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Home My WebLink About03-10-14 Fiscal Affairs Committee Meeting CHUCK ENGELKEN, CHAIRCHUCK ENGELKEN, CHAIRJAY MARTIN Councilmember, District 2Councilmember, District 2Councilmember, District 5Councilmember, District 5 Alternate Member 2Alternate Member 2 DARYL LEONARD Councilmember, District 3Councilmember, District 3 TOMMY MOSER Councilmember, District 4Councilmember, District 4 CITY OF LA PORTE FISCAL AFFAIRS COMMITTEECITY OF LA PORTE FISCAL AFFAIRS COMMITTEE MEETING AGENDAMEETING AGENDA Notice is hereby given of a meeting of the City of La Porte Fiscal Affairs Committee to be held on Notice is hereby given of a meeting of the City of La Porte Fiscal Affairs Committee to be held on March 10, 2014March 10, 2014, in the City Hall Council Chambers, 604 W. Fairmont Parkway, La Porte, Texas, , in the City Hall Council Chambers, 604 W. Fairmont Parkway, La Porte, Texas, beginning at 05:00 PM regarding the items of business according to the agenda listed below:beginning at 05:00 PM regarding the items of business according to the agenda listed below: 1.Call to orderCall to order 2.Consider approval of minutes of the January 27, 2014 Consider approval of minutes of the January 27, 2014 -- P. Fogarty P. Fogarty 3.Receive presentation of the 2013 Comprehensive Annual Financial (CAFR) Report Receive presentation of the 2013 Comprehensive Annual Financial (CAFR) Report -- M. Dolby M. Dolby 4.Receive and review audit contract renewal Receive and review audit contract renewal -- M. Dolby M. Dolby 5.Receive and review Franchise Fee Audit Contract Receive and review Franchise Fee Audit Contract -- M. Dolby M. Dolby 6.Set date for next meeting Set date for next meeting M. DolbyM. Dolby 7.7.Administrative Reports Administrative Reports Administrative Reports Administrative Reports C. AlexanderC. AlexanderC. AlexanderC. Alexander 8.Committee Comments regarding matters appearing on agenda Committee Comments regarding matters appearing on agenda Committee members Engelken, Committee members Engelken, Leonard, Moser, and MartinLeonard, Moser, and Martin 9.AdjournAdjourn In compliance with the Americans with Disabilities Act, the City of La Porte will provide for reasonable In compliance with the Americans with Disabilities Act, the City of La Porte will provide for reasonable accommodations for persons attending public meetings. To better serve attendees, requests should be received accommodations for persons attending public meetings. To better serve attendees, requests should be received 24 hours prior to the meetings. Please contact Patrice Fogarty, City Secretary, at 281.470.5019.24 hours prior to the meetings. Please contact Patrice Fogarty, City Secretary, at 281.470.5019. CERTIFICATIONCERTIFICATION I certify that a copy of the March 10, 2014, agenda of items to be considered by the Fiscal Affairs Committee was placed I certify that a copy of the March 10, 2014, agenda of items to be considered by the Fiscal Affairs Committee was placed on the City Hall Bulletin Board on .on the City Hall Bulletin Board on . Patrice Fogarty, City SecretaryPatrice Fogarty, City Secretary CHUCK ENGELKEN,CHAIR JAY MARTIN CouncilmemberDistrict 2 Councilmember District 5 Committee Member Alternate Member 1 DARYL LEONARD DOTTIE KAMINSKI Councilmember District 3 Councilmember At Large B Committee Member Alternate Member 2 TOMMY MOSER Councilmember District 4 Committee Member MINUTES OF MEETING OF FISCAL AFFAIRS COMMITTEE JANUARY 27,2014 January 27, 2014, at 5:00p.m., The Fiscal Affairs Committee met on in the La Porte City Hall Council Chambers, 604 West Fairmont Parkway, La Porte, Texas, to considerthe following items of business: 1.Call to Order ChairmanChuck Engelken called the meeting to order at 5:00p.m. Present were Committee MembersTommy MoserandDarylLeonard,andAlternate Member 1 Jay Martin.Also present were City Secretary Patrice Fogarty, City Manager Corby Alexander, Assistant City Manager Traci Leach, Finance Director Michael Dolby, Controller Phyllis Rinehartand Treasurer Shelley Wolny. Alternate member 2 Dottie Kaminski was absent. 2.Consider approval of Minutes of the October 28,2013,meeting of the Fiscal Affairs Committee–P. Fogarty Committee member Leonardmoved to approve the minutes of the October 28, 2013, meeting. MOTION PASSED. Committee member Moserseconded. Ayes:Chairman Engelken,Committee MembersMoserandLeonard Nays:None Absent:None 3.Receive and review First Quarter (FY 2014) Investment Report –M. Dolby Treasurer Shelley Wolnypresented the First Quarter (FY 2014) Investment Reportand provided a summary. Committee member Leonard questioned why is there a difference withthe average investment returns. Treasurer Wolny responded the difference has to do with timing. 4.Receive and review months of September(FY 2013), October(FY2013) and November (FY2013) Purchasing Card Expenditures –M Dolby Finance Director Michael Dolby presented the Purchasing Card Expenditures for monthsof September(FY 2013), October (FY2013) and November(FY 2013). 5.Discussion regarding Franchise Fee Audit and present results of Request for Proposal (RFP)–M. Dolby Finance Director Michael Dolbypresented a summary. Committee members directed the Finance Director to bring this item back to the full City Council. Page 1of 2 January 27, 2014, Fiscal Affairs Committee Minutes 6.Discussion regarding expansion of Procurement Card (P-card) Program –M. Dolby Purchasing Manager Cherell Daeumer presented a summary. Jay Martin, Alternate Member 1,suggested staff set up an account with vendors that allowthe City to pay once a month and eliminate high recurring charges. Purchasing Manager Cherell Daeumer responded,staff can get with the vendors and inquire to see if recurring charges can be avoided. 7.Set date for next meeting –M. Dolby The Committee setMarch 10,2014,at 5:00 p.m.,as the date and time for the next meeting. 8.Administrative Reports–C. Alexander There were no Administrative Reports. 9.Committee Comments –Matters appearing on agenda;Recognition of community members, city employees, and upcoming events;Inquiry of staff regarding specific factual information or existing policy. Therewere no Committee Comments. 10.Adjourn There being no further business, the meeting was adjourned at 5:20p.m. Respectfully submitted, ________________________________ Patrice Fogarty, City Secretary Passed and approved on the _____day of___________, 2013. ________________________________ Chairman Chuck Engelken Page 2of 2 January 27, 2014, Fiscal Affairs Committee Minutes REQUEST FOR FISCAL AFFAIRS COMMITTEE AGENDA ITEMREQUEST FOR FISCAL AFFAIRS COMMITTEE AGENDA ITEM March 10, 2014March 10, 2014AppropriationAppropriation Agenda Date Requested:Agenda Date Requested: Source of Funds:Source of Funds: Requested By:Requested By: Account Number:Account Number: Department: Amount Budgeted:Amount Budgeted: Report:Resolution:Resolution:Ordinance:Ordinance: Amount Requested:Amount Requested: Exhibits: Budgeted Item:Budgeted Item:YESYESNONO 1. Report1. Report SUMMARY & RECOMMENDATIONSSUMMARY & RECOMMENDATIONS Action Required by the Fiscal Affairs Committee:Action Required by the Fiscal Affairs Committee: Approved for Fiscal Affairs Committee AgendaApproved for Fiscal Affairs Committee Agenda Corby D. Alexander, City ManagerCorby D. Alexander, City ManagerDateDate CITY OF LA PORTE, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT Year Ended September 30, 2013 Prepared By Department of Finance CITY OF LA PORTE, TEXAS TABLE OF CONTENTS Page Introductory Section Letter of Transmittal i GFOA Certificate of Achievement vii Organization Chart viii List of Elected and Appointed Officials ix Financial Section Independent Auditors’ Report 1 Management’s Discussion and Analysis 3 Basic Financial Statements Government-wide Financial Statements: Statement of Net Position 15 Statement of Activities 16 Fund Financial Statements: Balance Sheet - Governmental Funds 18 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 19 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 20 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 21 Statement of Net Position- Proprietary Funds 22 Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds 23 Statement of Cash Flows - Proprietary Funds 24 Notes to the Financial Statements 25 Required Supplementary Information: General Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual 52 Notes to Required Supplementary Budget Information 53 Required Pension System Supplementary Information 54 Combining and Individual Fund Statements and Schedules Nonmajor Governmental Funds: Combining Balance Sheet 60 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 64 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: Budgetary Comparison Schedules: Debt Service Funds 70 Special Revenue Funds: Hotel/Motel Tax 71 Section 48 Sales Tax 72 Tax Increment Reinvestment Zone 73 Grant Fund 74 Street Maintenance Sales Tax Fund 75 Emergency Services Sales Tax Fund 76 CITY OF LA PORTE, TEXAS TABLE OF CONTENTS (continued) Page Combining and Individual Fund Statements and Schedules (continued) Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: Budgetary Comparison Schedules: Capital Projects Funds: 1998 General Obligation Bonds 77 2000 Certificate of Obligation Bonds 78 2004 Certificate of Obligation Bonds 79 2005 General Obligation Bonds 80 2006 Certificate of Obligation Bonds 81 2006 General Obligation Bonds 82 2007 Certificate of Obligation Bonds 83 2010 Certificate of Obligation Bonds 84 Drainage & Improvements 85 Supplementary Individual Fund Financial Statements and Schedules - General Fund Schedule of Revenues – Budget and Actual 88 Schedule of Expenditures – Budget and Actual 89 Combining Financial Statements – Internal Service Funds Combining Statement of Net Position 96 Combining Statement of Revenues, Expenses and Changes in Fund Net Position 97 Combining Statement of Cash Flows 98 Exhibit Unaudited Statistical Section Net Position by Component 102 1 Changes in Net Position 104 2 Fund Balances of Governmental Funds 108 3 Changes in Fund Balances of Governmental Funds 110 4 Assessed Value and Actual Value of Taxable Property 112 5 Property Tax Rates - Direct and Overlapping Governments 114 6 Principal Property Taxpayers 116 7 Property Tax Levies and Collections 117 8 Ratios of Outstanding Debt by Type 118 9 Ratio of General Bonded Debt to Taxable Value and Taxable Value of all 10 Property 120 Direct and Overlapping Governmental Activities Debt 121 11 Pledged Revenue Coverage 122 12 Demographic and Economic Statistics 123 13 Principal Employers 124 14 Full-Time Employees by Function/Program 125 15 Operating Indicators by Function/Program 126 16 Capital Asset Statistics by Function/Program 128 17 INTRODUCTORY SECTION CITY OF LA PORTE Established 1892 March 10, 2014 To the Honorable Mayor, Members of City Council, and Citizens of the City of La Porte, Texas: The Finance Department and City Manager’s Office are pleased to submit the Comprehensive Annual Financial Report for the City of La Porte, Texas for the fiscal year ended September 30, 2013. This report is published to provide the City Council, City staff, our citizens, our bondholders and other interested parties with detailed information concerning the financial condition and activities of the City government. This report consists of management’s representations concerning the finances of the City of La Porte. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of the City of La Porte’s financial statements in conformity with GAAP. The cost of internal controls should not outweigh their benefits; therefore the City of La Porte’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City of La Porte’s financial statements have been audited by Whitley Penn, LLP, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of La Porte for the fiscal year ended September 30, 2013, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amount and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City of La Porte’s financial statements for fiscal year ended September 30, 2013, are fairly presented in conformity with GAAP. The independent auditors’ report is presented as a component of the financial section of this report. The independent audit of the financial statements of the City of La Porte included a federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City of La Porte’s separately issued Single Audit Report. GAAP requires that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City of La Porte’s MD&A can be found immediately following the report of the independent auditors. i Profile of the City The City of La Porte, incorporated in 1892, is located in the southeast quadrant of Harris County and is bounded on the north by the Houston ship channel, on the east by Galveston Bay and the south by the Bayport channel. The City of La Porte currently encompasses 19 square miles and serves a population of 34,553. The City is a home rule city operating under the Council-Manager form of government. Policymaking and legislative authority are vested in a governing council consisting of the mayor and eight other members. The city council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees and hiring the City Manager, City Secretary and Attorney. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the City and for appointing the heads of various departments. The Council is elected on a non-partisan basis. The Mayor and Council members serve three-year staggered terms. Six of the council members are elected by district. The Mayor and the two remaining council members are elected at large. The City of La Porte provides a full range of services, including police and fire protection, the construction and maintenance of streets and other infrastructure and recreational activities and cultural events. Certain services are provided through a legally separate Water Authority, which functions, as a blended component unit and in essence, is a department of the City of La Porte, and, therefore, has been included as an integral part of the City of La Porte’s financial statements. Additional information on the Water Authority and other blended component units can be found in Note 1.B. of the notes to the financial statements. The City has established a Taxing Increment Reinvestment Zone one (the Zone). The zone is presented as a blended component unit and is being reported as a governmental fund type (see Note 1 B). The City has also established a section 4 B Sales Tax Corporation (see Note 1 B). The City’s accounting records for general governmental operations are maintained on modified accrual basis, with the revenues being recorded when available and measurable and expenditures being recorded when the services or goods are received and the liabilities are incurred. Accounting records for the City’s utilities and other proprietary activities are maintained on the accrual basis. The annual budget serves as the foundation for the City of La Porte’s financial planning and control. Budgetary control has been established at the fund level. All agencies of the City of La Porte are required to submit requests for appropriation to the City Manager on or before May 26 of each year. The City Manager uses these requests as the starting point for developing a proposed budget. The City Manager then presents this proposed budget to council for review prior to August. The council is required to hold a public hearing on the proposed budget and to adopt a final budget by no later than September 30th. The appropriated budget is prepared by fund, function (e.g., public safety) and department (e.g., police). The directors are given latitude to approve transfers of appropriations within a department. Transfers of appropriations between funds, however require the special approval of the city council. Budget-to-actual comparisons are provided in financial reports for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund, this comparison is presented on page 56 as part of the required supplementary information. For governmental funds, other than the general fund, with appropriated annual budgets, this comparison is presented in the governmental fund subsection of this report, which starts on page 72. Formal budgetary integration is employed as a management control device during the year for the General Fund and Enterprise Funds. Formal budget integration is not employed for the Debt Service and Capital Projects Funds because effective budgetary control is alternatively achieved through bond indenture provisions and legally binding construction contracts, respectively. Economic Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of La Porte operates. ii Local economy. The City of La Porte is located in the southeast quadrant of Harris County, which is a 1,723 square mile county is a leading oil, gas and petrochemical areas. The County has more than 3,200 manufacturing plants, the nation’s largest concentration of petrochemical plants, the third largest United States seaport and is a corporation management center. A significant part of the County’s major employers, manufacturers, education and financial institutions are located in Houston, the County seat. The Texas Medical Center, located in Harris County, is one of the nation’s largest, providing medical care and educational opportunities. Higher education facilities includes: University of Houston, Rice University, Texas Southern University, St. Thomas University and Houston Baptist University, all offering full four- year as well as postgraduate programs. The Lyndon B. Johnson Space Center is also located here. Located some 20 miles southeast of Houston on Galveston Bay in Harris County are the three communities that make up the La Porte Bayshore Area: La Porte, Morgan’s Point and Shoreacres. The area has a combined population of approximately 40,000. Though much of the image of this area is industrial, the La Porte- Bayshore area is still characterized by an expanse of resort homes. Future planning. The La Porte 2020 Comprehensive Plan is a 20-year master plan adopted by the City Council to guide policy decisions relating to the physical and economic development of the community. In general, the plan indicates how the community desires to develop and redevelop over the course of the next twenty years. The comprehensive plan is a physical plan; it is long range, comprehensive and states the goals, objectives and policies of the local government. The comprehensive plan provides clear direction through specific statements of action to achieve the desired results envisioned by citizens and the leadership of the community. The essential objectives of the comprehensive plan are as follows: It is a plan to guide the future physical development and redevelopment of the community; The time frame is long, extending over a twenty-year horizon; It encompasses a large geographic area including the corporate limits and ETJ of the community; It is general in nature, allowing some issues to be resolved and many decisions to be made; It articulates ideas in a framework of goals and objectives, policies and actions, and plans and projects; It is intended foremost, to serve as a continuing guide to decision-making, to provide a common direction and to provide stability as issues are addressed and future decisions are made. Residential Development. Neighborhoods are one of La Porte’s greatest assets as they form a foundation for a sound quality of life. The City is made up of several distinct neighborhood areas, each with somewhat different physical characteristics such as the age of housing, street configuration, and the sizes of structures and lots. Much of the City’s overall image and identity is due to the unique character of its neighborhoods and these distinguishing features should, therefore, be preserved. Neighborhoods that are safe, well maintained and have character which will maintain property values and thus maintain a sound neighborhood environment along with a stable residential tax base. The attractive appearance and environmental quality of existing and future low-density residential neighborhoods should be protected and improvements made where necessary to maintain the value of properties and enhance the quality of life. As the city continues to develop it is important that the integrity of the neighborhoods is preserved and the value and enjoyment of property is maintained and enhanced. iii Goals for residential development: Consider programs to revitalize and rehabilitate existing housing where needed. Meet the future housing needs by providing for a variety of housing options. Encourage the rehabilitation or replacement of substandard housing. Promote a standard of home ownership encouraging well-maintained residential properties. Preserve the integrity of existing neighborhoods and create livable and safe neighborhood environments. Protect the attractive appearance and environmental quality of existing neighborhoods and make necessary improvements to maintain the value of properties and enhance the quality of life. Beautification and Conservation. Citizens have expressed great interest for enhancing the visual appearance of La Porte and the redevelopment and reinvestment in Downtown, along major corridors and in nonresidential areas. Through public involvement it is apparent that citizens visualize attractive shopping centers, livable neighborhoods, landscaped roadways, pleasant places to walk and an enhanced quality of life. They want successful shopping areas that appeal to shoppers. They see the opportunities in downtown to create a destination that combines a lively entertainment district in a historically significant area, retail stores interspersed with restaurants and professional offices and a blend of residential units as well. Goals for Beautification: Improve the community character to make it a more desirable place to live, work and visit. Improve the aesthetic visual environment through enhancement of site design, signage, roadways, parking areas, open space and landscaping. Invest in Downtown to establish a vibrant mix of places to work, live and visit, with shops, restaurants, entertainment and a variety of dwelling units. Redevelopment Strategy. Urban redevelopment efforts require cooperative action to encourage new and sustained private investment and to provide supporting rehabilitation of public infrastructure. A key part of the process is determining what strategic actions the community should take to achieve its redevelopment goals and objectives. Successful redevelopment will often require cooperation and coordination between agencies at different levels of government as well as non-profit community organizations. This should include coordination of physical improvements with social service programs, which aim to enhance the health and economic capacity of residents in targeted neighborhoods. Redevelopment Goals: Stabilize and improve the quality of neighborhoods and other areas in decline by attracting renewed private investment activity. Revitalize the City’s historic downtown area. Relevant Financial Policy City Council voted to adopt GASB 54 which resulted in the passage of a resolution that measures net financial resources available to finance expenditures of future periods. iv Major Initiatives Following the completion of a comprehensive city-wide drainage plan, City Council directed staff to alleviate affected neighborhoods from surface water flooding. Consequently, in 2010, the City issued $6.28 million in certificates of obligation to be spent on engineering and construction projects. In 2011 the City was also a recipient of the second round of disaster recovery funds of $4.1 million which will also alleviate flooding on surface roads. Long Term Planning Given the current economy and the uncertainty of the next few years, the City’s existing financial position remains strong. The City has incorporated several strategies to decrease the expenses to the City over the next several years. Rising costs of personnel and the related benefits have been a challenge to the City; however, over the last few years, a healthy fund balance in the General Fund has allowed the City to weather these rising costs. Overall, revenues for the City have remained fairly stable. The City is projecting a slight increase in property tax revenues. Sales tax revenues, which represent about 14% of revenues, are beginning to increase again. Despite the unfavorable economy, the City has some new retail growth, which has aided in sales tax revenue increases. Conservative revenue estimates and efforts to reduce expenditures have contributed to the City’s strong financial position and have allowed the City to weather the economic slump. We are especially pleased that there have been no property taxes rate increases for a number of years. Additional capital projects are being funded by utilizing excess fund balances and previously issued debt that had been stranded. With the associated fund draw downs, the remaining fund balances continue to meet operational objectives and current fiscal policies. Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its comprehensive annual financial report for the fiscal year ended September 30, 2012. This was the thirty-second consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City published an easily readable and efficiently organized comprehensive annual financial report. This report satisfied both generally accepted accounting principles and applicable legal requirements. v A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report 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. In addition, the government also received the GFOA’s Distinguished Budget Award for its annual budget document. In order to qualify for the Distinguished Budget Presentation Award, the government’s budget document was judged to be proficient in several categories, including as a policy document, a financial plan, an operations guide and a communications device. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the finance and administration department. We would like to express our appreciation to all members of the department who assisted and contributed to the preparation of this report. Credit also must be given to the mayor and city council for their unfailing support for maintaining the highest standards of professionalism in the management of the City of La Porte’s finances. Respectfully submitted, vi vii CITY OF LA PORTE Organizational Chart viii CITY OF LA PORTE, TEXAS LIST OF ELECTED AND APPOINTED OFFICIALS For the year ended September 30, 2013 Elected Officials Position Louis Rigby Mayor Michael Mosteit Council Member - District One Chuck Engelken Council Member - District Two Daryl Leonard Council Member – District Three Tommy Moser Council Member - District Four Jay Martin Mayor Protem - District Five Mike Clausen Council Member - District Six John Zemanek Council Member – At Large A Dottie Kaminski Council Member – At Large B City Management Position Corby Alexander City Manager Traci Leach Assistant City Manager Ken Adcox Police Chief David Mick Director of Public Services Patrice Fogarty City Secretary Denise Mitrano Municipal Judge Michael G. Dolby Director of Finance ix FINANCIAL SECTION Houston Ofﬁ ce 3411 Richmond Avenue Suite 500 Houston, Texas 77046 713.621.1515 Main whitleypenn.com INDEPENDENT AUDITORS’ REPORT To the Honorable Mayor and Members of the City Council & Citizens City of La Porte, Texas We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of La Porte, Texas (the “City”) as of and for the year ended September 30, 2013, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the City, as of September 30, 2013, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. 1 An Independent Member of DallasFort WorthHouston To the Honorable Mayor and Members of City Council City of La Porte, Texas Emphasis of Matter As discussed in Note 12 to the financial statements, the City adopted the provisions of GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities as of September 30, 2013. Our opinion is not modified with respect to this matter. Other Matters Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, and budgetary comparison information and pension information system on pages 3 through 11 and 52 through 54, respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s financial statements. The combining and individual nonmajor fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and schedules are fairly stated in all material respects in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report date March 10, 2014, on our consideration of the City of La Porte, Texas internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of testing of internal controls over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of La Porte, Texas internal control over financial reporting and compliance. Houston, Texas March 10, 2014 2 CITY OF LA PORTE, TEXAS MANAGEMENT’S DISCUSSION AND ANALYSIS As management of the City of La Porte (the “City”), we offer the 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, 2013. It should be read in conjunction with the accompanying letter of transmittal and the accompanying basic financial statements. Overview of the Financial Statements The discussion and analysis serves 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, 3) notes to the financial statements and required supplementary information. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the City’s assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference between the four reported as net position.Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as 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 vacation leave). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through their user fees and charges (business- type activities). The governmental activities of the City include general government, public safety, health and sanitation and culture and recreation. The business-type activities of the City consist of the water and sewer utilities, airport, and the La Porte Area Water Authority. The government-wide financial statements can be found on pages 15 through 17 of this report. Fund Financial Statements. A fund is a grouping of related accounts that is 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 – and utilize different accounting approaches. 3 CITY OF LA PORTE, TEXAS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains 19 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the general, debt service and capital improvements funds, which are considered to be major funds. Data from the other 16 governmental funds are combined into a single, aggregated presentation. The City adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 18 through 21 of this report. Proprietary Funds. The City maintains two types of proprietary funds. Proprietary funds are used to report the same functions presented as business type activities in the government-wide statements. The City uses proprietary funds to account for its utilities, airport and water authority. 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 motor pool services, technology services and insurance. Because these services predominantly benefit the governmental rather than business type functions, they have been included in the governmental activities in the government-wide financial statements. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements, only in more detail. The City uses enterprise funds to account for its Utility operations, La Porte Area Water Authority and the Airport. All internal service funds are combined into a single aggregated presentation in the proprietary fund financial statements. The basic proprietary fund financial statements can be found on pages 22 through 24 of this report. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 25 through 51 of this report. Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City's progress in funding its obligation to provide pension benefits to its employees and general fund budgetary comparisons. Required supplementary information can be found on pages 53 through 55 of the City's Comprehensive Annual Financial Report. 4 CITY OF LA PORTE, TEXAS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) The combining statements referred to earlier in connection with nonmajor governmental funds and internal service funds are presented immediately following the required supplementary information on pensions. Combining and individual fund statements and supporting schedules can be found beginning on page 60 of the City's Comprehensive Annual Financial Report. Government-Wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of the City's financial position. For the City, assets and deferred outflows exceed liabilities and deferred inflows by $121.5 million as of September 30, 2013, in the primary government as follows: Condensed Schedule of Net Position September 30, 2013 and 2012 Amounts in (000's) Governmental ActivitiesBusiness-type ActivitiesTotals 2012, as 2012, as 2012, as 2013restated2013restated2013restated Assets Current and other assets $ 57,07259,227$ 6,244$ 7,173$ 65,470$ 64,245$ Capital assets 75,88840,15376,430 41,549116,582 117,437 Total Assets 132,960135,656 46,396 48,722 182,053 181,682 Deferred Outflows of Resources Deferred charge on refunding 791860- - 791 860 Total deferred outflows of resources 860791 - - 791 860 Liabilities Other liabilities 5,4395,9021,0531,5126,492 7,415 Long-term liabilities outstanding50,27251,4284,5925,33354,864 56,760 Total Liabilities 57,33055,711 5,645 6,845 61,356 64,175 Deferred Inflows of Resources Deferred gain on refunding - - 797 9 Total deferred inflows of resources -- 7 9 7 9 Net Position: Net investment in capital assets 46,81436,34749,304 37,567 85,651 84,381 Restricted8,902 8,7282,096 559 10,998 9,287 Unrestricted22,530 20,948 2,301 3,742 24,831 24,690 Total Net Position $ 76,49080,736$ 40,744$ 41,868$ 121,480$ 118,358$ Net Investment in Capital Assets The largest portion of the City's net position (71%) reflects its investment in capital assets (e.g., land, buildings, machinery, equipment, improvements, construction in progress and infrastructure), less any debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the assets themselves cannot be used to liquidate these liabilities. Restricted Net Position A portion of the City's net position, $10.9 million or 9% represents resources that are subject to external restriction on how they may be used. 5 CITY OF LA PORTE, TEXAS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Unrestricted Net Position The remaining balance is unrestricted net position, $24.8 million or 20%, and may be used to meet the City's ongoing obligations to residents and creditors. Both of these categories remained relatively stable compared to the prior year. The following table provides a summary of the City’s operations for the year ended September 30, 2013, with comparative totals for the year ended September 30, 2012. Governmental activities increased the City’s net position by $4.2 million. Business-type activities decreased net position by $1.1 million. Condensed Schedule of Changes in Net Position For the Years Ended September 30, 2013 and 2012 Amounts in (000's) Governmental ActivitiesBusiness-type ActivitiesTotals 2012, as 2012, as 2012, as 2013restated2013restated2013restated Revenues Program revenues: Charges for services7,874$ 7,821$ 9,170$ 9,715$ 17,045$ 17,536$ Operating grants and contributions 1,515-849 849 1,515 Capital grants and contributions 1- 1,398 8591,398 860 General revenue: Property taxes17,782 17,251- - 17,782 17,251 Other taxes10,902 10,580- - 10,902 10,580 Industrial payments11,108 10,471- - 11,108 10,471 Investment earnings84 1438 1293 155 Miscellaneous432 16836 16469 184 Special item- gain on sale of asset- 1,940- - - 1,940 Total Revenues 49,89049,032 10,612 10,602 59,645 60,494 Expenses General Government 14,091-13,854 - 13,854 14,091 Public Safety 17,375-17,765 - 17,765 17,375 Public Works 3,784-4,451 - 4,451 3,784 Culture and Recreation 6,361-5,722 - 5,722 6,361 Health, Welfare and Sanitation 2,424-2,328 - 2,328 2,424 Interest on Long-term debt 1,267-1,385 - 1,385 1,267 Water Services- - 8,206 7,6918,206 7,691 Sewer services- - 2,599 2,9322,599 2,932 Airport- - 210 213210 213 Total Expenses 45,30345,505 11,015 10,836 56,520 56,141 Increase (decrease) in net assets before transfers 4,5863,526 (403) (235) 3,123 4,352 Transfers 334(720)720 (334)- - Increase (decrease) in net assets 4,9204,246 (1,123) (569) 3,123 4,352 Net position - beginning, as restated 72,24341,86876,490 42,486118,358 114,729 Prior Period Adjustment (673)(673) (49) (49) (722) (722) Net position - beginning, restated 71,57041,86876,491 42,437118,358 114,729 Net position - ending $ 76,49080,736$ 40,744$ 41,868$ 121,480$ 118,358$ 6 CITY OF LA PORTE, TEXAS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business- type activities. Governmental Activities. A comparison of program expenses to program revenues and revenues by source for governmental activities follows: Expenses and Program Revenues -Governmental Activities 20,000 18,000 16,000 Expenses 14,000 Program Revenues 12,000 10,000 8,000 6,000 4,000 2,000 0 GeneralPublicPublicCulture andHealth,Interest on GovernmentSafetyWorksRecreationWelfare andLong-term Sanitationdebt Revenue sources for governmental activities were distributed as follows: Revenues by Source -Governmental Activities Grants and Charges for contributions services 2% 16% Other taxes 22% Property taxes 37% Industrial payments 23% For the year ended September 30, 2013, revenues without transfers in the governmental activities totaled $49.0 million. This represents a decrease of approximately $0.86 million or 1.7%. In the prior year, the City realized a gain of 1.9 million on the sale of property. During the current year, there was no gain sale of property and also had a decrease in operating grants and contributions of $0.67 million due to decrease in federal grant funding. 7 CITY OF LA PORTE, TEXAS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Business-type Activities. Revenues without transfers in the business-type activities totaled $10.6 million, a $0.10 million decrease from the prior year. This decrease is mainly due to a decrease in capital grants and contributions. A comparison between expenses and program revenues (charges for services) relating to Utility operations follows. Expenses and Program Revenues -Business-type Activities $7,000 $6,000 Expenses $5,000 Program Revenues $4,000 $3,000 $2,000 $1,000 $- Water ServicesSewer services Financial Analysis of the Government’s Funds The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. As of the close of the current fiscal year, the City's governmental funds reported combined $45.4 an increase $2.3 ending fund balances ofmillion,offrom the prior year. This increase is due to an increase in sales and use taxes and intergovernmental revenues. Governmental Funds. The focus of the City’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 financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. The General fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund balance of the general fund was $23.9 million, an increase of $3.6 million compared to last year. As a measure of the general fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 69% of total general fund expenditures and total fund balance represents 79% of the same. The Debt Service fund had a total fund balance of approximately $2.5 million, all of which is reserved for the payment of debt service. The net decrease in fund balance from the prior year of $600,037 was due to more debt service payments made than revenues collected. The Capital Projects Fund experienced a decrease in fund balance in the amount of $967,790 . This was a planned decrease as the City utilized bond funds to construct and acquire various capital assets. 8 CITY OF LA PORTE, TEXAS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Proprietary Funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements. Unrestricted net position of the respective proprietary funds are Utility - $52 thousand, La Porte Area Water Authority - $1.8 million and Airport - $371 thousand. The changes in net position of the proprietary funds for 2013 was as follows: Utility - decrease of $1.3 million, La Porte Area Water Authority - increase of $390 thousand and Airport - decrease of $154 thousand. General Fund Budgetary Highlights Actual revenues exceeded original and amended General Fund budgeted revenues by $3,290,047. Property taxes and industrial payments exceeded the projected budget by $1,409,482 and $577,472 respectively. Sales and use taxes and franchise fees also exceeded budget by $620,858 and $52,518 respectively. Total appropriations exceeded expenditures by $1,685,676, the majority of which can be attributed to five departments. Administration had a positive variance in the amount of $307,894 due to open positions and reduction in special programs. Planning and engineering had a positive variance in the amount of $225,751 due to open positions. The variance in Fire and Police for $269,709 and $288,774 was due to open positions in the department. Culture and recreation had a positive variance of $188,346 due to open positions. Capital Asset and Debt Administration Capital Assets. The City’s investment in capital assets for its governmental and business type activities , as of September 30, 2013 amounted to $116.6 million (net of accumulated depreciation). This investment in capital assets includes land, buildings, roads, park facilities, water and wastewater plants and service lines, machinery and equipment, and construction in progress. The total decrease in the City’s investment in capital assets for the current fiscal year was approximately $855 thousand. The following table shows capital asset activity for the 2013 fiscal year (in 000’s): Governmental ActivitiesBusiness-Type ActivitiesTotals 201320122013201220132012 Land $ 9,5109,472$ 428$ 428$ 9,900$ 9,938$ Construction in progress 12,85710,2694,0723,75116,929 14,020 Infrastructure -- 15,47216,051 16,05115,472 Buildings and improvements 30,91732,87735,31337,10166,230 69,978 Machinery and equipment 7,7127,1813392698,051 7,450 Total Capital Assets $ 75,88876,430$ 40,153$ 41,549$ 116,582$ 117,437$ Major capital asset events during the current year include the reporting of a drainage master plan study. Construction in progress at year-end represents ongoing projects; to include various water and sewer projects. Additional information on capital asset activity can be found in note 5 to the financial statements. 9 CITY OF LA PORTE, TEXAS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Long-term Debt. At the end of the current fiscal year, the City had total bonded debt outstanding of $39.5$36.5 million. Of this amount, million is backed by the full faith and credit of the City, and the remainder represents revenue bonds secured solely by specified revenue sources. The City of La Porte maintains and “Aa2”, “AA”, and “AA“ by Moody’s, Standard and Poor’s and Fitch respectively for general obligation debt. The revenue bonds have been rated “NR”, “AA”, “NR” by Moody’s, Standard and Poor’s and Fitch respectively. Additional information on long-term debt activity can be found in note 6 to the financial statements. Economic Factors and Next Year’s Budgets and Rates The unemployment rate for the City of La Porte is currently 6.4 percent which is an increase from the rate of 6.3 percent a year ago. This is higher than the state’s average unemployment rate of 6.3 percent which is less than the national average of 7.2 percent. During the upcoming year, the City will closely monitor the volatility in the housing market. Although our area has not been adversely affected by home foreclosures, we will observe future economic changes. Total assessed value for all residential and commercial property in the City of La Porte exceeded $2.3 billion for fiscal year 2013. The trend for total assessed values has fluctuated slightly over the past five years resulting in a total increase of 6 percent. Assessed property values trends (in billions): υЋ͵Ѝ υЋ͵Ѝ υЋ͵Ќ υЋ͵Ќ υЋ͵Ћ υЋ͵Ћ υЋ͵Њ ЋЉЉВЋЉЊЉЋЉЊЊЋЉЊЋЋЉЊЌ 10 CITY OF LA PORTE, TEXAS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Sales tax receipts have increased 5 percent this fiscal year. Sales tax revenues trends (in millions): υВ͵Љ υБ͵Љ υА͵Љ υЏ͵Љ υЎ͵Љ υЍ͵Љ υЌ͵Љ υЋ͵Љ υЊ͵Љ υΏ ЋЉЉВЋЉЊЉЋЉЊЊЋЉЊЋЋЉЊЌ Contacting the City's Financial Management This financial report is designed to provide our citizens, customers and creditors a general overview of the City’s finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Director of Finance, 604 West Fairmont Parkway, La Porte, Texas, 77571. 11 (This page intentionally left blank.) 12 BASIC FINANCIAL STATEMENTS 13 (This page intentionally left blank.) 14 CITY OF LA PORTE, TEXAS TATEMENT OF NET POSITION S eptember 30, 2013 S Primary Government Governmental Business-type ActivitiesActivitiesTotal Assets Cash and equivalents37,089,509$ 1,503,045$ 38,592,554$ Investments16,941,779 2,344,348 19,286,127 Receivables, net of allowance for uncollectibles 1,184,4124,854,189 6,038,601 Due from Other Governmental Agencies182,609 - 182,609 Inventories158,706 3,600 162,306 Restricted cash and equivalents- 1,208,145 1,208,145 Capital assets: Capital assets not subject to depreciation22,328,636 4,500,291 26,828,927 Capital assets, net of accumulated depreciation 35,652,60254,100,928 89,753,530 Total Capital Assets 40,152,89376,429,564 116,582,457 Total Assets 46,396,443135,656,356 182,052,799 Deferred Outflows of Resources Deferred charge on refunding 790,758 - 790,758 Total deferred outflows of resources -790,758 790,758 Liabilities Accounts payable and accrued liabilities 515,9505,299,977 5,815,927 Accrued interest 8,06755,730 63,797 Unearned revenues352 - 352 Customer deposits- 527,342 527,342 Other liabilities83,138 1,500 84,638 Long-term liabilities: Due within one year 909,4542,723,683 3,633,137 Due in more than one year47,548,256 3,682,65351,230,909 Total Liabilities 5,644,96655,711,136 61,356,102 Deferred Inflows of Resources Deferred gain on refunding - 7,075 7,075 Total deferred inflows of resources 7,075- 7,075 Net Position Net investment in capital assets49,304,074 36,347,233 85,651,307 Restricted for: Debt service 2,096,1783,400,824 5,497,002 Economic development 2,888,613- 2,888,613 Grants 440,066- 440,066 Public safety 1,217,254- 1,217,254 Public works 955,346- 955,346 Unrestricted 22,529,801 2,300,991 24,830,792 Total Net Position $ 40,744,40280,735,978$ 121,480,380$ See Notes to Financial Statements. 15 CITY OF LA PORTE, TEXAS TATEMENT OF ACTIVITIE SS For the Year Ended September 30, 2013 Program Revenue Operating Capital Grants Charges for Grants and and ContributionsContributions ExpensesServices Functions/Programs Primary government Governmental Activities: General Government13,854,988$ 645,517$ 2,841$ -$ Public Safety17,765,3883,313,735 433,367 - Public Works4,451,455 265,962 20,168 - Culture and Recreation5,721,611 1,444,002 393,035 470 Health, Welfare and Sanitation2,327,982 2,204,153 - - Interest on Long-term debt1,384,875- - - Total governmental activities 7,873,36945,506,299 849,411 470 Business-type activities: Water Services8,207,204 5,693,598 - 1,398,291 Sewer services2,598,649 3,420,370 - - Airport210,323 56,246 - - Total business-type activities 9,170,21411,016,176 - 1,398,291 Total primary government $ 17,043,58356,522,475$ 849,411$ 1,398,761$ General revenues: Taxes: Property taxes Sales and use taxes Industrial payments Franchise taxes Unrestricted investment earnings Miscellaneous Transfers Total general revenues and transfers Change in net position Net position - beginning Prior Period Adjustment Net position - beginning, as restated Net position - ending See Notes to Financial Statements. 16 Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Business-type ActivitiesActivities Total $ -(13,206,630)$ (13,206,630)$ -(14,018,286) (14,018,286) -(4,165,325) (4,165,325) -(3,884,104) (3,884,104) -(123,829) (123,829) -(1,384,875) (1,384,875) -(36,783,049) (36,783,049) (1,115,315)- (1,115,315) 821,721- 821,721 (154,077)- (154,077) (447,671)- (447,671) (447,671)(36,783,049) (37,230,720) 17,782,090- 17,782,090 8,717,613- 8,717,613 11,107,848- 11,107,848 2,184,020- 2,184,020 8,46884,170 92,638 36,378432,405 468,783 (720,356)720,356 - (675,510)41,028,502 40,352,992 (1,123,181)4,245,453 3,122,272 41,916,64177,163,625 119,080,266 (673,100)(49,057) (722,157) 76,490,52541,867,583118,358,108 $ 40,744,40280,735,978$ 121,480,380$ 17 CITY OF LA PORTE BALANCE SHEET GOVERNMENTAL FUNDS eptember 30, 2013 S Capital Other Total Debt Service Improvements Governmental Governmental General FundFundFundFundsFunds Assets Cash and cash equivalents $ 1,750,63121,336,550$ 4,173,630$ 7,227,197$ 34,488,008$ Investments 733,7748,933,011 1,749,369 1,888,682 13,304,836 Receivables, net of allowance for uncollectibles 23,6043,915,857 2,294 808,090 4,749,845 Due from other governments -- - 164,608 164,608 Due from other funds -- - 662,000 662,000 Inventories -125,190 - - 125,190 Total Assets$ 2,508,00934,310,608$ 5,925,293$ 10,750,577$ 53,494,487$ Liabilities and Fund Balances Liabilities: Accounts payable3,247,975$ -$ 262,316$ 292,719$ 3,803,010$ Accrued salaries payable915,805 - - 15,643 931,448 Due to others- - 77,349 - 77,349 Due to other funds- - - 662,000 662,000 Unearned revenue - Grants- - - 352 352 Other payables- - - 44,148 44,148 Total Liabilities -4,163,780 339,665 1,014,862 5,518,307 Deferred Inflows of Resources: Unavailable revenue - property taxes179,22717,510 - 196,737 Unavailable revenue - fines and fees522,367- 522,367 Unavailable revenue - EMS1,113,149- 1,113,149 Unavailable revenue - other 747,11832,258 779,376 Total Deferred Inflows of Resources 17,5102,561,861 - 32,258 2,611,629 Fund balances: Nonspendable: Inventories125,190 - - - 125,190 Restricted Debt service- 2,490,499 - 948,545 3,439,044 Grants- - - 440,066 440,066 Economic development- - - 2,888,613 2,888,613 Public safety- - - 1,218,054 1,218,054 Capital projects- - - 3,252,833 3,252,833 Public works- - - 955,346 955,346 Committed: Construction2,000,000 - 5,585,628 - 7,585,628 Health Funds1,500,000 - 1,500,000 Assigned: Assigned for encumbrances103,690 - - - 103,690 Unassigned -23,856,087 - - 23,856,087 Total Fund balances 2,490,49927,584,967 5,585,628 9,703,457 45,364,551 Total Liabilities, Deferred Inflows, and Fund Balances $ 2,508,00934,310,608$ 5,925,293$ 10,750,577$ 53,494,487$ See Notes to Financial Statements. 18 CITY OF LA PORTE RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION eptember 30, 2013 S Total fund balance, governmental funds $ 45,364,551 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not current financial resources and therefore are not reported in this fund financial statement, but are reported in the governmental activities of the Statement of Net Position. 69,676,692 Certain other long-term assets (property taxes receivable and adjudicated court fines receivable) are not available to pay current period expenditures and therefore are not reported in this fund financial statement, but are reported in the governmental activities of the Statement of Net Position. 2,611,629 Some liabilities and deferred outflows, are not due and payable in the current period and are not included in the fund financial statement, but are included in the governmental activities of the Statement of Net Position. Bonds payable (17,550,000) Certificates of Obligation Payable (18,905,000) Premium or discount on bonds payable (675,372) Deferred charge on refunding 790,758 Accrued interest governmental activity debt (55,730) Compensated absences (3,222,681) Net pension and OPEB Obligation (9,867,907) The assets and liabilities of certain internal service funds are not included in the fund financial statement, but are included in the governmental activities of the Statement of Net Position. 12,569,038 Net Position of Governmental Activities in the Statement of Net Position $ 80,735,978 See Notes to Financial Statements. 19 CITY OF LA PORTE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended September 30, 2013 Capital Other Total Debt Service Improvements Governmental Governmental General FundFundFundFundsFunds Revenues Property taxes $ 1,652,94314,630,070$ -$ 1,542,391$ 17,825,404$ Sales and use taxes -4,075,652 - 4,017,303 8,092,955 Franchise taxes -2,184,020 - - 2,184,020 Industrial payments -11,107,848 - - 11,107,848 Other taxes -59,115 - 565,562 624,677 Licenses and permits -368,130 - - 368,130 Fines and forfeits -1,665,755 - 221,008 1,886,763 Charges for services -5,536,065 152,408 320,372 6,008,845 Intergovernmental -- - 568,052 568,052 Interest 4,73649,204 9,300 12,787 76,027 Miscellaneous -289,067 - 136,778 425,845 Total Revenues 1,657,67939,964,926 161,708 7,384,253 49,168,566 Expenditures Current: General government -9,285,997 32,780 1,724,661 11,043,438 Public safety -15,284,835 - 1,036,773 16,321,608 Public works -2,792,430 - 454,974 3,247,404 Health and sanitation -2,244,341 - - 2,244,341 Culture and recreation -5,129,980 - 96,906 5,226,886 Debt Service: - Principal 2,365,000- - - 2,365,000 Interest and other charges 1,385,204- - - 1,385,204 Capital outlay -- 3,349,718 2,149,790 5,499,508 Total Expenditures 3,750,20434,737,583 3,382,498 5,463,104 47,333,389 Excess (deficiency) of revenues over expenditures (2,092,525)5,227,343 (3,220,790) 1,921,149 1,835,177 Other Financing Sources (Uses) Transfers in 1,492,488107,600 2,253,000 30,832 3,883,920 Transfers out -(1,929,876) - (1,700,098) (3,629,974) Proceeds from sale of land -215,342 - - 215,342 Total other financing sources and uses 1,492,488(1,606,934) 2,253,000 (1,669,266) 469,288 Net change in fund balances (600,037)3,620,409 (967,790) 251,883 2,304,465 Fund balances - beginning 23,964,5583,090,5366,553,4189,451,574 43,060,086 Fund balances - ending $ 2,490,49927,584,967$ 5,585,628$ 9,703,457$ 45,364,551$ See Notes to Financial Statements. 20 CITY OF LA PORTE RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended September 30, 2013 Net change in fund balances - total governmental funds: $ 2,304,465 Amounts reported for Governmental Activities in the Statement of Activities are different because: Governmental funds report outlays for capital assets as expenditures because such outlays use current financial resources. In contrast, the Statement of Activities reports only a portion of the outlay as expense. The outlay is allocated over the assets' estimated useful lives as depreciation expense for the period. This is the amount by which capital outlays $4,081,787 exceeded depreciation $3,897,384 in the current period. 184,403 Governmental funds report the entire net sales price (proceeds) from the sale of an asset as revenue because it provides current financial resources. In contrast, the Statement of Activities reports only the gain on the sale of assets. Thus, the change in net assets differs from the change in fund balance by the book value of the assets sold and disposed. (405,478) Governmental funds do not present revenues that are not available to pay current obligations. In contrast, such revenues are reported in the Statement of Activities when earned. 122,184 Repayment of bond principal is an expenditure in the governmental fund, but the repayment of principal reduces long-term liabilities in the statement of net assets. 2,365,000 ome expenses reporene saemen o acves o no requree use o curren Stdithtttftiitidtithft financial resources and these are not reported as expenditures in governmental funds: Change in accrued interest payable 4,217 Amortization of refunding loss (68,985) Amortization of deferred charges including premiums and discounts on issuance of bonds. 65,097 Change in NPO and OPEB Obligation (1,442,036) Change in Compensated Absences 137,829 Internal service funds are used by management to charge the costs of certain activities, such as fleet maintenance and information technology, to individual funds. The net revenue (expense) of certain internal service funds is reported with governmental activities. 978,757 Change in net position of governmental activities $ 4,245,453 See Notes to Financial Statements. 21 CITY OF LA PORTE TATEMENT OF NET POSITION S ROPRIETARY FUNDS P eptember 30, 2013 S Governmental Business-type ActivitiesActivities Internal Service Utility FundLPAWAAirportTotalsFund Assets Current Assets: Cash and cash equivalents $ 897,753342,113$ 263,179$ 1,503,045$ 4,395,908$ Investments 1,349,654884,383 110,311 2,344,348 1,842,536 Accounts receivable, net of allowance for doubtful accounts 171,4141,008,659 2,377 1,182,450 119,927 Accrued interest receivable 1,136681 145 1,962 2,418 Inventories -3,600 - 3,600 33,516 Restricted cash and cash equivalents 685,878522,267 - 1,208,145 - Total Current Assets 3,105,8352,761,703 376,012 6,243,550 6,394,305 Non-current Assets: Capital Assets: Land and improvements -224,308 203,504 427,812 - Construction in progress -4,072,479 - 4,072,479 - Buildings and improvements -57,620 - 57,620 - Improvements other than buildings 15,429,68065,057,116 5,778,399 86,265,195 - Vehicles and equipment 6,130682,819 - 688,949 14,603,950 Less Accumulated depreciation (8,625,984)(39,279,921) (3,453,257) (51,359,162) (7,851,078) Total Non-current Assets 6,809,82630,814,421 2,528,646 40,152,893 6,752,872 Total Assets 9,915,66133,576,124 2,904,658 46,396,443 13,147,177 Liabilities Current Liabilities: Accounts payable 78,618329,475 2,171 410,264 22,578 Accrued salaries payable -102,111 898 103,009 23,998 Other current liabilities -2,467 1,710 4,177 - Interest payable 2,7725,295 - 8,067 - Customer deposits -527,342 - 527,342 - Claims and judgments -- - - 480,584 Long-term debt, current portion Compensated absences 16,954- - 16,954 - Bonds payable, current portion 630,000262,500 - 892,500 - Total Current Liabilities 711,3901,246,144 4,779 1,962,313 527,160 Non-current Liabilities: Compensated absences -194,977 - 194,977 50,979 Net pension obligation -273,984 - 273,984 - OPEB obligation -988,830 - 988,830 - Bonds payable, current portion 1,699,862525,000 - 2,224,862 - Total Non-current Liabilities 1,699,8621,982,791 - 3,682,653 50,979 Total Liabilities 2,411,2523,228,935 4,779 5,644,966 578,139 Deferred Inflows of Resources Deferred gain on refunding 7,075- - 7,075 - Total deferred inflows of resources 7,075- - 7,075 - Net Position Net investment in capital assets 4,472,88929,345,698 2,528,646 36,347,233 6,752,872 Restricted for debt service 1,147,160949,018 - 2,096,178 - Unrestricted52,473 1,877,285 371,233 2,300,991 5,816,166 Total Net Position $ 7,497,33430,347,189$ 2,899,879$ 40,744,402$ 12,569,038$ See Notes to Financial Statements. 22 CITY OF LA PORTE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS For the Year Ended September 30, 2013 Governmental Business-type ActivitiesActivities Total Enterprise Internal Service Utility FundLPAWAAirportFundsFund Revenues Charges for services7,937,012$ 1,213,334$ 56,246$ 9,206,592$ 7,683,205$ Total Operating Revenues 1,213,3347,937,012 56,246 9,206,592 7,683,205 Operating Expenses Personnel services3,186,006 - 21,251 3,207,257 855,522 Supplies and materials281,534 8,090 - 289,624 272,600 Purchased water- 999,647 - 999,647 - Repairs and maintenance- - 4,896 4,896 - Other services and charges3,788,558 28,768 16,442 3,833,768 4,987,271 Depreciation1,962,364 464,999 167,734 2,595,097 961,147 Total Operating Expenses 1,501,5049,218,462 210,323 10,930,289 7,076,540 Operating income(1,281,450) (288,170) (154,077) (1,723,697) 606,665 Non-operating Revenues (Expenses) Earnings on investments3,568 4,362 538 8,468 8,143 Gain (loss) on disposal of capital assets- - - - (77,361) Interest expense(32,321) (53,566) - (85,887) - Total Non-operating Revenue (Expenses) (49,204)(28,753) 538 (77,419) (69,218) Income before contributions and transfers (337,374)(1,310,203) (153,539) (1,801,116) 537,447 Capital contributions604,437 793,854 - 1,398,291 (25,100) Transfers in- - - - 479,646 Transfers out(653,500) (66,338) (518) (720,356) (13,236) Change in net position(1,359,266) 390,142 (154,057) (1,123,181) 978,757 Total net position - Beginning 7,156,24931,706,455 3,053,936 41,916,640 11,590,281 Prior Period Adjustment (49,057)- - (49,057) - Total net position - Beginning, as Restated 31,706,4557,107,1923,053,936 41,867,583 11,590,281 Total net assets - ending $ 7,497,33430,347,189$ 2,899,879$ 40,744,402$ 12,569,038$ See Notes to Financial Statements. 23 CITY OF LA PORTE STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended September 30, 2013 Governmental Business-type ActivitiesActivities Total Enterprise Internal Service Utility FundLPAWAAirportFundsFund Cash Flows from Operating Activities Receipts from customers and users7,937,012$ 1,226,031$ 56,211$ 9,219,254$ 7,683,359$ Disbursed for personnel services(3,359,501) - (21,130) (3,380,631) (885,082) Disbursed for goods and services(4,073,450) (1,170,984) (20,462) (5,264,896) (5,277,438) Net cash provided (used) by operating activities 55,047504,061 14,619 573,727 1,520,839 Cash Flows from Noncapital Financing Activities Transfers from other funds- - - - 479,646 Transfers to other funds(653,500) (66,338) (518) (720,356) (13,236) Operating grants and contributions- - - - 25,100 Net cash provided by (used by) noncapital financing activities (66,338)(653,500) (518) (720,356) 491,510 Cash Flows from Capital and Related Financing Activities Capital grants and contributions604,437 - - 604,437 - Principal payments on debt(262,500) (625,000) - (887,500) - Interest paid on debt(34,335) (73,556) - (107,891) - Acquisition and construction of capital assets, net of dispositions -(1,199,043) - (1,199,043) (1,996,615) Capital contributions from participants for debt service- 697,727 - 697,727 - Capital contributions from participants for capital recovery - 96,127- 96,127 - Net cash used by capital and related financing activities 95,298(891,441) - (796,143) (1,996,615) - Cash Flows from Investing Activities - Purchase of investments- (137,028) (23,931) (160,959) (302,755) Sale of investments174,543 - - 174,543 75,002 Interest received 3,568 4,362 538 8,468 8,143 Net cash provided by (used by) investing activities (132,666)178,111 (23,393) 22,052 (219,610) Net increase in cash and equivalents(862,769) (48,659) (9,292) (920,720) (203,876) Cash and equivalents, beginning of year 1,632,2901,727,149 272,471 3,631,910 4,599,784 Cash and equivalents, at end of year$ 1,583,631864,380$ 263,179$ 2,711,190$ 4,395,908$ Unrestricted cash and equivalents342,113$ 897,753$ 263,179$ 1,503,045$ 4,395,908$ Restricted cash and equivalents522,267 685,878 - 1,208,145 - $ 1,583,631864,380$ 263,179$ 2,711,190$ 4,395,908$ Reconciliation of operating income to net cash provided by operating activities Operating income (loss)(1,281,450)$ (288,170)$ (154,077)$ (1,723,697)$ 606,665$ Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation1,962,364 464,999 167,734 2,595,097 961,147 (Increase) decrease in accounts receivable(15,864) 12,697 (35) (3,202) 393 (Increase) decrease in inventory- - - - 154 (Increase) decrease in prepaid expenses- - - - (18,862) Increase (decrease) in accounts payable(339,797) (134,479) 855 (473,421) 158 Increase (decrease) in salaries payable9,687 - 121 9,808 1,766 Increase (decrease) in other current liabilities(4,777) - 21 (4,756) (29,953) Increase (decrease) in due to/due from other funds- - - - (629) Increase (decrease) in customer utility deposits10,090 - - 10,090 - Increase (decrease) in compensated absences(27,758) - - (27,758) - Increase (decrease) in net pension and OPEB obligation 191,566 - - 191,566 - Net cash provided by operating activities$ 55,047504,061$ 14,619$ 573,727$ 1,520,839$ See Notes to Financial Statements. 24 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies The City of La Porte, Texas (the "City"), was incorporated under the laws of the State of Texas on August 10, 1892. The City operates under a “Council- Manager” form of government and provides the following services as authorized by its charter: public safety, development services, public health and welfare, culture and recreation and waterworks. The accounting and reporting policies of the City relating to the funds included in the accompanying basic financial statements conform to U.S Generally accepted Accounting Principles (GAAP) applicable to state and local governments which include the principles prescribed by the Governmental Accounting Standards Board (GASB), the American Institute of Certified Public Accountants and the Financial Accounting Standards Board. The more significant accounting policies of the City are prescribed below. A. Reporting Entity The City’s basic financial statements include the accounts of all City operations. The City, with its elected governing body of mayor and eight council members, is considered a primary government. As required by GAAP, the basic financial statements include the City and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are in substance, part of the government’s operations. All component units have been included as blended component units because of the significance of their operational and financial relationships with the City. The La Porte Area Water Authority (the “Authority”) is governed by a five-member board appointed by the City Council. Although it is a legally separate entity, the Authority provides services almost exclusively for the City’s water operations, and is in substance a part of the City’s primary operations. The Authority was created by the City to finance the operations involved in obtaining surface water supplies and converting these supplies to potable water. This water is sold primarily to the City of La Porte (86%) with the remainder being sold to other neighboring political subdivisions. The operations of the Authority are reported as a proprietary fund type. The Tax Increment Reinvestment Zone One (the “Zone”) is governed by a nine-member board appointed by the City Council. The Zone provides benefits exclusively for the City through reinvestment financing of ad valorem taxes, which are utilized for capital improvements for the City of La Porte. The Zone is presented as a governmental fund type. The Section 4B Sales Tax Corporation provides services that exclusively benefit the City of La Porte and is governed by a seven-member board appointed by City Council. The Section 4B Sales Tax Corporation is presented as a governmental fund type. Complete financial statements for each of the individual component units may be obtained through the City of La Porte. 25 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 1 - Summary of Significant Accounting Policies (continued) B.Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Changes in Net Position) report information about the City as a whole. These statements include all activities of the primary government and its component units. For the most part the effect of interfund activity has been removed from these statements. 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. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services or privileges provided, 2) operating grants and contributions and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than program revenues. Likewise, general revenues include all taxes. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed. GASB Statement No. 34 established standards for external financial reporting for all state and local governmental entities, which includes a Statement of Net Position and a Statement of Activities. It requires the reclassification of net position into three components – net investment in capital assets; restricted; and unrestricted. These classifications are as follows: Net investment in capital assets – This component of net position consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, notes or other borrowings. Restricted – This component of net position consists of constraints placed on net asset use through external constraints imposed by creditors, grantors, contributors, or laws or regulations of other governments or constraints imposed by law through contractual provisions or enabling legislation. Unrestricted net position – This component of net position consists of net position that do not meet the definition of “restricted” or “net investment in capital assets.” Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. 26 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 1 - Summary of Significant Accounting Policies (continued) C.Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recognized when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. General property taxes are recorded as receivables when levied and as revenue in the period for which they were levied and become available. Property taxes receivables have been recorded as unavailable revenues at year-end. Property taxes collected within 60 days subsequent to September 30, 2013, have not been recorded as revenue as the amount is not considered material. Franchise taxes and sales taxes relating to underlying transactions that occurred prior to September 30, 2013, have been recorded as receivables and revenue. Licenses and permits, and fines and forfeitures are not susceptible to accrual since they are not measurable until received. Revenue on federal and state cost-reimbursement grants is accrued when the related expenditures are incurred. Interest is recorded when earned. The City reports the following major governmental funds: TheGeneral Fund is used to account for all financial transactions that are not accounted for in another fund. The principal sources of revenue of the General Fund are property taxes, sales and use taxes, franchise taxes, licenses and permits, and fines and forfeitures. Expenditures are for general government, public safety, public works and other community services. TheDebt Service Fund is used to account for the payment of interest and principal on all general long- term debt of the City except for capital leases which are accounted for in the General Fund. The primary source of revenue for the Debt Service Fund is general property taxes. TheCapital Improvement Fund is used to account for projects that are generally small in nature and affect the general operation of the City. 27 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 1 - Summary of Significant Accounting Policies (continued) The City reports the following major proprietary funds: TheUtility Enterprise Fund is used to account for operations of the water and sewer services to the residents of the City. All activities necessary to provide such services are accounted for in this fund, but not limited to 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. La Porte Area Water Authority is used to account for revenues and expenses related to obtaining raw surface water and converting it to potable water Airport Fund is used to account for financial activities of the airport which includes rentals, grants and other revenues. Additionally, the government reports the Internal Service Funds which are used to account for the Motor Pool, Technology and Insurance services provided to other departments of the City on a cost reimbursement basis. 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 the proprietary fund’s principal ongoing operations. The principal operating revenues of the enterprise funds are charges to customers for sales and services. Operational expenses for the enterprise funds and internal service fund include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues not meeting this definition are reported as non-operating revenues and expenses. D.Assets, liabilities, deferred outflows/inflows of resources and net position/fund balance 1.Cash and Cash Equivalents Cash includes amounts in demand deposits, short-term investments which mature within ninety days of the fiscal year end, and various petty cash funds. The short-term investments are stated at cost or amortized cost, which approximate fair value. The short-term investments consist of U.S. Treasury Bills and deposits in the Texas Local Government Pool (TexPool), the Local Government Investment Cooperative (LOGIC) all of which have the general characteristics of a demand deposit account. For the purpose of the statement of cash flows, Proprietary Fund types consider temporary investments with a maturity of three months or less when purchased to be cash equivalents. In accordance with GASB Statement No. 31, the City reports all investments at fair value, except for “money market investments” and “2a7-like pools”. Money market investments, which are short-term highly liquid debt instruments that may include U.S. Treasury and agency obligations, are reported at amortized costs. Investments positions in external investment pools that are operated in a manner consistent with the SEC’s Rule 2a7 of the Investment Company Act of 1940, such as TexPool and LOGIC are reported using the pools’ share price. 28 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 1 - Summary of Significant Accounting Policies (continued) D.Assets, liabilities deferred outflows of resources and net position/fund balance (continued) 2.Receivables All receivables are reported at their gross value and, where appropriate, are reduced by the estimated portion that is expected to be uncollectible. 3.Due to and from Other Funds Interfund receivables and payables arise from interfund transactions and are recorded by all funds affected in the period in which transactions are executed. These receivables and payables are, for the most part, eliminated from the Government-Wide Statement of Net Position and are recorded as “due from other funds” or “due to other funds” in the fund financial statements. 4.Inventory and Prepaid Items Inventories are valued at costs using the first in/first out (FIFO) method. The costs of governmental fund type inventories are recorded as expenditures when consumed rather than when purchased. A portion of the fund balance is classified as non-spendable to reflect minimum inventory quantities considered necessary for the City’s continuing operations. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. The City did not have any prepaid items. 5.Capital Assets Capital assets are reported in the applicable governmental or business-type activities column in the government-wide financial statements. The government defines capital assets as assets with an initial, individual cost of $5,000 or greater and an estimated useful life in excess of one year. All purchased capital assets are valued at cost where historical records exist. Donated Capital assets are valued at their estimated fair value on the date received. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Improvements, including public domain and equipment are capitalized and Proprietary Fund Capital assets are depreciated over the remaining useful lives of the related Capital assets using the straight line method, as applicable. Estimated Asset Description Useful Life Buildings 20 years Building improvements 20 years Infrastructure 20-30 years Vehicles 4-10 years Machinery and equipment 4-10 years Water and sewer systems 20-40 years 29 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 1 - Summary of Significant Accounting Policies (continued) 6.Compensated Employee Absences The City’s employees earn vacation and sick leave, which may either be taken or accumulated, up to a certain amount, until paid upon termination or retirement. For all funds, this liability reflects amounts attributable to cumulative employee services already rendered, where the payment is probable and can be reasonably estimated. The current and long-term portion of the governmental fund type liabilities are recorded in the Government-Wide Statement of Net Position. The Proprietary fund type liability is recorded as a liability in the individual proprietary funds since payment will be made from the resources of these funds. Also, for the governmental activities, compensated absences are generally liquidated by the general fund. Policies relating to the accrual and payment of these benefits are as follows: Vacation – Employees earn from 10-25 days of vacation per year. Upon separation, employees are paid for all accumulated vacation leave (up to one and one half times their annual accrual rate). Sick leave – Full time 8 hour employees accrue 3.70 hours per pay period. Full time 24 hour employees accrue 5.91 hours per pay period and civil service employees accrue 15 days per calendar year. The maximum sick leave time which may be accumulated by any employee shall be 90 days for regular full time employees. For 24 hour shift personnel, the maximum accrual is 1,152 hours. Civil service employees may accrue unlimited sick leave. 7.General Property Taxes All taxes due the City on real or personal property are payable at the Office of the City Assessor- Collector and may be paid at any time after the tax rolls for the year have been completed and approved, which is October 1, or as soon thereafter as practicable. Taxes are due upon receipt and all taxes not paid prior to February 1 are deemed delinquent and are subject to such penalty and interest set forth by the Property Tax Code. All property located within the City limits on the first day of January of each year are charged with a special lien in favor of the City from such date for taxes due thereon. 8.Debt Service The ad valorem tax rate is allocated each year between the General Fund and the Debt Service Fund. The full amount estimated to be required for debt service on the general obligation debt is provided by the debt service tax together with interest earned in the Debt Service Fund. 9.Restricted Assets The City applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position is available. 30 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 1 - Summary of Significant Accounting Policies (continued) 10.Fund Balance In compliance with GASB No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, in the fund financial statements, governmental funds report the following classifications of fund balance: Nonspendable – includes amounts that cannot be spent because they are either not spendable in form or are legally or contractually required to be maintained intact. All amounts reported as nonspendable at September 30, 2013, by the City are nonspendable in form. The City has not reported any amounts that are legally or contractually required to be maintained intact. Restricted – includes amounts restricted by external sources (creditors, laws of other governments, etc.) or by constitutional provision or enabling legislation. Committed – includes amounts that can only be used for specific purposes. Fund balances are committed by formal action of the City Council. Amendments or modifications to the committed fund balance must be approved by formal action of the City Council. Formal action shall be by resolution or majority vote. Committed fund balance will not lapse at year end. Assigned – includes amounts that the City intends to use for a specific purpose, but do not meet the definition of restricted or committed fund balance. Under City Council’s adopted policy, amounts may be assigned by the City Manager under the authorization of the Fiscal Affairs Committee. Unassigned – includes amounts that have not been assigned to other funds or restricted, committed or assigned to a specific purpose within the General Fund. The General Fund is the only fund that is allowed to have a positive amount reported in this category. For the purposes of fund balance classification, expenditures incurred in the unrestricted fund balances shall be reduced first from the committed fund balance, then from the assigned fund balance and lastly, the unassigned fund balance. City council intends to maintain a minimum fund balance of 25% of the City’s General Fund operating expenditures. 11.Revenues and Expenditures/Expenses In the fund financial statements revenues for governmental funds are recorded when they are determined to be both measurable and available. Generally, tax revenues, fees and non-tax revenues are recognized when received. Grants from other governments are recognized when qualifying expenditures are incurred. Expenditures for governmental funds are recorded when the related liability is incurred. Revenues and expenses in the Government-Wide Statement of Activities are recognized in essentially the same manner as used in commercial accounting. 12.Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual amounts could vary from those estimates. 31 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 1 - Summary of Significant Accounting Policies (continued) 13.Budgetary Information Annual budgets are adopted on a basis consistent with GAAP. Annual appropriated budgets are adopted for the general, special revenue funds and debt service funds. All annual appropriations lapse at fiscal year-end. Project length financial plans are adopted for all capital projects funds and are revised annually. 14.Deferred outflows/inflows of resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/ expenditure) until then. The government only has one item that qualifies for reporting in this category. It is the deferred charge on refunding reported in the government-wide statement of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The government has only two types of this item, one which arises under a modified accrual basis of accounting; unavailable revenue which is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The other type is the deferred gain on refunding reported in the government-wide statement of net position. A deferred gain on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. Note 2 - Deposits (Cash) and Investments Authorization for Deposits and Investments The Texas Public Funds Investment Act (PFIA), as prescribed in Chapter 2256 of the Texas Government Code, regulates deposits and investment transactions of the City. In accordance with applicable statutes, the City has a depository contract with an area bank (depository) providing for interest rates to be earned on deposited funds and for banking charges the City incurs for banking services received. The City may place funds with the depository in interest and non-interest bearing accounts. State law provides that collateral pledged as security for bank deposits must have a market value of not less than the amount of the deposits and must consist of: (1) obligations of the United States or its agencies and instrumentalities; (2) direct obligations of the State of Texas or its agencies; (3) other obligations, the principal and interest on which are unconditionally guaranteed or insured by the State of Texas; and/or (4) obligations of states, agencies, counties, cities, and other political subdivisions of any state having been rated as investment quality by a nationally recognized investment rating firm and having received a rating of not less than A or its equivalent. City policy requires the collateralization level to be at least 102% of market value of principal and accrued interest. 32 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 2 - Deposits (Cash) and Investments (continued) The Council has adopted a written investment policy regarding the investment of City funds as required by the Public Funds Investment Act (Chapter 2256, Texas Government Code). The investments of the City are in compliance with the City’s investment policy. The City’s investment policy is more restrictive than the PFIA requires. It is the City’s policy to restrict its direct investments to obligations of the U.S. Government or U.S. Government Agencies, fully collateralized certificates of deposit, bankers’ acceptances, mutual funds, repurchase agreements and local government investment pools. The maximum maturity allowed is five years from date of purchase. The City’s investment policy does not allow investments in commercial paper, collateralized mortgage obligations, floating rate investments or swaps. Deposit and Investment Amounts The City's cash and investments are classified as: cash and cash equivalents and restricted cash and investments. The cash and cash equivalents include cash on hand, fully collateralized deposits with financial institutions and in a privately-managed public funds investment pool account (TexPool, TexStar and LOGIC). The restricted cash and investments are assets restricted for specific use. The following schedule shows the City’s recorded cash and investments at year-end: Total Fair Value Governmental Internal Service Business Type Funds FundsActivities Cash deposits6,479,238$ 527,508$ 450,580$ Pooled funds28,008,749 3,868,400 2,260,610 US Agency Securities13,304,8571,842,5362,344,348 $ 6,238,44447,792,844$ 5,055,538$ Investment Risks Interest Rate Risk At year-end, the City had the following investments subject to interest rate risk disclosure, under U.S. GAAP, by investment type: Weighted Average Total Fair Maturity Value(months) Investment Type Public funds investment pools34,137,759$ 1.6 Federal Home Loan Mortgage Corporation (FHLMC)4,002,390 33.4 Federal Farm Credit Bank (FFCB)9,483,340 24.0 Federal National Mortgage Association (FNMA)2,504,861 45.6 Farmer Mac (FAMCA)1,501,150 13.0 Total fair value51,629,500$ Portfolio weighted average maturity 10.7 33 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 2 - Deposits (Cash) and Investments (continued) The City’s investment policy specifies the maximum stated maturity from the date of purchase for any individual investments may not exceed 5 years and the maximum dollar weighted average maturity for the pooled fund group (investment portfolio) may not exceed 2 years. Concentration of Credit Risk The policy does require investments to be staggered in a way that protects interest income from the volatility of interest rates. The policy has not established limitations on percentages of the total portfolio that may be invested in securities other than the repurchase agreements, Treasury bills and notes or insured and collateralized Certificates of Deposits. Total Fair Percentage of Investment TypeValueTotal Portfolio 66% Investment Pools34,137,759$ 34% US Agency Securities17,491,741 100% Total $ 51,629,500 Credit Risk The primary objective of the City’s adopted Investment Policy is the safety of principal. Credit risk within the City’s portfolio among authorized investments approved by the City’s adopted Investment Policy is represented in U.S. Treasury Bills, Notes or Bonds, and other securities which are guaranteed as to principal and interest by the full faith and credit of the United States of America, collateralized or fully insured certificates of deposits, FDIC insured banks in the State of Texas, repurchase agreements if secured by U.S. Treasury Bills, Notes or Bonds and Public Funds Investment Pools. Note 3 - Property Tax The appraisal of property within the City is the responsibility of the Harris County Appraisal District (the “Appraisal District”). The Appraisal District is required under the Property Tax Code to appraise all property within the county on the basis of 100% of its market value. The value of real property within the Appraisal District must be reviewed every five 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, take 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 repayment of general obligation bonds and other contractual obligations, adjusted for new improvements, exceeds the effective tax rate and the rollback rate tax rate, qualified voters of the City may petition for an election to determine whether to limit the tax rate to no more than the rollback tax rate. The City’s property taxes are levied annually in October on the basis of the Appraisal District’s assessed values as of January 1 of that calendar year. Appraised values are established by the Appraisal District at market value, assessed at 100% of appraised value and certified by the Harris County Appraisal District Board of Review. The City’s property taxes are billed and collected by the City’s Tax Assessor/Collector. Such taxes are applicable to the fiscal year in which they are levied and become delinquent with an enforceable lien on property on February 1 of the current calendar year. 34 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 3 - Property Tax (continued) The City is permitted, by Article XI, Section 5, of the State of Texas Constitution and the City Charter, to levy property taxes up to $2.50 per $100 of assessed valuation for general governmental services. Within the $2.50 maximum levy, there is no legal limit upon the amount of property taxes, which can be levied for debt service. The property tax rates to finance general governmental services and debt service for the 2011-12 tax year were $0.64 and $0.07, respectively, per $100 of assessed valuation. The 2012 assessed value and total tax levy as adjusted through September 30, 2012 were $2,341,036,448 and $16,621,361 respectively. The City has enacted an ordinance providing for the exemption of twenty percent (20%) of the assessed value of residential homesteads plus an additional $60,000 for persons 65 years of age or older for property taxes. An exemption of $60,000 is allowed for disabled persons on homesteads and up to $12,000 is allowed for disabled veterans on any one piece of property. Additionally, the market value of agricultural land is reduced to agricultural value for purposes of the City’s tax levy calculation. Note 4 - Receivables Amounts recorded as receivables as of for the government’s individual major and non-major funds, including the applicable allowance for uncollectible accounts, are as follows: Debt Capital All Other Service Projects Internal FundsTotal General FundFundFundUtility Fund LPAWAService Funds Receivables Taxes $ 133,3311,841,647$ -$ -$ -$ -$ 757,777$ 2,732,755$ Intergovernmental -- - - - 119,927 162,688 282,615 Accounts -3,355,497 - 1,027,738 171,414 - 2,3774,557,026 Interest 96211,725 2,294 681 1,136 2,418 2,609 21,825 Other -- - 5,257 - - 49,769 55,026 Allowance for uncollectibles (110,689)(1,293,012) - (24,336) - - - (1,428,037) $ 23,6043,915,857$ 2,294$ 1,009,340$ 172,550$ 122,345$ 975,220$ 6,221,210$ Property taxes are levied by October 1 in conformity with Subtitle E, Texas Property Tax Code. Taxes are due on receipt of the tax bill and are delinquent if not paid before February 1 of the year following the year in which imposed. On January 1 of each year, a tax lien attaches to property to secure the payment of all taxes, penalties, and interest ultimately imposed. The Harris County Central Appraisal District ("HCCAD") establishes appraised values. Taxes are levied by the City Council based on the appraised values and operating needs of the City. 35 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 5 - Capital Assets A summary of activity for capital assets capitalized by the City for the year ended September 30, 2013 follows: Balance Balance September Reclassification/ September 30, 30, 2012Increases(Decreases)2013 Governmental Activities: Capital assets not being depreciated: Land 9,510,264$ -$ (38,546)$ 9,471,718$ Construction in progress10,268,9322,685,970 (97,984) 12,856,918 Total capital assets not being depreciated 2,685,97019,779,196 (136,530) 22,328,636 Other capital assets: Buildings and improvements35,656,551216,475 (2,358,377) 33,514,649 Improvements other than buildings24,519,137111,255 59,517 24,689,909 Infrastructure38,795,865946,196 - 39,742,061 Machinery and equipment17,357,1571,917,995 (1,134,386) 18,140,766 Total other capital assets116,328,710 3,191,921 (3,433,246) 116,087,385 Less accumulated depreciation for: Buildings and improvements(17,586,833)(1,265,600) 2,004,712 (16,847,721) Improvements other than buildings(9,712,154)(753,803) 25,965 (10,439,992) Infrastructure(22,744,604)(1,525,002) - (24,269,606) Machinery and equipment(10,175,958)(1,314,126) 1,060,946 (10,429,138) Total accumulated depreciation(60,219,549) (4,858,531) 3,091,623 (61,986,457) Other capital assets, net56,109,161 (1,666,610) (341,623) 54,100,928 Totals$ 1,019,36075,888,357$ (478,153)$ 76,429,564$ Balance Balance September Reclassification/ September 30, 30, 2012 Increases (Decreases)2013 Business-type Activities: Capital assets not being depreciated: $ - Land427,812$ $ 427,812-$ Construction in progress3,751,099 604,437 4,072,479(283,057) Total capital assets not being depreciated 604,4374,178,911 (283,057) 4,500,291 Other capital assets: Buildings and improvements57,620 -- 57,620 564,351 Improvements other than buildings85,417,787 86,265,195283,057 -30,255 Machinery and equipment658,694688,949 Total other capital assets86,134,101 594,606 283,057 87,011,764 Less accumulated depreciation for: Buildings and improvements(49,337) -(551) (49,888) (2,555,456)(48,325,163) - (50,880,619) Improvements other than buildings Machinery and equipment (39,090)(389,565) - (428,655) Total accumulated depreciation (48,764,065) (2,595,097) - (51,359,162) Total capital assets being depreciated, net (2,000,491)37,370,036 283,057 35,652,602 Totals $ (1,396,054)41,548,947$ -$ 40,152,893$ 36 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 5 - Capital Assets (continued) Depreciation was charged to functions of the primary government as follows: General government620,153$ Public safety944,051 Public works1,586,354 Parks and recreation746,826 Internal Service funds961,147 Total Governmental Activities $ 4,858,531 Water and sewer2,427,363$ Airport167,734 Total Business-Type Activities $ 2,595,097 September 30, 2013, Construction contract commitments outstanding as of are as follows: Governmental Activities Remaining Total In Progress Commitment Fund Hotel/Motel Fund52,315$ 7,684$ TIRZ Fund201,170 - General CIP Fund12,603,433 1,537,116 Totals12,856,918$ 1,544,800$ Business-Type Activities Remaining Total In Progress Commitment Fund Utility Fund3,678,065$ 115,511$ 2004 CO's 347,750 - 2007 CO's46,664 3,960 Totals4,072,479$ 119,471$ 37 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 6 - Long-Term Debt The City issues a variety of long-term debt instruments in order to acquire and/or construct major capital facilities and equipment for governmental and business type activities. These instruments include general obligation bonds, certificates of obligation and revenue bonds. Future ad valorem tax revenues, water and sewer system revenues or liens on property and equipment secure these debt obligations. The following is a summary of the terms of obligations, general obligation bonds, certificates of September 30, 2013 obligations and revenue bonds outstanding as of : Governmental Business-type 2002 Limited Tax Bonds due in annual installments of $270,000 through March 15, 2025; interest at 4.25% to 5%; $5,400,000 issued for wastewater treatment plant and fire station improvements.1,350,000$ -$ 2004 Certificates of Obligation due in annual installments through March 15, 2025; interest at 3.6% to 4.45% $7,000,000 issued for paving and drainage improvements, street extension and land acquisition.1,335,000 - 2005 General Obligation Serial Bonds due in annual payments through March 15, 2025; interest at 3.75% to 4.25% $7,675,000 issued to construct a police facility.2,790,000 - 2005 Certificates of Obligation due in annual payments through March 15, 2015; interest at 2.8% to 3.8% $1,800,000 issued for water and sewer improvements and fire truck.645,000 - 2006 Public Property Finance contractual Obligation due in annual payments through January 25, 2016; interest at 3.74% $2,625,000 issued for automated meter replacement program.- 787,500 2006 General Obligation Serial Bonds due in annual payments through March 15, 2025; interest at 3.625% to 4.25% $1,200,000 issued for park improvements.905,000 - 2006 Certificates of Obligation due in annual payments through March 15, 2025; interest at 3.75% to 4.3% $5,765,000 issued for police facility, sports and water and sewer improvements.4,340,000 - 2007 Certificates of Obligation due in annual payments through March 15, 2029; interest at 4.00% to 4.25% $8,075,000 issued for wastewater treatment plant improvements, sports complex and golf cart path improvements.6,980,000 - 2010 Certificates of Obligation due in annual payments through March 15, 2026; interest at 3.00% to 4.00% $6,265,000 issued for street, drainage and park improvements.5,605,000 - 2010 General Obligation Refunding Bonds due in annual payments through March 15, 2020; interest at 2.00% to 4.00% $4,295,000 issued to refund previous debt.3,145,000 - 2010 LPAWA Contract Revenue Refunding Bonds due in annual payments through March 15, 2017; interest at 2.50% to 4.00% $4,085,000 issued to refund previous debt.- 2,270,000 2012 General Obligation Refunding Bonds due in annual payments through March 15, 2025; interest at .65% to 3.00% $9,435,000 issued to refund previous debt.9,360,000 - Total Bonds Payable $ 3,057,50036,455,000$ 38 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 6 - Long-Term Debt September 30, 2013 During the year ended , the following changes occurred in long-term liabilities: Balance Balance Amounts Due September 30, September 30, Within One 2012 Additions (Reductions) 2013 Year Governmental Activities: Bonds and notes payable: General obligation bonds18,670,000$ -$ (1,120,000)$ 17,550,000$ 1,240,000$ Certificates of obligation20,150,000 - (1,245,000) 18,905,0001,320,000 Premium/Discount on bond issuance 740,469- (65,097) 675,372 - Total bonds payable39,560,469 - (2,430,097) 37,130,372 2,560,000 Compensated Absences3,441,442 - (167,782) 3,273,660 163,683 Net pension obligation2,313,311 3,111,167 (3,088,308) 2,336,170 - Net OPEB obligation6,112,560 2,220,443 (801,266) 7,531,737 - Total Governmental Activities$ 5,331,61051,427,782$ (6,487,453)$ 50,271,939$ 2,723,683$ Balance Balance Amounts Due September 30, September 30, Within One 2012 Additions (Reductions) 2013 Year Business-type Activities: Bonds payable: Revenue bonds2,895,000$ -$ (625,000)$ 2,270,000$ 630,000$ Public property finance certificates of obligation1,050,000 - (262,500) 787,500 262,500 Premium on bond issuance77,222 - (17,360) 59,862 - Total Bonds Payable4,022,222 - (904,860) 3,117,362 892,500 Compensated absences239,689 - (27,758) 211,931 16,954 Net pension obligation 271,460 365,206 (362,472) 274,194 - OPEB obligation 799,788 294,239 (105,197) 988,830 - Total Business-type Activities$ 659,4455,333,159$ (1,400,287)$ 4,592,317$ 909,454$ Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period and, accordingly, are not reported as fund liabilities in the governmental funds. Compensated absences generally are paid by the General Fund for the governmental activities. Net pension obligation is liquidated by the general fund. Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. General Obligation Bonds and Certificates of Obligations General Obligation Bonds are direct obligations issued on a pledge of the general taxing power for the payment of the debt obligations of the City. General Obligations Bonds and Certificates of Obligation require the City to compute, at the time other taxes are levied, the rate of tax required to provide (in each years bonds are outstanding) a fund to pay interest and principal at maturity. The City is in compliance with this requirement. 39 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 6 - Long-Term Debt (continued) In April 2012, the City issued General Obligation Refunding Bonds, Series 2012 in the amount of $9,435,000. The interest rate ranges from 2.0%-3.0%. The bonds were issued at a premium totaling $364,013. The proceeds of the bonds were used to refund a portion of the City’s outstanding bonds and pay costs of issuance related to the bonds. A portion of the proceeds were deposited into an irrevocable trust with an escrow agent to provide future debt service payments on the outstanding bonds. As a result $8,770,000 of the 2002 Limited Tax Bonds, 2004 and 2005 Certificates of Obligation and 2005 General Obligation Bonds are considered to be defeased and the liability has been removed from the books. The purpose of the bonds was to lower the City’s debt service payments. Sale of the bonds resulted in an economic gain of $629,705 and a deferred loss on refunding of $896,031. Revenue Bonds Water and Sewer Revenue Bonds constitute special obligations of the City solely secured by a lien on and pledge of the net revenues of the water and sewer system. The Revenue Bonds are collateralized by the revenue of the water and sewer system and the various special funds established by the bond ordinances. The ordinances provide that the revenue of the system is to be used first to pay operating and maintenance expenses of the system and second to establish and maintain the Revenue Bond funds. Remaining revenues may then be used for any lawful purpose. The ordinances also contain provisions, which, among other items, restrict the issuance of additional Revenue Bonds unless the special funds noted above contain the required amounts and certain financial ratios are met. The City is in compliance with all significant financial requirements as of September 30, 2013. The annual aggregate maturities for each bond type for the years subsequent to September 30, 2013 are as follows: General Obligation BondsCertificates of Obligation Governmental Activities Governmental Activities Fiscal YearPrincipalInterestPrincipalInterest 20141,240,000$ 767,753$ 1,320,000$ 1,017,699$ 20151,255,000 733,392 1,385,000 995,164 20161,265,000 697,021 1,445,000 965,646 20171,285,000 658,924 1,500,000 939,113 20181,675,000 609,674 1,195,000 767,119 20191,705,000 471,145 1,245,000 749,398 20201,605,000 419,189 1,300,000 732,869 20211,430,000 272,300 1,250,000 686,551 20221,465,000 236,350 1,305,000 670,876 20231,505,000 194,350 1,350,000 649,620 20241,540,000 156,300 1,410,000 632,614 20251,580,000 117,275 1,465,000 163,596 2026- - 1,050,000 113,092 2027- - 540,000 70,130 2028- - 560,000 36,330 2029- - 585,000 12,285 $ 5,333,67317,550,000$ 18,905,000$ 9,202,102$ 40 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 6 - Long-Term Debt (continued) Contract Revenue Bonds Public Property Finance CO Business-Tpe Activities Business-Tpe Activities yy Fiscal YearPrincipalInterestPrincipalInterest 2014630,000$ 58,650$ 262,500$ 24,544$ 2015650,000 41,838 262,500 14,726 2016670,000 22,850 262,500 4,909 2017320,000 6,400 - - $ 129,7382,270,000$ 787,500$ 44,179$ Prior Year Refunding of Debt Revenue Bonds The City defeased certain outstanding revenue bonds by placing proceeds of new bonds in irrevocable trust to provide for all future debt service payments. Accordingly, the respective trust accounts and liability for the defeased bond are not included in the City’s financial statements. As of September 30, 2013 approximately $6,220,000 and $2,335,000 of previously refunded bonds outstanding are considered defeased in association with the governmental activities and the business-type activities respectively. Note 7 - Interfund Activities Transfers between the primary government funds during the year were as follows: Transfers fromTransfers to AmountPurpose Utility FundDebt Service Fund $ 574,957 Annual transfer for debt service Utility FundInsurance Fund 47,711 Transfer for liability insurance and workers comp Airport FundInsurance Fund 518 Transfer for liability insurance and workers comp La Porte Area Water AuthorityGeneral Fund 65,033 Operators agreement La Porte Area Water AuthorityInsurance Fund 1,305 Transfer for liability insurance and workers comp 2005 Certificate of ObligationUtility Fund 30,832 Transfer of fund balance for closed out funds Vehicle Maintenance FundInsurance Fund 13,236 Transfer for liability insurance and workers comp Hotel Motel Tax FundGeneral CIP Fund 145,000 Transfer for capital projects Hotel/Motel FundGeneral Fund 42,500 Transfer for golf course advertising and city bordering bay for golf expenditures General FundInsurance Fund 416,876 Transfer for liability insurance and workers comp General FundDebt Service Fund 100,000 Transfer for debt service General FundGeneral CIP Fund 1,413,000 Transfer for capital projects Transportation & Other Infra.General Fund 67 Transfer for capital projects La Porte Development Corporation (4B)Debt Service Fund 410,061 Transfer for debt service La Porte Development Corporation (4B)General CIP Fund 695,000 Transfer for capital projects 1998 General Obligation FundDebt Service Fund 32,138 Transfer for debt service FundDebt Service Fund 257,571 Transfer for debt service 2005 General Obligation FundDebt Service Fund 895 Transfer for debt service 2006 Certificate of Obligation FundDebt Service Fund 78,662 Transfer for debt service 2006 General Obligation FundDebt Service Fund 19,946 Transfer for debt service 2007 Certificate of Obligation FundDebt Service Fund 18,258 Transfer for debt service $ 4,363,566 41 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 7 - Interfund Activities (continued) Interfund receivables at year end were as follows: Receivable FundPayable FundAmounts Purpose 2006 Certificates of Obligation FundTIRZ One Sewer improvements paid by the City $ 662,000 Note 8 - Employee Retirement System Plan Description The City provides pension benefits for all of its eligible employees, except firefighters, through a non- traditional, joint contributory, hybrid defined benefit plan (the “Plan”) in the statewide Texas Municipal Retirement System (TMRS), an agent multi-employer public employee retirement system. The plan provisions that have been adopted by the City are within the options available in the governing statutes of TMRS. TMRS issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information (RSI) for TMRS. The report provides detailed explanation of the contributions, benefits and actuarial methods and assumptions used by the system. This report may be obtained by writing TMRS, P.O. Box 149153, Austin, TX 78714-9153 or by calling 800-924-8677. The report is also available on the TMRS website at www.TMRS.com. The City provides pension benefits to its volunteer firemen through the Texas Statewide Emergency Services Personnel Retirement Fund, one of 150 administered by the Fire Fighters’ Pension Commissioner, a cost sharing multiple employer pension system. That report may be obtained by writing to the Firefighters Pension Commission, P.O. Box 12577, Austin, TX 78711. Both plans are more fully described below. Texas Municipal Retirement System Contributions and Annual Pension Cost Under the state law governing TMRS, the contribution rate for each City is determined annually by the actuary, using Projected Unit Credit actuarial cost method. This rate consist of the normal cost contribution rate and the prior service cost contribution rate, which is calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the portion of an active member’s projected benefit allocated annually; the prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the applicable period for the 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. 42 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 8 - Employee Retirement System (continued) Texas Municipal Retirement System (continued) Contributions and Annual Pension Cost (continued) 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. The annual pension cost and net pension obligation (asset) for the current year is calculated as follows: 2013 Annual Required Contribution (ARC) $3,450,780 Interest on net pension obligation (NPO) 180,947 Adjustment to ARC (155,542) Annual Pension Cost (APC) 3,476,185 Contributions (3,450,780) Change in NPO 25,405 NPO, beginning of the year 2,584,959 NPO, ending of the yea r $2,610,364 Percentage of APC contributed 99.3% Actuarial Cost MethodProjected Unit Credit Amortization MethodLevel Percent of Payroll Remaining Amortization Period27.1 Years - Closed Period Asset Valuation Method10-year Smoothed Market Actuarial Assumptions: Investment Rate of Return7.0% Projected Salary IncreasesVaries by age and service Includes Inflation At3.0% Cost-of-Living Adjustments2.1% Funded Status The funded status of the Plan as of December 31, 2012 Schedule of Funding Progress Unfunded Actuarial (UAAL) as a Actuarial Accrued Annual Percentage of Actuarial Valuation Actuarial Value Accrued Percentage Liability Covered Covered Date December 31, of Assets Liabilities Funded(UAAL) Payroll Payroll 2012102,718,435$ 118,112,651$ 87%15,394,216$ 19,658,099$ 78% The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of the plan assets is increasing or decreasing over time relative to the actuarial accrued liability. 43 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 8 - Employee Retirement System (continued) Three-year Trend Information 201320122011 Annual Required Contribution (ARC) $ 3,624,4103,450,780$ 3,933,822$ Interest on net pension obligation (NPO) 173,583180,947 113,334 Adjustment to ARC (139,265)(155,542) (93,771) Annual Pension Cost (APC) 3,658,7283,476,185 3,953,385 Contributions (3,388,213)(3,450,780) (3,150,061) Change in NPO 270,51525,405 803,324 NPO, beginning of the year 2,314,4442,584,959 1,511,120 NPO, ending of the yea r $ 2,584,9592,610,364$ 2,314,444$ Percentage of APC contributed 99.3%92.6%79.7% Texas Statewide Emergency Services Personnel Retirement Fund Summary of Significant Accounting Policies and Plan Asset Matters The Texas Statewide Emergency Services Personnel Retirement Fund financial statements are prepared using the accrual basis of accounting. The Fund’s fiscal year is from September 1 through the following August 31. Contributions are recognized as revenues in the period in which they are due to the Fund. No contributions applicable to the H.B. 258 Texas Local Fire Fighters Retirement Act (TLFFRA) are included herein. The Texas Statewide Emergency Services Personnel Retirement Fund investments are reported at a smoothed market-related value. The Fire Fighters’ Pension Commission is the administrator of the Texas Statewide Emergency Services Personnel Retirement Fund, a cost sharing multiple employer pension system established and administered by the State of Texas to provide pension benefits for emergency services personnel who serve without monetary remuneration. The Texas Statewide Emergency Services Personnel Retirement Fund is considered a component unit of the State of Texas financial reporting entity and is included in the State’s financial reports as a pension trust fund. At August 31, 2012 there were 188 member departments participating in the pension system. The following table summarizes the pension system membership as of August 31, 2012: Retirees and beneficiaries currently receiving benefits2,340 Terminated members entitled to benefits but not yet receiving those2,252 Current active members (vested and non-vested)4,446 th The pension system was created by Senate Bill 411, 65th Legislature, Regular Session (1977). The 79 Legislature, Regular Session (2005), recodified the provisions and gave the TESRS Board of Trustees authority to establish vesting requirements, contributions levels, benefit formulas and eligibility requirements by board rule. The benefit provisions include retirement benefits as well as death and disability benefits. Member are 50% vested after the tenth year of service, with the vesting percent increasing 10% for each of the next five years of service so that a member becomes 100% vested with 15 years of service. 44 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 8 - Employee Retirement System (continued) Texas Statewide Emergency Services Personnel Retirement Fund (continued) Summary of Significant Accounting Policies and Plan Asset Matters (continued) Upon reaching age 55, each vested member may retire and receive a monthly pension equal to his vested percentage multiplied by six times the governing body’s average monthly contribution over the member’s years of qualified service. For years of service in excess of 15 years, this monthly benefit is increased at the rate of 6.2 % compounded annually. On and off-duty death benefits and on-duty disability benefits are dependent on whether or not the member was engaged in the performance of duties at the time of death or disability. Death benefits include a lump sum amount and continuing monthly payments to a member’s surviving spouse and dependent children. Funding Policy Contribution provisions were established by S.B. 411, 65th Legislative, Regular Session (1977) and were amended by board rule in 2006. No contributions are required by individual members of participating departments. The governing bodies of participating department members are required to contribute at least the minimum prescribed amount per month for each active member. Additional contributions may be made by a governing body to pay for granting credit for service before the department began participating in TESRS (prior service). The State may also be required to make annual contributions up to a limited amount to make TESRS actuarially sound. Annual Required Contribution The contribution requirement per active emergency services personnel member per month is not actually determined. Rather, the minimum contribution provisions were set by board rule. For the fiscal year ending August 31, 2012, total contributions (dues and prior service) of $3,517,455 were paid into TESRS by the political subdivision and served by the member volunteer emergency services personnel. The state did not appropriate any maximum state contribution for fiscal years ending August 31, 2012 and 2013. Total contributions made were equal to the contribution required by the state statute and equal to the contributions required based on the August 31, 2010 actuarial valuation. The purpose of the biennial actuarial valuations is to test the adequacy of the contribution arrangement and determine if they are adequate to fund the benefits that are promised. The actuarial valuation as of August 31, 2012 revealed the inadequacy of the expected contributions (dues and prior service contributions) together with the actual state appropriations for the fiscal year ending August 31, 2013 ($528,538 to help pay for the Systems administrative expense) and with the assumed continuation of legislative appropriations of (1) the maximum state contribution amount in future years for the System to have a 30 year amortization period, and (2) approximately $530,000 each year to help pay for part of the System’s administrative expenses. The City’s annual contributions for fiscal year ending September 30, 2013, 2012 and 2011 were $24,624, $27,216, and $27,264 respectively. 45 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 9 - Risk Management The City is exposed to various risks of loss related to torts: theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The City’s risk management program encompasses various means of protecting the City against loss by obtaining property, casualty and liability coverage from participation in a risk pool. The participation of the City in the risk pool is limited to the payment of premiums. Further information regarding the pool is provided below. Settled claims have not exceeded insurance coverage in any of the three previous fiscal years. There has not been any significant reduction in insurance coverage from that of the previous year. Health Insurance Benefits The City self-insures a portion of health insurance benefits provided to employees. The City uses an internal service fund to account for the revenues and expenses for providing health care coverage. Charges are assessed to various City divisions based on their full-time employee count. Activity during the year included: Revenues Charges to divisions4,620,877$ Interfund transfers479,646 Charges to employees434,740 Charges to retirees103,094 Cobra charges5,008 Interest revenue1,787 Total revenues5,645,152$ Expenses Personnel expenses194,096$ Other expenses362,119 Claims administration223,636 Claims incurred4,115,749 Re-insurance premiums285,767 Total health services expenses5,181,367$ $480,584 Included in the claims paid amount is for incurred but not reported claims. Settled claims have not exceeded insurance coverage in any of the previous four fiscal years. Estimates of claims payable and of claims incurred but not reported at September 30, 2013, are reflected as liabilities of the Internal Service Fund. Because actual claims liabilities depend on such complex factors as inflation, changes in legal requirements and damage awards, the process used in computing claims liability is an estimate based on historical claims. Analysis of claims liability for the fiscal years 2011, , 2012 and 2013 are as follows: Beginning of Current year Payments for End of year year accrualestimatesclaimsaccrual 09/30/11499,000$ 4,286,990$ 4,212,096$ 573,894$ 09/30/12573,894 4,290,891 4,365,339 499,446 09/30/13499,446 4,096,890 4,115,752 480,584 46 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 9 - Risk Management (continued) Risk Pool The City is a member of the Texas Municipal League Intergovernmental Risk Pool, an unincorporated association of 1,860 political subdivisions of the State of Texas. The Pool contracts with a third party administrator for administration, investigation and adjustment services in the handling of claims. All loss contingencies, including claims incurred but not reported, if any, are recorded and accounted for by the Pool. Note 10 - Commitments and Contingencies The City is a defendant in lawsuits. Although the outcome of the lawsuits is not presently determinable, it is the opinion of the City's management that resolution of these matters will not have a materially adverse effect on the financial condition of the City. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends, including frequency and amount of payouts, and other economic and social factors. No claim liabilities are reported at year end. The City participates in certain federal and state assisted grant programs. These programs are subject to program compliance audits by the grantors or their representatives. Any liability for reimbursement which may arise as the result of these audits is not believed to be material. Note 11 - Post-employment Benefits Plan Description. In addition to pension benefits described in Note 6, employees who retire from the City and are eligible for pension benefits shall be provided medical coverage by the City to the extent and subject to the conditions of such coverage that is provided to current employees of the City. The City administers this single-employer defined benefit medical plan (“the Retiree Medical Plan”). The plan provides medical coverage for eligible retirees and their dependents through the City’s self-health insurance plan, which covers both active and retired members. Benefit provisions are established and amended by City Council. The Retiree Medical Plan does not issue a publicly available financial report. Funding Policy. This coverage for retired employees is provided at the option of City council through adoption of the annual budget. The City funds these premiums in the same manner as it funds similar premiums for current employees. Employees, who retired from the City before October 1, 1992, have 100% of their coverage paid for by the City. Employees who retired from the City in 1993 and up to December 31, 1999, with 20 or more years of service have 100% of their coverage paid for by the City. Prior to January 1, 2000, employees who have 15 years but less than 20 years of service are required to pay for 10% of the cost and employees who have 10 years but less than 15 years of service are required to pay for 20% of their costs. For employees who retire after January 1, 2000, the following applies: Retiree cost Retiree CostCity Costper year Years of service with the City At least 10 but less than 1555%45%3,300$ At least 15 but less than 20 25%75%1,500 At least 200%100%- 47 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 11 - Post-employment Benefits (continued) Employees who are eligible for the post-employment benefits are employees who retire after January 1, 2006 and who have a combination of years of service with the City of La Porte plus age totaling 80 and who retire as a qualified annuitant under the Texas Municipal Retirement System; who retire in accordance with the City of La Porte Employee Policies Handbook; who complete at least 20 years of service with the City of La Porte are currently employed by the City of La Porte at the time of their retirement. The total premium cost is the total annual dollar allocated by budget as approved by City Council for the City of La Porte for health insurance for each employee, including employee and employer contributions. The cost allocation shall be as follows: Years of service with the CityRetiree CostCity Cost at least 20 years60%+dependent premiums40% 21 years55%+dependent premiums45% 22 years50%+dependent premiums50% 23 years45%+dependent premiums55% 24 years40%+dependent premiums60% 25 years35%+dependent premiums65% 26 years30%+dependent premiums70% 27 years25%+dependent premiums75% 28 years20%+dependent premiums80% 29 years15%+dependent premiums85% 30 yearsActive employee/dependent rate Retirees who are entitled to receive retirement benefits under the City’s retirement plan may purchase continued health benefits for the retiree and the retiree’s dependents. The person must inform the City no later than the day on which the person retires that the person elects to continue coverage. If the retiree elects to continue coverage for himself and/or his dependents, once he decides to drop either type of coverage, the person and/or his dependents become eligible for coverage at the next open enrollment period. The level of coverage provided is the same level of coverage provided to current employees. The City’s coverage is secondary to Medicare when the person becomes eligible for those benefits. Payment for dependent coverage will be at the same rate as payments for current employees. Annual OPEB Cost and Net OPEB Obligation. The City’s annual other postemployment benefit (OPEB) cost is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the City’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City’s OPEB obligation to the postemployment medical plan shows the components of the City’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City’s OPEB obligation to the postemployment medical plan. 48 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 11 - Post-employment Benefits (continued) Fiscal Year 201320122011 Annual Required Contribution (ARC)2,491,816$ 2,280,768$ 2,214,338$ Interest on net pension obligation (NPO) 311,056 236,921 169,198 Adjustment to ARC(288,190) (219,505) (156,760) Annual Pension Cost (APC)2,514,682 2,298,184 2,226,776 Contributions(906,463) (650,741) (721,830) Change in NPO1,608,219 1,647,443 1,504,946 NPO, beginning of the year6,912,348 5,264,905 3,759,959 NPO, ending of the year8,520,567$ 6,912,348$ 5,264,905$ Percentage of ARC contribution36.0%28.3%32.4% The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2013, 2012 and 2011 are as follows. Percentage of Annual OPEB Annual OPEB Cost Net OPEB Fiscal Year Ended Cost Contributed Obligation 9/30/20112,226,776$ 32.42%5,264,905$ 9/30/20122,298,184 28.32%6,912,348 9/30/20132,514,682 36.05%8,520,567 Funded Status and Funding Progress. The funding status of the post employment medical plan as of the most recent actuarial valuation date is as follows: Schedule of Funding Progress Unfunded (UAAL) as Actuarial a Actuarial Accrued Percentage Actuarial Valuation Date Actuarial Accrued Percentage Liability Annual Covered of Covered December 31, Value of Assets Liabilities Funded (UAAL) Payroll Payroll 2012-$ 32,167,407$ 0%32,167,407$ 19,908,162$ 61.89% Actuarial valuations of an ongoing plan involve estimates of the value reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. A schedule of funding progress presents multi-trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. The 2012 actuarial valuation is the most recent actuarial valuation available. 49 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 11 - Post-employment Benefits (continued) Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the December 31, 2012, actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 4.5 percent investment rate of return compounded annually (net of administrative expenses), which is a blended rate of the expected long-term investment returns on plan assets and on the employer’s own investments calculated based on the funded level of the plan at the valuation date, an annual healthcare cost trend rate of 10 percent initially, reduced by decrements to an ultimate rate of 4.5 percent after 10 years, and a payroll growth rate for projecting normal cost of 3 percent. These rates include a 3 percent inflation assumption. The actuarial value of assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a five-year period. The UAAL is being amortized as a level percentage of payroll contributions over a 30 year open amortization period assuming payroll growth of 3 percent. The remaining amortization period at September 30, 2013, was 27 years. Supplemental Death Benefits Fund 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; this coverage is an “other postemployment benefit, “ or OPEB. The city contributes to 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 the fiscal year ended 2013, 2012, and 2011 were $29,311, $30,365 and $36,232 respectively, which equaled to the required contributions. Schedule of Contribution Rates Annual Required Actual Percentage of Plan/CaleContribution Contribution ARC ndar Year(Rate)Made (Rate)Contributed 20110.03%0.03%100% 20120.03%0.03%100% 20130.03%0.03%100% 50 CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Implementation of New GASB Standards Note 12 - In June 2011, the GASB issued Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. This statement will improve financial reporting by standardizing the presentation of deferred outflows of resources and deferred inflows of resources and their effects on a government’s net position. The requirements of this statement are effective for financial statements for periods beginning after December 15, 2011. The City has implemented GASB No. 63 in this annual report. In March 2012, the GASB issued Statement No. 65, Items Previously Reported as Assets and Liabilities. This statement will improve financial reporting by reclassifying certain items that were previously reported as assets and liabilities as deferred outflows of resources or deferred inflows of resources or as outflows or inflows of resources. The requirements of this statement are effective for financial statements for periods beginning after December 15, 2012. The City has implemented GASB No. 65 in this annual report. The deferred inflows of resources element of the financial statements represent an acquisition of net position that applies to future periods and will be not be recognized as an inflow of resources until that time. The City’s deferred gain on refunding of $7,075 and deferred loss on refunding of $790,758 are presented on the statement of net position. The government has one type of deferred inflow under a modified accrual basis of accounting; unavailable revenue which is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. Note 13 - Prior Period Adjustment The City implemented GASB Statement No. 65, Items Previously Reported as Assets and Liabilities during the fiscal year ended September 30, 2013. In accordance with GASB 65, debt issuance costs should be recognized as expenses in the period incurred. Previously, debt issuance cost were recorded as assets and amortized over the life of the debt. The implementation of GASB 65 resulted in the following prior period adjustment to the net position of the governmental activities: Governmental Business-type ActivitiesActivities Net position - beginning $ 41,916,64177,163,625$ Prior Period Adjustment (673,100)(49,057) Net position - beginning, as restated $ 41,867,58476,490,525$ 51 (This page intentionally left blank.) 52 REQUIRED SUPPLEMENTARY INFORMATION 53 CITY OF LA PORTE, TEXAS GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the year ended September 30, 2013 2013 Variance with Final Budget - Positive Budgeted Amounts gative) OriginalFinalActual(Ne Revenues Property taxes13,220,588$ 13,220,588$ 14,630,070$ 1,409,482$ Franchise fees2,131,502 2,131,502 2,184,020 52,518 Sales and use taxes3,454,794 3,454,794 4,075,652 620,858 Industrial payments10,530,376 10,530,376 11,107,848 577,472 Miscellaneous taxes60,000 60,000 59,115 (885) Licenses and permits375,975375,975368,130 (7,845) Fines and forfeitures1,445,2201,445,220 1,665,755 220,535 Interest earnings71,500 71,500 49,204 (22,296) Charges for services5,344,9245,344,9245,536,065 191,141 Miscellaneous 40,00040,000289,067 249,067 Total Revenues 36,674,87936,674,879 39,964,926 3,290,047 Expenditures General government Administration4,737,8784,809,6494,501,755307,894 Finance3,344,4083,149,0892,954,559194,530 Planning and engineering1,981,2022,055,4341,829,683225,751 Public safety Fire4,550,9914,633,2424,363,533269,709 Police10,886,69411,210,07610,921,302288,774 Public works Public works administration353,815358,294327,47730,817 Streets2,500,7912,546,0152,464,95381,062 Health and sanitation Solidwaste2,312,8462,343,1342,244,34198,793 Culture and recreation5,191,9605,318,3265,129,980188,346 Total Expenditures 36,423,25935,860,585 34,737,583 1,685,676 Excess (deficiency) of revenues over expenditures814,294 251,620 5,227,343 4,975,723 Other Financing Sources (Uses) Transfers in107,533 107,533 107,600 67 Transfers out(416,876) (1,929,876) (1,929,876) - Proceeds from sale capital assets- - 215,342 215,342 Total other financing sources and uses (1,822,343)(309,343) (1,606,934) 215,409 Net change in fund balances504,951 (1,570,723) 3,620,409 5,191,132 Fund balances, beginning of year 23,964,55823,964,558 23,964,558 - Fund balances at year end$ 22,393,83524,469,509$ 27,584,967$ 5,191,132$ 54 CITY OF LA PORTE, TEXAS NOTES TO REQUIRED SUPPLEMENTARY BUDGET INFORMATION Budgetary Controls and Procedures The objective of the City’s budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by City Council. The City Manager is required by charter to submit a proposed budget and accompanying message to City Council by August 1. The Council shall review and revise the proposed budget as they deem appropriate prior to circulation for the public hearing. A summary of the proposed budget and notice of the public hearing must be posted in City Hall and be published in the official newspaper at least 2 weeks prior to the hearing. Annual budgets for General, Debt Service, Special Revenue and Enterprise Funds are legally adopted by ordinance and must be done so no later than September 27th. Budgetary control for capital projects funds is achieved through legally binding construction contracts and project length budgets. The level of budgetary control (the level at which expenditures cannot legally exceed the appropriated amount) is the total approved budget for each department. The City manager is authorized to transfer part or all of any unencumbered appropriation balance among programs within a department. All other amendments and/or transfers must be approved by Council. Annual appropriated budgets are adopted for the general, special revenue, and debt service funds, using the same basis of accounting as for financial reporting. Annual budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP) except the capital projects funds, which adopt project length budgets. The City adopts separate budgets for each of the special revenue funds rather than as a whole. The original budget is adopted by the City Council prior to the beginning of the year. The legal level of control as defined by the charter is the total approved budget for each department. The City Manager may transfer appropriations within a department without seeking the approval of City Council; however, any revisions that alter total expenditures for any department must be approved by City Council. Appropriations lapse at the end of the year, excluding capital project budgets. 55 CITY OF LA PORTE, TEXAS REQUIRED PENSION SYSTEM SUPPLEMENTARY INFORMATION September 30, 2013 TEXAS MUNICIPAL RETIREMENT SYSTEM (UNAUDITED) Schedule of Funding Progress Unfunded Actuarial (UAAL) as a Actuarial Accrued Annual Percentage of Actuarial Valuation Actuarial Value Accrued Percentage Liability CoveredCovered Date December 31, of Assets Liabilities Funded (UAAL) Payroll Payroll 2012102,718,435$ 118,112,651$ 87%15,394,216$ 19,658,099$ 78% 201194,972,036 112,727,995 84%17,755,959 19,680,971 90% 201088,730,728 106,875,060 83%18,144,332 18,770,507 97% 56 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES 57 Nonmajor Governmental Funds Special Revenue Funds Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes. Hotel / Motel Occupancy Tax Fund – This fund is used to account for the accumulation of resources from the Hotel/Motel Tax assessment levied by the City. These monies are to be spent to promote the development or progress of the City within the guidelines set forth on disposition of revenues collected under the authority of the Texas Hotel Occupancy Act (Article 1269; Vernon’s Texas Civil Statutes). Section 4B Sales Tax Fund – This fund is used to account for funds received from the ½ cent sales tax dedicated to certain economic and infrastructure projects. Tax Increment Reinvestment Zone One Fund (TIRZ) – This fund is used to account for the disposition of property taxes collected on specific parcels within the boundaries of the TIRZ for the exclusive benefit of the City’s capital improvement programs. Grant Fund – This fund is used to account for funds received from another government or organization to be used for a specific purpose activity or facility. Street Maintenance Sales Tax Fund – This fund is used to account for the additional sales tax collected for street maintenance. Emergency Services Sales Tax Fund – This fund is used to account for the additional sales tax collected for emergency services. Capital Projects Funds Capital projects funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds. Transportation and Other Infrastructure Fund – This fund is used to account for the construction and expansion of roads, bridges, sidewalks and other major infrastructure capital improvements. 1998 General Obligation Bonds Fund – This fund is used to account for the proceeds and expenditures related to drainage and street improvements throughout the City. 2000 Certificate of Obligation Bonds Fund – This fund is used to account for the proceeds and expenditures for construction of the community library. 2004 Certificate of Obligation Bonds Fund – This fund is used to account for the proceeds and expenditures related to the Bay Area Boulevard, Canada Road Paving and Drainage Improvements and the land acquisition of the Police Headquarters. 2005 Certificate of Obligation Bonds Fund – This fund is used to account for the proceeds and expenditures related to the purchase of an aerial fire truck, Bayshore Water/Sewer Replacement and various other Water/Sewer Capital Improvements. 58 Nonmajor Governmental Funds Capital Projects Funds (continued) 2005 General Obligation Bond Fund – This fund is used to fund projects that benefit the City in general. A specific project from this issue is the construction of the police facility. 2006 Certificate of Obligation Bonds Fund – This fund is used to account for the proceeds and expenditures related to the Police Facility, a Sports Complex (Joint Venture), South La Porte Trunk Sewer and various other Water/Sewer projects. 2006 General Obligation Bonds Fund - This fund is used to account for the proceeds and expenditures related to the Westside Park Improvements. 2007 Certificate of Obligation Bonds Fund – This fund is used to account for the proceeds and expenditures related to wastewater treatment plant improvements, sports complex and golf cart path improvements. 2010 Certificates of Obligation Bond Fund – This fund is used to account for the proceeds and expenditures related to street, drainage and park improvements. Drainage Improvements – This fund is used to account for the proceeds and expenditures related to the drainage fees collected. 59 CITY OF LA PORTE COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS eptember 30, 2013 S Special Revenue Funds Tax Increment Hotel Motel Section 4b Reinvestment TaxSales TaxZoneGrant Fund Assets Cash and cash equivalents703,831$ 1,725,350$ 925,138$ 755,101$ Investments295,009 723,177 - 315,831 Receivables, net of allowance100,581 362,263 - 382 Intergovernmental receivable- - 1,920 162,688 Due from other funds- - - - Total Assets $ 2,810,7901,099,421$ 927,058$ 1,234,002$ Liabilities and Fund Balances Liabilities: Accounts payable $ 8,17227,696$ -$ 49,797$ Accrued salaries payable2,722 2,205 - 10,716 Other payables- - 10,000 16,485 Due to other funds- - 662,000 - Unearned revenue - Grants- - - 352 Total Liabilities 10,37730,418 672,000 77,350 Deferred Inflows of Resources Unavailable revenue - other - 32,258 - - Total Deferred Inflows of Resources 32,258- - - Fund balances: Restricted Debt service- 948,545 - - Grants- - - 440,066 Economic development1,069,003 1,819,610 - - Public safety- 716,586 - Capital projects- - 255,058 Public works- - - - Unassigned -- - - Total Fund balances 2,768,1551,069,003 255,058 1,156,652 Total Liabilities and Fund Balances $ 2,810,7901,099,421$ 927,058$ 1,234,002$ 60 Page 1 of 2 Capital Projects Funds 2000 Street Emergency Transportation & 1998 General Certificate of Maintenance Services Sales Total Special Other Obligation Obligation Sales Tax FundTax FundRevenue FundsInfrastructureBondsBonds $ 251,399664,776$ 5,025,595$ -$ -$ 20,923$ 105,374278,640 1,718,031 - - 8,770 164,136164,893 792,255 - - 12 -- 164,608 - - - -- - - - - $ 520,9091,108,309$ 7,700,489$ -$ -$ 29,705$ $ 15,958144,572$ 246,195$ -$ -$ -$ -- 15,643 - - - 3,4838,391 38,359 - - - -- 662,000 - - - -- 352 - - - 19,441152,963 962,549 - - - -- 32,258 - - - -- 32,258 - - - - - - -- 948,545 -- 440,066 - - - -- 2,888,613 - - - 501,468- 1,218,054 - - - -- 255,058 - - 29,705 -955,346 955,346 - - - -- - - - - 501,468955,346 6,705,682 - - 29,705 $ 520,9091,108,309$ 7,700,489$ -$ -$ 29,705$ 61 CITY OF LA PORTE COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS eptember 30, 2013 S 2004 Certificate of 2005 Certificate 2005 General 2006 Certificate Obligation of Obligation Obligation of Obligation BondsBondsBondsBonds Assets Cash and cash equivalents-$ -$ -$ 84$ Investments- - - - Receivables, net of allowance- - - 20 Intergovernmental receivable- - - - Due from other funds- - - 662,000 Total Assets $ --$ -$ 662,104$ Liabilities and Fund Balances Liabilities: Accounts payable $ --$ -$ -$ Accrued salaries payable- - - - Other payables- - - - Due to other funds- - - - Unearned revenue - Grants- - - - Total Liabilities -- - - Deferred Inflows of Resources Unavailable revenue - other - - - - Total Deferred Inflows of Resources -- - - Fund balances: Restricted Debt service- - - - Grants- - - - Economic development- - - - Public safety- - - - - - 662,104 Capital projects- Public works- - - - Unassigned -- - - Total Fund balances -- - 662,104 Total Liabilities and Fund Balances $ --$ -$ 662,104$ 62 Page 2 of 2 Capital Funds Project (continued) 2006 General 2007 Certificate 2010 Certificate Total Nonmajor Obligation of Obligation of Obligation Drainage Total Capital Governmental BondsBondsBondsImprovementsProjects FundsFunds $ --$ 1,823,913$ 356,682$ 2,201,602$ 7,227,197$ -- 12,378 149,503 170,651 1,888,682 -- 16 15,787 15,835 808,090 -- - - - 164,608 -- - - 662,000 662,000 $ --$ 1,836,307$ 521,972$ 3,050,088$ 10,750,577$ $ --$ 43,399$ 3,125$ 46,524$ 292,719$ -- - - - 15,643 -- 5,789 - 5,789 44,148 -- - - - 662,000 -- - - - 352 -- 49,188 3,125 52,313 1,014,862 -- - - - 32,258 -- - - - 32,258 -- - - - 948,545 -- - - - 440,066 -- - - - 2,888,613 -- - - - 1,218,054 -- 1,787,119 518,847 2,997,775 3,252,833 -- - - - 955,346 -- - - - - -- 1,787,119 518,847 2,997,775 9,703,457 $ --$ 1,836,307$ 521,972$ 3,050,088$ 10,750,577$ 63 CITY OF LA PORTE COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended September 30, 2013 Special Revenue Funds Tax Increment Hotel Motel Section 4b Reinvestment TaxSales TaxZoneGrant Fund Revenues Property Taxes $ --$ 1,542,391$ -$ Sales and use taxes 2,037,823- - - Other taxes -565,562 - - Fines and forfeitures -- - 221,008 Charges for services -- - 55,010 Intergovernmental -- - 568,052 Interest 3,8321,396 581 1,617 Miscellaneous 83,770 - 2,500 Total revenues 2,041,663570,728 1,542,972 848,187 Expenditures Current: General government 600,153344,743 573,446 206,319 Public safety -- - 356,611 Public Works -- - - Culture and recreation -- - 48,206 Capital outlay -- 1,231,449 248,980 Total Expenditures 600,153344,743 1,804,895 860,116 Excess (deficiency) of revenues over expenditures 1,441,510225,985 (261,923) (11,929) Other Financin Sources (Uses) g Transfers in -- - - Transfers out (1,105,061)(187,500) - - Total other financin sources (uses) g (1,105,061)(187,500) - - Net change in fund balances 336,44938,485 (261,923) (11,929) Fund balances - beinnin gg 2,431,7061,030,518 516,981 1,168,581 Fund balances - endin g $ 2,768,1551,069,003$ 255,058$ 1,156,652$ 64 Page 1 of 2 Capital Projects funds 2000 Street Emergency Transportation & 1998 General Certificate of Maintenance Services Sales Total Special Other Obligation Obligation Sales Tax FundTax FundRevenue FundsInfrastructureBondsBonds $ --$ 1,542,391$ -$ -$ -$ 960,5681,018,912 4,017,303 - - - -- 565,562 - - - -- 221,008 - - - -- 55,010 - - - -- 568,052 - - - 1451,438 9,009 - 44 26 -- 6,278 - - - 960,7131,020,350 6,984,613 - 44 26 -- 1,724,661 - - - 680,162- 1,036,773 - - - -380,450 380,450 - - - -- 48,206 - - - 26,256471,591 1,978,276 - - - 706,418852,041 5,168,366 - - - 254,295168,309 1,816,247 - 44 26 -- - - - - -- (1,292,561) (67) (32,138) - -- (1,292,561) (67) (32,138) - 254,295168,309 523,686 (67) (32,094) 26 247,173787,037 6,181,996 67 32,094 29,679 $ 501,468955,346$ 6,705,682$ -$ -$ 29,705$ 65 CITY OF LA PORTE COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended September 30, 2013 2005 2006 2004 Certificate of Certificate of 2005 General Certificate of Obligation Obligation Obligation Obligation BondsBondsBondsBonds Revenues Property Taxes $ --$ -$ -$ Sales and use taxes -- - - Other taxes -- - - Fines and forfeitures -- - - Charges for services -- - - Intergovernmental -- - - Interest -300 1 104 Miscellaneous -- - 130,500 Total revenues -300 1 130,604 Expenditures Current: General government -- - - Public safety -- - - Public Works -- - - Culture and recreation -- - - Capital outlay -- - - Total Expenditures -- - - Excess (deficiency) of revenues over expenditures -300 1 130,604 Other Financin Sources (Uses) g Transfers in 30,832- - - Transfers out -(257,571) (895) (78,662) Total other financin sources (uses) g 30,832(257,571) (895) (78,662) Net change in fund balances 30,832(257,271) (894) 51,942 Fund balances - beinnin gg (30,832)257,271 894 610,162 Fund balances - endin g $ --$ -$ 662,104$ 66 Page 2 of 2 Capital Projects Funds (continued) 2007 2006 General Certificate of 2010 Certificate Total Nonmajor Obligation Obligation of Obligation Drainage Total Capital Governmental BondsBondsBondsImprovementsProjects FundsFunds $ --$ -$ -$ -$ 1,542,391$ -- - - - 4,017,303 -- - - - 565,562 -- - - - 221,008 -- - 265,362 265,362 320,372 -- - - - 568,052 86387 1,783 570 3,778 12,787 -- - - 130,500 136,778 86387 1,783 265,932 399,640 7,384,253 -- - - - 1,724,661 -- - - - 1,036,773 -- - 74,524 74,524 454,974 -48,700 - - 48,700 96,906 21,503- 150,011 - 171,514 2,149,790 21,50348,700 150,011 74,524 294,738 5,463,104 (20,640)(48,613) (148,228) 191,408 104,902 1,921,149 -- - - 30,832 30,832 (18,258)(19,946) - - (407,537) (1,700,098) (18,258)(19,946) - - (376,705) (1,669,266) (38,898)(68,559) (148,228) 191,408 (271,803) 251,883 38,89868,559 1,935,347 327,439 3,269,578 9,451,574 $ --$ 1,787,119$ 518,847$ 2,997,775$ 9,703,457$ 67 (This page intentionally left blank.) 68 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE – BUDGET TO ACTUAL Debt Service Fund Special Revenue Fund Capital Projects Fund 69 CITY OF LA PORTE, TEXAS PECIAL REVENUE FUND - DEBT SERVICE FUND S SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended September 30, 2013 With comparative actual totals for the year ended September 30, 2012 2013 Variance Positive / Final BudgetActual(Negative)2012 Revenues Property taxes $ 1,652,9431,463,150$ 189,793$ 2,382,173$ Investment earnings 4,73611,000 (6,264) 27,489 Total Revenues 1,657,6791,474,150 183,529 2,409,662 Expenditures Principal2,170,000 2,365,000 (195,000) 2,170,000 Interest and other charges 1,385,2041,576,270 191,066 1,519,769 Bond issuance costs -- - 150,897 Total Expenditures 3,750,2043,746,270 (3,934) 3,840,666 Revenues over (under) expenditures (2,092,525)(2,272,120) 179,595 (1,431,004) Other Financin Sources (Uses) g Issuance of debt -- - 9,435,000 Premium on bonds -- - 364,013 Payment to escrow agent -- - (9,638,626) Transfers in 1,492,4881,492,446 42 1,248,271 Total Other Financin Sources (Uses) g 1,492,4881,492,446 42 1,408,658 Net change in fund balance (600,037)(779,674) 179,637 (22,346) Fund balances, beginning of year 3,090,5363,090,536 - 3,112,882 Fund balances at ear end $ 2,490,4992,310,862$ 179,637$ 3,090,536$ y 70 CITY OF LA PORTE, TEXAS SPECIAL REVENUE FUND - HOTEL MOTEL TAX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended September 30, 2013 With comparative actual totals for the year ended September 30, 2012 2013 Variance Positive / Final BudgetActual(Negative)2012 Revenues Other taxes $ 565,562425,000$ 140,562$ 499,431$ Investment earnings 1,396(104)1,500 1,829 Miscellaneous 3,769- 3,769 5,970 Total Revenues 570,727426,500 144,227 507,230 Exenditures p Current: General government 344,74333,042377,785 312,361 Total Exenditures p 344,743377,785 33,042 312,361 Revenues over (under) expenditures 225,98448,715 177,269 194,869 Other Financin Sources (Uses) g Transfers (out) (187,500)(187,500) - (39,000) Total Other Financin Sources (Uses) g (187,500)(187,500) - (39,000) Net change in fund balance 38,484(138,785) 177,269 155,869 Fund balances, beginning of year 1,030,5191,030,519 - 874,650 Fund balances at ear end $ 1,069,003891,734$ 177,269$ 1,030,519$ y 71 CITY OF LA PORTE, TEXAS PECIAL REVENUE FUND - SECTION 4B SALES TAX S SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended September 30, 2013 With comparative actual totals for the year ended September 30, 2012 2013 Variance Positive / Final BudgetActual(Negative)2012 Revenues Sales and Use Tax $ 2,037,8231,727,397$ 310,426$ 1,948,484$ Investment Earnings 3,8328323,000 4,299 Total Revenues 2,041,6631,730,397 311,266 1,952,783 Expenditures Current: General government 600,153187,233787,386 170,877 Total Expenditures 600,153787,386 187,233 170,877 Revenues over (under) expenditures 1,441,510943,011 498,499 1,781,906 Other Financing Sources (Uses) Transfers in -- - 154,914 Transfers (out) (1,105,061)(1,105,061) - (1,630,338) Total Other Financing Sources (Uses) (1,105,061)(1,105,061) - (1,475,424) Net change in fund balance 336,449(162,050) 498,499 306,482 Fund balances, beginning of year 2,431,7062,431,706 - 2,125,224 Fund balances at year end $ 2,768,1552,269,656$ 498,499$ 2,431,706$ 72 CITY OF LA PORTE, TEXAS PECIAL REVENUE FUND - TAX INCREMENT REINVESTMENT ZONE S SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended September 30, 2013 With comparative actual totals for the year ended September 30, 2012 2013 Variance Positive / Final BudgetActual(Negative)2012 Revenues Property Taxes $ 1,542,391-$ 1,542,391$ 1,633,547$ Investment Earnings 581- 581 635 Total Revenues 1,542,972- 1,542,972 1,634,182 Expenditures Current: General government 573,446(536,496)36,950 380,270 Capital outlay 1,231,449(25,695)1,205,754 1,095,875 Total Expenditures 1,804,8951,242,704 (562,191) 1,476,145 Net change in fund balance (261,923)(1,242,704) 980,781 158,037 Fund balances, beginning of year 516,981516,981 - 358,944 Fund balances at year end $ 255,058(725,723)$ 980,781$ 516,981$ 73 CITY OF LA PORTE, TEXAS PECIAL REVENUE FUND - GRANT FUND S SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended September 30, 2013 With comparative actual totals for the year ended September 30, 2012 2013 Variance Positive / Final BudgetActual(Negative)2012 Revenues Fines and forfeitures $ 221,008123,000$ 98,008$ 244,315$ Charges for services 55,01051,0104,000 27,339 Intergovernmental 568,052(5,664,446)6,232,498 1,224,849 Investment earnings 1,6171,617- 1,846 Miscellaneous 2,5001,650850 - Total Revenues 848,1876,360,348 (5,512,161) 1,498,349 Expenditures Current: General Government 206,3195,937,4506,143,769 166,535 Public Safety 356,61156,149412,760 255,438 Public Works -- - 592,469 Culture and recreation 48,20619,72467,930 58,804 Capital Outlay 248,98080,720329,700 241,638 Total Expenditures 860,1166,954,159 6,094,043 1,314,884 Net change in fund balance (11,929)(593,811) 581,882 183,465 Fund balances, beginning of year 1,168,5811,168,581 - 985,116 Fund balances at year end $ 1,156,652574,770$ 581,882$ 1,168,581$ 74 CITY OF LA PORTE, TEXAS PECIAL REVENUE FUND - STREET MAINTENANCE SALES TAX FUND S SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended September 30, 2013 With comparative actual totals for the year ended September 30, 2012 2013 Variance Positive / Final BudgetActual(Negative)2012 Revenues Sales and use tax $ 1,018,912863,699$ 155,213$ 974,242$ Investment earnings 1,4394391,000 2,018 Total Revenues 1,020,351864,699 155,652 976,260 Expenditures Current: Public Works 380,450(380,450)- 92,309 Capital Outlay 471,591728,4091,200,000 743,141 Total Expenditures 852,0411,200,000 347,959 835,450 Net change in fund balance 168,310(335,301) 503,611 140,810 Fund balances, beinnin of ear ggy 787,036787,036 - 646,226 Fund balances at ear end y $ 955,346451,735$ 503,611$ 787,036$ 75 CITY OF LA PORTE, TEXAS PECIAL REVENUE FUND - EMERGENCY SERVICES SALES TAX FUND S SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended September 30, 2013 With comparative actual totals for the year ended September 30, 2012 2013 Variance Positive / Final BudgetActual(Negative)2012 Revenues Sales and use tax $ 960,568863,699$ 96,869$ 887,849$ Investment earnings 1441,000 (856) - Total Revenues 960,712864,699 96,013 887,849 Expenditures Current: Public Safety 680,162776,234 96,072 640,675 Capital outlay 26,25627,263 1,007 - Total Expenditures 706,418803,497 97,079 640,675 Net change in fund balance 254,29461,202 193,092 247,174 Fund balances, beginning of year 247,174247,174 - - Fund balances at year end $ 501,468308,376$ 193,092$ 247,174$ 76 CITY OF LA PORTE, TEXAS CAPITAL PROJECTS FUND - 1998 GENERAL OBLIGATION BONDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended September 30, 2013 With comparative actual totals for the year ended September 30, 2012 2013 Variance Positive / Final BudgetActual(Negative)2012 Revenues Investment Earnings $ 45-$ 45$ 533$ Total Revenues 45- 45 533 Expenditures Current: Capital Outlay -- - 969,051 Total Expenditures -- - 969,051 Revenues over (under) expenditures 45- 45 (968,518) Other Financing Sources (Uses) Transfers (out) (32,138)(32,093) (45) - Net change in fund balance (32,093)(32,093) - (968,518) Fund balances, beginning of year 32,09332,093 - 1,000,611 Fund balances at year end $ --$ -$ 32,093$ 77 CITY OF LA PORTE, TEXAS CAPITAL PROJECTS FUND - 2000 CERTIFICATE OF OBLIGATION BONDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended September 30, 2013 With comparative actual totals for the year ended September 30, 2012 2013 Variance Positive / Final BudgetActual(Negative)2012 Revenues Investment earnings $ 26-$ 26$ 64$ Total Revenues 26- 26 64 Net change in fund balance 26- 26 64 Fund balances, beginning of year 29,67929,679 - 29,615 Fund balances at year end $ 29,70529,679$ 26$ 29,679$ 78 CITY OF LA PORTE, TEXAS CAPITAL PROJECTS FUND - 2004 CERTIFICATE OF OBLIGATION BOND S SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended September 30, 2013 With comparative actual totals for the year ended September 30, 2012 2013 Variance Positive / Final BudgetActual(Negative)2012 Revenues Investment earnings $ 299-$ 299$ 639$ Total Revenues 299- 299 639 Expenditures Capital Outlay -- - 306,145 Total Expenditures -- - 306,145 Net change in fund balance 299- 299 (305,506) Other Financing Sources (Uses) Transfers (out) (257,571)(257,571) - - Total Other Financing Sources (Uses) (257,571)(257,571) - - Net change in fund balance (257,272)(257,571) 299 (305,506) Fund balances, beginning of year 257,272257,272 - 562,778 Fund balances at year end $ -(299)$ 299$ 257,272$ 79 CITY OF LA PORTE, TEXAS CAPITAL PROJECTS FUND - 2005 GENERAL OBLIGATION BOND S SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended September 30, 2013 With comparative actual totals for the year ended September 30, 2012 2013 Variance Positive / Final BudgetActual(Negative)2012 Revenues Investment earnings $ 3-$ 3$ -$ Total Revenues 3- 3 - Other Financing Sources (Uses) Transfers (out) (895)(894) (1) - Total Other Financing Sources (Uses) (895)(894) (1) - Net change in fund balance (892)(894) 2 - Fund balances, beginning of year 892892 - 892 Fund balances at year end $ -(2)$ 2$ 892$ 80 CITY OF LA PORTE, TEXAS CAPITAL PROJECTS FUND - 2006 CERTIFICATE OF OBLIGATION BOND S SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended September 30, 2013 With comparative actual totals for the year ended September 30, 2012 2013 Variance Positive / Final BudgetActual(Negative)2012 Revenues Investment earnings $ 103-$ 103$ -$ Miscellaneous 130,500- 130,500 - Total Revenues 130,603- 130,603 - Other Financing Sources (Uses) Transfers (out) (78,662)(78,662) - - Net change in fund balance 51,941(78,662) 130,603 - Fund balances, beginning of year 610,163610,163 - 610,163 Fund balances at year end $ 662,104531,501$ 130,603$ 610,163$ 81 CITY OF LA PORTE, TEXAS CAPITAL PROJECTS FUND - 2006 GENERAL OBLIGATION BONDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended September 30, 2013 With comparative actual totals for the year ended September 30, 2012 2013 Variance Positive / Final BudgetActual(Negative)2012 Revenues Investment earnings $ 87-$ 87$ 134$ Total Revenues 87- 87 134 Expenditures Current: Culture and recreation 48,70048,700 - 51,037 Total Expenditures 48,70048,700 - 51,037 Revenues over (under) expenditures (48,613)(48,700) 87 (50,903) Other Financin Sources (Uses) g Transfers (out) (19,946)(19,949) 3 - Total Other Financin Sources (Uses) g (19,946)(19,949) 3 - Net change in fund balance (68,559)(68,649) 90 (50,903) Fund balances, beinnin of ear ggy 68,55968,559 - 119,462 Fund balances at ear end $ -(90)$ 90$ 68,559$ y 82 CITY OF LA PORTE, TEXAS CAPITAL PROJECTS FUND - 2007 CERTIFICATE OF OBLIGATION BONDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended September 30, 2013 With comparative actual totals for the year ended September 30, 2012 2013 Variance Positive / Final BudgetActual(Negative)2012 Revenues Investment earnings $ 862-$ 862$ 454$ Total Revenues 862- 862 454 Expenditures Capital outlay 21,50323,391 1,888 98,850 Total Expenditures 21,50323,391 1,888 98,850 Revenues over (under) expenditures (20,641)(23,391) 2,750 (98,396) Other Financin Sources (Uses) g Transfers (out) (18,258)(18,258) - (281,133) Total Other Financin Sources (Uses) g (18,258)(18,258) - (281,133) Net change in fund balance (38,899)(41,649) 2,750 (379,529) Fund balances, beinnin of ear ggy 38,89938,899 - 418,428 Fund balances at ear end $ -(2,750)$ 2,750$ 38,899$ y 83 CITY OF LA PORTE, TEXAS CAPITAL PROJECTS FUND - 2010 CERTIFICATE OF OBLIGATION BOND S SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended September 30, 2013 With comparative actual totals for the year ended September 30, 2012 2013 Variance Positive / Final BudgetActual(Negative)2012 Revenues Investment earnings $ 1,784-$ 1,784$ 3,669$ Total Revenues 1,784- 1,784 3,669 Expenditures Capital outlay 150,011- (150,011) 1,093,957 Total Expenditures 150,011- (150,011) 1,093,957 Net change in fund balance (148,227)- (148,227) (1,090,288) Fund balances, beinnin of ear ggy 1,935,3461,935,346 - 3,025,634 Fund balances at ear end $ 1,787,1191,935,346$ (148,227)$ 1,935,346$ y 84 CITY OF LA PORTE, TEXAS CAPITAL PROJECTS FUND - DRAINAGE IMPROVEMENTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended September 30, 2013 With comparative actual totals for the year ended September 30, 2012 2013 Variance Positive / Final BudgetActual(Negative)2012 Revenues Charges for services $ 265,362266,000$ (638)$ 265,734$ Investment earnings 570350 220 507 Total Revenues 265,932266,350 (418) 266,241 Expenditures Current: Public Works 74,524250,000 175,476 63,534 Total Expenditures 74,524250,000 175,476 63,534 Net change in fund balance 191,40816,350 175,058 202,707 Fund balances, beinnin of ear ggy 327,439327,439 - 124,732 ear end Fund balances at $ 518,847343,789$ 175,058$ 327,439$ y 85 (This page intentionally left blank.) 86 SUPPLEMENTARY INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES General Fund 87 CITY OF LA PORTE, TEXAS General Fund Schedule of Revenues - Budget and Actual For the Year Ended September 30, 2013 Variance with Final Budget Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) Taxes: Ad valorem: Current12,900,588$ 12,900,588$ 14,342,315$ 1,441,727$ Delinquent150,000150,00068,852(81,148) Industrial Payments10,530,37610,530,37611,107,848577,472 Total ad valorem23,580,964 23,580,964 25,519,015 1,938,051 Penaty annterest170,000170,000218,903 48,903 ldi Sales Taxes3,454,794 3,454,794 4,075,652 620,858 Other Taxes60,000 60,000 59,115 (885) Francse Fees: hi Electrical1,312,105 1,312,105 1,293,468 (18,637) Gas150,000 150,000 110,098 (39,902) Telephone382,500 382,500 256,677 (125,823) Cable201,897 201,897 434,437 232,540 Commercial Solidwaste85,000 85,000 89,340 4,340 Total Franchise Fees2,131,502 2,131,502 2,184,020 52,518 Charges for Services: Public safety service fees1,425,491 1,425,491 1,488,067 62,576 Health and sanitation service fees2,147,600 2,147,600 2,205,284 57,684 Culture and recreation fees1,509,233 1,509,233 1,542,701 33,468 Other service fees262,600 262,600 300,013 37,413 Total Charges for Services5,344,924 5,344,924 5,536,065 191,141 Licenses and permits: Building permits31,850 31,850 344,991 313,141 Licenses344,125 344,125 23,139 (320,986) Total Licenses and permits375,975 375,975 368,130 (7,845) Investment income71,500 71,500 49,204 (22,296) Fines and forfeitures1,445,220 1,445,220 1,665,755 220,535 Miscellaneous40,000 40,000 289,067 249,067 Total revenues36,674,879$ 36,674,879$ 39,964,926$ 3,290,047$ 88 CITY OF LA PORTE, TEXAS Page 1 of 4 General Fund Schedule of Expenditures - Budget and Actual For the year ended September 30, 2013 Variance with Final Budet g Budeted AmountsActualPositive g OriinalFinalAmounts(Neative) gg General Government Administration: Emergency Management: Persona servces196,897 205,267 204,923 344 li$$$$ Suppes7,878 9,378 8,998 380 li Oter servces an carges89,209 98,769 93,490 5,279 hidh Total Emergency Management293,984 313,414 307,411 6,003 Genera Amnstraton: ldiii Persona servces392,247 396,565 396,091 474 li Suppes4,150 4,575 4,288 287 li Oter servces an carges87,295 85,880 83,234 2,646 hidh Tota Genera Amnstraton483,692 487,020 483,613 3,407 lldiii Communty Investment: i Suppes44,000 38,990 34,019 4,971 li Oter servces an carges128,500 131,704 108,999 22,705 hidh Tota Communty Investment172,500 170,694 143,018 27,676 li Human Resources: Persona servces263,488 264,349 227,663 36,686 li Suppes2,400 3,700 3,409 291 li Oter servces an carges162,877 165,577 160,866 4,711 hidh Tota Human Resources428,765 433,626 391,938 41,688 l ormaton Tecnoogy In fihl servces397,005 495,149 489,152 5,997 Persona li es113,934 115,046 112,724 2,322 Supp li er servces an carges1,160,249 1,069,137 1,009,700 59,437 Ot hidh Inormaton Tecnoogy1,671,188 1,679,332 1,611,576 67,756 Tota lfihl Muncpa Court: iil Persona servces622,487 635,048 605,046 30,002 li Suppes an materas18,250 18,750 18,429 321 lidil Oter servces an carges138,575 138,075 112,163 25,912 hidh Tota Muncpa Court779,312 791,873 735,638 56,235 liil Purcasng: hi Persona servces228,439 219,844 205,644 14,200 li Suppes2,878 2,878 1,534 1,344 li Oter servces an carges12,082 24,582 22,402 2,180 hidh Tota Purcasng243,399 247,304 229,580 17,724 lhi Cty Secretary: i Persona servces338,471 342,395 333,312 9,083 li Suppes an materas11,900 12,271 12,042 229 lidil Oter servces an carges60,068 59,068 25,185 33,883 hidh Tota Cty Secretar 413,734410,439 370,539 43,195 liy Lega: l Persona servces19,420 20,844 20,844 - li Oter servces an carges185,000 195,000 159,436 35,564 hidh Tota Lega 215,844204,420 180,280 35,564 ll Cty Counc: iil Persona servces23,252 29,252 28,936 316 li Suppes an materas3,100 3,729 1,852 1,877 lidil Oter servces an carges23,827 23,827 17,374 6,453 hidh Cty Counc 56,80850,179 48,162 8,646 Tota liil Total Administration 4,809,6494,737,878 4,501,755 307,894 89 CITY OF LA PORTE, TEXAS Page 2 of 4 General Fund Schedule of Expenditures - Budget and Actual For the year ended September 30, 2013 Variance with Final Budget Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) General Government (continued) Finance: Accountng: i Persona servces634,372 650,057 649,856 201 li$$$$ Suppes10,500 10,500 8,897 1,603 li Oter servces an carges101,538 99,538 90,094 9,444 hidh Tota Accountng746,410 760,095 748,847 11,248 li Nonepartmenta: dl Persona servces811,015 909,463 908,552 911 li Suppes5,100 5,300 5,297 3 li Oter servces an carges1,324,024 1,008,714 834,392 174,322 hidh Tota Nonepartmenta 1,923,4772,140,139 1,748,241 175,236 ldl Tax Oce: ffi Persona servces249,423 262,081 261,722 359 li Suppes an materas10,800 10,800 8,939 1,861 lidil Other services and charges197,636 192,636 186,810 5,826 Tota Tax Oce457,859 465,517 457,471 8,046 lffi Total Finance 3,149,0893,344,408 2,954,559 194,530 Plannin and Enineerin: ggg annng an Engneerng: P lidii Persona servces959,388 962,507 897,170 65,337 li Suppes12,664 12,934 10,135 2,799 li Oter servces an carges55,680 105,277 82,124 23,153 hidh Capital Outlay20,000 19,730 18,674 1,056 Tota Pannng an Engneerng1,047,732 1,100,448 1,008,103 92,345 llidii Inspecton: i Persona servces752,548 773,263 704,125 69,138 li Suppes23,240 23,240 20,438 2,802 li Oter servces an carges157,682 158,483 97,017 61,466 hidh Tota Inspecton933,470 954,986 821,580 133,406 li Total Planning and Engineering 2,055,4341,981,202 1,829,683 225,751 Total General Government 10,014,17210,063,488 9,285,997 728,175 Public Safety Fire Fre Preventon: ii Persona servces274,473 280,673 280,406 267 li Suppes7,744 7,744 6,695 1,049 li Oter servces an carges15,851 15,851 15,158 693 hidh Total Fire Prevention298,068 304,268 302,259 2,009 Fre suppresson: ii Persona servces1,374,517 1,396,354 1,379,042 17,312 li Suppes40,480 40,480 38,710 1,770 li Oter servces an carges244,663 244,663 213,559 31,104 hidh Capta Outay- - - ill Tota Fre Suppresson1,659,660 1,681,497 1,631,311 50,186 lii Emergency meca servces: dili Personal services2,327,297 2,350,751 2,141,858 208,893 Suppes143,664 149,664 149,262 402 li Oter servces an carges122,302 139,802 138,843 959 hidh Capta Outay- 7,260 - 7,260 ill Tota Emergency Servces2,593,263 2,647,477 2,429,963 217,514 li Total Fire 4,633,2424,550,991 4,363,533 269,709 90 CITY OF LA PORTE, TEXAS Page 3 of 4 General Fund Schedule of Expenditures - Budget and Actual For the year ended September 30, 2013 Variance with Final Budet g Budeted Amounts ActualPositive g OriinalFinalAmounts(Neative) gg Public Safet (continued) y Police Poce Amnstraton: lidiii Persona servces733,187 752,691 675,556 77,135 li$$$$ Suppes20,919 27,919 27,607 312 li Oter servces an carges249,182 238,782 226,418 12,364 hidh Tota Poce Amnstraton1,003,288 1,019,392 929,581 89,811.00 llidiii Poce Patro: lil Persona servces4,638,194 4,728,927 4,724,034 4,893 li Suppes280,243 297,743 253,400 44,343 li Oter servces an carges695,753 700,253 609,731 90,522 hidh Tota Poce Patro 5,726,9235,614,190 5,587,165 139,758 llil Crmna Investgaton: iilii Persona servces1,767,635 1,878,024 1,878,110 86 li() Suppes62,998 62,998 59,651 3,347 li Oter servces an carges102,994 88,894 85,131 3,763 hidh Tota Crmna Investgaton1,933,627 2,029,916 2,022,892 7,024 liilii Support Servces: i Persona servces2,145,385 2,263,141 2,261,807 1,334 li Suppes91,566 76,566 61,920 14,646 li er servces an carges98,638 94,138 57,937 36,201 Ot hidh Support Servces2,335,589 2,433,845 2,381,664 52,181 Tota li Total Police 11,210,07610,886,694 10,921,302 288,774 Total Public Safet 15,843,31815,437,685 15,284,835 558,483 y Public Works Puc Wors Amnstraton: blikdiii Persona servces288,014 292,493 288,984 3,509 li Suppes an materas4,969 5,394 5,260 134 lidil Oter servces an carges60,832 60,407 33,233 27,174 hidh Tota Puc Wors Amnstraton353,815 358,294 327,477 30,817 lblikdiii Streets: Persona servces1,565,015 1,610,239 1,567,479 42,760 li Suppes156,447 168,111 164,403 3,708 li Oter servces an carges704,329 705,429 678,589 26,840 hidh Capta Outay75,000 62,236 54,482 7,754 ill Streets2,500,791 2,546,015 2,464,953 81,062 Tota l Total Public Works 2,904,3092,854,606 2,792,430 111,879 Health and Sanitation Resenta sowaste: idillid Persona servces1,185,813 1,168,101 1,077,996 90,105 li Suppes261,997 269,997 269,603 394 li Oter servces an carges846,036 886,036 881,483 4,553 hidh Capta Outay- - - ill Tota Resenta Sowaste2,293,846 2,324,134 2,229,082 95,052 lidillid Commerca sowaste: illid Oter servces an carges19,000 19,000 15,259 3,741 hidh Tota Commerca Sowaste19,000 19,000 15,259 3,741 lillid Total Health and Sanitation 2,343,1342,312,846 2,244,341 98,793 91 CITY OF LA PORTE, TEXAS Page 4 of 4 General Fund Schedule of Expenditures - Budget and Actual For the year ended September 30, 2013 Variance with Final Budget Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) Culture & Recreation Mantenance: Par ki Persona servces1,225,660 1,262,038 1,261,375 663 li$$$$ Suppes an materas122,873 132,533 127,611 4,922 lidil er servces an carges752,513 757,313 728,697 28,616 Ot hidh Capta outay28,000 18,340 13,305 5,035 ill Tota Par Mantenance2,129,046 2,170,224 2,130,988 39,236 lki Recreaton: i Persona servces496,086 478,096 452,881 25,215 li es40,068 40,068 32,627 7,441 Supp li Oter servces an carges175,735 183,887 168,396 15,491 hidh Tota Recreaton711,889 702,051 653,904 48,147 li Speca Servces: ili Persona servces369,534 378,625 354,554 24,071 li es23,583 24,498 24,170 328 Supp li Oter servces an carges50,210 50,295 49,553 742 hidh Tota Speca Servces443,327 453,418 428,277 25,141 lili Pars Amnstraton: kdiii Persona Servces499,143 540,561 536,665 3,896 li Suppes5,700 6,700 6,636 64 li Oter Servces an Carges25,905 24,905 17,269 7,636 hidh Tota Pars Amnstraton530,748 572,166 560,570 11,596 lkdiii Go Course - Cu House lflb Persona Servces395,733 405,874 394,618 11,256 li Suppes58,060 58,060 57,545 515 li Oter Servces an Carges74,979 74,979 63,498 11,481 hidh Tota Go Course528,772 538,913 515,661 23,252 llf Go Course - Mantenance lfi Persona Servces544,378 559,254 550,707 8,547 li Supplies155,800 152,900 144,517 8,383 Oter Servces an Carges148,000 169,400 145,356 24,044 hidh Go Course848,178 881,554 840,580 40,974 Tota llf Total Culture & Recreation 5,318,3265,191,960 5,129,980 188,346 Total General Fund $ 36,423,25935,860,585$ 34,737,583$ 1,685,676$ 92 COMBINING FINANCIAL STATEMENTS 93 (This page intentionally left blank.) 94 Internal Service Funds Internal Service Funds account for the financing of goods or services provided by one City department for another. Motor Pool Fund – This fund is used to account for the cost of operating and maintaining automotive and other equipment used by City departments and the purchase of general government vehicles (those not used by proprietary fund activities). Service charges are billed to departments on a monthly basis to cover all expenses of the fund. Technology Fund – This fund is used to account for the cost of operating and maintaining computer software and equipment used by City departments. Service charges are billed to departments on a monthly basis to cover all expenses of the fund. Insurance Fund – This fund is used to account for the provision of group health coverage for all City employees and others eligible under the City’s plan, including employee dependents and retirees. 95 CITY OF LA PORTE, TEXAS COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS September 30, 2013 Vehicle Employee Replacement Health FundInsuranceTechnology Total Assts Current assets: Cash and cash equivalents2,336,049$ 1,351,606$ 708,253$ 4,395,908$ Investments979,150 566,523 296,863 1,842,536 Accounts Receivables, net- 119,927 - 119,927 Other receivables1,284 745 389 2,418 Inventories33,516 - - 33,516 Total current assets 2,038,8013,349,999 1,005,505 6,394,305 Non-current assets: Capital Assets: Equipment and Furniture14,398,005 - 205,945 14,603,950 Less Accumulated depreciation(7,663,003) - (188,075) (7,851,078) Total non-current assets -6,735,002 17,870 6,752,872 Total assets 2,038,80110,085,001 1,023,375 13,147,177 Liabilities Current Liabilities: Accounts payable17,414 5,164 - 22,578 Salaries payable23,998 - - 23,998 Claims and judgments- 480,584 - 480,584 Total current liabilities41,412 485,748 - 527,160 Non-current liabilities: Compensated absences50,979 - - 50,979 Total non-current liabilities50,979 - - 50,979 Total liabilities 485,74892,391 - 578,139 Net Position Investment in capital assets6,735,002 - 17,870 6,752,872 Unrestricted3,257,6081,553,0531,005,5055,816,166 Total net position $ 1,553,0539,992,610$ 1,023,375$ 12,569,038$ 96 CITY OF LA PORTE, TEXAS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION INTERNAL SERVICE FUNDS For the Year Ended September 30, 2013 Vehicle Employee Replacement Health FundInsuranceTechnologyTotal Revenues Charges for services2,350,403$ 5,163,719$ 169,083$ 7,683,205$ Total operating revenues 5,163,7192,350,403 169,083 7,683,205 Operating Expenses Personal services661,426 194,096 - 855,522 Supplies and materials272,600- - 272,600 Other expenses- 4,987,271 - 4,987,271 Depreciation952,574 - 8,573 961,147 Total operating expenses 5,181,3671,886,600 8,573 7,076,540 Operating income (loss)463,803 (17,648) 160,510 606,665 Non-Operating Revenues (Expenses) Interest and investment revenue5,031 1,787 1,325 8,143 Gain (loss) on disposal of capital assets(77,361) - - (77,361) Total non-operating revenue (expenses) 1,787(72,330) 1,325 (69,218) Income (loss) before transfers391,473 (15,861) 161,835 537,447 Capital contributions(25,100) - - (25,100) Transfers in- 479,646 - 479,646 Transfers out(13,236) - - (13,236) Change in net position353,137 463,785 161,835 978,757 Total net position - beginning 1,089,2689,639,473 861,540 11,590,281 Total net position - ending $ 1,553,0539,992,610$ 1,023,375$ 12,569,038$ 97 CITY OF LA PORTE, TEXAS STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended September 30, 2013 Vehicle Replacement Employee Health FundInsuranceTechnologyTotal Cash Flows from Operating Activities Receipts from customers and users2,350,655$ 5,163,719$ 168,985$ 7,683,359$ Disbursed for personnel services(691,379) (193,703) - (885,082) Disbursed for goods and services(269,737) (5,007,701) - (5,277,438) Net cash provided (used) by operating activities (37,685)1,389,539 168,985 1,520,839 Cash Flows from NonCapital Financing Activities Transfers from other funds- 479,646 - 479,646 Transfers to other funds(13,236) - - (13,236) Operating grants and contributions25,100 - - 25,100 Net cash provided by (used by) noncapital financing activities 479,64611,864 - 491,510 Cash Flows from Capital and Related Financing Activities Acquisition and construction of capital assets, net of disposals(1,996,615) - - (1,996,615) Net cash used by capital and related financing activities -(1,996,615) - (1,996,615) Cash Flows from Investing Activities Purchase of investments- (206,876) (95,879) (302,755) Sale of investments75,002 - - 75,002 Interest received5,031 1,787 1,325 8,143 Net cash provided by (used by) investing activities (205,089)80,033 (94,554) (219,610) Net increase in cash and equivalents(515,179) 236,872 74,431 (203,876) Cash and equivalents, beginning of year 1,114,7342,851,228 633,822 4,599,784 Cash and equivalents, at end of year $ 1,351,6062,336,049$ 708,253$ 4,395,908$ Unrestricted cash and equivalents2,336,049$ 1,351,606$ 708,253$ 4,395,908$ $ 1,351,6062,336,049$ 708,253$ 4,395,908$ Reconciliation of operating income to net cash provided by operating activities Operating income (loss)463,803$ (17,648)$ 160,510$ 606,665$ Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation952,574 - 8,573 961,147 (Increase) decrease in accounts receivable98 393 (98) 393 (Increase) decrease in inventory154 - - 154 Increase (decrease) in claims and judgments payable- (18,862) - (18,862) Increase (decrease) in accounts payable1,097 (939) - 158 Increase (decrease) in salaries payable1,766 - - 1,766 Increase (decrease) in compensated absences(29,953) - - (29,953) Increase (decrease) in deferred revenue (629) (629) Net cash provided by operating activities $ (37,685)1,389,539$ 168,985$ 1,520,839$ 98 STATISTICAL SECTION (Unaudited) 99 (This page intentionally left blank.) 100 Unaudited Statistical Section This part of the City of La Porte, Texas’ comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government's overall financial health. Contents Page Financial Trends 102 These schedules contain trend information to help the reader understand how the government's financial performance and well-being have changed over time. Revenue Capacity 112 These schedules contain information to help the reader assess the government's most significant local revenue sources, the property tax. Debt Capacity 118 These schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future. Demographic and Economic Information 123 These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. Operating Information 125 These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 101 CITY OF LA PORTE, TEXAS NET POSITION BY COMPONENT Last Ten Fiscal Years Amounts in (000's) (Accrual Basis of Accounting) 20042005200620072008 Governmental Activities Net investment in capital assets32,753$ 28,933$ 28,424$ 27,529$ 24,923$ Restricted5,771 6,642 7,363 13,317 16,567 Unrestricted12,998 19,370 18,984 19,986 18,985 Total governmental activities net position$ 54,94551,522$ 54,771$ 60,832$ 60,475$ Business-type Activities Net investment in capital assets25,996$ 26,590$ 29,642$ 29,481$ 35,483$ Restricted3,663 3,407 2,1862,1852,188 Unrestricted2,647 1,265 3,3973,2963,799 Total business-type activities net position $ 31,26232,306$ 35,225$ 34,962$ 41,471$ Primary Government Net investment in capital assets58,749$ 55,523$ 58,066$ 57,010$ 60,406$ Restricted9,434 10,050 9,549 15,501 18,755 Unrestricted15,645 20,635 22,380 23,281 22,785 Total primary government net position$ 86,20783,828$ 89,996$ 95,793$ 101,945$ 102 Exhibit 1 20092010201120122013 $ 35,19532,667$ 37,324$ 46,814$ 49,304$ 18,10816,170 8,060 8,7288,902 13,90416,838 26,859 21,62122,530 $ 67,20765,676$ 72,243$ 77,163$ 80,736$ $ 40,59540,206$ 37,606$ 37,567$ 36,347$ 1,3531,4606805592,096 2,4732,0274,1993,7912,301 $ 44,08244,032$ 42,485$ 41,917$ 40,744$ $ 75,79072,874$ 74,930$ 84,381$ 85,651$ 19,56817,523 8,740 9,287 10,998 15,93219,311 31,058 25,412 24,831 $ 111,290109,707$ 114,728$ 119,080$ 121,480$ 103 CITY OF LA PORTE, TEXAS CHANGES IN NET POSITION Last Ten Fiscal Years Amounts in (000's) (Accrual basis of accounting) Fiscal Year 20042005200620072008 Expenses Governmental activities: General government10,488$ 7,411$ 7,349$ 8,411$ 10,056$ Public safety11,947 10,368 11,603 12,153 16,267 Public works1,268 5,165 5,210 3,668 4,348 Health, welfare and sanitation 1,907 1,887 1,862 2,488 2,465 Culture and recreation4,106 3,718 3,580 3,120 4,004 Interest on long-term debt690 864 1,226 1,353 1,695 Total governmental activities expenses 29,41330,406 30,830 31,193 38,836 Business-type activities: Water Services6,256 6,478 6,845 6,548 6,631 Sewer services1,896 1,820 1,894 2,087 2,247 Airport143 157 123 124 156 Bay Forest Golf Course1,223 1,243 1,285 1,311 1,362 Sylvan Beach Convention Center194 212 215 218 225 Total business-type activities expenses 9,9099,712 10,361 10,288 10,621 Total primary government expenses$ 39,32240,118$ 41,191$ 41,481$ 49,458$ Program Revenue Governmental activities: Charges for services General government528$ 670$ 1,002$ 2,007$ 2,725$ Public safety1,442 1,498 1,333 435 591 Public works106 24 - - - Health, welfare and sanitation 464 1,430 1,771 1,856 1,889 Culture and recreation1,157 461 430 418 418 Operating grants and contributions576 2,640 1,031 992 4,648 General government- - - - - Public safety- - - - - Public works- - - - - Culture and recreation- - - - - Capital grants and contributions General government- - - - 235 Culture and recreation- - - - - Total governmental activities program revenues 6,7234,273 5,567 5,708 10,505 Business-type activities: Charges for services Water Services4,156 4,500 5,439 4,790 6,133 Sewer services2,493 2,591 2,842 2,764 3,670 Airport33 33 36 42 65 Bay Forest Golf Course1,022 966 956 911 1,032 Sylvan Beach Convention Center181 164 163 189 161 Capital grants and contributions- - - 1,061 2,338 Total business-type activities program revenues 8,2547,884 9,435 9,758 13,398 Total primary government program revenues $ 14,97712,158$ 15,003$ 15,465$ 23,903$ Net (Expense)/Revenue Governmental activities(26,132)$ (22,689)$ (25,263)$ (25,486)$ (28,331)$ Business-type activities(1,828) (1,655) (926) (530) 2,777 Total primary government net expense$ (24,344)(27,960)$ (26,189)$ (26,016)$ (25,554)$ 104 Exhibit 2 Page 1 of 2 20092010201120122013 $ 11,49711,443$ 14,575$ 14,091$ 13,854$ 17,10915,495 16,306 17,375 17,765 4,6018,095 6,280 3,784 4,451 2,5212,379 2,453 2,424 2,328 6,4834,223 6,033 6,361 5,722 1,5571,527 1,871 1,268 1,385 43,76943,162 47,518 45,303 45,505 5,7214,833 5,721 7,691 8,206 2,6742,603 2,674 2,932 2,599 181183 181 213 210 1,4851,437 1,485 - - -26 - - - 10,0629,082 10,061 10,836 11,015 $ 53,83152,244$ 57,579$ 56,139$ 56,520$ $ 3,1163,061$ 712$ 844$ 646$ 1,5931,681 3,506 3,128 3,314 1,067- 330 268 266 1,8421,849 2,046 2,197 2,204 661448 1,474 1,385 1,444 1,0045,165 - - - -- 8 240 3 -- 611 431 433 -- 428 766 20 -- 107 78 393 -1,260 - - - -- 1 1 - 9,28313,463 9,223 9,338 8,723 3,8504,520 6,267 6,0555,694 3,3073,363 3,535 3,601 3,420 5353 56 59 56 1,0021,067 - - - -2 - - - 8601,786 1,442 859 1,398 9,07310,791 11,300 10,574 10,569 $ 18,35624,255$ 20,523$ 19,913$ 19,292$ $ (34,485)(29,699)$ (38,295)$ (35,965)$ (36,783)$ (989)1,710 1,239 (262) (448) $ (35,474)(27,990)$ (37,056)$ (36,226)$ (37,231)$ 105 CITY OF LA PORTE, TEXAS CHANGES IN NET POSITION Last Ten Fiscal Years Amounts in (000's) (Accrual basis of accounting) Fiscal Year 20042005200620072008 General Revenues and Other Changes in Net Position Governmental activities: Property taxes10,868$ 11,062$ 11,816$ 12,197$ 13,066$ Industrial payments7,277 6,896 6,992 7,660 8,189 Sales and use taxes3,038 3,263 3,460 4,068 5,736 Franchise taxes1,683 1,719 1,886 1,987 2,004 Investment earnings542 376 720 1,875 2,387 Other revenues444 495 857 1,213 89 Gain/(Loss) on sale of capital assets- - - - - Transfers(254) 685 382 (3,910) 76 Total governmental activities 24,49623,598 26,112 25,089 31,546 Business-type activities: Investment earnings121 89 165 300 343 Other revenues889 874 827 695 - Gain/(Loss) on sale of capital assets- (6) - (16) - (76) Transfers254 (685) (382) 3,910 Total business-type activities 2721,264 611 4,889 267 Total primary government $ 24,76824,862$ 26,723$ 29,978$ 31,813$ Change in Net Position Governmental activities(2,534)$ 1,807$ 850$ (396)$ 3,215$ Business-type activities(564) (1,383) (315) 4,359 3,044 Total primary government $ 424(3,098)$ 535$ 3,962$ 6,259$ 106 Exhibit 2 Page 2 of 2 20092010201120122013 $ 16,39113,683$ 17,742$ 17,251$ 17,782$ 10,5557,959 10,732 10,47111,108 5,8035,7875,9148,2678,718 2,1652,1602,1712,3122,184 1,78368814384 294 11593164168601 -- - 1,940(167) (779)(3,533) (1,000) 334 720 34,89527,975 36,017 40,887 41,029 73199 39 12 8 -- - 16 36 -- - - - 3,533 779 1,000 (334) (720) 8523,732 1,040 (306) (676) $ 35,74731,707$ 37,057$ 40,581$ 40,353$ $ 410(1,725)$ (2,278)$ 4,920$ 4,245$ 5,442(137)2,278(569)(1,123) $ 2733,717$ (0)$ 4,352$ 3,122$ 107 CITY OF LA PORTE, TEXAS FUND BALANCES, GOVERNMENTAL FUNDS Last ten Fiscal Years Amounts in (000's) (Modified Accrual Basis of Accounting) Fiscal Year 20042005200620072008 General Fund Nonspendable69$ 69$ 70$ 83$ 105$ Committed- - - - - Assigned372 550 126 134296 Unassigned7,093 8,644 11,582 14,49414,405 Total general fund $ 9,2637,534$ 11,778$ 14,711$ 14,806$ All Other Governmental Funds Restricted5,351$ 6,236$ 6,705$ 9,318$ 8,489$ Committed6,442 16,488 18,814 18,660 19,933 Assigned- - - - - Unassigned- - - - - Total all other governmental funds $ 22,72411,793$ 25,519$ 27,979$ 28,423$ 108 Exhibit 3 20092010201120122013 $ 135102$ 139$ 94$ 125$ -- - - 3,500 1991519630104 13,75812,27419,11923,83923,856 $ 12,56014,059$ 19,353$ 23,964$ 27,585$ $ 7,6445,813$ 14,084$ 12,573$12,194$ 20,33117,944 9,079 6,553 5,586 7- - - - -- - (31) - $ 27,98323,757$ 23,163$ 19,096$ 17,780$ 109 CITY OF LA PORTE, TEXAS CHANGES IN FUND BALANCE, GOVERNMENTAL FUNDS Last ten Fiscal Years Amounts in (000's) (Modified Accrual Basis of Accounting) Fiscal Year 20042005200620072008 Revenues Taxes $ 24,04622,949$ 25,688$ 28,919$ 30,060$ Donations 30- - 30 - Harris County Joint Ventures 1,752- - - - Licenses and permits 531320 683 920 560 Fines and forfeits 678555 848 1,244 1,726 Charges for services 3,2332,947 3,888 3,967 3,958 Intergovernmental 1,113576 1,174 716 4,755 Interest 631325 1,709 2,117 1,883 Miscellaneous 18433 163 77 90 Total Revenues 32,19727,705 34,154 37,990 43,033 Expenditures General government7,971 6,849 7,237 7,696 8,418 Public safety10,415 10,533 11,072 11,769 15,610 Public works2,361 2,430 2,360 2,407 2,909 Health and sanitation1,759 1,808 1,814 1,973 2,479 Culture and recreation3,245 3,068 3,011 3,103 3,470 Debt service: Principal1,490 1,330 1,195 1,235 1,655 Interest700 820 1,180 1,428 1,758 Bond issuance cost- 211 195 154 - Capital outlay3,259 8,566 6,550 10,013 6,351 Total Expenditures 35,61531,200 34,613 39,779 42,650 Excess of revenues over (under) expenditures (3,418)(3,495) (459) (1,789) 383 Other Financing Sources (Uses) General obligation bonds issued 16,587- 6,965 8,075 - Refunding bonds issued -- - - - Premium on refunding bonds issued -- 191 38 - Payment to refunded bond escrow agent 3,2223,469 6,056 4,197 7,625 Transfers in (3,774)(3,791) (7,533) (5,148) (7,501) Transfers out 9042 21 32 Sale of capital assets -- - - - Total other financing sources (uses) 16,077(322) 5,769 7,183 156 Net cange nunaances ,7 5,,5 5, 5 hifdbl$(381)$1269$310$393$38 Debt service as a percentage of noncapital expenditures 7.8%8.7%9.2%9.5%9.4% 110 Exhibit 4 20092010201120122013 $ 36,68234,930$ 35,76138,35339,835 -- - - - -- - - - 476642 313 465 368 1,8031,833 1,724 1,758 1,887 6,0844,470 5,680 5,957 6,009 9894,868 917 1,239 568 263610 193 129 76 125105 242 36 426 46,42247,458 44,829 47,938 49,169 9,7889,869 10,289 10,462 11,043 14,61213,859 15,688 15,752 16,322 2,8196,664 3,118 3,439 3,247 2,2332,087 2,182 2,226 2,244 5,0483,817 5,314 5,261 5,227 1,7551,695 1,740 2,170 2,365 1,3881,572 1,871 1,520 1,385 200- - 151 - 10,84315,557 8,714 8,583 5,500 48,68655,120 48,916 49,563 47,333 (2,263)(7,662) (4,088) (1,625) 1,835 6,265- - - - 4,295- - 9,435 - 225- - 364 - (4,410)14,232 - (9,639) - 9,158(12,119) 4,248 2,711 3,884 (10,545)137 (5,012) (2,644) (3,630) 5- 6,822 1,941 215 4,9932,250 6,057 2,169 469 5, ,7 5,7 , $(412)$229$191$44$2304 8.3%8.8%9.0%9.4%9.0% 111 CITY OF LA PORTE, TEXAS ASSESSED VALUE AND ACTUAL VALUE OF TAXABLE PROPERTY Last Ten Fiscal Years (unaudited) Less Tax Exempt Less Other Fiscal Tax Personal Real Exemptions and Total Taxable YearYearReal PropertyPropertyPropertyAbatementsAssessed Value 200420031,546,560,410$ 279,687,470$ -$ 265,840,970$ 1,560,406,910$ 200520041,601,433,200 311,721,280 - 278,265,540 1,634,888,940 200620051,777,351,563 325,549,640 - 407,734,605 1,695,166,598 200720061,861,821,075 350,191,031 - 419,779,423 1,792,232,683 200820072,007,113,146 372,331,715- 428,955,092 1,950,489,769 200920082,237,095,319 469,916,389 - 502,091,647 2,204,920,061 201020092,261,046,846 582,963,159 - 515,111,496 2,328,898,509 201120102,055,914,368 672,621,147 - 514,928,797 2,213,606,718 201220112,079,843,021 720,515,678 - 535,441,621 2,264,917,078 201320122,080,199,179 797,558,553 - 536,721,284 2,341,036,448 Source: Harris County Certified Tax Rolls and Corrections. 112 Exhibit 5 Assessed Value Estimated as a Percent of Total Direct Actual Taxable Actual Taxable Tax RateValueValue $ 1,560,406,9100.710000$ 100% 1,634,888,9400.710000 100% 1,695,166,5980.710000 100% 1,792,232,6830.710000 100% 1,950,489,7690.710000 100% 2,204,920,0610.710000 100% 2,328,898,5090.710000 100% 2,213,606,7180.710000 100% 2,264,917,0780.710000 100% 2,341,036,4480.710000 100% 113 CITY OF LA PORTE, TEXAS PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS Last Ten Fiscal Years 20042005200620072008 City of La Porte by fund: General0.57500$ 0.61100$ 0.61100$ 0.61200$ 0.61900$ Debt service0.13500 0.09900 0.09900 0.09800 0.09100 Total Direct Rates 0.710000.710000.710000.710000.71000 Harris County Flood Control District0.03318 0.03322 0.03241 0.03106 0.03086 Harris County0.39990 0.39986 0.40239 0.39239 0.38923 Port of Houston Authority0.01670 0.01474 0.01302 0.01437 0.01773 Harris County Board of Education0.00630 0.00629 0.00629 0.00585 0.00584 Hospital District0.19020 0.19020 0.19216 0.19216 0.19216 La Porte I.S.D.1.68000 1.73400 1.73400 1.30500 1.32500 San Jacinto Jr. College District0.13910 0.14537 0.14537 0.14537 0.16341 Total Direct and Overlapping Rates $ 3.233683.17538$ 3.23564$ 2.79620$ 2.83423$ Tax rates per $100 of assessed valuation Source: Harris County Appraisal District 114 xhibit 6 E 20092010201120122013 $ 0.619000.61900$ 0.60500$ 0.60500$ 0.64000$ 0.091000.09100 0.10500 0.10500 0.07000 0.710000.710000.710000.710000.71000 0.029230.02922 0.02809 0.02809 0.02827 0.388050.39224 0.39117 0.40021 0.41455 0.020540.01636 0.01856 0.01952 0.01716 0.006580.00605 0.00658 0.00662 0.00636 0.192160.19216 0.19216 0.18216 0.17000 1.325001.32500 1.35500 1.33000 1.33000 0.176280.17080 0.18560 0.18560 0.18560 $ 2.847842.84183$ 2.88716$ 2.86220$ 2.86194$ 115 CITY OF LA PORTE, TEXAS Exhibit 7 PRINCIPAL PROPERTY TAXPAYERS Current Year and 10 Years Ago 20132004 % of% of TaxableTaxableTaxableTaxable AssessedAssessedAssessedAssessed Property Tax PayerValueRankValueProperty Tax PayerValueRankValue Conoco Phillips Co55,003,611$ 12.35%Oxy Vinyls LP49,186,150$ 13.15% Equistar Chemicals LP48,080,698 22.05%Conoco Phillips, Inc.46,876,580 23.00% Wilson Supply44,744,569 31.91%Equistar Chemicals LP45,239,660 32.90% Granite Underwood Dist. Ctr LP42,146,335 41.80%BP Solvay 37,068,510 42.38% Oxy Vinyls LP40,374,180 51.72%PPG Industries35,723,480 52.29% Ineos USA LLC37,999,780 61.62%Attofina Petrochemicals26,149,430 61.69% Underwood Distibution Ctr. LP31,000,000 71.32%Centerpoint Energy23,112,520 71.48% The Dow Chemical Company22,403,065 80.96%Dow Chemicals20,718,750 81.34% Total Petrochemicals22,377,356 90.96%DuPont Dow Elastomers15,866,540 91.02% Dow Chemical22,010,369 100.94%Calpine Corporation 13,005,700 100.83% Subtotal366,139,963 15.64%312,947,320 20.06% Other Taxpayers1,974,896,485 84.36%1,247,459,590 79.94% Total2,341,036,448$ 100.00%1,560,406,910$ 100.00% Source: City of La Porte Tax Assessor-Collector's records. 116 CITY OF LA PORTE, TEXAS Exhibit 8 PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Fiscal Years Collected within the Fiscal Fiscal Year of the Levy Total Collections to Date YearTaxes LeviedCollections in Endedfor thePercentageSubsequentPercentage Sept 30,Fiscal YearAmountof LevyYearsAmountof Levy 200411,178,351$ 10,829,202$ 96.9%303,605$ 11,132,807$ 99.6% 200511,669,47311,334,57297.1%278,011 11,612,58399.5% 200612,080,35111,755,12197.3%276,535 12,031,65699.6% 200712,703,85012,418,873 97.8%244,758 12,663,63199.7% 200813,857,46713,476,872 97.3%352,207 13,829,07999.8% 200915,654,93715,377,149 98.2%229,682 15,606,83199.7% 201016,542,48316,309,818 98.6%139,511 16,449,32999.4% 201115,871,49815,599,930 98.3%203,730 15,803,66099.6% 201216,080,91115,860,664 98.6%144,568 16,005,23299.5% 201316,621,36116,518,207 99.4%- 16,518,20799.4% 117 CITY OF LA PORTE, TEXAS RATIOS OF OUTSTANDING DEBT BY TYPE Last Ten Fiscal Years (dollars in thousands, except per capita) Governmental ActivitiesBusiness-Type Activities GeneralCertificatesGeneral FiscalObligationof ObligationLimited RevenueObligationOther * YearBondsBondsTax BondsBondsBondsObligations 20045,430$ 2,400$ 5,400$ 625$ 585$ 6,904$ 200511,925 11,050 5,4005001456,500 200612,610 16,405 5,130 375 - 8,680 200712,070 24,055 4,860 250 - 7,958 200811,475 23,265 4,590 125 - 7,210 200910,870 22,445 4,320 - - 6,443 201011,665 26,350 4,050 - - 5,660 201110,940 25,605 3,780 - - 4,813 201217,050 20,150 1,620 - - 3,945 201316,875 18,905 1,350 - - 3,117 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. See Demographic and Economic Statistics for personal income and population data. * - Includes premium on bonds 118 Exhibit 9 TotalPercentage Primaryof PersonalPer Income GovernmentCapita $ N/A63321,344$ N/A1,02835,520 N/A1,24043,200 N/A1,41349,193 N/A1,32046,665 N/A1,24144,078 N/A1,29847,725 N/A1,32245,138 N/A1,21242,765 N/A1,16540,248 119 CITY OF LA PORTE, TEXAS xhibit 10 E RATIO OF GENERAL BONDED DEBT TO TAXABLE VALUE, GENERAL BONDED DEBT PER CAPITA, AND TAXABLE VALUE OF ALL PROPERTY Last Ten Fiscal Years (dollars in thousands, except per capita) Ratio of Net Percentage of General Less Debt Bonded Debt Personal Per Capita Fiscal Obligation Certificates Service Net Bonded to Assessed (2)(2) YearTax YearBondsof ObligationFundsDebtValueIncome 2004200313,230$ 2,400$ 1,797$ 13,833$ 0.9%N/A382$ 2005200417,325 11,050 1,584 26,791 1.6%N/A345 2006200517,740 16,405 1,705 32,440 1.9%N/A772 2007200616,930 24,055 1,814 39,171 2.2%N/A928 2008200716,065 23,265 1,926 37,404 1.9%N/A1,105 2009200815,190 22,445 2,000 35,635 1.6%N/A1,051 2010200915,715 26,350 2,15139,914 1.7%N/A965 2011201014,720 25,605 3,11837,207 1.7%N/A1,152 2012201118,670 20,150 3,11335,707 1.6%N/A1,090 2013201218,225 18,905 2,49034,640 1.5%N/A1,165 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. (2) Population data can be found in demographic and economic statistics table. 120 CITY OF LA PORTE, TEXAS Exhibit 11 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT September 30, 2013 (dollars in thousands, except per capita) Estimated EstimatedShare of DebtPercentageOverlapping Governmental UnitOutstandingApplicableDebt Debt repaid with property taxes Harris County2,640,417,190$ 0.82%21,651,421$ Harris County Department of Education7,605,000 0.82%62,361 Harris County Flood Control District96,470,000 0.82%791,054 a Harris County Toll Road - Toll Road Bonds 0.82%3,546,828432,540,000 La Porte ISD200,635,000 37.88%76,000,538 Port of Houston Authority731,969,397 0.82%6,002,149 San Jacinto Jr. College District298,015,568 6.15%18,327,957 Total Net Overlapping Debt4,407,652,155$ 126,382,308 b City of La Porte direct debt 100%37,242,50037,242,500 Total direct and overlapping debt163,624,808$ a Harris County Toll Road debt is considered self-supporting. b Approximately $16,152,236 of the City's outstanding debt is self-supporting Source: Texas Municipal Reports Percentages are based on total property values 121 CITY OF LA PORTE, TEXAS Exhibit 12 PLEDGED-REVENUE COVERAGE Last Ten Fiscal Years Debt Service Revenues Available Gross Operating Fiscal for Debt (1)(2) Expenses YearRevenues ServicePrincipalInterestTotalCoverage 20045,836,221$ 5,125,635$ 710,586$ 580,000$ 71,293$ 651,293$ 1.1 20056,193,451 5,259,943 933,508 565,000 43,161 608,161 1.5 20067,438,016 5,389,783 2,048,233 270,000 111,712 381,712 5.4 20076,722,774 5,681,548 1,041,226 262,500 106,828 369,328 2.8 20088,916,777 5,653,497 3,263,280 387,500 91,605 479,105 6.8 20097,920,114 5,743,725 2,176,389 387,500 76,350 463,850 4.7 20107,822,294 6,514,3431,307,951 525,000216,458741,458 1.8 20118,569,767 6,458,4832,111,284 585,000104,488689,488 3.1 20128,383,1626,641,4821,741,680 605,00088,150693,150 2.5 20137,940,5807,256,098684,482 625,00073,556698,556 1.0 (1) Total revenues including interest (2) Total operating expenses less depreciation 122 CITY OF LA PORTE, TEXAS Exhibit 13 DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Fiscal Years Fiscal YearPer Capita EndedPopulationPersonalPersonalMedianSchoolUnemployment (2)(2)(3)(4)(5) (1) IncomeIncomeAgeEnrollmentRate Sept. 30, 200433,712N/AN/AN/A7,6295.7% 200534,538N/AN/AN/A7,8085.3% 200634,825N/AN/AN/A7,7864.7% 200735,362N/AN/AN/A7,8894.4% 200835,518N/AN/AN/A7,9405.2% 200936,779N/AN/AN/A7,8309.4% 201033,800N/AN/A337,7818.2% 201134,138N/AN/A337,7329.0% 201235,280N/AN/A337,7516.3% 201334,553N/AN/A337,6296.3% Data sources: (1) Estimated population provided by city staff (2) Personal income and per capita personal income is currently unavailable (3) Median age data prior to 2010 is not available, medium age provided by 2010 Census (4) School enrollment provided by La Porte Independent School District (5) Unemployment rates provided from the Bureau of Labor Statistics 123 CITY OF LA PORTE, TEXAS Exhibit 14 PRINCIPAL EMPLOYERS Current Year and Seven Years Ago 20132006 PercentagePercentage of Total Cityof Total City EmployeesEmploymentEmployeesEmployment EmployerEmployer La Porte Independent School District1,083 7.87%La Porte ISD1,000 5.29% City of La Porte380 2.76%E.I. DuPont De Nemours & Co.5803.07% International Plant Svcs LLC376 2.73%City of La Porte3681.95% Sulzer Turbo Svcs Houston Inc330 2.40%Fumanite Worldwide3341.77% A&L Industrial Services Inc300 2.18%A & L Industrial Services Inc3001.59% CCC Group Inc300 2.18%CCC Group, Inc3001.59% Aker Kvaerner Industrial Constructors, Inc Evergreen Envmtl Svcs LLC275 2.00%2501.32% Amber LP250 1.82%James H. Jackson Industries Inc2501.32% Cat-Spec Ltd250 1.82%Occidental Chemical Corp.1750.92% Contech Control Services Inc250 1.82%Intercontinental Terminal Co.1600.85% Total3,794 27.56%Total3,717 19.67% Source: Centerpoint Energy Note: This list includes companies within the City limits of La Porte and within the industrial districts. Note: Employement data prior to 2006 was not available 124 CITY OF LA PORTE, TEXAS xhibit 15 E FULL-TIME EMPLOYEES BY FUNCTION/PROGRAM Last Nine Fiscal Years 200520062007200820092010201120122013 General Government 76768079787990 90 88 Public Safety: 138135 147 142 143 144 144 151 152 Public Works 3232 32 32 32 32 32 32 30 Health and Sanitation 2122 21 22 22 22 24 24 23 Culture and recreation 4547 44 45 45 46 46 46 42 Water services 2726 25 25 25 25 25 25 25 Sewer Services 2020 20 20 20 20 20 20 20 Golf Course13 13 12 12 12 12 - - - Sylvan Beach Convention Center3 3 4 4 4 - - - - Total 375374 385 381 381 380 381 388 380 Note: Data not availabe for fiscal years prior to 2005. 125 CITY OF LA PORTE, TEXAS OPERATING INDICATORS BY FUNCTION / PROGRAM Last Ten Fiscal Years Fiscal Year 20042005200620072008 Function / Program Police Physical arrests2,0002,3302,4652,4892,642 Tickets processed6,5936,8778,2129,65215,352 Fire Number of calls answered1,3431,7472,0281,6031,799 Inspections500500N/A600320 Highways and streets Street resurfacing (linear feet)33,80022,97527,83522,10019,887 Potholes repaired5245313211,260996 Sanitation Cu. Yds. Garbage collected29,67530,02230,79529,27929,282 Cu. Yds Trash collected54,87549,14049,14052,25048,136 Culture and recreation Fitness center admissions84,35381,86870,55862,82862,245 Water Number of water meters11,18911,39111,59211,74311,913 Average daily consumption 3.84.13.93.84.0 (millions of gallons) Water main breaks 299437483467455 Wastewater Average daily sewage treatment 4.03.52.83.93.2 (thousands of gallons) Golf Course Number of Paid Rounds Played38,90134,96132,73132,43335,839 Source: Various City departments Notes: N/A - Data not available 126 xhibit 16 E 20092010201120122013 2,7372,5382,3542,3112,205 16,09816,60314,61913,22113,861 1,4091,5591,4831,1951,219 600690725812950 23,55938,36560,47269,58013,520 1,0121,2364651,173271 29,89429,64227,96142,58930,625 78,90048,36845,77854,64132,137 53,40178,11864,98964,27964,587 11,96812,01512,06112,12912,234 4.03.94.64.34.0 498417666311379 2.83.72.83.32.7 36,009 31,27134,84834,03832,257 127 CITY OF LA PORTE, TEXAS CAPITAL ASSET STATISTICS BY FUNCTION / PROGRAM Last Ten Fiscal Years Fiscal Year 20042005200620072008 Function / Program Public Safety Police Station11111 Police Officers7272737474 Reserve Officers55562 Fire Stations44444 Sanitation Collection trucks1414141414 Highways and streets Streets (miles)164211217211295 Streetlights1,6652,1921,8031,8042,400 Traffic signals33333 Culture and recreation Parks acreage463337339347347 Parks1921212222 Swimming pools66666 Recreation Centers11111 Senior Center11111 Water and Sewer Water mains (miles)231165168176178 Fire hydrants1,8001,8001,8001,0761,161 Sanitary Sewers (miles)187187187189189 Storm sewers (miles)8989929292 Source: City Departments 128 Exhibit 17 20092010201120122013 11111 7475757474 12226 44444 1414141212 126126126125297 2,3872,3872,4152,4152,415 75566 356356356188188 2121212222 65555 14433 11111 180180181182183 1,1681,1791,1861,1991,226 191191192192192 92959760112 129 REQUEST FOR FISCAL AFFAIRS COMMITTEE AGENDA ITEMREQUEST FOR FISCAL AFFAIRS COMMITTEE AGENDA ITEM March 10, 2014March 10, 2014AppropriationAppropriation Agenda Date Requested:Agenda Date Requested: N/A N/A M. Dolby M. Dolby Source of Funds:Source of Funds: Requested By:Requested By: Account Number:Account Number: Administration Administration Department: Amount Budgeted:Amount Budgeted: Report:Resolution:Resolution:Ordinance:Ordinance: Amount Requested:Amount Requested: Exhibits: Budgeted Item:Budgeted Item:YESYESNONO SUMMARY & RECOMMENDATIONSSUMMARY & RECOMMENDATIONS The finance office is requesting to continue the current contract with Whitley Penn to perform the September 30, The finance office is requesting to continue the current contract with Whitley Penn to perform the September 30, 2014 year end audit. Whitley Penn has performed the city2014 year end audit. Whitley Penn has performed the citys year end for the past three years and offer stability s year end for the past three years and offer stability and continuity to the City of La Porte. Based on performance and experience, we believe they will do an excellent and continuity to the City of La Porte. Based on performance and experience, we believe they will do an excellent job. The City appreciates the size of the firm, the qualifications and availability of professional personnel assigned to The City appreciates the size of the firm, the qualifications and availability of professional personnel assigned to our audit. They have assisted staff in preparing an award winning CAFR. Staff believes the firm is well qualified our audit. They have assisted staff in preparing an award winning CAFR. Staff believes the firm is well qualified to perform the financial audit of the City. The audit fee proposed by Whitley Penn is $67,500. There are sufficient to perform the financial audit of the City. The audit fee proposed by Whitley Penn is $67,500. There are sufficient funds budgeted for the audit fees. At this time, staff recommends we proceed with a one year engagement with funds budgeted for the audit fees. At this time, staff recommends we proceed with a one year engagement with Whitley Penn for financial auditing services for the City of La Porte for fiscal year 2014.Whitley Penn for financial auditing services for the City of La Porte for fiscal year 2014. The RFP for audit services was bid out in 2011 with a three year contract with two additional renewable years.The RFP for audit services was bid out in 2011 with a three year contract with two additional renewable years. The RFP for audit services was bid out in 2011 with a three year contract with two additional renewable years.The RFP for audit services was bid out in 2011 with a three year contract with two additional renewable years. Action Required by the Fiscal Affairs Committee:Action Required by the Fiscal Affairs Committee: Receive and review audit contract renewal.Receive and review audit contract renewal. Approved for Fiscal Affairs Committee AgendaApproved for Fiscal Affairs Committee Agenda Corby D. Alexander, City ManagerCorby D. Alexander, City ManagerDateDate REQUEST FOR FISCAL AFFAIRS COMMITTEE AGENDA ITEMREQUEST FOR FISCAL AFFAIRS COMMITTEE AGENDA ITEM March 10, 2014March 10, 2014AppropriationAppropriation Agenda Date Requested:Agenda Date Requested: N/A N/A M. Dolby M. Dolby Source of Funds:Source of Funds: Requested By:Requested By: Account Number:Account Number: Finance Finance Department: Amount Budgeted:Amount Budgeted: Report:Resolution:Resolution:Ordinance:Ordinance: Amount Requested:Amount Requested: Exhibits: Budgeted Item:Budgeted Item:YESYESNONO 1. Contract1. Contract 2. Bid Tabulation2. Bid Tabulation SUMMARY & RECOMMENDATIONSSUMMARY & RECOMMENDATIONS The City of La Porte currently collects franchise payments for electrical services, cable services, telephone The City of La Porte currently collects franchise payments for electrical services, cable services, telephone services, natural gas services and solid waste services. Staff prepared an RFP for audit services of the various services, natural gas services and solid waste services. Staff prepared an RFP for audit services of the various franchise fees that are collected. The RFP was sent out in November with responses due in December. The City franchise fees that are collected. The RFP was sent out in November with responses due in December. The City received four proposals for audit service on the various franchises. The staff reviewed the four proposals and received four proposals for audit service on the various franchises. The staff reviewed the four proposals and determined that MuniServices was the best candidate of the four proposals. The City of La Porte currently has on determined that MuniServices was the best candidate of the four proposals. The City of La Porte currently has on ongoing relationship with MuniServices for hotel tax administration and auditing and also for review of the sales ongoing relationship with MuniServices for hotel tax administration and auditing and also for review of the sales tax collections. MuniServices has proposed a percentage based fee for this scope of services. The fee would be equal to a MuniServices has proposed a percentage based fee for this scope of services. The fee would be equal to a percentage of uncollected fees identified through the audit, thus there will be no expenditure of funds necessary.percentage of uncollected fees identified through the audit, thus there will be no expenditure of funds necessary. Action Required by the Fiscal Affairs Committee:Action Required by the Fiscal Affairs Committee: Receive and review the franchise fee audit contract.Receive and review the franchise fee audit contract. Receive and review the franchise fee audit contract.Receive and review the franchise fee audit contract. Approved for Fiscal Affairs Committee AgendaApproved for Fiscal Affairs Committee Agenda Corby D. Alexander, City ManagerCorby D. Alexander, City ManagerDateDate MuniServices, LLC Consultant Services Agreement 1. Us. We are MuniServices, LLC, a Delaware limited City of La Porte liability company, and a wholly owned subsidiary of Attn: Michael Dolby, Finance Director 0®±³¥®«¨® 2¤¢®µ¤±¸ !²²®¢¨ ³¤²Ǿ )¢ȁǿ ¶¨³§ ®¥ϭ¨¢¤ ³ 604 W. Fairmont Pkwy 7625 N. Palm Avenue, Suite 108, Fresno, California La Porte, TX 77571 93711. In this Agreement we are referred to as Email: dolbym@laportetx.gov Facsimile: 281.470.4018 company, RDS, to assist us with work. Sometimes we 3. Our Services and your payment. We will provide you with the services listed in If you need to contact us a short list of helpful contacts is attached as Attachment 3. fees listed in that same Attachment. If we are providing more than one Service, each service will If you are sending us a notice required by this have a separate attachment and will be labeled Agreement, send it to: Attachment 1-1, 1-2, etc. MuniServices, LLC 4. What our Services do not include. Attn: Legal Department We do not provide to you or any third-parties any 7625 N. Palm Avenue, Suite 108 legal advice or services. We also do not provide tax Fresno, CA 93711 advice to you or third parties. Also we cannot and Email: legal@muniservices.com therefore do not establish: the tax rates due from Facsimile: 559.312.2852 taxpayers; and the penalties and fees that are assessed against taxpayers (though we will calculate When providing notice to us, you must also provide a these amounts for you as part of the Services once copy of the notice to: PRA General Counsel, 120 you have established the rates). We also do not Corporate Blvd., Suite 100, Norfolk, VA 23502. All determine either the amount of refunds or the proper notices, including notices of address changes, government account(s) that taxpayer receipts shall provided under this Agreement are deemed received be deposited into. on the third day after mailing if sent by regular mail, or the next day if sent overnight delivery. We do not 5. Term of this Agreement. accept notices by email or facsimile. Notice of rate The initial term of this Agreement begins on changes or distribution changes must be sent by __________________________, 2014 ¢¤±³¨ϭ¨¤£ ¬ ¨«ȁ with an initial period of three years from the Effective Date. Thereafter this Agreement will automatically 2. You. renew for two successive one year terms (each a You are the City of La Porte. You are a municipal corporation of the State of Texas. In this Agreement other in writing of its intent not to renew 90 days prior to the end of the initial term or any Renewal are sending you a notice required by this Agreement, Term. There are some other ways this Agreement we will send it to: can end and those are found in Article I of the General Provisions, Attachment 2. La Porte, TX FF 021214 1 6. General Provisions. The parties are also bound by the General Provisions as set forth in Attachment 2 of this Agreement, which are by this reference incorporated into this Agreement. If something in this Agreement contradicts the General Provisions, then what is said in this Agreement governs rather than the General Provisions. The Parties are signing this Agreement on the Effective Date indicated in Section 5 above. MuniServices, LLC City of La Porte, a Municipal Corporation By: __ ______________________________________ By: ________________________________________ Lisa Broussard VP Central Operations Name: _____________________________________ Title: _______________________________________ ATTEST: _____________________________________________ City Clerk La Porte, TX FF 021214 2 ATTACHMENT 1 Franchise Fee Compliance Review Services Article 1-Objectives and Methods -´¨3¤±µ¨¢¤² ´£¤±²³ £² ³§ ³ ³§¤ #¨³¸ ²¤¤ª² ³® ±¤³ ¨ °´ «¨ϭ¨¤£ ¯±®¥¤²²¨® « ¨£¤¯¤£¤³ ϭ¨±¬ ³® ¢®£´¢³ review of the telephone, electrical, cable, and natural gas franchise collections and subsequent payments to the City of La Porte. This audit is i regulation under which fees are due to the City, identify any instances of non-compliance, and assist the City with the recovery of any amounts found to be due as a result of such non-compliance. The Reviews are an agreed-upon procedures review of the franchisee fee payments made to the City from the utility provider(s). The taxes and/or fees to be audited will include: a.Telephone b.Electric c.Cable and d.Natural Gas Article 2-Scope of Work Franchise Fee Compliance Review MuniServices shall ¯±®µ¨£¤ «« ±¤°´¨±¤£ « ¡®±Ǿ ¬ ³¤±¨ «²Ǿ ¤°´¨¯¬¤³ £ ³± ²¯®±³ ³¨® ²´¥ϭ¨¢¨¤³ ³® ¢®¬¯«¤³¤ ³§¤ ¡¤ £´¤ȁ 7§¨«¤ ³§¤ ²¯¤¢¨ϭ¨¢ ±¤¢®±£²Ǿ ¢®¬¯«¨ ¢e issues, and payment calculations to be reviewed will vary among the ¤«¤¢³±¨¢ £ ³´± « ¦ ² ´³¨«¨³¨¤²Ǿ ¢ ¡«¤ ®± µ¨£¤® ²¤±µ¨¢¤²Ǿ £ ¢¤±³¨ϭ¨¢ ³¤£ ³¤«¤¯§®¤ ¯±®µ¨£¤±² MuniServices audits on behalf of clients, the general process MuniServices follows includes the following steps: 1. from the City which allows us to audit as a third party. 2.Request and receipt of necessary records from the City, including payment history, annexation history, previous anomalies discovered, and addresses within the City. 3.A request for information (RFI) to the franchisee to include documentation such as general ledger, sample bills, chart of accounts, access line reports. 4.2¤µ¨¤¶ ®¥ ¯¯«¨¢ ¡«¤ ±¤¢®±£² ³® ¢§¤¢ª ¢®¬¯«¨ ¢¤ £ £¤³¤±¬¨¤ ¸ ϭ¨£¨¦². 5.0±¤¯ ± ³¨® £ £¤«¨µ¤±¸ ®¥ ϭ¨£¨¦² ±¤¯®±³ ³® ³§¤ #¨³¸ £ ³§¤ ¥± ¢§¨²¤¤ȁ 6.MuniServices can also assist the City in collecting if required. Pre-Audit Planning To initiate the project MuniServices recommends scheduling an introductory meeting with designated City management, to: 1.Review with the City any known compliance issues, results of any previous franchise fee audits, and any other factors, such as boundary changes, annexations, or rate changes, that might impact compliance. 2.Identify relevant payment records available from the City for the franchisee. 3.Obtain a letter of authorization from the City, copies of the agreement and/or ordinance relevant to the franchisee, any relevant prior correspondence with the franchisee, any prior reports prepared by internal or external auditors and a history of franchise fee payments. and, 4.Develop a prioritized list and estimated schedule for compliance review engagements authorized by the City. La Porte, TX FF 021214 3 Audit Engagements Request for Information Following this meeting, MuniServices shall proceed to contact those franchisees for which the City has approved audits. For each franchisee to be audited, MuniServices will utilize the following process to identify, evaluate, and recommend correction of any errors or omissions: 1.Received payment history and other records and documentation to be provided by the City. 2.Review payment history and any relevant correspondence for each franchisee. 3.Submit a Request for Information (RFI) and obtain from each franchisee the information needed to complete our review. Typically, MuniServices request that each franchisee provide, as applicable: a.A copy of the chart of customer accounts including account numbers and account descriptions. b.Monthly revenues by revenue account for each month of the review period. c.Copies of monthly general ledgers for the review period. d..´¬¡¤± ®¥ ¢´²³®¬¤±² «®¢ ³¤£ ¶¨³§¨ ³§¤ #¨³¸ ¡¸ ± ³¤ ¢« ²² ³ ϭ¨²¢ « ¸¤ ±-end or end of review period. e.Examples of bills to customers with service addresses located within the City. f.Explanation of how geographic coding is determined for a new customer account. g.Description of procedures used in the computation of franchise fees paid the City. If a formula is used, provide an explanation for each component of the formula, together with supporting documentation for each value used in the formula, for the payment received by the City for the review period. h.Copies of all reports, work papers, and other supporting documentation used in computing franchise fees paid the City for the review period. i.Copies of any documents, reports, and work papers by internal or external auditors which concern the computation or method for computing the franchise fees paid. j.Names, addresses, account numbers, and revenue codes of all residential, small commercial, large commercial and industrial customers. k.A digital listing of customer account information, including account number, complete service ££±¤²²Ǿ £ ³§¤ ϭ¨¤«£² ³§ ³ ¨£¤³¨¥¸ ³§¤ ¥± ¢§¨²¤ ¥¤¤ ©´±¨²£¨¢³¨® « ϭ« ¦ ®± ¨£¤³¨ϭ¨¤±ȁ l.Description of the procedures followed by the franchisee in the event of an annexation within the City. Include the impact of an annexation on the amount of franchise fees paid the City. m.A list of any exempted customers from the franchise fees computation. Examination of Franchisee Rec®±£²ȝ)£¤³¨ϭ¨¢ ³¨® ®¥ !¸ #®¬¯«¨ ¢¤ )²²´¤² In performing the examination of the franchisee records and identifying compliance issues, MuniServices will typically: 1.Review the work papers and supporting documentation used in the computation of franchise fee payments. 2. data for reasonableness, completeness, and accuracy as related to franchise fees. 3.Identify any excluded revenues from the franchise fee calculation. 4. a.determine revenues that are to be included or excluded from franchise fee computations; b.review the revenues excluded from the computations, if any, and c. 5.Determine if a franchisee or any of its subsidiaries receives any revenues from customers or third-parties for -of-way that are not included in the franchise fee calculation used to determine the payment to the City. 6.! «¸¹¤ ³§¤ ´¬¡¤± ®¥ ¢´²³®¬¤±² ±¤¯®±³¤£ ¨ ³§¤ #¨³¸ ¡¸ ± ³¤ ¢« ²²¨ϭ¨¢ ³¨® £ ®¡³ ¨ £ ±eview the address annexations. 7.Obtain and review the list of any exempted customers, if any, from the franchise fee computation. La Porte, TX FF 021214 4 8.Sample test the franchis verify that all monies collected are submitted to the City. 9. 10.Compare the actual payments made to the City for timeliness and accuracy. Timing 1.Commencement of the work: within 10 working days of a fully executed agreement and the required letter of authorization and other documents from the City. 2.Review of Franchise Fee payments: beginning within 10 working days of receipt of necessary data, such as franchise payment history, from the utility and the City. 3.#®¬¯«¤³¨® ®¥ ³§¤ ϭ¨ « ±¤¯®±³: within two to six months (depending on factors noted above). Throughout the project, MuniServices will provide the City with progress reports as applicable. Upon completion of ¯¯±®µ «Ǿ -´¨3¤±µ¨¢¤² ¶¨«« ¨²²´¤ ϭ¨ « ±¤¯®±³ȁ Article 3-Reports and Deliverables 1.Throughout the course of each engagement, MuniServices will provide the City with monthly reports documenting audit activities undertaken to date. These reports will include the following: a.Accomplishments to date. b.Next-step options and projected timeline for completion. c./¯¤ ¨³¤¬² ¤¤£¨¦ ³³¤³¨®Ǿ ¶¨³§ ¨£¤³¨ϭ¨¢ ³¨® ®¥ ³§¤ ±¤²¯®²¨¡«¤ ¯ ±³¸ȁ d.Updates on any issues requiring City attention. 2.Upon completion of our review of each franchisee, MuniServices will provide the City with a written report ¶¨³§ ϭ¨£¨¦² ³§ ³ ¤·¯« ¨² ³§¤ ±¤²´«³² ®¥ ®´± ±¤µ¨¤¶Ǿ ¨¢«´£¨¦Ȁ a.An account of the scope and procedures employed in the audit, including the records reviewed and the time periods covered. b.A summary report noting wheth¤± ³§¤ ¥± ¢§¨²¤¤ § ² ²´¡²³ ³¨µ¤«¸ ¥´«ϭ¨««¤£ ¨³² ϭ¨ ¢¨ « ®¡«¨¦ ³¨®² to the City and the extent to which they adhere to the general parameters of the applicable agreement or ordinance, and including a summary of any noncompliance items noted during the ´£¨³Ǿ ²¯¤¢¨ϭ¨¢ ««¸ ¨£¤³¨¥¸¨¦ ³§¤ ±¤ ² ®¥ ®¢®¬¯«¨ ¢¤ £ ³§¤ ³´±¤ ®¥ ³§¤ ®¢®¬¯«¨ ¢¤ actions including recommended actions. c.A detailed report, in spreadsheet form, itemizing all instances of noncompliance, with a detailed explanation of any resulting payment discrepancies and penalties. d.$± ¥³ ¢®±±¤²¯®£¤¢¤ ³® ³§¤ ¥± ¢§¨²¤¤ ® ¡¤§ «¥ ®¥ ³§¤ #¨³¸ £¤³ ¨«¨¦ ³§¤ ϭ¨£¨¦² £ ¬ ª¨¦ demand for any restitution due the City. 3.Upon request by the City, MuniServices will also: a. ¯ ¸¬¤³ ®¥ ¬®¨¤² £´¤ ³§¤ #¨³¸ ² ±¤²´«³ ®¥ ´£¨³ ϭ¨£¨¦²ȁ b.Assist the City with additional collection steps, to the extent desired by the City, to secure payments c. our percentage fee. d.- ª¤ ¯¯±®¯±¨ ³¤ ¬¤¬¡¤±² ®¥ ³§¤ -´¨3¤±µ¨¢¤² ´£¨³ ³¤ ¬ µ ¨« ¡«¤ ³® ¯±¤²¤³ ϭ¨£¨¦² £ recommendations to the City. La Porte, TX FF 021214 5 Article 4-Compensation What the City will pay MuniServices for the Franchise Fee Compliance Review MuniServices shall provide its Franchise Fee Audit Service on a performance-based pricing approach which places ³§¤ ϭ¨ ¢¨ « ±¨²ª £ ®¡«¨¦ ³¨® ³® ¯¤±¥®±¬ ® -´¨3¤±µ¨¢¤² and eliminates for the City any out-of-pocket expenses. The Franchise Fee Audit Services shall be provided on a one-time performance-based contingency fee, as shown in the table below, of the additional revenue received by the City as a result of our Franchise Fee Compliance Review Services. The contingency fee will apply to the current tax year, all eligible prior period revenues, and include any applicable penalties, interest, late charges and any other associated fees. #®³¨¦¤³ &¤¤ ® ϭ¨£¨¦² ´¯ ³® ͡ΒΏΏ+ #®³¨¦¤³ &¤¤ ® ϭ¨£¨¦² ¦±¤ ³¤± ³§ ͡ΒΏΏ+ 35% 25% These fees include any out-of-pocket expenses or travel-related expenses. We will invoice the City upon issuance of ³§¤ ϭ¨ « ±¤¯®±³ ³® ³§¤ #¨³¸ȁ Additional Consulting The City may request that MuniServices provide additional consulting services at any time during the term of the Agreement. If MuniServices and City agree on the scope of the additional consulting services requested, then MuniServices will provide the additional consulting on a Time and Materials basis. Depending on the personnel assigned to perform the work, standard hourly rates range from $75 per hour to $300 per hour. 4§¤ ¥®««®¶¨¦ ±¤ ² ¬¯«¤ §®´±«¸ ± ³¤² ¡ ²¤£ ® ³§¤ ©®¡ ¢« ²²¨ϭ¨¢ ³¨®Ȁ Principal: $300 per hour Client Services: $250 per hour Information Technology (IT) support: $200 per hour Operational Support: o Director: $175 per hour o Manager: $150 per hour o Senior Analyst: $125 per hour o Analyst: $100 per hour o Administrative: $75 per hour The additional consulting services will be invoiced at least monthly based on actual time and expenses incurred. The reimbursable expenses will receive prior approval from the City and will be reimbursed at cost to MuniServices. Article 5 City Obligations The City shall provide MuniServices with a letter of authorization from the City, copies of the franchise agreements, amendments, and any subsequent agreements relating to franchise fee collection, any prior reports prepared by the internal or external auditors which concern the computation or methodologies for computing franchise fee, and a history of franchise payments made by providers to the City. review, based on an interpretation of the applicable franchise fee agreement, ordinance, or state regulations as a point of law, the City may need to provide or engage separate legal representation. MuniServices does not provide legal advice or representation, but is prepared to provide support. La Porte, TX FF 021214 6 ATTACHMENT 2 General Provisions Article I Within 5 business days after You will designate, in writing, one individual to whom we may address signing this agreement. designee will be the principal point of contact for us in obtaining decisions, information, approvals, and acceptances. 10 business days after you You have until this date to dispute in the invoice, or a portion of it, in writing. receive our invoice. Your written dispute must be post-marked by this date and must be sent to the addresses in paragraph 1 of the Agreement. (Paragraph 1 is located on the front 10 business days after we receive We will either correct the error or explain to you why we think the invoice is your written notice that you dispute correct. During this time, we will not try to collect the amount being disputed. an invoice or part of an invoice. 30 days after receiving our You must pay our invoice(s) by this date. If you do not pay by that time, we have invoice. the right to charge you interest at the rate of one and one-half percent (1.5%) per month, or the maximum amount permitted by law, on any amounts you do not pay within thirty days. If we refer your account to an attorney for collection of past due amounts, we may charge you for our reasonable attorney fees, including costs for attorneys who are employed by us, and court costs incurred by us to the extent permitted by law. Any settlement of your account balance for less than what is owed requires our written consent. 40 days after receiving our If you have not paid, and have not disputed an invoice as provided above, then invoice we may terminate this Agreement with no further notice and we have no further obligation to you. When you provide us with By providing us information, you represent that: information for use in the Services. you have the right to provide us the information without violating the rights of third-parties; your release of the information to us does not violate any applicable laws and regulations; and to the best of your knowledge the information is accurate and not defamatory. You will notify us immediately if there is a change in the information you have provided to us. If we send you a report or other You will review all reports we provide to you in a timely fashion and you will deliverable. ®³¨¥¸ ´² ¨¬¬¤£¨ ³¤«¸ ¨¥ ¸®´ ϭ¨£ £¨²¢±¤¯ ¢¸ ¨ ¸ ®¥ ³§¤ ¨¥®±¬ ³¨® ¶¤ § µ¤ provided to you. Upon payment therefore, we will grant you all right, title, and interest in and to the reports, charts, graphs, and other deliverables we are required to produce under this Agreement. While the Agreement is effective. We will keep in full force and effect insurance coverage during the term of this comprehensive automobile liability insurance; professional liab¨«¨³¸ £ ϭ¨£¤«¨³¸ ¨²´± ¢¤ȁ 9®´ ¬ ¸ ³ ¸ ³¨¬¤ ±¤°´¤²³ ¢®¯¨¤² ®¥ ®´± ¢¤±³¨ϭ¨¢ ³¤²ȁ 90-days after prior written notice. This Agreement terminates for convenience but only if the terminating party sends the notice to the person designated to receive notices under this Agreement (see paragraph 1 or 2, as applicable, of this Agreement). La Porte, TX FF 021214 7 After giving written notice of a breach The non-breaching party may immediately terminate this Agreement if: other than a failure to pay. the written notice of the breach was sent to the person designated to receive notices for the breaching party under this Agreement (see paragraph 1 or 2, as applicable, of this Agreement); and the breach is not your failure to pay (that situation is addressed separately below.); and the breach has not been cured in a reasonable time after the breaching party received notice. Ordinarily, 30 days will be a reasonable time to cure the breach but if the party receiving notice of the breach can demonstrate that the breach will take more than 30 days to cure, the non-breaching party and breaching party will agree on an extended period to cure the breach. A party may terminate this Agreement immediately if the other party its ability to perform hereunder; or a party becomes or is declared insolvent or bankrupt; or a party is the subject of any proceedings relating to liquidation or insolvency or for the appointment of a receiver; or ¯ ±³¸ ¬ ª¤² ²²¨¦¬¤³ ¥®± ³§¤ ¡¤¤ϭ¨³ ®¥ «« ®± ²´¡²³ ³¨ ««¸ «« ®¥ ¨³² creditors; or a party enters into an agreement for the composition, extension, or readjustment of all or substantially all of its obligations. entire outstanding amounts and costs owing to us hereunder immediately due and payable. This Agreement is terminated or You remain obligated to: (1) pay us for Services performed through the effective expires. date of the termination or expiration; (2) if applicable, provide us with all the information necessary for us to calculate what you owe us on revenue you receive after the termination or expiration; and (3) if applicable pay invoices we send you after the expiration or termination of this Agreement for Services performed before termination or expiration or for continuing payments required by the Scope of Work or for both. La Porte, TX FF 021214 8 Article II. The parties also agree to the following miscellaneous terms. 1.Independent Contractor. We are an independent 8.Public Release and Statements. Neither you nor we nor contractor. Nothing in this Agreement is to be each of our representatives or agents shall interpreted as: creating the relationship of employer disseminate any oral or written advertisement, and employee between you and us or between you endorsement or other marketing material relating to and any of our employees or agents; or creating a partnership or joint venture between you and us. We the prior written approval of the other Party. No are responsible for any subcontractors we use in Party or its agent will use the name, mark or logo of performing Services for you and we are solely the other Party in any advertisement or printed responsible to pay those subcontractors. We may ²®«¨¢¨³ ³¨® ¶¨³§®´³ ϭ¨±²³ § µ¨¦ ¯±¨®± ¶±¨³³¤ ¯¯±®µ « perform similar services for others during this of the other Party. The Parties shall take reasonable Agreement and you agree that our representation of efforts to ensure that its Subcontractors shall not ®³§¤± ¦®µ¤±¬¤³ ²¤¢³®± ¢«¨¤³² ¨² ®³ ¢®ϭ«¨¢³ ®¥ disseminate any oral or written advertisement, interest. endorsement or other marketing materials referencing or relating to the other Party without that 2.Compliance with Laws. The parties agree to comply In addition, the Parties with all applicable local, state and federal laws and agree that their contracts with all Subcontractors will regulations during the term of this Agreement. include appropriate provisions to ensure compliance with the restrictions of this Section. 3.Intellectual Property. We retain all right, title, and interest in and to the processes, procedures, models, 9.Entire Agreement. This Agreement is the entire inventions, software, ideas, know-how, and any and all Agreement between us and you for the Service(s). other patentable or copyrightable material used, This Agreement supersedes and replaces any prior developed, or reduced to practice in the performance Agreements, of whatever kind or nature, for the of this Agreement. Service(s) Any prior Agreements, discussions, or representations not expressly set forth in this 4.Waiver Agreement are of no force or effect. No additional performance of any provision of this Agreement are terms, Purchase Order Terms and Conditions, or oral not to be construed as a waiver of that or any other of or written representations of any kind are of any force and effect unless in writing and signed with the same or time. formality as this Agreement 5.Force Majeure. Neither party is liable for failing to 10..® /± « -®£¨ϱ¨¢ ³¨®ȁ .® ¬®£¨ϭ¨¢ ³¨® ®¥ ³§¨² perform its obligations hereunder (other than Agreement is effective unless set forth in writing and payment obligations) where performance is delayed or signed with the same formality as this Agreement. hindered by war, riots, embargoes, strikes or acts of its vendors or suppliers, accidents, acts of God, or any 11.Invalidity. If any provision of this Agreement is other event beyond its reasonable control. determined to be invalid, illegal, or unenforceable, the remaining provisions of this Agreement remain in full 6.Counterparts. This Agreement may be signed in force, if the essential provisions of this Agreement for separate counterparts including facsimile copies. Each each party remain valid, binding, and enforceable. counterpart (including facsimile copies) is deemed an original and all counterparts are deemed on and the 12.Construction. This Agreement is to be construed in same instrument and legally binding on the parties. accordance with the laws of the State of Texas without ±¤¦ ±£ ³® ¨³² ¢®ϭ«¨¢³ ®¥ « ¶² ¯±¨¢¨¯ «²ȁ 7.Assignment. MuniServices may assign this Agreement, in whole or in part, without your consent to any 13.Headings. The section headings herein are for corporation or entity into which or with which convenience and reference purposes only and are not MuniServices has merged or consolidated; any parent, to serve as a basis for construction or interpretation. ²´¡²¨£¨ ±¸Ǿ ²´¢¢¤²²®± ®± ¥ϭ¨«¨ ³¤£ ¢®±¯®± ³¨® ®¥ MuniServices; or any corporation or entity which acquires all or substantially all of the assets of MuniServices. Subject to the foregoing, this Agreement ²§ «« ¡¤ ¡¨£¨¦ ´¯® £ ¨´±¤ ³® ³§¤ ¡¤¤ϭ¨³ ®¥ ³§¤ parties and their successors or assigns. La Porte, TX FF 021214 9 Attachment 3 MuniServices Helpful Contacts Contact Project Role Phone Email Ted Kamel Client Services Manager 903.952.9794 ted.kamel@muniservices.com Lisa Broussard, CPA VP Central Operations 713.459.5079 lisa.broussard@muniservices.com Jonathan Gerth VP Audit Services 205.423.4177 jvgerth@revds.com Tim Hunter Franchise Fee Manager 205.423.4170 tjhunter@revds.com Billing Department 757.321.2517 acctpay@portfoliorecovery.com Francesco Mancia VP Government Relations 559.288.7296 fran.mancia@muniservices.com Brenda Narayan Director of Govt. Relations 916.261.5147 brenda.narayan@muniservices.com Patricia Dunn Contracts Manager 559.271.6852 patricia.dunn@muniservices.com La Porte, TX FF 021214 10 7.87.24.03.022.0 RFP 14502- FRANCHISE FEE AUDIT FOR TELEPHONE, ELECTRICAL, CABLE AND NATURAL GAS New Gen 6.96.63.83.620.9 TriStem 6.66.93.23.219.9 Fox Solomon EVALUATION SUMMARY 7.87.54.25.625.1 MuniServices Final Scores Firm's Qualifications and Technical Experience Methodology to Achieve End Result Criteria Additional Services Cost Estimate