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Comprehensive Annual Financial ReportCITY OF ALLEN ,. 1 .. 40 s- CITYOF ALLEN ML 7CLPAL SERI'ICECENTL•R" • -aa- 900S.GREFNV[LLEgVB,- ,11 Official Copy Allen, 7exa s-.;, Service Center This service center is a part of the 2007-2013 Capital Improvement Program and will support street, drainage, traffic, water, sewer, parks and recreation operations, solid waste and recycling services, engineering inspection, fleet maintenance and storage. This facility has been designed to accommodate material warehousing, centralized fleet maintenance (including vehicle washing and fueling) and administrative functions. A public safety training facility, consisting of classroom space and a driving track, has also been included in this project. Construction was completed in September of 2010. Find out more about Allen, Texas at www.citvofallen.org and www.allentx.com. CITY OF ALLEN, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT CITY OF ALLEN FISCAL YEAR ENDED SEPTEMBER 30, 2010 AS PREPARED BY THE FINANCE DEPARTMENT CITY OF ALLEN, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010 TABLE OF CONTENTS II. FINANCIAL SECTION Independent Auditor's Report 1 A. MANAGEMENT'S DISCUSSION AND ANALYSIS 3 B. BASIC FINANCIAL STATEMENTS Government -Wide Financial Statements EXHIBIT Page I. INTRODUCTORY SECTION Statement of Net Assets Letter of Transmittal 19 Certificate of Achievement All Organizational Chart viii Elected Officials and Administrative Officers ix II. FINANCIAL SECTION Independent Auditor'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 Governmental 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, 2010 TABLE OF CONTENTS EXHIBIT Page Notes To Financial Statements Note 1. Summary of Significant Accounting Policies 35 Note 2. Deposits, Investments and Investment Policies 42 Note 3. Receivables 45 Note 4. Capital Assets 46 Note 5. Long -Term Debt 50 Note 6. Interfund Transfers 59 Note 7 Retirement Plan 60 Note 8 Water and Sewer Contracts 62 Note 9. Deferred Compensation Plan 62 Note 10. Risk Management 62 Note 11, Other Postemployment Benefits (OPEB) 64 Note 12 Commitments and Contingent Liabilities 67 C. REQUIRED SUPPLEMENTARY INFORMATION Schedule of TMRS Funding Progress and Contributions And Schedule of OPEB Funding Progress and Contributions A-1 68 General Fund Schedule of Revenues, Expenditures And Changes in Fund Balances — Budget and Actual A-2 69 Notes to Required Supplementary Information 70 D. COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Major Governmental Funds Comparative Balance Sheets - General Fund B-1 72 Comparative Statements of Revenues, Expenditures and Changes in Fund Balances —General Fund B-2 73 Comparative Balance Sheets — Debt Service Fund B-3 74 Comparative Statements of Revenues, Expenditures and Changes in Fund Balances — Debt Service Fund B-4 75 Budgetary Comparison Schedule — Debt Service Fund B-5 76 Comparative Balance Sheets—General Capital Projects Fund B-6 77 Comparative Statements of Revenues, Expenditures and Changes in Fund Balances — General Capital Projects Fund B-7 78 CITY OF ALLEN, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010 TABLE OF CONTENTS EXHIBIT Page Comparative Balance Sheets—General Obligation Bond Fund B-8 79 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance — General Obligation Bond Fund B-9 80 Non -major Governmental Funds Combining Balance Sheet C-1 82 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 85 Comparative Statements of Revenues, Expenses and Changes in Fund Net Assets— Water and Sewer D-2 86 Comparative Statements of Cash Flows — Water and Sewer D-3 87 Comparative Statements of Net Assets — Solid Waste D-4 88 Comparative Statements of Revenues, Expenses and Changes in Fund Net Assets— Solid Waste D-5 89 Comparative Statements of Cash Flows — Solid Waste D-6 90 Comparative Statements of Net Assets — Drainage D-7 91 Comparative Statements of Revenues, Expenses and Changes in Fund Net Assets — Drainage D-8 92 Comparative Statements of Cash Flows — Drainage D-9 93 Comparative Statements of Net Assets — Golf Course D-10 94 Comparative Statements of Revenues, Expenses and Changes in Fund Net Assets — Golf Course Fund D-11 95 Comparative Statements of Cash Flows — Golf Course Fund D-12 96 Internal Service Funds Combining Statement of Net Assets E-1 98 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets E-2 99 Combining Statement of Cash Flows E-3 100 CITY OF ALLEN, TEXAS F-5 106 COMPREHENSIVE ANNUAL FINANCIAL REPORT G-2 111 FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010 F-6 107 TABLE OF CONTENTS TABLE Page EXHIBIT F-7 Page Discretely Presented Component Units 1 115 Comparative Balance Sheets -Economic Development Corporation F-1 102 Reconciliation of the Governmental Funds Balance Sheet to the 3 118 Statement of Net Assets F-2 103 Comparative Statements of Revenues, Expenditures and Changes 5 120 in Fund Balances F-3 104 Reconciliation of the Governmental Funds Statement of 7 122 Revenues, Expenditures and Changes in Fund Balance F-4 105 Comparative Balance Sheets -Allen Community Development Corporation F-5 106 Reconciliation of the Governmental Funds Balance Sheet to the G-2 111 Statement of Net Assets F-6 107 Comparative Statements of Revenues Expenditures and TABLE Page Changes in Fund Balances F-7 108 Reconciliation of the Governmental Funds Statement of 1 115 Revenues, Expenditures and Changes in Fund Balance F-8 109 E. CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS Comparative Schedules by Source G-1 110 Schedule by Function and Activity G-2 111 Schedule of Changes by Function and Activity G-3 113 TABLE Page STATISTICAL SECTION Net Assets by Components 1 115 Changes in Net Assets 2 116 Fund Balances, Governmental Funds 3 118 Changes in Fund Balances, Governmental Funds 4 119 Assessed Value and Estimated Actual Value of Taxable Property 5 120 Direct and Overlapping Property Tax Rates 6 121 Principal Property Taxpayers 7 122 Ad Valorem Tax Levies and Collections 8 123 Ratio of Outstanding Debt by Type 9 124 Ratio of General Bonded Debt Outstanding 10 125 Direct and Overlapping Governmental Activities Debt 11 126 Pledged -Revenue Coverage 12 127 Demographic and Economic Statistics 13 128 Principal Employers 14 129 Full -Time Equivalent City Government Employees by Function/Program 15 130 Operating Indicators by Function/Program 16 131 Capital Asset Statistics by Function/Program 17 132 CITY OF ALLEN March 22, 2011 Honorable Mayor and City Council, City Manager, Citizens of Allen. The Finance Department is pleased to submit the Comprehensive Annual Financial Report (CAFR) of the City of Allen, Texas (the City), for the fiscal year ended September 30, 2010. This report is published to provide the City Council, our citizens, City staff, and other readers with detailed information concerning the financial position and activities of the City. Management has prepared the report and is responsible for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures. To the best of our knowledge and belief, the enclosed data is complete and reliable in all material respects. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. Also included in this report is an unqualified ("clean") opinion on the City of Allen's financial statements for the year ended September 30, 2010 issued by Weaver. The independent auditors' report is located in the beginning of the financial section of the CAFR. THE REPORT The CAFR is presented in three sections: introductory, financial, and statistical. The introductory section includes this transmittal letter, a list of principal officials, organizational charts, and the Government Finance Officers Association of the United States and Canada's (GFOA) Certificate of Achievement for Excellence in Financial Reporting. The financial section is prepared in accordance with generally accepted accounting principles. This section of the CAFR includes the Management Discussion and Analysis (MDBA) which can be found immediately following the independent auditor report, the basic financial statements and combining and individual fund statements and schedules, as well as the required supplementary information. The MDBA is a narrative introduction, overview and analysis to accompany the basic financial statements and should be read in conjunction with the transmittal letter. The basic financial statements include the government -wide financial statements that present an overview of the City's entire operations, while the fund level statements present the financial information of each of the City's major funds, as well as non -major funds. Lastly, the statistical section includes selected financial and demographic information, generally presented on a multi-year basis. 305 CENTURY PARKWAY • ALLEN, TEXAS 75013-8042.214.509.4100 WEB:..citvofallen.ore • EMAIL: coa@cityofallen.org REPORTING ENTITY This report includes all funds of the City including its component units. Component units are legally separate entities for which the City is financially accountable but are not part of the City's operations. The Allen Economic Development Corporation (AEDC) and Allen Community Development Corporation (ACDC) are included in the financial statements as discretely presented component units. CITY PROFILE The City of Allen is the fourth largest city in population in Collin County, one of the fasted growing counties in the nation. Located 25 miles north of downtown Dallas on US 75 and 31 miles from the Dallas -Fort Worth (DFW) International Airport, Allen encompasses approximately 27 square miles. With a population of 3.6 million in a 30 -mile radius, Allen sits in a prime location for restaurants, shopping centers and other retail venues. The quality of the Allen community attracts well-educated residents with a high level of spending power and disposable income. Current population of 85,315 is estimated to grow to 97,938 at build out. Incorporated in 1953, Allen is a home rule charter city. The Charter can be amended only by a vote of the people and provides for seven non-partisan Council members, including the Mayor, to be elected at -large to staggered terms of three years. The Council is responsible for enacting ordinances, resolutions, and regulations governing the City as well as adopting the annual budget which serves as the foundation for financial planning and control. The City Council appoints the City Manager, who has full responsibility for carrying out Council policies and administering City operations. The Council also appoints the Municipal Judge and vanous advisory boards. City service departments provide a full range of services including police and fire protection, emergency ambulance service, municipal courts, building code enforcement, library, parks and recreation, tourism, water and sewer services, sanitationtsolid waste services, traffic engineering, and construction and maintenance of streets and infrastructure. The City employs 706.7 full time equivalent positions. ECONOMIC CONDITIONS AND OUTLOOK Regional Economy The Dallas -Fort Worth Metroplex (DFW) has been impacted by the recession and credit crisis but has fared better than the nation. In July, 2010, Money magazine ranked Texas as America's Top State for Business and for the fourth year in a row ranked Texas first in the Economy category which is the 15" largest in the world. The Federal Reserve Bank of Dallas reported the DFW economy expanded modestly with increases in population, stable employment levels, and retail sales up on a year -over -year basis. Allen's Position in the Region Allen is a community that offers exceptional housing, award-winning schools and a dynamic business climate all of which are strong factors in the success of the City's economy. Allen has benefited from a well-educated and affluent workforce. With a median age of 34, over 46.7% of adults have a Bachelors degree or higher and the average household income is $123,879. In May 2010, when general obligation bonds were issued, Standard and Poor's (S&P) raised its long-term and undedying bond rating on the City of Allen to the highest rating of 'AAA". S&P's rating report supporting the'AAA' rating states the following credit factors: • Economic and property tax base, which has grown rapidly, to include a diverse mix of residential, commercial and industrial components; • High wealth and income levels; • Access to the large and diverse north -central Texas employment base, • History of very strong reserve levels and thorough planning processes; and • Moderately high overall net debt levels. The City also continues to benefit from other favorable conditions associated with a desirable location for work, destination and living. According to WalletPop, AOL's consumer finance website, a study by NeighborhoodScout.com recognized Allen as the best neighborhood for the money in the Dallas metro area. In the 2010 study, 20 metro areas throughout the United States were ranked as the most desirable towns based on median home value and premium community qualities. Allen's median house value was $234,808 whereas the cost of comparable premium neighborhoods in the DFW area was $789,818. Allen was also ranked No. 16 among Money magazine's Best Places to Live 2010. The rankings are based on scores for jobs/economy, housing affordability, education, arts/leisure, and health. Allen ranked No. 19 on the 2009 list. Long Range Financial Planning The Planning and Zoning Commission heard over 90 cases, an increase of about 30% from last year. Developments reviewed included the Allen High School Multipurpose Stadium, Cisco Data Center, Andrews Distributing, Walmart and the Aspens of Twin Creeks, a senior living community that expands the residential living option for seniors in Allen. Projects with less visibility but important to long-range planning included updating the land use plan for the Highway 121 corridor and enhancement of the City's interactive mapping system. The City's responsiveness to emerging economic challenges and its long-term planning have been key factors in its fiscal health. The City has a five-year financial plan and a seven year capital improvement plan where departments reevaluate project priorities, review funding sources, and identify new projects as needed. Using this plan allows the City to plan the timing of projects associated with debt issuance and the effects on the tax rate. Standard and Poor's credit rating report stated "the City's Financial Management Assessment (FMA) to be 'strong', indicating practices are strong, well embedded and likely sustainable." iii In May 2010 the City issued $12 million of general obligation bonds, the fourth year of a seven- year plan. Voters approved the 2007 bond election and the corresponding tax increase associated with the new bonds, however, long range planning has allowed issuance of new debt without raising the tax rate. Although economic forecasts remain favorable, the City has established a conservative budget that "holds the line" for 2011 existing City services as explained in the MDBA under "Economic Factors and Next Year's Budgets and Rates". The long range capital improvement program involves selling approximately $10 million in new and refunding general obligation bonds in the spring of 2011. Relevant Financial Policies A Debt Management and Fund Balance Reserve policy was approved by Council in February 2010. The Investment policy is also approved annually by the Council. All other policies (accounting, budgeting, procurement, capital improvements, asset management, and risk management) are internal policies approved by the Finance department and City Manager. These policies follow guidelines established by management, professional organizations and/or state and federal laws. On a quarterly basis the Finance department prepares financial and investment reports which are presented to the City Council. To prepare for Government Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, the General Fund now includes the Antenna Fund and Parks Special Revenue Fund, which no longer qualify as special revenue funds. The requirements for this Statement are effective for the City's FY2011 financial statements. Fiscal Year 2010 Highlights The vision of Allen as a destination point unfolded with the opening of the Allen Event Center in November 2009. This state -of -the art, multi -use facility has become a premier place for family shows, concerts, and the Southern Conference Champion Allen Americans Hockey Team. The center has become the new home of the Tom Thumb Texas Stampede and recently announced the addition of a new indoor football league team, the Allen Wranglers. Former Dallas Cowboy Drew Pearson will serve as the team's general manager. Located next door to the Event Center, the Village of Allen expanded with the opening of the Courtyard by Marriott, featuring 228 guest rooms and suites and over 15,000 square feet of flexible meeting space. Additionally, several other new hotels are now located in close proximity of the Event Center. Similarly, Watters Creek at Montgomery Farm continues to offer a unique geta-way for residents and visitors alike. D Magazine recently ranked it as one of the Best Places to Shop noting the 52 - acre setting of hills, trees and a creek. This development truly defines "live, shop and play" in Allen. With these two great destinations, Allen is a prime location for hosting conventions with shopping, dining, lodging and recreational opportunities Sales tax and property tax revenue have been greatly impacted by the success of these two developments. Total assessed property values increased 4.2% or $294 million from the previous year which allowed the City Council to decrease the property tax rate for the eighteen straight year. Sales tax revenue increased 12% over FY2009. In June 2010, through efforts of the City and the Allen Economic Development Corporation, an economic development agreement was entered into with Cabela's, the world's foremost outfitter of hunting, fishing and outdoor gear. As part of the agreement, the City provided land and a $5 million relocation grant to be paid out over five years. As the third store in Texas, Cabala's broke ground for a 110,000 square -foot store to be located just south of The Village at Allen with an April 2011 grand opening scheduled. Cabala's will generate over $40 million in annual sales, provide a capital investment of $20 million to build the store, employ 120 full-time equivalent positions and maintain a taxable property value of $15 million. With the opening of the Marriott hotel, the Allen Event Center, and Cabela's, a Convention and Visitors Bureau with 1.5 FTE's was created and funded by the hotel occupancy tax fund. Additional projects that enhance and promote tourism, the arts and the convention/hotel industry have been supported with the increase in hotel occupancy tax revenue. Following nationwide trends, healthcare costs continue to rise. Through aggressive wellness programs, the City's health and dental expenses were slightly below the revised budget. The Risk Management Fund is in good financial condition and continues to provide the financial security needed in the event that catastrophic claims should occur. The City actively pursued county, state and federal grants. Revitalization of older neighborhoods continued through the home repair assistance program and related initiatives defined in the Community Development Block Grant (CDBG). A $1.8 million Federal Grant was utilized to begin construction on Fire Station #5 which will be unique because its designed to achieve the highest level of certification offered by the Leadership in Environmental and Energy Design Green Building Rating System. As part of the Energy Efficiency and Conservation Block Grant from the U S. Department of Energy, light fixtures were upgraded in the police building and window film was added to City Hall. Solar electric systems were also installed on both the new Municipal Service Center Shop and Municipal Courts/Park and Recreation building. The Water and Sewer fund continued a very effective water leak detection program and completed the Texas Commission on Environmental Quality (TCEQ) Compliance Evaluation Investigation for Public Water System. The City's public water system retained its "Superior system rating from TCEQ. Additionally, the Water and Sewer Fund cash financed $1.3 million for water and sewer line replacements, pump station maintenance, sewer lift station maintenance, and future CIP funding as per the rate study. Advancements were made in major infrastructure construction. Projects included Fire Station #5, a new public safety dispatch center located at City Hall, a major renovation of the Animal Shelter and construction of a new Service Center. Comprised of several buildings to be utilized by multiple departments, the Service Center complex will expand the City's ability to better serve the public. The Engineering Department continued to make progress on numerous street projects, replacement of outdated sewer lines, intersection improvements and alley ways across the city. Numerous parks and trails experienced construction including a segment for the Six Cities Trail system and the Allen Veterans Memorial. The City's biggest event of the year was Allen USA 2010 Celebration where a record crowd of 75,000 enjoyed a fun -filled day of family entertainment on the grounds of Celebration Park including the headlining concert by the legendary Commodores and a fantastic fireworks display. While challenged by the continued economic recession, the City is positioned to maintain a strong financial standing. 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, 2009. This was the twelfth consecutive year that the government has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. Acknowledgements — We would like to express our sincere gratitude to City personnel who contributed to this report, especially Dana Thornhill, Accounting Manager, Tru Nguyen, Senior Accountant, Kembedy Jones, Accountant, Stephanie Helmick, Accountant and Trish Featherston, Budget Manager. Appreciation is expressed to representatives of Weaver for their invaluable assistance in producing the final document and to the City Manager's office and the members of the City Council whose leadership and commitment are vital to the health and vitality of Allen. Respectfully submitted, Kevin Hammeke Joanne Stoehr 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, 2009 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government wits and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. ( � President Executive Director vii 161111MIliff-Al11 ORGANIZATIONAL CHART city City Agomey City Manager Municipal Judge Aseiclant City Manager Building and Code Compliance Public and Media Relations I J City Sacretary Community Semces w Engineering Finance I I I Fire Human Resources I I I Information Tecbrwlogy Library M Parka and Recrerbon Planning and Ponce Detalopment CITY OF ALLEN, TEXAS CITY OFFICIALS Council Members Mayor Stephen Terrell Mayor Pro Tem Debbie Stout Place 2 Council Member Ross Obermeyer Place 3 Council Member Joey Herald Place 4 Council Member Robin L. Sedlacek Place 5 Council Member Gary L. Caplinger Place 6 Council Member Jeff McGregor Management Staff City Manager Peter H. Vargas Finance Director Kevin Hammeke Assistant Finance Director Joanne Stoehr Accounting Manager Dana Thornhill lb 41 agsFecr lNreo Rir � Y * cry OF �``�N weaver INDEPENDENT AUDITOR'S REPORT Honorable Mayor and Members of the City Council City of Allen, Texas We have audited the accompanying financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund and the aggregate remaining fund information of the City of Allen (the City) as of and for the year ended September 30, 2010, 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, 2010 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 9, 2011 on our consideration of the City's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of the testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The accompanying management's discussion and analysis, schedule of TMRS funding progress and contributions, schedule of OPEB funding progress and contributions and budgetary comparison information on pages 3 through 18 and 68 and 70, 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. ANINDEPENDENT WEAVER AND TIDWELL LIP DALLAS MEMBER OF BAKER TILLY CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS 12221 MERIT DRIVE, SUITE 1400, DALLAS, TA 75251 INTERNATIONAL WWW WEAVERLLP COM t P (972) 490 1970 FJ972)702 U21 City of Allen, Texas Page 2 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 govemmental 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 9, 2011 MANAGEMENT'S DISCUSSION AND ANALYSIS 7 �SPEGT 0. 4 IIy rF GR 'TL * ClrY OF p4`EH CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2010 (UNAUDITED) As management of the City of Allen, Texas, we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2010. FINANCIAL HIGHLIGHTS • The assets of the City exceeded its liabilities (net assets) at September 30, 2010 by $592,164,775. Of this amount, $67,364,195 (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 $10,216,714. The increase is primarily a result of developer contributions due to continued growth in business and retail development. • The City's governmental funds reported combined ending fund balances of $54,605,666 at September 30, 2010, a decrease of $13,545,606 from the prior fiscal year. The decrease is attributed to the expense associated with the capital projects. • At the end of the fiscal year, the unreserved fund balance for the General Fund was $15,466,113 or 25% of total General Fund expenditures. • On a government -wide basis, the City's total liabilities increased by $930,709. The factors contributing to the minimal increase are a result of the issuance of $12,000,000 in General Obligation Bonds and a decrease in accounts payable outstanding from the prior year. 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, 2010 (UNAUDITED) In the govemment-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, General Capital Projects Fund and General Obligation Bond Fund, all of which are considered to be major funds. Data for the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the non-major governmental funds is provided in the form of combining statements elsewhere in this report. During the course of the year, the City consolidated some funds in order to prepare for GASB 54 requirements. The basic governmental fund financial statements can be found on pages 22 through 27 of this report. CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2010 (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 government -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 and funding schedules for TMRS and OPEB found on pages 68 through 70 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 110 through 113. CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2010 (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 $592,164,775 as of September 30, 2010. By far the largest portion of the City's net assets ($523,534,179 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 Assete Governmental k1wrtes Rusinesi AMvties I= 2414 2448 2414 22 2414 248 Current and other assets $ 751 93,688,409 S 32,037.107 32732,961 $ 107,809,605 128,401,370 Capital asset 519.169.900 490,222,389 107,909,488 107,157,875 627.119,432 597,380244 Total Assess 594.942,442 503,890,]/0 139,906,595 139,890,836 734929037 723,781,614 Long-term liabilities 114,785,290 108,300,265 13,360,3]/ 14,512,936 128,145,667 12$093,201 Other liabilities 10,096057 15,858,072 4,124538 3,214.280 14.618,595 18,940.352 Total Liabilities 125,283,37 124,038,337 17,400,915 17,797,218 142,784262 14181 Net Assets Invested In capital ilin ,net M related debt 420,550,870 415,201,199 94,903,309 92,980,242 523,534,179 508,189,441 Restricted 889.439 1068,851 376,962 Ni 1,266401 1,723,172 Unrestritled 40,218,706 43,504,591 27,145,409 28,450,857 81 72,01 Total Net Assets $ 469,659,095 459,854,441 $ 122,505,600 122,093,820 $ 592,iiii 581,949001 An additional portion of the City's net assets, $1,266,401, represents resources that are subject to external restrictions on how they may be used; the remaining balance of $67,364,195 may be used to meet the government's ongoing obligations to citizens and creditors. Analysis of the City's Operations - As of September 30, 2010, the City had an overall increase in net assets of $10,216,714 for the government as a whole which represents an increase of $9,804,654 for governmental activities and an increase of $412,060 for business - type activities. The increase in governmental activities is due to the continued economic development which stimulates local business and developer contributions. A summary of the City's operations for the year ended September 30, 2010 is provided in Table 2. 0 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2010 (UNAUDITED) Table 2 Changes In Net Assets Governmental Activities Business -type Activities Total 2010 2009 2010 2009 2010 2009 Revenues Program Revenues: Charges for services It 8,062,127 $ 6,225,036 $ 34,047,154 $ 32,928,987 $ 42,109,281 $ 39,154,023 Operating grants and contributions 3,148,752 2,771,709 - - 3,148,752 2,771,709 Capital grants and contributions 21,864,059 70,200,823 5,142,221 2,135,885 27,026,280 72,336,708 General Revenues. Property taxes 40,757,240 39,450,387 - - 40,757,240 39,450,387 Sales tax 12,461,268 11,140,337 - - 12,461,268 11,140,337 Franchise taxes 6,091,857 5,533,573 - - 6,091,857 5,533,573 Hotel motel taxes 805,185 597,512 - - 805,185 597,512 Othertsxes 2,128,167 1,987,765 - - 2,128,167 1,987,765 Interest earnings 1,154,160 1,558,913 338,849 499,148 1,493,009 2,058,061 Gain on sale of capital asset 103,095 113,734 - - 103,095 113,734 Miscellaneous 1,312,462 1,052,164 408,104 1,720,566 1,052,184 Total Revenues 97,908,372 140,631,973 39,936,328 35,564.020 137,844,700 176,195,993 Expenses: General government 20,415,700 14,304,910 - - 20,415,700 14,304,910 Public safety 26,106,950 24,498,604 - - 26,106,950 24,498,604 Public works 16,036,561 14,893,306 - - 16,036,561 14,893,306 Culture and recreation 23,160,807 17,689,583 - - 23,160,807 17,689,583 Community development 2,665,534 2,718,864 - - 2,665,534 2,718,864 Interest on long-term debt 4,860,527 4,326,330 - - 4,8WS27 4,326,330 Water and sewer - - 26,344,371 22,227,624 26,344,371 22,227,624 Environmental waste services - - 5,111,913 4,893,175 5,111,913 4,893,175 Drainage - - 895,924 692,180 895,924 692,180 Golf course 2,029,699 2,165,144 2,029,699 2,165,144 Total Expenses 93,246,079 78,431,597 34,381,907 29,978,123 127,627,986 108,409,720 Increase in net assets before transfers 4,662,293 62,200,376 5,554,421 5,585,897 10,216,714 67,786,273 Transfers 5,142,361 3,211,453 (5,142,361) (3,211,453) Increase in net assets 9,804,654 65,411,829 412,060 2,374,444 10,216,714 67,786,273 Net assets, beginning of year (as previously reported) 459,854,441 406,428,473 122,093,620 122,797,604 581,948,061 529,226,077 Prior period adjustment (11,985,861) (3,078,428) (15,064,289) Net assets, end of year $469,659,095 $459,854,441 $122,505,680 $122,093,620 $592,164,775 $581,948,061 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2010 (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 Charges for Operating Grants $21,884,059 services &Contributions 22% $8,062,127 $3,148,752 / 8% 3% 1 Transfers 1,720,566_ 2% Other $4,529,4 5% $6,091,857LSales Tax 6% $12,461,268 13% Revenues for the City's governmental activities decreased by $42,723,601 or 30%. Major components of revenue decreases/increases are explained as follows: • Capital grants and contributions decreased by $48,316,764 from the prior year due to agreements and infrastructure related to the completion of the Allen Event Center. • Although the base sales tax continued to decline, sales tax revenue increased 12% due to population growth, new retail development and commercial construction in the City. • While the City was able to lower the property tax rate from .556 to .555 per $100 valuation, property tax revenue increased by 3% due to two new mixed-use developments being added to the community's property tax rolls. • Charges for services increased by 30% when compared to the prior year due to the increased revenues related to the addition of the Allen Event Center. 2 CITY OF ALLEN, TEXAS MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2010 (UNAUDITED) Expenses for governmental activities increased by $14,814,482 or 19%. Components of increases and decreases are explained as follows: • Expenses include employee annual merit increases. • To address the increasing costs of healthcare and maintain a prudent fund balance, the City opted to increase its portion of health premiums by 9%. • The General Fund transferred a total of $463,329 to the Golf Course Fund to cover operating expenses. • Expenses for general government went up by 42% due to economic incentive agreements generated from the Village at Allen development and Cabela's. • Culture and recreation expense increased by 31% due to the opening of the new Allen Event Center. The following chart illustrates the relationship between expenses and program revenues for governmental type activities. $30000,000 $25,000,000 $20000 000 $15000000 $10.000.000 $5000000 Expenses and Program Revenues-COvemmentalACidvltles �e„ Wean °urt,,.e �°'^^rt °aerK r^reearo eyr'Oeery�nt Sxery a,oaaeymn ^rtYDavebp� Wpka ^(o�ie y ^^0ebr 9 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2010 (UNAUDITED) Business -type activities — Revenues — The following chart visually illustrates the City's revenue by sources for business - type activities. Revenue By Source - Business -Type Activities Capital ort- Greats & Con Servic for C5142,221 Services 5,113% 34,047,154 13% 85% Other Revenue. 746.953 2% Business -type activities revenues increased $4,372,308 or 12%. Major components of the decreases/increases are as follows: Capital contributions for water and sewer lines and impact fees increased by 141% due to a contribution from the North Texas Municipal Water District in the amount of $2.4 million for the Chaparral Force Main and Lift Station. Charges for services for business -type activities realized a minimal increase of $1,118,167 or 3.4%. Water sales increased by 3.7% and sewer charges increased by 6% from the previous year. In accordance with the latest water and sewer rate study, water and sewer rates were increased in February 2010. Interest earnings decreased from $499,148 in FY2009 to $338,849 in FY2010, a reduction of 32%, as a result of the continued decline of rates on investments during FY2010. 10 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2010 (UNAUDITED) Expenses for business -type activities increased by $4,403,784 or 15%. The increases were primarily a result of expansion of waterlines, sewer replacement, and construction of the new Hillside Water Tower and Chaparral Force Main and Lift Station. The following chart illustrates the relationship between expenses and program revenues for business -type activities: Expenses and Program Revenues- Business -type Acdvitles ==000 oo M noo nm smPmum n5,OW,Om nup0o,® %AmAm Governmental funds Water &Sever Sohd Wage Drainage GO Cour FINANCIAL ANALYSIS OF THE GOVERNMENT'S 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 $54,605,666, a decrease of $13,545,606 in comparison with the prior fiscal year. Approximately 84% or $46,041,463 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 ($7,203,629), debt service ($1,359,712), and prepaid ($862). 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 $15,466,113. The total fund balance increased by $450,392 more than the final revised budget. Current operating expenditures had savings of $1,503,273 allowing $400,000 to be transferred to the Capital Projects Fund for financing of the I.T. Master Plan and for self financing of other capital projects. The fund balance increased from $15,156,255 to $15,466,975 resulting in a positive effect on the operational expenditure reserve for the 2009-2010 budget. 11 CITY OF ALLEN, TEXAS MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2010 (UNAUDITED) The Debt Service Fund balance of $1,359,712, all of which is reserved for the payment of debt, decreased from the prior year fund balance by ($219,095) due to interest earnings being less than anticipated and a budgeted drawdown on fund balance. The fund balance meets the FY2011 10% of annual debt service requirement of $1,159,082 and is approximately the amount projected in the City's long range financial plan. The General Capital Projects Fund provides information on cash financed capital projects. During the fiscal year, the fund balance decreased by $5,023,798 from $17,797,057 to $12,773,259. Revenues and transfers from other funds totaled $11,347,865 which included $1,840,000 from the County for road construction on Chaparral Road and design and construction of two lanes, underground storm sewers and street lighting on Walters Road from Bossy Boots to Ridgeview Drive, $711,199 from the City of Plano for road construction on Chaparral Road, $306,180 from the State of Texas for signal upgrade and maintenance, $3,192,905 transferred in from the Facilities Agreement Fund due to the City evaluating the different funds in preparation of GASB 54, $2,400,000 related to Cabella's agreements, and $1,005,024 from other funds to cash finance capital projects. Total expenditures were $13,056,451 and consisted of the remaining construction of the Allen Event Center, construction of Chaparral Bridge, and street construction on Exchange Parkway, Ridgeview Road, Walters Road, Chelsea Drive, and Commerce Parkway, traffic signals and street and alley repairs. The General Obligation Bond Fund had an ending fund balance of $20,669,168, a decrease of $9,218,254 from the prior year. Revenues and other financing sources included interest earnings and $12,000,000 of new issued bonds. Expenditures totaled $21,477,666 which included $12,229,056 for the construction of a new service center and public training facility, $2,108,857 for an additional phase of Celebration Park, $1,500,000 to the North Texas Tollway, $1,471,265 for street construction and alley repair, $1,747,619 for a public safety communication system, and $754,563 for an expansion to the animal shelter. 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, $21,281,419, Solid Waste, $3,220,098, Drainage, $1,407,559, and Golf Course, $238,531. The total change in net assets for the funds was $112,190, $373,614, $73,731, and ($132,185), respectively. All funds, except the Golf Course, had an increase in net assets as a result of capital contributions, transfers from other funds, and operating revenues. The Water and Sewer Fund contributed $1,298,809 for water and sewer line replacement, pump and sewer lift station maintenance and future construction in progress funding as per the rate plan study. Other factors concerning the finances of these funds have already been addressed in the discussion of the City's business -type activities. General Fund Budgetary Highlights During April and May, all accounts are evaluated to determine if they are in line with the original budgets. Accounts that are under or over budget are revised to meet year-end estimates. New projects are not added to the year-end estimate; only the cost of maintaining the current base operation is revised as needed. As is customary, during FY2009-10, the City Council amended the budget for the General Fund one time. U11 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2010 (UNAUDITED) Adjustments made during FY2009-10, increased the original revenue budget by $1,284,477 and increased the expenditure budget by $2,454,856. The increase in expense was due to costs associated with the Allen Event Center and incentive agreements. At the end of FY2010 revenues did not reach the anticipated revised budget by ($583,946). Contributing to the variance was lower than anticipated property taxes, charges for services for the Allen Event Center, and miscellaneous revenue due to reimbursement agreements which were not received. Positive expenditure variances were due to salary savings from open staffing positions and prudent conservative management by city staff. The net result of the revenue/expenditure budget variance allowed the General Fund to transfer out an additional $400,000 to the Capital Projects Fund representing $300,000 for the I.T. Master Plan and $100,000 for financing future capital projects. Although a small drawdown was budgeted, the resulting General Fund balance increased $310,720 which was $450,392 more than budgeted. The funds operational expenditure reserve increased from the budgeted 85.4 days to 88.5 days, within the City's financial policy of 60 to 90 days. CAPITAL ASSETS The City's investment in capital assets for its governmental and business -type activities as of September 30, 2010, amounts to $627,119,431 (net of accumulated depreciation.) This investment in capital assets includes land and improvements, buildings, vehicles, machinery and equipment, park land and facilities, roads and bridges. About 83% of the capital assets are governmental and 17% are business -type activities. The total increase in investment in capital assets for the current fiscal year was 5%. Table 3 Capital Aseets at Year-end Net of Accumulated Depreciation 13 Govemmental Activities Business -type Activities Total 2010 2909 220110 M QQ 2009 Land $ 113,951,577 111,867,601 $ 4,072,882 4,072,882 $ 118,024,458 115,940,481 Buildings 99,967,777 42,441,281 - - 99,967,777 42,441,281 Towers, tanks and pump stations - - 98,230,070 89,462,264 98,230,070 89,462,264 Other Improvements 249,379,705 248,746,792 404,152 416,416 249,783,856 249,163,208 Furniture and fiMures 4,530,596 288,644 3,444 5,974 4,534,040 294,618 Vehicles 4,957,225 5,157,730 243,375 298,972 5,200.601 5,456,702 Machinery and equipment 5,083,491 1,944,799 1,601,409 1,797,694 6,684,900 3,742,493 Construction in progress 41,299,574 79,775,522 3,394155 11,103,675 44,693,729 90,879,197 Total s 519,169,944 490.222,369 $ 107,949,488 107,157,876 d 627,1194431 597,380,245 13 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2010 (UNAUDITED) The major governmental -type capital improvement projects and developer contributions during the current fiscal year included the following: Proiects • Service Center and Public Safety Training Center $12,256,954 • Developer contributed Allen Event Center Parking Garage 7,676,628 • Allen Event Center Building 7,194,924 • Developer contributed right of way and park land 5,343,043 • Street construction: Chaparral Road/Bridge 1,472,650 Watters Road — Bossy Boots to Ridgeview 1,329,064 Chelsea Drive and Commerce Parkway 1,122,608 Business -type capital improvement projects and developer contributions during the current fiscal year include the following: Pro acts • Hillside Water Tower $3,086,792 • Chaparral Force Main and Lift Station 2,672,278 • Developer contributed water mains and sewer lines 1,347,073 • Timbercreek Sanitary Sewer 638,238 Additional information on the City's capital assets can be found in Note 4 on pages 46-50 of this report. As shown in Table 4, the City's total outstanding debt at September 30, 2010 was $185,294,730 of which $114,785,290 was governmental, $13,360,377 was business activities and $57,149,063 was component units. Total gross bonded debt was $180,610,000 which includes $105,550,000 -General Obligation (G.O.) bonds backed by the full faith and credit of the government, $41,685,000 -Certificates of Obligation backed by taxes and revenue generated from the golf course, $12,960,000 -secured solely by water and sewer revenue and the component unit's total of $57,415,000 secured by future sales tax revenue. Other long-term debt relates to compensating absences, notes payable, debt refunding and issuance, premiums, and discounts. In May 2010, the City issued $12,000,000 in G.O. Bonds resulting in a net indebtedness increase of $5,252,467 or 4%. Total debt for business -type activities decreased by 8%. At fiscal year end, the City had authorized but un -issued direct general obligation bonds totaling $47,855,000. The debt for both component units relates to debt issued in order to support public infrastructure improvements and construction of the new Allen Event Center. In May, 2010, the Allen Economic Development Corporation issued $6,770,000 in new revenue bonds secured by 4A sales tax revenue resulting in a net indebtedness increase of $6,360,839. Total debt for the 14 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30,2010 (UNAUDITED) Allen Economic Development Corporation increased 44% and the Allen Community Development Corporation debt was decreased by 2%. G—ral Oblgab- 3.1dy C.I.b. '1O.'ab- Bo�s P-anu. P ... yfi. S.I.OT- burva. G— B.. De. Table 4 0..W11 DOW .1 Y.—M Bords and 01� LW,,l Tom DOW �81 AMWOO 3ua-.OWa�0O.. componera uno TdO! Wv M M Ms am 1W,bsD,= K.5 .0 4rMbbD 49(5.000 12 WOOD 14.100000 $ 1N.W0.0D0 ,U6,000 O05r= 4.905000 lzwo.wo labl.000 57415.= 5i'm " 57415000 5I.M." 110235.01M) ID4.2.000 12,950M 141M.. 57.415,00D 51 bell D'D Iso,610" 170310000 oa� -�Ta— DOW Standard & Servim Pooes Aal AAA Aal AAA Aa2 C� Al Aa3 Abeences 3.49T. 3,V4,10 3.1a. �,ae 3.891205 3,617�450 N�as Payable eZ. 11943 1.,614 252.377 218,610 371 Wo nef-Onv (.ni) (002.067) (WI,713) (Mcbb) JIV.175) (1120.0131 (1.�5 M) P, ry—a. D=11 1,724,917 "bom 141,V8 1.�� J171,400) Oway') 16MAK 1,6B5 7. T.1 0. L.n, TO- Deat 4,5W.290 4.160264 eyoaTy 412 QW (M.071 (282 4�1) 4,684M 4 7� $ S _26��M1745W769 In May 2010, when general obligation bonds were issued, Standard and Poor's (S&P) raised its long-term and underlying bond rating on the City of Allen to the highest rating of 'AAK. Due to the credit worthiness of the City vs. insurance agencies, bond insurance was not obtained for the 2010 bonds as has been the practice in the past. The underlying credit ratings from both Moody's Investors Service and Standard and Poors for the City's General Obligation Bonds, Certificates of Obligation, Water and Sewer Revenue Bonds, Community Development Corporation's Sales Tax Bonds and Economic Development Sales Tax Revenue Bonds are shown below in Table 5. Additional information on the City's long-term debt can be found in Note 5. Table 5 Sond Ratings General Obligation Bonds Certificates of Obligation Water & Sember Revenue Bonds CDC Sales Tax Revenue Bonds EDC Sales Tax Revenue Bonds Moodys Investors Standard & Servim Pooes Aal AAA Aal AAA Aa2 AA+ Al Aa3 15 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2010 (UNAUDITED) ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES Like the nation, the state, and the region, the City of Allen continues to be affected by the recession. Focused on having a balanced community, the City takes a proactive approach to economic development with its business recruitment and retention efforts, as well as with its variety of housing options. In addition, the City conservatively manages its budget. The fiscal year 2010-2011 budget reflects the commitment of the City Council and staff to provide services and facilities to our citizens while maintaining a strong financial position during a period of economic uncertainty. The City revenues most impacted by the recession are property taxes and sales taxes. Due to current economic conditions, the rate at which new residential and commercial properties are being added has slowed greatly compared to prior years. Also, valuations have continued to decrease overall on existing properties, both residential and commercial. Base sales tax revenues, which are those revenues from existing establishments, are projected to remain relatively flat for the upcoming year. However, recent and upcoming economic development of retail and data center projects continue to add new revenue to the community's property and sales tax, keeping the overall property tax projections almost flat, and resulting in a projected increase for sales tax. Although the rate of residential growth has slowed, the City estimates issuance of 400 single family permits in FY2011. The current population of 85,315 is expected to reach 97,938 at build out in the next several years. The various infrastructure and operational needs of the City have resulted in the annual expenditure budget increasing from $97.4 million in FY2006, to $157.3 million for FY2011 for all funds combined. The certified assessed property value for 2010-2011 equates to an overall increase of approximately $72 million (0.99%) from the preceding year. Although the rate of growth has slowed tremendously compared to recent years, the City was able to reduce the property tax rate for the eighteenth straight year, from $0.555 to $0.554 per $100 valuation for FY2011. Of the total tax rate, $0.409082 is dedicated to operations and maintenance in the General Fund, and $0.144918 is dedicated to general obligation debt service. Ad valorem taxes are the General Fund's largest revenue source and will contribute $30.1 million or 41.59% of the fund's budgeted revenues in FY2011. 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 and continued population growth, the budget also reflects a 6% increase in sales tax from the revised 2009- 2010 budget. The General Fund ended FY2009-2010 with an increase to fund balance of $310,720. This brings the total fund balance to an equivalent 88.5 days of operating expenditures, which exceeds the budgeted 85.4 days, and is within the range of the City's financial policy of 60 to 90 days. The 2010-2011 General Fund expenditure budget reflects an 11.8% increase from the revised 2009-2010 budget. This is largely due to the City assuming the management responsibilities for the City -owned Allen Event Center. Staffing levels were adjusted in FY2010 for this change. In addition, staffing levels will be increased in FY2011 by 1.5 full-time equivalent positions, and the budget allows for merit increases of up to 3%. By focusing on the services we currently offer and the staff we currently employ, the City will be able to continue to effectively implement the City Council's strategic vision for Allen during a time when cities across the state are freezing or reducing programs and services. 16 CITY OF ALLEN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2010 (UNAUDITED) In accordance with the City's water and sewer rate study, which was updated in 2009, the Water and Sewer Fund budget includes a rate increase effective February 1, 2011. 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 FY2011 budget is $1.52 million to cash finance water and sewer capital projects. The Water and Sewer Fund is expected to finish fiscal year 2011 with approximately $8.2 million in working capital reserves, which exceeds the City ordinance requirement 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 demand when the City reaches build out. The Solid Waste Fund represents a stable operational service and staff continues its educational outreach programs through several key programs and events held throughout the year. Staff also continues to seek grant funding for future cycles. No Solid Waste Fund fee increases are planned in 2011. The Drainage Fund is supported by drainage fees on utility bills and development inspection fees. The fund continues to sustain a fund balance which supports drainage maintenance, mosquito abatement, Texas Pollution Discharge Elimination System (TPDES), and capital improvement activities. The City finished the sixth full year of operating the Chase Oaks Golf Course. In fiscal year 2009-2010 the City subsidized a portion of the course's operating costs, with transfers from the General Fund of $463,329. City staff continues to monitor expenses on a daily and weekly basis, and work to steadily improve the facilities and programs available to the public. The golf course will operate on a "business as usual" basis for fiscal year 2011, while the City's plan to renovate the course is under review. For 2010-2011, the Risk Management Fund budget reflects a savings in health plan costs due to the combination of a contract with a new third -party administrator, and the decline in recent claims relative to previous years. Premium costs for employees were not increased due to a prudent Risk Management Fund balance and positive trend in claims history. In Fiscal Year 2011 the City will continue to contribute about 79% of the total cost of the health and dental insurance premiums, with the employees making up the remaining 21%. The FY2011 budget will be revised to address the additional funds required for post employment benefits identified from a recent OPEB actuarial update. Worker's Compensation insurance premiums are projected to decrease by about 9.6% due to improved safety training resulting in the City's lack of recent claims activity. The Property and Liability components of the fund are projected to increase by 11.78% over the fiscal year 2010 revised budget due to the addition of the Allen Municipal Service Center complex, coverage for Public Art, and additions to Celebration Park. The Risk Management Fund continues to be in good financial condition. Despite current national economic conditions, the City of Allen's budget has been positively impacted by growth and by conservative fiscal management. The 2010-2011 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, 2010 (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)509-4626. 18 BASIC FINANCIAL STATEMENTS ob �' 4 Egp EC7 low N rFG R, * Clrr OF 00"' tit CITY OF ALLEN, TEXAS EXHIBIT 1 STATEMENT OF NET ASSETS YEAR ENDED SEPTEMBER 30, 2010 PRIMARY GOVERNMENT GOVERNMENTAL BUSINESS -TYPE COMPONENT ACTIVITIES ACTIVITIES TOTAL UNITS ASSETS Cash ark man equivalents $ 21,460,682 $ 7.583,030 $ 29,043,712 $ 3,862,648 Investments 47,559,620 15,941,253 63,500,873 9,142,628 Recervables(net of allowance for uncollectibles) 6,759,621 5,389,601 12,149,222 2,211,089 Internal balances (997,602) 997,802 - - Prepaid items and other assets 74,256 11,050 85,306 6,298 Inventones - 221,162 221,182 - RestdcteE cash and cash equivalents - 1,738,080 1,738.80 1,812,41 Capital assets'. Non-depreclable 155,251,150 7,467,037 162,718,187 5,33D,703 Depreciable (net of depreciation) 363.918.794 100,402,451 464,401,245 1,441,818 Deferred charges 916,121 155,109 1,071,230 973,189 TOTAL ASSETS $ 594,942.442 $ 139,986,595 $ 734,929.(37 $ 24,780,850 LABILITIES Accounts payable $ 5,421,518 $ 1,939,989 $ 7,381,507 5 697,827 Accrued liabilities 3,586,474 537,129 4,123,803 2D,109 Accrued interest payable 596,684 171,118 767,802 233,370 Customer deposits - 1,02,302 1,42,302 - Unearned revenue 82,155 - 82,155 - Retainage payable 811,226 - 811.226 73,00 Non-current liabilities: Due wahtn one year 9,186.45 1.841,843 10.828,318 1,745,000 Due In more than one year 105,598,815 11,718,534 117,317,349 55,404,063 TOTAL LIABILITIES $ 125,283,34 $ 17.450.915 $ 142764262 $ 58,174,049 NET ASSETS Invested in capital assets (net of related debt) 428,55,870 94,983,309 523,534179 (8,719,767) Restricted for debt service 889,439 376,962 1,266,401 - Unrestricted! 40,218,706 27,145.409 67,364195 (24,673,432) TOTAL NET ASSETS $ 469,659,095 $ 122,505,680 $ 592,164.775 $ (33,393.199) The Notes to Financial Statements are an integral part of this statement 19 CITY OF ALLEN, TEXAS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2010 Program Revenues The Notes to Financial Statements are an integral part of this statement 91 General revenues - Taxes' Property taxes, levied for general purposes Sales taxes Franchise taxes Hotel motel taxes Other taxes Investment earnings Gain on disposition of capital assets Miscellaneous Transfers Total general revenues and transfers CHANGE IN NET ASSETS NET ASSETS, beginning of year NET ASSETS, end of year Charges for Operating Grams Capital Grants Expenses Services and Contributions and Contributions Functions/Program Activities PRIMARY GOVERNMENT: Governmental Activi8es: General government $ 20,415,700 $ 619,950 $ - $ Public safety 26,108,950 1,464,849 1,341,893 - Public works 16,038,561 131,147 - 21,864,059 Culture and recreation 23,160,807 4,347,601 1,646,529 - Community development 2,665,534 1,498,580 160,330 - Interest on long-term debt 4,860,527 Total governmental activities 93.246.079 8.062.127 3.148.752 21.884.059 Business -type Activities. Water and sewer 26,344.371 25,588,187 - 5,142,221 Solid waste 5,111,913 5,789,828 - - Drainage 695,924 1,238,278 - - GolfCourse 2,029,699 1,430,861 Total business -type activities 34,381,907 34,047,154 5,142,221 TOTAL PRIMARY GOVERNMENT S 727.627.986 -L-12 109281 $ 3.148.752 $ 27.026 280 COMPONENT UNITS: Allen Economic Development Corporation $ 5,826,154 $ - $ - $ - Allen Community Development Corporation 6,223,092 TOTAL COMPONENT UNITS $ 12.049.246 $ $ $ The Notes to Financial Statements are an integral part of this statement 91 General revenues - Taxes' Property taxes, levied for general purposes Sales taxes Franchise taxes Hotel motel taxes Other taxes Investment earnings Gain on disposition of capital assets Miscellaneous Transfers Total general revenues and transfers CHANGE IN NET ASSETS NET ASSETS, beginning of year NET ASSETS, end of year EXHIBIT 2 Net (Expense) Revenue and Changes in Net Assets Primary Govemment Gawmmental Business - Type COMPONENT Activities Activities TOTAL UNITS $ (19,795,750) $ - $ (19,795,750) $ - (23,300,208) - (23,300,208) - 6,978,645 - 5,978,645 - (17,166,677) - (17,166,677) - (1,006,624) - (1,006,624) - (4,860,527) (4,860,527) (60.151,141) (60,151.141) - 4,386,037 4,386,037 - - 677,915 677,915 - - 342,354 342,354 - (598,838) (598.838) 4,807,468 4.807.468 S (60.151.1411 $ 4.807.468 $ (55.343.673) $ $ - $ - $ - $ (5,826,154) (6,223,092) $ $ $ $H2.049.2461 $ 40,757,240 $ - $ 40,757,240 $ - 12,461,268 - 12,461,268 12,233,906 6,091,857 - 6,091,857 - 805,185 - 805,185 - 2,128,167 - 2,128,167 - 1,154,160 338,849 1,493,009 166,605 103,095 - 103,095 - 1,312,462 408,104 1,720,566 1,010 5.142.361 (5,142,361) 69.955.795 (4,395,408) 65,560,387 12,401,521 9,804,654 412,060 10,216,714 352,275 459.854.441 122.093.620 581.948.061 (33,745,474) 469.659.095 $ 122,505.680 S 592.164175 S (33.393.1991 21 CITY OF ALLEN, TEXAS BALANCE SHEET GOVERNMENTALFUNDS SEPTEMBER 30, 2010 DEBT GENERAL SERVICE ASSETS GENERAL CAPITAL PROJECTS Cash and cash equivalents $ 5,405,281 $ 464,823 $ 4,450,829 Investments 10,525,864 929,206 9,257,376 Receivables, net of allowances for uncollectibles: Ad valorem taxes 261,014 86,361 - Sales taxes 2,148,961 - Accounts receivable - - - Accrued interest 64,944 5,733 57,117 Other 2,813,767 - - Special assessments - - 187,557 Prepaid items 862 TOTAL ASSETS $ 21220,693 $ 1,486,123 $ 13,952,879 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ 2,942,726 $ - $ 394,465 Accrued liabilities 2,102,948 - 697,736 Interest payable - 35,186 - Retainage payable - - 87,419 Deferred revenue 708,044 91,225 TOTAL LIABILITIES 5,753,718 126,411 1,179,620 FUND BALANCES Reserved for: Encumbrances - - 504,279 Prepaid items 862 - - Debt service - 1,359,712 - Unreserved, reported in: General fund 15,466,113 - - General obligation bond fund - - - Specialrevenuefunds - - - Capital projects funds 12,268,980 TOTAL FUND BALANCES 15,466,975 1,359,712 12,773,259 TOTAL LIABILITIES AND FUND BALANCES $ 21,220,693 $ 1,486,123 $ 13,952,879 The Notes to Financial Statements are an integral pan of this statement. 22 EXHIBIT 3 GENERAL OTHER TOTAL OBLIGATION GOVERNMENTAL GOVERNMENTAL BOND FUNDS FUNDS $ 6,678,194 $ 1,103,261 $ 18,102,388 15,996,359 2,878,023 39,586,828 347,375 2,148,961 - 967,339 967,339 98,696 17,757 244,247 - - 2,813,767 187,557 862 $ 22.773.249 $ 4,966,380 $ 64,399,324 $ 1,411,395 $ 488,579 $ 5,237,165 - 44,562 2,845,246 - - 35,186 692,686 31,121 811,226 65,566 864,835 2,104,081 629,828 9,793,658 6,143,654 555,696 7,203,629 - - 862 1,359,712 - - 15,466,113 14,525,514 - 14,525,514 - 3,780,856 3,780,856 12,268,980 20,669,168 4,336,552 54,605,666 $ 22,773,249 $ 4,966,380 $ 64,399,324 23 CITY OF ALLEN, TEXAS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS SEPTEMBER 30, 2010 EXHIBIT 4 Total fund balances - governmental funds $ 54,605,666 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. 519,169,944 Costs associated with the issuance of governmental long-term debt are expensed when incurred in the fund statements and capitalized and amortized over the lite of the debt in the government -wide financial statements. 916,121 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. (561,498) 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 ($997,802) and to capital assets ($5,437,336). 9,531,472 Revenues earned but not available within sixty days of the year end are not recognized as revenue on the fund financial statements. 782,680 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. (114,785,290) Net assets of governmental activities $ 469,659,095 The Notes to Financial Statements are an integral pan of this statement. 24 specr t* pb k� �~tFO R�r CITY OF ALLEN, TEXAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTALFUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2010 REVENUES Ad valorem taxes, penalties and interest Franchise taxes Municipal sales tax Licenses, permits and fees Charges for services Court fines Gifts and contributions Hotel / motel fees Intergovernmental Investment earnings Miscellaneous Total revenues EXPENDITURES Current General government Public safety Public works Culture and recreation Community development Capital outlay Debt service Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Issuance of debt Premium on debt issuance Transfers from other funds Transfers to other funds Sale of capital assets Total other financing sources(uses) NET CHANGE IN FUND BALANCES FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR The Notes to Financial Statements are an integral part of this statement. 25 17,830,576 - 825,427 24,490,511 - - 3,559,551 - - 13,874,313 - - 2,326,195 - - - - 12,231,024 - 5,995,000 - 4,710,338 62,061,146 10,705,336 13,056,451 (3,710,569) (219,095) (5,906,514) 5,629,086 - GENERAL (1,707,334) DEBT CAPITAL GENERAL SERVICE PROJECTS $ 29,697,481 $ 10,428,416 It - 5,986,972 - - 12,154,986 - - 1,052,032 - - 5,312,040 - 478,676 1,950,246 - - 460,014 - 149,508 - - 2,819,590 306,259 57,825 220,161 1,450,547 3,482,002 58,370,577 10,486,241 7,149,937 17,830,576 - 825,427 24,490,511 - - 3,559,551 - - 13,874,313 - - 2,326,195 - - - - 12,231,024 - 5,995,000 - 4,710,338 62,061,146 10,705,336 13,056,451 (3,710,569) (219,095) (5,906,514) 5,629,086 - 4,197,928 (1,707,334) - (3,315,212) 99,537 4,021,289 882,716 310,720 (219,095) (5,023,798) 15,156,255 1,578,807 17,797,057 $ 15,466,975 $ 1,359,712 $ 12,773,259 GENERAL OTHER TOTAL OBLIGATION GOVERNMENTAL GOVERNMENTAL BOND FUNDS FUNDS $ - $ 429,321 $ 40,555,218 - 104,885 6,091,857 - 306,282 12,461,268 - 68,369 1,120,401 - - 5,790,716 - 184,078 2,134,324 4,606,150 - 609,522 - 805,185 805,185 - 2,708,859 5,528,449 347,006 53,968 985,219 - 266,541 5,199,090 347,006 4,927,488 81,281,249 183,091 817,171 19,656,265 - 503,596 24,994,107 1,553,572 73,232 5,186,355 15,829 690,988 14,581,130 - 258,259 2,584,454 19,725,174 2,262,904 34,219,102 - - 5,995,000 4,710,336 21,477,666 4,606,150 111,926,749 (21,130,660) 321,338 (30,645,500) 12,000,000 - 12,000,000 150,733 - 150,733 - 309,828 10,136,842 (238,327) (25,000) (5,285,873) (1,345) 98,192 11,912,406 283,483 17,099,894 (9,218,254) 604,821 (13,545,606) 29,887,422 3,731,731 68,151,272 $ 20,669,168 $ 4,336,552 $ 54,605,666 Pil 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, 2010 EXHIBIT 6 Net change in fund balances- total governmental funds $ (13,545,606) 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. 34,399,154 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. 15,737,981 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. (21,487,288) The proceeds from issuance of long-term debt (e.g. bonds and capital lease obligations) provides current financial resources to governmental funds ($12,000,000), while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds ($6,062,367). (5,937,633) 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. (124,461) Current year changes in long-term liability for compensated absences do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. (222,851) Current year changes in accrued interest payable do not require the use of current financial mscumes and, therefore, are not reported as expenditures in governmental funds. (13,878) 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. 372,273 Governmental funds do not report disposition of capital assets. However, in the statement of activities, the net book balance of the capital assets disposed is recorded against the proceeds received. This amount is the net book balance of capital assets disposed in the current period. (5,500) 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. 632,463 Change in Net Assets of Governmental activities $ 9.804.654 The Notes to Financial Statements are an integral part of this statement 27 CITY OF ALLEN, TEXAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30, 2010 4.0M.802 - S - 4on.002 EXHIBIT OthesllrymvemenK 18.392.181 BUSINESS -TYPE ACTIVITIES 496132 - 496,132 - Tandis tanks, and Wmp statlms ENTERPRISE FUNDS GOVERNMENTAL 152,278.753 Vends. 888.691 31,898 98,260 ACTIVITIES 1,018,050 WATER AND SOLID 3.838.156 GOLF 403,597 INTERNAL SERVICE 4,691,888 SEWER WASTE DRAINAGE COURSE TOTAL FUNDS ASSETS %.883 ConsuuuLon in Morass 3.394.155 - Acwedmm,dindealabsencea - wren 253,617 CURRENT ASSETS 749,110 Total capital aaaeb 104,401,751 41,710 997.989 853,211 Casal and 25M1 addradents S 5,908.365 $1.037,303 $ 441,293 51NNS It Tell S 3.358.281 Immersed 12,535, 772 2,112,770 970.924 321,787 15,941,253 7,972782 Rem'1Yables, net maintenance be uncolteceNes 5497.3M DEFERRED CHARGES Revenue bonds Mablecurrent1,19Dc00 - A000 res 4,881473 252,578 55.697 820 3197,666 1,181 Accrued interest 77,314 13,038 5.990 1,965 86355 49,181 Olber 5.437,338 100.680 - - 103,580 - Inuentades 221.182 - - 1,402,881 221,182 Repaid items 0.621 - - 11.050 11897 73,391 Restricted ram and man auivalenas 1,738.000 64876 M.4 5,762381 1,738,080 025,501 Total wmm raw 25,360,216 3,516,265 1,473,001 533.811 30.8841188 11.151.855 NONCURRENT ASSETS CAPITAL ASSETS Lend 4.0M.802 - S - 4on.002 - OthesllrymvemenK 18.392.181 - 496132 - 496,132 - Tandis tanks, and Wmp statlms 152,278.753 - 152,278.753 Vends. 888.691 31,898 98,260 1,018,050 7,357,271 LNMiartandedarmant 3.838.156 9,818 403,597 642.317 4,691,888 1,591,351 wmlNre and 6Mules 11.114 - - 1ge94 22,008 %.883 ConsuuuLon in Morass 3.394.155 - Acwedmm,dindealabsencea - wren 253,617 3.394,155 749,110 Total capital aaaeb 104,401,751 41,710 997.989 853,211 188.174.668 8897.732 Les.- accumulated de"dietin (57,201,733) (38828) 1501,00814�.8J. - 158.225,1811 (4,289,396) Capltalascats, natdaccumulateddapodabon 197,280,018 1,890 491,983 173.597 107.940.108 5497.3M DEFERRED CHARGES Revenue bonds Mablecurrent1,19Dc00 - - Bond issuance vests, net M amarrotpn 10,109 - Capasleaded, payable -wanted 156197 - TWI damnedest .s 107435.127 1,990 493983 173,597 108,104,597 5.437,338 TOTALASSETS S 132,795343 S 3,518,155 S 1.882,887 $ 707408 S 138.930.103 S 18.392.181 LAINUTIES AND NET ASSETS CURRENT LIABILITIES Acmuns payable S 1531221 $ 224,T33 S 27,880 5155.975 $ 1.939,989 S 185,6115 Acuued tides- 429,292 31,079 17,975 %.883 537,129 - Acwedmm,dindealabsencea - wren 253,617 38,200 19,341 55.991 387,849 Inwm l bur not tepoded dams - - - - - 739,965 Payable ham teefided dead. Revenue bonds Mablecurrent1,19Dc00 - - 1.190,000 - Capasleaded, payable -wanted - - 04,104 84.194 - A.Winterest Mable 171,118 - - 171,118 - Customndep ehipayable 1,402,881 0.621 1472302 TWal cumand INNIU. 5,038'29 294,012 64876 M.4 5,762381 025,501 NONCURRENT LIABILITIES Revenue bonds payable 11,609.065 - - 11,800865 - Centel 1. see payable 82.320 62320 - A.Woompensatedabaenwa 8,915 2155 1.480 14.010 26,548 Total moneunent liabilities 11,818,580 2,155 1,469 98,330 11710531 TOTAL LIABILRIE9 10656.609 258,167 08.345 461,794 17,480915 925,501 NET ASSETS Ineseed in capital aveta, net of related dead 94,480,353 1.800 483.903 7.083 94.983309 5.437,330 ReMded for revenue bond glndpal and interest 378,982 376,962 Unintended 21,281,419 3,22.098 1407.558 230.531 28.147.007 10.520,274 TOTAL NET ASSETS S 116,138,734 S 3221,988 $ 1901,542 It 26.614 S 121507,878 S 15,988,010 The Notes to Financial Statements are an integral pall ofthis statement. 28 CITY OF ALLEN, TEXAS EXHIBIT 8 RECONCILIATION OF THE STATEMENT OF NET ASSETS OF PROPRIETARY FUNDS TO THE GOVERNMENT— WIDE STATEMENT OF NET ASSETS AS OF SEPTEMBER 30, 2010 Amounts reported for business -type activities in the statement of net assets are different because: Total net assets per statement of net assets $ 121,507,878 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. 997,802 Total net assets of business -type activities The Notes to Financial Statements are an integral part of this statement. 29 $ 122,505,680 CITY OF ALLEN, TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2010 EXHIBIT 9 BUSINESS -TYPE ACTNRIES ENTERPRISE FUNDS GOVERNMENTAL ACTIVITIES WATERAND SOLID GOLF INTERNAL SEWER WASTE DRAINAGE COURSE TOTAL SERVICE FUNDS OPERATING REVENUES Char9de, for aces and sem.s 1,208.154 - - - 1,205,154 - Water sales 5 15,230,450 3 - $ - $ - $ 15234450 $ - Seaachar9e. 8.607.625 - - - 9,607,625 - Gonnech.adds 171,020 (427.063) - - 171,020 - Garda ecdleclions (2.332.562) 5789,828 (292.a38) 483,329 5,788,828 291,382 Sam. charge. 579,092 - 56.781 1.430.861 2,088,734 8,527,804 Drana9e fees 115026.5" - 1,181497 - 1,181,497 - Int'..mmental 2.588.994 is3 Ul 988 $ 1901.542 $ 245,614 2,588,991 15,966,610 Mucellan.us 317,712 04.805 4.962 625 408,104 159,392 Total opted, revenues 28,494,893 5.874.633 1243,240 1,431.485 37.444,252 8,887,198 OPERATING EXPENSES Personnel semoas 3,559,483 377.239 400.914 1.118.090 5,455)28 119,746 Cmnectial sem.. 18,481,754 4,633,380 153,365 642.669 21.814.168 7,515,743 Menlenen. 245,644 4.771 243.220 82,206 575,841 - Su"lies 1P,= 9,768 37,321 148,977 373.128 Deprwahon 511PA50 510 Sao% 90.585 5,276,231 1,159,980 OtM, 153,920 88,215 5048 47,172 290.363 Totaloperein, aside.. 25,]4]921 5,111,913 895,924 2.029.699 33.785,45] 8.795,"9 OPERATING INCOME (LOSS) 2,745972 762,720 347,316 (598213) 312501?95 (108,253) NON-0PERATING REVENUES (EXPENSES) Inveamer,t saving. 278,940 3],95] 19,253 2699 338,849 160,941 1... ..sere (581,180) - - - (581160) Gain on disposal 0.pltel a.ets 4,903 Total nonopertlln9 revenues (30$2201 37,957 19,253 2699 (242,311) 93,8" INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS 2.444.752 00587] 396,589 (595514) 3.016.484 65.591 CAPITAL CONTRIBUTIONS AND TRANSFERS Development fee. 1,208.154 - - - 1,205,154 - crone! Midulione 1,347,073 - - 1.347,073 T .... fersfromolharfundc 1.469.919 463329 119321648 291.392 Transfersloother Wnds (6,355100) (427.063) (292.518) (7,075,009) Total depend con41bu11orrs and transfers (2.332.562) (427,0631 (292.a38) 483,329 (2,589,134) 291,382 CHANGE IN NET ASSETS 112.190 373,614 73,731 (132,185) 427,350 356,983 NET ASSETS, BEGINNING OF YEAR 115026.5" 2349.374 1,827,811 377,799 121.085528 15.609.627 NET ASSETS, ENO OF YEAR 3116.138.734 is3 Ul 988 $ 1901.542 $ 245,614 $ 121,5071878 $ 15,966,610 The Notes to Financial Statements are an Integral part of this statement. 30 CITY OF ALLEN, TEXAS EXHIBIT 10 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS OF PROPRIETARY FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2010 Amounts reported for business -type activities in the statement of activities are different because: Net change in fund net assets- total proprietary funds $ 427,350 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. (15,290) Change in net assets of business -type activities The Notes to Financial Statements are an integral part of this statement. 31 $ 412,060 CITY OF ALLEN, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2010 EXHIBIT 17 CASH FLOWS FROM NONLMRAL BUSINESS -TYPE ACTMTIES ENTERPRISE FUNDS GOVER mME Tlanes" Rom"o's tunas 1108818 MMnn WATERMD SOLID 1.02883 GOLF Trened-to nIn no, MTE 1@].0831 SEWER WASTE DMINSGE COURSE TOTK SERVICE FUNDS CABAL FLOW] FROM OPEMTING MTWIPES (42],08:) 1291,0301 403.325 15142861) 291,392 Cael, remlwal,am atlomers $ 27701.0IR $ 5.888.36! $ 1'245.]56 $ 1138.]21 S 35,271 B]6 S Ca¢n IesslwOlram IranuRohe hod, When Nnas REUTEDFINMCINGA RTI 6,]46,9]4 can Pmo...0 ....meas (3,532.0$) nees.1 (]s.) (1183.685) (SaW 9]1) (118.]461 Cwn velarorpaoaa 6naeMiva (16,32],$90) (4661816) (.331,]43) (716429) (2z 136 476) (3692.06) C.MPaorordalms (596262) Mqunoon and const—hon of bowel assets H.M0.7N1 (BBOD141) - (4.]20,]70) (1109.1 an IM aN paaaea"(Intent ln) aPaallrK actlN6M TNlf & 635.65] 415,219 (36150) 870567 6]3.001 CASH FLOWS FROM NONLMRAL FINMCINGACTMTEs Tlanes" Rom"o's tunas 1108818 483.29 1.02883 291.392 Trened-to nIn no, 0,3551081 1@].0831 02.6+81 (7n.s.) Mal 1483 proaced Wanted In) nan<agtal flnan..S s[9rl9as (4,805,7$9) (42],08:) 1291,0301 403.325 15142861) 291,392 CMH FILOM FROM CMRALMO REUTEDFINMCINGA RTI Pnnapal Palo on revenuo bona reammlres 0]40.0001 - - nhddo00) - and fees pad onl0no-lana on, -harts 15852021 (596262) Mqunoon and const—hon of bowel assets H.M0.7N1 - - (4.]20,]70) (1109.1 an Capaal lease down payment - - - (8'+.0091 (09$8]) Bondls¢uanw meR on ratedm9 aWt l awes - - - 480 Contanuhons.. b...m I2.j54 1.2.1. bled.. uvea In wpowend alMM... balalaNNtla 15250.878) 05.8931 Islas 741) (1458.285) CMM FLOW $ FROM INVESTING ACT W ITIES Furcnase Wlmn¢Ment ucuMrea $7,237 29.075 (]21.7071 1205.475) (01.221) w Proed¢h0m ak end manses W a—l—st e.wnoa WIN .1. Imaeel on awtlments 209.018 37.857 18.838 714 31o.. 149.307 Net bash provI d 0y 114444 Iof lmaen9 a... 63].1]5 125.194 48.324 (321.073) 989920 (ut,e341 NET CHINGE IN CMH MO CMH EOOWALEMs (11002001 533]9. I7... (]2,5210) (10B'v,915) (n5.7ffi) CMH MO CMH EQUIVALENTS, BEGINNING OF VEIR 9.104.653 503505 270.500 529279 K. .5 4.134.020 CMN MO CM1SN EOUNALEMO ENO M YEAS $ 7.044145 S 10374303 S 441.293 $ 190099 $ 9,321,110 3 3.3E8.2941 RECONABLIATNM OF OPEMTING INCOME (LOSS) TO NET CMH PROVIDED BY OPEMT W G ACTNITIEs Net.p..,... .... se, $ 2 74609 $ 763720 S 347.316 $ (30.213) $ 3.250,795 f (108153) aRnstm.n. to --do aperalln, inwma d ss) . net an pre,EM by (mea in) operetng acOnwe ponchoton eno manlaa5on erpenu 5169,552 540 59.036 93595 5312,733 1.159,883 Change In asate and isolate (Inaeaal 0emaaln acwunb..BW OB3.21) 1$292 2,516 7.2]5 (711.788) (1,150) 1..14 In.1.1 wre,v.blu - 0081 - 15091 Inaeeu In prepelas - - 93024 97.24 (73394) pnoneu)perreau in lnvantaaes Tied 13848 no.&E Inrxauldeaeaselln acwunb payed. 431.015 51971 1.954 (5077) 479.663 (1"192) Iroeaw In --al lst" 204987 H] 3.257 209,01I 09,01 - ImeaalnwmpenuleaWanae men 3895 2.10 14195 SOB% - ImeawlnWllaydepo¢as 52834 52094 Total agrrernenb 5092812 72947 07903 210810 5448.772 .1254 XNaaF praNaed by(uves In) op arffs..0N0.. 3 7039284 $ 035607 $ 415218 $ 1381 903) $ 0708,507 S 833001 RDN{pSN INVE$TNGA TIVRIES: Chance the fee blue of lneesunnts $ 3030 $ $ S f 2.036 S NONCASH FiM IMG ACTNRIES: CmRibabms of cepnal assets Rom emotions 3 187073 $ f $ f 1.0.0.3 $ Rw'mclNa$on to tow oath W me.lalarcnl G M aM C. and a on o'naefenta-.—I f S9M,M 3 1IX1 W S 441283 $ name $ 7.583.030 $ 3,350294 Reatatlea mM as mh e9ulvdeMe 1,]30660 1.7WOOW CMH ANO CMH E01MAIEMS. END OF VEM f 3844,445 $ 1,0].303 S "120 $ 198.08 S 8.321110 $ 3358.2. The Notes to Financial Statements are an Integral part of this statement 32 CITY OF ALLEN, TEXAS STATEMENT OF NET ASSETS COMPONENT UNITS SEPTEMBER 30, 2010 EXHIBIT 12 NONCURRENT ASSETS CAPITAL ASSETS Land ALLEN ALLEN 4,324,625 Land improvements ECONOMIC COMMUNITY 207,878 Furniture and fixtures DEVELOPMENT DEVELOPMENT 66,075 Improvements other than buildings CORPORATION CORPORATION TOTALS ASSETS 798,300 798,300 CURRENT ASSETS 8,525,467 - 8,525,467 Cash and cash equivalents $ 2,192,930 $ 1,669,718 $ 3,862,648 Investments 5,189,736 3,952,892 9,142.628 Sales tax receivable 1,074,480 1,074,480 2,148,960 Accounts receivable 2,860 2,860 5,720 Accrued interest receivable 32,020 24,389 56,409 Prepaid items 6,298 - 6,298 Restricted cash and cash equivalents 707,846 1,104,631 1,812,477 Total current assets 9,206,170 7,828,970 17,035,140 NONCURRENT ASSETS CAPITAL ASSETS Land 4,324,525 - 4,324,625 Land improvements 207,878 - 207,878 Furniture and fixtures 66,075 - 66,075 Improvements other than buildings 3,128,689 - 3,128,689 Construction in progress 798,300 798,300 Total capital assets 8,525,467 - 8,525,467 Less: accumulated depreciation (1,752,946) (1,752,946) Capital assets, net of accumulated depreciation 6,772,521 6,772,521 DEFERRED CHARGES Bond issuance cosh, net of amortization 385,092 588,097 973,189 Total noncurrent assets 7,157,613 588,097 7,745,710 TOTAL ASSETS $ 16,363,783 $ 8,417,067 $ 24,780,850 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable $ 388,250 $ 309,577 $ 697,827 Accrued interest payable 67,974 165,396 233,370 Accrued and other liabilities 20,109 - 20,109 Retainage payable 39,915 33,765 73,680 Revenue bonds payable - current 780,000 965,000 1,745,000 Total current liabilities 1,296,248 1.473,738 2,769.986 NONCURRENT LIABILITIES Revenue bonds payable (net of unamortizad discounts and deferred amount on refunding) 19,877,208 35,526,855 55,404,063 Total noncurrent liabilities 19,877,208 35,526,855 55,404,063 TOTAL LIABILITIES 21,173,456 37,000,593 58,174,049 NET ASSETS (ACCUMULATED DEFICIT) Invested in capital assets, net of related debt (8,719,767) - (8,719,767) Unrestricted 3,910,094 (28,583,526) (24,673,432) TOTAL NET ASSETS (ACCUMULATED DEFICIT) E(QBD9673) $ (28,583.526) $ (33,393,199) The Nates to Financial Statements are an integral pan of this statement. 33 CITY OF ALLEN, TEXAS STATEMENT OF ACTIVITIES COMPONENT UNITS FOR THE YEAR ENDED SEPTEMBER 30. 2010 FunclionlPmgmm Activities COMPONENT UNITS Allen Economic Development Corporation ANm Community Development Corporation TOTAL COMPONENT UNITS EXHIBIT 13 $ 5,826,154 $ - $ - g (5,826,154) $ - $ (5,826,15Q 6,223,092 - - (8,223,092) (6,223,092) E 12.p49.246 E - $ 8 (5.026.1541 $ (6.223.0821 _; 112.049.2461 The Notes to Financial Statements are an integral part of this statement. Generalrevenues - Salestums Interest on investments Miscellaneous Total general revenues CHANGE IN NET ASSETS NET DEFICIT, beginning of year NET DEFICIT, and of year 34 $ 6,116,953 $ 6,116,953 $ 12,233,906 81,063 85,542 168,605 1,010 1,010 6,199,026 6,202,495 12,401,521 372,872 (20,597) 352,275 (5,182.545) (28,562,929) (33,745,474) $ (4,809 673) $ (28.583.526) E 133.393.1991 Net (E"rese) Revenue amid Postman Revenues ChamlMa In Net AsaaM COMPONENT UNITS ALLEN ALLEN Operating ECONOMIC COMMUNITY Charges for Gnome and DEVELOPMENT DEVELOPMENT Eaunus Services Conbibutlons CORPORATION CORPORATION TOTALS $ 5,826,154 $ - $ - g (5,826,154) $ - $ (5,826,15Q 6,223,092 - - (8,223,092) (6,223,092) E 12.p49.246 E - $ 8 (5.026.1541 $ (6.223.0821 _; 112.049.2461 The Notes to Financial Statements are an integral part of this statement. Generalrevenues - Salestums Interest on investments Miscellaneous Total general revenues CHANGE IN NET ASSETS NET DEFICIT, beginning of year NET DEFICIT, and of year 34 $ 6,116,953 $ 6,116,953 $ 12,233,906 81,063 85,542 168,605 1,010 1,010 6,199,026 6,202,495 12,401,521 372,872 (20,597) 352,275 (5,182.545) (28,562,929) (33,745,474) $ (4,809 673) $ (28.583.526) E 133.393.1991 oSPgCr I~rEO R, � r` + C;ry OF p``EN NOTES TO FINANCIAL STATEMENTS EgpECr * C'ry OF ALLEN m x 0 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 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 Loral 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. 35 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Financial Reporting Entity — Continued The following entities were found to be component units of the City and are included in the basic financial statements: Allen Economic Development Corporation (AEDC) - The AEDC is responsible for aiding, promoting and furthering economic development within the City. Allen Community Development Corporation (ACDC) - The ACDC is responsible for supporting the improvements in community parks and recreation, streets and sidewalks, public safety and the community library. The members of both the AEDC's and ACDC's Boards of Directors are appointed by the City Council. Both the AEDC and ACDC are fiscally dependent upon the City as the City Council approves their budgets and must approve any debt issuance. However, the component units do not qualify for blending because the component services directly benefit the community rather than the City itself. The AEDC and ACDC are discretely presented as governmental fund types and do not issue separate financial statements. Basis of Presentation The govemment-wide financial statements (i e , the statement of net assets and the statement of activities) report information on all of the non -fiduciary activities of the primary government and its component units. The effect of 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. E2 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Basis of Presentation - Continued Governmental funds are those funds through which most governmental functions typically are financed. The measurement focus of governmental funds is on the sources, uses and balances of current financial resources. The City has presented the following major governmental funds: General Fund - The General Fund is the general operating fund of the City. It is used to amount 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 fazes levied by the City. The fund balance of the Debt Service Fund is reserved to signify the amounts that are restricted exclusively for debt service expenditures. General Capital Projects Fund - The General Capital Projects Fund is used to account for resources used for the acquisition and/or constr ion of capital facilities by the City, except those financed by proprietary funds and not accounted for by another capital projects fund. General Obligation Bond Capital Projects Fund - To account for financing, acquisitions, and construction of improvements to City facilities and infrastructure not accounted for by other bond funds Proprietary Funds 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-term debt principal and interest for water and sewer debt. All costs are financed through charges to utility customers with rates reviewed regularly and adjusted if necessary to ensure integrity of the fund. 37 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED Basis of Presentation - Continued Solid Waste Fund - The Solid Waste Fund is used to account for the provision of solid waste services to residents of the City. Drainage Fund - The Drainage Fund is used to account for the provision of developing and maintaining proper drainage services to the residents of the City. Golf Course Fund - The Golf Course Fund is used to account for activities associated with the operations of the Chase Oaks Golf Course purchased by the City in October 2004. Internal Service Funds: Replacement Fund - The Replacement Fund is an internal service fund that accounts for the costs associated with the acquisition and replacement of vehicles, machinery, and equipment through the rental of such items to other departments. Risk Management Fund - The Risk Management Fund accounts for the costs associated workers compensation, liability and property insurance and medical and dental programs established for City employees and their covered dependents. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. Operating expenses for the proprietary funds include the cost of personnel and contractual services, supplies and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. Measurement Focus and Basis of Accounting Measurement focus refers to what is being measured. Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. 38 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Measurement Focus and Basis of Accounting — Continued The government -wide statements and fund financial statements for proprietary funds are reported using the economic resources measurement focus and the accrual basis of accounting. The economic resources measurement focus means all assets and liabilities (whether current or non- current) are included on the statement of net assets and the operating statements present increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of accounting, revenues are recognized when earned, including unbilled water and sewer services which are accrued. Expenses are recognized at the time the liabilities are incurred. Governmental fund financial statements are reported using the current financial resources measurement focus and are accounted for using the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual; i.e., when they become both measurable and available. "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The City considers all revenues as available if they are collected within 60 days after year end. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long- term debt which is recognized when due, and certain compensated absences and claims and judgments which are recognized when the obligations are expected to be liquidated with expendable available financial resources. The revenues susceptible to accrual are property and sales taxes, franchise taxes and interest income. Other receipts (special assessments) become measurable and available when cash is received by the City and are recognized as revenue at that time. Cash, Cash Equivalents and Investments State statutes and policy as established by the City Council authorize the City to invest in certificates of deposit, direct obligations of the U.S. Treasury, investment pools consisting of such U.S. Treasury obligations, repurchase agreements, commercial paper and mutual funds. Substantially all operating cash and cash equivalents are maintained in pooled cash and time deposit accounts. Interest income relating to pooled deposits is allocated to the individual funds based on each fund's pro rata share of total pooled deposits. For purposes of the statement of cash flows, the proprietary funds consider all highly liquid investments (including restricted assets) with an original maturity of three months or less when purchased to be cash equivalents, as they are available for withdrawal on demand. Investments are recorded at amortized cost when original maturity at the time of purchase is less than one year or at market if greater than one year. Encumbrances Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of funds are recorded in order to reserve that portion of the applicable appropriation, is utilized in the governmental funds. Under the City's budgetary process, appropriations lapse at fiscal year end. Encumbrances are reported as reservations of fund balances because they do not constitute expenditures or liabilities. 39 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Property Taxes The City's property tax is levied each October 1 on the assessed value listed as of the prior January 1 for all real and certain personal property located within the City. Appraised values are established by the Central Appraisal District of Collin County at 100% of estimated market value and certified by the Appraisal Review Board. The assessed value upon which the 2009 levy was based is $7,317,367,749. 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 -tens 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, 2010 was $0.555 per $100 of assessed valuation In Texas, countywide central appraisal districts are required to assess all property within the appraisal district on the basis of 100% of its appraised value and are prohibited from applying any assessment ratios. The value of property within the appraisal district must be reviewed every three years; however, the City may, at its own expense, require annual reviews of appraised values. The City may challenge appraised values established by the appraisal district through various appeals and, if necessary, legal action. Under this legislation, the City continues to set tax rates on City property. However, if the effective tax rate, excluding tax rates for bonds and other contractual obligations, adjusted for new improvements, exceeds the rate for the previous year by more than 8%, qualified voters of the City may petition for an election to determine whether to limit the tax rate to no more than 8% above the tax rate of the previous year. Interfund Receivables and Payables Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are reported as "due to/from other funds". Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances". Transactions Between Funds and Between Funds and Component Units Intertund 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 intedund 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, 2010, ACDC contributed $267,120 to the General Fund which includes funds for administrative costs and for the Allen U.S.A. 2010 Celebration, and AEDC contributed $72,100 to the General Fund. These revenues were refiected as grants and contributions for the primary government in the government -wide statement of activities. ED] CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED Inventories and Prepaid Items Inventories, which are expended when consumed, are recorded using the average cost method, and are valued at cost. Prepaid items are for payments made by the City in the current year to provide services occurring in the subsequent fiscal year. 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). Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets, are reported in the applicable governmental or business -type activities columns in the government -wide financial statements and in the fund financial statements for proprietary funds. All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated assets are valued at fair market value on the date donated. The costs of normal repairs and maintenance that do not add to the value of the asset or materially extend the asset lives are not capitalized. Renewals and betterments are capitalized. Interest has not been capitalized during the construction period on property, plant and equipment. Assets capitalized have an original cost of $5,000 or more and over one year of useful life. Depreciation has been calculated on each class of depreciable property using the straight-line method. Estimated useful lives are as follows: Buildings 15 - 40 Years Towers, tanks, and pump stations 30 Years Infrastructure 10 - 50 Years Machinery and equipment 3 - 15 Years Vehicles 2 -15 years Library books 5 Years Furniture and fixture 5 Years Other improvements 2 - 30 Years The City has established the Replacement Fund to account for the replacement of the City -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. 41 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED Compensated Absences City employees earn vacation and sick leave, which may either be taken or accumulated, up to certain amounts, unfit 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. 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 of collateralized at September 30, 2010, with collateral required by state statutes. At yearend, the carrying amount of the City's deposits was $2,567,366 and the bank balance was $2,423,373. Of the bank balance, federal depository insurance covered $250,000 and the remainder was covered by collateral held by the pledging financial institution's agent in the City's name. The City's petty cash balance at September 30, 2010 was $11,998. The carrying amount of deposits for ACDC and AEDC, discretely presented component units, were $24,557 and $33,004, 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. 42 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 2. DEPOSITS, INVESTMENTS AND INVESTMENT POLICIES — CONTINUED The table below identifies the investment types that are authorized for the City by the Public Funds Investment Act. (Government Code Chapter 2256). The table also identifies certain provisions of the City's investment policy that address interest rate risk, credit risk, and concentration of credit risk. 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 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, 2010, the City had the following investments: Maximum Maximum Maximum Percentage Investment Maturity of Portfoli In One Issuer 5 years 300/6 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 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, 2010, the City had the following investments: 43 Fair Value Weighted Inveatnent Primary Avg. Maturity Type Government AEDC ACDC Total (Years) FFCB $ 6,162,723 $ 503,661 $ 383,626 $ 7,050,010 3.30 FHLB 10,609,395 858,901 654,204 12,022,500 2.96 FHLMC 6,569,322 536,891 408,936 7,515,149 2.16 FNMA 10,987,866 898,008 683,988 12,569,860 4.25 Certificates of Deposit 29,271,567 2,392,277 1,822,138 33,485,982 1.20 Texpool 28,166,627 2,867,772 2,749,792 33,784,191 0.003 Total $ 91,667,500 $ 8,057,506 $ 6,702,684 $106,427,692 43 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 2. DEPOSITS, INVESTMENTS AND INVESTMENT POLICIES -CONTINUED Disclosures Relating To Credit Risk The City's Investment policy, in conjunction with state law, specifies the type of credit rating of all authorized investments. Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This type of risk is typically expressed in terms of the credit ratings issued by a nationally recognized statistical rating organization. The City reduces the risk of issuer default by limiting investments to those instruments allowed by the Public Funds Investment Act, Chapter 2256, Texas Government Code The City's investments in U.S. Agency securities (FHLB and FHLMC) are rated AAA by Standard & Poor's and Ass by Moody's Investors Service. The investment in the Texas Local Government Pool (TexPool) carried a credit rating of AAAnn by Standard & Poor's as of September 30, 2010. . 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, 2010, with the exception of funds invested at Texpool, the following table represents 5% or more of the City's investments. Issuer Investment Type Reported Amount Percentage FNMA Federal agency securities $ 12,569,860 11.81% FHLB Federal agency securities 12,022,500 11.30% FHLMC Federal agency securities 7,515,150 7.06% FFCB Federal agency securities 7,050,010 6.62% 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 parry. 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, 2010, the City's deposits with financial institutions above the federal depository limits were fully collateralized. ari CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 3. RECEIVABLES Receivables at September 30, 2010 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, 2010. 45 Pmparly Sets Aurued Tax Twas Rcwurls Imereat Nssesemeda Other Total General Fund $ 265023 32148,%1 3 - 3 84.944 6 - $ 2.813.767 6 5,292,895 Oebl Service 116790 - - 5,733 - 122,523 General Capdal Pro)eds - - - 5],11] 137.557 - 244.674 G O. said Fund - - 98,8% - 98.696 Nornngor Governmental Funds - - 967,339 1]75] - - 985.0% Water and hewer - - 4.896,054 P.344 - 4,973.3% Sdid Wade - - 252,00 13.036 - 100.580 300,192 O,ainap - - 55,697 5,9% - - 61,607 GW Course - - 920 1,985 - - 2.905 Irdemal Service Funds 1,184 49,191 50,375 Gross Re vabiss 361,013 2,140,951 6.173,TID 391]93 13],55] 2,914,347 12,198,241 Lass P9oxence for UMdlMidea (34.4 (14,581) (49,019) Totes Nd Reraivadas, Primary Gavem..m 394).05 32,148,%1 L 6.159.189 3 391.793 5 18],55] 32,914347 $12,149,222 CompanaM Und. $ 33,148,960 3 3 56.409 $ $ 5.720 32,211009 The Water and Sewer Fund accounts receivable include unbilled charges for services rendered through September 30, 2010. 45 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 4. CAPITAL ASSETS Capital asset activity for the year ended September 30, 2010 was as follows: Governmental Activities General capital assets Balance Bel. or Balance being depreciated, September 30, Other Ad)ustmentsl September30, Buildings 2009 Additions Olapseltlons Transfers 2010 Govemmemal Funds: - General wmtalassets 390,224,194 3,994,270 (921,164) 13,659,292 406956.592 not being depredated 2,955,798 2,497,003 (49,991) 2,447,062 7,849,950 Land and land improvements IS 111,66],601 $ 2,083,976 $ - $ - $ 113,951,577 Canshuctianin progress 79,261,360 32,120,503 (858,283) (70,831,400) 40550,463 Tried t iudal assets 5)48,103 1,535,276 (183,386) 2,613,373 9,713,366 not being deprecated 191,128,961 34,204,479 (70.831400) 154,502,040 General capital assets being depreciated, Buildings 53,418,460 7,676,628 (7,239) 51,988420 113,076,269 Improvements other than buildings 390,224,194 3,994,270 (921,164) 13,659,292 406956.592 Furniture and fixtures 2,955,798 2,497,003 (49,991) 2,447,062 7,849,950 vehides 2,770,022 48,338 (211,796) 123,253 2,729.815 Library books 2,430,748 181,083 (858,283) - 1,955,528 Machms, and egmpment 5)48,103 1,535,276 (183,386) 2,613,373 9,713,366 Total wmtal assets being deprecated 457,547,323 15.932.658 (2,029,059) 70,831,400 542,281,520 Less amumuleted depreciation for. Building. (10,977,179) (2,138,552) 7,239 - (13,108,492) Improvemanas other than buildings (141,915,422) (17,165,147) 915,fi64 142,923 (158,021,982) Furniture and fixtures (2,667,152) (702,193) 49,991 - (3,319,354) vehicles (1,765,879) (237,581) 211.7% (150,057) (1,949,721) Library Books (1,%2,720) (173,991) 656,283 - (1,510,436) Medtini and equipment (4,269,683) (1(759,823) 183,386 15,134 (5,140,9117) Total accumulated depredation (163,588,023) (21487288) 2,024,359 (183,056952) Total general wptal assets being depreciated net 293,959,300 (5,554632) (5,500) 70,831400 359230,568 General wpdal assets, net $ 485,088,261 $ 28,649,047 $ (5,500) $ $ 513,732.608 46 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE4. CAPITAL ASSETS—CONTINUED Balance Saks or Balance September 30, Other Adjustments( September 30, 2009 MdRions Dispositions Transfers 2010 Internal Service Funds: Inh mal service funds assets 5,134,108 303,228 5,437,336 not being depreciated: Construction in progress $ 514,162 $ 234,048 $ $ $ 749,110 Total capital assets not being depreciated 514,162 234,948 749,110 Internal service assets being depreciated: $ 4,072,882 $ - $ - $ - $ 4,072,882 Vehicles 6,953,950 930,167 (526,646) - 7,357,271 Machinery and equipment 1,420,572 298,074 (127,295) 11591,351 Total internal service 15,176,557 4.316.489 (12,026,009) 7,467,037 assets being depreciated 8,374,522 1,228,241 (654,141) 8,848,622 Less accumulated 138,835,406 1,417,338 - 12,026,009 152,278,753 depreciation for'. 11,114 - - - 11,114 Vehicles (2,800,363) (906,621) 526,846 - (3,180,138) Machinery and equipment (954,213) (253,340) 127,295 (1,080,258) Total accumulated depreciation (3,754,576) (1,159,981) 654.141 (4,280,396) Total Internal service funds capital sass% being depreciated, net 4,619,948 68,280 - - 4,688,226 Total Internal service funds capital assets, net 5,134,108 303,228 5,437,336 Governmental activities capital assets, net $ 490.222.369 $ 28,953,075 $ (5,500) It $ 519,169.944 Business -Type Activities Water and Sewer Activities: Capital assets not being depreciated Land $ 4,072,882 $ - $ - $ - $ 4,072,882 Construction in progress 11,103,675 4,316,489 (12,026,009) 3,394,155 Total capital assets not being depreciated 15,176,557 4.316.489 (12,026,009) 7,467,037 Capital Assets Being deprecated: Towers, tanks, 8 pumps stations 138,835,406 1,417,338 - 12,026,009 152,278,753 Furniture and fixtures 11,114 - - - 11,114 Machinery and equipment 3,567,049 334,016 (64,909) - 3,836,156 Vehicles 999,7511( 11,060) 888,691 Total capital assets being depreciated 143,413,320 1)51,354 (175,959) 12,026,009 157,014,714 Less accumulated depreciation for'. Towers, tanks, 8 pumps stations (49,373,142) (4,675,541) - - (54048,683) Furniture and fixtures (10,588) (350) - - (10,938) Machinery and equipment (2,141,571) (408,362) 64,909 - (2,485,024) Vehicles (725,351) (42,797) 111,060 (657,088) Total accumulated depreciation (52,250,652) (5,127,050) 175,969 (57,201,733) Total capital assets being depreciated, net 91,162,668 (3,375,696) 12,026,009 99,812,981 Water and sewer activities capital assets. net $ 106,339,225 S 940,793 $ $ $ 107,280,018 47 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE4. CAPITAL ASSETS -CONTINUED Balance Saks or Balance September 30. Other Adjustments/ September 30, 2009 Additions Dispositions Transfers 2010 Solid Waste Activities Capital assets being depreciated: Capital assets being depreciated: Machinery and equipment $ 9,819 $ - $ - $ - $ 9,819 Vehicles 31,899 - $ 496,132 31,899 Total capital assets - (20,638) - 98,260 being depredated 41,718 41,718 403,597 Total capital assets Less accumulated depreciation for. depreciation for being depredated Machinery and equipment (7,389) (540) - - (7,929) Vehicles (31,899) (5,447) (31,899) Total accumulated depreciation for. depreciation (39,288) (540) (39,828) Solid waste ac9v8ies - - (91,980) Vehicles capital assets. net $ 2.430 S (540) $ $ $ 1,890 Drainage Activities: Capital assets being depredated: Capital assets being depreciated: Machinery and equipment $ 642,317 Other improvements $ 496,132 $ - $ - $ - $ 496,132 Vehicles 118,898 - (20,638) - 98,260 Machinery and equipment 403,597 653,211 403,597 Total capital assets depreciation for being depredated 1,018,627 Machinery and equipment (20,638) 997,989 Less accumulated Furniture and bxlures (5,447) (2,179) (7,626) depreciation for. depredation Other improvements (79,718) (12,262) - - (91,980) Vehicles (94,324) (12,800) 20,638 - (86,486) Machinery and equipment (292,647) (32,993) (325,540) Total accumulated $107,157.876 $ 791,612 $ $ $ 107,949,488 depredation (466,589) (58,055) 20,638 (504,006) Drainage ads is capital assets, net $ 552,038 $ (58,055) $ $ f 493,983 Goff Course Acth ltles'. Capital assets being depredated: Machinery and equipment $ 642,317 $ - $ - $ - $ 642,317 Furniture and futures 10,894 10,894 Total capital assets being depredated 653,211 653,211 Less accumulated depreciation for Machinery and equipment (383,581) (88,407) - - (471,988) Furniture and bxlures (5,447) (2,179) (7,626) Total accumulated depredation (389,028) (90,586) (479,614) Goff course activities capital assets, net 264,183 (90,586) 173,597 Business -type activities capital assets, net $107,157.876 $ 791,612 $ $ $ 107,949,488 48 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 4. CAPITAL ASSETS — CONTINUED Component Unita: Cabinet assets not being depremated Land Land imprarements Conatmcbon in progress Total apital assets nM being depremted capital assets being detonated'. Impmvemenn other than buildings FumXure and fiAums Total apM aaacta being depreciated Less ewumulated depredation for Balance (1.566.575) $alae or Balance September 30, (19,M) Me, MjueMenb/ September 30, 2009 M0ltlpns Da,dWWns Transfers 2010 Total apital ease% being depreciated, net I'Mis68 (lasses) 1.441.818 $ 4,324.525 $ - 5 - It - It 4,324,525 207.878 - - - 2W,878 798,300 798,300 4,532.403 798300 5.330.703 3,128,689 - - - 3.128,689 66,075 86,075 3.194.764 3.194,764 Buitdinga (1.566.575) (153,333) - - (1.719,908) FumiWre and fl,durea (19,M) (13115) (33,038) Total accumulated depreciation (1.586,388) (16es48) (1,752,946) Total apital ease% being depreciated, net I'Mis68 (lasses) 1.441.818 Component units capital asse6, ntl It 6,140,789 $ 631,752 $ $ $ BA2.521 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 49 $ 892,120 783,973 12,425,728 7,298,965 6,494 80,008 21,487,288 1,159,961 $ 22,647,249 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 4. CAPITAL ASSETS — CONTINUED Business -type activities. Water and sewer $ 5.127,050 Solid waste 540 Drainage utility 58,055 Goff course 90,586 Total depreciation expense - Business -type activities 5,276,231 Component units: Allen Economic Development Corporation $ 166,548 Outstanding commitments at September 30, 2010, under authorized construction contracts were $6,143,654. 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. At September 30, 2010, bonds payable consisted of the following individual issues. General Obligation Bonds: $20,715,000 Senes 2001 Bonds due in annual installments of $160,000 to $2,110,000 through September 1, 2021; interest at 4.0% to 5.25%. $13,000,000 Sense 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 through September 1, 2023; interest at 2.75% to 4.25%. $11,700,000 Series 2004 Bonds due in annual installments of $395,000 to $790,000 through September 1, 2024; interest at 4.0% to 5.25%. 50 $ 4,960,000 9,435,000 5,345,000 9,290,000 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 5. LONG-TERM DEBT—CONTINUED General Obligation Bonds — continued $32,330,000 Series 2005 Refunding Bonds due in annual installments of $75,000 to $3,505,000 through August 15, 2021, interest at 3.0% to 5.00%. 26,665,000 $1,595,000 Series 2006 Bonds due in annual installments $ 4,215,000 of $50,000 to $115,000 through August 15, 2026, interest at 4.0% to 4.20%. 1,370,000 $11,145,000 Series 2007 Bonds due in annual installments 3,525,000 of $380,000 to $815,000 through August 15, 2027, interest at 4.0% to 4.60%. 9,965,000 $10,185,000 Series 2008 Bonds due in annual installments 5,220,000 of $250,000 to $540,885 through August 15, 2028; $ 12.960.000 interest at 3.5% to 4.60%. 9,555,000 $15,400,000 Series 2009 Bonds due in annual installments of $435,000 to $1,140,000 through August 15, 2028; interest at 2.5% to 4.5% 14,965,000 $12,000,000 Sense 2010 Bonds due in annual installments of $370,000 to $865,000 through August 15, 2029; interest at 2.0% to 4.0% 12,000,000 $ 105,550,000 Certificates of Obligation: $4,735,000 Sense 2004A Combination Tax 8 Revenue Goff Course Certificates of Obligation due in annual installments of $165,000 to $390,000 through September 1, 2024, interest at 3.50% to 5.00%. $ 4,025,000 $765,000 Series 20048 Combination Tax & Revenue Golf Course Certificates of Obligation due in annual installments of $25,000 to $70,000 through September 1, 2024,interest at 4 875% to 5.50%. 660,000 $ 4,685,000 Water and Sewer Revenue Bonds: $6,710,000 Series 2004 Bonds due in annual installments of $175,000 to $490,000 through June 1, 2024, interest at 4.75% to 5.0%. $ 4,215,000 $4,300,000 Series 2005 Bonds due in annual installments of $140,000 to $310,000 through June 1, 2025; interest at 3.75% to 6.625%. 3,525,000 $5,795,000 Series 2009 Refunding Bonds due installments $575,000 to $630,000 through June 1, 2019, interest at 1.2% to 3.5% 5,220,000 $ 12.960.000 51 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTES. LONG-TERM DEBT—CONTINUED AEDC Sales Tax Revenue Bonds: $15,335,000 Series 2008 Sales Tax Revenue Bonds due in annual installments of $390,000 to $940,000 through September 1, 2032; interest at 3.50% to 4.50%. $1,605,000 Series 2010A Sales Tax Revenue Bonds due in annual installments of $440,000 to $595,000 beginning September 1, 2023 through September 1, 2025; interest at 4.00%. $5,165,000 Series 20108 Sales Tax Revenue Bonds due in annual installments of $105,000 to $520,000 through September 1, 2023; interest at 1.35% to 5.10%. ACDC Sales Tax Revenue Bonds: $5,600,000 Series 2006 Refunding Bonds due in annual installments of $290,000 to $785.000 through September 1, 2019; interest at 3.75% to 5.0%. $1,615,000 Series 2007-A Refunding Bonds due in annual installments of $260,000 to $515,000 through September 1, 2012, interest at 3.98%. $32,835,000 Series 2008 Sales Tax Revenue Bonds due in annual installments of $345,000 to $2,785,000 through September 1, 2032; interest at 4.00% to 6.00%. 52 $ 13,940,000 1,605,000 5,165,000 $ 20,710,000 $ 51000,000 570,000 31,135,000 $ 36,705,000 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE5. LONG-TERM DEBT -CONTINUED The following is a summary of long-term debt transactions, including current portion, of the City for the year ended September 30, 2010: Less deferred amounts: Balance Balance Due Balance Due (64,508) Beginning For refundings (882,087) - End Within Governmental actinty of Year Increases Decreases of Year One Year Governmental Activities 114785290 8 9.186. 75 343,303 239,962 (189,067) 394,198 367,649 General Obligation Bonds $ 99,325,000 $ 12,000,000 $ (5,]]5,000) $ 105,550.000 $ 6,560,000 CerO6cates of Obligation 4,905,000 - (220,000) 4,685,000 230,000 Capital lease payable 119,463 - (6],36]) 52,096 45,434 Compensated absences 3,274,196 2,235,724 (2,012,872) 3,497,048 2,351.41 Less deferred amounts: Balance Due For issuance premiums 1,638,692 150,733 (64,508) 1,]24,91] For refundings (882,087) - 158,316 (723,771) - Governmental actinty 965,000 Less deterrent amounts Long-term debt _L108.380.264 $ 14,386.45] =LE181 114785290 8 9.186. 75 The general fund has typically been used to liquidate the liability for Compensated absences for governmental activities. Business Typa.divides Water and Sewer Revenue Bonds Compensated absences Capital lease payable Less detained amounts For refundings For issuance discounts / premiums Business -type activity Balance Balance Due Beginning End! Within of Year Increases Denseness of Year One Year $ 965,000 Less deterrent amounts S 14,100,000 $ - it (1,140,000) $ 12.960,000 $ 1,190,000 343,303 239,962 (189,067) 394,198 367,649 252,377 - (85,863) 166,514 84,194 (336,086) - 34,383 (301,713) 153,352 (11,974) 141,378 Long-term debt $ 14,512,936 $ 239,962 E (1,392,521) E 13,360.37]$ 1,841.843 Allen Community Development Corporations Sales Tax Revenue Bonds $ 37,635,000 $ - $ (930,000) $ 36,705,000 $ 965,000 Less deterrent amounts For issuance discounts/premiums (116,625) (1,991) - (118,616) - For refuMings (117,175) 22,646 (94.529) - ACDC Long-term debt $ 37,401,200 $ (1,991) f (907,354) $ 36,491,855 $ 965,000 Allen Economic Development Corpore8on Sales Tax Revenue Bonds $ 14,345,000 $ 5,770,000 (405,000) $ 20,710,000 $ 780,000 For issuance discounts/premiums (48,631) (6,918) 2,757 (52.792) - AEDC Long-term debt $ 14,296,369 $ 6,763,082 $ (402,243) $ 20,657,208 $ 780,000 53 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTES. LONG-TERM DEBT—CONTINUED 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, 2010, are as follows: General Oblioadon Bonds Annual debt service requirements to maturity for general obligation bonds, including Interest of $37,908,045 are as follows: Governmental Activities Fiscal Year Ending September 30 Principal Interest Total 2011 $ 6,560,000 $ 4,685,241 $ 11,245,241 2012 6,980,000 4,315,511 11,295,511 2013 7,275,000 4,024,214 11,299,214 2014 7,595,000 3,725,741 11,320,741 2015 7,925,000 3,404,370 11,329,370 2016-2020 36,605,000 11,957,655 48,562,655 2021-2025 22,655,000 4,907,148 27,562,148 2026-2029 9.955.000 888.165 10.843.165 Total $ 105550.000 $ 37.908.045 $143.458.045 Certificates of Obligation Annual debt service requirements to maturity for the Certificates of Obligation, including interest of $1,721,068 are as follows: Governmental Activities Fiscal Year Ending September 30 Principal Interest Total 2011 $ 230,000 $ 202,175 $ 432,175 2012 240,000 190,525 430,525 2013 260,000 180,475 440,475 2014 270,000 170,894 440,894 2015 290,000 160,684 450,684 2016-2020 1,685,000 614,563 2,299,563 2021 -2024 1.710.000 201.752 1.911.752 Total $ 4 685 000 E 1 721 (lfirt 6 406.06 54 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE5. LONG-TERM DEBT—CONTINUED Wafer and Sewer Revenue Bonds Revenue bond debt service requirements to maturity, including interest of $3,499,143 are as follows: Business -type Activities Fiscal Year Ending September $0 Pdncioal Interest Total 2011 $ 1,190,000 $ 513,355 $ 1,703,355 2012 1,235,000 467,074 1,702,074 2013 1,165,000 423,049 1,588,049 2014 1,205,000 380,519 1,585,519 2015 1,250,000 335,934 1,585,934 2016-2020 4,520,000 1,061,426 5,581,426 2021 -2025 2.395.000 317.786 2.712.786 Total 12 960 00 1 ({ 16 450.14. AEDC Sales Tax and Revenue Bonds Sales Tax Revenue bond debt service requirements to maturity, including interest of $10,105,770 are as follows: 55 Governmental Activities Fiscal Year Ending September 30 Principal Interest Total 2011 $ 780,000 $ 815,688 $ 1,595,688 2012 800,000 796,127 1,596,127 2013 820,000 774,515 1,594,515 2014 845,000 750,440 1,595,440 2015 870,000 723,905 1,593,905 2016-2020 4,860,000 3,124,004 7,984,004 2021-2025 5,945,000 2,041,461 7,986,461 2026-2030 3,950,000 954,530 4,904,530 2031-2032 1.840.000 125.100 1.965.100 Total 2$ D_71U_nY $ 10105770 $ 30815770 55 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 5. LONG-TERM DEBT— CONTINUED ACDC Sales Tax and Revenue Bonds Sales Tax Revenue bond debt service requirements to maturity, including interest of $28,229,852 are as follows: General Obligation Bonds The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities and infrastructure During the year, $12,000,000 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 $1,359,712 available to service the general obligation debt at September 30, 2010. 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, 2010. A schedule of authorized but unissued direct General Obligation Bonds as of September 30, 2010, is as follows: Governmental Activities Fiscal Year Ending Date September 30 Principal Interest Total 2011 $ 965,000 $ 1,984,752 $ 2,949,762 2012 1,005,000 1,947,008 2,952,008 2013 1,045,000 1,906,116 2,951,116 2014 1,090,000 1,862,835 2,952,835 2015 1,135,000 1,816,365 2,951,365 2016-2020 6,545,000 8,210,260 14,755,260 2021-2025 8,420,000 6,337,558 14,757,558 2026-2030 11,090,000 3,673,258 14,763,258 2031-2032 5.410.000 491.700 5.901.700 Total $ 36.705000 R. 2985 66.936.9 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, $12,000,000 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 $1,359,712 available to service the general obligation debt at September 30, 2010. 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, 2010. A schedule of authorized but unissued direct General Obligation Bonds as of September 30, 2010, is as follows: Original Date Amount Issued 2010 unissued Purpose Authorization Authorized To Dale Issue Balance Performing Ads Center 11/05/02 $19,500,000 $2,815,000 $ - $16,685,000 Service Center Facilities 05/122007 14,500,000 12,500,000 - 2,000,000 Renovations 05/122007 1,700,000 - 275,000 1,425,000 Streets 05/122007 27,200,000 9,450,000 5,500,000 12,250,000 Palls 05/12/2007 17,250,000 5,850,000 1,050,000 10,350,000 Public Ad Pro/acts 05/122007 1,390,000 300,000 325,000 765.000 Public Safety 05/122007 15.855.000 E97 i_ot Opp 8.625.000 E 37540.000 48000 v nnn non 4.380.000 E4] 655.000 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 5. 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 $376,962 at September 30, 2010 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, 2010 of $1,738,080 are adequate to meet the reserve requirements. At September 30, 2010, restricted assets, which include Water and Sewer Revenue Bond Debt Service and Reserve Funds, were as follows: Revenue bond debt service $ 1,170,883 Revenue bond reserve fund 567,197 $ 1,738,080 Retained earnings reserved for Water and Sewer revenue bond retirement is detailed as follows. Restricted assets, revenue bond debt Service and reserve funds $ 1,738,080 Accrued interest, payable from restricted assets (171,118) Current maturities of revenue bonds, payable from restricted assets (1,190,000) Reserved for revenue bond principal and interest $ 376,962 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, 2010 was 4.80 times. 57 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30.2010 NOTES. 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, 2010, the capitalized costs of the Governmental leased property and Business -type leased property under capital leases were $821,279 and $642,317, respectively. The terms of the leases range from 3 - 5 years and call for monthly and annual payments over the life of the leases. The future minimum lease payments under the capitalized leases and the net present value of the future minimum lease payments at September 30, 2010 are as follows: Fiscal Year Ending Governmental Activities September 30, Principal Interest Total 2011 $ 45,434 $ 1,052 $ 46,486 2012 6,662 95 6,757 Total $ 52,096 $ 1,147 $ 53,243 Fiscal Year Ending Business -type Activities September 30, Principal Interest Total 2011 $ 84,194 $ 6,547 $ 90,741 2012 58,137 2,661 60,798 2013 22,809 387 23,196 2014 1,374 14 1,389 Total $ 166,514 $ 9,609 $ 176,124 Operating Leases The City leases machinery and equipment under noncancelable operating leases. Total costs for such leases were $165,619 for the fiscal year ended September 30, 2010. Future minimum lease payments, by year and in the aggregate, under the noncancelable lease commitments are as follows: Fiscal Year Ending September 30, 2011 2012 2013 2014 Total 58 Amount $ 172,527 39,182 7,536 628 $ 219,873 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 6. INTERFUND TRANSFERS All interfund transfers between the various funds are approved supplements to the operations of those funds. Individual fund operating transfers for fiscal year 2010 were as follows: Fund Major Governmental Funds. General Fund General Capital Projects General Obligation Bonds Total Major Governmental Funds Non -major Governmental Funds: Grants and Special Revenue Hotel Occupancy Tax Total Non -major Governmental Funds Major Enterprise Funds Water and Sewer Fund Solid Waste Fund Drainage Utility Fund Golf Course Fund Total Major Enterprise Funds Internal Service Funds: Replacement Fund Risk Management Fund Total Internal Service Funds Total Transfers Transfers In Transfers Out $ 5,629,086 $ 1,707,334 4,197,928 3,315,212 - 238,327 9,827,014 5,260,873 309,828 - - 25,000 309,828 25,000 1,469,319 6,355,108 - 427,063 - 292,838 463,329 1,932,648 7,075,009 62,131 - 229,261 291,392 $ 12,360,882 $ 12,360,882 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 $10,136,842 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 $5,285,873 include cash financing of capital projects, support of programs recorded in non -major governmental funds and internal service funds. 59 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTES. INTERFUND TRANSFERS—CONTINUED Proprietary funds: Total transfers in of $2,224,040 mainly represent amounts transferred into the Golf Course to support operations. The total transfer out of $7,075,009 represents the amount provided by other funds for technology, procurement, human resources, building maintenance, financial and administrative support. The Internal Service Funds transfer of $291,392 includes amounts for Replacement fund CID vehicles and a radar sign and for administrative support for the Risk Management fund. NOTE 7. RETIREMENT PLAN Plan Description The City provides pension benefits for all its eligible employees through a nontraditional, joint contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), an agent, multiple -employer public employee retirement system. TMRS issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information (RSI) for TMRS. The report also provides detailed explanations of the contributions, benefits and actuarial methods and assumptions used by the System. This report may be obtained by writing to TMRS, P.O. Box 149153, Austin, Texas 78714-9153, calling 800-924-8677, or accessing the publications section of the TMRS website at www.tmrs.ora. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS. Plan provisions for the City were as follows: Contributions and Fundina Policy Under the state law governing TMRS, the contribution rate for each City is determined annually by the actuary using the Projected Unit Credit actuarial cost method. The rete consists of the normal cost contribution rete and the prior service cost contribution rate, which is calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the portion of an active members projected benefit allocated annually; the prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the applicable period for that city. Both the normal cost and prior service contribution rates include recognition of the projected impact of annually repeating benefits such as Updated Service Credits and Annuity Increases. The City contributes to the TMRS Plan at an actuarially determined rate. Both the employees and the City make contributions monthly Since the City needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect (i.e. December 31, 2008 valuation is effective for rates beginning January 2010). The City's retirement cost rate was 10.90% from October to December 2009 and 11.91 % from January to September 2010. Ci Plan Year 2010 Plan Year 2009 Matching Ratio (City to employee) 2 to 1 2 to 1 Years required for vesting 5 5 Service retirement eligibility 6015,0/20 6015,0/20 (expressed as age/years of service) Updated Service Credit 100% Repeating 100% Repeating, Transfers Transfers Annuity Increase (to Retirees) 70% repeating 70% repeating Contributions and Fundina Policy Under the state law governing TMRS, the contribution rate for each City is determined annually by the actuary using the Projected Unit Credit actuarial cost method. The rete consists of the normal cost contribution rete and the prior service cost contribution rate, which is calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the portion of an active members projected benefit allocated annually; the prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the applicable period for that city. Both the normal cost and prior service contribution rates include recognition of the projected impact of annually repeating benefits such as Updated Service Credits and Annuity Increases. The City contributes to the TMRS Plan at an actuarially determined rate. Both the employees and the City make contributions monthly Since the City needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect (i.e. December 31, 2008 valuation is effective for rates beginning January 2010). The City's retirement cost rate was 10.90% from October to December 2009 and 11.91 % from January to September 2010. Ci CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 7. RETIREMENT PLAN — CONTINUED Beginning in fiscal year 2008, changes in actuarial funding and assumptions resulted in higher required contributions and lower funded ratios. To assist in this transition to higher rates, TMRS approved an eight-year phase-in period, which allows cities the opportunity to increase their contributions gradually to their full required contribution rate. The City made additional voluntary contributions of approximately 1% from January to September 2008 and approximately 2% for the 2009 and 2010 fiscal years to reduce the unfunded actuarial accrued liability. The annual pension cost and net pension obligation/(asset) are as follows: Annual Required Contribution (ARC) $4,663,050 Contributions Made -statutorily required (3,853,818) Contributions Made — voluntary ( 570.000) Increase in net pension obligation 239,232 Net Pension Obligation, beginning of the year 40.765 Net Pension Obligation, end of the year Three -Year Trend Information Fundino Status and Funding Progress: As of December 31, 2009, the most recent actuarial valuation date, the plan was 70% funded. The actuarial accrued liability for benefits was $79,567,937, and the actuarial value of assets was $55,724,219, resulting in an unfunded actuarial accrued liability (UAAL) of $23,843,718. These amounts include the assets and actuarial liabilities related to both the Municipal Accumulation fund (MAF) and the Employee Savings Fund (ESF) of the City. It should be noted that only the assets of the MAF can be used to pay for the MAF's actuarial liabilities, and if ESF assets and liabilities had been excluded, the reported funding status would be lower. The covered payroll (annual payroll of active employees covered by the plan) was $33,147,218, and the ratio of the UAAL to the covered payroll was 72%. A summary of actuarial methods and assumptions is as follows Actuarial Cost Method Amortization Method Remaining Amortization Period Asset Valuation Method Investment Rate of Return Projected Salary increases Includes Inflation at Cost -of -Living Adjustments 61 -- Projected Unit Credit -- Level Percent of Payroll -- 28 Years — Closed Period -- 10 Year Smoothed Market 7.5% -- Varies by Age and Service 3.0% 2.1% Annual Percentage Net Pension Fiscal Pension of APC (Obligation) Year Cost (APC) Contributed Asset 2008 $2,680,367 100% 2009 $4,028,765 99% ($ 40,765) 2010 $4,423,818 95% ($279,997) Fundino Status and Funding Progress: As of December 31, 2009, the most recent actuarial valuation date, the plan was 70% funded. The actuarial accrued liability for benefits was $79,567,937, and the actuarial value of assets was $55,724,219, resulting in an unfunded actuarial accrued liability (UAAL) of $23,843,718. These amounts include the assets and actuarial liabilities related to both the Municipal Accumulation fund (MAF) and the Employee Savings Fund (ESF) of the City. It should be noted that only the assets of the MAF can be used to pay for the MAF's actuarial liabilities, and if ESF assets and liabilities had been excluded, the reported funding status would be lower. The covered payroll (annual payroll of active employees covered by the plan) was $33,147,218, and the ratio of the UAAL to the covered payroll was 72%. A summary of actuarial methods and assumptions is as follows Actuarial Cost Method Amortization Method Remaining Amortization Period Asset Valuation Method Investment Rate of Return Projected Salary increases Includes Inflation at Cost -of -Living Adjustments 61 -- Projected Unit Credit -- Level Percent of Payroll -- 28 Years — Closed Period -- 10 Year Smoothed Market 7.5% -- Varies by Age and Service 3.0% 2.1% CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE7. RETIREMENT PLAN—CONTINUED The schedule of funding progress, presented as Required Supplementary Information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing overtime relative to the actuarial accrued liability of benefits. NOTE 8. WATER AND SEWER CONTRACTS In 1972, the City entered into a forty -year contract with the North Texas Municipal Water District (District) for the purchase of water. Under the terms of this contract, the City is obligated to make a minimum annual payment (adjusted annually) in return for a minimum volume of gallons of water per year. During 1998, the City was annexed into the North Texas Municipal Water District, which guaranteed the City a minimum volume of water. During the year ended September 30, 2010, the cost of water purchased under this contractwas $6,985,324. 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 2010, the cost for transportation, treatment and disposal of sewage and other wastes was $5,590,432. NOTE 9. 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, 2010, the deferred compensation investments are not reported in the City's financial statements. Insitzli N1411711TJZE H4�ST#71111 Health and Dental Insurance The City provides health and dental insurance benefits to City employees under a modified self- insurance plan. Under the plan, the City and the employee pay a portion of a predetermined monthly premium, which is based on the estimated claims cost for the plan and the extent of medical coverage selected by the employee. To cover annual costs, premium payments are reported as operating revenues of the Risk Management Fund and operating expenditures/expenses of the participating funds. A commercial insurance carrier is utilized to adjudicate and pay medical claims on behalf of the City. The City's liability is limited by an excess ("stop loss") insurance policy covering individual claims in excess of $125,000 per person. Throughout the policy year, the "stop loss" insurance carrier reimburses the City for claims paid during the policy year which exceeded the "stop loss" amount Through 12/31/10 a commercial insurance company re -insures the City for individual 62 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE10. RISK MANAGEMENT—CONTINUED Health and Dental Insurance — Continued claims in excess of up to a lifetime maximum of $2,000,000. Per the Health Care Reform act no lifetime maximum will be imposed effective 1/1/11. The liabilities for insurance claims reported are based on GASB No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. These liabilities include an estimate for incurred but not reported claims. The estimated amount at September 30, 2010 was $739,965. 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 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 2009 629,487 4,448,591 4,518,707 599,371 2010 599,371 5,685,199 5,544,605 739,965 Workers Compensation, Property and Liability Insurance The City participates in the Texas Municipal League Intergovernmental Risk Pool (TMLIRP) for workers' compensation claims, liability (general, automobile, law enforcement, and emors/omissions), and property insurance. The cost is based on the pool's claims cost, which is adjusted to reflect the City's individual claims experience. As claims arise they are submitted to and paid by TMLIRP. To cover annual costs, premium payments are reported as operating revenues of the Risk Management Fund and operating expenditures/expenses of the participating funds. The City has a workers' compensation deductible of $25,000 per occurrence, with an annual aggregate deductible of $250,000. During 2010, the City contributed $221,684 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 2010, the City contributed $539,195 for property and general liability. 63 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 11. OTHER POSTEMPLOYMENT BENEFITS (OPEB) The City implemented Governmental Accounting Standards Board (GASB) Statement 45 "Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions (OPEB)" prospectively (no beginning Net OPEB Obligation) in fiscal year 2009. Retiree Health Care Benefits Program Description In addition to the pension benefits described in Note 7, as required by state law the City makes health care benefits available to all retired employees through a single -employer defined benefit medical plan. This healthcare plan provides lifetime insurance or until age 65 to all employees at any age with 20 years of service and their dependents. Retirees must make a one-time irrevocable decision to continue benefits at the time of retirement, after that their eligibility for this benefit ends. The benefits and contribution rates are approved annually by the City Council as part of the budget process. The retiree benefit consists of medical, dental and vision care at the same cost as an employee until age 65. Retiree premiums are equal to COBRA rates and are paid entirely by the retiree (no City subsidy). Since an irrevocable trust has not been established, the plan is not accounted for as a trust fund, therefore, does not issue a separate financial report. For financial reporting purposes, health benefits for retiree and active employees are reported in the Risk Management Fund. As of September 30, 2010, membership consisted of: Retirees and beneficiaries receiving benefits 9 Active employees 515 Total 524 Funding Policy Actuarial studies were completed in August 2006 and September 2008 to prepare for the implementation of GASB 45. As part of the annual budget process plan premium rates (annually determined by a medical consulting firm) and the OPEB annual required contribution (ARC) are approved by the City Council. Retiree premiums are equal to COBRA rates and are paid entirely by the retiree. In FY2010 retirees contributed $58,849 with COBRA rates ranging from $380 to $1780 per month depending on coverage selected. For the second year of GASB 45 implementation the City contributed the ARC of $48,973 to the Risk Management Fund where payments of current OPEB benefits are made on a pay-as-you-go basis. The City is not required to establish an irrevocable trust fund to accumulate assets for payment of future OPEB benefits, and has elected not to do so for 2010. Annual OPEB costs and NET OPEB Obligation The City's annual other post�employment benefit (OPEB) cost is calculated based on the annual required contribution of the City (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. 0 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 11. OTHER POSTEMPLOYMENT BENEFITS (OPEB) —CONTINUED The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. Annual required contribution $ 48,973 Interest on prior year Net OPEB obligation - Adjustment to annual required contribution - Annual OPEB cost $48,973 Contributions made $48,973 Change in OPEB obligation - Net OPEB obligation (asset) — beginning of year Net OPEB obligation (asset) — end of year - Percentage of OPEB costs contributed 100% Funded Status and Funding Progress As of September 30, 2010, using the last actuarial valuation date of September 30, 2008, the actuarial accrued liability for benefits was $534,259, all of which was unfunded. The covered payroll (annual payroll of active employees covered by the plan) was $33,147,218, and the ratio of the unfunded actuarial accrued liability to the covered payroll was 1.6%. Actuarial values of the program involve estimates of the value of reported amounts and assumptions of the probability of occurrence of events far into the future. Amounts determined regarding the funded status of the program and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend that shows whether the actuarial value of plan assets held in an irrevocable trust is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. As the City chose not to establish an irrevocable trust, plan assets will aways be reported under GASB Statement 45 as zero. It is important to note, however, that the net assets of $3,454,708 available in the Risk Management Fund exceed the $534,259 actuarial accrued liability. In February 2011, the City Council was presented the results of an actuarial study update completed in November 2010. The study indicated the actuarial accrued liability increased from $534,259 to $2,736,262 and the annual required contribution increased from $48,973 to $321,597. The FY2011 budget will be adjusted to address the new actuarial findings and establish an irrevocable trust. Actuarial Methods Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan understood by the employer and plan members) and include the type of benefits in force at the valuation date and the historical pattern of sharing benefit costs between the City and the plan members at that point. Actuarial calculations refiect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. 65 CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 11. OTHER POSTEMPLOYMENT BENEFITS (OPEB) — CONTINUED Significant methods and assumptions used for this were: Actuarial Assumptions Discount Rate Amortization Method/Period Health Care Cost Trend Rate. Retirement Rates: Retiree Participation Rate Dependent Status: Mortality: Actuarial Value of Assets Actuarial Cost Method Supplemental Death Benefits Plan: Program Description 5.00% level dollar, open, 30 years 9% graded to 5 1/2% in year 8 and thereafter Ages 50-55-2%, 56-60-5%, 60-64-15%, 65+ 100% 20% Actual composition used RP 2000 EE/Combined Interest-bearing liquidity account Projected unit credit The City also participates in the cost sharing multiple -employer defined benefit group -term life insurance plan operated by the Texas Municipal Retirement System (TMRS) known as the Supplemental Death Benefits Fund (SDBF) The city elected, by ordinance, to provide group - term life insurance coverage to both current and retired employees. The city may terminate coverage under and discontinue participation in the SDBF by adopting an ordinance before November 1 of any year to be effective the following January 1. The death benefit for active employees provides a lump -sum payment approximately equal to the employee's annual salary (calculated based on the employee's actual earnings, for the 12 -month period preceding the month of death). Retired employees are insured for $7,500 and this coverage is reported as an "other postemployment benefit" or (OPEB). Contributions and Funding Policy The city contributes to the SDBF at a contractually required rate as determined by an annual actuarial valuation. The rate is equal to the cost of providing one-year term life insurance. The funding policy for the SDBF program is to assure that adequate resources are available to meet all death benefit payments for the upcoming year; the intent is not to pre -fund retiree term life insurance during employee's entire careers. The city's contributions to the TMRS SDBF for retiree's for the years ended 2010, 2009, and 2008 were $54,440, $56,341, and $56,560, which equals the required contributions (ARC) each year. III CITY OF ALLEN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2010 NOTE 12. COMMITMENTS AND CONTINGENT LIABILITIES Federal Grants The City participates in a number of State and Federal assisted grant programs. Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the Federal Government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the City expects such amounts, if any, to be immaterial. Litigation The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the City's counsel that resolution of these matters will not have a material adverse effect on the financial condition of the City. Economic Development Grant The City has several economic development agreements whereby it has agreed to pay a grant(s) to a developer and/or business in return for the design, construction, operating and/or managing of the business within the City of Allen. All grants are performance based and do not constitute a liability on the City's financial records. 67 5A .+ 4 RE5p ECT 'NTfC R� • c'TY OF p``EM REQUIRED SUPPLEMENTARY INFORMATION EgpECT *a 'k TFC R?. s C'TY OF A`LEM CITY OF ALLEN, TEXAS EXHIBIT A-1 SCHEDULE OF TMRS FUNDING PROGRESS AND CONTRIBUTIONS AND SCHEDULE OF OPER FUNDING PROGRESS AND CONTRIBUTIONS FOR THE YEAR ENDED SEPTEMBER 30, 2010 Required Supplementary Information Schedule of Texas Municipal Retirement System Funding Progress and Contributions Last Three Valuation Years (unaudited) UAAL as a Actuarial %of Valuation Value of Funded Covered Covered Date Assets AAL' Ratio UAAL•' Payroll Payroll 12/31/07 $44,996,760 $65,013,172 69.2% $20,016,412 $27,986,779 71.5% 12/31/08 $49,860,343 $72,366,502 68.9% $22,506,159 $31,392,512 71.7% 12/31/09 $55,724,219 $79,567,937 70.0% $23,843,718 $33,147,218 71.9% Required Supplementary Information Schedule of Other Post Employment Benefits Funding Progress and Contributions Last Three Valuation Years (unaudited) UAALas Actuarial a % of Valuation Value of Funded Covered Covered Date Assets AAL` UAAL" Ratio Payroll Payroll 09/30/07 N/A N/A N/A 09/30/08 N/A $534,259 $534,259 0% 09/30/09 N/A $534,259 $534,259 0% "Actuarial Accrued Liability —Unfunded Actuarial Accrued Liability 68 $31,392,512 1.7% $33,147,218 1.6% CITY OF ALLEN, TEXAS GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2010 4,397,558 EXHIBIT A-2 5,629,086 (168,472) Transfers to other funds (956,793) VARIANCE WRH (1,707,334) BUDGETED AMOUNTS Sale of capital assets FINAL BUDGET - 99,637 99,537 Total other financing sources (uses) POSITIVE 4,490,224 ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES 310,720 450,392 FUND BALANCES, BEGINNING OF YEAR 15,156,255 Ad valorem taxes, penalties and interest $ 30,041,006 $ 30,035,559 $ 29,697,481 $ (338,078) Franchise taxes 5,828,503 5,722,562 5,986,972 264,410 Municipal sales 12,460,253 12.112,746 12,154,986 42,240 Licenses, permits and fees 1,007,100 893,900 1,052,032 158,132 Charge for services 4,520,543 5,850,821 5,312,040 (538,781) Court fines 1,929.215 1,926,695 1,950,246 23,551 Gifts and contributions 81,000 292,905 460,014 167,109 Investment earnings 466,800 283,304 306,259 22,955 Miscellaneous 1,335,626 1,836,031 1,450,547 (385,484) Total revenues 57,670,046 58,954,523 58,370,577 (583,946) EXPENDITURES Current: General government 16,643,605 18,093,602 17,830,576 263,026 Public safety 24,867,059 24,426,344 24,490,511 (64,167) Publicwarks 3,690,171 3,611,693 3,559,551 52,142 Culture and recreation 13,524,471 15,076,539 13,874,313 1,202,226 Community development 2,404,257 2,376,241 2,326,195 50,046 Total expenditures 61,129,563 63,584,419 62,081.146 1,503,273 Excess (defiaency) of revenues over expenditures (3,459,517) (4,629,896) (3,710,569) 919,327 OTHER FINANCING SOURCES (USES) Transfers from other funds 4,397,558 5,797,558 5,629,086 (168,472) Transfers to other funds (956,793) (1,307,334) (1,707,334) (400,000) Sale of capital assets 99,637 99,537 Total other financing sources (uses) 3,440,765 4,490,224 4,021,289 (468,935) NET CHANGE IN FUND BALANCE (18,752) (139,672) 310,720 450,392 FUND BALANCES, BEGINNING OF YEAR 15,156,255 15,156,255 15,156,255 FUND BALANCES, END OF YEAR $ 15,137,503 $ 15,016,583 $ 15,466,975 $ 450,392 CITY OF ALLEN, TEXAS NOTES TO REQUIRED SUPPLEMENTARY INFORMATION YEAR ENDED SEPTEMBER 30, 2010 BUDGETARY INFORMATION The City Council adheres to the following procedures in establishing the budgets reflected in the financial statements: 1. Each year the City Manager is required to submit to the City Council a proposed budget for the fiscal year beginning on the following October 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayers' comments. 3. Prior to October 1, the budget is legally enacted by the City Council through passage of an ordinance 4. Annual budgets are legally adopted for the General Fund and Debt Service Fund on a basis consistent with accounting principles generally accepted in the United States of America. Formal budgetary integration is not employed for proprietary funds. However, the City does adopt an annual budget for those funds for managerial control. 5. The City Manager is authorized to adjust budgeted amounts, however, such revisions may not result in total expenditures (appropriations) in excess of budgeted expenditures without approval of the City Council. Therefore, the legal level of budgetary control is the combined total budgeted expenditures for all fund types. 6. Formal budgetary integration is not employed for Special Revenue Funds, Proprietary Funds or Capital Projects Funds However, the City does adopt an annual budget for those funds for managerial control. 7. Budgetary data for the Special Revenue Funds and Capital Projects Funds has not been presented in the accompanying basic financial statements as such funds are budgeted over the life of the respective grant or project and not on an annual basis. Budgetary information for the Proprietary Funds has not been presented since reporting on such budgets is not legally required. The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual — General Fund presents a comparison of budgetary data to actual results. The General Fund utilizes the same basis of accounting for both budgetary purposes and actual results. 70 067%%• * R?. r Cary OF A`4�N COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES �SPFCT + C;ry OF A``YN MAJOR GOVERNMENTAL FUNDS GENERALFUND The General Fund is used to account for resources associated with traditional governmental functions that are not required legally or by sound financial management to be accounted for in another fund. DEBT SERVICE FUND The Debt Service Fund is used to account for the accumulation of resources for and the payment of general obligation bonds, certificate of obligation bonds, and interest from governmental resources. MAJOR CAPITAL PROJECTS FUNDS The Capital Projects Funds account for all resources used for the acquisition and/or construction of major capital 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. 71 CITY OF ALLEN, TEXAS EXHIBIT B-1 COMPARATIVE BALANCE SHEETS GENERALFUND YEAR ENDED SEPTEMBER 30, 2010 AND 2009 2010 2009 ASSETS Cash and cash equivalents $ 5,405,281 $ 1,498,466 Investments 10,525,864 14,458,372 Receivables: Ad valorem taxes (net of allowances for uncollectibles of $4,009 in 2010 and $91,361 in 2009) 261,014 112,753 Sales taxes 2,148,961 1,878,457 Accrued interest 64,944 71,027 Other 2,813,767 1,532,781 Prepaid items 862 941 TOTAL ASSETS $ 21,220,693 $ 19,552,797 LIABILITIES AND FUND BALANCE LIABILITIES Accounts payable 2,942,726 $ 2,156,143 Accrued liabilities 2,102,948 2,113,892 Deferred revenue 708,044 126,507 TOTAL LIABILITIES 5,753,718 4,396,542 FUND BALANCES Reserved for encumbrances - 36,509 Reserved for prepaid items 862 941 Unreserved, undesignated 15,466,113 15,118,805 TOTAL FUND BALANCES 15,466,975 15,156255 TOTAL LIABILITIES AND FUND BALANCE $ 21,220,693 $ 19,552,797 72 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GENERALFUND FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES Ad valorem taxes, penalties and interest Franchise taxes Municipal sales tax Licenses, permits and fees Charge for services Court fines Gifts and contributions Investment earnings Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Public works Culture and recreation Community development Total expenditures Excess (deficiency) 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 (uses) NET CHANGE IN FUND BALANCES FUND BALANCE, BEGINNING OF YEAR FUND BALANCE, END OF YEAR 73 PIN, 11=1Yi:IPI 2010 2009 $ 29,697,481 5,986,972 12,154,986 1,052,032 5,312,040 1,950,246 460,014 306,259 1,450,547 $ 29,828,073 5,448,977 10,879,111 1,738,538 3,900,935 1,817,068 483,860 427,523 395,221 58,370,577 54,919,306 17,830,576 11,915,266 24,490,511 23,662,504 3,559,551 3,499,107 13,874,313 13,028,058 2,326,195 2,284,704 62,081,146 54,389,639 (3,710,569) 529,667 5,629,086 3,956,842 (1,707,334) (4,367,396) - 35,069 99,537 71,718 4,021,289 (303,767) 310,720 225,900 15,156,255 14,930,355 $ 15,466,975 $ 15,156,255 CITY OF ALLEN, TEXAS COMPARATIVE BALANCE SHEETS DEBT SERVICE FUND SEPTEMBER 30, 2010 AND 2009 EXHIBIT B3 2010 2009 ASSETS Cash and cash equivalents $ 464,823 $ 787,587 Investments 929,206 850,019 Receivables: Ad valorem taxes (net of allowances for uncollectibles of $30,429 in 2010 and $66,258 in 2009) 86,361 37,464 Accrued interest receivable 5,733 3,103 Total assets $ 1,486,123 $ 1,678,173 LIABILITIES AND FUND BALANCES LIABILITIES Interest payable $ 35,186 $ 61,902 Deferred revenue 91,225 37,464 Total liabilities 126,411 99,366 FUND BALANCE Reserved for debt service 1,359,712 1,578,807 TOTAL LIABILITIES AND FUND BALANCE $ 1,486,123 $ 1,678,173 74 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES DEBT SERVICE FUND FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES Ad valorem taxes Investment earnings Total revenues EXPENDITURES Principal retirement Interest and fiscal charges Total expenditures Deficiency of revenues over expenditures NET CHANGE IN FUND BALANCES FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR 75 1�:1:11.1Y131 2010 2009 $ 10,428416 $ 9,407,830 57,825 52,164 10 486,241 9,459,994 5,995,000 5,200,000 4.710,336 4,309,099 10,705,336 9,509,099 (219,095) (49105) (219,095) (49,105) 1,578,807 1,627,912 $ 1,359,712 $ 1,578,807 CITY OF ALLEN, TEXAS BUDGETARY COMPARISON SCHEDULE DEBT SERVICE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2010 EXHIBIT 0-5 NET CHANGE IN FUND BALANCES (151,845) (212,554) (219,095) VARIANCE FUND BALANCE, BEGINNING OF YEAR 1,578,807 1,578,807 1,578,807 WITH FINAL FUND BALANCE, END OF YEAR $ BUDGETEDAMOUNTS $ 1,366,253 BUDGET $ (6,541) POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) REVENUES Ad valorem taxes $10,532,955 $ 10,536,431 $ 10,428,416 $ (108,015) Investment earnings 85,000 20,815 57,825 37,010 Total revenues 10,617,955 10,557,246 10,486,241 (71,005) EXPENDITURES Principal retirement 5,995,000 5,995,000 5,995,000 - Interest and fiscal charges 4,774,800 4,774,800 4,710,336 64,464 Total expenditures 10,769,800 10,769,800 10,705,336 64,464 NET CHANGE IN FUND BALANCES (151,845) (212,554) (219,095) (6,541) FUND BALANCE, BEGINNING OF YEAR 1,578,807 1,578,807 1,578,807 FUND BALANCE, END OF YEAR $ 1,426,962 $ 1,366,253 $ 1,359,712 $ (6,541) 76 CITY OF ALLEN, TEXAS EXHIBIT B4 COMPARATIVE BALANCE SHEETS GENERAL CAPITAL PROJECTS FUND SEPTEMBER 30, 2010 AND 2009 ASSETS Cash and cash equivalents Investments Accrued interest receivable Special assessments receivable Other receivable Total assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Retainage payable Accrued liabilities Total liabilities FUND BALANCES Reserved for encumbrances Unreserved, undesignated Total fund balances TOTAL LIABILITIES AND FUND BALANCES 77 2010 2009 $ 4,450,829 $ 11,084,611 9,257,376 2,200,034 57,117 9,561 187,557 187,557 $ 13,229,711 $ 26,711,474 $ 13,952,879 $ 26,711,474 $ 394,465 $ 7,231,082 87,419 850,927 697,736 832,408 1,179,620 8,914,417 504,279 2,607,808 12, 268, 980 15,189, 249 12,773,259 17,797,057 $ 13,952,879 $ 26,711,474 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GENERAL CAPITAL PROJECTS FUND FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES Charges for services Intergovernmental Investment earnings Gifts and contributions Miscellaneous Total revenues EXPENDITURES General government Capital outlay Total expenditures Excess (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 78 2010 EXHIBIT B-7 2009 $ 478,676 $ 332,174 2,819,590 21,433,248 220,161 245,177 149,508 23,418,303 3,482,002 535,671 7,149,937 45,964,573 825,427 664,737 12,231,024 40,348,527 13, 056, 451 41, 013, 264 (5,906,514) 4,951,309 4,197,928 1,725,070 (3,315,212) (675,435) 882,716 1,049,635 (5,023,798) 6,000,944 17,797,057 11, 796,113 $ 12,773,259 $ 17,797,057 CITY OF ALLEN, TEXAS COMPARATIVE BALANCE SHEETS GENERAL OBLIGATION BOND FUND SEPTEMBER 30, 2010 AND 2009 $ 1,411,395 $ EXHIBIT B-8 Retainage payable 2010 2009 ASSETS 2,104,081 568,459 Cash and cash equivalents $ 6,678,194 $ 2,580,758 Investments 15,996,359 27,753,813 Accrued interest receivable 98,696 121,310 Total assets $ 22,773,249 $ 30,455,881 LIABILITIES AND FUND BALANCES $ 22,773,249 $ 30,455,881 LIABILITIES Accounts payable $ 1,411,395 $ 378,941 Retainage payable 692,686 189,518 Total liabilities 2,104,081 568,459 FUND BALANCES Reserved for encumbrances 6,143,654 3,485,095 Unreserved, undesignated 14,525,514 26,402,327 Total fund balances 20,669,168 29,887,422 TOTAL LIABILITIES AND FUND BALANCES $ 22,773,249 $ 30,455,881 79 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GENERAL OBLIGATION BOND FUND SEPTEMBER 30, 2010 AND 2009 EXHIBIT B-9 2010 2009 REVENUES Investment earnings $ 347,006 $ 534,391 Miscellaneous 17,024 Total revenues 347,006 551,415 EXPENDITURES General government Culture and recreation Public works 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 011 183,091 203,324 15,829 7,604 1,553,572 - 19,725,174 7,648,538 15,339,639 21,477,666 7,859,466 (21,130,660) (7,308,051) (238,327) (250,233) 150,733 189,872 12,000,000 15,400,000 11,912,406 15,339,639 (9,218,254) 8,031,588 29,887,422 21,855,834 $ 20,669,168 $ 29,887,422 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: Hotel Occupancy Tax Fund — To account for funds received from hotel occupancy tax and expend as allowed by state law Asset Forfeiture Fund — To account for activities associated with assets legally seized and forfeited. Grants and Special Revenue Fund — To account for monies received from other governmental agencies that have restricted legal requirements and multi-year budgets. Park Dedication Fund — To account for funds received and expended for the acquisition of additional park land and for the development of neighborhood parks. Tax Increment Financing Fund — To account for the tracking of property tax and sales tax revenue and associated expenses for the City's Tax Increment Financing agreements. 81 CITY OF ALLEN, TEXAS COMBINING BALANCE SHEET NON -MAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2010 EXHIBIT C-1 SPECIAL REVENUE GRANTS TOTAL HOTEL AND TAK NONMMOR OCCUPANCY ASSET SPECUIL PARK INCREMENT GOVERNMENTAL TAK FORFEITURE REVENUE DEDICATION FINANCING FUNDS ASSETS Cash and rash equivalents $ 4481553 $ 88,375 $ 3.167 S 72,671 S 1W,495 E 1,103,281 ImesLnents 993,723 115,766 - 1,404,185 304,349 2,878,023 A ouMsr .eAls 80,178 - 747,983 88,370 62,808 987,339 Amauedintelest 6,131 714 2.377 6,57 1,878 17,757 TOTAL ASSETS S 1,534585 E 202,855 51,097,527 $ 1.611,083 E 519,530 E 4.966,380 LIABILITIES AND FUND BALANCES LIABILITIES Amounts Payable 5 43,702 $ 21.677 422,957 $ 243 S - $ 488,579 Attrued faMfdes 4,161 14,462 25,939 - - 44,582 Retainage Payable - - 31,121 - - 31,121 Detained! revenue 65.568 85,566 TOTAL LIABILITIES 47,063 36,139 545,583 243 629,820 FUND SALANCES Reserved loronmmb.nms 20,887 1.957 526.306 6,708 - 555,896 Unreserved 1,400,055 164,759 25,038 1,604,874 519,530 3]80,856 TOTAL FUND BALANCES 1,486,722 166.716 551,944 1,611,640 510i530 4,336,652 TOTAL LUU$ILITIES AND FUND BALANCES$ 1.534.505 $ 202.055 S1097,5D E 1,611.883 E 519,530 $ 4,806.380 FY1 CITY OF ALLEN COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2010 EXHIBrc C-2 EXPENDITURES GRANTS TOTAL General government HOTEL - AND - TAX NONJMOR Publ¢salety OCCUPANCY ASSET SPECIAL PARK INCREMENT GOVERNMENTAL Publicx rks TAX FORFEITURE REVENUE DEDICATION FINANCING FUNDS REVENUES SA,811 - 95,540 17,637 - 698988 Ad adore. taxes, Fenalbes end ,mere d $ - $ - $ - S - $ 428,321 $ 429.321 Franchise Woes - - 104885 - - 104.885 Mun."I sales tax - - - - 306,282 306,282 Licenses, permits, dint Ices - - - 68,369 - 88369 Court fines - - 184078 - - 184,078 Hotel l motel taxes 805,185 - - - - 805.185 Intergovernmental - - 2,571,141 - 137,718 3,706,859 Invesbnenteamings 20,681 2,074 8,243 17,597 5,373 53,968 Miscellaneous 2,125 264267 129 286,541 Tobi revenues 827,991 266,WI 2,888,478 85,966 878,694 4,927,488 EXPENDITURES General government - - 203,060 - 814111 817.171 Publ¢salety - 117.434 385,162 - - 03,596 Publicx rks - - 73,232 - - 73.232 Culture and recrestmn SA,811 - 95,540 17,637 - 698988 Commundy development - - 258,259 - - 250.259 Capdal outlay 72,527 2,65,723 124854 - 2,282904 Tool sapsnciltums 577811 189.961 3.081,976 142,291 814,111 4,608,10 Excess (defGeney) of navenues over axpendeume 250,180 76,400 (213,500) (58,325) 264,583 321,338 OTHER FINANCING SOURCES (USES) Tranafem from oMer funds - - 309,828 - - 309.828 Transfers to oMer funds (25,000) - - - - (25,000) Sale of capdal assets (1,315) (1,315) Total other financing sources (us") (25,000) (1,345) 309,828 - 283,03 NET CHANGE IN FUND BALANCES 225,180 75,055 98328 (0,325) 204,503 601,821 FUND BALANCES, BEGINNING OF YEAR 1,261,542 91,661 455,616 1,867,985 251,90 3.731.731 FUND BALANCES, END OF YEAR 5 1"186722 $ 168718 $ 551,944 $ 1,611,040 $ 519.530 $ 4,338,552 83 espeCT *a �NTf CR i rr } CITY OF p`tiEN 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. 0 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF NET ASSETS WATER AND SEWER ENTERPRISE FUND SEPTEMBER 30, 2010 AND 2009 EXHIBIT D-1 2010 2009 ASSETS CURRENTASSETS Cash and cash equivalents $ 5,906,365 7,123,912 Investments 12,535,772 13,117,892 Receivables, net of allowance for uncollectibles'. Accounts 4,881,473 4,087,652 Accrued interest 77,344 53,459 Inventories 221,182 228,342 Restncted cash and cash equivalents 1,738,080 1,980,741 Total current assets 25,360,216 26,591,998 NONCURRENT ASSETS CAPITAL ASSETS Land 4,072,882 4,072,882 Tourers, tanks, and pump stations 152,278,753 138,835,406 Vehicles 888,691 999,751 Machinery and equipment 3,838,156 3,567,049 Furniture and fixtures 11,114 11,114 Construction in progress 3,394,155 11,103,675 Total capital assets 164,481,751 158,589,877 Less: accumulated depreciation (57,201,733) (52,250,652) Capital assets, net of accumulated depreciation 107,280,018 106,339,225 DEFERRED CHARGES Bond issuance costs, net of amortization 155,109 169,202 Total noncurrent assets 107,435,127 106,508,427 TOTAL ASSETS 132,795,343 133,100,425 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable 1,531,321 1,100,306 Accrued liabilities 429,292 224,405 Payable from restricted assets. Revenue bonds payable - current 1,190,000 1,140,000 Accrued interest payable 171,118 186,220 Accrued compensated absences - current 253,617 227,838 Customer deposits payable 1,462,681 1,409,847 Total current liabilities 5,038,029 4,288,616 NONCURRENT LIABILITIES Revenue bonds payable 11,609,665 12,777,256 Accrued compensated absences 8,915 8,009 Total noncurrent liabilities 11,618,580 12,785,265 TOTAL LIABILITIES 16,656,609 17,073,881 NET ASSETS Invested in capital assets, net of related debt 94,460,353 92,421,969 Restricted Restricted for revenue bond principal and interest 376,962 654,521 Unrestricted 21,281,419 22,950,054 TOTAL NET ASSETS $ 116,138,734 $ 116,026,544 85 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS WATER AND SEWER ENTERPRISE FUND FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 3,559,483 EXHIBIT D-2 Contractual and other services 2010 2009 OPERATING REVENUES 245,644 235,356 Water sales $ 15,230,450 $ 14,690,231 Sewer charges 9,607,625 9,068,330 Connection fees 171,020 183,765 Service charges 579,092 412,370 Intergovernmental 2,588,994 - Miscellaneous 317,712 287,338 Total operating revenues 28,494,893 24,642,034 OPERATING EXPENSES Personnel services 3,559,483 3,406,253 Contractual and other services 16,484,754 12,964,954 Maintenance 245,644 235,356 Supplies 177,062 227,511 Depreciation 5,127,050 4,573,275 Other 153,928 368,521 Total operating expenses 25,747,921 21,775,870 OPERATING INCOME 2,746,972 2,866,164 NON-OPERATING REVENUES (EXPENSES) Interest income 278,940 433,779 Interest expense (581,160) (593,774) Total non-operating expense (302,220) (159,995) INCOME BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS 2,444,752 2,706,169 CAPITAL CONTRIBUTIONS AND TRANSFERS Development fees 1,206,154 1,255,969 Capital contributions 1,347,073 879,916 Transfers from other funds 1,469,319 24,126 Transfers to other funds (6,355,108) (3,044,603) Total capital contributions and transfers (2,332,562) (884,592) CHANGE IN NET ASSETS 112,190 1,821,577 NET ASSETS, BEGINNING OF YEAR 116,026,544 114,204,967 NET ASSETS, END OF YEAR $ 116,138,734 $ 116,026,544 37 CITY OF ALLEN, TEXAS EXHIBIT D-3 COMPARATIVE STATEMENTS OF CASH FLOWS WATER AND SEWER ENTERPRISE FUND FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 27,701,072 S 24,712,906 Cash paid to employees for services (3,532)98) (3.401,835) Cash paid for goods and services (16,328,990) (13,966.186) Net cash Provided by operating activRii s 7,839,284 7,404,885 CASH FLOWS FROM NON4:APITAL FINANCING ACTIVITIES Transfers from other funds 1,469,319 24,126 Transfers to other funds (6,355,108) (3,044,603) Net cash used in non -capital financing activities (4,885,789) (3,020,477) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Princpal paid on revenue bond maturities (1140.000) (1,035,000) Debt issuance costs paid with refunding issuance - (72,141) Interest and fees paid on long-term debt (596,262) (644,023) Acquisition and construction of capital assets (4,720,770) (3,090,907) Contributions from developers 1,206,154 1,255,969 Net cash used in capital and related financing activities (5,250.678) (3,586,102) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investment securities - (13,863,589) Proceeds from the sale and maturities of investment secedties 584,156 9,730,289 Interest on investments 253,019 447.796 Net cash provided by (used in) investing activities 837,175 (3,685,5(34) NET DECREASE IN CASH AND CASH EQUIVALENTS (1,460,208) (2,887,198) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 9,104,653 11,991,851 CASH AND CASH EQUIVALENTS, END OF YEAR $ 7,644.445 $ 9,104,653 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net operating income $ 2,746,972 $ 2,866,164 Adjustments to reconcile net operating income to net cash provided by operating activities Depreciation and amoimUltion expense 5,163,552 4,606,448 Change in assets and liabilities: Accounts receivable (793,821) 130,872 Inventories 7,160 (34,964) Accounts payable 431,015 (209,761) Accrued liabllities 204,887 8,014 Compensated absences 26.685 4,418 Utility deposits 52,834 33,694 Total adjustments 5,092,312 4,538,721 Net cash provided by operating activities $ 7,839,284 $ 7,404,885 NON-CASH INVESTING ACTIVITIES Change in the fair value of investments $ 2,036 $ 2,036 NONCASH FINANCING ACTIVITIES Contributions of capital assets from developers $ 1.347.073 $ 879,916 Refunding of revenue bonds Payment to escrow agent $ - $ 5,826,899 Bonds refunded - (5,695,000) Loss on refunding (131,899) S $ 87 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF NET ASSETS SOLID WASTE ENTERPRISE FUND SEPTEMBER 30, 2010 AND 2009 31,899 EXHIBIT D-4 Machinery and equipment 2010 2009 ASSETS 41,718 41,718 CURRENT ASSETS (39,828) (39,288) Cash and cash equivalents $ 1,037,303 $ 503,505 Investments 2,112,770 2,200,007 Receivables, net of allowance for uncollectibles: 3,518,155 3,083,828 Accounts 252,576 264,490 Other 100,580 100,948 Accrued interest 13,036 12,448 Total current assets 3,516,265 3,081,398 NONCURRENT ASSETS CAPITAL ASSETS Vehicles 31,899 31,899 Machinery and equipment 9,819 9,819 Total capital assets 41,718 41,718 Less: accumulated depreciation (39,828) (39,288) Capital assets, net of accumulated depreciation 1,890 2,430 Total noncurrent assets 1,890 2,430 TOTAL ASSETS 3,518,155 3,083,828 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable 224,733 172,762 Accrued compensated absences-cument 38,200 30,726 Accrued liabilities 31,079 30,232 Total current liabilities 294,012 233,720 NONCURRENT LIABILITIES Accrued compensated absences 2,155 1,734 Total noncurrent liabilities 2,155 1,734 TOTAL LIABILITIES 296,167 235,454 NET ASSETS Invested in capital assets, net of related debt 1,890 2,430 Unrestricted 3,220,098 2,845,944 TOTAL NET ASSETS $ 3,221,988 $ 2,848,374 EM CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS SOLID WASTE ENTERPRISE FUND FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 OPERATING REVENUES Garbage collections Other Total operating revenues OPERATING EXPENSES Personnel services Contractual and other services Maintenance Supplies Depreciation Other Total operating expenses OPERATING INCOME NON-OPERATING REVENUES Interest income INCOME BEFORE TRANSFERS TRANSFERS Transfers to other funds Total transfers CHANGE IN NET ASSETS NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR M EXHIBIT D-5 2010 2009 $ 5,789,828 $ 5,488,800 84,805 52,575 5,874,633 5,541,375 377,239 374,129 4,633,380 4,416,854 4,771 2,212 9,768 9,399 540 539 86,215 90,042 5,111,913 4,893,175 762,720 648,200 37,957 45,957 800,677 694,157 (427,063) (398,762) (427,063) (398,762) 373,614 295,395 2,848,374 2,552,979 $ 3,221,988 $ 2,848,374 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF CASH FLOWS SOLID WASTE ENTERPRISE FUND FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 EXHIBIT D-6 2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 5,886,327 $ 5.534,369 Cash paid to employees for services (369,344) (370,266) Cash paid for goods and services (4,681,316) (4,590,431) Net cash provided by operating activities 835,667 573,672 CASH FLOWS FROM NON -CAPITAL FINANCING ACTIVITIES Transfers to other funds (427,063) (398,762) Net cash used in non -capital financing activities (427,063) (398,762) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investment securities 87,237 (950,007) Interest on investments 37,957 45,957 Net cash provided by (used in) investing activities 125,194 (904,050) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 533,798 (729,140) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 503,505 1,232,645 CASH AND CASH EQUIVALENTS, END OF YEAR $1,037,303 $ 503,505 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net operating income $ 762,720 $ 648,200 Adjustments to reconcile net operating to net rash provided by operating activities: Depreciation 540 539 Change in assets and liabilities' Accounts receivable 12,282 (4,817) Other receivables (588) (2,189) Accounts payable 51,971 (74,589) Accrued liabilities 847 2,665 Accrued compensated absences 7,895 3,863 Total adjustments 72,947 (74,528) Net cash provided by operating activities $ 835,667 $ 573,672 am CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF NET ASSETS DRAINAGE ENTERPRISE FUND SEPTEMBER 30, 2010 AND 2009 EXHIBIT D-7 2010 2009 ASSETS CURRENT ASSETS Cash and cash equivalents $ 441,293 $ 270,588 Investments 970,924 1,000,000 Receivables: Accounts 55,697 58,213 Accrued interest 5,990 5,986 Total current assets 1,473,904 1,334,787 NONCURRENT ASSETS CAPITAL ASSETS Other improvements 496,132 496,132 Vehicles 98,260 118,898 Machinery and equipment 403,597 403,597 Total capital assets 997,989 1,018,627 Less: accumulated depreciation (504,006) (466,589) Capital assets, net of accumulated depreciation 493,983 552,038 Total noncurrent assets 493,983 552,038 TOTAL ASSETS 1,967,887 1,886,825 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable 27,960 26,006 Accrued compensated absences 19,841 17,867 Accrued liabilities 17,075 13,818 Total current liabilities 64,876 57,691 NONCURRENT LIABILITIES Accrued compensated absences 1,469 1,323 Total noncurrent liabilities 1,469 1,323 TOTAL LIABILITIES 66,345 59,014 NET ASSETS Invested in capital assets, net of related debt 493,983 552,038 Unrestricted 1,407,559 1,275,773 TOTAL NET ASSETS $ 1,901,542 $ 1,827,811 91 CITY OF ALLEN, TEXAS EXHIBIT D-8 COMPARATIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS DRAINAGE ENTERPRISE FUND FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 OPERATING REVENUES Drainage fees Service charges Other Total operating revenues OPERATING EXPENSES Personnel services Contractual and other services Maintenance Supplies Depreciation Other Total operating expenses OPERATING INCOME NON-OPERATING REVENUES Interest income INCOME BEFORE TRANSFERS TRANSFERS Transfers to other funds Total operating transfers CHANGE IN NET ASSETS NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR pY 2010 2009 $ 1,181,497 $ 1,094,223 56,781 22,658 4,962 1,243,240 1,116,881 400,914 294,661 153,365 157,010 243,220 170,484 37,321 23,023 58,056 41,892 3,048 5,110 895,924 692,180 347,316 424,701 19,253 19,412 366,569 444,113 (292,838) (249,169) (292,838) (249,169) 73,731 194,944 1,827,811 1,632,867 $ 1,901,542 $ 1,827,811 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF CASH FLOWS DRAINAGE ENTERPRISE FUND FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers Cash paid to employees for services Cash paid for goods and services Net cash provided by operating activities CASH FLOWS FROM NON -CAPITAL FINANCING ACTIVITIES Aquistion and construction of capital assets Transfers to other funds Net cash used in non -capital financing activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments Interest on investments Net cash provided by (used in) investing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net operating income Adjustments to reconcile net operating income to net cash provided by operating activities: Depreciation Change in assets and liabilities: Accounts receivable Accounts payable Accrued liabilities Compensated absences Total adjustments Net cash provided by operating activities 93 EXHIBIT D-9 2010 2009 $ 1,245,756 $ 1,105,925 (398,794) (291,187) (431,743) (350,880) 415,219 463,858 (59,682) (292,838) (249,169) (292,838) (308,851) 29,075 (1,000,000) 19,249 19.412 48,324 (980,588) 170,705 (825,581) 270,588 1,096,169 $ 441,293 $ 270,588 $ 347,316 $ 424,701 58,056 41,892 2,516 (10,956) 1,954 3,343 3,257 3,141 2,120 1,737 67,903 39,157 $ 415,219 $ 463,858 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF NET ASSETS GOLF COURSE ENTERPRISE FUND SEPTEMBER 30, 2010 AND 2009 EXHIBIT D-10 2010 2009 ASSETS CURRENT ASSETS Cash and cash equivalents $ 198,069 $ 523,279 Investments 321,787 - Receivables: Accounts 920 8,155 Accrued interest 1,985 - Prepaid items 11,050 11,050 Total current assets 533,811 542,484 NONCURRENT ASSETS CAPITAL ASSETS Furniture and fixtures 10,894 10,894 Machinery and equipment 642,317 642,317 Less: accumulated depreciation (479,614) (389,029) Capital assets, net of accumulated depreciation 173,597 264,182 Total noncurrent assets 173,597 264,182 TOTAL ASSETS 707,408 806,666 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable 155,975 58,951 Accrued liabilities 59,683 47,035 Accrued compensated absences 55,991 44,638 Capital leases payable - current 84,194 85,862 Customer deposits payable 9,621 14,698 Total current liabilities 365,464 251,184 NONCURRENT LIABILITIES Capital leases payable 82,320 166,515 Accrued compensated absences 14,010 11,168 Total noncurrent liabilities 96,330 177,683 TOTAL LIABILITIES 461,794 428,867 NET ASSETS Invested in capital assets, net of related debt 7,083 11,805 Unrestricted 238,531 365,994 TOTAL NET ASSETS $ 245,614 $ 377,799 94 CITY OF ALLEN, TEXAS EXHIBIT D-11 COMPARATIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS GOLF COURSE ENTERPRISE FUND FOR THE YEARS ENDED SEPTEMBER 30.2010 AND 2009 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 NON-OPERATING REVENUES Interest income LOSS BEFORE TRANSFERS TRANSFERS Transfers from other funds Total transfers CHANGE IN NET ASSETS NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR 2010 2009 $ 1,430,861 $ 1,623,377 625 5,320 1,431,486 1,628,697 1,118,090 1,119,008 542,669 533,455 82,206 241,367 148,977 148,339 90,585 75,570 47,172 47,405 2,029,699 2,165,144 (598,213) (536447) 2,699 (595,514) (536,447) 463,329 456,955 463,329 456,955 (132,185) (79,492) 377,799 457,291 $ 245,614 $ 377,799 CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF CASH FLOWS GOLF COURSE ENTERPRISE FUND FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 EXHIBIT D-12 2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 1,438,721 $ 1,629,789 Cash paid to employees for services (1,103,895) (1,106,489) Cash paid for goods and services (716,429) (993,238) Net cash used in operating activities (381,603) (469,938) CASH FLOWS FROM NON -CAPITAL FINANCING ACTIVITIES Operating transfers from other funds 463,329 456,955 Net cash provided by non -capital financing activities 463,329 456,955 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets - (203,454) Capital lease down payment (85,863) 132,608 Net cash used in capital and related financing activities (85,863) (70,846) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments (321,787) Interest on investments 714 Net cash used in investing activities (321,073) NET DECREASE IN CASH AND CASH EQUIVALENTS (325,210) (83,829) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 523,279 607,108 CASH AND CASH EQUIVALENTS, END OF YEAR $ 198,069 $ 523,279 RECONCILIATION OF OPERATING LOSS TO NET CASH USED IN OPERATING ACTIVITIES Net operating loss $ (598,213) $ (536,447) Adjustments to reconcile net operating loss to net cash used in operating activities: Depreciation 90,585 75,570 Change in assets and liabilities: Accounts receivable 7,235 1,092 Accounts payable 97,024 (11,803) Accrued liabilities 12,648 1,764 Customer deposits (5,077) (12,633) Compensated absences 14,195 12,519 Total adjustments 216,610 66,509 Net cash used in operating activities _L_L3 _L_269 938) 4M * 0.�gpECT � �N TpO i a �� rr C�rV OF FL%"fN 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. 97 CITY OF ALLEN, TEXAS COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS SEPTEMBER 30, 2010 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 20, 2009) EXHIBIT E-1 RISK TOTALS REPLACEMENT MANAGEMENT FUND FUND 2010 2009 ASSETS CURRENT ASSETS Cash and cash equivalents $ 2,119,001 $ 1,239,293 $ 3,358,294 $ 4,134,020 Investments 5,029,706 2,943,086 7,972,792 7,381,571 Accounts receivable - 1,184 1,184 34 Accrued interest receivable 31,033 18,158 49,191 29,637 Prepaid items 73,394 73,394 Total current assets 7,179,740 4,275,115 11,454,855 11,545,262 CAPITAL ASSETS Machinery and equipment 1,591,351 - 1,591,351 1,420,572 Vehicles 7,357,271 - 7,357,271 6,953,950 Construction in progress 749,110 - 749,110 514,162 Accumulated depredation (4,260,396) (4,260,396) (3,754,576) Capital assets, not of accumulated depreciation 5,437,336 5,437,336 5,134,108 TOTAL ASSETS 12,617,076 4,275,115 16,892,191 16,679,370 LIABILITIES AND NET ASSETS LIABILITIES Accounts payable 105,174 80,442 185,616 470,372 Incurred but not reported claims 739,965 739,965 599,371 TOTAL LIABILITIES 105,174 820,407 925,581 1,059,743 NET ASSETS Invested in capital assets, net of related debt 5.437,336 - 5,437.336 5,134,108 Unrestricted 7.074,566 3,454,708 10,529.274 10,475,519 TOTAL NET ASSETS $ 12.511,902 $ 3,454,708 $ 15,966.610 $ 15,609,627 M CITY OF ALLEN, TEXAS EXHIBIT E-2 COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2010 (WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER, 30, 2009) 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 RISK TOTALS REPLACEMENT MANAGEMENT FUND FUND 2010 2009 $ 1,461,617 $ 7,066,187 1,131 158,261 1,462,748 7,224,448 119,746 - 7,515,743 1,159,960 1,159,960 7,635,489 $ 8.527,804 $ 8,159,124 159,392 192,100 8,687,196 8,351,224 119,746 166,277 7,515,743 6,282,756 1,159,960 973,563 8,795,449 7,422,596 302,788 (411,041) (108,253) 928,628 Investment earnings 108,414 60,527 168,941 240,209 Gain on disposal of capital assets 4,903 4,903 55,820 Total non-operating revenues 113,317 60,527 173,644 296,029 INCOME BEFORE TRANSFERS 416,105 (350,514) 65,591 1,224,657 TRANSFERS Transfers from other funds 62,131 229,261 291,392 2,555,782 Total transfers 62,131 229,261 291,392 2,555,782 CHANGE IN NET ASSETS 478,236 (121,253) 356,983 3,780,439 NET ASSETS, BEGINNING OF YEAR 12,033,666 3.575,961 15,609,627 11,829,188 NET ASSETS, END OF YEAR $ 12,511,902 $ 3.454,708 $ 15,966,610 $ 15,609,627 4311 CITY OF ALLEN, TEXAS EXHIBIT E-3 COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2010 (WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2009) RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Net operating income (loss) Adjustments to reconcile operating income (lose) to nM cash proNded by (used in) operating scbvil Depreciation Change m assets and Ilabihties. Accounts receivables Prepaids Accounts payable Total adjustments Net each provided by (used In) operating activities NONCASH INVESTING ACTIVITIES Change in the faa value of investments $ 302,788 $ (411,041) $ (188,253) $ 928,628 1,158,960 - 1,159,960 973,563 (1,150) (1,150) 5,991 (73,391 (73,394) - (263,818) 119.656 (144162) 373.574 896,142 45,112 941,254 1,353,128 $ 1,198,930 $ (365,9297 $ 833,001 $2,281,756 8 8 8 $ 17,741 100 RISK TOTALS REPLACEMENT MANAGEMENT FUND FUND 2010 20M CASH FLOWS FROM OPERATING ACTIVITIES Cash received from bansachons w8h other funds $ 1,198,930 $ 7,149,904 $8,348,834 $8,]09)03 Cash paid to misnomers for services - (119,746) (119,746) (165277) Cash paid for goods and services - (3,892,946) (3,892,946) (2,830,669) Cash paid for claims (3.503.141) (3,503,141) (3,431,001) Net cash provided by (used In) operating activities 1,198,930 (365,928) 833,001 2,281,756 CASH FLOWS FROM NONCAPIIAL FINANCING ACTIVITIES Transfers from other funds 62,131 228261 291,392 2,555,782 Net cash provided by non -capital financing activities 62,131 229,261 291,382 2,555,782 CASH FLOW$ FROM CAPITAL AND RELATED FINANCING ACTIVITIES Aconsition of capital assets (1,483,188) - (1,463,188) (3,355,485) Proceeds from sale of capital assets 4,903 4,903 55,820 Nat cash used in capitol and slated financing activities (1,458285) 11.458,2851 (3,299.645) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investment secunfies (1,782,218) 1,190,997 (591 (3,148,584) Interest on investments 81,597 57,790 149,387 210,753 i cash provided by (used in) investing activities; (1,690.621) 1245787 (441.834) (2,937,831) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,887,845) 1,112,119 jn5,126) (1,399,938) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 4,005848 127,174 4.134.020 5.533.958 CASH AND CASH EQUIVALENTS, END OF YEAR $ 2.119.001 $ 13239293 $3,358294 $4,134020 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Net operating income (loss) Adjustments to reconcile operating income (lose) to nM cash proNded by (used in) operating scbvil Depreciation Change m assets and Ilabihties. Accounts receivables Prepaids Accounts payable Total adjustments Net each provided by (used In) operating activities NONCASH INVESTING ACTIVITIES Change in the faa value of investments $ 302,788 $ (411,041) $ (188,253) $ 928,628 1,158,960 - 1,159,960 973,563 (1,150) (1,150) 5,991 (73,391 (73,394) - (263,818) 119.656 (144162) 373.574 896,142 45,112 941,254 1,353,128 $ 1,198,930 $ (365,9297 $ 833,001 $2,281,756 8 8 8 $ 17,741 100 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. 101 CITY OF ALLEN, TEXAS COMPARATIVE BALANCE SHEETS ALLEN ECONOMIC DEVELOPMENT CORPORATION SEPTEMBER 30, 2010 AND 2009 EXHIBIT F-1 _ 2010 2009 ASSETS CURRENT ASSETS Cash and cash equivalents $ 2,900,776 $ 814,169 Investments 5,189,736 1,376,984 Sales tax receivable 1,074,480 939,229 Accounts receivable 2,860 2,070 Accrued interest receivable 32,020 7,333 Prepaid items 6,298 6,298 TOTAL ASSETS $ 9,206,170 $ 3,146,083 LIABILITIES AND FUND BALANCES CURRENT LIABILITIES Accounts payable $ 388,250 $ 325,750 Retainage payable 39,915 - Accrued and other liabilities 20,109 57,781 TOTAL LIABILITIES 448,274 383,531 FUND BALANCES Reserved for encumbrances 1,900 - Unrestricted 8,755,996 2,762,552 TOTAI FUND BALANCES 8,757,896 2,762,552 TOTAL LIABILITIES AND FUND BALANCES $ 9,206,170 $ 3,146,083 102 CITY OF ALLEN, TEXAS RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS ALLEN ECONOMIC DEVELOPMENT CORPORATION SEPTEMBER 30, 2010 EXHIBIT F-2 Total governmental fund balance $ 8,757,896 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. 385,092 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. (67,974) 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. (20,657,208) 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. 6,772,521 Net assets of governmental activities 103 $ (4,809673) CITY OF ALLEN, TEXAS EXHIBIT F-3 COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALLEN ECONOMIC DEVELOPMENT CORPORATION FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 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 (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Issuance of revenue bonds Total other financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR 104 $ 6,116,953 $ 5,476,995 81,063 45,226 1,010 24,438 6,199,026 5,546,659 5,142,692 3,336,111 798,300 780,475 405,000 390,000 627,690 589,030 6,973,682 5,095,616 (774,656) 451,043 6,770,000 6,770,000 - 5,995,344 451,043 2,762,552 2,311,509 $ 8,757.896 $ 2,762,552 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, 2010 EXHIBIT F4 Net change in fund balances- total governmental funds $ 5,995,344 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 govemment-wide financial statements. 130,802 The proceeds from issuance of long-term debt (e.g. bonds and capital lease obligations) provides current financial resources to governmental funds ($6,770,000), while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds ($405,000). Neither transaction, however, has any effect on net assets. (6,365,000) 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. (20,026) Depreciation expense on capital assets is reported in the statement of activities but does not require the use of current financial resources. Therefore, depreciation expense is not reported as expenditures in the governmental funds. (166,548) Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets are allocated over their estimated useful lives and reported as depreciation expense. 798,300 Change in net assets of governmental activities 105 $ 372,872 CITY OF ALLEN, TEXAS COMPARATIVE BALANCE SHEETS ALLEN COMMUNITY DEVELOPMENT CORPORATION SEPTEMBER 30, 2010 AND 2009 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 106 EXHIBIT F-5 2010 2009 $ 2,774,349 $ 2,300,873 3,952,892 7,159,111 1,074,480 939,229 2,860 2,070 24,389 29,830 $ 7,828,970 $ 10,431,113 $ 309,577 $ 987,999 33,765 1,061,859 343,342 2,049,858 517,971 1,013,468 6,967,657 7,367,787 7,485,628 8,381,255 $ 7,828,970 $ 10,431,113 CITY OF ALLEN, TEXAS RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS ALLEN COMMUNITY DEVELOPMENT CORPORATION SEPTEMBER 30,2010 EXHIBIT F-6 Total governmental fund balance $ 7,485,628 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. 588,097 Interest payable on long-term debt does not require current financial resources, and, therefore, is not reported as a liability in the governmental funds balance sheet. (165,396) 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. (36,491,855) Net assets of governmental activities 107 $ (28,583,526) CITY OF ALLEN, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALLEN COMMUNITY DEVELOPMENT CORPORATION FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009 REVENUES Sales and other taxes Investment earnings Miscellaneous Total revenues EXPENDITURES Current: Community development Capital projects: Community development Debt service: Principal retirement Interest and fiscal charges Total expenditures Deficiency of revenues over expenditures FUND BALANCES, BEGINNING OF YEAR FUND BALANCES, END OF YEAR 108 EXHIBIT F•7 2010 2009 $ 6,116,953 $ 5,476,994 85,542 491,878 8,359 6,202,495 5,987,231 1,435,189 1,158,257 2,711,810 25,339,566 930,000 895,000 2,021,123 2,056,146 7,098,122 29,448,969 (895,627) (23,461,738) 8,381,255 31,842,993 $ 7,485,628 $ 8,381,255 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, 2010 EXHIBIT F46 Net change in fund balances - total governmental funds $ (895,627) 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 delat is first issued. However, these amounts are deferred and amortized in the government -wide financial statements. (58,001) Current year changes in accrued interest payable do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. 3,031 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. 930,000 Change in net assets of governmental activities $ (20,597) 109 4b `p F W 4 Wm *aogpEC7 #'NTFC' R -� r` Clry OF m x m CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS EgpEGT � ♦ a + C;TY OF A' CITY OF ALLEN, TEXAS COMPARATIVE SCHEDULES OF CAPITAL ASSETS USED IN THE OPERATIONS OF GOVERNMENTAL FUNDS — BY SOURCE (a) SEPTEMBER 30, 2010 AND 2009 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 2010 EXHIBIT G-1 2009 $ 113,951,577 $ 111,867,601 113,076,269 53,418,460 9,713,366 5,748,102 7,849,950 2,955,796 2,729,815 2,770,023 1,955,528 2,430,749 406,956,592 390,224,193 656,233,097 569,414,924 40,550,463 79,261,360 $ 696,783,560 $ 648,676,284 General obligation bond proceeds and interest income $ 167,910,175 $ 148,221,743 Revenue bonds 10,475,000 10,475,000 Contributions 347,606,091 334,586,420 Other governments 9,951,500 9,951,500 General and other fund operations 141,911,249 129,110,571 Special revenue funds 18,929,545 16,331,050 Total governmental funds capital assets $ 696,783,560 $ 648,676,284 (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. 110 CITY OF ALLEN, TEXAS SCHEDULE OF CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS BY FUNCTION AND ACTIVITY (a) AS OF SEPTEMBER 30, 2010 Land Machinery & Function and Activity Land Improvements Buildings Equipment GENERAL GOVERNMENT Municipal court $ 631,788 $ City administration 2,719,532 Infonnabon technology - Human resources - Internal services Finance _ Total General Government 3,351,320 PUBLIC SAFETY Police - Fire 78,932 Total Public Safety 78,932 PUBLIC WORKS Community services and streets 51,274,858 Engineenng 46,898,957 Total Public Works 98,173,815 $ 289,669 $ 57,885 8,871,016 309,035 - 527,643 (7,239) 318,793 9,153,446 1,213,356 7,464,437 802,566 6,983,460 817,981 14,447,897 1,620,547 - 287,164 7,676,628 135,390 7,676,628 422,554 CULTURE & RECREATION Parks & recreation 11,005,354 842,156 70,756,911 5,254,613 Library 11,041,387 388,854 Total Culture & Recreation 11,005,354 842,156 81,798,298 5,643,467 COMMUNITY DEVELOPMENT Building & code compliance - - - 10,790 Planning & development 6,993 Total community development 17,783 GRANT ADMINISTRATION Grant Administration 500,000 795,659 Total grant administration 500,000 795,659 Construction In Progress Total governmental funds capital assets $113,109,421 $ 842,156 $ 113,076,269 $ 9,713,366 (a) This schedule presents only the capital asset balances related to governmental funds, including infrastrucrure. Accordingly, the capital assets reported in the internal servcie funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. 111 EXHIBIT G-2 Furniture 8 482,853 Other Construction in 235,398 Fixtures Vehides Books Improvements Progress Total $ 413 $ - $ - $ - $ - $ 979,755 838,706 - - - - 12,738,289 21,626 (483) - 1,346,688 - 1,895,474 5,771 - - - - 5,771 (31,670) 123,252 - (260,306) - 142,830 23,991 532,384 1,891,400 34,067,796 23,991 858,837 122,769 1,086,382 15,786,110 276,939 482,853 - 100,117 235,398 1,074,358 - 269,885 512,337 1,557,211 - 370,002 -209,413 - 260,793,642 519,575 (10,116) 110,314,117 519,575 199,297 371,107,759 5,112,264 532,364 - 33,923,801 839,459 - 1,891,400 143,995 5,951,723 532,384 1,891,400 34,067,796 -87,147 7,478 (41,467) 7,478 45,680 272,474 64,128 324,663 272,474 64,128 324,653 9,126,912 9,460,014 18,586,926 312,565,077 165,534,551 478,099,628 127,427,483 14,305,095 141,732,578 97,937 (26,996) 70,941 1,956,914 1,956,914 40,550,463 40,550,463 $7,849,950 $ 2,729,815 $ 1,955,528 $406,956,592 $ 40,550,483 $696,783,560 112 CITY OF ALLEN, TEXAS EXHIBIT G-3 SCHEDULE OF CHANGES IN CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS — BY FUNCTION AND ACTIVITY (a) FOR THE YEAR ENDED SEPTEMBER 30, 2010 (a) The echadole presents only Me mpin Asmt balenms related to governmental funds, Inoluding Infrastructure. Accordingly, the capital assets repented in Me INemM semen funds are excluded from the ali amounts. Generally, the capital assets of iManM service funs arc mounted as gOh mmental intonation In the s[Memem N me assets 113 Governmental Funs Governmental Funds Capkal Aside October Developer Capital Asset Function an Activity t�009 Con[nbmions Additions Deductions Transfers Septem66r302010 GENERAL GOVERNMENT smitten CcuN E 979,755 $ - $ - $ - 3 - 3 979,755 CRy AtlminlArarmi 12646.266 - 92023 - - 12,738,229 Information Technology 1.360,392 - - 535,052 1,895,471 Human Roommate 5,771 - - - - SJ71 IMemel Sammons 200.061 - (57,231) - 142.830 Firuae 23.991 23,981 TNM Gemral Government 15,212,235 92.023 (57,231) 95,082 15.786.110 PUBLIC SAFE]] Pdim 8,842880 - 316.890 (32,868) - 9,126,912 Fire 8,803,826 24.000 1%7,8121 9.460014 Taal Public Seim 16,644715 340,890 (400.680) 10,585,926 PUBLIC WORM Community ummst&areas 312,595.077 - 312.565.077 Eyinuny 140'6195 13.019571 1,0M,601 1895150) 11.122,421 161 TNM Pubic WOMs 49,226,832 13,019,671 1,3,601 (891 11/22,424 478,099.826 CULTURE & RECREATION Parks&Recreation 65,593,595 - 3,054384 (19,M) 9]97,469 127,427,483 Ub., 14,780,314 181'64 (69,2831 14,305,095 TOW Come & Recre shon 80.373.91 3.237,448 (67,248) 58197.469 141,732,5/2 COMMUNITY DEVELOPMENT Building& Cade Compliance 97,937 - - - - 97.97 Planning is Developmem Gini 1,,991 TNM Community Development 70,911 70,941 GRANTADMINISTR (TION Grant Adminisaaium TOM)490 76,425 1,99.914 TNM Gram Administration 1,94490 76,425 1,99,914 TNM general fxn Means allocated byfuni 561 13,014871 4,994982 (302 9859) 70,831.40D 856,233,097 Construction in progress 79,M1,360 32J210 502 (70,831,400) 40,550,423 TOW governmental funds mpMB assets E 6448,,282 3 13019,671 $37,117.461 E 2,029.859 E - E 6%703560 (a) The echadole presents only Me mpin Asmt balenms related to governmental funds, Inoluding Infrastructure. Accordingly, the capital assets repented in Me INemM semen funds are excluded from the ali amounts. Generally, the capital assets of iManM service funs arc mounted as gOh mmental intonation In the s[Memem N me assets 113 STATISTICAL SECTION (UNAUDITED) aES?SCT x 3 carr OF p``Ed 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 City's 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 9, 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 Citys ability to issue additional debt in the future. Economic and Demographic Information 13 & 14 These tables offer economic and demographic indicators to help the reader understand the environment within which the 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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