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HomeMy WebLinkAbout123106 Comprehensive Annual Financial ReportCOMPREHENSIVE ANNUAL FINANCIAL REPORT of the CITY OF WEST UNIVERSITY PLACE, TEXAS Year Ended December 31, 2006 Officials Issuing Report: Michael Ross City Manager Walter Thomas Finance Director (This page intentionally left blank.) CITY OF WEST UNIVERSITY PLACE, TEXAS ' TABLE OF CONTENTS December 31, 2006 Page INTRODUCTORY SECTION Letter of Transmittal 3 ' Organizational Chart 7 Certificate of Achievement for Excellence in Financial Reporting 8 Principal Officials 9 FINANCIAL SECTION Independent Auditors' Report 13 Management's Discussion and Analysis 17 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Assets 29 Statement of Activities 30 Fund Financial Statements Governmental Funds Financial Statements Balance Sheet-Governmental Funds 32 Statement of Revenues, Expenditures, and Changes in Fund Balances- Governmental Funds 34 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 37 Proprietary Funds Financial Statements Statement of Net Assets 38 Statement of Revenues, Expenses, and Changes in Fund Net Assets 42 Statement of Cash Flows 44 Notes to Financial Statements 49 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures, and Changes in Fund Balances- ' Budget and Actual: General Fund 69 Schedule of Funding Progress-Texas Municipal Retirement System 71 ' COMBINING STATEMENTS AND SCHEDULES Schedule of Revenues, Expenditures, and Changes in Fund Balances- ' Budget and Actual: Debt Servce Fund 75 Combining Balance Sheet-Nonmajor Governmental Funds 78 ' Combining Statement of Revenues, Expenditures, and Changes in Fund Balance-Nonmajor Governmental Funds 80 CITY OF WEST UNIVERSITY PLACE, TEXAS TABLE OF CONTENTS December 31, 2006 Page Schedule of Revenues, Expenditures, and Changes in Fund Balance- Budget and Actual: Special Revenue Funds: Parks 82 Senior Activity 83 Court Technology 84 METRO Grant 85 Combining Balance Sheet-Internal Service Funds 88 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance-Intemal Service Funds 89 Combining Statement of Cash Flows-Internal Service Funds 90 STATISTICAL SECTION Net Assets by Component - Last Four Years 93 Changes in Net Assets - Last Four Years 94 Tax Revenues by Source, Governmental Activities - Last Four Years (accrual basis) 97 Fund Balances, Governmental Funds- Last Ten Years 98 Changes in Fund Balance, Governmental Funds - Last Ten Years 100 Tax Revenues by Source, Governmental Activities - Last Ten Years ( modified accrual basis) 102 Assessed Value and Actual Value of Taxable Property - Last Ten Years 104 Property Tax Rates - Direct and Overlapping Governments - Last Ten Years 106 Principal Property Taxpayers - Current Year and Four Years Ago 109 Property Tax Levies and Collections - Last Ten Years 110 Ratios of Outstanding Debt by Type - Last Four Years 112 Ratio of Net Bonded Debt to Assessed Value, Net Bonded Debt Per Capita, and Assessed and Estimated Actual Value of Taxable Property - Last Ten Years 114 Direct and Overlapping Governmental Activities Debt 116 Legal Debt Margin Information - Last Four Years 117 Pledged-Revenue Coverage -Last Ten Years 118 Demographic and Economic Statistics 120 Principal Employers - Current Year 121 Full-Time Equivalent City Government Employees by Function/Program - Last Ten Years 122 Operating Indicators by Function/Program - Last Four Years 123 Capital Asset Statistics by Function/Program - Last Four Years 124 INTRODUCTORY SECTION (This page intentionally left blank.) 0 City of West University Place A Neighborhood City ® Recycled Paper June 1, 2007 To the Honorable Mayor and Citizens of the City of West University Place, Texas: The Comprehensive Annual Financial Report of the City of West University Place, Texas (the "City") for the fiscal year ended December 31, 2006 is hereby submitted. Responsibility for both the accuracy of the data, and completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a manner designed to present fairly the financial position, results of operations and cash flows of the various funds of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. In developing and evaluating the City's accounting system, consideration is given to the adequacy of internal accounting controls. These controls are designed to provide reasonable, but not absolute, assurance regarding the safeguarding of assets against loss from unauthorized use or disposition, and the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived, and the evaluation of costs and benefits requires estimates and judgments by management. We believe that the City's current system of internal controls adequately safeguards assets and provides reasonable assurance of proper recording of financial transactions. As required by the City's charter, the financial statements have been audited by Sandersen Knox and Belt, L.L.P., a firm of certified public accountants. The goal of the independent audit was to provide reasonable assurances that the fmancial statements of the City of West University Place for the fiscal year ended December 31, 2006, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City of West University Place's financial statements for fiscal year ended December 31, 2006, are presented in conformity with generally accepted accounting principles (GAAP). The Comprehensive Annual Financial Report is presented in three sections: introductory, financial and statistical. The introductory section includes this transmittal letter and the City's organizational chart. The financial section includes auditor's report on the financial statements, a narrative introduction, overview and analysis required by GAAP in the form of the Management's Discussion and Analysis (MD&A), the basic financial statements, fund financial statements, and combining and individual financial statements. This letter of transmittal is designed to complementthe MD&A and should be read in conjunction with it. The City's MD&A can be found immediately following the report of the independent auditors. The statistical section includes selected unaudited financial and demographic information generally presented on a multi-year basis. 3800 University Boulevard • West University Place, Tfxas 77005-2899 • 713.668.4441 • www.westu.org PROFILE OF THE GOVERNMENT The City was incorporated in 1924 and became a Texas Home-Rule City in 1940. West University Place operates under the Council-Manager form of municipal government. The mayor and council are responsible for passing ordinances, adopting the budget, appointing board and committee members, and hiring the City Manager. The City Manager is responsible for carrying out the policies and ordinances of the mayor and council, overseeing the day-to-day operations of the City, and appointing department heads. The Mayor and Council are elected on an at large, non-partisan basis. The Mayor and Council members are elected for two- year terms. The City provides a full range of municipal services. These services include police and fire protection, municipal court, streets, drainage, leisure services, water and sewer, solid waste collection and disposal, community development, and general administrative services. Based upon the criterion set forth in generally accepted accounting principles, the following organizations are includable within the City's reporting entity: Entity Method of Inclusion Friends of West University Place Parks Blended ECONOMIC CONDITION AND OUTLOOK The City of West University Place, Texas encompasses a 1.9 square mile area located a few blocks south of U.S. Highway 59 (the "Southwest Freeway") and approximately five miles from downtown Houston, Texas. The City is an integral part of the Houston metropolitan area and is completely surrounded by the Cities of Houston, Bellaire, and Southside Place. The City is primarily a residential area whose approximately 14,211 inhabitants are employed throughout the Houston urban area. Rice University and the Texas Medical Center complex are located about one mile east of the city limits in the City of Houston. There is almost no vacant and/or undeveloped land in West University Place, so construction generally involves rebuilding and remodeling. In the mid-1980s, building activity took off at a blistering pace. Property values soared as a result. Assessed value of property in the City rose from $768 million in 1988 to over $2.9 billion in 2006. In 2006, the City gained over $67.5 million in increased property values from new construction. The economic condition of the entire Houston area has been steadily improving since the recession that halted growth in the late 1980s. The economy is much more diverse so it will be less likely to suffer wild swings that were the hallmark of the past. The collapse of Enron, the merger of Compaq with Hewlett Packard and Continental Airlines' continued woes all have challenged the resiliency of the Houston area economy. These events slowed growth, but the economy has proved stable. The City of West University Place's stability and growth is the result of a trend for suburban families to move closer to work. The City's low crime rate and hometown appeal has attracted many of these families. These factors have contributed and continue to contribute to the growth in property values in West University Place. For the Future Growth in the value of real property in the City is expected to continue to be robust into 2008. Expenditures are also expected to grow due to competitive pressure on personnel costs. Longterm planning Asa part of the fiscal year 2007 budget process, the Mayor and Council and City Staff updated a multi-year capital improvements program. Several projects in this plan are moving from planning: A Park will be constructed. Transportation improvements aimed at relieving street flooding will be fmanced with a $4.3 million grant from METRO. A new safer emergency operations center is planned along with a complete reconstruction of the police station. These projects are expected to be implemented in fiscal year 2007. FINANCIAL INFORMATION Budgeting Controls The City Charter of the City of West University Place establishes the fiscal year as January I through December 31. The Charter requires the City Manager to submit a proposed budget and accompanying budget message to the City Council each year. The proposed budget is presented to the City Council at a series of budget work sessions. Department directors have an opportunity to make a budget presentation to the City Council and are available for questions. Copies of the proposed budget are made available to the public and the press and the public hearing schedule is confirmed. Before the public hearings are held, notices of the public hearings on the proposed budget are posted and published in the newspaper. After public hearings at two consecutive regular City Council meetings, the Council may adopt the proposed budget, with or without amendment. The budget ordinance is to be adopted no later than 60 days after receiving the Certified Tax Roll from the Harris County Appraisal District which is usually received around August 12 each year. The Council adopts the tax rate ordinance at the same meeting as the budget. The City maintains budgetary control by adopting an annual operating budget for the General Fund, Debt Service Fetid, Water and Sewer Fund, and Solid Waste Fund. Detail control is maintained at the line item level by encumbering available funds at the time a purchase order is written. Encumbrances do not lapse at fiscal year end. The City Manager is authorized to transfer budgeted amounts within departments within any fund. However, any revisions that alter the total expenditures of any fund or department must be approved by the City Council. Cash Management Cash temporarily idle during the year was invested in U.S. Treasury Bills and Notes, Agency Discount Notes and Medium Term Notes and a local government investment pool (Texpool). The average yield on investments for the year was approximately 2.5%. The primary objectives of the City's investment policy, in priority order, are safety (preservation of capital), liquidity (to provide adequate and timely working funds), and return on investment (obtaining a rate of return commensurate with investment risk constraints and cash flow needs). All deposits were either insured by federal deposit insurance or collateralized and the collateral was held by a trustee bank in the City's name, which is the lowest category of risk as defined by the Governmental Accounting Standards Board. The City currently holds the Certificate of Distinction from the Government Treasurer's Organization of Texas for its investment policy. ' Risk Management Insurance coverage for property, liability, and workers' compensation is provided by the Texas Municipal League Intergovernmental Risk Pool (the "Risk Pool"), a State Insurance Pool. Contributions to the Risk Pool for workers' rates are based on the City's past claims history. The Risk Pool retains a limit of ' loss and reinsurance companies insure the risks beyond those limits. During the fiscal year, representatives from the Risk Pool physically reviewed City facilities to identify possible risks. City employees also participated in Risk Pool sponsored safety training classes. ' AWARDS AND ACKNOWLEDGEMENTS ' Awards The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of West University Place for its comprehensive annual financial report for the fiscal year ended December 31, 2005. This was the fifteenth ' consecutive year the City has received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements, and we are ' submitting it to GFOA to determine its eligibility for another certificate. Acknowledgements The preparation of this report could not have been accomplished on a timely basis ' without the dedicated endeavors of the entire staff of the Finance Department. I would like to express my sincere appreciation to all employees who contributed to the preparation. Additionally, I would also like to thank the Mayor, City Council, and City Manager for their support in planning and conducting the financial , operations of the City in a responsible and progressive manner. Respectfully submitted, Walter Thomas Finance Director 11 it 11 11 CITY OF WEST UNIVERSITY PLACE, TEXAS ORGANIZATIONAL CHART December 31, 2006 Citizens of West University Place city City Judges & Secretary pta utms Mayor & City Coancll City Appdntea awrd Aftorssev & Commi~#ous City Manager Fire Finance poitte Depa meet , Department Department 1+vn Sua,prox4ina PmerhmCY htsd Baca Aoarrunbny ffieaialrxl Cower }Mtrnl SarviceP fiuppvi 9rniarp fmPdrtnwn FssPmm~®R. firoSUPprsmon EmeagercY Mmabartnr ISreali!k Nam Sena amc1S&SiR~ C. muT.m C.PPICast AA Tramva a P A ..W ft M 1lriin, rPane MUM Coves AMin'vbafiw CoXeu ica&t"w Pa4w Pnrol t~uaa®e S'iRrt Shan m.alBauR Tnl(rc RnFortmrnt Crirtt Prtrrnlu9 C#bm nwiamrs FrMvEmnpgn Fuelis saklY lli+P+un FW#iRzgron Wblk Wades Pants&liecreattan Do{wrtnaat Depanrcat lxxraym:m fienml PIRRe}ng 1 4 d Smi,, Smieti SLR'fCCS FnMSUY q,oPfiooe SCIYtCe6 BwkA hePa'riw So4tl Wrmtc WWtt FnrFt 1'acn0 1' rR~~ccFMain~NUrte SadOC&m'eA Plan RevicV Rn,dore 5~.45a+ice Pbrmb~B FwIMY ManleimA Trnu(~arlt!bn SeMcec ' auim;rr PCmii1 Tnlfic 5ipiW SReny MtiMn~Ylca T,(rCpR RcaretliomtPmpv.ua mm NCaRbn ProRmro ( Cmk En!aea+sm Grta Spm Srmx Water iha'ugye Saul Ereepv Pecseworol Pragranurva NM Nan[manc GmL'W>'k lnfomWbo Smvp RHertN Sm%ee 7 CITY OF WEST UNIVERSITY PLACE, TEXAS CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING Certificate of Achievement for Excellence in Financial Reporting Pcc5Cn1€d laa City= of West University Place Texas Fer il+ Cnntprchowime Annual Financial Rcpon Asir the fiscal Ycar Ended Ddccanb r31, 005 A Cenifwair aJ Ac ljoverum fin E,ud kiwe ni Financial R,vpunsng is presrc let Dj.. Its [iovcum cin F nu.mcr Ofims A s.a lx[ubiz of Or U nineal Sum and Canada in al}kC".In31"W.. units -aud lamlic capl-Dpet zcai :LL'#iS. splenti a'?ur,r ccn2praeiexr`.ism annuaE financial icpn[rz I'CAFRS) a,r ^nc nrn Rinilian rrdneined; u. Fns'crrnaanl as adadang 0,1d . f0dwici4l repnnin}, F culcve Director 8 CITY OF WEST UNIVERSITY PLACE, TEXAS PRINCIPAL OFFICL4LS December 31, 2006 City Officials Elective Position Term Expires Burt Ballanfant Mayor 05/2007 Phyllis Cohen Council Member 05/2007 Steven Segal Council Member 05/2007 Mike Woods Council Member 05/2007 Richard Yehle Council Member 05/2007 Key Staff Michael Ross Chris Peifer Kaylynn Holloway Alan Petrov Candelario Elizondo Tim O'Conner Steve Ralls Wendy Stardorf Walter Thomas Ken Walker Position City Manager Assistant City Manager/Public Works Director City Secretary City Attorney City Judge Parks and Recreation Director Fire Chief Director of Human Resources Finance Director Police Chief 9 (This page intentionally left blank.) 10 FINANCIAL SECTION 11 (This page intentionally left blank.) 12 INDEPENDENT A UDITORS' REPORT To the Honorable Mayor and Members of the City Council City of West University Place, 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 West University Place, Texas (the "City"), as of December 31, 2006, and for the year then ended, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes ' assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. ' In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, ' and the aggregate remaining fund information of the City as of December 31, 2006, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended, in conformity with generally accepted accounting principles in the United States of America. ' The management's discussion and analysis on pages 17 through 25, budgetary comparison information on page 69, and pension information on page 71, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States ' of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. 13 730 North Post Oak Rd., Ste. 202 Houston, TX 77024 PH: 713.263.1123 FX: 713.263.1550 info@texmauditon.com www.texasauditors.com Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The introductory section, combining statements and schedules, and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining fund statements and schedules have been subjected to auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. Subsequent to the original release of the financial statements on June 29, 2007, we noted that retainage payable was understated in two funds, as more fully described in footnote 17V D. to the financial statements. Accordingly, related accounts have been corrected and our report reissued and dual dated for footnote IV D. as to which the date is July 3, 2007. June 19, 2007 (except for Note IV.D., as to which the date is July 3, 2007) 14 MANAGEMENT'S DISCUSSION AND ANALYSIS 15 11 (This page intentionally left blank.) 16 11 CITY OF WEST UNIVERSITY PLACE, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A) December 31, 2006 The purpose of the management's discussion and analysis (MD&A) is to give the readers an objective and easily readable analysis of the City of West University Place's financial activities for the year ending December 31, 2006. The analysis is based on currently known facts, decisions, or economic conditions. It presents short and long-term analysis of the City's activities, compares current-year results with those of the prior year, and discusses the positive and negative aspects of that comparison. GASB Statement No. 34 establishes the content of the minimum requirements for MD&A. Please read the MD&A in conjunction with the transmittal letter at the front of this report and the City's financial statements, which follow this section. THE STRUCTURE OF OUR ANNUAL REPORT Components of the Financial Section Management's Discussion and Analysis Basic Financial Statements I Required Supplementary Information Inde endent Govemment- Fund Financial Component Units Notes to the P Auditor's Report Wide Financial Statements Financial Financial Statements Statements Statements Summary Detail The Comprehensive Annual Financial Report is presented as compliant with the financial reporting model in effect pursuant to GASB Statement No. 34. This financial reporting model requires governments to present certain basic financial statements as the MD&A and certain other required supplementary information (RSI). The basic financial statements include (1) government-wide financial statements, (2) individual fund financial statements, and (3) notes to the financial statements. Government-Wide Statements The government-wide statements report information for the City as a whole. These statements include transactions and balances relating to all assets, including infrastructure capital assets. These statements are designed to provide information about cost of services, operating results, and financial position of the City as an economic entity. The statement of net assets and the statement of activities, which appear first in the City's financial statements report information on the City's activities that enable the reader to understand the financial condition of the City of West University Place. These statements are prepared using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year's revenues and expenses are taken into account even if cash has not yet changed hands. 17 CITY OF WEST UNIVERSITY PLACE, TEXAS MANAGEMENT'SDISCUSSIONANDAAALYSIS, Continued December 31, 2006 The statement of net assets presents information on all of the City of West University Place's assets and liabilities. The difference between the two is reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City of West University Place is improving or deteriorating. Other non-financial factors, such as the City's property tax base and the condition of the City's infrastructure, need to be considered in order to assess the overall health of the City. The statement of activities presents information showing how the City's net assets changed during the most recent year. All changes in the net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows - the accrual method rather than modified accrual that is used in the fund level statements. The statement of net assets and the statement of activities divide the City into two classes of activities: Governmental activities - Most of the City's basic services are reported here including police and fire protection, municipal court, streets, drainage, leisure services, community development and general administrative services. Interest payments on the City's debt are also reported here. Sales tax, property tax, franchise taxes, municipal court fines and permit fees finance most of these activities. 2. Business-type activities - Services involving a fee for those services are reported here. These services include the City's water and sewer services as well solid waste collection. The government-wide financial statements can be found after the MD&A. FUND FINANCIAL STATEMENTS Funds may be considered as operating companies of the parent corporation, which is the City of West University Place. Thev are usually segregated for specific activities or objectives. The City of West University Place uses fund accounting to ensure and demonstrate compliance with finance related legal reporting requirements. The two categories of City funds are governmental and proprietary. 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-terns inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the year. Such information may be useful in evaluating the City'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-tern 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. 18 ' CITY OF WEST UNIVERSITY PLACE, TEXAS ' MANAGEMENT'S DISCUSSIONAND ANALYSIS, Continued December 31, 2006 The City of West University Place maintains 11 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 fund, which is considered to be a major fund. The City ' of West University Place adopts an annual appropriated budget for its general fund and each of the special revenue funds. Budgetary comparison schedules have been provided for these funds to demonstrate compliance with these budgets. Proorietarv Funds The City maintains two types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water distribution, wastewater collection/treatment, and solid waste operations. The proprietary fund financial statements provide separate information for the water distribution, wastewater collection/treatment, and solid waste funds. The basic proprietary fund financial statements can be found in the basic financial statements of this report. The City also uses internal service funds to account for its equipment replacement services and for expenses associated with separated employees and health benefits. These internal service funds have been included within governmental activities in the government-wide financial statements. Notes to Financial Statements The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes are the last section of the basic financial statements. Other Information In addition to basic financial statements, MD&A, and accompanying notes, this report also presents certain required supplementary information (RSI). The RSI that GASB Statement No. 34 requires includes budgetary comparison schedules for the general fund and schedule of funding progress for Texas Municipal Retirement System. RSI can be found after the basic financial statements. GOVERNMENT-R'IDE FINANCIAL ANALYSIS As noted earlier, net assets may serve over time as a useful indicator of the City's financial position. For the City of West University Place, assets exceed liabilities by $41,632,280 as of December 31, 2006, in the primary government. As required by GASB Statement No. 34, a comparative analysis of government-wide data has been presented as a component of the MD&A for the year ending December 31, 2006. The largest portion of the City's ' net assets (78.6%) reflects its investments in capital assets (e.g., land, building, 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 can not be used to liquidate these liabilities. I I 1 19 CITY OF WEST UNIVERSITY PLACE, TEXAS ' MANAGEMENT'S DISCUSSIONAND ANALYSIS, Continued ' December 31, 2006 Statement of Net Assets: The following table reflects the condensed statement of net assets: SUMMARY OF STATEMENT OF NET ASSETS Total Governmental Business-type Primary Activities Activities Government 2006 2005 2006 2005 2006 2005 Current and other assets $ 23,515,145 $ 20,305,537 $ 1,891,489 $ 2,158,800 $ 25,406,634 $ 22,464,337 Capital assets, net 80.894,007 75,710,453 35,192,242 36,698,904 116,086.249 112,409,357 Total Assets 104.409.152 WO 15,990 37,083,731 38.857.704 141.492.883 134.873,694 Long-term liabilities 65,878,709 69,043,225 13,804,549 14,247,409 79,683,258 83,290,634 'i Other liabilities 19,161,269 13,150,602 1,016,076 1,316,700 20,177345 14,467,302 Total Liabilities 85,039.978 82,193,827 14.820,625 15,564,109 99,860,603 97.757,936 Net Assets: Invested in capital assets, net of related debt 11,786,607 2,285,217 20,924,046 21,776,495 32,710,653 241061,712 Restricted 3,605,569 8,550,763 813,673 622,627 4,419,242 %173,390 Unrestricted 3,976,998 2,986,183 525,387 894,473 4,502,385 3,880,656 Total Net Assets $ 19,369.174 $ 13,822,163 $ 22,263,106 $ 23.293,595 $ 41,632,280 $ 37.115.758 A portion of the primary government's net assets, $4,419,242 or 10.7%, represents resources that are subject to external restriction on how they may be used. This is a decrease of 51.9%, primarily as a result of the City utilizing these restricted funds to continue infrastructure improvements. The remaining balance of unrestricted net assets, $4,502,385 or 10.9%, may be used to meet the City's ongoing obligation to citizens and creditors. The City's total net assets increased by $4,516,522 during the current fiscal year, an increase of 12.2% in comparison to the prior year. This increase is largely the result of an increase in general revenues as well as a decrease in operating expenses. 11 I 1 20 CITY OF WEST UNIVERSITY PLACE, TEXAS MANAGEMENT'SDISCUSSIONANDANALYSIS, Continued December 31, 2006 Statement of Activities: The following table provides a summary of the City's changes in net assets: CHANGES IN NET ASSETS t Revenues Proeram revenues: Charges for services Operating grants and contributions Capital grants and contributions ' General revenues. Ad valorem taxes Sales Imes Franchise taxes Other taxes Contributions investment earnings Other revenues Loss on sale ofcapital assets Total Revenues Expenses General government Public safety Public works Public services Interest and fiscal agent fees on long-term debt Water and Sewer Systems Solid Waste Total Expenses Increase (Decrease) in Net Assets Before Transfers 'Transfers Change in Net Assets Net assets, beginning of year I Net Assets, End of Year I I Tidal Governmental Business-type Primary Activities Activities Government 2006 2005 2006 2005 2006 2005 $ 2,108,282 $ 2,315,601 $ 5_739,970 $ 6,010,960 $ 7,848 252 s 8,326,561 259,000 16,915 - - 259,000 16,915 - 370,864 - - - 370,864 12,636,535 12,132,958 - - 12,636,535 12,132,958 1,028946 745,716 - - 1,028,946 745,716 1,000,930 913,998 - - L000,930 913,998 14,795 15,460 - - 14,795 15,460 326,656 268,081 - - 326,656 268,081 695,749 458,208 72,757 71,374 768,506 479,582 1,828 944 22,044 139,805 216,047 1,968,749 438,091 (25,950) - (25 950) 19,899,837 17,433 895 5,952,532 6248,381 25,852,369 23,682,276 2,706,514 2,594,417 - - 2,706,514 2,594,417 5,187,464 5,109,968 - - 5,187,464 5,109,968 2,654,368 3,073,735 - - 2,654,368 3073,735 1,874,113 1,840,117 - - 1,874,113 1,840,117 2,984,308 3,501 076 - - 2 .984,308 3,501,076 - - 5,084,326 5,083,562 5 .084,326 5,083,562 844,754 850,366 844,754 850,366 15,406,767 16,119,313 5,929090 5 933 928 21,335,847 2,053 241 4,493,070 1,314,582 23,452 314,453 4,516,522 1,629,035 1 053 941 870,000 (1,053,941) (870900) , , 5547,011 2,184,582 (1,030,489) (555,547) 4,516,522 1,629,035 822,163 13 11,637,581 23.293,595 23,849,142 37,115758 35A86,723 , 369 174 $ $ 19 13,822,163 $ 22,263,106 s 23,293,595 $ 41.632,28D $ 37 115,758 , , 21 CITY OF WEST UNIVERSITY PLACE, TEXAS MANAGEMENT'SDISCUSSIONANDANALYSIS, Continued December 31, 2006 Graphic presentations of selected data from the summary tables follow to assist in the analysis of the City's activities. GOVERNMENTAL REVENUES O ther revenues 9% Charges for services 11 Investment earnings 3% Contributions 1.6% Operating grants and contributions Other taxes £ 1.3% 0% r Franchise taxes 5% Ad valorem taxes SeIQS TAXeS I 64% J% For the year ended December 31, 2006, revenues from governmental activities totaled $19,899,837. Property tax revenues are the City's largest revenue source. Property tax revenue increased by modest 5% because of the increase in assessed property values in the prior year. In addition, sales tax increased over 38% during the current fiscal year. Investment earnings were also up in comparison to the prior year, a dramatic 52%. The City is continuing to heavily invest in U.S. Agencies as well as TexPool, accounting for these strong investment earnings. Franchise fees, collected from electric, gas, cable and telephone/telecommunications utilities, totaled $1,000,930 for the year ended December 31, 2006, an increase of 10% from the prior year. This graph shows the governmental function expenses of the City: GOVERNMENTAL FUNCTIONAL EXPENSES Interest on long-term debt 22% General government Public services 11% Public safety 34% Pul 22 CITY OF WEST UNIVERSITY PLACE, TEXAS MANAGEMENT'SDISCUSSIONANDANALYSIS, Continued December 31, 2006 For the year ended December 31, 2006, expenses for governmental activities totaled $15,406,767. This represents a decrease of $712,546 from last year. Over 40% of this aggregate decrease can be attributed to the decrease in interest on long-tern debt, due to the City's advance refunding of several series of permanent improvement bonds in 2005. Public works account for the remaining decrease in expenses. A contributing factor in the decrease of this expense included net decreases in compensated absences for this functional expense. Expenses per capita were $1,084, a decrease over last year of 4%. M Business-type activities are shown comparing operating costs to revenues generated by related services BUSINESS-TYPE ACTIVITIES Revenue vs. Costs (Dollars in millions) ® Operating Revenues 0 Operating Costs Operating revenues and expenses for business-type activities were comparable to those of the prior year. Transfers included the donation of several capital assets purchased by solid waste to governmental activities. FINANCIAL ANALYSIS OF THE CITY'S FUNDS As noted earlier, fund accounting is used to demonstrate and ensure compliance with finance-related legal requirements. Governmental Funds - The focus of the City's governmental funds is to provide information of near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of the City's net resources available for spending at the end of the year. The City's governmental funds reflect a combined fund balance of $8,891,748. Of this $1,169,072 is reserved for debt service, $18,127 for prepaids and inventory, and 5486,766 for capital purchases. There was a decrease in the combined fund balance of $3,016,552 over the prior year. This is largely attributable to the continuation of both infrastructure replacement and sidewalk construction projects. These projects are expected to be complete by the end of the next fiscal year. All other funds as presented on the governmental funds statement of revenues, expenditures, and changes in fund balances experienced a positive net change in fund balance. The general fund is the chief operating fund of the City. At the end of the current year, unreserved, undesignated fund balance of the general fund was $4,187,536, while total fund balance reached $4,203,052. As a measure of the general fund's liquidity, it may be useful to compare both unreserved fund balance and total fund balance to 23 CITY OF WEST UNIVERSITY PLACE, TEXAS MANAGEMENT'SDISCUSSIONANDANALYSIS, Continued December 31, 2006 total fund expenditures. Unreserved, undesignated fund balance represents 40% of total general fund expenditures, while total fund balance represents 41% of that same amount. The debt service fund has a total fund balance of $1,169,072, all of which is reserved for the payment of debt service. The net increase in fund balance during the current year in the debt service fund was $172,145. This increase can be attributed to the growth in property tax revenues as well as investment earnings. GENERAL FUND BUDGETARY HIGHLIGHTS There had been a planned increase in budgeted fund balance in the amount of $712,140 in the general fund. However, the net change in fund balance increased by $830,011 resulting in a positive variance of $117,871 from budgeted as amended over actual. Actual general fund revenues exceeded original and amended budgeted revenues by $89,153 during 2006. This increase includes the positive variances of $168,377 for charges for services and $52,225 for franchise revenues. Expenses in Public service exceeded budgeted amounts by $26,545 for the fiscal year. This variance can be attributed to increased utility costs for the City. GENERAL FUND BUDGETARY HIGHLIGHTS - YEAR 2006 Original and Amended Budget Actual Revenues Taxes $ 7,897,790 $ 7,909,827 Other 2,433,070 2,510,186 Total 10,330,860 10,420,013 Expenditures Expenditures 10,488,720 10,462,932 Other Financing Sources Transfers in 870,000 872,930 Total 870,000 872,930 Change in Fund Balance $ 712,140 $ 830,011 Proprietary Funds - The City's proprietary funds financial statements provide the same type of information found in the government-wide financial statements, but in more detail. CAPITAL ASSETS At the end of year 2006, the City's governmental activities funds had invested $80,894,007 in a variety of capital assets and infrastructure (net of accumulated depreciation). This represents a net increase of $5,183,554. Depreciation is included with the governmental capital assets as required by GASB Statement No. 34 with an increase in depreciation expense of $1,837,668. Major capital asset events during the current year include the following: 24 CITY OF WEST UNIVERSITY PLACE, TEXAS MANAGEMENT'S DISCUSSIONANDANALYSIS, Continued December 31, 2006 • Continuation of the Area 10 and 11 B Street and Drainage System Projects for $3,281,632 • Sidewalk construction in the amount of $3,173,673 More detailed information about the City's capital assets is presented in note III. C to the financial statements. LONG-TERM DEBT At the end of the current year, the City had total bonds and certificates of obligation outstanding of $83,155,000. Of this amount, $55,945,000 was general obligation debt, $14,580,000 was revenue bond debt, and certificates of obligation accounted for $12,630,000. During the year, the City had a net reduction in the long-term debt of $3,404,131. In addition, the City entered into a capital lease with Bank of America for the purchase of a fire truck in the amount of $473,285. However, as of year end, the City had not received the fire truck. More detailed information about the City's long-term liabilities is presented in note 111, D to the financial statements. Current underlying ratings on debt issues are as follows: Moody's Investors Service Water revenue bonds Aaa ECONOMIC FACTORS AND NEXT YEAR'S BUDGET Standard and Poor's AAA The City of West University Place City Council approved a $23.9 million budget for the City's major operating funds (General, Debt Service, Water Utility, and Solid Waste) for calendar year 2007. The budget incorporates a 7% decrease in the property tax rate made possible by a 10% growth in assessed property values. West University Place's tax rate is one of the lowest in the Houston area and is projected to remain stable into the future due to steady growth in assessed values, the political stability of the community, and the underlying strength in the Houston area economy. The Water Utility Fund had been a source of concern because a series of wetter years and dramatic increases in debt service had steadily decreased reserves and pushed the Fund into non-compliance with its bond covenants. The City Council took action in late 2003 by increasing water and sewer rates. Since then, the City has carefully monitored the performance of this utility and increased rates as needed with the last increase being in April 2006. Assessed values have grown almost 25% in the last five years and, while the rate of growth is expected to slow, reconstruction will continue to impact the value of property well into the future. CONTACTING THE CITY'S FINANCIAL MANAGEMENT ' This financial report is designed to provide a general overview of the City of West University Place's finances for all those with an interest in the City's finances. Questions concerning this report or requests for additional ' financial information should be directed to Walter Thomas, Finance Director, 3800 University Boulevard, West University Place, TX, 77005, telephone 713.662.5186, or for general City information, visit the City's website at www.westu.ore. 25 (This page intentionally left blank.) 26 BASIC FINANCIAL STATEMENTS 27 1 (This page intentionally left blank.) 28 CITY OF WEST UNIVERSITY PLACE, TEXAS STATEMENT OF NET ASSETS December 31, 2006 Assets Cash and equity in pooled cash and investments Cash with fiscal agent Receivables, net of allowances Internal balances Inventory Prepaids and other assets Deferred charges Restricted assets: Cash and equity in pooled cash Capital assets: Land construction in progress Depreciable capital assets, net Total assets Liabilities Accounts payable and accrued liabilities Unearned revenue Accrued bond interest Noncurrent liabilities: Due within one year Due in more than one year Total liabilities Net Assets Invested in capital assets, net of related debt Restricted for: Capital projects Debt service Special revenue projects Unrestricted Total net assets See Notes to Financial Statements. Primary Government Governmental Business-Type Activities Activities Total $ 14,828,602 $ 474,258 $ 15,302,860 486,766 - 486,766 7,362,061 902,205 8,264,266 500,000 (500,000) - 2,611 2,611 15,516 - 15,516 319,589 201,353 520,942 813,673 813,673 5,864,089 193,875 6,057,964 21,355,482 - 21,355,482 53,674,436 34,998,367 88,672,803 104,409,152 37,083,731 141,492,883 1,243,853 146,569 1,390,422 12,646,760 - 12,646,760 1,080,516 204,507 1,285,023 4,190,140 665,000 4,855,140 65,878,709 13,804,549 79,683,258 85,039,978 14,820,625 99,860,603 11,786,607 20,924,046 32,710,653 2,240,303 313,673 2,553,976 88,556 500,000 588,556 1,276,710 - 1,276,710 3,976,998 525,387 4,502,385 $ 19,369,174 $ 22,263,106 $ 41,632,280 29 CITY OF WEST UNIVERSITY PLACE, TEXAS STATEME7VT OF ACTIVITIES For the year ended December 31, 2006 Program Revenues Operating Charges for Grants and Functions/Programs Expenses Services Contributions Primary Government Governmental Activities General government $ 2,706,514 $ 1,260,376 $ - Public safety 5,187,464 267,609 259,000 Public works 2,654,368 - - Public services 1,874,113 580,297 Interest on long-term debt 2,984,308 - - Total Governmental Activities 15,406,767 21108,282 259,000 Business-type Activities Water and sewer 5,084,326 4,795,073 - Solid waste 844,754 944,897 Total Business-type Activities 5,929,080 5,739,970 Total Primary Government $ 21,335,847 $ 7,848,252 $ 259,000 General Revenues: Ad valorem taxes Sales taxes Franchise taxes Other taxes Contributions Investment earnings Other revenues Transfers Total General Revenues and Transfers Change in Net Assets Beginning Net Assets Ending Net Assets See Notes to Financial Statements. 30 Net Revenue (Expense) and Changes in Net Assets ' Primary Government Governmental Business-Type Activities Activities Total $ (1,446,138) $ $ (1,446,138) (4,660,855) (4,660,855) (2,654,368) (2,654,368) (1,293,816) (1,293,816) (2,984,308) (2,984,308) (13,039,485) (11039,485) (289,253) (289,253) 100,143 100,143 (189,110) (189,110) (13,039,485) (189,110) (13,228,595) 12,636,535 - 12,636,535 1,028,946 - 1,028,946 1,000,930 - 1,000,930 14,795 14,795 326,656 - 326,656 695,749 72,757 768,506 1,828,944 139,805 1,968,749 1,053,941 (1,053,941) - 18,586,496 (841,379) 171745,117 5,547,011 (1,030,489) 4,516,522 13,822,163 23,293,595 37,115,758 $ 19,369,174 $ 22,263,106 $ 41,632,280 31 CITY OF WEST UNIVERSITY PLACE, TEXAS BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2006 Assets Current assets: Cash and equity in pooled cash and investments Cash with fiscal agent Receivables, net Due from other funds Inventory Prepaid costs Total Assets Liabilities and Fund Balances Liabilities: Accounts payable and accrued liabilities Due to other funds Deferred revenue Total Liabilities Fund Balances: Reserved for: Prepaids and inventory Debt service Capital purchases Unreserved, undesignated reported in: General fund Special revenue funds Capital projects funds Total Fund Balances Total Liabilities and Fund Balances Capital Projects Debt Infrastructure Sidewalk General Service Replacement Construction $ 6,554,260 S 4,292,163 $ 1,215,118 $ 932,172 3,640,255 3,627,649 758,540 - 15,516 $ 10,968,571 $ 7,919,812 $ 1,215,118 $ 931172 $ 596,892 $ 44,908 $ 211,281 $ 390,697 36,243 - - 6,132,384 6,705,832 - - 6,765,519 6,750,740 211281 390,697 15,516 - I,169,072 4,187,536 - - 1,003,837 541,475 4,203,052 1,169,072 1,003,837 541,475 $ 10,968,571 $ 7,919.812 $ 1,215,118 $ 932,172 Amounts reported for governmental activities in the statement of net assets are different, because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Capital assets, non-depreciable Capital assets, net depreciable Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred in the funds. Internal service funds are used by management to charge the costs of certain capital assets to individual funds. The assets and liabilities of the Internal Service Funds are included in the governmental activities in the statement of net assets. Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds. Accrued interest payable Non-current liabilities due in one year Non-current liabilities due in more than one year Deferred charges for issuance costs Net Assets of Governmental Activities See Notes to Financial Statements. 32 Nonmajor Governmental Funds Total $ 1,576,743 $ 14,570,456 486,766 486,766 750 7,268,654 - 758,540 2.611 2,611 - 15,516 $ 2,066,870 $ 23,102,543 $ 75 $ 1,2431853 92,483 128,726 - 12,838,216 92,558 14,210,795 2,611 18,127 - 1,169,072 486,766 486,766 - 4,187,536 1,276,710 1,276,710 208.225 1,753,537 1,974,312 8,891,748 $ 2,066,870 27,219,571 52,951,089 191.456 945,086 (1,080,516) (4,190,140) (65,878,709) 319,589 $ 19.369,174 33 CITY OF WEST UNIVERSITY PLACE, TEXAS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the year ended December 31, 2006 Revenues Taxes Permits, licenses, and fees Fines and forfeitures Charges for services Intergovernmental Contributions Investment earnings Other revenue Total Revenues Expenditures Current: General government Public safety Public works Public service Capital outlay Debt service: Principal Interest and fiscal agent fees Total Expenditures Capital Projects Debt Infrastructure Sidewalk General Service Replacement Construction $ 7,909,827 $ 6,748,355 $ $ 580,297 - 250,849 1,260,376 268,377 118,703 165,039 110,859 150,287 - 1,173,668 490,356 10,420,013 6,867,058 1,338,707 601,215 2,381,154 - - - 5,028,528 - - - 1,557,955 - - - 1,495,295 - - - - - 3,336,197 3,173,697 3,375,000 - , 3,319,913 - 10,462,932 6,694,913 3.336,197 3,173,697 1 Excess (Deficiency) of Revenues Over (Under) Expenditures (42,919) 172,145 (1,997,490) (2,572,482) Other Financing Sources (Uses) Transfers in 872,930 Transfers (out) - Capital lease proceeds - Total Other Financing Sources (Uses) 872.930 Net Change in Fund Balance 830,011 172,145 52,682 ' (667,783) - (667,783) 52,682 (2,665,273) (2,519,800) Beginning fund balances 3,373,041 996,927 3.669,1 10 3,061.275 Ending Fund Balances $ 4,203,052 $ 1,169,072 $ 1.003,837 $ 541,475 See Notes to Financial Statements. , 34 Nonmajor Governmental Funds Total $ $ 14,658,182 580,297 16,760 267,609 - 1,260,376 259,000 259,000 326,656 326,656 25,915 688,893 - 1,814,311 628,331 19,855,324 - 2,381,154 5,028,528 - 1,557,955 216,913 1,712,208 330,509 6,840,403 - 3,375,000 - 3,319,913 547,422 24,215,161 80,909 (4,359,837) 615,101 1,540,713 (2,930) (670,713) 473.285 473,285 1,085,456 1,343285 1,166,365 (3,016,552) 807,947 11,908,300 $ 1,974,312 $ 8,891,748 35 (This page intentionally left blank.) 36 ' CITY OF WEST UNIVERSITY PLACE, TEXAS RECONCILL9TION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OFACTIVITIES For the year ended December 31, 2006 Amounts reported for governmental activities in the statement of activities are different because: Net changes in fund balances - total governmental funds $ (3,016,552) Governmental funds report capital outlays as expenditures. However, in the statement of I activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays was more than depreciation in the current period. 5,246,419 The issuance of long-term debt (e.g., bonds, certificates of obligation) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts and similar items when debt is first issued; whereas, these amounts are deferred and amortized in the statement of activities. Capital lease proceeds (473,285) Principal payments 3,375,000 Amortization of bond issuance costs, premiums, and discounts 4,547 Revenue in the statement of activities that does not provide current financial resources are not reported as revenue in the funds. 23,024 Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. 293,102 Internal service funds are used by management to charge the costs of certain capital assets to individual funds. The net revenue (expense) is reported with governmental activities. 94,756 Change in Net Assets of Governmental Activities $ 5,547,011 See Notes to Financial Statements. 37 CITY OF WEST UNIVERSITY PLACE, TEXAS STATEMENT OF NET ASSETS (Page I of 2) PROPRIETARY FUNDS December 31, 2006 Business-Type Activities-Enterprise Funds Water and Solid Sewer Waste Total Assets Current assets: Cash and equity in pooled cash and investments $ 354,064 $ 120,194 $ 474,258 Accounts receivable, net of allowances 742,555 159,650 902,205 Due from other funds - Total Current Assets 1,096,619 279,844 1,376,463 Noncurrent assets Restricted cash and equity in pooled cash 813,673 - 813,673 Total Restricted Assets 813,673 - 813,673 Deferred charges 201,353 - 201,353 Capital assets: Land 193,875 - 193,875 Buildings and improvements 459,625 - 459,625 Furniture and equipment 788,503 - 788,503 Water and sewer system 53,703,598 - 53,703,598 Construction in progress - - - Less: accumulated depreciation (19,953,359) - (19,953,359) Total Capital Assets (Net of Accumulated Depreciation) 35,192,242 - 35,192,242 Total Noncurrent Assets 36,207,268 - 36,207,268 Total Assets $ 37,303,887 $ 279,844 $ 37,583,731 See Notes to Financial Statements. 38 Governmental Activities - Internal Service Funds $ 258,146 93,407 36,243 387,796 1,659,028 (935,681) 723,347 723,347 $ 1,111,143 39 CITY OF WEST UNIVERSITY PLACE, TEXAS STATEMENT OF NET ASSETS (Page 2 of 2) PROPRIETARY FUNDS December 31, 2006 Liabilities Current liabilities: Accounts payable and accrued liabilities Accrued interest payable Due to other funds Revenue bonds Total Current Liabilities Noncurrent liabilities: Revenue bonds payable (net of unamortized discounts and deferred amounts on refunding) Total Noncurrent Liabilities Total Liabilities Net Assets Invested in capital assets, net of related debt Restricted for capital projects Restricted for debt service Unrestricted Total Net Assets See Notes to Financial Statements. Business-Type Activities-Enterprise Funds Water and Solid Sewer Waste Total $ 106,312 $ 40,257 $ 146,569 204,507 - 204,507 500,000 500,000 6651000 665,000 1,475,819 40,257 1,516,076 13,804,549 13,804.549 13,804,549 11804,549 157280,368 40,257 15,320,625 20,924,046 20,924,046 313,673 313,673 500,000 - 500,000 285,800 239,587 525,387 $ 22,023,519 $ 239,587 $ 22,2631106 40 Governmental Activities - Internal Service Funds 166,057 166,057 166,057 723,347 221,739 $ 945,086 41 CITY OF WEST UNIVERSITY PLACE, TEXAS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For the year ended December 31, 2006 Operating Revenues Charges for sales and services Other revenues Total Operating Revenues Operating Exnenses Costs of sales and services Personnel Depreciation Total Operating Expenses Operating Income Nonoperatin2 Revenues (Expenses) Investment income Interest expense Gain (loss) on sale of assets Total Nonoperating Revenues (Expenses) Income (Loss) Before Transfers Transfers (out) Change in Net Assets Beginning net assets Ending Net Assets See Notes to Financial Statements. Business-Type Activities-Enterprise Funds Water and Solid Sewer Waste Total $ 4,795,073 $ 944,897 $ 5,739,970 4,955 134,850 139,805 4,800,028 1,079,747 51879,775 1,910,005 336,774 2,246,779 827,993 507,980 1,335,973 1,815,756 - 1,815,756 4,553,754 844,754 51398,508 246,274 234,993 481,267 42,453 30,304 72,757 (530,572) - (530,572) (488,119) 30,304 (457,815) (241,845) 265,297 233452 (645,000) (408,941) (1,053,941) (886,845) (143,644) (1,030,489) 22,910,364 383,231 23,293,595 $ 22,023,519 $ 239,587 $ 22,263,106 42 Governmental Activities - Internal Service Funds $ 317,521 26,011 343,532 69,599 181,267 250,866 92,666 6,856 (4,766) 2,090 94,756 94,756 850,330 $ 945,086 43 CITY OF WEST UNIVERSITY PLACE, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Page I of 2) For the year ended December 31, 2006 Cash Flows from Operating Activities Receipts from customers and users Payments to suppliers Payments to employees Net Cash Provided by Operating Activities Cash Flows from Noncapital Financing Activities Transfer to other funds Net Cash (Used) by Capital and Related Financing Activities Cash Flows from Capital and Related Financing Activities Acquisition and construction of capital assets Principal paid on capital debt Interest paid on capital debt Proceeds from sale of capital assets Net Cash Provided (Used) by Capital and Related Financing Activities Cash Flows from investing Activities Interest received Net Cash Provided by Investing Activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Year Unrestricted cash and cash equivalents Restricted cash and cash equivalents Beginning cash and cash equivalents Ending Cash and Cash Equivalents Ending Cash and Cash Equivalents: Unrestricted cash and cash equivalents Restricted cash and cash equivalents See Notes to Financial Statements. Business-Type Activities-Enterprise Funds Water and Solid Sewer Waste Total $ 4,768,493 $ 1,052,255 $ 5,820,748 (1,603,163) (346,731) (1,949,894) (827,993) (507,980) (1,335,973) 2,337,337 197,544 2,534,881 (645,000) (408,941) (1,053,941) (645,000) (408,941) (1,053,941) (309,093) (309,093) (675,000) (675,000) (597,295) (597,295) (1,581388) (],581,388) 42,453 30,304 72,757 41453 30,304 72,757 153,402 (181,093) (27,691) 391,708 301,287 692,995 622,627 - 622,627 1,014,335 301,287 1,315,622 $ 1,167,737 $ 120,194 $ 1,287,931 $ 354,064 $ 120,194 $ 474,258 813,673 - 813,673 $ 1,167,737 $ 120,194 $ 1,287,931 44 i Governmental Activities - Internal Service Funds $ 364,029 (69,599) 294,430 (128,568) 5.400 (123,168) 6,856 6,856 178,118 80,028 80,028 $ 258,146 $ 258,146 $ 258,146 45 CITY OF WEST UNIVERSITY PLACE, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Page 2 of 2) For the year ended December 31, 2006 Business-Type Activities-Enterprise Funds Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation Changes in Operating Assets and Liabilities: (Increase) Decrease in Current Assets: Accounts receivable Due from other funds increase (Decrease) in Current Liabilities: Accounts payable and accrued liabilities Due to other funds Net Cash Provided by Operating Activities See Notes to Financial Statements. Water and Solid Sewer Waste Total $ 246.274 $ 234,993 $ 481,267 1,815,756 - 1,815,756 (31,535) (27,492) (59,027) (193,158) (9,957) (203,115) 500,000 - 500,000 $ 2,337,337 $ 197,544 $ 2,534,881 46 Governmental Activities - Internal Service Funds $ 92,666 181,267 (93,407) (36,243) 150,147 $ 294,430 47 (This page intentionally left blank.) 48 ' CITY OF WEST UNIVERSITY PLACE, TEXAS NOTES TO FINANCIAL STATEMENTS December 31, 2006 L SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The City of West University Place, Texas (the "City"), was incorporated in 1924. The City has operated under a "Home Rule Charter" which provides for a Council-Manager form of government since 1940. The City Council is the principal legislative body of the City. The City Manager is appointed by a majority vote of the City Council and is responsible to the Council for the administration of all the affairs of the City. The City Manager is responsible for the appointment and removal of department directors and employees, supervision and control of all City departments, and preparation of the annual budget. The City provides the following services: public safety to include police and fire services; municipal court; leisure services; streets; drainage; water and sewer services; solid waste collection and disposal; community development; and general administration. The City is an independent political subdivision of the State of Texas governed by an elected council and a mayor and is considered a primary government. As required by generally accepted accounting principles, these basic financial statements have been prepared based on considerations regarding the potential for inclusion of other entities, organizations, or functions as part of the City's financial reporting entity. The Friends of West University Parks Fund, Inc., although legally separate, is considered part of the reporting entity. No other entities have been included in the City's reporting entity. Additionally, as the City is considered a primary government for financial reporting purposes, its activities are not considered a part of any other governmental or other type of reporting entity. Considerations regarding the potential for inclusion of other entities, organizations or functions in the City's financial reporting entity are based on criteria prescribed by generally accepted accounting principles. These same criteria are evaluated in considering whether the City is a part of any other governmental or other type of reporting entity. The overriding elements associated with prescribed criteria considered in determining that the City's financial reporting entity status is that of a primary government are that it has a separately elected governing body; it is legally separate; and it is fiscally independent of other state and local governments. Additionally, prescribed criteria under generally accepted accounting principles include considerations pertaining to organizations for which the primary government is financially accountable and considerations pertaining to organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. Blended Component Unit Friends of West University Parks Fund, Inc. Friends of West University Parks Fund, Inc. (the "Corporation") has been included in the reporting entity as a blended component unit. The Corporation is a not-for-profit entity created to solicit private contributions for the beautification, improvement, and maintenance of the City's parkland. The Corporation's Board of Directors is appointed by and serves at the discretion of City Council. City Council approval is required for any projects of the Corporation that exceed $1,000. In the event of dissolution, any assets of the Corporation will be transferred to the City. The operations of the Corporation are presented as a governmental fund type. Separate financial statements of the Corporation may be obtained from the Finance Department of the City. 49 CITY OF WEST UNIVERSITY PLACE, TEXAS NOTES TO FINANCLAL STATEMENTS, Continued December 31, 2006 B. Financial Statement Presentation These financial statements include implementation of Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis -for State and Local Governments. Certain of the significant changes in the Statement include the following: • A Management's Discussion and Analysis (MD&A) section providing an analysis of the City's overall financial position and results of operations. • Financial statements prepared using full accrual accounting for all of the City's activities. • A change in the fund financial statements to focus on the major funds. GASB Statement No. 34 established standards for external financial reporting for all state and local governmental entities, which includes a statement of net assets and a statement of activities. It requires the classification of net assets into three components: invested in capital assets, net of related debt; restricted; and unrestricted. These classifications are defined as follows: Invested in capital assets, net of related debt-This component of net assets consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Restricted-This component of net assets consists of constraints placed on net asset use through external constraints imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation. Unrestricted-This component of net assets consists of net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt." C. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of ' changes in net assets) 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 intergovermnental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities presents a comparison between direct expenses and program revenues for ' each segment of the business-type activities of the City and for each function of the City's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include ' charges paid by the recipients of goods or services offered by the programs and grants that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, such as taxes and investment earnings, are presented as ' general revenues. 50 t ' CITY OF WEST UNIVERSITY PLACE, TEXAS ' NOTES TO FINANCIAL STATEMENTS, Continued December 31, 2006 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. In the fund financial statements, the accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The ' operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Following is a description of the various funds: ' Governmental Funds ' Governmental funds are those funds through which most governmental functions are typically financed. ' General Fund The general fund is used to account for all financial transactions not properly includable in other funds. The principal sources of revenues include local property taxes, sales and franchise taxes, ' licenses and permits, fines and forfeitures, and charges for services. Expenditures include general government, public safety, public works, and public service. ' Special Revenue Funds The special revenue funds are used to account for proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. The special revenue funds include Parks Fund, Friends of the Parks Fund (blended component unit), Senior Activity Fund, Court Technology Fund, and the METRO Grant Fund. The special revenue funds are considered nonmajor funds for reporting purposes. Debt Service Fund The debt service fund is used to account for the payment of interest and principal on all general obligation bonds and other long-term debt of the City. The primary source of revenue for debt ' service is local property taxes. The debt service fund is considered a major fund for reporting purposes. Capital Projects Funds The capital projects funds are used to account for the expenditures of resources accumulated from sales tax revenues and the sale of bonds and related interest earnings for capital improvement ' projects. The Infrastructure Replacement Fund and the Sidewalk Construction Fund are considered major funds for reporting purposes with the Capital Projects Fund and Drainage Improvement Fund reported as nonmajor funds. Proprietary Fund Types I' Proprietary funds are used to account for activities that are similar to those often found in the private sector. All assets, liabilities, equities, revenues, expenses, and transfers relating to the government's business activities are accounted for through proprietary funds. The measurement focus is on determination of net income, financial position, and cash flows. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues include charges for services. Operating expenses include costs of materials, contracts, personnel, and depreciation. All ' revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. Proprietary fund types follow GAAP prescribed by the Governmental Accounting Standards Board (GASB) and all financial Accounting Standards Board's standards issued prior to 51 CITY OF WEST UNIVERSITY PLACE, TEXAS NOTES TO FINANCIAL STATEMENTS, Continued December 31, 2006 November 30, 1989. Subsequent to this date, the City accounts for its enterprise funds as presented by GASB. The proprietary fund types used by the City include the following: Enterprise Funds The enterprise funds are used to account for the operations that provide water and wastewater collection, wastewater treatment operations and solid waste collection and disposal. The services are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (expenses including depreciation) of providing goods or services to the general public on a continuing basis will be financed or recovered primarily through user charges. The Water and Sewer Fund and the Solid Waste Fund are considered major funds for reporting purposes. Additionally, the government reports the following fund types: Internal Service Funds Internal service funds account for services provided to other departments or agencies of the government, or to other governments, on a cost reimbursement basis. The Equipment Replacement Fund is used to account for equipment replacement and maintenance services. The Health Benefits Fund accounts for costs associated with retired or separated employees as well as health benefits. D. Measurement Focus and Basis of Accounting The government-wide statements of net assets and statements of activities and all proprietary funds are accounted for on a flow of economic resources measurement focus, accrual basis of accounting. With this measurement focus, all assets and all liabilities associated with the operations of these ' activities are included on the balance sheet. Proprietary fund equity consists of net assets. Proprietary fund-type operating statements present increases (i.e., revenues) and decreases (i.e., expenses) in net total assets. ' The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds and component units are accounted for using a current financial , resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other , financing uses) in net current assets. The City utilizes the modified accrual basis of accounting in the governmental fund type and , component units. Under the modified accrual basis of accounting, revenues are recognized in the accounting period when they are susceptible to accrual (i.e., when they are measurable and available). Measurable means the amount of the transaction can be determined and available means collectible ' within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues available if they are collected within 60 days of the end of the current period. Revenues susceptible to accrual include charges for services and interest on ' temporary investments. 52 ' CITY OF WEST UNIVERSITY PLACE, TEXAS NOTES TO FINANCIAL STATEMENTS, Continued December 31, 2006 Property taxes, sales taxes, franchise taxes, and interest associated with the current period are all considered to be susceptible to accrual and so have been recognized as revenues of the current period. Other receipts and other taxes become measurable and available when cash is received by the government and are recognized as revenue at that time. Under modified accrual accounting, expenditures are recognized in the accounting period in which the liability is incurred, if measurable, except for interest on general long-term debt, which is recognized when due. The accrual basis of accounting is used for the proprietary fund types. This basis of accounting recognizes revenues in the accounting period in which they are earned and become measurable, and expenses in the accounting period in which they are incurred and become measurable. The statements of net assets, statements of activities, and financial statements of proprietary fund types are presented on the accrual basis of accounting. Under this method of accounting, revenues are recognized in the accounting period in which they are earned, and expenses in the accounting period in which they are incurred. Generally, the effect of interfund activity has been eliminated from the goverment-wide financial statements. E. Assets, Liabilities, and Net Assets or Fund Equity 1. Deposits and Investments The City maintains a pooled cash and investments account. Each fund whose monies are deposited in the pooled cash and investment account has equity therein, and interest earned on the investment of these monies is allocated based upon relative equity at the previous month end. Amounts on deposit ' in interest bearing accounts and other investments are displayed on the combined balance sheet as "Cash and equity in pooled cash and investments." In accordance with GASB Statement No. 31 Accounting and Reporting for Certain Investments and External Investment Pools, 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. Investment positions in external investment pools that are operated in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1910, such as TexPool, are reported using the pools' share price. The City has adopted a written investment policy regarding the investment of its funds as defined in the Public Funds Investment Act, Chapter 2256, Texas Governmental Code. In summary, the City is authorized to invest in the following: Direct obligations of the U.S. Government Money Market Mutual Funds that meet certain criteria Statewide investment pools I I 1 53 CITY OF WEST UNIVERSITY PLACE, TEXAS NOTES TO FINANCIAL STATEMENTS, Continued December 31, 2006 2. Receivables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the year are referred to as either "interfund receivables/payables" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds" in the fund financial statements. If the transactions are between the primary government and its component unit, these receivables and payables are classified as "due to/from component unit/primary government" Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances." Advances between funds are offset by a fund balance reserve account in applicable governmental funds to indicate they are not available for appropriation and are not expendable available financial resources. All trade receivables are shown net of an allowance for uncollectibles. Property taxes Property taxes are levied during October of each year and are due upon receipt of the City's tax bill. Taxes become delinquent, with an enforceable lien on property, on February 1 of the following year. 3. Inventories and Prepaid Items The costs of governmental fund type inventories are recorded as expenditures when the related liability is incurred (i.e., the purchase method). Certain payments to vendors reflect costs applicable to future accounting periods (prepaid expenditures) are recognized as expenditures when utilized. 4. Capital assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. In accordance with GASB Statement No. 34, infrastructure has been capitalized retroactively. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest costs incurred in connection with construction of enterprise fund capital assets are capitalized when the effects of capitalization materially impact the financial statements. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not capitalized. 54 ' CITY OF WEST UNIVERSITY PLACE, TEXAS NOTES TO FINANCIAL STATEMENTS, Continued December 31, 2006 Property, plant, and equipment of the primary government, as well as the component units, are depreciated using the straight-line method over the following estimated useful years: Estimated ' Asset Description Useful Life Buildings 20 to 50 years Improvements 5 to 50 years Equipment 5 to 10 years Water and sewer system 20 to 30 years Infrastructure 40 to 50 years 5. Compensated Employee Absences It is the City's policy to permit employees to accumulate earned but unused vacation, sick pay benefits, and compensatory time. Amounts accumulated, up to certain amounts, may be paid to employees upon termination of employment. The estimated amount of compensation for services provided that is expected to be liquidated with expendable available financial resources are reported as an expenditure and a fund liability of the governmental fund that will pay it when it matures or becomes due. Amounts of vested or accumulated vacation leave that are not expected to be liquidated with expendable available financial resources are maintained separately and represent a reconciling item between the fund and government-wide presentations. 6. Long-Term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities statement of net assets. The long-term debt consists primarily of bonds payable and accrued compensated absences. Long-term debt for governmental funds is not reported as liabilities in the fund financial statements until due. The debt proceeds are reported as other financing sources, net of the applicable premium or discount and payments of principal and interest are reported as expenditures. In the governmental fund types, issuance costs, even if withheld from the actual net proceeds received, are reported as debt service expenditures. However, claims and judgments paid from governmental funds are reported as a liability in the fund financial statements only for the portion expected to be financed from expendable available financial resources. ' Long-term debt and other obligations financed by proprietary funds are reported as liabilities in the appropriate funds. For proprietary fund types, bond premiums, discounts and issuance costs are deferred and amortized over the life of the bonds using the effective interest method, if material. Bonds payable are reported net of the applicable bond premium or discount. Issuance costs are reported as deferred charges. The property tax rate is allocated each year between the general and debt service funds. The full amount estimated to be required for debt service on general obligation debt is provided by the tax along with interest earned in the debt service fund. Though a portion of the general obligation debt ' was directly related to the purchase of water and sewer infrastructure, the debt service expenditures are included in the govenmental fund financial statements as they are expected to be paid from debt service tax revenues instead of water system revenues. Assets acquired under the terms of capital leases are recorded as liabilities and capitalized in the government-wide financial statements at the present value of net minimum lease payments at 55 CITY OF WEST UNIVERSITY PLACE, TEXAS NOTES TO FINANCIAL STATEMENTS, Continued December 31, 2006 inception of the lease. In the year of acquisition, capital lease transactions are recorded as other financing sources and as capital outlay expenditures in the applicable fund. Lease payments representing both principal and interest are recorded as expenditures in the general fund upon payment with an appropriate reduction of principal recorded in the government-wide financial statements. 7. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. 8. Estimates The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. H. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Annual budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP) except the capital projects funds, which adopt a project length budget. 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 in the approved budget is the department level in the general fund and all others are the fund level. The City Manager may transfer appropriations within a department without seeking the approval of City Council. Appropriations lapse at the end of the year, excluding capital project budgets. Supplemental budget appropriations were made for the year ended. Encumbrances represent the estimated amount of expenditures ultimately to result when unperformed contracts (in progress at year-end) are completed. Such encumbrances do not constitute expenditures or liabilities because the commitments will be reappropriated and honored during the subsequent year. A. Excess of Expenditures Over Appropriations For the year ended, expenditures exceeded appropriations at the legal level of control as follows: General Fund: Public Service $26,545 Senior Activity Transfers (out) $2,930 Court Technology Capital outlay $2,221 56 CITY OF WEST UNIVERSITY PLACE, TEXAS NOTES TO FINANCIAL STATEMENTS, Continued December 31, 2006 III. DETAILED NOTES ON ALL FUNDS A. Deposits and Investments Custodial credit risk - deposits. In the case of deposits, this is the risk that in the event of a bank failure, the City's deposits may not be returned to it. The City's investment policy requires funds on deposit at the depository bank to be collateralized by securities. As of December 31, 2006, market values of pledged securities were $3,042,261 and bank balances were $1,928,055. As of December 31, 2006, the City had the following investments: Weighted Average Investment Type Fair Value Maturity (Years) U.S. Agencies TexPool Total fair value Portfolio weighted average maturity $ 8,902,374 0.5 6,243,665 0.0 $ 15,146,039 0.5 TexPool TexPool was established as a trust company with the Treasurer of the State of Texas as trustee, segregated from all other trustees, investments, and activities of the trust company. The State Comptroller of Public Accounts exercises oversight responsibility over TexPool. Oversight includes the ability to significantly influence operations, designation of management, and accountability for fiscal matters. Additionally, the State Comptroller has established an advisory board composed of both participants in TexPool and other persons who do not have a business relationship with TexPool. The advisory board members review the investment policy and management fee structure. Finally, ' Standard & Poor's rate TexPool AAAm. As a requirement to maintain the rating, weekly portfolio information must be submitted to Standard & Poor's, as well as to the office of the Comptroller of Public Accounts for review. TexPool operates in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. TexPool uses amortized cost rather than market value to report net assets to compute share prices. Accordingly, the fair value of the position in TexPool is the same as the value of TexPool shares. 57 CITY OF WEST UNIVERSITY PLACE, TEXAS NOTES TO FINANCIAL STATEMENTS, Continued December 31, 2006 B. Receivables The following comprise receivable balances at year end: Water and General Debt Service Sewer Solid Waste Nonmajor Ad valorem taxes $ 3,318,044 $ 3,627,649 $ $ $ Other taxes 237,345 Accounts 49,869 869,283 182,305 Other 35.657 - - 750 Less allowance (660) (126,728) (22.655) - $ 3.6407255 $ 3,627,649 $ 742.555 $ 159.650 $ 750 C. Capital assets A summary of changes in capital assets for the year end were as follows: Primary Goverment Beginning Ending Balance Increases (Decreases) Balance Governmental Activities: Capital assets not being depreciated Land $ 5,864,089 $ $ $ 5,864,089 Construction in progress 14,767,828 6,657,686 (70,032) 21,355,482 Total capital assets not being depreciated 20,631,917 6,657,686 (70,032) 27,219,571 Other capital assets: Buildings and improvements 7,966,099 - 7,966,099 Madunery and equipment 4,947,384 437,797 (68,148) 5,317,033 Infrash»cttue 56,738,542 5,936 56,744,478 Total other capital assets 69,652,025 443,733 (68,148) 70,027.610 Less accumilated depreciation for. Buildings and inhrovenents (3,818,259) (281,548) - (4,099,807) Machinery and equipment (3,463,202) (421,230) 57,983 (3,826,449) Inliastruchrre (7,292,028) (1,134,890) - (8,426,918) Total accumiateddepiaiation (14,573,489) (1,837,668) 57,983 (16,353,174) Other capital assets, net 55,078,536 (1393,935) (10,165) 53,674,436 Totals $ 75,710,453 $ 5,263,751 $ (80,197) $ 80,894,007 Less associated debt (69,107,400) Invested in Capital Assets, Net of Related Debt $ 11,786.607 All capital assets constructed or paid for with funds of the component units are titled in the City's nane. Accordingly, component unit capital assets and construction in progress are recorded in the governmental activities totals. 58 11 11 1I CITY OF WEST UNIVERSITY PLACE, TEXAS NOTES TO FIA'ANCIAL STATEMENTS, Continued December 31, 2006 Depreciation was charged to governmental functions as follows: General government $ 164,304 Public safety 114,034 Public works 1,209,636 Public service 168,427 Capital assets held by the City's Internal Service Fund are charged to various functions based on their usage of the assets 181267 Total Governmental Activities Depreciation Expense $ 1,837,668 The following is a summary of changes in capital assets for business-type activities for the year ended: II II II Business-type Activities: Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated Other capital assets: Buildings Water and sewer system Machinery and equipment Total other capital assets Less accumulated depreciation for Beginning Balance Increases $ 193,875 $ 2,494,124 2,687,999 459,625 - 50,900,381 2,803,217 788,503 - 52,148,509 2,803,217 - 459,625 - 53,703,598 - 788,503 54,951,726 Buildings (234,940) (18,385) - (253,325) Water and sewer system (17,255,860) (1,777,543) - (19,033,403) Machinery and equipment (646,803) (19,828) - (666,631) Total accumulated depreciation (18,137,603) (1,815,756) - (19,953,359) Other capital assets, net 34,010,906 987,461 - 34,998,367 Totals $ 36,698,905 $ 987,461 $ (2,494,124) $ 35,192,242 Less associated debt Invested in Capital Assets, Net of Related Debt Depreciation was charged to business-type functions as follows: Water and sewer $ 1,815,756 Total Business-type Activities Depreciation Expense $ 1,815,756 59 (Decreases)/ Ending Reclassifications Balance (2,494,124) (2,494,124) 193,875 (14268,196) $ 20,924,046 193,875 CITY OF WEST UNIVERSITY PLACE, TEXAS NOTES TO FINANCIAL STATEMENTS, Continued December 31, 2006 D. Long-term Debt The following is a summary of changes in the City's total governmental long-term liabilities for the year ended. In general, the City uses the general and debt service funds to liquidate governmental long-term liabilities. Governmental Activities: Bonds, notes and other payables: General obligation bonds Certificates of obligation Unamortized refunding items Capital leases Other liabilities: Compensated absences Total Governmental Activities Long-term debt due in more than one year Business-type Activities: Revenue bonds (Less) unamortized premiums and or discounts Total Business-type Activities Long-term debt due in more than one year Beginning Ending Balance Additions Reductions Balance Amounts Due within One Year $ 59,095,000 $ - $ 3,150,000 $ 55,945,000 * $ 3,275,000 12,855,000 - 225,000 12,630,000 * 250,000 407,835 - 29,131 378,704 * - - 473,285 - 473,285 * 87,466 72,357,835 473,285 3,404,131 69,426,989 3,612,466 603,904 581,470 543,514 641,860 577,674 $ 72,961,739 $ 1,054,755 $ 3,947,645 $ 70,068,849 $ 4,190,140 $ 65,878.709 $ 15,255,000 $ (332,591) $ 14,922,409 $ - $ 675,000 $ 14,580,000 $ (222,140) (110,451) $ 452,860 $ 14,469,549 $ 13,804,549 *Debt associated with governmental activity capital assets $ 69,426,989 Deferred charges (319,589) Total debt associated with governmental activity capital assets 69,107,400 **Debt associated with business-type activity capital assets $ 14,469,549 Deferred charges (201,353) Total debt associated with business-type activity capital assets 14,268,196 11 665,000 ' $ 665,000 1 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. The governmental activities compensated absences are generally 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. 11 11 11 it 1I 60 11 CITY OF WEST UNIVERSITY PLACE, TEXAS NOTES TO FINANCIAL STATEMENTS, Continued December 31, 2006 Long-term debt at year end was comprised of the following debt issues: ' Interest Description Rates Balance Governmental Activities ' General Obligation Bonds Permanent improvement Series 2000 5.25-6.75% $ 1,825,000 Permanent improvement and refunding Series 1998 3.65-5.625% 5,895,000 Series 2002 4.0-5.5% 23,175,000 Series 2005 2.45-5.25% 25,050,000 Total General Obligation Bonds 55,945,000 Certificates of Obligation Series 2001 Series 2003 Total Certificates of Obligation Total Bond and Certificate Obligations Capital Leases Fire truck Total Capital Leases Total Governmental Activities Long-Term Debt Business-type Activities Revenue Bonds Water and sewer, series 2001A Water and sewer, series 2001 B Water and sewer, refunding series 2005 Total Business-type Activities Long-Term Debt 4.40% 2,955,000 3.15-4.0% 9,675,000 12,630,000 68,575,000 3.95% 473,285 473,285 $ 69,048,285 4.6-6.5% $ 3,340,000 2.25-4.3% 2,745,000 2.8711.50% 8,495,000 $ 14,580,000 The annual requirements to amortize bond and certificate debt issues outstanding at year ending were as follows: Year Ending Dec 31 2007 2008 2009 2010 2011 2012-2016 2017-2021 2022 Total Governmental Activit Principal Interest $ 3,525,000 $ 3,166,330 3,690,000 3,004,091 3,875,000 2,823,918 4,055,000 2,640,024 4,235,000 2,461,785 24,530,000 9,018,498 24,665,000 2,381,826 $ 68,575,000 $ 25,496,472 Business-tvv e Activity Principal Interest $ 665,000 $ 601,873 690,000 577,814 715,000 551,749 745,000 523,446 785,000 492,801 4,415,000 1,952,257 5,500,000 891,105 1,065,000 25,455 $ 14,580,000 $ 5,616,500 Total $ 7,958,203 7,961,905 7,965,667 7,963,470 7,974,586 39,915,755 33,437,931 1,090,455 $ 114,267,972 61 CITY OF WEST UNIVERSITY PLACE, TEXAS NOTES TO FINANCIAL STATEMENTS, Continued December 31, 2006 General obligation bonds are direct obligations of the City for which its full faith and credit are pledged. Repayment of general obligation bonds are from taxes levied on all taxable property located within the City. The City is not obligated in any manner for special assessment debt. Advance Refundings In 2005, the City defeased certain permanent improvement bonds, series' 1996, 1998, and 2000 in the amount of $25,395,000 by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liability for the defeased bonds are not included in the City's financial statements. At December 31, 2006, $5,290,000 of permanent improvement and refunding bonds, series 1998 and $18,045,000 of permanent improvement bonds, series 2000, were considered defeased related to the 2005 refunding. The City also defeased certain waterworks and sewer system revenue bonds, series' 1996A, 1996B, and 1998A in 2005 in the amount of $8,655,000 by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liability for the defeased bonds are not included in the City's financial statements. At December 31, 2006, $4,060,000 of revenue bonds, series 1998A was considered defeased related to the 2005 refunding. Federal Arbitrage The Tax Reform Act of 1986 instituted certain arbitrage restrictions consisting of complex regulations with respect to issuance of tax-exempt bonds after August 31, 1986. Arbitrage regulations deal with the investment of tax-exempt bond proceeds at an interest yield greater than the interest yield paid to bondholders. Generally, all interest paid to bondholders can be retroactively rendered taxable if applicable rebates are not reported and paid to the Internal Revenue Service at least every five years for applicable bond issues. Accordingly, there is the risk that if such calculations are not performed or not performed correctly could result in a substantial liability to the City. The City periodically engages an arbitrage consultant to perform the calculations in accordance with the IRS's rules and regulations. Capital Leases The annual requirements to amortize capital leases outstanding at year end were as follows: Year Ending Governmental Activity Dee 31 Principal Interest Total 2007 $ 87,466 $ 18,701 $ 106,167 2008 90,922 15,245 106,167 2009 94,515 11,652 106,167 2010 98,250 7,918 106,168 2011 102,132 4,036 106.168 Total $ 473,285 $ 57,552 $ 530,837 As of year end, the City had not taken possession of the fire truck and according there is no asset and related accumulated depreciation values related to this obligation. 62 CITY OF WEST UNIVERSITY PLACE, TEXAS NOTES TO FINANCIAL STATEMENTS, Continued December 31, 2006 E. Interfund Transactions The composition of interfund balances as of year end was as follows: Due To: General Fund Health Benefits* Due From: Nonmajor governmental funds Equipment Replacement Health Benefits Water and Sewer General Fund Amounts $ 92,483 15,910 150,147 500,000 36,243 $ 794,783 * Internal service funds Amounts recorded as "due to/from" are considered to be temporary loans and will be repaid during the following year. Transfers between the primary government funds during the year were as follows: Transfer Out Water and Sewer Solid Waste Infrastructure Replacement Nonmajor governmental funds Transfer In General Fund General Fund Governmental activities Sidewalk Contraction Nonmajor governmental funds General Fund Amounts $ 645,000 225,000 * 183,941 52,682 765,101 2,930 $ 1,874,654 *Solid waste transferred capital assets acquired during the year. Transfers to the general fund were subsidies for administrative expenditures. Other amounts transferred between funds related to amounts collected by the nonmajor governmental funds for various govermnental expenditures. Amounts recorded as due to/from are considered to be temporary loans and will be repaid during the following year. F. Fund Equity The City records fund balance reserves on the fund level to indicate that a portion of the fund balance is legally restricted for a specific future use or to indicate that a portion of the fund balance is not available for expenditure. 63 CITY OF WEST UNIVERSITY PLACE, TEXAS NOTES TO FINANCL4L STATEMENTS, Continued December 31, 2006 The following is a list of fund balances reserved or designated recognized by the City: General Fund Reserved for prepaids and inventory Debt Service Fund Reserved for debt service Nonmajor Other Governmental Funds Reserved for inventory Reserved for capital purchases G. Restricted Assets 15,516 1,169,072 2,611 486,766 The balance of the restricted cash account in the water and sewer fund recognized by the City is as follows: Water and Sewer Fund Restricted for construction $ 313,673 Restricted for debt service 500,000 $ 813,673 IV. OTHER INFORMATION A. 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 for which the City participates along with 2,539 other entities in the Texas Municipal League's Intergovernmental Risk Pools (the "Pool"). The Pool purchases commercial insurance at group rates for participants in the Pool. The City has no additional risk or responsibility to the Pool, outside of the payment of insurance premiums. The City has not significantly reduced insurance coverage or had settlements which exceeded coverage amounts for the past three years. B. Contingent Liabilities Amounts received or receivable from granting agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amounts of expenditures which may be disallowed by the grantor cannot be determined at this time although the City expects such amounts, if any, to be immaterial. The City is a defendant in several lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the City's management that resolution of these matters will not have a material adverse effect of the financial condition of the City. 64 CITY OF WEST UNIVERSITY PLACE, TEXAS NOTES TO FINANCIAL STATEMENTS, Continued December 31, 2006 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. C. Pension Plans 1. Texas Municipal Retirement Systems Plan Description The City provides pension benefits for all of its full-time employees through a non-traditional, joint contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), one of 811 currently administered by TMRS, an agent multiple-employer public employee retirement system. Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the City financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount at least equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are a percent (100%, 150%, or 200%) of the employee's accumulated contributions. In addition, the City can grant, as often as annually, another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contributions accumulated with interest if the current employee contribution rate and city matching percent had always been in existence and if the employee's salary had always been the average of his salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer-financed monetary credits with interest were used to purchase an annuity. Members can retire at ages 60 and above with 5 or more years of service or with 20 years of service regardless of age. A member is vested after 5 years. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. Contributions The contribution rate for the employees is 7%, and the City's matching ratio is currently two to one, both as adopted by City Council. Under the state law governing TMRS, the actuary annually determines the City contribution rate. This rate consists of the normal cost contribution rate and the prior service contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the currently accruing monetary credits due to the City matching percent, which are the obligation of the City as of an employee's retirement date, not at the time the employee's contributions are made. The normal cost contribution rate is the actuarially determined percent of payroll necessary to satisfy the obligation of the City to each employee at the time his/her retirement becomes effective. The prior service contribution rate amortizes the unfunded (over funded) actuarial liability (asset) over the remainder of the plan's 25-year amortization period. The unit credit actuarial cost method is used for determining the City contribution rate. Both the employees and the City make contributions monthly. 65 CITY OF WEST UNIVERSITY PLACE, TEXAS NOTES TO FINANCL4L STATEMENTS, Continued December 31, 2006 Since the City needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect (i.e., December 31, 2005 valuation is effective for rates beginning January 2007). All assumptions for the 12/31/05 valuations are contained in the 2005 TMRS Comprehensive Annual Financial Report, a copy of which may be obtained by writing to P.O. Box 149153, Austin, Texas 78714-9153. The following is a summary of the actuarial assumptions: Actuarial Cost Method Amortization Method Remaining Amortization Period Asset Valuation Method Investment Rate of Return Projected Salary Increases Includes Inflation. at Cost of Living Adjustments Three-Year Contribution Information Unit Credit Level % of Payroll 25 Years - Open period Amortized cost 7% None 3.5% None Annual Pension Percentage of ARC Net Pension Fiscal year Cost (ARC) Contributions Obligation 2004 $ 730,622 100% $ 2005 $ 893,021 100% $ 2006 $ 944,597 100% $ - D. Retainage Payable Subsequent to the release of the financial statements, additional information was discovered relating to the recording of a retainage payable in two funds for construction activity. The cumulative effect of recording this payable resulted in an increase in liabilities and expenditures of $539,772, of which $390,096 was recorded in the Sidewalk Construction Fund and $149,676 in the Infrastructure Replacement Fund. 66 I REQUIRED SUPPLEMENTAR Y INFORMA TION 67 I 11 'I (This page intentionally left blank.) 68 ' CITY OF WEST UNIVERSITY PLACE, TEXAS ' SCHEDULE OFBEVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND ' For the year ended December 31, 2006 Variance with Original Final Final Budget Budget Budget Actual Positive Amounts Amounts Amounts (Negative) Revenues Taxes: Ad valorem $ 5,891,350 $ 5,928,220 $ 5,865,156 $ (63,064) ' Franchise 976,200 963,500 1,015,725 52,225 Sales 710,300 1,006,070 1,028,946 22,876 Licenses and permits 484,700 557,260 580,297 23,037 Fines 201,800 250,850 250,849 (1) Charges for services 1,102,910 1,233,260 1,260,376 27,116 Investment eamings 100,000 100,000 268,377 168,377 Other revenues 190,710 291,700 150,287 (141,413) Total Revenues 9,657,970 10,330,860 10,420,013 89.153 Expenditures ' General government: Administration 644,630 919,630 911,548 8,082 Finance 1,472,330 1,472,330 1,469,606 2,724 ' Public safety: Police 2,846,070 2,726,070 2,707,128 18,942 Fire 2,329,390 2,329,390 2,321,400 7,990 Public works 1,812,550 1,572,550 1,557,955 14,595 Public service 1,394,750 1,468,750 1,495,295 (26,545) Total Expenditures 10,499,720 10,488,720 107462,932 25,788 Excess of Revenues Over (Under) Expenditures (841,750) (157,860) (42,919) 114,941 Other Financing Sources Transfers in 870,000 870,000 872,930 2,930 Total Other Financing Sources 870,000 870,000 872,930 2,930 Net Change in Fund Balance $ 28,250 $ 712,140 830,011 $ 117,871 Beginning fund balance Ending Fund Balance 3.373,041 $ 4,203,052 Notes to Required Supplementary Information: 1. Annual budgets are adopted on a basis consistent with generaly accepted accounting principles (GAAP). 2. Excess of expenditures over appropriations * 69 (This page intentionally left blank.) 70 CITY OF WEST UNIVERSITY PLACE, TEXAS SCHEDULE OF FUNDING PROGRESS- TEXAS MUNICIPAL RETIREMENT SYSTEM The City's annual covered payroll and pension costs are actuarially valued on a calendar year basis. Because the City makes all the annually required contributions, no net pension obligation (NPO) exists. The information presented below represents the City's Schedule of Funding Progress. Fiscal year 2006 2005 2004 2003 2002 Actuarial Valuation date 12/312005 12/31/2004 12/312003 12/31/2002 12/31/2001 Actuarial Value of Assets $ 14.095,876 $ 12,886,461 $ 13,522,221 $ 10,748,722 $ 9,745,961 Actuarial Accrued Liability $ 20,777,707 $ 19,196,674 $ 19,648,251 $ 14,372,452 $ 13,228,490 Percentage Funded 6Z8% 67.1% 68.8% 74.8% 73.7% Unfunded Actuarial Accrued Liability $ 6,681,831 $ 6,310,213 $ 6,126,030 $ 3,623,730 $ 3,482,529 Annual Covered Payroll $ 5,700,977 $ 5,545,016 $ 5,708,418 $ 4,902,792 $ 4,018,383 Unfunded Actuarial Accrued Liability (UAAL) % of Covered Payroll 117.2% 113.8% 107.3% 73.9°/ 86.7% Net Pension Obligation (NPO) at the Beginning of Period $ - $ - $ - $ - $ Annual Req. Contrib. (ARC) $ 944,597 $ 893,021 $ 730,622 $ 670,077 $ 568,996 Contributions Made $ 944,597 $ 893;021 $ 730,622 $ 670,077 $ 568,996 NPO at the End of Period $ - $ - $ - $ - $ - 71 (This page intentionally left blank.) 72 , COMBINING STATEMENTS AND SCHEDULES 73 (This page intentionally left blank.) 74 ' CITY OF WEST UNIVERSITY PLACE, TEXAS SCHEDULE OFREVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE- BUDGET AND ACTUAL DEBT SERVICE FUND For the year ended December 31, 2006 Revenues Ad valorem taxes Investment earnings Total Revenues Expenditures Debt service: Principal Interest and fiscal agent fees Total Expenditures Net Change in Fund Balance Beginning fund balance Ending Fund Balance 996,927 $ 1,169,072 Notes to Required Supplementary Information: 1. Annual budgets are adopted on a basis consistent with generaly accepted accounting principles (GAAP). Original and Amended Budget Amounts Actual Amounts Variance with Final Budget Positive (Negative) $ 6,652,670 $ 6,748,355 $ 95,685 42,000 118,703 76,703 61694.670 6,8677058 172,388 3,375,000 3,375,000 - 3,319,670 3,319.913 (243) 6,694,670 6,694,913 (243) $ - 172,145 $ 172,145 75 (This page intentionally left blank.) 76 CITY OF WEST UNIVERSITY PLACE, TEXAS NONMAJOR GOVERNMENTAL FUNDS December 31, 2005 SPECIAL REVENUE FUNDS Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditures for particular purposes. Parks Fund This fund is used to account for donations made by citizens for the specific purpose of improving the City's parks. Friends of the Parks Fund This fund accounts for the financial activity of the Friends of West University Parks Fund, Inc. This fund's revenues are restricted to use in improving the City's parks. Senior Activity Fund This fund is used to account for donations made to provide activities for the City's senior citizens. Court Technology Fund This fund is used to account for a portion of traffic fine revenue set aside to acquire technology for the municipal court. METRO Grant Fund This fund is used to account for the proceeds of a multi-year transportation grant from METRO. CAPITAL PROJECTS FUNDS Capital Projects Funds are used to account for resources used in the acquisition or construction of major general capital assets. Capital Projects Fund This fund is used to account for a wide range of construction projects and the acquisition of very costly capital equipment. Drainage Improvement Fund This fund is used to account for the cost and financing of a major project to improve drainage in the City. 77 CITY OF WEST UNIVERSITY PLACE, TEXAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2006 Assets Current assets: Cash and equity in pooled cash and investments Cash with fiscal agent Accounts receivable Inventory Total Assets Liabilities and Fund Balance Liabilities: Accounts payable Due to other funds Total Liabilities Fund balances Parks Special Revenue Funds Friends of Senior Court the Parks Activity Technology $ 15,593 $ 363,449 $ $ 6,300 750 - 2,611 - $ 15.593 $ 366,810 $ $ 6,300 Reserved for inventory 2,611 Reserved for capital purchases - - - Unreserved 15,593 364,199 6,300 Total Fund Balances 15,593 366,810 6,300 Total Liabilities and Fund Balances $ 15,593 $ 366,810 $ $ 6,300 78 Special Total Revenue Funds Capital Projects Funds Nonmajor METRO Capital Drainage Governmental Grant Projects Improvement Funds $ 983,]01 $ 208,300 $ - $ 1,576,743 486,766 - 486,766 - 750 - 2,611 $ 983,101 $ 695,066 $ - $ 2,066,870 $ $ 75 $ - $ 75 - 92,483 92,483 75 92,483 92,558 - 2,611 - 486,766 486,766 983,101 208,225 (92,483) 1,484,935 983,101 694,991 (92,483) 1,974,312 $ 983,101 $ 695,066 $ - $ 2,066,870 79 CITY OF WEST UNIVERSITY PLACE, TEXAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE NONMAJOR GOVERA;NIENTAL FUNDS For the year ended December 31, 2006 Special Revenue Funds Friends of Senior Court Parks the Parks Activity Technology Revenues Fines and forfeitures $ $ $ $ 16,760 Intergovernmental - - - - Contributions 15,310 175,682 - investment earnings 784 6,204 225 Total Revenues 16,094 181,886 16,985 Expenditures Current: Public service - 211,642 Capital outlay 11,309 Total Expenditures 11,309 211,642 Excess of Revenues Over (Under) Expenditures 4,785 (29,756) Other Financing Sources (Uses) Transfer in Transfers (out) Capital lease proceeds Total Other Financing Sources (Uses) Net Change in Fund Balances (2,930) (2,930) 4,785 (29,756) (2,930) Beginning fund balances Ending Fund Balances 17,121 17,121 (136) (136) 10,808 396,566 2,930 6,436 $ 15,593 $ 366,810 $ - $ 6,300 80 Special Total Revenue Funds Capital Projects Funds Nonmajor METRO Capital Drainage Governmental Grant Projects Improvement Funds $ - $ $ - $ 16,760 259,000 - 259,000 - 135,664 - 326,656 - 18,702 - 25,915 259,000 154,366 - 628,331 5,271 - - 216,913 - 205,056 97,023 330,509 5,271 205,056 97,023 547,422 253,729 (50,690) (97,023) 80,909 465,101 150,000 - 615,101 - - - (2,930) - 473,285 - 473,285 465,101 623,285 - 1,085,456 718,830 572,595 (97,023) 1,1661365 264,271 122,396 4,540 807,947 $ 983,101 $ 694,991 $ (92,483) $ 1,974,312 81 CITY OF WEST UNIVERSITY PLACE, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL NONMAJOR SPECIAL REVENUE FUNDS For the year ended December 31, 2006 PARKS Original and Variance with Final Final Budget Budget Actual Positive Amounts Amounts (Negative) Revenues Contributions $ 2,500 $ 15,310 $ 12,810 Investment earnings 100 784 684 Total Revenues 2,600 16,094 13,494 Expenditures Capital outlay 15,000 11,309 3,691 Total Expenditures 15,000 11,309 3,691 Net Change in Fund Balance $ (12,400) 4,785 $ 17,185 Beginning fund balance Ending Fund Balance 10,808 $ 15,593 82 CITY OF WEST UNIVERSITY PLACE, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL NONMAJOR SPECIAL REVENUE FUNDS For the year ended December 31, 2006 SENIOR ACTT VITY Revenues Permits, licenses and fees Investment earnings Total Revenues Other Financine (Uses) Transfers (out) Total Other Financing (Uses) Net Change in Fund Balance Beginning fund balance Ending Fund Balance 1. Excess of expenditures over appropriations.* Original and Variance with Final Final Budget Budget Actual Positive Amounts Amounts (Negative) (2,930) (2,930) (21930) (2,930) $ (2,930) $ (2,930) 2,930 83 CITY OF WEST UNIVERSITY PLACE, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL ' NONMAJOR SPECIAL REVENUE FUNDS For the year ended December 31, 2006 COURT TECHNOLOGY Original and Variance with Final Final Budget Budget Actual Positive Amounts Amounts (Negative) Revenues Fines and forfeitures Investment earnings Total Revenues Expenditures - Capital outlay Total Expenditures Net Change in Fund Balance Beginning fund balance Ending Fund Balance 1. Excess of expenditures over appropriations.* $ 11,700 $ 16,760 $ 5,060 25 225 200 11,725 16,985 5,260 14,900 17,121 (2,221) 14,900 17,121 (2,221) $ (3,175) (136) $ 3,039 6,436 $ 6,300 1 t t 41 'I II I I 84 11 CITY OF WEST UNIVERSITY PLACE, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL NONMAJOR SPECIAL REVENUE FUNDS For the year ended December 31, 2006 METRO GRANT Original and Final Budget Amounts Actual Amounts Variance with Final Budget Positive (Negative) Revenues Intergovernmental $ 259,000 $ 259,000 $ Investment earnings - - Total Revenues 259,000 259,000 Expenditures Public service 518,000 5,271 512,729 Total Expenditures 518,000 5,271 512,729 Other Financing Sources Transfers in - 465,101 465,101 Total Other Financing Sources 465,101 465,101 Net Change in Fund Balance $ (259,000) 718,830 $ 977,830 Beginning fund balance Ending Fund Balance 264,271 $ 983,101 85 II (This page intentionally left blank.) 86 ZI 11 I I CITY OF WEST UNIVERSITY PLACE, TEXAS ' INTERNAL SERVICE FUNDS December 31, 2006 Equipment Replacement Fund This internal service fund is used to account for equipment replacement and maintenance services to departments or agencies of the City on a cost reimbursement basis. ■ Healtb Benefits Fund This internal service fund is used to account for the costs associated with health benefits to departments or agencies of the City on a cost reimbursement basis as well as costs associated with retiring and seperating employees. i 1 87 1 CITY OF WEST UNIVERSITY PLACE, TEXAS COMBINING STATEMENT OF NET ASSETS , INTERNAL SERVICE FUNDS December 31, 2006 Equipment Healthcare Replacement Benefits Total Assets Current assets: Equity in pooled cash and investments Accounts receivable Due from other funds Total Current Assets Noncurrent assets: Capital assets: $ 223,146 $ 35,000 $ 258,146 - 93,407 93,407 36,243 36.243 223.146 164,650 387,796 1 Machinery and equipment 1,659,028 - 1,659,028 Less: accumulated depreciation (935,681) - (935,681) Total Capital Assets (Net of Accumulated Depreciation) 723,347 - 723,347 ' Total Noncurrent Assets 723,347 - 723,347 Total Assets 946,493 164,650 1,111,143 Liabilities Current liabilities: Due to other funds 15,910 150,147 166,057 Total Current Liabilities 15.910 150,147 166,057 Total Liabilities 15,910 150,147 166,057 Net Assets Invested in capital assets 723,347 - 723,347 Unrestricted 207,236 14,503 221,739 Total N t A t $ 930 583 $ 14 503 $ 945 086 e sse s , , , 88 CITY OF WEST UNIVERSITY PLACE, TEXAS COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS For the year ended December 31, 2006 Equipment Healthcare Replacement Benefits Total Operating Revenues Charges for sales and services $ 257,800 $ 59,721 $ 317,521 Other revenues 14,633 11,378 26,011 Total Operating Revenues 272,433 71,099 343,532 Operatine Expenses Costs of sales and services 10,821 58,778 69,599 Depreciation 181,267 - 181,267 Total Operating Expenses 192,088 58,778 250,866 Operating Income (Loss) 80,345 12,321 92,666 NonoDeratinE Revenues (Expense Investment income 6,856 - 6,856 (Loss) on sale of capital assets (4,766) (4,766) Total Nonoperating Revenues (Expenses) 2,090 - 2,090 Change in Net Assets 82,435 12,321 94,756 Beginning net assets 848,148 2,182 850,330 Ending Net Assets $ 930,583 $ 14,503 $ 945,086 II , 89 CITY OF WEST UNIVERSITY PLACE, TEXAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the year ended December 31, 2006 Cash Flows from Operating Activities Receipts from customers and users Payments to suppliers Net Cash Provided by Operating Activities Cash Flows from Capital and Related Financing Activities Acquisition and construction of capital assets Proceeds from sale of capital assets Net Cash (Used) by Capital and Related Financing Activities Cash Flows from Investing Activities Interest received Net Cash Provided by Investing Activities Net Increase in Cash and Cash Equivalents Beginning cash and cash equivalents Ending Cash and Cash Equivalents Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation Changes in Operating Assets and Liabilities: (Increase) Decrease in Current Assets: Accounts receivable Due from other funds Increase (Decrease) in Current Liabilities: Accounts payable Due to other funds Net Cash Provided by Operating Activities Equipment Healthcare Replacement Benefits Total $ 272,433 $ 91,596 $ 364,029 (10,821) (58,778) (69,599) 261,612 32,818 294,430 (128,568) - (128,568) 5,400 - 5,400 (123,168) - (1231168) 6,856 - 6,856 6,856 - 6,856 145,300 32,818 178,118 77,846 2,182 80,028 $ 223,146 $ 35,000 $ 258,146 $ 80 345 $ 12 321 $ 92 666 , , , 181,267 - 181,267 - (931407) (93,407) (36,243) (36,243) - 150,147 150,147 $ 261,612 $ 32,818 $ 294,430 90 i ■ STATISTICAL SECTION ■ ' This part of the City's 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 City's overall financial health. Contents Page Financial Trends 93 These schedules contain mend information to help the reader understand how the Chys financial performance and well-being have changed over time. Revenue Capacity 104 These schedules contain information to help the reader assess the City's most significant local revenue source, property tax. Debt Capacity 112 These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information 120 These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. Operating Information 122 These schedules contain service and infi•astr•ucture data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. 91 ti (This page intentionally left blank.) 92 11 11 tl CITY OF WEST UNIVERSITY PLACE, TEXAS NET ASSETS BY COMPONENT Last Four Years (1) (accrual basis of accounting) Fiscal Year 2003 2004 2005 Governmental activities Invested in capital assets, net of related debt Restricted Unrestricted Total governmental activities net assets Business-type activities ■ Invested in capital assets, net of related debt Restricted Unrestricted Total business-type activities net assets Priman, government Invested in capital assets, net of related debt Restricted Unrestricted Total primary government net assets $ 7,811,571 $ 8,838382 $ 2,285,217 $ 11,786,607 305,496 363,478 8,533,406 3,605,569 2.139,980 2,435,721 3,0031540 3,976,998 $ 10,257.047 $ 11,637,581 $ 13,822163 $ 19,369,174 $ 22,140,957 $ 22,647,508 $ 21,776,495 $ 20,924,046 1,180,254 1,531649 622,627 813,673 (486,050) (331,015) 8947473 525,387 $ 22.835,161 $ 23,849,142 $ 23,293.595 $ 22,2631106 $ 29,952,528 $ 31,4851890 $ 24,061,712 $ 32,710,653 1,485,750 1,896,127 9,156,033 4,419,242 1.653,930 2,104.706 3,898,013 4,502,385 $ 33,092,208 $ 35886,723 $ 37,115,758 $ 41,632,280 (1) The requirement for statistical data is ten years; only four years are available at this time. 93 CITY OF WEST UNIVERSITY PLACE, TEXAS CHANGES IN NET ASSETS Last Four Years (1) (accrual basis of accounting) Expenses Governmental activities General government Public safety Public works Public services Interest and fiscal agent fees on long-term debt Total governmental activities expenses Business-type activities Water and sewer Solid waste Total business-type activities expenses Total primary government expenses Program Revenues Governmental activities Charges for services General government Public safety Public works Public services Operating grants and contributions Capital grants and contributions Total governmental activities program revenues Business-type activities Charges for services Water and sewer Solid waste Total business-type activities program revenues Total primary government program revenues Fiscal Year 2003 2004 2005 2006 $ 2,070,377 $ 2,405,983 $ 2,594,417 $ 2,706,514 4,816,966 4,826,905 5,109,968 5,187,464 2,554,406 1587,621 3,073,735 2.654,368 1,148,718 1,368,549 1,840,117 1,874,113 3.820,949 3.377,944 3,501,076 2,984,308 14,411.416 14.562002 16,119,313 15.406,767 4,567,117 4,844,930 5,083,562 5,084,326 798,759 676.448 850,366 844.754 5365,876 5,521,378 5,933,928 5.929,080 $ 19-777.292 $ 20,088,380 $ 21053,241 $ 21335,847 $ 428,859 710,560 651,351 236,989 261,976 2.289,735 3,106,875 1.048,171 4.155,046 $ 6A44.781 $ 551,379 $ 1,530,847 530,266 186;844 696,804 342,450 1.270,704 3,391,603 597,910 16.915 370,864 2,703,380 4,201,687 1,103,485 5,305,172 $ 8.696.775 Net (Expense)/Revenue Governmental activities $ (11121,681) $ (11,175,399) Business-type activities (1,210.830) (216,206) Total primary government net expense $ (13,332511) $ (11,391,605) 94 5,084,828 926,132 6,010,960 $ 8,714,340 $ (13,415,933) 77,032 $ (13,338,901) $ 1,260,376 267,609 580;297 259;000 2,367,282 4,795,073 944,897 5,739,970 $ 8,107.252 $ (13,039,485) (189,110) $ (13.228,595) CITY OF WEST UNIVERSITY PLACE, TEXAS CHANGES EV NET ASSETS (Continued) Last Four Years (1) (accrual basis of accounting) General Revenues and Other Changes in Net Assets Governmental activities Taxes Property taxes, levied for general purposes Property taxes, levied for debt service Sales taxes Franchise and local taxes Other taxes Contributions Investment earnings Other revenues Gain (loss) on sale of capital assets Transfers Total governmental activities Business-type activities Investment earnings Other revenues Transfers Total business-type activities Total primary government Change in Net Assets Governmental activities Business-type activities Total primary government Fiscal Year 2003 2004 2005 2006 $ 4,765,758 $ 5,134,667 $ 5,337,999 $ 5,888,180 6,011,109 6,536,129 6,794,959 6,748355 758947 683,572 745,716 1,028,946 873,649 872,221 913,998 1,000,930 18,343 16,021 15,460 14,795 - - 268,081 326,656 515,414 338,969 458,208 695,749 159,582 197,645 222,044 1,828,944 - - (25,950) - (2,914,442) (1,223,291) 870,000 1,053,941 10,188,360 12.555,933 15.600,515 18,586,496 10,280 67896 21,374 72,757 - - 216,047 139,805 2,914.442 1,223.291 (870,000) (1.053941) 2,924,722 1.230.187 (632,579) (841,379) $ 137113.082 $ 13,786,120 $ 14.967,936 $ 17,745,117 $ (1,933,321) $ 1,38M34 $ 2,184,582 $ 5,547011 11711892 1.013,981 (555,547) (1.030,489) $ (219,429) $ 2.394,515 $ 1,629,035 $ 4,516,522 (1) The requirement for statistical data is ten years; only four years are available at this time. 95 (This page intentionally left blank.) 96 CITY OF WEST UNIVERSITY PLACE, TEXAS TAXREVENUESBYSOURCE, GOVERNMENTAL ACTIVITIES Last Four Years (1) (accrual basis of accounting) Change Function 2003 2004 2005 2006 2005-2006 Property $ 11,481,442 $ 11,670,796 $ 12,132,958 $ 12,636,535 4.2% Sales 777,290 667,552 730,156 1,028,946 40.9% Franchise fee 873,649 872,221 913,998 1,000,930 95% Other taxes 159,582 16,020 15,460 14,795 -4.3% $ 13,291,963 $ 13,226,589 $ 13,792,572 $ 14,681.206 6.4% (1) The requirement for statistical data is ten years; only four years are available at this time. 97 CITY OF WEST UNIVERSITY PLACE, TEXAS FUND BALANCES, GOVERNMENTAL FUNDS Last Ten Years (modified accrual basis of accounting) General Fund Reserved Unreserved Total general fund All Other Governmental Funds Reserved Unreserved, reported in: Capital project funds Nonmajor governmental funds Total all other governmental funds Fiscal Year 1997 1998 1999 2000 $ 88,752 $ - $ 48,059 $ 5&934 3,875,695 4,394.820 47173,141 3.934.596 $ 3,964.447 $ 4,394,820 $ 4221,200 $ 3.993530 $ 7,699,519 $ 13,927,927 $ 10,951,602 $ 27,915,848 1,884,809 199,695 (551,473) (81,464) 424.134 294.254 400,884 246523 $ 10.008,462 $ 14,421,876 $ 10.801,013 $ 28.080.907 98 Fiscal Year 2001 2002 2003 2004 2005 2006 $ 7,364 $ 80544 $ 2,148,781 $ 2,098,916 $ 15,504 $ 15,516 2,985.884 2,846.051 841,381 936,365 3.357,537 4,187.536 $ 2,993,248 $ 2,926,595 $ 2,990,162 $ 3.035,281 $ 3.373,041 $ 4,201052 $ 20,188,647 $ 20,919,924 $ 656,903 $ 782,534 $ 998,780 $ 1,658,449 538,775 698,630 19,412,415 9,106,291 6,852,781 1,545,312 545,459 121,914 139,427 233,004 683,698 1,484,935 $ 21,272,281 $ 21.740468 $ 20,208,745 $ 10,121,829 $ 8,535,259 $ 4,688,696 99 CITY OF WEST UNIVERSITY PLACE, TEXAS CHANGES IN FUND BALANCE, GOVERNMENTAL FUNDS Last Ten Years (modified accrual basis of accounting) 1997 Revenues Taxes Pemits, licenses, and fees Fines and forfeitures Charges for services Intergovernmental Contributions investment earnings Other revenues Total revenues Expenditures General government Public safety Public works Public service Capital outlay Debt service Principal Interest Total expenditures Excess of revenues over (under) expenditures Other Financing Sources (Uses) Transfers in Transfers out issuance of debt Premium on debt issued Payment to refunded bond escrow agent Sale of capital assets Total other financing sources Net change in fund balances Debt service as a percentage of noncapital expenditures Fiscal Year 1999 2000 $ 6,910,111 $ 7,495,912 $ 7,972,546 $ 8,987,973 421,159 558,469 396,484 496,677 367,165 184,813 307,058 274,001 1,488,771 702,131 796,763 914,686 565,919 125,318 650,459 1,055,425 1,100,372 1,120,750 1,288,324 1,015,579 281.251 317,661 343.348 553,268 11,134,748 10,505,054 11,754,982 13,297,609 1,462,013 1,685,246 11803,017 1,777,263 2,900,458 2,892,950 2,952,688 3,525,192 2,007,833 1,288,618 1,435,693 1,490,417 747,746 709,674 866,489 987,209 2,993,082 5,890,116 5,560,612 61473,002 1,085,000 1,425,000 1,585,000 1,780,000 1,856A75 1,935,122 2,045,071 1058,343 13,052,607 15,826,726 16,248,570 18,091,426 (1,917,859) (5,321,672) (4,493,588) (4,793,817) 1,430,000 1,310,390 1,172,500 1,986,950 (520,000) (711,480) (473,400) (1,173,842) 650,000 14,901,901 21,107,933 (5,335,352) 1,560,000 10,165,459 699,100 21,921,041 $ (357,859) $ 4,841787 $ (3,794,488) $ 17,127,224 29.24% 33.82% 33.96% 33.04% 100 Fiscal Year 2001 2002 2003 2004 2005 2006 $ 9,963,477 $ 11,534,667 $ 12,416,216 $ 11263,355 $ 13,803,975 $ 14,658,182 472,081 386,124 444,886 577,164 597,910 580,297 276,815 319,388 243,931 193,322 186,844 267,609 901,544 1,074,335 1,086,952 974,549 1,165,967 1,260,376 259,000 277,769 307,784 1,392,662 387,779 259,000 - - - - 268,081 326,656 1,720,839 655,918 511,267 336,967 457,078 688,893 389,693 603.217 387,897 451,551 212,924 1,814511 13,983,449 14,851,418 15,398,933 17,189,570 17,080,558 19,855,324 1,981,486 2,061,227 1,952,308 2,211,183 2,268,862 2,381,154 4,019,282 4,3361152 4,701,684 4,616,019 4,769,582 5,028,528 1,515,164 1,500,127 1,631,434 1,642, 867 1,582,592 1,557,955 896,309 941,302 1,015,026 1,255,857 1,579,982 1,712,208 12,886,880 13,583,834 13,107,808 11,882,057 2,569,023 6,840,403 1,880,000 2,185,000 2,295,000 2,685,000 2,900,000 3,375,000 2,812,336 3,130,630 3,808,650 3,775,384 3,669,628 3,319,913 25,991,457 27,738,272 28,511,910 28,068,367 19,339,669 24,215,161 (12,008,008) (12,886,854) (13,112,977) (10,878,797) (2,259,111) (4,359,837) 1,790,600 1,691,111 631,000 837,000 1,1391000 1,540,713 (991,500) (1,002,861) - - (269,000) (670,713) 3,325,000 29,180,987 9,918331 - 25,075,000 473,285 _ _ - - 1,793,024 - (16,397,937) - (26,751,058) _ _ - - 23,335 - 4,124,100 13,471,300 10,549,331 837,000 1,010,301 1,343,285 $ (7,883,908) $ 584,446 $ (2,563,646) $ (10,041,797) $ (1;248,810) $ (3,016,552) 35.81% 37.55% 39.62% 39.91% 39.26% 39.48% 101 CITY OF WEST UNIVERSITY PLACE, TEXAS TAX REVENUES BYSOURCE, GOVERNMENTAL ACTIVITIES Last Ten Years (modified accrual basis of accounting) Function Fiscal Year 1997 1998 1999 2000 Property $ 5,650,077 S 6,054,801 $ 6,610,664 $ 7,376,687 Sales 537,074 627,443 531,246 776,085 Franchise fee 716,279 804,005 818,326 786,672 Other taxes 6,681 9,663 12,310 10,587 $ 6,910,111 $ 7,495,912 $ 7,972,546 $ 8,950.031 102 11 it ' Fiscal Year Change 2001 2002 2003 2004 2005 2006 2004-2005 $ 81532,873 $ 9,717,905 $ 11,481,442 $ 11,691,541 $ 12,128,801 $ 12,613,511 4.0% 523,665 862,325 758,987 683,573 745,716 1,028,946 38.0% 533,646 939,577 873,649 872,221 913,998 1,000,930 9.5% 9981 14.860 18,303 16.020 15,460 14.796 -43% 600,165 $ $ 9 11,534,667 13,132,381 $ 13,263,355 $ 13,803,975 $ 14,658,183 6.2% , I 103 CITY OF WEST UNIVERSITY PLACE, TEXAS ASSESSED VALUE AND ACTUAL VALUE OF TAXABLE PROPERTY Last Ten Years Residential Property Commercial Property Less: Tax Exempt Property Total Taxable Assessed Value (1) Total Direct Tax Rate 1997 1998 1999 2000 $ 1,475,517,440 $ 1,497,313,260 $ 1,704,205,400 $ 1,997,785,950 55,906,970 48,657,800 54,608,270 56,534,900 (63,727,640) (59,3265660) (56,106,070) (57,022,280) 1,467,696,770 1,486,6441400 1,702,707,600 1,997,298,570 0.38000 0.40000 0.42000 0.41000 Source: Harris County Certified / Uncertified Tax Roll. (1) Property is assessed at actual value; therefore, the assessed values are equal to actual value. Tax rates are per $100 of assessed value. 104 2001 2002 2003 2004 2005 2006 $ 2,224,515,970 $ 2,391,518,150 $ 2,544,734,110 $ 2,680,629,150 $ 2,816,526,599 $ 3,032,378,632 64,388,870 60,317,070 52,571,420 56,271,940 79,232,269 200,638,039 014 970) (54 (54,4261270) (79,831,440) (80,402,800) (128,158,556) (238,088,255) , , 2,234,889,870 2,397,408,950 2,517,474,090 2,6561498,290 2,767,600,312 2,994,928,416 0.42000 0.42000 0.43000 0.44670 0.43000 0.40200 105 CITY OF WEST UNIVERSITY PLACE, TEXAS PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS Last Ten Years City of West University Place by fund: General Debt service Total Direct Rates Houston Independent School District Harris County Harris County Flood Control District Port of Houston Authority Harris County Hospital District Harris County Dept. of Education Houston Community College Total Direct and Overlapping Rates (1) Tax rates per $100 of assessed valuation Source: Harris County Appraisal District 1997 1998 1999 2000 $ 0.21000 $ 0.21000 $ 0.21000 $ 0.20500 0.17000 0.19000 011000 0.21500 7 0.38000 $ 0.40000 $ 0.42000 $ 0.42000 138400 1.38400 1.45900 1.51900 0.42770 0.41870 0.39480 0.39480 0.07420 0.07420 0.08000 0.08000 0.01600 0.01960 0.02130 0.02040 0.12380 0.12380 0.14650 0.14650 0.06615 0.06615 0.06615 0.08233 $ 2.47185 $ 2.48645 $ 2.58775 S 2.66303 (1) Overlapping rates are those of local and county governments that apply within the City of West University Place. 106 2001 2002 2003 2004 2005 2006 $ 0.19500 $ 0.19000 $ 0.19670 $ 0.20000 $ 0.20100 $ 0.19200 0.22500 0.24000 0.25000 0.24000 0.22900 0.21000 $ 0.42000 $ 0.43000 $ 0.44670 $ 0.44000 $ 0.43000 $ 0.40200 1.51900 1.58000 1.58000 1.58000 1.62000 1.47570 0.35900 038390 0.38810 0.38800 0.39986 0.40239 0.06170 0.04760 0.04170 0.04170 0.03322 0.03241 0.01830 0.01830 0.01990 0.02000 0.01474 0.01302 0.20270 0.19020 0.19020 0.19020 0.19216 0.19216 _ _ _ - 0.00629 0.00629 0.08133 0.08133 0.08133 0.09598 0.09577 0.09518 $ 2.66203 $ 2.73133 $ 2.74793 $ 2.75588 $ 2.79204 $ 2.61915 107 (This page intentionally left blank.) 108 I CITY OF WEST UNIVERSITY PLACE, TEXAS PRINCIPAL PROPERTY TAXPAYERS Current Year and Four Years Ago (1) 2003 Property Tax Payer Southwestern Bell $ CenterPoint Energy, Inc. U West Marketplace Assoc Bardwell Building Co. 5650 Kirby Partnership Kenneth and Kimberly Alo 5177 Builders LTD Covington Builders Echostar Satellite Corp. Max and Christine Lukens Southwestern Bell Tele Co Houston Lighting & Power Bellaire Shopping Center Craig and Patricia Biggio Frank and Lillian Orson James L. Salners Brian and Carol Kirshon Subtotal Other Taxpayers Total % of Taxable Taxable Assessed Assessed Value Rank Value 12,715,228 1 0.42% 5,919,230 2 0.20% 5,223,389 3 0.17% 4,989,716 4 0.17% 4,475,596 5 0.15% 3,875,000 6 0.13% 3,841,124 7 0.13% 2,982,078 8 0.10% 2,977,900 9 0.10% 2,693,640 10 0.09% n/a n/a n/a n/a n'a n/a n/a $ 49,692,901 2,945,235,515 $ 2,994,928,416 % of Taxable Taxable Assessed Assessed Value Rank Value $ 21,606,830 1 0.87% 3,775,690 4 0.15% 2,262,700 9 0.09% 2,099,369 10 0.08% 4,487,230 2 0.18% 3,943,040 3 0.16% 2,331,900 8 0.09% 2,460,100 5 0.10% 21435,900 6 0.10% 2,348,700 7 0.09% 1.66% $ 47,751,459 98.34% 2,441,221 8II 100.00% $ 2,488,973,270 Source: Harris County Tax Assessor-Collector's records. (1) The requirement for statistical date is the current year and nine years ago; only the current year and four years ago is available at this time. 1.92% 98.08% 100.00% 109 CITY OF WEST UNIVERSITY PLACE, TEXAS PROPERTY TAXLEHESAND COLLECTIONS Last Ten Years 1997 Tax levy Current tax collected Percent of current tax collections Delinquent tax collections Total tax collections Total collections as a percentage of current levy Outstanding delinquent taxes Outstanding delinquent taxes as percentage of current levy $ 5,628,421 $ $ 5,386,852 $ 95.71% $ 240,468 $ $ 5,627,320 $ 99.98% $ 1,101 $ 0.020% 1998 1999 2000 6,022,837 $ 6,564,512 $ 7,305,615 5,980,947 $ 6,524,907 $ 7,255,353 99.30% 99.40% 99.31% 40,081 $ 36,821 $ 44,389 6,021,028 $ 6,561,728 $ 7,299,742 99.97% 99.96% 99.92% 1,809 $ 2,784 $ 5,873 0.030% 0.042% 0.080% 110 2001 2002 2003 2004 2005 2006 $ 8,703,604 $ 9,630,400 $ 10,680,077 $ 11,581,528 $ 12,192,921 $ 12,621,201 $ 8,655,130 $ 9,582,032 $ 10,629,260 $ 11,516,657 $ 12,124,169 $ 12,539,957 99.44% 99.50% 99.52% 99.44% 99.44% 9936% $ 43,160 $ 37,410 $ 33,046 $ 41,448 $ 32,902 $ 105 $ 8,698,290 $ 9,619,442 $ 10,662,306 $ 11,558,105 $ 12,157,071 $ 12,540,062 99.94% 99.89% 99.83% 99.80% 99.71% 99.36% $ 5,314 $ 10,958 $ 17,771 $ 23,423 $ 35,850 $ 81,139 0.061% 0.114% 0.166% 0.202% 0.294% 0.643% 111 CITY OF WEST UNIVERSITY PLACE, TEXAS RATIOS OF OUTSTANDING DEBT BY TYPE Last Four Years (1) 2003 2004 2005 2006 PRIMARY GOVERNMENT Governmental Activities: General obligation bonds $ 64,715,000 $ 62,120,000 $ 59,095,000 $ 55,945,000 Certificates of obligation 13,140,000 13,050,000 12,855,000 12,630,000 Capital leases - - - 473,285 Subtotal $ 77,855.000 $ 75,170,000 $ 71,950,000 $ 69.048,285 Business-Type Activities: Revenue bonds $ 15,995.000 $ 15,455,000 $ 15,255,000 $ 14.580,000 TOTAL PRIMARY GOVERNMENT $ 93,850,000 $ 90,625,000 $ 87,205,000 $ 83,628,285 PERSONAL INCOME (2) DEBT AS A PERCENTAGE OF PERSONAL INCOME (2) - - - - POPULATION 14,211 14,211 14,211 14,211 DEBT PER CAPITA $ 6,604 $ 6.377 $ 6,136 $ 5,885 (1) The requirement for statistical data is ten years; only four years are available at this time. (2) Personal income data is not available. Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 112 (This page intentionally left blank.) 113 CITY OF WEST UNIVERSITY PLACE, TEXAS RATIO OF NET BONDED DEBT TO ASSESSED VALUE, NET BONDED DEBT PER CAPITA, AND ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY Last Ten Years 1997 1998 1999 2000 NET TAXABLE ASSESSED VALUE All property $ 1,481,163,540 $ 1,505,694,530 $ 1,567,240,600 $ 1,78],467,580 NET BONDED DEBT Gross bonded debt $ 32,760,000 $ 41,020,000 $ 39,045,000 $ 58,475,000 Less debt service funds 938,753 636.948 811,335 838,547 Net Bonded Debt $ 31,821,247 $ 40,383,052 $ 38,233,665 $ 57.636,453 RATIO OF NET BONDED DEBT TO ASSESSED VALUE 2.15% 2.68% 2.44% 3.24% POPULATION 12,920 12,920 12,920 14,211 NET BONDED DEBT PER CAPITA $ 2,463 $ 3,126 $ 2,959 $ 4,056 114 2001 2002 2003 2004 2005 2006 $ 2,022,417,900 $ 2,300,012,640 $ 2,488,976,270 $ 2,517,474,090 $ 2,895,758,868 $ 3,072,558,941 $ 60,050,000 $ 70,250,000 $ 76,705,000 $ 75,170,000 $ 71,950,000 $ 68,575,000 633,071 567,825 656,144 782,534 1,169,072 11169,072 $ 59,416,929 $ 69,6821175 $ 76,048,856 $ 74,387,466 $ 70,7801928 $ 67,405,928 2.94% 3.03% 3.06% 2.95% 2.44% 2.19% 14,211 14,211 14,211 14,211 14,211 14,211 $ 4,181 $ 4,903 $ 5,351 $ 5,234 $ 4,981 $ 4,743 115 11 CITY OF WEST UNIVERSITY PLACE, TEXAS DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT December 31, 2006 Estimated Net Bonded Estimated Share of Debt Percentage Overlapping Governmental Unit Outstanding Applicable (1) Debt Debt repaid with property taxes HoustonlSD $ 2,041,775,818 2.800% $ 57,169,723 Harris County (2)(3) 2,047,314,000 1.120% 22,929,917 Harris Co. Flood Control District (3) 329,765,000 1.120% 3,693,368 Port of Houston Authority (3) 339,221,000 1.920% 6.513,043 Subtotal, overlapping debt 90,306,051 City direct debt 57,636,453 100.000% 57,636,453 Total direct and overlapping debt $ 147,942,504 Source: Harris County (1) Estimated Percentage Applicable obtained from Municipal Advisory Council of Texas (2) Excludes Toll Road Tax Bonds. The County's policy and practice has been to provide payment of debt service on the outstanding Toll Road Tax Bonds from toll revenues and certain other funds, and to date, no tax has been collected to provide for such debt service. (3) Debt outstanding is as of December 31, 2006 11 11 11 116 CITY OF WEST UNIVERSITY PLACE, TEXAS LEGAL DEBT MARGIN INFORMATION Last Four Years (1) Debt limit Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of debt limit Fiscal Year 2003 2004 2005 2006 $ 124,448,664 $ 125,873,705 $ 144,787,943 $ 153,627,947 76,048,856 74,387,466 70,953,073 67,405,928 $ 48,399.808 $ 51,486,239 $ 73,834,870 $ 86,222,019 61.11% 59.10% 49.00% 43.88% Legal Debt Margin Calculation for Fiscal Year 2006 Assessed value $ 3,072,558,941 Debt limit (5% of assessed value) 153,627,947 Debt applicable to limit: General obligation bonds 68,575,000 Less: amount set aside for repayment of general obligation debt (1,169,072) Total net debt applicable to limit 67,405,928 Legal debt margin $ 86,222,019 Note: The City's Home Rule Charter (1983), Section 7.07 limits all bonded debt to no more than 5% of the assessed valuation. (1) The requirement for statistical data is ten years; only four years are available at this time. 117 CITY OF WEST UNIVERSITY PLACE, TEXAS PLEDGED-REVENUE COVERAGE Last Ten Years Gross revenues (1) Operating expenses (2) Net revenues available for Debt Service 1997 1998 $ 2,968,012 $ 3,366,410 $ $ 1,990,369 $ 2,360,258 $ $ 977,643 $ 1,006,152 $ 1999 2000 3,413,889 $ 3,427,821 2,297,558 $ 2,613,128 1,116,331 $ 814,693 DEBT SERVICE REQUIREMENTS (3) Principal $ 5,000 $ 220,000 $ Interest 251,590 316.630 _ Total $ 256,590 $ 536,630 $ Coverage 181 1.87 (1) Total revenues including interest, excluding tap fees (2) Total operating expenses less depreciation (3) Includes revenue bonds only 225,000 $ 335,000 484,177 510,759 709,177 $ 845,759 1.57 0.96 118 2001 2002 2003 2004 2005 2006 $ 3,274,339 $ 3,358,111 $ 3,106,875 $ 4,204,407 $ 57098,008 $ 4,842,481 $ 2,352,802 $ 21469,348 $ 2,359,745 $ 2,565,022 $ 2,780,664 $ 2,737,998 $ 921,537 $ 888,763 $ 747,130 $ 1,639,385 $ 2,317,344 $ 2,104,483 $ 350,000 $ 360,000 $ 510,000 $ 540,000 $ 565,000 $ 675,000 489,684 801.739 765,160 740,339 714,225 597,295 $ 839,684 $ 1,161,739 $ 1,275,160 $ 1,280,339 $ 1,279,225 $ 1,272,295 1.10 0.77 0.59 1.28 1.81 1.65 119 'i CITY OF WEST UNIVERSITY PLACE, TEXAS DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Years Fiscal Year Per Capita Ended Personal Personal Median School Unemployment Dec 3l Population(]) Income(4) Income (6) Age (5) Enrollment(2) Rate(3) 1997 12,920 - N/A N/A 885 0.90% 1998 12,920 - N/A N/A 885 0.90% 1999 12,920 - N/A N/A 952 1.10% 2000 14,211 - N/A 39.30 950 0.07% 2001 14,211 - N/A 39.30 947 1.06% 2002 14,211 - N/A 39.30 915 1.06% 2003 14,211 - N/A 39.30 915 1.06% 2004 14,211 - N/A 3930 951 4.60% 2005 14,211 - N/A 39.30 972 6.00% 2006 14,211 - N/A 39.30 981 3.70% Data sources: (1) Bureau of the Census (2) The school enrollment reflects enrollment in schools located within the City limits. (3) Texas Workforce Commission (4) Personal income data are not available. (5) Median age data prior to 2000 are not available. 120 1 ' CITY OF WEST UNIVERSITY PLACE, TEXAS ' PRINCIPAL EMPLOYERS Current Year (1) I ' Southwestern Bell West University Elementary School City of West University Place 1 I Note: The residents of the City of West University Place are primarily employed outside of the City limits. ' (1) The requirement is for the current year and nine years ago, only the current year and one year ago are available at thistime, which are the same. I I 1 I 121 CITY OF WEST UNIVERSITY PLACE, TEXAS FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTIONIPROGRAM Last Ten Years Fiscal Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 General Fund: Administration 3 3 3 4 4 4 4 4 4.5 4 Finance 12 10 10 10 10 9 9 9 9 8 Police Department 28 28 28 35 35 36 35 35 34 32 Fire Department 20 20 21 21 20 20 23 24 24.5 25 Public Works 21 22 22 23 22 23 23 21 21 21 Parks & Recreation 6 6 6 6 6 6 6 8 8 8 General Fund Total 90 89 90 99 97 98 100 101 101 98 Enterprise Fund: Water 15 15 15 14 14 15 14 14 14 14 Solid Waste 9 9 9 10 10 10 10 10 7 7 Enterprise Fund Total 24 24 24 24 24 25 24 24 21 21 TOTAL CITY POSITIONS 114 113 114 123 121 123 124 125 122 119 NOTES: Around 20-35 temporary and seasonal employees are hired during the summer months as camp counselors, pool personnel and front desk. This count is not reflected above. Around 6 Contract personnel are used year round to augment solid waste crews. This count is not reflected above. On-call firefighters (9) are not included. School crossing guards (8) are not included. 122 CITY OF WEST UNIVERSITY PLACE, TEXAS OPERATING INDICATORS BY FUNCTION/PROGRAM Last Four Years (1) Fiscal Year 2004 2005 2006 Function/Program Police Arrests Accident reports Citations Offense reports Calls for service Fire Emergency responses Fire incidents Average response time Water New accounts Source: Water Sewer Average daily consumption (millions of gallons) Number of million gallons of surface water pumped Number of million gallons of well water pumped Total consumption (millions of gallons) Peak daily consumption (millions of gallons) Sewer Average daily sewage treatment (millions of gallons) Total consumption (millions of gallons) Peak daily consumption (millions of gallons) 145 321 366 432 186 139 138 123 5,235 3,675 3,583 3,581 804 1,018 1,027 1,040 10,896 11,353 13,688 25,790 447 659 624 686 650 655 776 740 2:30 3:08 3:08 3:06 879 915 760 860 80 80 80 80 20 20 20 20 2.170 2.170 2.279 2.149 696.694 674.705 735.622 687.972 174.103 117.389 101.457 87.844 870.797 792.094 837.079 784.499 5.990 5.990 8.640 4.976 1.354 1.423 1.271 1.356 0.000 0.000 452.618 495.250 4.685 5.123 4.684 6.707 Source: Various City departments (1) The requirement for statistical data is ten years: only four years are available at this time. 123 CITY OF WEST UNIVERSITY PLACE, TEXAS CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM Last Four Years (1) Function/Program Police Fiscal Year 2003 2004 2005 2006 Stations 1 1 1 1 Patrol units 9 9 7 7 Fire stations 1 1 1 1 Other public works Streets (miles - centerlines) 43.0 43.0 43.0 43.0 Streetlights 690 690 690 690 Parks and recreation Parks 9 9 9 9 Parks acreage 12.6 12.6 12.6 12.6 Swimming pools 2 2 2 2 Baseball / softball diamonds 5 5 5 5 Tennis courts 5 5 5 5 Racquetball/handball courts 2 2 2 2 Gymnasiums 1 1 1 1 Basketball courts 2 2 2 2 Water Water mains (miles) 40.0 40.0 40.0 40.0 Fire hydrants 324 357 357 357 Storage capacity (millions of gallons) 3.65 3.65 3.65 3.65 Sewer Sanitary sewers (miles) 40.0 40.0 40.0 40.0 Storm sewers (miles) 32.0 32.0 32.0 32.0 Open ditch / creek / canal drainage (miles) 1.32 132 1.32 1.32 Treatment capacity (millions of gallons) 2.00 2.00 2.00 2.00 Source: Various City departments (1) The requirement for statistical data is ten years; only four years are available at this time. 124