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MOVING THE NEEDLE ON

Quality of Life City of Baytown

fy2016 Popular Annual Financial Report Fiscal Year Ending September 30, 2016


From the Mayor Fellow Baytonians, On behalf of the Council and Staff of the City of Baytown, I am proud to present Baytown’s 2016 Popular Annual Financial Report: Moving the Needle on Quality of Life. We’re happy to report another successful year and believe that providing you with a clear and concise look at how your city operates is of utmost importance in maintaining the trust you’ve placed in us. Throughout 2016, the continuation/completion of many private and public projects within the community have Baytown experiencing unprecedented growth. Baytown’s economy is booming as these new infrastructure, commercial, residential and industrial projects progress. Today Baytown is seeing a substantial growth in industry, population and opportunity. Moving the Needle on Quality of Life is an especially appropriate theme for us this year as we work towards our Primary Directive - To build on Baytown’s rich history, sense of community, and bayside location to fuel economic vitality, while creating the opportunity for all residents to enjoy an exceptional quality of life.” 2016 was an exciting, yet demanding year. The City of Baytown met its financial challenges and prospered. 2017 will be no different. We understand completely the sacred trust that is ours; to maximize our citizens’ investment in our community. I‘m proud to be part of such an incredible community and I am confident the City of Baytown will continue to provide the best service possible to our customers, the citizens of Baytown. Sincerely, Stephen DonCarlos, Mayor

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About Baytown

Laura Alvardo District 1

Chris Presley District 2

Charles Johnson Mayor ProTem

Terry Sain District 4

Robert Hoskins District 5

David McCartney District 6

Cross over the scenic Fred Hartman Bridge and you’ll find Baytown. Located just 30 miles east of downtown Houston, Baytown is the fourth largest city in Harris County, and is easily accessible via Interstate 10, a major gateway on the city’s northern border. The city encompasses an area of about 40 square miles and boasts a rich environment, as well as a strong historical and economic heritage. The city’s strategic location has encouraged a successful and diverse blend of employment opportunities and recreational activities centered around the area’s waterways. Located in the Texas Independence Trail region, Baytown is rich in history. General Sam Houston was an early resident, and the area played a significant role in the Battle of San Jacinto in 1836. The region was also home to the Karankawa Indians; their artifacts can still be found at the Baytown Nature Center. Originally three separate towns, the City of Baytown combined Goose Creek (dating back to before 1850), and oil boom towns Pelly (established in the late 1910s), and East Baytown (early 1920s) when it incorporated in 1948. Baytown is a Home Rule City operating under the CouncilManager form of government, with a City Council composed of a Mayor (elected at large) and six single district Council members. The City Council appoints a City Manager to act as the chief administrative and executive officer of the City.

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Our Foundation For Success The City of Baytown is proud to be an organization where character counts and service is more than a catch phrase. Our Mission: To balance public resources and services in order to provide for the health, safety, and welfare of the community, enhance quality of life, and plan for the future. Our Vision: To be a progressive community that values quality of life, diverse economic opportunities and civic pride as we honor our past and shape our future.

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Live The City’s Core Values

Leadership: show others the way Integrity: we earn and honor the trust of others Teamwork: we help each other succeed Excellence: we understand our jobs and take pride in doing them well Respect: we conduct our business with courtesy, kindness and fairness Service: we anticipate our customers’ needs and provide solutions

Get Better All The Time

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Innovate by learning from others and evaluating how we can improve the way we provide services. Ask customers and employees how we can improve. Train employees to perform their jobs at higher levels. Develop employees within their current positions and grow leaders from within the organization.

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Always step back when making a decision and consider who needs to be involved and who needs to be informed of what is happening, whether it’s the public or fellow employees. Make every decision with the future in mind. Will the decision make Baytown a better place to live, work and visit? What impact will the decision have on Baytown in twenty years? Will the decision have a positive impact on Baytown’s community spirit?

Positively impact the Baytown area as public servants and as members of the community.

Communicate

Give Back


How We Serve Each of the City’s 817 full-time employees works toward a common goal “I want to be a part of a community where I’m proud to tell people where I’m from.”

Police Statistics

By the Numbers Population Elevation Avg. Temp Avg. High Avg. Low Avg. Precip. Med. Income Median Age

79,215 34 ft. 68.7o F 77.9o F 59.6o F 53.8 in. $50,107 31

Parks & Recreation Statistics Parks Developed Park Acreage Undeveloped Park Acreage Spraygrounds Baseball/Softball Diamonds Tennis Courts Community Centers Water parks Quick Soccer Courts

52 1,120 179 5 22 4 1 2 2

2015 Arrests Accident Reports Citations Offense Reports Calls for Service

5,637 2,594 20,144 14,788 67,765

2016 5,584 2,676 23,817 15,014 70,236

Water & Sewer Customers Water Sewer

2015 22,599 21,705

2016* 21,389 20,533

* In 2016 the Water & Sewer Customers reporting criteria was changed from reporting based on customer connections, to customer accounts.

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Visitors Welcome Tourism plays an important role in a community’s economic development and stability. When hotels are full, restaurants do well, and retail gets a boost. The end result is increased municipal tax revenues, which contribute to lower taxes for residents. A great way to support tourism is to personally know your city’s assets. What better way to support our local economy than to be a tourist in our own backyard? Baytown – Where Family, History and Nature Come Together! Ever dream of running across one of the largest stay-cable bridges in the world or kayaking in the reflection of the San Jacinto Monument? In Baytown, the possibilities are endless and adventures abound. If you’re an arts enthusiast, you’ll find plenty to view. Visit the Portrait of a Warrior Memorial Art Gallery, which holds amazing works of fallen heroes memorialized through art. Visit the Art Center of Baytown to admire paintings, photographs, illustrations, and jewelry made by talented local artists. Then catch a first-rate production by the Baytown Little Theater, the Baytown Symphony Orchestra, or the Lee College Performing Arts Center. Enjoy the outdoors? Take a romantic stroll through Yepez Vineyard or enjoy Texas Avenue. Wildlife and birding enthusiasts will appreciate the Baytown Nature Center and Eddie V. Gray Wetlands Center, both situated among the scenic waterways that once witnessed the decisive battle of the Texas Revolution. For family fun, consider geocaching or taking part in the official Baytown GeoTour, or spending the day by the water, where Baytown’s 6-acre Pirate’s Bay Waterpark thrills children of all ages. Royal Purple Raceway is also a popular destination hosting year-round events like the ever popular NHRA Spring Nationals. For more information, log on to VisitBaytown.com.

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Quality Of Life Baytown has experienced significant change; even so, the City has been proactively developing plans that address infrastructure needs of the neighborhoods along with those of new developments that are now coming online. Some of the major initiatives are as follows: • Construction began on San Jacinto Boulevard, Phase 1 at a projected cost of $20.5 million.. The new roadway will extend from IH-10 Eastbound Frontage Road to West Cedar BayouLynchburg Road at Bush Road. San Jacinto Boulevard will provide an alternate to Garth Road. • Two slides will be added to the Pirates Bay waterpark, referred to as the Aqua Loop. The Aqua Loop will be part of an expansion on the north side of the park and involves the addition of a tower with two separate slides. The project is projected to cost $2.7 million with a completion date before the 2017 opening season. • A $1.9 million Fire Training Center consisting of 6,000 square foot training station, storage classrooms and amenities, a three-story industrial platform for rope rescue and fire training structures and props. • The Central District Waste Water Treatment Plant mitigation project to elevate critical components, equipment and controls above the base flood elevation continues. This plant was submerged during Hurricane Ike. Funding sources include CDBG recovery and FEMA ($15.6 million), Certificates of Obligation ($1.5 million) and capital match funds ($.6 million). • In an effort to provide improved pressures and flows system-wide, the City has partnered with Chambers County Improvement District No. 1 (CCID1) to design and construct a one million gallon elevated storage tank near CCID1 in Chambers County for a projected cost of $3.4 million. Design was complete in December 2014 and the construction is was substantially complete by October 2016. • Construction of the 911 Center and expansion of fiber optic network. The project consists of a 17,902 square foot tilt-wall facility hardened to withstand 150 MPH winds. The building will house the City’s ITS and 911 dispatch services for Police, Fire and after-hours dispatch for Public Works. The project is scheduled for closeout February 2017 with a final cost of $11.9 million.

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Strong Financial Stability Statement Of Net Position

2015

Bond Ratings 2016

Current and Other Assets Capital Assets, Net Total Assets

$130,260,751 456,386,461 586,647,212

$129,555,679 482,215,669 611,771,348

Total Deferred Outflows of Resources

10,755,811

24,032,561

303,840,422 20,485,454 324,325,896

326,815,478 21,173,357 347,988,835

652,749

974,071

Net Position: Net investment in Capital Assets 268,404,395 Restricted 28,385,937 Unrestricted (24,365,954) Total Net Position $ 272,424,378

298,789,668 25,361,066 (37,309,731) $286,841,003

Long-Term Liabilities Other Liabilities Total Liabilities Total Deferred Inflows of Resources

The Statement of Net Position presents information on all of the City's assets and liabilities, with the difference between the two presented as net position. The statement excludes the Baytown Area Water Authority (BAWA) and the Municipal Development District (MDD).

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Moody’s Aa2 Stable

Ongoing development occurring within the city and industrial districts Historically sound financial operations and healthy reserves Sizeable tax base bolstered by industrial district values

Standard & Poor’s AA Stable

Deep and stable economy, with access to the stable Houston metropolitan statistical area Steady payments from a payments-in-lieu-of-taxes (PILOTs) agreement with industrial districts, which account for a significant portion of its revenue stream Very strong financial position, coupled with very strong reserves

Glossary Of Terms Accrual Basis of Accounting - A method of accounting that recognizes the financial effect of transactions, events, and interfund activities when they occur, regardless of the timing of related cash flows. Capital Assets - Land, improvements to land, easements, buildings, building improvements, vehicles, machinery, equipment, works of art and historical treasures, infrastructure, and all other tangible or intangible assets that are used in operations and that have initial useful lives extending beyond a single reporting period. Current Assets - Assets which are available or can be made readily available to finance current operations or to pay current liabiities. Current assets also include those which will be used up or converted into cash within one year. Some examples are cash, temporary investments and taxes receivable which will be collected within one year. Deferred Inflows of Resources - An acquisition of net assets that is applicable to future reporting periods. Deferred Outflows of Resources - A consumption of net assets applicable to future reporting periods Reference Note 1 - Summary of Significant Accounting Policies (SSAP).

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(cont.)


Smart Fiscal Responsibility Statement Of Activities

Glossary Of Terms (cont.) Net Investment in capital assets - This represents the City’s investment in its capital assets less accumulated depreciation and any outstanding debt due to the acquisition, construction, or improvement of capital assets. Long-Term Liability - a liability with a future benefit over one year, such as notes payable that mature in more than one year. Restricted Net Position - A component of net assets calculated by reducing the carrying value of restricted assets by the amount of any related debt outstanding. Unrestricted Net Position - The portion of net assets that is neither restricted nor invested in capital assets (net of related debt).

Governmental Revenues

Governmental Revenues 3% 24%

Charges for Services

7%

Grants & Contributions Property Taxes 15%

Industrial District Other Taxes Other Revenues

29%

22%

2015

General Revenues Property Taxes Sales and Hotel/Motel Taxes Franchise Taxes Industrial District Payments Investment Income Miscellaneous Total Revenues

$22,991,938 22,460,619 4,155,898 31,675,333 410,245 5,574,464 87,268,497

2016 $24,824,084 22,790,624 4,233,571 32,136,165 513,282 2,922,284 87,420,010

Net Revenue (Expense) Governmental Activities General Government Public Safety Public Works Public Health Parks, Recreation & Culture Interest and Fiscal Agent Fees Total Governmental Activities

(19,951,025) (41,124,521) (5,284,131) (2,265,812) (9,421,535) (3,989,720) (82,036,744)

(21,685,908) (44,590,590) 740,264 (2,479,707) (6,713,413) (4,561,801) (79,291,155)

Business-Type Activities Water and Sewer Sanitation Bayland Island Development Aquatics Storm Water Utility Total Business-Type Activities

9,424,160 27,814 (214,297) 222,291 762,297 10,222,265

6,621,031 81,369 (196,641) (39,699) (178,290) 6,287,770

(71,814,479) $15,454,018

(73,003,385) $14,416,625

Total Expenses Change in Net Position

Governmental Functional Expenses 3%

Governmental Functional Expenses

10%

General Government

4% 24%

Public Safety Public Works

10%

Public Health

49%

Parks, Recreation, and Culture Interest and Fiscal Agent Fees on Long-Term Debt

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Recognized Excellence 2016 Awards And Recognitions The Government Finance Officers Association of the United States and Canada (GFOA) has given an Award for Outstanding Achievement in Popular Annual Financial Reporting to the City of Baytown, Texas for its Popular Annual Financial Report for the fiscal year ended September 30, 2015. The Award for Outstanding Achievement in Popular Annual Financial Reporting is a prestigious nation award recognizing conformance with the highest standards for preparation of state and local government popular reports. In order to receive an Award for Outstanding Achievement in Popular Annual Financial Reporting, a government unit must publish a Popular Annual Financial Report, whose contents conform to program standards of creativity, presentation, understandability and reader appeal. An Award for Outstanding Achievement in Popular Annual Financial Reporting is valid for a period of one year only. The City of Baytown, Texas has received a Popular Award for the last four consecutive years (2011-2015.) We believe our current report continues to conform to the Popular Annual Financial Reporting requirements, and we are submitting it to GFOA.

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Government Finance Officers Association (GFOA) Distinguished Budget Presentation Award for Fiscal Year 2015-16

GFOA Certificate of Achievement for Excellence in Financial Reporting for Fiscal Year Ending 2015

GFOA Award for Outstanding Achievement in Popular Annual Financial Reporting for Fiscal Year Ending 2015

Texas Comptroller Leadership Circle Gold Member

Harris/Galveston Area Council 2016 Parks and Natural Areas Award, On-the-Ground Project under $500,000, Special Recognition, Town Square

Texas Recreation and Park Society (TRAPS) 2016 East Region Volunteer of the Year

TRAPS 2016 Lone Star Recreation Programming Award Class III, Special Pirates Celebration

TRAPS 2016 East Region Lone Star Programming Award, First Annual Seed Fling Wingding


Strong Community Top Ten Taxpayers

Source: Goose Creek ISD Tax Office and Chambers County Appraisal District.

Property Taxpayer CenterPoint Energy Inc. ExxonMobil Corp. LCY Elastomers TPC Group MREF Villas LLC WalMart

2016 Taxable Assessed Value

AREG Rollingbrook Dr TX Partners I

2008 Baker Rd. AHC Goose Creek LLC 2008 Baker R II LTD

$ 44,956,431 32,735,611 26,354,760 23,721,330 21,806,549 21,070,583 19,505,217 18,352,000 18,010,141 17,465,971

$243,978,593

Top Ten Area Employers

Source: Baytown Chamber of Commerce, City of Baytown and Lee College.

Employees Employer 3,660 ExxonMobil Baytown Complex 3,012 GCCISD 1,571 Houston Methodist San Jacinto Hospital 1,009 Covestro 960 Chevron Phillips Chemical Company 817 City of Baytown 662 WalMart Distribution Center 600 Lee College 600 JW Steel 325 Home Depot Distribution Center 13,255

Source: Harris County Appraisal District

City of Baytown $ 0.822030 Harris County 0.419230 Harris County Flood Control District 0.027330 Port of Houston Authority 0.013420 Harris County Hospital District 0.170000 Harris County Dept. of Education 0.005422 Goose Creek ISD 1.431890 Lee Junior College District 0.250200 Total $3.139522

2016 Sales Tax Rate Breakdown State of Texas General Fund Municipal Development District Street Maintenance Crime Control & Prevention District Fire Control, Prevention & EMS District Total Sales Tax

6.250% 1.000% 0.500% 0.250% 0.125% 0.125% 8.250%

Baytown Mayor Stephen DonCarlos and Exxon Mobil CEO Darren Woods are given a tour the company’s multi-billion dollar Baytown expansion project, currently under construction

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Have you ever considered what you get for your tax dollars? City taxes paid by the average household per year with a homestead exemption are $848. That’s about $2.32 a day. Less than the price of a soda in a restaurant. What does the City provide for that $2.32? 24/7 Police, Fire and Emergency Medical Services Restaurant Inspections Code Enforcement and Building Inspections Neighborhood Protection and Animal Control Services Maintenance of over 440 miles of paved streets, 780 miles each of water and sanitary sewer lines 52 Parks, including softball fields, skate parks, a bark-park and water parks Concerts, Special Events, Leisure Activities Library Services For more information on the City of Baytown, visit www.baytown.org, follow us on Facebook and Twitter or Baytown Television on Comcast Channel 16. The Popular Annual Financial Report (PAFR) is intended to summarize and simplify the statistical, economic and financial information contained in the 2016 Comprehensive Annual Financial Report (CAFR). The CAFR was prepared in conformance with generally accepted accounting principles (GAAP) and was independently audited by Belt Harris Pechacek, LLLP. The PAFR, while unaudited, provides a brief analysis of where the City’s revenues come from and where the dollars are spent as well as trends and details on the local economy. It is presented as a means of increasing public awareness about the City’s financial condition through a more user-friendly presentation. For a more detailed, GAAP basis, full disclosure review of the individual funds and component units’ financial statements, please refer to the City’s CAFR that is accessible through the City’s website: http://www.baytown.org/city-hall/departments/finance/financial-reports ©2017 City of Baytown 2401 Market Street, Baytown, TX 77520 281-420-5311 www.baytown.org

City of Baytown 2016 PAFR