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Home My WebLink AboutRes 14-05 Approving the Comprehensive Annual Financial Report Year Ending September 30, 2013WHEREAS, Section 103.001 of the Local Government Code requires that a municipality shall have its records and accounts audited annually and shall have an annual financial statement prepared based on the audit; and WHEREAS, Section 103.002 of the Local Government Code requires that a municipality shall employ at its own expense a certified public accountant who is licensed in this state or a public accountant who holds a permit to practice from the Texas State Board of Public Accountancy to conduct the audit and to prepare the annual financial statements; and NOW, '' i'" BE i 1 BY iWN COUNCIL OF i OF WESTLAKE: SECTIN l: That, all matters stated in the Recitals hereinabove are found to be true and correct and are incorporated herein by reference as if copied in their entirety. SECTI®N 2: That the Town Council does hereby accept the fiscal year 2012-2013 Comprehensive Annual Financial Report from Pattillo, Brown & Hill, L.L.P., Certified Public Accountants attached as Exhibit "A" SECTION 3: If any portion of this Resolution shall, for any reason, be declared invalid by any court of competent jurisdiction, such invalidity shall not affect the remaining provisions hereof and the Council hereby determines that it would have adopted this Resolution without the invalid provision. Resolution 14-05 Page 1 of 2 SECTION 4: That this resolution shall become effective from and after its date of passage. ATTEST: A Kelp Edwar Town Secretary APPROVED AS TO F L. ton Lo T wttorney La , ra Wheat, Mayor Thomas E. Brym ,"Torn Manager Resolution 14-05 Page 2 of 2 m THE T0- 4F ESTLAKE , TEXAS COMPREHENSIVE ANNUAL ► 11 r `' - , i_ FOR THE FisCAr.L YEAR ENDED SEPTEMBER 30, 2013 PERFORMANCE: LEADERSHIP TEAMWORK DEDICATION `. INTEGRITY p 1bbbam. ervice The Town of Westlake, Texas * 3 Village Circle #702 * Westlake, Tetras 76262 * www.westlii(e-tx.org .. .. ..... ---- --- ... ... ... ...... ...... ...... .. . .. ...... ... ... ...... ....... ............ ......... ... .. .. ........ . . . ................. . ------- ......... .... ... --- ........ ....... . ..... --------- ------ --- . .. ........ ...... . .. .. .......... . .. ... .. . ........ . ... -------- ....... ... ... . ...... ... ........ ... ...... .... ... ... .... d- ... ........ ........ .. ..... ... ... ................ .... ....... . ... ... ... ..... .... ... ... .. ........... ... I TOWN OF WESTLAKE COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 Prepared by Town of Westlake Finance Department 3 Village Circle, Suite 202 Westlake, TX 76262 THIS PAGE LEFT BLANK INTENTIONALLY TOWN OF WESTLAKE, TEXAS TABLE OF CONTENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 Page Number INTRODUCTORY SECTION Letter of Transmittal........................................................ , ... , .............. i — viii Certificate of Achievement........................................................................... ix Organizational Chart ....... ............................................................... x Principal Town Officials....................................................................... xi FINANCIAL SECTION Independent Auditor's Report ....................................................................................... 1-2 Management's Discussion and Analysis....................................................................... 3-15 Basic Financial Statements Government -wide Financial Statements Statementof Net Position................................................................................ 16 Statement of Activities.................................................................................... 17-18 Fund Financial Statements Balance Sheet — Governmental Funds............................................................ 19-20 Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds ..................................................... 21 -22 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities......................................................... 23 Statement of Net Position — Proprietary Funds ............................................... 24 Statement of Revenues, Expenses and Changes in Fund Net Position — Proprietary Funds ..................................................... 25 Statement of Cash Flows — Proprietary Funds ................................................ 26 TOWN OF WESTLAKE, TEXAS TABLE OF CONTENTS (Continued) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012 Page Number Discretely Presented Component Units Financial Statements: Discretely Presented Component Units - Combining Statement of Net Position......................................................... 27-28 Discretely Presented Component Units - Combining Statement of Activities........................................................... 29-30 Notes to Financial Statements................................................................................ 31 -62 Required Supplementary Information Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — GeneralFund............................................................................................. 63 Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — Visitors Association Fund......................................................................... 64 Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — WestlakeAcademy.................................................................................... 65 Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — Economic Development Fund ....................................................... 66 Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — Lone Star Public Facility Corporation .......................................... 67 Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — 4B Economic Development Corporation .... .................................. 68 Schedule of Funding Progress ......... . ......................................................... 69 Notes to Required Supplementary Information .......................................... 70 TOWN OF WESTLAKE, TEXAS TABLE OF CONTENTS (Continued) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 Page Number Individual Fund Schedule: Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — Debt Service Fund......................................................................... 71 STATISTICAL SECTION (Unaudited) Net Position by Component ........ . ............. ................................................... 72 Changes in Net Position............................................................................... 73-74 Fund Balances — Governmental Funds ......... , .............. . . ............................. 75 Changes in Fund Balance — Governmental Funds ...................................... 76-77 Assessed Value and Estimated Actual Value of TaxableProperty........................................................................... 78 Principal Property Tax Payers .............................. , ,.................................... 79 Property Tax Levies and Collections........,.,................................................ 80 Direct and Overlapping Property Tax Rates ........... . ......... . .......................... 81 Taxable Sales by Industry Type ................. . . . . . . . ......................................... 82 Ratios of General Bonded Debt Outstanding ............................ ................. 83 Ratios of Outstanding Debt by Type.......................................................... 84 Direct and Overlapping Governmental Activities Debt ............................... 85 Demographic and Economic Statistics ........................ . .............................. 86 PrincipalEmployers.................................................................................... 87 Full-time Equivalent Town Government Employees by Function/Program.......................................................................... 88 TOWN OF WESTLAKE, TEXAS TABLE OF CONTENTS (Continued) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 Page Operating Indicators by Function/Program........................................................... 89 Capital Asset Statistics by Function/Program....................................................... 90 COMPLIANCE SECTION Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards............................................................................. 91 -92 INTRODUCTORY SECTION THIS PAGE LEFT BLANK INTENTIONALLY Town of Westlake February 17, 2014 Honorable Mayor, Council Members and the Citizens of the Town of Westlake, The Town of Westlake (the "Town") Fiscal and Budgetary Policies require that the Town's Finance Department prepare a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Accordingly, the Comprehensive Annual Financial Report (CAFR) for the Town of Westlake, Texas for the fiscal year ended September 30, 2013, is hereby issued. This report consists of management's representations concerning the finances of the Town. Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making representations, the Town established a comprehensive internal control framework that was designed both to protect the Town's assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of the Town's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the Town's comprehensive framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatements. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The Town's financial statements have been audited by Pattillo, Brown and Hill LLP, Independent Certified Public Accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Town for the -fiscal year ended September 30, 2013, were free of material misstatements. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the Town's financial statements for the fiscal year ended September 30, 2013, were fairly presented in conformity with GAAP. The independent auditors' report is presented as the first component of the financial section of this report. This report is presented in three sections: Introductory, Financial and Statistical. The Introductory Section includes this transmittal letter, a listing of Town Officials, and an organizational chart of the Town. The Financial Section includes the independent auditor's report on the basic financial statements, Management's Discussion and Analysis (MD&A), basic financial statements, the notes to 3 Village Circle #202 • Westlake, Texas 76262 Metro: 817-430-0941 . Fax: 817-430-1812 • www.wcstlake-tx.org the basic financial statements, and combining and individual fund statements and schedules. The MD&A is a narrative introduction, containing 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 Town of Westlake's MD&A can be found immediately following the independent auditor's report. The Statistical Section includes financial and demographic information relevant to readers of the Town's financial statements. The statistical data is generally presented on a multi-year basis. Profile of the Town Minutes from downtown Fort Worth, Texas and DFW International Airport, the Town of Westlake is home to several upscale residential communities and Fortune 500 companies, all of which share a unique character and charm, along with a commitment to excellence. The Town is located in northeast Tarrant County and may be conveniently accessed by several major thoroughfares, including SII 114 and US 377. The Town occupies approximately 7 square miles and serves a population appraised home value of $1.2 million. Town obf Westla * „4 uzuj 35 j iij 1)nll.t of approximately 1,100 with an average The Town, incorporated in 1956, is considered a Type A general -law municipality. The Town operates under the Council -Manager form of government. The Council is comprised of a mayor and five (5) council members and is responsible for, among other things, passing ordinances, adopting the budget, appointing committees, and hiring the Town Manager. The Town Manager is responsible for carrying out the policies and ordinances of the Council, for overseeing the day-to-day operations of the Town and appointing and supervising heads of various departments. The Mayor and Town Council members serve two (2) year terms. All elected officials are elected at -large. The financial reporting entity (the government) includes all funds of the primary government (i.e. the Town of Westlake), as well as all of its component units. Component units are legally separate entities for which the primary government is financially accountable. The following entities are considered blended component units: Lone Star Public Facilities Corporation is a Texas nonprofit corporation that acts on behalf of the Town to further the public purposes under the Public Facilities Corporation Act, as it's duly constituted authority and instrumentality. The board of directors, appointed by the Town's governing body, is comprised of seven members, of whom five must be members of the Town's governing body. 4B Economic Development Corporation is a Texas nonprofit industrial corporation under the Development Corporation Act of 1979 formed to promote economic development within the Town and the State of Texas in order to eliminate unemployment and underemployment, and to promote and encourage employment and the public welfare of, for, and on behalf of the Town by developing, implementing, financing, and providing one or more projects defined and permitted under Section 4B of the Act. The board of directors is composed of seven persons appointed by the members of the Town's governing board. Four of the members of the board of directors are members of the Town's governing board. ii Westlake Academy (Academy) is an open -enrollment charter school, as provided by Subchapter D, Chapter 12, of the Texas Education Code. The Town of Westlake ("Charter Holder") applied for and became the first municipality in Texas to ever receive this special charter designation. The Academy had 658 students in FY 12-13 and serves Kindergarten thru 12th grade. The Academy graduated their first class in FY 09-10. The Board consists of six (6) trustees and is appointed by the Town's governing body. Currently, all members of the board of trustees are members of the Town's governing body. The Academy's year-end is August 31. Discretely presented component units are legally separate entities and not part of the primary government's operations. These component units are as follows: Texas Student Housing Authority - Ballpark Austin Project, Texas Student Housing Corporation -The Ridge at North Texas Project, Texas Student Housing Authority -Town Lake Austin Project, Texas Student Housing Authority - College Station Project, and Texas Student Housing Authority. Services Provided The Town provides to its citizens those services that have proven to be necessary and meaningful and which the Town can provide for the least amount of cost. Major services provided under the general government and enterprise functions are: Fire and emergency medical services, police, water and sewer utility services, park and recreational facilities, street improvements, education and administrative services. The Town utilizes a combination of direct service delivery along with out- sourced services in its service delivery mix. The decision as to which service to deliver directly versus out -sourcing is based on analysis of cost-effectiveness, citizen responsiveness, and customer service quality. Economic Conditions and Outlook The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the environment within which the Town operates. Local Economy While we clearly understand the nation as a whole continues to try and recover from the economic downturn, the Town remains committed to budgeting and forecasting projections based on a fiscally conservative formula. We have accomplished many great things this past year through our use of partnerships and inventive strategies to govern our community. We have begun the process of reinvesting in our infrastructure and will continue to do so over the next several years — paying special attention to unique cost sharing opportunities, both public and private. Our overall goal is to provide our residents with a living experience that is second -to -none. The Town staff is aware that the Town of Westlake does not create wealth, but instead, is entrusted with public dollars collected on behalf of our citizens. We are stewards who are fully vested in the success of the Town of Westlake and Westlake Academy. We exist as a municipal corporation for one reason and one reason only: to prioritize and deliver the best services possible with the resources provided to achieve an exceptional quality of life. This is a challenge the Staff takes very seriously, one that we pursue with vigor every day. Below, please find the milestones and strategic priorities that were achieved during FY 12-13: iii ♦ Received the International City/County Managers Association 2013 ICMA Strategic Leadership & Governance Award for the Town's Strategic Issues -Focused Governance Systems (SIGS). ♦ Continued to receive recognition for the transparency and high quality of its financial reporting by receiving the following: o Distinguished Budget Presentation Award from the Governmental Finance Officers Association (GFOA) marking the 6th year in a row that we have received this honor for our municipal budget and the 4th year for our educational services budget (Westlake Academy). o International Award for Budget Excellence from the Association of School Business Officials International for the past four years. o Certificate of Achievement for Excellence in Financial Reporting for our Comprehensive Annual Financial Report (CAFR), also known as the annual audit which has also been recognized through GFOA for the last five years. o The Town's first Popular Annual Financial Report (PAFR) by converting much of the CAFR document into an easy -to -read format for our residents. ♦ The Town's open enrollment charter school, Westlake Academy, completed its 10th year of operations with another strong showing of academic and extra -curricular results by our students. ♦ Westlake Academy was also ranked among the best high schools in America. o Washington Post shows them as 20th out of 1,900 schools across the nation. o Newsweek listed the school as the 52nd best high school in the United States o U.S. News & World Report ranked the school as 41st in the nation, 6th in Texas and 11th in national charter schools. They further designated the Academy as a Gold Medal recipient; one of only 2% in the nation to receive this designation of top 500 schools based on highest college readiness. ♦ Recognized by the Texas Economic Development Council with an award for Deloitte University being the top economic development project in Texas for cities of Westlake's size. ♦ Completed construction on the State's $15 Million Phase 1 FM 1938 (Davis Blvd.) project ♦ Began installation of streetscape improvements on FM 1938 (Davis Blvd) with median plantings. ♦ Completed and adopted a facility plan for Westlake Academy, the Town's charter school that is integrated into the Towns 5 Year CIP. ♦ Invested a total of $4.5M in the Town's infrastructure through the Town's CIP ($3.4M) as well as a public-private partnership with Hillwood Properties ($ l .1 M) for improvements to Westlake's major roadways - Dove Road and JT Ottinger Road. This public-private partnership is a multi-year agreement in the amount of $5.3M. Following are short term trends of growth and investment in service excellence that we feel "Move us Forward Together". ♦ Complete the second of a two (2) year program to move municipal employees' compensation closer to market: this will move our municipal employees into the same compensation position per the same compensation policy that we utilize for Westlake Academy employees (i.e. to be within 3% of the market median) IV ♦ Housing Start Increases: Westlake is seeing an upswing of single family residential family residential home construction. It can be seen from the side -chart how we are approaching pre -recession (i.e. '05-06) housing starts. Permanent Population Growth: The North Central Council of Govermnents has updated Westlake's 2010 Census from 992 to 1,040 as FYFY FY FY FY FY FY FY FY of January 1, 2013. Based on the Town's water 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 accounts, the calculated population is approximately 1,100 at the fiscal year-end. An increase in population of 210 in 1990 to the present estimated of 1,100 represents a 423% increase. Wniidnn Rind InrrPnaes ♦ Daytime Population Growth: Because Westlake is the home of major corporate office campuses, its Monday -Friday 8AM-5PM population is in the 10,000 -12,000 range. These office complexes are comprised of notable corporate clients that include Deloitte LLP, Core Logic and Fidelity Investments. Fidelity Investments expanded their office campus in 2008- 09 and is currently populating it. ♦ Impact of Westlake Academy on Westlake's Residential Growth: The number of Westlake residents that are sending their students to Westlake Academy has doubled in the past five years. Resident surveys show Westlake Academy as one of the main reasons they have moved to Westlake, and why they plan to remain here. ♦ Increase in Westlake Academy Enrollment: Westlake Academy, the Town's charter school, has shown a steady total enrollment growth from 491 in FY 2009-10 to a projected 677 in FY 2013-14. The number of these students that live in Westlake has increased as shown in the side -chart. Attendance from the school's secondary boundaries (i.e. outside Westlake) has increased as well. There has also been a corresponding increase in boundary waiting list students; year. Number of Westlake Students In Westlake Academv 254 FY 12/13 FY 13/14 FY 08/09 FY 09/10 FY 10/11 FY 11/12 Waiting List for Westlake Academy 1,241 1,265 844 705 2,079 FY 07/00 FY 08/09 FY 09/10 FY 10/11 FY 11/12 FY 12/13 secondary from 700 in 2010 to over 2,000 students for this past school ♦ Beginning Phase I Facility Improvements: Construction has begun to add approximately 36,000 sq. ft. of new facilities comprised of 3 buildings (a secondary classroom building, field house, and primary years' multi -use building) for which $8.5 million in debt was issued in FY 2012-13. v ♦ Comprehensive Plan: The Town's 1992 Comprehensive Plan is in need of total review and consideration for updating. The Comprehensive Plan serves as the "blue print" for planning the Town's growth and for that reason, is of paramount importance for the Town. To date, the current plan has had only had nominal review of the land use portion of the plan. However, a comprehensive plan has many elements and the financial resources proposed for FY 2013-14 will allow for holistic review of the entire plan and all its elements, not just the land use plan element. The total cost of this project ($338,950) is budgeted in FY 2013-14. ♦ Sales tax collections increased by 19% for FY 12-13. This increase was primarily caused by a 24% increase in revenues due to collections based on the Town's "base" sales taxes. The remaining portions of the tax remained substantially flat. Bases on the analysis of the payers the Town anticipates this upswing to continue in subsequent years. $4.50 $4.25 $4.00 $3.75 $3.50 $3.25 $3.00 $2.75 $2.50 $2.25 0$2.00 $1.50 2$1.25 $1.00 $0.75 $0.50 $0.25 $0.00 Local Sales and Use Tax FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 ■ Base Sales Tax Economic Development Agreements ■ Audit Payments 1i Presumed One-time Payments Long -Term Financial Outlook The Town of Westlake has developed a comprehensive capital improvements document as well as a multi-year strategic plan. Such strategic planning assists both the Council and staff in establishing priorities and allocating resources appropriately. Over the course of the last several years, we have incorporated a `theme' into our budget document to help guide and focus our efforts on the critical issues facing us for the coming budget year. This has been an iterative process and can be seen in how we have progressed in our budgeting over the last 5 fiscal years: ♦ In FY 2009-10, the budget theme was "Critical Challenges, Critical Choices" as we initiated community -wide dialogue on how best to achieve our community's vision for Westlake, ensure our quality of life, as well as begin the task of identifying our challenges as it related to our future financial sustainability. vi ♦ In FY 2010-11, the budget theme was "Securing the Vision. " After a lengthy community dialogue and Council discussions, the Council took the important step to institute our first ad valorem property tax to stabilize our revenue stream and shift from a revenue source that relied almost solely on general sales and use tax. The decision reversed the preceding trend of depleting the General Fund. ♦ Decisions in FY 2010-11 led to the FY 2011-12 budget theme of "Investing in Our Future ". This theme was derived by being able to assess a small property tax which would give us the ability to invest in the improvement of roadways and other infrastructure projects that would provide tremendous benefits to our residents and businesses over the next several years. ♦ With our financial situation stabilized and investment in infrastructure occurring, the FY 2012-13 theme of "Driving Service Excellence" focused on providing resources that will improve our ability to deliver excellent customer service, something that is integral to maintaining Westlake's quality of life and its status as a one -of -a -kind community. The selection of any budget theme is intended to bring into focus how resources are recommended to be prioritized and used in order to take the next step in achieving or creating our vision, mission and community values for Westlake. Over the history of our Town, budgets have been prepared with an eye towards being fiscally conservative, while providing for the highest quality of customer service that our residential population has come to expect in Westlake. In that light, the FY 2013-14 theme of "Moving Forward Together: A Growing Community, A Growing School" is relating to the Town's attention to growth related issues both in Westlake as a municipality and at our Town owned charter school. At this juncture, the short-term trends identified above appear to be the trend for the foreseeable future, thus becoming long term trends. The long term factors that will shape Westlake appear at this point to be: ♦ Continued Westlake Permanent Population Growth: Housing starts do not appear to be slowing down any time soon. This is for two reasons. o First, existing lot inventory in developed Westlake subdivisions continues to be reduced through purchase by prospective Westlake residents. These include potential residents who are building in Westlake in order for their children to attend Westlake Academy. o Second, there are 2 developments slated to begin in the next 12-24 months. The first is Granada, an 84 lot single family residential subdivision. The second is Entrada, an 84 acre mixed-use development that will be comprised of various types of residential development as well as commercial development. ♦ Completion of Phase 1 of Westlake Academy Facility Improvements: When these improvements are complete (scheduled for SY 2014-15), Westlake Academy's enrollment will go from approximately 700 to 800. Users of this document, as well as others interested in the programs and services offered by the Town of Westlake, are encouraged to read the Town's Fiscal Year 2013-2014 Budget. The budget details the Town's long-term goals and financial policies, and describes program accomplishments and initiatives. vii Other Information The Government Finance Officers Association of the United States of America and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of Westlake for its comprehensive annual financial report (CAFR) for the fiscal year ended September 30, 2012. This was the sixth year the Town has received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report (CAFR) continues to meet the Certificate of Achievement Program's requirements and we are submitting it to GFOA to determine its eligibility for another certificate. In addition, we also received our sixth GFOA Distinguished Budget Presentation Award for the fiscal year beginning October 1, 2012 for our municipal budget and the 4th year for our educational services budget for Westlake Academy, a component unit of the Town. In order to qualify for the Distinguished Budget Presentation Award, the Town and Academy budget documents had to be judged proficient as a policy document, a financial plan, an operations guide, and a communications device. Westlake Academy has also received recognition from the Association of School Business Officials International as a recipient of the International Award for Budget Excellence for the past four years. The Finance Department received its second Popular Annual Financial Report (PAFR) converting much of the FY 2012-2013 audit document into an easy -to -read format for our residents. The goal is to encourage resident awareness as it relates to Town finances through the condensed version of the budget. The report provides an "overview of our financial position and policies, and conveys our commitment to delivering responsive services and programs in a fiscally responsible manner." Acknowledgements The preparation of this report could not be accomplished without the efficient and dedicated services of the entire staff of the Finance Department. Appreciation is expressed to Town employees throughout the organization, especially those employees who were instrumental in the successful completion of this report. The staff would also like to thank the Mayor and Town Council for their conservative leadership and their support in planning and conducting the financial operations of the Town in a responsible and progressive manner. Respectfully Submitted, yJ d- r In, NA, Tom Brymer Town Manager viii Debbie Piper, CPA Finance Director Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to Town of Westlake Texas For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2012 *10*0e 40-spAwo Executive Director/CEO ix Texas Student Housing Executive Director + Board j Secretary Exemplary Governance Town Officials, Doth Elected and Appointed, Exhibit Respect, Stewardship, Vision, and Transparency Service Excellence Public Service that Is Responsive and Professional, while balancing Efficiency, Effectiveness and Financial Stewardship 1_,— "fawn Attorney. Town Manager Director of Curriculum & Instructlon Town Secretary Administrative Coordinator Administrative ` Planning& Assistants (2) Development/ Building inspector Dining Holl ` Sr. Administrative Nurse Assistant (.50) Primary Principal Fire Chief - PYP Ity Coordinator 31.inutenant: i I . PYP Teachers 1 — & Pirehghler PYP paratnetiics Counselor f PYP Special -a ll Education Police Services (contracted khru the of an Kollar ELibrarlim Human Re54311rCe5 Secondary Principal MYP/DP f Hutson Itesourcm Coordinator tianerallat MYP/DP Teachers MYP/DP Finance Counselors---- MYP/DP Special Education Supervisor Athletic I Director Academy "' iii Municipal Communications Facilities Malntenonce / Parks & Recreation WA Technician Sr. Adm#nlstrative Assistant (.SDJ Technician Public Works Information Technology WATachltlolan Billing Clerk I Personnel staffing levels for the Town of Westlake are presented In full-time equivalents (FTE) positions. For example, a position staffed for 40 hours per week for 52 weeks per year equals one full-time equivalent position with a total of 2,080 hours. Therefore an FTE_ position of .50 refers to a position that is funded for 1,040 hours per year. X Assistant Town Manager - Interns 2 x .50 Court Supervisor )udga Marshal Dalmty Clark Clerk (.50) Communications Facilities Malntenonce / Parks & Recreation WA Technician Sr. Adm#nlstrative Assistant (.SDJ Technician Public Works Information Technology WATachltlolan Billing Clerk I Personnel staffing levels for the Town of Westlake are presented In full-time equivalents (FTE) positions. For example, a position staffed for 40 hours per week for 52 weeks per year equals one full-time equivalent position with a total of 2,080 hours. Therefore an FTE_ position of .50 refers to a position that is funded for 1,040 hours per year. X TOWN OF WESTLAKE ELECTED AND APPOINTED OFFICIALS September 30, 2013 Laura Carol Wheat Langdon Mayor Mayor Pro -Tem Council Member Council Member Council Member Council Member Michael Rick Clif Barrett Rennhack Cox ELECTED OFFICIALS Wayne Stoltenberg LAURA WHEAT CAROL LANGDON MICHAEL BARRETT RICK RENNHANK CL1F COX WAYNE STOLTENBERG APPOINTED OFFICIALS TOM BRYMER Town Manager AMANDA DEGAN, MPA GINGER AWTRY Assistant Town Manager Director of Communications and Community Affairs DEBBIE PIPER, CPA Finance Director EDDIE EDWARDS Director of Planning and Development JARROD GREENWOOD Director of Public Works TROY MEYER Facilities/ Parks and Recreation Director xi KELLY EDWARDS, TRMC Town Secretary TODD WOOD, SPHR, IPMA-CP Director of Human Resources and Administrative Services RICHARD WHITTEN Fire Chief JASON POWER Director of Information Technology THIS PAGE LEFT BLANK INTENTIONALLY FINANCIAL SECTION THIS PAGE LEFT BLANK INTENTIONALLY rv k l PATTILLO, BROWN & HILL, CERTIFIED PUBLIC ACCOUNTANTS EBUSINESS CONSULTANTS INDEPENDENT AUDITOR'S REPORT To the Honorable Mayor and Members of the Town Council Town of Westlake, Texas We have audited the accompanying financial statements of the governmental activities, the business - type activities, the aggregate discretely presented component units, and each major fund of the Town of Westlake, Texas, as of and for the year ended September 30, 2013, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity'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 entity'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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 115 SOUTH CFIURC14 S'rREE, N HILI.SI301Z0, TX 76645 0(254)582-2583 N FAX: (254) 582-5731 E www.pbhcpB.com AFFILIATE OFFICES: 13ROWNSVILLE, TX (956) 544-7778 ■ TEMPLE, TX (254) 791-3460 WACO, TX (254) 772-4901 ■ ALBUQUERQUE, NM (505) 266-5904 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, the aggregate discretely presented component units, and each major fund of the Town of Westlake, Texas, as of September 30, 2013, 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 and budgetary comparison information on pages 3-15 and 63-70 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town of Westlake, Texas's basic financial statements. The introductory section, individual fund budgetary analysis schedules and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements. The individual fund budgetary analysis 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 and individual nonmajor fund financial statements 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. PW A- J &r. � V J 1, / P February 14, 2014 2 MANAGEMENT'S DISCUSSION AND ANALYSIS THIS PAGE LEFT BLANK INTENTIONALLY MANAGEMENT'S DISCUSSION AND ANALYSIS The Town of Westlake is pleased to present this overview and analysis of the financial activities of the Town for the fiscal year ended September 30, 2013. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found in the introductory section of this report. FINANCIAL HIGHLIGHTS • The assets of the Town exceeded its liabilities at the close of the most recent fiscal year by $37,817,033 (Net position). This number must be viewed within the context that the vast majority of the Town's net position of $27,779,375 (73.5%) are capital assets and that most capital assets in a government entity do not directly generate revenue nor can they be sold to generate liquid capital. The net position restricted for specific purposes totaled $4,243,239 (11.2%). The remaining $5,794,419 (15.3%) is unrestricted net position and may be used to meet the government's ongoing obligations to citizens and creditors in accordance with the Town's fund designation and fiscal policies. • As of the close of the current fiscal year, the Town of Westlake's governmental funds reported combined ending fund balances of $19,443,647, which is an increase of $8,512,786 in comparison with the prior year. Within this total, $12,692,285 is non -spendable, restricted, committed or assigned by management or council. • At the end of the current fiscal year, fund balance for the general fund was $7,051,631, an increase of $1,787,826 in comparison with the prior year. Of this total fund balance, $6,751,362 is unassigned. This represents 148% of the total general fund expenditures and is equivalent to 539 operating days. • The Town's capital assets (net of accumulated depreciation) increased by $6,555,286. Eighty- four percent (84%) of this increase ($5,444,623) is attributed to the completion of the Town's multi-year, public-private partnership with Hillwood Properties. Hillwood contributed materials and workmanship in the amount of $4,665,818 to help with the completion of the improvements to Dove and JT Ottinger Road. An additional $1.8M was added to construction in progress expense for the Westlake Academy Expansion and several road projects. In addition, three new portable buildings and three lease/purchased portable buildings located at the Westlake Academy campus totaling $379,404 were capitalized during the current year. • The Town's bonds payable increased by $8,565,000 in total, due to the issuance of Certificates of Obligation bonds in the amount of $9,320,000 for various projects, and the issuance of General Obligation Refunding Bonds in the amount of $2,200,000 offset by scheduled principal payments and bond refundings of $2,955,000. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the Town's basic financial statements. The Town's basic financial statements are comprised of the following three components: 3 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains supplementary information in addition to the basic financial statements themselves. Government -wide financial statements The government -wide financial statements are designed to provide readers with a broad overview of the Town's finances, in a manner similar to a private -sector business. The government -wide financial statements are prepared utilizing the economic resources measurement focus and the accrual basis of accounting. The statement of net position presents information on all of the Town's assets and liabilities with the difference between the two reported as net position. Over time, increases or decreases in the Town's net position serves as a useful indicator of whether the financial position of the Town is improving or weakening. The statement of activities presents information showing how the government's net position changed during the most recent fiscal year. All of the revenues and expenses are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cashflows. Thus revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. Both of the government -wide financial statements distinguish functions of the Town that are principally supported by sales taxes, property taxes, and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the Town include general government, public safety, culture and recreation, economic development, public works, visitor services and education. The business -type activities of the Town include water/sewer and cemetery. The government -wide financial statements include not only the Town (known as the primary government), but also discretely presented component units including all of the Texas Student Housing entities. Financial information for these component units is reported separately from the financial information presented for the primary government itself. See pages 27 - 30 of the "Financial Section" for detail on these entities. In addition, the Town has the following blended component units: Lone Star Public Facility Corporation, 413 Economic Development Corporation, and Westlake Academy, an open enrollment charter school owned and operated by the Town of Westlake. Fund Financial Statements A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The Town, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Below are the three types of funds. The Town had only Governmental and Proprietary funds for the year ended September 30, 2013. Governmental funds - Governmental funds are used to account for essentially the same functions reported as government activities in the government -wide financial statements. However, unlike the M 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 fiscal year. Such information may be useful in evaluating a government's near-term financial 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, the reader 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 governmental funds and governmental activities. The Town maintains nine individual governmental funds. Information 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, Visitors Association, Westlake Academy, Debt Service, Capital Projects, Westlake Academy Expansion, Economic Development, Lone Star Public Facility Corporation and Westlake 4B Economic Development Corporation funds, all of which are presented as major funds. The Town adopts an annual appropriated budget for all funds, except the Capital Projects and Westlake Academy Expansion funds which are project -length based budgets. A budgetary comparison statement has been provided for all appropriate funds to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 19 - 23 of this report. Proprietary funds - There are two types of proprietary funds, Enterprise Funds and Internal Service Funds. An Enterprise Fund is the only proprietary fund currently maintained by the Town. Enterprise funds are used to report the same functions presented as business -type activities in the government - wide financial statements. The Town uses enterprise funds to account for its water and sewer activities and its cemetery activities. All activities associated with providing such services are accounted for in this fund, including administration, operation, maintenance, debt service, capital improvements, billing and collection. The Town's intent is that costs of providing the services to the general public on a continuing basis is financed through user based charges in a manner similar to a private enterprise. The Town has no Internal Service Funds (fund to report activities that provide supplies and services for the Town's other programs and activities, i.e. self-insurance and fleet management.) The basic proprietary fund financial statements can be found on pages 24 - 26 on this report. Fiduciary funds - Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not available to support the Town's own programs. The accounting used for fiduciary funds is similar to the accounting used for proprietary funds. The Town of Westlake does not currently have any fiduciary funds. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found on pages 31 - 62 of this report. 5 Other information. In addition to the basic financial statements and accompanying notes, this report also presents schedules that further support the information in the financial statements. The schedules are presented immediately following the notes to the financial statements and can be found on pages 63 - 70. GOVERNMENT -WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of the government's financial position. In the case of the Town, assets exceeded liabilities by $37,817,033 at the close of the most recent fiscal year. The Town's combined net position changed from a year ago, increasing $7,959,321 from $29,857,712 to $37,817,033. Our analysis below focuses on the net position (Table 1) and changes in net position (Table 2) of the Town's governmental and business -type activities. The largest portion of the Town's net position, $27,779,375 (73.5%), reflects its investment in capital assets (e.g. land, buildings, equipment, improvements, construction in progress, and infrastructure), less any debt used to acquire capital assets still outstanding. The Town uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the Town'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 capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the Town's net position, $4,243,239 (11.2%), represents resources that are subject to external or internal restrictions on how they may be used. The remaining balance of unrestricted net position, $5,794,419 (15.3%), may be used to meet the government's ongoing obligations to citizens and creditors. Assets: Current and other assets Capital assets Total Assets Liabilities: Long-term liabilities outstanding Other liabilities Total Liabilities Net Position: Invested in capital assets, net of related debt Restricted Unrestricted Total Net Position Table 1 Condensed Statement of Net Position At September 30, 2013 Governmental Activities Business -Type Activities 2013 2012 2013 2012 Total 2013 2012 $ 21,781,962 $ 12,185,864 $ 5,987,119$ 3,503,989$ 27,769,081$ 15,689,853 41,121,883 34,313,615 12,123,241 12,376,223 53,245,124 46,689,838 62,903,845 46,499,479 18,110,360 15,880,212 81,014,205 62,379,691 27,874,090 20,098,829 6,381,767 5,422,434 34,255,857 25,521,263 2,972,214 1,784,244 5,969,101 5,216,472 8,941,315 7,000,716 30,846,304 21,883,073 12,350,868 10,638,906 43,197,172 32,521,979 21,177,426 14,866,299 6,601,949 6,877,555 27,779,375 21,743,854 4,243,239 4,726,376 - - 4,243,239 4,726,376 6,636,876 5,023,731 (842,457) (1,636,249) 5,794,419 3,387,482 $ 32,057,541 $ 24,616,406 $ 5,759,492$ 5,241,306$ 37,817,033 $ 29,857,712 31 Revenues: Program revenues: Fees, fines & charges for services Operating grants & contributions Capital grants & contributions General revenues: Taxes Sales taxes Property taxes Hotel occupancy taxes Mixed beverage taxes Franchise taxes Interest on investments Miscellaneous Extraordinary items Special item Total revenues Expenses: General government Public safety Culture and recreation Economic development Public works Visitor services Education Interest on long-term debt Water and sewer Cemetery Total expenses Inc (Dec) in net position before transfers Transfers Change in net position Net position, beginning Net position, ending Table 2 Changes in Net Position At September 30, 2013 Governmental Activities Business -T w Activities Total 2013 2012 2013 2012 2013 2012 $ 1,798,529 $ 1,417,879 $ 3,162,842 $ 2,939,342 $ 4,961,371 $ 4,357,221 4,907,472 5,269,841 - 24,423 4,907,472 5,294,264 5,897,456 - - - 5,897,456 - 4,375,397 3,657,274 - - 4,375,397 3,657,274 1,366,633 1,441,238 - - 1,366,633 1,441,238 709,578 590,853 - - 709,578 590,853 39,727 38,286 - - 39,727 38,286 734,935 664,991 - - 734,935 664,991 24,218 33,353 6,552 10,077 30,770 43,430 1,023,149 1,112,858 224,995 84,780 1,248,144 1,197,638 - (124,346) - - - (124,346) - 67,760 - - - 67,760 $ 20,877,094 $ 14,169,987 $ 3,394,389 $ 3,058,622 $ 24,271,483 $ 17,228,609 2,606,785 2,518,490 - - 2,606,785 2,518,490 1,978,803 1,883,424 - - 1,978,803 1,883,424 113,924 111,765 - - 113,924 111,765 267,973 216,901 - - 267,973 216,901 626,423 546,039 - - 626,423 546,039 521,521 475,719 - - 521,521 475,719 5,803,611 6,193,560 - - 5,803,611 6,193,560 1,031,328 897,573 - - 1,031,328 897,573 - - 3,356,466 3,098,466 3,356,466 3,098,466 - - 5,3286,282 _ 5,328 6,282 12,950,368 12,843,471 3,361,794 3,104,748 16,312,162 15,948,219 7,926,726 1,326,516 (485,591) 45,507 7,441,135 1,372,023 32,595 (46,126) 7,959,321 1,280,390 485,591 (45,507) - 518,186 (91,633) 7,959,321 1,280,390 24,616,406 23,244,383 5,241,306 5,332,939 29,857,712 28,577,322 $ 32,057,541 $ 24,616,406 $ 5,759,492 $ 5,241,306 $ 37,817,033 $ 29,857,712 7 Governmental activities: Governmental activities increased the Town's net position by $7,441,135 (30%), increasing net position from $24,616,406 to $32,057,541. Unrestricted net position, the part of net position that can be used to finance day-to-day operations without constraints established by debt covenants, enabling legislation, other legal requirements, and/or Council or management's decision, increased by $1,613,145 or 6.6% of total governmental net position. The majority of the total increase was due to the completion of the work to Dove and JT Ottinger Road which was supplemented by the materials and work connected to the Town's multi-year public private agreement with Hillwood Properties. The Town's fees, fines & charges for services increased $380K (26%) primarily due to the increase of building permits/fees plus an increase ($718K) in sales tax revenues. Total revenues (including transfers) for governmental activities increased by $6,135,050 when compared to the prior year. General revenue had an increase of $791,370, while program revenues had an increase of $5,915,737. Program revenues — o Charges for services increased by $380,650 which was primarily due to an increase of building permits/fees (twice as many as previous year) o Operating Grants and Contributions decreased by $362,369 o Capital Grants and Contributions increased by $5,897,456 o $4,665,818 materials/work contribution from Hillwood Properties related to Dove and JT Ottinger Road o $1,000,000 contribution for the Westlake Academy Expansion Project o $149,622 from Roanoke and Trophy Club for Hwy 114/170 enhancements o $82,016 from Fidelity for FM 1938 landscape enhancements (median) General revenues — Increase of $791,370 was primarily made up of the following components: o Sales tax increased by $718,123 which appears to be attributed to the continued improvement in the local economy as well as several new technology and professional related companies and several one-time payments related to purchases and/or construction o Hotel occupancy taxes increased by $118,725 — includes an additional $82K receipt from Deloitte University in the current year o Transfers decreased by $531,098— represents the transfer of $500K to the Utility Fund for the ground storage tank Expenses — o Total expenses for governmental activities increased by $106,897 or approximately 0.8%. The increase is made up of several components including the purchase of Laserfiche software for archiving purposes, increase in payroll and related expenditures due to Phase 2 market increases, increase in the Keller Police Contract and fire fighter equipment. In addition Economic Development increased due to the payment based on an economic development agreement related to hotel/motel tax receipts. Public works expenditures increased because of the growth in right-of-way irrigation costs. All these expenditures were offset by a reduction of approximately $350K due to the elimination of the contribution from the Town to Westlake Academy. Business -type Activities._ The net position of our business -type activities ended fiscal year 2013 at $5,759,492 compared with $5,241,306 in 2012. This represents an increase in net position of $518,186, or 10% more than the prior fiscal year. Revenues of the Town's business -type activities were $3,394,389 for the fiscal year ending September 30, 2013. Revenues increased $335,767 or 11% more than the prior year. Operating expenses for the business -type activities were $3,361,794 for the year, an increase of $257,046 or 8%. The business - type activities also had net transfers in of $485,591 in 2013 compared to net transfers out of $45,507 in the prior year. The resulting increase in net position is due to several factors, including the following: o Increase in Charges for Services was $223,500. This 7.6% increase was primarily realized because FY 12/13 was a drier year than normal resulting in increased water billing revenues and other associated fees in addition to a utility rate increase effective 1/1/13. o The Town's increase in expenses of $257,046 is attributed to the additional water purchases experienced during the dry weather months. oThe General Fund transferred $500K to the Utility Fund to supplement the $1M bond proceeds received for the construction of the Town's second water storage tank. FINANCIAL ANALYSIS OF THE TOWN'S FUNDS As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance - related legal requirements. Governmental funds. The focus of the Town's governmental funds is to provide information on near- term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a town's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the Town's governmental funds reported combined ending fund balances of $19,443,647; an increase of $8,512,786 in comparison with the prior year. Approximately 34.7% of this total ($6,751,362) constitutes unassigned fund balance, which is available for spending at the government's discretion. The remainder of fund balance is nonspendable, restricted, committed or assigned to indicate that it is not available for new spending because it has already been committed. The following tables present a summary of general, special revenue, capital project, and debt service fund revenues and expenditures for the fiscal year ended September 30, 2013, and the amount and percentage of increases and decreases in relation to the prior year. 7 Revenues Taxes Sales Property Mixed beverage Hotel occupancy Franchise Subtotal - Taxes State program Federal program Interest income Building permits and fees Fines and penalties Intergovernmental Contributions Miscellaneous Total Revenues Table 3 Summary of Governmental Fund Revenues 7,226,180 4,696,540 81,958 24,218 969,735 695,167 10,331 5,916,014 1,280,454 J4.070 22.5% 0.4% 0.1% 4.6% 3.3% 0.1% 28.3% A o/ $ 20,900,597 100.0% $ 832,708 326,905 (70,393) (9,135) 371,341 72,829 10,331 5,183,479 (42,783) Percent Increase (Decrease) 19.6% -5.2% 3.8% 20.1% 10.5% 13.0% 7.5% -46.2% -27.4% 62.1% 11.7% 100.0% 707.6% -3.2% 6,675,282 46.9% Table 4 Summary of Governmental Fund Expenditures Expenditures General government $ Public safety Culture and recreation Public works Economic development Visitor services Education Capital outlay Debt service Total Expenditures $ Increase 2012-13 Percent (Decrease) Amount of Total from 2011/12 $ 4,375,397 20.9% $ 718,123 1,366,543 6.6% (75,525) 39,727 0.2% 1,441 709,578 3.4% 118,725 734,935 3.5% 69,944 7,226,180 4,696,540 81,958 24,218 969,735 695,167 10,331 5,916,014 1,280,454 J4.070 22.5% 0.4% 0.1% 4.6% 3.3% 0.1% 28.3% A o/ $ 20,900,597 100.0% $ 832,708 326,905 (70,393) (9,135) 371,341 72,829 10,331 5,183,479 (42,783) Percent Increase (Decrease) 19.6% -5.2% 3.8% 20.1% 10.5% 13.0% 7.5% -46.2% -27.4% 62.1% 11.7% 100.0% 707.6% -3.2% 6,675,282 46.9% Table 4 Summary of Governmental Fund Expenditures Expenditures General government $ Public safety Culture and recreation Public works Economic development Visitor services Education Capital outlay Debt service Total Expenditures $ 10 Increase Percent 2012-13 Percent (Decrease) Increase Amount of Total From 2011/12 (Decrease) 1,910,545 8.4% $ 31,660 1.7% 1,967,584 8.7% (256,885) -11.5% 113,924 0.5% 2,159 1.9% 532,675 2.3% 141,560 36.2% 296,565 1.3% 52,626 21.6% 521,521 2.3% 45,802 9.6% 5,803,611 25.5% (389,949) -6.3% 7,601,631 33.5% 6,491,155 584.5% 3,971,124 17.5% 2,202,206 124.5% 22,719,180 100.0% $ 8,320,334 57.8% 10 Below are summaries and explanations of the changes in fund balances from FY 2012 to FY 2013 of the Governmental Funds that are contained in the above totals: General Fund - Fund balance increased $1,787,826 (34%). Most General Fund revenue categories realized increases over the prior year and many surpassed budget estimates as well. Sales tax receipts, fines and fees, and building permits exceeded both budget and prior year. Sales taxes grew as a result of continued improvement in the local economy. Fines and fees increases as a result of increased collections in municipal court fines and fees and there were double the number of housing permits/fees issued in the current year. 4B Economic Development Corporation Fund - Fund balance decreased $178,384 due to the final reduction which was made related to a receivable from the Utility fund for an interfund loan made to the Utility Fund for several utility projects in past years Visitors Association Fund - Fund balance decreased by $25,907 primarily due to a budgeted transfer of funds for the partial payment of the bonds related to the Arts and Sciences Center. Debt Service Fund - Fund balance decreased $21,175 because property tax receipts were in excess of the debt serviced in the prior year and taken into consideration when setting tax rate for FY 2012-2013. Capital Projects Fund - Fund balance decreased by $941,968 was largely due to the continuation of several street projects (FM 1938 and SH 114/Hwy 170) and the completion of the Dove and JT Ottinger Road project. Westlake Academy Expansion Fund - Fund balance increased by $7,718,480 because bond proceeds of $8.2M were received in the current year for the expansion to the campus which was offset by project expenses through year-end Proprietary Funds. The Town's proprietary fund statements provide the same type of information found in the government -wide financial statements with greater detail. Total net position of the Proprietary Funds amounted to $5,759,492, an increase of $518,186. Operating income totaled $736,004 which was offset by a net non-operating revenues (expenses) total of $703,409. A transfer in the amount of $500K from the General Fund to supplement the construction costs of the ground storage tank constitutes the increase. General Fund Budgetary Highlights The General Fund budget for fiscal year 2013 was amended in total to increase the net change in fund balance from ($1,506,069) to $1,020,783, a total increase of $2,526,852. o The amended budget for net revenues was increased by $697,040 (13%) ■ Sales Tax - $393,750 — received more taxes than anticipated ■ Property Tax - $41,486 - original budget was based on September values but then updated ■ Building permits and fees - $243,710 — the Town had more housing starts/permits than anticipated o The amended budget for expenditures increased by $1,088 11 o Transfers In budget was amended to increase by $36,398 which represents the reimbursement of funds used for the Westlake Academy Expansion project that was repaid upon receipt of the bond proceeds. oAmended budget for Transfers Out was decreased by $1,794,504 - originally budgeted to transfer $2M to Utility Fund for the construction of ground storage tank. Budget was amended to only transfer $500K due to receipt of bond proceeds. The General Fund actual revenue collections were more than the amended budget by $672,258 which can be attributed to the unanticipated increase in sales tax, building permits and fees, and municipal fines and penalties received. The final expenditures were $58,451 less than budgeted (1%). Capital Assets and Debt Administration • Capital Assets. The Town's investment in capital assets for its governmental and business -type activities as of September 30, 2013, totaled $53,245,124 (net of accumulated depreciation). The investment in capital assets includes land, buildings, improvements, machinery and equipment, infrastructure, and construction in progress. The net increase in the Town's investment in capital assets for the current fiscal year was $6,555,286 or 14%. Eighty-four percent (84%) of this increase ($5,444,623) is attributed to the completion of the Town's multi- year, public-private partnership with Hillwood Properties. Hillwood contributed materials and workmanship in the amount of $4,665,818 to help with the completion of the improvements to Dove and JT Ottinger Road. An additional $1.8M was added to construction in progress expense for the Westlake Academy Expansion and several road projects. In addition, three new portable buildings and three lease/purchased portable buildings located at the Westlake Academy campus totaling $379,404 were capitalized during the current year. Table 5 Town's Capital Assets (Net of Accumulated Depreciation) Governmental Activities 2013 2012 Business -Type Activities 2013 2012 Total 2013 _ 2012 Land $ 11,896,663 $ 11,896,663 $ - $ - $ 11,896,663 $ 11,896,663 Capital improvements 8,184,522 2,386,902 9,614,902 9,883,837 17,799,424 12,270,739 Buildings 17,611,891 17,767,343 - - 17,611,891 17,767,343 Machinery & equipment 594,715 710,703 1,948,389 2,069,390 2,543,104 2,780,093 W/W treatment rights - - 217,026 248,786 217,026 248,786 Construction in progress 2,834,092 1,552,004 342,924 174,210 3,177,016 1,726,214 Total capital assets $ 41,121,883 $ 34,313,615 $ 12,123,241 $ 12,376,223 $ 53,245,124 $ 46,689,838 Additional information on the Town's capital assets can be found in Note III on pages 43 - 44 of this report. 12 Long-term debt - At the end of the current fiscal year, the Town had total long-term debt outstanding of $35,344,832. Of this amount, $30,947,157 represents bonded indebtedness, $96,026 economic development reimbursement, and $5,412,149 business -type debt. During the fiscal year 2012-2013, the Town's total debt payable increased by $8,882,468. This increase is primarily attributed to the issuance of Certificates of Obligation bonds in the amount of $9.32M for the Westlake Academy expansion project and the ground storage tank. This amount was offset by the scheduled repayment of principal and interest on outstanding bonded debt. Standard & Poor's Ratings Services, a division of the McGraw-Hill, Inc. has recently increased the Town's rate from AA to AA+/stable. Additional information about the rating agency or the significance of the rating provided may be obtained from Standard & Poor's web site. Additional information on the Town's long-term debt can be found in Note III on pages 48 - 52. General obligation bonds Certificates of obligation Contractual obligations Notes payable Compensated absences Deferred amounts Total long-term debt $ 28,859,387 $ 20,952,268 $ 6,485,445 $ 5,510,096 $ 35,344,832 $ 26,462,364 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS While we clearly understand the nation as a whole continues to try and recover from the economic downturn, the Town remains committed to budgeting and forecasting projections based on a fiscally conservative formula. We have accomplished many great things this past year through our use of partnerships and inventive strategies to govern our community. We have begun the process of reinvesting in our infrastructure and will continue to do so over the next several years — paying special attention to unique cost sharing opportunities, both public and private. Our overall goal is to provide our residents with a living experience that is second -to -none. Below are long-term trends related to the FY 2013-2014 budget: • Continued Westlake Permanent Population Growth: Housing starts do not appear to be slowing down any time soon. This is for two reasons. o First, existing lot inventory in developed Westlake subdivisions continues to be reduced through purchase by prospective Westlake residents. These include potential residents who are building in Westlake in order for their children to attend Westlake Academy. 13 Table 6 Outstanding Debt at Year -End 2013 2012 2013 2012 2013 2012 $ 17,010,892 $ 17,180,938 $ - $ - $ 17,010,892 $ 17,180,938 12,876,496 4,877,000 1,059,769 - 13,936,265 4,877,000 96,026 124,618 5,412,149 5,498,668 5,508,175 5,623,286 17,420 34,075 - - 17,420 34,075 106,404 81,905 13,527 11,428 119,931 93,333 (1,247,851) (1,346,268) _ _ (1,247,851) (1,346,268) $ 28,859,387 $ 20,952,268 $ 6,485,445 $ 5,510,096 $ 35,344,832 $ 26,462,364 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS While we clearly understand the nation as a whole continues to try and recover from the economic downturn, the Town remains committed to budgeting and forecasting projections based on a fiscally conservative formula. We have accomplished many great things this past year through our use of partnerships and inventive strategies to govern our community. We have begun the process of reinvesting in our infrastructure and will continue to do so over the next several years — paying special attention to unique cost sharing opportunities, both public and private. Our overall goal is to provide our residents with a living experience that is second -to -none. Below are long-term trends related to the FY 2013-2014 budget: • Continued Westlake Permanent Population Growth: Housing starts do not appear to be slowing down any time soon. This is for two reasons. o First, existing lot inventory in developed Westlake subdivisions continues to be reduced through purchase by prospective Westlake residents. These include potential residents who are building in Westlake in order for their children to attend Westlake Academy. 13 o Second, there are 2 developments slated to begin in the next 12-24 months. The first is Granada, an 84 lot single family residential subdivision. The second is Entrada, an 84 acre mixed-use development that will be comprised of various types of residential development as well as commercial development. • Completion of Phase 1 of Westlake Academy Facility Improvements: When these improvements are complete (scheduled for SY 2014-15), Westlake Academy's enrollment will go from approximately 700 to 800. GENERAL FUND In the FY 2013-14 budget, General Fund revenues and transfers are budgeted to decrease by $394K o Budgeted revenues are $385,753 (6%) less than the prior year actual ■ Sales tax revenue budget only increased by approximately $90K based on information we had at the time of the budget preparation (due to accruals). Based on the actual amounts received in FY 2012-2013; we anticipate an increase in the FY 2013-2014 budget. There was a reduction in permits and fees and fines and forfeitures based on prior year projections but again looking at the prior year actual amounts, we expect an increase in these budgeted revenues. Operating budgeted expenditures in the General Fund (which includes the General Major Maintenance Fund for audit purposes) are projected to increase by $1.4M. The larger components of this increase are related to the following: o Increase in Operating Expenditures ■ $338K - Comprehensive Plan update ■ $ 41 K - mandated bunker gear for part time fire/ems employees ■ $ 24K - new permitting software for the Planning and Development Department ■ $ 41K - increase to Keller Police contract services ■ $ 55K - increased building inspection costs related to the Entrada and Granada development. o Increase of $395K in Payroll Expenditures ■ This increase includes $115,000 in market pay increases (inclusive of taxes and insurance) for work force attraction and retention and is the second year of a 2 year program. A portion of this increased expenditure is subsidized by transfers in from the Utility Fund ($11.5K) and the Visitors Association Fund ($11.5K). An additional portion of this increase includes the personnel changes to include an additional full-time Lieutenant (Fire Department), additional full-time HR Generalist and the change from a part-time utility -person to a full-time position. Medical, dental and life insurance costs are predicted to increase by 18% ($50K) and an additional $52K (15%) was budgeted for social security and Medicare taxes. o Purchase of a facilities/maintenance vehicle at $45K o Maintenance/repair towards facilities/technology for Westlake Academy in the amount of $90K 14 The Capital Project Fund balance reduction of $8.865M is a direct reflection of the construction of the following projects: • FM1938 Streetscape Project - $893K • SH114/Hwy 170 Enhancement project - $390K • Trail Connection at 114/Solana Project - $15K • Westlake Academy West Parking Improvement Project - $200K • Outdoor Warning System Project - $99K Westlake Academy Facility Expansion Project - $8.068M The Enterprise Funds have another large reduction in fund balance and is related specifically to the Utility Fund, totaling ($1.189M). This is primarily related to a construction project. The Town's second ground storage tank should be completed by the end of FY 2013-14. During FY 2012-13 the Utility Fund received bond proceeds of $1.0M and an inter -fund loan of $500K from the General Fund. The inter - fund loan amount is scheduled to be re -paid over two years starting in FY 2014-15. CONTACTING THE TOWN'S FINANCE DEPARTMENT This financial report is designed to provide our citizens, customers, and investors and creditors with a general overview of the Town's finances and to demonstrate the Town's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Debbie Piper, Town of Westlake Finance Director, at 817-490-5712. 15 THIS PAGE LEFT BLANK INTENTIONALLY BASIC FINANCIAL STATEMENTS THIS PAGE LEFT BLANK INTENTIONALLY TOWN OF WESTLAKE, TEXAS STATEMENT OF NET POSITION SEPTEMBER 30, 2013 The accompanying notes are an integral part of these financial statements. 16 Primary Government Discretely Governmental Business -type Presented Activities Activities Total Component Units ASSETS Cash and cash equivalents $ 19,481,553 $ 4,859,411 $ 24,340,964 $ 6,142,756 Receivables (net of allowance) 1,290,062 843,337 2,133,399 419,864 Inventories - 97,582 97,582 - Other assets 69,541 14,987 84,528 - Restricted cash and cash equivalents 293,363 171,802 465,165 5,349,906 Deferred charges 647,443 - 647,443 3,352,256 Capital assets: Land 11,896,663 - 11,896,663 12,070,678 Buildings and improvements 33,152,248 13,376,253 46,528,501 91,741,792 Wastewater treatment rights - 635,199 635,199 - Machinery and equipment 2,911,682 3,466,046 6,377,728 12,052,793 Construction in progress 2,834,092 342,924 3,177,016 - Less: accumulated depreciation ( 9,672,802) ( 5,697,181) ( 15,369,983) ( 41,919,087) Total capital assets 41,121,883 12,123,241 53,245,,124 73946,176 Total assets 62,903,845 18,110,360 81,014,205 89,210,958 LIABILITIES Accounts payable 1,555,933 228,154 1,784,087 2,085,658 Customer deposits payable - 171,802 171,802 - Unearned revenue 71,508 353,427 424,935 3,083,474 Accrued interest payable 359,476 5,112,040 5,471,516 25,677,324 Noncurrent liabilities: Due within one year 985,297 103,678 1,088,975 2,170,620 Due in more than one year 27,874,090 6,381,767 34,255,857 110,058,725 Total liabilities 30,846,304 12,350,868 43,197,172 143,075801 NET POSITION Net invested in capital assets 21,177,426 6,601,949 27,779,375 ( 38,283,169) Restricted for: Tourism 1,025,891 - 1,025, 891 Future projects 2,284,772 _ 2,284,772 Debt service 1,482 - 1,482 Education 931,094 - 931,094 - Unrestricted6,636,876 ( 842,457) 5,794,419 ( 15,581 „674] Total net position $� 32,057,541 $ 5,759,492 $ 37,817,033 $( 53,864,843) The accompanying notes are an integral part of these financial statements. 16 TOWN OF WESTLAKE, TEXAS STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 General revenues: Sales taxes Property taxes Hotel occupancy taxes Mixed beverage taxes Franchise taxes Interest income Miscellaneous Transfers Total general revenues and transfers Change in net position Net position, beginning Net position, ending The accompanying notes are an integral part of these financial statements. 17 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary government: Governmental activities: General government $ 2,606,785 $ 774,909 $ - $ - Public safety 1,978,803 182,154 15,175 - Culture and recreation 113,924 - - - Economic Development 267,973 - - - Public works 626,423 659,246 6,250 4,897,456 Visitor Services 521,521 - - _ Education 5,803,611 182,220 4,886,047 1,000,000 Interest on long-term debt 1,031,328 _ _- - - Total governmental activities 12,950,368 1,798,529 _4,907,472 5,897,456 Business -type activities: Water utilities 3,356,466 3,157,332 - - Cemetery 5,328 5,510 - - Total business -type activities 3,361,794 3,162,842 - - Total primary government $ 16,312,162 $ 4,961,371 $ 4,907,472 $ 5,897,456 Component units: Business -type activities $ 23,879,165 $ 17,816,530 $ - $ - Total component units $ 23,879,165 $ 17,816,530 $ - $ - General revenues: Sales taxes Property taxes Hotel occupancy taxes Mixed beverage taxes Franchise taxes Interest income Miscellaneous Transfers Total general revenues and transfers Change in net position Net position, beginning Net position, ending The accompanying notes are an integral part of these financial statements. 17 Net (Expense) Revenue and Clxanaes in Net Position Primary Government Discretely Governmental Business -type Presented Activities Activities Total Component Units $( 1,831,876) $ - $( 1,831,876) $ ( 1,781,474) _ ( 1,781,474) ( 113,924) - ( 113,924) - ( 267,973) - ( 267,973) - 4,936,529 - 4,936,529 - ( 521,521) - ( 521,521) - 264,656 _ 264,656 - ( 1,031,328) - ( 1,031,328) _ - ( 346,911) _ _ ( 346,911- - - { 199,134) ( 199,134) - - 182 182 - - ( 198,952) ( 198,952) - ( 346,9 ( 198,952) ( 545,863) - $( 6,062,6 $[ 6,062,635 4,375,397 - 4,375,397 - 1,366,633 - 1,366,633 - 709,578 - 709,578 - 39,727 - 39,727 - 734,935 - 734,935 - 24,218 6,552 30,770 8,583 1,023,149 224,995 1,248,144 - ( 485,591) 485,591 - - 7,788,046 717,138 8,505,184 _ 8,583 7,441,135 518,186 7,959,321 ( 6,054,052) 24,616,406 5,241,306 29,857,712 ( 47,810,791 $ 32,057,541 $ 5,759,492 $ 37,817,033 $( 53,864,843) 18 TOWN OF WESTLAKE, TEXAS BALANCESHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2013 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds Certain other long-term assets are not available to pay current period expenditures and therefore are deferred in the funds Net position of governmental activities The accompanying notes are an integral part of these financial statements. 19 Debt Visitors Westlake Service General Association Academy Fund ASSETS: Cash and cash equivalents $ 6,219,206 $ 1,012,151 $ 845,075 $ 1,481 Receivables Property taxes 1,961 - 166 Accounts receivable 703,875 61,165 242,095 - Due from other funds 165,140 - - Other assets 6,906 748 61,887 Restricted cash and investments 293,363 - - - TOTAL ASSETS $ 7,390,451 $ 1,074,064 $ 1,149,057 $ 1,647 LIABILITIES AND FUND BALANCE: Liabilities: Accounts payable $ 336,859 $ 4,358 $ 86,428 $ - Deferred revenue 1,961 1,860 69,648 165 Due to other funds 41,207 - Total liabilities 338,820 47,425 156,076 165 Fund Balances: Nonspendable: Prepaid items 6,906 748 61,887 Restricted for: Tourism - 1,025,891 - Future projects 74,941 - - Debt service - - - 1,482 Education - - 931,094 - Committed for: Court security and technology 194,422 - - Assigned for: Future equipment purchase 24,000 - - Unassigned 6,751,362 - - - Total fund balances 7,051,631 1,026,639 992,981 1,482 TOTAL LIABILITIES AND FUND BALANCES $ 7,390,451 $ 1,074,064 $ 1,149,057 $ 1,647 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds Certain other long-term assets are not available to pay current period expenditures and therefore are deferred in the funds Net position of governmental activities The accompanying notes are an integral part of these financial statements. 19 Westlake Economic Lone Star 4B Economic Total Capital Academy Development Public Facility Development Governmental Proiects Expansion Fund Corporation_ Corporation Funds $ 2,702,678 $ 8,687,363 $ - $ 13,599 $ - $ 19,481,553 2,127 - 54,355 165,140 1,226,630 41,207 - - 206,347 69,541 293,363 $ 2,702,678 $ 8,687,363 $ 95,562 $ 13,599 $ 165,140 $ 21,279,561 $ 63,843 $ 968,883 $ 95,562 $ $ - $ 1,555,933 - _ - 73,634 - - 165,140 206,347 63,843 968,883 95,562 - 165,140 1,835,914 69,541 1,025,891 2,638,835 7,718,480 13,599 - 10,445,855 - - - - 1,482 _ - 931,094 194,422 24,000 6,751,362 2,638,835 7,718,480 - 13,599 _ 19,443,647 $ 2,702,678 $ 8,687,363 $ 95,562 $ 13,599 $ 165,140 41,121,883 ( 28,571,420) 63,431 $ 32,057,541 20 TOWN OF WESTLAKE, TEXAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 The accompanying notes are an integral part of these financial statements. 21 Debt Visitors Westlake Service General Association Academy Fund REVENUES: Taxes Sales $ 3,061,948 $ - $ $ - Property 1,236,978 - - 129,565 Mixed beverage 39,727 - - - Hotel occupancy - 668,371 - Franchise 734,935 - - State program revenues - - 4,696,540 - Federal program revenues - - 81,958 - Interest income 9,286 1,830 1,594 - Building permits and fees 969,735 - - - Fines and penalties 695,167 - - Intergovernmental 10,331 - - - Contributions 11,094 7,464 - - Miscellaneous 73,933 9,111 1,197,410 - Total revenues 6,843,134 686,776 5,977,502 129,565 EXPENDITURES: Current General government 1,910,545 - - - Public safety 1,967,584 - - Culture and recreation 113,924 - - - Public works 532,675 - - Economic Development - - - Visitor services - 521,521 - Education - - 5,803,611 Capital outlay 50,014 - - - Debt service Principal retirement - - 2,955,000 Interest and other fiscal charges - - - 830,425 Bond issuance costs - - - 62,383 Total expenditures 4,574,742 521,521 5,803,611 3,847,808 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 2,268,392 165,255 173,891 ( 3,718,243) OTHER FINANCING SOURCES (USES) Transfers in 609,826 - - 1,459,345 Transfers out ( 1,090,392) ( 191,162) - - Refunding bonds issued - - - 2,200,000 Premium on refunding bonds issued - - - 37,723 Certificates of obligation issued - - - - Premium on certificates of oblgation issued - - - - Total other financing sources (uses) ( 480,566) ( 191,162) - _ 3,697,068 NET CHANGE IN FUND BALANCES 1,787,826 ( 25,907) 173,891 ( 21,175) FUND BALANCES, BEGINNING 5,263,805 1,052,546 819,090 22,657 FUND BALANCES, ENDING $ 7,051.631 $ 1,026,639 $ 992,981 $ 1,482 The accompanying notes are an integral part of these financial statements. 21 Westlake Economic Lone Star 4B Economic Total Capital Academy Development Public Facility Development Governmental Projects Expansion Fund Corporation Corporation Funds $ - $ $ 219,600 $ 41,207 5,503 5,647 - 4,897,456 1,000,000 4,902,959 1,005,647 260,807 - 296,565 5,844,927 1,706,690 - - 123,316 - 5,844,927 1,830,006 296,565 ( 941,968) ( 824,359) ( 35,758) - - 35,758 - ( 36,398) - - 8,294,800 - - 284,437 - - 8,542,839 35,758 ( 941,968) 7,718,480 3,580,803 - $ 2,638,835 $ 7,718,480 $ $ 1,093,849 $ 4,375,397 - 1,366,543 - 39,727 709,578 734,935 4,696,540 81,958 23 335 24,218 - - 969,735 - - 695,167 - - 10,331 - - 5,916,014 - _ - 1,280,454 23 1,094,184 20,900,597 1,910,545 1,967,584 113,924 532,675 296,565 521,521 5,803,611 7,601,631 2,955,000 830,425 - - 185,699 22,719,180 23 1,094,184 ( 1,818,583) - 2,104,929 ( 1,272,568) ( 2,590,520) - 2,200,000 - - 37,723 - - 8,294,800 - - 284,437 { 1,272,568) 10,331,369 23 { 178,384) 8,512,786 13,576 178,384 10,930,861 $ 13,599 $ - $ 19,443,647 22 THIS PAGE LEFT BLANK INTENTIONALLY TOWN OF WESTLAKE, 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, 2013 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balance - total governmental funds $ 8,512,786 Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation exceeds capital outlays in the current period. 6,808,268 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. ( 23,503) The issuance of long-term debt (e.g., bonds, leases) provided current financial resources to governmental funds, while repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. ( 7,631,014) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. ( 225,402) Change in net position of governmental activities $_ 7,441,135 The accompanying notes are an integral part of these financial statements. 23 TOWN OF WESTLAKE, TEXAS STATEMENT OF NET POSITION PROPRIETARY FUNDS SEPTEMBER 30, 2013 Business -type Activities -Enterprise Funds Utility Cemetery Fund Fund Total ASSETS Current assets: Cash and cash equivalents Accounts receivable (net of allowance) Inventories Deferred Charges Restricted cash and investments Total current assets Noncurrent assets Capital assets: Construction in progress Buildings and improvements Wastewater treatment rights Machinery and equipment Less: accumulated depreciation Total capital assets Total noncurrent assets Total assets LIABILITIES Current liablities: Accounts payable Customer deposits payable Accrued interest payable Deferred revenue Compensated absences Current portion of bonds payable Contractual obligations Total current liabilities Long-term liabilities: Bonds payable Compensated absences Contractual obligations Total long-term liabilities Total liabilities $ 4,808,230 $ 51,181 $ 4,859,411 843,221 116 843,337 - 97,582 97,582 14,987 - 14,987 171,802 171,802 5,838,240 148,879 5,987,119 342,924 - 342,924 13,376,253 - 13,376,253 635,199 - 635,199 3,466,046 - 3,466,046 ( 5,697,181) - ( 5,697,181) 12,123,241 - 12,123,241 12,123,241 - 12,123,241 17,961,481 148,879 18,110,360 228,154 - 228,154 171,802 _ 171,802 5,112,040 - 5,112,040 352,169 1,258 353,427 1,353 - 1,353 11,000 _ 11,000 91,325 - 91,325 5,967,843 1,258 5,969,101 1,048,769 - 1,048,769 12,174 12,174 5,320,824 - 5,320,824 6,381,767 - 6,381,767 12,349,610 1,258 12,350,868 NET POSITION Net investment in capital assets 6,601,949 - 6,601,949 Unrestricted ( 990,078) 147,621 ( 842,457) Total net position $ 5,61 1,871 $ 147,621 $ 5,759,492 The accompanying notes are an integral part of these financial statements. 24 TOWN OF WESTLAKE, TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 Business -type Activities -E nterp rise Funds Utility Cemetery Fund Fund Tots OPERATING REVENUES: Charges for services $ 3,157,332 $ 5,510 $ 3,162,842 Miscellaneous revenue 224,995 - 224,995 Total operating revenue 3,,3 82,327 5,510 3,387,837 OPERATING EXPENSES: Payroll costs 275,910 - 275,910 Professional and contract services 81,630 5,030 86,660 Depreciation 432,628 - 432,628 Amortization of wastewater treatment rights 31,428 - 31,428 Water purchases 965,192 - 965,192 Cost of cemetary lots sold - 298 298 Other operating costs 859,717 _ - 859,717 Total operating expenses 2,646,505 _ 5,328 2,651,833 OPERATING INCOME 735,822 182 736,004 NON-OPERATING REVENUES (EXPENSES): Interest income 6,46 ( 709,9611 ) 87 - 6,552 ( 709;961) Interest expense Total non-operating revenues (expenses) ( 703,496) 87 { 703,409) INCOME (LOSS) BEFORE TRANSFERS AND CAPITAL CONTRIBUTIONS 32,326 269 32,595 Transfer in 550,000 550,000 Transfer out ( 64,409) - ( 64,409) Total transfers and capital contributions 485,591 - 485,591 CHANGE IN NET POSITION 517,917 269 518,186 TOTAL NET POSITION, BEGINNING 5,093,954 147.352 5,241,306 TOTAL NET POSITION, ENDING $ 5,611,871 147,621$ 5,759,492 The accompanying notes are an integral part of these financial statements. 25 THIS PAGE LEFT BLANK INTENTIONALLY TOWN OF WESTLAKE, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 Business -type Activities -Enterprise Funds Utility Cemetery Total Fund Fund Current Year CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 3,376,428 $ 6,652 $ 3,383,080 Cash payments to employees/retirees ( 273,811) - ( 273,811) Cash payments for goods and services ( 1,752,1(,3) ( 5,697) ( 1,758,260) Net cash provided by operating activities 1,350,054 955 1,351,009 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfer from other funds 550,000 - 550,000 Transfer to other funds ( 64,449) - ( 64,409) Advances to other funds ( 178,384} - ( 178,384) Net cash provided by noncapital financing activities 307,207 - 307,207 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from bonds 1,060,355 - 1,060,355 Principal paid on debt ( 86,519) ( 86,519) Interest paid on debt ( 132,870) - ( 132,870) Purchase of property and equipment ( _211,406 - ( 211,406) Net cash used by capital and related financing activities 629,560 - u 629,560 CASH FLOWS FROM INVESTING ACTIVITIES Investment earnings 6,465 87 6,552 NET INCREASE IN CASH AND CASH EQUIVALENTS 2,293,286 1,042 2,294,328 CASH AND CASH EQUIVALENTS, BEGINNING 2,686,746 50.139 2,736,885 CASH AND CASH EQUIVALENTS, ENDING $� 4,980,032 $ 51,181 $ 5,031,213 RECONCILIATION OF TOTAL CASH AND CASH EQUIVALENTS Cash and cash equivalents $ 4,808,230 $ 51,181 $ 4,859,411 Restricted cash and cash equivalents 171,802 - 171,802 Total cash and cash equivalents $ 4,980,032 $ 51,181 $ 5,031,213 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income $ 735,822 $ 182 $ 736,004 Adjustments to reconcile operating loss to net cash provided by operating activities: Depreciation and amortization 464,056 - 464,056 Changes in operating assets and liabilities: Receivables 4,387 116) 4,271 Other assets (15,241) 298 (14,943) Accounts payable 169,217 F 667) 168,550 Compensated absences 2,099 - 2,099 Customer deposits payable 22,762 - 22,762 Deferred revenue ( 33,048) 1,258 ( 31,790) Net cash provided by operating activities $ 1,350,(154 $ 955 $ 1,351,009 The accompanying notes are an integral part of these financial statements. 26 TOWN OF WESTLAKE, TEXAS DISCRETELY PRESENTED COMPONENT UNITS COMBINING STATEMENT OF NET POSITION SEPTEMBER 30, 2013 LIABILITIES AND NET POSITION LIABILITIES Accounts payable and accrued expenses Texas Student Texas Student Texas Student Unearned revenue Housing Housing Housing Accrued interest payable Authority - Corporation - Authority - Noncurrent liabilities: Ballpark Austin The Ridge at Town Lake Due within one year Project North Texas Austin Project ASSETS 33,858,434 26,352,646 19,977,645 Cash and cash equivalents $ 380,577 $ 381,265 $ 377,017 Accounts receivables (net of allowance) 16,249 3,872 13,273 Restricted assets: ( 13,996,103) { 9,703,194) { 6,767,257) Cash and cash equivalents 1,119,010 1,949,197 185,033 Deferred charges 2,145,311 605,372 601,573 Capital assets: Land 4,788,265 2,200,000 2,182,816 Buildings and improvement 21,345,305 25,705,000 16,963,841 Machinery and equipment 6,993,063 1,253,841 1,211,085 Less: accumulated depreciation ( 12,559,302) ( 11,811,874) ( 6,819,249) Total assets 24,228,478 20,286,673 14,715,389 LIABILITIES AND NET POSITION LIABILITIES Accounts payable and accrued expenses 1,175,615 381,490 286,799 Unearned revenue 192,187 245,906 181,013 Accrued interest payable 7,850,774 5,670,894 2,756,615 Noncurrent liabilities: Due within one year 705,000 697,515 328,105 Due in more than one year 33,858,434 26,352,646 19,977,645 Total liabilities 43,782,010 33,348,451 23,530,177 NET POSITION Net investment in capital assets ( 13,996,103) { 9,703,194) { 6,767,257) Unrestricted ( 5,557,429) ( 3,358,584) { 2,047,531) Total net position $( 19,553,532) $( 13,061,778) $( 8,814,788) The accompanying notes are an integral part of these financial statements. 27 Texas Student Housing Authority - Texas Student College Station Housing Project Authority Total $ 4,554,177 $ 449,720 $ 6,142,756 385,497 973 419,864 2,096,666 - 5,349,906 - -- 3,352,256 2,899,597 - 12,070,678 27,727,646 - 91,741,792 2,594,804 - 12,052,793 ( 10,728,662) - ( 41,919,087) 29,529,725 450,693 89,210,958 236,163 5,591 2,085,658 2,424,540 39,828 3,083,474 9,399,041 - 25,677,324 440,000 _ 2,170,620 29,870,000 - 110,058,725 42,369,744 45,419 143,075,801 { 7,816,615) - ( 38,283,169) ( 5,023,404) 405,274 ( 15,581,674) $( 12,840,019) $ 405,274 $( 53,864,843) 28 TOWN OF WESTLAKE, TEXAS DISCRETELY PRESENTED COMPONENT UNITS COMBINING STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 Program Revenues The accompanying notes are an integral part of these financial statements. 29 Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Business -type activities: Texas Student Housing Authority $ 701,013 $ 819,070 $ - $ - Texas Student Housing Authority: College Station Project 7,794,480 5,946,884 - - Ballpark Austin Project 5,487,624 3,834,672 - - Town Lake Austin Project 4,189,657 3,061,901 - - Texas Student Housing Corporation: The Ridge at North Texas 5,706,391 4,154,003 -- --. .-.__ ..... Total business -type activities 23,879,165 17,816,530 Total primary government $ 23,879,165 $ 17,816,530 $ - $ General revenues: Interest income Total general revenues and transfers Change in net position Net position, beginning Net position, ending The accompanying notes are an integral part of these financial statements. 29 Net (Expense) Revenue and Chances in Net Position Texas Student Texas Student Texas Student Texas Student - ( 1,552,388) Housing Housing Housing Housing 118,057 ( 6,062,635) Authority - Corporation - Authority - Authority - Texas Student ( 6,062,635 Ballpark Austin The Ridge at Town Lake College Station Housing Project North Texas Austin Project Project Authority _ Total $ _ $ _ $ _ $ - $ 118,057 $ 118,057 - - - ( 1,847,596) - ( 1,847,596) ( 1,652,952) - - - - ( 1,652,952) - - ( 1,127,756) - - ( 1,127,756) - ( 1,552,38 - - - ( 1,552,388) ( 1,652,952) ( _1,552,388) ( 1,127,756) ( 1,847,596) 118,057 ( 6,062,635) 1,652,952) 1,552,388 ( 1,127,756) ( 1,847,596) 118,057 ( 6,062,635 127 7,793 31 321 311 8,583 127 7,793 31 321 311 8,583 ( 1,€52,825) ( 1,544,595) ( 1,127,725) ( 1,847,275) 118,368 ( 6,054,052) ( 17,900,707) ( 11,517,183) ( 7,687 ( 10,992,74 286,906 ( 47,810,791) ${ 19,553,532 $( 13,061,778 $ 8,814,788) $( 12,840,019) $ 405,274 $( 53,864,843 30 THIS PAGE LEFT BLANK INTENTIONALLY TOWN OF WESTLAKE, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2013 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Town of Westlake, Texas (the "Town") was incorporated under the provisions of the laws of the State of Texas on December 26, 1956. The Town operates under a Council - Manager form of government and provides the following services as authorized by the laws of the State of Texas: public safety; cultural and recreation; and economic development. The accounting and reporting policies of the City conform to accounting principles generally accepted in the United States of America for local governments. Generally accepted accounting principles (GAAP) for local governments include those principles prescribed by the Governmental Accounting Standards Board (GASB). The following is a summary of the more significant accounting and reporting policies: A. ReportinL, Entity The accompanying financial statements 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 Town's operations and are appropriately presented as funds of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the government -wide financial statements to emphasize it is legally separate from the Town. Based on these criteria, the financial information of the following entities have been blended or discretely presented within the financial statements: Lone Star Public Facilities Corporation, 4B Economic Development Corporation, Westlake Academy, Texas Student Housing Authority, Texas Student Housing Authority - Ballpark Austin Project; Texas Student Housing Authority - Town Lake Austin Project, Texas Student Housing Authority - College Station Project and Texas Student Housing Corporation - The Ridge at North Texas. B. Component Units Discretely Presented The Texas Student Housing Authority, Texas Student Housing - Ballpark Austin Project, Texas Student Housing - Town Lake Austin Project, Texas Student Housing - College Station Project, and Texas Student Housing Corporation — The Ridge at North Texas Project (collectively, "Texas Student Housing") are Texas nonprofit organizations as a duly constituted authority of the Town pursuant to Section 53.35(b) of the Texas Education Code, as amended (Act). Texas Student Housing's primary purpose is to construct, own, and operate student housing facilities on college campuses in Texas. The board consists of seven directors which are appointed by the Town's governing body and has the ability to remove at will the appointed members, thus the governing body can impose its will on the organizations. Housing entities are reported as Enterprise Funds. The Town is not responsible for the long-term debt of the Texas Student Housing entities. 31 Separately issued financial reports are available for the all the Texas Student Housing entities. These reports may be obtained by contacting the following office. Texas Student Housing Authority 3 Village Circle, Suite 202 Westlake, Texas 76262 Blended Lone Star Public Facilities Corporation is a Texas nonprofit corporation that acts on behalf of the Town to further the public purposes under the Public Facilities Corporation Act, as it's duly constituted authority and instrumentality. The board of directors, appointed by the Town's governing body, is comprised of seven members, of whom five must be members of the Town's governing body. Since a voting majority of the board of directors is on the Town's governing body, the Town can impose its will on the entity. 4B Economic Development Corporation is a Texas nonprofit industrial corporation under the Development Corporation Act of 1979 formed to promote economic development within the Town and the State of Texas in order to eliminate unemployment and underemployment, and to promote and encourage employment and the public welfare of, for, and on behalf of the Town by developing, implementing, financing, and providing one or more projects defined and permitted under Section 4B of the Act. The board of directors is composed of seven persons appointed by the members of the Town's governing board. Four of the members of the board of directors are members of the Town's governing board. Since a voting majority of the board of directors is on the Town's governing body, the Town can impose its will on the entity. Westlake Academy ("Academy') is an open -enrollment charter school, as provided by Subchapter D, Chapter 12, of the Texas Education Code. The Town of Westlake ("Charter Holder") applied for and became the first municipality in Texas to ever receive this special charter designation. The board consists of six trustees and is appointed by the Town's governing body. Currently, all the members of the board of trustees are members of the Town's governing body. Since a voting majority of the board of directors is on the Town's governing body, the Town can impose its will on the entity. The Academy's year-end is August 31. C. Government -wide and Fund Financial Statements The government -wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the non -fiduciary activities of the Town. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. 32 The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues includes 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual Governmental Funds and major individual Enterprise Funds are reported as separate columns in the fund financial statements. D. Measurement Focus Basis of Accounting, and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 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 Town considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. 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 current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the Town. The Town uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. A fund is a separate accounting entity with a self -balancing set of accounts. Governmental Funds are those through which most governmental functions of the Town are financed. The acquisition, use, and balances of the Town's expendable financial resources and the related liabilities (except those accounted for in the proprietary fund type) are accounted for through governmental funds. The measurement focus is upon determination of changes in financial position, rather than upon income determination. 33 The Town reports the following major governmental funds: General Fund — to account for all financial resources except those required to be accounted for in another fund. The General Fund balance is available for any purpose, provided it is expended or transferred in accordance with the legally adopted budget of the Town. Special Revenue Funds — to account for the proceeds of specific revenue sources (other than special assessments, expendable trusts, or major capital projects) that are legally restricted to expenditures for specified purposes. Visitors Association Fund — to account for municipal hotel occupancy taxes collected and expenditures to promote tourism and the convention and hotel industry. Westlake Academy Fund — to account for all local, state and federal revenue and related education expenditures of the Academy. Lone Star Public Facilities Corporation — to account for investment activity relating to the Lone Star Public Facilities Corporation. 4B Economic Development Corporation — to account for sales tax collected to fund the activities of the 4B Economic Development Corporation. Economic Development Fund — to account for sales tax and hotel occupancy tax collected to fund activity relating to Economic Development agreements. Debt Service Fund — to account for resources accumulated and payments made for principal and interest on long-term general obligation debt of governmental funds in a Debt Service Fund. Capital Projects Fund — to account for proceeds from long-term financing and revenue and expenditures related to authorized construction and other capital asset acquisitions. 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 Town's Enterprise Fund are charges to customers for sales and services. Operating expenses for the Enterprise Fund include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as nonoperating revenue and expenses. The Town reports the following major proprietary funds: Utility Fund — to account for revenues and expenses related to providing water and sewer services to the general public on a continuing basis. Cemetery Fund — to account for the operations of the Town's cemetery. 34 As a general rule, the effect of interfund activity has been eliminated from the government - wide financial statements. Exceptions to this general rule are charges between the Town's water and wastewater function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenue reported for the various functions concerned. Amounts reported as program revenues include: 1) charges to customer or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenue. Likewise, general revenue includes all taxes. E. Assets, Liabilities, and Net Position or Equity Cash and Cash Equivalents Cash and investments of all funds, including restricted cash, are available upon demand and are considered to be "cash equivalents." For purposes of the statement of cash flows, the Town considers highly -liquid investments (including restricted assets) with an original maturity of three months or less when purchased to be cash equivalents. State statues authorize the Town to invest in (1) obligations of the United States or its agencies and instrumentalities; (2) direct obligations of the State of Texas or its agencies; (3) other obligations, the principal of and interest on which are unconditionally guaranteed or insured by the State of Texas or the United States; (4) obligations of states, agencies, counties, cities, and other political subdivisions of any state having been rated as to investment quality by a nationally recognized investment rating firm and having received a rating of not less than "A" or its equivalent; (5) certificates of deposit by state or national banks domiciled in this state that are (a) guaranteed or insured by the Federal Deposit Insurance Corporation, or its successor; or, (b) secured by obligations that are described by (1) — (4); or (6) fully collateralized direct repurchase agreements having a defined termination date, secured by obligations described by (1) pledged with third -party selected or approved by the Town, and placed through a primary government securities dealer. All investments are recorded at fair value based on quoted market prices. Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties. Receivables and Payables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans. All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances." 35 Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. All property tax receivables are shown net of an allowance for uncollectibles. The net property tax receivable allowance is equal to 25 percent of outstanding property taxes at September 30, 2013. The Town's property taxes are levied on October 1 on the assessed value listed as of the prior January 1 for all real and business personal property located in the Town. Assessed values are established at 100% of estimated market value. Property taxes attach as an enforceable lien on property as of January 1. Taxes are due by January 31 following the October 1 levy date and are considered delinquent after January 31 of each year. Restricted Assets Certain bond proceeds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. Inventories and prepaid items Inventories, which are expended as they are consumed, are stated at the lower of cost or market on a first -in, first -out basis. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government -wide and fund financial statements. Fund Changes and Transactions Between Funds Legally authorized transfers are treated as operating transfers and are included in the results of operations of both governmental and proprietary funds. The Town allocates an indirect cost percentage of the salaries, wages and related costs of personnel who perform administrative services as well as other indirect costs necessary for the operation of various funds. Expenses are budgeted and paid from the appropriate fund. Capital Assets All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. The cost of nominal maintenance and repairs that do not add value to the asset or materially extend assets' lives are not capitalized. Donated assets are valued at their fair market value on the date donated. Assets capitalized have an original cost of $5,000 or more and over three years of life. All infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), regardless of the acquisition date or amount, have been included. Estimated historical cost for initial reporting of infrastructure assets (those reported by governmental activities) was valued by estimating the current replacement cost of the infrastructure and using an index to deflate the cost to the estimated acquisition/construction year. As the Town constructs or acquires additional capital assets, including infrastructure assets, they are capitalized and reported at historical cost. 36 Depreciation has been calculated on each class of depreciable property using the straight-line method. Estimated useful lives are as follows: Assets Years Water and sewer system 10-50 Buildings 20-50 Machinery and equipment 3-30 Improvements 5-30 Information systems and software 3 Compensated Absences The Town's policy allows employees to earn 5 days of vacation and 5 days of sick leave between six months and one year of service, and 10 days of vacation and 10 days of sick leave between one year and two years of service and each successive year through five years of service. After completion of 5 years of service, 15 days of vacation and 15 days of sick leave per year are earned. After completion of 10 years of service, 20 days of vacation and 20 days of sick leave per year are earned. The Town makes sick and vacation time available in full at the beginning of each year, and hours are actually earned throughout the year. Unused, earned vacation hours are paid upon termination or retirement at the employee's normal hourly rate; accumulated, unused sick time is not payable upon termination or retirement. Long-term Obligations In the government -wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method, which approximates the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. 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 the debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts are reported as other financing uses. Issuance costs, even if withheld from the actual proceeds, are reported as expenditures. Fund Equity and Net Position The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy that is based primarily on the extent to which the Town is bound to honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. 37 The classifications used in the governmental fund financial statements are as follows: • Nonspendable: This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) are legally or contractually required to be maintained intact. Nonspendable items are not expected to be converted to cash or are not expected to be converted to cash within the next year. • Restricted: This classification includes amounts for which constraints have been placed on the use of the resources either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation. • Committed: This classification includes amounts that can be used only for specific purposes pursuant to constraints imposed by board resolution of the Town council, the Town's highest level of decision making authority. These amounts cannot be used for any other purpose unless the Town council removes or changes the specified use by taking the same type of action that was employed when the funds were initially committed. This classification also includes contractual obligations to the extent that existing resources have been specifically committed for use in satisfying those contractual requirements. • Assigned: This classification includes amounts that are constrained by the Town's intent to be used for a specific purpose but are neither restricted nor committed. In the General Fund, assigned amounts represent intended uses established by the Town council or a Town official delegated that authority by Town Charter or ordinance. • Unassigned: This classification includes the residual fund balance for the General Fund. The unassigned classification also includes negative residual fund balance of any other governmental fund that cannot be eliminated by offsetting of assigned fund balance amounts. In the government -wide financial statements, net position represents the difference between assets and liabilities. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used for the acquisition, construction or improvements of those assets, and adding back unspent proceeds. Net position is reported as restricted when there are limitations imposed on its use either though the enabling legislations adopted by the Town or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. The government -wide and fund level financial statements report restricted fund balances for amounts not available for appropriation or legally restricted for specific uses. When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, it is the City's policy to use restricted resources first, then unrestricted resources as needed. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the City considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds. 38 II. Estimates The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual amounts could differ from those estimates. RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS Ex -Planation of Certain Differences Between the Governmental Fund Balance Sheet and the Government -wide Statement of Net Position The governmental fund balance sheet includes a reconciliation between fund balance — total governmental funds and net position — governmental activities as reported in the government - wide statement of net position. One element of that reconciliation explains, "Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds." The details of this $28,571,420 difference are as follows: Certificates of obligation bonds General obligation bonds Bond premiums (to be amortized of life of debt) Notes payable Deferred loss on refunding bonds (to be amortized over life of debt) Deferred charges for issuance costs (to be amortized over life of debt) Compensated absences Accrued interest payable Net adjustment to reduce fund balance - total governmental funds to arrive at net position - governmental activities $ 12,596,800 16,590,000 700,588 113,446 (1,247,851) (647,443) 106,404 359,476 $ 28,571,420 Explanation of Certain Differences Between the Governmental Fund Statement of Revenue Expenditures and Chan es in Fund Balances and the Government -wide Statement of Activities The governmental fund statement of revenues, expenditures and changes in fund balances includes a reconciliation between net changes in fund balances — total governmental fund and changes in net position of governmental activities as reported in the government -wide statement of activities. One element of that reconciliation explains, "Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense." The details of this $6,808,268 difference are as follows: 39 Capital outlay ($44, 221 capitalized from public safety and $49,674 capitalized from public works) Depreciation expense Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net position of'governmental activities $ 7,695,526 (887,258 $ 6,808,268 Another element of that reconciliation states, "The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of issuance costs, premiums, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Details of this $7,631,014 difference are as follows: Principal repayments: General obligation debt $ 2,955,000 Note payments 16,655 Deferred rebates 28,592 Debt issuance: General obligation debt (10,494,800) Bond issuance costs 185,699 Deferred loss on refunding - Premium on bonds (322,160) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net position of'governmental activities $ (7,631,014) Another element of that reconciliation states, "Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds." The details of this $225,402 difference are as follows: Accrued interest $ (103,3 51) Compensated absences (24,499) Amoritization of premium 32,510 Amortization of deferred charge on refunding (98,417) Amortization of issuance costs (31,645) Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities $ (225,402) 40 III. DETAILED NOTES ON ALL FUNDS Deposits and Investments Legal provisions generally permit the Town to invest in certificates of deposit, repurchase agreements, public funds investment pools, direct obligations of the United States of America or its subdivisions and state and local government securities. The Town did not engage in repurchase or reverse repurchase agreement transactions during the current year. During the year ended September 30, 2013, the Town had investments with TexPool. TexPool, a public funds investment pool created by the Treasurer of the State of Texas acting by and through the Texas Treasury Safekeeping Trust Company, which is empowered to invest funds and acts as custodian of investments purchased with local investment funds. These investments are not required to be categorized because the investor is not issued securities, but rather it owns an undivided beneficial interest in the assets of the respective funds. The fair value of the position in TexPool is the same as the value of the pool shares. On September 1, 1989, local government investment pools became authorized investments for the majority of public entities in Texas. The Interlocal Cooperation Act was amended by the 71St Texas Legislature to facilitate the creation of local government investment pools in Texas. This act permits the creation of investment pools to which a majority of political subdivisions (local governments) may delegate, by contract, the authority to make investments purchased with local investment funds and to hold legal title as custodian of the investments. TexPool was organized to conform with the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code, and the Public Funds Investment Act, Chapter 2256 of the Texas Government Code. The Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions in the areas of investment practices, management reports and establishment of appropriate policies. Among other things, it requires the Town to adopt, implement, and publicize its investment policy. That policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6) maximum allowable stated maturity of portfolio investments, (7) maximum average dollar — weighted maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and capabilities, and (9) bid solicitation preferences for certificates of deposit. Statutes and the Town's investment policy authorized the Town to invest in the following investments as summarized in the table below: 41 Maximum Maximum Authorized Maximum Percentage Investment Investment Type Maturity of Portfolio in One Issuer Obligations of, or guaranteed by Governmental entities 2 years None None Certificates of deposit 1 year None None Mutual funds 2 years 80% None Investment pools - None None 41 At September 30, 2013, the Town's investments included investment pools in the name of the Town or its agent in the Town's name. The Town's investments were as follows: Total cash and investments $ 24,806,129 $ 24,806,129 Reconciliation of total cash and investments at September 30, 2013, are as follows: Cash and cash equivalents Restricted cash and investments Total cash and investments $ 24,340,964 465,165 $ 24,806,129 The Town's entire cash deposits in the bank of $25,601,318 on September 30, 2013, were covered by federal depository insurance or by collateral. Carrying Component units Amount Investments: Cash and cash equivalents $ 11,492,662 Total $ 11,492,662 Fair Value $ 11,492,662 $ 11,492,662 Weighted Average Maturity (Days) N/A Interest Rate Risk. This is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to changes in market interest rates. In order to limit interest and market rate risk from changes in interest rates, the Town's investment policy sets a maximum stated maturity limit of two years for obligations of the United States Government, its agencies and instrumentalities (excluding mortgage backed securities) and one year for fully insured or collateralized certificates of deposit. No more than 80% of the Town's monthly average balance may be invested in money market funds. Additionally, the Town invests in an investment pool that purchases a combination of shorter term investments with an average maturity of less than 29 days thus reducing the interest rate risk. Information about the sensitivity of the fair values of the Town's investments to market interest rate fluctuations is provided by the following table that shows the distribution of the Town's Investments. The Town has negotiated an interest rate for all checking account deposits; therefore, cash is considered in the balance of our investments. 42 Minimum Rating Carrying Fair Legal as of Primary government Amount Value Rating Year-end Investments: TexPool $ 350 $ 350 N/A AAA -m Cash 24,805,779 24,805,779 N/A N/A Total cash and investments $ 24,806,129 $ 24,806,129 Reconciliation of total cash and investments at September 30, 2013, are as follows: Cash and cash equivalents Restricted cash and investments Total cash and investments $ 24,340,964 465,165 $ 24,806,129 The Town's entire cash deposits in the bank of $25,601,318 on September 30, 2013, were covered by federal depository insurance or by collateral. Carrying Component units Amount Investments: Cash and cash equivalents $ 11,492,662 Total $ 11,492,662 Fair Value $ 11,492,662 $ 11,492,662 Weighted Average Maturity (Days) N/A Interest Rate Risk. This is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to changes in market interest rates. In order to limit interest and market rate risk from changes in interest rates, the Town's investment policy sets a maximum stated maturity limit of two years for obligations of the United States Government, its agencies and instrumentalities (excluding mortgage backed securities) and one year for fully insured or collateralized certificates of deposit. No more than 80% of the Town's monthly average balance may be invested in money market funds. Additionally, the Town invests in an investment pool that purchases a combination of shorter term investments with an average maturity of less than 29 days thus reducing the interest rate risk. Information about the sensitivity of the fair values of the Town's investments to market interest rate fluctuations is provided by the following table that shows the distribution of the Town's Investments. The Town has negotiated an interest rate for all checking account deposits; therefore, cash is considered in the balance of our investments. 42 Credit Risk. This is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented above is the minimum rating required by (where applicable) the Public Funds Investment Act, the Town's investment policy, or debt agreements, and the actual rating as of year-end for each investment type. Capital Assets Capital asset activity for the year ended September 30, 2013, was as follows: Primary Government Governmental activities: Capital assets, not being depreciated: Land Construction in progress Total assets not being depreciated Capital assets, being depreciated: Capital improvements Buildings Machinery and equipment Information systems and software Total capital assets being depreciated Less accumulated depreciation: Capital improvements Buildings Machinery and equipment Information systems and software Total accumulated depreciation Total capital assets beina depreciated, net Governmental activities capital assets, net Beginning Ending Balance Increases Decreases Balance $ 11 .896.663 $ - $ - $ 11,896,663 1,552,004 1,802,882 520,794 2,834,092 13,448,667 1,802,882 _ 520,794 14,730,755 5,407,850 5,966,526 - 11,374,376 21,398,468 379,404 - 21,777,872 2,791,744 49,084 - 2,840,828 52,430 18,424 - 70,854 29,650,492 6,413,438 - 36,063,930 3,020,948 168,906 - 3,189,854 3,631,125 534,856 - 4,165,981 2,081,041 183,496 - 2,264,537 52,430 - - 52,430 8,785,544 887,258 - _ 9,672,802 20,864,948 5,526,180 - _26,391,128 $ 34,313,615 $ 7,329,062 $ 43 520,794 $ 41,121,883 Depreciation was charged to departments of the primary government as follows: Governmental activities: General government Public safety Public works Total depreciation expense - governmental activities 44 $ 679,826 65,235 142,197 $ 887,258 Beginning Ending Balance Increases Decreases Balance Business -type activities: Capital assets, not being depreciated: Construction in progress $ 174,210. $ 168,714 $ _ $ 342,924 Total assets not being depreciated 174,210 168,714 - 342,924 Capital assets, being depreciated: Capital improvements 13,333,561 42,692 13,376,253 Wastewater treatment rights 635,199 - - 635,199 Machinery and equipment 3,466,046 - - 3,466,046 Total capital assets being depreciated 17,434,806 42,692 - 17,477,498 Less accumulated depreciation: Capital improvements 3,449,724 311,627 - 3,761,351 Wastewater treatment rights 386,413 31,760 - 418,173 Machinery and equipment 1,396,656 121,001 - 1,517,657 Total accumulated depreciation _ 5,232,793 464,388 - 5,697,181 Total capital assets being depreciated, net 12,202,013 ( 421,696 - 11,780,317 Business -type activities capital assets, net $ 12,376,223 $( 252,982 $ - $ 12,123,241 Depreciation was charged to departments of the primary government as follows: Governmental activities: General government Public safety Public works Total depreciation expense - governmental activities 44 $ 679,826 65,235 142,197 $ 887,258 A summary of discretely presented component units' capital assets at September 30, 2013, follows: Texas Student Housing Authority - Ballpark Austin Project Texas Student Housing Corporation - The Ridge at North Texas Beginning Ending Balance Additions Deletions Balance Capital assets, not being depreciated: Land $ 4,788,265_ $ - $ - $ a. 4,788,265 Total capital assets, not being depreciated 4,788,265 - _ 4,788,265 Capital assets, being depreciated: Building 21,345,305 - - 21,345,305 Furniture and fixtures 6,993,063 _ - _ 6,993,063 Total capital assets, being depreciated 28,338,368 - 28,338,368 Less accumulated depreciation for: Building 7,589,442 711,510 - 8,300,952 Furniture and fixtures 4,109,184 149,166 - 4,258,350 Total accumulated depreciation 11,698,626 860,676 - 12,559302 Total capital assets, being depreciated, net 16,639,742 860,676 - 15,779,066 Capital assets, net $_ 21,428,007 $ 860,676 $ - $ 20,567,331 Texas Student Housing Corporation - The Ridge at North Texas M -I Beginning Ending Balance Additions Deletions Balance Capital assets, not being depreciated: Land $ 2,200,000 $ - $ - $ 2,200,000 Total capital assets, not being depreciated 2,200,000 - - 2,200,000 Capital assets, being depreciated: Building 25,705,000 25,705,000 Furniture and fixtures 1,253,841 - 1,253,841 Total capital assets, being depreciated 26,958,841 - _ - 26,958,841 Less accumulated depreciation for: Building 9,782,181 856,833 - 10,639,014 Furniture and fixtures 1,164,364 8,496 - 1,172,860 Total accumulated depreciation 10,946,545 865,329 - 11,811,874 Total capital assets, being depreciated, net 16,012,296(__865,329 - 15,146,967 Capital assets, net $ 18,212,296 $( 865,329) $ - $ 17,346,967 M -I Texas Student Housing Authority - Town Lake Austin Project Beginning Ending Balance Additions Retirements Balance Capital assets, not being depreciated: Land Total capital assets, not being depreciated Capital assets, being depreciated: Building and improvements Capitalized purchase costs Land improvements Unit appliances Furniture and fixtures Total capital assets, being depreciated Less accumulated depreciation for: Building and improvements Capitalized purchase costs Total accumulated depreciation Total capital assets, being depreciated, net Capital assets, net $ 2,182,816 $ - $ - $ 2,182,816 2,182, 816 - - 2,182, 816 13,270,150 - - 13,270,150 887,095 - - 887,095 2,806,596 - - 2,806,596 295,134 - - 295,134 915,951 - - 9151,951 18,174,926 - - 18,174,926 5,929,821 604,588 - 6,534,409 256,356 28,484 - 284,840 6,186,177 633.072 - 6,819,249 11,988,749 ( 633,072 - 11,355,677 $ 14,171,565 $( 633,072) $ - $ 13,538,493 Texas Student Housing Authority - College Station Project Beginning Ending Balance Additions Retirements Balance Capital assets, not being depreciated: Land Total capital assets, not being depreciated Capital assets, being depreciated: Building Furniture and fixtures Total capital assets, being depreciated Less accumulated depreciation for: Building Furniture and fixtures Total accumulated depreciation Total capital assets, being depreciated, net Capital assets, net $ 2,899,597 $ - $ - $ 2,899,597 2,899,597 - - 2,899,597 27,727,646 - - 27,727,646 2,594,804 - - 2,594,804 30,322,450 - - 30,322,450 7,060,819 896,614 - 7,957,433 2,682,668 88,561 - 2,771,229 9,743,487 985,175 10,728,662 20,578,963 i 985,175} - 19,593,788 $ 23,478,560 $( 985,175) $ - $ 22,493,385 46 Restricted Cash General Fund Within the governmental funds, $293,363 in cash and cash equivalents represents funds held to assist in the financing of future projects and court security and technology. Proprietary Fund Within the proprietary funds, $171,802 of the fund represents customer deposits received for water and sewer usage that are refundable upon termination of service. Discretely Presented Component Units Within the discretely presented component units, $5,349,906 in cash and cash equivalents represents funds held for debt service. 47 General Long-term Debt Long-term liability activity for the year ended September 30, 2013, was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Combination tax and limited Pledge Revenue Certificates of Obligation, Series 2002 $ 645,000 $ - $ 315,000 $ 330,000 $ 330,000 Combination tax and limited Pledge Revenue Certificates of Obligation, Series 2003 2,225,000 - 170,000 2,055,000 175,000 General Obligation Refunding Bonds, Series 2007 7,260,000 - 25,000 7,235,000 35,000 Less deferred amounts on refunding ( 508,008) - ( 44,336) ( 463,672) - General Obligation Bonds, Series 2008 2,135,000 - 2,135,000 _ - Combination tax and Revenue Certificates of Obligation, Series 2011 2,007,000 - 90,000 1,917,000 93,000 General Obligation Refunding Bonds, Series 2011 7,375,000 - 100,000 7,275,000 100,000 General Obligation Refunding Bonds, Series 2011 Premium 410,938 - 26,512 384,426 - Less deferred amounts on refunding ( 838,260) - ( 54,081) ( 784,179) - Certificates of Obligation Series 2013 - 8,294,800 - 8,294,800 89,000 Certificates of Obligation Series 2013 Premium - 284,437 4,741 279,696 - General Obligation Refunding Bonds, Series 2013 2,200,000 120,000 2,080,000 105,000 General Obligation Refunding Bonds, Series 2013 Premium - 37,723 1,257 36,466 - Notes payable 34,075 - 16,655 17,420 17,420 Compensated absences 81,905 89,869 65,370 106,404 10,640 Fidelity Tax Reimbursement 124,618 - 28,592 96,026 30,237 $ 20,952,268 $ 10,906,829 $ 2,999,710 $ 28,859,387 $ 985,297 48 The Certificates of Obligation, Series 2002 and 2003 require the Town to provide certain updated financial information and operating data to certain information vendors annually, as permitted by SEC Rule 15c2-12 (the "Rule"). The issuer will provide the updated information to each nationally recognized municipal securities information repository ("NRMSIR") and to any state information depository ("SID") that is designated by the State of Texas and approved by the staff of the United States Securities and Exchange Commission (the "SEC"). During the fiscal year ended September 30, 2008, the Town issued General Obligation bonds of $2.5 million. These bonds were used for the construction of an Arts & Sciences Center. During the fiscal year ended September 30, 2011, the Town issued Certificates of Obligation in the amount of $2,095,000 for various street projects. During the fiscal year ended September 30, 2013, the Town issued Certificates of Obligation in the amount of $9,320,000 for the Westlake Academy Expansion and ground storage tank. Current Refunding The government issued $2,200,000 in general obligation bonds for a current refunding of $2,135,000 of 2008 general obligation bonds. The refunding was undertaken to lower debt service requirements. The reacquisition price exceeded the net carrying amount of the old debt by $40,064. This amount is being netted against the new debt and amortized over the life of the refunding debt. The transaction also resulted in an economic gain of $218,480 and a reduction of $255,176 in future debt service payments. Prior year defeasance of debt. In prior years, the government defeased general obligations bonds by placing proceeds of the new bonds in an irrevocable trust account to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the government's financial statements. At September 30, 2013, $13,120,000 of defeased bonds remain outstanding. Debt service requirements of certificates of obligation and general obligations to be retired from governmental funds are as follows: Year Ending September 30, 2014 2015 2016 2017 2018 2019-2023 2024-2028 2029-2033 2034-2038 2039-2043 Total 49 Total Principal Interest Requirements $ 927,000 $ 1,151,319 $ 2,078,319 1,050,550 1,015,923 2,066,473 1,073,550 992,507 2,066,057 1,083,000 982,751 2,065,751 1,122,000 940,726 2,062,726 6,148,100 4,165,669 10,313,769 7,211,850 3,086,441 10,298,291 7,050,800 1,543,879 8,594,679 1,593,100 598,547 2,191,647 1,926,850 222,749 _ 2,149,599 $ 29,186,800 $ 14,700,511 $ 43,887,311 49 During the fiscal year ended September 30, 2011, the Town entered into a note payable in the amount of $50,000 for the purchase of two heart monitors for the EMS/Fire Department. Debt service requirements for the note payable to be retired from governmental funds are as follows: Year Ending Total September 30, Principal Interest Requirements 2014 $ 17,420 $ 800 $ 18,220 Total $ 17,420 $ 800 $ 18,220 On August 10, 1998, the Town entered into an economic development agreement with Fidelity Texas Limited Partnership ("Fidelity") which provided that Fidelity will receive a rebate of one percent of local sales taxes collected by the Town and paid by Fidelity. The agreement provided that the rebate will be paid to Fidelity within 30 days of each calendar quarter from the sales taxes received by the Town. On November 13, 2000, the agreement was amended to allow for a payment schedule of 15 annual equal installments for sales tax rebate due and payable to Fidelity. The amount due will not bear interest. The loan is discounted to present value and amortized over the life of the loan using the effective interest method. Debt service requirements for deferred rebates to be retired from governmental funds are as follows: Year Ending Total September 30, Principal Interest Requirements 2014 $ 30,237 $ 5,521 $ 35,758 2015 31,975 3,783 35,758 2016 33.814 1,944 35,758 Total $ 96,026 $ 11,248 $ 107,274 Compensated absences are typically liquidated by the fund to which they relate. 50 Proprietary Long-term Debt Proprietary long-term debt as of September 30, 2013, is as follows: Outstanding Description 9/30/2012 Contractual obligations: Elevated water storage $ 818,724 $ Limited pledge contractual obligation: Dove Road Water Line and West Pump Station 4,679,944 2013 Certificates of Issued Outstanding Current 9/30/2013 Portion $ 86,519 $ 732,205 $ 91,325 4,679,944 Obligation 1,025,200 - 1,025,200 11,000 2013 Certificates of Obligation Premiums 35,155 586 34,569 - Compensated absences 11.428 12,108 10,009 13,527 1,:353 $ 5,510,096 $ 1,072,463 $ 97,114 $ 6,485,445 $ 103,678 Debt service requirements of certificates of obligation to be retired from proprietary funds are as follows: Year Ending Total - September 30,_ Principal Interest Requirements 2014 $ 11,000 $ 44,787 $ 55,787 2015 21,450 34,325 55,775 2016 21,450 33,896 55,346 2017 22,000 33,461 55,461 2018 22,000 33,021 55,021 2019-2023 119,900 157,536 277,436 2024-2028 139,150 139,225 278,375 2029-2033 233,200 107,112 340,312 2034-2038 196,900 65,840 262,740 2039-2043 238.150 _ 24,503 _ 262,653 Total $ 1,025,200 $ 673,706 $ 1,698,906 51 The schedule of future payments by the Town under these agreements is as follows: Year Ending Total September 30, Principal Interest Requirements 2014 $ 91,325 $ 716,830 $ 808,155 2015 94,530 761,423 855,953 2016 99,336 811,805 911,141 2017 104,143 861,283 965,426 2018 108,950 916,518 1,025,468 2019-2023 233,921 2,752,024 2,985,945 2024-2028 4,679,944 _ 4,679,944 Total $ 5,412,149 $ 6,819,883 $ 12,232,032 Elevated Water Storage Facility On October 9, 2000, the Town approved an interlocal agreement with the City of Keller, which provided for the joint construction, operation, maintenance and use of an elevated water storage facility and appurtenances. The Town recorded a contractual obligation of $1,466,000 based on the terms of the interlocal agreement, which requires 20 annual principal and interest payments to the City of Keller, with payments due each September 30 at interest rates ranging from 5.0% to 5.65%. Dove Road Water Line and West Pump Station In April 2000, the Town approved an agreement with the Hillwood Development Corporation ("Hillwood"). In the agreement, Hillwood agreed to bear all initial costs for the design, engineering and constructions of the Dove Road Water Line and the West Pump Station that will service the residents of the Town. The Town agreed to reimburse Hillwood for the cost of the project upon completion and the Town's acceptance of the project, which occurred in June 2001, solely from a $.25 charge per 1,000 gallons of usage. The Town further agreed to deposit debt service revenue of $.25 per 1,000 gallons of usage collected from Town residents to fund its repayment to Hillwood. Debt service revenue will be allocated between Hillwood service area and Town service area by 52% and 48%, respectively and deposited into two separate debt service funds that will result in debt service revenue to pay the respective share of the construction cost. The Town recorded a limited pledge contractual obligation of $4,679,944 for the project cost based upon the terms of the agreement, which requires 239 monthly principal and interest payments to Hillwood, at an interest rate of 6.75%. If the Town collects insufficient funds to pay current interest on the debt, the interest payment may be deferred. No portion of debt payments will be applied to the principal component, until all current and deferred interest is fully paid. The obligation of the Town to pay the purchase price and interest thereon is not a general obligation of the Town but is a limited recourse obligation payable solely from debt service revenue. 52 Discretely Presented Long-term Debt Texas Student Housing Authority - College Station Project The Project's installment note payable is summarized as follows: Lender/Security/Due Date Rate Balance Cambridge Student Housing Financing Company, L.P.; substantially all assets and assignment of rents; due November 1, 2039 8.00% $ 30,310,000 The Project's installment note is payable monthly with principal and interest payments of $231,545 until November 1, 2039. The following is a summary of long-term debt transactions of the Project for the year ended August 31, 2013: Amounts Beginning Ending Due Within Balance Increases Decreases Balance One Year $ 30,720,000 $ - $ 410,000 $ 30,310,000 $ 440,000 The Project's original developer refinanced the installment note through a secondary offering with Cambridge Student Housing Financing Company, L.P. The debt certificates were sold to private investors in the following classes: Class (Series) OfferingTotal A $ 16,530,000 B 3,990,000 C 4,820,000 D 55380,000 Total $ 30,720,000 Class C and D bonds are in default and the property does not generate enough revenue to pay the debt obligations so the maturity schedules are not included. All of the Class C and D bonds issued remain outstanding as of August 31, 2012. Each class has certain rights and privileges, as contained in the private placement memorandum. As a part of the offering, the Project entered into a trust agreement with J. P. Morgan Trust Company, N.A. (the "Trustee") for the purpose of determining that each class is paid in accordance with the private placement memorandum. At August 31, 2013, the Project was in compliance with the fixed charge coverage ratio. Should the project default, the lender may accelerate the maturity of the unpaid portion of the principal payable under the installment sale agreement. However, the Authority does not anticipate this 53 event will occur, since foreclosure by private interests would result in the loss of tax-exempt status for the Project. Texas Student Housing Authority - Town Lake Austin Project Amounts Due Beginning Within One Balance Increases Decreases Ending Balance Year Revenue Bonds: 2002 A-1 Bonds $ 15,518,242 $ - $ 301,733 $ 15,216,509 $ 328,105 2002 A-2 Bonds 5,089,241 - - 5,089,241 - Total $ 20,607,483 $ - $ 301,733 $ 20,305,750 $ 328,105 The bonds are payable solely from the revenues generated by the Project and are secured by the revenues pledged and assigned under the terms of the Trust Indenture. Interest rates on the bonds range from 7.76% to 8.69% at present and principal and interest payments are made monthly. The future debt service requirements of the bonds are as follows: Year Ending Amounts August 31, Principal Interest Total 2014 $ 328,105 $ 1,563,532 $ 1,891,637 2015 354,491 1,537,146 1,891,637 2016 382,998 1,508,639 1,891,637 2017 413,797 1,477,840 1,891,637 2018 447,074 1,444,563 1,891,637 2019-2023 2,836,079 6,622,106 9,458,185 2024-2028 4,175,185 4,102,458 8,277,643 2029-2033 11,368,021 3,312,414 14,680,435 $ 705,000 The bonds are payable solely from the revenues generated by the Totals $ 20,305,750 $ 21,568,698 $ 41,874,448 Texas Student Housing Authority - Ballpark Austin Project The long-term debt activity of the Ballpark Austin Project is as follows: Amounts Beginning Ending Due Within Balance Increases Decreases Balance One Year Revenue Bonds: 2001A Bonds $ 28,840,000 $ - $ $ 28,840,000 $ 705,000 2001B Bonds 2,365,000 - - 2,365,000 - 2001C Bonds 3,000,000 - - 3,000,000 - Deferred purchase price 1,460,000 - - 1,460,000 - Less discounts ( 1,161,651) - ( 60,085) ( 1,101,566) - Total 34,503,349 $ - $( 60,085) $_ 34,563,434 $ 705,000 The bonds are payable solely from the revenues generated by the Project and secured by the revenues pledged and assigned under the terms of the trust indenture. Interest rates on the bonds 54 range from 4.00% to 11.00% and are payable semi-annually. The debt service requirements of the bonds are as follows: Year Ending August 31, 2014 2015 2016 2017 2018 2019-2023 2024-2028 2029-2033 2034-2038 Totals Governmental Activities Pri nc i pal Interest Total $ 1,035,000 $ 2,006,275 $ 3,041,275 800,000 1,962,856 2,762,856 845,000 1,916,950 2,761,950 890,000 1,868,556 2,758,556 940,000 1,817,406 2,757,406 5,510,000 8,218,281 13,728,281 7,210,000 6,433,000 13,643,000 12,470,000 4,062,075 16,532,075 4,505,000 - 4,505,000 $ 34,205,000 $ 28,285,399 $ 62 490,399 At August 31, 2013, the Project had not made interest payments on the Subordinate 2001C Bond Series since July 2003, and the Subordinate 2001C Bond is in default. In addition, the Project's fixed charges coverage ratio was not in compliance with the covenants of the indenture. These events do not constitute an event of default that accelerates the bonds. As a result, the maturities are presented under the original repayment terms. Texas Student Housing Corporation - The Ridge at North Texas The long-term debt activity of the Ridge at North Texas is as follows: Beginning Balance Revenue Bonds: Increases Decreases Amounts Ending Due Within Balance One Year 2001A Bonds $ 25,130,000 $ - $ 685,000 $ 24,445,000 $ 735,000 2001B Bonds 3,240,000 - - 3,240,000 - Trustee Fee 5,000 - - 5,000 - Payable Less discounts ( 672,324) - ( 37,485 ( 634,839) _37,485 Total $ 27,702,676 $ - $ 647,515 $ 27,055,161 $ 697,515 The debt originally was to be amortized through 2031 with varying monthly principal payment amounts ranging from $2,618,093 to $3,465,280 for interest and principal. The annual requirements to amortize all debts outstanding as of August 31, 2013, are as follows and have not been adjusted for the default of the bonds. Under the original terms of the Indenture, a total of $645,000 in principal and $1,976,793 in interest is due in fiscal 2013. The total interest to be paid will depend on the ultimate maturities of the bonds. Year Ending August 31, 2013 Principal $ 27,685,000 55 Interest $ 21,609,085 Total $ 49,294,085 The Town of Westlake does not have any liability for the payment of debt of the discretely presented component units as the bonds are non-recourse to both the Town and Texas Student Housing Authority. Deferred Revenue Deferred revenue in the proprietary fund of $352,169 relates to the collection of the entire amount due on eight Ductbank leases as follows: One 25 -year lease with AT&T local network services, five 20, 25 and 30 -year leases with Verizon Southwest, one 5 -year lease with MCI Metro and one 5 -year lease with L3 Communications for use of the Town's Ductbank. Interlocal Agreement with the City of Southlake In August 1995, the Town entered into an agreement with the City of Southlake to allow the Town to utilize capacity in a sewer line and to set forth their respective rights and obligations with respect to the sewer line owned by the City of Southlake. The Town is obligated to share in the cost of construction, operation and maintenance of the water sewer line. The sewer line was constructed in 2000. Additionally, the Town must pay the City of Southlake all transportation, treatment and related costs allocable to the metered flow of sewage from the Town into the sewer line. Federal and State Program Revenues The Town received financial assistance from various federal and state governmental agencies in the form of grants for Westlake Academy. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and are subject to audit by the grantor agencies. Any unallowed disbursement resulting from such audits becomes a liability of the Town. In the opinion of the Town management, no material refunds will be required as a result of unallowed disbursements (if any) by the grantor agencies. Sources of federal and state program revenues for the year ended September 30, 2013, were as follows: Source Federal program revenues: U. S. Department of Education - Passed through State Department of Education Total federal program revenues: State program revenues: State Department of Education 56 Westlake Academy Total $ 81,958 $ 81,958 $ 81,958 $ 81,958 $ 4,696,540 $ 4,696,540 Interfund Balances and Transactions Interfund receivables and payables at September 30, 2013, were as follows: Due from Other Funds General fund: 4B Economic Development Corporation fund Visitors Association fund: Economic Development fund Economic Development fund: Visitors Association fund 4B Economic Development Corporation fund: General Fund Due to Other Funds $ 165,140 $ - 41,207 41,207 - 165,140 $ 206,347 $ 206,347 The 4B Economic Development Corporation fund (4B) amount of $165,140 payable to the General Fund is related to debt service payment reimbursement. The $41,270 payable to the Economic Development fund from the Visitors Association fund is related to a portion of hotel/motel tax from an economic development agreement with a business. Interfund transfers between the primary government's funds consisted of: Primary Government General fund: Westlake Academy Expansion Visitors Association fund Economic Development fund Debt Service fund Utility fund General maintenance Visitors Association fund: General fund Debt service fund Debt Service fund: General fund Visitors Association fund 4B Economic Development Corporation fund Economic Development fund: General fund 4B Economic Development Corporation fund: Debt Service fund Westlake Academy Expansion: General fund Utility fund: General fund Utility PCM fund Totals 57 Transfers To Funds 35,758 4,634 500,000 550,000 9,019 182,143 1,272,568 36,398 Transfers From Funds $ 36,398 9,019 14,409 550,000 4,634 182,143 1,272,568 35,758 14,409 500,000 50,000 50,000 $ 2,654,929 $ 2,654,929 Inter -fund transfers are reported in the governmental funds and proprietary fund financial statements. In the government -wide statements, inter -fund transfers are eliminated within the governmental activities column and business -type column, as appropriate. Transfers are used to (1) move revenues collected in the special revenue funds to finance various programs in accordance with budgetary authorizations, (2) move receipts restricted for debt service from the funds collecting the receipts to the Debt Service fund as debt service payments become due, (3) reimburse one fund for services provided to another fund, (4) move unrestricted General fund revenues to Capital Project fund as determined by the Council for capital projects, and (5) transfer payment for economic development agreements to the Economic Development fund. Receivables Water Purchase and Wastewater Treatment Contracts The Town has a contract with the City of Fort Worth, Texas, to purchase water. Under the contract, the Town may obtain from the City of Fort Worth, a supply of potable water at a reasonable rate based on water usage. The rate charges are subject to minimum annual contract payments. Water expense for the year ended September 30, 2013 was $965,192. IV. OTHER INFORMATION Retirement Plan Plan Description The Town provides pension benefits for all of its eligible employees through a non-traditional, joint contributory, hybrid defined benefit plan in the statewide Texas Municipal Retirement System (TMRS), an agent multiple -employer public employee retirement system. The plan provisions that have been adopted by the Town are within the options available in the governing state statutes of TMRS. 58 Governmental Funds Enterprise Funds Debt Economic Westlake Visitors Westlake Service Development 4B Utility Cemetery General Association Academv Fund Fund Corporation Fund Fund Total Receivables: Sales tax $ 441,067 $ $ $ - $ 54,355 $ 165,140 $ $ $ 660,562 Property tax 2,615 221 2,836 Othertaxes 12,243 61,165 73,408 Franchise fees 189,140 - 189,140 Accounts 28,728 843,221 116 872,065 Other 40,109 - 242,095 - - - 282,204 Gross receivables 713,902 61,165 242,095 221 54,355 165,140 843,221 116 2,080,215 Less: Allowance for uncollectibles 8,066 - 55 8,121 Net total receivables $ 705,836 $ 61,165 $ 242,095 $ 166 $ 54,355 $ 165,140 $ 843,221 $ 116 $ 2,072,094 Water Purchase and Wastewater Treatment Contracts The Town has a contract with the City of Fort Worth, Texas, to purchase water. Under the contract, the Town may obtain from the City of Fort Worth, a supply of potable water at a reasonable rate based on water usage. The rate charges are subject to minimum annual contract payments. Water expense for the year ended September 30, 2013 was $965,192. IV. OTHER INFORMATION Retirement Plan Plan Description The Town provides pension benefits for all of its eligible employees through a non-traditional, joint contributory, hybrid defined benefit plan in the statewide Texas Municipal Retirement System (TMRS), an agent multiple -employer public employee retirement system. The plan provisions that have been adopted by the Town are within the options available in the governing state statutes of TMRS. 58 TMRS issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information (RSI) for TMRS; the report also provides detailed explanations of the contributions, benefits and actuarial methods and assumptions used by the System. This report may be obtained from TMRS' website at www.TMRS.com. The plan provisions are adopted by the governing body of the Town, within the options available in the state statutes governing TMRS. Plan provisions for the Town were as follows: Contributions Under the state law governing TMRS, the contribution rate for each town is determined annually by the actuary, using the Projected Unit Credit actuarial cost method. This rate consists of the normal cost contribution rate and the prior service cost contribution rate, which is calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the portion of an active member's projected benefit allocated annually; the prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the applicable period for that city. Both the normal cost and prior service contribution rates include recognition of the projected impact of annually repeating benefits, such as Updated Service Credits and Annuity Increases. The Town contributes to the TMRS Plan at an actuarially determined rate. Both the employees and the Town make contributions monthly. Since the Town needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect. Accounting Annual Actual Percentage Net Year Pension Contribution of APC Pension Ending Cost (APC) Made Contributed _ Obligation 09/30/11 151,868 151,868 100% 09/30/12 132,882 132,882 100% 09/30/13 135,813 135,813 100% The required contribution rates for fiscal year 2013 were determined as part of the December 31, 2010 and 2011 actuarial valuations. Additional information as of the latest actuarial valuation, December 31, 2012, also follows: 59 Plan Year 2012 Plan Year 2013 Employee deposit rate 7.0% 7.0% Matching ratio (town to employee) 2 to 1 2 to 1 Years required for vesting 5 5 Service retirement eligibility (expressed as age/years of service) 60/5,0/20 60/5,0/20 Updated service credit 100% repeating, 100% repeating, transfers transfers Annuity increase (to retirees) 0% of CPI 0% of CPI repeating repeating Contributions Under the state law governing TMRS, the contribution rate for each town is determined annually by the actuary, using the Projected Unit Credit actuarial cost method. This rate consists of the normal cost contribution rate and the prior service cost contribution rate, which is calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the portion of an active member's projected benefit allocated annually; the prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the applicable period for that city. Both the normal cost and prior service contribution rates include recognition of the projected impact of annually repeating benefits, such as Updated Service Credits and Annuity Increases. The Town contributes to the TMRS Plan at an actuarially determined rate. Both the employees and the Town make contributions monthly. Since the Town needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect. Accounting Annual Actual Percentage Net Year Pension Contribution of APC Pension Ending Cost (APC) Made Contributed _ Obligation 09/30/11 151,868 151,868 100% 09/30/12 132,882 132,882 100% 09/30/13 135,813 135,813 100% The required contribution rates for fiscal year 2013 were determined as part of the December 31, 2010 and 2011 actuarial valuations. Additional information as of the latest actuarial valuation, December 31, 2012, also follows: 59 Valuation Date Actuarial Cost Method Amortization Method GASB 25 Equivalent Single Amortization Period Amortization Period for new Gains/Losses Asset Valuation Method Actuarial Assumptions: Investment Rate of Return* Projected Salary Increases * * Includes Inflation at Cost -of -Living Adjustments 12/31/10 Projected Unit Credit Level percent of payroll 21.6 years; closed period 25 years 10 -year Smoothed Market 7.0% Varies by age and service 3.0% 0.0% 12/31/11 Projected Unit Credit Level percent of payroll 21.3 years; closed period 25 years 10 -year Smoothed Market 7.0% Varies by age and service 3.0% 0.0% 12/31/12 Projected Unit Credit Level percent of payroll 20.9 years closed period 25 years 10 -year Smoothed Market 7.0% Varies by age and service 3.0% 0.0% The funded status as of December 31, 2012, under the actuarial valuation, is presented as follows: Actuarial Actuarial Valuation Value of Date Assets Unfunded Actuarial Actuarial Accrued Funded Accrued Covered Liability Ratio Liability Payroll 12/31/2012 $ 2,611,474 $ 3,086,228 84.6% $ 474,754 $ 1,869,500 Unfunded Actuarial Accrued Liability as a Percentage of Covered Payroll 25.4% Actuarial valuations involve estimates of the value 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 Required Supplementary Information following the notes to the financial statements, present 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. 60 Other Postemployment Benefits Supplemental Death Benefits Fund The Town also participates in the cost sharing multiple -employer defined benefit group term life insurance plan operated by the Texas Municipal Retirement System (TMRS) known as the Supplemental Death Benefits Fund (SDBF). The Town elected, by ordinance to provide group term life insurance coverage to both current and retired employees. The Town 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 postemployment benefit," or OPEB. Contributions The Town 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 years ended 2013 and 2012 were $491 and $2,240, respectively. Schedule of Contribution Rates (RETIREE -only portion of the rate) Risk Manallement The Town is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets; errors and omissions; injuries to employees, and natural disasters. The Town's general liability, workers' compensation liability, law enforcement liability, errors and omissions liability, and automobile liability coverage is insured by the Texas Municipal League, a public entity risk pool. The Town's only responsibility to the Texas Municipal League is to pay premiums for insurance and related deductible amounts of these policies. Other risk of loss is covered by commercial insurance. Settlements of claims have not exceeded coverage in the past three years. 61 Annual Actual Plan/ Required Contribution Percentage Calendar Contribution Made of ARC Year (Rate) (Rate) Contributed 2011 0.00% 0.00% 100% 2012 0.00% 0.00% 100% 2013 0.00% 0.00% 100% Risk Manallement The Town is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets; errors and omissions; injuries to employees, and natural disasters. The Town's general liability, workers' compensation liability, law enforcement liability, errors and omissions liability, and automobile liability coverage is insured by the Texas Municipal League, a public entity risk pool. The Town's only responsibility to the Texas Municipal League is to pay premiums for insurance and related deductible amounts of these policies. Other risk of loss is covered by commercial insurance. Settlements of claims have not exceeded coverage in the past three years. 61 Contingent Liabilities Litigation Various claims and lawsuits are pending against the Town. In the opinion of Town management, after consultation with legal counsel, the potential loss on these claims and lawsuits will not materially affect the Town's financial position. Circle T Municipal Utility Districts The Town and Hillwood are currently in discussions regarding the debt for Municipal Utility District's (MUDs) #1 and #3 on the Circle T property in Westlake which is controlled by AIL Investments, L.P. As this property develops, Hillwood agreed to de -annex developed property from the MUDS in exchange for pro -rata payments on water and sewer infrastructure installed by the MUD at their inception. To date, two projects, Chrysler Financial and Deloitte University, have been or are being developed within these MUDs. Discussions regarding the Town's payment to AIL Investments, L.P. in exchange for de -annexation of these two tracks from the Circle T MUDs have taken place but have not come to a conclusion as to the settlement amounts. These discussions are ongoing until the Town receives full documentation that it determines is adequate to support the requested payments. The Town of Westlake holds full rights and privileges under the State granted Certificate of Convenience and Necessity (CCN) and can serve all water and sewer customers within these MUD boundaries regardless of the status of these negotiations. Subsequent Events At the council meeting on October 28, 2013, the Council adopted a resolution authorizing the issuance of general obligation refunding bonds. On January 9, 2014, the Town issued $1.91 million GO Refunding Bonds, Series 2014 for the purpose of refunding selected maturities of the Town's outstanding Certificates of Obligation, Series 2003 in order to lower the debt service requirements. Total savings over the next 18 years equals $197,294. The present value of such savings using the yield on the 2014 Bonds, is $141,287 or 7.515% of the principal retired. 62 REQUIRED SUPPLEMENTARY INFORMATION THIS PAGE LEFT BLANK INTENTIONALLY TOWN OF WESTLAKE, TEXAS GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 63 General Fund Variance Budgeted Amounts Favorable Original Amended Actual (Unfavorable) REVENUES Taxes Sales $ 2,490,000 $ 2,883,750 $ 3,061,948 $ 178,198 Property 1,183,514 1,225,000 1,236,978 11,978 Mixed beverages 32,750 49,000 39,727 ( 9,273) Franchise 664,925 643,950 734,935 90,985 Interest income 15,220 10,420 9,286 ( 1,134) Building permits and fees 476,150 719,860 969,735 249,875 Fines and penalties 560,000 560,000 695,167 135,167 Intergovernmental - 10,350 10,331 ( 19) Contributions from others - 11,094 11,094 - Other miscellaneous income 51,277 57,452 73,933 16,481 Total revenues 5,473,836 6,170,876 6,843,134 672,258 EXPENDITURES Current General government and administration 1,933,240 1,932,236 1,910,545 21,691 Public safety 1,965,406 1,981,085 1,967,584 13,501 Cultural and recreational 139,879 139,879 113,924 25,955 Public works 524,080 521,908 532,675 ( 10,767) Capital Outlay 69,500 _ 58,085 50,014 8,071 Total expenditures 4,632,105 4,633,193 4,574,742 58,451 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 841,731 1,537,683 2,268,392 730,709 OTHER FINANCING SOURCES (USES) Transfers in 596,519 632,917 609,826 C 23,091) Transfers out ( 2,944,319) 1� 149`,817} { 1,090,392) 59,425 Total other financing sources (uses) ( 2,347,800 ( 516,900) 480,56_6N 36,334 NET CHANGE IN FUND BALANCE ( 1,506,069) 1,020,783 1,787,826 767,043 FUND BALANCE, BEGINNING 5,2,63,805 5,263,805 5,263,805 - FUND BALANCE, ENDING $ 3,757,736 $ 6,284,588 $ 7,051,631 $ 767,043 63 TOWN OF WESTLAKE, TEXAS VISITORS ASSOCIATION FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 REVENUES Taxes Hotel occupancy Interest income Contributions Other miscellaneous income Total revenues EXPENDITURES Visitors services Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers out Total other financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING FUND BALANCE, ENDING 64 Variance Budgeted Amounts Favorable Original Amended Actual (Unfavorable) $ 540,350 $ 700,000 $ 668,371 $( 31,+629) 2,900 2,900 1,830 ( 1,070) 6,610 7,060 7,464 404 12,040 11,590 9,111 [ 2,479 561,900 721,550 686,776 ( 34,774) 504,427 507,975 521,521 ( 13,546) 504,427 507,975 521,521 ( 13,546) 57,473 213,575 165,255 ( 48,320) (192,711) ( 191,162 191,162) - ( 192,711) ( 191,162) ( 191;162) - ( 135,238) 22,413 ( 25,907) ( 48,320) 1,052,546 1,052,546 1,052,546 - $ 917,308 $ 1,074,959 $ 1,026,639 $( 48,320 64 TOWN OF WESTLAKE, TEXAS WESTLAKE ACADEMY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2013 REVENUES State program revenues Federal program revenues Interest income Other miscellaneous income Total revenues EXPENDITURES Education Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING FUND BALANCE, ENDING Budgeted Amounts Original Amended Actual $ 4,488,261 $ 4,583,926 $ 4,696,540 69,239 82,367 81,958 1,500 1,500 1,594 1,280,434 1,206,513 1,197,410 5,839,434 5,874,306 5,977,502 5,818,815 5,931,128 5,803,611 5,818,815 5,931,128 5,803,611 20,619 ( 56,822) 173,891 44,823 ( 57,663) 12,840 7,779 819,090 $ 826,869 65 28,178 28,178) ( 56,822) 819,090 $ 762,268 173,891 819,090 $ 992,981 Variance Favorable (Unfavorable) $ 112,614 ( 409) 94 ( 9,103) 103,196 127,517 127,517 28,178) 28,178 230,713 $ 230,713 TOWN OF WESTLAKE, TEXAS ECONOMIC DEVELOPMENT FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 REVENUES Taxes Sales Hotel occupancy Total revenues EXPENDITURES Economic Development Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Total other financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING FUND BALANCE, ENDING Variance Budgeted Amounts Favorable Original Amended Actual (Unfavorable) $ 180,000 $ 210,000 $ 219,600 $ 9,600 - - 41,207 41,207 180,000 210,000 260,807 50,807 215,758 245,758 296,565 215,758 245,758 296,565 ( 35,758) ( 35,758) ( 35,758) 35,758 35,758 66 35,758 35,758 35,758 35,758 ( 50,807) ( 50,807) TOWN OF WESTLAKE, TEXAS LONE STAR PUBLIC FACILITY CORPORATION SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 REVENUES Interest income Total revenues EXPENDITURES General government Total expenditures NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING FUND BALANCE, ENDING Budgeted Amounts Original Amended Actual $ 45 $_ 45 $ 45 45 45 13,576 $ 13,621 67 45 13,576 $ 13,621 Variance Favorable (Unfavorable) 23 $( 22 23 ( 22 23 13,576 $ 13,599 THIS PAGE LEFT BLANK INTENTIONALLY TOWN OF WESTLAKE, TEXAS 4B ECONOMIC DEVELOPMENT CORPORATION SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 68 Variance Budgeted Amounts Favorable Original Amended Actual (Unfavorable) REVENUES Taxes Sales $ 890,000 $ 1,031,250 $ 1,093,849 $ 62,599 Interest income 500 500 _ 335 { 165 Total revenues 890,500 1031,750 _1,094,184 62,434 EXPENDITURES General government - - Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 890,500 1,031,750 1,094,184 62,434 OTHER FINANCING SOURCES (USES) Transfers out 9�20,_23JO ( 1,210,134) ( 1,272,568) ( 62,434) Total other financing sources (uses) ( 920,230) ( 1,210,134) ( 1,272,56 ( 62,434) NET CHANGE IN FUND BALANCE ( 29,730) ( 178,384) { 178,384) - FUND BALANCE, BEGINNING 178,384 178,384 178,384 - FUND BALANCE, ENDING $ 148,654 $ __- _ $ - $ - 68 THIS PAGE LEFT BLANK INTENTIONALLY TOWN OF WESTLAKE, TEXAS TEXAS MUNICIPAL RETIREMENT SYSTEM SCHEDULE OF FUNDING PROGRESS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 (unaudited) 69 Unfunded Unfunded Actuarial Actuarial Actuarial Actuarial Actuarial Accrued Liability Valuation Value of Accrued Funded Accrued Covered as a Percentage Date Assets Liability Ratio Liability Payroll of Covered Payroll 12/31/2009 $ 1,863,399 $ 2,197,161 84.8% $ 333,762 $ 1,534,927 21.7% 12/31/2011 2,226,028 2,631,416 84.6% 405,388 1,759,432 23.0% 12/31/2012 2,611,474 3,086,228 84.6% 474,754 1,876,305 25.3% 69 THIS PAGE LEFT BLANK INTENTIONALLY TOWN OF WESTLAKE, TEXAS NOTES TO REQUIRED SUPPLEMENTARY INFORMATION SEPTEMBER 30, 2013 (Unaudited) BUDGETARY INFORMATION - The Town follows these procedures annually in establishing the budgetary data reflected in the budgetary comparison schedules: The Town Manager submits to the Town Council a proposed budget for the fiscal year commencing the following October 1. The budget includes proposed expenditures and the means of financing them. 2. Prior to October 1, the budget is legally adopted through passage of an ordinance. This budget is reported as the Original Budget in the budgetary comparison schedules. 3. During the fiscal year, changes to the adopted budget may be authorized, as follows: a) Items requiring Town Council action - appropriation of fund balance reserves; transfers of appropriations between funds; new inter -fund loans or advances; and creation of new capital projects or increases to existing capital projects. b) Items delegated to the Town Manager — appropriation balances from an expenditure account to another within a single fund 4. Annual budgets are legally adopted and amended as required for the general, special revenue and debt service funds. Project length budgets are adopted for the capital projects funds. All budgets are adopted on a basis consistent with generally accepting accounting principles. Budgets are adopted for the proprietary funds annually only as a management tool. There are no legally mandated budgetary constraints for the proprietary funds. 5. Budget amounts are reflected after all authorized amendments and revisions. This budget is reported as the Final Budget in the budgetary comparison schedules. The appropriated budget is prepared by fund, function and department. The Town's management may make transfers of appropriations within a fund. Transfers of appropriations between funds require the approval of the Town Council. The legal level of budgetary control is the fund level. The Town Council made several supplementary budget appropriations during the year. Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting under which purchase orders, contracts and other commitments for the expenditure of resources are recoded to reserve that portion of the applicable appropriation, is utilized in the governmental funds. Encumbrances lapse at year-end and do not constitute expenditures or liabilities because the commitments must be re -appropriated and honored during the subsequent year. Expenditures exceeded appropriations in the public works department of the General Fund as well as in visitor services in the Visitors Association Fund and economic development in the Economic Development Fund for the year. These deficits were covered by additional collections of revenue, unspent budget in other functions and available fund balance. In addition, transfers out exceeded appropriations in the 4B Economic Development Corporation Fund. This excess was covered by additional revenue and available fund balance. 70 THIS PAGE LEFT BLANK INTENTIONALLY INDIVIDUAL FUND SCHEDULE THIS PAGE LEFT BLANK INTENTIONALLY TOWN OF WESTLAKE, TEXAS DEBT SERVICE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 REVENUES Taxes Property Miscellaneous Total revenues EXPENDITURES Debt service Principal retirement Interest and other fiscal charges Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Refunding bonds issued Premium on refunding bonds issued Total other financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING FUND BALANCE, ENDING 71 820,000 Variance Final Budgeted Favorable Amounts Actual (Unfavorable) $ 130,792 $ 129,565 $( 1,227) 3,609 _ { 3,609 134,401 129,565 { 4,836 820,000 2,955,000 ( 2,135;000) 793,393 892,808 ( 99,415 1,613,393 3,847,808 ( 2,234,415) ( 1,478,992) ( 3,718,243) ( 2,239,251) 1,456,336 1,459,345 3,009 - 2,200,000 2,200,000 - 37,723 37.723 1,456,336 3,697,068 2,240,732 ( 22,656) ( 21,175) 1,481 22,657 22,657 - $ 1 $ 1,482 $ 1,481 THIS PAGE LEFT BLANK INTENTIONALLY STATISTICAL SECTION THIS PAGE LEFT BLANK INTENTIONALLY STATISTICAL SECTION (Unaudited) This part of the Town of Westlake, Texas' comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures and required supplementary information says about the Town's overall financial health. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the Town's financial performance and well-being have changed over time. 72-77 Revenue Capacity These schedules contains information to help the reader assess the Town's most significant local revenue sources. Although sales taxes are the Town's most significant local revenue source, information about principal revenue payers is confidential under Texas statutes, and; therefore, not disclosed. Trend information about sales tax revenue is provided in Table 9. 78-82 Debt Capacity These schedules present information to help the reader assess the affordability of the Town's current levels of outstanding debt and the Town's ability to issue additional debt in the future. 83-85 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the Town's financial activities take place. 86-87 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the Town's financial report relates to the services the Town provides and the activities it performs. 88-90 Sources: Unless otherwise noted, the information in these schedules is derived from annual financial reports for the relevant year. 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O Z 0 o y z W rn W GCA U cd R w W N U N C O 2> C X •O U C = W 4v - W 'O ,C cCd O U D U U A w w p R N 7 > id b00 > O R '�' rn o G U O X 0 a U a W n` > w U p a W W a N N O N 00o v o rn vcvi V � O t-:, Ov C, 00 O M DD N N N 10+n O D\ N D O 1 7 C, C, M h M O V1 C7, Ln n O i 10 ~ N r r r N N 69 O O O 0 7 0 0 o r rn h V1 t + Cl �o N 10 In kn 00 C O Omi 69 v h r O Cl 00 00 69 v O n 10 � M h N N 69 O � V)O m 0 M O � N N '. 69 0 0 0 'kr> 0000 n + e kf) , 00 M n + + 00 7 00 O N N r h h o0 h +n V, N O 'n h �+ 69 v rn m M M O C, r M O M N 6A rn N r r M �. E O � cd tn, n O 00 W M > O � � U � C a N _ 00 N O O c O YJ W M V1 r > W N N Q O N N v � O N C 3 ° 69 N w ti w p ti N C C Y O p OBD C� C � ,o G cd O 0. ,O fY� 75 0 z U Go 0 m � C7 .� W p o ro Ln E p = � U Z � c L c U tw w W aoi E LL) w ¢ y„ o n a a a. a zc x w F E a Ww Z w D o c 0 z V) r r Table 5 TOWN OF WESTLAKE, TEXAS ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST THREE FISCAL YEARS (Modified Accrual Basis of Accounting - unaudited) Note: Prior to fiscal year ended September 30, 2011, the Town of Westlake did not assess an ad valorem tax. Source: Tarrant County Appraisal District Denton Central Appraisal District 78 Appraised Value Less: Total Taxable Total Fiscal Real Personal Tax -Exempt Assessed Direct Year Property Property Property Value Tax Rate 2011 $ 951,070,355 $ 70,569,170 $ 143,856,142 $ 877,783,383 0.1601 2012 1,016,474,604 85,329,823 156,315,552 945,488,875 0.15684 2013 1,099,249,031 122,792,343 335,814,215 886,227,159 0.15684 Note: Prior to fiscal year ended September 30, 2011, the Town of Westlake did not assess an ad valorem tax. Source: Tarrant County Appraisal District Denton Central Appraisal District 78 v F 0 0 0 0 0 0 0 0 0 0 09 "t "t N N -^ Cl O O 12. v [-• aN+ o Q O N F 00 o a O V'l O F O N zt 00 00 O V1 D\ F O 00 M O� O� N w U O\ O r- U O Go O A y 7 000 N N �D N N N 7 7 lc� oo .F. m .N- oo r- 'D � M yq 69 y y N W a 4) � a c 0 °,3 t O C U U N y 4� y O O E _ U «3 z L O 01 0 0 0 0 0 0 � O F N ca 00 O N �t N N N 7 O O Ol O V O� O 00 (V C O 7 V r K d m m �D M M d �D 00 N �O L O R vii M oo llc - M O� oo oo F m vi O a 00 0. Q a E `'• f� on C13 w '� U D is cd o o0 U on a 5 110 s 2 v! J U cu a v cr 0 > F-' o v cn C nr N M a «3 z L O 01 1 M C, M M 00 o0 o lr �O �oN �O M ON 10 m m �D M M d �D 00 N �O llp M oo llc - M O� oo oo F m vi O a 00 0. Q a E `'• f� on C13 w '� U D is cd o o0 U on a 5 110 s 2 v! J U cu a v cr 0 > F-' o v cn «3 z L i y cd N i a 0. Q a E `'• f� on C13 w '� U D is cd o o0 U on a 5 110 s 2 v! J U cu a v cr 0 > F-' o v cn «3 z L Table 7 TOWN OF WESTLAKE, TEXAS PROPERTY TAX LEVIES AND COLLECTIONS LAST THREE FISCAL YEARS (Unaudited) Note: Prior to fiscal year ended September 30, 2011, the Town of Westlake did not assess an ad valorem tax. Source: Tarrant County Appraisal District Denton Central Appraisal District 80 Collected within the Fiscal Year Total Collections Taxes Levied Adjusted of the Levy Collections to Date Fiscal for the Adjustments Taxes Levied Percent in Subsequent Percentage Year Fiscal Year to Levy for Fiscal Year Amount of Levy Years Amount of Lev 2011 $ 1,409,956 $ 47,560 $ 1,362,396 $ 1,356,050 99.53% 5,556 $ 1,361,606 99.94% 2012 1,486,968 47,220 1,439,748 1,437,908 99.87% 1,437,908 99.87% 2013 1,398,777 45,297 1,353,480 1,352,097 99.90% 1,352,097 99.90% Note: Prior to fiscal year ended September 30, 2011, the Town of Westlake did not assess an ad valorem tax. Source: Tarrant County Appraisal District Denton Central Appraisal District 80 A b c._ o c o � � oNo opo N A O O O O U 0 O o rn O M T 4 L � _ � M_ _ F V 5 c o 0 d W O O O G 4,a aS C L � � HUS o It' C a < O e F U C Ilj L � F C 0 00 rn rn rn � r � N N N O Cl O v r n 0 0+ o t� 00 00 O O O O O O N N N O O O �c r c- m oo 00 N N 00 00 N N N 0 0 0 N z 00 O �o o Cl O o A oM vVi ~ O O O N z 00 O O O O � O ~ O O O U N z 00 O � � N O A O O O F VC7% O O\ r- It 00 fl u a a > o O 0 0 O O N z 00 M N L e o c 0 0 OC7w d W O O O N z 00 N :7 Pk lc vl 00 V vl T N lO O lU lO N l/1 lO �O O� 20 N ^ M N'1 yq 00 O �--� O vl �O [� �O 00 h V .• h O� �O �D M vl vt V O �--� O h V V �•-• N CO r M Olc� �- V '+ 00 D b 10 M h /A 5q �O lO M r- 10 M h O N O r iD m 0 vt M �O V� l/1 O M^ O Ow � 7 O V1 h V'1 V M CO N V H'1 5q N O cl b m V �O M ll .� N N n N O. T V l� 00 00 �O vi h M h h N D\ D\ W O 7 O V M N M �p .�. .�. W M t. Gn O O M 10 10 Vl 00 O V 10 V N h O C\ M D\ V O %O M O 00 00 h oe N N N V O --� � 69 N T N h M D\ D\ W 01 D\ O T N w 10 O 00 O h l ll 4 .. O 0 l0 .� T .-� 00 M 00 [ � [ � N N 00 NO O [� W h D\ O W O\ N T M Vr ti .M.+ h M d, h 10 �O M M I� O O N V %C ' M O oc M O M M N O O V M M M V N - h O N V O vl V N Vl .Mi O\ N N M N N N M � N M N N V V V �D 00 N V O M Thr V V M S N � M 0 O N 0 N e O N O N e O N e N N z N 00 E o V) xC rEN2 U O U •O W ttl C W4� y 9 � ¢ U. V) • a wo c a c U N y O O b 'O C O .0 r-•. = t=d U 5 oC [- 5 'w a a. ¢ w x Q O a z 0 O N 0 N e O N O N e O N e N N z N 00 'ruble 10 TOWN OF WESTLAKE, TEXAS RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS 35 30 25 20 N 15 1= 2 10 2004 2005 2006 2007 2008 2009 2010 2011 2012 ■ Serlesl ■ Serles2 83 2013 Geomrnl liontled DebtOutsfaudiug Percentage General Certificates of Actual Fiscal Obligation of 'Taxable Per Year Bonds Obligation Total `+ales Ca ritx 2004 18,810,000 18,810,000 21.31% 57,348 2005 18,810,000 18,810,000 18.91% 52,986 2006 - 18,460,000 18,460,000 10.19% 26,447 2007 7,365,000 11,755,000 19,120,000 13.05% 27,198 2008 9,850,000 11,375,000 21,225,000 11.82% 27,038 2009 9,735,000 10,975,000 20,710,000 11.30% 25,791 2010 9,630,000 10,555,000 20,185,000 10.65% 23,831 2011 9,515,000 12,210,000 21,725,000 9.43% 21,900 2012 16,770,000 4,877,000 21,647,000 11.84% 20,369 2013 16,590,000 12,596,800 29,186,800 13.34% 26,327 Notes: Details regarding; the'I'own's outstanding debt can be found in the notes to the financial statements. There was no debt issued until fiscal year 2002. See Table 13 for population data. 35 30 25 20 N 15 1= 2 10 2004 2005 2006 2007 2008 2009 2010 2011 2012 ■ Serlesl ■ Serles2 83 2013 Table 11 TOWN OF WESTLAKE, TEXAS RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS (Unaudited) Note Details regarding the Town's outstanding debt can be found in the notes to the financial statements. No debt was issued until fiscal year 2000. See Table 13 for personal income and population data. 40 — 35 30 — - 25 — — 20 0 15 10 5 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 84 Business -Type Governmental Activities Activities General Certificates Certificates Other Total Percentage Fiscal Obligation of Capital of Contractual Primary of Personal Per Year Bonds Obligation Leases Loans _ Obligation Obligations Government Income Capita 2004 12,400,000 - - 6,027,387 18,427,387 45% 56,181 2005 - 18,810,000 - 5,980,921 24,790,921 55% 69,834 2006 - 18,460,000 - - - 5,878,381 24,338,381 27% 34,869 2007 7,365,000 11,755,000 23,000 - 5,822,299 24,965,299 27% 35,513 2008 9,850,000 11,375,000 15,264 - 5,763,022 27,003,286 23% 34,399 2009 9,735,000 10,975,000 46,559 - 5,734,191 26,490,750 22% 32,990 2010 9,630,000 10,555,000 - - - 5,658,888 25,843,888 25% 30,512 2011 9,515,000 12,210,000 - 50,000 - 5,580,380 27,355,380 22% 27,576 2012 16,770,000 4,877,000 - 34,075 - 5,498,668 27,179,743 20% 25,576 2013 16,590,000 12,596,800 17,420 1,025,200 5,412,149 35,641,569 24% 32,149 Note Details regarding the Town's outstanding debt can be found in the notes to the financial statements. No debt was issued until fiscal year 2000. See Table 13 for personal income and population data. 40 — 35 30 — - 25 — — 20 0 15 10 5 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 84 Taxiu Carroll ISD Denton County TOWN OF WESTLAKE, TEXAS DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF SEPTEMBER 30, 2013 (Unaudited) Keller ISD Northwest ISD Tarrant County Tarrant County College District Tarrant County Hospital District Trophy Club MUD# 1 Total Overlapping Debt Town of Westlake Outstanding Debt Total Direct & Overlapping Debt Amount of Debt Outstanding As of $ 236,000,353 9/30/2013 583,697,026 9/30/2013 654,597,837 9/30/2013 609,066,922 9/30/2013 313,450,474 9/30/2013 26,576,548 9/30/2013 26,315,626 9/30/2013 5,995,998 9/30/2013 Table 12 Overlapping Percent (1) Amount 0.79% 5.41% $ 12,767,619 0.02% 116,739 4.65% 30,438,799 1.08% 6,577,923 0.79% 2,476,259 0.79% 209,955 0.79% 207,893 19.70% 1.181.212 53,976,399 22,753,000 $ 76,729,399 Source: Texas Municipal Report prepared by employees of the Municipal Advisory Council of Texas ("MAC") Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the Town. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the Town of Westlake. This process recognized that, when considering the Town's ability to issue and repay long-term debt, the entire debt burden borne by the resident and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. (1) The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of the entity's taxable assessed value that is within the Town's boundaries and dividing it by the entities' total taxable assessed value. 85 Table 13 TOWN OF WESTLAKE, TEXAS DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS (Unaudited) Per Capita Tarrant County Calendar Estimated Personal Personal Unemployment Year Potruh►tiou Income Income 1;ate 2004 328 41,027,552 $ 125,084 5.3% 2005 355 45,292,916 127,586 5.1% 2006 698 90,835,901 130,137 4.6% 2007 703 93,316,319 132,740 4.3% 2008 785 115,891,905 147,633 5.1% 2009 803 120,920,285 150,586 8.1% 2010 847 102,852,057 121,431 8.1% 2011 992 126,678,400 127,700 7.9% 2012 1,063 138,423,531 130,254 6.2% 2013 1,109 147,292,890 132,859 6.0% Sources; Population for 2000 is from the 2000 census. Fiscal Years 2001 through 2003 are estimated. The Town took over the utilility billing in 2004 and estimated the population by using number of residential water accounts and assuming a 2.5 average household sire. 2010 Census shows median household income at $250,000. Due to the influx of residenls coming to Westlake Academy, surveys have shown that there are approximately 1.28 school-age children in each household; therefore, we will use a 3.23 average household size to calculate population. 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O «. cd .3 3 y L y td y Op 1J A N Cl) a.. ��F--33'wv�3rn5_ a� �� o c is a n n V) Z 0 O� COMPLIANCE SECTION THIS PAGE LEFT BLANK INTENTIONALLY pl[Fkl�ll PATTiLLO, BROWN & HILL, CERTIFIED PUBLIC ACCOUNTANTS NBUSINESS CONSULTANTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the IIonarable Mayor and Members of the Town Council Town of Westlake, Texas 3 Village Circle, Suite 202 Westlake, Texas 76262 We have audited, in accordance with the 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, the financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, and each major fund of the Town of Westlake, Texas, as of and for the year ended September 30, 2013, and the related notes to the financial statements, which collectively comprise the Town of Westlake, Texas' basic Financial statements, and have issued our report thereon dated February 14, 2014. Internal Control Over Financial Renortint� In planning and performing our audit of the financial statements, we considered the Town of Westlake, Texas' internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Town of Westlake, Texas' internal control. Accordingly, we do not express an opinion on the effectiveness of the Town of Westlake, Texas' internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any 91 115 SOUTH CHURCH STREET ■ HILLSBORO, TX 76645 ■ (254) 582-2583 ■ FAX: (254) 582-5731 ■ www.pbhcpa,com AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 ■ TEMPLE, TX (254) 791-3460 WACO, TX (254) 772-4901 ■ ALBUQUERQUE, NM (505) 266-5904 deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Town of Westlake, Texas' financial statements are free from material misstatement, we performed .tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. February 14, 2014 92