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HomeMy WebLinkAboutComprehensive Annual Financial ReportComprehensive Annual Financial Report For Fiscal Year Ended September 30, 2011 1T.1�fr'�,wijr! Fire Station #5 III 111/ y {i0p je�llj 1 IY `` � Itl J%Y iY Ii141 ALLEN, TEXAS Fire Station #5 In 1999, the City of Allen voters approved the issuance of $1,335,000 in General Obligation (G.O.) Bond Funds for the design and construction of Fire Station #5 to serve the western portions of the City. In May 2007, City of Allen voters approved the issuance of an additional $1,375,000 to cover inflation of construction and equipment costs; however, these escalating costs continued to outpace the reserved funding causing the project to be delayed. On September 25, 2009, the City of Allen was awarded $1.8 million appropriated through the Department of Homeland Security (DHS) and the Federal Emergency Management Agency (FEMA) as a part of the American Recovery and Reinvestment Act of 2009. The goals of the project are to increase firefighter safety, increase citizen protection, and enhance preparedness capabilities. By building this station, current response times will decrease for the western portions of the City from more than nine minutes to the recommended five minute time frame. An additional benefit of Fire Station #5 will be the ability to readily offer automatic and mutual aid to the citizens of Allen's three neighboring cities. This project consists of the construction of a new 10,600 square foot fire station located at the intersection of Shallowater Drive and McDermott. The fire station will have the necessary accommodations for 24/7/365 staffing, including a kitchen, sleeping quarters, and gender separate shower/restrooms. Fire Station #5 will be one of the first fire stations in the United States to be built according to Platinum LEED Standards. The facility will be the City of Allen's first certified "green" municipal building and will serve as proof to our citizens and cities across the nation that we are committed to our community and the environment. Find out more about Allen, Texas at www.Cty hlie.ore, www allentx com, and www visitaliemeoiscom. CITY OF ALLEN, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT CITY OF ALLEN FISCAL YEAR ENDED SEPTEMBER 30, 2011 AS PREPARED BY THE FINANCE DEPARTMENT CITY OF ALLEN, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 TABLE OF CONTENTS EXHIBIT Page 1. INTRODUCTORY SECTION Letter of Transmittal Certificate of Achievement vii Organizational Chart viii Elected Ot0cials and Administrative Officers ix II. FINANCIAL SECTION Independent Auditors Report 1 A. MANAGEMENT'S DISCUSSION AND ANALYSIS 3 B. BASIC FINANCIAL STATEMENTS Govemment-Wide Financial Statements Statement of Net Assets 1 17 Statement of Activities 2 18 Fund Financial Statements Governmental Funds Financial Statements Balance Sheet— Governmental Funds 3 20 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets 4 22 Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds 5 23 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 6 25 Proprietary Funds Financial Statements Statement of Net Assets — Proprietary Funds 7 26 Reconciliation of the Fund Level Statement of Net Assets of Proprietary Funds to the Government -wide Statement of Net Assets 8 27 Statement of Revenues, Expenses and Changes In Net Assets — Proprietary Funds 9 28 Reconciliation of the Statement of Revenues, Expenses and Changes in Net Assets of Proprietary Funds to the Statement of Activities 10 29 Statement of Cash Flows — Proprietary Funds 11 30 Component Units Financial Statements Statement of Net Assets — Component Units 12 31 Statement of Activities — Component Units 13 32 CITY OF ALLEN, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 TABLE OF CONTENTS C. REQUIRED SUPPLEMENTARY INFORMATION Schedule of TMRS Funding Progress and Contributions And Schedule of OPEB Funding Progress and Contributions A-1 66 General Fund Schedule of Revenues, Expenditures And Changes in Fund Balances — Budget and Actual A-2 67 Notes to Required Supplementary Information 68 D. COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES EXHIBIT Page Notes To Financial Statements Note 1. Summary of Significant Accounting Policies 33 Note 2. Deposits, Investments and Investment Policies 41 Note 3. Receivables 44 Note 4. Capital Assets 45 Note 5. Long -Term Debt 49 Note 6. Intertund Transfers 58 Note 7. Retirement Plan 59 Note 8. Water and Sewer Contracts 61 Note 9. Deferred Compensation Plan 61 Note 10. Risk Management 62 Note 11. Other Postemployment Benefits (OPEB) 63 Note 12. Commitments and Contingent Liabilities 65 Note 13. Subsequent Events 65 C. REQUIRED SUPPLEMENTARY INFORMATION Schedule of TMRS Funding Progress and Contributions And Schedule of OPEB Funding Progress and Contributions A-1 66 General Fund Schedule of Revenues, Expenditures And Changes in Fund Balances — Budget and Actual A-2 67 Notes to Required Supplementary Information 68 D. COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Major Governmental Funds Comparative Balance Sheets - General Fund B-1 70 Comparative Statements of Revenues, Expenditures and Changes in Fund Balances — General Fund B-2 71 Comparative Balance Sheets — Debt Service Fund B-3 72 Comparative Statements of Revenues, Expenditures and Changes in Fund Balances — Debt Service Fund B-4 73 Budgetary Comparison Schedule— Debt Service Fund B-5 74 Comparative Balance Sheets — General Capital Projects Fund B-6 75 Comparative Statements of Revenues, Expenditures and Changes in Fund Balances — General Capital Projects Fund B-7 76 CITY OF ALLEN, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 TABLE OF CONTENTS EXHIBIT Page Comparative Balance Sheets — General Obligation Bond Fund B-8 77 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance — General Obligation Bond Fund B-9 78 Non -major Governmental Funds Combining Balance Sheet C-1 80 Combining Statement of Revenues, Expenditures and Changes in Fund Balances C-2 81 Major Enterprise Funds Comparative Statements of Net Assets —Water and Sewer D-1 83 Comparative Statements of Revenues, Expenses and Changes in Fund Net Assets — Water and Sewer D-2 84 Comparative Statements of Cash Flows — Water and Sewer D-3 85 Comparative Statements of Net Assets — Solid Waste D-4 86 Comparative Statements of Revenues, Expenses and Changes in Fund Net Assets — Solid Waste D-5 87 Comparative Statements of Cash Flows—Solid Waste D-6 88 Comparative Statements of Net Assets — Drainage D-7 89 Comparative Statements of Revenues, Expenses and Changes in Fund Net Assets — Drainage D-8 90 Comparative Statements of Cash Flows — Drainage D-9 91 Comparative Statements of Net Assets — Golf Course D-10 92 Comparative Statements of Revenues, Expenses and Changes in Fund Net Assets — Golf Course Fund D-11 93 Comparative Statements of Cash Flows — Golf Course Fund D-12 94 Internal Service Funds Combining Statement of Net Assets E-1 96 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets E-2 97 Combining Statement of Cash Flows E-3 98 CITY OF ALLEN, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 TABLE OF CONTENTS EXHIBIT Page Discretely Presented Component Units Comparative Balance Sheets -Economic Development Corporation F-1 1D0 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets F-2 101 Comparative Statements of Revenues, Expenditures and Changes in Fund Balances F-3 102 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance F-4 103 Comparative Balance Sheets -Allen Community Development Corporation F-5 104 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets F-6 105 Comparative Statements of Revenues Expenditures and Changes in Fund Balances F-7 106 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance F-8 107 E. CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS Comparative Schedules by Source G-1 108 Schedule by Function and Activity G-2 109 Schedule of Changes by Function and Activity G-3 111 TABLE Page III. STATISTICAL SECTION Net Assets by Components 1 113 Changes in Net Assets 2 114 Fund Balances, Governmental Funds 3 116 Changes in Fund Balances, Governmental Funds 4 117 Assessed Value and Estimated Actual Value of Taxable Property 5 118 Direct and Overlapping Property Tax Rates 6 119 Principal Property Taxpayers 7 120 Ad Valorem Tax Levies and Collections 8 121 Ratio of Outstanding Debt by Type 9 122 Ratio of General Bonded Debt Outstanding 10 123 Direct and Overlapping Governmental Activities Debt 11 124 Pledged -Revenue Coverage 12 125 Demographic and Economic Statistics 13 126 Principal Employers 14 127 Full -Time Equivalent City Government Employees by Function/Program 15 128 Operating Indicators by Function/Program 16 129 Capital Asset Statistics by Function/Program 17 130 I ' CITY OF ALLEN March 13, 2012 ' Honorable Mayor and City Council, City Manager, Citizens of Allen: ' The Finance Department is pleased to submit the Comprehensive Annual Financial Report (CAFR) of the City of Allen, Texas (the City), for the fiscal year ended September 30, 2011. This report is published to provide the City Council, our citizens, City staff, and other readers with detailed information concerning the financial position and activities of the City. Management has prepared the report and is responsible for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures. To the best of our ' knowledge and belief, the enclosed data is complete and reliable in all material respects. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. t Also included in this report is an unqualified ("clean") opinion on the City of Allen's financial statements for the year ended September 30, 2011 issued by Weaver. The independent auditors' report is located in the beginning of the financial section of the CAFR. ' THE REPORT The CAFR is presented in three sections: introductory, financial, and statistical. The introductory section includes this transmittal letter, a list of principal officials, organizational charts, and the Government Finance Officers Association of the United States and Canada's (GFOA) Certificate of Achievement for Excellence in Financial Reporting. The financial section is prepared in accordance with generally accepted accounting principles. This section of the CAFR includes the Management Discussion and Analysis (MD&A) which can be found immediately following the independent auditor report, the basic financial statements and ' combining and individual fund statements and schedules, as well as the required supplementary information. The MD&A is a narrative introduction, overview and analysis to accompany the basic financial ' statements and should be read in conjunction with the transmittal letter. The basic financial statements include the govemment-wide financial statements that present an overview of the City's entire operations, while the fund level statements present the financial information of each ' of the City's major funds, as well as non -major funds. Lastly, the statistical section includes selected financial and demographic information, generally presented on a multi-year basis. 1 ' 305 CENTURY PARKWAY • ALLEN, TEXAS 75013-8042 •214.509.4100 WEB..citvofallca ore • EMAIL: coa@cayofalim.org REPORTING ENTITY This report includes all funds of the City including its component units. Component units are legally separate entities for which the City is financially accountable but are not part of the City's operations. The Allen Economic Development Corporation (AEDC) and Allen Community Development Corporation (ACDC) are included in the financial statements as discretely presented component units. CITY PROFILE The City of Allen is the fourth largest city in population in Collin County, one of the fasted growing counties in the nation. Located 25 miles north of downtown Dallas on US 75, Allen encompasses approximately 27 square miles. The completion of the George Bush Tollway and Sam Rayburn Tollway (Hwy 121) provide direct access into the Metroplex and access to Love Field (27 miles) and Dallas Ft Worth International Airport (31 miles). With a population of 3.6 million in a 30 -mile radius, Allen sits in a prime location for restaurants, shopping centers and other retail venues. The quality of the Allen community attracts well-educated residents with a high level of spending power and disposable income. Current population of 86,633 is estimated to grow to 97,938 at build out. Incorporated in 1953, Allen is a home rule charter city. The Charter can be amended only by a vote of the people and provides for seven non-partisan Council members, including the Mayor, to be elected at -large to staggered terms of three years. The Council is responsible for enacting ordinances, resolutions, and regulations governing the City as well as adopting the annual budget which serves as the foundation for financial planning and control. The City Council appoints the City Manager, who has full responsibility for carrying out Council policies and administering City operations. The Council also appoints the Municipal Judge and various advisory boards. City service departments provide a full range of services including police and fire protection, emergency ambulance service, municipal courts, building code enforcement, library, parks and recreation, tourism, water and sewer services, sanitation/solid waste services, traffic engineering, and construction and maintenance of streets and infrastructure. The City employs 713.10 full time equivalent positions. ECONOMIC CONDITIONS AND OUTLOOK Regional Economy In 2011 Texas claimed the number 1 spot for the nation's top business climate and the Dallas - Fort Worth Metroplex (DFW) ranked No. 2 in the nation behind the Washington, D.C. area for employment growth. The DFW area excels in a low unemployment rate, a growing labor force, low cost of living, affordable real estate costs and a superior business climate. The lower cost of living creates huge savings to corporations and their employees when relocating to Texas. Allen's Position in the Region Allen is a community that offers exceptional housing, award-winning schools and a dynamic business climate all of which are strong factors in the success of the City's economy. Allen has benefited from a well-educated and affluent workforce. With a median age of 33.5, over 50.5% of adults have a Bachelors degree or higher and the average household income is $109,414. The Economic Development Corporation (EDC) continued its work in attracting high quality businesses to Allen in order to increase both the tax base and local employment. Frontier Communications signed a 10 -year lease, will invest $406 million and also create 600-800 employment positions in Allen. WatchGuard Video, the world's leading manufacturer of in -car video systems for law enforcement, also signed a long -tens lease, creating 120 high wage employment positions and combining the company's operations for Engineering, Manufacturing, Sales and Customer Service. Zynga, a $9 billion company that designs games primarily for social media -related applications, will employ approximately 100 software developers in the 20,000 square foot Millennium Building. No Magic, Inc, the leading global provider of integrated modeling, simulation and analysis solutions and services relocated its headquarters to One Allen Center, bringing new jobs to Allen. These types of EDC efforts help the City to maintain a strong financial base. The City also continues to benefit from other favorable conditions associated with a desirable location for work, destination and living. In August 2011 Forbes listed Allen in the top 25 suburbs for retirement with a median home price of barely $200,000, low cost of living, low crime, a favorable tax climate and a local hospital. For the third time in four years, Allen ranked among the 10 safest cities in the United States according to a city crime rankings study, published by CQ Press, a unit of Congressional Quarterly Inc., and based on the FBI's 2010 statistics report. Allen was listed first in Texas, making it the safest city in Texas. In May 2010, when general obligation bonds were issued, Standard and Poor's (S&P) raised its long -tens and underlying bond rating on the City of Allen to the highest rating of 'AAA. S&P's rating report supporting the 'AAA' rating stated the following credit factors: • Economic and property tax base, which has grown rapidly, to include a diverse mix of residential, commercial and industrial components; • High wealth and income levels; • Access to the large and diverse north -central Texas employment base; • History of very strong reserve levels and thorough planning processes; and • Moderately high overall net debt levels. All indicators point to the City maintaining that highest'AAA' rating. Long Range Financial Planning The City's responsiveness to emerging economic challenges and its long-term planning have been key factors in its fiscal health. The City has a five-year financial plan and a seven year capital improvement plan where departments reevaluate project pnorkies, review funding sources, and identify new projects as needed. Using this plan allows the City to plan the timing of projects associated with debt issuance and the effects on the tax rate. Standard and Poor's credit rating report stated 'the city's Financial Management Assessment (FMA) to be 'strong', indicating practices are strong, well embedded and likely sustainable." In November 2010 the City took advantage of low interest rates and issued $8,785,000 in G.O. Refunding bonds and in May 2011 issued $8,840,000 in G.O. Refunding and Improvement Bonds of which $5,135,000 was new G.O. bonds. Voters approved the 2007 bond election and the corresponding tax increase associated with the new bonds, however, long range planning has allowed issuance of new debt without raising the tax rate. Although economic forecasts remain favorable, the City has established a conservative budget that "holds the line" for 2012 existing City services as explained in the MD&A under "Economic Factors and Next Years Budgets and Rates". The FY2012 budget includes issuing new debt, however, review of current projects and staffing needs of a new fire station and other public safety needs indicates that the City will delay issuing new debt until the spring of 2013. Despite current economic conditions, Allen continues to experience strong permitting and development activity. The Planning and Zoning Commission heard over 77 development cases, including 21 zoning cases, 36 final plats, and 18 site plan reviews which encompasses over 1100 acres of land. New development such as Allen Assisted Living, additional phases of Waterford Parks, and Twin Creeks, and new developments at Hamilton Hills and The Preserve have added to the residential growth. Major commercial developments include Walmart, Andrews Distributing, TopGolf, In -N -Out Burger, Rudy's BBC, and Cabela's. Fortunately, the timing of these projects has prepared Allen to weather the financial down tum and provide long term sustainability and a strong sales tax base. Fiscal Year 2011 Highlights The vision of Allen as a destination point unfolded with the opening of the Allen Event Center in November 2009. Professional hockey and football, the Tom Thumb Texas Stampede championship rodeo and a multitude of concerts and special events has contributed to the growing base of lodging, shopping and dining options surrounding the Event Center in the Village of Allen. New entertainment businesses, such as a cable wakeboarding park (Hydrous Wake Park), a new golf driving range concept (TopGolf), plus the opening of Cabela's, strengthens Allen's position as a destination point. Similarly, Watters Creek at Montgomery Farm continues to offer a unique get -a -way for residents and visitors alike with D Magazine ranking it as one of the Best Places to Shop noting the 52 -acre setting of hills, trees and a creek. This development truly defines "live, shop and play' in Allen. With these two great destinations, Allen is a prime location for hosting conventions with shopping, dining, lodging and recreational opportunities. Also with the efforts of the AEDC, sales tax and property tax revenue have been greatly impacted. Total assessed property values increased 2.88% or $215.5 million from the previous year. Sales tax revenue increased 11.7% over FY2010. The Engineering Department made significant strides in constructing city facilities including Fire Station 5, Public Safety Dispatch Center, Public Safety Training Facility, Animal Shelter renovations, and a new Service Center. Infrastructure improvements include completing the US75 and SH121 Interchange, Chaparral Road Bridge, the 2 million gallon Hillside Water Tower, and various roadways to address the growing population and visits to Allen's entertainment and shopping options. Due to conservative budgeting and effective management, the City continues to cash finance capital projects thus saving debt issuance and interest costs. In FY2011 the General Fund contributed $790,000, Water and Sewer Fund -$1,520,000, Solid Waste Fund -$300,000, TIF Fund -$35,000 and Economic Development Corp. -$1,000,000. It is important for city services to keep pace with continued growth. The Police Department worked closely with the Information Technology Department on two important initiatives. First, the communication center was relocated from Police Headquarters to the basement of City Hall, providing additional space and state-of-the-art equipment for dispatch emergency operations. Another important improvement was the completed upgrade of the digital public safety radio and communications system which went online earlier this year. With assistance from a $1.8 million dollar federal grant, construction of Fire Station 5 was completed. It is designed to achieve the highest level of certification offered by the Leadership in Environmental and Energy Design Green Building Rating System. The Fire Department upgraded medical treatment protocols to reflect the most cutting edge procedures and techniques. Also, a new 100 -toot ladder truck was purchased to meet rescue and response needs created by the growing number of tall buildings in Allen. Along with continued care of streets and alleys, the Community Services Department staff increased education and outreach initiatives as the City moved from Stage 1 to Stage 3 water conservation. landscape irrigation inspections were offered as a new service to residents with the highest residential water use as well as a water efficiency rebate program and the Sustainable Landscape Series. Following nationwide trends, healthcare costs continue to rise. To address the requirements of GASB 45, a medical trust fund was established to address the funding of post employment benefits which the City is required by state law to offer to retirees and dependants. The Risk Management Fund continues to be in good financial condition to provide the financial security needed in the event that catastrophic claims should occur. The Library transitioned to a new Polaris library automation system, formerly part of the City of Piano's system. The stand alone system offers the ability for customized features and functionality improving the overall service to Allen residents. Attendance and event scheduling has increased substantially when management of the Allen Event Center and Community Ice Rink was transitioned from a private management company to the Parks Department. Parks staff also completed numerous construction projects and began plans for renovation of the Chase Oaks Golf Course. The new Parks, Trail and Open Space Master Plan was finalized and staff facilitated the Public Art Committee with two public art projects at Fire Station 5 and City Hall. Once again, the City's biggest event was Allen USA 2011 Celebration. An estimated crowd of 85,000 enjoyed a free, fun -filled day of family entertainment on the grounds of Celebration Park including the headlining concert by Foreigner and one of the largest and best fireworks show in North Texas. Relevant Financial Policies A resolution amending the Debt Management and Fund Balance Reserve Policy to reflect new accounting requirements (GASB 54) was approved by Council in September 2011. The Investment Policy is also approved annually by the Council. All other policies (accounting, budgeting, procurement, capital improvements, asset management, and risk management) are internal policies approved by the Finance department and City Manager. These policies follow guidelines established by management, professional organizations and/or state and federal laws. On a quarterly basis the Finance Department prepares financial and investment reports which are presented to the City Council. AWARDS AND ACKNOWLEDGEMENTS ' Awards -- The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Allen for its CAFR for the fiscal year ended September 30, 2010. This was the thirteenth ' consecutive year that the government has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. ' A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program's requirements, and we are ' submitting it to the GFOA to determine its eligibility for another certificate. I I Acknowledgements — We would like to express our sincere gratitude to City personnel who ' contributed to this report, especially Dana Thornhill, Amounting Manager, Tru Nguyen, Senior Accountant, Kembedy Jones, Accountant, Stephanie Helmick, Accountant and Trish Featherston, Budget Manager. Appreciation is expressed to representatives of Weaver for their invaluable assistance in producing the final document and to the City Managers office and the members of ' the City Council whose leadership and commitment are vital to the health and vitality of Allen. Respectfully submitted, Kevin Hammeke Joanne Stoehr ' Chief Financial Officer Assistant Finance Director ' A 1.1 Certificate of Achievement for Excellence in Financial Reporting Presented to City of Allen Texas For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2010 A Certificate of Achievement for Exwllenoe in Financial Reporting is presented by the Government Finante Officers Association of the United Status and Canada m government units and public employee tetuement systems whose wnvmhemiw amend fiveaial report, (CAFRa) achieve the highest standard, to government accounting and financial reporting- President eporting President Executive Director CITY OF ALLEN ORGANIZATIONAL CHART City Atlomey City Manager Assistant City Meneger Public and Media Relations Community Services Finance Human Resources Library Planning and Development Municipal Judge Building and Code Compliance City Secretary Engineenng Flre Information Technology Parka antl Recreaaan Police CITY OF ALLEN, TEXAS CITY OFFICIALS Council Members Mayor Stephen Terrell Mayor Pro Tem Debbie Stout Place 2 Council Member Ross Obermeyer Place 3 Council Member Joey Herald Place 4 Council Member Robin L. Sedlacek Place 5 Council Member Gary L. Caplinger Place 6 Council Member Jeff McGregor Management Staff City Manager Peter H. Vargas Chief Financial Officer Kevin Hammeke Assistant Finance Director Joanne Stoehr Accounting Manager Dana Thornhill ttEgpEC7 * 'N rFO A * m k A T C'rr OF ALL* -r I II weaver> - II INDEPENDENT AUDITOR'S REPORT Honorable Mayor and Members of the City Council City of Allen, Texas We have audited the accompanying financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund and the aggregate remaining fund information of the City of Allen (the City) as of and for the year ended September 30, 2011, which collectively comprise the City's basic financial statements, as listed in the table of contents. These basic financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these basic financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion the basic financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Allen at September 30, 2011 and the respective changes in financial position and cash flows, where applicable, thereof, for the year then ended in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1, to the basic financial statements, the City implemented Governmental Accounting Standards Board (GASB), Statement No. 54, "Fund Balance Reporting and Governmental Fund Type Definitions". In accordance with Government Auditing Standards, we have also issued our report dated March 5, 2012 on our consideration of the City's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of the testing, and not to provide an opinion on the intemal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The accompanying management's discussion and analysis, schedule of TMRS funding progress and contributions, schedule of OPEB funding progress and contributions and budgetary comparison information on pages 3 through 16 and fib through 68, respectively, are not a required part of the basic financial statements but are supplementary information required by the GASB. 1 AN INDEPENDENT MEMBER Of BAKER TILLY INTERNATIONAL 11 WEAVERAND TIDWELL LIP DALLAS (TERTUIED PUBLICACCOUNTANISANO CONSULTANTS 12221 MERIT ORIVE, SUITE 1100. DALLAS, T%15251 WWWWEAVERLIPCOM 1 PR(912)4901910 Er912)]02V21 City of Allen, Texas Page 2 We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was made for the purpose of forming opinions on the basic financial statements taken as a whole. The introductory section, combining and individual major and non -major fund financial statements and schedules, the discretely presented component units financial statements and schedules, schedules of capital assets used in the operation of governmental funds, and statistical tables listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements of the City. The combining and individual major and non -major fund financial statements and schedules, discretely presented component units financial statements and schedules, and schedules of capital assets used in the operation of governmental funds have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated, in all material respects in relation to the basic financial statements taken as a whole. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on such data. WEAVER AND TIDWELL, L.L.P. Dallas, Texas March 5, 2012 1 1 1 1 1 1 MANAGEMENT'S DISCUSSION 1 AND ANALYSIS 1 1 1 1 1 1 1 1 1 t * af.ypgGT * INTFQ4 CITY OF PllEo CITY OF ALLEN, TEXAS ' MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 (UNAUDITED) ' As management of the City of Allen, Texas, we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2011. ' FINANCIAL HIGHLIGHTS ' • The assets of the City exceeded its liabilities (net assets) at September 30, 2011 by $589,418,484. Of this amount, 73,070,337 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. • The City's total net assets decreased by $2,746,291. The decrease is primarily a result of ' capital projects being completed. • The City's governmental funds reported combined ending fund balances of $46,818,012 at September 30, 2011, a decrease of $7,787,654 from the prior fiscal year. This decrease is attributed to the expenses associated with the capital projects. ' • At the end of the fiscal year, the unassigned fund balance for the General Fund was $15,628,882 or 23% of total General Fund expenditures. • On a government -wide basis, the City's total liabilities decreased by $6,634,295. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City's basic financial ' statements. The City's basic financial statements are comprised of three components: 1) government - wide financial statements, 2) fund financial statements and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. ' Government -wide financial statements - The government -wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to that of a private -sector business. ' The Statement of Net Assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. To t assess the overall health of the City, other non-financial factors should also be taken into consideration, such as changes in the City's property tax base and the condition of the City's infrastructure. The Statement of Activities presents information showing how the City's net assets changed during the fiscal year. All changes in net assets are reported when the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes ' and earned but unused compensated absences). Both the Statement of Net Assets and the Statement of Activities are prepared utilizing the accrual basis of accounting as opposed to the modified accrual basis used in prior reporting models. ' In the government -wide financial statements, pages 17 through 19, the City is divided into three kinds of activities: ' • Governmental activities - Most of the City's basic services are reported here, including the police, fire, library, community development, parks and recreation, municipal court, and general administration. Property and sales taxes, charges for services, franchise fees, and state and federal grants finance most of these activities. ' • Business -type activities - The City's water, sewer, solid waste, drainage, and golf course operations are reported here. These are functions intended to recover all or a significant portion of their costs through user fees and charges. 1 1 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 (UNAUDITED) • Component units - The City includes two separate legal entities in this report: the Allen Economic Development Corporation (AEDC) and the Allen Community Development Corporation (ACDC). Although legally separate, these component units are important because the City is financially accountable for them. 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 City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the City can be divided into two categories: governmental and proprietary. Governmental Funds - These funds are used to account for the majority of the City's activities, which are essentially the same functions as governmental activities in the government -wide statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near- term inflows and outflows of spendable resources, as well as resources available for future spending at fiscal year end. These funds are reported using the modified accrual basis of accounting, which measures cash and all other financial assets that can be readily converted to cash. When compared with similar information in the broader government -wide financial statements, readers may better understand the long-temr impact of the government's near-term financing decisions. Reconciliation is provided that details the relationships or differences between governmental activities and governmental funds; reconciliation follows the fund financial statements. The City maintains several 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 balance for the General Fund, Debt Service Fund, General Capital Projects Fund and General Obligation Bond Fund, all of which are considered to be major funds. Data for the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the non -major governmental funds is provided in the form of combining statements elsewhere in this report. During the course of the year, the City consolidated some funds in order to prepare for GASB 54 requirements. The basic governmental fund financial statements can be found on pages 20 through 25 of this report. Proprietary Funds - The City maintains two different types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to report the same functions presented as business - type activities in the government -wide financial statements. The City uses enterprise funds to account for its water and sewer operations, solid waste collection, disposal services, drainage operations, and golf course operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. The City uses its internal service funds to account for vehicle, machinery, and equipment replacements and costs associated with workers compensation, liability and property insurance, and employee medical and dental insurance programs. These services have been included within governmental activities in the government -wide financial statements as they predominantly benefit governmental rather than business -type functions. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the water and sewer operations, solid waste collection, and disposal services since they are considered to be major funds of the City. The Drainage Fund and the Golf Course Fund are the only remaining enterprise funds, so they are being presented as major funds even though they do not meet the criteria of a major fund established in Governmental Accounting Standards Board Statement No. 34. All internal service funds are combined into a single aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements can be found on pages 26 through 30 of this report. CIN OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 (UNAUDITED) Notes to the Financial Statements - Additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements is provided in the notes to the financial statements found on pages 33 through 65 of this report. Other Information - In addition to the basic financial statements and accompanying notes, this report also presents required supplementary information highlighting budgetary information for the General Fund and funding schedules for TMRS and OPEB found on pages 66 through 68 of this report. The combining statements referred to earlier in connection with non -major governmental funds and internal service funds are presented following the required supplementary information. Comparative schedules of capital assets used in the operation of governmental funds are found on pages 108 through 111. GOVERNMENT -WIDE FINANCIAL ANALYSIS As noted earlier, over fime net assets may serve as a useful indicator of the financial position of a government. The assets of the City of Allen exceed the liabilities by $589,418,484 as of September 30, 2011. By far the largest portion of the City's net assets ($515,511,699 or 87%) refects its investment in capital assets (i.e. land, buildings, infrastructure, vehicles, machinery, and equipment), less any related debt used to acquire those assets that are still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's net assets, $836,448, represents resources that are subject to external restrictions on how they may be used; the remaining balance of $73,070,337 may be used to meet the government's ongoing obligations to citizens and creditors. 5 Table 1 Net Aevals Governmental Ao9N8es Business -bene AdivNes Total 2411 2414 2411 2410iNil 2919 Curren) and other assets $85,5]2,003 $75.772,498 $35,120,831 $3&03],10] $100,892,094 $107,009,805 Cal assets 518831918 519,109,914 108023,838 107,949,408 626055557 827,119.432 Total Assets 582403981 594,912,442 143144470 139,988,595 725,518,451 734,929037 Long-term liabilities 113,548,811 114]85,290 12,155,973 13380.377 125,704]84 120,145,067 Other lla idess 8793281 104911,057 3,631,922 4.124530 10425103 14,610,595 Total Liabilities 120.944072 12529,4.34] 15787095 17.480915 138129967 142764282 Net Assets Investedlin ppital assets, net of de ated debt 419.223648 428,550,870 98,298,053 91,983309 515,511,699 523,534,179 Restnded 486,756 889.439 319092 374882 834448 1,266,401 Unraseidad 42351697 40.210,788 30718830 27,145,409 ]30]0337 87,360.195 Total Nat Assets $462.081,909 $469,659.095 $127358575 $122,505,880 $589.418./04 $692,181,775 An additional portion of the City's net assets, $836,448, represents resources that are subject to external restrictions on how they may be used; the remaining balance of $73,070,337 may be used to meet the government's ongoing obligations to citizens and creditors. 5 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 (UNAUDITED) Analysis of the City's Operations - As of September 30, 2011, the City had an overall decrease in net assets of $2,746,291 for the government as a whole which represents a decrease of $7,597,186 for governmental activities and an increase of $4,850,895 for business -type activities. The decrease in governmental activities is due to completion of capital projects. A summary of the City's operations for the year ended September 30, 2011 is provided in Table 2. Table Changes In NO Nub Gov,,,dbal Add, B,eirmsNneAytiMea read ZLI 2011 20_10 22911 ZM1 R.a'. P"mra Ravenna 18.969.047 20415,)00 - - 16,999047 20.415.7n00 charges tp aentua $11,371,933 60062,127 $39.62!.671 $34.047.156 850,%9,651 $42.109281 opened, gnnla aM 161]ID,3% 16,0%.561 - - 16,M,393 16,036,561 wnbibutiom 2,738,0% 3,140752 1p9g000 - 3.736.094 3.148.752 Cagbl grznb and 2,142.294 2,66S.531 - - 2.742294 2,665,534 wnNban. 5,437,433 21,804,059 2.749,029 51QX11 0160482 2],026,280 General Revenues - - 25,839%) 26,311,371 25635007 26,314.371 Pmperlytuma 41.111.106 40.]57.240 - - 41.111,1% 40.757340 sale. tax 13,907.015 12181.263 - - 13.%],095 12461368 Freo Mu!sate 6121,059 a.091 857 - - 6,421.09 BA91 W7 Hob, mMel (area 1,113,312 M.1m - - 1,113,312 80.4185 Flnu 1,886,6455 2,128,167 - 34381%T 1,668.565 2,120167 Interest namin, 864,169 11%,100 184,709 338,849 828.870 1.4W.M Gain on aab M mpita, (12,889582) 4,882293 9,922.241 5554121 (2,748291) 10316.114 eaten =.767 103,0% - 51433611 233]83 103,095 Misoglanean 1,451,743 1312462 143329 408104 15%0]2 1]20568 Tota, Rwenuea 80314042 $!900.372 43 1",M 39938328 130019180 137,1344 700 Eeyuau General ga..a. 18.969.047 20415,)00 - - 16,999047 20.415.7n00 R611auMy 27.110,78 261%,950 - - 2],110,)78 26,106,950 Pubicw.. 161]ID,3% 16,0%.561 - - 16,M,393 16,036,561 cations and muaabon 3.645922 23.16980] - - 39645,923 23,169807 conmunirydeodwenent 2,142.294 2,66S.531 - - 2.742294 2,665,534 IMMO on long-term debt 4,715.567 4,88).52! - - 4,715.550 4,3%,52] WMxand newer - - 25,839%) 26,311,371 25635007 26,314.371 Eandro—erWl weab e—da. - 5.411.9% 51111,913 5,411,960 5.111,913 DnnWe - 819,841 8%,1124 019,947 5%.924 Go. 1912583 20298% 1812 yJ 2039688 T.1 Eip,nnua %%29]4 932480]9 Ni 182.497 34381%T 132]654]1 13]BZ1988 Inpeaae In net... Wore traMere (12,889582) 4,882293 9,922.241 5554121 (2,748291) 10316.114 TranaMa 5,071,&8 5.142361 50713461 51433611 )!crease In nat... (7,57,188) 910041654 4,050595 412.%0 (2.748.291) 10316,714 NO a aeb, beginrirg of yur las pevotaly rrygde8) 469.%9.% 4598X,441 122,505.880 122,00620 57164]]5 $819490451 Net...., aM W year $462,081,903 $469,659,0% $127,356675 $122505,680 $599.418.484 ,$592164.TT5 91 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 (UNAUDITED) Governmental activities Revenues — The following chart visually illustrates the City's revenue by sources for governmental activities. Revenue by Source- GovernmentaIActivities Transfers $5,071,341 5% Other Franchise Tax $6,421,059 7% Sales Tax 513,907,095 15% Operating Grants &Contributions Capital Grantsand $2,736,094 Contributions 3% $5,437,433 7% Charges for services $11,371,983 12% Preperty taxes $41,111,106 45% ' Revenues for the City's governmental activities decreased by $11,593,930 or 12%. Major components of revenue decreases/increases are explained as follows: a Charges for services increased by 41% when compared to the prior year due to the increased ' revenues related to the operation of the Allen Event Center. • Capital grants and contributions decreased by $16,446,626 from the prior year due to agreements with developers in relation to infrastructure in the prior year being completed. ' . Although the base sales tax continued to decline, sales tax revenue increased 12% due to population growth, new retail development and commercial construction in the City. Hotel taxes increased by 38% due to receiving a full year of revenues from multiple hotels that opened in 2010 and due to the City of Allen becoming a destination point for many activities. ' a Interest earnings decreased from $1,154,160 in FY2010 to $644,169 in FY2011, a reduction of 44%, as a result of the continued decline of rates on investments during FY2011. ' Expenses for governmental activities increased by $5,736,895 or 6%. Components of increases and decreases are explained as follows: '• Expenses include employee annual merit increases. • Expenses for general government decreased by 17% due primarily to changes in economic grant incentives, as well as, prudent conservative management by city staff. a Expenses for public safety increased by 4% due to additional over time costs associated with events held at the Allen Event Center and merit increases. a Culture and recreation expense increased by 32% due to transitioning the operations of the Allen Event Center. These expenses are offset by additional revenues created by its operations. 7 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 (UNAUDITED) The following chart illustrates the relationship between expenses and program revenues for governmental type activities. Expenses and Program Revenues -Governmental Activities ■ Expense ■ Revenue $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 General Goveullent�ryCyhy�andR��tlpityi). rnentnterpst on tonq_t t 0 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 (UNAUDITED) Business -type activities — Revenues — The following chart visually illustrates the City's revenue by sources for business -type activities. Revenue By Source - Business-TypeActivltles we, Business -type activities revenues increased $3,768,410 or 9%. Major components of the decreases/increases are as follows: • Charges for services for business -type activities increased by $5,580,517 or 16% due to an increase in water sales of 11 % and an increase in sewer charges of 6% from the previous year. In accordance with the latest water and sewer rate study, water and sewer rates were increased in February 2011. • Interest earnings decreased from $338,849 in FY2010 to $184,709 in FY2011, a reduction of 45%, as a result of the continued decline of rates on investments during FY2011. • Capital contributions for water and sewer lines and impact fees decreased by 47% due to receiving developer contributions for the Chaparral Force Main and Lift Station in the prior year. 0 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 (UNAUDITED) Expenses for business -type activities decreased by $599,410 or 2%. The decrease was primarily a result of capital projects being completed and prudent conservative management by city staff. The following chart illustrates the relationship between expenses and program revenues for business -type activities: Expenses and $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 Governmental funds Activities Water&Sewer Solid Waste Drainage Golf Course FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS The focus of the City of Allen's governmental funds is to provide information on near -tens inflows, outflows and balances of spendable resources. Such information is useful in assessing the City's measure of a government's net resources available for spending at the end of the fiscal year. At the end of the current fiscal year, the governmental funds reported combined ending fund balances of $46,818,012, a decrease of $7,787,654 in comparison with the prior fiscal year. Approximately 34% or $15,628,882 constitutes unassigned fund balances, which are available for spending at the government's discretion. The remaining fund balances are classified as assigned, restricted or nonspendable to indicate that they are not available for new spending because the funds have already been assigned for public safety ($1,402), restricted for debt service ($925,812), capital projects ($24,958,283), tourism ($1,984,453), asset forfeiture ($159,229), state and federal grants ($745,080), park acquisition and development ($1,658,108), tax increment financing agreements ($700,709), cemetery trust ($55,898), and for prepaid items ($156). The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the total unassigned fund balance was $15,628,882. The total fund balance increased by $219,363 more than the final revised budget. Current operating expenditures had savings of $908,200 allowing $775,000 to be transferred to the Capital Projects Fund for financing of the I.T. Master Plan and for self financing of other capital projects. The total fund balance increased from $15,466,975 to $15,686,338 resulting in a positive effect on the operational expenditure reserve for the 2011-2012 budget. The Debt Service Fund balance of $925,812, all of which is reserved for the payment of debt, decreased from the prior year fund balance by ($433,900) due to interest earnings being less than anticipated and a budgeted drawdown on fund balance. The fund balance meets the FY2012 5-10% of annual debt service requirement of $598,167 to $1,196,334 and is approximately the amount projected in the City's long range financial plan. 10 CITY OF ALLEN, TEXAS ' MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 (UNAUDITED) The General Capital Projects Fund provides information on cash financed capital projects. During the fiscal year, the fund balance increased by $93,378 from $12,773,259 to $12,866,637. Revenues and transfers from other funds totaled $3,665,727 which included $690,000 from the County for road t construction on Chaparral Road and widening of Bethany Drive, $779,866 from the City of Plano for road construction on Chaparral Road, and $1,125,000 from other funds to cash finance capital projects. Total expenditures of $3,265,124 consisted of the continued construction of Chaparral Bridge, traffic signals, and street and alley repairs. The General Obligation Bond Fund had an ending fund balance of $12,091,646, a decrease of $8,577,522 from the prior year. Revenues and other financing sources included interest earnings and $5,135,000 of new issued bonds. Expenditures totaled $13,700,527 which included $2,346,011 for a public safety communications system, $4,249,853 for the purchase of Watters Branch park land, $1,876,213 for construction of Fire Station #5, $760,808 to complete the construction of a new service center and public training facility, $443,956 for street and alley repair, and $1,134,131 for purchase of right-of-way on Ridgeview Drive —Alma to US75. Proprietary Funds ' The City's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. At the end of the year, unrestricted net assets for all enterprise funds are as follows: Water and Sewer, $24,831,817, Solid Waste, $3,513,862, Drainage, $1,300,778, and Golf ' Course, $33,707. The total change in net assets for the funds was $4,855,650, $293,224, ($129,298), and ($209,545), respectively. The Water and Sewer Fund and the Solid Waste Fund had an increase in net assets as a result of capital contributions, transfers from other funds, and operating revenues. The Water and Sewer Fund contributed $1,520,000 for water and sewer line replacement, pump and sewer lift ' station maintenance and future construction in progress funding as per the rate plan study. Other factors concerning the finances of these funds have already been addressed in the discussion of the City's business -type activities. ' General Fund Budgetary Highlights During April and May, all accounts are evaluated to determine if they are in line with the original budgets. ' Accounts that are under or over budget are revised to meet year-end estimates. New projects are not added to the year-end estimate; only the cost of maintaining the current base operation is revised as needed. As is customary, during FY2010-11, the City Council amended the budget for the General Fund one time. ' Adjustments made during FY2010-11, decreased the original revenue budget by $3,132,223 and decreased the expenditure budget by $4,059,364. At the end of FY2011 revenues exceeded the anticipated revised budget by $78,045. Contributing to the positive variance was higher than anticipated ' sales tax and miscellaneous revenues. Positive expenditure variances were due to prudent conservative management by city staff. The net result of the revenue/expenditure budget variance allowed the General Fund to transfer out an additional $775,000 to the Capital Projects Fund representing $500,000 for the ' I.T. Master Plan and software upgrade and $275,000 for financing future capital projects. Although it was budgeted for the General Fund balance to remain unchanged from the prior year, the resulting General Fund balance increased $219,363. The funds operational expenditure reserve ' increased based on the amended budget from 81.8 days to 83.1 days, within the City's financial policy of 60 to 90 days. t 11 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 (UNAUDITED) CAPITAL ASSETS The City's investment in capital assets for its governmental and business -type activities as of September 30, 2011, amounts to $624,855,558 (net of accumulated depreciation.) This investment in capital assets includes land and improvements, buildings, vehicles, machinery and equipment, park land and facilities, roads and bridges. About 83% of the capital assets are governmental and 17% are business -type activities. There was a decrease of less than 1% in the investment in capital assets for the current fiscal year due to some assets being disposed of during the fiscal year. Towers, tanks and pump stations - - 94,863,295 Table 3 98,230,071 Other Improvements 253,116,617 249,379,704 391,888 Capital Assets at Year end Net of Accumulated Depredation 249.783,856 Govemmenlal Activdies Business -type AC ities Total 22011 2210 2211 2010 2011 2010 Land $120,411,988 $113,951,577 $4,072,882 $4,072,862 $124,484,850 $118,024.458 Buildings 98,138,405 99,967,T/7 - - 98,136,405 99,967,777 Towers, tanks and pump stations - - 94,863,295 98,230,071 94,563,295 98,230,071 Other Improvements 253,116,617 249,379,704 391,888 404,152 253,508,505 249.783,856 Furniture and BMures 3,558,109 4,530,596 1,089 3,444 3.559,198 4,534,040 Vehicles 4,416,203 4,957,225 230,424 243,376 4,646,627 5,200,601 Machinery and equipment 4,318,948 5,083,491 1,548,671 1,601,409 5,867,619 6,684,900 Construction in progress 32,873,668 41,299,574 6,915,390 3,394,155 39,789,058 44,693,729 Total $516,831,918 $519,169.943 $108,023,639 $107,949,489 $624,855,557 $627,119,432 The major governmental -type capital improvement projects and developer contributions during the current fiscal year included the following: Proieds • Watters Branch Parkland $4,249,853 • Developer contributed right of way and park land 3,266,627 • Fire Station #5 2,820,509 • Public Safety Communication Systems 2,346,011 • Street construction: Chaparral Road/Bridge 1,517,845 Ridgeview Drive — Alma to US75, purchase of right-of-way 1,134,131 • Service Center and Public Safety Training Center 764,967 Business -type capital improvement projects and developer contributions during the current fiscal year include the following: Pro acts • Hillside Water Tower $1,907,356 • Developer Contributed rater mains and sewer lines 1,430,068 • US 75 Waterline Replacement 1,192,598 • Walden Park Water/Sewer Replacement 1,095,562 Additional information on the City's capital assets can be found in Note 4 on pages 45-49 of this report. 12 CITY OF ALLEN, TEXAS ' MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 (UNAUDITED) As shown in Table 4, the City's total outstanding debt at September 30, 2011 was $181,132,259 of which ' $113,548,811 was governmental, $12,155,973 was business activities and $55,427,475 was component units. Total gross bonded debt was $176,225,000 which includes $104,330,000 -General Obligation (G.O.) bonds backed by the full faith and credit of the government, $4,455,000 -Certificates of Obligation backed by taxes and revenue generated from the golf course, $11,770,000 -secured solely by water and sewer revenue and the component unit's total of $55,670,000 secured by future sales tax revenue. Other long-term debt relates to compensating absences, notes payable, debt refunding and issuance, premiums, and discounts. ' In November 2010 the City issued $8,785,000 of G.O. Refunding Bonds and in May 2011 the City issued $8,840,000 in G.O. Refunding and Improvement Bonds, which resulted in a net indebtedness decrease of $2,440,883 or 2%. Total debt for governmental activities decreased by 1% and business -type activities decreased by 9%. At fiscal year end, the City had authorized but un -issued direct general obligation bonds totaling $42,720,000. t The debt for both component units relates to debt issued in order to support public infrastructure improvements and construction of the Allen Event Center. Total debt for the component units decreased by 3%. Total debt for the Allen Economic Development Corporation decreased by 4% and the Allen Community Development Corporation debt decreased by 2.5%. reblea GubY, W Int DOM at reerand BaMe and 0. 11 Term DOM ' Go7—W M9ndee BY51nuvNoe Psd: ConWMn111n" Ti 2411 � 24ll 2819 141+ $014 Nll 2418 Gw BmdM Oehl Gmeml ObliNt Bonet f104.33b000 SIN...030 2101,130.000 fIDss50,0ao cmm®1e a ob11":Wn Sond 00551. 4.&88000 - - - - 1.455,940 a085.000 Revenue.. PeYade - - 11.11.940 1$9PO,. - - 11}]0.940 12,81.01 Salve Tar Revenue B. 55.8]0.0.tl 5]415.030 SB]O D30 57.415.000 TOW Gmtt 8CMe]GeM 1003&5000 1109501 111]00]0 13980030 556)OOM 57.416.094 1. 115.0[0 100.81000] an.,wno-re,m G.M C ,Ow pDtwcea 3N.,.. 3,49].0!8 420,39] 384.199 - - 4,28.,. 3A91.M NMee Nyaa. 9,fifi2 51098 100,512 182.51 - - 1113,114 218.810 ReN,Mn9 (1,358,3591 (723.P1) (297,11) (301.]13) ff"W) (945291 11,fl9],5ID) (1.1M 0131 eeu 1—U—. Olewun4 2294812 1YN917 129,405 141,A8 11]0..) (1]1.40) 22253]5 104887 Tobi O. —gT OeM 413911 4550293 1959]3 40031] Rd2525 1295931 4907259 4094.730 TOM] 5113518911 2114785290 S12 156 9n 5133901] 55541]4]5 88]119093 518118259 5185194]1 The underlying credit ratings from both Moody's Investors Service and Standard and Poor's for the Citys General Obligation Bonds, Certificates of Obligation, Water and Sewer Revenue Bonds, Community Development Corporation's Sales Tax Bonds and Economic Development Sales Tax Revenue Bonds are shown below in Table 5. Additional information on the City's long-term debt can be found in Note 5. 13 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 (UNAUDITED) Table 5 Bond Ratings ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES Like the nation, the state, and the region, the City of Allen continues to be challenged by the recession and slow recovery over the past couple of years. Focused on having a balanced community, the City takes a proactive approach to economic development with its business recruitment and retention efforts, as well as with its variety of housing options. In addition, the City conservatively manages its budget. The fiscal year 2011-2012 budget reflects the commitment of the City Council and staff to provide services and facilities to our citizens while maintaining a strong financial position during a period of economic uncertainty. The City revenues most impacted by the economy are property taxes and sales taxes. These revenue sources are no longer growing as they have in recent years, and growth in these two areas continues to primarily be due to new construction. For fiscal year 2011-2012, values for existing residential properties decreased compared to FY2011, while valuations for existing commercial property increased by a small percentage. New residential and commercial property accounts for the majority of an overall increase in valuation of 2.88%. Base (existing) sales tax is expected to increase by a small percentage, as it has over the last couple of years. The projected increase in total sales tax revenue for FY2012 is due to a full year's impact of new retail development and commercial construction. Although the rate of residential growth has slowed, the City estimates issuance of 450 single family permits in FY2012. The current population of 86,633 is expected to reach 97,938 at buildout in the next several years. The various infrastructure and operational needs of the City have resulted in the annual expenditure budget increasing from $110.7 million in FY2007, to $164.5 million for FY2012 for all funds combined. The certified assessed property value for 2011-2012 equates to an overall increase of approximately $212.5 million (2.88%) from the preceding year. The FY2012 tax rate was set a $0.553 per $100 valuation. Of the total tax rate, $0.405328 is dedicated to operations and maintenance in the General Fund, and $0.147672 is dedicated to general obligation debt service. Ad valorem taxes are the General Fund's largest revenue source and will contribute $30.6 million or 39.9% of the fund's budgeted revenues in FY2012. Appraisal values are established by the Central Appraisal District of Collin County, and collections are certified at 100% by the Collin County Tax Assessor -Collectors office. Due to new development and continued population growth, the budget also reflects a 3% increase in sales tax from the revised 2010-2011 budget. The General Fund ended FY2010-2011 with an increase of $219,363 to the unassigned fund balance. This brings the unassigned fund balance to an equivalent 83.1 days of operating expenditures, which exceeds the amended estimate of 81.8 days, and is within the range of the City's financial policy of 60 to 90 days. The 2011-2012 General Fund expenditure budget reflects an 11.6% increase from the revised 2010-2011 budget. This is primarily due to the City's continued management responsibilities for the City - 14 Moody's Investors Standard & Service Poor's General Obligation Bonds Aal AAA Certificates of Obligation Aat AAA Water & Sewer Revenue Bonds Aa2 AA+ CDC Sales Tax Revenue Bonds At EDC Sales Tax Revenue Bonds Aa3 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES Like the nation, the state, and the region, the City of Allen continues to be challenged by the recession and slow recovery over the past couple of years. Focused on having a balanced community, the City takes a proactive approach to economic development with its business recruitment and retention efforts, as well as with its variety of housing options. In addition, the City conservatively manages its budget. The fiscal year 2011-2012 budget reflects the commitment of the City Council and staff to provide services and facilities to our citizens while maintaining a strong financial position during a period of economic uncertainty. The City revenues most impacted by the economy are property taxes and sales taxes. These revenue sources are no longer growing as they have in recent years, and growth in these two areas continues to primarily be due to new construction. For fiscal year 2011-2012, values for existing residential properties decreased compared to FY2011, while valuations for existing commercial property increased by a small percentage. New residential and commercial property accounts for the majority of an overall increase in valuation of 2.88%. Base (existing) sales tax is expected to increase by a small percentage, as it has over the last couple of years. The projected increase in total sales tax revenue for FY2012 is due to a full year's impact of new retail development and commercial construction. Although the rate of residential growth has slowed, the City estimates issuance of 450 single family permits in FY2012. The current population of 86,633 is expected to reach 97,938 at buildout in the next several years. The various infrastructure and operational needs of the City have resulted in the annual expenditure budget increasing from $110.7 million in FY2007, to $164.5 million for FY2012 for all funds combined. The certified assessed property value for 2011-2012 equates to an overall increase of approximately $212.5 million (2.88%) from the preceding year. The FY2012 tax rate was set a $0.553 per $100 valuation. Of the total tax rate, $0.405328 is dedicated to operations and maintenance in the General Fund, and $0.147672 is dedicated to general obligation debt service. Ad valorem taxes are the General Fund's largest revenue source and will contribute $30.6 million or 39.9% of the fund's budgeted revenues in FY2012. Appraisal values are established by the Central Appraisal District of Collin County, and collections are certified at 100% by the Collin County Tax Assessor -Collectors office. Due to new development and continued population growth, the budget also reflects a 3% increase in sales tax from the revised 2010-2011 budget. The General Fund ended FY2010-2011 with an increase of $219,363 to the unassigned fund balance. This brings the unassigned fund balance to an equivalent 83.1 days of operating expenditures, which exceeds the amended estimate of 81.8 days, and is within the range of the City's financial policy of 60 to 90 days. The 2011-2012 General Fund expenditure budget reflects an 11.6% increase from the revised 2010-2011 budget. This is primarily due to the City's continued management responsibilities for the City - 14 i CITY OF ALLEN, TEXAS ' MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 (UNAUDITED) ' owned Allen Event Center. Much of this increase is expected to be offset by additional revenue created by its operations. Also, General Fund staffing levels will be increased in FY2012 by 18 full-time equivalent positions (12 Police Officers and 6 Firefighters), and the budget allows for merit increases of ' 2%. In order to provide some additional offset to FY2012 increases, the City reduced expenditures in areas that would not directly or immediately affect service levels, such as conferences and training, overtime, and certain employee programs. This will allow the City to meet its strategic goals and continue ' its commitment to maintaining a high level of service to the public. In accordance with the City's water and sewer rate study, which was updated in 2009, the Water and Sewer Fund budget anticipates a rate increase in February 2012. The rate increase is necessary as North ' Texas Municipal Water District proceeds with capital expansion plans, therefore increasing the costs associated with water and sewer service from the District. Also included in the FY2012 budget is $1.52 million to cash finance water and sewer capital projects. The Water and Sewer Fund is expected to finish the fiscal year 2012 with approximately $10.8 million in working capital reserves resulting in 136.7 days of ' operating expenditures in reserve, which exceeds the City policy of 90 to 120 days. This healthy balance is necessary to fund the future capital projects and ongoing maintenance that are planned to ensure the water and sewer infrastructure will meet the demand when the City reaches buildout. ' The Solid Waste Fund represents a stable operational service and staff continues its educational outreach programs through several key programs and events held throughout the year. Staff also continues to seek grant funding for future cycles. No Solid Waste Fund fee increases are planned in 2012. Rather than passing cost increases on to residents and businesses, in 2012 the Solid Waste fund will absorb the impact of a Consumer Price Index cost increase that is contractually due to the City's waste disposal provider, as well as a North Texas Municipal Water District disposal cost increase. The Drainage Fund is supported by drainage fees on utility bills and development inspection fees. The fund continues to sustain a fund balance which supports drainage maintenance, mosquito abatement, Texas Pollution Discharge Elimination System (TPDES), and capital improvement activities. ' Continuing to build its reputation as one of the best golf courses in the area, the Chase Oaks Golf Course closed in October 2011 and major renovations are underway. The course has been redesigned in order to improve the overall golf experience. While golf course operations will be significantly reduced (the driving range remains open), renovation related operating expenses are anticipated to be approximately $1.2 million. These costs will be covered primarily by transfers in from the General Fund and the renovation project budget, and supplemented by some operational revenues. ' For 2011-2012, the Risk Management Fund reflects a rise in health care costs, due largely to the combination of new federally mandated health care requirements, a maturing workforce, and inflationary pressures related to health care costs. In FY 2011-2012, employees will see a 9% increase in their ' health insurance premiums, and the City will incur a 9% increase as well. This will allow the City to continue to contribute 79% of the total cost of employee health insurance premiums with the employees making up the remaining 21%. For the second year, $325,000 will be put into a trust fund for other post employment benefits. Workers compensation premiums will increase slightly, by 0.79%, due to the City's recent claims activity. Property and liability insurance rates have decreased relative to fiscal year 2011, but with the addition of newly insured property, overall costs are projected to remain relatively flat for fiscal year 2012. Recent additions to the policy include Fire Station #5, Hillside Water Tower, Public Safety Communications Tower, the newly renovated Animal Shelter, and the Allen Event Center. The ' Risk Fund continues to be in good financial condition. The City of Allen's budget continues to be positively impacted by growth and by conservative fiscal ' management. The 2011-2012 budget reflects the efforts of the governing body and city staff to address the need to provide services and facilities to support our vibrant and growing community, while maintaining a strong financial position. 1 15 I CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS ' FOR THE YEAR ENDED SEPTEMBER 30, 2011 (UNAUDITED) Request for Information 1 The financial report is designed to provide our citizens, customers, investors, and creditors with a general overview of the City's finances. If you have questions about this report or need any additional information, ' contact the Finance Department at 305 Century Parkway, Allen, Texas, 75013, or call (214)50944626. 16 1 1 i 1 i 1 1 BASIC FINANCIAL 1 STATEMENTS 1 1 1 1 1 1 1 1 1 aEyp EG7 i INTfC CITY OF AllEo CITY OF ALLEN, TEXAS STATEMENT OF NET ASSETS SEPTEMBER 30, 2011 EXHIBIT 1 PRIMARY GOVERNMENT GOVERNMENTAL BUSINESS -TYPE COMPONENT ACTIVITIES ACTIVITIES TOTAL UNITS ASSETS Cash and cash equivalents $ 14,316,152 $ 6,061,683 $ 20,377,835 $ 2,618,474 Investments 44,294,865 19,438,140 63,733,005 9,491,243 Receivables (net of allowance for uncollectibles) 6,706,544 6,605,091 13,311,635 2,493,525 Internal balances (1,038,666) 1,038,666 - - Prepaid items and other assets 149,233 11,050 160,283 6,298 Inventories - 84,802 84,802 - Restricted cash and cash equivalents - 1,740,383 1,740,383 1,861,202 Capital assets: Non -depreciable 153,285,636 10,988,272 164,273,908 5,925,152 Depreciable (net of depreciation) 363,546,282 97,035,367 460,581,649 1,275,270 Defamed charges 1,143,935 141,016 1,284,951 922,090 TOTAL ASSETS $ 582,403,981 $ 143,144,470 $ 725,548,451 $ 24,593,254 LIABILITIES Accounts payable $ 3,917,286 $ 1,559,555 $ 5,476,841 $ 81,830 Accrued liabilities 2,154,854 116,330 2,271,184 10,603 Accrued interest Payable 517,063 155,691 672,764 228,595 Customerdeposits - 1,500,870 1,500,870 - Unmanned revenue 39,075 - 39,075 - Retainage payable 164,983 299,476 464,459 28,938 Non-cument liabilities: Due within one year 9,777,499 1,689,514 11,467,013 1,805,000 Due in more than one year 103,771,312 10,466,459 114,237,771 53,622,475 TOTAL LIABILITIES $ 120,342,072 $ 15,787,895 $ 136,129,967 $ 55,777,441 NETASSETS Invested in capital assets (net of related debt) $ 419,223,646 $ 96,288,053 $ 515,511,699 $ 7,200,422 Restricted for debt service 486,756 349,692 836,448 1,632,607 Unrestricted 42,351,507 30,718,830 73,070,337 (40,017,216) TOTAL NET ASSETS $ 462,061,909 $ 127,356,575 $ 689.418,484 1_(2 1,184.187) The Notes to Financial Statements are an integral pad of this statement, 17 CITY OF ALLEN, TEXAS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2011 The Notes to Finanual Statements are an integral part of this statement. 18 General revenues: Taxes: Property taxes, levied for general purposes Sales taxes Franchise taxes Hotel motel taxes Other taxes Investment earnings Gain on disposition of capital assets Miscellaneous Transfers Total general revenues and transfers CHANGE IN NET ASSETS NET ASSETS, beginning of year NET ASSETS, end of year I I Program Revenues Charges for Operating Grants Capital Grants Expenses Services and Contributions and Contributions Functions/Program Activities PRIMARY GOVERNMENT: Governmental Activities: General government $ 16,989,047 $ 575,406 $ - $ - Publicsafety 27,110,778 1,521,787 1,697,034 - Public works 16,779,393 117,518 - 5,437,433 Culture and recreation 30,645,922 7,762,439 1,021,131 - Community development 2,742,284 1,394,833 17,929 - Intereston long-term debt 4,715,550 Total governmental activities 98,982,974 11.371,983 2,736,094 5,437,433 Business -type Activities: Water and sewer 25,638,007 30,798,158 1,000,000 2,749,029 Solid waste 5,411,960 6,138,900 - - Drainage 819,947 1,284,058 - - Gulf course 1.912.583 1.406,555 Total business -type activities 33.782.497 39.627,671 1,000,000 2.749.029 TOTAL PRIMARY GOVERNMENT $ 132.7fi5.471 $ 50,999,654 $ 3.736.094 8 8.186.462 COMPONENT UNITS: Allen Economic Development Corporation $ 8,429,767 $ - $ - $ - Allen Community Development Corporation 3.514,527 TOTAL COMPONENT UNITS $ 11.944.294 $ $ $ The Notes to Finanual Statements are an integral part of this statement. 18 General revenues: Taxes: Property taxes, levied for general purposes Sales taxes Franchise taxes Hotel motel taxes Other taxes Investment earnings Gain on disposition of capital assets Miscellaneous Transfers Total general revenues and transfers CHANGE IN NET ASSETS NET ASSETS, beginning of year NET ASSETS, end of year I I EXHIBIT 2 Net (Expense) Revenue and Changes in Net Assets Primary Government Governmental Business - Type COMPONENT Activities Activities TOTAL UNITS $ (16,413,641) $ - $ (16,413,641) $ - (23,891,957) - (23,891,957) - (11,224,442) - (11,224,442) - (21,862,352) - (21,862,352) - (1,329,522) - (1,329,522) - (4,715,550) 1,886,665 (4,715,550) 1,886,665 (79.437,464) 644,169 (79.437.464) - 828,878 102,922 - 8,909,180 8,909,180 - - 726,940 726,940 - - 464,111 464,111 - (5,071,346) (506,028) (506,0281 71.840.278 - 9.594.203 9.594.203 - E (79.437.464) $ 9.594.203$ (69.843.2611 $ - $ - $ - $ (8,429.767) (3.514,527) $ $ $ $ (11.944.294) $ 41,111,106 $ - $ 41,111,106 $ - 13,907,095 - 13,907,095 13,670,908 6,421,059 - 6,421,059 - 1,113,312 - 1,113,312 - 1,886,665 - 1,886,665 - 644,169 184,709 828,878 102,922 233,783 - 233,783 - 1,451,743 143,329 1,595,072 379,476 5.071.346 (5,071,346) 71.840.278 (4,743,308) 67,096,970 14.153,306 (7,597,186) 4,850,895 (2,746,291) 2,209,012 469,659,095 122.505.680 592,164.775 (33,393,199) $ 462.061.909 $ 127.356.575 $ 589.418.484 $ (31.184.187) 19 CITY OF ALLEN, TEXAS BALANCE SHEET GOVERNMENTALFUNDS SEPTEMBER 30, 2011 GENERAL DEBT CAPITAL GENERAL SERVICE PROJECTS ASSETS Cash and cash equivalents $ 3,450,684 $ 899,144 $ 3,141,726 Investments 10,935,723 - 10,585,288 Receivables, net of allowances for uncollectibles: Ad valorem taxes 217,814 77,970 - Sales taxes 2,443,289 - - Accounts receivable - - - Accrued interest 81,013 26,705 47,368 Other 3,026,978 - 2,774 Special assessments - - 187,557 Prepaid items 156 TOTAL ASSETS $ 20,155,657 $ 1,003,819 $ 13,964,713 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ 2,836,687 $ - $ 651,400 Accrued liabilities 963,548 - 446,586 Retainage payable - - 90 Defamed revenue 84 669,0,007 78 TOTAL LIABILITIES 4,469,319 78,007 1,098,076 FUND BALANCES Nonspendable Prepaid items 156 - - Restricted Debt service - 925,812 - Capital projects - - 12,866,637 Tourism _ _ Asset forfeiture - _ State and federal grants - _ - Park acquisition and development - - - Tax increment financing agreement - - Cemetery trust 55,898 - - Assigned Public safety 1,402 - - Unassigned 15,628,882 TOTAL FUND BALANCES 15,686,338 925,812 12,866,637 TOTAL LIABILITIES AND FUND BALANCES $ 20,155,657 $ 1,003,819 $ 13,964,713 The Notes to Finandal Statements are an integral pert of this statement. 20 EXHIBIT 3 GENERAL OTHER TOTAL OBLIGATION GOVERNMENTAL GOVERNMENTAL BOND FUNDS FUNDS $ 2,643,012 $ 1,133,030 $ 11,267,596 9,570,762 3,845,380 34,937,153 295,784 - 2,443,289 - 473,347 473,347 62,961 17,139 235,186 - - 3,029,752 187,557 $ 12,276,735 $ 5,468,896 $ 52,869,820 $ 95,641 $ 108,265 $ 3,691,993 - 19,361 1,429,495 89,448 75,445 164,983 18,246 765,337 185,089 221,317 6,051,808 - - 156 - 925,812 12,091,646 - 24,958,283 - 1,984,453 1,984,453 - 159,229 159,229 - 745,080 745,080 - 1,658,108 1,658,108 - 700,709 700,709 - 55,898 1,402 15,628,882 12,091,646 5,247,579 46,818,012 $ 12,276,735 $ 5,468,896 $ 52,869,820 21 CITY OF ALLEN, TEXAS EXHIBIT 4 RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS SEPTEMBER 30,2011 Total fund balances- governmental funds $ 46,818,012 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not current financial resources and, therefore, are not reported in the governmental funds balance sheet. 516,831,918 Costs associated with the issuance of governmental long -tens debt are expensed when incurred in the fund statements and capitalized and amortized over the life of the debt in the government -wide financial statements. 1,143,935 Interest payable on long-term debt does not require current financial resources, therefore interest payable is not reported as a liability in the governmental funds balance sheet. (517,063) Internal service funds are used by management to charge the cost of certain activities, such as insurance and Fleet management, to individual funds. The assets and liabilities of the internal service funds are net of the amount allocated to business -type activities ($1,038,666) and to capital assets ($5,665,603). 10,607,656 Revenues earned but not available within sixty days of the year end are not recognized as revenue on the fund financial statements. 726,262 Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the fund financial statements. (113,548,811) Net assets of governmental activities $ 462,061,909 The Notes tc Financial Statements are an integral part M this statement. 22 oSpECT * INTFG . + R,pr. n A m x m CITY OF CITY OF ALLEN, TEXAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTALFUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011 REVENUES Ad valorem taxes, penalties and interest Franchise taxes Municipal sales tax Licenses, permits and fees Charges for services Fines Gifts and contributions Hotel / motel fees Intergovernmental Investment earnings Miscellaneous Total revenues EXPENDITURES Current General government Public safety Public works Culture and recreation Community development Capital outlay Debt service: Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Issuance of debt Premium on debt issuance Payment to refund band escrow agent Transfers in Transfers out Sale of capital assets Total other financing sources (uses) NET CHANGE IN FUND BALANCES FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR The Notes to Financial Statements are an integral part of this statement. 23 15,020,469 - 388,650 25,633,080 - - 3,572,487 - - 20,411,524 - - 2,331,888 - - - - 2,876,474 - 6,930,000 - 4,775,982 66,969,428 11,705,982 3,265,124 (3,118,117) (1,007,989) (724,397) 12,625,000 447,508 GENERAL - DEBT CAPITAL GENERAL SERVICE PROJECTS $ 30,018,546 $ 10,627,997 $ - 6,230,269 - - 13,573,016 - - 1,009,913 - - 8,829,051 - 405,567 1,720,678 - - 986,125 - - 1,545,801 192,723 69,996 109,307 1,290,990 480,052 63,851,311 10,697,993 2,540,727 15,020,469 - 388,650 25,633,080 - - 3,572,487 - - 20,411,524 - - 2,331,888 - - - - 2,876,474 - 6,930,000 - 4,775,982 66,969,428 11,705,982 3,265,124 (3,118,117) (1,007,989) (724,397) 12,625,000 447,508 - (12,998,419) - 5,015,341 500,000 1,125,000 (1,685,979) - (307,225) 8,118 3,337,480 574,089 817,775 219,363 (433,900) 93,378 15,466,975 1,359,712 12,773,259 $ 15,686,338 $ 925,812 $ 12,866,637 EXHIBIT 5 GENERAL OTHER TOTAL OBLIGATION GOVERNMENTAL GOVERNMENTAL BOND FUNDS FUNDS - 209,641 $ - $ 520,981 $ 41,167,524 - 190,790 6,421,059 - 334,079 13,907,095 - 260,580 1,270,493 - - 9,234,618 - 165.987 1,886,665 4,336,552 - 986,125 - 1,113,312 1,113,312 - 2,249,286 3,795,087 136,232 39,267 547,525 168,310 1,939,352 136,232 5,042,592 82,268,855 93,830 999,239 16,502,188 - 456,499 26,089,579 214,641 69,245 3,856,373 753,360 620,330 21,785,214 - 217,367 2,549,235 12,638,696 1,883,667 17,398,837 6,930,000 4,775,982 13,700,527 4,246,347 99,887,408 (13,564,295) 796,245 (17,618,553) 5,000,000 - 17,625,000 220,194 - 667,702 - - (12,998,419) - 209,641 6,849,982 (233,421) (110,000) (2,336,625) 15,141 23,259 4,986,773 114,782 9,830,899 (8,577,522) 911,027 (7,787,654) 20,669,168 4,336,552 54,605,666 $ 12,091,646 $ 5,247,579 $ 46,818,012 24 CITY OF ALLEN, TEXAS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED SEPTEMBER 30, 2011 EXHIBIT 6 Net change in fund balances - total governmental funds $ (7,787,654) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of 1,304,451 activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount of capital assets recorded in the current period. 17,577,260 Governmental funds do not recognize assets contributed by developers. However, in the statement of activities the fair market value of those assets is recognized as revenue, (14086) then allocated over their estimated useful lives and reported as depreciation expense. 3,776,930 Depreciation expense on capital assets is reported in the statement of activities but does not require the use of current financial resources. Therefore, depreciation (56,418) expense is not reported as expenditures in the governmental funds. (23,906 397) The proceeds from issuance of long -tens debt (e.g. bonds and capital lease obligations) provides current financial resources to governmental funds ($17,625,000), while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds ($19,120,434). 1,495,434 Governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued. However, these amounts are deferred and amortized in the government -wide financial statements. 320,704 Current year changes in long-term liability for compensated absences do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. (351,845) Current year changes in accrued interest payable do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. 44,435 Internal service funds are used by management to charge the costs of certain activ8ies, such as insurance and Fleet management, to individual funds. The net operating and non-operating income and transfers of the internal service funds is reported with governmental activities net of amounts allocated to business -type activities. 1,304,451 Governmental funds do not report disposition of capital assets. However, in the statement of activities, the net book balance of the capital assets disposed is recurred against the proceeds received. This amount is the net book balance of capital assets disposed in the current period. (14086) Certain revenues in the government -wide statement of activities mat do not provide current financial resources are not reported as revenue in the governmental funds. (56,418) Change in Net Assets of Governmental activities $ (7,597,186) The Notes to Financial Statements are an integral pan of this statement. 25 CITY OF ALLEN, TEXAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30,2011 EXHIBIT 7 The Notes to Financial Statements are an integral part of this statement. 26 BUSINESS -TYPE ACTMf1E3 ENTERPRISE FUNDS GOVERNMENTAL ACTWRIES WATER ANO SOLID GOLF INTERNAL SERVICE BEWER WASTE ORNNAGE COURSE TOTAL FUNDS ASSETS CURRENT ASSETS Cash and cash e,lemMs f 4,940,555 S 781.030 $ 282.863 $ 77,4M S 6,061.553 $ 3.048.559 Imeabnents 15.597.355 2M4406 1,015,328 99.M 19,d38A40 9,357.712 Receivabass, nN M allowance br-WleGlbNa Pccounb 610&,551 268.377 58,153 7,464 6.419.545 Mwef interest 62,106 10,760 4,258 - 77,126 41,828 Other 108,4Z) - 108,420 - Imemanes 64.802 - - - 64,802 - Prepaialbms - 11,050 li'm 1491077 .asst. rash and cash e0uiveleMs 1.740.383 1.740.383 Tadl current assets 28,609.765 3.874.893 1.361.400 1941991 33.941.149 12596.974 NONCURREWASSETS CAPOALASSETS Land 4.072,682 - - - 4,072.882 - Commission lnprp3ress 6,1115.390 - - 6.9151390 1,900,830 gMr'mpmremenb - 496.132 - 496.132 - T.rbn"andpumpstalime 153.546.33 - - - 153,546,335 - VehMes SQ.M 12,923 43.933 applies 1,130,M5 Michael, and s0uipment 4,153,586 8.392 430,682 583,641 5,158.301 1.758.627 Furniture ant Mean, 11114 - 1(i 22720 TOYleplhlasseb 169.543.140 21,315 970,747 574.539 171,109.737 laral182 Laosaccumulated depredabon (820581911 (19965) (499,231) 14556911 (83.086.098) 15.124579) Capital asset, net W moomulated depredation t0]W.B19 1,350 471.48610y874 IN.M.639 5,665,603 DEFERRED CHARGES Bondiamarm coats. net of emwtim5en 141,016 141.016 Total nancurtsttt useh 107,SBSA85 11360 471.466105,_874 108,164855 5.685,603 TOTAL ASSETS f 136.096.730 S 3.878,313 f 1832,866 $ 300,865 $142105.804 $ 18262,577 .11.IIIES AND NET ASSETS CURRENT W&LITIES Ac.payable f 1,168.228 f W6,15 $ 29,896 S SEW f 1,559,555 $ 225 As A.0laush es 71,0siB 17.544 6172 21,632 116.330 - Rebim,gyable 25.476 - - - 299476 " Axrued rampensaled abserte5-amem 274,646 36,863 23,089 57,868 392466 - IncuneEbutadrepMetldaima - - - Payable M1cm mature d assets. Revenue bonds dyable - nonan 1235,000 - - 1,D5,000 Capllalbasespayable- cunent - - 62,01e 62.048 - AwuedmlprestTaysble 15.691 - - - t55W1 - CwbmmtlaposiapayabH 1490.518 - 1y3M 1,500.870 - Tnlelcunemlbbllllles 4,694.617 359.452 58.913208_854 5321.436 950.852 NONCURRENT WBILRIE3 Revenue brands payable 10,397,074 - - - 10.391.074 - Capiblleasespayabm - 41.46s 41.454 - McrvNcompmmbdaimencea 9.655 2.079 I'mi;t=476 271921 Tom nmarrem liabilities 10.728.729 210" 1109 55,942 10.4664511 TOTAL 1NBILITE3 15,101.346 381,131 60,822 284.796 15787.she 950.652 NETASSETS ImeslW lncapiblassels, nelufrelebEdebt 85.812.875 1,350 471.466 2362 98208.053 5,665.603 Rase. or revenue Wnd principal And mamt 349.692 - - - 349,552 mmab. MAN 817 3,513.862 1.300.778 33.707 sassa184 11,618.322 TOTAL NET ASSETS f120.991.381 $3,515,212 $ 1772$14 S 36`089 $126,31].909 $ 17,311,925 The Notes to Financial Statements are an integral part of this statement. 26 CITY OF ALLEN, TEXAS RECONCILIATION OF THE STATEMENT OF NET ASSETS OF PROPRIETARY FUNDS TO THE GOVERNMENT — WIDE STATEMENT OF NET ASSETS AS OF SEPTEMBER 30, 2011 Amounts reported for business -type activities in the statement of net assets are different because: Total net assets per statement of net assets Internal service funds are used by management to charge the costs of replacing machinery and equipment, fleet management, workers compensation, property liability loss, medical and dental insurance, and health claims to individual funds. The assets and liabilities of internal service funds are included in the governmental activities in the government -wide statement of net assets. The amount shown represents the net receivable from internal service funds allocated to business -type activities since the adoption of GASB 34. Total net assets of business -type activities The Notes to Financial Statements are an integral part of this statement. 27 EXHIBIT S ! $ 126,317,909 1,038,666 $ 127,356,575 CITY OF ALLEN, TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011 EXHIBIT 9 BUSINESS -TYPE ACTIVITES ENTERPRISE FUNDS GOVERNMENTAL ACTIVITIES WATERAND SOLID GOLF INTERNAL smm WASTE DRAINAGE COURSE TOTAL SERVICE FUNDS OPERATING REVENUES ChaMes for eales and services' Water sales S 19.343.3]] $ - $ - $ - S 19,343.3]] $ - Sevarchalges 10.652.500 - - - 10,682.500 - Conneconfees 173.]37 - - 173.737 Garbage collectors - 6,130,990 - - 6,135.900 - SeMcechargae 598.544 - 52,626 1,406,555 2,95].]25 9,236,063 Drainage fees - 1,231,432 - 1,231.432 li teryovernarm al 54.163 - - - 54.163 Gifts and contributions 1,00,000 1,000,OW Miscellaneous 83.029 47,504 5.230 4,558 143.329 45].]01 Total operalleg nevanux 31935 350 0,1&8.04 1.292.285 1411,121 40.025.163 9.693.644 OPERATING EVENSE9 Pe,eonnM esoAcee 3.791.330 391,829 395,216 1.108,595 5,6611,970 471.85 Canaria servces 15.18],]98 4,913,609 124.718 410,712 20.666,895 ],539,8]5 Maintenance 265,011 1,814 216,067 128,175 611,067 Supplars 260.733 11,314 30.338 101,70 404.175 2,269 Depraciatlon 5.390.482 540 49,602 59,321 S.S2,925 1,100,477 Oh. 245.010 92,854 4,006 43,930) 398.500 TWl operating expenses 25.143.342 5,411,96D 619.94] 1,912,503 33.287.832 9.213.606 OPERATING INCOME (LOSS) 6.792.008 774.444 02.341 (501,402) 7.531.331 480.150 N0N-0PERATING REVENUES )EXPENSES) Investment earnings 153,206 23,694 7.850 - 164.769 95,644 Interest expense- Gainondisposalofcap,lalassets - - 210.524 Total mmpara in9 revenues (expenses) (382323) 23,694 ].SOB - (350.620) 301.165 INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS 6.409.685 798.138 4BD.150 (501402) 1.186.511 ]0].326 CAPITAL CONTRIBUTIONS AND TRANSFERS Development hes 1.2M,798 -- CapdalwnlAbuwns 1,430,088 - - - 1.430.0511 Translera from other funds 2307 291,917 S21.3M 551,939 Tranetera to o near Nnds (4,115,3]8) (504.914) (aw',Lt8) (5.392.]40) Total estoppel wmributions and translers (11551 (504.914) (6OB.115) 291.917 12.376,4001 551.989 CHANGE IN NET ASSETS 4,855,650 293,224 (12,290) (209,045) 4.610,031 1.345.315 NET "SETS. BEGINNING OF YEAR 11Q130,734 3.221.966 1,901,542 245.614 121,50]8]8 15.968,810 NET ASSETS, END OF YEAR $120,994,304 53.515.212Li,771.2H $ 38.009 $IIB31].909 S 9,311,1125 The Notes to Financial Statements are an integral part of this statement 28 CITY OF ALLEN, TEXAS EXHIBIT 10 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS OF PROPRIETARY FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2011 Amounts reported for business -type activities in the statement of activities are different because: Not change in fund net assets- total proprietary funds $ 4,810,031 Internal service funds are used by management to charge the costs of replacing machinery and equipment, Beet management, workers compensation, property liability Ion, medical and dental insurance, and health claims to individual funds. The net expenses of certain activities of internal service funds is allocated to business -type activities. 40,884 Change in net assets of business -type activities $4,850,895 The Notes to Financial Statements are an integral pan of this statement. 121 1 1 1 1 1 CITY OF ALLEN, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011 EXHIBIT 11 BUSINESS -TYPE ACTNIiIES ENTERPRISE FUNDS OOVERNMEN]AL ACTNOIES WATERAHO SOLID GOLF INTERNAL SEWER WASTE ONYNAGE COURSE TOTAL SERVICE FUNDS CtlN FI -ONS FROM OFERA NOACTNmES CMI nwlrPo I-wilwrert f S, .j. $ 6"Sa T9 S).Men f 1,cM.5P S 3E.E..T10 S ' San nalwe lrtm4awclmnawiln Nna,mnos - e,5u,li1 aM wM m.mplryen Miemus 13.ta.2) (99xrz11) 001112s) It,IDaz501 Is.OBJ.]ell (a74,547) CeSX WN brpweaentlaerviw5 (18.IBR,863) X.05rz14) (J01.]W) (M1D[AI )')?.3]1,34) M.%1.61)1 a.n Pam Mrxalmi ]x7%91 XMcnl, pmvYee b]Iuae Ml4a,Mlnp.cWllle tO.INI,ON B ,, 513.ifi1 CES' m) 11S59.W6 IA31,.7 CiOH FLOWS FROM XON-CWrtAL FNNICINOACIINTIES Tnntbrtln M1om otnar Nnaa N.a]] ,11.917 931,191 531.9W im5lert oal to oNermntla 4310.9181 I.,B11 ffioo'�f, � 16.393.1401 N.I cwx pmbbd by (b^.ti ln) nmcapXM flnmc4M acalt 120,901) _ NFM,F4) DREI 391,917 0,071,M) 537,969 CASHFLtlNa FROMCAPRALAND RELATED FINANCING AC N yTnES Il02nd memetin 011a,O") 11.19a0w) - l rtle..venue I11. antl bo pon ld eIm 401 v (SW.968) - - - (ENASM nenawreWNmolcapWmsata X.125325) - Onr.WS) (21,s0) R171003) (1.126.;.) O.11.1 M... Pavmeul - 163.DD21 1050ve) - I'l-ea5r.mwbmnP'nalesmb - - - - - 21a5M c11t1bW1nSM1 Il aavolopan 1R1a0 I3fi1.199 x51 nib ".y. by 417.4517) IbMftM vN nl.M1e flnanclalSNVXbB NAN...) W.P.) Iy01 (4.71].101 11,2182201 CASH FLOWS FROM INVESTNG ACTNRIEO Pwansu 0llnvenmenluweun O.0s9ss]1 (913,0n (M.1az) (8717,595) (1,101,Ean ea lmm ul...em mnha.0r�nnNm.m uwn6n a 22z,7u 2a.7a4 Inb-.¢ton mv.aM.nm by"m �_BM 9611 teas 20t02e 1w.IDfi Neon. p..d By''mann'lnvF.Xn9 •(4nlDm IZANJE) (MES".) ("At) x1.729 1339xxs1 4120,1111 NETCHANGEINCAMANDCA3HEpUNA1-ENTS (909.0fi) (.1%2T) (lSafi90) (420,135) X.519.04) (909.1]01 CASH AND CASX EOUNAI3NTS. BEGINNING OF YEIR l,0M 025 1.C,C X120 anti. .."in, CASH AND CASH EWNALEXTS, END OF WAIN a f00.929 $ FI S 0203 T 17A. $ 7AAME I ,10511.650 RECONCILMTpI OF OPE.IXG INCOME (LOSS) TO NET CA.9H PROVIDED BY OPERATING ACYINSMS Net oxtraylnmma 9-,) S 6.10.000 f 77041 $ 472311 S .J. f 7,W7,331 $ 00,10 Aerye -1. c'..tln ms llwe w n®.n Protean by Inee In I wmaln9 anlvlen. Dep,nb.b anti ammeaeim a.psnie E.F. sa 19.02 09.]31 6$...531 1100,477 Cb.'. in ...s I. 11Fs9a... n -W n.creusln It...m-N. (1,203,0711) (23.E11) OLE) IOSN) (1,23fi.719) 1,104 Dewsem mb.rmnrvaxn Ana - - 2179 - waPnmi - (0,191) fla99X Va.) (Inc,ewltieamnln lnwmabi 1]fi.300 - - 130,1511 9a3ID - mn(eeveeSF.,-nm p.yJNe (]0.09) ]9.912 Vat iS, (z00.142) rzS.D]1 Inncmvin 17'.4'9. payed. b.00 ]050 Cb-M--1MNMM '13.) (13535) (,am)- Iwufe(Mcnn.,-Ibmeeti...nws 21.1 (1.113) $09 2A5 .,IN - Inp.aaamutilry tiegels 2]110] � � 31.07 TWl Mqu.MM. 3.90,CC1 U.139 40.49 (51219) 4.021,3114 1,151,019 N.bbbp.vN.e Oy Un.tl '.',whine actlNb. S 10.10.@9 S B14M $ 512'& f 452.011 T 1150.90 $ IbOl,.) bobL HIxvEaTWGKTINTIE9 Clu,S.m nabevaluammv®Iments 3 tax s 3 $ s 2.0S $ - NON{ASH FINANCMG ACTNIIES contenuMns d wplbl ave.¢ M1om ti.wb.. f 1.4x.00 S - SS f� T 1.431,10 S - entll1.11-.1.W -h m St bbbb mnt 0not cmn an a cnb e.ulveemm--,t f 4.... f II $ rze2M3 T n.lx $ 'A".. S Aau.su Reat,otW uin anti wah qulnbn6 1.7W.w CASH AND C73H EOUNALENTS, END OF IRI S B,M0.09 fT ]fit. $ =60 $ 77.4x f ].BM.Ofi S 3.MaSSfi The Notes t0 Financial Statements are an integral part of Mis statement. 30 CITY OF ALLEN, TEXAS EXHIBIT 12 STATEMENT OF NET ASSETS COMPONENT UNITS SEPTEMBER 30, 2011 The Notes to Financial Statements are an integral part of Nis statement 31 ALLEN ALLEN ECONOMIC COMMUNITY DEVELOPMENT DEVELOPMENT CORPORATION CORPORATION TOTALS ASSETS CURRENT ASSETS Cash and cash equivalents $ 992,376 It 1,626,098 $ 2,618,474 Investments 3,518,735 5,972,508 9,491,243 Sales tax receivable 1,221,645 1,221,645 2,443,290 Accounts receivable 2,501 2,501 5,002 Accrued interest receivable 20,592 24,641 45,233 Prepaid items 6,298 - 6,298 Restricted cash and cash equivalents 754,194 1,107,008 1,861,202 Total current assets 6,516,341 9,954,401 16,470,742 NONCURRENT ASSETS CAPITAL ASSETS Land 4,324,525 - 4,324,525 Land improvements 207,878 - 207,878 Furniture and fixtures 66,075 - 66,075 Improvements other than buildings 3,128,689 - 3,128,689 Construction in progress 1,392,749 1,392,749 Total capital assets 9,119,916 - 9,119,916 Less. accumulated depredation (1,919,494) (1,919,494) Capital assets, net of accumulated depreciation 7,200,422 7,200,422 DEFERRED CHARGES Bond issuance costs, net of amortization 371,339 550,751 922,090 Total noncurrent assets 7,571,761 550,751 8,122,512 TOTAL ASSETS $ 14,088,102 $ 10,505,152 $ 24,593,254 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable $ 80,097 $ 1,733 $ 81,830 Accrued interest payable 66,344 162,251 228,595 Accrued and other liabilities 10,603 - 10,603 Retainage payable 28,938 - 28,938 Revenue bonds payable - current 800,000 11005,000 1,805,000 Total current liabilities 985,982 11168,984 2,154,966 NONCURRENT LIABILITIES Revenue bonds payable (net of unamortized discounts and defamed amount on refunding) 19,079,965 34,542,510 53,622,475 Total noncurrent Ilabllltles 19,079,965 34,542,510 53,622,475 TOTAL LIABILITIES 20,065,947 35,711,494 55,777,441 NET ASSETS (ACCUMULATED DEFICIT) Invested in capital assets, net of related debt 7,200,422 - 7,200,422 Restricted for debt service 687,850 944,757 1,632,607 Unrestricted (13,866,117) (26,151,099) (40,017,216) TOTAL NET ASSETS (ACCUMULATED DEFICIT) $ (5,977,845) $ (25,206,342) $ (31,184,187) The Notes to Financial Statements are an integral part of Nis statement 31 CITY OF ALLEN, TEXAS STATEMENT OF ACTIVITIES COMPONENT UNITS FOR THE YEAR ENDED SEPTEMBER 30, 2011 Net (Expense) Revenue and Program Revenues Changes In Net Assets COMPONENT UNITS EXHIBIT 13 II The Notes to Financial Stalemerls are an Integral part of this statement. 32 5 6,835,454 General revenues: $ 13,670.908 ALLEN ALLEN Interest an mvestments 379,476 Mlscelleneeus Operating ECONOMIC COMMUNITY CHANGE IN NET DEFICIT 7,261,595 Charges for Grants and DEVELOPMENT DEVELOPMENT NET DEFICIT, and oryear (1,168,172) Expenses Servlces Contributions CORPORATION CORPORATION TOTALS FunctionlProgmm Activities $ (5.977.0451 $ (25.206.3421 _L.;i COMPONENT UNUS Allen Economic Development Corporation $ 8.429767 $ - $ - $ (81429.767) $ - $ (8.429767) Allen Community Development Computation 3,514.527 - (3,514,527) (3.514,527) TOTAL COMPONENT UNITE =L11 E 8 _L_11429 1.7671 S 13.514.5271 S 111.944.2941 II The Notes to Financial Stalemerls are an Integral part of this statement. 32 5 6,835,454 General revenues: $ 13,670.908 Sales taxes ' Interest an mvestments 379,476 Mlscelleneeus 379,476 Total general revenues ' CHANGE IN NET DEFICIT 7,261,595 NET DEFICIT, beginning of year 14,153,306 NET DEFICIT, and oryear II The Notes to Financial Stalemerls are an Integral part of this statement. 32 5 6,835,454 $ 6,035,454 $ 13,670.908 46,606 56,257 102.922 379,476 379,476 7,261,595 6,891,711 14,153,306 (1,168,172) 3,377.184 2,200012 (4.809,673) (28.503.526) (33,393,199) $ (5.977.0451 $ (25.206.3421 _L.;i * VL�SpECT + INTe4, I R� P M m x T CITY OF P1.lEtl 1 1 1 1 1 i 1 NOTES TO 1 FINANCIAL STATEMENTS VLESPECT * INtFG CITY OF ALLEN CITY OF ALLEN, TEXAS ' NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General Statement The City of Allen (the City) was incorporated in 1953, under the provisions of Chapter 11, Title 28, Texas Revised Civil Statutes of 1925. In 1979, the City adopted a charter making it a home rule city operating under a Council -Manager form of government. The City provides such ' services as are authorized by its charter to advance the welfare, health, comfort, safety and convenience of its inhabitants. The accounting and reporting policies of the City relating to the funds Induced in the ' accompanying basic financial statements conform to accounting principles generally accepted in the United States of America applicable to state and local governments. Generally accepted accounting principles for local governments include those principles prescribed by the Governmental Accounting Standards Board (GASB), the American Institute of Certified Public Accountants in the publication entitled Audits of State and Local Governmental Units and by the Financial Accounting Standards Board (when applicable). As allowed by Governmental Accounting and Financial Reporting Standards, the City has elected not to apply Financial Accounting Standards Board Statements and Interpretations, Accounting Principles Board Opinions, and Accounting Research Bulletins of the Committee of Accounting Procedure issued after November 30, 1989. The more significant accounting policies of the City are described below. ' Financial Reporting Entity As required by accounting principles generally accepted in the United States of America, the ' financial statements of the City include the primary government and organizations for which the primary government is financially accountable and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The City is financially accountable for legally separate organizations if its officials appoint a voting majority of an organization's governing body and either it is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to, or ' to impose specific financial burdens on, the primary government. A primary government may also be financially accountable for governmental organizations that are fiscally dependent on it. A primary government has the ability to impose its will on an organization if it can significantly influence the programs, projects, or activities of, or the level of services performed or provided by, the organization. A financial benefit or burden relationship exists if the primary government (a) is entitled to the organization's resources; (b) is legally obligated or has otherwise assumed the obligation to finance the deficits of, or provide financial support to, the organization; or (c) is obligated in some manner for the debt of the organization. Some organizations are included as component units because of their fiscal dependency on the primary government. An organization is fiscally dependent on the primary government if it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without ' approval by the primary government. t 33 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 I I NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Financial Reporting Entity—Continued The following entities were found to be component units of the City and are included in the basic financial statements: Allen Economic Development Corporation (AEDC) - The AEDC is responsible for aiding, promoting and furthering economic development within the City. Allen Community Development Corporation (ACDC) - The ACDC is responsible for supporting the improvements in community parks and recreation, streets and sidewalks, public safety and the community library. The members of both the AEDC's and ACDC's Boards of Directors are appointed by the City Council. Both the AEDC and ACDC are fiscally dependent upon the City as the City Council approves their budgets and must approve any debt issuance. However, the component units do not qualify for blending because the component services directly benefit the community rather than the City itself. The AEDC and ACDC are discretely presented as governmental fund types and do not issue separate financial statements. Basis of Presentation The govemment-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the non -fiduciary activities of the primary government and its component units. The effect of intertund activity, within the governmental and business -type activities columns, has been removed from these statements; however, intertund services provided and used are not eliminated in the process of consolidation. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. Additionally, the primary government is reported separately from the legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given program are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific program. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given program and 2) operating or capital grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Taxes and other items not properly included among program revenues are reported instead as general revenues. Fund Financial Statements: The City segregates transactions related to certain functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Separate statements are presented for governmental funds and proprietary funds. These statements present each major fund as a separate column on the fund financial statements; all non -major funds are aggregated and presented in a single column. 34 CITY OF ALLEN, TEXAS ' NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Basis of Presentation —Continued Governmental funds are those funds through which most governmental functions typically are financed. The measurement focus of governmental funds is on the sources, uses and balances of current financial resources. The City has presented the following major governmental funds: ' General Fund - The General Fund is the general operating fund of the City. It is used to account for all ' financial resources not accounted for in other funds. All general tax revenues and other receipts that are not restricted by law or contractual agreement to some other fund are accounted for in this fund. General operating expenditures, fixed charges and capital ' improvement costs that are not paid through other funds are paid from the General Fund. Debt Service Fund - ' The Debt Service Fund is used to account for the accumulation of financial resources for the payment of principal, interest and related costs on general long-term debt paid primarily from taxes levied by the City. The fund balance of the Debt Service Fund is reserved to signify the amounts that are restricted exclusively for debt service expenditures. ' General Capital Projects Fund - The General Capital Projects Fund is used to account for resources used for the acquisition and/or construction of capital facilities by the City, except those financed by proprietary funds and not accounted for by another capital projects fund. ' General Obligation Bond Capital Projects Fund - To account for financing, acquisitions, and construction of improvements to City facilities and infrastructure not accounted for by other bond funds. ' Proprietary Funds am accounted for using the economic resources measurement focus and the accrual basis of accounting. The accounting objectives are determinations of net income, financial position and cash flow. All assets and liabilities are included on the Statement of Net Assets. The City has presented the following major proprietary funds: Enterprise Funds: Water and Sewer Fund - The Water and Sewer Fund is used to account for the provision of water and sewer services to the residents of the City. Activities for the fund include administration, operations and maintenance of the water and sewer system and billing and collection activities. The fund also accounts for the accumulation of resources for, and the payment of, long-term debt principal and interest for water and sewer debt. All costs are financed through charges to utility customers with rates reviewed regularly and adjusted if necessary to ensure integrity of the fund. 35 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 I II NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Basis of Presentation — Continued Solid Waste Fund - The Solid Waste Fund is used to account for the provision of solid waste services to residents of the City. Drainage Fund - The Drainage Fund is used to account for the provision of developing and maintaining proper drainage services to the residents of the City. Golf Course Fund - The Golf Course Fund is used to account for activities associated with the operations of the Chase Oaks Golf Course purchased by the City in October 2004. Internal Service Funds: Replacement Fund - The Replacement Fund is an internal service fund that accounts for the costs associated with the acquisition and replacement of vehicles, machinery, and equipment through the rental of such items to other departments. Risk Management Fund - The Risk Management Fund accounts for the costs associated workers compensation, liability and property insurance and medical and dental programs established for City employees and their covered dependents. Proprietary funds distinguish operating revenues and expenses from non-operating 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. Operating expenses for the proprietary funds include the cost of personnel and contractual services, supplies and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. Measurement Focus and Basis of Accounting Measurement focus refers to what is being measured. Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. 36 iI I 91 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 ' NOTE1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED Measurement Focus and Basis of Accounting — Continued ' The government -wide statements and fund financial statements for proprietary funds are reported using the economic resources measurement focus and the accrual basis of accounting. The economic resources measurement focus means all assets and liabilities (whether current or non- current) are included on the statement of net assets and the operating statements present increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of accounting, revenues are recognized when earned, including unbilled water and sewer services which are accrued. Expenses are recognized at the time the liabilities are incurred. Governmental fund financial statements are reported using the current financial resources measurement focus and are accounted for using the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual; i.e., when they become both measurable and available. "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The City considers all ' revenues as available if they are collected within 60 days after year end. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long- term debt which is recognized when due, and certain compensated absences and claims and judgments which are recognized when the obligations are expected to be liquidated with expendable available financial resources. The revenues susceptible to accrual are property and sales taxes, franchise taxes and interest income. Other receipts (special assessments) become measurable and available when cash is received by the City and are recognized as revenue at that time. Cash, Cash Equivalents and Investments ' State statutes and policy as established by the City Council authorize the City to invest in certificates of deposit, direct obligations of the U.S. Treasury, investment pools consisting of such U.S. Treasury obligations, repurchase agreements, commercial paper and mutual funds. ' Substantially all operating cash and cash equivalents are maintained in pooled cash and time deposit accounts. Interest income relating to pooled deposits is allocated to the individual funds based on each fund's pro rata share of total pooled deposits. For purposes of the statement of cash flows, the proprietary funds consider all highly liquid investments (including restricted assets) with an original maturity of three months or less when purchased to be cash equivalents, as they are available for withdrawal on demand. Investments are recorded at amortized cost when original maturity at the time of purchase is less than one year or at market if greater than one year. Encumbrances Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of funds are recorded in order to reserve that portion of the applicable appropriation, is utilized in the governmental funds. Under the City's budgetary process, appropriations lapse at fiscal year end. Encumbrances are reported as assigned fund balance because they do not constitute expenditures or liabilities. 37 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Property Taxes The City's property tax is levied each October 1 on the assessed value listed as of the prior January 1 for all real and certain personal property located within the City. Appraised values are established by the Central Appraisal District of Collin County at 100% of estimated market value and certified by the Appraisal Review Board. The assessed value upon which the 2010 levy was based is $7,356,536,569. Taxes are due on October 1 and are delinquent after the following January 31. The City is permitted by Article XI, Section 5 of the State of Texas Constitution to levy taxes up to $2.50 per $I DO of assessed valuation for general governmental services, including the payment of principal and interest on general obligation long-term debt. The combined tax rate to finance general governmental services including the payment of principal and interest on long-term debt for the year ended September 30, 2011 was $0.554 per $100 of assessed valuation. In Texas, countywide central appraisal districts are required to assess all property within the appraisal district on the basis of 100% of its appraised value and are prohibited from applying any assessment ratios. The value of property within the appraisal district must be reviewed every three years; however, the City may, at its own expense, require annual reviews of appraised values. The City may challenge appraised values established by the appraisal district through various appeals and, if necessary, legal action. Under this legislation, the City continues to set tax rates on City property. However, if the effective tax rate, excluding tax rates for bonds and other contractual obligations, adjusted for new improvements, exceeds the rate for the previous year by more than 8%, qualified voters of the City may petition for an election to determine whether to limit the tax rate to no more than 8% above the tax rate of the previous year. Interfund Receivables and Payables Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are reported as "due to/from other funds". Any residual balances outstanding between the governmental activities and business -type activities are reported in the govemment-wide financial statements as "internal balances". Transactions Between Funds and Between Funds and Component Units Interfund services provided and used are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as a reduction of expenditures/expenses in the fund reimbursed. All other interfund transactions, except transactions between the component units and the primary government are recorded as transfers. Transactions between the component units and the primary government are accounted for as external transactions (revenues and expenses). During the fiscal year ended September 30, 2011, ACDC contributed $263,034 to the General Fund which includes funds for administrative costs and for the Allen U.S.A. 2011 Celebration, and AEDC contributed $72,100 to the General Fund. These revenues were reflected as grants and contributions for the primary government in the govemment-wide statement of activities. 17 II CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Inventories and Prepaid Items Inventories, which are expended when consumed, are recorded using the average cost method, and are valued at cost. Prepaid items are for payments made by the City in the current year to provide services occurring in the subsequent fiscal year. Prepaid items are reported as nonspendable fund balance in the governmental funds in the fund level financial statements to signify that a portion of fund balance is not available for other subsequent expenditures. Special Assessments The City has the authority to make special assessments to property owners as part of the financing of capital improvements. Such assessments are recorded in the capital projects fund as receivables when assessed and are recognized as revenue when both the measurable and available criteria have been met (generally when collected). Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets, are reported in the applicable governmental or business -type activities columns in the government -wide financial statements and in the fund financial statements for proprietary funds. All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated assets are valued at fair market value on the date donated. The costs of normal repairs and maintenance that do not add to the value of the asset or materially extend the asset lives are not capitalized. Renewals and betterments are capitalized. Interest has not been capitalized during the construction period on property, plant and equipment. Assets capitalized have an original cost of $5,000 or more and over one year of useful life. Depreciation has been calculated on each class of depreciable property using the straight-line method. Estimated useful lives are as follows: Buildings 15 - 40 Years Towers, tanks, and pump stations 30 Years Infrastructure 10 - 50 Years Machinery and equipment 3 - 15 Years Vehicles 2 - 15 years Library books 5 Years Furniture and fixture 5 Years Other improvements 2 - 30 Years The City has established the Replacement Fund to account for the replacement of the City -awned vehicle, machinery, and equipment. Charges for use in the form of user payments are made by City departments to the Replacement Fund to provide for future acquisitions and replacements. W*: CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 I 1 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED Compensated Absences City employees earn vacation and sick leave, which may either be taken or accumulated, up to certain amounts, until paid upon retirement or termination. Upon termination or retirement, an employee is reimbursed up to a maximum number of hours of vacation pay and sick leave based upon the years of service. Accumulated vacation and sick leave is accrued when incurred in the government -wide, proprietary, and fiduciary fund financial statements. Net Assets Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt 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 assets are reported as restricted when there are limitations imposed on their use either through the enabling legislations adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. Fund Balance The City has adopted the provisions of GASB Statement No. 54, Fund Balance Reporting and Government Fund Type Definitions. The objective of the statement is to enhance the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing government fund type definitions. The statement establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. Fund balance classifications, under GASB 54 are Nonspendable, Restricted, Committed, Assigned, and Unassigned. These classifications refect not only the nature of funds, but also provide clarity to the level of restriction placed upon fund balance. Fund balance can have different levels of constraint, such as external versus internal compliance requirements. Unassigned fund balance is a residual classification within the General Fund. The General Fund should be the only fund that reports a positive unassigned balance. In all other funds, unassigned is limited to negative residual fund balance. In accordance with GASB 54, the City classifies governmental fund balances as follows Nonspendable — includes amounts that cannot be spent because they are either not in spendable form, or, for legal or contractual reasons, must be kept intact. This classification includes inventories, prepaid items and long term receivables. Restricted - includes fund balance amounts that are constrained for specific purposes which are externally imposed by providers, such as creditors or amounts restricted due to constitutional provisions or enabling legislation. This classifcetion includes retirement of long term debt, construction programs, and other federal and state grants. Committed -- includes fund balance amounts that are constrained for specific purposes that are internally imposed by the City through formal action of the highest level of decision making authority. Committed fund balance is reported pursuant to resolution passed by the City Council. 40 iI I1 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 ' NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Fund Balance -continued ' Assigned — includes fund balance amounts that are self-imposed by the City to be used for a particular purpose. Fund balance can be assigned by the City Council or the Chief Financial Officer. This classification includes insurance deductibles, encumbrances, program start-up ' costs, projected budget deficit for subsequent years and other legal uses. Unassigned — includes residual positive fund balance within the General Fund which has not been classified within the other above mentioned categories. Unassigned fund balance may also ' include negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned for those specific purposes. When multiple categories of fund balance are available for expenditure, the City will start with the most restricted category and spend those funds first before moving down to the next category with available funds. Minimum General Fund Unassigned Fund Balance - It is the goal of the City to achieve and maintain an unassigned General Fund balance that is within a range of 60 to 90 days of annual expenditures. If unassigned General Fund balance falls below the goal or has a deficiency, the City will establish a timeframe and work plan to replenish the fund balance. The work plan may ' include tax increases, fee increases, reduction of services, and/or reduction of expenditures (i.e. hiring freeze, salary freeze, or reduction of travelRraining). NOTE 2, DEPOSITS, INVESTMENTS AND INVESTMENT POLICIES Deposits — State statutes require that all deposits be fully collateralized by U.S. Government obligations or obligations of Texas and its agencies that have a market value of not less than the principal amount of the deposits. The City's demand deposits and certificates of deposit were fully insured or collateralized at September 30, 2011, with collateral required by state statutes. At yearend, the carrying amount of the City's deposits was $2,581,368 and the bank balance was $3,827,222. Of the bank balance, federal depository insurance covered $250,000 and the remainder was covered by collateral held by the pledging financial institution's agent in the City's name. The City's petty cash balance at September 30, 2011 was $49,000. The carrying amount of deposits for ACDC and AEDC, discretely presented component units, were $42,764 and $59,546, respectively, with no corresponding bank balances as they are pooled with the City's deposits. Investments — State statutes authorize the City to invest in U.S. Government obligations, obligations of Texas and its agencies and fully collateralized repurchase agreements. The City, AEDC and ACDC invest in Texpool which is an investment fund authorized by the Texas Legislature and administered by the Texas State Treasury. The Texas Treasury Safekeeping Trust Company is trustee of Texpool and is a limited purpose trust company authorized pursuant to Texas Government Code. The purpose of Texpool is to allow for the pooling of public funds to provide a higher yield on the pooled investment than would be possible with the investment of the individual public enfitys funds. Texpool investments are subject to the same investment policies maintained by the State Treasury for all state funds. The Legislature has authorized only certain investment instruments for public funds, including repurchase agreements, U.S. Treasury bills and bonds, securities of other ' 41 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 I I NOTE 2. DEPOSITS, INVESTMENTS AND INVESTMENT POLICIES —CONTINUED U.S. Government agencies, commercial paper and other safe instruments. The investment in Texpool and any accrued interest may be redeemed at the City's discretion. The City's position in the pool is not materially different from the value of the pool shares. The table below identifies the investment types that are authorized for the City by the Public Funds Investment Act. (Government Code Chapter 2256). The table also identifies certain provisions of the City's investment policy that address interest rate risk, credit risk, and concentration of credit risk. Maximum Maximum Authorized Maximum Percentage Investment Investment Type Maturity of Portfolio In One Issuer Certificates of Deposit 5 years 40% None Repurchase Agreements 5 years 30% None U. S. Treasure Obligations 5 years 100% None Municipal Investment Pool 5years 100% None Commercial Bank Savings Account 5years 15% None U. S. Government Securities (non -callable) 5 years 100% None U. S. Government Securities (callable) 5 years 70% None U. S. Government Sponsored Corp. 5 years 75% None Instruments: noncallable U. S. Government Sponsored Corp. 5 years 70% None Instruments: callable Commercial Paper 5 years 20% None Bankers Acceptance 5years 10% None Guaranteed Investment Contracts 5years 25% None State or Local Governmental Obligations 5years 30% None Disclosures Relating To Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Investments with interest rates that are fixed for longer periods of time are more likely to be subject to increased variability in their fair values due to changes in the market interest rates. The City manages its exposure to market price changes by avoiding over - concentration of assets in a specific maturity sector, limitation of average maturity of operating funds investments to less than eighteen months, and avoidance of over -concentration of assets in specific instruments other than U.S. Treasury Securities and authorized investment pools. As of September 30, 2011, the City had the following investments: 42 Fax Value Weighted Investment Primary Avg. Maturity Type Govemment AEDC ACDC Total (Years) FFCB $ 3.496,341 $ 193,019 $ 327,620 $ 4,018,900 3.46 FHLB 6,576,252 352,841 615,867 7,564.960 3.29 FHLMC 4)93,512 264,480 446,913 5,506,905 2.75 FNMA 8,703,817 480,229 815.114 9,999.160 4.40 Certificates of Deposit 40.161,083 2,218,168 3,784,994 46,144,243 0.98 Texpool 19,497,850 1,887,024 2.690.342 23.865,216 0.003 Total $ 83,220,855 $ 5,205.759 $ 8,662,850 $ 97,099,464 42 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 NOTE 2. DEPOSITS, INVESTMENTS AND INVESTMENT POLICIES —CONTINUED Disclosures Relating To Credit Risk The City's Investment policy, in conjunction with state law, specifies the type of credit rating of all authorized investments. Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This type of risk is typically expressed in terms of the credit ratings issued by a nationally recognized statistical rating organization. The City reduces the risk of issuer default by limiting investments to those instruments allowed by the Public Funds Investment Act, Chapter 2256, Texas Government Code. The City's investments in U.S. Agency securities (FHLB and FHLMC) are rated AAA by Standard & Poor's and Ass by Moody's Investors Service. The investment in the Texas Local Government Pool (TexPool) carried a credit rating of AAAm by Standard & Poor's as of September 30, 2011. Concentration of Credit Risk The City's investment policy does not contain stipulations regarding the amount of funds that can be invested in any single issuer. As of September 30, 2011, with the exception of funds invested at Texpool, the following table represents 5% or more of the City's investments. Issuer Investment Type Reported Amount Percentage FNMA Federal agency securities $ 9,999,160 10.30% FHLB Federal agency securities 7,554,960 7.78% FHLMC Federal agency securities 5,506,905 5.67% Custodial Credit Risk The custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. The City's investment policy minimizes custodial credit risk by requiring pledged securities to be in the name of the City. The Public Funds Investment Act does require that financial institutions secure deposits made by state or local governmental bodies by pledging securities in an undivided collateral pool held by a depository regulated under state law. The market value of the pledged securities of the collateral must always remain at least equivalent to the bank balance less the FDIC insurance. As of September 30, 2011, the City's deposits with financial institutions above the federal depository limits were fully collateralized. 43 I 44 1 1 CRY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS 1 YEAR ENDED SEPTEMBER 30, 2011 NOTE 3. RECEIVABLES 1 Receivables at September 30, 2011 for both governmental and business -type activities, including the applicable allowances for uncollectible accounts, consist of the following: Property Sells Apcnsd 1 Tax Teras Accounts IMaresl Acemorr enie crier Total General Fund $ 334,052 $2,443,289 $ - $ 81,013 $ - $ 3,02 978 $ 5,885,332 Debt Service 147,562 - - 26,705 - - 1]4,28] General capital Pmleda - - - 47,360 181,657 2.]]4 23],fi99 , G.O. Bond Fund - - - 62,961 - 82,961 NOn-malor Governmental Funds - - 4]3,34] 17.139 - - 490,486 Water all Sewer - - 6,099,132 82,108 - - 6,161 240 Sidi Wall - - 268,3]] 10,760 - 100,420 38],55] Drainage - - 58,153 4,258 - - 63,411 Gott Course - - 7,464 - - - ],464 Internal service FwMs - 41,629 41,629 Gross Receivables 401,614 2,443,289 6,97,473 353,941 18],55] 3,138,172 13,512,048 1 Less: Allowance for Unwllecbbles 185,830 (14,581) 1200,411) Total Net Receivables, Primary G.ver-o nt $295.]04 $2,443,289 $ 6,892,882 S 353,941 $ 18]b5] 53,138,1]2 $131311,635 Component Units E $2,443.290 E $ 45,233 S E 54002 $ 2,493,525 1 1 The Water and Sewer Fund accounts receivable include unbilled charges for services rendered through September 30, 2011. 1 1 1 i 1 1 44 1 I I CITY OF ALLEN, TEXAS ' NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 NOTE 4. CAPITAL ASSETS Capital asset activity for the year ended September 30, 2011 was as follows: Governmental Activities 45 Beare Salle or Balance September 30, Other Adusbnenbl September, 30, 2010 AddiBons Dispositions Transfer. 2011 Govemmental Furl General capital assets not being depreciated: Land and land improvements $ 113,951,5]] S 6,4]4,4T] $ (14,086) $ - $ 12,411,968 Conatmchan In pregress 4.550,463 11,4]],636 - (20,455,261) 31,572,838 Total capdal assets net being depredated 1541502,040 17,952,113 (14,086) (2),455,261) 151,9M,806 General capital assets being deprecated: Buildings 113,076,269 - (44.276( 1,064,310 114,096.303 Improvements other than buildings 406,956,592 2.498,565 (1,318,062) 19,390,951 42],529,268 Furniture and fbdures 7,849,950 83,273 - - 7,933,223 Vehicles, 2729,815 16,6]] (18,039) - 2!/28,453 Library books 1,955,528 1]9,851 (4]4,58]) - 1,660,812 Machinery and equipment 9,713,366 623,691 (816,103) - 9520954 Total capital assets being depreciated 542,281,520 3,402077 (2,659,847) 20,455,281 563,469,011 Less acvmutated depreciationfor.. Building. (13.100.492) (2,895,682) 44.276 - (15,959,8%) Improvementhe other than building. (150,021,982) (18.158,395) 1,316,662 - (174.663,515) Furniture and fixtures (3.319,354) (1,055,760) - - (4,375,114) Vehicles (1,949,721) (197,806) 18,039 - (2,129,486) Library Batiks (1,510,438) (1]4,0]0) 4]4,56] - (1,209.947) Machinery and equipment (5,14).967) (1.24,676) 816.103 - (5,149,540) Total accumulated depreciation (183,05,952) (23,906,397) 2.661 - (204.287,502) Total general capital assets bang deprecated, net 359,230,568 (2),504,320) - 20,455,281 3591181,509 General cepdal sonata, net $ 513732608 $ (2,552,20]7 $ (14,088) $ - $ 5111166,315 45 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 NOTE4. CAPITAL ASSETS—CONTINUED Balance sales or Balance September30. Other Adludmenol September 30, 2010 Addmons Dispositions Trandea 2011 Internal Service Further Internet service funds aeeets not being depreciated. Construction in progress $ 749,110 $ 551.7M $ E $ 1,300,830 Total capital assets not being depreciated 749,110 5511720 11300,830 Internal service assets being depreciated capital asset., net 5,437.336 228,267 Vehicles 7,357,271 624,018 (250.564) - 7,730,725 Machinery and equipment 1,591,351 253,006 (85,730) 1)58,627 TONT normal service $ (14,086) $ $ 516,831,918 Business -Type Activities assets Wing depreciated 8,948.622 877,024 (336,294) 9,489,352 Less accumulated dsprwaLan for: Capital assets not being depreciated: Wind. (3.180.138) (983912) 250,584 - (3,911487) Machinery and equipment (1,080,258) (216,565) 85,730 (1,211,093) TONI accumulated (124,725) 6,915,390 Total capital assets not depreciation (4,260,396) (1,200.477) 336,294 (5,124,579) Total Internal service funds 7,467,037 3,645,960 (124,725) capital assets being depreciated, net 4,688,226 (323453) 4.364.773 Total Internal service funds capital asset., net 5,437.336 228,267 5,865,603 Governmental activities cepwI ass.t., net $ 519,169,944 $(2,323940) $ (14,086) $ $ 516,831,918 Business -Type Activities Water and $ower Activities: Capital assets not being depreciated: Land $ 4,072,882 $ - $ - $ - $ 4,072,882 Construction in progress 3,394,155 3,645,960 (124,725) 6,915,390 Total capital assets not being depreciated 7,467,037 3,645,960 (124,725) 10,988,272 Capital Assets Being depreciated. Towers, banks, B pumps stations 152,278,753 1,430,068 (287,211) 124,725 153,546,335 Furniture and futures 11,114 - - - 11,114 Machinery aro equipment 3,836,156 442,467 (125,037) - 4,153,586 Vehicles 888,691 36.898 (81,758) 843,833 TONI capwl assets being depreciated 157,014,714 1,909,433 (494,004) 124,725 158,554,868 Less accumulated depreciation for. Towers, tanks, 8 pumps stations (54,048,683) (4,921,568) 287,211 - (58,683,040) Furniture and fixtures (10,938) (176) - - (11,114) Machinery and equipment (2,485,024) (422,231) 125,037 - (2,782,218) Vehid. (657,088) (46,487) 81,758 (621,819) Total accumulated depreciation (57,201,733) (5,390,462) 494,004 (62,098,191) Total capital assets being depreciated, net 99,812,981 (3,481,029) 124,725 98,456,677 Water and sewer activities capital assets, net $ 107,280,018 E 164,931 $ - $ - $ 107,444,949 kL I II CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 NOTE 4. CAPITAL ASSETS -CONTINUED depreciation for Balance Sales or Balance (91.%0) September 3D, - (104,244) Other Adjustments' September 30, (3,364) 64,327 2010 Additions Dispositions Transfers 2011 Solid Waste Activities Total accumulated Capital assets being depreciated: (504,006) (49,602) 54,327 (499,281) Drainage activities Machinery and equipment $ 9,819 $ - $ (1,427) $ - $ 8,392 Vehicles 31,899 (18,976) 12,923 Total capital assets Machinery and equipment (471,988) (87,142) 100,274 being depreciated 41,718 (7,626) (20,403) 21,315 Less accumulated depreciation for: Total accumulated Machinery and equipment (7,929) (540) 1,427 - (7.042) Vehicles (31,899) 18,976 (12,923) Tolal accumulated capital assets, net 173,597 (67,723) depredation (39,828) (540) 20,403 (19,965) Solid waste activities capital assets, net $107,949,488 $ 74,151 $ $ capital assets, net E 1,890 L___"510 $ $ $ 1,350 Drainage Activities: Capital assets being depreciated, Other improvements $ 496,132 $ - $ - $ - $ 496,132 Vehides 98,260 - (54,327) - 43,933 Machinery and equipment 403,597 27,085 430,6B2 Total capital assets being depredated 997,989 27,085 (54,327) 970,747 Lass accumulated depreciation for Capital assets being depreciated ONer improvements (91.%0) (12,264) - - (104,244) Vehicles (86,486) (3,364) 64,327 - (35,523) Machinery and equipment (325,540) (33,974) (359,514) Total accumulated depreciation (504,006) (49,602) 54,327 (499,281) Drainage activities - 574,535 Less accumulated capital assets, net $ 493.983 E(22,5171 $ E $ 471.466 Golf Course Activities: Capital assets being depreciated Machinery and equipment $ 642,317 $ 21,598 $ (100,274) S - $ 563,641 Furniture and fixtures 101894 10,894 Total capital assets being depreciated 653,211 21,598 (11)(1,274) - 574,535 Less accumulated depreciation for: Machinery and equipment (471,988) (87,142) 100,274 - (458,856) Furniture and futures (7,626) (2,179) (9,805) Total accumulated depreciation (479,614) (89,321) 100,274 (468,861) Golf roan. activities capital assets, net 173,597 (67,723) 105,B74 Business -type activities capital assets, net $107,949,488 $ 74,151 $ $ $ 108,023,639 47 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 NOTE 4. CAPITAL ASSETS — CONTINUED Depreciation expense was charged as direct expense to programs of the primary government as intense saleaor Balance General government sepembx 30, Public safety other Adjustment/ septemlter 3a, 13,173,543 2010 Misses Di,suibona Tensfes 2011 Component Uni4: 97,089 Total depreciation expense- General capital assets 23,906,397 Internal Service Funds Caped asses net bee, depecied: Total depreciation expense- Governmental activities $ 25,106,874 Lend 5 4,324,525 $ - $ - $ - $ 4,32,525 Land impnbemene 207,878 - 207,878 Construction in Progress 798300 594.09 1.392,749 Total taPital assets net being depreciated 5,33D,703 594,449 5,05,152 Gariel assets being depreciated Impmvamenta ewer than buildings 3, 128,es9 - - - 3,128,699 Furniture and RMurea 66,m5 WU75 Tonal capbd assets being depredated 3 19 3.194,764 Leas accnmulaed deprenanon ter' Buildings (1,719,908) (153.333) - - (1.873,241) Furniture and extures (33,am) (13,215) 148,253) Teel accumulated Lepmpaton (1]52.918) (18115481 (1,919494) Total capital assets being dapeuated, net 1,01,818 11es'sun 1.275.270 Component units capital assets, net $ 6,772,521 $ 427,901 $ $ 5 7,20042E Depreciation expense was charged as direct expense to programs of the primary government as follows: Governmental activities: General government $ 826,662 Public safety 803,193 Public works 13,173,543 Cullum and recreation 9,001,346 Community development 4,564 Grant Administration 97,089 Total depreciation expense- General capital assets 23,906,397 Internal Service Funds 1,200,477 Total depreciation expense- Governmental activities $ 25,106,874 48 11 i CITY OF ALLEN, TEXAS ' NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 NOTE4. CAPITAL ASSETS—CONTINUED Business -type activities: Water and sewer $ 5,390,462 Solid waste 540 Drainage utility 49,602 Goff course 89,321 Total depreciation expense - Business -type activities 5,529,925 Component units: ' Allen Economic Development Corporation $ 166,548 Outstanding commitments at September 30, 2011, under authorized construction contracts were $1,285,015. These outstanding commitments for capital projects will be funded from unexpended bond proceeds and additional general obligation bonds. Authorization to issue additional bonds may be requested from the qualified voters of the City. ' NOTE 5. LONG-TERM DEBT At September 30, 2011, bonds payable consisted of the following individual issues: General Obligation Bonds: $13,000,000 Series 2002 Bonds due in annual installments of $175,000 to 1,020,000 through September 1, 2022; interest at 4.2% to 5.5%. $ 625,000 $7,210,000 Series 2003 Bonds due in annual installments of $175,000 to $515,000 through September 1, 2023; interest at 2.75% to 4.25%. 5,025,000 $11,700,000 Series 2004 Bonds due in annual installments ' of $395,000 to $790,000 through September 1, 2024; interest at 4.0% to 5.25%. 8,800,000 1 1 1 1 49 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 NOTE5. LONG-TERM DEBT -CONTINUED General Obligation Bonds—continued $4,735,000 Series 2004A Combination Tan & Revenue $32,330,000 Series 2005 Refunding Bonds due in annual installments of $75,000 to $3,505,000 through August 15, 2021, interest at 3.0% to 5 00% $ 26,395,000 $1,595,000 Sade. 2006 Bonds due in annual installments of $50,000 to $115,000 through August 15, 2026; $ interest at 4.0% to 4.20% 1,310,000 $11,145,000 Series 2007 Bond. due in annual installments of $380,000 to $815.000 through August 15, 2027: interest at 4,0% to 4.60%. 9,550,000 $10,185,000 Series 2008 Bonds due In annual Installments of $250,000 to $540,685 through August 15, 2028: interest at 3 5% to 4 60%. 9,160,000 $15,400,000 Series 2009 Bonds due In annual Installments 4,455,000 of $435,000 to $1,140,000 through August 15, 2028, interest at 2,5% to 4.5% 14,350,000 $12,000,000 Series 2010 Bonds due in annual installments of $370.000 to $865,000 through August 15, 2029; interest at 2 0% to 4.0% 11,630,000 $8,785,000 Series 2010A Refunding Bonds tlue In annual 3,790,000 installments of $110,000 to $970,000 through August 15, 2022; interest at 2.0% to 3.0%. 6,645,000 $8,640,000 Series 2011 Refunding and Improvement Bonds due in annual installments of $255,000 to $795,000 through August 15. 2030. interest at 2.0% to 4.25% 8,840,000 $ 104,330,000 CertBicates of Obligation: $4,735,000 Series 2004A Combination Tan & Revenue Golf Course Cedifivates of Obligation due in annual Installments of $165,000 to $390,000 through September 1, 2024, interest at 150% to 5.00%. $ 3,825,000 $765,000 Series 2004B Combination Tax & Revenue Golf Course Certificates of Obligation due in annual installments of $25,000 to $70,000 through September 1, 2024;intemst at 4.875% to 5 50% 630,000 $ 4,455,000 Water and Sewer Revenue Bonds: $6,710,000 Series 2004 Bonds due In annual installments of $175,000 to $490,000 through June 1, 2024; interest at 4.75% to 50%. $ 3,790,000 $4,300,000 Series 2005 Bonds due in annual installments of $140,000 to $310,000 through June 1, 2025; interest at 3.75%to 6.625%. 3,350,000 $5,795,000 Series 2009 Refunding Bonds due installments $515,000 to $630,000 through June 1, 2019; interest at 1 2% to 3.5%. 4,630,000 $ 11,770,000 50 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 NOTES. LONG-TERM DEBT—CONTINUED AEDC Sales Tax Revenue Bonds: $15,335,000 Series 2008 Sales Tax Revenue Bonds due in annual installments of $390,000 to $940,000 through September 1, 2032, interest at 3.50% to 4.50%. $1,605,000 Series 2010A Sales Tax Revenue Bonds due in annual installments of $440,000 to $595,000 beginning September 1, 2023 through September 1, 2025; interest at 4.00%. $5,165,000 Series 2010B Sales Tax Revenue Bonds due in annual installments of $105,000 to $520,000 through September 1, 2023; interest at 1.35% to 5.10%. ACDC Sales Tax Revenue Bonds: $5,600,000 Series 2006 Refunding Bonds due in annual installments of $290,000 to $785,000 through September 1, 2019; interest at 3.75% to 5.0%. $1,615,000 Series 2007-A Refunding Bonds due in annual installments of $260,000 to $515,000 through September 1, 2012; interest at 3.98%. $32,835,000 Series 2008 Sales Tax Revenue Bonds due in annual installments of $345,000 to $2,785,000 through September 1, 2032; interest at 4.00% to 6.00%. 51 $ 13,520,000 1,605,000 4.805.000 $ 19,930,000 $ 4,680,000 290,000 30,770,000 $ 35,740,000 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 I 11 NOTES. LONG-TERM DEBT—CONTINUED Balance The following is a summary of long-term debt transactions, including current portion, of the City for the year ended September 30, 2011: End Within Balance Increases Decreases Balance Due One Year Beginning End Whin of Year Increases Decreases of Year One Year Governmental Activities 11,770,000 $1,235,000 Compensated absences 394,197 349,965 General Obligation Bonds $ 105,550,000 $ 17,625,000 $ (18,845,000) $ 104,330.000 $ 7,310,000 Certificates of Obligation 4,685,000 - (230,000) 4,455,000 240,000 Capital lease payable 52,096 - (45,434) 6.662 6,662 Compensated absences 3,497,048 2,]]4,469 (2,422,624) 3,848,893 2,220,837 Less deferred amounts: Forissuancedismunts/premiums 141,378 (11,973) For issuance premiums 1,]24,91] 68],]02 (126,007) 2,266.612 - For refundings (723.]]1) (853,419) 218,834 (1,358,356) Governmental activity long-term debt $ 13,360,376 E 349,965 longterm debt J 114]85.290 $ 20.213.752 E (21.450.2311 iiiE 113548.811iii8 9.]]].499 The general fund has typically been used to liquidate the liability for compensated absences for governmental activities. 52 Balance Balance Due Beginning End Within of Year Increases Decreases of Year One Year Business Type Actield. Water and Sewer Revenue Bonds $ 12,960,000 $ - It (1,10,000) $ 11,770,000 $1,235,000 Compensated absences 394,197 349,965 (323,]]5) 420,387 392,466 Capital lease payable 166,514 - (63,002) 103,512 62,048 Less defamed amounts: For refundings (301,713) - 34,382 (267,331) - Forissuancedismunts/premiums 141,378 (11,973) 129,405 Business -type activity long-term debt $ 13,360,376 E 349,965 $ (1,554,368) $ 12,155.973 $ 1,689,514 Compone d i Alan Community Development Corporation Sales Tax Revenue Bonds E 36,705,000 It - E (965.000) $ 35,740,000 $ 1.005,000 Less defamed amounts' For issuance discounts l premiums (118,616) (1,%1) - (120.607) - For refundil (94,529) 22646 (71,883) ACDC Zang -term debt E 36.491,855 $ _I N_) $ (942354) $ 35.54],510 $ 1,005,900 Allen Ecbnomk Development Corporation Sales Tax Revenue Bonds $ 20,710,000 $ - (780,000) $ 19,93,000 $ 800,000 For issuance discounts l premiums (52792) 2,]5] (5,035) AEDC long-term debt E 20.65],208 $ $ (7]7,243) E 19,879,965 $ 800,000 Component unit long-term debt $ 57,149,063 $ (1991) $ (1,]19,59]1 $ 5542],4]5 $ 1,805,000 52 I I 53 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 ' NOTES. LONG-TERM DEBT—CONTINUED Annual Requirements to Retire Debt Obligations t The City intends to refire all of its general long-term liabilities, plus accrued interest, from ad valorem taxes and other current revenues. The proprietary fund type long-term debt will be repaid, plus accrued interest, from operating revenues of the Water and Sewer Fund. The annual aggregate ' maturities for each bond type for the years subsequent to September 30, 2011, are as follows: General Oblicafion Bonds Annual debt service requirements to maturity for general obligation bonds, including interest of $33,590,849 are as follows: Governmental Activities Fiscal Year Ending ' September 30 Princioal 2012 7,310,000 Interest 4,222,813 Total 11,532,813 2013 7,695,000 3,936,167 11,631,167 2014 7,905,000 3,655,208 11,560,208 2015 8,285,000 3,356,323 11,641,323 2016 7,965,000 3,027,067 10,992,067 2017-2021 35,740,000 10,498,400 46,238,400 2022-2026 21,590,000 4,311,091 25,901,091 2027-2030 7.840.000 583.780 8.423.780 Total 704 330 O6 '1i0n a^Q $ 13] 42f1.Rd0 Certificates of Obligation Annual debt service requirements to maturity for the Certificates of Obligation, including interest of $1,518,893 are as follows: Governmental Activities Fiscal Year Ending September 30 Principal Interest Total 2012 240,000 2013 260,000 190,525 180,475 430,525 440,475 2014 270,000 170,894 440,894 2015 290,000 160,684 450,684 2016 300,000 149,269 449,269 t 2017-2021 1,780,000 543,461 2,323,461 2022-2024 1.315.000 123,585 1.438.585 Total $ 4.455 000 $ 1 518 893 $ 59]3.993 1 I 53 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 NOTES. LONG-TERM DEBT — CONTINUED Water and Sewer Revenue Bonds Revenue bond debt service requirements to maturity, including interest of $2,985,788 are as follows: Business -type Activities Fiscal Year Ending September 30 Princioal Interest Total 2012 1,235,000 467,074 1,702,074 2013 1,165,000 423,049 1,588,049 2014 1,205,000 380,519 1,585,519 2015 1,250,000 335,934 1,585,934 2016 955,000 286,789 1,241,789 2017-2021 4,050,000 885,493 4,935,493 2022- 2025 1.910.000 206.930 2.116.930 Totel $ 11 770 000 $ 2 985 788 $ 14 755 788 AEDC Sales Tax and Revenue Bonds Sales Tax Revenue bond debt service requirements to maturity, including interest of $9,290,083 are as follows: Governmental Activities Fiscal Year Ending September 30 Principal Interest Total 2012 800,000 796,128 1,596,128 2013 820,000 774,515 1,594,515 2014 845,000 750,440 1,595,440 2015 870,000 723,905 1,593,905 2016 900,000 694,625 1,594,625 2017-2021 5,050,000 2,934,958 7,984,958 2022-2026 5,580,000 1,792,122 7,372,122 2027-2032 5.065.000 823.390 5.888.390 Total $ 19 930 000 $ 20 22rLn0. 54 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 NOTES. LONG-TERM DEBT—CONTINUED ACDC Sales Tax and Revenue Bonds Sales Tax Revenue bond debt service requirements to maturity, including interest of $26,245,100 are as follows: General Obligation Bonds The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities and infrastructure. During the year, $8,785,000 of general obligation refunding bonds and $8,840,000 of general obligation refunding and improvement bonds were issued to refund outstanding obligations of the City and to finance permanent public improvements and public purposes. The resources were placed in an irrevocable trust for the purpose of generating resources for all future debt service payments. As a result, the refunded bonds are considered defeased and the liability has been removed from the governmental activities column of the statement of net assets. The reacquisition prices exceeded the net carrying amount of the old debt by $853,419. The $8,785,000 advance refunding was undertaken to reduce total debt service payments over the next 12 years by $74,000 annually and resulted in an economic gain of $705,319. The $8,840,000 issuance included an advance refunding amount of $3,840,000 that was undertaken to reduce total debt service payments over the next 11 years by $49,500 annually and resulted in an economic gain of $445,227. The City is required by ordinance to create from ad valorem tax revenues a sinking fund sufficient to pay the current interest and principal installments as they become due. The Debt Service Fund has $925,812 available to service the general obligation debt at September 30, 2011. There are a number of limitations and restrictions contained in the various general obligation bond indentures. The City is in compliance with all significant limitations and restrictions at September 30, 2011. A schedule of authorized but unissued direct General Obligation Bonds as of September 30, 2011, is as follows: Governmental Activities Fiscal Year Ending September 30 Principal Interest Total 2012 $ 1,005,000 $ 1,947,008 $ 2,952,008 2013 1,045,000 1,906,116 2,951,116 2014 1,090,000 1,862,835 2,952,835 2015 1,135,000 1,816,365 2,951,365 2016 1,190,000 1,760,455 2,950,455 2017-2021 6,870,000 Ta88,888 14,758,888 2022-2026 8,880,000 5,874,248 14,754,248 2027-2032 14.525,000 3,189,185 17.714.185 Total $ 35740000 $ 2e245.100 $$ EL211510 General Obligation Bonds The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities and infrastructure. During the year, $8,785,000 of general obligation refunding bonds and $8,840,000 of general obligation refunding and improvement bonds were issued to refund outstanding obligations of the City and to finance permanent public improvements and public purposes. The resources were placed in an irrevocable trust for the purpose of generating resources for all future debt service payments. As a result, the refunded bonds are considered defeased and the liability has been removed from the governmental activities column of the statement of net assets. The reacquisition prices exceeded the net carrying amount of the old debt by $853,419. The $8,785,000 advance refunding was undertaken to reduce total debt service payments over the next 12 years by $74,000 annually and resulted in an economic gain of $705,319. The $8,840,000 issuance included an advance refunding amount of $3,840,000 that was undertaken to reduce total debt service payments over the next 11 years by $49,500 annually and resulted in an economic gain of $445,227. The City is required by ordinance to create from ad valorem tax revenues a sinking fund sufficient to pay the current interest and principal installments as they become due. The Debt Service Fund has $925,812 available to service the general obligation debt at September 30, 2011. There are a number of limitations and restrictions contained in the various general obligation bond indentures. The City is in compliance with all significant limitations and restrictions at September 30, 2011. A schedule of authorized but unissued direct General Obligation Bonds as of September 30, 2011, is as follows: Original Date Ampu,R Issued 2011 unissued Puwse AWW..bpn Audwrized b Date yg_ valence Padorming Arts Center 1VO5l2W2 $19,500,000 $ 2,815,000 $ - $16,685,000 Semke Center Fadlities W122007 14,500,000 12,50,000 - 2,00.000 Remvadons 05122007 1,700,000 275,000 20,000 1,225,000 stre8% 05122007 27,2W,W0 14,95.000 4,135,000 a, 115,000 Parks 05122W7 17,250,000 6,9W,W0 3W,OW 10,05,W0 Public Ari Prcleds 05122W7 1,3901000 625,000 - 765,1300 P.M. a." 05122007 15855W0 <A] 4A5 00n 114�75.M La5gl p0n Woom ¢ 5135 nm 369 W0 S41 M orn 55 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 NOTES. LONG-TERM DEBT—CONTINUED General Oblioadon Bonds — Continued In August 2011 the Arts Center of North Texas approved two six month fiscal year 2012 budgets. At the end of the first six months these three opportunifies would be considered: 1) spin off to a private nonprofit organization, 2) be on hold — hiatus/evaluation period and 3) dissolution. In February 2012, the Board chose to spin off to a private nonprofit organization. Therefore, the City will not issue bonds for the project in fiscal year 2012 and the feasibility of the private nonprofd organization and decisions of the other cities will determine when, if ever, the remaining bonds will be issued. Water and Sewer Revenue Bonds The City is required by the applicable revenue bond indentures to pledge the net revenues of the Water and Sewer Enterprise Fund for the retirement of its outstanding revenue bonds, including interest thereon, and is required to maintain debt service funds and bond reserve funds for all such bonds outstanding. Funds aggregating $349,692 at September 30, 2011 are restricted within the Water and Sewer Enterprise Fund for servicing of the debt. The respective bond indentures require the City to make equal monthly payments to the restricted accounts to accumulate the annual principal and interest requirements as they become due. Water and Sewer Revenue Bonds and Refunding Bonds are payable solely from and, equally secured by, a first lien on and pledge of the net revenue of the Citys combined waterworks and sanitary sewer systems. The ordinances authorizing the Revenue Bonds stipulate that the City will deposit, in addition to principal and interest requirements, certain amounts in a reserve fund. Amounts in the reserve fund are to be used to pay principal and interest on outstanding bonds at any time sufficient funds are not available in the bond interest and redemption fund. The bond indentures require that the City accumulate reserves to an amount equal to the average annual principal and interest requirements of all outstanding bonds secured by the net revenues of the system. Such reserves are funded up to the required level in equal monthly installments over a maximum five-year period, as defined in the indentures. Amounts in the reserve fund at September 30, 2011 of $1,740,383 are adequate to meet the reserve requirements. At September 30, 2011, restricted assets, which include Water and Sewer Revenue Bond Debt Service and Reserve Funds, were as follows: Revenue bond debt service $ 1,172,380 Revenue bond reserve fund 568,003 $ 1,740,383 Retained earnings reserved for Water and Sewer revenue bond retirement Is detailed as follows' Restricted assets, revenue bond debt Service and reserve funds $ 1,740,383 Accrued Interest, payable from restricted assets (155,691) Current maturities of revenue bonds, payable from restricted assets (1,235,000) Reserved for revenue bond principal and interest $ 349,692 56 CITY OF ALLEN, TEXAS ' NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 'NOTES. LONG-TERM DEBT—CONTINUED Water and Sewer Revenue Bonds - Continued ' The City is in compliance with the various requirements of the bond ordinances. This covenant requires that operating revenues, as defined, cover the current debt requirement including principal and interest by a minimum of 1.2 times. Such coverage at September 30, 2011 was 7.24 times. ' Capital Leases The City acquired office equipment under various leases accounted for as capital leases. These ' leases meet the criteria of a capital lease as defined by the Financial Accounting Standards Board (FASB) Accounting Standards Codification guidance on "Accounting for Leases", which defines a capital lease generally as one which transfers benefits and risks of ownership to the lessee. As of September 30, 2011, the capitalized costs of the Governmental leased property and Business -type leased property under capital leases were $821,279 and $663,914, respectively. The terms of the leases range from 3 - 5 years and call for monthly and annual payments over the life of ' the leases. The future minimum lease payments under the capitalized leases and the net present value of the future minimum lease payments at September 30, 2011 are as follows: I ' Operating Leases The City leases machinery and equipment under non -cancelable operating leases. Total costs for such ' leases were $250,321 for the fiscal year ended September 30, 2011. Future minimum lease payments, by year and in the aggregate, under the non -cancelable lease commitments are as follows: Fiscal Year Ending ' September 30, Amount 2012 $ 173,007 2013 140,329 2014 105,166 2015 97.660 2016 56,031 Total $ 572,193 ' 57 1 Fiscal Year Ending Governmental Activities ' September 30, Prindpal Interest Total 2012 $ 6,662 $ 95 $ 6,757 Total $ 6,662 $ 85 $ 6,]57 Fiscal Year Ending Business -Hoe Activities September 30, Principal Interest Total 2012 $ 62,048 $ 3,602 $ 65,650 2013 26,914 1,135 28,049 2014 51684 558 6,242 2015 4,523 330 4,853 ' 2016 4.343 106 4,449 Total $ 103,512 $ 5,731 $ 109,243 ' Operating Leases The City leases machinery and equipment under non -cancelable operating leases. Total costs for such ' leases were $250,321 for the fiscal year ended September 30, 2011. Future minimum lease payments, by year and in the aggregate, under the non -cancelable lease commitments are as follows: Fiscal Year Ending ' September 30, Amount 2012 $ 173,007 2013 140,329 2014 105,166 2015 97.660 2016 56,031 Total $ 572,193 ' 57 1 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 NOTE 6. INTERFUND TRANSFERS All interfund transfers between the various funds are approved supplements to the operations of those funds. Individual fund operating transfers for fiscal year 2011 were as follows: Fund Major Governmental Funds: General Fund General Capital Projects General Obligation Bonds Debt Service Fund Total Major Governmental Funds Non -major Governmental Funds: Grants and Special Revenue Tax Increment Financing Hotel Occupancy Tax Total Non -major Governmental Funds Major Enterprise Funds Water and Sewer Fund Solid Waste Fund Drainage Utility Fund Golf Course Fund Total Major Enterprise Funds Internal Service Funds: Replacement Fund Risk Management Fund Total Internal Service Funds Transfers In Transfers Out $ 5,015,341 $ 1,685,979 1,125,000 307,225 - 233,421 500,000 6,640,341 2,226,625 209,641 - - 35,000 75,000 209,641 110,000 29,477 4,278,378 - 504,914 - 609,448 291,917 321,394 5,392,740 367,225 190,764 557,989 Total Transfers $ 7,729,365 $ 7,729,365 Transfers are used to 1) move amounts from funds receiving administrative and operating support to the appropriate fund incurring the administrative and operating costs and 2) to move unrestricted funds to finance various programs that the City must account for in other funds in accordance with budgetary authorizations, including amounts provided as subsidies or matching funds for various grant programs and to support cash financing of capital projects. The fund financial statements show: Governmental funds: Total transfers in of $6,849,982 include funding for capital projects, grant matching funds, and reimbursement for operating and administrative costs incurred to provide technology, procurement, human resources, building maintenance, financial and administrative support. Transfers out totaling $2,336,625 include cash financing of capital projects, support of programs recorded in non -major governmental funds and internal service funds. 58 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30.2011 NOTES. INTERFUND TRANSFERS —CONTINUED Proprietary funds: Total transfers in of $879,383 mainly represent amounts transferred into the Golf Course to support operations. The total transfer out of $5,392,740 represents the amount provided by other funds for technology, procurement, human resources, building maintenance, financial and administrative support. The internal service funds total transfer in of $557,989 mainly represents the amounts needed for police vehicles, Replacement Fund public safety dispatch system, and administrative support for the Risk Management Fund. NOTE 7. RETIREMENT PLAN Plan Description The City provides pension benefits for all its eligible employees through a nontraditional, joint centiibutory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), an agent, multiple -employer public employee retirement system. The plan provisions that have been adopted by the city are within the options available in the governing state statutes of TMRS. TMRS issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information (RSI) for TMRS. The report also provides detailed explanations of the contributions, benefits and actuarial methods and assumptions used by the System. This report may be obtained by writing to TMRS, P.O. Box 149153, Austin, Texas 78714-9153, calling 800-924-8677, or accessing the publications section of the TMRS website at wwwAmrs.com. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS. Plan provisions for the City were as follows: Contributions and Fundina Policy Under the state law goveming TMRS, the contribution rate for each City is determined annually by the actuary using the Projected Unit Credit actuarial cost method. The rate consists of the normal cost contribution rete 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 members projected benefit allocated annually: the prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the applicable period for that city. Both the normal cost and prior service contribution rates include recognition of the projected impact of annually repeating benefits such as Updated Service Credits and Annuity Increases. The City contributes to the TMRS Plan at an actuarially determined rate. Both the employees and the City make contributions monthly. Since the City needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect (i.e. December 31, 2009 valuation is effective for rates beginning January 2011). The City's retirement cost rate was 11.91% from October to December 2010 and 12.61% from January to September 2011. 59 Plan Year 2011 Plan Year 2010 Employee deposit rate 7% 7% Matching ratio (City to employee) 2 to 1 2 to 1 Years required for vesting 5 5 Service retirement eligibility 60/5,0/20 60/5,0/20 (expressed as age/years of service) Updated service credit 100% repeating, 100% repeating, transfers transfers Annuity Increase (to Retirees) 70% repeating 70% repeating Contributions and Fundina Policy Under the state law goveming TMRS, the contribution rate for each City is determined annually by the actuary using the Projected Unit Credit actuarial cost method. The rate consists of the normal cost contribution rete 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 members projected benefit allocated annually: the prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the applicable period for that city. Both the normal cost and prior service contribution rates include recognition of the projected impact of annually repeating benefits such as Updated Service Credits and Annuity Increases. The City contributes to the TMRS Plan at an actuarially determined rate. Both the employees and the City make contributions monthly. Since the City needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect (i.e. December 31, 2009 valuation is effective for rates beginning January 2011). The City's retirement cost rate was 11.91% from October to December 2010 and 12.61% from January to September 2011. 59 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 NOTE 7. RETIREMENT PLAN — CONTINUED Beginning in fiscal year 2008, changes in actuarial funding and assumptions resulted in higher required conMbutions and lower funded ratios. To assist in this transition to higher rates, TMRS approved an eight-year phase-in period, which allows cities the opportunity to increase their contributions gradually to their full required contribution rate. The City made additional voluntary contributions of approximately 1% from January to September 2008 and approximately 2% for the 2009, 2010, and 2011 fiscal years to reduce the unfunded actuarial accrued liability. The annual pension cost and net pension obligation/(asset) are as follows Annual required contribution (ARC) Projected unit credit Amortization Method — $ 5,266,956 Interest on net pension obligation 27.1 years —dosed period Amortization period for new gains/losses— 4,415 Adjustment to the ARC 10 year smoothed market Investment Rate of Return — (3,595) Annual pension cost (APC) Varies by age and service Includes Inflation at — 5,267,776 Contributions made — statutorily required monthly 2.1 (4,510,950) Contnbulions made — voluntary monthly (570,000) Increase in net pension obligation 186,826 Net pension obligation, beginning of the year 58,871 Net pension obligation, end of the year $ 245,697 Three -Year Trend Information: Annual Actual Percentage Net Pension Fiscal Pension Contribution of APC Obligation Year Cost (APC) Made Contributed Asset 2009 $4,028,765 $3,988,000 99% ($180,361) 2010 4,663,050 4,423,818 95 58,871 2011 5,267,776 5,080,950 96 245,697 A summary of actuarial methods and assumptions is as follows Actuarial Cost Method — Projected unit credit Amortization Method — Level percent of payroll Remaining Amortization Period — 27.1 years —dosed period Amortization period for new gains/losses— 30 years Asset Valuation Method — 10 year smoothed market Investment Rate of Return — T.5% Projected Salary increases — Varies by age and service Includes Inflation at — 3.0% Cost -of -Living Adjustments — 2.1 Fundina Status and Funding Progress In June, 2011, SB 350 was enacted by the Texas Legislature, resulting in a restructure of the TMRS funds. This legislation provided for the actuarial valuation to be completed, as if restructuring had occurred on December 31, 2010. In addition, the actuarial assumptions were updated for the new fund structure, based on an actuarial experience study that was adopted by the TMRS Board at their May, 2011 meeting (the review compared actual to expected experience for the four-year period of January 1, 2006 through December 31, 2009). For a complete description of the combined impact of the legislation and new actuarial assumptions, including the effects on TMRS city rates and funding ratios, please see the December 31, 2010 TMRS Comprehensive Annual Financial Report (CAFR). M CITY OF ALLEN, TEXAS ' NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 ' NOTE 7. RETIREMENT PLAN —CONTINUED As of December 31, 2010, the most recent actuarial valuation date, the plan was 77.3% funded. ' The actuarial accrued liability for benefits was $97,860,304, and the actuarial value of assets was $75,602,771, resulting in an unfunded actuarial accrued liability (UAAL) of $22,257,533. The covered payroll (annual payroll of active employees covered by the plan) was $33,316,861, ' and the ratio of the UAAL to the covered payroll was 66.8%. 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-temr 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, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability of benefits. NOTE 8. WATER AND SEWER CONTRACTS In 1972, the City entered into a forty -year contract with the North Texas Municipal Water District (District) for the purchase of water. Under the terms of this contract, the City is obligated to make a minimum annual payment (adjusted annually) in return for a minimum volume of gallons of water per ' year. During 1998, the City was annexed into the North Texas Municipal Water District, which guaranteed the City a minimum volume of water. During the year ended September 30, 2011, the cost of water purchased under this contract was $7,816,635. In 1978, the City entered into a contract with the District for the transportation, treatment and disposal of sanitary sewage and other waste. The contract will continue in torte at least until all bonds issued by the District pursuant to the contract have been paid in full and will remain in force thereafter throughout the useful life of the District's sanitary sewer system. The contract requires the City to pay ' varying amounts based on the costs associated with sewage transported and/or treated and disposed of. The cost includes the City's proportionate share of the District's operating and maintenance expenses and related debt service costs. During 2011, the cost for transportation, treatment and disposal of sewage and other wastes was $5,547,575. NOTE 9. DEFERRED COMPENSATION PLAN ' As a result of legislative changes, all amounts of compensation defamed, all property and rights purchased, and all income, property or rights are (until paid or made available to the employee or other beneficiary) held in trust for the exclusive benefit of the participants and their beneficiaries, ' whereas, prior to these legislative changes, these amounts were solely the property and rights of the City subject only to the claims of the City's general creditors. As a result at September 30, 2011, the deferred compensation investments are not reported in the City's financial statements. 61 1 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 NOTE 10. RISK MANAGEMENT Health and Dental Insurance The City provides health and dental insurance benefits to City employees under a modified self- insurance plan. Under the plan, the City and the employee pay a portion of a predetermined monthly premium, which is based on the estimated claims cost for the plan and the extent of medical coverage selected by the employee. To cover annual costs, premium payments are reported as operating revenues of the Risk Management Fund and operating expenditures/expenses of the participating funds. A commercial insurance carrier is utilized to adjudicate and pay medical claims on behalf of the City. The City's liability is limited by an excess ("stop loss") insurance policy covering individual claims in excess of $125,000 per person. Throughout the policy year, the "stop loss" insurance carder reimburses the City for claims paid during the policy year which exceeded the "stop loss" amount. Through 12/31/10 a commercial insurance company re -insures the City for individual claims in excess of up to a lifetime maximum of $2,000,000. Per the Health Care Reform act no lifetime maximum will be imposed effective 111/11. The liabilities for insurance claims reported are based on GASB No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. These liabilities include an estimate for incurred but not reported claims. The estimated amount at September 30, 2011 was $725,359. Changes in the Risk Management liability during the past five fiscal years were as follows, Current Year Balance at Claims and Balance at Year Ending Beginning of Changes in Claim End of September 30, Fiscal Year Estimates Payments Fiscal Year 2007 $515,021 $6,056,992 $5,954,712 $617,301 2008 617,301 9,206,758 9,194,572 629,487 2009 629,487 4,448,591 4,518,707 599,371 2010 599,371 5,685,199 5,544,605 739,965 2011 739,965 5,444,705 5,459,311 725,359 Workers Compensation, Property and Liability Insurance The City participates in the Texas Municipal League Intergovernmental Risk Pool (TMLIRP) for workers' compensation claims, liability (general, automobile, law enforcement, and emors/omissions), and property insurance. The cost is based on the pool's claims cost, which is adjusted to reflect the City's individual claims experience. As claims arise they are submitted to and paid by TMLIRP. To cover annual costs, premium payments are reported as operating revenues of the Risk Management Fund and operating expenditureslexpenses of the participating funds. The City has a workers' compensation deductible of $25,000 per occurrence, with an annual aggregate deductible of $250,000. During 2011, the City contributed $203,538 to the Risk Management Fund for workers compensation. E II CITY OF ALLEN, TEXAS ' NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30.2011 ' NOTE10. RISK MANAGEMENT—CONTINUED Health and Dental Insurance — Continued t The City has various levels of insurance deductibles for property, liability, and automobile insurance with the maximum deductible set at $10,000. All insured claims are paid by TMLIRP, less the appropriate deductible. During 2011, the City contributed $508,891 for property and ' general liability. NOTE 11. OTHER POSTEMPLOYMENT BENEFITS (OPEB) ' Program Description In addition to the pension benefits described in Note 7, as required by state law the City makes health ' care benefits available to all retired employees through a single -employer defined benefit medical plan. The retiree benefit consists of medical, dental and vision care at the same cost as an employee until age 65. Retiree premiums are equal to COBRA rates and are paid entirely by the retiree (no City ' subsidy). Retirees must make a one-time irrevocable decision to continue benefits at the time of retirement, after that their eligibility for this benefit ends. Current OPEB benefits are made on a pay-as-you-go basis from the Risk Management Fund. In ' 2011 retirees paid $75,313 in the form of premiums and incurred $543,351 in expenses. Funding Policy ' In November, 2010 an actuarial study update was completed. This study estimated the actuarial accrued liability increased from $534,259 to $2,736,262 and the annual required contribution (ARC) increased from $48,973 to $321,597. To address the new actuarial findings, in March 2011, the City ' established a Section 115 Trust (the Trust) to comply with the requirements of Governmental Accounting Standards Board Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits other than Pensions (OPEB), for the purpose of funding and providing certain benefits to its eligible retirees and dependents. The single -employer defined benefit plan is created by City ordinance and appoints the City Manager as Plan Administrator for the program. The trust was established with Public Agency Retirement Services Company (PARS). Prior to establishment of the trust, the ARC was contributed to the Risk Management Fund where all ' medical costs are incurred. Net assets of $3,641,813 available in the Risk Management Fund exceeds the $2,736,262 actuarial accrued liability, therefore, OPEB costs will continue to be covered by the Risk Management Fund until the funded ratio of the trust is more positive. tAnnual OPEB costs and NET OPEB Obligation The City's annual other post -employment benefit (OPEB) cost is calculated based on the annual ' required contribution of the City (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. fl 63 I Annual required contribution (ARC) Interest on net OPEB obligation Adjustment to the ARC Annual OPEB cost Contributions made Decrease in OPEB obligation Net OPEB obligation, beginning of the year Net OPER obligation (asset), end of the year Significant methods and assumptions used for this were: Actuarial Assumptions $ 321,597 ' 321,597 (325,000) (3,403) $(3,403) Discount Rate , CITY OF ALLEN, TEXAS level dollar, open, 30 years NOTES TO BASIC FINANCIAL STATEMENTS ' YEAR ENDED SEPTEMBER 30, 2011 Ages 50-55-2%, 56-60-5%, 60-64-15%, 65+ 100% NOTE 11. OTHER POSTEMPLOYMENT BENEFITS (OPEB) -CON rlNUED ,Annual OPEB costs and NET OPEB Obligation - Continued RP 2000 EE/Combined The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover Market value on valuation date normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a Unit credit period not to exceed thirty years. ' Annual required contribution (ARC) Interest on net OPEB obligation Adjustment to the ARC Annual OPEB cost Contributions made Decrease in OPEB obligation Net OPEB obligation, beginning of the year Net OPER obligation (asset), end of the year Significant methods and assumptions used for this were: Actuarial Assumptions $ 321,597 ' 321,597 (325,000) (3,403) $(3,403) Discount Rate 4.00% Amortization Method/Period level dollar, open, 30 years Health Care Cost Trend Rate: Avg. 5.8% Yrs 1-10, 5.63% -Yrs 11-20, 5.28% -Yrs 21-30 Retirement Rates: Ages 50-55-2%, 56-60-5%, 60-64-15%, 65+ 100% Retiree/Spouse Participation Rate 20%/40% Mortality: RP 2000 EE/Combined Actuarial Value of Assets Market value on valuation date Actuarial Cost Method Unit credit Schedule of Funding Information Actuarial valuation date 9/30/10 Actuarial value of assets $296,824 Actuarial Accrued Liability (AAL) $2,736,262 Funded Ratio 10.8% Unfunded Actuarial Accrued Liability (UAAL) $2,439,438 Annual covered payroll $34,267,319 UAAL as % of covered payroll 7.1% The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets held in an irrevocable trust is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. EV I I CITY OF ALLEN, TEXAS ' NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2011 ' NOTE 11. OTHER POSTEMPLOYMENT BENEFITS (OPEB) —CONTINUED Supplemental Death Benefits Plan: Program Description The City also participates in the cost sharing multiple -employer defined benefit group -lens life ' insurance plan operated by the Texas Municipal Retirement System (TMRS) known as the Supplemental Death Benefits Fund (SDBF). The city elected, by ordinance, to provide group - term life insurance coverage to both current and retired employees. The city may terminate coverage under and discontinue participation in the SDBF by adopting an ordinance before ' November 1 of any year to be effective the following January 1. The death benefit for active employees provides a lump -sum payment approximately equal to the employee's annual salary (calculated based on the employee's actual earnings, for the 12 -month period preceding the month of death). Retired employees are insured for $7,500 and this coverage is reported as an "other postemployment benefit" or (OPEB). Contributions and Funding Policy The city contributes to the SDBF at a contractually required rate as determined by an annual actuarial valuation. The rate is equal to the cost of providing ane -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 employee's entire careers. ' The city's contributions to the TMRS SDBF for retiree's for the years ended 2011, 2010, and 2009 were $63,471, $53,964, and $56,341, which equals the required contributions (ARC) each year. ' NOTE 12. COMMITMENTS AND CONTINGENT LIABILITIES Federal Grants The City participates in a number of State and Federal assisted grant programs. Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor ' agencies, principally the Federal Government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the City expects such amounts, if any, to be immaterial. Litigation The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the City's counsel that resolution of these matters will not ' have a material adverse effect on the financial condition of the City. Economic Development Grant The City has several economic development agreements whereby it has agreed to pay a grant(s) to a developer and/or business in return for the design, construction, ' operating and/or managing of the business within the City of Allen. All grants are performance based and do not constitute a liability on the City's financial records. NOTE 13. SUBSEQUENT EVENTS The City has evaluated all events or transactions that occurred after September 30, 2011 up through March 5, 2012, the date the financial statements were issued. During this period, there were no ' subsequent events requiring disclosure. 65 afSpECT * IN), A m x m Carr OF ALIi� 1 1 1 1 1 1 1 1 1 REQUIRED SUPPLEMENTARY 1 INFORMATION 1 1 1 1 1 1 1 1 1 SVECT k I NTFC p f m x n CITY OF PLLEv CITY OF ALLEN, TEXAS EXHIBIT AA SCHEDULE OF TMRS FUNDING PROGRESS AND CONTRIBUTIONS AND SCHEDULE OF OPEB FUNDING PROGRESS AND CONTRIBUTIONS FOR THE YEAR ENDED SEPTEMBER 30, 2011 Required Supplementary Information Schedule of Other Post Employment Benefits Funding Progress and Contributions Last Three Valuation Years (unaudited) Required Supplementary Information Schedule of Texas Municipal Retirement System Actuarial Funding Progress and Contributions a %of Valuation Last Three Valuation Years (unaudited) Funded Covered Covered Date UAALasa Actuarial UAAL" Ratio Payroll % of Valuation Value of Funded Covered Covered Date Assets AAL' Ratio UAAL" Payroll Payroll $534,259 0% $31,392,512 1.7% 09/30/09 12/31/08 $49,860,343 $72,366,502 68.9% $22,506,159 $31,392,512 71.7% 12/31/09 $55,724,219 $79,567,937 70.0% $23,843,718 $33,147,218 71.9% 12/31/10 $75,602,771 $97,860,304 77.3% $22,257,533 $33,316,861 66.8% Required Supplementary Information Schedule of Other Post Employment Benefits Funding Progress and Contributions Last Three Valuation Years (unaudited) 'Actuanal Accrued Liability —Unfunded Actuarial Accrued Liability M UAALas Actuarial a %of Valuation Value of Funded Covered Covered Date Assets AAL' UAAL" Ratio Payroll Payroll 09/30/08 N/A $534,259 $534,259 0% $31,392,512 1.7% 09/30/09 N/A $534,259 $534,259 0% $33,147,218 1.6% 09/30/10 $296,824 $2,736,262 $2,439,438 10.8% $34,267,319 7.1% 'Actuanal Accrued Liability —Unfunded Actuarial Accrued Liability M CITY OF ALLEN, TEXAS GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES- BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30.2011 REVENUES Ad valorem taxes, penalties and interest Municipal sales tax Franchise taxes Licenses, partings; and lees Charge for services Fines Gifts and contributions Investment earrings Miscellaneous Total revenues EXPENDITURES Current General government Public safety Publicvrorus Culture and recreation Community development Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) I I EXHIBIT A-2 1(1,134,468 15,914,990 15,020,469 VARUINCE WITH BUDGETED AMOUNTS 25,486,817 FINAL BUDGET - (146,263) 3,766,172 3.688,603 POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) 21,811 2,428,998 2,353,883 2,331,868 $ 30,060,044 $ 30,097,822 $ 30018,546 $ (79,276) 12,833,232 13,078217 13,573,016 494,799 5,811,414 6,187,410 8230269 42,859 951,900 1,107,400 1,OD9,913 (97,487) 11,532,572 9,272,169 8,829,051 (443,118) 1,985,866 1,622,820 1,720,678 87,858 1,262,611 1,052,513 986,125 (66.388) 20.465 225,360 192,723 (32,637) 2,552,519 1,129,555 1290,990 161,435 67,260,623 63,773266 63,851,311 78,045 1(1,134,468 15,914,990 15,020,469 894,521 25,166,693 25,486,817 25,633,080 (146,263) 3,766,172 3.688,603 3,572,487 116,116 22,440,661 20,433,335 20,411,524 21,811 2,428,998 2,353,883 2,331,868 22,015 4,391,175 4,104,362 3,337,480 (766,882) 71,936,992 67,877,628 66,969,428 908,200 (4,676,369) (4,104,362) (3,118,117) 986,245 Transfers in 5,009,841 5,015,341 5,015,341 - Transfersout (61(1,666) (910,99) (1,685,979) (!75,000) Sale of capital assets 8,118 8,118 Total other financing sources (uses) 4,391,175 4,104,362 3,337,480 (766,882) NET CHANGE IN FUND BALANCE (285,194) - 219,363 219,363 FUND BALANCES, BEGINNING OF YEAR 15,466,975 15,486,975 15,468975 FUND BALANCES, END OF YEAR $ 15,181,781$ 15,456,95 $ 15,686,338 $ 219,363 67 11 I CITY OF ALLEN, TEXAS ' NOTES TO REQUIRED SUPPLEMENTARY INFORMATION YEAR ENDED SEPTEMBER 30, 2011 ' BUDGETARY INFORMATION ' The City Council adheres to the following procedures in establishing the budgets reflected in the financial statements: 1. Each year the City Manager is required to submit to the City Council a proposed budget for ' the fiscal year beginning on the following October 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayers' comments. ' 3. Prior to October 1, the budget is legally enacted by the City Council through passage of an ordinance. ' 4. Annual budgets are legally adopted for the General Fund and Debt Service Fund on a basis consistent with accounting principles generally accepted in the United States of America. Formal budgetary integration is not employed for proprietary funds. However, the City does adopt an annual budget for those funds for managerial control. 5. The City Manager is authorized to adjust budgeted amounts; however, such revisions may not result in total expenditures (appropriations) in excess of budgeted expenditures without ' approval of the City Council. Therefore, the legal level of budgetary control is the combined total budgeted expenditures for all fund types. ' 6. Formal budgetary integration is not employed for Special Revenue Funds, Proprietary Funds or Capital Projects Funds. However, the City does adopt an annual budget for those funds for managerial control. ' 7. Budgetary data for the Special Revenue Funds and Capital Projects Funds has not been presented in the accompanying basic financial statements as such funds are budgeted over the life of the respective grant or project and not on an annual basis. Budgetary information for the Proprietary Funds has not been presented since reporting on such budgets is not ' legally required. The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual — General Fund presents a comparison of budgetary data to actual results. The General Fund ' utilizes the same basis of accounting for both budgetary purposes and actual results. 1 1 11 68 VLSgp ECT * tNTfG 4If.. M A * m x n m CliY OF Pl6EC COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES I I *,,SPECT * I NrFG I A x CITY OF Al \'e[ MAJOR GOVERNMENTAL FUNDS GENERALFUND The General Fund is used to account for resources associated with traditional governmental functions that are not required legally or by sound financial management to be accounted for in another fund. DEBT SERVICE FUND The Debt Service Fund is used to account for the accumulation of resources for and the payment of general obligation bonds, certificate of obligation bonds, and interest from governmental resources. MAJOR CAPITAL PROJECTS FUNDS The Capital Projects Funds account for all resources used for the acquisition and/or construction of major capital facilifies by the City, except those financed by proprietary funds and trust funds. The following Capital Projects Funds are classified as major funds: General Capital Projects Fund — To account for the acquisition and/or construction of capital facilities and infrastructure, except those financed by proprietary and trust funds and not accounted for by the other capital project funds. Proceeds from nonrecurring revenue sources are allocated to this fund. General Obligation Bond Fund — To account for bond proceeds used for financing, acquisitions, and construction of improvements to City facilities and infrastructure not accounted for by other band funds. Proceeds from the sale of general obligation bonds provide financing for this fund. 169 CITY OF ALLEN, TEXAS COMPARATIVE BALANCE SHEETS GENERALFUND SEPTEMBER 30, 2011 AND 2010 EXHIBIT B-1 2011 2010 ASSETS Cash and cash equivalents $ 3,450,684 $ 5,405,281 Investments 10,935,723 10,525,864 Receivables: Ad valorem taxes (net of allowances for uncollectibles of $116,238 in 2011 and $4,009 in 2010) 217,814 261,014 Sales taxes 2,443,289 2,148,961 Accrued interest 81,013 64,944 Other 3,026,978 2,813,767 Prepaid items 156 862 TOTAL ASSETS $ 20,155,657 $ 21,220,693 LIABILITIES AND FUND BALANCE LIABILITIES Accounts payable $ 2,836,687 $ 2,942,726 Accrued liabilities 963,548 2,102,948 Deferred revenue 669,084 708,044 TOTAL LIABILITIES 4,469,319 5,753,718 FUND BALANCES Nonspendable Prepaid items 156 862 Restricted Cemetery trust 55,898 55,874 Assigned Public safety 1,402 - Unassigned 15,628,882 15,410,239 TOTAL FUND BALANCES 15,686,338 15,466,975 TOTAL LIABILITIES AND FUND BALANCE $ 20,155,657 $ 21,220,693 70 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GENERALFUND FOR THE YEARS ENDED SEPTEMBER 30, 2011 AND 2010 REVENUES Ad valorem taxes, penalties and interest Franchise taxes Municipal sales tax Licenses, permits and fees Charges for services Fines Gifts and contributions Investment earnings Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Public works Culture and recreation Community development Total expenditures Deficiency of revenues over expenditures OTHER FINANCING SOURCES Transfers in Transfers out Sale of capital assets Total other financing sources NET CHANGE IN FUND BALANCES FUND BALANCE, BEGINNING OF YEAR FUND BALANCE, END OF YEAR 71 EXHIBIT B-2 2011 2010 $ 30,018,546 $ 29,697,481 6,230,269 5,986,972 13,573,016 12,154,986 1,009,913 1,052,032 8,829,051 5,312,040 1,720,678 1,950,246 986,125 460,014 192,723 306,259 1,290,990 1,450,547 63,851,311 58,370,577 15,020,469 17,830,576 25,633,080 24,490,511 3,572,487 3,559,551 20,411,524 13,874,313 2,331,868 2,326,195 66,969,428 62,081,146 (3,118,117) (3,710,569) 5,015,341 5,629,086 (1,685,979) (1,707,334) 8,118 99,537 3,337,480 4,021,289 219,363 310,720 15,466,975 15,156,255 $ 15,686,338 $ 15,466,975 CITY OF ALLEN, TEXAS COMPARATIVE BALANCE SHEETS DEBT SERVICE FUND SEPTEMBER 30, 2011 AND 2010 EXHIBIT B-3 2011 2010 ASSETS Cash and cash equivalents $ 899,144 $ 464,823 Investments - 929,206 Receivables: Ad valorem taxes (net of allowances for uncollectibles of $69,592 in 2011 and $30,429 in 2010) 77,970 86,361 Accrued interest receivable 26,705 5,733 Total assets $ 1,003,819 $ 1,486,123 LIABILITIES AND FUND BALANCES LIABILITIES Interest payable $ - $ 35,186 Deferred revenue 78,007 91,225 Total liabilities 78,007 126,411 FUND BALANCE Restricted for debt service 925,812 1,359,712 TOTAL LIABILITIES AND FUND BALANCE $ 1,003,819 $ 1,486,123 72 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES DEBT SERVICE FUND FOR THE YEARS ENDED SEPTEMBER 30, 2011 AND 2010 REVENUES Ad valorem taxes Investment earnings Total revenues EXPENDITURES Principal retirement Interest and fiscal charges Total expenditures Deficiency of revenues over expenditures OTHER FINANCING SOURCES Issuance of refunding bonds Premium on issuance of bonds Payment to refund bond escrow agent Transfers in Total other financing sources NET CHANGE IN FUND BALANCES FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR 1 1 1 1 73 EXHIBIT B-4 2011 2010 $ 10,627,997 $ 10,428,416 69,996 57,825 10,697,993 10,486,241 6,930,000 5,995,000 4,775,982 4,710,336 11,705,982 10,705,336 (1,007,989) (219,095) 12,625,000 - 447,508 (12,998,419) - 500,000 574,089 (433,900) (219,095) 1,359,712 1,578,807 $ 925,812 $ 1,359,712 CITY OF ALLEN, TEXAS BUDGETARY COMPARISON SCHEDULE DEBT SERVICE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 REVENUES EXHIBIT B5 VARIANCE WITH FINAL BUDGETEDAMOUNTS BUDGET POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) Ad valorem taxes $ 10,676,382 $ 10,677,185 $ 10,627,997 $ (49,188) Investment earnings 16,900 56,698 69,996 13,298 Total revenues 10,693,282 10,733,883 10,697,993 (35,890) EXPENDITURES Principal retirement 6,930,000 6,930,000 6,930,000 - Interestandfiscalcharges 4,754,027 4,788,207 4,775,982 12,225 Total expenditures 11,684,027 11,718,207 11,705,982 12,225 OTHER FINANCING SOURCES Issuance of refunding bonds - 12,625,000 12,625,000 - Premium on issuance of bonds - 447,508 447,508 - Payment to refund band escrow agent - (12,998,419) (12,998,419) - Trdnsfers in 500,000 500,000 500,000 Total other financing sources 500,000 574,089 574,089 - NET CHANGE IN FUND BALANCES (490,745) (410,235) (433,900) (23,665) FUND BALANCE, BEGINNING OF YEAR 1,359,712 1,359,712 1,359,712 FUND BALANCE, END OF YEAR $ 868,967 $ 949,477 $ 925,812 $ (236665) 74 CITY OF ALLEN, TEXAS COMPARATIVE BALANCE SHEETS GENERAL CAPITAL PROJECTS FUND SEPTEMBER 30.2011 AND 2010 ASSETS Cash and cash equivalents Investments Accrued interest receivable Special assessments receivable Other receivable Total assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Retainage payable Accrued liabilities Total liabilities FUND BALANCES Restricted for capital projects Total fund balances TOTAL LIABILITIES AND FUND BALANCES 75 EXHIBIT B-6 2011 2010 $ 3,141,726 $ 4,450,829 10,585,288 9,257,376 47,368 57,117 187,557 187,557 2,774 $ 13,964,713 $ 13,952,879 $ 651,400 $ 394,465 90 87,419 446,586 697,736 1,098,076 1,179,620 12,866,637 12,773,259 12,866,637 12,773,259 $ 13,964,713 $ 13,952,879 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GENERAL CAPITAL PROJECTS FUND FOR THE YEARS ENDED SEPTEMBER 30. 2011 AND 2010 REVENUES Charges for services Intergovernmental Investment eamings Gifts and contributions Miscellaneous Total revenues EXPENDITURES General government Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES Transfers in Transfers out Total other financing sources NET CHANGE IN FUND BALANCES FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR 76 EXHIBIT B-7 ' 2011 2010 $ 405,567 $ 478,676 1,545,801 2,819,590 109,307 220,161 - 149,508 480,052 3,482,002 2,540,727 7,149,937 388,650 825,427 2,876,474 12,231,024 3,265,124 13,056,451 (724,397) (5,906,514) 1,125,000 (307,225) 4,197,928 (3,315,212) 817,775 882,716 93,378 12,773,259 (5,023,798) 17,797,057 $ 12,866,637$ 12,773,259 Ll CITY OF ALLEN, TEXAS EXHIBIT B-8 COMPARATIVE BALANCE SHEETS GENERAL OBLIGATION BOND FUND SEPTEMBER 30, 2011 AND 2010 2011 2010 ASSETS Cash and cash equivalents Investments Accrued interest receivable Total assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Retainage payable Total liabilities FUND BALANCES Restricted for capital projects Total fund balances TOTAL LIABILITIES AND FUND BALANCES 77 $ 2,643,012 $ 6,678,194 9,570,762 15,996,359 62,961 98,696 $ 12,276,735 $ 22,773,249 $ 95,641 $ 1,411,395 89,448 692,686 185,089 2,104,081 12,091,646 20,669,168 12,091,646 20,669,168 $ 12,276,735 $ 22,773,249 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GENERAL OBLIGATION BOND FUND FOR THE YEARS ENDED SEPTEMBER 30, 2011 AND 2010 REVENUES Investment earnings Total revenues EXPENDITURES General government Culture and recreation Public works Capital outlay Total expenditures Deficiency of revenues over expenditures OTHER FINANCING SOURCES Transfers out Premium on debt issuance Issuance of debt Total other financing sources NET CHANGE IN FUND BALANCES FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR 78 EXHIBIT B-9 2011 2010 $ 136,232 $ 347,006 136,232 347,006 93,830 183,091 753,360 15,829 214,641 1,553,572 12,638,696 19,725,174 4,986,773 11,912,406 13,700,527 21,477,666 (13,564,295) (21,130,660) (233,421) (238,327) 220,194 150,733 5,000,000 12,000,000 4,986,773 11,912,406 (8,577,522) (9,218,254) 20,669,168 29,687,422 $ 12,091,646 $ 20,669,168 NON -MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Hotel Occupancy Tax Fund — To account for funds received from hotel occupancy tax and expend as allowed by state law. Asset Forfeiture Fund — To account for activities associated with assets legally seized and forfeited. Grants and Special Revenue Fund — To account for monies received from other governmental agencies that have restricted legal requirements and multi-year budgets. Park Dedication Fund — To account for funds received and expended for the acquisition of additional park land and for the development of neighborhood parks. Tax Increment Financing Fund — To account for the tracking of property tax and sales tax revenue and associated expenses for the City's Tax Increment Financing agreements. 179 CITY OF ALLEN, TEXAS COMBINING BALANCE SHEET NON -MAJOR GOVERNMENTAL FUNDS SEPTEMBER 30,2011 EXHIBIT C-1 SPECM REVENUE GRANTS TOTAL NOTELAND TAX NONM"011 OCCUPANCY ASSET SPECUIL PARK INCREMENT GOVERIll TAX FORFEITURE REVENUE DEDICATION FINANCING FUNDS ASSETS Cash and cash equWalenta $ 422,312 $ 53.839 S 131,998 $ 369,504 $ 154,849 $ 1,133,030 In....nds 1,495,861 125.621 471,799 1,202)35 469.354 3,845.330 Accounts receivable 97,748 - 301,410 - 74.181 473,347 ACcmed interest 8,301 809 1,785 51869 2.315 17,139 TOTAL ASSETS $ 2.022.812 $ 180,289 $ 906,998 $ 1.658,108 S 700,709 $ 5.460.896 LUUMLKIES AND FUND BALANCES LUIBILMES A unts payable $ 36,062 $ 8,102 $ 63,301 $ - $ - $ 108,285 A dd liabillies 1,497 12,933 4,928 - - 19,361 ReW'mage payable - - 75,445 - - 75,"5 Defmredrevenue 18,246 18,246 TOTALLUIBILITIES 38,359 21.040 161,918 221.317 FUND BALANCES Restricted Tourism 1,984,453 - - Asset foOedure - 159,229 - - 159,229 State and federal grants - - 745,060 - - 745,080 Park acquicieon and devaWment - - - 1,358.108 - 110581108 Tax increment financing agreement 700.709 700,709 TOTAL FUND BALANCES 119841453 159,229 745.080 1,858,103 700.709 5.247.579 TOTAL LIABILITIES AND FUND BALANCES S 2,022.812 $ 180,269 S 900998 $ 1.858.108 $ 700709 $ 514881896 CITY OF ALLEN EXHIBIT C-2 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011 EXPENDITURES Excess (deficiency) of revenues over SPECIAL REVENUE Generalgwernment - - 216,617 - 182,622 999,239 Public safety - 135,930 320,569 GRANTS 458,499 Public walls TOTAL 89245 HOTEL 89,245 AND 554.450 - TAX NON-MMOR 820.339 OCCUPANCY ASSET SPECIAL PARK INCREMENT GOVERNMENTAL 51.103 TAX FORFEITURE REVENUE DEDICATION FINANCING FUNDS REVENUES (35,000) Total expantlXures 556,450 193,033 2,488,130 221,512 702,622 4248,347 Ad valorem taxes, penal lel Interest $ - $ - $ $ - $ 520,9111 $ 520,901 Fmnchte ®e xas - - 190,)90 - - 190)90 Municipal sales tax - - - 181,119 334.079 334,0)9 Licel osmotic, and fee. - - - 280.580 - 280,589 Fines FUND BALANCES.END OF YEAR - 185.987 - - 185,901 Hotel l motel texas 1.113,312 - - - - 1,113,312 In"osiommnental - - 2,110,680 - 130,828 2.249,288 Investment eamin9s 131889 2,095 4,788 13,400 5,115 39,267 Miscellaneous 188,310 180,310 Total revenues 1.127,181 170,405 2,472225 273,900 998,801 5,012,592 EXPENDITURES Excess (deficiency) of revenues over Generalgwernment - - 216,617 - 182,622 999,239 Public safety - 135,930 320,569 - - 458,499 Public walls - - 89245 - - 89,245 CU6ure and inecreabon 554.450 - 83,335 2,544 - 820.339 Community development - - 211,387 - - 211.367 Capital outlay 51.103 1,6011596 224.988 - 1,8831001 - - (35,000) Total expantlXures 556,450 193,033 2,488,130 221,512 702,622 4248,347 81 Excess (deficiency) of revenues over expendaues 5)2,)31 (2$628) (15,5051 48,400 216,179 790.245 OTHER FINANCING SOURCES (USES) Transfersln 209,641 209.841 Transfereout (75,000) - - (35,000) (110,000) Sac of capital masts - 15,141 - - - 15,141 Total other financing sources (uses) (75,000) 15,141 209,841 (35,000) 114,182 NET CHANGE IN FUND BALANCES 49),)31 (7,481) 193,130 40,488 181,119 911,027 ' FUND BALANCES, BEGINNING OF YEAR 1.408.)22 188,716 551.944 1,611,840 519.530 4,330.552 FUND BALANCES.END OF YEAR $ 1,984,453 S 159.229 $ 145,000 S 1.050,108 $ )00,)09 $ 5,241,519 81 SSSpgCT t I~r�G . + Raw. CITY of Al`En MAJOR ENTERPRISE FUNDS The Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises where the intent is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or where the City's council has decided that periodic determination of net income is appropriate for accountability purposes. Water and Sewer Fund — To account for the provision of water and sewer services to the residents of the City. Solid Waste Fund — To account for the provision of solid waste services to the residents of the City. Drainage Fund — To account for the provision of developing and maintaining proper drainage services to the residents of the City. Golf Course Fund — To account for activities associated with the operations of the Chase Oaks Golf Course purchased by the City in October 2004. 82 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF NET ASSETS WATER AND SEWER ENTERPRISE FUND SEPTEMBER 30, 2011 AND 2010 1,168,228 EXHIBIT D-1 Accrued liabilities 2011 2010 ASSETS 299,476 262,890 CURRENTASSETS Cash and cash equivalents $ 4,940,556 $ 5,906,365 Investments 15,597,365 12,535,772 Receivables, net of allowance for unalleclibles: 274,646 253,617 Accounts 6,084,551 4,881,473 Accrued interest 62,108 77,344 Inventories 84,802 221,182 Restricted rash and cash equivalents 1,740,383 1,738,080 Total current assets 28,509,765 25,360,216 NONCURRENT ASSETS 10,406,729 11,618,580 CAPITALASSETS 15,101,346 16,858,609 Land 4,072,882 4,072,882 Towers, tanks, and pump stations 153,546,335 152,278,753 Vehicles 843,833 888,691 Machinery and equipment 4,153,586 3,836,156 Furniture and fortunes 11,114 11,114 Construction in progress 8,915,390 3,394,155 Total capital assets 169,543,140 164,481,751 Lessaccumulated depreciation (62,098,191) (57,201,733) Capital assets, net of accumulated depreciation 107,444,949 107,280,018 DEFERRED CHARGES Bond issuance costs, net of amortization 141,015 155,109 Total noncurrent assets 107,585,965 107,435,127 TOTAL ASSETS 136,095,730 132,795,343 LIABILITIES AND NET ASSETS Accounts payable 1,168,228 1,531,321 Accrued liabilities 71,028 166,402 Retainage payable 299,476 262,890 Payable from restricted assets: Revenue bonds payable - anent 1,235,000 1,190,000 Accrued interest payable 155,691 171,118 Accrued compensated absences -current 274,646 253,617 Customer deposits payable 1,490,548 1,462,681 Total current liabilities 4,694,617 5,038,029 NONCURRENT LIABILITIES Revenue bonds payable 10,397,074 11,609,665 Accrued compensated! absences 9.655 8,915 Total noncurrent liabilities 10,406,729 11,618,580 TOTAL LIABILITIES 15,101,346 16,858,609 NET ASSETS Invested in capital assets, net of related debt 95,812,875 94,480,353 Restricted Restricted for revenue bond principal and interest 349,692 376,962 Unrestricted 24,831,817 21,281,419 TOTAL NET ASSETS $ 120,994,384 $ 116,138,734 CIN CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS WATER AND SEWER ENTERPRISE FUND FOR THE YEARS ENDED SEPTEMBER 30, 2011 AND 2010 EXHIBIT D-2 2011 2010 OPERATING REVENUES Water sales $ 19,343,377 $ 15,230,450 Sewer charges 10,682,500 9,607,625 Connection fees 173,737 171,020 Service charges 598,544 579,092 Intergovernmental 54,163 2,588,994 Gifts and contributions 1,000,000 - Miscellaneous 83,029 317,712 Total operating revenues 31,935,350 28,494,893 OPERATING EXPENSES Personnel services 3,791,330 3,559,483 Contractual and other services 15,187,796 16,484,754 Maintenance 265,011 245,644 Supplies 260,733 177,062 Depreciation 5,390,462 5,127,050 Other 248,010 153,928 Total operating expenses 25,143,342 25,747,921 OPERATING INCOME 6,792,008 2,746,972 NON-OPERATING REVENUES (EXPENSES) Interest income 153,206 278,940 Interest expense (535,529) (581,160) Total nonoperating expense (382,323) (302,220) INCOME BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS 6,409,685 2,444,752 CAPITAL CONTRIBUTIONS AND TRANSFERS Development fees 1,264,798 1,206,154 Capital contributions 1,430,068 1,347,073 Transfers in 29,477 1,469,319 Transfers out (4,278,378) (6,355,108) Total capital contributions and transfers (1,554,035) (2,332,562) CHANGE IN NET ASSETS 4,855,650 112,190 NET ASSETS, BEGINNING OF YEAR 116,138,734 116,026,544 NET ASSETS, END OF YEAR $ 120,994,364 $ 116,138,734 84 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF CASH FLOWS WATER AND SEWER ENTERPRISE FUND FOR THE YEARS ENDED SEPTEMBER 30, 2011 AND 2010 I EXHIBIT D-3 , VR 2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 30,732,272 $ 27,701,072 Cash paid to employees for services (3,769,561) (3,532,798) Cash paid for goods and services (16,182,682) (18,328,990) Net cash provided by operating activities 10,780,029 7,839,284 CASH FLOWS FROM NON-CAPRAL FINANCING ACTIVITIES Transfers in 29,07 1,469,319 Transfers out (4,278,378) (6,355,108) Net cash used in noncapital financing activities (4,248901) (4,885789) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal paid on revenue bond matundes (1,190,000) (1,140,000) Interest and fees paM on long -tern debt (550,956) (596262) Acquisition and construction of capital assets (4,125.325) (4720,770) Contributions from developers 1,264,798 1206,154 Net cash used In capital and related financing activities (4,601,483) (5,250,878) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investment samefies (3,059,557) - proceedsfromthesaleandmattressofinvestmentsecurNes - S84,156 Interest on investments 166,406 253,019 Net cash provided by (used m) InvesDrg activitlea (2,893,f51) 637,175 NET DECREASE IN CASH AND CASH EQUIVALENTS (963,506) (1,460,208) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 7,644,445 9,104,653 CASH AND CASH EQUIVALENTS, END OF YEAR $ 6,680,939 $ 7.64.445 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net operating income $ 6,792,008 $ 2,746,972 Adusbnents to reconcile net operating income to net cash provided by operating sent es: Depreciation and amortization expense 5,426,964 5,183,552 Change In assets and liabilities. Accounts receivable (1,203,078) (793,821) Inventories 136,380 7,160 Accounts payable (363,093) 431,015 Accrued liabilities (95,374) 14,130 Retairage payable 38,586 190,757 Compensated absences 21,769 26,685 Utilitydeposits 27.867 52.84 Total adjustments 3,988,021 5,092,312 Net cash provided by operating activities $ 10.780.029 $ 7,839,284 NON-CASH INVESTING ACTIVITIES Change in the fair value of investments $ 2.036 $ 2.036 NON{ASH FINANCING ACTIVITIES Contributions of capital assets from developers $ 1430.068 $ 1.347,073 VR I 86 CITY OF ALLEN, TEXAS EXHIBIT D-4 COMPARATIVE STATEMENTS OF NET ASSETS SOLID WASTE ENTERPRISE FUND SEPTEMBER 30, 2011 AND 2010 ' 2011 2010 ASSETS CURRENT ASSETS Cash and cash equivalents $ 761,030 $ 1,037,303 Investments 2,726,406 2,112,770 Receivables, net of allowance for uncollectibles. ' Accounts 268,377 252,576 Other 108,420 100,580 Accrued interest Total 10,760 13,036 current assets 3,874,993 3,516,265 NONCURRENT ASSETS CAPITAL ASSETS Vehicles 12,923 31,899 Machinery and equipment 8,392 9,819 ' Total capital assets 21,315 41,718 Less: accumulated depreciation (19,965) (39,828) ' Capital assets, net of accumulated depreciation 1,350 1,890 Total noncurrent assets 1,350 1,890 ■■ TOTAL ASSETS 3,876,343 3,518,155 LIABILITIES AND NET ASSETS ' CURRENT LIABILITIES Accounts payable 304,645 224,733 Accrued compensated absences -current 36,863 38,200 'Accrued liabilities 17,544 31,079 Total current liabilities 359,052 294,012 NONCURRENT LIABILITIES Accrued compensated absences 2,079 2,155 Total noncurrent liabilities 2,079 2,155 ITOTAL LIABILITIES 361,131 296,167 NET ASSETS Invested in capital assets, net of related debt 1,350 1,890 Unrestricted 3,513,862 3,220,098 TOTAL NET ASSETS $ 3,515,212 $ 3,221,988 86 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS SOLID WASTE ENTERPRISE FUND FOR THE YEARS ENDED SEPTEMBER 30, 2011 AND 2010 OPERATING REVENUES Garbage collections Other Total operating revenues OPERATING EXPENSES Personnel services Contractual and other services Maintenance Supplies Depreciation Other Total operating expenses OPERATING INCOME NON-OPERATING REVENUES Interest income INCOME BEFORE TRANSFERS TRANSFERS Transfers out Total transfers CHANGE IN NET ASSETS NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR 87 EXHIBIT DS 2011 2010 $ 6,138,900 $ 5,789,828 47,504 84,805 6,186,404 5,874,633 391,829 377,239 4,913,609 4,633,380 1,814 4,771 11,314 9,768 540 540 92,854 86,215 5,411,960 5,111,913 774,444 762,720 23,694 37,957 798,138 800,677 (504,914) (427,063) (504,914) (427,063) 293,224 373,614 3,221,988 2,848,374 $ 3,515,212 $ 3,221,988 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF CASH FLOWS SOLID WASTE ENTERPRISE FUND FOR THE YEARS ENDED SEPTEMBER 30, 2011 AND 2010 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers Cash paid to employees for services Cash paid for goads and services Net cash provided by operating activities CASH FLOWS FROM NON -CAPITAL FINANCING ACTIVITIES Transfers out Net cash used in non -capital financing activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investment securities Interest on investments Net cash provided by (used in) investing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net operating income Adjustments to reconcile net operating to net cash provided by operating activities: Depreciation Change in assets and liabilities: Accounts receivable Other receivables Accounts payable Accrued liabilities Accrued compensated absences Total adjustments Net cash provided by operating activities RE EXHIBIT D-6 2011 2010 $6,165,039 $ 5,886,327 (393,242) (369,344) (4,953,214) (4,681,316) 818,583 835,667 (504,914) (427,063) (504,914) (427,063) (613,636) 87,237 23,694 37,957 (589,942) 125,194 (276,273) 533,798 1,037,303 503,505 $ 761,030 $ 1,037,303 $ 774,444 $ 762,720 540 540 (23,641) 12,282 2,276 (588) 79,912 51,971 (13,535) 847 (1,413) 7,895 44,139 72,947 $ 818,583 $ 835,667 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF NET ASSETS DRAINAGE ENTERPRISE FUND SEPTEMBER 30, 2011 AND 2010 EXHIBIT 0-7 RE 2011 2010 ASSETS CURRENT ASSETS Cash and cash equivalents $ 282,663 $ 441,293 Investments 1,015,326 970,924 Receivables: Accounts 59,153 55,697 Accrued interest 4,258 5,990 Total current assets 1,361,400 1,473,904 NONCURRENT ASSETS CAPITAL ASSETS Other improvements 496,132 496,132 Vehicles 43,933 98,260 Machinery and equipment 430,682 403,597 Total capital assets 970,747 997,989 Less: accumulated depreciation (499,281) (504,006) Capital assets, net of accumulated depreciation 471,466 493,983 Total noncurrent assets 471,466 493,983 TOTAL ASSETS 1,832,866 1,967,887 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable 29,698 27,960 Accrued compensated absences 23,089 19,841 Accrued liabilities 6,126 17,075 Total current liabilities 58,913 64,876 NONCURRENT LIABILITIES Accrued compensated absences 1,709 1,469 Total noncurrent liabilities 1,709 1,469 TOTAL LIABILITIES 60,622 66,345 NET ASSETS Invested in capital assets, net of related debt 471,466 493,983 Unrestricted 1,300,778 1,407,559 TOTAL NET ASSETS $ 1,772,244 $ 1,901,542 RE CITY OF ALLEN, TEXAS EXHIBIT DA COMPARATIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS DRAINAGE ENTERPRISE FUND FOR THE YEARS ENDED SEPTEMBER 30, 2011 AND 2010 2011 2010 OPERATING REVENUES Drainage fees $ 1,231,432 $ 1,181,497 Service charges 52,626 56,781 Other 8,230 4,962 Total operating revenues 1,292,288 1,243,240 OPERATING EXPENSES Personnel services 395,216 400,914 Contractual and other services 124,718 153,365 Maintenance 216,067 243,220 Supplies 30,338 37,321 Depreciation 49,602 58,056 Other 4,OO6 3,048 Total operating expenses 819,947 895,924 OPERATING INCOME 472,341 347,316 NON-OPERATING REVENUES Interest income 7,809 19,253 INCOME BEFORE TRANSFERS 480,150 366,569 TRANSFERS Transfers out (609,448) (292,838) Total operating transfers (609,448) (292,838) CHANGE IN NET ASSETS (129,298) 73,731 NET ASSETS, BEGINNING OF YEAR 1,901,542 1,827,811 NET ASSETS, END OF YEAR $ 1,772,244 $ 1,901,542 M CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF CASH FLOWS DRAINAGE ENTERPRISE FUND FOR THE YEARS ENDED SEPTEMBER 30, 2011 AND 2010 EXHIBIT D-9 2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 1,288,832 $ 1,245,756 Cash paid to employees for services (391,728) (398,794) Cash paid for goods and services (384,340) (431,743) Net cash provided by operating activities 512,764 415,219 CASH FLOWS FROM NON -CAPITAL FINANCING ACTIVITIES Transfers out (609,448) (292,838) Net cash used In non -capital financing activities (609,448) (292,838) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition of capital assets (27,085) Net cash used in capital and related financing activities (27,085) - CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments (44,402) 29,075 Interest on investments 9,541 19,249 Net cash provided by (used in) investing activities (34,861) 48,324 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (158,630) 170,705 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 441,293 270,588 CASH AND CASH EQUIVALENTS, END OF YEAR $ 282,663 $ 441,293 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net operating income $ 472,341 $ 347,316 Adjustments to reconcile net operating income to net cash provided by operating activities: Depreciation 49,602 58,056 Change in assets and liabilities: Accounts receivable (3,456) 2,516 Accounts payable 1,738 1,954 Accrued liabilities (10,949) 3,257 Compensated absences 3,488 2,120 Total adjustments 40,423 67,903 Net cash provided by operating activities $ 512,764 $ 415,219 91 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF NET ASSETS GOLF COURSE ENTERPRISE FUND SEPTEMBER 30, 2011 AND 2010 EXHIBIT D-10 2011 2010 ASSETS CURRENT ASSETS Cash and cash equivalents $ 77,434 $ 198,069 Investments 99,043 321,787 Receivables: Accounts 7,464 920 Accrued interest - 1,985 Prepaid items 11,050 11,050 Total current assets 194,991 533,811 NONCURRENT ASSETS CAPITAL ASSETS Furniture and f aures 10,894 10,894 Machinery and equipment 563,641 642,317 Less: accumulated depreciation (468,661) (479,614) Capital assets, net of accumulated depreciation 105,874 173,597 Total noncurrent assets 105,874 173,597 TOTAL ASSETS 300,865 707,408 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable 56,984 155,975 Accrued liabilities 21,632 59,683 Accrued compensated absences 57,868 55,991 Capital leases payable - current 62,048 84,194 Customer deposits payable 10,322 9,621 Total current liabilities 208,854 365,464 NONCURRENT LIABILITIES Capital leases payable 41,464 82,320 Accrued compensated absences 14,478 14,010 Total noncurrent liabilities 55,942 96,330 TOTAL LIABILITIES 264,796 461,794 NET ASSETS Invested in capital assets, net of related debt 2,362 7,083 Unrestricted 33,707 238,531 TOTAL NET ASSETS $ 36,069 $ 245,614 92 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS GOLF COURSE ENTERPRISE FUND FOR THE YEARS ENDED SEPTEMBER 30, 2011 AND 2010 EXHIBIT O-11 2011 2010 OPERATING REVENUES Service charges $ 1,406,555 $ 1,430,861 Miscellaneous 4,566 625 Total operating revenues 1,411,121 1,431,486 OPERATING EXPENSES Personnel services 1,108,595 1,118,090 Contractual and other services 440,772 542,669 Maintenance 128,175 82,206 Supplies 101,790 146,977 Depreciation 89,321 90,585 Other 43,930 47,172 Total operating expenses 1,912,583 2,029,699 OPERATING LOSS (501,462) (598,213) NON-OPERATING REVENUES (EXPENSES) Interest income (loss) - 2,699 LOSS BEFORE TRANSFERS (501,462) (595,514) TRANSFERS Transfers in 291,917 463,329 Total transfers 291,917 463,329 CHANGE IN NET ASSETS (209,545) (132,185) NET ASSETS, BEGINNING OF YEAR 245,614 377,799 NET ASSETS, END OF YEAR $ 36,069 $ 245,614 93 I 94 CITY OF ALLEN, TEXAS EXHIBIT D-12 ' COMPARATIVE STATEMENTS OF CASH FLOWS GOLF COURSE ENTERPRISE FUND FOR THE YEARS ENDED SEPTEMBER 30, 2011 AND 2010 ' 2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 1,404,577 $ 1,438,721 ' Cash paid to employees for services (1,106,250) (1,103,895) Cash paid for goods and services (851,008) (716,429) Net cash used in operating activities (552,681) (381,603) CASH FLOWS FROM NON -CAPITAL FINANCING ACTIVITIES Transfers in 291,917 463,329 ' Net cash provided by non -capital financing activities 291,917 463,329 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES ' Acquisition and construction of capital assets (21,598) Capital lease payment (63,002) (85,863) Net cash used in capital and related financing activities (84,600) (85,863) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investments 222,744 - ' Purchase of investments (321,787) Interest on investments 1,985 714 Net cash provided by (used in) investing activities 224,729 (321,073) NET DECREASE IN CASH AND CASH EQUIVALENTS (120,635) (325,210) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 198,1169 523,279 CASH AND CASH EQUIVALENTS, END OF YEAR $ 77,434 $ 198,069 ' RECONCILIATION OF OPERATING LOSS TO NET CASH USED IN OPERATING ACTIVITIES Net operating loss $ (501,462) $ (598,213) Adjustments to reconcile net operating loss to net cash used in operating activities: ' Depreciation 89,321 90,585 Change in assets and liabilities: Accounts receivable (6,544) 7,235 ' Accounts payable (98,991) 97,024 Accrued liabilities (38,051) 12,648 Customer deposits 701 (5,077) ' Compensated absences 2,345 14,195 Total adjustments (51,219) 216,610 IS Net cash used in operating activities L12L26811 $(381,603) 94 Sf_5PECT * 'NTFC C'?y OF Pl6Er INTERNAL SERVICE FUNDS ' The Internal Service Funds are used to account for financing of services provided by one department to other departments of the City on a cost -reimbursement basis. ' Replacement Fund - accounts for the costs associated with the acquisition of vehicles, machinery, and equipment through the rental of such items to other departments. Risk Management Fund —accounts for the costs associated with workers compensation, liability and property insurance and medical and dental programs established for City employees and their covered dependents. 95 CITY OF ALLEN, TEXAS COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS SEPTEMBER 30,2011 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 20, 2010) EXHIBIT E-4 RISK TOTALS REPLACEMENT MANAGEMENT FUND FUND 2011 2010 ASSETS CURRENT ASSETS Cash and cash equivalents $ 2,005,555 $ 1,043,001 $ 3,048,556 $ 3,358,294 Investments 5,972,869 3,384,843 9,357,712 7,972,792 Accounts receivable - - - 1,184 Accrued interest receivable 26,085 15,544 41,629 49,191 Prepaid items 149,077 149,077 73,394 Total cuff ant assets 8,004,509 4,592,465 12,596,974 11,454,855 CAPITAL ASSETS Machinery and equipment 1,758,627 - 1,758,627 1,591,351 Vehicles 7,730,725 - 7,730,725 7,357,271 Construction in progress 1,300,830 - 1,300,830 749,110 Accumulated depreciation (5,124,579) (5,124,579) (4,260,396) Capital assets, net of accumulated depreciation 5,665,603 5,665,603 5,437,336 TOTAL ASSETS 13,670,112 4,592,465 18,262,577 16,892,191 LIABILITIES AND NET ASSETS LIABILITIES Accounts payable - 225,293 225,293 185,616 Incurred but not reported daims 725,359 725,359 739,965 TOTAL LIABILITIES 950,652 950,652 925,581 NET ASSETS Invested in capital assets, net of related debt 5,685,603 - 5.665.603 5,437,336 Unrestricted 8,004,509 3,641,813 11,646,322 10,529,274 TOTAL NET ASSETS $ 13,670,112 $ 3.641.813 $ 17,311,925 $ 15,966,610 Em CITY OF ALLEN, TEXAS EXHIBIT E-2 COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011 (WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER, 30, 2010) RISK TOTALS REPLACEMENT MANAGEMENT FUND FUND 2011 2010 OPERATING REVENUES Charges for services $ 1,723,638 $ 7,512,425 $ 9,236,063 $ 8,527,804 Other income 457,781 457,781 159,392 Total operating revenues 1,723,638 7,970,206 9,693,844 8,687,196 OPERATING EXPENSES Personal services - 471,065 471,065 119,746 Contractual services - 7,539,875 7,539,875 7,515,743 Supplies 2,269 - 2,269 - Deprecialion 1,200,477 1,200,477 1,159,960 Total operating expenses 11202,746 8,010,940 9,213,686 8,795,449 OPERATING INCOME (LOSS) 520,892 (40,734) 480,158 (108,253) NON-OPERATING REVENUES Investment earnings 59,569 37,075 96,644 168,941 Gain on disposal of capital assets 210,524 210,524 4,903 Total non-operating revenues 270,093 37,075 307,168 173,844 INCOME BEFORE TRANSFERS 790,985 (3,659) 787,326 65,591 TRANSFERS Transfers in 367,225 190,764 557,989 291,392 Total transfers 367,225 190,764 557,989 291,392 CHANGE IN NET ASSETS 1,158,210 187,105 1,345,315 356,983 NET ASSETS, BEGINNING OF YEAR 12,511,902 3,454,708 15,966.610 15,609,627 NET ASSETS, END OF YEAR $ 13,670,112 $ 3,641,813 $ 17,311,925 $ 15,966,610 PIN CITY OF ALLEN, TEXAS EXHIBIT E-3 COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011 (WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2010) CASH FLOWS FROM CAPITAL AND RELATED RISK TOTALS REPLACEMENT MANAGEMENT FUND FUND 2011 2010 CASH FLOWS FROM OPEMTING ACTWITIES - (1,428]44) (1,463.188) Proceeds from sale of capital assets Cash received from transactions vnth other funds $ 1,818,464 $ 7,895,707 $9,514,171 $8,348,8% Cash paid b employees for services -(471,06S) (471,065) (119,746) Cash paid for goods and services (2,289) (4,072,278) (4,074,547) (3,992,948) Cash and for dinners (3,3)7,352) (3.337,352) (3,503,141) Net cash previded by operating activities 1,818,195 15,012 1,631,207 633,001 CASH FLOWS FROM NON -CAPITAL FINANCING ACTIVITIES 39,689 104,206 10,387 Net cash used in investing atllvitles Transfers in 367,225 190,784 57.989 291,392 Net cash provided by non -capital financing activities 387,225 190.764 57,989 291,392 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES ArquisNw of capital assets (1,428,744) - (1,428]44) (1,463.188) Proceeds from sale of capital assets 210,524 210,524 4.903 Net cash used in capital and related financing aGNNies (1,218,220) (1,218,220) (1,45,25) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of in,esbnent secunies (943,10) (441757) (1,384,920) (591,221) Interest on investments 6t,517 39,689 104,206 10,387 Net cash used in investing atllvitles 1870,646) (40258) (1,2807141 (441,034) NET DECREASE IN CASH AND CASH EQUIVALENTS (113,446) (198292) (309,738) (775,726) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 2,119,001 1,239,293 3,35,294 4,134.020 CASH AND CASH EQUIVALENTS, END OF YEAR $ 2,005,555 $ 110431001 $3,048556 $3,358,294 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net operating income (low) $ 520,892 $ (40,734( $ 4 J% $ (108,253) Adjustments fo reconcile operating income (loss( to not cash prmided by (used in) operebng activities: Depreciation 1,208477 - 1,208477 1,159,95 Change in assets and labilitles: Amounts recenales - 1,184 1,184 (1,15) Prepaids - (75,53) (75,53) (73,394) Accounts payable (15.174) 130,245 28071 (1",182) Total nQusbnents 1.095.303 5.746 11151.049 941,254 Net wish provided by operating wtMBae $ 1.811{,15 $ 151012 $118311207 _L 633,001 0 ' DISCRETELY PRESENTED COMPONENT UNITS 99 Allen Economic Development Corporation (AEDC) — AEDC is a legally separate entity from the City ' and is responsible for aiding, promoting and furthering economic development within the City. Allen Community Development Corporation (ACDC) —ACDC is a legally separate entity from the City and is responsible for supporting the improvements in community parks and recreation, streets and sidewalks, public safety and the community library. 1 t 99 CITY OF ALLEN, TEXAS COMPARATIVE BALANCE SHEETS ALLEN ECONOMIC DEVELOPMENT CORPORATION SEPTEMBER 30, 2011 AND 2010 $ 80,097 $ EXHIBIT F•1 Retainage payable 2011 2010 ASSETS 10,603 20,109 CURRENT ASSETS 119,638 448,274 Cash and cash equivalents $ 1,746,570 $ 2,900,776 Investments 3,518,735 5,189,736 Sales tax receivable 1,221,645 1,074,480 Accounts receivable 2,501 2,860 Accrued interest receivable 20,592 32,020 Prepaid items 6,298 6,298 TOTAL ASSETS $ 6,516,341 $ 9,206,170 LIABILITIES AND FUND BALANCES CURRENT LIABILITIES Accounts payable $ 80,097 $ 388,250 Retainage payable 28,938 39,915 Accrued and other liabilities 10,603 20,109 TOTAL LIABILITIES 119,638 448,274 FUND BALANCES Restricted Capital projects 2,318,212 5,230,127 Debt service 754,194 707,846 Unassigned 3,324,297 2,819,923 TOTAL FUND BALANCES 6,396,703 8,757,896 TOTAL LIABILITIES AND FUND BALANCES $ 6,516,341 $ 9,206,170 100 CITY OF ALLEN, TEXAS EXHIBIT F-2 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS ALLEN ECONOMIC DEVELOPMENT CORPORATION SEPTEMBER 30, 2011 Total governmental fund balance $ 6,396,703 Amounts reported for governmental activities in the statement of net assets are different because: Costs associated with the issuance of governmental long-term debt are expensed when incurred in the fund statements and capitalized and amortized over the life of the debt in the government -wide financial statements. 371,339 Interest payable on long-term debt does not require current financial resoumes, therefore interest payable is not reported as a liability in the governmental funds balance sheet. (66,344) Long -tens liabilities, including bonds payable are not due and payable in the current pend and, therefore, are not reported in the fund financial statements. (19,879,965) Capital assets (net of accumulated depreciation) used in governmental activities are not current financial resources and therefore are not reported in the governmental funds balance sheet. 7,200,422 Net assets of governmental activities $ (5,977,845) 101 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALLEN ECONOMIC DEVELOPMENT CORPORATION FOR THE YEARS ENDED SEPTEMBER 30, 2011 AND 2010 REVENUES Sales and other taxes Investment earnings Miscellaneous Total revenues EXPENDITURES Current: Economic development Capital projects: Economic development Debt service: Principal retirement Interest and fiscal charges Total expenditures Deficiency of revenues over expenditures OTHER FINANCING SOURCES Issuance of revenue bonds Total other financing sources NET CHANGE IN FUND BALANCE FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR 102 EXHIBIT F3 2011 2010 $ 6,835,454 $ 6,116,953 46,665 81,063 379,476 1,010 7,261,595 6,199,026 7,432,651 5,142,692 594,449 798,300 780,000 405,000 815,688 627,690 9,622,788 6,973,682 (2,361,193) (774,656) 6,770,000 - 6,770,000 (2,361,193) 5,995,344 8,757,896 2,762,552 $ 6,396,703 $ 8,757,896 CITY OF ALLEN, TEXAS EXHIBIT F-4 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE TO THE STATEMENT OF ACTIVITIES ALLEN ECONOMIC DEVELOPMENT CORPORATION FOR THE YEAR ENDED SEPTEMBER 30, 2011 Net change in fund balances - total governmental funds $ (2,361,193) Amounts reported for governmental actw6ies in the statement of activities are different because: Governmental funds report the effect of issuance mats, premiums, discounts, and similar items when debt is that issued. However, these amounts are deferred and amortized in the government -wide financial statements. (16,510) The repayment of the principal of long-term debt consumes the current financial resources of governmental funds ($780,000). The transaction, however, has no effect on net assets. 780,000 Current year changes in accrued interest payable do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. 1,630 Depreciation expense on capital assets is reported in the statement of activities but does not require the use of current financial resources. Therefore, depreciation expense is not reported as expenditures in the governmental funds. (166,548) Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets are allocated over their estimated useful lives and reported as depreciation expense. 594,449 I' Change in deficit of governmental activities 103 $ (1,168,172) CITY OF ALLEN, TEXAS EXHIBIT F-5 COMPARATIVE BALANCE SHEETS ALLEN COMMUNITY DEVELOPMENT CORPORATION SEPTEMBER 30, 2011 AND 2010 2011 2010 ASSETS CURRENT ASSETS Cash and cash equivalents $ 2,733,106 $ 2,774,349 Investments 5,972,508 3,952,892 Sales tax receivable 1,221,645 1,074,480 Accounts receivable 2,501 2,860 Accrued interest receivable 24,641 24,389 TOTAL ASSETS $ 9,954,401 $ 7,828,970 LIABILITIES AND FUND BALANCES CURRENT LIABILITIES Accounts payable $ 1,733 $ 309,577 Retainage payable 33,765 TOTAL LIABILITIES 1,733 343,342 FUND BALANCES Restricted Debt service 1,107,008 1,104,631 Unassigned 8,845,660 6,380,997 TOTAL FUND BALANCES 9,952,668 7,485,628 TOTAL LIABILITIES AND FUND BALANCES $ 9,954,401 $ 7,828,970 104 CITY OF ALLEN, TEXAS RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS ALLEN COMMUNITY DEVELOPMENT CORPORATION SEPTEMBER 30, 2011 EXHIBIT F-6 Total governmental fund balance $ 9,952,668 Amounts reported for governmental activities in the statement of net assets are different because: Costs associated with the issuance of governmental long-term debt are expensed when incurred in the fund statements and capitalized and amortized over the life of the debt in the government-wide financial statements. 550,751 Interest payable on long-term debt does not require current financial resources, and, therefore, is not reported as a liability in the governmental funds balance sheet. (162,251) Long-term liabilities, including bonds payable are not due and payable in the current period and, therefore, are not reported in the fund financial statements. (35,547,510) Net assets of governmental activities $ (25,206,342) 105 CITY OF ALLEN, TEXAS EXHIBIT F•7 COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 1,435,189 ALLEN COMMUNITY DEVELOPMENT CORPORATION 2,711,810 FOR THE YEARS ENDED SEPTEMBER 30, 2011 AND 2010 930,000 2011 2010 REVENUES Sales and other taxes $ 6,835,454 $ 6,116,953 Investment earnings 56,257 85,542 Total revenues EXPENDITURES Current: Community development Capital projects: Community development Debt service: Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over expenditures NET CHANGE IN FUND BALANCES FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR 106 6,891,711 6,202,495 975,149 1,435,189 499,770 2,711,810 965,000 930,000 1,984,752 2,021,123 4,424,671 7,098,122 2,467,040 (895,627) 2,467,040 (895,627) 7,485,628 8,381,255 $ 9,952,668 $ 7,485,628 CITY OF ALLEN, TEXAS EXHIBIT F-8 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE TO THE STATEMENT OF ACTIVITIES ALLEN COMMUNITY DEVELOPMENT CORPORATION FOR THE YEAR ENDED SEPTEMBER 30, 2011 Net change in fund balances -total governmental funds $ 2,467,040 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued. However, these amounts are deferred and amortized in the government -wide financial statements (58,001) Current year changes in accrued interest payable do not require the use of currant financial resources and, therefore, are not reported as expenditures in governmental funds. 3,145 Repayment of the principal on long-term debt consumes the current financial resources of governmental funds. However, these transactions have no effect on net assets. 965,000 Change in net assets of governmental activities $ 3,377,184 107 �EgprCT f INifG CltY OF CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS a�SPEGT r I NTEG C'TY OF PELF" CITY OF ALLEN, TEXAS COMPARATIVE SCHEDULES OF CAPITAL ASSETS USED IN THE OPERATIONS OF GOVERNMENTAL FUNDS — BY SOURCE (a) SEPTEMBER 30, 2011 AND 2010 GOVERNMENTAL FUNDS CAPITAL ASSETS Land and land improvements Buildings Machinery and equipment Furniture and fixtures Vehicles Books Infrastructure Total property and equipment in service Construction in progress Total governmental funds capital assets INVESTMENTS IN GOVERNMENTAL FUNDS CAPITAL ASSETS BY REVENUE SOURCE General obligation bond proceeds and interest income Revenue bonds Contributions Other governments General and other fund operations Special revenue funds Total governmental funds capital assets EXHIBIT G-1 2011 2010 $ 120,411,968 $ 113,951,577 114,096,303 9,520,954 7,933,223 2,728,454 1,660,812 427,529,266 683,880,980 31,572,838 $ 715,453,818 113,076,269 9,713,366 7,849,950 2,729,815 1,955,528 406,956,592 656,233,097 40,550,463 $ 696,783,560 $ 180,548,868 $ 167,910,175 10,475,000 10,475,000 350,872,718 347,606,091 9,951,500 9,951,500 142,877,895 141,911,249 20,727,837 18,929,545 $ 715,453,818 $ 696,783,560 (a) This schedule presents only the capital asset balances related to governmental funds, including infrastructure. Accordingly, the capital assets reported in the internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. 108 CITY OF ALLEN, TEXAS SCHEDULE OF CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS BY FUNCTION AND ACTIVITY (a) AS OF SEPTEMBER 30, 2011 Police Land - 8,528,747 Machinery& Function and Activity Land Improvements Buildings Equipment GENERAL GOVERNMENT 78,932 15,512,207 1,707,056 Municipal court $ 631,788 $ - $ 289,669 $ 57,885 City administration 2,719,531 - 8,871,016 309,035 Information technology - - - 538,177 Human resources - - - - Internal services - - - 318,793 Finance 15,376,539 828,070 70,756,911 4,528,502 Total General Government 3,351,319 9,160,685 1,223,890 PUBLIC SAFETY 15,376,539 828,070 81,798,298 4,917,356 Police - - 8,528,747 876,699 Fire 78,932 6,983,460 828,357 Total Public Safety 78,932 15,512,207 1,707,056 PUBLIC WORKS Accordingly, the capital assets reported in the internal servcie funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. Community services & streets 51,274,858 - - 607,959 Engineering 49,002,250 7,625,113 160,284 Total Public Works 100,277,108 7,625,113 768,243 CULTURE & RECREATION Parks & recreation 15,376,539 828,070 70,756,911 4,528,502 Library 11,041,387 388,854 Total Culture & Recreation 15,376,539 828,070 81,798,298 4,917,356 Building & code compliance - - - 10,791 Planning & development 6,993 Total community development 17,784 GRANT ADMINISTRATION Grant Administration 500,000 - - 886,625 , Total grant administration 500,000 886,625 Construction in Progress - - Total governmental Ponds capital assets $ 119,583,898 $ 828,070 $ 114,096,303 $ 9,520,954 ' , (a) This schedule presents only the capital asset balances related to governmental funds, including inherstrucrure. Accordingly, the capital assets reported in the internal servcie funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. , ' 109 1 EXHIBIT G-2 Furniture& 464,827 Other Construction in 623,090 - Fixtures Vehicles Books Improvements Progress Total $ 413 $ - $ - $ - $ - $ 979,755 838,707 - - - - 12,738,289 21,624 (483) - 1,346,689 - 1,906,007 5,771 - - - - 5,771 18,321 123,252 30,616 - 490,982 23,991 482,499 199,298 23,991 908,827 122,769 1,377,305 16,144,795 297,698 464,827 - 623,090 - 10,793,061 235,398 1,074,358 (46,741) 9,153,764 533,096 1,539,185 576,349 19,946,825 12,915 119,413 - 260,941,693 - 312,956,838 469,584 79,885 126,356,575 183,693,691 482,499 199,298 387,298,268 496,650,529 5,161,864 532,385 - 37,082,677 - 134,266,948 839,459 1,595,256 143,995 14,008,951 6,001,323 532,385 1,595,256 37,226,672 148,275,899 - 62,343 - - - 73,134 7,478 14,471 7,478 62,343 87,605 272,474 65,556 1,050,672 2,775,327 272,474 65,556 1,050,672 2,775,327 31,572,838 31,572,838 $ 7,933,223 $ 2,728,454 $ 1,660,812 $ 421529,266 $ 31,572,838 $ 715,453,818 110 CITY OF ALLEN, TEXAS SCHEDULE OF CHANGES IN CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS — BY FUNCTION AND ACTIVITY (a) FOR THE YEAR ENDED SEPTEMBER 30, 2011 ii I EXHIBIT G3 (a) Thus schaddle weaents only the capipl asset beienwa related u governmental funs, excluding lnfrasW Wre. Aaardrlgly, the capital a.. repotted in he Ildemal servion Mas are accounted fi an Me atop emotional Generally, the spiel assets of Inemal sarvim NMa are MtlWed as go menta an iN les 1n W sleemand of Wan its 111 11 Gosemme be Funk Governmental Funds cannel gasses 0. mmxr Derincl,er capital Aaeem Funmon and Activity 1 2010 C,V,bdbons Mtl1'ions Q$iliono, Tranam,s Senmmber 30. 2011 GENERAL GOVERNMENT Municipal Court E 9!9,]55 S - $ - E - S - $ 929.7W Cit,Zh nietrtion 12,238.289 - - - - 12,238,289 Inlamal Tednougy 1,895,474 - 10.533 - - 1.908.002 Human Resources 5,221 - - - - 5,771 Internal Services 142830 - 262,545 (155053) 235,860 490.982 Finance 25991 M'991 Total Cannot Go4remment 15.784110 Zoli (1551053) 235.660 16.144.795 PUBLIC SAFETY Phi 9,18,912 - 118.634 (39268) 1,587,283 10,793,061 Fire 9,460,014 1088 (510.435) 195809 9,153,764 Thal Pi Safety 18,58,928 18,010 (550.831 1,781,992 19,946,825 PUBLIC WORKS Community services& streets 312,5649/7 243,709 (260.305) 408,357 312,9546311 Etgineerng 165.534,551 3,8888 1315,110 (857,944) 14,535.345 185893,691 Tonal Public Works 478,0911 3.264629 1.154619 11.118,2491 14,1143}02 495,650.528 CULTURE 8 RECREATION Parka S Recreation 127.427,483 - 4,879,137 IW4160) 2.268.28 134.85,948 Lbi 14.85.095 176.422 (474,586) 14,008,951 Total CWWre B Redea un 141,732578 5,05259 (1,283,08) 2,710.789 148375893 MMMUNIW DEVELOPMENT Bundirg B Code Compliance 97,937 - (24,803) - 73.134 PN,mi, 8 Development (28 M) 41,467 14,471 Total Community DevalWment 70,941 41,467 (24803) a7,6D5 GR TAOMINISTMnON Grant Admnsidnaen 1,95,914 92,394 728.019 2.775822 Tdtl Grant Monotone on 1.95.914 921394 28,019 2.78,327 Teta) general fixed asseR allwxted bylunaon lifi4 897 3,84829 7,042327 (3.131.334) 8,45,81 883,BBJ,880 CopWcd.In Progress 40.550.483 t1pT7,e8 (8,45.261) 31422,88 Total gosemmental funs capital aaseb $ 6%783.50 S 525.58 518,534.983 $(3,131,3M) § E 215.45.618 (a) Thus schaddle weaents only the capipl asset beienwa related u governmental funs, excluding lnfrasW Wre. Aaardrlgly, the capital a.. repotted in he Ildemal servion Mas are accounted fi an Me atop emotional Generally, the spiel assets of Inemal sarvim NMa are MtlWed as go menta an iN les 1n W sleemand of Wan its 111 11 1 1 i 1 1 1 1 1 STATISTICAL SECTION 1 1 1 1 1 1 1 1 1 1 (UNAUDITED) RESP QGT t INrEG • RAJ•. A m x n cirr of 40-e� STATISTICAL SECTION This part of the City of Allen's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, notes disclosures, and required supplementary information says about the Citys overall financial health. This information has not been audited by the independent auditor. Contents Table #s Financial Trends 1, 2,3 & 4 These tables contain trend information to help the reader understand how the Citys financial performance and well-being have changed over time. Revenue Capacity 5, 6, 7 & 6 These tables contain information to help the reader assess the Citys two most significant local revenue sources, the property and sales taxes. Debt Capacity 9, 10, 11 & 12 These tables present information to help the reader assess the affordability of the Citys current levels of outstanding debt and the Citys ability to issue additional debt in the future. Economic and Demographic Information 13 & 14 These tables offer economic and demographic indicators to help the reader understand the environment within which the Citys financial activities take place. Operating Information 15, 16 & 17 These tables contain service and infrastructure data to help the reader understand how the information in the Citys financial report relates to the services the City provides. Source: Unless othenvise noted, the information in these tables is derived from the comprehensive annual financial reports for the relevant year. 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Bf �!■ `. !#; RK f /K§ ] � :f `!! ^, m■k K f � q !! -!! `� !§■ yR= Ef ) \ FE . ;!� ,, ;., ;t2;§,! - «■: , .! \� mm +! t !! -\ *;' - .0@,! _\ E16 !!!_)W "d 15 , !!!\ !x� lit !.r| JE zz !•!!_...!!z• -[ Y3 a uEa iv m01 m °' E � N m o 3 LL LL LL LL j N Q LL d y R' y HZ > 1 U' W � Il y N li d O U i O m �mdd M 10N���IA���� fONNb e N O N NM M� emomi� M NI m NI �N ee Nt0 Vl��� y m rOy��� IM+1Cy (7O M N ' Qa1M� m N Mdd IOIN mN------- 1�dm r m N m y 0 N i O m I`p N a iq m N of N� IKON ' tm+lO N01 ONII M O N ��dd �rpnm M vmim �rn���ln� � N e ••� m N N N N N NI Y3 a uEa iv m01 m °' E � N m o 3 LL LL LL LL j N Q LL d y R' y HZ > 1 U' W � Il y N li d O U i O m **LEgp ECT * INTFC I R> CITY of AI�Ev CITY OF ALLEN, TEXAS SINGLE AUDIT REPORTS FOR THE YEAR ENDED SEPTEMBER 30, 2011 CONTENTS Page 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 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-733, AND ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SUMMARY OF PRIOR AUDIT FINDINGS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS weaver} 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 The Honorable Mayor and City Council City of Allen, Texas We have audited the accompanying financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Allen, Texas (the City), as of and for the year ended September 30, 2011, which collectively compromise the City's basic financial statements and have issued our report thereon dated March 5, 2012. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City's internal control over financial reporting as a basis for designing our auditing procedures 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 City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. 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 City's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free of 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. ANINDEPENDENT WEAVER AND TIDWELL LLP DALLAS MEMBER OF BAKER TILLY CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS 1 12221 MERIT DRIVE, SUITE 1400, DALLAS, Tx 75251 INTERNATIONAL WWW.WEAVERLLP.COM P.(972) 490 1970 F (972) 702 8321 City of Allen, Texas Page 2 This report is intended solely for the information and use of City Council, management, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. WEAVER AND TIDWELL, L.L.P. Dallas, Texas March 5, 2012 weaver® INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133, AND ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS The Honorable Mayor and City Council City of Allen, Texas Compliance We have audited the compliance of the City of Allen (the City) with the types of compliance requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended September 30, 2011. The City's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the City's management. Our responsibility is to express an opinion on the City's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A- 133, Audits of States, Local Governments, and Non -Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City's compliance with those requirements. In our opinion, the City, complied, in all material respects, with the requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended September 30, 2011. Internal Control Over Compliance The management of the City is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the City's internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on intemal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. ANINDEPENDENT MEMBER OF BAKER TILLY INTERNATIONAL WEAVER AND TIDWELL LLP WWWWEAVERLLPCOM DALLAS 3 12221 MERIT DRIVE, SUITE 1400, DALLAS, TX 75251 R(972) 490 1970 F (972) 702 8321 City of Allen, Texas Page 4 A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. Schedule of Expenditures of Federal Awards We have audited the financial statements of the City as of and for the year ended September 30, 2011 and have issued our report dated March 5, 2012. Our audit was performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB A-133 and is not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated, in all material respects in relation to the financial statements taken as a whole. This report is intended solely for the information and use of City Council, management, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. WEAVER AND TIDWELL, L.L.P Dallas, Texas March 5, 2012 CITY OF ALLEN, TEXAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED SEPTEMBER 30, 2011 I. Summary of the Auditor's Results: Financial Statements a. An unqualified opinion was issued on the financial statements. b. Internal control over financial reporting: Material weakness(es) identified? _Yes X No Significant deficiency(ies) identified that are not considered a material weakness? _Yes X None reported c. Noncompliance material to financial statements noted _Yes X No Me or Proorams d. Internal control over major programs: Material weakness(es) identified? _Yes X No Significant deficiency lies) identified that are not Considered a material weakness? _Yes X None reported e. An unqualified opinion was issued on compliance for major programs. f. Any audit findings disclosed that were required to be reported under Section 510(a) or OMB Circular A-133. Yes X No g. Identification of major programs: 97.115 ARRA - Assistance to Firefighters Station Construction Grant h. The dollar threshold used to distinguish between type A and type B programs. $300,000 i. Auditee qualified as a low-risk auditee. X Yes No 5 CITY OF ALLEN, TEXAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED SEPTEMBER 30, 2011 11. Findings Relating to the Financial Statements Which Are Required To Be Reported in Accordance with Generally Accepted Government Auditing Standards: NONE III. Findings and Questioned Costs for Federal Awards: NONE CITY OF ALLEN, TEXAS SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE YEAR ENDED SEPTEMBER 30, 2011 IV. Summary of Prior Year Findings: NONE CITY OF ALLEN, TEXAS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2011 U.S. DEPARTMENT OF JUSTICE Passed through Bureau of Justice Assistance Bulletproof Vest Partnership TOTAL DEPARTMENT OF JUSTICE U.S. DEPARTMENT OF ENERGY Direct Funding ARRA- Energy Efficiency and Conservation Block Grant Passed through State Conservation Office ARRA- Traffic Synchroniuhon or Replacement TOTAL DEPARTMENT OF ENERGY U.S. DEPARTMENT OF HOMELAND SECURITY Direct Funding ARRA-Assistance to Firefighters Station Construction Grants TOTAL DEPARTMENT OF HOMELAND SECURITY U.S. DEPARTMENT OF HOUSING & URBAN DEVELOPMENT Direct Funding Community Development Block Grant Community Development Block Grant Community Development Block Grant TOTAL DEPARTMENT OF HOUSING 6 URBAN DEVELOPMENT TOTAL EXPENDITURES G CFDA Number Grant Number Expenditures 16.607 n/a $ 6,068 6,068 81.128 DE-SC0003178 90,035 81.041 TR-AG2-2010 165,013 255,048 97115 EMW-2009-FC-02220R 940,292 940,292 14.218 B-08-MC48-0044 3,809 14.218 B -09 -MC -08-0044 3,282 14.218 B-10-MC48-0044 210,275 217,366 $ 1,418,774 CITY OF ALLEN, TEXAS NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2011 NOTE 1. GENERAL The accompanying schedule of expenditures of federal awards presents the activity of all applicable federal awards of the City of Allen, Texas (the City). The City's reporting entity is defined in Note 1 to the City's basic financial statements. NOTE 2. BASIS OF ACCOUNTING The accompanying schedule of expenditures of federal awards is presented using modified accrual basis of accounting, which is described in Note 1 to the City's basic financial statements. NOTE 3. RELATIONSHIP TO FEDERAL FINANCIAL REPORTS Amounts reported in the accompanying schedule may not agree with amounts reported in the related federal financial reports since the City used the modified accrual basis of accounting in preparing the schedule and the cash basis in preparing the federal financial reports. NOTE 4. CONTINGENCIES The City participates in several grant programs, which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs are subject to audit and adjustment by grantor agencies. Therefore, to the extent that the City has not complied with the rules and regulations governing the grants, refunds of any money received may be required, and the collectability of any related receivable at September 30, 2011 may be impaired. In the opinion of the management, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants. NOTES. NON-CASH ASSISTANCE During the fiscal year ended September 30, 2011 the City did not receive any non-cash federal assistance. At September 30, 2011 the City did not have any outstanding loans due to any federal agencies. CITY OF ALLEN, TEXAS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING YEAR ENDED SEPTEMBER 30, 2011 weaver REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAL AUDITING STANDARDS City Council City of Allen, Texas Allen, Texas We have audited the financial statements of the governmental activities, business -type activities, its discretely presented component units, each major fund and the aggregate remaining fund information of City of Allen as of and for the year ended September 30, 2011, and have issued our report thereon dated March 5, 2012. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered City of Allen's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Allen's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City of Allen's internal control over financial reporting. 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. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether City of Allen's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, 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. ANINDEPENDENT MEMBER OF BAKER TILLY INTERNATIONAL WEAVER AND TIDWELL LLP WWWWEAVERLLPCOM DALLAS 1 12221 MERIT DRIVE, SUITE 1400, DALLAS, TX 75251 P (972) 4901970 N972) 702 8321 City of Allen Page 2 This report is intended for the information of the Allen City Council, the audit committee, the administration, federal awarding agencies and pass-through entities, and is not intended to be used and should not be used by anyone other than these specified parties. Yours truly, WEAVER AND TIDWELL, L.L.P. Dallas, Texas March 5, 2012 2011: CITY OF ALLEN, TEXAS SCHEDULE OF FINDINGS AND RESPONSES SEPTEMBER 30, 2011 No findings in the Current Year.