Item 4ECITY OF
SOUTHLAKI
Item 4E
MEMORANDUM
March 9, 2015
To: Shana Yelverton, City Manager
From: Sharen Jackson, Chief Financial Officer
Subject: Approval of the 2014 Comprehensive Annual Financial Report
Action
Requested: Approval of September 30, 2014 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 L.L.P., Certified Public Accountants,
performed the audit for fiscal year 2014. City received an
unmodified ("clean") opinion on the City's financial
statements for the year ended September 30, 2014. Shawn
Parker, Partner, will present the report to the audit
committee on Tuesday during the committee meeting
scheduled at 5.00 prior to the city council meeting.
Financial
Considerations: None required
Strategic Link: F4 Establish and maintain effective internal controls
Citizen Input/
Board Review: None required
Legal Review: None required
Alternatives: None required
Supporting
Documents: 2014 CAFR
Staff Recommendation: Approval of 2014 Comprehensive Annual Financial
Report
CITY OF
SOUTH Al<,,,E
TEXAS
Comprehensive Annual Financial Report
For The Fiscal Year Ended
September 30, 2014
CITY OF SOUTHLAKE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2014
As Prepared By
Sharen Jackson, CPA
Chief Financial Officer
CITY OF SOUTHLAKE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2014
TABLE OF CONTENTS
Exhibit Page
INTRODUCTORY SECTION
Letter of Transmittal i
Certificate of Achievement viii
Organizational Chart ix
List of Principal Officials x
aI�Fil�INFil1&yxQ1101►
Independent Auditor's Report 1
A. MANAGEMENT'S DISCUSSION AND ANALYSIS 4
B. BASIC FINANCIAL STATEMENTS
Government -Wide Financial Statements
Statement of Net Position 1 15
Statement of Activities 2 16
Fund Financial Statements
Governmental Funds Financial Statements
Balance Sheet 3 17
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Position 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 Funds Financial Statements
Statement of Net Position 7 23
Statement of Revenues, Expenses, and Changes in Net Position 8 24
Statement of Cash Flows 9 25
Fiduciary Fund Financial Statement
Statement of Fiduciary Net Position 10 26
Notes to the Basic Financial Statements 27
CITY OF SOUTHLAKE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2014
TABLE OF CONTENTS
Exhibit Page
C. REQUIRED SUPPLEMENTARY INFORMATION
Budgetary Comparison Schedule - General Fund
A-1 54
Budgetary Comparison Schedule - Crime Control District Special Revenue Fund
A-2 55
Budgetary Comparison Schedule - Tax Increment Financing District Special
Revenue Fund
A-3 56
Notes to Required Supplementary Information
57
Condition Rating of Street System
A-4 58
D. COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES
Major Governmental Funds
Budgetary Comparison Schedule - General Obligation Debt Service Fund B-1 60
Nonmajor Governmental Funds
Combining Balance Sheet - Nonmajor Governmental Funds
C-1
63
Combining Statement of Revenues, Expenditures, and Changes in Fund Balance -
Nonmajor Governmental Funds
C-2
66
Budgetary Comparison Schedule - Parks Dedication Special Revenue Fund
C-3
69
Budgetary Comparison Schedule - Southlake Parks Development
Corporation Special Revenue Fund
C-4
70
Budgetary Comparison Schedule - Hotel Occupancy Special Revenue Fund
C-5
71
Budgetary Comparison Schedule - Storm Water Utility Special Revenue Fund
C-6
72
Budgetary Comparison Schedule - Red Light Camera Special Revenue Fund
C-7
73
Budgetary Comparison Schedule - Southlake Parks Development Corporation
Debt Service Fund
C-8
74
Agency Funds
Statement of Changes in Assets and Liabilities - Cash Escrow Agency Fund F-1 76
E. Capital Assets Used in the Operation of Governmental Funds
Comparative Schedules of Capital Assets by Source G-1 77
Schedule of Changes in Capital Assets by Function and Activity G-2 78
CITY OF SOUTHLAKE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2014
TABLE OF CONTENTS
Exhibit
Page
III. STATISTICAL SECTION
Table
Net Position By Component
1
79
Changes in Net Position
2
81
Fund Balances, Governmental Funds
3
83
Changes in Fund Balances, Governmental Funds
4
84
Assessed Value and Estimated Actual Value of Taxable Property
5
85
Direct and Overlapping Property Tax Rates
6
86
Principal Property Tax Payers
7
87
Ad Valorem Tax Levies and Collection
8
88
Ratio of Outstanding Debt By Type
9
89
Ratio of General Bonded Debt Outstanding
10
91
Direct and Overlapping Governmental Activities Debt
11
92
Pledged -Revenue Coverage
12
93
Demographic and Economic Statistics
13
94
Principal Employers
14
95
Full -Time Equivalent City Government Employees By Function/Program
15
96
Operating Indicators By Function/Program
16
97
Capital Asset Statistics By Function/Program
17
98
INTRODUCTORY SECTION
e CITY OF
SOU 1 1 iLAKE
Finance Department
March 11, 2015
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, 2014. This
report was prepared by the Finance Department in accordance with the Southlake
Charter, Statutes and generally accepted accounting principles for governments. In
addition to meeting legal requirements, this report reflects the City's commitment to full
financial disclosure. We encourage you to thoroughly read this report and take the
opportunity to discuss some of the important items it addresses.
In developing and evaluating the City's accounting system, consideration is given to the
adequacy of internal accounting controls. These controls are designed to provide
reasonable, but not absolute, assurance regarding the safeguarding of assets against loss
from unauthorized use or disposition, and the reliability of financial records for preparing
financial statements and maintaining accountability for assets. The concept of reasonable
assurance recognizes that the cost of a control should not exceed the benefits likely to be
derived, and the evaluation of costs and benefits requires estimates and judgments by
management. We believe that the City's current system of internal controls adequately
safeguards assets and provides reasonable assurance of proper recording of financial
transactions.
The financial statements are presented in accordance with Governmental Accounting
Standards Board Statement 34, Basic Financial Statements -and Management's
Discussion and Analysis -For State and Local Governments. The presentation of the
City's financial information includes two financial statements that provide a government -
wide perspective using the accrual basis of accounting. The two government -wide
statements present governmental activities separately from business -type activities. The
inclusion of the government -wide statements in this format enables a more thorough
understanding of the financial operations and condition of the City.
1400 Main Street, Suite 440, Southlake, TX 76092 (817) 748-8345
Innovation 0 Integrity 0 Accountability 0 Commitment to Excellence 0 Teamwork
i
The fund financial statements focus on individual major funds. Each major fund is
presented in a separate column in the fund financial statements. Nonmajor funds are
aggregated and presented in a combined column. Budget to actual comparisons are
presented as required supplementary information and are limited to the general fund and
major special revenue funds. The comparisons are now more informative, including both
the original adopted budget and the final amended budget.
We believe the reporting model will assist in making economic, social and political
decisions and in assessing accountability to the residents by:
• comparing actual financial results with the legal adopted budget, where
appropriate;
• assessing financial condition and results of operations;
• assisting in determining compliance with fiscally -oriented laws, rules and
regulations; and
• assisting in evaluating the efficiency and effectiveness of City operations.
Responsibility for both the accuracy of the presented data and the completeness and
fairness of the presentation, including all disclosures, rests with the City. To the best of
our knowledge and belief, the data, as presented, is accurate in all material respects and is
reported in a manner designed to present fairly the financial position and results of
operations. All disclosures necessary to enable the reader to gain an understanding of the
City's financial activities have been included.
FINANCIAL STATEMENT FORMAT
This report has been prepared and organized to meet the requirements of the Government
Finance Officers Association (GFOA) Certificate of Achievement for Excellence in
Financial Reporting Program. By following the guidelines of this program, the report's
format facilitates understanding by the residents and provides information needed by the
most sophisticated and interested financial observers. The report is presented in three
sections: introductory, financial and statistical.
• The introductory section, which is unaudited, includes this transmittal letter,
GFOA certificate, the City's organizational chart, and a list of principal officials.
This section is designed to provide an overview and general understanding of the
report.
ii
• The financial section provides a detailed presentation of the financial position and
results of operations for the fiscal year ended September 30, 2014. 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 1/2 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.
iii
PROFILE OF THE GOVERNMENT
General Information
Although Southlake has been a high -growth community for years, when the first settlers
arrived in 1845 they found only a vast area of land and trees where the grand prairie and
cross timbers merged. As the site of the first permanent settlement in Tarrant County, a
portion of present day Southlake was homesteaded in 1866, which consisted of 360 acres.
Keeping with the time, the primary industry was agriculture. Farmers grew peanuts,
grains and cotton, and families raised their own livestock.
The area that would become Southlake remained a rural farming community for more
than 100 years until the U.S. Army Corps of Engineers built Lake Grapevine in 1952.
The lake spurred much of the area's early growth and was the beginning of dramatic
change. The town officially incorporated on September 25, 1956 by a public vote of 30
in favor and 24 against. The original town contained 1.62 square miles and had a
population of just over 100. The residents chose to call this new town Southlake because
it was... south of Lake Grapevine! The Southlake Fire Department was launched in 1965
and the first piece of fire equipment was a 1950 Diamond T-Military unit with a tank
capacity of 1,000 gallons and an auxiliary pump. The first chief of police was hired in
1966, and the City purchased its first patrol car in 1967.
The opening of the Dallas -Fort Worth International Airport in 1974 served as the next
catalyst of growth in the area and Southlake residents adopted a home -rule charter in
April 1987, which created the current council-manager form of government with six
Council Members and a Mayor who are elected at large on a non -partisan basis for
staggered three-year terms. But the single most important event in bringing residential
subdivision development to Southlake was the completion of water and sewer lines in the
southern portion of the city in the early 1990s.
Since that time, much like the area's first settlers were attracted to the area with its
endless possibilities, Southlake has continued to attract the suburban settler desiring a
high quality of life and the small town charm that has been preserved from Southlake's
past.
Services Provided
Services provided by the City under general governmental functions include public
events, public safety, planning and development, engineering, street maintenance, parks
operation and maintenance, recreation, library services, and general administrative
services. The City does not provide educational or welfare services.
Water and sewer services and solid waste collection are provided under an Enterprise
Fund concept, with user charges set by the City Council to ensure adequate coverage of
operating expenses and payments of outstanding debt.
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
iv
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.
150
100
50
0
Single Farniry Resldentisl Home Permits
2010 2011 2012 2013 2014
There were
197 single
family
residential
permits issued in Fiscal
Year 2014
with an
average new home
construction
value,
excluding land value, of
more than
$665,000.
Residential
home
construction
has
increased as
evidenced
by the chart.
Water customers
Number of Water Cuslorners increased from 9,812 in
Fiscal Year 2013 to
i0,i00
10,000
9,800
9,600
9,400
9,200
9 000
9,964 in 2014, while
wastewater customers
increased from 7,756 to
8,129 during the same
year. The chart shows
the five-year trend of
increasing water
customers, the result of
2010 2011 2012 2013 2014 the building permit
activity. The City has
developed master plans for land use, water, sewer, parks, trails, and thoroughfares, and
has implemented regulatory controls that will maintain the anticipated quality growth into
the future.
Saks Tax Revenue
30,00,000
25,00,000
20,000,000
15,0a0,a0n
10.000.001)
s,00a,00n
2010 2011 2012 2013 2014
■General oSPDC �Criure
The City of Southlake
experienced an increase
in sales tax collections
during the fiscal year as
indicated on the chart.
Sales tax collections
totaled $25,346,047 in
fiscal year 2014, a
17.7% increase from
the previous year.
v
Future Development
During 2014, approximately 42 new construction commercial permits were issued by the
City, representing over 630,277 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 $850,000.
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 2014, the property tax rate was held steady at $0.462 per $100 net taxable
valuation.
OTHER INFORMATION
Independent Audit
The City Charter requires an annual audit of the financial status of the City by
independent Certified Public Accountants selected by the City Council. This requirement
has been met and the auditor's report has been included in this report.
Avunrdc
The Certificate of Achievement is a prestigious national award recognizing conformance
with the highest standards for preparation of state and local government financial reports.
In order to be awarded a Certificate of Achievement, a government unit must publish an
easily readable and efficiently organized comprehensive annual financial report, whose
contents conform to program standards.
vi
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, 2013, and believes our current report conforms to the Certificate of
Achievement program requirements, and we are submitting it to GFOA.
In addition, the City also received the GFOA's Distinguished Budget Presentation award
for its annual budget dated October 1, 2013. In order to qualify for this award, the City's
budget document was judged to be proficient in all categories, including as a policy
document, a financial plan, and operations guide, and a communications device. The
City received the silver member designation for the Texas Comptroller's Leadership
Circle for online financial transparency.
Acknowledgments
The preparation of this report could not be accomplished without the dedication and
efficiency of the entire staff and our independent auditor. I would like to express my
sincere appreciation to all employees who contributed to its preparation. I would also
like to thank the Mayor and members of the City Council for their support in planning
and conducting the financial operations of the City in a responsible and efficient manner.
Respectfully submitted,
Sharen Jackson, CPA
Chief Financial Officer
vii
Goverr,rnont Fr'nauce Officm Association
Certificate of
Achievement
for Excellence
in Financial.
Reporting
Pros ailed to
City of Southlake
Texas
for its Compreher►sive Annual
Knaneial Report
for the Fiscal Year Ended
September 30, 2013
*e f*,� I e d 0-;: PAO W,,;,
ExKtitive Director/CEO
CITY OF SOUTHLAKE
ORGANIZATIONAL CHART
SOUTHLAKE
CITIZENS
MAYOR AND
CITY COUNCIL
_ _ _ _ _ _ _ _ CITY
MANAGER
CITY CITY
ATTORNEY SECRETARY
ASSISTANT CITY
MANAGER
COMMUNITY I I I FIRE SERVICES
SERVICES
POLICE
SERVICES
PLANNING &
DEVELOPMENT
ASSISTANT CITY
MANAGER
CITY MANAGER'S
OFFICE
HUMAN
RESOURCES
ECONOMIC
DEVELOPMENT &
TOURISM
PUBLIC WORKS
MUNICIPAL
JUDGE
INFORMATION
TECHNOLOGY
FINANCE
IX
LIST OF PRINCIPAL OFFICIALS
John Terrell Mayor
Laura K. Hill Mayor Protem
Brandon Bledsoe Deputy Mayor Protem
Shahid Shall
Council Member
Carolyn Morris
Council Member
Randy Williams
Council Member
Gary Fawks
Council Member
Shana K. Yelverton City Manager
Benjamin Thatcher Assistant City Manager
Alison Ortowski Assistant City Manager
Lori Payne City Secretary
Sharen Jackson
Chief Financial Officer
Shannon Hamons
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 (the City) as of and for the year ended September 30, 2014, and the related
notes to the financial statements, which collectively comprise the City's basic financial
statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant
to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
AN INDEPENDENT MEMBER OF WEAVER AND TIDWELL, L.L.P. 12221 MERIT DRIVE, SUITE 1400, DALLAS, TX 75251
BAKER TILLY INTERNATIONAL CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS P: 972.490.1970 r- 972.702.8321
City of Southlake
Page 2
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business -type activities, each
major fund, and the aggregate remaining fund information of the City, as of September 30,
2014, and the respective changes in financial position, and, where applicable, cash flows
thereof for the year then ended in conformity with accounting principles generally accepted in
the United States of America.
Change in Accounting Principle
As discussed in Note 14 to the financial statements, the City adopted new accounting guidance,
GASB Statement No. 65, "Items Previously Reported as Assets and Liabilities", in 2014. Our
opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis (pages 4 through 14), budgetary comparison
information (pages 54 through 57), and condition rating of street system (page 58) be presented
to supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board, who
considers it to be an essential part of financial reporting for placing the basic financial
statements in an appropriate operational, economic, or historical context. We have applied
certain limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which consisted of
inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements.
We do not express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City's basic financial statements. The introductory section, combining
and individual fund financial statements and schedules, and statistical section, are presented for
purposes of additional analysis and are not a required part of the financial statements.
The combining and individual fund statements and schedules are the responsibility of
management and were derived from and relate directly to the underlying accounting and other
records used to prepare the basic financial statements.
City of Southlake
Page 3
Such information has been subjected to the auditing procedures applied in the audit of the
financial statements and certain additional procedures, including comparing and reconciling
such information directly to the underlying accounting and other records used to prepare the
basic financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the combining and individual fund financial statements and schedules
are fairly stated in all material respects in relation to the basic financial statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we do not express an
opinion or provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
March 11, 2015, on our consideration of the City's internal control over financial reporting and
on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing
of internal control over financial reporting and compliance and the results of that testing, and not
to provide an opinion on internal control over financial reporting or on compliance. That report is
an integral part of an audit performed in accordance with Government Auditing Standards in
considering the City's internal control over financial reporting and compliance.
"45� aaw T�4-�-
WEAVER AND TIDWELL, L.L.P.
Dallas, Texas
March 11, 2015
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, 2014 by
$501,339,589 (net position). Of this amount, $74,817,205 (unrestricted net position)
may be used to meet the government's ongoing obligations to citizens and creditors.
The City's total net position increased by $24,569,605. This increase can be attributed to
increases in ad valorem, sales tax revenue, fines and forfeitures, contributions, and
charges for services.
At September 30, 2014, the City's governmental funds reported combined ending fund
balances of $109,115,753. Approximately 15.0 percent of this amount, $16,399,991, is
available for spending at the government's discretion (unassigned fund balance).
At the end of the current fiscal year, unassigned fund balance for the General Fund was
$16,399,991 or 47.9 percent of total General Fund expenditures.
At the end of the current fiscal year, the City of Southlake outstanding debt totals
$172,776,503, a net decrease of $4,501,576 from the previous year.
4
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City's basic
financial statements. The reporting focus is on the City as a whole and on individual
major funds. It is intended to present a more comprehensive view of the City's financial
activities.
The basic financial statements are comprised of three components: 1) government -wide
financial statements, 2) fund financial statements, and 3) notes to the financial statements.
This report also contains other supplementary information in addition to the basic
financial statements themselves.
GOVERNMENT -WIDE FINANCIAL STATEMENTS
The government -wide financial statements include the Statement of Net Position and the
Statement of Activities. These statements are designed to provide readers with a broad
overview of the City's finances in a manner similar to a private -sector business. Both are
prepared using the economic resources measurement focus and the accrual basis of
accounting; meaning that all the current year's revenues and expenses are included
regardless of when cash is received or paid.
The Statement of Net Position presents information on all of the City's assets and
liabilities, including capital assets and long-term obligations. The difference between the
two is reported as net position. Over time, the increases or decreases in net position may
serve as a useful indicator of whether the financial position of the City is improving or
deteriorating. Other indicators of the City's financial position should be taken into
consideration, such as the change in the City's property tax base and condition of the
City's infrastructure (i.e., roads, drainage systems, water and sewer lines, etc.), in order to
more accurately assess the overall financial condition of the City.
The Statement of Activities presents information showing how the City's net position
changed during the most recent fiscal year. It focuses on both the gross and net costs of
the government's various activities and thus summarizes the cost of providing specific
government services. This statement includes all current year revenues and expenses.
The Statement of Net Position and the Statement of Activities divide the City's activities
into two types:
Governmental activities- Most of the City's basic services are reported here, including
general administration, debt services, public safety, public works, parks and community
services, public library, public events and facilities, planning and development and
finance. Property, sales and franchise taxes provide the majority of the financing for
these activities.
G7
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 22 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, Southlake Parks Development Corporation Capital Projects Fund, Crime
Control District Capital Projects Fund and Tax Increment Financing District Fund, all of
which are considered to be major funds. Data for the other governmental funds are
combined into a single, aggregated presentation. Individual fund data for each of the
Cel
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 27-53 of this report.
GOVERNMENT -WIDE FINANCIAL ANALYSIS
Total assets of the City at September 30, 2014 were $678,576,118 while total deferred
outflows of resources were $4,836,883 and total liabilities were $182,073,412 resulting in
a net position balance of $501,339,589.
The largest portion of the City's net position, $411,429,780 reflects its investment in
capital assets (land and improvements, building, infrastructure, machinery and equipment
net of accumulated depreciation); less any related debt used to acquire those assets that is
still outstanding. The City uses these assets to provide services to its citizens;
consequently, these assets are not available for future spending. Although the City
reports its capital assets net of related debt, the resources needed to repay this debt must
be provided from other sources, since the capital assets themselves cannot be used to
liquidate these liabilities.
7
Governmental Activities net position increased by $23,304,341. This increase is
primarily attributable to increases in both property taxes and charges for services.
Business -type Activities net position increased by $1,265,264. 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 position as of September 30, 2014:
Current and other assets:
Capital assets
Total assets
Deferred outflows of resources
Other liabilities
Long-term debt
outstanding
Total liabilities
Net position:
Net investment in
capital assets
Restricted -debt service
Restricted -other
Unrestricted
Total net position
Governmental Business -Type 2014
Activities Activities Total
$ 119,160,773
418,439,098
537,599,871
3,975,876
6,767,682
$ 31,831,555
109,144,692
140,976,247
861,007
2,529,227
$ 150,992,328
527,583,790
678,576,118
4,836,883
9,296,909
122,679,683
50,096,820
172,776,503
129,447,365
52,626,047
182,073,412
338,303,633
73,126,147
411,429,780
9,809,483
-
9,809,483
5,283,121
-
5,283,121
58,732,145
16,085,060
74,817,205
$ 412,128,382 $
89,211,207
$ 501,339,589
The following analysis highlights the net position as of September 30, 2013:
Current and other assets
Capital assets
Total assets
Other liabilities
Long-term debt
outstanding
Total liabilities
Net position:
Net investment in
capital assets
Restricted -debt service
Restricted -other
Unrestricted
Total net position
Governmental Business -Type 2013
Activities Activities Total
$ 119,020,782
406,118,126
525,138,908
7,069,502
$ 31,750,452
108,810,198
140,560,650
2,244,656
$ 150,771,234
514,928,324
665,699,558
9,314,158
127,604,967
49,673,112
177,278,079
134,674,469
51,917,768
186,592,237
324,928,883
70,968,919
395,897,802
10,056,551
-
10,056,551
5,122,247
-
5,122,247
50,356,758
17,673,963
68,030,721
$ 390,464,439 $
88,642,882
$ 479,107,321
8
The following analysis highlights the changes in net position for the year ended
September 30, 2014:
Governmental
Business -Type
2014
Activities
Activities
Total
Revenues:
Program revenues:
Charges for services
$ 8,305,138
$ 23,591,438
$ 31,896,576
Operating grants and
contributions
443,157
-
443,157
Capital grants and
contributions
4,436,346
3,510,936
7,947,282
General revenues:
Taxes
62,563,693
-
62,563,693
Interest on
investments
482,607
101,469
584,076
Gain on sale of
capital assets
99,109
-
99,109
Miscellaneous
639,571
6,963
646,534
Total revenues
76,969,621
27,210,806
104,180,427
Expenses:
General government
13,417,904
-
13,417,904
Public safety
18,245,617
-
18,245,617
Public works
8,870,998
-
8,870,998
Culture and recreation
8,948,841
-
8,948,841
Interest on long-term debt
5,097,036
-
5,097,036
Water and sewer
-
25,030,426
25,030,426
Total expenses
54,580,396
25,030,426
79,610,822
Increase in net position
before transfers
22,389,225
2,180,380
24,569,605
Transfers
915,116
(915,116)
-
Increase in net position
23,304,341
1,265,264
24,569,605
Net position -beginning
of year, as previously stated
390,464,439
88,642,882
479,107,321
Cumulative effect of
change in accounting principle
(1,640,398)
(696,939)
(2,337,337)
Net position -End of Year $
412,128,382 $
89,211,207 $
501,339,589
9
The following analysis highlights the changes in net position for the year ended
September 30, 2013:
Governmental
Activities
Business -Type
Activities
2013
Total
Revenues:
Program revenues:
Charges for services
$ 8,119,595
$ 22,806,432
$ 30,926,027
Operating grants and
contributions
639,230
-
639,230
Capital grants and
contributions
2,244,965
1,981,354
4,226,319
General revenues:
Taxes
57,151,241
-
57,151,241
Interest on
investments
30,110
25,227
55,337
Gain on sale of
capital assets
89,923
-
89,923
Miscellaneous
836,068
37,527
873,595
Total revenues
69,111,132
24,850,540
93,961,672
Expenses:
General government
12,892,140
-
12,892,140
Public safety
18,425,878
-
18,425,878
Public works
8,528,331
-
8,528,331
Culture and recreation
8,829,394
-
8,829,394
Interest on long-term debt
6,747,628
-
6,747,628
Water and sewer
-
22,119,518
22,119,518
Total expenses
55,423,371
22,119,518
77,542,889
Increase in net position
before transfers
13,687,761
2,731,022
16,418,783
Transfers
915,475
(915,475)
-
Increase in net position
14,603,236
1,815,547
16,418,783
Net position -beginning
of year
375,861,203
86,827,335
462,688,538
Net position -End of Year
$ 390,464,439
$ 88,642,882
$ 479,107,321
FINANCIAL ANALYSIS OF THE GOVERNMENTAL FUNDS
Governmental Funds- The focus of the City of Southlake's governmental funds is to
provide information on near -term inflows, outflows and balances of spendable resources.
Such information is useful in assessing the City's financing requirements. In particular,
unassigned fund balance may serve as a useful measure of a government's net resources
available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City's governmental funds reported combined
fund balances of $109,115,753. Approximately 15.0 percent or $16,399,991 constitutes
unassigned fund balance, which is available for spending at the government's discretion.
Other portions of the fund balance are either nonspendable, restricted, committed or
assigned for specific purposes to pay for debt service ($12,150,184), recycling
($34,609), police expenditures ($5,561,643), parks ($8,020,248), capital projects
($53,053,840), reinvestment zone expenditures ($4,422,565), municipal court
expenditures ($860,556), oil and gas expenditures ($53,160), storm water expenditures
($450,824), strategic initiative expenditures ($7,980,605) and other ($127,528).
10
The General Fund is the chief operating fund of the City. At the end of the current fiscal
year, unassigned fund balance of the general fund was $16,399,991. As a measure of the
General Fund's liquidity, it may be useful to compare both the unassigned fund balance
and total fund balance to total fund expenditures. Unassigned fund balance represents
47.9 percent of total General Fund expenditures, while total fund balance represents 71.7
percent of total General Fund expenditures. The fund balance of the General fund
increased $3,780,891 during the current fiscal year. The key factor in the increase is
attributable to the revenue increases in taxes and licenses, permits and fees of $2,914,509
and $341,705, respectively.
The General Obligation Debt Service Fund has a fund balance of $10,477,887, all of
which is restricted for the payment of debt service. The fund balance decreased during
the year by $352,517, primarily due to the increased debt service payments. The fund
balance in the General Capital Projects Fund ended the year at $40,264,035, an increase
of $1,521,101, primarily due to the issuance of bonds and transfers. Fund balance in the
Crime Control District Fund increased by $651,149, primarily the result of increased
sales tax revenues. Fund balance in the Southlake Parks Development Corporation and
Crime Control District Capital Projects Funds decreased by $3,680,449 and $768,148,
respectively, due to spending on capital projects. Fund balance in the Tax Increment
Financing District Fund increased $124,055, primarily due to increased property tax
revenues.
FINANCIAL ANALYSIS OF THE PROPRIETARY FUNDS
The City's proprietary funds provide the same type of information found in the
government -wide financial statements, but in more detail.
Unrestricted net position reported in the Proprietary Funds were: $16,085,060 in the
Water and Sewer Fund and $3,356,178 in the Vehicle Replacement Fund. Both the
Water and Sewer Fund and Vehicle Replacement Fund net position increased by
$1,265,264 and $417,545, respectively. The increase in water, sewer and garbage,
contributions -impact fees and transfers from the previous year are the primary reasons for
the change in net position.
GENERAL FUND BUDGETARY HIGHLIGHTS
There was an increase in appropriations from the original budget to the final amended
budget of $152,927, which is attributable to field equipment purchased with grant funds.
11
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, 2014 amount to $527,583,790 (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 2014 was
not material. Major capital projects completed during the current year included the
following:
• 30" Waterline to TW King
• DPS North Facility
• Pavement Management System — various overlays and rehab
• Various Sidewalks
Land and improvements
Buildings and improvements
Improvements
Infrastructure
Machinery and equipment
Construction in Progress
Total
Land and improvements
Buildings and improvements
Improvements
Infrastructure
Machinery and equipment
Construction in Progress
Total
Governmental Business -Type 2014
Activities Activities Total
$ 98,522,782 $ 16,789,625
68,008,655 380,505
- 88,570,613
221,430,610
8,655,433
21,821,618
$ 418,439,098
1,293,725
2,110,224
$ 109,144,692
$ 115,312,407
68,389,160
88,570,613
221,430,610
9,949,158
23,931,842
$ 527,583,790
Governmental Business -Type 2013
Activities Activities Total
$ 98,045,799 $
54,149,660
219,628,317
8,153,856
26,140,494
$ 406,118,126
15,731,876
410,823
79,670,303
1,444,099
11,553,097
$ 108,810,198
$ 113,777,675
54,560,483
79,670,303
219,628,317
9,597,955
37,693,591
$ 514,928,324
Additional information on the City's capital assets can be found in Note 4 on pages 42-43
of this report.
12
Long-term Debt- At the end of the current fiscal year, the City of Southlake had
$121,633,943 total long-term debt outstanding of bonds issued to finance capital
improvements for roadway, parks and recreation, public building and infrastructure.
$49,775,833 of Utility System bonds, which financed projects to increase capacity of the
Utility system, was also outstanding. An additional $1,123,237 was reported for
compensated absences at year-end.
Bonds payable
Unearned revenue
Compensated absences
Total
Bonds payable
Unearned revenue
Compensated absences
Total
Governmental Business -Type 2014
Activities Activities Total
$ 121,633,943
1,045,740
$ 122,679,683
$ 49,775,833
243,490
77,497
$ 50,096,820
$ 171,409,776
243,490
1,123,237
$ 172,776,503
Governmental Business -Type 2013
Activities Activities Total
$ 130,421,645
1,002,623
$ 131,424,268
$ 50,227,759
253,764
81,477
$ 50,563,000
$ 180,649,404
253,764
1,084,100
$ 181,987,268
The City's bonds are rated "AAA" by Standard and Poor's and FitchRatings. The City is
permitted by Article XI, Section 5, of the State of Texas Constitution to levy taxes up to
$2.50 per $100 of assessed valuation for general governmental services including the
payment of principal and interest on general obligation long-term debt. The current ratio
of tax -supported debt to the assessed value of all taxable property is 1.48 percent.
Additional information on the City's long-term debt can be found in Note 6 on pages 44-
48 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 45.7% of total
governmental revenue. Sales tax continues to grow as the second largest governmental
resource representing 36.7% of total governmental revenue. The City monitors all of its
resources and determines the need for program adjustment or fee increases accordingly.
The FY 2015 Adopted Budget maintains the City's property tax rate at $0.462 per $100
net taxable valuation, which is unchanged from the FY 2014 rate. The City's property
tax roll on net taxable value increased $331,666,203 or 5.9 percent from the 2013
certified roll to the 2014 certified roll.
13
As a result, the City is projected to collect more in FY 2015 than in FY 2014, even
without a tax rate increase. The estimate of the FY 2015 tax roll is based on the certified
roll as provided by the Tarrant Appraisal District (TAD) in July. The assumed collection
rate is 100 percent.
Requests for Information
This financial report is designed to provide a general overview of the City of Southlake's
finances for all those with an interest in the government's finances. Questions
concerning any of the information provided in this report or requests for additional
financial information should be addressed to the Office of the Chief Financial Officer,
1400 Main Street, 4`h Floor Finance Department, Southlake, Texas 76092.
14
BASIC FINANCIAL STATEMENTS
GOVERNMENT -WIDE
FINANCIAL STATEMENTS
CITY OF SOUTHLAKE, TEXAS
STATEMENT OF NET POSITION
SEPTEMBER 30, 2014
ASSETS
Cash and cash equivalents
Investments
Receivables (net of allowance for uncollectibles)
Prepaid items
Inventories
Restricted assets
Cash and cash equivalents
Investments
Receivables
OPEB asset
Capital assets:
Non -depreciable
Depreciable (net of depreciation)
TOTAL ASSETS
DEFERRED OUTFLOW OF RESOURCES
Deferred charge for refunding
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 POSITION
Net investment in capital assets
Restricted for debt service
Restricted for municipal court
Restricted for reinvestment zone
Unrestricted
TOTAL NET POSITION
The Notes to Financial Statements are
an integral part of this statement.
EXHIBIT 1
PRIMARY GOVERNMENT
GOVERNMENTAL BUSINESS -TYPE
ACTIVITIES ACTIVITIES TOTAL
$ 71,226,780 $
5,647,256
$ 76,874,036
31,014,965
1,070,854
32,085,819
6,033,184
4,025,085
10,058,269
7,699
-
7,699
38,309
-
38,309
3,264,893
9,697,392
12,962,285
7,226,055
11,390,968
18,617,023
72,572
-
72,572
276,316
-
276,316
294,224,374
18,899,849
313,124,223
124,214,724
90,244,843
214,459,567
537,599,871
140,976,247
678,576,118
3,975,876
861,007
4,836,883
3,339,087
1,603,882
4,942,969
2,019,135
361,534
2,380,669
-
236,708
236,708
655,423
-
655,423
754,037 - 754,037
- 327,103 327,103
14,583,251
5,203,182
19,786,433
108,096,432
44,893,638
152,990,070
129,447,365
52,626,047
182,073,412
338,303,633
73,126,147
411,429,780
9,809,483
-
9,809,483
860,556
-
860,556
4,422,565
-
4,422,565
58,732,145
16,085,060
74,817,205
$ 412,128,382 $
89,211,207
$ 501,339,589
15
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(7 H
FUND FINANCIAL STATEMENTS
GOVERNMENTAL FUNDS
FINANCIAL STATEMENTS
CITY OF SOUTHLAKE, TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2014
GENERAL
OBLIGATION
GENERAL
CRIME
DEBT
CAPITAL
CONTROL
GENERAL
SERVICE
PROJECTS
DISTRICT
ASSETS
Cash and cash equivalents
$ 13,375,148
$ 3,264,893
$ 28,698,401
$ 3,789,848
Investments
11,892,980
7,226,055
11,980,708
174,386
Receivables, net of allowances for
uncollectibles:
Ad valorem taxes
189,399
62,124
-
-
Franchise taxes
505,534
-
-
Sales taxes
2,281,221
-
-
1,047,090
Interest
39,617
10,448
44,998
16
Other
73,194
-
259,662
-
Due from other funds
803
-
Inventories
38,309
Prepaid items
7,699
-
-
-
TOTAL ASSETS
$ 28,403,904
$ 10,563,520
$ 40,983,769
$ 5,011,340
LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND FUND BALANCES
LIABILITIES
Accounts payable
$ 1,142,015
$
$ 719,734
$ 2,428
Accrued liabilities
1,729,805
-
40,742
Due to other funds
-
-
Unearned revenue
655,423
TOTAL LIABILITIES
3,527,243
719,734
43,170
DEFERRED INFLOWS OF RESOURCES
Unavailable resources
313,248
85,633
TOTAL DEFERRED INFLOWS OF RESOURCES
313,248
85,633
FUND BALANCES
Nonspendable for:
Inventories
38,309
-
Prepaid expenditures
7,699
-
Restricted for:
Debt service
-
10,477,887
Municipal court expenditures
-
Reinvestment zone expenditures
-
Capital projects
-
40,264,035
-
Committed for:
Police expenditures
28,647
-
4,968,170
Parks and recreation
-
-
Oil and gas expenditures
Storm water expenditures
Library
-
Assigned for:
Teen Court expenditures
18,832
Senior Center expenditures
10,623
Recycling
34,609
Reforestation expenditures
44,098
Strategic initiatives
7,980,605
Unassigned
16,399,991
-
-
-
TOTAL FUND BALANCES
24,563,413
10,477,887
40,264,035
4,968,170
TOTAL LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
$ 28,403,904
$ 10,563,520
$ 40,983,769
$ 5,011,340
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
$ 6,060,963
$ 1,016,124
$ 4,117,158
$
13,240,867
$
73,563,402
2,663,206
111,248
305,378
1,568,829
35,922,790
-
-
-
-
251,523
-
505,534
-
1,162,652
4,490,963
11,791
11
29
4,806
111,716
-
303,487
636,343
-
803
38,309
-
-
-
-
7,699
$ 8,735,960
$ 1,127,383
$ 4,422,565
$
16,280,641
$
115,529,082
$ 1,001,917
$ -
$ -
$
472,993
$
3,339,087
-
248,588
2,019,135
803
803
-
655,423
1,001,917
722,384
6,014,448
-
-
398,881
398,881
38,309
-
7,699
1,672,297
12,150,184
-
860,556
860,556
-
-
4,422,565
-
4,422,565
7,734,043
1,127,383
-
3,928,379
53,053,840
-
-
564,826
5,561,643
8,020,248
8,020,248
53,160
53,160
450,824
450,824
7,967
7,967
-
18,832
10,623
34,609
44,098
7,980,605
-
-
-
-
16,399,991
7,734,043
1,127,383
4,422,565
15,558,257
109,115,753
$ 8,735,960
$ 1,127,383
$ 4,422,565
$
16,280,641
$
115,529,082
18
CITY OF SOUTHLAKE, TEXAS EXHIBIT 4
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET POSITION
AS OF SEPTEMBER 30, 2014
Total fund balances - governmental funds $ 109,115,753
Amounts reported for governmental activities in the statement of net position
are different because:
Capital assets used in governmental activities are not current financial resources
and, therefore, are not reported in the governmental funds balance sheet
(Less $1,864,321 in assets allocated to governmental activities from the internal
service fund).
416,574,777
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.
(754,037)
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.
5,220,499
OPEB asset has not been included in the governmental fund financial statements, as
these assets do not represent current financial resources.
276,316
Revenues earned but not available within sixty days of the year end are not
recognized as revenue on the fund financial statements.
398,881
For debt refundings, the difference between the acquisition price and net carrying
amount of the debt has been deferred and amortized in the government -wide
financial statements.
3,975,876
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.
(122,679,683)
Net position of governmental activities $ 412,128,382
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, 2014
GENERAL
OBLIGATION
GENERAL
CRIME
DEBT
CAPITAL
CONTROL
GENERAL
SERVICE
PROJECTS
DISTRICT
REVENUES
Ad valorem taxes, penalties and interest
$ 19,193,801
$ 6,732,167
$
$
Franchise taxes
2,841,025
-
Municipal sales and mixed beverage taxes
12,585,569
6,516,603
Licenses, permits and fees
2,411,851
-
Charges for services
1,778,003
Fines and forfeitures
1,330,324
Grants
213,630
Capital recovery fees
-
-
474,172
Interest earned
193,537
103,366
117,064
(1,258)
Contributions
-
-
71,974
Miscellaneous
358,757
-
26,175
-
TOTAL REVENUES
40,906,497
6,835,533
689,385
6,515,345
EXPENDITURES
Current
General government
City secretary/mayor
381,127
City manager's office
810,604
Human resources
622,991
Support services
2,857,271
Economic development
240,014
Finance
1,120,153
Municipal court
586,020
Teen court
130,282
Information technology
1,874,521
Public safety
-
Police services
5,875,416
618,921
Fire services
7,550,397
-
Public safety support
1,213,567
Building inspection
909,420
-
Public works
Public works administration
1,738,788
1,548,583
Streets and drainage
1,671,514
494,466
Planning
850,398
-
Cultural and recreation
Community services
874,931
Parks and recreation
4,256,617
Library services
673,188
Intergovernmental
-
-
Capital outlay
-
6,052,429
Debt service:
Principal retirement
11,235,280
-
Interest and fiscal charges
-
3,642,965
72,806
TOTAL EXPENDITURES
34,237,219
14,878,245
8,168,284
618,921
Excess (deficiency) of revenues
over (under) expenditures
6,669,278
(8,042,712)
(7,478,899)
5,896,424
OTHER FINANCING SOURCES (USES)
Issuance of long-term debt
-
-
4,380,000
-
Proceeds from issuance of refunding bonds
7,400,000
-
Payment to refund bond escrow agent
(7,887,452)
Premium on issuance of long-term debt
675,875
Proceeds from the sale of property
-
-
-
Transfersfromotherfunds
1,601,613
7,501,772
4,620,000
Transfers to other funds
(4,490,000)
-
-
(5,245,275)
TOTAL OTHER FINANCING SOURCES (USES)
(2,888,387)
7,690,195
9,000,000
(5,245,275)
NET CHANGE IN FUND BALANCES
3,780,891
(352,517)
1,521,101
651,149
FUND BALANCES, BEGINNING OF YEAR
20,782,522
10,830,404
38,742,934
4,317,021
FUND BALANCES, END OF YEAR
$ 24,563,413
$ 10.477,887
$ 40.264, 335
$ 4,968,1 00
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
$
$
$ 7,248,842
$
$ 33,174,810
-
2,841,025
7,521,489
26,623,661
1,514,105
3,925,956
-
1,778,003
1,043,897
2,374,221
522
214,152
-
474,172
29,038
(803)
(2,204)
19,080
457,820
-
-
58,590
130,564
167,612
552,544
29,038
(803)
7,246,638
10,325,295
72,546,928
381,127
810,604
622,991
2,857,271
240,014
1,120,153
586,020
- 130,282
6,267 1,880,788
756,564 7,250,901
- 7,550,397
1,213,567
909,420
3,287,371
2,165,980
850,398
- 874,931
1,400,711 5,657,328
- 22,181 695,369
- - 3,834,118 - 3,834,118
6,359,487 1,767,345 - 444,701 14,623,962
695,000
11,930,280
1,266,796
4,982,567
6,359,487
1,767,345
3,834,118
4,592,220
74,455,839
(6,330,449)
(1,768,148)
3,412,520
5,733,075
(1,908,911)
-
-
4,380,000
16,000,000
23,400,000
(17,659,670)
(25,547,122)
625,501
1,301,376
-
-
1,521
1,521
2,650,000
1,000,000
3,125,598
20,498,983
(3,288,465)
(7,360,127)
(20,383,867)
2,650,000
1,000,000
(3,288,465)
(5,267,177)
3,650,891
(3,680,449)
(768,148)
124,055
465,898
1,741,980
11,414,492
1,895,531
4,298,510
15,092,359
107,373,773
$ 7,734,043
$ 1.127. 883
$ 4.422. 665 $
15,558,257 $
109,115,753
21
CITY OF SOUTHLAKE, TEXAS EXHIBIT 6
RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES OF
GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2014
Net change in fund balances - total governmental funds $ 1,741,980
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 $717,766 allocated from internal service fund). 13,437,783
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 $507,028 allocated from internal service fund). (5,752,901)
The issuance of long-term debt (e.g. bonds) provides current financial resources
to governmental funds, while the repayment of the principal of long-term debt
consumes the current financial resources of governmental funds. Neither
transaction, however, has any effect on net position. Also, governmental funds
report the effect of premiums, discounts, and similar items when
debt is first issued, whereas the amounts are deferred and amortized in the
statement of activities. This amount is the net effect of the following items:
o Bond proceeds (27,780,000)
o Payment to refunded bond escrow 25,547,122
o Bond premiums (1,301,376)
o Deferred loss on refunding (net) (7,938)
o Repayments 11,930,280
o Amortization of premiums 859,958
o Amortization of deferred loss
on refunding (303,768)
8,944,278
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.
(43,117)
Changes in the other post employment benefit assets and liabilities are not reported
at the fund level; however they are reported at the government -wide level.
88,408
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.
120,868
Internal service funds are used by management to charge the costs of certain
activities, such as fleet management, to individual funds. The net income
of the internal service fund is allocated entirely to governmental activities.
417,545
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.
4,436,346
Loss on disposal of capital assets results in a decrease in net position, but the
net effect is not reported in governmental funds.
(10,994)
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.
(75,855)
Change in net position of governmental activities
$ 23,304,341
The Notes to Financial Statements are
an integral part of this statement.
22
PROPRIETARY FUNDS
FINANCIAL STATEMENTS
CITY OF SOUTHLAKE, TEXAS EXHIBIT 7
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
SEPTEMBER 30, 2014
BUSINESS -TYPE
GOVERNMENTAL
ACTIVITIES
ACTIVITIES
WATER AND SEWER
VEHICLE REPLACEMENT
ENTERPRISE
INTERNAL SERVICE
FUND
FUND
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$ 5,647,256
$ 928,271
Investments
1,070,854
2,318,230
Receivables, net of allowance for uncollectibles:
Trade accounts
2,094,570
-
Unbilled trade accounts
1,905,146
-
Interest
25,369
109,677
Restricted assets
Cash restricted for capital
9,697,392
Investments restricted for customer meter deposits
327,103
Investments restricted for capital
11,063,865
Total current assets
31,831,555
3,356,178
NON -CURRENT ASSETS
Capital assets
Land and improvements
16,789,625
-
Buildings and improvements
935,501
Distribution system
133,654,657
Equipment
2,415,927
-
Vehicles
572,041
4,617,436
Capacity rights
9,190,988
-
Construction in progress
2,110,224
Total capital assets
165,668,963
4,617,436
Less: accumulated depreciation
(56,524,271)
(2,753,115)
Capital assets, net of accumulated depreciation
109,144,692
1,864,321
Total non -current assets
109,144,692
1,864,321
TOTAL ASSETS
$ 140,9 66,247
$ 5,220,499
DEFERRED OUTFLOW OF RESOURCES
Deferred charge for refunding
861,007
LIABILITIES AND NET POSITION
CURRENT LIABILITIES
Accounts payable
$ 1,603,882
$
Accrued liabilities
361,534
Accrued interest
236,708
Current portion of general obligation debt
4,770,685
Current portion of contract obligation debt
350,000
Current portion of compensated absences
77,497
Current portion of unearned revenue
5,000
Payable from restricted assets:
Customer meter deposits
327,103
Total current liabilities
7,732,409
NON -CURRENT LIABILITIES
Unearned revenue
238,490
Contract revenue obligations
750,000
General obligation debt
43,905,148
Total non -current liabilities
44,893,638
TOTAL LIABILITIES
52,626,047
NET POSITION
Net investment in capital assets
73,126,147
1,864,321
Unrestricted
16,085,060
3,356,178
TOTAL NET POSITION
$ 89.211.207
$ 5,220,499
The Notes to Financial Statements are
an integral part of this statement.
23
CITY OF SOUTHLAKE, TEXAS EXHIBIT 8
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
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)
NON -OPERATING REVENUES (EXPENSES)
Gain (loss) on sale of capital assets
Interest income
Interest expense
Total non -operating revenues (expenses)
INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS
CAPITAL CONTRIBUTIONS AND TRANSFERS
Capital contributions - property owners
Contributions - impact fees
Transfers from other funds
Transfers to other funds
Total capital contributions and transfers
CHANGE IN NET POSITION
NET POSITION, BEGINNING OF YEAR
Cumulative effect of change in accounting
principle
NET POSITION, END OF YEAR
The Notes to Financial Statements are
an integral part of this statement.
BUSINESS -TYPE
GOVERNMENTAL
ACTIVITIES
ACTIVITIES
WATER AND SEWER
VEHICLE REPLACEMENT
ENTERPRISE
INTERNAL SERVICE
FUND
FUND
$ 23,419,974
171,464
6,963
23,598,401
2,307,754 1,349,077 -
186 19,000
113,489 -
9,005,661 -
296,754 -
3,261,120 -
21,105 -
4,753,156 485,147
21,108, 302 504,147
2,490,099 (504,147)
(55) 99,109
101,469 -
(3,922,069) 22,583
(3,820,655) 121,692
(1,330,556) (382,455)
2,508,221 1,002,715 -
- 800,000
(915,116)
2,595,820 800,000
1,265,264 417,545
88, 642, 882 4,802,954
(696,939)
$ 89,211,207 $ 5, 220,499
24
CITY OF SOUTHLAKE, TEXAS EXHIBIT 9
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
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 expenses
Principal payments on bonds
Proceeds from issuance of bonds
Interest paid
Proceeds from sale of capital assets
Contributions - impact fees
Net cash used in capital and related financing activities
CASH FLOWS FROM NON -CAPITAL
FINANCING ACTIVITIES
Transfers from other funds
Transfers to other funds
Net cash provided by (used in) non -capital
financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
Net purchases 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 POSITION
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
Increase (decrease) in liabilities
Payables and accruals
Customer deposits
Net cash provided by (used in) operating activities
BUSINESS -TYPE
GOVERNMENTAL
ACTIVITIES
ACTIVITIES
WATER AND SEWER
VEHICLE REPLACEMENT
ENTERPRISE
INTERNAL SERVICE
FUND
FUND
$ 23,412,319 $
(13,817,955) (19,000)
(2,311,734)
7,282,630 (19,000)
(2,550,603)
(695,885)
(19,704,505)
19,252,579
-
(3,935,180)
22,583
-
99,109
1,002,715
-
(5,934,994)
(574,193)
800,000
(915,116)
-
(915,116)
800,000
4,839,872
111,930
103,876
-
4,943,748
111,930
5,376,268
318,737
9,968,380
609,534
$
15,344,648
$
928,271
$
5,647,256
$
928,271
9,697,392
-
$
15,344,648
$
928,271
$
2,490,099
$
(504,147)
4,753,156
485,147
(244,053)
-
215,116
68,312
$
7,282,630
$
(19,000)
NON -CASH CAPITAL AND RELATED FINANCING:
Contributions of capital assets from developers $ 2,508,221 $
The Notes to Financial Statements are
an integral part of this statement.
25
FIDUCIARY FUND
FINANCIAL STATEMENTS
CITY OF SOUTHLAKE, TEXAS
CASH ESCROW AGENCY FUND
STATEMENT OF FIDUCIARY NET POSITION
SEPTEMBER 30, 2014
ASSETS
Cash and cash equivalents
Investments
Accrued interest receivable
Ito] Iri1 WeF:9NkK
LIABILITIES
Due to builders
TOTAL LIABILITIES
The Notes to Financial Statements are
an integral part of this statement.
EXHIBIT 10
Agency Fund
Cash
Escrow
$ 57,380
10,687
3
$ 68,070
$ 68,070
$ 68,070
26
NOTES TO BASIC FINANCIAL STATEMENTS
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Statement
The City of Southlake (the City) operates under a Home Rule Council — Manager form of
government. All powers of the City are vested in an elected council, which enables local
legislation, adopts budgets, determines policies and appoints the City Manager. The City
Manager is responsible for executing the laws and administering the government of the City.
The accounting and reporting policies of the City relating to the funds included in the
accompanying basic financial statements conform to accounting principles generally accepted in
the United States of America applicable to state and local governments. Generally accepted
accounting principles for local governments include those principles prescribed by the
Governmental Accounting Standards Board (GASB). The more significant accounting policies of
the City are described below.
Financial Reporting Entity
The City is governed by an elected mayor and a six -member council and has the authority to
make decisions, appoint administrators and managers, and significantly influence operations. It
also has the primary accountability for fiscal matters. Therefore, the City is a financial reporting
entity as defined by the Governmental Accounting Standards Board (GASB) in its Statement No.
14, "The Financial Reporting Entity", as amended by GASB Statement No. 39 "Determining
Whether Certain Organizations Are Component Units" and GASB Statement No. 61, "The
Financial Reporting Entity: Omnibus —an amendment of GASB Statements No. 14 and No. 34."
Under GASB 14 component units are organizations for which the City is financially accountable
and all other organizations for which the nature and significance of their relationship with the City
are such that exclusion would cause the reporting entity's financial statements to be misleading or
incomplete. Financial accountability exists if the City appoints a voting majority of an
organization's governing board and is either able to impose its will on that organization or there is
a potential for the organization to provide specific financial benefits to, or impose specific financial
burdens on, the City. The City may be financially accountable for governmental organizations
with a separately elected governing board, a governing board appointed by another government,
or a jointly appointed board that is fiscally dependent on the City. The financial statements of the
component units may be discretely presented in a separate column from the primary government
or blended with the financial statements of the primary government. GASB 39 added clarification
to GASB 14 by including entities which meet all three of the following requirements:
1. The economic resources received or held by the separate organization are entirely for the
direct benefit of the primary government, its component units, or its constituents.
2. The primary government, or its component units, is entitled to, or has the ability to
otherwise access, a majority of the economic resources received or held by the separate
organization.
3. The economic resources received or held by an individual organization that the specific
primary government, or its component units, is entitled to, or has the ability to otherwise
access, are significant to that primary government.
27
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED
Financial Reporting Entity — Continued
Based on these criteria, the financial information of the following entities has been blended within
the reporting entity. Individual financial statements are not available for these component units.
Southlake Parks Development Corporation (the Corporation) - The Corporation is a nonprofit
industrial development corporation formed in January 1994 under the Development
Corporation Act of 1979. The Corporation is organized exclusively to act on behalf of the City
for the financing, development and operation of parks and recreation facilities. The affairs of
the Corporation are managed by a seven member board of directors, of which four are
members of the City Council. The annual corporate budget and issuance of debt must be
approved by the City Council. Since the Board of the Corporation is substantively the same
as the City Council, the Corporation has been reported as a blended component unit.
Southlake Tax Increment Financing District (the TIF) - The TIF was formed to finance and
make public improvements, under the authority of the Tax Increment Financing Act. The TIF
is governed by a twelve member board of directors consisting of the eight members
appointed by the City Council, and one member each appointed by Carroll Independent
School District, Tarrant County, Tarrant County Junior College District, and the Tarrant
County Hospital District Board of Directors. Since the Board of the TIF is substantively the
same as the City Council, the TIF has been reported as a blended component unit.
Southlake Crime Control and Prevention District (the District) — The District was formed under
Chapter 363 of the Texas Local Government Code, the Crime Control and Prevention Act.
The District is organized exclusively to act on behalf of the City for the financing,
development and crime control throughout the City. The District is governed by a seven
member board appointed by the City Council. The annual budget and issuance of debt must
be approved by the City Council. Since the District provides services entirely to the City, it
has been reported as a blended component unit.
Basis of Presentation
The government -wide financial statements (the statement of net position and the statement of
activities) report information on all of the activities of the City, except for fiduciary funds. The
effect of interfund activity, within the governmental and business -type activities columns, has
been removed from these statements. Governmental activities, which normally are supported by
taxes and intergovernmental revenues, are reported separately from business -type activities,
which rely to a significant extent on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given
program are offset by program revenues. Direct expenses are those that are clearly identifiable
with a specific program.
Program revenues include 1) charges to customers or applicants who purchase, use, or directly
benefit from goods, services, or privileges provided by a given program and 2) operating or
capital grants and contributions that are restricted to meeting the operational or capital
requirements of a particular program. Taxes and other items not properly included among
program revenues are reported instead as general revenues.
28
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED
Fund Financial Statements:
The City segregates transactions related to certain functions or activities in separate funds in
order to aid financial management and to demonstrate legal compliance. Separate statements
are presented for governmental funds and proprietary funds. These statements present each
major fund as a separate column in the fund financial statements; all non -major funds are
aggregated and presented in a single column.
Governmental funds are those funds through which most governmental functions typically are
financed. The measurement focus of governmental funds is on the sources, uses and balances
of current financial resources.
Governmental Funds
The City reports the following major governmental funds:
General Fund -
The General Fund is the general operating fund of the City. It is used to account for all financial
resources not accounted for in other funds. All general tax revenues and other receipts that are
not restricted by law or contractual agreement to some other fund are accounted for in this fund.
General operating expenditures, fixed charges and capital improvement costs that are not paid
through other funds are paid from the General Fund.
General Obligation Debt Service Fund -
The General Obligation Debt Service Fund is used to account for the accumulation of financial
resources for the payment of principal, interest and related costs on long-term debt paid primarily
from taxes levied by the City. The fund balance of the General Obligation Debt Service Fund is
restricted to signify the amounts that are restricted exclusively for debt service expenditures.
General Capital Projects Fund -
The General Capital Projects Fund is used to account for resources used for the acquisition
and/or construction of capital facilities by the City, except those financed by proprietary funds and
not accounted for by another capital projects fund.
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.
Southlake Parks Development Corporation Capital Projects Fund -
The Southlake Parks Development Corporation ("SPDC") Capital Projects Fund is utilized to fund
the acquisition and construction of park recreational facilities as approved by the SPDC board of
directors. The fund has been financed through the issuance of general obligation debt.
29
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED
Basis of Presentation — Continued
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 ("TIF") District Fund was established to account for the general
operations of the TIF, which was formed to finance and make public improvements. The TIF is
funded primarily through the assessment of ad valorem taxes.
In addition, the City reports the following non -major governmental funds:
Special Revenue Funds — The City's Special Revenue Funds are used to account for revenue
sources that are committed or restricted to expenditures for specified purposes, as follows:
Police Fund -
The Police Fund was established to account for the resources required to be utilized by the police
department.
Parks and Recreation Fund -
The Parks and Recreation Fund was established to account for resources restricted for use by
the parks and recreation department.
Parks Dedication Fund -
The Parks Dedication Fund was established to account for resources restricted for use by the
parks department. The primary source of revenue for the Parks Dedication Fund is user charges
for the use of City parks.
Southlake Parks Development Corporation -
The Southlake Parks Development Corporation ("SPDC") Fund was established to account for
the general operations of the non-profit corporation established to finance, develop and operate
park and recreational facilities. The SPDC is funded primarily through the receipt of municipal
sales taxes.
Hotel Occupancy -
The Hotel Occupancy Tax Fund accounts for all revenues and expenditures relating to the hotel
occupancy tax received by the City.
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.
30
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED
Basis of Presentation — Continued
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.
Commercial Vehicle Enforcement Fund -
The Commercial Vehicle Enforcement Fund is used to account for the fees assessed for
commercial vehicle violations.
Southlake Parks Development Corporation Debt Service Fund -
The Southlake Parks Development Corporation Debt Service Fund is utilized to account for the
accumulation of financial resources, primarily transfers from other funds, for the payment of long-
term principal and interest costs associated with the financing of improvements of the Southlake
Parks Development Corporation.
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, 2014
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED
Basis of Presentation — Continued
Proprietary Funds -
Proprietary Funds are accounted for using the economic resources measurement focus and the
accrual basis of accounting. The accounting objectives are determinations of net income,
financial position and cash flow. All assets and liabilities are included in the Statement of Net
Position.
The City reports the following major proprietary fund
Water and Sewer Enterprise Fund -
The Water and Sewer Enterprise Fund is used to account for the acquisition, operation and
maintenance of a municipal water and sewer utility, supported primarily by user charges to the
public.
Additionally, the City reports an Internal Service Fund which is used to account for vehicle
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 position and the operating statements present increases (revenues) and
decreases (expenses) in net total position. Under the accrual basis of accounting, revenues are
recognized when earned, including unbilled water and sewer services which are accrued.
Expenses are recognized at the time the liability is incurred.
Governmental fund financial statements are reported using the current financial resources
measurement focus and are accounted for using the modified accrual basis of accounting. Under
the modified accrual basis of accounting, revenues are recognized when susceptible to accrual;
i.e., when they become both measurable and available.
32
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
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 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, 2014, 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 2014 levy was
based on was $5,629,996,800. 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, 2014 was $0.462 per $100 of assessed valuation.
33
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
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 items in
the government -wide and fund financial statements. These items consist principally of postage
and building deposits and are reported on the consumption method.
Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets, are reported
in the applicable governmental or business -type activities columns in the government -wide
financial statements and in the fund financial statements for proprietary funds. All capital assets
are valued at historical cost or estimated historical cost if actual historical cost is not available.
Donated assets are valued at fair market value on the date donated.
34
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
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 have an original cost of $5,000 or more and over one year of useful life.
Depreciation has been calculated on each class of depreciable property using the straight-line
method. Estimated useful lives are as follows:
Buildings
20 - 50 Years
Water and Sewer distribution system
35 - 50 Years
Water hydrants
10-15 Years
Water tanks
35 Years
Computer equipment
5 Years
Heavy equipment and vehicles
10 - 20 Years
Light vehicles
2 - 10 Years
Vehicles
5 Years
Improvements
25 Years
Infrastructure
10 Years
The street network is not depreciated. The City has elected to use the modified approach in
accounting for its street infrastructure. The modified approach allows governments to report as
expenses in lieu of depreciation, infrastructure expenditures which maintain the asset but do not
add to or improve the asset. Additions and improvements to the street network are capitalized.
The City uses an asset management system to rate street condition and quantify the results of
maintenance efforts.
The City has established the Vehicle Replacement Internal Service Fund to account for all City -
owned vehicles. Charges for use of the vehicle in the form of lease payments are made by the
City departments to the Vehicle Replacement Internal Service Fund to provide for future
acquisitions and replacement of City -owned vehicles.
Vacation and Sick Leave (Compensated Absences)
City employees earn vacation and sick leave, which may either be taken or accumulated, up to
certain amounts, until paid upon retirement or termination. Upon termination or retirement, an
employee is reimbursed up to a maximum number of hours of vacation pay and sick leave based
upon the years of service. All vacation and sick pay is accrued in the government -wide and
proprietary fund financial statements. A liability for these amounts is reported in the governmental
funds only if they have matured.
Long -Term Obligations
In the government -wide financial statements and proprietary fund financial statements, long-term
debt and other long-term obligations are reported as liabilities in the applicable governmental
activities, business -type activities, or proprietary fund statement of net position. Bond premiums
and discounts, as well as any deferred losses on the refunding of bonds, are amortized over the
life of the bonds using the effective interest method. Bonds payable are reported net of the
applicable bond premium or discount.
35
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
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
The City has adopted the provisions of GASB Statement No. 54, Fund Balance Reporting and
Government Fund Type Definitions. The objective of the statement is to enhance the usefulness
of fund balance information by providing clearer fund balance classifications that can be more
consistently applied and by clarifying the existing government fund type definitions. The
statement establishes fund balance classifications that comprise a hierarchy based primarily on
the extent to which a government is bound to observe constraints imposed upon the use of the
resources reported in governmental funds. Fund balance classifications, under GASB 54 are
Nonspendable, Restricted, Committed, Assigned, and Unassigned. These classifications reflect
not only the nature of funds, but also provide clarity to the level of restriction placed upon fund
balance. Fund balance can have different levels of constraint, such as external versus internal
compliance requirements. The General Fund should be the only fund that reports a positive
unassigned balance. In all other funds, unassigned is limited to negative residual fund balance.
In accordance with GASB Statement No. 54, the City classifies governmental fund balances as
follows:
1. Nonspendable fund balance — includes amounts that are not in a spendable form or are
required to be maintained intact (example — inventory or permanent funds).
2. Restricted fund balance — includes amounts that can be spent only for the specific
purposes stipulated by external resource providers either constitutionally or through
enabling legislation (example — court technology and court security funds).
3. Committed fund balance — includes amounts that can only be used for specific purposes
determined by City Council (example — reforestation and park dedication).
4. Assigned fund balance — comprises amounts intended to be used by the City for specific
purposes. Intent can be expressed by the City Council or their designee (Chief Financial
Officer). In governmental funds other than the general fund, assigned fund balance
represents the amount that is not restricted or committed. This indicates that resources in
other governmental funds are, at a minimum, intended to be used for the purpose of that
fund (example — Facility Maintenance and Strategic Initiative Fund).
5. Unassigned fund balance — is the residual classification of the general fund and includes
all amounts not contained in other classifications.
In accordance with GASB 54, the City has also adopted the following policies:
Committed Fund Balance - The City Council is the City's highest level of decision -making
authority and approval by resolution is required to establish, modify, or rescind a fund
balance commitment. The resolution must either be approved or rescinded, as applicable,
prior to the last day of the fiscal year. The amount subject to the constraint may be
determined in the subsequent period.
Assigned Fund Balance - The City Council has authorized the City's Chief Financial Officer
as the official authorized to assign fund balance to a specific purpose as approved by this
fund balance policy.
36
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED
Fund Equity — Continued
Unassigned Fund Balance_- It is the goal of the City to maintain a fund balance in the General
Fund, equal to a minimum of 15% of General Fund budgeted operating expenditures, with the
optimum goal of 25%. The City considers a balance of less than 15% to be cause for
concern, barring unusual or deliberate circumstances.
It is the goal of the City to maintain 60 days of working capital in the Enterprise Fund, with the
optimum goal of 90 days of working capital.
The City shall also maintain all Reserve funds for all statutorily required reserve funds to
guarantee debt service.
Order of Expenditure of Funds - When multiple categories of fund balance are available for
expenditures, the City will start with the most restricted category and spend those funds first
before moving to the next category with available funds (restricted, committed, assigned and
unassigned).
During fiscal year 2006, the City began designating funds for strategic initiatives. The source of
these funds is reserves in excess of 25% of general fund expenditures. The funds will be used
for one-time high impact projects involving infrastructure maintenance, community enhancement
and capital acquisition; and are reported as assigned fund balance in the general fund.
Net Position
Net position represents the difference between assets and liabilities. Net investment in capital
assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding
balances of any borrowing used for the acquisition, construction or improvements of those
assets, and adding back unspent proceeds. Net position is reported as restricted when there are
limitations imposed on their use either through the enabling legislations adopted by the City or
through external restrictions imposed by creditors, grantors or laws or regulations of other
governments.
Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses/expenditures during the reporting period. Actual results could differ from
those estimates.
Subsequent Events
The City has evaluated all events or transactions that occurred after September 30, 2014 up
through March 11, 2015, the date the financial statements were available to be issued. During
this period, there were no subsequent events requiring disclosure.
37
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
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, 2014 the carrying amount of the City's deposits was $15,368,599 and the bank
balance was $16,321,508. As of September 30, 2014, 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, 2014 are classified in the accompanying financial
statements as follows:
Primary Government
Cash and cash equivalents
$ 76,874,036
Investments
32,085,819
Restricted cash and cash equivalents
12,962,285
Restricted investments
18,617,023
Total primary government
140,539,163
Fiduciary Funds:
Cash
57,380
Investments
10,687
Total fiduciary funds
68,067
Total cash and investments
$ 140,607,230
38
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 2. CASH AND INVESTMENTS — CONTINUED
Cash and investments as of September 30, 2014 consist of the following:
Cash on hand $ 3,471
Deposits with financial institutions 15,368,599
Investments 125,235,160
Total cash and investments $ 140,607,230
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, 2014, the City had the following investments:
Investment Type
Government agency securities
Mutual funds
TexStar
TexPool
Certificates of Deposit
Commercial Paper
Total
Amount
$ 36,922,094
30,144,366
18,553,890
25,823,375
8,141,435
5,650,000
$ 125,235,160
Weighted
Average
Maturity
919 days
41 days
51 days
48 days
404 days
549 days
As of September 30, 2014 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
Government agency securities
Mutual funds
TexStar
TexPool
Certificates of Deposit
Commercial Paper
Total
Amount
$ 36,922,094
30,144,366
18,553,890
25,823,375
8,141,435
5,650,000
$ 125,235,160
Minimum
Rating as
Legal
of Year
Rating
End
N/A
Not rated
N/A
AAAm
N/A
AAAm
N/A
AAAm
N/A
AAAm
N/A
Aa3
39
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
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, 2014, investments other than external investment pools that
represent 5% or more of the City's investments are as follows:
Issuer
Investment Type Reported Amount
FNMA Government agency securities $ 24,000,000
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, 2014, 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 position to compute share prices. Accordingly, the fair value of the position in TexPool is the
same as the value of TexPool shares.
TexStar is administered by First Southwest Asset Management, Inc. and JPMorgan Chase. Together
these organizations bring to the TexStar program the powerful partnership of two leaders in financial
services with a proven and noted track record in local government investment pool management.
TexStar is a local government investment pool created under the Interlocal Cooperation Act
specifically tailored to meet Texas state and local government investment objectives of preservation
of principal, daily liquidity, and competitive yield. TexStar uses amortized costs rather than market
value to report net position to compute share prices. Accordingly, the fair value of the position in
TexStar is the same as the value of TexStar shares.
40
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 3. RECEIVABLES
Receivables at September 30, 2014, for the government's individual major, non -major, internal
service, and fiduciary funds in the aggregate, including the applicable allowances for uncollectible
accounts, consist of the following:
Southlake
General
Parks
Crime
Obligation
General
Crime
Development Corp
Control District
Debt
Capital
Control
Capital
Capital
General
Service
Projects
District
Projects
Projects
Receivables:
Property taxes
$
393,181
$ 141,884
$
$ -
$
$
Sales taxes
2,281,221
-
1,047,090
Franchise taxes
505,534
-
Accounts
-
-
259,662
Interest
39,617
10,448
44,998
16
11,791
11
Other
73,194
-
-
-
-
Gross
receivables
3,292,747
152,332
304,660
1,047,106
11,791
11
Less: allowance
203,782
79,760
-
-
-
Net total
receivables
$
3,088,965
$ 72,572
$ 304,660
$1,047,106
$
11,791
$
11
Tax
Non -
Increment
Major
Water
Financing
Govern-
and
Internal
District
mental
Sewer
Service
Agency
Total
Receivables:
Property taxes
$
$ -
$
$
$
$
535,065
Sales taxes
1,162,652
4,490,963
Franchise taxes
-
505,534
Accounts
-
4,388,597
4,648,259
Interest
29
4,806
25,369
109,677
3
246,765
Other
303,487
-
-
376,681
Gross
receivables
29
1,470,945
4,413,966
109,677
3
10,803,267
Less: allowance
-
388,881
-
672,423
Net total
receivables
$
29
$ 1,470,945
$4,025,085
$ 109,677
$
3
$
10,130,844
The Water and Sewer Fund accounts receivable include unbilled charges for services rendered
through September 30, 2014 of $1,905,146 .
41
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 4. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2014, was as follows:
Governmental Activities:
Capital assets not being depreciated:
Land
Street infrastructure
Construction -in -progress
Total capital assets not
being depreciated
Capital assets being depreciated:
Land improvements
Buildings and building improvements
Public art
Office equipment
Communications equipment
Field equipment
Heavy equipment
Computer equipment
Computer software
Vehicles
Drainage
Bridges, road signs, and fiber
optic lines
Park improvements
Pathways
Total capital assets being depreciated
Accumulated depreciation:
Land improvements
Buildings and building improvements
Public art
Office equipment
Communications equipment
Field equipment
Heavy equipment
Computer equipment
Computer software
Vehicles
Drainage
Bridges, road signs, and fiber
optic lines
Park improvements
Pathways
Total accumulated depreciation
Beginning
Capital
Sales or
Adjustments/
Ending
Balance
Acquisitions
Disposals
Transfers
Balance
$ 83,418,898
$ 1,870,865
$
$
$ 85,289,763
185, 357, 392
1,755,601
187,112,993
26,140,494
12,679,494
(16,998,370)
21,821,618
294,916,784
16,305,960
(16,998,370)
294,224,374
6,806,154
-
-
6,806,154
64,540,493
15,404,776
79,945,269
859,802
168,050
1,027,852
1,824,994
611,389
2,436,383
3,845,411
-
23,840
3,869,251
1,382,297
311,168
(17,800)
-
1,675,665
2,057,038
57,252
(30,000)
-
2,084,290
1,286,453
145,000
79,720
1,511,173
3,443,802
-
-
3,443,802
9,580,608
962,634
(400,450)
-
10,142,792
39,579,023
809,881
514,410
40,903,314
3,250,517
-
3,250,517
15,593,483
-
15,593,483
9,612,740
-
196,185
9,808,925
163,662,815
2,285,935
44( 8,250)
16,998,370
182,498,870
(591,492)
(945)
-
(592,437)
(11,056,473)
(1,626,450)
(12,682,923)
(194,162)
(87,381)
(281,543)
(587,298)
(99,263)
(686,561)
(2,874,859)
(125,218)
-
(3,000,077)
(764,104)
(177,607)
17,800
(923,911)
(1,253,668)
(143,716)
30,000
(1,367,384)
(992,847)
(118,243)
-
(1,111,090)
(3,224,682)
(86,154)
-
(3,310,836)
(5,569,294)
(928,226)
389,456
(6,108,064)
(13,459,061)
(1,028,079)
-
(14,487,140)
(1,017,710) (18,802)
(7,181,245) (1,392,936)
(3,694,578) (426,909) -
(52,461,473) (6,259,929) 437,256
(1,036,512)
(8,574,181)
(4,121,487)
(58,284,146)
Total capital assets being depreciated, net 111,201,342 (3,973,994) (10,994) 16,998,370 124,214,724
Governmental activities capital assets, net $ 406,118,126 $ 12,331,966 $ 1( 0,994) $ - $ 418,439,098
42
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
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
$ 15,731,876
$ 1,057,749
$
$ -
$ 16,789,625
11,553,097
2,039,013
(11,481,886)
2,110,224
27,284,973
3,096,762
(11,481,886)
18,899,849
935,501
-
935,501
2,320,801
102,626
(7,500)
2,415,927
572,041
-
572,041
9,190,988
-
-
9,190,988
120,315,204
1,863,333
(5,766)
11,481,886
133,654,657
133,334,535
1,965,959
(13,266)
11,481,886
146,769,114
(524,678)
(30,318)
-
-
(554,996)
(1,120,975)
(220,051)
7,500
(1,333,526)
(327,768)
(32,949)
-
(360,717)
(3,336,398)
(183,820)
-
(3,520,218)
(46,499,491)
(4,257,293)
1,970
(50,754,814)
(51,809,310)
(4,724,431)
9,470
-
(56,524,271)
81,525,225
(2,758,472)
(3,796)
11,481,886
90,244,843
$ 108,810,198
$ 338,290
$ (3,796)
$ -
$ 109,144,692
Depreciation expense was charged as a direct expense to functions of the primary government as
follows:
Governmental activities:
General government $ 1,150,024
Public safety 1,186,325
Public works 2,116,571
Culture and recreation 1,807,009
Total depreciation expense -
governmental activities $ 6,259,929
Business -type activities:
Water and Sewer $ 4,724,431
43
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 5. DEFERRED INFLOWS OF RESOURCES/UNEARNED REVENUE
Governmental funds report deferred inflows of resources in connection with receivables for revenue that
is not considered to be available to liquidate liabilities of the current period. Governmental funds also
defer revenue recognition in connection with resources that have been received, but not yet earned
(unearned revenue). At the end of the current fiscal year, the various components of unearned revenue
and deferred inflows of resources reported in the governmental funds were as follows:
General Debt Service
Deferred inflows of resources: Fund Fund
Property taxes $ 165,890 $ 85,633
Other 147,358 -
Total deferred inflows of resources $ 313,248 $ 85,633
Unearned revenue:
Franchise taxes $ 652,393
Other 3,030
Total unearned revenue $ 655,423
NOTE 6. LONG-TERM DEBT
Total
$ 251,523
147,358
$ 398,881
$ 652,393
3,030
$ 655,423
The City issues general obligation bonds, combination tax and revenue certificates of obligation and
tax notes to provide for the acquisition and construction of major capital facilities and infrastructure.
Combination tax and revenue certificates of obligation are issued for both governmental and
business -type activities. General obligation bonds, governmental revenue bonds and tax notes
pledge the full faith and credit of the City. Combination tax and revenue certificates of obligation are
payable from the net revenues of the water and sewer system and general debt service tax.
In May 2014, the City issued $8,780,000 of Series 2014, Tax and Waterworks and Sewer System
(limited pledge) certificates of obligation. The debt was issued to pay the costs of various general
capital project improvements. The obligations are payable over the next 20 years.
In May 2014, the City issued $21,330,000 of Series 2014, General Obligation Refunding Bonds, of
which $13,930,000 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 totaled $22,988,151. Of these proceeds, $22,743,519 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 $1,880,970, which
resulted in an economic gain (difference between the present value of the debt service payments of
the old debt and new debt) of $1,788,489. As a result of this transaction, $22,445,000 of general
obligation bonds, of which $14,661,074 was included as part of business -type activities, is considered
legally defeased, and is no longer included as a liability in the City's basic financial statements.
In May 2014, the City also issued $16,000,000 of Series 2014, Southlake Parks Development
Corporation (SPDC) Sales Tax Revenue Refunding Bonds. The debt was issued to refund the
SPDC's outstanding sales tax revenue bonds and to lower the debt service requirements of the
obligations. The obligations are payable over the next 12 years.
This refunding resulted in a decrease in the City's debt service payments of $2,096,890, which
resulted in an economic gain (difference between the present value of the debt service payments of
the old debt and new debt) of $1,637,191. As a result of this transaction, $17,295,000 of revenue
bonds was refunded, is considered legally defeased, and is no longer included as a liability in the
City's basic financial statements.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 6. LONG-TERM DEBT— Continued
General obligation bonds, combination certificates of obligation, tax notes and governmental revenue
bonds are as follows as of September 30, 2014:
Final
Interest
Business -
General Obligation Bonds and Certificates of Obligation
Maturity
Rates
Governmental
Type
$6,075,000 Series 2006, Combination Tax and Waterworks
and Sewer System Revenue Certificates of Obligation
2026
3.75
- 4.375%
$ 260,000 $
$6,540,000 Series 2007, Combination Tax and Waterworks
and Sewer System Revenue Certificates of Obligation
2018
4.0
- 5.0%
2,715,000
-
$14,015,000 Series 2008, Combination Tax and Waterworks
and Sewer System Revenue Certificates of Obligation
2028
3.5 -
4.625%
5,388,855
5,749,860
$24,835,000 Series 2009, Combination Tax and Waterworks
and Sewer System Revenue Certificates of Obligation
2029
2.0
- 5.0%
10,395,000
5,315,000
$26,730,000 Series 2010, General Obligation
Refunding Bonds
2023
3.0
- 4.0%
8,805,674
3,373,955
$4,480,000 Series 2011A, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation
2018
2.00
- 5.00%
2,695,000
-
$3,365,000 Series 2011 B, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation
2031
2.00
- 4.125%
-
3,000,000
$15,745,000 Series 2010, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation
2030
3.0
- 4.25%
4,800,000
4,575,000
$11,300,000 Series 2012, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation
2032
3.0
- 4.25%
1,685,000
2,555,000
$9,965,000 Series 2012, General Obligation
Refunding Bonds
2026
3.0-4.25%
8,790,000
275,000
$14,250,000 Series 2013, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation
2033
2.0
- 5.0%
9,235,000
2,415,000
$22,295,000 Series 2013, General Obligation
Refunding Bonds
2026
2.0
- 5.0%
20,360,000
1,345,000
$21,330,000 Series 2014, General Obligation
Refunding Bonds
2026
2.0
- 5.0%
7,400,000
13,930,000
$8,780,000 Series 2014, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation
2034
2.0
- 3.5%
4,380,000
4,400,000
Governmental Revenue Bonds
$15,745,000 Series 2010, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation
$3,285,000 Series 2011C, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation
$11,300,000 Series 2012, Tax and Waterworks and Sewer
System (Limited Pledge) Certificates of Obligation
$16,000,000 Series 2014, Southlake Parks Development
Corporation, Sales Tax Revenue Refunding Bonds
$ 86,909,529
$ 46,933,815
Final
Interest
Business -
Maturity
Rates
Governmental
Type
2030
3.00 - 4.25%
$ 2,800,000
$
2031
2.00 - 4.125%
2,930,000
2032
3.0 - 4.25%
5,420,000
2027
3%
16,000,000
$ 27,150,000
$
45
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 6. LONG-TERM DEBT — Continued
The City has entered into various contractual agreements to unconditionally finance the principal and
interest or a fixed percentage of principal and interest of Trinity River Authority (TRA) Contract Revenue
Bonds. Under the agreements, the TRA utilized the bond proceeds to administer and construct various
sewer and wastewater treatment projects on the City's behalf. Such agreements provide the City title to
the assets upon retirement of the debt or capacity rights in the use of constructed assets. The City has
included in its financial statements its proportionate share of these obligations and its investment in
these assets as capacity rights. Contract revenue obligations at September 30, 2014 consist of the
following:
Contract Revenue Obligations
Series 2001, TRA- Denton Creek Wastewater Pressure
Interceptor - Refunding
Final Business -
Maturity Governmental Type
2017 $ $ 1,100,000
The following is a summary of long-term transactions for the year ended September 30, 2014:
Amount
Beginning Ending Due within
Balance Additions Reductions Balance One year
Governmental activities:
General obligation bonds and
certificates of obligation $ 94,378,649 $ 11,780,000 $ (19,249,120) $ 86,909,529 $ 12,879,311
Sales tax revenue bonds 28,910,000 16,000,000 (17,760,000) 27,150,000 1,610,000
Bond premiums (discounts) 7,132,996 1,301,376 (859,958) 7,574,414 -
Total bonds payable 130,421,645 29,081,376 (37,869,078) 121,633,943 14,489,311
Compensated absences 1,002,623 1,045,740 (1,002,623) 1,045,740 93,940
Total governmental activities $ 131,424,268 $ 30,127,116 $(38,871,701) $ 122,679,683 $ 14,583,251
The general fund has been used to liquidate capital lease liabilities with respect to acquisitions of
governmental capital assets and has also typically been used in prior years to liquidate the liability for
compensated absences.
Amount
Beginning
Ending
Due within
Balance
Additions
Reductions
Balance
One year
Business -type activities:
Revenue bonds and certificates
of obligation
$ 47,824,609
$ 18,330,000
$ (19,220,794)
$ 46,933,815
$ 4,770,685
Contract revenue obligations
1,435,000
-
(335,000)
1,100,000
350,000
Bond premiums
968,150
922,579
(148,711)
1,742,018
-
Total bonds payable
50,227,759
19,252,579
(19,704,505)
49,775,833
5,120,685
Unearned revenue
253,764
-
(10,274)
243,490
5,000
Compensated absences
81,477
77,497
(81,477)
77,497
77,497
Total business -type activities
$ 50,563,000
$19,330,076
$(19,796,256)
$ 50,096,820
$ 5,203,182
46
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 6. LONG-TERM DEBT— CONTINUED
The annual aggregate maturities for each bond type are as follows:
General Obligation Bonds and Certificates of Obligation
Fiscal Year Ending
September 30,
2015
2016
2017
2018
2019
2020-2024
2025-2029
2030-2034
Total
Sales Tax Revenue Bonds
Fiscal Year Ending
September 30,
2015
2016
2017
2018
2019
2020-2024
2025-2029
2030-2034
Total
Principal
$ 12,879,311
11,734,601
11,543,185
9,271,424
5,314,835
22,988,569
12,867,634
310,000
$ 86,909,559
Principal
$ 1,610,000
1,660,000
1,715,000
1,765,000
1,815,000
9,970,000
6,815,000
1,800,000
$ 27,150,000
Revenue Bonds and Certificates of Obligation
Fiscal Year Ending
September 30,
2015
2016
2017
2018
2019
2020-2024
2025-2029
2030-2034
Total
Principal
$ 4,770,685
4,870,396
4,961,814
4,643,576
3,415,165
11,226,069
9,691,110
3,355,000
$ 46,933,815
Governmental Activities
Interest
$ 3,061,219
2,594,249
2,184,568
1,798,946
1,521,689
4,837,700
1,002,416
6,588
$ 17,007,375
Governmental Activities
Interest
$ 835,120
782,445
731,144
678,944
624,868
2,239,179
776,527
76,009
$ 6,744,236
Business -Type Activities
Total
$ 15,940,530
14,328,850
13,727,753
11,070,370
6,836,524
27,826,269
13,870,050
316,588
$ 103,916,934
Total
$ 2,445,120
2,442,445
2,446,144
2,443,944
2,439,868
12,209,179
7,591,527
1,876,009
$ 33,894,236
Interest Total
$ 1,666,118
1,424,242
1,228,247
1,057,017
934,612
3,429,727
1,504,765
211,829
$ 11,456,557
$ 6,436,803
6,294,638
6,190,061
5,700,593
4,349,777
14,655,796
11,195,875
3,566,829
$ 58,390,372
47
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 6. LONG-TERM DEBT —CONTINUED
Contract Revenue Obligations
Fiscal Year Ending
September 30,
2015
2016
2017
Total
Principal
$ 350,000
365,000
385,000
Business -Type Activities
Interest Total
$ 46,250 $ 396,250
28,375 393,375
9,625 394,625
$ 1,100, 000 $ 84,250 $ 1,184, 250
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, 2014, the City had no outstanding bonds that were legally
defeased.
NOTE 7. INTERFUND TRANSFERS
All interfund transfers between the various funds are approved supplements to the operations of
those funds. Individual fund transfers for fiscal year 2014 were as follows:
Transfer In
Transfer Out
Amount
Purpose
Internal service fund
General fund
$ 800,000
To replace aging vehicles
Non major governmental funds
General fund
40,000
To fund operations
General capital project funds
General fund
150,000
To fund illuminated street signs and angled parking spaces at DPS
headquarters
General capital project funds
General fund
3,500,000
To fund a reserve for a future multi -purpose facility
General fund
Non major governmental funds
36,594
To fund indirect charges
General fund
Non major governmental funds
137,226
To fund attractive spaces and future art projects
General fund
Non major governmental funds
53,824
To fund indirect charges
General capital project funds
Non major governmental funds
650,000
To fund various drainage projects
General obligation debt service fund
Non major governmental funds
194.172
To pay the debt service for bonds issued on the Districts' behalf
General obligation debt service fund
Tax increment financing district fund
3,288,465
To fund the debt repayment for bonds issued for tax increment
financing district projects
General fund
Non major governmental funds
232,713
To fund indirect charges
Southlaka parks development corporation
Non major governmental funds
2,650,000
To assist with the funding of large park projects
capital projects fund
Non major governmental funds
Non major governmental funds
3,085,598
To pay the principal and interest on debt incurred
General fund
Crime control disitrict
226,140
To fund indirect charges
Crime control district capital projects fund
Crime control disitrict
1,000,000
To fund construction of DPS North
General obligation debt service fund
Crime control disitrict
4,019,135
To paythe debt service for bonds issued on the Districts' behalf
General capital project funds
Non major governmental funds
320,000
To fund various projects
General fund
Water and sewer fund
915,116
To fund indirect charges
$ 21,298,983
Interfund balances, recorded as "due to/from other funds" represent short-term financing of deficit
cash.
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 8. 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 (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 20 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.
Contrihutions
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 Entry Age Normal (EAN) actuarial cost method is used for determining
the City contribution rate (EAN was first used in the December 31, 2013 valuation; previously, the
projected unit credit method was used). 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, 2012 valuation is effective for
the rates beginning January 2014).
Annual Pension Cost
Contributions by the City were $2,293,837 for the year ended September 30, 2014, or 12.6% of
the covered payroll of $18,245,842 as required by the actuarial valuation. The total fiscal year
2014 payroll was $19,387,630.
49
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 8. RETIREMENT PLAN — CONTINUED
Annual City pension cost and related information for the last three years is as follows:
SCHEDULE OF ACTUARIAL LIABILITIES AND FUNDING PROGRESS
Actuarial Information: 12/31 /2013 12/31 /2012
Actuarial cost method Entry Age Normal Projected Unit Credit Projected Unit Credit
Amortization method Level % Level % Level %
Amortization period
Asset valuation method
Assumptions
Investment return
Projected salary increases
Inflation
Cost -of -living adjustment
City specific assumptions
Payroll growth assumption
Withdrawal rates for male/female
(low, mid/low, mid, mid/high or high)
Schedule of Funding Information
Actuarial valuation date
30.0 years -closed
period
10-year smoothed
market
7.0%
varies by age
and services
3.0%
1.5% (3.0% CPI)
3.0%
Mid-High/Mid
Actuarial Value of Assets
Actuarial Accrued Liability
Unfunded (Overfunded) Actuarial
Accrued Liability (UAAL)
Funded ratio
Annual Covered Payroll
UAAL as a Percentage of Covered Payroll
25.3 years -closed
period
10-year smoothed
market
7.0%
varies by age
and services
3.0%
1.5% (3.0% CPI)
3.0%
Mid-High/Mid
12/31/2011
26.2 years -closed
period
10-year smoothed
market
7.0%
varies by age
and services
3.0%
1.5% (3.0% CPI)
3.0%
Mid-High/Mid
12/31 / 13
12/31 / 12
12/31 / 11
$
57,189,902
$
51,561,469
$
46,290,272
$
67,664,562
$
59,529,822
$
55,624,216
$
10,474,660
$
7,968,353
$
9,333,944
84.5%
86.6%
83.2%
$
18,254,842
$
17,171,257
$
16,708,049
57.38%
46.41 %
55.90%
The City's net pension obligation (NPO) for TMRS at September 30, 2014, 2013 and 2012 is
calculated as follows:
9/30/2014 9/30/2013 9/30/2012
NPO at the beginning of the period $ - $ - $ -
Annual required contribution 2,293,837 2,152,516 2,068,611
Contributions made (100%) 2,293,837 2,152,516 2,068,611
NPO at the end of the period $ - $ - $ -
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 847 municipalities having the benefit plan administered by TMRS.
Each of the 847 municipalities has an annual, individual actuarial valuation performed. All
assumptions for the December 31, 2013 valuations are contained in the 2013 TMRS Comprehensive
Annual Financial Report, a copy of which may be obtained by writing to P.O. Box 149153, Austin,
Texas 78714-9153.
50
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 9. OTHER POSTEMPLOYMENT BENEFITS
Plan Description
The City provides other postemployment benefits (OPEB) in the form of health insurance benefits
through a single -employer defined benefit medical plan. Regular full-time employees retiring from
the City of Southlake have the option to continue medical insurance coverage until the retiree
becomes eligible for Medicare or is eligible to be covered under another medical plan. The City
contributes $125 per month towards the premium for retiree insurance coverage or $225 towards
the premium for retirees and dependents. A third -party administrator is utilized to provide claims
administration and payment of claims. Insurance is purchased to provide specific stop loss and
aggregate stop loss protection.
The Plan does not issue a separate financial report.
Funding Policy
The City passed a resolution in September 2009, electing to participate in the PARS Public
Agencies Post -Retirement Health Care Plan Trust (the Trust) to fund post -employment benefits
for its employees as specified in the City's policies and/or applicable collective bargaining
agreements. The Trust is a multiple employer trust arrangement established to provide
economies of scale and efficiency of administration to public agencies that adopt it to hold the
assets used to fund its OPEB obligation.
The City has made a determination to fund its annual required contribution. For fiscal year 2014,
the City contributed $125,000 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 the prior three
years is shown below:
Annual required contribution
Interest on prior year Net OPEB obligation
Adjustment to annual required contribution
Annual OPEB cost
Contributions made
Increase (decrease) in net OPEB obligation
Net Obligation (asset) - beginning of year
Net Obligation (asset) - end of year
2014 2013 2012
$ 36,592 $ 36,592 $ 155,999
(11,274) (5,970) (4,530)
11,274 5,970 4,530
36,592 36,592 155,999
125,000 125,000 180,000
(88,408) (88,408) (24,001)
(187,908) (99,500) (75,499)
$ (276,316) $ (187,908) $ (99,500)
Percentage of OPEB costs contributed 341.60% 341.60% 115.39%
51
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 9. OTHER POSTEMPLOYMENT BENEFITS — CONTINUED
Funded Status and Funding Progress — Continued
The funded status of other postemployment benefits as of December 31, 2012, the date of the
latest actuarial valuation, was as follows:
Actuarial accrued liability $ 686,413
Actuarial value of plan assets (856,451)
Overfunded actuarial accrued liability $ (170,038)
Funded ratio 124.8%
Covered payroll $18,254,842
Unfunded actuarial accrued liability
as a percentage of covered payroll 0.93%
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. The unfunded
actuarial accrued liability is being amortized assuming 10 level annual payments on an open
basis. Examples include assumptions about future employment, mortality, and the healthcare
cost trend. Amounts determined regarding the funded status of the plan and the annual required
contributions of the employer are subject to continual revisions as actual results are compared
with past expectations and new estimates are made about the future.
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan and
include the types of benefits provided at the time of each valuation and the historical pattern of
sharing of benefit costs between the employer and plan members to that point. The actuarial
methods and assumptions used include techniques that are designed to reduce short-term
volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-
term perspective of the calculations.
In the December 31, 2012 actuarial valuation, the projected unit credit cost method was used.
Key actuarial assumptions include: (a) level percent of payroll amortization method; (b) a 3.0%
net real rate of investment return; (c) a sliding scale payroll growth rate for financing the
Unfunded Actuarial Accrued Liability ranging from 5.5%-12.0% based on years of service; (d) a
sliding scale of medical inflation from 7.5% in 2013 to 4.5% by 2021 and later; and (e) general
inflation assumed to be 3.0%.
NOTE 10. DEFERRED COMPENSATION PLAN
The City offers its employees a deferred compensation plan created in accordance with Internal
Revenue Code Section 457. The plan, available to all City employees, permits them to defer a portion
of their salary until future years. The deferred compensation is not available to employees until
termination, retirement, death, or unforeseeable emergency.
The laws governing 457 plans were changed to state that plans would not be considered eligible
plans unless all assets and income of the plans are held in trust for the exclusive benefit of the
participants and their beneficiaries. The City amended the plan documents to comply with these
requirements.
In accordance with GASB 32, the plans as amended are not included in the City's financial
statements.
52
CITY OF SOUTHLAKE, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
NOTE 11. RISK FINANCING AND INSURANCE
The City is exposed to various risks of loss related to torts, theft of, damage to, and destruction of
assets; errors and omissions; injuries to employees; and natural disasters. During the fiscal year
1990, the City joined the Texas Municipal League Workers Compensation Joint Insurance Fund ("the
Pool") for risks related to employees. Premiums are paid to the Pool, which retains a limit of loss.
Reinsurance companies insure the risks beyond those limits. The City retains, as a risk, only the
deductible amount of each policy. The City continues to carry commercial insurance with Texas
Municipal League provided by Mutual of Omaha for other risks including general liability, property,
and errors and omissions. There were no significant reductions in coverage in the past year and there
were no settlements exceeding insurance coverage in any of the past three years.
NOTE 12. COMMITMENTS AND CONTINGENCIES
The City has entered into various contracts with the Trinity River Authority (TRA) and other cities.
Terms of the agreements provide the City will pay an amount equal to its proportional share of
maintenance and operations and debt service based upon volumes of wastewater transported,
treated, or disposed of. The City's proportional share of future costs under these contracts is
indeterminable and has not been recorded. Payments to the TRA under these contracts for the year
ended September 30, 2014 were $1,144,628.
The City has authorized various contracts obligating future funds of the City as the contracted
services are performed. Significant amounts unexpended under such contracts at year end are
reflected as reserves for authorized contracts in the applicable funds.
The City has certain claims and litigation pending with respect to matters arising in the normal course
of operations. City management is of the opinion that the settlement of these matters will not have a
material adverse impact on the City's financial statements.
NOTE 13. FUTURE REPORTING REQUIREMENTS
Statement No. 68, "Accounting and Financial Reporting for Pensions -an amendment of GASB
Statement No. 27." — This statement changes the focus of pension accounting for employers from
whether they are responsibly funding their plan over time to a point -in -time liability that is reflected in
the employer's financial statements for any actuarially unfunded portion of pension benefits earned to
date. This statement will become effective for the City in fiscal year 2015.
Management has not yet determined the effect of this statement on the financial statements.
NOTE 14. CUMULATIVE EFFECT OF ADOPTION OF GASB STATEMENT NO. 65
As a result of the implementation of GASB Statement No. 65, Items Previously Reported as Assets
and Liabilities, an adjustment has been made to write off all unamortized bond issuance costs from
previous years. As a result, the beginning net position of governmental activities and business -type
activities has been decreased by $1,640,398 and $696,939, respectively.
53
REQUIRED SUPPLEMENTARY
INFORMATION
BUDGETARY COMPARISON
GENERAL FUND
CITY OF SOUTHLAKE, TEXAS EXHIBIT A-1
GENERALFUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2014
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
VARIANCE WITH
BUDGETED AMOUNTS FINAL BUDGET -
POSITIVE
ORIGINAL FINAL ACTUAL (NEGATIVE)
$ 17,718,230
$ 19,201,395
$ 19,193,801 $
(7,594)
2,651,751
2,834,404
2,841,025
6,621
9,020,000
11,680,000
12,585,569
905,569
1,944,900
2,270,500
2,411,851
141,351
1,727,530
1,905,250
1,778,003
(127,247)
1,015,000
1,215,000
1,330,324
115,324
104,070
210,000
213,630
3,630
84,300
51,980
193,537
141,557
275,500
334,965
358,757
23,792
34,541,281
39,703,494
40,906,497
1,203,003
387,628
393,009
381,127
11,882
805,444
812,294
810,604
1,690
634,550
636,951
622,991
13,960
3,163,614
3,243,925
2,857,271
386,654
269,255
271,336
240,014
31,322
1,233,689
1,181,982
1,120,153
61,829
651,354
644,888
586,020
58,868
144,737
146,651
130,282
16,369
2,084,782
2,057,288
1,874,521
182,767
5,798,000
5,987,780
5,875,416
112,364
7,345,506
7,734,799
7,550,397
184,402
1,352,224
1,088,124
1,213,567
(125,443)
925,854
995,192
909,420
85,772
2,124,249
1,937,321
1,738,788
198,533
1,620,490
1,692,165
1,671,514
20,651
966,014
909,276
850,398
58,878
921,310
921,323
874,931
46,392
4,437,625
4,364,236
4,256,617
107,619
675,493
676,205
673,188
3,017
TOTAL EXPENDITURES
35,541,818
35,694,745
34,237,219
1,457,526
Excess (deficiency) of revenues over expenditures
(1,000,537)
4,008,749
6,669,278
2,660,529
OTHER FINANCING SOURCES (USES)
Transfers from other funds
1,505,874
2,751,612
1,601,613
(1,149,999)
Transfers to other funds
(7,625,000)
(5,640,000)
(4,490,000)
1,150,000
TOTAL OTHER FINANCING SOURCES (USES)
(6,119,126)
(2,888,388)
(2,888,387)
1
NET CHANGE IN FUND BALANCE
(7,119,663)
1,120,361
3,780,891
2,660,530
FUND BALANCES, BEGINNING OF YEAR
20,782,522
20,782,522
20,782,522
-
FUND BALANCES, END OF YEAR
$ 13,662,859
$ 21,902,883
$ 24,563,413 $
2,660,530
See Notes to Required
Supplementary Information
54
CITY OF SOUTHLAKE, TEXAS
EXHIBIT A-2
CRIME CONTROL DISTRICT SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
(GAAP
BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2014
VARIANCE WITH
BUDGETED
AMOUNTS
FINAL BUDGET -
POSITIVE
ORIGINAL
FINAL
ACTUAL
(NEGATIVE)
REVENUES:
Municipal sales tax
$ 5,650,000
$ 6,400,000
$ 6,516,603
$ 116,603
Interest
3,500
500
(1,258)
(1,758)
TOTAL REVENUES
5,653,500
6,400,500
6,515,345
114,845
EXPENDITURES
Police services
836,099
747,912
618,921
128,991
Excess of revenues
over expenditures
4,817,401
5,652,588
5,896,424
243,836
OTHER FINANCING USES
Transfers to other funds
(5,245,275)
(5,245,275)
(5,245,275)
-
TOTAL OTHER FINANCING USES
(5,245,275)
(5,245,275)
(5,245,275)
-
Net change in fund balance
(427,874)
407,313
651,149
243,836
Fund balance at
beginning of year 4,317,021 4,317,021 4,317,021 -
Fund balance at
end of year $ 3,889,147 $ 4,724,334 $ 4,968,170 $ 243,836
See Notes to Required
Supplementary Information
55
CITY OF SOUTHLAKE, TEXAS EXHIBIT A-3
TAX INCREMENT FINANCING DISTRICT SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2014
VARIANCE WITH
BUDGETED AMOUNTS
FINAL BUDGET -
POSITIVE
ORIGINAL
FINAL
ACTUAL
(NEGATIVE)
REVENUES
Ad valorem taxes, penalties and interest
$ 6,642,975
$ 7,248,842
$ 7,248,842
$ -
Interest
2,000
1,000
(2,204)
(3,204)
Total revenues
6,644,975
7,249,842
7,246,638
(3,204)
EXPENDITURES:
Intergovernmental
3,254,686
3,834,118
3,834,118
-
Total expenditures
3,254,686
3,834,118
3,834,118
-
Excess of revenues
over expenditures
3,390,289
3,415,724
3,412,520
(3,204)
OTHER FINANCING USES
Transfers to other funds
(3,288,465)
(3,288,465)
(3,288,465)
-
Total other financing uses
(3,288,465)
(3,288,465)
(3,288,465)
-
Excess (deficiency) of revenues over
expenditures and other financing uses
101,824
127,259
124,055
(3,204)
Fund balance at
beginning of year
4,298,510
4,298,510
4,298,510
-
Fund balance at
end of year
$ 4,400,334
$ 4,425,769
$ 4,422,565
$ (3,204)
See Notes to Required
Supplementary Information
56
CITY OF SOUTHLAKE, TEXAS
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
YEAR ENDED SEPTEMBER 30, 2014
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 and Commercial Vehicle Enforcement
Special Revenue Funds, and all Capital Projects Funds are not presented, as such funds are
budgeted over the life of the respective grant or project, and not on an annual basis.
Budgetary information for the Proprietary Funds have not been presented since reporting on
such budgets is not legally required.
7. Expenditures in excess of appropriations for the year ended September 30, 2014 were:
General Fund:
Public Safety Support
($125,443)
57
CITY OF SOUTHLAKE, TEXAS EXHIBIT A-4
CONDITION RATING OF STREET SYSTEM
SEPTEMBER 30, 2014
CONDITION OF ROADWAY SYSTEM
Index
2014
RCI
11.1
SDI
10.0
PQI
9.6
COMPARISON OF NEEDED -TO -ACTUAL MAINTENANCE/PRESERVATION
Needed Actual Difference
2010
$1,250,000
$ 936,158
(313,842)
2011
1,250,000
1,025,665
(224,335)
2012
1,250,000
1,252,394
2,394
2013
800,000
755,398
(44,602)
2014
800,000
1,050,404
250,404
Total
$5,350, 000
$5,020,019
(329 981
The City hired a consultant to implement a pavement management system (PMS) to cover all public
streets within the City. The condition of street pavement is measured using the Asphalt Pavement Rating
Form as developed by the Asphalt Institute. The Asphalt Pavement Rating Form is based on a weighted
average of thirteen defects found in pavement surfaces. The consultant conducted a pavement condition
survey on all City owned streets. This consisted of a ride condition or roughness survey, a surface
distress survey and a deflection survey. A present status analysis was conducted using data obtained
from the pavement condition survey to determine the Ride Condition Index (RCI) and the Surface
Distress Index (SDI). These indices were then combined into the composite Pavement Quality Index
(PQI). Values of PQI can range from 0 to 10. Typical values for a newly constructed pavement range
from 9.5 to 10.0. The PQI level at which a pavement becomes in need of rehabilitation is typically in the
5.0 to 7.0 range. It was the City's policy to maintain a PQI of 7.3 until 2012 when the City increased the
minimum PQI to 7.8 Needed maintenance is calculated based upon inspections and the pavement
quality index.
In accordance with GASB Statement No. 34, the City is required to report at least one complete condition
assessment at transition using the modified approach. The condition assessment was completed by the
City and documented that the eligible infrastructure assets are being preserved at or above the condition
level established by the City. A third of the City's public streets will be assessed annually to ensure all
public streets are assessed every three years.
The City calculates needed maintenance of its street system annually. However, the scheduling of these
road projects often crosses fiscal years. Therefore, actual maintenance may be less than the calculated
needed maintenance in one fiscal year and greater than the calculated needed maintenance in the
subsequent fiscal year.
58
COMBINING AND INDIVIDUAL FUND
FINANCIAL STATEMENTS AND SCHEDULES
MAJOR GOVERNMENTAL FUNDS
GENERAL OBLIGATION DEBT SERVICE FUND
The General Obligation Debt Service Fund is used to account for the accumulation of resources
for, and the payment of, general obligation bonds and interest from governmental resources.
59
CITY OF SOUTHLAKE, TEXAS EXHIBIT B-1
GENERAL OBLIGATION DEBT SERVICE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2014
VARIANCE WITH
BUDGETED AMOUNTS
FINAL BUDGET -
POSITIVE
ORIGINAL
FINAL
ACTUAL
(NEGATIVE)
REVENUES:
Ad valorem taxes
$ 6,655,483
$ 6,732,483
$ 6,732,167
$ (316)
Interest
20,000
20,000
103,366
83,366
Total revenues
6,675,483
6,752,483
6,835,533
83,050
EXPENDITURES:
Principal retirement
11,235,275
11,235,275
11,235,280
(5)
Interest and fiscal charges
3,490,770
3,490,770
3,642,965
(152,195)
Total expenditures
14,726,045
14,726,045
14,878,245
(152,200)
Deficiency of revenues
over expenditures
(8,050,562)
(7,973,562)
(8,042,712)
(69,150)
OTHER FINANCING SOURCES (USES)
Proceeds from refunding bonds - - 7,400,000
Payment to refund bond escrow agent - - (7,887,452)
Premium on bonds issued - - 675,875
Transfers from other funds 7,501,772 7,501,772 7,501,772
7,400,000
(7,887,452)
675,875
Total other financing sources (uses) 7,501,772 7,501,772 7,690,195 188,423
Deficiency of revenues and other financing
sources over expenditures and other
financing uses
Fund balance, beginning of year
Fund balance, end of year
(548,790) (471,790) (352,517) 119,273
10,830,404 10,830,404 10,830,404
$10,281,614 $10,358,614 $10,477,887 $ 119,273
.91
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.
Storm Water Utility Fund — This fund is used to account for fees collected for the purpose of
improving, upgrading and maintaining the City's drainage system. The City is mandated by the Texas
Commission on Environmental Quality (TCEQ) to develop and maintain a Storm Water Management
Plan in order to address capacity and quality issues and protect its residents and their properties from
possible flooding and pollution problems. Drainage fees are collected by residents to fund the
activities required to comply with TCEQ regulations.
Court Security Fund — Established to account for municipal court fees assessed to provide for court
security.
Court Technology Fund — Established to account for municipal court fees assessed to provide for
court technology.
Library Fund — Established to account for resources donated for use by library services.
Red Light Camera Fund — The Red Light Camera Fund is used to account for fees assessed for red
light violations captured through the City's camera monitoring system.
Storm Water Maintenance Fund- The Storm Water Maintenance Fund is used to account for the
maintenance on storm water infrastructure.
Oil and Gas Fund- The Oil and Gas Fund is used to account for permits fees and the related
expenditures for oil and gas drilling.
Commercial Vehicle Enforcement Fund- The Commercial Vehicle Enforcement Fund is used to
account for the fees assessed for commercial vehicle violations.
61
DEBT SERVICE FUNDS
The Debt Service Funds are utilized to account for the accumulation of financial resources for, and the
payment of, long-term debt principal, interest, and related costs arising from the issuance of bonds.
Southlake Parks Development Corporation Debt Service Fund — Established to accumulate
resources to finance the debt service of debt issues of the Southlake Parks Development
Corporation.
CAPITAL PROJECTS FUNDS
The Capital Projects Funds are utilized to account for financial resources to be used for the 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.
CITY OF SOUTHLAKE, TEXAS
NON -MAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
SEPTEMBER 30, 2014
ASSETS
Cash and cash equivalents
Investments
Accounts receivable
Sales tax receivable
Interest receivable
TOTAL ASSETS
Ue1:114111 I NRYe101 Ul WP► 1 I1=1e1 We101 Is] *?
LIABILITIES
Accounts payable
Accrued liabilities
Due to other funds
TOTAL LIABILITIES
FUND BALANCES
Restricted for:
Municipal court expenditures
Debt service
Capital projects
Committed for:
Police expenditures
Parks and recreation
Storm water expenditures
Oil and gas drilling
Library
TOTAL FUND BALANCES
TOTAL LIABILITIES AND FUND BALANCES
SPECIAL REVENUE
Southlake
Parks Parks
and Parks Development
Police Recreation Dedication Corporation
$14,994 $ 91,180 $ 589,757 $ 6,463,320
2,037 6,282 7,033 -
- - - 1,083,212
- - 1 -
$17,031 $ 97,462 $ 596,791 $ 7,546,532
$ 7,984 $ - $ - $ 2,667
- - 209,638 8,232
7,984 - 209,638 10,899
9,047 - - -
- 97,462 387,153 7,535,633
9,047 97,462 387,153 7,535,633
$17,031 $ 97,462 $ 596,791 $ 7,546,532
63
SPECIAL REVENUE
EXHIBIT C-1
CONTINUED
Storm
Hotel
Water
Court
Court
Red Light
Occupancy
Utility
Security
Technology
Library
Camera
$ 798,593
$1,757,977
$396,196
$ 347,138
$ 6,971
$ 608,543
677,688
589,172
70,944
47,543
880
92,384
695
205,443
-
-
154
97,191
79,440
-
-
-
-
-
1,036
3,758
6
4
-
-
$1,557,452
$2,556,350
$467,146
$ 394,685
$ 8,005
$ 798,118
$ 162,475
$ 7,108
$ 241 $
- $ 38 $ 292,480
12,306
7,090
1,034
- - 1,402
174,781
14,198
1,275
- 38 293,882
- - 465,871 394,685 - -
1,382,671 2,542,152 - - - -
- - - - - 504,236
- - - - 7,967 -
1,382,671 2,542,152 465,871 394,685 7,967 504,236
$1,557,452 $2,556,350 $467,146 $ 394,685 $ 8,005 $ 798,118
64
CITY OF SOUTHLAKE, TEXAS
NON -MAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
SEPTEMBER 30, 2014
EXHIBIT C-1
CONCLUDED
SPECIAL
DEBT
CAPITAL
REVENUE
SERVICE
PROJECTS
Southlake
Tax
TOTAL
Commercial
Parks
Increment
NON -MAJOR
Storm Water
Oil and
Vehicle
Development
Financing
GOVERNMENTAL
Maintenance
Gas
Enforcement
Corporation
District
FUNDS
ASSETS
Cash and cash equivalents
$ 403,748
$ 44,839
$ 60,429
$ 1,657,182
$ -
$ 13,240,867
Investments
47,072
8,320
-
15,115
4,359
1,568,829
Accounts receivable
4
-
-
-
303,487
Sales tax receivable
-
-
1,162,652
Interest receivable
-
1
-
-
4,806
TOTAL ASSETS
$ 450,824
$ 53,160
$ 60,429
$ 1,672,297
$ 4,359
$ 16,280,641
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts payable
$
$
$ -
$
$
$ 472,993
Accrued liabilities
8,886
248,588
Due to other funds
-
803
803
TOTAL LIABILITIES
8,886
803
722,384
FUND BALANCES
Restricted for:
Municipal court expenditures
-
-
860,556
Debt service
1,672,297
-
1,672,297
Capital projects
-
-
3,556
3,928,379
Commited for:
Police expenditures
51,543
-
564,826
Parks and recreation
-
8,020,248
Storm water expenditures
450,824
450,824
Oil and gas drilling
-
53,160
53,160
Library
-
-
-
-
7,967
TOTAL FUND BALANCES
450,824
53,160
51,543
1,672,297
3,556
15,558,257
TOTAL LIABILITIES AND
FUND BALANCES
$ 450,824
$ 53,160
$ 60,429
$ 1,672,297
$ 4,359
16,280,641
65
CITY OF SOUTH LAKE, TEXAS
NON -MAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED SEPTEMBER 30, 2014
SPECIAL REVENUE
Southlake
Parks
Parks
and
Parks
Development
Police
Recreation
Dedication
Corporation
REVENUES
Municipal sales tax
$ -
$ -
$ -
$ 6,571,837
Licenses, permits and fees
-
-
151,940
-
Fines and forfeitures
-
-
-
-
G ra nts
-
-
-
-
Interest
(15)
(45)
(47)
8,945
Contributions
1,050
57,540
-
-
Miscellaneous
-
-
-
153,824
Total revenues
1,035
57,495
151,893
6,734,606
EXPENDITURES
Current:
Court technology
-
-
-
-
Public safety
Police services
-
-
-
-
Cultural and recreation
Parks and recreation
-
-
-
647,484
Library services
-
-
-
-
Capital outlay
-
-
-
-
Debt service:
Principal retirement
-
-
-
-
Interest and fiscal charges
-
-
-
-
Total expenditures
-
-
-
647,484
Excess (deficiency) of revenues over
expenditures
1,035
57,495
151,893
6,087,122
OTHER FINANCING SOURCES (USES)
Proceeds from issuance of refunding bonds
-
-
-
-
Discount on issuance of long term debt
-
-
-
-
Payment to refund bond escrow agent
-
-
-
-
Proceeds from the sale of property
1,521
-
-
-
Transfers from other funds
-
-
-
-
Transfers to other funds
-
-
-
(5,968,311)
Total other financing sources (uses)
1,521
-
-
(5,968,311)
NET CHANGE IN FUND BALANCES
2,556
57,495
151,893
118,811
FUND BALANCES,
BEGINNING OF YEAR
6,491
39,967
235,260
7,416,822
FUND BALANCES, END OF YEAR
$ 9,047
$ 97,462
$ 387,153
$ 7,535,633
EXHIBIT C-2
CONTINUED
SPECIAL REVENUE
Storm
Hotel
Water
Court
Court
Red Light
Occupancy
Utility
Security
Technology
Library
Camera
$ 949,652
$ -
$ -
$ -
$ -
$ -
-
1,362,165
-
-
-
-
-
-
36,378
48,475
-
856,100
-
-
-
-
522
-
1,168
4,868
(512)
(343)
(6)
(667)
-
-
-
-
13,788
-
950,820
1,367,033
35,866
48,132
14,304
855,433
- - - 6,267 - -
- - - 5,936 - 633,165
753,227 - - - - -
- - - - 22,181 -
- 395,880 34,976 - - -
753,227 395,880 34,976 12,203 22,181 633,165
197,593 971,153 890 35,929 (7,877) 222,268
(173,820) (897,996) - - - (320,000)
(173,820) (897,996) - - - (320,000)
23,773 73,157 890 35,929 (7,877) (97,732)
1,358,898 2,468,995 464,981 358,756 15,844 601,968
$ 1,382,671 $ 2,542,152 $ 465,871 $ 394,685 $ 7,967 $ 504,236
RYA
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-2
NON -MAJOR GOVERNMENTAL FUNDS CONCLUDED
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED SEPTEMBER 30, 2014
REVENUES
Municipal sales tax
Licenses, permits and fees
Fines and forfeitures
Grants
Interest
Contributions
Miscellaneous
Total revenues
EXPENDITURES
Current:
Court technology
Public safety
Police services
Cultural and recreation
Parks and recreation
Library services
Capital outlay
Debt service:
Principal retirement
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues over
expenditures
OTHER FINANCING SOURCES (USES)
Proceeds from issuance of refunding bonds
Premium on issuance of long term debt
Payment to refund bond escrow agent
Proceeds from the sale of property
Transfers from other funds
Transfers to other funds
Total other financing sources (uses)
NET CHANGE IN FUND BALANCES
FUND BALANCES,
BEGINNING OF YEAR
FUND BALANCES, END OF YEAR
SPECIAL
DEBT
CAPITAL
REVENUE
SERVICE
PROJECTS
Southlake
Tax
TOTAL
Commercial
Parks
Increment
NON -MAJOR
Storm Water
Oil and
Vehicle
Development
Financing
GOVERNMENTAL
Maintenance
Gas
Enforcement
Corporation
District
FUNDS
$
$
$
$
$
$ 7,521,489
1,514,105
102,944
1,043,897
-
522
(340)
(60)
6,166
(32)
19,080
-
-
-
-
58,590
-
-
-
-
167,612
(340)
(60)
102,944
6,166
(32)
10,325,295
- 6,267
117,463 756,564
- 1,400,711
- 22,181
- 13,845 444,701
695,000 - 695,000
- 1,266,796 1,266,796
117,463 1,961,796 13,845 4,592,220
(340)
(60)
(14,519)
(1,955,630)
(13,877)
5,733,075
-
-
16,000,000
16,000,000
625,501
625,501
(17, 659, 670)
(17, 659, 670 )
-
-
1,521
40,000
3,085,598
3,125,598
(7,360,127)
40,000
2,051,429
(5,267,177)
(340)
(60)
25,481
95,799
(13,877)
465,898
451,164
53,220
26,062
1,576,498
17,433
15,092,359
$ 450,824
$ 53,160 $
51,543 $
1,672,297
$ 3,556
$ 15,558,257
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-3
PARKS DEDICATION SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2014
REVENUES:
Park fees
Interest
Total revenues
Excess of revenues over expenditures
Fund balance at
beginning of year
Fund balance at
end of year
BUDGETED AMOUNTS
ORIGINAL FINAL
VARIANCE WITH
FINAL BUDGET -
POSITIVE
ACTUAL (NEGATIVE)
$ 30,000 $ 80,000 $151,940 $ 71,940
1,500 250 (47) (297)
31,500 80,250 151,893 71,643
31,500 80,250 151,893 71,643
235,260 235,260 235,260 -
$ 266,760 $315,510 $387,153 $ 71,643
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-4
SOUTHLAKE PARKS DEVELOPMENT CORPORATION
SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2014
REVENUES:
Municipal sales tax
Miscellaneous
Interest
Total revenues
EXPENDITURES
Parks and recreation
Excess of revenues
over expenditures
OTHER FINANCING 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 ACTUAL
VARIANCE WITH
FINAL BUDGET -
POSITIVE
(NEGATIVE)
$ 5,650,000 $ 6,400,000 $ 6,571,837 $ 171,837
153,816 153,816 153,824 8
14,000 7,500 8,945 1,445
5,817,816 6,561,316 6,734,606 173,290
732,976 657,865 647,484 10,381
5,084,840 5,903,451 6,087,122 183,671
(5,918,311) (5,968,311) (5,968,311)
(833,471) (64,860) 118,811
7,416,822 7,416,822 7,416,822
183,671
$ 6,583,351 $ 7,351,962 $ 7,535,633 $ 183,671
70
CITY OF SOUTHLAKE, TEXAS
EXHIBIT C-5
HOTEL OCCUPANCY SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2014
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 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
$ 879,176
$ 914,343
$ 949,652 $
35,309
2,000
500
1,168
668
881,176
914,843
950,820
35,977
846,844
832,803
753,227
79,576
34,332
82,040
197,593
115,553
(167,423) (173,820) (173,820)
(133,091) (91,780) 23,773
1,358,898 1,358,898 1,358,898
115,553
$ 1,225,807 $1,267,118 $ 1,382,671 $ 115,553
71
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-6
STORM WATER UTILITY SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2014
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 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
$ 1,500 $ 1,500 $ 4,868 $ 3,368
1,285,000 1,344,100 1,362,165 18,065
1,286,500 1,345,600 1,367,033 21,433
512,426 512,426 395,880 116,546
774,074 833,174 971,153 137,979
(895,632) (897,996) (897,996)
(121,558) (64,822) 73,157
2,468,995 2,468,995 2,468,995
137,979
$ 2,347,437 $ 2,404,173 $ 2,542,152 $ 137,979
72
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-7
RED LIGHT CAMERA SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2014
REVENUES:
Fines and forfeitures
Interest
Total revenues
EXPENDITURES:
Public safety
Excess of revenues
over expenditures
OTHER FINANCING USES
Transfers to other funds
Total other financing uses
Deficiency of revenues over expenditures
and other financing uses
Fund balance, beginning of year
Fund balance, end of year
VARIANCE WITH
BUDGETED
AMOUNTS
FINAL BUDGET -
POSITIVE
ORIGINAL
FINAL
ACTUAL
(NEGATIVE)
$ 1,072,838
$ 831,278
$ 856,100
$ 24,822
1,500
200
(667)
(867)
1,074,338
831,478
855,433
23,955
886,054
679,054
633,165
45,889
188,284
152,424
222,268
69,844
(170,000)
(320,000)
(320,000)
-
(170,000)
(320,000)
(320,000)
-
18,284
(167,576)
(97,732)
69,844
601,968
601,968
601,968
-
$ 620,252
$ 434,392
$ 504,236
$ 69,844
73
CITY OF SOUTHLAKE, TEXAS EXHIBIT C-8
SOUTHLAKE PARKS DEVELOPMENT CORPORATION
DEBT SERVICE FUND
BUDGETARY COMPARISON SCHEDULE (GAAP BASIS)
FOR THE YEAR ENDED SEPTEMBER 30, 2014
VARIANCE WITH
BUDGETED AMOUNTS
FINAL BUDGET -
POSITIVE
ORIGINAL
FINAL
ACTUAL
(NEGATIVE)
REVENUES:
Interest
$ 10,000
$ 10,000
$ 6,166
$ (3,834)
Total revenues
10,000
10,000
6,166
(3,834)
EXPENDITURES:
Principal retirement
1,730,000
1,730,000
695,000
1,035,000
Interest and fiscal charges
1,357,098
1,357,098
1,266,796
90,302
Total expenditures
3,087,098
3,087,098
1,961,796
1,125,302
Deficiency of revenues over expenditures
(3,077,098)
(3,077,098)
(1,955,630)
1,121,468
OTHER FINANCING SOURCES (USES):
Proceeds from issuance of refunding bonds
-
-
16,000,000
16,000,000
Premium on issuance of long term debt
625,501
625,501
Payment to refund bond escrow agent
-
-
(17,659,670)
(17,659,670)
Transfers from other funds
3,085,598
3,085,598
3,085,598
-
Total other financing sources (uses)
3,085,598
3,085,598
2,051,429
(1,034,169)
Excess of revenues and
other financing sources
over expenditures and other
financing uses
Fund balance, beginning of year
Fund balance, end of year
8,500 8,500 95,799 87,299
1,576,498 1,576,498 1,576,498
$ 1,584,998 $1,584,998 $ 1,672,297 $ 87,299
74
AGENCYFUNDS
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.
75
CITY OF SOUTHLAKE, TEXAS EXHIBIT F-1
CASH ESCROW AGENCY FUND
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2014
Balance at Balance at
Beginning End
of Year Additions Deletions of Year
ASSETS
Cash and cash equivalents
Investments
Accrued interest receivable
TOTAL ASSETS
LIABILITIES
Due to builders
TOTAL LIABILITIES
$ 50,895 $ 6,485 $ - $ 57,380
17,246 - 6,559 10,687
4 - 1 3
$ 68,145 $ 6,485 $ 6,560 $ 68,070
$
68,145
$
(75)
$
- $
68,070
$
68,145
$
(75)
$
- $
68,070
76
CITY OF SOUTHLAKE, TEXAS EXHIBIT G-1
COMPARATIVE SCHEDULES OF CAPITAL ASSETS BY SOURCE
SEPTEMBER 30, 2014 AND 2013
General capital assets
Land and improvements
Buildings and improvements
Equipment
Infrastructure
Construction in progress
Total capital assets
Investment in general capital assets
Capital projects funds
General and other fund revenues
Gifts
Total investment in capital assets
2014
$ 107,689,400
80,973,121
25,163,356
241, 075, 749
21,821,618
2013
$ 105,818,535
65,400,295
23,420,603
237,799,672
26,140,494
$ 476,723,244 $ 458,579,599
$ 350,478,620 $ 337,799,126
80,231,223 79,203,418
46,013,401 41,577,055
$ 476,723,244 $ 458,579,599
77
CITY OF SOUTHLAKE, TEXAS EXHIBIT G-2
SCHEDULE OF CHANGES IN CAPITAL ASSETS BY FUNCTION AND ACTIVITY
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2014
Capital Capital
Assets Assets
October 1, September 30,
Function and Activity 2013 Additions Deductions 2014
General government
$ 187,302,817
$ 169,590
$ - $ 187,472,407
Public safety
59,242,528
18,765,513
(16,353,388) 61,654,653
Public works
212,034,254
16,655,161
(1,093,231) 227,596,184
Total capital assets
$ 458,579,599
$ 35,590,264
$ (17,446,619) $ 476,723,244
General
Public
Public
Government
Safety
Works
Total
Land and improvements
$ 2,418,798
$ 4,303,925
$ 100,966,677
$ 107,689,400
Buildings and improvements
25,818,684
48,666,203
6,488,234
80,973,121
Equipment
6,166,285
8,528,626
10,468,445
25,163,356
Infrastructure
153,068,640
114,414
87,892,695
241,075,749
Construction in Progress
-
41,485
21,780,133
21,821,618
Total
$ 187,472,407
$ 61,654,653
$ 227,596,184
$ 476,723,244
78
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.
CITY OF SOUTH LAKE, TEXAS
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
Fiscal Year
2005
2006
2007
2008
Governmental activities
Net investment in capital assets
$
188,066,133
$
190,896,842
$
209,824,992
$
222,046,528
Restricted
3,448,724
4,050,884
6,076,676
6,499,447
Unrestricted
38,254,925
52,221,446
59,208,874
75,986,531
Total governmental activities net position
$
229,769,782
$
247,169,172
$
275,110,542
$
304,532,506
Business -type activities
Net investment in capital assets
$
38,279,220
$
42,821,538
$
50,177,976
$
47,834,458
Restricted
-
-
-
-
Unrestricted
19,016,836
23,951,465
23,777,277
29,794,140
Total business -type activities net position
$
57,296,056
$
66,773,003
$
73,955,253
$
77,628,598
Primary government
Net investment in capital assets
$
226,345,353
$
233,718,380
$
260,002,968
$
269,880,986
Restricted
3,448,724
4,050,884
6,076,676
6,499,447
Unrestricted
57,271, 761
76,172, 911
82, 986,151
105, 780,671
Total primary governmental net position
$
287,065,838
$
313,942,175
$
349,065,795
$
382,161,104
Source: Comprehensive Annual Financial Report
79
TABLE 1
Fiscal Year
2009 2010 2011 2012 2013 2014
$ 246,238,808 $ 277,985,305 $ 298,418,769 $ 291,690,099 $ 324,928,883 $ 338,303,633
7,850,231 8,814,621 9,739,189 67,444,322 15,178,798 15,092,604
69,949,380 58,438,700 53,157,494 16,726,782 50,356,758 58,732,145
$ 324,038,419 $ 345,238,626 $ 361,315,452 $ 375,861,203 $ 390,464,439 $ 412,128,382
$ 60,541,445 $ 65,039,374 $ 68,911,163 $ 67,918,830 $ 70,968,919 $ 73,126,147
21,171,185 18,831,525 17,613,924 18,908,505 17,673,963 16,085,060
$ 81,712,630 $ 83,870,899 $ 86,525,087 $ 86,827,335 $ 88,642,882 $ 89,211,207
$ 306,780,253 $ 343,024,679 $ 367,329,932 $ 359,608,929 $ 395,897,802 $ 411,429,780
7,850,231 8,814,621 9,739,189 67,444,322 15,178,798 15,092,604
91,120,565 77,270,225 70,771,418 35,635,287 68,030,721 74,817,205
$ 405,751,049 $ 429,109,525 $ 447,840,539 $ 462,688,538 $ 479,107,321 $ 501,339,589
:S,
CITY OF SOUTHLAKE, TEXAS
CHANGES IN NET POSITION, LAST TEN FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
Fiscal Year
2005
2006
2007
2008
2009
Expenses
Governmental activities:
General government
$ 5,926,466 $
8,465,930
$ 9,833,572
$ 4,406,913
$ 11,068,965
Public safety
10,548,265
10,965,357
11,729,107
12,770,012
12,920,263
Public works
3,470,227
3,707,519
4,813,692
8,669,156
5,840,432
Culture and recreation
4,463,075
5,085,976
5,510,247
5,911,730
6,439,100
Interest on long-term debt
5,003,130
5,052,472
5,804,295
5,506,967
5,854,931
Total governmental activities expenses
29,411,163
33,277,254
37,690,913
37,264,778
42,123,691
Business -type activities:
Water and sewer
14,130,259
16,168,430
14,729, 469
17,689,865
18,066,346
Total business -type activities expenses
14,130,259
16,168,430
14,729,469
17,689,865
18,066,346
Total primary government expenses
$ 43,541,422 $
49,445,684
$ 52,420,382
$ 54,954,643
$ 60,190,037
Program Revenues
Governmental activities
Charges for Services:
General government
$ 1,321,236
$ 1,956,949
$ 1,778,215
$ 1,340,864
$ 1,949,993
Public safety
2,151,270
1,873,524
2,979,947
2,843,923
2,633,437
Public works
250,760
411,381
223,329
199,833
68,369
Culture and recreation
752,062
813,837
1,156,965
1,269,571
1,369,725
Operating grants and contributions
319,593
459,688
304,246
241,144
239,364
Capital grants and contributions
3,639,953
3,575,240
11,425,990
5,690,613
1,833,160
Total governmental activities program revenues
8,434,874
9,090,619
17,868,692
11,585,948
8,094,048
Business -type activities:
Charges for services:
Water and sewer
16,100,215
20,180,636
15,414,131
18,543,025
19,321,095
Capital grants and contributions
2,471,700
3,510,000
5,589,196
3,748,161
2,212,867
Total business -type activities program revenues
18,571,915
23,690,636
21,003,327
22,291,186
21,533,962
Total primary government program revenues
$ 27,006,789
$ 32,781,255
$ 38,872,019
$ 33,877,134
$ 29,628,010
Net (Expenses) Revenue
Governmental activities $ (20,976,289) $ (24,186,635) $ (19,822,221) $ (25,678,830) $ (34,029,643)
Business -type activities 4,441,656 7,522,206 6,273,858 4,601,321 3,467,616
Total primary government net expenses $ (16,534,633) $ (16,664,429) $ (13,548,363) $ (21,077,509) $ (30,562,027)
General Revenues
and Other Changes in Net Position
Governmental activities-
Taxes -
Property taxes
$
19,604,411
$ 21,439,614
$
24,509,730
$ 28,950,945
$ 30,911,161
Sales taxes
12,503,357
16,040,418
16,931,180
18,781,043
17,256,272
Franchise taxes
2,015,893
1,983,381
2,435,803
2,654,701
2,816,111
Interest on investments
860,725
2,591,520
3,598,458
3,128,226
1,703,418
Gain (Loss) on sale of capital assets
(33,071)
35,317
-
-
167,127
Transfers
-
-
275,595
229,436
341,957
Miscellaneous
7,008
166,789
8,688
52,023
339,510
Total governmental activities
34,958,323
42,257,039
47,759,454
53,796,374
53,535,556
Business -type activities:
Interest on investments
412,793
1,024,603
1,183,987
594,891
953,739
Gain (Loss) on sale of capital assets
-
930,138
(3,396)
-
-
Transfers
-
(275,595)
(229,436)
2,187
Miscellaneous
-
-
-
10,989
(339,510)
Total business -type activities
412,793
1,954,741
904,996
376,444
616,416
Total primary government
$
35,371,116
$ 44,211,780
$
48,664,450
$ 54,172,818
$ 54,151,972
Change in Net Position
Governmental activities
$
13,982,034
$ 18,070,404
$
27,937,233
$ 28,117,544
$ 19,505,913
Business -type activities
4,854,449
9,476,947
7,178,854
4,977,765
4,084,032
Total primary government
$
18,836,483
$ 27,547,351
$
35,116,087
$ 33,095,309
$ 23,589,945
Source: Comprehensive Annual Financial Report
81
TABLE 2
Fiscal Year
2010 2011 2012 2013 2014
$ 11,814,836 $ 13,754,529 $ 13,277,006 $ 12,892,140 $ 13,417,904
14,885,499 15,144,173 15,891,911 18,425,878 18,245,617
5,767,688 6,279,687 6,399,819 8,528,331 8,870,998
7,287,434 7,897,173 8,158,291 8,829,394 8,948,841
6,515,269 5,638,272 5,865,798 6,747,628 5,097,036
46,270,726 48,713,834 49,592,825 55,423,371 54,580,396
18,948,438 20,724,651 22,530,688 22,119,518 25,030,426
18,948,438 20,724,651 22,530,688 22,119,518 25,030,426
$ 65,219,164 $ 69,438,485 $ 72,123,513 $ 77,542,889 $ 79,610,822
$ 2,476,000 $
2,616,321 $
2,575,773 $
2,755,038 $
2,657,883
2,706,847
2,818,913
3,744,708
3,650,079
3,907,068
240,916
71,129
179,094
291,926
360,529
1,387,558
1,384,823
1,400,794
1,422,552
1,379,658
688,803
532,100
200,434
639,230
443,157
5,994,206
2,309,613
518,617
2,244,965
4,436,346
13,494,330
9,732,899
8,619,420
11,003,790
13,184,641
18,897,356 22,571,056 22,451,738 22,806,432 23,591,438
2,578,400 1,433,278 1,214,395 1,981,354 3,510,936
21,475,756 24,004,334 23,666,133 24,787,786 27,102,374
$ 34,970,086 $ 33,737,233 $ 32,285,553 $ 35,791,576 $ 40,287,015
$ (32,776,396) $ (38,980,935) $ (40,973,405) $ (44,419,581) $ (41,395,755)
2,527,318 3,279,683 1,135,445 2,668,268 2,071,948
$ (30,249,078) $ (35,701,252) $ (39,837,960) $ (41,751,313) $ (39,323,807)
$ 32,298,360 $ 31,568,583 $ 31,166,847 $ 31,844,930 $ 33,099,007
17,610,781 18,969,870 20,076,478 22,659,917 26,623,661
2,606,248 2,783,279 2,598,074 2,646,394 2,841,025
414,852 258,556 232,722 30,110 482,607
21,465 26,741 91,134 89,923 99,109
596,093 791,830 890,220 915,475 915,116
428,804 658,902 463,681 836,068 639,571
53,976,603 55,057,761 55,519,156 59,022,817 64,700,096
155,173 123,872 46,212 25,227 101,469
(596,093) (791,830) (890,220) (915,475) (915,116)
71,871 42,463 10,811 37,527 6,963
(369,049) (625,495) (833,197) (852,721) (806,684)
$ 53,607,554 $ 54,432,266 $ 54,685,959 $ 58,170,096 $ 63,893,412
$ 21,200,207 $ 16,076,826 $ 14,545,751 $ 14,603,236 $ 23,304,341
2,158,269 2,654,188 302,248 1,815,547 1,265,264
$ 23,358,476 $ 18,731,014 $ 14,847,999 $ 16,418,783 $ 24,569,605
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