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Item 4GCITY OF SOUTH LAKE MEMORANDUM March 30, 2011 To: Shana Yelverton, City Manager From: Sharen Jackson, Director of Finance Subject: Approval of the 2010 Comprehensive Annual Financial Report Action Requested: Approval of September 30, 2010 Comprehensive Annual Financial Report. Background Information: City Charter requires the City at the close of each fiscal year have an independent audit performed by a Certified Public Accountant. Weaver and Tidwell L.L.P., Certified Public Accountants, performed the audit for fiscal year 2010. Shawn Parker, Partner, will present the report to the audit committee on Tuesday during the committee meeting scheduled at 5.15 prior to the city council meeting. Financial Considerations: None required Strategic Link: F4 Establish and maintain effective internal controls Citizen Input/ Board Review: None required Legal Review: None required Alternatives: None required Supporting Documents: 2010 CAFR Staff Recommendation: Approval of 2010 Comprehensive Annual Financial Report CITY OF SOUTHLAKE, TEXAS Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2010 CITY OF SOUTHLAKE, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010 As Prepared By Sharen Jackson, CPA Director of Finance CITY OF SOUTHLAKE, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010 TABLE OF CONTENTS Exhibit Page I. INTRODUCTORY SECTION Letter of Transmittal i Certificate of Achievement viii Organizational Chart ix List of Principal Officials x II. FINANCIAL SECTION Independent Auditor's Report 1 A. MANAGEMENT'S DISCUSSION AND ANALYSIS 3 B. BASIC FINANCIAL STATEMENTS Government -Wide Financial Statements Statement of Net Assets 1 15 Statement of Activities 2 16 Fund Financial Statements Governmental Fund Financial Statements Balance Sheet 3 17 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets 4 19 Statement of Revenues, Expenditures, and Changes in Fund Balance 5 20 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities 6 22 Proprietary Fund Financial Statements Statement of Net Assets 7 23 Statement of Revenues, Expenses, and Changes in Net Assets 8 24 Statement of Cash Flows 9 25 Fiduciary Fund Financial Statement Statement of Fiduciary Net Assets 10 26 Notes to the Basic Financial Statements 27 CITY OF SOUTHLAKE, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010 TABLE OF CONTENTS Exhibit Page C. REQUIRED SUPPLEMENTARY INFORMATION Budgetary Comparison Schedule - General Fund A-1 53 Budgetary Comparison Schedule - Crime Control District Special Revenue Fund A-2 54 Notes to Required Supplementary Information 55 Condition Rating of Street System A-3 56 D. COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Major Governmental Funds Comparative Balance Sheets - General Fund B-1 58 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance - General Fund B-2 59 Comparative Balance Sheets - General Obligation Debt Service Fund B-3 60 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance - General Obligation Debt Service Fund B-4 61 Budgetary Comparison Schedule - General Obligation Debt Service Fund B-5 62 Comparative Balance Sheets - General Capital Projects Fund B-6 63 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance - General Capital Projects Fund B-7 64 Comparative Balance Sheets - Crime Control District Special Revenue Fund B-8 65 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance - Crime Control District Special Revenue Fund B-9 66 Comparative Balance Sheets - Southlake Parks Development Corporation Capital Projects Fund B-10 67 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance - Southlake Parks Development Corporation Capital Projects Fund B-11 68 Comparative Balance Sheets - Crime Control District Capital Projects Fund B-12 69 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance - Crime Control District Capital Projects Fund B-13 70 Comparative Balance Sheets - Tax Increment Financing District Special Revenue Fund B-14 71 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance - Tax Increment Financing District Special Revenue Fund B-15 72 Budgetary Comparison Schedule - Tax Increment Financing District Special Revenue Fund B-16 73 Nonmajor Governmental Funds Combining Balance Sheet - Nonmajor Governmental Funds C-1 76 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance - Nonmajor Governmental Funds C-2 79 Comparative Balance Sheets - Police Special Revenue Fund C-3 82 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance - Police Special Revenue Fund C-4 83 CITY OF SOUTHLAKE, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010 TABLE OF CONTENTS Exhibit Page Comparative Balance Sheets - Parks and Recreation Special Revenue Fund C-5 84 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance - Parks and Recreation Special Revenue Fund C-6 85 Comparative Balance Sheets - Parks Dedication Special Revenue Fund C-7 86 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance - Parks Dedication Special Revenue Fund C-8 87 Budgetary Comparison Schedule - Parks Dedication Special Revenue Fund C-9 88 Comparative Balance Sheets - Southlake Parks Development Corporation Special Revenue Fund C-10 89 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance - Southlake Parks Development Corporation Special Revenue Fund C-11 90 Budgetary Comparison Schedule - Southlake Parks Development Corporation Special Revenue Fund C-12 91 Comparative Balance Sheets - Hotel Occupancy Special Revenue Fund C-13 92 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance - Hotel Occupancy Special Revenue Fund C-14 93 Budgetary Comparison Schedule - Hotel Occupancy Special Revenue Fund C-15 94 Comparative Balance Sheets - Storm Water Utility Special Revenue Fund C-16 95 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance - Storm Water Utility Special Revenue Fund C-17 96 Budgetary Comparison Schedule - Storm Water Utility Special Revenue Fund C-18 97 Comparative Balance Sheets - Court Security Special Revenue Fund C-19 98 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance - Court Security Special Revenue Fund C-20 99 Comparative Balance Sheets - Court Technology Special Revenue Fund C-21 100 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance - Court Technology Special Revenue Fund C-22 101 Comparative Balance Sheets - Library Special Revenue Fund C-23 102 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance - Library Special Revenue Fund C-24 103 Comparative Balance Sheets - Red Light Camera Special Revenue Fund C-25 104 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance - Red Light Camera Special Revenue Fund C-26 105 Budgetary Comparison Schedule - Red Light Camera Special Revenue Fund C-27 106 Comparative Balance Sheets - Southlake Parks Development Corporation Debt Service Fund C-28 107 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance - Southlake Parks Development Corporation Debt Service Fund C-29 108 Budgetary Comparison Schedule - Southlake Parks Development Corporation Debt Service Fund C-30 109 Comparative Balance Sheets - Tax Increment Financing District Capital Projects Fund C-31 110 CITY OF SOUTHLAKE, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010 TABLE OF CONTENTS Exhibit Page Comparative Statements of Revenues, Expenditures and Changes C-32 111 in Fund Balance - Tax Increment Financing District Capital Projects Fund Major Enterprise Fund Comparative Statements of Net Assets- Water and Sewer Enterprise Fund D-1 113 Comparative Statements of Revenues, Expenses, and Changes in Net Assets - Water and Sewer Enterprise Fund D-2 114 Comparative Statements of Cash Flows - Water and Sewer Enterprise Fund D-3 115 Internal Service Fund Comparative Statements of Net Assets- Vehicle Replacement Internal Service Fund E-1 118 Comparative Statements of Revenues, Expenses, and Changes in Net Assets - Vehicle Replacement Internal Service Fund E-2 119 Comparative Statements of Cash Flows- Vehicle Replacement Internal Service Fund E-3 120 Agency Funds Statement of Changes in Assets and Liabilities - Cash Escrow Agency Fund F-1 122 E. Capital Assets Used in the Operation of Governmental Funds Comparative Schedules of Capital Assets by Source G-1 123 Schedule of Changes in Capital Assets by Function and Activity G-2 124 III. STATISTICAL SECTION Table Net Assets By Component 1 125 Changes in Net Assets 2 126 Fund Balances, Governmental Funds 3 128 Changes in Fund Balances, Governmental Funds 4 129 Assessed Value and Estimated Actual Value of Taxable Property 5 130 Direct and Overlapping Property Tax Rates 6 131 Principal Property Tax Payers 7 132 Ad Valorem Tax Levies and Collection 8 133 Ratio of Outstanding Debt By Type 9 134 Ratio of General Bonded Debt Outstanding 10 136 Direct and Overlapping Governmental Activities Debt 11 137 Pledged -Revenue Coverage 12 138 Demographic and Economic Statistics 13 139 Principal Employers 14 140 Full -Time Equivalent City Government Employees By Function/Program 15 141 Operating Indicators By Function/Program 16 142 Capital Asset Statistics By Function/Program 17 143 INTRODUCTORY SECTION CITY OF SOUTHLAKE U9 Finance Department March 31, 2011 Honorable Mayor John Terrell and Members of City Council City of Southlake Southlake, Texas Honorable Mayor and Councilmembers: It is with pleasure that we submit to you the Comprehensive Annual Financial Report (CAFR) of the City of Southlake for the fiscal year ended September 30, 2010. 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. The financial statements are presented in accordance with Governmental Accounting Standards Board Statement 34, Basic Financial Statements -and Management's Discussion and Analysis For State and Local Governments. The presentation of the City's financial information includes two financial statements that provide a government - wide perspective using the accrual basis of accounting. The two government -wide statements present governmental activities separately from business -type activities. The inclusion of the government -wide statements in this format enables a more thorough understanding of the financial operations and condition of the City. The fund financial statements focus on individual major funds. Each major fund is presented in a separate column in the fund financial statements. Nonmaj or funds are aggregated and presented in a combined column. Budget to actual comparisons are presented as required supplementary information and are limited to the general fund and major special revenue funds. The comparisons are now more informative, including both the original adopted budget and the final amended budget. 1400 Main Street, Suite 440, Southlake, TX 76092 (817) 748-8345 Innovation 0 Integrity 0 Accountability 0 Commitment to Excellence 0 Teamwork We believe the reporting model will assist in making economic, social and political decisions and in assessing accountability to the residents by: • comparing actual financial results with the legal adopted budget, where appropriate; • assessing financial condition and results of operations; • assisting in determining compliance with fiscally -oriented laws, rules and regulations; and • assisting in evaluating the efficiency and effectiveness of City operations. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the data, as presented, is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. FINANCIAL STATEMENT FORMAT This report has been prepared and organized to meet the requirements of the Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting Program. By following the guidelines of this program, the report's format facilitates understanding by the residents and provides information needed by the most sophisticated and interested financial observers. The report is presented in three sections: introductory, financial and statistical. The introductory section, which is unaudited, includes this transmittal letter, GFOA certificate, the City's organizational chart, and a list of principal officials. This section is designed to provide an overview and general understanding of the report. The financial section provides a detailed presentation of the financial position and results of operations for the fiscal year ended September 30, 2010. The financial section is divided into four main subsections: o Management's Discussion and Analysis o Basic Financial Statements and related notes o Required Supplementary Information o Combining and Individual Fund Financial Statements Readers are encouraged to pay particular attention to Management's Discussion and Analysis and to the footnotes to the basic financial statements. These provide valuable analysis and explanation of the financial statements. • The statistical section, which is unaudited, includes a number of multi -year tables and other data designed to present social, economic and financial trends of the City, providing an overall view of the fiscal capacity of the City. The financial reporting entity includes all the funds of the primary government, as well as all of its component units in accordance with GASB Codification of Governmental Accounting and Financial Reporting Standards, Section 2100, `Defining the Reporting Entity. " Component units are legally separate entities for which the primary government is financially accountable and for which the nature and significance of their relationship with the primary government are such that exclusion would cause the City's basic financial statements to be misleading or incomplete. The primary government is considered financially accountable if it appoints a voting majority of an organization's governing body and imposes its will on that organization. The primary government may also be financially accountable if an organization is fiscally dependent on the primary government regardless of the authority of the organization's governing board. Blended component units, although legally separate entities, are, in substance, part of the primary government's operations and are included as part of the primary government. Accordingly, the Southlake Parks Development Corporation ("SPDC"), Southlake Crime Control and Prevention District (the "District") and Tax Increment Reinvestment Zone ("TIF") are included in the governmental funds (special revenue) of the primary government as blended component units. SPDC was formed in January 1994 pursuant to a successful election in November 1993 to adopt an additional '/2 cent sales tax for park and recreation facility development. SPDC is organized exclusively to act on behalf of the City for the financing, development and operation of parks and recreation facilities. Also included in this report is financial information for the District. In November 1997, voters approved an additional '/2 cent sales tax for Crime Control and Prevention initiatives. The District is organized exclusively to act on behalf of the City for the financing, development and crime control throughout the City. Also, included are the financial statements of the TIF which was created in 1997 to encourage quality commercial growth. The TIF was formed to finance and make public improvements, under the authority of the Tax Increment Financing Act. PROFILE OF THE GOVERNMENT General Information Although Southlake has been a high -growth community for years, when the first settlers arrived in 1845 they found only a vast area of land and trees where the grand prairie and cross timbers merged. As the site of the first permanent settlement in Tarrant County, a portion of present day Southlake was homesteaded in 1866, which consisted of 360 acres. Keeping with the time, the primary industry was agriculture. Farmers grew peanuts, grains and cotton, and families raised their own livestock. The area that would become Southlake remained a rural farming community for more than 100 years until the U.S. Army Corps of Engineers built Lake Grapevine in 1952. The lake spurred much of the area's early growth and was the beginning of dramatic change. The town officially incorporated on September 25, 1956 by a public vote of 30 in favor and 24 against. The original town contained 1.62 square miles and had a population of just over 100. The residents chose to call this new town Southlake because it was... south of Lake Grapevine! The Southlake Fire Department was launched in 1965 and the first piece of fire equipment was a 1950 Diamond T-Military unit with a tank capacity of 1,000 gallons and an auxiliary pump. The first chief of police was hired in 1966, and the City purchased its first patrol car in 1967. City of Southlake Population The opening of the Dallas -Fort Worth International 60000 Airport in 1974 50000 served as the next 40000 catalyst of growth in the area and 30000 Southlake residents 20000 adopted a home - rule charter in 10000 April 1987, which 0 created the current 2000 Zoos Zoos 2007 2008 2009 2010 council-manager Year form Of government with six Council Members and a Mayor who are elected at large on a non -partisan basis for staggered three-year terms. But the single most important event in bringing residential subdivision development to Southlake was the completion of water and sewer lines in the southern portion of the city in the early 1990s. Since that time, much like the area's first settlers were attracted to the area with its endless possibilities, Southlake has continued to attract the suburban settler desiring a high quality of life and the small town charm that has been preserved from Southlake's past. Services Provided Services provided by the City under general governmental functions include public events, public safety, planning and development, engineering, street maintenance, parks operation and maintenance, recreation, library services, and general administrative services. The City does not provide educational or welfare services. Water and sewer services and solid waste collection are provided under an Enterprise Fund concept, with user charges set by the City Council to ensure adequate coverage of operating expenses and payments of outstanding debt. iv Economic Condition and Outlook The City of Southlake continues to be one of the major growth areas in Texas. The City is in a prime location in Northeast Tarrant County, 5 minutes west of Dallas/Fort Worth International Airport, and 10 minutes east of the Alliance Airport, a commercial aviation and industrial complex in north Fort Worth. State Highway 114, FM1709, and FM1938, the regional road arterials, serve the City. 200 180 160 140 120 100 80 60 40 20 0 Single Family Residential Home Permits FY06 FY07 FY08 FY09 FY10 Number of Water Customers 9400 9300 9200 9100 9000 8900 8800 8700 8600 8500 8400 8300 FY06 FY07 FY08 FY09 FY10 thoroughfares, and has implemented regulatory controls quality growth into the future. 20,000,000 15,000,000 10,000,000 5,000,000 Sales Tax Revenue 2006 2007 2008 2009 20,10 ■General ❑SPDC ❑Crime There were 52 single family residential permits issued in Fiscal Year 2010 with an average new home construction value, excluding land value, of more than $610,000. Residential home construction has slowed as evidenced by the chart. Water customers increased from 9,252 in Fiscal Year 2009 to 9,346 in 2010, while wastewater customers increased from 7,121 to 7,229 during the same year. The chart shows the five-year trend of increasing water customers, the result of the building permit activity. The City has developed master plans for land use, water, sewer, parks, trails, and that will maintain the anticipated The City of Southlake experienced minimum change in sales tax collections during the fiscal year as indicated on the chart. v Future Development During 2010, approximately 14 new construction commercial permits were issued by the city representing over 340,000 square feet of future retail/office. Residential also experienced an increase in activity; several subdivisions were approved for development with an estimated average home value over $700,000. Financial Management Principles The City has strong financial management principles that provide the framework for the City's financial sustainability. • Tax rate management. The tax rate is allocated properly between maintenance/operations and debt service. • Structural balance. The City's ability to weather potential economic downturns or other financial challenges is critical. The City does not use reserves to balance the operating budget. • Reserve management. The City's fund balance policy requires a minimum 15% and optimum 25% balance. The City uses "excess" reserves as a means to fund one-time, "pay-as-you-go" projects. • Multi -year financial plan. The long-term effect of today's decisions on tomorrow's financial situation is an important consideration during the budget process. • Quality service delivery. The City is committed to meeting the needs of our community through high quality service delivery. • Risk management. The City supports ongoing initiatives to safeguard the public trust by internal audits and other initiatives to maintain a strong control environment. For fiscal year 2010, the property tax rate was held steady at $0.462 per $100 net taxable valuation. In spite of the economic downturn the City did not use reserves to balance the operating budget for fiscal years 2010 or 2011. 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. vi Awards The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to prograin standards. Such CAFR must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The City of Southlake received a Certificate of Achievement for the year ended September 30, 2009, and believes our current report conforms to the Certificate of Achievement program requirements, and we are submitting it to GFOA. Acknowledgments _ The preparation of this report could not be accomplished without the dedication and efficiency of the entire staff and our independent auditor. I would like to express my sincere appreciation to all employees who contributed to its preparation. I would also like to thank the Mayor and members of the City Council for their support in planning and conducting the financial operations of the City in a responsible and efficient manner. Respectfully submitted, Sharen Jackson, CPA Director of Finance vii Certificate of Achievement for Excellence in Financial Reporting Presented to City of Southlake Texas For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2009 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. �I President Executive Director VIII ,x w of u�— O V) LIST OF PRINCIPAL OFFICIALS John Terrell Mayor Laura Hill Mayor Protem Brandon Bledsoe Deputy Mayor Protem Carolyn Morris Council Member Al Zito Council Member Jeff Wang Council Member Pamela Muller Council Member Shana K. Yelverton City Manager Jim Blagg Assistant City Manager Ben Thatcher Assistant City Manager Alicia Richardson City Secretary Jim Blagg Director of Public Safety Sharen Jackson Director of Finance Greg Last Director of Economic Development Robert Price Director of Public Works Chris Tribble Director of Community Services Stacey Black Director of Human Resources Ken Baker Director of Planning/Development x FINANCIAL SECTION weaver INDEPENDENT AUDITOR'S REPORT To Members of the City Council and City Manager City of Southlake, Texas We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the City of Southlake, Texas (the City) as of and for the year ended September 30, 2010, which collectively comprise the City's basic financial statements, as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express opinions on these basic financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Southlake, Texas at September 30, 2010, and the respective changes in financial position and cash flows, where applicable, thereof, for the year then ended in conformity with accounting principles generally accepted in the United States of America. The accompanying management's discussion and analysis (pages 3 through 14), budgetary comparison information (pages 53 through 55) and condition rating of the street system (page 56), are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. In accordance with Government Auditing Standards, we have issued a report dated March 29, 2011, on our consideration of the City's internal control over financial reporting and our tests of compliance with certain provisions of laws, regulations, contracts and grants. The purpose of that report is to describe the scope of testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. The report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. AN INDEPENDENT WEAVER AND TIDWELL LLP DALLAS MEMBER OF BAKER TILLY CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS 12221 MERIT DRIVE, SUITE 1400, DALLAS, TX 75251 INTERNATIONAL WWW.WEAVERLLP.COM 1 P:(972) 490 1970 F:(972) 702 8321 City of Southlake, Texas Page 2 Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The introductory section, combining and individual major and non -major fund financial statements and schedules, schedules of capital assets used in the operation of governmental funds, and statistical section listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements of the City. The combining and individual major and non -major fund financial statements and schedules and the schedules of capital assets used in the operation of governmental funds have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated, in all material respects in relation to the basic financial statements taken as a whole. The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on such data. "6v_� aaw T:41-0- Z�� WEAVER AND TIDWELL, L.L.P. Dallas, Texas March 29, 2011 2 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 take time to read and evaluate all sections of the report, including the footnotes and the other Required Supplementary Information that is provided in addition to this MD&A. FINANCIAL HIGHLIGHTS The assets of the City of Southlake exceeded its liabilities at September 30, 2010 by $429,109,525 (net assets). Of this amount, $77,270,225 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. The City's total net assets increased by $23,358,476. This increase can be attributed to increases in ad valorem, sales tax revenue, fines and forfeitures, contributions, and charges for services. At September 30, 2010, the City's governmental funds reported combined ending fund balances of $93,874,101. Approximately 19.2 percent of this amount, $17,982,350, is available for spending at the government's discretion (unreserved fund balance). At the end of the current fiscal year, unreserved fund balance for the General Fund was $17,982,361 or 61.2 percent of total General Fund expenditures. At the end of the current fiscal year, the City of Southlake had outstanding debt totaling $180,119,457, a net increase of $6,151,312 from the previous year. 3 OVERVIEW OF THE FINANCIAL STATEMENTS The discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The new reporting focus is on the City as a whole and on individual major funds. It is intended to present a more comprehensive view of the City's financial activities. The basic financial statements are comprised of three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. GOVERNMENT -WIDE FINANCIAL STATEMENTS The government -wide financial statements include the Statement of Net Assets 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 Assets presents information on all of the City's assets and liabilities, including capital assets and long-term obligations. The difference between the two is reported as net assets. Over time, the increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. Other indicators of the City's financial position should be taken into consideration, such as the change in the City's property tax base and condition of the City's infrastructure (i.e., roads, drainage systems, water and sewer lines, etc.), in order to more accurately assess the overall financial condition of the City. The Statement of Activities presents information showing how the City's net assets 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 Assets and the Statement of Activities divide the City's activities into two types: Governmental activities- Most of the City's basic services are reported here, including general administration, debt services, public safety, public works, parks and community services, public library, public events and facilities, planning and development and finance. Property, sales and franchise taxes provide the majority of the financing for these activities. M Business -Type activities- Activities for which the City charges a fee to customers to pay most or all of the costs of a service it provides are reported here. The City's business - type activities include water distribution and wastewater collection and solid waste collection and disposal. The government -wide financial statements are found on pages 15-16 of this report. FUND FINANCIAL STATEMENTS The City of Southlake, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. These statements focus on the most significant funds and may be used to find more detailed information about the City's most significant activities. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. Governmental Funds- These funds are used to account for the majority of the City's activities, which are essentially the same functions reported as governmental activities in the government -wide statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near -term inflows and outflows of spendable resources, as well as spendable resources available at the end of the fiscal year for future spending. Such information may be useful in evaluating a government's near -term financing requirements. The focus of the governmental funds financial statements is narrower than that of the government -wide financial statements. Therefore, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near -term financing decisions. Both the governmental funds Balance Sheet and the governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances provide a reconciliation to facilitate this comparison. The reconciliation explains the differences between the government's activities as reported in the government -wide financial statements and the information presented in the governmental funds financial statements. The City maintains twenty-one individual governmental funds. Information is presented separately in the governmental funds Balance Sheet and in the governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances for the General Fund, General Obligation Debt Service Fund, General Capital Projects Fund, Crime Control District Special Revenue Fund, Southlake Parks Development Corporation Capital Projects Fund, Crime Control District Capital Projects Fund and Tax Increment Financing District 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. E Individual fund data for each of the non -major governmental funds is provided in the form of combining statements elsewhere in this report. The basic governmental funds financial statements can be found on pages 17-22 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 its vehicle fleet. Proprietary funds financial statements provide the same type of information as the government -wide financial statements, only in more detail. The proprietary funds financial statements provide separate information for the water and sewer operations, which is considered to be a major fund of the City. 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 27-52 of this report. GOVERNMENT -WIDE FINANCIAL ANALYSIS Total assets of the City at September 30, 2010 were $618,046,396 while total liabilities were $188,936,871, resulting in a net asset balance of $429,109,525. The largest portion of the City's net assets, $343,024,679 reflects its investment in capital assets (land and improvements, building, infrastructure, machinery and equipment net of accumulated depreciation); less any related debt used to acquire those assets that are 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. I Governmental Activities net assets increased by $21,200,207. This increase is primarily attributable to increases in both property taxes and charges for services. Business -type Activities net assets increased by $2,158,269. The majority of this change can be attributed to an increase in charges for service which resulted from increased consumption during the dry summer months. The following analysis highlights the net assets as of September 30, 2010: Governmental Business -Type 2010 Activities Activities Total Current and other assets: $103,664,305 $ 36,746,389 $140,410,694 Capital assets 375,432,194 102,203,508 477,635,702 Total assets $479,096,499 $138,949,897 $618,046,396 Other liabilities $ 6,237,555 $ 2,579,859 $ 8,817,414 Long-term debt outstanding 127,620,318 52,499,139 180,119,457 Total liabilities $133,857,873 S 55,078,998 $188936,871 Net assets: Invested in capital assets $277,985,305 $ 65,039,374 $343,024,679 Restricted -debt service 8,814,621 8,814,621 Unrestricted 58,438,700 18,831,525 77,270,225 Total net assets $345,238,626 S 83,870,899 $429,109,525 The following analysis highlights the net assets as of September 30, 2009: Governmental Business -Type 2009 Activities Activities Total Current and other assets: $101,581,082 $ 37,677,246 $139,258,328 Capital assets 351,580,650 97,623,701 449,204,351 Total assets $453,161,732 $135,300,947 $588,462,679 Other liabilities $ 6,304,141 $ 2,439,344 $ 8,743,485 Long-term debt outstanding 122,819,172 51,148,973 173,968,145 Total liabilities $129,123,313 S 53,588,317 $182,711,630 Net assets: Invested in capital assets $246,238,808 $ 60,541,445 $306,780,253 Restricted -debt service 7,850,231 7,850,231 Unrestricted 69,949,380 21,171,185 91,120,565 Total net assets $324,038,419 S 81,712,630 $405,751,049 7 The following analysis highlights the changes in net assets for the year ended September 30, 2010: Governmental Business -Type 2010 Activities Activities Total Revenues: Program revenues Charges for services $ 6,811,321 $18,897,356 $25,708,677 Operating grants and contributions 688,803 688,803 Capital grants and contributions 5,994,206 2,578,400 8,572,606 General revenues: Taxes 52,515,389 52,515,389 Interest on investments 414,852 155,173 570,025 Gain on sale of capital assets 21,465 21,465 Miscellaneous 428,804 71,871 500,675 Total revenues 66,874,840 21,702,800 88,577,640 Expenses: General government 11,814,836 11,814,836 Public safety 14,885,499 14,885,499 Public works 5,767,688 5,767,688 Culture and recreation 7,287,434 7,287,434 Interest on long-term debt 6,515,269 6,515,269 Water and sewer 18,948,438 18,948,438 Total expenses 46,270,726 18,948,438 65,219,164 Increase in net assets before transfers 20,604,114 2,754,362 23,358,476 Transfers 596,093 (596,093) Increase in net assets 21,200,207 2,158,269 23,358,476 Net assets -beginning of year, as restated 324,038,419 81,712,630 405,751,049 Net Assets -End of Year S429,109,525 The following analysis highlights the changes in net assets for the year ended September 30, 2009: Governmental Business -Type 2009 Activities Activities Total Revenues: Program revenues Charges for services $ 6,021,524 $19,321,095 $25,342,619 Operating grants and contributions 239,364 239,364 Capital grants and contributions 1,833,160 2,212,867 4,046,027 General revenues: Taxes 50,983,544 50,983,544 Interest on investments 1,703,418 953,739 2,657,157 Gain on sale of capital assets 167,127 167,127 Miscellaneous 341,957 2,187 344,144 Transfers 339,510 (339,510) Total revenues 61,629,604 22,150,378 83,779,982 Expenses: General government 11,068,965 11,068,965 Public safety 12,920,263 12,920,263 Public works 5,840,432 5,840,432 Culture and recreation 6,439,100 6,439,100 Interest on long-term debt 5,854,931 5,854,931 Water and sewer 18,066,346 18,066,346 Total expenses 42,123,691 18,066,346 60,190,037 Increase in net assets 19,505,913 4,084,032 23,589,945 Net assets -beginning of year, as restated 304,532,506 77,628,598 382,161,104 Net Assets -End of Year S405,751,049 0 FINANCIAL ANALYSIS OF THE GOVERNMENTAL FUNDS Governmental Funds- The focus of the City of Southlake's governmental funds is to provide information on near -term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City's governmental funds reported combined fund balances of $93,874,101. Approximately 19.2 percent or $17,982,350, constitutes unreserved fund balance, which is available for spending at the government's discretion. The remainder of the fund balance is reserved to indicate that it is not available for new spending because it has already been committed to pay for debt service ($10,768,763), recycling ($68,092), police expenditures ($5,026,409), parks ($8,136,946), capital projects ($45,433,316), inventories ($27,091), prepaid expenditures ($3,835), reinvestment zone expenditures ($5,465,595), municipal court expenditures ($767,464), stormwater expenditures ($150,000), and oil and gas expenditures ($44,240). The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unreserved fund balance of the general fund was $17,982,361. As a measure of the General Fund's liquidity, it may be useful to compare both the unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 61.2 percent of total General Fund expenditures, while total fund balance represents 61.8 percent of total General Fund expenditures. The fund balance of the General fund increased $2,791,481 during the current fiscal year. Following are the key factors in this increase: Increase in taxes and charges for service revenue by $1,531,845 and $789,797, respectively. The General Obligation Debt Service Fund has a fund balance of $9,266,326, all of which is reserved for the payment of debt service. The fund balance increased during the year by $608,226, primarily due to a $4,454,197 transfer from the Tax Increment Financing District and Crime Control District Special Revenue Funds. The fund balance in the General Capital Projects Funds ended the year at $33,104,678, a slight decrease of $5,328. FINANCIAL ANALYSIS OF THE PROPRIETARY FUNDS The City's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. 10 Unrestricted net assets reported in the Proprietary Funds were: $18,831,525 in the Water and Sewer Fund and $2,295,950 in the Vehicle Replacement Fund. Total net assets in the Water and Sewer Fund increased by $2,158,269 while Vehicle Replacement Fund net assets decreased by $232,642. The increase in capital contributions and decrease in interest income from the previous year are the primary reasons for the change in net assets. GENERAL FUND BUDGETARY HIGHLIGHTS There was an increase in appropriations from the original budget to the final amended budget of $114,734, which can be briefly summarized as follows: • Increase in general operational costs (utilities, supplies, etc.) CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets- The City's investment in capital assets for its governmental and business - type activities as of September 30, 2010 amount to $477,635,702 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements, machinery and equipment, infrastructure and construction in progress. The City has elected to use the modified approach for its street system in lieu of the depreciation method. An up-to-date inventory of these infrastructure assets was performed and the annual costs to maintain and preserve these assets was established and disclosed through administrative policy. The current condition level of the street system meets the target condition level established by the City. There were no significant changes in the condition levels of infrastructure assets, and the differences between the estimated amounts necessary to maintain and preserve the street system at target condition levels and the actual amount of expense incurred for that purpose for 2010 was not material. Major capital projects completed during the current year included the following: • DPS Headquarter Facility • Quail Creek Sewer • Royal and Annie Smith Park • Liberty Park at Sheltonwood • Pavement Management System — various overlays and rehab • Various Sidewalks 11 Governmental Business -Type 2010 Activities Activities Total Land and improvements $ 85,987,988 Buildings and improvements 56,026,555 Improvements Infrastructure 207,014,670 Machinery and equipment 8,261,012 Construction in Progress 18,141,972 Total 8375,432,194 $ 14,471,242 452,898 78,685,371 1,027,947 7,596,050 8102,203,508 $100,459,230 56,479,453 78,685,371 207,014,670 9,288,959 25.738.022 8477,635,702 Governmental Business -Type 2009 Activities Activities Total Land and improvements $ 80,711,920 $ 13,868,508 $ 94,580,428 Buildings and improvements 28,052,746 480,813 28,533,559 Improvements 75,051,134 75,130,659 Infrastructure 200,667,400 200,667,400 Machinery and equipment 7,906,228 1,327,632 9,233,860 Construction in Progress 34,242,356 6,895,614 41,137,970 Total S21413,701 S449,204,351 Additional information on the City's capital assets can be found in Note 4 on pages 41-42 of this report. Long-term Debt- At the end of the current fiscal year, the City of Southlake had $126,741,347 total long-term debt outstanding of bonds issued to finance capital improvements for roadway, parks and recreation, public building and infrastructure. $52,164,653 of Utility System bonds, which financed projects to increase capacity of the Utility system, was also outstanding. An additional $941,243 was reported for compensated absences at year-end. 12 Bonds payable Unearned revenue Compensated absences Total Business - Governmental Type 2010 Activities Activities Total $126,741,347 878,971 S 127,620,318 $52,164,653 272,214 62,272 52.499.139 $178,906,000 272,214 941,243 180119.457 Governmental Business -Type 2009 Activities Activities Total Bonds payable $121,841,842 $50,805,953 $172,647,795 Accreted interest payable 126,510 126,510 Unearned revenue 278,437 278,437 Compensated absences 850,820 64,583 915,403 Total x122,819,172 51148973 173.968.145 The City's bonds are rated "AAA" by Standard and Poor's and "Aa" by Moody's Investors Service and "AA" by FitchRatings. The City is permitted by Article XI, Section 5, of the State of Texas Constitution to levy taxes up to $2.50 per $100 of assessed valuation for general governmental services including the payment of principal and interest on general obligation long-term debt. The current ratio of tax -supported debt to the assessed value of all taxable property is 1.50 percent. Additional information on the City's long-term debt can be found in Note 5 on pages 42- 47 of this report. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES The State of Texas, by constitution, does not have a personal income tax and therefore the State operates primarily using sales and gasoline taxes. Local governments primarily rely on property taxes and fees to fund their government activities. While property taxes are important to the City, they represent 53.1% of total governmental revenue. Sales tax continues to grow as the second largest governmental resource representing 28.9% of total governmental revenue. The City monitors all of its resources and determines the need for program adjustment or fee increases accordingly. The FY 2011 Adopted Budget maintains the City's property tax rate at $0.462 per $100 net taxable valuation, which is unchanged from the FY 2010 rate. The City's property tax roll on net taxable value increased $3,259,042 or 5.9 percent from the 2009 certified roll to the 2010 certified roll. As a result, the City is projected to collect more in FY 2011 than in FY 2010, even without a tax rate increase. The estimate of the FY 2011 tax roll is based on the certified roll as provided by the Tarrant Appraisal District (TAD) in July. The assumed collection rate is 98 percent. 13 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 Finance Director, 1400 Main Street, 41h Floor Finance Department, Southlake, Texas 76092. 14 BASIC FINANCIAL STATEMENTS GOVERNMENT -WIDE FINANCIAL STATEMENTS CITY OF SOUTHLAKE, TEXAS STATEMENT OF NET ASSETS SEPTEMBER 30, 2010 ASSETS Cash and cash equivalents Investments Receivables (net of allowance for uncollectibles) Prepaid items Inventories Restricted assets Cash and cash equivalents Investments Receivables Capital assets: Non -depreciable Depreciable (net of depreciation) Deferred charges TOTAL ASSETS LIABILITIES Accounts payable Accrued liabilities Accrued interest payable Unearned revenue Liabilities payable from restricted assets Accrued interest Customer meter deposits Non -current liabilities: Due within one year Due in more than one year TOTAL LIABILITIES NET ASSETS Invested in capital assets (net of related debt) Restricted for debt service Unrestricted TOTAL NET ASSETS The Notes to Financial Statements are an integral part of this statement. EXHIBIT 1 PRIMARY GOVERNMENT GOVERNMENTAL BUSINESS -TYPE ACTIVITIES ACTIVITIES TOTAL $ 52,413,340 $ 111,972 $ 52,525,312 36,147,262 7,660,332 43,807,594 4,350,224 4,736,330 9,086,554 3,835 628 4,463 27,091 - 27,091 5,907,921 9,973,794 15,881,715 3,377,376 13, 540, 969 16, 918, 345 85,595 - 85,595 275,341,697 22,067,292 297,408,989 100,090,497 80,136,216 180,226,713 1,351,661 722,364 2,074,025 $ 479,096,499 $ 138,949,897 $ 618,046,396 $ 3,636,186 $ 1,979,301 $ 5,615,487 1,574, 024 97,788 1,671, 812 - 316,163 316,163 490,715 - 490,715 536,630 - 536,630 - 186,607 186,607 9,542,336 3,602,273 13,144,609 118,077,982 48,896,866 166,974,848 133,857,873 55,078,998 188,936,871 277,985,305 65,039,374 343,024,679 8,814,621 - 8,814,621 58,438,700 18,831,525 77,270,225 $ 345,238,626 $ 83,870,899 $ 429,109,525 15 N m x w O NM w w m w acn(L xww w P: U) � 0 Y ~ 0 U J Q w LL o �- w mow} w Owe UC/)LL ia N V V d) (fl 00 00 00 O � 00 (!) (!) (1) 'IT (D 0) (1) 00 V) m N (0 0) I� (0 00 V N (O I- l!) r- V N O (O V 00 N (h (h (h O (h I- N O V (O ' (f) V O l!) V 00 I- N l!) (D r- r- 0) 00 O (0 O O I- 00 0) J 0 I- 0 00 � I- N N 'IT 0) Z6 O r- N O O (!) l!) O Q N— V N l!) I- N N N N (fl (0 l!) l!) (D m r- O O N L6 0 N c� N N O NI- N n (h u) (h N (!) 6 2 'ITN ER69 ER a) !Z 00 00 00 H' ' ' ' (h (h (h I- ' ' ' ' 000 'IT O (�O N (O 00 y N N N N y' (`1) 0000 '; N N N N W W 'y Q m VT V) O 00 N (!) V (h (h r- d) (D 00 (f) (h N (O d) d) (D 00 V (!) (O O d) O O N O (O V 00 N (h (h (h r- N 00 V 00 O (O N V (O C y V 00 I- N l!) (D (0 000 (0 V 00 (0 (0 O 00 00 a) a) 0I: 000 I- r- 0)Z6O�NN 0) I- O M M E E N V N l!) I- N (fl (D V V (!) 0) N O N N (f� (O cli N i ,> cN,) n N N N V O 0 EFT ER y y (D O (D O O O O O (O O 0 N N V V (O a V V 00 00 N L O L � � LO LO LO (0 C (f) (!) N N 00 O CL U R y a) 0 O y y C CL a) L 00 00 00 00 w L 0 ' (0 (0 (0 .Q O N y rnco R w 'a y ~ 0 O ER y y 7 C W a) 0 � y E � L LU a) C ' w w (0OvOo c wx °) O d Z N ._ rn rn O > y o N C i V I� N M 00 00 00 r- �� L W N N N N (0 00 00 V) O C (6 N CL jp L N N w 0 0 2 a) 0 a) O Z Q Q U N aa)i xI1()LL w ~ 2 W W � U Z Z C�~ (0 0) 00 v 0) (0 00 00 v y m 0) 00 m (0 N m m (0 y 00 V (O V N I- V V O- a �00(D W V V (D 00 00 I� N (!) N 0) 0) N K V LO I- (o (D 00 00 SO v) 69 y N y N Z Z Z � R R W � R c. W Z ayi� gE c w ul Q Z U rn d U 0 a> i } (6 W y 0 > O w Y > O ) N Q_0 y m 0) O O c 0) a) 0 a) 0 0 c 'a d O y U) 0 E U U .�. .�. }a' E ayi °>3 O a ~ Q > (D IL I1 U y > Q U � 0 7 am 0LL 0 y E E a) (6 N (n y m U 0 � O C LL I? O y O a) O z - a� � FUND FINANCIAL STATEMENTS GOVERNMENTAL FUNDS FINANCIAL STATEMENTS CITY OF SOUTHLAKE, TEXAS BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2010 GENERAL OBLIGATION GENERAL CRIME DEBT CAPITAL CONTROL GENERAL SERVICE PROJECTS DISTRICT ASSETS Cash and cash equivalents $ 1,765,084 $ 5,907,921 $ 23,169,646 $ - Investments 17,152,878 3,377,376 11,135,551 3,850,138 Receivables, net of allowances for uncollectibles: Ad valorem taxes 208,163 85,178 - - Franchise taxes 372,817 - - - Sales taxes 1,599,832 - - 727,359 Interest 104,866 417 43,102 62,098 Other 88,390 - - - Inventories 27,091 - - - Prepaid items 3,835 - - - TOTAL ASSETS $ 21,322,956 $ 9,370,892 $ 34,348,299 $ 4,639,595 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ 799,776 $ - $ 1,243,621 $ 7,737 Accrued liabilities 1,529,156 19,641 - - Deferred revenue 847,458 84,925 - - TOTAL LIABILITIES 3,176,390 104,566 1,243,621 7,737 FUND BALANCES Reserved for : Debt service - 9,266,326 - - Recycling 68,092 - - - Police expenditures 65,187 - - 4,631,858 Parks - - - - Capital projects - - 33,104,678 - Inventories 27,091 - - - Prepaid expenditures 3,835 - - - Oil and gas expenditures - - - - Reinvestment zone expenditures - - - - Municipal court expenditures - - - - Storm water expenditures - - - - Unreserved, undesignated reported in: General fund 12,605,246 - - - Special revenue fund - - - - Unreserved, designated reported in: General fund 5,377,115 - - - TOTAL FUND BALANCES 18,146,566 9,266,326 33,104,678 4,631,858 TOTAL LIABILITIES AND FUND BALANCES $ 21,322,956 $ 9,370,892 $ 34,348,299 $ 4,639,595 The Notes to Financial Statements are an integral part of this statement. 17 EXHIBIT 3 SOUTHLAKE PARKS CRIME DEVELOPMENT CONTROL TAX CORPORATION DISTRICT INCREMENT NON -MAJOR TOTAL CAPITAL CAPITAL FINANCING GOVERNMENTAL GOVERNMENTAL PROJECTS PROJECTS DISTRICT FUNDS FUNDS $ 9,134,544 $ - $ 5,462,257 $ 12,187,023 $ 57,626,475 26,667 1,588,131 3,338 789,789 37,923,868 - - - - 293,341 - - - - 372,817 - - - 821,111 3,148, 302 4,045 - - 28,806 243,334 - - - 289,241 377,631 - - - - 27,091 - - - - 3,835 $ 9,165,256 $ 1,588,131 $ 5,465,595 $ 14,115,970 $ 100,016,694 $ 1,031,450 $ 135,245 $ - $ 418,357 $ 3,636,186 - - - 25,227 1,574,024 - - - - 932,383 1,031,450 135,245 - 443,584 6,142,593 - - - 1,502,437 10,768,763 - - - - 68,092 - - - 329,364 5,026,409 - - - 8,136, 946 8,136, 946 8,133,806 1,452,886 - 2,741,946 45,433,316 - - - - 27,091 - - - - 3,835 - - - 44,240 44,240 - - 5,465,595 - 5,465,595 - - - 767,464 767,464 - - - 150,000 150,000 - - - - 12,605,246 - - - (11) (11) - - - - 5,377,115 8,133,806 1,452,886 5,465,595 13,672,386 93,874,101 $ 9,165,256 $ 1,588,131 $ 5,465,595 $ 14,115,970 $ 100,016,694 18 CITY OF SOUTHLAKE, TEXAS EXHIBIT 4 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS AS OF SEPTEM BER 30, 2010 Total fund balances - governmental funds $ 93,874,101 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not current financial resources and therefore are not reported in the governmental funds balance sheet. (Less $1,394,582 in assets allocated to governmental activities from the internal service fund). 374,037,612 Costs associated with the issuance of governmental long-term debt are expensed when incurred in the fund statements and capitalized and amortized over the life of the debt in the government -wide financial statements. 1,351,661 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. (536,630) 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. 3,690,532 Revenues earned but not available within sixty days of the year end are not recognized as revenue on the fund financial statements. 441,668 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the fund financial statements. (127,620,318) Net assets of governmental activities $ 345,238,626 The Notes to Financial Statements are an integral part of this statement. 19 CITY OF SOUTHLAKE, TEXAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2010 GENERAL OBLIGATION GENERAL CRIME DEBT CAPITAL CONTROL GENERAL SERVICE PROJECTS DISTRICT REVENUES Ad valorem taxes, penalties and interest $ 17,623,973 $ 6,898,145 $ $ Franchise taxes 2,606,248 - Municipal sales and mixed beverage taxes 8,165,335 4,295,145 Licenses, permits and fees 1,453,823 - Charges for services 1,535,363 Fines and forfeitures 1,032,817 Grants 409,498 Capital recovery fees - - 295,987 - Interest earned 19,771 48,963 167,224 181 Contributions - - 23,039 - Miscellaneous 442,465 TOTAL REVENUES 33,289,293 6,947,108 486,250 4,295,326 EXPENDITURES Current General government City secretary/mayor 340,590 City manager's office 577,187 Human resources 380,935 Support services 2,533,233 Economic development 230,209 Finance 1,081,859 Municipal court 656,109 Teen court 132,520 Information technology 1,786,064 Public safety - Police services 5,430,771 278,322 Fire services 5,062,613 - Public safety support 1,607,951 Building inspection 793,608 - Public works Public works administration 1,094,454 221,633 Streets and drainage 1,439,925 642,568 Planning 1,003,344 - Cultural and recreation Community services 528,592 Parks and recreation 4,051,304 Library services 651,906 Intergovernmental - - Capital outlay - 5,901,815 Debt service: Principal retirement 6,250,738 - Interest and fiscal charges 4,751,377 54,387 TOTAL EXPENDITURES 29,383,174 11,002,115 6,820,403 278,322 Excess (deficiency) of revenues over (under) expenditures 3,906,119 (4,055,007) (6,334,153) 4,017,004 OTHER FINANCING SOURCES (USES) Issuance of long-term debt - 19,325,790 4,355,000 - Payment to refund bond escrow agent (20,120,845) - Premium on issuance of long-term debt - 1,004,091 73,825 - Transfers from other funds 920,362 4,454,197 1,900,000 743,607 Transfers to other funds (2,035,000) (1,436,687) TOTAL OTHER FINANCING SOURCES (USES) (1,114,638) 4,663,233 6,328,825 (693,080) NET CHANGE IN FUND BALANCES 2,791,481 608,226 (5,328) 3,323,924 FUND BALANCES, BEGINNING OF YEAR 15,355,085 8,658,100 33,110,006 1,307,934 FUND BALANCES, END OF YEAR $ 18,146,566 $ 9,266,326 $ 33,104,678 $ 4,631,858 The Notes to Financial Statements are an integral part of this statement. 20 EXHIBIT 5 SOUTHLAKE PARKS CRIME DEVELOPMENT CONTROL TAX CORPORATION DISTRICT INCREMENT NON -MAJOR TOTAL CAPITAL CAPITAL FINANCING GOVERNMENTAL GOVERNMENTAL PROJECTS PROJECTS DISTRICT FUNDS FUNDS $ $ $ 7,773,841 $ $ 32,295,959 - 2,606,248 5,150,301 17,610, 781 1,400,253 2,854,076 - 1,535,363 1,083,588 2,116,405 - 409,498 - - 295,987 60,462 45,660 14,974 72,088 429,323 - - - 1,440 24,479 70,090 164,044 676,599 130,552 45,660 7,788,815 7,871,714 60,854,718 - - - - 340,590 577,187 380,935 16,305 2,549,538 - 230,209 1,081,859 656,109 - 132,520 38,105 1,824,169 812,552 6,521,645 - 5,062,613 1,607,951 793,608 1,316,087 2,082,493 1,003,344 - 528,592 799,397 4,850,701 - 10,153 662,059 - - 3,158,243 - 3,158,243 8,643,650 6,484,635 - 605,917 21,636,017 - - 1,310,000 7,560,738 37,365 30,817 1,113,300 5,987,246 8,681,015 6,515,452 3,158,243 4,705,729 70,544,453 (8,550,463) (6,469,792) 4,630,572 3,165,985 (9,689,735) 3,245,000 2,855,000 - - 29,780,790 - - (20,120,845) 54,839 188,615 - 1,321,370 2,776,000 - 2,716,749 13,510,915 (3,023,109) (6,655,026) (13,149,822) 6,075,839 3,043,615 (3,023,109) (3,938,277) 11,342,408 (2,474,624) (3,426,177) 1,607,463 (772,292) 1,652,673 10,608,430 4,879,063 3,858,132 14,444,678 92,221,428 $ 8,133,806 $ 1,452,8 6 -$ 5,465, 995 $ 13,672,386 $ 93,874, 001 21 CITY OF SOUTHLAKE, TEXAS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2010 EXHIBIT 6 Net change in fund balances - total governmental funds $ 1,652,673 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount of capital assets recorded in the current period. (Does not include $215,974 allocated from internal service fund). 22,617,740 Depreciation expense on capital assets is reported in the statement of activities but does not require the use of current financial resources. Therefore, depreciation expense is not reported as expenditures in the governmental funds. (Does not include $442,118 allocated from internal service fund). (4,497,161) 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 assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas the amounts are deferred and amortized in the statement of activities. This amount is the net effect of the following items: o Bond proceeds (29,780,790) o Payment to refunded bond escrow 20,120,845 o Bond premiums (1,321,370) o Deferred loss on refunding 127,827 o Debt issuance costs 404,629 o Repayments 7,560,738 o Net decrease in accreted interest 126,510 o Amortization of deferred charges (274,403) o Amortization of premiums 88,971 o Amortization of deferred loss on refunding (1,625,727) (4,572,770) 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. (28,151) 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. 350,286 Internal service funds are used by management to charge the costs of certain activities, such as fleet management, to individual funds. The net loss of the internal service fund is allocated entirely to governmental activities. (232,642) Governmental funds do not recognize assets contributed by developers. However, in the statement of activities the fair market value of those assets are recognized as revenue, then allocated over their estimated useful lives and reported as depreciation expense. 5,994,206 Loss on disposal of capital assets results in a decrease in net assets, but the net effect is not reported in governmental funds. (37,094) 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. (46,880) Change in Net Assets of Governmental activities $ 21,200,207 The Notes to Financial Statements are an integral part of this statement. 22 PROPRIETARY FUND FINANCIAL STATEMENTS CITY OF SOUTHLAKE, TEXAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30, 2010 ASSETS CURRENT ASSETS Cash and cash equivalents Investments Receivables, net of allowance for uncollectibles: Trade accounts Unbilled trade accounts Interest Special assessments Prepaid expenses Restricted assets Cash restricted for capital Investments restricted for customer meter deposits Investments restricted for capital Total current assets NON -CURRENT ASSETS Capital assets Land and improvements Buildings and improvements Distribution system Equipment Vehicles Capacity rights Construction in progress Total capital assets Less: accumulated depreciation Capital assets, net of accumulated depreciation Deferred charges Bond issuance costs, net of amortization Total deferred charges Total non -current assets TOTAL ASSETS LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable Accrued liabilities Accrued interest Current portion of general obligation debt Current portion of contract obligation debt Current portion of revenue bonds Current portion of compensated absences Current portion of deferred loss on refunding Current portion of deferred revenue Current portion of bond premiums Payable from restricted assets: Customer meter deposits Total current liabilities NON -CURRENT LIABILITIES Deferred revenue Contract revenue obligations General obligation debt Bond premiums Revenue bonds Deferred loss on refunding Total non -current liabilities TOTAL LIABILITIES NET ASSETS Invested in capital assets, net of related debt Unrestricted TOTAL NET ASSETS The Notes to Financial Statements are an integral part of this statement. EXHIBIT 7 BUSINESS -TYPE GOVERNMENTAL ACTIVITIES ACTIVITIES WATER AND SEWER VEHICLE REPLACEMENT ENTERPRISE INTERNAL SERVICE FUND FUND $ 111,972 $ 694,786 7,660,332 1,600,770 3,305,763 - 1,355,905 - 71, 634 394 3,028 - 628 9,973,794 186,607 13, 354, 362 36, 024, 025 2,295,950 14, 471, 242 - 887,424 107,886,940 1,664,392 - 329,881 3,212,914 9,190, 988 - 7,596,050 142,026,917 3,212,914 (39, 823, 409) (1,818,332) 102, 203, 508 1,394,582 722,364 722,364 102, 925, 872 1,394,582 $ 138,949,8 77 $ 3,69 5532 $ 1,979,301 $ - 97, 788 316,163 2,948,620 605,900 120,000 62,272 (181,488) 5,000 41,969 186,607 6,182,132 267,214 2,060,000 44, 717, 606 597,077 2,210,000 (955,031) 48, 896, 866 55, 078, 998 65, 039, 374 1,394,582 18, 831, 525 2,295,950 $ 83,870,899 $ 3, 990,532 23 CITY OF SOUTHLAKE, TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2010 OPERATING REVENUES Charges for sales and services: Water, sewer and garbage Service charges Miscellaneous Total operating revenues OPERATING EXPENSES: Personnel services Contractual services Lease payments Supplies Utilities Administrative Maintenance Professional benefits Depreciation and amortization Total operating expenses OPERATING INCOME (LOSS) BUSINESS -TYPE ACTIVITIES WATER AND SEWER ENTERPRISE FUND $ 18,815,054 82,302 71,938 18,969,294 EXHIBIT 8 GOVERNMENTAL ACTIVITIES VEHICLE REPLACEMENT INTERNAL SERVICE FUND 2,146,885 - 1,108,852 - 4,169 21,000 90,579 - 6,520,881 - 38,157 - 1,624,546 26,492 23,314 - 4,603,321 442,118 16,160,704 489,610 2,808,590 (489,610) NON -OPERATING REVENUES (EXPENSES) Gain (loss) on sale of capital assets (2,000) Interest income 155,106 Interest expense (2,785,734) 21,465 503 Total non -operating revenues (expenses) (2,632,628) 21,968 INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS 175,962 (467,642) CAPITAL CONTRIBUTIONS AND TRANSFERS Capital contributions - property owners 2,205,613 Contributions - impact fees 372,787 Transfers from other funds - Transfers to other funds (596,093) 235,000 Total capital contributions and transfers 1,982,307 235,000 CHANGE IN NET ASSETS NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR The Notes to Financial Statements are an integral part of this statement. 2,158,269 (232,642) 81,712,630 3,923,174 $ 83,870,899 $ 3,690,532 24 CITY OF SOUTHLAKE, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2010 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 Capital expenditures Principal payments on bonds Bond issue costs Proceeds from issuance of bonds Premium on the issuance of bonds Payment to refund bond escrow agent Interest paid Proceeds from sale of capital assets Contributions - impact fees BUSINESS -TYPE ACTIVITIES WATER AND SEWER ENTERPRISE FUND EXHIBIT 9 GOVERNMENTAL ACTIVITIES VEHICLE REPLACEMENT INTERNAL SERVICE FUND $ 17,769,896 $ (9,263,137) (47,492) (2,149,196) 6,357,563 (47,492) (6,484,270) (215,974) (4,202,100) (160, 066) 12,694,210 474,555 (7,758,141) (2,832,035) - - 21,465 372,787 - Net cash (used in) capital and related financing activities (7,895,060) (194,509) CASH FLOWS FROM NON -CAPITAL FINANCING ACTIVITIES Transfers (to) from other funds (596,093) 235,000 Cash paid to other funds (2,782,649) (614,490) Net cash (used in) non -capital financing activities (3,378,742) (379,490) CASH FLOWS FROM INVESTING ACTIVITIES Net sales of investments 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 ASSETS Cash and cash equivalents Cash restricted for capital 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 Receivables Prepaids Increase in liabilities Payables and accruals Customer deposits Net cash provided by (used in) operating activities NON -CASH FINANCING ACTIVITIES: Contributions of capital assets from developers The Notes to Financial Statements are an integral part of this statement. 25 14,826,436 1,306,059 175,569 10,218 15,002,005 1,316,277 10, 085, 766 694,786 $ 10,085,766 $ 694,786 $ 111,972 $ 694,786 9,973, 794 - $ 10,085,766 $ 694,786 $ 2,808,590 $ (489,610) 4,603,321 442,118 (1,232,002) (628) 139,388 38,894 $ 6,357,563 $ (47,492) $ 2,205,613 $ FIDUCIARY FUND FINANCIAL STATEMENTS CITY OF SOUTHLAKE, TEXAS EXHIBIT 10 CASH ESCROW AGENCY FUND STATEMENT OF FIDUCIARY NET ASSETS SEPTEMBER 30, 2010 ASSETS Cash and cash equivalents Investments Accrued interest receivable TOTAL ASSETS I1e1 314Ill 11*11 Due to builders TOTAL LIABILITIES The Notes to Financial Statements are an integral part of this statement. Agency Fund Cash Escrow 19,038 48,907 262 68,207 $ 68,207 68,207 NOTES TO FINANCIAL STATEMENTS CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 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 American Institute of Certified Public Accountants in the publication entitled Audits of State and Local Governmental Units and by the Financial Accounting Standards Board (when applicable). As allowed in Section P80 of GASB's Codification of Governmental Accounting and Financial Reporting Standards, the City has elected not to apply Financial Accounting Standards Board Statements and Interpretations, Accounting Principles Board Opinions, and Accounting Research Bulletins of the Committee of Accounting Procedure issued after November 30, 1989. The more significant accounting policies of the City are described below. Financial Reporting Entity The City is governed by an elected mayor and a six -member council and has the authority to make decisions, appoint administrators and managers, and significantly influence operations. It also has the primary accountability for fiscal matters. Therefore, the City is a financial reporting entity as defined by the Governmental Accounting Standards Board ("GASB") in its Statement No. 14, "The Financial Reporting Entity", as amended by GASB 39 "Determining Whether Certain Organizations Are Component Units". Under GASB 14 component units are organizations for which the City is financially accountable and all other organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. Financial accountability exists if the City appoints a voting majority of an organization's governing board and is either able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the City. The City may be financially accountable for governmental organizations with a separately elected governing board, a governing board appointed by another government, or a jointly appointed board that is fiscally dependent on the City. The financial statements of the component units may be discretely presented in a separate column from the primary government or blended with the financial statements of the primary government. GASB 39 added clarification to GASB 14 by including entities which meet all three of the following requirements: 1. The economic resources received or held by the separate organization are entirely for the direct benefit of the primary government, its component units, or its constituents. 2. The primary government, or its component units, is entitled to, or has the ability to otherwise access, a majority of the economic resources received or held by the separate organization. 27 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Financial Reporting Entity —Continued 3. The economic resources received or held by an individual organization that the specific primary government, or its component units, is entitled to, or has the ability to otherwise access, are significant to that primary government. Based on these criteria the financial information of the following entities has been blended within the reporting entity. Individual financial statements are not available for these component units. Southlake Parks Development Corporation (the Corporation) - The Corporation is a nonprofit industrial development corporation formed in January 1994 under the Development Corporation Act of 1979. The Corporation is organized exclusively to act on behalf of the City for the financing, development and operation of parks and recreation facilities. The affairs of the Corporation are managed by a seven member board of directors, of which four are members of the City Council. The annual corporate budget and issuance of debt must be approved by the City Council. The Corporation is reported as if it were part of the primary government as the City Council has sufficient representation on the Board to allow complete control over the Corporation's activities. Southlake Tax Increment Financing District (the TIF) - The TIF was formed to finance and make public improvements, under the authority of the Tax Increment Financing Act. The TIF is governed by a twelve member board of directors consisting of the seven City Council members, and one member each appointed by Carroll Independent School District, Tarrant County, Tarrant County Junior College District, and the Tarrant County Hospital District Board of Directors. The TIF is reported as if it were a part of the primary government as the City Council has sufficient representation on the board to allow for complete control over the TIF's activities. Southlake Crime Control and Prevention District (the District) — The District was formed under Chapter 363 of the Texas Local Government Code, the Crime Control and Prevention Act. The District is organized exclusively to act on behalf of the City for the financing, development and crime control throughout the City. The District is governed by a seven member board appointed by the City Council. The annual budget and issuance of debt must be approved by the City Council. The District is reported as a part of the primary government as the City Council acts as the governing body for the District. Basis of Presentation The government -wide financial statements (the statement of net assets 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. 28 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Basis of Presentation — Continued Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given program and 2) operating or capital grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Taxes and other items not properly included among program revenues are reported instead as general revenues. Fund Financial Statements: The City segregates transactions related to certain functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Separate statements are presented for governmental funds and proprietary funds. These statements present each major fund as a separate column in the fund financial statements; all non -major funds are aggregated and presented in a single column. Governmental funds are those funds through which most governmental functions typically are financed. The measurement focus of governmental funds is on the sources, uses and balances of current financial resources. Governmental Funds The City reports the following major governmental funds: General Fund - The General Fund is the general operating fund of the City. It is used to account for all financial resources not accounted for in other funds. All general tax revenues and other receipts that are not restricted by law or contractual agreement to some other fund are accounted for in this fund. General operating expenditures, fixed charges and capital improvement costs that are not paid through other funds are paid from the General Fund. General Obligation Debt Service Fund - The General Obligation Debt Service Fund is used to account for the accumulation of financial resources for the payment of principal, interest and related costs on general long-term debt paid primarily from taxes levied by the City. The fund balance of the General Obligation Debt Service Fund is reserved to signify the amounts that are restricted exclusively for debt service expenditures. General Capital Projects Fund - The General Capital Projects Fund is used to account for resources used for the acquisition and/or construction of capital facilities by the City, except those financed by proprietary funds and not accounted for by another capital projects fund. Crime Control District - The Crime Control District Special Revenue Fund was established to account for the operations of the Crime Control District, which was established for the financing and development of crime control within the City. The Crime Control Fund is funded primarily through the receipt of municipal sales taxes. 29 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Basis of Presentation — Continued Southlake Parks Development Corporation Capital Projects Fund - The Southlake Parks Development Corporation Capital Projects Fund is utilized to fund the acquisition and construction of park recreational facilities as approved by the SPDC board of directors. The fund has been financed through the issuance of general obligation debt. Crime Control District Capital Projects Fund - The Crime Control District Capital Projects Fund is utilized to account for the acquisition and construction of capital assets as approved by the District's board of directors. The fund has been funded primarily through the issuance of general obligation debt. Tax Increment Financing District - The Tax Increment Financing District Fund ("TIF") was established to account for the general operations of the TIF, which was formed to finance and make public improvements. The TIF is funded primarily through the assessment of ad valorem taxes. In addition, the City reports the following non -major governmental funds: Special Revenue Funds — The City's Special Revenue Funds are used to account for revenue sources that are legally restricted to expenditures for specified purposes, as follows: Police Fund - The Police Fund was established to account for the resources required to be utilized by the police department. Parks and Recreation Fund - The Parks and Recreation Fund was established to account for resources restricted for use by the parks and recreation department. Parks Dedication Fund - The Parks Dedication Fund was established to account for resources restricted for use by the parks department. The primary source of revenue for the Parks Dedication Fund is user charges for the use of City parks. Southlake Parks Development Corporation - The Southlake Parks Development Corporation Fund ("SPDC") was established to account for the general operations of the non-profit corporation established to finance, develop and operate park and recreational facilities. The SPDC is funded primarily through the receipt of municipal sales taxes. Hotel Occupancy - The Hotel Occupancy Tax Fund accounts for all revenues and expenditures relating to the hotel occupancy tax received by the City. 30 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Basis of Presentation — Continued Storm Water Utility - The Storm Water Utility Fund is used to account for fees collected for the purpose of improving, upgrading and maintaining the City's drainage system. Court Security Fund - The Court Security Fund is used to account for Municipal Court fees assessed to provide for court security. Court Technology Fund - The Court Technology Fund is used to account for Municipal Court fees assessed to provide for court technology. Library Fund - The Library Fund was established to account for resources donated for use by City library services. Red Light Camera Fund - The Red Light Camera Fund is used to account for fees assessed for red light violations captured through the City's camera monitoring system. Storm Water Maintenance Fund - The Storm Water Maintenance Fund is used to account for the maintenance on storm water infrastructure. Oil and Gas Fund - The Oil and Gas Fund is used to account for permit fees and the related expenditures for oil and gas drilling. Southlake Parks Development Corporation Debt Service Fund - The Southlake Parks Development Corporation Debt Service Fund is utilized to account for the accumulation of financial resources, primarily transfers from other funds, for the payment of long- term principal and interest costs associated with the financing of improvements of the Southlake Parks Development Corporation. Capital Projects Funds — The City's Capital Projects Funds are utilized to account for financial resources to be used for the acquisition or construction of specified capital improvements (other than those financed by proprietary funds). Such resources are derived from proceeds of general obligation debt, other sources designated for improvements and interest earned on such proceeds. The City's non -major Capital Projects Fund is as follows: Tax Increment Financing District Capital Projects Fund - The Tax Increment Financing District Capital Projects Fund is utilized to fund the acquisition and construction of public improvements as approved by the TIF board of directors. The fund has been financed through the issuance of general obligation debt. 31 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Basis of Presentation — Continued Proprietary Funds - Proprietary Funds are accounted for using the economic resources measurement focus and the accrual basis of accounting. The accounting objectives are determinations of net income, financial position and cash flow. All assets and liabilities are included in the Statement of Net Assets. The City reports the following major proprietary fund Water and Sewer Enterprise Fund - The Water and Sewer Enterprise Fund is used to account for the acquisition, operation and maintenance of a municipal water and sewer utility, supported primarily by user charges to the public. Additionally, the City reports an Internal Service Fund which is used to account for vehicle replacement provided to departments of the City. Proprietary funds distinguish operating revenues and expenses from non -operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. Operating expenses for the proprietary funds include the cost of personnel and contractual services, supplies and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non -operating revenues and expenses. The City also presents one agency fund, the Cash Escrow Agency Fund. This fund is custodial in nature and does not involve measurement of results of operations. Financial statements for the Cash Escrow Agency Fund are prepared on the accrual basis of accounting. Measurement Focus and Basis of Accounting Measurement focus refers to what is being measured; basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. The government -wide statements and fund financial statements for proprietary and fiduciary funds are reported using the accrual basis of accounting. The government -wide and proprietary fund financial statements are prepared using the economic resources measurement focus; however, the fiduciary funds have no measurement focus. The economic resources measurement focus means all assets and liabilities (whether current or non -current) are included in the statement of net assets and the operating statements present increases (revenues) and decreases (expenses) in net total assets. 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. 32 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Measurement Focus and Basis of Accounting — Continued "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 general long-term debt which is recognized when due, and certain compensated absences and claims and judgments which are recognized when the obligations are expected to be liquidated with expendable available financial resources. Property taxes, sales taxes, franchise taxes and interest are susceptible to accrual. Other receipts become measurable and available when cash is received by the City and are recognized as revenue at that time. Cash, Cash Equivalents and Investments In accordance with GASB Statement No. 31, the City's general policy is to report money market investments and short-term participating interest -earning investment contracts at amortized cost and to report nonparticipating interest -earning investment contracts using a cost -based measure. However, if the fair value of an investment is significantly affected by the impairment of the credit standing of the issuer or by other factors, it is reported at fair value. All other investments are reported at fair value unless a legal contract exists which guarantees a higher value. The term "short-term" refers to investments, which have a remaining term of one year or less at the time of purchase. The term "nonparticipating" means that the investment's value does not vary with market interest rate changes. The City's cash and cash equivalents are defined as cash on hand, demand deposits, and short- term investments with original maturities of three months or less from the date of acquisition for classification in the statement of cash flows for proprietary fund types. The City pools idle cash from all funds for the purpose of increasing income through coordinated investment activities. As of September 30, 2010, the investments held by the City had a remaining maturity of greater than one year from purchase and accordingly are carried at fair value. Interest earnings are allocated to the respective funds based upon each fund's relative balance in the pool. Cash and cash equivalents and investments reported as restricted are restricted for the acquisition and construction of capital assets, and for utility deposits held by the City. Property Taxes The City's property tax is levied each October 1 on the assessed value listed as of the prior January 1 for all real and certain personal property located within the City. Appraised values are established by the Central Appraisal District of Tarrant County at 100% of estimated market value and certified by the Appraisal Review Board. The assessed value upon which the 2010 levy was based was $5,560,632,174. 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, 2010 was $0.462 per $100 of assessed valuation. 33 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Property Taxes — Continued In Texas, countywide central appraisal districts are required to assess all property within the appraisal district on the basis of 100% of its appraised value and are prohibited from applying any assessment ratios. The value of property within the appraisal district must be reviewed every five years; however, the City may, at its own expense, require annual reviews of appraised values. The City may challenge appraised values established by the appraisal district through various appeals and, if necessary, legal action. Under this legislation, the City continues to set tax rates on City property. However, if the effective tax rate, excluding tax rates for bonds and other contractual obligations, adjusted for new improvements, exceeds the rate for the previous year by more than 8%, qualified voters of the City may petition for an election to determine whether to limit the tax rate to no more than 8% above the tax rate of the previous year. Interfund Receivables and Payables Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as "due to/from other funds." Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances". Transactions Between Funds Interfund services provided and used are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as a reduction of expenditures/expenses in the fund reimbursed. All other interfund transactions, except interfund services provided and used and reimbursements, are recorded as transfers. Restricted Resources When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted first, then unrestricted resources as required. Inventories Inventories are stated at cost (first -in, first -out) and are determined annually by taking a physical inventory. Inventory in the general fund consists of gasoline and supplies held for consumption and is reported on the consumption method. Under the consumption method the cost is recorded as an expenditure at the time individual inventory items are utilized. Prepaid Items Certain payments reflect costs applicable to future periods and are recorded as prepaid in the government -wide and fund financial statements. These items consist principally of postage and building deposits. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets, are reported in the applicable governmental or business -type activities columns in the government -wide financial statements and in the fund financial statements for proprietary funds. All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated assets are valued at fair market value on the date donated. 34 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED Capital Assets — Continued The costs of normal repairs and maintenance that do not add to the value of the asset or materially extend the asset lives are not capitalized. Renewals and betterments are capitalized. Interest has not been capitalized during the construction period on property, plant and equipment. Assets capitalized, not including infrastructure assets, have an original cost of $5,000 or more and over one year of useful life. Depreciation has been calculated on each class of depreciable property using the straight-line method. Estimated useful lives are as follows: Buildings 20 - 50 Years Water and Sewer distribution system 35 - 50 Years Water hydrants 10-15 Years Water tanks 35 Years Computer equipment 5 Years Heavy equipment and vehicles 10 - 20 Years Light vehicles 2 - 10 Years Vehicles 5 Years Improvements 25 Years The street network is not depreciated. The City has elected to use the modified approach in accounting for its street infrastructure. The modified approach allows governments to report as expenses in lieu of depreciation, infrastructure expenditures which maintain the asset but do not add to or improve the asset. Additions and improvements to the street network are capitalized. The City uses an asset management system to rate street condition and quantify the results of maintenance efforts. The City has established the Vehicle Replacement Internal Service Fund to account for all City - owned vehicles. Charges for use of the vehicle in the form of lease payments are made by the City departments to the Vehicle Replacement Internal Service Fund to provide for future acquisitions and replacement of City -owned vehicles. Vacation and Sick Leave (Compensated Absences) City employees earn vacation and sick leave, which may either be taken or accumulated, up to certain amounts, until paid upon retirement or termination. Upon termination or retirement, an employee is reimbursed up to a maximum number of hours of vacation pay and sick leave based upon the years of service. All vacation and sick pay is accrued in the government -wide and proprietary fund financial statements and reported as accrued liabilities. 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 assets. Bond premiums and discounts, as well as issuance costs and any deferred loss 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. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. 35 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Long -Term Obligations — Continued 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. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. The City has designated portions of fund balance for specific purposes based upon funding sources and management intent as follows: For Police expenditures For Teen Court expenditures For Senior Center expenditures For Reforestation expenditures For Strategic initiatives $ 32,027 17,496 8,973 197,996 5,120,623 $ 5,377,115 During fiscal year 2006, the City began designating funds for strategic initiatives. The source of these funds is reserves in excess of 25% of general fund expenditures. The funds will be used for one-time high impact projects involving infrastructure maintenance, community enhancement and capital acquisition. Net Assets Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used for the acquisition, construction or improvements of those assets, and adding back unspent proceeds. Net assets are reported as restricted when there are limitations imposed on their use either through the enabling legislations adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses/expenditures during the reporting period. Actual results could differ from those estimates. CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 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, 2010 the carrying amount of the City's deposits was $23,503,864 and the bank balance was $25,689,119. As of September 30, 2010, none of the City's deposits were uncollateralized. Legal and contractual provisions governing deposits and investments: The Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions in the areas of investment practices, management reports and establishment of appropriate policies. Among other things, it requires the City to adopt, implement, and publicize an investment policy. That policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6) maximum allowable stated maturity of portfolio investments, (7) maximum average dollar -weighted maturity, allowed based on the stated maturity date for the portfolio, (8) investment staff quality and capabilities, (9) and bid solicitation preferences for certificates of deposit. Statutes and the City's investment policy authorized the City to invest in the following investments as summarized in the table below: Maximum Maximum Authorized Maximum Percentage Investment Investment Type Maturity of Portfolio In One Issuer U.S. Government Securities 5 years 100% None Commercial Paper 270 days 20% None Eligible Investment Pools 365 days 100% None The Act also requires the City to have independent auditors perform test procedures related to investment practices as provided by the Act. The City is in substantial compliance with the requirements of the Act and with local policies. Cash and investments as of September 30, 2010 are classified in the accompanying financial statements as follows: Primary Government Cash and cash equivalents $ 52,525,312 Investments 43,807,594 Restricted cash and cash equivalents 15,881,715 Restricted investments 16,918,345 Total primary government 129,132,966 Fiduciary Funds Cash 19,038 Investments 48,907 Total fiduciary funds 67,945 Total cash and investments $ 129,200,911 37 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 2. CASH AND INVESTMENTS —CONTINUED Cash and investments as of September 30, 2010 consist of the following: Cash on hand $ 3,393 Deposits with financial institutions 23,503,864 Investments 105,693,654 Total cash and investments $ 129,200,911 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, 2010, the City had the following investments: Investment Type Government agency securities TexStar TexPool Certificates of Deposit Total Amount $ 45, 708, 889 22,201, 082 22, 717, 728 15.065.955 $ 105,693,654 Weighted Average Maturity 270 days 49 days 44 days 173 days As of September 30, 2010 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 Minimum Legal Rating Rating as of Year End Government agency securities $ 45,708,889 N/A Not rated TexStar 22,201,082 N/A AAAm TexPool 22,717,728 N/A AAAm Certificates of Deposit 15,065,955 N/A AAAm Total $ 105,693,654 38 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 2. CASH AND INVESTMENTS —CONTINUED Concentration of Credit Risk The investment policy of the City contains no limitations on the amount that can be invested in any one issuer. As of September 30, 2010, other than external investment pools, the City did not have 5% or more of its investments with one issuer. 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, 2010, none of the City's cash deposits were uncollateralized. Investment in State Investment Pools The City is a voluntary participant in two investment pools: TexStar and TexPool. The State Comptroller of Public Accounts exercises responsibility over TexPool. This oversight includes the ability to significantly influence operations, designation of management, and accountability for fiscal matters. Additionally, the State Comptroller has established an advisory board composed of both participants in TexPool and other persons who do not have a business relationship with TexPool. TexPool operates in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. TexPool uses amortized costs rather than market value to report net assets to compute share prices. Accordingly, the fair value of the position in TexPool is the same as the value of TexPool shares. TexStar is administered by First Southwest Asset Management, Inc. and JPMorgan Chase. Together these organizations bring to the TexStar program the powerful partnership of two leaders in financial services with a proven and noted track record in local government investment pool management. TexStar is a local government investment pool created under the Interlocal Cooperation Act specifically tailored to meet Texas state and local government investment objectives of preservation of principal, daily liquidity, and competitive yield. TexStar uses amortized costs rather than market value to report net assets to compute share prices. Accordingly, the fair value of the position in TexStar is the same as the value of TexStar shares. 39 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 3. RECEIVABLES Receivables at September 30, 2010, for the government's individual major, non -major, internal service, and fiduciary funds in the aggregate, including the applicable allowances for uncollectible accounts, consist of the following: Southlake Parks General Development Obligation General Crime Corporation Debt Capital Control Capital General Service Projects District Projects Receivables: Property taxes $ 416,788 $ 166,834 $ - $ - $ - Sales taxes 1,599,832 - - 727,359 - Franchise taxes 372,817 - - - - Accounts - - - - - Special assessments - - - - - Interest 104,866 417 43,102 62,098 4,045 Other 88,390 - - - - Gross receivables 2,582,693 167,251 43,102 789,457 4,045 Less: allowance 208,625 81,656 - - - Net total receivables $ 2,374,068 $ 85,595 $ 43,102 $ 789,457 $ 4,045 Non - Major Water Govern- and Internal mental Sewer Service Agency Total Receivables: Property taxes $ - $ - $ - $ - $ 583,622 Sales taxes 821,111 - - - 3,148,302 Franchise taxes - - - - 372,817 Accounts - 4,877,968 - - 4,877,968 Special assessments - 3,028 - - 3,028 Interest 28,806 71,634 394 262 315,624 Other 289,241 - - - 377,631 Gross receivables 1,139,158 4,952,630 394 262 9,678,992 Less: allowance - 216,300 - - 506,581 Net total receivables $ 1,139,158 $ 4,736,330 $ 394 $ 262 $ 9,172,411 The Water and Sewer Fund accounts receivable include unbilled charges for services rendered through September 30, 2010 of $1,355,905 . 40 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 4. CAPITAL ASSETS Capital asset activity for the year ended September 30, 2010, was as follows: Beginning Capital Sales or Adjustments/ Ending Balance Acquisitions Disposals Transfers Balance Governmental Activities: Capital assets not being depreciated: Land $ 77,738,029 $ 1,676,048 $ $ 2,237,533 $ 81,651,610 Street infrastructure 172,898,198 1,710,080 939,837 175,548,115 Construction -in -progress 34,242,356 21,897,847 (37,998,231) 18,141,972 Total capital assets not being depreciated 284,878,583 25,283,975 (34,820,861) 275,341,697 Capital assets being depreciated: Land improvements 832,463 (197,348) 635,115 Buildings and building improvements 33,428,251 143,279 (14,553) 28,829,127 62,386,104 Public art - 31,298 285,297 316,595 Office equipment 559,524 5,785 1,240,394 1,805,703 Communications equipment 2,714,525 - - 2,714,525 Field equipment 712,743 27,907 15,162 755,812 Heavy equipment 1,423,990 81,511 1,317 1,506,818 Computer equipment 771,608 92,319 141,874 1,005,801 Computer software 3,013,035 234,344 3,247,379 Vehicles 7,232,232 290,974 (50,004) 2,577 7,475,779 Drainage 32,663,554 2,608,078 1,990,292 37,261,924 Bridges, road signs, and fiber optic lines 995,987 - 80,663 1,076,650 Park improvements 6,315,182 16,000 1,973,872 8,305,054 Pathways 6,843,226 12,450 216,901 7,072,577 Total capital assets being depreciated 97,506,320 3,543,945 (64,557) 34,580,128 135,565,836 Accumulated depreciation Land improvements (516,024) (43,808) - 20,100 (539,732) Buildings and building improvements (5,375,505) (994,231) 10,187 - (6,359,549) Public art (3,638) (3,638) Office equipment (261,328) (37,038) - (298,366) Communications equipment (1,934,755) (332,917) (2,267,672) Field equipment (424,689) (108,070) (6,030) (538,789) Heavy equipment (920,233) (94,540) - (304) (1,015,077) Computer equipment (397,895) (130,347) 25,588 (502,654) Computer software (1,127,832) (573,904) (1,701,736) Vehicles (3,454,697) (832,200) 50,004 (2,577) (4,239,470) Drainage (9,590,920) (895,222) - 21,866 (10,464,276) Bridges, road signs, and fiber optic lines (717,336) (99,556) (375) (817,267) Park improvements (3,657,730) (551,349) 145,020 (4,064,059) Pathways (2,425,309) (242,459) 4,714 (2,663,054) Total accumulated depreciation (30,804,253) (4,939,279) 85,779 182,414 (35,475,339) Total capital assets being depreciated, net 66,702,067 (1,395,334) 21,222 34,762,542 100,090,497 Governmental activities capital assets, net $ 351,580,650 $23,888,641 $ 21,222 $ (58,319) $ 375,432,194 41 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 4. CAPITAL ASSETS — CONTINUED Business Type Activities: Capital assets not being depreciated: Land Construction -In -Progress Total capital assets not being depreciated Capital assets being depreciated: Buildings and building improvements Equipment Vehicles Capacity rights Distribution system Total capital assets being depreciated Accumulated depreciation: Buildings and building improvements Equipment Vehicles Capacity rights Distribution system Total accumulated depreciation Total capital assets being depreciated, net Business type activities capital assets, net Beginning Capital Sales or Adjustments/ Ending Balance Acquisitions Disposals Transfers Balance $13,868,508 $ 602,734 $ $ - $ 14,471,242 6,895,614 5,837,962 (5,137,526) 7,596,050 20,764,122 6,440,696 (5,137,526) 22,067,292 887,424 - 887,424 1,831,340 324,247 (491,195) 1,664,392 378,964 - (28,000) (21,083) 329,881 9,190,988 - - 9,190,988 100,352,194 1,924,941 5,609,805 107,886,940 112,640,910 2,249,188 (28,000) 5,097,527 119,959,625 (406,611) (27,915) - - (434,526) (582,016) (144,649) - 46,788 (679,877) (300,656) (20,910) 28,000 7,117 (286,449) (2,601,117) (183,821) - - (2,784,938) (31,890,931) (3,742,006) (4,682) (35,637,619) (35,781,331) (4,119,301) 28,000 49,223 (39,823,409) 76,859,579 (1,870,113) 5,146,750 80,136,216 $97,623,701 $ 4,570,583 $ $ 9,224 $ 102,203,508 Depreciation expense was charged as a direct expense to functions of the primary government as follows: Governmental activities: General government $ 902,248 Public safety 937,244 Public works 1,672,177 Culture and recreation 1,427,610 Total depreciation expense - governmental activities $ 4,939,279 Business -type activities: Water and Sewer $ 4,119,301 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. 42 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 5. LONG-TERM DEBT —CONTINUED In May 2010, the City issued $15,745,000 of Series 2010, Tax and Waterworks and Sewer System (limited pledge) certificates of obligation, of which $5,290,000 is included as part of business -type activities. The debt was issued to pay the costs of various general capital project improvements and water and sewer capital improvements. The obligations are payable over the next 20 years. In May 2010, the City also issued $26,730,000 of Series 2010, General Obligation Refunding Bonds, of which $7,404,210 is included as part of business -type activities. The debt was issued to refund a portion of the City's outstanding debt to achieve a present value debt service savings. Net proceeds from the sale of the bonds, $225,000 contribution from prior issue debt service funds, totaled $28,413,367. Of these proceeds, $28,004,992 was placed with an escrow agent to provide for all future debt payments of the refunded bonds. This refunding resulted in a decrease in the City's debt service payments of $2,402,210, which resulted in an economic gain (difference between the present value of the debt service payments of the old debt and new debt) of $2,044,888. General obligation bonds, combination certificates of obligation, tax notes and governmental revenue bonds are as follows as of September 30, 2010: Final General Obligation Bonds and Certificates of Obligation Maturity $9,605,000 Series 2002, General Obligation Refunding $30,275,000 Series 2004, General Obligation Refunding $3,025,000 Series 2004, Tax and Waterworks and Sewer System Revenue Certificates of Obligation $35,700,000 Series 2005, General Obligation Refunding Bonds $6,075,000 Series 2006, Combination Tax and Waterworks and Sewer System Revenue Certificates of Obligation $6,540,000 Series 2007, Combination Tax and Waterworks and Sewer System Revenue Certificates of Obligation $14,015,000 Series 2008, Combination Tax and Waterworks and Sewer System Revenue Certificates of Obligation $24,835,000 Series 2009, Combination Tax and Waterworks and Sewer System Revenue Certificates of Obligation $26,730,000 Series 2010, General Obligation Refunding Bonds $15,745,000 Series 2010, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation Interest Rates Business - Governmental Type 2018 1.65 - 4.35% $ 3,730,000 $ 2025 4.0 - 5.22% 27,230,000 2023 2.0 - 5.0% 2,370,000 - 2026 4.2% 11,604,164 21,836,476 2026 3.75 - 4.375% 4,785,000 2018 4.0 - 5.0% 5,010,000 2028 3.5 - 4.625% 6,443,760 6,870,540 2029 2.0 - 5.0% 17,110,000 6,265,000 2023 3.0 - 4.0% 19,325,790 7,404,210 2030 3.0 - 4.25% 7,210,000 5,290,000 $ 104,818,714 $ 47,666,226 43 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 5. LONG-TERM DEBT —CONTINUED Governmental Revenue Bonds $9,220,000 Series 1997, Sales Tax and Revenue Bonds, Refunding and Improvements $4,180,000 Series 2000, Sales Tax and Revenue Bonds, Refunding and Improvements $1,155,000 Series 2005, SPDC Taxable Sales Refunding Bonds $17,695,000 Series 2005, SPDC Refunding Bonds $4,425,000 Series 2006, Sales Tax and Revenue Bonds $15,745,000 Series 2010, Tax and Waterworks and Sewer System (Limited Pledge) Certificates of Obligation Final Interest Business - Maturity Rates Governmental Type 2021 3.5 - 5.38% $ 1,665,000 $ 2030 4.3 - 6.15% - 2011 5.00% 190,000 2027 4.30% 14,875,000 2027 3.75%-4.375% 3,745,000 2030 3.0-4.25% 3,245,000 $ 23,720,000 $ The City issues revenue bonds to make improvements to the water and sewer system. Revenue bonds are payable solely from the net revenues of the water and sewer system. Revenue bonds and certificates of obligation outstanding as of September 30, 2010 are as follows: Revenue Bonds and Combination Tax and Final Interest Business - Revenue Certificates of Obligation Maturity Rates Governmental Type $2,965,000 Series 2004-A, Tax and Waterworks and Sewer System Revenue Certificates of Obligation 2023 2.0 - 5.0% $ - $ 2,330,000 The City has entered into various contractual agreements to unconditionally finance the principal and interest or a fixed percentage of principal and interest of Trinity River Authority (TRA) Contract Revenue Bonds. Under the agreements, the TRA utilized the bond proceeds to administer and construct various sewer and wastewater treatment projects on the City's behalf. Such agreements provide the City title to the assets upon retirement of the debt or capacity rights in the use of constructed assets. The City has included in its financial statements its proportionate share of these obligations and its investment in these assets as capacity rights. Contract revenue obligations at September 30, 2010 consist of the following: Contract Revenue Obligations Series 1990, TRA - City of Southlake Sewer System Project - Contract Revenue Obligations Series 1996, TRA - Big Bear Creek Refunding Series 2001, TRA - Denton Creek Wastewater Pressure Interceptor - Refunding Final Business - Maturity Governmental Type 2011 $ $ 120,000 2011 45,900 2017 2,500,000 $ $ 2,665,900 44 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 5. LONG-TERM DEBT —CONTINUED The following is a summary of long-term transactions for the year ended September 30, 2010: Beginning Balance Additions Reductions Ending Balance Amount Due within One year Governmental activities: General obligation bonds and certificates of obligation $ 104,784,507 $ 26,535,790 $ (26,501,583) $ 104,818,714 $ 7,786,380 Sales tax revenue bonds 21,655,000 3,245,000 (1,180,000) 23,720,000 1,315,000 Bond premiums (discounts) 658,089 1,321,370 (88,971) 1,890,488 96,650 Deferred loss on refunding (5,255,754) (127,827) 1,695,726 (3,687,855) (260,669) Total bonds payable 121,841,842 30,974,333 (26,074,828) 126,741,347 8,937,361 Accreted interest payable 126,510 - (126,510) - - Compensated absences 850,820 28,151 878,971 604,975 Total governmental activities $ 122,819,172 $ 31,002,484 $ (26,201,338) $ 127,620,318 $ 9,542,336 The general fund has been used to liquidate capital lease liabilities with respect to acquisitions of governmental capital assets and has also typically been used in prior years to liquidate the liability for compensated absences. Business -type activities: Revenue bonds and certificates of obligation Contract revenue obligations Bond premiums Deferred loss on refunding Total bonds payable Unearned revenue Compensated absences Total business -type activities Amount Beginning Ending Due within Balance Additions Reductions Balance One year $ 48,160,491 $12,694,210 $ (10,858,475) $ 49,996,226 $ 3,068,620 3,553,680 - (887,780) 2,665,900 605,900 195,803 474,555 (31,312) 639,046 41,969 (1,104,021) (213,986) 181,488 (1,136,519) (181,488) 50,805,953 12,954,779 (11,596,079) 52,164,653 3,535,001 278,437 - (6,223) 272,214 5,000 64,583 62,273 (64,584) 62,272 62,272 $ 51,148,973 $13,017,052 $ (11,666,886) $ 52,499,139 $ 3,602,273 45 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 5. LONG-TERM DEBT —CONTINUED The annual aggregate maturities for each bond type are as follows: General Obligation Bonds and Certificates of Obligation Fiscal Year Ending September 30, 2011 2012 2013 2014 2015 2016-2020 2021-2025 2026-2030 Total Sales Tax Revenue Bonds Fiscal Year Ending September 30, 2011 2012 2013 2014 2015 2016-2020 2021-2025 2026-2030 Total Principal $ 7,786,380 8,156,094 8,109,864 8,064,610 8,393,069 30,113,698 24,743,379 9,451,620 Governmental Activities Interest $ 4,391,787 4,027,404 3,720,890 3,396,545 3,053,617 11,019,908 5,076,492 615,919 Total $ 12,178,167 12,183,498 11,830,754 11,461,155 11,446,686 41,133,606 29,819,871 10,067,539 $ 104,818,714 $ 35,302,562 $ 140,121,276 Principal $ 1,315,000 1,075,000 1,110,000 1,160,000 1,215,000 6,885,000 8,120,000 2,840,000 $ 23,720,000 Revenue Bonds and Certificates of Obligation Fiscal Year Ending September 30, 2011 2012 2013 2014 2015 2016-2020 2021-2025 2026-2030 Total Principal $ 3,068,620 3,313,906 3,845,136 4,275,390 4,456,931 18,546,302 7,331,621 5,158,320 $ 49,996,226 Governmental Activities Interest $ 1,053,330 959,619 913,797 865,679 815,251 3,248,035 1,627,353 225,301 $ 9,708,365 Business -Type Activities Total $ 2,368,330 2,034,619 2,023,797 2,025,679 2,030,251 10,133,035 9,747,353 3,065,301 $ 33,428,365 Interest Total $ 2,043,157 1,865,148 1,723,149 1,557,053 1,375,375 4,288,893 1,860,769 456,093 $ 15,169,637 $ 5,111,777 5,179,054 5,568,285 5,832,443 5,832,306 22,835,195 9,192,390 5,614,413 $ 65,165,863 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 5. LONG-TERM DEBT -CONTINUED Contract Revenue Obligations Fiscal Year Ending September 30, 2011 2012 2013 2014 2015 2016-2017 Total Principal $ 605,900 305,000 320,000 335,000 350,000 750,000 $ 2,665,900 Business -Type Activities Interest Total $ 115,165 92,967 78,432 62,956 46,250 38,000 $ 433,770 $ 721,065 397,967 398,432 397,956 396,250 788,000 $ 3,099,670 In previous years, the City has legally defeased certain outstanding general obligation and revenue debt by placing funds into irrevocable trusts pledged to pay all future debt service payments of the refunded debt. Accordingly, a liability for the defeased debt issues is not included in the City's financial statements. As of September 30, 2010, the following outstanding bonds were legally defeased: Series Type Amount 1994 Sales Tax Revenue Bonds $ 870,000 2001 SPDC Sales Tax Revenue Bonds Subordinate Lien 4,690,000 $ 5,560,000 NOTE 6. INTERFUND TRANSFERS All interfund transfers between the various funds are approved supplements to the operations of those funds. Individual fund transfers for fiscal year 2010 were as follows: Transfer In Internal service fund General capital projects fund General fund General fund General fund General obligation debt service fund General capital projects fund Non major governmental funds Transfer Out General fund General fund Non major governmental funds Non major governmental funds Non major governmental funds Non major governmental funds Non major governmental funds Non major governmental funds General obligation debt service fund TIF District operating fund General fund TIF District operating fund Non major governmental funds SPDC capital projects fund Crime control district operating fund General obligation debt service fund SPDC capital projects fund General fund Non major governmental funds Non major governmental funds Non major governmental funds Crime control district operating fund Non major governmental funds Water and sewer fund Amount Purpose Fund various infrastructure maintenance projects $ 235,000 and technology needs 1,800,000 Fund various priority roadway/drainage projects 19,389 Fund indirect charges 67,500 Fund attractive spaces & future art projects 37,380 Fund indirect charges 194,401 For debt service and indirect charges 100,000 Fund capital projects 150,000 Fund various future storm water maintenance Fund debt repayment for bonds issued for TIF 2,823,109 projects 200,000 2,566,749 To pay the principal and interest on debt incurred 2,500,000 Assist with the funding of large park projects 743,607 Fund land purchase 1,436,687 Fund bonds issued on TIF's behalf Fund major park improvements, signage and 276,000 amenities 596,093 Fund indirect charges $ 13,745,915 47 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 7. RETIREMENT PLAN Plan Description The City provides pension benefits for all of its full-time employees through a non-traditional, joint contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), an agent multiple -employer public employee retirement system. The plan provisions that have been adopted by the City are within the options available in the governing state statutes of TMRS. Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the City -financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount 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/her 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 25 years of service regardless of age. 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. Contributions Under the state law governing TMRS, the actuary annually determines the City contribution rate. This rate consists of the normal cost contribution rate and the prior service contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the currently accruing monetary credits due to City matching percent, which are the obligation of the City as of an employee's retirement date, not at the time the employee's contributions are made. The normal cost contribution rate is the actuarially determined percent of payroll necessary to satisfy the obligation of the City to each employee at the time his/her retirement becomes effective. The prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the remainder of the plan's 30-year amortization period. The projected unit credit actuarial cost method is used for determining the City contribution rate. Both the employees and the City make contributions monthly. Since the City needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect. (i.e. December 31, 2008 valuation is effective for the rates beginning January 2010). 48 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 7. RETIREMENT PLAN —CONTINUED SCHEDULE OF ACTUARIAL LIABILITIES AND FUNDING PROGRESS Actuarial Information: 12/31 /2009 12/31 /2008 12/31 /2007 Actuarial cost method Projected Unit Credit Projected Unit Credit Projected Unit Credit Amortization method Level % Level % Level % 30 years -closed Amortization period 28 years -closed period 29 years -closed period period 10-year smoothed Asset valuation method market Amortized cost Amortized cost Assumptions Investment return 7.5% 7.5% 7.0% varies by age varies by age varies by age Projected salary increases and services and services and services Inflation 3.0% 3.0% 3.0% Cost -of -living adjustment 1.5% (3.0% CPI) 2.1 % (3.0% CPI) 2.1 % (3.0% CPI) City specific assumptions Payroll growth assumption 3.0% 3.0% 3.0% Withdrawal rates for male/female Mid-High/Mid Mid-High/Mid Mid-High/Mid (low, mid/low, mid, mid/high or high) Schedule of Funding Information Actuarial valuation date 12/31/09 12/31/08 12/31/07 Actuarial Value of Assets $ 31,327,058 $ 27,171,220 $ 24,758,005 Actuarial Accrued Liability $ 42,184,877 $ 39,252,944 $ 35,796,445 Unfunded (Overfunded) Actuarial Accrued Liability (UAAL) $ 10,857,819 $ 12,081,724 $ 11,038,380 Funded ratio 74.3% 69.2% 69.2% Annual Covered Payroll $ 16,655,653 $ 14,968,247 $ 13,472,433 UAAL as a Percentage of Covered Payroll 65.20% 80.70% 81.90% The City's net pension obligation (NPO) for TMRS at September 30, 2010, 2009 and 2008 is calculated as follows: NPO at the beginning of the period Annual required contribution Contributions made (100%) NPO at the end of the period 9/30/2010 9/30/2009 9/30/2008 2,129,451 2,198,164 2,097,347 2,129,451 2,198,164 2,097,347 The City adopted the Updated Service Credit provision in 1992, on a repeating basis. Additionally, the City adopted annuity increases for its retirees, on a repeating basis in 1992 equal to 70% of the change in consumer price index. The City of Southlake is one of 833 municipalities having the benefit plan administered by TMRS. Each of the 833 municipalities has an annual, individual actuarial valuation performed. All assumptions for the December 31, 2009 valuations are contained in the 2009 TMRS Comprehensive Annual Financial Report, a copy of which may be obtained by writing to P.O. Box 149153, Austin, Texas 78714-9153. 49 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 8. OTHER POSTEMPLOYMENT BENEFITS Plan Description The City provides other postemployment benefits (OPEB) in the form of health insurance benefits through a single -employer defined benefit medical plan. Regular full-time employees retiring from the City of Southlake have the option to continue medical insurance coverage until the retiree becomes eligible for Medicare or is eligible to be covered under another medical plan. The City contributes $125 per month towards the premium for retiree insurance coverage or $225 towards the premium for retirees and dependents. A third -party administrator is utilized to provide claims administration and payment of claims. Insurance is purchased to provide specific stop loss and aggregate stop loss protection. The Plan does not issue a separate financial report. Funding Policy The City passed a resolution in September 2009, electing to participate in the PARS Public Agencies Post -Retirement Health Care Plan Trust ("the Trust") to fund post -employment benefits for its employees as specified in the City's policies and/or applicable collective bargaining agreements. The Trust is a multiple employer trust arrangement established to provide economies of scale and efficiency of administration to public agencies that adopt it to hold the assets used to fund its OPEB obligation. The City has made a determination to fund its annual required contribution. For fiscal year 2010, the City contributed $180,000 to the Trust. Annual OPEB Cost and Net OPEB Obligation. The City's annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years on an open basis. The City's annual OPEB cost and net OPEB obligation (asset) for 2010 and 2009 is shown below: Net pension obligation at beginning of period Annual required contribution Contributions made Net pension obligation (asset) at end of period Funded Status and Funding Progress 9/30/10 128,502 9/30/09 128,502 180,000 128,502 $ (51,498) $ The funded status of other postemployment benefits as of April 30, 2008, the date of the latest actuarial valuation, was as follows: Actuarial accrued liability (AAL) $ 1,611,446 Actuarial value of plan assets 308,502 Unfunded actuarial accrued liability $ 1,302,944 Funded ratio (actuarial value of plan asset/AAL) 19.1% 50 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 NOTE 8. OTHER POSTEMPLOYMENT BENEFITS —CONTINUED Funded Status and Funding Progress — Continued Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. The unfunded actuarial accrued liability is being amortized assuming 30 level annual payments on an open basis. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revisions as actual results are compared with past expectations and new estimates are made about the future. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long- term perspective of the calculations. In the April 30, 2008 actuarial valuation, the projected unit credit cost method was used. Key actuarial assumptions include: (a) level percent of payroll amortization method; (b) a 4.5% real rate of investment return; (c) a payroll growth rate for financing the Unfunded Actuarial Accrued Liability assumed to be 3.0%; a sliding scale of medical inflation from 10.0% in 2008 to 4.5% by 2023. 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. The laws governing 457 plans were changed to state that plans would not be considered eligible plans unless all assets and income of the plans are held in trust for the exclusive benefit of the participants and their beneficiaries. The City amended the plan documents to comply with these requirements. In accordance with GASB 32, the plans as amended are not included in the City's financial statements. NOTE 10. RISK FINANCING AND INSURANCE The City is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. During the fiscal year 1990, the City joined the Texas Municipal League Workers Compensation Joint Insurance Fund 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. 51 CITY OF SOUTHLAKE, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2010 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, 2010 were $1,033,274. 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. SUBSEQUENT EVENTS The City has evaluated all events or transactions that occurred after September 30, 2010 up through March 29, 2011, the date the financial statements were issued. During this period, there were no subsequent events requiring disclosure. 52 REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON GENERALFUND CITY OF SOUTHLAKE, TEXAS EXHIBIT A-1 GENERALFUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2010 REVENUES Ad valorem taxes, penalties and interest Franchise taxes Municipal sales and mixed beverage tax License, permits and fees Charges for services Fines and forfeitures Grants Interest earned Miscellaneous TOTAL REVENUES EXPENDITURES Current: General government City secretary/mayor City manager's office Human resources Support services Economic development Finance Municipal court Teen court Information technology Public safety Police services Fire services Public safety support Building inspection Public works Public works administration Streets and drainage Planning Culture and recreation Community services Parks and recreation Library services BUDGETED AMOUNTS rl-1 Vv 13 WA 413 WAN VARIANCE WITH FINAL BUDGET - POSITIVE ACTUAL (NEGATIVE) $ 16,977,089 $ 17,012,089 $ 17,623,973 $ 611,884 2,604,355 2,696,427 2,606,248 (90,179) 7,521,095 7,521,095 8,165,335 644,240 1,048,300 789,650 1,453,823 664,173 1,455,270 1,314,074 1,535,363 221,289 1,014,000 1,012,350 1,032,817 20,467 - - 409,498 409,498 168,800 269,800 19,771 (250,029) 400,175 255,000 442,465 187,465 31,189,084 30,870,485 33,289,293 2,418,808 387,483 411,333 340,590 70,743 550,524 551,136 577,187 (26,051) 419,964 427,919 380,935 46,984 2,779,179 2,727,616 2,533,233 194,383 254,205 264,550 230,209 34,341 1,127,156 1,123,865 1,081,859 42,006 641,653 676,653 656,109 20,544 132,282 132,282 132,520 (238) 2,140,551 2,079,951 1,786,064 293,887 5,469,144 5,347,278 5,430,771 (83,493) 5,138,627 5,139,027 5,062,613 76,414 1,655,053 1,652,905 1,607,951 44,954 934,812 945,812 793,608 152,204 1,283,995 1,223,625 1,094,454 129,171 1,437,233 1,434,833 1,439,925 (5,092) 1,006,082 991,212 1,003,344 (12,132) 568,015 573,642 528,592 45,050 4,181,446 4,520,032 4,051,304 468,728 649,655 648,122 651,906 (3,784) TOTAL EXPENDITURES 30,757,059 30,871,793 29,383,174 1,488,619 Excess (deficiency) of revenues over expenditures 432,025 (1,308) 3,906,119 3,907,427 OTHER FINANCING SOURCES (USES) Transfers from other funds 920,362 732,798 920,362 187,564 Transfers to other funds (2,035,000) (2,000,000) (2,035,000) (35,000) TOTAL OTHER FINANCING SOURCES (USES) (1,114,638) (1,267,202) (1,114,638) 152,564 NET CHANGE IN FUND BALANCE (682,613) (1,268,510) 2,791,481 4,059,991 FUND BALANCES, BEGINNING OF YEAR 15,355,085 15,355,085 15,355,085 - FUND BALANCES, END OF YEAR $ 14,672,472 $ 14,086,575 $ 18,146,566 $ 4,059,991 See Notes to Required Supplementary Information 53 CITY OF SOUTHLAKE, TEXAS EXHIBIT A-2 CRIME CONTROL DISTRICT SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2010 REVENUES: Municipal sales tax Interest TOTAL REVENUES EXPENDITURES Police services Excess of revenues over expenditures BUDGETED AMOUNTS ORIGINAL FINAL VARIANCE WITH FINAL BUDGET - POSITIVE ACTUAL (NEGATIVE) $ 4,065,675 $ 4,065,675 $ 4,295,145 $ 229,470 20,000 50,000 181 (49,819) 4,085,675 4,115,675 4,295,326 179,651 329,500 329,500 278,322 51,178 3,756,175 3,786,175 4,017,004 230,829 OTHER FINANCING SOURCES (USES) Transfers from other funds 743,607 743,607 743,607 Transfers to other funds (1,436,687) (1,436,687) (1,436,687) TOTAL OTHER FINANCING SOURCES (USES) Net change in fund balance Fund balance at beginning of year Fund balance at end of year See Notes to Required Supplementary Information (693,080) (693,080) (693,080) 3,063,095 3,093,095 3,323,924 1,307,934 1,307,934 1,307,934 230,829 $ 4,371,029 $ 4,401,029 $ 4,631,858 $ 230,829 54 CITY OF SOUTHLAKE, TEXAS NOTES TO REQUIRED SUPPLEMENTARY INFORMATION YEAR ENDED SEPTEMBER 30, 2010 Budgetary Data The City Council adheres to the following procedures in establishing the budgets reflected in the financial statements: 1. Each year the City Manager is required to submit to the City Council, between sixty and ninety days prior to the beginning of each fiscal year, a proposed budget for the fiscal year beginning on the following October 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayers' comments. 3. Prior to October 1, the budget is legally enacted by the City Council through passage of an ordinance. 4. Annual budgets are legally adopted for the General Fund, the Tax Increment Financing District, Crime Control, Parks Dedication, Hotel Occupancy, Storm Water Utility, Red Light Camera, and Southlake Parks Development Corporation Special Revenue Funds and all Debt Service Funds on a basis consistent with accounting principles generally accepted in the United States of America. Formal budgetary integration is not employed for proprietary funds. However, the City does adopt an annual budget for those funds for managerial control. Control over expenditures for the capital projects funds are maintained through general obligation bond indenture agreements, and authorized construction contracts. Accordingly, formal budgetary integration is not employed for the capital projects funds. During the fiscal year, the City Council may transfer funds allocated to a department to another department or re -estimate revenues or expenditures. The City Manager may transfer budgeted funds within a department. Expenditures should not exceed appropriations at the department level. 6. Budgetary data for the Police, Parks and Recreation, Court Security, Court Technology, Library, Storm Water Maintenance, Oil and Gas Special Revenue Funds and all Capital Projects Funds are not presented, as such funds are budgeted over the life of the respective grant or project, and not on an annual basis. Budgetary information for the Proprietary Funds have not been presented since reporting on such budgets is not legally required. 7. Expenditures in excess of appropriations for the year ended September 30, 2010 were: General Fund: City Manager's Office $(26,051) Police Services $(83,493) Streets and Drainage $ (5,092) Library Services $ (3,784) Planning $(12,132) Teen Court $ (238) 55 EXHIBIT A-3 CITY OF SOUTHLAKE, TEXAS CONDITION RATING OF STREET SYSTEM SEPTEMBER 30, 2010 CONDITION OF ROADWAY SYSTEM Index 2010 2007 RCI 6.4 6.5 SDI 9.3 9.3 PQI 8.5 8.3 COMPARISON OF NEEDED -TO -ACTUAL MAINTENANCE/PRESERVATION Needed Actual Difference 2006 $1,250,000 1,692,640 442,640 2007 $1,250,000 1,414,597 164,597 2008 $1,250,000 1,068,540 (181,460) 2009 $1,250,000 1,457,572 207,572 2010 $1,250,000 936,158 (313,842) Total $6.250. 000 $6.569.507 319 5 77 The City hired a consultant to implement a pavement management system (PMS) to cover all public streets within the City. The condition of street pavement is measured using the Asphalt Pavement Rating Form as developed by the Asphalt Institute. The Asphalt Pavement Rating Form is based on a weighted average of thirteen defects found in pavement surfaces. The consultant conducted a pavement condition survey on all City owned streets. This consisted of a ride condition or roughness survey, a surface distress survey and a deflection survey. A present status analysis was conducted using data obtained from the pavement condition survey to determine the Ride Condition Index (RCI) and the Surface Distress Index (SDI). These indices were then combined into the composite Pavement Quality Index (PQI). Values of PQI can range from 0 to 10. Typical values for a newly constructed pavement range from 9.5 to 10.0. The PQI level at which a pavement becomes in need of rehabilitation is typically in the 5.0 to 7.0 range. It is the City's policy to maintain a PQI of 7.3. Needed maintenance is calculated based upon inspections and the pavement quality index. In accordance with GASB Statement No. 34, the City is required to report at least one complete condition assessment at transition using the modified approach. The condition assessment was completed by the City and documented that the eligible infrastructure assets are being preserved at or above the condition level established by the City. A third of the City's public streets will be assessed annually to ensure all public streets are assessed every three years. The City calculates needed maintenance of its street system annually. However, the scheduling of these road projects often crosses fiscal years. Therefore, actual maintenance may be less than the calculated needed maintenance in one fiscal year and greater than the calculated needed maintenance in the subsequent fiscal year. COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES MAJOR GOVERNMENTAL FUNDS GENERALFUND The General Fund is used to account for resources associated with traditional governmental functions that are not required legally or by sound financial management to be accounted for in another fund. 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. GENERAL CAPITAL PROJECTS FUND The General Capital Projects Fund was established to account for the financing and construction of governmental fund type capital projects. CRIME CONTROL DISTRICT SPECIAL REVENUE FUND The Crime Control District Special Revenue Fund was established to account for the operations of the District, which was established for the financing and development of crime control within the City. SOUTHLAKE PARKS DEVELOPMENT CORPORATION CAPITAL PROJECTS FUND The Southlake Parks Development Corporation Capital Projects Fund was established to account for the financing and construction of park projects of the Southlake Parks Development Corporation. CRIME CONTROL DISTRICT CAPITAL PROJECTS FUND The Crime Control District Capital Projects Fund was established to account for the financing and construction of projects of the Crime Control District. TAX INCREMENT FINANCING DISTRICT SPECIAL REVENUE FUND (TIF) The Tax Increment Financing District Special Revenue Fund was established to account for the general operations of the TIF, which was formed to finance and make public improvements. 57 CITY OF SOUTHLAKE, TEXAS GENERALFUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2010 AND 2009 ASSETS Cash and cash equivalents Investments Receivables (net of allowances for estimated uncollectibles) Taxes (Ad valorem, sales and franchise) Interest Other Due from other funds Inventories Prepaid expenses TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities 2010 EXHIBIT B-1 2009 $ 1,765,084 $ - 17,152,878 29,306,129 2,180,812 2,126,889 104,866 115,507 88,390 24,578 - 4,092,632 27,091 144,330 3,835 9,195 $ 21,322,956 $ 35,819,260 Accounts payable $ 799,776 $ 573,656 Accrued liabilities 1,529,156 1,469,760 Due to other funds - 17,559,953 Deferred revenue 847,458 860,806 Total liabilities Fund balance Reserved for recycling Reserved for police expenditures Reserved for inventories Reserved for prepaids Unreserved - designated Unreserved and undesignated Total fund balance TOTAL LIABILITIES AND FUND BALANCE 3,176,390 20,464,175 68,092 68,092 65,187 - 27,091 144,330 3,835 9,195 5,377,115 8,501,122 12,605,246 6,632,346 18,146,566 15,355,085 $ 21,322,956 $ 35,819,260 58 CITY OF SOUTHLAKE, TEXAS EXHIBIT B-2 GENERALFUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 2010 2009 REVENUES Taxes (Ad valorem, penalties and interest, sales and franchise) $ 28,395,556 $ 26,671,791 Licenses, permits and fees 1,453,823 1,292,409 Charges for services 1,535,363 1,498,823 Fines and forfeitures 1,032,817 1,012,023 Grant revenue 409,498 43,962 Miscellaneous and interest 462,236 551,941 TOTAL REVENUES 33,289,293 31,070,949 EXPENDITURES City secretary/mayor 340,590 372,945 City manager's office 577,187 557,229 Human resources 380,935 516,726 Support services 2,533,233 1,923,523 Economic development 230,209 317,471 Finance 1,081,859 1,099,041 Municipal court 656,109 617,824 Teen court 132,520 116,665 Information Technology 1,786,064 1,912,152 Police 5,430,771 5,171,702 Fire 5,062,613 4,741,459 Public safety support 1,607,951 2,084,614 Building inspection 793,608 890,156 Public works administration 1,094,454 2,273,787 Streets and drainage 1,439,925 1,610,338 Planning 1,003,344 975,588 Community services 528,592 413,786 Parks and recreation 4,051,304 3,914,015 Library services 651,906 633,333 TOTAL EXPENDITURES 29,383,174 30,142,354 Excess of revenues over expenditures 3,906,119 928,595 OTHER FINANCING SOURCES (USES) Transfers to other funds (2,035,000) (3,500,000) Transfers from other funds 920,362 1,001,686 TOTAL OTHER FINANCING SOURCES (USES) (1,114,638) (2,498,314) Excess (deficiency) of revenues and other financing sources over expenditures and other financing uses 2,791,481 (1,569,719) Fund balance at beginning of year 15,355,085 16,924,804 Fund balance at end of year $ 18,146,566 $ 15,355,085 59 CITY OF SOUTHLAKE, TEXAS GENERAL OBLIGATION DEBT SERVICE FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2010 AND 2009 ASSETS Cash and cash equivalents Investments Taxes receivable (net of allowance for estimated uncollectibles) Interest receivable TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Interest payable Due to other funds Deferred revenue Total liabilities Fund balance Reserved for debt service TOTAL LIABILITIES AND FUND BALANCE 2010 $ 5,907,921 3,377,376 85,178 417 EXHIBIT B-3 2009 9,247,596 78,298 18,176 $ 9,370,892 $ 9,344,070 $ 19,641 $ 27,743 - 580,180 84,925 78,047 104,566 685,970 9,266,326 8,658,100 $ 9,370,892 $ 9,344,070 .E CITY OF SOUTHLAKE, TEXAS GENERAL OBLIGATION DEBT SERVICE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES: Ad valorem taxes, penalties and interest Interest Total revenues EXPENDITURES; Debt Service Principal Interest and fiscal charges Total expenditures Deficiency of revenues over expenditures OTHER FINANCING SOURCES (USES) Issuance of debt Net premium (discount) on issuance of long-term debt Payment to refund bond escrow agent Transfers from other funds Total other financing sources Excess of revenues and other financing sources over expenditures Fund balance at beginning of year Fund balance at end of year 2010 $ 6,898,145 48,963 EXHIBIT B-4 2009 $ 7,169,364 141,057 6,947,108 7,310,421 6,250,738 4,587,773 4,751,377 4,231,227 11,002,115 8,819,000 (4,055,007) (1,508,579) 19,325,790 - 1,004,091 - (20,120,845) - 4,454,197 3,061,311 4,663,233 3,061,311 608,226 1,552,732 8,658,100 7,105,368 $ 9,266,326 $ 8,658,100 61 CITY OF SOUTHLAKE, TEXAS EXHIBIT B-5 GENERAL OBLIGATION DEBT SERVICE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2010 REVENUES: Ad valorem taxes Interest Total revenues EXPENDITURES: Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) BUDGETED AMOUNTS ORIGINAL FINAL ACTUAL VARIANCE WITH FINAL BUDGET - POSITIVE (NEGATIVE) $6,664,300 $6,649,300 $ 6,898,145 $ 248,845 110,000 110,000 48,963 (61,037) 6,774,300 6,759,300 6,947,108 187, 808 6,214,541 6,214,541 6,250,738 (36,197) 4,574,636 4,373,186 4,751,377 (378,191) 10, 789,177 10, 587, 727 11, 002,115 (414,388) (4,014,877) (3,828,427) (4,055,007) (226,580) Proceeds from refunding bonds - - 19,325,790 Payment to refund bond escrow agent - - (20,120,845) Premium on bonds issued - - 1,004,091 Transfers from other funds 4,454,197 4,454,197 4,454,197 Total other financing sources Excess of revenues and other financing sources over expenditures Fund balance, beginning of year Fund balance, end of year 19, 325, 790 (20,120, 845) 1,004,091 4,454,197 4,454,197 4,663,233 209,036 439,320 625,770 608,226 (17,544) 8,658,100 8,658,100 8,658,100 $ 9,097,420 $ 9,283,870 $ 9,266,326 $ (17,544) CITY OF SOUTHLAKE, TEXAS GENERAL CAPITAL PROJECTS FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2010 AND 2009 ASSETS EXHIBIT B-6 2010 2009 Cash and cash equivalents $ 23,169,646 $ - Investments 11,135, 551 29, 001, 505 Due from other funds - 4,407,633 Interest receivable 43,102 65,067 TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Accounts payable Total liabilities Fund balance Reserved for capital projects TOTAL LIABILITIES AND FUND BALANCE $ 34,348,299 $ 33,474,205 $ 1,243,621 $ 364,199 1,243,621 364,199 33,104, 678 33,110, 006 $ 34,348,299 $ 33,474,205 63 CITY OF SOUTHLAKE, TEXAS GENERAL CAPITAL PROJECTS FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEARS SEPTEMBER 30, 2010 AND 2009 REVENUES: Capital recovery fees Contributions Interest Total revenues EXPENDITURES: Public works: Administration and streets and drainage Capital outlay Debt service: Interest and fiscal charges Total expenditures Deficiency of revenues over expenditures OTHER FINANCING SOURCES (USES): Transfers in Premium on issuance of long-term debt Issuance of debt Total other financing sources (uses) Excess (deficiency) of revenues and otherfinancing sources over expenditures and other financing uses Fund balance at beginning of year Fund balance at end of year EXHIBIT B-7 2010 2009 $ 295,987 $ 267,036 23,039 71,790 167,224 568,270 486,250 907,096 864,201 1,479,405 5,901,815 3,002,965 54,387 84,773 6,820,403 4,567,143 (6,334,153) (3,660,047) 1,900,000 3,500,000 73,825 154,227 4,355,000 4,935,000 6,328,825 8,589,227 (5,328) 4,929,180 33,110,006 28,180,826 $ 33,104,678 $ 33,110,006 64 CITY OF SOUTHLAKE, TEXAS EXHIBIT B-8 CRIME CONTROL DISTRICT SPECIAL REVENUE FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2010 AND 2009 2010 2009 ASSETS Investments $ 3,850,138 $ 12,827,947 Sales tax receivable 727,359 683,488 Interest receivable 62,098 63,302 TOTAL ASSETS $ 4,639,595 $ 13,574,737 LIABILITIES AND FUND BALANCE Liabilities: Accounts payable $ 7,737 $ - Due to other funds - 12,266,803 Total liabilities 7,737 12,266,803 Fund balance Reserved for police expenditures 4,631,858 1,307,934 TOTAL LIABILITIES AND FUND BALANCE $ 4,639,595 $ 13,574,737 65 CITY OF SOUTHLAKE, TEXAS CRIME CONTROL DISTRICT SPECIAL REVENUE FUND COMPARATIVE STATEMENTS OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES: Municipal sales tax Interest Total revenues EXPENDITURES: Public safety: Police services Total expenditures Excess of revenues over expenditures OTHER FINANCING SOURCES (USES): Transfers from other funds Transfers to other funds Total other financing sources (uses) Excess (deficiency) of revenues over expenditures and other financing uses Fund balance at beginning of year Fund balance at end of year 2010 EXHIBIT B-9 2009 4,295,145 $ 4,301,094 181 56,628 4,295,326 4,357,722 278,322 64,037 278,322 64,037 4,017,004 4,293,685 743,607 743,607 (1,436,687) (7,325,250) (693,080) (6,581,643) 3,323,924 (2,287,958) 1,307,934 3,595,892 $ 4,631,858 $ 1,307,934 CITY OF SOUTHLAKE, TEXAS SOUTHLAKE PARKS DEVELOPMENT CORPORATION CAPITAL PROJECTS FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2010 AND 2009 ASSETS Cash and cash equivalents Investments Due from other funds Interest receivable TOTAL ASSETS Liabilities Accounts payable Total liabilities Fund balance Reserved for capital projects TOTAL LIABILITIES AND FUND BALANCE EXHIBIT B-10 2010 2009 $ 9,134,544 $ - 26,667 1,356,814 - 9,280,426 4,045 11,547 $ 9,165,256 $ 10,648,787 $ 1,031,450 $ 40,357 1,031,450 40,357 8,133,806 10,608,430 $ 9,165,256 $ 10,648,787 67 CITY OF SOUTHLAKE, TEXAS SOUTHLAKE PARKS DEVELOPMENT CORPORATION CAPITAL PROJECTS FUND COMPARATIVE STATEMENTS OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES: Interest Miscellaneous Total revenues Expenditures: Capital outlay Debt service: Interest and fiscal charges Total expenditures Deficiency of revenues over expenditures OTHER FINANCING SOURCES (USES): Issuance of debt Premium on issuance of debt Transfer from other funds Total other financing sources (uses) Excess (deficiency) of revenues over expenditures and other financing uses Fund balance at beginning of year Fund balance at end of year EXHIBIT B-11 2010 2009 $ 60,462 $ 146,565 70,090 93,498 130,552 240,063 8,643,650 1,510,470 37,365 101,616 8,681,015 1,612,086 (8,550,463) (1,372,023) 3,245,000 5,915,000 54,839 185,208 2,776,000 1,065,000 6,075,839 7,165,208 (2,474,624) 5,793,185 10,608,430 4,815,245 $ 8,133,806 $ 10,608,430 W. CITY OF SOUTHLAKE, TEXAS CRIME CONTROL DISTRICT CAPITAL PROJECTS FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2010 AND 2009 ASSETS Investments Due from other funds TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Accounts payable Total liabilities Fund balance Reserved for capital projects TOTAL LIABILITIES AND FUND BALANCE 2010 $ 1,588,131 EXHIBIT B-12 2009 $ 2,268,895 4,650,341 $ 1,588,131 $ 6,919,236 $ 135,245 2,040,173 135,245 2,040,173 1,452,886 4,879,063 $ 1,588,131 $ 6,919,236 .• CITY OF SOUTHLAKE, TEXAS CRIME CONTROL DISTRICT CAPITAL PROJECTS FUND COMPARATIVE STATEMENTS OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES: Interest Total revenues EXPENDITURES: Capital outlay Interest and fiscal charges Total expenditures Deficiency of revenues over expenditures OTHER FINANCING SOURCES (USES): Issuance of debt Premium on issuance of long-term debt Transfers from other funds Total other financing sources Deficiency of revenues and other financing sources over expenditures Fund balance at beginning of year Fund balance at end of year EXHIBIT B-13 2010 2009 $ 45,660 $ 109,220 45,660 109,220 6,484,635 18,406,043 30,817 82,665 6,515,452 18,488,708 (6,469,792) (18,379,488) 2,855,000 7,575,000 188,615 506,704 - 7,325,250 3,043,615 15,406,954 (3,426,177) (2,972,534) 4,879,063 7,851,597 $ 1,452,886 $ 4,879,063 70 CITY OF SOUTHLAKE, TEXAS TAX INCREMENT FINANCING DISTRICT SPECIAL REVENUE FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2010 AND 2009 ASSETS Cash and cash equivalents Investments Due from other funds TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Accounts payable Total liabilities Fund balance Reserved for reinvestment zone expenditures TOTAL LIABILITIES AND FUND BALANCE 2010 $ 5,462,257 3,338 EXHIBIT B-14 2009 835,374 3,027,661 $ 5,465,595 $ 3,863,035 $ - $ 4,903 - 4,903 5,465,595 3,858,132 $ 5,465,595 $ 3,863,035 71 CITY OF SOUTHLAKE, TEXAS TAX INCREMENT FINANCING DISTRICT SPECIAL REVENUE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES: Ad valorem taxes, penalties and interest Interest Total revenues EXPENDITURES: Public works: Public works administration Intergovernmental Total expenditures Excess of revenues over expenditures OTHER FINANCING SOURCES (USES): Transfers to other funds Total other financing sources (uses) Excess of revenues over expendutu res and other financing uses Fund balance at beginning of year Fund balance at end of year EXHIBIT B-15 2010 2009 $ 7,773,841 $ 7,784,162 14,974 68,542 7,788,815 7,852,704 - 109,843 3,158,243 3,220,906 3,158,243 3,330,749 4,630,572 4,521,955 (3,023,109) (3,367,103) (3,023,109) (3,367,103) 1,607,463 1,154,852 3,858,132 2,703,280 $ 5,465,595 $ 3,858,132 72 CITY OF SOUTHLAKE, TEXAS EXHIBIT B-16 TAX INCREMENT FINANCING DISTRICT SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 BUDGETED AMOUNTS ORIGINAL FINAL VARIANCE WITH FINAL BUDGET - POSITIVE ACTUAL (NEGATIVE) REVENUES Ad valorem taxes, penalties and interest $ 7,773,841 $ 3,263,145 $ 7,773,841 $ 4,510,696 Interest 30,000 45,000 14,974 (30,026) Total revenues 7,803,841 3,308,145 7,788,815 4,480,670 EXPENDITURES: Intergovernmental 3,158,242 - 3,158,243 (3,158,243) Total expenditures 3,158,242 - 3,158,243 (3,158,243) Excess of revenues over expenditures 4,645,599 3,308,145 4,630,572 1,322,427 OTHER FINANCING SOURCES (USES) Transfers to other funds (4,276,832) (2,823,109) (3,023,109) (200,000) Total other financing sources (uses) (4,276,832) (2,823,109) (3,023,109) (200,000) Excess of revenues over expenditures and other financing uses 368,767 485,036 1,607,463 Fund balance at beginning of year 3,858,132 3,858,132 3,858,132 1,122,427 Fund balance at end of year $ 4,226,899 $4,343,168 $5,465,595 $ 1,122,427 73 NON -MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS The Special Revenue Funds are used to account for revenue sources that are legally restricted to expenditures for specified purposes. Police Fund -- Established to account for resources required to be utilized by the police department. Parks and Recreation Fund — Established to account for resources restricted for use by the parks and recreation department. Parks Dedication Fund — Established to account for resources restricted for use by the parks department. Southlake Parks Development Corporation Special Revenue Fund — Established to account for the general operations of the non-profit corporation established to finance, develop and operate park and recreational facilities. Hotel Occupancy Fund - The Hotel Occupancy Tax Fund accounts for all revenues and expenditures relating to the hotel occupancy tax received by the City. This was a new fund established by the City in 2007. Storm Water Utility Fund — This fund is used to account for fees collected for the purpose of improving, upgrading and maintaining the City's drainage system. The City is mandated by the Texas Commission on Environmental Quality (TCEQ) to develop and maintain a Storm Water Management Plan in order to address capacity and quality issues and protect its residents and their properties from possible flooding and pollution problems. Drainage fees are collected by residents to fund the activities required to comply with TCEQ regulations. Court Security Fund — Established to account for municipal court fees assessed to provide for court security. Court Technology Fund — Established to account for municipal court fees assessed to provide for court technology. Library Fund — Established to account for resources donated for use by library services. Red Light Camera Fund — The Red Light Camera Fund is used to account for fees assessed for red light violations captured through the City's camera monitoring system. Storm Water Maintenance Fund- The Storm Water Maintenance Fund is used to account for the maintenance on storm water infrastructure. Oil and Gas Fund- The Oil and Gas Fund is used to account for permits fees and the related expenditures for oil and gas drilling. 74 DEBT SERVICE FUNDS The Debt Service Funds are utilized to account for the accumulation of financial resources for, and the payment of, general long-term debt principal, interest, and related costs arising from the issuance of bonds. Southlake Parks Development Corporation Debt Service Fund — Established to accumulate resources to finance the debt service of debt issues of the Southlake Parks Development Corporation. CAPITAL PROJECTS FUNDS The Capital Projects Funds are utilized to account for financial resources to be used for the acquisition or construction of specified capital improvements (other than those financed by proprietary funds). Tax Increment Financing District Capital Projects Fund — The Tax Increment Financing District capital projects fund was established to account for the financing and construction of projects of the Tax Increment Financing District. 75 CITY OF SOUTHLAKE, TEXAS NON -MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET SEPTEMBER 30, 2010 ASSETS Cash and cash equivalents Investments Accounts receivable Sales tax receivable Interest receivable TOTAL ASSETS LIABILITIES AND FUND BALANCES (DEFICIT) LIABILITIES Accounts payable Accrued liabilities TOTAL LIABILITIES Southlake Parks Parks and Parks Development Police Recreation Dedication Corporation $ 6,497 $ 235 $ - $ 6,985,908 5,922 38,772 233,453 80,005 - - - 25,820 - - - 760,985 28 239 3,253 17,336 $12,447 $ 39,246 $ 236,706 $ 7,870,054 $ 6,459 $ - $ - $ 4,474 - - - 4,586 6,459 - - 9,060 FUND BALANCES (DEFICIT) Reserved for police expenditures 5,988 - - - Reserved for parks - 39,246 236,706 7,860,994 Reserved for oil and gas expenditures - - - - Reserved for municipal court expenditures - - - - Reserved for storm water expenditures - - - - Reserved for debt service - - - - Reserved for capital projects - - - - Unreserved: Undesignated - - - - TOTAL FUND BALANCES (DEFICIT) 5,988 39,246 236,706 7,860,994 TOTAL LIABILITIES AND FUND BALANCES (DEFICIT) $12,447 $ 39,246 $ 236,706 $ 7,870,054 WE SPECIAL REVENUE EXHIBIT C-1 CONTINUED Storm Hotel Water Court Court Red Light Occupancy Utility Security Technology Library Camera $1,032,688 $1,487,978 $227,400 $ 178,779 $ - $ 577,504 3,357 5,846 209,505 172,404 1,188 - - 176,105 - - - 87,316 60,126 - - - - - - 215 1,232 781 - - $ 1, 096,171 $ 1, 670,144 $ 438,137 $ 351,964 $1,188 $ 664,820 $ 2,836 $ 41,101 $ 4,532 $ 18,105 $1,199 $ 339,651 5,406 4,492 - - - 1,793 8,242 45,593 4,532 18,105 1,199 341,444 - - - - - 323,376 - - 433,605 333,859 - - 1,087,929 1,624,551 - - - - 1,087,929 1,624,551 433,605 333,859 (11) 323,376 $ 1, 096,171 $ 1, 670,144 $ 438,137 $ 351,964 $1,188 $ 664,820 77 CITY OF SOUTHLAKE, TEXAS NON -MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET SEPTEMBER 30, 2010 SPECIAL DEBT REVENUE SERVICE Southlake Parks Storm Water Oil and Development Maintenance Gas Corporation ASSETS EXHIBIT C-1 CONCLUDED CAPITAL PROJECTS Tax TOTAL Increment NON -MAJOR Financing GOVERNMENTAL District FUNDS Cash and cash equivalents $ 150,000 $44,149 $ 1,495,885 $ - $ 12,187,023 Investments - - 11,624 27,713 789,789 Accounts receivable - - 289,241 Sales tax receivable - - - 821,111 Interest receivable - 91 3,878 1,753 28,806 TOTAL ASSETS 150,000 44,240 1,511,387 29,466 14,115,970 LIABILITIES AND FUND BALANCES (DEFICIT) LIABILITIES Accounts payable - - - - 418,357 Accrued liabilities 8,950 25,227 TOTAL LIABILITIES 8,950 443,584 FUND BALANCES (DEFICIT) Reserved for police expenditures - 329,364 Reserved for parks - 8,136,946 Reserved for oil and gas expenditures 44,240 44,240 Reserved for municipal court expenditures - - 767,464 Reserved for storm water expenditures 150,000 - 150,000 Reserved for debt service - 1,502,437 - 1,502,437 Reserved for capital projects - 29,466 2,741,946 Unreserved: Undesignated - - - - (11) TOTAL FUND BALANCES (DEFICIT) 150,000 44,240 1,502,437 29,466 13,672,386 TOTAL LIABILITIES AND FUND BALANCES (DEFICIT) $ 150,000 $44,240 $ 1,511,387 $ 29,466 14,115,970 78 CITY OF SOUTHLAKE, TEXAS NON -MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED SEPTEMBER 30, 2010 Southlake Parks Parks and Parks Development Police Recreation Dedication Corporation REVENUES Municipal sales tax $ - $ - $ - $ 4,443,577 Licenses, permits and fees - - 95,222 - Fines and forfeitures - - - - Interest 66 155 1,780 29,038 Contributions - 1,440 - - Miscellaneous - - - 153,824 Total revenues 66 1,595 97,002 4,626,439 EXPENDITURES Current: General government Court technology - - - - Support services - - - - Public safety Police services - - - - Cultural and recreation Parks and recreation - - 29,886 265,479 Library services - - - - Capital outlay - - - - Debt service: Principal retirement - - - - Interest and fiscal charges - - - - Total expenditures - - 29,886 265,479 Excess (deficiency) of revenues over expenditures 66 1,595 67,116 4,360,960 OTHER FINANCING SOURCES (USES) Transfers from other funds - - - - Transfers to other funds - - (276,000) (5,810,356) Total other financing sources (uses) - - (276,000) (5,810,356) NET CHANGE IN FUND BALANCES 66 1,595 (208,884) (1,449,396) FUND BALANCES, BEGINNING OF YEAR 5,922 37,651 445,590 9,310,390 FUND BALANCES (DEFICIT), END OF YEAR $ 5,988 $ 39,246 $ 236,706 $ 7,860,994 79 EXHIBIT C-2 CONTINUED SPECIAL REVENUE Storm Hotel Water Court Court Red Light Occupancy Utility Security Technology Library Camera $ 706,724 $ - $ - $ - $ - $ - - 1,244,531 - - - - - - 32,074 42,677 - 1,008,837 7,355 9,713 2,054 1,789 28 - - - - - 10,220 - 714,079 1,254,244 34,128 44,466 10,248 1,008,837 - - - 38,105 - - - - - 8,249 - 804,303 504,032 - - - - - - - - - 10,153 - - 594,406 11,511 - - - 504,032 594,406 11,511 46,354 10,153 804,303 210,047 659,838 22,617 (1,888) 95 204,534 (86,889) (481,781) - - - - (86,889) (481,781) - - - - 123,158 178,057 22,617 (1,888) 95 204,534 964,771 1,446,494 410,988 335,747 (106) 118,842 $ 1,087,929 $ 1,624,551 $ 433,605 $ 333,859 $ (11) $ 323,376 all CITY OF SOUTHLAKE, TEXAS NON -MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED SEPTEMBER 30, 2010 EXHIBIT C-2 CONCLUDED SPECIAL DEBT CAPITAL REVENUE SERVICE PROJECTS Southlake Tax TOTAL Parks Increment NON -MAJOR Storm Water Oil and Development Financing GOVERNMENTAL Maintenance Gas Corporation District FUNDS REVENUES Municipal sales tax $ $ - $ $ $ 5,150,301 Licenses, permits and fees 60,500 1,400,253 Fines and forfeitures - 1,083,588 Interest 45 19,325 740 72,088 Contributions - - 1,440 Miscellaneous 164,044 Total revenues 60,545 19,325 740 7,871,714 EXPENDITURES Current: General government Court technology - 38,105 Support services 16,305 16,305 Public safety Police services - 812,552 Cultural and recreation Parks and recreation 799,397 Library services 10,153 Capital outlay - 605,917 Debt service: Principal retirement 1,310,000 1,310,000 Interest and fiscal charges - 1,113,300 1,113,300 Total expenditures 16,305 2,423,300 4,705,729 Excess (deficiency) of revenues over expenditures - 44,240 (2,403,975) 740 3,165,985 OTHER FINANCING SOURCES (USES) Transfers from other funds 150,000 - 2,566,749 - 2,716,749 Transfers to other funds - (6,655,026) Total other financing sources (uses) 150,000 2,566,749 (3,938,277) NET CHANGE IN FUND BALANCES 150,000 44,240 162,774 740 (772,292) FUND BALANCES, BEGINNING OF YEAR - 1,339,663 28,726 14,444,678 FUND BALANCES, END OF YEAR $ 150,000 $ 44,240 $ 1,502,437 $ 29,466 $ 13,672,386 81 CITY OF SOUTHLAKE, TEXAS POLICE SPECIAL REVENUE FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2010 AND 2009 ASSETS Cash and cash equivalents Investments Interest receivable TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Accounts payable Due to other funds Total liabilities Fund balance Reserved for police expenditures TOTAL LIABILITIES AND FUND BALANCE 2010 $ 6,497 5,922 28 EXHIBIT C-3 2009 13,727 34 $ 12,447 $ 13,761 6,459 $ 6,459 1,380 6,459 7,839 5,988 5,922 $ 12,447 $ 13,761 CITY OF SOUTHLAKE, TEXAS POLICE SPECIAL REVENUE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES: Interest Total revenues EXPENDITURES: Public safety: Police services Total expenditures Excess of revenues over expenditures Fund balance at beginning of year Fund balance at end of year EXHIBIT C-4 2010 2009 $ 66 $ 232 66 232 66 232 5,922 5,690 $ 5,988 $ 5,922 83 CITY OF SOUTHLAKE, TEXAS PARKS AND RECREATION SPECIAL REVENUE FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2010 AND 2009 ASSETS Cash and cash equivalents Investments Interest receivable TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Due to other funds Total liabilities Fund balance Reserved for parks TOTAL LIABILITIES AND FUND BALANCE 2010 $ 235 38,772 239 EXHIBIT C-5 2009 65,707 257 $ 39,246 $ 65,964 $ 28,313 28,313 39,246 37,651 $ 39,246 $ 65,964 84 CITY OF SOUTHLAKE, TEXAS PARKS AND RECREATION SPECIAL REVENUE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES: Interest Contributions Total revenues Excess of revenues over expenditures Fund balance at beginning of year Fund balance at end of year EXHIBIT C-6 2010 2009 $ 155 $ 686 1,440 1,784 1,595 2,470 1,595 2,470 37,651 35,181 $ 39,246 $ 37,651 85 CITY OF SOUTHLAKE, TEXAS PARKS DEDICATION SPECIAL REVENUE FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2010 AND 2009 ASSETS Investments Interest receivable TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Due to other funds Total liabilities Fund balance Reserved for parks TOTAL LIABILITIES AND FUND BALANCE 2010 EXHIBIT C-7 2009 $ 233,453 $ 973,278 3,253 3,721 $ 236,706 $ 976,999 $ - $ 531,409 531,409 236,706 445,590 $ 236,706 $ 976,999 CITY OF SOUTHLAKE, TEXAS PARKS DEDICATION SPECIAL REVENUE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES: Park fees Interest Total revenues EXPENDITURES: Cultural and recreation: Parks and recreation Total expenditures Excess of revenues over expenditures OTHER FINANCING SOURCES (USES): Transfers to other funds Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over expenditures and other financing uses Fund balance at beginning of year Fund balance at end of year EXHIBIT C-8 2010 2009 $ 95,222 $ 31,017 1,780 7,575 97,002 38,592 29,886 - 29,886 - 67,116 38,592 (276,000) - (276,000) - (208,884) 38,592 445,590 406,998 $ 236,706 $ 445,590 87 CITY OF SOUTHLAKE, TEXAS EXHIBIT C-9 PARKS DEDICATION SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2010 VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Park fees $ 98,000 $ 30,000 $ 95,222 $ 65,222 Interest 5,000 6,000 1,780 (4,220) Total revenues 103,000 36,000 97,002 61,002 EXPENDITURES: Parks and recreation 30,000 30,000 29,886 114 Total expenditures 30,000 30,000 29,886 114 Excess of revenues over expenditures 73,000 6,000 67,116 61,116 OTHER FINANCING SOURCES (USES): Transfers to other funds Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over expenditures and other financing uses Fund balance at beginning of year Fund balance at end of year (276,000) (276,000) (276,000) - (276,000) (276,000) (276,000) - (203,000) (270,000) (208,884) 61,116 445,590 445,590 445,590 - $ 242, 590 $ 175, 590 $ 236, 706 $ 61.116 CITY OF SOUTHLAKE, TEXAS SOUTHLAKE PARKS DEVELOPMENT CORPORATION SPECIAL REVENUE FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2010 AND 2009 EXHIBIT C-10 2010 2009 ASSETS Cash and cash equivalents $ 6,985,908 $ - Investments 80,005 2,026,865 Accounts receivable 25,820 12,819 Sales tax receivable 760,985 713,624 Due from other funds - 6,535,414 Interest receivable 17,336 25,625 TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Accounts payable Accrued liabilities Total liabilities Fund balance: Reserved for parks TOTAL LIABILITIES AND FUND BALANCE $ 7,870,054 $ 9,314,347 $ 4,474 $ 30 4,586 3,927 9,060 3,957 7,860,994 9,310,390 $ 7,870,054 $ 9,314,347 • CITY OF SOUTHLAKE, TEXAS SOUTHLAKE PARKS DEVELOPMENT CORPORATION SPECIAL REVENUE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES: Municipal sales tax Interest Miscellaneous Total revenues EXPENDITURES: Cultural and recreation: Parks and recreation Total expenditures Excess of revenues over expenditures OTHER FINANCING SOURCES (USES): Transfers to other funds Total other financing sources (uses) Excess (deficiency) of revenues over expenditures and other financing uses Fund balance at beginning of year Fund balance at end of year EXHIBIT C-11 2010 2009 $ 4,443,577 $ 4,360,934 29,038 215,823 153,824 153,824 4,626,439 4,730,581 265,479 203,009 265,479 203,009 4,360,960 4,527,572 (5,810,356) (3,965,612) (5,810,356) (3,965,612) (1,449,396) 561,960 9,310,390 8,748,430 $ 7,860,994 $ 9,310,390 CITY OF SOUTHLAKE, TEXAS SOUTHLAKE PARKS DEVELOPMENT CORPORATION SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2010 REVENUES: Municipal sales tax Miscellaneous Interest Total revenues EXPENDITURES Parks and recreation Excess of revenues over expenditures OTHER FINANCING SOURCES (USES): Transfers to other funds Excess (deficiency) of revenues over expenditures and other uses Fund balance at beginning of year Fund balance at end of year BUDGETED AMOUNTS ORIGINAL FINAL EXHIBIT C-12 VARIANCE WITH FINAL BUDGET - POSITIVE ACTUAL (NEGATIVE) $ 4,094,340 $ 4,094,340 $ 4,443,577 $ 349,237 153,816 153,816 153,824 8 100,000 150,000 29,038 (120,962) 4,348,156 4,398,156 4,626,439 228,283 271,895 216,895 265,479 (48,584) 4,076,261 4,181,261 4,360,960 (5,810,356) (5,810,356) (5,810,356) (1,734,095) (1,629,095) (1,449,396) 9,310,390 9,310,390 9,310,390 179,699 179,699 $ 7,576,295 $ 7,681,295 $ 7,860,994 $ 179,699 91 CITY OF SOUTHLAKE, TEXAS HOTEL OCCUPANCY SPECIAL REVENUE FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2010 AND 2009 I_F&9 A & EXHIBIT C-13 2010 2009 Cash and cash equivalents $ 1,032,688 $ - Investments 3,357 157,684 Sales tax receivable 60,126 69,292 Due from other funds - 754,376 TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Accounts payable Accrued liabilities Total liabilities Fund balance: Reserved for capital projects TOTAL LIABILITIES AND FUND BALANCE $ 1,096,171 $ 981,352 $ 2,836 $ 14,410 5,406 2,171 8,242 16,581 1,087,929 964,771 $ 1,096,171 $ 981,352 CITY OF SOUTHLAKE, TEXAS HOTEL OCCUPANCY SPECIAL REVENUE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES: Municipal sales tax Interest Total revenues EXPENDITURES: Cultural and recreation: Parks and recreation Total expenditures Excess of revenues over expenditures Other financing uses Transfers to other funds Total other financing uses Excess of revenues over expenditures and other financing uses Fund balance at beginning of year Fund balance at end of year EXHIBIT C-14 2010 2009 $ 706,724 $ 664,659 7,355 16,323 714,079 680,982 504,032 327,602 504,032 327,602 210,047 353,380 (86,889) (80,426) (86,889) (80,426) 123,158 272,954 964,771 691,817 $ 1,087,929 $ 964,771 93 CITY OF SOUTHLAKE, TEXAS EXHIBIT C-15 HOTEL OCCUPANCY SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2010 VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Municipal sales tax Interest Total revenues EXPENDITURES: Parks and recreation Excess of revenues over expenditures OTHER FINANCING SOURCES (USES): Transfers to other funds Excess of revenues over expenditures and other uses Fund balance at beginning of year Fund balance at end of year $ 646,313 $ 646,313 $ 706,724 $ 60,411 11,000 11,000 7,355 (3,645) 657,313 657,313 714,079 56,766 195,475 192,975 504,032 (311,057) 461,838 464,338 210,047 (254,291) - (86,889) (86,889) - 461,838 377,449 123,158 964,771 964,771 964,771 (254,291) $ 1,426,609 $ 1,342,220 $ 1,087,929 $ (254,291) 94 CITY OF SOUTHLAKE, TEXAS STORM WATER UTILITY SPECIAL REVENUE FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2010 AND 2009 ASSETS Cash and cash equivalents Investments Accounts receivable Due from other funds Interest receivable TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Accounts payable Accrued liabilities Total liabilities Fund balance: Reserved for capital projects TOTAL LIABILITIES AND FUND BALANCE EXHIBIT C-16 2010 2009 $ 1,487,978 $ - 5,846 388,317 176,105 179,223 - 917,442 215 - $ 1,670,144 $ 1,484,982 $ 41,101 $ 33,529 4,492 4,959 45,593 38,488 1,624,551 1,446,494 $ 1,670,144 $ 1,484,982 95 CITY OF SOUTHLAKE, TEXAS STORM WATER UTILITY SPECIAL REVENUE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES: Interest Licenses, permits and fees Total revenues EXPENDITURES: Capital outlay Total expenditures Excess of revenues over expenditures OTHER FINANCING SOURCES (USES): Transfers to other funds Total other financing uses Excess of revenues over expenditures and other financing uses Fund balance at beginning of year Fund balance at end of year EXHIBIT C-17 2010 2009 $ 9,713 $ 20,529 1,244,531 1,224,102 1,254,244 1,244,631 594,406 426,062 594,406 426,062 659,838 818,569 (481,781) (218,408) (481,781) (218,408) 178,057 600,161 1,446,494 846,333 $ 1,624,551 $ 1,446,494 CITY OF SOUTHLAKE, TEXAS EXHIBIT C-18 STORM WATER UTILITY SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2010 VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Interest Licenses, permits and fees Total revenues EXPENDITURES: Capital outlay Excess of revenues over expenditures OTHER FINANCING SOURCES (USES): Transfers to other funds Excess (deficiency) of revenues over expenditures and other uses Fund balance at beginning of year Fund balance at end of year $ 16,000 $ 15,000 $ 9,713 $ (5,287) 1,230,000 1,210,000 1,244,531 34,531 1,246,000 1,225,000 1,254,244 29,244 796,513 796,513 594,406 202,107 449,487 428,487 659,838 231,351 (481,781) (480,701) (481,781) (1,080) (32,294) (52,214) 178,057 1,446,494 1,446,494 1,446,494 230,271 $ 1,414,200 $ 1,394,280 $ 1,624,551 $ 230,271 97 CITY OF SOUTHLAKE, TEXAS COURT SECURITY SPECIAL REVENUE FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2010 AND 2009 ASSETS Cash and cash equivalents Investments Interest receivable TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Accounts payable Due to other funds Total liabilities Fund balance Reserved for municipal court expenditures TOTAL LIABILITIES AND FUND BALANCE 2010 EXHIBIT C-19 2009 $ 227,400 $ - 209,505 480,841 1,232 1,404 $ 438,137 $ 482,245 $ 4,532 $ - - 71,257 4,532 71,257 433,605 410,988 $ 438,137 $ 482,245 CITY OF SOUTHLAKE, TEXAS COURT SECURITY SPECIAL REVENUE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES: Fines and forfeitures Interest Total revenues EXPENDITURES: Capital outlay Total expenditures Excess of revenues over expenditures Fund balance at beginning of year Fund balance at end of year EXHIBIT C-20 2010 2009 $ 32,074 $ 29,076 2,054 7,416 34,128 36,492 11,511 11,511 22,617 36,492 410,988 374,496 $ 433,605 $ 410,988 . • CITY OF SOUTHLAKE, TEXAS COURT TECHNOLOGY SPECIAL REVENUE FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2010 AND 2009 ASSETS Cash and cash equivalents Investments Interest receivable TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Accounts payable Due to other funds Accrued liabilities Total liabilities Fund balance Reserved for municipal court expenditures TOTAL LIABILITIES AND FUND BALANCE 2010 $ 178,779 172,404 781 EXHIBIT C-21 2009 392,478 951 $ 351,964 $ 393,429 $ 18,105 $ - - 48,107 - 9,575 18,105 57,682 333,859 335,747 $ 351,964 $ 393,429 100 CITY OF SOUTHLAKE, TEXAS COURT TECHNOLOGY SPECIAL REVENUE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES: Fines and forfeitures Interest Total revenues EXPENDITURES: Court technology Public safety Total expenditures Excess of revenues over expenditures Fund balance at beginning of year Fund balance at end of year EXHIBIT C-22 2010 2009 $ 42,677 $ 38,432 1,789 6,244 44,466 44,676 38,105 - 8,249 18,411 46,354 18,411 (1,888) 26,265 335,747 309,482 $ 333,859 $ 335,747 101 CITY OF SOUTHLAKE, TEXAS LIBRARY SPECIAL REVENUE FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2010 AND 2009 ASSETS Investments TOTAL ASSETS LIABILITIES AND FUND BALANCE (DEFICIT) Liabilities: Accounts payable Due to other funds Total liabilities Fund balance (deficit) Unrestricted deficit TOTAL LIABILITIES AND FUND BALANCE EXHIBIT C-23 2010 2009 $ 1,188 $ 2,931 $ 1,188 $ 2,931 $ 1,199 $ 1,610 - 1,427 1,199 3,037 (11) (106) $ 1,188 $ 2,931 102 CITY OF SOUTHLAKE, TEXAS LIBRARY SPECIAL REVENUE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES: Interest Miscellaneous Total revenues EXPENDITURES: Cultural and recreation: Library services Total expenditures Excess of revenues over expenditures Fund deficit at beginning of year Fund deficit at end of year EXHIBIT C-24 2010 2009 $ 28 $ 42 10,220 6,146 10,248 6,188 10,153 5,747 10,153 5,747 95 441 (106) (547) $ (11) $ (106) 103 CITY OF SOUTHLAKE, TEXAS EXHIBIT C-25 RED LIGHT CAMERA SPECIAL REVENUE FUND COMPARATIVE BALANCE SHEETS FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 ASSETS Cash and cash equivalents Accounts receivable Due from other funds TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Accounts payable Accrued liabilities Total liabilities Fund balance Reserved for police expenditures TOTAL LIABILITIES AND FUND BALANCE 2010 2009 $ 577,504 $ - 87,316 113,589 - 291,253 $ 664,820 $ 404,842 $ 339,651 1,793 $ 286,000 341,444 286,000 323,376 118,842 $ 664,820 $ 404,842 104 CITY OF SOUTHLAKE, TEXAS RED LIGHT CAMERA SPECIAL REVENUE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES: Fines and forfeitures Total revenues EXPENDITURES: Public safety: Police services Total expenditures Excess of revenues over expenditures Fund balance at beginning of year Fund balance at end of year EXHIBIT C-26 2010 2009 $ 1,008,837 $ 574,503 1,008,837 574,503 804,303 455,661 804,303 455,661 204,534 118,842 118,842 - $ 323,376 $ 118,842 105 CITY OF SOUTHLAKE, TEXAS EXHIBIT C-27 RED LIGHT CAMERA SPECIAL REVENUE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2010 VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Fines and forfeitures $ 600,000 $ 1,092,911 $ 1,008,837 $ (84,074) Interest - 2,500 - (2,500) Total revenues 600,000 1,095,411 1,008,837 (86,574) EXPENDITURES: Public safety 523,000 815,200 804,303 10,897 Total expenditures 523,000 815,200 804,303 10,897 Excess of revenues 77,000 280,211 204,534 (75,677) over expenditures Fund balance, beginning of year 118,842 118,842 118,842 - Fund balance, end of year $ 195,842 $ 399,053 $ 323,376 $ (75,677) 106 CITY OF SOUTHLAKE, TEXAS EXHIBIT C-28 SOUTHLAKE PARKS DEVELOPMENT CORPORATION DEBT SERVICE FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2010 AND 2009 ASSETS Cash and cash equivalents Investments Due from other funds Interest receivable TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Accrued liabilities Total liabilities Fund balance: Reserved for debt service TOTAL LIABILITIES AND FUND BALANCE 2010 2009 $ 1,495,885 $ - 11,624 365,356 - 983,424 3,878 4,340 $ 1,511,387 $ 1,353,120 $ 8,950 $ 13,457 8,950 13,457 1,502,437 1,339,663 $ 1,511,387 $ 1,353,120 107 CITY OF SOUTHLAKE, TEXAS EXHIBIT C-29 SOUTHLAKE PARKS DEVELOPMENT CORPORATION DEBT SERVICE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES: Interest Total revenues EXPENDITURES: Debt Service Principal Interest and fiscal charges Total expenditures Deficiency of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers from other funds Total other financing sources Excess of revenues and other financing sources over expenditures Fund balance at beginning of year Fund balance at end of year 2010 2009 $ 19,325 $ 28,766 19,325 28,766 1,310,000 1,130,000 1,113,300 1,005,518 2,423,300 2,135,518 (2,403,975) (2,106,752) 2,566,749 2,157,005 2,566,749 2,157,005 162,774 50,253 1,339,663 1,289,410 $ 1,502,437 $ 1,339,663 108 CITY OF SOUTHLAKE, TEXAS EXHIBIT C-30 SOUTHLAKE PARKS DEVELOPMENT CORPORATION DEBT SERVICE FUND BUDGETARY COMPARISON SCHEDULE (GAAP BASIS) FOR THE YEAR ENDED SEPTEMBER 30, 2010 VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET - POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES: Interest $ 30,000 $ 20,000 $ 19,325 $ (675) Total revenues 30,000 20,000 19,325 (675) EXPENDITURES: Principal retirement 1,310,000 1,310,000 1,310,000 - Interest and fiscal charges 1,256,749 1,256,749 1,113,300 143,449 Total expenditures 2,566,749 2,566,749 2,423,300 143,449 Deficiency of revenues over expenditures (2,536,749) (2,546,749) (2,403,975) 142,774 OTHER FINANCING SOURCES (USES): Transfers from other funds 2,566,749 2,566,749 2,566,749 Total other financing sources Excess of revenues and other financing sources over expenditures Fund balance, beginning of year Fund balance, end of year 2,566,749 2,566,749 2,566,749 30,000 20,000 162,774 142,774 1,339,663 1,339,663 1,339,663 $ 1,369,663 $ 1,359,663 $ 1,502,437 $ 142,774 109 CITY OF SOUTHLAKE, TEXAS TAX INCREMENT FINANCING DISTRICT CAPITAL PROJECTS FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2010 AND 2009 ASSETS Investments Interest receivable TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Due to other funds Total liabilities Fund balance Reserved for capital projects TOTAL LIABILITIES AND FUND BALANCE 2010 EXHIBIT C-31 2009 $ 27,713 $ 457,533 1,753 1,767 $ 29,466 $ 459,300 $ - $ 430,574 - 430,574 29,466 28,726 $ 29,466 $ 459,300 110 CITY OF SOUTHLAKE, TEXAS TAX INCREMENT FINANCING DISTRICT CAPITAL PROJECTS FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES: Interest Total revenues EXPENDITURES: Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Transfers to other funds Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over expenditures and other financing uses Fund balance at beginning of year Fund balance at end of year EXHIBIT C-32 2010 2009 $ 740 $ 6,481 740 6,481 - 492,450 - 492,450 740 (485,969) - (57,550) - (57,550) 740 (543,519) 28,726 572,245 $ 29,466 $ 28,726 111 MAJOR ENTERPRISE FUND The Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises where the intent is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or where the City's council has decided that periodic determination of net income is appropriate for accountability purposes. Water and Sewer Fund — To account for the provision of water and sewer services to the residents of the City. 112 CITY OF SOUTHLAKE, TEXAS WATER AND SEWER ENTERPRISE FUND COMPARATIVE STATEMENTS OF NET ASSETS SEPTEMBER 30, 2010 AND 2009 EXHIBIT D-1 2010 2009 ASSETS CURRENT ASSETS Cash and cash equivalents $ 111,972 $ Investments 7,660,332 35,880,024 Receivables, net of allowance for uncollectibles: Trade accounts 3,305,763 2,259,391 Unbilled trade accounts 1,355,905 1,171,340 Interest 71,634 92,097 Special assessments 3,028 1,963 Due from other funds - 3,401,088 Prepaid expenses 628 - Restricted assets Cash restricted for capital 9,973,794 Investments restricted for customer meter deposits 186,607 - Investments restricted for capital 13,354,362 147,713 Total current assets 36,024,025 42,953,616 NON -CURRENT ASSETS Capital assets Land and improvements 14,471,242 13,868,508 Buildings and improvements 887,424 887,424 Distribution system 107,886,940 100,352,194 Equipment 1,664,392 1,831,341 Vehicles 329,881 378,963 Capacity rights 9,190,988 9,190,988 Construction in progress 7,596,050 6,895,614 Total capital assets 142,026,917 133,405,032 Less: accumulated depreciation (39,823,409) (35,781,331) Capital assets, net of accumulated depreciation 102,203,508 97,623,701 Deferred charges Bond issue costs, net of amortization 722,364 907,367 Total deferred charges 722,364 907,367 Total non -current assets 102,925,872 98,531,068 TOTAL ASSETS $ 138,949,897 $ 141,484,684 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable $ 1,979,301 $ 1,663,301 Accrued liabilities 97,788 265,866 Accrued interest 316,163 340,314 Due to other funds - 6,183,737 Current portion of general obligation debt 2,948,620 2,764,320 Current portion of revenue bonds 120,000 550,000 Current portion of contract obligation debt 605,900 887,780 Current portion of compensated absences 62,272 51,459 Current portion of deferred loss (181,488) (99,024) Current portion of premium 41,969 9,998 Current portion of deferred revenue 5,000 5,000 Payable from restricted assets: Accrued interest - 22,150 Customer meter deposits 186,607 147,713 Total current liabilities 6,182,132 12,792,614 NON -CURRENT LIABILITIES Compensated absences - 13,124 Deferred revenue 267,214 273,437 Contract revenue obligations 2,060,000 2,665,900 General obligation debt 44,717,606 44,846,171 Revenue bonds payable 2,210,000 - Premium on bond issuance 597,077 185,805 Deferred loss on refunding (955,031) (1,004,997) Total non -current liabilities 48,896,866 46,979,440 TOTAL LIABILITIES 55,078,998 59,772,054 NET ASSETS Invested in capital assets, net of related debt 65,039,374 60,541,445 Unrestricted 18,831,525 21,171,185 TOTAL NET ASSETS $ 83,870,899 $ 81,712,630 113 CITY OF SOUTHLAKE, TEXAS EXHIBIT D-2 WATER AND SEWER ENTERPRISE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 2010 2009 OPERATING REVENUES Water, sewer and garbage $ 18,815,054 $ 19,276,241 Service charges 82,302 32,992 Miscellaneous 71,938 372,063 Total operating revenues 18,969,294 19,681,296 OPERATING EXPENSES Personnel services 2,146,885 2,062,762 Contractual services 1,108,852 1,147,555 Lease payments 4,169 808 Supplies 90,579 97,379 Utilities 6,520,881 6,059,407 Administrative 38,157 84,109 Maintenance 1,624,546 1,755,723 Professional benefits 23,314 32,300 Depreciation and amortization 4,603,321 3,703,019 Total operating expenses 16,160,704 14,943,062 OPERATING INCOME 2,808,590 4,738,234 NON -OPERATING REVENUES (EXPENSES) Gain (loss) on sale of capital assets (2,000) (50,379) Interest income 155,106 593,538 Interest expense (2,785,734) (3,070,718) Total non -operating revenues (expenses) (2,632,628) (2,527,559) NET INCOME BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS 175,962 2,210,675 CAPITAL CONTRIBUTIONS AND TRANSFERS Capital contributions - property owners 2,205,613 1,883,664 Contributions - impact fees 372,787 329,203 Transfers from other funds - 57,550 Transfers to other funds (596,093) (397,060) Total capital contributions and transfers 1,982,307 1,873,357 CHANGE IN NET ASSETS 2,158,269 4,084,032 NET ASSETS, BEGINNING OF YEAR, 81,712,630 77,628,598 NET ASSETS, END OF YEAR $ 83,870,899 $ 81,712,630 114 CITY OF SOUTHLAKE, TEXAS EXHIBIT D-3 WATER AND SEWER ENTERPRISE FUND COMPARATIVE STATEMENTS OF CASH FLOWS YEARS ENDED SEPTEMBER 30, 2010 AND 2009 2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers and users $ 17,769,896 $ 19,520,309 Cash payments to suppliers (9,263,137) (9,564,369) Cash payments to employees (2,149,196) (2,062,762) Net cash provided by operating activities 6,357,563 7,893,178 CASH FLOWS FROM CAPITAL AND FINANCING ACTIVITIES: Capital expenditures (6,484,270) (3,774,790) Principal payments on bonds (4,202,100) (3,704,127) Proceeds from issuance of bonds 12,694,210 6,410,000 Premium on issuance of bonds 474,555 195,803 Bond issue costs (160,066) - Payment to refund bond escrow agent (7,758,141) - Interest paid (2,832,035) (3,090,898) Contributions - impact fees 372,787 329,203 Net cash used in capital and related financing activities (7,895,060) (3,634,809) CASH FLOWS FROM NON -CAPITAL FINANCING ACTIVITIES: Transfer (to) from other funds (596,093) (339,510) Cash paid to other funds (2,782,649) (1,024,605) Net cash used in non -capital financing activities CASH FLOWS FROM INVESTING ACTIVITIES: Net (purchase) sale of investments Interest received Net cash provided by (used in) investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of year Cash and cash equivalents at the end of year (3,378,742) 14,826,436 175,569 (1,364,115) (3,642,646) 651,273 15,002,005 (2,991,373) 10,085,766 (97,119) - 97,119 $ 10,085,766 $ - 115 CITY OF SOUTHLAKE, TEXAS WATER AND SEWER ENTERPRISE FUND COMPARATIVE STATEMENTS OF CASH FLOWS YEARS ENDED SEPTEMBER 30, 2010 AND 2009 RECONCILIATION OF CASH AND CASH EQUIVALENTS OF STATEMENT OF CASH FLOWS TO THE BALANCE SHEET: Cash and cash equivalents Cash restricted for capital Cash and cash equivalents at the end of the year RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization Decrease (increase) in assets Receivables Prepaids Increase (decrease) in liabilities Payables and accruals Customer deposits Net cash provided by operating activities NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES: 2010 $ 111,972 9,973,794 $ 10, 085, 766 EXHIBIT D-3 (CONTINUED) 2009 $ 2,808,590 $ 4,738,234 4,603,321 3,703,019 (1,232,002) (205,765) (628) - 139,388 (392,904) 38,894 50,594 $ 6,357,563 $ 7,893,178 During the fiscal years ended September 30, 2010 and 2009 the estimated value of water and sewer infrastructure contributed by developers was $2,205,613 and $1,883,664, respectively. 116 INTERNAL SERVICE FUND The Internal Service Fund is used to account for financing of services provided by one department to other departments of the City on a cost -reimbursement basis. The Vehicle Replacement Fund - accounts for the costs associated with the acquisition of vehicles through the rental of such vehicles to other departments. 117 CITY OF SOUTHLAKE, TEXAS EXHIBIT E-1 VEHICLE REPLACEMENT INTERNAL SERVICE FUND COMPARATIVE STATEMENTS OF NET ASSETS SEPTEMBER 30, 2010 AND 2009 FdN$I =k K CURRENT ASSETS Cash and cash equivalents Investments Receivables, net of allowance for uncollectibles: Interest Total current assets NON -CURRENT ASSETS Capital assets Vehicles Total capital assets Less: accumulated depreciation Total non -current assets TOTAL ASSETS LIABILITIES AND NET ASSETS CURRENT LIABILITIES Due to other funds Total current liabilities NET ASSETS Invested in capital assets Unrestricted TOTAL NET ASSETS 2010 2009 $ 694,786 $ - 1,600,770 2,906,829 394 10,109 2,295,950 2,916,938 3,212,914 3,045,367 3,212,914 3,045,367 (1,818,332) (1,424,641) 1,394,582 1,620,726 $ 3,690,532 $ 4,537,664 $ 614,490 614,490 1,394,582 1,620,726 2,295,950 2,302,448 $ 3,690,532 $ 3,923,174 118 CITY OF SOUTHLAKE, TEXAS VEHICLE REPLACEMENT INTERNAL SERVICE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 OPERATING EXPENSES Lease payments Maintenance Depreciation Total operating expenses OPERATING LOSS NON -OPERATING REVENUES Gain on sale of capital assets Interest income Total non -operating revenues LOSS BEFORE TRANSFERS Transfers from other funds CHANGE IN NET ASSETS NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR EXHIBIT E-2 2010 2009 $ 21,000 $ - 26,492 - 442,118 425,784 489,610 425,784 (489,610) (425,784) 21,465 134,026 503 39,400 21,968 173,426 (467,642) (252,358) 235,000 - (232,642) (252,358) 3,923,174 4,175,532 $ 3,690,532 $ 3,923,174 119 CITY OF SOUTHLAKE, TEXAS EXHIBIT E-3 VEHICLE REPLACEMENT INTERNAL SERVICE FUND COMPARATIVE STATEMENTS OF CASH FLOWS YEARS ENDED SEPTEMBER 30, 2010 AND 2009 2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES Cash paid to suppliers $ (47,492) $ 19,042 Net cash provided by (used in) operating activities (47,492) 19,042 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Capital expenditures (215,974) (657,184) Proceeds from sale of capital assets 21,465 134,026 Net cash used in capital and financing activities (194,509) (523,158) CASH FLOWS FROM NON -CAPITAL FINANCING ACTIVITIES Cash received from (paid to) other funds (614,490) 614,490 Transfers from other funds 235,000 - Net cash provided by (used in) non -capital financing activities (379,490) 614,490 CASH FLOWS FROM INVESTING ACTIVITIES: Net (purchase) sale of investments 1,306,059 (166,211) Interest received 10,218 55,837 Net cash provided by (used in) investing activities 1,316,277 (110,374) Net increase in cash and cash equivalents 694,786 - Cash and cash equivalents at the beginning of year - - Cash and cash equivalents at the end of year $ 694,786 $ - RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: Operating loss $ (489,610) $ (425,784) Adjustments to reconcile operating loss to net cash provided by (used in) operating activitiies: Depreciation 442,118 425,784 Decrease (increase) in assets Due from other funds - 19,042 Net cash provided by (used in) operating activities $ (47,492) $ 19,042 120 AGENCY FUNDS The Agency Funds are used to account for resources held for others in a custodial capacity. The City maintains the following Agency Fund: Cash Escrow Agency Fund - accounts for the receipt and subsequent disbursement of deposits paid to the City by builders/developers. 121 CITY OF SOUTHLAKE, TEXAS EXHIBIT F-1 CASH ESCROW AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FOR THE YEAR ENDED SEPTEMBER 30, 2010 Balance at Balance at Beginning End of Year Additions Deletions of Year I-11P&I =k K Cash and cash equivalents Investments Accrued interest receivable TOTAL ASSETS LIABILITIES Due to other funds Due to builders TOTAL LIABILITIES $ - $ 19,038 $ - $ 19,038 91,639 331 43,063 48,907 297 - 35 262 $ 91,936 $ 19,369 $ 43,098 $ 68,207 $ 24,060 $ - $ 24,060 $ - 67,876 331 - 68,207 $ 91,936 $ 331 $ 24,060 $ 68,207 122 CITY OF SOUTHLAKE, TEXAS COMPARATIVE SCHEDULES OF CAPITAL ASSETS BY SOURCE SEPTEMBER 30, 2010 AND 2009 General capital assets Land and improvements Buildings and improvements Equipment Infrastructure Construction in progress Total general capital assets Investment in general capital assets Capital projects funds General and other fund revenues Gifts Total investment in general capital assets EXHIBIT G-1 2010 2009 $ 90,591,779 $ 84,885,673 62,702,699 33,428,251 18,511,817 16,427,659 220,959,266 213,400,962 18,141,972 34,242,358 $ 410,907,533 $ 382,384,903 $ 294,598,025 $ 291,034,298 79,609,689 60,665,442 36,699,819 30,685,163 $ 410,907,533 $ 382,384,903 123 CITY OF SOUTHLAKE, TEXAS EXHIBIT G-2 SCHEDULE OF CHANGES IN CAPITAL ASSETS BY FUNCTION AND ACTIVITY FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010 Capital Capital Assets Assets October 1, September 30, Function and Activity 2009 Additions Deductions 2010 General government $ 186,630,629 $ 240,571 $ - $ 186,871,200 Public safety 35,999,896 31,041,713 (24,701,308) 42,340,301 Public works 159,754,378 26,865,077 (4,923,423) 181,696,032 Total general capital assets $ 382,384,903 $ 58,147,361 $ (29,624,731) $ 410,907,533 General Public Public Government Safety Works Total Land and improvements $ 2,418,798 $ 4,303,923 $ 83,869,058 $ 90,591,779 Buildings and improvements 25,787,054 32,874,634 4,041,011 62,702,699 Equipment 5,625,408 4,106,808 8,779,601 18,511,817 Infrastructure 153,039,940 114,989 67,804,337 220,959,266 Construction in Progress - 939,947 17,202,025 18,141,972 Total $ 186,871,200 $ 42,340,301 $ 181,696,032 $ 410,907,533 124 STATISTICAL SECTION STATISTICAL SECTION This part of the City of Southlake's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, notes disclosures, and required supplementary information says about the City's overall financial health. This information has not been audited by the independent auditor. Contents Table #s Financial Trends 1, 2,3 & 4 These tables contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. Revenue Capacity 5, 6, 7 & 8 These tables contain information to help the reader assess the City's two most significant local revenue sources, the property and sales taxes. Debt Capacity 9, 10, 11 & 12 These tables present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Economic and Demographic Information 13 & 14 These tables offer economic and demographic indicators to help the reader understand the environment within which the City's financial activities take place. Operating Information 15, 16 & 17 These tables contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides. Source: Unless otherwise noted, the information in these tables is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB Statement 34 in fiscal year 2003: tables presenting government -wide information include information beginning in that year. f6 N u U A LL V z_ F- Z QW ^O WOQU d W Q QOQO 2}cnfn OCn~mw fnWLL VQH O�W�� Q j inU z Uz-i- r- O N O (, (O I� M M ' N (3) U7 OO N N N (O (O N U7 Lo V 00 00 O) � O V V O O) O) 00 V N O 00 00 O 00 N I- 00 00 U') V) 00 (M M 00 I- O) N M M 00 M V 0OV LD W�M uM((D VOM00 00 N M V' (O N N U7 O 00 O (3) 00 N 00 0 M U') V M 00 L0 N 00 O) O LQ I� � 00 I� (O I- O) V O (0 r- U7 V (O N N (M (O N 00 O O) O (M V 0V NV MO LL 0) I� O 00 U7 V U7 U7 V ' U7 O) V (O (O (3) (O (14 V V 00 O O) O V O) 00 M O V O) U7 M 00 O) N I� (O 00 (3) 00 (O 00 V I- N (O U') V I- (3) I- (3) (O Lo N N I- O V N r- M O 00 ER ER 69 69 69 69 r- (14 r- � � � V O) (O O0 U7 O) ' r- U') N N (O lf') O) O) (O I� V (O 00 O I- r- U7 N (() (O U7 N I- O r- U7 O r- 00 (O 'O 00 ON ISO) OO O)O N (3) (O (3) U7 O (M (M O (O N (3) C O U7 I- U7 N r- (O 00 V N N N N m E 69 69 69 6rT 6rT 6rT N OL E N 00 00 V V)_ ' V O M W O) 00 O N 00 O) I� O G M � C O) U') V V N (O M N N M V) ER ER ER ER 6rT N (6 M M V U7 N - cc)N O (O (O M V 00 � O) ' 00 O (M I� 00 U) (o Oo v of of co (o Lo 00 Lo Q N� NMVOV O N O N 00 M 00 O) 00 O) I- (O M I- r N 00 M N N M U7 N V) 00 N N N A 6r) 6rT 69 69 69 69 M V) (O N (O (O V) N 00 O L ' V O ' ' U7 U7 L ' O L N I� 00 (O M V) V V V V M O 00 O O M O M (O (O M (O O Y _ _ _ U N M M N ER ER ER ER ER ER Q (6 O- O� M N(o O NM m 00 ' (M O) ' O) 00 00 ' N O A M V O r- r- N 0 V ((o M N U7 O I� � (M O M O Lo M 00 O (O V O .N M O M N lf') O V) N N fR fR fR fR fR fR L (6 N N N N A U O N O N O N Q U (6 (6 (6 N cr � O co D_- T - Fu T a U _ a) (6 U) (6 U N N T) U 'O U (6 N U 'O E . ._ .0 'O O O� C .c: '0 N i N N U N U` w N U` N N a) N N 'i N N i N 'i N OL Q > > 2 N> '-' N C C O- N C a) N C p j a) cr w cr C O -S� cr O U U co D U o v a m a) N CL L �w C D m a` cnn z Lo N CITY OF SOUTHLAKE, TEXAS CHANGES IN NET ASSETS, LAST EIGHT FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) Fiscal Year 2003 2004 2005 2006 2007 Expenses Governmental activities: General government $ 5,933,303 $ 5,587,931 $ 5,926,466 $ 8,465,930 $ 9,833,572 Public safety 10,252,829 10,493,951 10,548,265 10,965,357 11,729,107 Public works 3,348,517 3,318,138 3,470,227 3,707,519 4,813,692 Culture and recreation 3,848,090 3,937,540 4,463,075 5,085,976 5,510,247 Interest on long-term debt 3,448,154 4,916,955 5,003,130 5,052,472 5,804,295 Total governmental activities expenses 26,830,893 28,254,515 29,411,163 33,277,254 37,690,913 Business -type activities: Water and sewer 13,852,605 13,781,499 14,130,259 16,168,430 14,729,469 Total business -type activities expenses 13,852,605 13,781,499 14,130,259 16,168,430 14,729,469 Total primary government expenses $ 40,683,498 $ 42,036,014 $ 43,541,422 $ 49,445,684 $ 52,420,382 Program Revenues Governmental activities: Charges for Services: General government $ 1,226,438 $ 1,739,515 $ 1,321,236 $ 1,956,949 $ 1,778,215 Public safety 959,855 1,429,962 2,151,270 1,873,524 2,979,947 Public works 97,298 202,153 250,760 411,381 223,329 Culture and recreation 585,276 676,715 752,062 813,837 1,156,965 Operating grants and contributions 212,224 401,339 319,593 459,688 304,246 Capital grants and contributions 284,175 447,270 3,639,953 3,575,240 11,425,990 Total governmental activities program revenues 3,365,266 4,896,954 8,434,874 9,090,619 17,868,692 Business -type activities: Charges for services: Water and sewer 14,551,845 13,743,453 16,100,215 20,180,636 15,414,131 Capital grants and contributions 1,368,097 1,642,757 2,471,700 3,510,000 5,589,196 Total business -type activities program revenues 15,919,942 15,386,210 18,571,915 23,690,636 21,003,327 Total primary government program revenues $ 19,285,208 $ 20,283,164 $ 27,006,789 $ 32,781,255 $ 38,872,019 Net (Expenses) Revenue Governmental activities $(23,465,627) $(23,357,561) $(20,976,289) $(24,186,635) $(19,822,221) Business -type activities 2,067,337 1,604,711 4,441,656 7,522,206 6,273,858 Total primary government net expenses $ (21,398,290) $ (21,752,850) $ (16,534,633) $ (16,664,429) $ (13,548,363) General Revenues and Other Changes in Net Assets Governmental activities: Taxes: Property taxes $ 16,744,004 $ 18,694,986 $ 19,604,411 $ 21,439,614 $ 24,509,730 Sales taxes 10, 299, 692 10, 788, 469 12, 503, 357 16, 040, 418 16, 931,180 Franchise taxes 1,781,115 1,933,250 2,015,893 1,983,381 2,435,803 Interest on investments 599,276 735,978 860,725 2,591,520 3,598,458 Gain (Loss) on sale of fixed assets 226,162 50,400 (33,071) 35,317 - Transfers - 1,322,539 - - 275,595 Miscellaneous 653,876 51,512 7,008 166,789 8,688 Total governmental activities 30,304,125 33,577,134 34,958,323 42,257,039 47,759,454 Business -type activities: Interest on investments 335,487 380,571 412,793 1,024,603 1,183,987 Gain (Loss) on sale of fixed assets - - - 930,138 (3,396) Transfers (1,322,539) - (275,595) Miscellaneous - - - - Total business -type activities 335,487 (941,968) 412,793 1,954,741 904,996 Total primary government $ 30,639,612 $ 32,635,166 $ 35,371,116 $ 44,211,780 $ 48,664,450 Change in Net Assets Governmental activities $ 6,838,498 $ 10,219,573 $ 13,982,034 $ 18,070,404 $ 27,937,233 Business -type activities 2,402,824 662,743 4,854,449 9,476,947 7,178,854 Total primary government $ 9,241,322 $ 10,882,316 $ 18,836,483 $ 27,547,351 $ 35,116,087 Source: Comprehensive Annual Financial Report Note: Accrual -basis financial information for the city as a whole is only available back to 2003, the year GASB Statement 34 was implemented. 126 2008 2009 2010 $ 4,406,913 $ 11,068,965 $ 11,814,836 12, 770, 012 12, 920, 263 14, 885, 499 8,669,156 5,840,432 5,767,688 5,911,730 6,439,100 7,287,434 5,506,967 5,854,931 6,515,269 37,264,778 42,123,691 46,270,726 17, 689, 865 18, 066, 346 18, 948, 438 17, 689, 865 18, 066, 346 18, 948, 438 $ 54,954,643 $ 60,190,037 $ 65,219,164 $ 1,340,864 $ 1, 949,993 $ 2,476,000 2,843,923 2,633,437 2,706,847 199,833 68,369 240,916 1,269,571 1,369,725 1,387,558 241,144 239,364 688,803 5,690,613 1,833,160 5,994,206 11,585,948 8,094,048 13,494,330 18, 543, 025 19, 321, 095 18, 897, 356 3,748,161 2,212,867 2,578,400 22,291,186 21,533,962 21,475,756 $ 33,877,134 $ 29,628,010 $ 34,970,086 $(25,678,830) $(34,029,643) $(32,776,396) 4,601,321 3,467,616 2,527,318 $(21,077,509) $(30,562,027) $(30,249,078) $ 28,950,945 $ 30,911,161 $ 32,298,360 18, 781, 043 17, 256, 272 17, 610, 781 2,654,701 2,816,111 2,606,248 3,128,226 1,703,418 414,852 - 167,127 21,465 229,436 339,510 596,093 52,023 341,957 428,804 53,796,374 53,535,556 53,976,603 594,891 953,739 155,173 (229,436) (339,510) (596,093) 10,989 2,187 71,871 376,444 616,416 (369,049) $ 54,172,818 $ 54,151,972 $ 53,607,554 $ 28,117,544 $ 19,505,913 $ 21,200,207 4,977,765 4,084,032 2,158, 269 $ 33,095,309 $ 23,589,945 $ 23,358,476 TABLE 2 127 0 cice n 0 Z Z D LL O J U Q Z LL W O Qz C/) x w '^ � L \ VI r \ Q W W O W J Q 0J D = W Q U O<LL in J z 0 LLmWWO O ~ LL D OH0< zC/)OZ U LL J _ In � (O M N (0 (O N V O O In O (O (O N co In (O N It (O O It r N d) M In Nt O N ' Cl) `-' N V N (O M (O M N r O 'ItI- (Orn� �rn�cc��� r_ o0 o c Do ui ui ui c � I� 00N Cl) 00 O In co (O V O �QNr V ' ' ' M 1- M In r NCl) Cl) I- 00 (O (O C\lN (M Cl) d) N � O 00 r 00 In N 01 - 01 � Cl) (O N r ER ER ER ER 0) In V 00 N 0) Cl) O 00 M N O (O 00 I- 00 O (O 00 r r N (O O N (3 V V 0) In V V O 00 Cl) Cl) In (O N N (O d) 0) O d) N O 00 (M (3) r (O M N (O (O 00 Cl) 0) N N I- V (O V3 V3 V3 V3 01 O In M N M (O (O Cl) d) d) d) V (O N (O O "I In 00 N Nt O ' ' ' O ' 00 O Cl) Ito0 00 V M 00 O N O M N O 00 COr- (O 00_ d) d) r (D 00 00 N n V3 V3 V3 V3 O 0) 0) N In r I- N N 00 co In (O r (M (`') r_ 00 ' ' ' N ' r O I-OC) r O I- 00 1-00 It C\lN 00 r (O 00 d) co In O (O r N 0) (O N N V V3 V3 V3 V3 O r- 00 0) (O r (M N (O 00 d) N 00 O O O O 00 O '' O ' N V (O 'ItO N 00 O (O N N 0) In (O O d) (O O o0 00 r d) O In CO (M 00 N N t In N N 00 N V3 V3 V3 V3 N In r r r (O O r 00 00 Cl) (O 00 IT V 01 V 0) 00 (O (O r N O (M O ' ' 00 r ' (3) I� d) r r N N V 0) N t It I� 00 N Cl) I- r M It O (O d) (M M N In O O V co V In 00 N V3 V3 V3 V3 00 O O 0) O (O N N N r Itr- d) N (O O r (3 ' ' N O ' N (O r V O V V Cl) Cl) V Cl) O (O 00 d) 0) I- V O In (O 00 00 00 (O V N Cl) d) 00 00 co N M (O r � N V3 V3 V3 V3 r Cl) Cl) M O- M 0 ln (, 01 (O M O o0 O O I_ (O O ' ' O_ ' (O In V 0) (O 00 r 0) O M V 0) M (M In (O 0) In N M o0 r N (3 N CO r N r N N N r (O V3 V3 V3 V3 I- 00 0) 00 0) 00 V (O N N N V 01 00 r N O V Cl) d) Cl) (M o0 � V 0) ' ' In (O ' M Cl) r� N In r In N M V V V r V 00 r- N N ­ O ((D I� E N N O d Q w � � U Q w LL w w Qa a) � m X m m =o w E -wo s= a Q C Q w 0 a w w oa Qa) CL w m E a a) X 0 w > s m Q LL a) m m o Q > w c�i a) m w o m as a � o a Q a) Q °' a` E aw Za aZ a) E w cmiY.° >'� E m ZZ Q._ s z > CL E w m Z a) o `m m a) o— w m o Q o w awl_ >:5 0 U)a) �s U— a) m o a) C� L ii o r O m ` w o H c z c7 Q co N LL cn Z D1, LL J Q Z CW ZZ_L C r Z Z w D O O 0 W 0 Q U cn Z Q m Y J z J D Q H LL Dz_�Qo LL cnCnz�� 0 ~ a�D UL)—i— O) MN W 0 W O O W I N O N I� m V V O) V m i0 i0 W O V i0 W O) i0 V O) W NO W W -- o N N V o m fA N W m V N W V O W N N N m W m I� W V W A N N i0 W O m O i0 O I� ' m m i0 O CO N r N - 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(CAI U rn M CITY OF SOUTHLAKE, TEXAS TABLE 14 PRINCIPAL EMPLOYERS CURRENT YEAR AND FOUR YEARS AGO (UNAUDITED) 2010 2006 Percentage of Percentage Total City of Total City Employer Employees Employment Employer Employees Employment Sabre Holdings 2,700 20.61 % Sabre Holdings 3,000 20.00% Carroll ISD 1,072 8.18% Carroll ISD 1,037 6.91% Verizon Wireless 619 4.73% Tri Dal Ltd. 450 3.00% City of Southlake 276 2.11% Verizon Wireless 450 3.00% Hilton Dallas/Town Square 218 1.66% City of Southlake 273 1.82% Tri Dal Ltd. 194 1.48% Cheesecake Factory 200 1.33% Cheesecake Factory 161 1.23% Costco Wholesale 180 1.20% Variosystems Inc. 150 1.15% Tom Thumb 140 0.93% Lowe's Home Improvement 145 1.11% Home Depot 131 0.87% Ameristar Information Network 125 0.95% Dallas Marriott Solana 122 0.81% Kroger 121 0.92% Lowe's Home Improvement 115 0.77% Home Depot 120 0.92% Albertson's 100 0.67% Costco Wholesale 107 0.82% Eagle Contracting L.P. 100 0.67% Albertson's 100 0.76% Floors Inc. 100 0.67% Kohl's 100 0.76% Kohls 100 0.67% Floors, Inc 100 0.76% Kroger 100 0.67% Tom Thumb 89 0.68% Steak-n-Shake 100 0.67% Darr Lift 84 0.64% Darr Lift 90 0.60% Chick-fil-A 75 0.58% Buca di Beppo 75 0.50% Buca di Beppo 75 0.58% Century 21 Worldwide 70 0.47% PetsMart 70 0.47% Re/Max Masters 70 0.47% Bear Creek Construction, LTD. 60 0.40% Greater Metroplex Interiors 60 0.40% Red Lobster 60 0.40% Circuit City 55 0.37% Timarron Country Club 55 0.37% Ebby Halliday Realtors 51 0.34% Blue Mesa Cafe 50 0.32% Eklund's, Inc. 50 0.32% Total 6,631 50.63% 7,514 50.09% Total Southlake Daytime Employees 13,098 Total Southlake Daytime Employees Note: Information for 2001 was not available at the time, therefore, an alternate year was presented in its place. 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