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Home My WebLink AboutCity of Euless Comprehensive Annual Financial Report FY2013 CITY OF EULESS, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDING SEPTEMBER 30, 2013 201 N. Ector Drive Euless, TX 76039 www.eulesstx.gov City of Euless, Texas Comprehensive Annual Financial Report Fiscal Year Ending September 30, 2013 Prepared by City of Euless Finance Department 201 North Ector Drive Euless, TX 76039 CITY OF EULESS, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED SEPTEMBER 30, 2013 C O N T E N T S Page(s) INTRODUCTORY SECTION Letter of Transmittal i-ix City Officials x Organizational Chart xi GFOA Certificate of Achievement xii FINANCIAL SECTION Independent Auditor's Report 1-2 Management’s Discussion and Analysis (unaudited) 3-14 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position 15 Statement of Activities 16 Fund Financial Statements Governmental Funds Balance Sheet 17 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 18 Statement of Revenues, Expenditures and Changes in Fund Balances 19 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 20 Proprietary Funds Statement of Net Position 21-22 Statement of Revenues, Expenses, and Changes in Net Position 23 Statement of Cash Flows 24-25 Fiduciary Funds Statement of Net Position 26 Statement of Changes in Fiduciary Net Position 27 Notes to Basic Financial Statements 28-59 Required Supplementary Information Schedule of Funding Progress for Participation in Texas Municipal Retirement System 60 Schedule of Funding Progress – OPEB Trust 61 Budgetary Comparison Schedules 62-64 Notes to Required Supplementary Information 65 Combining and Individual Fund Statements and Schedules Non-Major Governmental Funds Combining Balance Sheet 68-69 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 70-71 CITY OF EULESS, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED SEPTEMBER 30, 2013 C O N T E N T S – CONTINUED Page(s) Combining and Individual Fund Statements and Schedules - Continued Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Hotel/Motel Special Revenue Fund 72 Half-Penny Sales Tax Special Revenue Fund 73 Police Drug Enforcement Special Revenue Fund 74 Crime Control and Prevention District Special Revenue Fund 75 Public Safety Grant Special Revenue Fund 76 Police Seized Assets Special Revenue Fund 77 Juvenile Case Special Revenue Fund 78 Glade Parks PID Special Revenue Fund 79 TIRZ #3 Glade Parks Special Revenue Fund 80 Non-Major Proprietary Funds Combining Statement of Net Position 82-83 Combining Statement of Revenues, Expenses, and Changes in Net Position 84 Combining Statement of Cash Flows 85 Internal Service Funds Combining Statement of Net Position 87 Combining Statement of Revenues, Expenses, and Changes in Net Position 88 Combining Statement of Cash Flows 89 Escrow Agency Funds Combining Statement of Changes in Assets and Liabilities 90 STATISTICAL SECTION (Unaudited) Table Page(s) Net Position by Component 1 92 Changes in Net Position 2 93-94 Fund Balances, Governmental Funds 3 95 Changes in Fund Balances, Governmental Funds 4 96 Assessed and Estimated Actual Value of Taxable Property 5 97 Direct and Overlapping Property Tax Rates 6 98 Principal Property Tax Payers 7 99 Property Tax Levies and Collections 8 100 Ratio of Outstanding Debt by Type 9 101 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita 10 102 Direct and Overlapping Governmental Activities Debt 11 103 Schedule of Revenue Bond Coverage Water and Wastewater Bonds 12 104 Schedule of Revenue Bond Coverage Drainage Utility Bonds 13 105 Demographic Statistics 14 106 Principal Employers 15 107 Full-time Equivalent City Government Employees by Function/Program 16 108 Operating Indicators by Function/Program 17 109 Capital Asset Statistics by Function/Program 18 110 INTRODUCTORY SECTION i 201 N. Ector Drive, Euless TX 76039-3595 817/685-1400 Metro 817/267-4403 Fax 817/685-1416 www.ci.euless.tx.us January 28, 2014 To the Honorable Mayor, Members of the City Council, and Citizens of the City of Euless, Texas The Finance Department and City Manager’s Office are pleased to submit the Comprehensive Annual Financial Report (“CAFR”) for the City of Euless, Texas (“City”) for the fiscal year ended September 30, 2013. This report complies with State law which requires that all local governments publish, within six months of the close of each fiscal year, a complete set of financial statements presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and audited in accordance with auditing standards generally accepted in the United States of America by a firm of licensed certified public accountants. This report is published to provide the City Council, City staff, citizens, bondholders, and other interested parties with detailed information concerning the financial condition and activities of the City. The report consists of City management’s representations concerning the finances of the City. Consequently, management assumes full responsibility for the accuracy, completeness, and reliability of all of the information presented in the report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed both to protect the City’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh the benefits derived from them, the City’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City’s financial statements have been audited by Weaver, L.L.P., a firm of licensed, certified public accountants. The goal of the independent audit is to provide reasonable assurance that the financial statements of the City for the fiscal year ended September 30, 2013, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; ii assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified (“clean”) opinion that the City’s financial statements for the fiscal year ended September 30, 2013, are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the Financial Section of this report. This report is presented in three sections: Introductory, Financial, and Statistical. The Introductory Section includes this transmittal letter, a listing of City Officials, and an organizational chart of the City. The Financial Section includes the independent auditor’s report on the basic financial statements, Management’s Discussion and Analysis (“MD&A”), basic financial statements, the notes to the basic financial statements, and combining and individual fund statements and schedules. The MD&A is a narrative introduction, overview, and analysis to accompany the basic financial statements. This letter of transmittal is designed to complement, and should be read in conjunction with, the MD&A. The City of Euless’ MD&A can be found immediately following the independent auditor’s report. The Statistical Section includes financial and demographic information relevant to readers of the City’s financial statements. The statistical data is generally presented on a multi-year basis. Profile of the City of Euless, Texas The City of Euless is located in North Central Texas in Northeast Tarrant County approximately 16 miles west of Dallas and 16 miles east of Fort Worth. Euless is readily accessible by State Highway 183 which is a six-lane expressway linking Dallas to Fort Worth. Other major highways through the City include State Highway 121, State Highway 360, State Highway 10 and Farm-to-Market Road 157. Euless’ centralized location provides quick access to both Dallas and Fort Worth metropolitan areas and is adjacent to Dallas-Fort Worth International Airport (“DFW Airport”) in east Tarrant County, one of the world’s busiest airports. The City is approximately 16.9 square miles and serves a population of approximately 51,750. The City of Euless was incorporated February 24, 1953 and is a home rule city operating under a Council/Manager form of government. The City Council is comprised of the mayor and six council members who are elected at large. The Council has the authority to enact local legislation, levy taxes, adopt budgets, determine policies, incur debt, and appoint the City Secretary, City Attorney, Municipal Court Judge, and the City Manager. The City Manager reports directly to the City Council, and is responsible for the daily management of the various City departments. Council members serve three-year staggered terms, with two council members elected each year. The Mayor is elected to serve a three-year term. In addition, several boards and commissions were created to assist the City Council in deciding matters of policy and procedure and meet on various issues throughout the year. The City of Euless provides a full range of services to its citizens including: police and fire protection; emergency ambulance services; municipal court operations; development and code services; construction and maintenance of streets and highways, parks, and iii recreational facilities; water service and wastewater collection and treatment; and library operations. The City also operates a top-ranked, 18-hole golf course and conference center, an adult softball facility, and a youth athletic complex. Internal services of the City account for risk management, equipment replacement, and employee insurance coverage activities on a cost reimbursement basis. A private contractor, through a franchise agreement, provides solid waste collection and disposal services for the City. Three component units of the City, the Euless Development Corporation, the Euless Crime Control and Prevention District, and Tax Increment Reinvestment Zone #3 – Glade Parks, are presented in the financial statements of the City as blended component units. Data for these organizations is recorded and presented in special revenue funds of the City’s financial statements. Additional information on these component units can also be found in Note 1 in the Notes to the Basic Financial Statements. The annual budget serves as the foundation for the City of Euless’ financial planning and control. Per the City Charter, the City Manager provides to the City Council the proposed budget by August 1st each year. The budget is filed with the City Secretary and is open for public inspection. Upon receipt of the budget, the City Council sets a date for a public hearing at which time interested citizens may express their opinions regarding the proposed budget. The Charter requires the Council to adopt the budget by a favorable majority vote at least ten days prior to the beginning of the next fiscal year. The City Manager is authorized to transfer budgeted amounts between line items and departments within any fund; however any revisions that alter the total expenditures of any fund must be approved by the City Council. Budgetary control has been established at the individual fund level. Financial reports are produced showing budget to actual expenditures by line item and are distributed monthly to City departments for review. Economic Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of Euless operates. The City of Euless is located in Tarrant County, one of the fastest-growing counties in Texas, in the heart of the Dallas/Fort Worth (“DFW”) Metroplex and adjacent to DFW Airport. Thus, the economic vitality of the region significantly impacts the economic health of Euless. DFW’s strategic central location and diverse economy are major factors contributing to businesses relocating to the area. As a result, DFW is one of the fastest- growing economic regions in the country. Due to the tremendous growth experienced over the last decade, DFW has become the largest metropolitan area in Texas. DFW’s highly-diversified economy includes more than 141,000 businesses, 1,500 regional and corporate headquarters, 20 Fortune 500 Companies, and a total workforce topping 3.4 million. Such economic diversity has helped the region weather economic downturns in key sectors better than other regions of the nation (U.S. Census Bureau County Business iv Patterns). For September 2013, the City’s unemployment rate of 5.4% compares favorably with the state rate of 6.3% and a national rate of 7.0%. DFW Airport is the world’s fourth-busiest airport in terms of operations and eighth in terms of passengers. DFW Airport serves more than 58.3 million passengers a year, provides in excess of 321,000 jobs and contributes $15.7 billion annually to the regional economy (SOURCE: DFW website www.dfwairport.com Fast Facts and DFW Airport 2012 Comprehensive Annual Financial Report). The AllianceTexas development in North Fort Worth is an 18,000-acre master-planned, mixed-use community which is home to 350 companies, 35,000 employees, 7,700 single- family homes, and is anchored by the inland port known as the Alliance Global Logistics Hub. The development includes Fort Worth’s Alliance Airport, the first purely industrial airport in the Western Hemisphere, which serves as the cornerstone for the nation’s fastest-growing industrial complex. The area offers a variety of commercial real estate options as well as industrial, office, and retail space. Additionally, the AllianceTexas development contributes an estimated $2.14 billion annually to the local economy (SOURCE: Alliance website www.allianceairport.com, AllianceTexas Facts). Although the DFW Metroplex has fared better than other areas of the nation during the recession, the local economy did experience a downturn. During FY2013, Euless realized significant improvement in local revenues. Property values have been restored to pre-recession levels as have sales tax revenue collections. Close monitoring of all revenues has allowed the City to fill some of the vacant positions that have been held for a number of years. Euless continues to look for new, innovative revenue opportunities in an effort to minimize the tax burden to its citizens. Throughout the economic difficulties faced the last several years, City staff has made every effort to ensure service levels to citizens were preserved. Many of the budgetary reductions and other cost-saving measures enacted in prior fiscal years were carried over into the current fiscal year to minimize the City’s risk. In the upcoming fiscal year, management will continue to closely monitor revenue collections in conjunction with expenditure patterns to ensure the City maintains a healthy financial position. Taxable value for all residential and commercial property in the City of Euless totaled approximately $2.8 billion for fiscal year 2013, which represents a 3.5% increase over the prior year. For fiscal year 2013, sales tax collections, another significant revenue source for the City, exceeded budget expectations by close to 9% and prior year collections by almost 8%. The City receives significant revenues from a consolidated rental car facility at DFW Airport. While a portion is used to fund general operations to reduce the tax burden on citizens, the City Council has chosen to utilize the majority of this funding source to build reserves and to cash flow capital projects in lieu of debt issuance. Doing so has allowed the City to refrain from becoming overly dependent on a volatile resource, while providing much needed improvements within the community. v The City of Euless has approximately 958 acres of undeveloped land outside of DFW Airport and another 1,700 developable acres within the airport boundaries. Euless continues to focus on attracting quality, sustainable development to the area, to pursue redevelopment opportunities, and to renew the emphasis on business retention. As a result, over the last several years, Euless has experienced new commercial, industrial, residential, and multi-family growth. The Glade Parks mixed-use development consisting of major retail, restaurants, neighborhood pedestrian-oriented retail uses and residential neighborhoods is currently under construction. During 2013, more than 80 certificates of occupancy were issued to new businesses in Euless. The types of businesses were from many different sectors including manufacturing, personal and professional services, medical and dental office, medical labs, and retail/restaurants. This economic activity is located throughout the City. New businesses included Chipotle Mexican Grill, Rosa’s Café, The Texas Kitchen, Plato’s Closet, and Sheet Metal Manufacturing. Also during 2013, the City processed new residential housing permits totaling approximately $12 million in new development. The Dallas Cowboys AT&T Stadium and Texas Rangers Ballpark in Arlington, within minutes of Euless, continue to attract additional tourism to the City by hosting major concerts and sporting events, including Super Bowl XLV in 2011, World Series in 2010 and 2011, NCAA Regional Basketball Tournament in 2013, and the NCAA Final Four Basketball Tournament in 2014. During the fiscal year, various capital improvement projects located throughout the City were completed. The projects included the outdoor portion of the aquatic center located at Midway Park, miscellaneous street improvements, and street overlay projects throughout the City. Additionally, the reconstruction of Ash Lane and Phase IV improvements to Texas Star Sports Complex were finalized this year. The City finished the replacement of several wastewater lines along Blanco Drive, Aransas Drive and Crane Drive. Completed water projects include well repairs, miscellaneous water rehab and the initial phase of the reclaimed water project. The City benefits from a well-educated workforce, with approximately 80% of graduating seniors in the Hurst-Euless-Bedford School District pursuing further education. In addition, Euless’ median household income of $50,025 (source: Claritas Site Reports) compares favorably to $48,646 for the State of Texas. Long-Term Financial Planning The City of Euless has developed a comprehensive capital improvements document as well as a multi-year financial plan. Such strategic planning has allowed the City Council to fund several major infrastructure upgrades, park enhancements, and capital purchases in a systematic manner while considering the full impact to the operating budget and tax requirements. Many of these projects have been completed on a pay-as-you-go basis by utilizing operating revenues, excess reserves, and rental car taxes, thereby avoiding the issuance of additional debt. vi The City Council and citizens of Euless have determined that debt issuance is a viable method of financing major capital projects. Analysis of potential debt issuance includes the operating impact the repayment thereof will have on citizens, property tax rates, and enterprise fund service fee revenues. Per the City’s fiscal policies, long-term debt will not be used for operating purposes and the life of the debt instruments will not exceed the useful life of the projects financed. Policy also specifies that bonds with an average life of 20 years or less will be issued to reduce net interest cost and maintain future flexibility by paying off debt earlier. The majority of the City’s existing long-term debt was used to finance infrastructure needs and traditional government facilities such as streets, fire stations, libraries, and development of parks and open spaces. The City’s fiscal policies state current expenditures will be paid with current revenues. Deferrals, short-term loans, or one-time sources will be avoided as budget balancing techniques. Reserves will be used for emergencies or nonrecurring expenditures, except when balances can be reduced because levels exceed guidelines or legally-required minimums. Fiscal policies provide for a General Fund reserve equal to between 30 and 60 days of working capital. At no time shall the reserve fall below 8.3% of the General Fund expenditure budget (i.e. 30-day level). The current reserve is maintained at 107 days of operations which equates to approximately 27.1% of next year’s budgeted expenditures. At the end of the current year, the City was in compliance with this policy. The City’s fiscal policies for the Water and Wastewater Fund require the maintenance of a minimum reserve of 45 to 75 days of operations in working capital. The City currently maintains a 94-day reserve. Water and Wastewater revenue bond covenants require the City to maintain reserve amounts sufficient to cover the average annual debt service requirements. This revenue bond reserve is in addition to the working capital required by the City’s fiscal policies and is maintained in a separate fund. As of September 30, 2013, the revenue bond reserve totaled $305,072 which slightly exceeds the average annual debt service on the outstanding debt. Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc. rates the City’s general obligation debt and sales tax revenue debt at AA and the water and wastewater revenue debt at AA+. Moody’s Investor Service, Inc. rates the general obligation debt and water and wastewater revenue debt at Aa2 and the sales tax revenue debt at A1. Additional information about the rating agencies or the significance of the ratings provided may be obtained from each agency’s web site. Major Initiatives The City has partnered with Tarrant County, surrounding cities, local churches and businesses to renovate qualifying homes in the community through the Tarrant County Home Program and the Community Powered Revitalization Program (“CPR”). Through this partnership, the cities of Hurst, Euless, and Bedford have joined forces to assist qualifying residents in all three communities. vii The City’s updated Facility Master Plan addresses the remaining facility needs of the City. The Parks Master Plan, which focuses on improving the quality of life for the community, includes additional hike/bike trails, park amenities and upgrades. Completion of the outdoor portion of the Euless Family Life Center Aquatic Facility at Midway Park opened during the summer of 2013 and the indoor portion of the facility opened during the winter of 2014. The City’s Capital Improvement Plan addresses the infrastructure needs throughout the City. With the reconstruction of State Highway 183, the City executed a Master Utility Adjustment Agreement with the Texas Department of Transportation, North Tarrant Express (“NTE”) Mobility Partners, and Bluebonnet Contractors to relocate existing water and wastewater mains along this thoroughfare. Texas Department of Transportation is seeking proposals for the State Highway 183 reconstruction and expansion from Farm-to-Market Road 157 through the eastern city limits. In the upcoming fiscal year, the construction is anticipated to begin for Cullum Drive. The street will be reconstructed to a concrete roadway with underground drainage, sidewalks, and wastewater main replacement. ADA Infrastructure Improvements (CDBG), county overlay projects, replacement of the wastewater line along Denton Drive, and replacement of the water line at El Camino Real are also anticipated to begin in the upcoming year. Texas Star Golf Course is scheduled for greens replacement and bunker renovations in FY2014. The course will close mid-June through the end of the fiscal year while the improvements are in progress. Raven’s Grille and the Conference Centre will remain open during the construction period. In order to meet fixed obligations and continuing operations costs of the course, an appropriation from reserves in the amount of $513,000 is anticipated. The City of Euless, along with the City of Arlington and the DFW International Airport, contracted with the City of Fort Worth for the purchase of reclaimed water from the Village Creek Wastewater Plant. The City uses reclaimed water to irrigate over 300 acres of City property including Texas Star Golf Course and the Texas Star Sports Complex. The use of reclaimed water for irrigation is a viable alternative to potable water that allows the City to protect valuable assets by continuing to water during drought conditions. The first phase of the extension of the reclaimed water line began in fiscal year 2013. Phase I includes the installation of a booster pump station located at Midway Road and Bear Creek Drive and service extension 1700 feet north of Harwood Road. Ultimately, with the completion of all phases of the extension, the availability of reclaimed water will extend to multiple multi-family properties from Harwood Road to Mid Cities Boulevard as well as the City’s Bear Creek Park. Additional system expansion is possible in the future as well. viii Over the last several years, the City has worked with a developer on a major, mixed-use center located along the southwest corner of Glade Road and Highway 121. This center will ultimately provide approximately 1.2 million square feet of retail/office and includes a unique residential component. The City expects the sales tax benefit from this center to be significant. In an effort to promote development in this area, the City created a Tax Increment Reinvestment Zone (“TIRZ”) for this development (Glade Parks) and approved the related project and financing plan. This plan authorizes the City to undertake certain public improvements associated with the Glade Parks development. The City also executed a development agreement with Ruby 12 Glade Retail, LLC, formally known as Glade 121 L.P., which specifies the extent to which the City will provide the improvements and provides for the conditions under which these improvements will be constructed or reimbursed. Additionally, the City created the Glade Parks Public Improvement District (“PID”) which is funded from assessments within the district. At the 2013 fiscal year-end, portions of the phase two infrastructure improvements were finalized and construction of the urban lofts was substantially complete. To further promote development, the City also executed an agreement in 2011 with SLF – Euless Riverwalk JV, L.P., related to the Riverwalk Development. The City approved a planned development relating to this project which includes approximately 200 acres located at the northwest corner of Airport Freeway and State Highway 360 extending north to Harwood Road. Lennar Homes continues the overall site development work for the Dominion subdivision at this location. Lennar will be developing a 206-lot subdivision on fifty-five acres. Model homes will be constructed in early 2014. A 2013 National Homebuilders Association Developer of the Year, The NRP Group, received approval for a 300-unit urban loft project that will establish the architectural design quality and theme for the future commercial development. Awards and Acknowledgements The Government Finance Officers Association (“GFOA”) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Euless for its Comprehensive Annual Financial Report (“CAFR”) for the fiscal year ended September 30, 2012. 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 CAFR, whose contents conform to program standards. Such report must satisfy both Generally Accepted Accounting Principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The City has been awarded a Certificate of Achievement for the last 26 consecutive years. We believe that the current CAFR meets the Certificate of Achievement program requirements and are submitting it to GFOA for review. MARY LIB SALEH, MAYOR Tim Stinneford, Council Member —Place One Leon Hogg, Council Member — Place Two, Mayor Pro Tem Linda Martin, Council Member — Place Three Linda Eilenfeldt, Council Member — Place Four Glenn Porterfield, Council Member — Place Five Perry Bynum, Council Member — Place Six Gary McKamie, City Manager Loretta Getchell, Deputy City Manager Chris Barker, Assistant City Manager CITY OF EULESS FISCAL YEAR 2012-2013 CITIZENS OF EULESS MAYOR & COUNCIL CITY MANAGER Gary McKamie CITY ATTORNEY Wayne K. Olson CITY SECRETARY Kim SuƩer MUNICIPAL COURT JUDGE Lacy BriƩen MUNICIPAL COURT OF RECORD DEPUTY CITY MANAGER LoreƩa Getchell DIRECTOR OF FINANCE Janina Jewell DIRECTOR OF PUBLIC WORKS Hal Cranor FLEET & FACILITIES ADMINISTRATOR Kyle McAdams GENERAL MANAGER TEXAS STAR Glenda Hartsell‐Shelton IS ADMINISTRATOR Dan McLain LIBRARY ADMINISTRATOR Sherry Knight Gary L. McKamie, City Manager September 16, 2013 OrganizaƟonal Chart DIR. OF PARKS & COMMUNITY SERVICESS Ray McDonald POLICE CHIEF Mike Brown FIRE CHIEF Wes Rhodes COMMUNICATIONS/MARKETING MANAGER Betsy Deck ASSISTANT CITY MANAGER Chris Barker HR/RISK ADMINISTRATOR Carolyn Marshall MUNICIPAL COURT Teresa Alexander SOLID WASTE/RECYCLING FRANCHISES DIRECTOR OF PLANNING AND ECONOMIC DEV. Mike Collins AUDITOR Doug Burkham DIRECTOR OF ADMINISTRATIVE SERVICES Dale Harwell xii FINANCIAL SECTION 1 AN INDEPENDENT MEMBER OF BAKER TILLY INTERNATIONAL WEAVER AND TIDWELL LLP CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS 2821 WEST SEVENTH STREET, SUITE 700, FORT WORTH, TX 76107 P: 817.332.7905 F: 817.429.5936 INDEPENDENT AUDITOR’S REPORT To the Honorable Mayor, City Council and City Manager City of Euless, 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 Euless, Texas (the City) as of and for the year ended September 30, 2013, 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Euless, Texas, as of September 30, 2013, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. To the Honorable Mayor, City Council and City Manager Page 2 2 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the analysis of funding progress, and budgetary comparison information on pages 3 through 14 and 62 through 65 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 nonmajor fund financial statements and schedules, and statistical tables are presented for purposes of additional analysis and are not a required part of the financial statements. The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor 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. WEAVER AND TIDWELL, L.L.P. Fort Worth, Texas January 24, 2014 3 CITY OF EULESS, TEXAS Management’s Discussion and Analysis For the Year Ended September 30, 2013 (Unaudited) Management of the City of Euless offers the readers of the City’s financial statements this narrative overview and analysis of the financial activities and financial position of the City for the fiscal year ended September 30, 2013. In the broadest context, the financial well-being of a government lies in the underlying wealth and willingness of its citizens and property owners to pay adequate taxes combined with the vision of the government’s elected and appointed leadership to spend those taxes strategically so that the City’s tax base, service levels, City assets, and the City’s desirability will be maintained not just for the current year but well into the future. Financial reporting is limited in its ability to provide the “big picture” but rather focuses on financial position and changes in financial position. In other words, are revenues and/or expenditures higher or lower than the previous year? Has net position (containing both short- term and long-term assets and liabilities) or fund balances (the current “spendable” assets less current liabilities”) of the government been maintained? Readers are encouraged to consider the information presented here in conjunction with the additional information furnished in the letter of transmittal (pages i-ix of this report) and the statistical section (pages 92-110 of this report) as well as information in the annual budget and the capital improvement plan along with other community information found on the city’s website at www.eulesstx.gov. It should be noted that the Independent Auditor’s Report describes the auditors’ association with the various sections of this report and that all of the additional information from the website and other City sources are unaudited. Financial Highlights  The assets of the City of Euless exceeded its liabilities at the close of the most recent fiscal year by $190,817,473 (Net position). This number must be viewed in the context that the vast majority of the City’s net position of $140,562,850 (74%) is net investment in capital assets and that most capital assets in government do not directly generate revenue nor can they be sold to generate liquid capital. The net position restricted for specific purposes totaled $7,193,601 (4%). The remaining $43,061,022 (22%) is unrestricted net position and may be used to meet the government’s ongoing obligations to citizens and creditors in accordance with the City’s fund designation and fiscal policies.  Governmental activities realized an increase in total net position of $7,829,664 and business- type activities realized an increase in total net position of $922,920 bringing the net increase in total net position for the City to $8,752,584.  At the close of the current fiscal year, the City of Euless’ governmental funds reported combined ending fund balances of $27,419,013 which represents a decrease of $1,870,685 in comparison with the prior year. Within this total, $1,776,644 is restricted for debt service; $365,641 is restricted by bond covenant for capital projects; $124,312 and $132,707 are restricted for court technology and juvenile case management, respectively; and another $1,447,759 is restricted for capital projects by developer agreements. Amounts restricted for 4 cable PEG fees and historical preservation total $290,467 and $1,245, respectively. Nonspendable fund balance of $58,726 represents fund balance amounts for inventories and prepaid items. Fund balances of $13,625,954 represent assigned fund balance in the general, special revenue, and capital projects funds. The unassigned fund balance in the General Fund of $9,595,558 can be used for any lawful purpose. The General Fund unassigned balance represents 29% of fiscal year 2013 total fund expenditures.  The City’s total capital assets (net of accumulated depreciation) increased by $8,473,116 which is primarily attributed to current year capital improvement project expenditures and asset additions exceeding current year depreciation expense and asset retirements.  The City’s bonds payable decreased by $3,415,000 or 7%, due to the scheduled repayment of principal on outstanding bonded debt combined with refunding bonds issued for the defeasance of certain issues of general obligation debt. These figures include the issuance of water and wastewater revenue bonds in the amount of $1,585,000. OVERVIEW OF THE FINANCIAL STATEMENTS The discussion and analysis are intended to serve as an introduction to the City of Euless’ basic financial statements which 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 required supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City of Euless’ finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the City of Euless’ assets and deferred outflows of resources and liabilities and deferred inflows of resources, with the difference between them reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Euless is improving or deteriorating. The statement of activities presents information showing how the City’s net position changed during the fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash receipts and cash outlays in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences). The government-wide financial statements distinguish between functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government and administration, public safety, highways and streets, development, and culture and recreation. The business-type activities of the City include water and wastewater system, drainage system, golf course, and other recreational activities. The government-wide financial statements include not only the City of Euless (the primary government), but also the Economic Development Corporation, the Crime Control and 5 Prevention District, and the Tax Increment Reinvestment Zone #3 – Glade Parks which are legally separate entities that are financially accountable to the City. A blended presentation has been used to report the financial information of these component units. The government-wide financial statements can be found on pages 15-16 of this report. Fund Financial Statements. A fund is a self-balancing set of accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Euless, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements with the exclusion of internal service fund activity. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, 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, the reader may better understand the long-term impact of the government’s near- term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains twenty 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, Debt Service, Car Rental Tax, and Car Rental CIP funds, all of which are considered to be major funds. Data from the other sixteen governmental funds are combined into a single, aggregate presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for its General and Car Rental Tax major governmental funds. A budgetary comparison schedule has been provided for each fund to demonstrate compliance with the adopted budgets. The basic governmental fund financial statements can be found on pages 17-20 of this report. Proprietary funds. The City maintains two different types of proprietary 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 wastewater, drainage utility, and golf operations, as well as several other recreational activities. Internal service funds are an accounting device used to accumulate resources and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its equipment replacement, risk management, and health insurance services. Because these services predominately benefit governmental rather than business-type functions, 6 a portion of the activities in these funds is included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for Water and Wastewater, Drainage Utility, and Golf, all of which are considered to be major funds of the City. Data from the other recreational activities are combined into a single, aggregate presentation. Individual data for each of these non-major enterprise funds is provided in the form of combining statements elsewhere in this report. The internal service funds are combined into a single, aggregate presentation in the proprietary fund financial statements. Individual data for the internal service funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements can be found on pages 21-25 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on pages 26 and 27 of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 28-59 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s progress in funding its obligations to provide pension and post-employment healthcare benefits to its employees. Additionally, schedules comparing budgetary figures and actual results of the General Fund and the Car Rental Tax Fund are also located in this section of the report. Required supplementary information can be found on page 60-65 of this report. The combining statements referred to earlier in connection with non-major governmental funds, non-major proprietary funds, and internal service funds are presented immediately following the required supplementary information on pensions, OPEB, and budgetary comparisons. Combining and individual fund statements and schedules can be found on pages 66-91 of this report. Government-Wide Financial Statement Analysis As noted earlier, net position and especially net position by category may serve over time as a useful indicator of a government’s financial position. In the case of the City of Euless, assets exceeded liabilities by $190,817,473 as of September 30, 2013. The largest portion of the City’s net position (74%) reflects its investment in capital assets (i.e., land, buildings, equipment, improvements, construction in progress, and infrastructure) net of accumulated depreciation, less any debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently these assets are not available for future spending and with exception of business-type assets, do not generate direct 7 revenue for the City. They do represent, however, an obligation on the part of the City to maintain these assets into the future. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that 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. An additional portion of the City’s net position (4%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position of $43,061,022 (22%) may be used to meet the City’s ongoing obligations to citizens, creditors, and employees. Net Position Governmental Business-type Amounts shown in 000's activities activities Total 2013 2012 2013 2012 2013 2012 Current and other assets 46,791$ 48,480$ 26,725$ 25,217$ 73,516$ 73,697$ Capital assets 121,152 113,054 63,247 62,872 184,399 175,926 Total assets 167,943 161,534 89,972 88,089 257,915 249,623 Long-term liabilities 37,492 39,888 12,290 11,385 49,782 51,273 Other liabilities 13,174 12,198 4,142 4,087 17,316 16,285 Total liabilities 50,666 52,086 16,432 15,472 67,098 67,558 Net position: Net investment in capital assets 88,228 77,829 52,335 52,203 140,563 130,032 Restricted 4,139 4,427 3,055 2,711 7,194 7,138 Unrestricted 24,910 27,192 18,150 17,703 43,060 44,895 Total net position 117,277$ 109,448$ 73,540$ 72,617$ 190,817$ 182,065$ As of September 30, 2013 the City reports positive balances in all three categories of net position, for the government as a whole, as well as for its separate governmental and business- type activities. The same situation held true for fiscal year 2012. The City’s unrestricted net position decreased by $1,834,437 in fiscal year 2013. Restricted net position realized an increase of $55,970 and the amount invested in capital assets, net of related debt also increased by $10.5 million. The increase in total net position of $8.75 million resulting from current year operations flowed to the net investment in capital assets category of net position. The details of the results of current year operations are found in the table shown on the following page. 8 Changes in Net Position  Governmental activities. Governmental activities increased the City’s net position by $7,829,664 thereby accounting for most of the growth in total net position. Most revenue categories, including sales taxes, charges for services, and grant revenues, exceeded projections. Sound fiscal management, continued holding of frozen positions, and close Governmental Business-type Amounts shown in 000's Activities Activities Totals 2013 2012 2013 2012 2013 2012 REVENUES Program revenues: Fees, fines and charges for services 6,336$ 6,241$ 26,551$ 25,521$ 32,887$ 31,762$ Operating grants and contributions 2,979 482 - - 2,979 482 Capital grants and contributions 1,213 690 1,847 369 3,060 1,059 General revenues: Property taxes 12,745 12,452 - - 12,745 12,452 Sales taxes 16,142 14,958 - - 16,142 14,958 Car rental taxes 13,592 12,934 - - 13,592 12,934 Mixed beverage taxes 61 54 - - 61 54 Occupancy taxes 329 293 - - 329 293 Gross receipts taxes 4,209 4,276 - - 4,209 4,276 Investment income 107 133 40 61 147 194 Rents and royalties 1,481 397 - - 1,481 397 Gain (loss) on asset disposal 118 68 42 - 160 68 Miscellaneous 36 638 - - 36 638 Total revenues 59,348 53,616 28,480 25,951 87,828 79,567 EXPENSES Culture and recreation 6,026 5,681 - - 6,026 5,681 Development services 1,155 973 - - 1,155 973 General government 17,146 15,911 - - 17,146 15,911 Highways and streets 3,334 2,969 - - 3,334 2,969 Public safety 23,324 22,317 - - 23,324 22,317 Interest on LTD 1,227 1,327 - - 1,227 1,327 Water and wastewater - - 18,555 17,813 18,555 17,813 Drainage utility - - 1,246 1,284 1,246 1,284 Golf course - - 4,750 4,599 4,750 4,599 Recreational enterprises - - 2,313 2,116 2,313 2,116 Total expenses 52,212 49,178 26,864 25,812 79,076 74,990 Increase (decrease) in net position before transfers 7,136 4,438 1,616 139 8,752 4,577 Transfers 693 691 (693) (691) - - Increase (decrease) in net position 7,829 5,129 923 (552) 8,752 4,577 Net position, beginning 109,448 104,319 72,617 73,169 182,065 177,488 Net position ending 117,277$ 109,448$ 73,540$ 72,617$ 190,817$ 182,065$ 9 monitoring of revenues and expenses allowed the City to realize an increase in net position before transfers of $7,136,713. Total revenue for the governmental activities (excluding transfers from business-type activities) increased from the previous year by $5,733,395. General Revenue, which is primarily made up of property taxes, sales taxes, and car rental taxes, had a net increase of $2,617,766. Property tax revenue increased due to an overall increase in both the residential and commercial tax base. Sales tax collections increased as a result of new business openings and continued improvement in the local economy. Program revenues, which consist primarily of fines, fees, and charges for services combined with contributions, increased $3,115,629. The receipt of police seized asset funds accounts for close to $2.5 million of the total increase in this category. Capital grants and contributions also increased significantly in FY2013 as a result of developer contribution of capital assets. Total expenses increased by $3,035,445 during FY2013. Interest on long-term debt declined by approximately $100,000 due predominantly to recent debt refundings. The raise package for employees included an increase of 3.25% which accounts for a large portion of the expense increase. Furthermore, two new police officers, staffing for the aquatic center and restoration of some unfilled positions were added. General and administrative expenses increased primarily as a result of rebate payments based on significant revenue increases. The net position of general governmental operations accounts for 61% of total net position.  Business-type activities. Business-type activities increased the City’s net position by $922,920. The change in net position before transfers totals $1,615,871. Program revenues for the business-type activities increased from the previous year by $2,508,760 due in part to an increase in water and wastewater rates as well as increases in developer contributions. Capital grants and contributions accounted for 59% of the revenue increase. While some expense categories realized decreases for the year, overall business-type expenses increased 4.1%, a portion of which is attributable to the raise package mentioned previously. Water purchases decreased due to a reduction in consumption of approximately 3% and wastewater charges increased as a result of treatment cost increases. Net position for business-type activities represents 39% of total net position. Expenses and Program Revenues $0 $5,000 $10,000 $15,000 $20,000 $25,000 G&A Culture & Rec Dev Svcs Hwys & Sts Public SafetyIn Thousands of DollarsGovernmental Activities Expenses Prog Revs $0 $5,000 $10,000 $15,000 $20,000 $25,000 Water & WW Drainage Golf Other RecIn Thousands of DollarsBusiness-Type Activities Expenses Prog Revs 10 Financial Analysis of the City’s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the City’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 City’s net resources available for spending at the end of the fiscal year. At the end of the current fiscal year, the City of Euless’ governmental funds reported combined ending fund balances of $27,419,013, a decrease of $1,870,685 in comparison with prior year. Approximately 35% or $9.6 million constitutes unassigned fund balance in the general fund that is available for spending at the City’s discretion. Another $58,726 in non-spendable fund balance represents amounts invested in inventories and prepayments. Another portion is reserved to indicate that it is not available for new spending because it has already been committed 1) to pay debt service ($1,776,644); 2) to pay for specific capital improvements per developer agreements ($1,447,759); 3) restricted by bond covenant for specific capital projects ($365,641); and 4) for a variety of other restricted purposes ($548,731). Assigned fund balance includes funds which management has planned to use for a specific purpose as well as residual balances of governmental funds other than the general fund. Assigned fund balance totals $13,625,954 and includes assigned fund balance in the general fund of $121,542 and $13,504,412 which represents residual balances in other governmental funds. See discussion under Fund Balance Classifications in the Notes to the Basic Financial Statements for additional details on fund balance. In the General Fund, the City budgeted for a decrease in fund balance (planned reduction) of $1,900,861. Due to a positive budget variance in overall revenues and expenditures, the General Fund ended the year with an increase to fund balance of $578,939 which represents a positive budget variance of $2,479,800 resulting primarily from increased revenues, departmental expenditure savings, and personnel savings from vacant positions. Most General Fund revenue categories realized increases over the prior year and many surpassed budget estimates as well. Sales tax receipts, fines and fees, intergovernmental revenues, and other revenues exceeded both budget and prior year. Sales taxes grew as a result of new development and continued improvement in the local economy. Fines and fees increased as a result of increased collections in municipal court fines and deferred adjudication fees. Property tax collections exceeded prior year due to the increase in the tax base as mentioned previously, but did not achieve budgeted levels. Ambulance fees exceeded budget parameters, but fell below prior year levels. License and permit revenues realized a significant increase over building permit budget estimates due primarily to construction on urban lofts, several projects for the school district, and new restaurants. Gross receipts taxes and investment income did not achieve budget estimates or prior year levels. Personnel and related benefit budgetary savings of approximately $359,000 result primarily from holding numerous vacant and funded positions open throughout the year. In addition to salary and benefit savings, general and administrative expenditures realized savings in supplies, travel, extermination services, and contingencies. Increased rebate incentive payments from the improvement in sales tax revenues resulted in additional expenditures of approximately $59,000, while the revenue sharing agreement with the cities of Dallas and Fort Worth realized budgetary savings of just under $40,000. Savings in public safety expenditures were noted in salaries and 11 benefits, supplies, training, and equipment rentals and maintenance. Capital expenditures including street overlay, traffic signals and lighting, and sidewalks realized budgetary savings of nearly $51,000. One-time expenditures were $446,000 under budget as a result of cost savings and timing of purchases (for which the funds will roll into the next fiscal year). The Debt Service fund balance increased $12,470 which is $126,150 more than the anticipated drawdown of $113,680. The anticipated drawdown for the Half-Penny Sales Tax fund totaled $495,314 while actual results added $264,567 to fund balance. The variance with the original budget of $759,881 primarily results from increased sales tax revenues combined with expenditure savings in salaries and benefits and capital outlay. The Car Rental Tax fund balance was originally anticipated to increase $225,132, but instead ended the year with an increase of $961,460 resulting from an increase in net car rental taxes and savings in capital outlay. The Car Rental CIP Fund ended the year with a drawdown of fund balance of close to $4.2 million resulting primarily from aquatic project expenditures. The non-major governmental funds realized a combined increase in fund balance of $759,649 primarily resulting from sales tax receipts, intergovernmental revenues, and rents and royalties. The combined net effect of these changes in governmental fund balances totals a drawdown of $1,870,685. Proprietary funds. The City’s proprietary fund statements provide the same type of information found in the government-wide financial statements for business-type activities, but in more detail. Unrestricted net position of the proprietary funds at the close of the fiscal year is: Water and Wastewater fund $10,531,427; Drainage Utility fund $1,522,110; Golf Course fund $1,882,548; and all other non-major recreation enterprise funds combined $2,135,934. The Water and Wastewater fund realized an increase in operating income resulting predominantly from expense savings due to reduced consumption realized in part from watering restrictions in effect for a portion of the year. Operating income, impact fees, and developer contributions are primarily responsible for the increase in net position of $346,845. The increase in net position of the Drainage Utility fund results primarily from developer contributions. Net position for the Golf Course fund increased $71,914 due in large part to transfers from the Hotel/Motel fund and sales tax rebates from the general sales tax collections. All other non-major recreation enterprise funds combined realized a decrease of $167,482 which is primarily attributable annual depreciation charges for the Texas Star Sports Complex and part-time salaries in Recreation Classes. The combined net effect of these changes in net position totals $700,299. Capital Asset and Debt Administration Capital assets. The City’s investment in capital assets for its governmental and business-type activities as of September 30, 2013, totaled $184,399,527 (net of accumulated depreciation). The investment in capital assets includes land, buildings, improvements, machinery and equipment, infrastructure, and construction in progress. The net increase in the City’s investment in capital assets for the current fiscal year was $8,473,116 or just under 5%. Major capital asset events occurring during the current fiscal year included the following:  Capital asset contributions for the year primarily consisted of $284,581 in Community Development Block Grant (CDBG) contributions for the ADA/TAS infrastructure improvements throughout the City and developer contributions of $658,477 in utility infrastructure and more than $1 million in drainage infrastructure. 12  Miscellaneous street improvements and county street overlay projects located throughout the City were also completed at a total cost of $312,456. Miscellaneous park improvements of $105,110 were also recorded.  Ash Lane reconstruction was completed at a cost of $1,597,270 and phase IV improvements to Texas Star Sports Complex were also finished at a cost of $556,196.  Construction-in-progress related to general government operations of $9,602,560 primarily consisted of Glade Park Infrastructure ($2.5 million), design charges for Cullum Drive ($121,669) and the Euless Family Life Center Aquatics Facilities ($7 million).  Capital asset additions for governmental operations include, but are not limited to, the public safety radio system, a fire attack truck and related equipment, treadmills, copiers, E-citation system, and several Lifpak 15 monitors.  Construction-in-progress additions related to business-type operations totaled $1.2 million and consisted primarily of wastewater line replacements of $66,555 and the reclaimed water main extension for $1.1 million.  The wastewater line replacements along Blanco Drive, Aransas Drive, and Crane Drive were completed at a cost of $284,321. Well repairs and miscellaneous wastewater rehab were finished at a cost of $26,853 and $135,311, respectively. The initial phase of the reclaimed water project was closed and infrastructure recorded at a cost of $1.6 million.  Capital asset additions for the business-type activities include, but are not limited to, leak detection equipment and an A/V system for the Conference Centre at Texas Star Golf Course. Capital Assets (Net of Accumulated Depreciation) Amounts shown in 000s activities activities Total 2013 2012 2013 2012 2013 2012 Land 26,476$ 26,354$ 3,619$ 3,619$ 30,095$ 29,973$ Buildings 37,002 38,618 2,198 2,323 39,200 40,941 Other improvements 2,730 2,350 9,914 10,565 12,644 12,915 M&E 6,768 4,701 395 462 7,163 5,163 Infrastructure 38,574 36,960 45,890 44,284 84,464 81,244 Construction in Progress 9,603 4,071 1,231 1,620 10,834 5,691 Total 121,153$ 113,054$ 63,247$ 62,873$ 184,400$ 175,927$ Governmental Business-type Additional information on the City’s capital assets can be found in Note 3 on pages 42-44 of this report. Long-term debt. At the end of the current fiscal year, the City had total bonded debt outstanding of $42,249,869 net of unamortized losses on prior refundings. Of this amount, $35,769,986 comprises debt backed by the full faith and credit of the government, where $13,400,707 is the amount of self-supported debt for Softball World, Texas Star Golf Course and Stars Center. The remainder of the City’s debt, $6,479,883, represents bonds secured solely by specific revenue sources (i.e. revenue bonds). 13 Outstanding Bonded Debt Governmental Business-Type Amounts shown in 000s activities activities Total 2013 2012 2013 2012 2013 2012 GO Bonds 27,095$ 29,915$ 7,495$ 8,165$ 34,590$ 38,080$ COs 2,910 3,230 - - 2,910 3,230 GO/CO Deferred Loss (1,061) (1,191) (669) (576) (1,730) (1,767) Revenue Bonds 2,050 2,910 4,690 3,435 6,740 6,345 Revenue Deferred Loss (56) (57) (204) (235) (260) (292) Totals 30,938$ 34,807$ 11,312$ 10,789$ 42,250$ 45,596$ In fiscal year 2013, the City issued $8,805,000 in 2012A General Obligation Refunding Bonds to refund the outstanding 2003 General Obligation Refunding Bonds and the 2004 General Obligation Refunding Bonds. The Water and Wastewater Fund issued $1,585,000 in Water and Wastewater Revenue Bonds, Series 2013 to provide funding for phase I of the reclaimed water line extension. The City’s total debt decreased $3,415,000 or 7% during fiscal year 2013 which is attributed to scheduled annual principal payments combined with the refunded bonds net of the issuance of the refunding bonds and revenue bonds. Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc. rates the City’s general obligation debt and revenue debt at AA and the water and wastewater revenue debt at AA+. Moody’s Investor Service, Inc. rates the general obligation debt and the water and wastewater revenue debt at Aa2 and the sales tax revenue debt at A1. Additional information on the City’s long-term debt can be found in Note 4 on pages 44-49. Economic Factors and Next Year’s Budgets and Rates In the FY2013-14 budget, General Fund revenues and transfers are budgeted to increase by 5% from the 2012-13 budget year with property taxes accounting for 30% of budgeted revenues and sales tax comprising approximately 30% of budgeted revenues. Certified assessed valuations as of July 1, 2013, increased 3.3% from the preceding year. As of September 30, 2013, the City’s unemployment rate is 5.4% compared to the State of Texas, which is 6.3%. In the FY2013-14 budget, sales tax receipts are projected to increase 2% over prior year estimates. The car rental tax receipts are projected at the same level as FY2013 projected collections. Baseline budgeted expenditures in the General Fund are projected to increase approximately 5% from the FY2012-13 original budget. This increase is primarily attributed to rebates associated with increased revenue collections, the employee raise package and related costs, and the restoration of unfilled positions. Other baseline increases include cost for maintenance, supplies, and utilities as well as increased transfers for equipment replacement. The City elected to use excess reserves in various funds to cash flow capital programs including city computer and technology upgrades, library furnishings and A/V system replacement, police equipment and jail appliances, fitness equipment, document imaging system, security system upgrades, roof repairs, and various other equipment purchases and miscellaneous expenses. In addition, continued funding is provided for the City’s contribution to the Tarrant County Home Program, community revitalization, and street overlay. The property tax rate remained at .4700¢ per $100 of assessed valuation for FY2013-14. 14 For the Water and Wastewater Fund, the FY2013-14 budget includes the continuation of the tiered rate structure for water volume billing. Under the tiered structure, customers pay a graduated volume rate based on varying levels of monthly water consumption. Residential volume rates range from $2.67 to $5.30 per thousand gallons. Monthly water and wastewater base rates remained flat for both residential customers and commercial customers. A wastewater volume charge of $3.19 per thousand gallons applies to all customer classes. Residential wastewater volume charges are capped at a maximum of 12,000 gallons per month. The City budgeted to continue its pay-as-you-go capital expenses in the Water and Wastewater Fund which includes approximately $1,054,000 for water line replacement at El Camino Real and wastewater line replacement along Denton Drive. Equipment purchases of approximately $244,000 consist of computer and technology upgrades, surveillance equipment, SCADA system replacement, and a digital gator cam. The Texas Star Golf Course and Conference Centre is a vibrant part of the Euless community. This facility is well-known for world class golf that is secluded in the midst of the Dallas/Fort Worth Metroplex. This challenging course has been recognized as a premier municipal facility by leading golf publications, including Golf Digest and Golfweek. Additionally, Raven’s Grille ranked in the top five for best service and best place to dine before or after your golf experience by Avid Golfer. The Conference Centre has 7,000 square feet of divisible space and hosts business conferences, weddings, concerts, and other events. The FY2013-14 capital budget includes funding for greens and bunker replacement. The course is scheduled to be closed during the renovations which are anticipated to begin in mid-June and continue through the end of the fiscal year. As a result, a projected drawdown of $513,000 in reserves is required to cover operating costs during the closure. Proposed revenues of $3,313,012 (excluding the drawdown) and proposed operating expenses of $3,826,012 comprise the FY2013-14 operating budget. Request for Information The financial report is designed to provide citizens, customers, investors, and creditors with a general overview of the City’s finances. If you have questions about this report or need additional information, contact the Finance Department, Attn: Janina Jewell, Director of Finance, at 201 North Ector Drive, Euless, Texas 76039, call (817) 685-1626, or e-mail jjewell@eulesstx.gov. CITY OF EULESS, TEXAS GOVERNMENT–WIDE STATEMENT OF NET POSITION SEPTEMBER 30, 2013 The Notes to the Basic Financial Statements are an integral part of these statements. 15 Primary Government Governmental Business-type Activities Activities Total Deposits and investments 40,806,527$ 17,818,533$ 58,625,060$ Receivables, net of allowances 6,858,379 3,139,027 9,997,406 Internal balances (2,078,422) 2,078,422 - Inventories, at cost 11,330 269,245 280,575 Prepaid items 102,171 27,220 129,391 Restricted assets Deposits and investments 365,641 3,054,827 3,420,468 Deferred charges 440,261 263,822 704,083 Net OPEB asset 285,004 73,765 358,769 Capital assets Land and construction in progress 36,078,616 4,849,200 40,927,816 Other capital assets, net of accumulated depreciation 85,073,886 58,397,825 143,471,711 Total assets 167,943,393 89,971,886 257,915,279 Accounts payable 11,230,967 2,026,808 13,257,775 Accrued liabilities 1,577,741 189,435 1,767,176 Accrued interest payable 169,094 50,303 219,397 Unearned revenue 196,006 107,611 303,617 Money held in escrow - 1,767,724 1,767,724 Noncurrent liabilities Due within one year 4,400,274 1,012,033 5,412,307 Due in more than one year 33,091,676 11,278,134 44,369,810 Total liabilities 50,665,758 16,432,048 67,097,806 Net investment in capital assets 88,228,280 52,334,570 140,562,850 Restricted for Debt service 1,776,643 314,171 2,090,814 Capital projects 365,641 661,816 1,027,457 Impact fees - 2,078,840 2,078,840 Court technology 124,312 - 124,312 Juvenile cases 132,707 - 132,707 PEG fees 290,467 - 290,467 Developer agreements 1,447,759 - 1,447,759 Historical preservation 1,245 - 1,245 Unrestricted 24,910,581 18,150,441 43,061,022 Total net position 117,277,635$ 73,539,838$ 190,817,473$ ASSETS LIABILITIES AND NET POSITION LIABILITIES NET POSITION CITY OF EULESS, TEXAS GOVERNMENT–WIDE STATEMENT OF ACTIVITIES YEAR ENDED SEPTEMBER 30, 2013 The Notes to the Basic Financial Statements are an integral part of these statements. 16 Primary GovernmentFees, Fines Operating Capital Business - and Charges Grants and Grants and Governmental TypeProgram Activities Expenses for Services Contributions ContributionsActivitiesActivities TotalPrimary governmentGovernmental activitiesCulture and recreation 6,025,540$ 297,361$ 228$ -$ (5,727,951)$ -$ (5,727,951)$ Development services 1,155,089 1,186,347 - - 31,258 - 31,258 General and administrative 17,145,752 1,383,779 15,770 - (15,746,203) - (15,746,203) Highways and streets 3,334,188 112,736 - 1,177,110 (2,044,342) - (2,044,342) Public safety 23,324,328 3,355,604 2,962,935 36,231 (16,969,558) - (16,969,558) Interest on long-term debt 1,227,084 - - - (1,227,084) - (1,227,084) Total governmental activities 52,211,981 6,335,827 2,978,933 1,213,341 (41,683,880) - (41,683,880) Business-type activitiesWater and wastewater 18,554,761 19,183,198 - 829,435 - 1,457,872 1,457,872 Drainage utility 1,245,838 708,984 - 1,017,662 - 480,808 480,808 Golf course 4,750,359 4,520,224 - - - (230,135) (230,135) Other recreation enterprises 2,312,949 2,138,600 - - - (174,349) (174,349) Total business-type activities 26,863,907 26,551,006 - 1,847,097 - 1,534,196 1,534,196 Total primary government 79,075,888$ 32,886,833$ 2,978,933$ 3,060,438$ (41,683,880) 1,534,196 (40,149,684) General RevenuesTaxesProperty taxes, levied for general purposes 12,744,753 - 12,744,753 Sales taxes 16,142,357 - 16,142,357 Car rental taxes 13,592,255 - 13,592,255 Mixed beverage taxes 60,823 - 60,823 Hotel/motel occupancy taxes 329,368 - 329,368 Gross receipts taxes 4,209,564 - 4,209,564 Investment income 106,521 40,045 146,566 Rents and royalties 1,481,305 - 1,481,305 Gain on sale of assets 117,763 41,630 159,393 Miscellaneous35,884 - 35,884 Transfers692,951 (692,951) - Total general revenues and transfers 49,513,544 (611,276) 48,902,268 Change in net position 7,829,664 922,920 8,752,584 NET POSITION, beginning of year109,447,971 72,616,918 182,064,889 NET POSITION, end of year117,277,635$ 73,539,838$ 190,817,473$ Net (Expense) Revenue andChanges in Net PositionProgram Revenues CITY OF EULESS, TEXAS BALANCE SHEET – GOVERNMENTAL FUNDS SEPTEMBER 30, 2013 The Notes to the Basic Financial Statements are an integral part of these statements. 17 Debt Car Car Rental Non-major Total General Service Rental Tax Capital Projects Governmental Governmental Fund Fund Fund Fund Funds Funds Deposits and investments 10,481,437$ 807,089$ 9,878,065$ 1,270,271$ 10,960,634$ 33,397,496$ Receivables Property taxes 383,556 165,967 - - - 549,523 Accounts receivable 857,733 - 2,261,102 - 247,463 3,366,298 Accrued interest receivable 6,304 - 4,932 30 2,305 13,571 Due from other governments 1,747,723 - - - 1,048,537 2,796,260 Prepaids and deposits 37,932 - - - 9,464 47,396 Inventories, at cost 11,330 - - - - 11,330 Restricted deposits and investments - - - - 365,641 365,641 Total assets 13,526,015$ 973,056$ 12,144,099$ 1,270,301$ 12,634,044$ 40,547,515$ Liabilities Accounts payable 1,673,219$ -$ 8,271,118$ 507,336$ 386,439$ 10,838,112$ Accrued liabilities 984,941 3,010 - - 100,974 1,088,925 Deferred revenue 977,181 162,992 - - 61,292 1,201,465 Total liabilities 3,635,341 166,002 8,271,118 507,336 548,705 13,128,502 Fund Balances Nonspendable Prepaids, deposits, and inventories 49,262 - - - 9,464 58,726 Restricted for Debt service - 807,054 - - 969,590 1,776,644 Capital projects - - - - 365,641 365,641 Developer agreements - - - - 1,447,759 1,447,759 Court technology 124,312 - - - - 124,312 Juvenile case management - - - - 132,707 132,707 Cable PEG - - - - 290,467 290,467 Historical preservation - - - - 1,245 1,245 Assigned 121,542 - 3,872,981 762,965 8,868,466 13,625,954 Unassigned 9,595,558 - - - - 9,595,558 Total fund balances 9,890,674 807,054 3,872,981 762,965 12,085,339 27,419,013 Total liabilities and fund balances 13,526,015$ 973,056$ 12,144,099$ 1,270,301$ 12,634,044$ 40,547,515$ ASSETS LIABILITIES AND FUND BALANCES CITY OF EULESS, TEXAS RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION SEPTEMBER 30, 2013 The Notes to the Basic Financial Statements are an integral part of these statements. 18 Total fund balances - governmental funds 27,419,013$ Capital assets of governmental funds are not current financial resources and therefore are not reported in the governmental funds balance sheet. 118,796,431 Costs associated with the issuance of governmental long-term debt are expensed when incurred in the fund statements and capitalized and amortized over the life of the debt in the government-wide financial statements.440,261 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.(169,094) Internal service funds are used by management to charge the cost of certain activities, such as insurance and fleet management, to individual funds. The assets and liabilities of the internal service funds are net of the amount allocated to business-type activities.6,984,488 Revenues earned but not available within sixty days of the year end are not recognized as revenue on the fund financial statements.1,005,459 Funds comprising the net other post employment benefit asset are not current financial resources and therefore are not reported in the governmental funds balance sheet.285,004 Long-term liabilities, including bonds payable, compensated absences (excluding those of internal service funds), and pension obligations are not due and payable in the current period and therefore are not reported in the fund financial statements.(37,483,927) Net position of governmental activities 117,277,635$ Amounts reported for governmental activities in the statement of net position are different because: CITY OF EULESS, TEXAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS YEAR ENDED SEPTEMBER 30, 2013 The Notes to the Basic Financial Statements are an integral part of these statements. 19 Debt Car Car Rental Non-major Total General Service Rental Tax Capital Projects Governmental Governmental Fund Fund Fund Fund Funds Funds Revenues General property tax 9,740,510$ 3,153,073$ -$ -$ -$ 12,893,583$ Gross receipts tax 4,077,700 - - - 461,232 4,538,932 Mixed beverage tax 60,823 - - - - 60,823 General sales tax 10,096,646 - - - 6,045,711 16,142,357 Car rental tax - - 13,592,255 - - 13,592,255 Fines and fees 4,627,199 - - - - 4,627,199 Licenses and permits 1,152,875 - - - - 1,152,875 Investment income 40,710 1,425 18,030 8,621 23,332 92,118 DEA revenues - - - - 2,446,594 2,446,594 Intergovernmental 371,623 - - - 24,899 396,522 Rents and royalties - 709,929 - - 314,092 1,024,021 Other revenues 990,027 - - - 393,145 1,383,172 Total revenues 31,158,113 3,864,427 13,610,285 8,621 9,709,005 58,350,451 Expenditures Current Culture and recreation 3,041,458 - - - 2,130,019 5,171,477 Development services 606,945 - - - 199,330 806,275 General and administrative 7,869,353 - 9,033,888 - 304,693 17,207,934 Highways and streets 1,144,223 - - - - 1,144,223 Public safety 20,021,595 - - - 2,170,893 22,192,488 Debt service Principal - 3,115,000 - - 860,000 3,975,000 Interest and fiscal charges - 1,225,927 - - 41,913 1,267,840 Capital outlay - - 439,257 6,910,296 3,041,029 10,390,582 Total expenditures 32,683,574 4,340,927 9,473,145 6,910,296 8,747,877 62,155,819 Excess (deficiency) of revenues over (under) expenditures (1,525,461) (476,500) 4,137,140 (6,901,675) 961,128 (3,805,368) Other financing sources (uses) Issuance of refunding debt - 1,160,000 - - - 1,160,000 Premiums on issuance of debt - 79,046 - - - 79,046 Payment to refunding escrow agent - (1,190,252) - - - (1,190,252) Issuance of capital lease - - - - 1,446,603 1,446,603 Transfers in 2,420,189 440,176 - 2,718,472 699,694 6,278,531 Transfers out (315,789) - (3,175,680) - (2,347,776) (5,839,245) Total other financing sources (uses) 2,104,400 488,970 (3,175,680) 2,718,472 (201,479) 1,934,683 Net change in fund balances 578,939 12,470 961,460 (4,183,203) 759,649 (1,870,685) Fund balances, beginning of year 9,311,735 794,584 2,911,521 4,946,168 11,325,690 29,289,698 Fund balances, end of year 9,890,674$ 807,054$ 3,872,981$ 762,965$ 12,085,339$ 27,419,013$ CITY OF EULESS, TEXAS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED SEPTEMBER 30, 2013 The Notes to the Basic Financial Statements are an integral part of these statements. 20 Net change in fund balances - total governmental funds (1,870,685)$ Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over the estimated useful lives and reported as depreciation expense. In addition, governmental funds report cash proceeds from the disposal of capital assets as revenues, while only the net gain/loss on the transaction is reported in the statement of activities. This is the amount of capital expenditures and disposals recorded in the current period.11,888,780 Depreciation expense on capital assets is reported in the statement of activities but does not require the use of current financial resources. Therefore, depreciation expenses are not reported as expenditures in the governmental funds.(4,158,740) The issuance of long-term debt provides current financial resources to governmental funds, but has no effect on net position.(2,606,603) The repayment of the principal of long-term debt consumes the current financial resources of governmental funds, but has no effect on net position.5,247,527 Governmental funds report the effect of debt issuances costs, premiums, discounts, and similar items when debt is first issued, whereas the amounts are deferred and amortized in the statement of activities.(157,658) Current year changes in the long-term liabilities for compensated absences and pension and other post employment obligations do not require the use of current financial resources; therefore, they are not reported as expenditures in governmental funds.(369,611) Current year changes in accrued interest payables do not require the use of current financial resources; therefore, they are not reported as expenditures in governmental funds.15,301 Internal service funds are used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The net revenue of the internal service funds is reported with governmental activities net of the amount allocated to business-type activities.167,509 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.(326,156) Change in net position of governmental activities 7,829,664$ Amounts reported for governmental activities in the statement of activities are different because: CITY OF EULESS, TEXAS STATEMENT OF NET POSITION – PROPRIETARY FUNDS SEPTEMBER 30, 2013 (1 of 2) The Notes to the Basic Financial Statements are an integral part of these statements. 21 Governmental Activities - Other Total Internal Water and Drainage Golf Enterprise Enterprise Service Wastewater Utility Course Funds Funds Funds Current assets Deposits and investments 12,354,471$ 1,520,637$ 1,858,289$ 2,085,136$ 17,818,533$ 7,409,031$ Accounts receivable and unbilled revenue less allowance for uncollectibles of $30,235 for water and wastewater and $634 for drainage utility 2,791,929 79,674 227,028 31,114 3,129,745 130,610 Accrued interest receivable 8,349 933 - - 9,282 2,117 Prepaids and deposits 555 - 8,227 18,438 27,220 54,775 Inventory 100,845 - 100,935 67,465 269,245 - Total unrestricted current assets 15,256,149 1,601,244 2,194,479 2,202,153 21,254,025 7,596,533 Restricted assets W&WW impact fees - deposits and investments 2,078,840 - - - 2,078,840 - Revenue bond deposit and investments 661,816 - - - 661,816 - Revenue bond reserve for debt service 314,171 - - - 314,171 - Total restricted assets 3,054,827 - - - 3,054,827 - Total current assets 18,310,976 1,601,244 2,194,479 2,202,153 24,308,852 7,596,533 Non-current assets Bond issuance cost 105,201 - 147,772 10,849 263,822 - Net OPEB asset 55,086 364 13,635 4,680 73,765 - Total 160,287 364 161,407 15,529 337,587 - Property, plant, and equipment in service, at cost Land 1,576,667 559,826 897,520 584,532 3,618,545 - Building 97,094 - 3,523,732 488,275 4,109,101 - Equipment 1,030,878 6,400 924,631 200,275 2,162,184 8,612,201 Improvements 1,033,401 658,824 8,019,920 8,150,654 17,862,799 - Construction in progress 1,211,260 19,395 - - 1,230,655 - Utility system 63,854,778 26,096,467 - - 89,951,245 - Total property, plant, and equipment in service 68,804,078 27,340,912 13,365,803 9,423,736 118,934,529 8,612,201 Less accumulated depreciation 34,221,419 11,231,284 6,124,066 4,110,735 55,687,504 6,256,130 Net property, plant, and equipment in service 34,582,659 16,109,628 7,241,737 5,313,001 63,247,025 2,356,071 Total non-current assets 34,742,946 16,109,992 7,403,144 5,328,530 63,584,612 2,356,071 Total assets 53,053,922$ 17,711,236$ 9,597,623$ 7,530,683$ 87,893,464$ 9,952,604$ ASSETS Business - Type Activities - Enterprise Funds CITY OF EULESS, TEXAS STATEMENT OF NET POSITION – PROPRIETARY FUNDS SEPTEMBER 30, 2013 (2 of 2) The Notes to the Basic Financial Statements are an integral part of these statements. 22 Governmental Activities - Other Total Internal Water and Drainage Golf Enterprise Enterprise Service Wastewater Utility Course Funds Funds Funds Current liabilities Payable from current assets Accounts payable 1,868,496$ 4,479$ 103,690$ 50,143$ 2,026,808$ 392,855$ Accrued salaries and wages 304,354 37,337 82,631 19,403 443,725 11,514 Current portion of bonds payable 405,000 - 430,000 150,000 985,000 - Accrued insurance claims - - - - - 485,325 Unearned revenue - - 107,611 - 107,611 - Accrued interest 25,350 - 23,028 1,925 50,303 - Total current liabilities 2,603,200 41,816 746,960 221,471 3,613,447 889,694 Non-current liabilities Customer and escrow deposits 1,689,851 - 77,873 - 1,767,724 - Net pension obligation 335,142 37,682 78,505 10,277 461,606 - Bonds payable 4,055,147 - 6,220,287 313,837 10,589,271 - Total non-current liabilities 6,080,140 37,682 6,376,665 324,114 12,818,601 - Total liabilities 8,683,340 79,498 7,123,625 545,585 16,432,048 889,694 NET POSITION Net investment in capital assets 30,784,328 16,109,628 591,450 4,849,164 52,334,570 2,356,071 Restricted for Impact fees 2,078,840 - - - 2,078,840 - Capital projects 661,816 - - - 661,816 - Revenue bond reserve for debt service 314,171 - - - 314,171 - Unrestricted 10,531,427 1,522,110 1,882,548 2,135,934 16,072,019 6,706,839 Total net position 44,370,582$ 17,631,738$ 2,473,998$ 6,985,098$ 71,461,416 9,062,910$ Reconciliation to government-wide statement of net position Adjustment to reflect the consolidation of internal service funds' activities related to enterprise funds 2,078,422 Net position of business-type activities 73,539,838$ LIABILITIES Business - Type Activities - Enterprise Funds CITY OF EULESS, TEXAS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION – PROPRIETARY FUNDS YEAR ENDED SEPTEMBER 30, 2013 The Notes to the Basic Financial Statements are an integral part of these statements. 23 Governmental Activities - Other Total Internal Water and Drainage Golf Enterprise Enterprise Service Wastewater Utility Course Funds Funds Funds Operating revenues Water service 11,047,759$ -$ -$ -$ 11,047,759$ -$ Reclaimed water service 163,739 - - - 163,739 - Wastewater service 6,606,665 - - - 6,606,665 - Drainage fees - 708,984 - - 708,984 - Recreation fees - - - 447,032 447,032 - Insurance premiums - - - - - 5,450,584 Service fees and miscellaneous 1,365,035 - 4,520,224 1,691,568 7,576,827 931,866 Total operating revenues 19,183,198 708,984 4,520,224 2,138,600 26,551,006 6,382,450 Operating expenses General and administrative 540,267 - - - 540,267 1,440,293 Water production 6,405,108 - - - 6,405,108 - Water distribution 840,290 - - - 840,290 - Utility engineering 507,376 - - - 507,376 - Wastewater collection and treatment 3,044,977 - - - 3,044,977 - Nondepartmental 3,658,884 - - - 3,658,884 - Geographic information systems 476,263 - - - 476,263 - Service center 1,187,232 - - - 1,187,232 - Drainage - 567,216 - - 567,216 - Recreation classes - - - 498,801 498,801 - Golf course - - 1,693,406 - 1,693,406 - Pro shop - - 417,579 - 417,579 - Food and beverage - - 1,391,065 - 1,391,065 - Conference center - - 342,704 - 342,704 - Cart operations - - 189,914 - 189,914 - Texas Star Sports Complex - - - 1,395,406 1,395,406 - Arbor Daze - - - 66,885 66,885 - Insurance costs - - - - - 4,439,218 Depreciation 1,754,567 678,622 394,335 314,761 3,142,285 765,018 Amortization 35,972 - 75,115 11,004 122,091 - Total operating expenses 18,450,936 1,245,838 4,504,118 2,286,857 26,487,749 6,644,529 Operating income (loss) 732,262 (536,854) 16,106 (148,257) 63,257 (262,079) Nonoperating revenues (expenses) Gain (loss) on sale of capital assets 11,009 - 30,938 (317) 41,630 159,141 Investment income 34,149 2,170 1,679 2,047 40,045 14,403 Interest expense (82,110) - (270,714) (20,955) (373,779) - Total nonoperating revenues (expenses), net (36,952) 2,170 (238,097) (19,225) (292,104) 173,544 Income (loss) before contributions and transfers 695,310 (534,684) (221,991) (167,482) (228,847) (88,535) Developer contributions 829,435 1,017,662 - - 1,847,097 - Transfers in - 1,500 293,905 - 295,405 478,665 Transfers out (1,177,900) (35,456) - - (1,213,356) - Net income (loss) 346,845 449,022 71,914 (167,482) 700,299 390,130 Net position, beginning of year 44,023,737 17,182,716 2,402,084 7,152,580 8,672,780 Net position, end of year 44,370,582$ 17,631,738$ 2,473,998$ 6,985,098$ 9,062,910$ Reconciliation to government-wide statement of net position Adjustment to reflect the consolidation of internal service funds' activities related to enterprise funds 222,621 Change in net position of business-type activities 922,920$ Business - Type Activities - Enterprise Funds CITY OF EULESS, TEXAS STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS YEAR ENDED SEPTEMBER 30, 2013 The Notes to the Basic Financial Statements are an integral part of these statements. 24 Governmental Activities - Other Total Internal Water and Drainage Golf Enterprise Enterprise Service Wastewater Utility Course Funds Funds Funds OPERATING ACTIVITIES Cash received from customers 19,356,989$ 710,088$ 4,488,558$ 2,135,040$ 26,690,675$ 6,390,109$ Cash payments to suppliers for goods and services (13,838,708) (259,775) (2,395,149) (1,461,601) (17,955,233) (6,189,709) Cash payments to employees for services (2,914,420) (315,783) (1,605,457) (464,486) (5,300,146) (84,768) Net cash provided by operating activities 2,603,861 134,530 487,952 208,953 3,435,296 115,632 NONCAPITAL FINANCING ACTIVITIES Transfer in - 1,500 293,905 - 295,405 478,665 Transfer out (1,177,900) (35,456) - - (1,213,356) - Net cash provided by (used in) noncapital financing activities (1,177,900) (33,956) 293,905 - (917,951) 478,665 CAPITAL AND RELATED FINANCING ACTIVITIES Impact fees 170,958 - - - 170,958 - Interest paid on bonds (71,697) - (300,931) (22,921) (395,549) - Principal paid on bonds (330,000) - (7,695,000) (620,000) (8,645,000) - Purchase of capital assets (1,810,163) (19,396) (18,093) - (1,847,652) (1,140,553) Proceeds from bond issuances 1,504,677 - 7,328,224 484,618 9,317,519 - Proceeds from sale of capital assets 12,009 - 37,017 - 49,026 166,352 Net cash used in capital and related financing activities (524,216) (19,396) (648,783) (158,303) (1,350,698) (974,201) INVESTING ACTIVITIES Proceeds from sale of investment securities - - - - - 763 Interest received on investments 35,389 1,237 1,677 2,047 40,350 13,527 Net cash provided by investing activities 35,389 1,237 1,677 2,047 40,350 14,290 Net change in cash and cash equivalents 937,134 82,415 134,751 52,697 1,206,997 (365,614) Cash and cash equivalents, beginning of year 14,472,164 1,438,222 1,723,538 2,032,439 19,666,363 7,774,645 Cash and cash equivalents, end of year 15,409,298$ 1,520,637$ 1,858,289$ 2,085,136$ 20,873,360$ 7,409,031$ Business - Type Activities - Enterprise Funds CITY OF EULESS, TEXAS STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS – CONTINUED YEAR ENDED SEPTEMBER 30, 2013 The Notes to the Basic Financial Statements are an integral part of these statements. 25 Governmental Activities - Other Total Internal Water and Drainage Golf Enterprise Enterprise Service Wastewater Utility Course Funds Funds Funds Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) 732,262$ (536,854)$ 16,106$ (148,257)$ 63,257$ (262,079)$ Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation and amortization 1,790,539 678,622 469,450 325,765 3,264,376 765,018 Changes in assets and liabilities: Accounts receivable and unbilled revenue 71,066 1,104 (131,941) (3,563) (63,334) 7,659 Prepaids and deposits 3,093 - 552 (3,977) (332) (54,775) Inventory (1,954) - 23,651 37,725 59,422 - Net OPEB asset 36,658 3,575 10,149 1,087 51,469 - Net pension obligation 2,819 381 (2,148) (194) 858 - Accounts payable (150,913) (17,445) (12,501) (487) (181,346) 10,912 Accrued salaries and wages 17,564 5,147 14,359 854 37,924 522 Accrued insurance claims - - - - - (351,625) Customer and escrow deposit 102,727 - - 102,727 - Deferred revenue - - 100,275 - 100,275 - Net cash provided by operating activities 2,603,861$ 134,530$ 487,952$ 208,953$ 3,435,296$ 115,632$ Noncash financing activities Developer contributed assets 658,477$ 1,017,662$ -$ -$ 1,676,139$ Reconciliation of cash to balance sheet: Cash - current 12,354,471$ 1,520,637$ 1,858,289$ 2,085,136$ 17,818,533$ Cash - restricted 3,054,827 - - - 3,054,827 Cash and cash equivalents 15,409,298$ 1,520,637$ 1,858,289$ 2,085,136$ 20,873,360$ Business - Type Activities - Enterprise Funds CITY OF EULESS, TEXAS STATEMENT OF NET POSITION – FIDUCIARY FUNDS SEPTEMBER 30, 2013 The Notes to the Basic Financial Statements are an integral part of these statements. 26 Agency OPEB Funds Trust Fund ASSETS Investments at fair value Money market account 1,704,452$ 98,831$ Fixed income funds - 973,209 Equity funds - 1,383,078 Total assets 1,704,452$ 2,455,118 LIABILITIES Due to other entities 1,704,289$ 400 Refunds payable 163 - Total liabilities 1,704,452$ 400 NET POSITION Held in trust for OPEB 2,454,718$ CITY OF EULESS, TEXAS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION OPEB TRUST FUND YEAR ENDED SEPTEMBER 30, 2013 The Notes to the Basic Financial Statements are an integral part of these statements. 27 OPEB Trust Fund ADDITIONS Employer contributions 1,165,680$ Other contributions 244,826 Investment income Net increase in fair value of investments 229,144 Less: investment expense (4,966) Net investment earnings 224,178 Total additions 1,634,684 DEDUCTIONS Insurance claims 910,163 Administrative expenses 100,343 Total deductions 1,010,506 Change in net position 624,178 Net position - beginning 1,830,540 Net position - ending 2,454,718$ CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 28 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General Statement The City of Euless (City) was incorporated on February 24, 1953. The City operates under a Council-Manager form of government and provides the following services as authorized by its charter: general government, police and fire protection, emergency ambulance service, road and traffic signal maintenance, water and wastewater operations, drainage system, parks and recreational facilities, courts, library services, planning land use, building inspection, and traffic control. 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 (GAAP) applicable to state and local governments. GAAP for local governments include those principles prescribed by the Governmental Accounting Standards Board (GASB), the American Institute of Certified Public Accountants in the publication entitled Audits of State and Local Governmental Units, and by the Financial Accounting Standards Board (when applicable). The more significant accounting policies of the City are described as follows: Financial Reporting Entity As required by GAAP, these basic financial statements present the primary government and its component units, entities for which the government is considered to be financially accountable. The blended component units, although legally separate entities, are, in substance, part of the primary government’s operations. As such, data from these units is combined with data of the primary government. Blended Component Units The City includes three component units in the financial statements. The Euless Development Corporation (Corporation) is used to account for the accumulation of half-cent sales tax proceeds dedicated to building and improving City parks and facilities, enhancing library services, and stimulating economic development activities within the City. The Euless Crime Control and Prevention District (District) is used to account for the accumulation and use of quarter-cent sales tax proceeds dedicated for crime reduction programs. The Corporation and the District are reported as special revenue funds of the primary government. The Boards of Directors of both component units are substantively the same as the City Council. There are seven directors on each board, four of whom are council members which constitutes a voting majority of the City Council. The remaining three board members are residents of the City. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 29 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Financial Reporting Entity – Continued Blended Component Units – Continued Upon dissolution of the Corporation or the District, the entity’s assets will be distributed to the City. Each component unit provides all of its services to the City. The financial statements for the units were obtained from the respective Boards of Directors. Financial information for both entities may be obtained from the City. The Tax Increment Reinvestment Zone #3 - Glade Parks (TIRZ #3) is also reflected as a blended component unit of the City and is reflected in the financial statements as a special revenue fund. TIRZ #3 was created to stimulate development and enhance the value of taxable real property within the boundaries of the zone. Tarrant County and Tarrant County College District are taxing entities participating in TIRZ #3. The Board of Directors of TIRZ #3 is substantially the same as the City Council. The Board is comprised of seven directors, four of whom are council members which constitutes a voting majority of the Board. The remaining three board members are representatives selected by the other participating taxing entities and the Tarrant County Hospital District. 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 fiduciary funds. The effect of interfund activity, with the exception of interfund services provided or used, 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 user 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. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 30 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Basis of Presentation – 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 compliance with various legal provisions. Separate statements are presented for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. These statements present each major fund as a separate column on 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 are typically financed. The measurement focus of governmental funds is on the sources, uses, and balances of current financial resources. The City has presented the following major governmental funds: General Fund The General Fund is the main operating fund of the City. This fund 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. Debt Service Fund The Debt Service Fund is used to account for the accumulation of financial resources for the payment of principal, interest, and related costs on general long-term debt paid primarily from property taxes levied by the City. The fund balance of the Debt Service Fund is restricted exclusively for debt service expenditures. Car Rental Tax Fund The Car Rental Tax Fund is used to account for revenues received from the collection of short-term motor vehicle rental taxes and the expenditures thereof. Per contractual agreement, revenues are shared with the cities of Dallas and Fort Worth. The City’s portion of the revenues is used primarily for debt reduction, one-time capital projects, and to maintain the property tax rate. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 31 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Basis of Presentation – Continued Car Rental Capital Projects Fund The Car Rental Capital Projects Fund is used to account for the building and infrastructure projects that are funded from the short-term motor vehicle rental tax. 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 on the statement of net position. The City has presented the following major proprietary funds: Water and Wastewater Fund Water and Wastewater Fund is used to account for the acquisition, operation and maintenance of a municipal water and wastewater utility, supported primarily by user charges. Drainage Utility Fund Drainage Utility Fund is used to account for the acquisition, operation, and maintenance of a municipal drainage utility, supported primarily by user charges. Golf Course Fund Golf Course Fund is used to account for operation and maintenance of the City’s golf course, supported primarily by user charges. Additionally, the City reports the Internal Service Funds which are used to account for equipment replacement, risk management, and self-funded health insurance coverage and disability insurance provided to employees of the City. The City also reports three fiduciary funds in the financial statements. The Stars Center Escrow Fund accounts for investments that will be held on behalf of the Dallas Stars until the debt issued for the specific purpose of purchasing the Star Center is fully repaid. The Glade Parks Escrow agency fund accounts for developer funds deposited with the City for contractor payments for public improvements in the Glade Parks Development on behalf of the developer. Upon satisfactory completion, any excess funds will be returned to the developer or a designee. The OPEB Trust Fund accounts for the accumulation and use of resources for benefit payments related to post-employment health care. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 32 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Basis of Presentation – Continued 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. 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 funds are reported using the economic resources measurement focus and the accrual basis of accounting. The economic resources measurement focus means all assets and liabilities (whether current or noncurrent) are included on the statement of net position and the operating statements present increases and decreases in total net position. Under the accrual basis of accounting, revenues are recognized when earned, including unbilled water, wastewater, and drainage 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., become both measurable and available. “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The City considers property taxes and other revenues as available if they are collected within 60 days of year end. Expenditures are recorded when the related fund liability is incurred. However, debt service expenditures, as well as expenditures related to compensated absences and other long-term liabilities are recorded only when payment is due. The significant revenues susceptible to accrual are property taxes, franchise fees, licenses, charges for service, interest income, and intergovernmental revenues. Sales taxes collected and held by the state at year end on behalf of the City are also recognized as revenue. All other governmental fund revenues are recognized when received. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 33 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Deposits and Investments Substantially all operating cash, deposits, and short-term investments are maintained in consolidated cash accounts or individual fund investment accounts. Related interest income is allocated to the various funds based primarily on ownership by each fund of specific investments. Cash equivalents consist of highly-liquid investments with original maturities of three months or less. For purposes of the statement of cash flows, the City considers all highly liquid investments to be cash equivalents. Investments in U.S. Treasury and agency obligations with maturities of one year or less when purchased are reported at amortized cost. All other investments are reported at fair value. State statutes authorize the City to invest in obligations of the U.S. Government or its agencies; obligations of the State of Texas or its agencies; and certain other obligations, repurchase agreements, money market mutual funds, and certificates of deposits within established criterion. Taxes Property taxes are levied for appropriation for the fiscal year beginning on October 1, are due October 1, attach as an enforceable lien on property as of January 1, and become delinquent on February 1. Property taxes are accrued based on the period for which they are levied and available. Delinquent taxes estimated not to be available are treated as deferred revenue. Property taxes for cities, including those applicable to debt service, are limited by the Texas Constitution to $2.50 per $100 of assessed valuation. The City's current tax rate is $.4700 per $100 of assessed valuation ($.4700 per $100 last year) and assessed valuation is approximately 100% of estimated value. Inventories Inventories, which are recognized as expenditures/expenses as consumed, are stated at cost (first-in, first-out method) for the General Fund and Enterprise Funds. Inventories consist primarily of expendable supplies for the General Fund and merchandise for resale for the Enterprise Funds. Prepaid Items Prepaid balances are for payments made by the City in the current year to provide services occurring in the subsequent fiscal year, and are recognized as expenditures utilizing the consumption method. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 34 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Interfund Receivables and Payables 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 and expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures or expenses initially made from it that are properly applicable to another fund, are recorded as expenditures or expenses in the reimbursing fund and as a reduction of expenditures or expenses in the fund reimbursed. All other interfund transactions are recorded as transfers. 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 recorded at historical cost or estimated historical cost if actual historical cost is not available. Donated assets are recorded at fair market value on the date donated. Repairs and maintenance are recorded as expenses. 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 $5,000 or more and over one year of useful life. Depreciation has been calculated on each class of depreciable property using the straight-line method. Estimated useful lives are as follows: Buildings 33 1/3 years Water and wastewater system 33 1/3 years Storm drainage system 33 1/3 years Infrastructure 7 - 40 years Machinery and equipment 5 - 15 years Improvements 25 years Compensated Absences Employees may accumulate a maximum of two times their annual vacation accrual. The City's policy is to pay the employee accumulated vacation upon termination. The City does not pay employees for accumulated sick leave upon termination. Vacation pay accrued in the proprietary fund financial statements is reported as accrued salaries and wages (a current liability). Compensated absences are recorded in governmental funds as they mature (i.e. as taken). The liability for governmental fund compensated absences is typically liquidated in the general fund, the juvenile case fund, the half- penny sales tax fund, and the crime control and prevention district fund. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 35 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Fund Balance Classifications Fund balances are classified as follows on the governmental fund financial statements: General Fund Debt Service Fund Car Rental Tax Fund Car Rental CIP Fund Nonmajor Governmental Funds Total Governmental Funds Nonspendable 49,262$ -$ -$ -$ 9,464$ 58,726$ Restricted for Debt service - 807,054 - - 969,590 1,776,644 Capital projects - - - - 365,641 365,641 Developer agreements - - - - 1,447,759 1,447,759 Court technology 124,312 - - - - 124,312 Juvenile case processing - - - - 132,707 132,707 PEG fees - - - - 290,467 290,467 Historical preservation - - - - 1,245 1,245 Assigned Capital projects - - - 762,965 3,297,848 4,060,813 Betterments 51,431 - - - - 51,431 Emergency/radio systems 47,230 - - - - 47,230 Tourism and conference facilities - - - - 253,362 253,362 Parks, library, and economic development - - - - 2,087,442 2,087,442 Police department - - - - 3,154,378 3,154,378 Grants - - - - 75,436 75,436 Other 22,881 - 3,872,981 - - 3,895,862 Unassigned 9,595,558 - - - - 9,595,558 Total 9,890,674$ 807,054$ 3,872,981$ 762,965$ 12,085,339$ 27,419,013$ Reported in Nonspendable: This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) are legally or contractually required to be maintained intact. The City has classified prepaid items and inventory as being nonspendable. Restricted: This classification includes amounts for which constraints have been placed on the use of the resources either (a) externally imposed by creditors (such as through a debt covenant), grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 36 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Fund Balance Classifications – Continued The City has recorded the following restrictions at year-end: a. Restricted for debt service represents that portion of fund equity legally restricted for retirement of bond principal and payment of interest and related charges. b. Restricted for capital projects represents that portion of fund equity legally restricted by debt covenant for capital projects. c. Restricted for court technology represents funds collected from a court technology fee that must be used to upgrade court systems. d. Restricted for developer agreements represents the portion of fund equity that must be used for future improvements to various development areas within the City. e. Restricted for juvenile case processing represents funds collected from a fee on municipal court citations that must be used to support the expenditures associated with juvenile case processing. f. Restricted for PEG fees represents the portion of fund equity that must be used for the expansion of the City’s public, educational, and government access channel. g. Restricted for historical preservation represents donations that must be used toward the preservation of Euless historical sites. Committed: This classification includes amounts that can be used only for specific purposes pursuant to constraints imposed by formal action (ordinance) of the City Council. These amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by taking the same type of action that was employed when the funds were initially committed. This classification also includes contractual obligations to the extent that existing resources have been specifically committed for use in satisfying those contractual requirements. The City has no committed fund balance at year-end. Assigned: This classification includes amounts that are constrained by the City’s intent to be used for a specific purpose but are neither restricted nor committed. The City Council delegates the authority for determining this intent to the City Manager. Assignments are made at the City Manager's discretion, but generally represent items for which specific funds have been informally dedicated internally. This classification also includes the remaining positive fund balance for all governmental funds except for the General Fund. The City has recorded the following assignments at year-end: a. Assigned for capital projects represents revenue sources that are to be used for capital projects for the City. b. Assigned for betterment represents funds donated by citizens that are to be used for the betterment of the community. c. Assigned for emergency/radio systems represents funding that is to be used to upgrade emergency and radio systems. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 37 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Fund Balance Classifications – Continued d. Assigned for tourism and conference facilities represents funds to promote the City through tourism, conference booking, and historical preservation. e. Assigned for parks, libraries, and economic development represents funds from sales taxes that are to be used for park improvements, library activities, and economic development throughout the City. f. Assigned for the police department are funds from the Crime Control and Prevention District and the sale of assets seized in connection with drug arrests to be used for police department expenditures. g. Assigned for grants are funds from grant revenues that are to be spent in accordance with grant provisions. h. Assigned for other are funds from specific revenues that are to be spent for facility remodel, victim assistance, and injured animals. Unassigned: This classification includes all amounts that are not included in other spendable classifications. When available, the City uses restricted fund balances first, followed by committed resources, assigned resources, then unassigned resources, as appropriate opportunities arise. However, the City reserves the right to selectively spend unassigned resources first to defer the use of these other classified funds. Net Position Net position represents the difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources of governmental and business-type activities and proprietary funds. Net investment in capital assets consists of capital assets, net of accumulated depreciation, plus capital-related deferred outflows of resources, reduced by the outstanding balances of any borrowing and capital related deferred inflows of resources used for the acquisition, construction, or improvements of those assets, plus unspent debt proceeds. Net position is reported as restricted when there are limitations imposed on its use, either through the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 38 NOTE 2. DEPOSITS AND INVESTMENTS GASB 40 Disclosures As of September 30, 2013, the City’s portfolio contained the following investments: % of Rating Book Value Fair Value Portfolio WAM Rating Agency Overnight pools TexPool 12,775,658$ 12,775,658$ 19.96% 60 AAAm S&P TexStar 12,205,780 12,205,780 19.07% 51 AAAm S&P Bank of Texas 11,542 11,542 0.02% 52 AAAm S&P/Moody's Total overnight 24,992,980 24,992,980 39.05% Investment securities FFCB 8,413,215 8,412,136 13.14% 58 AA+/Aaa S&P/Moody's FHLB 20,998,399 21,003,179 32.82% 118 AA+/Aaa S&P/Moody's FHLMC 6,677,098 6,682,230 10.44% 44 AA+/Aaa S&P/Moody's FNMA 1,411,308 1,410,904 2.20% 11 AA+/Aaa S&P/Moody's FAMCA 1,500,350 1,499,582 2.34% 7 Total investment securities 39,000,373 39,008,031 60.94% Total portfolio 63,993,353$ 64,001,011$ 100.00% 237 Investment Type not rated Weighted average maturity (WAM) of the portfolio by investment type categories reflected in the previous table is stated in days. For the investment pools, the Reset WAM is presented. Investment type acronyms displayed in the previous table are defined as follows: FFCB – Federal Farm Credit Bank, FHLB – Federal Home Loan Bank, FHLMC – Federal Home Loan Mortgage Corporation, FNMA – Federal National Mortgage Association, and FAMCA – Federal Agricultural Mortgage Corporation. The rating agency acronyms are defined as follows: S&P – Standard and Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc. and Moody’s – Moody’s Investor Service, Inc. Additional information about the rating agency or the significance of the ratings provided may be obtained from the agency’s web site. Deposits State statutes and the City’s investment policy require that all uninsured deposits in financial institutions be fully collateralized by U.S. Government obligations or its agencies or instrumentalities or direct obligations of Texas or its agencies or instrumentalities that have a market value of not less than the principal amount of the deposits. The City’s deposits were fully insured or collateralized as required by state statutes as of September 30, 2013. At year-end, the carrying amount of the City’s deposits was $267,323, with a bank balance of $868,000. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 39 NOTE 2. DEPOSITS AND INVESTMENTS GASB 40 Disclosures – Continued Deposits – Continued The total bank balance is covered by Federal Depository Insurance Corporation (FDIC) insurance. The additional collateral is held by The Federal Reserve Bank in the City’s name under a joint safekeeping agreement with Frost National Bank. The market value of the collateral at the close of the fiscal year was $3,491,109. Investments State statutes, City bond ordinances, and City resolutions authorize the City’s investments. The City is authorized to invest in obligations of the U.S. Government and its agencies and instrumentalities, obligations of the State of Texas and its agencies and instrumentalities, fully insured or collateralized certificates of deposit, fully-collateralized repurchase agreements and reverse repurchase agreements, government pools, and no-load SEC-registered money market funds consisting of any of these securities listed. Because the City is responsible for the investment portfolio of its component units, the City’s investment practices and policies disclosed herein apply equally to its component units. During the year ended September 30, 2013, the City did not own any types of securities other than those permitted by statute. The City’s investment pools are 2a7-like pools. A 2a7-like pool is one which is not registered with the Securities and Exchange Commission (SEC) as an investment company, but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC’s Rule 2a7 of the Investment Company Act of 1940. This type of pool uses amortized investment costs rather than market values to compute participant share values. Furthermore, the pools in which the City is currently participating seek to maintain a stable $1 net asset value per share or unit. Accordingly, the fair value of the City’s position in these pools is substantially the same as the market value of the shares in each of the pools. TexPool falls under the purview of the Texas Comptroller of Public Accounts (Comptroller) who is responsible for oversight of TexPool operations. Federated Investors is responsible for managing pool assets and day-to-day operations. TexStar is duly chartered and administered by First Southwest Asset Management, Inc. and JPMorgan Chase Investment Management, Inc. TexStar has established a governing board that is partially comprised of pool participants. Duties of the governing board include oversight responsibility. The Comptroller and the governing board exercise oversight of the pools’ activities via daily, weekly, and monthly reporting requirements. Additionally, per the requirements of the Public Funds Investment Act (PFIA), all pools will maintain an AAA or equivalent rating from at least one nationally recognized rating agency. The PFIA also requires an annual examination of the financial statements of the pools by an independent certified public accounting firm. In connection with the financial audit, a compliance audit of management controls on investments and adherence to the investment policies is also required. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 40 NOTE 2. DEPOSITS AND INVESTMENTS – CONTINUED GASB 40 Disclosures – Continued Interest Rate Risk In compliance with the City’s Investment Policy, as of September 30, 2013, the City minimized the interest rate risk, the risk relating to the decline in market value of securities in the portfolio, by: limiting the weighted average maturity to 365 days and the stated maturity to two years or less, with the exception of securities purchases related to reserve funds; structuring the investment portfolio so that securities matured to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities in the secondary market prior to maturity; monitoring credit ratings of portfolio positions to assure compliance with rating requirements imposed by the PFIA; and investing operating funds primarily in money market mutual funds, government investment pools, and shorter-term securities with a weighted average maturity of less than 100 days. The following table details the maturity schedule for the City’s investments as of September 30, 2013. % of Maturity Schedule Book Value Fair Value Portfolio Overnight 24,992,980$ 24,992,980$ 39.1% Less than 1 month 2,500,000 2,500,158 3.9% 1 to 6 months 6,275,031 6,277,339 9.8% 6 to 9 months 2,999,920 3,000,562 4.7% 9 to 12 months 6,999,575 7,000,593 10.9% 12 to 18 months 10,322,396 10,324,706 16.1% 18 to 24 months 9,003,451 9,001,474 14.1% Over 24 months 900,000 903,199 1.4% Total 63,993,353$ 64,001,011$ 100.0% Credit Risk In compliance with the City’s Investment Policy, as of September 30, 2013, the City minimized credit risk losses due to default of a security issuer or backer, by: limiting investments to the safest types of securities; primarily investing in U.S. Agency Bonds rated AA+ by Standard & Poor’s; pre-qualifying financial institutions, brokers/dealers, and advisors with which the City will do business; and diversifying the investment portfolio so that the potential losses on securities are minimized. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 41 NOTE 2. DEPOSITS AND INVESTMENTS – CONTINUED GASB 40 Disclosures – Continued Credit Risk – Continued Custodial credit risk – the risk that a government will not be able to recover (a) deposits if the depository financial institution fails or (b) the value of investment or collateral securities that are in the possession of an outside party if the counterparty to the investment or deposit transaction fails. To minimize such risk, the City requires collateralization of deposits in excess of FDIC coverage, utilizes the delivery vs. payment method for investment purchases, and contracts with a third-party safekeeping agent. Per the terms of its depository agreement, for bank deposits in excess of the coverage provided by the FDIC, the City requires the depository bank to pledge to the City securities (collateral) equal to the following percentages, as applicable, to the largest balances the City maintains in the bank. Other Type of Collateral Securities Eligible collateral other than mortgage-backed securities 102% Mortgage-backed securities 100% The percentages as shown reflect the requirement based on market value of the pledged securities. The City actively monitors and manages collateral levels for all deposits. On September 30, 2013, the City’s bank balances were insured or fully collateralized. The City’s depository bank also acts as its safekeeping agent per the terms of the depository contract. City policy dictates that all securities rendered for payment will be sent delivery vs. payment, meaning that the funds required for purchase of a security will not be released until the safekeeping agent has received the security purchased in the City’s name. No broker holds City funds. The City does not purchase securities from its depository bank or any subsidiary banks of the same bank holding company. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 42 NOTE 3. CAPITAL ASSETS Capital asset activity for the year ended September 30, 2013, was as follows: Balance Balance Beginning Adjustment/ End of of Year Increase Decrease Transfer Year Governmental activities Capital assets not being depreciated Land 26,354,088$ 75,403$ -$ 46,565$ 26,476,056$ Construction in progress 4,071,126 7,089,788 (13,973) (1,544,381) 9,602,560 Total capital assets not being depreciated 30,425,214 7,165,191 (13,973) (1,497,816) 36,078,616 Capital assets being depreciated Buildings 54,685,886 - (80,300) - 54,605,586 Improvements other than buildings 5,304,039 506,945 - 58,399 5,869,383 Infrastructure 66,555,055 2,104,451 - 1,439,417 70,098,923 Machinery and equipment 7,063,673 2,158,950 (197,724) - 9,024,899 Total capital assets being depreciated 133,608,653 4,770,346 (278,024) 1,497,816 139,598,791 Less accumulated depreciation Buildings (16,068,006) (1,598,648) 63,097 - (17,603,557) Improvements other than buildings (2,953,777) (186,087) - - (3,139,864) Infrastructure (29,594,838) (1,930,137) - - (31,524,975) Machinery and equipment (4,350,855) (443,868) 182,143 - (4,612,580) Total accumulated depreciation (52,967,476) (4,158,740) 245,240 - (56,880,976) Total capital assets being depreciated, net 80,641,177 611,606 (32,784) 1,497,816 82,717,815 Total governmental fund capital assets, net 111,066,391 7,776,797 (46,757) - 118,796,431 Internal service funds Capital assets being depreciated Machinery and equipment 8,111,882 1,140,553 (640,234) - 8,612,201 Total internal service assets being depreciated 8,111,882 1,140,553 (640,234) - 8,612,201 Less accumulated depreciation Machinery and equipment (6,124,135) (765,018) 633,023 - (6,256,130) Total internal service funds capital assets, net 1,987,747 375,535 (7,211) - 2,356,071 Total governmental activities capital assets, net 113,054,138$ 8,152,332$ (53,968)$ -$ 121,152,502$ CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 43 NOTE 3. CAPITAL ASSETS – CONTINUED Balance Balance Beginning Adjustment/ End of of Year Increase Decrease Transfer Year Business-type activities Capital assets not being depreciated Land 3,618,545$ -$ -$ -$ 3,618,545$ Construction in progress 1,619,870 1,229,627 - (1,618,842) 1,230,655 Total assets not being depreciated 5,238,415 1,229,627 - (1,618,842) 4,849,200 Capital assets being depreciated Buildings 4,109,101 - - - 4,109,101 Equipment 2,272,562 64,184 (174,562) - 2,162,184 Improvements 17,862,799 - - - 17,862,799 Utility system 86,102,283 2,230,120 - 1,618,842 89,951,245 Total capital assets being depreciated 110,346,745 2,294,304 (174,562) 1,618,842 114,085,329 Less accumulated depreciation Buildings (1,786,010) (124,603) - - (1,910,613) Equipment (1,810,272) (124,076) 167,668 - (1,766,680) Improvements (7,297,870) (650,626) - - (7,948,496) Utility system (41,818,735) (2,242,980) - - (44,061,715) Total accumulated depreciation (52,712,887) (3,142,285) 167,668 - (55,687,504) Total capital assets being depreciated, net 57,633,858 (847,981) (6,894) - 58,397,825 Total business-type activities capital assets, net 62,872,273$ 381,646$ (6,894)$ -$ 63,247,025$ Depreciation expense was charged as direct expense to programs of the primary government as follows: Governmental activities Culture and recreation 780,305$ Development services 330,586 General administrative 1,074,577 Highways and streets 2,037,376 Public safety 700,914 Total depreciation expense - governmental activities 4,923,758$ Business-type activities Water and wastewater 1,754,567$ Drainage utility 678,622 Golf course 394,335 Other recreation enterprises 314,761 Total depreciation expense - business-type activities 3,142,285$ CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 44 NOTE 3. CAPITAL ASSETS – CONTINUED Outstanding commitments at September 30, 2013, under authorized construction contracts, were $2,414,328. These outstanding commitments are to be financed by available deposit and investment balances, which include proceeds from previous bond issuances. NOTE 4. LONG-TERM DEBT At September 30, 2013, bonds payable consisted of the following individual issues: Governmental Business-type $13,900,000 Series 2005, General Obligation Refunding Bonds, dated March 1, 2005, due in annual installments through 2020, bearing interest rates of 2.40% to 5.00%.8,215,000$ -$ $8,110,000 Series 2010, Taxable General Obligation Refunding Bonds, dated August 15, 2010, due in annual installments through 2025, bearing interest rates of 0.68% to 4.40%. 6,690,000 - $6,575,000 Series 2011, General Obligation Refunding Bonds, dated January 15, 2011, due in annual installments through 2021, bearing interest rates of 2.00% to 4.00%.6,005,000 - $3,035,000 Series 2011, Revenue Certificates of Obligation, dated January 15, 2011, due in annual installments through 2030, bearing interest rates of 3.00% to 4.25%.2,910,000 - $3,340,000 Series 2012, Waterworks and Sewer System Revenue Refunding Bonds, dated March 29, 2012, due in annual installments through 2024, bearing interest at 2.03%.- 3,105,000 $3,785,000 Series 2012, Sales Tax Revenue Refunding Bonds, dated January 12, 2012, due in annual installments through 2019, bearing interest at 1.43%.2,050,000 - $5,955,000 Series 2012, General Obligation Refunding Bonds, dated December 1, 2011, due in annual installments through 2024, bearing interest rates of 2.00% to 4.00%.5,040,000 - $8,805,000 Series 2012A, General Obligation Refunding Bonds, dated November 1, 2012, due in annual installments through 2027, bearing interest rates of 2.00% to 4.00%.1,145,000 7,495,000 $1,585,000 Series 2013, Waterworks and Sewer System Revenue Bonds, dated June 25, 2013, due in annual installments through 2033, bearing interest rates of 2.00% to 5.00%.- 1,585,000 32,055,000$ 12,185,000$ CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 45 NOTE 4. LONG-TERM DEBT – CONTINUED The following is a summary of long-term debt transactions of the City for the year ended September 30, 2013: Balance Balance Due Beginning End within of Year Increases Decreases of Year One Year Governmental activities General obligation bonds 29,915,000$ 1,160,000$ (3,980,000)$ 27,095,000$ 3,025,000$ Certificates of obligation 3,230,000 - (320,000) 2,910,000 130,000 Sales tax revenue bonds 2,910,000 - (860,000) 2,050,000 875,000 Capital leases 272,524 1,446,603 (87,527) 1,631,600 258,723 Deferred loss on debt refunding (1,248,341) (81,690) 213,313 (1,116,718) (151,452) Premium on bonds 835,048 79,046 (118,251) 795,843 88,781 Discount on bonds (82,538) - 6,676 (75,862) (6,677) Net pension obligation 2,369,898 23,200 - 2,393,098 - Compensated absences 1,686,572 541,255 (418,838) 1,808,989 180,899 Total governmental activities 39,888,163 3,168,414 (5,564,627) 37,491,950 4,400,274 Business-type activities Water and sewer revenue bonds 3,435,000 1,585,000 (330,000) 4,690,000 405,000 General obligation refunding bonds 8,165,000 7,645,000 (8,315,000) 7,495,000 580,000 Deferred loss on debt refunding (810,421) (722,311) 659,319 (873,413) (23,936) Premiums on bonds - 315,234 (26,827) 288,407 27,165 Discounts on bonds (120,155) (25,723) 120,155 (25,723) (1,625) Net pension obligation 460,748 858 - 461,606 - Compensated absences 254,546 170,846 (171,102) 254,290 25,429 Total business-type activities 11,384,718 8,968,904 (8,063,455) 12,290,167 1,012,033 Total primary government 51,272,881$ 12,137,318$ (13,628,082)$ 49,782,117$ 5,412,307$ The liability for the governmental fund net pension obligation is typically liquidated in the general fund, the juvenile case fund, the half-penny sales tax fund, and the crime control and prevention district fund. Bond Issuance In fiscal year 2013, the City executed a current refunding in the amount of $1,185,000 of series 2003 general obligation refunding bonds and $7,640,000 of series 2004 general obligation refunding bonds. The bonds were refunded with a single issue of $8,805,000 series 2012A general obligation refunding bonds dated November 1, 2012 bearing interest rates ranging from 2.00% to 4.00%. A cash contribution combined with the net proceeds from the refunding issue totaling $9,131,869 provided sufficient resources for CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 46 NOTE 4. LONG-TERM DEBT – CONTINUED Bond Issuance – Continued the completion of the refunding transaction. The refunding was undertaken to reduce total debt service payments over the next fifteen years by $1,268,604 and to obtain an economic gain of $1,067,107. The City also issued $1,585,000 in Waterworks and Sewer System Revenue Bonds, Series 2013 dated June 25, 2013, payable solely from and, together with the outstanding bonds similarly secured, secured by a first lien on and pledge of the Net Revenues of the City’s Waterworks and Sewer System. Payment of principal and interest is due in annual installments through 2033. Interest rates on the debt range from 2.00% to 5.00%. The proceeds from the bonds will be used for the construction, acquisition, purchase, renovation, enlargement, and improvement of and equipment for Waterworks and Sewer System properties and facilities including the acquisition of land and rights-of- way and paying the costs associated with the issuance of the bonds. All defeased debt has been redeemed. Annual Requirements to Retire Debt Obligations The annual aggregate maturities for each bond type for the years subsequent to September 30, 2013, are as follows: General Obligation Bonds: Principal Interest Principal Interest Total 2014 3,025,000$ 997,458$ 580,000$ 193,825$ 4,796,283$ 2015 3,120,000 899,184 595,000 176,125 4,790,309 2016 3,240,000 784,024 625,000 151,725 4,800,749 2017 2,970,000 668,599 455,000 134,675 4,228,274 2018 3,090,000 547,244 470,000 125,425 4,232,669 2019-2023 9,780,000 1,250,956 2,525,000 428,569 13,984,525 2024-2027 1,870,000 97,239 2,245,000 114,906 4,327,145 27,095,000$ 5,244,704$ 7,495,000$ 1,325,250$ 41,159,954$ Governmental Activities Business-Type Activities CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 47 NOTE 4. LONG-TERM DEBT – CONTINUED Annual Requirements to Retire Debt Obligations – Continued Certificates of Obligation: Principal Interest Principal Interest Total 2014 130,000$ 111,244$ -$ -$ 241,244$ 2015 130,000 107,344 - - 237,344 2016 135,000 103,444 - - 238,444 2017 140,000 99,394 - - 239,394 2018 145,000 95,194 - - 240,194 2019-2023 805,000 392,220 - - 1,197,220 2024-2028 975,000 218,164 - - 1,193,164 2029-2030 450,000 28,900 - - 478,900 2,910,000$ 1,155,904$ -$ -$ 4,065,904$ Governmental Activities Business-Type Activities Revenue Bonds: Principal Interest Principal Interest Total 2014 875,000$ 29,315$ 405,000$ 123,401$ 1,432,716$ 2015 890,000 16,803 410,000 116,922 1,433,725 2016 165,000 4,076 415,000 108,618 692,694 2017 45,000 1,716 425,000 100,211 571,927 2018 35,000 1,073 440,000 91,001 567,074 2019-2023 40,000 572 1,525,000 322,694 1,888,266 2024-2028 - - 545,000 186,165 731,165 2029-2033 - - 525,000 80,774 605,774 2,050,000$ 53,555$ 4,690,000$ 1,129,786$ 7,923,341$ Governmental Activities Business-Type Activities CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 48 NOTE 4. LONG-TERM DEBT – CONTINUED Annual Requirements to Retire Debt Obligations – Continued Water and sewer revenue bonds authorized and unissued as of September 30, 2013, amounted to $1,200,000. The water and sewer bonds were authorized in 1970, and currently the City Council has no intent to issue these bonds. Water and sewer revenue bonds and refunding revenue bonds are payable solely from and equally secured by a first lien on and pledge of the net revenue of the City's combined waterworks and sanitary sewer system. In accordance with the water and sewer revenue and refunding bond ordinances, the following reserves were established: Reserve for revenue bond debt service – to be used for retirement of the current portion of principal and interest payments due. Reserve for emergency – to be used for payment of extraordinary repairs or replacements to the system necessitated by an emergency for which no other funds are available. Revenue bond reserve – a reserve established with a portion of the bond proceeds pursuant to the revenue bond covenants which will be used for principal and interest payments in the event of default by the issuer. Should the reserve for revenue bond debt service and/or the revenue bond reserve prove deficient, the reserve for emergency shall be used for the purpose of meeting principal and/or interest requirements of the bonds. All funding requirements for the above reserves were met at September 30, 2013. Investments of funds included in the bond reserve and emergency accounts are restricted to obligations of the United States or its agencies or instrumentalities (except for mortgage pass-through securities). Capital Lease The City has entered into two capital lease agreements under which the related equipment will become the property of the City when all terms of the lease agreements are met. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 49 NOTE 4. LONG-TERM DEBT – CONTINUED Capital Lease – Continued As of September 30, 2013, capital lease annual amortization is as follows: Governmental Activities 2014 265,643$ 2015 265,642 2016 167,923 2017 167,922 2018 167,923 2019-2023 839,612 Total 1,874,665 Less interest (243,065) Present value of remaining payments 1,631,600$ Equipment and related accumulated amortization under capital leases are as follows at September 30, 2013: Governmental Activities Equipment 1,940,925$ Less: accumulated amortization (98,864) Net book value 1,842,061$ NOTE 5. COMMITMENTS AND CONTINGENT LIABILITIES The City entered into a contract dated January 21, 1972, with Trinity River Authority (TRA) whereby TRA agreed to provide treated water to the City. This contract was for an original term of thirty-five (35) years and continues in effect until all bonds, or any bonds issued to refund same, have been paid in full. Additionally, on October 10, 1973, the City entered into a contract with TRA to provide wastewater treatment services to the City. The contract remains in force and effect for a period of fifty (50) years and thereafter until any bonds, or any bonds issued to refund same, have been paid in full. Payments by the City are based on metered usage at rates designed to charge the City a prorata share of TRA's annual operating and maintenance expenses and principal and interest requirements on bonds issued by TRA. Payments under these contracts approximated $8,204,750 and are included as operating expenses of the water and wastewater fund. The City entered into a 20-year contract dated February 2, 2010, with the City of Fort Worth (Fort Worth) whereby Fort Worth agreed to provide reclaimed water service to the City. Payments by the City are based on metered volume. Payments under this contract were CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 50 NOTE 5. COMMITMENTS AND CONTINGENT LIABILITIES – CONTINUED $161,223 in the year ended September 30, 2013 and are included as operating expenses of the water and wastewater fund. The City is involved in a number of lawsuits arising in the ordinary course of business. In the opinion of the City's legal counsel and management, any liability resulting from such litigation would not be material in relation to the City's financial position. NOTE 6. SERVICE CENTER The water and wastewater enterprise fund historically bears the major portion of the operating costs of the City's service center, which provides services to all City departments. NOTE 7. INTERFUND TRANSFERS All interfund transfers between the various funds are approved supplements to the operations of those funds. Transfers in Major Governmental General Debt service Car rental capital projects Nonmajor governmental Subtotal governmental Transfers out General -$ -$ -$ 74,694$ 74,694$ Car rental tax 1,433,333 200,182 1,213,500 300,000 3,147,015 Water and wastewater 951,400 - - - 951,400 Drainage utility 35,456 - - - 35,456 Nonmajor governmental - 239,994 1,504,972 325,000 2,069,966 Total transfers in 2,420,189$ 440,176$ 2,718,472$ 699,694$ 6,278,531$ Transfers in Internal Golf Subtotal Total service course proprietary transfers out Transfers out General 225,000$ 16,095$ -$ 241,095$ 315,789$ Car rental tax 28,665 - - 28,665 3,175,680 Water and wastewater 225,000 - 1,500 226,500 1,177,900 Drainage utility - - - - 35,456 Nonmajor governmental - 277,810 - 277,810 2,347,776 Total transfers in 478,665$ 293,905$ 1,500$ 774,070$ 7,052,601$ Major Enterprise Drainage utility CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 51 NOTE 7. INTERFUND TRANSFERS – CONTINUED Transfers are primarily used to move funds from:  The general fund to the non-major governmental funds to satisfy grant matching requirements.  The car rental tax fund, the water and wastewater fund, and the drainage utility fund to the general fund for general and administrative charges.  The car rental tax fund to the debt service fund for the principal and interest on previously issued bonds.  The car rental tax fund to the car rental CIP fund for approved capital projects.  The non-major governmental funds to the debt service fund for the debt service payments on the 2011 Certificates of Obligation and the car rental CIP fund for approved projects.  The car rental tax fund to the car rental CIP fund and the nonmajor governmental funds to provide funding for approved capital projects.  The general fund and water and wastewater fund to the internal service funds for workers’ compensation and general liability insurance claims.  The car rental tax fund to the internal service fund for equipment replacement.  The general fund to the golf course fund to rebate the City portion of sales taxes paid.  The non-major governmental funds to the golf course fund to cover a portion of the operating and debt costs associated with the conference center.  The water and wastewater fund to the drainage utility fund for OPEB. NOTE 8. RISK MANAGEMENT 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. The City participates in the Texas Municipal League Joint Self-Insurance Fund (TMLIF) to provide both general liability and property insurance. The City, along with other participating entities, contributes annual amounts determined by TMLIF management. As claims arise they are submitted to and paid by TMLIF. The City is not liable for payments beyond their annual contributions to TMLIF and related deductibles. In fiscal year 2006, the City contracted with the Texas Municipal League Intergovernmental Risk Pool to provide workers’ compensation insurance and effectively discontinued being self-insured for workers’ compensation claims. This policy has no deductibles, includes all claims handling, and has a fixed premium. In fiscal years prior to 2006, the City was self-insured for workers' compensation claims. Contributions were made to a separate risk management fund by other funds and were available to pay claims, claim reserves, and administrative costs of the program. The City remains liable under its self-insurance program for any claims occurring prior to October 1, 2005. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 52 NOTE 8. RISK MANAGEMENT – CONTINUED The City provides employee health insurance coverage on a self-insured basis. Premiums are paid into a separate insurance fund by other funds, by the City's employees, and by retirees. The premiums are used to fund claims, administrative costs of the program, and claim reserves. An excess coverage insurance policy covers individual claims in excess of $100,000 and aggregate claims in excess of $4,217,094. During fiscal year 2013, the City and the City's employees contributed approximately $3,911,543 and $1,431,215 respectively, for medical coverage. The City's contributions are accounted for as interfund services provided and used. Claims liabilities are based on estimates of the ultimate cost of claims (including future claim adjustment expenses) that have been reported but not settled, and of claims that have been incurred but not reported, and are accounted for in the Insurance Internal Service Fund. Changes in the balances of health and dental claims liabilities for the years ended September 30, 2013 and 2012 are as follows: 2013 2012 Unpaid claims, beginning of year 721,422$ 493,342$ Incurred claims 4,241,373 4,135,486 Paid claims (4,590,138) (3,907,406) Unpaid claims, end of year 372,657$ 721,422$ Settlement amounts have not exceeded stop loss insurance coverage for the year ended September 30, 2013 or any of the three preceding years ended September 30. NOTE 9. EMPLOYEE RETIREMENT SYSTEM Plan Description The City provides pension benefits for all eligible 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. TMRS issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information (RSI) for TMRS; the report also provides detailed explanations of the contributions, benefits, and actuarial methods and assumptions used by TMRS. This report may be obtained by writing to TMRS, P.O. Box 149153, Austin, TX 78714-9153 or by calling 800-924-8677; in addition, the report is available on the TMRS website at www.TMRS.com. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 53 NOTE 9. EMPLOYEE RETIREMENT SYSTEM – CONTINUED Plan Description – Continued The plan provisions are adopted by the City Council of the City, within the options available in the state statutes governing TMRS. Plan provisions for the City were as follows: Plan Year 2012 Plan Year 2013 Employee deposit rate 7.00% 7.00% Matching ratio (city to employee) 2 to 1 2 to 1 Years required for vesting 5 5 Service retirement eligibility (expressed as age/years of service) 60/5, 0/20 60/5, 0/20 Updated service credit 100% Repeating, Transfers 100% Repeating, Transfers Annuity increase (to retirees) 70% of CPI Repeating 70% of CPI Repeating Contribution Under the state law governing TMRS, the contribution rate for each city is determined annually by the actuary, using the projected unit credit actuarial cost method. This rate consists of the normal cost contribution rate and the prior service cost contribution rate, which is calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the portion of an active member's projected benefit allocated annually; the prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the applicable period for that city. Both the normal cost and prior service contribution rates include recognition of the projected impact of annually repeating benefits, such as updated service credits and annuity increases. The City contributes to the TMRS Plan at an actuarially determined rate. Both the employees and the City make contributions monthly. Since the City needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect. The annual pension cost and net pension obligation/(asset) are as follows: Annual required contribution (ARC) 4,715,718$ Interest on net pension obligations 198,145 Adjustment to the ARC (174,087) Annual pension cost (APC) 4,739,776 Contributions made (4,715,718) Increase (decrease) in net pension obligation 24,058 Net pension obligation, beginning of year 2,830,646 Net pension obligation, end of year 2,854,704$ CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 54 NOTE 9. EMPLOYEE RETIREMENT SYSTEM – CONTINUED Contribution – Continued The required contribution rates for fiscal year 2013 were determined as a part of the December 31, 2010 and 2011 actuarial valuations. Additional information as of the latest actuarial value, December 31, 2012, also follows: December 31, 2010 December 31, 2011 December 31, 2012 Actuarial cost method Projected Unit Credit Projected Unit Credit Projected Unit Credit Amortization method Level Percent of Payroll Level Percent of Payroll Level Percent of Payroll Remaining amortization period 27.2 years - closed 26.1 years - closed 25.1 years - closed Asset valuation method 10 year Smoothed Market 10 year Smoothed Market 10 year Smoothed Market Actuarial assumption Investment rate of return 7.0% 7.0% 7.0% Projected salary increases Varies by age/service Varies by age/service Varies by age/service Inflation 3% 3% 3% Cost of living adjustments 2.1% 2.1% 2.1% Euless payroll growth assumptions 3% 3% 3% Valuation date For cities with repeating features in their plans, changes in the valuation methodology would likely result initially in higher required contributions and lower funded ratios. However, the funded ratio should show steady improvement over time. The City has adopted the updated service credit and annuity increase provisions on an annually repeating basis. The schedule of funding progress, presented as Required Supplementary Information immediately following the Notes to the Financial Statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Funded Status and Funding Progress The funded status of the plan is presented as follows as of actuarial valuation dated December 31: Unfunded Valuation Actuarial Actuarial Actuarial Annual UAAL Dated Value of Accrued Accrued Liability Fund Covered as % of December 31 Assets Liability (UAAL) Ratio Payroll Payroll 2010 111,425,190$ 134,305,874$ 22,880,684$ 82.96% 22,615,709$ 101.17% 2011 121,232,189 142,935,453 21,703,264 84.82% 22,698,035 95.62% 2012 131,280,817 150,172,732 18,891,915 87.42% 23,525,885 80.30% CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 55 NOTE 9. EMPLOYEE RETIREMENT SYSTEM – CONTINUED Funded Status and Funding Progress – Continued Annual pension cost and percentage of pension cost contributed are as follows: Annual Actual Net Pension Fiscal Year Pension Contribution Percentage Obligation at Ended 9/30 Cost Made Contributed Year End 2011 4,867,639$ 3,986,692$ 82% 2,585,881$ 2012 4,661,466 4,416,702 95% 2,830,645 2013 4,739,776 4,715,718 99% 2,854,704 Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. NOTE 10. OTHER POSTEMPLOYMENT BENEFITS Postemployment Healthcare Plan Plan Description The City adopted the City of Euless Post-Employment Benefits Trust (OPEB Trust) by passage of Resolution No. 09-1319 on September 8, 2009 which authorized participation in the PARS Public Agencies Post-Retirement Health Care Plan Trust, including the City of Euless Public Agencies Post-Retirement Health Care Plan (the Plan), as part of the City’s Retirement Program. Article III of the Public Agencies Post- Retirement Health Care Plan Master Plan Document as adopted provides for the determination of eligibility under the plan to each participating Employer to the extent provided in the Employer’s applicable policies. The City’s policies with regard to post-employment healthcare coverage are governed by the City of Euless Medical and Dental Plan, the City’s group health insurance plan, the benefits of which are established by management. The City provides postemployment medical, dental, life, and vision benefits under the Plan to eligible retirees and dependents qualifying as one of the eligible classes of dependents as described in the Plan. To be eligible for coverage under the Plan, an employee must retire with the City of Euless and be eligible for retirement through TMRS. TMRS retirement eligibility requirements are described in detail in Note 9. Additionally, written application to enroll himself/herself and all eligible dependents (for which coverage is elected) in the Plan must be made by the employee prior to or on the retirement date. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 56 NOTE 10. OTHER POSTEMPLOYMENT BENEFITS – CONTINUED Postemployment Healthcare Plan – Continued The Plan provides lifetime benefits or until Medicare eligibility is attained. Regardless of Medicare enrollment status, the Plan will base payment of benefits as though Medicare were responsible for primary payment of benefits insomuch as allowed by Federal law. The Plan is a single-employer defined benefit healthcare plan administered by the City Manager, his/her successor, or his/her designee. Separate financial statements for the Plan are not issued, but rather are included in the financial statements of the City which are available on-line at http://www.eulesstx.gov/finance/cafr.htm. The OPEB Trust is an agent multiple-employer trust arrangement established to provide economies of scale and efficiency of administration to public agencies. The OPEB Trust is established as a tax-exempt trust within the meaning of Section 115 of the Internal Revenue Code and is intended to hold the assets used to fund the City’s post- employment benefits offered by the City to its employees as specified in the City’s policies. The OPEB Trust is administered by Public Agency Retirement Services pursuant to the Trust Agreement adopted on September 8, 2009 by the City Council with passage of Resolution No. 09-1319. Upon adoption of the Trust Agreement, a separate Agency Account was established under the OPEB Trust for the City, and all assets of the Trust attributable to the City are held in the City’s Agency Account. The assets of the Trust are available only to pay postemployment healthcare benefits of eligible employees of the City and their dependents and other associated administrative costs. Funding Policy A Participant in the OPEB Trust is required from time-to-time to contribute to its Agency Account an amount determined by such Participant at its sole discretion. Such amount may, but need not, equal such Participant’s annual required contribution (ARC) as determined in accordance with GASB 45. However, it is currently the intent of the Plan Administrator to annually fund an amount equal to, or in excess of, the ARC. This intent is subject to change and is subject to annual appropriation. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 57 NOTE 10. OTHER POSTEMPLOYMENT BENEFITS – CONTINUED Funding Policy – Continued Contribution requirements of Plan members and the City are determined by the Plan Administrator and may be amended by same from time to time. Plan members contribute: Medical and Dental Vision Retiree only 611.57$ 7.87$ Retiree plus spouse 1,406.61 15.29 Retiree plus family 1,773.51 21.60 Retiree plus children 1,161.99 12.87 Monthly Premiums Retired employees meeting all eligibility requirements as set forth in the Plan that were hired prior to October 1, 2006 and are either: a) Retired and enrolled in the Plan on or prior to September 30, 2007; or b) Retired and not enrolled in the Plan on or prior to September 30, 2007 and meet guidelines for reinstatement to the Plan; or c) Employees who were not retired as September 30, 2007 that retire with at least ten years of service to the City of Euless and have a combined age and years of service equal to at least 70 will qualify for a service discount on their total premium, subject to annual appropriation, as set forth in the table below. Retired employees meeting all eligibility requirements as set forth in the Plan that were hired after October 1, 2006 retiring with a minimum of 20 years of service with a combined age and years of service to the City of Euless equal to at least 80 qualify for a service discount on their total premium, subject to annual appropriation, as set forth in the following: Service Retiree Retiree+ Retiree Retiree+ 10 to 14 years 15% 30% N/A N/A 15 to 19 years 25% 40% N/A N/A 20 to 24 years 35% 50% 35% 50% 25 to 29 years 50% 65% 50% 65% 30+ years 60% 75% 60% 75% Discounts on Premiums Hired Pre-10/2006 Hired Post-10/2006 Retirees are permitted to participate with active employees in the healthcare plan but retirees must pay all premiums (less applicable discounts) assigned to them. The City will continue to apply the applicable discount to surviving spouse/dependents based upon a deceased employee’s years of service. CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 58 NOTE 10. OTHER POSTEMPLOYMENT BENEFITS – CONTINUED Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) 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 at that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of plan assets, consistent with the long-term perspective of the calculations. In the October 1, 2012 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions include a 7.5% investment rate of return (compounded annually net after expenses) and an annual healthcare cost trend rate of 6.2% initially, with annual increases and decreases to an ultimate rate of 6.2% in twenty- six years and an annual dental cost trend rate of 5.7% initially, declining by decrements to an ultimate rate of 3.9% after thirteen years. The inflation rate of 2.75% is used for the calculation. The UAAL is being amortized over a thirty year open period utilizing a level dollar amortization method. Annual OPEB Cost and Net OPEB Obligation The City’s annual OPEB cost (expense) for the Plan is calculated based on the ARC, an amount actuarially determined in accordance with the parameters of GASB 45. The ARC represents the level of funding that, if paid on an on-going 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. For the year ended September 30, 2013, the City has estimated the cost of providing these benefits through an actuarial valuation as of October 1, 2012. The following table represents the components of the City’s annual OPEB cost for the fiscal year, the amount actually contributed to the Plan, and any changes in the City’s net OPEB obligation. Annual required contribution 1,450,220$ Interest on net OPEB obligation (47,568) Adjustments to annual required contribution 53,705 Annual OPEB cost (expense) 1,456,357 Contributions made (1,180,892) Change in OPEB obligation 275,465 Net OPEB obligation (asset) - beginning of year (634,234) Net OPEB obligation (asset) - end of year (358,769)$ CITY OF EULESS, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 59 NOTE 10. OTHER POSTEMPLOYMENT BENEFITS – CONTINUED Annual OPEB Cost and Net OPEB Obligation – Continued The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2013 and the two previous fiscal years are as follows: Actuarial Fiscal % of Annual Valuation Year Discount Annual Cost Net OPEB Date Ended Rate OPEB Cost Contributed Obligation 10/1/2010 9/30/2011 7.0% 868,574$ 101.39% (631,987)$ 10/1/2010 9/30/2012 7.0% 865,298 100.26% (634,234) 10/1/2012 9/30/2013 7.5% 1,456,357 81.09% (358,769) Funding Status and Funding Progress 10/1/2010 9/30/2011 828,339$ 7.0% 8,368,989$ 6.0% 7,540,650$ 10/1/2010 9/30/2012 1,222,028 7.0% 8,368,989 14.6% 7,146,961 10/1/2012 9/30/2013 1,830,940 7.5% 14,087,206 13.0% 12,256,266 Fiscal Year Ended Actuarial Valuation Date Discount Rate Funded Ratio Unfunded AAL (UAAL) 10/1 Value of Assets Actuarial Accrued Liability (AAL) As of October 1, 2012, the plan was 87.0% unfunded. The value of assets was $1,830,940, resulting in an UAAL of $12,256,266. Actuarial valuations of an ongoing plan involve estimates of the value of the reported amounts and assumptions about the probability of occurrences of events far into the future. Examples include, but are not limited to, future employment, mortality, and healthcare cost trends. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the Notes to the Basic Financial Statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. NOTE 11. EXCESS OF EXPENDITURES OVER APPROPRIATIONS As of September 30, 2013, the following individual funds had an excess of expenditures over appropriations: Police drug enforcement special revenue fund $53,147 Public safety grant special revenue fund 97,135 Car rental tax special revenue fund 43,957 THIS PAGE INTENTIONALLY LEFT BLANK REQUIRED SUPPLEMENTARY INFORMATION CITY OF EULESS, TEXAS SCHEDULE OF FUNDING PROGRESS FOR PARTICIPATION IN TEXAS MUNICIPAL RETIREMENT SYSTEM SEPTEMBER 30, 2013 60 Unfunded Valuation Actuarial Actuarial Actuarial Annual UAAL Dated Value of Accrued Accrued Liability Fund Covered as % of December 31, Assets Liability (UAAL) Ratio Payroll Payroll 2010 111,425,190$ 134,305,874$ 22,880,684$ 82.96% 22,615,709$ 101.17% 2011 121,232,189 142,935,453 21,703,264 84.82% 22,698,035 95.62% 2012 131,280,817 150,172,732 18,891,915 87.42% 23,525,885 80.30% The Schedule of Funding Progress summarizes the actuarial value of the plan's assets and actuarial accrued liability as of December 31, 2012 and each of the two preceding calendar years. The data presented in the schedule was obtained annually from TMRS and was based upon the annual actuarial valuation for the years represented. The City is financially responsible for its own portion of the plan. Therefore, the numbers shown above reflect only the condition of the City's plan. The schedule is presented to provide a consistent basis for measuring the plan's annual progress toward funding its actuarial accrued liability in accordance with its actuarial funding method. The primary measure of funding progress is the plan's funded ratio (i.e. actuarial value of assets expressed as a percentage of the actuarial accrued liability). An increase in the funded ratio indicates improvement in the plan's ability to pay all projected benefits as they come due. The plan is fully funded if the funded ratio is greater than or equal to 100%. During the year ended December 31, 2012, the plan's funded ratio was 87.42%. The Schedule of Funding Progress also discloses the relationship between the plan's covered payroll (i.e. all elements included in compensation paid to active members on which contributions are based) and the UAAL. This relationship, expressed as a ratio, is a measure of the significance of the UAAL relative to the capacity to pay all contributions required to fund the liability. During the year ended December 31, 2012, the plan's ratio of the UAAL to its covered payroll was 80.30%. Calendar Years 2013 2012 2011 2010 2009 City's annual contribution stated as a % of covered payroll 18.99% 18.73% 17.99% 16.49% 15.19% Note Source: TMRS Comprehensive Annual Report for the Year Ending December 31, 2012 and City records. CITY OF EULESS, TEXAS SCHEDULE OF FUNDING PROGRESS – OPEB TRUST SEPTEMBER 30, 2013 61 Fiscal 10/1 Unfunded Valuation Year Actuarial Actuarial Actuarial Dated Ended Value of Discount Accrued Accrued Liability Funded Covered UAAL % of 10/01, 09/30, Assets Rate Liability ("UAAL") Ratio Payroll Payroll 2009 2010 400,005$ 7.0% 6,651,203$ 6,251,198$ 6% 22,279,037$ 28% 2010 2011 826,339 7.0% 8,368,989 7,542,650 10% 22,722,347 33% 2010 2012 1,222,028 7.0% 8,368,989 7,146,961 15% 23,230,021 31% 2012 2013 1,830,940 7.5% 14,087,206 12,256,266 13% 24,264,642 51% The Schedule of Funding Progress summarizes the actuarial value of the plan’s assets and actuarial accrued liability as of October 1, 2012 and the three preceding actuarial valuations for which the trust has been in effect. The schedule is presented to provide a consistent basis for measuring the plan’s annual progress toward funding its actuarial accrued liability in accordance with its actuarial funding method. The primary measure of funding progress is the plan’s funded ratio (i.e. actuarial value of assets expressed as a percentage of the actuarial accrued liability). An increase in the funded ratio indicates an improvement in the plan’s ability to pay all projected benefits as they come due. The plan is fully funded if the funded ratio is greater than or equal to 100%. At October 1, 2012, the plan’s funded ratio was 13%. For more information concerning the plan and the actuarial method and assumptions, see Note 10 Other Post Employment Benefits in the Notes to the Financial Statements. CITY OF EULESS, TEXAS BUDGETARY COMPARISON SCHEDULE - GENERAL FUND YEAR ENDED SEPTEMBER 30, 2013 62 Variance with Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues General property tax Current and delinquent taxes 9,711,342$ 9,711,342$ 9,655,096$ (56,246)$ Penalty and interest 55,000 55,000 85,414 30,414 Total property tax 9,766,342 9,766,342 9,740,510 (25,832) Gross receipts and mixed beverage tax Telephone line access fee 360,000 360,000 346,864 (13,136) Electric company 1,650,000 1,650,000 1,609,057 (40,943) Gas company 365,000 365,000 306,295 (58,705) Cable TV 640,000 640,000 645,301 5,301 City garbage service 190,000 190,000 203,770 13,770 Water and wastewater system 983,086 983,086 951,400 (31,686) Others 69,750 69,750 75,836 6,086 Total gross receipts and mixed beverage tax 4,257,836 4,257,836 4,138,523 (119,313) General sales tax 9,275,290 9,275,290 10,096,646 821,356 Fines and fees Municipal court fines 3,036,000 3,036,000 3,110,913 74,913 Jail income 300,000 300,000 370,425 70,425 Dog licenses and pound fees 7,000 7,000 3,684 (3,316) Ambulance fees 865,000 865,000 910,275 45,275 Library fees 35,100 35,100 35,025 (75) Zoning fees 15,000 15,000 25,268 10,268 Deferred adjudication fee 141,000 141,000 171,609 30,609 Total fines and fees 4,399,100 4,399,100 4,627,199 228,099 Licenses and permits Building permits 430,000 430,000 692,787 262,787 Miscellaneous permits 213,350 213,350 234,632 21,282 Minimum housing 211,820 211,820 225,456 13,636 Total licenses and permits 855,170 855,170 1,152,875 297,705 Investment income 60,000 60,000 40,710 (19,290) Intergovernmental 359,780 359,780 371,623 11,843 Other revenues Rental income 512,472 512,472 457,297 (55,175) Swimming pools 112,500 112,500 241,812 129,312 Miscellaneous income 261,650 261,650 290,918 29,268 Total other revenues 886,622 886,622 990,027 103,405 Total revenues 29,860,140 29,860,140 31,158,113 1,297,973 Budgeted Amounts CITY OF EULESS, TEXAS BUDGETARY COMPARISON SCHEDULE - GENERAL FUND YEAR ENDED SEPTEMBER 30, 2013 (CONTINUED) 63 Variance with Actual Final Budget GAAP Positive Original Final Basis (Negative) Expenditures Current Culture and recreation 3,038,235$ 3,055,638$ 3,041,458$ 14,180$ Development services 689,429 648,849 606,945 41,904 General and administrative 8,839,736 8,804,904 7,869,353 935,551 Highways and streets 1,157,843 1,157,843 1,144,223 13,620 Public safety 20,254,510 20,312,519 20,021,595 290,924 Total expenditures 33,979,753 33,979,753 32,683,574 1,296,179 Excess (deficiency) of revenues over (under) expenditures (4,119,613) (4,119,613) (1,525,461) 2,594,152 Other financing sources (uses) Transfers in 2,494,752 2,494,752 2,420,189 (74,563) Transfers out (276,000) (276,000) (315,789) (39,789) Total other financing sources (uses), net 2,218,752 2,218,752 2,104,400 (114,352) Net change in fund balance (1,900,861) (1,900,861) 578,939 2,479,800 Fund balance, beginning of year 9,311,735 9,311,735 9,311,735 - Fund balance, end of year 7,410,874$ 7,410,874$ 9,890,674$ 2,479,800$ Budgeted Amounts CITY OF EULESS, TEXAS BUDGETARY COMPARISON SCHEDULE – CAR RENTAL TAX SPECIAL REVENUE FUND YEAR ENDED SEPTEMBER 30, 2013 64 Variance with Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues Car rental tax 12,900,000$ 12,900,000$ 13,592,255$ 692,255$ Investment income 35,000 35,000 18,030 (16,970) Total revenues 12,935,000 12,935,000 13,610,285 675,285 Expenditures General and administrative 8,607,951 8,607,951 9,033,888 (425,937) Capital outlay 821,237 821,237 439,257 381,980 Total expenditures 9,429,188 9,429,188 9,473,145 (43,957) Excess of revenues over expenditures 3,505,812 3,505,812 4,137,140 631,328 Other financing uses Transfers out (3,280,680) (3,280,680) (3,175,680) 105,000 Total other financing uses (3,280,680) (3,280,680) (3,175,680) 105,000 Net change in fund balance 225,132 225,132 961,460 736,328 Fund balance, beginning of year 2,911,521 2,911,521 2,911,521 - Fund balance, end of year 3,136,653$ 3,136,653$ 3,872,981$ 736,328$ Budgeted Amounts CITY OF EULESS, TEXAS NOTES TO REQUIRED SUPPLEMENTARY INFORMATION 65 NOTE 1. BUDGET BASIS OF ACCOUNTING The City Council adheres to the following procedures in establishing budgetary data reflected in the financial statements: 1. Prior to August 1, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following October 1. The operating budget includes proposed expenditures and expenses and means of financing them. 2. Public hearings are conducted to obtain taxpayers' comments. 3. Prior to September 30, the budget is legally enacted through passage of an ordinance and a budgetary report is prepared. 4. The City Manager is authorized to transfer budgeted amounts between departments within any fund; however, any revision that alters the total expenditures of any fund must be approved by the City Council. The budget presented reflects revisions made during the year. The legal level of control is at the fund level. 5. A budget is legally adopted for the general fund and special revenue funds on a basis consistent with accounting principles generally accepted in the United States of America. Formal budgetary integration is employed as a management control device during the year for the general fund and special revenue funds. Appropriations and encumbrances lapse at year-end. 6. Formal budgetary integration is not employed for the debt service funds because effective budgetary control is alternatively achieved through general obligation bond indenture provisions. 7. Budgetary data for the capital projects funds has not been presented in the accompanying basic financial statements as such funds are budgeted over the life of the respective project and not on an annual basis. Accordingly, formal budgetary integration of the capital projects funds is not employed and comparison of actual results of operations to budgetary data for such funds is not presented. 8. Appropriated budgets for the proprietary funds are also adopted but have not been presented since reporting on such budgets is not legally required. The Budgetary Comparison Schedules — general fund and car rental tax special revenue fund present a comparison of budgetary data to actual results. These funds utilize the same basis of accounting for both budgetary purposes and actual results. THIS PAGE INTENTIONALLY LEFT BLANK COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES 66 NON-MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenues that are legally restricted to expenditures for particular purposes. Hotel/Motel Fund – to account for the operations and expenditures for which hotel/motel occupancy taxes are used. Occupancy tax revenues are used primarily for advertising and promotion of the City. Half-Penny Sales Tax Fund – to account for the sales tax revenues and expenditures of the Euless Development Corp, a component unit of the City of Euless. The revenues can only be spent on parks, library, debt service, and economic development activities with the City of Euless. Police Drug Enforcement Fund – to account for proceeds from the sale of assets seized in connection with drug arrests. Revenues are used solely for police department expenditures. Crime Control and Prevention District Fund – to account for the revenues and expenditures of this component unit of the City of Euless. The revenues are collected from sales taxes and expenditures can only be spent for police department operations and capital as approved by the Crime Control and Prevention District Board. Public Safety Grant Fund – to account for grant revenues received by the police department which must be spent in accordance with the grant provisions. Police Seized Asset Fund – to account for resources received from asset forfeiture pursuant to court judgment File No. 09-13-640 to be administered in compliance with Chapter 59, Texas Code of Criminal Procedure. Juvenile Case Fund – to account for a fee added to municipal court citations. This fee is used to support the expenditures associated with juvenile case processing. Glade Parks Public Improvement District (PID) Fund – to account for the accumulation of resources from an assessment levied upon properties within the district boundaries. The resources are utilized for the repayment of debt issued to fund public improvements within the district. The district assesses property owners only for the portion of the debt payment not covered with resources of the Glade Parks TIRZ #3. Tax Increment Reinvestment Zone #3 - Glade Parks Fund (TIRZ #3) – to account for the accumulation of a portion of the incremental property taxes from taxing entities participating in the tax increment reinvestment zone. The resources are used for the repayment of debt issued to fund public improvements within the district. Cable PEG Fees Fund – to account for a 1% fee collected from cable channel providers for expansion of the city’s public, educational, and governmental access channel. 67 NON-MAJOR GOVERNMENTAL FUNDS – Continued CAPITAL PROJECTS Streets Capital Improvements Project Fund - to account for street construction and reconstruction projects and the means of financing such improvements. Half-Penny Sales Tax Capital Projects Fund – to account for bond proceeds and sales tax receipts to be expended for capital projects funded by the Euless Development Corporation, a component unit of the City of Euless. Developers' Contribution Fund – to account for funds received for the purpose of making new and future improvements to various development areas within the City. Police Facility Construction Fund – to account for the construction of a police facility. General Capital Projects Fund – to account for various general construction projects within the City. Redevelopment Fund – to account for land acquisition and revitalization projects designed to enhance development and promote redevelopment throughout the community. CITY OF EULESS, TEXAS COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2013 68 Police Crime Drug Control and Public Police Hotel/ Half-Penny Enforce- Prevention Safety Seized Juvenile Glade Parks Motel Sales Tax ment District Grant Assets Case PID Fund Fund Fund Fund Fund Fund Fund Fund ASSETS Deposits and investments 169,788$ 2,486,318$ 121,164$ 309,244$ 67,081$ 2,432,586$ 136,133$ 56,060$ Accounts receivable 140,660 - - - 21,462 - 5,451 - Accrued interest receivable - 400 - - - - - - Due from other governments - 699,089 - 349,448 - - - - Prepaids - 3,975 5,007 - - - - - Restricted deposits and investments - - - - - - - - Total assets 310,448$ 3,189,782$ 126,171$ 658,692$ 88,543$ 2,432,586$ 141,584$ 56,060$ LIABILITIES AND FUND BALANCES Liabilities Accounts payable -$ 142,389$ 8$ 3,511$ 11,276$ -$ 1,274$ -$ Accrued salaries and wages - 42,446 - 50,518 1,831 4,027 2,152 - Deferred revenue 55,841 - - - - - 5,451 - Total liabilities 55,841 184,835 8 54,029 13,107 4,027 8,877 - Fund Balances Nonspendable - 3,975 5,007 - - - - - Restricted, debt service - 913,530 - - - - - 56,060 Restricted, capital projects - - - - - - - - Restricted, historical preservation 1,245 - - - - - - - Restricted, juvenile case management - - - - - - 132,707 - Restricted, PEG fees - - - - - - - - Restricted, developer agreements - - - - - - - - Assigned 253,362 2,087,442 121,156 604,663 75,436 2,428,559 - - Total fund balances 254,607 3,004,947 126,163 604,663 75,436 2,428,559 132,707 56,060 Total liabilities and fund balances 310,448$ 3,189,782$ 126,171$ 658,692$ 88,543$ 2,432,586$ 141,584$ 56,060$ Special Revenue Funds 69 Cable Special Half-Penny Police General Capital Total TIRZ #3 PEG Revenue Streets Sales Tax Developers' Facility Capital Project Non-major Glade Parks Fees Funds CIP Capital Contribution Construction Projects Redevelopment Funds Governmental Fund Fund Total Fund Projects Fund Fund Fund Fund Totals Funds -$ 258,467$ 6,036,841$ 1,516,312$ 1,043,333$ 1,448,097$ 77,526$ 633,129$ 205,396$ 4,923,793$ 10,960,634$ - 32,000 199,573 - - - - 47,890 - 47,890 247,463 - - 400 863 75 967 - - - 1,905 2,305 - - 1,048,537 - - - - - - - 1,048,537 - - 8,982 308 174 - - - - 482 9,464 - - - 365,641 - - - - - 365,641 365,641 -$ 290,467$ 7,294,333$ 1,883,124$ 1,043,582$ 1,449,064$ 77,526$ 681,019$ 205,396$ 5,339,711$ 12,634,044$ -$ -$ 158,458$ 226,502$ 174$ 1,305$ -$ -$ -$ 227,981$ 386,439$ - - 100,974 - - - - - - - 100,974 - - 61,292 - - - - - - - 61,292 - - 320,724 226,502 174 1,305 - - - 227,981 548,705 - - 8,982 308 174 - - - - 482 9,464 - - 969,590 - - - - - - - 969,590 - - - 365,641 - - - - - 365,641 365,641 - - 1,245 - - - - - - - 1,245 - - 132,707 - - - - - - - 132,707 - 290,467 290,467 - - - - - - - 290,467 - - - - - 1,447,759 - - - 1,447,759 1,447,759 - - 5,570,618 1,290,673 1,043,234 - 77,526 681,019 205,396 3,297,848 8,868,466 - 290,467 6,973,609 1,656,622 1,043,408 1,447,759 77,526 681,019 205,396 5,111,730 12,085,339 -$ 290,467$ 7,294,333$ 1,883,124$ 1,043,582$ 1,449,064$ 77,526$ 681,019$ 205,396$ 5,339,711$ 12,634,044$ Special Revenue Funds Capital Projects Funds CITY OF EULESS, TEXAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – NON-MAJOR GOVERNMENTAL FUNDS YEAR ENDED SEPTEMBER 30, 2013 70 Police Crime Drug Control and Public Police Hotel/ Half-Penny Enforce- Prevention Safety Seized Juvenile Glade Parks Motel Sales Tax ment District Grant Asset Case PID Fund Fund Fund Fund Fund Fund Fund Fund Revenues Gross receipts tax 329,368$ -$ -$ -$ -$ -$ -$ -$ General sales tax - 4,042,405 - 1,993,937 - - - - Investment income 114 10,129 124 178 - 116 73 - DEA revenues - - 3,571 - - 2,443,023 - - Intergovernmental - - - - - - - - Rents and royalties - - - - - - - - Other revenues 5 - 23,152 3,302 125,137 - 93,781 126,860 Total revenues 329,487 4,052,534 26,847 1,997,417 125,137 2,443,139 93,854 126,860 Expenditures Culture and recreation - 2,105,404 - - - - - - Development services - 199,330 - - - - - - General and administrative - 237,172 - - - - 67,521 - Public safety - - 46,694 1,890,824 187,605 14,580 - - Debt service Principal - 860,000 - - - - - - Interest and fiscal charges - 41,913 - - - - - - Capital outlay - 19,148 6,953 - 14,117 - - - Total expenditures - 3,462,967 53,647 1,890,824 201,722 14,580 67,521 - Excess (deficiency) of revenues over (under) expenditures 329,487 589,567 (26,800) 106,593 (76,585) 2,428,559 26,333 126,860 Other financing sources (uses) Issuance of capital lease - - - - - - - - Transfers in - - - - 74,694 - - - Transfers out (277,810) (325,000) - - - - - (230,625) Total other financing sources (uses) (277,810) (325,000) - - 74,694 - - (230,625) Net change in fund balances 51,677 264,567 (26,800) 106,593 (1,891) 2,428,559 26,333 (103,765) Fund balance, beginning of year 202,930 2,740,380 152,963 498,070 77,327 - 106,374 159,825 Fund balance, end of year 254,607$ 3,004,947$ 126,163$ 604,663$ 75,436$ 2,428,559$ 132,707$ 56,060$ Special Revenue Funds 71 Cable Special Half-Penny Police General Capital Total TIRZ #3 PEG Revenue Streets Sales Tax Developers' Facility Capital Project Non-major Glade Parks Fees Funds CIP Capital Contribution Construction Projects Redevelopment Funds Governmental Fund Fund Totals Fund Projects Fund Fund Fund Fund Totals Funds -$ 131,864$ 461,232$ -$ -$ -$ -$ -$ -$ -$ 461,232$ 9,369 - 6,045,711 - - - - - - - 6,045,711 - - 10,734 3,637 4,149 2,331 91 2,139 251 12,598 23,332 - - 2,446,594 - - - - - - - 2,446,594 - - - 24,899 - - - - - 24,899 24,899 - - - - - - - 314,092 - 314,092 314,092 - - 372,237 - - 20,908 - - - 20,908 393,145 9,369 131,864 9,336,508 28,536 4,149 23,239 91 316,231 251 372,497 9,709,005 - - 2,105,404 - 20,536 4,079 - - - 24,615 2,130,019 - - 199,330 - - - - - - - 199,330 - - 304,693 - - - - - - - 304,693 - - 2,139,703 - - - 31,190 - - 31,190 2,170,893 - - 860,000 - - - - - - - 860,000 - - 41,913 - - - - - - - 41,913 - - 40,218 858,826 619,979 - - 1,446,603 75,403 3,000,811 3,041,029 - - 5,691,261 858,826 640,515 4,079 31,190 1,446,603 75,403 3,056,616 8,747,877 9,369 131,864 3,645,247 (830,290) (636,366) 19,160 (31,099) (1,130,372) (75,152) (2,684,119) 961,128 - - - - - - - 1,446,603 - 1,446,603 1,446,603 - - 74,694 300,000 325,000 - - - - 625,000 699,694 (9,369) - (842,804) - - - - (1,504,972) - (1,504,972) (2,347,776) (9,369) - (768,110) 300,000 325,000 - - (58,369) - 566,631 (201,479) - 131,864 2,877,137 (530,290) (311,366) 19,160 (31,099) (1,188,741) (75,152) (2,117,488) 759,649 - 158,603 4,096,472 2,186,912 1,354,774 1,428,599 108,625 1,869,760 280,548 7,229,218 11,325,690 -$ 290,467$ 6,973,609$ 1,656,622$ 1,043,408$ 1,447,759$ 77,526$ 681,019$ 205,396$ 5,111,730$ 12,085,339$ Special Revenue Funds Capital Projects Funds CITY OF EULESS, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL HOTEL / MOTEL SPECIAL REVENUE FUND YEAR ENDED SEPTEMBER 30, 2013 72 Variance with Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues Gross receipts tax 280,000$ 280,000$ 329,368$ 49,368$ Investment income 150 150 114 (36) Other revenues - - 5 5 Total revenues 280,150 280,150 329,487 49,337 Other financing uses Transfers out (277,810) (277,810) (277,810) - Total other financing uses (277,810) (277,810) (277,810) - Net change in fund balance 2,340 2,340 51,677 49,337 Fund balance, beginning of year 202,930 202,930 202,930 - Fund balance, end of year 205,270$ 205,270$ 254,607$ 49,337$ Budgeted Amounts CITY OF EULESS, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL HALF-PENNY SALES TAX SPECIAL REVENUE FUND YEAR ENDED SEPTEMBER 30, 2013 73 Variance with Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues General sales tax 3,710,116$ 3,710,116$ 4,042,405$ 332,289$ Investment income 3,500 3,500 10,129 6,629 Total revenues 3,713,616 3,713,616 4,052,534 338,918 Expenditures Culture and recreation 2,204,916 2,204,916 2,105,404 99,512 Development services 567,626 567,626 199,330 368,296 General and administrative 209,474 209,474 237,172 (27,698) Debt service Principal 860,000 860,000 860,000 - Interest and fiscal charges 41,914 41,914 41,913 1 Capital outlay - - 19,148 (19,148) Total expenditures 3,883,930 3,883,930 3,462,967 420,963 Excess (deficiency) of revenues over (under) expenditures (170,314) (170,314) 589,567 759,881 Other financing uses Transfers out (325,000) (325,000) (325,000) - Total other financing uses (325,000) (325,000) (325,000) - Net change in fund balance (495,314) (495,314) 264,567 759,881 Fund balance, beginning of year 2,740,380 2,740,380 2,740,380 - Fund balance, end of year 2,245,066$ 2,245,066$ 3,004,947$ 759,881$ Budgeted Amounts CITY OF EULESS, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL POLICE DRUG ENFORCEMENT SPECIAL REVENUE FUND YEAR ENDED SEPTEMBER 30, 2013 74 Variance with Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues Investment income 1,000$ 1,000$ 124$ (876)$ DEA revenues - - 3,571 3,571 Other - - 23,152 23,152 Total revenues 1,000 1,000 26,847 25,847 Expenditures Public safety 500 500 46,694 (46,194) - - 6,953 (6,953) Total expenditures 500 500 53,647 (53,147) Net change in fund balance 500 500 (26,800) (27,300) Fund balance, beginning of year 152,963 152,963 152,963 - Fund balance, end of year 153,463$ 153,463$ 126,163$ (27,300)$ Budgeted Amounts CITY OF EULESS, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL CRIME CONTROL AND PREVENTION DISTRICT SPECIAL REVENUE FUND YEAR ENDED SEPTEMBER 30, 2013 75 Variance with Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues General sales tax 1,782,440$ 1,782,440$ 1,993,937$ 211,497$ Other revenue - - 3,302 3,302 Investment income 150 150 178 28 Total revenues 1,782,590 1,782,590 1,997,417 214,827 Expenditures Public safety 1,890,825 1,890,825 1,890,824 1 Total expenditures 1,890,825 1,890,825 1,890,824 1 Net change in fund balance (108,235) (108,235) 106,593 214,828 Fund balance, beginning of year 498,070 498,070 498,070 - Fund balance, end of year 389,835$ 389,835$ 604,663$ 214,828$ Budgeted Amounts CITY OF EULESS, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL PUBLIC SAFETY GRANT SPECIAL REVENUE FUND YEAR ENDED SEPTEMBER 30, 2013 76 Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues Other revenues 69,587$ 69,587$ 125,137$ 55,550$ Total revenues 69,587 69,587 125,137 55,550 Expenditures Public safety 104,587 104,587 187,605 (83,018) Capital outlay - - 14,117 (14,117) Total expenditures 104,587 104,587 201,722 (97,135) Other financing sources Transfers in 35,000 35,000 74,694 39,694 Total other financing sources 35,000 35,000 74,694 39,694 Net change in fund balance - - (1,891) (1,891) Fund balance, beginning of year 77,327 77,327 77,327 - Fund balance, end of year 77,327$ 77,327$ 75,436$ (1,891)$ Budgeted Amounts CITY OF EULESS, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL POLICE SEIZED ASSETS SPECIAL REVENUE FUND YEAR ENDED SEPTEMBER 30, 2013 77 Variance with Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues Investment income -$ -$ 116$ 116$ DEA revenues 263,970 263,970 2,443,023 2,179,053 Total revenues 263,970 263,970 2,443,139 2,179,169 Expenditures Public safety 263,970 263,970 14,580 249,390 Total expenditures 263,970 263,970 14,580 249,390 Net change in fund balance - - 2,428,559 2,428,559 Fund balance, beginning of year - - - - Fund balance, end of year -$ -$ 2,428,559$ 2,428,559$ Budgeted Amounts CITY OF EULESS, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL JUVENILE CASE SPECIAL REVENUE FUND YEAR ENDED SEPTEMBER 30, 2013 78 Variance with Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues Investment income -$ -$ 73$ 73$ Other revenues 82,500 82,500 93,781 11,281 Total revenues 82,500 82,500 93,854 11,354 Expenditures General and administrative 80,589 80,589 67,521 13,068 Total expenditures 80,589 80,589 67,521 13,068 Net change in fund balance 1,911 1,911 26,333 24,422 Fund balance, beginning of year 106,374 106,374 106,374 - Fund balance, end of year 108,285$ 108,285$ 132,707$ 24,422$ Budgeted Amounts CITY OF EULESS, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL GLADE PARKS PID SPECIAL REVENUE FUND YEAR ENDED SEPTEMBER 30, 2013 79 Variance with Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues Other revenues 114,994$ 114,994$ 126,860$ 11,866$ Total revenues 114,994 114,994 126,860 11,866 Other financing sources (uses) Transfers in 105,000 105,000 - (105,000) Transfers out (228,364) (228,364) (230,625) (2,261) Total other financing sources (uses) (123,364) (123,364) (230,625) (107,261) Net change in fund balance (8,370) (8,370) (103,765) (95,395) Fund balance, beginning of year 159,825 159,825 159,825 - Fund balance, end of year 151,455$ 151,455$ 56,060$ (95,395)$ Budgeted Amounts CITY OF EULESS, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL TIRZ #3 GLADE PARKS SPECIAL REVENUE FUND YEAR ENDED SEPTEMBER 30, 2013 80 Variance with Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues General sales tax 11,630$ 11,630$ 9,369$ (2,261)$ Total revenues 11,630 11,630 9,369 (2,261) Other financing uses Transfers out (11,630) (11,630) (9,369) 2,261 Total other financing uses (11,630) (11,630) (9,369) 2,261 Net change in fund balance - - - - Fund balance, beginning of year - - - - Fund balance, end of year - $ - $ - $ -$ Budgeted Amounts 81 NON-MAJOR PROPRIETARY FUNDS Enterprise funds are used to account for operations financed and operated in a manner similar to private business enterprises where the intent of the government's council is to recover the costs of providing goods or services to the general public on a continuing basis primarily through user charges; or where the government's council has decided that periodic determination of net income is appropriate for accountability purposes. Recreation Classes – to account for the operation of recreational programs and activities which are offered to groups and individuals on a fee basis. Texas Star Sports Complex – to account for the operation and maintenance of Softball World and The Parks at Texas Star Complexes, supported primarily by user charges. Arbor Daze Fund – to account for the receipts and disbursements of the annual Arbor Daze Festival, supported primarily by user charges. CITY OF EULESS, TEXAS COMBINING STATEMENT OF NET POSITION NON-MAJOR PROPRIETARY FUNDS SEPTEMBER 30, 2013 (1 of 2) 82 Recreation Texas Star Arbor Classes Sports Complex Daze Totals ASSETS Current assets Deposits and investments 363,979$ 1,687,626$ 33,531$ 2,085,136$ Accounts receivable and unbilled revenue 664 30,450 - 31,114 Prepaids and deposits 998 17,440 - 18,438 Inventory - 67,465 - 67,465 Total current assets 365,641 1,802,981 33,531 2,202,153 Non-current assets Bond issuance cost, net - 10,849 - 10,849 Net OPEB asset 555 4,125 - 4,680 Total non-current assets 555 14,974 - 15,529 Property, plant, and equipment, at cost Land - 584,532 - 584,532 Building - 488,275 - 488,275 Equipment 73,777 126,498 - 200,275 Improvements - 8,150,654 - 8,150,654 Total property, plant, and equipment 73,777 9,349,959 - 9,423,736 Less accumulated depreciation 64,698 4,046,037 - 4,110,735 Net property, plant, and equipment 9,079 5,303,922 - 5,313,001 Total non-current assets 9,634 5,318,896 - 5,328,530 Total assets 375,275$ 7,121,877$ 33,531$ 7,530,683$ CITY OF EULESS, TEXAS COMBINING STATEMENT OF NET POSITION NON-MAJOR PROPRIETARY FUNDS SEPTEMBER 30, 2013 (2 of 2) 83 Recreation Texas Star Arbor Classes Sports Complex Daze Totals LIABILITIES Current liabilities Payable from current assets Accounts payable 10,570$ 39,573$ - $ 50,143$ Accrued salaries and wages 2,554 16,849 - 19,403 Current portion of bonds payable - 150,000 - 150,000 Accrued interest - 1,925 - 1,925 Total current liabilities 13,124 208,347 - 221,471 Non-current liabilities Net pension obligation - 10,277 - 10,277 Bonds payable - 313,837 - 313,837 Total non-current liabilities - 324,114 - 324,114 Total liabilities 13,124 532,461 - 545,585 NET POSITION Net investment in capital assets 9,079 4,840,085 - 4,849,164 Unrestricted 353,072 1,749,331 33,531 2,135,934 Total net position 362,151$ 6,589,416$ 33,531$ 6,985,098$ CITY OF EULESS, TEXAS COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION NON-MAJOR PROPRIETARY FUNDS YEAR ENDED SEPTEMBER 30, 2013 84 Recreation Texas Star Arbor Classes Sports Complex Daze Totals Operating revenues Recreation fees 447,032$ -$ -$ 447,032$ Service fees and miscellaneous - 1,624,516 67,052 1,691,568 Total operating revenues 447,032 1,624,516 67,052 2,138,600 Operating expenses Recreation classes 498,801 - - 498,801 Texas Star Sports Complex - 1,395,406 - 1,395,406 Arbor Daze - - 66,885 66,885 Depreciation 3,896 310,865 - 314,761 Amortization - 11,004 - 11,004 Total operating expenses 502,697 1,717,275 66,885 2,286,857 Operating income (loss) (55,665) (92,759) 167 (148,257) Nonoperating revenues (expenses) Loss on sale of capital asset (317) - - (317) Investment income 389 1,638 20 2,047 Interest expense - (20,955) - (20,955) Total nonoperating revenues (expenses), net 72 (19,317) 20 (19,225) Change in net position (55,593) (112,076) 187 (167,482) Net position, beginning of year 417,744 6,701,492 33,344 7,152,580 Net position, end of year 362,151$ 6,589,416$ 33,531$ 6,985,098$ CITY OF EULESS, TEXAS COMBINING STATEMENT OF CASH FLOWS NON-MAJOR PROPRIETARY FUNDS YEAR ENDED SEPTEMBER 30, 2013 85 Recreation Texas Star Arbor Classes Sports Complex Daze Totals OPERATING ACTIVITIES Cash received from customers 446,368$ 1,621,619$ 67,053$ 2,135,040$ Cash payments to suppliers for goods and services (319,892) (1,074,823) (66,886) (1,461,601) Cash payments to employees for services (173,116) (291,370) - (464,486) Net cash provided by (used in) operating activities (46,640) 255,426 167 208,953 CAPITAL AND RELATED FINANCING ACTIVITIES Interest paid on bonds - (22,921) - (22,921) Reduction in bonds payable - (620,000) - (620,000) Proceeds from bond issuances - 484,618 - 484,618 Net cash used in capital and related financing activities - (158,303) - (158,303) INVESTING ACTIVITIES Interest received on investments 389 1,638 20 2,047 Net cash provided by investing activities 389 1,638 20 2,047 Net change in cash and and cash equivalents (46,251) 98,761 187 52,697 Cash and cash equivalents, beginning of year 410,230 1,588,865 33,344 2,032,439 Cash and cash equivalents, end of year 363,979$ 1,687,626$ 33,531$ 2,085,136$ Reconciliation of operating income (loss) to net cash provided by (used in) operating activities Operating income (loss) (55,665)$ (92,759)$ 167$ (148,257)$ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities Depreciation and amortization 3,896 321,869 - 325,765 Changes in assets and liabilities Accounts receivable and unbilled revenue (664) (2,899) - (3,563) Prepaids and deposits (928) (3,049) - (3,977) Net OPEB asset - 1,087 - 1,087 Net pension obligation (55) (139) - (194) Inventory - 37,725 - 37,725 Accounts payable 6,358 (6,845) - (487) Accrued salaries and wages 418 436 - 854 Net cash provided by (used in) operating activities (46,640)$ 255,426$ 167$ 208,953$ 86 INTERNAL SERVICE FUNDS Internal service funds are used to account for the financing of goods or services provided by one department to other departments of the City and to other government units on a cost reimbursement basis. Equipment Replacement Fund – to account for the accumulation of funds to be used for replacement of existing equipment. Funding is provided annually by the user departments. Insurance Fund – to account for the revenues and expenses resulting from providing health insurance to the City's employees. Risk Management/Workers’ Compensation (Risk/WC) Fund – to account for the revenue and expenses applicable to providing workers’ compensation coverage for all City employees, as well as, general liability and property coverage. CITY OF EULESS, TEXAS COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS SEPTEMBER 30, 2013 87 Equipment Replacement Insurance Risk/WC Fund Fund Fund Total Deposits and investments 2,703,859$ 2,857,433$ 1,847,739$ 7,409,031$ Accounts receivable 8,404 122,206 - 130,610 Prepaid expenses - 54,775 - 54,775 Accrued interest receivable 172 1,825 120 2,117 Total current assets 2,712,435 3,036,239 1,847,859 7,596,533 Property, plant, and equipment, at cost Equipment 8,598,331 - 13,870 8,612,201 Less accumulated depreciation 6,247,216 - 8,914 6,256,130 Net property, plant, and equipment 2,351,115 - 4,956 2,356,071 Total assets 5,063,550 3,036,239 1,852,815 9,952,604 Accounts payable 1,575 9,481 381,799 392,855 Accrued salary and wages - 7,272 4,242 11,514 Accrued insurance claims - 372,657 112,668 485,325 Total liabilities 1,575 389,410 498,709 889,694 Net investment in capital assets 2,351,115 - 4,956 2,356,071 Unrestricted 2,710,860 2,646,829 1,349,150 6,706,839 Total net position 5,061,975$ 2,646,829$ 1,354,106$ 9,062,910$ ASSETS LIABILITIES NET POSITION CITY OF EULESS, TEXAS COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS YEAR ENDED SEPTEMBER 30, 2013 88 Equipment Replacement Insurance Risk/WC Fund Fund Fund Total Operating revenues Insurance premiums -$ 5,097,932$ 352,652$ 5,450,584$ Service fees and miscellaneous 902,861 29,005 - 931,866 Total operating revenues 902,861 5,126,937 352,652 6,382,450 Operating expenses General and administrative 80,924 1,295,600 63,769 1,440,293 Insurance costs - 3,880,220 558,998 4,439,218 Depreciation 764,255 - 763 765,018 Total operating expenses 845,179 5,175,820 623,530 6,644,529 Operating income (loss) 57,682 (48,883) (270,878) (262,079) Nonoperating revenues Gain on sale of capital assets 159,141 - - 159,141 Investment income 5,535 7,383 1,485 14,403 Total nonoperating revenues 164,676 7,383 1,485 173,544 Income (loss) before transfers 222,358 (41,500) (269,393) (88,535) Other financing sources Transfers in 28,665 - 450,000 478,665 Change in net position 251,023 (41,500) 180,607 390,130 Net position, beginning of year 4,810,952 2,688,329 1,173,499 8,672,780 Net position, end of year 5,061,975$ 2,646,829$ 1,354,106$ 9,062,910$ CITY OF EULESS, TEXAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS YEAR ENDED SEPTEMBER 30, 2013 89 Equipment Replacement Insurance Risk/WC Fund Fund Fund Total OPERATING ACTIVITIES Cash received from customers 894,457$ 5,143,000$ 352,652$ 6,390,109$ Cash payments to suppliers for goods and services (79,349) (5,540,840) (569,520) (6,189,709) Cash payments to employees for services - (40,963) (43,805) (84,768) Net cash provided by (used in) operating activities 815,108 (438,803) (260,673) 115,632 NONCAPITAL FINANCING ACTIVITIES Transfers in 28,665 - 450,000 478,665 Net cash provided by noncapital financing activities 28,665 - 450,000 478,665 CAPITAL AND RELATED FINANCING ACTIVITIES Purchase of capital assets (1,140,553) - - (1,140,553) Proceeds from sale of capital assets 166,352 - - 166,352 Net cash used in capital and related financing activities (974,201) - - (974,201) INVESTING ACTIVITIES Proceeds from sale of investment securities 763 - - 763 Interest received on investments 5,535 6,627 1,365 13,527 Net cash provided by investing activities 6,298 6,627 1,365 14,290 Net increase (decrease) in cash and cash equivalents (124,130) (432,176) 190,692 (365,614) Cash and cash equivalents, beginning of year 2,827,989 3,289,609 1,657,047 7,774,645 Cash and cash equivalents, end of year 2,703,859$ 2,857,433$ 1,847,739$ 7,409,031$ Reconciliation of operating income (loss) to net cash provided by (used in) operating activities Operating income (loss) 57,682$ (48,883)$ (270,878)$ (262,079)$ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities Depreciation expense 764,255 - 763 765,018 Change in assets and liabilities Receivables (8,404) 16,063 - 7,659 Prepaids - (54,775) - (54,775) Accounts payable 1,575 (2,321) 11,658 10,912 Accrued salaries and wages - (122) 644 522 Accrued insurance claims - (348,765) (2,860) (351,625) Net cash provided by (used in) operating activities 815,108$ (438,803)$ (260,673)$ 115,632$ CITY OF EULESS, TEXAS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ESCROW AGENCY FUNDS YEAR ENDED SEPTEMBER 30, 2013 90 Balance Balance October 1, September 30, 2012 Additions Deductions 2013 Stars Center Escrow Fund Assets Investments at fair value 1,421,048$ 1,347$ (1,685)$ 1,420,710$ Total assets 1,421,048$ 1,347$ (1,685)$ 1,420,710$ Liabilities Due to other entities 1,420,547$ -$ -$ 1,420,547$ Refunds payable 501 163 (501) 163 Total liabilities 1,421,048$ 163$ (501)$ 1,420,710$ Glade Parks Escrow Fund Assets Investments at fair value 513,370$ 440$ (230,068)$ 283,742$ Total assets 513,370$ 440$ (230,068)$ 283,742$ Liabilities Due to other entities 513,370$ 440$ (230,068)$ 283,742$ Total liabilities 513,370$ 440$ (230,068)$ 283,742$ Total Agency Funds Assets Investments at fair value 1,934,418$ 1,787$ (231,753)$ 1,704,452$ Total assets 1,934,418$ 1,787$ (231,753)$ 1,704,452$ Liabilities Due to other entities 1,933,917$ 440$ (230,068)$ 1,704,289$ Refunds payable 501 163 (501) 163 Total liabilities 1,934,418$ 603$ (230,569)$ 1,704,452$ STATISTICAL SECTION (Unaudited) THIS PAGE INTENTIONALLY LEFT BLANK 91 STATISTICAL SECTION (Unaudited) The statistical section of the City of Euless’ comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial health. Contents Tables Financial Trends 1-4 The financial trend schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. Revenue Capacity 5-8 The revenue capacity schedules contain information to help the reader assess the City’s most significant local revenue source, the property tax. Debt Capacity 9-13 The debt capacity schedules present information to help the reader assess the affordability of the City’s current level of outstanding debt (including that of its blended component units) and the City’s ability to issue additional debt in the future. Demographic and Economic Information 14-15 The demographic and economic schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities occur. Operating Information 16-18 The operating information schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services it provides and the activities it performs. CITY OF EULESS, TEXAS NET POSITION BY COMPONENT – LAST TEN FISCAL YEARS (Accrual Basis of Accounting – Unaudited) Table 1 92 Fiscal Year2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Governmental activitiesNet investment in capital assets 46,733,074$ 49,659,438$ 49,883,218$ 58,251,542$ 60,799,897$ 66,241,593$ 73,815,504$ 71,051,094$ 77,828,950$ 88,228,282$ Restricted 1,304,226 1,455,709 1,448,741 1,725,998 1,813,871 1,845,987 1,375,950 1,818,957 4,426,819 4,138,774 Unrestricted 14,657,018 17,512,832 25,497,497 27,104,410 31,041,434 29,885,070 24,933,443 31,448,528 27,192,202 24,910,579 Total governmental activities net position 62,694,318$ 68,627,979$ 76,829,456$ 87,081,950$ 93,655,202$ 97,972,650$ 100,124,897$ 104,318,579$ 109,447,971$ 117,277,635$ Business-type activitiesNet investment in capital assets 43,283,643$ 47,988,447$ 48,278,044$ 50,186,697$ 52,155,251$ 53,569,070$ 53,318,214$ 53,132,882$ 52,202,849$ 52,334,570$ Restricted for debt service - - - - - 3,963,919 438,340 438,948 309,595 314,171 Restricted for impact fees and debt service - - - - - - 2,999,156 2,649,336 2,401,217 2,740,656 Unrestricted 16,906,068 15,830,507 19,099,883 16,421,971 16,900,637 12,980,130 13,987,730 16,947,928 17,703,257 18,150,441 Total business-type activities net position 60,189,711$ 63,818,954$ 67,377,927$ 66,608,668$ 69,055,888$ 70,513,119$ 70,743,440$ 73,169,094$ 72,616,918$ 73,539,838$ Primary governmentNet investment in capital assets 90,016,717$ 97,647,885$ 98,161,262$ 108,438,239$ 112,955,148$ 119,810,663$ 127,133,718$ 124,183,976$ 130,031,799$ 140,562,852$ Restricted 1,304,226 1,455,709 1,448,741 1,725,998 1,813,871 5,809,906 1,814,290 4,907,241 7,137,631 7,193,601 Unrestricted 31,563,086 33,343,339 44,597,380 43,526,381 47,942,071 42,865,200 38,921,173 48,396,456 44,895,459 43,061,020 Total primary government net position 122,884,029$ 132,446,933$ 144,207,383$ 153,690,618$ 162,711,090$ 168,485,769$ 167,869,181$ 177,487,673$ 182,064,889$ 190,817,473$ Source: Comprehensive Annual Financial Reports CITY OF EULESS, TEXAS CHANGES IN NET POSITION – LAST TEN FISCAL YEARS (Accrual Basis of Accounting – Unaudited) Table 2 93 Fiscal Year2004 2005 2006 2007 2008 2009 2010 2011 2012 2013ExpensesGovernmental activities:Culture and recreation 4,411,726$ 4,573,219$ 4,892,346$ 5,002,569$ 4,862,749$ 4,892,936$ 5,004,580$ 5,091,589$ 5,680,772$ 6,025,540$ Development services 1,217,794 1,113,875 1,169,285 1,487,102 1,420,477 1,707,421 1,692,845 1,707,148 972,770 1,155,089 General and administrative 12,337,712 13,370,907 15,122,831 16,495,449 17,733,714 17,267,094 14,571,600 15,698,832 15,910,313 17,145,752 Highways and streets 2,398,447 1,734,487 2,211,083 2,206,697 2,534,856 2,057,123 2,662,949 2,923,241 2,968,770 3,334,188 Public safety 15,315,777 15,514,301 16,252,071 17,047,334 18,708,849 19,379,290 21,416,966 20,754,733 22,316,429 23,324,328 Interest on long-term debt 2,765,102 2,572,094 2,741,754 2,664,658 3,151,039 2,377,564 1,885,177 1,618,420 1,327,482 1,227,084 Total governmental activities expenses 38,446,558 38,878,883 42,389,370 44,903,809 48,411,684 47,681,428 47,234,117 47,793,963 49,176,536 52,211,981 Business-type activities:Water and wastewater 12,550,708 13,227,562 15,285,026 15,418,299 16,462,599 15,623,464 17,035,520 17,827,272 17,813,199 18,554,761 Drainage utility 793,358 875,995 884,763 1,059,272 932,771 947,869 1,107,206 1,177,938 1,283,617 1,245,838 Golf 3,667,537 3,792,552 4,003,035 4,250,866 4,421,256 4,690,701 4,460,627 4,483,252 4,599,099 4,750,359 Other recreation enterprises 2,299,391 2,630,760 1,842,550 2,109,291 2,155,131 2,016,273 1,866,786 1,982,613 2,115,730 2,312,949 Total business-type activities expenses 19,310,994 20,526,869 22,015,374 22,837,728 23,971,757 23,278,307 24,470,139 25,471,075 25,811,645 26,863,907 Total primary government expenses 57,757,552 59,405,752 64,404,744 67,741,537 72,383,441 70,959,735 71,704,256 73,265,038 74,988,181 79,075,888 Program RevenuesGovernmental activities:Fees, fines, and charges for servicesCulture and recreation 52,651 91,925 92,837 83,084 65,349 67,283 66,368 69,950 65,912 297,361$ Development services 817,293 896,894 841,033 833,822 688,348 783,955 751,323 779,939 1,263,477 1,186,347 General and administrative 1,401,057 1,241,408 1,706,000 1,252,030 1,391,437 4,092,387 1,548,497 1,707,890 1,760,023 1,383,779 Highways and streets - - 6,300 (8,026) 722,334 11,008 - - 54,622 112,736 Public safety 3,328,327 3,734,364 4,505,202 4,423,564 5,439,171 4,030,566 4,345,101 3,271,115 3,097,141 3,355,604 Operating grants and contributions 517,307 1,302,332 592,231 411,857 486,862 487,059 511,093 469,404 481,655 2,978,933 Capital grants and contributions - - 8,706 2,199,106 1,885,266 268,130 602,372 1,015,402 689,642 1,213,341 Total governmental activities program revenues 6,116,635 7,266,923 7,752,309 9,195,437 10,678,767 9,740,388 7,824,754 7,313,700 7,412,472 10,528,101 Business-type activities:Charges for servicesWater and wastewater 13,235,590 14,213,072 16,065,814 13,730,467 15,849,209 16,381,801 17,321,670 19,978,802 18,437,963 19,183,198 Drainage utility 643,229 659,949 658,231 701,476 661,725 689,889 691,800 694,751 705,474 708,984 Golf 3,052,947 3,347,922 3,777,018 3,825,486 3,904,008 4,069,151 5,279,259 4,746,242 4,335,149 4,520,224 Other recreation enterprises 2,012,214 2,453,905 1,518,386 1,636,883 1,819,459 1,703,196 1,937,416 2,684,905 2,041,878 2,138,600 Operating grants and contributions - 3,308,393 - - - - - - - - Capital grants and contributions - - 312,835 1,012,919 2,183,600 1,705,746 26,400 772,714 368,882 1,847,097 Total business-type activities program revenues 18,943,980 23,983,241 22,332,284 20,907,231 24,418,001 24,549,783 25,256,545 28,877,414 25,889,346 28,398,103 Total primary government program revenues 25,060,615 31,250,164 30,084,593 30,102,668 35,096,768 34,290,171 33,081,299 36,191,114 33,301,818 38,926,204 (Continued) (Continued) (Continued) (Continued) (Continued) (Continued) (Continued) (Continued) (Continued) (Continued) CITY OF EULESS, TEXAS CHANGES IN NET POSITION – LAST TEN FISCAL YEARS (Accrual Basis of Accounting – Unaudited) – Continued Table 2 94 Net (Expense) RevenueGovernmental activities (32,329,923)$ (31,611,960)$ (34,637,061)$ (35,708,372)$ (37,732,917)$ (37,941,040)$ (39,409,363)$ (40,480,263)$ (41,764,064)$ (41,683,880)$ Business-type activities (367,014) 3,456,372 316,910 (1,930,497) 446,244 1,271,476 786,406 3,406,339 77,701 1,534,196 Total primary government net expense (32,696,937) (28,155,588) (34,320,151) (37,638,869) (37,286,673) (36,669,564) (38,622,957) (37,073,924) (41,686,363) (40,149,684) General Revenues and Other Changes in Net PositionGovernmental activities:TaxesProperty taxes, levied for general purposes 10,233,079 10,777,414 11,188,598 12,343,359 12,231,294 12,685,268 12,306,387 11,855,993 12,451,543 12,744,753 Sales taxes 9,229,819 9,648,979 12,303,965 13,990,652 14,319,938 12,602,345 12,337,598 13,252,805 14,957,757 16,142,357 Car rental taxes 10,190,256 10,841,899 12,580,371 12,955,882 12,832,458 11,632,215 11,480,736 12,457,910 12,933,884 13,592,255 Mixed beverage taxes 82,058 82,759 85,659 87,400 84,653 76,433 71,653 66,383 54,138 60,823 Hotel/motel occupancy taxes 167,259 179,989 216,591 240,457 234,780 185,417 237,429 272,809 292,931 329,368 Gross receipts taxes 3,226,468 3,326,641 4,116,704 3,619,955 3,816,501 4,074,355 3,967,036 4,174,627 4,276,136 4,209,564 Investment income 463,239 870,841 1,611,815 2,031,580 1,727,542 863,225 292,761 168,929 132,607 106,521 Contributions from property owners 3,191,097 1,229,401 - - - - - - - - Rents and royalties - - - - - - - - 397,527 1,481,305 Gain/(loss) on disposal of assets 30,811 (21,023) 24,866 74,163 71,143 37,909 116,978 100,110 68,329 117,763 Miscellaneous 18,208 - - - - 11,018 103,569 1,419,512 637,975 35,884 Transfers 340,834 608,721 709,969 617,418 (1,012,140) 90,303 647,463 904,867 690,629 692,951 Total governmental activities 37,173,128 37,545,621 42,838,538 45,960,866 44,306,169 42,258,488 41,561,610 44,673,945 46,893,456 49,513,544 Business-type activities:Investment income 266,240 407,468 771,888 1,023,865 726,385 254,071 87,799 66,161 60,752 40,045 Contributions from property owners 3,588,379 374,124 271,707 253,786 252,045 - - - - - Gain/(loss) on disposal of assets - - - 277,004 - - 3,579 (141,979) - 41,630 Miscellaneous - - 2,908,437 224,001 10,406 21,987 - - - - Transfers (340,834) (608,721) (709,969) (617,418) 1,012,140 (90,303) (647,463) (904,867) (690,629) (692,951) Total business-type activities 3,513,785 172,871 3,242,063 1,161,238 2,000,976 185,755 (556,085) (980,685) (629,877) (611,276) Total primary government 40,686,913 37,718,492 46,080,601 47,122,104 46,307,145 42,444,243 41,005,525 43,693,260 46,263,579 48,902,268 Change in Net PositionGovernmental activities 4,843,205 5,933,661 8,201,477 10,252,494 6,573,252 4,317,448 2,152,247 4,193,682 5,129,392 7,829,664 Business-type activities 3,146,771 3,629,243 3,558,973 (769,259) 2,447,220 1,457,231 230,321 2,425,654 (552,176) 922,920 Total primary government 7,989,976$ 9,562,904$ 11,760,450$ 9,483,235$ 9,020,472$ 5,774,679$ 2,382,568$ 6,619,336$ 4,577,216$ 8,752,584$ (concluded) (concluded) (concluded) (concluded) (concluded) (concluded) (concluded) (concluded) (concluded) (concluded)Source: Comprehensive Annual Financial Reports CITY OF EULESS, TEXAS FUND BALANCES, GOVERNMENTAL FUNDS – LAST TEN FISCAL YEARS (Modified accrual basis of accounting – Unaudited) Table 3 95 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013General FundReserved for other 193,253$ 239,592$ 310,956$ 392,950$ 362,018$ 354,882$ 492,776$ -$ -$ -$ Nonspendable - - - - - - - 19,344 28,796 49,262 Restricted - - - - - - - 311,076 258,765 124,312 Assigned - - - - - - - 103,423 111,096 121,542 Unreserved/Unassigned 5,552,863 6,363,113 8,989,805 10,594,492 8,355,946 7,288,976 7,121,683 7,296,719 8,913,078 9,595,558 Total general fund 5,746,116$ 6,602,705$ 9,300,761$ 10,987,442$ 8,717,964$ 7,643,858$ 7,614,459$ 7,730,562$ 9,311,735$ 9,890,674$ All Other Governmental FundsReserved for:Debt service 1,432,251$ 1,642,766$ 1,587,754$ 1,893,893$ 1,967,502$ 1,987,783$ 1,622,584$ -$ -$ -$ Development Agreements 1,442,999 1,470,156 1,535,647 1,598,658 1,671,038 1,553,876 1,454,496 - - - Other 1,245 1,245 1,245 1,245 1,245 1,245 7,677 - - - Unreserved, reported in:Special revenue funds 5,830,664 8,086,786 7,643,232 11,330,717 5,741,072 6,020,996 7,780,378 - - - Capital funds 13,708,861 11,110,293 7,482,417 4,627,428 10,940,619 10,918,516 5,792,872 - - - Nonspendable - - - - - - - 5,665 5,803 9,464 Restricted for:Debt service - - - - - - - 1,818,957 1,867,971 1,776,644 Capital projects - - - - - - - 2,168,956 606,505 365,641 Other - - - - - - - 87,972 1,694,821 1,872,178 Assigned - - - - - - - 14,855,820 15,802,863 13,504,412 Total all other governmental funds 22,416,020$ 22,311,246$ 18,250,295$ 19,451,941$ 20,321,476$ 20,482,416$ 16,658,007$ 18,937,370$ 19,977,963$ 17,528,339$ Source: Comprehensive Annual Financial ReportsNote: The City of Euless first applied GASB Statement No. 54 "Fund Balance Reporting and Governmental Fund Type Definitions'" in fiscal year 2011. Reclassification of fund balances for prior years was not required. CITY OF EULESS, TEXAS CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (Modified accrual basis of accounting – Unaudited) Table 4 96 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Revenues:General property tax 10,297,219 11,138,582 11,266,615 12,482,090 12,200,974 12,735,324 12,277,457 11,786,579 12,382,757 12,893,583$ Gross receipts tax 3,475,785 3,589,389 4,418,954 3,947,812 4,135,934 4,336,205 4,276,110 4,513,819 4,623,205 4,599,755 General sales tax 9,229,819 9,648,979 12,303,965 13,990,652 14,319,938 12,602,345 12,337,598 13,252,805 14,957,757 16,142,357 Car rental tax 10,190,256 10,841,899 12,580,371 12,955,882 12,832,458 11,632,215 11,480,736 12,457,910 12,933,884 13,592,255 Fines and fees 3,162,113 3,662,327 4,089,056 4,348,839 4,297,304 4,086,594 4,336,063 4,033,868 4,278,738 4,627,199 Licenses and permits 1,190,059 870,010 806,476 804,404 752,421 783,955 719,918 744,978 1,233,465 1,152,875 Investment income 444,653 798,485 1,468,812 1,784,492 1,512,898 742,444 253,302 143,564 107,195 92,118 DEA revenues 128,341 14,607 77,461 5,360 26,580 14,883 15,350 6,589 12,488 3,571 Intergovernmental 292,265 303,713 315,487 334,979 353,567 379,503 376,512 377,660 1,012,673 2,839,545 Rents and royalties - - - - - - 1,620,210 1,233,686 1,111,873 1,024,021 Other revenues 1,434,035 2,238,652 2,015,047 1,513,511 2,924,573 4,300,564 978,179 1,194,966 1,206,611 1,383,172 Total Revenues 39,844,545 43,106,643 49,342,244 52,168,021 53,356,647 51,614,032 48,671,435 49,746,424 53,860,646 58,350,451 Expenditures:Culture and recreation 3,586,026 3,890,845 4,079,825 4,500,202 4,461,329 4,350,573 4,120,435 4,335,786 4,676,100 5,171,477 Development services 1,150,194 1,079,073 1,117,614 1,461,222 1,232,277 1,355,105 1,251,706 1,340,898 688,296 806,275 General and administrative 11,912,050 12,494,352 14,860,076 16,377,711 17,660,608 16,230,408 14,796,474 15,610,772 15,539,673 17,207,934 Highways and streets 766,030 670,742 656,964 693,711 943,171 861,885 610,996 713,742 861,748 1,144,223 Public safety 13,814,758 14,409,786 15,334,138 16,958,988 17,930,526 18,560,852 19,011,663 19,492,862 21,074,399 22,192,488 Debt Service:Principal 2,666,815 2,600,000 2,790,000 3,030,000 3,010,000 2,990,000 3,110,000 3,445,000 8,210,000 3,975,000 Interest and fiscal charges 3,308,249 2,939,783 2,596,934 2,577,106 2,437,894 2,312,734 2,189,070 1,798,615 1,361,259 1,241,776 Issuance costs 80,000 128,000 97,810 5,946 - - 95,000 178,229 184,966 26,064 Capital outlay 3,455,190 4,248,437 7,997,263 3,777,225 5,843,641 5,730,944 6,865,802 4,805,147 3,727,193 10,390,582 Total expenditures 40,739,312 42,461,018 49,530,624 49,382,111 53,519,446 52,392,501 52,051,146 51,721,051 56,323,634 62,155,819 Excess (deficiency) of revenuesover (under) expenditures (894,767) 645,625 (188,380) 2,785,910 (162,799) (778,469) (3,379,711) (1,974,627) (2,462,988) (3,805,368) Other Financing Sources (Uses):Proceeds from capital lease - - - - - - - 494,322 - 1,446,603 Proceeds from issuance of debt 7,580,000 13,900,000 6,710,000 - - - 8,110,000 9,610,000 9,740,000 1,160,000 Payment of escrow for refunding - (14,386,070) (6,879,482) - - - (8,443,763) (6,804,790) (5,381,310) (1,190,252) Bond premium - 508,038 - - - - - 390,694 260,435 79,046 Bond discount - - - - - - (94,828) - - - Transfers in 3,985,286 2,435,617 5,536,285 2,920,599 12,313,757 4,461,419 3,371,742 5,696,323 8,134,018 6,278,531 Transfers out (5,982,152) (2,351,396) (6,541,319) (2,818,181) (13,550,897) (4,596,116) (3,417,248) (5,016,456) (7,668,389) (5,839,245) Total other financing sources 5,583,134 106,189 (1,174,516) 102,418 (1,237,140) (134,697) (474,097) 4,370,093 5,084,754 1,934,683 Net change in fund balances 4,688,367$ 751,814$ (1,362,896)$ 2,888,328$ (1,399,939)$ (913,166)$ (3,853,808)$ 2,395,466$ 2,621,766$ (1,870,685)$ Debt service as a percentageof noncapital expenditures 16.2% 14.8% 13.2% 12.3% 11.4% 11.4% 11.9% 11.6% 18.5% 10.1%Source: Comprehensive Annual Financial Reports CITY OF EULESS, TEXAS ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY – LAST TEN FISCAL YEARS (Unaudited) Table 5 97 Total Total Less: Total Taxable DirectFiscal Real Personal Market Tax-Exempt Assessed TaxYear Property Property Value Property Value Rate2004 1,908,435,313 410,962,260 2,319,397,573 249,704,249 2,069,693,324 0.4950002005 2,029,651,370 428,198,142 2,457,849,512 271,935,496 2,185,914,016 0.4950002006 2,190,313,348 375,328,844 2,565,642,192 312,107,619 2,253,534,573 0.4917772007 2,324,055,440 424,995,712 2,749,051,152 308,569,035 2,440,482,117 0.4895002008 2,438,826,320 464,735,670 2,903,561,990 320,650,590 2,582,911,400 0.4700002009 2,477,673,867 508,213,527 2,985,887,394 325,886,654 2,660,000,740 0.4700002010 2,470,282,654 449,954,489 2,920,237,143 330,392,987 2,589,844,156 0.4700002011 2,473,997,250 390,731,885 2,864,729,135 341,730,427 2,522,998,708 0.4700002012 2,610,172,289 389,778,962 2,999,951,251 348,227,246 2,651,724,005 0.4700002013 2,661,959,213 445,909,463 3,107,868,676 351,726,906 2,756,141,770 0.470000Source: Tarrant Appraisal DistrictEstimated Market Value CITY OF EULESS, TEXAS DIRECT AND OVERLAPPING PROPERTY TAX RATES (per $100 of Assessed Value) – LAST TEN FISCAL YEARS (Unaudited) Table 6 98 Fiscal YearOperating / General RateGeneral Obligation Debt ServiceTotal Direct RateHurst-Euless-Bedford ISDGrapevine-Colleyville ISDTarrant CountyTarrant County Hospital DistrictTarrant County Community College2004 0.309241 0.185759 0.495000 1.6616 1.7011 0.2725 0.2354 0.13942005 0.331396 0.163604 0.495000 1.7105 1.7000 0.2725 0.2354 0.13942006 0.340321 0.151456 0.491777 1.7230 1.7000 0.2725 0.2354 0.13942007 0.343227 0.146273 0.489500 1.5975 1.5743 0.2715 0.2354 0.13942008 0.340341 0.129659 0.470000 1.3037 1.2900 0.2665 0.2304 0.13942009 0.351937 0.118063 0.470000 1.2950 1.2900 0.2640 0.2279 0.13802010 0.360791 0.109209 0.470000 1.2955 1.2900 0.2640 0.2280 0.13772011 0.343905 0.126095 0.470000 1.2882 1.2900 0.2640 0.2279 0.13762012 0.345388 0.124612 0.470000 1.4140 1.3100 0.2640 0.2280 0.14902013 0.355130 0.114870 0.470000 1.4075 1.3201 0.2640 0.2279 0.1490Sources: City of Euless Budget Office, Tarrant Appraisal DistrictOverlapping RatesCity Direct Rates CITY OF EULESS, TEXAS PRINCIPAL PROPERTY TAX PAYERS Current Year and Nine Years Ago (Unaudited) Table 7 99 Percentage Percentageof Total City of Total CityTaxable Taxable Taxable TaxableAssessed Assessed Assessed AssessedTaxpayerValue Value (1) TaxpayerValue Value (2)Ean Holdings, LLC 59,616,590$ 2.16 % Hertz Corp. Rent-a-Car 50,000,000$ 2.42 %Avis Rent A Car System LLC 50,649,087 1.84 Avis Rent-a-Car, Inc. 37,376,233 1.81The Hertz Corp. 49,171,866 1.78 National Rental Systems Inc. 33,465,656 1.62UDR The Mandolin LLC 45,630,000 1.66 The Bear Apartments 31,403,466 1.52IRA Stoneleigh Feeco LLC 41,000,000 1.49 Somerset Village Partners LP 31,013,586 1.50AP WP Seramont Reit LLC 37,650,000 1.37 Cingular Wireless 27,953,071 1.35CMF 15 Portfolio LLC 34,980,000 1.27 Southwest Properties 27,385,440 1.32AP WP Vineyard Reit LLC 34,765,700 1.26 Saluda Apartments, LP 26,139,355 1.26Oncor Electric Delivery Co. LLC 34,393,728 1.25 Oncor Electric Delivery Co. 25,370,812 1.23Big Vineyard Village MSV LLC 34,250,623 1.24 Southwestern Bell Telephone 23,164,091 1.12Total 422,107,594$ 15.32 % Total 313,271,710$ 15.15 %Source: Tarrant County Tax OfficeNote: (1) Total Taxable Assessed Value including real and personal property for tax year 2012 (fiscal year 2013) is $2,756,141,770.(2) Total Taxable Assessed Value including real and personal property for tax year 2003 (fiscal year 2004) is $2,069,693,324.Fiscal Year 2013 Fiscal Year 2004 CITY OF EULESS, TEXAS PROPERTY TAX LEVIES AND COLLECTIONS – LAST TEN FISCAL YEARS (Unaudited) Table 8 100 Taxes Levied Adjustments AdjustedWithin the to Levy in Taxes Levied CollectionsFiscal Fiscal Year Subsequent for the Percentage in Subsequent Percentage PercentageYear of the Levy Years Fiscal Year Amount of Levy Years Amount of Levy Amount of Levy2004 10,219,893 52,711 10,272,604 10,026,897 97.61% 205,581 10,232,478 99.61% 40,126 0.39%2005 10,789,150 55,448 10,844,597 10,663,367 98.33% 136,122 10,799,489 99.58% 45,108 0.42%2006 11,194,338 1,289 11,195,627 11,007,367 98.32% 171,578 11,178,945 99.85% 16,682 0.15%2007 11,908,489 (9,233) 11,899,256 11,801,183 99.18% 82,650 11,883,833 99.87% 15,423 0.13%2008 12,083,956 (39,211) 12,044,745 11,986,396 99.52% 41,572 12,027,968 99.86% 16,777 0.14%2009 12,747,343 (125,614)12,621,729 12,556,281 99.48% 15,406 12,571,687 99.60% 50,042 0.40%2010 12,318,061 (16,481) 12,301,580 12,182,266 99.03% 96,260 12,278,526 99.81% 23,054 0.19%2011 11,796,659 (43,464) 11,753,195 11,637,719 99.02% 87,543 11,725,262 99.76% 27,933 0.24%2012 12,436,816 (92,385) 12,344,431 12,252,510 99.26% 53,668 12,306,178 99.69% 38,253 0.31%2013 12,926,215 (203,914) 12,722,301 12,648,635 99.42% - 12,648,635 99.42% 73,666 0.58%Source: Tarrant County Tax Office and Tarrant Appraisal DistrictDelinquent TaxesTotal CollectionCollected within theFiscal Year of the Levy CITY OF EULESS, TEXAS RATIO OF OUTSTANDING DEBT BY TYPE – LAST TEN FISCAL YEARS (Unaudited) Table 9 101 Taxable General PercentageGeneral Certificates Certificates Sales Tax W&S Drainage Certificates Obligation Total of Personal PerFiscal Obligation of of Revenue Capital Revenue Revenue of Refunding Primary Income CapitaYear Bonds Obligation Obligation Bonds Leases Bonds Bonds Obligation Bonds Government (1) (1)2004 17,525,000 21,915,000 9,700,000 8,310,000 - 5,220,000 1,135,000 500,000 11,095,000 75,400,000 5.67% 1,516 2005 27,410,000 10,365,000 9,510,000 7,725,000 - 4,915,000 965,000 210,000 11,095,000 72,195,000 5.27% 1,445 2006 28,820,000 7,175,000 9,305,000 7,175,000 - 4,805,000 785,000 - 11,005,000 69,070,000 4.86% 1,361 2007 27,350,000 6,475,000 9,080,000 6,540,000 - 4,585,000 600,000 - 10,560,000 65,190,000 4.40% 1,232 2008 25,985,000 5,735,000 8,840,000 5,875,000 - 4,350,000 410,000 - 10,105,000 61,300,000 4.15% 1,148 2009 24,350,000 5,330,000 8,580,000 5,185,000 - 4,105,000 210,000 - 9,640,000 57,400,000 3.78% 1,062 2010 30,765,000 4,910,000 - 4,470,000 438,227 3,850,000 - - 9,160,000 53,593,227 3.39% 989 2011 29,235,000 6,590,000 - 3,715,000 356,897 3,580,000 - - 8,675,000 52,151,897 3.69% 1,017 2012 29,915,000 3,230,000 - 2,910,000 272,526 3,435,000 - - 8,165,000 47,927,526 3.47% 931 2013 27,095,000 2,910,000 - 2,050,000 1,631,602 4,690,000 - - 7,495,000 45,871,602 3.37% 886 Note: Details regarding the City's outstanding debt can be found in the Notes to the Financial Statements.(1) See Table 14 for personal income and population data.Business-Type Activities Governmental ActivitiesFigures for years prior have been restated to include capital leases. CITY OF EULESS, TEXAS RATIO OF NET GENERAL BONDED DEBT TO TAXABLE ASSESSED VALUE AND NET BONDED DEBT PER CAPITA – LAST TEN FISCAL YEARS (Unaudited) Table 10 102 Net DebtGeneral Certificates Less: Debt Net O/S Estimated Taxable to Taxable NetFiscal Obligation of Capital Service Debt Population Assessed Assessed Debt PerYear Bonds Obligation Leases Reserves Total (1) Value (2) Value Capita2004 28,620,000 22,415,000 - 481,633 50,553,367 49,750 2,069,693,324 2.44% 1,016 2005 38,505,000 10,575,000 - 692,148 48,387,852 49,950 2,185,914,016 2.21% 969 2006 39,825,000 7,175,000 - 637,136 46,362,864 50,750 2,253,534,573 2.06% 914 2007 37,910,000 6,475,000 - 955,555 43,429,445 52,900 2,440,482,117 1.78% 821 2008 36,090,000 5,735,000 - 1,029,164 40,795,836 53,400 2,582,911,400 1.58% 764 2009 33,990,000 5,330,000 - 1,049,445 38,270,555 54,073 2,660,000,740 1.44% 708 2010 39,925,000 4,910,000 438,227 684,246 44,588,981 54,200 2,589,844,156 1.72% 823 2011 37,910,000 6,590,000 356,897 880,619 43,976,278 51,277 2,522,998,708 1.74% 858 2012 38,080,000 3,230,000 272,526 956,430 40,626,096 51,500 2,651,724,005 1.53% 789 2013 34,590,000 2,910,000 1,631,602 807,054 38,324,548 51,750 2,756,141,770 1.39% 741 Note: Source:(1) Estimates by North Central Texas Council of Governments(2) Tarrant Appraisal District General Bonded Debt OutstandingDetails regarding the City's outstanding debt can be found in the Notes to the Financial Statements. Total does not include revenue bonds. Figures for years prior have been restated to reduce total debt outstanding by available reserves and to include business-type activity general bonded debt, self-supporting general bonded debt, and capital leases. CITY OF EULESS, TEXAS DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT As of September 30, 2013 – (Unaudited) Table 11 103 Estimated Estimated Share ofDebt Percentage OverlappingGovernmental Unit Outstanding Applicable DebtDebt repaid with property taxesGrapevine-Colleyville Independent School District 345,235,467$ 9.55% 32,969,987$ Hurst-Euless-Bedford Independent School District 302,122,934 21.70% 65,560,677Tarrant County 373,845,000 2.16% 8,075,052Tarrant County Hospital District 25,375,000 2.16% 548,100Tarrant County College District 15,485,000 2.16% 334,476Subtotal, overlapping debt107,488,292City of Euless (direct debt)24,946,602 100.00% 24,946,602Total direct and overlapping debt132,434,894$ Notes:The percentage of overlapping debt applicable is estimated using taxable property values. Applicable percentages wereestimated by determining the portion of another governmental unit's taxable value that is within the City's boundaries anddividing it by each unit's total taxable value.The current year calculation of direct debt includes all general governmental activities debt including capital leases whichwere excluded in previous presentations. Self-supporting general obligation debt is excluded from the calculation.Source: Debt outstanding data provided by Municipal Advisory Council of Texas and City records. CITY OF EULESS, TEXAS SCHEDULE OF REVENUE BOND COVERAGE WATER AND WASTEWATER BONDS – LAST TEN FISCAL YEARS (Unaudited) Table 12 104 Less InterestTotal Operating Net andFiscal Revenues Expenses Revenue Fiscal CoverageYear (1) (2) Available Principal Charges Total Ratio2004 13,443,174 10,902,522 2,540,652 500,000 183,946 683,946 3.712005 14,548,715 11,555,108 2,993,607 305,000 275,524 580,524 5.162006 16,568,058 13,485,955 3,082,103 195,000 229,437 424,437 7.262007 14,645,201 13,668,755 976,446 220,000 213,643 433,643 2.252008 16,369,368 14,722,644 1,646,724 235,000 191,228 426,228 3.862009 16,594,856 13,722,593 2,872,263 245,000 180,820 425,820 6.752010 17,475,984 14,799,879 2,676,105 255,000 171,452 426,452 6.282011 20,148,834 15,952,372 4,196,462 270,000 161,333 431,333 9.732012 18,714,408 15,824,724 2,889,684 90,000 105,785 195,785 14.762013 19,399,314 16,660,397 2,738,917 330,000 82,110 412,110 6.65Notes: (1) Operating and nonoperating revenues of water and wastewater fund(2) Total operating expenses of water and wastewater fund exclusive of depreciation and amortization CITY OF EULESS, TEXAS SCHEDULE OF REVENUE BOND COVERAGE DRAINAGE UTILITY BONDS – LAST TEN FISCAL YEARS (Unaudited) Table 13 105 Less InterestTotal Operating Net andFiscal Revenues Expenses Revenue Fiscal CoverageYear (1) (2) Available Principal Charges Total Ratio2004 667,131 225,815 441,316 165,000 46,255 211,255 2.092005 700,316 265,444 434,872 170,000 41,305 211,305 2.062006 741,256 257,919 483,337 180,000 35,355 215,355 2.242007 790,647 420,586 370,061 185,000 34,303 219,303 1.692008 736,433 298,712 437,721 190,000 21,565 211,565 2.072009 714,250 286,741 427,509 200,000 14,417 214,417 1.992010 700,827 457,376 243,451 210,000 8,400 218,400 1.112011 699,709 519,622 180,087 - - - n/a2012 707,165 604,994 102,171 - - - n/a2013 711,154 567,215 143,939 - - - n/aNotes: (1) Operating and nonoperating revenues of drainage utility fund(2) Total operating expenses of drainage utility fund exclusive of depreciation and amortization CITY OF EULESS, TEXAS DEMOGRAPHIC STATISTICS – LAST TEN FISCAL YEARS (Unaudited) Table 14 106 Per Personal Estimated Capita Income School UnemploymentFiscal Population Income (thousands Median Age Enrollment RateYear (1) (2) of dollars) (2) (3) (4)2004 49,750 26,710 1,328,822 N/A 19,700 3.8%2005 49,950 27,406 1,368,930 N/A 19,600 4.5%2006 50,750 27,999 1,420,949 33.7 20,111 4.8%2007 52,900 28,029 1,482,734 34.1 20,318 3.8%2008 53,400 27,634 1,475,656 34.2 20,048 4.5%2009 54,073 28,110 1,519,992 34.4 20,504 7.3%2010 54,200 29,179 1,581,502 32.4 20,898 7.9%2011 51,277 27,590 1,414,732 34.4 21,071 7.3%2012 51,500 26,820 1,381,230 34.4 21,570 6.6%2013 51,750 26,299 1,360,973 34.6 21,814 5.4%Notes: 1. Estimates by North Central Texas Council of Governments 2. Estimates by Claritas Site Reports; Research & Demographic Solutions3. Hurst-Euless-Bedford Independent School District4. Texas Workforce Commission CITY OF EULESS, TEXAS PRINCIPAL EMPLOYERS Current Year and Nine Years Ago (Unaudited) Table 15 107 Percentage Percentageof Total City of Total CityEmployerEmployees Employment EmployerEmployees EmploymentHEB ISD 1,025 3.95% City of Euless 400 1.79%LSG Sky Chefs, Inc. 600 2.31% Super Target 300 1.34%City of Euless 380 1.47% Krispy Kreme 200 0.90%Autogrill Group, Inc. 450 1.73% Atlas Match 150 0.67%Life Outreach International 185 0.71% Home Depot 150 0.67%Super Target 170 0.66% First Odyssey Group 100 0.45%Lowe's 180 0.69% Office Depot 100 0.45%Home Depot 130 0.50% Ferguson Enterprises 90 0.40%TJ Lambrecht Construction 120 0.46% Heath & Company 75 0.34%Redi-Mix Concrete 65 0.25% Liberty Printing 70 0.31%Total 3,305 12.73% 1,635 7.32%Source: 2004 Official Statement, City of Euless Planning and Development Department2013 2004 CITY OF EULESS, TEXAS FULL–TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM – LAST TEN FISCAL YEARS (Unaudited) Table 16 108 Function/Program2004 2005 2006 2007 2008 2009 2010 2011 2012 2013General Governmentand Administration 52.25 51.25 50.75 53.00 54.50 54.50 50.00 48.50 48.50 48.50 Public Safety117.00 118.00 120.00 123.00 126.00 126.00 118.00 121.00 129.00 132.00 Fire Safety61.00 64.00 67.00 70.00 73.00 73.00 71.00 71.00 72.00 72.00 Development Services 15.00 12.00 12.00 12.00 12.00 12.00 11.50 13.50 6.00 6.00 Culture and Recreational 35.75 35.75 35.75 36.50 36.00 36.00 30.00 31.00 32.00 30.50 Water and Wastewater 49.00 48.00 49.50 50.00 50.00 50.00 46.00 42.00 42.50 42.00 Golf Course 15.25 15.25 15.25 15.25 15.25 17.25 13.00 13.00 13.00 12.00 Public Works 15.75 15.75 15.75 15.75 15.75 15.75 14.00 17.50 18.50 18.50 Service Center 6.00 6.00 6.00 6.00 6.00 6.00 5.00 5.00 5.00 5.00 Risk Management / Insurance 2.00 2.00 2.00 1.50 1.50 1.50 1.50 1.50 1.50 1.50 Total 369.00 368.00 374.00 383.00 390.00 392.00 360.00 364.00 368.00 368.00 Source: City Budget Office CITY OF EULESS, TEXAS OPERATING INDICATORS BY FUNCTION/PROGRAM – LAST TEN FISCAL YEARS (Unaudited) Table 17 109 Function/Program2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Public SafetyPoliceNumber of Certified Officers 81 82 82 82 85 85 85 85 85 87Number of Citations Issued 25,491 32,200 38,359 34,368 26,503 29,925 24,126 21,790 22,787 26,356FireNumber of Certified Firefighters 59 62 65 68 71 70 69 69 70 70Number of Alarms 4,699 3,949 3,661 3,675 4,197 3,827 4,097 4,196 4,204 4,296Number of EMS Calls 1,854 2,202 2,317 2,561 2,688 2,634 2,793 2,848 2,982 3,108Municipal CourtCases Filed 34,258 41,027 46,085 39,096 30,551 33,670 31,442 27,022 26,889 32,192DevelopmentNumber Residential Inspections - New 518 319 315 58 77 100 101 52 44 42Number Commercial Inspections - New 13 8 10 24 28 16 14 11 29 16Number Multifamily Inspections - New 0000000 0 0 0Public WorksStreet Overlay (Square Footage) 1,004,735 1,391,889 1,117,894 664,472 999,285 797,326 770,380 953,406 368,654 540,613Cultural and RecreationalParks and RecreationRecreation Center Memberships 4,123 4,260 4,160 3,990 3,944 3,703 2,443 4,337 3,654 5,137Class Attendance (Youth/Adult) 24,522 24,575 25,704 29,067 59,541 74,452 56,833 28,804 41,766 UnavailableWater and WastewaterNumber of Water Consumers 23,848 25,012 24,486 24,484 24,608 24,677 24,760 24,924 24,428 25,039Water Produced (In Gallons x 1000) 384,306 314,085 372,695 414,934 348,548 730,291 579,154 477,914 299,107 416,843Water Purchased - TRA (In Gallons x 1000) 2,146,706 2,382,040 2,947,945 2,202,426 2,291,974 1,955,535 2,028,760 2,566,370 2,440,539 2,133,211Water Supplied (In Gallons x 1000) 2,531,012 2,696,125 3,320,6402,617,360 2,640,522 2,685,826 2,607,914 3,044,284 2,739,646 2,550,054Annual Rainfall (In Inches) 41.08 32.51 20.74 53.51 27.10 36.32 38.65 22.26 36.57 24.41Golf CourseNumber of Paid Rounds Played 33,146 32,725 36,639 35,094 36,528 43,029 32,996 35,075 34,550 35,890Source: City DepartmentsComprehensive Annual Financial ReportCity Budget OfficeNotes:Unavailable - Data not available. CITY OF EULESS, TEXAS CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM – LAST TEN FISCAL YEARS (Unaudited) Table 18 110 Function/Program2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Public SafetyPolice Stations 1 1 1 1 1 1 1 1 1 1Fire Stations 3 3 3 3 3 3 3 3 3 3Public WorksStreets - Paved (1)182.0 182.0 182.0 211.0 217.6 217.6 217.6 332.1 332.4 333.36 Cultural and RecreationalSwimming Pools 3 3 3 3 3 3 3 3 3 4 Parks 16 16 17 17 17 17 17 17 17 17 Parks Land (Acres) 539 539 566 632 632 632 632 632 632 632 Community Buildings 5 5 5 5 5 5 5 6 6 6 Ampitheater 2 2 2 2 2 2 2 2 2 2 Conference Centre 1 1 1 1 1 1 1 1 1 1 Golf Course 1 1 1 1 1 1 1 1 1 1 Athletic Fields 24 24 35 35 35 35 33 33 33 33 Library Holdings 96,228 99,972 97,334 98,613 101,672 103,122 106,121 110,149 111,230 111,312 Water and WastewaterWater Mains - Potable (2)210.00 212.00 218.00 222.10 226.80 226.80 228.20 228.50 227.99 231.06 Water Mains - Reclaimed (2)- - - - - - - - - 1.73 Fire Hydrants 1,318 1,318 1,377 1,441 1,477 1,477 1,525 1,526 1,550 1,579 Wastewater Mains (2)161.0 162.0 162.0 168.0 186.3 186.3 186.5 186.7 187.6 187.6 Source: City Departments(1) Fiscal years to 2010 are reported in linear miles. 2011 and forward are reported in lane miles.(2) Miles of lines. Fiscal year 2012 figures have been restated to exclude approximately two miles of TRA lines that had been accidentally included as City lines.