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2012 Comprehensive Annual Financial ReportCITY OF 7 TEXAS Comprehensive Annual Financial Report Year Ended September 30, 2012 T E X A S B/tic-.Skies lfoldeaO�Portursties ��?a F'��' CITY OF WICHITA FALLS, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2012 ISSUED BY: DEPARTMENT OF FINANCE CITY OF WICHITA FALLS, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2012 TABLE OF CONTENTS Exhibit Page INTRODUCTORY SECTION Letterof Transmittal................................................................................................................................ i-vi GFOA Certificate of Achievement........................................................................................................... vii Organizationalart............................................................................................................................... viii Listof Principal Officials.......................................................................................................................... ix FINANCIAL SECTION Independent Auditor's Report.................................................................................................................. 1-2 Management's Discussion and Analysis.................................................................................................. 3-13 BASIC FINANCIAL STATEMENTS: Statementof Net Assets.................................................................................................................A-1 14 Statement of Activities....................................................................................................................A-2 15 Balance Sheet - Governmental Funds............................................................................................A-3 16 Reconciliation of the Governmental Funds Balance Sheet to the Statement ofNet Assets................................................................................................................................A-4 17 Statement of Revenues, Expenditures and Changes in Fund Balances - GovernmentalFunds.....................................................................................................................A-5 18 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of the Governmental Funds to the Statement of Activities.............................................A-6 19 Statement of Fund Net Assets - Proprietary Funds........................................................................A-7 20-21 Statement of Revenues, Expenses and Changes in Fund Net Assets - ProprietaryFunds.........................................................................................................................A-8 22 Statement of Cash Flows - Proprietary Funds................................................................................A-9 23-24 Statement of Fiduciary Assets and Liabilities.................................................................................A-10 25 Notes to the Financial Statements..................................................................................................... 26-59 REQUIRED SUPPLEMENTARY INFORMATION: Budgetary Comparison Schedule - General Fund.......................................................................... B-1 60 Notes to the Required Supplementary Information............................................................................ 61 Texas Municipal Retirement System - Analysis of Funding Progress - LastTen Plan Years..................................................................................................................... B-2 62 Wichita Falls Firemen's Relief and Retirement Fund - Analysis of Funding Progress ..................... B-3 63 Wichita Falls Retiree Health Care Plan- Analysis of Funding Progress ........................................... B-4 64 CITY OF WICHITA FALLS, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2012 TABLE OF CONTENTS (CONT'D. Exhibit Page COMBINING FINANCIAL STATEMENTS: Nonmajor Governmental Funds: CombiningBalance Sheet.........................................................................................................C-1 65 Combining Statement of Revenues, Expenditures and Changes in Fund Balances..................C-2 66 Budgetary Comparison Schedule — Community Development Block Grant..............................C-3 67 Budgetary Comparison Schedule — Section 8 Housing Fund....................................................C-4 68 Budgetary Comparison Schedule — Home Investment Partnership Agreement Fund ...............C-5 69 Budgetary Comparison Schedule — Hotel/Motel Tax Fund........................................................C-6 70 Budgetary Comparison Schedule — Golf Fund..........................................................................C-7 71 Budgetary Comparison Schedule — MPEC Fund.......................................................................C-8 72 Budgetary Comparison Schedule — Debt Service Fund.............................................................C-9 73 Nonmajor Enterprise Funds: Combining Statement of Net Assets..........................................................................................D-1 74 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets.....................D-2 75 Combining Statement of Cash Flows........................................................................................D-3 76-77 Internal Service Funds: Combining Statement of Net Assets.......................................................................................... E-1 78 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets ..................... E-2 79 Combining Statement of Cash Flows........................................................................................ E-3 80 Agency Fund: Statement of Changes in Assets and Liabilities......................................................................... F-1 81 Component Units: Combining Statement of Net Assets..........................................................................................G-1 82 Combining Statement of Activities.............................................................................................G-2 83 SUPPORTING SCHEDULES: Combined Schedule of Bonded Debt and Interest Maturities.........................................................H-1 84 Combined Schedule of Bonds Payable..........................................................................................H-2 85-89 Debt Service Coverage — Revenue Bonds..................................................................................... H-3 90 Capital Assets Used in the Operation of Governmental Funds - Schedule By Function and Activity................................................................................................ H-4 91 Capital Assets Used in the Operation of Governmental Funds - Schedule of Changes By Function and Activity.............................................................................H-5 92 Municipal Airport Fund — Capital Assets and Accumulated Depreciation........................................H-6 93 Kickapoo Airport Fund — Capital Assets and Accumulated Depreciation........................................H-7 94 Transit Fund — Capital Assets and Accumulated Depreciation........................................................H-8 95 Stormwater Drainage Fund - Capital Assets and Accumulated Depreciation ................................. H-9 96 Sanitation Fund — Capital Assets and Accumulated Depreciation.................................................. H-10 97 CITY OF WICHITA FALLS, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2012 TABLE OF CONTENTS (CONT'D. Exhibit Page Water and Sewer Fund — Capital Assets and Accumulated Depreciation ..................................... H-11 98 Waterpark Fund — Capital Assets and Accumulated Depreciation ................................................ H-12 99 Fleet Maintenance Fund — Capital Assets and Accumulated Depreciation .................................... H-13 100 Duplicating Services Fund — Capital Assets and Accumulated Depreciation ................................. H-14 101 Information Technology Fund — Capital Assets and Accumulated Depreciation ............................ H-15 102 Wichita Falls Economic Development Corporation — Capital Assets and Accumulated Depreciation...........................................................................................................H-16 103 STATISTICAL SECTION (UNAUDITED) Net Assets By Component — Last Ten Fiscal Years........................................................................1-1 104 Changes in Net Assets — Last Ten Fiscal Years..............................................................................1-2 105-106 Fund Balances, Governmental Funds — Last Ten Fiscal Years........................................................1-3 107 Changes in Fund Balances, Governmental Funds — Last Ten Fiscal Years.....................................1-4 108 Tax Revenues By Source, Governmental Funds — Last Ten Fiscal Years.......................................1-5 109 Assessed and Estimated Actual Value of Taxable Property — Last Ten Fiscal Years......................1-6 110 Direct and Overlapping Property Tax Rates — Last Ten Fiscal Years..............................................1-7 111 Principal Property Taxpayers — Current Year and Nine Years Ago..................................................1-8 112 Property Tax Levies and Collections — Last Ten Fiscal Years..........................................................1-9 113 Ratios of Outstanding Debt by Type — Last Ten Fiscal Years.........................................................1-10 114 Ratios of General Bonded Debt Outstanding — Last Ten Fiscal Years............................................1-11 115 Direct and Overlapping Governmental Activities Debt...................................................................1-12 116 Computation of Legal Debt Margin — Last Ten Fiscal Years...........................................................1-13 117 Pledged Revenue Coverage — Water and Sewer Revenue Bonds — LastTen Fiscal Years...................................................................................................................1-14 118 Demographic Statistics — Last Ten Fiscal Years.............................................................................1-15 119 Principal Employers — Current Year and Ten Years Ago................................................................1-16 120 Full -Time Equivalent City Government Employees by Function/Program — LastTen Fiscal Years...................................................................................................................1-17 121 Operating Indicators by Function/Program — Last Ten Fiscal Years...............................................1-18 122 Capital Asset Statistics by Function/Program — Last Ten Fiscal Years...........................................1-19 123 Graphics: Cashand Investments............................................................................................................... J-1 124 TotalBonds Payable.................................................................................................................. J-2 125 General Obligation Bonds Payable............................................................................................J-3 126 Revenue Bonds Payable........................................................................................................... J-4 127 GeneralFund Equity.................................................................................................................. J-5 128 Comparison of Tax Levy and Collections.................................................................................. J-6 129 Revenues by Source — FYE 9/30/12......................................................................................... J-7 130 Expenditures by Function — FYE 9/30/12................................................................................... J-8 131 General Governmental Revenues (General Fund Only)............................................................ J-9 132 General Governmental Expenditures (General Fund Only) ...................................................... J-10 133 Introductory Section Uic l4 lal�5 T E X A S $/ueSkie, 111-41W O��o�ttr itie March 14, 2013 The Honorable Mayor, Members of the City Council, City Manager and Citizens of Wichita Falls, Texas OFFICE OF THE CITY MANAGER 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, 2012. 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, 2012, was prepared in accordance with accounting principles as promulgated by the Governmental Accounting Standards Board (GASB). The financial statements and related notes have been audited by the independent audit firm of Edgin, Parkman, Fleming & Fleming, PC, whose report is included herein. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City. We believe the data, as presented, are accurate in all material aspects; that they are presented in a manner designed to fairly set forth the financial position and results of operation of the City as measured by the financial activity of its various funds; and that all disclosures necessary to enable the reader to gain understanding of the City's financial activities have been included. The CAFR continues to present financial data using the reporting model promulgated by GASB Statement No. 34. This reporting model changed governmental financial reporting by incorporating government -wide financial statements. The Finance Department believes that this presentation provides better information to users of the report, and it requires management to provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of a Management's Discussion and Analysis (MD&A). The MD&A can be found immediately following the independent auditors' report and is designed to complement this transmittal letter and should be read in conjunction with it. GENERAL INFORMATION - CITY OF WICHITA FALLS, TEXAS The City of Wichita Falls is located in the south-central United States in north -central Texas. Wichita Falls is linked to major southwestern, western, and mid -western cities by Interstate 44, U.S. Highways 82, 281,277,287, and Texas State Route 79. The city is approximately 130 miles northwest of the Dallas/Fort Worth Metroplex, 15 miles from the Red River that marks the Texas/Oklahoma border, and 125 miles south of Oklahoma City. The city is located in the cross -timbers area of the gently rolling north -central plains and is dissected by the Wichita River. Due to the city's geographic location, Wichita Falls serves as a regional economic hub for north Texas and south central Oklahoma. Wichita Falls is the county seat of Wichita County and the major population center in North Texas. The economy is based on mineral production, retail trade, manufacturing, agribusiness, and government installations. Principal sources of agricultural income include cattle, cotton and wheat. Wichita Falls is home to Sheppard Air Force Base, which operates the Euro-NATO jet pilot training program. The city's major university is Midwestern State University. Principal manufacturers within the area include metal fabrication, industrial and CITY OF WICHITA FALLS 1300 7t" St., PO Box 1431, Wichita Falls, TX 76307 t: (940) 761.7404 f: (940) 761.8833 commercial equipment, engine components, flexible packaging, and assorted plastic, glass and fiberglass. North Texas State Hospital -Wichita Falls Branch, Midwestern State University, James V. Allred Prison and Sheppard Air Force Base are also large employers located within the city. The City operates a Multi -Purpose Events Center, which includes a coliseum, exhibit hall, and an agricultural arena/show barn. The 2012 population for Wichita Falls, as estimated by the City, is 103,931, a decrease of 0.3% from the 2000 Census estimates, and an increase of 7.97% over the 1990 population. CITY SERVICES AND ORGANIZATION OF THE GOVERNMENT The City of Wichita Falls utilizes a Council -Manager form of government and is organized under the Constitution and Laws of the State of Texas. The City Council is comprised of five members elected from separate districts, and a Mayor and one member elected by the citizens at -large. The City Council appoints the City Manager, City Attorney, Municipal Court Judge and City Clerk. All other staff members work under the direction of the City Manager. The City provides on a continuing basis a full range of basic municipal services including: public safety (police, fire and building inspection); highways, streets and engineering; health and welfare services; parks, recreation and cemeteries; library services; public improvements; planning and zoning; and general administrative services. In addition, the City provides water, sewer, sanitation and transportation services for its citizens. ECONOMIC CONDITION AND ACTIVITY Over the past few decades, Wichita Falls has successfully diversified its economy to include new manufacturing, government, medical services, retail and service related commerce. This diversification is in addition to the more typical North Texas industries of agriculture, and oil and gas production. The Wichita Falls MSA houses a robust manufacturing sector, with many companies having employment in excess of 100 persons. This sector of the economy generates almost $261 million in annual payroll, representing approximately 9% of total employment within the city, and accounts for more than $933 million in gross sales annually. Wichita Falls is also a nexus of international investment. Three area manufacturing facilities are foreign -owned, representing France, Sweden, and Germany. The city is the economic hub of a 60-mile radius trade area, populated by an estimated 379,000 people. Of that population, an estimated 240,000 are currently in the workforce, and look to Wichita Falls for their employment, shopping, entertainment, educational, cultural and health care needs. Being the largest community within 100 miles, Wichita Falls boasts a larger retail trade than a community its size would normally enjoy. Many national retailers and restaurants have found Wichita Falls to be a superb location. At the beginning of the 2009- 10 fiscal year, the local economy was showing considerable signs of stress. In March of 2009, the Avis/Budget Call Center closed its doors displacing 220 workers. In July of 2009, Saint Gobain ceased manufacturing fiberglass reinforcements eliminating 750 jobs. In September 2009, Washex closed its doors, idling 50 manufacturing workers. Also in September 2009, ABB Control announced it would close its manufacturing operation by the end of March 2010, ultimately affecting 170 employees. The recession also took its toll on many area businesses in the form of layoffs. Howmet/Alcoa, United Electric, Circuit City, Wichita Tank, PPG, OCV Fabrics, Kalco Machine, Wichita Clutch and many others laid off between 10 to 20 percent of their workforce. In response to the worst recession in modern history and this downturn in the local economy, efforts were made to nearly double the economic development marketing campaigns. Additionally, in December of 2009 the Chamber of Commerce, City of Wichita Falls, Convention and Visitor's Bureau, and Downtown Proud organizations unveiled a well thought out community -wide branding, marketing and public relations campaign. This effort was a public/private partnership with a goal of generating $250,000 per year for three years from citizens and local businesses, and matching funds from the 4A Economic Development Corporation. Within 90 days of the goal's announcement, the funding commitments were generated. This marketing effort is nearly two-thirds complete and discussions are underway about maintaining this program in some capacity. The City and 4A Economic Development Corporation has also been aggressive over the last few years in granting economic development incentives for primary job creation. Since the 2009-10 fiscal year, 13 projects ll were approved for funding with the potential for creating, and/or retaining, over 2,000 jobs. These projects include Carter Aviation Technologies, Tryer Process Equipment, WDS/Global, Wichita Clutch, Armor Controls, Sharp Iron, Pratt/Whitney Canada, Albert Moving Staffers, BuyDentalEquipment.com, Excaliber Paint and Coatings, MagicAire, Latex International, and Cryovac. Several of these projects have invested in the local economy resulting in the addition or retention of hundreds of jobs. Others are still in the early phases of their expansion plans and the results remain to be seen. 4A Economic Development Sales tax funds have also been used to assist with activities of the Military Affairs Committee, a regional organization established a few years ago to work directly with Sheppard Air Force Base (SAFB), Air Education and Training Command, the Chief of Staff for the Air Force, and our Congressional, State and Local elected officials. This Committee was formed to increase the value of SAFB, strengthen community development and build a stronger economy. The City, SAFB and surrounding communities are also conducting a Joint Land Use Study (JLUS), which is a cooperative planning initiative to promote compatible community growth that supports military training and operational missions. The inter jurisdictional partnership will result in the identification of actions that can be taken jointly by the community and installation to promote compatible development and address current and future encroachment. The goal of compatibility planning is to promote an environment where both entities (military and civilian) can coexist successfully. Although these efforts and others have had some success, the recovery of the local economy continues to be very slow and gradual. During 2011-12, no new major plant developments were announced, but several industries made investments to retain hundreds of primary jobs. Additionally, very few primary jobs were affected by plant closings and layoffs. The unemployment rate also continues to improve slowly as the commercial and retail sectors announce new additions to the community. Construction permits is also an indication of economic activity in the community. Residential permits totaled $30,469,292, which is an increase of $2,943,269, or 11 % from the prior year. Although the value of commercial construction permits declined during the fiscal year, the amount was still fairly strong for Wichita Falls. Commercial construction permits totaled $67,593,577, which is a reduction of 9% from the prior fiscal year. Nevertheless, 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 Hospital (Barnett Medical Addition) — a total of 27,000 sq. ft. with an estimated value of $2,000,000. • Vernon Regional College Addition — a total of 94,186 sq. ft. with an estimated value of $2,216,188. • Parkstone Addition (Multi -Family Units) — a total of 69,791 sq. ft. with an estimated value of $3,887,190. • Roberts Truck Center (Commercial Storage) a total of 26,916 sq. ft. with an estimated value of $1,530,980. • Faith Refuse (Commercial Storage) — a total of 15,000 sq. ft. with an estimated value of $1,600,000. • Echo Meter (New Office Building) a total of 6,000 sq. ft. with an estimated value of $1,000,000. Another indicator of local economic performance is the retail sales tax. During the 2011-12 fiscal year, the City generated $28,542,43 l in retail sales taxes, which was $431,773, or 1.54% more than in the prior fiscal year. MAJOR INITIATIVES For The Year. The City Council continues to identify programs to meet citizens' requests for services and to safeguard the environment. Work is nearing completion on the City's water system improvement projects that were started in 2001. Since 2001, over $130 million in improvements have been made to expand the City's water supply and treatment capabilities and to meet regulatory treatment requirements of the EPA and TCEQ. The final element of this work is the construction of a new 10 million gallon per day conventional water iii treatment facility, sludge dewatering facilities, chemical building improvements, high service pump station, and miscellaneous site work at the Cypress Water Treatment Plant. Construction of this $42.7 million project began in August 2009 and is very near completion. During the 2011-12 fiscal year, approximately $4.2 million was expended on this project. In October 2011, the City issued $3.2 million of 20-Year Combination Tax and Revenue Certificates of Obligation for the Rhea/Callfield/Lawrence Road Realignment Project. The project consisted of property acquisition, demolition, roadway construction, and traffic controls. The project was designed to alleviate traffic congestion in this major retail area of the city by eliminating a traffic controlled intersection. Actual construction began in March 2012 and was completed in late 2012. Funds from the 4B Sales Tax Corporation and the Tax Increment Financing Zone #2 are being used to finance the debt service for this project. During the 2011-12 fiscal year, the City refinanced approximately $4.3 million of outstanding General Obligation Bonds to take advantage of lower interest rates for the remaining life of the bonds. The refinancing of this debt will save the City approximately $600,000 over the remaining ten years of this bond issue. In April 2012, the City entered into an energy services agreement with an energy services company in the amount of $5.12 million to install energy savings projects in numerous City facilities. The improvements primarily consisted of lighting, heating and cooling units and energy management systems in various City facilities. Additionally, a dehumidification system was installed at the Kay Yeager Coliseum. The Energy Services Agreement required the company to design, engineer, hire contractors, perform construction management services, train City employees on equipment, and guarantee to the City that the cost of these projects will be repaid, and over $1.6 million in cost savings will be realized, through reduced energy bills and lower maintenance expenses over a period of 15 years. The capital cost of these projects is being financed from three sources of funds: (1) $4.4 million by using a 13 year capital leasing program, (2) $450,000 in 4B Sales Tax Funds budgeted for the coliseum dehumidification system, and (3) $274,000 in energy rebates from ONCOR. During this fiscal year, considerable strides were made in the extension of the City's Circle Hike and Bike Trail System. In August 2010, a Texas Transportation Enhancement Grant in the amount of $2.5 million was awarded for continuation of the trail system. During 2011-12, approximately $1.95 million was expended for the Seymour Highway and Barnett Road sections of the trail, and to begin design on the section from Lucy Park to the Seymour Highway. In addition, about $150,000 was expended for a parking lot in the Wichita Bluffs Open Space area on Seymour Highway. The City also currently has applied for another grant from the Texas Department of Transportation in the amount of $958,000 to finance another section of the trail from Seymour Highway, connecting to Barnett Road. For The Future. A major undertaking that is making progress in the downtown area is the construction of a new travel center for various public and private transportation services. This new travel center will serve as a major transportation hub for the region. Property acquisition, demolition of dilapidated property, and design services were completed during in the prior fiscal year with funds from the Federal Transit Administration (FTA) and the 4A Economic Development Sales Tax Corporation. The cost for these elements of the project was approximately $1 million. Construction of the facility began in October 2012 and is expected to be complete in late summer of 2013. The cost of the construction is $4.2 million and is principally being funded with a grant from the FTA. However, the City granted $500,000 of General Funds for the project. Additionally, the City and 4A and 4B Sales Tax Corporations provided a three year loan to the project in the total amount of $941,000. This loan will be repaid to the three organizations with annual entitlement funds from the FTA. In October 2012, the City began construction of Phase I of the new Airport Facilities at Municipal Airport. The cost for this phase is approximately $4.5 million, 90% of which is being funded with grants from the Federal Aviation Administration, with the remaining 10% coming from reserves in the Municipal Airport Fund. The project consists of a new entry road and circular driveway to accommodate the new terminal building. In February 2013, the City issued $19.875 million of 20-Year Combination Tax and Revenue Certificates of Obligation to partially fund Phase II of the Airport Facilities Project at Municipal Airport. The cost of this phase is anticipated to be $28 million, with the remaining costs being funded with grants from the Federal Aviation Administration. The project generally consists of construction of a new terminal building and airport aprons. The debt service for the 20-Year Certificates will be paid from annual entitlement funds received from the IMA Federal Aviation Administration, operating income in the Municipal Airport Fund, and annual grants from the 4A and 4B Sales Tax Corporations and the General Fund. Construction is expected to begin in August 2013 and be completed in October 2014. Recently, the City refinanced two outstanding General Obligation Bond Issues in the amount of $3.74 million to take advantage of lower interest rates for the remaining life of the bonds. The refinancing of this debt will save the City approximately $250,000 over the remaining five years of this bond issue. The McNeil Avenue Drainage Project is currently under design and is expected to be completed in the summer of 2013. However, the construction cost is estimated to be $4.2 million, which won't be available in the Storm Water Utility Fund until sometime in the summer of 2014. As a result, this project will be delayed until funds are available. This project, when complete, will be a major flood control improvement for that area of the City. In the 2012-13 budget, funds were included to purchase mowing equipment and hire a crew in the Parks Department to assume mowing responsibility of the major state highways throughout the city in response to reduced mowing efforts by the State. This crew will supplement the work of the State, not replace it. The State will be able to use their existing funding levels to mow the minor state highways on a more consistent basis. This new program ties in well with City beautification efforts and the Pride in the Falls Campaign. The annual cost of this program is estimated to be $170,000, with a start-up cost for equipment of $222,000. The City is also working on plans to construct a temporary pipeline and pump station that runs from the River Road Wastewater Treatment Plant across the city to the Cypress Water Treatment Plant to use reclaimed water for water supply needs. This temporary plan will only be implemented for emergency needs if rainfall this spring is insufficient to raise the water in the lakes to adequate levels. If this emergency system is needed during an extended drought, the City would issue Water/Sewer Revenue Bonds for this project. The cost for the temporary project is estimated to be $13 million. Regardless if the temporary system is needed or not for this drought, the City is also working on plans to build a permanent system to capture this treated wastewater for water supply needs in the future. This permanent system is more costly than the temporary pipeline, and would also include the issuance of Water/Sewer Revenue Bonds. FINANCIAL INFORMATION In developing and evaluating the City's accounting system, consideration is given to the adequacy of internal control as deemed appropriate by the City Manager. Internal control is designed to provide reasonable, but not absolute, assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition; and (2) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived and the evaluation of costs and benefits requires estimates and judgments by the City Manager. All internal control evaluations occur within the above framework. The City believes that its internal control adequately safeguards assets and provides reasonable assurance of proper recording of financial transactions. The Annual Operating Budget is proposed by the City Manager and approved by the City Council following public discussion. Budgetary control is maintained at the class level by the Finance Department within each division by the encumbrance of estimated purchase amounts prior to the release of purchase orders to vendors. Purchase orders which result in an overrun of class level balances are not released until additional appropriations are made available. In instances when budgetary transfers are necessary, management control of the operating budget is maintained at the fund and department level. Transfers within a department of the same fund must be approved by the City Manager. Transfers across departments or funds must be approved by the City Council. 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, 2012, 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 v balance in the General Fund, 17% of expenditures (less debt service expenses) in the Water/Sewer Fund, and 15% of expenditures in the Sanitation Fund. These financial statements reflect that this policy has been followed. Additionally, the City 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, 2012, the City's tax supported debt was approximately $39.6 million, which is 0.89% of the taxable value of property, and $379 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 OMB Circular A-133, 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, 2011. This was the 17`h consecutive year that the government has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to GFOA to determine its eligibility for another certificate. Acknowledgments My appreciation is extended to the various elected officials, city manager, department heads and employees responsible for the fair presentation of the CAFR and for contributing to the sound financial position of the City of Wichita Falls. The City of Wichita Falls has been blessed with a group of persons who appreciate and respect principles of fiscal restraint and propriety. In particular, I would like to acknowledge the special efforts of the Department of Finance employees who contributed directly to the development of this report. The continuing support of City Council and City Manager, who remain committed to fiscal integrity and financial leadership, is likewise appreciated. Respectfully submitted, Jim Dockery Assistant City Manager/CFO vi Certificate of Achievement for Excellence in Financial Presented to City of Wichita Falls Texas For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2011 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. 6LZ�;- *aw, President fp e 44 0.: PAVt - -V Executive Director VH v x< C. Ua GI z� � O� yZ U. Op �C z �Z a mz z z rzF ` F �°a C cd� x zUQ F UU UO A m� °U .J W C7 I-)y z Gx W x a c O C Z F Z -4 C Z U -' F o z .z. IZ z z � Q z Fm Z U Q Q F � P� VO tiz,.x. U U� F F >° z O GaJ �1 x N. cF,] QC a QUA w x G a° ° U ° o ICI V F X z z O F_ U O > U L) L—Fj cz oz o U mo ,u 0 HN-I U dF F x I Q az z z °zFz a� u� c � F H axe Fo. U C F Boa C z oz a C z �U a F x ° + F z rx Ua Z � � zo F Urx U C azt z zQ z C F z z o v Q Q 'z >z u. Z,z � U a ` x Uw aU x 4 Q _� F F z U Q � o z .a x z � � z OF c� z o eU L) Z _U S ;, Ua F �' CITY OF WICHITA FALLS, TEXAS LIST OF PRINCIPAL OFFICIALS SEPTEMBER 30, 2012 Title Name Mayor Glenn Barham Mayor Pro-Tem Dorothy Roberts -Burns City Council Member Michael Smith City Council Member Brian Hooker City Council Member Tim Ingle City Council Member Mary Ward City Council Member Annetta Pope City Manager Darron Leiker City Attorney Miles Risley Municipal Court Judge Larry Gillen City Clerk Lydia Ozuna Assistant City Manager / Director of Community Development Kevin Hugman Director of Aviation, Traffic and Transportation John Burrus Assistant City Manager / Chief Financial Officer Jim Dockery Director of Public Health Lou Kreidler Police Chief Manuel Borrego Fire Chief Earl Foster Director of Parks and Recreation Jack Murphy Director of Public Works and Public Utilities Russell Schreiber Director of Multi -Purpose Events Center Bob Sullivan ix Financial Section Independent Auditor's Report EDGIN, PARKMAN, FLEMING & FLEMING, PC CERTIFIED PUBLIC ACCOUNTANTS 4110 KELL BLVD., SECOND FLOOR P.O. Box 750 WICHITA FALLS, TEXAS 76307-0750 PH. (940) 766-5550 • FAx (940) 766-5778 Independent Auditor's Report The Honorable Mayor and Members of the City Council City of Wichita Falls, Texas MICHAEL D. EDGIN, CPA DAVID L. PARKMAN, CPA, CFE A. PAUL FLEMING, CPA J. MARK FLEMING, CPA We have audited the accompanying financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Wichita Falls, Texas, as of and for the year ended September 30, 2012, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the 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 of Wichita Falls, Texas, as of September 30, 2012, and the respective changes in financial position, and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued under separate cover our report dated March 14, 2013 on our consideration of the City of Wichita Falls, Texas' internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements as a whole. The introductory section, combining and individual 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 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. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements taken 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. EDGIN, PARKMAN, FLEMING & FLEMING, PC Wichita Falls, Texas March 14, 2013 Management Discussion and Analysis �/C l lal�s T E X A S B/cr�Skies ��de� O��o�ttuvitie, City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2012 OFFICE OF THE CITY MANAGER 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, 2012. 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, 2012, by $378,063,016 (net assets). Of this amount, $35,610,941 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. The City's total net assets increased by $18,572,689. This increase can be attributed to several factors: (1) continued reduction of nearly $7.1 million in long term liabilities (outstanding debt) in business activities; (2) over $1.4 million in additional cash and cash equivalents in the Sanitation Fund due to higher than anticipated revenues at the landfill, savings on several maintenance and equipment expenditures, and to begin saving for future landfill expansion costs; (3) municipal court fines were above budgeted amounts; (4) receipt of over $4.8 million in grant funds from the Federal Aviation Administration for Phase II of the Runway Improvement Project at the Municipal Airport; (5) receipt of over $1.2 million in State grant funds for the Above Ground Fuel Farm and Apron Improvement Project at the Kickapoo Downtown Airport; (6) income in the Stormwater Utility Fund that is being used for drainage improvement projects; and (7) less than anticipated expenses for salaries, benefits and worker's compensation claims in the governmental funds. At September 30, 2012, the City's governmental funds reported combined ending fund balances of $30,803,944. Of this amount, $16,301,387, or 52.92%, is available for spending at the government's discretion, (unassigned fund balance). At the end of the current fiscal year, unassigned fund balance for the General Fund was $16,570,675 or 25.56% of total General Fund expenditures. During the 2011-12 fiscal year, the City's total debt decreased by $3,065,826. The primary reason for this reduction is because the City continued to retire outstanding General Obligation Bonds, Water and Sewer System Revenue Bonds, and Combination Tax and Revenue Bonds. However, this reduction was offset, partially, by the issuance of $3,200,000 in Combination Tax and Revenue Certificates of Obligation to fund a portion of the Rhea, Call Field and Lawrence City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2012 (continued) Road Realignment Project. It should also be noted, that the City refinanced $4,365,000 in outstanding General Obligation Bonds to lower annual debt service obligations. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The reporting focus is on the City as a whole and on individual major funds. It is intended to present a comprehensive view of the City's financial activities. The basic financial statements are comprised of three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report contains other supplementary information in addition to the basic financial statements. Government -wide Financial Statements The government -wide financial statements, which can be found on pages 14-15 of this report, include the Statement of Net Assets (Exhibit A-1) and the Statement of Activities (Exhibit A-2). These statements are designed to provide readers with a broad overview of the City's finances in a manner similar to a private -sector business. Both are prepared using the economic resources focus and the accrual basis of accounting; meaning that all current year's revenues and expenses are included regardless of when cash is received or paid. Thus, revenues and expenses are reported in these statements for some items that will result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but not used vacation leave). The Statement of Net Assets 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 assets. Over time, the increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. Other indicators of the City's financial position should be taken into consideration, such as the change in the City's property tax base and condition of the City's infrastructure (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 assets 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 Assets 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. City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2012 (continued) Business-=e 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, municipal airports, transit system, storm water drainage improvements, fleet maintenance services and water park operations. Component Units — Four 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 42, and the Wichita Falls Reinvestment Zone 43. Fund Financial Statements The City of Wichita Falls, like other state and local governments, uses fund accounting to provide more detailed information about the City's most significant funds, not the City as a whole. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Some funds are required to be established by state law or bond covenants. However, the City Council establishes many other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental Funds — These funds are used to account for the majority of the City's activities, which are essentially the same functions reported as governmental funds in the government -wide statements. However, unlike the government -wide financial statements, governmental fund financial statements are reported using an accounting method identified as the modified accrual basis of accounting, which measures cash and all other financial assets that can be readily converted to cash. The governmental fund statements focus on near -term inflows and outflows of expendable resources, as well as expendable resources available at the end of the fiscal year for future spending. Such information may be useful in evaluating a government's near -term financing requirements. The focus of the governmental funds financial statements is narrower than that of the government -wide financial statements. Therefore, it is use 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 5 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2012 (continued) Governmental Fund Statement of Revenues 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 16-19 of this report. Proprietary Funds — When the City charges customers for services it provides, whether to outside customers or to other units within the City, the activities are generally reported in proprietary funds. The City of Wichita Falls maintains two different types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City uses enterprise funds to account for its water and sewer operations, sanitation collection and disposal services, municipal airports, transit operations, storm water utility district, and water park operations. Internal service funds are an accounting device used to report activities that provide supplies and services to other City programs, such as fleet maintenance, print shop services, information technology, and employee benefit trust. Because these services benefit both governmental and business -type functions, they have been allocated between governmental and business -type activities in the government -wide financial statements. Proprietary fund financial statements provide the same type of information as the business -type activities shown in the government -wide financial statements, only in more detail and include some of the internal service fund -type activities. The proprietary fund financial statements provide separate information for the Water and Sewer Fund and the Sanitation Fund since they are considered to be 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. City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2012 (continued) Notes to the Financial Statements The Notes to the Financial Statements provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. These notes can be found on pages 26-59 of this report. Government -Wide Financial Analysis The City's combined net assets were $378,063,016 as of September 30, 2012, an increase of $18,572,689, or 5.17% from the prior year. Using the Tables below, an analysis of the net assets of the City can be made. The largest portion of the City's net assets, $324,146,248, or 85.74%, is reflected in capital assets (land and improvements, buildings, infrastructure, machinery and equipment), less any related debt used to acquire those assets that is still outstanding. The City uses these assets to provide services to its citizens; consequently, these assets are not available for future spending. Although the City reports its capital assets net of related debt, the resources needed to repay this debt must be provided from other sources since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's net assets, $18,305,827, or 4.84%, represents resources that are subject to external restrictions on how they may be used. The remaining balance of net assets, $35,610,941, or 9.42%, may be used to meet the government's ongoing obligations to citizens and creditors. Net Assets (in thousands) Governmental Business -type Activities Activities Total 2012 2011 2012 2011 2012 2011 Current and Other Assets $ 38,034 $ 37,262 $ 58,822 $ 59,273 $ 96,856 $ 96,535 Capital Assets 172,672 169,806 302,357 290,817 475,029 460,623 Total Assets 210,706 207,068 361,179 350,090 571,885 557,158 Long Term Liabilities 48,214 45,605 128,997 134,328 177,211 179,933 Other Liabilities 9,048 9,349 7,563 8,386 16,611 17,735 Total Liabilities 57,262 54,954 136,560 142,714 193,822 197,668 Net Assets: Invested in Capital Assets, Net of Related Debt 139,059 138,876 185,088 172,634 324,147 311,510 Restricted 6,931 6,048 11,374 11,735 18,305 17,783 Unrestricted 7,454 7,190 28,157 23,007 35,611 30,197 Total Net Assets 153 444 152 114 224 619 207 376 378 063 359 490 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2012 (continued) CHANGES IN NET ASSETS (in thousands) Governmental Business -type Activities Activities Total 2012 2011 2012 2011 2012 2011 Revenues: Program Revenues: Charges For Services $ 9,388 $ 9,431 $ 55,882 $ 58,747 $ 65,270 $ 68,178 Operating Grants and Contributions 9,869 13,269 2,372 1,323 12,241 14,592 Capital Grants and Contributions 8,066 2,315 182 193 8,248 2,508 General Revenues: Property Taxes 28,626 28,557 - - 28,626 28,557 Sales Taxes 21,407 21,083 - - 21,407 21,083 Other Taxes/Fees 7,521 7,485 - - 7,521 7,485 Investment Earnings 54 49 40 51 94 100 Miscellaneous 327 - (59) (42) 268 (42) Total Revenue 85,258 82,189 58,417 60,272 143,675 142,461 Expenses: Administrative Services 11,935 10,882 - - 11,935 10,882 Police 22,104 21,823 - - 22,104 21,823 Fire 13,523 13,291 - - 13,523 13,291 Parks and Recreation 5,153 5,406 - - 5,153 5,406 Accounting/Finance 976 2,534 - - 976 2,534 Community Development 6,777 7,084 - - 6,777 7,084 Public Works 7,957 7,613 - - 7,957 7,613 Health 5,022 4,911 - - 5,022 4,911 Traffic and Transportation 2,511 2,451 - - 2,511 2,451 MPEC 3,896 4,296 - - 3,896 4,296 Interest and Fees on Long-term Debt 1,711 1,765 - - 1,711 1,765 Municipal Airport - - 530 436 530 436 Kickapoo Airport - - 1,420 1,263 1,420 1,263 Transit - - 1,903 1,847 1,903 1,847 Sanitation - - 8,905 8,960 8,905 8,960 Water and Sewer - - 28,996 32,970 28,996 32,970 Stormwater Drainage - - 407 534 407 534 Waterpark - - 1,376 1,399 1,376 1,399 Total Expenses 81,565 82,056 43,537 47,409 125,102 129,465 Increase (Decrease) in Net Assets Before Transfers 3,693 133 14,880 12,863 18,573 12,996 Transfers (2,363) 1,754 2,363 (1,754) - - Increase (Decrease) in Net Assets 1,330 1,887 17,243 11,109 18,573 12,996 Net Assets - Beginning of Year 152,114 150,227 207,376 196,267 359,490 346,494 Prior Period Adjustment - - - - - - Net Assets - End of Year $153,444 152 114 $224,619 SZE 376 S378 063 S15L9 490 8 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2012 (continued) Governmental Activities — Governmental Activities increased the City's net assets by $1,329,725 for numerous reasons, including but not limited to: (1) payments resulting from the electric franchise agreement were higher than expected due to a very hot and dry summer in 2011; (2) municipal court revenue exceeded budgetary projections; (3) property tax receipts were higher than anticipated; (4) revenues from tourism activities exceeded budget projections; and (5) the City realized savings in electricity expenses, workers compensation costs, and salary expenses due to turnover of personnel. Business -Type Activities — Business -type Activities increased the City's net assets by $17,242,964, which was 92.84% of the total growth in the City's net assets. The City continues to reduce liabilities in its Water and Sewer Fund as debt service payments are made on outstanding revenue bonds. Business -type Activities also benefited from receipt of over $4.8 million in grant funds from the Federal Aviation Administration for Phase II of the Runway Improvement Project at the Municipal Airport and receipt of over $1.2 million in State grant funds for the Above Ground Fuel Farm and Apron Improvement Project at the Kickapoo Downtown Airport. In addition, the Transit Fund benefited from a grant from the City's General Fund of $500,000 to partially fund the construction of a new Travel Center. Also, the Sanitation Fund improved its cash position by over $1.4 million due to higher than anticipated revenues at the landfill, savings on several maintenance and equipment expenditures, and to set aside funds for future landfill expansion costs. Finally, most all revenue in the Stormwater Utility Fund either remains in the fund or is being used for drainage improvement projects. 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, 2012, the City's governmental funds reported combined fund balances of $30,803,944, which is an increase of $997,366 from the prior year. Much of this increase is reflected in the General Fund due to higher than expected electric franchise fees, municipal court revenue and property tax receipts. The General Fund also experienced expenditure savings in personnel costs due to turnover, lower than anticipated workers compensation expenses, and savings in electricity expenses from more efficient street lighting. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund balance of the General Fund was $16,570,675, an increase of $568,314 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 25.56% of total General Fund expenditures, while the total fund balance represents 27.66% of total General Fund expenditures. 1 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2012 (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 assets and changes in net assets of the enterprise funds in these financial statements are identical with the net assets and changes in net assets 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, 2012, the net assets for the City's internal service funds were $24,627,829, an increase of $1,901,002. This increase is principally because the City's new Information Technology Fund is generating reserve funds to address replacement of public safety communication systems as those systems become obsolete. Additionally, the Fleet Maintenance Fund increased in net assets principally because of transfers in of equipment purchased with Sanitation Funds. It should be noted that of the net assets for the City's internal service funds, $19,937,991 is invested in capital assets and $2,274,078 is reserved for employee and retiree life and health benefits. The purpose of the internal service funds is to provide services within the organization on a break-even basis. The net income or loss from these internal service funds has been allocated back to the using departments or funds for the City-wide financial statements. General Fund Budgetary Highlights The final amended expenditure budget for the General Fund, including transfers out, was increased by $1,366,250 from the original adopted budget. The reasons for this increase in appropriations can be briefly summarized as follows: • Approximately $579,000 of prior year encumbrances for numerous commitments were carried forward to the 2011-12 amended budget, most of which was for street improvements, traffic control equipment and software maintenance. • Approximately $66,000 was appropriated to complete the funding needed to change our non-public safety radio system to a narrow frequency band. • Approximately $105,000 was appropriated to make capital improvements to the Champion's Course at Weeks Park. • An additional $116,000 was appropriated to partially fund the replacement of one of the City's trolleys. • An additional $500,000 was budgeted to cover the cost of settling a lawsuit involving a vehicle accident in the Police Department. Actual revenues in the General Fund for the 2011-12 fiscal year were $63,950,697, which was $1,047,477 above final budgeted figures. The largest share of this amount was due to contributions of street and drainage improvements. Franchise fees from ONCOR also exceeded budget estimates due to a very hot and dry summer in 2011. The City also exceeded budget estimates in Municipal Court Fines. 10 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2012 (continued) Actual expenditures in the General Fund for the 2011-12 fiscal year were $64,834,543 compared to a final budget of $66,500,210. Much of this variance was due to turnover in personnel that allowed positions to remain unfilled for a period of time. The City also continued to benefit greatly through a third party administrative agreement to manage workers compensation claims. The City also saved money in electricity expenses, principally due to installation of LED street lights. Finally, there was over $1 million in encumbrances that were not liquidated by the close of the fiscal year and will be expended during the 2012-13 fiscal year. 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, 2012 amounts to $475,030,101 (net of accumulated depreciation). This investment in capital assets includes land, buildings, equipment, infrastructure and construction in progress. Major capital asset events during this fiscal year included the following: • Continued water system improvements, principally at Cypress Water Treatment Plant. • Construction of a fuel farm and apron improvements at Kickapoo Airport • Runway improvements at Municipal Airport • Current Street Rehabilitation and Utility Improvement Projects • Extension of the Park System Hike/Bike Trail • Callfield/Rhea/Lawrence Road Realignment Project Capital Assets, net of Accumulated Depreciation (in thousands) Governmental Business -type Activities Activities Total 2012 2011 2012 2011 2012 2011 Land $ 10,614 $ 10,609 $ 9,004 $ 8,970 $ 19,618 $ 19,579 Land Betterments 18,724 19,199 24,743 22,926 43,467 42,125 Buildings, Systems and Improvements 50,693 52,069 191,751 193,751 242,444 245,820 Infrastructure 78,811 74,346 - - 78,811 74,346 Machinery and Equip 12,131 13,145 2,535 2,024 14,666 15,169 Furniture and Fixtures 4 5 - 1 4 6 Motor Vehicles - - 18,095 16,638 18,095 16,638 Construction in Progress 1,695 433 56,230 46,507 57,925 46,940 Totals 172 672 169 806 302 358 $290,817 475 030 $460,623 11 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2012 (continued) Additional information on the City's capital assets can be found in Note 7 on pages 41-43 of this report. Long Term Debt — At the end of the current fiscal year, the City of Wichita Falls had a total bonded debt, notes and capital leases outstanding of $165,684,645. During the 2011-12 fiscal year, the City issued $3.2 million in 20-Year Combination Tax and Revenue Certificates of Obligation for construction of the Callfield/Rhea/Lawrence Road Realignment Project. As of September 30, 2012, Moody's Investor's Service had assigned a credit rating of Aa2 for the City's General Obligation Bonds and a rating of Al 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 AA- for its Water and Sewer System Revenue Bonds. Outstanding Debt at Year -End (in thousands) Governmental Business -type Activities Activities Total 2012 2011 2012 2011 2012 2011 General Obligation Bonds $ 4,116 $ 4,450 $ - $ - $ 4,116 $ 4,450 Combination Tax and Revenue Bonds 35,503 34,104 19,799 23,970 55,302 58,074 Utility System Revenue Bonds - - 102,566 105,278 102,566 105,278 Capital Lease Payable 1,453 - 1,704 372 3,157 372 Notes Payable - = 544 577 544 577 Total 41 072 38 554 124 613 130 197 165 685 168 751 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, 2012, was $.62526 per $100, which means that the City has a tax margin of $1.62474 per $100, and could raise up to $71,989,223 additional tax revenue a year from the present assessed valuation of $4,430,814,978 before the limit is reached. The current ratio of general bonded debt outstanding to the assessed value of all taxable property is 0.89%. Additional information about the City's long-term debt can be found in Note 13 on pages 51-54 of this report. 12 City of Wichita Falls, Texas Management's Discussion and Analysis September 30, 2012 (continued) Economic Factors and Next Year's Budget and Rates Total 2012-13 operating revenues, including transfers in from other funds, are budgeted at $154,903,774, which is an increase of $2,632,239, or 1.73% from the 2011-12 adopted budget. In the 2012-13 budget, sales taxes in the General Fund are projected to generate $21,448,817, an increase of $249,669, or 1.18% from the prior year adopted budget. It should be noted that this projection was based upon an estimate of 2011-12 actual receipts and a growth rate of 1.00%. This projection is fairly conservative. The Property Tax is the largest source of revenue in the City's budget and is relied heavily upon to provide general City services. The property tax base, as certified by the Wichita County Appraisal District, is $4.46 billion; an increase of $36.2 million, or 0.82% from the prior year. This is the fourth consecutive year that the property tax base has remained relatively unchanged. The property tax rate was increased by $0.01 per $100 of taxable value to $0.63526 principally to provide funding for three operating programs: (1) a new mowing crew to supplement the State's mowing efforts on the State highways within the city; (2) to hire 2 additional Code Enforcement Officers and administrative staff to become more proactive in enforcement efforts in the community; and (3) to generate $140,000 per year in revenue to assist with the debt service anticipated for construction of a new Municipal Airport Terminal. The adopted budget includes the use of $1,518,026 of General Fund Reserves for the following projects: (1) $500,000 to begin a 3-year program to install vehicular, pedestrian, and facility signage throughout the community with a consistent design and theme; (2) to loan $348,334 to the Transit Fund to assist in cost to construct a Regional Transit Hub in the downtown area; (3) $348,517 for mowing and computer equipment; (4) $201,175 to finance various building maintenance projects; (5) $85,000 to construct a modular playground and shelter for public use at the Army Reserve Building that will soon be used to house Parks Maintenance employees and equipment; and (6) $35,000 to hire professionals to conduct an audit of how local hotels are complying with the State Hotel/Motel Tax laws. The budget also included a 4% increase in retail water and sewer rates to address rising costs to operate the water/sewer system. Requests for Information This financial report is designed to provide a general overview of the City of Wichita Falls' finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report, or request for additional financial information, should be addressed to the City Finance Department, 1300 Seventh Street, Wichita Falls, Texas 76301. 13 Basic Financial Statements EXHIBIT A-1 CITY OF WICHITA FALLS, TEXAS STATEMENT OF NET ASSETS SEPTEMBER 30, 2012 Primary Government Governmental Business -type Component Activities Activities Total Units Assets Cash and cash equivalents $ 32,791,246 $ 18,728,766 $ 51,520,012 $ 16,792,332 Receivables (net): Taxes and assessments 1,114,499 - 1,114,499 - Customer and trade - 5,930,293 5,930,293 - Government agencies 6,787,330 751,710 7,539,040 1,220,776 Other 1,225,002 450,148 1,675,150 - Internal balances (6,143,955) 6,143,955 - Inventory 364,151 1,893,106 2,257,257 Prepaid items 77,904 30,742 108,646 Other assets 200,854 - 200,854 Deferred charges - 4,746,905 4,746,905 Restricted assets: Cash and cash equivalents 1,616,971 20,146,407 21,763,378 - Capital assets not being depreciated 12,309,699 65,233,645 77,543,344 1,469,797 Capital assets net of accumulated depreciation 160,362,654 237,124,103 397,486,757 832,756 Total assets 210,706,355 361,179,780 571,886,135 20,315,661 Liabilities Accounts payable - trade 2,486,762 1,936,209 4,422,971 58,115 Accrued payroll 1,118,868 266,135 1,385,003 - Accrued interest payable 309,126 907,319 1,216,445 Payable to government agencies 384,586 72,167 456,753 Estimated health claims payable 594,291 - 594,291 - Otherliabilities 4,117,674 1,539,390 5,657,064 14,117 Unearned revenue 37,236 - 37,236 - Customer deposits - 2,842,030 2,842,030 Long-term liabilities: Portion due or payable within one year 4,615,623 7,342,313 11,957,936 Portion due or payable after one year 43,598,322 121,655,067 165,253,389 - Totalliabilities 57,262,488 136,560,630 193,823,118 72,232 Net Assets Invested in capital assets, net of related debt 139,058,565 185,087,683 324,146,248 2,302,553 Restricted for: Perpetual care 959,114 - 959,114 - Debt service 797,062 11,374,316 12,171,378 Capital projects 2,331,192 - 2,331,192 Federal grant programs 2,709,739 2,709,739 Tourism 134,404 - 134,404 - Unrestricted 7,453,791 28,157,151 35,610,942 17,940,876 Total net assets $ 153,443,867 $ 224,619,150 $ 378,063,017 $ 20,243,429 See accompanying notes to the basic financial statements. 14 N a s X N W M H W K W C.. pm J j � W J F F lL QW O W F = W Z (� MW �¢w LL O W H m U o '-' N I� r N O 0I� O O 0. N (O W W N N V O .'N_' V M NN m W N V O- E O (O M M I� r M M N � O O U N M M (O (O M O V 0 O F�' o V - M O N I O O O V OMNOOOV I M W (O (O (O N W (O V O M MN_ MM_ M�_ MN_ MW_ 0I�_ W(O_ M(�V(flO_ W MN_ WM�fl_ N OM(O_ WNfl_ N Wfl_ V WM M_ MO MN O _ N_ O_ O O r O (O W N O _ M W (O N N M N co M W V W O M N M N N M W W M M (O V 0 N (O N N N W 0 N V O O N Q M M A A Z Y N E° M O N O O O O N M N N W . . . . . . . . . . � � � � � � ON MV L> N flMN OOMNOOOM M W� MMMV m�� N (O W W O '+� N- M (O r O N V O W W N M W W M Z T M O N Q N N . m EA a M M (O (O M O V O F�' o V V (O M N O N (O WO M W N N I� N V (O r 0 N M N N (O � VOMN N O I r O (O ONOI I� M M V M N V > M N M M W V W O M N M N N (O V N (O N M M N T- M V d Q O N a r r N M (O I� (6 '� (O (O V W O M � N N U N ro ro N M M r O N V O M V V M MN V 6I a O M (fl W (O M N M M V 0. (O (O O M O m M 0O N M M O N r � 4 N N � °N W O� M M N m E Q N ±. V N m N (V (V U U10 o 2 M M N W O N M M M M N O M O N M (O O OO NO OO V V Ofl OO ON OW O MOO N U O N N V N (Or MV-N VN FN (fl co N N NVm OO N Mo p) MN NW OO M M N V M N m (n V M N � M N- 00 U V N (O (O M V N N (O N M I O N O O N N (O V O W (O N N M (O N M M (O (O M (O r (fl W (O M I� N M (O M N I M M W M (fl N r- N N M I� V I� M N V W M V (O (O N (O M � M N r N N V O O W O M� NWWWVmNO NONM� V (O I N N M- � M EA M M - M N N V N EA 0N EA a a E m y 0 m u > - o° n r .� E T o� a°i N > u°i> .... .� ° o m ° m� N U 6(6 I yx(6 —.N� 0 QE Q Q QOO` .O°O N °6 66o o° _ osan6 a n LLx co co >o ¢LL¢o w 14U°mI NU°mI U U7 F U Z Z c E m E i d F 0 EXHIBIT A-3 CITY OF WICHITA FALLS, TEXAS BALANCE SHEET - GOVERNMENTAL FUNDS SEPTEMBER 30, 2012 Total Nonmajor Governmental General Governmental Funds Assets Cash and cash equivalents $ 18,588,341 $ 11,826,498 $ 30,414,839 Receivables (net): Taxes and assessments 899,437 215,062 1,114,499 Other City funds 1,400,268 - 1,400,268 Government agencies 3,727,362 3,059,968 6,787,330 Other 1,090,335 114,057 1,204,392 Inventory 289,580 74,571 364,151 Prepaid items 62,340 15,097 77,437 Other assets - 200,854 200,854 Total assets $ 26,057,663 $ 15,506,107 $ 41,563,770 Liabilities and Fund Balances Liabilities: Accounts payable $ 1,925,490 $ 478,251 $ 2,403,741 Accrued payroll 1,005,841 91,792 1,097,633 Payable to other City funds - 1,176,891 1,176,891 Payable to government agencies 294,295 90,291 384,586 Other liabilities 3,421,136 696,537 4,117,673 Deferred revenue 1,399,016 102,887 1,501,903 Claims and judgments payable 77,399 - 77,399 Total liabilities 8,123,177 2,636,649 10,759,826 Fund balances: Nonspendable: Inventory and prepaid items 352,835 89,668 442,503 Restricted for: Perpetual care - 959,114 959,114 Debt service - 731,411 731,411 Capital projects - 6,209,397 6,209,397 Federal and state grant programs - 2,709,739 2,709,739 Tourism - 134,404 134,404 Committed for: Golf course - 29,163 29,163 Multi -Purpose Events Center - 378,947 378,947 Local projects - 1,896,903 1,896,903 Assigned for: Subsequent year's expenditures 1,010,976 - 1,010,976 Unassigned 16,570,675 (269,288) 16,301,387 Total fund balances 17,934,486 12,869,458 30,803,944 Total liabilities and fund balances $ 26,057,663 $ 15,506,107 $ 41,563,770 See accompanying notes to the basic financial statements. 16 EXHIBIT A-4 CITY OF WICHITA FALLS, TEXAS RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS SEPTEMBER 30, 2012 Total fund balances - governmental funds (Exhibit A-3) Amounts reported for governmental activities in the Statement of Net Assets (Exhibit A-1) are different because: Capital assets used in governmental activities are not financial resources and therefore not reported in the funds. Capital assets at year-end consist of: Gross capital assets Related accumulated depreciation $ 291,203,145 118,726,436 Property taxes receivable and municipal court fines are not available to pay for current period expenditures and therefore are deferred in the funds. Long-term liabilities are not due and payable in the current period and therefore not reported as liabilities in the funds. Long-term liabilities at year-end consist of: General obligation bonds payable 39,619,233 Capital lease payable 1,452,760 Accrued vacation and sick leave 6,981,560 Claims and judgments payable 80,444 Accrued interest 309,126 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 assets and liabilities of these internal service funds are included with the governmental activities. Internal service funds are used by management to charge the costs of central garage services to the individual funds. The assets and liabilities of this fund are included with the business -type activities. This amount represents the governmental activity portion of the central garage activity. Total net assets - governmental activities (Exhibit A-1) See accompanying notes to the basic financial statements. $ 30,803,944 172,476,709 1,464,667 (48,443,123) 3,560,990 (6,419,320) $ 153,443,867 17 EXHIBIT A-5 CITY OF WICHITA FALLS, TEXAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 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 Debt service - bond issuance costs Total expenditures Excess of revenues over (under) expenditures Other Financing Sources (Uses) Bond proceeds Premium on bond proceeds Bond proceeds - refunding bonds Premium on refunding bond proceeds 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 $ 55,183,869 $ 2,423,443 $ 57,607,312 2,842,447 867,924 3,710,371 2,002,559 - 2,002,559 2,211,710 198,082 2,409,792 9,492 14, 478, 744 14, 488, 236 641,745 2,804,568 3,446,313 1,058,875 2,202,174 3,261,049 63, 950, 697 22, 974, 935 86, 925, 632 10, 683, 914 1,474,867 12,158, 781 20, 232, 522 313,443 20, 545, 965 13, 056, 554 221,322 13, 277, 876 4,691,686 142,057 4,833,743 845,076 - 845,076 1,589,971 5,239,047 6,829,018 5,154, 672 622,577 5,777,249 2,775,458 2,118, 893 4,894,351 1,907,622 287,340 2,194, 962 - 3,062,507 3,062,507 3,897,068 4,639,981 8,537,049 - 2,270,000 2,270,000 - 1,604,392 1,604,392 - 137,461 137,461 64, 834, 543 22,133, 887 86, 968, 430 (883,846) 841,048 501,051 2,771,519 (1,514,237) 1,758,333 874,487 3,200,000 77,038 4,365,000 194,300 951,709 (4,484,698) 3,640,336 (8,661, 854) (718,169) 122,879 (42, 798) 3,200,000 77,038 4,365,000 194,300 1,452, 760 (4,484,698) 6,411, 855 (10,176, 091) 1,040,164 997,366 17, 059, 999 12, 746, 579 29, 806, 578 $ 17, 934, 486 $ 12, 869, 458 $ 30, 803, 944 See accompanying notes to the basic financial statements. `Rl EXHIBIT A-6 CITY OF WICHITA FALLS, TEXAS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2012 Net change in fund balances - total governmental funds (Exhibit A-5) $ 997,366 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 $ 8,634,626 Depreciation expense for the year 5,797,430 2,837,196 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. (161,999) 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 revenues decreased by this amount this year. (134,778) 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 Assets. Long-term debt issued in 2011-2012 was: Capital lease payable (1,452,760) General obligation bonds issued (7,857,794) (9,310,554) 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 Assets. Bond principal payments in 2011-12 were: 6,792,722 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 (96,272) Claims and judgments payable 1,428 (94,844) 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, 2011 323,083 Accrued interest at September 30, 2012 309,126 13,957 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. 1,043,090 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. (652,431) Change in net assets of governmental activities (Exhibit A-2) $ 1,329,725 See accompanying notes to the basic financial statements. 19 EXHIBIT A-7 (Page 1 of 2) Assets Current assets: Cash and cash equivalents Restricted cash and cash equivalents Receivables (net): Customer and trade Government agencies Other Inventory Prepaid items Total current assets Long-term assets: Deferred charges Capital assets, net of accumulated depreciation Total long-term assets Total assets CITY OF WICHITA FALLS, TEXAS STATEMENT OF FUND NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30, 2012 Water and Sewer Sanitation Funds Nonmajor Enterprise Funds Internal Total Service Funds $ 9,096,394 $ 3,838,703 $ 5,336,194 $ 18,271,291 $ 2,833,882 19, 593, 858 - 552,549 20,146, 407 1,616,971 4,333,759 1,324,853 271,681 5,930,293 - 51,419 - 700,291 751,710 - 52,530 - 57,303 109,833 360,925 1,016,324 - 62,364 1,078,688 814,418 510 - 30,232 30,742 467 34,144,794 5,163,556 7,010,614 46,318,964 5,626,663 4,746,905 - - 4,746,905 - 231, 449, 773 7,382,183 42, 381,160 281, 213,116 21, 340, 275 236,196, 678 7,382,183 42, 381,160 285, 960, 021 21, 340, 275 270, 341, 472 12, 545, 739 49, 391, 774 332, 278, 985 26, 966, 938 See accompanying notes to the basic financial statements. 20 EXHIBIT A-7 (Page 2 of 2) CITY OF WICHITA FALLS, TEXAS STATEMENT OF FUND NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30, 2012 Liabilities Current liabilities: Accounts payable - trade Accrued payroll Accrued vacation and sick leave Payable to other City funds Payable to government agencies Estimated health claims payable Other liabilities Payable to U.S. Government - current maturity Capital leases - current maturities Revenue bonds - current maturities Accrued interest - revenue bonds Total current liabilities Long-term liabilities: Payable to U.S. Government, less current maturities Capital leases, less current maturities Revenue bonds, less current maturities Estimated liability for landfill closure and post -closure care costs Customer deposits Total long-term liabilities Enterprise Funds Nonmajor Water and Enterprise Internal Sewer Sanitation Funds Total Service Funds 794,795 564,803 467,991 1,827,589 191,641 148,758 53,408 28,853 231,019 56,351 335,348 112,539 37,960 485,847 83,237 88,142 - 125,083 213,225 10,150 - 67,211 4,956 72,167 - - - - - 594,291 1,432,852 9,301 96,082 1,538,235 1,155 34,281 - - 34,281 - - - - - 428,365 6,354,667 - - 6,354,667 - 907,319 - - 907,319 - 10, 096,162 807,262 760,925 11, 664, 349 1,365,190 509,596 - - 509,596 - 302,057 - - 302,057 973,919 116,009,768 - - 116,009,768 - - 3,818,193 - 3,818,193 - 2,842,030 - - 2,842,030 - 119,663,451 3,818,193 - 123,481,644 973,919 Total liabilities 129,759,613 4,625,455 760,925 135,145,993 2,339,109 Net Assets Invested in capital assets, net of related debt 115,581,993 7,382,183 42,381,160 165,345,336 19,937,991 Restricted for debt service 11,374,316 - - 11,374,316 - Unrestricted 13,625,550 538,101 6,249,689 20,413,340 4,689,838 Total net assets $140,581,859 $ 7,920,284 $ 48,630,849 197,132,992 $24,627,829 Adjustment to reflect the consolidation of internal service funds activities related to enterprise funds 27,486,157 Net assets of business type activities $224,619,149 See accompanying notes to the basic financial statements. 21 EXHIBIT A-8 CITY OF WICHITA FALLS, TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 Operating revenues: Charges for services Rents, concessions and other Contributions Total operating revenues Operating expenses: Personnel services Supplies and materials Maintenance and repairs Utilities and other services Insurance and contract support Otherexpenses Depreciation and amortization Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Interest income Gain/(loss) on sale/abandonment of capital assets Interest expense and paying agent fees Intergovernmental operating grants Total nonoperating revenues (expenses) Income (loss) before contributions and transfers Capital contributions Transfers in Transfers out Change in net assets Enterprise Funds Nonmajor Water and Enterprise Internal Sewer Sanitation Funds Total Service Funds $ 36,627,625 $ 12,739,971 $ 4,040,802 $ 53,408,398 $ 12,821,260 143,383 67,189 2,263,188 2,473,760 619,205 - - - - 10,124,446 36,771,008 12,807,160 6,303,990 55,882,158 23,564,911 8,333,407 3,288,656 1,850,078 13,472,141 3,038,276 2,339,498 277,818 1,351,694 3,969,010 4,244,665 1,516,928 318,734 334,439 2,170,101 2,246,261 5,252,621 3,996,581 761,553 10,010,755 318,610 526,436 89,299 114,705 730,440 9,008,129 1,533,052 490,232 207,952 2,231,236 1,838,792 5,552,648 186,401 1,038,973 6,778,022 3,516,006 25,054,590 8,647,721 5,659,394 39,361,705 24,210,739 11,716,418 4,159,439 644,596 16,520,453 (645,828) 30,644 3,331 5,890 39,865 209,582 95,109 (116,000) (166,521) (187,412) 125,287 (4,851,051) - (4,851,051) (10,928) 2,371,658 2,371,658 - (4,725,298) (112,669) 2,211,027 (2,626,940) 323,941 6,991,120 4,046,770 2,855,623 13,893,513 (321,887) 181,759 - - 181,759 116,000 743,908 6,715,394 7,459,302 2,418,889 (1,414,779) (2,762,886) (1,624,288) (5,801,953) (312,000) 6,502,008 1,283,884 7,946,729 15,732,621 1,901,002 Net assets - beginning 134,079,851 6,636,400 40,684,120 Net assets - ending $140,581,859 $ 7,920,284 $ 48,630,849 Adjustment to reflect the consolidation of internal service funds activities related to enterprise funds Change in net assets of business type activities See accompanying notes to the basic financial statements. 1,510,343 $ 17,242,964 22,726,827 $ 24,627,829 22 EXHIBIT A-9 (Page 1 of 2) Cash flows from operating activities: Received from customers and users Payments to suppliers Payments to employees Net cash provided by operating activities CITY OF WICHITA FALLS, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 Enterprise Funds Nonmajor Water and Enterprise Internal Sewer Sanitation Funds Total Service Funds $ 37,550,745 $12,682,430 $ 6,325,903 $ 56,559,078 $ 23,239,947 (14,837,409) (5,339,727) (3,316,448) (23,493,584) (18,714,559) (6,026,534) (2,346,162) (1,441,700) (9,814,396) (2,228,084) 16,686,802 4,996,541 1,567,755 23,251,098 2,297,304 Cash flows from noncapital financing activities: Intergovernmental operating grants 1,911,654 1,911,654 10,150 Interfund loans received (repaid) - 53,769 53,769 (46,409) Transfers in from other funds 743,908 6,715,394 7,459,302 2,418,889 Transfers out to other funds (1,414,779) (2,762,886) (1,624,288) (5,801,953) (312,000) Net cash provided (used) by noncapital financing activities (670,871) (2,762,886) 7,056,529 3,622,772 2,070,630 Cash flows from capital and related financing activities: Capital contributions - - 116,000 Acquisition and construction of capital assets (7,766,662) (818,529) (7,713,296) (16,298,487) (3,836,265) Proceeds from sale of capital assets 15,109 15,109 129,072 Proceeds from issuance of long-term debt 302,057 302,057 - Principal paid on long-term debt (5,838,202) (5,838,202) (436,266) Interest and fees paid on long-term debt (5,665,022) (5,665,022) (10,928) Net cash used for capital and related financing activities (18,952,720) (818,529) (7,713,296) (27,484,545) (4,038,387) Cash flows from investing activities: Interest on investments 30,644 3,331 5,890 39,865 209,582 Net cash provided by investing activities 30,644 3,331 5,890 39,865 209,582 Net Increase (Decrease) in Cash and Cash Equivalents (2,906,145) 1,418,457 916,878 (570,810) 539,129 Cash and Cash Equivalents - Beginning 31,596,397 2,420,246 4,971,865 38,988,508 3,911,724 Cash and Cash Equivalents - Ending $ 28,690,252 $ 3,838,703 $ 5,888,743 $ 38,417,698 $ 4,450,853 Reconciliation of cash and cash equivalents on the balance sheet to the statement of cash flows: Cash and cash equivalents $ 9,096,394 $ 3,838,703 $ 5,336,194 $ 18,271,291 $ 2,833,882 Restricted assets - cash and cash equivalents 19,593,858 - 552,549 20,146,407 1,616,971 Total cash and cash equivalents at end of year $ 28,690,252 $ 3,838,703 $ 5,888,743 $ 38,417,698 $ 4,450,853 See accompanying notes to the basic financial statements. 23 CITY OF WICHITA FALLS, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 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 by operating activities: Depreciation and amortization Customer deposits received (Increase) decrease in current assets: Receivables: Customer and trade Other Inventory Prepaid items Increase (decrease) in current liabilities: Accounts payable - trade Accrued payroll Accrued vacation and sick leave Payable to other City funds Estimated health claims payable Payable to government agencies Other liabilities Estimated liability for landfill closure Total adjustments Net cash provided by operating activities Noncash capital and financing activities: Capital assets received from developers EXHIBIT A-9 (Page 2 of 2) Enterprise Funds Nonmajor Water and Enterprise Internal Sewer Sanitation Funds Total Service Funds $ 11,716,418 $ 4,159,439 $ 644,596 $ 16,520,453 $ (645,828) 5,552,648 186,401 1,038,973 6,778,022 3,516,006 68,840 - - 68,840 - 697,274 (124,730) 401 572,945 13,623 21,512 35,135 (320,416) 605 (9,697) (9,092) (41,545) (399) - (24,798) (25,197) 185 (777,791) 539,714 (109,923) (348,000) (76,222) 11,795 2,699 (3,239) 11,255 20,885 12,614 (4,146) 2,294 10,762 (522) 88,142 - 88,142 - - - - (150,691) 3,296 (13,567) (10,271) (696,967) (9,894) 21,203 (685,658) (4,548) - 243,762 - 243,762 - 4,970,384 837,102 923,159 6,730,645 2,943,132 $ 16,686,802 $ 4,996,541 $ 1,567,755 $ 23,251,098 $ 2,297,304 $ 181,759 $ - $ - $ 181,759 $ - See accompanying notes to the basic financial statements. 24 EXHIBIT A-10 CITY OF WICHITA FALLS, TEXAS STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES SEPTEMBER 30, 2012 Assets Cash and cash equivalents Liabilities Other liabilities Agency Fund $ 81,226 $ 81,226 See accompanying notes to the basic financial statements. 25 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 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. 39, 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. 26 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2012 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 31, 2025, or when all debt has been paid if later. After all costs have been paid at the end of the tax increment financing period, any money remaining is to be remitted to the taxing entities. Since the City Council appoints a majority of its Board, approves its budget, and exercises final authority over its operations, the Wichita Falls Reinvestment Zone #2 is considered to be part of the City's reporting entity and presented in the accompanying basic financial statements as a discretely presented component unit. The Zone utilizes full accrual accounting. Wichita Falls Reinvestment Zone #3. On September 1, 2009, the City of Wichita Falls, Texas, with the advice and consent of the Wichita Falls Independent School District and Wichita County, approved the creation of the Wichita Falls Reinvestment Zone #3 (Zone). This Zone is permitted by Article 1066e of the State of Texas Tax Increment Financing Act passed in 1981. The area of the Zone is approximately 630 acres and includes a significant portion of the Eastside Neighborhood. The purpose of the Zone is to capture increments of growth in real property values in the Zone from base values established on January 1, 2009, and use the ad valorem taxes derived from these increments to contribute to the zoned area. Tax funds derived from the increment can only be spent for public improvements in the Zone or for the payment of debt service on bonds issued to provide funds for public improvements. The Zone terminates on December 31, 2029. After all costs have been paid at the end of the tax increment financing period, any money remaining is to be remitted to the taxing entities. Since the City Council appoints a majority of its Board, approves its budget, and exercises final authority over its operations, the Wichita Falls Reinvestment Zone #3 is considered to be part of the City's reporting entity and presented in the accompanying basic financial statements as a discretely presented component unit. The Zone utilizes full accrual accounting. 27 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2012 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) 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 Assistant City Manager/CFO at 1300 7th Street, Wichita Falls, Texas. Excluded From the Reporting Entity Wichita Falls Firemen's Relief and Retirement Fund. The Wichita Falls Firemen's Relief and Retirement Fund was established and is controlled through various State of Texas legislative enactments. This Fund is administered locally by a seven -member board, independent of the City Council. City management and the City Council do not influence or control the administrative and financial affairs of the Fund, and the assets of the Fund are not the property of the City. The seven -member Board of Trustees, composed of the Mayor, the Finance Manager from the City's Finance Department, three firefighters elected by a majority vote of the firefighters and two citizens, who are not employees or officers of the City and are chosen by the unanimous vote of the first five Trustees, are subject to the administrative supervision of and report to the State Firemen's Pension Board. The activities of the Firemen's Relief and Retirement Fund, in the City's judgment, are not a part of the City and thus are excluded from the accompanying financial statements. B. Basis of Presentation Government -wide financial statements The basic financial statements include both government -wide (based on the City as a whole) and fund financial statements. The government -wide financial statements (i.e., the statement of net assets 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. 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. 28 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2012 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) 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, liabilities, 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 and the Sanitation 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 accountina 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. 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. 29 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2012 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) The City reports the following major governmental fund: 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 water and sewer utility services 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. 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. 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. GASB Statement No. 34 eliminates the presentation of account groups but provides for these records to be maintained and incorporates the information into the Governmental Activities column in the government -wide Statement of Net Assets. Private -sector standards of accounting and financial reporting (as issued by the Financial Accounting Standards Board) issued prior to December 1, 1989, generally are followed in both the government -wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private -sector guidance for their business -type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private -sector guidance. 30 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2012 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expense 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 government on exchange transactions. • Imposed nonexchange revenues result from assessments by governments on nongovernmental entities, other than assessments on exchange transactions. • Government -mandated nonexchange transactions occur when a government at one level provides resources to a government at another level and require that government to use them for a specific purpose or purposes established in the provider's enabling legislation. • Voluntary nonexchange transactions result from legislative or contractual agreements, other than exchanges, entered into willingly by two or more parties. Examples of the City's voluntary nonexchange transactions include capital grants, state shared revenue and private donations. 31 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2012 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 assets or equity 1. Cash, cash equivalents and investments The City's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Investments are carried at fair value. Fair value is determined as the price at which two willing parties would complete an exchange. Interest earned on investments is recorded in the funds in which the investments are recorded. 2. Inventory and Prepaid Items Inventories of the general and proprietary funds consist of supplies and various materials used for the maintenance of capital assets. The consumption method is used to account for these inventories. Under this method, inventory acquisitions are recorded in inventory accounts initially and charged as expenditures when used. Inventories are stated at average cost. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government -wide and fund financial statements. 3. Capital Assets Capital assets, which include property, plant and equipment, and infrastructure assets (e.g. roads, bridges, sidewalks and similar items), are reported in the applicable governmental or business -like activities columns in the government -wide financial statements. The City defines capital assets as assets with an initial, individual cost of more than $1,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the time received. Capital assets are depreciated using the straight line method over the following useful lives: 32 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2012 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) Assets Years Buildings, systems and improvement 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, 2012, the City's business -type activities incurred a total of $4,861,979 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. Long -Term Obligations Long-term debt and other obligations for general government purposes are recorded in the government -wide statement of net assets. Long-term debt and other obligations financed by proprietary funds are reported as liabilities in the appropriate funds. 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. 5. 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. 33 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2012 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) Committed Fund Balance — represents amounts that can only be used for a specific purpose because of a formal action by the City Council. Committed amounts cannot be used for any other purpose unless the governing board removes those constraints by taking the same type of formal action. Committed fund balance amounts may be used for other purposes with appropriate due process by the governing board. Commitments are typically done through adoption and amendment of the budget. 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. 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. Intent may be stipulated by the governing board or by an official or body to which the governing board delegates the authority. Specific amounts that are not restricted or committed in a special revenue, capital projects, debt service or permanent fund are assigned for purposes in accordance with the nature of their fund type or the fund's primary purpose. Assignments within the General Fund convey that the intended use of those amounts is for a specific purpose that is narrower than the general purposes of the City itself. 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. 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. 6. 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. 34 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2012 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) 7. 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. 8. Vacation and Sick Leave All full-time employees accumulate vacation benefits based on length of service up to 15 days per year. The maximum allowable accumulation is 30 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. 9. 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. 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. 35 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2012 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) 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, 2012 is based on management's estimate of probable losses in the amount of $158,243. 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. $77,799 is believed by City management to be currently payable from available resources and is recorded in the General Fund. The following represents changes in the amount of claims liabilities for the City from October 1, 2010 to September 30, 2012: Liability balance, October 1, 2010 Incurred claims/adjustments Claim payments Liability balance, September 30, 2011 Incurred claims/adjustments Claim payments Liability balance, September 30, 2012 Note 2 - COMPLIANCE AND ACCOUNTABILITY Finance -Related Legal and Contractual Provisions Health Workers' Care Compensation $ 520,797 $ 202,584 8,942,608 461,856 ( 8,718,423) ( 500,541) 744,982 163,899 8,397,787 401,867 ( 8,548,478) ( 407,523) In accordance with GASB Statement No. 38, "Certain Financial Statement Note Disclosures", violations of finance -related legal and contractual provisions are reported below, along with actions taken to address such violations. Violation Action Taken None 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, 2012, the total amount of the City's demand and time deposits per the general ledger was $3,154,003, and the total amount per the City's September 30, 2012 bank statements was $4,716,633. 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. 36 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2012 Note 3 - DEPOSITS AND INVESTMENTS (CONTD.) Investments The investment policies of the City and its discretely presented component units are governed by The Public Funds Investment Act. Authorized investments include obligations of the U.S. Treasury, agencies and instrumentalities, obligations of the State of Texas and related agencies, obligations of states, agencies, counties, cities and political subdivisions of any state rated A or above by a nationally recognized investment rating firm, repurchase agreements, public funds investment pools, and commercial paper. The investments of the City and its discretely presented component units at September 30, 2012 are as follows: Fair Value/ Average Weighted Average Carrying Credit Quality/ Months to Types of Investments Amount Cost Ratings Maturity Primary Government: TexPool $31,307,625 $31,307,625 Not rated 1.00 LOGIC 27,348,245 27,348,245 Not rated 1.00 Money market account 9,826,932 9,826,932 Not rated 1.00 Total primary government investments 68,482,802 68,482,802 Component Units: TexPool 18,515,070 18,515,070 Not rated 1.00 Total component unit investments 18,515,070 18,515,070 Total investments TexPool is a public funds investment pool administered by the Treasurer of the State of Texas pursuant to the Interlocal Cooperation Act passed in 1989 by the 71st Texas Legislature. This Act authorized the City to delegate to TexPool the authority to make investment purchases and to hold legal title as custodian of the investment securities. All TexPool investments are in the possession of the Texas Treasury Safekeeping Trust Company and held in its book -entry safekeeping account at the Federal Reserve Bank of Dallas. The Texas Treasury Safekeeping Trust Company was created in 1986 by the 69th Texas Legislature to enable the Treasurer of the State of Texas to manage, safekeep, and invest public funds of state agencies and political subdivisions more efficiently and economically. TexPool is not registered with the Securities and Exchange Commission (SEC) as an investment company. TexPool is operated in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. Therefore, the fair value of the City's position in TexPool is the same as the value of the pool shares. LOGIC was also established pursuant to the Interlocal Cooperation Act passed by the State of Texas and is administered by Southwest Securities Group, Inc. LOGIC's governing body is a five - member board of directors comprised of three government officials and two other persons with expertise in public finance. LOGIC's investments are only those authorized by the Texas Public Funds Investment Act governing pools for local governments. LOGIC presently offers two investment pools, each of which is separately managed and has a different investment objective. 37 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2012 Note 3 - DEPOSITS AND INVESTMENTS (CONTD.) Each participating government owns an undivided beneficial interest in the assets of the pool represented by units. Participants may terminate their participation in LOGIC at any time by redeeming their units. LOGIC is not registered with the Securities and Exchange Commission (SEC) as an investment company. LOGIC is operated in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. Therefore, the fair value of the City's position in LOGIC is the same as the value of the pool shares. 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. 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. 38 0 N -71 Q 0 X LU F— H z W 04 J W N LL H M a -JW H a_ m = zw U za EL- W LL W U) O L�L 0 r U F- 0 z C O O 4- 4- 0 N C O U N_ O N O M L E N Q W co m � O N N O _ U 01 O) V N 00 Ln In N> O r t' O O m In Ln O Ln r M O) M Q L C- X O O' 00 O W r- 00 N N •� U °? U N N (O (O L = � � O C N O " O N O N E C 0 >+ O co E C co _ N m (O V Inr_j (O :E a)O) V N O O O O O) In o0 In In M E O cu ~ > 00 00 V In M - r r N O (O N O U O (iJ L Co 0 C N C04 , , , , G .0 0 0 U .. O M (`m Q - EA O co N N O - N O N M Ln M (n :EE 2' C 'ITO In O r r d 3 c LL M O O z w U X co O 'E O) N 0 ao 0 aoo c o O Q 0o 0)o rn c N O N In In V (O a) a)O W M N N U) V) U) Q -a (» O Q O y+ C O M 76 7 O C O , (O In N M (V E O (O o In 0 - O c (o of c V a� Lo 0 N LL N O z > M M _- cu L � CO (11 U) N , (O (O m (O 00 V 00 L +-+ N M N Cl m N o0 4- O 'ITO I- O 0 N O L � ri � O O ( O cu LO > CO .5 (/)- U >+ Q) 77D N N E N E -6 U y � cu C N O C N N a)w 7 O N a)X �._ N 01 N O N O U U Q O (6 N w Q cuO C N cu > Q N Q d cu E U 0 o s ccu ¢ N N 3 OE H0000 N o O N y L co OU d' (9 J Z T O M CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2012 Note 5 - 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, 2012 was $.62526 per $100 which means that the City has a tax margin of $1.62474 per $100, and could raise up to $71,989,223 additional tax revenue a year from the present assessed valuation of $4,430,814,978 before the limit is reached. Note 6 - RESTRICTED ASSETS Restricted assets in the Water and Sewer Fund, Municipal 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 $11,374,316 For Capital Improvements: Cash and cash equivalents 8,219,542 Total 19.593.858 Municipal Airport restricted assets are comprised of the following: For Passenger Facility Charges: Cash and cash equivalents $ 306,358 For Customer Facility Charges: Cash and cash equivalents 246,191 Total 552 549 Internal Service Fund restricted assets are comprised of the following: For Employee Insurance: Cash and cash equivalents $ 1,616,971 40 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2012 Note 7 - CAPITAL ASSETS Capital asset activity for the year ended September 30, 2012 was as follows: Balance Balance Governmental activities: October 1, September 30, 2011 Increases Decreases 2012 Capital assets not being depreciated Land $ 10,609,499 $ 4,625 $ - $ 10,614,124 Construction in progress 433,362 1,456,367 194,154 1,695,575 Total capital assets not being depreciated 11,042,861 1,460,992 194,154 12,309,699 Capital assets being depreciated: Land betterments 23,460,902 17,330 - 23,478,232 Buildings, systems and improvements 68,674,747 53,985 790 68,727,942 Infrastructure 158,318,607 6,814,455 531,943 164,601,119 Machinery and equipment 21,810,218 674,581 346,494 22,138,305 Furniture and fixtures 189,661 16,172 173,489 Total capital assets being depreciated 272,454,135 7,560,351 895,399 279,119,087 Less accumulated depreciation for: Land betterments 4,262,176 491,848 - 4,754,024 Buildings, systems and improvements 16,605,908 1,429,293 410 18,034,791 Infrastructure 83,972,905 2,252,880 435,406 85,790,379 Machinery and equipment 8,665,376 1,644,659 302,364 10,007,671 Furniture and fixtures 184,368 1,372 16,172 169,568 Total accumulated depreciation 113,690,733 5,820,052 754,352 118,756,433 Total capital assets being depreciated, net 158,763,402 1,740,299 141,047 160,362,654 Governmental activities capital assets, net 41 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) SEPTEMBER 30, 2012 Note 7 - CAPITAL ASSETS (CONTD.) Business -type activities: Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets being depreciated: Land betterments Buildings, systems and improvements Machinery and equipment Furniture and fixtures Motor vehicles Total capital assets being depreciated Less accumulated depreciation for: Land betterments Buildings, systems and improvements Machinery and equipment Furniture and fixtures Motor vehicles Total accumulated depreciation Balance October 1, 2011 $ 8,969,905 46, 506, 939 55, 476, 844 35, 939, 206 282, 993, 919 7,343,981 40,819 48,114, 871 374, 432, 796 Balance September 30, Increases Decreases 2012 $ 33,600 $ - $ 9,003,505 12,172,830 2,449,629 56,230,140 12,206,430 2,449,629 65,233,645 2,668,814 4,114, 249 563,893 5.017.955 12, 364, 911 811,200 5,599,836 429,559 46 3.297.207 10,137, 848 Total capital assets being depreciated, net 235,340,006 2,227,063 Business -type activities capital assets, net $290,816,850 $14,433,493 Depreciation expense was charged to functions as follows: Governmental activities: Administrative services Police Fire Parks and recreation Accounting/finance Community development Public works Health Traffic and transportation Multi -Purpose Events Center 13, 012, 942 89,641,896 4,920,529 40,773 31,476,650 139, 092, 790 Total governmental depreciation 102,572 679,000 73,756 1.584.880 2,440,208 61,543 563,000 51,376 1.321.323 1,997,242 442,966 $ 599,989 1,366,956 151,156 235,700 135,574 10,909 2,027,514 154,407 300,452 837.395 $5,820, 552 38, 505, 448 286, 429,168 7,834,118 40,819 51.547.946 384, 357, 499 13, 762, 599 94, 678, 732 5,298,712 40,819 33.452.534 147, 233, 396 237,124,103 42 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2012 Note 7 - CAPITAL ASSETS (CONTD.) Business -type activities: Municipal Airport Kickapoo Airport Transit Sanitation Water and sewer Stormwater drainage Waterpark Total business -type depreciation Note 8 - PENSION PLANS Texas Municipal Retirement System Plan Description $ 263,942 381,892 406,340 2,539,585 6,104,449 199,686 186,976 $10,082, 770 The City provides pension benefits for all of its eligible employees, except firefighters, through a nontraditional, joint contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), an agent multiple -employer public employee retirement system. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS. TMRS issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information (RSI) for TMRS; the report also provides detailed explanations of the contributions, benefits and actuarial methods and assumptions used by the System. This report may be obtained by writing TMRS, P.O. Box 149153, Austin, TX 78714-9153 or by calling 800-924-8677; in addition, the report is available on TMRS' website at www.TMRS.org. Plan provisions for the City were as follows Plan Year 2010 Employee deposit rate 5%/7% Matching ratio (City to employee) 2 to 1 Years required for vesting 10 Service retirement eligibility (expressed as age / years of service) 60/10, 0/25 Updated Service Credit 50% Repeating, Transfers Annuity Increase (to retirees) 70% of CPI Repeating Plan Year 2011 5%/7% 2 to 1 10 60/10, 0/25 50% Repeating, Transfers 70% of CPI Repeating 43 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2012 Note 8 - PENSION PLANS (CONTD.) Contributions Under the state law governing TMRS, the contribution rate for each city is determined annually by the actuary, using the Projected Unit Credit actuarial cost method. This rate consists of the normal cost contribution rate and the prior service cost contribution rate, which is calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the portion of an active member's projected benefit allocated annually; the prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the applicable period for that city. Both the normal cost and prior service contribution rates include recognition of the projected impact of annually repeating benefits, such as Updated Service Credits and Annuity Increases. The City contributes to the TMRS Plan at an actuarially determined rate. Both the employees and the City make contributions monthly. Since the City needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect. 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. Benefits are determined on a "formula" or a "final salary" plan. A firefighter who qualifies for a retirement benefit will receive monthly retirement equal to 2.55% of the firefighter's average salary, multiplied by the member's years of credited service. Benefits are calculated based upon a member's average salary for the 78 consecutive biweekly pay periods which produce the highest average. Members can receive a service retirement at ages 50 and above with 20 or more years of service. Members are eligible for actuarially reduced early retirement benefits before age 50, provided the employee has accrued at least 20 years of service. The plan also provides death and disability benefits. Members who terminate their service and are nonvested are entitled to the excess of the member's contributions over any benefits previously received. Contributions The contribution rate for the firefighters is 12% and the City contributes 11.39%. 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. 44 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2012 Note 8 - PENSION PLANS (CONTD.) The actuarial assumptions included (a) 8% investment rate of return, compounded annually (net of trust expenses), (b) projected salary increases for individual members of 4.75% per year, compounded annually, and (c) increases in total payroll of 4.75% per year, compounded annually. Active members are assumed to retire once they have both attained age 57 and completed at least 20 years of service. Benefits for vested terminated members are assumed to start on the date the member attains age 50 or, if later, the date the member would have completed 20 years of service. The actuarial value of assets was determined using a method that is market related and is consistent with the classes of current and anticipated assets. The method is consistent with the assumptions used to develop the actuarial present value of total projected benefits, and actuarial standards for valuation. Schedule of Actuarial Liabilities and Funding Progress Texas Municipal Firemen's Retirement Relief and System Retirement Total Actuarial Valuation Date 12/31/11 12/31/10 * Actuarial Value of Assets $164,206,444 $41,107,385 $205,313,829 Actuarial Accrued Liability (AAL) 201,160,651 60,152,150 261,312,801 Percentage Funded 81.6% 68.3% 78.6% Unfunded Actuarial Accrued Liability (UAAL) 36,954,207 19,044,765 55,998,972 Annual Covered Payroll 38,791,669 8,527,417 47,319,086 UAAL as a Percentage of Covered Payroll 95.3% 223.3% 118.3% Net Pension Obligation (NPO) at the Beginning of the Period -0- -0- -0- Annual Pension Cost Annual Required Contribution (ARC) $ 5,177,200 $ 1,176,541 $ 6,353,741 Interest on NPO -0- -0- -0- Adjustment to the ARC -0- -0- -0- Annual Pension Cost 5.177.200 1.176.541 6.353.741 * The Wichita Falls Firemen's Relief and Retirement Fund has not had an actuarial valuation since this date. A valuation is planned for December 31, 2012. 45 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2012 Note 8 - PENSION PLANS (CONTD.) Percentage of Annual Pension Costs Contributed Contributions Made Increase in NPO NPO At the End of the Period Texas Municipal Firemen's Retirement Relief and System Retirement Total 100% 100% 100% $ 5,218,722 $ 1,174, 529 $ 6,393,251 -0- -0- -0- -0- -0- -0- Two preceding years: 2011: Annual Pension Cost $ 5,300,506 $ 1,136,628 $ 6,437,134 Percentage of Annual Pension Costs Contributed 100% 100% 100% NPO At the End of the Period -0- -0- -0- 2010: Annual Pension Cost $ 4,997,318 $ 1,018,126 $ 6,015,444 Percentage of Annual Pension Costs Contributed 100% 100% 100% NPO At the End of the Period -0- -0- -0- Actuarial Assumptions Texas Municipal Firemen's Retirement Relief and System Retirement Actuarial Cost Method Amortization Method Amortization Period Remaining Amortization Period Amortization Period for New Gains/Losses Asset Valuation Method Investment Rate of Return Projected Salary Increases Includes Inflation at Cost -of -Living Adjustments Projected Unit Credit Level Percent of Payroll Closed 26.1 Years 30 Years 10-Year Smoothed Market 7.0% Varies by Age & Service 3.0% 2.1 % (3.0% CPI) Individual Entry Age Level Percent of Payroll Open N/A 30 Years Smooth Market Value 8% 4.75% 4.75% None The stand-alone financial reports for both the Texas Municipal Retirement System and Firemen's Relief and Retirement Fund can be obtained from the City's Director of Finance at 1300 7th Street, Wichita Falls, Texas. A schedule of funding progress is presented as required supplementary information for both the Texas Municipal Retirement System and the Firemen's Relief and Retirement Fund. These schedules provide multi -year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. 46 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2012 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. Retiree Contributions Pre -Medicare Eligibility Retirees share in the cost of the Plan by paying premiums according to the following schedule: BC/BS BC/BS Core Plan Enhanced Plan Retiree Only (under 65) $171 $278 Retiree Only (over 65) N/A N/A Retiree/Spouse (both < 65) $321 $492 Retiree/Spouse (both > 65) N/A N/A Retiree/Spouse (1 >, 1 < 65) $583 $690 Retiree/Child $294 $465 Retiree/Family $364 $578 Dental premiums are included in the under 65 premiums above. Benefits for Spouses of Retired Employees Spouses of retirees are eligible to participate in a retiree health care program. Spouses are eligible to continue with same coverage after the death of retiree. Non -Medicare and Medicare -Eligible Provisions 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 already 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. Spouses currently covered in the health plan will also be eligible for the $250 premium assistance. For members 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. Spouses can participate in the Medicare subsidy program, but will receive no premium assistance. 47 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2012 Note 9 - POST -EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS (CONTD.) For members who retire on or after January 1, 2009, the City will provide no premium assistance once Medicare -eligible. The retiree premium for post-65 coverage is $421/month for each covered member as of June 1, 2010. Vision Coverage There is no vision coverage provided as of September 30, 2012. 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 retiree or spouses on the Medicare supplement. Life Insurance Coverage Life Insurance of $7,500 is provided to each retiree. There is no Life coverage for spouses of retirees. Funding Policy and Annual OPEB Cost The City's annual other post -employment benefits (OPEB) cost is based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The City's OPEB cost for the year ended September 30, 2012 is as follows: Annual Required Contribution $2,373,230 Interest on OPEB obligation - Adjustment to ARC - Annual OPEB cost (expense) end of year 2,373,230 Net estimated employer contributions ( 2,373,230) Increase (decrease) in net OPEB obligation Net OPEB obligation — beginning of year Net OPEB obligation — end of year - The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the fiscal year ending September 30, 2012 and the preceding two fiscal years were as follows: Employer Annual Amount Percentage Net OPEB Fiscal Year Ended OPEB Cost Contributed Contributed Obligation September 30, 2010 $2,367,716 $2,367,716 102.9% $ - September 30, 2011 2,437,686 2,437,686 100.0% - September 30, 2012 2,373,230 2,373,230 100.0% - 48 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2012 Note 9 - POST -EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS (CONTD.) Schedule of Actuarial Liabilities and Fundina Status Actuarial Valuation Date 12/31/10 Actuarial Value of Assets $ 853,478 Actuarial Accrued Liabilities $32,409,858 Unfunded Actuarial Accrued Liability (UAAL) $31,556,380 Funded Ratio 2.63% Annual Covered Payroll $47,297,531 UAAL as a Percentage of Annual Covered Payroll 66.72% Actuarial Methods and Assumptions The Projected Unit Credit actuarial cost method is used to calculate the GASB ARC for the City's retiree health care plan. Using the plan benefits, the present health premiums and a set of actuarial assumptions, the anticipated future payments are projected. The projected unit credit method then provides for a systematic funding for these anticipated payments. The yearly ARC is computed to cover the cost of benefits being earned by covered members as well as to amortize a portion of the accrued liability. Projections of health benefits are based on the plan as understood by the City and include the types of benefits in force at the valuation date and the pattern of sharing benefit costs between Wichita Falls and its employees to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant methods and assumptions were as follows: Inflation rate Investment rate of return Actuarial cost method Amortization method Amortization period Salary growth Medical trend 3.00% per annum 7.5%, net of expenses Projected unit credit cost method Level as a percentage of salary Open 30 year period 3.0% per annum 9.0% for 2009; decreasing by 0.5% each year until 2018; then 4.5% thereafter Actuarial valuations involve estimates of the value of reported amounts and assumptions about the profitability of events in the future. Amounts determined regarding the funded status and the annual required contributions of the City's retiree health care plan are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. The required schedule of funding progress presented as required supplementary information provides multi -year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. 49 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2012 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 Municipal 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, 2012 was $35,222. The lease payment increases by 3% per year with a final lease payment of $141,307 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, 2012. 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, 2012: Year ending September 30: 2013 $ 147,648 2014 145,446 2015 130,239 2016 103,791 2017 68,651 2018-2022 223,285 2023-2027 258,849 2028-2032 300,076 2033-2037 347,871 2038-2042 403,278 2043-2047 467,509 2048-2052 541,972 2053-2057 628,293 2058-2059 278,497 Total minimum payments required 4.045.405 The total rental expenses for all operating leases for the year ended September 30, 2012 was $146,676. There were no contingent rentals during the year ended September 30, 2012. 50 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2012 Note 13 - LONG-TERM LIABILITIES Long-term liabilities transactions for the year ended September 30, 2012 are summarized as follows: Governmental Activities: General obligation bonds Combination tax and revenue 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 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 2011 Issued Transferred (1) 2012 One Year $ 4,450,000 $ 4,559,300 $ 4,893,191 $ 4,116,109 $ 434,431 34,104,161 3,298,494 1,899,532 35,503,123 2,103,793 6,887,020 1,995,974 1,898,884 6,984,110 2,000,000 - 1,452,760 - 1,452,760 - 163.899 401,867 407,923 157,843 77,399 45,605,080 11,708,395 9,099,530 48,213,945 4,615,623 105,277,778 23,969,757 557,112 562,244 577,079 - 371,696 1,768,911 3,574,431 243,762 134,327,853 2,574,917 2,711,685 102,566,093 3,354,224 4,171,415 19,798,342 3,000,443 552,822 566,534 525,000 33,202 543,877 34,281 436,266 1,704,341 428,365 3,818,193 7,905,390 128,997,380 7,342,313 (1) Includes bond premium amortization of $28,191 related to the general obligation bonds, $44,532 related to combination tax and revenue bonds (governmental activities), $836,685 related to revenue bonds, and $241,414 related to the combination tax and revenue bonds (business -type activities). For governmental activities, claims and judgments payable and compensated absences are generally liquidated by the General Fund. Bonds Payable Bonds payable at September 30, 2012, including net unamortized premium on the revenue bonds, are comprised of the following individual issues: Range of Final Annual Bonds Interest Maturity Serial Bonds Outstanding Rates Date Payments Authorized at 9/30/12 General Obligation Bonds: General Obligation Refunding 1.50% - 9/01 /21 $405,000 to $ 4,365,000 $ 3,950,000 Bonds, Series 2011 3.00% $485,000 Plus bond premium 166,110 Total General Obligation Bonds 4,116,110 51 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2012 Note 13 - LONG-TERM LIABILITIES (CONTD.) Range of Final Annual Bonds Interest Maturity Serial Bonds Outstanding Rates Date Payments Authorized at 9/30/12 Combination Tax and Revenue Bonds: Combination Tax and Revenue 3.00% - 9/01 /18 $335,000 to 7,550,000 2,235,000 Certificates of Obligation, Series 2003 4.00% $775,000 Combination Tax and Revenue 4.90% - 8/01 /16 $115,000 to 14,020,000 9,700,000 Refunding Bonds, Series 2005 5.00% $2,650,000 Plus bond premium 257,816 Combination Tax and Revenue 3.55% - 9/01 /26 $580,000 to 16,875,000 13,030,000 Certificates of Obligation, Series 2006A 5.00% $1,225,000 Plus bond premium 252,465 Combination Tax and Revenue 5.20% - 9/01 /26 $130,000 to 4,275,000 3,395,000 Certificates of Obligation, Series 2006B 6.25% $345,000 Plus bond premium 58,751 Combination Tax and Revenue 2.25% - 10/01 /28 $340,000 to 10,820,000 9,660,000 Certificates of Obligation, Series 2009 4.75% $780,000 Combination Tax and Revenue 5.60% 2/01 /25 $165,000 to 3,930,000 3,580,000 Certificates of Obligation, Series 2010 $375,000 Combination Tax and Revenue 2.00% - 8/01 /18 $170,000 to 9,830,000 9,375,000 Refunding Bonds, Series 2010 4.00% $3,600,000 Plus bond premium 465,526 Combination Tax and Revenue 2.00% - 9/01 /31 $135,000 to 3,200,000 3,200,000 Certificates of Obligation, Series 2011 4.00% $220,000 Plus bond premium 91,907 Total Combination Tax and Revenue Bonds 55,301,465 Revenue Bonds: Water & Sewer System Priority 4.00%- 8/01 /27 $225,000 to 103,495,000 102,290,000 Lien Refunding Revenue Bonds, 4.50% $11,070,000 Series 2007 Plus bond premium 276,092 Total Revenue Bonds 102,566,092 Total All Bonds 161.983.667 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, 2012, $185,412 was available in this fund to service these bonds. 52 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2012 Note 13 - LONG-TERM LIABILITIES (CONTD.) 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 2003, 2010 and 2011 Certificates will be serviced by the Debt Service Fund by contributions from the Wichita Falls 4B Economic Development Corporation. The Series 2004 and the Series 2005 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. 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, 2012 is classified as follows: Long-term $509,596 Current portion 34,281 Total Capital Leases Payable The City issued capital leases in 2009 and 2012 for the purchase of fire department equipment in the amount of $916,548 and $1,466,854, respectively. The assets are listed under "Motor Vehicles" in the business -type activities. The leases carry interest rates of 2.94% and 1.57% and mature in 2013 and 2016, respectively. These capital leases are recorded in the Fleet Maintenance Internal Service Fund and are included in the business -type activities of the government -wide statements. The City also entered into a capital lease agreement in 2012 to finance a portion of an energy efficiency project that includes several City facilities. The capital lease is expected to finance $4,419,310 of the total project that is estimated at $5,143,427. The project is not complete as of September 30, 2012. Therefore, only the amount incurred to date ($1,754,817) has been recorded as a capital lease payable as of September 30, 2012. The related construction in progress has been recorded in General Capital Assets ($1,452,760) and the Water and Sewer Fund ($302,057). The lease will carry an interest rate of 2.54% and will be for a period of 15 years. The first payment will not be due until the fiscal year ending September 30, 2014. 53 0 -71 Q 0 X LU F- F- Z W 04 J W N LL H M N Q J W H a_ m = Z W U aF- z w �y LL W O L� 00L i r U F- 0 Z Q Z 0 U co uj W Q J ,U V 0 J M O Z N O C V V N (0 M 100 o0 V O (0 (0 V N In In 10 o0 r to N o0 O r (O O (O N r 4 O ~ — V3 I� (M In n N 0) (0 N (O M (0 , 0) M (0 N 0) N N to O o0 (0 (0 M O (0 I� .cz U O a— M m V o0 m m O (O O (O (0 LO M I- N LO (4 0 m a) J N 0 C oc LO 0) m N N V V V M L In N N r M U (4 _ 0 f/1 (0 (M w 0) (0 N (M M O (O IQ N In V d) M (0 (O M N to 0o M r O O M V N r o0 w O N O (0 (4 a O ER �O0 N 0 z N _ 0 o0 N V V Md) In In (O rM r (0)0 06 (O0 V N (0 O (0 (NO DM N Lo 000 N 0 0 m 0) M Nt 0 (M N 0 O o (3) o 00 m In a) > a) V N N N V M (0 M V w M O N V d) (0 M m t In I0 00 m O ( N d M V M M O N M 0o M I- M M O V O (r0 (0 C m w NC ~ 0 C O C N 0) (0 M � N d) N N w 0) r- — — M In 0 N — (O 0o 00 o M — N O (0 - 0o DN In 00 (01 N E W. N 0 M N V O (o � oc d) 00 In M � O M (M In V oc M I� (o 0 00 (0 00 (O O C (M In oc oc O M N C O m .o N N — 0) (0 N » 0o O Oo V O In (O O 0o I- N (0 I N In O 00 w N N m 0 0 p � _ _ M V N (O o0 r N 0 0 E M V M t V V V V N V 00 o M C\l_ N O N Cl) O O p 0 W E N M O V In O O (O O r O N o0 O N N M o0 N N OC\l O N0 } U) Ln CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2012 Note 14 - DEFEASED DEBT On October 15, 2011, the City issued general obligation refunding bonds of $4,365,000 (par value) with interest rates ranging from 1.50% to 3.00%. The debt was issued to refund revenue bonds with rates ranging from 3.75% to 5.375% and a par value of $4,450,000. The general obligation bonds to be refunded matured through September 1, 2021. As a result of the refunding, the City reduced its total debt service by $855,414, resulting in an economic gain (difference between the present value of the debt service payments on the old and new debt) of $788,310. Note 15 - 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 $3,754,078 as of September 30, 2012, which is based on 18% usage of the landfill. The City will recognize the remaining estimated cost of closure and postclosure care of $16,893,349 as the remaining estimated capacity is filled. The landfill is expected to be filled to capacity in 2153. Actual costs may be higher due to inflation, change in technology, or changes in regulations. Note 16 - INTERFUND BALANCES Due To Fund Due From Fund General Fund Nonmajor Governmental Funds General Fund Water and Sewer Fund General Fund Nonmajor Enterprise Funds General Fund Internal Service Funds Total Amount Purpose $1,176,891 Short-term loan 88,142 Short-term loan 125,083 Short-term loan 10,150 Short-term loan All amounts due are scheduled to be repaid within one year. 55 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2012 Note 16 - INTERFUND BALANCES (CONTD.) Transfers to and from other funds during the year ended September 30, 2012 were as follows: Transfers From General Fund General Fund General Fund General Fund Nonmajor Governmental Funds Nonmajor Governmental Funds Nonmajor Governmental Funds Nonmajor Governmental Funds Nonmajor Governmental Funds Nonmajor Governmental Funds Water and Sewer Fund Water and Sewer Fund Sanitation Fund Sanitation Fund Sanitation Fund Nonmajor Enterprise Funds Nonmajor Enterprise Funds Nonmajor Enterprise Funds Internal Service Funds Transfers To Amount Reason Nonmajor Governmental Funds $ 249,682 Supplement operating deficits Nonmajor Enterprise Funds 527,239 Supplement operating grants Nonmajor Governmental Funds 618,180 Supplement operating grants Internal Service Fund 119,135 Purchase capital assets General Fund 49,988 Repay remaining equity Nonmajor Governmental Funds 286,679 Fund debt service payment Nonmajor Governmental Funds 1,459,943 Fund operating deficits Nonmajor Enterprise Funds 6,188,156 Purchase capital assets Internal Service Funds 28,439 Purchase capital assets Water and Sewer Fund 648,650 Fund construction projects General Fund 914,779 Administrative overhead Nonmajor Governmental Funds 500,000 Fund debt service payment General Fund 1,494,751 Administrative overhead Water and Sewer Fund 95,258 Purchase capital assets Internal Service Funds 1,172,877 Purchase capital assets Nonmajor Governmental Funds 74,898 Supplement operating grant Nonmajor Governmental Funds 450,953 Fund debt service payment Internal Service Funds 1,098,438 Purchase capital assets General Fund 312,000 Administrative overhead Total $16,290,045 Note 17 - COMMITMENTS AND CONTINGENCIES Litigation The City is a defendant in numerous lawsuits. In the opinion of the City's management, any unrecorded liabilities resulting from such suits will not materially affect the financial position of the City. Accrued Vacation and Sick Leave The City's liability for accrued vacation and sick leave, excluding the amount recorded in the proprietary funds, was $6,984,110 at September 30, 2012. This accrual is recorded as a long- term liability in the Government -wide Statement of Net Assets. 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 56 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2012 the calendar year 1997 and all years thereafter until the end of contract will be $500,000 per year. Note 17 - COMMITMENTS AND CONTINGENCIES (CONTD.) 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, 2012 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, 2012, 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 $ 661,415 Nonmajor Governmental Funds 1,377,876 Water and Sewer Fund 4,610,350 Sanitation Fund 253,520 Nonmajor Enterprise Funds 1,003,563 Total contract commitments $7,906,724 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. 57 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2012 Note 18 - CONDENSED FINANCIAL INFORMATION FOR DISCRETELY PRESENTED COMPONENT UNITS The City has four component units that are discretely presented in the City's basic financial statements. Condensed financial information for the year ended September 30, 2012 is as follows: Wichita Falls Wichita Falls Economic 4B Sales Wichita Falls Wichita Falls Development Tax Reinvestment Reinvestment Corporation Corporation Zone #2 Zone #3 Totals Condensed statement of net assets: Cash, investments and other current assets $15,379,214 $2,521,199 $ - $112,695 $18,013,108 Capital assets, net of accumulated depreciation 2,302,553 - 2,302,553 Total assets 17,681,767 2,521,199 112,695 20,315,661 Accounts payable and other current liabilities 15,153 57,079 72,232 Total liabilities 15.153 57.079 72.232 Net assets Condensed statement of activities: Expenses: Community development $ 2,647,369 $3,500,201 $305,804 $ 6,453,374 Program revenues: Charges for services 106,800 - - 106,800 Operating grants and contributions - 305,804 305,804 Total program revenues 106,800 305,804 - 412,604 Net program expense ( 2,540,569) ( 3.1 44.397) ( 305,804) ( 6. 440.770) General revenues: Tax revenues 3,567,804 3,567,804 305,693 39,364 7,480,665 Non -tax general revenues 409,818 4,217 111 98 414,244 Total general revenues 3,977,622 3,572,021 305,804 39,462 7,894,909 Change in net assets 1,437,053 377,624 - 39,462 1,854,139 Beginning net assets 16,229,561 2,086,496 73,233 18,389,290 Ending net assets $17,666,614 $2,464, 220 -$--- 1112 995 $20,243,429 58 CITY OF WICHITA FALLS, TEXAS NOTES TO THE FINANCIAL STATEMENTS (CONT-D.) SEPTEMBER 30, 2012 Note 19 - SUBSEQUENT EVENT On March 1, 2013, the City issued Combination Tax and Revenue Certificates of Obligation, Series 2013. These certificates totaled $19,875,000 and will be used to fund a portion of the new airport terminal project at Municipal Airport. The certificates are payable in annual installments ranging from $530,000 to $1,315,000 with final maturity on September 1, 2033. The average interest rate for the certificates is 3.075%. Note 20 - SUBSEQUENT PRONOUNCEMENTS In July 2011, the GASB issued GASB Statement No. 63 to provide a new statement of net position to report all assets, deferred outflow of resources, liabilities, deferred inflows of resources and net position (which is the net residual amount of the other elements). The Statement is effective for periods beginning after December 15, 2011 and requires that deferred outflows of resources and deferred inflows of resources be reported separately from assets and liabilities. The Statement also amends certain provisions of GASB Statement 34 and related pronouncements to reflect the residual measure in the statement of financial position as net position, rather than net assets. The GASB also issued GASB Statement No. 65 in April 2012 (effective for periods beginning after December 15, 2012) to limit the recognition of deferred outflows and deferred inflows of resources to those instances specifically identified in authoritative GASB pronouncements. Together these statements will affect the City's reporting of its governmental activities on the government -wide statements as of and for the year ended September 30, 2013, although the impact of applying the statements is not known at this time. These statements will decrease the September 30, 2012 net assets of the City's Water and Sewer Fund and Business -type Activities by $1,971,513 as bond issuance costs will no longer be considered assets under the new guidance. 59 Required Supplementary Information EXHIBIT B-1 CITY OF WICHITA FALLS, TEXAS REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2012 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 Variance With Final Budget - Positive (Negative) $ 55, 034, 678 $ 55, 034, 678 $ 55,183, 869 $ 149,191 2,857,035 2,857,035 2,842,447 (14, 588) 2,013,122 2,013,122 2,002,559 (10, 563) 1,928,000 1,928,000 2,211,710 283,710 27,850 27,850 9,492 (18, 358) 40,000 40,000 641,745 601,745 1,002,535 1,002,535 1,058,875 56,340 62, 903, 220 62, 903, 220 63, 950, 697 1,047,477 11,133, 840 11, 654, 278 10, 683, 914 970,364 20, 597, 396 20, 413, 520 20, 232, 522 180,998 13, 059, 789 13, 092, 590 13, 056, 554 36,036 4,858,165 4,907,451 4,691,686 215,765 760,856 839,966 845,076 (5,110) 1,796,071 1,812,110 1,589,971 222,139 5,232,797 5,239,127 5,154,672 84,455 2,881,610 2,912,560 2,775,458 137,102 2,063,261 1,928,461 1,907,622 20,839 3,173,121 3,700,147 3,897,068 (196, 921) 65, 556, 906 66, 500, 210 64, 834, 543 1,665,667 (2,653,686) (3,596,990) (883,846) 2,713,144 - - 501,051 501,051 2,721,530 2,721,530 2,771,519 49,989 (917,234) (1,340,180) (1,514,237) (174,057) 1,804,296 1,381,350 1,758,333 376,983 (849,390) (2,215,640) 874,487 3,090,127 17, 059, 999 17, 059, 999 17, 059, 999 - $ 16, 210, 609 $ 14, 844, 359 $ 17, 934, 486 $ 3,090,127 .E CITY OF WICHITA FALLS, TEXAS NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION SEPTEMBER 30, 2012 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 $1,366,250 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. 61 EXHIBIT B-2 CITY OF WICHITA FALLS, TEXAS TEXAS MUNICIPAL RETIREMENT SYSTEM - ANALYSIS OF FUNDING PROGRESS - LAST TEN PLAN YEARS (UNAUDITED)* (1) (2) (3) (4) (5) (6) Unfunded UAAL as a Actuarial Actuarial Actuarial Percentage Actuarial Accrued Annual Percentage of Valuation Value Accrued Funded Liability (UAAL) Covered Covered Payroll Date of Assets Liability (AAL) (1) _ (2) (2) - (1) Payroll (4) _ (5) 12/31 /02 $ 69, 770, 838 $ 93,176, 395 74.9% $ 23, 405, 557 $ 31, 065,101 75.3% 12/31 /03 72, 469, 506 98, 017, 025 73.9% 25, 547, 519 31, 516,130 81.1 % 12/31/04 70,462,244 98,405,860 71.6% 27,943,616 33,522,283 83.4% 12/31 /05 71, 393, 893 101, 093, 789 70.6% 29, 699, 896 32, 846, 479 90.4% 12/31 /06 69, 201, 457 100, 991, 795 68.5% 31, 790, 338 33, 791, 762 94.1 % 12/31 /07 (1) 70, 561, 545 120, 374, 701 58.6% 49, 813,156 35, 873, 970 138.9% 12/31 /08 68, 910, 226 122, 001, 202 56.5% 53, 090, 976 38, 272, 312 138.7% 12/31 /09 71, 505, 945 125, 325, 301 57.1 % 53, 819, 356 39, 020, 039 137.9% 12/31 /10 (2) 155, 809, 040 193, 990, 630 80.3% 38,181, 590 38, 337, 008 99.6% 12/31/11 164,206,444 201,160,651 81.6% 36,954,207 38,791,669 95.3% Analysis of the dollar amounts of the actuarial value of assets, actuarial accrued liability, and unfunded actuarial accrued liability in isolation can be misleading. Expressing the actuarial value of assets as a percentage of the actuarial accrued liability provides one indication of the City's funding status on a going -concern basis. Analysis of this percentage over time indicates whether the system is becoming financially stronger or weaker. Generally, the greater this percentage, the stronger the pension plan. Trends in unfunded actuarial accrued liability and annual covered payroll are both affected by inflation. Expressing the unfunded actuarial accrued liability as a percentage of annual covered payroll approximately adjusts for the effects of inflation and aids analysis of the City's progress made in accumulating sufficient assets to pay benefits when due. Generally, the smaller this percentage, the stronger the pension plan. This City retirement plan is substantially a defined contribution plan. These voluntary disclosures, similar to the disclosures required for a defined benefit plan, are provided for additional analysis of the plan. (1) TMRS made changes to both the actuarial funding method and actuarial assumptions for the 2007 valuation. (2) TMRS, with the approval of the Texas Legislature, amended the fund structure of the plan as of December 31, 2010. 62 EXHIBIT B-3 CITY OF WICHITA FALLS, TEXAS WICHITA FALLS FIREMEN'S RELIEF AND RETIREMENT FUND - ANALYSIS OF FUNDING PROGRESS (UNAUDITED) (1) (2) (3) (4) (5) (6) Unfunded UAAL as a Actuarial Actuarial Actuarial Percentage Actuarial Accrued Annual Percentage of Valuation Value Accrued Funded Liability (UAAL) Covered Covered Payroll Date of Assets Liability (AAL) (1) + (2) (2) - (1) Payroll (4) + (5) 12/31/02 $ 27,439,565 $ 37,003,896 74.2% $ 9,564,331 $ 6,609,807 144.7% 12/31/03 (a) - - - - - - 12/31/04 32,240,524 42,178,490 76.4% 9,937,966 7,175,196 138.5% 12/31/05 (a) - - - - - - 12/31/06 35,584,639 47,582,190 74.8% 11,997,551 7,697,370 155.9% 12/31/07 (a) - - - - - - 12/31/08 39,358,309 54,260,301 72.5% 14,901,992 8,915,419 167.1% 12/31/09 (a) - - - - - - 12/31/10 41,107,385 60,152,150 68.3% 19,044,765 8,527,417 223.3% 12/31/11 (a) - - - - - - Analysis of the dollar amounts of the actuarial value of assets, actuarial accrued liability, and unfunded actuarial accrued liability in isolation can be misleading. Expressing the actuarial value of assets as a percentage of the actuarial accrued liability provides one indication of the City's funding status on a going -concern basis. Analysis of this percentage over time indicates whether the system is becoming financially stronger or weaker. Generally, the greater this percentage, the stronger the pension plan. Trends in unfunded actuarial accrued liability and annual covered payroll are both affected by inflation. Expressing the unfunded actuarial accrued liability as a percentage of annual covered payroll approximately adjusts for the effects of inflation and aids analysis of the City's progress made in accumulating sufficient assets to pay benefits when due. Generally, the smaller the percentage, the stronger the pension plan. (a) Historical trend information is presented for as many years as such information about the plan is available. No actuarial valuation or update was performed as of these dates. Texas state law does not require an actuarial valuation to be completed annually. 63 EXHIBIT B-4 CITY OF WICHITA FALLS, TEXAS WICHITA FALLS RETIREE HEALTH CARE PLAN - ANALYSIS OF FUNDING PROGRESS (UNAUDITED) (1) (2) (3) (4) (5) (6) Unfunded UAAL as a Actuarial Actuarial Actuarial Percentage Actuarial Accrued Annual Percentage of Valuation Value Accrued Funded Liability (UAAL) Covered Covered Payroll Date of Assets Liability (AAL) (1) _ (2) (2) - (1) Payroll (4) _ (5) 12/31/06 (a) $ - $ 29,656,852 0.0% $ 29,656,852 $ 40,021,675 74.1% 12/31/07 (b) - - - - - - 12/31/08 - 32,143,378 0.0% 32,143,378 43,571,340 73.8% 12/31/09 (b) - - - - - - 12/31/10 853,478 32,409,858 2.6% 31,556,380 47,297,531 66.7% 12/31/11 (b) - - - - - - Analysis of the dollar amounts of the actuarial value of assets, actuarial accrued liability, and unfunded actuarial accrued liability in isolation can be misleading. Expressing the actuarial value of assets as a percentage of the actuarial accrued liability provides one indication of the City's funding status on a going -concern basis. Analysis of this percentage over time indicates whether the system is becoming financially stronger or weaker. Generally, the greater this percentage, the stronger the pension plan. Trends in unfunded actuarial accrued liability and annual covered payroll are both affected by inflation. Expressing the unfunded actuarial accrued liability as a percentage of annual covered payroll approximately adjusts for the effects of inflation and aids analysis of the City's progress made in accumulating sufficient assets to pay benefits when due. Generally, the smaller the percentage, the stronger the pension plan. (a) The first actuarial valuation was performed as of December 31, 2006 as the City began to prepare for the implementation of GASB 45. (b) Historical trend information is presented for as many years as such information about the plan is available. No actuarial valuation or update was performed as of these dates. Texas state law does not require an actuarial valuation to be completed annually. M. 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 Fund accounts for federal funds received to make capital improvements to the Kickapoo Downtown Airport. This fund is not required to have a legally adopted budget; therefore no budgetary comparison schedule is presented. 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 Projects 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. 2011 Bond Fund This fund was established to account for projects financed by the Combination Tax and Revenue Certificates of Obligation, Series 2011. These funds are being used for the Rhea, Call Field, and Lawrence Road realignment project. This fund was also used to show the activity related to the General Obligation Refunding Bonds, Series 2001, which were issued to refund the General Obligation Bonds, Series 2001. 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. )\ 3. -E - -!\\:!; /Sc « _ : i ` _)) ®�${\.(\�®`� \ ,)) \\\\/\}\ \ \\\}}\\� \\\)/)/)))\\/{� / 3 \ In k ( | \wm § § 2 | § o - k |§§ § § [ § 2 29 Fa m _E � ;|/, , , .....}} ...\...... ...\ f ......... « # 3 ...§.;§ ...,.::..¥ .;.; : ......... o ! , _ .....¥p .....:...� CD CD m § G§o §....!! .......... .... ! ......./ / ]( ±M . NM .......... 8\.7 r ......M-. !\ ® [ } S! } } \ \ ^ ! ! " #744k3!#k ! ){) .E¥44k! !m(ee! ...§ ®m!°}` N 1 ......! 1. Tm® NW IT o - - .E...§! ........\& ...: 4 ....r.f.■ R ® ° .4...# C......... ...& M.]......7.7 E �r� . 0E ...:..; .......1.. ...: & ..... --- ~ - - } ) `£^ ° 1.....! 1......... ...! 6.6 ~ ~ ` ° N N ( }} _�_ ...1.!\ ....;..... ...; ... /2 ` !; o ...;.R! ....;..... ...; } ....... - - - 14 z!! &...[[...; : .3.3..\ ...\ ...... E /) ! § : ! : EE I M- \ ,� o o o o —oo o -M I o lo ) ` - / ;: - o>o- - \\�\ (~o _mom I k�())\ ]�f. !!!+:!!;#,®® _ � ))f)!)/` {j!2!!!!!)]22z!!® )\ \/)/)/ƒ))� \ ) ) EXHIBIT C-3 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE - COMMUNITY DEVELOPMENT BLOCK GRANT FUND FOR THE YEAR ENDED SEPTEMBER 30, 2012 Revenues: Charges for services Intergovernmental revenue Total revenues Expenditures: Administrative services Community development Public works Capital outlay Total expenditures Excess of revenues over (under) expenditures Other financing sources (uses) Budgeted Amounts Original Final Actual Variance With Final Budget - Positive (Negative) $ - $ - $ 14,435 $ 14,435 1,285,144 1,285,144 1,285,144 - 1, 285,144 1,285,144 1,299,579 14,435 187,772 135,772 135,772 - 889, 029 1,126, 464 812,911 313,553 100,000 100,000 100,000 - 557, 252 1,077,208 49,283 1,027,925 1,734,053 2,439,444 1,097,966 1,341,478 (448,909) (1,154,300) 201,613 1,355,913 Transfers out - - (639,231) (639,231) Total other financing sources (uses) - - (639,231) (639,231) Excess of revenues and other sources over (under) expenditures and other uses (448,909) (1,154,300) (437,618) 716,682 Fund balance - beginning 979,977 979,977 979,977 - Fund balance - ending $ 531,068 $ (174,323) $ 542,359 $ 716,682 67 EXHIBIT C-4 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE - SECTION 8 HOUSING FUND FOR THE YEAR ENDED SEPTEMBER 30, 2012 Revenues: Intergovernmental revenue Miscellaneous revenue Total revenues Expenditures: Community development Capital outlay Total expenditures Excess of revenues over expenditures Fund balance - beginning Fund balance - ending Variance With Final Budget - Budgeted Amounts Positive Original Final Actual (Negative) $ 3,804,860 $ 3,804,860 $ 2,461,816 $ (1,343,044) - - 12,047 12,047 3,804,860 3,804,860 2,473,863 (1,330,997) 3,803,660 3,803,660 3,731,301 72,359 1,200 1,200 - 1,200 3,804,860 3,804,860 3,731,301 73,559 - - (1,257,438) (1,257,438) 2,488,588 2,488,588 2,488,588 - $ 2,488,588 $ 2,488,588 $ 1,231,150 $ (1,257,438) EXHIBIT C-5 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE - HOME INVESTMENT PARTNERSHIP AGREEMENT FUND FOR THE YEAR ENDED SEPTEMBER 30, 2012 Variance With Final Budget - Budgeted Amounts Positive Original Final Actual (Negative) Revenues: Intergovernmental revenue $ 487,069 $ 487,069 $ 487,069 $ - Miscellaneous revenue - - 10,503 10,503 Total revenues 487,069 487,069 497,572 10,503 Expenditures Community development 487,069 1,101,878 300,518 801,360 Total expenditures 487,069 1,101, 878 300,518 801,360 Excess of revenues over (under) expenditures - (614,809) 197,054 811,863 Fundbalance- beginning 739,176 739,176 739,176 - Fund balance - ending $ 739,176 $ 124,367 $ 936,230 $ 811,863 EXHIBIT C-6 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE - HOTEL/MOTEL TAX FUND FOR THE YEAR ENDED SEPTEMBER 30, 2012 Variance With Final Budget - Budgeted Amounts Positive Original Final Actual (Negative) Revenues: Taxes $ 1,472,000 $ 1,472,000 $ 1,626,194 $ 154,194 Total revenues 1,472,000 1,472,000 1,626,194 154,194 Expenditures: Administrative services 87,500 87,500 91,256 (3,756) Total expenditures 87,500 87,500 91,256 (3,756) Excess of revenues over expenditures 1,384,500 1,384,500 1,534,938 150,438 Other financing sources (uses): Transfers out (1,383,163) (1,383,163) (1,459,943) (76,780) Total other financing sources (uses) (1,383,163) (1,383,163) (1,459,943) (76,780) Excess of revenues and other sources over (under) expenditures and other uses 1,337 1,337 74,995 73,658 Fund balance - beginning 59,409 59,409 59,409 - Fund balance - ending $ 60,746 $ 60,746 $ 134,404 $ 73,658 70 EXHIBIT C-7 Revenues: Charges for services Miscellaneous revenue Total revenues Expenditures: Administrative services Total expenditures CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE - GOLF FUND FOR THE YEAR ENDED SEPTEMBER 30, 2012 Budgeted Amounts Original Final Actual Variance With Final Budget - Positive (Negative) $ 750,000 $ 750,000 $ 520,204 $ (229,796) - - 260,086 260,086 750,000 750,000 780,290 30,290 900,000 1,005,259 1,029,973 (24, 714) 900,000 1,005,259 1,029,973 (24, 714) Excess of revenues over (under) expenditures (150,000) (255,259) (249,683) 5,576 Other financing sources (uses): Transfers in Total other financing sources (uses) Excess of revenues and other sources over (under) expenditures and other uses 150,000 255,259 249,682 (5,577) 150,000 255,259 249,682 (5,577) Fund balance - beginning 31,781 31,781 31,781 - Fund balance - ending $ 31,781 $ 31,781 $ 31,780 $ (1) 71 EXHIBIT C-8 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE - MPEC FUND FOR THE YEAR ENDED SEPTEMBER 30, 2012 Variance With Final Budget - Budgeted Amounts Positive Original Final Actual (Negative) Revenues: Charges for services $ 180,320 $ 180,320 $ 186,578 $ 6,258 Miscellaneous revenue 1,643,028 1,643,028 1,451,436 (191,592) Total revenues 1,823,348 1,823,348 1,638,014 (185,334) Expenditures: MPEC 3,198, 764 3,697,569 3,062,507 635,062 Capital outlay - 6,302 958,011 (951,709) Total expenditures 3,198,764 3,703,871 4,020,518 (316,647) Excess of revenues over (under) expenditures (1,375,416) (1,880,523) (2,382,504) (501,981) Other financing sources (uses): Capital lease proceeds - - 951,709 951,709 Transfers in 1,375,416 1,375,416 1,427,189 51,773 Total other financing sources (uses) 1,375,416 1,375,416 2,378,898 1,003,482 Excess of revenues and other sources over (under) expenditures and other uses - (505,107) (3,606) 501,501 Fund balance - beginning 705,051 705,051 469,604 (235,447) Fund balance - ending $ 705,051 $ 199,944 $ 465,998 $ 266,054 72 EXHIBIT C-9 CITY OF WICHITA FALLS, TEXAS BUDGETARY COMPARISON SCHEDULE - DEBT SERVICE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2012 Variance With Final Budget - Budgeted Amounts Positive Original Final Actual (Negative) Revenues: Taxes $ 556,529 $ 556,529 $ 552,681 $ (3,848) Contributions 3,367,427 3,367,427 2,078,314 (1,289,113) Miscellaneous revenue - - 220 220 Total revenues 3,923,956 3,923,956 2,631,215 (1,292,741) Expenditures: Debt service - principal 2,228,980 2,228,980 2,270,000 (41,020) Debt service - interest and paying agent fees 1,764,976 1,764,976 1,603,982 160,994 Total expenditures 3,993,956 3,993,956 3,873,982 119,974 Excess of revenues over (under) expenditures (70,000) (70,000) (1,242,767) (1,172,767) Other financing sources (uses) Transfers in - - 1,237,632 1,237,632 Total other financing sources (uses) - - 1,237,632 1,237,632 Excess of revenues and other sources over (under) expenditures and other uses (70,000) (70,000) (5,135) 64,865 Fund balance - beginning 313,439 313,439 190,547 (122,892) Fund balance - ending $ 243,439 $ 243,439 $ 185,412 $ (58,027) 73 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. Municipal Airport Fund The Municipal Airport Fund was established to account for the operating revenues and expenses of the Wichita Falls Municipal Airport. The airport is operated on land leased from the Department of Defense. Commercial and private aviation share airport facilities and runways owned by Sheppard Air Force Base. Kickapoo Airport Fund During the year ended September 30, 2000, the City acquired Kickapoo Downtown Airport, a private airport. The Kickapoo Airport Fund was established to account for the operating revenues and expenses of the airport. Transit Fund 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 Drainaae 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. Watemark 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. n m_ S X W V O) M V N V O V M O M CO N LO O O O O 0) V CO O O O M — LO CO N M M N O N O I N O CO CO �_ O I� I� ) LO O co LO coN O co O O O O r W r LO V O O O CO CO �_ O O V W O 'gyp m E Q -O O M LO I� O LO O M M LO N I� CO O M O M O N M N o) V O I� W V M N M (D C a) O ~ O C W LO O N O W Z W Efl O O O Lo O W W Lo O O O O Lo Y O CO O O CO O O V N M M V CO (D V O M_ O M Lo O M Q Lo Lo O CO OM N o) o)m M m o) j>p M V M V Efl CO O O M CO V I� N r W N CO O O O M M O M O O LO N LO O M M_ M O O m O Cp W O r O N Lo N O O Ln .— O O N O N O O M M O W Ln Ln 0 Q M V Lo O Lo M O Efl CO O CO CO co I CO CO co N N O (D co r O) r co0 O N co I� co O r O W O O CO C O O CO O O O) CO LO LO O CO M O) m O O I� O a) coN O(m (DN I CO OHO V (O Efl O O V V V O O Lo co V co I (D CO CO V co (o r W O O) O O -) O W O O r W 0 O- O O CO co N (o O) N V N V coLO CO O) co O) O) (oV I� M_ V O) M co V Y Q O co (oM LO CO N Lo N W Y Q o 0 0 0 I� O) r W O) O O Lo r r O O) O) N Q LO V O Ln M O) Lo V O O V r 0 0 O W Lo r N O co N O O) O (oW Ln .0 O N (oW (o V O N LO O (or V ._ Q �_ O Lo N O) N LO I� V Ln V M M V (oC LO I� M a x W w �' N P aZ (/� W LL N J LLV/N O U- ZKM a WWW mwZm �WW _ awoL �w o LL Zz ZO o m Z C a C N U U m ° u, M >. 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V CO O CO LO CO CO LO LO N LO CO O) CO LO V N CO O) N O- I� O co T W M co N W N V CO M O) Efl Efl N CO O O CO CO CO O CO N O O Ln .od) O CO I� 0 N N N N CO CO N N N N W O) T M N M C E LO CO d1 LO " d1 N Lo V Lo W ad) W Lo Lo V V o) d) V N V V M M � Efl Efl N CO M V o) V o) W Ln Ln _ LO CO O) r O O) Lo O (D (D (D r V M N M N V N V LO V O O) � M V CO O) O) O) O(D V O) Lo O O W O O a t� c\l� o) � t� _ 69 V 69 O M N � V V CO O N N V N V N V N V O O O O O N O O) O O-L- 2- V CO LO LO O CO CO CO N N T Lo LO Ln O O 69 LO N W LO M M O F F O O O O O (6 Q o CO LO r T O O W CO W LO V V O) CO O) CO N N W N O LO U Q (p V O) O M M CO V O M I� N M T M V CO CO M V LO O Q " N — CO I� O) O) V V V 69 uH N N X O N W LL 0 M Z W Q= 1 LL m J U w � J LL N W Q O a w ZIL Wu)i w H w Z w W 0 2 F Z m U y-- a) 2� �¢w uj O Z 0 w w m m U m z m > m mo > C U V O N C U uj a)O C O Q O O U (6 C a N O (6 N > 9 9 C C N -o 9 o o .� a m a a _ E o V Q o w c c a .0 c m o m 0 m m o .� o a U o .> L a �° o o m in o o Q Q Q a o m coi o Y a_ Q� z� > o U E> � o o> U +. � U W W E Eww2 E E o o �- O O -2 -2 O E m O Q ` O O w O U O om O (6 (6 L L U .� a) C N a) ON E E o C C N O C (6 s U (6 (6 L Z f/) L (6 (6 Z L C () Q L C L L C) C) C) C) z C) C) 0 ZN a V N N M � Z K fn �LLm J = Ur) W LLL UW-aw a "" O F 0 ZWZ U W"W 0 L Wiz} N W Z Z F Z 0 U 0 U O M — N i� W M F V i� M O) Ln O) I� O O) O) NMO) (O O Ln o LO O) V Ln O O) N N Ln N I� V M N� N O C N N CO O (p O O) LO H co O O r O) CO O) O) N y. N (D I� O) O O .0 co V N N V O I� O O) O O CO Efl Efl co O co V i� W O N O o) (D ( O o(D Lo C V O) V � O V O) � Efl Efl O) N M N (D M _ O) V CO (D r O) O) I� T Lo O O) V N (D n V O) Lo M O n O) Efl Efl O M Ln r M M N N O O O O-L- O (D V (D O) CO T CO N a) o N O) Q U Q o) V Lo N N M Lo Y 69 d) O) M O Lo mo U o (p O OM M a N V V N Efl Efl 0 0 � C O C 'C O t0/1 9 () a to m M>6 U Mn () C C C C N O N °) () U (06 9 a) n m U O- V N O atn a '+• a O a) U O U 6 a) T a y a .> C t�/1 U 9 E c C "' E O O a) O a a C a`) �a a m -o m m o.o > Qa� Q a) N> C MC6 W N T a) O a) O O E O a) b w E U a) > U u- a m (6 E OU y0 O 9 E T.� -OO O' > 9 U Q O C y .� t^O/1 > O N a a) j N N 9 ' O z 0 to () () a) O E E a) a) H N N N U O> N U U U (T6 L m O Q o c 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 ASSETS INTERNAL SERVICE FUNDS SEPTEMBER 30, 2012 Employee Information Fleet Duplicating Benefit Technology Maintenance Services Trust Fund Totals ASSETS Current assets: Cash and cash equivalents $ 457,475 $ 692 $ 1,268,498 $ 1,107,217 $ 2,833,882 Restricted cash and cash equivalents - - 1,616,971 - 1,616,971 Receivables: Other 340,315 20,610 360,925 Inventory 814,418 - - 814,418 Prepaid items - 467 - - 467 Total current assets 1,612,208 1,159 2,906,079 1,107,217 5,626,663 Capital assets, net of accumulated depreciation 21,144,631 5,210 - 190,434 21,340,275 Total assets 22,756,839 6,369 2,906,079 1,297,651 26,966,938 LIABILITIES Current liabilities: Accounts payable - trade 108,620 3,179 25,859 53,983 191,641 Accrued payroll 35,116 692 1,701 18,842 56,351 Accrued vacation and sick leave 80,687 2,550 - - 83,237 Payable to other City funds - - 10,150 10,150 Estimated health claims payable - 594,291 594,291 Other liabilities 1,155 - 1,155 Capital leases - current maturities 428,365 - - - 428,365 Total current liabilities 653,943 6,421 632,001 72,825 1,365,190 Long-term liabilities: Capital leases, less current maturities 973,919 - - - 973,919 Total liabilities 1,627,862 6,421 632,001 72,825 2,339,109 NET ASSETS Invested in capital assets 19,742,347 5,210 - 190,434 19,937,991 Unrestricted 1,386,630 (5,262) 2,274,078 1,034,392 4,689,838 Total net assets $ 21,128,977 $ (52) $ 2,274,078 $ 1,224,826 $ 24,627,829 78 EXHIBIT E-2 CITY OF WICHITA FALLS, TEXAS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 Employee Information Fleet Duplicating Benefit Technology Maintenance Services Trust Fund Totals Operating revenues Charges for services $ 9,819,329 $ 234,101 $ 8,521 $ 2,759,309 $ 12,821,260 Rents, concessions and other 47,128 - 507,077 65,000 619,205 Contributions - - 10,124,446 - 10,124,446 Total operating revenues 9,866,457 234,101 10,640,044 2,824,309 23,564,911 Operating expenses: Personnel services 1,868,016 43,327 94,035 1,032,898 3,038,276 Supplies and materials 4,110,044 19,946 12,702 101,973 4,244,665 Maintenance and repairs 1,716,595 981 47,796 480,889 2,246,261 Utilities and other services 88,518 2,774 75,500 151,818 318,610 Insurance and contract support 41,267 - 8,966,862 - 9,008,129 Other expenses 175,671 126,647 1,530,728 5,746 1,838,792 Depreciation and amortization 3,493,385 1,462 - 21,159 3,516,006 Total operating expenses 11,493,496 195,137 10,727,623 1,794,483 24,210,739 Operating income (loss) (1,627,039) 38,964 (87,579) 1,029,826 (645,828) Nonoperating revenues (expenses) Interest income 209,582 209,582 Interest expense (10,928) - (10,928) Gain on sale of capital assets 128,487 (3,200) - 125,287 Total nonoperating revenues (expenses) 117,559 (3,200) 209,582 - 323,941 Income (loss) before contributions and transfers (1,509,480) 35,764 122,003 1,029,826 (321,887) Capital contributions 116,000 - - - 116,000 Transfers in 2,418,889 2,418,889 Transfers out (312,000) - - - (312,000) Change in net assets 713,409 35,764 122,003 1,029,826 1,901,002 Net assets - beginning 20,415,568 (35,816) 2,152,075 195,000 22,726,827 Net assets - ending $ 21,128,977 $ (52) $ 2,274,078 $ 1,224,826 $ 24,627,829 79 EXHIBIT E-3 CITY OF WICHITA FALLS, TEXAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 Employee Information Fleet Duplicating Benefit Technology Maintenance Services Trust Fund Totals Cash flows from operating activities: Received from customers and users $ 9,548,896 $ 234,101 $ 10,632,641 $ 2,824,309 $ 23,239,947 Payments to suppliers (6,747,207) (151,438) (10,868,996) (946,918) (18,714,559) Payments to employees (1,375,678) (30,440) (68,385) (753,581) (2,228,084) Net cash provided (used) by operating activities 1,426,011 52,223 (304,740) 1,123,810 2,297,304 Cash flows from noncapital financing activities Interfund loans received 10,150 Interfund loans repaid - (46,409) - Transfers in from other funds 2,418,889 Transfers out to other funds (312,000) - Net cash provided (used) by noncapital financing activities 2,106,889 (46,409) 10,150 Cash flows from capital and related financing activities: Capital contributions Acquisition of capital assets Proceeds from sale of capital assets Principal paid on long-term debt Interest and fees paid on long-term debt Net cash used for capital and related financing activities Cash flows from investing activities: Interest on investments Net cash provided by investing activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents - Beginning Cash and Cash Equivalents - Ending Cash flows from operating activities: Operating income (loss) Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation and amortization (Increase) decrease in current assets: Receivables: Other Inventory Prepaid items Increase (decrease) in current liabilities: Accounts payable - trade Accrued payroll Accrued vacation and sick leave Estimated health claims payable Other liabilities Total adjustments Net cash provided (used) by operating activities 116,000 (3,619,550) (5,122) 129,072 (436,266) (10,928) (3,821,672) (5,122) 10,150 (46,409) 2,418,889 (312,000) 2,070,630 116,000 (211,593) (3,836,265) 129,072 (436,266) (10,928) (211,593) (4,038,387) 209,582 209,582 - 209,582 - 209,582 (288,772) 692 (85,008) 912,217 539,129 746,247 - 2,970,477 195,000 3,911,724 $ 457,475 $ 692 $ 2,885,469 $ 1,107,217 $ 4,450,853 $ (1,627,039) $ 38,964 $ (87,579) $ 1,029,826 $ (645,828) 3,493,385 1,462 21,159 3,516,006 (313,013) - (7,403) - (320,416) (52,754) 11,209 (41,545) 185 - 185 (70,627) (437) (59,141) 53,983 (76,222) 1,947 22 74 18,842 20,885 (1,340) 818 - (522) - (150,691) (150,691) (4,548) - (4,548) 3,053,050 13,259 (217,161) 93,984 2,943,132 $ 1,426,011 $ 52,223 $ (304,740) $ 1,123,810 $ 2,297,304 80 Agency Fund Escheatment Fund - The agency fund is used to account for assets held by the City of Wichita Falls in a custodial capacity. The assets in this fund have been abandoned or remain unclaimed pending escheatment to the State of Texas. EXHIBIT F-1 CITY OF WICHITA FALLS, TEXAS AGENCYFUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FOR THE YEAR ENDED SEPTEMBER 30, 2012 ESCHEATMENT FUND Assets Cash and cash equivalents Liabilities Other liabilities Balance 10/1/2011 Additions Deductions $ 126,830 $ 126,830 Balance 9/30/2012 $ 11,453 $ 57,057 $ 81,226 $ 11,453 $ 57,057 $ 81,226 81 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 four 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. EXHIBIT G-1 CITY OF WICHITA FALLS, TEXAS COMBINING STATEMENT OF NET ASSETS COMPONENT UNITS SEPTEMBER 30, 2012 Assets Cash and cash equivalents Receivables: Government agencies Prepaid items Capital assets, net of accumulated depreciation Total assets Liabilities Accounts payable - trade Other liabilities Total liabilities Net assets Investment in capital assets, net of related debt Unrestricted Total net assets Wichita Falls Economic Wichita Falls Development 413 Sales Tax Corporation Corporation $ 14,768,826 $ 1,910,811 610,388 610,388 2,302,553 - 17,681,767 2,521,199 Wichita Falls Wichita Falls Reinvestment Reinvestment Zone #2 Zone #3 $ $ 112,695 $ 16,792,332 - 1,220,776 - 2,302,553 112,695 20,315,661 15,153 42,962 58,115 - 14,117 14,117 15,153 57,079 72,232 2,302,553 - - 2,302,553 15,364,061 2,464,120 112,695 17,940,876 $ 17,666,614 $ 2,464,120 $ $ 112,695 $ 20,243,429 82 / / 2 x F Cl) LL « E §_ k LL 0 » § a k / w krk §zr Z/§ w)2 @22 j�w \ � o § 0m0 000(0 §§§ \\\ ..\.\ ... \\\ m m © , ^ co, , ,\ Co � { \ \, \�\\ \\\ 0 /®)k Lo 0 ) /E Eo */aa - _{$\\ ��,:: ) § )� E.CoWW_ �:\ ,:a -- {/{]» f\\\\® } )\\ )))))0 / k Supporting Schedules m w U) W a a a W x W w w H z 0 J Q N a lL W M a 0W w m zW U o Co a LL W ON o O W� 13 w U m 0 w z m O U .I �ms — fil � o F m °I m, , , , , , , , , , i M u E R R R R R LL e E r E e E o o o o E OD o Lu / \ \ __ « C : ) LLj o � . « LULU % B -- u L- - -- k k§ _ - - §/ \\ }\ o § mm L) a o 6o .. f \t# ;) E o |}± . o lo k)\ j� _ j�w _ oN om \}\ ow } o \\w ow \} \\\ o oo oo oo No No No No No No oN 1 5 \ IN \ k k ` LLI 2 { /� / �lo C > } z} LL� IT o ° z m u_ LU_ -- - k �� -- - - --~ -~ 0 §` :o ,\ ,\ § L B - - S w! }o )t \\\ \\\ \\T \\\ O m rn n rn m E o �mrno��i n iv n o�mrn o�mrno��i 000000000000000_ rn iv n ohm 00000000_ a m _ _ _ _ _ _ _ _ _ _ _ _ r�vvvvvvvvin in in _ _ _ _ _ _ _ _ in in �o �o �orrr ���NNNNNNNr�r�r�r�r� �Nin in in M M 0 ~ (� Z LLt5 0 OQ 0 0 Q O U x W w C } J a o N of o 0 0 J y N LL Z M Q m LL m U wa vo WUW) 6 ? �� LL x 00 z U m U `o 'w ow'w ow �° a 0 a 0 0 0�� mo m° - - - _ - E Evw ,,Ow Eve 0,00 Ev OK Evv U K a o o o o o o 1 5 /� / 2 ) { 0 LLI 2 : j ) Z} LLLL M owoo - °m 00000 Imo u_ -j_ - - k LuL }/ _ .- 0 §` ,\ ,\ § B = S ! ! Sw§ }i }o •« :# :#; m {!� )» ))f ) °o oc /!! \ )2! f a T ■ R F , 2. 0 Z O U w J a } aN LLo No VI y N 0 O Z M m W LL m v 02 t5 v J d w �w oy w - x U N 0 w z m O E U E is � o v 3 � a t o o EXHIBIT H-3 CITY OF WICHITA FALLS, TEXAS DEBT SERVICE COVERAGE - REVENUE BONDS SEPTEMBER 30, 2012 Water and Sewer Revenue Bonds: Change in net assets (Exhibit A-8) Add: Depreciation and amortization Interest expense and paying agent fees Transfers out Subtract: West Texas Utilities water revenues Gain (loss) on sale/abandonment of capital assets Capital contributions from developers Transfers in Net earnings for determining debt service coverage Net earnings for determining debt service coverage Principal and interest requirements to maturity Number of years remaining to pay bonds Average annual principal and interest requirement Minimum bond covenant debt service coverage Minimum debt service coverage requirement $ 6,502,008 $ 5,552,648 4,851,051 1,414,779 11,818,478 365,087 95,109 181,759 743,908 (1,385,863) $ 16,934,623 Priority Subordinate Lien Bonds Lien Bonds $ 16,934,623 $ 144,982,661 $ - 15 N/A 9,665,511 N/A 1.25 1.10 $ 12,081,888 $ - 12,081,888 Excess over debt service coverage requirements $ 4,852,735 m w w z LL H Z w Q K H X w> x 0 ~ UU fn 0Z N J Z ¢ N LL 0 ¢0 M tea' uw F_ w Z m 0nm LL w U w } H a ZWw Z J N LL a 0 wW FSU HN U w y y J H U s a Z -ol _ E w - E 15 Um e '�'°- _ u OE 0 E n 3 _ N N Y °' c "' .E c '^ u 0 my m o - m 'c m=' E m N (� N c a a' U x a U o '_° S N N c T n S C o �' s N 2 rn c E a `_' s y_ `- °' E s _ T d N N U v v r = S20- m `o `o c v- - U `° '� c w °! `u _ o c_ u'� a w ~ 3 c o w 1- 0 3` m. c-: E a' 19 :- T-o c= I m D E �`-� - E U a C7 m' Z U 2 r 'o = x E T U @ o `� 5 E `m o a- a` 2 _- w` Yn 5 5 E OQ C7 r a LL a Qu U a 0 r EXHIBIT H-5 CITY OF WICHITA FALLS, TEXAS CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY FOR THE YEAR ENDED SEPTEMBER 30, 2012 Beginning Ending Balance Balance 10/1/2011 Additions Deletions 9/30/2012 Administrative services: Mayor and City Council $ 5,218 $ $ $ 5,218 City Manager 281,561 - - 281,561 Personnel/Risk Management 12,244 2,964 1,116 14,092 Martin Luther King Center 802,089 - - 802,089 Library 5,530,185 28,567 15,285 5,543,467 General Public Information 288,379 4,366 - 292,745 Building Maintenance 1,115,694 52,467 - 1,168,161 Nondepartmental 495,274 506,172 16,000 985,446 Municipal Court 750,358 7,214 10,787 746,785 Legal 1,869 - - 1,869 City Clerk 1,411 1,411 Homeland security 802,766 802,766 Training center 536,255 536,255 Golf course 4,385,212 - - 4,385,212 Total administrative services 15,008,515 601,750 43,188 15,567,077 Police 27,209,153 138,385 33,172 27,314,366 Fire 7,523,298 - - 7,523,298 Parks and recreation: Recreation 2,602,442 35,730 18,421 2,619,751 Park maintenance 13,024,353 9,050 1,344 13,032,059 Cemetery 141,042 - - 141,042 Total parks and recreation 15,767,837 44,780 19,765 15,792,852 Accounting/finance: Accounting/finance 1,192 - 1,192 - Information Systems 2,093,928 233,562 94,342 2,233,148 Total accounting/finance 2,095,120 233,562 95,534 2,233,148 Community development: Planning 28,465 - - 28,465 Inspection 7,447 - 1,449 5,998 Property management 3,210,543 17,330 - 3,227,873 Weed and Seed program 7,504 - 7,504 Hazard Mitigation Grant 170,800 - 170,800 Total community development 3,424,759 17,330 1,449 3,440,640 Public works: Engineering 280,371 8,796 4,995 284,172 Street maintenance 138,170 4,452 - 142,622 Infrastructure 150,637,326 6,196,686 237,782 156,596,230 Total public works 151,055,867 6,209,934 242,777 157,023,024 Health: Administration 3,288,864 4,394 10,867 3,282,391 General city nursing 108,492 - 10,080 98,412 Environmental health 19,998 - - 19,998 Lab water pollution 31,044 13,185 44,229 Animal reclaim center 3,481,691 2,500 - 3,484,191 Total health 6,930,089 20,079 20,947 6,929,221 Traffic and transportation 9,160,732 627,507 322,062 9,466,177 Multi -Purpose Events Center 44,222,119 958,011 140,657 45,039,473 Wichita Falls Business Park 1,099,507 - - 1,099,507 Total capital assets $ 283,496,996 $ 8,851,338 $ 919,551 $ 291,428,783 0W EXHIBIT H-6 CITY OF WICHITA FALLS, TEXAS MUNICIPAL AIRPORT FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2012 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 Balance $ 7,229,618 $ 49,101 $ - $ 7,278,719 1,698,058 - - 1,698,058 34,871 1,499 3,964 32,406 36,705 - - 36,705 704,082 4,941,921 49,101 5,596,902 9,703,334 4,992,521 53,065 14,642,790 1,667,953 232,882 - 1,900,835 1,106,720 25,765 - 1,132,485 27,115 1,816 2,775 26,156 36,659 46 - 36,705 2,838,447 260,509 2,775 3,096,181 $ 6,864,887 $ 4,732,012 $ 50,290 $11,546,609 93 EXHIBIT H-7 CITY OF WICHITA FALLS, TEXAS KICKAPOO AIRPORT FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2012 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 Balance Balance 10/1 /2011 Additions Deletions 9/30/2012 $ 6,526,882 $ 2,269,776 $ 102,572 $ 8,694,086 3,259,730 - - 3,259,730 610,925 - 19,600 591,325 1,032,180 - 996,933 35,247 11,429,717 2,269,776 1,119,105 12,580,388 1,068,028 220,569 61,543 1,227,054 445,451 107,301 - 552,752 203,253 31,762 7,839 227,176 1,716,732 359,632 69,382 2,006,982 $9,712,985 $ 1,910,144 $1,049,723 $ 10,573,406 94 EXHIBIT H-8 CITY OF WICHITA FALLS, TEXAS TRANSIT FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2012 Balance Balance 10/1/2011 Additions Deletions 9/30/2012 Capital Assets Land and betterments $ 159,925 $ 33,600 $ - $ 193,525 Buildings and improvements 680,718 13,384 - 694,102 Machinery and equipment 262,339 72,492 19,421 315,410 Construction in progress - 389,950 - 389,950 Total capital assets 1,102,982 509,426 19,421 1,592,987 Accumulated Depreciation: Buildings and improvements 226,499 10,791 - 237,290 Machinery and equipment 156,991 21,377 18,749 159,619 Total accumulated depreciation 383,490 32,168 18,749 396,909 Net capital assets $ 719,492 $477,258 $ 672 $ 1,196,078 95 EXHIBIT H-9 CITY OF WICHITA FALLS, TEXAS STORMWATER DRAINAGE FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2012 Capital Assets: Drainage Land betterments Machinery and equipment Construction in progress Total capital assets Accumulated Depreciation: Drainage Land betterments Machinery and equipment Total accumulated depreciation Net capital assets Balance Balance $ 14,376,510 $ 122,013 $ - $ 14,498,523 24,800 - - 24,800 73,376 7,532 8,400 72,508 776,907 1,133,565 103,695 1,806,777 15,251,593 1,263,110 112,095 16,402,608 461,255 192,444 - 653,699 402 115 - 517 62,188 7,127 224 69,091 523,845 199,686 224 723,307 $ 14,727,748 $ 1,063,424 $ 111,871 $ 15,679,301 EXHIBIT H-10 CITY OF WICHITA FALLS, TEXAS SANITATION FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2012 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 Balance Balance $5,796,258 $ 349,937 $ - $6,146,195 2,287,861 671,234 290,000 2,669,095 340,457 17,857 - 358,314 347,695 127,196 347,695 127,196 8,772,271 1,166,224 637,695 9,300,800 452,665 113,741 - 566,406 1,348,891 48,283 174,000 1,223,174 104,660 24,377 - 129,037 1,906,216 186,401 174,000 1,918,617 $ 6,866,055 $ 979,823 $ 463,695 $ 7,382,183 97 EXHIBIT H-11 CITY OF WICHITA FALLS, TEXAS WATER AND SEWER FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2012 Balance Balance 10/1 /2011 Additions Deletions 9/30/2012 Capital Assets: Land and betterments $ 24,345,465 $ - $ - $ 24,345,465 Buildings, systems and improvements 253,188,406 3,300,200 389,000 256,099,606 Machinery and equipment 4,841,964 78,243 15,000 4,905,207 Furniture and fixtures 1,164 - - 1,164 Motor vehicles 1,235 - - 1,235 Construction in progress 43,639,367 5,580,196 945,497 48,274,066 Total capital assets 326,017,601 8,958,639 1,349,497 333,626,743 Accumulated Depreciation Land and betterments 9,822,719 243,632 - 10,066,351 Buildings, systems and improvements 83,645,676 4,960,074 389,000 88,216,750 Machinery and equipment 3,746,066 160,405 15,000 3,891,471 Furniture and fixtures 1,164 - - 1,164 Motor vehicles 1,235 - - 1,235 Total accumulated depreciation 97,216,860 5,364,111 404,000 102,176,971 Net capital assets $ 228,800,741 $ 3,594,528 $ 945,497 $ 231,449,772 M. EXHIBIT H-12 CITY OF WICHITA FALLS, TEXAS WATERPARK FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2012 Balance Balance 10/1 /2011 Additions Deletions 9/30/2012 Capital Assets: Land and betterments $ 389,894 $ - $ - $ 389,894 Buildings and improvements 3,362,609 - - 3,362,609 Machinery and equipment 188,457 - - 188,457 Total capital assets 3,940,960 - - 3,940,960 Accumulated Depreciation Buildings and improvements 332,026 168,130 - 500,156 Machinery and equipment 36,192 18,846 - 55,038 Total accumulated depreciation 368,218 186,976 - 555,194 Net capital assets $ 3,572,742 $ (186,976) $ - $ 3,385,766 EXHIBIT H-13 CITY OF WICHITA FALLS, TEXAS FLEET MAINTENANCE FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2012 Capital Assets: Land and betterments Buildings and improvements Machinery and equipment Furniture and fixtures Motor vehicles Construction in progress Total capital assets Accumulated Depreciation: Land and betterments - other Buildings and improvements Machinery and equipment Furniture and fixtures Motor vehicles Total accumulated depreciation Net capital assets Balance Balance $ 436,269 $ - $ - $ 436,269 4,140,027 7,418 - 4,147,445 991,592 386,270 7,374 1,370,488 2,950 - - 2,950 48,113,636 5,017,955 1,584,880 51,546,711 6,706 - 6,706 - 53,691,180 5,411,643 1,598,960 57,503,863 1,175 261 - 1,436 2,075,378 87,046 - 2,162,424 584,064 163,849 6,789 741,124 2,950 - - 2,950 31,475,415 3,297,205 1,321,323 33,451,297 34,138,982 3,548,361 1,328,112 36,359,231 $19,552,198 $ 1,863,282 $ 270,848 $ 21,144,632 100 EXHIBIT H-14 CITY OF WICHITA FALLS, TEXAS DUPLICATING SERVICES FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2012 Capital Assets: Machinery and equipment Accumulated Depreciation: Machinery and equipment Net capital assets Balance Balance $ 24,925 $ 5,122 $ 16,000 $ 14,047 20,175 1,462 12,800 8,837 $ 4,750 $ 3,660 $ 3,200 $ 5,210 101 EXHIBIT H-15 CITY OF WICHITA FALLS, TEXAS INFORMATION TECHNOLOGY FUND CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2012 Balance Capital Assets: Machinery and equipment Accumulated Depreciation: Machinery and equipment Net capital assets Deletions $ - $ 211,593 $ - Balance 9/30/2012 $ 211,593 21,159 - 21,159 $ - $ 190,434 $ - $ 190,434 102 EXHIBIT H-16 CITY OF WICHITA FALLS, TEXAS WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION CAPITAL ASSETS AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED SEPTEMBER 30, 2012 Balance 10/1/2011 Additions Deletions Capital Assets: Land and betterments Buildings and improvements Total capital assets Accumulated Depreciation: Buildings and improvements Net capital assets $ 1,469,797 $ - 957,191 - 2,426,988 - Balance 9/30/2012 $ 1,469,797 957,191 2,426,988 105,291 19,144 - 124,435 $ 2,321,697 $ (19,144) $ - $ 2,302,553 103 Statistical Section (Unaudited) This part of the City of Wichita Falls, Texas' comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government's overall financial health. Contents Page Financial Trends 104 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 110 These schedules contain information to help the reader assess the government's most significant local revenue source, the property tax. Debt Capacity 114 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 119 These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. Operating Information 121 These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs. 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0 `0 C O C O O 4% N t/1 t0/1 (6 N N N N f/) Y O U U U Q > w 0 U w O .0 L C (6 Q X f�/) a- C a -O 'C C O C O Z Z Z N f/) N f/) O O N U O N N O (6 >O 9 M -O5 � (C6 C O O N N N 0 Y C_ N N Z (6 C C U O -O .0 U Y O U 'w d Y6 f/) f/) f/) O a LL U '� E C C O L O L U C_ p w H N -O O (6 U 0 9 N O (6 N N N N Q N 2 m m U U �CiJW �U� �Qa LaQC�aS��C�0 X x LaC)a�� (r W W O Z 0 o O 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 2002-2003 $ 20,891,772 $ 16,598,733 $ 5,286,038 $ 1,221,620 $ 196,663 $ 230,280 $ 44,425,106 2003-2004 21,410,615 17,192,706 5,218,860 1,278,102 202,841 209,825 45,512,949 2004-2005 22,567,902 17,845,502 5,191,741 1,262,518 204,727 164,128 47,236,518 2005-2006 23,469,615 19,272,204 5,740,202 1,333,747 234,075 178,666 50,228,509 2006-2007 24,968,481 20,068,529 5,780,311 1,417,397 236,367 166,233 52,637,318 2007-2008 26,217,499 21,353,896 5,598,406 1,565,523 251,386 168,864 55,155,574 2008-2009 27,865,394 20,451,906 5,570,399 1,506,423 249,121 109,739 55,752,982 2009-2010 27,501,412 20,033,820 5,593,573 1,513,484 246,541 77,883 54,966,713 2010-2011 28,554,029 21,082,994 5,593,781 1,572,105 248,350 70,747 57,122,006 2011-2012 28,679,076 21,406,823 5,574,882 1,677,100 207,735 61,696 57,607,312 109 EXHIBIT 1-6 CITY OF WICHITA FALLS, TEXAS ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY - LAST TEN FISCAL YEARS (UNAUDITED) Personal Real Property Property Total Total Fiscal Assessed Assessed Assessed Direct Estimated Year Value Value Value Tax Rate Actual Value 2002-2003 $ 2,775,175,780 $ 652,625,915 $ 3,427,801,695 $0.55194 $ 3,427,801,695 2003-2004 2,901,708,013 629,284,576 3,530,992,589 0.59246 3,530,992,589 2004-2005 3,047,463,928 632,056,253 3,679,520,181 0.59246 3,679,520,181 2005-2006 2,992,717,987 726,512,178 3,719,230,165 0.59246 3,719,230,165 2006-2007 3,208,236,037 744,353,082 3,952,589,119 0.59246 3,952,589,119 2007-2008 3,389,094,572 802,449,151 4,191,543,723 0.59246 4,191,543,723 2008-2009 3,553,825,553 877,030,381 4,430,855,934 0.59526 4,430,855,934 2009-2010 3,622,501,148 803,697,677 4,426,198,825 0.60526 4,426,198,825 2010-2011 3,693,399,778 728,642,824 4,422,042,602 0.62526 4,422,042,602 2011-2012 3,714,449,662 716,365,316 4,430,814,978 0.62526 4,430,814,978 Ratio of Total Assessed to Total Estimated Actual Value 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% ITUS 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 2002-2003 $ 0.53 $ 0.06 $ 0.59 $ 0.40 $ 0.02 $ 0.42 $ 1.49 $ 0.14 $ 1.63 2003-2004 0.53 0.06 0.59 0.43 0.02 0.45 1.50 0.14 1.64 2004-2005 0.54 0.05 0.59 0.44 0.02 0.46 1.50 0.14 1.64 2005-2006 0.55 0.04 0.59 0.44 0.02 0.46 1.50 0.13 1.63 2006-2007 0.57 0.02 0.59 0.43 0.02 0.45 1.37 0.13 1.50 2007-2008 0.57 0.02 0.59 0.43 0.01 0.44 1.17 0.11 1.28 2008-2009 0.58 0.02 0.60 0.43 - 0.43 1.17 0.14 1.31 2009-2010 0.59 0.02 0.61 0.48 - 0.48 1.17 0.14 1.31 2010-2011 0.61 0.01 0.62 0.52 - 0.52 1.17 0.14 1.31 2011-2012 0.61 0.01 0.62 0.53 - 0.53 1.17 0.14 1.31 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 2002-2003 $ 1.50 $ 0.19 $ 1.69 $ 1.50 $ 0.11 $ 1.61 $ 1.50 $ 0.06 $ 1.56 $ 7.50 2003-2004 1.50 0.19 1.69 1.50 0.08 1.58 1.50 0.06 1.56 7.51 2004-2005 1.50 0.23 1.73 1.49 0.09 1.58 1.50 0.06 1.56 7.56 2005-2006 1.50 0.25 1.75 1.49 0.09 1.58 1.50 0.06 1.56 7.57 2006-2007 1.50 0.23 1.73 1.36 0.09 1.45 1.33 0.06 1.39 7.11 2007-2008 1.37 0.23 1.60 1.04 0.08 1.12 1.04 0.15 1.19 6.22 2008-2009 1.04 0.22 1.26 1.04 0.08 1.12 1.04 0.16 1.20 5.92 2009-2010 1.17 0.23 1.40 1.04 0.11 1.15 1.04 0.16 1.20 6.15 2010-2011 1.17 0.25 1.42 1.04 0.10 1.14 1.04 0.16 1.20 6.21 2011-2012 1.17 0.25 1.42 1.04 0.09 1.13 1.04 0.17 1.21 6.22 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 111 EXHIBIT 1-8 CITY OF WICHITA FALLS, TEXAS PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO SEPTEMBER 30, 2012 2011-2012 Taxable Assessed Taxpayer Value GGP - Sikes Senter LLC $ 49,506,348 Oncor Electric Delivery Co 36,786,078 Wal-Mart Stores Texas LP 24,597,829 Southwestern Bell 19,089,579 Wal-Mart Stores East Inc 17,932,134 Quail Creek Crossing Ltd 15,358,000 North American Pipe Corp 12,987,822 Kell West Regional Hospital 12,847,161 Lowe's Home Centers, Inc. 12,087,569 Atmos Energy/ Mid -Tex Division 11,721,246 Clinics of North Texas - Time Warner - Southwestern Bell Wireless LLC - Sams East Inc - Totals $ 212,913,766 Rank 1 2 3 4 5 6 7 8 9 10 N/A N/A N/A N/A 2002-2003 Percentage of Total Taxable Assessed Assessed Valuation Value 1.12% $ 42,045,000 0.83% 42,843,090 0.56% 36,064,620 0.43% 45,872,012 0.40% - 0.35% - 0.29% - 0.29% 13,829,399 0.27% 13,746,383 0.26% - 0.00% 13,992,264 0.00% 12,972,531 0.00% 12,969,900 0.00% 9,830,788 4.81 % $ 244,165, 987 Rank 3 2 4 1 N/A N/A N/A 6 7 N/A 5 8 9 10 Percentage of Total Assessed Valuation 1.23% 1.25% 1.05% 1.34% 0.00% 0.00% 0.00% 0.40% 0.40% 0.00% 0.41 % 0.38% 0.38% 0.29% 7.13% 112 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 2002-2003 $ 19, 439, 511 $ 18, 962, 880 97.55% $ 410,689 $ 19, 373, 569 99.66% 2003-2004 20, 039, 039 19, 646, 529 98.04% 314,740 19, 961, 269 99.61 % 2004-2005 20,919,473 20,494,272 97.97% 312,867 20,807,139 99.46% 2005-2006 22, 034, 951 21, 612, 888 98.08% 301,651 21, 914, 539 99.45% 2006-2007 23, 421, 270 23, 043,185 98.39% 272,878 23, 316, 063 99.55% 2007-2008 24,833,219 24,408,683 98.29% 269,868 24,678,551 99.38% 2008-2009 26, 375,113 25, 905, 854 98.22% 306,224 26, 212, 078 99.38% 2009-2010 26,752,242 26,166,043 97.81% 288,413 26,454,456 98.89% 2010-2011 27,649,264 27,179,642 98.30% 165,507 27,345,149 98.90% 2011-2012 27, 704,114 27, 306, 706 98.57% - 27, 306, 706 98.57% 113 O I� co O co O r CO co M co I� M O N CO O m y6 .Q N CO O CO (D O co LO � N V V co V 0) co V V 0) co LO X W O o 0 0 0 0 0 0 0 0 0 (Op o a) C o f V oCO V V M O V I� M M O o r a) ` O I� CO U d C w - a o C T O 75 o OLO O CO M LO O O N O O O CO I� O V M O N CO I� V V O O O E E a 'o LED o N o M o O o o a) (D 9 C(O V N N CO O o V CO M V M LLo C� J a t/1 O a) y0 m ' CO I� O O CO o V o LO M O co N I� O M Ln O I� r M O T M N O O o r O CO r M I� V a) z CO O O O O Lo Lo a U Q a) Q Efl Y -O o O m a m O W CO o W o LO Lo M M o) cD V V CO (D N M N o CO (D I� o CO V r V I� N LO V r M COO Co o) O o)CO V O I� O r 9 a5 C o) M M O M N N N N N Om OH N U a) 69 -O O Y m M M W CO o CO r V W W M V N V N N M o) O M O W V r V V r O o r O CO I� O f/) j M CO I� V Lo O o V o M o W Ln N Lo o N CO V O O O cje a) O O a5 V ,^ V/ � fl a w „ W �W o H � 0 9 Lo v o m� 0 oa5 Lo m o J F Q mZ T za Lo M N Co o CO w:3 LL Z Q Q o w o O O O O W O r N M Z} C C -O O O O O N r CO O N F Q E� -O m O o o O O r V CO V M O U_ F y .0 �6 a) CO o M o o o)O Lo �J O LL O O LoN M M M M i o OE E F- a) lL L` w C) a) O 0 O Q J (� o O 0 O 0 O 0 O 0 O 0 O 0 O 0 O o O O o '� a) (6 a O M O (O LO N O I O M O W LO M O O O (O LO C 6- 0 m N O I� O N -0r M V (O LO LO I� V V _ V V ( -5 0 Efl o Ll r m O O N O O N O O N O O N O O N O O N 'o O O N O O N O O N O O N O O N O O N O O N O O N O O N O O N N O O N N O O O N N EXHIBIT 1-11 Fiscal Year 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 CITY OF WICHITA FALLS, TEXAS RATIOS OF GENERAL BONDED DEBT OUTSTANDING - LAST TEN FISCAL YEARS (UNAUDITED) Governmental Activities General Combination Obligation Tax and Bonds Revenue Bonds $ 15,290,000 13,060,000 10,725,000 8,270,000 7,390,000 6,480,000 5,535,000 4,790,000 4,450,000 4,116,110 6,810,000 6,095,000 5,360,000 25,396,016 23,867,228 33,524,726 35,918,687 34,104,162 35,503,123 Total - $ 15,290,000 19,870,000 16,820,000 13,630,000 32,786,016 30,347,228 39,059,726 40,708,687 38,554,162 39,619,233 Percentage of Actual Taxable Value of Per Property Capita 0.45% $ 146.02 0.56% 189.56 0.46% 157.38 0.37% 126.63 0.83% 304.60 0.72% 281.39 0.88% 368.71 0.92% 389.36 0.87% 368.75 0.89% 381.21 115 EXHIBIT 1-12 CITY OF WICHITA FALLS, TEXAS DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT (UNAUDITED) SEPTEMBER 30, 2012 Gross General Bonded Debt (1) Direct Percentage Applicable to City of Wichita Falls (2) Amount Applicable to City of Wichita Falls City of Wichita Falls $ 39,619,233 100% $ 39,619,233 Overlapping: Wichita County 700,000 100% 700,000 Burkburnett Independent School District 8,353,718 25% 2,088,430 City View Independent School District 8,120,665 90% 7,308,599 Iowa Park Consolidated Independent School District 18,373,247 2% 367,465 Wichita Falls Independent School District 59,009,000 99% 58,418,910 Total overlapping 94,556,630 68,883,403 Total direct and overlapping bonded debt $ 134,175,863 $ 108,502,636 Sources: (1) Listed taxing jurisdictions (2) City of Wichita Falls Planning Department calculated based on percentage of taxing entity within the City of Wichita Falls city limits. 116 M 0] X w O O O N N � fA fA fA N O N N 0 O M V y3 O O � V EA EA 0 O O 0 O EA EA EA O O O N N O N N NO NO r O q V EA Ep � EA N O O 0 O W N N N V O N 00 �O r N V EA EA M O O 0 W � EA EA EA O 0 N N M p m N N NO r O V y � V EA EA N O O 0 0 N O c N N O W (V N NO 00 O p � (6 U N O O O 0 N N N (V N r N 0 N NO NO N EA EA O O 0 A A A 0 O N N N O N W N O O N O p M EA � EA M O O O W O O V W O O N N (O V W V W N V N r W Nr O N (NO (00 EA O � EA N (OHO c EA A EA 00 O O O O O N V N O O16 W N (V N O (V N N O 0 EA O O EA 0 0 0 0 O 0 N N N N NO O V N 0 E m O Q O U O T O O (6 y6 N N > N N N N N O Q NEp O 0 2 E N 2 E N N N XX6 W N N N N a N " N (6 E N N EX O O _ N O F � U 2 F UNI Q 2 U 2 F m x W O O N N c) N CO Lo I� M N M o N Lo - V O U o LO o O) M O CO LO N CO N_ M I� M M LO M O) LO V V O CO O O) CO O) O) Ln O) M V V LO LO LO V V V Ln O) CO I V CO O O O LO V V M N V CO LO O O) M CO CO LO N CO N Cl) N M CO O CO V Ln O) CO V V o COO COO V W (D Cl) CO CO CO CO CO CO LO LO LO EH M OOOOOOOOOo OOOOOOOOO O Ln O o o o o O o o O U O) CO r O CO Cl)LO O CO O) CO V CO O CO M_ C M V V V V LO LO LO LO CO O O Lo O Lo r r T LO M O) C LL 'U O) CO O) M CO O) V O O)_ O) > N Z CO O CO O V O Cl) M N Cn o) o) o) o) Cl)CO Cl)COO O Z> 0 9 U N Z 69 O m x W � a j w o w a (n > ax W _ X 0 �L- U N V N O O N M N o r o N N W W F F" CO V N CO CO LO O) 0 jp O O O) co O) V N N O OLL w Q J0 C CO O) co N W LO o) O) o) V LO o) a m Z O �- w �' J aj 69 W5� u) LL ww m� a W Q �w N a ar o Y O (6 J = Q N > n wN o U U M N �j LL ` O) N (o I� V O) O I� LO O N CO CO CO U O N O '-' O S i Z w W Co N O O M (o CO V N Co V V V O) Ln > (>,)N O 9 LL > F O O LO N CO I� o) (o (o CO O N a to L E O O C CJ O O (o o) Lo Lo (o N O V O C C x E_ U u) > O M N M M M M > O o- W 7 J 01 � E U w > m m .° a w 9 Q y C Q N O - 9 0 W ci o a � a E a m w M o o Co o Co o a x J 5 O O O O O O O O O O C m U C - !6 W IL ow N N N N N N N N N N N LL r o o o o o O N o N o o N o N o o N o o N o N o N o N o N o N O Z EXHIBIT 1-15 CITY OF WICHITA FALLS, TEXAS DEMOGRAPHIC STATISTICS - LAST TEN FISCAL YEARS (UNAUDITED) Per Capita Fiscal Estimated Personal Personal Median Education School Unemployment Year Population (1) Income Income (2) Age Level (3) Enrollment (3) Rate (4) 2002-2003 104,712 $ 3,929,158,919 $ 37,523 35.4 13.1 13,765 5.5% 2003-2004 104,823 4,067,057,042 38,799 35.4 13.1 13,857 3.6% 2004-2005 106,876 4,287,700,173 40,118 35.4 13.1 13,755 4.8% 2005-2006 107,635 4,464,967,184 41,482 35.4 13.1 13,743 4.2% 2006-2007 107,635 4,616,776,069 42,893 34.9 13.1 14,707 4.1 % 2007-2008 107,847 4,783,148,919 44,351 34.9 13.3 14,533 5.5% 2008-2009 105,935 2,470,050,408 23,317 33.2 13.5 15,473 8.2% 2009-2010 104,553 2,205,022,770 21,090 32.3 13.3 16,217 7.3% 2010-2011 104,553 2,766,263,274 26,458 32.8 13.2 15,539 6.6% 2011-2012 103,931 2,330,756,606 22,426 32.4 13.2 14,569 6.9% Sources: (1) City of Wichita Falls Planning Department for all years, except for 2009-10 and 2010-11 from US Bureau of Census. (2) C.A.C.I. Marketing Services (3) Wichita Falls I.S.D. - Educational level is grade equivalent of graduating senior (4) Texas Workforce Commission 119 EXHIBIT 1-16 CITY OF WICHITA FALLS, TEXAS PRINCIPAL EMPLOYERS CURRENT YEAR AND TEN YEARS AGO (UNAUDITED) SEPTEMBER 30, 2012 Employer Sheppard Air Force Base Wichita Falls ISD North Texas State Hospital United Regional Health Care System City of Wichita Falls Midwestern State University Wal-Mart - 3 locations Howmet Corporation James B. Allred Prison Unit Cryovac Division - Sealed Air Corp Vetrotex America Stanley Works, Mechanics Division Totals Employees 10,015 2,574 1,987 1,668 1,499 1,309 1,251 1,084 980 780 23,147 2011-2012 Rank 1 2 3 4 5 6 7 8 9 10 N/A N/A Percentage of Total City Employment Employees 14.01% 13,088 3.60% 1,700 2.78% 1,055 2.33% 1,700 2.10% 1,477 1.83% - 1.75% - 1.52% 903 1.37% 930 1.09% 738 - 1,000 - 550 32.37% 23,141 2001-2002 Percentage of Total City Rank Employment 1 18.30% 3 2.38% 5 1.48% 2 2.38% 4 2.07% N/A - N/A - 8 1.26% 7 1.30% 9 1.03% 6 1.40% 10 0.77% 32.37% Sources: 2001-2002 data is from Texas Workforce Commission. 2010-2011 data is from Wichita Falls Chamber of Commerce. 2002-2003 data was not available; therefore the City used 2001-2002 data. 120 N (o LO O O O LO O O Co N LO O O N M O o) o) Co Co o N W o N O N O LO O O O N LO O Co O LO O V (o M Im O N Ln O O) N N O) N LO Wo O O) O) O Ln W N� O O N O O O O Co O Co O LO (o V (o M N LO V V Co O M O N LO � o o O O O) Co CO N V CO Co LO N CO CO N N � o) O O N O Co O O o) O O Co O Co O o) LO Co V M O V V V N Co O o) O M O) N V N O O O) Co CO N V CO Co LO N I� coN N � N � � W O O N W O O o) LO LO N LO (o Co LO O (o V (o M O LO M V N LO O o N oN N O) N V O) O O O) Co CO N V CO I� N r W N � N � � o O O N O O O Co LO I� N o) Co V LO O V Co V N M O M V N LO V O W o V N N O) O) V O) O O O) Co I� N V r oN r W N � O O O N (o o) LO O Co V LO LO O N O O M M O o) Co Co LO N Co O) LO o O) O CO LO I� N M CO N N � � O o O N 0 a Z � Ln Ln O W V I� N O) LO O O I� O O M M 0 O Ln O O Ln N W O O N O) LO O) F O O) o Ln r N M Co N N � � U Z o o o LL N mw W W~ W CO LO O Co V O Cl) N O Co O Co Cl) Cl) p N o Co o N o O V o) O) V O) O }O Q O o) oL� N M o o Ch J Z a ? 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