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2018 Comprehensive Annual Financial ReportTY OF'Comprehensive Annual TEXAS Financial Report Year Ended September 30, 2018 Circle Trail at Loop 11 CITY OF WICHITA FALLS, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2018 ISSUED BY: DEPARTMENT OF FINANCE CITY OF WICHITA FALLS, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2018 TABLE OF CONTENTS Exhibit Page INTRODUCTORY SECTION Letterof Transmittal................................................................................................................................ i-xi GFOA Certificate of Achievement........................................................................................................... xii OrganizationalChart............................................................................................................................... xiii Listof Principal Officials.......................................................................................................................... xiv FINANCIAL SECTION IndependentAuditor's Report................................................................................................................. 1-2 Management's Discussion and Analysis (Required Supplementary Information) .................................. 3-14 BASIC FINANCIAL STATEMENTS: Statement of Net Position...............................................................................................................A-1 15 Statementof Activities.................................................................................................................... A-2 16 Balance Sheet - Governmental Funds...........................................................................................A-3 17 Reconciliation of the Governmental Funds Balance Sheet to the Statement ofNet Position.............................................................................................................................. A-4 18 Statement of Revenues, Expenditures and Changes in Fund Balances - GovernmentalFunds....................................................................................................................A-5 19 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of the Governmental Funds to the Statement of Activities............................................A-6 20-21 Statement of Net Position - Proprietary Funds...............................................................................A-7 22-23 Statement of Revenues, Expenses and Changes in Net Position - ProprietaryFunds.........................................................................................................................A-8 24 Statement of Cash Flows - Proprietary Funds................................................................................A-9 25-26 Statement of Fiduciary Assets and Liabilities................................................................................A-10 27 Notes to the Financial Statements..................................................................................................... 28-69 REQUIRED SUPPLEMENTARY INFORMATION: Budgetary Comparison Schedule - General Fund.......................................................................... B-1 70 Schedule of Changes in Net Pension Liability and Related Ratios — Texas Municipal Retirement System............................................................................................ B-2 71 Schedule of Contributions — Texas Municipal Retirement System ................................................. B-3 72 Schedule of Changes in Net Pension Liability and Related Ratios — Wichita Falls Firemen's Relief and Retirement Fund................................................................... B-4 73 Schedule of Contributions — Wichita Falls Firemen's Relief and RetirementFund........................................................................................................................... B-5 74-75 Schedule of Changes in Net OPEB Liability and Related Ratios — City of Wichita Falls Retiree Health Care Plan............................................................................. B-6 76 Schedule of Contributions — City of Wichita Falls Retiree HealthCare Plan.......................................................................................................................... B-7 77 Notes to the Required Supplementary Information........................................................................... 78-79 CITY OF WICHITA FALLS, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2018 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 Agency Fund: Statement of Changes in Assets and Liabilities........................................................................ F-1 Component Units: Combining Statement of Net Position........................................................................................G-1 Combining Statement of Activities.............................................................................................G-2 SUPPORTING SCHEDULES: Combined Schedule of Bonded Debt and Interest Maturities.........................................................H-1 Combined Schedule of Bonds Payable.......................................................................................... H-2 Debt Service Coverage — Revenue Bonds.....................................................................................H-3 Capital Assets Used in the Operation of Governmental Funds - Schedule By Function and Activity............................................................................................... H-4 Capital Assets Used in the Operation of Governmental Funds - Schedule of Changes By Function and Activity............................................................................ H-5 Regional Airport Fund — Capital Assets and Accumulated Depreciation........................................H-6 Kickapoo Airport Fund — Capital Assets and Accumulated Depreciation ....................................... H-7 Transit Fund — Capital Assets and Accumulated Depreciation...................................................... H-8 Stormwater Drainage Fund - Capital Assets and Accumulated Depreciation ................................ H-9 Sanitation Fund — Capital Assets and Accumulated Depreciation ................................................ H-10 80 81 82 83 84 85 86 87 88 89 90 91-92 93 94 95 97 98 99 100-105 106 107 108 109 110 111 112 113 CITY OF WICHITA FALLS, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2018 TABLE OF CONTENTS (CONT'D.) Exhibit Page Water and Sewer Fund — Capital Assets and Accumulated Depreciation ..................................... H-11 114 Waterpark Fund — Capital Assets and Accumulated Depreciation ................................................ H-12 115 Fleet Maintenance Fund — Capital Assets and Accumulated Depreciation ................................... H-13 116 Duplicating Services Fund — Capital Assets and Accumulated Depreciation ................................ H-14 117 Information Technology Fund — Capital Assets and Accumulated Depreciation ........................... H-15 118 Wichita Falls Economic Development Corporation — Capital Assets and Accumulated Depreciation........................................................................................................... H-16 119 STATISTICAL SECTION (UNAUDITED) Net Position By Component — Last Ten Fiscal Years..................................................................... 1-1 120 Changes in Net Position — Last Ten Fiscal Years.......................................................................... 1-2 121-122 Fund Balances, Governmental Funds — Last Ten Fiscal Years ..................................................... 1-3 123 Changes in Fund Balances, Governmental Funds — Last Ten Fiscal Years .................................. 1-4 124 Tax Revenues By Source, Governmental Funds — Last Ten Fiscal Years .................................... 1-5 125 Assessed and Estimated Actual Value of Taxable Property — Last Ten Fiscal Years .................... 1-6 126 Direct and Overlapping Property Tax Rates — Last Ten Fiscal Years ............................................ 1-7 127 Principal Property Taxpayers — Current Year and Nine Years Ago ................................................ 1-8 128 Property Tax Levies and Collections — Last Ten Fiscal Years ....................................................... 1-9 129 Ratios of Outstanding Debt by Type — Last Ten Fiscal Years ....................................................... 1-10 130 Ratios of General Bonded Debt Outstanding — Last Ten Fiscal Years ......................................... 1-11 131 Direct and Overlapping Governmental Activities Debt................................................................. 1-12 132 Computation of Legal Debt Margin — Last Ten Fiscal Years......................................................... 1-13 133 Pledged Revenue Coverage — Water and Sewer Revenue Bonds — LastTen Fiscal Years.................................................................................................................. 1-14 134 Demographic Statistics — Last Ten Fiscal Years........................................................................... 1-15 135 Principal Employers — Current Year and Ten Years Ago.............................................................. 1-16 136 Full -Time Equivalent City Government Employees by Function/Program — LastTen Fiscal Years.................................................................................................................. 1-17 137 Operating Indicators by Function/Program — Last Ten Fiscal Years ............................................. 1-18 138 Capital Asset Statistics by Function/Program — Last Ten Fiscal Years ......................................... 1-19 139 Graphics: Cashand Investments............................................................................................................... J-1 140 TotalBonds Payable................................................................................................................. J-2 141 General Obligation Bonds Payable........................................................................................... J-3 142 Revenue Bonds Payable........................................................................................................... J-4 143 GeneralFund Equity................................................................................................................. J-5 144 Comparison of Tax Levy and Collections................................................................................. J-6 145 Revenues by Source — FYE 9/30/18......................................................................................... J-7 146 Expenditures by Function — FYE 9/30/18.................................................................................. J-8 147 General Governmental Revenues (General Fund Only)........................................................... J-9 148 General Governmental Expenditures (General Fund Only) .................................................... J-10 149 Introductory Section FINANCE DEPARTMENT March 27, 2019 The Honorable Mayor, Members of the City Council, City Manager and Citizens of Wichita Falls, Texas 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, 2018. 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, 2018, 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 (SAFB), which operates the Euro-NATO jet pilot training program. The city's major university is Midwestern State University (MSU). 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 (MPEC), which includes a coliseum, exhibit hall, and an agricultural arena/show barn. The 2018 population for Wichita Falls, as estimated by the City, is 104,747, 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 Metropolitan Statistical Area (MSA) houses a robust manufacturing sector, with many companies having employment in excess of 100 persons. This sector of the economy generates almost $304 million in annual payroll, representing approximately 9% of total employment within the city, and accounts for more than $1.5 billion in gross sales annually. Wichita Falls is also a nexus of international investment. Canadian and Mexican companies call Wichita Falls home. The city is the economic hub of a 60-mile radius trade area, populated by an estimated 437,417 people. Of that population, an estimated 194,517 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, restaurants and hotel/motels have located in Wichita Falls over the last five years. After suffering four plant closings and the loss of 1,200 jobs as a result of the 2008 recession, Wichita Falls has seen remarkable growth. Since that time, efforts were made to nearly double the economic development marketing campaigns — social media marketing, community -wide branding, target industry marketing efforts and a public relations campaign. Additionally, the City and the Wichita Falls Economic Development Corporation (WFEDC) has been aggressive in attracting new companies and helping local companies to expand over the last eight years in granting economic development incentives for primary job creation. From 2010 through 2018, 46 projects have been approved for incentive funding totaling $47,809,413 with the potential for creating and/or retaining over 6,512 jobs. Several of these projects have invested in the local economy resulting in the addition or retention of hundreds of jobs including companies such as Pratt & Whitney Component Repair, Vitro Architectural Glass, Arconic, Cryovac/Sealed Air, USA800, Eagle Rail Car Services, and many others. During the 2018 calendar year, the Wichita Falls Economic Development Corporation (WFEDC) supported numerous economic development projects totaling $5,987,520: • Comprehensive Economic Development Strategy — One of the City Council's top strategic goals is to accelerate economic growth. An objective to accomplish that goal was to collaborate on a comprehensive economic development strategy. In early 2017, the WFEDC and 4B Sales Tax Boards selected a nationally recognized firm to prepare this strategy. The project established an Economic Development Steering Committee consisting of 25-30 leaders from representatives of the City, County, 11 WFEDC, 4B Sales Tax Board, WFISD, MSU, SAFB, and a few industries and local businesses. The work was separated into six phases: project initiation and stakeholder engagement; a regional assessment and development of scorecard; target sector analysis and marketing review; development of the strategy; implementation of the plan; and a one-year implementation assessment. The plan was completed in early 2018 and implementation has begun. It is anticipated that the consulting firm will be back in the Fall of 2019 to assess how well the plan is working. The cost of the study was $183,500, and both the WFEDC and the Wichita Falls 4B Sales Tax Corporations shared equally with $91,750 of the cost of the study. Sheppard AFB Installation Main Gate Upgrades Project — Sheppard Air Force Base (SAFB) has plans to make extensive revisions to the main gate to the Base, known as Sheppard Gate. These modifications are principally designed to address Unified Facilities Criteria (UFC), in the area of Anti- Terrorism/Force Protection guidelines. This proposed Main Gate Upgrade Project will deliver necessary improvements to safeguard the installation against outside threats and will ensure the safety of airmen, civilians, and support personnel on base. Upgrades will include traffic calming measures by adding curves to inbound/outbound lanes, speed humps, and channelization islands. An additional inbound lane will improve queuing capacity within the Entry Control Facility and reduce traffic congestion past the Burkburnett Road/Sheppard Access Road intersection. Placement of guard booths at the channelization islands will allow for greater efficiency in ID checks and vehicular denial, while also providing additional safety measures for Security Forces personnel. The cost estimated to complete the project is $8.7 million. SAFB has a total of $5.7 million available from grants, and the remaining funds are expected to come from a $1.5 million State DEAAG Grant and $1.5 million of WFEDC funds. • Eagle Rail Car Services Project Phase III) — Eagle Rail Car Services began operations in Wichita Falls at new facilities located at the former Vetrotex/Certainteed plant in September of 2014. The WFEDC provided incentives in two previous phases in return for the creation of 124 jobs. The company met those requirements and has invested in excess of $15 million in the Wichita Falls facility. In late 2018, the WFEDC approved an additional $500,000 in equipment and cash for jobs if the company creates and maintains an additional 3 2 job s . Owens Corning Technical Fiberglass Project. Owens Corning has two facilities that manufacture technical fiberglass fabric in the United States, (Wichita Falls, Texas, and Brunswick, Maine). Neither plant is currently competitive, primarily because the company doesn't have enough business to justify two sites. Due to incentives offered by the WFEDC, Owens Corning's management gave approval to consolidate the two facilities in Wichita Falls through an expansion of their existing plant at 210 Randy Drive/2401 Burkburnett Road in Wichita Falls. It is anticipated that approximately $12 million of capital investment will be made at the site and a total of 52 net new full-time positions will be created. The total WFEDC economic development incentive is $1,545,000, consisting of a 10-year forgivable loan of $820,000 to assist with equipment purchases, $500,000 in cash for jobs created and retained, and $225,000 in training funds. Operating Expenses Related to Ownership of the former ATCO Structures Property at 2400 Burkburnett Road and former Stanley Tools Building at 2800 Production Blvd. Each year, operating expenses for buildings owned by the WFEDC are needed while these properties are being renovated and prepared for the market. Due to environmental concerns with the ATCO site, a total of $105,000 was approved to pay utilities, insurance and maintenance costs while the environmental issues are being addressed. Similarly, the WFEDC owns the former Stanley Tools Property and has spent approximately $2.6 million renovating that property for a potential economic development project. While this renovation work and marketing efforts are in progress, the WFEDC Board budgeted $100,000 to pay for routine operating costs at the site. Braun Intertec Services Phase II Environmental Study and Affected Property Assessment Report at 2400 Burkburnett Road. Braun Intertec conducted a Phase II Environmental Study of the former ATCO Structures property at a cost of $55,000. They conducted twelve borings and installed monitoring wells to collect data over time. They then completed a written report of the environmental contamination along with a cost estimate to remediate the problems. The WFEDC Board then approved an additional $91,770 for Braun Intertec Services to prepare an Affected Property 111 Assessment Report. In that report, they are proposing to enroll the site in the TCEQ's Voluntary Cleanup Program in pursuit of a Certificate of Completion (COC) that can be utilized by a future landowner. Groundwater monitoring wells are also proposed in efforts to delineate the on -site chlorinated groundwater contaminant plume identified during the previous investigation. In addition, the field efforts include certain requirements by the Texas Risk Reduction Program to complete an Affected Property Assessment Report (APAR), such as conduct a pump test to characterize the aquifer, conduct a 500-foot Receptor Survey, obtain a 0.5 mile drinking water well report, and other ancillary efforts. They will also sample the pre-existing wells to determine plume stability. Part of that sampling effort will include collection of natural attenuation parameter data that will help them determine what the potential degradation pathways are, and may help identify differences in source plumes. The APAR will incorporate all of these data and the resulting APAR will be submitted to the TCEQ Voluntary Cleanup Program towards the effort of obtaining site closure. Workforce Recruitment Program by Sharp Iron. Sharp Iron signed a contract with a customer that resulted in a large demand for skilled Welding Technicians and Assembly Technicians. However, they were finding it difficult to locate and hire welders in the Wichita Falls MSA. Therefore, the WFEDC Board approved $30,000 to incentivize talent from outside of Wichita County through the Tulsa Welding School (TWS). Tulsa Welding School is one of the nation's top welding schools. With these funds, Sharp Iron is able to provide an additional $3,000 sign -on bonus and relocation stipend per employee recruited to Wichita Falls under the conditions that the employee to be relocated from outside Wichita County, establish residency in Wichita County, and remain employed in Wichita County a minimum of 6 months. The WFEDC Board approved $24,000 for the 8 positions needed by the company. Nexstar Manufacturing. A new company called Nexstar Manufacturing was established under a lease agreement at 307 Mississippi (the former Lone Star Tool facility). NexStar has begun operations by focusing its offerings in two main sectors: (1) construction manufacturing and (2) oil & gas. Examples of the types of products the company will build include: skids, weldments for heavy construction, waste and water containers, gas production units' separator packages, vertical and horizontal treaters, vertical / horizontal, high and low-pressure separators, indirect line heaters / oil line heaters, gas production units, gas dehydration units and vertical and horizontal filter separators. The total project cost is expected to be $765,000 and the company has plans to create 94 jobs by the end of 2022. The WFEDC economic incentive package totals $175,000 for the creation of 25 jobs and will consider additional incentives if/when the company expands. • Arconic Wichita Falls Improvements to Railroad Tracks on Bacon Switch Road. This project includes the reconstruction of the rail crossing and approaches on Bacon Switch Road that services both the Arconic and Vitro Architectural Glass plants. The WFEDC approved $50,000 to pay the railroad for the materials to renovate the crossing, the railroad is providing the labor, and Wichita County will improve the approaches to the crossing. Cryovac Sealed Air. Cryovac is considering new capital investments in the Wichita Falls plant that could anchor Sealed Air/Cryovac plants in their North Texas locations. A new roof, estimated at $2.5 million dollars; a new parking lot and other improvements, with costs yet to be determined, will be added to the Wichita Falls plant. The WFEDC incentives are based on a $1,250,000, No Interest, Forgivable Loan to the company for a period of seven years for the acquisition of a "Vision System" that will be used in conjunction with their printers to inspect the quality of print being placed in their labels, and one Uninterruptable Power Supply (UPS). The WFEDC would require a first lien position on this equipment. For each year that the company creates and maintains 450 jobs at the two regional plants, the loan would be forgiven at the rate of 14.29% per year. At the end of year seven, the company would own the equipment outright. If the company is unable to create and maintain the jobs specified, the amount of the loan not already forgiven would be repayable to the WFEDC. • Magic Aire. Magic Aire is establishing a new business line to service replacement coils for a multinational HVAC manufacturer. This new coil business would increase the current coil volume produced at Magic Aire by approximately 50%. Magic Aire proposes to establish this new business over a 3-year phase -in period, beginning in May/June 2018, due to the complexity and diversity of the product package, as well as new equipment required of Magic Aire to meet capacity and cost 1V requirements. The WFEDC Corporation approved a 7-Year forgivable loan for $500,000 to purchase equipment for this project and to create 20 additional positions. Additionally, the Wichita Falls 4B Sales Tax Corporation (413 Corporation) provided economic development incentives during the 2018 calendar year primarily to help meet the City Council's goal of redeveloping downtown. Over the past year, 5 Downtown Improvement Grants were approved through the $5,000 matching grant program, for a total of $23,043. These grants are typically used for existing business that need help improving their property for such things as sidewalks, facades, awnings, landscaping, lighting, signage, windows, paint, etc. The 4B Corporation also approved 5 projects for new developments in the downtown area totaling $215,721. These projects are summarized below: ARP Brown Building, LLC for a renovation project at 901 Ninth Street. The current owner of the Brown Building at 901 Ninth Street, was awarded $122,805 to install a fire suppression and alarm system in the building for the construction of 10 upscale apartments in the building at 901 Ninth Street. This project, is expected to cost $1,2501,000 and will include one 870 square foot apartment on the first floor and nine apartments on the second floor ranging from 472 square feet to 920 square feet. The funds were approved as a five-year forgivable loan with payment being made upon receipt of the Certificate of Occupancy. The approved funds would be released after the owners have operated the building as intended for a period of 5 years such that 20% of the loan is forgiven at the end of each year of successful operation. Downtown Wichita Falls Development, Inc., for Repair and Upgrades to the Wichita Falls Farmers Market. The City of Wichita Falls owns the Farmers Market at 8th and Ohio and the management and oversight of the facility is addressed through a lease agreement with Downtown Wichita Falls Development, Inc., (DWFD). Pursuant to that lease agreement, the DWFD is responsible for all utilities and operational costs, and minor maintenance expenses that are less than $400. However, capital improvements are the responsibility of the City. The DWFD was awarded $20,916 to make lighting, HVAC, electrical, bathroom and other plumbing, and irrigation system improvements at the facility. Upstate Ireland, LLC for Historical Preservation and Infrastructure Improvements at Property Located at 614 Seventh Street. The 4B Board awarded a five-year forgivable loan for $22,000 to Upstate Ireland LLC to restore the historic building at 614 Seventh Street to be used as a retail establishment, yet to be determined. This building has been vacant since 1995. The $22,000 is 10% of the estimated renovation/construction cost for the project. Museum of North Texas History for an Interactive Children's Exhibit. The Museum of North Texas History has plans to redevelop an unused office area of the museum into an interactive children's exhibit. Specifically, the cost of the project is estimated to be $122,000 to develop an 18' X 14' office space into several exhibits such as a Chisholm Trail Wall and Interactive, Donation Box, Aviation Reading Area, Interactive Plane, Aviation Lightbox Wall, Interactive Lightbox Plane, Oil and Gas Wall and Interactive, Photo Op, and Character Puzzle. The Museum was awarded $25,000 from the 413 Corporation. • Historical Preservation and Infrastructure Improvements at Property Located at 600 Sixth Street. The 413 Board approved $25,000 as a five-year forgivable loan to the owner of this property to restore the historic building at 600 Sixth to be used as a Texas Winery and Tasting Business. The $25,000 is 10% of the estimated renovation/construction cost for the project of $254,175. Full -Service Hotel/Conference Center Project. For the past 3 years, the City has been working with hotel developers to design and build a full -service hotel and conference center to be located on the grounds of the City's Multi -Purpose Events Center. During that time, the 4B Corporation has spent approximately $700,000 in pre -development costs such as a conceptual plan, a third party market and econometric study; conceptual architectural drawings; conceptual development and construction budgets; term sheets from the hotel brand and management firm; an outline of the proposed capital and operating financing structure, and establishment of the proposed professional development team. The conceptual plan resulting from this initial work identified a project consisting of a public -private partnership between the City/4B Corporation and the developer in the construction and operation of a MA 150-room full -service hotel with approximately 12,000 square foot of conference space. Work continues on this project and is conceptualized to be paid for through a large private investment and a forgivable grant from the 413 Corporation for the hotel, 413 Revenue Bonds for the conference center space, and other local tax incentives such as property tax abatement, sales tax rebates, and hotel occupancy tax rebates. Market and Econometric Studies show that this project, if completed, will provide needed hotel space to complement the Multi -Purpose Events Center and generate approximately $75 million in economic impact to the community over a ten-year period. 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 with several new businesses or relocations occurring in the downtown revitalization emphasis of the City. The value of construction permits is also an indication of economic activity in the community. Residential permits totaled $32,733,954 during the 2017-18 fiscal year, which is a decrease of $213,525, or 0.65% from the prior year. However, the value of commercial construction permits totaled $84,988,771, which is an increase of $14,151,863, or 19.98% above the prior fiscal year. 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: • United Regional Health Care - a total of 38,800 sq. ft. with an estimated value of $7,500,000. • Cascade Villa Apartments - a total of 79,917 sq. ft. with an estimated value of $2,128,000. • ONCOR - a total of 10,947 sq. ft. with an estimated value of $1,954,000. • Production Machine and Tool - a total of 20,000 sq. ft. with an estimated value of $1,800,000. • United Regional Health Care - a total of 10,000 sq. ft. with an estimated value of $1,640,500. Another indicator of local economic performance is the retail sales tax. During the 2017-18 fiscal year, the City generated $31,814,686 in retail sales taxes, which was $1,930,157, or 6.56% more than in the prior fiscal year. MAJOR INITIATIVES For The Year. In October 2017, the City Council continued to address a strategic goal to "Redevelop Downtown" by hiring a professional services firm to evaluate the needs for revitalization of the area and to make recommendations for improvements. The study was conducted and a final report was made to the City Council in late 2018. The cost for the study was $149,000 and was paid for with 4B Sales Tax funds. City staff and several downtown groups are working on implementation of the recommendations outlined in the study. Another strategic goal of the City Council is to "Provide Adequate Infrastructure", with three objectives: 1) Plan for Future Infrastructure Bond Elections; 2) Complete Signature Public Improvements; and 3) Replace City Hall. To that end, the City staff established a Public Infrastructure Committee representing every City department to review our capital improvement project needs, develop costs estimates for those projects, and to prioritize the importance of those projects. That committee work was presented to the City Council at their Planning Sessions in January 2018 to discuss a future bond election to finance the highest priority projects. After that discussion, the City Council identified 29 projects at $131 million to be considered for a bond election to be held in May 2018. These projects were classified under 9 propositions for the voters to consider. Unfortunately, only 1 of the 9 propositions was approved ($17.3 million in Street improvements). This $17.3 million was issued though a General Obligation Bond and the proceeds are designated for the extension of Maplewood Avenue from Lawrence Road to McNeil Avenue (estimated at $1.6 million), widening of Taft Boulevard from FM 369 to FM 2380 (estimated at $4.7 million), and routine capital street repairs throughout the Vl city limits (estimated at $11 million). The projects that were not approved by the voters remain listed in the City's Capital Improvement Plan and will be addressed as alternative funding sources are identified. During the 2017-18 fiscal year, the Information Technology Department and Finance and Human Resources staffs began implementation of new Finance and Human Resources software applications with technology that integrates with the new Utility Billing and Collections and Municipal Court systems. When this project is complete, Finance, Budgeting, Payroll, Human Resources, Utility Billing and Collections and the Municipal Court Systems will be provided through a fully -integrated product supplied by one vendor. The cost of the new systems was approximately $840,000 for the Finance and HR applications and is being paid for with funds earmarked for the project in the Information Technology Fund. This project was expected to require approximately 18 months to complete, and it is nearing completion. In May 2017, bids were awarded for the Hike and Bike Trail from Wichita Bluffs to Loop 11 and construction began in the early part of the 2017-18 fiscal year. This project is generally described as the construction of a concrete hike and bike trail from the Wichita Bluffs Nature Area to Loop 11 with a parking lot, and associated work. This project is the second of three phases in connecting the Circle Trail along Seymour Highway to Lucy Park. The cost of the project was approximately $1.5 million, 80% of which was paid for with TxDOT & the FHWA's Transportation Alternatives Program (TAP). The City's 20% share of the costs were funded through the 4B Sales Tax Corporation and other Special Park Revenue Funds. The trail is now complete and has been accepted. The City also refinanced approximately $6.2 million of outstanding Certificates of Obligation as General Obligation Bonds that will be fully repaid in October 2028. This refinancing resulted in total debt service savings over the remaining life of the bonds at $670,000. This savings will accrue mostly to the 413 Sales Tax Corporation, but also lowers annual debt service paid from property taxes and proceeds from a contract with the West Texas Utilities Company. During the year, the City Council approved an energy savings contract with Ameresco Incorporated in the amount of $2.9 million to install LED roadway lighting fixtures with a performance guarantee that the annual savings in energy and operational costs will be sufficient to pay for the system over a 15 -year period. The project is nearly complete and anticipates the replacement of 5,727 street light fixtures. These fixtures have life expectancy of 20 years. The City financed the capital cost for the project through a 15 -year lease/purchase agreement and the project is guaranteed to save the City a minimum of $1.25 million over that 20-year period. In addition to operational cost savings, other benefits of LED's include lower maintenance expense, improved lighting output, and reduced carbon emissions. The City also entered into a 5-year lease/purchase agreement in the amount of $414,000 to complete the purchase of a new Traffic Signalization Communication System. The total cost of the system was $544,000, but $130,000 was cash financed with funds available in the Traffic Division's budget. This system replaced the prior one that was no longer repairable. Additionally, this newer technology will provide much better communication controls. In May 2018, the City Council awarded a bid and contract for the construction of a new Wastewater Collection's Office and Equipment Storage Facility. The existing facilities were becoming dilapidated and repairing them was not cost effective. The cost of this facility, including design costs, totaled just slightly over $1,04500. The facility is now complete and fully operational. In July 2018, the City completed Phase I of the Kemp/Monroe Drainage Project. The total cost of the system was financed with cash available in the Stormwater Drainage Improvement Fund in the amount of $4,203,000. The system consisted of a complete drainage system including curb inlets, box culverts, detention pond with outlet structure, utility relocations, concrete paving and related work. For The Future. The City Council recently awarded a contract for Phase II of the Kemp/Monroe Drainage Project. This project is a continuation from Phase I, and is generally described as the construction of an underground drainage system, inlets, street rehabilitation, utility relocations, and associated work improving the storm water drainage in the area. The overall project will eliminate the nuisance flooding of Kemp Street at Avenue M and will V11 further protect 35 homes from a 100-year rain event. It will also reduce the flood water depth in Monroe Street from approximately 4 feet to 1.3 feet during a 100-year event, allowing for access of emergency vehicles. The total cost for this contract is $4,112,000 and is also being financed from available cash in the Stormwater Drainage Improvement Fund. Although several of the propositions for public infrastructure improvements failed at the May 2018 election, the 2018-19 budget for the 4B Corporation, includes funds to address a few of the projects that were on the ballot: TAP Grant Match (Circle Trails)..The City has received a grant from TxDOT through the Transportation Alternatives Program for three circle trail projects: (1) Loop 11 to Lucy Park; (2) Seymour Highway to Barnett Road; and (3) Lake Wichita from Fairway to Marina. These trail projects will complete 3 of the last 4 sections of the entire 26-mile loop and are very high priorities of the City. The grant provides for 80% of the cost to construct the trails and the City must provide the remaining 20%, plus design costs. There are also some advanced funding amounts the City must pay to TxDOT that will be reimbursed once the projects are completed if the funds aren't needed. These three grants total $5,432,531 and the City's required funding amount is $1,547,898. These projects must be under construction by October 2020, so the City is proposing to spread these projects over three fiscal years. The 4B Corporation was asked to provide these matching funds over the next three budget years. In the 2018-19 budget, $675,560 was approved to construct the section from Loop 11 to Lucy Park, and advance funding amounts for the other two projects that need to be made in 2018-19. It is anticipated that the 4B Corporation will assist in the remaining matching funds for these projects in subsequent budgets. • MPEC Facility Projects: The 413 Corporation also approved funding in the amount of $230,000 to address two of the numerous building maintenance/improvement projects for our MPEC facilities: (1) LED Lighting in the Coliseum; and (2) Restroom Renovations in the Exhibit Hall. The City staff also continues to work with the architectural firm of Bundy, Young, Sims and Potter on a Restoration and Feasibility Evaluation of the City Hall/Memorial Auditorium. This project was separated into two phases: 1) Feasibility Study; and 2) West Wing Stabilization. The Feasibility Study included a comprehensive evaluation of the facility conditions of the City Hall/Memorial Auditorium Building, a current and projected needs assessment of the existing City Hall offices, and conceptual design options for the renovations, restoration, and/or additions to the existing building. The West Wing Stabilization effort was an analysis of the structural stabilization of the West Wing of the building and basic A/E services for the design and construction contract administration for the project selected to stabilize that portion of the building. This study has been completed and it is anticipated that approximately $500,000 will be needed to stabilize the West Wing and it identified two options for complete renovation of the facility and one option to build a new facility. All three of these options are in excess of $30 million to complete. The City entered into a professional services agreement for the design of the Holliday Creek Sanitary Sewer Trunk Main Rehabilitation Project. The City's overall wastewater collection system is comprised of a gravity collection system with numerous lift stations throughout the city. Collection system piping ranges from 6 inches in diameter up to 48 inches in diameter. Approximately 75% of all the wastewater eventually flows into the large diameter collection piping located in the bottom of Holliday Creek and empties into the River Road Resource Recovery Facility. Due to the importance and location of this large collection piping, it is imperative that failure of this pipe be prevented. This large diameter pipe was designed and installed during the construction of the Holliday Creek Flood Control Project in the mid-1980's and is approaching 40 years of age. Over time, the sewer gases have deteriorated some of the pipe to the point that the reinforcing steel is exposed. This project is needed to eliminate the possibility of a failure in this line. The project cost is estimated to be $3.6 million with funding for the project to come from bond funds remaining from the Indirect Potable Reuse Project and the Direct Potable Reuse Project. Recently, the City in conjunction with Rolling Plains Management Corporation, applied for, and received nearly $10 million in a grant award from the Federal Transit Administration (FTA) Section 5339 Buses and Bus Infrastructure Investment Grant Program to design and construct a bus maintenance and repair facility. The current facility was completed in 1984, and it is located in the Central Services Complex. Given the expansion of route services over the years and an increase in the number of buses owned by the City, the Public Transportation Division has outgrown its current location. Additionally, Rolling Plains Management Vlll Corporation has a need for these services and desires to enter into a joint venture agreement to construct this facility to accommodate both organizations. The planned location for this facility is 2004 Old Windthorst Road, which currently houses an old fire station used by the City's Radio staff, as well as 7 acres to the south and west of this building. As this project moves forward, the old fire station will be demolished and the radio staff will move into the Central Services Complex on Seymour Highway. Once the project is complete, the proposed facility will include the following: • Wichita Falls Transit System administrative offices • Rolling Plains Management Corporation administrative offices (funding secured by their staff through TxDOT) • Shared -use facilities to include dispatch, restrooms, locker room, break room, conference room, and wellness room to be built as part of this grant application • Administrative space to accommodate social service organizations • Repair/Maintenance facility with seven pull -through bays • Bus Wash facility • Fueling facilities to accommodate both diesel and unleaded • Covered parking for buses • Parking to accommodate 60 buses The City's Lake Wichita Revitalization Committee and City staff are using approximately $400,000 of privately raised funds for professional design and construction oversight services for three shoreline improvement projects at Lake Wichita. The plan for revitalization of Lake Wichita includes the development of a Boardwalk/Pavilion, Kemp Street Boat Ramp and Seawall, and a Veteran's Memorial Plaza. It is anticipated that the Boardwalk/Pavilion will be designed and ready for bidding in April 2019, with the other two projects being ready to bid in September 2019. This timeline, however, assumes that the additional private funds are raised to complete the construction work. At present, the City has received a grant from the Texas Parks & Wildlife in the amount of $499,536 for the Boardwalk/Pavilion Project, with a project cost estimate of $1,890,000; a grant from the TP&W in the amount of $499,680 for the Kemp Street Boat Ramp and Seawall, with a project cost estimate of $2,305,000; and private pledges have been received for the Veteran's Memorial Plaza in the amount of $725,000, with a project cost estimate of $2.4 million. If these private funds are not raised, the City will either be required to scale the projects down considerably, raise the public funds, or consider allowing the grant funding to be reallocated by the State. The City Council recently authorized a professional services agreement to an engineering firm in the amount of $385,000 to develop a Sewer System Master Plan. The City of Wichita Fall's wastewater collections system is comprised of 570 miles of sewer collections mains, 51 lift stations, and over 5,300 manholes. The pipe materials are vitrified clay, concrete, and PVC with some of the collection piping being 100 years old. The last update to the sewer collection system master plan was performed in 1999 and primarily focused on constructing large diameter mains to divert flows from the south and western sections of the city to a new treatment facility located near the Tanglewood subdivision. Since 1999, there have been several events that have rendered the exiting master plan obsolete. The primary focus of this plan will be to evaluate the existing collections system for hydraulic deficiencies and develop a capital improvement plan for these areas. It will also evaluate several sectors of the city which have been, and are expected to see continued growth. The plan will identify and recommend how to best service these areas as the collection system expands to accommodate the new growth. In October 2018, the City Council awarded a project to TriTech Software Systems in the amount of $1,350,000 to provide installation services and software necessary to implement the City's Computer Aided Dispatch, Police Records Management, and Police/Fire Mobile System. This integrated system of applications are the primary applications used for public safety departments. The prior system was reaching its end of life and that vendor did not have a clear path forward for upgrading to their product. The cost of this project was planned for in the budget and will be paid for with funds available within the Information Technology Service Fund. Work on implementation is beginning and is expected to require 18 months to complete. 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; 1X 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. 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, 2018, 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. If funds fall below these percentages, plans are to be put into place to replenish fund balance. These financial statements reflect that the policy has been followed in the General Fund, Water/Sewer Fund, and the Sanitation 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, 2018, the City's tax supported debt was approximately $55.2 million, which is 1.12% of the taxable value of property, and $527 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, 2017. This was the 23rd 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 x 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. X1 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Report49 ing Presented to City of Wichita Falls Texas For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2017 Executive Director/CEO XII z W C7 Q Lu p LU C7 p U J W O v i U O cn Q T m Z I j Z WLU 2 LU Z H z - W W 3 p a Q in O w Q Q t w O w LU > ~ p cn i w z Z ~ w 2 U LU LU w z a of O p aQ °z COL a a ¢ (D L inc Z ti LU 2 � O G J Q Z Q p Z _O w r O W \ J m d Q ~ Z > W l l u cn r 2 w j J N acu G> \ cn LU Y�_Z LU r y W �, 2 Q LU k „H �o" f; � ; Q LUC Q J H H < Z = U U J W m c J f w Z Co LU(7 a a p Z LUf; Z f, f,' w 1 LU w f, Y LU U z ti f co ti a a G k W Nz f; If Z Z F- O Q H Q F{ Z Q ti U¢ — i Co 0 O i> k J LUa oC U Z m LU LU N w p Q w � { i Z LU U w W Q LL Q oC Q i O Q z O m O w IZ w i p �/� V J z w � � Q °C ~ 11 Q arc � w Q k zz0 O Q a O z cn Q J a � w p a Z W�� LI)z a Q ,,,,F r z a= ° f Qof � NLn z LL V I I 0 a Of LLLu oQc z - aJ a �t1 LU w J V CLU 7 W j E% O w z ( aO N Q LL. 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O r } w ~ Z O (D U Z Q OJ O mcr = LU ; U- LU w b (D T Q r D Z LU r Lu z _O z k cc Z j Q re O f LU J d z 1 m LU LUd p Z z Z Q W r Ln< N Q Z a G w d j LU p J H I z O D U ti w C a LU W p r { Z (7 ' Wc ., W G i cn C7 a Q p O 2 { Z oC LU Q w LUU Lu j U f, co> c Y W C of G W W LU U CITY OF WICHITA FALLS, TEXAS LIST OF PRINCIPAL OFFICIALS SEPTEMBER 30, 2018 Title Name Mayor Stephen Santellana Mayor Pro-Tem Deandra Chenault City Council Member Eric West City Council Member Jeff Browning City Council Member Brian Hooker City Council Member Jesse Brown City Council Member Mitesh Desai City Manager Darron Leiker City Attorney Kinley Hegglund Municipal Court Judge Larry Gillen City Clerk Marie Balthrop Deputy City Manager Jim Dockery Assistant City Manager Paul Menzies 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 Public Works and Public Utilities Russell Schreiber AV Financial Section Independent Auditor's Report EDGIN, PARKMAN, PEENING & FLEMING, PC CERTIFIED PUBLIC ACCOUNTANTS 4110 KELL BLVD., SECOND FLOOR P.O. Box 750 MICHAEL D. EDGIN, CPA WICHITA FALLS, TEXAS 76307-0750 DAVID L. PARKMAN, CPA PH. (940) 766-5550 ■ FAx (940) 766-5778 A. PAUL FLEMING, CPA Independent Auditor's Report on Financial Statements The Honorable Mayor and Members of the City Council City of Wichita Falls, Texas 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, 2018, 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, 2018, 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. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued under separate cover our report dated March 27, 2019, 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, A 'go -MO." 1k -% q I �Jc t*" I &3�1 * LA�wb Edgin, Parkman, Fleming & Fleming, PC March 27, 2019 Management Discussion and Analysis FINANCE DEPARTMENT got NZIESSIMUNIM City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2018 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, 2018. 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, 2018, by $376,000,504 (net position). The net position for the City decreased by $797,418 over the prior year. This decrease is a result of an increase in net position of $15,027,850 from the current fiscal year activity offset by a prior period adjustment of ($15,825,268) as a result of the implementation of Governmental Accounting Standards Board (GASB) Statement No. 75, (GASB 75) Accounting and Financial Reporting for Post -Employment Benefits Other Than Pensions. Among other things, GASB 75 requires the governmental entity to record the unfunded actuarial liability for post - employment benefits other than pensions on the face of the government -wide financial statements. The City has implemented GASB 75 which required prior period adjustments to report the effect of GASB 75 retroactively. (See Note 1 Sec G, Note 9 and Note 20 for additional information). The unrestricted net position for Governmental Activities was ($81,755,666), while the Business - type Activities had an unrestricted net position of $35,237,418, for an overall unrestricted net position of ($46,518,248). Governmental Activities decreased by $13,289,505 in unrestricted net position from the prior year, while Business -type Activities increased by $7,663,960 in unrestricted net position from the prior year. The reduction in unrestricted net position in the Governmental Activities is principally due to the new reporting requirement for the City's Net OPEB Liability of $11.3 million and an increase in the net pension liability for the Wichita Falls Firemen's Relief and Retirement Fund of approximately $11 million. Some of these liability increases have been offset, however, by increases in fund balances of the General Fund, Excess Sales Tax Debt Service Fund, Employee Benefit Trust Fund, and Debt Service Fund. The General Fund and the Excess Sales Tax Debt Service Fund benefited by much improved sales tax collections. The Employee Benefit Trust Fund (Internal Service Fund) benefited by lower than anticipated health claims for employees and retirees. Additionally, the Debt Service fund improved its unrestricted net position as grant funds from the Federal Aviation Administration are being used to pay debt service costs for the recently constructed new Regional Airport Terminal. 3 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2018 (continued) Contributing to the positive change in the Business -type Activities unrestricted net position was activity in the Water/Sewer Fund as it increased by $9.7 million from the prior year. Much of this change in the unrestricted net position of the Water/Sewer Fund is due to an increase in operating revenue of $2,697,301 compared to the prior year. This increased income can be attributed to the customer base continuing to recover from drought consumption levels while maintaining the same water rates that were approved in August 2014. Additionally, expenditures in the Water/Sewer Fund ended the fiscal year significantly below anticipated levels for work on Lake Ringgold, the Automated Metering System Lease Payment, salaries and benefits, and chemical supplies. The Employee Benefit Trust Fund (Internal Service Fund) benefited by lower than anticipated health claims for employees and retirees. However, over $4.5 million of unrestricted net position in the Business -type Activities was negatively affected due to the new OPEB reporting requirement. At September 30, 2018, the City's governmental funds reported combined ending fund balances of $421682,534. Of this amount, $13,229,031, or 30.99%, 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 $14,133,369 or 18.82% of total General Fund expenditures. During the 2017-18 fiscal year, the City's total debt increased by $5,932,785. In August 2018, the City issued $16,345,000 of General Obligation Bonds with related bond premiums to finance Street Improvements after approval of the voters at an election held in May 2018. Additionally, $6,170,000 of General Obligation Refunding Bonds with related bond premiums were issued to capitalize on lower interest rates. The City also entered into two capital lease agreements totaling $3,310,000 during the 2017-18 fiscal year: 1) to finance the replacement of the City -owned street lights with newer and more energy efficient LED lights; and 2) to finance the replacement of the City's Traffic Signal Communication System. 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 15-16 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 11 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2018 (continued) 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. 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. 5 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2018 (continued) 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 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 17-21 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 z City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2018 (continued) 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 28-69 of this report. Government -Wide Financial Analysis The City's combined net position was $376,000,504 as of September 30, 2018, a decrease of $797,418, or .21 % 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, $405,321,627, or 107.80%, 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. 7 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2018 (continued) An additional portion of the City's net position, $17,197,125, or 4.57%, represents resources that are subject to external restrictions on how they may be used. Net Position (in thousands) Governmental Business -type Activities Activities Total 2018 2017 2018 2017 2018 2017 Current and Other Assets $ 50,252 $ 271797 $ 71,124 $ 721357 $ 121,376 $ 1001154 Capital Assets 177,655 177,256 390,028 386,984 567,683 564,240 Total Assets 227,907 205,053 461,152 459,341 689,059 664,394 Deferred Outflows of Resources 48,153 37,804 7,016 8,229 55,169 46,033 Long Term Liabilities 17802 1401491 1571238 167,891 335,240 3081382 Other Liabilities 9,631 10,207 5,968 10,728 15,599 20,935 Total Liabilities 187,633 150,913 163,206 178,619 350,839 329,317 Deferred Inflows of Resources 13,723 41136 3,666 176 17,389 4,312 Net Position: Net Investment in Capital Assets 150,834 1501776 2541488 2501154 4051322 4001930 Restricted 5,626 51498 111571 11,047 17,197 161545 Unrestricted 81 756 (68,251) 35,237 27,574 (46,519) (40,677) Total Net Position 74 704 88 023 S 301,296 288 775 376 000 376 798 8 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2018 (continued) CHANGES IN NET POSITION (in thousands) Governmental Business -type Activities Activities Total 2018 2017 2018 2017 2018 2017 Revenues: Program Revenues: Charges For Services $ 7,760 $ 81958 $ 671691 $ 641419 $ 75,451 $ 731377 Operating Grants and Contributions 12,437 141935 3,938 1,702 16X5 161637 Capital Grants and Contributions 4,296 1,033 876 397 5J72 1,430 General Revenues: Property Taxes 3 5, 842 351121 - - 3 5, 842 351121 Sales Taxes 2301 221413 - - 235861 221413 Other Taxes/Fees 7,590 71363 - - 7,590 71363 Investment Earnings 625 303 748 416 L373 719 Miscellaneous 497 11652 89 22 586 19674 Total Revenue 92N8 911778 731342 66,956 1661250 1581734 Expenses: Administrative Services 16M29 141984 - - 16M29 14N4 Police 25M46 251513 - - 25M46 251513 Fire 241206 21,108 - - 24,206 21,108 Parks and Recreation 5,485 59656 - - 5,485 51656 Accounting/Finance 664 760 - - 664 760 Community Development 6,580 61903 - - 69580 61903 Public Works 8,563 81552 - - 8,563 8,552 Health 5,799 51815 - - 5,799 51815 Traffic and Transportation 2,384 21579 - - 2,384 21579 MPEC 3,251 41021 - - 3,251 4M21 Interest and Fees on Long-term Debt 1,556 1,444 - - 11556 1,444 Regional Airport - - 1 N8 1,828 1 N8 1,828 Kickapoo Airport - - 11259 11199 11259 11199 Transit - - 2X7 25540 21377 21540 Sanitation - - 101301 109217 K301 101217 Water and Sewer - - 331427 33,289 33,427 331289 Stormwater Drainage - - 797 816 797 816 Waterpark - - 1,591 L538 1,591 L538 Total Expenses 99,563 97,335 5100 51,427 1511223 148,762 Increase (Decrease) in Net Position Before Transfers (6,655) (51557) 2102 15,529 151027 9,972 Transfers 4,612 5 J 84 (4,612) (5,184) - - Increase (Decrease) in Net Position (2,043) (373) 171070 101345 151027 91972 Net Position - Beginning of Year 881023 881396 2881775 278,430 3761798 3661826 Prior Period Adjustment (11,276) - (41549) - (15,825) - Net Position - End of Year S74704 SK023 301 296 SZ88 775 $376M00. $376.798 616 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2018 (continued) Governmental Activities — Governmental Activities decreased the City's net position by $13,319,008. This reduction is principally due to the new reporting requirement for the City's Net OPEB Liability of $11.3 million and an increase in the net pension liability for the Wichita Falls Firemen's Relief and Retirement Fund of approximately $11 million. Some of these liability increases have been offset, however, by increases in fund balances of the General Fund, Excess Sales Tax Debt Service Fund, Employee Benefit Trust Fund, and Debt Service Fund. The General Fund and the Excess Sales Tax Debt Service Fund benefited by much improved sales tax collections. The Employee Benefit Trust Fund (Internal Service Fund) benefited by lower than anticipated health claims for employees and retirees. Additionally, the Debt Service fund improved its unrestricted net position as grant funds from the Federal Aviation Administration are being used to pay debt service costs for the recently constructed new Regional Airport Terminal. Business -Type Activities — Business -type Activities increased the City's net position by $121521,590. Contributing to the positive change in the Business -type Activities in net position is the Water/Sewer Fund as it reflected a net change of $11,222,796. Much of this change in the Water/Sewer Fund is due to an increase in operating revenue of $2,697,301 compared to the prior year. This increased income can be attributed to the customer base continuing to recover from drought consumption levels while maintaining the same water rates that were approved in August 2014. Additionally, expenditures in the Water/Sewer Fund ended the fiscal year significantly below anticipated levels for work on Lake Ringgold, the Automated Metering System Lease Payment, salaries and benefits, and chemical supplies. Other Business -type Activities to note that resulted in an increase of the City's net position include the Kickapoo Airport Fund due to receipt of approximately $2.2 million in grant revenue for capital improvements, and the Transit Fund as nearly $2 million in capital assets for the Travel Plaza that is located at the entrance to Sheppard Air Force Base were reclassified from Governmental Funds. Furthermore, the Sanitation Fund received higher than anticipated revenues at the landfill and lower than anticipated expenditures due to a purchase for motor vehicle equipment that was encumbered but not paid for prior to close of the fiscal year. These increases in net position, however, were partially offset due to the new OPEB reporting requirement of over $4.5 million of liability in the Business -type Activities. 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, 2018, the City's governmental funds reported combined fund balances of $42,682,534, which is an increase of $21,289,847 from the prior year. Virtually all of this increase is due to proceeds from capital leases and the General Obligation Bond Issue that remained to be spent at the close of the fiscal year. 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 $14,133,369, an increase of $995,062 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 18.82% of total General Fund expenditures, while the total fund balance represents 24.37% of total General Fund expenditures. City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2018 (continued) 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 September 30, 2018, the net position for the City's internal service funds was $29,199,609, an increase of $1,698,027. The largest contributing factor for this increase in net position is reflected in the Employee Benefit Trust Fund. The EBT Fund benefited this fiscal year due to lower than anticipated health claims. General Fund Budgetary Highlights The final amended expenditure budget for the General Fund, including transfers out, was increased by $1,609,881 from the original adopted budget. The reason for this increase in appropriations can be briefly summarized as follows: • Approximately $1,060,000 of prior year encumbrances were carried forward into the 2017-18 amended budget. These encumbrances were used for on -going projects which included $707,860 for street repairs and $213,387 for City Hall structural engineering fees and repairs. • Other amendments to the General Fund budget were needed for increases to central garage charges to account for higher than anticipated fuel prices; an appropriation for a large legal settlement; and increased subsidies for the MPEC and Regional Airport that were higher than original budgeted expectations. Actual revenues in the General Fund for the 2017-18 fiscal year were $72,965,565, which was $585,838 over final budgeted revenues. Sales tax collections and municipal court fines performed better than budgeted levels. Additionally, interest earnings on the City's idle cash generated nearly $300,000 more than budgeted amounts due to financial market improvements and higher interest rates on investments. Actual expenditures in the General Fund for the 2017-18 fiscal year were $75,116,308, which was $1,002,167 below budgeted expenditures. A large portion of this variance was due to large encumbrances for street repairs and building structure repairs that were not liquidated by the close of the fiscal year that will be expended in the 2018-19 fiscal year. Additionally, the General Fund experienced lower than budgeted expenditures for personnel services as savings accrued while vacated positions were being advertised and recruited to fill those vacancies. 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, 2018 amounts to $567,683,153 (net of accumulated depreciation). 11 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2018 (continued) 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: • Completion of the Permanent Indirect Potable Water Reuse Project • Completion of Phase I of the Kemp -Monroe Drainage Improvements Project • Substantial Completion of the Hike and Bike Trail from the Wichita Bluffs to Loop 11 • Construction in progress of the Wastewater Collections Office and Equipment Storage Facility • Completion of the Sheppard Air Force Base Main Gate Plaza Project • Street Rehabilitation and Utility Improvement Projects Capital Assets, net of Accumulated Depreciation (in thousands) Governmental Business -type Activities Activities Total 2018 2017 2018 2017 2018 2017 Land $ 101683 $ 12,227 $ 10,835 $ 91303 $ 211518 $ 211530 Land Betterments 15,698 161192 361965 29,920 521663 461112 Buildings, Systems and Improvements 471666 49,381 318,589 279,109 366,255 3281490 Infrastructure 90,535 841404 - - 901535 841404 Machinery and Equip 91251 M820 2,175 2,395 11426 13,215 Furniture and Fixtures - - 6 9 6 9 Motor Vehicles - - 16,588 14,874 16,588 14,874 Construction in Progress 3,822 4,232 4,870 51,374 8,692 55,606 Totals 177 655 177 256 390 028 386 984 567 683 564 240 Additional information on the City's capital assets can be found in Note 7 on pages 45-46 of this report. Long Term Debt — At the end of the current fiscal year, the City had a total bonded debt, notes and capital leases outstanding of $200,868,078. During the 2017-18 fiscal year, the City's total debt increased by $5,932,785. In August 2018, the City issued $16,345,000 of General Obligation Bonds with related bond premiums to finance Street Improvements after approval of the voters at an election held in May 2018. Additionally, $6,170,000 of General Obligation Refunding Bonds with related bond premiums were issued to capitalize on lower interest rates. The City also entered 12 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2018 (continued) into two capital lease agreements totaling $3,310,000 during the 2017-18 fiscal year: 1) to finance the replacement of the City -owned street lights with newer and more energy efficient LED lights; and 2) to finance the replacement of the City's Traffic Signal Communication System. 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, 2018, 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. It should be noted, however, that in November 2018, Moody's announced that the City's rating for Water and Sewer System Revenue Bonds was increased from A3 to Al due to much improved financial position and stability of the City's Water and Sewer Fund. Outstanding Debt at Year -End (in thousands) Governmental Business -type Activities Activities Total 2018 2017 2018 2017 2018 2017 General Obligation Bonds $ 34,000 $ 135355 $ - $ - $ 341000 $ 131355 Combination Tax and Revenue Bonds 211155 291315 411170 46,260 621325 751575 Utility System Revenue Bonds - - 68,485 71,370 681485 71,370 Premiums on Bonds 21393 898 906 11,767 121059 1205 Capital Lease Payable 51468 2,466 18,210 M 143 231678 2109 Notes Payable - - 321 361 321 361 Total $ 63,016 $ 46,034 $ 137,852 $ 148,901 $ 200,868 $ 194,935 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, 2018, was $.70598 per $100, which means that the City has a tax margin of $1.54402 per $100, and could generate up to $76,300,093 additional tax revenue a year from the present assessed valuation of $4,941,651,841 before the limit is reached. The current ratio of general bonded debt outstanding to the assessed value of all taxable property is 1.16%. Additional information about the City's long-term debt can be found in Note 14 on pages 61-65 of this report. 13 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2018 (continued) Economic Factors and Next Year's Budget and Rates Total revenues for the 2018-19 budget are projected at $179,534,242, which is an increase of $5,934,615, or 3.42% from the 2017-18 adopted budget. Taxes make up the largest portion of this increase because of growth in the property tax base, increased property tax rate, and increasing sales tax receipts. The property tax rate was increased to $0.72988, which is an increase by 2.39 cents per $100 of taxable property value and the revenue generated from this tax increase is needed entirely to pay for new debt payments on the 20-year General Obligation Bonds that were issued for street improvements. Sales tax revenues for the 2018-19 budget are projected to be $23,520,755, which is $1,141,061, or 5.10% above the prior year budget. This revenue forecasting methodology does not apply future growth because the average annual increase in sales tax receipts for the City of Wichita Falls over the last five years has only been 1.46%. The budget also includes an increase in revenue from Sanitation Collection Charges resulting from an increase in rates of 6% to all customer classes. The total expenditure budget for the 2018-19 fiscal year is $178,442,949, which is an increase of $4,449,920, or 2.56% from the 2017-18 adopted budget. The primary causes for this change is due principally to a 3% across the board pay increase to all of the City's pay plans, step/merit pay, and increased contributions to the Employee/Retiree Health Insurance Program. Another increase in expenditures is to begin the first payment for 20-Year General Obligation Bonds that were issued for Street Improvements resulting from the May 2018 bond election. The City maintains reserves in the General Fund to be used for major emergencies such as a widespread tornado, large legal liabilities or important one-time expenditures. The Government Finance Officers Association recommends maintaining a fund balance in the General Fund between 15 to 25% of the annual operational cost of the fund. The City's fund balance policy established a goal of maintaining 20% of expenditures in General Fund Reserves. The Unassigned General Fund Balance is slightly below the 20% level so the City does not plan to use these reserve funds to fund any one-time capital improvement project. 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. 14 Basic Financial Statements EXHIBIT A-1 CITY OF WICHITA FALLS, TEXAS STATEMENT OF NET POSITION SEPTEMBER 30, 2018 Primary Government Assets Cash and cash equivalents $ 43,431,752 $ 32,166,750 $ 75,598,502 $18,855,569 Receivables (net): Taxes and assessments 883,860 - 883,860 - Customer and trade - 7,629,562 7,629,562 - Government agencies 7,386,247 1,695,155 9,081,402 1,763,193 Other 1,282,493 186,467 1,468,960 200,000 Internal balances (9,681,363) 9,681,363 - - Inventory 99,249 1,873,350 1,972,599 - Prepaid items 212,505 516,414 728,919 5,625 Other assets 705,719 - 705,719 - Restricted assets: Cash and cash equivalents 5,931,459 17,374,947 23,306,406 - Capital assets not being depreciated 14,505,112 15,705,615 30,210,727 1,469,797 Capital assets net of accumulated depreciation 163,149,539 374,322,887 537,472,426 682,165 Total assets 227,906,572 461,152,510 689,059,082 22,976,349 Deferred Outflows of Resources Pension -related 46,678,104 3,493,234 50,171,338 - OPEB-related 1,065,280 430,899 1,496,179 - Deferred losses on bond refundings 410,097 3,091,626 3,501,723 - Total deferred outflows of resources 48,153,481 7,015,759 55,169,240 - Liabilities Accounts payable - trade 1,309,022 1,075,186 2,384,208 2,054,233 Accrued payroll 2,349,646 605,643 2,955,289 - Accrued interest payable 346,706 724,005 1,070,711 - Payable to government agencies 512,787 78,636 591,423 - Estimated health claims payable 524,926 - 524,926 - Other liabilities 4,550,627 290,548 4,841,175 936 Unearned revenue 37,236 - 37,236 - Customer deposits - 3,194,035 3,194,035 - Long-term liabilities: Portion due or payable within one year 6,845,356 10,489,357 17,334,713 - Portion due or payable after one year 65,934,685 133,025,083 198,959,768 - Net pension liability 93,510,775 8,985,942 102,496,717 - Net OPEB liability 11,710,981 4,737,026 16,448,007 - Total liabilities 187,632,747 163,205,461 350,838,208 2,055,169 Deferred Inflows of Resources Pension -related 13,466,078 3,562,350 17,028,428 - OPEB-related 257,162 104,020 361,182 - Total deferred inflows of resources 13,723,240 3,666,370 17,389,610 - Net Position Net investment in capital assets 150,833,699 254,487,928 405,321,627 2,151,962 Restricted for: Perpetual care (nonexpendable) 1,119,345 - 1,119,345 - Debt service (expendable) 1,993,626 11,571,092 13,564,718 - Federal grant programs (expendable) 2,513,052 - 2,513,052 - Tourism (expendable) 10 - 10 - Unrestricted (81,755,666) 35,237,418 (46,518,248) 18,769,218 Total net position $ 74,704,066 $ 301,296,438 $ 376,000,504 $ 20,921,180 See accompanying notes to the basic financial statements. 15 co a o x N W M Cl) Cl) W m J � � J H LLLL Q w LL0) Hew Zo V2W �ww LULU Q U) >- � L r _H V O LL o �= Q c E D O U C CO � f- O 00 O � N CO M � M M O r f- M fl Lf') II- M O N M� M M N r L(") Ln ' N Ln ' O M O O N 00 CO CO r CO f- O Co CV _0 Co - O LO M N r r1- LO "t M M N LO O r C) � C: 76 N f` N N CO � M M O O T CO N r LC) O f,- M M� N co c -O M M O CO r LO � N r- O r O (N ',I- CD M 00 N (D r T CO It - N M Lf) M M N O� O r N N r- r N LO o Z } c N U') w O N't It Co LO M M N co O !? 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U (7 H U Z d Z cE Fu E 0 0 UL a 0 EXHIBIT A-3 CITY OF WICHITA FALLS, TEXAS BALANCE SHEET -GOVERNMENTAL FUNDS SEPTEMBER 30, 2018 Total Nonmajor Governmental General Governmental Funds Assets Cash and cash equivalents $ 1474767296 $ 24,647,605 $ 39,1237901 Receivables (net): Taxes and assessments 7107192 173,668 883,860 Other City funds 6,112,571 - 6,112,571 Government agencies 4,017,349 3,368,898 7,386,247 Other 15196,400 741723 13271,123 Inventory 98,670 - 98,670 Prepaid items 210,372 2,133 212,505 Other assets 1,000 704,719 705,719 Total assets $ 26, 822, 850 $ 28, 971, 746 $ 55, 794, 596 Liabilities Accounts payable $ 845,128 $ 367,993 $ 11213,121 Accrued payroll 25207,590 99,840 2,307,430 Payable to other City funds - 3,213,124 3,213,124 Payable to government agencies 418,025 941762 512787 Other liabilities 3,796,990 740,977 4,537,967 Claims and judgments payable 11,922 - 11,922 Unearned revenue - 37,236 371236 Total liabilities 7,2797655 4,5535932 11,8337587 Deferred inflows of resources Unavailable revenues 17240,886 37,589 112787475 Fund balances Nonspendable: Inventory and prepaid items 309,042 - 309,042 Restricted for: Perpetual care - 1,119,345 151197345 Debt service - 1,956,037 1,9567037 Capital projects 2,8957784 1774875142 20,382,926 Federal and state grant programs - 275131052 2,513,052 Tourism - 10 10 Committed for: Golf course - 43,784 43,784 Multi -Purpose Events Center - - 0 Local projects - 27165,193 25165,193 Assigned for: Subsequent year's expenditures 9647114 - 9647114 Unassigned 1471337369 (904,338) 13,2297031 Total fund balances 18,3027309 24,380,225 42,6827534 Total liabilities, deferred inflows of resources and fund balances $ 26,822,850 $ 28,971,746 $ 55,794,596 See accompanying notes to the basic financial statements. 17 EXHIBIT A-4 CITY OF WICHITA FALLS, TEXAS RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION SEPTEMBER 30, 2018 Total fund balances - governmental funds (Exhibit A-3) $ 42,682,534 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 $ 322,639,814 Related accumulated depreciation 148,906,008 173,733,806 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. 1,278,475 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 55,155,000 Premiums on bonds payable 2,392,826 Capital lease payable 5,468,674 Accrued vacation and sick leave 8,929,564 Claims and judgments payable 776,840 Accrued interest 346706 (73,069,610) 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. 410,097 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 not meet criteria to be reported in the governmental funds financial statements. These items consist of: Net pension liabilities 92,8311273 Deferred outflows - pension related items (46,413,951) Deferred inflows - pension related items 13,196,699 (59,614,021) The City's net OPEB liability and related deferred outflows and inflows related to the City of Wichita Falls Retiree Health Care Plan do not meet the criteria to be reported in the governmental funds financial statements. These items consist of: Net OPEB liabilities 11,4291719 Deferred outflows - OPEB related items (1,039,695) Deferred inflows - OPEB related items 250,986 (10,641,010) 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. 11,653,380 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. (11,729,585) Total net position - governmental activities (Exhibit A-1) $ 74,704,066 See accompanying notes to the basic financial statements. 18 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, 2018 Revenues Taxes Charges for services Licenses and permits Fines and forfeitures Intergovernmental revenue Contributions Miscellaneous revenue Total revenues Expenditures Administrative services Police Fire Parks and recreation Accounting/finance Community development Public works Health Traffic and transportation Multi -Purpose Events Center Capital outlay Debt service - principal Debt service - interest and paying agent fees Total expenditures Excess of revenues over (under) expenditures Other Financing Sources (Uses) Issuance of bonds Premium on issuance of bonds Issuance of refunding bonds Premium on issuance of refunding bonds Capital lease proceeds Payment to refunded bond escrow agent Transfers in Transfers out Total other financing sources (uses) Net change in fund balance Fund balances - beginning Fund balances - ending Total Nonmajor Governmental General Governmental Funds $ 63, 946, 065 $ 3, 308, 827 $ 67, 254, 892 2, 805, 308 5341435 3, 339, 743 1, 963, 353 - 1, 963, 353 2, 593,494 1631722 2, 757, 216 4,021 91108,260 9,112,281 164,580 4,160,243 4,324,823 13, 550, 700 11228, 247 14, 778, 947 23, 927, 640 2771521 24, 205,161 16, 201, 856 6951007 16, 896, 863 5,160, 344 126, 773 5, 287,117 7011643 - 701,643 2,103,088 41582,240 6,685,328 5)053,709 457,335 5,511,044 3,216,858 2,577,008 5,793,866 1,604,398 5091160 2,113, 558 - 2,4151875 2,415,875 3,596,072 2,032,920 5,628,992 - 3,6105000 3,610,000 - 1,5975143 1,597,143 75,1165308 20,1095229 95,2255537 (2,150,743) (1,822,570) (3,973,313) - 16, 345, 000 16, 345, 000 - 1,176,516 1,176,516 - 6,170, 000 6,170, 000 - 4791801 4791801 3,310,009 - 3,310,009 - (6,546,898) (6,546,898) 37625, 384 5, 097, 236 8, 722, 620 (811,810) (3,582,080) (4,393,890) 6,123,583 19,139,575 25,263,158 37972)840 1773175005 21,2895845 See accompanying notes to the basic financial statements. W EXHIBIT A-6 (Page 1 of 2) 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, 2018 Net change in fund balances - total governmental funds (Exhibit A-5) 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 Depreciation expense for the year Donated capital assets are not recorded as revenues in the governmental funds. In the Statement of Activities, the value of the assets are added to capital assets and the contribution is recorded as a capital contribution. 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. The transfer of capital assets to enterprise funds are not reflected in the governmental funds as they do not represent current financial resources. Current year transfers to enterprise funds were: 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 increased by this amount this year. The issuance of long-term 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 2017-18 in the amount of $24,171,317 (includes premiums on issuance of bonds). The City also issued capital leases in the amount of $3,310,009 during the year. 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 2017-18 were: 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 Claims and judgments payable 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, 2017 Accrued interest at September 30, 2018 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: See accompanying notes to the basic financial statements. $ 21,289,845 $ 6,582,843 6,644,648 (61,805) 3,296,164 (312,835) (1,914,014) (58,107) (27,481,326) 10,499,488 (214,390) (764,464) 269,207 346.706 (978,854) (77,499) 126,898 20 EXHIBIT A-6 (Page 2 of 2) 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, 2018 Amortization of deferred losses on refundings is only reported in the government -wide financial statements. Current year amortization was: (43,324) 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. (7,978,806) The City sponsors an OPEB plan for retiree health care. 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. 365,126 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. 1,829,854 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. (543,578) Change in net position of governmental activities (Exhibit A-2) $ (2,042,773) See accompanying notes to the basic financial statements. 21 EXHIBIT A-7 (Page 1 of 2) CITY OF WICHITA FALLS, TEXAS STATEMENT OF NET POSITION PROPRIETARY FUNDS SEPTEMBER 30, 2018 Enterprise Funds Nonmajor Water and Regional Enterprise Internal Sewer Sanitation Airport Funds Total Service Funds Assets Current assets: Cash and cash equivalents $ 18,291,821 $ 7,026,412 $ 1,000 $ 6,236,640 $ 31,555,873 $ 4,918,728 Restricted cash and cash equivalents 17,029,259 - 345,688 - 17,374,947 5,931,459 Receivables (net): Customer and trade 5,665,138 1,550,842 - 413,582 7,629,562 - Government agencies 71,859 - - 1,623,296 1,695,155 - Other 49,161 19,445 34,197 2,052 104,855 92,982 Inventory 1,099,977 - - 58,854 1,158,831 714,519 Prepaid items 211 - 34,662 6,726 41,599 475,394 Total current assets 42,207,426 8,596,699 415,547 8,341,150 59,560,822 12,133,082 Long-term assets: Capital assets, net of accumulated depreciation 267,561,387 8,799,247 48,238,181 46,155,706 370,754,521 23,194,826 Total long-term assets 267,561,387 8,799,247 48,238,181 46,155,706 370,754,521 23,194,826 Total assets 309,768,813 17,395,946 48,653,728 54,496,856 430,315,343 35,327,908 Deferred Outflows of Resources Pension -related 1,910,226 827,918 22,879 310,381 3,071,404 685,983 OPEB-related 237,144 109,071 2,095 36,357 384,667 71,817 Deferred losses on bond refundings 3,091,626 - - - 3,091,626 - Total deferred outflows of resources 5,238,996 936,989 24,974 346,738 6,547,697 757,800 See accompanying notes to the basic financial statements. 22 EXHIBIT A-7 (Page 2 of 2) CITY OF WICHITA FALLS, TEXAS STATEMENT OF NET POSITION PROPRIETARY FUNDS SEPTEMBER 30, 2018 Enterprise Funds Nonmajor Water and Regional Enterprise Internal Sewer Sanitation Airport Funds Total Service Funds Liabilities Current liabilities: Accounts payable - trade 486,788 88,682 5,559 149,433 730,462 440,625 Accrued payroll 324,730 141,182 7,284 63,367 536,563 111,296 Accrued vacation and sick leave 394,287 192,082 9,797 42,374 638,540 173,582 Payable to other City funds 76,603 - 134,364 2,563,879 2,774,846 124,601 Payable to government agencies - 74,579 1,291 2,766 78,636 - Estimated health claims payable - - - - - 524,926 Other liabilities 205,992 6,616 20,000 57,940 290,548 738 Payable to U.S. Government - current maturity 41,541 - - - 41,541 - Capital leases - current maturities 922,339 - - - 922,339 430,477 Revenue bonds - current maturities 8,420,000 - - - 8,420,000 - Accrued interest - revenue bonds 724,005 - - - 724,005 - Total current liabilities 11,596,285 503,141 178,295 2,879,759 15,157,480 1,806,245 Long-term liabilities: Payable to U.S. Government, less current maturities 279,177 - - - 279,177 - Capital leases, less current maturities 15,048,261 - - - 15,048,261 1,808,846 Revenue bonds, less current maturities 110,900,943 - - - 110,900,943 - Estimated liability for landfill closure and post -closure care costs - 4,907,871 - - 4,907,871 - Customer deposits 3,194,035 - - - 3,194,035 - Net pension liability 4,913,835 2,129,723 58,853 798,422 7,900,833 1,764,611 Net OPEB liability 2,607,009 1,199,060 23,027 399,687 4,228,783 789,505 Total long-term liabilities 136,943,260 8,236,654 81,880 1,198,109 146,459,903 4,362,962 Total liabilities 148,539,545 8,739,795 260,175 4,077,868 161,617,383 6,169,207 Deferred Inflows of Resources Pension -related 1,948,020 844,299 23,331 316,524 3,132,174 699,555 OPEB-related 57,247 26,330 506 8,776 92,859 17,337 Total deferred inflows of resources 2,005,267 870,629 23,837 325,300 3,225,033 716,892 Net Position Net investment in capital assets 134,260,136 8,799,247 48,238,181 46,155,706 237,453,270 20,955,503 Restricted for debt service 11,571,092 - - - 11,571,092 - Unrestricted 18,631,769 (76,736) 156,509 4,284,720 22,996,262 8,244,106 Total net position $ 164,462,997 $ 8,722,511 $ 48,394,690 $ 50,440,426 272,020,624 $ 29,199,609 Adjustment to reflect the consolidation of internal service funds activities related to enterprise funds 29,275,814 Net position of business type activities $ 301,296,438 See accompanying notes to the basic financial statements. 23 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, 2018 Enterprise Funds Nonmajor Water and Regional Enterprise Internal Operating revenues: Charges for services $ 46,104,645 $13,678,624 $ - $ 5,178,969 $ 64,962,238 $ 13,973,773 Rents, concessions and other 120,636 22,591 1,178,304 1,406,933 2,728,464 1,215,920 Contributions - - - - - 14,125,230 Total operating revenues 46,225,281 13,701,215 1,178,304 6,585,902 67,690,702 29,314,923 Operating expenses: Personnel services 9,703,298 4,328,479 181,959 2,224,402 16,438,138 3,449,748 Supplies and materials 2,565,959 307,225 5,908 1,036,873 3,915,965 3,747,667 Maintenance and repairs 1,583,901 118,774 59,389 422,575 2,184,639 2,970,971 Utilities and other services 4,293,529 4,697,018 164,530 789,571 9,944,648 336,293 Insurance and contract support 873,018 146,589 24,201 156,286 1,200,094 11,230,643 Other expenses 1,841,560 475,009 207,352 182,793 2,706,714 2,282,160 Depreciation and amortization 9,346,931 292,781 1,400,375 1,183,546 12,223,633 4,557,099 Total operating expenses 30,208,196 10,365,875 2,043,714 5,996,046 48,613,831 28,574,581 Operating income (loss) 16,017,085 3,335,340 (865,410) 589,856 19,076,871 740,342 Nonoperating revenues (expenses): Interest income 546,204 96,368 6,270 99,592 748,434 434,588 Gain/(loss) on sale/abandonment of capital assets (946,002) - - (1,150) (947,152) 87,972 Interest expense and paying agent fees (3,397,913) - - - (3,397,913) (31,428) Intergovernmental operating grants - - - 3,938,011 3,938,011 - Total nonoperating revenues (expenses) (3,797,711) 96,368 6,270 4,036,453 341,380 491,132 Income (loss) before contributions and transfers 12,219,374 3,431,708 (859,140) 4,626,309 19,418,251 1,231,474 Capital contributions 876,211 - - - 876,211 - Transfers in 901,083 - 127,458 2,683,243 3,711,784 1,562,348 Transfers out (2,773,872) (2,219,191) (670,729) (2,441,756) (8,105,548) (337,623) Change in net position 11,222,796 1,212,517 (1,402,411) 4,867,796 15,900,698 2,456,199 Net position - beginning 155,743,749 8,661,468 49,819,214 45,956,455 27,501,582 Prior period adjustment (2,503,548) (1,151,474) (22,113) (383,825) (758,172) Net position - ending $ 164,462,997 $ 8,722,511 $ 48,394,690 $ 50,440,426 $ 29,199,609 Adjustment to reflect the consolidation of internal service funds activities related to enterprise funds 1,169,925 Change in net position of business type activities $ 17,070,623 See accompanying notes to the basic financial statements. 24 EXHIBIT A-9 (Page 1 of 2) CITY OF WICHITA FALLS, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2018 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 $ 46,042,546 $ 13,658,862 $ 1,157,833 $ 6,610,193 $ 67,469,434 $ 4,901,028 Received from inter -fund charges - - - - - 23,411,384 Other operating receipts - - - - - 939,217 Payments to suppliers (12,560,661) (1,845,594) (363,374) (2,129,055) (16,898,684) (20,844,943) Payments for interfund charges (3,721,394) (5,013,292) (151,626) (1,196,750) (10,083,062) (623,554) Payments to employees (6,842,937) (2,984,314) (144,358) (1,722,934) (11,694,543) (2,466,428) Net cash provided (used) by operating activities 22,917,554 3,815,662 498,475 1,561,454 28,793,145 5,316,704 Cash flows from noncapital financing activities: Intergovernmental operating grants - - - 2,747,355 2,747,355 - nterfund loans received (repaid) (86,452) - (61,750) 1,177,108 1,028,906 (41,209) Transfers in from other funds - - 127,458 769,229 896,687 1,562,348 Transfers out to other funds (2,773,872) (2,219,191) (670,729) (786,349) (6,450,141) (337,623) Net cash provided (used) by noncapital financing activities (2,860,324) (2,219,191) (605,021) 3,907,343 (1,777,193) 1,183,516 Cash flows from capital and related financing activities: Acquisition and construction of capital assets (9,681,258) (390,682) - (5,215,778) (15,287,718) (3,300,656) Proceeds from sale of capital assets - - - - - 89,331 Principal paid on long-term debt (8,464,304) - - - (8,464,304) (443,387) Interest and fees paid on long-term debt (5,165,747) - - - (5,165,747) (31,428) Net cash provided (used) for capital and related financing activities (23,311,309) (390,682) - (5,215,778) (28,917,769) (3,686,140) Cash flows from investing activities: Interest on investments 546,204 96,368 6,270 99,592 748,434 434,588 Net cash provided (used) by investing activities 546,204 96,368 6,270 99,592 748,434 434,588 Net Increase (Decrease) in Cash and Cash Equivalents (2,707,875) 1,302,157 (100,276) 352,611 (1,153,383) 3,248,668 Cash and Cash Equivalents - Beginning 38,028,955 5,724,255 446,964 5,884,029 50,084,203 7,601,519 Cash and Cash Equivalents - Ending $ 35,321,080 $ 7,026,412 $ 346,688 $ 6,236,640 $ 48,930,820 $ 10,850,187 Reconciliation of cash and cash equivalents on the balance sheet to the statement of cash flows: Cash and cash equivalents $ 18,291,821 $ 7,026,412 $ 1,000 $ 6,236,640 $ 31,555,873 $ 4,918,728 Restricted assets - cash and cash equivalents 17,029,259 - 345,688 - 17,374,947 5,931,459 Total cash and cash equivalents at end of year $ 35,321,080 $ 7,026,412 $ 346,688 $ 6,236,640 $ 48,930,820 $ 10,850,187 See accompanying notes to the basic financial statements. 25 CITY OF WICHITA FALLS, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2018 Reconciliation of Operating Income (Loss) to Net Cash Provided by Operating Activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization Customer deposits received (Increase) decrease in assets and deferred outflows: Receivables: Customer and trade Other Inventory Prepaid items Deferred outflows - pension -related Deferred outflows - OPEB-related Increase (decrease) in liabilities and deferred inflows: Accounts payable - trade Accrued payroll Accrued vacation and sick leave Estimated health claims payable Payable to government agencies Other liabilities Estimated liability for landfill closure Net pension liability Net OPEB liability Deferred inflows - pension -related Deferred inflows - OPEB-related Total adjustments Net cash provided (used) by operating activities Noncash capital and financing activities: Capital assets received from developers Transfers of capital assets (in) Transfers of capital assets (out) Total EXHIBIT A-9 (Page 2 of 2) Enterprise Funds Nonmajor Water and Regional Enterprise Internal Sewer Sanitation Airport Funds Total Service Funds $ 16,017,085 $ 3,335,340 $ (865,410) $ 589,856 $ 19,076,871 $ 740,342 9,346,931 292,781 1,400,375 1,183,546 12,223,633 4,557,099 91,234 - - - 91,234 - (253,428) (42,353) - (6,690) (302,471) - (20,541) - (20,471) 30,981 (10,031) (62,736) (80,415) - - (15,942) (96,357) (14,884) 37,480 174 (3,283) (818) 33,553 41 720,347 284,132 7,348 116,124 1,127,951 243,786 (6,746) (3,102) (60) (1,034) (10,942) (2,043) (2,349,222) 10,111 (10,592) (95,434) (2,445,137) 21,505 8,393 8,003 843 70 17,309 (181) (10,540) 1,789 (274) 1,368 (7,657) 4,911 - - - - - 56,923 - 638 250 (829) 59 - 180,571 (1,371) (5,000) (118,959) 55,241 (558) - 181,678 - - 181,678 - (2,544,965) (1,023,415) (26,853) (410,904) (4,006,137) (871,682) (126,938) (58,383) (1,121) (19,461) (205,903) (38,442) 1,851,061 8037310 22,217 300,804 2,977,392 665,286 57,247 26,330 506 8,776 92,859 17,337 6,900,469 480,322 11363,885 971,598 9,716,274 4,576,362 $ 22,917,554 $ 3,815,662 $ 498,475 $ 1,561,454 $ 28,793,145 $ 5,316,704 $ 876,211 $ - $ - $ - $ 876,211 $ - 901,083 - - 1,914,014 2,815,097 - - - - (1,655,407) (1,655,407) - $ 1,777,294 $ - $ - $ 258,607 $ 2,035,901 $ - See accompanying notes to the basic financial statements. 26 EXHIBIT A-10 CITY OF WICHITA FALLS, TEXAS STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES SEPTEMBER 30, 2018 Assets Cash and cash equivalents Liabilities Other liabilities See accompanying notes to the basic financial statements. Agency Fund $ 1777550 $ 177,550 27 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2018 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 Entity 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. Discretely 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. 28 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 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 4B 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 311 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. 29 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 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 Reaortina Entit 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 Director of Finance 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. 30 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 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. 31 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 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. 32 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 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. 33 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 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 via the purchases method. 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 acquisition value at the time received. 34 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 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, 2018, the City's business -type activities incurred a total of $3,429,341 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) and OPEB plan (Note 9) 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 ($782,699) and municipal court fines receivable ($495,755) 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) and OPEB plan (See Note 9) that are reported in this category. 5. Long -Term Obli,_ atq ions 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. 35 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 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 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 7s 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. 36 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 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 Management 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. 37 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 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 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 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, 2018 is based on management's estimate of probable losses in the amount of $776,840. 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. The following represents changes in the amount of claims liabilities for the City from October 1, 2016 to September 30, 2018: Health Workers' Care Compensation Liability balance, October 1, 2016 $ 5807000 $ 637177 Incurred claims/adjustments 1172441196 7197069 Claim payments ( 11,356,196) ( 757,948) Liability balance, September 30, 2017 4687000 247298 Incurred claims/adjustments 1074977456 113897632 Claim payments ( 10,440,530) ( 637,090) Liability balance, September 30, 2018 $ 524,926 $ 776,840 F. Pension Plan 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. 38 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) G. Other Post-Emplovment Benefits The fiduciary net position of the City of Wichita Falls Retiree Health Care Plan has been determined using the flow of economic resources measurement focus and full accrual basis of accounting. This includes for purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to other post -employment benefits, OPEB expense, and information about assets, liabilities and additions to/deductions from the Plan's fiduciary net position. Benefit payments are recognized when due and payable in accordance with the benefit terms. H. New Accounting Standard Adopted In fiscal year 2018, the City adopted GASB Statement No. 75, Accounting and Financial Reporting for Post -Employment Benefits Other Than Pensions. The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for post -employment benefits other than pensions (other post -employment benefits or OPEB). It also improves information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. This Statement replaces the requirements of Statements No. 45, Accounting and Financial Reporting by Employers for Post -Employment Benefits Other Than Pensions, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple -Employer Plans, for OPEB. Statement No. 74, Financial Reporting for Post -Employment Benefit Plans Other Than Pension Plans, establishes new accounting and financial reporting requirements for OPEB plans. The scope of this Statement addresses accounting and financial reporting for OPEB that is provided to the employees of state and local governmental employers. This Statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this Statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about defined benefit OPEB also are addressed. Note 2 - COMPLIANCE AND ACCOUNTABILITY Finance -Related Legal and Contractual Provisions The City had no violations of finance -related legal and contractual provisions for the year ended September 30, 2018. Deficit Fund Balances — Individual Funds The Airport Improvement Grant Fund, a special revenue fund, and the 4B Sales Tax Projects Fund, a capital projects fund, had deficit fund balances of $904,338 and $47,128, respectively, as of September 30, 2018. The City plans for these deficits to be alleviated within a year. 39 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 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, 2018, the total amount of the City's demand and time deposits per the general ledger was $1,790,062, and the total amount per the City's September 30, 2018 bank statements was $3,367,330. 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. I nvA_qtmAntc 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, 2018 are as follows: Fair Value/ Average Weighted Average Carrying Credit Quality/ Months to Types of Investments Amount Cost Ratings Maturity Primary Government: TexPool $ 2911375566 $ 2911371566 Not rated 1.00 LOGIC 46,873,911 46,873,911 Not rated 1.00 Money market accounts 21,730,861 21,730,861 Not rated 1.00 Total primary government investments 97,742,338 97,742,338 Component Units: TexPool 19,003,071 19,003,071 Not rated 1.00 Total component unit investments 19,003,071 19,003,071 Total investments $116,745,409 $116,745,409 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. 40 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 3 - DEPOSITS AND INVESTMENTS (CONTD.) 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 certificates of deposit and money market accounts using Level 2 inputs, which are values provided by the City's depositories. 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. b. Custodial Credit Risk Deposits are exposed to custodial credit risk if they are not covered by depository insurance and the deposits are uncollateral ized, 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. 41 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 3 - DEPOSITS AND INVESTMENTS (CONT'D.) c. Concentration of Credit Risk This risk is the risk of loss attributed to the magnitude of a government's investment in a 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, 2018 was $.70598 per $100 which means that the City has a tax margin of $1.54402 per $100, and could raise up to $76,300,093 additional tax revenue a year from the present assessed valuation of $4,941,651,841 before the limit is reached. 42 F- z O V W ... -H n ` W co J WN a ~ LL H M C0 a JW F— gm u� = zW z a — LL W W Cl) LL m O F- O co (� W H O z O O i 4- 0 4-1 U) .(n O U 00 T— O co M N a� N CO MW � W � U � � N _ O CO CO M O •> U r--tiM� � C'7 L-0 LO C� LC� Ln N Ili 00 00 O CM ti N � : � M 0 Z LO CO r't Cfl C9 N O uJ � Ln r 00 Cfl (C) L') . — � CY) U N N � � M O o) o M 0 ��+ L) U cn E ti N co O� U 6� r r 0 Ca M 4— 00 M r N O a) a) N r ' ti O (9 m O LOcl� 0)M Cfl = a-•' U) �, � CM co L L6 LO CO CO CEO O N O O ,_ O L M� r O I` U") •— r r Cfl CA r CA N m — E U cn (� V N 1 1 1 00C\i N 00 cn m m 0 L > m a> m C4 rn O U) E0 O E }^ \+ W (n L a) 00 CO N LO M LC) c9 CDf` CD X IZ— O .i E Q C7) Ncy� O m N N C'7 N ( ) coN 4-0 O 0 Z3 LL U') co N r Z W 69- r (Ni .� � O N >I O 0 M C 0 , 4--0 U) 4-0 N -� CO X LO LO It O M LO O Zt M 4-0� rn r o t O cp A A X � 6g N NColl 0 a--+ 0 O 0')r O N a) L m U-) (D r CO r r N LO O /���` i.i W 00 r CA I—Ln CA M co O a) L (6 - •� — 00 00 N .... a) m .-. +.+ L (L) U) 0o CY) LO cO O (D E 00 00E � r-: O a) co No N . Z 0 M cli O N It o 1—i Ln U-) M "t 0')oNo 00 M N cli -r— O r N rl c9 CD r r 0) r- 00 r LO a- J M r O r cz cD O U O O cn O L LO E {f} cn -0 cn a) 0) Cn 0N N Orn co N a) U cu m U 0 E N E U s= U •X cn L0 L L N U) — > 0 X cn �_ > � Cn O O L N (a �M _ UOC�O o a (D Of CD —i z CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 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 $ 11,571,092 For Capital Improvements: Cash and cash equivalents 5,458,167 Total $ 17,029,259 Regional Airport restricted assets are comprised of the following: For Passenger Facility Charges: Cash and cash equivalents $ 297 For Customer Facility Charges: Cash and cash equivalents 345,391 Total 345 688 Internal Service Fund restricted assets are comprised of the following: For Employee Insurance: Cash and cash equivalents $ 51931,459 44 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 7 - CAPITAL ASSETS Capital asset activity for the year ended September 30, 2018 was as follows: Balance Balance Governmental activities: October 1, September 30, 2017 Increases Decreases 2018 Capital assets not being depreciated: Land $ 127226,813 $ - $1,543,993 $ 10,682,820 Construction in progress 4,231,944 78,140 487,792 3,822,292 Total capital assets not being depreciated 16,458,757 78,140 2,031,785 14,505,112 Capital assets being depreciated: Land betterments 23,425,044 - - 23,425,044 Buildings, systems and improvements 751536,087 151000 91213 75,5411874 Infrastructure 1801515,171 9,706,709 11760,752 188,4615128 Machinery and equipment 272101,245 423,590 512,296 27,012,539 Furniture and fixtures 152,949 - 7,528 145,421 Total capital assets being depreciated 306,730,496 10,145,299 2,289,789 314,586,006 Less accumulated depreciation for: Land betterments 71232776 493,833 - 7726,609 Buildings, systems and improvements 26,154,783 1,730,065 8,397 27,876,451 Infrastructure 96,111,405 3,203,994 1,388,638 97,926,761 Machinery and equipment 161281,314 17987,073 5077162 17,7611225 Furniture and fixtures 152,715 466 7,760 145,421 Total accumulated depreciation 145,932,993 7,415,431 1,911,957 151,436,467 Total capital assets being depreciated, net 160,797,503 2,729,868 377,832 163,149,539 Governmental activities capital assets, net $1771256,260 $ 2,808,008 $21409,617 $177,654,651 Depreciation expense was charged to functions as follows: Governmental activities: Administrative services $ 1,366,361 Police 1,117)456 Fire 203,913 Parks and recreation 229,388 Accounting/finance 11,981 Community development 6,315 Public works 2,806,640 Health 1677106 Traffic and transportation 473,499 Multi -Purpose Events Center 1,032,772 Total governmental depreciation $ 7,415,431 45 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 7 - CAPITAL ASSETS (CONTD.) Balance Balance Business -type activities: October 1, September 30, 2017 Increases Decreases 2018 Capital assets not being depreciated: Land $ 9,303,195 $ 1,543,993 $ 12,010 $ 10,835,178 Construction in progress 51,373,397 2,156,732 48,659,692 4,870,437 Total capital assets not being depreciated 60,676,592 3,700,725 48,671,702 15,705,615 Capital assets being depreciated: Land betterments 47,943,500 8,459,512 3,300 56,399,712 Buildings, systems and improvements 412,1167034 51,934,234 45628,590 459,4211678 Machinery and equipment 916837196 342556 593,446 934323306 Furniture and fixtures 16,943 - - 16,943 Motor vehicles 56,820,458 5,256,551 1,363,106 60,713,903 Total capital assets being depreciated 526,580,131 65,992,853 6,588,442 585,984,542 Less accumulated depreciation for: Land betterments 18,023,394 1,413,115 1,991 19,434,518 Buildings, systems and improvements 133,007,122 10,543,033 25717,006 140,833,149 Machinery and equipment 7,288,520 509,685 540,502 7,2571703 Furniture and fixtures 7,963 2,566 - 10,529 Motor vehicles 41,946,192 3,542,671 1,363,107 44,125,756 Total accumulated depreciation 200,273,191 16,011,070 4,622,606 211,661,655 Total capital assets being depreciated, net 326,306,940 49,981,783 1,965,836 374,322,887 Business -type activities capital assets, net $386,983,532 $53,682,508 $50,637,538 $390,028502 Depreciation expense was charged to programs as follows: Business -type activities: Regional Airport $ 174031659 Kickapoo Airport 4571794 Transit 829,724 Sanitation 2,676,433 Water and sewer 91972,655 Stormwater drainage 417,985 Waterpark 252,820 Total business -type depreciation $16,011,070 46 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 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, 2018. Detailed information for each plan follows. Net pension liability Deferred outflows of resources Deferred inflows of resources Pension expense Texas Municipal Retirement System Plan Description TMRR \A/FFRRF Tntnl $32,010,200 $70,486,517 $1021496,717 12,443,786 371727,552 12,689,991 4,338,437 61397,190 81844,060 50,171, 338 17,028,428 15,241,250 The City participates as one of 872 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 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. 47 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 8 - PENSION PLANS (CONTD.) Employees Covered by Benefit Terms At the December 31, 2017 valuation and measurement date, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 642 Inactive employees entitled to but not yet receiving benefits 445 Active employees 988 (.nntrihi itinnc 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 12.54% and 12.83% in calendar years 2017 and 2018, respectively. The City's contributions to TMRS for the year ended September 301 2018, were $5,675,065, and were equal to the required contributions. Net Pension Liability The City's Net Pension Liability (NPL) was measured as of December 31, 2017, 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, 2017 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. 48 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 8 - PENSION PLANS (CONTD.) Actuarial assumptions used in the December 31, 2016, 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: Long -Term Expected Real Asset Class Target Allocation Rate of Return (Arithmetic) Domestic Equity 17.5% 4.80% International Equity 17.5% 6.05% Core Fixed Income 10.0% 1.50% Non -Core Fixed Income 20.0% 3.50% Real Return 10.0% 1.75% Real Estate 10.0% 5.25% Absolute Return 10.0% 4.25% Private Equity 5.0% 8.50% Total Discount Rate 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. 49 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 8 - PENSION PLANS (CONTD.) Changes in Net Pension Liability Balances as of December 31, 2016 Changes for the year: Service cost Interest on total pension liability Change of benefit terms Difference between expected and actual experience Change of assumptions Contributions — employer Contributions — employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Balances as of December 31, 2017 Sensitivity Analysis Increase (Decrease Total Pension Fiduciary Net Net Pension Liability Position Liability (a) (b) (a) — (b) $253,744,464 $205,988,203 $475756,261 4,917,413 - 4,917,413 16, 873,140 - 16, 873,140 ( 1,117,057) - ( 1,117,057) - 5,565,648 ( 5,565,648) - 274701741 ( 2,470,741) - 28, 538, 620 ( 28,538,620) ( 12,461,447) ( 1254615447) - - ( 147,954) 147,954 - ( 7,498) 7,498 $261, 956, 513 $229, 946, 313 $32, 010, 200 The following presents the net pension liability of the City, calculated using the discount rate of 6.75%, as well as what the City's net pension liability / (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. 1% Current 1% Decrease Discount Rate Increase Net pension liability $6675727907 $3270107200 $3,4857648 Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources For the year ended September 30, 2018, the City recognized pension expense of $6,397,190 related to its participation in TMRS. 50 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 8 - PENSION PLANS (CONTD.) At September 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to TMRS from the following sources: Deferred Outflows Deferred Inflows Differences between expected and actual experience $ 11947,718 $ 975,230 Net difference in assumptions 3477455 - Net difference between projected and actual earnings 67010,797 1177147760 Contributions made subsequent to measurement date 41137,816 - Total $12,4431786 $12,6891990 $4,137,816 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, 2019. 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: 2018 $ 11169,307 2019 4437997 2020 ( 31056,655) 2021 ( 219407669) 2022 - Thereafter - Total ($ 4.384.020) 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. 51 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 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% (2.50% for those hired after April 20, 2016) 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 hired prior to April 21, 2016 can receive a service retirement at ages 50 and above with 20 or more years of service. Members hired after April 20, 2016 can receive a service retirement at ages 55 and above with 20 or more years of service. Members are eligible for actuarially reduced early retirement benefits before the applicable retirement age, 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 January 1, 2018. Employees Covered by Benefit Terms At the January 1, 2018 measurement date, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 135 Inactive employees entitled to but not yet receiving benefits 1 Active employees 155 C'Inntrihi itinnc The contribution rate for the firefighters is 13% and the City contributes 12%. 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, 2018, were $1,411,351, and were equal to the required contributions. Net Pension Liability The City's Net Pension Liability (NPL) was measured as of January 1, 2018, and the Total Pension Liability used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date. 52 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 8 - PENSION PLANS (CONTD.) Actuarial Assumptions The Total Pension Liability in the January 1, 2018, actuarial valuation was determined using the following actuarial assumptions: Inflation Salary increases Discount Rate Investment rate of return 3.0% per year Service -based 5.03% per year 7.75%, net of pension inflation plan investment expense, including Mortality rates for employee and healthy annuitant combined rates were taken from RP2000 Mortality Table, projected to 2024 using Scale AA — Sex Distinct. Actuarial assumptions used in the valuation were based on the results of actuarial experience studies. The experience study was last performed October 6, 2017. 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. For 2018 the inflation rate assumption of the investment advisor was 2.50%. 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. Best estimates of geometric real rates of return for each major class included in the Plan's target asset allocation as of December 31, 2017 are summarized in the following table: Long -Term Expected Real Asset Class Target Allocation Rate of Return (Arithmetic) Domestic Equity 40.00% 7.50% International Equity 15.00% 8.50% Domestic Fixed Income 20.00% 2.50% Global Fixed Income 5.00% 3.50% Real Estate 10.00% 4.50% Alternative 10.00% 5.00% Total 100.00% Discount Rate The projection of cash flows used to determine the discount rate assumed that current plan member and sponsor contributions will be made at the current contribution rate. Future member's contributions in excess of their normal cost were also included. Based on these assumptions, the pension plan's Fiduciary Net Position was projected to be available to make all projected future benefit payments for 30 years. Future benefit payments beyond 30 years were discounted using a high quality municipal bond rate of 3.44%. The high quality municipal bond rate was based on the week closest to, but not later than, the measurement date of the Bond Buyer 20-Bond Index as published by the Bond Buyer. The single equivalent discount rate was 5.03%. 53 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 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, 2016 $ 98,359,668 $467950,042 $5174097626 Changes for the year: Service cost 2,8597969 - 2,859,969 Interest on total pension liability 57728,347 - 577287347 Change of benefit terms - - - Difference between expected and actual experience 5,304,698 - 573047698 Change of assumptions 147862,872 - 1478627872 Contributions — employer - 174111351 ( 17411,351) Contributions — employee - 174631122 ( 1,463,122) Net investment income - 615811299 ( 6,581,299) Benefit payments, including refunds of employee contributions ( 5,250,040) ( 5,250,040) - Administrative expense - ( 124,267) 1245267 Other changes - 347,490 ( 347,490) Balances as of December 31, 2017 $121,865,514 $51,378,997 $70,486,517 Sensitivity Analysis The following presents the net pension liability of the City, calculated using the discount rate of 5.03%, 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 (4.03%) or 1 percentage point higher (6.03%) than the current rate. 1% Current 1% Decrease Discount Rate Increase Net pension liability $9373927921 $7074867517 $59,9277518 Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources For the year ended September 30, 2018, the City recognized pension expense of $8,844,060 related to the Wichita Falls Firemen's Relief and Retirement Fund. Pension Plan Fiduciary Net Position Detailed information about the pension Plan's Fiduciary Net Position is available in the separately issued Plan financial report. 54 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 8 - PENSION PLANS (CONTD.) At September 30, 2018, 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 Rocni irr-oc of Pncni irr+nc Differences between expected and actual experience $ 41715,288 $2,8877624 Difference due to changes in actuarial assumptions 31,961,836 330,712 Net difference between projected and actual earnings - 15120,101 Contributions made subsequent to measurement date 1,050,428 - Total $37,727,552 $4,338,437 $1,050,428 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, 2019. 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: 2019 $ 415977267 2020 415357779 2021 318727084 2022 316617445 2023 414467669 Thereafter 11,225,443 Total $32,338,687 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. 55 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 9 - POST -EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS (CONT'D.) Retiree Premiums Pre -Medicare: Retirees share in the cost of the Plan by paying premiums according to the following schedule: PPO PPO PPO Under 65 Core CAT HSA Retiree Only $ 406 $ 304 $ 288 Retiree/Spouse $17630 $1,285 $11229 Retiree/Child $17273 $ 999 $ 954 Retiree/Family $21344 $1,856 $13778 Rates for pre -Medicare retirees over the age of 65 are $514 for retiree only and $1,028 for retiree/spouse. 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. Benefits for Spouses of Retired Employees 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. 56 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 9 - POST -EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS (CONTD.) 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. Employees Covered by Benefit Terms At the December 31, 2016 measurement date, the following employees were covered by the benefit terms: Inactive plan members or beneficiaries currently receiving benefits 671 Inactive plan members entitled to but not yet receiving benefits - Active plan members 1,165 Actuarial Assumptions The demographic assumptions are based on the assumptions that were developed for the defined benefit plans in which the City participates (TMRS and the Firemen's Pension Plan). The TMRS assumptions are based on the experience study covering the four-year period ending December 31, 2014 as conducted for the Texas Municipal Retirement System (TMRS). The firefighter assumptions are based on the January 1, 2017 Valuation for the Wichita Falls Firemen's Relief and Retirement Fund. Actuarial Methods and Assumptions: Valuation Date December 31, 2016 Actuarial Cost Method Individual Entry Age Normal Discount Rate 7.10% as of December 31, 2017 Inflation 2.50% Salary Increases 3.50% to 10.50% for TMRS and 0.40% to 4.30% for firemen, including inflation Demographic Assumptions TMRS: Based on the experience study covering the four-year period ending December 31, 2014 as conducted for TMRS. Based on the January 1, 2017 valuation for the Wichita Falls Firemen's Relief and Retirement Fund. Mortality TMRS: For healthy retirees, the gender -distinct RP-2000 Combined Healthy Mortality Tables with Blue Collar Adjustment are used with male rates multiplied by 109% and female rates multiplied by 103%. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements. WFRRF: The firefighters' mortality table was the RP-2000 Combined Healthy Mortality Table for males and females, projected to year 2024 using Scale AA. Participation Rates TMRS: 50% of employees retiring after the age of 49 or with disability at any age were assumed to elect retiree health care benefits through the City. 0% of TMRS employees retiring before the age of 49 were assumed to elect coverage. Fire: 100% of employees retiring at any age were assumed to elect retiree health care benefits through the City. 57 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 9 - POST -EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS (CONTD.) Healthcare Cost Trend Rates Initial rate of 7.30% declining to ultimate rates of 4.25% after 14 years. A single discount rate of 7.10% was used to measure the total OPEB liability. The asset portfolio of the OPEB trust largely consists of long-term growth stocks and can therefore support a 7.10% long-term rate of return. The City's current funding policy is to pay the recommended actuarially determined contribution, which is based on a closed amortization period. As a result, the OPEB plan's fiduciary net position is expected to be available to make all projected future benefit payments for current plan members. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability. Changes in Net OPEB Liability Balances as of December 31, 2016 Changes for the year: Service cost Interest on total OPEB liability Change of benefit terms Difference between expected and actual experience Change of assumptions Contributions — employer Contributions — employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Balances as of December 31, 2017 Discount Rate Sensitivity Analysis Increase (Decrease) Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability (a) (b) (a) — (b) $21, 052,192 $3, 803, 317 $17, 248, 875 505,385 - 505,385 11456,410 - 17456,410 - 210291653 ( 2,029,653) - 7375181 ( 737,181) ( 1,584,144) ( 1,584,144) - - ( 47171) 41171 -�L_I,44J1 4.5 �4,JZ51,Z5.51� -�-I10,44ZS,UUI The following schedule shows the impact of the net OPEB liability if the discount rate used was 1 % less than and 1 % greater than the discount rate that was used (7.10%) in measuring the net OPEB liability. Current 1 % Discount 1 % Decrease Rate I ncrease f% A nni -7 A nni n A nni $185218,501 $165448,007 $1458715598 58 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 9 - POST -EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS (CONTD.) The following schedule presents the net OPEB liability of the plan using the assumed healthcare cost trend rate as well as what the net OPEB liability would be if it were calculated using a trend ratio that is 1 % less than and 1 % greater than the assumed healthcare cost trend rate: Current Healthcare 1 % Cost Trend 1 % $155068, 872 $16,448, 007 $185043, 185 Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources For the year ended September 30, 2018, the City recognized OPEB expense of $1,589,967 related to the City of Wichita Falls Retiree Health Care Plan. At September 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to the City of Wichita Falls Retiree Health Care Plan from the following sources: Differences between expected and actual experience, liability Difference due to changes in actuarial assumptions Net difference between projected and actual earnings Contributions made subsequent to measurement date Total Deferred Outflows Deferred Inflows .— .— - 3617182 11496,179 - $1,496,179 $361,182 $1,496,179 reported as deferred outflows of resources related to OPEB resulting from contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability for the year ending September 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in pension expense as follows: Year Ended December 31: 2019 ($ 90,296) 2020 ( 90,296) 2021 ( 90,296) Thereafter 90 294) Total 361 184 59 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 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, 2018 was $47,347. The lease payment increases by 3% per year with a final lease payment of $157,805 in 2059. 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, 2018. 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, 2018: Year ending September 30: 2019 $ 138,248 2020 1387092 2021 137, 731 2022 122, 831 2023 86,357 2024-2028 307, 751 2029-2033 355,520 2034-2038 4121145 2039-2043 4771789 2044-2048 5537889 2049-2053 642,108 2054-2058 744,380 Total minimum payments required $4,116,841 The total rental expenses for all operating leases for the year ended September 30, 2018 was $156,138. There were no contingent rentals during the year ended September 30, 2018. CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 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 $4,839,002 as of September 30, 2018, which is based on 22% usage of the landfill. The City will recognize the remaining estimated cost of closure and postclosure care of $17,339,755 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 $68,870 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. Note 14 - LONG-TERM LIABILITIES Long-term liabilities transactions for the year ended September 30, 2018 are summarized as follows: Governmental Activities: General obligation bonds Combination tax and revenue bonds Premiums on bonds Accrued vacation and sick leave payable Capital lease payable Claims and judgments payable Total governmental activities Business -type Activities: Utility system revenue bonds, net of premium (discount) Combination tax and revenue bonds Premiums on bonds Accrued vacation and sick leave payable Note payable Capital leases payable Landfill closure, post -closure costs Total business -type activities Total long-term liabilities Balance at Balance at October 1, Retired and September 30, Due Within 2017 Issued Transferred 2018 One Year $ 13,355,000 $22,515,000 $ 1,870,000 $ 34,000,000 $ 2,215,000 29,315,000 - 8,160,000 21,155,000 1,785,000 898,073 1,656,317 161,564 2,392,826 - 8,767,486 2,595,054 2,375,839 8,986,701 2,375,000 2,466,589 3,310,000 307,924 5,468,665 400,203 24,298 1,377,710 625,168 776,840 70,153 54,826,446 31,454,081 13,500,495 72,780,032 6,845,356 71,370,000 - 2,885,000 68,485,000 6,915,000 46,260,000 - 5,090,000 41,170,000 1,505,000 11,767,065 - 2,101,122 9,665,943 - 762,556 676,547 684,118 754,985 675,000 360,951 - 40,232 320,719 41,541 19,142,615 - 932,690 18,209,925 922,339 4,726,193 181,678 - 4,907,871 - 154,389,380 858,225 11,733,162 143,514,443 10,058,880 For governmental activities, claims and judgments payable and compensated absences are generally liquidated by the General Fund. 61 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 14 - LONG-TERM LIABILITIES (CONTD.) Bonds Pam Bonds payable at September 30, 2018 are comprised of the following individual issues: Range of Final Annual Bonds Interest Maturity Serial Bonds Outstanding Rates Date Payments Authorized at 9/30/18 General Obligation Bonds: General Obligation Refunding 1.50% - 9/01/21 $405,000 to $ 4,365,000 $ 1,410,000 Bonds, Series 2011 3.00% $485,000 General Obligation Refunding 2.00% - 9/01/26 $200,000 to 9,650,000 7,810,000 Bonds, Series 2015A 5.00% $111053000 General Obligation Refunding 0.73% - 9/01/26 $110,000 to 218857000 2,265,000 Bonds, Series 2015B 3.48% $310,000 General Obligation Bonds, 2.00% - 9/01/38 $550,000 to 16,345,000 16,345,000 Series 2018A 5.00% $17155,000 General Obligation Refunding 2.00% - 9/01/28 $803000 to 611707000 6,170,000 Bonds, Series 2018B 4.00% $725,000 Total General Obligation Bonds 34,000,000 Combination Tax and Revenue Bonds: Combination Tax and Revenue 2.25% - 10/01/29 $340,000 to 10,820,000 505,000 Certificates of Obligation, Series 2009 4.75% $780,000 Combination Tax and Revenue 5.60% 2/01/25 $165,000 to 3,930,000 2,240,000 Certificates of Obligation, Series 2010 $375,000 Combination Tax and Revenue 2.00% - 9/01/31 $135,000 to 3,200,000 2,350,000 Certificates of Obligation, Series 2011 4.00% $220,000 Combination Tax and Revenue 2.00% - 9/01/33 $530,000 to 19,875,000 16,060,000 Certificates of Obligation, Series 2013 3.375% $1,315,000 Combination Tax and Revenue 2.00% - 9/01/33 $505,000 to 13,0007000 1014355000 Certificates of Obligation, Series 4.625% $905,000 2013A Combination Tax and Revenue 0.00% - 3/01/45 $8907000 to 33,5457000 3077351000 Certificates of Obligation, Series 2015 2.12% $1,425,000 Total Combination Tax and Revenue 62,325,000 Bonds Revenue Bonds: Water & Sewer System Revenue 2.00% - 8/01/27 $2,635,000 to 74,005,000 68,485,000 Refunding Bonds, Series 2016 5.00% $9,705,000 Total All Bonds $164,810,000 62 ' 0 V Z O V F- F- .� Z C LU G co J J HN Q Q � LL F- LU M � V C = Z W U Z a ''W^^ vI LL W O >. 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SEPTEMBER 30, 2018 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. These bonds are serviced by the Debt Service Fund with an apportionment of the ad valorem tax levy. At September 30, 2018, this fund had a fund balance of $1,444,396. 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 Payable 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, 2018 is classified as follows: Long-term $ 279,177 Current portion 41,541 Total 320 718 Capital Leases Payable The City 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. 64 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 14 - LONG-TERM LIABILITIES (CONTD.) 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. These assets are listed under "Buildings, systems and improvements" 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. The City issued a capital lease in 2017 for the purchase of fire department equipment in the amount of $2,682,710. These assets are listed under "Motor vehicles" in Business -type Activities. This capital lease carries an interest rate of 1.98% and is for a period of 6 years with final payment due in fiscal year 2023. The City entered into a capital lease agreement in 2018 to finance the conversion of the City's street lights to more energy -efficient LED lights. This project did not begin until after September 30, 2018. Therefore, the $2,895,784 in proceeds has been included as "Restricted Fund Balance" on Exhibit A-3. The lease carries an interest rate of 3.45% and is for a period of 15 years, with final payment due in fiscal year 2034. The City also issued a capital lease in 2018 for the purchase of new traffic signal communication equipment in the amount of $414,225. These assets are listed under "Infrastructure" under Governmental Activities. This lease carries an interest rate of 3.03% for a period of 5 years with final payment due in fiscal year 2023. Note 15 - DEFER SED DEBT General Obligation Bonds On August 21, 2018, the City issued general obligation refunding bonds of $6,170,000 (par value) with interest rates ranging from 2.00% to 4.00%. The debt was issued to refund combination tax and revenue certificates of obligation with rates ranging from 4.00% to 4.75% and a par value of $6,420,000. The general obligation bonds to be refunded matured through October 1, 2028. The proceeds of the bonds were placed in an irrevocable trust in order to redeem the bonds on October 1, 2018. The refunding met the requirements of an in -substance defeasance and the original bonds were removed from Governmental Activities. As a result of the refunding, the City reduced its total debt service by $670,324, resulting in an economic gain (difference between the present value of the debt service payments on the old and new debt) of $583,075. Note 16 - INTERFUND BALANCES Due To Fund Due From Fund General Fund Nonmajor Governmental Funds General Fund Water and Sewer Fund General Fund Regional Airport Fund General Fund Nonmajor Enterprise Funds General Fund Internal Service Funds Total Amount Purpose $ 3,213,124 Short-term loan 76,603 Short-term loan 134,364 Short-term loan 27563,879 Short-term loan 124.601 Short-term loan $ 6,112, 571 All amounts due are scheduled to be repaid within one year. 65 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 16 - INTERFUND BALANCES (CONTD.) Transfers to and from other funds during the year ended September 30, 2018 were as follows: TrnncfArc Frnm General Fund General Fund General Fund General Fund Nonmajor Governmental Funds Nonmajor Governmental Funds Nonmajor Governmental Funds Nonmajor Governmental Funds Water and Sewer Fund Water and Sewer Fund Water and Sewer Fund Sanitation Fund Sanitation Fund Regional Airport Fund Nonmajor Enterprise Funds Nonmajor Enterprise Funds Nonmajor Enterprise Funds Internal Service Funds Internal Service Funds Transfers To Amount Reason Nonmajor Governmental Funds $ 169,957 Supplement operating grants Nonmajor Governmental Funds 435,772 Supplement operating deficits Regional Airport Fund 127,458 Supplement operating deficits Nonmajor Enterprise Funds 78,623 Supplement operating deficits Nonmajor Governmental Funds 1,074,377 Fund debt service payment Nonmajor Governmental Funds 1,817,097 Fund operating deficits Nonmajor Enterprise Funds 543,579 Fund capital projects Nonmajor Enterprise Funds 147,027 Fund operating deficits General Fund 11719,976 Administrative overhead Nonmajor Governmental Funds 500,000 Fund debt service payment Internal Service Funds 553,896 Purchase capital assets General Fund 11593,408 Administrative overhead Internal Service Funds 625,783 Purchase capital assets Nonmajor Governmental Funds 670,729 Fund debt service payment Nonmajor Governmental Funds 403,681 Fund debt service payment Water and Sewer Fund 901,083 Transfer of capital assets Internal Service Funds 382,669 Purchase capital assets General Fund 312,000 Administrative overhead Nonmajor Governmental Funds 25,623 Fund debt service payment Total $11,935,712 Additionally, the Governmental Activities transferred $1,914,014 in capital assets to the Nonmajor Enterprise Funds and the Nonmajor Enterprise Funds transferred $754,323 in capital assets to Governmental Activities. These transfers are not reported on the Governmental Funds financial statements as the capital assets do not represent current financial resources. Note 17 - COMMITMENTS AND CONTINGENCIES Litigation tion 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 Company 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. CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 17 - COMMITMENTS AND CONTINGENCIES (CONT'D.) 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, 2018 was $.404046 per one thousand gallons. 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, 2018, 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 $ 870,934 Nonmajor Governmental Funds 188,581 Water and Sewer Fund 21892,104 Sanitation Fund 127,959 Nonmajor Enterprise Funds 359927277 Internal Service Funds 357,488 Total contract commitments - City $8,4291343 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. Note 18 - TAX ABATEMENT AGREEMENTS The City has approved value limitation agreements with companies for a limitation on the appraised value of properties within the City pursuant to Chapter 312 of the Texas Tax Code, as amended, i.e., the Property Tax Abatement Act. Under these agreements, the City has agreed to abate varying amounts of property taxes levied on qualified improvements during the abatement period. These abatements may be granted to businesses that construct improvements within certain areas designated by the Mayor and City Council. For the fiscal year ended September 30, 2018, the City abated property taxes totaling $1,034,030 under this program and received payments in lieu of taxes totaling $969,971. 67 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 19 - 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, 2018 is as follows: Condensed statement of net position: Cash, investments and other current assets Capital assets, net of accumulated depreciation Total assets Accounts payable and other current liabilities Total liabilities Net position Condensed statement of activities: Expenses: Community development Program revenues: Operating grants and contributions Net program expense General revenues: Tax revenues Non -tax general revenues Total general revenues Change in net position Beginning net position Ending net position Wichita Falls Wichita Falls Economic 4B Sales Development Tax Wichita Falls Reinvestment Corporation Corporation Zone #2 Zone #3 Zone #4 Totals $ 14,375,862 $ 4,848,613 $867,081 $564,334 $168,497 $ 20,824,387 2,151,962 - - - - 2,151,962 16,527,824 4,848,613 867,081 564,334 168,497 22,976,349 2,039,084 16,085 - - - 2,055,169 2,039,084 16,085 - - - 2,055,169 $14,488,740 $4,832,528 $867,081 $564,334 $168,497 $20,921,180 $ 7,464,442 $3,329,579 $357,608 $11,151,629 357,608 - - - 357,608 ( 7,464,442) ( 2,971,971) ( 357,608) - - ( 10,794,0211 3,976,836 329.219 4,306,055 (3,158,387) 17,647,127 $ 14 AB , 740 3,976,836 706,736 92,504 87,374 8,840,286 45,395 8,934 7,425 1,455 392,428 4,022,231 715,670 99,929 88,829 9,232,714 1,050,260 358,062 99,929 88,829 (1,561,307) 3,782,268 $4,832,528 509,019 464,405 $564,334 79,668 $168,497 22,482,487 $20,921,180 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2018 Note 20 - PRIOR PERIOD ADJUSTMENT For fiscal year ended September 30, 2018, the City implemented GASB Statement No. 75. As a result, a prior period adjustment to the beginning net position for governmental activities, business -type activities, enterprise funds, and internal service funds for post -employment benefits other than pensions (OPEB) is required. The total prior period adjustments are shown below: Total Governmental Business -Type Primary At4hA+ino At4i%A+ioo (�niornmont (-nxiornmor►f_XAArta - Net OPEB liability ($12,313,972) ($4,967,676) ($17,248,875) Deferred outflows of resources - contributions 1,037,737 418,643 1,453,617 Total prior period adjustment ($11,276.235) ($4,549,033) ($15,825,268) At the fund level, the adjustment related to the implementation of new standards decreased beginning net position in the Water and Sewer Fund ($2,503,548), Sanitation Fund ($1,151,474), Regional Airport Fund ($22,113), Nonmajor Enterprise Funds ($383,825) and Internal Service Funds ($758,172). Since OPEB liability data is not available for periods prior to September 30, 2017, the effect of the prior period adjustment on the change in net position for the fiscal year ended September 30, 2017, is not determinable. Required Supplementary Information CITY OF WICHITA FALLS, TEXAS REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE -GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2018 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): Capital lease proceeds 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 Budgeted Amounts Original Final Actual $ 63,204,441 $ 63,754,471 $ 63,946,065 2,827,723 2,827,723 2,805,308 1,973,904 1,973,904 1,963,353 2,552,000 2,552,000 2,593,494 4,800 4,800 4,021 169,571 169,571 164,580 19097,258 110971258 154889744 7118297697 7213791727 7219655565 EXHIBIT B-1 Variance With Final Budget - Positive (Negative) $ 191,594 (22,415) (10,551) 41,494 (779) (4,991) 5851838 1350337721 1358951112 135505700 344,412 2414397981 2359657981 23,9275640 385341 15, 984, 557 16, 210, 363 16, 201, 856 85507 5,582,090 5,420,817 5,160,344 260,473 725,122 725,122 701,643 23,479 211711250 2,1721120 21103,088 69,032 5,130,481 5,103,252 5,053,709 49,543 3,336,869 3,323,878 3,216,858 107,020 1,571,502 1,580,848 1,604,398 (23,550) 2,856,383 3,720,982 3,596,072 124,910 74, 831, 956 76,118,475 75,116, 308 1,002,167 (3,002,259) (3,738,748) (2,150, 743) 1,588,005 - - 3,310,009 3,310,009 3,625,384 3,625,384 3,625,384 - (623,125) (946,487) (811,810) 134,677 3,002,259 2,678,897 6,123,583 3,444,686 - (1,059,851) 3,972,840 510325691 145329,469 1473291469 14,3295469 - $ 1453297469 $ 1352691618 $ 1813025309 $ 550327691 70 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 2017 2016 2015 2014 Total Pension Liability Service cost $ 4,917,413 $ 21466,531 $ 41697,339 $ 41098,031 Interest on total pension liability 16,873,140 16,126,720 16,093,246 15,665,423 Changes of benefit terms - - - - Difference between expected and actual experience (11117,057) 31641,511 203,406 (21042,671) Changes of assumptions - - 1,3401184 - Benefit payments/refunds of contributions (12,461,447) (12,342,806) (121073;025) (11,744,340) Net change in total pension liability 81212,049 91891,956 10,2617150 51976,443 Total pension liability, beginning 2537744,464 24318521508 23375911358 22716141915 Total pension liability, ending (a) $261,956,513 $253,744,464 $243,852,508 $233,591,358 Fiduciary Net Position Contributions - employer $ 51565,648 $ 51339,437 $ 516395053 $ 51379,333 Contributions - employee 2,470,741 21494,525 2,497,984 21303,770 Net investment income 28,538,620 13,331,438 296,795 111109,980 Benefit payments/refunds of contributions (12,4617447) (12,342,806) (12,0737025) (11,744,340) Administrative expenses (147,954) (150,608) (180,789) (116,005) Other (71498) (81114) (81931) (91538) Net change in fiduciary net position 23,958,110 81663,872 (31828,913) 61923,200 Fiduciary net position, beginning 205,988,203 197,324,331 201,153,244 1941230,044 Fiduciary net position, ending (b) $229,946,313 $205,988,203 $197,324,331 $2011153,244 Net pension liability, ending = (a) - (b) $ 32,010,200 $ 471756,261 $ 46,528,177 $ 32,438,114 Fiduciary net position as a % of total pension liability 87.78% 81.18% 80.92% 86.11% Covered payroll $ 44, 380, 980 $ 44, 793, 885 $ 45, 036, 746 $ 41, 538, 672 Net pension liability as a % of covered payroll 72.13% 106.61 % 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. 71 EXHIBIT B-3 CITY OF WICHITA FALLS, TEXAS REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS TEXAS MUNICIPAL RETIREMENT SYSTEM Actuarial determined contribution $ 5,6751065 $ 57521,772 $ 574275145 $ 5,422,031 Contributions in relation to the actuarially determined contribution (5,675,065) (5,521,772) (5,427,145) (5,422,031) Contribution deficiency $ - $ - $ - $ - Covered payroll $ 44,522,000 $ 44,687,123 $ 44,674,967 $ 42,951,296 Contributions as a percentage of covered payroll 12.75% 12.36% 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 28 years Asset Valuation Method 10 Year smoothed market; 15% soft corridor Inflation 2.5% Salary Increases 3.50% to 10.50% 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 2015 valuation pursuant to an experience study of the period 2010-2014 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. 72 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 Position Contributions - employer Contributions - employee Net investment income Benefit payments/refunds of contributions Administrative expenses Other Net change in fiduciary net position Fiduciary net position, beginning Fiduciary net position, ending (b) Net pension liability, ending = (a)-(b) Fiduciary net position as a % of total pension liability Covered payroll Net pension liability (asset) as a % of covered payroll $ 2,8591969 5,7281347 2016 $ 11560,472 51827,804 $ 11493,672 5,298,361 7,781 $ 11447, 068 51537,931 5,3041698 (2,151,748) (11542,023) (320,862) 14,8621872 2411071651 - (4235984) (51250,040) (41543,166) (31950,906) (31616,549) 23, 505, 846 24, 801, 013 113067885 21623,604 98, 359, 668 01% I 0% I r% 0% r r/ I 731558, 655 A% 0% A 0% r 0% -% 0% r% 72, 251, 770 ,ti 1 0% r r A /% r r 69, 6281166 rK 1 0% /\ r I 1 1 A $ 15411,351 1,463,122 6,581,299 (5,250,040) (124, 267) � A� w � � $ 11283,410 11350,904 2,577,572 (4,543,166) (1155843) 1-% �'r% $ 1,273,913 1, 221, 926 4211270 (31950,906) (87,245) $ 11232, 957 11144,644 312841243 (3,616,549) (85,636) 46, 950, 042 46, 396, 915 47, 517, 957 45, 558, 298 fi r I I1 1 A /1 /1 1 A% I /1 n r n A AI rK I I r A% I l r I l / r l 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. 73 CITY OF WICHITA FALLS, TEXAS REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS WICHITA FALLS FIREMEN'S RELIEF AND RETIREMENT FUND 2018 Actuarial determined contribution $ 1,411,351 Contributions in relation to the actuarially determined contribution (1,411,351) Contribution deficiency $ - Covered payroll $ 11,214,407 Contributions as a percentage of covered payroll 12.59% EXHIBIT B-5 (Page 1 of 2) 2017 2016 2015 $ 1,283,410 $ 1,273,913 $ 1,232,957 (1,283,410) (1,273,913) (1,232,957) $ 10, 929, 570 $ 11, 088, 538 $ 10,179, 831 11.74% 11.49% 12.11 % Valuation Date: 1 /1 /2018 Methods and Assumptions Used to Determine Contribution Rates: Actuarial Cost Method Entry Age Normal Amortization Method Level Percentage of Compensation Remaining Amortization Period Infinite (as of 1/1/2018 valuation) Mortality RP-2000 Mortality Table, projected to 2024 using Scale AA, with separate rates for males and females Retirement Age Based upon tables dependent upon hire date, in conjunction with an actuarial study dated October 2017. Retirement Election Members eligible for the DROP are assumed to elect either straight service retirement benefits or the DROP, whichever is more valuable. Other members are assumed to receive straight service retirement benefits. Termination Rates Based upon service table, in conjunction with an actuarial experience study dated October 2017. Disability Rates Based upon member age, in conjunction with an actuarial experience study dated October 2017. Interest Rate: 7.75% per year, compounded annually, net of expenses. This is supported by the asset allocation of the trust and the long-term expected return by asset class. Salary Increases Based upon service table, in conjunction with an actuarial experience study dated October 2017. 74 EXHIBIT B-5 (Page 2 of 2) CITY OF WICHITA FALLS, TEXAS REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS WICHITA FALLS FIREMEN'S RELIEF AND RETIREMENT FUND Payroll Growth 4.00% per year for amortization of the Unfunded Actuarial Accrued Liability. The assumed payroll growth was approved in conjunction with an acturial study dated October 2017. Marital Status: 100% of actives are assumed to be married at time of benefit commence- ment. Males are assumed to be two years older than their spouses. Dependent Children: Each member is assumed to have two children. The first child is assumed to have been born when the member was 25. The second child is assumed to be two years younger. It is also assumed that benefits will be paid until each child reaches the age of 20. Contribution Rates: Members - 13.00% City - 12.00% (12.83% in 2018, 12.77% in 2019) Actuarial Asset Method: Fair Market Value 75 EXHIBIT B-6 CITY OF WICHITA FALLS, TEXAS REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS CITY OF WICHITA FALLS RETIREE HEALTH CARE PLAN 2017 Total OPEB Liability Service cost $ 505,385 Interest on total pension liability 11456,410 Changes of benefit terms - Difference between expected and actual experience - Changes of assumptions - Benefit payments/refunds of contributions (1,584,144) Net change in total OPEB liability 3775651 Total OPEB liability, beginning 215052,192 Total OPEB liability, ending (a) $ 215429,843 Fiduciary Net Position Contributions - employer $ 21029,653 Contributions - employee - Net investment income 7373181 Benefit payments/refunds of contributions (15584,144) Administrative expenses (4,171) Other - Net change in fiduciary net position 15178,519 Fiduciary net position, beginning 35803,317 Fiduciary net position, ending (b) $ 41981,836 Net OPEB liability / (asset), ending = (a) - (b) $ 16,448,007 Fiduciary net position as a % of total OPEB liability 23.25% Covered payroll $ 55,647,372 Net pension liability (asset) as a % of covered payroll 29.56% 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 74/75, they should not be shown here. Therefore, we have shown only years for which the new GASB statements have been prepared. 76 EXHIBIT B-7 CITY OF WICHITA FALLS, TEXAS REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS CITY OF WICHITA FALLS RETIREE HEALTH CARE PLAN Actuarial determined contribution $ 2,072,215 Contributions in relation to the actuarially determined contribution (2,072,215) Contribution deficiency $ - Covered payroll $ 5510421215 Contributions as a percentage of covered payroll 3.76% Valuation Date: December 31, 2016 Methods and Assumptions Used to Determine Contribution Rates: Actuarial Cost Method Individual Entry Age Normal Amortization Method Level Percentage of Pay Remaining Amortization Period 15 years; closed Asset Valuation Market Value Investment Rate of Return 7.10% Inflation 2.50% Salary Increases 3.50% to 10.50% for TMRS and 0.40% to 4.30% for Fire, including inflation Demographic Assumptions TMRS: Based on the experience study covering the four-year period ending December 31, 2014 as conducted for the TMRS. Fire: Based on the January 1, 2017 valuation for the Wichita Falls Firemen's Relief and Retirement Fund. Mortality TMRS: For healthy retirees, the gender -distinct RP-2000 Combined Healthy Mortality Tables with Blue Collar Adjustment are used with male rates multiplied by 109% and female rates multiplied by 103%. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements. Fire: The firefighters' mortality table was the RP-2000 Combined Healthy Mortality Table for males and females, projected to year 2024 using Scale AA. Participation Rates TMRS: 50% of employees retiring after the age of 49 or with disability at any age were assumed to elect retiree health care benefits through the City. 0% of TMRS employees retiring before the age of 49 were assumed to elect coverage. Fire: 100% of employees retiring at any age were assumed to elect retiree health care benefits through the City. Healthcare Cost Trend Rates Initial rate of 7.30% declining to ultimate rates of 4.25% after 14 years. Other Information: There were no benefit changes during the year. 77 CITY OF WICHITA FALLS, TEXAS NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION SEPTEMBER 30, 2018 Budgetary Information 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 $1,286,519 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. Wichita Falls Firemen's Relief and Retirement Fund Changes of benefit terms: Effective April 20, 2016, there have been multiple changes in benefits, as - The member contribution rate was increased from 12% to 13% of salary for all members. - All future new entrants will accrue benefits under a "Tier 2" benefit structure. Changes of assumptions: For purposes of determining the GASB discount rate at the 12/31/17 measurement date, a depletion date projection as of that date have been performed. The results of this projection showed a single discount rate of 5.03%. The discount rate was decreased from 5.81 % to 5.03%. 78 CITY OF WICHITA FALLS, TEXAS NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION (CONT'D.) SEPTEMBER 30, 2018 As a result of an actuarial experience study dated October 6, 2017, the following assumption changes have been approved by the Board of Trustees: - The investment return assumption was lowered from 8.00% to 7.75% per year, net of all expenses. - The assumed rates of salary increases were amended. - The assumed rates of retirement were amended. - The assumed rates of withdrawal were amended. - The assumed rates of disablement were amended. For purposes of determining the GASB discount rate at the 12/31 /2016 measurement date, a depletion date projection as of that date have been performed. The results of this projection showed a single discount rate of 5.81 %. The discount rate was decreased from 8.00% to 5.81 %. 79 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. Community Development Block Grant Fund The Community Development Block Grant Fund accounts for federal block grant revenues and related expenditures. Section 8 Housing 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 Agreement 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. 2018-A Bond Projects This fund was established to account for the proceeds of the Series 2018-A General Obligation Bonds that were issued for the purpose of street improvements within the City. Miscellaneous Capital Projects 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. 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V Y @ @ fn c O � O @ O � CD 7 @ N U U U L N c O E O E i @ fll c c O @ Q _� Q �_ fCll O @ @ a) -Q C ~ @ a) o fn a H U LL c U 0-1 Q M L� U 2 H Q U U 0 W C c U)) m O O @ X v � M d M d d H H W O Z LL LL EXHIBIT C-3 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE -COMMUNITY DEVELOPMENT BLOCK GRANT FUND FOR THE YEAR ENDED SEPTEMBER 30, 2018 Revenues: Charges for services Intergovernmental revenue Miscellaneous revenue Total revenues Expenditures: Administrative services Parks and recreation Community development Public works Health Capital outlay Total expenditures Excess of revenues over (under) expenditures Fund balance - beginning Fund balance - ending Budgeted Amounts Original Final 17122,227 17122,227 Variance With Final Budget - Positive Actual (Negative) $ 9,949 $ 9,949 1,123, 027 800 1,1223227 1,1221227 1,137,870 15,643 1071834 107,834 1071834 - 37,332 371332 375332 - 877, 061 11371,445 8205585 5501860 1003000 201,676 201,676 - - 32,882 737 323145 - 3,373 3,373 - 1,122, 227 17754,542 1,171, 537 583,005 - (632,315) (33,667) 598,648 6211207 621,207 6215207 - $ 6211207 $ (11,108) $ 5875540 $ 5985648 82 EXHIBIT C-4 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE -SECTION 8 HOUSING FUND FOR THE YEAR ENDED SEPTEMBER 30, 2018 Variance With Final Budget - Budgeted Amounts Positive Original Final Actual (Negative) Revenues: Intergovernmental revenue $ 3,809,766 $ 3,800,000 $ 3,716,559 $ (83,441) Miscellaneous revenue - - 28,436 28,436 Total revenues 3,809,766 3,800,000 3,744,995 (55,005) Expenditures: Community development 3,809,766 3,809,766 3,619,804 189,962 Total expenditures 318091766 358091766 3,619,804 1897962 Excess of revenues over (under) expenditures - (9,766) 1257191 134,957 Fund balance - beginning 11192,948 11192,948 11192,948 - Fund balance - ending $ 13192,948 $ 15183,182 $ 1,318,139 $ 134,957 83 EXHIBIT C-5 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE -HOME INVESTMENT PARTNERSHIP AGREEMENT FUND FOR THE YEAR ENDED SEPTEMBER 30, 2018 Variance With Final Budget - Budgeted Amounts Positive Original Final Actual (Negative) Revenues: Intergovernmental revenue $ 274,508 $ 274,508 $ 4111762 $ 1371254 Miscellaneous revenue - - 11200 13200 Total revenues 274,508 274,508 412,962 138,454 Expenditures: Community development 274,508 719,918 1411851 5787067 Total expenditures 274508 719,918 1411851 5781067 Excess of revenues over (under) expenditures - (445,410) 2711111 7161521 Fund balance - beginning 336,262 336,262 336,262 - Fund balance - ending $ 336,262 $ (109,148) $ 607,373 $ 716,521 84 EXHIBIT C-6 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE -HOTEL/MOTEL TAX FUND FOR THE YEAR ENDED SEPTEMBER 30, 2018 Variance With Final Budget - Budgeted Amounts Positive Original Final Actual (Negative) Revenues: Taxes $ 1,865,000 $ 1,914,597 $ 1,914,597 $ - Total revenues 1,865,000 1,914,597 1,914,597 - Expenditures: Administrative services 975500 97500 971500 - Total expenditures 97,500 97,500 977500 - Excess of revenues over (under) expenditures 117677500 118177097 118171097 - Other financing sources (uses): Transfers out (1,767,500) (1,817,097) (1,817,097) - Total other financing sources (uses) (1,767,500) (1,817,097) (1,817,097) - Excess of revenues and other sources over (under) expenditures and other uses - - - - Fund balance - beginning 10 10 10 - Fund balance - ending $ 10 $ 10 $ 10 $ - 85 EXHIBIT C-7 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE -GOLF FUND FOR THE YEAR ENDED SEPTEMBER 30, 2018 Budgeted Amounts Original Final Actual Revenues: Charges for services $ 750,000 $ 750,000 $ 441,636 Miscellaneous revenue - - 392,566 Total revenues 750,000 750,000 834,202 Expenditures: Administrative services 865,000 8657000 8711126 Total expenditures 8657000 8657000 871,126 Excess of revenues over (under) expenditures (115,000) (115,000) (36,924) Other financing sources (uses): Transfers in 115,000 115,000 36,924 Total other financing sources (uses) 115,000 115,000 36,924 Excess of revenues and other sources over (under) expenditures and other uses - - - Fund balance - beginning 43,784 43,784 43,784 Fund balance - ending $ 437784 $ 437784 $ 43,784 Variance With Final Budget - Positive (Negative) $ (308,364) 84,202 (6,126) (6,126) 78,076 (78,076) (78,076) EXHIBIT C-8 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE - MPEC FUND FOR THE YEAR ENDED SEPTEMBER 30, 2018 Variance With Final Budget - Budgeted Amounts Positive Original Final Actual (Negative) Revenues: Contributions $ 35,000 $ 35,000 $ 35,000 $ - Miscellaneous revenue 1,367,074 11247,074 10,872 (1,236,202) Total revenues 1,623,074 11282,074 45,872 (1,236,202) Expenditures: MPEC 3,409,570 3,354,372 2,414,425 939,947 Total expenditures 37409,570 313547372 21414425 939,947 Excess of revenues over (under) expenditures (1,786,496) (2,072,298) (27368,553) (296,255) Other financing sources (uses): Transfers in 2,007,496 211277496 25215,945 88,449 Total other financing sources (uses) 2,007,496 211277496 27215,945 88,449 Excess of revenues and other sources over (under) expenditures and other uses 2217000 55,198 (152,608) (207,806) Fund balance - beginning 1527608 1527608 1521608 - Fund balance - ending $ 3737608 $ 2077806 $ - $ (207,806) 87 EXHIBIT C-9 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE -DEBT SERVICE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2018 Variance With Final Budget - Budgeted Amounts Positive Original Final Actual (Negative) Revenues: Taxes $ 894,343 $ 894,343 $ 882,689 $ (11,654) Contributions 23270,672 25270,672 21270,672 - Miscellaneous revenue - - 47,516 47,516 Total revenues 3,165,015 3,165,015 3,200,877 35,862 Expenditures: Debt service - principal 3,610,000 3,610,000 3,610,000 - Debt service - interest and paying agent fees 15499,490 1499,490 1,597,143 (97,653) Total expenditures 5,109,490 5,109,490 5,207,143 (97,653) Excess of revenues over (under) expenditures (1,944,475) (1,944,475) (2,006,266) (61,791) Other financing sources (uses): Bond proceeds - refunding bonds - - 6,170,000 6,170,000 Premium on refunding bond proceeds - - 479,801 479,801 Payment to refunded bond escrow agent - - (6,546,898) (6,546,898) Transfers in 1,944,475 1,944,475 2,674,410 729,935 Total other financing sources (uses) 1,944,475 1,944,475 21777,313 832,838 Excess of revenues and other sources over (under) expenditures and other uses - - 7715047 7715047 Fund balance - beginning 673,349 673,349 673,349 - Fund balance - ending $ 673,349 $ 673,349 $ 13444,396 $ 771,047 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. Tran-Rit Find 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. 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^ i N O ~ N m N r c� W Cfl LO CO � O r N 00 ,t It "t O 00 O O' r� CO O 00 � r N M M fl- (4 N L() O CQ O f— M 4t O LO 00 a) LO M Cfl O O OD r O � co 0000 0) O NT 00 r— CO O Ln CO r Ln 00 O O O 00 LO It 1-7 1-7 + o 00 LO Ef} 00 r M r r O r r r 0 r CO I- CO O LO r ff} ^ O N LO O N 00 ^ ^ ^ ^ ^ ^ LO Cfl r I` ti r O N N O O LO 0) O O r M G M't N 00 Cfl M� r ' M ' ' O r ' r f` 00 O (9 O LO O N ti (6 Q a) O O N LO N N q�— O ti N M (M N M Cfl Op 0p N r >(o 60- fA L O LO O 4t 00 O Cfl N ti LO LO co N I` 1- CO CO Ln a) +' (a M I- r N 00 co O r— M I- O I- CO r CO I� r CO ' ' r O r M M N ' It M M (.0 LO Cfl 00 r LO CO CO CO O r r I r M r E M co N N co It O mt O N co "-' N M f� r O N co O r O f— N N 00 CO N 00 LO O co O fl- f� � CO ' ' O Lf) W LO ' ' I- O M Oco fl- f- O N r r CO 00 In co I- ti O 00 4 Il- N " r- r O L() r 00 O 00 to r N r r I- ff} O co co 00 I- N N 00 ` 'CI- I00 N co O� It N mCfl r--It O LO CO N r CO r f` O r—M O O L Q O r ' O O O N r O co 00 r r O r M f� f— �: Q p � Q O (D r M N Ln — 00 � r � N M 00 r ' r r `-' (D M M � O M U Cl) co Z Y Q O ER 60- X W c� Cl) CD M ~ zw Cl)LJL LL m U L U J Ncn H Q p N aka LL a L CD W ,� O Q LL LU O�Q O W cn o Q ZWZ O ,} W ci V SOW (n O j o a� Lu c L � Z Q (u i1 O W N 70 c Z p _0 COc6 Z U) ^ N + (� .O (On O (� U i O N 0)� (� II �1 m 0-0 v > N O a (D O += 1 >, m -0 (n O V 0 QZ) m O .� N U) m cw �- � °m � a) a) a— m � W a) 0),(D >, o c _0 OLO c� - � a)��70> ca o E >, 0-0 > O E a) cO� (n a6 o v, N o o m m > n (n �oQ a� O M WE4 •� a) >, L M O N 0 0� + p Q O 0= cn 0= O ^� N a) O O O Q O •O m .� .� co U a) EO �'� -0 � m W -0 � p v1 (6 > O O O L N a O Z fn C U a) 0 E U (6 a) a) n a) a) O L L (6 Q O a - - - --� m U O > a) a) U U U n3 a) a) a) m C� a) �� �a-00 UaaaD-OZZin0 U Q -0 Q cc�/ �Oa C: U N O 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. Employee 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 Technology 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, 2018 Employee Information Fleet Duplicating Benefit Technology Maintenance Services Trust Fund Totals Assets Current assets: Cash and cash equivalents $ 610,877 $ 862 $ 1,701,571 $ 2,605,418 $ 4,918,728 Restricted cash and cash equivalents - - 5,931,459 - 51931,459 Receivables: Other 81,612 - 11,370 - 92,982 Inventory 714,519 - - - 714,519 Prepaid items 474,815 579 - - 475,394 Total current assets 1,881,823 1,441 7,644,400 2,605,418 12,133,082 Capital assets, net of accumulated depreciation 19,273,981 - - 3,920,845 23,194,826 Total assets 211155,804 11441 7,644,400 6,526,263 35,327,908 Deferred outflows of resources I PenSion-re ated +4 I ,VJV J,`+U 1 1 O,LL / L�FV,`+JJ V00,Z70J OPEB-related 46,232 1,047 2,544 21,994 71,817 Total deferred outflows of resources 468,062 6,538 20,771 262429 757,800 Liabilities Current liabilities: Accounts payable - trade 344,724 51923 22,294 671684 440,625 Accrued payroll 69,080 616 1,899 39,701 111,296 Accrued vacation and sick leave 116,445 - - 575137 173,582 Payable to other City funds - - 124,601 - 124,601 Estimated health claims payable - - 524,926 - 524,926 Other liabilities - - 738 - 738 Capital leases - current maturities 4305477 - - - 430,477 Total current liabilities 960,726 6,539 674,458 164,522 1,806,245 Long-term liabilities: Capital leases, less current maturities 1,808,846 - - - 1,808,846 Net pension liability 1,085,109 14,124 46,886 618,492 1,764,611 Net OPEB liability 508,243 11,514 27,962 241,786 789,505 Total long-term liabilities 3,402,198 25,638 74,848 860,278 4,362,962 Total liabilities 4,362,924 32,177 749,306 1,024,800 6,169,207 Deferred inflows of resources Pension -related 430,176 5,599 18,587 245,193 699,555 OPEB-related 11,161 253 614 5,309 17,337 Total deferred inflows of resources 441,337 5,852 19,201 250,502 716,892 Net position Net investment in capital assets 17,034,658 - - 3,920,845 20,955,503 Unrestricted (215,053) (30,050) 6,896,664 1,5921545 8,2445106 Total net position $ 16,819,605 $ (30,050) $ 6,896,664 $ 5,513,390 $ 29,199,609 93 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, 2018 Employee Information Fleet Duplicating Benefit Technology Maintenance Services Trust Fund Totals Operating revenues: Charges for services $ 10,408,914 $ 134,151 $ - $ 3,430,708 $ 13,973,773 Rents, concessions and other 11,970 - 112031950 - 1,2151920 Contributions - - 14,125,230 - 14,125,230 Total operating revenues 10,420,884 1343151 15,329,180 3,430,708 29,314,923 Operating expenses: Personnel services 2,143,214 29,708 89,341 1,187,485 3,449,748 Supplies and materials 3,139,973 2,510 173 605,011 3,747,667 Maintenance and repairs 2,360,393 - - 610,578 2,970,971 Utilities and other services 76,091 896 92,242 167,064 336,293 Insurance and contract support 142,509 - 11,0881119 15 11;2301643 Other expenses 179,796 95,123 1,999,666 7,575 2,282,160 Depreciation and amortization 3,787,438 - - 7691661 4557,099 Total operating expenses 11,829,414 128,237 13,269,541 3,347,389 28,574,581 Operating income (loss) (1,408,530) 5,914 2,059,639 83,319 740,342 Nonoperating revenues (expenses): Interest income - - 434,588 - 434,588 Gain on sale of capital assets 891331 - - (1,359) 871972 Interest expense (31,428) - - - (31,428) Total nonoperating revenues (expenses) 57,903 - 434,588 (1,359) 491,132 Income (loss) before transfers (1,350,627) 5,914 2,494,227 81,960 1,231,474 Transfers in 1,562,348 - - - 1,562,348 Transfers out (312,000) - - (25,623) (337,623) Change in net position (100,279) 5,914 2,494,227 56,337 2,456,199 Net position - beginning 17,407,957 (24,907) 4,429,289 5,689,243 27,501,582 Prior period adjustment (488,073) (11,057) (26,852) (232,190) (758,172) Net position - endinc $ 16,819,605 $ (30,050) $ 6,896,664 $ 5,513,390 $ 29,199,609 94 EXHIBIT E-3 CITY OF WICHITA FALLS, TEXAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2018 Employee Information Fleet Duplicating Benefit Technology Maintenance Services Trust Fund Totals Cash flows from operating activities: Received from customers and users $ 318,237 $ - $ 4,582,791 $ - $ 4,901,028 Received from interfund charges 10,048,325 134,151 9,798,200 3,430,708 23,411,384 Other operating receipts - - 939,217 - 939,217 Payments to suppliers (5,874,755) (94,770) (13,118,073) (1,757,345) (20,844,943) Payments for interfund services (454,421) (14,302) (16,680) (138,151) (623,554) Payments to employees (1,511,784) (19,712) (65,159) (869,773) (2,466,428) Net cash provided (used) by operating activities 2,525,602 5,367 2,120,296 665,439 5,316,704 Cash flows from noncapital financing activities: Interfund loans received - - - - - Interfund loans repaid - (4,505) (36,704) - (41,209) Transfers in from other funds 1,562,348 - - - 1,562,348 Transfers out to other funds (312,000) - - (25,623) (337,623) Net cash provided (used) by noncapital financing activities 1,250,348 (4,505) (36,704) (25,623) 1,183,516 Cash flows from capital and related financing activities: Acquisition of capital assets (3,139,115) - - (161,541) (3,300,656) Proceeds from sale of capital assets 89,331 - - - 89,331 Principal paid on long-term debt (443,387) - - - (443,387) Interest and fees paid on long-term debt (31,428) - - - (31,428) Net cash used for capital and related financing activities (3,524,599) - - (161,541) (3,686,140) Cash flows from investing activities: Interest on investments - - 434,588 - 434,588 Net cash provided by investing activities - - 434,588 - 434,588 Net Increase (Decrease) in Cash and Cash Equivalents 251,351 862 2,518,180 478,275 3,248,668 Cash and Cash Equivalents - Beginning 359,526 - 5,114,850 2,127,143 7,601,519 Cash and Cash Equivalents - Ending $ 610,877 $ 862 $ 7,633,030 $ 2,605,418 $ 10,850,187 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 Deferred outflows - OPEB-related Increase (decrease) in liabilities and deferred inflows: Accounts payable - trade Accrued payroll Accrued vacation and sick leave Estimated health claims payable Other liabilities Net pension liability Net OPEB liability Deferred inflows - pension -related Deferred inflows - OPEB-related Total adjustments Net cash provided (used) by operating activities $ (1,408,530) $ 5,914 $ 2,059,639 $ 83,319 $ 740,342 3,787,438 - - 769,661 4,557,099 (54,322) - (8,414) - (62,736) (14,884) - - - (14,884) - (109) - 150 41 140,483 2,091 8,931 92,281 243,786 (1,315) (29) (73) (626) (2,043) 189,151 164 18,362 (186,172) 21,505 921 (302) (1,235) 435 (181) 86 - - 4,825 4,911 - - 56,923 - 56,923 - - (558) - (558) (509,290) (7,373) (30,118) (324,901) (871,682) (24,747) (562) (1,361) (11,772) (38,442) 409,450 5,320 17,586 232,930 665,286 11,161 253 614 5,309 17,337 3,934,132 (547) 60,657 582,120 4,576,362 95 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 AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FOR THE YEAR ENDED SEPTEMBER 30, 2018 Balance Balance 10/1 /2017 Additions Deductions 9/30/2018 ESCHEATMENT FUND Assets Cash and cash equivalents $ 1275799 $ 665232 $ 165481 $ 177,550 Liabilities Other liabilities $ 127,799 $ 66,232 $ 167481 $ 177,550 •e 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. EXHIBIT G-1 CITY OF WICHITA FALLS, TEXAS COMBINING STATEMENT OF NET POSITION COMPONENT UNITS SEPTEMBER 30, 2018 Wichita Falls Economic Wichita Falls Wichita Falls Wichita Falls Wichita Falls Development 413 Sales Tax Reinvestment Reinvestment Reinvestment Corporation Corporation Zone #2 Zone #3 Zone #4 Totals Assets Cash and cash equivalents $ 13,478,191 $ 4,156,567 $ 574,159 $ 520,265 $ 126,387 $ 18,855,569 Receivables: Government agencies 692,046 6927046 292,922 441069 423110 11763,193 Other 200,000 - - - - 200,000 Prepaid items 5,625 - - - - 5,625 Capital assets, net of accumulated depreciation 2,151,962 - - - - 2,151,962 Total assets 16,527,824 41848,613 867,081 564,334 168,497 22,976,349 Liabilities Accounts payable - trade 2,038,148 16,085 - - - 2,054,233 Other liabilities 936 - - - - 936 Total liabilities 2,039,084 16,085 - - - 2,055,169 Net position Net investment in capital assets 2,151,962 - - - - 2,151,962 Unrestricted 12,336,778 4,832,528 867,081 564,334 168,497 18,769,218 Total net position $ 14,488,740 $ 4,832,528 $ 867,081 $ 564,334 $ 168,497 $ 20,921,180 97 Q� co x W N w J act J w—w ��a w Q w Z N H wzw V g w cn Z O W LL z >- O m = H O w U LL O C= � M C a) } � a ry ay a z w a `. t CD C Z N r 00 r O O ' ' O r rl ' CB O LO O7 0 It d7 M f` N O r 6q U C LL E � a) U > O N LL E M C v N .yry LL F N 1 1 1 1 m m a) Ln LO > C:M M .� N LL U) 0 0 O') O� L cNr65 0cNi m t;q N N U Q 1 1 1 1 U- Q m — C: _O O U OU � w o � w 00 00 0 1 � 1 1 1 co ca m LO LO O N C •i M M :3 QC: o M " N (� O > U Ef} Efl L d cn U ca m U N O 00 O Lr �o N LO Lii Q It co M r X f` M r W r c O co O 0L 0 U 1= N M ik 4 k *k E o Q) 0) aD o " C: c C: N O N N N U H E C O FU O O X C: U) r-0 0 c c O a. 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C2 a) C C .O .Co m C C C6 O O a) QS cn .- L) C E a >, i� C � f1 U) .� L U L) co() O �_ C C5 � L m a) m m m N U (n (L6 (6 C J O Q _Q a) (a iT O O U) O O. c> � O E •O .0 p ~ a) E L O O U ~C O O O a co.(0 >m ~ (6 m m m U— �� Co 6 O U JC7o0Z2J U a) m a) Or_ L) N E U) O> _0 C m C O— 75m QW JQ Ud EXHIBIT H-5 CITY OF WICHITA FALLS, TEXAS CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITIY FOR THE YEAR ENDED SEPTEMBER 30, 2018 Beginning Ending Balance Balance 10/1 /2017 Additions Deletions 9/30/2018 Administrative services: Mayor and City Council $ 5,218 $ - $ - $ 5,218 City Manager 281,562 - - 281,562 Personnel/Risk Management 9,318 - - 9,318 Martin Luther King Center 749,447 - - 749,447 Library 5,695,829 - 7,388 5,688,441 General Public Informatior 947,753 6,149 183,737 770,165 Building Maintenance 2,909,802 - 2,679 2,907,123 Nondepartmental 512,598 - - 512,598 Municipal Court 614,261 - 6,428 607,833 Legal 1,488 1,517 - 3,005 City Clerk 1,411 - - 1,411 Homeland security 732,673 - 84,267 648,406 Training center 42,172 - 39,901 2,271 Golf course 4,717,515 - - 4,717,515 Total administrative services 17,221,047 7,666 324,400 16,904,313 Police 26,451,987 89,251 110,775 26,430,463 Fire 8,028,746 - - 8,028,746 Parks and recreation: Recreation 2,704,366 - 15,578 2,688,788 Park maintenance 5,240,707 - - 5,240,707 Cemetery 151,108 - 2,975 148,133 Total parks and recreatior 8,096,181 - 18,553 8,077,628 Accounting/finance: Information Systems 7,647,219 266,292 156,783 7,756,728 Total accounting/finance 7,647,219 266,292 156,783 7,756,728 Community development: Planning 26,833 6,036 1,411 31,458 Inspection 3,610 - - 3,610 Property management 10,767,100 - - 10,767,100 Weed and Seed program 7,504 - - 7,504 Hazard Mitigation Grant 170,800 - - 170,800 Total community development 10,975,847 6,036 1,411 10,980,472 Public works: Engineering 151,785 18,640 1,612 168,813 Street maintenance 143,641 - 2,780 140,861 Lake Wichita Revitalizatior 424,175 - - 424,175 SAFB Gate Perimeter Projecl 1,914,014 - 1,914,014 - Infrastructure 173,519,682 8,548,896 1,577,258 180,491,320 Total public works 176,153,297 8,567,536 3,495,664 181,225,169 Health: Administration 3,247,559 29,740 14,041 3,263,258 General city nursing 87,642 - - 87,642 Environmental health 47,156 13,655 - 60,811 Lab water pollution 37,273 5,350 - 42,623 Animal reclaim center 4,268,837 - - 4,268,837 Total health 7,688,467 48,745 14,041 7,723,171 Traffic and transportation 11,587,621 1,159,771 121,807 12,625,585 Multi -Purpose Events Center 48,239,335 - - 48,239,335 Wichita Falls Business Park 1,099,507 - - 1,099,507 Total capital assets $ 323,189,253 $ 10,145,297 $ 4,243,434 $ 329,091,117 108 CITY OF WICHITA FALLS, TEXAS REGIONAL AIRPORT FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2018 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 10/1/2017 Additions Deletions $ 14, 892, 849 $ 5,492,103 $ - 34, 086, 309 - - 127,836 - - 12,829 - - EXHIBIT H-6 Balance $ 20, 384, 952 34, 086, 309 127,836 12,829 54, 611, 926 51492,103 51492,103 54, 611, 926 278897913 7057556 - 31595,469 270437845 6765665 - 21720,510 357763 15,588 - 517351 31849 27566 - 67415 41973,370 1,400, 375 - 69373,745 $ 491638, 556 $ 4, 091, 728 $ 5492,103 $ 48, 238,181 109 EXHIBIT H-7 CITY OF WICHITA FALLS, TEXAS KICKAPOO AIRPORT FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2018 Balance Balance 10/1/2017 Additions Deletions 9/30/2018 Capital Assets: Land and betterments $ 817691905 $ 214975075 $ - $ 111266,980 Buildings and improvements 352641730 - - 35264730 Machinery and equipment 583,215 - - 583,215 Construction in progress 2911414 2821380 2561167 3171627 Total capital assets 121909,264 217795455 2561167 151432,552 Accumulated Depreciation: Land and betterments 255323458 2923717 - 258251175 Buildings and improvements 1,0891831 1071433 - 11197,264 Machinery and equipment 3765005 311034 - 4071039 Total accumulated depreciation 319981294 4311184 - 41429,478 Net capital assets $ 8,9101970 $ 2,348,271 $ 2561167 $ 111003,074 110 CITY OF WICHITA FALLS, TEXAS TRANSIT FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2018 Balance 10/1/2017 Additions Deletions 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 EXHIBIT H-8 RnInncP $ 4571254 $ 1,543,993 $ - $ 2,001,247 5,135, 957 913, 600 - 67049, 557 51933,202 2,648,170 - 8,5815372 475470 101549 - 581019 6041833 1233084 - 7273917 939,379 165,717 - 1,1055096 $41993,823 $ 2,4825453 $ - $ 754765276 111 EXHIBIT H-9 CITY OF WICHITA FALLS, TEXAS STORMWATER DRAINAGE FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2018 Balance Balance 10/1/2017 Additions Deletions 9/30/2018 Capital Assets: Drainage $ 25,0801233 $ 116221541 $ 997,688 $25,705,086 Land and betterments 4265513 155000 21300 4395213 Machinery and equipment 91,340 3,640 - 94,980 Construction in progress 733,214 3071710 657,719 383,205 Total capital assets 26,331,300 11948,891 1,657,707 26,622,484 Accumulated DeDreciation: Drainage 1,828,766 3253193 - 231531959 Land betterments 231051 51534 11150 271435 Machinery and equipment 82,603 31098 - 85,701 Total accumulated depreciation 1,934,420 333,825 11150 2,267,095 Net capital assets $ 24,3965880 $ 11615,066 $ 156565557 $2453555389 112 CITY OF WICHITA FALLS, TEXAS SANITATION FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2018 Balance 10/1/2017 Additions Deletions Capital Assets: Land and betterments Buildings and improvements Machinery and equipment Construction in progress Total capital assets Accumulated Depreciation: Land and betterments Buildings and improvements Machinery and equipment Total accumulated depreciation Net capital assets EXHIBIT H-10 Balance $ 7, 511, 043 $ 4551333 $ - $ 7, 966, 376 3,5551655 51460 - 315613115 655,824 91759 1,850 663,733 11,802,392 4701552 815720 1251911224 13243, 379 1551147 - 133983526 1, 549,445 937557 - 11643,002 308,223 445076 11850 350,449 3,101, 047 2921780 11850 31391,977 $ 8, 701, 345 $ 1771772 $ 795870 $ 81799,247 113 EXHIBIT H-11 CITY OF WICHITA FALLS, TEXAS WATER AND SEWER FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2018 Balance Balance 10/1/2017 Additions Deletions 9/30/2018 Capital Assets: Land and betterments $ 24,362,969 $ - $ 13,010 $ 24,349,959 Buildings, systems and improvements 331,6727016 49,3545120 37630,902 3777395,234 Machinery and equipment 519847166 775193 4007482 5,660,877 Furniture and fixtures 17164 - - 15164 Motor vehicles 17235 - 11235 - Construction in progress 4477767793 115665642 4271731830 411695605 Total capital assets 406,798,343 50,997,955 46,219,459 411,576,839 Accumulated Depreciatior: Land and betterments 11,284,511 243,612 840 11,5275283 Buildings, systems and improvements 121,7547877 818697392 217171006 12719077263 Machinery and equipment 4,6937352 2331927 3471537 475795742 Furniture and fixtures 17164 - - 11164 Motor vehicles 17235 - 15235 - Total accumulated depreciation 13757357139 95346,931 370665618 1447015,452 Net capital assets $ 26970637204 $ 4156511024 $ 4371521841 $ 26715615387 114 EXHIBIT H-12 CITY OF WICHITA FALLS, TEXAS WATERPARK FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2018 Balance Balance 10/1/2017 Additions Deletions 9/30/2018 Capital Assets: 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 assets $ 389,894 $ - $ - $ 3895894 4,601,487 - - 416017487 2211268 95443 - 2305711 51212,649 95443 - 5,222,092 1,4931840 2301075 - 117235915 1541464 225746 - 1773210 1,6487304 2527821 - 179017125 $ 3,5641345 $ (243,378) $ - $ 3,3207967 115 EXHIBIT H-13 CITY OF WICHITA FALLS, TEXAS FLEET MAINTENANCE FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2018 Balance Balance 10/1/2017 Additions Deletions 9/30/2018 Caaital Assets: Land and betterments $ 436,269 $ - $ - $ 436,269 Buildings and improvements 47719,647 38,513 - 47758,160 Machinery and equipment 1,679,551 51,946 1915114 1,540,383 Furniture and fixtures 21950 - - 21950 Motor vehicles 56,819,223 51256,551 173617871 60,713,903 Total capital assets 63,657,640 513475010 1,552,985 6714515665 Accumulated Depreciation: Land and betterments - other 27611 - - 21611 Buildings and improvements 2,641,682 1175632 - 277597314 Machinery and equipment 1,351,033 1271132 191,114 11287,051 Furniture and fixtures 2,950 - - 25950 Motor vehicles 419944,955 39542,674 11361,871 449125,758 Total accumulated depreciation 45,943,231 3,7871438 17552,985 48,1771684 Net capital assets $17,714,409 $ 115595572 $ - $19,2735981 116 CITY OF WICHITA FALLS, TEXAS DUPLICATING SERVICES FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2018 Balance 10/1/2017 Additions Deletions Caaital Assets: Machinery and equipment $ 9,117 $ - Accumulated Depreciation: Machinery and equipment 9,117 - Net capital assets $ - $ - 117 EXHIBIT H-14 Balance 9/30/2018 $ 9,117 9,117 EXHIBIT H-15 CITY OF WICHITA FALLS, TEXAS INFORMATION TECHNOLOGY FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2018 Capital Assets: Machinery and equipment Construction in progress Total capital assets Accumulated Depreciation: Machinery and equipment Net capital assets Balance Balance 10/1/2017 Additions Deletions 9/30/2018 $ 6;179)292 $ 2661292 $ 31397 $ 6,4421187 1047751 - 1045751 - 6,2845043 2661292 108,148 61442,187 1, 753, 719 7691661 21038 2)521,342 $ 47530, 324 $ (503, 369) $ 106,110 $ 3)920,845 118 CITY OF WICHITA FALLS, TEXAS WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2018 Capital Assets: Land and betterments Buildings and improvements Total capital assets Accumulated Depreciation: Buildings and improvements Net capital assets EXHIBIT H-16 Balance Balance 10/1/2017 Additions Deletions 9/30/2018 $ 114321069 $ 21000 $ - $ 114341069 9571191 - - 9571191 2,389,260 2,000 - 2,391,260 220,154 191144 - 239,298 $ 21169,106 $ (17,144) $ - $ 2,151, 962 119 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 120 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 126 These schedules contain information to help the reader assess the government's most significant local revenue source, the property tax. Debt Capacity 130 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 135 These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. 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I_ M N O N ao aD Un � N Ili O O M rl C0 4 N Ln 00 MO ti M M O N r MO M Ln N M Ln L() O O CO CO CO I` It co co co O 00 I-- C0 w d) N N w CO M r MO * M�:* M N N Co (D M d) M co u') 't O7 t Cl Ln cli d7 co- co m O N Ln N I` Ln Ni N M N N r O r O Ln d) (D CD co U) (n O z; OU L U) a) O U "O O O O O U c c _0 � U c c co � D c o (1)�) c c O U _ O U) U L C UEO O� M 0 a) Q>L L O cn O C O (n a) m> C.S �C a) in a(n Co a) >, o) EOL C O E >O(C6 C cO m a)a) N N C ON }a)OO C cB N •> •> > x C O (U Qcn mQ LL CU C C C cm uC UQ O mn E -0 Z (nx 6 aO O C nL (a co UO a U aaaaa) (B c6a) ��U�LL UQUxa U w�) QUc O w w 0 Z 0 C N V- 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 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 287554,029 2170827994 57593781 175725105 248,350 703747 577122,006 2011-2012 287679,076 211406,823 5,574,882 17677,100 207735 61,696 57,607,312 2012-2013 297277,956 22,062,365 5,423,680 1,578,764 230,728 403122 58,613,615 2013-2014 29, 780, 795 22, 397, 536 5, 558, 599 1,6847329 281,598 36, 688 59, 739, 545 2014-2015 3170903472 22,403,406 5,414,414 17775,372 291,091 323764 61,007,519 2015-2016 347567,763 22,3737768 5,035,947 17910,477 286,986 26,736 64,2017677 2016-2017 3571101173 22,4137397 5,1935721 178781061 281,687 97098 64,886,137 2017-2018 35,804,507 23,861,013 5,326,402 17952,011 308,333 27626 677254,892 125 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 2008-2009 $ 3,55378257553 $ 877,030,381 $4,430,855,934 $0.59526 $ 4,430,855,934 100.00% 2009-2010 3,622,501,148 803,697,677 41426,198,825 0.60526 43426,198,825 100.00% 2010-2011 3,6937399,778 728,642,824 45422,042,602 0.62526 4,422,042,602 100.00% 2011-2012 3,714,449,662 716,365,316 47430,814,978 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 3,7777010,620 771,002,233 4,548,0127853 0.63526 43548,012,853 100.00% 2014-2015 3185975607337 76512517406 4162478117743 0.65526 4,62418111743 100.00% 2015-2016 3194477837610 82018277696 4176576117306 0.70598 476516111306 100.00% 2016-2017 41031, 689, 962 817, 687, 012 4, 849, 376, 974 0.70598 4, 849, 376, 974 100.00% 2017-2018 4,1237022,727 818,629,114 4,941,6517841 0.70598 4,941,651,841 100.00% 126 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 I&S Total M&O I&S Total M&O I&S Total 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 2016-2017 0.69 0.02 0.71 0.58 0.03 0.61 1.17 0.37 1.54 2017-2018 0.69 0.02 0.71 0.58 0.08 0.66 1.17 0.37 1.54 City View ISD (2) Iowa Park CISD (3) Wichita Falls ISD (4) Grand M&O I&S Total M&O I&S Total M&O I&S Total Total 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 2016-2017 1.17 0.25 1.42 1.17 0.16 1.33 1.04 0.19 1.23 6.84 2017-2018 1.17 0.25 1.42 1.17 0.16 1.33 1.04 0.19 1.23 6.89 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 127 CITY OF WICHITA FALLS, TEXAS PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO SEPTEMBER 30, 2018 2017-2018 Percentage Taxable of Total Assessed Assessed Taxpayer Value Rank Valuation GGP - Sikes Senter LLC $ 64,000,000 1 Oncor Electric Delivery Co 41,702,850 2 Atmos Energy / Mid -Tex Division 22,996,120 3 Wal-Mart Stores East Inc 20,645,100 4 North American Pipe Corp 19,850,886 5 Wal-Mart Stores Texas LP 18,126,653 6 Quail Creek Crossing Ltd 171186,000 7 Kell West Regional Hospital 15,380,706 8 Winfield Solutions LLC 12,822,433 9 Lowe's Home Centers Inc. 12,059,579 10 Southwestern Bell - N/A Clinics of North Texas - N/A Wal-Mart Real Estate Business Trust - N/A Totals $ 244,770,327 Source: Wichita Appraisal District 128 EXHIBIT 1-8 2008-2009 Percentage Taxable of Total Assessed Assessed Value Rank Valuation 1.30% $ 52,964,416 1 1.20% 0.84% 39,368,627 2 0.89% 0.47% - N/A 0.00% 0.42% 18,854,411 5 0.43% 0.40% 11,960,975 8 0.27% 0.37% 25,904,572 3 0.58% 0.35% 13,672,000 6 0.31 % 0.31 % - N/A 0.00% 0.26% - N/A 0.00% 0.24% 12,306,384 7 0.28% 0.00% 2515205925 4 0.58% 0.00% 11,3525391 9 0.26% 0.00% 117429,636 10 0.26% 4.95% $ 223,334,337 5.06% 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 2008-2009 $ 26,375,113 $ 25,905,854 98.22% $ 373,087 $ 26,278,941 99.64% 2009-2010 2677527242 2671667043 97.81 % 3941854 26,5601897 99.28% 2010-2011 2776497264 2771797642 98.30% 3181774 27,4981416 99.45% 2011-2012 277704,114 277306,706 98.57% 3041932 2716111638 99.67% 2012-2013 28,362,591 27,906,520 98.39% 2771408 28,183,928 99.37% 2013-2014 28,876,552 28,375,563 98.27% 2641103 28,639,666 99.18% 2014-2015 30,270,748 29,809,308 98.48% 285,081 30,094,389 99.42% 2015-2016 33,644,264 33,124,968 98.46% 315,610 33,440,578 99.39% 2016-2017 347228,872 337694,059 98.44% 2361251 33,9301310 99.13% 2017-2018 3478877074 347298,367 98.31 % - 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O O r N co Nt LO CD I� co (6 L U cn N O O N r O N r O N r O N r O N r O N r O N r O N r r O O N N IL o0 CA O r N M 4 LO 6 I` O O O O r O r O r O r O r O r O r r O O N N N N N N N N N N N U .Q (6 N cn E iZ s= O O U m i O .Q C= (0 ti 0 N i O O N O O E Q r O co r 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 2008-2009 $ 515357000 $ 33, 524, 726 $ 397059, 726 0.88% $ 368.71 2009-2010 47790, 000 35, 918, 687 402708, 687 0.92% 389.36 2010-2011 414507000 34,104,162 387554,162 0.87% 368.75 2011-2012 41116,110 35,503,123 397619,233 0.89% 381.21 2012-2013 57491,678 51,5707623 577062,301 1.28% 545.78 2013-2014 47679,866 49, 302, 503 53, 982, 369 1.19% 514.62 2014-2015 31850,706 46,710,294 50,561,000 1.09% 481.01 2015-2016 16112% 132 311138,675 479267,807 0.99% 451.42 2016-2017 147132,973 29,4357100 431568,073 0.90% 416.03 2017-2018 3470007000 2171557000 5571551000 1.12% 526.55 131 EXHIBIT 1-12 CITY OF WICHITA FALLS, TEXAS DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT (UNAUDITED) SEPTEMBER 30, 2018 Direct: City of Wichita Falls Overlapping: Wichita County Burkburnett Independent School District City View Independent School District Iowa Park Consolidated Independent School District Wichita Falls Independent School District Total overlapping Total direct and overlapping bonded debt Sources: Gross Percentage Amount Governmental Applicable Applicable Activities to City of to City of Debt (1) Wichita Falls (2) Wichita Falls $ 60,623,665 100% $ 60,623,665 707835,256 100% 70,835,256 49,179, 558 25% 121294, 890 81153,232 90% 71337,909 157693,061 2% 3131861 96, 643, 374 99% 95, 676, 940 240,504,481 1864581856 $ 301,1287146 $ 247, 082, 521 (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. 132 M m X w Q , Z ^ X LU LWL F- ) a J wD LL Q a LU Q W 5. r J J = O V U Z V) CO T oc T O O f!} LO N N O O b9 00 0') O O O bg N O � O CD CD O T O N CF) Ef} �} r- LO r- Ef} CA CD T CD T O T � M Cl Cl N M C)� oc 't 64 N N E!? � U)� O r- O Itil LO 00 It r` Ef? 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O O N O O N r O N r O N r O N r O N r O N r O 04 r O N r O N + r O Z N M coItt r EXHIBIT 1-15 Fiscal Estimated Year Population (1) 2008-2009 105,935 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 104,553 104553 103,931 104,552 104, 898 105,114 104,710 104, 724 104,747 Sources: (1) World Population Review (2) Texas Education Agency (3) Bureau of Labor Statistics CITY OF WICHITA FALLS, TEXAS DEMOGRAPHIC STATISTICS - LAST TEN FISCAL YEARS (UNAUDITED) Per Capita Personal Personal Median Education School Unemployment Income Income (1) Age (1) Level Enrollment (2) Rate (3) $ 214707050,408 $ 231317 33.2 13.5 151473 8.2% 21205,022,770 21,090 32.3 13.3 16,217 7.3% 257661263,274 261458 32.8 13.2 15539 6.6% 2,330,756,606 221426 32.4 13.2 14,569 6.9% 21499,106,456 23,903 32.5 13.1 14,639 6.2% 213367602,950 22,275 32.5 13.2 151181 4.9% 2,397,229,884 22,806 32.5 13.2 15,155 4.4% 253941298,860 221866 32.5 13.2 151181 4.8% 2139579807396 22,879 32.5 13.2 15,124 3.4% 2,597,725,600 24,800 32.8 13.2 15,150 3.1% 135 EXHIBIT 1-16 CITY OF WICHITA FALLS, TEXAS PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO (UNAUDITED) SEPTEMBER 30, 2018 2017-2018 2008-2009 Percentage Percentage of Total of Total City City Employer Employees Rank Employment Employees Rank Employment Sheppard Air Force Base 12,581 1 17.60% 127201 1 17.06% North Texas State Hospital 2,071 2 2.90% 1,947 3 2.72% United Regional Health Care System 22021 3 2.83% 15800 4 2.52% Wichita Falls ISD 1,992 4 2.79% 2,007 2 2.81 % Midwestern State University 1,315 5 1.84% 11223 6 1.71 % City of Wichita Falls 11238 6 1.73% 1,350 5 1.89% Wal-Mart - 3 locations 11140 7 1.59% - N/A - Howmet Corp. WF Casting Division 850 8 1.19% 860 8 1.20% James V. Allred Prison Unit 806 9 1.13% 975 7 1.36% United Supermarkets - 3 locations 778 10 1.09% - N/A - Cryovac Division - Sealed Air Corp - N/A - 781 9 1.09% AT&T Wireless - N/A - 669 10 0.94% Totals 24,792 34.69% 23,813 33.30% Sources: 2006-2007 data is from Texas Workforce Commission. 2017-2018 data is from Wichita Falls Chamber of Commerce. 136 ti co f` LO LO CO I` O m M O CO M LO CO It N M . . . . . . . . . . . . . . r O Lo 6 N 00 S O N CO N 4 M Cfl r� Lo 't It N 00 O CO 00 N ti ti m 00 00 N N r r O N ti O 00 m m ID O m 00 O M r m CO 't N 00 . . . . . . . . . . . . . . . . r Cl CO M N O CO O N 00 N N CO CO r;I- M't M O (fl w N It r-[I- LO N 00 M N N N r r i C� r O N co r O Lf) CO N O LO f'- O 00 CO LO CO 't ti 00 . . . . . . . . . . . . . . . r O M N N CO r M M f` N M LO r't CD r O M CO O N It ti ti LO N 00 CO N N N r r Lb r O N LO r O Ln Cfl 't O LO LC) r OD f- LO O 't ti M r O N i LO O N N CO r 00 I- CO N f- M M CO Cfl r O O O O) N It I- r- LO N 00 00 N N r r r O N r 0 LO r 0 0 LO r- r CO r LO CO 't N 00 . . . . . . . . . . . . . . r O 4 O N N Il N co 00 Cfl N O) M r M O r m O (D O N It ti ti LO N m m N N CO r r M O N M M LO LO M O O LO M CO cor LO CO 't ti 00 . . . . . . . . . . . . . . . . r O t O N N I- N 00 r M N N r r CO r O) O) (D O) N It ti 00 LO N 00 00 N N N r r i N r O N N 14 LO O f- O O LO O C4 CO N LO CO CO N CO. . . . . . . . . . . . . . . . r O t 00 N m ti O M N M N O N r LO N r m m CO 00 N It ti ti LO N 00 00 N N N r r � O N O w Zr O LO O f` O O N LO CO 00 Co LO CDIt CO M O r O I- CO N 00 LO O C) r N N O N r Ln r r O7 O Q0 00 N Itrl- ti LO N 00 N N N r r L) o Z (n D o N Q LL u m W W L F- LU O O O 00 CDr 00 't ti O r LO CO 't CO M C O Q O N LO It It CO O O 00 r CO O N LO T- T- O O) CO 00 N It 00 CO LO N 00 00 N r 0-4 r r J J Z J a? 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