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Comprehensive Annual Financial Report0 The City of Allen is proud to be a first-rate City in which to live, work and play. Allen was recognized in Money Magazine as one of the 'Best Places to Live in 2008" with a ranking of 20 out of 100 small cities. Allen now has a wide variety of places to dine, from fast food to gourmet. Millennium Technology Park, Allen's first technology park, is home to nationally recognized high-tech Shopping choices in Allen range from discount to couture. Watters Creek Allen has excellent neighborhoods. One of the newest, Montgomery Farm, was named one of the six "Hottest Neighborhoods" in Dallas by DHome at Montgomery Farm is a \ Magazine. unique, resort -style mixed-use development. The first of it's kind in Allen, the 52 -acre project incorporates a large creekside village green and interactive public art with a variety of retail options and restaurants, some with outdoor dining and water views. Once completed, the 1.15 million square foot development will also include office space and residential \lofts. Phase I of the retail development K opened in May 2008, Celebration Park offers such amenities as a sprayground, playground, soccer fields, baseball/ softball fields, basketball courts, and hike and bike trail. The City of Allen has 893 acres of parks designed for a wide variety of uses by our citizens. Allen has a great selection of office space. One example is Allen Central Park, which boasts Allen's first Class A office buildinq. Chase Oaks Golf Club, a 260 -acre course, features a newly renovated pavilion with a great view of the golf course and seating for up to 150 guests. Find out more about Allen, Texas at www.citvofallen.org and www.allentx.com. Cover layout by Carolyn Hardin CITY OF ALLEN, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT CITY OF ALLEN FISCAL YEAR ENDED SEPTEMBER 30, 2008 AS PREPARED BY THE FINANCE DEPARTMENT CITY OF ALLEN, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2008 TABLE OF CONTENTS II. FINANCIAL SECTION Independent Aud'itor's Report 1 A. MANAGEMENT'S DISCUSSION AND ANALYSIS 3 B. BASIC FINANCIAL STATEMENTS Government -Wide Financial Statements EXHIBIT Page 1. INTRODUCTORY SECTION Statement of Net Assets Letter of Transmittal i Certificate of Achievement vii Organizational Chart viii Elected Officials and Administrative Officers ix II. FINANCIAL SECTION Independent Aud'itor's Report 1 A. MANAGEMENT'S DISCUSSION AND ANALYSIS 3 B. BASIC FINANCIAL STATEMENTS Government -Wide Financial Statements Statement of Net Assets 1 19 Statement of Activities 2 20 Fund Financial Statements Governmental Funds Financial Statements Balance Sheet— Governmental Funds 3 22 Reconciliation of the Balance Sheet of Government Funds to the Statement of Net Assets 4 24 Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds 5 25 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 6 27 Proprietary Funds Financial Statements Statement of Net Assets — Proprietary Funds 7 28 Reconciliation of the Fund Level Statement of Net Assets of Proprietary Funds to the Government -wide Statement of Net Assets 8 29 Statement of Revenues, Expenses and Changes In Net Assets — Proprietary Funds 9 30 Reconciliation of the Statement of Revenues, Expenses and Changes in Net Assets of Proprietary Funds to the Statement of Activities 10 31 Statement of Cash Flows — Proprietary Funds 11 32 Component Units Financial Statements Statement of Net Assets — Component Units 12 33 Statement of Activities — Component Units 13 34 CITY OF ALLEN, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2008 TABLE OF CONTENTS C. REQUIRED SUPPLEMENTARY INFORMATION General Fund Schedule of Revenues, Expenditures And Changes in Fund Balances — Budget and Actual A-1 66 Notes to Required Supplementary Information 67 D. COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES EXHIBIT Page Notes To Financial Statements Note 1. Summary of Significant Accounting Policies 35 Note 2. Deposits, Investments and Investment Policies 43 Note 3. Receivables 46 Note 4. Capital Assets 47 Note 5. Long -Term Debt 51 Note 6. Interfund Transfers 59 Note 7. Retirement Plan 60 Note S. Water and Sewer Contracts 62 Note 9. Deferred Compensation Plan 63 Note 10. Risk Management 63 Note 11. Commitments and Contingent Liabilities 64 C. REQUIRED SUPPLEMENTARY INFORMATION General Fund Schedule of Revenues, Expenditures And Changes in Fund Balances — Budget and Actual A-1 66 Notes to Required Supplementary Information 67 D. COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Major Governmental Funds Comparative Balance Sheets - General Fund B-1 69 Comparative Statements of Revenues, Expenditures and Changes in Fund Balances — General Fund B-2 70 Comparative Balance Sheets — Debt Service Fund B-3 71 Comparative Statements of Revenues, Expenditures and Changes in Fund Balances — Debt Service Fund B-4 72 Budgetary Comparison Schedule — Debt Service Fund B-5 73 Comparative Balance Sheets — Facilities Agreement Fund B-6 74 Comparative Statements of Revenues, Expenditures and Changes in Fund Balances - Facilities Agreement Fund B-7 75 Comparative Balance Sheets — General Capital Projects Fund B-8 76 Comparative Statements of Revenues, Expenditures and Changes in Fund Balances — General Capital Projects Fund B-9 77 CITY OF ALLEN, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2008 TABLE OF CONTENTS EXHIBIT Page Comparative Balance Sheets — General Obligation Bond Fund B-10 78 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance — General Obligation Bond Fund 8-11 79 Non -major Governmental Funds Combining Balance Sheet C-1 81 Combining Statement of Revenues, Expenditures and Changes in Fund Balances C-2 83 Major Enterprise Funds Comparative Statements of Net Assets — Water and Sewer D-1 86 Comparative Statements of Revenues, Expenses and Changes in Fund Net Assets — Water and Sewer D-2 87 Comparative Statements of Cash Flows — Water and Sewer D-3 88 Comparative Statements of Net Assets — Solid Waste D4 89 Comparative Statements of Revenues, Expenses and Changes in Fund Net Assets — Solid Waste D-5 90 Comparative Statements of Cash Flows — Solid Waste D-6 91 Comparative Statements of Net Assets — Drainage D-7 92 Comparative Statements of Revenues, Expenses and Changes in Fund Net Assets — Drainage D-8 93 Comparative Statements of Cash Flows — Drainage D-9 94 Comparative Statements of Net Assets — Golf Course D-10 95 Comparative Statements of Revenues, Expenses and Changes in Fund Net Assets — Golf Course Fund D-11 96 Comparative Statements of Cash Flows — Golf Course Fund D-12 97 Internal Service Funds Combining Statement of Net Assets E-1 99 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets E-2 100 Combining Statement of Cash Flows E-3 101 CITY OF ALLEN, TEXAS F-5 107 COMPREHENSIVE ANNUAL FINANCIAL REPORT G-2 112 FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2008 F-6 108 TABLE OF CONTENTS TABLE Page EXHIBIT Page Discretely Presented Component Units Reconciliation of the Governmental Funds Statement of 1 Comparative Balance Sheets -Economic Development Corporation F-1 103 Reconciliation of the Governmental Funds Balance Sheet to the Fund Balances, Governmental Funds 3 Statement of Net Assets F-2 104 Comparative Statements of Revenues, Expenditures and Changes Assessed Value and Estimated Actual Value of Taxable Property 5 in Fund Balances F-3 105 Reconciliation of the Governmental Funds Statement of Principal Property Tax Payers 7 Revenues, Expenditures and Changes in Fund Balance F-4 106 Comparative Balance Sheets -Allen Community Development Corporation F-5 107 Reconciliation of the Governmental Funds Balance Sheet to the G-2 112 Statement of Net Assets F-6 108 Comparative Statements of Revenues Expenditures and TABLE Page Changes in Fund Balances F-7 109 Reconciliation of the Governmental Funds Statement of 1 116 Revenues, Expenditures and Changes in Fund Balance F-8 110 E. CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS Comparative Schedules by Source G-1 111 Schedule by Function and Activity G-2 112 Schedule of Changes by Function and Activity G-3 114 TABLE Page STATISTICAL SECTION Net Assets by Components 1 116 Changes in Net Assets, Last Three Fiscal Years 2 117 Fund Balances, Governmental Funds 3 119 Changes in Fund Balances, Governmental Funds 4 120 Assessed Value and Estimated Actual Value of Taxable Property 5 121 Direct and Overlapping Property Tax Rates 6 122 Principal Property Tax Payers 7 123 Ad Valorem Tax Levies and Collections 8 124 Ratio of Outstanding Debt by Type 9 125 Ratio of General Bonded Debt Outstanding 10 126 Direct and Overlapping Governmental Activities Debt 11 127 Pledged -Revenue Coverage 12 128 Demographic and Economic Statistics 13 129 Principal Employers 14 130 Full -Time Equivalent City Government Employees by Function/Program 15 131 Operating Indicators by Function/Program 16 132 Capital Asset Statistics by Function/Program 17 133 CITY OF ALLEN March 2, 2009 Honorable Mayor and City Council, City Manager, Citizens of Allen: The Comprehensive Annual Financial Report (CAFR) of the City of Allen, Texas (the City), for the fiscal year ended September 30, 2008, is submitted herewith. Management assumes full responsibility for the completeness and reliability of information contained in this report, based upon a comprehensive framework of internal control that is established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. Weaver and Tidwell, L.L.P. have issued an unqualified ("clean") opinion on the City of Allen's financial statements for the year ended September 30, 2008. The independent auditors' report is located in the beginning of the financial section of the CAFE. This letter of transmittal is designed to complement Management's Discussion and Analysis (MDSA) and should be read in conjunction with it. The City's MDBA can be found immediately following the independent auditors' report and provides a narrative introduction, overview and analysis of the basic financial statements. PROFILE OF THE GOVERNMENT The City of Allen, incorporated in 1953, is located in central Collin County, Texas, 25 miles north of downtown Dallas, on U.S. Highway 75 and currently occupies a land area of 26.31 square miles. The City's population was 82,318 at the end of the fiscal year and has grown to over 82,756 in January 2009. The City Council is comprised of the Mayor and six Council members, who enact local laws, determine policies and adopt the annual budget. The City Council appoints the City Manager, who has full responsibility for carrying out Council policies and administering City operations. City service departments provide a full range of services including police and fire protection, sanitation/solid waste service, water and sewer services, construction and maintenance of streets, recreational activities and cultural events. The financial reporting entity (the government) includes all funds of the primary government (i.e., the City of Allen as legally defined), as well as all of its component units. Component units are legally separate entities for which the primary government is financially accountable. Discretely presented component units are legally separate entities and not part of the primary government'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. The annual budget serves as the foundation for Allen's financial planning and control. Annual budgets are legally adopted for the General Fund and Debt Service Fund. 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. Public hearings are conducted to obtain taxpayers' comments. Prior to 305 CENTURY PARKWAY " ALLEN, TEXAS 75013-8042.214.509.4100 WEB:w .ciwofallen.ore" EMAIL: coaAcityofallen.ore October 1, the budget is legally enacted by the City Council through passage of an ordinance, setting the limit for expenditures during the fiscal year. Expenditure appropriations in the adopted budget are by department and may be amended during the year. The City Manager is authorized to adjust budgeted amounts; however, such revisions may not result in total expenditures exceeding budgeted expenditures without approval of the City Council. As part of each years budget development process, departments are required to update revenue and expenditure estimates for the current fiscal year. The re -estimated current year budget is submitted to the City Council along with the proposed budget for the next fiscal year. The revised budget is then used as a working budget for the last half of the current fiscal year. Throughout the year on-line reporting using an automated management accounting system is utilized by individual departments to review and compare actual versus budgeted amounts. The Finance department also reviews operating revenues and expenditures, recommending adjustments as needed. On a quarterly basis, the Finance department submits financial reports to the City Council. Formal budgetary integration is not employed for Special Revenue Funds, Proprietary Funds or Capital Project Funds. However, the City does adopt an annual budget for those funds for managerial control. LOCAL ECONOW During 2008, Allen was ranked #20 in Money Magazine as one of the best small cities in the United States to live in. Along with an ideal location just 12 miles north of Dallas on US 75, Allen's appealing demographics have spurred along record breaking growth. The population of approximately 82,318 is expanding with an estimated 2.8% growth. Estimated population at build out is 97,938. The quality of the Allen community attracts well-educated residents with a high level of spending power and disposable income. Also a population of 3.5 million in a 30 -mile radius makes Allen a prime location for restaurants, shopping centers and other retail venues. Allen is a community that offers exceptional housing, award-winning schools, a pro-business attitude and enthusiastic accommodation of industry. In addition to maintaining Allen's quality of life, the Planning and Development department along with the Allen Economic Development Corporation (AEDC) actively work to balance new residential growth with quality commercial developments. During 2008, two major retail developments, totaling approximately two million square feet, completed Phase I of their projects. Watters Creek at Montgomery Farms opened at Bethany and U.S. 75. As Allen's first "live, shop and play" development, this development offers first -in -class shopping and fine dining making it a central destination point in Allen. Also, the Allen Event Center with 6,300 fixed seats is under construction and scheduled to open in November 2009. It will host a Central Hockey League team with two sheets of ice, one for the hockey league and one for community use. The Event Center will host graduations, sport tournaments, and trade shows along with over 100 entertainment performances annually. Located in the 181 -acre Village at Allen commercial development at U.S. 75 and Stacy Road, the Allen Event Center will be surrounded by two parking garages as well as 1.8 million square feet of retail, restaurants, office and hotel space. The vision of the City is to create the highest quality of life in Allen. These developments achieve that goal as well as create regional attractions that bring people from surrounding communities and additional tax dollars to Allen. The following categories represent key factors that impact Allen's economic and financial success: Property Values - Assessed property values increased $734 million (12.8%) from the preceding year with $405 million in new property and a $329 million increase in the value of existing property. During the last five years assessed property value has increased 45.6% and property taxes account for 52.86% of the General Fund revenue. With a well-educated populace and average household income of $109,789, Allen enjoys an exceptionally high property tax collection rate. Through careful fiscal management, the City Council has been able to reduce the tax rate each year since 1994. Retail Sales - The General Fund's second largest revenue source is sales tax generated from a variety of businesses operating in the City of Allen. Despite the national economic downturn, new development such as Wetter's Creek at Montgomery Farm, The Villages at Allen and the large number of retailers and restaurants that opened in Allen, contributed to a 1.9% increase over the prior year resulting in revenue of $9.9 million in fiscal year 2007-08. Long -Term Strategic Planning - Long-term vision and strategic planning have been the catalyst for the City's transformation of shaping Allen into a community with big -city amenities and attractions while maintaining a hometown atmosphere. The City's annual budget process involves incorporating the goals and strategies identified by the City Council. Individual departments develop their goals and objectives in terms of these all-encompassing organizational goals. Priorities during the 2007-2008 budget year were: • Enhance neighborhood livability and safety. • Cultivate alliances and partnerships with agencies and govemmental units that affect Allen. • Improve regional mobility through transportation initiatives. • Signify, enhance and communicate Allen's identity to the region and the nation. • Systematically invest in public infrastructure. • Maintain operational excellence in City government services. • Provide economic investment that increases employment opportunity, the tax base, and provides desired goods and services for residents and contributes to the community character and identity. • Proactively work to protect and conserve water resources Strategic Financial Plan - An appropriate financial plan for the City of Allen requires many elements all working in concert with one another. Additional demands for "essential" City services such as police, fire, water, sewer, drainage and street improvement is anticipated. The Finance Department's management role will be to maintain and enhance financial plan elements and ensure the continued financial stability for the City of Allen. Financial Resource Planning - Strategic planning begins with determining the City's fiscal capacity based upon long-temr financial forecasts of recurring available revenues. Financial forecasts coupled with financial trend analysis techniques and careful reserve analysis will preserve the fiscal well being of Allen. Strategic planning is a critical element not only to meet long-term financial stability goals but also to determine City Council objectives that will require special financial planning to achieve success. Capital Improvement Program Planning - The City of Allen's Capital Improvement Program is a multi-year financial plan for the acquisition, expansion, or rehabilitation of infrastructure, capital assets, or productive capacity of City services. The City's operating and capital project budgets are closely linked. Revenues for the capital budget come from bond sales, development fees, intergovernmental revenue and current operating revenues. The Capital Improvement Program unlike the operating budget is a five-year plan that is reviewed and projects are repriontized as needed. Project budgets are used as a guide for projects, debt and other related budget planning. As such, future years are subject to change; in addition, debt issuance for many future projects is subject to voter approval. The City utilizes the project accounting and budgeting components of the financial software to assist with the monitoring aspect of the process. Monthly reports are provided to Council to keep them informed of the status of projects. Debt Management — All debt issuances are for the purposes of financing capital infrastructure or long-lived costly assets. Each debt issuance is evaluated against multiple policies addressing: debt service as a percent of operating expenditures, tax and revenue bases for the repayment of debt, the overall debt burden on the community, statutory limitations and market factors affecting tax-exempt interest costs. Sizing of the City's capital improvement program based on debt capacity in conjunction with conservatively estimated pay-as-you-go revenues help stabilize per capita debt and lower annual debt service costs to the City over the long-term. Cash Management Policies and Practices — The City of Allen's investment policy is to invest all City funds at the highest available interest rate, assuring that all monies are fully secured with emphasis on safety of principal, liquidity, yield, diversification, and public trust. State statutes authorize the City to invest in U.S. Government obligations, state investment pools, commercial paper, obligations of Texas and its agencies and fully collateralized repurchase agreements. The City utilizes a pooled cash concept in order to invest greater amounts of rash at one time and therefore receives more favorable interest rates. Insurance and Risk Management - The City has a comprehensive risk management program, including property, liability, safety, workers' compensation, health, dental and wellness. The safety incentive program promotes employee safety on the job and focuses on risk control techniques designed to minimize accident-related losses. In addition to the safety program's preventive measure, claims are closely monitored in order to minimize the City's liability exposure. Administration of these functions requires participation from the Risk Manager, outside legal counsel and consultants. To reduce health claim costs, the City promotes a wellness program to improve employee awareness of exercise, nutrition, and lifestyle choices. Procurement Planning- Under the Finance Department, the Purchasing division is responsible for the procurement of items required to operate and maintain the City. This division assists all departments in planning and maintaining the City's financial health, by establishing a uniform procedure for obtaining goods and services in an effective and timely manner in accordance with generally accepted purchasing procedures and legally mandated procurement standards. The City has contracted with DemandStar.com for the maintenance of an automated vendor list which categorizes each vendor by commodity codes for the specific goods or services offered by the vendor. Also, the City's Business Diversity Program encourages the participation of small, minority and women-owned businesses in the City of Allen procurement process. FISCAL YEAR 2008 HIGHLIGHTS Throughout the year progress of the Event Center and development of The Village at Allen were closely monitored by City staff. The Economic Development Corporation issued sales tax revenue bonds of $15.3 million to support public infrastructure improvements needed for the development of The Village at Allen and the Event Center. Also, through the issuance of sales tax revenue bonds of $32.8 million, the Community Development Corporation contributed to the funding of the Allen Event Center and construction of two parking garages. This was part of a unique funding agreement in which The MGHemng Group will contribute $40 million to the event center and related parking garages. Their contribution will be repaid from sales and property taxes generated by the development. To allow the City to support a higher level of service required by new development, 25 full time equivalent positions were added of which 11 were for public safety. An environmental health specialist and a fourth plans examiner were added to help meet the demand for commercial development. Two new positions in the Finance department were added to address the accounting and mandatory reporting requirements of economic agreements and two tax increment financing agreements. The City also updated its classification and compensation plan approved by Council in 2003. This was the 2n0 year of a 5-year IT Master Plan. The City's Information Technology Department reworked the entire core of the network, including crucial hardware upgrades that allow the provision of online services and expands the use of the City's technology based applications. To further enhance customer service a dedicated IT staff position was added at the library. Several large-scale projects completed include build out of a new data center at City Hall with installation of exterior conduit pathways to support cabling needs, remodeling the Public Safety server room, and adding a large capacity storage area network from EMC to centralize storage and backup needs. Also, half of the City's desktops were replaced with leased equipment and all were upgraded to 2007 Office suite applications. Efforts are underway to procure a new system-wide public safety application package. In the Public Safety area, a fourth ambulance was purchased and 6 new firefighter/paramedics were added. The Council adopted "insurance only' billing for ambulance service in December 2007, eliminating the out-of pocket costs residents used to pay. The Police department utilized budget savings and grant funding to purchase a mobile command center vehicle that will be used as a remote command post for special events, emergency situations and related incident needs. The vehicle is equipped with remote access that allows use of the internet, dispatch, incident monitoring and more. In spite of the fact that the General Fund undertook a budget adjustment of almost $200,000 due to rising electric costs, the City achieved a 19.6% reduction in electric use as part of the 5-year plan to reduce usage by 5 % each year. The Council's strategic goal for conservation remains a top priority as evidenced by the addition of a new Water Conservation Manager, investment in technology advanced water system leak detection equipment, record participation in the City's water conservation rebate programs resulting in utility bill credits totaling $70,900, and a superior water quality rating from TCEO's with no violations. Park projects funded by the Community Development Corporation included shade structures, fitness equipment, aquatic improvement, a water recirculation system, trail constructionfimprovements and renovation of facilities. Renovations to the golf course clubhouse were completed and will encourage public usage. Progress with city roadway improvements and traffic Flow continues with 40 traffic signals added throughout the city. Ramp reversals on U.S. 75 improved access to new development in Niter. General Obligation bonds in the amount of $10,185,000 were issued in 2008. Some of the projects the bonds will fund include a service center, a public safety training center, Fire Station #5 and Phase II of Celebration Park. Fiscally conservative management has continuously improved fund reserves in all major funds and allowed for cash financing of projects rather than issuing debt. The General Fund transferred $1.2 million to the Capital Project Fund and the Water and Sewer Fund transferred $1.84 million to the W&S Capital Project fund. In April 2008, Allen's financial strength led to bond rating upgrades. Standard and Poor's upgraded the City's General Obligation bond rating from AA to AA+, and the Water and Sewer bond rating increased from AA- to AA+. Then in February 2009 Moody's Investors Services upgraded its rating from A2 to Aa3 on the water and sewer bonds. 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, 2007. This was the tenth consecutive year that the govemment 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. Acknowledgements -- Many people are responsible for the preparation of this report, and for the maintenance of records upon which it is based. Appreciation is expressed to representatives of Weaver and Tidwell L.L.P. for their invaluable assistance in producing the final document and to Dana Murray, Accounting Manager, Tru Nguyen, Senior Accountant, and Kembedy Jones, Accountant who were instrumental in the completion of this report. We would also like to thank the City Manager's office and the members of the City Council for their interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner. Respectfully submitted, Kevin Hammeke Joanne Stoehr Finance Director Assistant Finance Director 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, 2007 A Certificate of Achievemeut for Excellence in Financial Re,orting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in govertunent accounting and financial reporting. s / P Nrzs U i W President Coccutivc Director CITY OF ALLEN ORGANIZATIONAL CHART Ali CITY OF ALLEN, TEXAS CITY OFFICIALS 77 Council Members Mayor Mayor Pro Tem Place 2 Council Member Place 3 Council Member Place 4 Council Member Place 5 Council Member Place 6 Council Member Y Stephen Terrell Debbie Stout Ross Obermeyer Joey Herald Robin L. Sedlacek Gary L. Caplinger Jeff McGregor Management Staff City Manager Peter H. Vargas Finance Director Kevin Hammeke Assistant Finance Director Joanne Stoehr Accounting Manager Dana Murray a�SVSCT +$ CITY OF A`�EN 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, 2008, 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, 2008 and the respective changes in financial position and cash flows, where applicable, thereof, for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated March 2, 2009 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 nere fore ri.:N reporting and compliance and the results of the testing, and not to provide an 1=Mm iIndPP opinion on the internal control over financial reporting or on compliance. That S.11,, I" report is an integral part of an audit performed in accordance with Government "'iOa"•T"W.1970 0 Auditing Standards and should be considered in assessing the results of our vT.as rmo 9 9 r972.7028321 audit. WB/W.WMFEEIDTWWELLMM AN INDEPENDENT MEMBER DE EMERTUB INTERNATIONAL 011l[6," Daus PDRTWORTN .0"'.. uN ANTDMD I INDEPENDENT AUDITOR'S REPORT WEAVER TIDWELL L L.R Honorable Mayor and Members of the City Council CERTIFIED P-BUI AC ... NT.NTB CITY OF ALLEN, TEXAS ..D C.NB.LE..n 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, 2008, 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, 2008 and the respective changes in financial position and cash flows, where applicable, thereof, for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated March 2, 2009 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 nere fore ri.:N reporting and compliance and the results of the testing, and not to provide an 1=Mm iIndPP opinion on the internal control over financial reporting or on compliance. That S.11,, I" report is an integral part of an audit performed in accordance with Government "'iOa"•T"W.1970 0 Auditing Standards and should be considered in assessing the results of our vT.as rmo 9 9 r972.7028321 audit. WB/W.WMFEEIDTWWELLMM AN INDEPENDENT MEMBER DE EMERTUB INTERNATIONAL 011l[6," Daus PDRTWORTN .0"'.. uN ANTDMD I CITY OF ALLEN, TEXAS March 2, 2009 Page 2 The accompanying management's discussion and analysis and budgetary comparison information on pages 3 through 18 and 66 and 67, respectively, are not a required part of the basic financial statements but are supplementary information required by the GASB. 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 2, 2009 MANAGEMENT'S DISCUSSION AND ANALYSIS A�SVpC7 } CITY OF CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2000 (UNAUDITED) As management of the City of Allen, Texas, we offer readers of the City's financial statements this narrative overview and analysis of rhe financial activities of the City for the fiscal year ended September 30, 2008. FINANCIAL HIGHLIGHTS • The assets of the City exceeded its liabilities (net assets) at September 30, 2008 by $529,226,077. Of this amount, $62,450,048 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. • The City's total net assets increased by $55,303,352. The increase is primarily a result of an increase in developer contributions due to growth in commercial development and an increase in the assessed property values. • The City's governmental funds reported combined ending fund balances of $53,531,405 at September 30, 2008, an increase of $10,184,553 from the prior fiscal year. • At the end of the fiscal year, the unreserved fund balance for the General Fund was $13,778,417 or 27% of total General Fund expenditures. • On a government -wide basis, the City's total liabilities increased by $4,283,436. The key factor for this increase is a result of the issuance of $10,185,000 in General Obligation Bonds. 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 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. CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2008 (UNAUDITED) In the government -wide financial statements, pages 19 through 21, 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. • 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-term 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, Facilities Agreement 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. The basic governmental fund financial statements can be found on pages 22 through 27 of this report. CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2008 (UNAUDITED) 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 28 through 32 of this report. Notes to the Financial Statements - Additional information that is essential to a full understanding of the data provided in the govemment-wide and fund financial statements is provided in the notes to the financial statements found on pages 35 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 found on pages 66 through 67 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 111 through 114. CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2008 (UNAUDITED) GOVERNMENT -WIDE FINANCIAL ANALYSIS As noted earlier, over time 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 $529,226,077 as of September 30, 2008. By far the largest portion of the City's net assets ($464,701,352 or 88%) reflects 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. Table 1 Net Assets Governmental Activities Business-tvoa Michas Total 208 2007 2Qd 2007 2Qd 3007 Current and other assets It 71.162.034 59,308,638 $ 31.099,109 26,826,739 $ 102,261.223 8.135,377 Capital assets 441,881.827 409,210816 110,693,620 99.095689 552,575.447 509.114505 Total Assets 5131043,861 468,527.454 141.792,809 126,722.428 654.83.670 595,249,882 Long -farm liabilities 97,589,061 91,983,878 15,40,511 16,839,720 112,993,572 108,823,590 Other liaindo.. 9,026.32T 8.550.309 3,590.694 3,953.250 12,617,021 12,503,559 Total Liabilities 106,615,388 10.534.187 18,995,205 20,]92,970 125,610,50 121.327.157 Netmsels: Invested in capital seefa, net of needed debt 369.080,938 333,40.275 95.620.414 83,485274 484]01,352 416,975,549 Reatdcted 1,151,814 1,09.990 922,863 336,842 2,074,677 11438.840 Unrestricted 3.19.721 33,402,98/ 26.254327 22.107.342 62.450048 55,510.336 Total Net Assets $ 406,428,473 367,993,267 $ 122.797.604 105,929,450 $ 52922.077 473,922,725 An additional portion of the City's net assets, $2,074,677, represents resources that are subject to external restrictions on how they may be used; the remaining balance of $62,450,048 may be used to meet the government's ongoing obligations to citizens and creditors. Analysis of the City's Operations - As of September 30, 2008, the City had an overall increase in net assets of $55,303,352 for the government as a whole which represents $38,435,206 for governmental activities and $16,868,146 for business -type activities. The increase is due to the continued economic development, developer contributions, and a 12.8% increase of total assessed property values from the preceding year. Assessed property values have increased 45.6% over the past five years. A summary of the City's operations for the year ended September 30, 2008 is provided in Table 2. 67 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2008 (UNAUDITED) Revenues: Program Revenues: Charges for services Operating grants and contributions Capital grants and contributions General Revenues PmpeM taxes Sales tax Franchise taxes Hotel motel taxes Oder ruse Interest semi.. Gain on ..Is of wpilal as3et Miscellaneous Total Revenues E,anses Genteel 9ovemment Public eatery Public sears. Culture and recreation Community development Interest on long-term deal Water and sewer Enmronmental waste sem ea Drainage GoOcourse Tons bpenses Increase in net assets babre transfers Tranefam Increase in net assets Net assets. beginning of year Net assets, and of year 112,798,958 02.364221 48.140.395 33.608396 180939353 115,970,617 13,416,124 Table 2 13.466,124 11,171,912 23.438,274 28718,946 23,438,274 Changes in Net Assets 14,508,426 13.]]8,80 14,508426 39vernmenwl Activities Business -Noe Activities Tstal 4,557,090 29 2007 2008 2007 zQQ@ Tg z $ 0,74T,558 6,543,584 32,135,903 26,37,817 40,683,471 32,851,381 2,]62,51] 2767,412 2,762,517 2,767,412 42,823,515 18,898.468 14,01.4M 6,79,089 57,304970 24,925,555 37,261,411 32,922,229 37,281,411 32,922,229 10,048,50 9,70,380 10,018,534 97M,380 5,530,732 4,931,006 5,530]32 4,931,008 719,039 673,383 719.039 673,383 11900,081 1,893,830 1,908001 11893,630 2,437,926 3,011,145 775,413 1169,510 3,213,339 4,280,05 57,979 77,930 667,624 725,603 77,930 112,798,958 02.364221 48.140.395 33.608396 180939353 115,970,617 13,416,124 11,171,912 13.466,124 11,171,912 23.438,274 28718,946 23,438,274 20,718,846 14,508,426 13.]]8,80 14,508426 13,178,850 16,908568 14,912,287 16,980560 14,912,287 4,557,090 2,031,522 4,557.090 2.031,72 4,219,MB 4,040,682 16.310,022 2,718,588 4,219,BM 4.040,162 21,37,015 19,463,383 21,37,015 19,483,30 4,433,560 3,921,OM 4,433,00 3,921,060 710,711 705,503 710,711 705,503 1,964.37 1,803,174 1,964.367 1,803,174 77,90 340 68054199 28 416163 25 893120 105 838 001 91,947,319 35,628,610 2,006,596 16.310,022 2,718,588 19,674,742 (2,008,5961 7,713,276 12,718,5801 55,303,352 24,023,290 38,438208 19,028,610 16,868,146 4,994,688 55,303,352 24,023,290 367,993,267 340,964,657 105.929.40 100,934770 473,922725 449,899,427 $ 406,428 473 36],993,267 122,77,604 105,929,458 949,22610]7 473,922,725 7 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2008 (UNAUDITED) Governmental activities Revenues — The following chart visually illustrates the City's revenue by sources for governmental activities. Revenue by Source -Governmental Activities Capital Grants and Contributions $42,823,515 37% Operating Grants & Contributions $2,762,517 2% Transfers $2,806,596 2% Other, $5,626,681 5% Charges for services 1$8,747,568 / 8% 32% �,- Sales Tax $10,046,534 Franchise Taxes 9% $5,530,732 5% Revenues for the City's governmental activities increased by $30,434,737 or 37%. Major components of revenue decreases/increases are explained as follows: • Capital grants and contributions increased by $23,927,029 from the prior year as a result of new commercial growth and street construction being completed. • While the City was able to lower the property tax rate from $0.558 to $.0557 per $100 valuation, the property tax base and assessed property value increased on the average single family home by 6.4%. • Sales taxes increased due to an improved economic outlook for sales in Allen from increased commercial development and population growth. • Franchise taxes increased due to rising costs of energy when compared to the previous year. • Charges for services increased by 34% due to roadway impact fees and commercial permits associated with new commercial development; however, due to incentive agreements generated from the commercial developments, the fees were refunded and are shown as expenses. • Investment earnings decreased as a result of lower interest rates on investments due to the economic downturn. CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2008 (UNAUDITED) Expenses for governmental activities increased by $11,116,149 or 16.8%. Increases were due to increased personnel and maintenance costs for new facilities, and an increase in service demands caused by population growth and additional commercial developments. Major components of increases are explained as follows: • Staffing levels increased by 21.50 full time equivalent positions in order to allow the City to support a higher level of service required by new development within the City and to provide the citizens of Allen a safe and secure environment. • Expenditures include an update to the City's classification and compensation plan. • The second year of the five-year IT Master Plan resulted in the replacement of phases 1 & 2 of all desktop equipment with a lease program, installation of a generator to support the new data center in City Hall, installation of a conduit support system for outside plant cabling to support the data center and the purchase of two Storage Area Networks for cross network backup and data support. • As a result of the addition of new staff, as well as increased medical claims, the cost the City contributes for health insurance premiums increased by 8%.. • Street construction consisted of the widening of Exchange Parkway from Twin Creek to State Highway 121 and ongoing street improvements on Angel Parkway. The General Fund transferred a total of $754,155 to the Golf Course Fund to cover operating expenses and to renovate the clubhouse. The following chart illustrates the relationship between expenses and program revenues for governmental type activities. $25,000,000 $20.000.000 $15,000,000 WAD, 000 $5,00,000 Expenses and Program Revenues-Govemmental Aeldvldes den PyN° CW". Co -obl, Im". sy°M1 a,dRe ""zniryp° arky 8,,4 M1g01 cre�ro reb°�� °'4lgrl„p°D f CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2008 (UNAUDITED) Business -type activities — Revenues — The following chart visually illustrates the City's revenue by sources for business - type activities. Revenue By Source - Business-TypeAcdvides Business -type activities revenues increased by $14,533,999 or 43%. Major components of the decreases/increases are as follows: • Charges for services for business -type activities increased by $5,828,086 or 22%. Water sales increased by 31.5% and sewer charges increased by 16.6% from the previous year. • Capital contributions for water and sewer lines and impact fees increased by 142% due to commercial growth. • Due to revenue shortfalls and needed clubhouse repairs the Golf Course Fund required transfers from the General Fund of $754,155. • Interest earnings decreased from $1,269,510 in FY2007 to $775,413 in FY2008 as a result of the continued decline of rates on investments during FY2008. 10 Capital Grants 8 Contnbulions Charges for 14,581,455 services 30% 32,135,903 B7% e ko Other Revenue 1,443,037 3% Business -type activities revenues increased by $14,533,999 or 43%. Major components of the decreases/increases are as follows: • Charges for services for business -type activities increased by $5,828,086 or 22%. Water sales increased by 31.5% and sewer charges increased by 16.6% from the previous year. • Capital contributions for water and sewer lines and impact fees increased by 142% due to commercial growth. • Due to revenue shortfalls and needed clubhouse repairs the Golf Course Fund required transfers from the General Fund of $754,155. • Interest earnings decreased from $1,269,510 in FY2007 to $775,413 in FY2008 as a result of the continued decline of rates on investments during FY2008. 10 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2008 (UNAUDITED) Expenses for business -type activities increased by $2,572,533 or 10%. The increases were primarily a result of expansion of waterlines, expansion of Custer Road pump station #3, renovation of Hillside Water Tower, and sewer replacement in the Allenwood subdivision. The following chart illustrates the relationship between expenses and program revenues for business -type activities: Expenses and Program Revenues- Buslness4typeAc8vl8es no,aoa= sMm fza,am,000 515000,000 510m = ZMAD We &S.r S.WWase Dwape Gar Course FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS Governmental funds The focus of the City of Allen's governmental funds is to provide information on near-term 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 $53,531,405, an increase of $10,184,553 in comparison with the prior fiscal year. Approximately 90% or $48,105,776 constitutes unreserved fund balances, which are available for spending at the government's discretion. The remaining fund balances are reserved to indicate that they are not available for new spending because the funds have already been committed to pay for encumbrances ($3,796,591), debt service ($1,627,912), and prepaids ($1,126). The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the total unreserved fund balance was $13,778,417. The total fund balance increased by $408,832 more than the final revised budget. Contributing to this variance was revenue greater than the revised budget by $351,170 due to higher than anticipated revenue from all sources except sales tax, licenses, permits and fees, court fines, and investment earnings. Current 11 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2008 (UNAUDITED) operating expenditures had savings of $1,803,339 allowing an additional $492,000 to be transferred to the Golf Course Fund, $375,941 to be transferred to the Capital Projects Fund for financing of the I.T. Master Plan, and $832,059 transferred to the Capital Projects Fund for self financing of other capital projects. The fund balance increased from $13,373,243 to $13,831,447 resulting in a positive effect on the operational expenditure reserve for the 2007- 2008 budget. The Debt Service Fund balance of $1,627,912, all of which is reserved for the payment of debt, increased from the prior year fund balance by $227,927. The fund balance meets the FY2009 10% of annual debt service requirement of $955,091 and is approximately the amount projected in the City's long range financial plan. The Facilities Agreement Fund records the use of funds received from builders and developers on specific facility agreements. At fiscal year-end revenues exceeded expenditures by $209,830 resulting in the fund balance increasing from $3,169,516 to $3,379,346. The net increase was mainly a result of gifts and contributions. The major expenditure for the fund was widening of Exchange from Twin Creek to State Highway 121. The General Capital Projects Fund provides information on cash financed capital projects. During the fiscal year, the fund balance increased by $586,462 from $7,830,305 to $8,416,767. Revenues and transfers from other funds totaled $7,330,339 which included $1,350,000 from the County for the widening of Exchange, $209,343 from the State of Texas for signal upgrade and maintenance, and $1,764,397 transferred in from other funds to cash finance capital projects. Total expenditures were $6,723,877 and consisted of street improvements at Angel Parkway, widening of Exchange, street and alley repairs, construction of the I.T. Data Center, and street repair on Jupiter Road due to sewer line replacement. The General Obligation Bond Fund had an ending fund balance of $21,855,834, an increase of $8,621,112 from the prior year. Revenues and other financing sources included interest earnings and $10,185,000 of new issued bonds. Expenditures totaled $2,099,726 which included $118,401 to fund construction of the Arts of Collin County project. 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, $21,293,864, Solid Waste, $2,550,010, Drainage, $1,098,619, and Golf Course, $440,762. The total change in net assets for the funds was $16,328,097, $217,799, ($187,182), and $344,449, respectively. All funds, except the Drainage Fund, had an increase in net assets as a result of capital contributions, transfers from other funds, and operating revenues. A budgeted drawdown of reserves in the Drainage Fund was for funding half of the cost of a vector truck shared with the Water and Sewer Fund and for self funding of capital projects. The Water and Sewer Fund contributed $1,840,000 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. 12 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2008 (UNAUDITED) 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 FY2007-08, the City Council amended the budget for the General Fund one time. Small adjustments made during FY2007-08, increased the original revenue budget by $776,932 and increased the expenditure budget by $946,812. At the end of FY2008 revenues exceeded the revised budget by $351,170. Contributing to the variance was higher than anticipated property tax revenues due to rollback taxes. Revenues for investment earnings and sales tax came in lower than the revised budget due to the lower than anticipated interest rates and continued economic down turn. Positive expenditure variances were due to salary savings from open staffing positions and prudent conservative management by city staff. The net result of positive revenues and expenditure budget variances allowed the General Fund to transfer out an additional $1,700,000 representing an additional $492,000 to the Golf Course Fund for clubhouse repairs and operating costs and $1,208,000 to the General Capital Projects Fund for funding of the I.T. Master Plan and to cash finance additional capital projects. The resulting General Fund balance increased $458,204 which was $408,832 more than budgeted and increased the funds operational expenditure reserve from the budgeted 88.2 days to 94.7 days, well above the City's financial policy of 60 days. CAPITAL ASSETS The City's investment in capital assets for its governmental and business -type activities as of September 30, 2008, amounts to $552,575,447 (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 80% of the capital assets are governmental and 20% are business -type activities. The total increase in investment in capital assets for the current fiscal year was 8.5%, out of which 75% was governmental and 25% was business -type activities. Table 3 capital Assets at Year-end Net of Accumulated Depreciation Gc remmental Activities Business -type Activities Total 2008 2007 2008 2007 2008 2007 Land $ 111,362,169 103,304,006 $ 4,048,296 3,380,635 $ 115,410,4645 106,684,641 Buildings 43,752,648 44,693,164 43,752,648 44,693,164 Towers, tanks and pump stations 93,229,167 84,221,962 93,229,167 84,221,960 Other Improvements 257,345,696 245,244,734 429,620 441,911 257,775,317 245,686,648 Fumtiure and rndures 564,227 792,169 8,504 11,035 572,733 803,201 Vehicles 3,657,307 3,269,854 26,840 44,128 3,684,146 3,313,982 Machinery and equipment 1,542,711 1,079,668 1,650,423 1,626,246 3,193,132 2,705,916 Construction in progress 23,657069 10,835,221 11,300,770 10,169,772 34,957,839 21,004,993 Total $ 441,881,827 409,218,816 $ 110,693,620 99,895,689 $ 552,575,445 509,114,505 13 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2008 (UNAUDITED) Governmental -type capital improvement projects and developer contributions during the current fiscal year included the following: Projects • Developer contributed right of way and park land $ 26,100,851 • Event Center Parking Garage 6,650,000 • Event Center Infrastructure 3,835,860 • Heritage Guild Historic Village 552,441 • Street construction: Exchange, Twin Creek-SH121 1,588,236 Angel Parkway 746,701 Business -type capital improvement projects and developer contributions during the current fiscal year include the following: Projects • Developer contributed water mains and sewer lines $ 12,077,569 • Allenwood Sanitary Sewer 1,031,556 • Custer Road Pump Station Expansion 307,639 • Hillside Water Tower 179,610 Additional information on the City's capital assets can be found in Note 4 on pages 47-51 of this report. DEBT ADMINISTRATION At September 30, 2008, the City (including component units) had long-term debt totaling $165,952,898 as shown in Table 4. Of this amount $112,993,572 is the total bonded amount of government and business activities and $52,959,325 is the component units. The gross bonded debt includes: $88,920,000-G.O. bonds backed by the full faith and credit of the government, $5,110,000 -Certificates of Obligation backed by taxes and revenue generated from the golf course, $15,035,000 -secured solely by water and sewer revenue and the component units total of $53,265,000 secured by future sales tax revenue. Other long-term debt relates to compensating absences, notes payable, debt refunding and issuance, premiums, and discounts. Total debt for governmental activities increased by 6.1 % and business -type activities decreased by 8.5%. In May 2008, the City issued $10,185,000 in General Obligation Bonds resulting in a net indebtedness increase of $4,169,974. At fiscal year end, the City had authorized but un- issued direct general obligation bonds totaling $75,255,000. Both component units issued sales tax revenue debt to support public infrastructure improvements and construction of the new event center. The Allen Economic Development Corporation issued $15,335,000 in bonds secured by 4A sales tax revenue. Prior to this issue, the AEDC did not have any long-term outstanding debt. The Allen Community Development Corporation issued $34,450,000 of new revenue bonds resulting in a net indebtedness increase of $31,087,106. Outstanding long-term debt totals $38,275,545 and is secured by 4B sales tax revenue. 14 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2008 (UNAUDITED) General Od,i Bonds s COM U of Cdl3atlon Bonds Rayons"¢ Ba Ms Psi Szlas Taa Rarenue Bonds Tood Bons Bonded CeM Omer lang-Tann Debt caaoanoamd Ad eenoi s Notes Peyants Rosi Rwn um 4 Dieaunls Total (241nor Loss, T. - Not 3559061 335311718 369.511 229720 (3055]5) 330$8 4832.498 3.62].03] T..1 3 9],589,061 91,989.878 15.401.511 16.83)1 5 M.325 7.180138 $ 155.852,889 118,012.09] Tables owbnding oaM at resi Grvemnrenlal Activities Business type ActiNties Cannonent Units 2000 297 M 2497 2444 2497 84920.000 83.310," 2444 2947 $ 68,9.41000 83,310,003 6,110,000 5,310,p30 Bond Ratings Moody's 5,110,000 5,310,003 Service Poor$ 150]5.000 16.610.OW Aa2 AA+ lo,m,000 16,610,003 Al 53,285.000 ].t56.W] M,M, 00 7,1Maw 91033000 11000 15035000 16.610,000 53285000 7155090 181 112.3,003 2,932338 2,619,513 320,763 2.4,311 3,253,101 3$?Di 151,103 76.272 116.]5] 11.203 2]1.1]0 12].4]5 (Uos 03) (1498,]18) (73,010) 0`71"1 1139.421) 11318921 0 53.2 ) O.Q7.6589 1515123 1,536,812 1989 (1H]) 118685f) 11i 1,351.458 1,700.368 The City's bonds are insured resulting in AAA ratings. The underlying credit ratings from both Moody's Investors Service and Standard and Poor's for the City's General Obligation Bonds, Community Development Corporation's Sales Tax Bonds and Water and Sewer Revenue Bonds are shown below in Table 5. Additional information on the City's long-term debt can be found in Note 5. General Obligation Bonds Certificates of Obligation Water & Sewer Revenue Bonds Revenue Bonds Table 5 Bond Ratings Moody's Investors Standard & Service Poor$ Aa2 AA+ Aa2 AA+ A2 AA+ Al 15 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2008 (UNAUDITED) ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES Through September 30, 2008, Allen has continued to expand as a result of new development and population growth. Focused on having a balanced community, the City takes a proactive approach to economic development, both with its business recruitment and retention, as well as with its variety of housing options. Although the rate of residential growth has slowed due to current national economic conditions, the City budgeted to issue 450 single family permits in FY2009, as several residential developments are in various stages of completion. Current population of 82,318 is expected to reach 97,938 at buildout in the next several years. Commercial growth is expected to continue at a steady pace in the near term, primarily due to two major mixed use developments currently underway. Watters Creek at Montgomery Farm and The Village at Allen adds approximately 2 million square feet of retail, restaurants, and office space, several hundred residences, a hotel, and a 6,300 seat event center. In addition, the City has earned a reputation as a premier location for high-tech manufacturing, assembly/distribution facilities and corporate headquarters. The reasonable cost of living, a highly rated school district and home prices below the national average continue to make Allen an attractive area for businesses to locate. The various infrastructure and operational needs of the City have resulted in the annual budget increasing from $77.9 million in FY2004, to $135.9 million for FY2009 for all funds combined. The certified assessed property value for 2008-2009 equates to an overall increase of approximately $570 million (8.8%) from the preceding year. This has afforded the opportunity for the City to reduce the property tax rate for the sixteenth straight year from $0.557 to $0.556 per $100 valuation. Of the total tax rate, $0.423695 is dedicated to operations and maintenance in the General Fund, and $0.132305 is dedicated to general obligation debt service. Ad Valorem Taxes are the City's largest revenue source and will contribute $29.9 million or 51.85% of the General Fund budgeted revenues in FY2009. Appraisal values are established by the Central Appraisal District of Collin County, and collections are certified at 100% by the Collin County Tax Assessor -Collector's office. Due to new development, the budget also reflects a 20.9% increase in sales tax from the revised 2007-2008 budget. The General Fund ended FY2007-2008 with an increase to fund balance of $458,204. This brings the total fund balance to an equivalent of 94.7 days of operating expenditures, which exceeds the budgeted 88.2 days, and is well above the City's financial policy of 60 days. The 2008-2009 General Fund expenditure budget reflects a 10% increase from the revised 2007- 2008 budget. The 2008-2009 budget demonstrates a significant commitment to provide public safety to the community and to operate and maintain each of the public facilities and the increasing staffing levels they require. City-wide staffing levels will increase by 10.55 full-time equivalent positions (including 8.05 in the General Fund) to address public safety, communication and marketing efforts, and the implementation of a debt collection improvement program in the Municipal Court. The budget also includes a slight increase in TMRS funding to reduce the Citys unfunded liability. Also included in the General Fund budget is $1.15 million for the second year of a five year Information Technology Master Plan. CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2008 (UNAUDITED) In accordance with the City's 2005 water and sewer rate study, the Water and Sewer Fund budget includes a rate increase effective February 1, 2009. 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 FY2009 budget is a rate study update and $2.19 million to cash finance water and sewer capital projects. The Water and Sewer Fund is expected to finish fiscal year 2009 with approximately $7.8 million in working capital reserves, which exceeds the bond covenant requirements of 1.2 times the size of the annual debt service obligations. 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 demands when the City reaches build out. The Solid Waste Fund represents a stable operational service and staff has expanded educational outreach programs and prepared grant requests for future grant cycles. No Solid Waste Fund fee increases are planned in 2009. The Drainage Fund is supported by drainage fees on utility bills and development inspection fees. The fund has reached a turning point where, despite increasing drainage fee revenues, total revenues are falling because development activities are diminishing. As a result, for the fund to continue to support the array of activities it has in the past, a 9-1% increase in drainage fees is included in the 2008-2009 budget. The Parks and Recreation Special Revenue Fund continues to record only revenue generating activities and related costs. Operation and maintenance expenditures for facilities are budgeted in the General Fund. It is the goal of the City to have all revenue generating programs be 100% self sustaining. The City finished the fourth full year of operating the Chase Oaks Golf Course. According to figures released by the National Golf Foundation, there was very little growth in annual golf rounds across the country. In fiscal year 2007-2008, the City subsidized the course with approximately $454,155 to cover revenue shortfalls, and $300,000 for clubhouse repairs. The budget for 2008-2009 reflects a transfer from the General Fund in the amount of $399,532. Like many golf facilities and businesses, the Golf Course continues to face many challenges with the current national economic conditions. City staff continues to make a concerted effort to monitor the expenditures on a daily and weekly basis and works to steadily improve its facilities and programs available to the public. Since healthcare costs continue to rise, the 2008-2009 Risk Management Fund budget includes an 8% budgeted increase to cover projected costs for medical, prescriptions, dental and vision claims, immunizations and physicals for employees and claims handling administration. Premium costs for employees were not increased due to a prudent Risk Management Fund balance and positive trend in claims history. The City contributes about 77% of the cost of the health and dental insurance premiums. The Worker's Compensation and Property and Liability components of the fund also continue to have positive claims histories. Despite current national economic conditions, the City of Allen's budget has been positively impacted by growth and by conservative fiscal management. The 2008-2009 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. 17 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2008 (UNAUDITED) Request for Information 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)5094626. W BASIC FINANCIAL STATEMENTS *pEgFECr * INrFOle I'r �� Y Clrr OF p``EN n CITY OF ALLEN, TEXAS EXHIBIT 1 STATEMENT OF NET ASSETS AS OF SEPTEMBER 30. 2008 LIABILITIES Accounts payable $ PRIMARY GOVERNMENT $ 1,650,835 $ GOVERNMENTAL BUSINESS -TYPE 1,391,638 COMPONENT ACTIVITIES ACTIVITIES TOTAL UNITS ASSETS 53,681 Accrued interest Payable Cash and cash equivalents $ 29,796,116 $ 12,733,441 $ 42,529,557 $ 27,243,698 Investments 37,271,170 10,232,556 47,503,726 5,361,389 Receivables (net of allowance for uncollectibles) 4,307,906 4,721,406 9,029,312 1,873,684 Internal balances (871,072) 871,072 - - Prepaid items and other assets 1,126 11,050 12,176 6,298 Inventories - 193,378 193,378 - Restrictetl rash and cash equivalents - 2,194,332 2,194,332 1,186,057 Capital assets. Non -depreciable 135,019,238 15,349,066 150,368,304 16,961,924 Depreciable (net of depreciation) 306,862.589 95,344,554 402,207,143 1,774,914 Defemed charges 656,788 141,964 798,742 928,308 TOTAL ASSETS $ 513,043,861 $ 141,792,809 $ 654,836,670 $ 55,336,272 LIABILITIES Accounts payable $ 3,665,068 $ 1,650,835 $ 5,315,903 $ 1,391,638 Accrued liabilities 3,389,026 299,906 3,688,932 53,681 Accrued interest Payable 529,392 236,469 765,881 220,432 Customer deposits - 1,403,484 1,403,484 - Uneamed revenue 1,332,003 - 1,332,003 - Retainage payable 110,838 - 110,838 71,305 Nan -current liabilities: Due within one year 7,021,703 1,305,157 8,326,860 1,285,000 Due in more than one year 90,567,368 14,099,354 104,666,712 51,674,325 TOTAL LIABILITIES $ 106,615,388 $ 18,995,205 $ 125,610,593 $ 54,696,381 NETASSETS Invested in capital assets (net of related debt) 369,080,938 95,620,414 464701,352 (34,222,467) Restncted for debt service 1,151,814 922,863 2,074,677 - Unrestricted 36,195,721 26,254327 62,450,048 34,862,378 TOTAL NET ASSETS $ 406,428,473 $ 122,797,604 $ 529.226.077 $ 639,891 The Notes to Financial Statements are an integral part of this statement. W, CITY OF ALLEN, TEXAS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2008 Program Revenues The Notes to Financial Statements are an integral part of this statement. 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 K11 NET ASSETS, beginning of year NET ASSETS, end of year Charges for Operating Grants Capital Grants Expenses Services and Contributions and Contributions Functions/Program Activities PRIMARY GOVERNMENT: Governmental Activities: General government $ 13,466,124 $ 508,964 $ - $ Public safety 23,438,274 1,274,374 588,858 - Public works 14,508,426 194,223 - 42,823,515 Culture and recreation 16,980,568 2,473,738 517,682 - Community development 4,557,098 4,296,269 1,655,977 - Interest on long-term debt 4,219,858 Total governmental activities 77.170,348 8.747.568 2.762.517 42.823.515 Business -type Activities: Water and sewer 21,357,015 24,589,440 - 14,561,455 Environmental waste services 4,433,560 4,975,594 - - Drainage 710,711 1,016,208 - - Golf Course 1.964.367 1.554,661 Total business -type activities 28,465,653 32.135.903 14,561,455 TOTAL PRIMARY GOVERNMENT $ 105.636.001 $ 40.883.471 $ 2.762.517 $ 57.384.970 COMPONENT UNITS: Allen Economic Development Corporation $ 10,081,681 $ - $ - $ - Allen Community Development Corporation 14.411.918 TOTAL COMPONENT UNITS S 24.493.599 $ $ $ The Notes to Financial Statements are an integral part of this statement. 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 K11 NET ASSETS, beginning of year NET ASSETS, end of year EXHIBIT 2 Not (Expense) Revenue and Changes in Net Assets Primary Government Governmental Business - Type COMPONENT Activities Activities TOTAL UNITS $ (12,957,160) $ - $ (12,957,160) $ - (21,575,042) - (21,575,042) - 28,509,312 - 28,509,312 - (13,989,148) - (13,989,148) - 1,395,148 - 1,395,148 - (4,219,858) 1,900,081 (4,219,858) 1,900,081 (22,836,748) 2,437,926 (22,836,748) 3,213,339 907,509 - 17,793,880 17,793,880 - - 542,034 542,034 - - 305,497 305,497 - (2,806,596) (409.706) (409,706) 61.271.954 (1,363,559) 18, 231.705 18.231, 705 38,435,206 16,868,146 $ (22.836.748) _$ 18.231.705 $ (4.605.0431 $ (10,081,681) (14,411,918) $ $ $ $ (24.493.5991 $ 37,261,411 $ - $ 37,261,411 $ - 10,046,534 - 10,046,534 9,936,265 5,530,732 - 5,530,732 - 719,039 - 719,039 - 1,900,081 - 1,900,081 - 2,437,926 775,413 3,213,339 907,509 57,979 667,624 725,603 - 511,656 - 511,656 89,491 2.806,596 (2,806,596) 61.271.954 (1,363,559) 59.908.395 10.933,265 38,435,206 16,868,146 55,303,352 (13,560,334) 367,993.267 105,929,458 473.922,725 14,200.225 $ 406.428.473 $ 122.797.604 $ 529.226.077 $ 639.891 21 CITY OF ALLEN, TEXAS BALANCE SHEET GOVERNMENTALFUNDS SEPTEMBER 30,2008 The Notes to Financial Statements are an integral part of this statement. 22 GENERAL DEBT FACILITIES CAPITAL GENERAL SERVICE AGREEMENT PROJECTS ASSETS Cash and cash equivalents It 191,843 It 1,674,SW It 2,584,248 It 5,802,769 Investments 14,275,913 2,244,034 4,238,837 Receivables, not of allowances for uncollectibles'. Ad valorem taxes 171,074 53,294 - - Sales door 1,836)84 - - - Accounts receivable - - - - Accrued interest 125,764 - 14,634 32,250 Other 1,518,2W - - Special assessments - - - 187,557 Prepaid items 1,126 TOTAL ASSETS It 18,119,7]0 $ 1,]2],834 $ 4,842,916 $ 10,061,513 LIABILITIES AND FUND SALANCES LIABILITIES Accounts payable $ 2,198,805 It - $ 158,42 $ 853,431 Accrued liabilities 1,918,44 - - 761,532 Interest payable - 46,628 - - Ranieri payable - - 70,000 29,783 Deferred revenue 171,074 53,294 1,235,128 TOTAL LIABILITIES 4,288,323 99.922 1.463.570 1,644.7W FUND BALANCES Reserved for'. Encumbrances 51,904 - 124,999 481,802 Prepaid items 1,126 - - - Debtservice - 1.627.912 - - Unreservad, reported in General fund 13,776,417 - - - Facilities agreement - - 3,254,347 General obligation bond fund - - - - Specialrevenuefunds - - - - Capitalprojectsfunds 7,934,965 TOTAL FUND BALANCES 13,831,4] 1,627,912 3,379.346 8,416,767 TOTAL LIABILITIES AND FUND BALANCES S 18,119,770 $ 1 ]2],834 $ 4842,916 $ 10,061,513 The Notes to Financial Statements are an integral part of this statement. 22 EXHIBIT 3 GENERAL OTHER TOTAL OBLIGATION GOVERNMENTAL GOVERNMENTAL BOND FUNDS FUNDS $ 10,808,303 $ 3,400,455 $ 24,262,158 11,233,278 1,063,762 33,055,924 224,368 1,835,784 245,899 245,898 96,558 2,879 272,105 1,518,246 187,557 ,126 $ 22,138,139 $ 4,712,895 $ 61,603,167 $ 271,2W $ 116,458 $ 3,598,388 79,563 2,759,539 - 46,628 11,055 - 110,838 96,875 1.5W.371 282,305 292886 8,071,762 2,948,042 191,644 3,79,591 1,126 - - 1,627,912 - - 13,778.417 - - 3,254,347 18,909,792 - 16,909,792 - 2,452,785 2,452,785 1.775.470 9.710,435 21.855,834 4,420,099 53,531A05 $ 22,138,139 $ 4.712.995 $ 61,603,167 23 CITY OF ALLEN, TEXAS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS SEPTEMBER 30, 2008 EXHIBIT 4 Total fund balances - governmental funds $ 53,531,405 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. 441,881,827 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. 656,788 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. (482,764) 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 ($871,072) and to capital assets ($2,752,206). 8,205,910 Revenues earned but not available within sixty days of the year end are not recognized as revenue on the fund financial statements. 224,368 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. (97,589,061) Net assets of governmental activities $ 406,428,473 The Notes to Financtal Statements are an integral part of this statement. 24 %%f-gPECT 'NTFO Rtr � t * CITY OF A``60 CITY OF ALLEN, TEXAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2008 The Notes to Financial Statements are an integral part of this statement. 25 GENERAL DEBT FACILITIES CAPITAL GENERAL SERVICE AGREEMENT PROJECTS REVENUES Ad valorem taxes, penalties and interest $ 28,616,988 $ 8,838,673 $ - $ Franchise taxes 5,458,370 - - - Municipal sales tax 9,940,618 - - - Licenses, permits and fees 1,832,689 - - - Chargesforservices 1,557,929 - - 2,611,524 Court fines 1,713,351 - - - Gifts and contributions 278,357 - 1,644,927 46,128 Hotel / motel fees - - - - Recrealion fees - - - - Intergovernmental - - - 1,559,343 Investment earnings 751,511 150,821 209,830 254,464 Miscellaneous 198,072 1,094,483 Total revenues 50,347,885 8,989,494 1,854,757 5,565,942 EXPENDITURES Current General government 11,864,246 - - 3,244,163 Public safety 22,928,597 - - - Public works 3,478,586 - - - Culture and recreation 10,378,193 - - - Communitydevelopment 2,254,889 - - - Capitill outlay - - 1,644,927 3,479,714 Debt service: Principal retirement - 4,775,000 - - Interest and fiscal charges 3,986,567 Total expenditures 50,904,511 8,761,567 1,644,927 6,723,877 Excess (deficiency) of revenues over (under) expenditures (556,626) 227,927 209,830 (1,157,935) OTHER FINANCING SOURCES (USES) Issuance of debt - - - - Premium on debt issuance - - - - Tmnsfers from other funds 3,243,426 - - 1,764,397 Transfers to other funds (2,433,919) - - (20,000) Capital lease obligations 153,455 - - - Sale of capital assets 51,868 Total other financing sources (uses) 1,014,830 1,744,397 NET CHANGE IN FUND BALANCES 458,204 227,927 209,830 586,462 FUND BALANCES, BEGINNING OF YEAR 13,373,243 1,399,965 3,169,516 7,830,305 FUND BALANCES, END OF YEAR $ 13,831,447 $ 1,627,912 $ 3,379,346 $ 8,416,767 The Notes to Financial Statements are an integral part of this statement. 25 EXHIBIT 5 GENERAL OTHER TOTAL OBLIGATION GOVERNMENTAL GOVERNMENTAL BOND FUNDS FUNDS $ - 68,780 $ 37,524,441 - 72,362 5,530,732 - 105,916 10,046,534 - 488,450 2,321,139 - - 4,169,453 - 187,126 1,900,477 - 220,099 2,189,511 - 719,039 719,039 - 2,154,236 2,154,236 - 625,909 2,185,252 646,628 146,757 2,160,011 12,923 126,807 1,432,285 659,551 4,915,481 72,333,110 333,689 259,490 15,701,588 - 340,555 23,269,152 - 100,845 3,579,431 - 2,960,788 13,338,981 - 159,977 2,414,866 1,766,037 1,231,345 8,122,023 - - 4,775,000 3,986,567 2,099,726 5,053,000 75,187,608 (1,440,175) (137,519) (2,854,498) 10,185,000 - 10,185,000 50,904 - 50,904 - 495,104 5,502,927 (174,617) (278,133) (2,906,669) - 153,455 1,566 53,434 10,061,287 218,537 13,039,051 8,621,112 81,018 10,184,553 13,234,722 4,339,081 43,346,852 $ 21,855,834 $ 4,420,099 $ 53,531,405 26 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, 2008 EXHIBIT 6 Net change in fund balances - total governmental funds $ 10,184,553 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 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. 9,264,109 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, then allocated over their estimated useful lives and reported as depreciation expense. 40,399,292 Depreciation expense on capital assets is reported in the statement of activities but tices not require the use of current financial resources. Therefore, depredation expense is not reported as expenditures in the governmental funds. (17,149,950) The proceeds from issuance of long-term debt (e.g. bonds and capital lease obligations) provides current financial resources to governmental funds ($10,338,455), while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds ($4,853,323). Neither transaction, however, has any effect on net assets. (5,485,132) 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. 36,606 Current year changes in long-term liability for compensated absences do not require the use of currant financial resources and, therefore, are not reported as expenditures in governmental funds. 17,175 Current year changes in accrued interest payable do nm require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. (64,110) Internal service funds are used by management to charge the costs of certain activities, 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. 1,495,693 Certain revenues in the government -wide statement of activities that do not provide current financial resources are not reported as revenue in the governmental funds. (263,030) Change in Net Assets of Governmental activities $ 38,435,206 The Notes to the Basic Financial Statements are an integral pan ofthis statement. 27 CITY OF ALLEN, TEXAS EXHIBIT 7 STATEMENT OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30,2008 S 9.297.519 $ 1,232,845 BUSINESS -TYPE ACTNITIES $ 607,108 S 12,733,441 ENTERPRISEFUNOS GOYERNMENTO Inveshnenb 81982.558 ACTIVITIES 1,250,000 WATERAND SOLID GOLF INTERNAL SERVICE 10,232.556 SEWER WASTE DRAINAGE COURSE TOTAL FUNDS ASSETS CURRENTASSETS Cash and rash equivalent S 9.297.519 $ 1,232,845 $ 1,096.169 $ 607,108 S 12,733,441 $ 5,533,950 Inveshnenb 81982.558 1,250,000 - - 10,232.556 4.215,248 Receivablea,mand.Anwuicelwunmltctlbles: Acwunls 4,210,524 259.673 53,243 9.247 4,540,682 Acomcd Interest 69,512 - - 69,512 23.9,17 Omer 111.207 - - 111,2W - Invemmries 193,328 - - 193,376 - Prepaid - - 11069 11,050 - ResblcteUcashandcashd,uivalenls 2.194,332 2,194,332 Total wrtent evNs 25,455,821 2.853.525 1,149412 &1 30.IMR103 9,273.151 NONCURRENTASSETS CARNAL ASSETS Land 4,048,296 - - 4,048,296 Other improvements - 498,132 - 498,132 - nasals, tanks, and pump stations 135.540519 - 135,540,518 Vehicles 716.2% ","8 102,029 862,819 4.621.191 Machinery and squirmed 312891907 9,819 360,734 430.863 4.59.2323 1,308.6155 Fumllure and fiYmme 11,114 - - 1018" MON - Consmen.In go9ress 11,300,720 11300,770 Total capital asset 154.906.698 54,26] 85.2945 449.257 158,389,867 5.930.856 Les accumulated deprecation I",BBB.20) (51,290) (424,692) (313.459) (5.826247) (3,128,850) Cannot assets, net of accumulated tlapecia6cn 110,ozo.105 2,889 534.248 136,299 110.893.820 2752.206 DEFERRED CHARGES Gcndbsuancew4s, net ofamvteetion 141,951 141.954 Tmal cenwrrenlaseb 110162.059 2,969 W.240 136298 110,835,574 2]52.206 TOTAL ASSETS $135.812.690 S 2.858494 $ 1,683,fiW S 283]03 $140.921]37 $ 12,525,37 LIABILITIES AND NET ASSETS CURRENT LIABILITIES A¢oums payable $ 1,31DC87 S 247,351 $ 22.683 $ 70.754 $ 1,869,835 $ E6,682 Accrued Humane, 216,391 27,582 101871 45,271 Ma'am - Acomedwmpensat .1mccees-anent 181,295 7,803 13,242 26,126 228.818 Incurred but nal r.,. claims - - - - 129.487 Payable hem resNcted asset. Revenue bonds payaae - current 1.035000 - 1,a35ac0 - Capitalleasespayabk-artent - - 41.341 41,341 - ArcruedmaresipayeNe 23.469 - - 238.469 - Cuslomerdapostpayable 1,378.153 22.331 1,403,454 Tota current fiabill6ea 4,35,075 282.521 48,502 210.873 4.895,851 6adjat NONCURRENT LIABILITIES Revenue cards payable 13,828.976 - - 13,920,925 - Capilal Nass payade 78.428 70,428 - AccrvedwmpensatedeMences 49.8& 20,994 4,211 17,111 91,950 Total nonanent lINbtee 13,978,510 20.984 4.211 95,539 14,099.951 TOTAL LIABILITIES 18.334485 303.515 50,793 308,412 10.995.206 696,169 NETASSETS vestedm capital asse., nN 0 retMd dat 95,0691668 2.969 534,248 16,529 95,620.414 2,752,206 Resmcted for revenue bwN principal yMinternal 922,883 922.063 Unrestricted 21293.084 2,550.010 1.095019 "0.782 25,383.255 9,076,982 TOTAL NET ASSETS $ 112,283,395 $ 257,979 $ 1,032867 $ 457,291 $ 121.926,532 $ 11,829.180 The Notes t0 Me Financial Statements are an integral part of this statement - 28 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, 2008 EXHIBIT 8 Amounts reported for business -type activities in the statement of net assets are different because: Total net assets per statement of net assets $ 121,926,532 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. 871.072 Total net assets of business -type activities The Notes to the Financial Statements are an integral part of this statement. 29 $ 122,797,604 CITY OF ALLEN, TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2008 EXHIBIT 9 BUSINESS -TYPE ACTIVITIES ENTERPRISE FUNDS GOVERNMENTAL, ACTIVITIES WATER AND SOLID GOLF INTERNAL SERVICE SEWER WASTE DRAINAGE COURSE TOTAL FUNDS OPERATING REVENUES 12,077,569 - - 12,077.569 Transfers from other funds Charges nor sales and services: - 754,155 914,632 210,338 Transfers to other funds (2,798,118) Watersales $ 14,45@505 $ - $ - f - $ 14,458.505 $ - Sevrercharges 8,260,250 - - - 0,260250 - Conneceonfees 275,350 - - 275,350 Garbage,collec5ons - 4,931,558 - 4,831,555 - Servicecharges 1,195,952 - 66,256 1,547,902 2,810,112 0,404,916 Drainage fees - 949,950 919,950 Miscelleneoua 399,383 14,036 6,759 450,178 1M,026 Total operating revenues 24,589,440 4,975,594 1.016,208 1,554.861 32,135,903 8,548.972 OPERATING EXPENSES Personnel services 3,256,682 344,170 311,991 1,063.811 4,976,657 163,918 Contactual services 11.642,981 3,908,631 90,318 550,450 18,280,360 6,412,182 Maintenance 219,849 191,178 86,253 497,280 - supplies 122,942 16,330 15,385 149,653 301,310 - Depreciation 4,529,586 614 37,165 65,511 4,632,876 8041994 Other 980558 83.815 50871 48.609 1,157,733 Total operating expenses 20.740.578 1,435560 710,711 1,964,367 27,849.216 7,381,094 OPERATING INCOME (LOSS) 3,818,862 542.034 305,497 (409706) 4.286,687 1,167,878 NON-OPERATING REVENUES (EXPENSES) Investmenteamings 669,215 69,118 37,080 - P5,413 277,915 Interest expense (781,420) - - - (781,420) Gam on disposal of capital assets 067,624 - - - 667,624 4,515 De mlopment fees 2,483,888 2,483,806 Total nonoperating revenues 3.039.305 69,118 37.080 3,145,503 282.460 INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS 6,888,187 611,152 342,577 1409,706) 7,432,190 1,450,330 CAPITAL CONTRIBUTIONS AND TRANSFERS Capital contributions 12,077,569 - - 12,077.569 Transfers from other funds 160,477 - 754,155 914,632 210,338 Transfers to other funds (2,798,118) (393.353) (529,759) (3721,228) Total wool contributions and tenders 9.439,930 (393,333) (529759) 754,155 9,270,973 210,336 CHANGE IN NET ASSETS 16,326,097 217,790 (187,182) 344.449 16,703,163 1,660.676 NET ASSETS, BEGINNING OF YEAR 100955,290 2,335,180 1,820049 112,812 105,223,369 10,168,512 NET ASSETS, END OF YEAR $117,283,395 $2,552,979 $ 1,832,867 $ 457,291 $ 121,926,532 $ 11,829,180 The Notes to the Financial Statements are an integral part of this statement M CITY OF ALLEN, TEXAS 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, 2008 Amounts reported for business -type activities in the statement of activities are different because: EXHIBIT 10 Net change in fund net assets- total proprietary funds $ 16,703,163 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 net expenses of certain activities of internal service funds is allocated to business -type activities. 164,983 Change in net assets of business -type activities The Was to the Financial statements are an integral part of this statement. 31 $ 16,868,146 CITY OF ALLEN, TEXAS EXHIBIT 11 ENTERPRISE FUNDS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2008 BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS GOVERNMENTAL ACTIVITIES WATER AND SOLID GOLF INTERNALSERVICE SEWER WASTE DRAINAGE COURSE TOTAL FUNDS CASH FLOWS FROM OPERATING ACTIVITIES Cam rewrved M1cm cuslomera $ 24,491,264 f 3.958,888 It 1,016,901 Is 1.552.263 f 32,223,332S Cam Revised hantrmvsactians win otbcr Nos8535,214 Cem paid to emgoyees brvices (3,218,838) (331,752) i83) (1,053,349) (0,918,202) .9889181 Cam pro for owes and services (13.436.858) (0,010,]]5) (358.5531 CE (815,3191 (1883],803) 13.90.]00) Cam pais /or tlaims (3536431) NO win provided by (used int operating activities 7,841,968 811.371 318.292 1316.3051 8562325 1.91 CASH FLOWS FROM MON-CAPITAL FINANCING ACTM]IEB Trmelers from other burns 160,4]] i54,m55 914,632 210,338 Transom to oN., finds 12,7881161 1393.3531 (529,]59) (3.]21,228) NO cash Revised by luwd RI non-capital Rnenchn, activities 12637ENG (]93.3531 (529,]59) ]54.155 (2.808,598) 210,338 CASH FLOWS FROM CAPRAL AND RELATED FINANCING ACIplai Principal pais on revenue bone malueeaa (1,575,000) - - (1,575.000) - .as,sohas pai,im-,R- date (698300) - (899(803) Acyuisures and croslmcticn of capital assets (2$58282) - - (129.355) (2685.801 (984,0331 Centra lease down payment 68,588 88.566 Proceedsfrom sale frosale of capiol asset - - - Ism Consumers fran developers 2,483,8% 2,483,666 Net ush(used in) capital and headed financial adralllee (2,4,17,fri1 168789) fagoting) 1950.0101 CASH FLOWS FROM INVESTING ACT na Purmase of Investment semMles 9,610,0[0 (1,250,000) - - 8,360,000 (2.185.4991 Proceeds from nine and hodudles of amendment secuNea (12..08.688) - (12.403.866) Irl ton Nvealmenls 853.811 88118 37,080 790,009 282,539 NO h prwl,led by (us. 1.) In.... WaclNMw (1,910,05) 11,1&,8.21 37.060 13,058.8571 .,902,980) NET CHANGE IN CASH AND CASH EQUIVALENTS 8481598 (7828&) (144,367) 314,081 313.408 (727,533) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 11,145,254 119951509 1,240.555 233.0a] 14,614,366 8261,881 CNN AND CASH EAUWALENTS END OF YEAR It 11,Ne1,B52 f 1232,645 S 1.098169 $ 607,106 $ 14,911,774 $ 5,533.9% RECONCIWTION OF OPERATING INCOME (LOSS) TO NET CNN PRONOEO BY OPE& NG ACTWMH Neloperetirgimmme(shes) S 3.848,862 $ fissi f 385.497 $ N09.71181 $ 4,286,687 $ 1167,81B Adjustment 0 reconce Cpending income (ion) to net cosh prmideu coy (head'"" Mama activities'. DWW.rn and amorthlym exwnse 4,539.266 .1. 37,165 0,511 4,642558 801,991 Chinos in waeta and loLl90ec (Increases decrease In accounts nceoaub (95,176) (28.0`,8) m (2368) (II2,wR 2.2% Decrease in other receveuka 210,355 - 210,358 - DemaarinprepaNs - - 3.129 3,129 - (Increese)necm»inlnventmiee (81.897) 12.7% (49.143) Increase (decrease) in sevum&payable (208.581) 71,879 (110) &3 (138989) (W.M) Increase decrease) in aurum neWMea (29291) 6,120 1.810 (285.010) - Increasainrien ensales auaencea 43$4,1 6,118 3.231 10.542 III - Inpease'm Ality dewasM 87.190 811 W Total adjustments 3.988108 289337 42795 all 4,8&3.009 ]4].221 Net cash prwlftd by(uesd In)e9enW9 noters $ 7,1141,988 $ 811.371 $ 348.292 $ 1319,3051 $ 8189,8328 S 1,915,099 NON-CASH INVESTING ACTVTES: Change in the%im value of enormous S (15,707) $ $ $ $ (15,707) f 18B20) NCH{ASH FINANCING ACTMTIES: Chi bons of repel aaeet from developers $ 121001589 $ f It $ 12,0 .589 $ Rectimull e8on a..I men to this stabmen1.1 natasseta Cash and cash umoms-come. $ 9,797,519 $ 1,232645 S 1,088100 S 607,108 Is 12,733,441 $ 5.513,958 Rea.tW cash eM cash equtelent 2,194,332 2194332 CNH AND CASH EQUIVALENTS, END OF YEAR if 11,981.851 $ 1,232,845L I&&189 f 607,108 Is 1492],]73 $ 5.520.951, The Notes to the Financial Statements are an integral Dart of this statement. KY CITY OF ALLEN, TEXAS COMPONENT UNITS STATEMENT OF NET ASSETS SEPTEMBER 30, 2008 EXHIBIT 12 ALLEN ALLEN ECONOMIC COMMUNITY DEVELOPMENT DEVELOPMENT CORPORATION CORPORATION TOTALS ASSETS CURRENT ASSETS Cash and man equrvalents $ 839,906 $ 28,403,792 $ 27,243,698 Investments 681,250 4,680,139 5,361,389 Sales tax receivable 917,893 917,893 1,835,786 Accounts receivable 1,772 1,7M 3,544 Accrued interest receivable 2,543 31,811 34,354 Prepaid items 6,298 - 6,298 Restricted cash and rash equivalents 82,325 1,103,732 1,186,057 Total current assets 2,531,987 33,139,139 35,671,126 NONCURRENT ASSETS CAPITAL ASSETS Land 4,325,551 - 4,325,551 Land improvements 20],8]8 - 20],8]8 Furniture and fixtures 14,103 - 140,103 Improvements other than buildings 3,128,689 - 3,128,689 Construction in progress 12,428,495 12,428,495 Total capital assets 20,230,716 - 20,230,716 Less: accumulated depreciation (1,493,8]8) (1,493,8]8) Capital assets, net af.crunnulate! depreciation 18,736,838 18,73,838 DEFERRED CHARGES Bond issuance costs, net of amortization 272,206 65,102 928,308 Total noncurrent assets 19,009,044 656.102 19.665.146 TOTAL ASSETS E 21,541,031 $ 33,795,241 $ 55.336.272 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable $ 166,]9] $ 1,224,841 $ 1,391,638 Accrued interest payable 49,086 171,346 220,432 Accrued and other Iisblbties 53.681 - 53,681 Retainage payable -71,305 71,305 Revenue bonds payable - torten 390,000 895,000 1,285,000 Total current liabilities 859,564 2,362,492 3,022,056 NONCURRENT LIABILMES Revenue bonds Payable (nal of unamorapid! discounts and deferred amount on refunding) 14,293,780 37,380,545 51,674,325 Total noncurrent liabilities 14,293,780 37,380,545 51,674,325 TOTAL LUBILIMES 14.953.344 39,743,037 %,698,381 NET ASSETS (ACCUMULATED DEFICIT) Invested in capital assets, net of related debt 4,053,058 (38,275,545) (34,222,487) Unrestricted 2.534,629 32,327,749 34882378 TOTAL NET ASSETS(ACCUMULATED DEFICIT) $ 658],68] E 15,94],]967 $ 639,891 The Notes to the Financial Statements are an Integral part of this statement. 33 CITY OF ALLEN, TEXAS - $ - $ (10,081,681) $ - EXHIBIT 13 STATEMENT OF ACTIVITIES 907,509 (14,411,918) (14,411,918) COMPONENT UNITS $ 24.493599 $ $ $ 11 C081.6811 $ (14.411,918) FOR THE YEAR ENDED SEPTEMBER 30, 2008 10,933,265 (4,888,228) (8,692,106) (13,560,334) 11,455.915 2.744.310 14.200.225 Net (Expense) Revenue and Program Revenues Changes in Net Assets COMPONENT UNITS ALLEN ALLEN Operating ECONOMIC COMMUNITY Charges for Grants and DEVELOPMENT DEVELOPMENT Expense. Services Contributions CORPORATION CORPORATION TOTALS Function/Program Activities COMPONENT UNITS Allen Economic Development Corpore6on Allen Community Development Corporation TOTAL COMPONENT UNITS $ 10,081,681 $ - $ - $ (10,081,681) $ - $ (10,081,681) 14,411,918 907,509 (14,411,918) (14,411,918) 89,491 $ 24.493599 $ $ $ 11 C081.6811 $ (14.411,918) $ (24493,599) The Notes to the Financial Statements are an Integral part of this statement. General revenues: Saks taxes Interest on investments Miscellaneous Total general revenues CHANGE IN NET ASSETS NET ASSETS, beginning of year NET ASSETS, and of year 34 $ 4,968,133 $ 4,968,132 $ 9,936,265 155,829 751,680 907,509 89,491 89,491 5,213,453 5,719,812 10,933,265 (4,888,228) (8,692,106) (13,560,334) 11,455.915 2.744.310 14.200.225 $ 8.58268] $ (5,947.]961 $ 639.881 PsgpECT 'NTFC R, — Ty CITY OF A``gN NOTES TO FINANCIAL STATEMENTS a�gpEOT * INrfG R, CITY OF ALLEN n CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 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 included 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. kil CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 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 discreetly presented as governmental fund types and do not issue separate financial statements. Basis of Presentation The government -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 interfund activity, within the governmental and business -type activities columns, has been removed from these statements; however, interfund services provided and used are not eliminated in the process of consolidation. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. 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. im CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE 7. 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. Facilities Agreement Special Revenue Fund - The Facilities Agreement Special Revenue Fund is used to account for funds received from builders and developers used on specific facility agreements such as neighborhood parks, paving and assessments in new developments. 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. 37 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Basis of Presentation — continued Proprietary Funds are 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-temt 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. 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. 38 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Basis of Presentation — continued 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. 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 rash 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. 39 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED Cash, Cash Equivalents and Investments - continued 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 reservations of fund balances because they do not constitute expenditures or liabilities. Property Texas 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 2007 levy was based is $6,453,510,061. 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 $100 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, 2008 was $0.557 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. S9 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED 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 government -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, 2008, ACDC contributed $182,500 to the General Fund and $70,000 to the Park and Recreation Special Revenue Fund and AEDC contributed $68,500 to the General Fund. These revenues were reflected as grants and contributions for the primary government in the government -wide statement of activities. 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. A reserve for prepaid items is recognized 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). 41 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED 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 -vide 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 -owned 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. 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. 42 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 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, 2008, with collateral required by state statutes. At year-end, the carrying amount of the City's deposits was $886,488 and the bank balance was $2,195,961. Of the bank balance, federal depository insurance covered $200,000 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, 2008 was $10,200. The carrying amount of deposits for ACDC and AEDC, discretely presented component units, were $24,245 and $41,363, 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 entity's 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 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 rale risk, credit risk, and concentration of credit risk. Authorized Investment Type Certificates of Deposit Repurchase Agreements U. S. Treasure Obligations Municipal Investment Pool Commercial Bank Savings Account U. S. Government Securities (non -callable) U. S. Government Securities (callable) U. S Government Sponsored Corp. Instruments : non -callable U. S. Government Sponsored Corp. Instruments callable Commercial Paper Bankers Acceptance Guaranteed Investment Contracts State or Local Governmental Obligations 43 Maximum Maximum Maximum Percentage Investment Maturity of Portfolio In One Issuer 5 years 30% None 5 years 30% None 5 years 100% None 5 years 100% None 5 years 15% None 5 years 100% None 5 years 70% None 5 years 75% None 5 years 70% None 5 years 20% None 5 years 10% None 5 years 25% None 5 years 30% None CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE 2. DEPOSITS, INVESTMENTS AND INVESTMENT POLICIES —CONTINUED 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, 2008, the City had the following investments: Fair Value Weighted Investment Primary Avg. Maturity Type Government AEDC ACDC Total (Years) Commercial Paper $ 3,000,000 $ - $ - $ 3,000,000 0.45 FHLB 3,952,031 446,549 1,265,178 5,663,758 0.61 FHLMC 2,100,338 234,701 664,961 3,000,000 0.56 Certificates of Deposit 38,451,357 - 2,750,000 41,201,357 0.02 Texpool 43,827,201 880,868 27,483,279 72,191,348 0.003 Total $ 91,330,927 $1,562,118 $32,163,418 $125,056,463 Disclosures Relating To Credit Risk 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 defau0 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 Aaa by Moody's Investors Service. The investment in the Texas Local Government Pool (TexPool) carried a credit rating of AAAm by Standard & Poors as of September 30, 2008. The City's investments in commercial paper are rated A-1, F-1, and P-1 by Moody's Investors Service, Fitch, and Standard & Poors as of September 30, 2008. 44 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE 2. DEPOSITS, INVESTMENTS AND INVESTMENT POLICIES -CONTINUED 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, 2008, 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 FHLB Federal agency securities $ 5,663,758 4.53% FHLMC Federal agency securities $ 3,000,000 2.40% 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, 2008, the City's deposits with financial institutions above the federal depository limits were fully collateralized. 45 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE 3. RECEIVABLES Receivables at September 30, 2008 for the government's individual major funds and non -major, and internal service funds in the aggregate, including the applicable allowances for uncollectible accounts, consist of the following: The Water and Sewer Fund accounts receivable include unbilled charges for services rendered through September 30, 2008. 46 Property S.W. Aamed Tax Texas Accounts Interasl Aesessmenis Giber Total General Fund $ 324,114 $ 1,835,784 E - $ 125,784 $ - $ 1,518,246 $ 3,803,928 Gold Service 142,027 - - - - 142,027 FaeilNes Agreement - - - 14,634 - - 14,634 General capital Projv% - - - 32,250 187,557 - 219,807 G.O. Bond Fund - - 98,558 981558 Non-mapr Gosammental Funds - - 197,MB 2,879 - 48,451 248,778 Water and Sewer - - 4,233,105 89.512 - - 4,302,817 SOIid Waste - - 259,673 - - 111,207 370,880 Ommage - - 53,243 - - - 53243 Gott Course - - 9,247 - - - 9,247 Internal Servico Funds 23.947 23,947 Groes Receivables 488,141 1,635,7& 4.752,716 365.584 187,557 1,677.904 9,285.666 Less Allawanco for UncolleNbles (241,773) (14,581) (256,354) Total Net Reousables, Primary Government $ 224,368 $ 1,835]84 E 4,738,135 $ 365.564 $ 187,557 $ 1,677.904 $ 9,029,312 ComponentUmts $ $ 1,835.786 $ $ 34,354 $ $ 3.544 $ 1.873,884 The Water and Sewer Fund accounts receivable include unbilled charges for services rendered through September 30, 2008. 46 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30.2008 NOTE 4. CAPITAL ASSETS Capital asset activity for the year ended September 30, 2008 was as follows Governmental Activities 47 Balance Sales or Balance September 30, Other Adjustmenisl September 30, 2007 Additions Dispositions Transfers 2008 Governmental Funds: General capital assets not being depreciated: Land and lend improvements $ 103,304,007 $ 8,058,162 $ - $ - $ 111,362,169 Construction in progress 10,835,221 19,583,635 (6,761,787) 23,657,069 Total capital assets not being depreciated 114,139,228 27,641,797 (6,761,787) 135,019,238 General capital assets being depreciated: Buildings 52,231,593 - - 429,478 52,661,071 Improvements other than buildings 345,395,845 20,331,097 - 6,188,314 371,915,256 Furniture and hudures 2,894,713 61,083 - - 2,955,796 Vehicles 3,021,981 390,033 (254,544) - 3,157,470 Library books 2,761,938 177,192 (227,659) - 2,711,471 Machinery and equipment 4,380,533 1,062,198 (4,452) 143,995 5,582,274 Total capital assets being deprecated 410,686,603 22,021,603 (486,655) 6761,787 438,983,338 Less accumulated depreciation for. Buildings (7,538,429) (1,369,994) - - (8,908,423) Improvements other than buildings (100,570,480) (14,433,010) - - (115,003,490) Furniture and fixtures (2,102,547) (289,022) - - (2,391,589) Vehicles (1,698,843) (266,847) 254,544 - (1,711,146) LibraryBooks (2,342,567) (162,632) 227,658 - (2,277,541) Machinery and equipment (3,956,794) (628,445) 4,453 (4,580,788) Total accumulated depreciation (118,209,660) (17,149,950) 486,655 (134,872,955) Total general capital assets being depreciated net 292,476,943 4,871,653 6,761,787 304,110,383 General capital assets, net $ 406,616,171 $ 32,513,450 $ $ $ 439,129,621 47 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE4. CAPITAL ASSETS—CONTINUED Business -Type Activities Water and Sewer Activities: Capital assets not being depreciated: Land ConsWclion in progress Total capital assets not being depredated Capital Assets Being depreciated: Towers, tanks, 8 pumps stations Furniture and fixtures Machinery and equipment Vehicles Total capital assets being depredated Less accumulated depreciation for: Towers, tanks, 8 pumps stations Furniture and fixtures Machinery and equipment Vehicles Total accumulated depreciation Total capital assets being depreciated, net Water and sewer activities capital assets, net $ 3,380,635 $ 3,111,200 $(2,443,539) $ - $ 4,048,296 10.169,772 2,141,408 (1,010,410) 11,300,770 13,550,407 5,25208 (2,443,539) (1,010,410) 15,349,086 122,452,540 12,0T7,569 - 1,010,410 135,540519 11,114 - - - 11,114 2,948.093 389,891 (48,077) - 3,289.907 760,655 24,924 (69,287) 716,292 126,172,402 12,492,384 (117,364) 1,010,410 139,557,832 (38,230,579) Balance - - Sales or (9,884) Balance - - September 30, (1,499,925) Glher Adjustments/ September 30, (734,184) 2007 Additions Dispositions Transfers 2008 Internal Semice Funds: (44,886,793) 85,697,830 7,962,799 1,010,410 94,671,039 Vehicles It 3,875,798 $ 817,309 $ (71,916) $ - $ 4,621,191 Machinery and equipment 1,167,326 146,691 (4,352) 1,309,665 Total internal service assets being depreciated 5,043,124 964,000 (76,268) 5,930,856 Lass accumulated depreciation for: Vehicles (1,929,082) (643,597) 62,471 - (2,410,208) Machinery and equipment (511,397) (261,397) 41352 (768,442) Total accumulated depreciation (2,440,479) (804,994) 66,823 (3,178,650) Internal service funds capital assets, net 2,602,645 159,006 (9,445) 2,752,206 Governmental activities capital assets, net $ 409,218,816 $ 32,672,456 $ (9,445) $ $ 441,881,827 Business -Type Activities Water and Sewer Activities: Capital assets not being depreciated: Land ConsWclion in progress Total capital assets not being depredated Capital Assets Being depreciated: Towers, tanks, 8 pumps stations Furniture and fixtures Machinery and equipment Vehicles Total capital assets being depredated Less accumulated depreciation for: Towers, tanks, 8 pumps stations Furniture and fixtures Machinery and equipment Vehicles Total accumulated depreciation Total capital assets being depreciated, net Water and sewer activities capital assets, net $ 3,380,635 $ 3,111,200 $(2,443,539) $ - $ 4,048,296 10.169,772 2,141,408 (1,010,410) 11,300,770 13,550,407 5,25208 (2,443,539) (1,010,410) 15,349,086 122,452,540 12,0T7,569 - 1,010,410 135,540519 11,114 - - - 11,114 2,948.093 389,891 (48,077) - 3,289.907 760,655 24,924 (69,287) 716,292 126,172,402 12,492,384 (117,364) 1,010,410 139,557,832 (38,230,579) (4,080,773) - - (42.31 1,=) (9,884) (352) - - (10,236) (1,499,925) (410,556) 48,077 - (1,862,404) (734,184) (37,904) 69,287 (702,801) (40,474,572) (4,529,585) 117,364 (44,886,793) 85,697,830 7,962,799 1,010,410 94,671,039 $ 99,248,237 $13215,407 $(2,443,539) $ $ 110,020,105 48 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE4. CAPITAL ASSETS -CONTINUED Balance Sales or Balance September 30, Other Adjustments/ September 30, 2007 Additions Dispositions Transfers 2008 Solid Waste Activities. Capital assets being depreciated: Capital assets being depreciated: Machinery and equipment $ 9,819 $ - $ - $ - $ 9,819 Vehicles 44,448 Vehicles 44,448 Total capital assets - - 102,079 Machinery and equipment being depreciated 64,267 (13,000) 54,267 Less accumulated depreciation for: Machinery and equipment (6,236) (614) - - (6,850) Vehicles (44,448) Less accumulated (44,448) Total accumulated depreciation for: depreciation (50,684) (614) (51,298) Solid waste activities (54,221) (12,291) - capital assets, net $ 3,583 $ (674) $ $ $ 2,969 Drainage Activities: Capital assets being depreciated: Other improvements $ 496,132 $ - $ - $ - $ 496,132 Vehicles 102,079 - - - 102,079 Machinery and equipment 373,734 (13,000) 360,734 Total capital assets being depreciated 971,945 (13,000) 958,945 Less accumulated depreciation for: Other improvements (54,221) (12,291) - - (66,512) Vehicles (84,423) (4,307) - - (88,730) Machinery and equipment (261,888) (20,567) 13,000 (269,455) Total accumulated depreciation (400,532) (37,165) 13,000 (424,697) Drainage activities capital assets, net $ 571,413 $ 37,165 $ - $ - $ 534,248 Golf Course Activities: Capital assets being depreciated: Machinery and equipment $ 309,508 $ 129,355 $ - $ - $ 438,863 Furniture and frtures 10,894 10,894 Total capital assets being depreciated 320,402 129,355 449,757 Less accumulated depreciation for: Machinery and equipment (246,869) (63,332) - - (310,191) Furniture and futures (1,089) (2,179) (3,268) Total accumulated depreciation (247,948) (65,511) (313,459) Golf course activities capital assets, net 72,454 63,844 136,298 Business -type activities capital assets, net $ 99,895,687 $ 13,241,472 $ (2,443,5391 $ $ 110,693,620 49 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE4. CAPITAL ASSETS—CONTINUED Depreciation expense was charged as direct expense to programs of the primary government as follows: Governmental activities: General government Public safety Public works Culture and recreation Community development Grant Administration Total depreciation expense - General capital assets Internal Service Funds Total depreciation expense - Governmental activities bY0 $ 749,320 741,220 11,034,521 4,562,699 10,508 51,682 17,149,950 804,994 $ 17,954,944 Balance sales or sea. September 30, Other Adjustmenet September 30, 2007 Additions Dibol lone Thunders 2008 Component Units: Capital assets not being depredated Land $ 7,384,605 $ 82,153 It (3,121,207) $ - $ 4.325.551 Land improvemems 207,278 - 900 - 27,078 Construction in progress 12.428.4% 12.428,495 Total capital assets not being dep,adeed 7.591.883 12.490.640 (3.120,607) 16961924 Capital assets being depredatttl: Improvements other Man buildings 3,129,289 - (600) 3,128.689 Furniture and fixtures 74.028 66.75 140,103 Total capital addets being depreaatel 3,203.317 86.75 (8001 3260792 Leas abbumaiated depredation fon Buildings (1,259,909) (153.333) - - (1,413,242) Furniture a,M(aures (74.028) 18.6081 (00.636) Total accumulated depreciation (1,333.937) (159.941) (1.493.878) Total captal assets being depredated, net 1.869300 (93,866) (800) 1,774,914 Component units capital assets, net $ 9,461,263 S 12,399782 $ (3.121,27) $ 6 10,739.030 Depreciation expense was charged as direct expense to programs of the primary government as follows: Governmental activities: General government Public safety Public works Culture and recreation Community development Grant Administration Total depreciation expense - General capital assets Internal Service Funds Total depreciation expense - Governmental activities bY0 $ 749,320 741,220 11,034,521 4,562,699 10,508 51,682 17,149,950 804,994 $ 17,954,944 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE4. CAPITAL ASSETS—CONTINUED Business -type activities: Water and sewer Solid waste Drainage utility Golf course Total depreciation expense - Business -type activities Component units: Allen Economic Development Corporation $ 4,529,585 614 37,165 65,511 4,632,875 $ 159,940 Outstanding commitments at September 30, 2008, under authorized construction contracts were $19,187,701. 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 S. LONG-TERM DEBT At September 30, 2008, bonds payable consisted of the following individual issues: General Obligation Bonds: $13,340,000 Series 1999 Bonds due in annual installments of $320,000 to $1,055,000 through September 1, 2019; interest at 4.875% to 6.375%. $11,100,000 Series 2000 Bonds due in annual installments of $115,000 to $915,000 through September 1, 2020; interest at 5.0% to 6.5%. $20,715,000 Series 2001 Bonds due in annual installments of $160,000 to $2,110,000 trough September 1, 2021; interest at 4.0% to 5.25%. $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%. $7,210,000 Series 2003 Bonds due in annual installments of $175,000 to $515,000 trough September 1, 2023; Interest at 2.75% to 4.25%. 51 Governmental Business -type $ 630,000 $ - 1,015,000 - 6,895,000 - 10,535,000 - 5,955,000 - CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE 5. LONG-TERM DEBT -CONTINUED General Obligation Bonds — continued Governments! Business -type $11,700,000 Series 2004 Bonds due in annual installments of $395,000 to $790,000 through September 1, 2024; interest at 4 0% W 5.25%. 10,210,000 $32,330,000 Series 2005 Refunding Bonds due in annual installments of $75,000 W $3,505,000 through August 15, 2021; interest at 3.0% to 5.00%. 31,265,000 $1,595,000 Series 2006 Bonds due in annual installments $ 88,920,000 $ of $50,000 W $115,000 through August 15, 2026; Interest at 4 0% W 4.20%. 1,490,000 $11,145,000 Sense 2007 Bonds due in annual installments of $380,000 W $815,000 through August 15, 2027; interest at 4 0% W 4.60%. 10,740,000 - $10,185,000 Series 2008 Bonds due In annual Installments of $250,000 W $540,885 through August 15, 2028; interest at 3.5% W 4.60%. 10,185,000 $ 88,920,000 $ Certificates of Obligation: $4,735,000 Series 2004A Combination Tax 8 Revenue Golf Course Certificates of Obligation due in annual installments of $165,000 to $390,000 through September 1, 2024; interest at 3.50% W 5.00%. $ 4,395,000 $ - $765,000 Sedes 20046 Combination Tax 8 Revenue Golf Course CeruOcates of Obligation due in annual installments of $25,000 W $70,000 through September 1, 2024;interesl at 4.875% to 5.50%. 715,000 $ 5,110,000 $ AEDC Salsa Tax Revenue Bonds: $15,335,000 Series 2008 Sales Tax Revenue Bonds due in annual installments of $390,000 W $940,000 through September 1, 2032; interest at 350%to 450%. $ 14,735,000 $ $ 14,735,000 $ ACDC Sake 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%. 5,600,000 - $1,615,000 Sense 2007-A Refunding Bontls due In annual installments of $260,000 W $515,000 through September 1, 2012; interest at 398% 1,100,000 - $32,835,00D 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% W 6 00% 31,830,000 $ 38,530,000 $ 52 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE5. LONG-TERM DEBT—CONTINUED Water and Sewer Revenue Bonds: $12,545,000 Series 1999 Bonds due in annual installments of $330,000 to $950,000 through June 1, 2019; interest at 3.55% to 5.0%. $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 5.0%. $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%. Governmental Business -type $ - $ 6,195,000 4,995,000 3,845,000 $ $ 15,035,000 The following is a summary of long-term debt transactions, including current portion, of the City for the year ended September 30, 2008: Govemmantal Activities General Obligation Bonds certificates of Obligation Capital lease payable Compensate! absences Less deferred! amounts: For issuance premiums For refundings Governmental ao8vity Balance Balance Due Beginning End within of Year Increaess Decreases of Year One Year $ 83,310,000 $ 10,185,000 $ (4,575,000) $ 88,920,000 $ 4,995,000 5,310,000 - (200,000) 5,110,000 205,000 78,272 153,454 (78,323) 151,403 62,300 2,949,513 2229,478 (2,246,653) 2,932,338 1,759,403 1,538,812 - (21,089) 1,515)23 - (1.198.]191 158.316 (1,040.403) Long -tern debt $ 91.983.878$ 12,56].932 8 (6.962.]491 L.2 The general fund has typically been used to liquidate the liability for compensated absences for governmental activities. 53 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE 5. LONG-TERM DEBT — CONTINUED Business Type Activitles Water and Sevref Revenue Bads Compensated absences Capital lease payable Less deferred amounts: For refundings For issuance discourds / premiums Business -type ad,vily Balance $ 7,155(700 $ 34,450,000 Balance Due Beginning Interest Total End Wd6in of Year Increases Decreases ofYear One Year For refundings (131,292) (31.176) 22,647 (139,821) $ 16,610,000 $ - $ (1,575,000) $ 15,035,000 $ 1,035,000 257.308 122,408 (58,950) 320,766 228,816 51,203 129,352 (60,788) 119,767 41,341 (77,646) - 4,636 (73,010) (1,147) 3,135 1,988 Long-term tleM $ 16,839.718 $ 251.760 $ (1,686,9671 $ 15,404,511 $$ 1/305157 Allen community Development corporation Sales Tax Revenue Bonds $ 7,155(700 $ 34,450,000 $ (3,075,000) $ 38,530,000 $ B95,000 Less deferred amounts: Interest Total 2009 4,995,000 For issuance discounts/premiums 164,731 (274,111) (5,254) (114,634) For refundings (131,292) (31.176) 22,647 (139,821) ACDC 5,845,000 3,357,180 9,202,180 2013 Long -tens tleM $ 7,188,439 $ 34.144,713$ (3.057,607) $ 38,275,545 $�� Allen Economic Development corporation Sales Tax Revenue Bonds $ - $ 15,335,000 $ (600,000) $ 14,735,000 $ 390,000 For issuancediscounts /premiums (53,052) 11832 (51,220) AEDC Long-lemi debt $ - $ 15,281,948 $ (598,168) $ 14,683,780 $ 390,000 Annual Requirements to Retire Debt Obligations The City intends to retire 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, 2008, are as follows: General Obligation Bonds Annual debt service requirements to maturity for general obligation bonds, including interest of $34,282,194 are as follows: Governmental Activities Fiscal Year Ending September 30 Principal Interest Total 2009 4,995,000 4,128,391 9,123,391 2010 5,340,000 3,799,612 9,139,612 2011 5,575,000 3,583,018 9,158,018 2012 5,845,000 3,357,180 9,202,180 2013 6,115,000 3,091,759 9,206,759 2014-2018 32,095,000 11,140,917 43,235,917 2019-2023 21,665,000 4,347,818 26,012,818 2024-2028 7,290,000 833,499 6,123.499 Total L-8== 54 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTES. LONG-TERM DEBT -CONTINUED 1,035,000 709,407 Certificates of Obligation 2010 1,085,000 659,089 Annual debt service requirements to maturity for the Certificates of Obligation, including interest of $2,158,093 are as follows: 605,277 1,750,277 2012 1,200,000 549,221 Governmental Activities 2013 Fiscal Year Ending 493,996 1,633,996 2014-2018 September 30 Principal Interest Total 2009 205,000 223,700 428,700 2010 220,000 213,325 433,325 2011 230,000 202,175 432,175 2012 240,000 190,525 430,525 2013 260,000 180,475 440,475 2014-2018 1,515,000 741,864 2,256,864 2019-2024 2.440.000 406.029 2.846.029 Total 5.77000 $ 2.758.099 $ 7.26A 093 Water and Sewer Revenue Bonds Revenue bond debt service requirements to maturity, including interest of $5,319,667 are as follows: Business -type Activities Fiscal Year Ending September 30 Principal Interest Total 2009 1,035,000 709,407 1,744,407 2010 1,085,000 659,089 1,744,089 2011 1,145,000 605,277 1,750,277 2012 1,200,000 549,221 1,749,221 2013 1,140,000 493,996 1,633,996 2014-2018 5,460,000 1,668,511 7,128,511 2019-2023 3,100,000 580,376 3,680,376 2024-2025 870.000 53.790 923.790 Total 4 15 035 000 $ 5 319 587 $ 20 354.667 AEDC Sales Tax and Revenue Bonds Sales Tax Revenue bond debt service requirements to maturity, including interest of $8,815,603 are as follows: W Governmental Activities Fiscal Year Ending September 30 Principal Interest Total 2009 390,000 589,030 979,030 2010 405,000 575,380 980,380 2011 420,000 561,205 981,205 2012 435,000 548,505 981,505 2013 450,000 531,280 981,280 2014-2b18 2,495,000 2,409,125 4,904,125 2019-2023 2,985,000 1,924,950 4,909,950 2024-2028 3,635,000 1,273,128 4,908,128 2029-2032 3.520.000 405,000 3.925.000 Total $ 14 735.000 A B 815 803 23 550 fi0 W CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTES. LONG-TERM DEBT—CONTINUED Original Dale ACDC Sales Tax and Revenue Bonds Authorized Authorized Sales Tax Revenue bond debt service requirements to maturity, including interest of $32,307,121 are as follows: 5/12/2007 14,500,000 5/12/2007 1,700,000 5/12/2007 Governmental Activities 5/1212007 Fiscal Year Ending 5112/2007 1,390,000 5/12/2007 September 30 Principal Interest Total 2009 895,000 2,056,146 2,951,146 2010 930,000 2,021,123 2,951,123 2011 965,000 1,984,752 2,949,752 2012 1,005,000 1,947,008 2,952,008 2013 1,045,000 1,906,116 2,951,116 2014-2018 5,965,000 8,791,620 14,756,620 2019-2023 7,585,000 7,172,538 14,757,538 2024-2028 9,910,000 4,848,918 14,758,918 2029-2032 10.230.000 1.578.900 11.808.900 Total $ 38.530000 $ 32307.121 7DA37.12 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, $10,185,000 of general obligation bonds were issued to finance permanent public improvements and public purposes. 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 $1,627,912 available to service the general obligation debt at September 30, 2008. 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, 2008. A schedule of authorized but unissued direct General Obligation Bonds as of September 30, 2008, is as follows: Purpose Patios Performing Arta Center Service Center Facilities Renovations Streets Parks Public Art Projects Public Safety Issued To Date Original Dale Amount Authorized Authorized 6/12/1999 $ 22,000,000 11/5/2002 19,500.000 5/12/2007 14,500,000 5/12/2007 1,700,000 5/12/2007 27,200,000 5/1212007 17,250,000 5112/2007 1,390,000 5/12/2007 15,855,000 Issued To Date 2008 Issue Unissued Balance $ 21,750,000 $ 250,000 $ - 2,815,000 - 16,685,000 - 2,000,000 12,500,000 - - 1,700,000 2,840,000 5,160,000 19,200,000 4,150,000 1,700,000 11,400,000 200,000 - 1,190,000 2,200,000 1,075,000 12,580,000 $ 119,395,000 $ 33,955,000 $ 10,185,000 $ 75,255,000 56 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30.2008 NOTE5. LONG-TERM DEBT—CONTINUED 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 $922,863 at September 30, 2008 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 City's 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, 2008 of $2,194,332 are adequate to meet the reserve requirements. At September 30, 2008, restricted assets, which include Water and Sewer Revenue Bond Debt Service and Reserve Funds, were as follows: Revenue bond debt service Revenue bond reserve fund $ 1,404,564 789,768 $ 2,194,332 Retained earnings reserved for Water and Sewer revenue bond retirement is detailed as follows: Restricted assets, revenue bond debt Service and reserve funds $ 2,194,332 Accrued interest, payable from restricted assets (236,469) Current maturities of revenue bonds, payable from restricted assets (1,035,000) Reserved for revenue bond principal and interest $ 922,863 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, 2008 was 4.88 times. 57 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE 5. LONG-TERM DEBT -CONTINUED 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 Statement of Financial Accounting Standards No. 13, "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, 2008, the capitalized costs of the Governmental leased property and Business -type leased property under capital leases were $786,210 and $426,144, respectively. The temis 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, 2008 are as follows: Fiscal Year Ending Govemmental Activities September 30, Principal Interest Total 2009 $ 62,300 $ 5,500 $ 67,800 2010 55,750 2,904 58,654 2011 33,353 509 33,862 Total $ 151,403 $ 8,913 $ 160,316 Fiscal Year Ending Business -type Activities September 30, Principal Interest Total 2009 $ 41,341 $ 5,725 $ 47,066 2010 38,398 3,398 41,796 2011 34,314 1,388 35,702 2012 5,714 41 5,755 Total $ 119,767 $ 10,552 $ 130,319 Operating Leases The City leases machinery and equipment under noncancelable operating leases. Total costs for such leases were $139,403 for the fiscal year ended September 30, 2008. Future minimum lease payments, by year and in the aggregate, under the non -cancelable lease commitments are as follows: Fiscal Year Ending September 30, 2009 2010 2011 2012 Total 6*1 Amount $ 140,339 140,339 140,339 6,994 $ 428,011 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTES. 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 2008 were as follows: Fund Transfers In Transfers Out Major Governmental Funds: General Fund $ 3,243,426 $ 2,433,919 General Non -Bond Capital Projects 1,764,397 20,000 General Obligation Bonds 174.617 Total Major Governmental Funds 5.007.823 2.628.536 Non -major Governmental Funds: Antenna Rental Fund - 190,600 Parks & Recreation Special Revenue 210,600 - Park Improvement - 62,533 Grants & Special Revenue 284,504 - Library Acquisition 25.000 Total Non -major Governmental Funds 495.104 278,133 Major Enterprise Funds Water and Sewer Fund 160,477 2,798,116 Solid Waste Fund - 393,353 Drainage Utility Fund - 529,759 Golf Course Fund 754.155 Total Major Enterprise Funds $ 914.632 $ 3.721.228 Internal Service Funds: Risk Management Fund 210,338 Total Internal Service Funds 210.338 Total Transfers $ 6.627.897 $ 6.627.897 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 $5,007,823 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 $2,628,536 include rash financing of capital projects, support of programs recorded in non -major governmental funds and internal service funds. W. CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE 6. INTERFUND TRANSFERS —CONTINUED Proprietary funds: Total transfers in of $914,632 mainly represent amounts transferred into the Golf Course to support operations. The total transfer out of $3,721,228 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 $210,338 mainly represents the amounts needed for administrative support of the Risk Management fund. NOTE 7. RETIREMENT PLAN Plan Description The City provides pension benefits for all of its full-time employees through a non-traditional, joint contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), one of 827 currently administered by TMRS, an agent multiple -employer public employee retirement system. Each of the 827 municipalities has an annual, individual actuarial valuation performed. All assumptions for the December 31, 2006 valuations are contained in the 2005 TMRS Comprehensive Annual Financial Report. A copy of that report can be obtained by writing to: Texas Municipal Retirement System, P.O. Box 149153, Austin, Texas 78714-9153. Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the City -financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount at least equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are a percentage (100%, 150%, or 200%) of the employee's accumulated contributions. In addition, the City can grant, as often as annually, another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contributions accumulated with interest if the current employee contribution rate and City matching percent had always been in existence and if the employee's salary had always been the average of his salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer -financed monetary credits with interest were used to purchase an annuity. 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 (as of 4/01/08): Deposit Rale: 7% Matching Ratio (City to Employee) 2 to 1 A member is vested after 5 years Members can retire at certain ages, based on the years of service with the City. The Service Retirement Eligibilities for the City are: 5 years/age 60; 20 years/any age. Contributions and Funding Policy Under the state law governing TMRS, the actuary annually determines the City contribution rate. This rate consists of the normal cost contribution rate and the prior service contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the currently accruing monetary credits due to the City matching percent, which are the obligation of the City as of an employee's retirement date, not at the time the employee's contributions are made. The normal cost contribution rate is the actuarially determined percent of RE CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE 7. RETIREMENT PLAN - CONTINUED payroll necessary to satisfy the obligation of the City to each employee at the time his/her retirement becomes effective. The prior service contribution rate amortizes the unfunded (over funded) actuarial liability (asset) over the remainder of the plan's 25 -year amortization period. The unit credit actuarial cost method is used for determining the City contribution 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, 2006 valuation is effective for rates beginning January 2008). Contributions and Fundina Policy Contributions by the City were $2,680,367 or 9.6% of the covered payroll of $27,986,779 as required by the actuarial valuation. Annual City TMRS pension cost and related information for the last three years is as follows: Annual Pension Fiscal Year Cost (APC) 2006 2,570,900 2007 2,519,314 2008 2,680,367 Percentage of Net Pension APC Contributed Obligation 100% 0 100% 0 100% 0 Actuarial Assumotions Actuarial Cost Method -- Projected Unit Credit Amortization Method -- Level Percent of Payroll Amortization Period - - 30 Years — Closed Period Asset Valuation Method -- Amortized Cost Investment Rate of Return -- 7% Projected Salary increases -- Varies by Age and Service Includes Inflation At -- 3.0% Cost -of -Living Adjustments -- 2.1%(3.0 CPI) Schedule of Fundina Proaress December 31, Actuarial Valuation Date 2007 2006 2005 2004 2003 Actuarial value of assets $44,966,760 $39,700,687 $34,749,259 $30,154,132 $26,378,242 Actuarial accrued liability 65,013,172 47,412,499 41,257,545 36,4511,050 33,315,146 Percentage funded 69.2% 83.73% 84.2% 83% 79% Unfunded (Over -funded) Actuarial Accrued Liability (UAAL) 20,016,412 7,711,812 6,508,286 6,296,918 6,936,904 Annual covered payroll 27,986,779 25,875,248 23,580,572 21,251,288 18,963,358 UAAL as a percentage of covered payroll 71.5% 29.8% 27.6% 30% 37% 61 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE 7. RETIREMENT PLAN - CONTINUED Additional Information At its December 8, 2007 meeting, the TMRS Board of Trustees adopted actuarial assumptions to be used in the actuarial valuation for the year ended December 31, 2007. A summary of the actuarial assumptions and definitions can be found in the December 31, 2007 TMRS Comprehensive Annual Financial Report (CAFR). Since its inception, TMRS has used the traditional Unit Credit actuarial funding method. This method accounts for liability accrued as of the valuations date but does not project the potential future liability of provisions adopted by a city. Two-thirds of the cities participating in TMRS have adopted the Updated Service Credit and Annuity Increases provisions on an annually repeating basis. These provisions are considered to be "committed" benefits (or likely to be guaranteed); as such, the TMRS Board has adopted the Projected Unit Credit (PUC) actuarial funding method, which facilitates advance funding for future updated service credits and annuity increases that are adopted on an annually repeating basis. For the December 31, 2007 valuation, the TMRS Board determined that the PUC method will be used. In addition, the Board also adopted a change in the amortization period from a 25 -year "open" to a 25 -year "closed" period. TMRS Board of Trustee rules provide that, whenever a change in actuarial assumptions or methods results in a contribution rate increase in an amount greater than 0.5%, the amortization period may be increased up to 30 years, unless a city requests that the period remain at 25 years. For cities with repeating features, these changes will likely result initially in higher required contributions and lower funded ratios. To assist in this transition to higher rates, the Board also approved an eight-year phase-in period, which will allow cities the opportunity to increase their contributions gradually (approximately 12.5% each year) to their full rate (or their required contribution rate). Using demographic data from the 12/31/06 valuation, TMRS' actuary has made calculations with the new actuarial assumptions. For cities with annually repeating benefits, those calculations resulted in estimated higher contribution rates, increased unfunded actuarial liabilities, and lower funded ratios. As of January 2008, The City elected to fund an additional 1% of the estimated payroll to reduce the unfunded liability. 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, 2008, the cost of water purchased under this contract was $6,035,319. 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 force 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 2008, the cost for transportation, treatment and disposal of sewage and other wastes was $4,319,308. :�f3 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2006 NOTES. DEFERRED COMPENSATION PLAN As a result of legislative changes, all amounts of compensation deferred, 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, 2008, the deferred compensation investments are not reported in the City's financial statements. 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 carder 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 $100,000 per person. Throughout the policy year, the "stop loss" insurance carrier reimburses the City for claims paid during the policy year which exceeded the "stop loss" amount. A commercial insurance company re -insures the City for individual claims in excess of up to a lifetime maximum of $2,000,000. 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, 2008 was $629,487. 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 2004 $ 362,020 $ 3,827,089 $ 3,764,493 $ 424,616 2005 424,616 4,506,755 4,404,086 527,285 2006 527,285 4,347,042 4,359,306 515,021 2007 515,021 6,056,992 5,954,712 617,301 2008 617,301 9,206,758 9,194,572 629,487 63 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE10. RISK MANAGEMENT—CONTINUED Postemplovment Benefits The City provides post -employment health care benefits to all employees who retire from the City at any age with 20 years of service. The benefit provided by the City consists of participation in the Citys health insurance plan at the same cost as an employee until age 65. Premiums are equal to COBRA rates and are paid entirely by the retired employee. Currently only one retiree is covered by these benefits. During fiscal year 2007-2008, retiree claims were $4,689 less than premiums collected. Revenues and expenditures are included in the Risk Management Fund. In fiscal year 2008-2009 the City will be required to implement GASB Statement 45 "Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. To prepare for this implementation the City has contributed a total of $80,136 as operating transfers from the operating funds to the Risk Management Fund to offset a $534,259 unfunded liability determined from an independent actuarial valuation completed as of September 30, 2008. The annual required contribution for fiscal year 2008-2009 will be $48,973. The City is currently evaluating options of establishing an irrevocable trust and implementing the reporting requirements of this new statement. 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 errors/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 $400,000. During 2008, the City contributed $367,846 to the Risk Management Fund for workers' compensation. 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 2008, the City contributed $566,386 for property and general liability. NOTE 11. COMMITMENTS AND CONTINGENT LIABILITIES Federal Grants The City participates in a number of Stale 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. M CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2008 NOTE 11. COMMITMENTS AND CONTINGENT LIABILITIES • CONTINUED 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. 03 05pgCT *'NrfG R� �� rL ClrY OF Al"*o%h REQUIRED SUPPLEMENTARY INFORMATION SpeCT f �NTF GR i � ry G�TY OF CITY OF ALLEN, TEXAS EXHIBIT A-1 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2008 Total revenues 49,219,783 49,996,715 50,347,885 VARIANCE WITH EXPENDITURES BUDGETED AMOUNTS FINAL BUDGET - Current: POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Public safety 22,547,930 23,116,313 22,928,597 Ad valorem taxes, penalties and interest $ 27,836,891 $ 27,935,025 $ 28,616,988 It 681,963 Franchise taxes 5,068,750 5,372,079 5,458,370 86,291 Municipal sales tax 10,484,154 10,103,519 9,940,618 (162,901) Licenses, permits and fees 1,605,000 2,200,645 1,832,689 (367,956) Charge for services 1,308,596 1,534,401 1,557,929 23,528 Court Ines 1,914,027 1,759,700 1,713,351 (46,349) Gifts and contributions 137,865 221,142 278,357 57,215 Investment earnings 800,000 800,000 751,511 (48,469) Miscellaneous 64,500 70,204 198,072 127,868 Total revenues 49,219,783 49,996,715 50,347,885 351,170 EXPENDITURES Current: General government 12.768,832 12,860,048 11,864,246 995,802 Public safety 22,547,930 23,116,313 22,928,597 187,716 Public corks 3,577,032 3,645,242 3,478,586 166,656 Culture and recreation 10,528,058 10,791,342 10,378,193 413,149 Community development 2,339,186 2,294,905 2,254,889 40,016 Total expenditures 51,761,038 52,707,850 50,904,511 1,803,339 Excess (deficiency) of revenues over expenditures (2,541,255) (2,711,135) (556,626) 2,154,509 OTHER FINANCING SOURCES (USES) Transfers from other funds 3,439,551 3,494,426 3,243,426 (251,000) Transfers to other funds (693.776) (733,919) (2,433,919) (1,700,000) Capital lease obligations - - 153,455 153,455 Sale of capital assets 51,868 51,868 Total other financing sources (uses) 2,745,775 2,760,507 1,014,830 (1,745,677) NET CHANGE IN FUND BALANCE 204,520 49,372 458,204 408,832 FUND BALANCES, BEGINNING OF YEAR 13,373,243 13,373243 13,373,243 FUND BALANCES, END OF YEAR $ 13,577,763 $ 13,422,615 $ 13,831,447 $ 408,832 M CITY OF ALLEN, TEXAS NOTES TO REQUIRED SUPPLEMENTARY INFORMATION YEAR ENDED SEPTEMBER 30, 2008 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 total budgeted expenditures. 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. 67 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES 4* ?g I 66gPgGT * JAII, R, �� ry } Ctrr OF W-60 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 SPECIAL REVENUE FUND The Special Revenue Funds account for the proceeds of specific revenue sources (other than expendable trust or capital projects) that are legally restricted to expenditures for specific purposes. The City classifies the following Special Revenue Fund as a major fund: Facilities Agreement Fund - To account for funds received from builders and developers used on specific facility agreements such as neighborhood parks, paving and assessments in new developments. MAJOR CAPITAL PROJECTS FUNDS The Capital Projects Funds account for all resources used for the acquisition and/or construction of major capital facilities 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 bond funds. Proceeds from the sale of general obligation bonds provide financing for this fund. M CITY OF ALLEN, TEXAS GENERALFUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2008 AND 2007 ASSETS Cash and cash equivalents Investments Receivables: Ad valorem taxes (net of allowances for uncollectibles of $153,040 in 2008 and $176,292 in 2007) Sales taxes Accrued interest Other Prepaid items TOTAL ASSETS LIABILITIES AND FUND BALANCE LIABILITIES Accounts payable Accrued liabilities Deferred revenue TOTAL LIABILITIES FUND BALANCES Reserved for encumbrances Reserved for prepaid items Unreserved, undesignated TOTAL FUND BALANCES TOTAL LIABILITIES AND FUND BALANCE BTt; EXHIBIT B-1 2008 2007 $ 191,843 $ 947,111 14,275,913 12,269,447 171,074 340,921 1,835,784 1,676,639 125,784 109,679 1,518,246 1,369,040 1,126 - $ 18,119,770 $ 16,712,837 $ 2,198,805 $ 1,561,408 1,918,444 1,437,265 171,074 340,921 4,288,323 3,339,594 51,904 - 1,126 - 13, 778,417 13,373,243 13, 831,447 13,373,243 $ 18,119,770 $ 16,712,837 CITY OF ALLEN, TEXAS GENERALFUND COMPARATIVE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEARS ENDED SEPTEMBER 30, 2008 AND 2007 REVENUES Ad valorem taxes, penalties and interest Franchise taxes Municipal sales tax Licenses, permits and fees Charge for services Court fines Gifts and contributions Intergovernmental Investment earnings Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Public works Culture and recreation Community development Total expenditures Excess of revenues over expenditures OTHER FINANCING SOURCES AND (USES) Transfers from other funds Transfers to other funds Capital lease obligations Sale of capital assets Total other financing sources NET CHANGE IN FUND BALANCES FUND BALANCE, BEGINNING OF YEAR FUND BALANCE, END OF YEAR 70 EXHIBIT B•2 2008 2007 $ 28,616,988 $ 23,230,344 5,458,370 4,866,243 9,940,618 9,755,380 1,832,689 1,637,556 1,557,929 1,404,376 1,713,351 1,727,693 278,357 152,018 - 11,826 751,569,303 11 9 198,072 261,404 50,347,885 44,016,143 11,864,246 22,928,597 3,478,586 10,378,193 2,254,889 50,904,511 (556,626) 3,243,426 (2,433,919) 153,455 51,868 1,014,830 458,204 9,111,806 19,825,653 3,025,105 8,772,497 1,893,229 42,628,290 1,387,853 2,639,250 (2,180,010) 33,917 493,157 1,881,010 13,373,243 11,492,233 $ 13,831,447 $ 13,373,243 CITY OF ALLEN, TEXAS DEBT SERVICE FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2008 AND 2007 EXHIBIT B-3 Ill/c1-1111111kit I*WlzIr711121,Jf-T11AG1\fy V LIABILITIES Interest payable $ 46,628 $ 36,810 Deferred revenue 53,294 146,477 Total liabilities 99,922 183,287 FUND BALANCE Reserved for debt service 1,627,912 1,399,985 TOTAL LIABILITIES AND FUND BALANCE $ 1,727,834 $ 1,583,272 71 2008 2007 ASSETS Cash and cash equivalents $ 1,674,540 $ 1,434,750 Receivables: Ad valorem taxes (net of allowances for uncollectibles of $88,733 in 2008 and $109,352 in 2007) 53,294 146,476 Other receivables - 2,046 Total assets $ 1,727,834 $ 1,583,272 Ill/c1-1111111kit I*WlzIr711121,Jf-T11AG1\fy V LIABILITIES Interest payable $ 46,628 $ 36,810 Deferred revenue 53,294 146,477 Total liabilities 99,922 183,287 FUND BALANCE Reserved for debt service 1,627,912 1,399,985 TOTAL LIABILITIES AND FUND BALANCE $ 1,727,834 $ 1,583,272 71 CITY OF ALLEN, TEXAS DEBT SERVICE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEARS ENDED SEPTEMBER 30, 2008 AND 2007 REVENUES Ad valorem taxes Investment earnings Total revenues EXPENDITURES Principal retirement Interest and fiscal charges Total expenditures Deficiency of revenues over (under) expenditures NET CHANGE IN FUND BALANCES FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR 72 EXHIBIT B-0 2008 2007 $ 8,838,673 $ 9,957,899 150,821 316,837 8,989,494 10,274,736 4,775,000 6,325,000 3,986,567 3,843,462 8,761,567 10,168,462 227,927 106,274 227,927 106,274 1,399,985 1,293,711 $ 1,627,912 $ 1,399,985 CITY OF ALLEN, TEXAS DEBT SERVICE FUND BUDGETARY COMPARISON SCHEDULE FOR THE YEAR ENDED SEPTEMBER 30, 2008 EXHIBIT B-5 73 VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Ad valorem taxes $ 8,574,023 $ 8,616,954 $ 8,838,673 $ 221,719 Investment earnings 280,000 140,000 150,821 10,821 Total revenues 8,854,023 8,756,954 8,989,494 232,540 EXPENDITURES Principal retirement 4,705,277 4,775,000 4,775,000 - Inlerest and fiscal charges 4,099,731 4,027,714 3,986,567 41,147 Total expenditures 8,805,008 8,802,714 8,761,567 41,147 NET CHANGE IN FUND BALANCES 49,015 (45,760) 227,927 273,687 FUND BALANCE, BEGINNING OF YEAR 1,399,985 1,399,985 1,399,985 FUND BALANCE, END OF YEAR $ 1,449,000 $ 1,354,225 $ 1,627,912 $ 273,687 73 CITY OF ALLEN, TEXAS FACILITIES AGREEMENT FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2008 AND 2007 ASSETS Cash and cash equivalents Investments Accrued interest receivable Total assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Retainage payable Deferred revenue Total liabilities FUND BALANCES Reserved for encumbrances Unreserved, undesignated Total fund balances TOTAL LIABILITIES AND FUND BALANCES 74 EXHIBIT S-6 2008 2007 $ 2,584,248 $ 2,598,795 2,244,034 3,339,310 14,634 35,664 $ 4,842,916 $ 5,973,769 $ 158,442 $ 23,887 70,000 57,325 1,235,128 2,723,041 1,463,570 2,804,253 124,999 154,712 3,254,347 3,014,804 3,379,346 3,169,516 $ 4,842,916 $ 5,973,769 CITY OF ALLEN, TEXAS FACILITIES AGREEMENT FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEARS ENDED SEPTEMBER 30, 2008 AND 2007 REVENUES Gifts and contributions Investment earnings Total revenues EXPENDITURES Capital outlay Total expenditures NET CHANGE IN FUND BALANCES FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR 75 EXHIBIT B-7 2008 2007 $ 1,644,927 $ 1,527,029 209,830 343,099 1,854,757 1,870,128 1,644,927 1,527,029 1,644,927 1,527,029 209,830 343,099 3,169,516 2,826,417 $ 3,379,346 $ 3,169,516 CITY OF ALLEN, TEXAS GENERAL CAPITAL PROJECTS FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2008 AND 2007 ASSETS Cash and cash equivalents Investments Accrued interest receivable Special assessments receivable Total assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Retainage payable Accrued liabilities Total liabilities FUND BALANCES Reserved for encumbrances Unreserved, designated Total fund balances TOTAL LIABILITIES AND FUND BALANCES 76 EXHIBIT B-8 2008 2007 $ 5,602,769 $ 5,670,780 4,238,937 3,072,227 32,250 32,812 187,557 187,557 $ 10,061,513 $ 8,963,376 $ 853,431 $ 229,328 29,783 121,407 761,532 782,336 1,644,746 1,133,071 481,802 1,784,737 7,934,965 6,045,568 8,416,767 7,830,305 $ 10,061,513 $ 8,963,376 CITY OF ALLEN, TEXAS GENERAL CAPITAL PROJECTS FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEARS ENDED SEPTEMBER 30, 2008 AND 2007 REVENUES Charges for services Intergovernmental Investment earnings Gifts and contributions Miscellaneous Total revenues EXPENDITURES General government Capital outlay Total expenditures Deficiency of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers from other funds Transfers to other funds Total other financing sources (uses) NET CHANGE IN FUND BALANCES FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR 77 EXHIBIT B-9 2008 2007 $ 2,611,524 $ 770,929 1,559,343 1,359,628 254,464 415,660 46,128 - 1,094,483 721,002 5,565,942 3,267,219 3,244,163 76,095 3,479,714 3,802,831 6,723,877 3,878,926 (1,157,935) (611,707) 1,764,397 2,068,362 (20,909) 1,744,397 2,068,362 586,462 1,456,655 7,830,305 6,373,650 $ 8,416,767 $ 7,830,305 CITY OF ALLEN, TEXAS GENERAL OBLIGATION BOND FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2008 AND 2007 ASSETS Cash and cash equivalents Investments Accrued interest receivable Total assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Retainage payable Total liabilities FUND BALANCES Reserved for encumbrances Unreserved, undesignated Total fund balances TOTAL LIABILITIES AND FUND BALANCES IN EXHIBIT B-10 2008 2007 $ 10,808,303 $ 3,131,576 11, 233, 278 10,105, 881 96,558 107,932 $ 22,138,139 $ 13,345,389 $ 271,250 $ 91,616 11,055 19,051 282,305 110,667 2,946,042 96,773 18,909, 792 13,137,949 21,855,834 13,234, 722 $ 22,138,139 $ 13,345,389 CITY OF ALLEN, TEXAS GENERAL OBLIGATION BOND FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES SEPTEMBER 30, 2008 AND 2007 REVENUES Investment earnings Miscellaneous Total revenues EXPENDITURES General government Capital outlay Total expenditures Deficiency of revenues over expenditures OTHER FINANCING SOURCES Transfers to other funds 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 79 EXHIBIT B-11 2008 2007 $ 646,628 $ 245,817 12,923 10,138 659,551 255,955 333,689 1,263,817 1,766,037 83,434 2,099,726 1,347,251 (1,440,175) (1,091,296) (174,617) - 50,904 - 10,185,000 11,145,000 10,061,287 11,145,000 8,621,112 10,053,704 13,234,722 3,181,018 $ 21,855,834 $ 13,234,722 NON -MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS The Special Revenue Funds account for the proceeds of specific revenue sources (other than expendable trust or capital projects) that are legally restricted to expenditures for specific purposes. Non - major Special Revenue Funds are as follows: Antenna Rental Fund — To account for funds received and expended for capital items for the City. 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. Parks and Recreation Fund — To account for the provision of recreation services to the residents of the City, account for the operations and maintenance of the City's leisure and competitive swimming pools and to account for funds received and expended for the City of Allen swim team activities. Library Acquisition Fund — To account for funds received and expended for the acquisition of library books and other resources. 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. CAPITAL PROJECTS FUNDS The Capital Projects Funds account for all resources used for the acquisition and/or construction of major capital facilities by the City, except those financed by proprietary funds and trust funds. The following Capital Projects Funds are classified as non -major funds: Park Improvements Fund — To account for the financing, improvements, and enlargements of the City's parks. These improvements and enlargements are funded by general obligation bond proceeds and interest on investments. CITY OF ALLEN, TEXAS NON -MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET SEPTEMBER 30, 2008 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ - $ 20,679 $ - GRANTS 38,783 Accrued liabilities - HOTEL 10,790 AND PARKS Deferred revenue ANTENNA OCCUPANCY ASSET SPECIAL AND TOTAL LIABILITIES RENTAL TAX FORFEITURE REVENUE RECREATION ASSETS Cash and cash equivalents $ 278,636 $ 881,243 $ 19,651 $ 423,352 $ 698 553 Investments 114,041 79,333 - - 99.166 Accounts receivable 4,870 59,099 - 132,778 5.941 Accrued interest 397,547 $ 1,019,675 $ 19,651 $ 556,130 $ 803,660 TOTAL ASSETS $ 397,547 $ 1,019,675 $ 19,651 $ 556,130 $ 803.660 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ - $ 20,679 $ - $ 56,133 $ 38,783 Accrued liabilities - - 10,790 18,9]2 49,801 Deferred revenue 83,160 13,715 TOTAL LIABILITIES 20,679 10,790 158,265 102,299 FUND BALANCES Reserved for encumbrances - - - 51,845 - Unreserved 397,547 998,996 8,861 346,020 701,361 TOTAL FUND BALANCES 397,547 998.996 8,861 397865 701,361 TOTAL LIABILITIES AND FUND BALANCES $ 397,547 $ 1,019,675 $ 19,651 $ 556,130 $ 803,660 81 EXHIBIT C-1 CAPITAL PROJECTS TOTAL TAX NON -MAJOR LIBRARY PARK INCREMENT PARK GOVERNMENTAL ACQUISITION DEDICATION FINANCING IMPROVEMENTS FUNDS $ - $ 948,560 $ 150,460 $ - $ 3,400,455 771,222 - - 1,063,762 - 43,211 - 245,899 2,879 2,879 $ $ 1,722,661 $ 193,871 $ $ 4,712,995 863 $ - $ 116,458 - 79,563 96,675 663 292,896 139,999 - - 191,844 1,582,662 192,808 4,228,255 1,722,661 192,808 4,420,099 E - $ 1,722,661 $ 193,671 $ $ 4,712,995 ryll CITY OF ALLEN, TEXAS NON -MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED SEPTEMBER 30, 2008 83 SPECIAL REVENUE GRANTS HOTEL AND PARKS ANTENNA OCCUPANCY ASSET SPECIAL AND RENTAL TAX FORFEITURE REVENUE RECREATION REVENUES Atl valorem taxes, penalties and interest $ - $ - $ - $ - $ Franchise taxes - - - 72,362 - Munidpalsauestax - - - - - Licenses, portals. and lines 326,741 - - - - Courtfines - - - 187,126 - HotelImoteltakes - 719,039 - - Recreation fees - - - - 2,154,236 Gifts and contributions - - - - 220,099 Inter9ovemmenfal - - - 607,524 - Investmenteamings 10,730 19,879 343 10585 17,345 Miscellaneous 25,641 116 101,050 Total revenues 337,471 738,718 25,984 877,713 2,492,730 EXPENDDURES General government - - - 1861943 - Public sefoh, - - 23,276 317,279 Public .*a - - - IODM5 - Culture add recreation 72,351 274,M0 - 59,850 2,386,354 Communitydevelopment - - - 159,977 - Capital outray 16,075 222,313 Total expenditures 72,351 274,020 39,351 1,047,007 2,386,354 Excess (deficenoyj of revenues over expenitures 265,120 484,698 (13,367) (169294) 106,376 OTHER FINANCING SOURCES (USES) Transfers from other funs - - - 284,504 210,600 Transfers to other funds (19 4)600) - - - - Sale of capital assets 1588 - Total other financing sources(uses) (180.600) 1586 284,504 210,600 NET CHANGE IN FUND BALANCES 74,520 484,698 (11,801) 115,210 316.976 FUND BALANCES, BEGINNING OF YEAR 323.027 534,298 20,662 282,655 384385 FUND BALANCES, END OF YEAR $ 397,54] $ 998,998 $ 8,861 S 397.865 $ 701,361 83 EXHIBIT C-2 (282,153) (693)32) 192,808 CAPITALPROJECTS 81,018 262.153 2,416,393 115.508 4.339.081 $ - $ 1.722.861 $ 192,808 5 TOTAL E 4.620,099 TAX NON -1111A 01R LIBRARY PARK INCREMENT PARK GOVERNMENTAL ACQUISITION OEOICATION FINANCING IMPROVEMENTS FUNDS $ - $ - $ 68,780 $ - $ 68,780 - - - 72.382 - - 105,916 - 105,916 - 161,709 - - 488,450 - - - - 187,126 - - - - 719,039 - - - - 2,154,236 - - - - 220,099 - - 16,385 - 625,809 2,944 81,749 590 2,792 146.757 126,807 2.944 243,458 193,671 2,792 4.915.481 71,684 - 863 - 259,490 - - - - 340,555 . - - - 100.845 168,413 - - - 2,980,786 - - - - 159,977 937.190 55.787 1.231,345 240.097 937,190 863 55.767 5,053,000 (237,153) (693.732) 192.808 (52.975) (137,519) - - - - 495,104 (25,000) - - (62,533) (278,133) 1.588 (25.000) (62 533) 218,5 7 (282,153) (693)32) 192,808 (115,508) 81,018 262.153 2,416,393 115.508 4.339.081 $ - $ 1.722.861 $ 192,808 5 E 4.620,099 84 ESpEC7 a 'N TFG R, _ Ty { Ci7Y OF 01"%'E0 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. '.:b7 CRY OF ALLEN, TEXAS WATER AND SEWER ENTERPRISE FUND COMPARATIVE STATEMENTS OF NET ASSETS SEPTEMBER 30, 2008 AND 2007 EXHIBIT 0.1 2008 2007 ASSETS CURRENT ASSETS Cash and cash equivalents $ 9,797.519 $ 8.970,293 Investments 8,982,556 6.404,397 Receivables, net of albwance for uncollectibles: Amounts 4,218,524 4,123,348 Accmed interest 69,512 68,401 Inventories 193,378 131,481 Restricted cash and cash equivalents 2,194,332 2,174,961 Total current assets 25,455,821 21,872,881 NONCURRENT ASSETS CAPITAL ASSETS Lend 4,048,296 3,380,635 Towers, tanks, and pump stations 135,540,519 122,452,540 Vehicles 716,292 760,655 Machinery and equipment 3,289,907 2,946093 Furniture and fixtures 11,114 11,114 Construction in progress 11,300,770 10,169,772 Total capital assets 154,906,898 139,722,809 Less: accumulated depreciation (44886793) (40,474,572) Capital assets, net of accumulated depreciation 110,020,105 99,248,237 DEFERRED CHANGES Bond issuance costs, net of amortization 141,954 151.632 Total noncurrent assets 110,162,059 96396869 TOTAL ASSETS 135,617,880 121,272,750 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable 1,310,067 1,516,648 Accrued liabilities 216,391 506331 Payable from restricted! assets: Revenue bonds payable - current 1,035,000 1,575,000 Accrued interest payable 236,469 263,119 Accrued compensated absences -current 181,795 147,826 Customer deposits payable 1,376,153 1,306963 Total current liabilities 4,355,875 5,320,887 NONCURRENT LIABILITIES Revenue bonds payable 13,926,976 14,956,206 Accrued compensated absences 49,634 40,359 Total noncurrent liabilities 13.97B.610 14,996565 TOTAL LIABILITIES 18,334,485 20,317,452 NET ASSETS Invested In capital assets, net of related! debt 95,066,668 82,889,025 Restricted Restricted for revenue bond principal and interest 922,863 336,842 Unrestricted 21,293,864 17,729,431 TOTAL NET ASSETS $ 117,283,395 $ 100,955.298 EM CITY OF ALLEN, TEXAS WATER AND SEWER ENTERPRISE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS SEPTEMBER 30, 2008 AND 2007 EXHIBIT D-2 2008 2007 OPERATING REVENUES Water sales $ 14,458,505 $ 10,992,395 Sewer charges 8,260,250 7,084,215 Connection fees 275,350 241,895 Service charges 1,195,952 469,517 Miscellaneous 399,383 606,264 Total operating revenues 24,589,440 19,394,286 OPERATING EXPENSES Personnel services 3,256,682 2,833,142 Contractual and other services 11,642,961 10,953,668 Maintenance 219,849 277,231 Supplies 122,942 123,102 Depreciation - 4,529,586 4,373,306 Other 968,558 126,462 Total operating expenses 20,740,578 18,686,911 OPERATING INCOME 3,948,862 707,375 NON-OPERATING REVENUES (EXPENSES) Interest income 669,215 1,130,430 Interest expense (781,420) (856,339) Gain on disposal of capital assets 667,624 - Development fees 2,483,886 1,889,477 Total non-operating expense 3,039,305 2,163,568 INCOME BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS 6,888,167 2,870,943 CAPITAL CONTRIBUTIONS AND TRANSFERS Capital contributions 12,077,569 4,139,592 Transfers from other funds 160,477 22,145 Transfers to other funds (2,798,116) (3,066,675) Total capital contributions and transfers 9,439,930 1,095,062 CHANGE IN NET ASSETS 16,328,097 3,966,005 NET ASSETS, BEGINNING OF YEAR 100,955,298 96,989,293 NET ASSETS, END OF YEAR $ 117,283,395 $ 100,955,298 87 CITY OF ALLEN, TEXAS EXHIBIT D-3 WATER AND SEWER ENTERPRISE FUNDS COMPARATIVE STATEMENTS OF CASH FLOWS FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2008 AND 2007 2008 2007 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 24,494,264 $ 18,602,810 Cash paid to employees for services (3,213.438) (2.819,333) Cash paid for goods and services (13,438,858) (11,812,361) Net cash provided by operating activities 7,841,968 3,971,116 CASH FLOWS FROM NONtAPITAL FINANCING ACTIVITIES Transfers from other funs 160,477 1,495,645 Transfers to other funds (2,798,116) (4,540,175) Net cash used in non -capital financing activities (2,637,639) (3,044,530) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal paid on revenue bond maturities (1,575,000) (1,580,000) Interest and fees paid on long-term debt (800,300) (873,036) Acquisition and construction of capital assets (2,556,262) (6,667,748) Contributions from developers 2,483,886 1,889,477 Net cash used in capital and related financing activities (2,447,676) (7,231,307) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investment securities 9,810,000 (4,406,570) Proceeds from the sale and maturities of Investment securities (12,403,866) 7,865,285 Interest on investments 683,811 1,106,905 Net cash provided by (used in) investing activities (1,910,055) 4,565,620 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 846,598 (1,739,101) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 11.145,254 12,864,355 CASH AND CASH EQUIVALENTS, END OF YEAR $ 11,991,852 $ 11,145,254 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net Operating income $ 3.848,862 $ 707,375 Adjustments to reconcile net operating income to net cash provided by operating activities: Depredation and amortlzatlon expense 4,539,266 4,382,986 Change in assets and liabilities: (Increase) in accounts racelvable (95,176) (791,478) (Increase) decrease in Inventories (61,897) 10,028 Decrease in accounts payable (206,581) (558.360) Increase (Decrease) in accrued liabilities (292,940) 148,395 Increase in compensated absences 43,244 13,809 Increase in utility deposits 67,190 58,379 Total adjustments 3,993.105 3,263,741 Net cash provided by operating activities $ 7,341,968 $ 3.971.116 NON-CASH INVESTING ACTIVITIES Change in the fair value of investments$ (15,707) $ 9,534 NON-CASH FINANCING ACTIVITIES Contributions of capital assets from developers $ 12,077,569 $ 4,139,592 CITY OF ALLEN, TEXAS EXHIBIT D4 SOLID WASTE ENTERPRISE FUND COMPARATIVE STATEMENTS OF NET ASSETS SEPTEMBER 30, 2008 AND 2007 NONCURRENT ASSETS CAPITAL ASSETS Vehicles 2008 2007 ASSETS 9,819 9,819 CURRENTASSETS 54,267 54,267 Cash and cash equivalents $ 1,232,645 $ 1,995,509 Investments 1,250,000 - Receivables, net of allowance for uncollectibles: 2,969 3,584 Accounts 259,673 233,619 Other 111,207 321,565 Total current assets 2,853,525 2,550,693 NONCURRENT ASSETS CAPITAL ASSETS Vehicles 44,448 44,448 Machinery and equipment 9,819 9,819 Total capital assets 54,267 54,267 Less: accumulated depreciation (51,298) (50,683) Capital assets, net of accumulated depreciation 2,969 3,584 Total noncurrent assets 2,969 3,584 TOTAL ASSETS 2,856,494 2,554,277 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable 247,351 175,471 Accrued compensated absences -current 7,603 16,828 Accrued liabilities 27,567 21,447 Total current liabilities 282,521 213,746 NONCURRENT LIABILITIES Accrued compensated absences 20,994 5,351 Total noncurrent liabilities 20,994 5,351 TOTAL LIABILITIES 303,515 219,097 NET ASSETS Invested in capital assets, net of related debt 2,969 3,584 Unrestricted 2,550010 2,331,596 TOTAL NET ASSETS $ 2,552,979 $ 2,335,180 M CITY OF ALLEN, TEXAS EXHIBIT D-5 SOLID WASTE ENTERPRISE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS FOR THE YEARS ENDED SEPTEMBER 30, 2008 AND 2007 :U]:G•19A:LV I:[H:7A�/q:P14=: Interest income 2008 2007 OPERATING REVENUES 611,152 757,331 Garbage collections $ 4,931,558 $ 4,552,398 Other 44,036 45,407 Total operating revenues 4,975,594 4,597,805 OPERATING EXPENSES 217,799 683,196 Personnel services 344,170 219,162 Contractual and other services 3,988,631 3,634,416 Supplies 16,330 9,438 Depreciation 614 9,449 Other 83,815 48,595 Total operating expenses 4,433,560 3,921,060 OPERATING INCOME 542,034 676,745 :U]:G•19A:LV I:[H:7A�/q:P14=: Interest income 69,118 80,586 INCOME BEFORE TRANSFERS 611,152 757,331 TRANSFERS Transfers to other funds (393,353) (74,135) Total transfers (393,353) (74,135) CHANGE IN NET ASSETS 217,799 683,196 NET ASSETS, BEGINNING OF YEAR 2,335,180 1,651,984 NET ASSETS, END OF YEAR $ 2,552,979 $ 2,335,180 g CITY OF ALLEN, TEXAS EXHIBIT D-6 SOLID WASTE ENTERPRISE FUND COMPARATIVE STATEMENTS OF CASH FLOWS FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2008 AND 2007 91 2008 2007 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 5,159,898 $ 4,530,553 Cash paid to employees for services (337,752) (219,568) Cash paid for goods and services (4,010,775) (3,597,107) Net cash provided by operating activities 811,371 713,878 CASH FLOWS FROM NON -CAPITAL FINANCING ACTIVITIES Transfers to other funds (393,353) (74,134) Net cash used in non -capital financing activities (393,353) (74,134) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investment securities (1,250,000) - Interest oninvestments 69,118 80,586 Net cash provided by (used in) investing activities (1,180,882) 80,586 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (762,864) 720,330 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,995,509 1,275,179 CASH AND CASH EQUIVALENTS, END OF YEAR $ 1,232,645 $ 1,995,509 RECONCILIATION OF OPERATING (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Net operating $ 542,034 $ 676,745 Adjustments to reconcile net operating to net cash provided by operating activities: Depreciation 616 9,449 Change in assets and liabilities: Increase in accounts receivable (26,054) (45,179) (Increase) decrease in other receivables 210,358 (22,073) Increase in accounts payable 71,879 106,437 Increase (decrease) in accrued liabilities 6,120 (11,095) Increase (decrease) in accrued compensated absences 6,418 (406) Total adjustments 269,337 37,133 Net cash provided by operating activities $ 811,371 $ 713,878 91 CITY OF ALLEN, TEXAS DRAINAGE ENTERPRISE FUND COMPARATIVE STATEMENTS OF NET ASSETS SEPTEMBER 30, 2008 AND 2007 EXHIBIT D-7 2008 2007 ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,096,169 $ 1,240,556 Accounts receivable 53,243 53,942 Total current assets 1,149,412 1,294,498 NONCURRENT ASSETS CAPITAL ASSETS Other improvements 496,132 496,132 Vehicles 102,079 102,079 Machinery and equipment 360,734 373,734 Total capital assets 958,945 971,945 Less: accumulated depreciation (424,697) (400,531) Capital assets, net of accumulated depreciation 534,248 571,414 Total noncurrent assets 534,248 571,414 TOTAL ASSETS 1,683,660 1,865,912 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable 22,663 22,774 Accrued compensated absences 13,242 10,791 Accrued liabilities 10,677 8,867 Total current liabilities 46,582 42,432 NONCURRENT LIABILITIES Accrued compensated absences 4,211 3,431 Total noncurrent liabilities 4,211 3,431 TOTAL LIABILITIES 50,793 45,863 NET ASSETS Invested in capital assets, net of related debt 534,248 571,414 Unrestricted 1,098,619 1,248,635 TOTAL NET ASSETS $ 1,632,867 $ 1,820,049 92 CITY OF ALLEN, TEXAS EXHIBIT D-8 DRAINAGE ENTERPRISE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS FOR THE YEARS ENDED SEPTEMBER 30, 2008 AND 2007 2008 2007 OPERATING REVENUES Drainage fees Service charges 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 to other funds Total operating transfers CHANGE IN NET ASSETS NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR 93 $ 949,950 $ 909,066 66,258 66,573 1,016,208 975,639 311,994 299,721 98,318 87,916 191,178 178,765 15,385 28,632 37,165 47,326 56,671 63,143 710,711 705,503 305,497 270,136 37,080 58,494 342,577 328,630 (529,759) (170,575) (529,759) (170,575) (187,182) 158,055 1,820,049 1,661,994 $ 1,632,867 $ 1,820,049 CITY OF ALLEN, TEXAS DRAINAGE ENTERPRISE FUND COMPARATIVE STATEMENTS OF CASH FLOWS FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2008 AND 2007 EXHIBIT D-9 2008 2007 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 1,016,907 $ 963,705 Cash paid to employees for services (308,763) (296,108) Cash paid for goods and services (359,852) (342,491) Net cash provided by operating activities 348,292 325,106 CASH FLOWS FROM NON -CAPITAL FINANCING ACTIVITIES Transfers to other funds (529,759) (170,575) Net cash used in non-capkal financing activities (529,759) (170,575) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 37,080 58,494 Net cash provided by investing activities 37,080 58,494 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (144,387) 213,025 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,240,556 1,027,531 CASH AND CASH EQUIVALENTS, END OF YEAR $ 1,096,169 $ 1,240,556 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net operating income $ 305,497 $ 270,136 Adjustments to reconcile net operating income to net cash provided by operating activities: Depreciation 37,165 47,326 Change in assets and liabilities: Increase (decrease) in accounts receivable 699 (11,934) Increasse (decrease) in accounts payable (110) 15,466 Increase in accrued liabilities 1,810 499 Increase in compensated absences 3,231 3,613 Total adjustments 42,795 54,970 Net cash provided by operating activities $ 348,292 $ 325,106 i 711 CITY OF ALLEN, TEXAS GOLF COURSE ENTERPRISE FUND COMPARITIVE STATEMENTS OF NET ASSETS SEPTEMBER 30, 2008 AND 2007 EXHIBITD-10 2008 2007 ASSETS CURRENT ASSETS Cash and rash equivalents $ 607,108 $ 233,047 Accounts receivable 9,247 6,849 Prepaid items 11,050 11,050 Total current assets 627,405 250,946 NONCURRENT ASSETS CAPITAL ASSETS Furniture and fixtures 10,894 10,894 Machinery and equipment 438,863 309,508 Less: accumulated depreciation (313,459) (247,948) Capital assets, net of accumulated depreciation 136,298 72,454 Total noncurrent assets 136,298 72,454 TOTAL ASSETS 763,703 323,400 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable 70,754 67,625 Accrued liabilities 45,271 32,517 Accrued compensated absences 26,176 19,789 Capital leases payable - current 41,341 36,063 Customer deposits payable 27,331 26,488 Total current liabilities 210,873 182,482 NONCURRENT LIABILITIES Capital leases payable 78,428 15,140 Accrued compensated absences 17,111 12,936 Total noncurrent liabilities 95,539 28,076 TOTAL LIABILITIES 306,412 210,558 NET ASSETS Invested in capital assets, net of related debt 16,529 21,251 Unrestricted 440,762 91,591 TOTAL NET ASSETS $ 457,291 $ 112,842 FR CITY OF ALLEN, TEXAS EXHIBIT D-11 GOLF COURSE ENTERPRISE FUND COMPARITIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS FOR THE YEARS ENDED SEPTEMBER 30, 2008 AND 2007 OPERATING REVENUES Service charges Miscellaneous Total operating revenues OPERATING EXPENSES Personnel services Contractual and other services Maintenance Supplies Depreciation Other Total operating expenses OPERATING LOSS TRANSFERS Transfers from other funds Total transfers CHANGE IN NET ASSETS NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR 92 2008 2007 $ 1,547,902 $ 1,317,956 6,759 22,131 344,449 107,565 1,554,661 1,340,087 $ 457,291 $ 112,842 1,063,811 981,802 550,450 515,133 86,253 76,054 149,653 123,946 65,511 72,738 48,689 33,501 1,964,367 1,803,174 (409,706) (463,087) 754,155 570,652 754,155 570,652 344,449 107,565 112,842 5,277 $ 457,291 $ 112,842 CITY OF ALLEN, TEXAS GOLF COURSE ENTERPRISE FUND COMPARITIVE STATEMENTS OF CASH FLOWS FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2008 AND 2007 EXHIBIT D-12 2008 2007 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 1,552,263 $ 1,348,948 Cash paid to employees for services (1,053,249) (972,854) Cash paid for goods and services (818,319) (725,514) Net cash provided in operating activities (319,305) (349,420) CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Operating transfers from otherfunds 754,155 660,652 Net cash provided by non-capital financing activities 754,155 660,652 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (129,355) (23,612) Capital lease down payment 68,566 (88,713) Net cash provided by (used in) capital and related financing activities (60,789) (112,325) NET INCREASE IN CASH AND CASH EQUIVALENTS 374,061 198,907 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 233,047 34,140 CASH AND CASH EQUIVALENTS, END OF YEAR $ 607,108 $ 233,047 RECONCILIATION OF OPERATING LOSS TO NET CASH USED IN OPERATING ACTIVITIES Net operating loss $ (409,706) $ (463,087) Adjustments to reconcile net operating loss to net cash used in operating activities: Depreciation 65,511 72,738 Change in assets and liabilities: (Increase) decrease in accounts receivable (2,398) 8,861 Increase in accounts payable 3,129 21,573 Increase (decrease) in accrued liabilities 12,754 (972) Increase in customer deposits 843 2,519 Increase in compensated absences 10,562 8,948 Total adjustments 90,401 113,667 Net cash provided (used in) operating activities$ (319,305) $(349,420) 97 %ESpECT • ,N rFG R, �� YY * ClTY OF AU" 61% M k O n 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. U9 CITY OF ALLEN, TEXAS EXHIBIT E-1 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET ASSETS SEPTEMBER 30,2008 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2007) RISK TOTALS REPLACEMENT MANAGEMENT FUND FUND 2008 2007 ASSETS CURRENT ASSETS Cash and cash equivalents $ 3,177,507 $ 2,356,451 $ 5,533,958 $ 6,261,491 Investments 3,229,747 985,499 4,215,246 2,036,567 Accounts receivable - - - 2,295 Accrued interest receivable 17,922 6,025 23,947 21,751 Total current assets 6,425,176 3,347,975 9,773,151 8,322,104 CAPITAL ASSETS Machinery and equipment 1,309,665 - 1,309,665 1,167,326 Vehicles 4,621,191 - 4,621,191 3,875,798 Accumulated depreciation (3,178,650) (3,178,650) (2,440,479) Capital assets, net of accumulated depreciation 2,752,206 2,752,206 2,602,645 TOTAL ASSETS 9,177,382 3,347,975 12,525,357 10,924,749 LIABILITIES AND NET ASSETS LIABILITIES Accounts payable 16,504 50,178 66,682 138,936 Incurred but not reported claims 629,487 629,487 617,301 TOTAL LIABILITIES 16,504 679,665 696,169 756,237 NETASSETS Invested in capital assets, net of related debt 2,752,206 - 2,752,206 2,602,645 Unrestricted 6,408,672 2,668,310 9,076,982 7,565,867 TOTAL NET ASSETS $ 9,160,878 $ 2,668,310 $ 11,829,188 $ 10,168,512 M CITY OF ALLEN, TEXAS EXHIBIT E-2 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS FOR THE YEAR ENDED SEPTEMBER 30, 2008 (WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2007) RISK TOTALS REPLACEMENT MANAGEMENT FUND FUND 2008 2007 OPERATING REVENUES Charges for services Other income Total operating revenues OPERATING EXPENSES Personal services Contractual services Depreciation Total operating expenses OPERATING INCOME NON-OPERATING REVENUES Investment earnings Gain on disposal of capital assets Total non-operating revenues INCOME BEFORE TRANSFERS TRANSFERS Transfers from other funds Total transfers CHANGE IN NET ASSETS NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR $ 1,374,695 $ 7,030,251 $ 8,404,946 $ 7,341,182 11,470 132,556 144,026 67,396 1,386,165 7,162,807 8,548,972 7,408,578 - 163,918 163,918 156,678 - 6,412,182 6,412,182 6,056,994 804,994 804,994 668,279 804,994 6,576,100 7,381,094 6,881,951 581,171 586,707 1,167,878 526,627 192,129 85,786 277,915 432,293 4,545 4,545 38,499 196,674 85,786 282,460 470,792 777,845 672,493 1,450,338 997,419 210,338 210,338 777,845 882,831 8,383,033 1,785,479 $ 9,160,878 $ 2,668,310 100 210,338 208,665 210,338 208,665 1,660,676 1,206,084 10,168,512 8,962,428 $ 11,829,188 $ 10,168,512 CITY OF ALLEN, TEXAS EXHIBIT E-3 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED SEPTEMBER 30, 2008 (WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2007) RISK TOTALS REPLACEMENT MANAGEMENT FUND FUND 2008 2007 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from transactions with other funds Cash paid to employees for services Cash paid for goods and services Cash paid for claims Net cash provided by operating activities CASH FLOWS FROM NON -CAPITAL FINANCING ACTIVITIES Transfers from other funds Net cash provided by non -capital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES ANuisition of capital assets Proceeds from sale of capital assets Net cash used in capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investment secunbes Interest on investments Net rash provided by (used in) investing activities NETINCREASE(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 operating income to net cash provided by operating activities: Depredation Change in assets and liabilities: Decrease (Increase) in accounts receivables Increase in accounts payable Total adjustments Net cash provided by operating activities NON-CASH INVESTING ACTIVITIES Change in the fair value of investments $ 1,370,142 $ 7,165,102 $ 8,535,244 $ 7,315,026 - (163,918) (163,918) (156,678) (2,917,793) (2,917,793) (2,472,511) (3,538,434) (3,538,434) (3,515,916) 1,370,142 544,957 1,915,099 1,169,921 210,338 210,338 208,665 210,338 210,338 208,665 (964,000) - (964,000) (1,037,386) 13.990 13,990 104,353 (950,010) (950,010) (933,033) (1,200,000) (985,499) (2,185,499) 995,933 202,778 79,761 282,539 388,580 (97,222) (905,738) (1,902,960) 1,384,513 (577,090) (150,443) (727,533) 1,830066 3,754,597 2,506,894 6261,491 4,431,425 $ 3,177,507 $ 2,356,451 $ 5533956 $ 6,261,491 $ 581,171 $ 586,707 $ 1,167,878 $ 526,627 804,994 - 804,994 668,279 - 2,295 2,295 (2,295) (16,023) (44,045) (60,068) (22,690) 788,971 (41,750) 747,221 643,294 $ 1.370.142 $ 544,957 $ 1,915.099 $ 1,189,921 $ .L6,820) $ $16,820) $ 49,741 101 DISCRETELY PRESENTED COMPONENT UNITS 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. 102 CITY OF ALLEN, TEXAS ALLEN ECONOMIC DEVELOPMENT CORPORATION COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2008 AND 2007 ASSETS CURRENTASSETS Cash and cash equivalents Investments Sales tax receivable Accounts receivable Accrued interest receivable Prepaid items TOTAL ASSETS LIABILITIES AND FUND BALANCES CURRENT LIABILITIES Accounts payable Accrued and other liabilities TOTAL LIABILITIES FUND BALANCES Reserved for encumbrances Unrestricted TOTAI FUND BALANCES TOTAL LIABILITIES AND FUND BALANCES 103 EXHIBIT F-1 2008 2007 $ 922,231 $ 856,156 681,250 1,741,319 917,893 838,319 1,772 1,301 2,543 18,598 6,298 $ 2,531,987 $ 3,455,693 $ 166,797 $ 1,448,157 53,681 12,884 220,478 1,461,041 666,024 - 1,645,485 1,994,652 2,311,509 1,994,652 $ 2,531,987 $ 3,455,693 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. 2008 Total governmental fund balance $ 2,311,509 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. 272,206 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. (49,086) 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. (14,683,780) 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. 18,736,838 Net assets of governmental activities $ 6,587,687 104 CITY OF ALLEN, TEXAS EXHIBIT F-3 ALLEN ECONOMIC DEVELOPMENT CORPORATION COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEARS ENDED SEPTEMBER 30, 2008 AND 2007 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 Excess of revenues over expenditures OTHER FINANCING SOURCES (USES) Issuance of revenue bonds Discount on issuance of debt Total other financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR 105 2008 2007 $ 4,968,133 $ 4,837,072 155,829 310,990 89,491 22,115 5,213,453 5,170,177 6,699,195 6,125,403 12,555,693 3,060,080 600,000 - 323,655 20,178,543 9,185,483 (14,965,090) (4,015,306) 15,335,000 - (53,053) 15,281,947 - 316,857 (4,015,306) 1,994,652 6,009,958 $ 2,311,509 $ 1,994,652 CITY OF ALLEN, TEXAS 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, 2008 EXHIBIT F-4 Net change in fund balances- total governmental funds $ 316,857 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. 324,455 The proceeds from issuance of long-term debt (e.g. bands and capital lease obligations) provides cunenl financial resources to governmental funds ($15,335,000), while the repayment of the principal of long -tans debt consumes the current financial resoumes of governmental funds ($600,000). Neither transaction, however, has any effect on net assets. (14,735,000) 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. (49,086) In the governmental fund financial statements, the proceeds from a sale of assets are shown as an increase in financial resources. However in the statement of activities, the gain or loss is reported (3,121,207) 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. (159,940) 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. 12,555,893 Change in net assets of governmental activities $ (4,888,228) 106 CITY OF ALLEN, TEXAS ALLEN COMMUNITY DEVELOPMENT CORPORATION COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2008 AND 2007 ASSETS CURRENT ASSETS Cash and cash equivalents Investments Sales tax receivable Accounts receivable Accrued interest receivable TOTAL ASSETS LIABILITIES AND FUND BALANCES CURRENT LIABILITIES Accounts payable Retainage payable TOTAL LIABILITIES FUND BALANCES Reserved for encumbrances Unreserved TOTAL FUND BALANCES TOTAL LIABILITIES AND FUND BALANCES 107 EXHIBIT F-5 2008 2007 $ 27,507,524 $ 6,522,230 4,680,139 2,859,239 917,893 838,320 1,772 39,301 31,811 30,537 $ 33,139,139 $ 10,289,627 $ 1,224,841 $ 343,543 71,305 73,940 1,296,146 417,483 14,520,466 497,827 17,322,527 9,374,317 31,842,993 9,872,144 $ 33,139,139 $ 10,289,627 CITY OF ALLEN, TEXAS EXHIBIT F-6 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS ALLEN COMMUNITY DEVELOPMENT CORPORATION SEPTEMBER 30, 2008 Total governmental fund balance $ 31,842,993 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. 656,102 Interest payable on long -tens debt does not require current financial resources, and, therefore, is not reported as a liability in the governmental funds balance sheet. (171,346) 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. (38,275,545) Net assets of governmental activities $ (5,947,796) 108 CITY OF ALLEN, TEXAS ALLEN COMMUNITY DEVELOPMENT CORPORATION COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEARS ENDED SEPTEMBER 30, 2008 AND 2007 REVENUES Sales and other taxes Investment earnings 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 OTHER FINANCING SOURCES AND (USES) Issuance of debt Discount on debt issuance Payment to refund bond escrow agent Total other financing sources NET CHANGE IN FUND BALANCES FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR 109 EXHIBIT F-7 2008 2007 $ 4,968,132 $ 4,837,072 751,680 450,743 5,719,812 5,287,815 1,542,817 611,457 12,017,797 1,461,696 1,520,000 470,000 1,258,062 343,068 16,338,676 2,886,221 (10,618,864) 2,401,594 34,450,000 - (274,111) - (1,586,176) 32,589,713 21,970,849 2,401,594 9,872,144 7,470,550 $ 31,842,993 $ 9,872,144 CITY OF ALLEN, TEXAS 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, 2008 EXHIBIT F-8 Net change in fund balances - total governmental funds $ 21,970,849 Amounts reported for governmental activities in the statement of activities are different because: The proceeds from issuance of long-term debt (e.g. bonds) provides current financial resources to governmental funds ($32,835,000), while the repayment to escrow of long-term debt for refunding consumes the current financial resources of governmental funds ($1,586,176). Neither transaction, however, has any effect on net assets. (32,863,824) 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 govemment-wide financial statements. 825,690 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. (144,821) 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. 1,520,000 Change in net assets of governmental activities $ (8,692,106) 110 aEgpECT Iivr a R,r � Y CITY OF Al1.Ea m X n m n CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS *�ESVECT * INTFO R �� rL CITY OF AO1fo CITY OF ALLEN, TEXAS COMPARATIVE SCHEDULES OF CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS - BY SOURCE (a) SEPTEMBER 30, 2008 AND 2007 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 EXHIBIT G-1 2008 2007 $ 111,362,169 $ 103,304,007 52,661,071 52,231,593 5,582,274 4,380,533 2,955,796 2,894,713 3,157,470 3,021,981 2,711,471 2,761,938 371,915,256 345,395,845 550,345,507 513,990,610 23,657,069 10,835,221 $ 574,002,576 $ 524,825,831 $ 118,615,928 $ 106,550,241 10,475,000 10,475,000 333,185,583 307,084,732 9,951,500 9,951,500 87,321,560 79,115,782 14,453,005 11,648,576 Total governmental funds capital assets $ 574,002,576 $ 524,825,831 (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. 111 CITY OF ALLEN SCHEDULE OF CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS43Y FUNCTION AND ACTIVITY (a) AS OF SEPTEMBER 30, 2008 Land Machinery & Function and Activity Land Improvements Buildings Equipment GENERAL GOVERNMENT 51,239,719 - - 287,164 Municipal court $ 631,788 $ - $ 289,669 $ 57,885 City administration 2,712,976 - 8,871,016 223,566 Information technology - - - 527,643 Human resources - - - 10,998,411 Internalservices - - - (6,784) Finance 532,849 Total Culture & Recreation 10,998,411 Total General Government 3,344,764 9,160,685 802,310 PUBLIC SAFETY Police - - 6,729,217 552,356 Fire 26,432 6,983,460 1,022,748 Total Public Safety 26,432 13,712,677 1,575,104 PUBLIC WORKS Community services & streets 51,239,719 - - 287,164 Engineering 44,410,687 15,897 Total Public Works 95,650,406 303,061 CULTURE & RECREATION Parks & recreation 10,998,411 842,156 18,746,322 1,598,752 Library 11,041,387 532,849 Total Culture & Recreation 10,998,411 842,156 29,787,709 2,131,601 COMMUNITY DEVELOPMENT Building & code compliance Planning & development Total community development 10,790 6,993 17,783 GRANT ADMINISTRATION Grant Administration 500,000 752,415 Total grant administration 500,000 752,415 Construction in Progress Total governmental funds capital assets $ 110,520,013 $ 842,156 $ 52,661,071 $ 5,582,274 (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. 112 DIHIBITG-2 Furniture & Other Construction in Fixtures Vehicles Books Improvements Progress Total $ 413 $ - $ - $ - $ - $ 979,755 838,708 - - - - 12,846,266 21,624 (482) - 811,607 - 1,360,392 5,771 - - - - 5,771 18,321 - - - - 11,537 23,991 23,991 906,828 (482) 811,607 15,027,712 274,766 470,785 - 71,867 - 8,098,991 235,398 1,424,818 269,885 9,962,741 510,164 1,895,603 341,752 18,061,732 - 209,413 - 260,793,642 - 312,529,938 17,701 79,884 92,780,111 137,304,280 17,701 289,297 353,573,753 449,834,218 672,166 608,408 - 17,014,915 50,481,130 839,459 2,647,343 15,061,038 1,511,625 608,408 2,647,343 17,014,915 65,542,168 - 99,400 - - - 110,190 7,478 14,471 7,478 99,400 124,661 265,244 64,128 173,229 1,755,016 - 265,244 64,128 173,229 1,755,016 23,657,069 23,657,069 $ 2,955,796 $ 3,157,470 $ 2,711,471 $ 371,915,256 $ 23,657,069 $ 574,002,576 113 CITY OF ALLEN, TEXAS SCHEDULE OF CHANGES IN CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS - BY FUNCTION AND ACTIVITY (a) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, ]DOB EXHIBIT G-3 Total General Government Governmental Funds 2,614 R1 Governmental Funds 569.288 Capital Assets October 1. Dvglyygr Capital Auats Function ands IN 2D07 Contributions Additions Daudastil TrMSNn Bananas- 30, 2009 GENERAL GOVERNMENT 232540 (20.440) - CM secri Fire 9.701,774 33].68] MUnldpal Crud 9]9,]55 S - S - S - $ - $ 979,765 City Admincepri 10.323,085 - 2.323,181 - - 12,649,286 Information Technology 616,257 - 265,014 (10,165) 589,288 1,380,392 Human Resourced 3,338 - 2,435 - - 5,771 Interna Service. 11,537 - - - 11,537 Finance 26 100,850 23,991 117.1351 23.991 Total General Government 11.833.90 2,614 R1 (10.165) 569.288 15.02] ]12 PUBLIC SAFETY Police 7,868,891 232540 (20.440) - 6.098991 Fire 9.701,774 33].68] 1]6.]001 9.962741 Total Public Safety 17.588.665 5]0.20] 197.1401 18,061.732 PUBLIC WORM Community semces& streets 311.107,766 - 906 (16.449) 143],]15 312,529,938 Engineer, 108.34].22] 26 100,850 4,526 117.1351 2,8ell 137,304,280 Total Public Worts 419.454.993 5.100.850 5432 133.5841 4.306.52] 449.834.218 OULNRE & RECREATION Paris &Recreation 48,163.682 - 55,071 (68.798) 1,865,975 50,481.130 Library 15.111.505 1]].192 (227.6%) 15061.038 Trial Copse & Recession 63,2]5.38] 69,263 (298.457) 1866,975 6ES42.168 COMMUNITY DEVELOPMENT Building & Code Cdnplanre 145,879 - 13,621 (49,310) - 110,1911 Planning &Development 14.471 14.411 Total Community Development 160,350 13,621 (49,310) 124,661 GRANT ADMINIST VON Grznt Adenevabor 16]].246 7T770 1755,016 Total Grand AGministation 16]].246 ]].]]0 1755,016 Trial general fixed saves allocated by ftoclion 513.9901611 5.100.850 3,978.914 (486.655) 6.761,]8] 550,345,501 Construction In propose 10.635.221 19.583.635 (6,761.787) 23.657069 Total governmental funds capital loves E 524.825.832 $ 26.100,850 E 23,582,549 8 HN655) E S 5]4,002,5]8 (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 am excluded from the above amounts Generally, the capital assets of internal service funds are Included as governmental activities in the statement of net assets. 114 STATISTICAL SECTION (UNAUDITED) a�SpgCT ,N tfG R, � YY T C'rY OF AUUSIX n 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 City's financial performance and well-being have changed over time. Revenue Capacity 5, 6, 7 & 8 These tables contain information to help the reader assess the City's two most significant local revenue sources, the property and sales taxes. Debt Capacity 8, 10, 11 & 12 These tables present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's 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 City's 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 City's financial report relates to the services the City provides. Source: Unless otherwise noted, the information in these tables is derived from the comprehensive annual financial reports for the relevant year. 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G■ § q` q °I \ \! 92 #` J 1 ®\ !! q |}{\ e a Hill 2\ §{! § 100 ! /7galQ // z/ !,! }� /k!# \ !, \\{\\� }\{\\ ,r= (09 / !� ! J� ! ) `_`, „ ��... !§ §! k[§■ q }� /k!# \ !, \\{\\� }\{\\ ,r= (09 / !� ! J� ! ) * af-gpgC7 * I #V r. i R CITY OF A`-gN NTROL OVER FINANC[AL IANCE OTHER TTERS BASED I I I REPORTAN AUDIT OFFIINANOCIALDSTATEMENAON TS PERFFORME REPORTING A ITL IN ACCORDANCE WITH GOVERNMENTAL AUDITING STANDARDS WEAVER TIDWELL City Council L.L.F. City of Allen, Texas CENbAED PUBLIC Allen, Texas ACCOUNTANTS AND CONSULTANTS We have audited the financial statements of the governmental 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, 2008, and have issued our report thereon dated March 2, 2009. 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 Govemment 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 control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City of Allen's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the City of Allen's financial statements that is more than inconsequential will not be prevented or detected by the City of Allen's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity's internal control. Our consideration of the internal control over financial reporting was for the ih,.. N. rvz„ limited purpose described in the first paragraph of this section and would not ,zzzr M.,n D— necessarily identify all deficiencies in the internal control that might be s- 7400 52 D..ii 724x 7szsr-nao significant deficiencies and, accordingly, would not necessarily disclose all vnaso 1970 significant deficiencies that are also considered to be material weaknesses. r972702832/ We did not identify any deficiencies in internal control that we consider to be WWW WEAVERANOTOWELLOOM material weaknesses, as defined above. AN INDWINDE MEMBER OF OSSTCSSp,. ...ALLY IMERNA I. pALUS FORT WORTH HOUSTON 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 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. This report is intended for the information of the District's Board of Directors, 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. Very truly yours, WEAVER AND TIDWELL, L.L.P. Dallas, Texas March 2, 2009