for future spending. Such information may be useful in evaluating a government's near -term financing requirements. The focus of the governmental funds financial statements is narrower than that of the government -wide financial statements. Therefore, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near - IN term financing decisions. Both the governmental fund Balance Sheet and the governmental fund 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 fund financial statements. The City maintains 26 individual governmental funds. Information is presented separately in the governmental fund Balance Sheet and in the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances for the General Fund, General Obligation Debt Service Fund, General Capital Projects Fund, Southlake Parks Development Corporation Capital Projects Fund, Southlake Parks Development Corporation Special Revenue 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 nonmajor 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 30-36 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 funds 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 36-39 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 45-46 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 49-87 of this report. GOVERNMENT -WIDE FINANCIAL ANALYSIS As noted earlier, net position over time may be a useful indicator of the City's financial position. As of September 30, 2024, the City's assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $829,662,667 (net position) at the close of the most recent fiscal year. The largest portion of the City's net position, $547,115,657, reflects its investment in capital assets (land and improvements, buildings, infrastructure, machinery and equipment, and right -to -use assets, net of accumulated depreciation and amortization), 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. The following analysis highlights the net position as of September 30, 2024, and 2023: Governmental Activities Business -type Activities Totals 2024 2023 2024 2023 2024 2023 Current and other assets $ 234,247,365 $ 228,001,169 $ 98,781,086 $ 79,307,211 $ 333,028,451 $ 307,308,380 Capital assets 532,406,280 516,100,285 96,335,544 98,690,072 628,741,824 614,790,357 Total assets 766,653,645 744,101,454 195,116,630 177,997,283 961,770,275 922,098,737 Deferred outflows of resources 8,572,281 13,228,194 726,463 1,081,723 9,298,744 13,995,534 Long-term liabilities 87,183,147 101,619,386 35,513,509 27,461,733 122,696,656 129,081,119 Other liabilities 13,050,024 14,759,356 3,358,199 5,304,624 16,408,223 20,063,980 Total liabilities 100,233,171 116,378,742 38,871,708 32,766,357 139,104,879 149,145,099 Deferred inflows of resources 2,022,673 1,975,158 278,800 310,095 2,301,473 1,970,870 Net position: Net investment in capital assets 472,883,752 450,639,461 74,231,905 75,167,644 547,115,657 525,807,105 Restricted 111,948,381 121,858,264 11,659,020 8,464,094 123,607,401 130,322,358 Unrestricted 88,137,949 66,478,023 70,801,660 62,370,816 158,939,609 128,848,839 Total net position $ 672,970,082 $ 638,975,748 $ 156,692,585 $ 146,002,554 $ 829,662,667 $ 784,978,302 12 The following analysis highlights the changes in net position for the years ended September 30, 2024 and 2023: Revenues: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Taxes Investment earnings Miscellaneous Gain on sale of capital assets Total revenues Expenses: General government Public safety Public works Culture and recreation Promotion of culture and tourism Interest on long-term debt Water and sewer Governmental Activities Business -type Activities Totals 2024 2023 2024 2023 2024 2023 $ 12,298,382 $ 11,629,939 $ 35,597,701 $ 37,630,965 $ 47,896,083 375,784 825,770 - - 375,784 4,890,150 2,382,770 1,734,388 2,064,296 6,624,538 91,590,428 93,889,807 - - 91,590,428 11,116,664 7,934,301 3,839,868 2,594,308 14,956,532 151,752 512,725 - - 151,752 143,146 4,156 96,269 - 239,415 120,566,306 117,179,468 41,268,226 42,289,569 161,834,532 26,994,341 26,292,171 27,798,598 26,658,917 10,709,563 12,108,564 19, 939, 371 18, 657,110 871,217 - 1,867,737 2,071,867 $ 49,260,904 825,770 4,447,066 93,889,807 10,528,609 512,725 4,156 159,469,037 26,994,341 26,292,171 27,798,598 26,658,917 10,709,563 12,108,564 19,939,371 18,657,110 871,217 - 1,867,737 2,071,867 Total expenses 88,180,827 85,788,629 28,969,340 28,506,292 117,150,167 114,294,921 Increases in net position before transfers 32,385,479 31,390,839 12,298,886 13,783,277 44,684,365 45,174,116 Transfers 1,608,855 1,336,469 (1,608,855) (1,336,469) - - Change in net position 33,994,334 32,727,308 10,690,031 12,446,808 44,684,365 45,174,116 Net position, beginning 638,975,748 606,248,440 146,002,554 133,555,746 784,978,302 739,804,186 Net position, ending $ 672,970,082 $ 638,975,748 $ 156,692,585 $ 146,002,554 $ 829,662,667 $ 784,978,302 Governmental activities net position increased by $33,994,334. This can be largely attributed to the City's total revenues of $120,566,306 exceeding total expenses of $88,180,827 by $32,385,479. Significant changes in revenues and expenses between FY 2024 and FY 2023 include the following: • The City received $4.8 million in public works -related capital grants and contributions for FY 2024, including donated capital assets of $1.1 million and grant funding related to replacing the North White Chapel Bridge for over $3.2 million. The total increase from FY 2023 was over $2.5 million. • There was also a $3.2 million increase in interest income received by the City for FY 2024, largely due to increased interest rates and the City's ability to reinvest lower -yielding investments, at maturity, into higher -yielding securities that much better reflect current market conditions. • Tax revenues decreased by almost $2.3 million. Sales taxes decreased by over $3.2 million. This decrease was expected as FY 2023 appeared higher due to one-time audit adjustments received from the state. Property taxes increased by almost $1 million. Property tax rates were reduced to the no -new -revenue rate, so this increase was related to additional properties being added to the tax roll and increases in total assessed property values. 13 Public safety expenses increased by over $1.1 million for FY 2024. Salary and benefit -related costs were the driving factors for this increase, which resulted from scheduled raises and increased overtime needs. • Public works had a decrease of almost $1.4 million. This decrease can be attributed to reduced non -capital project costs for FY 2024. • Culture and recreation increased by almost $1.4 million. This increase can be attributed to the purchase of replacement non -capital equipment, salary and benefit costs resulting from scheduled raises, and staffing the Southlake Pickleball Complex, which opened in FY 2024. The net position of business -type activities increased by $10,690,031. While revenues also consistently outpace expenses in business -type activities, there were some significant increases and decreases in revenues and expenses for FY 2024. Charges for services declined by just over $2 million in FY 2024 as rainfall increased in some of the hottest and highest water usage months, including June, July, and September. Investment earnings increased by over $1.25 million, again, largely due to increased interest rates and the City's ability to reinvest lower - yielding investments, at maturity, into higher -yielding securities that much better reflect current market conditions. Expenses increased by almost $500,000, the largest contributor being the rising cost of wastewater treatment. The cost of wastewater plant expansion is passed through to all participating municipalities and governments within the region of the Trinity River Authority ("TRA"). As the DFW metroplex has continued to grow, the need for more capacity at these plants also continues to grow. Additionally, the City saw a reduction in the cost of purchased water. This reduction offset a significant portion of this increase from wastewater treatment. This reduction in water costs would be directly related to the charges for services revenues and would also be a result of the rainfall received in FY 2024. 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 $206,393,821. Approximately 8.2% or $17,019,733 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, $44,905; (2) restricted for particular purposes, $1 1 1,358,465; (3) committed for particular purposes, $2,092,186; or (4) assigned for particular purposes, $75,878,532. 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 $17,019,733. 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 30.9% of total General Fund expenditures, while total fund balance represents 86.3% of total General Fund expenditures. The fund balance of the General Fund decreased by $1,426,858 during the current fiscal year. This net decrease was the result of several factors, including: • Property tax revenues increased by over $600,000 as additional properties were added to the tax roll, and total assessed property values continued to rise. 14 • Sales tax revenues decreased by over $1.7 million. This decrease was expected as FY 2023 appeared higher due to one-time audit adjustments received from the state. • There was also an over $650,000 increase in interest income received in the General Fund for FY 2024; this was largely due to high interest rates. • Expenditures related to Support Services increased by over $870,000 for FY 2024. A majority of this was for maintenance projects, including elevator remodeling, HVAC upgrades, flooring, and various other projects at City facilities. • Public Safety expenditures increased by over $1 million for FY 2024. Salary and benefit -related costs were the driving factors for this increase, which resulted from scheduled raises and increased overtime needs. The General Obligation Debt Service Fund has a fund balance of $2,268,218, all of which is restricted for debt service payment. The fund balance decreased during the year by $725,045. This decrease was expected as reserves, property tax collections and future debt service requirements were all considered when determining the current property tax rate. The fund balance in the General Capital Projects Fund ended the year at $70,061,339, an increase of $7,655,979. This increase can be attributed to (1) interfund transfers of $9.25 million to cash -fund upcoming roadway, drainage, and other infrastructure projects, (2) intergovernmental revenues of $3.5 million received to fund infrastructure projects, and (3) investment earnings also increased in this fund for FY 2024 by over $1.2 million because of high interest rates. These inflows of resources were made available to fund various capital projects for the City and in FY 2024, the City spent $8.8 million of available project funding on capital outlays in the General Capital Projects Fund. The Southlake Parks Development Corporation Capital Projects Fund significantly increased expenditures, by approximately $11.5 million, for FY 2024 related to turf projects. In FY 2023, the City Council approved these projects to install new artificial turf on several sports fields at both Bicentennial and Bob Jones Park to improve safety, drainage, and maintenance. Also, $5.5 million transfer was made from the Southlake Park Development Corporation Special Revenue Fund to provide additional funding for future park capital projects. The Southlake Parks Development Corporation Special Revenue Fund increased its fund balance by $367,967. This increase was primarily due to consistency in revenues from FY 2023 to FY 2024 overall, with sales tax decreasing from one-time audit adjustments received in FY 2023, increased charges for services received as the Southlake Pickleball Complex opened, and increased investment earnings from consistently high interest rates. Operating expenditures also increased for the fund because of the opening of the Pickleball Complex. The Community Enhancement Development Corporation Special Revenue Fund increased its fund balance by $4,156,989. Revenues outpaced expenditures for the year, but expenditures did increase by almost $1 million. This expenditure increase was related to scheduled salary and benefit increases and purchases of equipment following the capital replacement schedule. 15 FINANCIAL ANALYSIS OF THE PROPRIETARY FUNDS The City's proprietary funds provide the same information found in the government -wide financial statements but in more detail. Unrestricted net position reported in the Proprietary Funds included $70,801,660 in the Water and Sewer Fund and $13,086,009 in the Vehicle and Equipment Replacement Fund. The total net position in the Water and Sewer Fund increased by $10,690,031 while the net position of the Vehicle and Equipment Replacement Fund increased by $1,870,132. Revenues consistently outpace expenses in the Water and Sewer Fund, so even though revenues decreased by just over $2 million because of higher rainfall and expenses increased by almost $500,000 because of wastewater treatment, the growth of net position still remained strong. Transfers of $2.6 million to fund vehicle and equipment purchases, net of depreciation, resulted in an increase in net position in the Vehicle and Equipment Replacement Fund. GENERAL FUND BUDGETARY HIGHLIGHTS The City made revisions to the original budget approved by the City Council. Management's estimate of the General Fund's budgeted revenues increased $1,982,930 or 3.5% from the original budget based on year-to-date experience. Actual revenues exceeded budget by $1,484,374. The General Fund expenditure budget was amended by $1,060,005 to account for increases in legal settlements, property and liability insurance, and vehicle maintenance. Actual expenditures, in total, were $1,920,404 less than final budget. This favorable variance in conjunction with the revenue variance allowed actual ending fund balance to exceed ending budgetary fund balance by $4,501,478. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets —As of September 30, 2024, The City's investment in capital assets for its governmental and business -type activities amounts to $628,741,824 (net of accumulated depreciation and amortization). This investment includes land, buildings, improvements, machinery and equipment, infrastructure, construction in progress, and right -to -use assets. 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 were 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 2024 were not material. Major capital projects completed during the current year included the following: • Southlake Pickleball Complex • Drainage improvements at Dove Creek Trail, Highland Creek Crossing, and Creekside Drive • Kirkwood Intersection Improvements • Bob Jones Nature Center Barn • Various water line improvements 0. Land and improvements Construction in progress Buildings and improvements Improvements I nfrastructure Machinery and equipment Right -to -use assets: Lease buildings Lease equipment Subscriptions Governmental Activities Business -type Activities Totals 2024 2023 2024 2023 2024 2023 $ 109,622,983 $ 111,367,374 $ 21,646,232 $ 21,447,795 $ 131,269,215 $ 132,815,169 30,310,495 17,195,881 4,701,687 5,519,580 35,012,182 22,715,461 108,497,159 106,641,267 77,325 107,643 108,574,484 106,748,910 - - 69,697,534 71,571,273 69,697,534 71,571,273 269,447,100 265,723,506 - - 269,447,100 265,723,506 11,783,462 12,358,011 173,796 43,781 11,957,258 12,401,792 234,031 - 569,408 447,330 234,031 - 569,408 447,330 Total $ 532,406,280 $ 516,100,285 $ 96,335,544 $ 98,690,072 $ 628,741,824 $ 614,790,357 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 $66,351,332 total bonds outstanding which were issued to finance capital improvements for roadway, parks and recreation, public buildings and infrastructure. The business -type activities had $34,118,969 of total bonds outstanding which were issued to finance projects to increase capacity of the utility system. Governmental Activities Business -type Activities Totals 2024 2023 2024 2023 2024 2023 Bonds Payable $ 66,351,332 $ 76,946,956 $ 34,118,969 $ 25,805,211 $ 100,470,301 $ 102,752,167 Total OPEB liability 803,422 728,306 64,590 59,591 868,012 787,897 Net pension liability 14,056,529 18,318,244 1,214,748 1,498,377 15,271,277 19,816,621 Compensated absences 3,132,308 2,703,252 81,150 98,554 3,213,458 2,801,806 Financed purchases 208,476 308,329 - - 208,476 308,329 Lease liabilities 813,519 448,904 - 813,519 448,904 Subscription liabilities 1,817,561 2,165,395 34,052 - 1,851,613 2,165,395 $ 87,183,147 $ 101,619,386 $ 35,513,509 $ 27,461,733 $ 122,696,656 $ 129,081,119 The City takes its debt obligation very seriously. Several years ago, the City Council, working with City staff, set goals to reduce the debt as a percentage of assessed valuation over the total long-term debt. As seen in the figure below, the City has reduced the percentage from 3.01 % in 2003 to 0.28% in 2024, during a time of growth for the City. Our debt management strategies receive a rigorous annual review from bond rating agencies tasked with letting potential borrowers know how credit -worthy the City is. The City has three AAA ratings — a strong external endorsement of the City's financial management. 17 aL s L Long-term Debt as a Percentage of Assessed Valuation �low_TsRmDw—DMAs%0cASSE%WViU)M M !l FlscwL YEAR $120,000,000 $100,000,000 $80,000,000 0 $bo,000,000 s at $40,000,000 $20,000,000 Through the City's use of cash and aggressive amortization schedules when debt is issued, the City has reduced the property tax -supported debt per capita from $3,506 in 2010 to $1,179 in 2024. 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 67-73 of this report. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES The State of Texas does not have a personal income tax by constitution, so it operates primarily using sales and gasoline taxes. Local governments rely primarily on property and sales taxes and fees to fund their government activities. While property taxes are important to the City, they represent 36.5% of total governmental revenue. Sales tax has grown to the largest governmental resource, representing 37.8% of total governmental revenue. The City monitors all of its resources and determines the need for program adjustment or fee increases accordingly. The FY 2025 adopted budget incorporates a tax rate of $0.305 per $100 valuation, reducing the rate by just over one cent. The tax rate of $0.305 is split between General Fund operations and debt service. The allocation for FY 2025 is $0.250 for general operations and $0.055 for debt service. The reduction has been taken from the operations part of the rate. The ongoing use of the 20% homestead exemption will complement the current over-65 exemption of $75,000, disabled exemption of $75,000, and the over-65 tax freeze. The continuation of these exemptions offers additional tax relief. A 20% homestead exemption will reduce the taxable value of an average - valued home in Southlake by $218,883. The property owner of an average -valued home will see the equivalent of a tax rate reduction of approximately 6.4 cents per $100 valuation with the exemption applied. With the homestead exemption in place, and considering the tax rate reduction, the equivalent residential tax rate on an average -valued home is $0.241. In More than 70% of the City's General Fund budgeted expenditures are related to personnel costs. It is the City's goal to continue to provide for a fair compensation and benefits program to ensure a stable and high -performing workforce. The FY 2025 budget recognizes and addresses the competitive labor market and the need to recruit and retain strong talent. Multi -year financial planning is another budget development consideration, one of the most important. Executive leaders evaluate the operational impact of all identified projects and include those costs in future budget projections. Staff monitors trends that depict the long-term financial health of the City and uses these trends to make decisions to reach financial and service goals. The City has taken an additional formal step to understand and plan for the organization's financial future by adopting the Sustainability Master Plan as an element of the Southlake Comprehensive Plan. It contains formal recommendations to ensure positive financial outcomes for the City. 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, Suite 420, Southlake, Texas 76092. Ro 20 Basic Financial Statements 21 22 Government -wide Financial Statements 23 24 City of Southlake, Texas Statement of Net Position September 30, 2024 Exhibit 1 PRIMARY GOVERNMENT GOVERNMENTAL BUSINESS -TYPE ACTIVITIES ACTIVITIES TOTAL ASSETS Cash and investments $ 219,376,288 $ 67,515,787 $ 286,892,075 Receivables (net of allowance for uncollectibles) 9,513,462 6,801,612 16,315,074 Prepaid items 2,197,532 - 2,197,532 Inventories 31,529 - 31,529 Restricted assets Cash and cash equivalents 2,262,936 24,193,275 26,456,211 Restricted cash for customer deposits - 270,412 270,412 OPEB asset 865,618 - 865,618 Capital assets: Not being depreciated/amortized 363,476,414 26,347,919 389,824,333 Net of depreciation/amortization 168,929,866 69,987,625 238,917,491 Total assets 766,653,645 195,116,630 961,770,275 DEFERRED OUTFLOWS OF RESOURCES Deferred loss on refunding 321,049 141,549 462,598 Deferred outflows - TMRS pension 7,495,410 572,088 8,067,498 Deferred outflows - TMRS OPEB 165,698 12,826 178,524 Deferred outflows - OPEB Health 590,124 - 590,124 Total deferred outflows of resources 8,572,281 726,463 9,298,744 LIABILITIES Accounts payable 6,826,323 2,452,788 9,279,111 Accrued liabilities 2,024,382 302,579 2,326,961 Accrued interest payable - 138,552 138,552 Retainage payable 930,729 19,187 949,916 Deposits payable 798,361 - 798,361 Unearned revenue 2,155,302 174,681 2,329,983 Liabilities payable from restricted assets Accrued interest 314,927 - 314,927 Customer meter deposits - 270,412 270,412 Non -current liabilities: Due within one year 12,024,851 2,528,892 14,553,743 Due in more than one year 75,158,296 32,984,617 108,142,913 Total liabilities 100,233,171 38,871,708 139,104,879 DEFERRED INFLOWS OF RESOURCES Deferred gain on refunding 63,266 232,776 296,042 Deferred inflows - leases 680,315 - 680,315 Deferred inflows - TM IRS pension 331,457 22,059 353,516 Deferred inflows - TM IRS OPEB 330,374 23,965 354,339 Deferred inflows - OPEB Health 617,261 617,261 Total deferred inflows of resources 2,022,673 278,800 2,301,473 NET POSITION Net investment in capital assets 472,883,752 74,231,905 547,115,657 Restricted for: Debt service 4,776,366 - 4,776,366 OPEB Asset 865,618 865,618 Capital projects 24,660,776 24,660,776 Municipal court 920,494 920,494 Reinvestment zone 11,565,009 11,565,009 Police 7,323,201 7,323,201 Parks and recreation 55,441,867 55,441,867 Library 21,403 21,403 Storm water 2,150,530 2,150,530 Promotion of culture and tourism 4,223,117 - 4,223,117 Impact fees - 11,659,020 11,659,020 Unrestricted 88,137,949 70,801,660 158,939,609 TOTAL NET POSITION $ 672,970,082 $ 156,692,585 $ 829,662,667 The Notes to the Financial Statements are an integral part of this statement. 25 City of Southlake, Texas Statement of Activities For the Fiscal Year Ended September 30, 2024 Exhibit 2 Net (Expense) Revenue and Program Revenues Changes in Net Position Primary Government Charges for Operating Grants Capital Grants Governmental Business - Type Functions/Program Activities Expenses Services and Contributions and Contributions Activities Activities TOTAL PRIMARY GOVERNMENT: Governmental Activities: General government $ 26,994,341 $ 2,271,472 $ 161,195 $ $ (24,561,674) $ $ (24,561,674) Public safety 27,798,598 1,081,451 125,414 (26,591,733) (26,591,733) Public works 10,709,563 3,337,594 - 4,890,150 (2,481,819) (2,481,819) Culture and recreation 19,939,371 5,607,865 89,175 - (14,242,331) (14,242,331) Promotion of culture and tourism 871,217 - - (871,217) (871,217) Interest on long-term debt 1,867,737 - - (1,867,737) (1,867,737) Total govemmental activities 88,180,827 12,298,382 375,784 4,890,150 (70,616,511) (70,616,511) Business -type Activities: Water and sewer 28,969,340 35,597,701 1,734,388 8,362,749 8,362,749 Total business -type activities 28,969,340 35,597,701 1,734,388 8,362,749 8,362,749 TOTAL PRIMARY GOVERNMENT $ 117,150,167 $ 47,896,083 $ 375,784 $ 6,624,538 (70,616,511) 8,362,749 (62,253,762) General revenues and transfers: General revenues Property taxes, levied for general purposes 43,315,203 - 43,315,203 Sales taxes 44,830,166 44,830,166 Franchise taxes 3,445,059 - 3,445,059 Investment income 11,116,664 3,839,868 14,956,532 Gain on disposal of capital assets 143,146 96,269 239,415 Miscellaneous 151,752 - 151,752 Transfers 1,608,855 (1,608,855) - Total general revenues and transfers 104,610,845 2,327,282 106,938,127 Change in net position 33,994,334 10,690,031 44,684,365 Net position, beginning of year 638,975,748 146,002,554 784,978,302 NET POSITION, end of year $ 672,970,082 $ 156,692,585 $ 829,662,667 The Notes to the Financial Statements are an integral part of this statement. 26 Fund Financial Statements 27 m Governmental Funds Financial Statements 29 City of Southlake, Texas Balance Sheet -Governmental Funds September 30, 2024 ASSETS Cash and investments Receivables, net of allowances for uncollectibles: Taxes Interest Leases Other Inventories Prepaid items TOTAL ASSETS LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES LIABILITIES Accounts payable Accrued liabilities Retainage payable Deposits payable Unearned revenue TOTAL LIABILITIES DEFERRED INFLOWS OF RESOURCES Unavailable resources Deferred inflows - leases TOTAL DEFERRED INFLOWS OF RESOURCES FUND BALANCES Nonspendable Restricted Committed Assigned Unassigned TOTAL FUND BALANCES TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES GENERAL OBLIGATION DEBT GENERAL SERVICE $ 49,342,043 $ 2,262,936 3,528,361 5,754 68,426 2,361 726,746 - 813,244 28 31,529 - CAPITAL PROJECTS SOUTHLAKE GENERAL PARKS CAPITAL DEVELOPMENT $ 72,861,483 $ 14,348,812 76,023 14,971 $ 54,523,725 $ 2,271,079 $ 72,937,506 $ 14,363,783 $ 3,327,135 $ - $ 973,261 $ 538,108 1,699,290 - - - - - 313,104 569,590 67,476 - 659,635 - 781, 384 - 930,167 - 5,875,285 - 2,876,167 1,107,698 425,518 2,861 - - 680,315 - - - 1,105,833 2,861 - - 44,905 - - - - 2,268,218 24,660,776 13,256,085 30,477,969 - 45,400,563 - 17, 019, 733 - - - 47,542,607 2,268,218 70,061,339 13,256,085 $ 54,523,725 $ 2,271,079 $ 72,937,506 $ 14,363,783 The Notes to the Financial Statements are an integral part of this statement. 30 Exhibit 3 SPECIAL REVENUE SOUTHLAKE COMMUNITY PARKS ENHANCEMENT NONMAJOR TOTAL DEVELOPMENT DEVELOPMENT GOVERNMENTAL GOVERNMENTAL CORPORATION CORPORATION FUNDS FUNDS $ 12,980,903 $ 24,777,718 $ 34,174,694 $ 210,748,589 1,732,768 1,283,532 671,163 7,221,578 13,558 25,945 35,626 236,910 - - - 726,746 38,456 204,058 261,224 1,317,010 - - - 31,529 - - - 13,376 $ 14,765,685 $ 26,291,253 $ 35,142,707 $ 220,295,738 $ 92,963 $ 713,463 $ 1,181,398 $ 6,826,328 30,292 133,801 160,999 2,024,382 - - 48,035 930,729 71,250 - 798,361 - 443,751 2,155,302 123,255 1,362,265 1,390,432 12,735,102 25,637 32,484 486,500 - - 680,315 25,637 32,484 1,166,815 - - - 44,905 14, 616,793 24,928,988 31,627, 605 111,358,465 - - 2,092,186 2,092,186 - 75,878,532 - - - 17,019,733 14,616,793 24,928,988 33,719,791 206,393,821 $ 14,765,685 $ 26,291,253 $ 35,142,707 $ 220,295,738 31 City of Southlake, Texas Exhibit 4 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position September 30, 2024 Total fund balances - governmental funds $ 206,393,821 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not current financial resources and therefore, are not reported in the governmental funds balance sheet (less $6,803,707 in assets allocated to governmental activities from the internal service fund). 525,602,573 Interest payable on long-term debt does not require current financial resources; therefore, interest payable is not reported as a liability in the governmental funds balance sheet. (314,927) Internal service funds are used by management to charge the cost of certain activities, such as fleet management, to individual funds. This amount represents the assets less the liabilities of the internal service fund allocated to governmental activities. 19,889,716 OPEB asset has not been included in the governmental fund financial statements, as these assets do not represent current financial resources. 865,618 Revenues earned but not available within sixty days of the year end are not recognized as revenue on the fund financial statements. 486,500 For debt refundings, the difference between the acquisition price and net carrying amount of the debt has been deferred and amortized in the government -wide financial statements. This amount is the net of deferred losses, $321,049, and gains ($63,266) on refundings. 257,788 Deferred outflows of resources related to the Citys pension and OPEB liabilities result in an increase in net position in the government -wide financial statements. 8,251,232 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. (1,279,092) Long-term liabilities, including bonds payable and net pension and OPEB liabilities, are not due and payable in the current period and therefore are not reported in the fund financial statements. (87,183,147) NET POSITION OF GOVERNMENTAL ACTIVITIES $ 672,970,082 The Notes to the Financial Statements are an integral part of this statement. 32 33 City of Southlake, Texas Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds For the Fiscal Year Ended September 30, 2024 REVENUES Ad valorem taxes, penalties and interest Franchise taxes Municipal sales and mixed beverage taxes Licenses, permits and fees Charges for services Fines and forfeitures Intergovernmental revenue Capital recovery fees Investment income (losses) Contributions Miscellaneous Total revenues EXPENDITURES Current General government City secretary/mayor City managers office Human resources Support services Economic development Finance Municipal court Teen court Information technology Public safety Police services Fire services Public safety support Public works Public works administration Streets and drainage Planning Building inspection Cultural and recreation Community services Parks and recreation Library services Promotion of culture and tourism Intergovernmental Capital outlay Debt service: Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Issuance of lease Issuance of subscriptions Sale of capital assets Transfers from other funds Transfers to other funds Total other financing sources (uses) Net change in fund balances Fund balances, beginning of year, as previously presented Change within financial reporting entity (nonmajor to major) Fund balances, beginning of year, as restated FUND BALANCES, END OF YEAR CAPITAL PROJECTS GENERAL SOUTHLAKE OBLIGATION GENERAL PARKS DEBT CAPITAL DEVELOPMENT GENERAL SERVICE PROJECTS CORPORATION $ 27,190,295 $ 5,690,222 $ $ 3,445,059 - 21,278,207 1,924,639 2,373,061 860,634 433,490 3,573,901 - - 143,101 - 2,747,448 168,430 3,544,673 879,060 31,505 - 1,481 - 134,402 - 60,418,740 5,858,652 7,263,156 879,060 618,645 1,226,412 905,101 5,762,333 441,221 2,117,153 790,601 164,960 3,479,999 8,904,349 12,192,174 1,702,592 2,775,504 - 1,479,051 1,656,983 1,221,947 - 1,266,686 1,649,823 - 4,407,542 1,096 1,224, 652 - 1,685,400 7,199,098 13,968,342 1,003,961 5,771,358 53,272 1,209,680 - - 55,073,378 6,981,038 8,857,177 13,968,342 5,345,362 (1,122,386) (1,594,021) (13,089,282) 752,937 333,898 43,351 - - - 3,131,080 397,341 9,250,000 5,500,000 (11,033,486) (6,772,220) 397,341 9,250,000 5,500,000 (1,426,858) (725,045) 7,655,979 (7,589,282) 48,969,465 2,993,263 62,405,360 ')n nds zxv 48,969,465 2,993,263 62,405,360 20,845,367 $ 47,542,607 $ 2,268,218 $ 70,061,339 $ 13,256,085 The Notes to the Financial Statements are an integral part of this statement. 34 Exhibit 5 SPECIAL REVENUE SOUTHLAKE PARKS DEVELOPMENT CORPORATION COMMUNITY ENHANCEMENT DEVELOPMENT CORPORATION NONMAJOR GOVERNMENTAL FUNDS TOTAL GOVERNMENTAL FUNDS $ $ $ 10,470,200 $ 43,350,717 - 3,445,059 10,661,725 7,897,574 4,992,660 44,830,166 - - 342,310 2,266,949 255,389 4,541,874 1,613,076 8,783,400 - - 101,507 962,141 7,060 4,014,451 - - - 143,101 599,793 1,111,659 1,562,175 10,613,238 - 14,840 43,029 90,855 1,104 16,246 151,752 11,516,907 13,567,051 19,148,263 118,651,829 618,645 1,226,412 - 905,101 529,694 6,292,027 - 441,221 - 2,117,153 71,208 861,809 - 164,960 - 3,479,999 2,880,543 11,784,892 7,060 12,199,234 - 1,702,592 - 2,775,504 602,947 3,738,981 - 1,221,947 - - - 1,266,686 2,337,909 6,181,162 31,327 10,200,221 - - - 4,408,638 7,889 1,232,541 871,217 871,217 - 6,849,951 6,849,951 72,236 - 1,756,017 24,681,093 - 13,016 4,213,141 11,001,476 1,073 1,221,886 2,485,911 2,410,145 6,195,251 19,042,880 112,528,211 9,106,762 7,371,800 105,383 6,123,618 - 752,937 43,458 377,356 - 43,351 5,908,632 24,187,053 (8,738,795) (3,214,811) (2,219,335) (25,206,427) (8,738,795) (3,214,811) 3,732,755 154,270 367,967 4,156,989 3,838,138 6,277,888 14,248,826 20,771,999 50,727,020 200,115,933 (20,845,367) - 14,248,826 20,771,999 29,881,653 200,115,933 $ 14,616,793 $ 24,928,988 $ 33,719,791 $ 206,393,821 35 City of Southlake, Texas Exhibit 6 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Fund to the Statement of Activities For the Fiscal Year Ended September 30, 2024 Net change in fund balances - total governmental funds $ 6,277,888 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation and amortization expense. This is the amount of capital assets additions recorded in the current period (does not include additions of $1,758,809 allocated from internal service fund). 24,672,473 Depreciation and amortization expense on capital assets are reported in the statement of activities 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 $1,351,619 allocated from internal service fund). (10,024,229) The issuance of long-term debt (e.g. bonds) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is first issued, whereas the amounts are deferred and amortized in the statement of activities. This amount is the net effect of the following items: Issuance of right -to -use leases $ (752,937) Issuance of SBITAs (377,356) Principal payments on debt 9,900,211 Principal payments on financed purchases, lease and subscription liabilities 1,101,265 Amortization of premiums and deferred gains and losses 548,574 10,419,757 The changes in net pension liability and deferred outflows/inflows from TMRS are not reported in the governmental funds. This is the net effect of the decrease in the net pension liability, $4,261,714, increase in deferred inflows of resources, ($331,457), and decrease in deferred outflows of resources, ($4,153,634). (223,377) The changes in total OPEB liability and deferred outflows/inflows from TMRS are not reported in the governmental funds. This is the net effect of the increase in the total SDBF OPEB liability ($75,116), decrease in deferred inflows of resources, $77,537, and decrease in deferred outflows of resources, ($20,607). 110,100) The changes in net OPEB liability and deferred outflows/inflows for healthcare are not reported in the governmental funds. This is the net effect of the increase in the total healthcare OPEB asset, $413,330, increase in deferred inflows of resources, ($70,950), and decrease in deferred outflows of resources, ($221,613). 120,767 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. (429,055) 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. 69,600 Internal service funds are used by management to charge the costs of certain activities, such as fleet management, to individual funds. The net income of the internal service fund is allocated entirely to governmental activities. 1,870,132 Governmental funds do not recognize assets contributed by developers. However, in the statement of activities, the fair value of those assets is recognized as revenue, then allocated over their estimated useful lives and reported as depreciation expense. 1,171,669 Gain on disposal of capital assets results in an increase in net position, but the net effect is not reported in governmental funds. 5,654 Certain revenues in the government -wide statement of activities that do not provide current financial resources are not reported as revenue in the governmental funds. 81,241 Change in net position of governmental activities $ 33,994,334 The Notes to the Financial Statements are an integral part of this statement. 36 Proprietary Funds Financial Statements 37 City of Southlake, Texas Statement of Net Position - Proprietary Funds September 30, 2024 BUSINESS -TYPE GOVERNMENTAL ACTIVITIES ACTIVITIES WATER AND SEWER VEHICLE AND EQUIPMENT ENTERPRISE REPLACEMENT INTERNAL FUND SERVICE FUND ASSETS CURRENT ASSETS Cash and investments $ 67,515,787 $ 10,890,635 Receivables, net of allowance for uncollectibles: Billed and unbilled trade accounts 6,705,485 - Interest 96,127 11,218 Prepaid expenses - 2,184,156 Restricted assets: Cash restricted for capital 24,193,275 - Restricted cash for customer deposits 270,412 - Total current assets 98,781,086 13,086,009 NON -CURRENT ASSETS Capital assets: Land 21,646,232 - Buildings and improvements 935,501 - Distribution system 159,003,927 - Equipment 2,891,880 703,246 Vehicles - 14,731,413 Capacity rights 9,190,988 - Construction in progress 4,701,687 - SBITA 87,316 - Total capital assets 198,457,531 15,434,659 Less: accumulated depreciation and amortization (102,121,987) (8,630,952) Capital assets, net of accumulated depreciation and amortization 96,335,544 6,803,707 Total non -current assets 96,335,544 6,803,707 Total assets 195,116,630 19,889,716 DEFERRED OUTFLOW OF RESOURCES Deferred loss on refunding 141,549 - Deferred outflows - TMRS pension 572,088 - Deferred outflows - TMRS OPEB 12,826 - Total deferred outflows of resources $ 726,463 $ - The Notes to the Financial Statements are an integral part of this statement. 38 Exhibit 7 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION CURRENT LIABILITIES Accounts payable Accrued liabilities Retainage payable Accrued interest payable Unearned revenue Current portion of compensated absences Current portion of subscription liability Current portion of total OPEB liability Current portion of general obligation debt Payable from restricted assets: Customer meter deposits Total current liabilities NON -CURRENT LIABILITIES Compensated absences General obligation debt Subscription liability Net pension liability Total OPEB liability Total non -current liabilities Total liabilities DEFERRED INFLOW OF RESOURCES Deferred gain on refunding Deferred inflows - TM RS pension Deferred inflows - TMRS OPEB Total deferred inflows of resources NET POSITION Net investment in capital assets Restricted for impact fees Unrestricted TOTAL NET POSITION BUSINESS -TYPE GOVERNMENTAL ACTIVITIES ACTIVITIES WATER AND SEWER VEHICLE AND EQUIPMENT ENTERPRISE REPLACEMENT INTERNAL FUND SERVICE FUND $ 2,452,788 $ 302,579 19,187 138,552 174,681 20,686 29,320 1,192 2,477,694 270,412 5,887,091 60,464 31,641,275 4,732 1,214,748 63,398 32,984,617 38,871, 708 232,776 22,059 23,965 278,800 74,231,905 6,803,707 11,659,020 - 70,801,660 13,086,009 $ 156,692,585 $ 19,889,716 39 City of Southlake, Texas Statement of Revenues, Expenses, and Changes in Net Position - Proprietary Funds For the Fiscal Year Ended September 30, 2024 OPERATING REVENUES Charges for sales and services: Water, sewer and garbage Service charges Total operating revenues OPERATING EXPENSES Personnel services Contractual services Supplies Utilities Administrative Maintenance Professional benefits Depreciation and amortization Total operating expenses OPERATING INCOME (LOSS) NON -OPERATING REVENUES (EXPENSES) Investment income Gain on disposal of capital assets Interest expense and bond administration expense Total non -operating revenues (expenses) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS CAPITAL CONTRIBUTIONS AND TRANSFERS Capital contributions - property owners Contributions - impact fees Transfers from other funds Transfers to of her funds Total capital contributions and transfers Change in net position Net position, beginning of year NET POSITION, END OF YEAR Exhibit 8 BUSINESS -TYPE GOVERNMENTAL ACTIVITIES ACTIVITIES WATER AND SEWER VEHICLE AND EQUIPMENT ENTERPRISE REPLACEMENT INTERNAL FUND SERVICE FUND $ 35,550,815 $ 46,886 35, 597, 701 2,917,911 - 2,676,685 - 303, 645 - 9,868,178 - 10,087 - 7,084,158 4,045 99,882 - 5,224,740 1,351,619 28,185,286 1,355,664 7,412,415 (1,355,664) 3,839,868 503,426 96,269 94,141 (784,054) - 3,152,083 597,567 10,564,498 (758,097) 1,471,706 262,682 - - 2,628,229 (1,608,855) - 125,533 2,628,229 10,690,031 1,870,132 146,002,554 18,019,584 $ 156, 692, 585 $ 19, 889, 716 40 City of Southlake, Texas Statement of Cash Flows - Proprietary Funds For the Fiscal Year Ended September 30, 2024 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers and users Cash payments to suppliers Cash payments to employees Net cash provided by (used in) operating activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets Principal payments on bonds Proceeds from issuance of bonds Premium on bond issuance Principal payments on subscription liability Interest paid on capital debt Proceeds from disposal of capital assets Contributions - impact fees Net cash provided by (used in) capital and related financing activities CASH FLOWS FROM NON -CAPITAL FINANCING ACTIVITIES Transfers from other funds Transfers to other funds Net cash provided by (used in) non -capital financing activities CASH FLOWS FROM INVESTING ACTIVITIES Net investment gains Interest received Net cash provided by investing activities Net change in cash and cash equivalents CASH AND CASH EQUIVALENTS, beginning of year CASH AND CASH EQUIVALENTS, end of year RECONCILIATION TO STATEMENT OF NET POSITION Cash and cash equivalents Cash restricted for capital Restricted cash for customer deposits Total cash and cash equivalents RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization Decrease (increase) in assets and deferred outflows of resources Receivables Prepaid expenses Deferred outflows of resources - pensions and OPEB Increase (decrease) in liabilities and deferred outflows of resources Payables and accruals Customer deposits Deferred inflows of resources - pensions and OPEB Decrease in pension and OPEB liabilities Unearned revenue Net cash provided by (used in) operating activities NON -CASH CAPITAL AND RELATED FINANCING: Contributions of capital assets from developers Exhibit 9 BUSINESS -TYPE GOVERNMENTAL ACTIVITIES ACTIVITIES WATER AND SEWER VEHICLE AND EQUIPMENT ENTERPRISE REPLACEMENT INTERNAL FUND SERVICE FUND $ 36,279,967 $ (21,601,529) (1,147,000) (2,919,238) 11, 759,200 (1,147,000) (1,717,392) (1,766,294) (2,488,643) 9,805,000 1,279,193 (28,880) (1,004,881) - 96,269 16,141 262,682 - 6,203,348 (1,750,153) - 2,628,229 (1,608,855) - (1,608,855) 2,628,229 3,839,868 503,426 (75,638) (8,235) 3,764,230 495,191 20,117,923 226,267 71,861,551 10,664,368 $ 91,979,474 $ 10,890,635 $ 67,515,787 $ 10,890,635 24,193,275 - 270,412 - $ 91,979,474 $ 10,890,635 $ 7,412,415 $ (1,355,664) 5,224,740 1,351,619 719,686 - (1,142,955) 277,809 (1,576,298) (27,925) 16,898 (278,630) (9,495) $ 11,759,200 $ (1,147,000) $ 1,471,706 $ 41 42 Fiduciary Fund Financial Statements 43 44 City of Southlake, Texas Exhibit 10 OPEB Liability Trust Fund Statement of Fiduciary Net Position December 31, 2023 Trust Fund* Southlake OPEB Liability ASSETS Investments $ 2,740,052 TOTAL ASSETS $ 2,740,052 NET POSITION Restricted for post employment benefits other than pensions $ 2,740,052 TOTAL NET POSITION $ 2,740,052 * The Southlake Other Post Employment Benefit (OPEB) Liability Trust Fund is reported as of December 31, 2023. The Notes to the Financial Statements are an integral part of this statement. 45 City of Southlake, Texas OPEB Liability Trust Fund Statement of Changes in Fiduciary Net Position For the Fiscal Year Ended December 31, 2023 ADDITIONS Employer contributions Investment earnings, net of unrealized/realized gain/(loss) TOTAL ADDITIONS DEDUCTIONS Benefit payments Administrative expenses TOTAL DEDUCTIONS Change in net position Net position, beginning of year NET POSITION - END OF YEAR Exhibit 11 Trust Fund Southlake OPEB Liability $ 209,818 269,081 478,899 69,818 8,145 77,963 400,936 2,339,1 16 $ 2,740,052 The Notes to the Financial Statements are an integral part of this statement. 46 Notes to the Financial Statements 47 EM City of Southlake, Texas Notes to the Financial Statements 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 (SPDQ - The SPDC is a nonprofit industrial development corporation formed in January 1994 under the Development Corporation Act of 1979. The SPDC 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 SPDC 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 SPDC is substantively the same as the City Council, the SPDC 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 District (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. 49 City of Southlake, Texas Notes to the Financial Statements Southlake Crime Control and Prevention District (CCDJ - The CCD was formed under Chapter 363 of the Texas Local Government Code, the Crime Control and Prevention Act. The CCD is organized exclusively to act on behalf of the City for the financing, development and crime control throughout the City. The CCD 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 CCD 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 nonmajor funds are aggregated and presented in a single column. Governmental funds are those funds through which most governmental functions typically are financed. The measurement focus of governmental funds is on the sources, uses and balances of current financial resources. Governmental Funds The City reports the following major governmental funds: General Fund The General Fund is the general operating fund of the City. It is used to account for all financial resources not accounted for in other funds. All general tax revenues and other receipts that are not restricted by law or contractual agreement to some other fund are accounted for in this fund. General operating expenditures, fixed charges and capital improvement costs that are not paid through other funds are paid from the General Fund. General Obligation Debt Service Fund The General Obligation Debt Service Fund is used to account for the accumulation of financial resources for the payment of principal, interest and related costs on long-term debt paid primarily from taxes levied by the City. The fund balance of the General Obligation Debt Service Fund is restricted exclusively for debt service expenditures. 50 City of Southlake, Texas Notes to the Financial Statements General Capital Projects Fund The General Capital Projects Fund is used to account for resources used for the acquisition and/or construction of capital facilities by the City, except those financed by proprietary funds and not accounted for by another capital projects fund. Southlake Parks Development Corporation Capital Projects Fund The Southlake Parks Development Corporation Capital Projects (SPDCCP) Fund was 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. Southlake Parks Development Corporation The Southlake Parks Development Corporation (SPDC) Fund (Special Revenue) 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 municipal sales taxes. Community Enhancement and Development Corporation The Community Enhancement and Development Corporation (CEDC) Fund (Special Revenue) 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. 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. 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 postemployment healthcare benefits for retirees of the City and their dependents which is presented as of December 31, 2023. 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. 51 City of Southlake, Texas Notes to the Financial Statements 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. 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. As of September 30, 2024, the investments held by the City had a remaining maturity of greater than one year from purchase and accordingly are carried at fair value. 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. 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. 52 City of Southlake, Texas Notes to the Financial Statements 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 2023 levy was based on was $11,359,781,892. 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, 2024 was 0.319 per $100 of assessed valuation. In Texas, countywide central appraisal districts are required to assess all property within the appraisal district on the basis of 100% of its appraised value and are prohibited from applying any assessment ratios. The value of property within the appraisal district must be reviewed every five years; however, the City may, at its own expense, require annual reviews of appraised values. Interfund Receivables and Payables Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as "due to/from other funds." Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances". Transactions between Funds Interfund services provided and used are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as a reduction of expenditures/expenses in the fund reimbursed. All other interfund transactions, except interfund services provided and used and reimbursements, are recorded as transfers. Interfund services provided and used are not eliminated in the process of consolidation. 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. 53 City of Southlake, Texas Notes to the 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. 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 noncancellable 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. Subscription -Based Information Technology Arrangements (SBITAs) The City has noncancellable contracts with SBITA vendors for the right -to -use information technology (IT) software, alone or in combination with tangible capital assets (the underlying IT assets). The City recognizes a subscription liability, reported with long-term debt, and a right -to -use subscription asset (an intangible asset), reported with other capital assets, in the government -wide and proprietary fund financial statements. The City recognizes subscription liabilities with an initial, individual value of $5,000 or more. 54 City of Southlake, Texas Notes to the Financial Statements At the commencement of a SBITA, the City initially measures the subscription liability at the present value of payments expected to be made during the subscription term. Subsequently, the subscription liability is reduced by the principal portion of SBITA payments made. The subscription asset is initially measured as the initial amount of the subscription liability, adjusted for SBITA payments made at or before the SBITA commencement date, plus certain initial implementation costs. Subsequently, the subscription asset is amortized on a straight-line basis over the shorter of the subscription term or the useful life of the underlying IT assets. Key estimates and judgments related to SBITAs include how the City determines (1) the discount rate it uses to discount the expected subscription payments to present value, (2) subscription term and (3) subscription payments. The City uses the interest rate charged by the SBITA vendor as the discount rate. When the interest rate charged by the SBITA vendor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for SBITAs. The subscription term includes the noncancellable period of the SBITA. Subscription payments included in the measurement of the subscription liability are composed of fixed payments, variable payments fixed in substance or that depend on an index or a rate, termination penalties if the City is reasonably certain to exercise such options, subscription contract incentives receivable from the SBITA vendor, and any other payments that are reasonably certain of being required based on an assessment of all relevant factors. The City monitors changes in circumstances that would require a remeasurement of its SBITAs and will remeasure the subscription asset and liability if certain changes occur that are expected to significantly affect the amount of the subscription liability. Capital Assets Capital assets, which include property, plant, equipment, right -to -use lease 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 55 City of Southlake, Texas Notes to the Financial Statements 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 lease and subscription assets are amortized over the duration of the lease or subscription 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 to 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 Postemployment 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 TMRS'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. 56 City of Southlake, Texas Notes to the Financial Statements 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. 57 City of Southlake, Texas Notes to the Financial Statements Fund Balances 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. The City reported an assigned fund balance in its General Capital Projects Fund of $45,400,563 on September 30, 2024. This fund balance is assigned with the intent to cash -fund future capital projects. 0 City of Southlake, Texas Notes to the Financial Statements As of September 30, 2024, the City had the governmental fund balances categorized as follows: SOUTHLAKE SOUTHLAKE COMMUNITY PARKS PARKS ENHANCEMENT GENERAL DEVELOPMENT DEVELOPMENT DEVELOPMENT OBLIGATION GENERAL CORPORATION CORPORATION CORPORATION NONMAJOR TOTAL DEBT CAPITAL CAPITAL SPECIAL SPECIAL GOVERNMENTAL GOVERNMENTAL GENERAL SERVICE PROJECTS PROJECTS FUND REVENUE REVENUE FUNDS FUNDS FUND BALANCES Nonspendable for: Inventories $ 31,529 $ $ $ $ $ $ $ 31,529 Prepaid items 13,376 13,376 Restricted for: Debt service - 2,268,218 2,783,850 5,052,068 Capital projects - 24,660,776 - 24,660,776 Municipal court - 920,494 920,494 Reinvestment zone - - - - - - 11,565,009 11,565,009 Parks and recreation 13,256,085 14,616,793 24,928,988 2,640,001 55,441,867 Storm water - - - 2,150,530 2,150,530 Police 7,323,201 7,323,201 Library - - - - - - 21,403 21,403 Promotion of tourism 4,223,117 4,223,117 Committed for: - Police - - - - - - 2,031,814 2,031,814 Parks and recreation - 60,372 60,372 Assigned for: Teen Court 23,161 - - - - - - 23,161 Senior Center 12,061 12,061 Recycling 77,363 77,363 Reforestation 160,358 160,358 Public art 539,053 539,053 Facility maintenance 12,934,258 - - - - - - 12,934,258 Economic investment 3,541,789 3,541,789 Strategic initiatives 13,189,926 - 13,189,926 Capital projects - 45,400,563 45,400,563 Unassigned 17,019,733 17,019,733 TOTAL FUND BALANCES $47,542,607 $ 2,268,218 $70,061,339 $ 13,256,085 $ 14,616,793 $ 24,928,988 $ 33,719,791 $ 206,393,821 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/amortization, 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, 2024. 59 City of Southlake, Texas Notes to the Financial Statements New Accounting Pronouncements The GASB pronouncements effective in fiscal year 2024 and beyond are listed as follows: 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 has implemented this Statement in fiscal year 2024. 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. GASB Statement No. 102, Certain Risk Disclosures, will provide users of government financial statements with essential information about risks related to a government's vulnerabilities due to certain concentrations or constraints. The requirements of this Statement are effective for fiscal years beginning after June 15, 2024, and all reporting periods thereafter. The City is currently evaluating the impact of this Statement. GASB Statement No. 103, Financial Report Model Improvements, will establish new accounting and financial reporting requirements - or modify existing requirements - related to the following: • Management's discussion and analysis • Unusual or infrequent items • Presentation of the proprietary fund statement of revenues, expenses, and changes in fund net position • Information about major component units in basic financial statements • Budgetary comparison information • Financial trends information in the statistical section The requirements of this Statement are effective for fiscal years beginning after June 15, 2025, and all reporting periods thereafter. The City is currently evaluating the impact of this Statement. GASB Statement No. 104, Disclosure of Certain Capital Assets, will establish requirements for certain types of capital assets to be disclosed separately in the capital assets note disclosures required by Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments. It will also establish requirements for capital assets held for sale, including additional disclosures for these capital assets. The requirements of this Statement are effective for fiscal years beginning after June 15, 2025, 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, 2024 through February 21, 2025, the date the financial statements were available to be issued. During this period, there were no subsequent events requiring disclosure. City of Southlake, Texas Notes to the Financial Statements 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, 2024, the carrying amount of the City's on demand deposits was $18,992,263 and the bank balance was $19,211,504. As of September 30, 2024, 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. 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 365 days 20% Money Market Mutual Funds 60 days* 50% Eligible investment pools N/A 100% Insured deposit accounts N/A 2017. *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. m City of Southlake, Texas Notes to the Financial Statements Cash and investments as of September 30, 2024, are classified in the accompanying financial statements as follows: Primary Government: Cash and cash equivalents $ 286,892,075 Restricted cash and cash equivalents 26,456,211 Restricted cash for customer deposits 270,412 Total primary government 313,618,698 Trust Fund: Investments at fair value 2,740,052 Total fiduciary funds 2,740,052 Total cash and investments $ 316,358,750 Cash and investments of the primary government as of September 30, 2024 consist of the following: Cash on hand $ 4,150 Deposits with financial institutions 18,992,263 Investments at amortized cost 164,400,719 Investments at fair value 130,221,566 Total cash and investments $ 313,618,698 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, 2024, 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. Investment Type Amount U.S. Government securities $ 38,008,980 Mutual funds 92,212,586 TexStar 59,445,962 TexPool 36,468,953 Lonestar Investment Pool 41,125,283 Texas Class 27,360,521 Total $ 294, 622, 285 Minimum Rating as Legal of Year Rating End N/A AAA N/A AAAm AAA/AAAm AAAm AAA/AAAm AAAm AAA/AAAm AAAm AAA/AAAm AAAm 62 City of Southlake, Texas Notes to the Financial Statements 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, 2024, 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. 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, 2024, 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. 63 City of Southlake, Texas Notes to the Financial Statements 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: Fair Value Measurements Percent of Value at Total 9/30/24 Level Inputs Level 2Inputs Level 3Inputs Investments Investments not subject to Fair Value Investment Pools TexPool $ 36,468,953 $ $ $ 13% TexStar 59,445,962 20% Lone Star 41,125,283 14% Texas CLASS 27,360,521 9% Investments by Fair Value Level U.S. Treasury Notes & Bonds 21,819,221 U.S. Government securities 16,189,759 - Mutual Funds Short -Term Investments Trust 92,212,586 92,212,586 21,819,221 16,189,759 7% 6% 31% Weighted Average Maturity (Days) 28 30 27 29 39 130 28 Total $ 29A,622,285 $ 92,212,586 $ 38,008,980 $ 100% 44 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 Hilltop Securities and JPMorgan Chase. TexStar is a local government investment pool created under the Interlocal Cooperation Act specifically tailored to meet Texas state and local government investment objectives of preservation of principal, daily liquidity, and competitive yield. TexStar uses amortized costs rather than market value to report net position to compute share prices. Accordingly, the fair value of the position in TexStar is the same as the value of TexStar shares. Texas CLASS is organized under the Sixth Amended and Restated Trust Agreement in accordance with all the requirements contained in section 2256.016 of the Public Funds Investment Act. Texas CLASS is administered by Public Trust Advisors, LLC and all funds are held by the custodial agent, Wells Fargo N.A. Texas CLASS may invest in obligations of the U.S. or its agencies and instrumentalities; repurchase agreements; SEC -registered money market funds rated in the highest rating category by at least one NRSRO; and commercial paper rated A-1, P-1 or equivalent by two nationally recognized rating agencies. Texas CLASS is measured at fair value (i.e., net asset value). The Lone Star Investment Pool (the Pool) is organized in conformity with the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code, and the Public Funds Investment Act, Chapter 2256 of the Texas Government Code. The Pool is governed by an 11 member Board of Trustees, consisting of individuals representing entities participating in the Pool. The fair value of the City's position in the Pool is the same as the value of the Pool shares. 64 City of Southlake, Texas Notes to the Financial Statements Note 3. Receivables Receivables at September 30, 2024, for the government's individual major, nonmajor, internal service, and fiduciary funds in the aggregate, including the applicable allowances for uncollectible accounts, consist of the following: General SPDC Obligation General SPDC Operating Debt Capital Capital Special General Service Projects Projects Revenue Receivables: Property taxes $ 335,899 $ 69,979 $ - $ - $ - Sales taxes 3,500,741 - - 1,732,768 Accounts - - - 38,456 Interest 68,426 2,361 76,023 14,971 13,558 Leases 726,746 - - - - Other 813,244 28 - - Gross receivables 5,445,056 72,368 76,023 14,971 1,784,782 Less: allowance 308,279 64,225 - - - Net total receivables $ 5,136,777 $ 8,143 $ 76,023 $ 14,971 $ 1,784,782 CEDC Water Primary Special Non -Major and Internal Government Revenue Governmental Sewer Service Total Receivables: Property taxes $ - $ - $ - $ - $ 405,878 Sales taxes 1,283,532 671,163 - - 7,188,204 Accounts - 262,918 6,761,149 - 7,062,523 Interest 25,945 35,626 96,127 11,218 344,255 Leases - - - - 726,746 Other 204,058 - - - 1,017,330 Gross receivables 1,513,535 969,707 6,857,276 11,218 16,744,936 Less: allowance - 1,694 55,664 - 429,862 Net total receivables $ 1,513,535 $ 968,013 $ 6,801,612 $ 11,218 $ 16,315,074 The Water and Sewer Fund and the Storm Water Utility Fund accounts receivable include unbilled charges for services rendered through September 30, 2024, of $2,932,370. 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, 2024, relate to leases whose terms expire between December 2024 and January 2028. 65 City of Southlake, Texas Notes to the Financial Statements 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 $726,746 remaining in lease receivables and $680,315 remaining in deferred inflow as of September 30, 2024. The City recorded lease revenue including interest of $287,283 in the fiscal year. As of September 30, 2024, the expected lease receipts through the expiration of all leases for which the City is a lessor is as follows: Fiscal Year Ending September 30, Principal Interest Total 2025 $ 226,422 $ 20,247 $ 246,669 2026 239,670 13,331 253,001 2027 213,636 6,016 219,652 2028 47,018 284 47,302 Total $ 726,746 $ 39,878 $ 766,624 Note 4. Capital Assets Capital asset activity for the year ended September 30, 2024, was as follows: Governmental Activities: Capital assets not being depreciated/amortized: Land Street infrastructure Construction -in -progress Total capital assets not being depreciated/amortized Capital assets being depreciated/amortized: Land improvements Buildings and building improvements Public art Equipment Drainage infrastructure Right -to -use assets: Lease buildings Lease equipment Subscriptions Total capital assets being depreciated/amortized Accumulated depreciation/amortization: Land improvements Buildings and building improvements Public art Equipment Drainage infrastructure Right -to -use assets: Lease buildings Lease equipment Subscriptions Total accumulated depreciation/amortization Total capital assets being depreciated/amortized, net Governmental activifles capital assets, net Beginning Capital Sales or Adjustments/ Ending Balance Acquisitions Disposals Transfers Balance $ 97,313,799 $ 247,447 $ $ - $ 97,561,246 232,950,577 488,881 2,165,215 235,604,673 17,195,881 22,858,010 (9,743,396) 30,310,495 347,460,257 23,594,338 (7,578,181) 363,476,414 42,070,435 - (155,827) 41,914,608 142,309,234 5,155,015 147,464,249 1,956,720 - - 1,956,720 41,808,368 2,528,776 (715,012) 130,920 43,753,052 65,810,992 435,341 2,448,073 68,694,406 - 312,041 - 312,041 755,549 410,827 (439,564) 726,812 3,071,032 615,392 (154,936) 3,531,488 297,782,330 4,302,377 (1,309,512) 7,578,181 308,353,376 (28,016,860) (1,836,011) - (29,852,871) (36,355,279) (3,190,823) (39,546,102) (1,269,408) (108,300) - (1,377,708) (29,450,357) (3,234,245) 715,012 (31,969,590) (33,038,063) (1,813,916) - (34,851,979) (78,010) - (78,010) (308,219) (130,075) 280,890 (157,404) (704,116) (984,468) 98,738 (1,589,846) (129,142,302) (11,375,848) 1,094,640 (139,423,510) 168,640,028 (7,073,471) (214,872) 7,578,181 168,929,866 $ 516,100,285 $ 16,520,867 $ (214,872) $ $ 532,406,280 City of Southlake, Texas Notes to the Financial Statements Beginning Capital Sales or Adjustments/ Ending Balance Acquisitions Disposals Transfers Balance Business Type Activities: Capital assets not being depreciated/amortized: Land $ 21,447,794 $ 198,438 $ $ - $ 21,646,232 Construction -in -progress 5,519,581 1,299,652 (2,117,546) 4,701,687 Total capital assets not being depreciated/amortized 26,967,375 1,498,090 (2,117,546) 26,347,919 Capital assets being depreciated/amortized: Buildings and building improvements 935,501 - - 935,501 Equipment 3,024,292 11,539 (287,380) 143,429 2,891,880 Capacity rights 9,190,988 - - 9,190,988 Distribution system 155,756,543 1,273,267 1,974,117 159,003,927 Subscriptions 87,316 87,316 Total capital assets being depreciated/amortized 168,907,324 1,372,122 (287,380) 2,117,546 172,109,612 Accumulated depreciation/amortization: Buildings and building improvements (827,858) (30,318) - - (858,176) Equipment (2,980,511) (24,953) 287,380 (2,718,084) Capacity rights (5,174,595) (183,820) - (5,358,415) Distribution system (88,201,663) (4,937,303) (93,138,966) Subscriptions (48,346) (48,346) Total accumulated depreciation/amortization (97,184,627) (5,224,740) 287,380 (102,121,987) Total capital assets being depreciated/amortized, net 71,722,697 (3,852,618) 2,117,546 69,987,625 Business type activities capital assets, net $ 98,690,072 $ (2,354,528) $ $ _L96,335,544 Depreciation/amortization expenses were charged as a direct expense to functions of the primary government as follows: Governmental activities: General government $ 2,831,058 Public safety 2,426,103 Public works 2,125,209 Culture and recreation 3,993,478 Total depreciation/amortization expense - governmental activities $ 11,375,848 Business -type activities: Water and Sewer $ 5,224,740 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, 2024, the City had no additional outstanding bonds that were legally defeased. As of September 30, 2024, the City had $9,881,821 in authorized but unissued general obligation bonds. The City does not anticipate the issuance of additional general obligation debt within the next twelve months. 67 City of Southlake, Texas Notes to the Financial Statements General obligation bonds, certificates of obligation, tax notes, and governmental revenue bonds are as follows as of September 30, 2024: 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% $ 2,770,000 $ 1,300,000 $9,965,000 Series 2012, General Obligation Refunding Bonds 2026 3.0 - 4.25% 1,610,000 - $14,250,000 Series 2013, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2033 2.0 - 5.0% - 1,320,000 $22,295,000 Series 2013, General Obligation Refunding Bonds 2026 2.0 - 5.0% 4,255,000 - $21,330,000 Series 2014, General Obligation Refunding Bonds 2026 2.0 - 5.0% 125,000 235,000 $8,780,000 Series 2014, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2034 2.0 - 3.5% - 2,085,000 $3,295,000 Series 2015, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2035 2.75 - 4.017o - 2,520,000 $7,910,000 Series 2017, General Obligation Refunding Bonds 2028 3.0 - 4.0% 1,716,477 1,828,520 $5,400,000 Series 2017, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2037 2.25 - 5.0% - 4,005,000 $4,205,000 Series 2018, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2038 3.0 - 4.0% - 3,255,000 $17,290,000 Series 2019, General Obligation Refunding Bonds 2030 3.0 - 5.0% 2,845,000 3,695,000 $4,240,000 Series 2021, General Obligation Refunding Bonds 2031 1.21% 1,434,000 1,606,000 $8,595,000 Series 2022, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation 2037 4.0 - 5.0% 5,990,000 - $9,805,000 Series 2024, Tax and Waterworks and Sewer 2039 4.0-5.0% - 9,805,000 System (Limited Pledge) Certificates of Obligation $ 20,745,477 $ 31,654,520 City of Southlake, Texas Notes to the Financial Statements Governmental Revenue Bonds $16,000,000 Series 2014, Southlake Parks Development Corporation, Sales Tax Revenue Refunding Bonds $24,450,000 Series 2016, Southlake Community Enhancement and Development Corporation, Sales Tax Revenue Bonds $9,945,000 Series 2017, Southlake Community Enhancement and Development Corporation, Sales Tax Revenue Bonds Final Interest Maturity Rates Governmental 2027 3% $ 3,155,000 2036 3.00 - 5.00% 17,475,000 2036 2.00 - 5.00% 7,065,000 $ 27,695,000 Final Interest Governmental Tax Notes Maturity Rates Governmental $3,753,000 Series 2021, Tax Notes 2026 0.83% $ 1,354,000 $13,397,000 Series 2023, Tax Notes 2030 3.48% 13,397,000 $ 14,751,000 During 2024, the City issued $9,805,000 of Water and Sewer Revenue Certificates of Obligation, Series 2024. The debt was issued for the purpose of improving, extending and equipping the City's combined waterworks and sewer system. The following is a summary of long-term liability transactions for the year ended September 30, 2024: Governmental activities: General obligation bonds and certificates of obligation Sales tax revenue bonds Tax notes Bond premiums (discounts) Total bonds payable Total OPEB liability -SDBF Net pension liability Compensated absences Financed purchase liabilities Right -to -use lease liability Subscription liability Total governmental activities Beginning Balance Additions Reductions Ending Balance Amount Due within One year $ 26,796,835 $ - $ (6,051,358) $ 20,745,477 $ 6,298,304 30,775,000 - (3,080,000) 27,695,000 3,025,000 15,420,000 - (669,000) 14,751,000 804,000 3,955,121 - (795,266) 3,159,855 - 76,946,956 - (10,595,624) 66,351,332 10,127,304 728,306 75,116 803,422 17,916 18,318,244 - (4,261,715) 14,056,529 - 2,703,252 3,516,404 (3,087,348) 3,132,308 725,807 308,329 - (99,853) 208,476 102,748 448,904 752,937 (388,322) 813,519 225,205 2,165,395 377,356 (725,190) 1,817,561 825,871 $ 101,619,386 $ 4,721,813 $ (19,158,052) $ 87,183,147 $ 12,024,851 .• City of Southlake, Texas Notes to the Financial Statements Amount Beginning Ending Due within Balance Additions Reductions Balance One year Business -type activities: General obligation bonds and certificates of obligation $ 24,338,163 $ 9,805,000 $ (2,488,643) $ 31,654,520 $ 2,477,694 Bond premiums 1,467,048 1,279,193 (281,792) 2,464,449 - Total bonds payable 25,805,211 11,084,193 (2,770,435) 34,118,969 2,477,694 Tot alOPEBliability -SDBF 59,591 4,999 - 64,590 1,192 Net pension liability 1,498,377 - (283,629) 1,214,748 - Compensated absences 98,554 198,898 (216,302) 81,150 20,686 Subscription liability - 62,932 (28,880) 34,052 29,320 Total business -type activities $ 27,461,733 $ 11,351,022 $ (3,299,246) $ 35,513,509 $ 2,528,892 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. The annual aggregate maturities for each bond type are as follows: General Obiiation Bonds and Certificates of Obliaation Governmental Activities Fiscal Year Ending September 30, Principal Interest Total 2025 $ 6,298,304 675,660 $ 6,973,964 2026 6,560,251 419,782 6,980,033 2027 1,632,198 259,470 1,891,668 2028 1,695,724 197,119 1,892,843 2029 1,292,000 422,006 1,714,006 2030-2034 2,627,000 48,114 2,675,114 2035-2039 640,000 40,025 680,025 Total $ 20,745,477 $ 2,062,176 $ 22,807,653 Sales Tax Revenue Bonds Governmental Activities Fiscal Year Ending September 30, Principal Interest Total 2025 $ 3,025,000 $ 816,731 $ 3,841,731 2026 2,790,000 706,256 3,496,256 2027 2,640,000 618,506 3,258,506 2028 1,890,000 550,556 2,440,556 2029 1,950,000 492,956 2,442,956 2030-2034 10,665,000 1,537,706 12,202,706 2035-2039 4,735,000 144,897 4,879,897 Total $ 27,695,000 $ 4,867,608 $ 32,562,608 70 City of Southlake, Texas Notes to the Financial Statements Tax Notes Governmental Activities Fiscal Year Ending September 30, Principal Interest Total 2025 $ 804,000 $ 472,395 $ 1,276,395 2026 810,000 462,252 1,272,252 2027 3,115,000 402,967 3,517,967 2028 3,225,000 292,651 3,517,651 2029 3,339,000 178,437 3,517,437 2030-2034 3,458,000 60,169 3,518,169 Total $ 14,751,000 $ 1,868,871 $ 16,619,871 General Obligation Bonds and Certificates of Obligation Business -Type Activities Fiscal Year Ending September 30, Principal Interest Total 2025 $ 2,477,694 $ 1,156,152 $ 3,633,846 2026 3,060,748 1,067,244 4,127,992 2027 3,063,802 944,597 4,008,399 2028 3,183,276 824,800 4,008,076 2029 2,791,000 713,818 3,504,818 2030-2034 10,398,000 2,338,963 12,736,963 2035-2039 6,680,000 648,619 7,328,619 Total $ 31,654,520 $ 7,694,193 $ 39,348,713 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. The annual debt service requirement to amortize the financed purchase liabilities outstanding at September 30, 2024, are as follows: Financed Purchase Liabilities Governmental Activities Fiscal Year Ending September 30, Principal Interest Total 2025 102,748 6,046 108,794 2026 105,728 3,066 108,794 Total $ 208,476 $ 9,112 $ 217,588 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. 71 City of Southlake, Texas Notes to the Financial Statements The annual debt service requirement to amortize the other lease liabilities outstanding at September 30, 2024, are as follows: Lease Liabilities Governmental Activities Fiscal Year Ending September 30, Principal Interest 2025 $ 225,205 2026 235,485 2027 158,128 2028 125,282 2029 69,419 $ 19,085 13,073 7,487 3,719 637 Total 244,290 248,558 165,615 129,001 70,056 Total $ 813,519 $ 44,001 $ 857,520 Subscription Based Information Technology Arrangements (SBITA) The City has entered into multiple SBITAs that allow the right -to -use the SBITA vendor's information technology software over the subscription term. The City is required to make annual or monthly payments at its incremental borrowing rate or the interest rate stated or implied within the SBITAs. The SBITA rate, term and ending subscription liability are as follows: Interest Liability at SBITA Term Ending Rate(s) Commencement in Months Balance Governmental activities Software 2.240% - 3.2577o 3,638,158 16 - 105 $ 1,817,561 Total governmental activities $ 1,817,561 Business -type activities Software 3.591% 62,932 36 $ 34,052 Total business -type activities $ 34,052 The future principal and interest SBITA payments as of fiscal year end are as follows: Fiscal Year Ending Principal Interest Total 2025 $ 825,871 $ 54,517 $ 880,388 2026 428,301 29,069 457,370 2027 174,856 16,620 191,476 2028 146,384 11,589 157,973 2029 146,457 7,217 153,674 2030 - 2031 95,692 2,869 98,561 Total governmental activities $ 1,817,561 $ 121,881 $ 1,939,442 Fiscal Year Ending Principal Interest Total 2025 $ 29,320 $ 54,517 $ 83,837 2026 4,732 2,869 7,601 Total business -type activities $ 34,052 $ 57,386 $ 91,438 72 City of Southlake, Texas Notes to the Financial Statements The value of the governmental activities subscription assets as of the end of the current fiscal year was $3,531,488 with accumulated amortization of $1,589,846. The value of the business -type activities subscription assets as of the end of the current fiscal year was $87,316 with accumulated amortization of $48,346. 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 2024 were as follows: Transfers in: General General Vehicle and Obligation Capital Southlake Parks Nonmajor Equipment General Debt Service Projects Development Governmental Replacement Total Fund Fund Fund Corp - CPF Funds Fund transfers Transfers out: General Fund $ - $ $ 8,400,000 $ - $ 100,000 $ 2,533,486 $11,033,486 Southlake Parks Development Corporation Fund 456,219 - 5,500,000 2,782,576 - 8,738,795 Community Enhancement and Development Corporation Fund 523,255 - - 2,691,556 3,214,811 Nonmajor Governmental Funds 637,494 397,341 850,000 334,500 2,219,335 Water and Sewer Enterprise Fund 1,514,112 94,743 1,608,855 Total transfers $ 3,131,080 $ 397,341 $ 9,250,000 $ 5,500,000 $ 5,908,632 $ 2,628,229 $26,815,282 During the year, interfund transfers were used for the following recurring items: • To allocate indirect charges from the General Fund to the Southlake Parks Development Corporation, Water and Sewer Enterprise Fund, and other nonmajor governmental funds. • 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. • To move funding for vehicle and equipment replacement to the internal service fund. • To fund the annual subsidy for commercial vehicle enforcement. Further, during the year ended September 30, 2024, the City made the following one-time transfers: • Transfer of $6,700,000 from the General Fund to the General Capital Projects Fund for roadway projects. • Transfer of $1,300,000 from the General Fund to the General Capital Projects Fund for infrastructure projects. • Transfer of $400,000 from the General Fund to the General Capital Projects Fund for public art projects. • Transfer of $5,500,000 from the Southlake Parks Development Corporation to the General Capital Projects Fund for parks projects. • Transfer of $241,000 from the Community Enhancement and Development Corporation to nonmajor governmental funds for community enhancement projects. • Transfer of $850,000 from nonmajor governmental funds to the General Capital Projects Fund for infrastructure projects. • Transfer of $334,500 from nonmajor governmental funds to the General Capital Projects Fund for crime control district projects. 73 City of Southlake, Texas Notes to the Financial Statements Note 7. Retirement Plan A. Plan Description The City participates as one of 934 plans in the defined benefit cash -balance plan administered by the Texas Municipal Retirement System (TMRS). TMRS is a statewide public retirement plan 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 employees of Texas participating cities. The TMRS Act places the general administration and management of TMRS with a six -member, Governor -appointed Board of Trustees; however, TMRS is not fiscally dependent on the State of Texas. TMRS issues a publicly available Annual Comprehensive Financial Report (Annual Report) that can be obtained at tmrs.com. All eligible employees of the City are required to participate in TMRS. B. Benefits Provided TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the governing body of the city, within the options available in the state statutes governing TMRS. At retirement, the Member's benefit is calculated based on the sum of the Member's contributions, with interest, and the city -financed monetary credits with interest. The retiring Member may select one of seven monthly benefit payment options. Members may also choose to receive a portion of their benefit as a lump sum distribution in an amount equal to 12, 24 or 36 monthly payments, which cannot exceed 75% of the total Member contributions and interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount at least equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are a percent (100%, 150%, or 200%) of the employee's accumulated contributions. In addition, the City can grant, as often as annually, another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contributions accumulated with interest if the current employee contribution rate and City matching percent had always been in existence and if the employee's salary had always been the average of his salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer -financed monetary credits with interest were used to purchase an annuity. Members can retire at ages 60 and above with 5 or more years of service or with 20 years of service. A member is vested after 5 years. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. 74 City of Southlake, Texas Notes to the Financial Statements Employees covered by benefit terms. At the December 31, 2023 valuation and measurement date, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 191 Inactive employees entitled to but not yet receiving benefits 318 Active employees C. Contributions 384 893 Member contribution rates in TMRS are either 5%, 6% or 7% of the Member's total compensation, 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 city's contribution rate is based on the liabilities created from the benefit plan options selected by the city and any changes in benefits or actual experience over time. Employees for the City were required to contribute 7% of their annual compensation during the fiscal year. The contribution rates for the City were 12.46% and 12.56% in calendar years 2023 and 2024, respectively. The City's contributions to TMRS for the year ended September 30, 2024, were $4,151,701 and were greater than the required contributions by $46,094. D. Net Pension Liability The City's Net Pension Liability (NPL) was measured as of December 31, 2023, and the Total Pension Liability (TPL) used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date. Actuarial Assumptions The Total Pension Liability in the December 31, 2023 actuarial valuation was determined using the following actuarial assumptions: Inflation 2.5% per year Overall payroll growth 2.75% per year, adjusted down for population declines, if any Investment Rate of Return 6.75%, net of pension plan investment expense, including inflation Salary increases are based on a service -related table. Mortality rates for active members are based on the PUB(10) mortality tables with the Public Safety table used for males and the General Employee table used for females. Mortality rates for healthy retirees and beneficiaries are based on the Gender -distinct 2019 Municipal Retirees of Texas mortality tables. Male rates are multiplied by 103% and female rates are multiplied by 105%. The rates for actives, healthy retirees and beneficiaries are projected on a fully generational basis by Scale LIMP to account for future mortality improvements. For disabled annuitants, the same mortality tables for healthy retirees are used with a 4-year set -forward for males and a 3-year set -forward for females. In addition, a 3.5% and 3.0% minimum mortality rate is applied, for males and females respectively, to reflect the impairment for younger members who become disabled. The rates are projected on a fully generational basis by Scale LIMP to account for future mortality improvements subject to the floor. 75 City of Southlake, Texas Notes to the Financial Statements The actuarial assumptions were developed primarily from the actuarial investigation of the experience of TMRS over the four-year period from December 31, 2018 to December 31, 2022. The assumptions were adopted in 2023 and first used in the December 31, 2023, actuarial valuation. The post -retirement mortality assumption for Annuity Purchase Rates (APRs) is based on the Mortality Experience Investigation Study covering 2009 through 2011 and dated December 31, 2013. Plan assets are managed on a total return basis with an emphasis on both capital appreciation as well as the production of income to satisfy the short-term and long-term funding needs of TMRS. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. In determining their best estimate of a recommended investment return assumption under the various alternative asset allocation portfolios, GRS focused on the area between (1) arithmetic mean (aggressive) without an adjustment for time (conservative) and (2) the geometric mean (conservative) with an adjustment for time (aggressive). The target allocation and best estimates of real rates of return for each major asset class in fiscal year 2024 are summarized in the following table: Asset Class Target Allocation Global Equity 35.0% Core Fixed Income 6.0% Non -Core Fixed Income 20.0% Other public and private markets 12.0% Real Estate 12.0% Hedge funds 5.0% Private Equity 10.0% Total 100.0% Long -Term Expected Real Rate of Return (Arithmetic) 6.70% 4.70% 8.00% 8.00% 7.60% 6.40% 1 1.60% 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 Member 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 Members. 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. 76 City of Southlake, Texas Notes to the Financial Statements Changes in the Net Pension Liability Balance at 12/31/2022 Changes for the year: Service Cost Interest Change of benefit terms Difference between expected and actual experience Changes of assumptions Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net Changes Balance at 12/31 /2023 Increase Total (Decrease) Net Pension Plan Fiduciary Pension Liability Net Position Liability (a) (b) (a)-(b) $ 139,795,674 $119,979,054 $ 19,816,620 5,197,252 - 5,197,252 9,435,242 - 9,435,242 1,315,727 - 1,315,727 (467,923) - (467,923) 3,967,997 (3,967,997) 2,229,213 (2,229,213) - 13,917,389 (13,917,389) (5,225,884) (5,225,884) - - (88,341) 88,341 - (617) 617 10,254,414 14,799,757 (4,545,343) $ 150, 050, 088 $ 134,778,811 $ 15, 271, 277 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 $ 38,050,073 $ 15,271,277 $ (3,285,956) Pension Plan Fiduciary Net Position Detailed information about the pension plan's Fiduciary Net Position is available in the Schedule of Changes in Fiduciary Net Position, by Participating City. That report may be obtained at tmrs.com. 77 City of Southlake, Texas Notes to the Financial Statements E. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended September 30, 2024, the City recognized pension expense of $4,424,375. At September 30, 2024, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual economic experience $ 1,712,991 $ - Changes in actuarial assumptions 6,360 (353,516) Difference between projected and actual investment earnings 3,124,554 - Contributions subsequent to the measurement date 3,223,593 - Total $ 8,067,498 $ (353,516) The $3,223,593 reported as deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date will be recognized as a reduction of the Net Pension Liability for the year ending September 30, 2025. 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 2025 $ 1,410,841 2026 1,516,680 2027 2,707,971 2028 (1,145,103) Total $ 4,490,389 Note 8. Other Postemployment Benefits (OPEB) The City of Southlake provides for two other postemployment 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 TM IRS Plan SDBF Total OPEB liability (asset) $ (865,618) $ 868,012 $ 2,394 Deferred outflows of resources 590,124 178,524 768,648 Deferred inflows of resources 617,261 354,339 971,600 OPEB expense (121,105) 20,310 (100,795) m City of Southlake, Texas Notes to the Financial Statements City of Southlake Retiree Health Care Plan Plan Description The City provides other postemployment 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, 2023: Inactive employees currently receiving benefits 6 Inactive employees entitled to but not yet receiving benefits - Active Employees 339 345 Contributions The City's contributions during the fiscal year ending September 30, 2024 were $209,480 and were greater than the required contributions by $167,637. 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, 2023. 79 City of Southlake, Texas Notes to the Financial Statements Actuarial Assumptions The total OPEB asset in the December 31, 2023 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Actuarial Cost Method Individual Entry -Age Normal Single Discount Rate 5.007. as of December 31, 2023 Inflation rate 2.507. per year Salary Increases 3.607. to 11.85% including inflation Demographic Assumptions Based on the experience study covering the four-year period ending December 31, 2023 as conducted for the Texas Municipal Retirement System JMRS). Mortality For healthy retirees, the gender -distinct Municipal Retirees of Texas mortality tables were used, with male rates multiplied by 103% and female rates multiplied by 105%. The rates are projected on a fully generational basis using the ultimate mortality improvement rates in the MP-2021 table to account for future mortality Healthcare Cost trend rates Initial rate of 7.00% declining to ultimate rates of 4.25% after 15 years. 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. 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. :E City of Southlake, Texas Notes to the Financial Statements Changes in the Net OPEB Asset Balance at 12/31/2022 Changes for the year: Service Cost Interest Difference between expected and actual experience Changes of assumptions Contributions - employer Net investment income Benefit payments, including refunds of employee contributions Administrative expense Net Changes Balance at 12/31 /2023 Increase (Decrease) Total Plan Net OPEB Fiduciary OPEB (Asset) Liability Net Position (Asset) Liability (a) (b) (a)-(b) $ 1,886,828 $ 2,339,116 $ (452,288) 128,267 - 128,267 95,803 - 95,803 (16,206) - (16,206) (150,440) - (150,440) - 209,818 (209,818) - 269,081 (269,081) (69, 818) (69, 818) - - (8,145) 8,145 (12,394) 400,936 (413,330) $ 1,874,434 $ 2,740,052 $ (865,618) 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 $69,818 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 $ 10,325 City's implicit subsidy (explicit subsidy * 5.762) 59,493 Total benefit payments $ 69,818 The 5.762 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 % Decrease 1 % Increase in Discount Discount in Discount Rate (4.00%) Rate (5.00%) Rate (6.00%) Net OPEB asset $ (703,914) $ (865,618) $ (1,010,870) m City of Southlake, Texas Notes to the Financial Statements 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 $ (1,050,037) $ (865,618) $ (648,370) OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources For the year ended December 31, 2023, the City recognized OPEB expense of $88,713. At September 30, 2024, the reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Difference between Expected and Actual Economic Experiences $ 11,203 $ (336,144) Changes in Assumptions 241,831 (281,117) Investment Experience 145,192 - Contributions subsequent to the measurement date 191,898 - $ 590,124 $ (617,261) The $191,898 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, 2025. 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 2025 $ 1,504 2026 21,161 2027 21,456 2028 (74,502) 2029 (74,839) Thereafter (113,815) Total $ (219,035) 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 3,227 years. Additionally, the total plan membership (active employees and inactive employees) was 345. 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 9.3548 years. m City of Southlake, Texas Notes to the Financial Statements 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, 2023 valuation and measurement date, the following employees were covered by the benefit terms: Inactive employees currently receiving benefits 135 Inactive employees entitled to but not yet receiving benefits 77 Active Employees 384 596 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. m City of Southlake, Texas Notes to the Financial Statements The retiree portion of contribution rates to the SDBF for the City was 0.06% and 0.06% in calendar years 2023 and 2024, respectively. The City's contributions to the SDBF for the year ended September 30, 2024 were $19,864, and were equal to the required contributions. Total OPEB Liability The City's Total OPEB Liability (TOL) was measured as of December 31, 2023 and was determined by an actuarial valuation as of that date. Actuarial Assumptions The Total OPEB Liability in the December 31, 2023 actuarial valuation was determined using the following actuarial assumptions: Inflation Salary Increases Discount rate Retiree's share of benefit -related costs Administrative expenses 2.50% 3.60% to 11.85% including inflation 3.77% $0 All administrative expenses are paid through the Pension Trust and accounted for under reporting requirements of GASB Statement No. 68. 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, 2023 valuation were developed primarily from the actuarial investigation of the experience of TMRS over the four-year period from December 31, 2018 to December 31, 2022. They were first adopted in 2023 and first used in the December 31, 2023 actuarial valuation. The discount rate used to measure the Total OPEB Liability was 3.77% and was based on the Fidelity Index's "20-Year Municipal GO AA Index" rate as of December 31, 2023. m City of Southlake, Texas Notes to the Financial Statements Changes in Total OPEB Liability Balances as of 12/31/2022 Changes for the year: Service cost Interest Difference between expected and actual experience Changes of assumptions Contributions - employer Net Changes Balances as of 12/31 /2023 Total OPEB Liability $ 787,897 35,030 32,232 (12,044) 44,005 (19,108) 80,115 $ 868,012 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 3.77%, 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 (2.77%) or 1 percentage -point higher (4.77%) than the current rate: 1% Decrease Discount Rate 1% Increase (2.77%) (3.77%) (4.77%) Total OPEB liability $ 1,060,361 $ 868,012 $ 720,425 OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended September 30, 2024, the City recognized OPEB expense of $39,418. At September 30, 2024, the City reported deferred outflows and inflows of resources related to the OPEB plan from the following sources: Deferred Deferred Outflows of Inflows of Pacni irrac Pacnt irrac Difference between expected and actual economic experiences $ - $ (27,907) Changes in actuarial assumptions 163,137 (326,432) Contributions subsequent to the measurement date 15,387 - $ 178,524 $ (354, 339) The $15,387 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, 2024. m City of Southlake, Texas Notes to the Financial Statements 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 2025 $ (36,661) 2026 (26, 737) 2027 (50, 955) 2028 (64, 400) 2029 (13,126) Thereafter 677 Total $ (191,202) 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. 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 Cityjoined 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, 2024 were $5,780,289. City of Southlake, Texas Notes to the Financial Statements 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, 2024, the City rebated $242,493 in sales taxes, $122,770 in property taxes, and $636,417 in hotel occupancy taxes. The City also refunded $92,782 in developer construction cost reimbursements for the fiscal year ending September 30, 2024. Note 13. Change Within the Reporting Entity For the fiscal year ending September 30, 2024, the City's Southlake Parks Development Corporation Capital Project (SPDCCP) Fund became a major fund after previously being reported as nonmajor. This represents a change within the reporting entity, affecting the beginning fund balance of the SPDCCP major fund and the nonmajor governmental funds. See below for the changes to beginning fund balances. Reporting Units Affected by Adjustments to and Restatements of Beginning Balances Funds Southlake Parks Development Nonmajor Corporation Governmental Capital Projects Funds Fund 9/30/2023, as previously reported $ 50,727,020 $ - Change within reporting entity (nonmajor fund to major fund) (20,845,367) 20,845,367 10/ 1 /2023, as restated 29,881,653 $ 20,845,367 m Required Supplementary Information :• a Budgetary Comparison Schedules m City of Southlake, Texas General Fund Budgetary Comparison Schedule (GAAP Basis) For the Fiscal Year Ended September 30, 2024 Exhibit A-1 VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Ad valorem taxes, penalties and interest $ 28,140,607 $ 27,340,607 $ 27,190,295 $ (150,312) Franchise taxes 2,973,106 3,348,860 3,445,059 96,199 Municipal sales and mixed beverage tax 19,908,000 21,545,284 21,278,207 (267,077) License, permits and fees 1,499,100 1,395,200 1,924,639 529,439 C ha rges f or s ery ic es 2,126,623 1,958,915 2,373,061 414,146 Fines and forfeitures 798,500 798,000 860,634 62,634 Intergovernmental revenue 72,000 345,000 433,490 88,490 Investment income (losses) 1,243,500 1,987,500 2,747,448 759,948 Contributions 5,000 30,000 31,505 1,505 Miscellaneous 185,000 185,000 134,402 (50,598) Total revenues 56,951,436 58,934,366 60,418,740 1,484,374 EXPENDITURES General government City secretary/mayor 667,578 662,578 618,645 43,933 City manager's office 1,202,778 1,245,953 1,226,412 19,541 Human resources 1,080,100 980,739 905,101 75,638 Support services 4,947,294 5,434,510 5,762,333 (327,823) Economic development 397,159 515,801 441,221 74,580 Finance 2,173,778 2,208,399 2,117,153 91,246 Municipal court 888,133 804,413 790,601 13,812 Teen court 176,673 176,673 164,960 11,713 Information technology 4,974,504 4,965,504 3,479,999 1,485,505 Public safety Police services 8,984,427 9,140,509 8,904,349 236,160 Fire services 12,059,313 12,701,373 12,192,174 509,199 Public safety support 1,867,695 1,867,695 1,702,592 165,103 Public works Public works administration 3,048,741 2,999,771 2,775,504 224,267 Streets and drainage 1,436,397 1,487,670 1,479,051 8,619 Planning 1,331,690 1,299,854 1,221,947 77,907 Building inspection 1,374,054 1,351,020 1,266,686 84,334 Culture and recreation Community services 1,775,911 1,731,299 1,649,823 81,476 Parks and recreation 4,685,666 4,588,979 4,407,542 181,437 Library services 1,354,461 1,323,617 1,224,652 98,965 Capital Outlay 1,507,425 1,507,425 1,685,400 (177,975) Debt Service Principal - - 1,003,961 (1,003,961) Interest - - 53,272 (53,272) Total expenditures 55,933,777 56,993,782 55,073,378 1,920,404 Excess of revenues over expenditures 1,017,659 1,940,584 5,345,362 3,404,778 OTHER FINANCING SOURCES (USES) Issuance of financed purchases - - 752,937 752,937 Issuance of subscriptions - 333,898 333,898 Sale of capital assets - - 43,351 43,351 Transfers from other funds 3,089,065 3,131,080 3,131,080 - Transfers to other funds (10,000,000) (11,000,000) (11,033,486) (33,486) Total other financing sources (uses) (6,910,935) (7,868,920) (6,772,220) 1,096,700 Net change in fund balance (5,893,276) (5,928,336) (1,426,858) 4,501,478 Fund balances, beginning of year 48,969,465 48,969,465 48,969,465 - FUND BALANCES, END OF YEAR $ 43,076,189 $ 43,041,129 $ 47,542,607 $ 4,501,478 The Notes to the Budgetary Comparison Schedules are an integral part of this statement. 92 City of Southlake, Texas Exhibit A-2 Southlake Parks Development Corporation Operating Fund Budgetary Comparison Schedule (GAAP Basis) For the Fiscal Year Ended September 30, 2024 REVENUES Municipal sales tax Charges for services Investment income (losses) Total revenues EXPENDITURES Community services Capital outlay Total expenditures Excess of revenues over expenditures OTHER FINANCING USES Transfers to other funds Net change in fund balance Fund balances, beginning of year, FUND BALANCE, END OF YEAR VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) $ 9,898,000 $ 10,747,650 $ 10,661,725 $ (85,925) 153,824 237,824 255,389 17,565 152,000 420,000 599,793 179,793 10,203,824 11,405,474 11,516,907 111,433 2,357,397 2,352,501 2,337,909 14,592 472,500 472,500 72,236 400,264 2,829,897 2,825,001 2,410,145 414,856 7,373,927 8,580,473 9,106,762 526,289 (8,690,729) (8,738,795) (8,738,795) - (1,316,802) (158,322) 367,967 526,289 14,248,826 14,248,826 14,248,826 - $ 12,932,024 $ 14,090,504 $ 14,616,793 $ 526,289 The Notes to the Budgetary Comparison Schedules are an integral part of this statement. 93 City of Southlake, Texas Community Enhancement Development Corporation Special Revenue Fund Budgetary Comparison Schedule (GAAP Basis) For the Fiscal Year Ended September 30, 2024 REVENUES: Municipal sales tax Charges for services Investment income (losses) Contributions Miscellaneous Total revenues EXPENDITURES: Community services Capital outlay Debt Service Principal Interest Total expenditures Excess of revenues over expenditures OTHER FINANCING USES: Transfers to other funds Total other financing uses Net changes in fund balance Fund balances, beginning of year FUND BALANCES, END OF YEAR BUDGETED AMOUNTS ORIGINAL FINAL ACTUAL Exhibit A-3 VARIANCE WITH FINAL BUDGET - POSITIVE (NEGATIVE) $ 7,423,500 $ 7,986,875 $ 7,897,574 $ (89,301) 4,591,040 4,489,091 4,541,874 52,783 265,000 770,000 1,111,659 341,659 5,247 5,400 14,840 9,440 - - 1,104 1,104 12,284, 787 13,251,366 13,567,051 315,685 7,217,921 7,231,393 6,181,162 1,050,231 1,408,839 1,408,839 - 1,408,839 - - 13,016 (13,016) - - 1,073 (1,073) 8,626,760 8,640,232 6,195,251 2,444,981 3,658,027 4,611,134 7,371,800 2,760,666 (3,180,948) (3,214,811) (3,214,811) - (3,180,948) (3,214,811) (3,214,811) - 477,079 1,396,323 4,156,989 2,760,666 20,771,999 20,771,999 20,771,999 - $ 21,249,078 $ 22,168,322 $ 24,928,988 $ 2,760,666 The Notes to the Budgetary Comparison Schedules are an integral part of this statement. 94 City of Southlake, Texas Notes to Budgetary Comparison Schedules 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, 2024 as follows: • Support services ($327,823) - A building remodel project was budgeted as capital outlay. However, expenditures did not meet the capitalization criteria, so they were reported as operating expenditures. • Capital outlay ($177,975) - Due to GASB 87 and 96, not a true cash flow expenditure over budget. • Debt service: Principal ($1,003,961) - Due to GASB 87 and GASB 96, not a true cash flow expenditure over budget. • Debt service: Interest ($53,272) - Due to GASB 87 and GASB 96, not a true cash flow expenditure over budget. W. Required Pension and OPEB Schedules 97 City of Southlake, Texas Schedule of Changes in Net Pension Liability and Related Ratios Texas Municipal Retirement System Last Ten Measurement Years Total pension liability: Service cost Interest Changes of benefit terms Difference between expected and actual experience Change in assumptions Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability- beginning Total pension liability- ending (a) Plan fiduciary net position: Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) Net pension liability - ending (a) - (b) Plan fiduciary net position as a percentage of total pension liability Covered payroll Net pension liability as a percentage of covered payroll Measurement Measurement Measurement Year Year Year 2023 2022 2021 $ 5,197,252 $ 4,838,653 $ 4,328,436 9,435,242 8,750,754 8,133,486 1,315,727 1,059,885 426,450 (467,923) - - (5,225,884) (4,150,172) (3,847,375) 10,254,414 10,499,120 9,040,997 139, 795, 674 129, 296, 554 120, 255, 557 150, 050, 088 139, 795, 674 129, 296, 554 3,967,997 3,714,760 3,348,713 2,229,213 2,070,328 1,871,403 13,917,389 (9,335,205) 14,591,844 (5,225,884) (4,150,172) (3,847,375) (88,341) (80,641) (67,416) (617) 96,229 462 14,799,757 (7,684,701) 15,897,631 119,979,054 127,663,755 111,766,124 134, 778, 81 1 119, 979, 054 127, 663, 755 $ 15,271,277 $ 19,816,620 $ 1,632,799 89.82% 85.82% 98.74% $ 31,845,904 $ 29,576,118 $ 26,441,262 47.95% 67.00% 6.18% Exhibit A-4 Measurement Measurement Measurement Measurement Measurement Measurement Measurement Year Year Year Year Year Year Year 2020 2019 2018 2017 2016 2015 2014 $ 4,289,132 $ 4,190,311 $ 3,919,389 $ 3,579,734 $ 3,482,384 $ 3,222,126 $ 2,906,949 7,554,362 6,945,183 6,379,342 5,865,601 5,393,997 5,090,308 4,779,462 39,572 250,630 537,249 213,937 179,076 102,364 (1,602,645) - 324,280 - - - 760,500 (2,798,825) (2,671,062) (2,506,166) (1,930,078) (2,304,726) (1,921,361) (1,680,030) 9,084,241 9,039,342 8,329,814 7,729,194 6,750,731 7,253,937 4,403,736 111,171,316 102,131,974 93,802,160 86,072,966 79,322,235 72,068,298 67,664,562 120,255,557 111,171,316 102,131,974 93,802,160 86,072,966 79,322,235 72,068,298 3,322,051 3,212,690 2,992,110 2,682,629 2,595,919 2,425,455 2,283,310 1,829, 612 1,773,541 1,673,450 1,520,518 1,480,965 1,409,008 1,340,870 7,731,319 13,337,326 (2,598,044) 10,284,603 4,588,256 97,252 3,463,018 (2,798,825) (2,671,062) (2,506,166) (1,930,078) (2,304,726) (1,921,361) (1,680,030) (49,969) (75,264) (50,164) (53,258) (51,781) (59,224) (36,150) (1,950) (2,262) (2,623) (2,699) (2,790) (2,925) (2,972) 10,032,238 15,574,969 (491,437) 12,501,715 6,305,843 1,948,205 5,368,046 101,733,886 86,158,917 86,650,354 74,148,639 67,842,796 65,894,591 60,526,545 111,766,124 101,733,886 86,158,917 86,650,354 74,148,639 67,842,796 65,894,591 $ 8,489,433 $ 9,437,430 $ 15,973,057 $ 7,151,806 $ 11,924,327 $ 11,479,439 $ 6,173,707 92.94% $ 26,137,309 32.48% 91.51 % $ 25,334,408 37.25% 84.36% $ 23, 710, 761 67.37% 92.38% $ 21,721,689 32.92% 86.15% $ 21,156,637 56.36% 85.53% $ 20,113,150 57.07% 91.43% $ 19,154,225 32.23% • • City of Southlake, Texas Schedule of Pension Contributions Texas Municipal Retirement System Last Ten Fiscal Years Actuarially determined contribution Contribution in relation of the actuarially determined contribution Contribution deficiency (excess) Covered payroll Contributions as a percentage of covered payroll Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2024 2023 2022 2021 $ 4,105,607 $ 3,792,064 $ 3,547,858 $ 3,244,987 4,151, 701 3,879,580 3,610,307 3,297,682 $ (46,094) $ (87,516) $ (62,449) $ (52,695) $ 33,106, 641 $ 31, 070, 964 $ 28, 738, 669 $ 26,156, 402 12.54% 12.49% 12.56% 12.61 Exhibit A-5 Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2020 2019 2018 2017 2016 2015 $ 3,131,667 $ 3,101,504 $ 2,829,615 $ 2,580,380 $ 2,508,791 $ 2,439,627 3,201,451 3,182,749 2,894,219 2,654,303 2,632,209 2,439,627 $ (69,784) $ (81,245) $ (64,604) $ (73,923) $ (123,418) $ - $ 25,202,798 $ 25,156,408 $ 23,132,172 $ 21,525,552 $ 21,551,426 $ 20,034,712 12.70% 12.65% 12.51 % 12.33% 12.21 % 12.18% IN City of Southlake, Texas Schedule of Changes in Net OPEB Liability (Asset) and Related Ratios Southlake Net OPEB Liability (Asset) for Health Insurance Last Seven Measurement Years Total OPEB liability (asset): Service cost Interest Changes of benefit terms Difference between expected and actual experience Change in assumptions Benefit payments, including refunds of employee contributions Net change in total OPEB liability (asset) Total OPEB liability (asset) - beginning Total OPEB liability (asset) - ending (a) Plan fiduciary net position: Contributions - employer Net investment income Benefit payments, including refunds of employee contributions Administrative expense Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) Net OPEB liability (asset)- ending (a) - (b) Plan fiduciary net position as a percentage of total OPEB liability (asset) Covered payroll Net OPEB liability (asset) as a percentage of covered payroll Measurement Measurement Measurement Year Year Year 2023 2022 2021 $ 128,267 $ 120,612 $ 80,561 95,803 92,533 97,367 (16,206) (163,080) 6,855 (150,440) 89,089 (217,142) (69,818) (85,370) (83,319) (12,394) 53,784 (115,678) 1,886,828 1,833,044 1,948,722 1,874,434 1,886,828 1,833,044 209,818 225,370 323,319 269,081 (343,355) 117,346 (69,818) (85,370) (83,319) (8,145) (7,980) (7,918) 400,936 (211,335) 349,428 2,339,116 2,550,451 2,201,023 2,740,052 2,339,116 2,550,451 $ (865,618) $ (452,288) $ (717,407) 146.18% 123.977o 139.14% $ 32,671,598 $ 30,420,420 $ 27,287,214 -2.65% -1.49% -2.63% Note: Only seven years of data is presented in accordance with GASB #75. Additional years' information will be displayed as it becomes available. HIM, Exhibit A-6 Measurement Measurement Measurement Measurement Year Year Year Year 2020 2019 2018 2017 $ 73,365 $ 66,950 $ 53,239 $ 55,061 114,848 108,953 87,706 84,496 (337,496) (1,262) 16,549 (3,965) 87,222 8,001 297,855 - (81,362) (75,967) (75,843) (76,779) (143,423) 106,675 379,506 58,813 2,092,145 1,985,470 1,605,964 1,547,151 1,948,722 2,092,145 1,985,470 1,605,964 321,362 165,967 172,843 116,779 201,804 207,145 (38,598) 121,500 (81,362) (75,967) (75,843) (76,779) (6,098) (5,348) (4,389) (3,483) 435,706 291,797 54,013 158,017 1,765,317 1,473,520 1,419,507 1,261,490 2,201,023 1,765,317 1,473,520 1,419,507 $ (252,301) $ 326,828 $ 511,950 $ 186,457 112.95% 84.38% 74.22% 88.39% $ 26,994,043 $ 26,143,074 $ 22,468,011 $ 20,607,676 -0.93% 1.25% 2.28% 0.9070 103 City of Southlake, Texas Schedule of Contributions Southlake Net OPEB Liability (Asset) for Health Insurance Last Seven Fiscal Years Actuarially determined contribution Contribution in relation of the actuarially determined contribution Contribution deficiency (excess) Covered payroll Contributions as a percentage of covered payroll Fiscal Year Fiscal Year Fiscal Year 2024 2023 2022 $ 41,843 $ 39,085 $ 144,728 209,480 21 1, 408 229,678 $ (167,637) $ (172,323) $ (84,950) $ 33,925,759 $ 31,894,347 $ 29,572,038 0.62% 0.66% 0.78% Note: The schedule is intended to show information for 10 years. Additional years will be displayed as they become available. 104 Exhibit A-7 Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2021 2020 2019 2018 $ 142,458 $ 140,254 $ 89,240 $ 89,240 332,082 301,318 177,639 168,167 $ (189,624) $ (161,064) $ (88,399) $ (78,927) $ 25,882,453 $ 24,988,882 $ 24,537,271 $ 23,132,172 1.28% 1.21 % 0.72% 0.73% 105 City of Southlake, Texas Schedule of Changes in the Total OPEB Liability and Related Ratios Texas Municipal Retirement System - Supplemental Death Benefits Last Seven Measurement Years Total OPEB liability: Service cost I nterest Changes of benefit terms Difference between expected and actual experience Change in assumptions Contributions - employer Net change in total pension liability Total OPEB liability- beginning Total OPEB liability - ending (a) Covered employee payroll Net pension liability as a percentage of covered employee payroll Measurement Measurement Measurement 2023 2022 2021 $ 35,030 $ 79,856 $ 66,103 32,232 21,624 21,646 (12,044) 26,255 (26,578) 44,005 (467,745) 38,907 (19,108) (14, 788) (13,221) 80,115 (354,798) 86,857 787,897 1,142,695 1,055,838 $ 868,012 $ 787,897 $ 1,142,695 $ 31,845,904 $ 29,576,118 26,441,273 2.73% 2.66% 4.32% Note: The schedule is intended to show information for 10 years. Additional years will be displayed as they become available. W. Exhibit A-8 Measurement Measurement Measurement Measurement 2020 2019 2018 2017 $ 52,275 $ 38,002 $ 42,679 $ 34,755 24,403 25,388 23,155 21,919 (37,301) (13,1 12) (18,599) - 156,506 149,523 (56,421) 62,407 (2,614) (5,067) (2,371) (4,344) 193,269 194,734 (11,557) 114,737 862,569 667,835 679,392 $ 564,655 $ 1,055,838 $ 862,569 $ 667,835 $ 679,392 26,137, 309 25, 334, 408 23, 710, 761 $ 21, 721, 689 4.04% 3.40% 2.82% 3.13% 107 City of Southlake, Texas Schedule of OPEB Contributions Texas Municipal Retirement System - Supplemental Death Benefits Last Seven Fiscal Years Fiscal Year Fiscal Year Fiscal Year 2024 2023 2022 Actuarially determined contribution $ 19,864 $ 15,327 $ 21,326 Contribution in relation of the actuarially determined contribution 19,864 15,327 21,326 Contribution deficiency (excess) $ - $ - $ - Covered employee payroll $ 33,106,641 $ 31,070,964 $ 28,738,669 Contributions as a percentage of covered employee payroll 0.06% 0.05% Note: The schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Note: There are no assets accumulated in a trust that meet the criteria of GASB codification P22.101 or P52.101 to pay related benefits for the plan. 0.07% E Exhibit A-9 Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2021 2020 2019 2018 $ 10,272 $ 3,206 $ 3,965 $ 2,846 10,272 3,206 3,965 2,846 $ 26,156, 403 $ 25, 202, 798 $ 25,156, 408 $ 23,132,172 0.04% 0.01 % 0.02% 0.01 m City of Southlake, Texas Exhibit A-10 Condition Rating of Street System September 30, 2024 City Required 2024 2023 2022 Minimum International Roughness Index (IRI) 79.7 73.6 69.8 Pavement Condition Index (PCI) 80.0 81.2 78.6 Pavement Quality Index (PQI) 81.2 81.8 79.3 78.0 Needed Actual Difference 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) 2023 1,900,000 1,982,896 82,896 2024 2,500,000 911,077 (1,588,923) 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. are Combining and Individual Fund Financial Statements and Schedules Major Governmental Funds General Obligation Debt Service Fund The General Obligation Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general obligation bonds and interest from governmental resources. OWN City of Southlake, Texas General Obligation Debt Service Fund Budgetary Comparison Schedule (GAAP Basis) For the Year Ended September 30, 2024 REVENUES Ad valorem taxes, penalties, and interest Investment income (losses) Total revenues EXPENDITURES Debt Service Principal Interest Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES: Transfers from other funds Total other financing sources Net change in fund balance Fund balance, beginning of year FUND BALANCE, END OF YEAR BUDGETED AMOUNTS ORIGINAL FINAL ACTUAL $ 5,862,343 $ 5,697,043 $ 5,690,222 Exhibit B-1 VARIANCE WITH FINAL BUDGET - POSITIVE (NEGATIVE) $ (6,821) 5,957,343 5,827,043 5,858,652 31,609 5,656,358 5,771,358 5,771,358 - 1,112, 781 1,221,556 1,209, 680 11,876 6,769,139 6,992,914 6,981,038 11,876 (811,796) (1,165,871) (1,122,386) 43,485 397,341 397,341 397,341 - 397,341 397,341 397,341 - (414,455) (768,530) (725,045) 43,485 2,993,263 2,993,263 2,993,263 - $ 2,578,808 $ 2,224,733 $ 2,268,218 $ 43,485 113 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. Tax Increment Financing District - 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. Disaster Recovery - Established to account for grant awards to provide disaster relief. 114 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). 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. 115 City of Southlake, Texas Nonmajor Governmental Funds Combining Balance Sheet September 30, 2024 ASSETS Cash and cash equivalents Receivables, net of allowances for uncollectibles: Taxes Interest Other TOTAL ASSETS LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Accrued liabilities Retainage payable Total liabilities DEFERRED INFLOWS OF RESOURCES Unavailable resources FUND BALANCES Restricted Committed Total fund balances TOTAL LIABILITIES AND FUND BALANCES SPECIAL REVENUE Parks Crime and Parks Control Police Recreation Dedication District $ 62,738 $ 230,744 $ 2,029,696 $ 5,061,386 - - - 415,282 65 241 2,118 5,230 $ 62,803 $ 230,985 $ 2,031,814 $ 5,509,676 $ 7,984 $ - 7,984 - $ $ 1,856 109,547 - 111,403 - 22,877 54,819 230,985 - 5,375,396 - 2,031,814 - 54,819 230,985 2,031,814 5,375,396 $ 62,803 $ 230,985 $ 2,031,814 $ 5,509,676 Exhibit C-1 (Page 1 of 2) SPECIAL REVENUE Storm Hotel Water Court Court Municipal Red Light Occupancy Utility Security Technology Jury Library Camera $ 4,619,972 $ 1,944,678 $ 454,888 $ 324,405 $ 2,540 $ 21,381 $ 172,666 255,881 - - - - - - 4,846 2,033 478 338 3 22 180 1,000 223,839 - - - - - $ 4,881,699 $ 2,170, 550 $ 455,366 $ 324,743 $ 2,543 $ 21,403 $ 172,846 646,498 $ 6,435 $ - $ 15,605 $ $ $ 45,000 11,084 13,585 1,443 - - 657,582 20,020 1,443 15,605 - 45,000 1,000 - - - - - 4,223,117 2,150,530 453,923 309,138 2,543 21,403 127,846 4,223,117 2,150,530 453,923 309,138 2,543 21,403 127,846 $ 4,881,699 $ 2,170,550 $ 455,366 $ 324,743 $ 2,543 $ 21,403 $ 172,846 117 City of Southlake, Texas Nonmajor Governmental Funds Combining Balance Sheet - Continued September 30, 2024 SPECIAL REVENUE Tax Commercial Increment Oil and Vehicle Truancy Financing Disaster Gas Enforcement Prevention District Recovery ASSETS Cash and cash equivalents $ 60,309 $ 161,795 $ 154,729 $ 11,578,974 $ Receivables, net of allowances for uncollectibles: Taxes - - - - Interest 63 163 161 12,073 Other - 8,607 TOTAL ASSETS $ 60,372 $ 161,958 $ 154,890 $ 11,599,654 $ LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ - $ $ $ 8,121 $ Accrued liabilities - 7,423 17,917 Retainage payable - - - Total liabilities 7,423 26,038 DEFERRED INFLOWS OF RESOURCES Unavailable resources - - - 8,607 FUND BALANCES Restricted - 154,535 154,890 11,565,009 Committed 60,372 - - TOTAL FUND BALANCES 60,372 154,535 154,890 11,565,009 TOTAL LIABILITIES AND FUND BALANCES $ 60,372 $ 161,958 $ 154,890 $ 11,599,654 $ Exhibit C-1 (Page 2 of 2) DEBT SERVICE CAPITAL PROJECTS Formerly Southlake Community Non -Major Community Parks Enhancement Southlake Parks Enhancement Crime Development Development Development Development Control Corporation Corporation Corporation Corporation District TOTAL NON -MAJOR GOVERNMENTAL FUNDS $ 2,122,341 $ 658,608 $ $ 2,406,505 $ 2,106,339 $ 34,174,694 - - - - 671,163 2,214 687 2,511 2,200 35,626 - - - - 261,224 $ 2,124,555 $ 659,295 $ $ 2,409,016 $ 2,108,539 $ 35,142,707 $ $ $ $ $ 449,899 $ 1,181,398 - 160,999 48,035 48,035 497,934 1,390,432 - 32,484 2,124,555 659,295 2,409,016 1,610,605 31,627,605 - - - - 2,092,186 2,124,555 659,295 2,409,016 1,610,605 33,719,791 $ 2,124,555 $ 659,295 $ $ 2,409,016 $ 2,108,539 $ 35,142,707 ME City of Southlake, Texas Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended September 30, 2024 REVENUES Ad valorem taxes, penalties and interest Municipal sales tax Licenses, permits and fees Fines and forfeitures Charges for services Grants Investment income (losses) Contributions Miscellaneous Total revenues EXPENDITURES Current: General government Support services Municipal court Public safety Police services Fire services Public works Streets and drainage Cultural and recreation Community services Parks and recreation Library services Promotion of culture and tourism Intergovernmental Capital outlay Debt service: Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Issuance of subscriptions Transfers from other funds Transfers to other funds Total other financing sources (uses) Net change in fund balances Fund balances, beginning of year, as previously presented Change within financial reporting entity (nonmajor to major) Fund balances, as restated FUND BALANCES, END OF YEAR SPECIAL REVENUE Police Parks and Recreation Parks Dedication Crime Control District - 2,600,691 - 342,310 590 - 3,427 11,493 88,135 250,002 - 34,310 - - 4,327 - - 8,344 45,803 430,445 2,850,693 37,809 2,200,980 - 31,327 - - - 32,547 4,300 - 157,600 - - - 14,562 42,109 31,327 - 2,405,689 (33,765) 14,476 430,445 445,004 - (445,900) - - (445, 900) (33,765) 14,476 430,445 (896) 88,584 216,509 1,601,369 5,376,292 00,004 LIO,JVY I,OU I,JOY J,3/O,LYL $ 54,819 $ 230,985 $ 2,031,814 $ 5,375,396 120 Exhibit C-2 (Page 1 of 2) SPECIAL REVENUE Hotel Occupancy Storm Water Utility Court Security Court Technology Municipal Jury Library Red Light Camera 2,391,969 - - - 31,389 25,769 635 - 1,613,076 185,121 92,412 22,827 15,337 2 1,039 10,447 - - - - 8,719 - 11,919 - - - - - - 2,589,009 1,705,488 54,216 41,106 637 9,758 10,447 - - 48,844 22,364 - - - - - - - - - 122,099 - 602,947 - - - 7,889 871,217 - - 43,458 - 19,935 - 2,306 1,053 - - - - 935,663 602,947 51,150 22,364 - 7,889 122,099 1,653,346 1,102,541 3,066 18,742 637 1,869 (111,652) 43,458 - - - - - (658,850) (1,114,585) - - - - (615,392) (1,114,585) - - - - 1,037,954 (12,044) 3,066 18,742 637 1,869 (111,652) 3,185,163 2,162,574 450,857 290,396 1,906 19,534 239,498 450,857 3,185,163 2,162,574 290,396 1,906 19,534 239,498 $ 4,223,117 $ 2,150,530 $ 453,923 $ 309,138 $ 2,543 $ 21,403 $ 127,846 121 City of Southlake, Texas Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Continued For the Year Ended September 30, 2024 SPECIAL REVENUE REVENUES Ad valorem taxes, penalties and interest $ Municipal sales tax Licenses, permits and fees Fines and forfeitures Charges for services Grants Investment income (losses) Contributions Miscellaneous Total revenues EXPENDITURES Current: General government Support services Municipal court Public safety Police services Fire services Public works Streets and drainage Cultural and recreation Community services Parks and recreation Library services Promotion of culture and tourism Intergovernmental Capital outlay Debt service: Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures 2,924 (151,452) 38,360 3,217,814 OTHER FINANCING SOURCES (USES) Issuance of subscriptions Transfers from other funds Transfers to other funds Total other financing sources (uses) Net change in fund balances Fund balances, beginning of year, as previously presented 57,448 Tax Commercial Increment Oil and Vehicle Truancy Financing Disaster Gas Enforcement Prevention District Recovery $ $ $ 10,470,200 $ 11,521 31,603 - - - - 7,060 2,924 9,509 6,757 474,432 - 38,360 7,060 2,924 21,030 10,944,632 - - 529,694 172,482 347,173 - - - - 7,060 - - 6,849,951 - 172,482 7,726,818 7,060 100,000 100,000 - - 2,924 (51,452) 38,360 3,217,814 205,987 116,530 8,347,195 Change within financial reporting entity (nonmajor to major) - - - - Fund balances, as restated 57,448 205,987 116,530 8,347,195 FUND BALANCES, END OF YEAR $ 60,372 $ 154,535 $ 154,890 $ 11,565,009 $ 122 DEBT SERVICE CAPITAL PROJECTS Exhibit C-2 (Page 2 of 2) Southlake Parks Development Corporation Community Enhancement Development Corporation Formerly Nonmajor Southlake Parks Development Corporation Community Enhancement Development Corporation Crime Control District TOTAL NONMAJOR GOVERNMENTAL FUNDS $ $ $ $ $ $ 10,470,200 4,992,660 342,310 101,507 - 1,613,076 - 7,060 106,554 40,677 117,635 123,445 1,562,175 - - - - 43,029 - - - - 16,246 106,554 40,677 117,635 123,445 19,148,263 - - - 529,694 - - - 71,208 - - - - 2,880,543 - - - 7,060 - - - - 602,947 - - - - 31,327 - - - - 7,889 - - - - 871,217 - - - - - 6,849,951 - - - 212,106 1,467,906 1,756,017 2,409,000 1,620,000 - - 4,213,141 378,565 827,706 - - - 1,221,886 2,787,565 2,447,706 - 212,106 1,467,906 19,042,880 (2,681,011) (2,407,029) - (94,471) (1,344,461) 105,383 - - - - - 43,458 2,782,576 2,450,556 - 241,000 334,500 5,908,632 - - - - - (2,219,335) 2,782,576 2,450,556 - 241,000 334,500 3,732,755 101,565 43,527 - 146,529 (1,009,961) 3,838,138 2,022,990 615,768 20,845,367 2,262,487 2,620,566 50,727,020 - (20,845,367) (20,845,367) 2,022,990 615,768 - 2,262,487 2,620,566 29,881,653 $ 2,124, 555 $ 659,295 $ - $ 2,409,016 $ 1,610,605 $ 33, 719, 791 123 City of Southlake, Texas Police Special Revenue Fund Budgetary Comparison Schedule (GAAP Basis) For the Year Ended September 30, 2024 Exhibit C-3 VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Fines and forfeitures $ - $ 590 $ 590 $ - Investment income (losses) 1,200 2,600 3,427 827 Miscellaneous - 4,327 4,327 - Total revenues 1,200 7,517 8,344 827 EXPENDITURES Current: Public safety Police services 57,426 57,426 37,809 19,617 Debt service: Interest and fiscal charges - - 4,300 (4,300) Total expenditures 57,426 57,426 42,109 15,317 Excess (deficiency) of revenues over (under) expenditures (56,226) (49,909) (33,765) 16,144 Net change in fund balances (56,226) (49,909) (33,765) 16,144 Fund balances, beginning of year 88,584 88,584 88,584 - FUND BALANCES, END OF YEAR $ 32,358 $ 38,675 $ 54,819 $ 16,144 124 City of Southlake, Texas Parks and Recreation Special Revenue Fund Budgetary Comparison Schedule (GAAP Basis) For the Year Ended September 30, 2024 REVENUES Investment income (losses) Contributions Total revenues EXPENDITURES Cultural and recreation Community services Total expenditures Excess (deficiency) of revenues over (under) expenditures Net change in fund balances Fund balances, beginning of year FUND BALANCES, END OF YEAR Exhibit C-4 VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) $ 4,300 $ 8,000 $ 11,493 $ 3,493 66,500 25,000 34,310 9,310 70,800 33,000 45,803 12,803 87,500 87,500 31,327 87,500 87,500 31,327 56,173 56,173 (16,700) (54,500) 14,476 68,976 (16,700) (54,500) 14,476 68,976 216,509 216,509 216,509 - $ 199,809 $ 162,009 $ 230,985 $ 68,976 125 City of Southlake, Texas Parks Dedication Special Revenue Fund Budgetary Comparison Schedule (GAAP Basis) For the Year Ended September 30, 2024 REVENUES: Licenses, permits, and fees Investment income (losses) Total revenues Net change in fund balance Fund balances, beginning of year FUND BALANCES, END OF YEAR Exhibit C-5 VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) 90,000 $ 293,300 $ 342,310 $ 49,010 30,000 60,000 88,135 28,135 120,000 353,300 430,445 77,145 120,000 353,300 430,445 77,145 1,601,369 1,601,369 1,601,369 - $ 1,721,369 $ 1,954,669 $ 2,031,814 $ 77,145 126 City of Southlake, Texas Crime Control District Special Revenue Fund Budgetary Comparison Schedule (GAAP Basis) For the Year Ended September 30, 2024 Exhibit C-6 VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Municipal sales tax $ 2,424,000 $ 2,600,000 $ 2,600,691 $ 691 Investment income (losses) 95,000 185,000 250,002 65,002 Total revenues 2,519,000 2,785,000 2,850,693 65,693 EXPENDITURES: Public safety Police services 2,217,238 2,234,920 2,200,980 33,940 Capital outlay - - 32,547 (32,547) Debt service: Principal retirement - - 157,600 (157,600) Interest and fiscal charges - - 14,562 (14,562) Total expenditures 2,217,238 2,234,920 2,405,689 (170,769) Excess (deficiency) of revenues over (under) expenditures 301,762 550,080 445,004 (105,076) OTHER FINANCING SOURCES (USES): Transfers to other funds (435,260) (445,900) (445,900) - Total other financing (uses) (435,260) (445,900) (445,900) - Net change in fund balance (133,498) 104,180 (896) (105,076) Fund balances, beginning of year 5,376,292 5,376,292 5,376,292 - FUND BALANCES, END OF YEAR $ 5,242,794 $ 5,480,472 $ 5,375,396 $ (105,076) 127 City of Southlake, Texas Hotel Occupancy Special Revenue Fund Budgetary Comparison Schedule (GAAP Basis) For the Year Ended September 30, 2024 Exhibit C-7 VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Municipal sales tax $ 2,090,500 $ 2,290,000 $ 2,391,969 $ 101,969 Investment income (losses) 55,000 125,000 185,121 60,121 Miscellaneous revenue - - 11,919 11,919 Total revenues 2,145,500 2,415,000 2,589,009 174,009 EXPENDITURES: Promotion of culture and tourism 1,143,044 1,143,044 871,217 271,827 Capital outlay - - 43,458 (43,458) Debt service: Principal retirement - - 19,935 (19,935) Interest and fiscal charges - - 1,053 (1,053) Total expenditures 1,143,044 1,143,044 935,663 207,381 Excess (deficiency) of revenues over (under) expenditures 1,002,456 1,271,956 1,653,346 381,390 OTHER FINANCING USES: Issuance of subscriptions - - 43,458 43,458 Transfers to other funds (607,645) (658,850) (658,850) - Total other financing (uses) (607,645) (658,850) (615,392) 43,458 Net change in fund balance 394,811 613,106 1,037,954 424,848 Fund balances, beginning of year 3,185,163 3,185,163 3,185,163 - FUND BALANCES, END OF YEAR $ 3,579,974 $ 3,798,269 $ 4,223,117 $ 424,848 City of Southlake, Texas Storm Water Utility Special Revenue Fund Budgetary Comparison Schedule (GAAP Basis) For the Year Ended September 30, 2024 REVENUES: Charges for service Investment income (losses) Total revenues EXPENDITURES: Public works Streets and drainage Excess revenues over expenditures OTHER FINANCING USES: Transfers to other funds Net change in fund balance Fund balances, beginning of year FUND BALANCES, END OF YEAR BUDGETED AMOUNTS ORIGINAL FINAL $ 1,611,300 $ 1,615,100 $ 40,000 66,000 Exhibit C-8 VARIANCE WITH FINAL BUDGET - POSITIVE ACTUAL (NEGATIVE) 1,613,076 $ (2,024) 92,412 26,412 1,651,300 1,681,100 1,705,488 24,388 609,912 609,912 602,947 6,965 1,041,388 1,071,188 1,102,541 31,353 (1,113,393) (1,114,585) (1,114,585) - (72,005) (43,397) (12,044) 31,353 2,162,574 2,162,574 2,162,574 - $ 2,090,569 $ 2,119,177 $ 2,150,530 $ 31,353 129 City of Southlake, Texas Court Security Special Revenue Fund Budgetary Comparison Schedule (GAAP Basis) For the Year Ended September 30, 2024 Exhibit C-9 VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Fines and forfeitures $ 23,000 $ 25,000 $ 31,389 $ 6,389 Investment income (losses) 9,000 16,000 22,827 6,827 Total revenues 32,000 41,000 54,216 13,216 EXPENDITURES General government Municipal court 80,520 80,100 48,844 31,256 Debt service: Principal retirement - - 2,306 (2,306) Total expenditures 80,520 80,100 51,150 28,950 Excess (deficiency) of revenues over (under) expenditures (48,520) (39,100) 3,066 42,166 Net change in fund balance (48,520) (39,100) 3,066 42,166 Fund balances, beginning of year 450,857 450,857 450,857 - FUND BALANCES, END OF YEAR $ 402,337 $ 411,757 $ 453,923 $ 42,166 130 City of Southlake, Texas Court Technology Special Revenue Fund Budgetary Comparison Schedule (GAAP Basis) For the Year Ended September 30, 2024 Exhibit C-10 VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Fines and forfeitures $ 20,000 $ 22,000 $ 25,769 $ 3,769 Investment income (losses) 6,500 11,000 15,337 4,337 Total revenues 26,500 33,000 41,106 8,106 EXPENDITURES General government Municipal court 26,530 27,160 22,364 4,796 Excess revenues over expenditures (30) 5,840 18,742 12,902 Net change in fund balance (30) 5,840 18,742 12,902 Fund balances, beginning of year 290,396 290,396 290,396 - FUND BALANCES, END OF YEAR $ 290,366 $ 296,236 $ 309,138 $ 12,902 131 City of Southlake, Texas Library Special Revenue Fund Budgetary Comparison Schedule (GAAP Basis) For the Year Ended September 30, 2024 REVENUES Investment income (losses) Contributions Total revenue EXPENDITURES Cultural and recreation Library services Excess (deficiency) of revenues over (under) expenditures Net change in fund balance Fund balances, beginning of year FUND BALANCES, END OF YEAR BUDGETED AMOUNTS ORIGINAL FINAL $ 300 $ 700 4,000 8,500 Exhibit C-I I VARIANCE WITH FINAL BUDGET - POSITIVE ACTUAL (NEGATIVE) $ 1,039 $ 339 8,719 219 4,300 9,200 9,758 558 8,000 8,000 7,889 111 (3,700) 1,200 1,869 669 (3,700) 1,200 1,869 669 19,534 19,534 19,534 - $ 15,834 $ 20,734 $ 21,403 $ 669 132 City of Southlake, Texas Red Light Camera Special Revenue Fund Budgetary Comparison Schedule (GAAP Basis) For the Year Ended September 30, 2024 Exhibit C-12 VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Investment income (losses) $ 1,500 $ 8,000 $ 10,447 $ 2,447 EXPENDITURES: Public safety Police services 126,205 126,205 122,099 4,106 Excess (deficiency) of revenues (124,705) (118,205) (111,652) 6,553 over (under) expenditures Net change in fund balance (124,705) (118,205) (111,652) 6,553 Fund balances, beginning of year 239,498 239,498 239,498 - FUND BALANCES, END OF YEAR $ 114,793 $ 121,293 $ 127,846 $ 6,553 133 City of Southlake, Texas Commercial Vehicle Enforcement Budgetary Comparison Schedule (GAAP Basis) For the Year Ended September 30, 2024 REVENUES Fines and forfeitures Investment income (losses) Total revenues EXPENDITURES Public safety Police services Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES Transfers from other funds Total other financing sources Net change in fund balance Fund balances, beginning of year FUND BALANCES, END OF YEAR BUDGETED AMOUNTS ORIGINAL FINAL $ 25,000 $ 29,500 15,000 $ 7,000 Exhibit C-13 VARIANCE WITH FINAL BUDGET - POSITIVE ACTUAL (NEGATIVE) 11,521 $ (3,479) 9,509 2,509 21,030 (970) 174,750 174,750 172,482 2,268 (145,250) (152,750) (151,452) 1,298 100,000 100,000 100,000 - 100,000 100,000 100,000 - (45,250) (52,750) (51,452) 1,298 205,987 205,987 205,987 - $ 160,737 $ 153,237 $ 154,535 $ 1,298 134 City of Southlake, Texas Tax Increment Financing District Special Revenue Fund Budgetary Comparison Schedule (GAAP Basis) For the Year Ended September 30, 2024 BUDGETED AMOUNTS Exhibit C-14 VARIANCE WITH FINAL BUDGET - POSITIVE ACTUAL (NEGATIVE) REVENUES Ad valorem taxes, penalties and interest $ 9,562,848 $ 10,470,200 $ 10,470,200 $ - Investment income (losses) 160,000 300,000 474,432 174,432 Total revenues 9,722,848 10,770,200 10,944,632 174,432 EXPENDITURES General government: Support services 565,453 565,453 529,694 35,759 Public safety: Police services 397,446 397,446 347,173 50,273 Intergovernmental 6,256,730 6,849,951 6,849,951 - Total expenditures 7,219,629 7,812,850 7,726,818 86,032 Excess of revenues over expenditures 2,503,219 2,957,350 3,217,814 260,464 Net change in fund balance 2,503,219 2,957,350 3,217,814 260,464 Fund balance, beginning of year 8,347,195 8,347,195 8,347,195 - FUND BALANCE, END OF YEAR $ 10,850,414 $ 11,304,545 $ 11,565,009 $ 260,464 135 City of Southlake, Texas Exhibit C-15 Southlake Parks Development Corporation Debt Service Fund Budgetary Comparison Schedule (GAAP Basis) For the Year Ended September 30, 2024 VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Investment income (losses) $ 69,000 $ 76,000 $ 106,554 $ 30,554 EXPENDITURES: Debt service: Principal retirement 2,409,000 2,409,000 2,409,000 - Interest and fiscal charges 379,576 379,576 378,565 1,011 Total expenditures 2,788,576 2,788,576 2,787,565 1,011 Excess (deficiency) of revenues over (under) expenditures (2,719,576) (2,712,576) (2,681,011) 31,565 OTHER FINANCING SOURCES: Transfers from other funds 2,782,576 2,782,576 2,782,576 - Total other financing sources 2,782,576 2,782,576 2,782,576 - Net change in fund balance 63,000 70,000 101,565 31,565 Fund balances, beginning of year 2,022,990 2,022,990 2,022,990 - FUND BALANCES, END OF YEAR $ 2,085,990 $ 2,092,990 $ 2,124,555 $ 31,565 136 City of Southlake, Texas Exhibit C-16 Community Enhancement Development Corporation Debt Service Fund Budgetary Comparison Schedule (GAAP Basis) For the Year Ended September 30, 2024 VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Investment income (losses) $ 35,000 $ 35,000 $ 40,677 $ 5,677 EXPENDITURES: Debt service: Principal retirement 1,620,000 1,620,000 1,620,000 - Interest and fiscal charges 830,556 830,556 827,706 2,850 TOTAL EXPENDITURES 2,450,556 2,450,556 2,447,706 2,850 Excess (deficiency) of revenues over (under) expenditures (2,415,556) (2,415,556) (2,407,029) 8,527 OTHER FINANCING SOURCES: Transfers from other funds 2,450,556 2,450,556 2,450,556 - Total other financing sources 2,450,556 2,450,556 2,450,556 - Net change in fund balance 35,000 35,000 43,527 8,527 Fund balances, beginning of year 615,768 615,768 615,768 - FUND BALANCES, END OF YEAR $ 650,768 $ 650,768 $ 659,295 $ 8,527 137 W-1 Statistical Section 139 140 City of Southlake, Texas Statistical Section (Unaudited) 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. Contents Page FinancialTrend......................................................................................................................................................142 These tables contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. RevenueCapacity...............................................................................................................................................150 These tables contain information to help the reader assess the City's two most significant local revenue source, the property and sales taxes. DebtCapacity......................................................................................................................................................154 These tables present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information.......................................................................................................158 These tables offer economic and demographic indicators to help the reader understand the environment within which the City's financial activities take place. OperatingInformation.........................................................................................................................................160 These tables contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. Sources: Unless otherwise noted, the information in these tables is derived from the annual comprehensive financial reports for the relevant year. 141 City of Southlake, Texas Net Position by Component (Accrual Basis of Accounting) Last Ten Fiscal Years (Unaudited) Fiscal Year 2015 2016 2017 2018 Governmental activities Net investment in capital assets $ 366,796,228 $ 364,161,725 $ 385,506,389 $ 392,406,812 Restricted 13,624,164 11,589,350 49,850,439 28,492,591 Unrestricted 59,447,800 80,992,079 45,930,426 78,585,681 Total governmental activities net position $ 439,868,192 $ 456,743,154 $ 481,287,254 $ 499,485,084 Business -type activities Net investment in capital assets $ 78,143,445 $ 79,055,138 $ 82,251,014 $ 83,461,157 Restricted 3,151,309 6,817,038 7,804,197 8,980,312 Unrestricted 10,509,498 12,487,875 15,721,755 17,935,009 Total business -type activities net position $ 91,804,252 $ 98,360,051 $ 105,776,966 $ 110,376,478 Primary government Net investment in capital assets $ 444,939,673 $ 443,216,863 $ 467,757,403 $ 475,867,969 Restricted 16,775,473 18,406,388 57,654,636 37,472,903 Unrestricted 69,957,298 93,479,954 61,652,181 96,520,690 Total primary government al net position $ 531,672,444 $ 555,103,205 $ 587,064,220 $ 609,861,562 Source: Annual Comprehensive Financial Report 142 Table 1 Fiscal Year 2019 2020 2021 2022 2023 2024 $ 399,651,828 $ 415,945,257 $ 432,717,828 $ 444,246,656 $ 450,639,461 $ 472,883,752 32,690,100 25,518,844 39,870,051 99,360,585 121,858,264 111,948,381 87,753,906 96,924,423 95,211,152 62,641,199 66,478,023 88,137,949 $ 520,095,834 $ 538,388,524 $ 567,799,031 $ 606,248,440 $ 638,975,748 $ 672,970,082 $ 83,223,713 $ 76,271,158 $ 77,068,608 $ 77,774,937 $ 75,167,644 $ 74,231,905 6,215,686 10,555,032 10,966,728 9,877,167 8,464,094 11,659,020 21,579,170 29,619,463 36,831,318 45,903,642 62,370,816 70,801,660 $ 111,018, 569 $ 116, 445, 653 $ 124, 866, 654 $ 133, 555, 746 $ 146, 002, 554 $ 156, 692, 585 $ 482,875,541 $ 492,216,415 $ 509,786,436 $ 522,021,593 $ 525,807,105 $ 547,115,657 38,905,786 36,073,876 50,836,779 109,237,752 130,322,358 123,607,401 109, 333, 07 6 126, 543, 886 132, 042, 470 108, 544, 841 128, 848, 839 158, 939, 609 $ 631,114, 403 $ 654, 834,177 $ 692, 665, 685 $ 739, 804,186 $ 784, 978, 302 $ 829, 662, 667 143 City of Southlake, Texas Changes in Net Position (Accrual Basis of Accounting) Last Ten Fiscal Years (Unaudited) Expenses Governmental activities: General government Public safety Public works Culture and recreation Promotion of culture and tourism Interest on long-term debt Total governmental activities expenses Business -type activities: Water and sewer Total business -type activities expenses Total primary government expenses Program Revenues Governmental activities: Charges for Services: General government Public safety Public works Culture and recreation Operating grants and contributions Capital grants and contributions Total governmental activities program revenues Business -type activities: Charges for services: Water and sewer Capital grants and contributions Total business -type activities program revenues Total primary government program revenues Net (Expenses) Revenue Governmental activities Business -type activities Total primary government net expenses General Revenues and Other Changes in Net Position Governmental activities: General revenues: Property taxes Sales taxes Franchise taxes Investment income (losses) Gain (Loss) on sale of capital assets Miscellaneous Transfers Total governmental activities Business -type activities: Interest on investments Gain (Loss) on sale of capital assets Transfers Miscellaneous Total business -type activities Total primary government Change in Net Position Governmental activities Business -type activities Total primary government Source: Annual Comprehensive Financial Report Notes: The City started splitting out promotion of culture and tourism in 2024 Fiscal Year 2015 2016 2017 2018 $ 14,602,425 $ 12,851,787 $ 17,430,052 $ 18,255,444 18,176,698 19,300,590 21,179,963 23,962,971 9,762,184 11,950,671 8,979,020 10,040,453 9,311,006 10,655,763 11,780,022 12,775,020 2,528,113 3,005,359 3,834,897 3,047,221 54,380,426 57,764,170 63,203,954 68,081,109 26,692,373 24,741,428 24,703,007 29,068,434 26,692,373 24,741,428 24,703,007 29,068,434 $ 81,072,799 $ 82,505,598 $ 87,906,961 _t97,149,543 $ 2,309,861 $ 2,363,499 $ 2,262,247 $ 2,895,701 4,427,137 4,620,030 3,929,564 2,495,288 265,432 223,533 143,935 1,635,163 1,399,822 1,537,185 1,814,319 1,301,793 455,575 310,636 328,288 459,006 8,967,466 2,228,863 7,714,765 1,044,834 17,825,293 11,283,746 16,193,118 9,831,785 24,792,619 25,474,777 27,939,504 32,229,361 5,776,438 1,638,842 3,851,057 2,367,774 30,569,057 27,113,619 31,790,561 34,597,135 $ 48,394,350 $ 38,397,365 $ 47,983,679 $ 44,428,920 $ (36,555,133) $ (46,480,424) $ (47,010,836) $ (58,249,324) 3,876,684 2,372,191 7,087,554 5,528,701 $ (32,678,449) $ jAj, I 08,233L 923,282) $ (52,720,623) $ 33,176,285 $ 34,501,608 $ 37,705,796 $ 40,380,926 30,090,614 29,047,285 29,968,331 30,822,431 3,327,739 2,955,114 2,907,537 2,972,143 523,954 379,342 843,082 2,108,804 102,900 102,960 71,284 - 1,066,818 136,477 216,881 - 968,160 (3,767,400) (157,975) 1,211,036 69,256,470 63,355,386 71,554,936 77,495,340 112,967 94,837 167,068 320,473 23,100 317,276 350 - (968,160) 3,767,400 157,975 (1,211,036) 4,521 4,095 3,968 4,166 (827,572) 4,183,608 329,361 (886,397) $ 68,428,898 $ 67,538,994 $ 71,884,297 $ 76,608,943 $ 32,701,337 $ 16,874,962 $ 24,544,100 $ 19,246,016 3,049,112 6,555,799 7,416,915 4,642,304 $ 35,750,449 $ 23,430,761 $ 31,961,015 $ 23,888,320 144 Table 2 Fiscal Year 2019 2020 2021 2022 2023 2024 $ 20,014,583 $ 21,275,487 $ 20,990,841 $ 20,685,238 $ 26,292,171 $ 26,994,341 23,881,485 24,054,527 23,642,969 24,915,801 26,658,917 27,798,598 10,081,721 9,839,646 9,122,951 10,111,585 12,108,564 10,709,563 15,955,201 17,665,953 15,367,103 16,970,272 18,657,110 19,939,371 - - - - - 871,217 2,750,037 2,171,359 2,076,809 1,979,546 2,071,867 1,867,737 72,683,027 75,006,972 71,200,673 74,662,442 85,788,629 88,180,827 29,873,788 27,490,815 25,730,741 28,397,036 28,506,292 28,969,340 29,873,788 27,490,815 25,730,741 28,397,036 28,506,292 28,969,340 $ 102,556,815 $ 102,497,787 $ 96,931,414 $ 103,059,478 $ 114,294,921 $117,150,167 $ 2,498,549 $ 1,631,816 $ 1,733,148 $ 1,957,434 $ 1,712,925 $ 2,271,472 3,001,895 2,536,553 2,166,430 803,365 774,891 1,081,451 1,724,344 1,824,434 1,658,723 4,287,138 3,477,348 3,337,594 2,145,128 2,993,552 3,387,430 4,477,031 5,664,775 5,607,865 866,518 1,807,473 894,423 8,736,294 825,770 375,784 1,437,166 1,422,315 5,882,015 2,653,556 2,382,770 4,890,150 11,673,600 12,216,143 15,722,169 22,914,818 14,838,479 17,564,316 29,929,932 32,271,341 32,071,140 37,241,976 37,630,965 35,597,701 896,652 1,315,092 3,332,452 1,376,002 2,064,296 1,734,388 30,826,584 33,586,433 35,403,592 38,617,978 39,695,261 37,332,089 $ 42,500,184 $ 45,802,576 $ 51,125,761 $ 61,532,796 $ 54,533,740 $ 54,896,405 $ (61,009,427) $ (62,790,829) $ (55,478,504) $ (51,747,624) $ (70,950,150) $ (70,616,511) 952,796 6,095,618 9,672,851 10,220,942 11,188,969 8,362,749 $(60,056,631) $(56,695,211) $(45,805,653) $ (41,526,682) $ (59,761,181) $(62,253,762) $ 41,734,946 $ 41,973,780 $ 41,660,369 $ 41,392,861 $ 42,315,760 $ 43,315,203 31,868,204 32,119,114 38,461,312 43,723,490 47,917,152 44,830,166 3,114,117 2,811,573 2,671,726 2,988,874 3,656,895 3,445,059 3,247,401 1,721,876 101,746 (475,934) 7,934,301 11,116,664 - - - - 4,156 143,146 476,577 1,222,231 709,736 804,354 512,725 151,752 1,178,932 1,234,945 1,284,122 1,360,830 1,336,469 1,608,855 81,620,177 81,083,519 84,889,011 89,794,475 103,677,458 104,610,845 868,227 566,411 32,272 (171,020) 2,594,308 3,839,868 - - - - 96,269 (1,178,932) (1,234,945) (1,284,122) (1,360,830) (1,336,469) (1,608,855) (310,705) (668,534) (1,251,850) (1,531,850) 1,257,839 2,327,282 $ 81,309,472 $ 80,414,985 $ 83,637,161 $ 88,262,625 $ 104,935,297 $106,938,127 $ 20,610,750 $ 18,292,690 $ 29,410,507 $ 38,046,851 $ 32,727,308 $ 33,994,334 642,091 5,427,084 8,421,001 8,689,092 12,446,808 10,690,031 $ 21,252,841 $ 23,719,774 $ 37,831,508 $ 46,735,943 $ 45,174,116 $ 44,684,365 145 City of Southlake, Texas Fund Balances, Governmental Funds (Modified Accrual Basis of Accounting) Last Ten Fiscal Years (Unaudited) General Fund Nonspendable Committed for: Police expenditures Assigned for: Teen court expenditures Senior center expenditures Recycling Reforestation expenditures Public art Facility maintenance Economic investment Strategic initiatives Unassigned Total general fund All Other Governmental Funds* Fiscal Year 2015 2016 2017 2018 $ 27,826 $ 86,286 $ 57,997 $ 86,286 34,609 - 46,657 - 19,077 19,835 19,684 19,835 10,624 10,743 10,671 10,743 40,612 59,163 52,811 59,163 101,873 111,728 112,300 111,728 - - - 678,829 - - - 6,708,556 - - - 2,237,211 7,673,680 5,297,998 6,052,063 5,299,595 18, 230, 317 19, 762, 633 18, 745, 735 11,799,021 $ 26,138,618 $ 25,348,386 $ 25,097,918 $ 27,010,967 Nonspendable $ - $ - $ - $ 50,177 Restricted for: Debt service 11,057,196 9,005,985 8,029,607 7,750,782 Capital projects - - - - Municipal court expenditures 878,490 838,458 868,393 851,104 Reinvestment zone expenditures 4,010,195 3,851,783 1,954,971 923,093 Parks and recreation 41,949,791 72,654,652 78,664,646 40,726,831 Storm water - - - - Police expenditures - - - - Library expenditures - - - - Promotion of culture and tourism - - - - Committed for: Police expenditures 7,813,849 4,986,804 3,645,226 4,743,948 Parks and recreation 10,720,498 11,125,967 17,968,695 8,904,671 Oil and gas expenditures 53,168 53,227 53,404 53,719 Storm water expenditures 451,371 4,856,336 453,374 456,388 Library expenditures 8,832 7,132 7,432 8,338 Capital projects - - - 34,285,874 Assigned for: Capital projects - - - - Unassigned - - - - Total all other governmental funds $ 76,943,390 $107,380,344 $1 11,645,748 $ 98,704,748 Source: Annual Comprehensive Financial Report Notes: ° Includes encumbrances and prepaid items. * The City started splitting parks and recreation with storm water and promotion of culture and tourism in 2020 146 Table 3 Fiscal Year 2019 2020 2021 2022 2023 2024 $ 63,189 $ 40,839 $ 69,373 $ 401,529 $ 54,317 $ 44,905 20,427 20,693 20,721 20,882 21,862 23,161 10,938 11,064 11,074 11,042 11,486 12,061 66,253 70,395 76,458 138,291 70,977 77,363 63,030 35,150 54,847 96,012 153,918 160,358 835,991 500,819 364,046 441,984 610,439 539,053 7,222,995 8,813,795 9,351,441 10,064,326 11,843,299 12,934,258 2,282,718 3,525,280 2,870,637 2,950,994 3,225,478 3,541,789 7,585,671 10,603,712 15,096,120 20,306,807 15,383,080 13,189,926 12,517,340 14,022,976 15,810,846 14,681,556 17,594,609 17,019,733 $ 30,668,552 $ 37,644,723 $43,725,563 $ 49,113,423 $ 48,969,465 $ 47,542,607 8,419,008 7,102,145 5,594,579 5,751,585 5,632,021 5,052,068 - - - 26,395,656 34,698,804 24,660,776 847,247 739,828 775,437 835,268 859,689 920,494 2,925,977 4,999,895 5,641,893 6,663,970 8,347,195 11,565,009 24,372,567 9,381,019 24,792,059 47,632,465 58,345,188 55,441,867 - 1,789,612 1,255,873 1,936,358 2,162,574 2,150,530 - - - 7,791,993 8,530,927 7,323,201 - - - 14,604 19,534 21,403 - 1,834,337 2,089,422 2,653,697 3,185,163 4,223,1 17 5,254,694 5,256,684 6,549,013 1,169,498 1,601,369 2,031,814 8,815,413 11,121,825 1,793,351 55,266 57,448 60,372 54,754 55,424 55,541 - - - 465,180 - - - - - 9,528 11,323 12,725 - - - 44, 554, 528 45, 315, 086 44, 304, 341 - - - - - - 19,442,768 27,706,556 45,400,563 - (175,833) - - - - $ 95, 718,896 $ 87, 431, 345 $ 92, 864, 234 $ 120, 343,128 $ 151,146,468 $158, 851,214 147 City of Southlake, Texas Changes in Fund Balances, Governmental Funds (Modified Accrual Basis of Accounting) Last Ten Fiscal Years (Unaudited) REVENUES Ad valorem taxes, penalties and interest Franchise taxes Municipal sales tax and mixed beverage tax Licenses, permits and fees Charges for services Fines and forfeitures Intergovernmental revenue Capital recovery fees Investment income (losses) Contributions Miscellaneous Total revenues EXPENDITURES General government Public safety Public works Culture and recreation Promotion of culture and tourism Intergovernmental Capital outlay Debt service Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Sale of property Issuance of tax notes payable Issuance of general obligation bonds Premium (Discount) on issuance of refunding bonds Issuance of sales tax revenue bonds Issuance of refunding bonds Issuance of lease Issuance of subscriptions Premium (Discount) on issuance of general obligation bonds Payment to refund bond escrow agent Transfer from other funds Transfer to other funds Total other financing sources (uses) NET CHANGE IN FUND BALANCES Debt service as a percentage of noncapital expenditures Source: Annual Comprehensive Financial Report Fiscal Year 2015 2016 2017 2018 $ 33,294,062 $ 34,445,902 $ 37,688,372 $ 40,484,511 3,327,739 2,955,114 2,907,537 2,972,143 30,090,614 29,047,285 29,968,331 30,822,431 4,385,000 4,590,477 4,103,003 2,184,965 1,849,747 1,797,676 1,909,922 1,984,377 1,943,406 2,011,137 1,969,180 2,040,036 90,428 128,489 100,899 2,108,228 866,782 1,237,552 308,095 376,004 490,551 71,411 118,956 2,044,822 112,409 383,732 859,199 97,644 672,333 528,093 544,727 481,919 77,123,071 77,196,868 80,478,221 85,597,080 8,974,058 9,301,750 9,608,516 11,053,010 16, 968, 939 17, 376, 310 18, 520, 588 19, 806, 464 5,332,402 5,483,131 19,112,170 23,225,431 7,441,366 8,456,526 8,783,323 8,026,149 4,478,312 4,623,919 5,348,444 6,045,218 21,349,324 8,658,067 4,800,627 12,214,328 14,489,311 13,394,604 13,258,185 12,220,242 3,894,535 3,796,740 4,084,086 3,695,048 82,928,247 71,091,047 83,515,939 96,285,890 (5,805,176) 6,105,821 (3,037,718) (10,688,810) 3,271 - 884,928 24,450,000 9,945,000 - 3,830,000 2,168,153 - - (4,309,151) - 21,925,067 23,584,605 23,332,602 23,056,973 (22,156,907) (28,352,005) (24,940,577) (23,345,937) (228,569) 21,850,753 8,742,802 (288,964) $ (6,033,745) $ 27,956,574 $ 5,705,084 $ (10,977,774) 29.9% 27.5% 22.0% 18.9% .; Table 4 Fiscal Year 2019 2020 2021 2022 2023 2024 $ 41,744,243 $ 41,980,391 $ 41,675,661 $ 41,429,872 $ 42,299,595 $ 43,350,717 3,114,117 2,811,573 2,671,726 2,988,874 3,656,895 3,445,059 31,868,204 32,119,114 38,461,312 43,723,490 47,917,152 44,830,166 3,161,228 2,868,166 2,041,189 3,071,428 2,475,077 2,266,949 4,970,991 5,013,769 5,783,552 7,104,883 8,234,710 8,783,400 1,798,033 968,495 954,809 1,213,211 903,685 962,141 124,141 1,737,849 760,658 9,974,795 1,545,199 4,014,451 621,715 693,293 232,525 773,745 466,928 143,101 3,123,081 1,634,301 96,183 (448,117) 7,485,826 10,613,238 198,449 82,225 72,565 242,645 110,067 90,855 341,934 1,544,346 836,962 324,548 512,725 151,752 91,066,136 91,453,522 93,587,142 110,399,374 115,607,859 118,651,829 12,988,724 13,233,455 14,236,006 13,493,594 15,976,466 16,107,327 21,145,351 21,534,858 22,015,080 22,719,906 24,066,322 25,686,718 5,687,428 7,834,577 7,177,205 8,861,496 10,287,273 9,003,118 21,815,043 13,226,045 11,202, 609 13,118,278 14,545,618 15,841,400 - - - - - 871,217 6,123,926 7,214,798 6,049,200 5,934,584 6,454,981 6,849,951 8,285,716 15,951,425 11,521,223 11,601,162 15,026,038 24,681,093 8,385,059 9,896,675 10,341,201 8,645,737 10,777,728 11,001,476 3,175,731 3,108,014 2,629,585 2,321,838 2,436,839 2,485,911 87,606,978 91,999,847 85,172,109 86,696,595 99,571,265 112,528,211 3,459,158 (546,325) 8,415,033 23, 702, 779 16,036,594 6,123,618 6,019 27,288 52,124 4,156 43,351 - - - 13,397,000 - - 3,753,000 - - 1,329,086 - 8,595,000 10,860,000 1,989,000 - - - - - 514,162 53,975 752,937 - 3,031,188 377,356 737,765 - - (12,311,639) - (1,954,804) - - - 17,941,263 15,937,424 14,161,081 28,575,100 27,129,055 24,187,053 (20,662,331) (16,702,479) (14,876,959) (29,714,270) (28,992,586) (25,206,427) (2,837,602) (765,055) 3,098,606 8,759,881 14,622,788 154,270 $ 621,556 $ (1,311,380) $ 11,513,639 $ 32,462,660 $ 30,659,382 $ 6,277,888 14.6% 17.1 % 17.6% 14.6% 15.6% 15.4% 149 City of Southlake, Texas Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (Unaudited) Fiscal Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Estimated Market Value Real Property 6,497,726,969 6,803,420,392 7,728,483,676 8,434,595,190 9,207,076, 601 9,875,022,046 10,050,064,169 10,901,930,889 13,402,397,974 16,010,553,069 Source: Tarrant Appraisal District Personal Property 615,477,149 543,329,621 544,366,919 604,366,009 616,734,066 660,867,222 670,131,158 656,909,695 694,991,067 756,859,920 Less: Tax-Exemot Probert 781,092,303 1,076,075,223 1,405,299,263 1,731,612,466 1,898,185,963 2,044,945,094 2,119,446,400 2,175,862, 927 3,692,093,268 5,407,631,097 Total Taxable Assessed Value Table 5 Total Direct Tax Rate 6,332,111,815 0.46200 6, 270, 674, 790 0.46200 6,867,551,332 0.46200 7,307,348,733 0.46200 7, 925, 624, 704 0.44700 8,490,944,174 0.41000 8, 600, 748, 927 0.40500 9,382,977,657 0.39000 10,405,295,773 0.36000 11,359,781,892 0.31900 150 City of Southlake, Texas Direct and Overlapping Property Tax Rates (Per $100 of Assessed Value) Last Ten Fiscal Years (Unaudited) Fiscal Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 City Direct Rates General Operating/ Obligation General Rate Debt Service Total Direct 0.34200 0.12000 0.46200 0.36200 0.10000 0.46200 0.36200 0.10000 0.46200 0.36200 0.10000 0.46200 0.35700 0.09000 0.44700 0.33000 0.08000 0.41000 0.33000 0.07500 0.40500 0.32500 0.06500 0.39000 0.29500 0.06500 0.36000 0.26400 0.05500 0.31900 Source: Tarrant Appraisal District Overlaooina Rates Carroll Independent Tarrant Denton School District County County 1.40000 0.264000 0.272200 1.39500 0.264000 0.262000 1.39000 0.254000 0.248410 1.38500 0.244000 0.237810 1.38000 0.234000 0.225570 1.30000 0.234000 0.225280 1.28640 0.234000 0.224990 1.26860 0.229000 0.233090 1.21880 0.224000 0.217543 1.00250 0.194500 0.189485 Tarrant County Hospital District 0.227897 0.227897 0.227897 0.224429 0.224429 0.224429 0.224429 0.224429 0.224429 0.194500 Table 6 Tarrant County College District 0.149500 0.149500 0.144730 0.140060 0.136070 0.130170 0.130170 0.130170 0.130170 0.112170 151 City of Southlake, Texas Principal Property Tax Payers Current Year and Nine Years Ago (Unaudited) 2024 Taxpayer Town Square Ventures LP Cellco Partnership SC Southlake Owner LLC MCI Communications Svcs Inc TD Ameritrade Services Company Inc Carroll/1709 Ltd Excel Southlake LP 1400 Plaza Place Southlake Owner LLC BDP Southlake Dst DSL Landlord II LLC Total Total Assessed Valuation Source: Tarrant Appraisal District Taxable Assessed Value Percentage of Total City Taxable Assessed Value $ 296,207,832 2.147o 120,369,787 0.87% 101,462,569 0.737o 74,217,006 0.547. 66,500,000 0.487o 57,000,000 0.41% 52,005,178 0.3817 44,000,000 0.32% 40,053,750 0.29% 39,928,000 0.297o $ 891, 744,122 6.45% 13, 827, 523, 992 100.007. 2015 Taxoaver Verizon Wireless Texas LLC Town Square Ventures LP SLTS Grand Avenue/II LP Wyndham Properties Ltd Sabre Headquarters LLC Carroll/1709 Ltd H & C Southlake Hilton LLC Inland Western Southlake Corners Ltd Cambridge 114Inc Costco Wholesale Corporation Total Total Assessed Valuation Notes: °Taxpayers are assessed on January 1, 2023 (2023 tax year) for the 2024 fiscal year. bTaxpayers are assessed on January 1, 2014 (2014 tax year) for the 2015 fiscal year. Taxable Assessed Value $ 172,818,555 141,692,722 80,996,312 56,153,054 54,803,383 50,236,877 45,538,856 31,208,142 29,435,986 22,492,599 $ 685,376,486 6,199,833,416 Table 7 Percentage of Total City Taxable Assessed VnII I e b 2.79% 2.29% 1.31 % 0.91 % 0.88% 0.81 % 0.73% 0.50% 0.47% 0.36% 11.05% 100.0017 152 City of Southlake, Texas Ad Valorem Tax Levies and Collections Last Ten Fiscal Years (Unaudited) Taxes Levied for Fiscal Year the Fiscal Year 2015 $ 27,791,839 2016 28,965,792 2017 31,410,934 2018 33,358,429 2019 34,957,519 2020 34,109,141 2021 34,329,457 2022 34,526,168 2023 34,929,247 2024 35,165,809 Source: Tarrant County Tax Office Collected within the Fiscal Year of the Levy Collections in Amount Percentage of Levy Subsequent Years $ 27,556,790 99.15 $ 106,959 28,684,131 99.03 170,050 31,054,006 98.86 95,756 32,975,600 98.85 66,110 34,486,820 98.65 13,597 33,572,469 98.43 91,517 33,833,652 98.56 (85,475) 34,013, 771 98.52 (73, 798) 34,409,848 98.51 (52,121) 34, 649, 633 98.53 - Table 8 Total Collections Amount Percentage of Levy 27, 663,749 99.54 28,854,181 99.61 31,149,762 99.17 33,041,710 99.05 34,500,417 98.69 33, 663, 986 98.69 33, 748,177 98.31 33,939,973 98.30 34,357,727 98.36 34, 649, 633 98.53 153 City of Southlake, Texas Table 9 Ratios of Outstanding Debt by Type Last Ten Fiscal Years (Unaudited) Governmental Activities General Obligation Certificates of Revenue Financed Fiscal Year Bonds Obligation Bonds Tax Notes Purchases Leases Subscriptions 2015 40,847,363 33,182,855 25,540,000 - - - - 2016 40, 733, 282 29, 511, 905 48, 330, 000 - - - - 2017 39,022,933 18,706,525 57,207,643 - - - - 2018 30,112,187 11,050,000 53,605,000 - - - - 2019 40,949,900 6,606,486 44,592,458 - - - - 2020 33, 224,148 6,172,109 41, 767, 697 - - - - 2021 27,428,338 3,782,833 38,832,936 3,753,000 - - - 2022 22, 757, 701 12, 783,180 35, 788,175 2,686,000 405,368 338,051 - 2023 17,925,536 10,953,008 32,648,415 15,420,000 308,329 448,904 2,165,395 2024 12, 933, 845 9,282,834 29, 383, 653 14, 751, 000 208,476 813,519 1,817,561 Business -Type Activities General Contract Percentage Obligation Certificates of Revenue Revenue Total Primary of Personal Fiscal Year Bonds Obligation Bonds Obligations Subscriptions Government Income° Per Capita" 2015 15, 422, 270 30, 035, 860 - 750,000 - 99, 570, 218 9.03 5,238 2016 12,974,232 29,143,202 - 385,000 - 118,575,187 9.30 5,694 2017 13,846,422 28,963,708 - - - 114,937,101 8.08 5,358 2018 9,187,813 30,550,000 - - - 94,767,187 6.14 4,547 2019 14,816,097 22,463,654 - - - 92,148,844 6.01 4,270 2020 12,678,798 21,352,753 - - - 81,163,954 5.29 3,793 2021 12,916,025 18,217,805 - - - 73,797,107 4.84 3,363 2022 11,319,357 17,193,400 - - - 74,758,475 4.12 3,271 2023 9,676,216 16,128,995 - - - 79,869,587 4.09 3,305 2024 8,020,271 26,098,698 - 34,052 69,190,888 2.00 2,137 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. °See Table 13 for personal income and population data. 154 City of Southlake, Texas Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years (Unaudited) General Bonded Debt Outstanding General Less: Available Obligation Certificates of Debt Service Fiscal Year Bonds Obligation Total Funds 2015 56,269,633 63,218,715 119,488,348 8,735,479 2016 53,707,514 58,655,107 112,362,621 6,899,109 2017 52,869,355 47,670,233 100,539,588 7,444,512 2018 39,300,000 41,600,000 80,900,000 7,345,622 2019 55,765,997 29,070,140 84,836,137 8,009,333 2020 45,902,946 27,524,862 73,427,808 6,774,153 2021 40,344,363 22,000,638 62,345,001 5,315,367 2022 34,077,058 29,976,580 64,053,638 5,436,574 2023 27,601,752 27,082,003 54,683,755 5,256,902 2024 20,954,116 35,381,535 56,335,651 4,776,366 Note: Details regarding the citys outstanding debt can be found in the notes to the financial statements 'See Table 5 for property value data. bSee Table 13 for population data. Table 10 Percentage of Actual Taxable Net General Value of Bonded Debt Property' Per Capitab 110,752,869 1.79% 3,979 105,463,512 1.727o 3,728 93,095,076 1.38% 3,162 73,554,378 1.03% 2,487 76,826,804 0.99% 2,535 66, 653, 655 0.80% 2,195 57,029,634 0.68% 1,828 58, 617,064 0.64% 1,857 49,426,853 0.50% 1,710 51,559,285 0.41 % 1,740 155 City of Southlake, Texas Direct and Overlapping Governmental Activities Debt As of September 30, 2024 (Unaudited) Governmental Unit Debt repaid with property taxes Carroll ISD Denton County Grapevine-Colleyville ISD Keller ISD Northwest ISD Tarrant County Tarrant County College District Tarrant County Hospital District Subtotal, overlapping debt City of Southlake (direct debt) Total direct and overlapping debt Gross Bonded Debt Percentage of Debt Applicable to Area Table 11 Share of Overlapping Debt $ 269,520,000 84.72% $ 228,337,344 673,670,000 0.187o $ 1,212,606 272,665,659 1.52% $ 4,144,518 736,234,989 2.43% $ 17,890,510 2,280,247,569 1.04% $ 23,714,575 345,130,000 3.86% $ 13,322,018 569,915,000 3.86% $ 21,998,719 440,020,000 3.86% $ 16,984,772 327,605,062 $ 69,190,696 100.00% 69,190,696 $ 396, 795, 758 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 propertywithin the overlapping taxing bodies and the City, and then dividing that share value bythe total assessed value of taxable property within the overlapping tax body. 156 City of Southlake, Texas Pledged -Revenue Coverage - Southlake Parks Development Corporation Last Ten Fiscal Years (Unaudited) Fiscal Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Sales Tax Collections 7,440,726 7,318,490 7,578,446 7,705,009 7,741,005 7,908,601 9,249,930 10,610,993 12,829,196 10,661,725 Note: °Includes Principal and Interest Southlake Parks Development Corporation - Sales Tax Revenue Refunding Bonds Debt Service Principal Interest 1,120,000 463,200 1,150, 000 429,150 1,190,000 394,050 1,225,000 357,825 1,260,000 320,550 1,300,000 282,150 1,340,000 242,550 1,385,000 201,675 1,415,000 159,675 1,460,000 116,550 Total Annual Requirement° 1,583,200 1,579,150 1,584,050 1,582,825 1,580,550 1,582,150 1,582,550 1,586,675 1,574,675 1,576,550 Table 12 Times Coveraae 4.70 4.63 4.78 4.87 4.90 5.00 5.84 6.69 8.15 6.76 157 City of Southlake, Texas Table 13 Pledged -Revenue Coverage - Southlake Community Enhancement and Development Corporation Last Ten Fiscal Years (Unaudited) Southlake Community Enhancement and Development Corporation - Sales Tax Revenue Bonds Debt Service Total Annual Fiscal Year Sales Tax Collections Principal Interest Requirement° Times Coverage 2016 (1) $ 5,421,104 $ - $ - $ - - 2017 5,613,664 - 869,749 869,749 6.45 2018 5,707,414 1,190,000 1,252,239 2,442,239 2.34 2019 5,734,078 1,280,000 1,163,406 2,443,406 2.35 2020 5,858,223 1,340,000 1,102,406 2,442,406 2.40 2021 6,851,800 1,410,000 1,033,656 2,443,656 2.80 2022 7,859,995 1,475,000 968,056 2,443,056 3.22 2023 8,463,832 1,540,000 899,206 2,439,206 3.47 2024 7,897,574 1,620,000 822,556 2,442,556 3.23 Note: "Includes Principal and Interest (1) This was the year of issuance. Accordingly, no principal or interest payments were scheduled in this year, and no debt was outstanding in the previous 2 years that was secured by pledged revenue. IFS City of Southlake, Texas Demographic and Economic Statistics Last Ten Calendar Years (Unaudited) Table 14 Per Capita Personal Fiscal Year Estimated Population° Personal Income Income School Enrollment Unemployment Rated 2015 27,833 1, 613, 952,171 57,987 7,884 3.5% 2016 28,290 1, 732, 875, 660 61,254 8,177 3.5% 2017 29,440 1,951,901,440 66,301 8,190 3.0% 2018 29,580 2,189,038,320 74,004 8,341 3.2% 2019 30,310 2,151, 828,140 70,994 8,344 2.7% 2020 30,370 2,177, 863,070 71,711 8,509 5.2% 2021 31,199 2,169, 765, 654 69,546 8,318 3.6% 2022 31,569 2, 506, 862, 721 79,409 8,382 3.0% 2023 31,975 2, 585, 284, 275 80,853 8,318 3.6% 2024 32,376 3, 453, 868,176 106,680 8,292 3.6% Note: °City of Southlake Economic Development bCarroll Independent School District `Texas Workforce Commission 159 City of Southlake, Texas Principal Employers Current Year and Nine Years Ago (Unaudited) 2024 Employer° Employees° Sabre Holdings 2,404 Carroll ISD 1,149 Charles Schwab 1,094 Verizon Wireless 738 Gateway Church 604 City of Southlake 585 Keller Williams 500 2020 Companies 461 Central Market 442 Immunotek Bio Centers LLC 378 Total Total Southlake Daytime Employeesb Source: 'City of Southlake Economic Development bTexas Workforce Commission Percentage of Total City Emolovment 14.83% 7.09% 6.75% 4.55% 3.73% 3.61 % 3.09% 2.84% 2.73% 2.33% Emoloveesa 3,600 1,100 750 570 487 2015 Table 15 Percentage of Total City Employment 27.89% 8.52% 0.00% 5.81 % 4.42% 0.00% 3.77% 0.00% 0.00% 0.00% 8,355 51.55% 6,507 50.41 % 16,206 12,907 .e] City of Southlake, Texas Table 16 Full-time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years (Unaudited) Fiscal Year Function/Program 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 General Government and Administration 52.00 51.00 57.00 60.00 74.00 75.75 78.14 80.64 82.64 82.63 Public Safety 140.95 140.95 139.95 141.45 145.15 145.15 145.15 145.15 149.70 150.55 Public Works 33.25 35.25 34.50 35.50 35.00 35.00 35.00 34.35 35.35 35.35 Culture and Recreational 65.65 71.40 72.03 114.78 108.93 111.80 113.93 113.93 121.48 121.48 Water and Sewer 29.50 30.25 31.00 31.00 31.00 30.00 30.00 31.65 31.65 31.65 Community Development 23.00 23.00 23.00 23.00 22.00 23.00 22.50 22.50 23.50 23.50 Economic Development 4.00 4.00 1.00 1.00 2.00 3.63 3.63 4.00 4.00 4.00 Total 348.35 355.85 358.48 406.73 418.08 424.33 428.35 432.22 448.32 449.16 Source: City Budget OF City of Southlake, Texas Operations Indicators by Function/Program Last Ten Fiscal Years (Unaudited) Table 17 Fiscal Year Function/Program 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Public Safety Police Number of employees 68 68 67 68 72 72 72 72 76 76 Number of violations (citations) 16,241 15,003 13,840 13,492 13,759 9,095 8,230 9,551 7,342 8,582 Number of arrests 1,095 513 1,148 1,027 719 1,025 838 640 324 367 Number of alarm calls 3,497 3,673 3,284 3,434 3,171 2,465 2,549 893 1,469 1,523 Fire Number of employees 72 73 73 73 73 73 73 73 74 74 Number of fire runs 1,220 760 807 811 748 999 1,036 834 894 940 Number of EMS runs 1,448 1,745 1,808 1,802 1,875 1,517 1,994 2,256 2,418 2,423 Number of hazardous materials runs 43 95 105 109 90 94 92 ill 93 151 Number of alarm calls 501 608 652 651 678 602 748 659 590 598 Development Services Streets maintained (miles) 204 209 199 211 213 214 214 214 217 217 Streets crack sealed (blocks) N/A N/A 75 391 384 5 0 68 0 0 Roadway signage replaced/installed N/A 568 N/A 21 136 13 132 128 137 165 Asphalt repairs (tons) 4,849 4,667 6,671 5,191 6,100 213 7,747 151 250 375 Concrete repairs to roads/sidewalks (cu. yds.) 2,421 308 1,462 1,188 503 41 1,269 11 7 15 Right-of-way maintenance (miles) N/A N/A 5 417 417 558 55 7 2 9 Building permits Issued° 2,979 2,703 3,163 3,453 3,133 2,834 3,209 3,372 2,990 2,827 Planning & zoning cases heard 136 190 100 110 76 62 82 53 65 77 Cultural and Recreational Parks and Recreation Park maintain & operate per acre 1,200 1,106 1,106 1,106 1,106 1,106 561 561 561 1,139 Participants in leisure service programs 6,200 8,687 8,735 9,844 17,555 8,065 7,360 13,010 25,000 22,790 Participants in special events 60,000 66,000 72,625 71,400 65,000 900 36,300 44,000 48,000 54,700 Participants in senior center programs 4,900 8,868 13,449 13,552 14,068 4,989 6,390 6,691 8,663 10,219 Library Volumes in collection 44,971 45,416 44,899 43,947 41,789 43,699 41,895 42,607 42,034 42,533 Patrons 16,838 13,461 13,764 14,327 15,267 13,274 14,467 15,446 17,054 15,450 Water and Sewer Number of water consumers 10,183 10,581 10,941 11,009 11,133 11,236 11,349 11,461 11,528 11,598 Number of sewer accounts 8,167 8,470 8,889 9,111 11,886 9,053 9,142 9,229 9,319 9,387 Line inspections (feet) 1,086,624 789,266 687,246 574,136 641,941 377,081 214,789 141,503 189,370 409,254 Water meters installed/repaired/replaced 1,284 10,566 135 191 279 186 359 4,099.00 102 94 Transmitters installed/replaced N/A 10,566 489 124 113 466 1,327 7,891.00 6,666 203 Gallons purchased from Ft. Worth (millions) 3,069,971 2,904,048 3,206,363 3,156,019 2,762,227 3,013,801 3,057,825 3,914,878 3,805,874 3,527,876 Gallons distributed (millions) 2,870,430 2,935,818 2,900,926 3,229,438 2,363,542 2,957,582 2,731,697 3,569,090 3,539,810 3,371,031 Maximum storage capacity (million of gallons) 21 21 21 21 21 21 21 21 21 21 Source: City Departments Nofes: N/A Data not available °Includes residential, commercial, and miscellaneous (e.g. pools, fences) permits 162 City of Southlake, Texas Capital Asset Statistics by Function/Program Last Ten Fiscal Years (Unaudited) Function/Program 201 Public Safety Police Stations Police Patrol Units Fire Stations Police Motorcycle Units Cultural and Recreational Parks Playgrounds Dog Park Senior Center Tennis Courts In -line hockey rink/turf field° Ballfields Soccer Fields Nature Center Pickleball courts Water and Sewer Water Mains (miles) Lift Stations Sanitary Sewer Mains (miles) Drainage, ditches/creeks (miles) Fire hydrants 2, Water valves Source: City Departments Note: N/A - Data not available °In -line hockey rink converted to turf field in 2020. Table 18 Fiscal Year 5 2016 2017 2018 2019 2020 2021 2022 2023 2024 3 3 3 3 3 3 3 3 3 3 25 25 25 25 25 21 23 20 23 23 3 3 3 3 3 3 3 3 3 3 5 5 5 5 5 5 5 5 5 5 18 18 18 18 18 18 35 35 35 35 7 1 6 1 6 1 6 1 7 1 7 1 6 1 7 1 7 1 7 1 1 21 1 21 1 21 1 21 1 21 1 21 1 21 1 21 1 21 1 21 1 32 1 27 1 29 1 29 1 29 1 29 1 22 1 22 1 22 1 22 13 12 21 21 21 21 21 21 21 21 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 9 285 290 284 298 301 304 293 294 296 304 13 13 14 15 15 15 9 13 13 13 206 209 212 216 218 220 220 222 223 224 36 36 48 52 51 51 42 51 51 51 594 2,643 2,723 2,774 2,809 2,854 2,919 2,938 2,973 3,017 163 City of Southlake, Texas Single Audit Report For the Fiscal Year Ended September 30, 2024 weaver r9 • Tax • Advisory City of Southlake, Texas Single Audit Report For the Fiscal Year Ended September 30, 2024 Table of Contents Page Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards.............................................................................................................................. Independent Auditor's Report on Compliance for Each Major State Program, Report on Internal Control over Compliance, and Report on Schedule of Expenditures of State Awards Required by the Texas Grant Management Standards.............................................................................. Schedule of Expenditures of State Awards ....................... Notes to Schedule of Expenditures of State Awards ............................... Schedule of Findings and Questioned Costs ............................................ weaver � A)wraejo.' • Tax -Advisozy 2300 North Field Street, Suite 1000 Dallas, Texas 75201 972-490-1970 Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards The Honorable Mayor and Members of the City Council of the City of Southlake, Texas We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, 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, 2024, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated February 21, 2025. Report on Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) as a basis for designing procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that have not been identified. Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Weaver and Tidwell, L.L.P. CPAs AND ADVISORS I WEAVER.COM The Honorable Mayor and Members of the City Council of the City of Southlake, Texas Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. WEAVER AND TIDWELL, L.L.P. Dallas, Texas February 21, 2025 2 weaver � A)wraejo.' • Tax -Advisozy 2300 North Field Street, Suite 1000 Dallas, Texas 75201 972-490-1970 Independent Auditor's Report on Compliance for Each Major State Program, Report on Internal Control over Compliance, and Report on Schedule of Expenditures of State Awards Required by the Texas Grant Management Standards To the Honorable Mayor and Members of the City Council of the City of Southlake, Texas Report on Compliance for Each Major State Program Opinion on Each Major State Program We have audited the City of Southlake, Texas (the City)'s compliance with the types of compliance requirements identified as subject to audit in the Texas Grant Management Standards that could have a direct and material effect on each of the City's major state programs for the year ended September 30, 2024. The City's major state programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. In our opinion, the City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major state programs for the year ended September 30, 2024. Basis for Opinion on Each Major State Program We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the Texas Grant Management Standards (TxGMS) issued by the Texas Comptroller of Public Accounts Statewide Procurement Division. Our responsibilities under those standards and TxGMS are further described in the Auditor's Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with 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 opinion on compliance for each major state program. Our audit does not provide a legal determination of the City's compliance with the compliance requirements referred to above. Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the City's state programs. Weaver and Tidwell, L.L.P. 3 CPAs AND ADVISORS I WEAVER.COM The Honorable Mayor and Members of the City Council of the City of Southlake, Texas Auditor's Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City's compliance based on our audit. 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, Government Auditing Standards, and TxGMS will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City's compliance with the requirements of each major state program as a whole. In performing an audit in accordance with GAAS, Government Auditing Standards, and TxGMS, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, 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 City's compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. • Obtain an understanding of the City's internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the TxGMS, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on Internal Control Over Compliance A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a state program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a state program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a state program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. 4 The Honorable Mayor and Members of the City Council of the City of Southlake, Texas Our consideration of internal control over compliance was for the limited purpose described in the Auditor's Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the TxGMS. Accordingly, this report is not suitable for any other purpose. Report on Schedule of Expenditures of State Awards Required by the Texas Grant Management Standards 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 as of and for the year ended September 30, 2024, and the related notes to the financial statements, which collectively comprise the City's basic statements. We issued our report thereon dated February 21, 2025, which contained an unmodified opinion on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of state awards is presented for purposes of additional analysis as required by the Texas Grant Management Standards and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The 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 schedule of expenditures of state awards is fairly stated in all material respects in relation to the basic financial statements as a whole. W arq' �,f :f- f WEAVER AND TIDWELL, L.L.P. Dallas, Texas February 21, 2025 5 City of Southiake, Texas Schedule of Expenditures of State Awards For the Fiscal Year Ended September 30, 2024 State Grantor/Pass-Through Grantor/ Program Title Texas Comptroller of Public Accounts LEOSE - Law Enforcement Officer Standards and Education Texas Department of State Health Services Passed through North Central Texas Trauma Regional Advisory Council FY24 EMS County Assistance Allocations Texas Department of Transportation Regional Toll Revenue Funding for N White Chapel Blvd; Bluestemto Wingate Texas Division of Emergency Management 2024 Wildfire Season Passed through Texas A&M Engineering Extension Service 23-0026 20NOV Severe Weather Passed through Texas A&M Forest Service Training Request Training Request Training Request Training Request Total Texas Division of Emergency Management TOTAL STATE ASSISTANCE Grant State Number Expenditures N/A $ 8,748 N/A 4,885 0902-90-249 3,231,880 TX-TFM S-230003 71,202 471090-100150-5474 2,186 TT-1763-15216 1,200 TT-1763-19307 600 TT-1763-20634 75 TT-1763-20635 300 75,563 $ 3,321,076 See accompanying Notes to the Schedule of Expenditures of State Awards. 6 City of Southlake, Texas Notes to the Schedule of Expenditures of State Awards Note 1. General and Basis of Presentation The accompanying schedule of expenditures of state awards (Schedule) includes the state award activity of the City of Southlake, Texas (City) under programs of the state government for the year ended September 30, 2024. The accompanying notes are an integral part of this Schedule. The information in this Schedule is presented in accordance with the requirements of the State of Texas Grant Management Standards (TxGMS) issued by the Texas Comptroller of Public Accounts Statewide Procurement Division. Because the Schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position or cash flows of the City. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the TxGMS, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Note 2. Subrecipients Of the state expenditures presented in the Schedule, the City provided no state awards to subrecipients Note 3. Loans At September 30, 2024, the City had no loans or loan guarantees outstanding with state awarding agencies. Note 4. Indirect Cost Rate The City has elected not to use the 10 percent de minimis indirect cost rate allowed under the TxGMS. 7 City of Southlake, Texas Schedule of Findings and Questioned Costs For the Fiscal Year Ended September 30, 2024 Section 1. Summary of Auditor's Results Financial Statements An unmodified opinion was issued on the financial statements. Internal control over financial reporting: • Material weakness(es) identified? • Significant deficiency(ies) identified that are not considered to be material weakness(es)? Noncompliance material to the financial statements noted? State Awards Yes X No Yes X None reported Yes X No An unmodified opinion was issued on compliance for the major programs. Internal control over major programs: • Material weakness(es) identified? • Significant deficiencies identified that are not considered to be material weakness(es)? Any audit findings disclosed that are required to be reported in accordance with Texas Grant Management Standards? Identification of major programs: Assistance Listing/Grant Identification Number Major State Program: 0902-90-249 Dollar threshold used to distinguish between Type A and Type B programs: Yes X No Yes X None reported Yes X No Name of State Program or Cluster Regional Toll Revenue Funding for N White Chapel Blvd; Bluestem to Wingate $750,000 0 City of Southlake, Texas Schedule of Findings and Questioned Costs - Continued For the Fiscal Year Ended September 30, 2024 Section 2. Financial Statement Findings None Section 3. State Award Findings and Questioned Costs None Section 4. Schedule of Prior Year Findings and Questioned Costs Finding 2023-001 Significant Deficiency in Internal Controls over Financial Reporting- Payroll Condition and Context It was identified that the City's Human Resource Department manually adjusted overtime based on calculations performed by Human Resources' personnel. Corrective Action The City's Finance and Human Resources Departments will work with Tyler Technologies to implement overtime calculations within Munis, the Financial ERP system used by the City, which will eliminate manual overtime calculations in the payroll cycle. Additionally, Human Resources will institute secondary review and approval procedures for all changes occurring during payroll processing. Status Implemented. a