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COMPREHENSIVE ANNUAL FINANCIAL REPORT of the

CITY OF BAYTOWN, TEXAS For the Year Ended September 30, 2014

Issued by: Finance Department

Robert D. Leiper, City Manager Ron Bottoms, Deputy City Manager Kevin G. Troller, Assistant City l\1ailager Louise Richman, CPA, Director of Finance Carl C. Currie, CPA, Assistant Director of Finance


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CITY OF BAYTOWN, TEXAS TABLE OF CONTENTS September 30, 2014

INTRODUCTORY SECTION Letter of Transmittal Organizational Chart Certificate of Achievement for Excellence in Financial Reporting City Officials

1 9 10

11

FINANCIAL SECTION Independent Auditors' Report

15

Management's Discussion and Analysis (Required Supplementary Information)

21

BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Position Statement of Activities

34 36

Fund Financial Statements Governmental Funds Financial Statements Balance Sheet - Governmental Funds Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position Statement of Revenues, Expenditures, and Changes in Fund BalancesGovernmental Funds Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Proprietary Funds Financial Statements Statement of Net Position - Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net PositionProprietary Funds Statement of Cash Flows - Proprietary Funds Notes to Financial Statements

38 41 42

45

46 50 52 57

REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures, and Changes in Fund BalanceBudget and Achlal (Budget Basis) General Fund Schedule of Funding Progress - Texas Municipal Retirement System Schedule of Funding Progress - Post Employment Healthcare Benefits

86 89 91


CITY OF BAYTOWN, TEXAS TABLE OF CONTENTS (Continued) September 30, 2014

COMBINING STATEMENTS AND SCHEDULES Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Debt Service Fund Combining Balance Sheet - Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual- Special Revenue Funds (Budget Basis) Library Crime Control and Prevention District Hotel/Motel Fire Control, Prevention, and EMS District Combining Statement of Net Position - Nonmajor Proprietary Funds Combining Statement of Revenues, Expenses, and Changes in Fund Net Position - Nonmajor Proprietary Funds Combining Statement of Cash Flows - Nonmajor Proprietary Funds Combining Statement of Net Position - Internal Service Funds Combining Statement of Revenues, Expenses, and Changes in Fund Net Position - Internal Service Funds Combining Statement of Cash Flows - Internal Service Funds

95 98 100 102 103 104 105 109

110 111 115 116 117

STATISTICAL SECTION Net Position by Component Changes in Net Position Tax Revenues by Source, Governmental Activities (Accrual Basis of Accounting) Fund Balances, Governmental Funds Changes in Fund Balances, Governmental Funds Tax Revenues by Source, Governmental Activities (Modified Accrual Basis of Accounting) Assessed Value and Estimated Actual Value of Taxable Property Property Tax Rates - Direct and Overlapping Governments Principal Property Taxpayers Property Tax Levies and Collections Ratios of Outstanding Debt by Type Ratio of General Bonded Debt Outstanding Direct and Overlapping Governmental Activities Debt Legal Debt Margin Information Pledged Revenue Coverage (Water and Sewer Fund) Demographic and Economic Statistics Principal Employers Full-Time Equivalent City Employees by Function Operating Indicators by Function Capital Asset Statistics by Function

120 122 126 128 130 132 134 136 139

140 142 144 147 148 150 152 155 156 158 160


INTRODUCTORY SECTION


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CITY OF BAYTOWN Finance Department P.O. Box 424

Fax (281) 420-6586 Baytown, TX 77522-0424

February 9,2015 Honorable Mayor, Members of City Council, and Citizens of the City of Baytown, Texas: The Comprehensive Annual Financial RepOli (CAFR) of the City of Baytown, Texas (the "City"), for the fiscal year ended September 30,2014, is hereby submitted as mandated by City Chmiel'. The City Chmiel' requires that the City issue an annual repoli of its financial position and activities, and that an independent Certified Public Accounting finn audit this repOli. Responsibility for both the accuracy of the data and completeness and fairness of the presentation, including all disclosures, rests with management. We believe the data, as presented, is accurate in all material respects and is presented in a manner designed to fairly present the financial position and results of operations of the City as measured by the financial activity of its various funds. All disclosures necessary to enable the reader to gain the maximum understanding of the City's financial affairs have been included. The CAFR is presented in three sections: introductory, financial, and statistical. The introductory section includes this letter of transmittal, a copy of the Certificate of Achievement for Excellence in Financial RepOliing for the City's 2013 CAFR presented by the Government Finance Officers Association of the United States and Canada, an organizational chmi of the City, and a listing of City officials. The financial section includes the Management's Discussion and Analysis (MD&A); basic financial statements, including the notes; required supplementary information; combining and individual fund statements and schedules; as well as the independent auditors' report on these financial statements and schedules. The MD&A is a nanative introduction, overview, and analysis to accompany the basic financial statements. This letter of transmittal is designed to complement and should be read in conjunction with the MD&A. The statistical section includes selected financial and demographic infonnation, generally presented on a multi-year basis, that is relevant to the financial statement reader. Profile of the City The City of Baytown is the third largest city in the Houston Metropolitan Area. Located east of Houston, Baytown is only 20 miles from downtown Houston, within 35 minutes of the Houston Hobby AirpOli and within 55 minutes of the Houston Bush Intercontinental AirpOli. Houston is readily accessible via Interstate 10, a major thoroughfare running through the north side of Baytown. The City encompasses an area of 34 square miles with a cunent estimated population of 75,424. The City was incorporated on January 24, 1948, as a Home Rule City operating under the CouncilManager form of government. The City Council is composed of the Mayor and six City Council members. All six of the Council members are required to reside within the defined districts from which they are elected. The Mayor is elected at large. On May 13, 2006, the citizens approved seven chmiel' amendments approving three-year Council member terms; new methods for filling vacancies in office; executive sessions; changes for initiative, referendum and recall petitions; and granm1atical updates. As a result of this charter change, all Council positions will be elected for three-year staggered tenns.


City Chalier, Article III, Section 32, requires the Council to appoint a City Manager to act as the chief administrative and executive officer of the City. It is the responsibility of the City Manager to appoint and remove department heads and conduct the general affairs of the City in accordance with the policies of the Council. The financial reporting entity includes all funds of the primary government, as well as all of its component units. A component unit is considered to be part of the City's reporting entity when it is determined that the City is financially accountable for the entity or the nature and significance of the relationship between the City and the entity is such that exclusion would cause the City's financial statements to be misleading or incomplete. The City provides a full range of services including police and fire protection, emergency ambulance service, water and sewer services, sanitation services, storm water utility services, parks and recreational facilities, library services, street improvements, inspection and environmental health services. Internal services of the City, accounted for on a cost reimbursement basis, are the central services operations for the garage and warehouse functions and the risk management services. Discretely presented component units are legally separate entities and not part of the primary government's operations. Accordingly, the Baytown Area Water Authority and the Baytown Municipal Development District are reported separately. Local Economy The community is proud of its industrial heritage and the many oPPOliunities a strong industrial base provides. City officials, citizen groups, business and industlY have a similar vision; to make this conul1unity a better place to live, work and raise our children. Some of those effOlis include: The citizens of the City of Baytown authorized the creation of the Baytown Municipal Development District (MDD) in 2001 and the collection of a 1/2 cent sales and use tax for the purpose of financing economic development projects. The MDD generates in excess of $4 million annually which funds a multitude of economic development projects and public improvements including streets, drainage, sidewalks, and signalization improvements; utilities improvements; and parks improvements. Voters also approved a street maintenance sales tax in the amount of 1/4 of one percent in 2004 which was reauthorized in 2011. The funds generated by the sales tax are limited to the maintenance of existing residential streets at the time of authorization. Types of maintenance include concrete street repair, asphalt mill and overlay, base repair and sealing, and crack sealing. In 2006, Baytown citizens voted to create the Baytown Crime Control and Prevention District and the Fire Control, Prevention, and Emergency Medical Services District, each funded by a local sales and use tax at a rate of 1/8 of one percent. These funds are dedicated to crime reduction programs and to fire safety and enhancement of emergency medical services, respectively. Reauthorization of these special districts for another five-year term was approved by the voters on May 14, 2011. With significant support of the conu11l111ity, numerous amenities continue to be developed, including the Goose Creek Greenbelt Project, which creates a linear park through the heart of the conul1unity; the Eddie V. Gray Wetlands Education and Recreation Center, a cooperative effOli of the Goose Creek Consolidated School District, Lee College, and the City to provide an 0ppOliunity for young and old to learn more about fisheries, wildlife, ecology, etcetera; and The Baytown Nature Center, a 450 acre preserve within the City limits developed from the former Brownwood subdivision that was destroyed by subsidence and Hurricane Alicia. The Nature Center is on the Great Texas Birding Trail and is host to over 300 different species of birds along with numerous varieties of flora and fauna. The Nature Center continues to be a favorite spot for fishing, hiking and nature study, as well as a great place for families to spend quality time together.

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The City's aquatic facilities, which include the Pirates Bay Waterpark, Calypso Cove and five spray parks, continue to provide Baytown with affordable quality aquatic facilities. Pirates Bay has become a destination for tourism as visitors come from all over the state and Louisiana. The Pirates Bay Waterpark completed its sixth season enteliaining 619,13 8 guests over the past six years and Calypso Cove completed its fifth season entertaining 68,327 guests. The two aquatics facilities are set up as an enterprise fund and pay all expenses, including the set aside of a dollar for each ticket sold to a capital replacement account. Following the tremendous success of Pirates Bay, including capacity crowds on most days, the City hired the finn of Kimley H0111 and Associates and Councilman Hunsaker and Associates to prepare an Expansion Master Plan that paved the way for the future expansion of the waterpark. The Pirates Bay Phase I expansion focused on expanding capacity and included a wave pool, two family or multi-rider slides, concessions/restroom building and additional parking. The expansion opened on May 16, 2014. The expansion allowed for Pirates Bay to see an increase in attendance of 32,723 despite having 31 days of bad weather. The Parks and Recreation Department has five spray parks located across the City that are open daily starting in March. The spray parks are located at Roseland Park, McElroy Park, Bergeron Park, Central Heights Park and Pelly Park. The heavily used and free splash parks are open eight months out of the year. A future spray park is planned for Jenkins Park. The City has adopted a new zoning code that improves the livability, design standards and visual appearance of the community. The Neighborhood Protection Division and Planning Department provide enforcement and support of these and other Council-adopted initiatives that target an improved conununity. The Central Wastewater Treatment Plant is being overhauled as are the lift stations that serve it. Many of the City's lift stations now have generators or direct drive back up pumps so that they can continue to move sewage to the plants after a St01111. Sidewalks have been improved in many neighborhoods in the City. Several neighborhoods have seen new housing designed especially for recovery from st01111S. These houses are welcome new assets to neighborhoods. Phase 2 of the Raccoon Lift Station project is for the construction of a new 24-inch force main to take sewage from the lift station to the NOliheast Waste Water Treatment Plant. This expansion is necessary to acconm10date industrial growth occUlTing in west Chambers County. Construction is 20 percent complete as of February 2015. The Baytown Area Water Authority (BA WA) water treatment capacity is being increased by the construction of a new six-MGD surface water treatment plant in the southwest sector of Chambers County. The water plant is designed to ensure that the City wi11meet all regulatory and health requirements with its potable water system. Design is 50 percent complete as of January 2015 and construction is expected to be complete by February 2017. Also, BAW A is in the process of implementing a City-wide systems control and data acquisition (SCADA) system. The first step is to develop a SCADA master plan which should be completed by April 2015. Following that, the water plan SCADA component is scheduled to be completed by October 2015, and the final step, the sewer lift station network, will be incorporated in a systematic fashion with an estimated completion of October 2018. The reconstruction of the Central District Waste Water Lift Station was completed in 2014. Further, design of the Central District Waste Water Treatment Plant to meet 500-year flood elevation requirements is complete and construction is to stmi in April 2015. The Central District plant is estimated to be complete and operational as of April 2017.

3


The City established Tax Increment Reinvestment Zone (TIRZ) Number One in the Garth Road/San Jacinto Mall area and enlarged the TIRZ by adding non-contiguous areas in and near the Chevron Phillips plant. The creation of the TIRZ is to promote exclusively commercial and residential development within the zone. Having the TIRZ provides the ability to utilize the incremental revenue generated by improvements to reimburse developers for their investment in the community. Two 300-home subdivisions are in the final stages of construction within the zone. Harris County has agreed to participate in the TIRZ which will enable the realignment and reconstruction of John Martin Road, as well as additional residential and commercial development. TIRZ plans include the extension of Hunt Road from Garth Road to connect to both John Martin Road to the west and North Main Street to the east, improving the San Jacinto Mall area traffic flow and allowing areas adjacent to the mall to be developed with commercial, retail, and additional residential areas. Development of a 70,000 square feet Academy SpOlis and Outdoors store within the zone was completed and opened September 30, 2011, just in time for the holiday shopping season. The developer advanced 50 percent of the public infrastructure developments cost to facilitate the development. The City and the developer will be reimbursed for all of the public infrastructure developments costs from future zone increments. Additionally, Public Improvement District (PID) Number One was created in September 2007 in the Bay Oaks Harbor subdivision for improvements to the streets and associated utilities and drainage infrastructure in that recently annexed subdivision. The PID began collecting special assessments in fiscal year 2014 from propeliies benefitting from the improvements and these assessments may be paid over a ten-year period with interest included at a rate of three percent. The assessment collections reimburse the City's $1,750,000 cost of these improvements. The Grand Parkway is a 170-mile outer loop planned to serve the regional mobility needs of Houston and seven surrounding counties. It is being developed through a pminership with the Texas Depmiment of TranspOliation, private landowners, local governments, and public interest groups. The Grand Parkway (SH 99) has been divided into nine segments (A-I 2), each of which is a complete and independently justifiable project. Segment 1-2, from SH 146 to IH 10 which includes Baytown and its extraterritorial jurisdiction, opened in 2009, and is the second leg of SH 99 to be constructed. The Baytown City Council approved the establishment of impact fees in 2004 to ensure the provision of adequate facilities to serve new development in the area by requiring each such development to pay its pro rata share of the cost of water and wastewater capital improvements necessitated by and attributable to such new development. Baytown has been recognized by several organizations and agencies by being the recipient of the following awards: Government Finance Officers Association (GFOA) Distinguished Budget Presentation Award for Fiscal Year 2013-14 GFOA Certificate of Achievement for Excellence in Financial Reporting for Fiscal Year Ending 2013 Texas Comptroller Leadership Circle Gold Member Harris/Galveston Area Council o 2014 Parks and Natural Areas Award, On the Ground Project under $500,000 o 2014 Planning Special Recognition, Strategic Master Plan for Waterpark Texas Recreation and Park Society o 2013 Lone Star Programming Award, Wetlands Wagon Outreach Program o Innovations in Park and Facility Design Award o Advocate of the Year, Friends of Baytown Nature Center o Lone Star Recreation Progranmling Achievement Award Class III

4


o o

Outstanding Service in Conservation Award, Baytown Nature Center Dan Whitworth Fellow Award

The City of Baytown and its citizens share a vision of what this community can be. The decision was made several years ago to improve our quality of life and the information above represents tangible milestones of the City's progress toward realizing that vision.

Long-Term Planning

In 2007, the City Council adopted the Baytown 2025 Comprehensive Plan (the "Plan"). The Plan is an official public document that acts as general guide for how the City should grow and operate over the next 20 years. The Plan plays many important roles in shaping the future of the community by doing the following: Serving as a general "blueprint" for future development (and redevelopment) in and around Baytown with an emphasis on improving the community's desirability as a place to live, work, play, and shop; Documenting the character of the cOlmml11ity, as well as anticipated issues, trends, oPPOliunities, and challenges facing the City; Providing a common vision suppOlied by a series of goals and objectives for the next 20 years; Defining policies to guide daily decision-making regarding Baytown's physical and economic growth; and Establishing a core set of strategies for aggressive implementation that emphasizes action and results.

Relevant Financial Policies - Accounting System and Budgetary Control The City's accounting records for general governmental operations -are maintained on a modified accmal basis, with the revenues being recorded when available and measurable and expenditures being recorded when the services or goods are received and the liabilities are incurred. Accounting records for the City's utilities and other proprietary activities are maintained on an accmal basis.

In developing and maintaining the City's accounting system, consideration is given to the adequacy of the internal controls. Internal accounting controls are designed to ensure reasonable, but not absolute, assurance that assets are protected against loss, misuse, or unauthorized disposition, and to ensure that adequate accounting data is compiled to allow for preparation of financial statements in conformity with generally accepted accounting principles. The concept ofreasonab1e assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived and (2) the evaluation of costs and benefits require estimates and judgments by management. Any internal control evaluation occurs within the above framework. We believe that the City's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. The City Charter provides that City management shall submit a proposed annual budget to the City Council. The City Council shall adopt the annual budget no later than the twentyseventh day of the last month of the fiscal year. This budget is reviewed by the City Council and is forn1ally adopted by the passage of a budget ordinance. Any amendments providing for additional expenditures shall also provide, by ordinance, for reductions in other expenditures, for supplementmy revenues to fund such amendments, or use of available fund balance. Budgetmy control has been established at the department level. Financial reports are produced showing budget and actual expenditures by line item and are distributed monthly to City depmimental and

5


divisional management and others upon request. Individual line items are reviewed and analyzed for budgetary compliance. Personnel expenditures are monitored and controlled by position and capital expenditures (items over $5,000 and having a usef-ul life of one or more years) are monitored and controlled item by item. Revenue budgets are reviewed monthly. Major Initiatives

The City continues to actively address the growing needs of the community. Baytown has undergone major changes and the City has managed to proactively develop plans that address the infrastructure needs of the older neighborhoods along with the new developments that are coming online. Some of the major initiatives are as follows: • •

Construction of a new fire station located in the north central part of the City, as well as a new fire training facility. In November 2007, the voters overwhelmingly approved five initiatives that provide improvements in streets, sidewalks, drainage, public safety, parks, recreation and overall City beautification. A total of $69,000,000 General Obligation Bonds (GOs) have been sold over the first seven years of the 2007 program. In light of the stronger state of the economy and continuing favorable interest rates the City plans to issue $10.5 million of GOs in 2014-15. The City continues to monitor and assess the cash flow of projects, making adjustments as needed to the proj ect schedule. Engineering and construction continue on the Hugh Wood, Slapout Gully, Victoria Walker and West Main Lift Stations. These stations are being replaced or refurbished due to a combination of damage from HUlTicane Ike and the age of the equipment. The Central District Waste Water Treatment Plant mitigation project to elevate all facilities, equipment and controls above the base flood elevation continues. This plant was submerged during Hurricane Ike. In an effort to provide improved pressures and flows system-wide, the City has patinered with Chambers County Improvement District No.1 (CCID1) to design and construct a one million gallon elevated storage tank near CCID 1 in Chambers County. Design was complete in December 2014 and the construction is expected to be complete by July 2016. Construction was completed on the expansion of the West District Waste Water Treatment Plant which increased its capacity to treat an additional four million gallons per day of sewage and provides additional capacity to allow new development in the service area. Construction of the 911 Center and expansion of fiber optic network. Other Information

Independent Audit

Article II, Section 31 of the City Charter requires an audit of the books of accounts, financial records, and transactions of all administrative depatiments of the City by independent certified public accountants selected by the City Council. This requirement has been met and the independent auditors' report has been included in this repoli. Additionally, the City of Baytown's Finance Conm1ittee, a subcommittee of the City Council, functions as an audit committee that reviews all recommendations made by the independent auditors. Single Audit

The City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act Amendments of 1996 and U.S. Office of Management and Budget Circular A-133, Audits oj

6


State and Local Governments and Non-Profit Organizations. Information related to this single audit, including the schedule of expenditures of federal and state awards, findings and questioned costs, and independent auditors' repOlis on internal control and compliance with applicable laws and regulations, is issued separately from the CAFR. As a recipient of federal and state financial assistance, the City is responsible for ensuring that adequate internal controls are in place to ensure compliance with applicable laws and regulations related to both federal and state programs. These internal controls are subject to periodic evaluation by management and the outside auditors ofthe City's financial statements. As a part of the City's single audit, tests are made to determine the adequacy of the intemal controls including that pOliion related to the administration of federal financial assistance programs, as well as to determine that the City has complied with applicable laws and regulations. Certificate of Achievement The City's dedication to full financial disclosure is evidenced by its pmiicipation in the Govemment Finance Officers Association of the United States and Canada (GFOA) Certificate of Achievement for Excellence in Financial Reporting Program. The GFOA awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Baytown, Texas for its CAFR for the fiscal year ended September 30, 20133. This was the twenty-second consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City must publish an easily readable and efficiently organized CAFR. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement for Excellence in Financial RepOliing is valid for a period of one year. We believe that the current CAFR continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. The GFOA also presented a Distinguished Budget Presentation Award to the City of Baytown, Texas for its annual budget for the fiscal year beginning October 1, 20133. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a conununication device. Acknowledgments The preparation of this report could not have been accomplished without the efficient and dedicated services of the entire staff of the Finance Department. Appreciation is expressed to City employees throughout the organization, especially those employees of the Finance Depmiment who were instrumental in the successful completion of this report. Certain individuals worked many extra hours and exhibited extraordinary effort in ensuring the accuracy and timeliness of this report, and their contribution to this effort is greatly appreciated.

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We would like to thank the Mayor and members of the City Council for their interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner. Respectfully submitted,

Louise Richman, CPA, Director of Finance

Carl C. Currie, CPA, Assistant Director of Finance

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CITY OF BAYTOWN, TEXAS ORGANIZATIONAL CHART For the Year Ended September 30, 2014

Citizens

.

City COlllleil I

Bitards and Commissions Afunkipal Judge Ci~"Mana()u • 0

~gal

I

:l\fo:nicipal Court OfRec:ord

Em~Jgenty Mgt.

I

I

Depu~'Cily

Assistilllt Cit)' ArmagH

Milllag~r

I Polic.e

Fire & EMS

Eugin{lerin g

Publt Works

Fiscal Oll'eratioos

Humilll Rf's!xmes

Planning &

lltllitFs

Infurmation rechn()Iagy Smites (ITS)

Library

Cllrrnnun ic aiinns

Publt Health

Ci~'CI~rk

Dmlopment Smk~s Parks & Recreatioo

I

I

Capital Prlljecls

BAYfOWN ~

9


CITY OF BAYTOWN, TEXAS CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING

Govemment Finance Officers Association

CertifIcate of Achievement for Excelle.nce III Fillancial Repo11ing Presented to

City of Bayto\vn

Texas For its Comprelmnsi ve路 Annual Financial Rep()lt felr the Fisctil Yettr Ended

Sep,tenlber 30,,2013

Ex tx:llti 't'c Director/CEO

10


CITY OF BAYTOWN, TEXAS CITY OFFICIALS September 30, 2014

City Council

Elective Position

District

Stephen H. DonCarlos

Mayor

Mercedes Renteria III

Mayor Pro-Tern

District 1

Chris Presley

Council Member

District 2

Brandon Capetillo

Council Member

District 3

Terry Sain

Council Member

District 4

Robert C. Hoskins

Council Member

District 5

David McCartney

Council Member

District 6

Key Staff Robert D. Leiper Ron Bottoms Kevin G. Troller Louise Richman, CPA Carl C. Currie, CPA Jeffrey Miller, CPA

Position City Manager Deputy City Manager Assistant City Manager Director of Finance Assistant Director of Finance Controller

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BAYTOWN

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FINANCIAL SECTION

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INDEPENDENT AUDITORS' REPORT To the Honorable Mayor, City Council Members, and Finance Connnittee of the City of Baytown, Texas:

Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Baytown, Texas (the "City"), as of and for the year ended September 30,2014, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors'Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

15 I)artncrs Robert Belt, CPA Stephanie E. Harris, CPA Nathan Kru ke CPA

Houston 3210 Bingle Rd., Ste. 300 Houston, TX 77055 713.263.1123

Bellville 1304 South Front St. Bellville, TX 77418 979.865.3169

Austin 100 Congress Ave., Ste. 2000 Austin, TX 78701 512.381.0222

AllOffiecs V'fww.tcxasnllditors.com info@t:xauditors.com

713.263.1550 fax

..

=: Governrnental _ Audit Quality Center


We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of the City as of September 30, 2014, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended, in accordance with accounting principles generally accepted in the United States of America. Other Matters

Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, budgetary comparison information, and schedules of funding progress, identified as Required Supplementary Information on the table of contents, 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 inforn1ation for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information Our audit was conducted for the purpose of forming op1111Ons on the financial statements that collectively comprise the City's basic financial statements. The introductory section, combining statements and schedules, and statistical section are presented for purposes of additional analysis and are not required parts of the basic financial statements. The combining statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining statements and schedules are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

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Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated Febmary 9,2015 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 pmi of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance.

eJi'fELT

~RRIS ~CHACEK, LLLP

Belt Harris Pechacek, LLLP Certified Public Accountants Houston, Texas Febmary 9, 2015

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MANAGEMENT'S DISCUSSION AND ANALYSIS

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CITY OF BAYTOWN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS For the Year Ended September 30, 2014

The purpose of the Management's Discussion and Analysis (MD&A) is to give the readers an objective and easily readable analysis of the financial activities of the City of Baytown, Texas (the "City") for the year ending September 30, 2014. The analysis is based on currently known facts, decisions, or economic conditions. It presents short and long-term analysis of the City's activities, compares current year results with those of the prior year, and discusses the positive and negative aspects of that comparison. Please read the MD&A in conjunction with the transmittal letter at the front of this report and the City's financial statements, which follow this section. THE STRUCTURE OF OUR ANNUAL REPORT Components of the Financial Section ...... , ... " .................. " .... , ............................... .................................. \

J

1 ...... .

Management's Discussion and Analysis

........................... .......

Basic Financial Statements

.........

............................ "

..........

.......

Required Supplementary Information

.................................

.........................................

'r"- - - - - - - ,

Independent Auditors' Report

GovemmentWide Financial Statements

Summary

Fund Financial Statements

Component Unit Financial Statements

<,.----->

Notes to the Financial Statements

Detail

The City'S basic financial statements include (1) government-wide financial statements, (2) individual fund financial statements, and (3) notes to the financial statements. This report also includes supplementary information intended to furnish additional detail to support the basic financial statements themselves. Government-'Vide Statements

The government-wide statements report information for the City as a whole. These statements include transactions and balances relating to all assets, including infrastructure capital assets. These statements are designed to provide information about cost of services, operating results, and financial position of the City as an economic entity. The Statement of Net Position and the Statement of Activities, which appear first in the City's financial statements, report information on the City's activities that enable the reader to understand the financial condition ofthe City. These statements are prepared using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year's revenues and expenses are taken into account even if cash has not yet changed hands. The Statement of Net Position presents information on all of the City's assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. Other nonfinancial factors, such as the City'S property tax base and the condition of the City's infrastructure, need to be considered in order to assess the overall health of the City. The Statement of Activities presents information showing how the City'S net position changed during the most recent year. All changes in net position are reported as soon as the underlying event giving rise to the change

21


CITY OF BAYTOWN, TEXAS MANA GEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30, 2014

occurs, regardless of the timing of related cash flows - the accrual method rather than modified accrual that is used in the fund level statements. The Statement of Net Position and the Statement of Activities divide the City into two classes of activities: 1.

Governmental Activities - Most of the City's basic services are reported within this class including police and fire protection, municipal court, streets, drainage, leisure services, community development and general administrative services. This class also includes interest payments on the City's debt. Sales tax, propeliy tax, franchise taxes, municipal court fines, and pennit fees finance most of these activities.

2. Business-Type Activities - Services involving a fee for those services are reported within this class. These services include the City's water and sewer services, as well as solid waste collection, storm water utility operations, and water park operations. The government-wide financial statements include not only the City itself (known as the primary government), but also a legally separate municipal development district and the legally separate Baytown Area Water Authority for which the City is financially accountable. Financial information for these component units is reported separately from the financial information presented for the primary government itself. The tax increment reinvestment zone, crime control and prevention district, and fire control, prevention, and emergency medical services district, although also legally separate, function for all practical purposes as departments of the City and, therefore, have been included as an integral part of the primary government. The government-wide financial statements can be found after the MD&A. FUND FINANCIAL STATEMENTS

Funds may be considered as operating companies of the parent corporation, which is the City. They are usually segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance-related legal reporting requirements. The two categories of City funds are governmental and proprietary. Governmental Funds

Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the year. Such information may be useful in evaluating the City's near-term financing requirements~ Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmentalfimds and governmental activities. The City maintains 12 individual governmental f-unds. Inforn1ation is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, debt service fund, and capital projects fund, which are considered to be major funds

22


CITY OF BAYTOWN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30, 2014

for reporting purposes. The City adopts an annual appropriated budget for its general, debt service, library, crime control and prevention, hotel/motel, and fire control, prevention and emergency medical services district funds. Budgetary comparison schedules have been provided for these funds to demonstrate compliance with these budgets.

Proprietarv Funds The City maintains two types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The enterprise funds are used to account for operations that provide water and wastewater collection, wastewater treatment operations, solid waste collection and disposal, water park operations, and storm water utility operations. The proprietary fund financial statements provide separate information for the water distribution, wastewater collection/treatment, aquatics, and sanitation funds. The City also uses internal service funds to account for its equipment replacement services and for expenses associated with risk management of health benefits and workers' compensation claims. These internal service funds have been included within governmental activities in the government-wide financial statements.

Notes to 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. The notes are the last section of the basic financial statements.

Other Information In addition to basic financial statements, MD&A, and accompanying notes, this report also presents certain Required Supplementary Information (RSI). The RSI includes a budgetary comparison schedule for the general fund and schedules of funding progress for the Texas Municipal Retirement System and post employment healthcare benefits. RSI can be found after the notes to the basic financial statements.

GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of the City's financial position. For the City, assets and deferred outflows of resources exceed liabilities by $291,304,829 as of September 30,2014 in the primary government. The largest portion of the City's net position (89 percent) reflects its investments in capital assets (e.g., land, building, equipment, improvements, construction in progress, and infrastructure), less any debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the assets themselves cannot be used to liquidate these liabilities.

23


CITY OF BAYTOWN, TEXAS A1ANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30, 2014

Statement of Net Position: The following table reflects the condensed Statement of Net Position:

Current and other assets

$

Capital assets, net Total Assets Deferred charge on refunding Total Deferred Outflows of Resources Long-tenn liabilities Other liabilities Total Liabilities Net Position: Net investment in capital assets Restricted Unrestricted Total Net Position

$

80,769,327

2014

2013

2014 $

Total Primary Government

Business-Type Activities

Governmental Activities 74,175,762

$

43,943,899

2013 $

43,722,482

2014 $

124,713,226

2013 $

117,898,244

208,794,714 289,564,041

201,154,122 275,329,884

231,508,381 275,452,280

217,734,400 261,456,882

440,303,095 565,016,321

418,888,522 536,786,766

1,491,215

1,267,862

260,213

20,567

1,751,428

1,288,429

1,491,215

1,267,862

260,213

20,567

1,751,428

1,288,429

162,922,803

144,672,792

92,526,050

94,597,109

255,448,853

239,269,901

13,411,007

11,646,198

6,603,060

6,344,655

20,014,067

17,990,853

176,333,810

156,318,990

99,129,110

100,941,764

275,462,920

257,260,754

105,468,075

108,585,824

152,339,260

136,434,868

257,807,335

245,020,692

35,688,185

32,167,392

5,873,007

5,364,616

41,561,192

37,532,008

(26,434,814) 114,721,446

$

(20,474,460) 120,278,756

$

18,371,116 176,583,383

$

18,736,201 160,535,685

$

(8,063,698) 291,304,829

$

(1,738,259) 280,814,441

A portion of the primary government's net position, $41,561,192 or 14 percent, represents resources that are subject to external restriction on how they may be used. The City'S total net position increased by $10,490,388 during the current fiscal year, an increase of four percent in comparison to the prior year. This increase is largely the result of more revenue being received from taxes, charges for services, and capital grants and contributions.

24


CITY OF BAYTOWN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30, 2014

Statement of Activities: The following table provides a summary of the City's changes in nct position:

Governmental Activities 2014 2013 Revenues Program revenues: Charges for services Operating grants Capital grants and contributi ons General revenues: Propeliy taxes Industrial district Other taxes Other revenues Total Revenues Expenses General government Public safety Public works Public health Parks, recreation, and culture Interest and fiscal agent fees on long-term debt Water and sewer Sanitation Aquatics Bayland development St01111 water utility Total Expenses Increase in Net Position before Transfers

Transfers Change in Net Position

Beginning net position Ending Net Position

$

6,892,220 8,007,514

$

6,003,083 7,903,949

Total Primary Government 2014 2013

Business-Type Activities 2014 2013

$

73,000

44,788,520

4,517,598

$

41,902,188

$

51,680,740 8,007,514

$

47,905,271 7,903,949

2,241,040

4,517,598

2,314,040

265,092 44,408,320

21,788,376 29,379,711 24,548,524 3,410,288 143,332,751

21,128,244 28,339,356 22,384,041 2,671,361 132,646,262

21,788,376 29,379,711 24,548,524 3,169,672 93,786,017

21,128,244 28,339,356 22,384,041 2,406,269 88,237,942

22,600,531 44,295,623 8,869,974 2,554,462

22,049,401 39,297,052 8,881,876 2,431,619

22,600,531 44,295,623 8,869,974 2,554,462

22,049,401 39,297,052 8,881,876 2,431,619

9,339,424

8,739,612

9,339,424

8,739,612

4,111,811

3,749,173

240,616 49,546,734

31,539,964 4,685,496 2,245,949 208,078 436,934 39,116,421

4,111,811 32,762,226 4,742,268 2,917,055 200,308 448,681 132,842,363

3,749,173 31,539,964 4,685,496 2,245,949 208,078 436,934 124,265,154

10,490,388

8,381,108

91,771,825

85,148,733

32,762,226 4,742,268 2,917,055 200,308 448,681 41,070,538

2,014,192

3,089,209

8,476,196

5,291,899

(7,571,502)

2,750,047

7,571,502

(2,750,047)

(5,557,310)

5,839,256

16,047,698

2,541,852

10,490,388

8,381,108

120,278,756

114,439,500

160,535,685

157,993,833

280,814,441

272,433,333

$ 114,721,446

$ 120,278,756

$ 176,583,383

$ 160,535,685

$ 291,304,829

$ 280,814,441

25


CITY OF BAYTOWN, TEXAS A1ANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30, 2014

Graphic presentations of selected data from the summary tables follow to assist in the analysis of the City's activities.

GOVERNMENTAL REVENUES Other revenues 3% Charges for services

Other taxes 26%

7%

Operating grants 9% Capital grants and contributions 1 %

roperty taxes 23 %

Industrial district 31 %

For the year ended September 30, 2014, revenues from governmental activities totaled $93,786,017. Industrial district payments are the City's largest revenue source at $29,379,711 or 31.33 percent. Other taxes increased by 9.67 percent mainly due to gains in sales tax revenue as a result of more economic activity in the City. Property tax revenue had an increase of 3.12 percent due to an increase in property tax appraisal values. Charges for services increased $889,137 or 14.81 percent, which was primarily due to collections from emergency services. Other revenues increased significantly due to increases in miscellaneous revenues from a subsidy from corporations to help with the costs of City facility expansion and revenues collected for rent of City facilities.

26


CITY OF BAYTOWN, TEXAS MANA GEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30, 2014

GOVERNMENTAL FUNCTIONAL EXPENSES

Parks, recreation, and culture 10%

Interest and fiscal agentfees on long-term debt 4%

Public health 3%

Public works 10%

General government 25%

Public safety 48%

For the year ended September 30,2014, expenses for governmental activities totaled $91,771,825. This represents an increase of $6,623,092 from last year or 7.78 percent. This increase was mainly due to expenses in public safety for wages due to more overtime. There was a contribution of capital to business type activities for a total of $4,090,925 related to the emergency generators, lift station, waterlines, and improvements on the water parks in aquatics.

27


CITY OF BAYTOWN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30, 2014

Business-type activities are shown comparing operating costs to revenues generated by related services.

BUSINESS-TYPE ACTIVITIES Revenue vs. Costs

$50,000,000 $45,000,000 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0

-F-------;--------.-"

!II

2014 2013 Operating Revenues m Operating Costs

Operating revenues increased $5,138,414 or 11.57 percent, which was primarily due to an increase in charges for services and grants and contributions. Charges for services increased due to an increase in water consumption. Expenses increased $1,954,117 or 5.00 percent, which is primarily due to the rising costs of utility bills to operate water and sewer to service the increase in water consumption. After transfers from governmental activities, total net position increased by $16,047,698 or 10.00 percent over the prior year. FINANCIAL ANALYSIS OF THE CITY'S FUNDS As noted earlier, fund accounting is used to demonstrate and ensure compliance with finance-related legal requirements. Governmental Funds - The focus of the City's govenm1ental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of the City's net resources available for spending at the end of the year. The City'S governmental funds reflect a combined fund balance of $60,096,945. Of the total governmental fund balance, $7,593 is nonspendable and $35,688,185 is restricted for various purposes. The remaining balance of $24,401,167 is unassigned. There was a net increase in the combined fund balance of $4,027,469 from the prior year. This IS largely attributable to the increase in property tax revenue, charges for services, and sales tax revenue. The general fund is the chief operating fund of the City. At the end of the CUlTent year, unassigned fund balance of the general fund was $24,401,167, while total fund balance reached $24,406,818. As a measure of the general fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned and total fund balance represents 36.18 percent of total general fund expenditures, respectively.

28


CITY OF BAYTOWN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30, 2014

The debt service fund has a total fund balance of $5,486,465, all of which is restricted for the payment of debt service. The net increase in fund balance during the current year in the debt service fund was $1,770,946. This increase can be attributed to property tax revenue and refunding of debt. The capital projects fund had a total fl.md balance of $22,743,462. The capital projects fund issued debt for $13,775,886 and spent approximately $14,328,805 on capital improvements. The capital projects fund had a decrease of$103,494. Proprietary Funds - The City's water and sewer fund has a total net position of $149,379,927, which was an increase in net position of $11,020,853. This increase can be attributed to capital contributions and charges for serVIces.

The City'S aquatics fund had a net position increase of $5,435,570. This increase was primarily due to a transfer in from the debt service fund for capital projects. The City'S sanitation fund had a total net position of $661,458, which is a decrease of $344,331 from the prior year. This decrease can be attributed to a transfer to the general fund and internal service fund totaling $220,554. GENERAL FUND BUDGETARY HIGHLIGHTS

There had been a planned decrease in budgeted fund balance in the amount of $4,431,280 in the general fund. However, there was a net increase in fund balance of $1,867,875 resulting in a positive variance of $6,299,155 from budgeted as amended. Actual general fund revenues exceeded original and amended budgeted revenues by $3,655,669 during 2014. This increase includes the positive variance of $1,755,356 for taxes which is primarily due to more sales and property tax revenue, and industrial development agency payments being collected than expected. The revenue budget increase also includes a positive variance of $707,574 for charges for services from emergency service revenue. Total expenditures were lower than budgeted amounts by $2,250,722 for the fiscal year. This decrease is mainly due to less expenditures for payroll than what was expected. eAPIT AL ASSETS

At the end of fiscal year 2014, the City's governmental activities had invested $208,794,714 in a variety of capital assets and infrastructure (net of accumulated depreciation). Major capital asset events during the current year include the following: •

The City continues to maintain a comprehensive street reconstmction program with capital expenditures for various street projects in excess of $5.8 million in fiscal year 2013-2014.

The City has a total of $8.2 million in construction in progress for the fiscal year 2013-2014 for governmental funds.

$4.9 million in new construction, expansion and improvements to fire, police, and training facilities, and other City amenities.

The City also spent roughly $5.2 million on vehicles and equipment for all of the City's departments.

29


CITY OF BAYTOWN, TEXAS MANA GEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30,2014

More detailed information about the City's capital assets is presented in note IILC to the financial statements. LONG-TERM DEBT

At the end of the cunent year, the City's governmental funds had total bonds and certificates of obligation outstanding of $115,154,650. Of this amount, $104,834,650 was general obligation debt and $10,320,000 was certificates of obligation. Business-type activities had total revenue bonds and certificates of obligation outstanding of $86,635,350 at year end. During the year, the City had a net increase in the long-term debt of $8,877,371. This increase in debt was primarily due to debt issuance of general obligation and refunding bonds, series 2014 for $28,520,000 and certificates of obligation, series 2014 for $11,715,000. Out of the debt issued, $18,530,000 went toward refunding general certificate obligation, series 2005, 2005A, 2006, and 2006A. The City also refunded their capital lease of $2,440,463 for $2,579,696 to gain a lower interest rate. The City made principal payments of $12,966,861. More detailed information about the City's long-term liabilities statements.

IS

presented

111

note III.D to the financial

The City maintains an underlying rating of "AA" from Standard & Poor's and an "Aa2" rating from Moody's Investors Services for general obligation debt. Revenue bonds of the City have an underlying rating of "AA-" from Standard & Poor's and an "Aa3" rating by Moody's. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET

The City Council approved a $159.4 million budget for the City's major operating funds (general, debt service, hotel/motel tax, aquatics, water and sewer, water and sewer debt service, sanitation, storm water utility, garage and warehouse operations) for fiscal year 2015. This budget did not require a property tax rate increase due to strategic and contingency planning which began during the first quarter of fiscal year 2009. This planning proactively addressed the potential slowdown of the economy and the recovery efforts predicated by Hurricane Ike. The 2014-2015 budget focuses on the City's priorities within the constraints of available resources. The top priorities considered were: provide outstanding Customer Service to our citizens and visitors through efficient delivery of essential services; continue to enhance public safety in the City; implement capital project and bond programs to improve traffic flow and ensure our infrastruchlre keeps pace with our growth; attract and retain the highest quality workforce and provide competitive employee benefit programs; continue quality of life and infrastruchlre maintenance and improvement programs; continue economic development in all areas of our conmmnity; and ensure long term financial integrity - matching recurring revenues to recuning expenditures and maintaining adequate working capital reserves. The City Council, Administration and Citizens agree that mainta1l1111g and improving the facilities and infrastructure within the City are vital to our growth and development. In November 2007, the voters overwhelmingly approved five initiatives that will provide improvements in the streets, sidewalks, drainage, public safety, parks, recreation and overall City beautification. A total of $69,000,000 General Obligation Bonds have been sold over the first five years of the 2007 program. In light of the stronger state of the economy and continuing favorable interest rates the City plans to issue $10.15 million ofGOs in 2014-15. At this point in our bond program we were scheduled to have implemented a 10 cent tax increase. Due to economic gains and efficient program implementation, the bonds have only required an 8.5 cent increase thus far. The improving state of the economy and the commercial and industrial growth will allow $10.15 million in additional bond proj ects without an accompanying tax increase.

30


CITY OF BAYTOWN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30, 2014

Our community is in the midst of change and our organization is responding. In past years our focus was on stimulating and managing growth. Now, we continue to stimulate growth, development and redevelopment while balancing the need to preserve the excellent quality of life in our conmmnity. As the end of the 2007 bond programs come to a close it is anticipated that work should begin on our next bond program in 2015 with the goal of bringing a bond initiative to the voters in November of 2016. We will continue to engage our citizens and stakeholders to strategically invest in efforts to strengthen our community. The Baytown-West Chambers County Economic Development Foundation (EDF), on behalf of the City of Baytown, serves as an advocate for and provides technical assistance to existing and/or new commercial/retail business as well as industry seeking to locate, relocate or expand operations in the Baytown-West Chambers County service area. This advocacy is conducted via the following performance categories, the results of which are the creation and preservation of jobs and the attraction of new investments: • • • • • • • •

Stimulating & Encouraging Business and Commercial Activity Workforce Development & Analysis Facilitating Local, State & Federal Incentive Programs Conducting Educational and Informational Seminars Supporting the Creation and Expansion of Foreign Trade Zones Compilation and Dissemination of Economic & Business Data Interaction and Support of Officials, Economic Developers Promoting Regional Tourism and Business

In 2014, as in recent years, EDF efforts in the above-referenced categories to further economic development were aligned with economic growth trends in the following areas: • • • • • •

Petrochemical Expansions Healthcare Retail Recruitment Heavy Fabrication & Manufacturing Logistics & Distribution; and Transportation

Additionally, recent dynamics in the local and regional petrochemical cluster have forged a strong public-private partnership of the EDF, industry/manufacturers/contractors, educational institutions, the City of Baytown and other units of government, working together as a system to implement a workforce preparedness strategy to address current and future manufacturing demands. The City budget is the ultimate partnership between City Council, staff, citizens, business owners, customers and other partners in the Baytown community. In the face of tough economic times, the adopted budget reflects a balanced approach of minimizing impacts to our citizens and customers while providing funding to enhance and maintain quality of life initiatives while fostering economic development.

CONTACTING THE CITY'S FINANCIAL MANAGEMENT This financial report is designed to provide a general overview of the City's finances. Questions concerning this report or requests for additional financial information should be directed to Finance Director, City of Baytown, Texas, 2401 Market Street, Baytown, TX 77522; telephone 281-420-6531; or for general City information, visit the City'S website at http://www.baytown.org.

31


(This page intentionally left blank.) 32


BASIC FINANCIAL STATEMENTS

33


CITY OF BAYTOWN, TEXAS STATEMENT OF NET POSITION September 30, 2014 Primary Government Governmental Activities Assets Cash and equity in pooled cash and investments Receivables, net Inventories Prep aids and other assets Restricted assets: Cash and cash equivalents - debt service Cash and cash equivalents - bonds Capital assets: Nondepreciable Depreciable, net Total Assets

$

70,259,388 9,769,792 540,044 200,103

Net Position Net investment in capital assets Restricted for: Capital proj ects Debt service Special revenue projects Unrestricted Total Net Position

$

39,504,346 4,436,015 3,538

Total

$

21,420,191 210,088,190 275,452,280

42,525,497 397,777,598 565,016,321

1,491,215

260,213

1,751,428

7,887,061 2,891,595 660,074 105,805 1,866,472

2,708,896 20,182 524,070 2,633,768

10,595,957 2,911,777 1,184,144 2,739,573 1,866,472 716,144

716,144

$

109,763,734 14,205,807 543,582 200,103

21,105,306 187,689,408 289,564,041

Deferred Outflows of Resources Deferred charge on refunding Liabilities Account payable Accrued expenses Accrued interest payable Refundable deposits and escrow funds Claims and judgments Retainage payable Noncurrent liabilities: Portion due within one year: Compensated absences Bonds payable Capital leases payable Portion due in more than one year: Compensated absences Net pension obligation Net OPEB obligation Bonds payable Capital leases payable Total Liabilities

Business-Type Activities

9,042,670 7,599,700 306,422

591,414 5,715,300

9,634,084 13,315,000 306,422

1,004,741 5,187,926 25,250,378 112,257,692 2,273,274 176,333,810

65,713 797,474 3,569,535 81,786,614 99,129,110

1,070,454 5,985,400 28,819,913 194,044,306 2,273,274 275,462,920

105,468,075

152,339,260

257,807,335

24,448,541 5,486,465 5,753,179 (26,434,814) 114,721,446

See Notes to Financial Statements.

34

5,873,007

$

18,371,116 176,583,383

$

24,448,541 11,359,472 5,753,179 (8,063,698) 291,304,829


Component Units Municipal Baytown Development Area Water District Authority

$

5,867,574 1,018,790

$

7,789,955 146,907

4,055,869 5,929,178 1,554,729 34,108,454 53,585,092

6,886,364

95,042 77,363

796,661 213,085

137,534

1,915,000

143,132

15,046,762

358,029

17,971,508 21,098,634 5,464,126 3,842,784

$

6,528,335 6,528,335

$

5,303,082 35,708,626

35


CITY OF BAYTOWN, TEXAS STATEMENT OF ACTIVITIES For the Year Ended September 30, 2014

Functions/Programs Primary Government Governmental Activities General government Public safety Public works Public health Parks, recreation, and culture Interest and fiscal agent fees Total Governmental Activities

Expenses

$

Business-Type Activities Water and sewer Sanitation Bayland Island development Aquatics Storm water utility Total Business-Type Activities Total Primary Government Component Units Municipal Development District Baytown Area Water Authority Total Component Units

Charges for Services

22,600,531 44,295,623 8,869,974 2,554,462 9,339,424 4,111,811 91,771,825

$

$

6,892,220

1,369,942 1,487,665 4,589,452 560,455

Capital Grants and Contributions

$

8,007,514

35,990,349 4,618,491 49,086 2,903,853 1,226,741 44,788,520

32,762,226 4,742,268 200,308 2,917,055 448,681 41,070,538 $

132,842,363

$

$

5,245,388 7,239,129 12,484,517

$

$

183,147 4,371,773 1,305,831 611,297 420,172

Program Revenues Operating Grants and Contributions

$

51,680,740

11,700,681 11,700,681

4,517,598

4,517,598 $

8,007,514

$

$

$

$

$

4,517,598路路

General Revenues: Taxes: Property taxes Sales and hotel/motel taxes Franchise taxes Industrial district payments Investment income Miscellaneous Transfers, net Total General Revenues and Transfers Change in Net Position BegilU1ing net position Ending Net Position See Notes to Financial Statements.

36


Net Revenue (Expense) and Changes in Net Position Primary Government Component Units Baytown Municipal Area Water Business-Type Development Governmental Total Authority Activities District Activities

$

(21,047,442) (38,436,185) (2,974,691 ) (1,382,710) (8,919,252) (4,111,811) (76,872,091)

$

(76,872,091)

$

(21,047,442) (38,436,185) (2,974,691) (1,382,710) (8,919,252) (4,111,811) (76,872,091)

7,745,721 (123,777) (151,222) (13,202) 778,060 8,235,580

7,745,721 (123,777) (151,222) (13,202) 778,060 8,235,580

8,235,580

(68,636,511)

$

$

(5,245,388) 4,461,552 4,461,552

(5,245,388)

$

21,788,376 20,494,629 4,053,895 29,379,711 699,761 2,469,911 (7,571 ,502) 71,314,781

7,571,502 7,812,118

(5,557,310)

16,047,698

120,278,756 114,721,446

21,788,376 20,494,629 4,053,895 29,379,711 940,377 2,469,911

240,616

$

160,535,685 176,583,383

$

5,701,282

15,528 62,258

14,017 65,852

79,126,899

5,779,068

79,869

10,490,388

533,680

4,541,421

280,814,441 291,304,829

$

37

5,994,655 6,528,335

$

31,167,205 35,708,626


CITY OF BAYTOWN, TEXAS BALANCE SHEET GO VERNMENTAL FUNDS September 30, 2014

Debt Service

General Assets Current assets: Cash and equity in pooled cash and investments Receivables, net Due from other funds Prep aids Total Assets Liabilities. Deferred Inflows of Resources l and Fund Balances Liabilities: Account payable Accmed expenditures Due to other funds Refundable deposits Total Liabilities

$

$

$

Nonmajor Governmental Funds

Capital Projects

23,831,771 5,538,167 373,086 5,651 29,748,675

$

5,486,465 ],098,179

$

24,614,817 56,275

$

$

6,584,644

$

24,671,092

$

1,942 12,791,963

649,896 2,891,595

$

$

1,927,630

$

5,178,406

9,712,850 3,077,171

153,357 105,805 3,647,296

Deferred inflows of resources: Unavailable revenue - property taxes Total Deferred Inflows of Resources

1,927,630

1,098,179 1,098,179

1,694,561 1,694,561

Fund balances: Nonspendable: Prepaids Restricted: Debt service Capital proj ects Special projects Unassigned

5,331,763

5,651

1,942 5,486,465

24,401,167 24,406,818

Total Fund Balances Total Liabilities, Deferred Inflows of Resources, and Fund Balances

$

29,748,675

38

5,486,465 $

6,584,644

$

22,743,462

1,705,079 5,753,179

22,743,462

7,460,200

24,671,092

$

12,791,963


Total Funds

$

$

$

63,645,903 9,769,792 373,086 7,593 73,796,374

7,755,932 2,891,595 153,357 105,805 10,906,689

2,792,740 2,792,740

7,593 5,486,465 24,448,541 5,753,179 24,401,167 60,096,945 $

73,796,374

39


(This page intentionally left blank.) 40


CITY OF BAYTOWN, TEXAS RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION September 30, 2014

Total fund balances for goverm11ental funds

$

Amounts reported for governmental activities in the Statement of Net Position are different, because: Capital assets used in govel11111ental activities are not financial resources and, therefore, are not reported in the funds. Capital assets, nondepreciable Capital assets, net depreciable

60,096,945

21,105,306 187,689,408 208,794,714

Some of the City's revenues will be collected after year end, but are not available to pay for current period expendihlres and, therefore, are repOlied as deferred inflows in the funds. Internal service funds are used by management to charge the costs of certain services and benefits to individual funds. The assets and liabilities of the internal service funds are included in the govenU11ental activities in the Statement of Net Position. Internal service funds' net position Capital assets accounted for in capital assets used in governmental activities Compensated absences accounted for in long-term liabilities Pension obligation accounted for inlong-tern1liabilities OPEB obligation accounted for in long-term liabilities

2,792,740

5,234,972 (329,476) 95,424 72,174 55,615 5,128,709

Long-tenn liabilities are 110t due and payable in the current period and, therefore, are not reported in the funds. Bonds payable, net of unamortized premium Deferred charge on refunding Capital leases Compensated absences Net pension obligation Net OPEB obligation Accrued interest payable

(119,857,392) 1,491,215 (2,579,696) (10,047,411) (5,187,926) (25,250,378) (660,074) (162,091,662)

Net Position of Governmental Activities

41

$

114,721,446


CITY OF BAYTOWN, TEXAS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GO VERNMENTAL FUNDS For the Year Ended September 30, 2014

General Revenues Taxes Licenses and permits Charges for services Fines and forfeitures Intergovemmental Investment earnings Miscellaneous

$

Total Revenues Expenditures Current: General government Public safety Public works Public health Parks, recreation, and culture Capital outlay Debt service: Principal Payments to refunded bond escrow agent Interest and fiscal agent fees Issuance costs Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures

57,681,691 1,665,982 2,377,124 2,510,917 942,204 602,223 1,369,145 67,149,286

$

9,921,005

Nonmajor Governmental Funds

Capital Projects

Debt Service

$

$

427,738 41,645

69,472 268,725 6,637,572 18,634 688,440 16,117,521

37,099 412,326 449,425

10,390,388

63,275 312,417 2,874,654

15,404,969 36,144,774 4,103,682 2,159,107 6,364,301 3,274,286

8,434,678

6,584,180 3,692,345 589,293 52,302 1,373,111 1,026,352

11,078,459 6,482,061

125,000

9,593,273 3,706,569 325,255 20,107,158

14,328,805

13,537,458

(301,833)

(9,716,770)

(13,879,380)

2,580,063

4,257,855 (3,195,768)

1,766,278 (19,648,443)

13,775,886

318,013 (1,298,313)

1,062,087

(3,593,865) 1,864,050 31,099,696 11,487,716

13,775,886

(980,300)

Net Change in Fund Balances

760,254

1,770,946

Begil1lling fund balances Ending Fund Balances

23,646,564 24,406,818

3,715,519 5,486,465

67,451,119

Other Financing Sources {Uses) Transfers in Transfers (out) Payments to refunded bond escrow agent Bond premium Debt issued Total Other Financing Sources (Uses)

$

See Notes to Financial Statements.

42

$

94,875

(103,494)

$

22,846,956 22,743,462

1,599,763

$

5,860,437 7,460,200


Total Funds

$

76,037,374 1,665,982 2,446,596 2,779,642 8,007,514 699,601 2,469,911 94,106,620

22,052,424 40,149,536 7,567,629 2,211,409 7,737,412 15,379,097 6,607,061 9,593,273 3,801,444 325,255 115,424,540 (21,317,920)

20,118,032 (24,142,524) (3,593,865) 1,864,050 31,099,696 25,345,389 4,027,469

$

56,069,476 60,096,945

43


(This page intentionally left blank.) 44


CITY OF BAYTOWN, TEXAS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended September 30, 2014 Amounts repOlied for governmental activities in the Statement of Activities are different because: Net changes in fund balances - total govenmlental funds

$

Govermnental funds report capital outlay as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives and repOlied as depreciation expense. Capital outlay, net of contributions to business-type funds and disposals Depreciation

4,027,469

15,725,051 (8,084,459)

The issuance oflong-term debt (e.g., bonds, celiificates of obligation) provides current financial resources to governmental funds, while the repayment of the principal oflong-tenn debt consumes the CU11'ent financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, govenunental funds repoli the effect of premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities. Debt principal repayments Capital lease principal payment Debt issued - revenue and refunding bonds Capital lease issued Payment to refund boild and capitallease Additional premium on bonds Amortization of deferred charge on refunding AmOliization of premium on bonds

6,380,200 226,861 (28,520,000) (2,579,696) 13,098,488 (1,864,050) (80,667) 234,541

Revenue in the Statement of Activities that does not provide current financial resources is not reported as revenue in the funds.

(320,763)

Some expenses repOlied in the Statement of Activities do not require the use of current financial resources and, therefore, are not repOlied as expenditures in govenunental funds. Compensated absences Change in pension obligation Change in OPEB obligation Interest expense on bonds

(863,140) (210,424) (3,848,771) (50,336)

Internal service funds are used by management to charge the costs of providing various services and benefits to individual funds. The net revenue of certain activities of internal service funds is reported with govenmlental activities.

1,172,386

Change in Net Position of Governmental Activities See Notes to Financial Statements.

45

$

(5,557,310)


CITY OF BAYTOWN, TEXAS STATEMENT OF NET POSITION (Page 1 of2) PROPRIETARY FUNDS September 30, 2014

Business-Type Activities-Enterprise Funds Water and Sewer Assets Current assets: Cash and equity and equity in pooled cash and investments Accounts receivable, net Inventories Prepaid items Total Current Assets Noncurrent assets: Capital assets: Nondepreciable Depreciable, net Total Capital Assets (Net of Accumulated Depreciation) Total Noncurrent Assets Total Assets Deferred Outflows of Resources Deferred charge on refunding

$

37,098,812 3,697,112

Aquatics

$

1,263,526

Sanitation

$

480,535 671,833

Nonmajor

$

661,473 67,070

3,538 40,795,924

1,267,064

1,152,368

728,543

21,420,191 184,979,928

19,904,323

257,803

4,946,136

206,400,119 206,400,119 $ 247,196,043

19,904,323 19,904,323 21,171,387

257,803 257,803 1,410,171

4,946,136 4,946,136 5,674,679

260,213

46

$

$

$


Total Funds

$

$

39,504,346 4,436,015 3,538

Internal Service

$

6,613,485

43,943,899

540,044 192,510 7,346,039

21,420,191 210,088,190

329,476

231,508,381 231,508,381 275,452,280

329,476 329,476 7,675,515

$

260,213

47


CITY OF BAYTOWN, TEXAS STATEMENT OF NET POSITION (Page 2 of2) PROPRIETARY FUNDS September 30, 2014

Business-Type Activities - Enterprise Funds Water and Sewer Liabilities Current liabilities: Accounts payable Accrued expenses Compensated absences Refundable deposits Due to other funds Retainage payable Accrued interest payable Accounts payable - restricted Bonds payable - current Total Current Liabilities

$

Net Position Net investment in capital assets Restricted for: Debt service Unrestricted Total Net Position

6,669

55,926

381,798

45,473

741 20,724 21,465 77,391

6,528 65,037 295,350 366,915 748,713

3,795 31,741 145,668 181,204 226,677

127,230,998

19,904,323

257,803

4,946,136

5,873,007 16,275,922 149,379,927

1,189,673 21,093,996

403,655 661,458

$

716,144 524,070 2,341,479 5,715,300 12,426,577

81,786,614 54,649 679,972 3,128,517 85,649,752 98,076,329

$

See Notes to Financial Statements.

48

$

49,257

Nonmajor

302,868 20,182 58,748

3,976 491,840 2,633,768

Noncurrent liabilities: Bonds payable, net of premiums Compensated absences Net pension obligation Net OPEB obligation Total Noncurrent Liabilities Total Liabilities

Sanitation

Aquatics

$

$

$

11,316

34,157

$

501,866 5,448,002


Internal Service

Total Funds

$

367,417 20,182 591,414 2,633,768

$

131,129 1,866,472

219,729 716,144 524,070 2,341,479 5,715,300 12,909,774

2,217,330

81,786,614 65,713 95,424 797,474 72,174 3,569,535 55,615 86,219,336 .. 223,213 -----'--99,129,110 2,440,543

$

152,339,260

329,476

5,873,007 18,371,116

4,905,496

176,583,383

=$=:::::::=5,=23=4=,9=72=

49


CITY OF BAYTOWN, TEXAS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS For the Year Ended September 30, 2014 Business-Type Activities - Enterprise Funds Water and Sewer Operating Revenues Water and sewer sales Service charges and other services Solid waste collection Total Operating Revenues

$

32,425,993 3,564,356

Aquatics

$

Sanitation

$

$

2,903,853

35,990,349

2,903,853

1,275,827 4,618,491 4,618,491

1,275,827

330,798 38,058 2,500 72,512 13,147 187,287 644,302 631,525

Operating Expenses PersOlmel costs Supplies Maintenance Services Claim payments and fees Miscellaneous Depreciation Total Operating Expenses Operating Income (Loss)

8,373,794 10,891,376 1,319,292 2,565,249

1,901,258

279,744

798,784 63,401 112,982 3,505,373

84,734 6,233,293 29,467,738 6,522,611

108,792 627,261 2,917,055 (13,202)

133,504 128,224 4,742,268 (123,777)

NonoQerating Revenues {Expenses} Investment earnings Interest expense and other Total Nonoperating Revenues (Expenses)

240,616 (3,294,488) (3,053,872)

Income (Loss) Before Contributions and Transfers

(4,687) (4,687)

3,468,739

(13,202)

8,184,258 195,473 (827,617)

Capital contributions Transfers in Transfers (out)

Beginning net position Ending Net Position

$

138,359,074 149,379,927

See Notes to Financial Statements.

50

(123,777)

626,838

(220,554)

37,549 (728,781)

(344,331)

(64,394)

424,265 5,024,507

11,020,853

Change in Net Position

Nonmajor

5,435,570

$

15,658,426 21,093,996

$

1,005,789 661,458

$

5,512,396 5,448,002


Total Funds $

32,425,993 7,744,036 4,618,491 44,788,520

Internal Service $ 16,478,579 16,478,579

709,807 1,862,818 16,094 44,669 13,205,012

11,404,634 10,992,835 1,434,774 6,422,878 340,177 7,176,065 37,771,363 7,017,157

52,648 15,891,048 587,531

240,616 (3,299,175) (3,058,559)

160 160

3,958,598

587,691

8,608,523 5,257,529 (1,776,952)

543,915

16,047,698

$

160,535,685 176,583,383

1,131,606

$

4,103,366 5,234,972

51


CITY OF BAYTOWN, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Page 1 of2) For the Year Ended September 30, 2014 Business-Type Activities-Enterprise Funds Water and Sewer Cash Flows from OQerating Activities Cash received from customers Cash payments for goods and services Cash payments to employees Net Cash Provided (Used) by Operating Activities

$

$

Cash Flows from CaQital and Related Financing Activities Acquisition, and constmction of capital assets Principal paid on capital debt Interest and fiscal agent fees paid Proceeds from bond issuance Net Cash Provided (Used) by Capital and Related Financing Activities Cash Flows from Investing Activities Interest received

2,903,853 (362,951) (1,889,686)

$

651,216

13,391,175

Cash Flows from NoncaQital and Related Financing Activities Transfers in Transfers (out) Net Cash Provided (Used) for Noncapital and Related Financing Activities

195,473 (827,617)

5,024,507

(632,144)

5,024,507

4,480,996 (3,980,566) (737,296)

Nonmajor

$

1,268,983 (103,575) (330,798)

(236,866)

834,610

(220,554)

37,549 (728,781)

(220,554)

(691,232)

(7,110,904) (14,539,800) (3,141,107) 11,715,000

(5,230,617)

(4,688)

(13,076,811 )

(5,230,617)

(4,688)

240,616 240,616

Net Cash Provided by Investing Activities Net Increase (Decrease) in Cash and Cash Equivalents

Beginning cash and cash equivalents Ending Cash and Cash Equivalents

36,030,455 (14,515,144) (8,124,136)

Sanitation

Aquatics

445,106

(77,164)

$

37,175,976 37,098,812

See Notes to Financial Statements.

52

$

818,420 1,263,526

(457,420)

$

937,955 480,535

138,690

$

522,783 661,473


Total Funds $

44,684,287 (18,962,236) (11,081,916)

Internal Service $

16,472,279 (14,915,016) (709,807)

14,640,135

847,456

5,257,529 (1,776,952)

543,915

3,480,577

543,915

( 12,346,209) (14,539,800) (3,141,107) 11,715,000 (18,312,116)

$

240,616

160

240,616

160

49,212

1,391,531

39,455,134 39,504,346

$

5,221,954 6,613,485

53


CITY OF BAYTOWN, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Page 2 of2) For the Year Ended September 30,2014 Business-Type Activities-Enterprise Funds Nonmajor Sanitation Aquatics Funds

Water and Sewer Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (Used) by operating activities: Depreciation Changes in Operating Assets and Liabilities: (Increase) Decrease in Current Assets: Accounts receivable Inventory Increase (Decrease) in Current Liabilities: Accounts payable Accrued expenses Retainage payable Compensated absences Net pension obligation Net OPEB obligation Refundable deposits Due to other funds Net Cash Provided (Used) by Operating Activities

Noncash investing, capital, and financing activities: Contributions of capital assets from governmental funds See Notes to Financial Statements.

$

6,522,611

$

6,233,293

(13,202)

$

(27,864)

25,585

3,258 8,314

$

13,391,175

$

651,216

$

$

8,184,258

$

424,265

$

54

$

128,224

627,261

(212,442) (23,339) 557,949 (93,305) (3,695) 369,997 67,970

(123,777)

631,525

187,287

(137,495)

(6,844)

(165,306) 4,974

3,011

5,583 3,952 46,979

4,358 (263) 15,536

(236,866)

$

$

834,610


Total Funds

$

7,017,157

Internal Service

$

587,531

52,648

7,176,065

(172,203) 1,210

(36,113) 331,855

(349,152) (18,365) 557,949 (80,106) 8,308 432,512 67,970

(13,329) (7,876) 9,337 (70,297)

$

14,640,135

$

8,608,523

$

847,456

=$=====

55


(This page intentionally left blank.) 56


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS For the Year Ended September 30, 2014

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity The City of Baytown, Texas (the "City") was incorporated and has operated under a "Home Rule Charter," which provides for a Council-Manager form of government, since 1948. The City Council is the principal legislative body of the City. The City Manager is appointed by a majority vote of the City Council and is responsible to the Council for the administration of all the affairs of the City. The City Manager is responsible for the appointment and removal of department directors and employees, supervision and control of all City departments, and preparation of the annual budget. The City provides the following services: public safety (police, fire services, and emergency medical services), municipal court, culture and recreation, streets, drainage, water and sewer services, solid waste collection and disposal, storm water utilities, community development, and general administration. The City is an independent political subdivision of the State of Texas governed by an elected council and a mayor and is considered a primary government. As required by generally accepted accounting principles, these basic financial statements have been prepared based on considerations regarding the potential for inclusion of other entities, organizations, or functions as part of the City's financial repOliing entity. They present the government and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government's operations. Each discretely presented component unit is reported in a separate column in the government-wide financial statements to emphasize that it is legally separate from the government. Additionally, as the City is considered a primary government for financial reporting purposes, its activities are not considered a part of any other governmental or other type of reporting entity. Considerations regarding the potential for inclusion of other entities, organizations, or functions in the City's financial reporting entity are based on criteria prescribed by generally accepted accounting principles. These same criteria are evaluated in considering whether the City is a part of any other governmental or other type of repOliing entity. The overriding elements associated with prescribed criteria considered in determining that the City's financial reporting entity status is that of a primary government are that it has a separately elected governing body, it is legally separate, and it is fiscally independent of other state and local governments. Additionally, prescribed criteria under generally accepted accounting principles include considerations petiaining to organizations for which the primary government is financially accountable and considerations pettaining to organizations for which the nature and significance of their relationship with the primary goverlUl1ent are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. 1. Blended Component Units

Crime Control and Prevention District The Crime Control and Prevention District (CCPD) has been included in the reporting entity as a blended component unit. The CCPD is reported as a blended component unit due to CCPD providing services almost entirely for the City. The CCPD is funded by a local sales and use tax at a rate of oneeighth of one percent. The expenditure of this tax is restricted for public safety activities. The CCPD is dissolved on the fifth anniversary of the date the CCPD began to levy taxes, if the CCPD has not 57


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30,2014

held a continuation or dissolution referendum (Texas Local Government Code, Chapter 363). The operations of the CCPD are presented as a governmental fund type.

Fire Control, Prevention, and Emergencv Medical Services District The Fire Control, Prevention, and Emergency Medical Services District (FCPEMSD) has been included in the reporting entity as a blended component unit The FCPEMSD is reported as a blended component unit due to FCPEMSD providing services almost entirely for the City. The FCPEMSD is dedicated to fire safety and emergency medical services and is funded by a local sales and use tax at a rate of one-eighth of one percent. The FCPEMSD is dissolved on the fifth anniversary of the date the FCPEMSD began to levy taxes, if the FCPEMSD has not held a continuation or dissolution referendum (Texas Local Government Code, Chapter 344). The operations of the FCPEMSD are presented as a governmental fund type.

Tax Increment Reinvestment Zone No. One The Tax Increment Reinvestment Zone (TIRZ) Number One was created in 2001 as a development/redevelopment financing tool and is included in the rep0l1ing entity as a blended component unit. The TIRZ is reported as a blended component unit due to TIRZ providing services almost entirely for the City. The TIRZ provides a method to finance public improvements in a designated zone utilizing the property tax increment, or growth in value, subsequent to the creation of the zone. The operations of the TIRZ are presented as a governmental fund type.

2. Discretely Presented Component Units Baytown Area Water Authority The Baytown Area Water Authority (BAWA) was created to purchase and distribute surface and/or water supplies to the City of Baytown and seven other smaller entities and neighborhoods. The boundaries of BAW A include the entire City and most of the City's extraterritorial jurisdiction in east Harris County, Texas. The City Council appoints all members of the governing board of BAW A and approves any debt issued by BAW A. Separate financial statements of BAW A may be obtained from the finance department of the City.

Municipal Development District The Municipal Development District (MDD) was created to levy and account for the collection of a sales and use tax at the rate of one-half of one percent for the purpose of financing economic development projects that provide economic benefit and diversify the economic base of the community. The boundaries of the MDD include the portion of the City that is in Harris County and exclude the p0l1ion that is in Chambers County. City Council appoints all members of the governing board of the MDD and approves any debt issued by the MDD.

B. Government-Wide Financial Statements The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all activities of the primary government and its component units. Governmental activities, which normally are supported by taxes, intergovernmental revenues, and other nonexchange transactions, are reported separately from business-type activities, which rely to a significant extent on fees and charges to external customers for support. Likewise, the primm]! government is reported separately from certain legally separate component units for which the primary government is financially accountable. 58


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2014

C. Basis of Presentation - Government-Wide Financial Statements While separate government-wide and fund financial statements are presented, they are interrelated. The governmental activities column incorporates data from governmerital funds and internal service funds, while business-type activities incorporate data from the City's enterprise funds. Separate financial statements are provided for governmental funds and proprietary funds. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments in lieu of taxes where the amounts are reasonably equivalent in value to the interfund services provided and other charges between the City's water functions and various other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

D. Basis of Presentation - Fund Financial Statements The fund financial statements provide information about the City's funds, including its blended component units. Separate statements for each fund category - governmental and proprietary - are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate colunm. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. The City reports the following governmental funds:

General Fund The general fund is used to account for all financial transactions not properly includable in other funds. The principal sources of revenues include local property taxes, sales and franchise taxes, licenses and permits, fines and forfeitures, and charges for services. Expenditures include general government, public safety, public works, public health, and parks and recreation. The general fund is considered a major fund for reporting purposes. Special Revenue Funds The special revenue funds are used to account for proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes other than debt service or capital projects. The special revenue funds are considered nonmajor funds for reporting purposes. Debt Service Fund The debt service fund is used to account for the payment of interest and principal on all general obligation bonds and other long-term debt of governmental funds. The primary source of revenue for debt service is local property taxes. The debt service fund is considered a major fund for reporting purposes. Capital Projects Funds The capital projects fund is used to account for the resources that are restricted, committed, or assigned to expenditures for capital outlay. The capital projects fl.l11d is considered a maj or fund for reporting purposes. The City reports the following enterprise funds:

Enterprise Funds The enterprise funds are used to account for the operations that provide water and wastewater collection, wastewater treatment operations, solid waste collection and disposal, water park operations (aquatics), and storm utility operations. The services are financed and operated in a 59


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2014

manner similar to private business enterprises where the intent of the governing body is that the costs (expenses including depreciation) of providing goods or services to the general public on a continuing basis will be financed or recovered primarily through user charges. The water and sewer and aquatics fund are considered major funds for reporting purposes. The City has elected to present the sanitation fund as a major fund. The nonmajor funds include the Bayland Island fund and storm water utility fund. Additionally, the City reports the following fund types: Internal Service Funds Internal service funds account for services provided to other departments or agencies of the City, or to other governments, on a cost reimbursement basis. These funds include the central services operation for the garage and warehouse and the risk management fund. During the course of operations, the City has activity between funds for various purposes. Any residual balances outstanding at year end are repOlied as due from/to other funds and advances to/from other funds. While these balances are repOlied in fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Balances between the funds included in governmental activities (i.e., the governmental and internal service funds) are eliminated so that only the net amount is included as internal balances in the governmental activities colunm. Similarly, balances between the funds included in business-type activities (i.e., the enterprise funds) are eliminated so that only the net amount is included as internal balances in the business-type activities colunm. Fmiher, certain activity occurs during the year involving transfers of resources between funds. In fund financial statements, these amounts are repOlied at gross amounts as transfers in/out. While reported in fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Transfers between the funds included in governmental activities are eliminated so that only the net amount is included as transfers in the governmental activities column. Similarly, balances between the funds included in business-type activities are eliminated so that only the net amount is included as internal balances in the business-type activities column. E. Measurement Focus and Basis of Accounting The accounting and financial reporting treatment is detern1ined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources or economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements. The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. 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 for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The governmental fund 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 City 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 60


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30,2014

under accmal accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long-term debt and acquisitions under capital leases are reported as other financing sources. Property taxes, sales taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the cunent fiscal period. Entitlements are recorded as revenues when all eligibility requirements are met, including any time requirements, and the amount is received during the period or within the availability period for this revenue source (within 60 days of year end). Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incuned and all other eligibility requirements have been met, and the amount is received during the period or within the availability period for this revenue source (within 60 days of year end). All other revenue items are considered to be measurable and available only when cash is received by the City.

F. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance 1. Cash and Cash Equivalents The City maintains a pooled cash and investments account. Each fund whose monies are deposited in the pooled cash and investment account has equity therein, and interest earned on the investment of these monies is allocated based upon relative equity at the previous month end. Amounts on deposit in interest-bearing accounts and other investments are displayed on the combined balance sheet as "cash and equity in pooled cash and investments."

2. Investments In accordance with GASB Statement No. 31, Accounting and Reporting for Certain Investments and External Investment Pools, the City reports all investments at fair value, except for "money market investments" and "2a7-like pools." Money market investments, which are short-term highly liquid debt instruments that may include U.S. Treasury and agency obligations, are reported at amortized costs. Investment positions in external investment pools that are operated in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940, such as TexPool, are reported using the pools' share price. The City has adopted a written investment policy regarding the investment of its funds as defined in the Public Funds Investment Act, Chapter 2256, Texas Government Code. In summary, the City is authorized to invest in the following: Direct obligations of the U.S. government Money market mutual funds that meet certain criteria Collateralized certificates of deposits and share certificates Statewide investment pools

3. Inventories and Prepaid Items The costs of governmental fund type inventories are recorded as expenditures when the related liability is incurred (i.e., the purchase method). Inventories in the central services fund consist of expendable supplies held for consumption and are carried at weighted-average cost. The weightedaverage cost is recorded as an expenditure at the time of consumption. Celiain payments to vendors 61


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEA1ENTS (Continued) For the Year Ended September 30, 2014

reflect costs applicable to future accounting periods (prepaid expenditures) and are recognized as expenditures when utilized.

4. Restricted Assets Certain resources of the BAW A fund are set aside for the repayment of revenue bonds, which are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. The revenue bond construction account is used to report those proceeds of bond issuance that are restricted for use in construction. The bond reserve requirement account is used to segregate resources accumulated for debt service payments over the next 12 months.

5. Capital Assets Capital assets, which include propeliy, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. In accordance with GASB Statement No. 34, infrastructure has been capitalized retroactively. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of three years. 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 date of donation. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest costs incurred in connection with construction of enterprise fund capital assets are capitalized when the effects of capitalization materially impact the financial statements. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not capitalized. Property, plant, and equipment of the primary government, as well as the component units, are depreciated using the straight-line method over the following estimated useful lives: Estimated Useful Life

Asset Description Buildings and improvements Machinery and equipment Infrastructure

15 to 50 years 3 to 10 years 30 to 50 years

6. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City only has one item that qualifies for reporting in this' category. It is the deferred charge on refunding reported in the government-wide Statement of Net Position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has only one type of item, 62


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30,2014

which arises only under a modified accrual basis of accounting, that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from propeliy taxes and special assessments. This amount is deferred and recognized as an inflow of resources in the period that the amount becomes available.

7. Compensated Employee Absences It is the City'S policy to permit employees to accumulate certain earned but unused benefits. Amounts accumulated, up to certain amounts, may be paid to employees upon termination of employment. The estimated amount of compensation for services provided that is expected to be liquidated with expendable, available financial resources is reported as an expenditure and a fund liability of the governmental fund that will pay it when it matures or becomes due. Amounts of vested or accumulated vacation leave that are not expected to be liquidated with expendable, available financial resources are maintained separately and represent a reconciling item between the fund and government-wide presentations.

8. Long-Term Obligations The government-wide financial statement and proprietary fund type financial statements report longterm debt and other long-term obligations as liabilities in the applicable governmental activities, business-type activities or proprietary fund type Statement of Net Position. Bond premiums and discounts are defe11'ed and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are repOlied as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. The propeliy tax rate is allocated each year between the general and debt service funds. The full amount estimated to be required for debt service on general obligation debt is provided by the tax along with the interest earned in the debt service fund. Although a portion of the general obligation debt was directly related to the purchase of water and sewer infrastructure, the debt service expenditures are included in the governmental fund financial statements as they are expected to be paid from debt service tax revenues instead of water system revenues. Assets acquired under the terms of a capital lease are recorded as liabilities and capitalized in the government-wide financial statements at the present value of net minimum lease payments at inception of the lease. In the year of acquisition, capital lease transactions are recorded as other financing sources and as capital outlay expenditures in the applicable fund. Lease payments representing both principal and interest are recorded as expenditures in the general fund upon payment with an appropriate reduction of principal recorded in the government-wide financial statements.

9. Net Position Flow Assumption Sometimes the City will fund outlays for a particular purpose fro111 both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position in the government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to 63


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2014

be applied. It is the City's policy to consider restricted net position to have been depleted before unrestricted net position is applied.

10. Fund Balance Flow Assumptions Sometimes the City will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of cOlmnitted, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City's policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last.

11. Fund Balance Policies Fund balances of governmental funds are reported in various categories based on the nature of any limitations requiring the use of resources for specific purposes. The City itself can establish limitations on the use of resources through either a commitment (committed fund balance) or an assignment (assigned fund balance). Amounts that cannot be spent because they are either not in spendable form or legally or contractually required to be maintained intact are classified as nonspendable fund balance. Amounts that are externally imposed by creditors, grantors, contributors or laws or regulations of other governments; or imposed by law through constitutional provisions are classified as restricted fund balance. The conm1itted fund balance classification includes amounts that can be used only for the specific p'urposes determined by a formal action of the City's highest level of decision-making authority. The City Council is the highest level of decision-making authority for the City that can, by adoption of an ordinance prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the ordinance remains in place until a similar action is taken (the adoption of another ordinance) to remove or revise the limitation. Amounts in the assigned fund balance classification are intended to be used by the City for specific purposes but do not meet the criteria to be classified as conm1itted. The City Council may also assign fund balance as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year's appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an additional action is essential to either remove or revise a conm1itment.

12. Estimates The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the repOlied amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the repoliing period. Actual results could differ from those estimates.

64


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2014

G. Revenues and Expenditures/Expenses 1. Program Revenues Amounts reported as program revenues include 1) charges to customers or applicants who purchase, use, or directly benefits from goods, services, or privileges provided by a given function or segment and 2) grants and contributions (including special assessments) that are restricted to meeting the operational or capital requirements of a particular function or segment. All taxes, including those dedicated for specific purposes, and other internally dedicated resources are reported as general revenues rather than as program revenues.

2. Property Taxes Property taxes are levied during October of each year and are due upon receipt of the City's tax bill. Taxes become delinquent, with an enforceable lien on property, on February 1 of the following year.

3. Proprietary Funds Operating and Nonoperating Revenues and Expenses Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the enterprise funds and internal service funds are charges to customers for sales and services. The water and sewer fund also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. 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 and expenses not meeting this definition are reported as nonoperating revenues and expenses.

II. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Budgetary Information The City prepares its general and special revenue funds' annual budgets on a basis that differs from GAAP. The budget and all transactions are presented in accordance with the City's method (budgetary basis) in the schedule of revenues, expenditures, and changes in fund balances - budget and actual (budgetary basis) for the general f111ld to provide a meaningful comparison of actual results with the budget. The major differences between budgetary and GAAP basis of accounting for the general funds' budget are that some revenue and expenditures within the general fund do not have an adopted budget. The debt service fund's budget is adopted and presented in accordance with GAAP. On or before May 31 of each year, all departments of the City submit requests for appropriations to the City Manager so that a budget may be prepared. At least 60 days prior to the beginning of each fiscal 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. The Council holds public hearings and a final budget must be prepared and adopted no later than September 27. The annual budget adopted by the City Council covers the general; debt service; library grant; crime control and prevention district; hotel/motel; fire control, prevention, and emergency medical services district; water and sewer; sanitation; storm water; and garage, warehouse, and central services funds. The budget is legally enacted at the department level by the City Council through passage of an ordinance prior to the beginning ofthe fiscal year.

65


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2014

The City Council must approve any supplemental budget appropriations at the department level. The City Manager is authorized to transfer budgeted amounts within departments within any fund. During the fiscal year ended September 30, 2014, the City Manager approved various budget revisions within departments. III. DETAILED NOTES ON ALL FUNDS A. Deposits and Investments As of September 30, 2014, the City had the following investments:

Inyestment Type Commercial paper Bankers' acceptances Municipal bonds Coupon agencies Certificate of deposits External investment pools TexPool TexSTAR Total Fair Value POltfolio weighted average maturity

Fair Value 21,200,000 $ 18,339,035 16,505,100 3,536,024 994,800

$

34,850,588 34,483,036 129,908,583

Weighted AYerage Maturity (Years) 0.20 2.68 0.29 0.20 0.66 0.00 0.00

Credit Risk A-I-I/F-l A-l-1/F-1+

AAlAa

AAAlAA+ AAA AAAm AAAm

0.14

Interest rate risk. In accordance with its investment policy, the City manages its exposure to declines in fair values by limiting the weighted average maturity not to exceed five years, structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, monitoring credit ratings of portfolio position to assure compliance with rating requirements imposed by the Public Funds Investment Act, and investing operating funds primarily in short-term securities or similar government investment pools. Credit risk. The City'S investment policy limits investments in no-load money market mutual funds rated as to investment quality not less than "AAA" by a nationally recognized investment rating finn. As of September 30, 2014, the City's investments in TexPool and TexSTAR were rated "AAAm" by Standard & Poor's. All other investments are guaranteed (either express or implied) by the full faith and credit of the United States government or the issuing U.S. agency. More specifically, the investments in U.S. agencies held by the City as of September 30, 2014 consist of a variety of bonds and discount notes issued by the Federal Home Loan Bank, Federal Home Loan Mortgage Corporation, and the Federal National Mortgage Association. Custodial credit risk - deposits. In the case of deposits, this is the risk that in the event of a bank failure, the City's deposits may not be returned to it. State statutes require that all deposits in financial institutions be insured or fully collateralized by U.S. government obligations or its agencies and instrumentalities or direct obligations of Texas or its agencies and instrumentalities that have a market value of not less than the principal amount of the deposits. As of September 30, 2014, the market values of pledged securities and FDIC coverage exceeded bank balances. Custodial credit risk - investments. For an investment, this is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City's investment policy requires that it will seek to safe keep securities at financial institutions, avoiding physical possession. Further, all

66


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2014

trades, where applicable, are executed by delivery versus payment to ensure that securities are deposited in the City's safekeeping account prior to the release of funds. TexPool

TexPool was established as a trust company with the Treasurer of the State of Texas as trustee, segregated from all other trustees, investments, and activities of the trust company. The State Comptroller of Public Accounts exercises oversight responsibility over TexPool. Oversight includes the ability to significantly influence operations, designation of management, and accountability for fiscal matters. Additionally, the State Comptroller has established an advisory board composed of both participants in TexPool and other persons who do not have a business relationship with TexPool. The advisory board members review the investment policy and management fee structure. Finally, Standard & Poor's rates TexPool "AAAm". As a requirement to maintain the rating, weekly portfolio information must be submitted to Standard & Poor's, as well as to the office of the Comptroller of Public Accounts for review. TexSTAR

The Texas Short Term Asset Reserve Fund (TexST AR) is a local government investment pool organized under the authority of the Interlocal Cooperation Act, Chapter 791, Texas Government Code, and the Public Funds Investment Act, Chapter 2256, Texas Government Code. TexSTAR was created in April 2002 by contract among its participating governmental units and is governed by a board of directors. JPMorgan Fleming Asset Management (USA), Inc. and First Southwest Asset Management, Inc. act as co-administrators, providing investment management services, participant services, and marketing. JPMorgan Chase Bank and/or its subsidiary, J.P. Morgan Investor Services, Inc., provide custodial, transfer agency, fund accounting, and depository services. TexPool and TexSTAR operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. TexPool and TexSTAR use amortized cost rather than market value to report net assets to compute share prices. Accordingly, the fair value of the position in TexPool and TexSTAR are the same as the value of TexPool and TexSTAR shares. B. Receivables

The following comprise receivable balances at year end: Governmental Funds

Taxes Accounts Interest Grants Less allowance

$

$

General 1,926,931 4,473,513 1,439,012 65,440 (2,366,729) 5,538,167

$

Debt Service 1,453,737

Capital Projects $

$

56,275

Nonmajor Special Revenue 1,451,274 124,462

1,501,435 (355,558) 1,098,179

$

67

$

56,275

$

3,077,171


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2014 Proprietary Funds

Accounts Less allowance

Water and Sewer $ 4,194,938 (497,826) 3,697,112 $

$

Sanitation 671,833

$

671,833

Nonmajor $ 67,070

Total Funds 4,933,841 (497,826)

67, 070

=$==4~,4,;;3::;6k;' 0,;;:15~

$

C. Capital Assets A summary of changes in capital assets for the year ended is as follows: 1. Primary Government Beginning Balance Governmental Activities: Capital assets not being depreciated: Land Construction in progress

$

Total Capital Assets Not Being Depreciated Capital assets being depreciated: Buildings Improvements other than buildings Machiner'y and equipment Infioastructure Total Capital Assets Being Depreciated Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Infioastructure Total Accumulated Depreciation Total Capital Assets, Net Governmental Activities Capital Assets, Net

9,212,702 22,087,354

Increases

$

31,300,056

16,968,932

59,350,481 14,006,010 48,165,211 154,494,653

5,202,665 709,803 4,979,671 15,027,662

276,016,355

25,919,801

201,154,122

$

$

34,804,274

Ending Balance

$ (27,163,682)

12,842,775 8,262,531

(27,163,682)

21,105,306

64,553,146 14,715,813 52,685,068 169,522,315

(459,814)

(459,814)

(1,404,161) (532,481 ) (2,738,558) (3,409,259) (8,084,459) 17,835,342

(18,780,008) (2,167,061) (39,034,552) (46,180,668) (106,162,289) 169,854,066 $

3,630,073 13,338,859

Reclassifications! (Decreases)

301,476,342

(20,184,169) (2,699,542) (41,313,296) (49,589,927) (113,786,934) 187,689,408

459,814 459,814

$

(27,163,682)

208,794,714

Less associated debt Plus deferred charge on refunding Unspent bond proceeds Net Inyestment in Capital Assets

68

(122,437,088) 1,491,215 17,619,234 $

105,468,075


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2014

Depreciation was charged to governmental functions as follows: General government Public safety Public works Public health Recreation and culture Capital assets held by the City's internal service funds are charged to various functions based on their usage of the assets Total Governmental Activities Depreciation Expense

$

$

582,171 2,265,508 3,746,708 262,886 1,174,538 52,648 8,084,459

=======

2. Construction Commitments - Governmental The City has active governmental activities construction projects as of September 30, 2014. The projects include the following:

Project Description Street Rehabilitation and Construction Baker Road Extension Community Center Improvements Total

Authorized Contract $ 7,494,074 8,957,732 288,791 $ 16,740,597

69

Contract Expenditures $ 2,869,349 8,728,779 86,634 $ 11,684,762

Remaining Commitment $ 4,624,725 228,953 202,157 $ 5,055,835


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30,2014

The following is a summary of changes in capital assets for business-type activities for the year ended: Beginning Balance Business-Type Activities Capital assets not being depreciated: Land Construction in progress Total Capital Assets Not Being Depreciated

$

63,112,219 213,236,288 1,395,559 7,891,585 285,635,651

217,734,400

Ending Balance

$

20,140,767

(12,759,840)

533,426 20,886,765

20,140,767

(12,759,840)

21,420,191

(94,607) (94,607)

63,112,219 226,402,367 1,395,559 8,206,828 299,116,973

87,797 87,797 (6,810)

(48,766,625) (32,003,197) (l,299,274) (6,959,687) (89,028,783) 210,088,190

13,166,079 409,850 13,575,929

(1,264,431) (5,391,912) (931) (518,791) (7,176,065) 6,399,864

(47,502,194) (26,611,285) (l,298,343) (6,528,693) (81,940,515) 203,695,136

$

$

$

14,039,264

Capital assets being depreciated: Buildings and systems Improvements other than buildings Office furniture and equipment Machinery and equipment Total Capital Assets Being Depreciated Less accumulated depreciation for: Buildings and systems Improvements other than buildings Office furniture and equipment Machinery and equipment Total Accumulated Depreciation Total Capital Assets, Net Business-Type Activities Capital Assets, Net

533,426 13,505,838

RecJassifica tions/ (Decreases)

Increases

$

$

26,540,631

(12,766,650)

231,508,381

Less associated debt Plus deferred charge on refunding Unspent bond proceeds Net Investment in Capital Assets

Depreciation was charged to business-type functions as follows: Water and sewer Sanitation Bayland Island Storm water Aquatics Total Business-Type Activities Depreciation Expense

70

$

$

6,233,293 128,224 181,912 5,375 627,261 7,176,065

(87,501,914) 260,213 8,072,580

$

152,339,260


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30,2014

3. Construction Commitments - Business-Type The City has active business-type activities construction projects as of September 30, 2014. The projects include the following:

Project Description Central District Wastewater Treatment Plant Central District Wastewater Lift Station West Main Lift Station Victoria Walker Lift Station Baker Water Well Raccoon Lift Station Annexed Area Utilities Pirates Bay Expansion Total

Authorized Contract $ 826,240 7,434,108 1,029,920 2,462,322 252,547 2,887,100 2,143,737 6,689,728 $ 23,725,702

Contract Expenditures 613,718 $ 6,643,569 891,517 1,550,109 150,498

$

Remaining Commitment $ 212,522 790,539 138,403 912,213 102,049 2,887,100 84,547 99,111 $ 5,226,484

2,059,190 6,590,617 18,499,218

4. Discretely Presented Component Units The following is a summary of changes in capital assets for BAW A for the year ended September 30, 2014: Beginning Balance Capital assets, not being depreciated: Land Construction in progress Total Capital Assets Not Being Depreciated

$

Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and equipment Total Capital Assets Being Depreciated Total Capital Assets Less accumulated depreciation for: Buildings Improvements other than buildings MachinelY and equipment Total Accumulated Depreciation Total Capital Assets Being Depreciated, Net Discretely Presented Component Units Capital Assets, Net

$

Increases

264,321 871,909 1,136,230

$

$ 1,075,084 1,075,084

1,021,268 46,363,344 3,972,823 51,357,435 52,493,665

666,016 363,766 1,029,782 2,104,866

(597,542) ( 12,692,440) (3,882,730) (17,172,712) 34,184,723

(23,639) (1,058,716) (23,696) (1,106,051) (76,269)

35,320,953

$

998,815

Ending Balance

(Decreases)

$ (656,585) (656,585)

264,321 1,290,408 1,554,729

(656,585)

1,021,268 47,029,360 4,336,589 52,387,217 53,941,946

(621,181) (13,751,156) (3,906,426) (18,278,763) 34,108,454

$

(656,585)

$

Less associated debt Plus defelTed charge on reflll1ding Unspent bond proceeds Net Investment in Capital Assets

71

35,663,183 (16,961,762) 95,042 2,302,171

$

21,098,634


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2014

5. Construction Commitments - Component Units The City has active construction projects for BAWA as of September 30,2014. The projects are listed below: Authorized Contract

Project Description BA W A Plant Improvements

$

Contract Expenditures

3,971,363

$

Remaining Commitment

585,045

$

3,386,318

D. Long-Term Debt The following is a summary of changes in the City's primary government and component units total long-term liabilities for the year ended. In general, the City uses the general and debt service funds to liquidate governmental long-term liabilities.

Beginning Balance Governmental Activities Bonds, notes and other payables: General obligation bonds Combinations and tax revenue bonds Plus deferred amounts: For premiums Capital leases

$

92,419,850

Reductions

Additions

$

28,520,000

$

10,945,000

Total Other liabilities: Net pension obligation Net OPEB obligation Compensated absences Total Total Govel'l1mental Activities

$

3,077,237 2,667,325 109,109,412

1,864,050 2,579,696 32,963,746

4,977,502 21,401,607 9,184,271 35,563,380

210,424 3,848,771 9,128,984 13,188,179

144,672,792

$

46,151,925

$

16,105,200

238,545 2,667,325 19,636,070

4,702,742 2,579,696 122,437,088

8,265,844 8,265,844

5,187,926 25,250,378 10,047,411 40,485,715

associated with capital assets

72

104,834,650 10,320,000

Long-term debt due in more than one year ~'Debt

$

625,000

27,901,914

Amounts Due Within One Year

Ending Balance

$

162,922,803

$

145,974,011

$

122,437,088

$

6,954,700 645,000

306,422 7,906,122

*

9,042,670 9,042,670 $

16,948,792


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30,2014

Beginning Balance Business-Type Activities Revenue bonds Certificates of obligation Less deferred amounts: For premiums

$

Total Other liabilities: Net pension obligation Net OPEB obligation Compensated absences Total Total Business-Type Activities

$

4,145,150 85,315,000

11,715,000

1,449,800 13,090,000

473,537 89,933,687

425,805 12,140,805

32,778 14,572,578

866,564 87,501,914

789,166 3,137,023 737,233 4,663,422

8,308 432,512 583,405 1,024,225

663,511 663,511

797,474 3,569,535 657,127 5,024,136

94,597,109

$

$

$

Total

$

15,236,089

2,695,350 83,940,000

92,526,050

Long-term debt due in more than one year

$

86,219,336

*Debt associated with capital assets

$

87,501,914

18,780,000 412,823

13,165,030

$

$

Beginning Balance Discretely Presented Component Units Revenue bonds Bank Loan Less deferred amounts: For premiums

Reductions

Additions

$

Additions

$

43,847 19,236,670

1,860,000 132,157

$

*

$

2,085 1,994,242

591,414 591,414 $

*

41,762 17,242,428

*

$

15,189,894

Long term debt related to capital assets

$

16,961,762

6,306,714

Amounts Due Within One Year

16,920,000 280,666

Long term debt payable in more than one year

780,300 4,935,000

5,715,300

Ending Balance

Reductions

$

Amounts Due Within One Year

Ending Balance

$

1,915,000 137,534

2,052,534

*

Long-term liabilities applicable to the City's govemmental activities are not due and payable in the cunent period and, accordingly, are not reported as fund liabilities in the governmental funds. Internal service funds predominantly serve the governmental funds. Accordingly, long-term liabilities for them are included as part of the above totals for governmental activities. At year end, $223,213 make up the internal service funds' compensated absences, pension obligation, and OPEB obligation which The governmental activities is included in the above amounts for governmental activities. compensated absences, net pension obligations, and other post employment benefit obligations are generally liquidated by the general and water and sewer funds. Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. Refunded Debt During the year, the City sold general obligation and refunding bonds, series 2014 for $28,520,000, of which $18,530,000 provided resources for a current and advanced refunding of long-term debt. The cunent refunding portion provided debt service payments of $6,860,000 to ref-und bond series 2005 and 2005A. The advanced refunding portion provided resources to purchase direct obligations of the United States of America that were placed in an inevocable trust for the purpose of generating 73


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2014

resources for future debt service payments of $11,670,000 for outstanding bond series 2006 and 2006A. As a result, the refunded portion of the bonds is considered to be defeased and the pro-rata portion of the liability has been removed from the applicable governmental and business-type activities colunms in the Statement of Net Position. The reacquisition price exceeded the net carrying amount of the old debt by $654,171. The refunding bonds reduced total debt service payments by $1,737,891 over the next 12 years and resulted in an economic gain of $1,451,697. At September 30, 2014, $3,490,000 of general obligation bonds series 2006 and $8,180,000 of combination tax and revenue certificate of obligation series 2006A were considered defeased. The City also obtained a tax-exempt lease purchase refinancing agreement for $2,579,696, of which $2,440,463 was used to provide resources to refinance the equipment lease purchase agreement. As a result, the refunded portion of the lease is considered to be defeased and the pro-rata portion of the liability has been removed from the applicable governmental activities column in the Statement of Net Position. The reacquisition price equaled the net carrying amount of the old debt. The refinancing lease reduced total lease payments by $229,658 over the next eight years and resulted in an economic gain of approximately $201,516. Long-term governmental debt at year end was comprised of the following debt issues:

Descri[!tion General Obligation Bonds: Series 2004 Series 2005 Refunding, Series 2005 Series 2006 Series 2008 Refunding, Series 2010 Refunding, Series 2011 Partial Refunding, Series 2012 Series 2013 Refunding, Series 2014 Total General Obligation Bonds Combination and Tax Revenue Bonds: Series 2007 A Tax Increment, Series 2008 Series 2010 Total Combination Tax and Revenue Bonds

Interest Rate (%)

Maturity Date

4.00 - 6.00 3.50 - 4.25 4.00 - 6.00 3.00 - 4.51 3.00-4.50 1.00 - 3.00 2.50 - 5.00 1.69-3.23 2.00-3.375 2.00-4.00

2024 2025 2020 2026 2028 2018 2031 2032 2033 2034

3.82 5.75 1.00 - 4.38

4.00 - 5.00 2.16

$

2017 2024 2030

Total General Bonded Debt Capital Leases: Energy performance improvements Tax-exempt agreement 2032

Original Issue

2022 2022

Total Capital Leases

$

1,000,000 2,200,000 10,000,000 13,200,000

4,705,000 5,060,000 7,740,000 4,975,000 2,395,000 5,343,450 4,030,000 1,735,000 660,000

Outstanding $

36,643,450

240,000 10,495,000 2,589,650 18,360,000 28,490,000 16,140,000 28,520,000 104,834,650

655,000 675,000 1,550,000 2,880,000

345,000 1,525,000 8,450,000 10,320,000

$

157,698,100

$

42,543,450

$

$

3,430,293 2,579,696

$

3,430,293

$

6,009,989

$

$

74

4,705,000 5,060,000 7,740,000 5,215,000 12,890,000 7,933,100 22,390,000 30,225,000 16,800,000 28,520,000 141,478,100

Net Retirement

115,154,650

2,579,696 3,430,293

$

2,579,696


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30,2014

Long-term business-type activity debt at year end was comprised of the following debt issues: Interest Rate (%)

Maturity Date

1.25 - 4.90 1.00 - 3.00

2013 2018

Texas Water Development Board Bonds: TWDB, Series 2005 TWDB, Series 2.006 Total Texas Water Development Board Bonds

1.35 - 3.50 2.70 - 3.70

2025 2026

13,370,000 19,700,000 33,070,000

4,270,000 6,315,000 10,585,000

Certificates of Obligation: Certificates of Obligation, Series 2.004 Certificates of Obligation, Series 2.006 Certificates of Obligation, Series 2.007 Certificates of Obligation, Series 2.0.08 Certificates of Obligation, Series 2.0 13 Certificates of Obligation, Series 2.0 14 Total Certificates of Obligation

4 ..00 - 6.00 4 ..00 - 5.88 4 ..0.0 - 6 ..01 4 ..00 - 4.5.0 2..0.0-3.38 2..0.0-4 ..0.0

2.024 2.026 2.027 2.028 2033 2.034

11,98.0,.0.00 12,23.0,.0.00 13,.0.0.0,.0.00 29,5.0.0,.0.00 16,5.0.0,.0.00 11,715,0.00 94,925,.0.0.0

11,980,.0.00 11,67.0,0.00 3,165,.0.0.0 6,.0.05,.0.00 65.0,.000

DescriEtion Water and Sewer Bonds: Refunding Series, 2003 Refunding Series, 201O Total Water and Sewer Bonds

Total Revenue-Bonded Debt

Original Issue

8,100,000 8,256,900 16,356,900

$

144,351,9.00

$

Net Retirement

8,100,000 5,561,550 13,661,550

$

Outstanding $

2,695,350 2,695,350

9,100,000 13,385,000 22,485,0.00

560,.0.0.0 9,835,.0.0.0 23,495,0.00 15,85.0,0.0.0 11,715,0.0.0 61,455,0.0.0

33,470,.0.00 $

57,716,550

$

86,635,350

The discretely presented component unit's debt at year end was comprised of the following debt issues:

Description Certificates of Obligation: Celiificates of Obligation, Series 20.06 Certificates of Obligation, Series 20.07 Celtificates of Obligation, Series 2.0 12 Total Certificates of Obligation

Interest Rate (%)

Maturity Date

2.25 - 2.9.0 4 ..0.0 - 4.25 2 ..0.0 - 4 ..0.0

2022 2.019 2.032

Texas State InfrastI'ucture Bank Loan Bank Loan Series 2.0.08

Original Issue $

2.016

Total Discretely Pl'esented Component Unit Debt

$

1,.0.0.0,.00.0 $

75

13,29.0,.00.0 6,505,.0.00 8,315,0.0.0 28,11.0,.0.00

Net Retirement

29,11.0,.0.0.0

7,87.0,.0.0.0 2,325,.0.00 995,.0.00 11,19.0,.0.00

Outstanding $

719,334 $

11,9.09,334

5,42.0,.0.0.0 4,180,000 7,32.0,.0.0.0 16,92.0,00.0

280,666 $

17,20.0,666


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2014

The annual requirements to amortize bond and certificate debt issues outstanding at year end were as follows: Year Ending Sept. 30 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 Total

$

$

Governmental Activities Interest Principal 3,946,809 7,599,700 $ 3,722,526 8,234,050 3,489,533 8,108,650 3,269,452 7,712,250 3,048,743 7,440,000 10,823,432 37,845,000 4,536,069 25,210,000 875,570 13,005,000 33,712,134 115,154,650 $ Year Ending Sept. 30 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2032 Total

$

$

$

$

Business-Type Activities Interest Principal 3,054,571 5,715,300 $ 5,245,950 2,880,988 2,707,985 5,446,350 2,526,380 5,462,750 2,339,829 5,135,000 8,592,054 29,170,000 3,116,960 22,565,000 659,694 7,895,000 86,635,350 $ 25,878,461

Total Primary Government $ 20,316,380 20,083,514 19,752,518 18,970,832 17,963,572 86,430,486 55,428,029 22,435,264 $ 261,380,595

Discretely Presented Component Units Total Principal Interest 2,426,402 1,915,000 $ 511,402 $ 2,433,570 1,980,000 453,570 2,423,392 2,030,000 393,392 2,421,180 2,090,000 331,180 2,429,518 2,165,000 264,518 4,612,972 3,910,000 702,972 2,042,645 1,680,000 362,645 1,150,000 1,230,913 80,913 $ 20,020,592 16,920,000 3,100,592 $

General obligation bonds are direct obligations of the City for which its full faith and credit are pledged. Repayment of general obligation bonds is from taxes levied on all taxable property located within the City. The City is not obligated in any manner for special assessment debt. The annual requirement to amortize capital leases outstanding at year end were as follows: Year Ending Sept. 30 2015 2016 2017 2018 2019 2020-2023 Total

$

$

Governmental Activities Principal Interest 306,422 $ 53,234 $ 316,293 46,531 323,177 39,646 330,211 32,612 25,425 337,398 966,195 31,571 2,579,696 $ 229,019 $

76

Total 359,656 362,824 362,823 362,823 362,823 997,766 2,808,715


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEAIENTS (Continued) For the Year Ended September 30, 2014

The assets acquired through capital leases are as follows: Governmental Activities Assets: Machinery and equipment Less: Accumulated depreciation Total

$

$

3,448,119 (517,218) 2,930,901

========

The Tax Reform Act of 1986 instituted certain arbitrage legislation consisting of complex regulations with respect to issuance of tax-exempt bonds after August 31, 1986. Arbitrage regulations deal with the investment of tax-exempt bond proceeds at an interest yield greater than the interest yield paid to bondholders. Generally, all interest paid to bondholders can be retroactively rendered taxable if applicable rebates are not reported and paid to the Internal Revenue Service (IRS) at least every five years for applicable bond issues. Accordingly, there is the risk that if such calculations are not performed or are not performed conectly, a substantial liability to the City could result. The City periodically engages an arbitrage consultant to perform the calculations in accordance with the IRS rules and regulations. E. Interfund Transactions

Transfers between the primary government funds during the year were as follows: Transfers In Governmental Funds: Individual major govemmental funds: General

$

Debt service Capital projects Other non-major govenll1ental funds Total Governmental Funds

4,257,855

$

1,766,278 13,775,886 318,013 20,118,032

Enterprise Funds: Individual major enterprise funds: Water and sewer Sanitation Aquatics Other nOlll1ajor enterprise funds Total Enterprise Funds

5,024,507 37,549 5,257,529

Internal Service Funds: Central services Total Internal Service Funds

543,915 543,915

Total Transfers

Transfers Out

1,298,313 24,142,524

195,473

$

25,919,476

3,195,768 19,648,443

827,617 220,554 728,781 1,776,952

$

25,919,476

Transfers are used to move revenues from the fund with collection authorization to the debt service fund as debt service principal and interest payments become due. They are also utilized to move unrestricted general fund revenues to finance various programs that must be accounted for in other funds in accordance with budgetary authorizations, including amounts provided as matching funds for various grant programs and governmental expenditures. Transfers out of the debt service fund were used to finance capital projects in the governmental and enterprise funds. 77


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2014

The composition of interfund balances as of year end was as follows: Receivable Fund General

Payable Fund Nonmajor governmental Central services

$

Total

$

Amounts 153,357 219,729 373,086

=======

Amounts recorded as due tolfrom are considered to be temporary loans and will be repaid during the following year. F. Fund Equity

As of September 30, 2014, $3,073,150 of the City's total fund balance is restricted by enabling legislation. IV. OTHER INFORMATION A. Risk Management

The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the City participates along with 2,617 other entities in the Texas Municipal League's Intergovernmental Risk Pools (the "Pool"). The Pool purchases commercial insurance at group rates for participants in the Pool. The City has no additional risk or responsibility to the Pool, outside of the payment of insurance premiums. The City has not significantly reduced insurance coverage or had settlements which exceeded coverage amounts for the past three years. The City maintains a self-insurance program for medical benefits and workers' compensation. The risk management internal service fund pays claims and judgments, maintains loss reserves, and purchases insurance coverage as required. A third-party administrator pays group medical benefits and workers' compensation claims. Revenues are recognized from payroll deductions for employee dependent coverage from City contributions for employee coverage and from interest earnings. Group medical benefits have an annually negotiated specific and aggregate stop-loss policy. The fund provides the first dollar coverage of claims up to the casualty insurance policy's deductible amounts. This policy also contains aggregate excess loss coverage for claims in excess of approximately $3 million, less any amounts reimbursed on the individual stop-loss insurance. Medical claim liabilities have been recorded at $1,274,492 as of September 30, 2014. The City maintains third-party coverage for workers' compensation claims that exceed $300,000 per individual claim. Workers' compensation claims and judgments at year end have been recorded at $414,356. Liabilities include an amount for claims that have been incuned but not reported (IBNR).

78


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30,2014

Changes in the balances of claim liabilities during the past year are as follows: Reconciliation of Changes in the Aggregate Liabilities for Claims and Judgments: Unpaid claims, beginning of year Plus: incurred claims (including IBNR) Less: claim payments Unpaid Claims, End of Year

2014 $

$

] ,534,617 10,271,604 (9,939,749) 1,866,472

=========

2013 $

$

],435,5] 1 8,924,334 (8,825,228) 1,534,617

B. Related Party Transactions The City and BAWA entered into an agreement on November 26, 1996 to provide treated water to the City. BAW A is contractually obligated to provide treated water to the City with a maximum obligation of 14.22 million gallons per day per month through calendar year 2040. Should the consumption exceed the contract quantity by ten percent, a five percent surcharge shall be charged against that portion of the consumption that exceeds the contract quantity.

C. Contingent Liabilities Amounts received or receivable from granting agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amounts of expenditures which may be disallowed by the grantor cannot be determined at this time, although the City expects such amounts, if any, to be inm1aterial. The City is a defendant in several lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the City's management that resolution of these matters will not have a material adverse effect of the financial condition of the City. Liabilities are reported when it is probable that a loss has occUlTed and the amount of the loss can be reasonably estimated. 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 payouts, and other economic and social factors. With the exception of medical and workers' compensation claims, no other claim liabilities are reported at year end.

D. Pension Plans Texas Municipal Retirement System Plan Description The City provides pension benefits for all of its full-time employees through a non-traditional, joint contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), an agent multiple-employer public employee retirement system. The plan provisions that have been adopted by the City are within the options available in the governing state statutes of TMRS. TMRS issues a publicly available comprehensive annual financial report that includes financial statements and Required Supplementary Information for TMRS. The report also provides detailed explanations of the contributions, benefits, and actuarial methods and assumptions used by TMRS. This report may be obtained from TMRS' website at www.TMRS.com.

79


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30,2014

The plan provisions are adopted by the goveming body of the City, within the options available in the state stahltes goveming TMRS. Plan provisions for the City were as follows:

Employee deposit rate Matching ratio (City to employee) Years required for vesting Service requirement eligibility (expressed as age/yrs of service) Updated service credit Allluity increase (to retirees)

2014 7.00% 2 to 1 5

2013 7.00% 2 to 1 5

60/5,0/20 100% Repeating, Transfers 70% ofCPI Repeating

60/5,0/20 100% Repeating, Transfers 70% ofCPI Repeating

Contributions Under the state law goveming TMRS, the contribution rate for each city is determined annually by the actuary, using the Entry Age Normal (EAN) cost method (EAN was first used in the December 31, 2013 valuation; previously, the Projected Unit Credit achlarial cost method had been used). This rate consists of the normal cost contribution rate and the prior service cost contribution rate, which is calculated to be a level percentage of payroll from year to year. The normal cost contribution rate for an employee is the contribution rate which, if applied to a member's compensation throughout their period of anticipated covered service with the municipality, would be sufficient to meet all benefits payable on their behalf. The salary-weighted average of the individual rates is the total normal cost rate. 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 TMRS at an aChrarially determined rate. Both the employees and the City make contributions monthly. Since the City needs to lmow its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect. The annual pension cost and the net pension obligation (asset) are as follows: Arumal required contribution (ARC) Interest on net pension obligation (NPO) Adjustment to the ARC Annual pension cost (APC) Contributions made Increase in NPO NPO - beginning of year NPO - end of year

80

$

$

8,038,778 403,667 (362,980) 8,079,465 (7,860,733) 218,732 5,766,668 5,985,400


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30,2014

Three-year trend information for the annual pension cost (APC) is as follows:

Fiscal Year 2012 2013 2014

Annual Pension Cost (APC) $ 7,634,974 7,452,120 $ $ 8,079,465

$ $ $

Actual Contribution Made 7,075,764 7,170,203 7,860,733

Percentage of ARC Contributed 92.68% 96.22% 97.29%

$ $ $

NPO 5,484,751 5,766,668 5,985,400

The required contribution rates for fiscal year 2014 were determined as pati of the December 31, 2011 and 2012 actuarial valuations. Additional information as of the latest actuarial valuation, December 31,2013, also follows: 2014 ] 2/3112013 Entry Age Nomlal Level % of Payroll 24.0 Years - Closed period

Actuarial valuation date Actuarial cost method Amortization method GASB 25 equivalent single amortization period Amortization period for new gains/losses Asset valuation method

2013 12/31/2012 Projected Unit Credit Level % of Payroll 25.1 Years - Closed period

30 years

30 years 10-year smoothed market 7.0% Varies by age and service 3.00% 2.10%

I O-year smoothed

market 7.0% Varies by age and service 3.00% 2.10%

Investment rate of rehlrn Proj ected salary increases Includes inflation at Cost ofliving adjustments

2012 12/3112011 Projected Unit Credit Level % of Payroll 26.1 Years-Closed period

30 years 10-year smoothed market 7.0% Varies by age and serVIce 3.00% 2.10%

Funded Status and Funding Progress In October 2013, the TMRS Board approved actuarial changes in (a) the funding method from Proj ected Unit Credit to Entry Age Normal, (b) the post-retirement mortality assumptions used in calculating liabilities and contribution rates and in the development of the Annuity Purchase Rate factors, and (c) the amortization policy. These actuarial changes were effective with the December 31, 2013 actuarial valuation. For complete description of the new actuarial cost method and assumptions, please see the December 31,2013 TMRS Comprehensive Annual Financial Report. The funded status as of December 31,2012, the most recent valuation date, is as follows:

Actuarial valuation date Actuarial value of assets Actuarial accrued liability Percentage funded Unfunded liability (UAAL) Annual covered payroll UAAL as a percentage of covered payroll

81

$ $ $ $

2014 12/3112013 198,608,130 255,781,341 77.6% 57,173,211 40,500,343

141.2%


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30,2014

Actuarial valuations involve estimates of the values of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Actuarial calculations are based on the benefits provided under the terms of the substantive plan in effect at the time of each valuation, and reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The schedule of funding progress, presented as RSI following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability of benefits. E. Other Post Employee Benefits

TMRS Supplemental Death Benefits Fund

Plan Description The City also participates in the cost-sharing multiple-employer defined benefit group-tel111 life insurance plan operated by the TMRS known as the Supplemental Death Benefits Fund (SDBF). The City elected, by ordinance, to provide group-term life insurance coverage to both current and retired employees. The City may terminate coverage under and discontinue participation in the SDBF by adopting an ordinance before November 1 of any year to be effective the following January 1. The death benefit for active employees provides a lump-sum payment approximately equal to the employee's annual salary (calculated based on the employee's actual earnings, for the 12-month period preceding the month of death); retired employees are insured for $7,500; this coverage is an "other post employment benefit," or OPEB. The obligations of this plan are payable only from the SDBF and are not an obligation of, or a claim against, the pension trust fund. For the year ended September 30, 2014, the City offered the supplemental death benefit to both active and retired employees. Contributions The City contributes to the SDBF at a contractually required rate as determined by an annual actuarial valuation. The rate is equal to the cost of providing one-year term life insurance. The funding policy for the SDBF program is to assure that adequate resources are available to meet all death benefit payments for the upcoming year; the intent is not to pre-fund retiree term life insurance during employees' entire careers. The City'S contributions to the TMRS SDBF for the fiscal years ended 2014, 2013, and 2012 were $17,255, $15,897, and $15,751, respectively. The City's contribution rates for the past three years are shown below: 2014

2013

2012

Annual req. contrib. (rate)

0.04%

0.04%

0.04%

Actual contribution made

0.04%

0.04%

0.04%

100.00%

100.00%

100.00%

Percentage of ARC contrib.

82


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2014

Post Employment Healthcare Plan Plan Description The City administers a single-employer defined benefit other post employment benefits OPEB plan, known as the City of Baytown Retiree Healthcare Plan (the "Plan"). The Plan offers medical benefits for eligible retirees and their dependents. The premiums are based on a combination of years of service and hire date, and the coverage levels for retirees are the same as coverage provided to active employees. Upon the death of the retiree, spouses are eligible to receive the same coverage at the same rate. Like the retiree, the coverage is supplemental once the spouse is eligible for Medicare. The City requires all covered retirees/spouses to apply for Medicare when eligible in order to continue coverage under the City's plan. Employees hired after January 1,2010 are not eligible for benefits under this plan. Funding Policy The City has elected to subsidize premiums for the Plan and funding is provided on a pay-as-you-go basis. Annual OPEB Cost The City's annual OPEB cost (expense) is calculated based on the annual required contribution of the employer annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial路路 . liabilities (or funding excess) over a period not to exceed 30 years. The following table shows the components of the City's annual OPEB cost of the year, the amount actually contributed to the Plan, and the City's net OPEB obligation: Annual required contribution (ARC) Interest on net OPEB obligation (NPO) Adjustment to the ARC Annual OPEB cost Contributions made Increase in net OPEB obligation Net OPEB obligation - begilming of year Net OPEB obligation - end of year

A separate audited GAAP-basis OPEB plan report is not available.

83

$

$

5,559,345 1,104,238 (581,057) 6,082,526 (1,801,243) 4,281,283 24,538,630 28,819,9l3


CITY OF BAYTOWN, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30,2014

The City's annual OPEB cost, the percentage of annual OPEB cost contributed on the Plan, and the net OPEB obligation for 2013 and the two preceding years are as follows:

Fiscal Year 2012 2013 2014

Annual OPEB Cost CAOC) $ 6,362,501 $ 5,081,668 $ 6,082,526

$ $ $

Actual Contribution Made 2,029,700 1,522,911 1,801,243

Percentage ofAOC Contributed 31.90% 29.97% 29.61%

Net OPEB Obligation $ 20,979,873 $ 24,538,630 $ 28,819,913

Funded Status and Funding Progress As of December 31,2012, the most recent actuarial valuation date, the plan was 0.00 percent funded. The actuarial accmed liability for benefits was $58,072,450, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $58,072,450. The annual covered payroll is $40,500,343 and the UAAL as a percentage of covered payroll is 156.1 percent. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the Plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as RSI following the notes to the financial statements, presents multi-year trend information about whether the achlarial value of plan assets is increasing or decreasing over time relative to the actuarial accmed liabilities for benefits. AChlarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The aChmrialmethods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in achlarial accrued liabilities and the actuarial value of assets, consistent with the long-tenn perspective of the calculations. The following is a sunm1ary of the achmrial assumptions: Actuarial cost method Amortization method Remaining amOliization period Asset valuation method Investment rate of return Healthcare cost trend rate (initial/ultimate) Inflation rate

84

Projected unit credit Level dollar contributions 30 years - Open period Market value 4.5% 9.0%/4.5% 3.0%


REQUIRED SUPPLEMENTARY INFORMATION

85


CITY OF BAYTOWN, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND (B UDGET BASIS) (Page 1 of 2 ) For the Year Ended September 30, 2014

Original Budget Amounts Revenues Taxes Licenses and pennits Charges for services Fines and forfeitures Intergovernmental Interest Miscellaneous Total Revenues EXQenditures General government: General administration Fiscal operation Legal services Information technology services Planning and development Human resources City clerk Municipal court City facilities

General overhead Public safety: Police Fire Emergency management Communication Public works: Public works administration Streets and drainage Traffic control Engineering Public health: Health and welfare

$

55,926,335 1,286,125 1,654,550 2,198,689 862,468 150,000 365,450 62,443,617

Final Budget Amounts

$

55,926,335 1,286,125 1,669,550 2,198,689 952,468 150,000 1,310,450 63,493,617

Actual Amounts

$

57,681,691 1,665,982 2,377,124 2,510,917 942,204 602,223 1,369,145 67,149,286

Variance with Final Budget Favorable (Unfavorable)

$

1,755,356 379,857 707,574 312,228 (10,264) 452,223 58,695 3,655,669

1,195,148 2,368,758 791,534 2,006,482 1,705,828 945,379 552,683 1,178,758 183,360

987,047 2,314,333 793,880 2,004,815 1,611,477 950,570 817,956 1,255,652 271,360

968,224 2,014,410 765,170 1,935,923 1,529,475 769,310 724,509 1,222,870 134,635

18,823 299,923 28,710 68,892 82,002 181,260 93,447 32,782 136,725

5,544,159

4,747,927

4,232,822

515,105

18,292,293 15,741,702 610,248 1,314,131

19,199,529 15,356,587 529,601 1,426,502

19,079,470 15,222,360 441,374 1,401,570

120,059 134,227 88,227 24,932

372,784 1,747,624 1,038,991 931,992

390,480 1,727,399 1,208,849 940,473

390,480 1,707,936 1,094,354 910,912

19,463 114,495 29,561

2,217,193

2,231,503

2,159,107

72,396

86


CITY OF BAYTOWN, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND (B UDGET BASIS) (Page 2 of 2) For the Year Ended September 30, 2014

Final Budget Amounts

Original Budget Amounts

Parks, recreation, and culture: Parks and recreation Library Capital outlay Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures

$

$

(7,001,488)

Other Financing Sources (Uses) Transfers in Transfers (out) Total Other Financing Sources Net Change in Fund Balance

3,745,261 2,354,621 4,606,176 69,445,105

3,802,138 2,644,152 3,381,990 68,594,220

Actual Amounts

$

(5,100,603)

3,797,908 2,566,393 3,274,286 66,343,498

Variance with Final Budget Favorable (Unfavorable)

$

805,788

4,230 77,759 107,704 2,250,722 5,906,391

/'

4,795,30i (2,225,093) 2,570,208 $

(4,431,280)

$

4,245,301 (3,575,978) 669,323

4,257,855 (3,195,768) 1,062,087

(4,431,280)

1,867,875 23,646,564

Begilming fund balance Reconciliation offund balance (GAAP basis) Perspective differences: Net effect of consolidated fund without an adopted budget Ending Fund Balance

87

(1,107,621)

$

24,406,818

12,554 380,210 392,764 $

6,299,155


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CITY OF BAYTOWN, TEXAS SCHEDULE OF FUNDING PROGRESS TEXAS MUNICIPAL RETIREMENT SYSTEM For the Year Ended September 30, 2014

Fiscal Years Actuarial valuation date Actuarial value of assets Actuarial accrued liability Percentage funded Unfunded actuarial accrued liability (UAAL) Annual covered payroll UAAL% of covered payroll Net pension obligation (NPO) at the beginning of period Annual pension cost (APC) Contributions made NPO at the End of Period

2014 12/3112013 $ 198,608,130 $ 255,781,341 77.6%

2013 12/3112012 $ 184,197,313 $ 229,104,179 80.4%

2012 12/31/2011 $ 170,528,355 $ 217,325,723 78.5%

$ $

57,173,211 40,500,343 141.2%

$ $

44,906,866 39,543,087 113.6%

$ $

46,797,368 37,527,757 124.7%

$

5,766,668 8,079,465 7,860,733 5,985,400

$

5,484,751 7,452,120 7,170,203 5,766,668

$

4,925,541 7,634,974 7,075,764 5,484,751

$

$

89

$


(This page intentionally left blank.)

90


CITY OF BAYTOWN, TEXAS SCHEDULE OF FUNDING PROGRESS POST EMPLOYMENT HEALTHCARE BENEFITS For the Year Ended September 30, 2014

Actuarial Valuation Date 12/31/07 12/31/10 12/31/12

Actuarial Value of Assets (a) $ $ $

Actuarial Accrued Liability (AAL) (b) $91,877,369 $ 81,509,532 $ 58,072,450

Unfunded AAL (UAAL) (b-a) $91,877,369 $ 81,509,532 $ 58,072,450

91

Funded Ratio (a/b) 0.0% 0.0% 0.0%

Annual Covered Payroll (c) $29,020,617 $36,825,430 $40,500,343

UAAL as a Percentage of Covered Payroll f(b-a)/c] 316.6% 221.3% 156.1%


(This page intentionally left blank.)

92


COMBINING STATEMENTS AND SCHEDULES

93


(This page intentionally left blank.) 94


CITY OF BAYTOWN, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL DEBT SERVICE FUND For the Year Ended September 30, 2014

Original Budget Amounts Revenues Property taxes Intergovenm1ental Investment eamings

$

Total Revenues EX]2enditures Debt service: Principal Interest Payments to refunded bond escrow agent Issuance costs Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources {Uses} Transfers in Transfers (out) Payments to refunded bond escrow agent Premiums on bonds sold Debt issued Total Other Financing Sources Net Change in Fund Balance

Final Budget Amounts

9,519,587 427,738 10,000 9,957,325

$

$

9,921,005 427,738 41,645 10,390,388

$

401,418 31,645 433,063

10,066,861 4,306,612

7,128,421 4,306,612

6,482,061 3,706,569

646,360 600,043

9,593,273 325,255 20,107,158

(88,650)

14,373,473

9,504,623 325,255 21,264,911

1,157,753

(4,416,148)

(11,307,586)

(9,716,770)

1,590,816

2,602,501

2,602,501 (19,648,443)

1,766,278 (19,648,443)

(3,593,865) 1,864,050 31,099,696 12,323,939

(3,593,865) 1,864,050 31,099,696 11,487,716

1,016,353

1,770,946

2,830,000 5,432,501 $

9,519,587 427,738 10,000 9,957,325

Actual Amounts

Variance with Final Budget Favorable (Unfavorable)

$

1,016,353

Begim1ing fund balance Ending Fund Balance

$

95

3,715,519 5,486,465

(836,223)

(836,223) $

754,593


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96


CITY OF BAYTOWN, TEXAS NONMAJOR GOVERNMENTAL FUNDS September 30, 2014

SPECIAL REVENUE FUNDS The Special Revenue Funds are used to account for proceeds of specific revenue resources that are restricted or conmlitted to expenditures for specified purposes other than debt service or capital projects.

Community Development Block Grant Fund This fund is used to account for the operations of proj ects utilizing grant funds received from the Department of Housing and Urban Development. Such revenues are restricted to expenditures for specified projects approved/outlined by the Department of Housing and Urban Development.

Emergency Management Fund This fund is used to account for the revenues and expenditures for the emergency management program. The City receives funds from local industries and a federal grant from FEMA that the City matches for emergency preparedness activities.

Librmy Fund This fund is used to account for funds granted by the State of Texas Library and the Department of Education. The grants are restricted for use for library services for the disadvantaged population and literacy programs.

Crime Control and Prevention District Fund This fund is used to account for a one-eighth percent sales tax. The tax is dedicated to crime control and prevention programs. The district is dissolved on the fifth anniversary of the date the district began to levy taxes for district purposes, if the district has not held a continuation or dissolution referendum (Texas Local Govemment Code, Chapter 363).

Police Grant Fund This fund is used to account for revenues and grants provided to the City by the U.S. Department of Justice-Office of Justice Programs and the Office of National Drug Control Policy, forfeitures of seized funds or assets, and local agency contributions. The funds are restricted to use for crime prevention and drug resistance programs for school aged children.

Hote/lMotel Fund This fund is used to account for the accumulation of resources from the hotel/motel tax levied by the City. These funds are spent to promote the progress and development of the City within the guidelines set forth on disposition of revenues collected under the authority of the Texas Hotel Occupancy Tax Act (Article 1269, Vernon's Texas Civil Statutes).

Fire Control, Prevention, and Emergency Medical Services District Fund This fund is dedicated to fire safety and emergency medical services and the adoption of a proposed local sales and use tax at a rate of one-eighth of one percent. The district is dissolved on the fifth atmiversary of the date the district began to levy taxes for district purposes, if the district has not held a continuation or dissolution referendum (Texas Local Govenm1ent Code, Chapter 344).

TIRZ No. lFulld This fund is used to finance public improvements in a designated zone utilizing the property tax increment, or growth in value, subsequent to the creation of the zone.

Other Special Revenues Fund This fund is dedicated to special revenue. The majority of the special revenue is from grants for recovery from Hurricane Ike. Other special revenues consists of various sources such as revenues for permit fees and other local grants.

97


CITY OF BAYTOWN, TEXAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS September 30, 2014

Special Revenue Funds Community Development Block Grant Assets Current assets: Cash and equity in pooled cash and investments Taxes receivable Accounts receivable Prep aids

$

Emergency Management

$

151,219

Crime Control Prevention District

Library

$

52,122

$

149,140 265,030

462,551

234,841

Total Assets

462,551

386,060

52,122

414,170

Liabilities l Deferred Inflows of Resources l and Fund Balances Liabilities: Accounts payable Due to other funds Total Liabilities

326,726 135,825 462,551

20,438

103

39,943

20,438

103

39,943

365,622 365,622

52,019 52,019

374,227 374,227

Fund balances: Nonspendable: Prepaids Restricted: Capital projects Special projects Total Fund Balances Total Liabilities, Deferred Inflows of Resources, and Fund Balances

$

462,551

98

$

386,060

$

52,122

$

414,170


Special Revenue Funds Fire Control, Prevention, and EMS District Hotel/Motel

Police Grant

$

$ 209,764 619 210,383

53,721 17,532 71,253

1,298,885 372,866

$

832,893 266,152

$

Other Special Revenue

TIRZNo.l

1,248,493

$

1,671,751

1,099,045

1,248,493

5,980,098 547,226 718,741 1,323 7,247,388

55,233

16,640

45,118

4,620,484

55,233

16,640

45,118

4,620,484

5,178,406 153,357 5,331,763

1,323

1,942

1,705,079 920,502 2,626,904

1,705,079 5,753,179 7,460,200

619

$

210,383

1,082,405 1,082,405

1,616,518 1,616,518

138,511 139,130 $

Total Nonmajor Governmental Funds

1,671,751

$

1,099,045

1,203,375 1,203,375 $

99

1,248,493

$

7,247,388

$

$

9,712,850 1,451,274 1,625,897 1,942 12,791,963

12,791,963


CITY OF BAYTOWN, TEXAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended September 30, 2014

Special Revenue Funds Community Development Block Grant Revenues Taxes Charges for services Intergovernmental Fine and forfeitures Investment earnings Miscellaneous

EXQenditures CUlTent: General government Public safety Public works Public health Parks, recreation, and culture Capital outlay Debt service: Principal Interest and fiscal agent fees Total Expenditures Excess of Revenues Over (Under) Expenditures

Library $

$

$

Total Revenues

Emergency Management

3,982,310

560,455

15,287 3,997,597

27,362 587,817

Crime Control Prevention District $

4 46,457 46,461

1,544,106

99 1,544,205

3,778,564 1,307,059 589,293 52,302 64,512 166,731

460,075

3,997,597

64,512

589,293 (1,476)

Other Financing Sources (Uses} Transfers in Transfers (out) Total Other Financing Sources (Uses)

1,767,134

(18,051)

(222,929)

(18,051)

(222,929)

10,000 (200) 9,800

Net Change in Fund Balances

8,324

Beginning fund balances Ending Fund Balances

357,298 365,622

$

$

100

$

70,070 52,019

$

597,156 374,227


Special Revenue Funds Fire Control, Prevention, and EMS District Hotel/Motel

Police Grant $

$ 1,487,665 157,521 1,287 3,053 1,649,526

1,339,303

$

1,554,240

Other Special Revenue

TIRZNo.l

$

824,935

$

272,201 7,036

366

1,346,339

1,554,606

1,097,136

702,956 1,821,388

(171,862)

185,124

612,737 214,422

3,014,949

125,000 94,875 13,537,458

1,278,885

2,580,063

663,892

650,477

890,714

174,305

92,979

$

(78,883)

639,677

218,013 139,130

$

976,841 1,616,518

(109,286) 1,191,691 1,082,405

215,034 (171,000) 44,034

(116,313) (116,313)

(1,000,000) (1,000,000)

$

8,434,678 69,472 6,637,572 268,725 18,634 688,440 16,117,521

6,584,180 3,692,345 589,293 52,302 1,373,111 1,026,352

695,862

92,979

$

2,102,660 85,130

125,000 94,875 922,831

(10,800) (10,800)

3,172,094 69,472 334,941 111,204 9,842 596,281 4,293,834

478,768

695,862

1,821,388

Total Nonmajor Governmental Funds

1,322,919

57,992

$

101

1,145,383 1,203,375

318,013 (1,298,313) (980,300)

$

1,303,985 2,626,904

1,599,763

$

5,860,437 7,460,200


CITY OF BAYTOWN, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL LIBRARY FUND (BUDGET BASIS) For the Year Ended September 30,2014

Final Budget Amounts

Original Budget Amounts Revenues Miscellaneous

$ Total Revenues

44,550 44,550

Expenditures Parks, recreation, and culture: Conmmnity outreach program Total Expenditures

89,357 89,357

Net Change in Fund Balance

$

(44,807)

$

$

44,550 44,550

Actual Amounts $

46,461 46,461

89,357 89,357

64,512 64,512

(44,807)

(18,051) 70,070

Beginning fund balance Ending Fund Balance

102

$

52,019

Variance with Final Budget Favorable (Unfavorable) $

1,911 1,911

24,845 24,845 $

26,756


CITY OF BAYTOWN, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL CRIME CONTROL AND PREVENTION DISTRICT FUND (BUDGET BASIS) For the Year Ended September 30, 2014

Final Budget Amounts

Original Budget Amounts Revenues Taxes Investment earnings

$ Total Revenues

1,491,465 350 1,491,815

Total Expenditures

1,400,882 435,896 1,836,778

EXl2enditures Public safety Capital outlay

Net Change in Fund Balance

$

(344,963)

$

1,491,465 350 1,491,815

Actual Amounts $

1,368,247 481,270 1,849,517 $

1,544,106 99 1,544,205

(222,929) 597,156

Beginning fund balance

103

$

1,307,059 460,075 1,767,134

(357,702)

Ending Fund Balance

Variance with Final Budget Favorable (Unfavorable)

$

374,227

52,641 (251) 52,390 61,188 21,195 82,383

$

134,773


CITY OF BAYTOWN, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL HOTELlAfOTEL FUND (BUDGET BASIS) For the Year Ended September 30, 2014

Final Budget Amounts

Original Budget Amounts Revenues Taxes Investment earnings

$ Total Revenues

900,000 2,100 902,100

EXI!enditures Parks, recreation, and culture: Arts Promotional Bay conullunities Historical Total Expenditures

68,104 1,064,218 33,780 84,865 1,250,967

Excess (Deficiency) of Revenues Over (Under) Expenditures

$

(348,867)

$

(348,867)

$

68,104 1,047,088 33,840 91,135 1,240,167

Other Financing Sources (Uses} Transfers (out) Total Other Financing (Uses) Net Change in Fund Balance

900,000 2,100 902,100

Actual Amounts

$

1,339,303 7,036 1,346,339

$

42,092 580,530

439,303 4,936 444,239

73,240 695,862

26,012 466,558 33,840 17,895 544,305

(338,067)

650,477

988,544

(10,800) (10,800)

(10,800) (10,800)

(348,867)

639,677 976,841

Beginning fund balance Ending Fund Balance

104

Variance with Final Budget Favorable (Unfavorable)

$

1,616,518

$

988,544


CITY OF BAYTOWN, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FIRE CONTROL, PREVENTION, AND EMS DISTRICT FUND (BUDGET BASIS) For the Year Ended September 30, 2014

Original Budget Amounts Revenues Taxes Investment earnings

Final Budget Amounts 1,469,000 725 1,469,725

Total Revenues

Total Expenditures

655,638 189,176 844,814

655,638 189,176 844,814

478,768 185,124 663,892

176,870 4,052 180,922

Excess of Revenues Over Expenditures

624,911

624,911

890,714

265,803

EXQenditures Public safety Capital outlay

Other Financing Sources (Uses} Transfers (out) Total Other Financing (Uses) Net Change in Fund Balance

(1,000,000) (1,000,000) $

(375,089)

$

$

1,554,240 366 1,554,606

1,469,000 725 1,469,725

$

$

Actual Amounts

Variance with Final Budget Favorable (Unfavorable)

(1,000,000) (1,000,000)

(1,000,000) (1,000,000)

(375,089)

(109,286) 1,191,691

Beginning fund balance En'ding Fund Balance

105

$

1,082,405

$

$

85,240 (359) 84,881

265,803


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CITY OF BAYTOWN, TEXAS NONMAJOR PROPRIETARY FUNDS September 30, 2014

Bayland Island Fund

This fund is used to account for the operation and maintenance of facilities on Bayland Island. The fund also accounts for the accumulation of resources for, and the payment of, long-term debt principal and interest for notes payable and other debt instruments issued to construct facilities on the island. Repayment of the current note payable is financed through a lease with a private entity, which performs the operation and maintenance of the facilities. Storm Water Utility Fund

This fund is used to account for the provision of funding a storm water utility feasibility study and developing fees to provide funding sources for this program. The Clean Water Act was enacted in 1972 to protect surface waters such as lakes, rivers, and coastal areas. National Pollutant Discharge Elimination System (NPDES) permits were introduced to increase accountability for protecting water quality. This required industrial and municipal wastewater dischargers of pollutants into the waters of the U.S. from a point source to obtain a NPDES permit. The final Phase II regulations that affect smaller communities, such as Baytown, were signed in October 1999. Small municipal separate storm sewer systems programs, such as Baytown's, are required to participate.

107


(This page intentionally left blank.) 108


CITY OF BAYTOWN, TEXAS COMBINING STATEMENT OF NET POSITION NONMAJOR PROPRIETARY FUNDS September 30, 2014

Bayland Island Assets Current assets: Cash and equity in pooled cash and investments Accounts receivable Inventories

$

155,847

Enterprise Funds Storm Water Utility

$

505,626 67,070

Total Funds

$

661,473 67,070

Total Current Assets

155,847

572,696

728,543

Total Noncurrent Assets Total Assets

4,936,274 4,936,274 5,092,121

9,862 9,862 582,558

4,946,l36 4,946,l36 5,674,679

506

10,810 34,157 44,967

11,316 34,157 45,473

506

3,795 31,741 145,668 181,204 226,171

3,795 31,741 145,668 181,204 226,677

4,936,274 155,341 5,091,615

9,862 346,525 356,387

4,946,l36 501,866 5,448,002

Noncurrent assets: Nondepreciable asset Capital assets, net

Liabilities Current liabilities: Account payable Compensated absences Totul Current Liabilities

------506

Noncurrent liabilities: Compensated absences Net pension obligation Net OPEB obligation Total Noncurrent Liabilities Total Liabilities Net Position Net investment in capital assets Unrestricted Total Net Position

$

109

$

$


CITY OF BAYTOWN, TEXAS COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION NONMAJORPROPRIETARYFUNDS For the Year Ended September 30, 2014

Bayland Island OQerating Revenues Charges for sales and services Total Operating Reyenues

$

OQerating EXQenses Personnel costs Supplies Maintenance Services Miscellaneous Depreciation

49,086 49,086

Enterprise Funds Storm Water Utility $

(4,687) (4,687)

Contributions and Transfers

(151,222)

(4,687) (4,687) 778,060

626,838

(728,781)

37,549 (728,781)

49,279

(64,394)

37,549

Transfers in Transfers (out) Change in Net Position

(113,673)

Begimling net position Ending Net Position

$

5,205,288 5,091,615

110

1,275,827 1,275,827

330,798 38,058 2,500 72,512 13,147 187,287 644,302 631,525

61,676 13,147 5,375 448,681 778,060

181,912 195,621 (146,535)

NonoQerating Revenues (ExQenses} Interest expense and other Total Nonoperating (Expenses) Income (Loss) before

$

330,798 37,685

373 2,500 10,836

Total Operating Expenses Operating Income (Loss)

1,226,741 1,226,741

Total Funds

$

307,108 356,387

$

5,512,396 5,448,002


CITY OF BAYTOWN, TEXAS COMBINING STATEAIENT OF CASH FLOWS NONMAJORPROPRIETARYFUNDS For the Year Ended September 30, 2014

Bayland Island Cash Flows from OQerating Activities Receipts from customers and users Payments to suppliers Payments to employees Net Cash Provided by Operating Activities

$

49,086 (13,203)

1,219,897 (90,372) (330,798) 798,727

Total Funds $

37,549

Net Increase in Cash and Cash Equivalents

1,268,983 (103,575) (330,798) 834,610

(728,781)

37,549 (728,781)

(728,781)

(691,232)

(4,687)

(1)

(4,688)

(4,687)

(1)

(4,688)

37,549

BegilUling cash and cash equivalents

Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation Changes in Operating Assets and Liabilities: (Increase) Decrease in Current Assets: Accounts receivable Increase (Decrease) in Current Liabilities: Accounts payable Compensated absences Net pension obligation Net OPEB obligation Net Cash Provided by Operating Activities

$

35,883

Cash Flows from NoncaQital and Related Financing Activities Transfers in Transfers (out) Net Cash Provided (Used) by Noncapital and Related Financing Activities Cash Flows from CaQital and Related Financing Activities Acquisition, disposal, and construction of capital assets Net Cash (Used) by Capital and Related Financing Activities

Ending Cash and Cash Equivalents

Enterprise Funds Storm Water Utility

68,745

69,945

138,690

87,102

435,681

522,783

$

155,847

$

505,626

$

661,473

$

(146,535)

$

778,060

$

631,525

181,912

5,375

506

$

35,883

See Notes to Financial Statements.

111

$

187,287

(6,844)

(6,844)

2,505 4,358 (263) 15,536 798,727

3,011 4,358 (263) 15,536 834,610

$


(This page intentionally left blank) 112


CITY OF BAYTOWN, TEXAS INTERNAL SERVICE FUNDS September 30, 2014

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 and to other governmental units on a cost reimbursement basis.

Central Services Fund This fund is to account for the cost of operating and maintaining vehicles and other equipment used by the City departments and to provide central warehouse services. Services charged are billed to departments on a monthly basis to cover all expenses of the fund.

Risk Management Fund This fund is to account for the operation of a self-insured retention fund for health services for all City employees and workers' compensation claims. Claims are primarily administered by an outside agency.

113


(This page intentionally left blank.) 114


CITY OF BAYTOWN, TEXAS COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS September 30,2014

Central Services Assets Current assets: Equity in pooled cash and investments Prepaid expenses Inventories Total Current Assets

Risk Management

$

$ 540,044 540,044

Noncurrent assets: Capital assets: Buildings and improvements Machinery and equipment Less: accumulated depreciation Total Capital Assets (Net of Accumulated Depreciation) Total Noncurrent Assets Total Assets

6,985 1,866,472 1,873,457

131,129 1,866,472 219,729 2,217,330

95,424 64,976 49,884 210,284 554,157

7,198 5,731 12,929 1,886,386

95,424 72,174 55,615 223,213 2,440,543

329,476 (14,113) 315,363

4,919,609 4,919,609

329,476 4,905,496 5,234,972

Total Current Liabilities

219,729 343,873

Total Noncurrent Liabilities Total Liabilities Net Position Net investment in capital assets Unrestricted Total Net Position

$

115

329,476 329,476 7,675,515

6,805,995

124,144

6,613,485 192,510 540,044 7,346,039

167,540 892,590 (730,654)

58,847 (58,847)

329,476 329,476 869,520

Noncurrent liabilities: Compensated absences Net pension obligation Net OPEB obligation

$

6,805,995

167,540 833,743 (671,807)

Liabilities Current liabilities: Account payable Accrued expenses Due to other funds

6,613,485 192,510

Total Funds

$

$


CITY OF BAYTOWN, TEXAS COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION INTERNAL SERVICE FUNDS For the Year Ended September 30, 2014

Central Services OQerating Revenues Charges for sales and services Total Operating Revenues

$

OQerating EXQenses PersOlmel costs Supplies Maintenance Services Claim payments and fees Depreciation

2,151,609 2,151,609

Risk Management $

14,326,970 14,326,970

Total Funds $

709,807 1,862,818 16,094 44,669 51,329 2,684,717

Total Operating Expenses

16,478,579 16,478,579

l3,205,012 1,319 l3,206,331

709,807 1,862,818 16,094 44,669 l3,205,012 52,648 15,891,048

Operating Income (Loss)

(533,108)

1,120,639

587,531

Income (Loss) Before Transfers

(533,108)

1,120,799

587,691

543,915

Transfers in Change in Net Position

1,120,799

10,807

Beginning net position Ending Net Position

543,915

$

116

304,556 315,363

$

3,798,810 4,919,609

1,131,606

$

4,103,366 5,234,972


CITY OF BAYTOWN, TEXAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SER VICE FUNDS For the Year Ended September 30,2014

Central Services Cash Flows from OQerating Activities Receipts from customers and users Payments to suppliers Payments to employees Net Cash Provided (Used) by Operating Activities

$

Cash Flows from NoncaQital Financing Activities Transfers in Net Cash Provided by Noncapital Financing Activities

2,152,819 (1,986,927) (709,807) (543,915)

Risk Management

$

Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Changes in Operating Assets and Liabilities: (Increase) Decrease in Current Assets: Inventory Increase (Decrease) in Current Liabilities: Accounts payable Accrued expenses Due to other funds Compensated absences Net pension obligation Net OPEB obligation Net Cash Provided (Used) by Operating Activities

543,915

543,915

543,915 1,391,531

1,391,531

$

5,221,954 6,613,485

$

5,221,954 6,613,485

(533,108)

$

1,120,639

$

587,531

1,319

51,329

52,648

1,210

1,210 (53,411) 331,855

17,298

$

117

16,472,279 (14,915,016) (709,807) 847,456

543,915

$

$

$

1,391,371

Net Increase (Decrease) in Cash and Cash Equivalents Beginning cash and cash equivalents Ending Cash and Cash Equivalents

14,319,460 (12,928,089)

Total Funds

(70,297) (11,982) (6,771) 8,406 (543,915)

$

(1,347) (1,105) 931 1,391,371

$

(36,113) 331,855 (70,297) (13,329) (7,876) 9,337 847,456


(This page intentionally left blank.) 118


STATISTICAL SECTION

This part of the City's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and Required Supplementary Information says about the City's overall financial health. Contents

120

Financial Trends

These schedules contain trend information to help the reader understand how the City's financial]Jelformance and well-being have changed over time. 134

Revenue Capacity

These schedules contain information to help the reader assess the City's most significant local revenue source: property tax.

142

Debt Capacity

These schedules present information to help the reader assess the ajJordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the jitture.

152

Demographic and Economic Information

These schedules ojJer demographic and economic indicators to help the reader understand the environment vvithin which the City's financial activities take place.

158

Operating Information

These schedules contain service and inji-astructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it pelforms.

119


CITY OF BAYTOWN, TEXAS NET POSITION B Y COMPONENT Last Ten Fiscal Years (Accrual Basis of Accounting)

2005 Governmental Activities Net investment in capital assets Restricted Unrestricted Total Governmental Activities Net Position

$

2006

34,834,842 17,520,023 12,646,578 65,001,443

$

38,228,537 18,434,239 14,618,386 71,281,162

2007 $

94,019,731 29,965,325 17,911,070 141,896,126

2008 $

94,051,443 41,741,277 14,311,352 150,104,072

Business-Type Activities Net investment in capital assets Restricted Unrestricted Total Business-Type Activities Net Position

56,021,699 5,026,131 5,548,575 66,596,405

59,327,695 6,104,941 7,852,815 73,285,451

61,231,067 6,681,082 . 14,139,670 82,051,819

71,163,579 6,375,954 17,860,378 95,399,911

Primary Government Net investment in capital assets Restricted Unrestricted Total Primary Government Net Position

90,856,541 22,546,154 18,195,153 131,597,848

97,556,232 24,539,180 22,471,201 144,566,613

155,250,798 36,646,407 32,050,740 223,947,945

165,215,022 48,117,231 32,171,730 245,503,983

$

120

$

$

$


2009 $

$

119,146,529 29,680,983 (3,124,300) 145,703,212

2010 $

128,029,500 22,354,718 (5,377,969) 145,006,249

2012

2011 $

101,431,576 15,805,828 (2,797,904) 114,439,500

$

103,140,238 15,805,828 (1,993,410) 116,952,656

2013 $

108,585,824 32,167,392 (20,474,460) 120,278,756

2014 $

105,468,075 35,688,185 (26,434,814) 114,721,446

76,775,912 6,461,098 18,406,182 101,643,192

81,095,248 7,584,718 17,058,527 105,738,493

111,514,790 5,405,286 20,394,613 137,314,689

133,432,737 5,023,851 20,790,018 159,246,606

136,434,868 5,364,616 18,736,201 160,535,685

152,339,260 5,873,007 18,371,116 176,583,383

195,922,441 36,142,081 15,281,882 247,346,404

209,124,748 29,939,436 11,680,558 250,744,742

212,946,366 21,211,114 17,596,709 251,754,189

236,572,975 20,829,679 18,796,608 276,199,262

245,020,692 37,532,008 (1,738,259) 280,814,441

257,807,335 41,561,192 (8,063,698) 291,304,829

$

$

$

121

$

$


CITY OF BAYTOWN, TEXAS CHANGES IN NET POSITION Last Ten Fiscal Years (Accrual Basis of Accounting)

2006

2005 Expenses Goverm11ental activities: General government Public safety Public works Public health Parks, recreation, and culture Interest and fiscal agent fees on long-term debt Total Governmental Activities Expenses Business-type activities: Water and sewer Sanitation Bay1and Island development Aquatics Storm water utility Total Business-Type Activities Expenses Total Primary Government Expenses Program Revenues Govenunenta1 activities: Charges for services: General government Public safety Public works Public health Parks, recreation, and culture Operating grants and contributions Capital grants and contributions Total Governmental Activities Program Revenues

$

$

$

11,605,263 30,051,431 5,071,236 1,122,097 6,748,098 3,493,575 58,091,700

$

12,333,914 30,375,261 7,471,263 1,125,234 6,671,924 2,974,959 60,952,555

2007

$

10,563,503 28,649,012 5,950,837 1,202,475 6,341,240 2,905,717 55,612,784

$

21,327,943 29,838,903 6,538,034 1,806,566 6,791,904 2,813,437 69,116,787

17,408,005 2,773,726 69,662

18,187,507 2,876,730 60,770

19,746,886 3,274,139 65,858

22,144,119 3,596,913 60,105

106,055 20,357,448 78,449,148

141,122 21,266,129 82,218,684

197,558 23,284,441 78,897,225

199,677 26,000,814 95,117,601

88,874 3,206,990 601,465 177,502 209,187 5,605,951 3,639,831

$

$

121,468 2,899,453 866,055 405,424 278,666 5,904,790 1,434,147

$

$

132,747 3,168,682 946,4 73 443,070 304,541 2,360,977 109,215

$

$

156,740 3,741,394 1,117,539 523,151 359,585 8,556,359 4,252,180

13,529,800

11,910,003

7,465,705

18,706,948

21,355,121 3,144,372 42,660

23,042,411 2,994,578 41,154

24,119,344 3,182,861 44,166

26,500,708 3,320,233 49,499 509,091 4,241 2,623,031 33,006,803 51,713,751 (50,409,839) 7,005,989 (43,403,850)

Business-type activities: Charges for services: Water and sewer Sanitation Bayland Island development Aquatics Storm water Operating grants and contributions Capital grants and contributions Total Business-Type Activities Program Revenues Total Primary Government Program Revenues

376,321

477,563

1,415,066 26,333,540 39,863,340

1,183,218 27,738,924 39,648,927

505,372 21,847 1,749,002 29,622,592 37,088,297

Net (Expense)/Revenue Governmental activities Business-type activities Total Primary Government Net Expense

(44,561,900) 5,976,092 (38,585,808)

(49,042,552) 6,472,795 (42,569,757)

(48,147,079) 6,338,151 (41,808,928)

$

2008

122

$

$

$


2009

$

34,694,738 35,863,793 7,248,788 2,461,251 7,781,634 3,243,597 91,293,801

2010

23,768,225 38,294,806 8,982,131 2,730,527 8,588,907 2,888,909 85,253,505

2012

28,893,005 4,340,682 84,280

380,125 29,767,029 $ 121,060,830

463,602 33,781,569 $ 118,574,183

29,453,795 4,400,433 96,401 1,504,850 410,723 35,866,202 $ 121,119,707

30,344,693 4,396,725 146,375 2,051,620 467,170 37,406,583 $ 123,089,948

31,539,964 4,685,496 208,078 2,245,949 436,934 39,116,421 $ 124,265,154

32,762,226 4,742,268 200,308 2,917,055 448,681 41,070,538 $ 132,842,363

$

$

$

$

$

$

162,242 3,872,740 1,156,772 541,518 372,209 17,002,961 1,537,175

$

22,049,401 39,297,052 8,881,876 2,431,619 8,739,612 3,749,173 85,148,733

25,510,584 3,832,013 44,307

151,742 3,622,132 1,081,917 506,476 348,123 8,451,134 53,643

23,539,249 38,976,626 8,522,846 2,465,254 8,949,422 3,229,968 85,683,365

2014

$

145,936 3,483,521 1,040,514 487,094 334,801 9,181,350

$

2013

22,893,640 38,814,830 8,605,802 2,894,089 8,689,530 2,894,723 84,792,614

137,321 3,277,872 979,087 458,338 315,036 13,202,642 233,993

$

2011

159,520 3,807,788 1,137,371 532,436 365,967 7,903,949 73,000

$

22,600,531 44,295,623 8,869,974 2,554,462 9,339,424 4,111,811 91,771,825

183,147 4,371,773 1,305,831 611,297 420,172 8,007,514

18,604,289

14,673,216

14,215,167

24,645,617

13,980,032

14,899,734

29,054,280 3,396,485 4,509

32,602,743 3,767,543 3,005

506,359 125,683 1,120,920 34,208,236 52,812,525

511,404

36,025,403 4,546,742 17,302 1,725,900 641,826

35,400,103 4,678,089 7,716 1,796,262 1,174,477 2,531,225

34,022,544 4,589,026 16,327 2,056,711 1,217,580

35,990,349 4,618,491 49,086 2,903,853 1,226,741

839,464 37,724,159 52,397,375

4,834,355 47,791,528 62,006,695

45,587,872 70,233,489

2,241,040 44,143,228 58,123,260

4,517,598 49,306,118 64,205,852

(70,119,398) 3,942,590 (66,176,808)

(71,038,338) 11,925,326 (59,113,012)

(61,037,748) 8,181,289 (52,856,459)

(71,168,701) 5,026,807 (66,141,894)

(76,872,091 ) 8,235,580 (68,636,511)

(72,689,512) 4,441,207 $ (68,248,305)

$

$

$

123

$

$


CITY OF BAYTOWN, TEXAS CHANGES IN NET POSITION (Continued) Last Ten Fiscal Years (Accrual Basis of Accounting)

2006

2005 General Revenues and Other Changes in Net Position Governmental activities: Taxes: Property taxes Sales and hotel/motel taxes Franchise taxes Industrial district payments Investment earnings Miscellaneous income Transfers, net Total Governmental Activities

$

Business-type activities: Investment earnings Miscellaneous Transfers, net Total Business-Type Activities Total Primary Government

Changes in Net Position Governmental activities Business-type activities Total Primary Government Changes in Net Position

$

15,344,175 9,724,993 3,196,447 16,870,355 1,581,491 2,720,882 1,519,299 50,957,642

$

16,065,176 10,439,285 4,227,213 17,275,592 2,659,933 2,366,908 2,288,164 55,322,271

2007

$

16,976,846 14,011,632 3,846,484 18,400,449 3,103,114 1,401,417 2,497,957 60,237,899

2008

$

18,447,192 14,659,564 3,911,211 19,241,209 2,321,652 1,677,695 2,498,087 62,756,610

910,808 63,944 (1,519,299) (544,547) 50,413,095

2,185,441 318,974 (2,288,164) 216,251 55,538,522

3,696,015 1,230,159 (2,497,957) 2,428,217 62,666,116

2,702,036 2,377,028 (2,498,087) 2,580,977 65,337,587

6,395,742 5,431,545

6,279,719 6,689,046

12,090,820 8,766,368

12,346,771 9,586,966

11,827,287

124

$

12,968,765

$

20,857,188

$

21,933,737


2010

2009

$

$

20,864,156 16,185,851 4,265,055 21,129,127 962,771 2,481,973 2,399,719 68,288,652

$

20,531,721 14,948,919 3,485,310 23,026,843 434,687 1,978,083 2,902,580 67,308,143

2012

2011

$

18,470,910 15,576,815 3,994,547 25,496,842 431,038 2,472,446 (16,088,839) 50,353,759

$

20,121,463 17,343,951 3,800,997 27,403,488 238,038 1,496,293 (16,735,496) 53,668,734

2013

$

21,128,244 18,558,609 3,825,432 28,339,356 628,564 1,777,705 2,750,047 77,007,957

2014

$

21,788,376 20,494,629 4,053,895 29,379,711 699,761 2,469,911 (7,571,502) 71,314,781

870,575 3,331,218 (2,399,719) 1,802,074 70,090,726

339,306 2,948,592 (2,902,580) 385,318 67,693,461

422,355

154,808

16,088,839 16,511,194 66,864,953

16,735,496 16,890,304 70,559,038

(2,750,047) (2,484,955) 74,523,002

7,571,502 7,812,118 79,126,899

(4,400,860) 6,243,281

(2,811,255) 4,327,908

(20,684,579) 28,436,520

(7,369,014) 25,071,593

5,839,256 2,541,852

(5,557,310) 16,047,698

1,842,421

$

1,516,653

$

7,751,941

$

17,702,579

125

265,092

$

8,381,108

240,616

$

10,490,388


CITY OF BAYTOWN, TEXAS TAX REVENUES BY SOURCE, GOVERNMENTAL ACTIVITIES Last Ten Fiscal Years (Accrual Basis of Accounting)

2005

Function Property taxes Sales and hotel/motel taxes Franchise taxes Industrial in-lieu-of-taxes

$

Total

$

2007

2006

15,344,175 9,724,993 3,196,447 16,870,355 45,135,970

126

$

$

16,065,176 10,439,285 4,227,213 17,275,592 48,007,266

$

$

16,976,846 14,011,632 3,846,484 18,400,449 53,235,411

2008 $

$

18,447,192 14,659,564 3,911,211 19,241,209 56,259,176


2009 $

$

20,864,156 16,185,851 4,265,055 21,129,127 62,444,189

2010 $

$

20,531,721 14,948,919 3,485,310 23,026,843 61,992,793

2011 $

$

18,470,910 15,576,815 3,994,547 25,496,842 63,539,114

2012 $

$

127

20,121,463 17,343,951 3,800,997 27,403,488 68,669,899

2013 $

$

21,128,244 18,558,609 3,825,432 28,339,356 71,851,641

2014 $

$

21,788,376 20,494,629 4,053,895 29,379,711 75,716,611


CITY OF BAYTOWN, TEXAS FUND BALANCES, GOVERNMENTAL FUNDS Last Ten Fiscal Years (Modified Accrual Basis of Accounting)

2005 General fund: Nonspendable Unassigned Total General Fund

All Other Governmental Funds: N onspendable and restricted Unassigned, repOlied in special revenue funds Total All Other Governmental Funds

$

$

$

4,641 15,843,577 15,848,218

32,467,767

$

33,625,388

$

42,919,171

32,467,767

$

33,625,388

$

42,919,171

$

$

33,518,414

$

33,518,414

$

$

$

$

$

128

2008

14,017 19,734,391 19,748,408

393,500 16,065,063 16,458,563

959,335 14,680,301 15,639,636

$

2007

2006


2010

2009 $ $

936 16,679,153 16,680,089

$

$

$

2011

$

169,624 17,854,264 18,023,888

$ $

2,235 19,387,708 19,389,943

41,517,086

$

30,637,159

$

(4,484,253) 37,032,833

$

(705,793) 29,931,366

$

2012 $

2013

2014

220,522 21,942,516 22,163,038

$

$ =========

$

2,432 23,644,132 23,646,564

25,357,611

$

29,983,278

$

32,422,912

$

(2,144,485) 23,213,126

=$==29=,9=8:::3,=2=:78=

$

32,422,912

$ 35,690,127 =========

129

$

5,651 24,401,167 24,406,818

$ ========

35,690,127


CITY OF BAYTOWN, TEXAS CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS Last Ten Fiscal Years (Modified Accrual Basis of Accounting)

Fiscal Year

2005 Revenues Taxes Licenses and permits Charges for services Fines and forfeitures Intergovernmental Investment earnings Other revenues

$

Total Revenues Expenditures General govenm1ent Public safety Public works Public health Parks, recreation, and culture Capital outlay Debt service: Principal Payment to bond escrow agent Interest Issuance costs Total Expenditures

2007

2006

45,085,265 691,096 1,857,755 3,025,647 6,365,752 1,514,693 1,430,402 59,970,610

$

47,867,459 1,004,601 1,657,473 2,590,884 6,565,100 2,548,099 1,575,506 63,809,122

$

53,035,426 1,103,462 1,841,588 2,050,463 2,470,192 2,929,591 1,401,417 64,832,139

2008 $

56,142,813 1,266,293 2,031,882 2,600,234 8,601,399 2,180,999 1,677 ,695 74,501,315

10,776,015 26,873,652 4,134,898 958,435 5,325,058 8,133,822

12,008,362 28,922,600 6,750,873 1,107,306 5,853,608 8,730,301

12,177,560 26,601,574 3,648,853 1,187,748 5,934,613 10,768,555

19,168,075 28,448,789 6,297,505 1,745,951 6,073,295 11,573,473

7,185,000

4,995,000

5,235,000

6,036,221

2,976,287 185,192 66,548,359

2,939,710 49,458 71,357,218

2,947,291 29,500 68,530,694

2,654,380 73,749 82,071,438

(Deficiency) of Revenues (Under) Expenditures

(6,577,749)

(7,548,096)

(3,698,555)

(7,570,123)

Other Financing Sources (Uses) Transfers in Transfers out Debt issued Premium on refunded bonds Premium on bonds Payment to bond escrow agent Total Other Financing Sources

7,069,722 (5,739,150) 12,800,000 5,743 1,164 (7,701,773) 6,435,706

5,140,378 (3,040,941) 5,215,000

4,505,705 (2,103,614) 1,625,106

9,902,966 (7,483,207) 12,890,000

4,027,197

15,309,759

Net Change in Fund Balances Debt service as a percentage of noncapital expenditures

$

(142,043)

17.40%

130

1,939 7,316,376 $

(231,720)

12.67%

$

328,642

14.17%

$

7,739,636

13.37%


Fiscal Year

2009 $

2011

2010

61,987,534 1,066,981 2,014,938 2,085,735 13,436,635 899,362 2,481,973 83,973,158

$

61,847,746 1,196,580 694,539 3,600,747 9,181,350 412,651 1,978,083 78,911,696

$

63,803,207 923,871 1,951,435 2,835,084 8,504,777 413,708 2,472,446 80,904,528

2012 $

68,613,205 1,261,683 2,167,437 2,676,361 17,002,961 228,271 1,496,293 93,446,211

2013 $

71,412,597 1,487,239 1,862,802 2,653,042 7,976,949 628,564 1,777,705 87,798,898

2014 $

27,823,804 31,091,963 4,265,955 1,816,595 6,341,923 24,603,366

19,864,495 32,695,166 5,524,041 2,093,632 6,892,095 18,874,965

16,305,601 33,030,194 7,620,588 2,025,190 6,797,043 21,213,893

18,086,658 34,759,167 6,041,762 2,097,100 7,287,529 24,026,301

22,112,626 35,931,532 12,140,511 2,157,928 7,232,586 14,699,587

22,052,424 40,149,536 7,567,629 2,211,409 7,737,412 15,379,097

5,985,256

6,534,952

7,179,657

7,025,465

5,720,963

3,325,192 88,555 105,342,609

2,851,170 211,222 95,541,738

2,803,734 252,760 97,228,660

3,207,221 306,526 102,837,729

3,561,552 278,160 103,835,445

6,607,061 9,593,273 3,801,444 325,255 115,424,540

(21,369,451)

(16,630,042)

(16,324,132)

(9,391,518)

(16,036,547)

(21,317,920)

4,499,671 (2,879,831 ) 5,630,293

8,631,417 (5,911,765) 17,933,100 107,342

5,838,266 (6,384,844) 22,390,000 766,072

10,884,230 (15,871,347) 30,225,000 2,204,993

9,207,896 (5,131,440) 16,800,000

20,118,032 (24,142,524 ) 31,099,696

(8,069,794) 12,690,300

(5,312,193) 17,297,301

(8,508,111) 18,934,765

283,150 7,250,133 $

76,037,374 1,665,982 2,446,596 2,779,642 8,007,514 699,601 2,469,911 94,106,620

(14,119,318)

11.10%

$

(3,939,742)

12.49%

$

973,169

$

10.75%

9,543,247

11.18%

131

1,864,050 (3,593,865) 25,345,389

21,159,606 $

5,123,059

11.34%

$

4,027,469

10.44%


CITY OF BAYTOWN, TEXAS TAX REVENUES BY SOURCE, GOVERNMENTAL ACTIVITIES Last Ten Fiscal Years (Modified Accrual Basis of Accounting)

Function Property taxes Sales and hotel taxes Franchise taxes Industrial in-lieu-of-taxes

$

Total

$

2005 15,293,470 9,724,993 3,196,447 16,870,355 45,085,265

132

$

$

2006 15,925,369 10,439,285 4,227,213 17,275,592 47,867,459

$

$

2007 15,865,191 10,439,285 4,227,213 17,275,592 47,807,281

$

$

2008 18,330,829 14,659,564 3,911,211 19,241,209 56,142,813


$

$

2009 20,407,501 16,185,851 4,265,055 21,129,127 61,987,534

$

$

2010 20,386,674 16,185,851 4,265,055 21,129,127 61,966,707

$

$

2011 18,735,003 15,576,815 3,994,547 25,496,842 63,803,207

$

$

133

2012 20,064,769 17,343,951 3,800,997 27,403,488 68,613,205

$

$

2013 20,694,270 18,558,609 3,825,432 28,334,286 71,412,597

$

$

2014 22,109,139 20,494,629 4,053,895 29,379,711 76,037,374


CITY OF BAYTOWN, TEXAS ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY Last Ten Fiscal Years Fiscal Year

2005

2006

2007

2008

$ 2,127,989,730

$ 2,382,435,518

$ 2,661,656,747

$ 2,577,257,056

Personal assessed value

460,761,590

536,062,697

549,496,484

471,658,764

Total assessed value (1)

2,588,751,320

2,918,498,215

3,211,153,231

3,048,915,820

Real assessed value

Taxable value

$ 2,072,139,580

Taxable value as a percentage of assessed value Total tax rate

(785,578,290)

(516,611,740)

Less: real property exemptions

$ 2,132,919,925

80.0%

$

0.73703

(910,929,124)

$ 2,300,224,107

0.73703

(1) Assessed valuations are considered to be 100 percent of actual valuations.

134

$ 2,471,003,277

7l.6%

73.1%

$

(577,912,543)

$

0.73703

8l.0%

$

0.73703


Fiscal Year

2009

2010

2011

2012

2013

2014

$ 3,1l3,666,103

$ 3,065,166,229

$ 3,015,384,493

$ 2,926,000,599

$ 2,939,825,902

$ 3,014,917,703

546,159,699

555,950,392

350,698,140

411,118,921

436,801,409

503,811,955

3,659,825,802

3,621,116,621

3,366,082,633

3,337,119,520

3,376,627,311

3,518,729,658

(967,105,346) $ 2,692,720,456

$ 2,648,560,961

0.78703

$ 2,441,722,934

$

0.78703

(928,173,569) $ 2,408,945,951

72.5%

73.1%

73.6% $

(924,359,699)

(972,555,660)

$

0.78703

(886,164,075) $ 2,490,463,236

72.2% $

135

0.82203

(898,967,084) $ 2,619,762,574

73.8% $

0.82203

74.5% $

0.82203


CITY OF BAYTOWN, TEXAS PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS Last Ten Fiscal Years Fiscal Year

2005 City of Baytown by fund General fund Debt service fund

$ Total

$

Harris County Harris County Flood Control District Port of Houston Authority Harris County Hospital District Harris County Dept. of Education Goose Creek Independent School District Lee Junior College District Total Direct and Overlapping Rates

$

$

2006

0.45700 0.28003 0.73703

$

0.39986 0.03322 0.01474 0.19216 0.00629 1.68371 0.20841 3.27542

$

Tax rates per $100 of assessed valuation Source: Harris County Appraisal District

136

$

$

2007

0.45700 0.28003 0.73703

$

0.40239 0.03241 0.01302 0.19216 0.00629 1.72750 0.20678 3.31758

$

$

$

2008

0.45700 0.28003 0.73703

$

0.40240 0.03241 0.01302 0.19216 0.00629 1.59562 0.20228 3.18121

$

$

$

0.45700 0.28003 0.73703 0.39239 0.03106 0.01437 0.19216 0.00585 1.30196 0.20678 2.88160


Fiscal Year

2009

$ $ $

$

2011

2010

0.45700 0.33003 0.78703

$

0.38923 0.03086 0.01773 0.19216 0.00584 1.28213 0.20588 2.91086

$

$

$

0.45700 0.33003 0.78703

$

0.39224 0.02922 0.01636 0.19216 0.00605 1.28213 0.22120 2.92639

$

$

$

2013

2012

0.45700 0.33003 0.78703

$

0.38805 0.02923 0.02054 0.19216 0.00658 1.30213 0.25200 2.97772

$

$

$

0.42578 0.39625 0.82203 0.39117 0.02809 0.01856 0.19216 0.00568 1.33213 0.25200 3.04182

137

$

2014

$

0.43658 0.38545 0.82203

$ $ $

0.43713 0.38490 0.82203

$

0.40021 0.02809 0.19216 0.18216 0.00662 1.33213 0.24100 3.20440

$ $ $ $ $ $ $ $

0.41455 0.02827 0.17160 0.17000 0.00636 1.38679 0.26070 3.26030


(This page intentionally left blank) 138


CITY OF BAYTOWN, TEXAS PRINCIPAL PROPERTY TAXPAYERS Current Year and Nine Years Ago Fiscal Year

2014

Property Taxpayer CenterPoint Energy Inc. Exxon Mobil Corp. LCY Elastomers LP TPC Group Inc. Wal Mart Foothills Texas Inc. MREF Villas LLC ARC Goose Creek LLC 2008 Baker Rd. 2012 Baker R II LTD Verizon Southwest Continental Airlines, Inc Valero Marketing & Supply Car Son Bay LP Memorial NW Pavillion LTD Camden Property Trust

$

Subtotal Other Taxpayers Total

$

Taxable Assessed Value 48,844,569.00 31,161,035 29,213,072 23,865,498 19,994,151 19,780,116 19,716,000 18,005,435 17,294,358 15,601,040

2005

Rank 1 2 3 4 5 6 7 8 9 10 n/a n/a n/a n/a n/a n/a

% of Taxable Assessed Value 1.86% 1.19% 1.12% 0.91% 0.76% 0.76% 0.75% 0.69% 0.66% 0.60% n/a n/a n/a n/a n/a n/a

$

Taxable Assessed Value 57,784,828 140,711,926 9,537,454 24,039,291

24,750,800 16,970,170 12,349,160 11,945,301 10,646,100 9,950,000

Rank 2

* 10 n/a 4 n/a n/a n/a n/a n/a 3 5 6 7 8 9

% of Taxable Assessed Value 2% 7.01% 0.45% n/a 0.76% n/a n/a n/a n/a n/a 1.34% 0.76% 0.67% 0.64% 0.56% 0.50%

243,475,274

9.29%

318,685,030

15.11 %

2,376,287,300

90.71%

1,753,454,550

84.89%

2,619,762,574

100.00%

2,072,139,580

100.00%

$

Source: Goose Creek Independent School District Tax Office *A significant portion of Exxon Mobil Corporation's property was disall1lexed in fiscal year 20 I 0 and the tax revenue the City receives on such property is now accounted for as industrial district agreement revenue, not property tax revenue.

139


CITY OF BAYTOWN, TEXAS PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Fiscal Years

Fiscal Year

2005 Tax levy

$

Current tax collected

$

15,151,788

120,502

15,720,260

$

15,594,283

0.79%

125,977

0.80%

140

$

$

16,826,185

95.73% 635,249 $

99.25%

$

127,157

0.75%

18,107,174 17,333,357

893,058

99.20%

$

16,953,342

93.98%

437,742 $

2008

15,933,127

96.41 %

99.21 %

$

2007

15,156,541

528,483

Total collections as a percentage of current levy

Outstanding delinquent taxes as percentage of current levy

$

95.75%

Delinquent tax collections

Outstanding delinquent taxes

15,272,290 14,623,305

Percent of current tax collections

Total tax collections

2006

17,968,606 99.23%

$

l38,568

0.77%


Fiscal Year

2009 $

20,687,000

$

94.05%

$

178,051

0.86%

20,329,242

249,751

1.21 %

18,723,249

$

$

18,444,458

$

278,791

141

374,701

1.91%

20,289,862

$

21,420,205 20,706,861

96.16%

96.67%

327,119 $

98.09%

$

1.49%

19,215,684

2014

19,510,785

410,121

98.51 %

$

19,590,385

95.99%

472,244 $

2013

18,805,563

95.99%

98.79%

$

2012

17,972,214

895,046

99.14%

$

$

94.44%

1,052,664 20,508,949

20,578,993 19,434,196

19,456,285

$

2011

2010

19,837,904

$

97.77%

$

451,958

2.23%

20,706,861 96.67%

$

713,344

3.33%


CITY OF BAYTOWN, TEXAS RATIOS OF OUTSTANDING DEBT BY TYPE Last Ten Fiscal Years

Fiscal Year

2005 Governmental Activities: General obligation bonds Certificates of obligation Alternative minimum tax bonds Capital leases Premiums Business-Type Activities: Revenue bonds Certificates of obligation Discounts Premiums Total Primary Government

49,700,000 10,880,000 2,255,000

$

$

$

51,560,000 9,515,000 1,980,000 8,405

15,715,000 42,600,000

13,910,000 32,165,000

$

109,138,405

1,708

$

2008

48,045,000 9,085,000 1,690,000 589,947 7,867

$

1,520

$

154,672,035

57,035,000 7,510,000 1,385,000 333,726 7,329

10,050,000 109,610,000 (37,016) $

185,894,039

8.0% $

2,126

Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.

142

$

12,025,000 83,270,000 (40,779)

5.3%

5.0% $

2007

8,933

121,158,933

Percentage of personal income Per capita

2006

9.8%

$

2,502


Fiscal Year

2009

2010

52,615,000 8,690,000 1,065,000 3,538,763 6,791

$

$

52,343,100 12,850,000 725,000 3,353,811 106,638

7,985,000 105,165,000 (33,263) $

179,032,291

103,491 175,733,940

11.8% $

2,392

$

62,836,800 12,785,000 375,000 3,150,454 860,245

$

91,077 175,396,776

$

2,320

$

2,425

$

92,419,850 10,945,000

104,834,650 10,320,000 2,579,696 4,702,742

5,650,900 73,120,000

4,145,150 85,315,000

2,695,350 83,940,000

$

473,537 199,043,099

$

866,564 209,939,002

12.5%

2,409

--- - - - - - - - - - - - -

143

$

2,667,325 3,077,237

10.3% $

2014

2,874,038 3,014,470

78,663 176,817,171

$

11.3%

11.2%

2013

78,939,100 13,140,000

$

8,268,200 87,030,000

11,431,900 94,820,000

$

2012

2011

$ ----

--

2,692

11.5% $

2,783


CITY OF BAYTOWN, TEXAS RATIO OF GENERAL BONDED DEBT OUTSTANDING Last Ten Fiscal Years

Fiscal Year Net Taxable Assessed Value All property Net Bonded Debt Gross bonded debt Less debt service funds Total Net Bonded Debt

2005

2006

2007

2008

$ 2,072,139,580

$ 2,132,919,925

$ 2,300,224,107

$ 2,471,003,277

62,843,933 1,673,675 61,170,258

63,063,405 1,489,010 61,574,395

58,827,867 922,394 57,905,473

65,937,329 596,117 65,341,212

$

Ratio of Net Bonded Debt to Assessed Value

868

144

$

863

$

2.52%

2.64%

72,215

71,358

70,512

$

$

2.89%

2.95%

Population Net Bonded Debt per Capita

$

$

802

73,959

$

883


Fiscal Year

2009

2010

2011

2012

2013

2014

$ 2,692,720,456

$ 2,648,560,961

$ 2,441,722,934

$ 2,408,945,951

$ 2,490,463,236

$ 2,619,762,574

62,376,791 786,092 61,590,699

66,024,738 488,131 65,536,607

76,857,045 292,736 76,564,309

95,093,570 1,229,116 93,864,454

106,442,087 3,715,519 102,726,568

119,857,392 5,486,465 114,370,927

$

$

2.47%

2.29% 74,845 $

823

$

865

72,339 $

1,058

$

3.90%

3.14%

75,743 $

$

4.12%

145

1,279

4.37%

72,418

73,413 $

$

$

1,419

73,972

$

1,546


(This page intentionally left blank.) 146


CITY OF BAYTOWN, TEXAS LEGAL DEBT MARGIN INFORMATION Last Ten Fiscal Years

Fiscal Year 2006

2005

$

Debt limit Total net debt applicable to limit Legal Debt Margin

207,213,958

Total net debt applicable to the limit as a percentage of debt limit

2008

$

213,291,993

$

227,377,841

$

247, lOO,328

$

61,565,990 151,726,003

$

57,897,606 169,480,235

$

65,333,883 181,766,445

61,161,325 =$==1=4=6,=0=52=,=63=3=

2007

29.52%

28.86%

25.46%

Legal Debt Margin Calculation for Fiscal Year 2014 Assessed value Debt limit (10% of assessed value) Debt applicable to limit: General obligation bonds Less: amount set aside for repayment of general obligation debt Total net debt applicable to limit Legal debt margin

$ 2,619,762,574 261,976,257 119,857,392

(5,486,4652. $ 114,370,927 147,605,330 $

Note: The City's Home Rule Chalter (1983), Section 7.07 limits all bonded debt to no more than 1 percent of the assessed valuation.

148

26.44%


Fiscal Year

2011

2010

2009

2012

2013

2014

$

269,272,046

$

264,856,096

$

244,172,293

$

240,894,595

$

249,046,324

$

261,976,257

$

61,590,699 207,681,347

$

65,918,100 198,937,996

$

75,996,800 168,175,493

$

95,093,570 145,801,025

$

106,442,087 142,604,237

$

114,370,927 147,605,330

22.87%

24.89%

31.12%

39.48%

149

42.74%

43.66%


CITY OF BAYTOWN, TEXAS PLEDGED REVENUE COVERAGE (WATER AND SEWER FUND) Last Ten Fiscal Years

Fiscal Year

2005 $

Gross Revenues

2006

22,102,730

$

12,195,906

Operating Expenses (1) Net Revenues Available for Debt Service

Debt Service Requirements (2) Principal Interest Total

2007

25,032,317

$

2008

28,764,540

$

19,617,174

12,762,643

26,269,326 14,379,665

$

9,906,824

$

12,269,674

$

9,147,366

$

11,889,661

$

2,970,000 2,340,842 5,310,842

$

3,510,000 2,681,200 6,191,200

$

4,440,000 3,749,409 8,189,409

$

5,135,000 4,707,217 9,842,217

$

Coverage

1.87

(1) Total operating expenses less depreciation (2) Includes revenue bonds only

150

$

1.98

$

1.12

$

1.21


Fiscal Year

$

2011

2010

2009 28,951,379

$

30,793,030

$

33,456,570

$

20,866,590

18,838,982

16,760,578

2012

2013

35,369,368 22,553,420

$

12,190,801

$

11,954,048

$

12,589,980

$

12,815,948

$

6,510,000 4,733,526 11,243,526

$

3,163,700 4,198,917 7,362,617

$

2,617,300 4,025,737 6,643,037

$

1,505,750 3,274,771 4,780,521

$

l.08

$

l.62

$

$

$

l.90

151

2.68

2014

34,022,544

$

22,570,370

=$==1=1,4::5=2,=1::74=

$

1,620,000 3,123,765 4,743,765

$ ======= 2.41

35,990,349 23,234,448

$

12,755,901

$

2,380,000 3,224,871 5,604,871

$

2.28


CITY OF BAYTOWN, TEXAS DEAI0GRAPHIC AND ECONOMIC STATISTICS Last Ten Fiscal Years

Fiscal Year

2005

2006

2007

2008

70,512

71,358

72,215

73,959

Personal income

$2,388,452,976

$2,044,906,206

$1,923,952,030

$1,887,655,557

Per capita personal income (2)

$

$

Population (1)

33,873

28,657

$

26,642

$

25,523

Median age (3)

30.6

35.0

30.9

31.0

Education level in years of schooling (3)

14.8

14.8

14.8

14.8

20,161

20,224

20,352

School enrollment (4) Unemployment rate (5)

7.40%

6.30%

5.80%

Data sources: (1) Years 2002-2009: City of Baytown Plmming Department projection. Years 2010 and 2011: 2010 Census. (2) City of Baytown's per capita personal income in Houston-Sugarland-Baytown MSA figures for years 2001 to 2008. Years 2009 to 2011: - American FactFinder. (3) Wikipedia - Baytown, Texas (4) Goose Creek Consolidated Independent School District (5) Texas Workforce Commission

152

20,697 7.40%


Fiscal Year

2009

2010

2012

2011

2013

2014

74,845

75,743

72,339

73,413

73,950

75,424

$1,513,740,125

$1,575,984,601

$ 1,546,318,464

$1,709,495,118

$1,588,963,650

$1,822,625,836

$

$

$

$

$

20,225

20,807

21,376

23,286

21,487

$

24,165

31.0

31.0

31.0

31.0

31.0

31.0

14.8

14.8

14.8

14.8

14.8

14.8

21,793

21,663

21,723

20,839

21,136

21,516

11.50%

11.00%

11.60%

9.50%

153

8.60%

6.40%


(This page intentionally left blank.) 154


CITY OF BAYTOWN, TEXAS PRINCIPAL EMPLOYERS Current Fiscal Year and Nine Years Ago Fiscal Year 2014

Employees

Employer Exxon Mobil-Baytown Complex

Rank

3,785.00

2005 Percentage

Percentage

of Total City

of Total City

Employment 12%

Employees

Rank

4,067.00

Employment 13.43%

Goose Creek Consolidated Independent School District

3,012

2

9.46%

2,377

2

7.85%

San Jacinto Methodist Hospital

1,687

3

5.30%

1,357

4

4.48%

Bayer Corporation

1,100

4

3.46%

1,650

3

5.45%

JSW Steel

800

5

2.51%

nla

nla

nla

Chevron Phillips Chemical Company

789

6

2.48%

664

5

2.19%

Wal-Mati Distribution Center

685

7

2.15%

640

6

2.11%

Home Depot Distribution Center

600

8

1.88%

TMK-IPSCO

390

9

1.23%

TMK-IPSCO

325

10

1.02%

TMK-IPSCO

245

11

0.77%

Exel Logistics

200

12

0.63%

nla

42.78%

11,114

Total

13,618

Source: Baytown Economic Development Foundation, City of Baytown and Lee College.

155

nla

nla

nla

7

1.19%

nla

n/a

nla

n/a

n/a

nla

n/a

n/a

359

36.70%


CITY OF BAYTOWN, TEXAS FULL-TIME EQUIVALENT CITY EMPLOYEES BY FUNCTION Last Ten Fiscal Years Fiscal Year

2006

2005 General Fund: General government Public safety Police Officers路 Civilians Fire Firefighters and officers Civilians Other public safety Public works Public health Parks, recreation, and culture General Fund Total

2007

2008

76.56

77.50

79.50

82.65

117.00 54.00

124.00 54.00

124.00 57.00

129.00 52.00

84.50 6.00 43.00 46.50 8.19 55.00 490.75

90.50 6.00 45.00 46.50 9.19 55.00 507.69

90.50 6.00 45.00 49.50 12.75 67.00 531.25

90.50 6.00 47.00 50.50 24.00 60.00 541.65

101.00 11.50 2.00 12.00 126.50

101.00 9.50 2.00 12.00 124.50

108.00 9.50 2.00 12.00 131.50

111.85 9.50 2.00 12.00 135.35

1.50 12.00

1.50 11.06

1.50 6.50

2.50 5.25

18.00

12.00 1.00 1.25 3.00

1.25 3.00 14.00

1.25 3.00 15.00

1.00 1.00 1.00 2.00

1.00 1.00 2.00 2.00

Hotel/Motel Fund Enterprise Fund: Aquatics Water and sewer Sanitation Storm water utility Internal service Enterprise Fund Total Program Funds: Emergency management Community development block grant HalTis County organized crime and narcotics task force Organized crime unit transitional High intensity drug trafficking area Miscellaneous police Crime control and prevention district Fire control, prevention and emergency medical services district Municipal cOUli special revenue Wetlands education and recreation center Capital improvement program CIPF-water and sewer Odd tmst and agency MDD Baytown Nature Center Workers' compensation Program Funds Total

1.00 1.00 2.00 1.00 1.00

1.00 2.00 1.00 1.00

41.75

1.00 35.81

1.00 32.25

1.00 34.00

Total

659.00

668.00

695.00

711.00

1.25 3.00

156


Fiscal Year

2009

2011

2010

2012

2013

2014

87.65

91.40

91.40

92.40

92.40

93.40

129.00 52.00

129.00 51.00

129.00 51.00

131.00 49.00

137.00 49.00

143.00 50.00

101.00 6.00 50.00 50.50 23.00 64.00 563.15

101.00 6.00 50.00 49.50 23.00 65.00 565.90

106.00 6.00 50.00 49.50 23.00 65.00 570.90

106.00 6.00 49.00 44.50 22.00 64.00 563.90

112.00 6.00 53.00 44.50 23.00 64.00 580.90

140.00 10.00 26.00 43.50 23.00 64.00 592.90

1.00

1.00

2.00

0.50

113.85 9.50 2.00 12.00 137.35

113.85 12.50 3.00 12.00 141.35

113.85 12.50 3.00 12.00 141.35

2.00 116.85 12.50 4.00 12.00 147.35

2.00 117.85 12.50 4.00 12.00 148.35

3.00 122.85 13.50 4.00 12.00 155.35

4.75

4.50

4.50

4.50

4.50

4.50

0.25 3.00 15.00

0.25 3.00 15.00

0.25 3.00 15.00

0.25 4.00 15.00

0.25 4.00 15.00

0.25 4.00 15.00

1.00 1.00 2.00 3.00

1.00 1.00 2.00 3.00

1.00 1.00 2.00 3.00

1.00 2.00 3.00

2.00 2.00 2.00 3.00

2.00 2.00 2.00 3.00 1.00 3.00 1.00 1.00 38.75 789.00

1.00 31.00

1.00 30.75

1.00 30.75

1.00 30.75

2.00 1.00 1.00 36.75

732.00

738.00

743.00

743.00

767.00

157


CITY OF BAYTOWN, TEXAS OPERATING INDICATORS BY FUNCTION Last Ten Fiscal Years

Fiscal Year

2005 Function Police: Arrests Accident repOlis Citations Offense reports Calls for service Fire: Medical responses Firelrescue incidents Response times: One minute for turnout time Four minutes or less for the arrival ofthe first arriving engine company for a fire Eight minutes or less for the deployment of a full first alarm assignment at a fire suppression incident Five minutes or less for the arrival of the first arriving engine company for a fire Nine minutes or less for the deployment of a full first alarm assignment at a fire suppression incident Water: Number of water customers Source Average daily water usage (millions of gallons) Number of million gallons of surface water pumped Number of million gallons of well water pumped Peak daily consumption (millions of gallons) Sewer: Number of sewer connections Average daily treatment (millions of gallons) Total consumption (billions of gallons) Peak daily consumption (millions of gallons)

2006

2007

2008

5,411 2,010 14,248 12,432 57,029

5,689 2,230 17,193 13,596 60,151

5,823 2,504 17,254 13,972 60,486

4,919 2,374 15,344 13,780 53,468

2,557 1,882

3,002 1,967

3,065 2,069

3,241 2,336

100%

100%

90%

60%

59%

45%

42%

42%

53%

32%

28%

48%

nla

nla

nla

nla

nla

nla

nla

nla

19,950 Trinity River 12.45 4,544 11.69 17.80

19,834 Trinity River 11.83 4,487 3.33 15.76

20,629 Trinity River 9.15 3,341 2.11 11.44

21,453 Trinity River 10.00 3,112 0.38 13.30

19,047 11.04 4,297 37.70

19,280 10.18 3,715 59.60

20,055 13.39 4,886 91.85

20,834 11.27 4,110 46.61

Data source: various City depmiments

* In 2009, the new reporting software calculates the response times using the National Fire Protection Association 1710.

158


Fiscal Year

2010

2009

2011

2012

2013

2014

5,925 2,335 14,378 13,717 48,789

7,347 2,047 15,401 13,680 49,573

6,880 1,900 15,186 13,352 49,024

6,806 1,899 16,120 14,800 46,175

5,877 1,980 21,731 15,144 48,988

5,717 2,207 17,904 14,911 55,045

2,896 1,977

3,376 1,965

3,224 1,868

3,700 1,596

5,039 2,097

9,577 2,301

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

74%

74%

67%

69.65%

65.86%

61.81 %

69%

69%

73%

86.36%

91.03%

85.44%

21,678 Trinity River 11.90 3,148 1.10 18.36

21,804 Trinity River 12.29 4,486 0.11 22.07

21,903 Trinity River 12.92 5,255 8.06 24.63

22,104 Trinity River 12.01 5,140 0.60 20.92

22,212 Trinity River 12.58 4,262 0.53 18.55

22,417 Trinity River 12.70 4,638 2.13 17.11

20,918 10.57 3,708 40.00

21,011 11.40 4,161 40.23

21,086 10.30 3,760 35.39

21,241 9.53 3,479 35.39

21,316 12.23 4.462 40.16

21,513 10.44 3,811 35.95

159


CITY OF BAYTOWN, TEXAS CAPITAL ASSET STATISTICS BY FUNCTION Last Ten Fiscal Years

Fiscal Year 2006 2007

2005 Function Police: Stations Patrol units Fire stations Other public works: Streets (miles) Streetlights Parks and recreation: Parks Parks acreage Parks - developed Parks - undeveloped Swinm1ing pools Spraygrounds Baseball/softball diamonds Tennis courts Conu11lmity centers Water parks Quick soccer comis Water: Water mains (miles) Fire hydrants System capacity (millions of gallons) Sewer: Sanitary sewers (miles) Storm sewers (miles) Treatment plant capacity (millions of gallons)

3 75 5

3 75 5

3 75 5

3 75 5

288 4,013

375 4,038

379 4,358

404 4,481

45 985 490 495 2 I 21

45 985 490 495 2 1 21 10 2

45 985 490 495 2

45 985 490 495

21 10 2

21 8

10

2

Data source: various City departments

160

2008

366 1,661 26MGD

357 1,678 26MGD

359 1,700 26MGD

362 1,737 26MGD

365 180 16.2 MGD

347 170 16.2 MGD

350 172 16.2 MGD

352 173 16.2 MGD


Fiscal Year

2009

2011

2010

2012

2013

2014

5 78 5

5 83 5

3 83 6

3 87 6

3 87 6

3 93 7

408 4,921

408 4,726

409 4,641

429 4,728

429 5,098

431 4,91 I

45 985 490 495

47 1,084 967 117

47 1,084 967 117

47 1,084 967 117

47 1,084 967 117

50 1,151 972 179

22 7

2 22 7

4 22 4

2

2 2

4 22 4 1 2 2

5 22 4 1 2 2

22 6

362 1,780 26MGD

378 1,810 26MGD

383 1,860 26MGD

385 1,896 26MGD

390 1,937 26MGD

398 2,003 26MGD

352 173 20.2 MGD

365 173 20.2MGD

366 169 20.2 MGD

367 172 20.2 MGD

372 173 20.2 MGD

377 174 24.2MGD

161


(This page intentionally left blank.) 162

City of Baytown, CAFR, yr. ended 09/30/14  
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