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2016 Comprehensive Annual Financial ReportCITY OF 14 ic I ear TEXAS lNic i ' s1(S T E X A S B/aaSkics C/olom OrPorfwvVcs Comprehensive Annual Financial Report Year Ended September 30, 2016 a-- CITY OF WICHITA FALLS, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2016 ISSUED BY: DEPARTMENT OF FINANCE BIW,151 es 40lde07- OPforfffi ie - CITY OF WICHITA FALLS, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2016 TABLE OF CONTENTS INTRODUCTORY SECTION Exhibit Page Letterof Transmittal................................................................................................................................ i-vii GFOA Certificate of Achievement........................................................................................................... viii OrganizationalChart ............................................................................................................................... ix Listof Principal Officials.......................................................................................................................... x FINANCIAL SECTION IndependentAuditor's Report ................................................................................................................. 1-2 Management's Discussion and Analysis (Required Supplementary Information) .................................. 3-13 BASIC FINANCIAL STATEMENTS: Statement of Net Position...............................................................................................................A-1 14 Statement of Activities....................................................................................................................A-2 15 Balance Sheet - Governmental Funds...........................................................................................A-3 16 Reconciliation of the Governmental Funds Balance Sheet to the Statement ofNet Position..............................................................................................................................A-4 17 Statement of Revenues, Expenditures and Changes in Fund Balances - GovernmentalFunds....................................................................................................................A-5 18 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of the Governmental Funds to the Statement of Activities............................................A-6 19 Statement of Net Position - Proprietary Funds...............................................................................A-7 20-21 Statement of Revenues, Expenses and Changes in Net Position - ProprietaryFunds.........................................................................................................................A-8 22 Statement of Cash Flows - Proprietary Funds................................................................................A-9 23-24 Statement of Fiduciary Assets and Liabilities................................................................................A-10 25 Notes to the Financial Statements..................................................................................................... 26-64 REQUIRED SUPPLEMENTARY INFORMATION: Budgetary Comparison Schedule - General Fund.......................................................................... B-1 65 Notes to the Required Supplementary Information........................................................................... 66 Schedule of Changes in Net Pension Liability and Related Ratios — Texas Municipal Retirement System............................................................................................B-2 67 Schedule of Contributions — Texas Municipal Retirement System ................................................. B-3 68 Schedule of Changes in Net Pension Liability and Related Ratios — Wichita Falls Firemen's Relief and Retirement Fund...................................................................B-4 69 Schedule of Contributions — Wichita Falls Firemen's Relief and RetirementFund...........................................................................................................................B-5 70 Wichita Falls Retiree Health Care Plan — Analysis of Funding Progress ........................................ B-6 71 CITY OF WICHITA FALLS, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2016 TABLE OF CONTENTS (CONT'D.) Exhibit Page COMBINING FINANCIAL STATEMENTS: Nonmajor Governmental Funds: CombiningBalance Sheet.........................................................................................................C-1 Combining Statement of Revenues, Expenditures and Changes in Fund Balances.................C-2 Budgetary Comparison Schedule — Community Development Block Grant Fund ....................C-3 Budgetary Comparison Schedule — Section 8 Housing Fund...................................................C-4 Budgetary Comparison Schedule — Home Investment Partnership Agreement Fund ..............C-5 Budgetary Comparison Schedule — Hotel/Motel Tax Fund.......................................................C-6 Budgetary Comparison Schedule — Golf Fund..........................................................................C-7 Budgetary Comparison Schedule — MPEC Fund......................................................................C-8 Budgetary Comparison Schedule — Debt Service Fund............................................................C-9 Nonmajor Enterprise Funds: Combining Statement of Net Position........................................................................................D-1 Combining Statement of Revenues, Expenses and Changes in Fund Net Position .................D-2 Combining Statement of Cash Flows........................................................................................D-3 Internal Service Funds: Combining Statement of Net Position........................................................................................ E-1 Combining Statement of Revenues, Expenses and Changes in Fund Net Position ................. E-2 Combining Statement of Cash Flows........................................................................................ E-3 72 73 74 75 76 77 78 79 80 81 82 83-84 85 86 87 Agency Fund: Statement of Changes in Assets and Liabilities........................................................................ F-1 88 Component Units: Combining Statement of Net Position........................................................................................G-1 89 Combining Statement of Activities.............................................................................................G-2 90 SUPPORTING SCHEDULES: Combined Schedule of Bonded Debt and Interest Maturities.........................................................H-1 91 Combined Schedule of Bonds Payable..........................................................................................H-2 92-96 Debt Service Coverage — Revenue Bonds.....................................................................................H-3 97 Capital Assets Used in the Operation of Governmental Funds - Schedule By Function and Activity...............................................................................................H-4 98 Capital Assets Used in the Operation of Governmental Funds - Schedule of Changes By Function and Activity............................................................................H-5 99 Regional Airport Fund — Capital Assets and Accumulated Depreciation........................................H-6 100 Kickapoo Airport Fund — Capital Assets and Accumulated Depreciation ....................................... H-7 101 Transit Fund — Capital Assets and Accumulated Depreciation......................................................H-8 102 Stormwater Drainage Fund - Capital Assets and Accumulated Depreciation................................H-9 103 Sanitation Fund — Capital Assets and Accumulated Depreciation................................................H-10 104 CITY OF WICHITA FALLS, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2016 TABLE OF CONTENTS (CONT'D.) Exhibit Page Water and Sewer Fund — Capital Assets and Accumulated Depreciation ..................................... H-11 105 Waterpark Fund — Capital Assets and Accumulated Depreciation ................................................ H-12 106 Fleet Maintenance Fund — Capital Assets and Accumulated Depreciation...................................H-13 107 Duplicating Services Fund — Capital Assets and Accumulated Depreciation................................H-14 108 Information Technology Fund — Capital Assets and Accumulated Depreciation ...........................H-15 109 Wichita Falls Economic Development Corporation — Capital Assets and Accumulated Depreciation...........................................................................................................H-16 110 STATISTICAL SECTION (UNAUDITED) Net Position By Component — Last Ten Fiscal Years..................................................................... 1-1 111 Changes in Net Position — Last Ten Fiscal Years.......................................................................... 1-2 112-113 Fund Balances, Governmental Funds — Last Ten Fiscal Years ..................................................... 1-3 114 Changes in Fund Balances, Governmental Funds — Last Ten Fiscal Years .................................. 1-4 115 Tax Revenues By Source, Governmental Funds — Last Ten Fiscal Years .................................... 1-5 116 Assessed and Estimated Actual Value of Taxable Property — Last Ten Fiscal Years .................... 1-6 117 Direct and Overlapping Property Tax Rates — Last Ten Fiscal Years ............................................ 1-7 118 Principal Property Taxpayers — Current Year and Nine Years Ago ................................................ 1-8 119 Property Tax Levies and Collections — Last Ten Fiscal Years ....................................................... 1-9 120 Ratios of Outstanding Debt by Type — Last Ten Fiscal Years ....................................................... 1-10 121 Ratios of General Bonded Debt Outstanding — Last Ten Fiscal Years ......................................... 1-11 122 Direct and Overlapping Governmental Activities Debt................................................................. 1-12 123 Computation of Legal Debt Margin — Last Ten Fiscal Years......................................................... 1-13 124 Pledged Revenue Coverage — Water and Sewer Revenue Bonds — LastTen Fiscal Years.................................................................................................................. 1-14 125 Demographic Statistics — Last Ten Fiscal Years........................................................................... 1-15 126 Principal Employers — Current Year and Ten Years Ago.............................................................. 1-16 127 Full -Time Equivalent City Government Employees by Function/Program — LastTen Fiscal Years.................................................................................................................. 1-17 128 Operating Indicators by Function/Program — Last Ten Fiscal Years ............................................. 1-18 129 Capital Asset Statistics by Function/Program — Last Ten Fiscal Years ......................................... 1-19 130 Graphics: Cashand Investments............................................................................................................... J-1 131 TotalBonds Payable................................................................................................................. J-2 132 General Obligation Bonds Payable........................................................................................... J-3 133 RevenueBonds Payable...........................................................................................................J-4 134 GeneralFund Equity................................................................................................................. J-5 135 Comparison of Tax Levy and Collections................................................................................. J-6 136 Revenues by Source — FYE 9/30/16......................................................................................... J-7 137 Expenditures by Function — FYE 9/30/16.................................................................................. J-8 138 General Governmental Revenues (General Fund Only)........................................................... J-9 139 General Governmental Expenditures (General Fund Only) .................................................... J-10 140 dic4i ef ral(� B/u�51<10:�7 Cro�de O,P,AO,rf4wlfie, Introductory Section z 7lF, X A Sl�s BkW,Skies 4,714' 0,r?&rfMMAos March 24, 2017 The Honorable Mayor, Members of the City Council, City Manager and Citizens of Wichita Falls, Texas FINANCE DEPARTMENT I am pleased to submit herewith, the Comprehensive Annual Financial Report (CAFR) of the City of Wichita Falls, Texas for the fiscal year ended September 30, 2016. The purpose of this report is to provide the City Council, City Manager, citizens and other interested parties with detailed information concerning the financial condition of the City of Wichita Falls. In addition, this report provides assurance that the City presents fairly its financial position as verified by independent auditors. COMPREHENSIVE ANNUAL FINANCIAL REPORT The CAFR of the City of Wichita Falls, Texas, for the year ended September 30, 2016, was prepared according to accounting principles as promulgated by the Governmental Accounting Standards Board (GASB). The financial statements and related notes have been audited by the independent audit firm of Edgin, Parkman, Fleming & Fleming, PC, whose report is included herein. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City. We believe the data, as presented, are accurate in all material aspects; that they are presented in a manner designed to fairly set forth the financial position and results of operation of the City as measured by the financial activity of its various funds; and that all disclosures necessary to enable the reader to gain understanding of the City's financial activities have been included. The CAFR continues to present financial data using the reporting model promulgated by GASB Statement No. 34. This reporting model changed governmental financial reporting by incorporating government -wide financial statements. The Finance Department believes that this presentation provides better information to users of the report, and it requires management to provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of a Management's Discussion and Analysis (MD&A). The MD&A can be found immediately following the independent auditors' report and is designed to complement this transmittal letter and should be read in conjunction with it. GENERAL INFORMATION - CITY OF WICHITA FALLS, TEXAS The City of Wichita Falls is located in the south-central United States in north -central Texas. Wichita Falls is linked to major southwestern, western, and mid -western cities by Interstate 44, U.S. Highways 82, 281, 277, 287, and Texas State Route 79. The city is approximately 130 miles northwest of the Dallas/Fort Worth Metroplex, 15 miles from the Red River that marks the Texas/Oklahoma border, and 125 miles south of Oklahoma City. The city is located in the cross -timbers area of the gently rolling north -central plains and is dissected by the Wichita River. Due to the city's geographic location, Wichita Falls serves as a regional economic hub for north Texas and south central Oklahoma. Wichita Falls is the county seat of Wichita County and the major population center in North Texas. The economy is based on mineral production, retail trade, manufacturing, agribusiness, and government installations. Principal sources of agricultural income include cattle, cotton and wheat. Wichita Falls is home to Sheppard Air Force Base, which operates the Euro-NATO jet pilot training program. The city's major university is Midwestern State University. The city is also home to a branch of Vernon College, a fully accredited community college. Principal manufacturers within the area include metal fabrication, industrial and commercial equipment, engine components, flexible packaging, and assorted plastic, glass and fiberglass. North Texas State Hospital -Wichita Falls Branch, Midwestern State University, James V. Allred Prison and Sheppard Air Force Base are also large employers located within the city. The City operates a Multi -Purpose Events Center, which includes a coliseum, exhibit hall, and an agricultural arena/show barn. The 2016 population for Wichita Falls, as estimated by the City, is 104,710, an increase of 0.15% from the 2010 Census estimates, and an increase of 0.49% over the 2000 population. CITY SERVICES AND ORGANIZATION OF THE GOVERNMENT The City of Wichita Falls utilizes a Council -Manager form of government and is organized under the Constitution and Laws of the State of Texas. The City Council is comprised of five members elected from separate districts, and a Mayor and one member elected by the citizens at -large. The City Council appoints the City Manager, City Attorney, Municipal Court Judge and City Clerk. All other staff members work under the direction of the City Manager. The City provides on a continuing basis a full range of basic municipal services including: public safety (police, fire and building inspection); highways, streets and engineering; health and welfare services; parks, recreation and cemeteries; library services; public improvements; planning and zoning; and general administrative services. In addition, the City provides water, sewer, sanitation and transportation services for its citizens. ECONOMIC CONDITION AND ACTIVITY Over the past few decades, Wichita Falls has successfully diversified its economy to include new manufacturing, government, medical services, retail and service related commerce. This diversification is in addition to the more typical North Texas industries of agriculture, and oil and gas production. The Wichita Falls MSA houses a robust manufacturing sector, with many companies having employment in excess of 100 persons. This sector of the economy generates almost $271 million in annual payroll, representing approximately 9% of total employment within the city, and accounts for more than $1.2 billion in gross sales annually. Wichita Falls is also a nexus of international investment. Three area manufacturing facilities are foreign -owned, representing France, Sweden, and Germany. The city is the economic hub of a 60-mile radius trade area, populated by an estimated 379,400 people. Of that population, an estimated 240,000 are currently in the workforce and look to Wichita Falls for their employment, shopping, entertainment, educational, cultural and health care needs. Being the largest community within 100 miles, Wichita Falls boasts a larger retail trade than a community its size would normally enjoy. Many national retailers and restaurants have found Wichita Falls to be a superb location. From 2009 to 2011, the national recession considerably affected the local economy. During that time, four local manufacturing companies closed, eliminating almost 1,200 jobs and several other companies reduced their workforce by 10 to 20 percent. In response to this downturn in the local economy, efforts were made to nearly double the economic development marketing campaigns and develop a community -wide branding, marketing and public relations campaign. Additionally, the City and the Wichita Falls Economic Development Corporation have been aggressive over the last few years in granting economic development incentives for primary job creation. Since 2010, 26 projects have been approved for incentive funding with the potential for creating and/or retaining over 2,300 jobs. Several of these projects have invested in the local economy resulting in the addition or retention of hundreds of jobs. Others are still in the early phases of their expansion plans and the results remain to be seen. Although no major plant developments were announced during the 2015-16 fiscal year, several industries made investments in the local economy to create and/or retain hundreds of primary jobs. New and ongoing projects are outlined below: • GuideIT Project — GuideIT is an Information Technology Firm that provides assistance to companies to fulfill their missions through the advancement and optimization of technology. They are a third -party service provider to corporations around the world with its primary headquarters in Plano, Texas. The project in Wichita Falls is expected to provide an additional 91 jobs over a two to three-year period ii principally in Service Desk and IT Operations positions. They plan to lease space initially in the Energy Center. Incentives include cash for jobs in the amount of $463,000 for creating and retaining 91 jobs in Wichita Falls over a three-year period. Pratt & Whitney Technology Enhancement Project — technology investment of approximately $2,893,000 at the local plant for the purchase of three technology enhancement items — (1) 3D Measuring Equipment and Software; (2) Direct Metal Laser Sintering Equipment; and (3) Interactive Machining Equipment. Support for this endeavor by the Wichita Falls Economic Development Corporation is in the form of a no interest, forgivable loan of $1,815,000 for the purchase of the technology enhancements mentioned above. The loan is forgivable over a period of seven years should the company maintain 120 jobs as part of the agreement. American Fuel Cell and Coated Fabric's (AMFUEL) Project — AMFUEL, is owned by Zodiac Aerospace, a French company headquartered in Paris, France. Crosslake Investments, a Seattle based investment firm recently invested in AMFUEL's operation, and intends to establish an operation at the old Delphi facility in Wichita Falls. AMFUEL manufactures fuel tanks for the aerospace industry, primarily commercial/military/general aviation aircraft and helicopters. Additionally, AMFUEL makes liquid storage containers for industrial chemicals, water, sewage, and ground fuel storage. This operation is approximately $30 million per year. AMFUEL expects to create and retain 280 employees over a ten year period. The WFEDC incentives include a no interest, forgivable loan of $800,000 for the purchase of an autoclave, valued at $1.2 million, that is used in the manufacturing process, cash for jobs in the amount of $844,750 for creating and retaining 280 jobs in Wichita Falls, and a grant up to a maximum of $366,000 for skills development training should a grant application to the Governor's Economic Development and Tourism Department not be approved. Lone Star Milk Producers Recruitment Project — incentives for Lone Star Milk Producers and related entities in the amount of up to $116,000 of costs for expenditures for the retention and recruitment of primary jobs at the company headquarters facility in Wichita Falls. Lone Star Milk Producers (LSMP) was headquartered in Jack County, Texas and is a farmer owned dairy cooperative. It is ranked as the 12th largest dairy cooperative in the United States based on the annual survey in Hoard's Dairyman, and is ranked as the 64th largest cooperative in the United States according to the National Cooperative Bank. LSMP desires to relocate their main headquarters operations to Wichita Falls with staffing of (20) full time positions. The incentives are based on cash for jobs in the amount of $96,000 for twenty new positions to be created and retained with up to $20,000 in additional incentives for high paying positions. Eagle Railcar Services Expansion Project — up to $928,800 for creation of 64 new jobs, training expenses, and a forgivable loan to purchase a sponge jet robot blaster, a global finish spray booth, a 1,500 cfm air compressor, and related equipment at the company's facility located at 4501 Allendale Road. Eagle Railcar Services is one of the nation's leading independent providers of rail car repair services with facilities in Cairo, Ohio, Elkhart and Roscoe, Texas, and its newest location in Wichita Falls. All of the locations provide general maintenance and repair, cleaning, painting and lining, wreck damage repair and tank car requalification. Eagle Railcar Services seeks to expand its operations in Wichita Falls with an additional investment of more than $4,000,000 in land, capital improvements and machinery and equipment. Eagle expects to employ an additional 64 employees over a three year period, adding to its current labor force of 47 employees. The WFEDC incentives are based on cash for new positions up to $352,000 for the creation of at least 64 new jobs; a skills development training reimbursement up to $76,800 if a Texas Workforce Commission Skills Development Fund grant is not obtained; and a no interest, forgivable loan of $500,000 for the purchase of a sponge jet robot blaster, global finish spray booth, an air compressor and related equipment. The loan is forgivable over a period of five years should the company create and maintain the additional jobs as stipulated in the agreement. 4A Economic Development Sales tax funds have also been used to assist with activities of the Military Affairs Committee, a regional organization established a few years ago to work directly with Sheppard Air Force Base (SAFB), Air Education and Training Command, the Chief of Staff for the Air Force, and our Congressional, State and Local elected officials. This Committee was formed to increase the value of SAFB, strengthen community development and build a stronger economy. The City, SAFB and surrounding communities have iii also conducted a Joint Land Use Study (JLUS), which was a cooperative planning initiative to promote compatible community growth that supports military training and operational missions. The inter jurisdictional partnership resulted in the identification of actions that can be taken jointly by the community and installation to promote compatible development and address current and future encroachment. The goal of compatibility planning is to promote an environment where both entities (military and civilian) can coexist successfully. Implementation of those actions began in 2015. Also, scheduled for fall 2016 is a proposed Transportation and Perimeter Security Project for Sheppard Air Force Base that will utilize the use of $1,250,000 of 4A Economic Development Funds to provide improved security at the front gate entrance to minimize potential terrorist threat activity. This project will better position SAFB for any future Base Alignment and Closure processes that the federal government may consider. Small business manufacturing represents the fastest growing sector of the economy in terms of the number of new businesses. With many area manufacturers having less than 50 employees, small manufacturers represent a vital link in the economy. Companies in food, beverage and clothing are flourishing in Wichita County. The value of construction permits is also an indication of economic activity in the community. Residential permits totaled $34,551,287 during the 2015-16 fiscal year, which is an increase of $7,242,291, or 26.5% from the prior year. The value of commercial construction permits totaled $150,853,868, which is an increase of $70,807,822, or of 88.5% increase over the prior fiscal year. Most of this increase in commercial construction permits can be attributed to several school building additions and to the new WFISD Career Education Center. Additionally, several commercial construction permits issued were above $1 million in value which directly impacts local construction contractors, and often times results in additional secondary jobs. Those permits include: • Wichita Falls ISD Career Education Center — a total of 122,150 sq. ft. with an estimated value of $29,000,000. • WFISD Barwise School Addition — a total of 38,115 sq. ft. with an estimated value of $7,623,000. • WFISD McNeil Jr High School Addition — a total of 26,303 sq. ft. with an estimated value of $5,242,000. • Rolling Meadows Retirement Home Addition — a total of 23,142 sq. ft. with an estimated value of $5,000.000. • Fairfield Inn - New Construction — a total of 50,779 sq. ft. with an estimated value of $5,000,000. • Apartment Complex — New Construction — a total of 56,688 sq. ft. with an estimated value of $4,818,480. • ER Clinic — New Construction — a total of 6,775 sq. ft. with an estimated value of $2,000,000. • WFISD John Tower School Addition — a total of 7,791 sq. ft. with an estimated value of $1,681,000. • Admiral Linen Addition — a total of 14,589 sq. ft. with an estimated value of $1,400,000. • Car / Truck Repair Center — New Building — a total of 10,637 sq. ft. with an estimated value of $1,100,000. Another indicator of local economic performance is the retail sales tax. During the 2015-16 fiscal year, the City generated $29,831,690 in retail sales taxes, which was $39,519, or 0.13% less than in the prior fiscal year. 1V MAJOR INITIATIVES For The Year. In November 2015, a contract in the amount of $78,000 was awarded to Biggs & Mathews, Inc. for the City of Wichita Falls' Landfill for annual environmental engineering services for testing, surveying, and reporting in order to meet Texas Commission on Environmental Quality (TCEQ) regulations. Annually, the City is required to submit data and reports on air permitting, landfill capacity evaluation, and groundwater monitoring. The air permitting requirements include a Greenhouse Gas (GHG) Summary Report, Emissions Inventory, Air Emissions/Inspection Fee Basis Form, Federal Operating Permit Annual Compliance, Tier II Testing Report, and other air permits as required by the EPA and TCEQ. The landfill capacity evaluation requires on -site ground survey, capacity calculations, and waste -fill drawings. Annual groundwater monitoring includes sampling, testing, analytical evaluation, and reporting on existing monitoring wells. In December 2015, the City awarded a contract in the amount of $638,512 for the engineering, design, equipment, labor and installation of new lighting at the Four -field Softball Complex North. This new lighting replaced a lighting system that was 26 years old and improved the level of lighting for the complex at a reduced energy consumption of more than 50% over standard lighting system and addresses the 25-year guaranteed constant light level of 50 foot candles as required by Amateur Softball Association standards. With this contract, the City receives a warranty and maintenance program, eliminating 100% of maintenance cost for 25-years, including labor and material. In January 2016, the City awarded a contract for the 2016 Crack Seal Project in the amount of $99,085. This project is generally described as the cleaning and sealing of cracks and joints on various City streets, and associated work and part of the City's annual street maintenance program. In February 2016, the City awarded a contract to an energy services company as part of a performance contract for Advanced Metering Infrastructure (AMI). AMI Systems measure, collect, and assist with analyzing water usage through two-way radio communication media on a pre -defined schedule. They are essentially smart water meters capable of producing digital output automatically and sending readings from the meter to a data collector/radio repeater on a fixed tower system and returning data to the utility billing office for billing and data analysis. They also provide customers with the ability to log into a customer portal to view their water usage on an hourly basis. The system will consist principally of products provided by Sensus, who is a leading vendor in this industry, and has been used in numerous AMI/AMR systems for cities in the State of Texas. The funding for this project was acquired through Banc of America Public Capital Corporation in the form of a 20-year capital lease agreement in the amount of $16,561,360 with an obligation to AMERESCO in the amount of $15,884,487 and Financing Interest and related costs of $676,873. A preliminary study indicated that this system could produce enough savings and additional revenue to pay the annual debt service of a project costing $18 million over a 20-year period. Also in February 2016, the City awarded a contract for the 2016 Water Budget Utility Improvements Project in the amount of $865,581. This project is generally described as the installation of 8-inch, 12-inch, and 20-inch waterlines, and valves. The purpose of the project is to replace deteriorating cast iron water mains and to extend a major transmission main. This project will help to improve the water quality and overall reliability of the water distribution system. In March 2016, the City awarded a contract for the 2016 Asphalt Street Rehabilitation Project in the amount of $1,455,928. This project is to rehab asphalt streets and complete base repair at various locations. This contract is part of the City's overall annual street rehabilitation project. This contract includes the areas of Call Field Road and the Midwestern Parkway with the Call Field Road portion being a spot repair west of the McNiel Avenue intersection. The Midwestern Parkway addition is mainly repairs near the bridge over Holliday Creek east of Hampstead Boulevard. v In May 2016, a contract was awarded for the 2016 Concrete Street Rehabilitation Project in the amount of $310,922. This project is generally described as the concrete repair of selected City streets and associated work and is a part of the City's annual street rehabilitation program. Also in May 2016, a contract was awarded in the amount of $90,857 for the 2016 CDBG Waterline Replacement Project. Funding for this project comes from Federal Community Development Block Grant funds. This project will install new 8-inch waterlines and new services which will eliminate old deteriorated 2-inch steel mains that have become a continuous maintenance problem. The project will improve reliability of the distribution system in this area. In August 2016, a contract was awarded in the amount of $171,416 for the 2016 Sewer Budget Utility Improvements Project — Phase 2. This project is generally described as the installation of 6-inch and 8-inch sanitary sewer line, manhole installation/replacement, reconnect services, and associated work. The purpose of this project is to replace cracked and broken clay tile sanitary sewer main as well as old brick manholes. The areas included in this project were identified through the City's sewer assessment program. In September 2016, a contract was awarded in the amount of $280,000 for the 2016 Lift Station 53 & 61 Rehabilitation Project. This project includes the replacement of pumps, motors, piping, control panels, and associated work for these two lift stations. The City has 63 individual lift stations throughout the City which move wastewater through the collection system to the treatment plants. Staff budgets $270,000 annually for the rehab of two lift stations. Also in September 2016, a contract was awarded in the amount of $96,024 for the 2016 Alley Rehabilitation Project. This project is generally described as the removal and replacement of concrete alley, and associated work. These repairs facilitate the automated collection of waste from alleyways. For The Future. The City entered into a professional services agreement for a joint public/private construction of a major brand 150 room full -service conference hotel to be constructed adjacent to the City's multi -purpose event center. In addition, the City will construct a conference center next to the conference hotel. With the addition of this hotel and facilities, the City hopes to make major strides in attracting more conferences and conventions to the city. The City anticipates issuing debt in the summer of 2017 to fund the conference center and to assist with the construction of the conference hotel. FINANCIAL INFORMATION In developing and evaluating the City's accounting system, consideration is given to the adequacy of internal control as deemed appropriate by the City Manager. Internal control is designed to provide reasonable, but not absolute, assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition; and (2) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived and the evaluation of costs and benefits requires estimates and judgments by the City Manager. All internal control evaluations occur within the above framework. The City believes that its internal control adequately safeguards assets and provides reasonable assurance of proper recording of financial transactions. The Annual Operating Budget is proposed by the City Manager and approved by the City Council following public discussion. Budgetary control is maintained at the class level by the Finance Department within each division by the encumbrance of estimated purchase amounts prior to the release of purchase orders to vendors. Purchase orders which result in an overrun of class level balances are not released until additional appropriations are made available. In instances when budgetary transfers are necessary, management control of the operating budget is maintained at the fund and department level. Transfers within a department of the same fund must be approved by the City Manager. Transfers across departments or funds must be approved by the City Council. vi Unencumbered appropriation balances lapse at year end and are not carried forward to new budget periods. Open encumbrances are reported as reservations of fund balance at September 30, 2016, and related appropriations are carried forward to the new fiscal year through a supplemental budgetary allocation. In September 2012, the City adopted a fund balance policy for the General Fund, Water/Sewer Fund, and the Sanitation Fund. The policy requires the City to maintain at least 20% of expenditures in unassigned fund balance in the General Fund, 17% of expenditures (less debt service expenses) in the Water/Sewer Fund, and 15% of expenditures in the Sanitation Fund. These financial statements reflect that the policy has been followed in the General Fund and Sanitation Fund. Exiting from drought conditions and water restrictions in June 2015 resulted in much higher water sales this fiscal year, allowing the City to meet the stated reserve requirements in the Water/Sewer Fund. The City also maintains an informal policy to limit tax supported debt to no more than 5% of total assessed property value or $1,500 per capita. As of September 30, 2016, the City's tax supported debt was approximately $47.3 million, which is 0.99% of the taxable value of property, and $450 per capita. OTHER INFORMATION Independent Audit The City Charter requires an annual audit of the books of account, financial records, and transactions of all administrative departments of the City by Certified Public Accountants. The accounting firm of Edgin, Parkman, Fleming & Fleming, PC was selected by the Mayor and City Council to satisfy this charter requirement. The auditors' report on the basic financial statements and combining fund statements and schedules is included in the financial section of this report. In addition to meeting the requirements set forth in the City Charter, the audit also was designed to meet the requirements of the federal Single Audit Act Amendments of 1996 and related Uniform Guidance, and the State Single Audit Act. These reports are issued under separate cover. Awards The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Wichita Falls for its Comprehensive Annual Financial Report for the fiscal year ended September 30, 2015. This was the 21st consecutive year that the government has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This 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. We believe that our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to GFOA to determine its eligibility for another certificate. Acknowledgments My appreciation is extended to the various elected officials, city manager, department heads and employees responsible for the fair presentation of the CAFR and for contributing to the sound financial position of the City of Wichita Falls. The City of Wichita Falls has been blessed with a group of persons who appreciate and respect principles of fiscal restraint and propriety. In particular, I would like to acknowledge the special efforts of the Department of Finance employees who contributed directly to the development of this report. The continuing support of City Council and City Manager, who remain committed to fiscal integrity and financial leadership, is likewise appreciated. Respectfully submitted, Patrick Halverson Director of Finance Vll \" ic�i� �l(s B/u�Skie� 4o'lden Offortctwrle,, G� Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Wichita Falls Texas For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2015 *1�oe A`= Awry Executive Director/CEO DEPUTY CITYMANAGER COMMUNITY j DEVELOPMENT , DEPARTMENT COMPREHENSIVE I BUILDING _ PLANNNG INSPECTION PROPERTY - CODE MANAGEMENT ENFORCEMENT NEIGHBORHOOD RESOURCES HOUSING FINANCE DEPARTMENT BUDGET L - ACCOUNTING DEVELOPMENT PURCHASING - UTILITY COLLECTIONS MUNICIPAL COURT HUMAN RESOURCES DEPARTMENT PERSONNEL 1- - RISK MANAGEMENT EMPLOYEE BENEFITS I TECHNOLOGIES& i FACILITIES DEPARTMENT INFORMATION ! _ BUILDING TECHNOLOGY r MAINTENANCE PUBLIC COMMUNICATION CITY OF WICHITA FALLS ORGANIZATIONAL CHART WICHITA FALLS CITIZENS I CITIZEN CITY COUNCIL CITIZEN BOARDS COMMISSIONS '-'- '--- MUNICIPAL CITYMANAGER CITYATTORNEY CITY CLERK COURICIPAL - PUBLIC WORKS/ PUBLIC UTILITIES _DEPARTMENT ENGINEERING r- SANITATION STREET - UTILITIES MAINTENANCE POLICE DEPARTMENT TECHNICAL SERVICES �- FIELD SERVICES ADMINISTRATION FIRE DEPARTMENT FIRESUPRESSION -- ARSON INVESTIGATION EMERGENCY I MANAGEMENT J HEALTH DEPARTMENT ADMINISTRATION ENVIRONMENTAL HEALTH I PUBLIC HEALTH _ _ LAWWATER_ NURSING POLLUTION ANIMAL SERVICES I PARKS AND MULTI -PURPOSE I AVIATION, TRAFFIC. RECREATION EVENTCENTER AND DEPARTMENT DEPARTMENT TRANSPORTATION RECREATION - PARKS CONVENTION & _ VISITORS BUREAU EXHIBIT HALL - PUBLIC _ AIRPORTS MAINTENANCE TRANSPORTATION MLK CENTER �- LIBRARY AGRICULTURE _- COLISEUM ARENA TRAFFIC _- CENTRAL ENGINEERING SERVICES TRANSPORTATION CEMETERY PLANNING IX I* CITY OF WICHITA FALLS, TEXAS LIST OF PRINCIPAL OFFICIALS SEPTEMBER 30, 2016 Title Name Mayor Glenn Barham Mayor Pro-Tem Michael Smith City Council Member Stephen Santellana City Council Member Deandra Chenault City Council Member Brian Hooker City Council Member Tim Ingle City Council Member Tom Quintero City Manager Darron Leiker City Attorney Kinley Hegglund Municipal Court Judge Larry Gillen City Clerk Tracy Norr Deputy City Manager Jim Dockery Director of Aviation, Traffic and Transportation John Burrus Finance Director Patrick Halverson Director of Public Health Lou Kreidler Police Chief Manuel Borrego Fire Chief Jon Reese Director of Parks and Recreation Jack Murphy Director of Public Works and Public Utilities Russell Schreiber Interim Director of Multi -Purpose Events Center Lindsay Greer u B/cr�Skie� Crolde� O��ortc�n�7ie,�: Financial Section Independent Auditor's Report �- EDGIN, PARKMAN, FLEMING & FLEMING, PC CERTIFIED PUBLIC ACCOUNTANTS 4111 KELL BLVD., SECOND FLOOR P.O. BOX 750 WICHITA FALLS, TExAs 76307-0750 PH. (940) 766-5550 • FAx (940) 766-5778 Independent Auditor's Report on Financial Statements The Honorable Mayor and Members of the City Council City of Wichita Falls, Texas MICHAEL D. EDGIN, CPA DAVID L. PARKMAN, CPA A. PAUL FLEMING, CPA We have audited the accompanying financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Wichita Falls, Texas (the City) as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free 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 City'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 City'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 financial statement presentation. 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, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City as of September 30, 2016, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, the Budgetary Comparison Schedule — General Fund, the schedules on the Texas Municipal Retirement System, the Wichita Falls Firemen's Relief and Retirement Fund, and the Wichita Falls Retiree Health Care Plan 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, supporting schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and supporting schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the 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 supporting 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. Oher Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued under separate cover our report dated March 24, 2017, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Respectfully submitted, Edgin, Parkman, Fleming & Fleming, PC March 24, 2017 Management Discussion and Analysis FINANCE DEPARTMENT T E X A S B/IIGS/FfGS. �O/OGn O��?l'r[lRff1G5. City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2016 Management's discussion and analysis provides a narrative overview of the financial activities and changes in the financial position of the City of Wichita Falls, Texas, for the fiscal year ended September 30, 2016. It is offered here by the management of the City to the readers of its financial statements. Readers should use the information presented here in conjunction with additional information furnished in our letter of transmittal, which can be found in the Introductory Section of this Comprehensive Annual Financial Report. Financial Highlights The assets of the City of Wichita Falls exceeded its liabilities at September 30, 2016, by $366,818,062 (net position). The net position for the City increased by $15,451,482 over the prior year. This increase can be attributed principally to several factors: The Water/Sewer Fund revenues increased by $4.1 million over the previous fiscal year, while operating expenses only increased by $939,000; the Sanitation Fund revenues increased by $434,000 and expenses decreased by $724,000; the Stormwater Drainage Fund reflected an increase nearly a $1 million in operating revenues to fund future drainage projects. While the unrestricted net position for Governmental Activities was ($64,279,354), the Business - type Activities had an unrestricted net position of $31,265,373 for an overall unrestricted net position of ($33,013,981). Contributing to the positive change in the Business -type Activities in unrestricted net position is the Water/Sewer Fund as it reflected net change of $9,254,843 compared to a net change of $4,855,896 in the prior year. This change in the Water/Sewer Fund reflected an increase in operating income of $3.2 million compared to the prior year. This increased income can be attributed to a full year of water sales after water restrictions were removed in June 2015 while keeping the water rate increase passed in August 2014 in place. The Sanitation Fund had operating income of $3.6 million while the Regional Airport reported an increase in revenues of $245,454 over the prior year, while operating expenses increased by $435,159 for the same period. At September 30, 2016, the City's governmental funds reported combined ending fund balances of $21,932,425. Of this amount, $12,388,452, or 56.48%, is available for spending at the government's discretion, (unassigned fund balance). At the end of the current fiscal year, unassigned fund balance for the General Fund was $13,161,690 or 18.08% of total General Fund expenditures. During the 2015-16 fiscal year, the City's total debt increased by $3,649,565. The City refunded the outstanding W&S 2007 Priority Lien Refunding Bonds in the summer of 2016 to take advantage of attractive interest rates which resulted in debt service savings of $1.4 million 3 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2016 (continued) annually in the Water/Sewer Fund. The City also entered a capital lease in the amount of $16.5 million for an Automated Meter Infrastructure (AMI) project to replace all the City's water meters that required manual reading with automated meters. This new debt was partially offset as the City continued to retire outstanding General Obligation Bonds, Water and Sewer System Revenue Bonds, Combination Tax and Revenue Bonds, Capital Leases and Notes Payable. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The reporting focus is on the City as a whole and on individual major funds. It is intended to present a comprehensive view of the City's financial activities. The basic financial statements are comprised of three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report contains other supplementary information in addition to the basic financial statements. Government -wide Financial Statements The government -wide financial statements, which can be found on pages 14-15 of this report, include the Statement of Net Position (Exhibit A-1) and the Statement of Activities (Exhibit A-2). These statements are designed to provide readers with a broad overview of the City's finances in a manner similar to a private -sector business. Both are prepared using the economic resources focus and the accrual basis of accounting; meaning that all current year's revenues and expenses are included regardless of when cash is received or paid. Thus, revenues and expenses are reported in these statements for some items that will result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but not used vacation leave). The Statement of Net Position presents information on all of the City's assets and liabilities, including capital assets and long-term obligations. The difference between the City's assets and liabilities is reported as net position. Over time, the increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. Other indicators of the City's financial position should be taken into consideration, such as the change in the City's property tax base and condition of the City's infrastructure (e.g., roads, traffic signals, water and sewer lines, etc.), in order to more accurately assess the overall financial condition of the City. The Statement of Activities presents information showing how the City's net position changed during the most recent fiscal year. It focuses on both the gross and net costs of the government services. This statement includes all current year revenues and expenses. The Statement of Net Position and the Statement of Activities divide the City's activities into three types: Governmental activities — Most of the City's basic services are reported here, including police, fire, parks and recreation, public works, health, traffic and transportation, community development and planning, duplicating services, information technology, health insurance claims, and general administration and finance. The Multi -Purpose Events Center and Champions Golf Course are also reported as governmental activities. Property taxes, sales taxes, franchise fees, and various grant funds provide the majority of financing for these activities. 4 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2016 (continued) Business -type activities — Activities for which the City charges fees to customers to pay most or all of the cost of a service it provides are reported as business -type activities. The City's business -type activities include water and wastewater treatment and distribution, solid waste collection and disposal, regional and municipal airports, transit system, storm water drainage improvements, fleet maintenance services and water park operations. Component Units — Five legally separate organizations, for which the City is financially accountable, are included in these statements as discretely presented component units. These organizations include the Wichita Falls Economic Development Corporation, Wichita Falls 4B Sales Tax Corporation, Wichita Falls Reinvestment Zone #2, Wichita Falls Reinvestment Zone #3, and the Wichita Falls Reinvestment Zone #4. Fund Financial Statements The City of Wichita Falls, like other state and local governments, uses fund accounting to provide more detailed information about the City's most significant funds, not the City as a whole. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Some funds are required to be established by state law or bond covenants. However, the City Council establishes many other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental Funds — These funds are used to account for the majority of the City's activities, which are essentially the same functions reported as governmental funds in the government -wide statements. However, unlike the government -wide financial statements, governmental fund financial statements are reported using an accounting method identified as the modified accrual basis of accounting, which measures cash and all other financial assets that can be readily converted to cash. The governmental fund statements focus on near -term inflows and outflows of expendable resources, as well as expendable resources available at the end of the fiscal year for future spending. Such information may be useful in evaluating a government's near -term financing requirements. The focus of the governmental funds financial statements is narrower than that of the government -wide financial statements. Therefore, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide statements. By doing so, readers may better understand the long-term impact of the government's short 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. The reconciliation explains the differences between the government's activities reported in the government -wide statements and the information presented in the governmental funds financial statements. The City of Wichita Falls maintains 15 individual governmental funds. Information for the General Fund is presented separately in the Governmental Fund Balance Sheet and in the Governmental Fund Statement of Revenues, Expenditures and Changes in Fund Balances because it is considered a major fund of the City. Data for the other governmental funds are combined City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2016 (continued) into a single, aggregated presentation. Individual fund data for each of the non -major governmental funds are provided in the Combining Financial Statement Section of this report. The Basic Governmental Funds Financial Statements can be found on pages 16-19 of this report. Proprietary Funds — When the City charges customers for services it provides, whether to outside customers or to other units within the City, the activities are generally reported in proprietary funds. The City of Wichita Falls maintains two different types of proprietary funds: enterprise funds and internal service funds. • Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City uses enterprise funds to account for its water and sewer operations, sanitation collection and disposal services, regional and municipal airports, transit operations, storm water utility district, and water park operations. Internal service funds are an accounting device used to report activities that provide supplies and services to other City programs, such as fleet maintenance, print shop services, information technology, and employee benefit trust. Because these services benefit both governmental and business -type functions, they have been allocated between governmental and business -type activities in the government -wide financial statements. Proprietary fund financial statements provide the same type of information as the business -type activities shown in the government -wide financial statements, only in more detail and include some of the internal service fund -type activities. The proprietary fund financial statements provide separate information for the Water and Sewer Fund, the Sanitation Fund and the Regional Airport Fund since they are considered major funds of the City. The non -major proprietary funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for each of the non -major proprietary funds are provided in the Combining Financial Statement Section 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 method used for fiduciary funds is much like that used for proprietary funds. Agency funds are a component of fiduciary funds and are used to account for situations where the City's role is purely custodial, such as receipt, temporary investment and remittance of fiduciary funds to individuals, private organizations or other governments. The City maintains one fiduciary fund. This fund is an agency fund used to account for property that has been abandoned or unclaimed pending escheatment to the State of Texas. Notes to the Financial Statements The Notes to the Financial Statements provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. These notes can be found on pages 26-64 of this report. Gel City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2016 (continued) Government -Wide Financial Analysis The City's combined net position was $366,818,062 as of September 30, 2016, an increase of $15,451,482, or 4.40% from the prior year. Using the Tables below, an analysis of the net position of the City can be made. The largest portion of the City's net position, $384,281,073, or 104.76%, is reflected in capital assets (land and improvements, buildings, infrastructure, machinery and equipment), less any related debt used to acquire those assets that is still outstanding. The City uses these assets to provide services to its citizens; consequently, these assets are not available for future spending. Although the City reports its capital assets net of related debt, the resources needed to repay this debt must be provided from other sources since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's net position, $15,550,970, or 4.24%, represents resources that are subject to external restrictions on how they may be used. Net Position (in thousands) Governmental Business -type Activities Activities Total 2016 2015 2016 2015 2016 2015 Current and Other Assets $ 27,584 $ 31,074 $ 85,400 $ 80,790 $ 112,984 $ 111,864 Capital Assets 176,502 173,538 369,625 351,405 546,127 524,943 Total Assets 204,086 204,612 455,025 432,195 659,111 636,807 Deferred Outflows of Resources 16,789 5.565 8.728 3,837 25,517 9,402 Long Term Liabilities 119,579 110,389 174,893 163,578 294,472 273,967 Other Liabilities 10,103 10,333 10,135 8.023 20,238 18,356 Total Liabilities 129,682 120,722 185,028 171,601 314,710 292,323 Deferred Inflows of Resources 2,797 1,829 303 440 3.100 2.269 Net Position: Net Investment in Capital Assets 148,207 143,015 236,074 238,249 384,281 381,264 Restricted 4,468 3,715 11,082 11,801 15,550 15,516 Unrestricted (64,279) (59,309) 31,266 13,896 (33,013) (45,413) Total Net Position F7 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2016 (continued) CHANGES IN NET POSITION (in thousands) Governmental Business -type Activities Activities Total 2016 2015 2016 2015 2016 2015 Revenues: Program Revenues: Charges For Services $ 8,836 $ 8,661 $ 63,948 $ 58,398 $ 72,784 $ 67,059 Operating Grants and Contributions 14,803 10,815 2,282 1,827 17,085 12,642 Capital Grants and Contributions 3,943 5,349 209 1,559 4,152 6,908 General Revenues: Property Taxes 34,515 31,073 - - 34,515 31,073 Sales Taxes 22,374 22,403 - - 22,374 22,403 Other Taxes/Fees 7,262 7,514 - - 7,262 7,514 Investment Earnings 130 21 176 15 306 36 Miscellaneous 447 529 60 87 507 616 Total Revenue 92,310 86,365 66,675 61,886 158,985 148,251 Expenses: Administrative Services 14,236 14,838 - - 14,236 14,838 Police 25,634 23,705 - - 25,634 23,705 Fire 17,477 16,455 - - 17,477 16,455 Parks and Recreation 5,637 5,492 - - 5,637 5,492 Accounting/Finance 788 876 - - 788 876 Community Development 6,682 6,401 - - 6,682 6,401 Public Works 8,335 8,117 - - 8,335 8,117 Health 5,707 5,398 - - 5,707 5,398 Traffic and Transportation 2,667 2,556 - - 2,667 2,556 MPEC 4,545 4,554 - - 4,545 4,554 Interest and Fees on Long-term Debt 1,631 1,911 - - 1,631 1911, Regional Airport - - 1,881 2,532 1,881 2,532 Kickapoo Airport - - 1,252 1,412 1,252 1,412 Transit - - 2,673 2,524 2,673 2,524 Sanitation - - 9,842 9,490 9,842 9,490 Water and Sewer - - 32,120 33,555 32,120 33,555 Stormwater Drainage - - 828 675 828 675 Waterpark - - 1,599 1,602 1,599 1,602 Total Expenses 93,339 90,303 50,195 51,790 143,534 142,093 Increase (Decrease) in Net Position Before Transfers (1,029) (3,938) 16,480 10,096 15,451 6,158 Transfers 2,004 (2,073) (2,004) 2,073 - - Increase (Decrease) in Net Position 975 (6,011) 14,476 12,169 15,451 6,158 Net Position - Beginning of Year 87,421 139,249 263,946 260,034 351,367 399,283 Net Position - End of Year $278.422 S263.946 $366.818 $351 "367 8 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2016 (continued) Governmental Activities — Governmental Activities increased the City's net position by $975,375 principally resulting from the award of new grants for the City's Fire Department for acquiring Self -Contained Breathing Apparatus (SCBA) and a health grant for Diabetes Education. Business -Type Activities — Business -type Activities increased the City's net position by $14,476,107. The Sanitation Fund shows an increase of net position of $487,104 compared to a decrease of nearly $1.2 million in the previous fiscal year. This change of net position was a result of the City not having to address a funding shortfall in the Employee Benefit Trust Fund. The Storm Water Utility Fund shows improvement of nearly $2.9 million in net position to allow unrestricted net position to grow in anticipation of the ensuing Kemp/Monroe Drainage Improvement Project. Over $1.5 million is due to an increase in net position in the Information Technology Fund to allow unrestricted net position to grow in anticipation of future replacement of the City's financial software. Water consumption restrictions for drought conditions were removed in June 2015 and the City anticipates that water consumption will gradually return to near pre -drought usage patterns. With a full year of water consumptions without restrictions being in place, the Water/Sewer Fund experienced a change in net position of $9.2 million due to higher revenues resulting from increased water consumptions. Financial Analysis of the City's Funds Governmental Funds — The focus of the governmental funds is to provide information on near - term inflows, outflows and balances of expendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of September 30, 2016, the City's governmental funds reported combined fund balances of $21,932,425, which is a decrease of $1,112,502 from the prior year. Virtually all this decrease is attributable to the reduction of intergovernmental revenue over the previous fiscal year due to the completion of the Wichita Falls Regional Airport Terminal Project. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund balance of the General Fund was $13,161,690, a reduction of $520,371 from the prior year. As a measure of the General Fund's liquidity, it may be useful to compare both the unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 18.08% of total General Fund expenditures, while the total fund balance represents 19.51% of total General Fund expenditures. Proprietary Funds — The financial statements of the proprietary funds provide information for two types of funds: the business type (enterprise) funds and the internal service funds. The accounting principles applied to proprietary funds are similar to that of the private sector. Consequently, with the exception of the allocation of internal service fund net income or loss, the net position and changes in net position of the enterprise funds in these financial statements are identical with the net position and changes in net position reflected in the business type activities in the city-wide presentation. The City's internal service funds include the Fleet Maintenance Fund, Employee Benefit Trust Fund, Duplicating Services Fund and the Information Technology Fund. At the close of 9 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2016 (continued) September 30, 2016, the net position for the City's internal service funds was $26,182,035, an increase of $2,397,940. The Fleet Maintenance Fund reflects a reduction of $58,842 in net position principally because depreciation expenses were higher than equipment replacement expenses. The Employee Benefit Trust Fund reflects an increase of $929,000 in net position because of employee health care plan changes, an increase of employer contributions and a lower claim experience level compared to the previous year. The Information Technology Fund reflects an increase of $1,518,496 in net position as the City continues to increase this Fund's unrestricted net position to provide for the acquisition of a finance, purchasing, payroll and human resources software to replace the current software whose support terminates after December 2018. General Fund Budgetary Highlights The final amended expenditure budget for the General Fund, including transfers out, was increased by $1,102,029 from the original adopted budget. The reason for this increase in appropriations can be briefly summarized as follows: • Approximately $1,102,000 of prior year encumbrances was carried forward to the 2015- 16 amended budget. These projects included $814,729 for street repairs, $100,000 for parks trail land acquisition and $50,976 for traffic signals, striping and signage. Actual revenues in the General Fund for the 2015-16 fiscal year were $69,769,529, which was $966,667 below final budgeted figures. Reduced sales tax receipts accounted for approximately $186,797 of this amount. All three of the city's utility franchise agreements reflected declines with electricity franchise revenue being $239,465 less, the natural gas franchise revenue being $145,431 less and the cable franchise revenue being $49,659 less. A decrease in mixed beverage tax revenue of approximately $31,014 attributed to the overall change of revenue. Actual expenditures in the General Fund for the 2015-16 fiscal year were $72,784,713, which was $2,270,663 below budgeted expenditures. A large portion of this variance was due to large encumbrances for street repairs, building structure repairs, traffic control equipment and street lights that weren't liquidated by the close of the fiscal year that will be expended in the 2016-17 fiscal year. 10 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2016 (continued) 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, 2016 amounts to $546,126,924 (net of accumulated depreciation). This investment in capital assets includes land, buildings, equipment, infrastructure and construction in progress. Major capital asset events during this fiscal year included the following: • Construction in progress of the Advanced Metering Infrastructure • Construction in progress of the McNeil Avenue Drainage Improvements • Construction in progress of the Permanent Indirect Water Reuse Project • Construction in progress of the Upgrade to the Public Radio Communication System • Construction in progress of the Regional Airport Taxiway Charlie Rehabilitation • Street Rehabilitation and Utility Improvement Projects Capital Assets, net of Accumulated Depreciation (in thousands) Governmental Business -type Activities Activities Total 2016 2015 2016 2015 2016 2015 Land $ 12,225 $ 10,683 $ 9,303 $ 9,042 $ 21,528 $ 19,725 Land Betterments 16,686 17,184 31,036 31,967 47,722 49,151 Buildings, Systems and Improvements 49,678 51,389 279,203 283,138 328,881 334,527 Infrastructure 81,392 81,364 - - 81,392 84,145 Machinery and Equip 8,982 9,878 2,567 2,771 11,549 12,649 Furniture and Fixtures 1 1 12 - 13 1 Motor Vehicles - - 15,070 15,125 15,070 15,125 Construction in Progress 7,538 3.039 32,434 9,362 39,972 9.620 Totals S176.502 $351.405 0,546127 S 524.943 Additional information on the City's capital assets can be found in Note 7 on pages 42-43 of this report. 11 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2016 (continued) Long Term Debt — At the end of the current fiscal year, the City had a total bonded debt, notes and capital leases outstanding of $206,743,574. During the 2015-16 fiscal year, the City's total debt increased by $3,649,565. The City refunded the outstanding W&S 2007 Priority Lien Refunding Bonds in the summer of 2016 to take advantage of attractive interest rates which resulted in annual debt service savings of $1.4 million in the Water/Sewer Fund. The City also entered a capital lease in the amount of $16.5 million for an Automated Meter Infrastructure (AMI) project to replace all the City's water meters that required manual reading with automated read meters. This new debt was partially offset as the City continued to retire outstanding General Obligation Bonds, Water and Sewer System Revenue Bonds, Combination Tax and Revenue Bonds, Capital Leases and Notes Payable. As of September 30, 2016, Moody's Investor's Service had assigned a credit rating of Aa2 for the City's General Obligation Bonds and a rating of A3 for the City's Water and Sewer System Revenue Bonds. Standard & Poor's had assigned a credit rating of AA for the City's General Obligation Bonds and a rating of A for its Water and Sewer System Revenue Bonds. Outstanding Debt at Year -End (in thousands) Governmental Business -type Activities Activities Total 2016 2015 2016 2015 2016 2015 General Obligation Bonds $ 16,129 $ 3,851 - $ 1,930 $ 16,129 $ 5,781 Combination Tax and Revenue Bonds 31,139 46,710 51,323 54,126 82,462 100,836 Utility System Revenue Bonds - - 87,938 92,086 87,938 92,086 Capital Lease Payable 2,857 3,230 16,958 723 19,815 3,953 Notes Payable - - 400 438 400 438 Total $ 50,125 $ 53,791 $ 156,619 $ 149,303 $ 206,744 $ 203,094 The City is permitted by its Home Rule Charter to levy taxes up to $2.25 per $100 of assessed valuation for general governmental services, including the payment of principal and interest on long-term debt. The combined tax rate to finance general governmental services for the year ended September 30, 2016, was $.70598 per $100, which means that the City has a tax margin of $1.54402 per $100, and could generate up to $73,581,992 additional tax revenue a year from the present assessed valuation of $4,765,611,306 before the limit is reached. The current ratio of general bonded debt outstanding to the assessed value of all taxable property is 0.99%. Additional information about the City's long-term debt can be found in Note 14 on pages 57-61 of this report. 12 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2016 (continued) Economic Factors and Next Year's Budget and Rates Total 2016-17 operating revenues, including transfers in from other funds, are budgeted at $171,157,449, which is a decrease of $519,701, or -0.30% from the 2015-16 adopted budget. In the 2016-17 budget, sales taxes in the General Fund are projected to generate $22,422,692, a decrease of $54,400, or -2.4% from the prior year adopted budget. It should be noted that this projection was based upon an estimate of 2015-16 actual receipts with a growth rate of 1.00% for budget year 2016-17. The Property Tax is the largest source of revenue in the City's budget and is also relied heavily upon to provide general City services. The property tax base, as certified by the Wichita County Appraisal District, is $4.85 billion, an increase of $82.6 million, or 1.73% from the prior year. This is the eighth consecutive year that the property tax base has shown very slight growth or remained flat. The 2016-17 budget maintained the property tax rate of $0.70598 per $100 of taxable property that was in effect in the 2015-16 budget. This rate is estimated to generate $590,923 in additional property tax revenue for the General Fund during the 2016-17 fiscal year and will help provide increases to the City's pay plans that have remained significantly unchanged for several years. The 2016-17 budget includes a 1.5% cost of living adjustment across all the City's pay plans. The City maintains a reserve account in the General Fund to be used for major emergencies such as a widespread tornado, large legal liabilities or important one-time expenditures. The City's fund balance policy established a goal of maintaining 20% of expenditures in unassigned General Fund balance. Current figures indicate that the City will maintain this 20% General Fund balance goal which currently does not allow the flexibility to fund one-time capital improvements in the 2016-17 budget. The 2016-17 budget maintains the water rates as approved on August 5, 2014 that included an increase of 53% to retail water rates. This rate increase was needed to provide for approximately $1.4 million of anticipated annual debt service on the Indirect Potable Water Reuse Project, set aside $1 million annually for a future water supply project that will be determined, and to adjust for significantly lower water sales due to lower water consumption/demand. Requests for Information This financial report is designed to provide a general overview of the finances of the City of Wichita Falls for all those with an interest in the government's finances. Questions concerning any of the information provided in this report, or request for additional financial information, should be addressed to the City Finance Department, 1300 Seventh Street, Wichita Falls, Texas 76301. 13 B/WI-Skie, 4o1deol- O��o�tuat��ie, Basic Financial Statements EXHIBIT A-1 CITY OF WICHITA FALLS, TEXAS STATEMENT OF NET POSITION SEPTEMBER 30, 2016 Primary Government Governmental Business -type Component Activities Activities Total Units Assets Cash and cash equivalents $ 21,564,462 $ 18,845,964 $ 40,410,426 $ 21,202,491 Receivables (net): Taxes and assessments 857,721 - 857,721 - Customer and trade - 7,944,974 7,944,974 - Government agencies 7,341,364 592,198 7,933,562 1,310,802 Other 1,587,698 296,266 1,883,964 - Internal balances (8,462,877) 8,462,877 - Inventory 192,745 1,752,694 1,945,439 - Prepaid items 50,696 36,293 86,989 100,000 Other assets 182,963 - 182,963 - Restricted assets: Cash and cash equivalents 4,269,090 47,468,724 51,737,814 - Capital assets not being depreciated 19,762,576 41,737,025 61,499,601 1,469,797 Capital assets net of accumulated depreciation 156,739,656 327,887,667 484,627,323 718,453 Total assets 204,086,094 455,024,682 659,110,776 24,801,543 Deferred Outflows of Resources Pension -related 16,421,411 4,886,315 21,307,726 - Deferred losses on bond refundings 367,767 3,842,063 4,209,830 Total deferred outflows of resources 16,789,178 8,728,378 25,517,556 - Liabilities Accounts payable - trade 2,500,885 3,895,039 6,395,924 198,175 Accrued payroll 2,190,519 609,359 2,799,878 - Accrued interest payable 283,187 711,130 994,317 Payable to government agencies 442,320 83,918 526,238 Estimated health claims payable 580,000 - 580,000 Other liabilities 4,068,402 1,819,134 5,887,536 Unearned revenue 37,253 - 37,253 Customer deposits - 3,016,611 3,016,611 Long-term liabilities: Portion due or payable within one year 6,378,735 11,025,681 17,404,416 Portion due or payable after one year 52,485,233 150,892,428 203,377,661 Net pension liability 60,715,585 12,974,331 73,689,916 - Total liabilities 129,682,119 185,027,631 314,709,750 198,175 Deferred Inflows of Resources Pension -related 2,797,040 303,480 3,100,520 - Net Position Net investment in capital assets 148,206,829 236,074,244 384,281,073 2,188,250 Restricted for: Perpetual care (nonexpendable) 1,030,373 - 1,030,373 - Debt service (expendable) 59,615 11,082,332 11,141,947 Capital projects (expendable) 1,671,483 - 1,671,483 Federal grant programs (expendable) 1,707,157 1,707,157 Tourism (expendable) 10 - 10 - Unrestricted (64,279,354) 31,265,373 (33,013,981) 22,415,118 Total net position $ 88,396,113 $ 278,421,949 $ 366,818,062 $ 24,603,368 See accompanying notes to the basic financial statements. 14 CITY OF WICHITA FALLS, TEXAS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2016 Functions/Programs Primary government: Governmental activities: Administrative services Police Fire Parks and recreation Accounting/finance Community development Public works Health Traffic and transportation Multi -Purpose Events Center Interest and fees on long-term debt Total governmental activities Business -type activities: Regional Airport Kickapoo Airport Transit Sanitation Water and sewer Stormwater drainage Waterpark Total business -type activities Total primary government Component units: Community development General revenues and transfers: Taxes: Property tax Sales tax Franchise fees Hotel occupancy tax Beverage tax Bingo tax Investment earnings Miscellaneous Transfers Total general revenues and transfers Change in net position Net position - beginning Net position - ending Program Revenues Operating Charges for Grants and Expenses Services Contributions $ 14,235,870 $ 4,270,749 $ 306,692 25,633,843 335,112 247,242 17,476,759 1,749 171,343 5,637,654 429,207 185,354 787,945 - - 6,681,803 1,101,085 4,644,235 8,334,993 11,824 951,919 5,707,386 1,051,834 2,118,721 2,667,418 72,965 3,753,099 4,544,817 1,561,783 41,000 1,631,355 - 2,383,872 93,339,843 8,836,308 14,803,477 1,881,055 1,109,959 - 1,252,359 970,129 - 2,673,176 503,708 2,282,163 9,841,683 13,223,470 - 32,120,018 42,999,399 - 828,537 3,703,803 - 1,598,720 1,437,615 - 50,195,548 63,948,083 2,282,163 $ 143,535,391 $ 72,784,391 $ 17,085,640 $ 9,520,927 $ 106,800 $ 381,883 See accompanying notes to the basic financial statements. 15 Net (Expense) Revenue and Changes in Net Position Capital Primary Government Grants and Governmental Business -type Component Contributions Activities Activities Total Units $ $ (9,658,429) $ $ (9,658,429) $ - (25,051,489) (25,051,489) 723,959 (16,579,708) (16,579,708) - (5,023,093) (5,023,093) - (787,945) (787,945) - (936,483) (936,483) 3,218,970 (4,152,280) (4,152,280) - - (2,536,831) (2,536,831) - 1,158, 646 1,158, 646 - - (2,942,034) - (2,942,034) - - 752,517 - 752,517 - 3,942,929 (65,757,129) - (65,757,129) - - (771,096) (771,096) - (282,230) (282,230) - 112,695 112,695 - - - 3,381,787 3,381,787 - 209,110 - 11,088,491 11,088,491 - - - 2,875,266 2,875,266 - - - (161,105) (161,105) - 209,110 - 16,243,808 16,243,808 - $ 4,152,039 (65,757,129) 16,243,808 (49,513,321) - $ - - - (9,032,244) 34,515,164 34,515,164 689,931 22,373,768 22,373,768 7,457,922 5,038,247 5,038,247 - 1,910,468 1,910,468 - 286,986 286,986 - 26,736 - 26,736 - 129,886 175,860 305,746 177,082 447,357 60,331 507,688 142,269 2,003,892 (2,003,892) - - 66,732,504 (1,767,701) 64,964,803 8,467,204 975,375 14,476,107 15,451,482 (565,040) 87,420,738 263,945,842 351,366,580 25,168,408 $ 88,396,113 $ 278,421,949 $ 366,818,062 $ 24,603,368 EXHIBIT A-3 CITY OF WICHITA FALLS, TEXAS BALANCE SHEET - GOVERNMENTAL FUNDS SEPTEMBER 30, 2016 Assets Cash and cash equivalents Receivables (net): Taxes and assessments Other City funds Government agencies Other Inventory Prepaid items Other assets Total assets Liabilities Accounts payable Accrued payroll Payable to other City funds Payable to government agencies Other liabilities Claims and judgments payable Unearned revenue Total liabilities Deferred inflows of resources Unavailable revenues Fund balances Nonspendable: Inventory and prepaid items Restricted for: Perpetual care Debt service Capital projects Federal and state grant programs Tourism Committed for: Golf course Multi -Purpose Events Center Local projects Assigned for: Subsequent year's expenditures Unassigned Total fund balances Total liabilities, deferred inflows of resources Total Nonmajor Governmental General Governmental Funds $ 11,233,083 $ 8,284,369 $ 19,517,452 678,398 179,323 857,721 4,796,443 - 4,796,443 4,175,735 3,165,629 7,341,364 1,071,559 132,891 1,204,450 120,406 71,905 192,311 37,088 13,608 50,696 1,000 181,963 182,963 $ 22,113,712 $ 12,029,688 $ 34,143,400 $ 955,180 $ 1,439,040 $ 2,394,220 1,926,414 220,805 2,147,219 - 1,988,889 1,988,889 343,104 99,216 442,320 3,594,243 473,164 4,067,407 38,425 - 38,425 - 37,236 37,236 6,857,366 4,258,350 11,115,716 1,058,848 36,411 1,095,259 157,494 84,013 241,507 - 1,030,373 1,030,373 - 57,629 57,629 - 2,934,265 2,934,265 - 1,707,157 1,707,157 - 10 10 - 40,893 40,893 44,510 44,510 2,609,315 2,609,315 878,314 - 878,314 13,161,690 (773,238) 12,388,452 14,197,498 7,734,927 21,932,425 and fund balances $ 22,113,712 $ 12,029,688 See accompanying notes to the basic financial statements. 16 $ 34,143,400 EXHIBIT A-4 Ul CITY OF WICHITA FALLS, TEXAS RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION SEPTEMBER 30, 2016 Total fund balances - governmental funds (Exhibit A-3) Amounts reported for governmental activities in the Statement of Net Position (Exhibit A-1) are different because: Capital assets used in governmental activities are not financial resources and therefore not reported in the funds. Capital assets at year-end consist of: Gross capital assets Related accumulated depreciation $ 21,932,425 $ 310,909,126 139,103,785 171,805,341 Property taxes receivable and municipal court fines are not available to pay for current period expenditures and therefore are reported as deferred inflows of resources in the funds Long-term liabilities are not due and payable in the current period and therefore not reported as liabilities in the funds. Long-term liabilities at year-end consist of: Bonds payable Capital lease payable Accrued vacation and sick leave Claims and judgments payable Accrued interest 1,095,242 47,267,807 2,857,166 8,621,269 24,752 283,187 (59,054,181) In the governmental funds financial statements, refunding losses are expended when incurred, whereas in the government -wide financial statements the losses are capitalized and amortized. The City's net pension liability and related deferred outflows and inflows related to its participation in the Texas Municipal Retirement System and the Wichita Falls Firemen's Relief and Retirement Fund do meet criteria to be reported in the governmental funds financial statements. These items consist of: Net pension liabilities Deferred outflows - pension related items Deferred inflows - pension related items 367,767 59,727,416 (16,049,252) 2,773,926 (46,452,090) Internal service funds are used by management to charge the costs of duplicating services, information technology and health insurance claims to the individual funds. The assets and liabilities of these internal service funds are included with the governmental activities. Internal service funds are used by management to charge the costs of central garage services to the individual funds. The assets and liabilities of this fund are included with the business -type activities. This amount represents the governmental activity portion of the central garage activity. Total net position - governmental activities (Exhibit A-1) See accompanying notes to the basic financial statements. 8,424,423 (9,722,814) $ 88,396,113 17 EXHIBIT A-5 CITY OF WICHITA FALLS, TEXAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2016 Total Nonmajor Governmental General Governmental Funds Revenues Taxes $ 61,554,016 $ 2,647,661 $ 64,201,677 Charges for services 2,687,265 683,308 3,370,573 Licenses and permits 1,971,212 - 1,971,212 Fines and forfeitures 2,358,469 203,348 2,561,817 Intergovernmental revenue 6,133 13,531,736 13,537,869 Contributions 192,233 5,016,304 5,208,537 Miscellaneous revenue 1,000,201 2,120,432 3,120,633 Total revenues 69,769,529 24,202,789 93,972,318 Expenditures Administrative services 13,404,682 1,400,990 14,805,672 Police 23,369,097 211,895 23,580,992 Fire 15,682,731 394,541 16,077,272 Parks and recreation 5,134,985 69,311 5,204,296 Accounting/finance 702,883 - 702,883 Community development 1,961,370 4,717,383 6,678,753 Public works 5,219,063 336,866 5,555,929 Health 2,988,930 2,494,205 5,483,135 Traffic and transportation 1,933,608 290,903 2,224,511 Multi -Purpose Events Center - 3,718,058 3,718,058 Capital outlay 2,387,364 3,956,187 6,343,551 Debt service - principal - 3,745,000 3,745,000 Debt service - interest and paying agent fees - 1,764,412 1,764,412 Total expenditures 72,784,713 23,099,751 95,884,464 Excess of revenues over (under) expenditures (3,015,184) 1,103,038 (1,912,146) Other Financing Sources (Uses) Issuance of refunding bonds - 12,535,000 12,535,000 Premium on issuance of refunding bonds - 947,256 947,256 Payment to refunded bond escrow agent - (13,295,568) (13,295,568) Transfers in 2,958,089 4,616,245 7,574,334 Transfers out (739,563) (6,221,815) (6,961,378) Total other financing sources (uses) 2,218,526 (1,418,882) 799,644 Net change in fund balance (796,658) (315,844) (1,112,502) Fund balances - beginning 14,994,156 8,050,771 23,044,927 Fund balances - ending $ 14,197,498 $ 7,734,927 $ 21,932,425 See accompanying notes to the basic financial statements. A 18 EXHIBIT A-6 CITY OF WICHITA FALLS, TEXAS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2016 Net change in fund balances - total governmental funds (Exhibit A-5) $ (1,112,502) Amounts reported for governmental activities in the Statement of Activities (Exhibit A-2) are different because: Capital outlays are reported in governmental funds as expenditures. However, in the Statement of Activities, the cost of those assets are allocated over their estimated useful lives as depreciation expense. The net difference between the two is as follows: Capital outlay during the year $ 6,378,747 Depreciation expense for the year 6,478,127 (99,380) Proceeds from the sale of capital assets are recorded as revenues when received in the governmental funds. In the Statement of Activities, the difference between the proceeds and the book value of the capital asset is reported as a gain (loss) from sale. (109,583) Because property tax receivables and municipal court receivables will not be collected for several months after the City's fiscal year ends, they are not considered 'available' revenues and are deferred in the governmental funds. Deferred inflows decreased by this amount this year. (141,375) The issuance of long -tens debt provides current financial resources to governmental funds. However, the issuance increases long-term liabilities in the Statement of Net Position. The City issued bonds during 2015-16 in the amount of: (13,482,256) Repayment of long-term debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position. Bond and capital lease principal payments in 2015-16 were: 17,148,879 Included in long-term debt are obligations for accrued vacation and sick leave, and claims and judgments payable. The changes in these obligations are not included in the governmental fund financial statements, but are included in the government -wide financial statements. The changes in these long-term obligations were: Accrued vacation and sick leave (183,505) Claims and judgments payable (183,505) Interest on long-term debt in the Statement of Activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the Statement of Activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. The decrease in accrued interest is as follows: Accrued interest at September 30, 2015 313,596 Accrued interest at September 30, 2016 283,187 30,409 In an advance refunding of debt, the difference between the amount of debt defeased and the amount of assets put into escrow is deferred on the government -wide financial statements and amortized in future years, while that gain or loss is recognized in the year of defeasance in the governmental funds statements. The loss on the current year refunding was: 403,857 Amortization of deferred losses on refundings is only reported in the government -wide financial statements. Current year amortization was: (36,090) The City participates in two defined benefit pension plans. Contributions to the plan are expenditures at the fund level when payments are due. At the government -wide level, pension expenses are recognized on an actuarial basis. Payments were less than the actuarial expense in the current year. (2,731,642) Internal service funds are used by management to charge the costs of duplicating services, information technology and health insurance claims to the individual funds. The net revenues of these internal service funds are included with the governmental activities. 2,087,757 Internal service funds are used by management to charge the costs of central garage services to the individual funds. The net revenue of this fund is included with the business -type activities. This amount represents the governmental activity portion of the central garage activity. (799,193) Change in net position of governmental activities (Exhibit A-2) $ 975,376 See accompanying notes to the basic financial statements. 19 EXHIBIT A-7 (Page 1 of 2) Assets Current assets: Cash and cash equivalents Restricted cash and cash equivalents Receivables (net): Customer and trade Government agencies Other Inventory Prepaid items Total current assets Long-term assets: Capital assets, net of accumulated depreciation Total long-term assets Total assets Deferred Outflows of Resources Pension -related Deferred losses on bond refundings Total deferred outflows of resources CITY OF WICHITA FALLS, TEXAS STATEMENT OF NET POSITION PROPRIETARY FUNDS SEPTEMBER 30, 2016 Enterprise Funds Nonmajor Water and Regional Enterprise Sewer Sanitation Airport Funds $ 7,471,372 $ 5,554,430 $ 46,774,513 - 5,933,680 1,578,757 71,859 - 54,399 90,295 1,035,372 - 347 116 61,341,542 7,223,598 Internal Total Service Funds $ 6,081,335 $ 19,107,137 $ 1,785,837 694,211 - 47,468,724 4,269,090 - 432,537 7,944,974 - - 520,339 592,198 - 27,545 98,858 271,097 408,417 - 40,090 1,075,462 677,232 33,738 1,797 35,998 729 755,494 7,174,956 76,495,590 7,141,305 251,941,469 8,734,487 49,003,711 41,904,053 351,583,720 22,737,864 251,941,469 8,734,487 49,003,711 41,904,053 351,583,720 22,737,864 313,283,011 15,958,085 49,759,205 49,079,009 428,079,310 29,879,169 2,681,186 1,125,352 30,010 468,678 4,305,226 953,248 3,842,063 - - - 3,842,063 - 6,523,249 1,125,352 30,010 468,678 8,147,289 953,248 See accompanying notes to the basic financial statements. 20 EXHIBIT A-7 (Page 2 of 2) CITY OF WICHITA FALLS, TEXAS STATEMENT OF NET POSITION PROPRIETARY FUNDS SEPTEMBER 30, 2016 Enterprise Funds Nonmajor Water and Regional Enterprise Internal Sewer Sanitation Airport Funds Total Service Funds Liabilities Current liabilities: Accounts payable - trade 3,141,050 544,732 24,410 69,009 3,779,201 222,503 Accrued payroll 330,333 142,043 8,231 63,337 543,944 108,715 Accrued vacation and sick leave 406,261 180,608 9,501 42,598 638,968 167,456 Payable to other City funds 153,755 - 449,650 1,475,207 2,078,612 728,942 Payable to government agencies - 80,039 1,221 2,658 83,918 - Estimated health claims payable - - - - - 580,000 Other liabilities 1,432,299 25,340 359,226 1,816,865 3,265 Payable to U.S. Government - current maturity 36,548 - - 36,548 - Capital leases - current maturities 25,378 25,378 249,198 Revenue bonds - current maturities 9,864,099 9,864,099 - Accrued interest - revenue bonds 711,130 - - - 711,130 - Total current liabilities 16,100,853 947,422 518,353 2,012,035 19,578,663 2,060,079 Long-term liabilities: Payable to U.S. Government, less current maturities 363,367 - - - 363,367 - Capital leases, less current maturities 16,682,946 16,682,946 Revenue bonds, less current maturities 129,397,066 - 129,397,066 Estimated liability for landfill closure and post -closure care costs - 4,547,631 4,547,631 Customer deposits 3,016,611 - - - 3,016,611 - Net pension liability 7,119,190 2,988,077 79,683 1,244,451 11,431,401 2,531,099 Total long-term liabilities 156,579,180 7,535,708 79,683 1,244,451 165,439,022 2,531,099 Total liabilities 172,680,033 8,483,130 598,036 3,256,486 185,017,685 4,591,178 Deferred Inflows of Resources Pension -related 166,524 69,894 1,864 29,108 267,390 59,204 Net Position Net investment in capital assets 118,640,218 8,734,487 49,003,711 41,904,053 218,282,469 22,488,666 Restricted for debt service 11,082,332 - - - 11,082,332 - Unrestricted 17,237,153 (204,074) 185,604 4,358,040 21,576,723 3,693,369 Total net position $ 146,959,703 $ 8,530,413 $ 49,189,315 $ 46,262,093 250,941,524 $ 26,182,035 Adjustment to reflect the consolidation of internal service funds activities related to enterprise funds 27,480,425 Net position of business type activities $ 278,421,949 See accompanying notes to the basic financial statements. 21 B/u�Skie, Cro�de� O��o�'tr��ie, EXHIBIT A-8 CITY OF WICHITA FALLS, TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2016 Operating revenues: Charges for services Rents, concessions and other Contributions Total operating revenues Operating expenses: Personnel services Supplies and materials Maintenance and repairs Utilities and other services Insurance and contract support Other expenses Depreciation and amortization Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Interest income Gain/(loss) on sale/abandonment of capital assets Interest expense and paying agent fees Bond issuance costs Intergovernmental operating grants Total nonoperating revenues (expenses) Income (loss) before contributions and transfers Capital contributions Transfers in Transfers out Change in net position Net position - beginning Net position - ending Enterprise Funds Nonmajor Water and Regional Enterprise Sewer Sanitation Airport Funds Total Internal Service Funds $ 42,891,450 $ 13,182,925 $ 21,733 $ 5,174,704 $ 61,270,812 $ 13,520,935 107,949 40,545 1,088,226 1,440,551 2,677,271 1,176,559 - - - - - 13,556,838 42,999,399 13,223,470 1,109,959 6,615,255 63,948,083 28,254,332 9,885,760 4,332,241 221,139 2,341,151 16,780,291 3,468,822 1,378,019 241,927 7,880 1,010,333 2,638,159 2,781,828 1,489,366 324,765 45,309 372,208 2,231,648 2,576,248 4,888,621 3,804,932 211,152 1,005,513 9,910,218 319,328 707,555 82,222 27,766 156,603 974,146 12,395,746 2,066,054 544,999 218,653 402,458 3,232,164 2,158,519 8,432,530 280,768 1,286,053 1,037,563 11,036,914 4,264,063 28,847,905 9,611,854 2,017,952 6,325,829 46,803,540 27,964,554 14,151,494 3,611,616 (907,993) 289,426 17,144,543 289,778 131,530 23,910 1,984 18,436 175,860 345,955 - - (9,084) 8,201 (883) 54,859 (3,524,763) - (3,524,763) (7,764) (591,232) - (591,232) - 2,282,163 2,282,163 - (3,984,465) 23,910 (7,100) 2,308,800 (1,658,855) 393,050 10,167,029 3,635,526 (915,093) 2,598,226 15,485,688 682,828 209,110 - - - 209,110 - 316,893 3,068,668 641,633 4,027,194 2,027,112 (1,438,189) (3,148,419) (702,074) (1,066,580) (6,355,262) (312,000) 9,254,843 487,107 1,451,501 2,173,279 13,366,730 2,397,940 137,704,860 8,043,306 47,737,814 44,088,814 23,784,095 $146,959,703 $ 8,530,413 $49,189,315 $46,262,093 $ 26,182,035 Adjustment to reflect the consolidation of internal service funds activities related to enterprise funds Change in net position of business type activities See accompanying notes to the basic financial statements. 22 1,109, 377 $ 14,476,107 EXHIBIT A-9 (Page 1 of 2) CITY OF WICHITA FALLS, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2016 Enterprise Funds Nonmajor Water and Regional Enterprise Internal Sewer Sanitation Airport Funds Total Service Funds Cash flows from operating activities: Received from customers and users $ 43,168,266 $ 13,269,888 $ 1,127,552 $ 6,490,635 $ 64,056,341 $ 4,450,572 Received from interfund charges - - - - 23,172,579 Other operating receipts 1,212,209 Payments to suppliers (9,789,008) (1,399,076) (375,841) (2,551,913) (14,115,838) (20,944,360) Payments for interfund charges (3,288,828) (4,151,170) (166,464) (934,626) (8,541,088) (624,403) Payments to employees (6,999,288) (2,876,965) (171,712) (1,824,176) (11,872,141) (2,450,026) Net cash provided (used) by operating activities 23,091,142 4,842,677 413,535 1,179,920 29,527,274 4,816,571 Cash flows from noncapital financing activities: Intergovernmental operating grants - - - 3,619,001 3,619,001 551,357 Interfund loans received (repaid) 14,320 449,650 (1,097,665) (633,695) (3,128,467) Transfers in from other funds 316,893 3,068,668 641,633 4,027,194 2,027,112 Transfers out to other funds (1,438,189) (3,148,419) (702,074) (1,066,580) (6,355,262) (312,000) Net cash provided (used) by noncapital financing activities (1,106,976) (3,148,419) 2,816,244 2,096,389 657,238 (861,998) Cash flows from capital and related financing activities: Capital contributions - 12,834 12,834 Acquisition and construction of capital assets (21,702,289) (403,999) (3,155,862) (1,835,717) (27,097,867) (7,723,393) Proceeds from sale of capital assets - 10,303 10,303 74,280 Proceeds from issuance of long-term debt 16,506,103 - 16,506,103 - Proceeds from sale of refunding bonds 74,005,000 74,005,000 Premium on sale of refunding bonds 13,933,263 13,933,263 Payment to escrow agent for refunded bonds (94,090,381) (94,090,381) Payment of bond issuance costs (610,732) (610,732) Principal paid on long-term debt (4,733,032) (4,733,032) (245,346) Interest and fees paid on long-term debt (3,353,940) (3,353,940) (7,764) Net cash provided (used) for capital and related financing activities (20,046,008) (403,999) (3,155,862) (1,812,580) (25,418,449) (7,902,223) Cash flows from investing activities: Interest on investments 131,530 23,910 1,984 18,436 175,860 345,955 Net cash (used) provided by investing activities 131,530 23,910 1,984 18,436 175,860 345,955 Net Increase (Decrease) in Cash and Cash Equivalents 2,069,688 1,314,169 75,901 1,482,165 4,941,923 (3,601,695) Cash and Cash Equivalents - Beginning 52,176,197 4,240,261 618,310 4,599,170 61,633,938 9,656,622 Cash and Cash Equivalents - Ending $ 54,245,885 $ 5,554,430 $ 694,211 $ 6,081,335 $ 66,575,861 $ 6,054,927 Reconciliation of cash and cash equivalents on the balance sheet to the statement of cash flows: Cash and cash equivalents $ 7,471,372 $ 5,554,430 $ - $ 6,081,335 $ 19,107,137 $ 1,785,837 Restricted assets - cash and cash equivalents 46,774,513 - 694,211 - 47,468,724 4,269,090 Total cash and cash equivalents at end of year $ 54,245,885 $ 5,554,430 $ 694,211 $ 6,081,335 $ 66,575,861 $ 6,054,927 See accompanying notes to the basic financial statements. 23 EXHIBIT A-9 (Page 2 of 2) CITY OF WICHITA FALLS, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2016 Enterprise Funds Nonmajor Water and Regional Enterprise Internal Sewer Sanitation Airport Funds Total Service Funds Reconciliation of Operating Income (Loss) to Net Cash Provided by Operating Activities: Operating income (loss) $ 14,151,494 $ 3,611,616 $ (907,993) $ 289,426 $ 17,144,543 $ 289,778 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 8,432,530 280,768 1,286,053 1,037,563 11,036,914 4,264,063 Customer deposits received 74,354 - - - 74,354 - (Increase) decrease in assets and deferred outflows: Receivables: Customer and trade 107,677 82,877 - (69,560) 120,994 - Other (13,164) (36,459) 17,593 (55,060) (87,090) 578,133 Inventory 31,758 - - (11,324) 20,434 56,234 Prepaid items 1,542 (116) (1,518) 2,701 2,609 54,308 Deferred outflows - pension -related (1,730,583) (750,862) (20,476) (303,624) (2,805,545) (617,191) Increase (decrease) in liabilities and deferred inflows: Accounts payable - trade 368,120 508,980 6,303 (52,468) 830,935 (193,693) Accrued payroll (74,328) 41,319 1,693 12,062 (19,254) 13,886 Accrued vacation and sick leave (14,712) 3,717 5,753 (10,010) (15,252) 10,453 Estimated health claims payable - - (350,000) Payable to government agencies (13,078) 790 (1,760) (14,048) - Other liabilities (203,960) - (2,798) (6,945) (213,703) 2,895 Estimated liability for landfill closure - 153,845 - - 153,845 - Net pension liability 2,039,063 986,762 28,730 362,381 3,416,936 735,174 Deferred inflows - pension -related (78,649) (26,692) (595) (13,462) (119,398) (27,469) Total adjustments 8,939,648 1,231,061 1,321,528 890,494 12,382,731 4,526,793 Net cash provided (used) by operating activities $ 23,091,142 $ 4,842,677 $ 413,535 $ 1,179,920 $ 29,527,274 $ 4,816,571 Noncash capital and financing activities: Capital assets received from developers $ 209,110 $ - $ - $ - $ 209,110 $ - See accompanying notes to the basic financial statements. 24 EXHIBIT A-10 CITY OF WICHITA FALLS, TEXAS STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES SEPTEMBER 30, 2016 Agency Fund Assets Cash and cash equivalents $ 125,849 Liabilities Other liabilities $ 125,849 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2016 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting and reporting policies of the City of Wichita Falls, Texas (City) conform to accounting principles generally accepted in the United States of America (GAAP) applicable to state and local governments. GAAP for local governments includes those principles prescribed by the Governmental Accounting Standards Board (GASB), which includes all statements and interpretations of the National Council on Governmental Accounting (NCGA) unless modified by the GASB, and those principles prescribed by the American Institute of Certified Public Accountants in the publication entitled Audits of State and Local Governmental Units. The following is a summary of the more significant policies and practices used by the City. A. Reporting Entitv The City is a municipal corporation governed by an elected Mayor and six -member City Council. As required by Governmental Accounting Standards Board (GASB) Statement No. 61, these financial statements present the City and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities, are in substance, part of the City's operations and data from these units are combined with data presented by the City. A discretely presented component unit, on the other hand, is reported in a separate column in the basic financial statements to emphasize it is legally separate from the City. Each blended and discretely presented component unit has a September 30th year end. Blended Component Unit Employee Benefit Trust Fund. On October 1, 1983, an "Agreement and Declaration of Trust" was made and entered into between the City and the Employee Benefit Trust Committee, acting as Trustee to administer the Employee Benefit Trust (Trust). The Trust Committee consists of four Trustees selected by the City, who may, but need not be, beneficiaries of the health and welfare program funded by the Trust, and/or officers or employees of the City. The purpose of the Trust is to provide health and welfare benefits, which may include life, accidental death and dismemberment, disability, medical and dental insurance, and any other benefits as determined by the Trustee Committee. The Trust is funded through contributions by the City and employees who choose to participate. It may be terminated in writing, at any time, by either party. The Employee Benefit Trust Fund is presented in the accompanying financial statements as an internal service fund. Discretelv Presented Component Units The Wichita Falls Economic Development Corporation. The Wichita Falls Economic Development Corporation is a non-profit corporation formed in May 1997 for the purpose of increasing employment opportunities, primarily through assisting qualifying enterprises with funds provided by a portion of the local sales tax. Assistance may be in the form of incentive grants, loans or leases which call for discounted rates or rebates for job development. The Corporation operates under the authority of Vernon's Civil Statutes, Article 5190.6, Section 4A. Since the City Council appoints its Board of Directors, approves its budgets, and exercises final authority over its operations, the Wichita Falls Economic Development Corporation is considered to be part of the City's reporting entity and presented in the accompanying basic financial statements as a discretely presented component unit. The Wichita Falls Economic Development Corporation utilizes full accrual accounting. 26 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2016 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) The Wichita Falls 4B Sales Tax Corporation. The Wichita Falls 4B Sales Tax Corporation is a non-profit corporation formed in May 1997 for the purpose of increasing employment opportunities and for public improvement projects such as parks, auditoriums, learning centers, open space improvements, athletic and exhibition facilities, and the related maintenance and operating costs of such projects. The Corporation operates under the authority of Vernon's Civil Statutes, Article 5190.6, Section 4B. Since the City Council appoints its Board of Directors, approves its budgets, and exercises final authority over its operations, the Wichita Falls 4B Sales Tax Corporation is considered to be part of the City's reporting entity and presented in the accompanying basic financial statements as a discretely presented component unit. The Wichita Falls 413 Sales Tax Corporation utilizes full accrual accounting. Wichita Falls Reinvestment Zone #2. On August 16, 2005, the City of Wichita Falls, Texas, with the advice and consent of the Wichita Falls Independent School District and Wichita County, approved the creation of the Wichita Falls Reinvestment Zone #2 (Zone). This Zone is permitted by Article 1066e of the State of Texas Tax Increment Financing Act passed in 1981. The area of the Zone is approximately 236 acres and includes the Lawrence Road area of the City. The purpose of the Zone is to capture increments of growth in real property values in the Zone from base values established on January 1, 2004, and use the ad valorem taxes derived from these increments to contribute to the zoned area. Tax funds derived from the increment can only be spent for public improvements in the Zone or for the payment of debt service on bonds issued to provide funds for public improvements. The Zone terminates on December 31, 2025, or when all debt has been paid if later. After all costs have been paid at the end of the tax increment financing period, any money remaining is to be remitted to the taxing entities. Since the City Council appoints a majority of its Board, approves its budget, and exercises final authority over its operations, the Wichita Falls Reinvestment Zone #2 is considered to be part of the City's reporting entity and presented in the accompanying basic financial statements as a discretely presented component unit. The Zone utilizes full accrual accounting. Wichita Falls Reinvestment Zone #3. On September 1, 2009, the City of Wichita Falls, Texas, with the advice and consent of the Wichita Falls Independent School District and Wichita County, approved the creation of the Wichita Falls Reinvestment Zone #3 (Zone). This Zone is permitted by Article 1066e of the State of Texas Tax Increment Financing Act passed in 1981. The area of the Zone is approximately 630 acres and includes a significant portion of the Eastside Neighborhood. The purpose of the Zone is to capture increments of growth in real property values in the Zone from base values established on January 1, 2009, and use the ad valorem taxes derived from these increments to contribute to the zoned area. Tax funds derived from the increment can only be spent for public improvements in the Zone or for the payment of debt service on bonds issued to provide funds for public improvements. The Zone terminates on December 31, 2029. After all costs have been paid at the end of the tax increment financing period, any money remaining is to be remitted to the taxing entities. Since the City Council appoints a majority of its Board, approves its budget, and exercises final authority over its operations, the Wichita Falls Reinvestment Zone #3 is considered to be part of the City's reporting entity and presented in the accompanying basic financial statements as a discretely presented component unit. The Zone utilizes full accrual accounting. 27 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2016 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) Wichita Falls Reinvestment Zone #4. On March 17, 2015, the City of Wichita Falls, Texas, with the advice and consent of the Wichita Falls Independent School District and Wichita County, approved the creation of the Wichita Falls Reinvestment Zone #4 (Zone). This Zone is permitted by Article 1066e of the State of Texas Tax Increment Financing Act passed in 1981. The area of the Zone is approximately 246 acres and includes a significant portion of the downtown area. The purpose of the Zone is to capture increments of growth in real property values in the Zone from base values established on January 1, 2015, and use the ad valorem taxes derived from these increments to contribute to the zoned area. Tax funds derived from the increment can only be spent for public improvements in the Zone or for the payment of debt service on bonds issued to provide funds for public improvements. The Zone terminates on December 31, 2035. After all costs have been paid at the end of the tax increment financing period, any money remaining is to be remitted to the taxing entities. Since the City Council appoints a majority of its Board, approves its budget, and exercises final authority over its operations, the Wichita Falls Reinvestment Zone #4 is considered to be part of the City's reporting entity and presented in the accompanying basic financial statements as a discretely presented component unit. The Zone utilizes full accrual accounting. No separate audited financial statements are available for the City's blended and discretely presented component units. Complete financial statements for the individual component units may be obtained from the City's Deputy City Manager at 1300 7th Street, Wichita Falls, Texas. Excluded From the Regortino Entitv Wichita Falls Firemen's Relief and Retirement Fund. The Wichita Falls Firemen's Relief and Retirement Fund was established and is controlled through various State of Texas legislative enactments. This Fund is administered locally by a seven -member board, independent of the City Council. City management and the City Council do not influence or control the administrative and financial affairs of the Fund, and the assets of the Fund are not the property of the City. The seven -member Board of Trustees, composed of the Mayor, the Finance Manager from the City's Finance Department, three firefighters elected by a majority vote of the firefighters and two citizens, who are not employees or officers of the City and are chosen by the unanimous vote of the first five Trustees, are subject to the administrative supervision of and report to the State Firemen's Pension Board. The activities of the Firemen's Relief and Retirement Fund, in the City's judgment, are not a part of the City and thus are excluded from the accompanying financial statements. B. Basis of Presentation Government -wide financial statements The basic financial statements include both government -wide (based on the City as a whole) and fund financial statements. The government -wide financial statements (i.e., the statement of net position and the statement of activities) report information on all non -fiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. However, interfund services provided and used are not eliminated in the process of consolidation. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. 28 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2016 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) The government -wide statement of activities demonstrates the degree to which the direct expenses of a functional category (police, public works, etc.) or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment, 2) grants and contributions that are restricted to meeting operational requirements of a particular function or segment, and 3) grants and contributions that are restricted to meeting the capital requirements of a particular function or segment. Taxes and other items not included among program revenues are reported instead as general revenues. Fund financial statements Separate fund -based financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government -wide financial statements. Major individual governmental funds and major enterprise funds are reported as separate columns in the fund financial statements. GASB Statement No. 34 sets forth minimum criteria (percentage of assets (combined with deferred outflows of resources), liabilities (combined with deferred inflows of resources), revenues or expenditures/expenses of either fund category for governmental and enterprise) for the determination of major funds. The major governmental fund is the General Fund. The major enterprise funds are the Water and Sewer Fund, the Sanitation Fund and the Regional Airport Fund. Non -major funds are combined in a column in the fund financial statements. Non -major funds are detailed in the combining section of the statements. Internal service funds, which traditionally provide services primarily to other funds of the government, are presented in the summary form as part of the proprietary fund financial statements. Because the principal users of internal services are the City's governmental and business -type activities, financial statements of internal service funds are allocated (based on the percentage of goods or services provided) between the governmental and business -type activities when presented at the government -wide level. The government -wide focus is more on the sustainability of the City as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. The focus of the fund financial statements is on the major individual funds of the governmental and business -type categories. Each presentation provides valuable information that can be analyzed and compared to enhance the usefulness of the information. C. Measurement focus, basis of accounting and financial statement presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary funds. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year in which they are levied. Grants and similar items are recognized as soon as all eligibility requirements imposed by the provider have been met. 29 I CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2016 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) Government fund -level financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property tax, franchise fees, and sales tax associated with the current fiscal period are all susceptible to accrual and have been recognized as revenues of the current fiscal period. All of the revenue items are considered to be measurable and available only when cash is received. The City reports the following major governmental funds: The General Fund is the City's primary operating fund. All general tax revenues and other receipts that are not allocated by law or contractual agreement to some other fund are accounted for in this fund. From the fund are paid general operating costs, fixed charges, and capital improvement costs that are not paid through other funds. Other governmental funds are a summarization of all the non -major governmental funds. The City reports the following major proprietary funds: The Water and Sewer Fund accounts for the water and sewer utility services provided to residents of the City. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The Sanitation Fund accounts for refuse collection services to the residents of the City as well as the operations of the City's landfill. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations and maintenance. The Regional Airport Fund accounts for the operations of the Wichita Falls Regional Airport. Operational activities, including administration, operations and maintenance, of the airport are accounted for in this fund. Other enterprise funds are a summarization of all of the non -major proprietary funds. The City additionally reports the following fund types: Internal service funds are used to account for the financing of materials and services provided by one department of the City to other departments of the City on a cost -reimbursement basis. The City uses internal service funds to report the activities of fleet maintenance, duplicating services, employee health and life insurance, and information technology. 30 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2016 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) An agency fund is used to account for any unclaimed vendor or payroll checks that will be escheated to the State if they remain unclaimed. These funds are held on a purely custodial basis. Proprietary funds distinguish operating revenues and expenses from nonoperating 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. The principal operating revenues of the City's water and sewer, sanitation, transit, and airport funds are charges to customers for services. Operating expenses for the enterprise funds and internal service funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. Capital improvement assessments are recorded as revenues in the fiscal period when the assessment becomes both measurable and available to finance expenditures of the fiscal period. Assessment revenues are considered measurable and available when collected by the City and recognized as revenue at that time. Payments for capital improvement assessments received in advance of the levy are reflected as deferred revenue. D. Nonexchange Transactions In a nonexchange transaction, a government gives (or receives) value without directly receiving (or giving) equal value in return. The statement defines when the City should recognize revenue or expense for nonexchange transactions involving financial or capital resources and how to account for timing and purpose restrictions. The timing of recognition depends on whether a nonexchange transaction is (a) a derived tax revenue (b) an imposed nonexchange revenue transaction or (c) a government -mandated or voluntary nonexchange transaction. Under this standard, revenue transactions with purpose restrictions are recorded as restricted resources until the purpose restrictions are met. Nonexchange transactions include the following classifications: • Derived tax revenues result from assessments imposed by governments on exchange transactions. • Imposed nonexchange revenues result from assessments by governments on nongovernmental entities, other than assessments on exchange transactions. • Government -mandated nonexchange transactions occur when a government at one level provides resources to a government at another level and require that government to use them for a specific purpose or purposes established in the provider's enabling legislation. • Voluntary nonexchange transactions result from legislative or contractual agreements, other than exchanges, entered into willingly by two or more parties. Examples of the City's voluntary nonexchange transactions include capital grants, state shared revenue and private donations. 31 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2016 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) Providers of government -mandated nonexchange transactions and voluntary nonexchange transactions should recognize liabilities and expenses/expenditures and recipients should recognize receivables (or decrease in liabilities) and revenue when all applicable eligibility requirements, including time requirements are met. All nonexchange transactions occurring in governmental fund types are also subject to the modified accrual revenue recognition criteria. Accordingly, assets and revenue should not be recognized unless measurable and available. E. Assets, liabilities and net position or fund balances 1. Cash, cash equivalents and investments The City's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Investments are carried at fair value. Fair value is determined as the price at which two willing parties would complete an exchange. Interest earned on investments is recorded in the funds in which the investments are recorded. 2. Inventory and Prepaid Items Inventories of the general and proprietary funds consist of supplies and various materials used for the maintenance of capital assets. The consumption method is used to account for these inventories. Under this method, inventory acquisitions are recorded in inventory accounts initially and charged as expenditures when used. Inventories are stated at average cost. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government -wide and fund financial statements. 3. Capital Assets Capital assets, which include property, plant and equipment, and infrastructure assets (e.g. roads, bridges, sidewalks and similar items), are reported in the applicable governmental or business -like activities columns in the government -wide financial statements. The City defines capital assets as assets with an initial, individual cost of more than $1,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the time received. 32 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2016 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) Capital assets are depreciated using the straight line method over the following useful lives: Assets Years Buildings, systems and improvements 20-59 years Infrastructure 8-100 years Machinery, vehicles and other equipment 3 - 25 years Furniture and equipment 3 - 10 years For business -type activities' capital assets, interest is capitalized on construction costs incurred during the year at an average interest rate on borrowed funds (revenue bonds) in accordance with generally accepted accounting principles. For the fiscal year ended September 30, 2016, the City's business -type activities incurred a total of $3,524,763 of interest costs. This entire amount was charged to expense as there was no capitalized interest in the current year. Contributions of funds from federal, state, or local grants restricted for the purpose of purchasing plant and equipment are recorded as revenue when received. The cost of water and sewer lines installed by developers is valued by the contractor and recorded as nonoperating revenue in the Water and Sewer Fund. 4. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. Certain amounts related to the City's participation in pension plans (See Note 8) are reported in this category, along with deferred losses on bond refunding. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has only two types of items that qualify for reporting in this category. Property taxes receivable ($734,388) and municipal court fines receivable ($360,870) are unavailable and therefore cannot be recognized as revenue in the governmental funds until they are received. There are also certain items related to the City's participation in pension plans (See Note 8) that are reported in this category. 5. Lonq-Term Obliqations Long-term debt and other obligations for general government purposes are recorded in the government -wide statement of net position. Long-term debt and other obligations financed by proprietary funds are reported as liabilities in the appropriate funds. 33 I 0 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) ' SEPTEMBER 30, 2016 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) ' For the government -wide financial statements and proprietary fund types, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method in the government -wide financial statements. Bonds ' payable are reported net of the applicable bond premium or discount. Issuance costs are reported as deferred bond issue costs and amortized over the term of the related debt. In addition, gains or losses on proprietary fund bond refunding are amortized over the term of ' the lesser of the new bonds or the refunded bonds' life using the effective interest method. In the governmental fund financials, bond proceeds are reported as another financing source. Bond premiums and discounts in governmental funds are also recognized currently as other 1 financing sources or uses. Issuance costs, even if withheld from the actual net proceeds received, are reported as debt service expenditures. 6. Fund Balances — Governmental Funds Fund balances of the governmental funds are classified as follows: Nonspendable Fund Balance — represents amounts that cannot be spent because they are either not in spendable form (such as inventory or prepaid insurance) or legally required to remain intact (such as notes receivable or principal of a permanent fund). Restricted Fund Balance — represents amounts that are constrained by external parties, constitutional provisions or enabling legislation. Committed Fund Balance — represents amounts that can only be used for a specific purpose by adoption of an ordinance by the City Council. Committed amounts cannot be used for any other purpose unless the governing board removes those constraints through the adoption of another ordinance. Committed fund balance amounts differ from restricted balances in that the constraints on their use do not come from outside parties, constitutional provisions, or enabling legislation, but rather from inside the City. Assigned Fund Balance — represents amounts which the City intends to use for a specific purpose, but that do not meet the criteria to be classified as restricted or committed. The City Council has by resolution authorized the Deputy City Manager to assign fund balance. Specific amounts that are not restricted or committed in a special revenue, capital projects, debt service or permanent fund are assigned for purposes in accordance with the nature of their fund type or the fund's primary purpose. Assignments within the General Fund convey that the intended use of those amounts is for a specific purpose that is narrower than the general purposes of the City itself. Unlike commitments, assignments only exist temporarily. Therefore additional action does not normally have to be taken for the removal of an assignment. Unassigned Fund Balance — represents amounts which are unconstrained in that they may be spent for any purpose. Only the General Fund reports a positive unassigned fund balance. Other governmental funds might report a negative balance in this classification because of overspending for specific purposes for which amounts had been restricted, committed or assigned. 34 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2016 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) When an expenditure is incurred for a purpose for which both restricted and unrestricted fund balance is available, the City considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the City considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds. 7. Federal and State Grants Grants and shared revenues are generally accounted for within the appropriate fund of the City to be financed by such grants or shared revenues. Federal grants include Community Development Block Grant, Section 8 Housing Assistance, Home Investment Partnership Agreement Program, and numerous health -related grants. Each Federal grant is accounted for in a separate special revenue fund. State grant revenues received for purposes normally financed through the general government are accounted for within the General Fund. 8. Transactions Between Funds Outstanding balances between funds are reported as "due to/from other City funds." Any residual balances between governmental activities and business -type activities are reported in the government -wide statements as "internal balances." Nonrecurring or non -routine transfers of equity between funds are accounted for as transfers. 9. Vacation and Sick Leave All full-time employees accumulate vacation benefits based on length of service up to 20 days per year. The maximum allowable accumulation is 35 days. Upon leaving the employment of the City, employees will be paid for unused vacation days which they have accrued. Sick leave is earned at the rate of 4.62 hours per pay period up to a maximum of ninety days. Additionally, police officers and firefighters may accumulate an unlimited number of sick leave days while employed with the City. Upon termination, police officers and firefighters are compensated for up to 720 hours and 1,080 hours, respectively. 10. Risk Manaqement The government is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the government carries commercial insurance. For insured programs, there have been no significant reductions in insurance coverage. Settlement amounts have not exceeded insurance coverage for the current year or the three prior years. 35 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2016 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) ' The City maintains a group health insurance plan for employees and dependents which is ' partially self -insured by the City. A group life insurance plan is maintained through an insurance company. Contributions to the plans are provided for by both the City and t participating employees. These contributions are recognized as revenues in the internal ' service fund used to account for these plans. The contributions made by the City are recorded as expenditures or expenses of the various funds as appropriate. ' Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. An excess coverage insurance policy covers individual ' claims in excess of $500,000. Liabilities include an amount for claims that have been ' incurred but not reported. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of pay -outs and h other economic and social factors. The City is also self -insured up to $250,000 for workers' compensation claims. Such claims are processed by a third party administrator. The City's estimated liability for workers' compensation claims payable at September 30, 2016 is based on management's estimate of probable losses in the amount of $63,177. The payment dates of such claims cannot be precisely determined, but are expected to be paid on a periodic basis over the next few years. Accordingly, the long-term liability has been recorded in the government - wide financial statements. $38,425 is believed by City management to be currently payable from available resources and is recorded in the General Fund. The following represents changes in the amount of claims liabilities for the City from October 1, 2014 to September 30, 2016: Liability balance, October 1, 2014 Incurred claims/adjustments Claim payments Liability balance, September 30, 2015 Incurred claims/adjustments Claim payments Liability balance, September 30, 2016 F. Pension Plan Health Workers' Care Compensation $ 595,540 $ 127,746 13,251,044 503,245 ( 12,916,584) ( 567,814) 930,000 63,177 11,493,136 578,447 ( 11.843.136) ( 578.447) $ 580.000 $ 63.177 For purposes of measuring the net pension liability, deferred outflows of resources, and deferred inflows of resources related to pensions, and pension expense, information about the Fiduciary Net Position of the Texas Municipal Retirement System (TMRS) and the Wichita Falls Firemen's Relief and Retirement Fund (WFFRRF) and additions to/deductions from Fiduciary Net Position have been determined on the same basis as they are reported to TMRS and WFFRRF. For this purpose, plan contributions are recognized in the period that compensation is reported for the employee, which is when contributions are legally due. Benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 0. CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2016 Note 2 - COMPLIANCE AND ACCOUNTABILITY Finance -Related Leqal and Contractual Provisions The City had no violations of finance -related legal and contractual provisions for the year ended September 30, 2016. Deficit Fund Balances — Individual Funds The Airport Improvement Grant Fund, a special revenue fund, the Debt Service Fund, and the Airport Construction Fund, a capital projects fund, had deficit fund balances of $469,351, $32,909 and $270,978, respectively, as of September 30, 2016. These deficits will be alleviated within a year. Note 3 - DEPOSITS AND INVESTMENTS Deposits All of the City's demand and time depository accounts are held in local banking institutions under the terms of written depository contracts. At September 30, 2016, the total amount of the City's demand and time deposits per the general ledger was $3,184,716, and the total amount per the City's September 30, 2016 bank statements was $4,240,066. The entire amount of the year-end bank statement balances was covered by federal depository insurance or by collateral held by the City's agent in the City's name. Investments The investment policies of the City and its discretely presented component units are governed by The Public Funds Investment Act. Authorized investments include obligations of the U.S. Treasury, agencies and instrumentalities, obligations of the State of Texas and related agencies, obligations of states, agencies, counties, cities and political subdivisions of any state rated A or above by a nationally recognized investment rating firm, repurchase agreements, public funds investment pools, and commercial paper. The investments of the City and its discretely presented component units at September 30, 2016 are as follows: Tvoes of Investments Primary Government: TexPool LOGIC Money market accounts Total primary government investments Component Units: TexPool Total component unit investments Total investments Fair Value/ Average Weighted Average Carrying Credit Quality/ Months to Amount Cost Ratinas Maturitv $ 11,312,138 $ 11,312,138 Not rated 1.00 33,759,619 33,759,619 Not rated 1.00 40,589.654 40,589.654 Not rated 1.00 85,661,411 85.661.411 20,927,472 20.927.472 Not rated 1.00 20,927,472 20,927.472 $106 588,883 $106.588-8M 37 CITY OF WICHITA FALLS, TEXAS ' NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2016 Note 3 - DEPOSITS AND INVESTMENTS (CONTD.) ' TexPool is a local government investment pool organized in conformity with the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code, and operates under the Public Funds Investment Act, Chapter 2256 of the Texas Government Code. The State Comptroller of ' Public Accounts is the sole officer, director, and shareholder of the Texas Treasury Safekeeping Trust Company, which is authorized to operate TexPool. Pursuant to the TexPool Participation Agreement, administrative and investment services to TexPool are provided by Federated ' Investors, Inc., under an agreement with the Comptroller, acting on behalf of the Trust Company. As required by the Public Funds Investment Act, the Advisory Board is composed equally of participants in TexPool and other persons who do not have a business relationship with TexPool ' who are qualified to advise TexPool. TexPool is comprised of two investment alternatives: TexPool (which the City is invested in) and TexPool Prime. Both funds seek to maintain a net asset value of $1.00 per unit and are rated AAAm by Standard and Poor's. Local Government Investment Cooperative (LOGIC) was organized in conformity with the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code, and the Public Funds Investment Act, Chapter 2256 of the Texas Government Code, and operates as a public funds investment pool under the Public Funds Investment Act. LOGIC is organized and existing as a business trust under the laws of the State of Texas with all Participant funds and all investment assets held and managed in trust by a Board of Trustees for the benefit of the Participants. The Board of Trustees is LOGIC's governing body and is comprised of employees, officers or elected officials of Participant Government Entities or individuals who do not have a business relationship with the Pool and are qualified to advise it. A maximum of two advisory board members represent the Co -Administrators of the Pool. LOGIC seeks to maintain a net asset value of $1.00 per unit and are rated AAAm by Standard and Poor's. The City categorizes its fair value measurements with the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. Investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient are not classified in the fair value hierarchy below. In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The City's assessment of the significance of particular inputs to these fair value measurements requires judgement and considers factors specific to each asset or liability. The City values its money market accounts using Level 2 inputs. TexPool and LOGIC are valued at net asset value per unit/share. GASB Statement No. 40 requires a determination as to whether the City was exposed to the following specific investment risks at year end and if so, the reporting of certain related disclosures: a. Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The ratings of securities by nationally recognized rating agencies are designed to give an indication of credit risk. At year end, the City was not exposed to credit risk. 38 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2016 Note 3 - DEPOSITS AND INVESTMENTS (CONTD.) b. Custodial Credit Risk Deposits are exposed to custodial credit risk if they are not covered by depository insurance and the deposits are uncollateralized, collateralized with securities held by the pledging financial institution, or collateralized with securities held by the pledging financial institution's trust department or agent but not in the City's name. Investment securities are exposed to custodial risk if the securities are uninsured, are not registered in the name of the government, and are held by either the counterparty or the counterparty's trust department or agent but not in the City's name. At year end, the City was not exposed to custodial credit risk. c. Concentration of Credit Risk This risk is the risk of loss attributed to the magnitude of a government's investment in single issuer. At year end, the City was not exposed to concentration of credit risk. d. Interest Rate Risk This is the risk that changes in interest rates will adversely affect the fair value of an investment. In accordance with its investment policy, the City manages its exposure to interest rate risk by allowing no more than 20% of the City's portfolio to be invested for a period greater than one year. e. Foreign Currency Risk This is the risk that exchange rates will adversely affect the fair value of an investment. At year end, the City was not exposed to foreign currency risk. Note 4 - PROPERTY TAXES Property taxes attach as an enforceable lien on property as of the prior January 1. Taxes are levied on October 1, and become delinquent after January 31, unless the half -payment option is elected, in which case one-half of the tax is due November 30, and the balance the following June 30. The City is permitted by its Home Rule Charter to levy taxes up to $2.25 per $100 of assessed valuation for general governmental services including the payment of principal and interest on long-term debt. The combined tax rate to finance general governmental services for the year ended September 30, 2016 was $.70598 per $100 which means that the City has a tax margin of $1.54402 per $100, and could raise up to $73,581,992 additional tax revenue a year from the present assessed valuation of $4,765,611,306 before the limit is reached. fi'] CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2016 Note 5 - RECEIVABLES Receivables at September 30, 2016 consist of the following: Nonmajor Nonmajor Totals Totals Governmental Water and Regional Enterprise Internal Primary Component Reporting General Funds Sewer Sanitation Airport Funds Service Government Units Entitv Receivables: Taxes and assessments $ 1,302,081 $ 200,528 $ - $ - $ $ - $ $ 1,502,609 $ $ 1,502,609 Customer and trade - - 8,195,843 2,331,876 571,769 11,099,488 11,099,488 Other City funds 4,796,443 - - - - 4,796,443 4,796,443 Government agencies 4,175,735 3,165,629 71,859 - 520,339 7,933,562 1,310,802 9,244,364 Other 1.071,559 132,891 54.399 90.295 27,545 98.858 408,417 1.883.964 - 1,883.964 Gross receivables 11,345,818 3,499,048 8,322,101 2,422,171 27,545 1,190,966 408,417 27,216,066 1,310,802 28,526,868 Less: Allowance for uncollectible accounts ( 623.684) ( 21,205) ( 2.262.163) (_753.119) ( 139.233) - ( 3.799.404) - ( 3.799.404) Net total receivables There are no net receivables, other than delinquent property taxes, that the City does not expect to collect within a year. The City expects to collect approximately $350,000 of the $1,347,132 total delinquent property taxes within a year. This amount is similar to the amounts collected in previous years. 40 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 6 - RESTRICTED ASSETS Restricted assets in the Water and Sewer Fund, Regional Airport Fund, and Internal Service Funds, are held for specific purposes in accordance with bond ordinances or other legal restrictions. Water and Sewer restricted assets are comprised of the following: For Debt Service: Cash and cash equivalents $11,032,822 For Capital Improvements: Cash and cash equivalents 35,741,691 Total $46.774.513 Regional Airport restricted assets are comprised of the following: For Passenger Facility Charges: Cash and cash equivalents $ 168,839 For Customer Facility Charges: Cash and cash equivalents Total Internal Service Fund restricted assets are comprised of the following: For Employee Insurance: Cash and cash equivalents 525,372 $694.211 $4.269.090 41 1 1 1 1 1 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2016 Note 7 - CAPITAL ASSETS Capital asset activity for the year ended September 30, 2016 was as follows: Balance Balance Governmental activities: October 1, September 30, 2015 Increases Decreases 2016 Capital assets not being depreciated: Land $ 10,682,820 $ 1,541,774 $ - $ 12,224,594 Construction in progress 3.039.459 6,504,217 2,005,694 7,537,982 Total capital assets not being depreciated 13,722,279 8.045,991 2,005,694 19,762,576 Capital assets being depreciated: Land betterments 23,422,644 - - 23,422,644 Buildings, systems and improvements 74,221,782 - 78,302 74,143,480 Infrastructure 172,699,822 2,982,260 593,325 175,088,757 Machinery and equipment 23,393,620 995,863 236,467 24,153,016 Furniture and fixtures 161.735 - 8,786 152,949 Total capital assets being depreciated 293,899,603 3,978,123 916,880 296,960,846 Less accumulated depreciation for: Land betterments 6,238,245 498,214 - 6,736,459 Buildings, systems and improvements 22,833,271 1,690,075 58,424 24,464,922 Infrastructure 91,336,482 2,866,152 506,321 93,696,313 Machinery and equipment 13,515,271 1,883,386 227,411 15,171,246 Furniture and fixtures 160,570 466 8,786 152,250 Total accumulated depreciation 134,083,839 6,938,293 800,942 140.221.190 Total capital assets being depreciated, net 159,815,764 ( 2,960,170) 115,938 156,739,656 Governmental activities capital assets, net $173.538.043 $ 5.085.821 $ 2 121 632 $176 502 232 Depreciation expense was charged to functions as follows: Governmental activities Administrative services $1,093,394 Police 1,210,858 Fire 174,577 Parks and recreation 243,319 Accounting/finance 81,947 Community development 6,492 Public works 2,523,548 Health 157,012 Traffic and transportation 417,965 Multi -Purpose Events Center 1,029,181 Total governmental depreciation $6.938.293 42 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2016 Note 7 - CAPITAL ASSETS (CONTD.) Balance Business -type activities: October 1, 2015 Increases Decreases Capital assets not being depreciated: Land $ 9,042,199 $ 260,996 $ - Construction in progress 9,361,803 23,121,077 49,050 Total capital assets not being depreciated 18.404.002 23,382,073 49,050 Capital assets being depreciated: Land betterments 47,465,251 329,371 - Buildings, systems and improvements 397,645,253 5,574,072 285,890 Machinery and equipment 9,351,828 298,915 34,643 Furniture and fixtures 4,114 12,829 - Motor vehicles 53,494,639 3,536,931 1,604,600 Total capital assets being depreciated 507.961.085 9,752,118 1,925.133 Less accumulated depreciation for: Land betterments 15,498,309 1,260,059 - Buildings, systems and improvements 114,506,974 9,499,898 276,807 Machinery and equipment 6,580,959 500,898 32,543 Furniture and fixtures 4,114 1,283 - Motor vehicles 38,369.577 3.578.680 1.590,998 Total accumulated depreciation 174,959,933 14,840,818 1.900.348 Total capital assets being depreciated, net 333.001.152 ( 5,088.700) 24.785 Business -type activities capital assets, net $351.405.154 $18 293 373 $ 73,835 Depreciation expense was charged to programs as follows: Business -type activities: Regional Airport $ 1,290,905 Kickapoo Airport 435,069 Transit 497,091 Sanitation 2,822,980 Water and sewer 9,190,190 Stormwater drainage 354,798 Waterpark 249.785 Total business -type depreciation $14.840.818 Balance September 30, 2016 $ 9,303,195 32.433.830 41,73T025 47,794,622 402,933,435 9,616,100 16,943 55,426,970 515, 788, 070 16,758,368 123,730,065 7,049,314 5,397 40, 357, 259 187.900,403 327,887,667 $369.624.692 43 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 8 - PENSION PLANS Eligible City employees participate in one of two pension plans. Eligible firefighters participate in the Wichita Falls Firemen's Relief and Retirement Fund (WFFRRF). All other eligible employees participate in the Texas Municipal Retirement System (TMRS). The table below summarizes the amounts reported by the City for each plan as of September 30, 2016. Detailed information for each plan follows. Net pension liability Deferred outflows of resources Deferred inflows of resources Pension expense Texas Municipal Retirement Svstem Plan Description TMRS WFFRRF Total $46,528,177 $27,161,740 $73,689,917 17,523,161 3,784,564 21,307,725 1,088,330 2,012,189 3,100,519 7,559,567 2,416,854 9,976,421 The City participates as one of 860 plans in the nontraditional, joint contributory, hybrid defined benefit plan administered by the TMRS. TMRS is an agency created by the State of Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agent multiple -employer retirement system for municipal employees in the State of Texas. The TMRS Act places the general administration and management of the System with a six -member Board of Trustees. Although the Governor, with the advice and consent of the Senate, appoints the Board, TMRS is not fiscally dependent on the State of Texas. TMRS's defined benefit pension plan is a tax -qualified plan under Section 401(a) of the Internal Revenue Code. TMRS issues a publicly available comprehensive annual financial report (CAFR) that can be obtained at www.tmrs.com. All eligible employees of the City are required to participate in TMRS. Benefits Provided TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the City Council, within the options available in the governing state statutes of TMRS. ' At retirement, the benefit is calculated as if the sum of the employee's contributions, with interest, and the City -financed monetary credits with interest were used to purchase an annuity. Members may choose to receive their retirement benefit in one of seven payment 1 options. Members may also choose to receive a portion of their benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the member's deposits and interest. 44 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 8 - PENSION PLANS (CONTD.) Employees Covered by Benefit Terms At the December 31, 2015 valuation and measurement date, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 615 Inactive employees entitled to but not yet receiving benefits 376 Active employees 1,027 Contributions The contribution rates for employees in TMRS are either 5%, 6%, or 7% of employee gross earnings, and the participating city matching percentages are either 100%, 150%, or 200%, both as adopted by the governing body of the participating city. Under the state law governing TMRS, the contribution rate for each city is determined annually by the actuary, using the Entry Age Normal (EAN) actuarial cost method. The actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees of the City were required to contribute 5% of their annual gross earnings during the fiscal year. The contribution rates for the City were 12.52% and 11.92% in calendar years 2015 and 2016, respectively. The City's contributions to TMRS for the year ended September 30, 2016, were $5,427,145, and were equal to the required contributions. Net Pension Liability The City's Net Pension Liability (NPL) was measured as of December 31, 2015, and the Total Pension Liability used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date. Actuarial Assumptions The Total Pension Liability in the December 31, 2015 actuarial valuation was determined using the following actuarial assumptions: Inflation Overall payroll growth Investment rate of return 2.5% per year 3.0% per year 6.75%, net of pension inflation plan investment expense, including Salary increases were based on a service -related table. Mortality rates for active members, retirees, and beneficiaries were based on the gender -distinct RP2000 Combined Healthy Mortality Table, with male rates multiplied by 109% and female rates multiplied by 103%. Based on the size of the City, rates are multiplied by a factor of 100.0%. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements. For disabled annuitants, the gender -distinct RP2000 Disabled Retiree Mortality Table is used, with slight adjustments. 45 ! r 1 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 8 - PENSION PLANS (CONTD.) Actuarial assumptions used in the December 31, 2015, valuation were developed primarily from an actuarial investigation of the experience of TMRS over the four-year period from December 31, 2010 through December 31, 2014, first used in the December 31, 2015 valuation. The post -retirement mortality assumption for healthy annuitants and annuity purchase rates are based on a Mortality Experience Investigation Study covering 2009 through 2011, and dated December 31, 2013. These assumptions were first used in the December 31, 2013 valuation, along with a change to the Entry Age Normal (EAN) actuarial cost method. Assumptions are reviewed annually. The long-term expected rate of return on pension plan investments is 6.75%. The pension plan's policy in regard to the allocation of invested assets is established and may be amended by the TMRS Board of Trustees. Plan assets are managed on a total return basis with an emphasis on both capital appreciation as well as the production of income, in order to satisfy the short-term and long-term funding needs of TMRS. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset Class Domestic Equity ! International Equity r Core Fixed Income Non -Core Fixed Income Real Return Real Estate Absolute Return Private Equity Total Discount Rate Long -Term Expected Real Tarqet Allocation Rate of Return (Arithmetic) 17.5% 4.80% 17.5% 6.05% 10.0% 1.50% 20.0% 3.50% 10.0% 1.75% 10.0% 5.25% 10.0% 4.25% 5.0% 8.50% 100.0% The discount rate used to measure the Total Pension Liability was 6.75%. The projection of cash flows used to determine the discount rate assumed that employee and employer contributions will be made at the rates specified in statute. Based on that assumption, the pension plan's Fiduciary Net Position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability. 46 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 8 - PENSION PLANS (CONTD.) Changes in Net Pension Liability Increase (Decrease) Total Pension Fiduciary Net Net Pension Liability Position Liability (a) (b) (a) — (b) Balances as of December 31, 2014 $233,591,358 $201,153,244 $32,438,114 Changes for the year: Service cost 4,697,339 - 4,697,339 Interest on total pension liability 16,093,246 - 16,093,246 Change of benefit terms - - - Difference between expected and actual experience 203,406 - 203,406 Change of assumptions 1,340,184 - 1,340,184 Contributions — employer - 5,639,053 ( 5,639,053) Contributions — employee - 2,497,984 ( 2,497,984) Net investment income - 296,795 ( 296,795) Benefit payments, including refunds of employee contributions ( 12,073,025) ( 12,073,025) - Administrative expense - ( 180,789) 180,789 Other changes - ( 8.931) 8,931 Balances as of December 31, 2015 $243,852 508 $197,324,331 $46 528,177 Sensitivity Analysis The following presents the net pension asset of the City, calculated using the discount rate of 6.75%, as well as what the City's net pension liability / (asset) would be if it were calculated using a discount rate that is 1 percentage point lower (5.75%) or 1 percentage point higher (7.75%) than the current rate. Net pension liability 1 % Current 1 % Decrease Discount Rate Increase 5.75% 6.75% 7.75% $79,356,552 $46,528,177 $19,492,561 Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources For the year ended September 30, 2016, the City recognized pension expense of $7,559,567 related to its participation in TMRS. 47 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 8 - PENSION PLANS (CONTD.) At September 30, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to TMRS from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual experience $ 153,182 $ 1,088,330 Net difference in assumptions 1,009,274 Net difference between projected and actual earnings 12,518,819 - Contributions made subsequent to measurement date 3,841,884 - Total $17.523.159 $ 1.088.330 $3,841,884 reported as deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability for the year ending September 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended December 31: 2016 $ 3,157,974 2017 3,157,974 2018 3,501,155 2019 2,775,842 2020 - Thereafter - Total $12.592.945 Wichita Falls Firemen's Relief and Retirement Fund Plan Description The City provides pension benefits for all of its firefighters through a single -employer defined benefit pension plan. The Wichita Falls Firemen's Relief and Retirement Fund (Fund) operates under an act passed in 1937 by the Texas State Legislature and adopted by the City's firefighters. The stand-alone financial report for the Firemen's Relief and Retirement Fund can be obtained from the City's Deputy City Manager at 1300 7th Street, Wichita Falls, Texas. 48 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 8 - PENSION PLANS (CONTD.) Benefits Provided Benefits are determined on a "formula" or a "final salary" plan. A firefighter who qualifies for a retirement benefit will receive monthly retirement equal to 2.55% of the firefighter's average salary, multiplied by the member's years of credited service. Benefits are calculated based upon a member's average salary for the 78 consecutive biweekly pay periods which produce the highest average. Members can receive a service retirement at ages 50 and above with 20 or more years of service. Members are eligible for actuarially reduced early retirement benefits before age 50, provided the employee has accrued at least 20 years of service. The plan also provides death and disability benefits. Members who terminate their service and are nonvested are entitled to the excess of the member's contributions over any benefits previously received. The valuations used for this plan are based on a valuation performed as of December 31, 2015. Employees Covered by Benefit Terms At the December 31, 2015 measurement date, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 120 Inactive employees entitled to but not yet receiving benefits 3 Active employees 157 Contributions The contribution rate for the firefighters is 12% (13% effective April 20, 2016) and the City contributes 12.95%. Both the firefighters and City make contributions bi-weekly. Contribution requirements are not actuarially determined, however, state law requires that each plan of benefits adopted by the Fund must be approved by a qualified actuary. The actuary certifies that the contribution commitments by the firefighters and the City provide an adequate financing arrangement. Using the individual entry age normal cost method, the plan's normal cost is determined as a percentage of payroll. The City's contributions to the Plan for the year ended September 30, 2016, were $1,280,786, and were equal to the required contributions. Net Pension Liabilitv The City's Net Pension Liability (NPL) was measured as of December 31, 2015, and the Total Pension Liability used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date. CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 8 - PENSION PLANS (CONTD.) Actuarial Assumptions The Total Pension Liability in the December 31, 2015, actuarial valuation was determined using the following actuarial assumptions: Inflation 3.0% per year Overall payroll growth 4.5% per year Investment rate of return 8.0%, net of pension plan investment expense, including inflation Salary increases were based on a service -related table. Mortality rates for employee and healthy annuitant combined rates were taken from RP2000 Mortality Table, projected to 2016 using Scale AA, with separate rates for males and females. Actuarial assumptions used in the valuation were based on the results of actuarial experience studies. The experience study was last performed for the December 31, 2015 valuation. The long-term expected rate of return on pension plan investments is 8.0%. The pension plan's policy in regard to the allocation of invested assets is established and may be amended by the Plan's Board of Trustees. The long-term expected rate of return on pension plan investments was determined using a method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Long -Term Expected Real Asset Class Tarqet Allocation Rate of Return (Arithmetic) Domestic Equity 38.89% 7.50% International Equity 16.67% 8.50% Domestic Bonds 27.78% 2.50% International Bonds 5.56% 3.50% Real Estate 11.10% 4.50% Total 100.00°[a. Discount Rate The discount rate used to measure the Total Pension Liability was 8.0%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the plan member rate. Based on that assumption, the pension plan's Fiduciary Net Position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability. 50 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 8 - PENSION PLANS (CONTD.) Changes in Net Pension Liability Increase (Decrease) Total Pension Fiduciary Net Net Pension Liability Position Liability (a) (b) (a) — (b) Balances as of December 31, 2014 $72,251,770 $47,517,957 $24,733,813 Changes for the year: Service cost 1,493,672 - 1,493,672 Interest on total pension liability 5,298,361 - 5,298,361 Change of benefit terms 7,781 - 7,781 Difference between expected and actual experience ( 1,542,023) - ( 1,542,023) Change of assumptions - - - Contributions — employer - 1,273,913 ( 1,273,913) Contributions — employee - 1,221,926 ( 1,221,926) Net investment income - 421,270 ( 421,270) Benefit payments, including refunds of employee contributions ( 3,950,906) ( 3,950,906) - Administrative expense - ( 87,245) 87,245 Other changes - - - Balances as of December 31, 2015 $73,558,655 $46 396 915 $27,161,740 Sensitivity Analysis The following presents the net pension liability of the City, calculated using the discount rate of 8.0%, as well as what the City's net pension liability I (asset) would be if it were calculated using a discount rate that is 1 percentage point lower (7.0%) or 1 percentage point higher (9.0%) than the current rate. Net pension liability 1% Current 1% Decrease Discount Rate Increase 7.0% 8.0% 9.0% $36,192,766 $27,161,740 $19,573,358 Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources For the year ended September 30, 2016, the City recognized pension expense of $2,416,854 related to the Wichita Falls Firemen's Relief and Retirement Fund. 51 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 8 - PENSION PLANS (CONTD.) At September 30, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to the WFFRRF from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual experience $ - $1,634,841 Difference due to changes in actuarial assumptions - 377,348 Net difference between projected and actual earnings 2,839,243 - Contributions made subsequent to measurement date 945.321 - Total $3.784.564 $2.012.189 $945,321 reported as deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability for the year ending September 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended December 31: 2016 $ 491,465 2017 491,466 2018 491,466 2019 429,978 2020 (233,717) Thereafter (843,604) Total $827.054 Note 9 - POST -EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS Plan Description The City administers the City of Wichita Falls Retiree Health Care Plan for all permanent employees who retire after satisfying eligibility retirement requirements through a single -employer defined benefit plan. All employees who retire and are actively in one of the City's health plans can continue to receive health care benefits under the City's plan for themselves and any dependents for as long as the retiree and/or dependents live. The plan does not issue a stand- alone financial report. 52 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 9 - POST -EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS (CONTD.) Retiree Premiums Pre -Medicare: Retirees share in the cost of the Plan by paying premiums according to the following schedule: PPO PPO PPO PPO Under 65 Core Enhanced CAT HSA Dental Retiree Only $ 337 $ 556 $ 271 $ 257 $25 Retiree/Spouse $1,289 $1,786 $1,146 $1,096 $51 Retiree/Child $1,012 $1,427 $ 891 $ 851 $53 Retiree/Family $1,845 $2,503 $1,656 $1,586 $82 Post -Medicare: Eligible retirees and spouses on Medicare are eligible to participate in a Medicare supplement health care plan. Effective January 1, 2009, the following changes will be implemented to Medicare eligible retirees: For retirees and spouses who were on Medicare as of January 1, 2009, the City will provide $250 in premium assistance towards the full premium for a Medicare subsidy program. The $250 is expected to be a fixed amount. For retirees and spouses retired as of January 1, 2009 but not yet Medicare -eligible, the City will provide $100 in premium assistance towards the full premium for a Medicare subsidy program. The $100 is expected to be a fixed amount. For members who retire on or after January 1, 2009, the City will provide no premium assistance once Medicare -eligible. The retiree premium for post-65 coverage is $432/month for each covered member as of June 1, 2010. Benefits for Spouses of Retired EmDlovees Spouses of retirees are eligible to participate in the retiree health care program. Spouses are eligible to continue with same coverage after the death of the retiree. Vision Coverage Vision coverage is offered through a separate, fully -insured plan. Retirees may participate but are 100% responsible for payment of the vision premiums. Dental Coverage Retirees and spouses, prior to qualifying for Medicare, are eligible to participate in the same dental care program as active employees. There is no dental coverage for retirees or spouses on the Medicare supplement. Life Insurance Coverage General employees and Firefighters receive $7,500 of employer -paid life insurance which is included in the liabilities of the Plan. No life insurance coverage is provided for spouses of retirees. 53 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 9 - POST -EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS (CONTD.) Fundinq Policv and Annual OPEB Cost The City's annual other post -employment benefits (OPEB) cost is based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of accrual that, if paid on an ongoing basis, is projected to cover the normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The City's OPEB cost for the year ended September 30, 2016 is as follows: Annual Required Contribution $1,691,524 Interest on OPEB obligation 6,896 Adjustment to ARC ( 9,547) Annual OPEB cost (expense) end of year 1,688,873 Net estimated employer contributions ( 1,691.524) Increase (decrease) in net OPEB obligation ( 2,651) Net OPEB obligation — beginning of year 95,121 Net OPEB obligation — end of year 92.470 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the fiscal year ending September 30, 2016 and the preceding two fiscal years were as follows: Employer Annual Amount Percentage Net OPEB Fiscal Year Ended OPEB Cost Contributed Contributed Obligation September 30, 2014 $2,404,595 $2,274,645 94.6% $129,950 September 30, 2015 2,478,677 2,513,506 101.4% 95,121 September 30, 2016 1,688,873 1,691,524 100.2% 92,470 Schedule of Actuarial Liabilities and Fundinq Status Actuarial Valuation Date Actuarial Value of Assets Actuarial Accrued Liabilities Unfunded Actuarial Accrued Liability (UAAL) Funded Ratio Annual Covered Payroll UAAL as a Percentage of Annual Covered Payroll 12/31 /14 $ 2,849,848 $16,099,920 $13,250,072 17.7% $51,167,922 25.9% 54 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 9 - POST -EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS (CONTD.) Actuarial Methods and Assumptions The Individual Entry -Age actuarial cost method is used to calculate the GASB ARC for the City's retiree health care plan. Using the plan benefits, the present health premiums and a set of actuarial assumptions, the anticipated future payments are projected. The projected unit credit method then provides for a systematic funding for these anticipated payments. The yearly ARC is computed to cover the cost of benefits being earned by covered members as well as to amortize a portion of the accrued liability. Projections of health benefits are based on the plan as understood by the City and include the types of benefits in force at the valuation date and the pattern of sharing benefit costs between the City and its employees to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant methods and assumptions were as follows: Inflation rate Investment rate of return Actuarial cost method Amortization method Amortization period Salary growth Healthcare cost trend rate 2.50% per annum 7.25%, net of expenses Individual entry -age Level as a percentage of employee payroll 13-year closed amortization 3.0% per annum Initial rate of 7.00% declining to an ultimate rate of 4.25% after 14 years Actuarial valuations involve estimates of the value of reported amounts and assumptions about the profitability of events in the future. Amounts determined regarding the funded status and the annual required contributions of the City's retiree health care plan are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. The required schedule of funding progress presented as required supplementary information provides multi -year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Note 10 - DEFERRED COMPENSATION PLAN The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to the employees until termination, retirement, death, or an unforeseen emergency. Note 11 - AIRPORT LEASE The Regional Airport facilities are located on land at Sheppard Air Force Base. The land is leased from the Department of the Air Force for a period of fifty years, beginning May 15, 2009 and expiring May 14, 2059. The City's expense for the year ended September 30, 2016 was $39,643. The lease payment increases by 3% per year with a final lease payment of $141,307 in 2059. 55 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 12 - DESCRIPTION OF LEASING ARRANGEMENTS The majority of the City's operating leases contain an option for annual renewal at the end of the initial lease term. In most cases, these leases will be canceled or replaced by other leases. The City leases certain equipment under operating leases expiring at various times through the year ending September 30, 2016. The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining noncancellable lease terms in excess of one year as of September 30, 2016: Year ending September 30: 2017 $ 166,465 2018 148,649 2019 95,979 2020 65,568 2021 64,113 2022-2026 254,395 2027-2031 291,336 2032-2036 337,739 2037-2041 391,532 2042-2046 453,893 2047-2051 526,186 2052-2056 609,994 2057-2059 411,692 Total minimum payments required $3.817.541 The total rental expenses for all operating leases for the year ended September 30, 2016 was $157,029. There were no contingent rentals during the year ended September 30, 2016. Note 13 - LANDFILL AND TRANSFER STATION CLOSURE AND POSTCLOSURE CARE COSTS State and federal laws and regulations require that the City place a final cover on its landfill when closed, and perform certain maintenance and monitoring functions at the landfill site for thirty years after closure. In accordance with the Texas Administrative Code, Title 30, Part 1, Chapter 7, the City annually submits a financial assurance letter to the Texas Commission on Environmental Quality (TCEQ). In addition to operating expenses related to current activities of the landfill, an expense provision and related liability are being recognized based on the future closure and postclosure care costs that will be incurred near or after the date the landfill no longer accepts waste. The recognition of these landfill closure and postclosure care costs is based on the amount of the landfill used during the year. The estimated liability for landfill closure and postclosure care costs has a balance of $4,480,118 as of September 30, 2016, which is based on 21% usage of the landfill. The City will recognize the remaining estimated cost of closure and postclosure care of $17,261,630 as the remaining estimated capacity is filled. The landfill is expected to be filled to capacity in 2153. Additionally, the City has recorded a liability of $67,513 for closure and postclosure care costs related to the City's transfer station. Actual costs may be higher due to inflation, change in technology, or changes in regulations. 56 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 14 - LONG-TERM LIABILITIES Long-term liabilities transactions for the year ended September 30, 2016 are summarized as follows: Balance at Balance at October 1, Retired and September 30, Due Within 2015 Issued Transferred (1) 2016 One Year Governmental Activities: General obligation bonds $ 3,850,706 $ 13,482,256 $ 1,203,830 $ 16,129,132 $ 1,996,159 Combination tax and revenue bonds 46,710,294 - 15,571,619 31,138,675 1,703,575 Accrued vacation and sick leave payable 8,488,532 2,357,571 2,170,285 8,675,818 2,250,000 Capital lease payable 3,230,595 - 373,429 2,857,166 390,576 Claims and judgments payable 63,177 578.447 578,447 63.177 38.425 Total governmental activities 62,343,304 16,418,274 19,897,610 58,863,968 6,378.735 Business-tvoe Activities: Utility system revenue bonds, net of premium (discount) 92,086,092 87,938,263 92,086,092 87,938,263 4,839,290 Combination tax and revenue bonds 54,125,933 - 2,803,033 51,322,900 5,024,809 General obligation bonds 1,930,000 - 1,930,000 - - Accrued vacation and sick leave payable 755,384 662,002 665,511 751,875 625,000 Note payable 437,652 - 37,737 399,915 38,964 Capital leases payable 722,737 16,506,103 271,317 16,957,523 497,618 Landfill closure, post -closure costs 4.393.786 153.845 - 4,547,631 - Total business -type activities 154,451,584 105.260,213 97,793,690 161.918,107 11,025,681 Total long-term liabilities $216 794 888 %121.678.487 $117.691 300 S220782075 S17,404,416 (1) Includes bond premium amortization of $939,132 related to the general obligation bonds, $133,675 related to combination tax and revenue bonds (governmental activities), $13,933,263 related to revenue bonds, and $112,900 related to the combination tax and revenue bonds (business -type activities). For governmental activities, claims and judgments payable and compensated absences are generally liquidated by the General Fund. Bonds Pavable Bonds payable at September 30, 2016, including net unamortized premium on the bonds, are comprised of the following individual issues: Range of Final Annual Bonds Interest Maturity Serial Bonds Outstanding Rates Date Pavments Authorized at 9/30/16 General Obligation Bonds: General Obligation Refunding 1.50% - 9/01/21 $405,000 to $ 4,365,000 $ 2,290,000 Bonds, Series 2011 3.00% $485,000 Plus bond premium 63,585 General Obligation Refunding 1.50% - 9/01/18 $335,000 to 3,740,000 675,000 Bonds, Series 2013 3.00% $2,305,000 57 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2016 Note 14 - LONG-TERM LIABILITIES (CONTD.) Range of Final Annual Interest Maturity Serial Rates Date Pavments General Obligation Refunding 2.00% - 9/01/26 $200,000 to Bonds, Series 2015A 5.00% $1,105,000 Plus bond premium General Obligation Refunding 0.73% - Bonds, Series 2015B 3.48% Total General Obligation Bonds Combination Tax and Revenue Bonds: Combination Tax and Revenue 2.25% - Certificates of Obligation, Series 2009 4.75% Combination Tax and Revenue 5.60% Certificates of Obligation, Series 2010 Combination Tax and Revenue 2.00% - Refunding Bonds, Series 2010 4.00% Plus bond premium Combination Tax and Revenue 2.00% - Certificates of Obligation, Series 2011 4.00% Plus bond premium Combination Tax and Revenue 2.00% - Certificates of Obligation, Series 2013 3.375% Plus bond premium Combination Tax and Revenue 2.00% - Certificates of Obligation, Series 2013A 4.625% Combination Tax and Revenue 0.00% - Certificates of Obligation, Series 2015 2.12% Total Combination Tax and Revenue Bonds Revenue Bonds: Water & Sewer System Revenue 2.00% - Refunding Revenue, Series 2016 5.50% Plus bond premium Total Revenue Bonds Total All Bonds 9/01/26 $110,000 to $310, 000 10/01/29 $340,000 to $780,000 2/01/25 $165,000 to $375,000 8/01/18 $170,000 to $3,600,000 9/01/31 $135,000 to $220,000 9/01/33 $530,000 to $1, 315,000 9/01/33 $505,000 to $905,000 3/01/45 $890,000 to $1,425,000 8/01/27 $2,435,000 to $9,705,000 Bonds Authorized 9,650,000 2,885,000 Bonds Outstanding at 9/30/16 9,450,000 875,547 2,775,000 16.129.132 10,820,000 7,890,000 3,930,000 2,735,000 9,830,000 7,070,000 112,900 3,200,000 2,645,000 63,183 19, 875, 000 17, 735, 000 70,492 13,000,000 11,485,000 33,545,000 32,655,000 82,461,575 74,005,000 74,005,000 13.933.263 87.938.263 S 186 528 970 58 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 14 - LONG-TERM LIABILITIES (CONTD.) Aggregate maturities of the long-term debt (principal and interest) for the years subsequent to September 30, 2016 are as follows: Combination Tax and Year Ending General Obliqation Bonds Revenue Bonds Revenue Bonds Notes Pavable Capital Lease Pavable Total September 30. Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest 2017 $ 1,996,159 $ 338,160 $ 6,728,384 $ 2,211,499 $ 4,839,290 $ 1,573,024 $ 38,964 $ 13,009 $ 888,195 $ 881,672 $ 14,490,992 $ 5,017,364 2018 2,018,435 304,800 6,881,221 2,051,014 4,948,031 1,472,219 40,232 11,742 797,228 590,741 14,685,147 4,430,516 2019 1,717,018 264,785 3,302,670 1,877,833 8,893,852 1,412,148 41,541 10,433 806,994 566,363 14,762,075 4,131,562 2020 1,745,507 240,073 3,392,095 1,796,019 9,042,086 1,268,164 42,892 9,082 873,194 542,807 15,095,774 3,856,145 2021 1,771,429 203,382 3,486,501 1,718,406 9,200,108 1,116,892 44,287 7,686 992,409 515,754 15,494,734 3,562,120 2022-2026 6,880,584 545,905 18,536,027 6,978,177 48,508,848 3,049,902 191,999 15,862 5,184,995 2,093,696 79,302,453 12,683,542 2027-2031 - - 18,197,978 4,155,663 2,506,048 50,702 - - 3,939,735 1,381,439 24,643,761 5,587,804 2032-2036 10,101,699 1,746,518 - - 6,331,939 543,868 16,433,638 2,290,386 2037-2041 6,305,000 911,372 - - 6,305,000 911,372 2042-2045 5.530.000 237.100 5.530.000 237.100 Totals $16,129,132 $1 897.105 $82 461 575 $23 683 601 $87 938 263 $ 9.943 051 !Mg 91 S $ 67 814 $19 814.68q $7 116,340 =6,743,57.4 $42-707.911 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 14 - LONG-TERM LIABILITIES (CONTD.) All of the General Obligation Bonds were issued on the full faith and credit of the City and are secured by ad valorem taxes levied against all taxable property. With the exception of a portion of the Series 2013 General Obligation Refunding Bonds, these bonds are serviced by the Debt Service Fund with an apportionment of the ad valorem tax levy. At September 30, 2016, this fund had a deficit fund balance of $32,909. The Combination Tax and Revenue Bonds are secured by ad valorem taxes levied against all taxable property as well as a pledge of surplus net revenues of the City's combined waterworks and sewer system. The Series 2010 and 2011 Certificates will be serviced by the Debt Service Fund by contributions from the Wichita Falls 4B Economic Development Corporation. The Series 2016 Certificates will be serviced by the net revenues of the Water and Sewer Fund, as well as the Series 2010 Combination Tax and Revenue Refunding Certificates. A portion of the Series 2013 General Obligation Refunding Bonds will also be serviced by these net revenues. All of the Water and Sewer Revenue Bonds were issued for purposes of improving the City's water and sewer systems and are serviced by the net revenues of the Water and Sewer Fund. Notes Pavable The City of Wichita Falls and Wichita County Water Improvement District Number 2, upon the completion of the Lake Kemp reconstruction project in January 1976 by the U.S. Government, are required to reimburse the U.S. Government 22.7% of its reported total cost of $8,774,705, or $1,991,858. The City's share of this amount is 66.11%, or $1,316,817, payable in forty-nine annual installments through January 2025 of $51,974, which includes interest at the rate of 3.253%. The City's share of the total costs ($5,800,957) as well as the U.S. Government funded portion ($4,484,140) is reflected as capital assets in the Water and Sewer Enterprise Fund. This contractual arrangement is strictly a cost -sharing agreement and is not considered a joint venture as defined in Section J50 of the Codification of Governmental Accounting and Financial Reporting Standards. The remaining debt payable to the U.S. Government at September 30, 2016 is classified as follows: Long-term Current portion Total Capital Leases Pavable $ 360,951 38,964 $ 399.915 The City issued a capital lease in 2012 for the purchase of fire department equipment in the amount of $1,466,854. The asset is listed under "Motor Vehicles" in the business -type activities. The lease carries an interest rate of 1.57% and matures on October 1, 2016. This capital lease is recorded in the Fleet Maintenance Internal Service Fund and is included in the business -type activities of the government -wide statements. CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2016 Note 14 - LONG-TERM LIABILITIES (CONTD.) The City also entered into a capital lease agreement in 2012 to finance a portion of an energy efficiency project that includes several City facilities. The capital lease financed $4,419,310 of the total project. The assets are listed under "Buildings, systems and improvements" in both Governmental Activities and Business -type Activities. The lease carries an interest rate of 2.54% and is for a period of 12 years, with final payment due in fiscal year 2024. The City also entered into a capital lease agreement in 2015 to finance equipment purchased for the golf course. This capital lease totaled $48,990. The assets are listed under "Machinery and equipment" in Governmental Activities. The lease carries an interest rate of 5.89% and is for a period of 4 years, with final payment due in fiscal year 2019. The City entered into a capital lease agreement in 2016 to finance the replacement of all of the City's water meters. The total amount of the capital lease was $16,506,103. As the project is not yet completed, these assets are currently listed under "Construction in progress" in the Water and Sewer Fund and in Business -type Activities. The lease carries an interest rate of 3.23% and is for a period of 20 years, with final payment due in fiscal year 2036. Note 15 - DEFEASED DEBT General Obligation Bonds On November 15, 2015, the City issued general obligation refunding bonds of $12,535,000 (par value) with interest rates ranging from 0.73% to 5.00%. The debt was issued to refund general obligation bonds with rates ranging from 3.55% to 6.00% and a par value of $12,715,000. The general obligation bonds to be refunded matured through September 1, 2026. As a result of the refunding, the City reduced its total debt service by $1,714,156, resulting in an economic gain (difference between the present value of the debt service payments on the old and new debt) of $1,476,161. Revenue Bonds On June 1, 2016, the City issued revenue refunding bonds of $74,005,000 (par value) with interest rates ranging from 2.00% to 5.00%. The debt was issued to refund revenue bonds with rates ranging from 4.00% to 5.00% and a par value of $91,895,000. The combination tax and revenue certificates of obligation to be refunded matured through August 1, 2027. As a result of the refunding, the City reduced its total debt service by $15,712,173, resulting in an economic gain (difference between the present value of the debt service payments on the old and new debt) of $13,063,345. Note 16 - INTERFUND BALANCES Due To Fund Due From Fund Amount Purpose General Fund Nonmajor Governmental Funds $ 1,988,889 Short-term loan General Fund Water and Sewer Fund 153,755 Short-term loan General Fund Regional Airport Fund 449,650 Short-term loan General Fund Nonmajor Enterprise Funds 1,475,207 Short-term loan General Fund Internal Service Funds 728,942 Short-term loan Total $ 4 796 443 61 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 16 - INTERFUND BALANCES (CONTD.) All amounts due are scheduled to be repaid within one year. Transfers to and from other funds during the year ended September 30, 2016 were as follows: Transfers From General Fund General Fund General Fund Nonmajor Governmental Funds Nonmajor Governmental Funds Nonmajor Governmental Funds Nonmajor Governmental Funds Nonmajor Governmental Funds Nonmajor Governmental Funds Water and Sewer Fund Water and Sewer Fund Sanitation Fund Sanitation Fund Regional Airport Fund Regional Airport Fund Nonmajor Enterprise Funds Nonmajor Enterprise Funds Nonmajor Enterprise Funds Nonmajor Enterprise Funds Internal Service Funds Transfers To Amount Reason Nonmajor Governmental Funds $ 160,425 Supplement operating grants Nonmajor Governmental Funds 387,389 Supplement operating deficits Nonmajor Enterprise Funds 191,749 Supplement operating deficits Nonmajor Governmental Funds 580,065 Fund debt service payment Nonmajor Governmental Funds 1,766,105 Fund operating deficits Nonmajor Governmental Funds 40,200 Fund capital projects Regional Airport Fund 3,068,668 Supplement capital projects Water and Sewer Fund 316,893 Fund capital projects Nonmajor Enterprise Funds 449,884 Fund capital projects General Fund 938,189 Administrative overhead Nonmajor Governmental Funds 500,000 Fund debt service payment General Fund 1,591,789 Administrative overhead Internal Service Funds 1,556,630 Purchase capital assets Nonmajor Governmental Funds 673,629 Fund debt service payment Nonmajor Governmental Funds 28,445 Supplement operating grant General Fund 116,111 Administrative overhead Nonmajor Governmental Funds 33,078 Supplement operating grant Nonmajor Governmental Funds 446,908 Fund debt service payment Internal Service Funds 470,482 Purchase capital assets General Fund 312,000 Administrative overhead Total $13 628 639 Note 17 - COMMITMENTS AND CONTINGENCIES Litigation The City is a defendant in numerous lawsuits. In the opinion of the City's management, any unrecorded liabilities resulting from such suits will not materially affect the financial position of the City. Contract Commitment With West Texas Utilities Comoanv In 1977, the City and Wichita County Water Improvement District Number 2 entered into a sixty - year contract with the West Texas Utilities Company (the Company) and agreed to provide an adequate water supply for the Company's use in generating power upon completion of the Company's construction of a power plant adjacent to the Lake Kemp -Lake Diversion System. The significant terms of the contract provide for standby charges to be paid to the City and the Wichita County Water Improvement District Number 2 in equal amounts. Minimum charges for the calendar year 1997 and all years thereafter until the end of contract will be $500,000 per year. For water actually consumed, the Company shall pay the City and Wichita County Water Improvement District Number 2 equally, at the base rate of $0.23 per one thousand gallons, which is adjusted annually. The rate for the year ended September 30, 2016 was $.404046 per one thousand gallons. WA CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 17 - COMMITMENTS AND CONTINGENCIES (CONTD.) This contract can be terminated at any time by the Company. If the contract is terminated, the Company is required to make a maximum termination payment equal to the minimum charges which would have become due and payable during the following twenty-four month period. Contract Commitments At September 30, 2016, the City was committed to various contracts. The amounts for which the various funds are committed to complete these contracts are as follows: General Fund $ 705,508 Nonmajor Governmental Funds 2,047,753 Water and Sewer Fund 27,935,160 Sanitation Fund 414,524 Nonmajor Enterprise Funds 2,437,337 Internal Service Funds 414,995 Total contract commitments - City $33.955.277 Federal and State Grants - Compliance Audits The City participates in numerous Federal and State grants, on both a direct and state pass - through basis, as well as on a service -provider basis. Principal among these are Community Development Block Grants, Section 8 Housing Assistance, Home Investment Partnership Agreement Program, and numerous health -related grants. In connection with these grants, the City is required to comply with specific terms and agreements as well as applicable Federal and State laws and regulations. Such compliance is subject to review and audit by the grantors and their representatives. In the opinion of management, the City has complied with all requirements. However, since such programs are subject to future audit or review, the possibility of disallowed expenditures exists. In the event of any disallowance of claimed expenditures, the City expects the resulting liability to be immaterial. 63 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2016 Note 18 - CONDENSED FINANCIAL INFORMATION FOR DISCRETELY PRESENTED COMPONENT UNITS The City has five component units that are discretely presented in the City's basic financial statements. Condensed financial information for the year ended September 30, 2016 is as follows: Wichita Falls Wichita Falls Economic 4B Sales Development Tax Wichita Falls Reinvestment Corooration Corooration Zone #2 Zone #3 Zone #4 Totals Condensed statement of net position: Cash, investments and other current assets $18,139,910 $3,865,343 $190,854 $378,309 $38,877 $22,613,293 Capital assets, net of accumulated depreciation 2.188.250 - 2.188.250 Total assets 20.328.160 3.865.343 190,854 378,309 38,877 24.801.543 Accounts payable and other current liabilities 191.623 6,552 198.175 Total liabilities 191.623 6,552 198.175 Net position $20.136.537 $3 958 791 $ 4 6� 03 368 Condensed statement of activities: Expenses: Community development $ 4.898.626 $4.240.418 $381,883 $ $ 9.520.927 Program revenues: Charges for services 106,800 - - 106,800 Operating grants and contributions - 381,883 381.883 Total program revenues 106.800 381,883 - 488.683 Net program expense ( 4.791.826) ( 3,858.535) ( 381,883) ( 9.032.244) General revenues: Tax revenues 3,728,961 3,728,961 572,068 78,992 38,871 8,147,853 Non -tax general revenues 192.890 124,834 669 952 6 319,531 Total general revenues 3.921.851 3,853.795 572,737 79,944 38,877 8.467.384 Change in net position (869,975) (4,740) 190,854 79,944 38,877 ( 565,040) Beginning net position 21.006.512 3.863.531 - 298,365 - 25.168.408 Ending net position 64 B/w,-Skie"f *,Ideas O��o�ttyt>7ie, Required Supplementary Information EXHIBIT B-1 CITY OF WICHITA FALLS, TEXAS REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2016 Revenues: Taxes Charges for services Licenses and permits Fines and forfeitures Intergovernmental revenue Contributions Miscellaneous revenue Total revenues Expenditures: Current: Administrative services Police Fire Parks and recreation Accounting/finance Community development Public works Health Traffic and transportation Capital outlay Total expenditures Excess of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Excess of revenues and other sources over (under) expenditures and other uses Fund balance - beginning Fund balance - ending Variance With Final Budget - Budgeted Amounts Positive Original Final Actual (Negative) $ 62,051,258 $ 62,051,258 $ 61,554,016 $ (497,242) 2,876,108 2,876,108 2,687,265 (188,843) 1,970,455 1,970,455 1,971,212 757 2,554,000 2,554,000 2,358,469 (195,531) 10,800 10,800 6,133 (4,667) 162,202 162,202 192,233 30,031 1,111,373 1,111,373 1,000,201 (111,172) 70,736,196 70,736,196 69,769,529 (966,667) 13,566,830 13,920,132 13,404,682 515,450 23,757,164 23,411,910 23,369,097 42,813 15,213,683 15,713,966 15,682,731 31,235 5,447,772 5,348,255 5,134,985 213,270 694,546 703,505 702,883 622 2,068,233 2,084,176 1,961,370 122,806 5,434,439 5,350,985 5,219,063 131,922 3,267,373 3,039,359 2,988,930 50,429 1,844,408 1,887,920 1,933,608 (45,688) 2,787,732 3,595,168 2,387,364 1,207,804 74,082,180 75,055,376 72,784,713 2,270,663 (3,345,984) (4,319,180) (3,015,184) 1,303,996 2,958,089 2,958,089 2,958,089 - (612,105) (740,938) (739,563) 1,375 2,345,984 2,217,151 2,218,526 1,375 (1,000,000) (2,102,029) (796,658) 1,305,371 14,994,156 14,994,156 14,994,156 - $ 13,994,156 $ 12,892,127 $ 14,197,498 $ 1,305,371 65 CITY OF WICHITA FALLS, TEXAS NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION SEPTEMBER 30, 2016 Demonstrating compliance with the adopted budget is an important component of a government's accountability to the public. Many citizens participate in the process of establishing the annual operating budgets of state and local governments, and have a keen interest in following the actual financial progress of their governments over the course of the year. The City and many other governments revise their original budgets over the course of the year for a variety of reasons. Under the new reporting model, governments will continue to provide budgetary comparison information in their annual reports. An important change, however, is a requirement to add the government's original budget to the current comparison of final budget and actual results. The City adheres to the following procedures in establishing the operating budget reflected in the basic financial statements: On or before August 15 of each year, the City Manager submits to the City Council a proposed budget for the fiscal year beginning the following October 1. The operating budget includes proposed expenditures and the means of financing them. Public hearings are conducted. The budget is legally enacted by the City Council through passage of appropriation and tax levying ordinances prior to September 30 and is published under a separate cover. An annual budget, including debt service requirements, is legally adopted for the General Fund, the Community Development Block Grant Fund, the Section 8 Housing Fund, the HOME Investment Partnership Agreement Fund, the Hotel/Motel Tax Fund, the Golf Fund, the MPEC Fund and the Debt Service Fund, on a basis which is consistent with generally accepted accounting principles. The City Council must approve any transfer of appropriation balances or portions thereof from one department to another. The City Manager has the authority, without City Council approval, to transfer appropriation balances from one expenditure account to another within a single department of the City. Supplemental appropriations of $973,196 were approved by the City Council. The reported budgetary data includes amendments made during the year. At the close of each fiscal year, any unencumbered appropriated balance lapses to the unreserved fund balance. The unencumbered appropriation balances in the Capital Projects Funds do not lapse at year end. EXHIBIT B-2 CITY OF WICHITA FALLS, TEXAS REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS TEXAS MUNICIPAL RETIREMENT SYSTEM 2015 2014 Total Pension Liability Service cost $ 4,697,339 $ 4,098,031 Interest on total pension liability 16,093,246 15,665,423 Changes of benefit terms - - Difference between expected and actual experience 203,406 (2,042,671) Changes of assumptions 1,340,184 - Benefit payments/refunds of contributions (12,073,025) (11,744,340) Net change in total pension liability 10,261,150 5,976,443 Total pension liability, beginning 233,591,358 227,614,915 Total pension liability, ending (a) $ 243,852,508 $ 233,591,358 Fiduciary Net Pension Contributions - employer $ 5,639,053 $ 5,379,333 Contributions - employee 2,497,984 2,303,770 Net investment income 296,795 11,109,980 Benefit payments/refunds of contributions (12,073,025) (11,744,340) Administrative expenses (180,789) (116,005) Other (8,931) (9,538) Net change in fiduciary net position (3,828,913) 6,923,200 Fiduciary net pension, beginning 201,153,244 194,230,044 Fiduciary net pension, ending (b) $ 197,324,331 $ 201,153,244 Net pension liability / (asset), ending = (a) - (b) Fiduciary net position as a % of total pension liability Covered employee payroll Net pension liability (asset) as a % of covered payroll $ 46,528,177 80.92% $ 32,438,114 86.11 % $ 45,036,746 $ 41,538,672 103.31 % 78.09% This schedule is presented to illustrate the requirement to show information for 10 years. However, recalculations of prior years are not required, and if prior years are not reported in accordance with the standards of GASB 67/68, they should not be shown here. Therefore, we have shown only years for which the new GASB statements have been prepared. 67 EXHIBIT B-3 CITY OF WICHITA FALLS, TEXAS REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS TEXAS MUNICIPAL RETIREMENT SYSTEM 2016 2015 Actuarial determined contribution $ 5,427,145 $ 5,422,031 Contributions in relation to the actuarially determined contribution (5,427,145) (5,422,031) Contribution deficiency $ - $ - Covered employee payroll $ 44,674,967 $ 42,951,296 Contributions as a percentage of covered employee payroll 12.15% 12.62% Valuation Date: Actuarially determined contribution rates are calculated as of December 31 and become effective 13 months later. Methods and Assumptions Used to Determine Contribution Rates: Actuarial Cost Method Entry Age Normal Amortization Method Level Percentage of Payroll, Closed Remaining Amortization Period 19 years Asset Valuation Method 10 Year smoothed market; 15% soft corridor Inflation 2.5% Salary Increases 3.50% to 12.00% including inflation Investment Rate of Return 6.75% Retirement Age Experience -based table of rates that are specific to the City's plan of benefits. Last updated for the 2010 valuation pursuant to an experience study of the period 2005-2009 Mortality RP2000 Combined Mortality Table with Blue Collar Adjustment with male rates multiplied by 109% and female rates multiplied by 103% and projected on a fully generational basis with scale BB Other Information: There were no benefit changes during the year. 0 EXHIBIT B-4 CITY OF WICHITA FALLS, TEXAS REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS WICHITA FALLS FIREMEN'S RELIEF AND RETIREMENT FUND Total Pension Liability Service cost Interest on total pension liability Changes of benefit terms Difference between expected and actual experience Changes of assumptions Benefit payments/refunds of contributions Net change in total pension liability Total pension liability, beginning Total pension liability, ending (a) Fiduciary Net Pension Contributions - employer Contributions - employee Net investment income Benefit payments/refunds of contributions Administrative expenses Other Net change in fiduciary net position Fiduciary net pension, beginning Fiduciary net pension, ending (b) Net pension liability / (asset), ending = (a) - (b) Fiduciary net position as a % of total pension liability Covered employee payroll 2015 2014 $ 1,493,672 $ 1,447,068 5,298,361 5,537,931 7,781 - (1,542,023) (320,862) - (423,984) (3,950,906) (3,616,549) 1,306,885 2,623,604 72,251,770 69,628,166 $ 73,558,655 $ 72,251,770 $ 1,273,913 $ 1,232,957 1,221,926 1,144,644 421,270 3,284,243 (3,950,906) (3,616,549) (87,245) (85,636) (1,121,042) 1,959,659 47,517,957 45,558,298 $ 46,396,915 $ 47,517,957 $ 27,161,740 $ 24,733,813 63.07% 65.77% $ 10,182,717 $ 9,520,903 Net pension liability (asset) as a % of covered payroll 266.74% 259.78% This schedule is presented to illustrate the requirement to show information for 10 years. However, recalculations of prior years are not required, and if prior years are not reported in accordance with the standards of GASB 67/68, they should not be shown here. Therefore, we have shown only years for which the new GASB statements have been prepared. • e, EXHIBIT B-5 CITY OF WICHITA FALLS, TEXAS REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS WICHITA FALLS FIREMEN'S RELIEF AND RETIREMENT FUND 2016 2015 Actuarial determined contribution $ 1,310,258 $ 1,248,549 Contributions in relation to the actuarially determined contribution (1,310,258) (1,248,549) Contribution deficiency $ - $ - Covered employee payroll $ 10,182,717 $ 9,629,250 Contributions as a percentage of covered employee payroll 12.87% 12.97% Valuation Date: Actuarially determined contribution rates are calculated as of December 31 and become effective 13 months later. Methods and Assumptions Used to Determine Contribution Rates: Actuarial Cost Method Individual Entry Age Normal Amortization Method Level Percentage of Payroll, Closed Remaining Amortization Period 105.9 years Asset Valuation Method 5-year smoothed market with a 20% of market value corridor Inflation 3.0% Salary Increases SS Table 0515 Investment Rate of Return 8.00% Retirement Age RR Table 0515 Mortality Employee and healthy annuitant combined rates from the RP-2000 Mortality Table, projected to 2024 using Scale AA, with separate rates for males and females Other Information: There were no benefit changes during the year. 70 EXHIBIT B-6 CITY OF WICHITA FALLS, TEXAS WICHITA FALLS RETIREE HEALTH CARE PLAN - ANALYSIS OF FUNDING PROGRESS (UNAUDITED) (1) (2) (3) (4) (5) (6) Unfunded UAAL as a Actuarial Actuarial Actuarial Percentage Actuarial Accrued Annual Percentage of Valuation Value Accrued Funded Liability (UAAL) Covered Covered Payroll Date of Assets Liability(AAL) (1) _ (2) (2) - (1) Payroll (4) _ (5) 12/31/06 (a) $ - $ 29,656,852 0.0% $ 29,656,852 $ 40,021,675 74.1% 12/31/07 (b) - - - - - - 12/31/08 - 32,143,378 0.0% 32,143,378 43,571,340 73.8% 12/31/09 (b) - - - - - - 12/31/10 853,478 32,409,858 2.6% 31,556,380 47,297,531 66.7% 12/31/11 (b) - - - - - - 12/31/12 1,709,516 32,117,774 5.3% 30,408,258 48,492,352 62.7% 12/31/13 (b) - - - - - - 12/31/14 2,849,848 16,099,920 17.7% 13,250,072 51,167,922 25.9% 12/31/15 (b) - - - - - - Analysis of the dollar amounts of the actuarial value of assets, actuarial accrued liability, and unfunded actuarial accrued liability in isolation can be misleading. Expressing the actuarial value of assets as a percentage of the actuarial accrued liability provides one indication of the City's funding status on a going -concern basis. Analysis of this percentage over time indicates whether the system is becoming financially stronger or weaker. Generally, the greater this percentage, the stronger the pension plan. Trends in unfunded actuarial accrued liability and annual covered payroll are both affected by inflation. Expressing the unfunded actuarial accrued liability as a percentage of annual covered payroll approximately adjusts for the effects of inflation and aids analysis of the City's progress made in accumulating sufficient assets to pay benefits when due. Generally, the smaller the percentage, the stronger the pension plan. (a) The first actuarial valuation was performed as of December 31, 2006 as the City began to prepare for the implementation of GASB 45. (b) Historical trend information is presented for as many years as such information about the plan is available. No actuarial valuation or update was performed as of these dates. Texas state law does not require an actuarial valuation to be completed annually. 71 Combining Financial Statements Nonmajor Governmental Funds Special Revenue Funds The special revenue funds are used to account for the proceeds from specific revenue sources (other than for major capital projects or proprietary funds) that are either legally restricted to be expended for specified purposes or have revenue sources committed for specific purposes. Communitv Development Block Grant Fund The Community Development Block Grant Fund accounts for federal block grant revenues and related expenditures. Section 8 Housinq Fund The Section 8 Housing Fund accounts for federal funds received to subsidize rents and housing payments for lower income families within the City. Home Investment Partnership Aqreement Fund The Home Investment Partnership Agreement Fund accounts for federal funds received to provide home ownership opportunities to low income, first-time homebuyers through the acquisition, rehabilitation and resale of single-family dwellings that are currently owned by governmental agencies. Hotel/Motel Tax Fund The Hotel/Motel Tax Fund accounts for revenues derived from an occupancy tax which is expended on programs promoting the growth of the City of Wichita Falls. Airport Improvement Grant Fund The Airport Improvement Grant Fund is used to account for improvements made to the City's Regional Airport that are funded by state and federal grants. Golf Fund The Golf Fund accounts for the activities at the Weeks Park Golf Course. MPEC Fund The MPEC Fund is used to account for the operations of the City's Multi -Purpose Events Center. Miscellaneous Special Revenue Fund The Miscellaneous Special Revenue Fund accounts for various revenues generated in the form of contributions, fees, concessions, rents and other charges and their related expenditures. This fund also includes revenues derived from various grants for health and police programs. The revenues in this fund are expended to support the activity generating the revenue or as designated by the contributor. This fund is not required to have a legally adopted budget; therefore no budgetary comparison schedule is presented. Debt Service Funds Debt Service Fund The Debt Service Fund is established by ordinances authorizing the issuance of general obligation bonds to provide for the payment of bond principal and interest. An ad valorem tax rate and tax levy are required to be computed and levied which will be sufficient to produce the funds required to pay principal and interest as they come due. This fund is also used to provide for the payment of paying agent fees. Excess Sales Tax Fund The Excess Sales Tax Fund is used to account for and administer the excess sales tax collected related to the property reduction tax. This fund is not required to have a legally adopted budget; therefore no budgetary comparison schedule is presented. Capital Projects Funds The capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities, other than those financed by federal grants or proprietary funds. 4B Sales Tax Proiects This fund was established to account for projects financed by the Wichita Falls 4B Sales Tax Corporation. Significant projects accounted for in this fund included the construction of three fire stations and the renovation of the second floor of the Wichita Falls Public Library building for recreational purposes. Airport Construction Fund This fund was established to account for the construction of a new terminal building at Municipal Airport. This fund includes the proceeds of the Combination Tax and Revenue Certificates of Obligation, Series 2013, which will be used to fund a portion of the construction project. The City will also receive federal grant funding for a portion of the project. Miscellaneous Capital Proiects Funds This fund is an accumulation of several projects that have been undertaken over the years including library renovations, street improvements and drainage improvements. Permanent Fund The permanent fund is used to account for principal trust amounts received and related interest income. The interest earnings of this fund may be used for maintenance of the City's cemeteries. \ (NJCkl/a /al�S ,E.>s *,Ialen Cpfertwtie, 7 ASSETS Cash and cash equivalents Receivables: Taxes and assessments Government agencies Other Inventory Prepaid items Other assets Total assets LIABILITIES AND FUND BALANCE Liabilities Accounts payable - trade Accrued payroll Payable to other City funds Payable to government agencies Other liabilities Unearned revenue Total liabilities Deferred inflows of resources Unavailable revenues Fund balance: Nonspendable: Inventory and prepaid items Restricted for: Perpetual care Debt service Capital projects Federal and state grant programs Tourism Committed for: Golf course Multi -Purpose Events Center Local projects Unassigned Total fund balance Total liabilities, deferred inflows of resources and fund balances CITY OF WICHITA FALLS, TEXAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2016 Special Revenue Home Community Investment Hotel/ Airport Development Section 8 Partnership Motel Improvement Golf Block Grant Housing Agreement Tax Grant Fund $ 50 $ 1,102,745 $ 83,418 $ - $ $ - - - 155,477 761,270 197,955 - 177,610 8,455 - - 2,892 - - - - - 178,963 $ 769,775 $ 1,102,745 $ 281,373 $ 155,477 $ 177,610 $ 181,855 $ 48,398 $ 371 $ 5,500 $ $ 96,641 $ 74,008 7,628 13,147 - - - 204,641 - - 155,467 416,980 63,380 - 72,460 20,000 - - - 49,847 24,744 133,340 682 260,667 135,825 50,244 155,467 646,961 138,070 2,892 509,108 966,920 231,129 - - - 10 - 40,893 - - - - (469,351) - 509,108 966,920 231,129 10 (469,351) 43,785 $ 769,775 $ 1,102,745 $ 281,373 $ 155,477 $ 177,610 $ 181,855 72 EXHIBIT C-1 Permanent Debt Service Capital Projects Fund Total Miscellaneous Airport Miscellaneous Nonmajor MPEC Special Debt Excess 413 Sales Construction Capital Perpetual Governmental Fund Revenue Service Sales Tax Tax Projects Fund Projects Care Funds $ 288,396 $ 3,010,610 $ 16 $ $ 412,175 $ $ 2,359,074 $ 1,027,885 $ 8,284,369 - - 23,846 - - - 179,323 - 1,601,946 14,568 83,473 328,807 - 3,165,629 88,444 33,504 - - - 2,488 132,891 71,905 - - - 71,905 9,216 - 1,500 13,608 - 3,000 - - - - - 181,963 $ 457,961 $ 4,649,060 $ 39,930 $ 83,473 $ 412,175 $ $ 2,687,881 $ 1,030,373 $ 12,029,688 $ 42,045 $ 1,105,060 $ $ $ $ 134,882 65,148 34,573 779,837 36,428 25,844 4,454 2,302 - - 116,376 50,162 - 37,236 - - 332,330 2,039,745 36,428 25,844 - - 36,411 - 81,121 57,629 - - 412,175 44,510 - - 2,609,315 - - (32,909) - - 125,631 2,609,315 (32,909) 57,629 412,175 $ 457,961 $ 4,649,060 $ 39,930 $ 83,473 $ 412,175 $ $ 67,017 $ $ 1,439,040 - 220,805 270,977 762 1,988,889 - - 99,216 1 98,012 473,164 - - 37,236 270,978 165,791 4,258,350 36,411 84,013 1,030,373 1,030,373 - - 57,629 2,522,090 2,934,265 - 1,707,157 10 40,893 44,510 2,609,315 (270,978) - - (773,238) (270,978) 2,522,090 1,030,373 7,734,927 $ 2,687,881 $ 1,030,373 $ 12,029,688 CITY OF WICHITA FALLS, TEXAS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2016 Revenues: Taxes Charges for services Fines and forfeitures Intergovernmental revenue Contributions Miscellaneous revenue Total revenues Expenditures: Current: Administrative services Police Fire Parks and recreation Community development Public works Health Traffic and transportation Multi -Purpose Events Center Capital outlay Debt service: Principal retirement Interest and paying agent fees Total expenditures Excess of revenues over (under) expenditures Other financing sources (uses): Bond proceeds - refunding bonds Premium on refunding bond proceeds Payment to refunded bond escrow agent Transfers in Transfers out Total other financing sources (uses) Net change in fund balance Fund balance - beginning Fund balance - ending Special Revenue Home Community Investment Hotel/ Airport Development Section 8 Partnership Motel Improvement Golf Block Grant Housing Agreement Tax Grant Fund $ $ $ $ 1,858,605 $ $ 42 - 455,948 1,085,473 3,859,291 241,794 3,064,555 - 9,766 - - - 282,967 1,085,515 3,869,057 241,794 1,858,605 3,064,555 738,915 113,974 - - 92,500 - 888,712 10,331 - - 700,182 3,718,786 298,415 103,625 - - (6,297) 28,199 928,112 3,718,786 298,415 92,500 (6,297) 916,911 157,403 150,271 (56,621) 1,766,105 3,070,852 (177,996) 112,000 (314,393) (1,766,105) (2,989,341) - (314,393) - (1,766,105) (2,989,341) 112,000 (156,990) 150,271 (56,621) 81,511 (65,996) 666,098 816,649 287,750 10 (550,862) 109,781 $ 509,108 $ 966,920 $ 231,129 $ 10 $ (469,351) $ 43,785 73 EXHIBIT C-2 Permanent Debt Service Capital Projects Fund Total Miscellaneous Airport Miscellaneous Nonmajor MPEC Special Debt Excess 4B Sales Construction Capital Perpetual Governmental Fund Revenue Service Sales Tax Tax Projects Fund Projects Care Funds $ - $ - $ 705,583 $ 83,473 $ $ $ $ $ 2,647,661 182,088 45,230 - - 683,308 - 203,348 203,348 - 3,711,653 - 1,568,970 13,531,736 41,000 941,432 2,383,872 - 400,000 1,250,000 5,016,304 1,379,695 390,507 167 727 - (1) 4,993 51,611 2,120,432 1,602,783 5,292,170 3,089,622 84,200 400,000 (1) 2,823,963 51,611 24,202,789 - 305,804 - - - - - 1,400,990 211,895 211,895 394,541 - 394,541 31,389 27,591 69,311 - - - 4,717,383 8,195 225,046 336,866 2,491,405 2,800 2,494,205 - 297,200 - - 290,903 3,709,358 - 8,700 - 3,718,058 11,198 1,189,500 - - 2,727,290 3,956,187 - - 3,745,000 - 3,745,000 - - 1,764,412 - - - 1,764,412 3,720,556 4,929,929 5,509,412 - 8,700 2,955,136 27,591 23,099,751 (2,117,773) 362,241 (2,419,790) 84,200 391,300 (1) (131,173) 24,020 1,103,038 - 12,535,000 - - - 12,535,000 947,256 947,256 - - (13,295,568) - (13,295,568) 2,038,014 225,429 2,200,602 40,200 4,616,245 - (492,584) - (310,000) (349,392) - (6,221,815) 2,038,014 (267,155) 2,387,290 (310,000) - (349,392) 40,200 - (1,418,882) (79,759) 95,086 (32,500) (225,800) 391,300 (349,393) (90,973) 24,020 (315,844) 205,390 2,514,229 (409) 283,429 20,875 78,415 2,613,063 1,006,353 8,050,771 $ 125,631 $ 2,609,315 $ (32,909) $ 57,629 $ 412,175 $ (270,978) $ 2,522,090 $ 1,030,373 $ 7,734,927 EXHIBIT C-3 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE - COMMUNITY DEVELOPMENT BLOCK GRANT FUND FOR THE YEAR ENDED SEPTEMBER 30, 2016 Revenues: Charges for services Intergovernmental revenue Total revenues Expenditures: Administrative services Parks and recreation Community development Public works Capital outlay Total expenditures Excess of revenues over (under) expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Excess of revenues and other sources over (under) expenditures and other uses Fund balance - beginning Fund balance - ending Budgeted Amounts Original Final 1,156,356 1,085,473 1,156,356 1,085,473 Variance With Final Budget - Positive Actual (Negative) $ 42 $ 42 1,085,473 - 1,085,515 42 120,000 113,974 113,974 - 41,000 41,000 10,331 30,669 819,271 1,225,113 700,182 524,931 100,000 103,625 103,625 - 157,085 319,640 - 319,640 1,237,356 1,803,352 928,112 875,240 (81,000) (717,879) 157,403 875,282 (314,393) (314,393) (314,393) (314,393) (81,000) (717,879) (156,990) 560,889 666,098 666,098 666,098 - $ 585,098 $ (51,781) $ 509,108 $ 560,889 74 EXHIBIT C-4 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE - SECTION 8 HOUSING FUND FOR THE YEAR ENDED SEPTEMBER 30, 2016 Revenues: Intergovernmental revenue Miscellaneous revenue Total revenues Expenditures: Community development Total expenditures Excess of revenues under expenditures Fund balance - beginning Fund balance - ending Budgeted Amounts Original Final Actual $ 3,613,940 $ 3,767,940 $ 3,859,291 - - 9,766 3,613,940 3,767,940 3,869,057 3,613,940 3,613,940 816,649 816,649 $ Variance With Final Budget - Positive (Negative) $ 91,351 9,766 101,117 3,767,940 3,718,786 49,154 3,767,940 3,718,786 49,154 - 150,271 150,271 816,649 816,649 - 816,649 $ 966,920 $ 150,271 75 EXHIBIT C-5 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE - HOME INVESTMENT PARTNERSHIP AGREEMENT FUND FOR THE YEAR ENDED SEPTEMBER 30, 2016 Revenues: Intergovernmental revenue Total revenues Expenditures: Community development Total expenditures Excess of revenues over (under) expenditures Fund balance - beginning Fund balance - ending Variance With Final Budget - Budgeted Amounts Positive Original Final Actual (Negative) $ 325,444 $ 241,794 $ 241,794 $ - 325,444 241,794 241,794 - 325,444 626,941 298,415 328,526 325,444 626,941 298,415 328,526 - (385,147) (56,621) 328,526 287,750 287,750 287,750 - $ 287,750 $ (97,397) $ 231,129 $ 328,526 76 EXHIBIT C-6 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE - HOTEL/MOTEL TAX FUND FOR THE YEAR ENDED SEPTEMBER 30, 2016 Revenues: Taxes Total revenues Expenditures: Administrative services Total expenditures Excess of revenues over expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Excess of revenues and other sources over (under) expenditures and other uses Fund balance - beginning Fund balance - ending Variance With Final Budget - Budgeted Amounts Positive Original Final Actual (Negative) $ 1,695,000 $ 1,859,000 $ 1,858,605 $ (395) 1,695,000 1,859,000 1,858,605 (395) 92,500 92,500 92,500 - 92,500 92,500 92,500 - 1,602,500 1,766,500 1,766,105 (395) (1,602,500) (1,766,500) (1,766,105) 395 (1,602,500) (1,766,500) (1,766,105) 395 10 10 10 - $ 10 $ 10 $ 10 $ - 77 EXHIBIT C-7 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE - GOLF FUND FOR THE YEAR ENDED SEPTEMBER 30, 2016 Revenues: Charges for services Miscellaneous revenue Total revenues Expenditures: Administrative services Capital outlay Total expenditures Excess of revenues over (under) expenditures Other financing sources (uses): Transfers in Total other financing sources (uses) Excess of revenues and other sources over (under) expenditures and other uses Fund balance - beginning Fund balance - ending Budgeted Amounts Original Final Actual $ 760,000 $ 760,000 $ 455,948 - - 282,967 760,000 760,000 738,915 950,000 921,801 888,712 - 28,199 28,199 950,000 950,000 916,911 (190,000) (190,000) (177,996) 112,000 112,000 112,000 112,000 112,000 112,000 (78,000) (78,000) (65,996) 109,781 109,781 109,781 $ 31,781 $ 31,781 $ 43,785 Variance With Final Budget - Positive (Negative) $ (304,052) 282,967 (21,085) 33,089 33,089 12,004 12,004 $ 12,004 78 EXHIBIT C-8 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE - MPEC FUND FOR THE YEAR ENDED SEPTEMBER 30, 2016 Variance With Final Budget - Budgeted Amounts Positive Original Final Actual (Negative) Revenues: Charges for services $ 211,011 $ 211,011 $ 182,088 $ (28,923) Contributions 35,000 35,000 41,000 6,000 Miscellaneous revenue 1,516,823 1,551,862 1,379,695 (172,167) Total revenues 1,762,834 1,797,873 1,602,783 (195,090) Expenditures: MPEC 3,676,026 3,668,324 3,709,358 (41,034) Capital outlay - 11,198 11,198 - Total expenditures 3,676,026 3,679,522 3,720,556 (41,034) Excess of revenues over (under) expenditures (1,913,192) (1,881,649) (2,117,773) (236,124) Other financing sources (uses): Transfers in 1,878,153 1,878,153 2,038,014 159,861 Total other financing sources (uses) 1,878,153 1,878,153 2,038,014 159,861 Excess of revenues and other sources over (under) expenditures and other uses (35,039) (3,496) (79,759) (76,263) Fund balance - beginning 205,390 205,390 205,390 - Fund balance - ending $ 170,351 $ 201,894 $ 125,631 $ (76,263) 79 EXHIBIT C-9 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE - DEBT SERVICE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2016 Revenues: Taxes Contributions Miscellaneous revenue Total revenues Expenditures: Debt service - principal Debt service - interest and paying agent fees Total expenditures Excess of revenues over (under) expenditures Other financing sources (uses): Bond proceeds - refunding bonds Premium on refunding bond proceeds Payment to refunded bond escrow agent Transfers in Total other financing sources (uses) Excess of revenues and other sources over (under) expenditures and other uses Fund balance - beginning Fund balance - ending Variance With Final Budget - Budgeted Amounts Positive Original Final Actual (Negative) $ 741,586 $ 741,586 $ 705,583 $ (36,003) 2,389,145 2,389,145 2,383,872 (5,273) - - 167 167 3,130,731 3,130,731 3,089,622 (41,109) 3,435,000 3,745,000 3,745,000 - 1,900,308 1,590,308 1,764,412 (174,104) 5,335,308 5,335,308 5,509,412 (174,104) (2,204,577) (2,204,577) (2,419,790) (215,213) - - 12,535,000 12,535,000 - - 947,256 947,256 - - (13,295,568) (13,295,568) 2,204,577 2,204,577 2,200,602 (3,975) 2,204,577 2,204,577 2,387,290 182,713 - - (32,500) (32,500) (409) (409) (409) - $ (409) $ (409) $ (32,909) $ (32,500) :1, Nonmajor Enterprise Funds Nonmajor enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises. The intent of the governing body is that the cost of providing the service to the general public on a continuing basis be recovered primarily through user charges. Kickapoo Airport Fund During the year ended September 30, 2000, private airport. The Kickapoo Airport Fund revenues and expenses of the airport. Transit Fund the City acquired Kickapoo Downtown Airport, a was established to account for the operating The Transit Fund accounts for the operation of the Wichita Falls transit system. This system is supported from passenger fees, subsidies from the General Fund and subsidies from the Federal Transit Administration. Stormwater Drainage Fund The Stormwater Drainage Fund was established to account for operating revenues and expenses associated with the Storm Water Drainage Utility System (System). The System was established effective May 1, 2001 and provides a funding mechanism for drainage improvements in the City. Waterpark Fund The Waterpark Fund was established to account for the operating revenues and expenses of the Castaway Cove Waterpark. The waterpark was purchased on February 4, 2010. CITY OF WICHITA FALLS, TEXAS COMBINING STATEMENT OF NET POSITION NONMAJOR ENTERPRISE FUNDS SEPTEMBER 30, 2016 Kickapoo Airport Transit Assets Current assets: Cash and cash equivalents $ 467,174 $ 191,749 Receivables (net of allowance for uncollectible accounts): Customer and trade - - Government agencies - 431,432 Other 47,273 51,585 Inventory 40,090 - Prepaid items 1,797 - Total current assets 556,334 674,766 Capital assets, net of accumulated depreciation 9,081,324 5,128,595 Total assets 9,637,658 5,803,361 Deferred outflows of resources Pension -related 58,753 305,893 Liabilities Current liabilities payable from current assets: Accounts payable - trade 3,184 65,206 Accrued payroll 8,235 45,089 Accrued vacation and sick leave 9,622 16,878 Payable to other City funds - 1,475,207 Payable to government agencies 102 - Other liabilities 20,057 16,373 Total current liabilities payable from current assets 41,200 1,618,753 Long-term liabilities: Net pension liability 156,003 812,220 Deferred inflows of resources Pension -related 3,649 18,998 Net position Net investment in capital assets 9,081,324 5,128,595 Unrestricted 414,235 (1,469,312) Total net position $ 9,495,559 $ 3,659,283 81 EXHIBIT D-1 Total Nonmajor Stormwater Enterprise Drainage Waterpark Funds $ 5,126,309 $ 296,103 $ 6,081,335 432,537 - 432,537 88,907 - 520,339 - - 98,858 - - 40,090 - - 1,797 5,647,753 296,103 7,174,956 23,892,440 3,801,694 41,904,053 29,540,193 4,097,797 49,079,009 60,767 43,265 468,678 619 - 69,009 4,919 5,094 63,337 5,934 10,164 42,598 - - 1,475,207 - 2,556 2,658 322,547 249 359,226 334,019 18,063 2,012,035 161,350 114,878 1,244,451 3,774 2,687 29,108 23,892,440 3,801,694 41,904,053 5,209,377 203,740 4,358,040 $ 29,101,817 $ 4,005,434 $ 46,262,093 CITY OF WICHITA FALLS, TEXAS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2016 Kickapoo Airport Transit Operating revenues: Charges for services $ - $ 456,188 Rents, concessions and other 970,129 47,520 Total operating revenues 970,129 503,708 Operating expenses: Personnel services 298,801 1,250,085 Supplies and materials 410,427 383,393 Maintenance and repairs 1,521 305,313 Utilities and other services 113,394 205,068 Insurance and contract support 12,081 91,744 Other expenses 41,996 267,673 Depreciation and amortization 400,349 143,065 Total operating expenses 1,278,569 2,646,341 Operating income (loss) (308,440) (2,142,633) Nonoperating revenues (expenses): Interest income 1,359 - Gain (loss) on sale of capital assets (2,100) 10,301 Intergovernmental operating grants - 2,282,163 Total nonoperating revenues (expenses) (741) 2,292,464 Income (loss) before contributions and transfers (309,181) 149,831 Transfers in - 191,749 Transfers out (33,078) (566,914) Change in net position (342,259) (225,334) Net position - beginning 9,837,818 3,884,617 Net position - ending $ 9,495,559 $ 3,659,283 82 EXHIBIT D-2 Total Nonmajor Stormwater Enterprise Drainage Waterpark Funds $ 3,703,703 $ 1,014,813 $ 5,174,704 100 422,802 1,440,551 3,703,803 1,437,615 6,615,255 239,909 552,356 2,341,151 9,493 207,020 1,010,333 22,270 43,104 372,208 238,578 448,473 1,005,513 100 52,678 156,603 45,163 47,626 402,458 244,364 249,785 1,037,563 799,877 1,601,042 6,325,829 2,903,926 (163,427) 289,426 16,772 305 18,436 - - 8,201 - - 2,282,163 16,772 305 2,308,800 2,920,698 (163,122) 2,598,226 449,884 - 641,633 (466,588) - (1,066,580) 2,903,994 (163,122) 2,173,279 26,197,823 4,168,556 44,088,814 $ 29,101,817 $ 4,005,434 $ 46,262,093 CITY OF WICHITA FALLS, TEXAS COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2016 Kickapoo Airport Transit Cash flows from operating activities: Receipts from customers and users $ 966,654 $ 452,123 Payments to suppliers (544,459) (853,471) Payments for interfund services (116,059) (639,395) Payments to employees (223,361) (921,821) Net cash provided (used) by operating activities 82,775 (1,962,564) Cash flows from noncapital financing activities Intergovernmental operating grants - 3,619,001 Interfund loan repaid - (1,097,665) Transfers out to other funds (33,078) (566,914) Transfers from other funds - 191,749 Net cash provided (used) by noncapital financing activities (33,078) 2,146,171 Cash flows from capital and related financing activities: Capital contributions - - Acquisition and construction of capital assets - (2,161) Proceeds from sale of capital assets - 10,303 Net cash provided (used) for capital and related financing activities - 8,142 Cash flows from investing activities: Interest on investments 1,359 Net cash provided by investing activities 1,359 - Net Increase in Cash and Cash Equivalents 51,056 191,749 Cash and Cash Equivalents - Beginning 416,118 - Cash and Cash Equivalents - Ending $ 467,174 $ 191,749 83 so EXHIBIT D-3 (Page 1 of 2) Total Nonmajor Stormwater Enterprise Drainage Waterpark Funds $ 3,634,243 $ 1,437,615 $ 6,490,635 (305,162) (848,821) (2,551,913) (156,792) (22,380) (934,626) (204,271) (474,723) (1,824,176) 2,968,018 91,691 1,179,920 3,619,001 (1,097,665) (466,588) - (1,066,580) 449,884 - 641,633 (16,704) - 2,096,389 12,834 - 12,834 (1,795,413) (38,143) (1,835,717) - - 10,303 (1,782,579) (38,143) (1,812,580) 16,772 305 18,436 16,772 305 18,436 1,185,507 53,853 1,482,165 3,940,802 242,250 4,599,170 $ 5,126,309 $ 296,103 $ 6,081,335 CITY OF WICHITA FALLS, TEXAS COMBINING STATEMENT OF CASH FLOWS (CONT-D.) NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2016 Kickapoo Airport Transit Cash flows from operating activities: Operating income (loss) $ (308,440) $ (2,142,633) Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 400,349 143,065 (Increase) decrease in assets and deferred outflows of resources: Receivables: Customer and trade - Other (3,475) (51,585) Inventory (11,324) - Prepaid items 2,701 - Deferred outflows - pension -related (38,309) (199,086) Increase (decrease) in liabilities and deferred inflows of resources: Accounts payable - trade (4,321) 48,678 Accrued payroll 587 11,651 Accrued vacation and sick leave (52) - Payable to government agencies (64) - Other liabilities (2) (5,536) Net pension liability 46,749 241,431 Deferred inflows - pension -related (1,624) (8,549) Total adjustments 391,215 180,069 Net cash provided by (used in) operating activities $ 82,775 $ (1,962,564) EXHIBIT D-3 (Page 2 of 2) Stormwater Drainage Waterpark Totals $ 2,903,926 $ (163,427) $ 289,426 244,364 249,785 1,037,563 (69,560) - (69,560) - - (55,060) - (11,324) - - 2,701 (37,017) (29,212) (303,624) (96,825) - (52,468) (1,325) 1,149 12,062 (5,964) (3,994) (10,010) - (1,696) (1,760) (1,656) 249 (6,945) 34,426 39,775 362,381 (2,351) (938) (13,462) 64,092 255,118 890,494 $ 2,968,018 $ 91,691 $ 1,179,920 IM B/u�Skie, Cr�1de� O��o�'tcyt�7ies Cl Internal Service Funds Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the City on a cost -reimbursement basis. Fleet Maintenance Fund The Fleet Maintenance Fund accounts for the costs associated with the operation, maintenance and replacement of the City's vehicle and equipment fleet. City departments which use the vehicles and equipment are charged a monthly rental fee based upon actual operating costs associated with each class of vehicle or equipment. Duplicating Services Fund The Duplicating Services Fund accounts for the costs associated with the operation and maintenance of the City's duplicating equipment. City departments which use the duplicating services are charged a fee based upon actual usage. Emolovee Benefit Trust Fund The Employee Benefit Trust Fund is used to account for and administer group health insurance, which is self -insured by the City, and life insurance for employees and covered dependents. Information Technologv Fund The Information Technology Fund accounts for the costs associated with the operation and maintenance of the City's Information Technology assets. City departments which use information technology are charged a fee based on usage. EXHIBIT E-1 CITY OF WICHITA FALLS, TEXAS COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS SEPTEMBER 30, 2016 Employee Information Fleet Duplicating Benefit Technology Maintenance Services Trust Fund Totals Assets Current assets: Cash and cash equivalents $ 188,477 $ $ - $ 1,597,360 $ 1,785,837 Restricted cash and cash equivalents - 4,269,090 - 4,269,090 Receivables: Other 25,169 383,248 408,417 Inventory 677,232 - 677,232 Prepaid items 295 434 - - 729 Total current assets 891,173 434 4,652,338 1,597,360 7,141,305 Capital assets, net of accumulated depreciation 18,040,974 512 - 4,696,378 22,737,864 Total assets 18,932,147 946 4,652,338 6,293,738 29,879,169 Deferred outflows of resources Pension -related 581,089 5,470 23,126 343,563 953,248 Liabilities Current liabilities: Accounts payable - trade 115,838 4,636 10,438 91,591 222,503 Accrued payroll 65,415 654 3,098 39,548 108,715 Accrued vacation and sick leave 112,907 - - 54,549 167,456 Payable to other City funds - 16,035 712,907 - 728,942 Estimated health claims payable - - 580,000 580,000 Other liabilities 2,271 994 3,265 Capital leases - current maturities 249,198 - - - 249,198 Total current liabilities 545,629 21,325 1,307,437 185,688 2,060,079 Long-term liabilities: Net pension liability 1,542,930 14,523 61,406 912,240 2,531,099 Total long-term liabilities 1,542,930 14,523 61,406 912,240 2,531,099 Total liabilities 2,088,559 35,848 1,368,843 1,097,928 4,591,178 Deferred inflows of resources Pension -related 36,090 340 1,436 21,338 59,204 Net position Net investment in capital assets 17,791,776 512 - 4,696,378 22,488,666 Unrestricted (403,189) (30,284) 3,305,185 821,657 3,693,369 Total net position $ 17,388,587 $ (29,772) $ 3,305,185 $ 5,518,035 $ 26,182,035 0 85 EXHIBIT E-2 CITY OF WICHITA FALLS, TEXAS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2016 Operating revenues: Charges for services Rents, concessions and other Contributions Total operating revenues Operating expenses: Personnel services Supplies and materials Maintenance and repairs Utilities and other services Insurance and contract support Other expenses Depreciation and amortization Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Interest income Gain on sale of capital assets Interest expense Total nonoperating revenues (expenses) Income (loss) before transfers Transfers in Transfers out Change in net position Net position - beginning Net position - endinc I! Employee Information Fleet Duplicating Benefit Technology Maintenance Services Trust Fund Totals $ 9,183,123 $ 138,178 $ - $ 4,199,634 $ 13,520,935 12,120 - 1,164,439 - 1,176,559 - - 13,556,838 - 13,556,838 9,195,243 138,178 14,721,277 4,199,634 28,254,332 2,126,122 27,174 77,557 1,237,969 3,468,822 2,555,828 3,385 424 222,191 2,781,828 1,987,174 - - 589,074 2,576,248 77,396 763 87,940 153,229 319,328 279,075 - 12,116,354 317 12,395,746 193,153 96,396 1,855,957 13,013 2,158,519 3,803,898 1,174 - 458,991 4,264,063 11,022,646 128,892 14,138,232 2,674,784 27,964,554 (1,827,403) 9,286 583,045 1,524,850 289,778 - - 345,955 - 345,955 61,213 - (6,354) 54,859 (7,764) - (7,764) 53,449 - 345,955 (6,354) 393,050 (1,773,954) 9,286 929,000 1,518,496 682,828 2,027,112 - - - 2,027,112 (312,000) - - - (312,000) (58,842) 9,286 929,000 1,518,496 2,397,940 17,447,429 (39,058) 2,376,185 3,999,539 23,784,095 $ 17,388,587 $ (29,772) $ 3,305,185 $ 5,518,035 $ 26,182,035 M EXHIBIT E-3 CITY OF WICHITA FALLS, TEXAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2016 Cash flows from operating activities: Received from customers and users Received from interfund charges Other operating receipts Payments to suppliers Payments for interfund services Payments to employees Net cash provided (used) by operating activities Cash flows from noncapital financing activities: Interfund loans received Interfund loans repaid Transfers in from other funds Transfers out to other funds Net cash provided (used) by noncapital financing activities Cash flows from capital and related financing activities: Acquisition of capital assets Proceeds from sale of capital assets Principal paid on long-term debt Interest and fees paid on long-term debt Net cash used for capital and related financing activities Cash flows from investing activities: Interest on investments Net cash used by investing activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents - Beginning Cash and Cash Equivalents - Ending Cash flows from operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization (Increase) decrease in assets and deferred outflows: Receivables: Other Inventory Prepaid items Deferred outflows - pension -related Increase (decrease) in liabilities and deferred outflows: Accounts payable - trade Accrued payroll Accrued vacation and sick leave Estimated health claims payable Other liabilities Net pension liability Deferred outflows - pension -related Total adjustments Net cash provided (used) by operating activities Employee Information Fleet Duplicating Benefit Technology Maintenance Services Trust Fund Totals $ 252,042 $ - $ 4,198,530 $ - $ 4,450,572 8,920,304 138,178 9,914,463 4,199,634 23,172,579 - - 1,212,209 - 1,212,209 (5,317,829) (87,964) (14,419,293) (1,119,274) (20,944,360) (476,438) (4,476) (14,920) (128,569) (624,403) (1,487,078) (30,577) (58,649) (873,722) (2,450,026) 1,891,001 15,161 832,340 2,078,069 4,816,571 - - 551,357 - 551,357 - (15,161) (3,113,306) (3,128,467) 2,027,112 2,027,112 (312,000) (312,000) 1,715,112 (15,161) (2,561,949) (861,998) (4,083,721) (3,639,672) (7,723,393) 74,280 74,280 (245,346) (245,346) (7,764) (7,764) (4,262,551) - (3,639,672) (7,902,223) 345,955 345,955 345,955 345,955 (656,438) (1,383,654) (1,561,603) (3,601,695) 844,915 5,652,744 3,158,963 9,656,622 $ 188,477 $ - $ 4,269,090 $ 1,597,360 $ 6,054,927 $ (1,827,403) $ 9,286 $ 583,045 $ 1,524,850 $ 289,778 3,803,898 1,174 - 458,991 4,264,063 (25,169) - 603,302 - 578,133 56,234 - - - 56,234 (295) (233) 54,836 54,308 (373,016) (4,716) (12,718) (226,741) (617,191) (170,614) (1,231) 2,961 (24,809) (193,693) 5,033 241 591 8,021 13,886 6,672 - - 3,781 10,453 - (350,000) - (350,000) 2,272 - 623 - 2,895 430,964 10,494 5,784 287,932 735,174 (17,575) 146 (1,248) (8,792) (27,469) 3,718,404 5,875 249,295 553,219 4,526,793 $ 1,891,001 $ 15,161 $ 832,340 $ 2,078,069 $ 4,816,571 87 Agency Fund Escheatment Fund - The agency fund is used to account for assets held by the City of Wichita Falls in a custodial capacity. The assets in this fund have been abandoned or remain unclaimed pending escheatment to the State of Texas. EXHIBIT F-1 CITY OF WICHITA FALLS, TEXAS AGENCYFUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FOR THE YEAR ENDED SEPTEMBER 30, 2016 Balance Balance 10/1/2015 Additions Deductions 9/30/2016 ESCHEATMENTFUND Assets Cash and cash equivalents Liabilities Other liabilities $ 117,713 $ 18,554 $ 10,418 $ 125,849 $ 117,713 $ 18,554 $ 10,418 $ 125,849 W ::, Component Units Discretely Presented Component Units of the City of Wichita Falls are legally separate entities; however, the City is considered to be financially accountable for their operations. The five discretely presented component units are as follows: Wichita Falls Economic Development Corporation The Wichita Falls Economic Development Corporation is a nonprofit corporation formed in May 1997 for the purpose of increasing employment opportunities, primarily through assisting qualified enterprises with funds provided by a portion of the local sales tax. The Corporation operates under the authority of Vernon's Civil Statutes, Article 5190.6, Section 4A. Wichita Falls 4B Sales Tax Corporation The Wichita Falls 4B Sales Tax Corporation is a nonprofit corporation formed in May 1997 for the purpose of increasing employment opportunities and for public improvement projects such as parks, auditoriums, learning centers, open space improvements, athletic and exhibition facilities and the related maintenance and operating costs of such projects. These projects are funded by a portion of the local sales tax. The Corporation operates under the authority of Vernon's Civil Statutes, Article 5190.6, Section 4B. Wichita Falls Reinvestment Zone #2 The Wichita Falls Reinvestment Zone #2 was created in August 2005 by the City, with the advice and consent of the Wichita Falls Independent School District and Wichita County. The purpose of the Wichita Falls Reinvestment Zone #2 is to capture increments of growth in real property values in the designated zone area from base values established in January 2004 and use the ad valorem taxes derived from the increments to contribute to the zoned area. Tax funds derived from the increment can only be spent for public improvements in the zoned area or for payment of debt service on bonds issued to provide funds for public improvements. Wichita Falls Reinvestment Zone #3 The Wichita Falls Reinvestment Zone #3 was created in September 2009 by the City, with the advice and consent of the Wichita Falls Independent School District and Wichita County. The purpose of the Wichita Falls Reinvestment Zone #3 is to capture increments of growth in real property values in the designated zone area from base values established in January 2009 and use the ad valorem taxes derived from the increments to contribute to the zoned area. Tax funds derived from the increment can only be spent for public improvements in the zoned area or for payment of debt service on bonds issued to provide funds for public improvements. Wichita Falls Reinvestment Zone #4 The Wichita Falls Reinvestment Zone #4 was created in March 2015 by the City, with the advice and consent of the Wichita Falls Independent School District and Wichita County. The purpose of the Wichita Falls Reinvestment Zone #4 is to capture increments of growth in real property values in the designated zone area from base values established in January 2015 and use the ad valorem taxes derived from the increments to contribute to the zoned area. Tax funds derived from the increment can only be spent for public improvements in the zoned area or for payment of debt service on bonds issued to provide funds for public improvements. [NlCklla 1a��5 B/u�Ski� Cro�de� O��o�'tc�7i�, EXHIBIT G-1 CITY OF WICHITA FALLS, TEXAS COMBINING STATEMENT OF NET POSITION COMPONENT UNITS SEPTEMBER 30, 2016 Wichita Falls Economic Wichita Falls Wichita Falls Wichita Falls Wichita Falls Development 4B Sales Tax Reinvestment Reinvestment Reinvestment Corporation Corporation Zone #2 Zone #3 Zone #4 Totals Assets Cash and cash equivalents $ 17,384,280 $ 3,209,713 $ 190,854 $ 378,767 $ 38,877 $ 21,202,491 Receivables: 655,630 655,630 - (458) - 1,310,802 Government agencies 100,000 Prepaid items 100,000 - - 2,188,250 Capital assets, net of accumulated depreciation 2,188,250 - - - Total assets 20,328,160 3,865,343 190,854 378,309 38,877 24,801,543 Liabilities Accounts payable - trade 191,623 6,552 198,175 Total liabilities 191,623 6,552 198,175 Net position 2,188,250 Net investment in capital assets 2,188,250 - Unrestricted 17,948,287 3,858,791 190,854 378,309 38,877 22,415,118 Total net position $ 20,136,537 $ 3,858,791 $ 190,854 $ 378,309 $ 38,877 $ 24,603,368 :• CITY OF WICHITA FALLS, TEXAS COMBINING STATEMENT OF ACTIVITIES COMPONENT UNITS FOR THE YEAR ENDED SEPTEMBER 30, 2016 Community development Wichita Falls Economic Development Corporation Wichita Falls 46 Sales Tax Corporation Wichita Falls Reinvestment Zone #2 Wichita Falls Reinvestment Zone #3 Wichita Falls Reinvestment Zone #4 Total component units General revenues and special item: Taxes: Property tax Sales tax Investment earnings Miscellaneous Total general revenues and special item Change in net position Net position - beginning Net position - ending Program Revenue Operating Charges for Grants and Expenses Services Contributions $ 4,898,626 $ 106,800 $ - 4,240,418 - 381,883 381,883 - - $ 9,520,927 $ 106,800 $ 381,883 0 Ah EXHIBIT G-2 Net (Expense) Revenue and Changes in Net Position Wichita Falls Economic Wichita Falls Wichita Falls Wichita Falls Wichita Falls Development 4B Sales Tax Reinvestment Reinvestment Reinvestment Corporation Corporation Zone #2 Zone #3 Zone #4 Totals $ (4,791,826) $ - $ - $ - $ - $ (4,791,826) - (3,858,535) - - - (3,858,535) - - (381,883) - - (381,883) (4,791,826) (3,858,535) (381,883) - - (9,032,244) - - 572,068 78,992 38,871 689,931 3,728,961 3,728,961 - - - 7,457,922 50,621 124,834 669 952 6 177,082 142,269 - - - - 142,269 3,921,851 3,853,795 572,737 79,944 38,877 8,467,204 (869,975) (4,740) 190,854 79,944 38,877 (565,040) 21,006,512 3,863,531 - 298,365 - 25,168,408 $ 20,136,537 $ 3,858,791 $ 190,854 $ 378,309 $ 38,877 $ 24,603,368 dic(�i� ra(s $ W-151<es #Moen O��o�tu dies E Supporting Schedules LI B/u�Skie� Croldew- Opfo�'tctti�S CITY OF WICHITA FALLS, TEXAS COMBINED SCHEDULE OF BONDED DEBT AND INTEREST MATURITIES SEPTEMBER 30, 2016 Fiscal Year General Obligation Bonds Combination Tax and Revenue Bonds Ending Serial Bond Interest Total Bonds Serial Bond Interest Total Bonds September 30, Maturities (1) on Bonds and Interest Maturities (2) on Bonds and Interest 2017 $ 1,996,159 $ 338,160 $ 2,334,319 $ 6,728,384 $ 2,211,499 $ 8,939,883 2018 2,018,435 304,800 2,323,235 6,881,221 2,051,014 8,932,235 2019 1,717,018 264,785 1,981,803 3,302,670 1,877,833 5,180,503 2020 1,745,507 240,073 1,985,580 3,392,095 1,796,019 5,188,114 2021 1,771,429 203,382 1,974,811 3,486,501 1,718,406 5,204,907 2022 1,314,759 169,091 1,483,850 3,575,762 1,610,597 5,186,359 2023 1,344,180 138,687 1,482,867 3,670,001 1,508,862 5,178,863 2024 1,380,070 109,904 1,489,974 3,774,229 1,400,712 5,174,941 2025 1,404,044 84,717 1,488,761 3,898,433 1,285,469 5,183,902 2026 1,437,531 43,506 1,481,037 3,617,602 1,172,537 4,790,139 2027 - - - 3,726,747 1,064,448 4,791,195 2028 3,840,717 947,497 4,788,214 2029 3,969,658 823,421 4,793,079 2030 3,283,516 709,605 3,993,121 2031 3,377,340 610,692 3,988,032 2032 3,251,120 506,760 3,757,880 2033 3,350,579 406,087 3,756,666 2034 1,145,000 299,781 1,444,781 2035 1,170,000 278,191 1,448,191 2036 1,185,000 255,699 1,440,699 2037 1,215,000 232,357 1,447,357 2038 1,235,000 208,162 1,443,162 2039 1,260,000 183,148 1,443,148 2040 1,285,000 157,250 1,442,250 2041 1,310,000 130,455 1,440,455 2042 1,340,000 102,761 1,442,761 2043 1,370,000 74,237 1,444,237 2044 1,395,000 44,997 1,439,997 2045 - - - 1,425,000 15,105 1,440,105 $ 16,129,132 $ 1,897,105 $ 18,026,237 $ 82,461,575 $ 23,683,601 $ 106,145,176 (1) Includes amortization of bond premium of $939,132. (2) Includes amortization of bond premium of $246,575. (3) Includes amortization of bond premium of $13,933,263. 91 EXHIBIT H-1 Water and Sewer Priority Lien Revenue Bonds Totals - All Bonded Debt Serial Bond Interest Total Bonds Serial Bond Interest Total Bonds Maturities (3) on Bonds and Interest Maturities on Bonds and Interest $ 4,839,290 $ 1,573,024 $ 6,412,314 $ 13,563,833 $ 4,122,683 $ 17,686,516 4,948,031 1,472,219 6,420,250 13,847,687 3,828,033 17,675,720 8,893,852 1,412,148 10,306,000 13,913,540 3,554,766 17,468,306 9,042,086 1,268,164 10,310,250 14,179,688 3,304,256 17,483,944 9,200,108 1,116,892 10,317,000 14,458,038 3,038,680 17,496,718 9,352,334 957,916 10,310,250 14,242,855 2,737,604 16,980,459 9,518,618 791,132 10,309,750 14,532,799 2,438,681 16,971,480 9,698,231 616,019 10,314,250 14,852,530 2,126,635 16,979,165 9,880,444 432,056 10,312,500 15,182,921 1,802,242 16,985,163 10,059,221 252,779 10, 312,000 15,114, 354 1,468,822 16,583,176 2,506,048 50,702 2,556,750 6,232,795 1,115,150 7,347,945 - - - 3,840,717 947,497 4,788,214 3,969,658 823,421 4,793,079 3,283,516 709,605 3,993,121 3,377,340 610,692 3,988,032 3,251,120 506,760 3,757,880 3,350,579 406,087 3,756,666 1,145,000 299,781 1,444,781 1,170,000 278,191 1,448,191 1,185,000 255,699 1,440,699 1,215,000 232,357 1,447,357 1,235,000 208,162 1,443,162 1,260,000 183,148 1,443,148 1,285,000 157,250 1,442,250 1,310,000 130,455 1,440,455 1,340,000 102,761 1,442,761 1,370,000 74,237 1,444,237 1,395,000 44,997 1,439,997 - - - 1,425,000 15,105 1,440,105 $ 87,938,263 $ 9,943,051 $ 97,881,314 $ 186,528,970 $ 35,523,757 $ 222,052,727 CITY OF WICHITA FALLS, TEXAS COMBINED SCHEDULE OF BONDS PAYABLE SEPTEMBER 30, 2016 General Obligation Bonds: General Obligation Refunding Bonds, Series 2011 General Obligation Refunding Bonds, Series 2011 - Premium General Obligation Refunding Bonds, Series 2013 General Obligation Refunding Bonds Series 2015A General Obligation Refunding Bonds, Series 2015A - Premium General Obligation Refunding Bonds, Series 2015E Total General Obligation Bonds Interest Rates and (Dates) 1.50, 2.00, 3.00 (3/1, 9/1) 1.50, 2.00, 3.00 (3/1, 9/1) 2.00, 2.25, 2.625, 2.75, 3.00, 4.00, 5.00 (3/1, 9/1) 0.73, 1.19, 1.62, 1.99, 2.29, 2.62, 2.83, 2.91, 3.11, 3.27, 3.48 (3/1, 9/1) Final Issue Maturity Date Date 10/15/11 09/01/21 03/15/13 09/01/18 11/15/15 09/01/26 11/15/15 09/01/26 Annual Serial Payments 415,000 (2012) 405,000 (2013) 410,000 (2014) 420,000 (2015) 425,000 (2016) 435,000 (2017) 445,000 (2018) 455,000 (2019) 470,000 (2020) 485,000 (2021) 375,000 (2014) 385,000 (2015) 2,305,000 (2016) 335,000 (2017) 340,000 (2018) 200,000 (2016) 810,000 (2017) 830,000 (2018) 870,000 (2019) 890,000 (2020) 915,000 (2021) 955,000 (2022) 990,000 (2023) 1,030,000 (2024) 1,055,000 (2025) 1,105,000 (2026) 110,000 (2016) 255,000 (2017) 255,000 (2018) 260,000 (2019) 265,000 (2020) 270,000 (2021) 275,000 (2022) 285,000 (2023) 295,000 (2024) 305,000 (2025) 310,000 (2026) 92 EXHIBIT H-2 (Page 1 of 5) Bonds Retired or Authorized Issued Refunded Outstanding $ 4,365,000 $ 4,365,000 $ 2,075,000 $ 2,290,000 - 194,300 130,715 63,585 3,740,000 3,740,000 3,065,000 675,000 9,650,000 9,650,000 200,000 9,450,000 - 947,256 71,709 875,547 2,885,000 2,885,000 110,000 2,775,000 20,640.000 21,781,556 5,652,424 16,129,132 CITY OF WICHITA FALLS, TEXAS COMBINED SCHEDULE OF BONDS PAYABLE (CONT'D.) SEPTEMBER 30, 2016 Final Interest Rates Issue Maturity Annual and (Dates) Date Date Serial Payments Combination Tax and Revenue Bonds: Combination Tax and Revenue 2.25, 2.50, 2.75, 3.00, 01/15/09 10/01/29 340,000 (2010) Certificates of Obligation, 3.25, 3.50, 4.00, 4.125, 405,000 (2011) Series 2009 4.25, 4.50, 4.625, 4.75 415,000 (2012) (4/1, 10/1) 425,000 (2013) 435,000 (2014) 450,000 (2015) 460,000 (2016) 475,000 (2017) 490,000 (2018) 505,000 (2019) 525,000 (2020) 550,000 (2021) 570,000 (2022) 595,000 (2023) 620,000 (2024) 650,000 (2025) 675,000 (2026) 710,000 (2027) 745,000 (2028) 780,000 (2029) Combination Tax and Revenue 5.60 (2/1, 8/1) 01/01/10 02/01/25 165,000 (2011) Certificates of Obligation, 185,000 (2012) Series 2010 195,000 (2013) 205,000 (2014) 215,000 (2015) 230,000 (2016) 240,000 (2017) 255,000 (2018) 270,000 (2019) 285,000 (2020) 300,000 (2021) 320,000 (2022) 335,000 (2023) 355,000 (2024) 375,000 (2025) Combination Tax and Revenue 2.00, 3.00, 3.50, 4.00 05/01/10 08/01/18 170,000 (2010) Refunding Bonds, Series 2010 (2/1, 8/1) 285,000 (2012) 595,000 (2013) 580,000 (2014) 575,000 (2015) 555,000 (2016) 3,470,000 (2017) 3,600,000 (2018) Combination Tax and Revenue Refunding Bonds, Series 2010 - Premium 93 Authorized 10,820,000 3,930,000 Issued 10,820,000 3,930,000 Bonds Retired or Refunded Outstanding 2,930,000 7,890,000 1,195,000 2,735,000 9,830,000 9,830,000 2,760,000 7,070,000 685,333 572,433 112,900 EXHIBIT H-2 (Page 2 of 5) CITY OF WICHITA FALLS, TEXAS COMBINED SCHEDULE OF BONDS PAYABLE (CONT-D.) SEPTEMBER 30, 2016 Final Interest Rates Issue Maturity Annual and (Dates) Date Date Serial Payments Combination Tax and Revenue 2.00, 3.00, 4.00 10/15/11 09/01/31 135,000 (2013) Certificates of Obligation, (3/1, 9/1) 135,000 (2014) Series 2011 140,000 (2015) 145,000 (2016) 145,000 (2017) 150,000 (2018) 150,000 (2019) 155,000 (2020) 160,000 (2021) 165,000 (2022) 165,000 (2023) 170,000 (2024) 180,000 (2025) 185,000 (2026) 190,000 (2027) 195,000 (2028) 205,000 (2029) 210,000 (2030) 220,000 (2031) Combination Tax and Revenue Certificates of Obligation, Series 2011 - Premium Combination Tax and Revenue 2.00, 3.00, 3.25, 3.375 03/01/13 09/01/33 530,000 (2014) Certificates of Obligation, (3/1, 9/1) 795,000 (2015) Series 2013 815,000 (2016) 830,000 (2017) 845,000 (2018) 860,000 (2019) 890,000 (2020) 915,000 (2021) 940,000 (2022) 970,000 (2023) 1,000,000 (2024) 1,030,000 (2025) 1,060,000 (2026) 1,090,000 (2027) 1,125,000 (2028) 1,160,000 (2029) 1,195,000 (2030) 1,235,000 (2031) 1,275,000 (2032) 1,315,000 (2033) Combination Tax and Revenue Certificates of Obligation, Series 2013 - Premium 94 EXHIBIT H-2 (Page 3 of 5) Bonds Retired or Authorized Issued Refunded Outstanding 3,200,000 3,200,000 555,000 2,645,000 98,494 35,311 63,183 19,875,000 19,875,000 2,140,000 17,735,000 96,293 25,801 70,492 CITY OF WICHITA FALLS, TEXAS COMBINED SCHEDULE OF BONDS PAYABLE (CONT-D.) SEPTEMBER 30, 2016 Combination Tax and Revenue Certificates of Obligation, Series 2013A Combination Tax and Revenue Certificates of Obligation, Series 2015 Interest Rates and (Dates) 2.00, 3.00, 3.125, 3.25, 3.625, 3.75, 4.00, 4.25, 4.375, 4.50, 4.625 (3/1, 9/1) 0.00, 0.09, 0.40, 0.68, 0.89, 1.05, 1.16, 1.29, 1.40, 1.47, 1.53, 1.59 1,64, 1.69, 1.74, 1.79 1.84, 1.89, 1.93, 1.96 1.99, 2.02, 2.05, 2.08 2.10, 2.11, 2.12 (3/1, 9/1) Final Issue Maturity Date Date 08/15/13 09/01/33 01/02/15 03/01/45 Annual Serial Payments 505,000 (2014) 500,000 (2015) 510,000 (2016) 520,000 (2017) 530,000 (2018) 545,000 (2019) 560,000 (2020) 580,000 (2021) 595,000 (2022) 615,000 (2023) 630,000 (2024) 650,000 (2025) 675,000 (2026) 700,000 (2027) 730,000 (2028) 760,000 (2029) 795,000 (2030) 830,000 (2031) 865,000 (2032) 905,000 (2033) 890,000 (2016) 960,000 (2017) 960,000 (2018) 960,000 (2019) 965,000 (2020) 970,000 (2021) 975,000 (2022) 980,000 (2023) 990,000 (2024) 1,005,000 (2025) 1,015,000 (2026) 1,030,000 (2027) 1,040,000 (2028) 1,060,000 (2029) 1,080,000 (2030) 1,090,000 (2031) 1,110,000 (2032) 1,130,000 (2033) 1,145,000 (2034) 1,170,000 (2035) 1,185,000 (2036) 1,215,000 (2037) 1,235,000 (2038) 1,260,000 (2039) 1,285,000 (2040) 1,310,000 (2041) 1,345,000 (2042) 1,370,000 (2043) 1,395,000 (2044) 1,425,000 (2045) Total Combination Tax and Revenue Bonds 95 EXHIBIT H-2 (Page 4 of 5) Bonds Retired or Authorized Issued Refunded Outstanding 13,000,000 13,000,000 1,515,000 11,485,000 33,545,000 33,545,000 890,000 32,655,000 94,200,000 95,080,120 12,618,545 82,461,575 CITY OF WICHITA FALLS, TEXAS COMBINED SCHEDULE OF BONDS PAYABLE (CONT-D.) SEPTEMBER 30, 2016 Water and Sewer System Revenue Refunding Bonds, Series 2016 Water and Sewer System Revenue Refunding Bonds, Series 2016 - Premium Total Priority Lien Revenue Bonds Total All Bonds Final Interest Rates Issue Maturity and (Dates) Date Date 2.00, 4.00, 5.00 06/01/16 08/01/27 (2/1, 8/1) Annual Serial Payments 2,635,000 (2017) 2,885,000 (2018) 6,915,000 (2019) 7,265,000 (2020) 7,635,000 (2021) 8,010,000 (2022) 8,410,000 (2023) 8,835,000 (2024) 9,275,000 (2025) 9,705,000 (2026) 2,435,000 (2027) 0 Authorized 74,005,000 74,005,000 $ 188,845,000 Bonds Retired or Issued Refunded Outstanding 74,005,000 74,005,000 13,933,263 13.933,263 87,938,263 - 87,938,263 $ 204,799,939 $ 18,270,969 $ 186,528.970 EXHIBIT H-2 (Page 5 of 5) IP (N/C411a lal�S B/W.1Skies 40ke, n 4I EXHIBIT H-3 CITY OF WICHITA FALLS, TEXAS DEBT SERVICE COVERAGE - REVENUE BONDS SEPTEMBER 30, 2016 Water and Sewer Revenue Bonds: Change in net position (Exhibit A-8) Add: Depreciation and amortization Interest expense and paying agent fees Transfers out Subtract: West Texas Utilities water revenues Gain (loss) on sale/abandonment of capital assets Capital contributions from developers Transfers in Net earnings for determining debt service coverage Net earnings for determining debt service coverage Principal and interest requirements to maturity Number of years remaining to pay bonds Average annual principal and interest requirement Minimum bond covenant debt service coverage Minimum debt service coverage requirement Excess over debt service coverage requirements Priority Lien Bonds $ 97,881,314 11 8,898,301 1.25 $ 11,122,877 $ 8,432,530 3,524,763 1,438,189 499,917 209,110 316,893 Subordinate Lien Bonds N/A N/A 1.10 $ 9,254,843 13,395,482 (1,025,920) $ 21,624,405 $ 21,624,405 $ - 11,122,877 $ 10,501,528 97 CITY OF WICHITA FALLS, TEXAS CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE BY FUNCTION AND ACTIVITY SEPTEMBER 30, 2016 Buildings Machinery Land and and and Betterments Improvements Equipment Administrative services: Mayor and City Council $ $ - $ - City Manager 265,898 2,019 Personnel/Risk Management - 4,658 Martin Luther King Center - 749,447 - Library 477,942 4,511,041 638,454 General Public Information - - 433,893 Building Maintenance - 2,770,246 139,556 Nondepartmental 46,347 380,754 86,997 Municipal Court 230,000 312,519 184,502 Legal - - 1,488 City Clerk 1,411 Homeland security 748,684 Training Center - - 536,254 Golf course 3,808,375 786,801 122,339 Total administrative services 4,562,664 9,776,706 2,900,255 Police 1,131,749 10,231,506 14,889,523 Fire 190,565 7,051,522 786,659 Parks and recreation: Recreation 754,606 1,714,887 260,148 Park maintenance 4,586,567 597,892 61,938 Cemetery 141,685 - 9,423 Total parks and recreation 5,482,858 2,312,779 331,509 Accounting/finance: Information Systems - - 3,916,550 Total accounting/finance 3,916,550 Community development: Planning 26,833 Inspection - - 3,610 Property management 10,334,824 420,892 26,999 Weed and Seed program - - 7,504 Hazard Mitigation grant 170,800 - - Total community development 10,505,624 420,892 64,946 Public works: Engineering - 13,744 133,801 Street maintenance 10,147 100,108 33,386 Lake Wichita Revitalization - - - SAFB Gate Perimeter Project 1,541,774 Infrastructure 1,300,172 - - Total public works 2,852,093 113,852 167,187 Health: Administration 34,820 2,877,755 329,490 General City nursing 76,411 1,123 17,826 Environmental health - - 33,776 Lab water pollution - - 37,273 Animal reclaim center 150,737 3,321,311 28,633 Total health 261,968 6,200,189 446,998 Traffic and transportation - 31,045 138,680 Multi -Purpose Events Center 9,560,210 38,004,988 510,708 Wichita Falls Business Park 1,099,507 - - Total capital assets used in the operation of governmental funds $ 35,647,238 $ 74,143,479 $ 24,153,015 98 EXHIBIT H-4 Furniture and Construction Fixtures Infrastructure in Progress $ 5,218 $ $ 13,644 4,660 79,358 - 3,184 510,676 1,435 107,499 510,676 8,760 205,700 3,393,662 3,393,662 334,864 163,965,592 2,409,608 163,965,592 2,744,472 14,573 - 647,948 14,573 - 647,948 - 11,123,164 35,524 22,117 - - $ 152,949 $ 175,088,756 $ 7,537,982 Totals 5,218 281,561 9,318 749,447 5,706,795 947,753 2,909,802 514,098 728,456 1,488 1,411 748,684 536,254 4,717,515 17,857,800 26,467,238 8,028,746 2,729,641 5,246,397 151,108 8,127,146 7,310,212 7,310,212 26,833 3,610 10,782,715 7,504 170,800 10,991,462 147,545 143,641 334,864 1,541,774 167,675,372 169,843,196 3,256,638 95,360 33,776 37,273 4,148,629 7,571,676 11,328,413 48,098,023 1,099,507 $ 316,723,419 EXHIBIT H-5 CITY OF WICHITA FALLS, TEXAS CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY FOR THE YEAR ENDED SEPTEMBER 30, 2016 Beginning Ending Balance Balance 10/1/2015 Additions Deletions 9/30/2016 Administrative services: Mayor and City Council $ 5,218 $ $ $ 5,218 City Manager 281,561 281,561 Personnel/Risk Management 9,318 9,318 Martin Luther King Center 749,447 - - 749,447 Library 5,712,042 8,215 13,462 5,706,795 General Public Information 424,098 523,655 - 947,753 Building Maintenance 2,909,802 - 2,909,802 Nondepartmental 514,098 - 514,098 Municipal Court 737,861 9,405 728,456 Legal 1,488 - 1,488 City Clerk 1,411 - 1,411 Homeland security 721,006 27,678 748,684 Training center 536,254 - 536,254 Golf course 4,689,316 28,199 - 4,717,515 Total administrative services 17,292,920 587,747 22,867 17,857,800 Police 26,419,946 47,292 - 26,467,238 Fire 7,447,009 581,737 - 8,028,746 Parks and recreation: Recreation 2,753,869 8,862 33,090 2,729,641 Park maintenance 5,290,922 - 44,525 5,246,397 Cemetery 151,108 - - 151,108 Total parks and recreatior 8,195,899 8,862 77,615 8,127,146 Accounting/finance: Information System: 3,884,578 3,639,671 214,037 7,310,212 Total accounting/finance 3,884,578 3,639,671 214,037 7,310,212 Community development: Planning 26,833 - - 26,833 Inspection 3,610 3,610 Property management 10,782,715 10,782,715 Weed and Seed program 7,504 7,504 Hazard Mitigation Grant 170,800 170,800 Total community development 10,991,462 - 10,991,462 Public works: Engineering 139,592 7,953 - 147,545 Street maintenance 147,218 - 3,577 143,641 Lake Wichita Revitalizatior - 334,864 - 334,864 SAFB Gate Perimeter Project - 1,541,774 - 1,541,774 Infrastructure 165,776,071 2,376,213 476,912 167,675,372 Total public works 166,062,881 4,260,804 480,489 169,843,196 Health: Administration 3,256,698 1,371 1,431 3,256,638 General city nursing 97,212 - 1,852 95,360 Environmental health 21,911 11,865 - 33,776 Lab water pollution 37,273 - - 37,273 Animal reclaim center 3,555,356 595,448 2,175 4,148,629 Total health 6,968,450 608,684 5,458 7,571,676 Traffic and transportation 11,172,404 272,422 116,413 11,328,413 Multi -Purpose Events Center 48,086,825 11,198 - 48,098,023 Wichita Falls Business Park 1,099,507 - - 1,099,507 Total capital assets $ 307,621,881 $ 10,018,417 $ 916,879 $ 316,723,419 99 EXHIBIT H-6 CITY OF WICHITA FALLS, TEXAS REGIONAL AIRPORT FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2016 Capital Assets: Land and betterments Buildings and improvements Machinery and equipment Furniture and fixtures Construction in progress Total capital assets Accumulated Depreciation: Land and betterments Buildings and improvements Machinery and equipment Furniture and fixtures Total accumulated depreciation Net capital assets Balance 10/1/2015 Additions Deletions Balance 9/30/2016 $ 14,892,849 $ - $ - $14,892,849 33,789,040 362,159 64,890 34,086,309 60,479 68,800 1,443 127,836 - 12,829 - 12,829 854,651 2,712,074 - 3,566,725 49,597,019 3,155,862 66,333 52,686,548 1,698,485 595,714 - 2,294,199 745,671 677,314 55,805 1,367,180 9,875 11,743 1,443 20,175 - 1,283 - 1,283 2,454,031 1,286,054 57,248 3,682,837 $ 47,142,988 $ 1,869,808 $ 9,085 $49,003,711 100 EXHIBIT H-7 CITY OF WICHITA FALLS, TEXAS KICKAPOO AIRPORT FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2016 Balance Balance 10/1/2015 Additions Deletions 9/30/2016 Capital Assets Land and betterments $ 8,769,905 $ - $ - $ 8,769,905 Buildings and improvements 3,264,730 - - 3,264,730 Machinery and equipment 593,715 - 10,500 583,215 Construction in progress 61,682 - - 61,682 Total capital assets 12,690,032 - 10,500 12,679,532 Accumulated Depreciation: Land and betterments 2,009,450 261,504 - 2,270,954 Buildings and improvements 874,966 107,433 - 982,399 Machinery and equipment 321,843 31,412 8,400 344,855 Total accumulated depreciation 3,206,259 400,349 8,400 3,598,208 Net capital assets $ 9,483,773 $ (400,349) $ 2,100 $ 9,081,324 101 EXHIBIT H-8 CITY OF WICHITA FALLS, TEXAS TRANSIT FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2016 Capital Assets: Land and betterments Buildings and improvements Machinery and equipment Total capital assets Accumulated Depreciation: Land and betterments Buildings and improvements Machinery and equipment Total accumulated depreciation Net capital assets Balance Balance 10/1/2015 Additions Deletions 9/30/2016 $ 457,254 $ - $ - $ 457,254 5,135,957 - - 5,135,957 356,034 2,161 - 358,195 5,949,245 2,161 - 5,951,406 26,372 10,549 - 36,921 404,345 100,244 - 504,589 249,029 32,272 - 281,301 679,746 143,065 - 822,811 $5,269,499 $ (140,904) $ - $ 5,128,595 102 EXHIBIT H-9 CITY OF WICHITA FALLS, TEXAS STORMWATER DRAINAGE FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2016 Capital Assets: Drainage Land and betterments Machinery and equipment Construction in progress Total capital assets Accumulated Depreciation: Drainage Land betterments Machinery and equipment Total accumulated depreciation Net capital assets Balance Balance 10/1/2015 Additions Deletions 9/30/2016 $ 17,435,098 $ 699,303 $ - $18,134,401 161,597 264,916 - 426,513 89,017 - - 89,017 6,020,437 873,852 - 6,894,289 23,706,149 1,838,071 - 25,544,220 1,316,914 237,130 - 1,554,044 12,716 5,119 - 17,835 77,786 2,115 - 79,901 1,407,416 244,364 - 1,651,780 $ 22,298,733 $ 1,593,707 $ - $23,892,440 103 EXHIBIT H-10 CITY OF WICHITA FALLS, TEXAS SANITATION FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2016 Capital Assets: Land and betterments Buildings and improvements Machinery and equipment Total capital assets Accumulated Depreciation: Land and betterments Buildings and improvements Machinery and equipment Total accumulated depreciation Net capital assets Balance Balance 10/1 /2015 Additions Deletions 9/30/2016 $ 7,036,714 $ 325,451 $ - $ 7,362,165 3,524,350 31,305 - 3,555,655 584,817 47,243 - 632,060 11,145,881 403,999 - 11,549,880 951,820 143,280 - 1,095,100 1,362,584 93,161 - 1,455,745 220,221 44,327 - 264,548 2,534,625 280,768 - 2,815,393 $ 8,611,256 $ 123,231 $ - $ 8,734,487 104 EXHIBIT H-11 CITY OF WICHITA FALLS, TEXAS WATER AND SEWER FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2016 Balance Balance 10/1/2015 Additions Deletions 9/30/2016 Capital Assets Land and betterments $ 24,362,969 $ - $ - $ 24,362,969 Buildings, systems and improvements 325,763,608 3,960,321 221,000 329,502,929 Machinery and equipment 5,949,641 67,174 22,700 5,994,115 Furniture and fixtures 1,164 - - 1,164 Motor vehicles 1,235 - - 1,235 Construction in progress 2,375,983 19,535,151 - 21,911,134 Total capital assets 358,454,600 23,562,646 243,700 381,773,546 Accumulated Deoreciatior: Land and betterments 10,797,247 243,632 - 11,040,879 Buildings, systems and improvements 106,341,074 7,954,921 221,000 114,074,995 Machinery and equipment 4,502,526 233,978 22,700 4,713,804 Furniture and fixtures 1,164 - - 1,164 Motor vehicles 1,235 - - 1,235 Total accumulated depreciation 121,643,246 8,432,531 243,700 129,832,077 Net capital assets $ 236,811,354 $ 15,130,115 $ - $ 251,941,469 105 EXHIBIT H-12 CITY OF WICHITA FALLS, TEXAS WATERPARK FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2016 Capital AssetE: Land and betterments Buildings and improvements Machinery and equipment Total capital assets Accumulated Depreciatior: Buildings and improvements Machinery and equipment Total accumulated depreciation Net capital assetE Balance Balance 10/1/2015 Additions Deletions 9/30/2016 $ 389,894 $ - $ - $ 389,894 4,568,668 29,069 - 4,597,737 201,710 9,074 - 210,784 5,160,272 38,143 - 5,198,415 1,034,698 229,160 - 1,263,858 112,238 20,625 - 132,863 1,146,936 249,785 - 1,396,721 $ 4,013,336 $ (211,642) $ - $ 3,801,694 106 EXHIBIT H-13 CITY OF WICHITA FALLS, TEXAS FLEET MAINTENANCE FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2016 Balance Balance 10/1/2015 Additions Deletions 9/30/2016 Capital Assets: Land and betterments $ 436,269 $ - $ - $ 436,269 Buildings and improvements 4,163,802 491,915 - 4,655,717 Machinery and equipment 1,516,412 104,463 - 1,620,875 Furniture and fixtures 2,950 - - 2,950 Motor vehicles 53,493,404 3,536,931 1,604,600 55,425,735 Construction in progress 49,050 - 49,050 - Total capital assets 59,661,887 4,133,309 1,653,650 62,141,546 Accumulated Depreciation: Land and betterments - other 2,219 261 - 2,480 Buildings and improvements 2,426,720 100,533 - 2,527,253 Machinery and equipment 1,087,441 124,426 - 1,211,867 Furniture and fixtures 2,950 - - 2,950 Motor vehicles 38,368,340 3,578,678 1,590,996 40,356,022 Total accumulated depreciation 41,887,670 3,803,898 1,590,996 44,100,572 Net capital assets $ 17,774,217 $ 329,411 $ 62,654 $ 18,040,974 107 EXHIBIT H-14 CITY OF WICHITA FALLS, TEXAS DUPLICATING SERVICES FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2016 Balance 10/1/2015 Additions Deletions Capital Assets: Machinery and equipment Accumulated Depreciation: Machinery and equipment Net capital assets $ 10,617 $ - $ - 8,930 1,175 - $ 1,687 $ (1,175) $ - Balance 9/30/2016 $ 10,617 10,105 512 108 EXHIBIT H-15 CITY OF WICHITA FALLS, TEXAS INFORMATION TECHNOLOGY FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2016 Capital Assets: Machinery and equipment Construction in progress Total capital assets Accumulated Depreciation: Machinery and equipment Net capital assets Balance Balance 10/1/2015 Additions Deletions 9/30/2016 $ 2,179,889 $ 246,010 $ 15,885 $ 2,410,014 - 3,393,662 - 3,393,662 2,179,889 3,639,672 15,885 5,803,676 657,838 458,991 9,531 1,107,298 $ 1,522,051 $ 3,180,681 $ 6,354 $ 4,696,378 49 109 EXHIBIT H-16 CITY OF WICHITA FALLS, TEXAS WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2016 Capital Assets: Land and betterments Buildings and improvements Total capital assets Accumulated Depreciation: Buildings and improvements Net capital assets Balance 10/1/2015 Additions Deletions Balance 9/30/2016 $ 1,432,069 $ - $ - $ 1,432,069 957,191 - - 957,191 2,389,260 - - 2,389,260 181,866 19,144 - 201,010 $ 2,207,394 $ (19,144) $ - $ 2,188,250 110 B/u�Skie� ��1de� O��o�'tr�7ie, Statistical Section (Unaudited) This part of the City of Wichita Falls, detailed information as a context fo statements, note disclosures, and government's overall financial health. Contents Texas' comprehensive annual financial report presents r understanding what the information in the financial required supplementary information says about the Page Financial Trends ill These schedules contain trend information to help the reader understand how the government's financial performance and well-being have changed over time. Revenue Capacity 117 These schedules contain information to help the reader assess the government's most significant local revenue source, the property tax. Debt Capacity 121 These schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future. Demographic and Economic Information 126 These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. Operating Information 128 These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs. CITY OF WICHITA FALLS, TEXAS NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (UNAUDITED) 2006-2007 2007-2008 2008-2009 2009-2010 Governmental activities Net investment in capital assets $ 133,737,880 $ 139,868,969 $ 138,550,295 $ 135,957,279 Restricted 1,541,859 1,631,963 1,186,730 5,006,079 Unrestricted 27,487,733 21,189,932 14,880,792 9,263,524 Total governmental activities net position $ 162,767,472 $ 162,690,864 $ 154,617,817 $ 150,226,882 Business -type activities Net investment in capital assets $ 132,852,246 $ 143,023,239 $ 156,170,924 $ 172,590,416 Restricted 12,681,053 12,945,497 12,958,909 12,942,163 Unrestricted 12,513,454 12,810,854 10,712,005 10,734,533 Total business -type activities net position $ 158,046,753 $ 168,779,590 $ 179,841,838 $ 196,267,112 Primary government Net investment in capital assets $ 266,590,126 $ 282,892,208 $ 294,721,219 $ 308,547,695 Restricted 14,222,912 14,577,460 14,145,639 17,948,242 Unrestricted 40,001,187 34,000,786 25,592,797 19,998,057 Total primary government net position $ 320,814,225 $ 331,470,454 $ 334,459,655 $ 346,493,994 111 EXHIBIT 1-1 Fiscal Year 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 $ 138,876,124 $ 139,058,565 $ 138,319,208 $ 128,168,873 $ 143,014,752 $ 148,206,829 6,048,238 6,931,511 6,248,074 5,290,076 3,715,125 4,468,638 7,189,782 7,453,791 6,661,101 5,789,973 (59,103,807) (64,279,354) $ 152,114,144 $ 153,443,867 $ 151,228,383 $ 139,248,922 $ 87,626,070 $ 88,396,113 $ 172,634,321 $ 185,087,683 $ 198,540,484 $ 225,576,460 $ 238,249,137 $ 236,074,244 11,734,924 11,374,316 11,881,663 11,885,698 11,800,667 11,082,332 23,006,940 28,157,150 25,390,068 22,571,945 13,941,283 31,265,373 $ 207,376,185 $ 224,619,149 $ 235,812,215 $ 260,034,103 $ 263,991,087 $ 278,421,949 $ 311,510,445 $ 324,146,248 $ 336,859,692 $ 353,745,333 $ 381,263,889 $ 384,281,073 17,783,162 18, 305, 827 18,129, 737 17,175,774 15, 515, 792 15,550, 970 30,196,722 35,610,941 32,051,169 28,361,918 (45,162,524) (33,013,981) $ 359,490,329 $ 378,063,016 $ 387,040,598 $ 399,283,025 $ 351,617,157 $ 366,818,062 CITY OF WICHITA FALLS, TEXAS CHANGES IN NET POSITION LAST TEN FISCAL YEARS (UNAUDITED) Expenses Governmental activities: Administrative services Police Fire Parks and recreation Accounting/finance Community development Public works Health Traffic and transportation Multi -Purpose Events Center Interest and fees on long-term debt Total governmental activities expenses Business -type activities: Golf Municipal Airport Kickapoo Airport Transit Sanitation Water and Sewer Stormwater drainage Waterpark Total business -type activities expenses Total primary government expenses Program Revenues Governmental activities: Charges for services: Administrative services Police Fire Parks and recreation Accounting/finance Community development Public works Health Traffic and transportation Multi -Purpose Events Center Operating grants and contributions Capital grants and contributions Total governmental activities program revenues 2006-2007 2007-2008 2008-2009 2009-2010 $ 10,363,134 $ 11,662,086 $ 12,026,311 $ 10,043,369 18,587,210 20,527,967 21,008,696 21,133,526 11,295,623 12,492,842 13,028,146 13,065,768 4,478,311 5,107,579 5,757,363 5,687,527 1,893,389 2,231,952 2,473,024 2,428,055 6,573,917 6,921,352 7,584,142 7,243,744 8,616,348 8,314,596 8,282,184 8,035,626 4,736,162 4,873,643 4,995,764 4,931,859 2,590,309 2,679,026 2,499,869 2,525,097 4,291,434 4,335,968 4,027,612 4,181,379 1,308,748 1,405,383 1,620,854 1,781,245 74,734,585 80,552,394 83,303,965 81,057,195 276,368 310,980 289,195 337,946 966,961 1,245,021 1,354,624 1,108,515 1,373,283 1,793,369 1,616,322 1,602,362 8,638,374 9,199,341 8,509,153 9,152,130 26,764,879 28,126,920 30,165,844 30,250,390 355,697 407,035 477,415 785,543 - - - 1,253,557 38,375,562 41,082,666 42,412,553 44,490,443 $ 113,110,147 $ 121,635,060 $ 125,716,518 $ 125,547,638 $ 3,327,519 $ 3,211,546 $ 4,267,891 $ 4,414,667 700,216 600,020 470,020 495,459 5,434 2,612 4,369 2,042 443,827 517,707 513,682 515,008 1,138,671 1,124,534 891,803 1,042,574 7,286 100,000 165,363 2,600 803,115 864,874 888,890 908,415 212,911 154,941 164,350 201,961 2,215,411 2,141,584 1,789,269 1,767,398 12,298,595 11,468,654 10,891,021 14,606,807 3,218,003 3,097,319 1,631,109 6,145,852 24,370,988 23,283,791 21,677,767 30,102,783 112 Fiscal Year 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 EXHIBIT 1-2 (Page 1 of 2) 2015-2016 $ 10,881,691 $ 11,934,804 $ 12,782,404 $ 13,873,741 $ 14,837,668 $ 14,235,870 21,822,371 22,103,892 22,767,560 23,195,421 23,705,432 25,633,843 13,291,048 13,523,616 14,226,064 14,387,072 16,455,087 17,476,759 5,405,955 5,152,616 5,579,717 5,574,156 5,492,124 5,637,654 2,534,141 975,863 924,240 923,727 876,069 787,945 7,084,165 6,777,614 6,729,171 6,497,467 6,400,781 6,681,803 7,613,089 7,956,752 7,747,847 8,155,640 8,117,413 8,334,993 4,911,165 5,021,625 5,167,794 5,166,135 5,398,191 5,707,386 2,451,154 2,510,936 2,757,545 2,617,801 2,555,837 2,667,418 4,295,871 3,895,665 4,136,952 4,302,368 4,553,654 4,544,817 1,765,406 1,711,328 2,122,969 1,992,169 1,910,975 1,631,355 82,056,056 81,564,711 84,942,263 86,685,697 90,303,231 93,339,843 435,774 529,827 655,452 855,765 2,532,243 1,881,055 1,262,976 1,419,681 1,495,562 1,423,952 1,412,211 1,252,359 1,847,362 1,903,560 1,938,827 2,416,274 2,524,244 2,673,176 8,959,973 8,904,795 9,236,474 9,333,512 9,489,348 9,841,683 32,969,719 28,996,520 30,135,738 32,364,514 33,554,406 32,120,018 533,715 406,570 430,012 560,389 674,839 828,537 1,399,255 1,375,832 1,397,270 1,456,084 1,557,158 1,598,720 47,408,774 43,536,785 45,289,335 48,410,490 51,744,449 50,195,548 $ 129,464,830 $ 125,101,496 $ 130,231,598 $ 135,096,187 $ 142,047,680 $ 143,535,391 $ 4,499,281 $ 4,390,463 $ 4,304,737 $ 4,220,786 $ 4,030,674 $ 4,270,749 527,007 541,201 624,272 339,867 396,228 335,112 11,400 14,613 18,459 15,854 6,866 1,749 513,746 525,505 524,519 530,305 447,990 429,207 65,000 - - - - - 1,017,718 942,649 1,131,684 1,094,904 1,006,966 1,101,085 2,740 24,420 116,035 94,772 9,510 11,824 965,741 1,075,277 1,073,172 1,051,444 995,634 1,051,834 184,138 217,262 126,163 133,133 162,184 72,965 1,644,569 1,656,358 1,597,702 1,553,729 1,604,828 1,561,783 13,268,583 9,868,484 11,157,348 10,837,248 11,019,845 14,803,477 2,315,245 8,066,065 4,394,038 12,956,740 5,349,242 3,942,929 25,015,168 27,322,297 25,068,129 32,828,782 25,029,967 27,582,714 CITY OF WICHITA FALLS, TEXAS CHANGES IN NET POSITION (CONT'D.) LAST TEN FISCAL YEARS (UNAUDITED) 2006-2007 2007-2008 2008-2009 2009-2010 Business -type activities: Charges for services: Municipal Airport 441,471 430,561 544,332 624,298 Kickapoo Airport 789,522 1,025,300 745,444 798,034 Transit 206,109 224,856 229,483 274,577 Sanitation 9,917,386 10,939,617 12,025,478 11,826,882 Water and Sewer 30,031,969 33,042,845 33,888,553 33,264,688 Stormwater drainage 1,267,533 1,318,340 1,252,544 1,272,430 Waterpark - - - 1,283,919 Operating grants and contributions 1,026,685 1,389,202 1,142,191 2,312,062 Capital grants and contributions 580,729 1,021,644 456,743 108,471 Total business -type activities program revenueE 44,261,404 49,392,365 50,284,768 51,765,361 Total primary government program revenues $ 68,632,392 $ 72,676,156 $ 71,962,535 $ 81,868,144 Net(Expense)/Revenue Governmental activities $ (50,363,597) $ (57,268,603) $ (61,626,198) $ (50,954,412) Business -type activities 5,885,842 8,309,699 7,872,215 7,274,918 Total primary government net expense $ (44,477,755) $ (48,958,904) $ (53,753,983) $ (43,679,494) General Revenues and Other Changes in Net Position Governmental activities: Taxes: Property tax $ 24,975,158 $ 26,160,116 $ 27,869,849 $ 27,570,092 Sales tax 20,068,529 21,353,896 20,451,906 20,033,820 Franchise fees 5,780,311 5,598,406 5,570,399 5,593,573 Hotel occupancy tax 1,417,397 1,560,353 1,506,423 1,553,674 Beverage tax 236,367 251,386 249,121 246,541 Bingo tax 166,223 168,864 109,739 77,883 Investment earnings 2,684,388 1,727,671 415,156 129,653 Gain (loss) on sale of capital assets - (397,404) - - Miscellaneous 712,358 242,811 134,983 160,949 Transfers 1,972,819 525,898 (2,439,625) (8,802,705) Total governmental activities 58,013,550 57,191,997 53,867,951 46,563,480 Business -type activities Investment earnings 5,575,703 2,949,036 602,872 194,428 Miscellaneous 199,174 - 147,536 153,223 Transfers (1,972,819) (525,898) 2,439,625 8,802,705 Total business -type activities 3,802,058 2,423,138 3,190,033 9,150,356 Total primary government $ 61,815,608 $ 59,615,135 $ 57,057,984 $ 55,713,836 Change in Net Position Governmental activities $ 7,649,953 $ (76,606) $ (7,758,247) $ (4,390,932) Business -type activities 9,687,900 10,732,837 11,062,248 16,425,274 Total primary government $ 17,337,853 $ 10,656,231 $ 3,304,001 $ 12,034,342 113 EXHIBIT 1-2 (Page 2 of 2) Fiscal Year 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 681,639 716,608 769,557 775,829 864,505 1,109,959 988,457 1,153,038 1,255,153 1,239,973 1,090,276 970,129 367,374 405,852 410,737 476,716 541,389 503,708 11,911,026 12,807,160 12,606,675 13,196,489 12,790,072 13,223,470 40,679,751 36,771,008 32,798,786 31,272,972 38,855,845 42,999,399 2,485,346 2,552,650 2,503,255 2,601,158 2,763,120 3,703,803 1,633,155 1,475,842 1,398,164 1,292,639 1,492,787 1,437,615 1,323,581 2,371,658 3,787,014 1,830,334 1,826,749 2,282,163 192,620 181,759 1,339,265 1,017,827 1,558,589 209,110 60,262,949 58,435,575 56,868,606 53,703,937 61,783,332 66,439,356 $ 85,278,117 $ 85,757,872 $ 81,936,735 $ 86,532,719 $ 91,469,323 $ 94,022,070 $ (57,040,888) $ (54,242,414) $ (59,874,134) $ (53,856,915) $ (65,273,264) $ (65,757,129) 12,854,175 14,898,790 11,579,271 5,293,447 10,038,883 16,243,808 $ (44,186,713) $ (39,343,624) $ (48,294,863) $ (48,563,468) $ (55,234,381) $ (49,513,321) $ 28,556,762 $ 28,625,696 $ 29,107,168 $ 29,784,202 $ 31,072,640 $ 34,515,164 21,082,993 21,406,823 22,062,365 22,397,536 22,403,406 22,373,768 5,593,781 5,574,882 5,423,680 5,558,600 5,414,414 5,038,247 1,572,105 1,677,100 1,578,764 1,684,329 1,775,372 1,910,468 248,350 207,735 230,728 281,598 291,091 286,986 70,747 61,696 40,122 36,688 32,764 26,736 49,239 54,579 53,244 33,309 20,732 129,886 - 326,861 636,417 879,538 529,526 447,357 1,754,171 (2,363,233) (1,473,837) (18,778,342) (2,072,770) 2,003,892 58,928,148 55,572,139 57,658,651 41,877,458 59,467,175 66,732,504 50,858 (41,792) (1,754,171) (1,745,105) $ 57,183,043 39,865 (58,924) 2,363,233 2,344,174 $ 57,916,313 27,902 149,173 1,473,837 1,650,912 $ 59,309,563 $ 1,887,260 $ 1,329,725 $ (2,215,483) 11,109,070 17,242,964 13,230,183 $ 12,996,330 $ 18,572,689 $ 11,014,700 11,680 138,419 18,778,342 18,928,441 $ 60,805,899 $ (11,979,457) 24,221,888 $ 12,242,431 14,884 87,079 2,072,770 2,174, 733 $ 61,641,908 $ (5,806,089) 12,213,616 $ 6,407,527 175,860 60,331 (2,003,892) (1,767,701) $ 64,964,803 $ 975,375 14,476,107 $ 15,451,482 CITY OF WICHITA FALLS, TEXAS FUND BALANCES, GOVERNMENTAL FUNDS - LAST TEN FISCAL YEARS (UNAUDITED) General Fund Reserved Unreserved Nonspendable Assigned Unassigned Total general fund All other Governmental Funds Reserved Unreserved, reported in: Special revenue funds Capital projects funds Nonspendable Restricted Committed Unassigned Total all other governmental funds 2006-2007 $ 3,161,776 15,569,840 $ 18,731,616 2007-2008 $ 2,686,432 14,500,836 $ 17,187,268 2008-2009 $ 1,499,613 13,042,044 $ 14,541,657 2009-2010 $ 1,392,329 14,294,519 $ 15,686,848 $ 2,371,514 $ 2,888,944 $ 6,254,620 $ 11,753,749 7,089,584 6,180,559 4,808,127 1,713,168 23,458,510 15,033,333 10,963,970 1,850,806 $ 32,919,608 $ 24,102,836 $ 22,026,717 $ 15,317,723 Note : GASB 54 was implemented in 2010-11, which changed the terminology for fund balances. Prior years were not reclassified. 114 EXHIBIT 1-3 Fiscal Year 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 478,617 352,835 384,574 180,992 210,069 157,494 579,022 1,010,976 958,924 1,949,792 1,102,026 878,314 16,002,361 16,570,675 16,226,597 14,886,199 13,682,061 13,161,690 $ 17,060,000 $ 17,934,486 $ 17,570,095 $ 17,016,983 $ 14,994,156 $ 14,197,498 81,376 89,668 84,940 120,573 95,283 84,013 10,927,373 10,744,065 26,934,100 13,834,375 5,977,567 5,729,434 1,762,248 2,305,013 2,896,812 2,831,488 2,734,119 2,694,718 (24,418) (269,288) (269,288) (460,883) (550,863) (773,238) $ 12,746,579 $ 12,869,458 $ 29,646,564 $ 16,325,553 $ 8,256,106 $ 7,734,927 CITY OF WICHITA FALLS, TEXAS CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS - LAST TEN FISCAL YEARS (UNAUDITED) 2006-2007 2007-2008 2008-2009 2009-2010 Revenues Taxes $ 52,637,318 $ 55,155,574 $ 55,752,982 $ 55,006,901 Charges for services 3,202,699 3,270,930 3,689,717 3,715,832 Licenses and permits 2,215,813 2,116,140 1,887,434 1,990,328 Fines and forfeitures 2,127,062 1,964,391 1,970,612 2,214,884 Intergovernmental revenue 11,136,433 8,428,310 9,287,371 14,783,860 Contributions 4,366,961 6,137,663 3,234,759 5,711,904 Miscellaneous revenue 6,664,315 5,369,689 3,804,438 3,597,927 Total revenues 82,350,601 82,442,697 79,627,313 87,021,636 Expenditures Administrative services 9,965,494 10,873,576 11,315,351 9,694,632 Police 18,068,168 19,524,824 20,182,150 20,182,168 Fire 11,238,422 12,206,774 12,833,183 12,671,757 Parks and recreation 4,373,460 4,841,597 5,457,410 5,359,692 Accounting/finance 1,811,690 2,087,572 2,327,608 2,279,241 Community development 6,652,162 6,925,581 7,433,617 7,315,631 Public works 6,038,790 5,606,784 5,452,172 5,355,585 Health 4,728,414 4,775,418 4,950,213 4,896,841 Traffic and transportation 2,355,249 2,459,070 2,292,890 2,245,038 Multi -Purpose Events Center 3,498,189 3,506,091 3,208,713 3,358,470 Capital outlay 7,093,636 15,219,394 12,088,928 8,758,421 Debt service - principal 2,510,000 2,395,000 2,065,000 2,240,000 Debt service - interest 1,271,106 1,456,540 1,364,831 1,781,176 Debt service - bond issuance costs - - - - Total expenditures 79,604,780 91,878,221 90,972,066 86,138,652 Excess of revenues over (under) expenditures 2,745,821 (9,435,524) (11,344,753) 882,984 Other Financing Sources (Uses) Proceeds from bonds 21,702,048 - 10,840,779 3,930,000 Capital lease proceeds - - - - Payment to refunded bonds escrow agent - - - - Transfers in 5,922,091 7,268,938 5,530,309 5,676,896 Transfer out (5,401,565) (8,194,534) (9,433,265) (16,053,685) Total other financing sources (uses) 22,222,574 (925,596) 6,937,823 (6,446,789) Net change in fund balances Debt service as a percentage of noncapital expenditures $ 24,968,395 $(10,361,120) $ (4,406,930) $ (5,563,805) 5.21 % 115 5.02% 4.35% 5.20% EXHIBIT 1-4 Fiscal Year 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 $ 57,122,006 $ 57,607,312 $ 58,613,615 $ 59,739,545 $ 61,007,519 $ 64,201,677 3,886,160 3,710,371 3,422,621 3,331,183 3,362,172 3,370,573 2,064,972 2,002,559 2,234,081 2,048,293 1,941,205 1,971,212 2,209,026 2,409,792 2,435,625 2,402,794 2,262,781 2,561,817 11,041,679 14,488,236 11,722,524 18,081,798 12,401,075 13,537,869 4,542,149 3,446,313 3,828,862 5,712,190 4,011,809 5,208,537 3,216,734 3,261,049 3,463,425 3,642,155 3,118,424 3,120,633 84,082,726 86,925,632 85,720,753 94,957,958 88,104,985 93,972,318 10,235,720 12,158,781 12,677,867 13,347,029 14,413,640 14,805,672 20,235,012 20,545,965 20,884,744 21,539,820 21,997,801 23,580,992 12, 897, 810 13, 277, 876 13,807,699 14, 085, 219 14, 719, 074 16, 077, 272 4,966,060 4,833,743 5,157,417 5,197,591 5,065,222 5,204,296 2,367,814 845,076 793,960 831,313 747,341 702,883 7,124,851 6,829,018 6,760,826 6,559,064 6,440,963 6,678,753 5,170,624 5,777,249 5,325,013 5,613,107 5,449,860 5,555,929 4,796,934 4,894,351 5,004,381 5,057,946 5,217,970 5,483,135 2,233,311 2,194,962 2,468,051 2,274,249 2,395,837 2,224,511 3,436,052 3,062,507 3,365,932 3,536,661 3,747,189 3,718,058 7,600,491 8,537,049 7,867,468 5,230,269 5,368,119 6,343,551 2,115,000 2,270,000 2,515,000 3,000,000 3,350,000 3,745,000 1,934,935 1,604,392 1,618,299 2,342,331 1,998,760 1,951,100 - 137,461 310,777 - - - 85,114,614 86,968,430 88,557,434 88,614,599 90,911,776 96,071,152 (1,031,888) (42,798) (2,836,681) 6,343,359 (2,806,791) (2,098,834) - 7,836,338 23,869,261 - - 13,482,256 - 1,452,760 2,666,243 - 47,848 (13,295,568) - (4,484,698) (3,831,570) - - (13,295,568) 6,239,483 6,411,855 7,181,518 16,643,513 17,594,910 7,574,334 (6,405,589) (10,176,091) (10,636,058) (36,860,991) (23,335,238) (6,961,378) (166,106) 1,040,164 19,249,394 (20,217,478) (5,692,480) (12,495,924) $ (1,197,994) $ 997,366 $ 16,412,713 $(13,874,119) $ (8,499,271) $ (14,594,758) 5.22% 4.94% 5.12% 6.41 % 6.25% 6.35% EXHIBIT 1-5 CITY OF WICHITA FALLS, TEXAS TAX REVENUES BY SOURCE, GOVERNMENTAL FUNDS - LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Hotel Year Property Sales Franchise Occupancy Beverage Bingo Total 2006-2007 $ 24,968,481 $ 20,068,529 $ 5,780,311 $ 1,417,397 $ 236,367 $ 166,233 $ 52,637,318 2007-2008 26,217,499 21,353,896 5,598,406 1,565,523 251,386 168,864 55,155,574 2008-2009 27,865,394 20,451,906 5,570,399 1,506,423 249,121 109,739 55,752,982 2009-2010 27,501,412 20,033,820 5,593,573 1,513,484 246,541 77,883 54,966,713 2010-2011 28,554,029 21,082,994 5,593,781 1,572,105 248,350 70,747 57,122,006 2011-2012 28,679,076 21,406,823 5,574,882 1,677,100 207,735 61,696 57,607,312 2012-2013 29,277,956 22,062,365 5,423,680 1,578,764 230,728 40,122 58,613,615 2013-2014 29,780,795 22,397,536 5,558,599 1,684,329 281,598 36,688 59,739,545 2014-2015 31,090,472 22,403,406 5,414,414 1,775,372 291,091 32,764 61,007,519 2015-2016 34,567,763 22,373,768 5,035,947 1,910,477 286,986 26,736 64,201,677 116 EXHIBIT 1-6 CITY OF WICHITA FALLS, TEXAS ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY - LAST TEN FISCAL YEARS (UNAUDITED) Personal Ratio of Total Real Property Property Total Total Assessed to Fiscal Assessed Assessed Assessed Direct Estimated Total Estimated Year Value Value Value Tax Rate Actual Value Actual Value 2006-2007 $ 3,208,236,037 $ 744,353,082 $3,952,589,119 $0.59246 $ 3,952,589,119 100.00% 2007-2008 3,389,094,572 802,449,151 4,191,543,723 0.59246 4,191,543,723 100.00% 2008-2009 3,553,825,553 877,030,381 4,430,855,934 0.59526 4,430,855,934 100.00% 2009-2010 3,622,501,148 803,697,677 4,426,198,825 0.60526 4,426,198,825 100.00% 2010-2011 3,693,399,778 728,642,824 4,422,042,602 0.62526 4,422,042,602 100.00% 2011-2012 3,714,449,662 716,365,316 4,430,814,978 0.62526 4,430,814,978 100.00% 2012-2013 3,749,608,055 715,113,536 4,464,721,591 0.63526 4,464,721,591 100.00% 2013-2014 3,777,010,620 771,002,233 4,548,012,853 0.63526 4,548,012,853 100.00% 2014-2015 3,859,560,337 765,251,406 4,624,811,743 0.65526 4,624,811,743 100.00% 2015-2016 3,944,783,610 820,827,696 4,765,611,306 0.70598 4,765,611,306 100.00% 117 EXHIBIT 1-7 CITY OF WICHITA FALLS, TEXAS DIRECT AND OVERLAPPING PROPERTY TAX RATES - LAST TEN FISCAL YEARS (UNAUDITED) Tax Rates Per $100 Valuation Fiscal City of Wichita Falls Wichita County Burkburnett ISD (1) Year M&O AS Total M&O I&S Total M&O I&S Total 2006-2007 $ 0.57 $ 0.02 $ 0.59 $ 0.43 $ 0.02 $ 0.45 $ 1.37 $ 0.13 $ 1.50 2007-2008 0.57 0.02 0.59 0.43 0.01 0.44 1.17 0.11 1.28 2008-2009 0.58 0.02 0.60 0.43 - 0.43 1.17 0.14 1.31 2009-2010 0.59 0.02 0.61 0.48 - 0.48 1.17 0.14 1.31 2010-2011 0.61 0.01 0.62 0.52 - 0.52 1.17 0.14 1.31 2011-2012 0.61 0.01 0.62 0.53 - 0.53 1.17 0.14 1.31 2012-2013 0.62 0.01 0.63 0.52 - 0.52 1.17 0.13 1.30 2013-2014 0.62 0.01 0.63 0.51 - 0.51 1.17 0.12 1.29 2014-2015 0.64 0.02 0.66 0.51 - 0.51 1.17 0.14 1.31 2015-2016 0.69 0.02 0.71 0.55 - 0.55 1.17 0.14 1.31 City View ISD (2) Iowa Park CISD (3) Wichita Falls ISD (4) Grand M&O I&S Total M&O AS Total M&O I&S Total Total 2006-2007 $ 1.37 $ 0.23 $ 1.60 $ 1.04 $ 0.08 $ 1.12 $ 1.04 $ 0.15 $ 1.19 $ 6.45 2007-2008 1.04 0.22 1.26 1.04 0.08 1.12 1.04 0.16 1.20 5.89 2008-2009 1.17 0.23 1.40 1.04 0.11 1.15 1.04 0.16 1.20 6.09 2009-2010 1.17 0.25 1.42 1.04 0.10 1.14 1.04 0.16 1.20 6.16 2010-2011 1.17 0.25 1.42 1.04 0.09 1.13 1.04 0.17 1.21 6.21 2011-2012 1.17 0.25 1.42 1.04 0.24 1.28 1.04 0.17 1.21 6.37 2012-2013 1.17 0.25 1.42 1.04 0.24 1.28 1.04 0.17 1.21 6.36 2013-2014 1.17 0.25 1.42 1.04 0.24 1.28 1.04 0.17 1.21 6.34 2014-2015 1.17 0.25 1.42 1.04 0.23 1.27 1.04 0.10 1.14 6.31 2015-2016 1.17 0.25 1.42 1.17 0.16 1.33 1.04 0.19 1.23 6.55 Notes: (1) Burkburnett Independent School District - 25% in Wichita Falls city limits (2) City View Independent School District - 90% in Wichita Falls city limits (3) Iowa Park Consolidated Independent School District - 2% in Wichita Falls city limits (4) Wichita Falls Independent School District - 99% in Wichita Falls city limits 118 EXHIBIT 1-8 Taxpayer GGP - Sikes Senter LLC Oncor Electric Delivery Co Wal-Mart Stores Texas LP Wal-Mart Stores East Inc Quail Creek Crossing Ltd Atmos Energy / Mid -Tex Division Kell West Regional Hospital North American Pipe Corp Cryovac Sealed Air Corporation Alon USA LP Southwestern Bell Lowe's Home Improvement Center Cingular Wireless LLC HD Development Properties Clinics of North Texas Time Warner Cable Totals Source: Wichita Appraisal District CITY OF WICHITA FALLS, TEXAS PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO SEPTEMBER 30, 2016 2015-2016 2006-2007 Percentage Percentage Taxable of Total Taxable of Total Assessed Assessed Assessed Assessed Value Rank Valuation Value Rank Valuation $ 58,000,000 1 1.22% $ 54,110,143 1 1.16% 40,413,930 2 0.85% 40,617,599 2 0.87% 23,724,836 3 0.50% 33,788,039 3 0.73% 20,645,100 4 0.43% - N/A 0.00% 17,186,000 5 0.36% - N/A 0.00% 15,951,920 6 0.33% - N/A 0.00% 15,775,146 7 0.33% 11,542,268 8 0.25% 14,985,050 8 0.31 % - N/A 0.00% 12,762,025 9 0.27% - N/A 0.00% 12,587,278 10 0.26% - N/A 0.00% - N/A 0.00% 29,033,837 4 0.62% - N/A 0.00% 13,215,404 5 0.28% - N/A 0.00% 12,988,813 6 0.28% - N/A 0.00% 11,952,464 7 0.26% - N/A 0.00% 11,109,762 9 0.24% - N/A 0.00% 9,812,987 10 0.21 % $ 232,031,285 4.87% $ 228,171,316 4.90% 119 /creSkie, ilNalen CPfnr rm ie.s EXHIBIT 1-9 CITY OF WICHITA FALLS, TEXAS PROPERTY TAX LEVIES AND COLLECTIONS - LAST TEN FISCAL YEARS (UNAUDITED) Collected within the Taxes Levied Fiscal Year of the Levy Collections Total Collections to Date Fiscal for the Percentage in Subsequent Percentage Year Fiscal Year Amount of Levy Years Amount of Levy 2006-2007 $ 23,421,270 $ 23,043,185 98.39% $ 298,013 $ 23,341,198 99.66% 2007-2008 24,833,219 24,408,683 98.29% 304,751 24,713,434 99.52% 2008-2009 26,375,113 25,905,854 98.22% 366,363 26,272,217 99.61% 2009-2010 26,752,242 26,166,043 97.81% 386,521 26,552,564 99.25% 2010-2011 27,649,264 27,179,642 98.30% 306,238 27,485,880 99.41% 2011-2012 27,704,114 27,306,706 98.57% 282,346 27,589,052 99.58% 2012-2013 28,362,591 27,906,520 98.39% 245,519 28,152,039 99.26% 2013-2014 28,876,552 28,375,563 98.27% 191,870 28,567,433 98.93% 2014-2015 30,270,748 29,809,308 98.48% 166,541 29,975,849 99.03% 2015-2016 33,644,264 33,124,968 98.46% - 33,124,968 98.46% 120 CITY OF WICHITA FALLS, TEXAS RATIOS OF OUTSTANDING DEBT BY TYPE - LAST TEN FISCAL YEARS (UNAUDITED) Governmental Activities General Combination Fiscal Obligation Tax and Note Year Bonds Revenue Bonds Payable 2006-2007 $ 7,390,000 $ 25,396,016 $ 61,093 2007-2008 6,480,000 23,867,228 - 2008-2009 5,535,000 33,524,726 - 2009-2010 4,790,000 35,918,687 - 2010-2011 4,450,000 34,104,162 - 2011-2012 4,116,110 35,503,123 - 2012-2013 5,491,678 51,570,623 - 2013-2014 4,679,866 49,302,503 - 2014-2015 3,850,706 46,710,294 - 2015-2016 16,129,132 31,138,675 - Capital Utility Lease System Payable Revenue Bonds $ - $ 123,869,328 - 121,887,613 - 119,841,741 - 107,501,744 - 105,277,778 1,452,760 102,566,093 3,833,640 99,211,869 3,510,950 95,723,505 3,230,595 92,086,092 2,857,166 87,938,263 121 EXHIBIT 1-10 Business -type Activities Combination General Capital Total Percentage Tax and Obligation Note Leases Primary of Personal Per Revenue Bonds Bonds Payable Payable Government Income Capita $ 27,864,844 $ - $ 699,748 $ - $185,281,029 4.01% $ 1,721.38 24,479,232 - 670,537 - 177,384,610 3.71% 1,644.78 21,004,768 - 640,377 722,464 181,269,076 7.34% 1,711.13 27,744,748 - 609,234 549,621 177,114,034 8.03% 1,694.01 23,969,757 - 577,079 371,696 168,750,472 6.10% 1,614.02 19,798,342 - 543,877 1,704,341 165,684,646 7.11% 1,594.18 27,887,899 1,930,000 509,596 1,261,663 191,696,968 7.67% 1,833.51 24,284,987 1,930,000 474,200 999,606 180,905,617 7.74% 1,724.59 54,125,933 1,930,000 437,652 722,737 203,094,009 8.47% 1,932.13 51,322,900 - 399,915 16,957,523 206,743,574 8.63% 1,974.44 EXHIBIT 1-11 CITY OF WICHITA FALLS, TEXAS RATIOS OF GENERAL BONDED DEBT OUTSTANDING - LAST TEN FISCAL YEARS (UNAUDITED) Governmental Activities Percentage of General Combination Actual Taxable Fiscal Obligation Tax and Value of Per Year Bonds Revenue Bonds Total Property Capita 2006-2007 $ 7,390,000 $ 25,396,016 $ 32,786,016 0.83% $ 304.60 2007-2008 6,480,000 23,867,228 30,347,228 0.72% 281.39 2008-2009 5,535,000 33,524,726 39,059,726 0.88% 368.71 2009-2010 4,790,000 35,918,687 40,708,687 0.92% 389.36 2010-2011 4,450,000 34,104,162 38,554,162 0.87% 368.75 2011-2012 4,116,110 35,503,123 39,619,233 0.89% 381.21 2012-2013 5,491,678 51,570,623 57,062,301 1.28% 545.78 2013-2014 4,679,866 49,302,503 53,982,369 1.19% 514.62 2014-2015 3,850,706 46,710,294 50,561,000 1.09% 481.01 2015-2016 16,129,132 31,138,675 47,267,807 0.99% 451.42 122 EXHIBIT 1-12 CITY OF WICHITA FALLS, TEXAS DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT (UNAUDITED) SEPTEMBER 30, 2016 Gross Percentage Amount Governmental Applicable Applicable Activities to City of to City of Debt (1) Wichita Falls (2) Wichita Falls Direct: City of Wichita Falls $ 50,124,973 100% $ 50,124,973 Overlapping: Wichita County 8,563,870 100% 8,563,870 Burkburnett Independent School District 53,924,039 25% 13,481,010 City View Independent School District 9,475,223 90% 8,527,701 Iowa Park Consolidated Independent School District 14,766,819 2% 295,336 Wichita Falls Independent School District 110,563,672 99% 109,458,035 Total overlapping 197,293,623 140,325,952 Total direct and overlapping bonded debt $ 247,418,596 $190,450,925 Sources: (1) Listed taxing jurisdictions (2) City of Wichita Falls Planning Department calculated based on percentage of taxing entity within the City of Wichita Falls city limits. 123 CITY OF WICHITA FALLS, TEXAS COMPUTATION OF LEGAL DEBT MARGIN - LAST TEN FISCAL YEARS (UNAUDITED) Total assessed property value per 2015 tax roll $ 4,765,611,306 Maximum tax rate ' $ 2.25/$100 Current tax rate for 2015 tax year .70598/$100 Maximum tax rate in excess of 2015 tax rate Total legal debt margin 2006-2007 Assessed value $ 3,952,589,119 Maximum tax rate $ 2.25/$100 Current tax rate .59246/$100 Maximum tax rate in excess of current rate 1.65754/$100 Total legal debt margin $ 65,515,746 2007-2008 $ 4,191,543,723 $ 2.25/$100 .59246/$100 1.65754/$100 $ 69,476,514 1.54402/$100 $ 73,581,992 2008-2009 $ 4,430,855,934 $ 2.25/$100 .59526/$100 1.65474/$100 $ 73,319,145 There is no debt limit established by law. The limit is, therefore, governed by the City's ability to levy and collect taxes to service the outstanding indebtedness. The City's maximum legal tax rate established under its Charter is $2.25 per $100 assessed valuation. The 2015 tax rate was $.70598 per $100 assessed valuation. Maximum tax levy established by City Charter 2009-2010 $ 4,426,198,825 $ 2.25/$100 .60526/$100 1.64474/$100 $ 72,799,463 124 EXHIBIT 1-13 Fiscal Year 2010-2011 2011-2012 2012-2013 $ 4,422,042,602 S 4,430,814,978 S 4,464,721,591 $ 2.25/$100 $ 2.25/$100 $ 2.25/$100 .62526/$100 .62526/$100 .63526/$100 1.62474/$100 1.62474/$100 1.61474/$100 $ 71,846,695 $ 71,989,223 $ 72,093,645 2013-2014 S 4,548,012,853 $ 2.25/$100 .63526/$100 1.61474/$100 $ 73,438,583 2014-2015 $ 4,624,811,743 $ 2.25/$100 .65526/$100 1.59474/$100 $ 73,753,723 2015-2016 $ 4,765,611,306 $ 2.25/$100 .70598/$100 1.54402/$100 $ 73,581,992 CITY OF WICHITA FALLS, TEXAS PLEDGED REVENUE COVERAGE - WATER AND SEWER REVENUE BONDS - LAST TEN FISCAL YEARS (UNAUDITED) Net Revenue Fiscal Gross Operating Available For Year Revenues(l) Expenses (2) Debt Service 2006-2007 $ 29,598,709 $ 17,273,862 $ 12,324,847 2007-2008 33,514,257 17,896,263 15,617,994 2008-2009 33,662,220 19,546,745 14,115,475 2009-2010 33,264,688 19,924,687 13,340,001 2010-2011 40,084,478 22,422,525 17,661,953 2011-2012 36,405,921 19,501,942 16,903,979 2012-2013 32,200,867 19,160,351 13,040,516 2013-2014 30,839,265 20,981,384 9,857,881 2014-2015 38,456,107 20,477,673 17,978,434 2015-2016 42,499,482 20,415,375 22,084,107 Notes: (1) Includes all operating revenues with the exception of water sales to West Texas Utilities (see Exhibit H-3). (2) Includes all operating expenses of the Water and Sewer Fund with the exception of depreciation and amortization (see Exhibit H-3). (3) Excludes bond premium amortization. 125 EXHIBIT 1-14 Debt Service Requirement Principal (3) Interest Total Coverage $4,985,000 $ 6,608,627 $11,593,627 1.06 5,165,000 6,424,544 11,589,544 1.35 5,410,000 6,185,216 11,595,216 1.22 5,615,000 5,879,680 11,494,680 1.16 5,805,000 5,646,250 11,451,250 1.54 6,130,000 5,364,300 11,494,300 1.47 3,325,000 4,518,925 7,843,925 1.66 3,460,000 4,385,925 7,845,925 1.26 3,610,000 4,238,875 7,848,875 2.29 4,625,000 3,356,255 7,981,255 2.77 EXHIBIT 1-15 CITY OF WICHITA FALLS, TEXAS DEMOGRAPHIC STATISTICS - LAST TEN FISCAL YEARS (UNAUDITED) Per Capita Fiscal Estimated Personal Personal Median Education School Unemployment Year Population (1) Income Income (2) Age Level (3) Enrollment (3) Rate (4) 2006-2007 107,635 $ 4,616,680,420 $ 42,892 34.9 13.1 14,707 4.1% 2007-2008 107,847 4,783,049,824 44,350 34.9 13.3 14,533 5.5% 2008-2009 105,935 2,470,050,408 23,317 33.2 13.5 15,473 8.2% 2009-2010 104,553 2,205,022,770 21,090 32.3 13.3 16,217 7.3% 2010-2011 104,553 2,766,263,274 26,458 32.8 13.2 15,539 6.6% 2011-2012 103,931 2,330,756,606 22,426 32.4 13.2 14,569 6.9% 2012-2013 104,552 2,499,106,456 23,903 32.5 13.1 14,639 6.2% 2013-2014 104,898 2,336,602,950 22,275 32.5 13.2 15,181 4.9% 2014-2015 105,114 2,397,229,884 22,806 32.5 13.2 15,155 4.4% 2015-2016 104,710 2,394,298,860 22,866 32.5 13.2 15,181 4.8% Sources: (1) City of Wichita Falls Planning Department for all years, except for 2010-13 from US Bureau of Census. (2) U.S. Bureau of Census Department of Numbers (3) Wichita Falls I.S.D. - Educational level is grade equivalent of graduating senior (4) Texas Workforce Commission 126 4 EXHIBIT 1-16 CITY OF WICHITA FALLS, TEXAS PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO (UNAUDITED) SEPTEMBER 30, 2016 2015-16 2006-2007 Percentage Percentage of Total of Total City City Employer Employees Rank Employment Employees Rank Employment Sheppard Air Force Base 12,581 1 17.60% 12,887 1 16.93% North Texas State Hospital 2,071 2 2.90% 1,987 3 2.61% United Regional Health Care System 2,021 3 2.83% 1,800 4 2.37% Wichita Falls ISD 1,992 4 2.79% 2,000 2 2.63% Midwestern State University 1,315 5 1.84% 1,225 7 1.61% City of Wichita Falls 1,238 6 1.73% 1,615 5 2.12% Wal-Mart -3locations 1,140 7 1.59% 1,426 6 1.87% Howmet Corp. WF Casting Division 850 8 1.19% 1,000 8 1.31% James V. Allred Prison Unit 806 9 1.13% 990 9 1.30% United Supermarkets - 3 locations 778 10 1.09% - N/A - AT&T Wireless - N/A - 836 10 1.10% Totals 24,792 34.69% 25,766 33.85% Sources: 2006-2007 data is from Texas Workforce Commission. 2015-2016 data is from Wichita Falls Chamber of Commerce. 127 CITY OF WICHITA FALLS, TEXAS FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) 2006-2007 2007-2008 2008-2009 2009-2010 Administrative services 103.0 105.1 104.6 102.0 Police 294.0 293.0 294.0 295.0 Fire 162.0 164.0 164.0 164.0 Parks and recreation 75.8 82.9 82.9 84.8 Accounting/finance 24.5 25.5 26.0 26.0 Community development 40.7 40.5 41.0 40.1 Public works 80.2 80.2 80.8 80.8 Health 74.9 72.5 69.0 68.4 Traffic and transportation 52.6 52.6 50.6 51.7 Multi -Purpose Events Center 22.4 22.8 23.0 23.0 Water and sewer 179.5 179.5 179.9 180.1 Sanitation 81.0 82.0 82.5 82.5 Golf 19.4 - - - Municipal Airport 1.6 1.6 1.6 1.6 Kickapoo Airport 4.4 4.4 4.4 5.4 Transit 19.2 19.6 22.1 21.6 Stormwater Drainage 1.3 1.3 1.3 1.3 128 _m x W 7 O N L6 O N LO O (V O N ,I- C) N M O N M O N CV O N w O N O (V O N C7 O N O LO O N O LO r- O 00 (O M CO �1�- M 'It O N N O 00 00 f-- N 00 LSD , ',I- (O O O (D O N It f- I- m N 00 00 N N c e- O LO (D ,zj- O LO LO — M rl- LO O t I- O Lf7 O) N N CD — 00 I- (O N r-_ M , M M O O O (D O N It I- r- LO N 00 00 N N 7 O Ln — 0 0 LO r- — 00 — In (D It N 00 11- O N Nrl- N 00 00 (D N O cl) , M (D O O (D M 04-,:1- f- I-- LO N 00 00 N M LO LO O O O LO O (D w LO O Itrl- 00 O O (D O N V I- O LO N 00 00 CV N (D LO O Il- O O LO O CO M N LO (D (D N M M N D7 O M N M N O N ,- LO N r O M CO W N Itrl- r- Ln N M M N N O LO O Il- O O N LO O M (D M (O I- (D M (O N M M O O- N N M N , LO O M (O M N'IT r- r- LC) N I- 00 N N r CITY OF WICHITA FALLS, TEXAS OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) General government Building permits issued Building inspections conducted Police Physical arrests Parking violations Traffic violations Fire Emergency responses Fires extinguished Inspections Refuse collection Refuse collected (tons) Recyclables collected Library Volumes in collection Total volumes borrowed Water New connections Water main breaks Average daily consumption (thousands of gallons) Wastewater Average daily sewage treatment (thousands of gallons) Transit Total route miles Passengers 2006-2007 2007-2008 2008-2009 2009-2010 7,813 7,420 6,769 6,802 12,048 11,425 9,565 11,038 7,279 6,752 7,186 6,235 383 197 - 109 17,904 16,236 23,253 25,558 8,634 8,684 8,687 8,693 554 1,340 718 654 900 2,647 3,250 3,281 182,855 168,681 161,243 156,630 19,034 21,624 22,010 16,923 179,728 184,231 185,009 185,009 302,565 352,408 368,685 368,685 310 212 146 48 741 898 872 724 19,936 22,511 19,200 19,851 13,930 11,410 7,670 12,435 476,758 488,842 530,771 536,181 294,670 324,666 327,463 340,181 129 EXHIBIT 1-18 Fiscal Year 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 8,130 7,303 9,979 8,542 7,399 7,413 13,321 11,834 12,823 13,472 12,852 11,302 5,845 6,182 5,978 6,042 5,036 5,214 125 529 65 43 90 110 23,780 21,660 21,651 22,538 18,792 19,424 9,139 9,027 8,979 8,708 9,392 9,432 703 583 591 452 432 477 3,114 3,221 3,198 3,316 2,931 4,133 141,251 116,961 124,250 121,502 76,145 136,646 16,780 18,743 18,884 14,643 1,384 16,134 193,064 177,229 173,996 174,993 194,715 176,160 344,107 327,336 276,065 293,860 293,364 282,808 64 119 134 (344) 74 (2,523) 1,250 1,028 954 944 863 696 25,798 20,269 15,564 13,207 12,051 14,974 10,080 10,551 9,217 6,452 8,440 7,900 552,238 586,893 572,744 575,004 591,417 586,565 374,277 485,101 460,484 462,853 486,104 493,164 CITY OF WICHITA FALLS, TEXAS CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) 2006-2007 2007-2008 2008-2009 2009-2010 Police Stations 1 1 1 1 Patrol units 114 103 105 115 Fire stations 8 8 8 8 Refuse collection Collection trucks 34 36 36 36 Other public works Streets (miles) 587 515 529 514 Streetlights 7,922 7,976 8,203 7,958 Traffic signals 98 102 104 104 Parks and recreation Acreage 1,200 1,200 1,200 1,200 Playgrounds 47 47 40 39 Golf courses 1 1 1 1 Water Water mains (miles) 846 720 720 572 Fire hydrants 6,019 2,264 2,264 2,545 Storage capacity (thousands of gallons) 21,500 21,000 22,500 37,000 Wastewater Sanitary sewers (miles) 531 538 550 543 Storm sewers (miles) 96 117 117 97 Treatment capacity (thousands of gallons) 21,410 21,410 22,800 21,410 Transit Buses 12 12 12 14 130 EXHIBIT 1-19 Fiscal Year 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 1 1 1 1 1 1 114 114 113 113 113 113 8 8 8 8 8 8 36 36 36 36 36 36 514 515 515 515 515 530 8,084 7,931 7,942 7,972 7,996 8,015 104 104 104 104 104 104 1,200 1,200 1,200 1,200 1,200 1,200 39 39 39 39 39 39 1 1 1 1 1 1 572 577 578 579 580 806 2,547 2,579 2,588 2,588 2,593 2,842 37,000 37,000 37,000 37,000 37,000 37,000 543 545 546 547 548 599 97 97 98 98 98 98 24,410 24,410 21,410 21,410 21,410 21,410 14 14 14 14 13 13 (N/Cll� �I�g B/W,1Skies 4o�den O��o�tr die, Graphics i 100 90 80 IH, c O 60 E 50 N 40 O 0 30 20 10 0 2012 CITY OF WICHITA FALLS, TEXAS CASH AND INVESTMENTS I E:3 2013 2014 2015 September 30, 2016 (UNAUDITED) 131 EXHI BIT J - 1 200 150 O 100 L O r) 50 CITY OF WICHITA FALLS, TEXAS TOTAL BONDS PAYABLE September 30, (UNAUDITED) 132 2016 EXHIBIT J-2 20 15 O 10 cn L O M CITY OF WICHITA FALLS, TEXAS GENERAL OBLIGATION BONDS PAYABLE Qt;p CI11UCl OU, 2016 (UNAUDITED) EXHIBIT J-3 133 125 100 cn I` 0 75 E c cn 50 O r) OR CITY OF WICHITA FALLS, TEXAS REVENUE BONDS PAYABLE OtlyM II IUCI JU, 2Ulb (UNAUDITED) 134 EXHIBIT J-4 18 16 14 C O 12 E 10 C to 8 m O 6 n 4 CITY OF WICHITA FALLS, TEXAS GENERAL FUND EQUITY 5eptemoer ju, 1u,tj ❑Assigned/Committed ❑Unassigned (UNAUDITED) 135 EXHIBIT J-5 35 J 30 C 25 O E 2 C 0 L 15 O 0 10 - 5 N CITY OF WICHITA FALLS, TEXAS COMPARISON OF TAX LEVYAND COLLECTIONS LV ID OTax Collections ©Tax Levy 2016 (UNAUDITED) EXHIBIT J-6 ix Levy Collections 136 CITY OF WICHITA FALLS, TEXAS REVENUES BY SOURCE - FYE 9/30/16 Fines and forfeitures 90/ Taxes 40% Miscellaneous Contributions Intergovernmental 4% 3% 10% (UNAUDITED) 137 s for services 40% rises and permits 1% EXHIBIT J-7 Debt Ser 5% Capital Outlay 4% MPEC 2% Traffic and Transportatic 11% CITY OF WICHITA FALLS, TEXAS EXPENDITURES BY FUNCTION - FYE 9/30/16 Administrative Services 17% n r . Public Works 26% (UNAUDITED) EXHIBIT J-8 Fire 9% Parks and Recreation 4% Accounting/Finance 2% nmunity Development 4% 70 65 60 55 c 50 45 E 40 �. 35 N 30 O 25 20 1E 1( CITY OF WICHITA FALLS, TEXAS GENERAL GOVERNMENTAL EXPENDITURES (GENERAL FUND ONLY) Years tnaeQ JepiemDer ou, 2016 (UNAUDITED) EXHIBIT J-10 140 B/ct�Skies 40,12m crlrN'tc Nt 7